About a year ago, on June 30, 2012, Mohamed Morsi took his oath of office to become the first democratically elected president in Egypt. Though barely eking out a victory over Ahmed Shafik with 51.7% of the vote, Morsi acted as if he and his Muslim Brotherhood allies had a clear mandate from the people to rule as they wished. The troubles began brewing back in November of last year, when Morsi decreed that all decisions he made since June of that year are not subject to appeal of any other authority. As we mentioned in a past
Casey Daily Dispatch, he essentially showed democracy the middle finger and was poised to establish himself as the next dictator of Egypt.
He might have succeeded in doing so, however, if it was not for the fact that he managed to anger his army with some reckless statements—possible Egyptian participation in the overthrow of Syrian leader al-Assad being one of many. To say that he mismanaged the economy would also be an understatement, as he was unable to make most of the reforms needed to pull Egypt into prosperity. In fact, Egypt's economy was floundering under Morsi, and the government was forced to take loans out from its Gulf neighbours just to stay afloat.
The calls for Morsi's resignation grew by the day, and millions of people flooded into the streets to voice their opinion at Tahrir Square, the place where anti-Mubarak protests gathered during the Arab Spring. Finally, on June 30, the military issued an ultimatum to Mohamed Morsi: Come to a suitable solution with the opposition, or the military will do it for you. Morsi chose the latter, which led to the military ousting Morsi, suspending the Constitution (which was being drafted by Morsi), and imposing an interim government.
Was this really a case of Egyptians rising to overthrow an unpopular leader? Or is there something bigger behind the scenes?
Consider the implications of an Islamist Egypt, particularly if the country were to become more fundamentalist. Morsi's policies before he was ousted certainly indicated that the Muslim Brotherhood indeed has plans to push Egypt away from secularism and toward a greater dependence on Sharia law. As Egypt is one of the most important cultural influences in the Middle East, the rise of Islamist ideology in the country could easily spread to nearby countries, such as Turkey and Libya… perhaps even Saudi Arabia, where the populace has been grumbling that the opulence of its leaders contrasts greatly with the teachings of the prophet Muhammad.
An Islamist Egypt would pave the way for other Islamist regimes or groups to rise up all over the Middle East, many of which would harbor anti-American ideals fueled by decades of unwanted American intervention in Middle Eastern affairs. These Islamist regimes would waste no time to squeeze the U.S. out of the global energy picture by hitting where it hurts: the petrodollar.
An increasingly Islamist Middle East—along with Russia and China—would jump on the idea of trading oil in currencies other than the U.S. dollar. For Americans, this would be disastrous, as prices in the United States would begin skyrocketing the day it stops being the world's reserve currency. It is understandable, then, that the United States will stop at nothing to preventing this from happening.
And if it means that the U.S. has to topple a government that is not aligned with its interests, that's just too bad. The U.S. may have won this battle for the petrodollar, but this is definitely not the last time the very foundation of America's economy will be threatened.
What does this mean for the rest of us, particularly those trying to profit from the situation? It means that as the war over petrodollars continues to rage, we will continue to see political instability in the Middle East—which means volatility in the oil markets. In order to minimize the new political risks, investors will begin to flock toward companies that are in safe jurisdictions and have a stable amount of production.
Don't you want to be secure before the real storm hits? If so, take a
free, three-month, risk-free trial of our Casey Energy Report, and learn just how we are going to navigate the treacherous waters to the profits ahead.