Egypt Unrest Affects Relationship With U.S., Global Economy

Protesters call for U.S. support; analysts fear effect on oil markets.

January 30, 2011, 8:29 PM

WASHINGTON, Jan. 30, 2011— -- As protests in Egypt continue, questions about the United States role in the region have risen.

For the second day protestors arrived in front of the White House to demand that President Obama call on Egyptian President Mubarak to step down.

Instead, President Obama met with his national security team throughout the weekend and called for an "orderly transition" to a more responsive government.

Secretary of State Hillary Clinton said that a "faux democracy" is unacceptable.

She added on ABC News' "This Week with Christiane Amanpour," that Egypt needs "real democracy, not a democracy for six months or a year and when evolving into essentially a military dictatorship or a so-called democracy that then leads to what we saw in Iran."

In Egypt, leaders of the protest movement have expressed surprise that Washington has not thrown its full support behind their movement.

For Complete Coverage of the Crisis in Egypt, Featuring Exclusive Reporting From Christiane Amanpour, Click Here

"People expected the U.S. to be on the side of the people, there is a legitimate need for democracy and social justice and to let go of a dictator," Mohamed ElBaradei, the leader of the Egyptian protests and a Nobel Peace Prize winner, told Amanpour this morning.

Without completely abandoning Mubarak, who met with his military team this afternoon, the administration is now talking more about the Egyptian people.

"This is not about America. Let's not make Egypt about America. The minute we do that there is enough anger in the region, not just about our relations with authoritarians but on our foreign policy," says Shibley Telhami, a senior fellow at the Brookings Institution.

While the recent revolt in Tunisia brought about quick change and helped spark Egypt's uprising, change at the top in Egypt may not follow that same model. Some believe that Mubarak has a stronger will to remain in his country.

"My gut tells me Mubarak is not going to flee the country like the president of Tunisia. He's not made that way," former U.S. Ambassador to Egypt Nicholas Veliotes said.

The uprising and political unrest in Egypt is already having economic affects around the world. On Monday, analysts will watch to see if the stock market rebounds from Friday's 166-point drop, as the price of oil continues to rise.

Though Egypt does not produce much oil, it controls the Suez Canal and a major pipeline that exports 2 million barrels of oil from the Persian Gulf. Oil industry analysts predict that in the worst case scenario the Suez Canal will shut down and revolt will spread throughout the Arab world, which could interrupt production.

"You start getting into a doomsday scenario, where you do get very high oil prices. But you are going to see more than the price of oil affected. You are going to see the world economy effected everywhere," Robin West, an oil industry analyst said.

West added that it is very unlikely the effects will be that widespread.

There may be short term volatility, but whoever is in charge of Egypt will want to make money, so they will find a way to sell oil, he said.

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