February 13, 2011

After Egypt, Who's Next?

Two weeks ago, I had posted on my Facebook wall a link to Dr. James Hamilton's blog post, Geopolitical Unrest and World Oil Markets. In that post Dr. Hamilton (of the University of California, San Diego) showed that there is a possible inverse relationship between a country's oil production and that country's political instability. Meaning, those countries with low levels of oil production were among the first to revolt, whereas countries with high oil production have shown greater stability. The implication is that the lack of petrodollars had not provided enough of a political safety net for the governments to cover their weak economies.

Hamilton's brief analysis covers (in the order of increasing oil production as a percentage of the world total) Lebanon (0.0%), Tunisia (0.1%), Yemen (0.3%), Sudan (0.6%), Egypt (0.8%), Libya (2.1%), Algeria (2.5%), Iraq (2.7%), Iran (4.9%), and Saudi Arabia (11.7%).

Now, if Hamilton's thesis is correct, then Egypt appears to be the last of the "low-hanging fruit" to have undergone political unrest. Theoretically, then, Libya and/or Algeria should be the next to revolt.

The potential problem with this analysis is that it doesn't explain all of the recent events in the Middle East and North Africa or the lack thereof. For example, Lebanon and Sudan have had long-standing government instability; that they should be undergoing problems now (such as the collapse of the government in Lebanon or the recent referendum in Sudan to split the country into two) are not terribly surprising given these countries' histories.

Likewise, I suspect that some countries that should have gone into turmoil may have had their chance but won't either because their societies are too stable (Morocco? Oman?) or because the state's security apparatus is too strong (Syria?).

What the professor also didn't mention was that Iran, which is second only to Saudi Arabia in oil production, already had its instability in the Green Movement protests of June 2009 that were quashed. I'm not expecting another major uprising in Iran (a la Tahrir Square) anytime soon.

What I think the protests really point out is that standards of living matter. Even more so than a lack of democracy, the economic corruption that pervades certain countries' economies is ultimately the straw that breaks the camel's back, so to speak. I say this with not only the Arab revolts currently going on in mind, but also the dissolution of the Communist bloc in Eastern Europe in 1989, which underwent similar revolutions for similar reasons. Republicans in the United States, who seem hell bent on trying to lower American standards of living, should take note of the potential consequences for their actions.

1 comment:

Danish said...

The Dr.'s analysis, while bearing much relevance so far as the current empire of oil's crumbling much like the Soviet Union did from the weigh of its own unsustainablity neglects to factor in the role of an educated and dissatisfied young professional class gaining access to the internet and social media tools for organizing as we saw in both Egypt and Iran in 2009. I only bring them in as a factor to consider as the coordinating force that seems linked to the recent populist uprisings acting as an initiating spark.