What Obama isn't mentioning about Egypt (like the economy)

Since the protests began in Egypt, Obama has adopted a stance of 'coyness-with-conviction.' Given the diplomatic and economic relations between the United States and Egypt, he has spoken very little of the financial conditions of Egyptians, while indicating opportunistic support for their pro-democracy demands. I say, opportunistic, because - well - it's not like anybody in DC (on either side of the political aisle) was ever jumping up and down, livid about Egypt's growing poverty or youth unemployment rate. (Not that those stats are any better in the United States, so of course, that would have been awkward.)

That aside, the easiest way to not address the economic plight of Egyptians (the rising poverty, unemployment, income and wealth inequality, and cost of everything) is to focus solely on the issue of 'democracy.' On the one hand, it's not wrong. We can all (except for Glenn Beck) empathize with the Egyptian population's desire for fair representation and a non-dictatorial government. 

On the other, it omits discussion of a major reason for the protests, not just in Egypt, but throughout other countries in the region, in Europe, and soon to spread to Africa and Central America - people's economic situations. Obama has steadfastly kept his comments aligned with freedom and democracy while avoiding this personal economics topic. It's no different from what he did in his State of the Union speech, when he talked about recovery and innovation and destiny a lot, but discussed jobs only a little, and did not mention the specifics of increasingly difficult financial conditions for most of the country at all.

And, it equally misses the mark. 

On January 28th, he focused on the basic human rights to which the Egyptian's are entitled, which included "the right to peaceful assembly and association, the right to free speech, and the ability to determine their own destiny." He said that the United States stands behind those. 

So far so honorable.  He went on to say that "the United States has a close partnership with Egypt and we've cooperated on many issues, including working together to advance a more peaceful region.  But we've also been clear that there must be reform -- political, social, and economic reforms that meet the aspirations of the Egyptian people." He underscored that Mubarack had also said, when he addressed Egypt on TV that night, that he "pledged a better democracy and greater economic opportunity."

Obama concluded by stating, "the United States will continue to stand up for the rights of the Egyptian people and work with their government in pursuit of a future that is more just, more free, and more hopeful."

That was the last time, he officially mentioned anything regarding the economic plight of the Egyptian people. 

On February 1, with the protests growing, he didn't bring up the notion of economic reform or hardship at all. He spoke loftily of the core principals for which the United States stands, "we oppose violence", "we stand for universal values, including the rights of the Egyptian people to freedom of assembly, freedom of speech, and the freedom to access information" and "we have spoken out on behalf of the need for change." Ah, change. That magical word.

He said that it wasn't his place to dictate to another country how to change, but that the process "should include a broad spectrum of Egyptian voices and opposition parties.  It should lead to elections that are free and fair.  And it should result in a government that’s not only grounded in democratic principles, but is also responsive to the aspirations of the Egyptian people."

As to the nature of those aspirations from an economic perspective, as to any public recognition of what they could possibly be, beyond the compelling need to overthrow the Mubarak regime,  Obama provided no detail.

Today, with reports of Mubarak stepping aside, which later turned out to be premature, because instead, Mubarak restated he's planning on sticking around until elections, give or take an internal power shift, Obama remarked that the situation in Egypt was "a moment of transformation taking place because the people of Egypt are calling for change" and called for an "orderly and genuine transition to democracy in Egypt" as he had in his speech on January, 28. Nancy Pelosi called it a 'victory for the young people of Egypt" whose actions were "an inspiration to the world."

And, yes - they absolutely are. And, one reason is absolutely that the Egyptian's want a freer, fairer government and have revolted against the corrupt one they have. But, they also want a fairer economy, and that is something about which Washington has been very silent. 

The Washington Times stated that the only way for a new Egyptian government to fix the economy was to "liberalize it" and that some people mistakenly think this has already happened. (I guess I'd be one of them - though, I can't see how, for example, Egypt could ask for less than zero long-term capital down as a requirement for foreign businesses or speculators or charge less than zero local taxes for local profits from international investors, but maybe that's quibbling.) 

At any rate, what has happened in Egypt is truly amazing, exciting and as Pelosi called it, an inspiration. But, it was an accelerating tanking of economic prospects that catalyzed a 26-year old unemployed Tunisian man to spark a revolution across the region. And, it was a policy of catering to the short term needs of foreign investors and the wealthy internal elite, above the long-term ones of citizens that intensified the income inequality gap that so angered Egyptians. 

In order to truly meet the demands of the population, a new Egyptian government must address this problem. Properly. Because if people still can't afford to feed their families or themselves, they will not remain quiet. That is the true inspiration of the Egyptian protestors - that they did not remain quiet. Here, with similar unemployment, particularly growing for our youth, and rising inequality, poverty and basic needs prices, we are too quiet. 

Ellen Brown's Great Piece on Banks starving the Third World

Today, sugar prices reached a three-decade high. More scary, the United Nation's Food and Agricultural Food-Price Index reached an all-time high for January, up 3.4% over December, logging its 7th consecutive monthly increase. Meanwhile, the price of crude oil per barrel topped $100.

