Cable dated:2006-01-29T11:49:00 S E C R E T SECTION 01 OF 02 CAIRO 000493 SIPDIS FOR THE DIRECTOR FROM THE AMBASSADOR E.O. 12958: DECL: 01/26/2016 TAGS: PTER, KCRM, PREL, EG SUBJECT: SCENESETTER FOR FBI DIRECTOR MUELLER’S VISIT TO EGYPT REF: 05 CAIRO 8938 Classified by Ambassador Francis Ricciardone for reasons 1.4 (b) and (d). Director Mueller, 1. (C) Thank you for rescheduling your visit to Egypt. The Egyptians will welcome you warmly, but you should be aware of some shifts in the political context and atmospherics of our relationship with Egypt since we last updated you in December (reftel). Several internal developments in the past eight weeks have put a strain on our bilateral ties, although the core of our partnership in law enforcement and mutual security affairs remains solid. 2. (S) Your visit presents an opportunity to review and upgrade our law enforcement/intelligence cooperation with the Egyptians. The CIA has a strong and growing relationship with the Egyptian Intelligence Service (EGIS). We believe your visit can help the FBI to establish a similarly robust and productive partnership with the State Security Investigative Service. Although they see the national interest in improving law enforcement cooperation, leaders like Omar Soliman, Interior Minister Adly, SSIS Director Abdel Rahman and especially President Mubarak–all of whom we expect you will meet–remain suspicious of our intent. On our side, we should be ready with concrete proposals to advance practical cooperation in law enforcement. Exchange of forensic and biometric data and associated upgrades of Egypt’s capabilities in this field could provide a good beginning. 3. (C) Three developments in the past eight weeks have altered the political context. First, widespread irregularities and violence marred the parliamentary elections which concluded on December 8, drawing criticism from both domestic and international quarters, including the United States. Second, the December 24 conviction and jailing of opposition leader Ayman Nour, was an unconvincingly disguised act of political repression. Third, the December 29 operation by GOE security forces (who fall under the authority of Interior Minister Adly) to disperse a large group of Sudanese refugees squatting in a downtown park went badly awry, with 27 Sudanese dead. All three security-related incidents have undermined Mubarak’s credibility as a leader of democratic reforms, and has strained our ties with Egypt. The bedrock of our strategic interests with Egypt, however, remains as important as ever. 4. (C) After a long period of quiet, the specter of terrorism returned to Egypt in late 2004. Interior Minister Adly, and State Security Director Hassan Abdel Rahman, have now seen three major terrorist incidents on their watch: — The bombing of three resorts in the Sinai, October 2004; — The bombing at a major Cairo tourist market, April 2005; and — The Sharm el-Sheikh bombing, July 2005. 5. (C) Not withstanding these terrorist attacks and the MOI’s role in the election problems and Sudanese refugee deaths, Interior Minister Adly held on to his seat in the late December cabinet shuffle, and will remain a key interlocutor for us in the foreseeable future. Adly is an old-school, conservative security man, highly skeptical of any form of democratic political opening that might impact traditional MOI SoPs. But he has been very cooperative with us in most operational areas of security and law enforcement. 6. (C) We hope you will stress our interest in expanding technical cooperation, generally in your meeting with President Mubarak, and more specifically in your meetings with the Minister of Interior and the State Security Director. For example, Egypt should be a leading candidate for the FBI’s initiative to upgrade sharing of fingerprint and other biometric data on suspected terrorists and other criminals. Now that Washington has identified a funding source we hope you will be able to tell the Egyptians that we are ready to move forward with this project, which would include extensive training and equipment upgrades for Egyptian personnel. In addition, we hope you will invite State Security Director Hassan Abdel Rahman to bring a high level delegation to Washington to visit FBI HQ and the Quantico training facilities early this year. We expect that once he sees what the FBI can offer and establishes some personal contact, he will be more forthcoming with intelligence cooperation on their side. Not withstanding his suspicions, he probably would welcome an offer from you to expand training opportunities for Egyptian personnel at the FBI Academy. 