It is just weird that in the Middle East, where there is more cash than any place outside of the Chinese government treasury, the EU and the US are expected to pick up the broken pieces of the Tunisian and Egyptian economies. Where are the Saudis? Qata...

Bailing out The Pharoahs

It is just weird that in the Middle East, where there is more cash than any place outside of the Chinese government treasury, the EU and the US are expected to pick up the broken pieces of the Tunisian and Egyptian economies. Where are the Saudis? Qatar? Kuwait? They are all swimming in the rest of the world’s cash because of their good fortune to be where they are. Are not the governments of many of the countries of Europe and the US deep in hock? I mean, deep enough that some observers believe they cannot get out without massive  readjustments in government services and perhaps even living standards? And they are bailing out Egypt? What are the feelings of the average Egyptian towards the US? I think malice is the right word. And yet, once again, who comes riding to the rescue, this time for an economy based on tourism that isn’t there any more? Oh yes, they propped up Mubarak, but that suited everyone just fine until it didn’t. I get that a failed state in Egypt is unthinkable and at the rate they are going, their economy may collapse by December. But where is the rabid concern in these Arab states for their brothers that is so evident every time an Israeli kills one?

Harper was right to keep us out of it. We give considerable amounts to the World Bank and the IMF. More than ever actually. We are fighting in Libya to keep that lunatic from butchering more of his own people. Its enough.

Why is it that there are some places in the world that we have absolutely no expectations of, in any way shape or form? From terrorism, to the environment and on to how they treat half their population.

Weird.

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One comment

  1. Geopolitics is always more complex than it looks.

    First, all the elements of the Egyptian tourism economy are still there, (no one’s removed the pyramids), except for stability. The sooner that returns, the sooner the country will be able to stand on its own two feet. And Arab states are unified only by their hatred for Israel. There are tribal, religious and political differences that divide them just as there are in Western countries.

    To your question, though I’m not sure that we know for sure that the Saudis, Qatari and Kuwaitis are not helping in Egypt, their governments follow different strategies to most Western ones, I think because of what drives their economy, (oil exports vs. manufactured goods/resource exports).

    Developed economies usually give foreign aid for three main reasons, the least important of which is the moral one.

    The second is that it’s still the best way to have influence, if not friends, in a region. Wars are profitable for companies but expensive and messy for governments so economic influence is the way developed economies generally prefer to resolve conflicts in the modern age.

    If Western countries didn’t provide economic aid, they’d have no influence in the developing country as well as leave the door wide open for influence from competing economies like China and India. (Look at China’s projects in Brazil and Pakistan as examples).

    The last reason they want influence is partly to protect themselves from unfriendly regimes taking power, (this is what drove a lot of odd choices during the Cold War), but more often because fixing a broken economy is a great way to create new customers that fuel growth for businesses back in their own countries. That drives their own economies, especially as consumers in the developing economy take the steps up the usual acquisition ladder, (that tops out at household appliances, cars and finally, art if I remember correctly).

    So as frustrating and even immoral as it is sometimes, the short answer to your question is that self-interest trumps expectations.

    But we certainly aren’t out of it. Harper gave money to the IMF but the IMF could yet step in to help Egypt. While I prefer that route personally, you could make an argument that it’s a mistake because IMF deals are far less likely to contain preferred provider, (i.e. companies from the country that gave the money), clauses to encourage purchases from donor countries and funnel some of that donation money back home.

    I lived in Greece in 1992 and the only surprise is that the economy lasted this long. I suppose it’s different but I don’t know that it’s better to be supporting – through our support of the IMF – an economy that’s problems were very much self-inflicted. (Of course, the alternative would be much worse so self-interest wins again).

    I’ve got to add that to say that we’re fighting in Libya is a pretty colourful way to describe what we’re doing, compared to what’s happening on the ground. I suppose it’s fighting in the same way that I, as a Canadian, won the Olympic hockey gold. (Of course, if one of our planes is hit by anti-aircraft fire, we can call it fighting again).

    But that’s just my opinion. I could be wrong. :)