Why a Sino-American war is inevitable

Unwittingly no doubt, The New York Times last week offered a sidelong glance at why a Sino-American war is all but inevitable.

Paraphrasing the remarks of Washington-based Asia expert Michael J. Green, the Times reported that if the U.S. is digging in for a war of wills with Beijing over territorial disputes it would need “to project military power in [Asia], build up the defensive capacities of allies like Japan and the Philippines, and align the countries that ring China’s coastal waters to present a united front against Beijing’s aggression.”

Unfortunately, Green said, “the administration is very worried about appearing to contain China.”

This is nonsense, as Green himself knows well. The U.S. was deep into an intrusive military buildup in Asia long before President Obama announced its “pivot” back to the region two years ago. His remarks sustain a Pentagon narrative, swallowed whole by the Washington press corps like a school of mackerels, that implies China’s misbehavior of late is unprovoked. Now that Beijing has responded to Washington’s escalation - most recently by declaring an air-defense identification zone that overlaps with airspace claimed by Japan, America’s close ally - Washington can argue it has no choice but to counter Chinese “aggression.” You don’t have to be a tenured historian to know where this is heading.

The U.S. buildup is described in detail by Jonathan Holslag in his book Trapped Giant: China’s Troubled Military Rise, published in April 2011 by the London-based International Institute for Strategic Studies. Holslag begins with the Pentagon’s 2006 Quadrennial Defense Review, which reaffirmed the importance of maintaining the U.S. military’s forward-deployed bases to prevent the emergence of a potential regional hegemon inimical to American interests. The report, he writes, named China “as a key justification to this end.”

Since then, Holslag notes, the Pentagon has spent $15 billion transforming the island of Guam into a “joint-force inter-theatre hub and a stepping stone for long-range operations in Asia Pacific.” Thanks to work begun more than a half-decade ago, the island now accommodates the latest-generation intelligence, surveillance and reconnaissance systems and “new infrastructure to support the long-term presence of fighters and facilities for an additional 24 rotationally deployed fighters, provisions for cruise missiles, and advanced air-to-surface weapons.” For the last ten years, Guam has been hosting B-2 and B-52 bombers and F-15 and F-22 fighter jets on a rotational basis. John Pike of the Washington, D.C.-based Globalsecuirty.org has speculated that the Pentagon wants to “run the planet” from Guam by 2015.

In addition to the Guam buildup, the U.S. has since 2006 spent $10 billion strengthening its force presence in South Korea, where the government is developing a massive naval base on the southern island of Jeju that will host U.S. warships. Washington has also upgraded its military relations with Thailand, Singapore, Brunei, Indonesia and Malaysia, effectively trading access to their waterways, airspace and port facilities for security guarantees. The Pentagon has built a new chain of bases in Central Asia and the Middle East, largely to box-in China. A 2008 deal between the U.S. and India that would allow New Delhi to greatly expand its nuclear weapons capability was established very much with China, their mutual rival, in mind.

Needless to say, none of this is lost on Beijing. As Holslag quotes a senior military official: “The U.S. Navy is adjusting to ‘The China Threat’ by sending more [weaponry] to the western Pacific, which is a serious threat to the region’s peace and security. Distrust, power politics and nationalism will bring about Asian ‘waters of instability.’”

The genesis of Pentagon efforts to cage China dates back to the end of the Cold War a quarter century ago. Remember the Hainan incident, the March 2001 downing of a U.S. EP-3 spy plane by a Chinese fighter jet? While the confrontation seized headlines, its origins have been largely overlooked. In fall 2000, the Pentagon decided to cut back on the number of surveillance flights it was conducting off the eastern coast of the former Soviet Union and redeploy them to spy on China. As the tempo of U.S. intelligence gathering along its waters abruptly and dramatically increased, Beijing filed a demarche into the political void that exists before an outgoing administration in Washington departs and a new one settles in. With little in the way of a response, Chinese interceptors reacted to the stepped-up U.S. patrols with heightened aggression, making the Hainan affair the inevitable result of a reflexively hegemonic Pentagon and an increasingly headstrong Beijing.

Rather than re-evaluating its approach to China’s rise, however, the Pentagon entrenched itself. That same year, it produced a study called “Asia 2025,” which identified China as a “persistent competitor of the United States,” bent on “foreign military adventurism.” Far from lashing out unprovoked against U.S. interests in Asia, China is bridling against a noose knotted for it by Washington more than a decade ago.

Benjamin Franklin once said that rebellion is always legal in the first person, as in “our rebellion,” but illegal in the third person, such as “their rebellion.” The same may be said about hegemony. For the last six decades the U.S. has invested heaps of blood and treasure to control both the tributaries and main arteries of international commerce. Given the decidedly mixed results of Washington’s wars since the mid-twentieth century, one could reasonably ask: to what end?

The question would offend America’s political-military elites, for whom global dominion is a sacred end in itself. (It is also big money for arms manufacturers, the lubricant for a militarized economy that creates jobs and thus patronage on Capitol Hill.) There is, for them, no more potent symbol of American benevolence than their ability to employ lethal force anywhere in the world. Defiance of such goodwill implies, as Green did for the Times, that the Pentagon’s offensive posture abroad is not potent enough and should therefore be intensified. The outcome, more often than not, is more war.

Behind the Fall of Egypt's Muslim Brotherhood

Hard-liners including Mohammed Morsi seized control of the group prior to the Arab Spring but proved inflexible and incompetent in power.

Ali Ashmawi was a harvest of human wreckage. It was August 2006, and I had traveled to his remote, unnamed village — two hours from Cairo by car and a good half an hour from the nearest paved road — to learn more about the Muslim Brotherhood. Ashmawi, then 69, a devoted-member-turned-fierce-critic of the Brotherhood, bore visible scars from nearly a decade in Egypt’s gulag. His apartment was small but tidy, and his two young children, a son and a daughter, sat together on a couch and listened to his story as if hearing it for the first time.

A baker’s son, Ashmawi had joined the Brotherhood as a teenager in 1951 and rose to become a senior cadre in the group’s underground militia by the early 1960s. Fatefully, he joined a rogue plot to assassinate Gamal Abdel Nasser, the secular strongman then ruling Egypt, along with fellow conspirator Sayyid Qutb, the radical intellectual whose hard-line interpretations of Islam would inspire some of the Middle East’s most notorious terrorist groups, including al-Qaeda. The plot was foiled in 1965, and Nasser retaliated with a brutal crackdown on Brotherhood leaders.

In a low monotone, Ashmawi explained how he was stretched on a rack day and night for six months, denied a copy of the Koran and held in solitary confinement for weeks at a time. He pulled up his white short-sleeved shirt to show the scars on his back from relentless beatings; his listlessness testified to the emotional toll of his torture and isolation. Qutb was executed in 1966. Ashmawi was released from prison after nine years, and ever since has been a staunch critic of the Brotherhood (Ikhwan, as it is known in Arabic).

“If the Brotherhood became a ruling party, it would be a disaster,” Ashmawi told me. “It would scrap the peace treaty with Israel and impose a tax on Christians. This is an extremist group with stockpiles of weapons that will become a terrorist organization when it comes time.”

A year earlier, in 2005, Egypt’s president, Hosni Mubarak, had unleashed a fresh crackdown on the Ikhwan after its members polled well in parliamentary elections. I asked Ashmawi how the group could seize power when so many of its members were either in jail or under house arrest. He thought for a moment, then shrugged. “They’ll probably be voted in,” he said.

*      *     *

Until the Arab Spring toppled the region’s established political order, the Muslim Brotherhood was the closest thing to an authentic grass-roots movement in the Arab world. Secularists and Islamists alike respected the group for its incorruptibility; its genuine regard — conspicuously lacking among the region’s cohort of dictators and emirs — for the poor and underprivileged; and its regular, peaceful and at least semidemocratic transitions of power. After Mubarak’s overthrow in 2011, even secular Egyptians believed that the Brotherhood, having suffered more in resistance than any other constituency, had earned its chance to lead. When the Ikhwan’s Mohamed Morsi won a narrow victory to become Egypt’s first freely elected leader last June, he enjoyed a genuine popular mandate.

Barely a year later, the Brotherhood is widely reviled and drastically diminished. Most of its leaders are in prison and awaiting trial after a military coup in July. Hundreds of its rank-and-file members have been killed by soldiers and police, either huddled together with peaceful protesters or picked off one by one in gun battles. General Abdel Fattah al-Sisi, the army commander who led the putsch, is hailed by many Egyptians as a liberator; some analysts predict he will be the country’s next leader, either by seizing power as a dictator or by entering an election that he would almost certainly win. The interim government is mulling whether it should declare the Brotherhood a terrorist organization and dissolve it, a move that would most certainly radicalize what remains of the group and drive it deep underground.

It is a striking denouement for a sociopolitical movement that, since its formation in 1928, was alternatively persecuted by despots or locked in thorny alliances with them. Allegations of Brotherhood links to extremism are as common as they are unproven — despite Ashmawi’s warnings, the Ikhwan’s militias, if they exist at all, have yet to reveal themselves. Similarly, the group’s reputation for cool competence has turned out to be grossly inflated. The group’s demise was largely of its own making, the product of a internal split between liberals and Islamist hard-liners.

The Brotherhood’s brief rise to power and subsequent downfall was also assisted by third parties, particularly the U.S. government. Successive presidents could have pre-empted the 2011 revolution by demanding that Mubarak implement political reforms, but they recoiled from doing so lest such reforms lower the drawbridge to an Islamist government that would resume hostilities with Israel. (In fact, the Morsi government carefully preserved Egypt’s 1979 peace treaty with Israel.) Washington continued to indulge Mubarak despite the looming specter of a power struggle. By the mid-2000s, both the military and the Ikhwan were staunchly opposed to Mubarak’s grooming of his son Gamal as his successor. Popular antipathy to the regime deepened when cronies of Mubarak grabbed most of the spoils from the government’s economic reforms.

As early as 2008, political activist Osama al-Ghazali Harb warned me of the “general chaos” to come if Mubarak continued to resist a democratic transfer of power. He predicted the Ikhwan would leverage the situation to its advantage. Harb and his fellow secularists appealed to Washington to pressure Mubarak for gradual political reform, which would allow them to mobilize politically and eventually rival the Brotherhood for hearts and minds. Only that way, he argued, could a violent reckoning be avoided.

Years earlier, the U.S. flirted with but eventually abandoned any real effort to promote reforms. In 2005, Mubarak grudgingly permitted national elections in response to pressure from President George W. Bush, but when Brotherhood-affiliated candidates dominated the results, Bush lost his appetite for a democratic Arab world and imposed a de facto ban on U.S. dialogue with Ikhwan leaders. When the Arab Spring erupted in Cairo in 2011 and the Brotherhood emerged as the dominant political force, as Harb had predicted, Washington found itself largely ignorant of the men who would soon be running the Arab world’s most influential country. U.S. officials were blind, in particular, to the fault lines inside the Ikhwan.

Those fissures widened in 2010, when Mohammed Mahdi Akef stepped down as the Brotherhood’s seventh Supreme Guide. Akef had been an unusually progressive and high-profile leader, having encouraged group members to participate in politics and establish relations with non-Islamists. His deputy and presumptive successor, Mohammed Habib, was a leading liberal with plans to animate the Ikhwan’s ossified ruling culture with oxygen and light. “I had a vision that the group would meet in the open for everyone to see, that it would reach out and form alliances with secular and liberal groups,” Habib told me in 2011. “But others, both in the Brotherhood and in the regime, wanted us to remain in the shadows.”

By then, the group controlled 80 seats in Parliament, the largest minority bloc. Their representatives were, as the democracy activist Saad Eddin Ibrahim once told me, “responsible, fair, honest and predictable men.” Mubarak stepped up his war against the Brotherhood, however, jailing hundreds of its members on flimsy grounds and torturing many. With little to show for the group’s engagement in politics, Brotherhood conservatives opposed to Akef’s legacy of outreach and moderation quietly organized a coup against the leadership.

On one side of the schism were Habib and his allies, most prominently Abdel Moneim Aboul Fotouh and Ibrahim al-Zaafarani, both prominent doctors in Egypt’s medical associations, and the dissident writer Kamal Helbawy, who wanted to level the Brotherhood’s top-down hierarchy by allowing its younger members a greater say in group affairs. Opposing these liberals were doctrinaire members led by Khairet El-Shater, then in prison, a powerful industrialist known for his peculiar blend of pragmatism in economic affairs and dogmatism in matters of religion. Last year, in two interviews of more than 90 minutes each, El-Shater outlined for me his Renaissance Project, a multipronged plan to liberalize Egypt’s economy, rebuild its infrastructure, deregulate its markets, increase exports and modernize its tourist and agriculture sectors. He was flanked by two interpreters and three stenographers, and he rarely paused to take questions.

Al-Zaafarani once recalled for me the polemical jousts he and El-Shater engaged in while in prison, which for the Ikhwan has traditionally served as both theological salon and recruiting ground for new members. They were joined by Aboul Fotouh, himself a pragmatist but minus El-Shater’s imperiousness. “We’d talk every day,” said al-Zaafarani. “We’d have long discussions about the great personalities of modern Egypt, beginning with [Ikhwan founder] Hassan al-Banna, Nasser and Qutb. Aboul Fotouh and El-Shater disagreed on many things but they both agreed that Qutb radicalism should be rejected.”

Weeks before the election for the next Brotherhood Supreme Guide, Habib was alerted by informants within the country’s security apparatus that he would be denied the job. He was edged out in the voting by Mohammed Badie, an obscure Brotherhood member widely regarded as a cipher for El-Shater and his subalterns, Morsi and Saad El-Katatni, the group’s leading parliamentarian. According to Habib, Badie and his allies agreed to support a dynastic succession of power if Mubarak ended his campaign of oppression against the Brotherhood. In his acceptance speech, according to Habib, Badie issued a tacit endorsement of Gamal Mubarak, and later praised Hosni as “the father of Egypt.” (In a 2012 interview, El-Katatni said Badie’s remarks were misrepresented in the media and that the leadership never wavered in its opposition to a dynastic succession.)

In the months that followed, several of Badie’s allies were released from prison. Habib and other moderates were marginalized, and a rebellion among the Ikhwan’s restive younger members was snuffed out. Dissent of any kind was ruthlessly silenced. It was this Ikhwan — one run by men who, according to former Ikhwan member Tharwat El-Kherbawy, believed “it is not right for anyone to live his life unless he belongs to the Brotherhood” — that would steer the group through the riptides of postrevolutionary Egypt.

Seduced by a power vacuum that the Brotherhood, with vast political and commercial resources at its command, was uniquely qualified to fill, senior members plunged into the void and committed one blunder after another. They assured nervous Egyptians that the group’s members would contest no more than 15 percent of the seats in Parliament, only to triple that ratio weeks later. The group prohibited its members from running for president, but when Aboul Fotouh declared he would do so as an independent, the leadership expelled him from the Brotherhood, along with a cadre of younger members who had launched their own political parties, some in league with secularists and liberals. Over time, the Ikhwan would lose some of its most respected members, including al-Zaafarani and Helbawy as well as Aboul Fotouh, many of whom resigned from the group in disgust over the group’s naked power grab.

By early 2012, Brotherhood members dominated the newly elected Parliament and made El-Katatni its speaker. In March, El-Shater announced his own bid for the presidency, contradicting previous assurances that he had no ambitions for high office. Two weeks later, the Electoral Commission barred him from running on a technicality (he had been released from jail only a year earlier, well short of the six-year period required for presidential contenders with felony convictions), and Morsi stepped forward as the Brotherhood candidate. The 61-year-old engineer squeaked past a divided liberal opposition in the first round of voting, then won the runoff ballot in June with a margin of less than 2 percentage points over his opponent, Mubarak crony Ahmed Shafik.

The new president wasted no time alienating and antagonizing nearly all of Egypt’s non-Islamist constituencies. He snubbed liberal groups who actively supported him in the election’s final round. He ignored a petition, drafted and signed by some of the country’s most respected activists, calling for a coalition government and assurances that rights for women and the country’s minority groups, particularly its Christian community, would be respected. He granted himself unlimited power in response to what he said were the predations of Mubarak-era holdouts, which included the power to legislate without judicial oversight or review. He issued a declaration that effectively barred the judiciary from any role in the drafting of a new constitution by a committee that was dominated by Islamists. In response, the few liberals and secularists on the committee resigned, claiming Morsi was paving the way for Sharia law.

Morsi even squandered support from Islamists, particularly for his neglect of Egypt’s failing economy. Convulsions from the 2011 revolt sparked a flight of hard currency from the country as growth slowed to a crawl, joblessness rose, and shortages of food and fuel grew widespread. Incredibly for a group that draws much of its membership from Egypt’s bourgeoisie, Morsi all but ignored the pressing need to revive growth. Slogans inspired by El-Shater’s Renaissance Project, recited relentlessly during the campaign, disappeared once Morsi, who apparently doesn’t share his mentor’s enthusiasm for grand master plans, was sworn into office.

In December 2012, Morsi failed to win Islamist support for a $4.8 billion bailout package from the International Monetary Fund, conditioned as it was on painful reforms like cuts in subsidies. Instead, he turned to allies like the Gulf emirate of Qatar, which seeks to extend political Islam throughout the Arab world. Though such funding kept the Egyptian economy afloat, the political motive behind it did little to restore investor confidence. On the eve of the coup, an Egyptian economist complained to me that “not a single economic decision has been taken” since the revolution. “Investors like a certain amount of certainty, yet there is no talk of economics, just politics.”

For much of the 19th and 20th centuries the Arab world was a Franco-British fiefdom run by a clutch of pliant kings and emirs. The postwar nationalist governments that followed failed after their disastrous 1967 war with Israel and were replaced by a generation of Baath Party dictators, corrupt monarchies and petty despots. Having outlived them all, the Muslim Brotherhood seized its moment after Mubarak’s removal, only to collapse after a single year in power. In fact, the Ikhwan’s demise really began with the election that empowered Badie and his allies, who lacked in restraint and competence what they had in ambition and cunning. Just as Akef’s policy of outreach had provoked Ikhwan hard-liners, so did Morsi’s overreach trigger the coup that destroyed not only his presidency but also Islamist governance in general, and perhaps even the Brotherhood itself.

It is tempting to suggest that the future of Egyptian politics belongs to former Ikhwan members like Aboul Fotouh and al-Zaafarani as well as former members of the group’s youth wing, who are now leading their own parties and are working closely with non-Islamists. The Egyptians remain, after all, a deeply religious people who are likely to demand that their leaders remain piously Islamic. (Even General al-Sisi understands this, having made the point in a thesis he wrote while on a U.S. military fellowship in 2006.)

Nevertheless, with Egypt’s interim government now actively persecuting its critics as traitors, even moderate ex-Brotherhood members would be wise to keep their heads down. So thoroughly did the Ikhwan leadership discredit the group that it will take years for Islamists of any stripe to establish themselves politically, even those who were shrewd enough to have left the bus before hard-liners drove it off a cliff.

Cyrpus's Big Gas Field May Not Be the Country's Salvation

MITCHELL BELFER WAS ATTENDING AN energy conference at the University of Nicosia last November when he was struck by the way Cypriots talked about the country’s offshore gas field. Cyprus’s debt problems had yet to seize the attention of European officials and global markets, but local energy experts and academics were already attributing almost mythical powers of salvation to the field, dubbed Aphrodite after the Greek goddess of beauty.

“They knew the crisis was coming, and they assumed they could export their way out of it by exporting gas,” says Belfer, head of the international relations department at Metropolitan University Prague, who was in the capital, Nicosia, on an academic exchange. “They talked about how ‘our gas’ was not to be shared, not with Northern Cyprus or the European Union, and that export sales would come streaming in before the collapse. I wasn’t prepared for that kind of hubris.”

Cypriot self-intoxication had been mounting for years, along with the country’s global profile and living standards. In 2001 it was designated an advanced economy by the International Monetary Fund. Later, the government rebuffed attempts by the United Nations and the European Union to reunify the island in 2004, allowing Cyprus — the ethnic Greek country that occupies the southern two thirds of the island — to join the EU that year and leaving out the breakaway Turkish republic in the north. Nicosia fostered the country’s growth as an offshore financial center, transforming Cyprus from a sleepy Mediterranean enclave into a banking haven for Russian oligarchs. It forged a strategic alliance with Israel and outmaneuvered Turkey to negotiate an Exclusive Economic Zone (EEZ) with other countries, including Lebanon and Egypt, guaranteeing it a generous share of the Eastern Mediterranean’s gas riches. Cyprus joined the euro zone in 2008.

