I hesitate to refer to events in the Middle East as unrest. That implies that at one point there was rest, when in reality there was only silence. So what has happened over the past couple of months is more like an expression, a vocalization, of a simmering discontent that has been stifled for too long.
While this outcry has disrupted economies and cost lives, in the scheme of things, the boat needs to be rocked if the direction is going to change. After all, according to the 2010 Economist Intelligence Unit Democracy Index, all Arab nations, with the exception of Lebanon and Iraq, are considered autocratic regimes.
This vocalization is, in part, the result of food insecurity. And it started with the self-immolation of a young produce vendor in the Tunisian city of Sidi Bouzid. Mohamed Bouazazi was the only bread-winner in his household, and after authorities repeatedly confiscated his produce, he vocalized his outrage, shouting “no to misery, no to unemployment."
As much as Tunisia has been regarded as one of North Africa’s more peaceful and prosperous states, it was also run by (and for) the police. And now, the battle cry of oppressed people has spread, with protests in Libya, Egypt, Iraq, Yemen, Iran, Morocco, Oman, Algeria, Qatar and Bahrain.
This was bound to happen, in a region where corrupt, autocratic rulers have been allowed to deprive their people of human rights, free press, education and freedom. It was only a matter of time before young populations harnessed the power of social networks to navigate a new direction. They’re not just rocking the boat. They’re rocking an ultra-large oil tanker.
This was bound to happen ... and many saw it coming. Back in 2002, the United Nations Arab Human Development Report recognized that the Arab world was suffering from three serious gaps: A deficit of freedom, a deficit of women’s empowerment, and a deficit of knowledge relative to income. But back in 2002, centralized governments in the Middle East failed to understand a critical thing: “Content is the most important component of the information industry, but Arab policy-makers have not yet taken this fact to heart." Even worse, while governments were “reluctantly ceding their monopoly over the telecommunications sector," they held their grip on the content of information. We see how that backfired.
But this is only the beginning. New York Times columnist Tom Friedman put it best, “... the lid is being blown off an entire region with frail institutions, scant civil society and virtually no democratic traditions or culture of innovation." This is going to take awhile.
To put “awhile” in perspective: On March 1, 1811, Egyptian king Muhammad Ali Pasha oversaw the ceremonial killing of 500 people. And in March 2011, after shutting down over one month ago, Egypt’s stock exchange will reopen, without the previous regime holding sway over the country.
The vocalization in the Middle East has had unintended consequences. Emerging markets as a whole have been punished; technically, they’ve been over-punished.
Among the over-punished: iShares South Africa (EZA). The fund fell into oversold territory in the midst of all turmoil, and based on relative strength, this is a fund I would keep a close eye on.