Monday, February 14, 2011

Current Events Watch-Egypt’s Economic Ties to the U.S


"Egypt's turmoil is costing the country about $310 million a day, according to an analysis from Credit Agricole bank. The impact on commerce included a 1.6 percent drop in revenue in January from December for the Suez Canal, a vital source of income."
http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210
According to this article, what is necessary for there to be economic stability in the region? How will this ultimately affect the American businesses who rely on trade with Egypt?

9 comments:

  1. The only way that Egypt can get out of this financial turmoil is "The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition." (www.reuters.com). Since some American companies rely on trade with Egypt, they must urge Egypt to take these steps to find stability in their government and economy. The reason this is true is because if Egypt's government fails then American businesses may not be able to rely on them for trade. This will lead to the failing of many companies in Egypt, and eventually to American Companies. Stability will take a few steps, but if they find stability American businesses can still rely on the trade with Egypt. If not, businesses will fail.

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  2. Egypt's current country affairs are ones that have made the people unhappy of the governments ways. Since the people are unhappy, a revolution has risen upon the country. There is a high unemployment rate, which causes more debt within the country because the government doesn't have enough money that is taken away with taxes, thus not benefitting the countries debt. The poor are still poor and the rich are still rich, there is no middle class and the gap is not going to fix itself. All the corruption in Egypt has been blamed on President Hosni Mubarak and due to popular vote, he has resigned. In order to restore stability, President Obama has, "urged Egyptian President Hosni Mubarak's government to move more quickly on a transition of power and to do more to engage a broad swath of Egyptian society in talks on the country's political future." The longer it takes to turn over the power, the longer it takes to restore stability. Right now there needs to be a prominent figure that can earn the trust of the people and stop the revolts. Another stand point on the matter states that, "The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition." By appealing to the public, there would be better communication and cooperation. This process is not going to be easy, "Stability is not going to come from the status quo. It's going to actually come from steps that demonstrate meaningful change and to channel this into a set of negotiations that lead to free and fair elections." Right now there is not going to be business with Egypt until things are settled and Egypt can be a running country right now. American companies will suffer because of the products needed from Egypt, but there's not much that can be done. Since American companies will probably suffer, product prices may rise and inflation might occur because of the lack of materials that some American companies need. The main focus is to get Egypt back on track and hopefully since Americans are helping, there will be an even better alliance with each other, so that in the future if Americans needed aid, Egypt would try to support.

    http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210

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  3. In order for there to be economic stability in the region, Rhodes states, "The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition." (http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210) The fact that their revenue dropped 1.6% within a one month period is a call for stability and a need for change. Egypt needs to show "meaningful" change and have free/fair elections. With Egypt's current instability, it will be hard for America's business of trade with Egypt. Because Egypt is losing so much money, and is completely unstable at this point, it will be hard for America to continue trading with Egypt. "President Barack Obama and his aides have urged Egyptian President Hosni Mubarak's government to move more quickly on a transition of power and to do more to engage a broad swath of Egyptian society in talks on the country's political future." (http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210) America clearly cares about Egypt and we want them to reach stability, and Obama and his administration are closely monitoring the region. "Egypt and the United States exchanged $8.4 billion in goods in 2008, making Egypt our 52nd largest trading partner in goods. In May 2009, the United States and Egypt signed a Plan for a Strategic Partnership, which aims to further promote economic cooperation between the two countries." (http://www.ustr.gov/countries-regions/europe-middle-east/middle-east/north-africa/egypt) Egypt is in 36th place for the amount of exports America trades with other countries. We need Egypt to be stable in order to trade.

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  4. The Obama administration said that if Egypt's government can make progress towards a more democratic government it will help stem economic instability. With this turmoil it is costing the government about $310 million a day. "The impact on commerce included a 1.6 percent drop in revenue in January from December for the Suez Canal, a vital source of income." This is causing the economy in Egypt to shrink. "The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition." With more democratic actions the country will stabilize. Because of this instability trade with U.S. businesses has decreased, but when they finally become more democratic, U.S. businesses will trade more with Egypt.

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  5. "The Obama administration [...] believes progress toward democratic reforms would help stem economic instability."

    "The way to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition," Rhodes said.

    "Stability is [...]going to actually come from steps that demonstrate meaningful change and to channel this into a set of negotiations that lead to free and fair elections," he added.

    Ultimatly this could affect businesses in one of two ways. American businesses could capitalize on the econometrics of chaos in another state. Pull out funding for falling businesses and back raising country wide bubbles. This could lead to the fall of Egypts economy, but could greatly increase an American foothold in Egypt and take a good chunk out of our world wide debt.

    Or we could send troops in and try to instill democrocay at the cost of more American lives and tax dollars. We could aid Egypt with the hope that a stronger Egypt will help us stand economically, but America is already spread so thin that pivital businesses in Egypt that may fall could have a great impact on gas prices and some prices in raw materials from Egypt will sky rocket

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  6. The article clearly states the way how to get Egypt out of their turmoil and that is "to move out of this period of instability into one of greater stability is for the government to take concrete action, to demonstrate irreversible political progress (and) to get into a set of negotiations with the opposition". If they do not get out of this situation they will just become more and more in debt. It is simply that the rich is getting richer and the poor is getting poorer. If the Egypt government has to negotiate with the protestors to take action they need to do it quick because if they do not act soon they will be so far in debt that there will be no getting out of it. This will ultimately effect the United States because the trade is decreasing and if there is no trading going on then we do not get the stuff we need. Then they do not get the profit from our business to help them get out of the debt they are in. Like Rebecca says they are our 52nd largest trading partner and it is hard to focus on trading with other countries if Egypt doesn't even have stability themselves.

    http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210

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  7. In Egypt Obama's administration is keeping a close eye on their economic and political crisis to try "progress toward a democratic reform would help stem economic instability.
    (http://www.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210)
    Everyday in Egypt's turmoil is costing it's country 310 million dollars which is dropping a bank's revenue by 1.6 percent from January to December from the Suez Canal. "President Obama and aides are urging Egyptian President Hosni Mubarak's government to move quickly and have government take concrete action to demonstrate irreversible political." This will affect the business of trade with America and Egypt because they will not have any money to be able to even set trade with America because their government will have no money to support their government.

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  8. Yes there is much economic and political crisis going out in Egypt,due to their current affairs. Crisis that cant be easily resolved. People must realize that "stability is not going to come from the status quo. It's going to actually come from steps that demonstrate meaningful change and to channel this into a set of negotiations that lead to free and fair elections." (http://www.reuters.com/article/2011/02/10/us-egypt-usa-economy-idUSTRE71908Q20110210). The citizens of Egypt have resulted to protesting in order to show their disagreement with the government. In order for the government to see a change its going to take more than talking about the problems at hand, negotiations must be made and steps must be taken which will demonstrate change in the way things currently are or else Egypt will become further in debt.

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  9. Egypt's economy is slowly dying away. The turmoil in Egypt is costing $310 million a day. Obama's administration said that if Egypt's government was to lean more to a democratic government than the instability would die down and the $310 million dollar a day spendings would soon die out as well.

    "The impact on commerce included a 1.6 percent drop in revenue in January from December for the Suez Canal, a vital source of income."

    Because of Egypt's instability trade with United States businesses has decreased a lot and will return to normal after the stability of Egypt occurs. Until then Egypt will be spending $310 million a day, as there profit from the Suez Canal decreases and there economy shrinks.

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