Egypt and America – Parallels
Just like a lot of you, I’ve been transfixed watching the events unfold in Egypt this week. I see them on the cusp of a revolution, which will be televised. As I’ve listened to all the commentators and talking heads, I’ve seen a lot of similarities between Egypt and America on a number of issues.
1) Economic Bubbles – An economic bubble is when items are traded in high volumes at prices that have been inflated in some way. When the bubble bursts, the values of the items being traded rapidly diminish to below their original values. We’ve seen this in America in the stock market, housing market, and in commodities trading. When the stock market and housing bubbles collapsed, they were considered as major reasons for the depression we’re still digging out of. The commodities bubble concerns the trading in futures of corn and wheat, which for now is keeping food prices somewhat stable, but there are signs that this bubble is about to burst.
The deregulation of the futures market happened during the Clinton administration – the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000. These two laws allowed financial institutions to get deeply involved in commodities speculation, which has allowed financial institutions to hold more and more of the commodities futures. It also took away any oversight by the Commodity Futures Trading Commission of overseas electronic exchanges such as Britain’s InterContinental Exchange. As a result, there are no position limits on trades made on exchanges and practically no reporting requirements thereby allowing traders to buy and sell as much as they want with virtually no restrictions.
Since 2008, Egypt has seen occasional rioting over the increasing prices for wheat, corn and fresh vegetables. In the past year however, food prices have been skyrocketing. The price of bread has jumped 30% and corn has seen the same levels of increase. Egypt is the leading purchaser of American wheat and more than 50% of our corn exports head there as well. There have been warnings of increasing unrest over the price of food since November, according to Hamdi Abdel-Azim, an economist and former president at the Sadat Academy for Social Sciences in Cairo.
2) Lack of Reforms – As most people who have studied American history know, it was years of pressure from King George III and the lack of representation in the government process (taxation without representation, the quartering of soldiers against the people’s will) that were factors in the American Revolution. It took many years and thousands of deaths on both sides, but Americans earned their freedom from an oppressive government.
Over the past ten years in Egypt, there has been a lack of political, social, and economic reform in Egypt. President Mubarak was elected for three successive six-year terms, but the results of those elections, with the exception of the most recent one in 2005, has been questioned due to the fact that Mubarak was the only listed candidate for President. His political party, National Democratic Party, has held an overwhelming number of seats in the Assembly. With this level of control over the government he is considered by many to be an autocrat. It was only recently through new press freedoms that we’ve heard that Egyptians have been subjected to brutal police tactics, and a spate of economic reforms that trickled down to only a handful of Egyptians.
3) US Support – President Mubarak came to power in 1981 after the death of Anwar Sadat. It took years to regain the trust of the other Middle Eastern states because of the peace treaty that was brokered with Israel. He then saw the influence of Egypt wane due to the rise of Hamas and Hezbollah. But during all of this, Egypt was still a very staunch ally of the United States. Egypt was part of the coalition put together by the United States to invade Iraq. They have received billions of dollars of US aid over the years and was a key negotiator during the Palestinian crisis.
So far during the protests, there have been no direct signs that there is any anger directed toward Americans, though there have been reports that pro-Mubarak forces have been trying to keep the press from reporting the events. There are concerns however that a change in regime in Egypt, along with the unrest in Tunisia and Yemen, may change the face of the Middle East and Africa toward a more anti-American sentiment.
Just like the change of regime going on now in both Iraq and Afghanistan, there are no guarantees that it will be peaceful or even pro-American. It may be a case of dealing with the Devil you know, compared to the Devil you don’t.
As you watch the events unfold, what are your thoughts? Do you see other similarities between Egypt and America? Let me know here or email me at firstname.lastname@example.org.