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Here’s your final exam question in Middle Eastern studies:
A mass of Coptic Christians marches through Cairo to protest the military government’s failure to protect them from Muslim radicals. They are attacked by stone-throwing, club-wielding rowdies. Armed forces security personnel intervene, and the Copts fight it out with the soldiers, with two dozen dead and scores injured on both sides. Who is to blame?
The full credit answer is: Benjamin Netanyahu, for building apartments in Jerusalem. If that’s not what you wrote, don’t blame me if you can’t get a job at the New York Times.
Rarely in the course of human events have so few been blamed by so much for so many. There are precedents, for example, when Adolf Hitler claimed that a Jewish “stab in the back” lost World War I for Germany. The notion that the problems of three hundred million Arabs revolve around the governance of a few million Palestinians has the same order of credibility.
Israeli-Palestinian negotiations always presumed that Israel’s peace treaties with Egypt and Jordan would remain intact – that Egypt would interdict terrorists infiltrating Israel from the Sinai, stop weapons from reaching Hamas in Gaza, and otherwise fill its obligations. But Egypt is dissolving. The Egyptian army crossed a red line on October 9, according to Egyptian blogger Issander al-Armani.  Soldiers attacked Coptic demonstrators who were demanding protection from the army, The military not only shut down news coverage of the massacre, but used state television to call on Egyptian Muslims to “defend the army from the Copts.”
On September 19, the Egyptian army showed that it could not protect Israel’s embassy in Cairo; on October 9, it showed itself ready to murder members of the country’s Christian minority. Egypt is dissolving because it can’t feed itself, and it can’t feed itself because it is going bankrupt. Former International Atomic Energy chief Mohamed ElBaradei, now a candidate for Egypt’s presidency, warned last week that Egypt would run out of money within months, according to the English-language edition of Almasry Alroum:
Egypt might face bankruptcy within six months, Egyptian reform advocate and presidential hopeful Mohamed ElBaradei warned on Monday. During a meeting with labor leaders at the Center for Trade Unions and Workers Services (CTUWS) in Helwan, south of Cairo, ElBaradei attacked the “failing” policies of Egypt’s ruling military council.He criticized the Supreme Council of the Armed Forces (SCAF) for what he called incompetence and lack of experience, saying that experienced government officials don’t have enough power. Egypt is currently relying on its cash reserve with no gross domestic product, he said .
ElBaradei, the undeserved winner of the 2005 Nobel Peace Prize (he helped Iran cover its tracks en route to enriching uranium to near weapons grade), nonetheless is the closest thing to a responsible figure in Egyptian politics. His warning that Egypt is burning its cash reserves is accurate. On October 5, the Financial Times reported that Egypt’s foreign exchange reserves had fallen from $35 billion in January to only $19.4 billion,  enough to cover less than five months’ worth of imports.
The central bank had reported $25 billion of reserves in August,  so the monthly decline appears to be around $6 billion; it is hard to tell precisely because the Egyptian central bank publishes contradictory data about its reserve position. The earlier $25 billion figure might have counted loans expected from the Gulf states, but as the FT explains, “Only $500m of some $7bn of promised aid from Saudi Arabia and the United Arab Emirates have arrived so far.”
Almost 60% of Egyptians live in rural areas, yet the country imports half its caloric consumption and spends $5.5 billion a year in food subsidies. When it runs out of money, millions will starve. Many already are hungry. The state-controlled newspaper al-Dostour warned on October 9 that an “insane” increase in the price of food – up 80% so far this year – has left citizens “screaming.” 
The newspaper added that the “current state of lawlessness has left merchants and businesses with no supervision,” leading to hoarding, price-gouging and shortages. This was evident at the outset of the uprisings,  and a breakdown of the country’s food distribution system was evident by May, as I wrote at the time. 
The Supreme Council of the Armed Forces appears baffled. Its leader, Field Marshall Hussein Tantawi, does not appear in public. Previously he ran Egypt’s military industries. Prime Minister Essam Sharaf was briefly transportation minister, having taught highway engineering for most of his career.
