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Guest Post: Market Celebrates Egypt’s Coup, But It’s Not Over Yet

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Submitted by Jen Alic of OilPrice.com

Market Celebrates Egypt’s Coup, But It’s Not Over Yet

The situation in Egypt has not been tenable since the Muslim Brotherhood and President Mohamed Morsi took over, post-revolution, but now that the military has stepped in, ousted Morsi and placed him in detention, foreign investors are celebrating.

No one knows what’s going to happen next, but the general consensus—at least for investors—is that things couldn’t get any worse, only better. (Unless you’re Qatari, but more about that later.)

On 3 July, at the tail end of a 48-hour ultimatum for Morsi to heed protesters’ demands for his resignation or face the consequences, the military launched a coup, forcing Morsi off the stage and issuing arrest warrants for some 250 members of the Muslim Brotherhood for inciting violence and killing protesters.

Morsi and 35 other top Brotherhood figures are now the target of a military investigation and barred from leaving the country. In the meantime, an interim president—Aldy Mansour, head of the Supreme Constitutional Court—has been sworn in, and the military has cut off all communication outlets for the Muslim Brotherhood. 

It doesn’t look good for Morsi, especially since Egypt’s new prosecutor general—General Abdel Maquid Mahmoud--is a figure that Morsi personally had deposed in his quest to get rid of any high-level dissent. So he’s got a big axe to grind.

The Muslim Brotherhood has remained defiant, calling for their supporters to take to the streets in protest. The market has remained jubilant—if not a bit shortsighted, because it’s not over yet.

Still, Egypt’s EGX-30 (the country’s main index) rose 7.3% on the news of the coup, with the much-beleaguered Egyptian pound strengthening to 7.0264 to the dollar. It had reached a new low the day before the coup. The cost of insuring Egyptian debt against default also declined.

US crude oil futures rose to 14-month highs as oil bulls saw the chaos in Egypt raise the risk for oil and gas transit via pipeline through the Suez Canal. That risk appears considerably lower now that the military has acted decisively. (While oil production in Egypt is negligible at present, the country controls the Suez Canal.)

But what happens next will determine the security situation, and how long it takes to get a new, functional government in place will determine how long foreign oil and gas investors in Egypt will have to be nervous.

The central venue for protests—Tahrir Square—was quiet until today, when Egyptian security forces clashed with Morsi’s supporters in Cairo and across the country. While the military said it would allow protests if they were not violent, it opened fire today on demonstrators attempting to march on the Republican Guards headquarters in Cairo. Three people were killed.

In the longer term, we should be worried less about threats of Muslim Brotherhood protests—which the military could easily quash if they turned violent—than about reprisals from fringe Islamist groups, which would be doubly empowered should Qatar decide to support them as they have been doing in Syria.

On the political scene, watch the potential rise of Mohamed ElBaradei—former head of the UN’s nuclear watchdog, the International Atomic Energy Agency (IAEA). ElBaradei is an opposition leader who has been waiting for the right opportunity, and he’s already been nominated by the Tamarod movement to become prime minister.

The US, which has been extremely generous with military aid for Egypt—both before the revolution and after—has refrained from calling the military’s 3 July intervention a “coup”. If Washington used the word “coup”, that would effectively make it impossible to continue to provide the Egyptian military with aid, and it’s not sure it wants to close that door just yet. The military itself likes to refer to the move as a “correction” of the 2011 revolution.

Qatar, of course, will call it a “coup” in no uncertain terms—at least in the backrooms. Publicly, it’s congratulated Egypt, but this tiny petro-monarchy which has been throwing cash at the Muslim Brotherhood in Egypt (and more recently Syria) is nervous. Qatar stands to lose the most without the Muslim Brotherhood in power. It was only a couple of weeks ago that Morsi had openly encouraged Islamists in Egypt to take up arms in Syria to fight the Assad regime, certainly at the prompting of its benefactor, Qatar.

 


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Fri, 07/05/2013 - 12:57 | Link to Comment jbvtme
Fri, 07/05/2013 - 13:10 | Link to Comment malikai
malikai's picture

So, should I take it that Qatar wants the MB in power in Egypt so they can get as many Egyptian radicals over to Syria to pick up the destabilization campaign there?

The end result being US intervention/regime change in Syria so they can get that sweet, sweet pipeline built finally? If so, shouldn't we expect Europe/US to pick up the antagonization meddling?

Fri, 07/05/2013 - 14:06 | Link to Comment NotApplicable
NotApplicable's picture

Viva La Rerevolucion!

'cuz it worked so well the first time...

