Yale, £14.99, 282pp. £13.49 from the Independent Bookshop: 08430 600 030

Egypt on the Brink, By Tarek Osman

The wind from Tunis will lift hopes and sharpen fears in Cairo. Egypt is the highest-value domino liable to topple if popular unrest blows through the tyrannies of the Middle East. Anyone who has run into President Hosni Mubarak's increasingly baroque and arthritic regime incubates a certain fascination with it. In my case, it grew after a genteel kidnap at the Cairo Book Fair, when I and fellow-guests were whisked away for a bizarre offer-you-can't-refuse interview with Mubarak's longest-serving crony, the culture minister Farouk Hosny.

Egypt's pretence of parliamentary democracy more or less collapsed last month. Gerrymandering, intimidation and boycotts (fewer than 10 per cent voted in the second round on 5 December) conspired to deliver 420 seats out of 508 to the governing bloc, the NDP. Alaa Al-Aswany, best-selling novelist and fearless democratic activist, called the outcome "a miserable piece of theatre and another crime against the Egyptian people".

This weekend, a shadow "People's Parliament" of opposition groups convenes, with anti-government protests scheduled for Tuesday. The Muslim Brotherhood, in the vanguard of dissent for so long, is itself torn between militant Islamists and more pluralistic currents (no one condemns attacks on Egypt's Christians more fiercely). The Brothers across all their factions have little in common with the middle-class nationalists of the New Wafd party, nor the secular rebels of the "Kefaya" ("Enough") movement. Yet the Tunisian upheaval will hearten them all. Regime change there has called the bluff of the Mubarak clique, which has always justified its stagnation and repression by saying to its US patrons: back us or the weird beards take over. That line won't work any more.

Tarek Osman's timely, lively and authoritative book surveys the country's history since the Nasser revolution of 1952. It takes stock of every major force at work with a shrewd strategic eye. Osman dissects the Islamists, in crisis as their "everything to everyone" dissident stance loses its broad-brush appeal; the "liberal capitalists", who have flourished under the old regime and now pin their hopes on Mubarak's banker son Gamal for the presidential elections due in September; the Coptic Christians, driven to the margins by "emerging sectarianism" in spite of their illustrious history; and the game-changing army elite, who will have watched with keen attention their colleagues' ability to run the show behind the scenes in Tunis. Could the army, as Osman hints, soon switch its support to a credible alternative leader such as the moderate ex-UN atomic energy chief, Mohamed al-Baradei?

Above all, in the "surrealist painting" of Egypt today, Osman highlights the youth revolt that scores lines of "anger, frustration and occasionally menace" across the social landscape. Now 75 per cent of the country's population is under 35; unemployment and (for the educated) under-employment has lit the kindling under a cauldron of fury and impatience. In 2006, around eight million Egyptians (more than 10 per cent of the population) applied for the US Green Card lottery. Denied a voice, denied an exit, the disaffected young fill burgeoning cities (Cairo now has 15 million), a restless generation "animated by a passion to escape the failure it feels it has inherited". Read Hugh Miles's salty reportage in Playing Cards in Cairo (Abacus) for a rich flavour of middle-class pleasure-seeking on the edge of an abyss.

Osman traces "an endemic sense of wasted energy and unused potential, of a young population held back by a tired regime". Still, he notes some vital signs: a revival of secular civic society, in universities, cinema, blogging, private TV channels and the press. No publisher in the world has impressed me more than the merrily intrepid Mohamed Hashem of Dar Merit in Cairo, thorn in the side of minister, general and imam alike.

State patronage has utterly failed young Egypt. Hope for reform resides mostly in the non-corporate private sector. Meanwhile, the shape-shifting Salafists – rather than the mainstream Muslim Brotherhood – lure the embittered young down an ill-lit religious path that may not at all resemble the Western security-analyst's view of "political Islam". Swirling sands blur the vision and cover most tracks. Could some foreign trigger – from Tunis or elsewhere – unleash a perfect revolutionary storm? Anyone who wishes Egypt a firmer future can only wait and hope while, as Osman writes, the nation resembles the Egyptian glimpsed in Naguib Mahfouz's novel Autumn Quail, "standing in the middle of nowhere and everywhere".

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