The Region and Its History• After WW II, Arab world run by dictators• Hosni Mubarak has been in power for more than any Egyptian ruler in modern history• Like many political leaders in the region, he has unlawfully extended his term to stay in power as long as possible.
Libya Yemen TunisiaMuammar Qaddafi Ali Saleh Ben Ali41 Years 32 Years 29 Years
Background: Political• Martial law has been in effect in Egypt since President Sadat’s 1981 assassination – Police powers are extended – Constitutional rights suspended – Censorship legalized – Mass gatherings and protests prohibited – Government may imprison anyone indefinitely and without cause
Background: Economic• Population of Egypt is currently at 83mm – In 1976, the population was about 40mm, representing a growth of 43mm in 35 years• Much like other Middle East countries, Egypt is experiencing a “youth bulge”
Background: Economic• Official unemployment rate is at 9.7%, although unofficial estimates are higher (20%+) – Highest unemployment is among educated youth• Around 40% of population live on less than $2 per day• Food inflation at 17%
Tunisia as a Catalyst• Tunisia’s economic and political environment like Egypt’s• In 2010, Tunisia’s government has been overthrown during the Jasmine Revolution• Causes of revolution were mass unemployment, widespread corruption, appalling living conditions and the government’s propensity to squash free speech• Tunisia’s revolution has encouraged the citizens of many other countries in the region to rise up
US Ally• Mubarak was a “friend of the West” – Second-highest recipient of US aid• Egypt has a peace treaty with Israel• Many Egyptians see the US government as an accessory to Mubarak’s regime. – New government will likely carry a strong anti-American sentiment
Suez Canal• Carries 8% of all seaborne trade• Carries 5% of world’s oil• Shutdown would raise shipping costs and piracy rates – Unlikely, since profits represent 3% of GDP
Mineral and Energy Resources• Oil represented 7% of GDP in 2001 – Oil production has steadily fallen since• Vast untapped gold reserves – Previous government hoped that gold exports would soon exceed tourism, petroleum, and Suez Canal revenues combined
Timeline of Protests• January 25: On a national holiday to commemorate the police forces, Egyptians take to the streets in large numbers• January 28: Egypts interior ministry warns of "decisive measures“ to be taken against the protests.• January 29: Mubarak announces that he has fired his cabinet, but he himself refuses to step down.
Timeline of Protests• January 30: Mubarak appoints a vice- president for the first time during his three decades in power.• February 1: Mubarak announces in a televised address that he will not run for re- election but refuses to step down from office.• February 4: The leadership of Egypts ruling National Democratic Party resigns.• February 11: Mubarak resigns as president and hands over power to the army.
Protestors’ Demands• Removal of state of emergency• Raise in pay• Removal of current government appointed by Mubarak
Who is in Power?• Supreme Council of the Armed Forces – Armed Forces Chief of Staff – Defense Minister – Navy Commander in Chief – Air Force Commander in Chief
Committee in Charge of Reforms• Eight-person committee in charge of changing constitution – Including member of Muslim Brotherhood and Christian judge – In charge of rewriting six articles of constitution • Pertain to president’s powers to amend constitution and restrict liberties • Presidential term limit and judicial oversight • Institute popular referendum
Future Leader of Egypt?• Ayman Nour • df – Head of El-Ghad Party – Declared candidacy• Ran in 2005 and was imprisoned
Effects on Egyptian Economy• Unrest has cost Egypt $1.7B• 50% from foregone tourism – 20-40 foreign visitors per day – Popular sites such as downtown Egyptian Museum shut down• Labor Strikes - Banks & ATM’s closed• Investor confidence has diminished – Egyptian stock market closed – $1BN of outflows from equity market, $3-4BN from fixed income market
International Reaction• Possible instability around the Suez Canal leads to rising oil prices• Egyptian pound hit six-year low of 5.97 EGP/USD – Central Bank intervening by selling dollars to local banks• Bullish trade on safe-haven investments (gold)