Fri, 07/05/2013 - 14:23 | Link to Comment Freddie
Freddie's picture

Qatar - friend of Obam, the Gang of 8 including McCain, Graham and Rubio plus the Dems.  They all love the Syrian Rebels (Al-CIA-doh)

Fri, 07/05/2013 - 14:25 | Link to Comment Go Tribe
Go Tribe's picture

Maybe Egypt should just take out Gutter.

Fri, 07/05/2013 - 12:58 | Link to Comment cossack55
cossack55's picture

Sad that there are no extra T.E. Lawrence's lying around.  Can never find one when you need one.

Fri, 07/05/2013 - 12:59 | Link to Comment Flakmeister
Flakmeister's picture

The real fun has only just began in Egypt...

Doesn't matter who is running the show, they have to cut subsidies for fuel and wheat which currently run ~30-40% of the budget...

In the words of Edward Murrow,

Good Night and Good Luck....

Fri, 07/05/2013 - 13:01 | Link to Comment Flakmeister
Flakmeister's picture

Oh, did I mention that FOREX reserves would already be gone without Qatari loans and "gifts" of LNG and the like...

Fri, 07/05/2013 - 13:13 | Link to Comment malikai
malikai's picture

I finally got around to your notes. The 2-box is good, very good. I'll get back to you more later.

Fri, 07/05/2013 - 13:01 | Link to Comment JJ McApe
JJ McApe's picture

only good because the government media and wall street says so.

now get back to work muppet you will do what the vampire squids tell you to do!!!

the middle east is a ticking time bomb

Fri, 07/05/2013 - 13:09 | Link to Comment involuntarilybirthed
involuntarilybirthed's picture

Unfortunately there are those few in Egypt that know things must change (not just regimes) but far outnumbered by the many that live off flag waving emotions and depend upon hope which leads only to the next regime and more misery. 

Fri, 07/05/2013 - 13:16 | Link to Comment EL INDIO
EL INDIO's picture

The situation in Egypt is very dangerous.

 

The MB could pick arms again.

 

That’s right they did it before.

 

Civil war risk is high.

Fri, 07/05/2013 - 15:24 | Link to Comment TBT or not TBT
TBT or not TBT's picture

Egypt is easy to control. Geography, plus dependency on imported food and energy. The army can get foreign aid from the saudis, restore tourism, get IMF help. The MB are stupid assholes, as are the salafis. The military in Egypt is one of the few organizations that works, and they ha e all the guns

Fri, 07/05/2013 - 15:26 | Link to Comment The Shootist
The Shootist's picture

I feel like the previous military brass left over from Hosni is decidedly non Muslim fanatical. I doubt they'll lose to weak MB gangs.

Fri, 07/05/2013 - 13:20 | Link to Comment Crash Overide
Crash Overide's picture

I loved the statements from all the governments yesterday regarding the decision for the military to intervene. All the corrupt fascist assholes are all saying they were disappointed with the action the military took because in reality they saw what everyone else saw. The will and power of the people in numbers just removed their puppet and they are scared that this idea will catch on. Let's face it, most people in the world are living under some sort of power hungry out of control government, getting stepped on and squeezed more and more as each day passes.

 

I am wondering when Americans will understand the responsibility:

"But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security."

 

 

Fri, 07/05/2013 - 13:38 | Link to Comment Totentänzerlied
Totentänzerlied's picture

Didn't look like "the people" to me. Looked like armed military thugs obeying orders. The people did nothing. The official responses were for idiot consumption only. Everything is proceeding according to plan.

Fri, 07/05/2013 - 13:21 | Link to Comment q99x2
q99x2's picture

All people not in control of their currency are slaves. The extent of that slavery is determined by whoever controls the currency.

Fri, 07/05/2013 - 13:50 | Link to Comment Flakmeister
Flakmeister's picture

The purity of an ideologically driven statement is inversely proportional to its relevance to the real world....

Fri, 07/05/2013 - 20:32 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

not food and land? Control of what can be taken from the land "owned" or what genomes can be inserted into the "food" - or is that Fuud(tm) now?

Fri, 07/05/2013 - 13:41 | Link to Comment carbonmutant
carbonmutant's picture

In his last speech as president, Morsi repeated the word legitimacy over and over again. What he did not realise, however, was that the legitimacy of a ruler springs from popular consent. Falling back on the legitimacy of the ballot box is not much different from the husband who rapes his wife but insists that she is compelled by the legality of the marriage contract to accept his abuse..- Alexandria University professor Amira Nowaira

Fri, 07/05/2013 - 13:45 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

More interestingly this should get some radical Islamists panties in a wad.

http://english.ahram.org.eg/NewsContent/1/64/75668/Egypt/Politics-/Egypt...

