In its modern history, Egypt has never been subject to Islamist political domination, and the upcoming experiment is already the source of anxiety for many with a stake in the country’s economic future. The oil and gas sector, like all others, stands to be affected by any significant changes in policy, but while changes are expected, a drastic and potentially disastrous overhaul of the economy is not going to be realized anytime soon. The industry can adapt to whomever ends up running the country. What it will struggle with is the continuation of the status quo in which no one truly does. 

For a brief few months, and for the first time in the lives of many Egyptians, parliamentary elections managed to captivate the vast majority of the population. Egypt’s first post-revolutionary parliament may very well present a glimpse into the country’s political future. If this is true, that future is resoundingly Islamist. The Freedom and Justice party, the political wing of the Muslim Brotherhood, has won a staggering (if not unexpected) number of seats, far more than any of its rivals. The Salafist Al-Nour party, which adheres to a hardliner fundamentalist form of political Islam and is the only political force able to make the Brotherhood seem liberal in contrast, has managed a surprisingly strong showing, winning the second-largest number of seats.

Fear of Islamist rule in Egypt is not a new phenomenon. Egypt’s Islamists are an unknown quantity, and for years have been mistrusted and disliked by local and foreign investors alike. Mubarak’s regime was trusted to get things done with little hassle, and while this ease entailed severe consequences of all kinds for the Egyptian people, from the investor’s perspective the situation was in many ways ideal.There were problems, some of them substantial, but there was a framework of cooperation with the Egyptian regime that went a long way to building trust. Now that the Mubarak regime is gone, trust must be rebuilt from scratch, and monumental changes in policy may threaten the very possibility of such a relationship ever forming.

The possible difficulties of dealing with an Islamist regime in Egypt are not limited to possible shifts in economic policy; the political dimension naturally comes into play as well. If the future rulers of Egypt find themselves antagonizing Western powers, restrictive economic measures may be deployed by said powers, including sanctions that would undoubtedly include the Egyptian petroleum sector. Egypt’s reserves of petroleum resources are not comparable to some of its more fortunate Middle-Eastern and North African neighbors. Consequently, its standing in the global energy markets is not strong enough to indemnify it from such sanctions in case of a political standoff. Hostile nations will not hesitate to boycott Egyptian oil and gas.

These apprehensions and scenarios are not entirely unreasonable to contemplate, but they are based almost entirely on the notion that the accession of the Islamists in Egypt will constitute a radical overhaul of the Egyptian state.Irrational fear of the Islamists may become a self-fulfilling prophecy in radicalizing them through isolation, but taking a closer look at the Islamistsand their interests, particularly as they pertains to the petroleum sector, will allay much of this fear.

Unlike other political ideologies, Political Islam is a wide spectrum of wildly differing interpretations and applications. It is not so much an ideology as a general term used to describe political currents based on Islam. For years the Muslim Brotherhood of Egypt was considered a beacon of radicalism, not entirely without reason as the Brotherhood’s history is not devoid of militancy and extremist tendencies, not to mention regressive thought.

But increasingly throughout the last few decades, the Brotherhood has been leaning towards political pragmatism, which places them closer to the moderate, pluralist AKP of Turkey than the extreme fanaticism of the Taliban.The Brotherhood is arguably far more fundamentalist than the party of Erdogan, and the façade of social moderation and respect for civil liberties currently adopted by the Brotherhood is met with skepticismby many, but the fact that they are willing to deal in politics in a pragmatic, realistic way within the modern context is what matters, the details of their ideological rigidness notwithstanding. The Salafists may be argued to be truly regressive in many of their social policies, but once again, such policies will matter minimally as to oil and gas dealings.

The political conduct of both groups since the beginning of the uprising demonstrates their willingness to put practical political interest at the forefront of their agendas.This must be a reassuring sign for investors who will hope they won’t have to deal with forces that are entirely and immovably driven by puritanical ideological zealotry.

It is of course in the interest of any political force to achieve some level of economic development in order to gain political legitimacy and thus remain in power, but in the case of the Islamists of Egypt, it is an absolute necessity to ensure the economic welfare of the general populace. This is partly because brute force is the only alternative to legitimacy in terms of tools to rule, and as witnessed throughout 2011, Egyptians have demonstrated that they’re no longer willing to go down without a fight. It is also down to the Islamists’ need to avoid economic dissatisfaction, which was a major factor in the success of the anti-Mubarak uprising and remains one of the revolution’s driving forces, fuelling popular dissent.
Primarily, though, the Islamists must and will focus on economic development because they have survived decades upon decades of political struggle to find themselves today facing the historic, unprecedented opportunity to finally take charge, and they will naturally do all that is necessary to make sure this chance does not slip from their grasp. It would not be unwise, or unexpected, of the Islamists to hugely prioritize the economy and place minor emphasis on ideology in the coming period, if only to make sure their ideological vision does not find itself lost to history before it can ever see the light of day.

The economic programs of both the Freedom and Justice Party and the Al-Nour Party do not convey the image of political forces aiming for a radical overhaul of the economic system anytime soon.The professed economic policies of both parties are fairly liberal, much like those of the National Democratic Part of Hosni Mubarak. They have obviously vowed to apply said policies in a very different manner, stamping out corruption and ensuring fair competition, and the emphasis differs, focusing on social justice and income equality rather than rampant, neo-liberal privatization. The general outlook, however, is one that is not entirely dissimilar to what has been in place for decades, recognizing free trade and capitalist competition.