7. (C) Until recently, the GOE was reluctant to discuss publicly the issue of Trafficking in Persons (TIP), which as you know has taken on a high policy profile in Washington. However, on January 23, Egyptian First Lady Suzanne Mubarak delivered the keynote address at an international conference on TIP in Athens, denouncing the practice and calling for stronger international coordination to combat it. Particularly if you meet Mubarak, you may wish to compliment Egypt and Mrs. Mubarak in particular, for taking on an unaccustomed new role as an outspoken advocate against TIP and reiterate USG interest in cooperating with Egypt in this campaign. 8. (C) The November-December parliamentary elections resulted in a five-fold increase in the number of seats held by independent candidates representing the outlawed but tolerated Muslim Brotherhood. The GOE has a long history of threatening us with the MB bogeyman. Your counterparts may try to suggest that the President,s insistence on greater democracy in Egypt is somehow responsible for the MB,s electoral success,and may even try to draw a cautionary example out of Hamas’ January 25 election victory. (The GOE sees Hamas, with fair reason, as spawned by the MB.) We do not accept the proposition that Egypt’s only choices are a slow-to-reform authoritarian regime or an Islamist extremist one; nor do we see greater democracy in Egypt as leading necessarily to a government under the MB. The images of intimidation and fraud that have emerged from the recent elections favor the Islamist extremists whom we both oppose. The best way to counter narrow-minded Islamist politics is to open the system. If the Egyptians are willing, the FBI could serve as a resource and partner, among other U.S. agencies and programs, in professionalizing the Egyptian security services and modernizing their investigative techniques. This would enhance the credibility of the security apparatus and remove an arrow from the Islamists, quiver. 9. (C) We believe the Egyptians will welcome your visit as a serious effort to enhance our law enforcement cooperation, and another mark–only three weeks after VP Cheney’s visit–of the American recognition of the value of our larger partnership across the board. RICCIARDONE Egypt The US embassy cables US foreign policy guardian.co.uk
Continue reading …Cable dated:2005-11-29T14:19:00 C O N F I D E N T I A L CAIRO 008938 SIPDIS FOR THE DIRECTOR FROM THE AMBASSADOR E.O. 12958: DECL: 11/28/2015 TAGS: PTER, KCRM, PREL, EG, OVIP, Visits SUBJECT: SCENESETTER FOR FBI DIRECTOR MUELLER’S VISIT TO EGYPT Classified by Ambassador Francis Ricciardone for reasons 1.4 (b) and (d). Director Mueller, 1. (C) Thank you for including Cairo in your travel to the Middle East. Your visit presents an opportunity to review and upgrade our law enforcement/intelligence cooperation with the Egyptians. The CIA already has a strong and growing relationship with the Egyptian Intelligence Service (EGIS). We would like the FBI to establish a similarly robust and productive partnership with the State Security Investigative Service. The Ministry does not yet recognize the benefit for their side of enhanced ties with the FBI. But leaders like Omar Soliman and especially President Mubarak, with whom we hope you will be able to meet, have the vision and influence to overcome these reservations. On our side, we should be ready with concrete proposals to kick start new levels of practical cooperation. Exchange of forensic and biometric data and associated upgrades of Egypt’s capabilities in this field could provide a good beginning. 2. (C) The return of the specter of terrorism in Egypt in late 2004, following seven years of safety is seen here as a wake-up call to the Egyptian security forces. Interior Minister El Adly, and State Security Director Hassan, — you will meet both — have now seen three major terrorist incidents on their watch: — The bombing of three resorts in the Sinai, October 2004 — The bombing at a major Cairo tourist market, April 2005 — The Sharm el-Sheikh bombing, July 2005; 3. (C) El Adly may lose his job over the Sharm bombings as well as the mis-management of the current Parliamentary elections. As a result, you may find the Egyptians more receptive to a U.S. initiative to upgrade our law-enforcement cooperation. 