What Egypt’s unrest teaches us about (political) risk analysis – Andrew Bishop

Andrew D. Bishop is guest blogging for the World Economic Forum. He is a Project Associate on the Strategic Risk Foresight Team at the World Economic Forum.

Egypt’s early 2011 wave of unrest, which eventually led to the demise of 30-year ruler Hosni Mubarak and to the rise of a an allegedly temporary military rule, has been perceived by bystanders worldwide as one of the greatest game-changers to the Middle East in decades. As such, it would be surprising if these events did not hold a few worthwhile lessons for professional risk analysts and keen observers alike.

They do.

The private eye

First on the agenda, Egypt’s recent demonstrations should remind us of how captive our societies and their modern-day anthropologists have become of the media – for better and for worse. Indeed, despite widespread reports of harassment against journalists by security forces, combined with the difficulty for news outlets to access all corners of the country during the events, one might interpret Egypt’s unrest as having been surprisingly media-friendly.

Indeed, the demonstrations’ spectacular concentration on Cairo’s Tahrir Square provided an opportunity for 24-hour news networks to set their microscope on events that did not necessarily hold the significance or geographical spread they soon gained through this coverage, which may have exacerbated protestors’ drive to express preexisting and underlying grievances.

This magnifying effect enabled by our media age is one that reminds us of the French sociologist Pierre Bourdieu’s characterization of the media’s symbolic “power of constructing reality.” As my colleagues Nicholas Davis and Florian Ramseger recently argued, events no longer happen on the ground or in the digital sphere: they occur at both levels in real time and influence one-another through self-reinforcing feedback loops.

Yet, just as understanding the rise of information technologies has become a critical requirement for political risk analysts, sticking with the age-old priority of having one’s own network of trusted eyes and ears on the ground remains crucial. It may even have become more important than in the past, as the spread of noise has made the risk of false positives evermore likely.

This is where professional political risk analysts are supposed to step in. Their job require of them to create and nurture a network of reliable human sources. However, in this day and age they have often found this task difficult, as have governments. The United States’ intelligence community, for one, has been repeatedly chastised in recent years for over-relying on SIGNINT, or signals intelligence, and lagging behind in the race for HUMINT, or human intelligence.

The problem is not merely that of creating a network of friends on the ground. It is ensuring one’s pool of connections is representative enough of a given society’s heterogeneity and evolving societal forces to be fail-proof. So while having a direct line to the minister of energy may seem a luxury, it will come in just short of handy if the regime crumbles. This is why leading American political scientist Robert Jervis recently lamented that “the US government is rarely well informed about opposition forces,” and why one analyst with leading private intelligence advisory group Stratfor noted that “Iran taught me never to trust a revolutionary who spoke English.”

The tip is hard-edged but worth considering.

The swan mirage

A second error many observers have committed in analyzing Egypt’s recent events is to fall into the trap of characterizing former president Mubarak’s fall as a Black Swan. Ever since Nassim Taleb’s best-selling book by the same title, commentators seem to have found an uncanny pleasure in using this term, even when entirely irrelevant to the situation at hand.

Make no mistake, Taleb’s opus is a groundbreaking work of thought, but the claim that “similar to the massive exposure of a Lehman Brothers, Mubarak may very well turn out to be the next black swan” simply does not withstand the scrutiny of the author’s own definition. Speaking of the unruly duck, Taleb notes: “First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact.”

Sure, it is entirely true that Egypt’s recent change in government has shown once again that our minds fare lowly when challenged to think about unexpected events – which might remind us of the 9/11 Commission’s famous conclusion that failures of imagination were among the errors that led to one of the most consequential security shortcomings of the past decades.

Nevertheless, without going so far as to claim that Mubarak’s unraveling was precisely foreseeable, Egypt’s recent events cannot be characterized as outliers entirely. After all, it is not the first time Cairo serves as the stage for a military takeover. Gamal Abdel Nasser and the Free Officers Movement broke that ground when they put an end to Egypt’s monarchical days in 1952. And several other countries throughout the region have experienced muscular changes in government since then as well. Think only of Turkey 1960, 1971, 1980, and 1997. In short, uniforms in the palace are not an aberration in the Middle East (or elsewhere for that matter).

As regards the second particularity of Black Swans, it is not quite obvious that Mubarak’s leave has “carr[ied] an extreme impact,” at least to date. Indeed, not only was the 82-year old president on his way out of power even before the recent unrest, but, considering the military’s current takeover, it is also disputable that his overthrow has signaled the birth of democracy in Egypt. Military rule is not an abomination in itself, yet it certainly is no guarantee of people power.

Thinking regionally, many have highlighted that Israeli strategists may be scrambling at the prospect of a return to tense relations with a country that was a historic enemy of the Zionist state up until the Camp David Accords of 1978. However, while there may be cause for medium-term strategic reconsiderations, the immediate impact of Egypt’s turn of events is tempered by the country’s new leadership commitment to existing treaties as well as by Israel’s arguable military superiority.

Of course, in reading these comments Mr. Taleb might be prompt to point to the third element of his Black Swan’s description: “In spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.” On this all-encompassing count, I am guilty as charged.

