The Saudi Day of Rage Play

As the weekend passed without significant event in Libya, oil prices started the new week backing off recent 29-month highs as stocks simultaneously reconsidered recently sold ground. We suggest readers interpret the action as a rebalancing against heavy pre-weekend betting only, not a turn in trend, at least for the short-term. In fact, as the week progresses anxiety should build around the "Saudi Day of Rage" also called "the Day of Longing" planned for Friday March 11th. The day of rage has decent enough chance of blowing over without turning over the monarchy, but then again, who could have foreseen Egypt. Thus, money should run as the day nears.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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The Saudi Day of Rage Play

The democratic movement across the Middle East and foreign political interests, opposed by the religious rigidity of Saudi Arabia, which would be labeled civil oppression by most of the free world, could take the Arabian Peninsula in a couple directions this month, each being extreme, but only one involving change. The catalyst is a youth inspired movement for a Saudi Day of Rage this Friday March 11.

Several important barriers support the current regime, and have helped to also quell concern here in the west. Since civil protest is banned by Fatwa in Saudi Arabia, and punishable by death, it would take great courage and confidence for the Saudi people to organize in significant numbers. The Interior Minister issued a statement this past weekend that the ban would be strictly enforced against any protestors, after the sparks of revolution glimmered across the sand. Given the embedded investment in and the importance of Arabian oil to the US and the global community, many a commonly concerned ear would likely be turned away from any call by the resistance for aid, a much different position than that which exists in Libya.

However, the Saudis themselves, perhaps borrowing from the earlier actions of the Jordanians, have acted preemptively. The King announced a $37 billion dollar social welfare program, including a 15% increase in the pay of all government workers. This portion of the action might be directly targeting the Shiite dominated oil rich eastern region of the nation. It certainly could serve to keep many off the streets Friday, for fear of spoiling their new winnings. And with unemployment only barely in the double digits in the country, the streets do not call with the same song as the sirens of Egypt. That said, the Saudis have taken careful count of the significant youth segment of its population (about a third) and have offered unemployment support as well. Choosing between bullets and a pay raise will be easier for some than others.

However, globalization, new technologies and social media have opened the world up to Saudi youth as well, to some degree, and opened eyes to a different world. That tempting, happy and love filled place compares against a religiously rigid society that even American Catholic school graduates might fear. Saudi Arabia is one of few countries I will never visit, unless it changes its laws and its rejection of my own faith. If I cannot wear a cross in your home, I will not enter. If freedom of religion is a God given right, the righteousness of one's life is the result of free will. Your author, being a proponent of religious upbringing still recognizes the dangers of the repercussions of oppression versus the effects of education and guidance upon free will.

The words "Constitutional Monarchy" have been uttered by at least one prominent Saudi cleric, jailed and now freed thanks to growing crowds of protestors. As you might imagine, any loss of power is not favored by the ruling family, and so they will give up as little as possible. But how far is the King really willing to go? Would he risk trial by world court for killing his own people like his Libyan cousin-in-crimes against humanity? Mubarak's assets have been frozen, and Gaddafi might face justice akin to Saddam Hussein. There's not much incentive to stand long against a meaningful resistance. However, if it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of heaven, then it must likewise be near impossible for Abdullah to give up the kingdom he has created for himself on earth in exchange for the righteous will of the people for self-rule.

In Saudi Arabia, Abdullah will find more believers in claims of Iranian backed factions driving unrest than Gaddafi found in claims of al-Qaeda's factoring. The Shiite minority of Saudi Arabia would like equal representation in an important government. However, I do not believe Saudi Arabians of any sort want to be anything but Saudi Arabian, the land which hosts Mecca and Medina. There is little love lost between Saudi Arabians and Iranians, similarly to the Iraqi Shiite population favoring the Iraqi flag. Of course, the devil (Iranian regime) works subtly, and may offer some minor gain to the minority, which might lead to a separation of state or succession. But the religious tie that binds is the existence of the regarded important holy land that all Muslims are called to be a part of, and so I do not see separation likely. Democracy has a greater chance of succeeding as a result.

It is the great uncertainty around the peninsula and its great importance to the world though, that will have investors likely pulling capital home ahead of Friday. These fires tend to spread over time though, so while one day may not a revolution make a path may be engaged nonetheless. It will at least be interesting to see if Saudi Arabia goes the way of Jordan or the way of Egypt. It would appear the Jordanian model will apply, but capital will fly nonetheless in my humble opinion.



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Mubarak 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

The 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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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.

Pharaoh Speaks, Egypt Shakes

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

Last 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.



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.