Over the past few months, however, Nicosia has been devastated by the downfall of its economy and wrong-footed by geopolitical turns. A sharp decline in local property prices and steep losses on holdings of Greek government bonds left Cyprus’s banks on the verge of collapse earlier this year, with the government incapable of rescuing them. Desperate to avoid the draconian terms of an EU bailout deal, Nicosia appealed to Moscow for assistance, offering a share of Cyprus’s energy resources in compensation, only to be turned down. The government was forced to turn to the EU and the IMF for a €10 billion ($13 billion) bailout in late March.

Under the terms of its bailout, Cyprus faces years of austerity and a dramatic shrinking of its banking sector, including the winding down of Laiki Bank, the country’s second- largest lender. It’s not surprising that Cypriots are looking to offshore gas to provide a lifeline. Aphrodite is believed to contain as much as 8 trillion cubic feet of gas, enough to support the country’s 850,000 inhabitants for a century or generate up to $80 billion in export earnings, based on current prices. Cyprus will have difficulty exploiting the field, though. Officials exclude the idea of a pipeline to Turkey because of icy relations between the two governments. Nicosia wants instead to build a liquefaction plant to export its gas by ship, but such a plant could cost half of the country’s gross domestic product to build and would be expensive to operate.

Other developments also threaten Cyprus’s ability to exploit its energy resources. Just as Cyprus was finalizing its bailout deal, Israel and Turkey declared that they had agreed to settle a four-year-old diplomatic feud; that rapprochement revived talk of a natural-gas pipeline between the two countries that could effectively undercut the value of Cypriot gas. Meanwhile, Egypt’s new Islamist government has called for an extension of its EEZ borders at Cyprus’s expense.

Cyprus also confronts a threat from the shale-gas revolution in the U.S. and elsewhere, which some energy experts think will usher in a new era of cheap fuel. Aphrodite, which officials believed would save Cyprus, now seems to offer at best a distant hope. “Hydrocarbons are not an immediate out for Cyprus,” says Laura Le Cornu, a partner at Strata Insight, a Nicosia-based oil and gas consulting firm. “The Russians did not give them an out, the EU would not consider Aphrodite as collateral, and there are high expectations now for a pipeline between Israel and Turkey. Whatever obstacles Cyprus faced before are even more prominent now.”

The country’s plight is at least as daunting as that of any of the other recipients of EU-IMF bailouts. The EU specifically aims to prune Cyprus’s financial sector, which had swollen to eight times the size of the country’s GDP, making it too big to save. The sector has already shrunk by a third, and it will diminish further as officials wind down Laiki and impose stiff haircuts on uninsured depositors. The government is raising taxes and shedding employees in a bid to help bring down the debt. Economic output is forecast to contract by 12.5 percent over the next two years — and that’s if the bailout is successful. In April, Nicosia announced it would sell $400 million in gold from its reserves to help repay creditors.

The aftershocks of the EU plan have been so traumatic that residents are comparing their reduced conditions to the deprivations that followed Turkey’s invasion of Cyprus and the island’s subsequent division 40 years ago. “The war did to Cyprus physically what the bailout will do financially,” says Le Cornu.

Considering those circumstances, it’s not surprising that Cypriots have focused on Aphrodite’s potential. Developing the gas field could give their country a lifeline. The EU should have an equal interest in seeing the gas field brought on stream given that its member states are eager to reduce their dependence on Russian natural gas. Cyprus, which many residents like to refer to as “the eastern frontier of Western civilization,” could be a politically stable source of energy. Nicosia has already issued drilling licenses to two major European energy companies: Italy’s Eni and France’s Total. Cyprus hopes to be pumping gas for customers at home and abroad by the end of the decade.

By opting to develop Aphrodite unilaterally, however, the country has denied itself the cheapest and most efficient way of tapping export markets. The best chance of maximizing Aphrodite’s resources, analysts and academics say, is for the island’s Greek and Turkish sides to unite, economically and politically, and share in the spoils. But such a scenario seems far-fetched.

“This should be a win-win situation,” says Hubert Faustmann, an associate professor of history and political science at the University of Nicosia. “The best option is to solve the Cypriot dispute and build a pipeline through Turkey. Instead, Nicosia is going ahead with a plan to distribute liquefied gas. If fuel prices end up going down, what will the Cypriots do?”

MODERN CYPRUS WAS BORN IN 1974, when, after years of rising ethnic tensions between Cyprus’s Greek and Turkish communities, Cypriots working with the support of Athens staged a military coup that they hoped would lead to a union with Greece. In response, Turkish forces invaded the north of the island and established the Turkish Republic of Northern Cyprus. Since then the island’s majority Greek and ethnic Turkish populations have lived in separate realms. The prosperous, Greek-dominated Republic of Cyprus, which accounts for a majority of the island’s residents, commands de jure sovereignty over the island and its coastal waters, while the isolated and impoverished Turkish Republic of Northern Cyprus is recognized only by Ankara.

When Aphrodite was discovered nearly three years ago, Cyprus set about developing the field with little regard for its northern neighbor. This provoked Turkey’s government, which has never recognized the Republic of Cyprus or its maritime borders. Ankara has declared it would respond forcefully to continued energy exploration unless the “inherent and equal rights” of the Turkish Cypriots to hydrocarbon finds are respected. It has proposed that the two sides either suspend development of Aphrodite pending a resolution to the island’s long-standing political divide or jointly develop and manage its resources under U.N. supervision. It has also proposed that Cyprus export its gas to Europe via undersea pipeline to one of Turkey’s main ports. Nicosia has rejected both offers.

Cyprus strengthened its ties with Israel just as relations between Ankara and the Jewish state cratered in May 2010, when Israeli commandos killed nine activists aboard the Mavi Marmara, a Turkish-flagged relief ship bound for Gaza. Earlier this year Ankara warned it would act against any moves by Cyprus to develop Aphrodite unilaterally, particularly if it did so with help from Russia, Turkey’s historical rival.

Another risk factor is the vague definition of some of the EEZs, which give states special rights of exploration under United Nations maritime law. Portions of the Egyptian and Israeli zones overlap, for example. In March an Egyptian parliamentarian declared that Aphrodite lies within Cairo’s zone; Parliament is now considering a draft law that would redraw the country’s maritime maps accordingly. “If the proposed law passes, tensions in the Eastern Mediterranean arising from this newfound natural resource could further escalate,” warned the Signet Institute, a Cairo-based think tank, in a March bulletin.

Analysts generally discount the risk of a military clash over Aphrodite. By awarding drilling licenses this year to Eni and Total, while retaining Texas-based Noble Energy to explore its reserves, Cyprus shrewdly aligned its interests with those of companies from three member countries of NATO, to which Turkey also belongs. Having ruled out a pipeline to Turkey, however, Nicosia is developing a risky and expensive alternative: a liquefied-natural-gas, or LNG, terminal to process fuel for transport by ship. Such facilities can cost more than $10 billion and take a decade to build. They are also expensive to operate given the amount of energy they consume. Banks are reluctant to finance them without 20-year forward contracts from buyers.

According to estimates by the Peace Research Institute Oslo, the gas in Aphrodite’s block 12, where Noble Energy made its initial strike, would be worth about $50 billion after investment costs if it was liquefied. The institute estimates that the same gas would be worth $69 billion if it was pumped through a pipeline to the port of Ceyhan on Turkey’s southern coast, a regional hub for oil and gas. “An LNG terminal is a massive financial undertaking,” says Laura El-Katiri, a research fellow at the Oxford Institute for Energy Studies. “The economy will benefit in that a lot of money will pour into Cyprus and that will generate some jobs, but it certainly won’t solve the country’s problems immediately. Given that quite massive costs will need to be recovered initially, Cypriot LNG may not show profits unto 2020."

A Cypriot-Turkish pipeline would suit the Europeans better. EU countries, having experienced periodic cutoffs of Russian gas supplies from 2005 to 2009 because of feuding between Russia and Ukraine, have identified Turkey as a vital transit point for fuel. Nicosia, however, insists that a Turkish option is out of the question for both security and diplomatic reasons. Officials cite the occasional times Ankara has shut off gas shipments to Greece as proof that Turkey cannot be relied upon. In addition, says former Cypriot Foreign minister Erato Kozakou-Marcoullis, Cyprus should not reward a country that does not recognize its legitimacy as a sovereign state.

“I’ve said many times that a pipeline could provide the basis for goodwill and negotiations and that it would make a good means of distribution,” says Marcoullis. “But that’s provided the Cyprus issue is resolved.”

Marcoullis says Nicosia will leverage its investment in an LNG terminal by promoting itself as a regional liquefaction hub for neighboring Israel and perhaps Egypt and Lebanon. “We envision maximizing profits through cooperation among these countries in the export of natural gas and oil,” she says. “The Europeans are very interested in this approach, but we also plan to export to Asia.”

The odds against Cyprus’s succeeding at that approach are steep. There is no LNG terminal in the world that processes gas from multiple countries, experts point out. Israel is unlikely to be the first country to entrust a foreign partner with its feedstock. Nor is it clear that Israel, with proven gas reserves of some 34 trillion cubic feet from its Leviathan and Tamar fields, will choose to export at all. Despite the allure of foreign sales, the Jewish state is constrained by the need to ration its reserves against the prospect of a national emergency. Should Israel export its gas, it is likely to avoid long- term contracts that would deplete its resources faster than spot trades or short-term sales agreements, analysts say.

Either way, Israel has the luxury of time to decide which course to choose. “Israel is nowhere near making a decision this year,” says Oxford’s El-Katiri. “And when it does, it will likely take a different approach than Cyprus. In the end, everyone’s on their own.”

Even Noble Energy, which discovered Aphrodite, appears to be wavering in its commitment to Cyprus. After drilling an exploratory well in September 2011, the company declared that a second test well, to firmly establish the scope and quality of the gas, would be drilled in December 2012. When that date passed, Noble Energy said it would finish the job beginning in April. In February the company conceded it would miss that date as well, citing equipment problems. In an April interview with the Cyprus Mail, Noble CEO Charles Davidson said the second test well would “most likely” be

drilled in June. Such delays have prompted speculation about the true size of Aphrodite, and about Noble Energy’s desire to develop it. (Phone messages and e-mailed requests for comment by Noble Energy, both to Nicosia and to the company’s Houston headquarters, were not returned.) There are rumors that Noble Energy — which in 1998 discovered Israel’s Leviathan field and which has equity stakes in Israel’s reserves — is stalling for time to find a buyer for its 70 percent share of the drilling rights to Aphrodite. At the moment, energy analysts say, Noble Energy executives are working overtime to persuade the Israelis to green-light gas exports.

“Right now Cyprus’s main assets are controlled by a company that is not prioritizing them, and that is creating some commercial drag,” says Benjamin Gage, an analyst at PFC Energy, a Washington-based energy consulting firm. “If the Cypriot government finds more reserves, maybe it can tempt Noble back to Aphrodite.”

The potential is there. According to the U.S. Geological Survey, the Eastern Mediterranean is estimated to hold 122 trillion cubic feet of undiscovered and technically recoverable natural gas and 1.7 billion barrels of oil. Eni and Total beat out a pack of other bidders eager for licenses to prospect in Cypriot waters. Should they discover a field that is close in size to Aphrodite, the additional capacity would justify the expense of liquefaction.

“Eni and Total came in on the assumption that there will be additional resources,” says Michael Leigh, a senior adviser to the German Marshall Fund of the United States, a nonprofit organization devoted to transatlantic issues. “If Nicosia makes the right decisions, it can be exporting gas by 2019 and generating the kind of high-tech upstream and downstream industries that can promote Cypriot independence from the financial sector.”

But global energy markets may not be willing to wait that long. In February, for example, Israeli media reported that Turkish conglomerate Zorlu Holding, in league with Western multinationals, was lobbying Israel for access to its gas reserves via a pipeline that by some estimates would cost about $2 billion and take about three years to build. Despite strained ties between the two countries, according to Israeli daily Haaretz, Israel was considering Turkey’s appeal “because other options have become less attractive as well, with Greece’s economic crisis worsening and the cost and engineering challenges of LNG proving difficult.”

The Haaretz report appeared several weeks before Turkey — with U.S. President Barack Obama as mediator — accepted an apology from Israeli Prime Minister Benjamin Netanyahu for the Mavi Marmara incident. Since then the Turkish press has been heralding a rapprochement between the two countries, with a Turkey-Israel gas pipeline as its centerpiece. As Taner Yildiz, Turkey’s minister of Energy and Natural Resources, told reporters at an energy conference in April, “The reason for Israel’s apology was not energy projects, but the consequence could be energy projects.”

Such an outlook may be premature. As the German Marshall Fund’s Leigh points out, Netanyahu’s apology was “an important step, but only the first step” in what could be a fitful process of settling such matters as compensation for the families of those killed in the Mavi Marmara incident. Just days before he accepted Netanyahu’s gesture, Turkish Prime Minister Recep Tayyip Erdog ̆ an publicly compared Zionism to a “crime against humanity” — hardly the language of reconciliation, notes Leigh. “What has happened so far is too preliminary to change the geopolitical calculus of the Middle East,” he says. “The relationship between Israel and Cyprus will continue. The apology has not changed it.”

Nevertheless, beyond Erdog ̆an’s rhetoric lies a thicket of shared interests between Turkey and Israel and the unimpeachable logic of a shared pipeline. In a bid to reduce its dependence on rivals Russia and Iran for imported fuel — Ankara imports some $60 billion of foreign energy supplies each year — Erdog ̆an has appealed to Iraq’s northern Kurdish population, which has claims on enormous gas and oil reserves. (Iraqi Kurdistan is also thought to host Israeli army officers who train and advise the Kurds’ Peshmerga militias.)

Cutting an energy deal with Iraq’s semi-autonomous Kurdish region would antagonize both Iraq’s Shiite government, which regards any hydrocarbon resources within Iraq’s borders as its own, and Iran, which has developed a politically powerful and commercially lucrative relationship with its Arab neighbor. Anything that pains Tehran — and Iran’s besieged ally, Syria — is welcomed by Israel. Facing a common set of adversaries, Israel and Turkey have strategic as well as economic incentives to turn to each other, at least for the sake of energy security, some analysts say.

“Turkish-Israeli discord is largely for show,” says Metropolitan University Prague’s Belfer. “Erdog ̆an has had to burnish his anti-Zionist credibility with moderate Sunni rebels in Syria he wants to guide to power there once the civil war ends. All things being equal, it’s in Israel’s best interest to have a relationship with Turkey rather than Cyprus and the EU.”

Just as Cypriot officials invested an evangelical faith in Aphrodite’s capacity to help their country ride out the debt crisis, so too did they dismiss warnings that a warming of Turkish-Israeli relations would pose a major setback to its energy ambitions. As Strata Insight’s Le Cornu puts it: “If the Israelis decide to cooperate with Turkey over Leviathan, the momentum may prove too difficult for the Greek Cypriots to resist. A Turkish-Israeli pipeline could then become the principal channel for gas exports for the Eastern Med.”

As if there aren’t enough challenges to the viability of Cypriot gas exports, Cyprus also has to reckon with the looming American shale gale, as some are calling the rise in U.S. gas production. According to the U.S. Energy Information Administration, annual production of natural gas grew by nearly 19 percent between 2007 and 2011. Output is expected to rise a further 50 percent by 2040. Economists estimate that hydraulic fracturing, or fracking, a controversial but productive way to release new supplies of oil and gas from shale rock formations, could allow the U.S. to become a net gas exporter by 2020. A government study released in December concluded that gas exports would be a “net economic benefit” to the country. Plans for new LNG terminals that can process fuel for export as well as domestic use are well under way.

What’s good news for America and other presumptive shale-gas giants, energy analysts say, could be ominous for Cyprus. “With the LNG option, as opposed to a pipeline to Turkey, Cyprus risks entering a more competitive market in the future due to the long lead time to complete such a facility,” says Le Cornu. “There have been significant gas discoveries in Mozambique, Iraq may emerge as a major supplier, and there is also the potential downward impact on prices from shale gas.”

Price negotiations between energy distributors and suppliers are already factoring in expectations of a shale-gas boom. Crucially, the industry’s tradition of indexing long- term prices to petroleum rather than the lower LNG spot prices may be changing. According to a study released in March by Peace Research Institute Oslo, Korea Gas Corp. late last year reportedly agreed to buy fuel from a U.S. company at a price based on bids for LNG. The report also cites a July 2012 contract signed by a German energy company and Russian gas giant Gazprom “in which the lower price of LNG spot prices appears to have played a part.” If such a trend continues, cautions Global LNG Monitor, an industry newsletter, some of the more costly LNG projects will not be built.

Similarly, gas deposits that are expensive to develop, such as those deep underwater, may become unattractive to suppliers, industry experts say. According to the PRIO study: “More difficult areas tend to be exploited when prices are high. Thus, if global gas prices come down and this affects the current and future profits of oil and gas companies, there could be less interest in conducting further exploration in the more expensive deep-water areas such as the Eastern Mediterranean.”

SINCE TURKEY’S INVASION OF Cyprus 40 years ago, delegations from both sides of the divide have met more than 50 times to resolve the island’s partition, to no avail. The most recent and promising effort was led by former U.N. secretary general Kofi Annan in the run-up to Cyprus’s entry into the EU. A referendum on a draft agreement held in April 2004 was passed by Turkish Cypriots but turned down by the Greek side. Many officials in Ankara, Turkish Cyprus, New York and Brussels still blame Greek Cypriot leaders for not doing enough to sell the plan to their constituents.

The Turkish minister for EU affairs, calling for a revival of talks to resolve the Cyprus question, pointedly noted in February that “if three out of four Greek Cypriots had not rejected the [U.N.] plan, today the Greek Cypriots wouldn’t have been on the verge of bankruptcy and the EU wouldn’t have had an energy crisis.”

For years Cypriot elites on both sides of the island’s divide have yearned for a foreign intervention — by the U.S., the Russians or the Europeans — to impose a settlement. Ironically, the crippling demands contained in Cyprus’s rescue plan may represent the closest thing to a deus ex machina.

“We hear more talk, positive signals from France and Germany, about how it makes much more sense to transport gas through Turkey,” says Özdil Nami, a Turkish Cypriot and a participant in several negotiating rounds with Nicosia. “The troika can make it clear that a Cyprus-Turkish pipeline can become a catalyst for reconciliation. Besides, the Europeans want cheap gas, and they won’t get it if it comes liquefied.”

The Syria Report Survives as Independent Publication

ISTANBUL — Jihad Yazigi concedes that he owes a debt to Bashar al Assad. Without the now-besieged Syrian president, there would have been no free-market reforms, no surge in foreign investment and no modern banks in Syria. As Mr. Yazigi acknowledges, there also would not have been The Syria Report, his weekly economic digest that is one of the country’s few successful independent publications.

“My business thrived because there was an opening and I have to give Bashar credit,” Mr. Yazigi said during a recent conference in Istanbul, when asked to reflect upon the changes that awakened the Syrian middle class even as they enriched the elite. “The problem is he didn’t go deep or fast enough to head off the unrest. He didn’t reform the judicial system or encourage a free press, for example. These were red lines that could not be crossed.”

Jihad Yazigi in Istanbul, October 2012.

Mr. Yazigi, the son of an exiled Syrian dissident, publicly called for democratic reform as early as 2004, most notably in a column headlined “The D Word.” At the same time, he applauded the government for stimulating free trade and foreign investment, liberalizing its currency, reforming its financial sector and removing subsidies on everything from cooking oil to farm equipment. Largely as a result, the country’s gross domestic product rose steadily; between 2005 and 2010 it achieved an annualized growth rate of about 5 percent, among the highest for developing countries at the time.

Syria was not the only Arab country that aggressively deregulated its economy. Egypt, Tunisia, Jordan and Saudi Arabia all embraced similar changes which, by the end of the decade, had produced impressive growth but also high inflation, stubborn unemployment and yawning rates of income disparity. So was it free-market reforms that triggered the convulsions that continue to destabilize the region? Or regime kleptocrats who hijacked a badly needed reform process?

“It makes it a lot more difficult for people to sacrifice for the sake of change when elites are profiting,” Mr. Yazigi said. “That said, there were more problems than just corruption.”

