The New Middle Eastern Crisis: What’s Next?
Jan 30, 2011
Posted by Jody Eisenman | Filed under Uncategorized
Over the past month, events indicating a possible dramatic change in the Middle East have been unfolding rapidly. Curiously, despite the Obama’s administration contention that the Israeli-Palestinian conflict is the key to peace, these two parties are not involved. In fact, they are not even being mentioned by the protestors. Earlier this month, The Tunisian government fell thanks to street protests against repression. The US markets barely acknowledged it. However, now they have spread to Egypt. Egyptians have taken to the streets in protest against Hosni Mubarak’s dictatorial regime. Although the situation is still in doubt, it now appears there is a good chance that Mubarak’s government may fall as well. On Friday, the US markets dove, with the Dow dropping over 166 points, and the S and P 500 losing 23. The following is my personal analysis of the situation:
Whenever you have a dictatorial regime, you are going to have opposition. Opponents of a regime may have vastly different political views, but are united in the belief that they want the current government to be overthrown. These groups are generally kept under wraps by oppression. However, given the possibility that they could succeed, they will start to rear their heads. Although Mubarak is supposedly in control of the army, it is not clear whether the army will actively suppress the demonstrators. In addition, the United States seems to be backing away from supporting the current government. Predictably, chaos has descended upon Cairo and its’ environs. Already, prisons have been emptied, and looting is widespread according to news reports. The hope is that a democratic government would eventually take control. In my opinion, this is a pipe dream. Anytime a government is violently overthrown, a power vacuum occurs where the strongest elements will seize control. As such, the US and other countries are beginning to evacuate diplomatic personnel. Should the Egyptian government fall, I would bet on either the army or the Muslim Brotherhood taking control. Although it is unclear what side the army is on, the Muslim Brotherhood is clearly anti-American and aligned with Hamas. This would have a major destabilizing effect on the Middle East political situation.
However, this is not the biggest issue. The problem is that these protests can and probably will spread. Already, there have Yemen and Jordan. Although the mainstream media has portrayed these protests as “pro-democracy”, if the government were to fall, all bets are off. Based on the current situation in the region and the rise of radical Islamic movements, I believe that any change would likely be in that direction. Witness what happened in Afghanistan and Iraq. What these events mean to US interests is tough to determine at this point, but I cannot believe that they would be positive. As such, every Arab dictator is sleeping very poorly today. Meanwhile, the Dubai and Saudi Arabian stock markets both plunged over the weekend. The price of oil, predictably, jumped over 4%.
Looking at the S and P from a technical prospective, the rising trend line set since early December has not been broken. The first significant level of support is around the 1250 level. However, such as with 9/11 and other major events, charts may become meaningless if political events continue to unfold dramatically.