The heart and mind

The problem with analyzing situations such as Egypt’s recent game change – at the heart of which lie the prospect of democracy and dreams of other liberal values – is that one is easily caught thinking with one’s feelings rather than reason. Indeed, looking at events in late January-early February 2011 it would have been hard not to lean towards excessive enthusiasm and media gullibility on the one hand or exaggerated cynicism on the other.

The debate between the two is a fallacy, however. Any professional analyzing Egypt’s unrest would have owed it to him- or herself to stick to the facts with the detachment required of good political scientists.

On this note, political risk analysis kingmaker Ian Bremmer recounts: “I remember a colleague of mine from my Stanford days, the renowned international relations theorist Bruce Bueno de Mesquita, saying that he thought you shouldn’t learn the language of the country you cover because it creates bias. It broke me up at the time, as I had presumed he wasn’t (completely) serious. But there is a constant tension between knowing your topic and identifying with it. Why don’t psychoanalysts date their clients? If a researcher is serious about doing analysis, you have to maintain professional distance.”

Objects may appear closer (to the past) than they are

Regardless of whether we have an attachment to the country we are analyzing, another major mistake unworthy of quality analysts is the oft-repeated temptation of reading the future based on past experience and outdated knowledge. In the case of Egypt, columnists such as Roger Cohen have questioned whether Mubarak’s fall was akin to “Tehran 1979 or Berlin 1989?” Neither, is the better answer.

Indeed, as French commentator Alain Gresh has pointed out in an unparalleled blog post for Le Monde Diplomatique, Cairo 2011 is far from being Tehran 1979, for now at least. Not only does the Muslim Brotherhood lack the capacity to take over power given the state of Egypt’s military, but according to the author it also lacks a monopoly on an Islamic thought leadership shared with organizations such as the country’s famous al-Azhar University. It has also been thought of as the next would-be Justice and Development Party, or Turkish AKP, better known for its moderation and subtle political tactics than for fierce rhetoric. If anything, liberal observers could be concerned by the region’s more extreme Salafi voices, yet even they have tended to see protest as a road to chaos that must be avoided at all cost, in the view of at least one astute analyst.

As for any potential analogy with Berlin 1989, it is far too early to tell if Egypt’s true revolution will ever happen or if it will remain captured by the country’s military. Looking beyond the country’s immediate past, one sign of hope is worth noting however: “At the very least […] Egypt does have a parliamentary history.”

The tipping point

There is nothing wrong with looking at a country’s past in order to think about its future. There is a case to be made, however, for reading beyond the mere headlines of its history.

The safest bet in considering future evolutions in a region such as the Middle East, or any other geographical or topical realm, is to seek to identify and understand the deep forces driving a given issue. By doing so, one will have a better-than-average chance of getting around noise and focusing on the essentials.

That is one of the tenets at the heart of scenario planning, an activity that emphasizes creativity and inclusiveness in devising insights for decision-makers and communities. By taking into account a wide-ranging set of plausible yet challenging scenarios in their strategy-building processes, stakeholders offer themselves the chance of being ready for any eventuality, regardless of whether its occurrence can be precisely timed. (Side-note: beware of anyone who tells you they can time the next financial crisis or coup.) In this sense, the collective failure to foresee Egypt’s apparent earthquake was not one of early warning systems but rather of long-term planning.

The Devil is in the details

At the very opposite end of such long-term thinking’s spectrum, analysts may also want to afford looking at the minute details of current and future protest movements akin to Egypt’s.

Indeed, a closer look at the country’s demonstrators has shown they may not all have the profile most observers thought they did. As veteran intelligence analyst John McCreary notes: “The surprising disclosure over the weekend is that fundamental political change does not seem to have been the intention of the protest organizers. […] [The] demonstrations were not instigated by or for the mass of un- and under-employed. The instigators were doctors, students and lawyers with very high expectations, time on their hands and technology in their hands. / That explains why […] there were crowds in Cairo, but no mobs. It also explains why workers did not protest until late and never marched on Cairo, possibly wary of the rich kids.”

Elsewhere McCreary reminds us that a protest group’s level of organization can be a telling indicator of its nature and inclinations. Is it homogenous or composite? Are its actors angry or hopeful? And even: are their banners professionally printed or hastily scribbled? One could add: are they in English or vernacular language? (Which would tell you a lot about who is meant to be reading them.)

What a monkey can do

Examining all of these factors cumulatively, and avoiding some of the major blunders described above, should allow analysts to produce quality insights for their clients and communities. Yet few rose up to the challenge this time around. Why so?

A sorry soul would perhaps say that is because what Egypt’s early 2011 unrest teaches us is precisely that humans learn little from their mistakes and tend to repeat them in a sad cycle of ignorance

In this sense, the failure of most political risk analysts to predict such events as former President Mubarak’s fall may appear similar to the oft-repeated story of a monkey assigned to randomly throw darts at a board covered with stock names beating the collective performance of the world’s infinite number of investment funds.

The point is, however, that it has never mattered how well – or badly – funds fare on a collective average. What matters is one’s ability to choose precisely the one quality fund that will outperform in the coming decade and beyond. That same lesson is valid for political risk: quality analysts are a luxury. Seek them out…