Next dominoes in the Mid East?

February 3, 2011
by Robin Wigglesworth

Investors nervously wondering which Middle East country could be wracked by political turmoil next agree on three likely candidates: Algeria, Jordan and Bahrain.

Other contenders include Yemen, Lebanon and Saudi Arabia, but the first two have been basket cases for so long that international investment is largely non-existent (although there is plenty of Gulf money in Lebanon). The latter is considered extremely unlikely to face trouble given the wealth the government can feed to its people.

On the other hand, Algeria has already seen widespread protests; Jordan’s king recently sacked his entire government and promised reforms; while Bahraini youths (mainly Shia, the majority of the population in a Sunni-ruled monarchy) have called for a day of rage on February 14.

After poring over data on past revolutions – including correlations with youth bulges, wealth and unemployment – Renaissance Capital has calculated that Algeria has a 4.4 per cent chance of becoming a democracy and Bahrain a 3.7 per cent chance. The Russian investment bank didn’t calculate the odds for Jordan.

What are the market implications? Well, Algeria doesn’t even have a stock exchange. And in spite of the questions hanging over the two countries, stocks on the Bahrain Stock Exchange (BSE) and the Amman Stock Exchange (ASE) in Jordan have held up better than most regional exchanges in the past month.

While the Dow Jones regional index has slipped 5 per cent since the start of the year, the ASE is flat, and the BSE has edged up almost one per cent, albeit on extremely low volumes.

Still, this may be more a reflection of the investor universe in the two markets. Both are dominated by local investors rather than international institutions.

Both Jordan and Bahrain are relatively large bond market borrowers too and credit markets indicate more alarm than equity markets. Credit default swaps on Bahraini debt have climbed to 238 basis points, higher than Tunisia’s 212 bps, while the price of Jordanian bonds have slipped.

But those who argue Jordan and Bahrain won’t be the next dominoes to fall can point to several factors.

Jordan’s Hashemite royal family is still relatively popular among “native” Jordanians (less so among Palestinian Jordanians), and enjoys the backing of influential Bedouin tribes that dominate the security apparatus and armed forces.

In Bahrain, the security forces are considered loyal to the Sunni Al Khalifa royal family because so many are foreigners who have been granted jobs and Bahraini nationality.

Bahrain also has the resources to buy popularity among its populace, even though it is not as rich as its Gulf neighbors. Mainstream Shia politicians and clerics have tried to head off the planned demonstrations on February 14.

But it wasn’t long ago that conventional wisdom said Tunisia would remain in the grip of the Ben Ali family. When it fell, analysts were quick to stress why Egypt was not the same. Both assumptions were ripped apart by the Arab street.

Source: The Financial Times (FT).
Link: http://blogs.ft.com/beyond-brics/2011/02/03/next-dominos-algeria-jordan-bahrain/.

US angered over Egypt, hopeful over Yemen, Jordan

WARNING: Article contains propaganda!

* * * * *

By BRADLEY KLAPPER and MATTHEW LEE - Associated Press
Wednesday, Feb. 02, 2011

WASHINGTON -- Its allies across the Arab world shaken by popular anger, the United States sharpened its criticism of Egyptian President Hosni Mubarak's teetering regime and expressed outrage over violence against protesters, declaring that its once-close partner should set a brisk course for new elections.

President Barack Obama began his remarks at Thursday's National Prayer Breakfast with pointed hopes for better days ahead: "We pray that the violence in Egypt will end and the rights and aspirations of the Egyptian people will be realized."

The administration's call for an immediate end to three decades of authoritarian rule in Egypt coincides with American hopes that reforms in Jordan and Yemen could stave off similar revolt. It represents something of a dual approach for the Obama administration, which has gradually shed its support for the 82-year-old Mubarak while looking to shore up its other Arab friends facing much of the same resentment if not yet imminent revolution.

Aboard Air Force One Thursday, White House spokesman Robert Gibbs condemned the violence on the Egyptian streets. "The government of Egypt has to ensure that peaceful protests can take place," Gibbs said, as he accompanied Obama on a trip to State College, pa.

Gibbs offered a strong denunciation of reports of "systematic targeting" of journalists in Egypt, saying those actions are "totally unacceptable."

''Any journalist that has been detained should be released immediately," Gibbs said. "I think we need to be clear that the world is watching the actions that are taking place right now in Egypt."

In Egypt, Prime Minister Ahmed Shafiq acknowledged that the attack on anti-government protesters "seemed to have been organized." He promised an investigation into who was behind it.

