By Dr. Lynn Reaser
The Middle East was not even on the radar screens of the world’s economic and political elite recently gathered in Davos to ponder global challenges. Suddenly all eyes have focused on the explosive unfolding of events in Egypt.
The drive for President Hosni Mubarak to resign have been triggered by both economic and political forces. Rapidly rising food and energy prices have compounded the distress of the poor and middle class. Political reaction to thirty years of autocratic rule have been even more important. The toppling of Tunisa’s government encouraged opposition forces in Egypt to take action.
Equal to only about the size of the state of Missouri, Egypt is a small country. It also is an insignificant oil producer. Yet, Egypt’s future is important for a numbers of reasons. First, it controls the Suez Canal and an important pipeline which serve as important transit routes for oil. Second, Egypt is the only country in the region aside from Jordan that has worked to achieve peace with Israel. Third, efforts to overthrow authoritarian governments could spread to other Middle East countries, jeopardizing the supply of oil. Fourth, civil unrest could move to countries in other regions, including China in Asia and Venezuela in Latin America.
Surprisingly, the U.S. stock market has continued to move higher despite the turmoil and increases in the price of oil to more than $100 a barrel in terms of the benchmark, Brent crude oil, traded in London. Investors have quickly moved out of emerging markets to European and American markets, perceived as holding less risk.
Developments during the next few days and weeks will be critical. President Mubarak’s leadership is holding talks with the opposition and has acquiesced to some of their demands, including the freeing of political prisoners. Clearly some time is now required. An immediate election might find the Muslim Brotherhood as the only viable opposition party, which could lead to a “Sunni Iran”. More time could allow more parties to organize and build support for their candidates.
As tourism plummets, while foreign and domestic capital flees the country, public support for the protests could dwindle. This could set the stage for a more peaceful transition of governments, with the military continuing to control the conflict.
But for now, nothing is assured.