News of Mubarak's imminent release looks likely to inflame a highly volatile mood in Egypt. It comes after the army's clearance of two Cairo protest camps last week, which sparked bloodshed in which at least 900 people have been killed and unprecedented polarisation..'The prospect of Hosni Mubarak making a comeback is yet another blow to the hope of a 'political' solution being found by EU statesmen and envoys as they mill around in Brussels and utter vacuous statements about an "urgent review" of the $5 billion they give in aid.
The Egyptian military is large self financing from having over a third of the the economy of Egypt under its control. Having said that, the 2011 revolt against Mubarak empowered the military whose top generals had come to resent Mubarak's nepotism.
The real problem is the potential for destabilisation in the Sinai Peninsula after 26 policemen were shot dead. One reason the US is wary of going against the Egyptian military in spite of the coup and the attempt to eliminate the Muslim Brotherhood is that there is no other force that can ensure security there.
The Egyptian army knew that if they were to launch a military campaign against the Muslim Brotherhood, as part of its remit of 'counter terrorism' that the US has supported, the upsurge in jihadism would only serve to make them even more indispensible to external powers.
The threat to the border with Israel, and Saudi Arabia which is just across the Gulf of Aquaba, can only escalate if there was protracted violence in Egypt. Many unemployed angry young men who supported the Muslim Brotherhood will be tempted to turn to join terrorist groups.
The security of Sinai has been deteriorating since Britain and France helped insurgents in Libya overthrow Colonel Gaddafi in 2012. Weapons have been smuggled in to Sinai from Libya where jihadists have retained their arms and are irate at the way Western backed elites grabbed the oil pie for themselves.
Since 2012 Libya has been in a state of chaos. 30,000 have died since the West's military intervention ended. Many battle hardened jihadists moved to Syria after the collapse of the Gaddafi regime and will be spoiling for a fight in Egypt. Bedouin tribesmen are also hostile to the Egyptian state.
The chaos in Egypt emboldened jihadists to try and cause problems on the border from the outset of the coup. On July 4 2013 militants in the Mazar area blew up a gas pipeline to Jordan and Israel. On July 7 another bomb attack happened near El-Arish in North Sinai.
This upsurge of jihadist violence happened before the Egyptian military upped the ante and started clearing the street camps and mowing down Muslim Brotherhood protesters. The Izzadeen al-Qassam Brigades, the military wing of Hamas, is already protesting for Morsi.
Historically, Hamas is an ideological offshoot of the Egyptian Muslim Brotherhood. But it is isolated not just by the coup in Egypt, which sends the signal that only armed resistance is needed, but also by the fact that Iran cut off its funding after it broke off from Hizbollah.
The Syrian Civil War caused the old unity against Israel between Hamas and Hizbollah to fracture on sectarian lines. Feeling threatened , Hamas has condemned the massacre in Egypt and the Egyptian military could potentially react with violence to attacks coming from Gaza.
Within the Gaza Strip, there are already divisions about whether to stay in or out of conflict with Egypt and possibly, by extension, Israel. The air strike in Rafah on August 9 against militants has led to conjecture it was an Egyptian helicopter attack or Israeli drone strike.
The spectre of a joint Egyptian-Israeli action in Sinai is one clearly wanted by Al Qaida affiliated fanatics such as Ansar Bayt al-Maqdis (Supporters of Jerusalem), has already led to retaliatory rocket attacks on Eilat in southern Israel.
A BBC report three hours ago underscored the terrifying prospect of a regionwide conflagration, ( Sinai attacks: Dark omen for Egypt?)
'American officials are also worried that the generals might respond to an aid cut-off by suspending security co-operation or even allowing conditions in Sinai to worsen. That, in turn, might inflame Gaza and jeopardise the peace talks between Israelis and Palestinians, recently resumed after considerable American diplomatic effort.
Instability in Sinai has also resulted in repeated attacks on gas pipelines to Jordan, putting pressure on the fragile economy of a key American ally.
Sinai may be a dark omen of things to come in Egypt.
If the government acts on its threat to ban the Brotherhood, then the group's more radical and violent Islamist counterparts, including those in Sinai, will have a surfeit of recruits.
State repression of the Muslim Brotherhood in the 1950 and 1960s drove it underground and was instrumental in shaping the ideology of the modern, international jihad. The present leader of al-Qaeda, Ayman al-Zawahiri, was a young member of the Brotherhood who moved from Islamism to jihad in that period.
Today, that process would have the added advantages of social media, weak states like Libya on Egypt's border, and the context of flourishing al-Qaeda affiliates in places like Yemen and Syria.The situation in Egypt has the hallmarks of a serious global crisis. If the Sinai Peninsula becomes haven for terrorists, attacks on the Suez Canal and on oil and gas pipelines could cause potential disruption to oil supplies to Europe and the US as well as the import and export of global cargo.
Should Egypt founder deeper into violence, the chaos could spread even into Saudi Arabia creating an oil price shock and the global economy to go into meltdown. The entire framework of international relations could change dramatically and dangerously.