• Domino Effects in the Arab Countries: The Concern Over Crude Oil and the Contradictory Egyptian Protest Against the West

  • Joachim Bischoff | 10 May 11 | Posted under: Africa
  • With astonishment the world has taken note of the upheavals in Tunisia and Egypt as well as the mass protests in other countries of the Middle East and the Maghreb. While in most countries of the Middle East the social and political transformation was accompanied by little violence, we are now witnessing a murderous civil war in Libya. The uprisings in Tunisia, Egypt and Libya have fundamentally changed the Arab world, no matter what the future brings after the fall of the dictators in those countries. In Egypt, the alternative seems to be between democracy and military rule. It did not take even 20 days to unsettle an authoritarian power system which seemed so secure in many ways. For the time being, in Egypt only the most crucial knot has been cut through in this tightly woven net of coolly calculated interdependencies between the army, police, secret services, the economy and the social elite. The USA are chaperoning the change of power and the reform of the system, albeit with a frown. The mass protests have brought about a caesura, but in which direction the process of transformation will develop it is impossible yet to say. The outlived, ossified social and political structures have quickly melted down, yet the direction the social dynamics will eventually take is still undetermined. It applies to any revolutionary people’s movement that it finds its political space and the direction of its dynamics only when a representation, i.e. structures and subjects, are materialising. Besides arbitrary rule and corruption, what started the uprisings was soaring food prices and high unemployment among the youth. The price of staples is at its highest level since 1990 and thus higher than it was at the time of the global hunger revolts of 2008. These increase of price are very disturbing, since they affects millions of people, the more so when they concern staples such as grains. Worldwide, the prices for food rose by an average of 30% last year. This had different effects, varying from country to country, on the well-being of the population: only where a majority of the population contributes to the production of food, the high prices flow back to the producers. In financially weak countries poverty is spreading in urban areas in particular, that is, where people cannot produce their own food and are dependent on imported products.

    In Egypt, the lightening-quick democratisation is linked with the wetsern-oriented educated elites. Although the transformation is also supported by the masses in the slums of Cairo, they are still only little represented in the political arena. About three quarters of the 83 million inhabitants of Egypt live under harsh economic conditions. With its GNP of about 188 billion USD per year Egypt is – after Saudi-Arabia and the United Arab Emirates – the third largest national economy of the Arab countries. Yet, its importance in the region has decreased, although in recent years the growth rates have increased significantly. There is also a lot of discontent arising from unemployment, which officially amounts to 10%, but is in reality at least twice this.

    In 2009, the increase of GNP amounted to 4.7% and in 2010 to 5.15%. Yet the fruits of this increase have not trickled down to the lower income strata. Their purchasing power sank, because the increase in wages lagged far behind the 11% inflation. In spite of state subsidies, food prices rose even faster. About 40% of Egyptians live at the two-dollars a day poverty line defined by the World Bank. In the past three years food prices have increased steadily and remained at a high level, even when commodity prices decreased on the world market. One kilo of beef, which had cost 40 Egyptian pounds (5 Euros) only a few months ago, is now a rare luxury costing 65 pounds (8 Euros). In the meanwhile, experts estimate the price increase for food is now an untenable 17% per year. Soaring food prices in the wake of the global hunger crisis of 2007/2008 triggered the mass strikes and sit-ins in the industrial city of Mahalla al-Kubra in April 2008. These uprisings, which were also called “bread riots” or “hunger revolts”, were the foundation act of the April 6 Movement, which has in recent weeks co-organised numerous demonstrations in Cairo. It is not only in Egypt that the speculation-based factors affecting the agrarian commodity markets in the wake of the global financial crisis came up against domestic agricultural conditions, exacerbated by Mubarak’s export-oriented agrarian reforms which since the late 1980s led to an increase in rural poverty, and to a stagnation of productivity. In this process, redistributive reforms from the Nasser era were taken back.

    Mubarak’s regime is supported by the army and a repressive apparatus which was perfected in decades of states of emergency. Each year Germany paid an average of 64 million Euros and also exported arms to Egypt. From the USA, Mubarak got 1.3 billion USD military aid per year and economic aid amounting to 700 million USD. Besides this, the economic and political Egyptian elite reaped considerable benefits from Egypt’s control of the Suez Canal: the 5 billion USD income per year bestows political and economic power. According to estimates, the assets of the Mubarak family amount to 40 billion USD.

    Following the Tunisian model, the organisers of the demonstrations in Cairo and Alexandria proclaimed a “day of revolution against torture, poverty, corruption and unemployment”, and a peaceful revolution was set in motion. The citizens demanded participation, because they understood what they were deprived of – and because of modern technologies they are now able to assemble and unite quickly. This has to make nervous all those regimes in the Middle and also Far East, which had believed it possible to keep the educated layers of society pliable by means of exclusion, corruption and brutal intimidation. Cairo and Tunis show that this can work only as long as the armies of the poor without rights remain passive and susceptible to manipulation. If the enforced solidarity with those in power fades away – possibly also because, as we see in Egypt, too many soldiers come from the same social milieu as the protesters – the regimes begin toppling over.

