Game over in Egypt: Mubarak will hold on

The president and the military, have, in sum, outsmarted the opposition and, for that matter, the Obama administration. They skillfully retained the acceptability and even popularity of the Army, while instilling widespread fear and anxiety in the population and an accompanying longing for a return to normalcy. When it became clear last week that the Ministry of Interior’s crowd-control forces were adding to rather than containing the popular upsurge, they were suddenly and mysteriously removed from the street. Simultaneously, by releasing a symbolic few prisoners from jail; by having plainclothes Ministry of Interior thugs engage in some vandalism and looting (probably including that in the Egyptian National Museum); and by extensively portraying on government television an alleged widespread breakdown of law and order, the regime cleverly elicited the population’s desire for security. While some of that desire was filled by vigilante action, it remained clear that the military was looked to as the real protector of personal security and the nation as a whole. Army units in the streets were under clear orders to show their sympathy with the people…

Even in the best-case scenario of a rapid return to stability, Egypt faces a cash crunch. Capital flight, loss of foreign direct investment, drying up of tourist revenues, downgrading of sovereign debt and commensurate increase in interest, and lost earnings from interrupted production will all hammer the revenue side of the balance sheet. The expenditure side will be placed under yet more stress by acceleration of inflation already running at 10 percent, devaluation of the currency, and need to repair damage resulting from the clashes. Egypt will have to turn to its “friends” if it is to avert economic disaster and if the regime that just narrowly survived defeat is not to be challenged yet again.

The Obama administration, having already thrown its weight behind the military, if not Mubarak personally, thereby facilitating the outcome just described, can be expected to redouble its already bad gamble. Fearing once again that the regime might be toppled, it will lean on the Europeans, the Saudis, and others to come to Egypt’s aid. The final nail will be driven into the coffin of the failed democratic transition in Egypt. It will be back to business as usual with a repressive, U.S.-backed military regime, only now the opposition will be much more radical and probably yet more Islamist. The historic opportunity to have a democratic Egypt led by those with whom the U.S., Europe, and even Israel could do business will have been lost, maybe forever. Uncle Sam will have to eat yet more humble pie, served up by the dictator who has just been insulting him.