The biggest newspaper in the Netherlands is De Telegraaf. One of their best columnists for the financial pages, Alexander Sassen Van Elsloo, recently wrote an article that was promptly removed by De Telegraaf after publication – it was too much about politics instead of finance according the newspaper. Reason for me to ask Alexander for permission to translate te article (a valuable geopolitical analysis) and share it with my readers. “Sure“, he answered.
Oil, War And Islam
by Alexander Sassen Van Elsloo, June 16, 2014.
The Middle East is kind of a geopolitical pilot flame; each time it’s politically desirable for great powers (especially the U.S.) fuel is added and the region is ablaze. Apparently it was desirable for the U.S. and Saudi Arabia that Sunni terrorists ((affiliated with terrorist number one: Al-Qaeda)) conquer parts of Iraq. This assumption seems strange (Al Qaeda is after all a sworn enemy of the U.S.), but recent U.S. actions all point in the same direction: the U.S. allowed this to happen. There are two reasons for this: Iran and oil. For investors this means a period of geopolitical tensions that at least wil put a floor under the price of oil. For the people in the region this means a humanitarian disaster of enormous proportions. Something the beneficiaries of this conflict are accountable for.
Iran greatest threat
Since the fall of Saddam Hussein the Americans have a big problem: the Shiites. Many people think that the biggest clash of Islam has to do with Jews and/or Christians, but this is not true. The greatest conflict of Islam lies within Islam: the Shiites and the Sunnis have been in conflict for many centuries. After the reign of Saddam (who belonged to the Sunni minority of 30% of the Iraqi population) it was the turn of the Shiites (60% of the Iraqi population) to rule Iraq. Iran grabbed this opportunity with both hands and supported Iraqi Shiites in many ways. The plan is to build an Shiite empire, including Syria, Lebanon and the north of Saudi Arabia, controlled by Iran. While only 10 percent of the population in Saudi Arabia is Shia, they are concentrated in the north of the country. And here’s the catch: many of the oil fields in Saudi Arabia are in the north where the Shiites are being suppressed.
The plot thickens
Saudi Arabia fears that the Shiites, led by Iran, seize power in these areas. The nuclear ambitions of Iran should also be seen in this context; Iran with a nuclear weapon would the most powerful Shiite regime to unite all other Shia in the region. This new empire (Caliphate) would have the largest oil reserves in the world. For this reason, Saudi Arabia supports Sunni terrorists under the name ISIS/the Levant and the U.S. condones it. Even more proof of U.S. support for what’s happening was its willingness to support these same terrorists to fight the Syrian government of Assad, which is an ally of Iran. If it wasn’t desirable for the U.S., these terrorist groups would have never entered Iraq. The Pentagon saw three Russian tanks crossing the Ukraine border, but failed to notice hordes of tanks, jeeps and jihadist crossing the Syrian border with Iraq. Right. The fact that the U.S. ignored repeated requests from the Iraqi government for air support only confirms this. This leads me to the irony of the story; the U.S. (and the West) need the Al-Qaeda Sunni terrorists to prevent Iran from establishing a large Shiite empire.
One man’s loss is another man’s gain
This situation is a humanitarian disaster for ordinary Sunni and Shiite civilians in Iraq and a financial disaster for the tax payers in the West (higher energy prices and defense spending). The winners are the usual suspects: oil and gas producing countries (such as the U.S. and Saudi Arabia), the defense industry and politicians who need to divert the attention from problems in their own countries.
War for and because of oil
The Middle East is again in flames. Together with the soured Arab springs in the region, investors can assume that oil prices have at least firm support in the near future. Geopolitical tensions are not the only movers of the price of oil (in contrast, a cooling world economy will have a downward pressure), but because the potential of this conflict to derail is so high, I personally see little downside risk. If all humanitarian costs would be included, oil consists of an horrific amount of blood, some sweat and many tears. I prefer to see peace in the Middle East, but that is apparently not desirable for the big geopolitical players and the leaders of Islamic terrorist organizations. Each of the parties involved sees its own advantage in this warped game of chess. The difficult question to ask oneself is: “considering past mistakes in foreign policy as a given, what can/should the West do to stop Iran from uniting the Shiites, while preventing the ISIS from doing the same with the Sunnis?” I suspect that the answer might be very unsettling.