Was "Mubarak's Poodle" Pushed Out?

If you have been reading this blog, you would know that Field Marshall Mohammed Hussein Tantawi was known as Mubarak's poodle during his master's reign. I made it a point to repeat it as many times as I possibly could without appearing petulant or childish.

My purpose has been to highlight the fact that Tantawi was (and is) Washington's man as much as Mubarak was. As you can see in the above links, my view is that the Egyptian Spring was not really a popular revolution, it should more accurately be called a palace coup. Sure there were people chanting in Tahrir Square but they managed to stay there and to make themselves heard because of Tantawi's decision not to force them out. In fact, he did not lift a finger to keep Mubarak in power. Quite the contrary, his army stopped Mubarak's thugs and protected the citizens of the Square.

Everybody knew that the Brotherhood was going to take over and the one major player whose opinions counts seemed quite fine with that prospect. If you have been reading this blog, you'd know that the army and the Brotherhood began collaborating very early on and have been working together every step of the way.

So you can imagine my surprise when most media outlets announced that the newly elected Muslim Brotherhood President Mursi forced Tantawi (Defense Minister for three decades) and the Chief of Staff of the Armed Forces Sami Anan to early retirement.

Syria: Is A Palace Coup Unfolding?

A few days ago, I suggested that a palace coup in Syria is the most desirable outcome for the main players in this drama. I enumerated the reasons and ventured that because of that it is also the most likely outcome. I speculated that the upcoming Aleppo massacre might provide the necessary trigger for significant defections.

Two days after I posted this, several high ranking military officers began crossing the Syrian border to join previous defectors in Turkey. Among them was the Deputy Chief of Security Forces of Latakia region, a Brigadier General and the first Syrian astronaut, General Muhammed Ahmed Faris. Yesterday another Brigadier General defected to Turkey accompanied by five high ranking officers.

This brings the total number of generals who passed to the other side to 31.

Today's announcement that the Syrian Prime Minister has joined the rebel forces is making me think that a palace coup is actually underway.

Moreover, BBC reports that:

Unconfirmed reports suggested that two other cabinet ministers had also deserted and there were claims that a third, Finance Minister Mohammad Jalilati, had been arrested while trying to flee.

As if on cue, the leader of the main Syrian opposition group Abdelbasset Seida made an unexpected announcement, just yesterday:

The leader of Syria's main political opposition group has said he is ready to negotiate with government officials whose hands are not "stained with blood" once the president, Bashar al-Assad, and his associates leave power.

The funny thing is that a short few weeks ago, they denied this very possibility.

This is beginning to look like a palace coup is taking place.

Stay tuned.

Greece and Eurozone One More Time

My tiny but distinguished readership knows that I was one of the first people on the Internet to recommend a Greek default and a speedy exit.

Of course I am a total nobody. But, at least there were more authoritative voices like Krugman and Stergios Skaperdas who suggested the same approach. These contrarians knew that, with German and French banks' huge exposure to GIIPS sovereign debt (close to a trillion dollars at the time) a Greek default threat would have resulted in a much more flexible response. (Incidentally, since then the acronym GIIPS was dropped and PIIGS became more popular along with GIPSI -pronounced Gypsy- talk about adding insult to injury)

Papandreu tried this with his referendum idea but, whatever leverage they had on him, he buckled under pressure and renounced that notion within one weekend.

More than a year has passed and German and French banks had ample time to dump their sovereign debt holdings. So now you hear European officials and central bankers lightly suggesting that a Greek default is not only not feared but it is seen as a reasonable option. Every week someone else is quoted as saying that no one wants Greece to leave but they are not worried if it does. A couple of months ago BBC's Robert Peston summed it up like this:

I am mildly bemused that central bank governors seem to be talking with some equanimity about Greece leaving the euro: the Belgian central bank governor describes an "amicable divorce" as "possible"; his Irish counterpart says a Greek exit is "not necessarily fatal" though plainly not attractive.

Just last week this is what Reuters reported:

Some European politicians and central bankers clearly see jettisoning a delinquent member as a salutory lesson to others not to abuse club privileges. Like the English in Voltaire's philosophical novel Candide, they believe "it's a good thing to execute an admiral from time to time, to encourage the others".

