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Monday, February 14

Now that the Gamalists have been toppled, how does Egypt's old guard plan to stanch the country's brain drain? Cut to the sound of chirping crickets.

February 17 updates to this post are at the end, after the "Notes" section

"All politics is local" -- Tip O'Neill


Photo: Gamal Mubarak (left) serving as a human shield during the Coptic Christmas Eve Mass on January 6, 2011 at Abassiya Cathedral in Cairo, six days after the bombing of a Christian church in Alexandria

Failure to consider the possibility of a people's revolution in Egypt has been cited by many as a catastrophic U.S. intelligence failure. The latest to jump on the bandwagon is Niall Ferguson, professor of history and business administration at Harvard, senior research fellow at Jesus College at Oxford University and the Hoover Institution. In his debut as a columnist for Newsweek he smacked down Obama's handling of the Egyptian crisis and got off this salvo:
I can think of no more damning indictment of the [Obama] administration's strategic thinking than this: It never once considered a scenario in which Mubarak faced a popular revolt.
I don't like defending the Obama administration but there's actually a very good reason Obama's advisors and U.S. intelligence agencies never considered such a scenario: they didn't believe pigs could fly.

Only in a world where pigs fly can there be a popular revolt in Egypt -- a point that was underscored in a classified State Department cable leaked by Wikileaks late last year. The gist of the cable is that President Obama had gotten it into his head to organize a stealth putsch against Hosni Mubarak by using the best organized of Egypt's pro-democracy groups, the April 6 Youth Movement, which had been formed in 2008 and had an estimated 70,000 members during that year.

The cable disabused Obama of his fantasy by describing what had happened to the movement's leaders. They'd been jailed in 2009, which meant the rest of the group had been driven so far underground they'd had to content themselves with sniping at Mubarak's regime from the pages of Facebook and Twitter.

When an organization advertises its activities on social media websites it will be stuffed full of spies for the government. So I don't think Egypt's military had to wait on Wikileaks to learn that the Obama administration had confused itself with covert operatives.

But what's important about the cable, in the context of the coup, is that the Sixers had been driven underground. So how is it, then, that some leaders of this movement had no problem showing their faces to a CNN cameraman on or before January 29th when CNN aired the footage?

And how is it they weren't concerned about telling CNN reporter Nic Robertson, who was accompanying the cameraman, that they were coordinating with the military and police to set up and neighborhood patrols around all of Egypt to flummox the gangs of looters who'd piggybacked on the protests?

Nic was blindfolded or otherwise prevented from knowing the location of the meeting he attended. But that was theater in light of the cell leader's contention that they were working with the military and police, and given the cell's casualness about appearing bare-faced to a CNN camera in a country that has one of the best security agencies in the world.

Yet as word had spread about the Wikileaks cable (see the link I provided, which is to the (U.K.) Telegraph's report on the cable) and its suggestion that Obama had wanted to depose Hosni, the military and the Sixers must have found themselves in a pickle because the protests weren't backed by the U.S. government, and any suggestion they were would have put the protests in the worst light.

By every measure, including President Barack Obama's repeated foot-in-mouth response to the protests, the Obama administration, including State, was taken off guard by the protests and the large number in attendance. So the way I read it, I think it's possible the Sixer leaders and their actual backers felt they had no choice but to reveal a little about their close cooperation with each other and thus, CNN got a scoop.

As to the best-organized civilian group in Egypt, the Muslim Brotherhood, everyone in the movement who was wacky enough to attempt a major public protest against the Mubarak regime was either executed, in jail, or driven out of Egypt by the secret police.

I add that anyone who thinks it was Hosni Mubarak or even the Egyptian military who called for the creation of the country's dreaded secret police is ignorant of history. It was the Egyptian people who rose up and demanded a powerful secret police organization. This was after a large group of European tourists was slaughtered -- and I mean slaughtered in the way sheep are butchered -- at a major tourist site in Egypt. The terrorist attack was so gruesome that it threatened to destroy Egypt's tourism industry, which was propping up the country's economy.