4. (C) One specific area of cooperation that I understand is under consideration is sharing of fingerprint and other biometric data on suspected terrorists and other criminals. This could involve training and equipment upgrades for Egyptian personnel. This is a terrific initiative. In addition, you should urge State Security Director Hassan to bring a high level delegation to Washington to visit FBI HQ and the Quantico training facilities early in 2006. Once he sees what the FBI can offer and establishes some personal contact, he will be more forthcoming with intelligence cooperation on their side. I hope you will also consider offering to continue and ideally expand training opportunities for Egyptian personnel at the FBI Academy. 5. (C) Your arrival in Egypt coincides with the end of a month-long series of parliamentary elections, in which the outlawed but tolerated Muslim Brotherhood (MB) has made substantial gains. The elections have been conducted in three rounds. The final run-offs will be held on December 7. The ruling NDP will retain the super majority it needs to control the legislative agenda, but with the MB holding as much as 20 percent of the seats, atmospherics and tone of debate will probably change dramatically. 6. (C) The Egyptians have a long history of threatening us with the MB bogeyman. Your counterparts may try to suggest that the President,s insistence on greater democracy in Egypt is somehow responsible for the MB,s electoral success. You should push back that, on the contrary, the MB,s rise signals the need for greater democracy and transparency in government. The images of intimidation and fraud that have emerged from the recent elections favor the extremists both we and the Egyptian government oppose. The best way to counter narrow-minded Islamist politics is to open the system. The FBI could serve as a resource and partner ) if indeed you are willing — in professionalizing the Egyptian security services and modernizing their investigative techniques. This would enhance the credibility of the security apparatus and remove an arrow from the Islamists, quiver. 7. (C) At the end of the day, we believe you can best pitch your visit as a serious effort to enhance our law enforcement cooperation. Both sides are absolutely committed to defeating violent extremists, and both sides can take more tangible steps toward meeting this goal. RICCIARDONE Egypt The US embassy cables US foreign policy guardian.co.uk
Continue reading …Click here to view this media (h/t Heather at VideoCafe ) A rival for the McCrankypants moniker, former Senator Alan Simpson wants to know why we aren’t jumping on his drastic spending cuts recommendations for Social Security and other social safety net programs. And of course, State of the Union host Candy Crowley laps it up, wringing her hands over the lack of desire of Americans to “sacrifice”: SIMPSON: If you don’t do something with the ones that are on automatic pilot like Medicare, then it crushes out all the discretionary spending. It just wipes it out. I say to people, now what do you love? Well, I love education, I love whatever culture. Great. Don’t do anything then and then it just crushed out. And if you don’t do anything with Social Security when you waddle up to get your check in the year 2037, you’ll get 22 percent less. We’re not balancing the budget on the backs of Social Security. We’re trying to make it solvent for our children and grandchildren. If they don’t make the hard stuff on Medicare and Medicaid, and don’t forget what we’re doing with Social Security, we’re taking care of the lowest 20 percent and taking care of people over 80, changes in the COLA, we’re not talking about privatization. These jerks who keep dragging that up are lying. We never suggested that. We’re talking about doing a hideous thing, to change the retirement age to 68 by the year 2050. And hear people howl and bitch about that. Well, what do they care about their kids or their grandkids? CROWLEY: Let me ask you, I was talking to a historian on the 50th anniversary of Eisenhower’s “military-industrial complex” speech. And he said that was a generation that understood sacrifice. And, you know, the historian said he got it and there are few people, you know, now on the public scene that understand the idea of sacrifice when it comes to Medicare, Social Security, and Medicaid because they had become — especially Medicare and Social Security have become sacrosanct, as had, until recently, the defense budget. Oh sweet Flying Spaghetti Monster on a stick. Remind me again, Candy and Mr. 300 Tits Milk Cow , what was the