Wednesday, February 2, 2011

Mid-East contagion fears for Saudi Arabia's oil fields...

Saudi Arabia, main oil pipeline, car driving by at dusk
Saudi Arabia's main oil pipeline. 'The Shia are 10pc of the Saudi population. They are deeply aggrieved and marginalized, and sit on top of the kingdom's oil reserves' ....

Risk analysts and intelligence agencies fear that Egypt's uprising may set off escalating protests in the tense Shia regions of Saudi Arabia, home to the world's richest oilfields....

"Yemen, Sudan, Jordan, Morocco, Algeria, Vietnam, and Syria all look very vulnerable. However, the greatest risk in terms of both probability and severity is in Saudi Arabia," said a report by risk consultants Exclusive Analysis.

While markets have focused on possible disruption to the Suez Canal, conduit for 8pc of global shipping, it is unlikely that Egyptian leaders of any stripe would cut off an income stream worth $5bn (£3.1bn) a year to the Egyptian state.

"I don't think the Egyptians will ever dare to touch it," said Opec chief Abdullah El-Badri, adding that the separate Suez oil pipeline is "very well protected". The canal was blockaded after the Six Days War in 1967.

There has been less focus on the risk of instability spreading to Saudi Arabia's Eastern Province, headquarters of the Saudi oil giant Aramco. The region boasts the vast Safaniya, Shaybah and Ghawar oilfields. "This is potentially far more dangerous," said Faysal Itani, Mid-East strategist at Exclusive.

"The Shia are 10pc of the Saudi population. They are deeply aggrieved and marginalized, and sit on top of the kingdom's oil reserves. There have been frequent confrontations and street fights with the security forces that are very rarely reported in the media," he said.

Saudi King Abdullah is clearly alarmed by fast-moving events in Egypt and the Arab world. In a statement published by the Saudi press agency he said agitators had "infiltrated Egypt to destabilize its security and incite malicious sedition".

The accusations seem aimed at Iran's Shia regime, which has openly endorsed the "rightful demands" of the protest movement. There is deep concern in Sunni Arab countries that Iran is attempting to create a "Shia Crescent" through Iraq, Bahrain and into the Gulf areas of Saudi Arabia, hoping to become the hegemonic force in global oil supply.

Goldman Sachs said the Mid-East holds 61pc of the world's proven oil reserves – and 36pc of current supply – which may compel global leaders to make "concentrated efforts" to stabilize the region. The bank said high levels of affluence should shield Saudi Arabia and the Gulf's oil-rich states from "political contagion".

However, a third of Saudi Arabia's 25m residents are ill-assimilated foreigners and the country faces a "youth bulge", with unemployment at 42pc among those aged 20 to 24.

Nima Khorrami Assl, a Gulf expert at the Transnational Crisis Project, said Shi'ites have been "stigmatized, demonized, ill-treated, excluded from any Army or Security Jobs, barred from the Bureaucracy, and very deeply hated by the Saudi Royal family and the Saudi Establishment for decades, as a result of excessive paranoia since Iran's Islamic Revolution" and face systemic barriers in education and jobs, in other words, the Shiites in KSA are systematically discriminated against from birth to death....and are considered like 5th class citizens... "Should the Gulf states do nothing or attempt to preserve the status quo, social unrest becomes inevitable. The current situation is inherently very unstable," he told Foreign Policy Journal.

Exclusive Analysis said Egypt's revolt had gone beyond the point of no return as protesters plan a 1m strong rally on Tuesday, with president Hosni Mubarak likely to be ousted within 30 days.

John Cochrane, the group's global risk strategist, said the regime has so far refrained from ordering the army to crush protesters knowing that many officers will refuse to obey. "If asked to use lethal force, it is questionable whether the army's cohesion will hold together," he said.

The Muslim Brotherhood, the best-organized of the diffuse protest movement, has reached out to the military, praising its "long and honorable history", but it has also begun to set up its own populist militias to protect the streets.

A future government – with the Brotherhood pulling some strings – is expected to renationalize parts of industry, shifting away from "free-market" policies used to weaken the labor unions and steer contracts to an incestuous elite. Ezz Steel and other parts of the business empire of Ahmed Ezz may be seized, as well as infrastructure assets linked to corrupt ministers.

The Brotherhood's "old guard" has so far controlled its hotheads but the organization is close to Hamas in Gaza. Israel may soon find that it can no longer count on a secure southern border, even if Egypt's peace treaty remains in name.

