The Outlook for Egypt and the Middle East Is Grim By - Robert K. Lifton

While the world watches the events in Egypt play out, we should recognize a disturbing reality.  No matter what the results of the uprising, Egypt will be a volatile nation, no longer a country that the United States can count on to maintain a stable, peaceful Middle East. If President Mubarak manages to stop the demonstrations by use of force, it will only be a matter of time before they erupt again and again. Once the populace has tasted the freedom to assemble and demonstrate - even to react violently - they will resort to it again. The pressure on the Mubarak regime will never stop until he leaves office. Meantime, he will not have the power or flexibility to play the role he played until now; in maintaining the peace, however cold it may be, with Israel and the stability of the region.

The more likely scenario is that either Mubarak will be forced to leave the Presidency, or even if he manages to hold on to office temporarily, to carry out a new election very soon. Under the best of circumstances that the U.S. can hope for, that will result in a legitimate election of a new democratic government. The problem is that the new government, any more than a Mubarak government, will not be able to provide the economic conditions that the demonstrators are demanding. It will not be able to provide jobs for the millions of young people who are unemployed and it will not be able to keep prices of food, oil and other commodities from rising. Egypt does not have the financial resources or borrowing capability to provide its people with subsidies to offset the inflationary rise in food and other commodities. It does not have the industry that can create jobs for the unemployed. And in the face of the violence, it will be even less able to attract new capital or retain the capital it has, even to continue the unacceptable current levels of employment.

The result of a failure of a democratic government to solve the Egypt’s woes can well result in another wave of demonstrations and violence. This time, opening the door for a strongman, perhaps from the military, to take over the government, quell the demonstrators with overwhelming force and impose an autocracy. Whether this will be an Islamist government as in Iran, is difficult to predict. However, since one major organized group in Egypt is the Moslem Brotherhood, it is likely that even if the regime is secular it may have to make some concessions to the Islamist elements to avoid further conflict. Either way, the democracy that the Western world hopes for will not happen and the Egyptian government may no longer be one that we can count on.

It should be noted, that the likely tale of Egypt is also the tale of Tunisia and Yemen. Like Egypt neither of those countries can provide the solutions their demonstrators seek and the end result in each will probably be a new dictatorship replacing the one being overturned. The Obama Administration has no choice in any of these places but to support the rights of the demonstrators to freely assemble and speak out. But we should be aware of the likely results of the events we are witnessing and as best we can prepare for a different, more volatile and dangerous Middle East.

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Robert K. Lifton has been active as an entrepreneur/investor in a broad range of industries. He is now Chairman of Bradon Technologies, Ltd.  a web conferencing collaboration and VoIP communication company. 

He served as President of the American Jewish Congress, as a Founder and President of the Israel Policy Forum and as co-Chair of the Middle East Project of the Council on Foreign Relations.

Mr. Lifton has written extensively on political, business and economic issues. He is presently writing a memoire titled: “Life’s Lessons and Stories from A Member of the “Greatest Generation.”

 

 

 

 

Comments

[Arun]

I would like to ask Mr Lifton why economic liberalization does not work for Egypt?

[judith weingarten]

There's probably no good outlook, as you say, but what if we tried, just for once, to spend the billions of aid $ on local industry and help instead of on military stuff? Just asking.

[Patrick Lang]

Arun

Bob may answer you, but I think he will say what I have. Too many people, too little land. BTW, Bob and I wandered about the place quite a lot together. pl

[Patrick Lang]

judith

we have spent a great deal of money in Egypt on economic development aid. The reason the military gets their pound of flesh, is that it is a bribe to keep them in the treaty with Israel. pl

[walrus]

"The problem is that the new government, any more than a Mubarak government, will not be able to provide the economic conditions that the demonstrators are demanding. It will not be able to provide jobs for the millions of young people who are unemployed and it will not be able to keep prices of food, oil and other commodities from rising. Egypt does not have the financial resources or borrowing capability to provide its people with subsidies to offset the inflationary rise in food and other commodities. It does not have the industry that can create jobs for the unemployed."

I have some difficulty with this cynical appraisal because I believe it is not impossible for Egypt to trade its way out of its situation. To put it another way; I think Mr. Liftons economic analysis is a trifle simplistic, to put it mildly.