All that is another way of saying that only if you believe in flying pigs do you believe that the April 6 Youth Movement organized the protests on January 25 without the express permission and backing of Egypt's military.

Ditto for all the other youth groups that the Sixers corralled to help with the protests.

Ditto for the Muslim Brotherhood, which refrained from joining the protests until they were assured they wouldn't be jailed or worse for their participation. The only authority they would have trusted to provide the assurance would have been a high level in the military.

That means there was no people's revolution; there was a military-orchestrated coup disguised as a people's revolution.

Hamza Hendawi, chief of the Associated Press bureau in Cairo, who emerged during the protests as one of the most authoritative sources for news on Egypt's crisis, has not -- to this date -- jumped in with both feet as I have, above. He has to wait on his sources whereas I'm free to connect dots taken from very diverse data sets. But on February 9, in an AP report titled Analysis: Egypt military in power grab amid unrest, which The Washington Post snapped up, Hendawi stuck a toe in the water:
[...] The military, already the country's most powerful institution, has taken advantage of the unrest to solidify its authority, using a combination of force and public relations to deliver what amounts to a soft coup in a country where it is widely viewed as the ultimate guarantor of national interests. [...]
Two days later, in another of his reports for AP that WaPo published, he stuck a foot in the water:
Analysis: Military coup was behind Mubarak's exit: [...] Egypt's 18-day uprising produced a military coup that crept into being over many days - its seeds planted early in the crisis by Mubarak himself.

The telltale signs of a coup in the making began to surface soon after Mubarak ordered the army out on the streets to restore order after days of deadly clashes between protesters and security forces in Cairo and much of the rest of the Arab nation.

"This is in fact the military taking over power," said political analyst Diaa Rashwan after Mubarak stepped down and left the reins of power to the armed forces. "It is direct involvement by the military in authority and to make Mubarak look like he has given up power."
[...]
The military was clearly torn between its loyalty to the regime and the millions of protesters. Mubarak is one of their own, a former air force commander and a hero of the 1973 Arab-Israeli war.

But as the president continued to defy the growing crowds and cling to power, the Egyptian army moved more definitively toward seizing control for the first time in some 60 years. [...]
Ah, but while Hosni was one of their own, Gamal was not, and while the old guard in the military would have been torn between supporting Hosni's regime and the millions of protestors, it would have faced no such dilemma about ousting Gamal and the Gamalists from power. It's on that strong peg that my analysis hangs.

Now why did the highest echelon of Egypt's military want to stage out a coup? I interject that I suspect the coup was modeled not on the Tunisia protests but on the stealth coup that Thaksin Shinawatra and his backers in Thailand's military and Cambodia's regime attempted last year in Thailand, in which he placed the country's rural poor (the 'Red Shirts') in the role of Useful Idiot.

The coup failed in part because the expert on guerrilla and insurgency warfare tasked with making the coup look like peaceful protestors defending themselves with homemade weapons against the military's harassment had a huge ego. His ego was so huge he couldn't resist coming out of hiding to boast about his brilliance to a gaggle of Western reporters, where he was picked off by a police or military sniper.

The answer is that the coup was directed not at Hosni Mubarak but at his youngest of two sons, Gamal, and at Gamalists -- the Egyptians who backed Gamal's economic reforms and plans to transit Egypt to a genuine democracy.

Under Gamal's leadership and with his father's backing, and within the short space of a decade, the Gamalists became the first force in modern Egypt that threatened to act as a counterweight to the Egyptian military's power and even pose a serious challenge to its control of the country's affairs.

That much power vested in civilians was unheard of in Egypt, and viewed with rising concern within the military's old guard. It was also a unique situation, and somewhat of an artificial one in that no civilian in Egypt, other than a son of the country's president, could have be able to gather a civilian force strong enough to pose a challenge to the military. That's not understood by observers who charge that Hosni kept blocking other politicians with any kind of following from running against him. He blocked them because he couldn't protect them as well as he could protect his son.

