Bruce Albrecht: Middle East Thoughts
Comment of the Day

February 23 2011

Commentary by David Fuller

Bruce Albrecht: Middle East Thoughts

The author is a partner at P&C Global Wealth Managers and subscribers may recognise his name from the authoritative Global Thematic Investors report, which Fullermoney has been pleased to post for several years. Bruce Albrecht's comments on the Middle East, where he lived and worked for many years, originally appeared as an email in response to a question on the region. Here is the opening:
It is certainly a messy situation. The countries in the Middle East/North Africa are often grouped together but they are very different and frequently, away from the cameras, have not always got along with each other.

The uprising in Egypt was by general Egyptians rather than a religious or tribal grouping. The root cause was probably inflation. Food prices have been rising rapidly all over the world. This is only a nuisance in the West where food costs are always below 20% of the average person's budget. In the poorer Middle Eastern countries including Egypt and Jordan, food costs are over 40%. When people are suffering and simultaneously see a corrupt ruling elite enjoying a luxury lifestyle, trouble is not far behind. The protesting Egyptians were rebelling against the autocratic corruption that they believed was part of the economic problem in the country. The protestors were not particularly Muslim Brotherhood individuals. The army was composed of Egyptians from top to bottom. This made it difficult for Hosni Mubarak to use his armed forces to control the masses as we saw with the army refusing to fire upon the protestors which likely composed their friends and family. The result was always going to be either a resignation by Mubarak or a slow fizzling out of the protest. Egypt will still be Egypt. A country not particularly blessed with natural resources but then not devoid either. It has a large semi-educated population with an economy that is domestic dominated. Whoever is in power, it will continue in its reasonably steady progress. Any new government will be greeted with relief and a political honeymoon. No new government, however, can fulfil the aspirations of the masses who imagine a quick fix. As disappointments sets in later in 2011 or 2012, the Muslim Brotherhood might appear with a new solution and then we will have problems. It is a worrying development that Iranian Warships are presently passing through the Suez Canal for the first time in decades.

David Fuller's view I commend the rest of this informed analysis to readers.

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