Joel Bowman

“A kingdom founded on injustice never lasts”

– Lucius Annaeus Seneca (tutor and later advisor to emperor Nero)

Tunisia…Algeria…Yemen…Egypt…Jordan…the road to $200 oil…

And that’s just for starters!

Tempers are flaring and kingdoms are toppling across the Arab world this week as millions of discontented youths take to the streets to demand the overthrow of their respective leaders.

First it was Tunisia’s dictator of 23 years, Zine El Abidine Ben Ali, who found his head squarely on the political chopping block. Following a spate of insuppressible food riots across the country, the tiny nation’s second president has (after being denied entry to France) since fled to Saudi Arabia, where he is currently residing…although not before his wife, Leila Trabelsi, casually rocked up to Tunisia’s central bank to collect 1.5 metric tons of the country’s gold – roughly $66 million worth.

“That’s the trouble with trying to maintain an empire,” commented Addison Wiggin in The 5 at the time. “It gets very expensive. And messy.”

The Tunisian-born, Saudi-residing, US-backed former leader was, as recently as a few months ago, still enjoying some rather generous handouts from Uncle Sam.

“Last year,” continued Addison, “the Obama administration asked Congress to approve a $282 million sale of 12 ‘excess’ Sikorsky military helicopters to Tunisia with engines made by General Electric.

“A deal between the United States and the Ben Ali regime funneled $349 million in US military aid over to Ben Ali over the course of his 23-year regime, official Pentagon figures tell us.

“Admittedly, $349 million is not a lot of money considering the trillions the State Department has spent on Iraq and Afghanistan. Still, as just one outpost on the fringe of the empire… these sums begin to pile up.”

Unfortunately, burning outposts have a historical tendency of bringing the whole fence down.

Revolution, ever the last resort for repressed youths the world over, soon spread from Tunisia across the Red Sea, emboldening Yemenis to stampede their capital and to call for the ousting of their own US-backed leader of three decades, Ali Abdullah Saleh. Of course, the mood didn’t leave Algeria untouched…nor did it fail to light a spark across America’s other “moderate Arab clients,” as one blogger wryly referred to them.

But this week, the story is all Egypt. Although relatively small, with a total economic output of just $217 billion last year, the Land of the Pharaohs straddles the Suez Canal and is home to the Suez Mediterranean Pipeline, both vital conduits for the delivery of oil and gas between the Red Sea and the Mediterranean. It is little wonder, therefore, that as mobs throng the Egyptian capital, calling for the removal of Hosni Mubarak (another leader seen as sympathetic to the US), London Brent Crude lurched over the $100 per barrel mark. And, at just shy of $92 per barrel this morning, West Texas Intermediate is not far behind.

And, as we write, news is crossing the wires that Jordan’s King Abdullah II, bowing to public pressure in his own backyard, has fired his government and tasked his new prime minister with implementing new economic policies aimed at giving Jordanians a voice in the political sphere. But is it a case of too little too late?

Relays The Associated Press:

“The country’s powerful Muslim opposition, which had demanded the dismissal of Prime Minister Samir Rifai in several nationwide protests inspired by those in Tunisia and Egypt, said the changes didn’t go far enough.”

Of course, as any disheveled malcontent worth his (or her) Molotov cocktail will tell you, revolutions like those we’re now seeing in that oily patch of the world don’t happen overnight. They take patience…political ineptitude…and a demographic spark to set the whole thing off.

For some, the writing has been on the wall for some time now. But while the mainstream press was busy reporting on the region with pictures like this:

Egypt: The “New Iraq”?

Fox News Screen Shot of Egypt
[A Screenshot of Fox News’ Middle East “Coverage” Taken back in 2009]

…others were pouring over historical documents, doing the math and reaching the logical conclusions. In their 2002 bestseller, Financial Reckoning Day: Surviving the Soft Depression of the 21st Century, Bill Bonner and Addison Wiggin foretold much of the turmoil that would later come to pass, both in the financial markets and in the Middle East.

Here’s a snippet from Chapter 8, entitled “The Hard Math of Demography”:

“In his book Revolution and Rebellion in the Early Modern World, the historian Jack Andrew Goldstone argues that the great revolutions of Europe – the English and French revolutions – had one thing in common with the great rebellions of Asia that destroyed the Ottoman Empire and dynasties in Japan and China. All these crises occurred when inflexible political, economic, and social institutions were faced with the twin pressures of population growth and diminishing available resources.”

Continued Bill and Addison, “A large, unruly, and youthful rural population was a leading cause of social stress in France prior to and during the Revolution.”

“Likewise,” they observed, “the Russian population doubled between the 1850s and the beginning of World War I… The stress of feeding and providing shelter for that many people was too great for the existing order.”

Sound familiar?

Joel Bowman
for The Daily Reckoning

Joel Bowman

Joel Bowman is a contributor to The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

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