Gibbs, in response, said he hoped that Shafiq's "acknowledgment that anybody that is involved in this will be held accountable is something that the government is serious about."

A day after Obama pressed Mubarak to loosen his three-decade grip on power immediately, clashes between protesters and pro-government supporters Wednesday further alienated Egypt's besieged government from its longtime patron, the United States.

The administration decried the fighting that started when several thousand Mubarak supporters, including some riding horses and camels and wielding whips, attacked anti-government protesters. Demonstrators dragged some of the attackers to the ground and beat them bloody, and the two sides rained stones and bottles down on each other.

On Thursday, State Department spokesman P.J. Crowley Crowley drew attention to the increasing attacks on foreign reporters covering the upheaval. "There is a concerted campaign to intimidate international journalists in Cairo and interfere with their reporting," he said in a Twitter post. "We condemn such actions."

The administration's comments aim to keep the pressure on Mubarak amid fears that the Egyptian government was trying to outlast the protesters' calls for democratic change with cosmetic changes that don't meet the need for real reform. They echoed Obama's call for change to "begin now" after Mubarak announced he would not run for re-election.

Meanwhile, Secretary of State Hillary Rodham Clinton demanded in a telephone conversation with Egypt's new vice president, Omar Suleiman, that the government investigate the events and bring those responsible to account. She condemned the violence, Crowley reported.

"We don't know who unleashed these thugs on the streets of Cairo," he said, but called it a clear attempt to silence Egyptian voices of dissent. "The use of violence to intimidate the Egyptian people must stop."

The day of strife in Egypt underscored the unsure post-Mubarak future for the country. His declaration not to run again was accompanied by plans to shepherd the political changeover from his 30-year reign. But hundreds of thousands of Egyptians continued to demonstrate, determined to chase him from office.

Despite coming down increasingly harder in favor of the protesters, the U.S. was still keen to promote an ordered transition to safeguard Egypt's status as a powerful purveyor of American influence in the Middle East, from Arab-Israeli peace talks to countering Iran and fighting terrorism. Still, the administration would not join the chorus calling for Mubarak's prompt resignation, offering a shred of support for a leader who has long been loyal to the United States.

In contrast to the sharp tone on Egypt, the administration cautiously praised reforms in Yemen by another pro-Western president. Ali Abdullah Saleh pledged not to stay on beyond his current term in an attempt to head off his country's version of the pan-Arab unrest sparked last month by the Tunisian protesters who overthrew their president.

Crowley welcomed Saleh's "positive statements" about including opposition elements in a reform process after three decades in control of his country, which has become a main battleground against al-Qaida. Saleh is seen as a weak but increasingly important partner of the United States, allowing American drone strikes on al-Qaida targets and stepping up counterterrorism cooperation.

"Just as we've seen in Egypt, it is important for governments across the region ... to follow statements with actions," Crowley said.

The United States also was keeping a close watch on developments in Jordan, the only Arab country beside Egypt to have concluded a peace agreement with Israel. Jordan's powerful Muslim opposition has urged King Abdullah II's newly appointed prime minister to step down.

But State Department spokesman Mark Toner said the U.S. was looking forward to working with Abdullah's new government and prime minister. Recognizing the Middle Eastern country's steps toward better democracy, such as allowing monitors at November's primary elections, he said the U.S. would continue to raise the need for greater openness and participation in the country's governance.

Still, the calls for greater democracy were not without peril for the United States, which backtracked under President George W. Bush on an aggressive pursuit of Middle East elections after Hamas won a Palestinian vote and radical groups made gains elsewhere.

In Egypt, the dilemma concerns the Muslim Brotherhood, which has presented the most organized opposition to Mubarak and which rejects much of the U.S. agenda in the region. Israel sees the group as a threat. Asked if the U.S. saw the Muslim Brotherhood as part of Egypt's new democratic equation, Crowley struggled for a response.

"We do not have a favorite candidate or candidates. We are not going to anoint a successor to President Mubarak," he said. But he acknowledged that the Brotherhood was a "fact of life in Egypt."

"They are highly organized," he said. "If they choose to participate and respect the democratic process," then they can play a role in Egypt's transition to democracy. But he added that no U.S. officials have met with members of the group.

In addition to Clinton's conversation with Suleiman, Crowley said Obama's envoy to Egypt, Frank Wisner, held meetings with Mubarak and Suleiman earlier this week. Wisner left Egypt for Washington on Wednesday.