The outbreak of Arab populism vindicates claims by some that the region is ripe for change, but this is not what Washington had in mind. "US interests are the first casualty," said Mr. Itani.

Fairly or unfairly, America is tarred with the Mubarak brush.... Cairo may switch allegiance to the rising powers of Turkey, India, and above all, China....

Revolutionary Fervor to Spread
Beyond Arab States; Europe and possibly USA Next
By Gerald Celente

KINGSTON, NY, 1 February 2011 - When the Tunisian government toppled, the mass media and their stable of experts ­ who were blindsided by these events ­ quickly stepped in to proclaim the obvious: that citizens of other Arab nations would be emboldened to challenge autocratic and corrupt governments.

Now Egypt is in the throes of insurrection, and Algeria, Jordan, Morocco and Yemen are already targeted for revolutionary change. The richer and more tightly controlled Kingdoms of the Middle East will not be immune to challenges from their citizenry to break the chains of royal rule.

But, as I had forecast in the Trends Journal, it is not solely the Middle East that is destined to experience episodes of violent upheaval. What is transpiring in the Arab world will spread throughout many European states. While the call to arms will be spoken in different tongues, the underlying causes will be the same.

In December 2010 (before Tunisia made the headlines) we issued a Trend Alert® titled, "Off With Their Heads!" in which we predicted a "long war between the people and the ruling classes." We noted that, "Anyone questioning the intensity of the people's seething anger is either out of touch or in denial."

It wasn't Arab anger that led us to that forecast ­ it was the student and worker revolts spilling into the streets of Europe. The imposition of draconian austerity measures ­ higher taxes, tuition hikes, lost benefits, curtailed services, public sector job cuts ­ had young and old raging against a rigged system that paved the way for the privileged and punished the proles.

Though millions marched through the streets of Athens, Brussels, Dublin, Lisbon, London and Madrid, when the protests ended, the governments were barely shaken, let alone toppled. Unlike the autocratic Arab regimes, where the tight grip of repression could only be broken by violence, in the "democratic" West the illusion of representation and placating government promises mitigated the violence.

Both the press and politicians assumed the protests would run their course, people would accept their fate, and, like it or not, suffer the consequences. The protests, however, have not run their course. The economic toll of austerity and unemployment continues to ravage the lower and middle classes. As we wrote in the Winter 2011 Trends Journal, "It will only be a matter of time before a series of final straw events breaks the public's back, setting off uncontrollable uprisings, coups (bloodless and/or military), riots and revolts throughout the financially battered world."

Trend Forecast: The unintended consequences of the regime changes in North Africa and the Middle East, and the uprisings we forecast that will roil Europe will be as fully dramatic as their intended consequences: the overthrow of governments. The calls by Presidents, Prime Ministers, cabinet officials and foreign policy experts for "orderly transition of power" are nothing more than diplomatic doublespeak and pure windbaggery. There is no such thing as a clean and simple revolution.

As we will see in Egypt, military coups will be disguised as regime changes. Already the public is being conditioned to view the Egyptian military as beloved liberators. But in fact they are simply another arm of the autocratic government, no more familiar with democratic ideals than the dictator they replace ... who had himself been drawn from the ranks of the military.

The world leaders and world media are not recognizing the Egyptian uprising for what it is: a prelude to a series of civil wars that will lead to regional wars, that will lead to the first "Great War" of the 21st century.....

Our willingness to "bell the cat" is breathtaking.... It appears that the on-going meltdown of the utterly corrupt USG's (and the Zionists) model for even greater success in the sand box has enhanced our traditional willingness to "speak the truth and shame the devil..."
Now we'll have to see how rising food and energy prices play out in these "nations" that are hanging on by the skin of their teeth Worldwide...., courtesy of the Federal Reserve, QE2/3 and Ben Shalom Bernanke, George Soros/CIA shenanigans, NED, the WikedLeaks and other MOSSAD/MI6 dirty tricks...

Bahrain and the Royal Bin Khalifa Thugs...

In addition to the battles in the streets of Bahrain, there is a battle within the royal family. The king apologized for the one death on the first day, then the security forces launched an incredibly ugly attack shortly thereafter, killing at least 5 more Bahrainis. They then attacked people coming from the funerals today. They have prevented ambulances from reaching the wounded, and they have brutalized doctors trying to tend to the wounded.