In promoting service sectors like hotel construction and management over labor-intensive ones like manufacturing, Mr. Yazigi added, the government neglected a fertile source of jobs. It also exposed its industries to high quality, affordable imported goods when it signed a free trade deal with Turkey. The government withdrew price supports on farm equipment and produce too quickly, he said, sparking an exodus of laborers from an agriculture sector that once accounted for a quarter of total employment.

“Many farmers ended up moving into urban slums,” Mr. Yazigi said, “and that led to a lot of stress and resentment in the cities.”

Mr. Yazigi, a French citizen and Greek Orthodox Christian, is, like Mr. Assad, an outsider whose destiny lured him back to Syria. Both men are sons of plotters — though unlike Mr. Assad’s father, Hafez, an air force general who ruled Syria from 1970 until his death in 2000, Raja Yazigi was on the losing end of a 1961 coup he helped lead in Lebanon.

After fleeing via Jordan, he settled in Ghana, where he established a carpentry business and started a family. At the age of eight, Mr. Yazigi was sent to France for his education. Like Bashar, who studied ophthalmology in Britain before he was fated by his elder brother’s death to lead the Assad ruling dynasty, Mr. Yazigi was obliged to interrupt his studies at the American University in Paris and run the family business when his father passed away in 1995.

The building trade could never compete with Mr. Yazigi’s love of politics, and with the arrival of Bashar as president he sensed an opportunity to indulge a passion inspired by his father, who sent his children to Damascus every summer to improve their Arabic and learn the city’s political terrain. In October 2001, from Paris, Mr. Yazigi distributed an online translation of Syria’s then-fledgling financial press. He knew he was onto something just a few weeks later when The World Bank contacted him and asked for more.

“The Internet had just started,” he said. “I felt like this was something I could do that I really loved and give something back to the country.”

The Syria Report comes out each week with data and news gathered from a variety of sources, including Mr. Yazigi’s own reporting. Among his most precious resources is a database of hundreds of Syrian companies he compiled by soliciting such details as contact coordinates, names of board directors, financial returns and shareholder information. Extracting proprietary information from Syria’s secretive, family-owned businesses was not easy. Over time the database would evolve into a coveted tool for foreign investors and traders converging on Syria. Subscriptions rose in tandem with liberalization and growth.

A one-year membership costs $600. Mr. Yazigi is coy about the number of paying readers, though he allows that sales grew by 30 percent in 2010, a record year for foreign direct investment in Syria, then declined significantly in mid-2011, when peaceful demonstrations against Mr. Assad’s brutality grew into war. Much of the sales he lost to a diminished foreign business community have been absorbed by interest among academics, journalists and aid workers.

The heart of The Syria Report’s content is provided by the Syrian government, which despite the war still faithfully posts official economic data and tender offers. Between the stories about corporate earnings and the depreciating Syrian pound one can find the occasional reporting that is usually absent Syria’s state-controlled press. The government kicked out the country’s few accredited foreign correspondents not long after the violence began. Stories about multinationals quitting war-torn Syria, for example, or the simultaneous closings of several embassies, are rarely carried anywhere but in The Syria Report.

“Jihad has been very engaged and bold,” said Peter Harling, a Syria specialist for the Brussels-based International Crisis Group. “He’s taking principled but sophisticated positions just as other Syrians are becoming politically aware and acute in their analyses. This is what gives me hope for the future of Syria.”

Although Mr. Yazigi has blogged critically about the Assad government, his commentary in an English-language online economic bulletin is too esoteric to attract the attention of the state’s security apparatus. His recent decision to move to Beirut, he says, had more to do with the perils of war than government spies. He still maintains an office and a staffer in Damascus to assemble data.

In March 2011, when the regime responded to a first wave of protests by increasing public-servant pay, Mr. Yazigi scolded the government for political “gifts” that would impose “a severe drain on the Treasury and create serious inflationary risks.” In October that year, he disparaged as “nonsense” the government’s decision to ban imports to conserve foreign currency only to reverse its ruling in the face of opposition from the Aleppo business community. The episode confirmed the government “had no clear economic policy,” Mr. Yazigi wrote, and signaled a reversal of its commitment to free-market reform.

One day, when peace is restored to Syria, Mr. Yazigi said, he would like to expand his existing consulting work. Before the war he applied for a license to host business conferences but was told, in effect, that others close to the government had a lock on the business. It was the kind of red line, he said, that ended up ensnaring the regime.

War Drives Businesses of Aleppo Into Exile

ISTANBUL — In an unheated apartment in Istanbul, Mohammed Sahsoun, a businessman who fled the fighting in Syria, has set up a tiny garment factory. Here, on a chilly day, Mr. Sahsoun and the other proprietors of the shop welcomed a 32-year-old exiled trader from Aleppo with cigarettes and cups of sweet tea.

The guest is a former supplier. When Syria was at peace, his family sold Mr. Sahsoun and other garment makers denim fabric imported from China. At its peak, it was a $7.5 million-a-year business that now has been all but wiped out by the fighting.

“The war will go on for 10 years at least,” said Mr. Sahsoun. “We hate violence and we hate the two sides who are creating it in equal measure.”

Only a half-decade after Iraqi businessmen fled civil war in their country, a second exodus is depleting another stronghold of Mesopotamian enterprise. Aleppo, Syria’s largest city and a key hub on the old Silk Road, is the country’s industrial and commercial turbine. It is home to three million people and 30,000 industrial sites, from textile mills and pharmaceutical factories to small businesses, and it accounts for more than a third of Syria’s industrial output.

Those numbers were valid, of course, before the war to depose President Bashar al-Assad ensnared a city known — wrongly, many contend — as a pillar of the regime. Today, Aleppo’s factories are operating at a fraction of their peacetime capacity and their owners have gone along with their fortunes. They may return once the killing stops, as many Iraqis have done or, like previous generations of Levantine refugees, they may settle down with their riches far away.

“You cannot separate politics from economics,” said Mr. Sahsoun. “We were harassed by the regime. Policemen would extort us. Cronies of the government would crowd us out of the best deals. But we endured until the war reached our homes.”

Aleppo’s rich industrialists, at once respected and resented for their wealth, acumen and association with the ruling dynasty established four decades ago by Bashar’s father, Hafez, have long been regarded as a unique species of Syrian. The city’s centuries-old souk, much of which has become a casualty of the war, is in many ways the still-beating heart of commerce thanks to the resourcefulness of its merchant class.

Ancient Greeks developed Aleppo for its proximity to the Mediterranean to the west and the land bridge linking the Hellenic world to the spice markets and silk weavers of Asia. It served as the Ottoman Empire’s industrial belt just as Damascus, with its gold reserves that backed the imperial coin, was its financial center. Like so many other Arab city-states in the Ottoman era, Aleppo was a thriving complex of different religions, ethnicities and tribes. As late as the early 1980s, when Syria’s per-capita gross domestic product was higher than Turkey’s and on par with South Korea’s, Aleppan textiles were prized among the clothiers and fashion houses of Europe for their quality and affordability.

Back then, Aleppo’s industry was dominated by a handful of large families. Their patriarchs predated the Assad dynasty, which they quietly accommodated just as their forebears did the Ottomans, Mongols and Seleucids. Since the elevation of Bashar al-Assad as president after his father’s death in 2000, however, their authority has diminished. Over the last decade, a cabal of regime hangers-on have staked their claim to the city’s economy at the expense of established oligarchs as well as cottage industrialists.

Mr. Sahsoun knows well the intrusive reach of Aleppo’s nouveaux riches. A few years ago he wanted to expand his business portfolio by importing medical equipment. A well-connected colleague advised him against such a move as a friend of the Assad family wanted to monopolize the sector. Undaunted, he applied for an import license only to be denied it for lacking the proper paperwork that was never clearly defined.

“The regime created a whole class of super-rich businessmen,” said Waleed Fakhouri, an Aleppan who remains active in the Syrian resistance even as he lies low in Istanbul. “They include members of Parliament and the relatives of powerful clerics. And once the fighting reached Aleppo they all fled for Dubai and Cairo.”

Those who remained did so at their peril. Either the regime squeezed them to help cover the costs of war or the rebels, desperate for resources and angered at the income disparity that widened in tandem with economic liberalization, targeted them for ransom. At the current rate of exchange, a kidnapped Aleppo merchant can fetch the equivalent of tens of thousands of dollars. A prominent businessman, Mohammed Maher al Malah, for example, was recently released only after his captors were paid 5 million Syrian pounds, or about $70,000. Factories have been burned and small-scale business owners have been murdered for not respecting rebel calls for a general strike. Reprisal killings are becoming routine.

“The situation in Syria is so confusing,” said Mazen Kelab, one of Mr. Sahsoun’s business partners. “There is regime terrorism on one side and extremist terrorism from the Islamists on the other. We can’t go back now. If we did we’d face death. Today it is your neighborhood that gets destroyed. Tomorrow it is mine.”

The trader visiting Mr. Sahsoun described his troubles in Aleppo with a group of guerrilla fighters. “They demanded a million Syrian pounds from me and I refused,” he said. “So they threatened to kill me and now I’m here. This is the way of Aleppo today. Rich businessmen are kidnapped and held for ransom. The rebels say it’s to raise money to buy weapons. Sometimes that’s true and sometimes it’s not.”

Prior to the rebels’ summer assault on loyalist-held Aleppo, Mr. Sahsoun, 52, employed nearly 200 workers in a garment factory he opened 26 years earlier with $12,000 in seed money. In a good year he had revenue of more than $1 million, with a profit margin of 20 percent. After a free-trade agreement with Turkey failed to give Syrian producers access to European markets, Mr. Sahsoun refocused on buyers in Jordan, Iraq and Saudi Arabia. Between 2004 and 2008 he enjoyed record sales.

In July, when fighting broke out in his neighborhood in Aleppo’s old city, he and his family fled “with only some cash and the clothes on our backs.”

Within a few months, Mr. Sahsoun had raised about $100,000 in working capital from buyers, enough to rent an apartment in Istanbul’s Merkez Efendi district and buy nine second-hand sewing machines and an industrial fabric cutter. The factory employs eight workers, all exiles from Aleppo, and produces children’s garments. The factory has no name, but buyers know the address. Every few days they send trucks to pick up a shipment of clothes and deliver them to shops and bazaars in Amman, Baghdad and Riyadh.

“Ultimately, we want to recreate here what we built in Aleppo,” Mr. Sahsoun said. “If we fail we’ll move to Europe or the U.S. I’ve worked in a factory all my life. What else would I do?”

Austerity vs. Growth: A Prescription for The Path Less Traveled

"The public is an idiot," declared French General, the Marquis de Galliffet, as he stared down a rebellious 19th-century Paris. One can imagine Angela Merkel, Germany's president and embattled fiscal hawk, echoing the sentiment after Europe, led by a new generation of insurrectionist French, rejected spending cuts for stimuli in the name of eurozone recovery.

It was a populist if decisive dismissal of Merkel and the cudgel of her austerity doctrine. After years of slashed budgets and high interest rates, voters in May turned out a slate of leaders with a pro-growth agenda built on renewed public spending. In non-eurozone Britain, meanwhile, Prime Minister David Cameron's own dose of fiscal restraint had delivered nothing but prolonged recession and rising inflation. Once lauded as the eurozone's salvation, austerity is now blamed for hastening its dissolution. "When one steps back and looks at the dynamics in play," argued a post-election blog post in The Economist, "it becomes clear that the robotic push for national-level austerity across the euro zone is undermining integration and thereby exacerbating the process."

News of austerity's demise has yet to reach the United States, however. There, the policy divide has only deepened as the nation enters the home stretch of a coarse and polarizing presidential campaign. Republican Party contender Mitt Romney, having chosen the libertarian-leaning Paul Ryan as his running mate, has transformed the race from a political battle over how to reignite the economy to a Chautauqua-style lecture circuit about the proper role of the state, particularly as it relates to entitlement programs. Democrats, led by the incumbent President Barak Obama, are struggling to revive a Depression-era tradition of activist government; Republicans, meanwhile, would shrink the federal government until it could be "drowned in the bathtub," as anti-tax crusader Grover Norquist has put it.

The argument for immediate fiscal consolidation goes like this: America's federal debt, the estimated $16 trillion in outstanding obligations issued by the U.S. Treasury, is equal to just over 100 percent of its gross domestic product. Social Security, Medicare and Medicaid, which account for two thirds of the federal budget, will soon implode under the weight of baby-boomer retirees. Foreign investors will lose their nerve, unload their trove of U.S. Treasury bills and collapse the economy.

Sadly, this doomsday scenario is not terribly far-fetched. It is altogether possible that investors may one day become net sellers of U.S. federal debt, perhaps even in haste. Such a reckoning is a distant prospect, however, and would be more effectively forestalled through targeted public spending and easier, not tighter credit. The public may be an idiot in some matters, but it is not alone in rejecting spending cuts and high interest rates for a sick economy. A half-decade since the global economy began its spectacular collapse we are still, more or less, all Keynesians. The point is whether pro-growth enthusiasts, be they Obama or France's new president, the Socialist François Hollande, are wise and courageous enough to put on the brakes and start swinging the budget axe once growth becomes reality. The question begs a hearing now, before the age of easy-money finally slips below the horizon line, changing everything.

With the amount of central government debt among OECD nations averaging more than 55 percent of gross domestic product, and with aging populations placing their public health and pension systems under enormous strain, it is vital for the developed world to unwind a generation of leverage. To do so during a time of retrenchment and high unemployment, however, would stifle growth along with revenues, eroding whatever investor confidence deficit reduction might have engendered. Twice in the last four years, in spring 2008 and again in 2011, for example, the European Central Bank raised interest rates in response to a temporary rise in inflation driven by arcing commodity prices, smothering a prospective eurozone recovery. As Nobel Prize-winning economist and New York Times columnist Paul Krugman admonished, "The ECB famously overreacted to a temporary, commodity driven bump in inflation, raising interest rates as the world economy was plunging into a recession.... By all means, let's balance our budget once the economy has recovered - but not now."

In September 2011, an International Monetary Fund report based on data going back thirty years concluded that fiscal austerity lowers incomes in the short term, largely for wage-earners, and increases long-term unemployment. The stress and pain of consolidation intensifies if, as is the case among eurozone member states, central banks are unable to deflate their currencies to enhance export competitiveness. If several countries simultaneously cut spending and raise interest rates, according to the report, "the reduction in incomes in each country is likely to be greater, since not all countries can reduce the value of their currency and increase net exports at the same time."

In response to the argument that fiscal tightening assures investors of a state's creditworthiness, thereby priming it for increased investment and domestic demand, the IMF study concluded that "on average, the effects [of consolidation] are contractionary, with no evidence of any surge of consumption and investment."

As if in validation of the IMF's warning, investment bank Morgan Stanley this month reported that a renewed contraction in eurozone economic growth "seems more probable" due to "additional austerity measures [and] a continued funding squeeze." Conversely, it credited loose monetary policy for assisting much of the eurozone and Britain to finance budget deficits at low interest rates. "This has enabled fiscal policy to act as a stabilizer and remain growth-supportive," according to the analysis.

However discredited in Europe, a plurality of Americans have made fiscal restraint a rallying cry in the campaign to unseat Obama. Despite pressure from a Republican-controlled Congress, the President has not only resisted the Merkel doctrine, he has urged his German counterpart to stimulate consumer demand in her own country to fuel export sales from the eurozone periphery. In response, the German finance minister encouraged "Herr Obama" to get on with the reduction of America's public debt which is "higher than that in the eurozone."

For many fiscal conservatives in America, that is enough to make deficit reduction the nation's top priority even at the cost of an unemployment rate hovering at just over 8 percent. Otherwise, they warn, the bond market will demand higher returns in exchange for investing in U.S. public bonds. In fact, private as well as public investors have been hungrily buying up treasuries at miserly yields almost since the financial crisis began. Some are even accepting negative rates - effectively paying Washington for the privilege of holding its bonds in the hope that one day the government will see fit to give them their money back.

Even a downgrade of U.S. government debt, issued by rating agency Standard & Poor's in August 2011, could not dissuaded investors from betting on, rather than against, Washington's ability to make good on its obligations. Nor does the Federal Reserves' policy of "quantitative easing," under which the central bank has purchased trillions of dollars worth of federal securities, seem to bother the bond markets. Given the economic crisis in Europe, the seemingly endless malaise in Japan, and the illiquid debt markets of China and the Persian Gulf states, there are few places for investors to park their money that provides the security of America's high-volume capital markets. That, plus the U.S. dollar's pre-eminence as the world's reserve currency, allows Washington to borrow and spend its way to recovery almost with impunity. But for how long?

Eventually, the eurozone will recover. If a leitmotif in this spring's elections was the repudiation of austerity, so too was popular support for the eurozone generally, as isolationist candidates were sidelined. The fragility of their institutions duly exposed, eurozone elites must now construct a regulatory framework worthy of a global currency. Recapitalizing the European Investment Bank, for example, would stabilize debt markets and make funds available for so-called "project bonds" to finance fresh infrastructure. (The European Commission estimates that an investment of €230 million could generate €4.6 billion worth of projects.) Member states have endorsed in principal the creation of the so-called European Stability Mechanism, essentially a bailout fund that would provide a firewall against contagion from stricken member economies. Germany, now the de jure economic and political epicenter of Europe with all the responsibility such status confers, will inevitably ease credit to lubricate domestic demand.

Just as Europe will rise intact from the ashes of the current crisis, So too will emerging markets regain the momentum they conceded to low-wage China even before the financial crisis shut down their primary markets overseas. Having mistaken export receipts as an end, rather than a means of modernization, developing economies produced the same goods for ever-dwindling returns. To elude the middle income trap, they must nurture local consumption and diversify sources of growth. Saudi Arabia, for example, having leveraged its fossil fuels resources to develop upstream industries like petrochemicals production, is now investing in mineral extraction and invigorating its financial sector. Neighboring Abu Dhabi is retooling itself into a regional hub for university and post-graduate education while its sister emirate, Dubai, is finally rebounding from its 2010 property collapse.

That leaves China. Having averaged double-digit growth for three decades, the Chinese economy is losing steam. Its overheated property market, fueled by the same easy-credit terms that inflated asset bubbles in the developed world, could collapse with ruinous effect. Rising wages are eroding export competitiveness and a growing number of manufacturers are relocating their factories abroad. Until now, China's leaders have skillfully reconciled the demands of modernization with their insistence on political and intellectual control. But their margin for error has narrowed precariously and the presumption of China's successful evolution into a stable, developed economy can no longer be taken for granted.

There is one thing, however, that Beijing is doing right, with potentially huge consequences for the global economy: it is reforming its currency into fully convertible unit of exchange. In June, Joseph Yam, the former head of Hong Kong's de facto central bank, suggested it should consider dropping the local currency's thirty-year link to the dollar and re-pegging it to the Chinese renminbi. The dollar link, he said, obliged Hong Kong to outsource monetary policy to Washington, which contributed to the former British colony's soaring inflation rate and property prices.

Yam's remarks, which The Financial Times described as "a sign of China's increasing economic dominance in Asia," was also an early inflection point in the diminution of the dollar's role as the world's reserve currency. Over the last eighteen months, Beijing has opened overseas exchange centers in Hong Kong and Singapore and more are planned as trading volume soars. China is now the world's second largest economy and its gross domestic product is expected to exceed U.S. output by 2020. It is only natural that an internationalized renminbi would rival the dollar as the world's fiat currency, which would end the era of dollar hegemony and with it the U.S. government's entitlement to low borrowing costs.

To argue that weakened and highly indebted economies can spend their way to recovery without courting default is not to suggest, as did America's last Republican vice president, that "deficits don't matter." It is both possible and desirable to heal stricken economies without draconian spending cuts that are likely to extinguish the host they were meant to restore. That is the lesson from Europe, and Washington ignores it at its peril. Only then can the U.S. prepare itself for the truly daunting new age to come, one in which the writ of dollar dominion is no longer redeemable.

Egypt at War With Itself

Cairo has always had its slums, among them tidy neighborhoods like Shobra and Agouza, which were once middle-class but have been abandoned over time to the poor and homeless—the “Egypt of rags and sores,” as novelist Lawrence Durrell put it. Over the past decade, however, a new and more sinister species of urban blight has advanced along the city’s outskirts: great honeycombs of mostly uninhabited apartment blocks, products of a vast unregulated economy without permits and inspections or public services like paved streets, lighting, sewage systems and clean water. Many were built by speculators and abandoned in mid-construction. Colonies of squatters have moved in, announcing themselves by the lines of laundry that protrude through windows like flags of capitulation.