A senior administration official said Wisner was returning because it was clear he had accomplished all he could with the Egyptian leadership. It was unclear how far Wisner sought to push Mubarak, but the U.S. has sought an end to 30 years of an emergency law in the country that gives police wide scope to detain people.

Associated Press writers Steven R. Hurst, Bradley Klapper, Matthew Lee, Erica Werner, Julie Pace and Darlene Superville contributed to this story.

Source: BND.com.
Link: http://www.bnd.com/2011/02/02/1576103/white-house-challenges-mubarak.html.

Western hypocrisy towards the Arab world stands exposed

Saturday, 29 January 2011

Tunisia, Jordan, Yemen, Egypt...the arc of popular discontent continues to grow.

But it is the tumultuous scenes from Egypt this week, culminating in the running battles in many cities yesterday after Friday prayers, that highlight the volatility of the situation – and the dilemma for the United States and the rest of the Western world.

That such a dilemma exists at all, of course, is largely of our own making. We have long observed a double standard in relations with most Arab countries. We turned a blind eye to internal repression and stagnation, so long as the appearance of internal stability was preserved and the oil routes remained secure. The consequence was a chain of undemocratic regimes from North Africa to the Gulf, which enjoyed Western, primarily US and British, patronage. When, as in Iran, popular anger led to the overthrow of the pro-Western regime, we called foul and were surprised to be shunned. Leaving aside our differently lamentable treatment of Iraq, this is the state of affairs that persists pretty much to this day.

As demands for change reverberate further and further from Tunisia, the hypocrisy separating the West's words and deeds can no longer be sustained. But finding a new response is not easy in this fast-moving situation. France, although the former colonial power, conspicuously kept its distance from the events in Tunisia, wisely refusing asylum to its former protégé. The reticence of the United States has spoken volumes, as disturbances in Egypt have spread.

The instincts of the Obama administration pull it in conflicting directions. On the one hand, it is all in favor of democratic reform, especially democracy sprouting from the grass roots up. On the other, Egypt is a crucial ally in the region – a partner in Middle East peace, guardian of the Suez Canal, a beacon for other Arab countries – and allies need to be orderly and predictable. Here the forces of democracy and stability seem to be at odds. How much simpler it would be for the West to take a (negative) stand if the protests had been mounted in the name of fundamentalist Islam rather than in pursuit of elementary political and economic change.

There is a multitude of contradictions here. The copious amounts of US aid to Egypt, as the reward for supporting Middle East peace, may have had the perverse effect of reducing the pressure for domestic reform. America's neoconservatives, once such vocal champions of democracy in the region, have fallen strangely silent over these latest protests. And how rich an irony it was to hear Tony Blair – the man who so heedlessly helped to topple Saddam Hussein – speak yesterday of the need above all for stability in Egypt.

For the Arab countries, these are complicated, even revolutionary, times. As it is, the West has little choice but to watch and wait, while cautioning those who would cling to power against the sort of excesses that would exacerbate their plight. It is not for us to dictate the direction in which the people of these countries eventually decide to go. But it is in our interests to do nothing that would discredit, or make less likely, a democratic choice. As the broad participation in these protests has shown, it is by no means inevitable that militant anti-Western Islam will emerge the victor, and we should not assume the worst.

Source: The Independent.
Link: http://www.independent.co.uk/opinion/leading-articles/leading-article-western-hypocrisy-towards-the-arab-world-stands-exposed-2197801.html.

Nervous times ahead

Jordan's monarchy
Nervous times ahead
The king is catching a harsh wind, too

Feb 3rd 2011

Something strange is happening in a usually quiet corner of the Arab world, often mocked as “the Hashemite kingdom of boredom”. A group of former generals and intelligence officers, who served Jordan’s king in the security apparatus that was counted on to clobber street protests, have themselves been staging unlicensed demonstrations.

When rallies erupted in January, they were at first largely tribal affairs in the impoverished Bedouin villages where King Abdullah recruits his forces. But as they spread to Amman, the capital, and to other towns, other disgruntled Jordanians, including Islamists, teachers and leftists, have jumped on the bandwagon.

As the protests spread across classes and towns, demands for better living standards acquired a sharper political edge, aiming at the government and even the king himself. Dissident generals and Islamists are asking the king to rescind parts of the 1952 constitution, which enshrines his right to hire and fire unelected prime ministers. As in Tunisia and Egypt, disparate groups have joined forces. The protests have been peaceful. But, amid threats of civil disobedience and nationwide strikes, Jordan looks less secure as one of the West’s favored buffer states in the region.

