23
Feb
11

what next for the middle east?

With the current happenings throughout the middle east region, cartographers everywhere are watching with interest, trying to work out how they could fit ‘Peoples Republic of Bahrain‘ onto a country less than one third the size of Rhode Island.

Middle East Political

Maps.com - Middle East Political Map

Following  successful coups in Tunisia and Egypt, notable demonstrations have taken place in Yemen, Iran, Bahrain, Libya and Algeria as the people increasingly sense that they can make a difference. In spite of the almost shining example which led to the resignation of Hosni Mabarak, other regimes have chosen to meet the resistance with violence.

The ripple effect is being felt first and foremost in oil prices. Already the cost at the pump is rising steeply, as oil prices surge past $100 per barrel. Tourism has been severely affected, with carriers to the region seeing falling passenger numbers, and hotel occupancy rates in normally popular destinations significantly down (except for those filled with journalists of course). Meanwhile much of the focus of the US government, already heavily immersed in a domestic financial crisis of its own, has been diverted to these events, offering verbal support for ‘non-violent’ routes to democracy whilst ensuring that regimes who have protected US interests for long periods are not alienated in the event that they should prevail.

Analysts trying to anticipate possible shock waves are trying to predict where trouble might flare next, and the possible outcomes. Many of the world’s banks, who have significant interests in the Middle East, have had their own researchers provide reports on possible outcomes using available data.

Key features in the analysis include –

  • Average age of the population
  • Religious/Ethnic profiles
  • The age of the regime
  • Unemployment levels
Middle East data table - Nomura Financial Group

Middle East Data Table - Nomura Financial Group

This helps to give a snapshot of where significant change could occur. Unsurprisingly, Libya leads the group, with high unemployment and more than 40 years of dictatorship. As the world’s 12th largest oil producer, instability here is of serious concern to western nations including the United States. Bahrain boasts a Sunni Royal Family overseeing a mostly Shiite population, and this inherent tension was severely exacerbated after police opened fire on a previously peaceful protest, while Yemen is almost the perfect storm when it comes to potential trouble – corruption, poverty, unemployment, water shortages and an activist Shiite population could see violence levels rise further.

Deutsche Bank offers a full report on 10 potential hotspots reproduced here by Kathy Lien in her Forex Blog.

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