More to the point he blocked them because the military is the only universally liked force in the country; no civilian candidate for president who threatened to rock the military's boat had a ghost of a chance to be elected -- even in fair election. For that reason it's misleading to speak of the military's rule as a dictatorship even though technically that's what it is. The dictators are loved by the people.

(The same situation exists in Pakistan, although the military there has seen its image slightly tarnished during the past two years.) And when a civilian politician in Egypt did attract a large number of fans. he could mysteriously find himself with more troubles than he could shake a stick at. Let me show you how jealously Egypt's military guards its popularity. From Michele Dunn's 2008 analysis of the political currents in Egypt:
[...] The parliamentary elections were one of several political developments in 2000 that began to wake Egyptians from the political slumber into which they had fallen during the previous decade of regressive laws and repression (which were part and parcel of a campaign against domestic Islamic terrorism).

As the elderly Mubarak started his third decade in office, Egyptians began to speculate privately about when he would leave the scene and who would replace him. Mubarak’s second son, Gamal, a banker by training, had returned to Egypt after several years in London and was mobilizing support from the country’s business elite to address the problems of the young.

Then Saad Eddin Ibrahim, a sociologist and civil society activist, dared to mention publicly the possibility that Gamal would succeed his father, mocking the gumlukia (a hybrid of the Arabic words for “republic” and “monarchy”) that Egypt seemed destined to become.

For his indiscretion, Ibrahim and the entire staff of his research center found themselves in prison in late June 2000, accused of “harming the reputation of the country by spreading false information”, embezzling funds and other charges. (They were eventually cleared of all charges in 2003 after several trials and many months in prison.)

The example set by Ibrahim’s arrest was sobering, but the cat was nonetheless out of the bag. Gamal Mubarak began to build his career more openly. [...]
More openly, yes, but with both father and son from then on taking exquisite pains not to project that Gamal would be Egypt's next president.

The only other conceivable potential challenger to the military from the ranks of civilians, which would be a Muslim cleric, wouldn't have lived long enough or been able to stay in the country or out of jail long enough to raise a following that could challenge let alone overthrow the military's rule.

So while it's unpleasant to contemplate, considering the way things were in the country around the turn of the century the only way Egypt could start to move from a military rule to a democractic one was through undemocratic tactics that kept Gamal's power intact. If you ask whether this means Hosni was playing a dangerous game -- only Russian Roulette was more dangerous. One false step and both father and son, and Hosni's other son as well, would be taken down.

However comma it's not possible to move forward while standing still, so little by little the Gamalists had been working small alterations that together amounted to big ones. One example is that in 2003 Hosni declared the date of the Coptic Christmas a national holiday in Egypt. It was the only national holiday to recognize Christianity but you can imagine how that went over in several Muslim quarters. And yet the holiday was a milestone on the road to the liberal democracy that the Gamalists envisioned for Egypt.

I'll pass lightly over the next part of the story, which is heavy on economics and development issues. But in brief the Gamalists believed they could carry off the surest progress under the watchful eyes of the military's old guard by making their most radical alterations in the area of economic policy, and by leaving those social issues so dear to the hearts of Americans to a time when the society was more 'developed.'

So they were working pretty much from the same development theory that China's leaders adopted, and which is also boilerplate Worldbankia theory; i.e., if enough citizens have a job and food, medical care and potable water, and are literate enough, all this will somehow translate to a love for democratic institutions.

Worldbankia theory is full of holes, but given that all second- and third-world countries are most accurately termed provinces in the Worldbankia civilization, that's the way of doing things in Worldbankia, and so the Gamalists were being traditionalists by sticking to the way. They were also being good Worlbankites by implementing free-market neoliberal economic/ development theories, which were still in fashion at the Bank and IMF; these would be the same theories that are the bane of anti-globalists, labor unions, and Leftist politicians.

