Terror shakes Sharm

Following last weekend’s terrorist strike on the Red Sea resort of Sharm el-Sheikh, Massoud A. Derhally and Rhys Jones look at the repercussions of the attack on the country and on the region as a whole.

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By  Massoud A. Derhally and Rhys Jones Published  July 31, 2005

Terror shakes Sharm|~|SHARM-COVER-STORY-PIC-200.jpg|~|CARNAGE: Three seperate blasts levelled the reception area of the Ghazala Garden Hotel, ripped apart a coffee house in the Old Market and rattled the Naama Bay boardwalk.|~|BARELY TWO WEEKS HAD passed since the July 7 bombings in London before the world witnessed the scourge of terrorism in Turkey, Israel and Egypt. But this has been the unfolding picture since the attacks of 9/11 with suicide attacks taking place everywhere from Europe and North Africa to the Arabian peninsula and South East Asia. The national day bombings, which last week brought mayhem to the popular Red Sea tourist resort of Sharm el-Sheikh came just weeks before the country’s first multi-candidate presidential elections — when Egyptians decide whether or not their president Hosni Mubarak should be elected for a sixth term. It is highly likely that Egypt, one of the few Arab countries to have signed a peace treaty with Israel, was targeted because of its close links to the United States. It is also a destination for Western tourists — soft targets for terrorists. With Egyptian officials citing 88 fatalities and 130 injuries as a result of the blasts, the attacks are the deadliest in the country’s history and surpass the 58 tourists shot in 1997 at Luxor. Despite the bombings, the newly created presidential election commission has said the poll will be held on September 7. Two organisations claimed responsibility for the bombing — the previously unknown Holy Warriors of Egypt and the Abdullah Azzam Brigades of Al Qaeda in the Levant and Egypt, which also claimed three October 2004 bombings near Taba that killed 34 people. A statement from the Azzam Brigades said the bombs were “part of the response against the global evil powers which are spilling the blood of Muslims in Iraq, Afghanistan, Palestine and Chechnya” and described Sharm el-Sheikh as “crowded with Zionist invaders and Crusaders”. The attackers successfully penetrated the grounds of hotels in the early hours of July 22, causing chaos around the resort. Blasts levelled the reception area of the luxury Ghazala Garden Hotel in Sharm el-Sheikh’s popular Naama Bay district and ripped apart a coffee house crowded with Egyptians in the nearby Old Market. In addition, a third smaller bomb exploded along a Naama Bay boardwalk. So far more than 70 people have been detained in Sharm el-Sheikh and elsewhere on the Sinai Peninsula for questioning over the bombings and there are reports that there is a possible link to Pakistan. But none have yet been directly accused of involvement. Egypt’s interior minister, Habib Al Adly, said that while it was too early to say who was responsible, investigations had yielded clues. The roundups appeared similar to police operations after last October’s attacks at the Sinai resorts of Taba and Ras Shitan, which killed 34 people. At the time 3000 people were detained — around 200 of which are still believed to be in custody, including two Egyptian suspects whose trial resumed last week. However, the chaos caused by the Taba attacks did not match the carnage and destruction on the streets of Sharm el-Sheikh. “I was in the street. My phone was ringing and I had to walk five minutes away to hear it because it was very noisy. All of a sudden when I was just outside I just heard a big boom!” Mehrinaz Awady, who was near the first hotel bomb told Arabian Business. “I first thought it was fireworks, but people started screaming and saying it was a bomb, everyone was running. We were 10 minutes away, but we could see it. And then we heard the second bomb. It was just behind and no-one knew where it was coming from. Everyone was running in different directions and women, especially Arab women had a nervous breakdown; they were looking for their kids and they didn’t no where they were. Women were on the floor, crying. Some were fainting,” explains 31-year-old Awady. “Most of the people killed were Arabs. I was on vacation. I live in Cairo. It’s very sad. [On] saturday I went out for dinner because I couldn’t eat all day and I couldn’t sleep, so I went out and it was empty, no one was in the street. Shops were open but no foreigners were about. They stayed in their hotel rooms. It was very empty. Even Buddha Bar which stays open [until] 5 am or 6 am was closed by 1 am,” adds Awady, a social development worker with USAID. “We were stuck in the street. We couldn’t go back to the hotel because the streets were closed because of the police and ambulances. It took us a long time to get back to our hotels and we got lost in the desert for a while. It was tough.” The mayhem prompted the Kifaya movement that has been calling on president Mubarak to step down and allow a more pluralistic system with free elections to emerge, to postpone a major demonstration in Cairo. This was not in solidarity with the government, its spokesperson said, but in memory of those who perished in Sharm el-Sheikh. Reformists in Egypt say the government will continue to exploit and use terrorism as a pretext to maintain the emergency laws that have governed the country for the past 30 years and allowed it to crack down on anyone. “The bombings could hamper reform in Egypt if the government exploits them to reduce civil liberties and crack down on religious-oriented parties. This is certainly something that will be watched closely by an international community that wants to see a more credible electoral process in Egypt,” Wayne White, former deputy director of the US State Department’s Middle East intelligence shop told Arabian Business. “We must keep in mind that if it turns out that the bombers were Pakistanis and not Egyptians, the impact on the Egyptian internal political scene probably would be more limited,” White adds. Josh Mandel, an analyst with Control Risks Group, a business risk consultancy, says he believes incidents like the attacks in Egypt “give the authorities grounds for more stringent security measures and in some cases more stringent political control”. But Mandel says the attacks would not affect the reform movement in Egypt. “What the government is aiming for is a managed process in which they offer enough crumbs to prevent ... more friction, without really loosening their control of political life. There is no question about who is going to win the presidential elections this year,” he says. However, some critics who favour the current status quo in the