Tag Archives: Tunisia

Ending The Egyptian Revolution; Murbarak Hand Over Power To Military

President Hosni Mubarak on Friday evening yielded to Egypt ’s 18-day youth revolution, handing over power to the military, in the second ouster of an Arab leader by an overwhelming wave of popular upheaval sweeping the Middle East.

As Tahrir Square, the nerve-center of the revolt that started less than three weeks ago, exploded into massive chants of “He gave up, he gave up” and drivers sounded their horns in a festive tune across Cairo’s streets, the region’s largest country and one of its heavyweights bid farewell to 30 years of autocratic Mubarak rule, The Financial Times reports.

Mr Mubarak’s exit, in the face of an unstoppable uprising that refused every concession short of his immediate departure, came exactly four weeks after Tunisia’s Zein al-Abidine Ben Ali was ousted by popular protests, in an Arab world where the people have suddenly discovered their power to change the status quo.

“Egypt will be heaven in 10 years,” declared Wael Ghoneim, the Google executive who had emerged as a leading symbol of the youth revolution.

“I cannot get a grip of myself, it is overwhelming,” said a tearful Karim Arafa as he celebrated in Tahrir Square . “I’m so proud to be an Egyptian. The people have overcome, we have won.”

A senior member of the Muslim Brotherhood, Egypt’s biggest opposition group, said Egyptians had achieved the main goal of their popular uprising, according to Reuters.

Unlike Tunisia , however, the military, the only institution still respected by people but also most concerned about maintaining stability, has now stepped out of the shadows into direct rule for the first time since the 1952 officers revolt that brought down the monarchy in Egypt .

World Leaders Reactions


World leaders have begun reacting to the announcement that Hosni Mubarak has resigned as Egypt’s president and handed over power to the armed forces.

The following statements are given to Al Jazeera:

Catherine Ashton, the European Union’s foreign policy chief, said the move showed Mubarak had “listened the voices of the Egyptian peopleand opened the way to reform in the country.

“It is important now that the dialogue is accelerated leading to a broad-based government which will respect the aspirations of, and deliver stability for, the Egyptian people,” she said just after Egypt’s vice-president delivered the news on Friday.

“The future of Egypt rightly remains in the hands of the Egyptian people,” she said.

Barack Obama, the US president, is due to make a statement on the development later on Friday.

The White House said Obama watched the television coverage of history unfolding outside a meeting at the Oval Office.

A day earlier, the US leader had said Cairo “must spell out a clear path to democracy”.

Angela Merkel, the German chancellor, hailed Mubarak’s decision as an “historic change”, and called on the country to respect its 1979 peace treaty with Israel.

Her sentiments were echoed by a senior Israeli official, who said: “We hope that the change to democracy in Egypt will happen without violence and that the peace accord will remain.”

David Cameron, Britain’s prime minister, also urged Egypt to “move towards civilian and democratic rule”.

“Egypt now has a really precious moment of opportunity to have a government that can bring the country together,” he said.

Meanwhile Switzerland reacted by saying it was freezing the assets potentially belonging to Mubarak, according to a foreign ministry spokesman.

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Egyptian Government Has Internet Kill Switch

While the US, and most likely three or four countries more,  are racing to develop a so-called “kill switch” that can turn off the whole internet instantly, it seems like the Egyptian government already have one in place. According to a report by Department of Homeland Security’s Infosec Technology Transition Council, obtained by Wired.com, the Egyptian government shut down most of its country’s internet not by phoning ISPs one at a time, but by simply throwing a switch in a crucial data center in Cairo.

“Most of the outage was effected through a breaker flipped in the Ramses exchange, and the rest was phone calls and arm-twisting.”

Department of Homeland Security

The Ramses exchange refers to a central building in Cairo where Egyptian ISPs meet to trade traffic and connect outside of the country, a facility known as an internet exchange point. The report’s timeline also contradicts many observers’ guesses that a smaller internet provider called Noor escaped the initial shutdown because it provided connectivity to Egypt’s stock market and several government agencies.

The author of the report,  Bill Woodcock, an expert on internet security and infrastructure — especially connection hubs in developing countries — did not immediately respond to a request for comment on the document, wired.com writes.

Most media, including Wired.com, reported that government officials contacted individual ISPs and told them to shut down their networks, under threat of losing their communications licenses.

But the document (embedded below) contradicts that narrative, providing new details on the outage — largely laying the blame on Egypt’s internal security service, while describing the “flip-the-switch” shutdown as a “politically liberal” choice by the Egyptian communications ministry.

That’s because turning off the internet at the center exchange made it very easy to switch it back on, prevented surveillance, made it clear to everyone what had happened, and prevented spyware from being placed on the networks.

Compare that to Tunisia, where Facebook login pages were manipulated — presumably by the government — to grab the passwords of Tunisian activists in order to delete their accounts and protest pages.

The presentation suggests the week-long shutdown had severe effects on Egypt’s economy, in the short term from loss of commerce, and in the long term from a likely plummet in tourism, and an exodus of call centers from Egypt.