I think this is rubbish talk designed to hide a colossal game of chicken. And contrary to what you read in the papers, despite the reduction in direct exposure, European governments are scared witless of a Greek exit.

If they are not they should be.

Let me try to explain why.

What Could be the Syrian Endgame?

As I write this, a serious battle in and around Aleppo is raging. This will very likely end in massacre and human tragedy.

Most commentators have been saying that this is the final chapter in Assad's rule and he is on his way out. Unless they know something that we don't, I don't see how the opposition can drive his powerful army out.

Which got me to thinking that there must be something else that everyone is counting upon.

Since NATO or the US ruled out military intervention, there are two possibilities. One of them is that Turkey, the only regional power with the military capability, will go in.

Some observers actually believe that Turkey is getting ready to intervene militarily. They point to Erdogan's recent visit to Moscow and then to China as an effort to convince them to change their stance (since both Russia and China used their Security Council vetoes after Erdogan's visit, if that was the goal of his visit, it should be considered a failure).

But I am not sure that this was the goal of his visit. I think the aim was to inform Russia of the endgame being planned and remind Putin that Russia should stay neutral as Turkey is a much more strategically important ally. Besides being an ascendant regional power, Turkey is an important economic outlet for Russia. With their bilateral trade reaching $30 billion in 2011 and over 2000 Turkish companies investing and operating in Russia, it is clearly a more important partner than Syria. 

Moreover, Putin knows that, one way or another, Assad's days are numbered and he is too clever to continue to bet on a losing horse.

But the visit clearly indicates that something is being prepared. As I previously enumerated the reasons for Turkey's extreme reluctance to intervene militarily, I seriously doubt that a military push is in the cards. Besides, a foreign intervention might backfire by changing again the shifting alliances within Syria.

A Palace Coup?

This leaves only the possibility of a palace coup. I have no idea whether this is actually the case but a palace coup is the only way Assad could be removed from power in a short period of time. Operationally, I can see how the upcoming Aleppo massacre could lead to large defections within the ruling elite and how this could topple the regime from within.

Can Anyone Tell Me What is Wrong With Spain?

I was going to write about my favorite Eurozone subject, i.e. whether Greece should default or not. And in the course of checking up some statistics, I realized that something was rotten in the state of Spain.

And it is not what you think.

You see, I kept reading story after story that Spain was in trouble, its economy was in shambles, the austerity measures its conservative government introduced needed to be redoubled, etc. But I couldn't find a single piece that explained to me why this was the case. Not one.

All the articles pointed to the pre-2008 real estate and construction boom and the subsequent bursting of the bubble. The only other element they all mentioned was high unemployment.

I realized that there was something wrong with this picture as this was supposed to be a crisis caused by countries living beyond their means. That's why we need austerity measures, right?

Well, according to Wikipedia, at the start of the crisis period, Spain's public debt was 36.2 percent of its GDP. Even in 2010, Spain's debt was lower than Britain, France or Germany. And according to this map at 63 percent it is still one of the lowest in Europe. Take a look at France, Germany, Belgium and Britain in that map.

Wikipedia puts the debt a little higher than 63 percent but remarks that it is still lower than the Eurozone average: "As of June 15, 2012, Spain's public debt stood at 72.1% of GDP, still less that the Euro-zone average of 88%."

As for unemployment, well, it "stood at 7.6% in October 2006, a rate that compared favorably to many other European countries." Sure, it rose to over 17 percent when the crisis hit, as the construction sector accounted for almost 16 percent of the GDP. And it reached 25 percent with several rounds of austerity measures. But unemployment was not a structural issue, as it has since been commonly reported. It was the dependent variable in the equation, not the causal factor.

The Significance of the Syrian Suicide Bomb

As you probably know by now, a suicide bomber managed to get inside the National Security Building and killed three members of Bashar al-Assad's inner circle.

Defence minister General Daoud Rajha and Assad's brother-in-law Assef Shawkat were killed and interior minister Mohammed al-Shaar and General Hisham Ikhtiyar, head of National Security, were wounded, the channel and security officials said.

I have seen many breathless reporting about how this signals the end of the regime and how this should be marked as a turning point.

