Quote:Europe to Egypt: After Mubarak, don't rush election

(Reuters) - European powers Germany and Britain urged Egypt on Saturday to change leaders rapidly but take its time holding elections, saying traditions of tolerance and fairness had to be built to make democracy work.

German Chancellor Angela Merkel, British Prime Minister David Cameron and European Council President Herman van Rompuy reiterated demands for a rapid "transition" -- a phrase that has become a diplomatic codeword for the resignation of President Hosni Mubarak after 30 years of military-backed autocracy.

But they said caution would be needed in the aftermath.

"I don't believe that we solve the world's problems by flicking a switch and holding an election ... Egypt is a classic case in point," Cameron told a security conference in Munich.

"I think a very quick election at the start of a process of democratization would be wrong," Merkel told the same meeting, citing her own experiences as an East German pro-democracy activist at the time of the 1989 collapse of the Berlin Wall.

"If there is an election first, new structures (of political dialogue and decision-making) don't have a chance to develop."

Mubarak, who has pledged to step down in September, said on Thursday he believed Egypt would descend into chaos if he were to give in to almost two weeks of demands by an unprecedented popular revolt that he quit immediately.

He has fashioned himself as the crucial rampart against Islamist militancy in Egypt and the indispensable player in maintaining a peace treaty Egypt signed with Israel in 1979.

WORRY ABOUT ISLAMIST RISE

Political analysts say European caution about free elections in Egypt will be seen by many in the Middle East as evidence of Western anxiety about the possibility that Islamists could come to power in the Arab world's most populous country.

Critics of Western diplomacy in the region says this anxiety reflects a double standard, namely that the West compromises on its democratic ideals when the outcome would be unfavorable.

Egypt's largest opposition movement, the Muslim Brotherhood, is tolerated by the authorities despite being officially banned. The Brotherhood says that, if given the freedom to choose, most of Egypt's 80 million population would choose a form of Islamic law, although it is publicly committed to political pluralism.

Cameron said that a transition to a new leadership and political reform in Egypt is essential, because delay would produce an unstable country that the West would not welcome.

But he said building democracy in Britain itself had taken hundreds of years of inculcating traditions of tolerance, showing the growth of democracy was a process, not an event.

"Yes, the transition has to start now to demonstrate to people inside (Egypt) that their aspirations are being understood. But if we think it's about the act of holding an election, we are wrong," he said.

"I think there's a naivety that existed among politicians in the past that somehow if you introduce democracy like that you solve a country's problems," said Cameron. "I don't believe that for one second. But what I do believe is that we should build a partnership for an open society."

Quote:"I think there's a naivety that existed among politicians in the past that somehow if you introduce democracy like that you solve a country's problems," said Cameron. "I don't believe that for one second. But what I do believe is that we should build a partnership for an open society."

Quote:David Cameron tells Muslim Britain: stop tolerating extremists

PM says those who don't hold 'British' values will be shunned by government

Patrick Wintour The Guardian, Saturday 5 February 2011

David Cameron will today signal a sea-change in the government fight against home-grown terrorism, saying the state must confront, and not consort with, the non-violent Muslim groups that are ambiguous about British values such as equality between sexes, democracy and integration.

To belong in Britain is to believe in these values, he will say. Claiming the previous government had been the victim of fear and muddled thinking by backing a state-sponsored form of multiculturalism, the prime minister will state that his government "will no longer fund or share platforms with organisations that, while non-violent, are certainly in some cases part of the problem".

In a major speech to a security conference in Munich, he will demand: "We need a lot less of the passive tolerance of recent years and much more active, muscular liberalism."

He will say that "some organisations that seek to present themselves as a gateway to the Muslim community are showered with public money while doing little to combat extremism. This is like turning to a rightwing fascist party to fight a violent white supremacist movement."

Magda Hassan Wrote:I've lost the link but will try to find it. The Deputy Director of the Egyptian State TV quit saying it was a propaganda machine iirc.
Edit: http://www.youtube.com/watch?v=KfXimfZ6LcU
(CNN) Former Nile TV reporter Shahira Amin quits her job, claiming she was pressured to air only pro-Mubarak rallies.

Magda Hassan Wrote:

Magda Hassan Wrote:I've lost the link but will try to find it. The Deputy Director of the Egyptian State TV quit saying it was a propaganda machine iirc.
Edit: http://www.youtube.com/watch?v=KfXimfZ6LcU
(CNN) Former Nile TV reporter Shahira Amin quits her job, claiming she was pressured to air only pro-Mubarak rallies.

http://www.youtube.com/watch?v=qh-5oRtjHkM Al Jazeera interview with Shahira Amin

Frank Wisner, Sr.
" … Here in Washington, news that Mr. Obama had tapped Mr. Wisner revived memories for some of an even more colorful Frank Wisner: Mr. Wisner's father, a freewheeling if mentally unstable cold-war-era spy who helped found the modern C.I.A. and ran its clandestine service. The elder Mr. Wisner's clandestine exploits were said to have included masterminding an anticommunist coup in Guatemala in 1954. He suffered a mental breakdown after the Soviets crushed the Hungarian revolution in 1956 and never quite recovered; in 1965, he committed suicide. … "

Peter Lemkin Wrote:can't we bring the same collapse to the big ''western'" nations...it would do more good for the...

