Headlines 09/11/2016

Headlines

• UK Courts halts Brexit

• Egyptian Devaluations

• Houthi Attack on Mecca?

Details

UK Courts halts Brexit

On Thursday 3rd November, Britain's High Court ruled that an MP vote will be needed to invoke Article 50 in order to leave the EU. Protestors argued that the Prime Minister was not allowed to, by herself invoke the 2 year leaving process and that it required the consent of parliamentary MP's. The public have displayed mixed emotions, and despite the labour leader calling this a "victory for parliamentary democracy", this is in reality a compromise on one of the pillars of secular society, the voting process. The lack of fuss made by the public is largely due to the falling exchange rate and the lack of plan from the exit campaigners with an atmosphere of doubt created. This ruling gives Britain more time to evaluate its position in relation to Brexit, with a significantly likely outcome of Britain staying in after all.

Egyptian Devaluations

The Egyptian pound was devalued by 48% this week; a desperate but necessary measure for Sisi. For a long time exchange rates sat at 8.8 to the dollar, but now that the pound has fallen in value, it will open up exports as goods and services become more competitive on the international market - bringing in more profit to mitigate a growing budget deficit (which is expected to exceed 11%) and poor foreign direct investment. However, in attempting to solve one problem, the Egyptian government are likely to invite other issues - inflation has been in the double digits, and with a weaker currency, it is only likely to rise further. The higher costs for imports will also make it very difficult for the Egyptian population to afford certain goods and services (particularly sugar, which has risen 40%). The shortage of dollars, due to a decline in foreign investment after the turmoil of 2011, has forced Sisi to take $12 billion from the IMF, on condition that the Egyptian currency devalues, along with other requirements such as cuts in subsidies. Whilst some of the effects may be good - they are temporary and will not be enough to quench the peoples thirst for revolution! In fact, it may even kindle it; with higher prices and tougher conditions (particular in respect to costs and a reduction in subsidies), millions of Egyptians will struggle to make ends meet. Finally, this policy is transient at best. The IMF loan will really be used to fund immediate problems as opposed to bringing structural change to Egypt and it has been taken at the expense of the poor. In fact, these funds will be used to renew existing debts, and to stimulate short term growth.

Houthi Attack on Mecca?

News continues to trickle out that a Houthi missile strike targeting Mecca was intercepted by the Saudi military. The missile was “intercepted and destroyed” 65 kilometers from Mecca. The Houthis and their allies, including forces loyal to former Yemeni President Ali Abdullah Saleh, have a stockpile of Soviet-era Scud missiles and locally designed variants. A Houthi ballistic missile fired earlier this month targeted Taif, home to Saudi Arabia’s King Fahd Air Base, which is also near Mecca. The war in Yemen has dragged on ever since Saudi Arabia began launching attacks. With the Saudi economy in freefall the monarchy is badly looking at any way to deflect attention from the crisis it has created. There is no way to confirm the Saudi announcement, but why any group would attack Mecca, which would turn the works against the Houthi cause, make this claim very unlikely to be true.