Well, as most of y’all know, I’m not a big thread-starter. But I was asked to solicit some opinions on this subject, so I’m doing my best to be obliging.
First of all, a couple of links: ALERTE : Report des jeux de Marseille 2019-2020 - Les jeux de Marseille sont un excellent moyen de faire de belles rencontres
They’re a couple of articles detailing some of the current and recent serious economic difficulties facing Egypt and Lebanon respectively ( note the dire speculation in the Lebanon article ) Apparently there is a brewing currency crisis in the region even beyond these two, with many countries looking a bit shaky. Jordan is another country that is particularly vulnerable at this point - It has been getting oil for free for years under a special exemption on the Iraq sanctions and might not easily survive a sudden disruption. So the question is - Just what impact is this looming conflict going to have on the region from an economic standpoint?
A few things to think about - 1) I would imagine American and MENA markets tend to respond diffferently to different internal pressures. i.e. a short conflict just might calm American investor jitters. But that may not be the case in the ME. Long-term U.S. occupation, as many analysts have acknowledged, has at least the potential to be profoundly destabilizing, at least in the short-term, which could, conceivably, cause economic panic and resultant financial chaos.
Bad economic crises tend to trigger domestic reaction. In the U.S. you might see a shift in party dominance in a mid-term or presidential election. But in the rather undemocratic ME, such domestic reaction is likely to be either more constrained ( if the authorities successively contain it ), or vastly more destructive ( if they are unable to ). As in the collapse of regimes, including such “friendly” ones as Egypt’s. Likely? Probably not. Possible?
Even aside from the economic problems associated with side-effects, like say a spike in oil prices, obviously there is a real political threat to U.S. interests in the region from a prolonged regional depression or full-on economic meltdown. Both from the potential of a regime collapse noted above or simply street-level antipathy towards the U.S. ( and increased religious radicalization )growing. I know many might say “it couldn’t get any worse, so what does it matter?”, but I think that’s a simplistic assessment. It can indeed get worse.
Of course, there are also some potential upsides - Some Gulf Emirates seem pleased at the prospect of potential rebuilding contracts in Iraq ( wonder if the bin Laden construction company will put in a bid? ). Further, regularization of the Iraqi oil market and the decrease in Gulf tension ( if it comes about ) could lead to some stability on that front. The ultimate argument of course is that long-term, greater regional stability will be promoted, leading to eventual prosperity. The question is how long-term? and how much damage will be done before then ( if any ) and what is the potential ( if any ) that it could be catastrophic?
Final points - The war is going to happen ( barring some pretty unusual devlopments beyond the control of anyone here, far as I know ), so this is not a “no war” polemic. As I said, I just had a request to start a thread to generate some speculation on the above.
I an not an economist. So my opinions aren’t necessarily worth much more than the price of a cup of coffee in Budapest. I’ll say that upfront before somebody starts haranguing me on the relative benefits of pegging dinars on a fixed or sliding scale to the euro vs. the dollar ;).
I loathe partisan hissy-fits. I’d rather not see one here. Just a request.
[Removed broken link. – MEB]