top marginal tax rate during Eisenhower’s day ? How about we ask those top income earners to sacrifice a little more instead of putting it on the backs of those who need Social Security and Medicare? How about lifting the income cap on Social Security? How about putting Social Security back in the lockbox as it was intended. None of those suggestions were in your Very. Serious. Report. And yet any one would fund fully those programs. And raising the retirement age to 68 in 2050 *IS* putting the sacrifices on the backs of our children and grandchildren. How old will they have to be to retire. I don’t disagree with Simpson that there is massive waste and inefficiency in the Defense Department that could be cut without hurting the military, including paying all those sub-contractors in the Middle East. But until he can start being honest about “sacrifices”, I keep fiddling along to his plaintive wails that no one is listening to him. Transcripts below the fold: CROWLEY: Joining me now here in Washington, Alan Simpson, co- chair of the National Commission on Fiscal Responsibility and Reform, which is a mouthful, and it was a pretty big report. How optimistic are you that anything close to the kinds of cuts and revenue enhancements that you’d like to make are going to come — become a reality? SIMPSON: Well, the reality will come very soon and will come when the debt limit extension comes up, and that will be before April 1st. But the next time you hear any politician, in the range of my lovely voice, mellifluous voice, croaking — if you have a career politician get up and say, “I know we can get this done; we’re going to get rid of all earmarks, all waste, fraud, and abuse, all foreign aid, Air Force one, all congressional pensions,” that’s a sparrow’s belch in the midst of a typhoon. That’s about six, eight, 10 percent of where we are. So I’m waiting for the politician to get up and say, there’s only one way to do this, you dig into the big four, Medicare, Medicaid, Social Security, and defense. And anybody giving you anything different than that, you want to walk out the door, stick your finger down your throat and give them the green weenie (ph). CROWLEY: Isn’t there a big selling job to be done here before you can get these politicians, who, after all, owe their jobs to the American people, to move? SIMPSON: Well, the god here in Washington is the god of re- election. And I think that god is a little tarnished. I think the feet are crumbling. I had — I won’t say who it was, a Democrat senator last — well, I won’t use the time. It was said to me, I’m ready to go out this time by carrying the ball on this program. In other words, I’m ready to do this even if it defeats me. CROWLEY: So when you look at the president saying, I want a discretionary spending freeze for five years — three years, and you see the Republicans saying, we want to go back to — and I can’t remember now what level… SIMPSON: 2008. CROWLEY: 2008 spending levels, peanuts both? SIMPSON: Peanuts. If you don’t do something with the ones that are on automatic pilot like Medicare, then it crushes out all the discretionary spending. It just wipes it out. I say to people, now what do you love? Well, I love education, I love whatever culture. Great. Don’t do anything then and then it just crushed out. And if you don’t do anything with Social Security when you waddle up to get your check in the year 2037, you’ll get 22 percent less. We’re not balancing the budget on the backs of Social Security. We’re trying to make it solvent for our children and grandchildren. If they don’t make the hard stuff on Medicare and Medicaid, and don’t forget what we’re doing with Social Security, we’re taking care of the lowest 20 percent and taking care of people over 80, changes in the COLA, we’re not talking about privatization. These jerks who keep dragging that up are lying. We never suggested that. We’re talking about doing a hideous thing, to change the retirement age to 68 by the year 2050. And hear people howl and bitch about that. Well, what do they care about their kids or their grandkids? CROWLEY: Let me ask you, I was talking to a historian on the 50th anniversary of Eisenhower’s “military-industrial complex” speech. And he said that was a generation that understood sacrifice. And, you know, the historian said he got it and there are few people, you know, now on the public scene that understand the idea of sacrifice when it comes to Medicare, Social Security, and Medicaid because they had become — especially Medicare and Social Security have become sacrosanct, as had, until recently, the defense budget. Do you agree with that? SIMPSON: Oh, yes. And I think what we were — we were stunned, we’re like the people who know too much, the 10 months that all of us spent there. And I’ll tell you, we saw things — we asked the defense — we asked Conrad and Durbin, what do you hear from the Defense Department when we talk about cutting contractors? They don’t know how many contractors they have. It’s something between 250,000 and a million. So our proposal is to cut 250,000 contractors out of the game. Let me tell you, guys, nobody is going to hurt the military. We’re not going to hurt Iran and Iraq. But this is the first war in our history where we never had a tax to support a war, including the Revolution. And nobody has sacrificed in this country, nobody, except the people in the military. And in our report we use words like “sacrifice,” “self-sacrifice,” we used words like “going broke.” And it’s written in English. It’s not written for pundits or parliamentarians or journalists. It’s written for the American people. CROWLEY: It is as every bit as much our fault, it’s not like, oh, those darn politicians on Capitol Hill won’t do anything. It really is that there isn’t the will out there among the American people to say, yes, I’ll take that hit. SIMPSON: Well, there’s not much of that… CROWLEY: Is that where the fault lies? SIMPSON: Well, yes. I’ll tell you, they sent these people in Washington to bring home the bacon. I mean, they sent the — they elected these people who could get them the dam, who could get them the new money, who could get them the downtown redevelopment, who could get them more and more and more, and they re-elected them every time. And now, you can’t get guys to get on the Appropriations Committee, that’s a switch, because it’s not going — it’s going to be the “disappropriations”… CROWLEY: There’s no fun there. SIMPSON: But they asked me if I had any regret. And I’m going to say it to you because of the delightful person — you have always been real. And I’m not toadying up. You’re authentic. But I had one regret. I meant to say that America was a milk cow with 300 million teats and not just Social Security. CROWLEY: Senator Alan Simpson, rare and real, we could use a little more of that in Washington. SIMPSON: Well, but there are people, let me tell you, that commission, I respect every one of them completely and we all agree that deficit denial is dead as a dodo bird. And if they want to keep playing the violin, well, deficits mean nothing, well, I’ll buy the drinks.
Continue reading …Click here to view this media The Egyptian prime minister would have you believe the arrests of dozens of journalists was all just a big misunderstanding. Prime Minister Ahmed Shafiq feigned surprise Sunday when he was told that journalists and human rights activists had been arrested at anti-government protests in his country. “Why are you detaining them?” CNN’s Candy Crowley asked. “Oh, frankly speaking, it’s not intended at all, my dear,” Shafiq replied. “I insist to assure all of the authorities here not to ban anyone or not to bother anyone doing his work. But during some periods, such as the period we’re passing now, you will not be — it’s rather difficult to be sure 100 percent that this man or either men get some bad behavior… and he doesn’t understand their work or their job or something like that, so we have to excuse him for such action done with this group because this is not at all intended, my dear.” Al Jazeera said last week that six of their reporters had been arrested and later released. On Thursday, ABC News released a comprehensive list of dozens of reporters that either been threatened or detained while doing their jobs. Since then, Al Jazeera reporters Ayman Mohyeldin and Sherine Tadros have also reportedly been arrested. “We were told by our reporters today that you have arrested another Al Jazeera reporter from Al Jazeera English as well as more human rights activists,” Crowley told Shafiq. “Do you have a way to get them to stop those arrests?” “After our telephone now, our contact now, I will go directly to check this point,” the prime minister said. “They are not allowed at all to do something like that.” Shafiq also insisted that Egyptian President Hosni Mubarak would not leave office before September although demonstrators are calling for him to step down now. “A lot of points must be covered before he leaves,” he said.