    The role of the army

    Yet, it is about power structures. The politied figure of the Egyptian opposition, former General Director of the International Atomic Energy Organisation and Peace Nobel Prize Laureate Mohamed el-Baradei, hits the mark when describing the upcoming conflict in the following terms, “We have been waiting for this day for decades. All of us are set to cooperate with the military when preparing free and fair elections. I am expecting a transition period in which the power will be divided among the army and the people”. That in the recent riots the Egyptian army became the pivotal factor is no mere coincidence. Beside the politically dominant National Democratic Party there is no other institution that penetrates the state and society as thoroughly as the armed forces. The military apparatus is a determining element of the political system and a counterforce at the same time to the Egyptian power structure. It is directly responsible to the President who has the power to determine his course depending on the military commando structures tightly bound to him.

    Since the downfall of the monarchy in 1952, Egyptian politics is determined by the military. Their budget amounts to an estimated six billion USD, to which is added the approximately 1.5 billion USD paid by the USA. Field Marshall Mohammad Hussein Tantawi is the new wielder of power in Egypt. Although it is said that his leadership of the country is only to be temporary, he still is the most important man as the President of the Supreme Council of the Military Forces. In 1991, he led the Egyptian troops in the Gulf War, was appointed Minister of Defence and eventually, in 1995, Field Marshall. Since then he has been considered a close confidant of overthrown President Hosni Mubarak.

    It is undisputed that Tantawi has good connections to the US military-industrial complex. Critical observers claim that the Field Marshall is in part responsible for the slow rotting away of the Egyptian army of more than 450,000. He is said to have promoted only the army’s campaigns but not its military potential and thus to have transformed the army into an economic empire in command of agricultural and food companies. Allegedly, Tantawi has a right to veto all investments made in Egypt, which means that he holds a key position for future development. Recent news from Cairo shows that the army is beginning to take a stand against the demonstrators. Thus the British Guardian reported that in recent demonstrations hundreds of people were arrested by the army. Voices of warning speak of a continuation of the Mubarak-regime without Mubarak. New York Times columnist Nicholas Kristof writes from Cairo, “Mubarak’s regime has been a largely military one (in civilian clothes): Mubarak, Vice President Omar Suleiman and so many others are career military men. So if the military now takes over, how different will the system be?”

    The Suez Canal – its geo-strategic importance

    Beyond its importance as a regional power in the Middle East, Egypt also holds a key position for the global economy because of the Suez Canal. About 8% of global sea trade has its fastest route through the Suez Canal from Europe to Asia, with 45 to 50 ships passing through the Canal each day. Up to now, the political upheavals have not affected the transit. Should the Canal be closed, the USA has hinted that a military reaction might be the consequence. This also means that the new Egyptian regime will keep the Canal – which is controlled by the state – open at all costs. On the other hand, Egypt’s role in the global economy is a minor one. Internationally, the country is a small player with its nominal GNP of 188 billion USD in 2009 (as compared to 2,649 billion USD for France). Also negligible is its importance to global trade. According to OECD data, Egypt imported goods in the value of 45 billion USD, which is equivalent to a 0.4% share of global trade. When it comes to exports, the situation is even direr: With exports amounting to 23 billion USD (0.2%), Egypt is at the level of Belarus and Azerbaijan. With regard to the volume of trade, Algeria weighs about twice as much (45 billion USD), while from this perspective Tunisia, which is also rocked by protests, is even less important (14 billion USD).

    The most important export goods of North African countries are fuels – mostly oil and in the case of Egypt also liquid gas. That the price of oil of the European company Brent has recently climbed up to more than 100 USD per barrel cannot be attributed to fears of production losses in the Northern African region. According to data provided by the International Energy Agency, Egypt’s share of the daily worldwide production of crude oil of 85 million barrels only amounted to about 750,000 barrels per day in 2009. Compared to that, Saudi Arabia extracted 7.9 million, and all Arab OPEC countries 19.7 million barrels. So it is the worries about the transport of crude oil to Europe which is pushing the investors into action.

    The oil from the Arab region passes through Egypt on two routes: through the Sumed pipeline and on ships through the Suez Canal. The building of the Sumed pipeline from the Red Sea to the Mediterranean was a reaction to the closing of the Suez Canal in 1967, with the pipeline having a daily capacity of about 2.5 million barrels per day, while Goldman Sachs estimates the daily transport through the Canal at 2.2 million barrel; crude oil and refined products constitute about 15% of the entire freight. On these routes about 2.5% of global oil production passes through Egypt.

    Yet, it has to be taken into account that in recent years the flows of trade regarding oil have shifted considerably: Globally, the share of the OECD countries’ energy demand has decreased from 60% in 1973 to 44% in 2008; China and India, on the other hand, were the third and fourth largest oil importers respectively, their net imports amounting to 175 million and 128 million tons respectively. The Arab countries, which used to deliver their oil to the West via Egypt, are increasingly selling it directly to the East. According to Goldman Sachs, Saudi Arabia is in the meanwhile exporting more of its “black gold” to China than to the USA.