The trouble started when despite the twin blows of the steep global economic and food crisis in 2008, the Gamalists were able to continue attracting foreign investors and pull enough rabbits out of the hat to keep their economic reforms on track. In his February 13 overview of Egypt's economic outlook before and after the protests, the (U.K.) Telegraph's Diplomatic Editor, Praveen Swami, stated flatly that Gamal:
[...] had incensed the military by pushing forward with an unpopular sell-off of public sector industries, viewed as a threat by the military.
Yet there had been a great deal of unpopular selling off; no sooner had Hosni appointed Ahmed Nazif, a Gamal protege, to the post of prime minister in 2004 than Nazif closed down 17 public sectors -- in the first year alone of his term.

The sell-offs were seen as a threat by the Leftists and the workers in those sectors who lost their jobs in government but I don't think that put the military over the top because what they lost from the public sector they could make up for with deals they cut with foreign investors who were setting up business in the country.

No; it was the attitude that did it. As with that Thai genius the Gamalists fell prey to the Puffy Head syndrome. They overestimated their intellectual brilliance and power. So they began displaying open contempt for the old guard in Egypt's military and for Omar Suleiman, who's a powerful defender of the old guard.

The Gamalists had been throwing their weight around so much after they gained control of the 'ruling' National Democratic Party (NDP) that by last summer Hosni Mubarak could no longer protect them. Contrary to the myth that was promoted during the Egyptian protests, Hosni is not a dictator. He's a company man who kept his position as a figurehead for so many years because he had enough common sense to always keep his head lower than the Egyptian military's top ranks and work tirelessly for the military's interests.

The rest of the story is easier to follow if you know that since the middle of the last decade Gamal was known as Egypt's "parallel president." That wasn't strictly true; Gamal only controlled aspects of the government -- the ones connected with the economy. With the rest, Gamal had followed his father's lead; during the years he worked his way to prominence in the NDP he was careful not to confront the old guard. This translated in part to making sure his economic reforms left the military's business interests and land holdings intact.

Gamal contented himself with slowly building a support base in the military. The support, combined with his father's backing, should have been enough to protect him from being toppled from power. But after the November elections last year, which saw the Gamalists go so over the top with vote rigging that it rattled all of Egypt, the small division that been growing in the Gamalist ranks suddenly widened.

As near as I can make out the division seems to have pitted the Gamalist tycoons, who wanted to press full steam ahead with economic reforms, against the Gamalist social reformers, who argued that the economic reforms were running into massive opposition because they weren't matched by political- and civil-rights reforms.

I don't know where Gamal stood in this argument and it could be that he'd found himself boxed in by the two sides. If he'd had more support outside the NDP he might have gotten the public to see his reasoning about the necessity to stay the course with his economic reforms, even though they caused pain to Egyptians who depended on the public sector for employment.

On the other hand Egypt's poor are not given to plowing through 400-page policy papers about land reclamation for industry in Greater Cairo and the complexities of battling human capital flight or 'brain drain' as it's called in the vernacular.

Yet when Peter Mandelson of Britain's House of Lords wrote the Financial Times on February 2 to defend Gamal's economic reforms he knew what he was talking about; that's because of the years he'd served as Britain's representative on the EU Trade Commission. Although his letter didn't mention the issue of Egypt's brain drain it's the country's number one problem and surely Mandelson knows Gamal is well aware of that.

The only way to slow the rate of brain drain is by hewing to economic reforms that Gamal and his circle of economists and financiers had designed. But the poor can't subsist on policy papers. Only if Gamal was willing to slow the pace of economic reform and introduce programs dear to the hearts of Egypt's Leftists could he hope to receive support from large numbers of Egyptians.

By August there were clear indications he'd come to acknowledge all that and was attempting to launch a huge welfare program to benefit Egypt's jobless college graduates and the country's poorest. But given the Gamalist faction's growing open conflict with the old guard, word of his attempt to woo the general public would have only further alarmed the anti-Gamalists in the military.

In any event, by January 19 the Cairo bureau of the Associated Press was picking up the sound of war drums coming from the military's camp. In a report published on that date AP noted that the military's withdrawal of their support for Gamal was now "more fact than speculation." (No byline on the report but it's virtually certain Hendawi wrote it or at least vetted it.) That suggests whatever support Gamal had picked up over the years within the military had collapsed.

A week later the mass protests were launched in Tahrir Square.

