Beyond the political and social aspects of the various insurgencies that plague the Middle East, it is worth trying-with all the risks of such an exercise in crisis, identifying the issues of economic and financial nature which we face.
The first meets the eye is the energy challenge: It is useful to distinguish between what the oil-rich Libya (18th world producer) and other countries, Bahrain, Morocco, Jordan, Tunisia, Yemen and Egypt who are not fortunate enough to have important oil fields in their basement. However, Libya is a “small” oil which only exports 1.4 million barrels per day, a total of about 85 million barrels produced over half of which is produced outside the Middle East. Its population of 6.5 million inhabitants do not benefit from this windfall that fills the pockets of its leaders. Do you know that the first oil producing country is Russia, followed by Saudi Arabia and they alone produce 25% of world production?
Why we have experienced a surge of 20%? The psychological aspect and lack of knowledge of these fundamental economic realities, but also a speculation that has benefited from the ignorance and the fact dramatized and amplified by the dramatic scenes broadcast on television partly explain this sudden increase. A downturn has been felt on Monday. It is difficult to know exactly the role played by traders in raw materials in this context, but the increase goes far beyond the issues. It is high time to limit the speculative bubble that had already done serious damage in 2008-2009. Even if its oil is less “good”, Saudi Arabia immediately, with Abu Dhabi, announced that they would make a difference if the Libyan production would continue to decline: it is down two-thirds with a production of 500,000 barrels.
The decision to provide funding of 6 billion euros by the European Investment Bank and the ways that Americans and even the Chinese deploy should avoid a debt crisis in the region.
Two individual situations deserve special attention:
It is essential that Saudi Arabia remains stable: the announcement of grants totaling $ 36 billion to the population expresses a good intention. This is obviously not a long term solution, and demonstrates more of a reaction to short-term mercantile and panic as a response to long-term political and social aspirations of the Saudis. However not forget that this country does not have a very important national population, and that many workers are of foreign origin to form a total population of 25 million inhabitants, a quarter is not a Saudi national. The issue in Saudi Arabia, in the opinion of local academics, is political: the royal family of Al-Saud is ready to become a constitutional monarchy King reigns but not govern. The succession of King Abdullah will be a key moment in this evolution. That’s the approach the Amir of Bahrain has also discussed with his “cousins” Saudis. They have both a royal family whose extended arrogance and aggression facing the population.
Behind this power essential to the stability of the region also declined religious issues. Several countries in the region have Sunni leaders, and as more modern and not pursuing religious goals, but Mecca is in Saudi Arabia intends to be Sunni, while 30% of its population is not. What’s more reassuring is that the Shiite opposition in Egypt, Bahrain and Jordan, do not resemble the Iranian Shiism. The latter is more murderous and fanatical. One can only hope that the Shiite movement is closer to Turkish model, which coexists with a secular structure. Iran should not therefore be the winner of this fratricidal struggle.
The main economic issue is a transformation of structures that are privatizing many economies and manage to generate real economic growth to generate employment. For example, Egypt, most people of these countries needs a 7% growth to generate enough jobs and, between the assets held by the military and the family Mubarak c ‘ is a true industrial revolution that will have to be implemented. Most of these countries have corruption that has enriched the executives exorbitantly.
We feel that the economic, social, political, financial and even religion are closely linked. But they must also be distinguished in order to measure the risks to the region on each plan. The challenges are considerable. Beyond the intensely emotional aspect that we all share, it is important to measure issues less dramatic, but define the next years.
The image is disturbing yet, but does not warrant any panic in the economic and financial. Hope that new fires do not darken this picture.
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