The New York Times is shocked–shocked–to discover that Egypt’s Muslim Brotherhood president wants to bring Iran into a quartet of Muslim countries to manage the Syria crisis. In fact, Asia Times’ M.K. Bhadrakumar, a former senior Indian diplomat, reported this story more than a week ago. There is a bigger, and more frightening picture, including Egypt’s deployment of tanks into the Sinai in violation of its 1979 peace treaty with Israel, and the collapse of Egypt’s economy. “Worse is better,” the Bolsheviks said in 1917: the more hunger and the more chaos, the better the chances for a Bolshevik coup. The Muslim Brotherhood’s intention, it appears, is to turn Egypt into North Korea on the Nile: a starvation in state in which one’s chances of eating depend on loyalty to the ruling party.
Below are extracts from my weekly essay in Asia Times Online. America faces a foreign policy meltdown, the worst since the fall of Vietnam, with the collusion of the Republican establishment as well as the Obama administration. The one thing that might pull America’s chestnuts out of the fire is a successful Israeli strike against Iran’s nuclear weapons program. (Note: Footnotes with hyperlinks to sources can be found in the original on the Asia Times site).
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North Korea on the Nile
Reports that Egypt’s oil suppliers are cutting shipments to the nearly-bankrupt nation coincide with a dramatic diplomatic shift towards Iran by President Mohammed Morsi. Morsi’s attendance at the Non-Aligned Summit in Teheran today denotes the end of Iran’s diplomatic isolation in the Sunni Arab world.
In addition, as my Asia Times Online colleague M K Bhadrakumar noted in his Indian Punchline blog, Morsi proposed to include Iran in a four-nation contact group to resolve the Syrian crisis, along with Turkey, and Saudi Arabia. Morsi’s outreach to Iran at the August 15 Organization of Islamic Coordination summit in Mecca was welcomed by Iran’s Foreign Ministry.  
At the same time, Egypt has become a prospective threat to Israel for the first time in more than three decades. The deployment of Egyptian tanks in the Sinai, supposedly in pursuit of terrorists, violates the 33-year-old peace treaty with Israel, and persuades some Israeli analysts that Egypt might threaten Israel’s southern border in the event of an Israeli strike on Iran’s nuclear facilities.
“If Netanyahu finally decides to strike Iran’s nuclear sites, shouldn’t he consider a possible scenario, in which Morsi (soon to visit Tehran for a conference), orders two army divisions to cross the Suez Canal into Sinai?,” asks Amos Harel, the senior defense analyst at Ha’aretz. 
American analysts had assumed that Egypt’s massive need for external aid would keep Morsi’s Muslim Brotherhood on Washington’s leash. On the contrary, the Brotherhood indicated its intent to benefit from economic chaos months ago, as I wrote in this space last April (see Muslim Brotherhood chooses chaos, Asia Times Online, April 11, 2012). Now the gravity of the situation is beginning to sink in.
“Just two months after coming to power, Morsi is pursuing a rapprochement with Tehran and articulating a newfound ambition to jettison billions in US foreign assistance dollars and financing from Western financial institutions,” wrote David Shenker and Christina Lin in the April 24 Los Angeles Times. 
Economic privation, up to and including starvation, is not necessarily a hindrance to the exercise of power. As the Bolsheviks demonstrated in 1917, the Somali warlords during the 1990s, and North Korea for the past two decades, starvation benefits a totalitarian party ruthless enough to employ it as a weapon of social control. Reports from Egypt indicate that Morsi has begun rationing of daily essentials, reinforcing the Muslim Brotherhood’s grip on power.
The Egypt Independent reports, “The government decided to lower subsidies on oil products from LE95.5 billion [US$$15.5 billion] in the 2011-2012 budget to LE25.5 billion in the 2012-2013 budget by applying a coupon system on butane, gas and diesel in addition to other procedures for rationalizing energy consumption.”
And according to Magda Kankil of the Egyptian Center for Economic Studies, Egypt will move to a ration card system for bread as well.  If Egyptians want to eat, or cook dinner with propane, they can apply for a ration card to the local Muslim Brotherhood office.
