Middle Eastern Oil Economies and Political Liberalization

The question of how the Middle East would best be able to achieve modernization is a speculative one, and one that depends heavily on a number of things, such as what means would be best used to achieve this modernization, to what exactly the term “modernization” really encompasses.

Many people perceive the Middle East as a geographic area, which for several reasons may be especially resistant to the kind of modernization process that has taken place in the western world, and that has, and is still occurring in Asia. The chief reasons that are given in backing up this doubt center on the pervasiveness of the Islamic faith, as well as the nature of the governments that are already in place in many of these Middle Eastern nations.

To begin to examine the issue, the idea of modernity or modernization should be defined, for the purpose of discussion. There are a handful of characteristics that have been present in the modernization process of other nations, and which, by and large, exist in countries that have already undergone the modernization process, and have achieved the state of existence that many assume Middle Eastern nations ought to strive for.

Points that have been discussed both in lecture and reading include the following factors that generally occur within a modernized nation: Freedom, (civil liberties) technology and access to technology, mass education, literacy, political and economic liberalization, social tolerance and pluralism, democracy and equality, and secularism.

The first of these tenets of modernity, freedom, as it pertains to civil liberties and political participation seems as though it should be a given in the framework of what makes a country modern. To have the general populace protected by laws and statutes that protect their interest in participation in the affairs of the state of which they are a part would be requisite for any of the other items on the list to occur. Political and economic liberalization, democracy and access to technology cannot occur without the expansion of civil rights. In the still-modernizing nation of China, the economic liberalization has occurred without widespread increases in civil liberties, although its economic liberalization is only taking place in localized zones of the country. Total economic liberalization, in all likelihood, will not be able to happen without an increase in the overall level of freedom that the state allows to the people on the whole.

Increased levels of freedom domestically also include the protection of the general populace in regards to the freedom of speech, assembly, and so forth. The ideal of freedom is a wide ranging one, and one under which many of the other tenets of modernity fall.

Keep reading this post here

Iran: No Good Policy Options

The world leaders are in a no-win situation with Iranian nuclear developments. Recent news has a second nuclear enrichment plant discovered near Qom. In addition, Iran has done a saber-rattling display of weaponry, including a Shahab-3 rocket capable of reaching most of the Middle East, including Israel.

The “P5 plus 1” of the five permanent (and veto-wielding) members of the UN Security Council (US, UK, France, China and Russia) along with Germany have trying to use a carrot-and-stick approach, offering peaceful nuclear technology to Iran in return for backing away from any nuclear weapon ambitions. However, Iran doesn’t seem to like their carrots.

Iran is not part of the G20 bloc of economic powers that are replacing the smaller G8 as the main international economic policy grouping. However, if they had a G25 rather than a G20, Iran would be a candidate for inclusion; they’re the fourth leading oil producer behind the Saudis, Russia and the US, according to the U.S. Energy Information Administration.

That makes them more independent and more part of the world economy than the other major nuclear renegade, North Korea, whose two main cash exports are weapons and blackmail. North Korea has been open to economic quid-pro-quos, getting energy and food aid in return for being a nice world citizen for a time; the problem with Dear Leader is that he doesn’t stick with his deals for long.

The stick of minor UN sanctions has not made a dent in Iran’s nuclear ambitions. Getting stronger sanction through the UN have been problematic to date, since France and Russia are major trading partners of Iran; they have tended to let international trade get ahead of world security, especially since they would be minor demons in Iran’s eyes compared to the greater Satans US and Israel and thus less likely to be on the receiving end of an Iranian nuke.

One drawback to serious sanctions that would include blocking oil sales is that Iran only has to find a few players willing to ignore sanctions to get a market for its oil. Iraq managed to function nicely under UN sanctions during the Saddam era, as they could always find buyers for contraband oil. Thus, importation of refined products (Iran is short on refineries) is on the US’ wish list of sanctions.

