Middle East Unrest Update

Back in February I published an intuitive assessment of the Middle East unrest that has been a fairly accurate rendition of the events that have unfolded throughout the troubled region.  As effective as intuition is at providing insight into moments where facts are not forthcoming, or absent altogether, it is just a snapshot of a moment in time.  So intuitive assessments have to be updated and they must incorporate new facts as they appear.

Here is a factual run down of what is happening in some of the Middle Easts hotter spots, my quantitative assessment of intensity, and my intuitive assessment update:

• Bahrain (7) – Gulf Cooperation Council troops remain in the small country.  The “state of emergency” and its rules remain in force.  Intense protests have subsided and have been replaced by opposition numbering in the hundreds, not the thousands.  It is highly unlikely that GCC troops will be exiting Bahrain any time soon.  To me it feels as if the country is still very, very tense and that they could escalate if either side dares to blink and lose the staring contest.
• Jordan (3) – Once calm with consistent, but respectful protests, Jordan has become more tense over the last several days.  What has happened is that a cabal of students are wanting to erect a tent city in the heart of the capital, Amman.  Students are also refusing to leave unless their demands are met.  Their most onerous request is that the Jordanian parliament be dissolved.  However, the students are not wanting to oust King Abdullah II.  To me it feels as if Jordan is far, far away from an escalation of protests.  The country is also not about to witness an outbreak of violence.  However, the students do feel very serious in their peaceful intent to have their demands met.

• Syria (6) – Damascus, the capital, is not the scene of the most intense protests.  Instead the southwestern city of Daraa has seen tens of thousands of protesters continue to want radical change of the Syrian power elite.  These protesters, unlike those in Bahrain, have continued to grow in number despite having been shot at and some of their number actually being killed.  President Assad has directly ordered police and military forces to back away from the protesters and has forbidden the use of live ammunition in an effort to take the edge off of the situation.  Additionally, protest movements are breaking out all around Syria.  Protester deaths have occurred in many locations and security forces are having a difficult time containing the situation.  However, to me it feels as if the protesters in Syria, despite the security force violence, are very strongly aligned.  I would compare it to the force of will of African Americans in the United States during the civil rights movement.  It feels as if to me that Syria is going to look radically different in 6 months than it does today.  It also feels as if President Assad may end up ceding power at some point.

• Yemen (5) – Recall that Yemen saw a very important general defect to the opposition last week.  Effectively this has created the seeds for a potential civil war unless the two opposing sides are willing to negotiate a settlement.  To that end, the Saudis are acting as mediators between the two sides and for now the situation in Yemen is calm.  However, those seeking regime change do not feel to me as if they are willing to go back to “business as usual” if the negotiations should fail.  The good news is that President Saleh feels to me as if he is willing to surrender power and walk away peacefully.  The question is what will the government look like afterward?  Stratfor, my favorite source for geopolitical news, is reporting a very fractious opposition movement.  In short, nobody seems able to agree on what Yemen looks like next.

I will continue to keep you apprised of important shifts in the Middle East.  Because of oil, this region is the most important economic region on the planet.  As investors, we really do have to understand and appreciate what is going on here.  I continue to feel as if the movement toward democratization in the Middle East is a net good for the entire planet in the long run, even if the societies that emerge are less secular than those currently in place.

Jason