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Arab Spring: Counting Costs and [Oil] Profits In MENA
By EconMatters
To follow up on our last article about the Arab Spring shockwaves, we thought it'd be of interest to see what the cost impact is for countries affected by the uprising. A timely new study by the risk advisory firm Geopolicity provides some insight into that subject.
The report estimates that the Arab Spring has already cost countries across the MENA region (Middle East and North Africa) close to $56 billion so far just on the loss of GDP and productivity along, not including infrastructure damage, losses from foregone business and foreign direct investment, and casualties. (See Table Below).
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Chart Source: Geopolicity.com |
However, the other side of the ledger is that since the unrest either has threatened or actually disrupted oil exports (e.g. Libya's coveted light sweet crude), the fear and risk premiums added to crude oil prices (See Chart Below) have also benefited the oil exporters in the same MENA region.
The study concludes that so far, oil exporters such as Saudi Arabia, Kuwait, and UAE were winners and oil importers losers of Arab Spring, while Libya, though an oil exporter during normal times, has come out as one of the biggest losers. So in aggregate, the Arab Spring has actually provided a positive economic boost across the region worth almost $39 billion:
."....Libya, Egypt and Syria have so far paid the highest price—both human and economic....In terms of public spending, the uprising has led to a 77% reduction in revenues in Yemen and an 84% reduction in revenues in Libya, the impact of which will have been significant on basic and essential services.
.... oil exporting countries such as the UAE, Saudi Arabia and Kuwaitthe impact on GDP has been positive with GDP growth in the UAE totaling US$62.8 billion, Saudi Arabia totaling US$5 billion and Kuwait US$1 billion. As a result, the overall impact of the Arab Spring across the Arab Realm has been mixed, but positive in aggregate terms (+US$38.9 billion).
The report further criticizes the lack of international support in the region:
"Given the scale of the challenge at hand international support has fallen way short of expectations. The support promised by G8 at the May 2011 Deauville summit has to a large extent not materialized."
Actually, the same criticism could also be said about the richer and more stable countries (who actually benefited from Arab Spring according to Geopolicity's study) right in the heart of the region. Energy Intelligence quoted Saudi Arabia's Prince Turki al-Faisal at a recent industry conference in London that since the start of 2011,
"The kingdom has announced aid packages of over $4 billion to Egypt and over $1 billion to Jordan as well as being the main funder of aid packages to Bahrain and Oman, where we will give $10 billion over 10 years to each country in the hopes of helping those nations transition smoothly out of their current status of turmoil.”
To be fair, the resource of the developed nations, which make up the majority of G8 and G20, is a little stretched with their own debt and social economic crises, and the high oil price driven partly by the Arab Revolutions certainly has not helped either.
A proposal of injecting another $350 billion into the IMF (The U.S. share based on the IMF members' quota of 17% would've been roughly $60 billion) into EU debt bailout was immediately rejected by the U.S. and others, while the G20 sent an unusually direct message to the Euro Zone to basically to fix its own crisis in eight days.
Most people have come to accept that global economic and political power paradigm is shifting from developed countries towards the developing economies, which is part of the normal economic and business cycle on a global scale. Nevertheless, by the same token, the world also has to come to grip with the fact the days are numbered, when the developed economies are relied upon as the ultimate resource to fund or help with turmoils around the globe.
New status and power come with new responsibilities. "New Money" around the globe will need to step up to the plate as well.
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Ummmmmmm, kill a doubt here: so suppression of competition is benefitial, is it something like that?
If checked, that would be one of the bigger break throughs to happen... Awesome.
Impressive what this US world order yields. No one would have ever expected such conclusions.
And hopefully, a free market is here to reduce redundancies, so no gain made on already acquired knowledge long time ago.
Just wondering, that apple and that tree, must have something big behind that apple and that tree...
Call me crazy, but just kind of putting my veggies in the stone soup ...
