Living On

Armen is heavily missed. His absence left a hole in independent observation of the political and economic risk situation in Latin America. Beyond the merely analytical though his work was wide-ranging from Armenian philanthropy and social observation of Latin and European lifestyles through to being a "fly on the wall" at the Cannes Film Festival every year and reporting back on the more exotic foibles of the international jet-set.

We miss his wit, his sense of history and his bon mots (in French, Armenian and, even, Turkish). Armen was very much a product of the Levant but then, like so many other Levantines, converted to an international stage where they offer insight into all around them. This record tries to humbly accumulate his collected writings for public consumption so they can be preserved and appreciated for the urgency of the moment in which they were written to the timelessness of the observations.

How best to categorise the uncategorisable? Maybe Armen could be described as an Armenian/Anglo/Franco Samuel Pepys for our times.....

It is ironic that ultimately it was the very mediocrity and self-satisfaction of the Chilean "system", which he documented so thoroughly, that brought about his tragic end.

Saturday, February 13, 2010

EGYPT AND AFTER - Et Maintenant, que vais-je faire, Vers quel néant glissera ma vie?


Gilbert Bécaud´s famous song applies well to the situation in Egypt. We know what has happened, more or less, but nobody has any idea of the future, and there is nothing as risky as demolishing an imperfect house without knowing where you plan to live afterwards.

One of the reasons I stopped my weekly Chile “civilian” papers at the end of last year, was the fact that they were ignored by most people who matter, or worse, plagiarised my opinions and analysis to present them later as their own. The latest case was the paper by academics who “discovered” that unemployment statistics were being “massaged”, a matter I wrote about regularly for months, totally ignored by both the Chilean and international media. However, when two researchers from the Catholic University said the same thing six months later, their paper was hailed and publicised urbi & orbi.

This paper is an occasional one (certainly not monthly) I shall produce for my Defence list, to which are added, very conditionally, some survivors from my civilian lists, but who will be subject to close scrutiny and treated ruthlessly if they misbehave.

On Egypt, nobody was interested in the views of the only Arabic-speaking analyst in Chile, furthermore born in the Middle East, so a number of “expertos” have been filing in front of the TV cameras and filling the pages of the newspapers with increasing amounts of imbecile comments about a country and region they know nothing about. This paper aims at putting some facts straight.

WHAT HAPPENED LAST FRIDAY Some time ago, in other notes, I mentioned the day when I criticised at a Santiago conference the sale of the Peruvian state steel company to the Chinese government, pointing out that calling it “a privatisation” was stressing the definition. In Egypt, the outgoing president handed power to the Supreme Council for the Armed Forces, headed by a Defence minister appointed by him. They call it a Revolution, even a “historical” day. The military have promised free and fair elections (hey, just like most military governments resulting from a coup. The problem is that they get a taste for power and as time passes, find it difficult to leave it).

Since the fall of King Faruk in 1952 in a pretty bloodless revolution, Egypt has been ruled by military people. They may not have been partisans of Swiss-style democracy, but to describe Mubarak (who has the same surname as Shakira, did you know that?) as a cross between Stalin and Dracula is an exaggeration. It was one of his predecessors, Gamal Abd el Nasser, who gave not just Egyptians but the whole Arab world, a sense of pride and identity, even though his attempts at unifying failed. Mubarak took over from Anwar Sadat (who inherited the job from Nasser), as a result of an assassination, so transfer of power has been generally unexpected in the country. So much for the current “historical” events.

The fact that this time there was a big popular uprising (mind you, even if 3 million demonstrated against Mubarak, that only makes less than 4 % of the population), was not a novelty either. Following the 1967 defeat against Israel, Nasser offered to step down, but a popular protest in his favour (admittedly it contained some rent-a-crowd elements), made him change his mind.

The importance of Egypt is because of its size and shining light, as well as its prestige (due in no small terms to Nasser’s tenure and his clever diplomacy in taking over the Suez Canal in 1956 and arranging for a concerted Israeli-French-British invasion attempt to end shamefully). Egypt is the most populated Arab country, a traditional centre for culture and ideas, prestigious universities, a quality Foreign Service. Though rural illiteracy is still high, it has a sophisticated and well educated urban elite. The problem is that if you turn out all these millions of trained graduates and have no jobs for them, you build up resentment and frustration, educated resentment and frustration, on top of the tiredness of seeing the same faces for 30 years (mind you, Queen Victoria was on the throne for 64 years, and many Brits were tired of her too, particularly as her own depression following her husband’s death permeated through many aspects of life in a dreary way).