Although Gamal and his supporters in the NDP didn't turn in their resignations until February 5, it was all over on the night of January 28, when under cover of peaceful protests an armed assault was launched on the NDP headquarters in Tahrir Square; the offices were looted (read 'computers and file cabinets removed') then set on fire.

So, that's the story of the Egyptian People's Revolution; the bare bones of the story. Now we arrive at the door marked THE REALLY BAD NEWS

Samia Nakhoul, the Reuters Middle East News Editor, skirted huge chunks of reality in her tribute to the peacefulness of Egypt's revolution:
[Hosni] Mubarak pushed economic liberalization policies that drew crony capitalists into the bosom of the administration but left tens of millions of Egyptians below the poverty line. As the middle class was emaciated, the rich opted for gated communities in the desert around Cairo. The poor got poorer in the slum belts.
First of all, the only middle class to speak of that Egypt had prior to the Gamalists' reforms was a creation of the country's vast bureaucracies. But the bureaucracies were unable to stanch the unprecedented brain drain that hit Egypt. So it was not Hosni Mubarak's policies that decimated the middle class.

Secondly, it wasn't until Egypt's government could generate something approaching a healthy private sector, which could pay salaries high enough to dissuade educated Egyptians from leaving the country, and promote gated communities and other perks to rival ones that the Gulf oil kingdoms dangle in front of skilled labor in 'developing' countries, that Egypt had a chance to survive the brain drain onslaught.

As to whether the introduction of political and press freedoms in a post-Mubarak era might somehow stanch the brain drain -- this ignores the grim realities fueling Egypt's human capital flight. Even if Egypt transformed into a liberal democracy tomorrow this would have no significant impact on the rate of human capital flight simply because of geography.

Egypt's brain drain is not like the ones occurring in the 1970s because during that earlier era the Arab Gulf nations were just oil wealth fueling a construction boom. But by the end the 1990s the Gulf nations were in active competition with the Western world for foreign direct investment (FDI) and were diversifying like mad into businesses that weren't dependent on oil.

Cash rich, the governments of the Gulf nations sucked human capital out of the surrounding region to bring it to work in burgeoning financial and high-tech industries, education, and research and development facilities.

Egyptian businesses, many connected with the country's huge public sector, couldn't hope to match the salaries and promotion opportunities offered by the oil kingdoms. And yet, without large reserves of prized natural resources to exploit Egypt's brain drain, if unchecked, meant the society was facing doom.

There has been much talk about Egypt's 'youth bulge.' But a preponderance of young citizens can be ridden out, political reforms can be instituted and poverty can be alleviated. Yet all that depends on having enough intelligent, creative, and educated people to administer a democracy and build up enough industry to pay decent salaries to large numbers of citizens.

Brain drain can't be ridden out. And yet brain drain, if unchecked, is the absolute worst fate that befall a nation absent the drying of its water supplies. It sets up a vicious cycle spiraling ever more rapidly downward, of the kind seen in Pakistan.

Abigail Paris's 2008 report on brain drain's global impact cited IMF data that Iran had the highest incidence of the phenomenon among the countries it measured but Paris added that in Egypt, "human capital may even be one of the biggest exports."

Yes -- but the true horror of the situation can only be appreciated by noting the pattern of remittances to Egypt, which account for an estimated one quarter of household income for families that receive the money from relatives working outside Egypt. From Bikya Masr staff report:
(CAIRO - January 20, 2011) Remittances coming from Egyptians abroad increased to more than US $9.75 billion during fiscal year 2009-2010, an increase of 39 percent over the year before, Egypt`s official news agency, MENA, quoted a statement by the Ministry of Foreign Affairs.

Remittances come third after oil and tourism as a source of national income, Assistant Foreign Minister Mohamed Abdel Hakam said during a conference discussing the role of the transfers in domestic development.

Abdel Hakam added that according to the statistics of the Ministry of Labor and Immigration, the number of Egyptians working abroad ranges between six to seven million, 70 percent of whom live in the Gulf States. The other 30 percent are divided among the U.S., Europe, Canada, and Australia.

