Middle East Turmoil: Economic Implications

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The FINANCIAL — Watching the news channels over the last one year makes one wonder whether the news is making the revolutions or revolutions are making the news.


There has been very much a lob-sided media attention and coverage to some of the most tumultuous events in history, pouring out information with some degree of passion and emotion atypical of the journalistic genre one is used to in the golden age of publishing where “ opinion is free but facts are sacred”.


And it seems that journalists in hot pursuit of hot stories, competing with each other for the headlines of the revolutions from Tunisia, Egypt, Libya, Yemen, Bahrain, Syria and other trouble spots have contributed as much to the decay and chaos of civilisations as the protestors and revolutions. And the fleeting attention switches from one centre of information gravity to another, leaving behind a trail of massive information chaos, conflicting reports, conflicting opinion, conflicting numbers, discordant positions and eventually resulting in a “tubula rasa” where no one really knows what on earth is going on. For those intent on knowing what is happening, the media labyrinth and information content sends one in circles.


Middle East which gave the world the benefits of its rich oil fields to power the world’s energy supply and generate unprecedented growth have for long been rightly controlled by autocrats. Freedom was an unpleasant concept and much of the Middle East was far away from the principles and traditions of democracy.


There was and there is rigid control which some may indeed argue was and perhaps necessary to keep peace and order and allow the wealth of Middle East to be gradually re-distributed among the people. But the Arab “spring” and its aftermath, the continuing violence and protests, have fundamentally changed the paradigm of peaceful co-existence between the very rich autocrats and the very poor people. Right now, Middle East is on a time bomb, and no one really knows what will happen during the next years. In Irag, Iran, Syria, Egypt, Libya, Yemen where revolutions and chaos have been more significant and in other Middle East countries of the Gulf region, there is real concern about the future of politics, regimes and people’s lives.


The United States and NATO  have put Iran on the “hit list” with punishing sanctions and punitive threats in order to get Iran to toe the non-nuclear line. Iran is defiant and views the threats as breaking international laws and usurping its sovereign rights to go nuclear for peaceful purposes. The argument on both sides is contentious. Iran says and continues to declare that it is not developing nuclear bombs and the contrarians declare that they have evidence that Iran is indeed on its way to developing the bomb, although the Weapons of Mass Destruction claims which supported the Irag war have been found to be baseless. There is concern, a very deep concern, as to what will happen if and when there is a strike against Iran. India and China, two major global economic powers have taken a stubborn position on Iran Oil embargo, declaring that they will not support the oil sanctions against Iran.


Here in Georgia, there is concern about the possible outcome of a war with Iran and I hope to God that it never comes to that. Iran is not too far from Georgia and any major disturbance in Iran will have an economic impact on the Caucuses region. A war in Iran will also have a direct effect on Irag where the Iran-Irag Shi’ite coalition of intelligent interests could evolve a new approach to their relationships, derailed through a long and disastrous war which killed millions on both sides.


It is disturbing to think that Middle East and North Africa may indeed begin to slide through a cascade of revolts, protests, regime changes and a severe economic down turn which is already there. In addition, the European economic imbalance with some of the more sick economies still teetering on the edge of collapse, can only worsen if oil supplies are disrupted, prices of crude shoot up and add more costs to an already ailing economy.


I have always argued that we do not really have a mechanism on global consensus on what should be the right and appropriate methodology for averting strife, chaos, revolutions and wars. I also think that the world has had too many wars, too many pockets of violence and too much discord which continuously affects humanity, across all nations.


Angela Merkel of Germany went to China to meet with her counterparts and perhaps seek a solution not merely to the euro zone financial crisis, but to engage China in a broader and more involved dialogue on the state of the world. Perhaps, she may have it on her agenda to travel to India and seek India’s active cooperation in building tangible bridges between China and India and make these two giants take a leading role in contributing and conducting global policies. For long, these two countries have played it safe in their foreign policy formats, not making any strong stand on any major international issue, preferring to run with the hare and hunt with the hound.


With China, India, Brazil, Indonesia, Russia, Turkey and some other emerging markets catching up with their manufacturing and trade where some 40 per cent of global trade today is South-to-South and which volume is expected to increase to 60 per cent by 2010, there is no a greater level of justification that international policies that govern nations must begin to have a greater level of acceptance by emerging markets in the South.


The Middle East turmoil, managed by the Western powers, may not bring about a greater level of security or economic stability. There is no evidence that it has happened, if one take the case of Irag or Afghanistan. Middle East turmoil, if allowed unchecked, and if not calmed with a broader agenda of global engagement which includes the “Southern opinion”, a more understanding and appreciation of the current conflicts, we shall continue to slide down the economic and political roller coaster.


I was a student of Professor Joseph Nye at Harvard in American foreign policy. He is one of the brightest intellectuals who has done much research into leadership and power. His latest paradigm is about “soft power” which engages the minds of leaders into attracting them to accept an intelligent solution as opposed to “hard power” which uses coercion. We may perhaps give it a try and go “soft”, and safeguard what we have.



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