US debt markets are floated by the fed by way of principal payments which come in on that HUGE PREGNANT balance sheet they got knocked up with a couple years ago. I didn't see a ZH re-post of the standard graphic, but if anyone has a current one please provide the link. I got this notion from Jim Rickards who suggested the Fed BS is so big they could sponge up half of all debt demand going forward (I believe that number is what he suggested was middle of the road for the numbers involved).
The foreign buyers are drying up, but the fed can take this pay off and vacuum up some demand. Further, the banking system will increasingly get forced to absorb demand, up to the other half if necessary. See the reserves on deposit with the fed if you think I am full of shit.
The next oil shock will be the "chess move" that sets in motion the next phase of the game; it will happen very fast. I believe that MENA will get hit in the head with a 2x4, oil markets will freak out, and it will be game on. Here is why.
To control a population, the population much "opt in". That means the population wants to be part of whatever scheme is presented. No "police" are required, folks work for their role in the system willingly. Making the population work against their will consumes enormous resources and is quickly prohibitive. For the US, that means jobs and standard of living. You know, the stuff we are losing. OWS is the left version of the Tea Party on the right. The elite understand they are short timing if they don't change the tune pretty quick.
The entire financial system in the world is completely broke. The main working population of the US is slowly turning on the master. If allowed time to come around, the master will have a very pissed off elephant on a leash; the 99% would find and hang the 1%. This ensures a "diversion" which can reset the shot clock as it were.
Financial markets have to be crashed. Doing so, coupled with war, is an opportunity for the elite; (1) war works when you acquire new assets and fund the empire, such as early roman expansion, or (2) war works when you conquer those whom you owe shit loads of money, such as pre-WWII Germany.
If MENA gets rolled over, in a large scale way, much of the world oil supply is offline. Oil goes to the moon. Economies get raped in the process and some nations (and holders of US debt instruments) go tits up in the process. As a bonus, a villain is now offered to the masses creating the job opportunity of whopping the ass of the vilian, which is better than no job at all. I don't think MENA is supposed to recover from this encounter. If internal demand in MENA went away, that is a lot of oil left in the ground. I think the US has designs to crush oil demand and begin major exports for strategic global position. The US is a huge producer, but it also a huge consumer, so by crushing demand with prices, strategic importance is gained with the surplus. This is coupled with advancements in shale oil and tar sands and such. Folks, in this national climate the EPA tosses the rule book into the fire and its balls to the wall as far as development/production goes; ANWR, shale, tar sands, off shore, all of it (and as fast as possible).
Oh, and you can't win a war without oil, so those who can't cover their needs are in deep shit (and will be forced to the bargaining table).
I genuinely expect $200+/bbl due to loss of supply in MENA before the next presidential election, otherwise the elite are going to have to eat what they sowed and it isn't looking pretty right now.
It is going to be rough in the US, but it won't suck nearly as bad as elsewhere. And the money system will burn down to the ground, but the US will come out on top in the end in that regard as well.
But hey, I am a crazy nut job that moved to Alaska, so don't listen to me ... :-)
Regards,
Cooter
Cooter, my thoughts exactly.
I almost wonder sometimes if the powers that be don't want the undeveloped nations to become developed and dependant on oil, so that they can close the tap and basically destroy entire nations without lifting a finger.
Theres not enough food on the table for all of us. Someone is going to have to go hungry.
I feel that the only people that will realyl be fsafe are those living in total poverty in the plains, walking miles a day for water and living off the land. The quality of life for these people is horrible, yet it will remain the same with or without a global financial catastrophy/war or 200$ oil. Well those people and the rest of the preppers ;)
The US feeds the world. Those who survive either (1) get fed by the US, or (2) can fend for themselves.
Given that most populations around the world (1) don't export food and (2) if they do export, then they also have to have a military to prevent neighbors from taking their food. Call me nuts, but I really think the US is the only nation on this Earth that fits that bill.
