3. The Region and Its History
• After WW II, Arab world run by dictators
• Hosni Mubarak has been in power for more
than any Egyptian ruler in modern history
• Like many political leaders in the region, he
has unlawfully extended his term to stay in
power as long as possible.
4. Libya Yemen Tunisia
Muammar Qaddafi Ali Saleh Ben Ali
41 Years 32 Years 29 Years
5. Background: Political
• Martial law has been in effect in Egypt since
President Sadat’s 1981 assassination
– Police powers are extended
– Constitutional rights suspended
– Censorship legalized
– Mass gatherings and protests prohibited
– Government may imprison anyone
indefinitely and without cause
6. Background: Economic
• Population of Egypt is currently at 83mm
– In 1976, the population was about 40mm,
representing a growth of 43mm in 35 years
• Much like other Middle East countries, Egypt
is experiencing a “youth bulge”
7.
8.
9. Background: Economic
• Official unemployment rate is at 9.7%,
although unofficial estimates are higher
(20%+)
– Highest unemployment is among educated
youth
• Around 40% of population live on less than
$2 per day
• Food inflation at 17%
10.
11. Tunisia as a Catalyst
• Tunisia’s economic and political environment like
Egypt’s
• In 2010, Tunisia’s government has been
overthrown during the Jasmine Revolution
• Causes of revolution were mass unemployment,
widespread corruption, appalling living conditions
and the government’s propensity to squash free
speech
• Tunisia’s revolution has encouraged the citizens of
many other countries in the region to rise up
14. US Ally
• Mubarak was a “friend of the West”
– Second-highest recipient of US aid
• Egypt has a peace treaty with Israel
• Many Egyptians see the US government as
an accessory to Mubarak’s regime.
– New government will likely carry a strong
anti-American sentiment
15. Suez Canal
• Carries 8% of all seaborne trade
• Carries 5% of world’s oil
• Shutdown would raise shipping costs and
piracy rates
– Unlikely, since profits represent 3% of GDP
16. Mineral and Energy Resources
• Oil represented 7% of GDP in 2001
– Oil production has steadily fallen since
• Vast untapped gold reserves
– Previous government hoped that gold exports
would soon exceed tourism, petroleum, and
Suez Canal revenues combined
18. Timeline of Protests
• January 25: On a national holiday to
commemorate the police forces, Egyptians
take to the streets in large numbers
• January 28: Egypt's interior ministry warns of
"decisive measures“ to be taken against the
protests.
• January 29: Mubarak announces that he has
fired his cabinet, but he himself refuses to
step down.
19. Timeline of Protests
• January 30: Mubarak appoints a vice-
president for the first time during his three
decades in power.
• February 1: Mubarak announces in a
televised address that he will not run for re-
election but refuses to step down from office.
• February 4: The leadership of Egypt's ruling
National Democratic Party resigns.
• February 11: Mubarak resigns as president
and hands over power to the army.
20. Protestors’ Demands
• Removal of state of emergency
• Raise in pay
• Removal of current government appointed by
Mubarak
22. Who is in Power?
• Supreme Council of the Armed Forces
– Armed Forces Chief of Staff
– Defense Minister
– Navy Commander in Chief
– Air Force Commander in Chief
23. Committee in Charge of Reforms
• Eight-person committee in charge of
changing constitution
– Including member of Muslim Brotherhood and
Christian judge
– In charge of rewriting six articles of
constitution
• Pertain to president’s powers to amend
constitution and restrict liberties
• Presidential term limit and judicial oversight
• Institute popular referendum
24. Future Leader of Egypt?
• Ayman Nour • df
– Head of El-Ghad Party
– Declared candidacy
• Ran in 2005 and was
imprisoned
25. Effects on Egyptian Economy
• Unrest has cost Egypt $1.7B
• 50% from foregone tourism
– 20-40 foreign visitors per day
– Popular sites such as downtown Egyptian
Museum shut down
• Labor Strikes - Banks & ATM’s closed
• Investor confidence has diminished
– Egyptian stock market closed
– $1BN of outflows from equity market, $3-4BN
from fixed income market
26. International Reaction
• Possible instability around the Suez Canal
leads to rising oil prices
• Egyptian pound hit six-year low of 5.97
EGP/USD
– Central Bank intervening by selling dollars to
local banks
• Bullish trade on safe-haven investments
(gold)
