Blood and oil, bribes and bullets

Blood and oil, bribes and bullets
13 March 2011

 

WHAT a year it has been. And it's only three months in. So far we've had two dictators ousted, ongoing battles in Libya, demonstrations across the Arab world, loss of life, and billions being handed out in a bid to appease.

The ramifications are spreading far and wide. Food prices are going up. The price of oil is skyrocketing. And the impact is being felt by consumers and businesses alike.

This is unprecedented. But none of it is surprising. It's sort of like the credit crunch. Looking back, with hindsight, it's all so obvious. But the reasons for the current turmoil across the region are difficult to resolve and will take much time, and a lot more than cash injections a la credit crunch – which have yet to prove they worked, incidentally.

When the unrest first broke out  in north Africa, the overall message from analysts and the business community was that this is bad for business and bad for international investors; that the then regimes in place signalled stability. They wanted no nasty surprises: better the devil you know, they said.

But what about the will of the people? Well, as the past few months have shown, the people have spoken. And nothing will be the same again. Or will it?

You see, I am elated by what has happened on the ground, but the cynic in me believes that it won't last. It can't last. The uprisings will be hijacked by more organised institutions. And once again, the voice of the people will, well, become background – a sort  of 'white noise' to be piped into the bureaucratic machinery every now and then rather than a force to be reckoned with. 

And, perhaps we'll see the emergence of 'plan B'. What I mean by this is that it's as though the Western powers that propped up various regimes realised with a jolt that there was no plan B. Nothing was in place to fill the power vacuum should their local allies fold.

The roots of unrest

So how did it all come to be? Mohammed Bouazizi. That name should be etched into your memory. Mohamed Bouazizi, crushed by both the state and its corruption and then slapped by a policewoman, chose to set himself on fire.

He preferred, as a Tunisian psycho-analyst remarked, "annihilation over a life of nothingness". He chose death to the continuation of total powerlessness. And he sparked a revolution.

Five weeks later, Zine Al Abidine Ben Ali was no longer president. And the rest, as they say, is history.

And I'm sure whoever it was who pontificated something along the lines of "whatever happens in Tunisia stays in Tunisia, that there will be no impact on the world's economy", is thankful that he's not on YouTube – to the best of my knowledge anyway. How wrong he was. How could he ever live it down?

Demonstrations spread across north Africa, then the Gulf. The overwhelming message is that repression and subsidies no longer work. And the harder regimes come down on their people, the worse it will get.

The risks of unrest

So what sort of risks have been borne out of the events we're witnessing? A collapse of tourism, foreign investment and remittances from the affected countries; the risks of a failed state; a danger of contagion; and volatility in crude oil prices and supply, which affects companies and the global economy at large.

Other risks are that capital will be more difficult to come by; security concerns for evacuation of personnel; loss of property and business interruption; foreign investment laws changing; as well as transactions with state-owned enterprises and potential nationalisation of private enterprises.

And that's not all! The shipping industry has to contend with the additional issue of piracy at sea. I don't know if you're aware, but there are currently 700 people incarcerated in Somalia – around 30 vessels. There were 47 attacks in the Arabian Sea in January, seven of which were successful. It is said that the extra cost to the industry is £10 billion a year.

Insurance premiums are being ramped up. You have to travel further to mitigate risk – via the southern tip of Africa. More time. More fuel. More cost.

But when you think of 30 thousand ships passing through the Arabian sea each month, the numbers game seems to go in your favour – 'it won't happen to me'. And so many ships sail without insurance.

The problem is, if it does happen, the attacks are becoming more violent and the incarceration periods longer. Ships used to be held for 50 to 100 days. Now it's more like 200. And if you do catch a pirate, there's not much you can do, other than make sure they've enough fuel to get to shore and send them on their way.

The riches of unrest

So, will riches continue to collide with risks in the Arab world? Well, with 40% of the world's oil passing through the Gulf of Aden and the Arabian Sea, business will go on.

Now, have you stopped to think of who these pirates are? Mostly they're young boys who used to be fishermen. But now have a taste for something more. The only real way to deal with their menace is to look at the root  causes. Their waters were being overfished by foreign commercial vessels. The Somali fishermen had nothing to catch. Even when they chased the commercial vessels off, the fish still didn't come.

They need jobs. Income. Food in their bellies. And now they need to be reintegrated into civil society.

It's a bit like what's going on with the Arab army of angry youth, who created a revolution out of an individual's act of despair. And they now have a taste of something more.

The Arab world is the youngest region of the world. Nearly two-thirds of its roughly 350-plus million people are under 26-years-old. In some countries the populations are much younger. The median ages in Yemen, Iraq and Egypt are 18, 20, and 24 respectively.

It's going to get worse. By 2050, the population of the region is expected to double. This youth bulge poses immense difficulties, specifically in employment and education. The biggest challenge is employment. Something that is often cited is that the Arab world has the world's highest rate of youth unemployment.

But let me focus on one single group of people – who are marginalised and have the least options. Women. In Egypt, the most populous Arab nation, four out of five unemployed people are female.

The next big 'current' thing is women. Let me tell you a story. A few years ago a distant relative of my father's passed away in Jordan. His daughter was due to sit her final university exams. Her brother decided that she was not allowed to go to sit them because the university bus was mixed – both men and women used it. And so it came to be that my father went to Jordan to act as driver and guard. He picked the young woman up every morning and sat waiting for her to finish each exam and took her home. 

So, you can build all the universities and roads, invest in all sorts of businesses, create all sorts of stimulus packages. If you don't get through to the culture, to society, then what's the point? 

The biggest regional winners with regard to the current turmoil are Dubai and Abu Dhabi, and to a lesser extent Qatar. What we're living through will go down in history as defining moments in the development of this region. But remember, we're all in this together. And if we don't all benefit – the turmoil is here to stay.

Pic credit: Simon Howden/ FreeDigitalPhotos.net

What do you think the ramifications of the current turmoil will be? Join the conversation by commenting below...

Comments

  • cdnexpat
    cdnexpat
    2011-03-14T21:42:58

    Thanks for a super article Nima, it certainly gave me a lot to think about.  I took particular notice of your mention of women, and their role in the "new" Arab society.  Every week, I drive past the construction site for the new Princess Noura bint AbdulRahman University in Riyadh, Saudi Arabia.  It is touted to be the largest of it's kind in the Arab world.  While I think it is great that King Abdullah has instigated so many new educational opportunities for Saudi women, I wonder where they will work.  How will they get to their office if they are not allowed to drive? Will their male guardians allow them to work in businesses along side of unrelated men? I really think that the potential is being seen, and that women working can contribute to a sustainable economy, but I think there are much larger issues at hand, and simply giving women a degree is not enough.

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