Continue reading …Only a thousand families count in a country that Mubarak and his cronies regard as their fiefdom There is a lot more behind Hosni Mubarak digging in his heels and setting his thugs on the peaceful protests in Cairo’s Tahrir Square than pure politics. This is
Continue reading …Former spymaster turned vice president accused Islamist group of extremism in his contacts with US officials, leaked cables reveal Egypt’s new vice president, Omar Suleiman, has long sought to demonise the opposition Muslim Brotherhood in his contacts with sceptical US officials, leaked diplomatic cables show, raising questions whether he can act as an honest broker in the country’s political crisis. US embassy messages from WikiLeaks’s cache of 250,000 state department documents, which Reuters independently reviewed, also report that the former intelligence chief accused the Brotherhood of spawning armed extremists and warned in 2008 that if Iran ever backed the banned Islamist group, Tehran would become “our enemy”. The disclosure came as Suleiman met opposition groups, including the officially banned Brotherhood, to explore ways to end Egypt’s political crisis. The US has been exploring options for speeding up President Hosni Mubarak’s resignation, including a scenario that calls for turning over power to a transition government led by Suleiman and backed by the military. Mubarak, who had done without a vice president for 30 years, hurriedly appointed 74-year-old Suleiman as his deputy last month as protesters demanded the forcing out of the autocratic ruler. Suleiman privately voicing disdain for the Brotherhood will not surprise Egyptians. The comments could stoke suspicions, though, as he draws the movement into a dialogue on reform in response to mass protests. The clear implication in the cache of state department cables was that US officials were sceptical of Suleiman’s effort to depict the Brotherhood as “the bogeyman”. In a cable on 15 February 2006, then-ambassador Francis Ricciardone reported that Suleiman had “asserted that the MB [Muslim Brotherhood] had spawned ’11 different Islamist extremist organisations’, most notably the Egyptian Islamic Jihad and the Gama’a Islamiya [Islamic Group]“. In the 1990s Egyptian security forces crushed groups that campaigned for a purist Islamist state by targeting tourists, Christians, government ministers and other officials, and have kept a lid on them since. The Brotherhood once had a secret paramilitary section, but it now says it is committed to promoting its policies through peaceful, democratic means. The government has been unable to prove any serious act of violence orchestrated by the movement’s leadership for more than 50 years. Suleiman, then Mubarak’s top spymaster, was speaking to the FBI’s director, Robert Mueller, who was visiting Cairo in February 2006, the cable says. The cable, which uses the spelling Soliman, said he had told Mueller the Brotherhood was “neither a religious organisation, nor a social organisation, nor a political party, but a combination of all three”. It added: “The principal danger, in Soliman’s view, was the group’s exploitation of religion to influence and mobilise the public. Soliman termed the MB’s recent success in the parliamentary elections as ‘unfortunate’, adding his view that although the group was technically illegal, existing Egyptian laws were insufficient to keep the MB in check.” The cable was referring to parliamentary elections in November and December of 2005, in which the Brotherhood made strong gains, although Mubarak’s National Democratic party maintained a big majority. In a cable dated 2 January 2008, Ricciardone reported Suleiman as saying that Iran remained “a significant threat to Egypt”. “Iran is supporting Jihad and spoiling peace, and has supported extremists in Egypt previously. If they were to support the Muslim Brotherhood this would make them ‘our enemy’,” the ambassador reported Suleiman as saying. In a cable dated 25 October 2007, Ricciardone said Suleiman “takes an especially hard line on Tehran” and frequently refers to the Iranians as “devils”. The cables suggest US officials have consistently responded sceptically to the Egyptian government’s dire warnings about the Brotherhood. In a 29 November 2005 cable to Mueller before his visit, Ricciardone said Egyptian authorities “have a long history of threatening us with the MB bogeyman”. “Your counterparts may try to suggest that [then president George Bush's] insistence on greater democracy in Egypt is somehow responsible for the MB’s electoral success,” he wrote. “You should push back that, on the contrary, the MB’s rise signals the need for greater democracy and transparency in government. “The images of intimidation and fraud that have emerged from the recent elections favour the extremists both we and the Egyptian government oppose. The best way to counter narrow-minded Islamist politics is to open the system.” In a follow-up cable on 29 January 2006, Ricciardone seemed to foreshadow the current unrest when he wrote to Mueller: “We do not accept the proposition that Egypt’s only choices are a slow-to-reform authoritarian regime or an Islamist extremist one; nor do we see greater democracy in Egypt as leading necessarily to a government under the MB.” WikiLeaks Egypt United States Middle East guardian.co.uk
