Will the Middle East Continue to be the Most Dangerous Place on the Planet?
Image: Mohamed Azakir / Reuters
The only hot war in this hot-cold war region could occur if the status quo changes in Syria. What happens post Assad? There are doubts about unity of territory, social and ethnic cohesion and this fragmentation could lead to chaos and civil war that would have direct implications for Lebanon and the strength of Hezbollah. Here we’ll see just how interconnected factions in the region are: If things deteriorate in Syria, the government could ask Hezbollah to attack Israel to divert attention from the rebellion and this could lead to Israel going to war with Lebanon and/or Syria. Hezbollah, in turn, will not launch attacks without consent from Iran. What makes it so interesting is an unspoken, tacit understanding between two mortal enemies, Israel and Iran. Iran will not give Hezbollah the go-ahead to attack Israel and, in return, Israel will not destroy Iran’s nuclear sites. Watch out though, because the rhetoric will be the complete opposite.
There will be a lot of heated rhetoric but little chance of full-scale war. The real outcome of this edginess will be a step back for economic integration in the region. The processes for economic co-operation will be undermined; the golden quadrilateral FTA between Turkey, Syria, Jordan and Lebanon has already been suspended by Syria, and the business communities in the Middle East will suffer. Integration of banking has suffered and there will not be a revival in 2013. Though Iran and Iraq will move towards greater stability and the Gulf states will generally be fine, the incentive for Western parties to engage with the region will fall.
The real opportunity exists for countries like India, who do not have a big industrial footprint in the Middle Eastern powerhouses of Egypt and Saudi Arabia. Even Turkey, though it is losing its role as a mediator, remains an attractive economic proposition.
As Western powers are put off investing because of the perceived instability, Egypt and particularly Saudi Arabia are rolling out the red carpet for Indian investors. Don’t be put off by the turmoil: Things will calm down by 2014 and then the Arab nations will look West rather than East. Heavy industry like the automotive, fertiliser and steel sectors can set up manufacturing units in a region with over 400 million relatively prosperous people.
The Chinese understand this and are already in discussions with governments; they did the same thing in the last decade in Africa and are benefiting. Aside from the local market, it is a great base to expand into North Africa and the EU and if you manufacture from a Qualified Industrial Zone in the Middle East, you can export to the USA without any customs duties. India is a much more politically and culturally acceptable partner for Middle Eastern governments than most other interested parties and the Indian private sector must take the lead and set up a manufacturing platform for the future. While the rest of the world is cautious, India has a big opportunity in 2013.
(As told to Shravan Bhat)
Sundeep Waslekar is president of the policy think-tank Strategic Foresight Group. An alumnus of St John's College, Oxford University, he has advised governments across the world on international policy.