I think the squats are just to help get used to doing level changes, such as doing some hip or shoulder moves with more deeply bent knees and some up on toes. I think a lot of different styles of bellydance do this, not just tribal. Also, strong thighs and a good sense of balance are good things if you ever want to be graceful when getting down onto the floor to do work there or getting up from it.
Squats are actually very good for your thighs and butt (if you squeeze your tush when you rise up ) and good for your core muscles since you really need to keep your abdominals engaged in order to maintain good posture. Of course, abdominals should pretty much always be engaged anyway for nice controlled movement and to help protect your lower back. Most people who have lower back problems have weak abdominal muscles.
People with Knee problems may want to avoid squats though.
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