Sixty days of no world food trade is all it takes to pull the plug on the whole shit show. Humans, on empty stomachs, will revert to the plumbing that nature gave them and it will be very, very ugly. Too many people, too small a world, not enough resources. Once "conquored" those who are left will sell their children, their wives, and their elders for food security. Just how survival works.
The real game is ... do the elite come out on top/in control once it blows up.
Regards,
Cooter
...puff puff pass, doodz!! i had to hire a local stoner to interpret your writings. the findings? your stoned and you think college is a job!!
I can null and void all your theory and shatter your stoned temporal lobe by telling you all they have to do is give out ZERO percent credit cards with $5000 limits and America is rolling once again. Rinse it and repeat it beotch. today's assignment for you: Pavlov's dog.
"the financial equivalent of a salt lick." of course there's always a short seller waiting to take a pot shot...they're meat eaters too you know. Now excuse me while everyone celebrates the death of Kodak Corporation to ponder Internation Business Machines which Microsoft announced in public over thirty years ago that they were going to wipe off the map. Miraculously....they missed one. At least now we know why they love foreign labor. It wouldn't be capitalism if they were wiping off towns, cities, States and now entire Nations off the map I guess.
Libya, Syria, Egypt, Tunisia, Bahrain, Yemen = $55.84B costs
UAE = $62.8B gain
What would Muhammad do?
All these costs will seem pretty immaterial once the real fruits of the Arab Spring are reaped; it will take time but eventually the will of the people in the countries affected will come to the fore and unlike the last 65 years' post WW2 Western notion that the people in the Middle East are unable to govern effectively, the world at large should see a progressive Middle East. The problem always has been Western interference post WW2, that was born out of the Cold War paranoia and of course the Europeans rushing to create a state near the dead sea in Jordan after the exhaustion of WW2.
It seems that USA and Europe will be a little exhausted and pretty stretched financially to try to interfere and install puppet regimes (namely anti-communist and secularits....like Saddam Hussain) in the Middle East to an extent that they were able to in the booming 1960s and entrench themselves thereafter and so a new chapter may well begin in the Middle East.
The key issue in my view will be:
1. Iran and Pakistan. Should either or both countries face inundating chaos then the impact felt will be great because both have sizeable populations and both are capable of unleashing destabilizing shockwaves across the region.
2. Palestine: no need to elaborate over here.
IF my worst apprehensions about the above do materialize, then buckle up baby becoz its gonna be a wild ride - add to the equation bible thumping evangelicals who might want to grap a slice of the action and chaos in the Middle East in the name of redemption or whatever when the masses in their own countries might be facing recession and presto! you have a dangerous situation to say the least.
Remember the crusades were crafted by a cunning Pope who saw an opportunity to end European chaos, economic misery and internal bloodshed and arrest the waning power and influence of the Catholic Church at that time by asking unemployed knights, unemployed people, suffering masses to head thousands of miles towards the Middle East to grap Holy Lands.......gulp!
Why does EVERYONE forget that the Crusades were a REACTION to the Muslim INVASION? The Muslims VIOLENTLY expanded from a small piece of Saudi Arabia all the way across N Africa and into Spain/France...on the other side they began crossing the straights from Turkey and there the line was drawn. The Crusades were DEFENSIVE. And history shows...they should have finished the job on the FIRST Crusade!
$220 oil is around the corner. That's why JPM grabbed 50% of the "emergency oil reserve release" (30 million barrels) from Barry instead of it actually going to We The people.
Within the next few months Iran will be added to this list also. But first, the lies about Iran have to spread, then perhaps a false flag event that will trigger the Iran war. This will cause so much Kaos in the Persian Gulf that oil prices will rise by perhaps 100%, which is what the elite want. After all, the love of money is the root of all evil. But first things first. First Ghadaffi has to go before the Iran war plan can be set in motion. Or who knows, maybe they can't wait that long.
