Saturday,21 October, 2017
Current issue | Issue 1166, (26 September - 2 October 2013)
Saturday,21 October, 2017
Issue 1166, (26 September - 2 October 2013)

Ahram Weekly

Net Notes

Sinai battle like wars with Israel

The military operation in Sinai against Islamist militants took up much of the Egyptian debate on social networks this week. Some Egyptians believe that the current military battle in Sinai is the most important since the 1973 war against Israel.

“We have to end the Islamist militant problem in Sinai now, without delay. This battle is very important to liberate Egypt from terrorists and protect our borders,” said Ahmed Sami. Sami believes the militant attacks in Sinai are the most dangerous since Israel occupied Sinai in 1967.

But Alyaa Magdi said Sinai needs more than a military operation in order to prevent waves of terrorism in the future. “Sinai needs a mega development project that includes all of its youth in order to prevent them from being radicalised,” she said.

Magdi added that it was important to fight poverty before fighting terrorism as most youth who are joining these radical groups do so because they feel excluded from society and that the government ignores their basic needs.

Saleh Abdel-Razek said that the killings of dozens of our soldiers in Sinai “should make us united and we should recognise that Egypt is facing a big challenge that is seriously threatening our national, social and economic security”.

Abdel-Razek added that these groups “know very well that they will not last long, but want to be in Sinai as long as they can to affect tourism and investment and subsequently make the interim government fail in its mission to rescue the Egyptian economy”.

 

Political risk premium

Farah Halime wrote in her Rebel economy blog piece about the Arab Spring effect on the oil market:

“Among the first reactors to the Arab Spring back in January 2011 were the oil markets. The oil price, already volatile in the aftermath of the global financial crisis, became even more unstable as concerns that the oil supply would be choked off if the political problems of the Middle East affected global oil production.

Now, the world is dependent on a few Gulf countries, namely Saudi Arabia, to fill the supply gap. But should the Arab Spring countries, the majority of whom are not big oil producers, be a primary concern for unstable oil markets? Indeed, sometimes the oil market can be wrong, like it was on Egypt. Sometimes the oil market can prepare for the worst case scenario as it did on Syria.

Justin Dargin, an energy and Middle East scholar at the University of Oxford, said that there was a chain reaction in the global economy. After the protests began in Tunisia and spread to other Middle East and North Africa (MENA) countries, for a period of time, investors speculated that the instability would reach the major oil producing Arab countries. The trepidation that the major Arab oil producing countries were at risk of sustained political unrest caused the global oil market to react.

Dargin believes that what is problematic for the global economy is not elevated oil prices, per se, but rather that the oil market is much more volatile because of the tenuous political situation in the MENA region. Additionally, the Arab Spring began at an already delicate time for the global economy that was still reeling from the global financial crisis.

Dargin noted that much of the fluctuation in the global oil market is driven by what is known as the “fear premium”. The fear premium is basically a rise in the price of a commodity, such as oil, that is based on the expectation that a certain event will happen that would significantly impact the market in a negative way. This relates to the Arab Spring as there was a fear that several events could potentially happen. Global investors speculated that in the beginning months of the Arab Spring, there could be oil production disruption in the oil producing Gulf countries.

There was also the fear that perhaps several important sea lanes and canals, such as the Strait of Hormuz or the Suez Canal, could be blocked. Furthermore, a bit later on during the Arab Spring, terrorism fears grew and it was thought that the regional power vacuum could encourage militant groups to launch attacks on MENA energy infrastructure.

While these fears have largely subsided (although not completely), the international price of oil still remains extremely unstable because of this uncertainty.

So when we examine global energy price instability because of political instability in the MENA region, we must realise that this is ‘political risk’ premium that keeps oil prices artificially high.

The oil market fundamentals are relatively sound at the moment, with increased oil and natural gas production occurring in North America due to the shale oil production boom and increased production in Iraq and other areas around the world.

Nonetheless, when we assess the actual impact of the Arab Spring, the oil producing country of note that had notable disruption was Libya. And, when viewed in context, Libya supplies a minor amount of the global oil supply, while Syria, Egypt, Yemen and other Arab countries that had their own Arab Springs are not major oil producers of any note.”

 

Tweets

“You can be against the military takeover and not be a Muslim Brotherhood supporter but you wouldn’t ever use the Rabaa symbol.”

@Wael Eskandar

“If there is a way out it lies in Muslim Brotherhood truly recognising the presence of the Egyptian state!”

@Wael Nawara

“Victimising the Muslim Brotherhood and making them look as if they are the only ones fighting for freedom and democracy is a threat to the revolution.”

@Dina Samak

“Question to the Muslim Brotherhood sympathisers: why did you not object to people being shot by civilian snipers from the Muslim Brotherhood headquarters in Muqattam several months ago?”

@Mohamed Wael

“The Muslim Brotherhood axis (Egypt, Libya, Tunisia, Syria, Turkey AKP, Qatar) is the enemy of itself by trying to forward a perverted ideology.”

@truth will prevail

“Western media sees it as a military coup against an elected president, but people do not care about the process of democracy as much as they care about how it will be implemented.”

@Hisham Allam

“I am secular, so in my prayers right now I curse the military three times a day, the Islamists twice. During Morsi it was two to three.”

@Amr Magdi

“Defamation of religion cases almost doubled under Morsi. Here is the Muslim Brotherhood’s tolerance.”

@Mohmoud Ali

 

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