The End of the World Is Coming (Theirs, Not Ours)

Includes: GULF, OIL
by: David Goldman

I’ve been buying oil futures for the past ten days, slowly adding to positions on dips, and have held my position in gold futures. This “Arab spring” business really isn’t going to work out. Even my friend, the perspicacious pessimist Daniel Pipes, sees some hopeful signs in the Arab revolt. Fouad Ajami at Johns Hopkins was in the Wall Street Journal Monday comparing the “Arab spring” to Europe’s 1848 revolution. And the great Bernard Lewis was quoted in the Jerusalem Post the other day saying:

Bernard Lewis, the renowned Islamic scholar, believes that at the root of the protests sweeping across our region is the Arab peoples’ widespread sense of injustice. “The sort of authoritarian, even dictatorial regimes, that rule most of the countries in the modern Islamic Middle East, are a modern creation,” he notes. “The pre-modern regimes were much more open, much more tolerant.

Much as I respect these analysts, I think they miss the obvious point: the revolts started when food prices spiked. I addressed this in depth in Asia Times Online a month ago and am gratified to see some other analysts making the same point more recently. Here’s a February 28 piece from the German Marshall Fund:

Hungry for Democracy, and Just Plain Hungry

by Mark Allegrini and Joe Guinan

WASHINGTON – With all the focus on democracy and despots, the rising price of food is being overlooked as a trigger in the uprisings in North Africa and the Middle East.

Food prices are at an all-time high, and while the impacts are hardly felt in the United States and Europe, where basic commodities are a small portion of the total cost of diets comprised largely of processed food, the spike in commodity prices is felt much more acutely in developing countries. The densely-packed cities of North Africa, heavily reliant on imported food, are particularly vulnerable to spikes in commodity prices. Bad weather in Russia, Ukraine, and China has already pushed prices above even the highs of 2008, which led to unrest in 30 countries at the time. Although it is impossible to know to what extent,

It’s not hunger so much as humiliation that drives the revolts: the obvious fact that the Arab dictatorships have left their countries in such backward condition that they cannot compete on the world market for basic foodstuffs. At some point backwardness becomes intolerable, and that’s when someone else can pay for food, and you can’t.

Failed states everywhere: that has been what I have been predicting for two years in my Asia Times Online columns.

Even Turkey, that island of stability in the Middle East, had violent demonstrations–but in its remote, eastern Kurdish regions.

Police detained some 100 Kurdish demonstrators across southeast Turkey on Tuesday in clashes during protests marking the anniversary Kurdish rebel leader Abdullah Ocalan’s capture. Around 2,000 people gathered in downtown Diyarbakir, the largest city of the the mainly Kurdish region, denouncing Ocalan’s capture in Kenya on 15 February 1999, an AFP reporter said. Riot police used tear gas to stop the crowd from marching on the city’s main avenue, coming under a hail of sticks and stones from the demonstrators. Some 20 people were detained. At least one policeman and a protester were injured. Most shopkeepers in the city kept their businesses closed, heeding a traditional Kurdish custom of lending support to protests in the region.

It’s not the end of the world. It’s just the end of them and their world. And that will be messy. So I plan to continue adding to oil and other hedge positions, buying on dips.