Even worrying ideas like “Islamic banking” are to be implemented gradually in the case of Al-Nour, and are not mentioned at all by the Brotherhood party’s economic program, and in any case would most probably be identical to the systems in place in countries like Saudi Arabia and would thus make little practical difference.In addition, encouraging foreign investment is a stated goal of both economic programs, dismissing the ludicrous notion that the Islamists would deliberately curtail foreign investment in any way.

The specificity of the oil and gas sector renders it particularly resistant to any possible change in policy. Socially-motivated policies pertaining to dress code or public conduct will have exactly zero effect on the sector, and even income equality and social justice programs will most likely not dissuade investors and foreign companies who prioritize the presence of the resources rather than cheap or exploitable labor. Egypt’s moderate oil and gas wealth, of course, is not going anywhere regardless of any change in policy. In fact, the possible negative effect of Islamist policies on other sectors and industries may cause the Islamists to turn to the oil and gas sector and work towards developing it further to compensate for other sources of national income.

Any radical step in the international arena is just as unlikely for similar reasons. While rhetoric may shift and foreign policy will certainly not be identical to that of the Mubarak regime, a 180 degree turn would do nothing but destabilize Egypt and the region and most likely bring a swift end to the Islamist project. Statements and positions coming from the Islamist camp are unclear and in some cases contradictory, but the Muslim Brotherhood has shown itself able to compromise to protect its interests and thus will not start a war or take steps that would ignite one. They are also unlikely to choose the path of isolation due to the effect it would have on Egypt’s already battered economy. In the unlikely event that the Salfists push for such a foreign policy orientation, the Brotherhood, by far the stronger of the two groups, has proven its willingness to ally with liberal parties and movements for the sake of political gain.

Several Persian Gulf countries demonstrate the viability of a functioning and thriving oil trade under an Islamist regime. Saudi Arabia and Kuwait’s regimes are both arguably far more fundamentalist than anything the Egyptian political scene has to offer, and yet energy sectors in both countries are successful enough to prove any fears in Egypt unfounded. Even the pariah state of Iran has managed to survive off of its oil wealth for decades despite tensions with the so-called international community (although the sustainability of this model is questionable as tensions are reaching boiling point and the future is uncertain). Egypt’s inferior natural wealth does not detract from the fact that the model is viable in principle.

Oil and gas sector investors may initially approach Islamist-controlled Egypt tentatively, but there is little doubt that establishing a working relationship will be in the interest of both parties in the short-term, and once a mutually beneficial framework is put in place it is almost certain to guide future dealings for along time to come.This scenario is not exclusive to the Islamist, as any political force that comes to power, democratic or not, will be able to achieve similar results if it manages to maintain stability and agrees to deal on terms deemed reasonable from by the average investor or company.

The reasonable terms, as discussed, will most probably be adopted by the Islamists. The ability to stabilize the country and bring it under control, however, does not seem to be a characteristic of any of the current players, whether it be the Islamists, leftists, liberals, activists or even the armed forces.The Supreme Council of the Armed Forces, the self-appointed “guardians” of Egypt’s transitional period, have failed to stay above the fray and instead indulged in power politics in order to maximize gain, and conventional political forces seem more than willing to play politics outside of any legal framework and to violate law and regulation if necessary, making a mess of the transitional period.

The democratic process has been muddled with endless (but not baseless) allegations of transgressions and falsification from all sides. The credentials of this very process are in doubt as it is still not entirely clear to what extent democratic institutions will be in charge of the country. All the while the transitional authorities have consistently found themselves at odds with young revolutionary activists as well as conventional political forces, and at times have dealt with these differences in ways remarkably similar to those common in pre-revolutionary Egypt. This has created an atmosphere of distrust and lack of clarity that has led to constant political turbulence, which, at various points, has resulted in violent clashes.

At the heart of the instability is the power struggle between the Islamists, the Muslim Brotherhood in particular, and the Supreme Council of the Armed forces. Constant whispers of an under-the-table deal aside, it is clear that both parties are maneuvering to make the most of the transitional period, inciting further conflict and instability as proxy battles are fought. In aiming for their respective goals, the two entities have managed to undermine the goals of the transitional period and the revolution itself, and have delayed the country’s return to stability. Investors are not likely to deal with a government who is not fully in control, or one whose grip on power may slip at any moment.

The security situation, already undermined by these politically-grounded confrontations, has seen further deterioration manifested in rising criminality throughout the country as well as militant activity in the Sinai Peninsula. These militants have at times targeted the petroleum sector specifically through multiple attacks on the infrastructure delivering natural gas to Israel and Jordan. Such volatile ground is understandably off-putting to investors who seek guarantees that their investments will not be threatened, guarantees that no one is currently in a position to give.

Fears that an Islamist takeover would be a catastrophe for the economy and for the oil and gas sector in particular are unfounded, as the presented obstacles would be limited at best. The Islamists would most likely learn to deal with investors and foreign companies in order to fully utilize the resources at hand. What may truly threaten the sector are the viciously competing bids for power mounted by all forces active in Egyptian politics and the political bargaining being engaged in by all said forces. Ultimately, the vital concern will not be who holds power, but rather how much power they hold.

By Ahmed Maaty

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