Commodities are very much about supply and demand as well as perception, it's perception right now that will continue to lift crude. As you know, the market does not like uncertainty and a lot of uncertainty has been introduced into the middle east the last few weeks on an escalating basis.
New reports coming from inside Hamas, which is an outgrowth of the Egyptian Muslim Brotherhood, claim that the Egyptian police are no longer patrolling the Rafah border that crosses into Gaza and armed Hamas militants are entering Egypt to coordinate with the Muslim Brotherhood.
It is claimed that Egyptian Security Forces in plain clothing are among the protesters and destroying property to give the impression that the regime that the Egyptian people have known for 30 years is better then the unknown future -this along with accounts that the police presence on the streets is by and large gone, furthers that perception.
Hamas and the Muslim Brotherhood are said to be organizing citizen patrols to protect property and coordinate demonstrator activities including providing food, water and medical aid.
Further reports have come to light that suggest that this situation has been building since last year as there has been tension among the country's very well respected military and the old guard within it and Mubarak himself who sought to path a way to his son, Gamal's path to succession. Events in Tunisia simply offered an opportunity which has accelerated the dispute.
While Mubarak disposed of his cabinet and gave Suleiman the vice presidency which has been empty for nearly 30 years, Mubarak's plan was to have Suleiman hand over power to his son Gamal after a short period of time. Suleiman is respected among the military, but his advanced age is causing them to disapprove of this appointment as they see the writing on the wall.Instead they are demanding another Air force Branch member, Shafiq be designated successor. He also has the advantage of having been the head of civil aviation since 2002 and would make for a more palatable choice for the public. All in all it seems the end game is mapped out and as Washington feared last week, it is the military who two days ago was reported as clashing with riot police, is really pulling the stings and managing a transition whether Mubarak or the US like it or not. The question is what happens in a slight vacuum of power with the M.B. And Hamas taking an active interest in carving out a political place for themselves? As we learned from the 1979 Iranian Revolution, the ideology and composition of the protesters can have very little to do with the forces that end up in power.
Cities around the Suez Canal are seeing some of the fiercest fighting. Thus there may be elevated fears for sometime about the possibilities of a closure as well as revolutions in other Arab and African states as we have already seen calls for reform in Jordan and the Internet shut down in Syria. Protests have even moved into Eastern Europe through Albania. For now though, the military seems to be shaping the new government and as long as Mubarak remains in power, so do the protests, leading to a dangerous political situation. Even a misfire from the military that ends up killing protesters, who thus far have welcomed the military, could set off a clash of events between protesters and the military, giving the Muslim Brotherhood and Hamas an opening to call for democratically elected leaders, opening the door for their own power ambitions.
As I said late lat year, 2011 promises to be a exciting an unique year. We are barely through the first month and nearly two countries, one with a leader of 30 years have been deposed. The US, as mentioned a few days ago has always had a problem with calculating the unpredictable outcome of it's own economic and foreign policy. Protesters in Egypt can clearly see the tear gas bottles launched at them are American made. Our QE policy is exporting huge amounts of inflation to emerging economies, causing hunger strikes and protests and food rioting around the world. The one thing you can be sure of is the assumptions of Wall Street, the Media and the Government that seem to be so solidified are sometimes the fastest to fall-regardless of intentions.
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