Friday, October 10, 2008

US Economic Crisis and the Middle East

US Economic Crisis and the Middle East

Ali Asghar Kazemi
October 10 2008

The crisis that swept world financial markets in recent weeks did not surprise many analysts who expected the curse long before its occurrence. Some have compared it to the great American depression of 1930s which changed the political landscape of the world by the emergence of militarism and fascism that ended up to the Second World War.

There are solid indications that the American crisis that reverberated throughout the globe within days is a multidimensional phenomenon that seeks its causes in a number of dependent and intervening variables among which American military interventions in the Middle East and mounting threats against the Islamic regime in Iran are the most decisive.History bears good witness that the United States has always sought cure to economic crises and recession in massive military build-ups and interventions outside the American continent. Two world wars and wars in Korea, Vietnam and more recent military interventions in the Middle East are cited as vivid examples of this contention.

How far this argument is tenable in present international relations? What are the hidden dimensions of the crisis? What would be the impacts of the crisis for the Middle East as a whole and Iran in particular, as a plausible target of US preemptive strike? How the crisis should be managed in order to avoid the worse to happen?
The crisis that engulfed the world financial markets in the past two weeks was in fact not a surprise to most economic and political analysts who had foreseen the initial signs and symptoms of the anomaly well before its occurrence. Two years ago in 2006, a significant estimate was issued by the Laboratoire europĂ©en d’Anticipation Politique Europe 2020 - LEAP/E2020 which had predicted with high probability that an economic and financial crisis of a scope comparable with that of 1929 is on the way which will have most adverse political impact the world has known since the fall of the Soviet empire in 1989. It was referred to as ‘The End of the Western World we have known since 1945.' According to the same document, in case an American or Israeli military intervention is conducted against Iran, the probability of a major crisis to start rises up to 100%.

The study has based its estimates on two verifiable events related to decisions taken by two key-actors: the United States and Iran. Here is the main argument of the survey:
• On the one hand there is the Iranian decision of opening the first oil bourse priced in Euros on March 20th, 2006 in Teheran, available to all oil producers of the region;
• On the other hand, there is the decision of the American Federal Reserve to stop publishing M3 figures (the most reliable indicator on the amount of dollars circulating in the world) from March 23, 2006 onward.
According to the document, these two decisions constitute altogether the indicators, the causes and the consequences of the historical transition in progress between the order created after World War II and the new international equilibrium in gestation since the collapse of the USSR. Their magnitude as much as their simultaneity will catalyze all the tensions, weaknesses and imbalances accumulated since more than a decade throughout the international system. (LEAP/E2020)The survey further predicted in 2006 that as a consequence of the above phenomenon, a world crisis is susceptible to emerge in seven important sectors which will affect the whole planet in political as well as military fields as follow:
1. Crisis of confidence in the Dollar;
2. Crisis of US financial imbalances;
3. Oil crisis;
4. Crisis of the American leadership;
5. Crisis of the Arab-Muslim world;
6. Global governance crisis;
7. European governance crisis.
As can be seen in the above estimate, the financial crisis is just the tip of the mountain of a deeper and more systemic crisis situation which we should expect throughout the world.
There is little doubt that the first repercussion of the current financial crisis will be seen in the domestic affairs of the United States where the fate of the next American president will soon be decided. Democrats have now more chances to conquer the White House, not that they have better solutions for the crisis but just because the republicans have lost their credibility in the American leadership for sound governance.
The psychological shock of the crisis in the mind of the American public in an inopportune time will eventually lead them to vote for a democrat president, although they may not like him. The setback for the republicans is almost certain, because they ought to pay the price of horrendous mistakes of an unpopular president who engaged Americans into futile entanglements in the Middle East which is still going on. That is not to say that democrats are more pacifist or more lenient and restraint towards engaging into conflicts and hostility with their contenders, especially Iran. Since surprisingly, as I have said elsewhere, most major wars the United States engaged into were initiated by the democrats and terminated by the republicans.
Seen from the vantage point of the Islamic leaders in Iran, the crisis is yet another sign of American decadence behind which lay the invisible hands of the omnipotent Allah. They may naively think that an America in crisis will neither have the incentive nor the guts to go for a preemptive strike or put further pressure on Iran for its nuclear venture.
Unfortunately, hardliners in Iran miss an important truth. Whether they like it or not, the fate of the global economy is intimately interwoven with the American financial market. This is especially true for Iran’s two potential supporters, Russians and Chinese, whose economic viability is more exposed to the crisis than any other states. Thus, they should avoid tying their fate with unreliable partners. They should remember the financial and economic shocks of the past decades which brought down to nil Asian flourishing economy. In all of these crises the United States was able to recover smoothly at the costs of other developing and oil producing countries.
Though Iran holds important geo-strategic assets in the current crisis and so far has been able to stay somehow aloof of its negative impact, it should be cautious about taking provocative decisions that could aggravate the situation and give pretext to its contenders to further apply severe sanctions or to form a coalition for an eventual military strike.
In conclusion, the world has to cross fingers that the United States recovers safely and promptly from the ongoing crisis and does not endure much structural harm susceptible to endanger the present vulnerable international order. Otherwise, adverse condition is susceptible to further aggravate hostilities and conflicts, by spreading the plague of terrorism and militarism around the world.

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