Friday, August 26, 2016

Top Dollars for worthless Snake Oil

There is an Egyptian saying I would translate like this: “The foolish are exploiting the madmen.” Nowhere does it apply more aptly than in America where they pay top dollars to those who tell them – actually flatter them – with this: Let me tell you how you can use your superior know-how to exploit those who are lesser than you.

This is how defectors from the old Soviet Bloc used to live the good life in America without having to work. It is how every Jew and his cousin that can pronounce the words “security” and “expert” live high on the hog. It is how some Arabs – who followed in the footsteps of the now departed Iraqi con artist named Chalibi – used to live during America's misadventure in their part of the world.

Currently, there is a slew of Arabs – supposedly of the scholarly kind writing for publications often associated with a think tank – telling the Americans in power, how they can extend their influence in the Arab world. One of those is Samuel Ramani who wrote an article under the title: “America Can Exploit Saudi-Egyptian Tensions,” and had it published on August 24, 2016 in the National Interest.

The genius of Ramani is not that he has new insights to contribute to the debate; he is only using false clichés that were articulated by others over the years. Rather, he has managed to convince the Americans that he worked out a surefire way for them to outperform the Arabs. In so doing, he guaranteed himself a more attentive ear, thus had a more efficient way to exploit the American weakness of character.

Do you remember how everybody used to say America should use the leverage it has over Egypt with regard to the $1.3 billion military deal between the two countries? Look what Ramani is saying now:

“The United States has struggled to convert its $1.3 billion military provisions to Egypt into leverage over Cairo's policies and conduct. Instead of transitioning to democracy, Egypt has [opted] for political repression. As Egypt has become economically dependent on the GCC and strengthened its relationship with Russia, many have called for a downgrade in the U.S.-Egypt partnership … [However] despite underlying tensions between Washington and Cairo the United States should not dial down its alliance with Egypt. Sisi is on the cusp of realigning Egypt's foreign policy in a way that could greatly benefit U.S. interests”.

From this point on, Ramani sets out to explain his theory. Let me tell you right away that his presentation is a joke. You will be convinced of that when you get to this passage: “Modernizing one of Egypt's most significant landmarks has rallied Egyptian nationalists around Sisi, but large-scale corruption has caused Egyptian government revenues from the Suez Canal to decline over the past year.” What? From where did he get that?

The reality is that the modernization of the Canal has been one of the most efficient (and free of corruption) undertakings in recent Egyptian history in that the work was concluded in one year instead of three or even five as expected. Yes, the revenues have declined slightly over the past year but that has nothing to do with corruption, and everything to do with a slowing world trade.

But how did Ramani come up with an idiotic idea like that? It must be that he read one article which said there was corruption in Egypt. He then read another article which said that the Suez Canal revenues declined last year. And so, he “connected the dots” and came up with this monstrosity: large-scale corruption has caused revenues from the Canal to decline.

Now that you know how much intellectual fraud there is in Samuel Ramani's article, you should put a box of granulated salt in front of you as you read the rest of the article. You'll have to take a grain each time that you encounter what looks like a new insight because it will turn out to be a discarded old cliché. Let me now give you a couple of examples on what Ramani would have known had he followed events in Egypt instead of reading about them in America.

He says this: “GCC business elites have recently expressed frustration with Sisi's unwillingness to implement necessary economic reforms.” To explain what that is, he goes on to talk about the budget deficit. This is total rubbish. The truth is that the GCC business elites could not care less about the budget deficit in Egypt. What they wanted were two things. (1) They wanted a repeal of the law that forbids foreigners from owning land in Egypt. They wanted to build and own both the land and the buildings, not just own the buildings they construct over lands they were to lease. (2) The GCC business elites wanted total ownership of the mines with Egypt being satisfied only with levying taxes on the operation … and they better be rates of taxation low enough to compete against mines elsewhere in the developing world.

Ramani also says this: “Sisi has antagonized his GCC patrons by spending much of their financial assistance on inefficient government programs and status-building projects.” This is worse than rubbish. The fact is that with two revolutions in three years, a great deal of foreign reserves left the country. The result was that Egypt fell behind paying for the share of the oil and natural gas it bought from its foreign partners under the 'right of first refusal' provision in the contracts.

The foreign partners took advantage of the situation and tried to impose contracts on Egypt that would have given them total ownership of the resources they discover in the future. This kind of deal would have served as a model for the contracts that the oil companies were planning to impose on everyone else in the region. Thus, it was in the interest of the neighboring countries to stand with Egypt and give it the oil and gas it needed to keep the lights on while negotiating with the oil companies. They had Egypt’s back to cover their own backs.

Saudi Arabia, the UAE and Kuwait did just that by shipping oil and natural gas to Egypt. They also gave a little extra cash in the form of grants, loans and bank deposits to help stabilize the currency. This is how Egypt got over the difficulty with a devaluation of only 30 percent of its currency as compared to some other economies in Africa where the devaluation reached 60 percent … and they didn't even have a revolution.

The rest of Samuel Ramani's article is more of the same kind of rubbish, paragraph after paragraph.