On Friday, the king called (via a statement read by the Crown Prince) for the army to withdraw from the streets. Although he is the commander in chief of the army, the armed forces were still in place at last report. So who is in charge? Is Khalifa, the hardline PM and senior uncle of the king, the one who is calling the shots, quite literally?

I also suggested that the GCC FM “emergency” conference in Manama yesterday was intended to assure Bahrain that it had carte blanche to do whatever was necessary to put down the rebellion, regardless of cost. Saudi Arabia, I suggested, was terrified of the consequences of a Shia uprising spilling over into the Eastern Province. And other Arab rulers in the Gulf heartily concur that Bahrain is the place to draw the line, rather than Kuwait City or Abu Dhabi.

Finally, I suggested that it was probably too late for the dialogue that the king is requesting. After all the bloodshed — all coming only from the government side, it should be noted — it will be hard to get people to sitaround the table and reason together.

There does not seem to be a happy ending to this story....

"Oil price shock"

A group of European economists are now predicting an "Oil price shock" for America as a consequence of the destabilization of Middle Eastern regimes and continued depreciation of the American dollar.

Their belief is that the post 1945 world order is crumbling very quickly now and will be replaced by a new arrangement. Their view is that Governments, the media, punditry and commentators have been deliberately avoiding talking about the increasing instability of international financial systems that they believe has been evident for the last Five or more years.

There are elements of schadenfreud or European snark in their depiction of Western Governments caught flat footed by developments in the Middle East. They paint the West, lead by America, as "backward looking."

In my opinion, the death grip that corporate interests (including AIPAC) have on all the American legislatures precludes rational analysis of Americas best interests, both domestic and foreign, let alone a coherent set of strategies to address them. The Obama Administrations ongoing late and lukewarm response to Middle Eastern events being a case in point.

I also suspect that there are leaders outside the Middle East who are disconcerted by what has happened in Egypt. The longer Washington remains paralyzed, the worse the eventual disruption will be. Events in Madison, Wisconsin are a tiny harbinger of what must eventually come.

AIPAC is already working its wonders on behalf of the fatherland and the junior senator from NY has started the march:

They seem to forget that two Israeli nuclear subs were allowed to transit through the Canal from Israel in 2009 to patrol the sea lanes near the coast of Iran....and that Israel has a huge MOSSAD listening station in Sharjah...across from Iran....


The numbers behind the MENA Revolts....

What determines which Middle Eastern or North African (MENA) countries will face revolt?

On February 3rd, the Economist came up with a list of "vulnerable" countries based upon the amount of democracy, corruption and press freedom:


But the Economist index doesn't take unemployment into account unemployment.

As Alternet
Arab Labour Organisation (ALO) figures show that Arab countries have among the highest unemployment rates in the world -- an average of 14.5 percent in fiscal year 2007/08 compared with the international average of 5.7 percent. The rates may even be higher if one accepts unofficial estimates.
Global risk specialist Mi2g notes:
There are a lot of “orphans” and most are young – 65 percent of the population of the Arab League is under the age of 30. Youth unemployment rates are exorbitantly high – as high as 75 percent in some countries like Algeria. While the informal economy provides partial compensation, this does not provide security; the Jasmine Revolution was triggered by the self-immolation of a young man, Mohamed Bouazizi, unemployed after police confiscated his wheelbarrow, used to make ends meet by selling fruits and vegetables.
On February 2nd, Nomura published a report written by Steven Cook of the Council on Foreign Relations, arguing that youth unemployment and underemployment - along with a large proportion of youth - are primary factors driving revolt in the Middle East:
In both Tunisia and Egypt factors were at play which are also to be found in other economies in the region, notably:–An autocratic and corrupt regime [and] A significant―youth bulge and related unemployment and under-employment....
In other words, when there alot of young, unemployed (or under-employed) people, they might revolt.

Here are statistics from Nomura showing the percentage of youth under 15 years old and median age in years in the Middle East and Northern Africa:

Country Population Aged <15>
Median Age (2010)
Algeria 27.0% 26.2%
Egypt 32.1% 23.9%
Iran 23.8% 26.8%
Iraq 40.7% 19.3%
Jordan 34.0% 22.8%
Libya 30.1% 26.2 %
Morocco 28.0% 26.2%
Saudi Arabia 32.0 % 24.6%
Syria 34.7% 22.5%
Tunisia 22.9% 29.1%
Yemen 43.4% 17.8%

On February 9th, the Economist came up with a revised index, which they call the "shoe thrower's index" (throwing one's shoes at someone is the ultimate sign of disrespect in the Arab world).