Pop-up slums are only a small part of Hosni Mubarak’s legacy, the ousted dictator’s revenge on a nation whose natural resources he plundered and whose markets he rigged for his family and corrupt hangers-on. Having throttled even peaceful opposition throughout his thirty-year rule, he bequeaths a nation at war with itself ahead of the second round of its first free presidential elections. A once-molten political landscape has hardened into a handful of rival camps defined less by issues than by identity and class: Muslim and Christian, religious and secular, haves and have-nots, liberal-minded and security-conscious. Unless the new president can form a broad coalition government to confront the challenges that lie ahead, Egyptians could see years of partisan gridlock, with occasional interludes of violence.

The first round of electioneering in May produced a runoff between the two most divisive candidates: Mohammed Morsi of the powerful Muslim Brotherhood, and the law-and-order Ahmed Shafik, a Mubarak crony. Both men are creatures of an ossified establishment incompatible with the revolution’s liberal ideals. Shafik is regarded as feloul, a remnant of the old regime who would drag Egypt back to the wrong side of history, while Morsi’s Brotherhood (Ikhwan in Arabic) is a secretive, hierarchical order that rewards obedience, punishes dissenters and thrives on the politics of identity. Once widely respected for its decades-long resistance to the old regime, the Ikhwan has antagonized even orthodox Muslims since Mubarak’s departure with a series of ham-fisted miscalculations. The group assured Egyptians it sought only a minority bloc in Parliament, then fielded enough candidates to control half the seats; it promised to protect the virtue of the revolution, then colluded with the illiberal military that runs the country; it prohibited its members from running for president, but changed its mind midway through the campaign, when progressive contenders like Abdel Moneim Aboul Fotouh, an Ikhwan renegade, began polling well with voters.

Despite this, both Morsi and Shafik were able to prevail among a diverse field of candidates by appealing to their respective bases: Islamists on the one side, and, on the other, voters who, in turbulent Egypt, would trade one part liberty for an equal share of security—that slippery slope to autocracy that Benjamin Franklin warned about. The recent torching of Shafik’s campaign headquarters, as well as the outraged response to the dismissal on June 2 of corruption charges against Mubarak’s sons and the acquittal of six security officials charged with murder, shows how quickly Egyptian democracy can turn violent. As The Nation went to press, Morsi had allied with Fotouh and third-place candidate Hamdeen Sabahi to demand that election officials enforce the parliamentary legislation that disqualified Shafik because of his connection to the old regime. (The elder Mubarak, meanwhile, was sentenced to life in prison for accepting bribes and ordering a lethal response to peaceful protests.)

“Things are tense, and it will remain so for some time,” said Mohammed Habib, a former senior leader of the Muslim Brotherhood. “Violence is possible. I am not optimistic.”

* * *

After six decades of misrule—beginning with the wholesale nationalization of the Egyptian economy in the 1950s and ’60s by Gamal Abdel Nasser and the dispossession of minority groups, particularly the country’s Jewish merchant class—Egypt is broken and exhausted. The economy, which tumbled amid the uncertainty of Mubarak’s overthrow, has yet to achieve meaningful signs of recovery. The nation’s infrastructure is failing and there is no money, let alone a master plan, to rebuild it. The rate of tourist arrivals, the country’s most important source of hard currency, is at rock bottom, and the threat of a currency devaluation is keeping foreign investors at bay. Subsidies, some of them legacies of the Nasser era, are wasteful and biased toward industry at the expense of public goods and services. Banks choke on discarded government debt, even as small to midsize businesses—the backbone of the economy—are starved of capital.

Despite a free and fair legislative election in January and an imperfect but conclusive first-round presidential ballot in May, Egypt’s transition to civilian rule is far from certain. The government is administered by the Supreme Council of the Armed Forces, which has only tightened its grip on power since Mubarak’s toppling. The SCAF, already powerful economically with its lucrative share of the civilian economy, has marginalized rival agencies in the national security complex. Debate over the SCAF’s role in Egypt’s new democracy was all but absent before the first round of voting, and the generals are thought to have veto power over the soon-to-be-drafted Constitution.

“No one has tried to go after the deep state so far,” says Heba Morayef, the Cairo-based researcher for Human Rights Watch. “It used to be the State Security Investigations and the Mukhabarat at the center of power, with the military on the side. Now the military is doing everything. Whether you can peel that back is the big question.”

According to local human rights groups, security agents, with SCAF’s blessing, have been deployed to smother labor strikes, while conscripts man the production lines in army-owned factories. The military’s budget is cloaked in secrecy, as is its portfolio of commercial assets, which range from computer manufacturers to gas stations. (To coax the public into accepting proposed cuts in fuel subsidies, the SCAF is rumored to have engineered shortages of gasoline and delivery delays.) In December the military helped to replenish Egypt’s depleted treasury with a “loan” of $1 billion, a gesture that angered many Egyptians as brazen and cynical. Possibly as a hedge against a coup, it has also managed to top up the salaries of mid-ranking officers and enlisted men with generous monthly bonuses.

The SCAF’s main profit center is Egypt’s oil and gas sectors, which account for about 14 percent of economic output, and the ports and maritime authorities that process their exports. Through its holdings in Tharwa Petroleum, according to Shana Marshall and Joshua Stacher in the spring edition of Middle East Report, the military engages in energy exploration with several petroleum ventures involving Chinese and Italian firms. It also profits from Europe’s commercial links with China via enhanced traffic of Europe-bound Chinese goods through the Suez Canal Authority, which it administers.

In the past, competition for civilian assets from Egypt’s oligarchs kept the SCAF in check. Now, according to Marshall and Stacher, with so many Mubarak cronies under investigation or indicted in absentia, “the military is much freer to dictate its terms. With the power to determine the winners and losers at the commanding heights of Egypt’s capitalism, the SCAF will retain unchallengeable clout long after the formal return of civilian rule.”

The SCAF has a powerful advocate in Ahmed Shafik, a former air force general who is far more likely to collude with, rather than challenge, his former brother officers. (According to Egyptian press reports, junior officers in the security apparatus as well as civilian public servants were told by superiors to vote for Shafik, while military personnel, who are prohibited from voting, were told to mobilize their families on his behalf.) Brotherhood leaders have called for the military to declare the size of its budget, but they’ve also signaled that they must wait until the economy recovers before expending political capital in a fight with the SCAF.

“The army has always been the major power in Egypt,” says Nadeem Mansour, executive director of the Egyptian Center for Economic and Social Rights. “We need a long-term plan for asserting greater control over the military, but for now the most we can hope for is greater transparency.”

* * *

Neither candidate is likely to repeal the economic policies that transformed the Egyptian economy during the last decade of Mubarak’s rule and, according to activists and some economists, set the stage for insurrection. In 2004, with Egypt laid low by a cash crunch similar to the one it faces today, the government responded by privatizing industry, deregulating the pound, lifting import tariffs, and cutting personal and corporate tax rates. By the end of the decade, the economy had achieved an average annual growth rate of about 6.5 percent and was lauded as a model of reform by doting supply-siders. But the dividends failed to percolate beyond a small circle of predatory elites. Egyptian banks, despite higher reserve requirements and improved balance sheets, declined to diversify away from their more lucrative clients—big corporations and the treasury—at the expense of family-run businesses aching for credit. The result was rising unemployment and inflation at a time of rapid growth. As of 2008, the number of Egyptians living below the poverty line accounted for 22 percent of the population, up from 17 percent in 2000. Add to that corruption associated with the sale of Egypt’s largest companies, together with the prospect of a dynastic transfer of power from Mubarak to his son Gamal—widely loathed as both the architect and benefactor of divestment—and a reckoning was unavoidable.

If there is common cause between Morsi and Shafik, it is in their embrace of the neoliberal policies that have proven so unpopular with voters. The Brotherhood, which in the event of a Morsi victory would control the executive and legislative wings of government as well as white-collar syndicates such as the teacher and medical associations, is famously pro–free market. Its all-powerful Number 2, deputy supreme guide Khairat El Shater, is a wealthy businessman and investor who has urged a new round of privatization, including the sale of public utilities. The Brotherhood also administers a vast network of charities and patronage systems, however, and its free-market faith is not unconditional: it opposes the country’s flat tax as regressive, embraces self-sufficiency in strategic commodities, and supports a minimum and maximum wage. In an interview, Shater told The Nation that the Ikhwan might even back government intervention to shore up the pound. “The free market has adapted over fifty years,” he said, “but not without state support.”

As the election enters its home stretch, Morsi would be wise to promote such a progressive agenda, given how well it served the leftist candidate Hamdeen Sabahi in his surprisingly strong showing in the first round. (Analysts contend that had Sabahi allied with Aboul Fotouh, the ex-Ikhwanist who finished fourth, they would have prevailed.)

Though recent indicators suggest that the economy has stabilized, the future is obscured by an overhang of sovereign debt assumed by local banks after panicked foreign investors dumped their holdings last year. In the year after Mubarak’s February 2011 overthrow, loans to the government held by Egyptian banks swelled to nearly two-thirds of total lending, an extraordinarily high ratio that crowds out lending to businesses and corporations. The banks are willing financiers, but only at yields of at least 16 percent, a price many economists regard as unsustainable. In October, Standard & Poor’s cut Egypt’s sovereign debt rating, and in May it downgraded four top banks, citing Cairo’s “reduced sovereign creditworthiness,” which “limits the government’s ability to provide extraordinary support to banks in the event of financial distress.” In other words, if the treasury defaults on its obligations, it may drag lenders down with it.

The country’s foreign exchange reserve has stabilized at about $15 billion, less than half the pre-revolution level, largely because foreigners have finally disposed of their Egyptian treasuries. While that has cheered some economists, others fear a devaluation of the pound. “It’s great that foreigners have finished selling Egyptian debt,” says a Cairo-based investor who requested anonymity, given the fragility of Egypt’s financial system. “But if you’re no longer breathing, it doesn’t mean you don’t need oxygen. It means you’re dying.”

The analyst conceded that a revival of foreign investment and the tourist trade is likely once the country stabilizes politically. “But then what happens?” he said. “The existing cash crunch will deepen and people will be forced to go to the black market for dollars and interest rates will rise. The government has a choice. It can either devalue the currency or do nothing and hope that things will slowly turn around. But that could end in a slow death.”

The good news, according to economists, is that the risk of default is minimal. Unlike the beleaguered banking sectors of Greece and Spain, which were undone by incendiary derivatives and bundled mortgages, Egyptian banks have contented themselves with basic loans and fixed-income deposits. Another factor working in Egypt’s favor is its enormous shadow economy. Only 10 percent of Egyptians have bank accounts, which means the majority of transactions go unreported. Despite the diminished reserves of hard currency, a nebula of informal business activity has kept the economy afloat through previous recessions, and it is likely to see the country through the current one.

Of course, this is hardly an unqualified blessing. As the Arab world’s largest market, Egypt should be a major financial center. Instead, it is burdened with some of the most risk-averse bankers in the region. According to Egyptian economist Tarek El Ghamrawy, credit for new investment is worth 3.5 percent of the total, compared with 12.8 percent for the Middle East/North Africa region. Only 4.2 percent of that amount is held by small businesses, which account for more than two-thirds of economic output. Shunned by the banks, business owners either borrow from family members or turn to independent lenders at usurious rates of interest.

Eluding the treasurer’s audit, the shadow economy represents billions of dollars of unrealized public revenue. It is where unregulated housing flourishes and where schoolteachers, to supplement their meager incomes, hold after-school “tutoring” sessions that students are all but obligated to attend. It hosts much of the “officer economy,” where indentured enlisted soldiers line kitchen appliances with insulation rather than develop skills for better jobs after their return to civilian life. In the shadow economy, supply bottlenecks can multiply the price of goods by a factor of four, and farmers are violently evicted from fertile land—an increasingly precious resource given Egypt’s diminishing water supply—at the pleasure of rich developers. In a country where anyone who works more than one hour a week is counted as employed, the shadow economy is home to an invisible mass of jobless Egyptians.

It is in the shadow economy that the nation’s enterprise and illegality cross-fertilize, and it is there that Egyptian democracy will succeed or fail. The outlook is not good. The appeal of candidates Morsi and Shafik, figureheads of modern Egypt’s two most powerful warring tribes, is confined to the severely religious and the profoundly frightened. So irreconcilable are their competing values that it’s hard to believe they would lock arms for the greater good. For generations the Ikhwan and Egypt’s dictators struggled against each other like matter and antimatter, only to resume their war in the china shop of the nation’s new order. Just as the Ikhwan distinguished itself by resisting Mubarak, so does Shafik owe his resurrection to the Brotherhood’s outsized and off-putting belief in its own entitlement—first over the syndicates, then Parliament and finally the president’s office. Shafik may lose the election, but his constituency, a tactical alliance of secularists, Christians and pious Muslims unnerved by the prospect of single-party rule, will survive him unless the Brotherhood ditches its parochial parapet for an ecumenical big tent. Otherwise, the prospect of another revolt—one driven more by the need for food than the desire for political emancipation—will intensify in lockstep with Egypt’s economic and social debility.

A decade ago, when he was a member of Parliament, Morsi spent a day with me in his home district in the Nile Delta. We met at the local university, where he lectured as a professor of engineering, and as we prepared to embark on his scheduled rounds, he lamented the dire mismatch between the demands of Egypt’s youth and the diminishing returns of its economy. At one point, he gestured to the students around him. “When these students graduate, where will they go?” he asked. “We have 200,000 graduates in the market, and there are no jobs.”

Since then, that number has risen to 700,000.

Egyptian Farmers Make Themselves Heard

FAYOUM, EGYPT — Even as the struggle for control of Egypt’s future has played out in Cairo between the military power brokers and the Muslim Brotherhood, a parallel struggle has been playing out in the farm belt between dispossessed peasants and cronies of the old regime.

How each ends may be determined by the other.

Under the military dictatorship of former President Hosni Mubarak, farmers say, many small-scale growers were forcibly evicted by government security forces so that political elites could settle or develop their land. Since Mr. Mubarak’s ouster they have been fighting through the courts to get it back. The land wars pitch members of the old guard’s inner circle against the Brotherhood’s grass-roots supporters and their outcome may reveal who pulls the strings in post-revolutionary Egypt.

Khamis Abdel Khaled recalls the day in October 1997 when he and about 50 other residents of Fayoum, an ancient oasis in the Western desert, were rounded up and driven to the local police precinct. They were held there and beaten for three days without food or water, he said during an interview this month.

“They even kicked the women,” said Mr. Abdel Khaled. “They told us the land was not ours but ‘gifts to the Wali family from the state.’ We had to bribe a junior officer to use the bathroom.”

Youssef Wali was the minister of agriculture for two decades under Mr. Mubarak, who routinely gave huge tracts of land to loyal judges, generals and ministers. Driven from 400 feddans, or about 415 acres, the Fayoum growers spent the next 14 years as itinerant laborers or public-sector workers in Cairo. After Mr. Mubarak was ousted last year they resettled the land, but are now in a legal battle with the family of Mr. Wali, who recently was sentenced to 10 years in prison on corruption charges arising from his time as a minister.

The land feud in Fayoum, 130 kilometers, or 80 miles, southwest of Cairo, is part of an escalating war for control of Egypt’s most precious resources: arable land and fresh water. In 2010, according to data compiled by Sons of the Soil Land Center, a nonprofit organization in Cairo, 270 people were killed resisting dispossession, up from 197 in 2009.

Rural Egypt provided much of the support for Mohamed Morsi, the Muslim Brotherhood’s victorious presidential candidate, and the group’s campaign manifestos were accordingly sympathetic to the plight of small farmers. “Hosni Mubarak killed Egyptian agriculture over a 30-year period,” said Mohamed Gouda, a Brotherhood economist and a member of Mr. Morsi’s planning committee. “He did it with the help of people like Youssef Wali.”

The Agriculture Ministry did not respond to requests for comment, and attempts to reach Mr. Wali’s lawyer by telephone were unsuccessful.

Lawlessness in the countryside, where nearly 60 percent of Egyptians live, is one of the most malign symptoms of an industry in disarray. While agriculture accounts for 13 percent of the country’s gross domestic product and nearly a third of employment, it is perhaps the most neglected sector in the troubled post-revolutionary economy.

Among the many constituencies vying for Mr. Morsi’s attention, tenant growers have a compelling claim. “The farmers have feared the government for decades,” said Mahmoud al Mansy, who heads Sons of the Soil’s human rights center. “The banks are controlled by the landholders and any gathering of farmers is attacked by thugs. Finally, they are beginning to organize.”

Once the breadbasket of the Roman Empire, Egypt over the past several decades has become heavily reliant on imports to meet its nutritional needs. Estimates go as high as 80 percent, though the data are unreliable. Economists and farm experts attribute the shortfall to rapid population growth and poor dietary habits as well as corruption, bad management and a controversial policy, led by Mr. Wali in the late 1980s, to encourage the development and export of high-value-added products like fruit and flowers at the expense of lower-margin crops like wheat.

Egypt is not the only country in the Middle East that relies on foreign sources for a growing share of its food. Along with North Africa, the region depends more on imported produce and grains than any other part of the world. The situation is especially acute in Egypt, where food prices rose 37 percent from 2008 to 2010. “Bread, Dignity and Social Justice,” the clarion call of the revolt last year, is noteworthy not only for its elements but for the order in which they are ranked.

A number of various agencies, from ministries to chambers of commerce, compete for influence over dwindling resources. Seeds and fertilizers are distributed by a government-owned cooperative and credit is allocated through a state-owned bank — at usurious rates of interest, farmers say. Despite government lip service to free-market policies, growers say, it is largely Cairo that determines which crops they will produce, where they will grow them, and what their land is worth.

“Egypt suffers from a disconnect between farmers and the government,” says Ray Bush, a professor at the University of Leeds, in Britain, who specializes in Egyptian agriculture. “Policy makers cannot account for how many farmers there are and what is produced within a range of plus or minus 30 percent. They don’t know what’s going on.”

Even large-scale growers are frustrated. The Wadi Group, a local agribusiness giant, operates 5,000 feddans of land, employs 4,500 people and exports much of its output in an economy that, since the revolution, has been running short of hard currency. Yet recently, when the group decided to purchase desert land with brackish well water because of the scarcity of available estates in the more fertile Nile Delta, the government charged it 20,000 Egyptian pounds per feddan, or about $3,180 per acre, while refusing to support that investment by providing irrigation systems.

Such an investment, said Khalil Nasrallah, a Wadi Group partner, can be recovered only by selling into the lucrative European markets. Yet accessing those markets has been made harder since the post-Mubarak interim government suppressed a modest subsidy for exports to the European Union.

“Since the revolution, there’s been no clear direction from the government,” Mr. Nasrallah said. “There is a great mistrust between the private sector and the government.”

Promoting agricultural export revenue was a signature policy of Mr. Wali, who, some growers say, was encouraged in that direction by Washington through the United States Agency for International Development. The policy intensified Egypt’s reliance on imported staples, these farmers claim, by encouraging large producers to switch from their traditional cotton and grain crops to the higher-margin specialties like bananas and cut flowers.

“U.S.A.I.D. played the principal role in these ideas,” said Habib Ayeb, a geographer and professor at the American University in Cairo. “It is their way of thinking, to give money to agribusiness while refusing to give to small farmers.”

A U.S.A.I.D. official disputed this. “We don’t make decisions for farmers about what products they should grow,” he said. “We certainly don’t encourage them to bet the farm on flowers.”

Another legacy of the Wali years is legislation, signed in 1992, that allowed former landlords to reclaim property appropriated in the 1960s by the then-Egyptian strongman Gamal Abdel Nasser. Law 96, as it is known, invalidated the transfer of land in perpetuity from the original owners to tenant farmers, who after 30 years of paying property taxes had become eligible to own the plots outright. Almost overnight, the government restored an earlier era in which tenant farmers were indentured to a handful of aristocrats who controlled the country’s most fertile land.

