Macro Monday: The Middle East
The Middle East
I was feeling ambitious, so rather than post on Microsoft (coming soon) I thought I'd step out of my comfort zone and try something different.
I honestly think the piece is fantastic, and I hope you enjoy reading it as much I enjoyed writing it.
PLEASE NOTE: this is a look at the economic potential of the region given geopolitical realities - it's not an endorsement of anyone.
And with that…
In The Beginning
Don't matter who did what to who at this point. Fact is, we went to war and now there ain't no goin' back. I mean, shit, it's what war is, you know? Once you in it, you in it. If it's a lie, then we fight on that lie. But we gotta fight. - Slim Charles, The Wire
I searched everywhere for the "truth" behind conflict in the middle east and as far as I can tell, there's no such thing; experience colors perception, and alternative facts abound (thanks Kellyanne!).
Moreover I'd need to do a doctorate's worth of research to have a shot at explaining the history (and truthfully, I wouldn't do a great job), so I'm just going to focus on how things are, and do my best to project how things will be...
So what's the story?
As you might expect, it's complicated.
The One True God
Just as a candle cannot burn without fire, men cannot live without a spiritual life - Buddha
Religion might be the enabler, but I'm not so sure it's the cause of Middle Eastern conflict.
The Us vs. Them story sells: Christians vs. Muslims, Muslims vs. Jews, Me vs. You, the Good Guys vs. the Bad Guys…
Real life is rarely binary. Christianity, Islam, and Judaism - collectively known as "Abrahamic" religions - all share the same patriarch, Abraham.
The raw, visceral hatred that sometimes shows up between these 3 is well known, but the conflict occurring within them is often overlooked.
Some Catholics still despise Protestants, and go ahead and ask a right wing Orthodox Jew how they feel about the Reform movement (spoiler: not good).
Islam is no different. The Muslim world is roughly 85% Sunni - which for our purposes means Saudi Arabia, Egypt, Turkey, and Syria - and 15% Shia, meaning Iraq, Iran, Lebanon, and Bahrain.
The Sunni & the Shia disagree on some fundamental aspects of their faith, but are mostly non-violent.
Unfortunately, a few bad apples always spoil the bunch...
Killing in the Name of
Men never do evil so completely and cheerfully as when they do it from religious conviction - Blaise Pascal (On a scale of 1-10 how terrifying is that image?)
The radical side of Islam operates on a scale unmatched by Christian and Jewish contemporaries.
The 1915 KKK was the closest analog I could find: a Christian supremacist group boasting ~5 million (!) members, they used violence in the name of religion, and were denounced by every sect of the faith they preached.
The Salafi Jihadists, a Sunni sect, are similar, but FAR more dangerous. Estimates put their numbers around 10 million worldwide, and count Al-Qaeda, ISIS, Boko Haram and the Taliban as member factions.
Their operations are sophisticated, well financed, global in scope, and violent by nature; nearly all of the Muslim world rejects them.
As far as I can tell, these guys are bad news - period.
The Jihadists are part of a larger Salafi movement which includes Purists, who avoid politics, and Activists, who engage in the political process, hoping to spread sharia law globally.
Together, the three comprise nearly half of Qatar and the UAE, a quarter of Saudi Arabia, and number 50 million worldwide - this is important, and we'll come back to it.
Whether Hezbollah are terrorists or freedom fighters (or both :s) depends on who you ask, but they represent specific Shia interests and are an important regional player.
The Salafi Jihadis are - allegedly - funded by Saudi Arabia, and Hezbollah is - allegedly - financed by Iran.
Still with me?
Geography is Destiny
Nations have no permanent friends and no permanent enemies, only permanent interests - Lord Palmerston
I'm no petroleum engineer, but I think the technical term for the amount of oil pictured above is a "fuckton." Roughly half of the world's proven reserves reside in 6 Middle Eastern nations, with 13% in Saudi Arabia alone.
Aside from natural resources, the area is of major geostrategic importance, serving as a chokepoint between Africa & Asia, and providing direct access to continental Europe via the Mediterranean.
Ergo, the United States, Russia, and for the time being the EU (more on this soon too) all have interests in the region.
This is where things get extremely complex; the interplay of religion, politics, and economics is a case study in the human condition, and makes for some strange bedfellows.
Best Frenemies Forever
The enemy of my enemy is my friend - Ancient Sanskrit proverb (side note: there must be ungodly amounts of cash available to Middle Eastern bankers)
The Saudis & Israelis might not like each other, but they both despise Iran.
Iran says the Saudis are spreading extremist doctrine, and claims Israel is engaged in a Zionist plot to destroy Islam.
Israel fears a nuclear Iran marching northwest, uniting the region, and driving the Jewish people into the sea.
Aside from religious divide, Saudi Arabia and Iran are at odds over oil strategy, despite being 2 of the 5 founding members of OPEC,
Saudi-Israeli-Iranian tension manifests as proxy contests locally in Iraq, Syria, Yemen, and Lebanon, as well as fighting on the periphery in Central Asia and Africa.
