Attack in Egypt, Saudi Arabia and Oil

Blasts in Egypt Kill at Least 83 at Resort in Sinai Peninsula

SHARM EL-SHEIK, Egypt (AP) -- A rapid series of car bombs and another blast ripped through a luxury hotel and a coffeeshop in the Egyptian Red Sea resort of Sharm el-Sheik early Saturday, killing at least 83, a hospital official said. Terrified European and Arab tourists fled into the night, and rescue workers said the death toll could still rise.

This attack is different than the attacks in London. For starters is was very well organized and resembles some of the attacks in Iraq. One has to wonder of the perpetrators did their training in Iraq. Perhaps more significant is it's purpose. The purpose of the London blasts was terror, the purpose of the Egyptian blasts was to damage the economy. As Juan Cole explains:

The al-Jihad al-Islami organization of Ayman al-Zawahir has for over two decades targeted Egypt's tourism industry with violent attacks. For al-Jihad al-Islami, this tactic has several benefits. Tourism is associated in the minds of many ordinary Egyptians with a libertine lifestyle offensive to the puritanism of Muslim piety. Then, Egypt depends heavily on tourism for foreign exchange, and it is an important part of the economy (worth nearly $3 billion a year in good years). Egypt's economy grew 5.3 percent in 2004, the best it has done in a long while (September 11 badly hurt Egypt's economy-- Ayman al-Zawahiri's little revenge on the homeland that exiled him). Egypt depends more heavily than ever on services and remittances. Its petroleum exports are slipping. It only earned $1.5 billion in oil revenues last year despite the big bump in prices (it was over $3 bn. in the mid-1990s).

To see how this may be significant we have to look at Saudi Arabia, another middle eastern country with an unpopular government and an economy dependent of western currency. In April we reported that Saudi jihadis have been returning to Saudi Arabia from Iraq where they have been learning how to sabotage the oil production infrastructure. The attacks on the Egyptian tourist industry would seem to indicate that bringing down western friendly governments in the middle east by undermining the economy is part of the plan. Can the Saudi oil fields be far behind? A successful attack of the Saudi oil infrastructure at this time would result in immediate world wide shortages and a large spike in oil prices. The impact on the world economy could be devastating. We may be entering a new and more disruptive phase in the war on terror, one that will impact us all.