By Willis Sparks
The unrest now rattling North Africa and the Middle East generates new headlines each day. Today, it's an announcement from Morocco's King Mohammed VI that important constitutional reforms are on the way. It's a report that Qaddafi loyalists have pushed rebels from a couple of important port cities in eastern Libya and news that France has become the first country to recognize the rebels as Libya's legitimate government. It's the news that the Gulf Cooperation Council has promised to provide $10 billion each to member states Bahrain and Oman to help restore confidence in their stability amid ongoing protests.
But beyond the Middle East, the upheaval is producing a lengthening list of winners and losers. Here are a few of them:
Security hawks within China Security Ministry and military
The Chinese Communist Party leadership is a pretty risk-averse group, and recent turmoil in North Africa and the Middle East has strengthened the argument of those within the security forces and People's Liberation Army who say Beijing must never underestimate the dangers of quickly evolving technological and foreign policy challenges. Given the threat to Arab autocracies splashing across the headlines, we can expect China to devote still larger volumes of state resources to monitor social networking and other tools of modern communication -- and to further develop cyber capabilities generally. And just as the British military was able to evacuate British nationals from Libya, and with more Chinese than ever working abroad in sometimes volatile places, China's military will be in stronger position to win the extra resources it wants to assert China's interests abroad.
Four months ago, Cote d'Ivoire's President Laurent Gbagbo stood for re-election against challenger Alassane Ouattara. The United Nations, the African Union, and the European Union agree that Ouattara won a fair contest. But Gbagbo has refused to accept defeat, and efforts at mediation have gone nowhere. The defeated incumbent has shrugged off international pressure for a graceful exit -- or any exit -- and hundreds of people have been killed in the resulting violence. With so much attention on events in the Arab world, there's not much international consensus on what to do about Gbagbo. Cote d'Ivoire is the world's leading producer of cocoa. That might boost international attention if so many of us weren't staring at the price of oil these days.
Turmoil in the Middle East and North Africa, particularly among major energy producers like Libya, Algeria -- and in Bahrain and Yemen, which border the biggest oil producer of them all -- has helped push oil prices past $100 per barrel. That's good news for ethanol producers in the United States, who will profit from a widening separation between prices for ethanol and gasoline.
Russian arms dealers
Russian weapons dealers have seen the door close (at least temporarily) on a Libyan arms market worth some $2 billion. Yesterday, Russian President Dmitry Medvedev signed a decree that prevents Russian firms from providing the Libyan government with "all types of arms and related materials, including weapons and ammunition, combat vehicles and military hardware." The move was intended in part to ease international pressure for imposition of a no-fly zone in Libya or any other form of direct military intervention there. We don't know how long the ban will last, but money will be lost in the near term.
Until earlier this week, there was an 11,000-seat football stadium in the eastern Libyan town of Benina named for Venezuelan President Hugo Chavez. But the support Chavez has offered the embattled Qaddafi has angered the Libyan rebels who now control Benina, and they have renamed the arena Martyrs of February Stadium.
Willis Sparks in an analyst in Eurasia Group's Global Macro practice.
ROBERTO SCHMIDT/AFP/Getty Images
By Greg Priddy
There are several political factors adding upward pressure on oil prices at the moment. Libya, Africa's third largest producer, has descended into civil war. Saudi assurances of increased supply haven't been as specific as some would like. Most importantly, there is worry that spare capacity could be essentially tapped out if we see a second big disruption in the Middle East or North Africa.
For the moment, the worries are exaggerated. Market fears are not easily quelled, and the risk premium in prices will be with us awhile longer. But if Libya's troubles continue for several more weeks, the Saudis have very good reasons to eventually make up the full volume, and the risk is small that any of the region's other major oil producers will face the turmoil we see in Libya.
majority of Libyan crude oil export volumes will probably be offline for
months, not weeks. Saudi and other Gulf Cooperation Council members can cover
Libyan volumes, but the risk that a second substantial disruption elsewhere in
the region would reduce spare capacity to dangerously low levels would provide
genuine cause for alarm.
Market anxiety focuses on countries with large volumes potentially at risk. Algeria, Iran, and Oman have faced protests in recent days, and loud demonstrations in Bahrain and Tuesday's arrest of a prominent Shiite cleric in Saudi Arabia's Eastern Province have stoked fear for the stability of Saudi Arabia itself.
in all these countries will continue, but none of them are likely to face the
risk of military fragmentation we've seen in Libya. Clearly, there are risks of
further output disruptions across the region, particularly in Yemen, a smaller
producer. But none of these countries faces the kind of unrest that would shut
in enough oil to deplete Saudi spare capacity.
And the Saudis have good reason to keep oil prices in check. Moderate prices will bolster economic vitality among the Saudis' best customers in America, Europe, and Asia. They will help prevent regional rival Iran from filling its coffers with extra revenue at a moment of Sunni anxiety about Shiite power in the region. They will also ease pressure for development elsewhere in the world of hydrocarbon alternatives.
Greg Priddy is a Global Energy & Natural Resources analyst at Eurasia Group.
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