Arab politics

By Dalibor Rohac of the Cato Institute

Egypt is facing its deepest political crisis since February 2011. On Sunday, the Supreme Constitutional Court ruled that both the election to the Shura council, the country’s upper house, and the appointment of a panel charged with drafting the new constitution were unconstitutional. Although no one can predict the exact reverberations of these decisions, they are a reminder of the threat dysfunctional politics represents to the future of the Arab world. Read more

Egyptians are not the only Arabs who are grappling with the place of religion in their emerging democracy. In Tunisia, perhaps even more so than Cairo, the battle between liberals and Islamists has been raging since last year’s ousting of the Zine al-Abidine Ben Ali regime.

In a country where the state has been staunchly secular – there was a time when police would detain women wearing the headscarf – Islamists in all their shades have faced a more determined opposition than in Egypt.

 Read more

Bahrain, the Arab spring’s forgotten revolt, had fallen off the radar of the fickle global media. But thanks to Formula 1, the world has been at least been reminded this weekend of Bahrain’s scorched social fabric.

Now, 14 months since the island was rocked by the worst unrest in its history, the future of Bahrain’s economy also remains unclear. Read more

There’s no pleasing everyone. As Egypt and the IMF started talks on Monday about a $3.2bn loan package, equity markets dropped. The EGX30 index closed 0.62 per cent down and the CMA general index fell as much as 3.8 per cent before recovering to close 1.45 per cent down.

Why? After a big run-up this year, some negative signals out of Cairo will have given investors the trigger they were waiting for to take profits. Read more

By Stephen Snyder of Ergo

US Secretary of State Hillary Clinton visited Algiers on Saturday and gave Algerian President Abdelaziz Bouteflika a free pass on two major issues of contention between the two countries: his government’s upcoming rigged elections and his support for Bashar al-Assad in the worsening crisis in Syria.

In the midst of a regional tour to promote democracy-building and rally international support for intervention in Syria, Clinton’s sudden silence on these issues in Algeria spoke volumes. At the root of this silence is Algeria’s position as a cornerstone in the global oil and gas market. Read more

By Kathleen Sullivan of Ergo

From a petroleum perspective, 2011 appears to have been a fantastic year for Saudi Arabia. The country’s oil production soared to over 10m bpd, piling up cash reserves and reducing government debt. Proud holder of the world’s largest proven oil reserves, highest exports, and most spare capacity, Saudi Arabia seems guaranteed the pre-eminent position in world oil markets that it has held for decades.

Yet throughout the past year, threats to the Kingdom’s power intensified. Disruptions in Libyan production cast doubt on Saudi Arabia’s spare-capacity reserves. Fractious OPEC meetings highlighted the Saudis’ increasing tensions with nuclear-armed Iran. Arab Spring uprisings stirred emotions among restive Saudi youth. Read more

This post is the eighth of a series – 12 for 2012 – that beyondbrics is running on key emerging markets topics for the new year.

By David Gardner

A year that began fizzing with hope and pent-up yearning for change across despot-infested Arab lands ended on a note of foreboding.

Tahrir Square, a thrilling emblem of heroism across the world, is being reshaped into a snapshot of thuggery by generals long past their sell-by date. Syria is mired in a vicious stalemate. The triumph of Islamism at the polls has set nerves jangling in the west and in pockets of the Middle East. Ponderous metaphors proliferate about spring turning into winter. Read more

Moody’s, rating agency, has downgraded Egypt’s sovereign bond ratings by one notch to B2 from B1, pushing it further into junk territory. It has also placed Egypt on review for a further downgrade.

In its statement on Wednesday, Moody’s said the downgrade was prompted by the political uncertainty being violently played out on Cairo’s streets and by Egypt’s precarious fiscal situation – in particular the imminent and increasing risk of a balance of payments crisis. Read more

Prince Alwaleed bin TalalSaudi Arabia’s billionaire Prince Alwaleed bin Talal (pictured) has invested some $300m in Twitter, the social media network used frequently as a tool of protest.