If Egypt can execute sweeping economic reform and stamp out endemic corruption, perhaps with some enlightened assistance and guidance from the World Bank, I see no structural reasons that things cannot improve for the average Egyptian.

By "corruption" I do not mean the time honoured customs of the Middle East, I mean the ruthless operation of monopolies, cartels and other economic rent seekers that absolutely stifle business.

Epitomised by characters such as this one:

"Opposition parties, other parliamentarians, and groups including the banned Muslim Brotherhood movement are accusing Ezz of monopolizing the steel industry in Egypt by holding more than 60 percent of the market share, describing it as an act that is backed up by the government when the dominant share of monopoly was raised from 35 percent to 65 percent, an act that was described by the active parliamentarian Aboul Ezz Al Hariri as enhancing the proliferation of monopolies rather than fighting them. The groups mentioned are even blaming him for increasing steel prices by as much as 70 perent. But Ezz does not seem affected by the almost daily drubbings he gets in the press. He dryly told reporters that a competition law would at least provide a legal framework preventing everyone from making accusations."

http://en.wikipedia.org/wiki/Ahmed_Ezz

Do any of you not understand the absolutely crushing burdens these creatures place on an economy?

[JLCampos]

I went yesterday back to Ibn Khaldun trying to understand the Islamic frame of mind regarding government. He told me that there are two levels of government in Islamic thought. What he called the Kingdom which is merely an administrative set up and the caliphate where the Caliph actually governs according to the aims of religion bringing the will of God as a concrete reality. It seems to me that religion is inseparable from the innermost Islamic thinking and all these elucubrations about a "liberal Islam" are just that. That the caliphate on the other hand is no more that a wish is shown by the numerous candidates for the position, the Umayyads the Fatimids the Abbasids all competing for that badge of honor at once. At the end the Sultan from the Sublime Porte achieved something, a caliphate that lasted almost half a millennium.
The present situation is a real novelty, something in which our minds are at sea. How can we understand Islam if our fundamental tenet is that religion and society are separate realms?

[Patrick Lang]

JL Campos

To understand it yet remain a Western person, you have to be able to divide your mind. pl

[William R. Cumming]

Well curious as to whether US foreign policy and aid to Egypt was premised on the Big Guy living and ruling forever.

Actually why not do something dramatic and provide all the tools necessary to help bring the Egyptian people into the 21st Century. What are those tools? Well Wall Street and British and French bankers screwed Egypt historically forcing sale of the Suez Canal to western powers and providing cover for Western interests. What was ASWAN about except the US taking its toys and going home. Has any one or any organization issued some sort of strategy for the long run for Egypt and its people? The Chinese recognize Egypt as their launching pad to dominate the economies of sub-Saharan Africa so I would watch closely their policy choices. Was it Syria and Egypt that once tried a merger? Nothing should be off the table including sharing of OIL WEALTH with other GULF states. The Egyptian power structure is decrepit from any standpoint and doubting that the military leadership is up to leading that country into prosperity. Like PL states the military is bribed to be docile. Hey just like the US?

[Patrick Lang]

walrus

I think that liberalization and graft cleanup will produce some results in Egypt but not anything like enough. BTW, I can't imagine a less cynical man that Bob Lifton who deeply believes in the principle of "tikun olam" or whatever it is in Hebrew. pl

[Phil Giraldi]

Rubbish. Classic worst case scenario, gloom and doom. Let's all agree that Egypt is a basket case with no easy solutions, but that does not mean it will necessarily follow a path leading towards either volatility or autocracy. It could just as well muddle along as many other nations manage to do without attacking its neighbors or destabilizing the region.

[Ken Hoop]

What a joke! Lifton says that the US can't count on Egypt to maintain a stable Middle East. The US has wrought havoc to the Middle East in no small part thanks to the Zionist Lobby. Lifton's not an opponent of that Lobby is he?

[Clifford Kiracofe]

The Egyptian economy is Egypt's problem, not ours. It is for them to solve.

We or the Europeans giving advice? Look at our own economies.

Why should we give ANY country foreign aid except for humanitarian relief in emergency cases where food and medicine and so on are needed? Foreign aid supposedly buys governments and all that but why not spend that money here at home on infrastructure or ...?

Egypt does not need US money or weapons. Assistance and weapons are available elsewhere.