Hakam explained that the largest sum of transfers came from Egyptians living in the U.S., who sent $22 billion, followed by $1.5 billion from Kuwait, and $1 billion from Saudi Arabia.
In other words, although the majority of Egyptians who work abroad do so in the Gulf oil kingdoms, the remittance sums they return to their families in Egypt are paltry in comparison to the amounts sent by Egyptians working outside the Gulf region. I don't know whether the ministry also breaks down the numbers according to skilled vs unskilled labor but no matter which the statistics are juggled human capital flight from Egypt to the Gulf region adds up to a triple whammy.

Yet the country was just on the cusp of a huge turnaround when the Gamalists were driven from power! The turnaround was due to a situation that no one could have predicted even three years ago: because of the economic downturn in the United States and Western Europe, investors from the oil kingdoms were looking to diversify their investments out of those regions. And guess where many of them wanted to plunk their money and develop 'offshore' businesses, given the foreign investment- and business-friendly climate the Gamalists had created!

Talk about serendipity! If the cards fall right Egypt will be looking at more jobs than their educated class can fill, which will return Egyptian expats to the country in drovem, thus solving the brain-drain problem!

There is a catch, however: more land needs to be opened up in regions in Egypt that can support industry. The need does not sit well with Egypt's military, which controls large tracts of prime real estate, and which is probably Egypt's largest single employer if only anyone outside the highest level of the military knew the exact size of the military, but which anyhow has at least one family connection in virtually every household in Egypt.

Photo: Lefteris Pitarakis for Associated Press

NOTES

(Given the sensitivity of this post's topic I want to stress that just because I pull quotes from a report doesn't mean I agree with its conclusions or the author's interpretation of data.)

"Almost everything related to the Egyptian military is a black box. The number of people serving, their salaries, the military's land holdings, its budget -- none of that information is in the public record. Joshua Stacher, a political science professor at Kent State University who studies the Egyptian military, estimates that the military controls somewhere from 33 percent to 45 percent of the Egyptian economy, but there's no way to know for sure."

-- From Egypt's Command Economy, MENA-region veteran reporter and Cairo resident Sarah A. Topol's December 2010 investigative report on Egyptian military's business enterprises, which shines more light inside the black box than any other report I'm aware of written for the public to date

"All males between ages 18 and 30 must serve one to three years [in Egypt's military], as the CIA World Factbook notes, meaning almost every family in Egypt has some personal connection to the military."

-- From January 30, 2011 CNN report, Experts: Egypt's fate rests in hands of popular, powerful military

"The Nazif government, first appointed in 2004, has implemented a rigorous economic liberal reform program to transition Egypt to a market economy and stimulate direct foreign investment. Toward this end the government privatized a record number of 17 public sector enterprises in its first year alone. Despite Nazif's promise to alleviate unemployment caused by these sweeping reforms, his policies have prompted massive labor strikes throughout the last few years. Nazif has incorporated a growing number of business elites into his cabinet since becoming Prime Minister in 2004, boosting the younger generation of NDP [National Democratic Party] to positions of power."

-- From Carnegie Endowment's June 2010 profile of Egypt's then-Prime Minister, Ahmed Nazif

"Egypt's Prime Minister Ahmed Nazif opens Sunday the Egyptian-Chinese Investment forum, which aims to enhancing economic cooperation between both countries. The Chinese Ambassador in Cairo said Friday that the Chinese trade Minister will attend the event along with up to 100 businessmen and investors. He said Minister of Foreign Trade and Industry Rasheed M. Rasheed and Supply Minister Hassan Khedr will also attend the conference."

-- December 2004

More from Praveen Swami's report:
[...] it remains unclear how fast Egypt will be able to recover from the economic disruption, and its long-term prospects are even less secure.

Investment bank Credit Agricole has estimated that the each day of unrest cost Egypt $310 million. Panicked foreign investors are also estimated to have withdrawn up to £700 million a day during the crisis. Tourism, which makes up 11% of GDP and accounts for 10% of jobs, has been particularly hard hit.

