Net-less Egypt may face economic doom Monday

January 29, 2011

By Wilson Rothman, MSNBC

Egypt’s government must return Internet access to the country by Monday or perhaps suffer massive economic damage, as banks and other economic institutions return to work without the ability to conduct commerce.

It’s currently the weekend in Egypt, which means the government’s decision to block all Internet traffic in response to protests may seem to many of the nation’s 84 million inhabitants as more of an inconvenience than cataclysm.

“If you go beyond the weekend, real damage is done to capital flow and banking,” Neil Hicks, international policy analyst for Human Rights First told, citing a report from theEconomist Intelligence Unit. Egypt is part of the world’s financial infrastructure, he said. “That’s probably why most governments don’t do this — it hurts the state and hurts the economy.”

Not only would it impact government holdings, but it’s sure to hit those investors, businesses and middle-class citizens who may support the status quo of the Mubarak administration.

It’s counterproductive, Hicks explained, citing Secretary of State Hillary Clinton’s January 21 speech on Internet freedom. “States that uphold Internet freedom are going to do better economically,” Hicks said. Cutting off the Internet is “damaging your own prospects for prosperity and growth.”

“We’ve never had a lab in which to see what percentage of a country’s economy relies on the Internet,” Jim Cowie, chief technology officer of the global Internet monitoring firm Renesys, told “This is the experiment.”

Cowie cites Iran’s 2009 presidential elections as the counter-example. After protests ensued, and spread onto the Internet, connections got slow, and the Iranian government monitored traffic carefully, “but they never turned it off.”

Given the amount of damage likely to be sustained by not just the protesters but the ruling party if the Internet remains down Monday, perhaps the outage will end soon. If not, Egypt could be in even more trouble than it is now.

“I was befuddled when I saw they had turned off the Internet,” Cowie said. “No situation is worth the economic cost. It just shows how close to the edge they must really be.”

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