Because his family isn't starving, World Bank President, Robert Zoellick characterized this as a trend driven by excess demand in third-world countries (and not say, traders using that excuse to turn up the speculative heat) telling Reuters, ""This can put pressure but also create opportunities."

These price spikes across the spectrum of food and other necessary commodities, are happening for a reason, and it's not because of a collective third world sweet tooth. It is not a coincidence that this is concurrent with the revolts in Egypt and other countries, either. These events are part of a vicious global speculative cycle that has traders profiting excessively on the starvation and economic strangling of ordinary people. 

Ellen Brown, author of the wonderful book, Web of Debt, posted this compelling article on Truthout - entitled "The Egyptian Tinderbox: How Banks and Investors are Starving the Third World"  about this phenomenon. You gotta check it out.

The CIA on Egypt's Economy, Financial Deregulation and Protest

The ongoing demonstrations in Egypt are as much, if not more, about the mass deterioration of economic conditions and the harsh result of years of financial deregulation, than the political ideology that some of the media seems more focused on. Plus, as Mark Engler cross-posted on Alternet and Dissent yesterday, the notion that the protests in Cairo are 'spontaneous uprisings' misses the mark. As he eloquently wrote, "there are extraordinary moments when public demonstrations take on a mass character and people who would otherwise not have dreamed of taking part in an uprising rush onto the streets. But these protests are typically built upon years of organizing and preparation on the part of social movements."

That got me thinking about what else has been building up in Egypt under Mubarak's 29-year as President, but more specifically over the past decade, and in particular the years leading up to the world economic crisis catalyzed by the US banking system - and that would be, extreme financial deregulation and the increased influx of foreign banks, capital, and "investment" which tends to be a euphemism for "speculation" when it belies international funds looking for hot prospects, no matter what the costs to the local population.

According to the CIA's World Fact-book depiction of Egypt's economy, "Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth." And, while that was happening, "Despite the relatively high levels of economic growth over the past few years, living conditions for the average Egyptian remain poor."

Unemployment in Egypt is hovering just below the 10% mark, like in the US, though similarly, this figure grossly underestimates underemployment, quality of employment, prospects for employment, and the growing youth population with a dismal job future. Nearly 20% of the country live below the poverty line (compared to 14% and growing in the US) and 10% of the population controls 28% of household income (compared to 30% in the US). But, these figures, as in the US, have been accelerating in ways that undermine financial security of the majority of the population, and have been doing so for more than have a decade.

Around 2005, Egypt decided to transform its financial system in order to increase its appeal as a magnet for foreign investment, notably banks and real estate speculators. Egypt reduced cumbersome bureaucracy and regulations around foreign property investment through decree (number 583.) International luxury property firms depicted the country as a mecca (of the tax-haven variety) for property speculation, a country offering no capital gains taxes on real estate transactions, no stamp duty, and no inheritance tax.  

But, Egypt's more devastating economic transformation centered around its decision to aggressively sell off its national banks as a matter of foreign and financial policy between 2005 and early 2008 (around the time that US banks were stoking a global sub-prime and other forms-of-debt and leverage oriented crisis). Having opened its real estate to foreign investment and private equity speculation, the next step in the deregulation of the country's banks was spurring international bank takeovers complete with new bank openings, where international banks could begin plowing Egyptians for fees. Citigroup, for example, launched the first Cards reward program in 2005, followed by other banks.

According to an article in Executive Magazine in early 2007, which touted the competitive bidding, acquistion and rebranding of Egyptian banks by foreign banks and growth of foreign M&A action, the biggest bank deal of 2006 was the sale of one of the four largest state-run banks, Bank of Alexandria, to Italian bank, Gruppo Sanpaolo IMI. This, a much larger deal than the 70% acquisition by Greek's Piraeus Bank of the Egyptian Commercial Bank in 2005, one of the first deals to be blessed by the Central Bank of Egypt and the Ministry of Investment that unleashed the sale of Egypt's banking system to the highest international bidders.

The greater the pace of foreign bank influx and take-overs to 'modernize' Egypt's banking system, inevitably the more short-term, "hot" money poured into Egypt. Pieces of Egypt, or its companies, continued to be purchased by foreign conglomerates, trickling off when the global financial crisis brewed full force in 2008, though not before Goldman Sachs Strategic Investments Limited in the UK bought a $70 million chunk of Palm Hills Development SAE, a high-end real estate developer, in March, 2008.

When a country, among other shortcomings, relinquishes its financial system and its population's well-being to the pursuit of 'good deals', there is going to be substantial fallout. The citizens protesting in the streets of Greece, England, Tunisia, Egypt and anywhere else, may be revolting on a national basis against individual leaderships that have shafted them, but they have a common bond; they are revolting against a world besotted with benefiting the powerful and the deal-makers at the expense of ordinary people.