The presentation concludes that the ministry’s course of action in obeying the orders may have some positive effects in the future:

“Itʼs unlikely that Egyptʼs communications ministry will ever be asked to flip that switch again.”

Big Brother Barack

The resurgence of the so-called “kill switch” legislation happened on the same day Egyptians faced an internet blackout designed to counter massive demonstrations in that country.

The bill, which has bipartisan support, is being floated by Sen. Susan Collins, the Republican ranking member on the Homeland Security and Governmental Affairs Committee.

The proposed legislation, which Collins says would not give the president the same power Egypt’s Hosni Mubarak is exercising to quell dissent, sailed through the Homeland Security Committee in December but expired with the new Congress weeks later.

The bill is designed to protect against “significant” cyber threats before they cause damage, Collins says.

“My legislation would provide a mechanism for the government to work with the private sector in the event of a true cyber emergency,” Collins says.

“It would give our nation the best tools available to swiftly respond to a significant threat.”

The timing of when the legislation would be re-introduced was not immediately clear, as kinks to it are being worked out.

An aide to the Homeland Security committee described the bill as one that does not mandate the shuttering of the entire internet. Instead, it would authorize the president to demand turning off access to so-called “critical infrastructure” where necessary.

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Please, Don’t Mention “Contagion”!

Mention the word “contagion” to people in the credit markets and most of them will immediately think of the euro zone debt crisis, Greece, Ireland, and start swapping CDS’ like crazy!  This, of course, would be perfectly natural given that the fate of peripheral sovereigns is the ones that’s shapes spread direction these days. But that cognitive association may be about to change, according to Markit Credit Research.

“Investors sit up and take notice of events in North Africa. Over the last two weeks we have seen the “Jasmine Revolution” unfold in Tunisia, leading to the overthrow of a dictatorship and ongoing unrest. Investors have been asking is this contained or is it contagious? If it’s the latter then who’s next?”

Gavan Nolan

“The last few days have shown that the contagion scenario is more likely than it seemed last week and a frontrunner has emerged for the next country in line. Egypt has seen its fourth consecutive day of protests today, with anti-government demonstrators taking their cue from their Tunisian neighbors and demanding that President Mubarak, Egypt’s autocratic president, step down. The authorities have responded by cutting internet access and using force to break up the protests,” analyst Gavan Nolan writes in his weekly summary.

Credit investors have taken note, and the sovereign’s spreads have widened 17 bp’s Friday, to 405 bp’s ,and nearly 100 over the last week.

Egypt has always been one the riskier names in the region due to its considerable debt burden, high inflation and current account deficit; its spreads hit 800bp in October 2008 post-Lehman crisis.

It is also one of the more liquid credits, having a Markit Liquidity Score of 1 (the highest available). Morocco, a less liquid name (Markit Liquidity Score of 3), has also widened this week.

But now the markets are looking for answers for the “who’s next?” question beyond North Africa. Spreads have widened in Lebanon, Jordan and rich Gulf states such as Saudi Arabia, Qatar and Bahrain.  Even Israel – a liquid name – has seen its cost of protection rise sharply today. One might ask why spreads should widen in a country that is the only democracy in the region. But Egypt is Israel’s closest Arab partner, and the fall of Mubarak could leave it isolated if the dictator is succeeded by a less-friendly regime. Investors are starting to price in this risk,” Nolan points out.

In fact, one could take the view that the markets have been under-pricing political risk in emerging markets.

Investors have been focused, rightly, on the improving economic fundamentals of many countries in the less developed world. But politics matters, particularly in sovereigns with unstable, undemocratic systems.

“We remarked last week that the Markit iTraxx SovX CEEMEA was back above the Markit iTraxx SovX Western Europe index, a trend that has continued this week. This is a result of peripheral euro zone sovereigns rallying more than anything else. But the CEEMEA has widened in recent days as investors use the index to reflect their uncertainty on emerging markets. This is despite there being only three Middle Eastern names among the underlying constituents (Turkey, Qatar, Abu Dhabi). The chart above shows that the skew has widened on the CEEMEA, indicative of the widening in the index compared to the relative stability of the constituents. It is likely that the markets will start to differentiate between the countries in focus and price accordingly.”

But much will depend on how the Egypt story develops and whether the contagion effect swamps attempts at more discerning analysis.

Politicians will also have a role to play in determining spread direction in the developed world.

“Most of the key policy makers are in Davos, and it seems the informal talks of the forum have pushed opinion towards a more radical response to the sovereign debt crisis. The option of using the EFSF to buyback Greek government bonds is now “on the table”, according to EU officials. The credit markets have been nonplussed by the news thus far; they want concrete measures (unlikely before EU council meeting on March 24).” Nolan writes.

Aside from sovereigns, investors will be keeping an eye on developments in the banking sector. Spain has announced plans to boost the capital of its cajas, and the markets reacted positively to news of a restructuring at La Caixa, the biggest caja.

There was some confusion in the market over whether it would result in a succession event, though the consensus so far is that it isn’t.

“Earnings will continued to be closely watch, with bullish investors hoping that the broadly positive trend extends into next week,” credit analyst Gavan Nolan concludes.

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