The Middle East:
Chaos and the risks of contagion to oil-producing states remain most important systemic geopolitical risk
Iran: Nuclear issue on the back burner…for now
Mexico’s Pemex: Breakthrough will confound the sceptics…again
Keystone XL: Still on
EU: Public opinion growing increasingly hostile towards the EU
EU: The growing backlash against Germany’s clout in the EU
Mongolia: Risk of resource nationalism to persist despite Presidential elections
South Africa: Steep union wage demands add to risks facing mining sector
Brazil: Protests will likely lead to political reforms, rather than long-term instability
Latest Geopolitical Hotline: How robotics will reshape the global geopolitical and economic landscape (June 25, 2013)
The Middle East: Chaos and the risks of contagion to oil-producing states remain most important systemic geopolitical risk
There is no end in sight for the high intensity civil war in Syria. Egypt is undergoing a major crisis, which could lead to a civil war or military coup. Libya, Iraq, Yemen and Lebanon are experiencing increasing sectarian violence and a severe weakening of central authority. Conflicts between Sunnis and Shiites, radical and moderate Islamists, secularists and Islamists, and the growing oppression of minorities (including Christians, Turkmen and Kurds) are escalating between and within countries. Even the Arab monarchies – which have remained relatively stable throughout the Arab Spring – are facing uncertainty, including the challenge for regional supremacy by Shiite Iran.
From a geopolitical perspective, the greatest short-term threat to the global economy is a full-blown civil war in Iraq, which would have negative impacts on the country’s fastrising oil output. Violence between Shiites, Sunnis and Kurds have killed 1,045 civilians in May, a number of pipelines have been bombed or sabotaged, and other regional powers – including Iran, Turkey and Saudi Arabia – have taken an increasingly active role in the conflict.
Iran: Nuclear issue on the back burner…for now
While Western sanctions have created significant economic hardships, and while new President-elect Hassan Rouhani has taken a more “conciliatory” tone in discussions of the country’s nuclear program, there are no indications that Iran is prepared to compromise on its uranium enrichment program, or that a deal is a realistic outcome. In the short term, however, Iran has far more critical geopolitical priorities than developing its nuclear capabilities. It seeks not only to prevent the collapse of key Shiite (Alawite) ally Basher al-Assad in Syria, but also to consolidate the Shiite-dominated regime in Iraq, which is increasingly under threat from the formerly dominant Sunnis.
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