Quote:Egypt's Social Crisis: Financial Bonanza for Wall Street Investors and Speculators: Hidden Agenda behind Mubarak's Decision Not to Resign?

by Michel Chossudovsky

Global Research, February 6, 2011

http://www.globalresearch.ca/index.php?context=va&aid=23099

Mubarak's decision not to resign was taken in close consultation with Washington. The US administration including US intelligence had carefully identified the possible scenarios. If Washington had instructed Mubarak to step down, he would have obeyed forthright.

His decision not to resign indelibly serves US interests. It creates a situation of social chaos and political inertia, which in turn generates a vacuum in decision making at the government level.

The continued social crisis has also resulted in a massive outflow of money capital. More concretely, what this signifies is that Egypt's official foreign exchange reserves are being confiscated by major financial institutions.

The ransacking of the country's money wealth is an integral part of the macroeconomic agenda. The newly formed government on instructions from Washington has not taken concrete steps to curtail the massive outward flow of money capital. A prolonged social crisis means that large amounts of money will be appropriated.

According to official sources, Egypt's Central Bank had (prior to the protest movement) 36 billion dollars in foreign exchange reserves as well as an additional $21 billion of deposits with international banking institutions which are said to to constitute its so-called "unofficial reserves." (Reuters, 30 January, 2011).

Egypt's external debt, which has increased by more than fifty percent in the last five years is of the order 34.1 billion (2009). What this means is that these Central Bank reserves are de facto based on borrowed money.

In early 2010, there was a large influx of hot money deposits into Egyptian government debt instruments.

Foreign exchange flows into the country and is exchanged for Egyptian pounds (EgP), which are then used by institutional investors and speculators to purchase high yielding government bonds and treasury bills (denominated in Egyptian pounds) with short term interest rates of the order 10 percent.

The interest rate on long term government bonds shot up to 7.2 percent at the outset of the protest movement. (Egypt Banks to Open Amid Concern Deposit-Run May Weaken Pound, Lift Yields - Bloomberg, January 2, 2011)

At the onset of the crisis, international investors owned about $25bn of Egyptian T-bills and bonds, almost a fifth of the total T-bill market and about 40 per cent of the domestic bond market. Foreign investors also accounted for about 17 per cent of the stock market's turnover, and held about $5bn-$6bn of Egyptian shares. (Ibid)

Under its agreement with the IMF, Egypt is not allowed to implement foreign exchange controls. These hot money deposits are now leaving the country in anticipation of a devaluation of the Egyptian pound. In the days preceding Mubarak's speech, capital flight was running at several hundred million dollars a day.

In a bitter irony, Egypt deposits 21 billion with the commercial banks as "unofficial reserves" on the one hand, while the commercial banks acquire $25bn worth of EgP debt, with a yield of the order of 10 percent. What this suggests is that Egypt is financing its own indebtedness.

The protest movement started on a bank holiday. While the closure of the Cairo stock market and domestic banking system had put a temporary lid on the outflow of money capital, large amounts of capital flight instrumented by major financial institutions had already occurred in the days leading up to the protest movement.

Egypt's banking system reopened on February 5, leading to a renewed process of capital flight resulting in the depletion of central bank reserves and a corresponding increase in Egypt's foreign debt.

A devaluation of at least 20 percent is contemplated. According to UBS' emerging markets currency division, "the pound could "easily" drop by a further 50 per cent or so to E£9 per US dollar". FT.com / Currencies - Banks weigh risk of capital flight, February 1, 2010)

A devaluation of more than ten percent would wreck social havock: Domestic prices of food are dollarized. If there is a devaluation of the Egyptian pound, this would inevitably trigger a renewed increase in the prices of essential food staples, leading to a further process of impoverishment.

A scenario of currency devaluation, rising external debt coupled with a renewed package of IMF sponsored austerity measures would inevitably lead to an accentuation of the social crisis and a new wave of protests.

The newly appointed Finance Minister Samir Radwan is firmly committed to the Washington consensus, which has served to impoverish the Egyptian people. In a contraditory statement on February 3, Radwan confirmed that "the government won't reduce subsidies even if global prices of food and commodities rise. Public spending will be used as a tool to "achieve social justice," he told a news conference in Cairo." (Bloomberg, February 5, 2011)

Radwan is abiding by IMF-World Bank guidelines: no restrictions will be placed on capital flight. The Central Bank will ensure the conversion of hot money deposits into hard currency by major financial institutions. The coffers of the central will be ransacked.

With capital flight, domestic debt is transformed into foreign debt, putting the country into the stranglehold of foreign creditors:

Radwan said Egypt will honor its debt obligations and urged foreign investors to have confidence in the country. "All the bond obligations, everything will be honored on time," Radwan said in a Feb. 4 telephone interview from Cairo. "We are not defaulting on any obligations." (Bloomberg, February 5, 2011)

In a bitter irony, Mubarak's decision to remain as head of State with Washington's approval has served the interests of institutional investors, currency traders and speculators.