Egypt spends roughly US$25 billion a year on fuel, and the present subsidy of 95.5 Egyptian pounds is a life-and-death matter for the Egyptian poor. According to the Wall Street Journal on March 22, “Subsidies already absorb at least 28% of Egypt’s budget outlay of 476 billion Egyptian pounds ($79 billion).  About two-thirds of that goes toward fuel and energy, with the rest aimed at reducing food prices, particularly for wheat.”
A massive reduction in subsidies combined with rationing will put the existence of half of Egypt’s people under the immediate control of the state. Morsi’s apparent disregard of Egypt’s economic crisis conceals a deeper agenda, namely the entrenchment of the Muslim Brotherhood in the kind of power arrangement that characterizes modern totalitarian states. That is the source of his contempt for American diplomacy.
It is hard to recall an American foreign policy failure so catastrophic, and at the same time so bi-partisan. As M K Bhadrakumar – the only English-language journalist to predict Egypt’s turn – put it in the August 21 Asia Times, the US offered “an invitation to Obama to Morsi to visit Washington. And Morsi is instead traveling to China and Iran.” (See Egypt thumbs nose at US, Asia Times Online, August 21, 2012).
Morsi has undertaken what Schenker and Lin call “a foreign policy shift rivaling the scope of president Anwar Sadat’s expulsion of the Soviets in 1972 and subsequent reorientation to the West” when his country is almost out of cash. Liquid foreign exchange reserves at the Bank of Egypt fell to $5.9 billion in July, enough to cover barely a month of imports.
“Egypt is finding it increasingly difficult to import fuel as foreign banks and traders pull the plug on credit,” Reuters reported August 23. “In the strongest evidence to date of rising fuel import difficulties, traders said Egypt had to cancel a tender to buy crude earlier this month after receiving no bids, and also had to scrap parts of a gasoline import tender because the prices on offer were too high.” 
The country’s economy faces paralysis due to an endemic shortage of gasoline and diesel fuel, leading to regular electricity blackouts. Lack of fuel has forced the shutdown of bakeries, leading to regional shortages of the subsidized bread that makes up most of the caloric consumption of half of Egypt’s population living on less than $2 a day. 
Egypt received a cash deposit of $500 million from Qatar and a pledge of an additional $1.5 billion after the August 10 visit of Emir Al-Thani to Cairo. The same day, President Morsi purged Egypt’s senior officers and grabbed key constitutional powers from the military. Qatar’s contribution, though, is a stopgap; the tiny emirate has just $20 billion in total resources, less than Egypt’s annual requirement for external financing.
Morsi’s government is negotiating a $4.8 billion loan from the International Monetary Fund, enough to get through a few months – if and when the money arrives.
It has been, or should have been obvious all year that a dual power situation (as the Bolsheviks described it in 1917) has been gestating. The remains of the military-led government controlled the official levers of state, while the Muslim Brotherhood distributed food and fuel on the street. As I wrote on April 11 on this site:
The Brotherhood believes that widespread hunger will strengthen its political position, and is probably correct to believe this. As the central government’s corrupt and rickety system of subsidies collapses, local Islamist organizations will take control of food distribution and establish a virtual dictatorship on the streets. American analysts mistook the protestors of Tahrir Square for revolutionaries. The Muslim Brotherhood now reveals itself to be a revolutionary organization on the Leninist or Nazi model.
The Brotherhood’s revolutionary program has been gestating for some time. As food and fuel shortages emerged in the first months of after the downfall of President Hosni Mubarak last year, Islamist organizations already began to fill the vacuum left by the breakdown of the old civil regime. The Ministry of Solidarity and Social Justice began forming “revolutionary committees” to mete out street justice to bakeries, propane dealers and street vendors who “charge more than the price prescribed by law”, the Federation of Egyptian Radio and Television reported on May 3, 2011. According to the ministry, “Thugs are in control of bread and butane prices” and “people’s committees” are required to stop them. (See Muslim Brotherhood chooses chaos, Asia Times Online, April 11, 2012).