The index gives a 35% weighting for the share of the population that is under 25; 15% for the number of years the government has been in power; 15% for both corruption and lack of democracy as measured by existing indices; 10% for GDP per person; 5% for an index of censorship and 5% for the absolute number of people younger than 25:
More on this topic (What's this?)
Am I Missing Something?
Consumer Recovery Keeps Slip Slidin' Away
Unemployment rates greatly affected by educational attainment
Read more on Unemployment (U.S.) at Wikinvest

As a side note, youth unemployment is rising globally. As the New York Times reported last August:
Youth unemployment across the world has climbed to a new high and is likely to climb further this year, a United Nations agency said Thursday, while warning of a “lost generation” as more young people give up the search for work.

The agency, the International Labor Organization, said in a report that of some 620 million young people ages 15 to 24 in the work force, about 81 million were unemployed at the end of 2009 — the highest level in two decades of record-keeping by the organization, which is based in Geneva.

The youth unemployment rate increased to 13 percent in 2009 from 11.9 percent in the last assessment in 2007.

“There’s never been an increase of this magnitude — both in terms of the rate and the level — since we’ve been tracking the data,” said Steven Kapsos, an economist with the organization. The agency forecast that the global youth unemployment rate would continue to increase through 2010, to 13.1 percent, as the effects of the economic downturn continue. It should then decline to 12.7 percent in 2011.


In some especially strained European countries, including Spain and Britain, many young people have become discouraged and given up the job hunt, it said. The trend will have “significant consequences for young people,” as more and more join the ranks of the already unemployed, it said. That has the potential to create a “ ‘lost generation’ comprised of young people who have dropped out of the labor market, having lost all hope of being able to work for a decent living.


Data from Eurostat, the European Union’s statistical agency, show Spain had a jobless rate of 40.5 percent in May for people under 25.

Indeed, youth unemployment is also very high in the U.S. And when those who have given up looking for work and those who are underemployed are taken into account (i.e. using the U-6 measure of unemployment), it is clear that the youth of much of the world are suffering Depression-level unemployment.


As many have noted, soaring food prices are also one of the main reasons for the revolts in Tunisia, Egypt, Bahrain, Yemen, Libya and elsewhere.

Nomura pointed out last September:

The World Bank (2009, p.11) estimates that nearly two-thirds of total income
is spent on food in the poor urban population of the developing world. High food prices reduce the ability to meet even basic needs and can lead to increased poverty and become a potential source of protests, riots and political tension ....

Alternet notes:

"Tunisians and Algerians are hungry. The Egyptians and Yemenis are right behind them," Emirati commentator Mishaal Al Gergawi wrote in the Dubai- based newspaper Gulf News. "Mohammad Bouazizi didn't set himself on fire because he couldn't blog or vote. People set themselves on fire because they can't stand seeing their family wither away slowly, not of sorrow, but of cold stark hunger."
While Americans spend less than 15 percent of household expenditures on food, Egyptians spend 50%.

Just as in Tunisia, the spark was skyrocketing food prices -- increasing at a brisk 17 percent annually in Egypt. That's unhealthy in any economy but particularly one in which, as estimated by the investment house Nomura, on average 50 percent of household expenditures goes toward food. (In the United States, by comparison, food costs represent 14 percent -- and falling -- of the Consumer Price Index.)

For that, Egyptians may in no small way thank the U.S. Federal Reserve and its policies of "quantitative easing" -- known by most as "printing money."

Nomura prepared the following chart showing household spending on food as a percentage of income (I've bolded information on the MENA countries):