Continue reading …Global economic forces are creating ever-greater disparities of wealth within societies – the great policy challenge of our time As the dramatic events in North Africa continue to unfold, many observers outside the Arab world smugly tell themselves that it is all about corruption and political repression. But high unemployment, glaring inequality and soaring prices for basic commodities are also a huge factor. So observers should not just be asking how far similar events will spread across the region; they should be asking themselves what kind of changes might be coming at home in the face of similar, if not quite so extreme, economic pressures. Within countries, inequality of income, wealth and opportunity is arguably greater than at any time in the last century. Across Europe, Asia and the Americas, corporations are bulging with cash as their relentless drive for efficiency continues to yield huge profits. Yet workers’ share of the pie is falling, thanks to high unemployment, shortened working hours and stagnant wages. Paradoxically, cross-country measures of income and wealth inequality are actually falling, thanks to continuing robust growth in emerging markets. But most people care far more about how well they are doing relative to their neighbours, than to citizens of distant lands. The rich are mostly doing well. Global stock markets are back. Many countries are seeing vigorous growth in prices for housing, commercial real estate, or both. Resurgent prices for commodities are creating huge revenues for owners of mines and oil fields, even as price spikes for basic staples are sparking food riots, if not wholesale revolutions, in the developing world. The internet and the financial sector continue to spawn new multimillionaires, and even billionaires, at a staggering pace. Yet, high and protracted unemployment plagues many less-skilled workers. For example, in financially-distressed Spain, unemployment now exceeds 20%. It cannot help that the government is simultaneously being forced to absorb new austerity measures to deal with the country’s precarious debt burden. Indeed, given record-high public-debt levels in many countries, few governments have substantial scope to address inequality through further income redistribution. Countries such as Brazil already have such high levels of transfer payments from rich to poor that further moves would undermine fiscal stability and anti-inflation credibility. Countries such as China and Russia, with similarly high inequality, have more scope for increasing redistribution. But leaders in both countries have been reluctant to move boldly for fear of destabilising growth. Germany must worry not only about its own vulnerable citizens, but also about how to find the resources to bail out its southern neighbours in Europe. The causes of growing inequality within countries are well understood, and it is not necessary to belabour them here. We live in an era in which globalisation expands the market for ultra-talented individuals but competes away the income of ordinary employees .Competition among countries for skilled individuals and profitable industries, in turn, constrains governments’ abilities to maintain high tax rates on the wealthy. Social mobility is further impeded as the rich shower their children with private education and after-school help, while the poorest in many countries cannot afford even to let their children stay in school. Writing in the 19th century, Karl Marx famously observed inequality trends in his day and concluded that capitalism could not indefinitely sustain itself politically: eventually, workers would rise up and overthrow the system. Outside Cuba, North Korea and a few leftwing universities around the world, no one takes Marx seriously anymore. Contrary to his predictions, capitalism spawned ever-higher standards of living for more than a century, while attempts to implement radically different systems have fallen spectacularly short. Yet, with inequality reaching levels similar to 100 years ago, the status quo has to be vulnerable. Instability can express itself anywhere. It was just over four decades ago that urban riots and mass demonstrations rocked the developed world, ultimately catalysing far-reaching social and political reforms. Yes, the problems facing Egypt and Tunisia today are far more profound than in many other countries. Corruption and failure to embrace meaningful political reform have become acute shortcomings. But it would be very wrong to suppose that gaping inequality is stable as long as it arises through innovation and growth. How, exactly, will change unfold, and what form will a new social compact ultimately assume? It is difficult to speculate, though in most countries, the process will be peaceful and democratic. What is clear is that inequality is not just a long-term issue. Concerns about the impact of income inequality are already constraining fiscal and monetary policy in developed and developing countries alike, as they attempt to extricate themselves from the hyper-stimulative policies adopted during the financial crisis. More importantly, it is very likely that countries’ abilities to navigate the rising social tensions generated by gaping inequality could separate the winners and losers in the next round of globalisation. Inequality is the big wildcard in the next decade of global growth – and not just in North Africa. © Project Syndicate , 2011 Egypt Tunisia Protest Economics Globalisation Global recession Spain Greece Germany European Union Euro United States Social exclusion Poverty Equality Public finance Financial crisis Economic policy US economic growth and recession Unemployment and employment statistics US unemployment and employment data Kenneth Rogoff guardian.co.uk
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