Like the Shah’s generals in 1979 Iran, the Egyptian generals have something to fall back on – the townhouse in Chelsea or the yacht in Monaco. The younger officers who replaced them after Morsi’s August 10 purge have no hope of enriching themselves as their commanders once did, because there is nothing more to steal. In retrospect, the military’s failure to fight back against the Muslim Brotherhood could have been inferred from its behavior since the overthrow of Hosni Mubarak in January 2011. As foreign exchange reserves vanished last year, I asked last October:
Egypt’s economic route calls to mind the country’s military disaster during the 1967 war, when – according to the Egyptian government’s later evaluation – the military collapsed in part because of “the army’s fear of telling [President Gamal Abdul] Nasser the truth”.
It appears at first glance that the army does not want to tell itself the truth about Egypt’s economy. The truth probably is simpler, and more sinister … When the civil societies of developing countries disintegrate, the authorities often appear to be paralyzed. In most cases, the anonymous little men in charge of big functions are hard at work, making down payments on Paris apartments and private jets. Are the Generals Stealing Egypt?, Asia Times Online, October 18, 2011.)
America is confronted by a new and unwelcome set of alliances in the Middle East. Its cluster of allies – Egypt, Saudi Arabia, Turkey, Jordan and Israel – is reduced to only two. Saudi Arabia rails in vain at the “summit aligned towards Iran”, as Emad El Bin Adeeb derided the Non-Aligned movement event on August 23 in the Saudi newspaper Asharq Alawsat. 
Israel was wrong-footed by the Egyptian government’s challenge to the Camp David treaty, and is absorbed in a wrenching debate over the merits of a pre-emptive strike on Iran’s nuclear program. Turkey, whose Islamist government was promoted as a model of Islamic democracy by the Bush administration as well as by President Obama, is paralyzed by the chaos on its border, fearful that the Kurdish problem will spill over into its own territory. Jordan’s monarchy hopes to survive by making concession after concession to the Muslim Brotherhood.
Russia plays all sides, negotiating with Israel for the price of denying advanced anti-missile systems to Iran, while sustaining Iran’s allies in Syria’s beleaguered Assad regime. As the world’s largest oil producer, Russia stands to gain from the insecurity of Persian Gulf oil supplies. China watches on the sidelines wondering which of the pieces are worth acquiring.
If and when Iran acquires deliverable nuclear weapons, the Middle East will shift irreparably into a state that Americans barely can begin to fathom. Paradoxically, an Israeli strike on Iran – in open defiance of the Obama administration’s wishes – might offer the only hope of restoring America’s failing position.
A former Israeli diplomat, Yoram Ettinger, draws a parallel to Levi Eshkol’s decision to preempt a building Arab attack on Israel in the June 1967 war. Eshkol, he observed on August 17, “preempted the anti-US Arab axis; devastated a clear and present danger to vital Western interests; rescued the House of Saud from the wrath of Nasser; expedited the end of the pro-Soviet Nasser regime and the rise of the pro-US Sadat regime in Egypt; dealt a major setback to Soviet interests; and demonstrated Israel’s capability to snatch the hottest chestnuts out of the fire, without a single US boot on the ground.” 
With Iran neutralized, the Assad regime in Syria would become a friendless, purposeless hulk, and the Morsi regime in Egypt the proprietor of a failed and hungry state. Iraq, absent Iranian influence, would settle down into low-intensity violence without regional implications. Once again, the House of Saud would be rescued from the wrath of an overreaching Egyptian leader and US influence would predominate in the Gulf.
Egypt is a lost cause where Washington is concerned, but it could be a ruined cause for anyone else. As I wrote in May
Interdicting the Brotherhood, in turn, requires an uncharacteristic harshness on the part of American policy. War correspondent Peter Arnett might have concocted the notorious statement, “It became necessary to destroy the town to save it,” supposedly said by an American officer of the Vietnamese provincial capital Ben Tre in 1968. Something like that might be the outcome for Egypt. (See The Horror and the pita, Asia Times Online, May 1, 2012)
It may sound cold, but someone has to say it.
nneled by David P Goldman, president of Macrostrategy LLC. His book How Civilizations Die (and why Islam is Dying, Too) was published by Regnery Press in September 2011. A volume of his essays on culture, religion and economics, It’s Not the End of the World – It’s Just the End of You, also appeared last autumn, from Van Praag Press.
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