The Treaty with Israel? One "moderate" Egyptian policy during the transitional phase could be to keep the treaty for a while, even take US money, but find some other "strategic partners" besides the US, say China and ramp that up at a reasonable pace. The Treaty can be dropped at any appropriate time. Whether a threat to drop it would bring any leverage might be an open question.

So, perhaps a measured policy to "normalize" Egyptian foreign relations globally.

This is not to say that a more relaxed approach could not be worked out with HAMAS via the MB as an intermediary. Why should Gaza be sealed off, anyways? A brisk cross border trade might be good for the Egyptian economy even.

[Sidney O. Smith III]

This analysis is thoughtful and much appreciated. It certainly passes the common sense rule and appears free from ideological underpinnings. You have to hand it to that WWII generation.

That said, I cannot resist a comment about the American Jewish Congress.

For the vast majority of my life, I have marched in step with the Am. Jewish Congress and whistled the same tune. Then I came across this Matzav article in which Rabbi Kestenbaum discusses the role of Rabbi Wise during WWII and the Shoa. This article left me perplexed, so then I read the comments to the article, presumably from other Jews. The experience left me stunned and thoroughly confused, not knowing which way to turn.

http://tinyurl.com/2f73bd6

The Satmar rabbis take up the discussion here, under the rather provocative title, “Rabbi Kestenbaum: Jews Died During Holocaust Because of Zionist Rabbi Stephen Wise”

http://tinyurl.com/4s4fp22

I don’t know where the truth can be found, but I sure know a cognitive dissonance when I see one.

Plus, I do admit that at least right now, I have the deepest respect for Rabbi Teitelbaum, in part, because his analysis of the Middle East has proven more accurate than those who have formulated our current foreign policy. It is what it is, and if the goal is to identify the most accurate analytical assumptions that serve the US, then it seems foolish to shun his work.

Truth be told, Rabbi Teitelbaum and the other Satmar rabbis have been 100 per cent accurate in their analysis of our foreign policy. As for the accuracy of the neoconservatives as well as liberal Zionists (of which I was one, at least of the Leon Uris variety)-- they score nada. The warnings of the Satmar community are as close to prophecy as one can imagine, at least to date.

Also, I am yet to come across anyone so totally American and so completely Jewish as Rabbi Teitelbuam. And if it were not for Rabbi Teitelbaum, the Shoa would have been even worse.

No doubt the pain from the Shoa is unfathomable. In many ways, Menachim Begin's response makes perfect sense. Therein lies the cognitive dissonance and perhaps the searing tragedy unfolding before our eyes.

Rabbi Teitelbaum, imo, saw this catastrophe before anyone. Yet, the American historical narrative treats the Satmar community as outcasts. The DC policymakers laugh at them, as if they were beggars on the street. The progressive Jewish community views them much as they would some crazy uncle at a family reunion.

But these same progressives who are now questioning Zionism are relying on the identical analytical assumptions that Satmar gave us 60 years ago (actually much longer) and they just can’t bring themselves around to crediting Rabbi Teitelbaum. At least not yet.

As for the policymakers of the USG and think tanks who cannot deign to acknowledge the Satmar community, there is something to remember: the Satmar community grieves at the lost of US soldiers who have died in unnecessary wars. Hope these policymakers do as well.

The 2 state solution is dead, at least for now. Again, I don’t know the answer except that we ignore the wisdom of the Satmar community at own peril.

[WILL]

Professor Juan Cole's column today talks about the economic reforms of Abdul-Nasser and the retrograde liberalizations of his successors.

He agrees with the Col' analysis of the population expansion negating economic growth.

Everyone here realizes that in Herodotus' words, Egypt is "the gift of the Nile." It may be a big country on the map, but due to little rainfall, its farmland is restricted to the Nile valley. Hence in effective terms, it is a really small country. Its strength lays in its population & its military prowess with which it can threaten the oil fields.

http://www.juancole.com/2011/01/egypts-class-conflict.html

[walrus]

Glad to hear Mr. Lifton isn't cynical.

Egypt's GDP at around $6200 per person is ranked about number 103 out of 180 nations. For comparison, Brazil is around $11,500 and the U.S. is $47,000.

While you would need some international economists to confirm it, my estimate is that eliminating the worst type of corruption (ascending to the level of corruption of Italy) could at least double GDP which would enable major social improvements.

