Last week, when we discussed the recent ominous gas deal cancellation between Egypt and Israel we warned that the May Egyptian presidential election is the one that nobody is concerned about, yet should be far more prominent on everyone's radar, especially in the aftermath of not only the recent deterioration of Egypt-Israel relations, but also the withdrawal of the Arabian ambassador from Cairo. Art Cashin is one person who has been following this underreported hotbed of geopolitical tensions and has just issued his third warning of what he calls another "nose to nose" in the middle east. Issue is this particular nose has all the leverage courtesy of a little canal that has a huge impact on the most important asset price in the world.
From UBS Financial Services
Egypt Bears Watching Closely - Bob Hardy’s excellent GeoStrat site had a couple of keen insights on Egypt. (We hear the site is getting popular among the hedgies.) Bob did a thorough analysis of the rather confusing electoral setup. Here’s a small segment:
The Generals that run SCAF, clearly want the new President to be a former military man as has been the case since the 1950s, and Shafiq is the only candidate that now qualifies, and is likely their first choice.
The 13 candidates have several things in common, they are all in their 60s and 70s and none represents the first choice of their supporters. Some 40% of voters remain undecided according to recent polls, but most agree that there are four frontrunners. Amr Moussa and Ahmad Shafiq are competing for the votes of the secularists and those that want to bring law and order back to the country. The Islamists will have to choose between Abdel Aboul-Foutouh who was tossed out of the Muslim Brotherhood (MB) last summer for breaking its prohibition, then in place, for a member to run for President; and Muhammad Mursi, a member of the MB's Freedom and Justice Party (FJP) who entered the race as a backup to Khairat al-Shater, the FJP's preferred choice, after it broke its promise not to run a Presidential candidate. Al-Shater was disqualified because of his criminal record.
The voters seem to be growing wary of the MB, who have done nothing to solve the country's economic problems, and is seen as trying to seize total political power so that Egypt can become an Islamic state under its control. Just because the Islamists dominated the Parliamentary elections winning 65% of the vote, does not mean that they will be able to stage a repeat performance in the Presidential vote. The Al Ahram Center for Political and Strategic Studies issued a report last week that said that 45% of those who had voted for FJP candidates for Parliament would not do so again. This report must be taken with a grain of salt because Al Ahram is a government sponsored think tank, however; the large portion of undecided voters indicates that there is a lot of truth in its findings.
What most observers of the Arab Spring have missed is that it was all about "the economy stupid" in the beginning, before it morphed into a demand for political rights.
Hardy thinks the Generals have been effective so far in splitting the Islamist vote, raising hopes for a secular President (conveniently safe for the Generals). If that looks likely, they may steer the constitution (still in process) to a strong president/weak parliament model.
Bob also has a good analysis on the emerging split between Saudi Arabia and Egypt. The Saudis have closed all their consulates in Egypt and have recalled their ambassador. Just what we need - another nose to nose in the Middle East.