On Friday, Zero Hedge presented an extensive refresh on the one latent hotbed of troubles that everyone has conveniently forgotten about, yet which is getting worse by the day: the Mediterranean region, in "What Lies In Store For The "Cradle That Rocks The World" - A History Lesson In Crisis" and specifically Egypt -that most populous Arab nation, which last time we checked, is still Israel's neighbor (and which still controls the Suez canal). Still, for some of our more attention troubled readers who may have passed on the Friday piece, here is a much shorter version from Art Cashin which focuses on just one of numerous variables in play - the relationship between the controlling military and the resurgent Muslim Brotherhood. In other words, in deposing of Mubarak, the US has once again done its bull in a china shop approach to foreign relations and replaced one quite predictable dictator with a bevy of far more dangerous unknowns. Cashin's conclusion is traditionally cryptic and ominous: "The most populous Arab nation on the Earth and Israel’s closest neighbor is on the verge of something dramatic and potentially very, very dangerous. Watch carefully and constantly."
From UBS Financial Services
Egypt And Simmering - In Friday’s Comments, we cautioned that among geo-political concerns “Egypt simmers beneath the surface”. Unfortunately that simmering bubbled onto the surface and the streets. The always sharp-eyed Bob Hardy took some note on his terrific GeoStrat blog (MB is the Muslim Brotherhood).
We see some interesting parallels in what is transpiring on the surface in Egypt and beneath it. Egypt continues to descend into violence and chaos, which serves to doom the economy. The country is running out of money and the Generals seem to prefer that an elected government be in place when that occurs rather than their having to take the blame alone. The military has been trying to forge a bond with the MB that will protect its assets and interests, but it may have waited too late. The MB sees this moment as an opportunity to push out the military regime, as the country appears to be more pro-MB than pro-military. The regime is now at risk of having its annual $1.3 billion in U.S. military aid cancelled unless it can promise to maintain order in the country, and abide by the Camp David Accords. Therefore, we see money and political control as the subtext for the chaos that has enveloped the urban areas of the country.
The vote for President seems certain to be advanced, as nominations will be accepted starting February 23rd it appears, and that means that a Presidential election could be held in late April or May. This leaves little time for the writing of a new Constitution. We now expect to see a new Constitution negotiated in advance by the MB and the regime, which will allow the military to maintain control of defense and foreign affairs. Such a plan of action will require a certain amount of trust on both sides that we see lacking, but there is little time to waste.
The most populous Arab nation on the Earth and Israel’s closest neighbor is on the verge of something dramatic and potentially very, very dangerous. Watch carefully and constantly.