    Presumably, nervousness about the security of the transport routes would quickly grow if the political upheavals in Northern Africa were also to affect important oil exporters on the Arabian Peninsula. US President Barack Obama was right when he compared the events in Egypt to the fall of the Berlin Wall: it took a longer period of time for the structural changes prompted by the people’s uprisings to become visible to all. Yet, there is also something to be said against this comparison with 1989/90, namely that with the exception of the GDR and Poland the states of the Eastern bloc imploded from within; their governments were not overthrown by the masses. And, most of all, it was the state-oriented elites of actually-existing socialism that stepped down, while in the Maghreb and Middle East states today it is mafia-like capitalist ones. As to the 1979 Iranian Revolution, hardly any analogy between it and the events today can be observed: Islamists are hardly present in the protests or – as is the case with the Muslim Brotherhood – present themselves as rather moderate. The equation proposed by the enemies of Islam that the West = Enlightenment, democracy and human rights, and that the Orient = despotism, sharia and theocracy has been discredited by the current events, at least for the time being. On the other hand, it is not possible to verity that, as Ulrich Beck claims (in Frankfurter Rundschau of 2 February, 2011), the current uprisings mean the end to the post-colonial era, “in which ‘democracy’ in the Arab region in effect executed the continuing imperialism of the West”. At least the Western double standards have become obvious. Egyptian writer Alaa al Aswani said, “The West does not want a change, it wants the oil”. And in his assessment of the mood at Tahrir Square, the German-Egyptian political scientist Hamed Abdel-Samad said that in the face of the tear gas supplied by western democracies and used against the demonstrators no Egyptian believes in western democracies any more. In spite of this, the Arab uprisings seem to be a paradoxical protest against Western domination in the name of Western values and with Western means. The question is only how far the articulation of bourgeois-liberal principles without the social basis of an independent bourgeoisie can prevail, since the Egyptian bourgeoisie is mostly tied to the system of corruption and clientelism. On the other hand, this could also be an opportunity if demanding liberal principles is accompanied by economic and social demands that are supported by the working population.

    Military intervention?

    However, in the meanwhile the question of whether there is to be a military intervention on behalf of the USA and NATO in the civil war in Libya has moved to the foreground. For the major capitalist countries, Libya’s oil does not play an unimportant role in the global economy. The country possesses the largest oil reserves of all of Africa, ranks as number 17 on the list of global oil producers (ranking 7 among the OPEC-countries) and contributes about 2% of the entire global supply. In January 2011 Libya produced about 1.6 million barrels of crude oil per day, exporting most of it (85%) to Europe. The major recipients are Italy, France and Germany. With regard to the overall import of crude oil, Libyan crude oil is most important to Ireland (23%), Italy (22%) and Austria (22%). Beyond that, Ghaddaffi was a useful ally to the EU, as he took over the dirty work of anti-refugee defence at the source and penned up immigrants in desert camps.

    A NATO military attack is not only a violation of Libyan national sovereignty, but also contains the risk of a further military escalation far beyond Libya. A direct military intervention into the sovereignty of a country is a defacto act of war. Of this there are numerous examples: in the 1990s there were no-fly zones over Bosnia and Iraq. The no-fly zone over Bosnia was decided by the UN Security Council, while the one over Iraq was highly disputed, because the USA, Great Britain and France had established the ban on their own accord. Initially, in 1991, the air space in the north of the country was blocked to protect the Kurds against Saddam’s air force, and in 1992 an additional area in the south of the country was blocked for the protection of the Shiites. It is right to take the position that the Security Council is not allowed to decide a violation of any country’s sovereignty. The imposition of such a measure by NATO is definitely against international law. Moreover, these examples illustrate the limits of what can be achieved by no-fly zones, if they are not accompanied by the deployment of ground forces. In Bosnia the no-fly zone could not prevent the massacre of Srebrenica. To enforce it not only the enemy’s aircraft must be combated, but also the air defence and radar posts on the ground, in order to guarantee the sovereignty over the air space and to minimise the risks for the pilots.

    It is not only from the perspective of security policy that an escalation of the civil war in Libya – as was demanded by parts of the political classes of the major capitalist countries – would pose a massive danger. In addition, there are economic and financial repercussions on other countries in Northern Africa and on the global economy. According to the Egyptian Central Bank, money transfers from immigrant workers from abroad make up 17% of Egypt’s income. So far, approximately two billion USD have been transferred to Egypt from Libya each year. Due to both the recession in the tourism industry and the stoppage of these transfers the economic situation in Egypt will worsen, which among other things will be seen in a further increase of unemployment. Thus it is no wonder that unskilled labourers, in particular, would like to stay on in Libya. Their wages of about 500 USD per month are necessary for the survival of their families in Egypt. Therefore other political ways have to be found to solve the civil war in Libya, if there is not to be a firestorm igniting the region and beyond.


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