He has spoken publicly about only one topic of political importance, namely the peace treaty with Israel, which he proposes to change, as he told Turkish television on October 8.  Egypt’s leaders face a crisis brewing for two generations in which the Egyptian government kept half of its population illiterate and mired in rural poverty as an instrument of social control. As ElBaradei warns, they have no idea what they are doing.
Syria, meanwhile, is in civil war, which may turn into a proxy war between the Sunni powers and Iran. And Iraq’s leader Nuri al-Maliki, the leader of the supposed Iraqi democracy we spent a trillion dollars and 4,000 lives to put in place, is backing the Bashar al-Assad regime in alliance with Iran. 
Turkey, the self-styled rising power in the region, is about to get its come-uppance in the form of a nasty economic downturn. Prime Minister Recep Tayyip Erdogan’s belligerence has risen in inverse proportion to the market price of the Turkish lira:
I warned in August of the “instant obsolescence of the Turkish model” as the credit bubble engineered by the ruling party explodes.  Markets have already anticipated a sudden turnaround in the Turkish economy. The lira fell by a quarter between November 2010 and September 2011, making it the world’s worst-performing emerging market currency. The stock market has fallen in dollar terms by 40%, making Turkey the worst performer after Egypt among all the markets in the MSCI Tradable Index during 2011.
A hard landing for Turkey has now become the Wall Street consensus. “Goldman Sachs Group Inc added Garanti to its focus sell list, saying the stock’s gain last month was based on optimistic macroeconomic assumptions that don’t account for a ‘relatively high probability’ of a recession,” Bloomberg News  reported on October 6.
The Russian brokerage Renaissance Capital  and my own firm, Macrostrategy LLC  have published warnings about the Turkish banking system, which has increased lending at a 40% annual rate for the past couple of years.
In short, there is not a patch of ground in Israel’s proximity that is not roiling and boiling with political and economic turmoil. Echoing in the ears of Israel’s leaders are the words of Isaiah (57:20-21), which Jews around the world read on October 8 on the Day of Atonement: “The wicked are like the troubled sea, when it cannot rest, whose waters cast up mire and dirt. There is no peace, saith my God, to the wicked.”
Spengler’s corollary states: Neither is there peace to the stupid. We have Nicholas Kristof writing in the October 6 New York Times: “Now it is Israel that is endangered most by its leaders and maximalist stance. Prime Minister Benjamin Netanyahu is isolating his country, and, to be blunt, his hard line on settlements seems like a national suicide policy. Nothing is more corrosive than Israel’s growth of settlements because they erode hope of a peace agreement in the future.”
Kristof is talking about the Jerusalem neighborhood of Gilo, which was undeveloped land before 1967 and which every conceivable peace agreement would assign to Israel.
Nothing will appease the liberals, because if liberal social engineering can’t fix the problems of the Middle East, the world will have no need of liberals. The New York Times will demand  that Israel concede and apologize, as surely as a gumball will roll out of the machine when I crank in a quarter. Existential need trumps rationality, most of all among the self-styled priesthood of rationality.
For extra credit, class: If 15 million Egyptians starve to death, and all the Copts are murdered, and Syria plunges into a genocidal civil war, and Turkey kills another 40,000 Kurds, and the Iraqi Shi’ites and Iraqi Sunnis all fight to the death, whose fault will it be?
I bet you guessed right this time. Israel’s, for building apartments in Gilo.
1. See here.
2. See here.
3. See here (registration required).
4. Egypt government to rely less on local banks: Finance Minister Ahramonline. October 2.
5. See here.
6. See Food and failed Arab states Asia Times Online, February 2, 2011.
7. See The hunger to come in Egypt Asia Times Online, May 10, 2011.
8. See here.
9. See Iraq, siding with Iran, sends essential aid to Syria’s Assad Washington Post, October 9.
10. See Instant obsolescence of the Turkish model Asia Times Online, August 10.
11. See here.
12. See here.
13. See here.
14. See here.