Late last year, a Reuters survey of analysts had predicted that Egypt's GDP would grow at around 5.4%, which would have made it the most dynamic economy in the Arab world after Qatar. Now, experts are saying, GDP growth will likely hover around 2 %.

Egypt had one of the best-performing economies in the Middle East before last month's crisis erupted. Its GDP grew at a robust average of over 7% from 2006 to 2008. Despite the global economic crisis, it registered 4.7% growth in 2009 and 5.3% in 2010 – some of the highest rates of growth in the world.

Last year, the World Bank said Egypt's economic performance had "improved outcomes and living standards of the vast majority of the population."

Most economists believe Egypt's military will continue with past economic policies. Tim Ash, an emerging markets expert at RBS, noted that "the establishment are still around." "Their real agenda is no change until September," he said.

But some experts are warning that Egypt's interim military government could now stall or reverse moves to sell off inefficient public sector enterprises and cut subsidies, on the grounds that these could fuel discontent.

Rashid Khalidi, a scholar at Columbia University, said he expected a "return to some aspect of state-led development so the part of the economy that is controlled by the military may well be reinforced for some time."

Egypt's military is the largest single institutional actor in the economy, running factories which produce everything from bread to bottled water, construction and consumer electronics. [...]
Regarding Tim Ash's observation, all the leading proponents of free-market reforms were purged from the cabinet by Hosni Mubarak as his first move in response to the protestors' demands, and the entire leadership of the National Democratic Party had to resign.

The party leadership and sacked cabinet members such Prime Minister Ahmed Nazif and Finance Minister Youssef Boutros Ghali (who was replaced with a labor activist), were the strongest defenders of the economic reforms including extensive efforts to bring foreign investment to Egypt. So if by "establishment" Ash means neoliberals, they may still be around but as it stands now they've been removed from power.

UPDATE February 17 1:00 PM Eastern Time

I've just read STRATFOR chief George Friedman's February 14 analysis of the Egyptian protests (Egypt: The Distance Between Enthusiasm and Reality).

His view comports in some ways with mine but also with Hamza Hendawi's analysis (see below). Friedman thinks the Egyptian military staged a coup, as I do, and that the real target was Gamal Mubarak; again, I agree.

But in line with Hendawi's reports Friedman thinks the coup was an ad hoc affair; i.e., he concludes the military simply took advantage of the large protests to pull off a soft coup. Here I disagree and I'll use Friedman's own observations to shore my argument. I detail the argument in the writing below. But in brief, my study of the data led me to conclude that the 'Police Day' protests launched in Tahrir Square on January 25 were orchestrated by the Egyptian military high command using pro-democracy 'youth' groups to provide cover for a coup that aimed at ejecting Gamal from his position as Egypt's 'parallel president' and routing the Gamalists from power in the National Democratic Party (NDP).

Friedman states that the Egyptian military's 'old guard' was adamantly against Gamal becoming Egypt's next president and that the old guard believed Hosni was going to install Gamal as president in the election this fall.

Okay; so by that reasoning is Friedman saying that the old guard was willing to twiddle its thumbs and wait for the inevitable to happen? Even though it was widely known that the Gamalists wanted to break the military's stranglehold on Egypt's economy?

From everything in the public record about the old guard, I don't think those generals are the thumb-twiddling types -- especially not when their business interests are under serious threat.

So while I defer to Friedman on many issues because his intelligence network at STRATFOR can do excellent work, in this instance I respectfully suggest that he go back to the drawing board and rethink.

There is evidence to suggest that neither Hosni nor Gamal intended that he become president -- at least not in 2011 -- and that Hosni planned to stay on as president. But in August of last year at least one faction in the NDP made an obvious attempt to push Gamal for president in 2011. I think that was the final straw for the old guard.

In any case, from the old guard's viewpoint it was moot as to whether Gamal actually intended to run for president. By the summer of last year they had clear evidence that the Gamalists were working against them, and that the Gamalists had gotten so confident of their power they were no longer bothering to put on a show of deferring to the old guard.

