Monday, 19 August 2013

Egypt: European and US Energy Security.

"There may be years of turbulence in Egypt and other countries going through this profound debate about the nature of democracy and the role of religion in their society
What's happening now in the Middle East is the most important event so far of the 21st century, even compared to the financial crisis we've been through in terms of its impact on world affairs and I think it will take years and maybe even decades to play out".
"It is the government of Egypt, I don't think I can answer it better than that. In foreign policy terms these are the people we deal with in power in Egypt; it's not for us to take sides." British Foreign Secretary William Hague, Monday 19 August 2013
Shooting dead protesters in the streets is a peculiar way of advancing a 'profound debate' about the nature of Egypt's future as a democracy. It would have been more interesting to hear if Hague thinks the $1.3 billion the US gives annually should be cut or not. Or, indeed, aid from the EU.

Even Senator John McCain has come out to call the military takeover a coup and condemn President Obama for not cutting the $1.3 billion in aid to the Egyptian military. Therefore, what politicians say on the military coup can not be taken at face value.

What matters is the fact that the West depends on the Egyptian military to enforce the 1979 Camp David Treaty between Egypt and Israel because this underpins the entire foreign policy strategy of the US in the Middle East ( one shared almost wholly by Britain ).

The reason Hague is not 'taking sides' ( as he clearly has in Syria because the 'rebels' are supported by Saudi Arabia and Turkey ) is not only British arms deals with Egypt, which amout to $90 million, but the fact the West depends on the Egyptian military to uphold 'stability'.

It is only the fact that the Egyptian army is proving to be a law unto itself and snubbing Western concerns about the embarrassing scale of the brutality being meted out in the streets of Egyptian cities that the EU is now talking about halting the $5bn in aid it gives.

Given the fact that the Egyptian army and Tamarod have claimed they do not depend on Western aid anyway and that Egypt received $12 billion from the Gulf States after the coup the question is what really is at stake for the West rather than predictable accusations of double standards.

In the case of the US, the $1.3 billion provided for the Egyptian military to buy US weapons is very much about keeping the military-industrial complex content. For the EU, each member state has its own relationship and interests with Egypt. Italy and the Czech Republic are notable arms suppliers to Egypt.

Yet a common interest all the Western powers have is with the security of Egypt as a transit nation for oil and gas via the Sumed pipeline and the Suez Canal. . The EIA states 'In 2012, about 7% of all seaborne traded oil and 13% of liquefied natural gas (LNG).

Despite the goal of 'energy independence, the US still imports LNG from Egypt and Qatar, though not a great deal and this has been declining recently. It also imports from another state embroiled in turmoil after the Arab Spring of 2011 which is Yemen, now menaced by Al Qaida terrorism and US drone strikes.

But with Qatar's and Oman's exports of LNG via the Suez Canal forming a growing importance to EU states, including Britain but especialy states such as Spain and Italy, the security and stability of Egypt is going to be considered vital to economic recovery after the the 2008 crash.

One intractable problem in Egypt is that it still exporting gas when it is clear that it needs it for domestic purposes. One reason Britain prioritises security and may well not oppose a military regime is the interests companies such as the BG Group ( British Gas ) is responsible for a third of all gas produced in Egypt.

In May 2013 BG Group indicated that it wanted to increase drilling operations in Egypt. These are the 'trade interests' Hague had in mind when he first started reacting to the crisis in Egypt that followed the coup. With North Sea gas depleting rapidly, 'energy security' has become a main foreign policy aim.

The Egyptian military knew it could carry out the coup with the West caught over the oil and gas barrel because of their overdependence upon it and that 'instability' and the spread of violence across the Maghreb and Middle East could cause an oil price shock that could destroy Western economic recovery.

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