Behind The Middle East Crisis And It’s Effects On The World Economy

Sajawal Rehman
Posted on November 21, 2017, 8:27 am
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Iranian Oppression to the extreme!

The conflicted Middle East still remains trapped somewhere between the 19th and 20th centuries.
Being surrounded by three major continents, Europe, Asia and Africa, the geostrategic location of the Middle East is its greatest strength on the one hand and also its biggest weakness on the other. Albert Hourani, a British-Lebanese historian who specialized in the Middle Eastern studies rightly stated that “He who rules the Near East, rules the world; and he who has interests in the world is bound to concern himself with the Near East.”
Neither can one ignore the role of Russia, nor the interventions of its rival US. America’s interest that was originally based on its need for oil has now morphed into a strategic interest to keep anti-western powers from emergence, while its partnership with Israel supplementing it and two large military interventions of the two Gulf wars against Saddam Hussein’s Iraq being a cherry on the cake.
Now, the two rivals have cleared their stance in this time of conflict: the US is siding with Saudi Arabia and Russia with Iran and if Saudi Arabia retreats and stops fighting terrorism, the Iran-Russia duo has a lot to gain.
Not to mention the sacrifice and the fight Saudi Arabia has put up against terrorism, having faced 51 attacks inside the Kingdom, since the Iranian Revolution in 1979. Despite having stopped around 95% of the terrorist attacks, 208 people have died and another 1127 have suffered various injuries during these attacks, which speaks volumes for the sufferings of the country in combating the evil.
Saudi Arabia operates counter-terrorism special forces and commandos who are highly trained for combat in any situation; also Saudi Arabia has been a part of anti-ISIS coalition and counter-terrorism for years. Saudi Arabia has openly denounced terrorism and the religious clergy passed fatwas against terrorism; Saudi youth are also advised not to follow ‘radical ideologies’.
On the other hand, Iran funds Hezbollah and its military wing, a terrorist group situated in Lebanon, Hamas’ Qassam Brigades in the Gaza Strip, Houthi rebels in Yemen, and militia groups in Iraq and Syria and other insurgent groups in countries like Bahrain and Sudan. While Iran allied with U.S in Iraq regarding Saddam Hessian , on the other hand, it conspired against America through its Shia militias to fulfill its regional goals. Also, Iran is an aggressive meddler in the Middle East, even resorting to terrorism.
The Saudi royal family is more about business than war. They apply sharia and get their legitimacy from sharia law but they do not invest their citizen’s lives into the destruction of Israel or United States. Saudis are more interested in doing business and letting others do business as well, the Iranian regime spends its entire wealth hyping up Shi’ite victimization.
Saudi Arabia has a very religious population hence in order to govern has to apply sharia to the point. In cities like Riyadh, it does not enforce strict Sharia, whereas the Iranian regime enforces hijab and sharia law everywhere in its soil and murders minorities. To say the least, the average Saudi citizen is much wealthier than average Iranian citizen.
Terrorists in Iran and Iraq rely immensely on the oil prices because the oil prices influence the regional economic growth a great deal. So it won’t be wrong to say that the biggest story in the world economy now is the collapse of oil prices. Without oil, the economies and therefore the ruling regimes as they exist today in those nations would quickly collapse.
Russia:
Oil and gas account for 70% of export incomes of the country. With oil prices dipping, Russia has to draw from the foreign currency reserves, to defend the depreciating currency. This scenario is directly affecting its military budget.
Saudi Arabia:
Low oil prices have led to higher gas and energy prices in the kingdom. But KSA has made investments and bought agricultural land overseas. It might sustain a post-oil economy to some degree if good international relations are maintained and if unrest at home doesn’t become an issue.
Comparing these two: the cost of production of oil has been rising for the Russia and therefore margin available to Russia is very small compared to Saudi Arabia which can continue to sell oil for as low as $ 40 as its cost of production is only about $20 against $40 for Russia.
Oil prices have implications not only in terms of economics but also in geopolitics. Low oil prices will hit Algeria, Bahrain, Iraq, Iran, Oman, and war-torn Libya and Yemen before the richer countries of the GCC.
“Generally, increased tensions in the Middle East prop up oil prices with a fear bid, but the dynamic of this Qatar issue is different because it is largely between Saudi Arabia and Iran,” Tyler Richey
Conflict and low oil prices are weighing heavily on the economic prospects of the Middle East and North Africa, according to a new set of forecasts from the IMF, with every part of the region affected.
Oil exporting countries are suffering from low oil prices and a need to rapidly curtail government spending to try and bring their huge budget deficits under control. Oil importing countries, on the other hand, are being hurt by a slow-down in remittances from their overseas citizens.
This deficit in prices began almost three years ago. .OPEC and some other producers cut a deal to reduce production to raise the prices eventually. An agreement to cut production was reached in September last year, but the deal was due to run out later this year. Rosneft, Russia’s largest Oil producer, has expressed doubt that producers who weren’t included in the reduction pact, like Nigeria and Libya, have been actively increasing output.
The future of low oil revenues for the Middle East is entirely dependent on the choices these countries make.

 

References:
http://www.bbc.com/news/business-39921029
http://perspectives.pictet.com/2017/01/10/the-crisis-in-the-middle-east-and-oil-prices/
https://www.forbes.com/sites/dominicdudley/2016/10/19/middle-east-economic-prospects/#7d6efd021d7b
http://www.marketwatch.com/story/oil-prices-jump-after-saudi-arabia-other-middle-east-nations-cut-ties-with-qatar-2017-06-05

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Sajawal Rehman
Investigative Reporter

I am Sajawal Rehman and I am an Investigative Journalist who focuses on World News & Events. I believe in selfless, unbiased journalism and I do my best to dig deep and get to the bottom of the stories. With a special interest in Financial news around the world, I love writing about World Economy and how it impacts the world in many different ways. I have an Engineering degree in Geographical Information Systems. I have also been writing for numerous leading news outlets in my country for more than 5 years & I like to keep an eye on recent developments going on around the world. This is my first job as an Internationally oriented News Website which is an honor to be part of.

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