Egypt: Growing protests against military rule

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during the first quarter of 2012 by 50% over the same period in 2011. Saudi investments in Egypt are estimated at around $12 billion.

Egypt’s imports from Saudi Arabia during the first quarter of 2012 amounted to about $682 million, while the total of Egypt’s exports was about $528 million, part of a growing balance of trade deficit in favor of the Saudis.

Reuters noted that the embassy crisis came at a time when the Egyptian regime was turning increasingly to Gulf capital for economic aid. After assuming power, SCAF had initially rejected an IMF loan, worried that the country’s workers would reject the onerous austerity and privatization programs always imposed by the IMF as conditions for loans. But the regime then backtracked and asked for the loan. This in turn impelled it to ask for more Saudi aid so as to be able to better meet IMF demands for smaller budget deficits, which in turn would hopefully reassure potential investors. Said Reuters: “The IMF repeatedly has said that Egypt will need ‘adequate external financing from Egypt’s international partners,’ a phrase that economic analysts understand to mean in-kind loans from European, American, and particularly Persian Gulf Arab donors.”

The diplomatic tension between the two countries also follows investigations by the Egyptian government of corrupt Saudi business practices, investigations that would have been unheard of under Mubarak and are only happening now because of mass pressure to free the country’s economy from exploitative and corrupt foreign control.

U.S.-Saudi moves against regional revolution Meanwhile, the Saudis were also busy tightening military ties with the U.S. as part of deepening involvement in the entire region’s affairs, all designed to roll back the general Arab uprising.

Vijay Prashad wrote in Counterpunch that “in late March, Hillary Clinton traveled to Riyadh, the capital of the Kingdom of Saudi Arabia. There she met with King Abdullah, and then helped him inaugurate the U.S.-GCC Strategic Cooperation Forum. (The GCC is the Gulf Cooperation Council, the Arab NATO, whose memKhalil Hamra / AP Khalil Hamra / AP bers include Saudi Arabia, Qatar, Bahrain, Kuwait, Oman, and the United Arab Emirates).” Washington has also dramatically stepped up its alliance with the “new” regime in Yemen (i.e. the one in place after President Ali Abdullah Saleh’s departure, but leaving most of the rest of the old regime, including other Saleh family members, in office). The U.S. has increased drone strikes against the government’s opponents, despite repeated outcries at the heavy civilian toll. John Brennan, Obama’s chief counter-terrorism official, recently explained the rules under which such strikes occur, rules that allow targeting of individuals whose names are not even known but who supposedly possess “unique operational skills that are being leveraged in a planned attack.” In other words, make damned sure a drone doesn’t see you carrying a set of pliers anywhere near a jeep that’s in proximity to an alleged terrorist training camp!

The U.S. has also raised its monetary support to the Yemeni military to $1.2 billion, almost matching the annual $1.3 billion in military aid to Egypt.

On a nearby front, the Saudis, after having sent troops in March 2011 to crush a revolt in Bahrain, are now seeking to exercise overt economic control of the country. On May 2, a speech by Crown Prince Naif to a GCC meeting confirmed widespread speculation that the Saudis wanted to move toward a Gulf-wide common economic unit. Naif proposed to move from “cooperation,” as in the GCC’s name, to a gulf-wide economic “union.” So far only Bahrain has bitten on the idea, which is not surprising given the country’s heavy dependence on the Saudis.

The incentive for Bahrain to further its integration with its neighbor comes on the one hand from a stillgrowing mass opposition, and on the other from an economy which is steadily weakening as investors, both from the Gulf and from imperialist countries, reassess the stability of their investments.

The IMF reported on April 17 that while Middle East oil exporters could see a 4.8% GDP growth this year, Bahrain would be lucky to eke out a 2% increase and would likely have similarly poor performance the following two years.

Bahrain’s dependence on foreign investors has been dramatically heightened by its transformation into the Cayman Islands of the region, i.e., a haven for capital thanks to its tax, regulatory, and investment policies. So the loss in recent months of financial sector business and jobs to other Gulf countries has the country’s rulers peering into the abyss—and glancing nervously backward for a Saudi hand to stop it from plunging in.

The Abu Dhabi newspaper The National noted, “Bahrain’s offshore banking sector, which recycles international liquidity throughout the Gulf, is heavily reliant on funding from European banks, which are quickly withdrawing capital amid sector-wide deleveraging as a result of the euro-zone sovereign-debt crisis.

“’The volatile nature of foreign liabilities placed in Bahrain’s wholesale banks was exposed during the Arab Spring,’ analysts from Moody’s wrote.” This uncertainty will of course only be heightened as the Europe-wide economic crisis deepens. n