Rank Country Nomura’s Food Vulnerability Index (NFVI) GDP per
capita Current prices US$
spending on
food % of total
Net food
(% of
1 Bangladesh 101.5 497 53.8 -3.3
2 Morocco 101.3 2,769 63.0 -2.1
3 Algeria 101.3 4,845 53.0 -2.8
4 Nigeria 101.2 1,370 73.0 -0.9
5 Lebanon 101.2 6,978 34.0 -3.9
6 Egypt 101.0 1,991 48.1 -2.1
7 Sri Lanka 101.0 2,013 39.6 -2.7
8 Sudan 100.9 1,353 52.9 -1.3
9 Hong Kong 100.9 30,863 25.8 -4.4
10 Azerbaijan 100.8 5,315 60.2 -0.6
11 Angola 100.8 4,714 46.1 -1.4
12 Romania 100.7 9,300 49.4 -1.1
13 Philippines 100.7 1,847 45.6 -1.0
14 Kenya 100.7 783 45.8 -0.8
15 Pakistan 100.6 991 47.6 -0.4
16 Libya 100.6 14,802 37.2 -1.7
17 Dominican Rep 100.6 4,576 38.3 -1.1
18 Tunisia 100.5 3,903 36.0 -1.1
19 Bulgaria 100.5 6,546 49.5 -0.1
20 Ukraine 100.5 3,899 61.0 0.9
21 India 100.4 1,017 49.5 0.3
22 China 100.4 3,267 39.8 -0.3
23 Latvia 100.4 14,908 34.3 -1.1
24 Vietnam 100.4 1,051 50.7 0.8
25 Venezuela 100.4 11,246 32.6 -1.0
26 Portugal 100.4 22,923 28.6 -1.8
27 Saudi Arabia 100.3 19,022 25.1 -1.8
28 Kazakhstan 100.3 8,513 44.7 0.1
29 Uzbekistan 100.3 1,023 34.7 -0.3
30 Russia 100.3 11,832 34.4 -0.7
31 Mexico 100.3 10,232 34.0 -0.5
32 Indonesia 100.2 2,246 47.9 1.0
33 Croatia 100.2 15,637 30.1 -0.9
34 Peru 100.2 4,477 31.8 -0.3
35 Greece 100.2 31,670 38.3 -0.7
36 Belarus 100.1 6,230 42.3 0.8
37 Slovenia 100.1 27,019 25.8 -1.3
38 Syria 100.1 2,682 47.9 1.5
39 Turkey 100.1 9,942 35.2 0.2
40 South Korea 100.1 19,115 23.1 -0.9
41 Colombia 100.1 5,416 28.0 0.0
42 South Africa 100.0 5,678 25.0 -0.1
43 Serbia 100.0 6,811 44.8 1.4
44 Czech Republic 100.0 20,673 27.4 -0.4
45 Lithuania 100.0 14,098 41.1 1.1
46 Guatemala 99.9 2,848 37.1 1.3
47 Slovakia 99.9 18,212 22.3 -0.4
48 Poland 99.9 13,845 32.1 0.7
49 Singapore 99.9 37,597 21.9 -1.0
50 Kuwait 99.9 54,260 30.0 -1.1
51 UK 99.8 43,541 22.5 -1.0
52 Israel 99.8 27,652 17.7 -0.5
53 Japan 99.7 38,455 19.8 -0.6
54 Italy 99.7 38,492 22.1 -0.3
55 Thailand 99.6 4,043 39.0 2.7
56 Hungary 99.6 15,408 29.4 1.6
57 Sweden 99.5 51,950 17.4 -0.7
58 Finland 99.5 51,323 20.5 -0.5
59 Germany 99.5 44,446 18.5 -0.3
60 Spain 99.5 35,215 21.8 0.4
61 Austria 99.5 49,599 19.5 -0.3
62 Ecuador 99.5 4,056 30.6 2.5
63 Switzerland 99.5 64,327 24.0 -0.5
64 Malaysia 99.5 8,209 37.1 2.9
65 France 99.5 44,508 22.0 0.2
66 Brazil 99.5 8,205 20.8 1.8
67 United States 99.3 46,350 13.7 0.2
68 Canada 99.3 45,070 18.0 0.6
69 Australia 99.2 47,370 19.7 1.1
70 Belgium 99.2 47,085 15.9 0.9
71 Chile 99.1 10,084 22.5 3.1
72 Ireland 99.1 60,460 25.8 1.5
73 Norway 99.0 94,759 16.9 -0.6
74 Luxembourg 99.0 109,903 19.1 -1.0
75 Costa Rica 98.9 6,564 30.6 4.7
76 Netherlands 98.9 52,963 13.3 1.6`
77 Denmark 98.8 62,118 16.8 1.8
78 Argentina 98.7 8,236 33.4 5.6
79 Uruguay 98.5 9,654 25.3 5.6
80 New Zealand 97.7 30,439 18.8 7.5

As should be noted, there are countries outside of MENA with extremely high percentages of spending on food.

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