Boston, MA -- (SBWIRE) -- 11/09/2012 -- BMI's Egypt Defence & Security Report for Q412 examines the country's strategic position in the Middle East and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future.

The report examines the trends occurring in the country's current and future defence procurement, and the order of battle across its armed forces. The report's general conclusion is that the country's internal security situation will remain precarious, as it had been since the fall of former president Hosni Mubarak in 2011. Hopes that the election of a new president in June would usher in a new period of stability were not realised, thanks to the military's decision to stage a 'soft coup' designed to weaken both the parliament - which was dissolved - and also the office of the president. The military is very clearly reluctant to cede power.

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Egypt finds itself once again entering uncertain territory. Its short-to-medium-term stability may depend on the ability (and inclination) of President Mohammed Morsi and the military leadership to reach a modus vivendi, enabling some kind of political normality to be restored. Until that is achieved the country's economy will continue to be depressed, and the prospect of further mass unrest will remain very real.

Regional instability remains a concern for Egypt, but the stability of Egypt itself remains of the utmost concern to in particular to the US, Israel and Saudi Arabia. The US and Saudi Arabia have already made attempts to assist Cairo financially, but Washington in particular has now expressed concern about the country's political trajectory. In June, US Defense Secretary Leon Panetta called Field Marshal Tantawi, Egypt's military leader, to impress on him the importance of moving ahead with reforms.

Just as foreign partners and potential investors need to see democratic progress, so too do the m any thousands of Egyptians whose protests brought down Mubarak last year. If the military is seen to be derailing their revolution and preventing the parliament and the president from operating effectively, then a new stage in the Egyptian uprising is not unlikely.

Over the last quarter BMI has revised the following forecasts/views:

- The events surrounding the election of Morsi and the military's 'soft coup' are reviewed in detail in terms of their implications for stability in Egypt and the wider region.
- The internal dynamics within Egypt are also discussed; while the military has lost legitimacy, the Muslim Brotherhood - of which Morsi is a leading member - is not trusted by the country's minorities.

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