The Domino Theory, Egypt's Military and the Mighty Dollar

Mubarak's hesitation to simply waltz off the stage after 30 years in power was an acknowledgment that he is fully aware of the implications of doing so, for Egypt, for the Middle East, and beyond. This is a truly pivotal moment in Egypt's and the region's history, but is also a defining moment in just how significant social media and instant global communications can be in influencing the course of events. In spite of the success that Facebook and Twitter have had in influencing events in Tunisia and Egypt, we are currently inclined to view this in a mostly positive light, but there is surely a dark side to rapid transition of power, whether it is from freedom to authoritarianism, or the reverse.

It is hard to believe that the Domino Theory is in play in the Middle East. The decades-old regimes in Jordan, Syria, and Saudi Arabia are unlikely to all fall neatly into line and disintegrate in a matter of weeks or months, and the bells of freedom unfortunately are unlikely to ring from sea to shining sea any time soon. The only reason the crowds remained in Tahrir Square is because the army did not crush them in a Tienanmen Square moment. The army's benevolence toward the protesters is due in part to its historical obligation to safeguard the country's future. But it also happens to also coincide with safeguarding the armed forces own future, and the pockets of its generals. With tens of billions of dollars of investment in the Egyptian economy, they stand to lose more than anyone if events spin out of control.

A cynical interpretation of current events? I think not. In today's world, part of any realpolitik analysis of what happens next must inevitably include who has the most to lose. After peace broke out with Israel in the 1960s and 1970s, the Egyptian military invested heavily in the economy and is now estimated to own up to 40% of the economy. The military wants a peaceful transition of power because it is focused on maintaining its own power and prolonging its income. To the extent that whatever comes to rule Egypt does not interfere in the military's ability to operate as it has for decades, I don't think it matters all that much to the military's leaders.

As I see it, there are really three paths Egypt can take now: that of a truly democratic polity, a radical Islamic state, or a Turkish style polity wherein the military plays a largely positive role in maintaining forward momentum. Egypt stands about as much chance of becoming a truly democratic polity and it does of becoming an Iran-like state. What seems more likely is that a middle ground political force will become apparent, the armed forces will back him, and a gradual transition to democracy will occur. The question is, will be it be a uniquely Middle Eastern form of democracy (democracy 'light'), or will it be a wolf in sheep's clothing? My expectation is the latter.

The citizens of the Middle East and elsewhere should be careful what they wish for. Democracy sometimes delivers regimes that are distasteful, because they are the will of the majority of the people. One need look no further than what democratic elections delivered in Palestine or Venezuela. It may not be too long before the people of Egypt reminisce about the stability and predictability of life under Mubarak, as reprehensible as he was to many. Surely, many Egyptians, Israel, and the U.S. government, are already reminiscing.

Daniel Wagner is Managing Director of Country Risk Solutions, a political risk consulting firm based in Connecticut. He is also Senior Adviser to Political Risk Services.