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Wednesday, February 23, 2011

Farrell: In Middle East, Mottos and Armies Are Key

"Allah is our objective; the Prophet is our leader; the Quran is our law; Jihad is our way; dying in the way of Allah is our highest hope." That's the motto of the Muslim Brotherhood. It, or they, insist that Islam is the only source of legislation and that non-Muslims and women cannot become heads of state.
To believe a democratic outcome is a fait accompli in North Africa is failing to understand the Muslim Brotherhood's purpose. They may not have the influence they wish right now, but they are there, and patient.
A recent poll by the Washington Institute for Near East policy found that Muslim Brotherhood leaders received barely 1% of Egyptians support for the Presidency. Only 7% of those that responded believed that "the Mubarak regime is not Islamic enough."
This, says an article in the Wall Street Journal last Friday, February 16 by Maajid Nawaz (executor director of Quilliam, a counterextremism think tank in England) suggests the Muslim Brotherhood is likely to win seats in the Egyptian Parliament if an election were to be held, but unlikely to gain control.
But in the same edition of the Journal, Ms. Ayaan Hirsi Ali, a resident scholar at the American Enterprise Institute and a former member of the Dutch Parliament, warned that it should be remembered that al Qaeda, Islamic Jihad, and Hamas (and others) are offshoots of the Brotherhood.
She feels the Brotherhood has a hidden agenda and that the West should push for more time in drafting a new Egyptian constitution. Such a constitution, she says, "should introduce checks and balances, eliminate the one-party system and guarantee the protection of human rights." It should also safeguard against the imposition of Shariah law.
The above mentioned Mr. Nawaz, who was once held as a prisoner of conscience in Egypt, takes heart in the bold secular youth movements that had so much to do with Mubarak's downfall. The Egyptian Movement for Change, and the April 6th Youth were more influential that the allegedly most organized movement in Egypt, the Brotherhood. The Economist Magazine editorialized in a recent issue that '"fear of the Muslim Brotherhood is...overdone."
If a new government included the Brotherhood it would be harder on Israel and easier on Hamas, but the Brothers are a varied bunch and "wouldn't risk another war" with Israel. Some would argue for rescinding the peace treaty with Israel. But estimates of their popularity peak at about 20% depending on who is counting and they would probably bide their time. But remember their motto and what that implies.
The U.S. would be wise to remember the bitter truth written by playwright Bertolt Brecht, 1898-1956, an avowed Marxist, who said "First grub, then ethics." He was right. Food comes first and for the half of Egypt's population that lives on less than $2 a day, the next meal is more important than the next election. This represents an opportunity for the US that would be nice to take advantage off if we weren't broke as a nation.
And aid/assistance can't be distributed from the state down. Free enterprise and job creation has to come from the bottom up. Dan Henninger had a fascinating op-ed piece in the Journal recently.
Waiting in the wings is Saudi Arabia. Fabulously wealthy as a nation, the divide between haves and have nots is staggering. 40% of Saudis live in poverty and 70% can't afford homes says Karen Elliott House, a Pulitzer Prize winning reporter for her coverage of the Middle East.
In Egypt, pre-revolution, the percentage of the working population employed by the state was 35%. Large public sectors are almost universally smothering and inefficient. In Jordan, nearly 50% of the workforce is employed by the state and Yemen, Tunisia, and Algeria are in between those two.
A raft of Asian countries have less than 15% of the population working in the public sector, and they have vibrant economies. Korea, Indonesia, Taiwan, Thailand have less than 15% of the workforce employed by the state. In China it is 8.3%; Singapore is 3%; and also below 15% are Columbia, Peru, and Chile, "three of South America's strongest economies." Mr. Henninger figures a low number doesn't guarantee strong growth, "but a high number probably kills it."
Waiting in the wings is Saudi Arabia. Fabulously wealthy as a nation, the divide between haves and have nots is staggering. 40% of Saudis live in poverty and 70% can't afford homes says Karen Elliott House, a Pulitzer Prize winning reporter for her coverage of the Middle East. Further, 90% of all employees are imported non-Saudis. This nation could blow up!
Those newly emergent (hopefully) democratic governments might not want to look too closely at the US. Public sector costs have helped push New York, California, New Jersey, and Illinois to the financial brink. And Wisconsin is a wonderful example of how messy democracy can be. The newly elected governor of Wisconsin has done exactly what he said he would do during the campaign, and the legislature is ready to pass the package.
So skipping town makes all the sense in the world for the opposition. Just like taking your ball and going home if you don't get your way. I am perplexed and troubled myself about repealing collective bargaining rights, but that's what courts are for.
The essential point is we can't afford things and we have to cut. Read David Brooks in Tuesday's New York Times. Like his colleague, Tom Friedman, a national asset, Brooks summarizes the solution when he says "Make Everybody Hurt."
But hurt in the financial sense. Hurting in the Middle Eastern sense means being shot. Watch the armies. If, as in Egypt, they refuse to fire on the people, the leader is toast. If the army slaughters its fellow citizens by the hundreds, as in Libya, the dictator will probably prevail. Turning the military is key.
Vince Farrell
Vincent Farrell, Jr. is chief investment officer at Soleil Securities Group and a regular contributor to CNBC. 

© 2011 CNBC.com


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