Immediately after Law 96 was passed, rents tripled. According to Karam Saber, director of the Land Center for Human Rights, a nonprofit organization that represents aggrieved farmers, the Agriculture Ministry became a clearing house for counterfeit documents that conferred to the bearer ownership of farmland that more often than not would be razed to make room for a property development. In other cases, he says, farms were sold in secret auctions by the ministry as well as the state’s charitable trust. In the two decades since Law 96 was signed, 10 percent of Egyptians lost their farms.

“What the government did was change tenure for all kinds of farming,” Mr. Price said. “The consequences of this to rural employment were huge.”

This month, more than 100 Fayoum farmers demonstrated in front of the Justice Ministry in Cairo against a guilty verdict rendered against one of their own for refusing to concede his farm to a nephew of Mr. Wali. By the standards of Egypt’s once-passive tenant growers, it was an impressive display of unity and resolve. Since the revolution, according to Mr. Saber, some 35 growers’ unions have been established.

“They’re fighting the government, and they’re starting from scratch,” Mr. Saber said. “No one is helping them, and they have nothing to lose.”

Boozing it up in the Hermit Kingdom

At a time when our nation’s security apparatus is no doubt refreshing contingency plans for a war with North Korea, it’s worth noting that the North Koreans themselves doggedly persevere despite oppression from within and a militarized US foreign policy from without. For a counter-narrative to the predictable Sturm und Drang between Washington and Pyongyang, see below:

The bedlam revealed here is not a regular occurrence in ancient Sonchon, a North Korean coastal city about thirty-five miles south of the border with China. Sightings of foreigners are about as infrequent as they are anywhere else in the self-styled “Hermit Kingdom,” so it’s not surprising that a long-awaited visit from a delegation of aid workers would be celebrated with a decidedly unproletarian extravagance.

The lanky gent above toasting his bibulous hosts is Dr. Stephen Linton, who has just completed his resupply of medical goods at Sonchon People’s Hospital. The seated apparatchik with the toothy grin and heroically pomaded hair is the hospital director, and the young lady greeting Linton’s glass with one of her own is the proprietress of People’s No. 6 Diner, which apparently doubles as Sonchon’s top restaurant and unofficial greeting hall for visiting dignitaries.

I was along for the ride while reporting a profile of Linton and his work with North Korea’s tuberculosis victims. Journalists are regarded warily in the country, and I had been given the ground rules well before my arrival for the twelve-day assignment: no photographs between destinations, don’t talk politics with the minders, stick with the group at all times, don’t go near TB patients unless you’re wearing a mask, and eat and drink whatever the North Koreans put in front of you.

Hold it. Eat and drink? We were talking, or so I thought, about a famine-stricken country where people are commonly reduced to eating boiled tree bark. Could the local economy muster a selection of foodstuffs beyond the inevitable offerings of kimchi, the spicy fermented cabbage that is a staple in rich South Korea and a guilty pleasure in its impoverished neighbor?

As it turned out, the delegation did not want for good eating. On the contrary, we were welcomed and provided for as honored guests while we journeyed from one rural sanatorium to the next in a convoy of SUVs. At every stop, after dispensing drugs, electrocardiographs, parkas, and stethoscopes, we were ushered into the office of the director and treated to platters of roasted chestnuts, sweet potatoes, apples, and roast chicken. On tap were bottles of beer and soju, a high-octane hooch brewed from fermented potatoes or grains. (It’s best administered as a general anesthetic, of which the country is in dreadfully short supply.) The head of a care center in Ryongsong, a northern district of Pyongyang, celebrated our arrival by passing around shot glasses of ginseng-flavored soju that had the flavor and viscosity of cough syrup. We washed the shots down with beer chasers. It was nine in the morning.

Occasionally Linton and his delegation would be fêted beyond the confines of the care center. But the saturnalia at Sonchon was unforgettable. The business of resupply done, we were escorted to the diner, where a narrow table was set for 16 guests. Within minutes, we were steeped in small dishes filled with culinary confections hauled mostly from the nearby Yellow Sea. There were fried clams in their shells, crabmeat, cold cuttlefish diced and marinated in spicy garlic sauce, whole baby squid, fried dumplings, pâté of donkey meat, green-bean pancakes with congealed pig-fat centers (good for digestion, I was told), and rabbit fricassee prepared at table on portable gas stoves.

The toastmasters came at us in human waves. The soju and the steam from the fricassee provided an illusion of ambient warmth in defiance of North Korea’s severe energy shortages, though no one removed their coats. The diner’s windows fogged up, and the feast went on for more than two hours. Reluctantly, Linton declared our need to move on, which unleashed a scramble for photographs with the exclusively female and impressively apple-cheeked staff. Heady from the attention and nearly blind from the booze, I briefly convinced myself that I had liberated North Korea.

A snap snowstorm arrived, and with it its sobering properties. We climbed into the vehicles and continued on our way.

Brothers in Power

The Muslim Brotherhood promises a pragmatic blend of Islam and capitalism in office. Can the once-banned group deliver?

Click here to read the story.

New hope for Egypt’s pioneering journalist

CAIRO — A little over a year ago, on the eve of the revolution that ousted Egyptian autocrat Hosni Mubarak, Hisham Kassem was poised to launch the Arab world’s first independently owned multimedia news company. But the revolution failed to redeem its promise of full democracy, press freedoms deteriorated, the economy tanked, and Kassem’s shareholders abandoned him.

“Investors started missing payments in June,” Kassem says from his half-finished offices in downtown Cairo. “By late August I was cash-strapped.”

Kassem, who during the twilight of the Mubarak regime did as much as anyone to create pockets of oxygen for hard-hitting journalism, says he is confident that his Egyptian shareholders will return from the sidelines once the country stabilizes politically. Though recent elections turned out an Islamist-dominated parliament, he notes, the process was smooth, setting the stage for a presidential election this year and the end to an unpopular military-led interim government. Venture capitalists are showing renewed interest in his enterprise, the name of which he declines to divulge, and, he said, he’s getting fresh offers for shares.

Even Kassem admits, however, that there is no guarantee Egypt’s national security apparatus, which survived the revolution more or less intact, will go quietly.

Hisham Kassem

During the last few years of Mubarak’s rule, the country’s draconian press laws were loosened so that criticism of the regime was tolerated, if grudgingly and arbitrarily, and independent journals and magazines proliferated. But even that modest flowering was crushed by the ruling military council not long after Mubarak’s removal, according to journalists, with what they suspect is a stealth campaign of harassment.

“The pressure is now worse than ever,” says Ibrahim Eissa, an activist and publisher who last spring launched Tahrir, a newspaper and broadcast company named after the square that served as the locus of the anti-Mubarak movement. “The government passes laws that make it harder to publish. Now, anyone can declare themselves slandered by a story and demand fines. Of course, it’s impossible to say who’s behind these attacks.”

Growth potential

Investor interest in Egypt’s media sector and its enormous growth potential remains high, however. Though less than a fifth of the country’s 85 million people read daily newspapers, that could change if outlets like Kassem’s venture, which will generate print, television, radio and Web-driven content, take root. Internet usage is still relatively low, which means newspapers, radio and television broadcasters will be commercially sustainable for some time. Plus, the country’s state-run press and broadcasters, as unpopular as they are costly to run, are likely to consolidate or disappear altogether, creating new market share for independents.

Buoyed by such projections, Kassem says he will not hesitate to reengage the spooks and functionaries whose job it is to obscure truth from power. In the late 1990s he launched the English-language Cairo Times, a general interest monthly and a must-read for Cairenes outraged at Mubarak’s brutality. E xhausted, he closed shop after several years of prolonged skirmishes with regime censors as the only independent publication of its kind. In 2003 he was recruited to edit Al Masry Al Youm, an independent daily newspaper, and under his watch it evolved into an authentic and profitable dissenting voice.

Issandr El Amrani, who worked for Kassem at the Cairo Times as a journeyman reporter, remembers his old boss as a Middle East H.L. Mencken, equal parts stern, parsimonious and shrewd. “He proved you can make a successful business out of a good publication,” says Amrani, who now edits The Arabist Web site. “And that was before there was so much to write and read about.”

In 2008, Kassem resigned from Al Masry Al Youm to begin the spadework for a landmark Arab media conglomerate. He toured the world’s great newsrooms to learn how to develop his own news management system and organized a road show to line up 30 million pounds (about $5.2 million) in start-up capital — under Egypt’s press law, he is prohibited from raising funds from non-Egyptians.

As 2010 approached, he had signed a lease for two floors of prime office space and he was negotiating with an architect the fine points of the floor plan, from the thickness of sound-proofing tiles in the recording studios to the wattage of recessed halogen bulbs in the newsroom. He was just about to start hiring staff when the rebellion against Mubarak gripped the nation and consumed the world.

A push for ‘good governance’

Today, despite Egypt’s difficult economic environment, Kassem is optimistic. In a few weeks, he says, he’ll be accepting applications for the 60 or so positions that will round out the staff and he expects some 5,000 submissions. “I’m not exaggerating when I say every journalist in town wants to join us,” he says.

The vacant offices are silent except for the whir of a small refrigerator and the din of Cairo’s relentless traffic that pulses up from below. Kassem recalls how, when he was running the Cairo Times, he was ordered by the censors to stop reporting on a $60 billion residential and water-irrigation development, which like so many Pharaonic projects conceived under Mubarak was regarded as a corrupt land grab for regime cronies.

“We were told ‘don’t touch it’ and we had to leave it alone.” he said. “No more. There needs to be an end to graft and corruption and a move to good governance and if I’m doing my job here, it can happen.”

By Choosing Arms Over Diplomacy, America Errs in Asia

Washington

HAWKS on both sides of the Pacific greeted the Obama administration’s decision last month to fortify, rather than throttle back, America’s vast influence in East Asia as a defining moment in a looming confrontation between the United States and China. In the rush to militarize the world’s most important bilateral relationship, however, two questions have not been answered: Are the disputes that roil Asia more effectively resolved through armed might or diplomacy? If the answer is diplomacy, where is American statecraft when it is needed?

With the economy in disarray, President Obama chose a costly instrument in deciding to expand the American military commitment in Asia by deploying a Marine contingent to Australia; the move will only help insulate the Pentagon from meaningful spending cuts and preserve the leading role the military has played in foreign policy since the 9/11 attacks.

In looking to the military, Mr. Obama was embellishing an old policy course. For more than a century, the Pacific rim of Asia has seen a number of unnecessary American wars and interventions, beginning with Washington’s imperial thrust through Guam and the Philippines, its role in suppressing the Boxer Rebellion in China, and its 40-year-long Open Door policy (a demand that trading rights in Chinese coastal cities be shared among industrial nations that had sought zones of influence). In 1949, after Communist forces prevailed in China’s civil war, President Harry S. Truman chose not to engage the new People’s Republic but to contain it alongside the Soviet empire — with which Mao Zedong soon aligned, earlier entreaties to Washington having been rebuffed.

Having dismissed a diplomatic opening along with advice from some of his own China experts, Truman militarized Sino-American relations on China’s borders by extending aid to the French in Indochina and then by endeavoring, disastrously, to reunite the Korean Peninsula by force, in response to North Korea’s effort to do the same by invading its southern neighbor. The agonizing stalemate that followed foreshadowed America’s doomed intervention in Vietnam.

Mr. Obama, like his predecessors, seems now to be embracing a militarized policy with regard to China, the sinew of which is a global network of military bases that has changed little since the peak of the cold war. Far from reducing its profile in Asia, the Pentagon has been quietly enhancing or reconfiguring its capacity there in recent decades. For example, it has been building up forces on the United States territory of Guam, a far-reaching strategic enclave in the Pacific much like the British island of Diego Garcia in the Indian Ocean. Pentagon strategists say the aim is to “dissuade, deter and defeat” regional aggressors. And in recent months, the Defense Department has been developing a strategy for Asia called “AirSea Battle,” an instrument with which American military power can address “asymmetrical threats in the Western Pacific,” an implicit reference to China.

Washington justifies its Pacific buildup by citing China’s increasingly menacing claims on the region’s contested waterways. But there has been no serious American-led effort to resolve such disputes through bilateral or multilateral diplomatic rounds.

Indeed, America’s top diplomat has become the chief civilian advocate for military answers to diplomatic challenges. Speaking in Honolulu last month, Secretary of State Hillary Rodham Clinton called for “a more broadly distributed military presence” in Asia. While in Manila, she appeared on an American warship and reaffirmed the nearly 60-year-old security pact between the United States and the Philippines. She also has endorsed the creation of an American-led regional trade pact that pointedly excludes China for the present, a remarkably petty snub compared to the way her legendary predecessor George C. Marshall offered (without success, in the face of Stalin’s suspicions) to include the Soviet Union in the postwar reconstruction plan that now bears Marshall’s name. And this month she visited Myanmar, where the Obama administration has assiduously worked to neutralize a corrupt and repressive government in favor of democratic reform; in the grander strategic game, this, too, could be read in Beijing as a tactic to weave the country — which has been Beijing’s ally — into an American noose around China.

Since the end of the cold war, senior diplomats and general officers have coalesced in support of a central military role in the formulation and execution of foreign affairs. This role is a consequence of the growing imbalance between America’s diplomatic and military resources, and it shaped lamentably militarized responses to the Balkan crisis of the 1990s, the 9/11 attacks, the reconstitution of Iraq and now the rise of China. Mrs. Clinton may declare herself, as she did in an October article in Foreign Policy and again in Honolulu, to be for “a substantially increased investment — diplomatic, economic, strategic and otherwise” in the Asia-Pacific region, but this ignores the fact that the country’s diplomatic capacity has been cruelly cut back over the last two decades, particularly in relation to the Pentagon’s.

In fact, the Pentagon can be expected to keep outspending the State Department at an enormous rate — even in the unlikely event that Congress musters the courage to impose draconian budget cuts, as the law requires, in the wake of the deficit-reduction super committee’s collapse. Currently, Washington is allocating about a dozen dollars for defense outlays for every dollar it spends on diplomacy and international assistance. In Honolulu, Mrs. Clinton also celebrated the “opportunities and obligations” in Asia that are ripe for exploration after the immense expenditure of American blood and coin in Iraq and Afghanistan. That recalls the way the country’s policy making elite saw fresh dangers as well as opportunities in Asia after America’s withdrawal from Vietnam — an earlier example of Washington’s cyclical preoccupation with perceived threats from one end of the Eastern Hemisphere to the other.

So long as Congress insists on lavishing funds on the Pentagon at the State Department’s expense, there will be no shortage of perceived monsters to hem in or destroy. Witness the new species taking form in Asia.

Fault Lines in Egypt's Muslim Brotherhood

Mohammed Habib lives in a suburb of Cairo just beyond the ring of tenement housing that is closing in on the city like a noose. His flat is small but well kept, with great towers of stacked books erected from the floor and tables.

This has been Habib’s place of self-imposed exile since he and his allies in the Muslim Brotherhood lost a struggle for control of the Islamist group eighteen months ago. It was generally assumed that Habib, as the then-deputy chairman, would be elected chairman when Mohammed Akef, who had held the post for six years, announced he was stepping down. When the vote was held in January 2010, however, Habib was upset by Mohammed Badie, a conservative and relatively obscure member of the Brotherhood’s governing council, known as the Guidance Bureau. Delivering his acceptance speech, according to Habib, Badie referred affectionately to Egypt’s then-dictator Hosni Mubarak as “the father of Egypt,” and he implied the Brotherhood would accept a dynastic transfer of power to Mubarak’s son Gamal. Not long after that, several Badie allies were released from prison after long periods of detention.

Badie’s remarks, to say nothing of the election results, were a surprise to pretty much everyone but Habib. “Four months before the election,” he told me, “I received information through leads within the group that Badie would be the next Supreme Guide. I believe there was an agreement between Badie and his supporters and the government. The rest of us were strongly opposed to Gamal Mubarak and his succession.”

Predictably, Brotherhood leaders deny such a deal was made, though talk of an agreement has circulated within the group. “It’s been mentioned,” said a rank-and-file member who requested anonymity so as to avoid reprimand. “An official on the Guidance Bureau told me. And while I’d rather not believe in such a thing, it may contain a bit of truth.”

I met with Habib in June. Until then, he had kept his account of the transition largely to himself. So much had happened since February, however, when Mubarak and his ruling circle were ousted in a popular revolt, that he decided to come forward in interviews and with writings of his own. National elections have been scheduled for November, and the Ikhwan, as the Muslim Brotherhood is known in Arabic, is expected to win a plurality of seats in Parliament. Almost overnight Egypt, once the wellspring of Arab politics and culture before it was rendered mute by a half-century of one-party rule, has been transformed into a fragile young democracy. At the center of this whirlwind is the Ikhwan, one of Egypt’s oldest political movements, one that has survived decades of persecution by resisting and accommodating sequential fashions of autocracy, from monarchy to secular dictatorship. Now freed along with the rest of the country, and seemingly within reach of unprecedented power, the Brotherhood faces the prospect of implosion. Though it can now openly organize and contest elections, that same process is deepening longstanding fault lines within the group that threaten its dissolution.

“The Ikhwan is behaving as if the entire political system is in its grip,” Habib said. “In fact, there are fissures, and they may be to the very core. There is concern among the younger members that the leadership does not understand what’s going on around it. But their opinions are being cast aside, just as they were under Mubarak.”

Fractures within the Brotherhood are nothing new. Since its founding in 1928 by revivalist Hassan al-Banna, the Ikhwan has been home to competing visions of Islam and the group’s role in Egyptian society. The impulse among some leaders to engage in politics and revolution, both peaceful and violent, rather than confine themselves to proselytizing and social work has at times threatened to destroy the group. A failed bid in October 1954 by a Brotherhood faction to assassinate Egyptian President Gamal Abdel Nasser, the fierce secularist who led Egypt throughout the 1950s and ’60s, ended with mass arrests of Ikhwanists and the torture of the plot’s alleged leaders, including radical author and Islamic theorist Sayyid Qutb. (Al Qaeda leader Ayman al-Zawahiri was a Qutb disciple.)

Schismatics aside, the Brotherhood has remained whole largely by entering into tactical ententes with the state and nurturing social networks that are the basis of its political muscle. If Banna was a rebel—he lashed out against what he regarded as Cairo’s corrupt political elites, neo-imperialism and Zionism, and the social salons that were Westernizing Egypt and Islam—he was conflicted about the use of violence even when deployed against the country’s British occupiers. “Revolution is not part of the Brotherhood’s ideology,” said Habib. “Even Hassan al-Banna never spoke of it. The objective has always been to reform the system from within, not to replace it with a new one.”

The Brotherhood allied with Anwar Sadat, Nasser’s successor, in his battles with leftists, only to turn against him along with other Islamist groups once he recognized Israel in 1979. (Sadat’s assassination in 1981 was the work of a handful of rogue Ikhwan members and other radical Islamists, along with colluding military officers.) The Brotherhood’s relations with Mubarak were equally volatile; the two sides shared an uneasy truce during the 1990s, when the regime fought a low-level civil war with militant organizations like Al-Gama’a al-Islamiyya. In 2005, however, when Brotherhood candidates won the largest opposition bloc in parliamentary elections—they were allowed to campaign only as independents—Mubarak unleashed an extrajudicial assault on the group, detaining and torturing members under emergency security measures in place since Sadat’s assassination. In 2008 the government modified the Constitution to prohibit independent candidates from running for Parliament, a move clearly aimed at the Ikhwan. For good measure, it arrested thousands of its members, many of whom were tried in military courts.

It was largely in response to Mubarak’s iron hand, quietly abetted by the Bush administration and the US Congress, that the more conservative Ikhwan members became disillusioned with Akef and his policy of engaging non-Islamist dissidents in opposition to the regime. Younger members, however, pushed for more aggressive outreach to the secular world, not unlike the way Banna had challenged the religious hierarchy of his day. In a November 2008 interview, a 20-year-old Brotherhood member named Mohammed Adel told me of a growing restlessness among the youth cadres, some of whom were working with secular movements to unseat Mubarak through peaceful means. A website designer, Adel said he and a handful of young dissidents had launched an alternative to the Brotherhood’s official website, one that featured a page soliciting constructive criticism of the group. It was a hit among the Ikhwan’s youth, but the leadership ordered it removed.

“There are no dissenting ideas within the Ikhwan,” Adel told me in a coffee shop just off Tahrir Square, where thousands of demonstrators would later stage the peaceful rebellion that led to Mubarak’s eviction. “There are younger members who want to deviate from the old guard’s ways, to work with other political streams and to take action in the streets with the language of renewal, the language of the young. You also have young people who want representation in the leadership, but they have none.”