While the move might look odd for a member of the royal family in a country which is nervous of the internet, it seemed to make sense to the shareholders of Kingdom Holding, the prince’s investment company. Its shares surged by 5 per cent after the announcement. Saudi Arabia’s benchmark Tadawul All Share index fell 0.25 per cent. Read more

After the tumult of February demonstrations through the crackdown of March and the dark days of effective martial law through June, Bahrain has something to chew on.

The Bahrain Independent Commission of Inquiry’s damning report into systematic abuses against pro-democracy protesters earlier this year is an historic moment – never before has an Arab state opened its doors to such rigorous scrutiny. Read more

Egypt’s economic outlook is bleak as protests against the country’s ruling military council intensify ahead of next week’s parliamentary elections. The country’s ever more precarious fiscal state may hasten its dash into the arms of the International Monetary Fund – if the IMF will have it, that is. Read more

Despite deep political tensions and a vulnerable economy, Bahrain has managed to issue a $750m sovereign bond, becoming the first strife-hit country of the ‘Arab spring’ to tap capital markets since unrest began in January.

The seven-year sukuk is paying out 6.3 per cent, twice as expensive as, say, oil-rich Abu Dhabi, one of the city-states to have escaped street protests this year. But,  in the circumstances, the Bahrain government will be grateful for the terms it has secured. Read more

By Theodore May of Ergo

The Egyptian government appears to be seriously reconsidering a loan from the International Monetary Fund that it turned down last June. Early this month, Egyptian officials invited a delegation from the IMF to Cairo to discuss the country’s finances and to revisit the possibility of a loan.

The conversation is timely. The country faces a worsening budgetary and liquidity crisis, and the loan offers a major opportunity for Egypt to dig itself out from its current situation. Read more

Make a quick judgment call: how much political risk should investors price into Middle Eastern credit? Bear in mind: three governments have fallen this year, Syria is slaughtering civilians while slowing going broke, Israel is rattling its sabres (and its F-16s) against Iran, Bahrain is still cracking down on its own uprising, and Shia in Saudi Arabia’s oil-rich East have held their own protests.

So, what geopolitical risk premium are investors demanding to hold Israeli, Lebanese, Turkish and other regional credits? According to Citi’s analysts: none. Could that really, they ask, make any sense? Read more

It must be nice to be a Qatari bureaucrat. The country’s government recently gave salary and pensions raises of between 50 and 120 per cent to public sector workers – something other employers are wholly reluctant to hand out these days. Read more

As Saudi Arabia sends troops into neighbouring Bahrain to quell unrest, will the Arab Spring fail to take hold in the world’s largest oil-producing country? and has London become too close to the world’s less savoury autocrats and oligarchs? In the chair, analysis editor Frederick Studemann debates the issues with FT colleagues David Gardner, international affairs editor, James Blitz, defence and diplomatic editor, and tax correspondent Vanessa Houlder.

The Egyptian pound slipped on Monday as international banks had their first chance to trade the currency since the political crisis erupted.

After a 1.3 per cent drop on Sunday, where local banks opened their doors for the first time in nearly two weeks, the pound fell 0.37 per cent against the US dollar to 5.954. But Monday’s big financial test is yet to come, with the central bank planning to roll over E£15bn ($2.5bn) of short-term government debt. Read more

Updated at 1520 London time with closing prices.

Would everybody please calm down? That was what the Egyptian authorities seemed to be saying when they suspended share trading to let the spooked market compose itself. But the answer has come back: No.

Shares plunged further as soon as the Cairo stock exchange reopened late on Thursday morning, and the EGX30 index eventually closed down 10.52 per cent at 5,646.50. They were down 6.2 per cent before the suspension and had fallen by 6 per cent on Wednesday too, reacting to audacious street protests against president Hosni Mubarak. Read more