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Sam’s Exchange: The Carpet Revolutions…

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You can tell when a long standing regime like that of Egyptian President Hosni Mubarak is about to fall, because there are always vast transfers of money out of the country.

You can tell when a long standing regime like that of Egyptian President Hosni Mubarak is about to fall, because there are always vast transfers of money out of the country.  Apparently, there has been an exodus of money from Egypt connected to Mubarak, of some $10 billion - (http://maxkeiser.com/2011/01/31/huge-sums-leaving-egypt/#comments). 

The transfers have been from Egypt to France and Switzerland. The strange thing, however, that this has been going on for seven years, and intensified in the last three.  It is not as if these sums have been leaving in the last few weeks only.  This suggests that what is taking place in Egypt has not been wholly unexpected, and it begs the question, what about other countries in the Middle East?  Who is next?

Some of the other countries that have been mentioned include Algeria, Bahrain, Jordan, Saudi Arabia, Somalia, Syria and Yemen to name a few.  What is it that is similar or indeed different about these countries, and what is driving the desire for change?  It seems that social networking via Facebook and Twitter have been the method of communication between the citizens of each country.  What we are seeing is the Arab world’s own velvet revolution, the prayer mat, or the carpet revolution.

Clearly, change is sweeping the Middle East, and relationships, and their dynamics are also going to change.   These changes are part of the paradigm shift away from a unipolar world, where there is really only one global super power, the USA, to a multi polar world, where countries provide each other with security via political and economic interdependence.  In order for this kind of change to take place, you need the support of the masses for it to work, to open up economies and lower borders for easier trade. 

This carpet revolution, as I like to call it, is a healthy development in the Middle East, provided it remains nonviolent.  The likelihood that it will spread to somewhere like Saudi Arabia is strong.  Saudi Arabia has a high level of internet penetration, a burgeoning middle class, and a clear need for economic modernization, something which cannot be delivered solely from the top.  Jordan would be a similar case in point, and both these countries, plus Egypt, are the USA’s key partners in the Middle East.  This is not to say that the USA will not support some change in these countries – it will, and indeed is already doing so to some extent.  In the case of Egypt, President Mubarak will certainly go, and whoever replaces him will no doubt have the support of the US administration. 

Of course the elephant in the room is Israel.  Provided the carpet revolution remains driven by the Arab public’s desire for positive political and economic engagement, Israel will have no choice but to become part of this process.  In fact, there is a likelihood that the average Israeli will also welcome these changes.  Israel could also be part of the change that we are seeing, if Prime Minister Benyamin Netanyahu and his administration are replaced by a more representative, progressive, 21st century Israeli government.  Let’s hope so.

On the subject of change, what about Iran?  The change in the Middle East will mean that the sanctions currently on Iran are likely to be lifted, or ignored.  With the move from a unipolar world to a multipolar world, there will be a need for other countries, like Russia and China, to drive some of the political and economic interdependence, and bear some of the burden on the shoulders of the USA.  China actively trades in Iranian oil, and Russia’s President, Dmitry Medvedev, stated at Davos there is no evidence that Iran is developing nuclear weapons.  If political change has been demanded elsewhere in the region, then it is logical to expect Iranians will also demand it, and be likely to receive it. Ayatollah Ali Khamenei is not a young man, and the transition of power without a vote is becoming increasingly difficult for Iran’s ruling elite to maintain.  Together, the Iranians and the Israelis have much to offer the Middle Eastern region in potentially providing the long term security which would drive economic development.

The uprisings in Tunisia and Egypt are the beginnings of a social revolution in the Muslim world.  They are not driven by religious extremists, but on the contrary by ordinary, largely secular people.  They are driven by a population who are tired of seeing the cost of staple foods going through the roof, while their rulers promise but don’t deliver.  In my experience, the Muslim Arab world is peaceful on the whole, and we should embrace and support their gaining of a voice.

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Global Markets are anything but integrated. What if we had a paradigm shift in the way we think, the way we actually do business with each other, between nations. Balanced global trade can only occur if we have transparent, accessible, efficient markets, with standardized contracts and on a standardized platform of global exchange. We are on the cusp of achieving this, although most people cannot see it. Sam’s Exchange aims to give its readers a clearer view and a platform for discussion. Markets, trade and economics are in fact nothing more than the result of our thoughts and actions expressed in numbers, not the reverse.

Sam Barden is CEO of SBI Markets General Trading LLC, a Dubai-registered trading and advisory company. Barden, 39, has worked in the global financial markets for more than 17 years in Europe, Russia and the Middle East. He has advised and executed strategic transactions for both the government and private sector, in particular in energy and commodity markets, advising various energy producing nations on their strategic market developments and interaction. He holds a degree in economics and finance from Victoria University, Melbourne, Australia.

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