It was leaked out of the last Bilderburg meeting that the elite are unhappy with the progress of the war spreading throughout the Middle East. It is taking longer than they want it to. This information, just recently, came from Lindsey Williams sources also. But they should be patient. Starting World Wars take time. It's not something that can start overnight! They of all people should know this since they have started world wars in the past. See how this generation is? Even the evil people want everything now, now, now. Their evil ancestors were a little more patient.
But let me get back to this article. Let me get this straight. First they have a revolution to overthrow their governments because they are unhappy with, well mainly, their economic conditions. Now they are protesting because this revolution buried them deeper economically. Which makes me want to ask them this question: "Are you better off now than you were before your revolution"? I am just kidding though. I'm sure they were promised great things if they have these revolutions. Suckers. The elite promised them (the muslem brotherhood) the world if they have these revolutions. Of course this is just my opinion. I have no proof. I can only guess, since these things are planned in total secrecy; so these plans don't exactly make headline news. But, I'm sure a lot of people have this same opinion. If you only think about what is happening in the middle east, you may see that it is very possible. After all, speaking of the elite, with money, all things are possible.
please elucidate. Inquiring minds wish to know.
- Ned
These false allegations that Iran was trying to set up a hit on a low level Saudi prince. This info came from the same sources that were selling military weapons to the mexican drug cartels in the fast and furious operation. These allegations don't make sense, and many people don't believe it anyway. Iran doesn't support terrorism, although they are, I believe, fighting against us in Iraq and Afghanistan. But this isn't terrorism, it's self defense, because they know when we are finished with those 2 nations, that we will be coming after them next. They are just trying to keep us bogged down in those 2 countries to delay the inevitable. War with Iran. The US intelligence community has no credibility as far as I'm concerned. If they did, we would have found all of them chemical and biological, as well as nuclear weapons that they claimed Iraq had. Us going to war with Iraq made no sense to me either, at the time of the invasion. I always said that Iraq was no threat to the US, although they were a threat to Israel. In truth, all they had was oil, and lots of it, and it is barely tapped. It is perhaps the easiest and cheapest source of oil to get out of the ground in the world, and there are still many more oil fields that are to be discovered. They probably have more oil than Saudi Arabia, but no weapons of mass destruction.
And to go a step further, I didn't believe it for a moment when the government said they killed Bin Laden. The story stinks to high heaven. Common sense tells me that if he was the alleged leader of the 9/11 attacks, then we wouldn't want to kill him, we would want to interrogate him. If this war on terrorism is true, then Bin Laden knows everything there is to know about Al Quaeda. We would want him alive and find out everything he knows. And the mission would have been kept secret. But instead they say, the very next day, that they had him in their possession and then killed him and gave the biggest so called terrorist of our time a decent burial? It just doesn't make sense.
Now that I elucidated, you probably think I'm nuts. But I don't think I am. But in the future I'm sure I'll find out if I am or not. But then again, we are all nuts in our own way.
BL died years ago bc of kidney issues I believe... The people that asserted this have all been killed...That speaks enough to the truth
That's what I heard also, that he died of kidney failure right around 2001, either before or after 9/11. We might as well believe this since we can't believe anything Uncle Sam tells us.
Btw 1973 and 1974 oil went up 400%.........This week is the anniversary of the arab oil embargo.............
This was all planned out by kissenger and the oil oligarchs..........
http://nakedempire2.blogspot.com/2011/10/1973-arab-oil-embargo-look-back.html
A friend of mine used to run a gas station down south during the Arab oil embargo. He always told me that the people who delivered his gasoline would tell him there was no gas shortage. It was all being fabricated. I'm not saying this was true, I just don't know. Only the insiders knew if it was true or not.
"Costs to future aircraft industry disruptions." --> [TBD]
"Costs to future aircraft travel industry disruptions." --> [TBD]
"Costs to future [prospective] uses of chemical weapons" --> [TBD] (and doesn't matter if they have "aged" beyond their effective lifetime.)
All of this is rather simple, but even the simple is difficult (to coin one useful phrase, of few).
- Ned
wonderful article, keep up the fantastic job :)
http://expose2.wordpress.com