WHAT DID THE PROTESTERS WANT? OK, so the Mubarak regime muzzled the opposition, restricted freedom of speech, did nasty things to opponents who became serious, stole money, flirted with the wrong people, and was made to sign a “peace” agreement with Israel which resulted in removing the main military threat to them whilst they went on driving tanks over Palestinian babies.

All the above is not an end but a means towards a different life. What people want is better living conditions (otherwise try eating your Facebook account and make a twit through your backside for dessert..). “La politique, c’est le bifteck” said De Gaulle, and as often as not, he was dead on right.

Will the removal of Mubarak make Egyptians materially better, beyond the odd additional school or hospital? The answer is NO. Egypt is a poor country with limited resources, which cannot provide higher wages, more employment and less corruption. The latter is pervasive in such a society and after over 40 years as an international analyst, I cannot remember a single country where a political upheaval reduced or eliminated corruption. Most former Communist countries are far more corrupt now than in the USSR days. As for wages and jobs, with 60 % of the Arab population aged under 20, and today’s activities being less labour intensive, there just is no possibility to absorb this workforce.You can create McDonalds, IT companies, tour operators, and make only a small dent in the figures. The post-natal depression of the “historic” revolution is likely to be hard, without even mentioning the time it will take to make up the losses from the changeover and economic instability, the fall in foreign investment, etc..So even getting back to December 2010 levels (which
caused the uprising) might take one, two or even three years. Will the population be that patient?

India is supposedly democratic. Doesn’t it have poverty and corruption? Let us not go that far. Spain is democratic and not only does it have 20% unemployment, but its corruption scandals make even Latin American politicians blush. You cannot do such things by decree. The laws of gravity are against you.

WHO WILL RUN EGYPT? Well, for the moment the country is being run by military men appointed by the outgoing Mubarak. Elections were initially due next September. It remains to be seen whether such a deadline can be met when you need not just a new constitution, but the emergence of structured politcal parties, which just do not exist.

Apart from the military, the only structured set-up in the country is the Muslim Brotherhood, with over 80 years of existence and still very much around, despite constant hounding. Both they and the military have been making soft noises in order not to frighten anyone, but do not take it for granted. The sceptics say the Brotherhood has no charismatic leader (no Khomeini) but others say that it is not an essential ingredient for grabbing power, particularly in a vacuum.

Egypt has had a checkered history of being mainly run by foreigners in modern times and until 1952. The Ottoman Empire dominated until WWI following which the British took over. In 1919, there was a revolt against British rule encompassing a wide range of elements within the population, in fact very similar to the “unique historical event” of last week. Some 800 people died. The leading nationalist party was the Wafd, initially very powerful, but once it had more or less achieved its aim it lost touch with ist base and disappeared into oblivion. It is probably the only previous example of a popular-based party in modern Egyptian politics. Obama and the world press, please read history before you make asinine declarations about world events. Britain granted formal independence in 1922 but the country was de facto a British protectorate. I shall leave a copy of this paper under the door at the Hyatt hotel for your arrival on March 21. The period of the kings (Fuad and Faruk) was not exactly nationalist, as not only was the British consul-general constantly breathing down their necks, but they themselves were of Albanian origin. Man, even the first Ottoman prime Minister of Egypt, the man who was
behind the Suez Canal project, was Armenian Nubar Nubarian, better known as Nubar Pasha, born in Smyrna.

There are other groups lurking in the background. Among them are two Islamic groups. The fundamentalist Salafists, and the Jihadists, a more generic term but certainly on the more militant end of Islam. From Palestine, Hamas also has its eye on Egyptian politics. I would not put too much faith on Al Baradei, who at best can be a sort of short-term Egyptian Kerensky.

