Sunday, February 14, 2010

Egypt Suffers from Cabin Fever!

Cabin fever is a term used to describe the claustrophobic reaction that takes place when a person or group is isolated and/or shut in, in a small space, with nothing to do, for an extended period (as in a simple country vacation cottage during a long rain or snow). Symptoms include restlessness, irritability, forgetfulness, laughter, and excessive sleeping, distrust of anyone they are with, and an urge to go outside even in the (possibly dangerous) rain, snow or dark. Cabin fever can also be known as a term for a lack of sexual intercourse. Egyptians suffers from all the above symptoms.

 
Egyptians are currently completely locked within the boundaries of their country like it has never occurred before. Egypt is completely now sealed and isolated from its surroundings. Let’s explore that hypothesis:

 
Syrians and Lebanese had significant presence and influence in Egypt. For example, Beshara Takla founded Al-Ahram. Cinema and theater started with Syrian immigrants and those immigrants continued to have significant influence on Egyptian arts. Salahu-Al-Din Al-Ayoubi was an Iraqi Kurd who ruled Syria first then ruled Egypt to grow from that point onward and form the coalition that expelled the crusades. Religions came to Egypt through the Sinai whether Yussef PBUH or Islam or Christianity.

 
One does not have to go that far back in history. Till the 1960s, Greeks and other Europeans were strong part of the Egyptian economy. Mohammad Ali Pasha brought many Europeans to build Egypt, not least among them was Soleiman Pasha Al-Fransaoi, or the French, who was a prominent doctor and introduced modern medicine into Egypt.

 
Even when many of those Europeans left Egypt in the 1960s, Gamal Abdel-Nasser replaced them with many Poles and Russians who also participated in arming Egypt and building the Aswan dam. Moreover, Abdel-Nasser himself formed unity with Syria and many Syrians came to Egypt to settle and live during that time. Even under Sadat and after the severing of diplomatic ties between Egypt and most of the Arab world, many Egyptians left to the rich Gulf States (with dire consequences but that is a different subject). Throughout history, Egypt had a network of connections within its surroundings with free movement of people and ideas.

 
This network is extremely important Human societies need to interact with different cultures and school of thoughts to hone their own ideas and borrow new ideas and technologies. It has never happened that any human society was able to prosper and develop its civilization without the benefits of trade. Trade in the broader sense optimizes ideas, propagates them, and provide an ultimate test of the ideas’ usefulness. Agriculture as a technology did not start in Egypt. It started in the Levant but through trade and migration, agriculture moved to Egypt and created there one of the most prosperous agriculture-based civilization in history. Journalism did not start in Egypt. It started in Europe, then came to Egypt through the Levant creating in Egypt some of the most successful press in the Arab world. Cinema did not start in Egypt. It again to Egypt through the migration of few pioneers who settled in Egypt and created a movie industry that Talat Harb later capitalized to create one of the most successful movie industries in the world. Press started in Germany and through trade migrated to the rest of Europe. This phenomenon is called spatial diffusion of technology and is one of the key mechanisms by which human societies grow.

 
The current status of Egypt is that all of its historical routes of spatial diffusion have been severed. First, Egypt for the first time in history has lost its connection to most of the Arab world and to Europe. Up to the 1970s, many Egyptians had the ability to travel to Europe relatively easily. Not any more. Getting a visa to Europe is a significant hurdle that most Egyptians cannot afford. Traveling to Libya is shut down. Many Egyptians do not even think of going to Sudan or Syria or even Lebanon, countries that are natural extension to Egypt. Travel to the rich Gulf States has been significant curbed. The outcome is that Egyptians are virtually locked inside Egypt.



The status of Egypt now is that we have two men, a Muslim and a Christian locked together in a cabin with nothing to do except fighting with each other. They are both frustrated at their current situation. They are both frustrated at whoever locked them in this room but unable to reach him (the government in this case) but they have to vent, and then vent on each other.

 
If we analyze the symptoms of the cabin fever, we find them exactly applicable to today’s Egypt. Symptoms include restlessness (accusing everybody), irritability (think of Algeria and the unjustified Egyptian reaction to losing a soccer match), forgetfulness (for example think of forgetting basic tenants of Egyptian history and their significance and being confused about the role of Nasser or Sadat in Egypt), laughter (sometimes Egyptian laugh at the current sad situation for no obvious reason), and excessive sleeping (often it feels that the whole country is sleeping), distrust of anyone they are with (Muslims distrust Christians, Christians distrust Muslims, they both distrust Israel and America and blame both for anything that happens even though it is often not true), and an urge to go outside even in the (possibly dangerous) rain, snow or dark (think about the hundreds and maybe thousands of Egyptian youth willing to risk their lives to cross the sea to Europe).

 
Cabin fever can also be known as a term for a lack of sexual intercourse. Unfortunately, most Egyptian youth out of lack of means and out of cultural and religious barrier suffer from sexual deprivation that causes things like the current phenomenon of sexual assaults in streets, which is now unfortunately commonplace.


