Friday, December 23, 2011

Re-nationalization: A Cotton Pickin' Mess!

Egypt's white gold
Buried under the endless commentary of the recent violence in Egypt (but not lost on investors), a decision taken by an administrative court to annul the sale of shares of a then state-owned cotton ginning company threatens to cause far more lasting damage than any demonstrations, election results or political figurehead. Taken within the context of an already toxic mix of a fiscal crisis, unstable leadership and the urge for short-term, populist policymaking, this decision (still hopefully to be overturned) sets the stage for complete economic chaos. 
The ruling itself is based on vague allegations of an undervaluation of assets and even more vague allegations of corruption, and follows a troubling trend of similarly statist edits from imprecise, activist judges (encouraged/directed, no doubt, by military insiders seeking to reassert their total control over the private sector, incompetent interim governments, as well as misguided activists in their fanciful mission against the bourgeois). Left totally unanswered are questions of how to redeem shares held and traded by the wider public and workers (who as per most Egyptian privatizations, were granted a significant stake of floated shares as an incentive to participate as part owners in their company), and the impact on creditors. Egypt's reeling stock market is being further damaged, and the uncertainty of the decision further undermines the already compromised credibility of the country's investment climate.

Saturday, December 17, 2011

Buy Egyptian?

Not to be confused with the evil import
If the latest gimmick to jump start the dormant Egyptian economy is a sign of things to come, then we are in big trouble. No matter how many bags of kebab-flavored Chipsy (owned by Pepsico) are munched, nor colorful galabaya are purchased (typically with imported, short-staple cotton, since higher quality long-staple Egyptian cotton is used in higher end goods that are exported and produce much more value added), the “Buy Egypt” campaign will do nothing to address the structural deficiencies in the economic system. 

Worse, the campaign is a reflection of the quick-fix, delusional and autarkic thinking that looks to isolate Egypt from the global economy and create artificial markets, when it is precisely the opposite that is needed. Whether it is flawed ideas of disavowing foreign borrowing, fanciful and regressive notions of food self-sufficiency or grand, national schemes to create dead-end jobs, all of this is stifling the country’s potential and delaying badly needed reform.   

Sunday, December 11, 2011

Brothers in Arms: Team Obama and the Muslim Brotherhood

Senator John Kerry’s recent high-profile visit to the ostentatious new headquarters of the Muslim Brotherhood (query the funding source) is the latest in the continuing outrages of the Obama Administration's placation of regressive Islamists. Never mind that the lower house election cycle in Egypt is only one-third complete. Never mind that secular forces naturally allied to U.S. ideals of civil and individual rights are being suffocated by religious demagogues of whom the Muslim Brotherhood are the patron saint. Never mind that U.S. attention and recognition remain decisive factors on the Egyptian political scene. The head of the Salafist party - supposedly distinct and separate from the supposedly moderate Brotherhood party - synthezied it all quite well: "[t]he American administration's contact with Islamists is a sign of victory for us." 

Sunday, December 4, 2011

Message to Egyptian Revolutionaries: GET REAL!

So the experiment of populism has produced an unsurprisingly miserable outcome.  No need to whitewash the result through tortured reasoning about the differences between backward and even more backward brands of political Islam, the allocation of distant minority votes or trying to make sense of the idiosyncratic voting system Whatever feel-good factor was generated by the relatively high voter interest and participation, the landslide victory of the Islamists is a blow to the cause of the betterment of a progressive Egypt.     
This result should not be a surprise.  It is virtually exactly the same result as that of the constitutional referendum from last March.  The vote simply is a reflection of what Egypt has become over the past sixty years – a country lacking in economic growth, lacking in proper education, lacking in cultural openness, and a country that is highly susceptible to the corrupting influences of a paternalistic state and even more paternalistic and manipulative religious clergy.  The result is also unsurprising because it stems from an ill-considered process of political transformation driven by street demonstrations, Twitter feeds and idiotic political televangelists that cornered the ruling authorities into following quick-fix solutions to protect what will always matter most to them – maintaining a pliable status quo wherein they always come out on top.  And the result is unsurprising, because the brain-children in the White House fatally comprised the standing of secular forces in the region by naively (Team Obama is too ignorant to have done so intentionally) aiding-and-abetting the intractable rise of the Islamists.    

Get used to it
What is surprising, annoying, depressing and ultimately most damning to the cause of a progressively transformed Egypt, however, is the reaction of a wide spectrum of the self-appointed guardians of the defunct Egyptian “revolution.”  However well-intentioned and passionate, the ostrich-like vision of liberal activists to the trying circumstances surrounding them has been detrimental to the good cause.  The majority vote of the Egyptian populace will not be won during this election cycle, and it could not have been won.