Libya Burns, Saudi Arabia Worries, Prosperous China Maintains Power and Prosperous Turkey offers way for Egypt

Posted by PITHOCRATES - February 21st, 2011

Turkey Provides a Democratic Model for Egypt

Can democracy work in the Middle East?  Well, it’s working in a nation with a predominately Muslim population.  That nation on the BosporusTurkey (see A Muslim democracy in action posted 2/17/2011 on The Economist).

In his eight years in power, Mr Erdogan has done more than any of his secular predecessors to move Turkey closer to its coveted goal of full membership of the European Union. Reforms that he rammed through during AK’s first term in office persuaded the EU to open membership negotiations with Turkey in 2005…

Turkey’s economy has survived the global financial crisis relatively unscathed. It is expected to grow by 5% this year, putting it only just behind China and India. Unemployment is down and the budget has begun the year with a surplus…

On the Arab street, Mr Erdogan’s salvoes against Israel over the Palestinians have made him a hero. Turkey’s high-profile diplomacy, its successful economy and its drive for new markets have made it the envy of many Arab leaders. It is little wonder that so many pundits have taken to talking up a “Turkish model” as a way forward for Egypt. It is also no surprise that Mr Erdogan is brimming with confidence.

Of course, Turkey isn’t a ‘Muslim democracy’ as the Economist wrote in its title.  It’s a secular democracy where nearly all of the people are Muslim.  People practice their religion in their private lives.  But not in government.  For in Turkey there is a wall between church and state.  Or mosque and state, as it were.

Turkey is doing well.  And it can serve as a model for countries where nearly all of their people are Muslim.  If they separate religion and government.  And herein lies the concern.  If the Muslim Brotherhood rises to prominence in Egypt, Islam will play a role in government.  And in nations where this happens there are concerted efforts to move away from Western influences.  Including Western business practices.  And prosperity.  The more extreme cases of this can be seen in Afghanistan.  And Iran.  But Turkey is looking to the West.  And economic prosperity by joining the European Union.  Still there are the critics.

Yet critics claim that Mr Erdogan’s confidence has curdled into the sort of authoritarianism that, if left unchecked, might transform Turkey into another Russia. Such claims are surely overwrought: Turkish elections are free and fair, and the press is largely unfettered. Yet there is also no question that Mr Erdogan is getting bossier and less tolerant by the day.

With a healthy economy, a budget surplus and jobs for the people, there is little reason for the people to rise up.  The political opposition may.  But not the people.  That’s why the democratic movements have been confined to countries with poor economies and high unemployment.  For working people have better things to do.  Such as enjoying life.

Discontent is Easier to Manage when you have a Booming Economy

The collapse of the Soviet Union was not pretty.  In the Soviet Union.  Or the Russian state following.  Crime.  Corruption.  Lawlessness.  And, worse, high unemployment.  People were unable to buy the bare necessities.  These were dark and dangerous times.  And had many pining for the good old days of Soviet Communism.  You may have been poor, oppressed and wanting for the basic necessities of life.  But you could walk the streets at night.  You just had to worry about the state busting down your door at night and taking you away to some Siberian gulag.  But other than that, life was at a leisurely pace.  And had routine.  And routine begets political stability.

China saw this trouble.  And they learned some valuable lessons from their northern neighbor.  Change too fast can be bad change.  Hence their crackdown at Tiananmen Square.  And now (see Discontent, but no revolt in China — yet by Charles Hutzler, Associated Press, posted 2/21/2011 on Salon).

“The current regime structure is very fragile. It’s not right for revolution at the moment, but that doesn’t mean mass political upheaval can’t take place in the future,” said Minxin Pei, a China politics expert at Claremont McKenna College in California.

In the latest test, China’s authoritarian government seems to have dispatched the threat of public protests with great efficiency. In response to an Internet appeal of unknown origin for simultaneous protests in 13 cities Sunday, police detained known activists, disconnected some cell-phone text messaging services and blocked online searches for the phrase “Jasmine Revolution” — the name of both the protest call and the wave of Middle East democracy protests that started in Tunisia.

And the protests for now seem to have petered out.  Why?  Economics.

China is the world’s fastest-growing major economy, with economists predicting another year of better than 9 percent growth for 2011. While unemployment is surely higher than the nearly 5 percent urban joblessness rate, factory wages and conditions are improving for many. University graduates — a crucial group in Egypt’s uprising — are finding jobs in China, though they are poorly paid.

Life isn’t that bad when you have a job.  The protests in the Middle East and Northern Africa started over high unemployment.  The protesters were poor, oppressed and unemployed.  And when you have nothing, you have nothing to lose.  The Chinese have something.  It may not be much.  But it is a lot more than they used to have.  And things aren’t bad enough yet to lose this new life of plenty.

