The truth about Egypt

The US and the UK have backed and funded Hosni Mubarak's corrupt, tawdry dictatorship for far too lo

As the protests escalate across Egypt, I have a simple question: on which side are the US and UK governments? The side of the protesters, fighting for their democratic rights and freedoms, or the side of the ageing, corrupt dictator, Hosni Mubarak, and his secret police? The US and UK governments, aided and abetted by the US and UK media, might like us to believe that it is the former, rather than the latter.

But the reality is that Mubarak is in power in Cairo with the west's blessing, approval, support, sponsorship, funding and arms. Democrat and Republican presidents as well as Labour and Conservative prime ministers have all cosied up to Egypt's "secular" tyrant, a self-proclaimed but ineffective bulwark against "Islamic extremism", since he assumed the presidency in 1981.

Mubarak might be a son of a bitch but, as the saying goes, he is very much OUR son of a bitch. Some facts to consider:

* Egypt is the one of the biggest recipients of US economic and development assistance -- $28bn since 1975, according to USAid. Only Israel, Pakistan and Afghanistan have received more cash.

* Egypt is the second-biggest recipient (behind Israel) of US military aid -- over $1.3bn a year.

* The US State Department describes Egypt as "a strong military and strategic partner of the United States".

* According to the Federation of American Scientists' Arms Sales Monitoring Project, "The United States sells Egypt a large amount of military equipment and a significant number of small arms; such weaponry is both likely to be used for internal security and difficult to track once sold."

* This is what President Obama said about the despotic ruler of Egypt in August 2009:

I am grateful to President Mubarak for his visit, for his willingness to work with us on these critical issues, and to help advance the interest of peace and prosperity around the world.

Obama described Mubarak as a "leader and a counselor and a friend to the United States".

* This is what President Bush, that great neoconservative crusader for freedom and democracy in the Middle East, said about Mubarak in April 2004:

I'm pleased to welcome my friend, Hosni Mubarak, to my home. Welcome. I always look forward to visiting with him, and I look forward to hearing his wise counsel . . . Egypt is a strategic partner of the United States and we value President Mubarak's years of effort on behalf of the peace and stability of the Middle East.

* It's not just the dastardly Yanks who have been playing footsie with Mubarak, his torturers and his secret police. According to the UK's Foreign Office, "The British and Egyptian governments have a strong relationship and share mutual objectives."

* The UK is the largest foreign investor in Egypt.

* Tony Blair, that other great neoconservative crusader for freedom and democracy in the Middle East, visited Egypt with his family on holiday on several occasions, had countless meetings with Mubarak, but never chastised him in the manner that he now chastises, say, the Iranians. Shamefully, Blair, while in office as prime minister of the United Kingdom, allowed Mubarak to pay for his family's luxury holiday at the Red Sea resort of Sham-el-Sheikh in December 2001. Was he worried, I wonder, about the freedom and human rights of political prisoners languishing in Egyptian prisons while he sunned himself in his holiday villa, as a guest of Mubarak's dictatorship?

 

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

Getty
Show Hide image

Investors are panicked - why we should care

Look closely at the markets, they tell a story. 

If markets diving was a sport, this is the Olympics. Since it became clear Britain was heading for Brexit, the FTSE 100 and FTSE 250 have been plunging headfirst into the abyss, coming up for air and then plunging again. 

On Monday morning, RBS temporarily suspended trading in its shares after the value plunged 14%, and Barclays did similar after a 10% hit to the price. 

The FTSE 100 was down 1.2% overall, while the FTSE 250, which is more exposed to domestic markets and hence a better bellweather of the domestic economy, was down nearly 4%. 

Meanwhile, the pound could buy $1.33 on Monday, compared to $1.46 a week before. 

It's the kind of day that makes financial journalists giddy with excitement and sends normally sedate investment houses into meltdown. 

But how far should ordinary voters actually care? 

After all, the general public has not felt particularly sympathetic to bankers since their reckless behaviour caused a financial crisis that threatened the very fabric of society in 2008. 

The financial services industry disproportionately benefits London - the kind of metropolitan elite society that Leave voters resolutely protested against. 

And stock markets are famously nervy. Earlier in the year, unease about China triggered a "Black Monday" for FTSE traders but made little dent in ordinary workers' lives. 

Despite all these reservations, though, this time voters should keep an eye on market moves. This is what they appears to be telling us:

1. This is a domestic crisis

Many of the biggest companies based in the UK are actually international corporations, with customers all over the world. Shares in Unilever, for example, a company that does more than half of its business in emerging markets like India, are up. 

The real damage is in the companies with a lot of exposure to UK customers. For example, shares in the housebuilder Persimmon were down 12.5% on Monday morning, while EasyJet was down 18.4%. 

The FTSE 250, which has more domestically-exposed companies, was down 5% on Monday morning, compared to the FTSE 100's much milder 1.63% dip. 

All in all, this suggests investors are nervous about the impact the uncertainty will have on the domestic economy, whether that means less shoppers on the high street or less first-time buyers able to purchase homes. 

2. Banks are still a weak spot

We may love to hate banks, but for most of us they perform essential services, like providing a safe place to hold savings, dispense cash and provide credit. Underpinning their ability to do this is, of course, their own financial stability. Since the financial crisis, building a robust banking system has been a major project of the Government and Bank of England. 

Banks are also an important chunk of the economy - in 2014, financial services added £126.9billion in gross value to the UK economy. Banks also current benefit from an EU passport which allows them easy access to the European markets.

As the suspension of RBS and Barclays shares show, though, investors are clearly feeling nervous. Virgin Money shares - the rebranded Northern Rock - were down 18.9%, while those in Lloyds Banking Group had tumbled 9.4%. 

This doesn't mean anyone has to panic about their savings, but it does suggest that UK banks are hitting a rough patch. This in turn could mean a dent in economic growth, banks moving to Europe, or in the worst-case scenario it could lead to liquidity problems and taxpayer support. 

3. Investors still trust UK institutions

Government bonds, known as gilts, are generally seen as a safe investment. It effectively means you lend to the Government via the Bank of England, in return for a certain interest payment, known as a yield. Bonds from creditworthy states, such as German bunds, pay lower yields, whereas less creditworthy states generally pay higher ones in return for the investor taking more risk. 

On Monday, 10-year gilt yields fell below 1% for the first time ever in their history. In other words, investors may be very jumpy about the stock market, but they still regard gilts over a longterm as a safe investment.

It's generally obvious that investors see governments as a safe haven, but given the spasms the UK is now going through, it's worth noting. 

The days ahead

There will be less dramatic days ahead. But some of the concerns investors feel will be more long-lasting than others. If, for example, UK financial institutions decide to move headquarters to Frankfurt or Dublin, this could tear a hole out of our current economic set up, for better or worse. It would mean job losses, particularly in London and Edinburgh. 

If house prices do stagnate, as investors seem to fear, it could make buying a property more affordable. The flipside of this is we may see an echo of the years after 2008, when house prices are low but banks were unwilling to lend to anyone but the most creditworthy borrowers.

As for the investors, there will be winners and losers. Some who buy shares now may find that once the dust settles, confidence in returns and they make a profit. But that's little comfort to anyone on the rough end of a redundancy round, or negative equity.