Thursday, 11 July 2013

A snapshot of Middle East instability

There is talk that Saudi Arabia and Kuwait may have stoked the protests in Egypt over the past weekSome events lend weight to this, but other events point in a different direction.

Kuwait will give Egypt a US$4 billion aid package, including a US$2 billion central bank deposit, a US$1 billion grant, and US$1 billion in oil products, KUNA reported July 11. Saudi Arabia and the United Arab Emirates pledged a combined $8 billion in financial aid July 10. So whatever they’re doing the stability of Egypt is clearly in their interest, and the only way they’ll achieve this is by building up the Egyptian military by supplying them with the cash they need.

The United Arab Emirates will give Egypt US$1 billion and extend a loan for another US$2 billion, Reuters reported July 9. The US$3 billion is expected to be part of a larger financial package. Saudi Arabia is expected to lend US$2 billion to Egypt.  

For the Saudis, the Muslim Brotherhood was an existential threat. Not because they might start an Egyptian attack on the Kingdom, but because the success of the Islamist MB might bolster and encourage similar elements in Saudi Arabia. The House of Saud is very keen to keep their power and the Saudi elements of the MB are already a worry for them. Kuwait is in the same boat really.

It fits the strategic objectives of both Saudi Arabia and Kuwait to be happy at the collapse of the MB government, but whether they were directly involved in the protests I can’t say. Israel and the US also have interests in limiting MB power.

It has also been suggested that the Egyptian unrest is a good chance for Sunni Muslims to roll back the influence of Shiites. But the Shiites aren’t necessarily the problem at the moment. Iran is predominantly Shiite, but they’re seeing their influence weaken across the Middle East. Shiites dominate in Iraq as well, but they’re being beaten back in Syria.

What worries me is the Sunnis and their buddies in al Qaeda. They’re getting a lot of battle experience in Syria right now, and when the surviving fighters return home they could take their ideology with them. And I’m not just talking about Tunisians or Algerians, but Germans and Muslim men from the Balkans. What happens when those competent fighters (not the dumbass “martyrs”) finish their fight in Syria and get sick of their living conditions and government at home?

Middle East-wide civil wars are also unlikely in the near future, for various reasons. Right now is Ramadan, so battle will probably be out of the question for any country other than Syria and Egypt where its already a reality. There are two types of governments in the Middle East at the moment: semi-autonomous/pseudo-democratic and monarchic. The monarchies are surviving all this unrest quite well because they command a lot of legitimacy, but I wonder how long that can last.

Lebanon has the potential for acute instability. Thirty-seven people were injured when a vehicle-borne improvised explosive device detonated in the southern suburbs of Beirut, July 7. Lebanon's The Daily Star reported that one person died in the explosion. The area where the explosion occurred is a Hezbollah stronghold, and Hezbollah have been growing deeply involved in Syria lately.

Hezbollah's Al-Manar television reported the vehicle was in a parking lot near an Islamic centre. Lebanon has been experiencing greater instability and sectarian tensions due to the fighting in Syria and the various Syrian rebels have incentive to conduct attacks in Lebanon against Hezbollah targets to try to draw them away from assisting the al Assad regime.

Oil has risen over US105 a barrel since the Egyptian unrest, but it is unclear whether the two events are entirely linked. I’m of the opinion that oil has found its new floor price of US100 a barrel. It’s just becoming too expensive to produce easy oil now. Deepwater reserves and shale are very expensive to develop and take to market. Apparently they make only US$20 or so on each barrel after production costs, it just isn’t very lucrative anymore. The markets jittered a little over the past because of Egypt, but I think they’ve been ready for unrest in the Suez for a while. And the military secured the canal early in the protests on Thursday last week.

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