The Asian Economy so Strong they’re Building Bigger Ships for Exports

And things are looking up for the Asian economy.  While the U.S. continues to struggle in the worst recession since the Great Depression, Maersk just received an order to build the world’s biggest container ship.  And guess who’s building those ships.  And what they’re going to carry (see Deal for biggest ever cargo ships sets sail by Tom Clarke posted 2/21/2011 on channel4.com).

A major shipping contract is a good barometer for the global economy – the industry at least seems to think trade between Asia and Europe will remain strong. However the European economy won’t benefit as much as Asia from the deal. All the jobs to build the new ships are in Korea and the vast majority of high value goods the ships will carry will be made in Asia to be sold here.

And sold in other parts of the world.  Including the United States.  So Asia is doing all right.  China, too.  The fact that they were able to shut down those protests so quickly indicates that the larger population is content.  For now.  Of course, that may change in the future.  The Chinese workers may demand more pay and better benefits.  Perhaps try to unionize.  If they do China may have to meet their demands.  Or risk further unrest.  Either way the economy will more than likely lose steam.  Either through higher labor costs.  Or political unrest.  And that could prod them more towards a Libyan fate.

Libyan Violence Escalates, Oil Supply Interrupted

And how are things going in Libya?  By all measure it appears to be going from bad to worse (see Oil soars on Libya violence, WTI shorts cover posted 2/21/2011 on Reuters).

In Libya, scores were killed in anti-government protests as one of the region’s bloodiest revolts hit Tripoli for the first time, while army units defected to the opposition and Gaddafi’s son vowed to fight to the last man standing.

And it gets worse.  Economically.

The focus was on deadly clashes in Libya, where one oil firm was shutting down some 100,000 barrels per day (bpd) of production and others evacuated staff. The leader of the Al-Zuwayya tribe threatened oil exports to the West would be cut off unless authorities stopped violence.

“The market is on edge about the potential for Middle East and North Africa supply disruptions,” said Mike Wittner, head of commodities research, Americas, at Societe Generale.

When oil prices go up economies go down.  Because oil is the engine of the modern economy.  We’ll probably first notice this supply interruption in higher prices at the gas pump.  Then in a slow but steady price inflation on everything we buy.  Those nations trying to get themselves out of bad recessions will then have to deal with this inflation problem.  And inflations are typically solved by recessions.  Economically, this is not a good outlook.  For if Europe and the United States fall back into deeper recessions, where will all those exports go from China and Turkey?  Nowhere.  And then these prosperous nations will see a rise in their unemployment numbers.  Giving strength to their opposition forces.  And perhaps extending the political unrest from the Middle East and North Africa to China and Turkey.  And beyond.

Things look like they may get worse before they get better.  Especially with what is happening in Bahrain.

A wave of popular unrest in North Africa and the Middle East has already toppled long-time leaders in Tunisia and Egypt, and traders are watching events carefully in other members of the Organization of the Petroleum Exporting Countries (OPEC) for signs of escalating tension.

While protests continued in Bahrain and Yemen, the greater fear was that discontent among majority Shi’ites in Bahrain who are protesting against the Sunni government might spread to Saudi Arabia’s own Shi’ite minority — who mostly live in the eastern province, the source of the kingdom’s oil wealth.

And this is the greatest danger.  That all of this political unrest may transform these revolutions from democratic struggles into theocratic ones.  Many of the countries rife in political unrest are Sunni countries.  Some have oppressed Shiite populations.  Or underrepresented Shiite populations.  And these populations have an organizing force.  The Muslim Brotherhood.  And inserting itself at the top of this Shiite power swell is the region’s largest Shiite population.  Iran.  The mortal enemy of Saudi Arabia.

It’s a Small World after All

Peace in the Middle East is not easy.  It’s mostly Islamic.  And in Islam, the Sunni hates the Shiite and the Shiite hates the Sunni.  Any government trying to rule over these disparate people rules on a powder keg.  They can maintain the peace most times if the people have jobs and can buy what they need.  During bad economic times, though, it’s quite a different story.  The rich kingdoms (often Sunni) will be attacked for being too Western.  And then economic issues become religious issues.

What will happen in Egypt?  Will it follow the Turkish model?  Or will it succumb to the radical elements like what happened in Iran following their 1979 revolution?  And what about Saudi Arabia?  Are they next?  If OPEC oil fails to flow at market prices, economies may crash throughout the world.  Including Turkey.  And China.  Because oil is the engine of a modern economy. 

It’s a small world after all.  What happens in the Middle East matters.  Everywhere.

www.PITHOCRATES.com

Share

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , ,