Inside Egypt
Research for Online Investors

by John Dalt

1/31/11

We are all familiar with the Palestinian group “Hamas.” Hamas was split off from the “Muslim Brotherhood” in 1987 as a political wing. Hamas won the January 2006 elections in the Palestinian territories. The U.S. and other countries cut off aid to the Palestinian administration as Hamas is an arm of the Muslim Brotherhood.

In 2007, Hamas attacked Israel with rockets and suicide bombers. This continued through mid 2008 before a cease fire was declared. During the ensuing calm of four months, Hamas dug a tunnel under the Israeli border security fence. Their goal was to abduct Israeli soldiers. Israel discovered the tunnel and took military action that resulted in seven Hamas member deaths. Hamas launched a massive strike against Israel using rockets that had been covertly moved into the Palestinian territory.

Unconfirmed reports on Saturday to Stratfor Global Intelligence from inside Hamas are that Egyptian police are not patrolling the Rafah border between Gaza and Egypt.  Hamas armed men are crossing into Egypt, to collaborate with the Muslim Brotherhood.  The Muslim Brotherhood is involved in the Egyptian demonstrations.

Some of their members are dressed in plain clothes. They are destroying public property to create chaos and the perception that protesters represent a public menace. The Muslim Brotherhood is organizing neighborhood “peoples committees” to protect public and private property.

The Muslim Brotherhood is also supplying food and water to those that fall into their sphere of influence. The Muslim Brotherhood is not happy with President Mubarak replacing his cabinet and naming a Vice-President as they do not want "half-measure's" to be successful. They must escalate the protests against Mubarak as the enemy of the people so they can topple the government.

I thought reports of the Muslim Brotherhood’s (MB) activities in Egypt were fear mongering to fill the 24 hour news cycle.  This direct information from inside Hamas, courtesy of Stratfor, causes me concern.  If Mubarak falls to a “democratic” government, Hamas will not reduce their pressure.  They will increase it to make the new government seem ineffective.  This will create demands from the populace to replace the weak government with a strong government that can bring “order” back to the country.

Mohammed ElBardei has tried to capitalize on the current tension in Egypt.  NPR reports he has offered himself as an alternative to Mubarak.  He did not run for president in the last elections because he claimed they would be rigged and an opposition candidate could not win.  He does not have a natural base in the country because he has not lived there. 

ElBardei was at his house in Vienna when the protests started.  He is widely recognized because of his receipt of the Nobel Prize as the director of the International Atomic Agency.  In that capacity he stood up to the U.S.  He told the U.N. Security Council that  documents the U.S. had portraying Iraq's attempts to purchase uranium from Niger were "in fact not authentic."

Hamas will be in the wings, waiting for ElBardei or any other weak leader to take power. Then like a Jaguar, the MB will pounce and have their prize. The script will be a repeat of history. Iran, Afghanistan, Gaza; all have fallen to fundamental extremists. Hamas and the Muslim Brotherhood seek to export radical Islam throughout the region.

On Sunday, Stratfor reported that Egyptian Police are redeploying across the country.  After the cabinet was replaced on Saturday there was a showdown (behind the scenes) between the internal security police and the armed forces.  Egyptian Interior Minister Habib al-Adly reportedly ordered his internal security forces to stay home on Friday in a power struggle with the army.

Habib al-Adly felt he and his forces were being pushed to the sidelines, so he wanted the army to realize that violence would spiral out of control if the Interior Minister and police were not involved in controlling the protesters.

There were reports to Stratfor that some plainclothes police were involved in jail breaks, robberies, attacks and break-ins in upscale neighborhoods. Al-Adly is widely detested by the population of Egypt and was considered one of the first ministers that Mubarak should sack. Al-Adly has played the crisis seeking to hold onto his position and power in any new government.

The curfew has been extended from 3 p.m. to 8 a.m.  Egypt is seven hours ahead of the U.S. Eastern Time zone.  This means the news we hear is mostly rehash of what happened when we were asleep.  As you read this, it is the middle of the night in Egypt, Tuesday morning.

Stratfor Global Intelligence is a wonderful resource that publishes free reports.  I subscribe to their service as it helps with background information concerning topical world events.  You may wish to sign up for their free reports, or you can count on us to interpret their information for how it affects stock markets and investments we may recommend.

Egypt is in the Jaws of Hamas this week. Will they escape? We watch anxiously, but probably not as anxious as the governments of Israel and Jordan. The people of Egypt are being swept up in an emotional event that can easily be subverted to their detriment.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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