Russia maintains close ties to the Iranians for oil, and for eyes & ears in the territory.
America supports Saudi Arabia in return for preferential oil treatment, but it's something of a faustian bargain - remember the Salafis? Authorities speculate that Saudi petro-dollars financed their movement to the tune of $2-3 billion per annum since 1975, 2-3x what the Soviet Union spent on propaganda per year.
In theory, the US should prefer Iranian rule because of the Saudi Jihadist connection. In practice, Iran's alliance with Russia and America's military and cultural ties to Israel makes Saudi Arabia the less bad option.
Russia fears Islamic uprising in central Asia, and therefore allies with the Americans against ISIS et al.
This doesn't include quieter but still influential players such as Egypt, Turkey, Jordan, Qatar, Kuwait, and the UAE.
Add in maverick concerns from gun runners, drug cartels and local warlords, and the whole area begins to resemble one giant powder keg.
Here's what the dynamic looks like:
I am using him and you are using me and this is how it works - Leonardo DiCaprio, Blood Diamond
Did I mention it's complicated?
And unfortunately there are always people caught in the crossfire.
"Men sooner forget the death of their father than the loss of their patrimony" - Niccolo Machiavelli
Pawns in the global political chess game, the Palestinians are stuck between a rock and a hard place.
Argue over the morality of the situation all you want, but there is precisely zero chance Israel voluntarily gives up any land, and no way for Palestine to mount a counter-offensive - the IDF is just too strong.
Worse, Palestine has two sets of leadership, with Hamas representing Gaza and the Palestinian National Authority governing the West Bank, so the Palestinians are divided internally.
Hezbollah, through Hamas, has encouraged rocket attacks on Israel. Israeli politicians point to these incidents as justification for military action - this mobilizes the religious right, an extremely powerful group within Israel, who then demand more military action.
External support for Palestine ebbs & flows, and changes so rapidly it's hard to make sense of what's happening and why.
Major, seemingly structural shifts have happened recently, with the Trump administration officially recognizing Jerusalem as the capital of Israel and Saudi leadership publicly criticizing Palestine.
Egypt, Gaza's other border neighbor, offers only token assistance to Palestine, and mostly out of spite for Israel: Egyptians don't like the Palestinians - have a look at the barrier separating Egypt from Gaza - and they HATE Hamas.
The EU sends money, and the rest of the world watches, fearing instability and the wrath of the big guys.
But there might be a glimmer of hope for the Palestinians after all...
Bullets change governments far surer than votes - Lord of War
The proposed Saudi Aramco IPO is a harbinger for the end of oil, and the coming price collapse is going to radically remake the Middle Eastern landscape.
The Saudis know this, which is why you see them promoting their Vision 2030 plan, shopping for technology investments abroad (go Tesla!), and more importantly publicly supporting Israel.
Most telling, Mohammed Bin Salman has been moderating religious policy within SA - this has immediate implications.
First, it marginalizes the Salafis. In theory, this cools tension between the Saudis and Iran; in reality, tensions remain high, and Western powers lose rebel forces in Iran, so the ties between the US, Israel, and Saudi Arabia are further bound.
It follows that Iran strengthens relations with Russia, and the rest of the neighborhood pick sides in the classic East vs. West narrative we all know and love
This is just beginning, and things get scary looking forward.
But shockingly, the transition will be, relative to past tectonic shifts, painless, with the Middle East aided by an unlikely player….
The Wealth of Nations
There are few ways in which a man can be more innocently employed than in getting money - Samuel Johnson
What finally brings peace - or some semblance of it - to the Middle East?
The quest for cold, hard, cash.
China squares the circle, and stabilizes the region.
A rising China requires access to inexpensive labor and natural resources through Africa (highly interesting dynamic), necessitating a strong presence in the Middle East.
Middle Eastern countries have already begun working with China, and OPEC nations will welcome East Asian money once oil profits starts to sag.
A nation of atheists, the radical sects of Islam (becoming less powerful as we speak) will reject China, but the moderate groups will tolerate them if the Chinese bring economic prosperity, which they will.
China has no interest in playing regional cop, and needs Israel as a check on any leftover Islamic fundamentalism.
What happens post-transition?
The End of the Beginning
Chaos is a Ladder - Petyr Baelish, Game of Thrones
The Chinese-Africa relationship becomes a major worry for the Americans, as an aging population and declining birth rate force America to look to the dark continent for labor. This would get ugly, but economic interdependence precludes military mobilization.
Russia is the wild card, but with the US neutralized, the Russian people can turn their focus inward.
A rising middle class causes support for Islamic extremist groups to wane in the Middle East.
Israel continues to serve as the world's information broker, connecting East & West.
The Palestinians don't get the land they want, but are finally left to their own devices and start the (long) process of building a stable society.
And finally, Walls will crumble, people on the Streets will rejoice, and the desert's Oasis (see what I did there?) will be revealed.
(P.S. - Europe is likely the big loser here, but that's for another time)