All the symptoms of cabin fever are there…very sad situation indeed.



The Treatment

First, the causes of the cabin fever need to be eliminated. Egypt needs to restore its relationship with the Levant reaching all the way to Turkey. Politics should not interfere with the historical relations between the people. It is interesting to note that France’s Sarkozy is leading Europe to restore relations with Syria even though Syria is still bound with its strong ties to Iran. That is while Egypt is unable to turn around its relations with Syria on the grounds of Syrian role in Lebanon and in support of Hezbollah. A role that even the United States is willing to omit and despite which re-establish its diplomatic ties back with Syria. Many more Egyptians and Syrians need to visit each others, opening businesses and prospering. Ties to Syria should be the pinnacles of a strong Egyptian-Turkish relation. Turkey and Syria recently abolished visas between the two countries. Same should happen between Egypt and Turkey. Turkey and Syria both have a strong business community that can benefit Egypt significantly particularly in the area of improved banking and improved financial system. Turkish investment will also be key to the re-industrialization of Egypt particularly in both capital and know-how.

Similarly important, Egypt needs to reconnect with Sudan. The Chinese infiltration of Sudan is alarming as I discussed in a previous article. Sudan must be included in any regional settlement to avoid its constant drifting into despair and splintering.

A free trade zone between Turkey, Syria, Lebanon, Jordan, Egypt, Sudan, and potentially later including rich Gulf States, and Iran will encompass 300 million people (same as the EU) with significant capital within, know-how, agriculture land, territorial contiguity, and a massive market. This community does not have to include rich Arab states initially but they will have no option but join later on. The beauty of it is that most of these states initially have similar income per capita and can easily open boarders among themselves. Rich Arab states can provide capital without joining but will have little option except joining in later when the core team is more prosperous.

 
This is a policy that is designed to unlock Egypt from its current box and restore its historical ties with its surroundings.

Finally, there are tactical steps that have to be taken with respect to the Palestinian issue, Israel, and Gaza. First, Egypt has to open the boarders with Gaza within the framework of the regional coalition above. Gaza can be granted a special status in Egypt similar to Hong Kong within China. A regional peacekeeping force consisting of Egyptian-Jordanian-Turkish troops can maintain the peace in Gaza and can even be joined by US troops to assuage Israeli fears. An influx of Arab investment must be guaranteed within a regional framework to reinvigorate Gaza and Sinai economy. A tunnel should connect Sinai into Jordan and direct flight links need to be established from Al-Arish to Syria and Lebanon. Sinai need to be restored again as the link between Egypt and the Levant. That historical link needs to be re-activated.



With a regional collation such as the one proposed, Israel will have little option but to settle the West Bank issue. Territories conceded by Israel will be put under the regional coalition auspices with security guarantees provided by US, EU, Egypt, Jordan, and Turkey. On the long run and with better economic status, the regional collation can negotiate a better settlement of Jerusalem particularly if Iran turns out to join the coalition as a more democratic country (after getting rid or moderating its current corrupt regime) with nuclear potential.



These steps will restore Egypt again to its historical role in the region.

Saturday, February 13, 2010

Egyptian Natural Gas Prices

Israel's Natural Gas Grid. Completely Supplied by Egypt. Cheaper than LNG, less polluting than oil, and sold in Israel for at least $12 per Million BTU, compared to a buying price from Egypt of $3, Egyptian gas affords a margin of 60% to Israeli grid company ... a sweetheart deal of unbelievable proportion.

Yael Gruntman: Feb 10 11:43



Israel Electric Corporation (IEC) (TASE: ELEC.B22) has notified Egypt's East Mediterranean Gas Co. (EMG) that it has received all of the required approvals for the coming into force of the amendment to their gas sale agreement, EMG shareholder Ampal-American Israel Corporation (Nasdaq: AMPL; TASE:AMPL) announced today. The companies signed the amendment on September 17, 2009,.



EMG has contracted to supply to IEC 42 billion cubic meters of natural gas for a total value of about $6 billion.



El-Arish Gas Compression Station

This means that Egypt sells the gas to Israel at a. price of $140 per 1000 cubic meters. I can only compare Egypt gas price sales to Russian gas prices to Europe. According to New York Times (http://www.nytimes.com/2009/05/16/world/europe/16gazprom.html), Gazprom sells gas to Eastern Europe at a price of $340 per 1000 cubic meters throughout 2009. The price reflects a complex formula that is based on oil prices. Ukraine (a country that Russia is keen on courting before its elections) gets Russian gas at $230 per 1000 cubic meters. While the average country-to-country gas prices in Europe were $280 per 1000 cubic meters. These prices reflect 20-year contracts so they are based on long-term contracts in the same way that Egypt-Israel gas prices are based on.



This means that after a 40% escalation in Egyptian gas prices, it is still 40-50% below Russian gas price that is being sold to Ukraine, a country that Russia wants to court. This still opens a lot of questions in my mind about the sale of Egyptian long-term assets at discounted prices and what the political favors are that Egypt is courting Israel for, 

Why?