I am not so sure that this event presages the imminent collapse of the regime. While it is a major coup for the Free Syrian Army (FSA) they are still no match for the relatively formidable firepower and manpower of the Syrian Armed Forces.

The event, however, is significant in one respect. If the suicide bomber is (as it was reported early on) one of the bodyguards of these officials, I will have to assume that he was one of the thousands of Sunnis integrated into the power structure. Just like General Manaf Tlas who defected ten days ago.

If that was the case, this event signals that the current situation has now become an entirely sectarian conflict. If you remember the Bosnian civil war, even people who were sympathetic to the positions of the other side (or were linked to them through marriage, jobs and other social arrangements) had to choose a side quickly and then they were locked in to that identity for the duration of the conflict (and even beyond).

If a Sunni bodyguard was involved in this suicide bombing, it would mean that a highly trained and thoroughly vetted member of an elite force could now be turned by the lure of a primordial identity. It would indicate that someone who was not previously interested in that part of his identity was now suggestible enough to take his own life to harm what he perceives as "the other side."

That is bad news for al-Assad and the Alewites in Syria.

It is also bad news for the regime in general as it will force them to react to this catastrophic incident. And they have no good options.

One thing they might have to do is to purge the power structure of Sunnis. After Manaf Tlas and this bodyguard they would be fools not to do it. Such a move would inevitably enhance the sectarian nature of the conflict as loyal Sunnis, who served the Alewite minority for decades would find themselves sidelined and thrown under the bus in the middle of a civil war.

Expect mass defections if that happens.

Secondly, the regime might feel obligated to show that it has the upper hand militarily and might do something as reckless as carpet bomb several Sunni strongholds to kill thousands of civilians and ask their Shahiba militias to massacre a few hundred people.

Unfortunately for them, either of these moves would inevitably strengthen the sectarian identities and sharpen the dividing lines between warring factions. And Sunnis outnumber other minorities and they have the backing of Saudi Arabia, Qatar and Turkey.

Conversely, not doing any of these things might be perceived as a sign of weakness by the other side and could embolden them and the foreign forces behind them.

In other words, in my opinion, today's bombing was significant not because it killed a couple of senior Bashar allies. It was significant because it might force Bashar's hand to act in a way that would hasten his own demise.

Stay tuned.

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UPDATE

The FSA now claims that the blast was caused by a remote controlled device (instead of a suicide bomber) which was put in place the day before.

If this is true, it strengthens my point further, as such a setup would require extensive assistance from inside. The location and timing of the meeting had to be communicated. The bomb had to be smuggled into the building. And the device had to be planted and armed.

All of this would imply a major inside job involving several people. And Bashar al-Assad's equally unpalatable choices would remain the same.

What is Happening in Saudi Arabia?

Right now, everybody is focused on Syria.

That is understandable. A lot is happening there and with the killing of civilians by the hundreds, widespread torture allegations, the downing of a Turkish plane, and now, the Red Cross declaring that a civil war is underway, the whole thing plays out like a macabre soap opera.

But, as my tiny readership knows, ever the optimist, I see the implosion of Syria not just as a further descent into hellish chaos but as a prelude to something hopeful, a solution involving Kurdish statehood. It is like the apocryphal Chinese character "crisis." Horror leading to a new birth. It won't be easy, it won't be bloodless and it won't be very quick. But I believe something good will come out of this carnage.

I am worried, on the other hand, about the future of a country that is almost always absent from the headlines. A country so ruthlessly autocratic that, from outside, it appears like a paragon of stability. I am, of course, talking about Saudi Arabia.

Saudi Arabia is one of the most oppressive, reactionary and misogynistic regimes in the world. It tortures, imprisons and kill its citizens. Saudi women have no social or political rights. Its Islamic police force called Mutaween, tasked with enforcing the Sharia, is so strict that, ten years ago in a school fire it stopped 15 girls from leaving the school because they did not have proper Islamic dresses on them and let them burn alive.

Its political system should properly be called the last absolute monarchy in the world. The Saudi king's legitimacy is derived from two sources. One is spiritual the other is lineage. Together they constitute a very peculiar dynastic alliance.