The other possibility is that Iran might not fight the sanctions and take its oil off the world market. With Iranian oil off the market, oil prices would head back up to their 2008 levels and bring $4/gallon gas back, if not even higher. That would put the world economy back into a recession worse that the one we’re bottoming out from at present. Withholding oil can be a wicked weapon at Iran’s disposal, doing almost as much damage as a few nukes would.

That will make sanctions hard to use, as Iran can inflict more economic damage on the world than the world can inflict on it. In addition, the placement of the second enrichment plant makes a military attack problematic.

The second enrichment plant is in Qom, Iran’s spiritual center where the leading ayatollahs hold court. That would make the heavy bombardment needed to take out a nuclear plant in a military strike problematic, as collateral damage might include some clerics and holy sites. Even if an attack on the plant has no collateral damage, fellow Shiites in Iraq would not take kindly to the concept, creating psychological collateral damage.

That leaves accepting Iran as a nuclear power, much as India and Israel have managed to do, as the very uneasy path of least resistance.Iran: No Good Policy Options

The world leaders are in a no-win situation with Iranian nuclear developments. Recent news has a second nuclear enrichment plant discovered near Qom. In addition, Iran has done a saber-rattling display of weaponry, including a Shahab-3 rocket capable of reaching most of the Middle East, including Israel.

The “P5 plus 1” of the five permanent (and veto-wielding) members of the UN Security Council (US, UK, France, China and Russia) along with Germany have trying to use a carrot-and-stick approach, offering peaceful nuclear technology to Iran in return for backing away from any nuclear weapon ambitions. However, Iran doesn’t seem to like their carrots.

Iran is not part of the G20 bloc of economic powers that are replacing the smaller G8 as the main international economic policy grouping. However, if they had a G25 rather than a G20, Iran would be a candidate for inclusion; they’re the fourth leading oil producer behind the Saudis, Russia and the US, according to the U.S. Energy Information Administration.

That makes them more independent and more part of the world economy than the other major nuclear renegade, North Korea, whose two main cash exports are weapons and blackmail. North Korea has been open to economic quid-pro-quos, getting energy and food aid in return for being a nice world citizen for a time; the problem with Dear Leader is that he doesn’t stick with his deals for long.

The stick of minor UN sanctions has not made a dent in Iran’s nuclear ambitions. Getting stronger sanction through the UN have been problematic to date, since France and Russia are major trading partners of Iran; they have tended to let international trade get ahead of world security, especially since they would be minor demons in Iran’s eyes compared to the greater Satans US and Israel and thus less likely to be on the receiving end of an Iranian nuke.

One drawback to serious sanctions that would include blocking oil sales is that Iran only has to find a few players willing to ignore sanctions to get a market for its oil. Iraq managed to function nicely under UN sanctions during the Saddam era, as they could always find buyers for contraband oil. Thus, importation of refined products (Iran is short on refineries) is on the US’ wish list of sanctions.

The other possibility is that Iran might not fight the sanctions and take its oil off the world market. With Iranian oil off the market, oil prices would head back up to their 2008 levels and bring $4/gallon gas back, if not even higher. That would put the world economy back into a recession worse that the one we’re bottoming out from at present. Withholding oil can be a wicked weapon at Iran’s disposal, doing almost as much damage as a few nukes would.

That will make sanctions hard to use, as Iran can inflict more economic damage on the world than the world can inflict on it. In addition, the placement of the second enrichment plant makes a military attack problematic.

The second enrichment plant is in Qom, Iran’s spiritual center where the leading ayatollahs hold court. That would make the heavy bombardment needed to take out a nuclear plant in a military strike problematic, as collateral damage might include some clerics and holy sites. Even if an attack on the plant has no collateral damage, fellow Shiites in Iraq would not take kindly to the concept, creating psychological collateral damage.

That leaves accepting Iran as a nuclear power, much as India and Israel have managed to do, as the very uneasy path of least resistance.

Lets Collaborate!

My goal in having this blog is to bring together different views and various and diverse opinions on the world financial markets, political economy, and any niche that may fall under that large umbrella. I would love to have as many people contribute as possible. If you want to contribute, email me and lets make it happen!

Mark

mrkwil.w6@gmail.com