The Mideast Crisis to Come

When New York University economist Nouriel Roubini speaks, the world tends to listen. Dubbed "Dr. Doom" for his early -- and accurate -- prediction of the 2007 global recession, Roubini has since become a soothsayer of the universally unpleasant.

Yet one has to wonder what there remains for the world's 'perpetual pessimist' to critique amid the violence and upheaval occurring across much of the Middle East and North Africa (MENA). But for Roubini, it's what has yet to happen in the MENA region that the economist finds most worrisome. Roubini:

"In the past, geopolitical instability in the region triggered three global recessions. The 1973 Yom Kippur War between Israel and the Arab states caused an oil embargo that tripled prices and led to the stagflation (high unemployment plus inflation) of 1974-1975. The Iranian revolution of 1979 led to another embargo and price shock that triggered the global stagflation of 1980-1982. And the Iraq invasion of Kuwait in 1990 led to another spike in oil prices that triggered the U.S. and global recession of 1990-1991."

But such reverberations have yet to reach the rest of the globe; indeed, oil prices remain remarkably low, largely due to shrinking global demand and the shale revolution in the United States.

The world is in fact awash in oil, even as insecurity and instability surround many of its major suppliers. "Even in the parts of Iraq now controlled by the Islamic State, oil production continues, with output smuggled and sold in foreign markets," writes Roubini.

But the international community should take no solace in this fact, warns the NYU economist. While short-term trends appear unphased by Mideast instability, there could be greater consequences down the road should the world not work to aggressively address the refugee crisis that has resulted from wars in Syria, Iraq, and elsewhere.

Moreover, the population of the Middle East is big, and getting bigger. Mideast countries already imports tens of billions of dollars worth of food annually, and that price tag is expected to double in the coming years as the number of mouths to feed increases. Low oil returns -- coupled with a permanently displaced and poorly educated class of youths -- would likely put a strain on the "hydrocarbons for carbohydrates" arrangement the Middle East has enjoyed with the rest of the world, increasing the likelihood of perpetual unrest and uncertainty. Again, Roubini reads the tea leaves:

"[P]rolonged misery and hopelessness for millions of Arab young people will create a new generation of desperate jihadists who blame the West for their despair. Some will undoubtedly find their way to Europe and the U.S. and stage terrorist attacks."

Around the Region

El-Sissi's Sunni tightrope. Arab governments have not reacted well to Russia's recent entry into the Syrian civil war, viewing the intervention as an uninvited lifeline for Syrian President Bashar Assad, whom many of the wealthier regimes in the region have worked to remove from power. Russia did get a nod of approval this weekend, however, from one Arab stronghold: Egypt. Reuters has more:

"Russia's intervention in Syria will curtail the spread of terrorism and help deal a fatal blow to Islamic State in the war-torn country, Egypt's Foreign Minister Sameh Shoukry said.

"Russia launched airstrikes in Syria on Wednesday in its biggest Middle East intervention in decades, marking a dramatic escalation in a more than four-year-old civil war in which every major country in the region has a stake.

"'Russia's entrance, given its potential and capabilities, is something we see is going to have an effect on limiting terrorism in Syria and eradicating it,' Shoukry said in a televised interview on Saturday."

Relations have warmed in recent months between Russia and the Arab world's largest country, and presidents Putin and el-Sissi met recently to discuss economic and military cooperation between their respective countries.

El-Sissi -- whose country is largely subsidized by the very same Gulf states aiming to oust Mr. Assad -- must now walk a delicate tightrope in his overtures toward Russia, but it's a relationship that makes logical sense for Egypt's strongman, writes Vitaly Naumkin, director of the Institute of Oriental Studies in Moscow:

"[T]he fight against international terrorism remains key to the political engagement of Moscow and Cairo. The Jan. 29 Sinai Peninsula attack against the Egyptian army by terrorists from the Wilayat Sinai organization ... dealt a blow to Sissi.

[...]

"Sissi accused the Muslim Brotherhood of conducting a campaign of terror. Plus, the Egyptian ... Tellingly, a Muslim Brotherhood communique issued on the attack day promised to ‘intensify the jihad' against the government, according to the Middle East Briefing. In this context, cooperation with Russia that, like Egypt, views the Brotherhood as a terrorist organization, receives a strong impetus."

Saudi shadowboxing. Saudi Arabia -- which managed last week to successfully fend off a U.N. inquiry into its military campaign against Houthi rebels -- is strategically flailing in Yemen, argues Mideast analyst Neil Partrick:

"Saudi Arabia overstates Iran's capacities and does not believe its own propaganda that it is able to counter it. It is also partly a problem of Saudi Arabia's own making. The kingdom has no strategic approach to national security, preferring short-term tactical alliances and the comfort of familiar, ill-researched, and exaggerated assumptions about what Iran and its allies are up to-and what they ultimately want. These tactical motivations encourage shifting alliances that can alienate friends and create bigger problems for the kingdom, in Yemen and elsewhere."

Will Ankara bend to Moscow? The National's Joseph Dana wonders if the addition of Russian air power to Syria's civil war, coupled with ongoing unrest and economic woes at home, will force Turkey to change its tune on Syrian President Bashar Assad:

"Where exactly does this leave Turkey? Must it choose between warmer economic relations with Russia or rearming FSA battalions in Syria to continue the march towards Damascus? Turkey has been in desperate need of a strategy overhaul since its famed ‘no problems with neighbours' foreign policy became one of only problems with neighbours. The moderate opposition that Turkey supports stands no chance against the Russian air force. Counter-escalation by rearming FSA rebels will prolong the proxy war on the ground and prove ineffective. Only the Americans are able to stop the Russians from carrying out airstrikes -- and such a development is unlikely."

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