Failed States...

Here a hat tip to Belmont Club, first of all. Highly recommended at all times.

This is what I want to point out and expand on.

Looking back at the period after WW 2, we had a new world structure: The Cold War, aka The Long War, turned around two major power blocks, with multiple small regional power plays at the interface between the two and at the peripheries. After WW2 many borders were redrawn - wars have a tendency to do that - especially in the Third World. While the borders in the Middle East were largely laid down at the end of WW1 as the British and French conspired to divide and conquer the remnants of the Ottoman Empire (most state borders in the Middle East date to these times), the end of the colonial period was the immediate post-war years. The establishment of Israel in 1948 was one of the greatest changes in the area.

The problem is that the English and French drew lines not to create viable states, but rather to prevent them. Rather than working to unite ethnic groups, the colonialists drew the maps to create divisions and strife in order to ensure that these new countries would automatically have squabbles with their neighbors and would this be permanently distracted from getting on with the business of actually creating a working state. Not that many of the countries haven't had some modicum of success: they have.

But the borders as they are drawn today, as they were drawn in the 1950s, are and were artificial. If you look at the demographics, of the distribution of where borders should have been drawn, you end up with a vastly different picture, one that would have probably brought a lot more peace to the area.

As we know, most of the countries of the Middle East are either privately owned and run fiefdoms - the various Kingdoms, including Saudia Arabia - or privately owned and run despots, such as Syria. Iran, while have some integrity as the modern-day incarnation of ancient Persia, isn't all that much better.

The article from Richard Fernandez linked to at the Belmont Club points to an article by Spengler at the Asian Times. While Spengler -  whoever he is - is a tad too realpolitik for my tastes, his take on many things is very, very accurate.

Here's what Spengler points out:

Financial crises, like epidemics, kill the unhealthy first. The present crisis is painful for most of the world but deadly for many Muslim countries, and especially so for the most populous ones. Policy makers have not begun to assess the damage.

This is a good point: the world's financial crisis has opened up more than merely a few problems for the West, but has, more fundamentally, enormous potential to change the Middle East as well.

It is hard to forecast the political fallout, for when each available choice leads to a failed state, it is a matter of indifference which one you adopt. As state finances crumble, states will become less important, and freebooters will seize the stage. Think of the Mumbai terrorists as a political cognate of the Somali pirates, and the character of a Middle East made up of failed states comes into focus.

Iran's President Mahmud Ahmadinejad controls Iran through a kleptocracy of Central African proportions, dissipating the country's oil windfall into payoffs to an "entire class of hangers-on of the Islamic revolution", ... What will Ahmadinejad do now that the oil price has collapsed? According to my Iranian sources, the answer is: Exactly the same thing, but without the money.

While that last is intended as humor, it is everything but that: the point is that there is no way out for a country like Iran. Each and every path leads to failure, seen objectively, since it cannot export its Iranian revolution and bring all competitors down to the same level, i.e. to level the playing field down to the same basis. The description of Iran as being a kleptocracy is also very accurate: Ahmadinejad has purchased social peace at massive cost to the Iranian economy. The problem is that people don't stay bought when the economy continues to not function: subsidizing bread and gasoline alleviates only the symptoms of the problem and not the cause.

The point of the joke is that Iran's regime cannot reduce subsidies or raise taxes without losing control of the constituencies that brought it to power. They are the peasants and the urban poor who barely afford shelter and food as matters stand. Despite the oil-price collapse, the government has not reduced energy subsidies that the International Monetary Fund (IMF) puts at more than a fifth of gross domestic product (GDP). A proposed value-added tax was withdrawn last October after strikes in the bazaars, starting in Isfahan and other provincial towns and spreading to the capital Tehran. Iran is eating through its $60 billion of foreign exchange reserves, unable to adjust to a collapse of its only significant revenue source.

Iran must break down, I argued last June, or break out, through a military adventure. The sand is slipping out of the hour glass, and the regime must decide what to do within a few months.

Ouch. This is literally a do-or-die situation, if it is an accurate assessment of the strategic constellation in the Middle East right now. If oil prices stay down, then Iran collapses. The only way, right now, to get oil prices back up is to shorten the supply: if Iran were to, say, try to close the Straights of Hormuz by mining the waters there, then the price of oil shoots back up.

The only problem with that is that Iran needs an open Straight of Hormuz to export its oil and maintain domestic peace. The fastest way for Iran to collapse would be a blockade of Iran, enforced and comprehensive, to stop its oil exports: then the collapse is all but guaranteed. That way, though, lies war, since the government of Iran is treading a narrow, thin path to perdition, and deviating from that path only brings  perdition closer.

Spengler points out that the real problem isn't Iran, but rather Pakistan as well.

I'd take that several steps further.

What will develop in the next five years is nothing less than the collapse of key nation-states that have vastly overextended themselves in an attempt to transition from developing country to regional power without taking the intermediate steps of actually developing the country as a whole. This is a lesson to be learned at great cost, one that should be obvious, but has been rejected by those rulers whose ignorance of economics, they believe, can be compensated by their belief that Allah will provide.

What countries? Directly: Iran, Pakistan. We add those countries to the already failed states of the Middle East, those of Iraq, Egypt, Lebanon, Syria, Oman, Somalia, the list is fairly clear. Iraq was a failed state before the US invaded, and is only now slowly starting to work its way out of the depths that history had condemned it to; Egypt is kept alive only by US subsidies; Lebanon has been destroyed by decades of proxy fighting; Syria exists at the whim of the Ba'ath party; the rest are, as states, convenient labels on the map rather than functioning nation states.

The tragedy that will be Iran and Pakistan will not be pretty, especially Pakistan. Iran continues, at least, to have oil reserves that, properly handled, can bring its society some positive benefits; Pakistan does not have that. Pakistan's bombs are going to be the stuff of nightmares if they cannot be controlled.


So what can be done?

To be honest, under the current circumstances, not one hell of a lot. Unless you are willing to stop the failed states from failing, nothing. But stopping those states from failing will make the US involvement in Iraq really look like a picnic.