Adel, who was raised as an Ikhwanist in a family filled with them, said he participated in a day of peaceful protest launched by oppositionists in the spring of 2008. The April 6 Youth Movement, as it is known, was organized on Facebook and had particular appeal among Egypt’s angry and unemployed youth. Many young Brotherhood members joined in the demonstration in defiance of their elders’ objections. Three years later, they would do so again, with far more conclusive results.

The Ikhwan leadership was famously slow to involve itself in the anti-Mubarak rebellion that began in Tahrir Square on January 25. Even as their young brethren, in tandem with secularists and Coptic Christians, manned the barricades that kept regime thugs from clearing the area, senior Brotherhood members were loath to join a movement that was antithetical to the Ikhwan’s near-sacred embrace of gradualism. Only when it was clear Mubarak was on his way out, say dissident Ikhwanists, did Badie and other group elders officially endorse the movement. Even worse, critics say, it broke ranks with a coalition of opposition leaders by negotiating with Omar Suleiman, Mubarak’s intelligence chief and unofficial chamberlain, who briefly became Egypt’s de facto head of state after the president stepped down.

When the Supreme Council of the Armed Forces (SCAF) established a transitional government in response to popular demands for order in the chaotic aftermath of Mubarak’s departure, it entered into a tacit partnership with senior Brotherhood leaders to restore order. At the time, military leaders told reporters that it was only natural that it would leverage the group’s sizable network to clear the streets. That has not stopped a drumbeat of speculation that the two sides had cut a less prosaic deal: in exchange for the release from prison of Ikhwan members, it was argued, the leadership would keep silent about the military’s preponderant and profoundly undemocratic role in Egyptian industry, from textile milling to the tourism trade, just as it had agreed to support a dynastic transfer of presidential power eighteen months earlier. “They brokered a deal,” said an industrialist with close ties to the military who spoke on the strictest condition of anonymity. “The army said we’ll get your guys out of jail so long as you don’t challenge the new regime at a time of great instability.”

Elijah Zarwan, the Egyptian representative of the International Crisis Group, said the evidence of Ikhwan–military complicity is empirical. “It’s no great secret,” he said. “Just look at the facts. From the military’s side, they got the Muslim Brotherhood’s vast network to take people off the streets when there was no alternative. It was a way to end the bloodshed. So what did the Brotherhood get? They got their members out of prison, a political party that is allowed to campaign in the open and direct involvement in the drafting of the post-Mubarak Constitution.” Whether the agreement extends to the military’s economic interests remains to be seen, however. (Interestingly, one of the Ikhwanists released from prison after serving just more than half of a seven-year sentence was Khairet al-Shater, one of the Brotherhood’s most influential members and, according to a member of the youth league, the most forceful voice in opposition to its demands for a greater say in the group’s internal affairs.)

The Brotherhood’s Freedom and Justice Party is by far the most capable political machine in Egypt’s young democracy, given the estimated 600,000 Ikhwanists at its disposal, though it has gradually estranged itself from the very movement that made this possible. It has boycotted several demonstrations and revolutionary councils, including the May 7 National Conference, in which more than 1,000 delegates from parties and movements called for more aggressive democratic reform. It has opposed calls for a constitution to be written ahead of the fall elections, on the grounds that this clashes with the results of a March referendum, in which 77 percent of voters preferred that balloting be held as soon as possible. Such an outcome was welcomed by the Brotherhood, which is far better organized than its secular rivals.

Not long after Mubarak’s overthrow, the Ikhwan demanded that Coptic Christians, who constitute about 10 percent of Egypt’s population, and women be prohibited from running for president, and it has condemned as “sinners” those who have demonstrated against the SCAF. It has also entered into an alliance with a proliferation of Salafi (fundamentalist Islamist) groups, including at least one Salafi political party, which would all but guarantee an Islamist majority in Parliament should its compact prevail in the upcoming ballot. In July tens of thousands of largely Salafi activists jammed Tahrir Square in a compelling show of force, effectively Islamizing a parcel of Cairo known to the world as an idyll of ecumenicalism. Mocking the secularist chants of “Christian, Muslim, we’re all Egyptians” that had echoed throughout the square during the rebellion, these protesters bellowed “Islamic, Islamic, neither secular nor liberal.” The secular demonstrations, which had been promoted as a display of national unity, were overwhelmed by Islamist voices, particularly Salafi demands for strict adherence to Sharia law.

Under Mubarak, Salafis worshiped largely underground, and their growing clout has caught many observers by surprise. Now in a spoiler role in the upcoming elections, they could undermine as well as enhance the Ikhwan’s prospects. Just as liberal splittists may peel away votes from the Brotherhood’s left, Salafis may cherry-pick them from its right. “We got rid of Mubarak,” Sheik Mohammed Farahat, a leading Salafi sheik, told me over dinner in a Cairo cafe that, interestingly, served beer and wine. “Now anyone who fights us will lose. There has been no compromise with my Coptic friends, but there is no problem so long as they don’t cross the constants of Sharia.” It was a remark both disingenuous and chilling, implying as it did that Islamists, and not secularists, did the heavy lifting that deposed Mubarak, and that the only good Coptic is a supine one.

What of the Ikhwan? “We all follow the same principles, only we follow the texts literally,” said Farahat. “The Ikhwan tends to maneuver politically; it is very Machiavellian. Either way, the past era of secular liberalism is over.”

In an interview, Ikwhan spokesman Mohamed Saad el-Katatni dismissed talk of secret deals and accommodation between the group and the state, either under the SCAF or the ancien régime. The Brotherhood, he said, had always been opposed to the dynastic elevation of Gamal Mubarak as president. While he was unaware of any remarks by Badie that characterized Hosni Mubarak as a national patriarch, he said, “They may have been made in the spirit of our culture of respect for elder leaders, devoid of political content.” Far from negotiating with Omar Suleiman unilaterally, he said, the Ikhwan did so in a public meeting “on terms that included all political forces.” The National Conference, said Katatni, was an attempt to undermine the results of the March referendum. “Our policy is the will of the people, even if it is contrary to our own preference,” he said. “We have no plans to dominate Parliament.”

The day before my interview with Katatni, the Ikhwan expelled Dr. Abdel Moneim Abou el-Fotouh, one of the Brotherhood’s most respected members, for refusing to relinquish his independent presidential campaign. The leadership had declared the presidency off-limits to its members to ease public anxiety about its ambitions, and Fotouh’s renegade bid had revealed a deep split within the Ikhwan at its most senior levels. According to Katatni, the last time such a high-ranking member had been dismissed from the Brotherhood was in 1954, in the aftermath of the attempt on Nasser’s life.

Fotouh, who also served as the general secretary of the Arab Medical Association, has been a stalwart and pioneering proponent of ecumenicalism, liberal governance and a progressive Muslim Brotherhood. In a June interview with the New York Times, he declared that “people must have a free will.” He expressed support for the peace treaty between Egypt and Israel, and he insisted there was nothing incompatible between Western values and his interpretation of Islam. When I met Fotouh several years ago, he presciently implied that the weight of democracy would splinter Ikhwan solidarity. “The Muslim Brotherhood has a vision to interact with society, but you also have people who are narrow-minded,” he said. “There is greater awareness among the young, and they can make a difference in free elections. Otherwise, there will be an explosion.”

Many among the Brotherhood’s youth regard Fotouh as a mentor, and his banishment only hardened their resentment of the old guard. As news of Fotouh’s dismissal broke, Islam Lotfy, a 33-year-old lawyer, and a circle of fellow Ikhwanists were preparing to launch their own party in response to the Brotherhood’s refusal to consider their demands for more activist and inclusive expression. On a humid night in June, Lotfy told me the decision to break with the Ikhwan was taken only after attempts at negotiation had failed. “Our vision was heard but ignored,” he told me. “People were helping us project our beliefs, not only in Cairo but [Brotherhood] leaders in London, Kuwait and Palestine. But the leadership is undemocratic, and it will not allow us to reach out to other groups, period.”

The new party, which will contest the fall elections under the name Egyptian Current, was unveiled a few days later. Among its 5,000 members are some 200 dissident Brotherhood adherents, according to Lotfy. He described Egyptian Current not as secular—the word has been demagogued in post-Mubarak Egypt, just as it has in some right-wing quarters in the United States—but “pragmatic and nonideological.” He would just as much take advice from a Marxist as he would from a capitalist, he said, if it was found to be the most practical.

Lotfy said he expected to share Fotouh’s fate as a defector, and within days of our meeting he and four other Egyptian Current leaders were indeed expelled from the Brotherhood. The old guard, he told me, “cannot comprehend that we need to reach the people. In the Ikhwan literature there is no space for revolution in Islam. It is not in their culture, and now they’re in a dilemma. This is a revolution, and they don’t know how to interact with it.”

The only sustainable role for the Brotherhood in a democracy, according to Lotfy and his comrades among the Ikhwan youth, is its traditional mission as a social network and charitable movement of a moderate religious character. In that sense, he suggested, the ejection of liberal-minded members like him and Fotouh is part of an organic return by the group to its roots. “It is of important value,” Lotfy told me, “but when it comes to politics, they should stop or reform themselves completely.” Another frustrated young Ikhwanist and Lotfy ally, Mohammed al-Gebba, put it this way: “The Brotherhood must either return to religious outreach and social work, with its members campaigning as members of other parties, or it will bring itself down within the next few years. Politics and outreach are not reconcilable. One compromises the other.”

Recently, a senior Brotherhood official announced that any Egyptian citizen should be eligible to run for president, an apparent easing of its earlier proscription against Copts and women, and it has entered into an alliance with its old rival, the secular Al Wafd Party. While such gestures could be interpreted as a nod to the center after months of overreaching, it is not at all certain the Ikhwan can sustain itself in a democracy as it struggles to prevail against the fissionable agents of election fever. Throughout the century-long history of the modern Middle East, no political movement has proved itself so resilient as the Muslim Brotherhood. The tools of governance are different from the tools of survival, however, and the Ikhwan’s inelastic old guard has already seriously damaged itself trying to wield both at the same time.

Revolutionary Leader

Naguib Sawiris used his telecom and media empire to help the anti-Mubarak uprising. Now he wants to shape a secular future for his country.

Click here for the full story

The Empire at Dusk

In its scramble to avoid another legislative gang war over the nation's debt ceiling, Washington is preparing to shake down the Defense Department in the name of deficit reduction. While budget cutters preoccupy themselves with line-item expenditures, they overlook the Pentagon's biggest cost center: empire. The burden of global hegemony, the commitment to project force across every strategic waterway, air corridor, and land bridge, has exhausted the U.S. military and will be even harder to sustain as budget cuts force strategists and logisticians to do more with less. A national discussion about the logic of maintaining huge forward bases, to say nothing of their financial and human costs, is long overdue.

American relations with the world, and increasingly America's security policy at home, have become thoroughly and all but irreparably militarized. The culprits are not the nation's military leaders, though they can be aggressive and cunning interagency operators, but civilian elites who have seen to it that the nation is engaged in a self-perpetuating cycle of low-grade conflict. They have been hiding in plain sight, hyping threats and exaggerating the capabilities and resources of adversaries. They have convinced a plurality of citizens that their best guarantee of security is not peace but war, and they did so with the help of a supine or complicit Congress. Since the collapse of the Soviet Union, U.S. presidents have ordered troops into battle 22 times, compared with 14 times during the Cold War. Not once did they appeal to lawmakers for a declaration of war.

The legacy of American militarism is a national security complex that thrives on fraud, falsehood, and deception. In the 1950s, Americans were told the Soviets had not only the means to destroy the United States but the desire to do so. In reality, Moscow lacked the former and so gave little thought to the latter, while Washington squandered billions of dollars on needless weaponry. Time and again, U.S. presidents weaponized their response to challenges overseas to protect them from charges of appeasement from the right. Habitually, their administrations misinterpreted events -- from Russia's Bolshevik revolution to the September 11 attacks -- to disastrous effect. In each case, expert advice was overlooked, ignored, or concealed, while in others, threats were manufactured as chips in petty political wagers. The fraudulent bomber and missile gaps and the Gulf of Tonkin incident did as much to injure U.S. interests overseas as did the notion that Saddam Hussein possessed weapons of mass destruction and intended to use them preemptively.

Only a country so rich in resources and blessed by favorable geography could afford such malfeasance. America has been spared foreign invasion for more than 200 years and it can expect to remain inviolate for centuries to come. Yet each year, it spends enough money on national security to match the economic output of Indonesia -- with money borrowed largely from China, a country with which it is preparing for conflict. It insists on its right to launch a preemptive nuclear attack against such countries as North Korea and Iran -- oafish, bankrupt regimes that seek a complement of atomic bombs because they are surrounded by countries with bunkers full of them. America guarantees its friends and allies a place under its security umbrella even if their interests, particularly in the Middle East, diverge markedly from its own. In Europe, NATO remains a feudal confederation of armed forces with no raison d'être save to lend sanction to America's far-flung military enterprises. In Asia, South Korea, the world's 15th-largest economy, remains critically dependent on U.S. forces as a deterrent against its isolated, impoverished northern neighbor, while Japan wallows in a twilight world of middle-class prosperity and political ennui, content to slowly diminish as an American vassal.

In ancient times, empires exacted tribute from their dependencies. In the age of American hegemony, just the opposite is the case. In return for the global commons, the United States bankrolls a geopolitical welfare state that allows some of its largest beneficiaries to neglect their basic responsibilities as sovereign states and allies. A national debate over the economic and moral costs of this exchange is noteworthy for its absence. Segregated from the military and its burdens, with no reason to fear the consequences of war for themselves or their loved ones, a great majority of Americans are easily manipulated into backing a militarized response to challenges more suited to diplomacy. The purpose of hegemony is to preempt potential threats rather than respond to a clear and present danger. As voters are unlikely to support such a policy on its merits, hegemonists resort to gross exaggerations of speculative rivals, be they Russia and China or geopolitical runts such as North Korea and Iran.

The price of this deception is vast. If the Pentagon were a corporation, it would be the largest in the world as well as the most sloppily run. Its procurement budget, at a staggering $107 billion in 2010, expands even as the number of deployable warplanes, combat ships, and troops diminishes. To entice lawmakers into approving costly weapons programs, the Pentagon dangles the prospect of jobs in the states and districts of key lawmakers, a costly way of manufacturing but an astute political maneuver. Waste, inefficiency, and political patronage, no stranger to military-legislative affairs, get more lavish by the year. In April 2008, the Government Accountability Office found that 95 major Pentagon projects exceeded their original budgets by a total of nearly $300 billion. A year later, it concluded that nothing had changed. In 2009, lawmakers larded the Pentagon's annual budget proposal with nearly $5 billion in programs and weapons it did not request. With arms factories scattered like feeding troughs nationwide, America has become the equivalent of a company town with the Pentagon as primary employer. The making of war, or at least the preparation for it, has become a money center, a business line --- a racket, as Marine general and Medal of Honor recipient Smedley Butler put it nearly a century ago.

Though the Pentagon did not ask for empire, neither did it shirk from its calling. From 2001 to 2010, the baseline defense budget grew at an inflation-adjusted rate of 6 percent a year, to more than double its pre-September 11 size. Like interlocking threads in a great tapestry, no one really knows where the military's preserve begins and where it ends. Pentagon financial statements have been all but unauditable since 1991, the year it began submitting its accounts to Congress. In an October 2009 report, the Defense Department's Inspector General exposed more than a dozen "significant deficiencies" in Pentagon balance sheets from fiscal years 2004 to 2008. Mining opaque audit trails and murky contracting systems, the report uncovered more than $1 trillion in unsupported account entries. In September 2010, the Senate Finance Committee issued a report that slammed the Pentagon's "total lack of fiscal accountability" for "leaving huge sums of the taxpayers' money vulnerable to fraud and outright theft."

Even as defense officials and warfighters acknowledge that America's adversaries cannot be defeated with armed might alone, the Pentagon still has more lawyers than the State Department does diplomats. Washington's foreign aid budget routinely comes under assault by Congress as overly generous when in fact the United States is among the most miserly of countries when it comes to overseas assistance. The White House has called for 2,200 new Foreign Service officers for the State Department and USAID -- a drop in the bucket given the mismatch between the nation's resources and its commitments overseas. The number of State Department diplomats and support staff is only 10 percent greater than what it was a quarter century ago, when there were 24 fewer countries in the world and U.S. interests were concentrated in Europe and northeast Asia. The Pentagon, in contrast, has 1.5 million active-duty military personnel, an equal number of reservists and National Guardsmen, and 790,000 civilian employees. Moreover, unlike the U.S. military, which bases a fifth of its personnel overseas, nearly three-quarters of America's diplomatic corps are posted abroad. At any one time, a third of U.S.-based Foreign Service jobs are vacant, while 12 percent of the overseas positions, not including those in Iraq and Afghanistan, are unmanned. Foreign language proficiency, a core competency of the service, has languished due to funding gaps. Salaries have been slashed, and stingy retirement benefits have undercut retention rates.

American embassies loom imperiously over the skylines of the world's capital cities, barricaded against terrorist attacks and estranged from their hosts. They engender resentment from without and a siege mentality from within. Thanks to the gutting of State Department and foreign aid budgets by Senator Jesse Helms, followed by the disastrously militant politics of President George W. Bush, America's diplomats and aid workers are undermanned and overwhelmed. Absent an aggressive restructuring of America's civilian aid and diplomatic agencies, their dependence on, and submission to, the military will only intensify. An early draft of the 2010 Quadrennial Defense Review, the Pentagon's long-term threat assessment, put its civilian counterparts on notice. A key provision that demanded the Pentagon's "unprecedented say over U.S. security assistance programs" was softened to the wordy but more diplomatic: "Years of war have proven how important it is for America's civilian agencies to possess the resources and authorities needed to operate alongside the U.S. Armed Forces during complex contingencies at home and abroad." In other words, civilians must be harnessed in the service of military objectives in unstable regions or post-conflict areas, rather than focus on their core mission of nurturing U.S. diplomatic interests and reducing poverty. Or, as a source close to the QDR drafting process put it, "It is clear from the deleted parts that what DOD is saying about security assistance is: ‘We want in on the whole shebang.'"

Such is the state of disequilibrium between America's civilian and military resources as it enters the post, post-Cold War world. The years that followed the end of the Soviet era were but a prelude to what will be a far more enduring shift in the topography of geopolitical affairs. For the first time in two decades, U.S. hegemony will demand a price. The transaction Washington has kept with its allies -- generous subsidies in exchange for "full spectrum" control -- will be subject to competing claims. In theory at least, this should bid up the value of nonmilitary methods of protecting U.S. interests overseas. The aforementioned QDR, however, suggests otherwise. It makes numerous and repeated references to the centrality of "access," a catchword for the U.S. military's ability to operate unimpeded anywhere in the world. It identifies as a new and enduring threat "states armed with advanced anti-access capabilities and/or nuclear weapons," a veiled reference to the evolution of China as a regional power and the kind of peer competitor that Washington has made a policy of preempting. The looming rivalry between Beijing and Washington has already replaced Islamic extremism as the main preoccupation of U.S. security planners, the same way al Qaeda filled the void left by the departed Soviet Union on the Pentagon's revolving rotisserie of existential threats. Just as Washington militarized the Cold War and its response to the September 11 attacks, so too is it militarizing its relations with China.

In 2001, the Defense Department produced a study called "Asia 2025," which identified China as a "persistent competitor of the United States," bent on "foreign military adventurism." A U.S. base realignment plan made public in 2004 called for a new chain of bases to be erected in Central Asia and the Middle East, in part to box in China. A 2008 deal between the United States and India that would allow New Delhi to greatly expand its nuclear weapons capability was established very much with China, their mutual rival, in mind. At the same time, the Pentagon is well into a multiyear effort to transform its military base on Guam into its primary hub for operations in the Pacific. While the QDR drily refers to "the Guam buildup" as a means to "deter and defeat" regional aggressors, John Pike of the Washington, D.C. based Globalsecurity.org has speculated that the Pentagon wants to "run the planet from Guam and Diego Garcia by 2015."