The drag of major corruption on economies cannot be overstated, because not only does it totally distort resource allocation, it destroys growth prospects because new businesses can't get started and existing ones lose international competitiveness.

By way of a very small example, the Two largest card board packaging companies in Australia were caught colluding and price fixing Two years ago. By conservative estimates, they cost the Australian economy at least Two billion dollars over Ten years.

http://filipspagnoli.wordpress.com/stats-on-human-rights/statistics-on-gross-domestic-product-correlations/

[Grumpy]

Sir, are you also including the Suez Canal, with all of the ramifications?

[Adam L Silverman]

Sir: tikun olam usually translates as "to fix the world". The idea being that the reason for existence is to try to make things even a little better for those who come after you. It is in this concept that the faith without works teachings of St. James in his epistle is rooted.

[ex-PFC Chuck]

There's more than a little irony in prescriptions for eliminating corruption, crony capitalism and rent-seeking given the accelerating slippage of Western societies, especially the USA, down those same slopes.

[LeaNder]

Sidney, concerning this:

Moshe Shonfeld asserts that Wise prevented the shipment of food packages from American Jews to Poland due to fear that it would be interpreted by the Allies as giving aid to the enemy.

To pick up just one little item. No Jew would have received such a food package. Read Raul Hilberg, these packages were confiscated. And that's just a tiny detail in the larger bureaucratic dead machine. It started early no extras food rations for "the Jews", according to the late Nazi definition.

You really have to consider the time context, the possibilities.

[WILL]

@x-PFC-Chuck

"http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

"The Wealth Distribution
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010)."

[DanM]

I recall many people making a similar argument about Indonesia in the summer of 1998 (I think i was one of them).
Of course, Indonesia and its people are very different (lots of natural resources and fertile land).

[JohnH]

Thanks to Walrus for pointing out the glaring problem of monopolies, whose owners are typically bosom buddies of the tyrant, in a mutual admiration society.

IMHO monopolies are the scourge of the developing world, restricting competition, stifling growth, limiting jobs, and blocking innovation.

In this regard, the USA is fast becoming part of the developing world, as most important industries are really just cozy oligopolies (shared monopolies). I say "bust 'em!"

[Cal]

My question for Mr Lifton is this.

What would his prognosis for Egypt be, if now that the US has made Israel a first world country we switched that aid, support and favored trade status and investments to Egypt?

A few Intel plants in a deal similar to the one where we provided a 60 million grant for Intel to locate in Israel for employment of Israelis? The same US funded energy grants to private investment as we give Israel? How about one of those US OPIC funded venture capital funds like the one we did for the Israel Growth fund..we could do for entrepreneurs in Egypt too. How about we back with the full faith of the US gov, loan guarentees for Egyptians debts for economic expansion and debts for their purchases from other countries like we do for Israel? Tax and tariff free imports like we give Israel for tents, buttons and bows and chemicals? How about Egyptian gov bonds being bought by US cities,unions retirement funds like we allow for Israel? A generic drug plant? Instead of US congressmen like Ackerman interfering with Egypt's palm tree conservation effort and forcing Egypt to harvest palms for Israel's religious ceremonies we help them with their agr conservation programs instead? One thing we could right away that wouldn't cost the US a dime is rescind the US requirement that all Egyptian cotton goods imported into the US contain 10.5% Israeli manufactured goods?--see there you go, found them some extra jobs right there! And we could make all US Egyptians donations to Egypt tax free like we do for Israel. A bonus would be the US could also put extra money into Egypt because we wouldn't have to be constantly ponying up donating money to repair and rebuild things like the destruction, oil spills and etc., done in Lebanon by Israel's bombings or the replacing the US built power plants in Palestine Israel bombed cause Egypt probably wouldn't be bombing other countries.Or we could just save that money for ourselves--either way it's a win-win.

Yep...I can envision Egypt as a magnificent country blooming in the desert with just a little redirection of our money.

How about it Lifton? Would that change your outlook for Egypt?

[GulfCoastLaddie]

'He served as President of the American Jewish Congress, as a Founder and President of the Israel Policy Forum and as co-Chair of the Middle East Project of the Council on Foreign Relations.'

LMAO. Why does what is going on in Egypt scare you so?

[Jake]

How about this as a new foreign policy initiative in the ME. Let start ringing door bells and asking to use the restrooms, rather than just jump the fence and piss in their back yards.