Arab world contend that if the reform agenda and democracy fronts are pursued further and the power of autocrats crumbles, this could very well mean that Islamists will then be in the ascendant. “There is a chance that in certain countries Islamists could make significant gains in a democratic process, but ‘taking over’ is another matter,” says White. “They have demonstrated in a number of elections throughout the Muslim world that they can do a better job at grass-roots political campaigning than secular parties. The first round of the 1991-1992 Algerian parliamentary elections in Algeria was a demonstration of such Islamist ‘street power’. However, many voters support Islamist parties only because they provide an alternative to an unpopular authoritarian government, and their strength varies from country to country,” he adds. The Sharm el-Sheikh attacks also have wider implications. While they may have elicited condemnations from governments in the region and around the world, they have made Arab capitals, like that of Kuwait, jittery — with noticeable heightened security around tourist and commercial installations in many countries across the region. In the midst of it all, a two-month warning that was reposted to an Islamist website named al sakifah, warned the UAE government to expel non-Muslims from the country, particularly Americans, within 10 days. The warning titled “Opening a Jihadist front against the UAE soon”, was promptly shrugged off by the UAE government a day after the media reported on it, in the daily Al Bayan, saying it had done so already when the threat appeared on March 18 on a website hosted in Europe. “I don’t think this threat is telling anyone anything that people wouldn’t have already imagined,” says Simon Williams, deputy head of the Economist Intelligence Unit. “We can’t tell how credible or non-credible that warning actually is. A lot of times these warnings do prove to be distressingly prescient, but other times nothing follows from what is said. I would hope that the government of the UAE is very well aware of the kind of security threats that apply to the UAE in the same way they apply to all other states in the Gulf and will have been taking all the appropriate actions already. “Without a doubt there are groups out there, and individuals out there who would see the UAE as an ideal target” adds Williams. Neil Quilliam of Control Risks Group says his firm “was not taking the threat very seriously”. “It’s hard to validate the authenticity of the message and its quite unusual for posted messages to [warn] that things are going to take place in 10 days. Attacks just happen. Rarely are warnings issued,” explains Quilliam. There are always repercussions from terrorist attacks — not only politically but also in economic terms. And the latest bombings have certainly sent shock waves through the country’s vital tourism industry. Consequently, Control Risks’ Mandel says there are clearly implications for businesses operating in Egypt. “Clearly it is going to have a serious impact on the tourism industry, which is of course a major foreign currency earner in Egypt. With the two attacks in Sinai in nine months plus the incidents in Cairo in April it will be quite a sustained impact, similar to the Luxor massacre in 1997 that really depressed the industry for a couple of years,” explains Mandel. Egypt’s tourism industry will clearly suffer a short-term blow in the wake of the Sharm el-Sheikh attacks but will bounce back quickly, according to the nation’s tourism minister, Ahmed El-Maghraby. Some 6000 tourists flew out of Sharm in the first 24 hours. “Of course the attacks will have an impact, but I feel the industry will rebuild very quickly because of the recent pattern of bombings around the world,” El Maghraby said in the aftermath of the bombings. “People are no longer shocked by these things.” Egypt saw tourist arrivals from Western Europe decline by 28% in the aftermath of the Luxor massacre and 26% after the 9/11 attacks on the United States, according to EFG-Hermes, a leading investment bank and brokerage firm in Egypt. EFG-Hermes estimates tourists from Italy, Germany and Britain will stay away from Egypt in droves during the current financial year, amid fears of further terror attacks and a general unease about travel to the Middle East and Muslim countries. The firm believes in a worst-case scenario, the attacks could cost the industry — Egypt’s main source of foreign currency exchange — up to US$2 billion during the current fiscal year, which began July 1. “In the pessimistic scenario, tourism revenues are forecast to fall a steeper 35% to US$4.2 billion,” says Hany Genena, a senior economist with EFG-Hermes in a flash report issued by the firm on July 25. “In the optimistic scenario, tourism revenues are forecast to decline 14% from an estimated US$6.5 billion in fiscal year 2004/05 to US$5.5 billion.” But some say the fallout may have already started. Italy, Egypt’s top tourist market, has advised its citizens not to travel to Sharm, while some tour operators are offering bleak, medium-term forecasts for the industry. Sharm el-Sheikh accounts for around a quarter of Egypt’s tourism industry. EFG-Hermes had predicted tourism would bring US$7 billion into Egypt’s economy in 2005, US$1.4 billion more than 2004. Tourism operators are bracing for the worst, particularly in Sharm, which attracted at least 25% of Egypt’s 8.7 million visitors in 2004. In the UK, The Federation of Tour Operators, (FTO) met immediately after the bombs to assess the situation. It estimated there were around 9000 Britons in Sharm el-Sheikh. It was another jolt for Britons coping with the July 7 bombings in London that killed 52 people. The UK Foreign Office confirmed seven Britons were injured and two missing in the resort, as Egyptian police sources said two Britons were among the 88 dead. However, the Association of German Travel Agents and Tour Operators said more than 90% of the estimated 4800 German tourists in the Sharm el-Sheikh area were continuing their vacation. In the immediate aftermath Egyptian stocks plummeted some 4.6% and it is now apparent that foreign tourists prefer to be elsewhere than in the midst of the pandemonium. “Our concerns for possible future attacks would be tourist areas whether in Sinai or Cairo, I think that is going to be the most likely target for attacks. We have seen in Istanbul, Al Khobar, Riyadh, and Yanbu foreign businesses targeted directly,” says Mandel of Control Risks. “I think Saudi Arabia is somewhat of a special case. But certainly any high-profile foreign company in Egypt is going to need to take reasonable security precautions against that kind of attack.” ||**||

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