There are people, and not just foreign investors, who have much to loose. Not just the coterie of the Mubarak antourage, but even the military under him control large chunks of the economy. They may resent having to give it up. The US has made such a big song and dance about the U$ 1 bn + they give each year as military aid. At the height if the protests, there were hints of suspending it. What’s U$ 1 bn today? 40 % goes on “administration” and much of the rest on buying US goods. Little of it stays in Egypt. The amount is equal to just a third of the defence budget of tiny Azerbaijan..Last time the Americans thus tried to “punish” Egypt by withholding finance for the Aswan dam, the only result was to throw them into the open arms of the USSR.

IS THE DOMINO THEORY JUSTIFIED? The Arab world is much more diverse than Latin America, in every aspect of life, culture and politics. Each country has to be looked at separately, but one thing most have in common is that they have a political culture based on tribal, religious or personal allegiances, rather than Western-style political parties. Forget that as an analyst and you have lost your way.

A mixture of some political overture and better economics may help, but not everyone can afford both or either. Egypt, as was said earlier, is a poor country. Many people are government employees, and earn a pittance. On the other hand, Kuwait, in a move which is fundamental but received hardly any coverage, announced last month that it was giving each of its citizens a U$ 3,500 cash bonus and food rations for 14 months. It has plenty of money, like many of the low-population high-oil income countries of the Gulf. Algeria’s finances are prosperous, less so Morocco’s. Syria may be able to soften its politics, but it will be harder for Saudi Arabia. What they have all understood is that you cannot trust the USA as an ally. They should have consulted the Georgians, those Caucasian peasant Atamans who thought they could attack the Russian Federation and be backed by the USA and the EU. All they got was a shipful of relief supplies after they had lost the war.

What about Iran? Previous protests have been successfully stifled, and if you followed such things more closely and objectively, you would know that it is the Middle Eastern country with the hardest fought elections (much more passionate than the Chilean ones, to name but one). Will Egypt turn Islamic, and will it be as “light” “a la turca” or “hard” “a la persa”. Many commentators have claimed that in the case of Iran, a secular popular uprising had been hijacked by the Mullahs. Mazkharaf, as they say in Farsi. The Iranian revolution was a religious-inspired one from the beginning, and it was never on the cards, once the Shah’s regime and his own version of Kerensky, Shapur Bakhtiar, was out of the way.

So to tell the truth, we do not know who will fall as a result of popular protests elsewhere, if anywhere. The respected British magazine the New Statesman has suggested that one should not limit the speculation to developing countries with no Western-style democracy. The populations of Western Europe, as they will be increasingly affected by the overthrow of 150 years of social progress because their governments bought U$ 220 million Rafale combat aircraft instead of the U$ 20,000 second hand (and perfectly serviceable) MIG-19s that the Czech Republic was selling in the early 90’s, have now run out of money.

OTHER CONSEQUENCES The biggest looser in all this, and under any scenario, is Israel, and it was worth all the sacrifice just for that. Unfortunately, instead of filing in an application to rejoin the human race, they will become even more aggressive, inflexible and arrogant. 

Should there be unrest or a radical government, there is also the risk of a closure of the Suez Canal. This would be cutting a nose to spite a face, as the yearly revenues from its operations are U$ 5 bn, far more than the U$ 1 bn the USA give the Egyptian military. Increasingly bigger vessels and an extensive pipeline network to the Caspian, Black Sea and the Mediterranean, have made the canal less important but any lengthy interruption in its operations will hurt the trade of many people, as well as add to existing inflationary pressures.

COULD IT HAPPEN IN CHILE? The answer must be know, because with some local exceptions (such as the recent case in Punta Arenas), the natives here have no passion. They are lobotomized by cosy materialism, mind-numbing TV programmes and a studious censorship in the press or educational systems of any advice on how to get wrongs put right. It is the only country where if you complain loudly about bad service anywhere, the other users equally affected will not back you up, and in fact try to shut you up.

On January 19, I got angry at the fact that the Super Caja banking centre of Banco Santander near Escuela Militar was unable to giveme 20 1,000 peso bills. This is not just the largest bank in Chile, but the Super Cajas are service centres open longer hours with a limited range of services mainly consisting of cashing cheques, paying bills and depositing money. How could they not have U$ 40 in 1,000 peso bills at 12.30 PM? One guy behind me said that “why don’t you go back to your country and get your bills there!”. I will not tell you what I answered him just in case your innocent daughters read these papers. He is still in therapy. Those jerks are going to overthrow the Opus Dei Mullahs and the money-grabbing oligarchies? Give me a break.