For students of financial terrorism and economic warfare, there are two primary takeaways:
1) The trigger to the unrest was food prices. It has been widely reported that food inflation was a if not the primary factor behind the initial unrest. Egyptian households spend about 40% of their budget on food and food prices increased 20% in the past year. Corn prices shot up 90% and wheat slightly less.
2) Speculation played a role in higher food prices. Certainly the global monetary inflation made this possible. Another factor has been economic progress in emerging markets whereby people have been improving the quality and quantity of their diets. Both of these have justified higher prices. Speculation has been a factor on the margin. As we know, however, the marginal factors are generally the ones that create a tipping point. My sources tell me that this has been the case so far and that speculative interest in food is growing,
Both of the takeaways are factual.There should be no doubt that there was a serious economic component behind the events in Egypt. The question then becomes whether or not additional speculation on food prices could be used as a geopolitical lever. Based on our research, the answer is an unequivocal yes.
We are not saying that the Muslim Brotherhood speculated on food prices as a weapon to topple Mubarek, although some sources say that was the case. We are saying that whether or not they did, it is obvious that such a weapon could be used, albeit imprecisely. If done properly, it could even be used profitably. The cost is certainly less than a major arms program but the results are dramatic.
We would hope that our Intelligence Community has studied this in detail and prepared contingency response sets. Based on the fact that Obama's Intel Chief, Admiral Clapper, believes that the Muslim Brotherhood is a "secular" organization, we aren't very confident. For more than two years I have been informing and educating the Defense and Intelligence communities regarding the risks of financial terrorism and economic weapons. Some are beginning to notice.
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