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Wednesday, February 16, 2011

Quo Vadis, Aegyptus?

Quo Vadis Aegyptus
Where to Now Egypt?

The crowds are celebrating; fireworks light up the nighttime sky above Tahrir Square and all of Cairo; the bogey man has fled and tomorrow will shine anew. So goes the old Pharaoh into the sunset of Sharm el-Sheikh. Thus, Global Affairs Columnist Daniel Salem Padovano asks the question that concerns all of Egypt in the wake of revolution.


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Quo Vadis, Aegyptus?



Egypt analystMubarak's last year posed problems of stability and control to the regime; his time had indeed come. The deteriorating economic conditions and forcing his son's presidential candidacy (if not outright succession) made for unease and uncertainty. In several respects, it seemed as if Egypt was stepping back to before the July 26, 1952 Free Officer's Revolution. One Pharaoh overstepped his bounds and overstayed his time (and usefulness) thus paving the way for his own downfall.

This is the first time that Egypt has been without a central leader (or leaders) in nearly two centuries. A unique time for a land used to Pharaohs, Viziers and Kings.

As the Nile greets a new dawn, the question is: Wither goest thou Egypt?

Now the real work begins.

The end of the Mubarak era is not the end of the era of the Free Officer's Movement. The military remains in control of Egypt, pretty much as it has since 1952. The Supreme Council of the Armed Forces (SCAF) is in charge for the foreseeable future. Whatever course Egypt takes, it will be guided by the military.

As the guardian of Egypt and the 1952 Revolution, the military sees itself committed to the goals of that Revolution. Those goals are a secular state where the most modern and stable state institution (the military) manages the state. That the military leaders would hand over the country to the less disciplined masses is not an option. This is an institution that for better or worse has brought Egypt from a colony into the modern world. This guiding hand will not disappear; it is only now deciding how it will begin to rule.

So far, the military leaders are moving towards some form of representative democracy. The Mubarak Constitution has been suspended and the Parliament dissolved. The military is also planning to remove the State of Emergency laws in place since October 6, 1981. These are and were the key demands of the protestors. Plans are being made to create a committee to rewrite the constitution. Officially, elections are still planned for late September, 2011, however, concerns abound as to whether or not political parties will be ready.

The last time Egypt had a fully functioning multi-party parliament was in the mid-1950's. When this new parliament comes into session, the only other fully functioning parliaments in the Middle East will be those of Israel, Lebanon, Turkey, Iraq and Iran.

What needs to be kept in mind is that all of these developments are "extra-constitutional", meaning outside of the constitution, as the constitution no longer exists. The military is also on new ground as it appears that they will step back once things are more settled.

This proposition means that the military steps back into the shadows and gradually cedes power (but most likely not full authority) to civilian rule. The difference being that power would rest in the hands of the SCAF. The authority (and the amount of authority) to make that power real and effective would still rest in the hands of the military.

This change from military domination (if things progress that way) towards representative democracy is revolutionary. It would mean that the senior officers believe that the 1952 Free Officers Revolution has run its course. If they do not believe this, then little will change (maybe some window dressing).

On its own, this development would be as big as Mubarak's resignation. New reports Saturday and Sunday indicated that many junior officers (Colonel and below) have little trust or faith in the senior officers. (The senior officers are seen by the junior officers as "too" connected to the old regime). It would be the ultimate irony, if in the midst of "reform", a new officer's revolt followed.

Other challenges facing the Supreme Command of the Armed Forces and the soon to be Constitutional Committee are tackling the endemic corruption and getting the economy to function properly. One hopeful sign is one of Saturday's SCAF communiqués. In this communiqué, SCAF stated corruption would no longer be tolerated and would be prosecuted. Additionally, Mubarak era officials and public employees suspected of corruption will face prosecution. It will be interesting if this indeed does come to pass and whether or not military personnel will be among those charged.

SCAF and the new leaders that emerge will also need to concentrate on creating access to the economy for Egyptians, job creation and disengagement of the state / military apparatus from the economy. Not an easy task, but one that will need to be tackled.

As the new dawn arises over the Nile, will the land of Egypt trod a new path or await the rise of another Pharaoh?

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This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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Saturday, February 12, 2011

Mubarak Resignation Leaves Responsibility with Egyptian Military

Mubarak's resignation leaves responsibility with Egyptian military
Egypt Quake

Wall Street Greek Global Affairs Columnist and Middle East expert Daniel Padovano lays out the most likely next step for Egypt after its President and Dictator Hosni Mubarak's resignation. A void has been left behind, that Egypt's military is more than willing and capable of filling, based on the nation's history.


