Periscope: Why do we care about Egypt?

Why Do We Care About Egypt?

Dont dwell on what went wrong. Instead, focus on what to do next. Spend your energies on moving forward toward finding the answer. - Denis Waitley

Why Do We Care About Egypt?

Why do we care so much about Egypt? How might this affect our investments?

Egypt has 84 million residents, almost all of them in densely packed urban areas, and a big fertility rate; the United Nations calculates that the population will reach 100 million, or one-third of the USA, by 2030. (1)  

Egypt imports its food and oil. Petroleum production peaked in 1996 and Egypt now, like the USA, is a net importer of fuel. Unlike the USA, the Egyptians have comparatively few likely reserves left untapped. Further, Egypt is vulnerable to food shortages, in particular wheat. Egyptians eat a lot of bread and they import more than half of what they eat. They simply do not have enough arable land to support their population today--or growth tomorrow!

The key to Egypt is its control of the Suez Canal. Egypt is the geographic link between the Middle East and Africa, between the Islamic world and most of the rest of the world. Egypt extracts what has brilliantly been called "strategic rent" from the USA and other developed countries that depend upon stability in the region to maintain their daily operations.

If, in fact, the worst continues to play out in Egypt then we can expect disruptions in trade that passes through the Suez Canal.  As the USA continues on a path towards energy independence and as technology continues to develop incredible breakthroughs in sustainable energy, Egypt will likely become less strategic. Egypt is a country that exaggerates the challenges we already face or may face over the coming years.

For More Information

I am finishing this blog almost one week after I wrote the newsletter, and the newsletter contains more information.  I am sure we will get better as time passes. In fact, I am at the pool with the kids as I type on the ipad! 

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Stratfor Newsletter, July 4, 2013 “Egypt: Persistent Issues Undermine Stability”

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