In March 2011, Inside the Navy reported how the U.S. government was deep in the planning stages of a major military buildup in Asia. In response, China is expanding its fleet of diesel-powered subs at a base on Hainan Island and is developing the capacity to attack and destroy satellites as well as aircraft carriers. It has also laid a provocative marker down on a cluster of islands in the South China Sea that are the subject of a simmering territorial row between it and Vietnam, Malaysia, the Philippines, Brunei, Taiwan, and Indonesia. In 2010, Beijing identified the South China Sea as a "core interest," a term it previously applied only to Tibet and Taiwan, a move that was seized upon in Washington as a de facto declaration of sovereignty over the region and an augur of Chinese bullying to come. If a Sino-American war is inevitable, it is now generally assumed that a hotly contested South China Sea may be its epicenter.

There is nothing inevitable about an American war with China, however, and even Chinese security planners believe the U.S.-Chinese rivalry will be economic, rather than military, in character. There is, however, an emerging rhythm to Sino-U.S. affairs: The Pentagon, still clinging to the spirit, if not the letter, of the 1992 Defense Planning Guidance, reflexively interprets an emerging regional power or political movement as a strategic threat. It gathers allies and punishes neutrals in an undeclared policy to isolate it. Defense analysts exaggerate the threat's military might while discounting the historical factors that inform and motivate it. Politicians in Washington convene hearings and, briefed as to the nation's ill-preparedness, demand an immediate military buildup. Pundits condemn the commander in chief for being soft on America's adversaries even as diplomats and intelligence experts overseas assure the White House that the danger is largely in the minds of those peddling it back home. Such admonitions, however, are obscured or ignored in what is now a key election-year issue. Surveillance is met with countersurveillance. Heightened alert status provokes the same. An incident occurs, either by accident or by design.

It is war.

The Pentagon's New China War Plan

Despite budget woes, the military is preparing for a conflict with our biggest rival -- and we should be worried.

This summer, despite America’s continuing financial crisis, the Pentagon is effectively considering trading two military quagmires for the possibility of a third. Reducing its commitments in Iraq and Afghanistan as it refocuses on Asia, Washington is not so much withdrawing forces from the Persian Gulf as it is redeploying them for a prospective war with its largest creditor, China.

According to the defense trade press, Pentagon officials are seeking ways to adapt a concept known as AirSea Battle specifically for China, debunking rote claims from Washington that it has no plans to thwart its emerging Asian rival. A recent article in Inside the Pentagon reported that a small group of U.S. Navy officers known as the China Integration Team "is hard at work applying the lessons of [AirSea Battle] to a potential conflict with China."

AirSea Battle, developed in the early 1990s and most recently codified in a 2009 Navy-Air Force classified memo, is a vehicle for conforming U.S. military power to address asymmetrical threats in the Western Pacific and the Persian Gulf -- code for China and Iran. (This alone raises a crucial point: If the U.S. has had nothing but trouble with asymmetrical warfare for the last 45 years, why should a war with China, or Iran for that matter, be any different?) It complements the 1992 Defense Planning Guidance, a government white paper that precluded the rise of any "peer competitor" that might challenge U.S. dominance worldwide. The Planning Guidance is the Pentagon’s writ for control of what defense planners call "the global commons," a euphemism for the seaways, land bridges and air corridors that are the arteries of international commerce. For a foreign power to challenge this American dominion is to effectively declare war on the United States, and that is exactly what China appears to be doing in the South China Sea, a resource-rich and highly contested waterway in Southeast Asia.

It was in this spirit that Marine Corps Commandant Gen. Jim Amos, at a dinner hosted by the Center for a New American Security in late May, remarked that the wars in the Persian Gulf were denying Washington the resources it needed to cope with an increasingly assertive China. "We’d like to turn that around," he said. "I don't think we're there to [the extent] we need to be." In his candor, Amos became the latest U.S. military leader to speak about his service’s plans following the Afghanistan drawdown.

A U.S. mobilization in Asia is well underway, in faith with a spring 2001 Pentagon study called "Asia 2025," which identified China as a "persistent competitor of the United States," bent on "foreign military adventurism." Three years later, the U.S. government went public with a plan that called for a new chain of bases in Central Asia and the Middle East, in part to box in the People’s Republic. Similarly, the nuclear energy cooperation deal signed by the U.S. and India in 2008 was an obvious containment maneuver aimed at Beijing. In late March, press reports detailed a major buildup of American forces in Asia, including increased naval deployments and expansive cooperation with partner countries. Meanwhile, the Pentagon is forging ahead with a multi-year effort to transform Guam into its primary hub in the Pacific, an initiative so vast that John Pike of the Washington, D.C.-based GlobalSecurity.org has speculated that Washington wants to "run the planet from Guam and Diego Garcia by 2015."

Unlike America’s allies in Asia and Europe, however, China is not about to outsource its national security obligations to a foreign power, particularly when it comes to the South China Sea. There more than ever, and not without reason, Beijing identifies the U.S. not as a strategic partner but as an outright threat. In 2007, when China destroyed one of its weather satellites with a ballistic missile, it served as a warning to Washington after the ramming six years earlier of a U.S. spy plane by a Chinese fighter jet off the coast of Hainan Island. Though the crisis that followed was defused diplomatically, it was interpreted by some in Washington as vindication of the throaty Asia 2025. In fact, the clash followed a dramatic rise in the frequency of U.S. overflights in the area during the twilight of the Clinton years, which triggered a demarche from Beijing that slipped through the cracks of the transition to the Bush administration. The Hainan incident, as affair is known, was the inevitable outcome of a highly intrusive American surveillance regime.

In addition to China, Vietnam, Brunei, Taiwan, Malaysia and the Philippines all have competing claims on several clusters of South China Sea islands. Rather than intervening with quiet diplomacy to untangle this incendiary thicket, the U.S. has starkly sided against Beijing. In March 2010, when a Chinese official was quoted by Japanese media as identifying the region as a "core interest" of Chinese sovereignty, the White House retaliated by declaring that freedom of maritime navigation is a U.S. "national interest." As it turns out, according to the China scholars Nong Hong and Wenran Jiang, writing in the July 1 edition of the Washington-based Jamestown Foundation’s China bulletin, the core interest to which the official referred was “the peaceful resolution” of the disputes in question. Despite this, the White House refuses to climb down. Two weeks ago, three U.S. Navy ships paid call on Vietnam, China’s ancient antagonist, for a weeklong joint exercise at a time of strained relations between Beijing and Hanoi, prompting a formal protest from the Chinese. In Manila last month, Secretary of State Hillary Clinton pointedly assured her hosts that the U.S. would honor its mutual defense pact with the Philippines and sell it new weaponry on discounted terms.

For the first time since the end of the Cold War, the U.S. government has encountered the practical limits of the 1992 Defense Planning Guidance. In its story about AirSea Battle and the China Integration Team, Inside the Pentagon revealed an oblique, if profound insight from Andrew Krepinevich, the highly regarded head of Washington’s Center for Strategic and Budgetary Assessments. China, he said, is clearly jousting for control of the Western Pacific and "we have to decide whether we’re going to compete or not. If we’re not, then we have to be willing to accept the shift in the military balance." Otherwise, "the question is how to compete effectively."

Here is a noble appeal for Washington to match its commitments with the resources needed to sustain them, the absence of which has fueled the debt crisis that nearly reduced the United States to a mendicant state. Such are the crippling costs of a defense policy that makes global hegemony a mindless imperative.

How We Became a Nation of Warriors

(This article is a condensed excerpt from Stephen Glain's new book, "State vs. Defense: The Battle to Define America's Empire," available August 2 from Crown.)

News travels fast across the red desert bush of remote Djibouti. Even as U.S. military reservists hurry to erect a small field hospital around a cluster of tents and vacant block houses near a desolate watering hole, dozens of tribespeople are waiting for treatment in orderly rows. They arrive with maladies of every sort -- bad teeth, diarrhea, fevers, colds, arthritis. At the triage center, a middle-aged tribesman has had a thorn removed from the instep of his foot, a wound that had been infected for months. At the dental surgery station, Navy lieutenant Bill Anderson, an orthodontist from Northfield, New Jersey, will over the next few hours extract a dozen rotting or impacted teeth using instruments that sparkle in the late-morning sun. His patients endure their operations without so much as a wince or low groan, and he gives each one an antibiotic rinse to prevent infection.

It is 2008, and this Medical Civil Action Program, as it is known, is provided courtesy of Combined Joint Task Force-Horn of Africa, an 1,800-man deployment of soldiers, sailors, airmen, and Marines. The base was established in Djibouti, an enclave of calm in an unstable area, immediately after the September 11 attacks. Al Qaeda units, it was feared, would take advantage of the chaos in neighboring Somalia and nest there. When no terrorists turned up, the task force was assigned to perform humanitarian initiatives with the guidance of the United States Agency for International Development, the State Department's foreign assistance arm.

Embedded in the operation is a lone USAID official. Her minority status is symptomatic of a new age in U.S. foreign policy, one in which America, in peacetime as well as in war, is represented abroad more by warriors than by civilians.

Quietly, gradually -- and inevitably, given the weight of its colossal budget and imperial writ -- the Pentagon has all but eclipsed the State Department at the center of U.S. foreign policy. The process began just over a century ago, gathered pace with World War II, and hit its stride during the Cold War with a global empire that not only survived the collapse of the Soviet Union but was greatly enhanced by it. Even before terrorists struck the nation on September 11, America was spring-loaded for conflict on many fronts. A decade later, U.S. troops are engaged in the country's longest war in addition to counterinsurgency and developmental assistance work throughout the world. At the same time, the capability of the nation's diplomatic and foreign aid agencies has dramatically diminished. While four-star generals wield enormous influence among U.S. allies, ambassadors and senior USAID officials are regarded more and more as functionaries and contractors. They are saddled with chronic staff shortages, eroded language skills, and low morale. In an era of endless war, a growing share of diplomats and aid workers are assigned to missions in areas so hazardous they require armed escorts when traveling. And unlike their uniformed counterparts, they lack replacement staff for regular rotations. In the increasingly tight competition for humanitarian and development funds, they are losing out to the Pentagon, now the federal government's fastest-growing source of foreign aid.

Even Robert Gates, the former CIA director and the defense secretary to both Presidents George W. Bush and Barack Obama, has lamented the militarization of America's presence overseas. He has called for a significant boost in the State Department-USAID budgets, so that diplomats and development experts can bring more to the evolving partnership between civilian agencies and the military in the battle for hearts and minds. This implies, of course, that military might is key to the resolution of America's global challenges, when in fact it creates more problems than it solves. Twenty years after the end of the Cold War, political leaders in Washington and their proconsuls abroad continue to behave as if U.S. hegemony is not only inevitable and necessary but sustainable and desired. It is a costly misperception that led, at least in part, to the September 11 attacks and America's ruinous involvement in Iraq and Afghanistan. With the geopolitical map shifting from a U.S.-centric world back to a Victorian era cluster of competing regional powers, the myth of American exceptionalism has been dispelled nearly everywhere but in Washington.

American militarism is unique for its civilian provenance. It did not follow a barracks coup or a popular call for a man on horseback to impose order on an unraveling republic. No martial law was declared and there is no military cabal pulling the strings of a nominal civilian authority. In fact, it is largely civilians who have played the dominant role in weaponizing foreign policy abroad and security policy at home.

However diverse in temperament and background, American militarists throughout the last century share common values and proclivities: In the algorithms of global affairs they see a simple contest between good and evil, and in engagement they see a graveyard filled with grand, game changing initiatives. Their reality is selective, a buffet rather than a set course meal, from which convenient facts may be selected and neatly presented. Their impulse is not to reason but to alarm, and they freely concoct dangers when real ones are unavailable. For much of the Cold War, they believed in a communist monolith that never existed. Until the day the Berlin Wall fell, they promoted Pentagon exaggerations of Soviet power abroad while overlooking its crippling weaknesses at home.

Today, they counsel an armed onslaught against an Islamist movement that cannot be subdued by force, and they agitate for a militarized response to a resurgent China, which, if pursued as effectively as their other star-crossed enterprises, will make a war between the United States and the world's most populous nation all but inevitable. They have disparaged not only the agents of diplomacy but diplomacy itself, impoverishing the State Department and USAID and compelling the military to fill a growing share of what were once the roles and responsibilities of civilians. The Pentagon, wisely identifying such missions as a growth industry in the absence of a clear and present military threat, is very much along for the ride. A half century after Dwight Eisenhower's historic warning about an aggrandizing "military-industrial complex," American militarization is an established and probably immutable fact. It is a manifestation of the founders' deepest fears and the worst betrayal of the nation's republican ideals.

The lawyers, farmers, and merchants who shaped late-eighteenth-century America were preoccupied not with military adventures but with commerce. They had seen how permanent military bureaucracies in Europe had routinely eroded civilian authority and they emphatically rejected a standing army for their infant republic. In 1796 the outgoing President George Washington spoke for a nation of citizen-soldiers when he said that unity and neutrality would safeguard American interests far more efficiently than "overgrown military establishments which ... are to be regarded as particularly hostile to republican liberty."

If the founders were suspicious of standing armies led by Prussian style general staffs, they held the European tradition of diplomacy in similarly low esteem -- to the point of ambivalence about whether the United States should have a diplomatic corps. Serving President Washington as America's first secretary of state, Thomas Jefferson led a department with three clerks, two ambassadors, and ten counselors posted abroad. Even then, lawmakers considered high diplomacy a luxury and would deny the nation's envoys the resources enjoyed by their counterparts across the Atlantic. There would be no European-style academies for the study of languages, culture, history, and protocol. Jefferson's bud get, at $56,000, was so tight he was forced to sell a horse and some of his furniture to keep America's overseas missions adequately funded.

For much of the nineteenth century, it was diplomats, more often than not men in morning suits and top hats, who represented the United States as it extended its sovereign frontier westward and beyond. William Henry Seward, secretary of state to presidents Abraham Lincoln and Andrew Johnson, famously negotiated the purchase of Alaska from Russia for the equivalent today of $95 million. John Hay, statesman, author, journalist, and one of the most agile and renowned American minds of his era, began his career in government at the age of twenty-two as Lincoln's assistant private secretary. In 1898, as President William McKinley's secretary of state, he negotiated the Treaty of Paris that ended the Spanish-American War on terms favorable to Washington. In the early 1900s, he was an influential promoter of the Open Door Policy toward China, which gave Washington pole position in the extraterritorial rush among Western powers and Japan to colonize the coastal rim of China. Hay also shepherded the transfer of U.S. authority over what would become the Panama Canal from its French concessionaire.

Throughout his prolific career, Hay presided over some fifty bilateral and multilateral treaties. It was the high renaissance of American diplomacy and it succeeded too well. On behalf of a republic, Hay had negotiated the foundations of empire. It now required a military to build one.

Like so many of its recent wars, imperial America was itself a needless extravagance. The country is not an island nation like Britain or Japan, critically dependent on outside sources for raw materials and energy supplies. Nor was it forced to punch above its weight like tiny Belgium or Holland, wedged between rival and often hostile powers. The United States enjoyed a huge domestic market, was rich in natural resources, and was safely distant from potential aggressors. Instead of managing costly armies and imperial projects that had defined and debilitated Europe, America had wisely invested in the sinew and gray matter of a modern, self-reliant, and prosperous state: education, a transparent judicial system, railroads, seaports, agriculture, and industry.

The more America prospered, however, the greater its hunger for expansionism became. By the end of the nineteenth century, militarists in Washington and the media were angling for war with Spain and, sotto voce, its stable of dependencies. Bourgeois evangelicals who were already building churches and universities in Latin America, Asia, and the Middle East knew that a colonial system meant whole new tributaries of redeemable souls for the netting. American industry, most prominently tropical food processors such as United Fruit Company and the Hawaiian Pineapple Company (later known as the Dole Food Company), together with their financiers, similarly craved new markets and suppliers.

Opponents, meanwhile, argued that empire was antithetical to American ideals. In 1898 former president Grover Cleveland warned that expansionism was a "perversion of our national mission ... to build up and make a greater country out of what we have instead of annexing islands." A year later, the sociologist William Graham Sumner warned that Americans "cannot govern dependencies with our political system, and ... if we try it, the state which our fathers founded will suffer a reaction that will transform it into another empire just after the fashion of the old ones. That is what imperialism means."

To this, hegemonists had a ready answer: the nation's colonial mission was a righteous enterprise, divinely inspired. Accepting his Republican Party's nomination for governor of New York in October 1898, Theodore Roosevelt delivered a soaring, chauvinist oration. Admonishing a packed crowd at Carnegie Hall against "a life of fossilized isolation," and with U.S. troops mopping up resistance in Cuba and the Philippines, Roosevelt played the White Messiah card. The American flag, he said, "stands for liberty and civilization. Where it has once floated, there must and shall be no return to tyranny or savagery." It is no wonder that, while Franklin D. Roosevelt is the darling of the American left, militarists on the right are besotted with his excitable uncle.

Americans would have their empire, an enterprise rooted in the belief system of American exceptionalism that dates back to the seventeenth century, when religious exiles fancied the colonies a new Jerusalem ordained to Christianize a pagan land. Like the ideological impulse that drove it, American empire would differ from its European counterparts. There would be no colonial office, for example, no large administrative bureaucracies in villas and bungalows led by citizens from the mother stem and staffed by the foreign unfortunates. American empire would come in a carapace of large-scale military deployments and bases to accommodate them, together with pre-positioned arms depots and commissaries stocked with material goods from home. In concert with allied armies, key constituents in U.S. foreign relations, it would flex its expeditionary muscle through joint exercises with such code names as Cobra Gold and Team Spirit.

Geography, which made American empire unnecessary in the first place, now perversely accounts for its resilience. The United States, corseted as it is by two vast oceans, is the only country rich enough to afford the modern warships needed to patrol them. Most Americans, meanwhile, wrongly credit the warships, rather than the oceans, as the reason they can take security for granted. When the United States makes war, it does so in obscure, distant lands, and a vast majority of Americans are happily estranged from the conflicts waged in their name. For the 99.5 percent of the population that constitutes the civilian demographic, war is something experienced as a video game or an HBO miniseries, if at all.

Decades ago, when military service in America was compulsory, U.S. Army Chief of Staff General Fred C. Weyand wrote that "the American Army really is a people's Army in the sense that it belongs to the American people, who take a jealous and propriety interest in its involvement ... The Army, therefore, cannot be committed lightly." Weyand's remarks are as dated as conscription. Since the collapse of the Soviet Union, Washington has waged war eight more times than it did during its sixty-year confrontation with Moscow. Precisely because the U.S. military is professional and largely segregated from civilian society, it is deployed not only lightly but promiscuously, often out of domestic political imperatives rather than national security interests and in ways that evade public knowledge altogether.

As of 2007, the Pentagon acknowledged the concentration of 190,000 troops and 115,000 civilian employees inside 909 military facilities in forty-six countries and territories. They included, for example, Balad Air Base in Iraq, which covers sixteen square miles, with an additional twelve square-mile "security perimeter" large enough to be seen from outer space. In August 2010, President Barack Obama declared that America's major combat mission in Iraq was over. Balad Air Base, however, like Pentagon installations that have been around since the early years of the Cold War, is going nowhere.

The price of America's military base network overseas, along with the expense of its national security state at home, is enormous. There is the Defense Department's budget of more than $700 billion, of course, but beyond that is a host of related outlays that get little attention. There is the Department of Energy's $20 billion expense for nuclear weapons research and storage. The country's intelligence community, a subculture of sixteen agencies that engage in everything from satellite reconnaissance to cloak-and-dagger espionage, is funded from a "black" bud get estimated conservatively at about $75 billion. The Department of Veterans Affairs is the federal government's third-richest agency, with a funding mandate of over $120 billion, while the Department of Homeland Security draws nearly $45 billion. The Department of the Treasury spends another $25 billion or so underwriting veterans' retirement plans. Add to all this the interest owed on the money Washington borrows to pay for national security -- America is a net debtor, after all -- and the bill comes in at well over $1 trillion. That is equal to nearly 8 percent of gross domestic product and more than 20 percent of the federal budget. (By comparison, China, Russia, Iran, and North Korea, the four countries Pentagon planners routinely trot out as conventional threats to the general welfare, have cumulative defense expenditures of less than $200 billion.) These are only the known costs of hegemony. In July 2010, the Washington Post published a three-part exposé of a post–September 11 "top-secret world," a counterinsurgency network that had become "so large, so unwieldy and so secretive that no one knows how much money it costs, how many people it employs, how many programs exist within it or exactly how many agencies do the same work."