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Mubarak's Resignation Leaves Responsibility with Egyptian Military



Middle East AnalystThe news from Egypt that President Hosni Mubarak had resigned from the presidency shook the world. Mubarak's Vice President, left in command, formally announced his resignation to the people and a transfer of power to what is called "The Egyptian Higher Council of the Armed Forces". If true, this marks a departure from Egypt's current constitutional practice where the Speaker of the Parliament would succeed the President. This military council would be analogous to our own Joint Chiefs of Staff.

Assuming this is the coming course of events, The Council will be in power outside of the existing constitution. As such, the Council will need to define its existence and governmental responsibilities during its tenure. Among the issues to be considered would be: 1) length of term and existence, 2) securing national strategic assets, 3) securing public order, 4) who in the civilian (and religious community) will be asked / appointed to administer the transition to civilian administration and 5) constitutional reform.

Economic issues will need to be addressed as well, but after nearly sixty years of state centered fiscal and economic policies as well as nearly thirty years of little "non-governmental" management, this will be the most difficult issue facing the new government.

According to several reports, American and Western pressure for more speedy change and acquiescence to the protester's demands pushed the military to act. Little recognition was given to either the Committee on Constitutional Reform or several pledges already in place. That may be so, but little credibility existed or was evident over the last few days.

As this transition moves forward, it must be kept in mind that the Egyptian military has been the guardian of the Egyptian state and nation since the Free Officer's Revolution of 1952. It is still regarded as such and may very well be the most resilient and trustworthy part of the Egyptian state.

In 1952, the military leadership took six months before dissolving the monarchy and establishing a Republic. In this aspect, Egypt's military followed the example of Turkey where the military also served as guardian of the nation between 1922 and 2006.

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This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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Friday, February 11, 2011

Pharaoh Speaks, Egypt Shakes

Pharaoh Speaks Egypt shakes Mubarak leaves Cairo
Egypt Insists

Reports from Egypt state that President Mubarak has left the capitol, and after protests intensified, has also let go of control of the nation. Wall Street Greek Global Affairs Analyst Daniel Padovano discusses and analyzes how a bridge to new government might progress from here. Mr. Padovano is a Historian and Geopolitics Expert, with a focus on Middle Eastern Affairs.


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Pharaoh Speaks, Egypt Shakes



Egypt geopolitical analystLast evening, President Mubarak addressed Egypt. It was widely expected that he announce his resignation. That did not happen; instead, President Mubarak announced that he would remain as President so he could oversee the transition and political reforms. Mubarak did transfer some of his Presidential powers to Vice President Omar Suleiman. Since the speech, turmoil and frustration in Egypt greatly increased.

Demonstrations spread to more government related locations, including the state broadcasting center and the Presidential Palace. Those opposing President Mubarak and his regime wanted nothing less than for Mubarak to officially leave office, which occurred by the people's will this morning.

The Egyptian military's High Command issued a telling statement yesterday prior to Mubarak's address. In that statement, the military reiterated that it is "the guardian of the Motherland". This is true, as the military has ruled Egypt since the 1952 Free Officer's Revolution. All of Egypt's presidents: Naguib, Nasir, Sadat and Mubarak were military officers.

The legitimacy of that revolution is now questioned and doubted by the public. That reality and blame is Mubarak's. A large majority of Egypt's population have known no other regime other than that descended from the 1952 revolution. The people of Egypt believe that Mubarak has betrayed them; the real threat to Mubarak's tenure was that the military might share that same sentiment. If so, then Mubarak would become the military's, and therefore the Revolution's, most dangerous liability. As that threat played out into reality, Egypt could wait no longer.

Military intervention thus became very likely to maintain public order and to maintain Egypt. The goals of the 1952 Free Officer's Movement (and) Revolution were to make Egypt a modern state. The revolution is secular and nationalistic in nature; religious parties such as the Muslim Brotherhood and liberal parties such as the Wafd were seen as dangers to this. It is highly unlikely that the military would abdicate its "guardian" role and allow mob rule or the Muslim Brotherhood to change Egypt.

The situation was not sustainable as Mubarak left it last evening. Egyptians were being hurt, and the military so far has not demonstrated any sign that it will risk the good will and respect the public has for it. On the other hand, it is doubtful that the military will allow "mob rule" to threaten the country. At some point, the protesters and the state regime will have to meet. The very survival of Egypt as it is known today is at stake.

As Mubarak has acceded to demands to leave office, or been assisted in that decision, the military will most likely intervene at least as an overseer. Any transition and reforms will be the responsibility of the military and whatever power centers are called in to manage change. Public resentment of authoritarian rule is very high, and thus a prolonged military rule will probably be rejected (in time) as well.

The 1952 Revolution shook off a weak and corrupted monarchy and brought Egypt directly into the modern era. The goal of Egyptians ruling themselves may very well be the legacy of that Revolution, although not in a manner envisioned by the Free Officers of 1952.