In response, the king at first increased the meager government pensions and salaries by 20 dinars ($28) a month; few of the beneficiaries sounded grateful. Then, on January 31st, he sacked his government, a time-honored Jordanian device for fobbing off protest. The new prime minister, Marouf Bakhit, comes from the same Bedouin and military stock as most of the protesters. In a previous stint as prime minister, he placated his Bedouin troops by raising their salaries. Muhammad Sneid, who organized the first rural protest in the town of Dhiban, cheered the appointment of one of his own.

The Islamists, by contrast, have not been mollified. After three hotels in Amman were bombed by jihadists in 2005, Mr Bakhit led the crackdown which, among other things, saw the Islamists’ representation in parliament drastically reduced in rigged elections in 2007. The grumpy generals, however, seem readier to give Mr Bakhit a chance. In a sign of division, they scolded the Islamists for waving the green flags of Islam alongside Jordanian ones.

In any event, the new prime minister is unlikely to dampen Jordanians’ desire for faster economic and political progress. The king has talked of political reform for 12 years, retaining absolute power even as the kingdom’s economy has faltered. To pay for a national debt that has tripled in a decade, he has cut services and subsidies and raised taxes. “It took north Africa’s explosion to make him take notice,” says Adnan abu Odeh, who once ran the royal court and was one of the protesters.

Criticism of corruption has grown increasingly personal. The king is widely derided for spending too much time abroad, allegedly buying birthday presents, such as a yacht for Queen Rania. Tales abound of favored bureaucrats becoming rich.

The sour mood is notable in the south, where the intimate alliance the Hashemites enjoyed with the local tribes has begun to fray. The bunting and obsequious banners that recently marked the king’s official birthday were rarer than in previous years. “We feel we’re a minority in our own country,” says Mr Sneid. Referring to the business elite which is said to have the king’s ear, he continues: “We feel they’ve captured the government and we’re working for foreigners.”

Source: The Economist.
Link: http://www.economist.com/node/18065683?story_id=18065683.

Jordan's King Abdullah Met With Islamic Action Front Today

By Massoud A Derhally - Feb 3, 2011

Jordan’s King Abdullah today met with Islamic leaders who’ve been calling for political and economic changes after the appointment of a new premier this week.

In the meeting, the king stressed the need for “practical and effective steps to achieve the required progress in the political reform process,” according to an e-mailed statement from the Royal Court.

King Abdullah replaced Prime Minister Samir Rifai this week with Marouf Bakhit, a former prime minister, and asked him to form a new government and to act quickly to “launch a genuine political reform process.”

The change followed street protests in Egypt demanding the ouster of President Hosni Mubarak. The protests in Egypt were inspired by a revolt in Tunisia that forced President Zine El Abidine Ben Ali into exile on Jan. 14.

“Economic reform must continue to ensure a better life for all citizens and will not reach its required level without political reform,” Abdullah said during the meeting according to a statement.

Jordan, one of the smallest economies in the Middle East, imports more than 90 percent of its oil and relies on foreign investment and grants to finance its budget and current account deficit.

‘Real Reforms’

The country’s economy grew 2.3 percent in 2009. Economic growth may accelerate to as much as 6 percent this year from an expected 3.4 percent in 2010, outgoing Finance Minister Mohammad Abu Hammour said in a Jan. 22 interview.

“The prime minister asked if we wished or had an interest to join the government and we said we don’t have any such intention at this stage,” Hamzah Mansour, secretary general of the Islamic Action Front, the political arm of the Muslim Brotherhood, the largest opposition group in Jordan said in an interview today.

In an interview earlier this week, Mansour called for “real reforms like the manner in which the government is formed, the way lawmakers are elected and the issue of taxes.”

The Front, which hasn’t called for regime change, is the political arm of the Muslim Brotherhood, the largest opposition group in Jordan.

“There are protests in Jordan, however, they are not like those in Tunisia and Egypt,” said Mohammad Masri, a researcher at Jordan University’s Center for Strategic Studies. “What you have in Jordan are protests organized by political parties and social groups, it’s not a popular uprising.”

Source: Bloomberg.
Link: http://www.bloomberg.com/news/2011-02-03/jordan-s-king-abdullah-met-with-islamic-action-front-today.html.