Egyptian Crisis and what it means to US, China, India , Saudi Arabia(Africa Business Cell IIFT)

by Anoop Poonia on Tuesday 8 February 2011, 2:29 AM | Category: Miscellaneous| View: 1496 views

 *This is a part of the activity of the Africa Business cell in the Indian Institute of Foreign Trade.*

Egyptian Crisis and what it means to some of the major nations of the World




The protests in Egypt started on Jan. 25, 2011 in Cairo demanding an end to President Hosni Mubarak's 30- year rule. Africa Business Cell brings out an article on what are the implications on some of the major nations of the world, of this crisis.




About 2.5 percent of world oil output moves through Egypt via the Suez Canal according to Goldman Sachs. If the protests in Egypt continue and the Suez Canal is forced to be closed then oil prices could more than double in the world.




Implications on the United States




Egypt has been a strategic partner of US since the time of Mubarak's predecessor, President Anwar Sadat. America's strong military relationship with Egypt has supported peace between Egypt and Israel and ensured critical access to the Suez Canal and Egyptian airspace for American military operations. Egypt has played what the Americans have seen as a vital role in keeping Hamas bottled up in the Gaza Strip and slowing the flow of Iranian weapons to the radical Islamist movement. In the role of counterterrorism too, Egypt has been a significant and cooperative ally on questions about Hamas, al-Qaida, or Hezbollah to the United States. A new regime in Egypt might not act in the way Obama wants and this has been the reason why many are saying that this is the biggest foreign-policy crisis of Obama's presidency so far.




Implications on Israel




Israel wants President Hosni Mubarak to stay in power for as long as he can. From the perspective of Israeli interests, Mubarak would have kept the Israeli-Egyptian peace treaty in place; kept the Muslim Brotherhood from acceding to power; enforced security with respect to Hamas and its smuggling tunnels; acted as a broker in the peace process with the Palestinians; been a partner in the blockade of Gaza; and cooperated with Israel in handling the steady stream of migrant refugees from Sudan, Eritrea, and other African countries. The primary concern for Israel is that Egypt will elect a hostile Islamist government as Gazans did in 2006, or one will seize power as in Iran in 1979. For the Israeli leadership, and the Israeli people across the political spectrum, it is seen as a terrifying possibility.


Implications on China




Chinese diplomats show concern for the general instability of the region but remain largely detached from the conflict itself. Acquiring energy assets and large construction projects in Africa and the Middle East is a key element of China's economic growth strategy. But while energy and infrastructure are the main economic conduits between China and Egypt, it is unlikely that China views Egypt, specifically, as critical to its growth. China's energy security is more closely tied to Saudi Arabia and Sudan. The more relevant issue is general regional instability, which causes increases in oil prices and commodity prices across the board. That negatively affects China's growth as it does all other countries'. So the crisis doesn't mean as much to China as it means to the United States.


Implications on Saudi Arabia


The main concern for the ruling elite in Saudi Arabia is that a similar sort of an uprising of the people can happen in that country. They cannot be happy with the turmoil in Egypt, which could neutralize a strong Sunni ally in their contest with Iran, disrupt oil transportation through the Suez Canal, inspire ideological challenges to monarchy as a ruling order, and – in the event of a complete breakdown – provoke a wave of illegal immigration that the kingdom would be unable to deal with. An Islamist takeover in Cairo could bring a dangerous challenge to the Saudis' Islamic supremacy, and could inspire popular sentiment against the kingdom's alliance with the United States. Thus they would be happy, if Mubarak stays in power.


Implications on India


More than the political implications, the crisis in Egypt worries India because of the economic reasons. About 3/4ths of India's energy needs is met by its imports. India is worried of a mounting oil bill if the protests in Egypt continue. Uncertainty in Egypt and the Middle East will impose risks on oil and higher prices of oil could lead to inflation. The Reserve Bank of India on 7th February 2010 has said that the Egypt crisis is going to impact its policy decisions.


These protests are likely to spread to Syria, Jordan and Yemen and encourage the people there to oust their rulers.

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