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This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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Monday, January 31, 2011

Egyptian Tremors

Egyptian tremors Egypt revolution
A New Day Dawning

A week of rioting across Egypt have placed the future of President Hosni Mubarak in question. Egypt, the leader of the Arab World, now faces a crisis that may very well signal the closing of an old and the opening of a new chapter in Egyptian history.


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Egyptian Tremors



foreign affairs global geopoliticsEgyptian protesters are calling for President Mubarak to step down and to open up the political system. Protestors also want solutions to end severe unemployment and widespread corruption. Unlike protests in the past, this week's protests are centered squarely on economic and political issues. What has taken the ruling establishment by surprise are the continuing and growing calls for Mr. Mubarak to resign and leave office (and the country).

Riots are occurring in Al-Qahira (Cairo), Al-Iskandriya (Alexandria), and Asyut, Port Said, Al-Arish, Suez, Nasr City, Dumyat, Mansoura and others.

Mr. Mubarak became President on October 6, 1981, succeeding Anwar el-Sadat after the latter's assassination. Mr. Mubarak's tenure has included a stagnant economy, loss of stature both in the Arab and Islamic world and a governing bureaucracy that is very corrupt. Egyptians have been frustrated by their lack of jobs, access to jobs and economic opportunities.

Over 50% of Egypt's 80 million people are under age 30; many have never known neither any other ruler other than Hosni Mubarak, nor the dominance of the ruling National Democratic Party (NDP). Mubarak has won four elections since assuming office, with several of those elections being questioned as to their integrity. (The term of office for the Egyptian president is six years). Dissent of the regime is not tolerated. A state of emergency has been in place since President Sadat's assassination in 1981.

The state of emergency was originally instituted to combat "radical" Islamists associated with Sadat's murder. Since, however, it has been widely applied against all challengers to the regime. Those who challenge the rule of the NDP, or are seen to threaten the principals of the 1952 Officers' Revolution (brought about by Gamal abd El-Nasir), face prosecution and / or persecution by the government.

Nasir's revolution sought to modernize Egypt. The goals of the Officers' Revolution were to make Egypt a self-sufficient, secular leader in the Arab world. The leaders of the 1952 Officers' Revolution were from the Egyptian military, probably the most progressive and modern institution in Egypt. Gamal abd El-Nasir, Anwar el-Sadat and Hosni Mubarak were officers prior to becoming President. Like the U.S., the President of Egypt is also the Commander-in-Chief of the Egyptian military.

As calls for Mr. Mubarak's resignation continue and riots take hold in most Egyptian cities, the future of Egypt becomes cloudy. Can Mubarak continue to hold power? He has dissolved his cabinet and promised reforms. This has not placated the protestors.

Recent reports from Egypt include looting and attacks on the Interior Ministry. Protestors so far, have not been attacked by the military. In many instances, protestors are riding on military vehicles without incident. Also of note is that the protests have not taken on any anti-American or anti-Western tones. This is, as of now, a solely domestic matter.

Two things are notable about Egypt's protests. First, is that the military is holding back. Other than protecting government facilities and key economic assets the military has had little involvement in the protests or (at least not seen in public) in the political offices. Whether or not the military acts (on its own) or is provoked into acting is yet to be seen.

Second, is that like Tunisia (and Iran in 2009); this is a "mobile and electronic revolution". Protestors are using cell and satellite telephones and the internet to communicate, and to set and plan protests. Despite a shutdown of the nation's mobile communications networks, Egyptians are able to communicate and stage protests (many have circumvented the government's blockages). Vodafone (Nasdaq: VOD) and Mobinil remain active in numerous locations across Egypt.

Whether or not a regime change occurs, we are witnessing the beginning of a new era in the Middle East. The "street" is awakening. This is the third set of protests to break out in the Middle East where the people themselves have taken to the streets to seek and establish change: Iran in 2009, Tunisia in mid-January 2011 and now Egypt. Similar riots have occurred in Yemen, Lebanon, and Jordan this past week.

Tunisians overthrew President Zine el-Abidine Ben-Ali after nearly thirty years of one party rule. President Mubarak may very well be next.

The people in these protests are and have been motivated by economic frustration and political repression, coupled at times with political and institutional corruption. A new tool in facilitating the protests (and revolution) in Tunisia's case is the cell phone and the internet. One cannot but help but wonder at the power of the pocket sized phone or laptop. Earlier revolutions were fought with guns and bullets, will the new revolutions be fought with flip tops and send buttons?

Whatever change lies ahead for Egypt is yet to manifest itself. Egypt is critical to the U.S. and the Middle East, due to the Suez Canal, Egypt's commitment to the "war on terror" and the peace existing between Israel and Egypt.

Should Mubarak prevail, the inevitable will only be delayed. At some point in the future, a new leader will succeed him. Whether be through the military, an electoral process or some form of revolution, a new day in the Middle East is soon rising.

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This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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