That would have been enough to galvanize the old guard to use every means available to bring down Gamal Mubarak and his closest associates before the 2011 election got underway. I believe they accomplished their mission within three days of the protests, on the night of January 28.

As for the runaway protests that followed, the old guard would have seen those, and Hosni's downfall, as collateral damage that they were capable of containing.

UPDATE February 17 - 2:33 PM Eastern time

It was brought to my attention that this post was discussed at the (U.K.) Guardian Talk Page under one of the message board topics.

One participant in the discussion clearly implied I'd stated that Gamal had been forced to flee to London. I never made any such statement in the post; I didn't even came to close to implying that Gamal had fled. And just to keep the record straight, Christiane Amanpour ran into Gamal while she was interviewing his father at the palace during the protests. Gamal has never left his father's side.

An actual criticism from the Talk page is that I'd stated the April 6 Youth Movement had been driven underground. The critic wrote that the movement hadn't been driven underground. That is worth addressing in some detail.

If one thinks of 'underground' as say, the Hungarian Resistance during the Soviet occupation, I suppose one could say the movement hadn't been driven underground by the wave of arrests of Sixer leaders in early 2010.

But if participants at the Guardian talk page want some idea of how hard it was for the Sixers to function openly even before the arrests, they should check out a credible account of what the Sixers encountered when they tried to help organize the strike that the group was formed to support. The account was provided by Stanford historian Joel Beinin (H/T law professor Stephen F. Diamond):
“There’s a lot of confusion about that event. I was actually there on the spot. The strike didn’t happen. What happened was the textile workers of Mahalla al-Kubra -- there are about 22,000 of them; it’s the largest single enterprise in Egypt -- were running a campaign to raise the national monthly minimum wage to 1,200 Egyptian pounds a month. That campaign is still in place.

And they called for a general strike of workers on April 6, 2008, to support that demand. The security forces occupied their factory for three days before April 6th. Using a combination of coercion and cooptation, they made sure that the strike didn’t happen. Instead, what happened was a more or less spontaneous demonstration of mainly women and children protesting in the main square of Mahalla al-Kubra about the high price of food and especially subsidized bread, which is the key consumption item for a great majority of Egyptians. The protest was greeted with a hail of rocks by uniformed security people, just as we have seen in the days after January 25th in Tahrir Square. But there was no actual strike in Mahalla al-Kubra. ...
Again, that was what the Sixers faced before the arrests. So I think it's hair-splitting to argue that they weren't driven underground; they were rendered ineffective in 2009, which is as much saying they were driven underground.

Yet somehow, as I pointed out in the post below, the Sixers were able to openly organize the Police Day protests -- and were working with the military and police during the protests. Again, see the post below.

Now, on the chance that my critics at the Guardian Talk page nitpicked because they were insulted by my attempt at trench humor and saw it as a cheap shot, I'll revise the sentence in which I wrote that the Obama administration was dissuaded from its attempt to play MI6. I'll substitute 'covert operatives' for MI6.

That exhausts my efforts for today at cross-Pond diplomacy.

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Comments:
Brilliant analysis, thank you. I tried to link this on the the Coffee House Wall of the London Spectator magazine blog and for some reason the link was barred. Any suggestions?
 
Frank, Thank you. I've not encountered this problem before. You might try this converted version of the post's URL:

http://tinyurl.com/4ay2ne2

The Tinyurl website converts long URLs to short ones but because the URL is different from the Blogspot one the Spectator site might let it pass.

If that fails you might try Tiny's preview version of the converted URL, which is:

http://preview.tinyurl.com/4ay2ne2

Beyond that all I can think of is to type out the title of the post; anyone who's interested can then google the title and get the URL that way.

That exhausts my slender storehouse of URL wisdom. Kindly let me know how it works out.
 
Pundita

Thanks; it has now been linked to the Speccie commentary on The Coffee House Wall. We shall be linking with you often, I'm sure. You perspectives over there would be much appreciated, too. It's a robust, often raunchy debate but, as a cyberpub, a good hang-out if your sensibilities are not too tender. And Melanie Phillips has a blog there too.
 
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