I tend to shy away from attributing any political views especially on a financial blog. However the geopolitical ramifications of recent events in the Middle East are hard to ignore. Certainly the re-enfranchisement of the Arab peoples will have far reaching financial consequences in the coming years.
The inconvenient truth is that the West, most notably the US has systematically supported a number of Middle Eastern autocrats for decades. Without wishing to stir-up conspiracy frenzy, the rationale for such support is simply and unsurprisingly regional control. Now however that control is threatened by the exact embodiment that Western governments are built on; the people have had enough. Rampant corruption and a total lack of human rights have taken their toll and finally Arab populations have politely asked regional leaders to call it a day.
The US may have opened a Pandora’s Box with Iraq and now stands by virtually helpless in the face of democratic fervour, instead of its obvious champion. Israel will also have a weaker hand in this developing landscape, as it watches its first line of defence showing severe cracks. Even now some Israeli generals must question the benefit of such an awesome regional muscle, which would be clearly redundant in the face of hoards of protesters in say, Jerusalem.
There is little doubt that the Arabs deserve freedom, we all do, but the elephant in the room remains Israel and their shrinking comfort zone. We all hope that peace is still attainable and certainly desirable; however we can only hope and encourage a more enthusiastic dialogue out of this permanent purgatory.
By Louay Al-Doory
I say “More power to the people!” Democracy is what the West supports, democracy is what they will get and hopefully the oil and the money will go towards setting up proper systems of checks and balances and will actually help the people on whose backs these dictators and those supporting them rode.
Louay, How do you think this will affect oil prices in the near term? There was considerable volatility even before these recent events.
Near-term the answer is clearly, up. I understand that Libya produces 1.5 million bpd and represents 2% of global oil reserves. Therefore short-term supply must be impacted with the exodus of foreign workers. However market volatilty will tend to overshoot as pricing will also adjust for concerns relating to other Arab oil producers.
The outcome of these recent events are not as yet determined and may take many months or more likely years for the full ramifications to be appreciated. In terms of democracy – whilst not without its issues ( of which they have been documented to the Nth degree) Israel has without doubt the most robust democratic process in the region so I believe the least to worry about in terms of an uprising. The more important question in terms of the sociopolitical landscape is who will fill these power voids in the aforementioned countries?
South Africa during apartheid also had the most robust democratic process in the region.
But I agree we have a long way to go with plenty of uncertainty for financial markets.