Monday,11 December, 2017
Current issue | Issue 1229, (15 -21 January 2015)
Monday,11 December, 2017
Issue 1229, (15 -21 January 2015)

Ahram Weekly

Perfect storm

The region is facing crises on the economic and political fronts, but opportunity resides in the storm, if wisdom is allowed to prevail, writes
Abdel-Moneim Said

Al-Ahram Weekly

In October 1991, a powerful storm front and a hurricane converged on an area in the north Atlantic. Andrea Gail, a fishing boat, found itself in the middle of that confluence of fierce weather that became known as “the perfect storm.” The boat sank and no one survived. Its crew was memorialised in the 2000 film of the same name, starring George Clooney.

Afterwards, “the perfect storm” was used not only to describe disastrous weather conditions, such as the tsunamis in Southeast Asia and eastern Japan, but it also came to apply to sociopolitical phenomena characterised by the confluence of various factors at a single point, producing a major effect such as war or revolution.

Such a phenomenon is taking place now in the Middle East. Clouds and storm fronts have been coalescing on the region’s horizons and building up into a “perfect storm” carrying a number of crises at once. No one predicted the conditions, or if people saw the signs no one took them seriously. Certainly, no measures were taken to prevent them or minimise their effects.

The first crisis is of a geopolitical and strategic nature. The entire region is in a state of war against terrorism, which has reared its head in this vast strategic arena. There may be numerous war theatres — in Sinai, Libya and parts of Iraq, Syria, Lebanon and Yemen — and older fronts that have continued to seethe — in Somalia, southern Algeria and Morocco — but they are all linked by a single thread.

They are all part of the larger confrontation between the modern Arab state and groups that want to drag us back to the Middle Ages. This thread, in turn, is connected to others that intertwine in Pakistan and Afghanistan and even extend to Europe and the Americas. They may take the form of cells or organisations. But whatever form they take, what happened in Paris is not unconnected to what is happening in Kobani.

The crisis of the war against terrorism is being managed by means of an international and regional coalition. However, like all wars, this one is taking a political and economic toll that cannot be ignored. Foremost among the costs is plummeting oil prices. The phenomenon began in September with some fairly ordinary price fluctuations, but by the end of the year prices had plunged by 50 per cent.

By the end of the first week of the New Year, the price fell below the $50 per barrel barrier, leading many forecasters to predict a decrease to $30 per barrel, if not less. It is a special type of “perfect storm” created by the convergence of a number of conditions.

These include the increase of supply and drop in demand and technological advances that brought greater quantities of oil into the market and made renewable energy resources less costly. These and other details are now familiar. But the upshot is that some mighty economic forces, in the manner of the forces of nature, are driving down oil prices.

If declining oil prices is primarily an economic crisis, the third crisis is quintessentially a political one as it pertains to that wreckage that resulted from the revolutions that swept some countries in this region four years ago. The great “Arab Spring” jubilee has ended, leaving in its wake only chaos, a number of failed states, and painful economic and political crises that continue to rock those that remained intact.

The region looks like it has suffered a huge earthquake, followed by a series of aftershocks with more in the offing. It is a region filled with apprehension and uncertainty. In short, instability prevails, together with the pervasive threat of terrorism and violence.

Leaving aside historical chronic crises (such as the Arab-Israeli conflict) which constantly bring surprises, remain intractable and yet appear solvable, let’s turn to the crucial question of whether or not it is possible to confront this perfect storm which is made up of several interconnected perfect storms.

To me, the answer is yes. It is possible to confront it if people keep a cool head and wisdom is allowed to prevail. Even the forces of the perfect storms in nature eventually balance themselves out. This is not just due to the laws of meteorology and the universe, but also because the human intellect and drive become part of the equation.

With regard to terrorism, the period of its rapid spread has come to an end and it has begun to taper off and it is being driven back in Iraq, Syria and the Sinai. More importantly, the “legitimacy” of terrorism in the name of religion has come to an end.

Simultaneously, the Arabs have discovered that, ultimately, the only alternative to the state is destruction and the only alternative to regional cooperation is collapse. The reconciliation between Egypt and Qatar and the reopening of the Saudi Arabian embassy in Iraq are examples of the resolve to abide by this wisdom.

The plummeting oil price, as complicated as this question is, may have a silver lining as it could stimulate global economic growth, which would trigger increased demands and lead to an equilibrium with supply. The crux of the matter, therefore, is the revival of global economic growth. What precipitated the rise in oil prices in the past was the enormous growth in the economies of India, China and other Asian nations.

As that growth slowed it combined with the rising supply to generate the crisis. At the same time, the costs of subsidising energy, which are considerable in this region, will decline, leading to reductions in national deficits. Perhaps, then, governments will see the opportunity and use it to lift subsidies altogether.

In the longer term, the crisis has another important facet: technological developments may only have a minor impact at present but, whether we are speaking of fracking or of solar energy, they will be the technologies of the future. Fortunately, new petroleum technologies make it a more expensive product.

As is the case with other manufactured goods that are more expensive than raw materials, oil is more expensive after it has been refined than in its crude form. Petroleum is a carbon-rich substance that lends itself to the production of goods and products that are useful for mankind.

Perhaps the crisis due to the fallout from the Arab revolutions is more complex as its profound economic and social repercussions also converge with the war against terrorism and the oil price crisis. Nevertheless, a critical mass of “fighters for survival” on the storm-tossed ship has emerged with the resolve to deal with the storm by military means, if necessary, and by using financial, political and economic assets whenever and wherever needed.

The fact is that regardless of how powerful and perfect the storm may be, the available resources, if pooled and mobilised, will help nature do its work, restore balance and return the region to normal conditions.

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