Upper house of parliament annulled after constitution suspended by military on Wednesday

Egypt's Shura Council was dissolved by Wednesday's military statement that also deposed President Mohamed Morsi, a judicial source has told Al-Ahram Arabic news website.

The legislative chamber will not reconvene because the constitution has been temporarily suspended until a new one is drawn up and put to a referendum. Fresh presidential and parliamentary elections will then take place.

In early June, the law that regulated the council's elections was ruled unconstitutional by the High Consitutional Court (HCC).

However, the Islamist-dominated council had been granted immunity from dissolution by the now-suspended constitution.

The council had held legislative powers since the lower house was dissolved by a separate court ruling.

Egyptian army chief Abdel-Fattah Al-Sisi announced the ouster of Mohamed Morsi on Wednesday and said HCC chief Adly Mansour would become interim president until fresh elections are held.

Mansour was appointed HCC head in May. But his term only started on 30 June after the retirement of former head Maher El-Beheiry.

Armoured vehicles and metal barriers now surround the HCC building in the upscale Cairo district of Maadi.

Fri, 07/05/2013 - 13:54 | Link to Comment Make_Mine_A_Double
Make_Mine_A_Double's picture

Me thinks the House of Saud is behind the curtain here. Morsi was getting a little cute with the Persians and that's the big chess game in the Arab these days.

Also a nice roundhouse bitch slap to Mullah Bozo in DC.

I see the Army is shooting the Brotherz at the moment so your tax dollars are going to a good cause (at the moment).  

Fri, 07/05/2013 - 13:59 | Link to Comment SmittyinLA
SmittyinLA's picture

Funny, apparently everybody (not in Egypt) is unaware the guy ordering the military is the head of the religious council, ie they dumped their elected Islamist and went directly to a "Supreme Leader" like in Iran. 

 

Fuck elections

Fri, 07/05/2013 - 14:03 | Link to Comment Monedas
Monedas's picture

The military is bowing .... to the will of the people .... a popular uprising .... a coup .... is like something out of the blue .... like in Niggeragua and Pairagays ?

Fri, 07/05/2013 - 14:08 | Link to Comment FieldingMellish
FieldingMellish's picture

Saudis have gifted $2B and loaned a further $6B. They hated the MB.

Fri, 07/05/2013 - 14:16 | Link to Comment robertocarlos
robertocarlos's picture

My favorite ZH post today featured Casanova. To some, everything is utterly worthless. And if everything is utterly worthless then what difference does it make. 

Fri, 07/05/2013 - 14:30 | Link to Comment Cheduba
Cheduba's picture

The Daily Bell is a great website for alternate perspectives about current events.  Evidently, Morsi may have resisted the implementation of IMF loans, where ElBaradei, in contrast, would support them.

http://www.thedailybell.com/29345/USs-Man-ElBaradei-May-Head-Egypt

Fri, 07/05/2013 - 14:51 | Link to Comment One World Mafia
One World Mafia's picture

The US has a history of being behind Egyptian leaders, and when the writing is on the wall that that leader will be ousted, they make sure the next person to "win" is their guy, and when that guy is also ousted the process repeats.

From Jan 2011 "Mohamed ElBaradei: Globalist Pied Piper Of The Egyptian Revolt":

...but the man now being positioned to form a new government is a pied piper working for the very same globalists and NGO’s that autocrat leader Hosni Mubarak has dutifully served for nearly 30 years.

The US military-industrial complex has known for at least three years that Egypt was teetering on the verge of regime change, and they certainly were not going to let anyone outside parties take control after Mubarak’s fall. That’s why the American Embassy trained rebel leaders to infiltrate opposition groups from the very beginning, as the Telegraph reveals today.

http://www.infowars.com/mohamed-elbaradei-globalist-pied-piper-of-the-eg...

The military that overthrew Morsi is the main recipient of the $1.3 billion yearly US aid package to Egypt.

Fri, 07/05/2013 - 15:21 | Link to Comment DeliciousSteak
DeliciousSteak's picture

So, I guess it's safe to say that the Egyptian military is in reality a branch of the United States military and if a political leader gets too cocky and refuses to take every inch up his arse, the military will be used to take care of business. Gotcha.

Fri, 07/05/2013 - 15:28 | Link to Comment TBT or not TBT
TBT or not TBT's picture

Nah, but they are an army. Organized. Not much in egypt works as well as their army.

Fri, 07/05/2013 - 15:00 | Link to Comment news printer
news printer's picture

Three shot dead at pro-Mursi 'Friday of rage' march in Cairo

http://live.reuters.com/Event/World_News

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