In February 2011, facing trillion-dollar budget deficits for the next decade, President Barack Obama called for a five-year freeze on all domestic discretionary spending. But he exempted Medicare, Medicaid, and Social Security, the entitlement programs that consume nearly two thirds of the federal budget, as well as funding for the Pentagon, the Veterans Administration, and homeland security, which accounts for nearly everything else. In late 2010, a presidential debt-reduction commission called for a 15 percent cut in the Pentagon's procurement budget, a three year freeze in noncombatant military pay, and a reduction in its overseas deployments by a third. This met with howls of opposition, from the halls of Congress to the respected Small Wars Journal, an electronic journal focused on the culture and mechanics of counterinsurgency. Deep cuts in weapons procurement and research, argued its managing editor in a November 11 post, amounted to an unacceptable concession to "emerging peer competitors like China" while posing "higher risks to [U.S.] alliances in East Asia and around the Persian Gulf." The federal bud get, it seems, has become a $3.8 trillion perpetual trust -- rolled over annually by America's foreign creditors -- for the armed services and their contractors, the elderly, and the infirm.

Lawmakers from both sides of the legislative aisle are talking seriously about cutting defense outlays, a measure of how advanced is the nation's fiscal decay. Unveiling the Defense Department's 2012 budget, Secretary Gates placed several costly weapons programs on the chopping block and called for a "culture of savings" to replace the Pentagon's "culture of spending." Inevitably, that will put him on a collision course with politicians who cling to armaments projects for the employment opportunities they offer constituents back home. For them, the dividing line between national security and job security is all but invisible, and as a result even obsolete weapons have survived sustained attempts by Gates and his predecessors to have them killed. Moreover, long after the current budget debate is resolved, the State Department will still be struggling to make do with a fraction of the resources enjoyed by the Pentagon. Until that imbalance is reconciled, the militarization of U.S. foreign policy will only proliferate.

It is unusual, perhaps unprecedented, for a government to wage simultaneous wars while sparing all but a fraction of its citizens from their human costs. This creates its own kind of vulnerability. As the soldier-historian John McAuley Palmer noted between the world wars, professional armies subvert democracy because they "relieve the people themselves of the duty of self-defense ... An enduring government by the people must include an army of the people among its vital institutions." Elaborating on this, Boston University professor and Vietnam veteran Andrew Bacevich has written that "the ideal relationship between the armed forces and democratic society is a symbiotic one, in which each draws nourishment from the other. Symbiosis implies intimacy ... What ever its other merits, the present-day professionalized force is not conducive to civil-military intimacy."

State vs. Defense, the century-old competition between those who would confront America's overseas challenges through diplomatic means and those who would subdue them by force of arms, is all but decided. The economic and political resources commanded by the latter group are vast and powerful, while the former has been reduced to a cadre of supplicants forced to beg before the lavish table of the national security state. Such a lopsided state of affairs has been abetted by a citizenry generally uninterested in the policies carried out in its name and unwilling to share in the burden of their prosecution. Only now, with the specter of bankruptcy looming over the national accounts, are some in Washington daring to contest the bill for, if not the value of, unchecked global hegemony.

Listening to Fado where it's Sung

As the fat lady sings for the Euro zone, the Portuguese are doing what they've done for more than a century when things turn south: seeking refuge in the melancholic strains of fado, Iberia's signature species of torch music.

It’s midnight at Clube de Fado, a hothouse for Lisbon’s inimitable musical form, and the original crowd of a couple hundred or so has receded to a few dozen hardcore enthusiasts. Guitarist and fado great Mario Pacheco is about to open the final set of a two-hour performance, and he begins by introducing a red-haired songstress in a black dress with lace at the shoulders and her hair tied back in a bun. She is Dutch, a native of Amsterdam, though she has adopted fado and all its Iberian angst. Maria Fernandez, as she is introduced, is clearly nervous – this is her debut performance at the club – though the audience is sympathetic and eager to be wooed.

Fado great Mario Pacheco

Pacheco, tall and distinguished with a patrician brow and tightly clipped moustache, deploys some light banter to keep Fernandez’s stage freight at bay before they ease into the first number, a spirited ballad in three-quarter time. As the piece builds, he and his two bandmates – one on rhythm guitar, the other on bass fiddle – exchange wry glances as if sharing a private joke. Her inhibition vanquished, Fernandez warms to the beat and deftly nails the high notes. When the set ends twenty minutes later, she owns the room.

Romance and redemption is a staple offering in the fado bars of Lisbon, and no one serves it better than Pacheco, the 57-year-old fadista who is widely acknowledged as a master of the genre. He first picked up a guitar at 14, a relative latecomer, and within a few years was good enough to accompany his father, himself a classically trained musician. At 17 he attended a local conservatory, where he studied the guitar and the violin, and by his early thirties he was writing his own compositions. At 36, as one of Lisbon’s top classical guitarists, he switched to the Portuguese guitarra, a flat-backed, oval instrument that looks more like a mandolin than its conventional, hour-glass shaped counterpart. He’s been playing fado ever since.

“My father and my friends said they were losing a great classical guitarist and gaining a bad Portuguese guitarist,” Pacheco says with a grin. “That was my best motivation to learn fado.”

Often compared to the blues, fado – literally “fate” – identifies with the Portuguese concept of saudade, a yearning for what has been lost and what has never been attained. It evolved more than a century ago from the Alfama casbah and, like the blues, has remained true to is roots. “The tradition of fado runs deep,” Pacheco says between sets. “It is a timeless form of expression and its importance is increasing.”

Indeed, as Portugal packages itself into a high-end tourist draw, fado is evolving into a national brand. Young musicians throughout Europe are coming to Lisbon to learn the art, says Pacheco, and business at fado clubs has never been better. As if to reinforce the point, club impresario Louis Vaz de Camos, who keeps his eye on the crowd through a peephole in the wall that separates the bar from the stage, arrives to hustle Pacheco to start the next set.

Will success spoil fado? Unlikely, says Pacheco. Fans of the music are too devoted, too romantic, to over-commercialize such a national treasure. “Fado is not for the masses,” he says. “No matter how many people are in a room listening, they’re always seated. That’s how much respect they have for the music.”

Brothers Unburdened

As paranoics inside Washington’s Beltway agonize over the prospects of a strong showing by Islamists in Egypt’s upcoming elections, a very different reality is cohering on the streets of Cairo: the Muslim Brotherhood - historically the country’s most powerful and disciplined Islamist movement - appears to be breaking up.

The Brotherhood’s youth league has launched its own party with a progressive charter that is less about religious outreach and devotion than it is about social justice. A senior leader of the Ikhwan, as the Brotherhood is known in Arabic, who has long endorsed engagement with Egypt’s secular and non-Muslim constituencies, is running for president without the group’s official blessing. A debate within the Ikhwan about its core identity, muffled for survival’s sake under despots who suppressed free thinking of any kind, is ventilating subversively in the oxygen-rich air of the post-Mubarak era.

I was recently given an insightful tour through the Brotherhood’s molten political terrain by Mohammed Al Gebba, a young Ikhwanist who joined the group two decades ago as a high school student. A native of the coastal city of Damietta but for years an urbane Cairene, Al Gabba has evolved from ardent fundamentalist to Islamist humanist. It is a not uncommon journey in a political movement that, like its secular rivals, is scrambling to find its place in Egypt’s second republic.

“Politics and outreach are not reconcilable,” Al Gabba told me in Café Cilantro, a secularists enclave just off Tharir Square, the epicenter of the revolution that consumed the world for eighteen days ending February 11. “One compromises the other. What is needed is dialogue, and there is no dialogue in the Muslim Brotherhood.”

Mohammed Al Gabba

The Ikhwan is balkanized, according to Al Gabba, along ideological as well as demographic lines. Though he sympathizes with its youthful renegades, he chose to remain in the Brotherhood as a cadre to its relatively liberal wing despite the leadership’s rightward lurch in elections last year. It is the former, rather than the latter, he says, that is most faithful to the vision of Hasan Al Banna, the revivalist imam who founded the Ikhwan in 1926. “Our principals were his principals,” he said. “They are values of tolerance and dialogue.”

Al Gabba was deeply involved in the clashes between the confederation of secularists and Islamists, Christians and Muslims, and Communists and Capitalists against repeated onslaughts by regime loyalists to clear Tharir square. Having outlasted Mubarak and his hangers on, the revolution is now under threat by the proxies of foreign powers - not Israel and America, the usual suspects trotted out by demagogues of the ancién regime - but Iran and Saudi Arabia, tactical allies against the Arab world’s liberal awakening. “This is the one thing they can agree on,” says Al Gabba. “Their objective is to create chaos, to provoke the Egyptian army into oppression, to destroy the revolution.”

Conspiracy theories are as intrinsic to Egyptian politics as parsley is to Tabouleh, if for no other reason that so many of them have turned out to be more truth that fantasy. As proof of Saudi-Iranian perfidy, Al Gabba cites a seminar, to be held on July 1, on the salience and inevitability of sharia law in Egypt. A prominent Salafi sheik, he says, has declared the event to be the inspiration of Saudi Wahhabists working in tandem with remnants of Mubarak’s security apparatus.

If such intrigues do exist, according to Al Gabba, they will backfire. After nearly six decades of authoritarian rule, he told me, Egyptians will settle for nothing less than a secular republic. Candidates fielded by the Muslim Brotherhood in the coming election may do well, he allowed, but they are unlikely to capture more than a quarter of parliamentary seats. He predicts that in the next national ballot five years from now, Ikhwan members will campaign as independents whose loyalty to the state and devotion to faith are secularly distinct from each other.

Otherwise, he said, “the Brotherhood will bring itself down. It will ease to exist as we know it.”

Romancing Alexandria

The Port of Alexandria

The fish auction begins with the close of 4 a.m. prayers, after the fleet of green-prowled fishing boats dock and unload their catch. Dozens of hawkers barter over wooden crates filled with eels, prawns, crabs, sardines, mullets, and sea bass so recent from the sea their scales glisten and their gills quiver. The stone floor is worn and gleaming from a century of use. Exposed light bulbs dangle from a cat’s cradle of electrical wire below an arched ceiling and the clerestory of a church nave.

I am in a sacred place: the fish market of Alexandria, Egypt’s oldest city and the fountainhead of some of the best seafood in the eastern Mediterranean.

“It’s a good day’s catch,” says Wagih Yusef, who weighs each buyer’s haul from the market’s cast-iron scale. “There’s been strong winds lately and that churns up the fish.”

Wagih has to bellow to make himself heard above the clamor of the bidding and his eyes never deviate from the square counterweight that hovers above the scale. He appears to be in his mid-30s and, like most of the men in the fish market, has been working here his entire life.

A few blocks north is Kadura, a café on the demand side of Alexandria’s most ancient industry. Patrons choose from the day’s catch from ice-filled cartons in a tiled stall no bigger than a walk-in closet. There is al fresco seating on sunny days, with butcher paper for tablecloth and small dishes of the house’s own chili powder. Save for the occasional clang and whir of a tram car passing along Al Ghorfa al Tiganiya Street, Kadura is a primitive but quiet refuge.

Kadura was opened in 1955 by Kadura Abdel Salem. He passed away a little over three years ago, and his sons Mohammed, 25, and Kader, are now running things. They tell the story about how one day, when their father was very young, he and their grandfather went out on a boat that wasn’t much different from the trawlers that bob in the harbor today, though without the diesel-powered engines, electronic navigation devices and power winches. There was a huge storm and the boat almost capsized and when they finally returned safely to shore, Abdel Salam was forbidden by his father from ever fishing again.

Instead, when he was 19 years old, Abdel Salem opened a café with some tables and wicker chairs he had bought for 8 piasters each. Soon, he was hosting Alexandria’s governor and his aides for lunch and during the summer the ministers came from Cairo for Kadura’s signature calamari. Within a few years he opened a restaurant that fronted the sea until the municipality reclaimed a strip of land along the coastline.

Back then, say Alexandrians old enough to remember, the fisherman would tether their boats to the windowpanes of apartment buildings.

* * *

On a recent visit to the city, I met Dr. Galal Araf, a professor of pediatrics at the University of Alexandria, while he was summering with his family at their bungalow at Montazah, a gated beach resort and a former royal compound of the Egyptian monarchy. Dr. Araf, a proud, self-contained man, was seated razor-straight in pleated gabardine trousers and a pressed short-sleeved shirt as he watched his children and grandchildren chat and frolic in the briny Mediterranean air. I asked him about the old days, the twilight time of Alexandria as a City of the World.

“Alexandria,” he told me, his eyes suddenly alight, “was filled with Greeks and Maltese, Italians and Jews. There was a quarter of the city where residents spoke only Greek. People from all over came to Alexandria to see the latest fashions from Europe. Even then, we were rivals to Paris, London, and Rome.”

It’s true that “Alex,” as she is known among her many admirers, has been showing her age. She hasn’t yet recovered from the legacy of Gamal Abdel Nasser, the Egyptian president who in the 1950s nationalized the economy and drove out the Jews and the foreigners. But there is always the harbor, a crescent-shaped setting for a village founded by Alexander the Great and destined to become a pearl. It was the harbor that lured the young Macedonian here in 332 BC, and its bounty has sustained Alexandrians through a turbulent history. Most Middle Eastern cities have gone to seed over the last few generations, but few have slid from such sublimity and none with such grace. Once a flamboyant cosmopolitan with a strong Greek accent, Alex is now Muslim and staid. But even veiled, the old girl can still turn heads.

And in fact, the city is enjoying a mini-renaissance. The library has been reopened as a state-of-the-art temple of multi-media learning and on any given day is filled with student groups, including American ones. Western tourists are rediscovering Alex and some of the old villas, inns, and café’s are getting long-overdue makeovers. Hotels, including the new Four Seasons, are doing a brisk trade hosting international conferences – a testament to the city’s position as an enclave of stability in an otherwise dodgy neighborhood.

Take the Cecil Hotel, for example. Immortalized in Lawrence Durrell’s The Alexandria Quartet as the haunt of libertine expatriates and host to such giants as Somerset Maugham, Henry Moore, and Josephine Baker, the 89-room Cecil has been completely restored. The lobby is an Edwardian rapture, with high ceilings, extravagant crown molding, granite floors polished to the highest sheen, and stately chandeliers. The original elevators, with their intricately tiled parquet floors, have been rehabilitated. Le Jardin, the hotel coffee shop, is the de rigueur spot for lunching ladies and power-espresso breaks; from a window table you can enjoy a languid, if somewhat pricey, lunch in the reflection of a sparkling sea and the city’s iconic horse-drawn carriages clopping along the corniche.

From a perch like that, it’s easy to see how Alexandrians can cling to the conceit that they are more cultivated and urbane than their counterparts in noisy, congested Cairo. As Mountolive, Alexandria Quartet’s debonair but ill-fated diplomat remarks, “Alexandria is still Europe, not the Egypt of rags and sores.”

* * *

An Alexandrian Pâtisseire

I first visited Alexandria nearly a decade ago to write about the re-opening of its famous library, the centerpiece of its restoration drive. But it was the city’s crumbling beauty that hooked me. If Alexandria was Norma Desmond, the aging screen goddess in Sunset Boulevard, I was Joe Gillis, the frustrated writer (minus, sadly, William Holden’s rakish smile and heroically cleft chin) who succumbs to her charms. Constantine Cavafy, the renown Greek poet and one of Alexandria’s most distinguished residents,  wrote of Alexandria as a diminishing jewel. Strolling along Alex’s corniche, you can almost hear her reply with a riff off Norma’s classic rejoinder:

I’m STILL big. It’s civilization that got small.

Things Greek – the food, the empire, Cavafy’s verses – and Alexandria’s golden age inhabit one another like old lovers. From its founding until only a few decades ago, Alexandria was a Greek city. Half its population was Greek and Greeks dominated the economy and culture. And while greatly diminished in size, those that remain are defiantly holding on. They congregate each night at the Greek Club on the community’s vast compound of neo-classical schools, community centers, gymnasium, and theatres. The buildings, radiant in faded pastels, date back to the late 19th century and the grounds are immaculately groomed with date palms, citrus trees, and hedgerows. The club itself is unexceptional – just a dozen tables and a bar tended by the Greek-Armenian Aliko, who quietly fills members’ glasses from their personal bottles of scotch that are kept at the bar. Johnny Walker Red is the preferred brand, and single-liter bottles of it, their owners’ identified by names jotted on paste-it notes, line the bar shelves like prizes at a shooting gallery. The music – Aliko also spins disks – alternates between Greek pop and old jazz standards.

It is here where I met Maroun Ayac, a Lebanese optician and restaurant owner whose family came to Alexandria from Beirut in 1898. His short-sleeve shirt is opened at the abdomen and his sunglasses are perched high on his head. He is tanned, with several days growth of grizzled beard. In Alexandria, even eye doctors look like old salts.

At 50, Maroun is young enough to remember Alexandria when it sizzled. He rattles off the names of the dozens of nightclubs, all of them now closed, that used to swing until dawn. Sunbathers on Alexandria’s beaches used to rival those of the French Riviera for daring, he says. Today, women and girls swim in their clothes for fear of offending religious conservatives.

There is nothing fin de siècle about the Greek Club, however. “We are the last of the Greek way,” Maroun says. “But we stick together and we know how to live.”

Aliko brings us olives, Greek salad, spanakotyropitakia – small pastries filled with cheese and spinach – and Armenian pastrami. He refills my glass with scotch just as Rosemary Clooney slinks into Come On-A My House.

* * *

Alexandria has been ardently romanced throughout her 1,200 years. After Alexander came Ptolemy, whose lighthouse was one of the seven wonders of the ancient world. In 1798, Napoleon Bonaparte turned Egypt into a French vassal, only to lose it to the British in an epic sea battle off the Alexandrian coast. (There is as much to see beneath the Alexandrian port as there is above it, with its trove of sunken Greek ceramics and sculpture, the ruins of the lighthouse – it was destroyed by an earthquake in the 14th century – and the remains of Bonaparte’s fleet.) Less than a decade later, an Albanian foot soldier named Muhammad Ali emerged as the Ottoman empire’s viceroy in Egypt, and under his brutal but shrewd administration the city became the entrepot of the global cotton industry. The city’s commodities exchange was one of the world’s most heavily traded.

For the next century, Alexandria reigned as the Mediterranean’s most multicultural city. Vibrant diasporas plied the cotton trade and invigorated the place with related commerce – textiles, garments, finance – to complement the city’s eternal communion with the sea. The Greeks ran the restaurants and cafés, the British the bureaucracy (naturally, as they were Egypt’s occupying power until 1945), the Swiss administered the hospitals and nursing facilities, the Armenians owned the gold shops, the Italians designed the buildings, the French ran the bakeries and patisseries, and the Maltese – as Britain’s Ghurkas of the Mediterranean – patrolled the streets.

Alexandria provided sanctuary, and sometimes exile, for royals and heads of state. Egyptian kings, first Fuad and then his son, Faruk, summered in Alexandria’s palatial villas, along with their ministers. Writers and poets like Cavafy, Durrell, and E.M. Forrester thrived off Alex’s Levantine romance and intrigue. Artists, musicians, and couturiers drew inspiration from its kaleidoscope of cultures and mores.

Ahmed and his son Yacoub

Ahmed Nasser was there. He is 87 and, with the help of his son Yacoub, is still owner and proprietor of Athineos, one of Alexandria’s oldest and most popular cafes. At the age of 14, he left his small village to come to Alex. “Every summer,” he told me, “living in Alexandria was like attending a wedding. The king and his cabinet ministers would come here and we’d all be working together, we Muslims, Jews, and Christians, and no one wanted to leave because of the weather and the smell of the sea.”

Then came Gamal Nasser, the Prometheus to Alexandria’s Mt. Olympus, who stole its pyre of light. It was Nasser, they say, who cast the Jews out from Egypt during the Arab-Israeli wars and then seized foreign-owned businesses. Ahmed, a Muslim, bought Athineos in 1968 from the widow of its founder Constantin Athineos after she’d finally had enough and returned to Greece.

Out of respect for Athineos’s founder, Nasser kept the name. In tribute to the past, he and Yacoub have carefully preserved the café as it was the day they bought it 41 years ago, with its grand white columns, polished granite floors, dark-wood wainscoting, and an authentic French patisserie. They’ve even opened a Greek bar in the hopes of luring back the Greeks.

That way, when the world returns for a table with a sea view, it will be as if no one ever left.