John Bruton

Opinions & Ideas

Category: Middle East

A BAD START TO THE NEW YEAR

2016 drawing
The clash between Saudi Arabia and Iran over the execution of a Saudi cleric of Shia Muslim faith, and the occupation of the Saudi Embassy in Teheran in retaliation for that, is deeply worrying for many reasons.

The two countries are supporting opposite sides in the Syrian Civil War, and the participation of both countries would be vital to any chance of the brokering of a truce in that long running and deeply destructive war.

If the two countries now have no diplomatic relations with one another, it is hard to see how they can contribute to the talks in Vienna aimed at ending the war. That is tragic.

The two countries are also supporting opposite sides in another civil war, in Yemen, one of the poorest countries in the Arab world, which can least afford a regional power struggle being staged on its territory.

Many of the people executed in Saudi Arabia were on the death row for a long time.

The Shia cleric was condemned to death in 2014, so the timing of his and the other executions on the one day is significant. It may have been designed for domestic Saudi opinion, to send a message internationally, or both.

Some have suggested that the Saudis are raising the temperature in the region because they are worried about the Iran nuclear deal, and the fact that this may end of Iran’s economic isolation, which might change the balance of power in the region. Iran has the much bigger population, and greater unrealised economic potential.

Also executed on the same day as the Shia cleric were a number of Sunni opponents of the Saudi government, who have been on death row for some time too. A sort of sectarian balance of pain may have been sought by having all the executions at the same time.

Given the chronic underdevelopment of the entire region, and the high levels of unemployment, the diversion of scarce resources to proxy wars is not in the interest of the people of the region.

Low oil prices are reducing the revenues of both countries, and one would think they could both ill afford the support they are giving to opposite sides in proxy wars in Syria and Yemen.

If the increased friction between the two countries prolongs, or intensifies, the Syrian Civil War, this will add to the refugee flow to Europe and to the suffering and the political instability flowing from that.

Europe has an obligation to take refugees, but so also have all the other countries of the world. So far there is little sign of help coming from any continent other than Europe.
Both Iran and Saudi Arabia practice the death penalty on a wide scale, which emphasises the large gap in values between both of them, and the European Union, where the death penalty is banned.

European countries have strong common interests and values, but they are having increasing difficulty in giving effect to these values in a coordinated way.

WHAT ARE EUROPE AND AMERICA DOING TO HELP CHRISTIANS FLEEING THE MIDDLE EAST?

This article from the Wall Street Journal highlights a huge moral and political question for our times….the extermination of long established Christian communities in the Middle East. Some of the refugees, described so graciously by David Cameron as a “swarm”, are Christian refugees from Syria and Iraq.

While not the primary cause, Western interventions, like the invasion of Iraq, contributed  to the plight of Christians there. Western support for rebels in Syria is also worsening the position of religious minorities in that country.

People fear the arrival of refugees in the West, and suggest they will become a burden. But experience shows that previous refugee flows, like the East European Jews, the Ugandan Asians, and the Lebanese Christians have quickly become self supporting and active contributors to economic development in their host countries.

People look back and ask themselves why their governments failed to provide refuge for Jews fleeing the Nazis in the 1930’s and assume smugly that, knowing what we now know, this generation would do better.

The present response to the Middle Eastern refugee crisis throws that into doubt. In fact there is less excuse now, because many Western societies are ageing, and actually need an influx of younger people.

THE LONG HISTORY OF DISTRUST BETWEEN EUROPE AND THE MIDDLE EAST……. WAS THE BREAK UP OF THE OTTOMAN EMPIRE SUCH A GOOD THING AFTER ALL ! ?

I have just finished “A Line in the Sand, Britain, France and the Struggle that shaped the Middle East” by James Barr (Simon and Schuster). It is a great read. 

It deals with relations between France, Britain, and the Muslim world, a topic that has become tragically topical in recent days.

France and Britain were allies in the First World War, but bitter rivals, when it came to dividing up spheres of influence in the hoped for break up of the Ottoman Empire, something both correctly anticipated would be a result of an Allied victory in the War. The wishes of the local population, whether they were Muslim, Christian or Jew, were not considered to be a deciding factor at all. At most, they had to be “managed”.

While the First World War was still on, France and Britain drew up the famous Sykes/ Picot agreement in 1916, which allocated present day Syria and Lebanon to France, and allocated an area stretching from present day Israel, through Jordan, to Iraq, to Britain.

Britain wanted its chosen area, particularly Palestine, as a shield for the Suez Canal (a vital link to British India). It also wanted access to oil in present day Iraq. The French wanted access to the same oil, and saw itself as a protector of Christian interests in Syria and Lebanon. The crucial question was territory, rather than people.

But the British also wanted Arab support to defeat the Turks, so it promised support for an independent Arab state of Greater Syria ,which included areas it had agreed could be under French influence, and thus was in conflict with their agreement with the French.

Furthermore Britain wanted Jewish support in the US to push the US Administration to help the British war effort. In pursuit of the latter goal, they agreed in 1917 to a “homeland” for Jews in Palestine, in the Balfour Declaration.  This, of course, ran totally counter to Arab interests…..and led eventually to the present state of Israel on formerly Arab lands. Again the views of the local inhabitants counted for little.

These contradictory promises, made in desperate efforts to win the war, were to poison relations between all the parties for years to come. They lie behind the violent distrust that was  manifest in the vile murders in Paris last week.

When France and Britain came, after the end of the First World War, to occupy their respective areas under their 1916 deal, with the backing of a League of Nations mandate, they each faced revolts from the local populations. But there was no “European solidarity”. The Anglo/ French rivalry was such that they each gave support to the other side’s rebels!

This rivalry continued into the Second World War, and Barr argues that British support for the ejection of France from Syria in 1944/5, so poisoned de Gaulle’s relations with Britain, that it contributed to his vetoing British membership of the Common Market 20 years later. 

France also gave strong initial support to the Zionist resistance to continued British presence in Palestine in 1947/8, in revenge for the support the British had given to the ouster of France from Syria in 1945.

As we can see in the Middle East today, and also in Bosnia, we have yet to escape from the consequences of the break up of the multi ethnic Ottoman Empire, and the ignorant response of European nations to this event. Because the Ottoman Empire had fallen behind materially, it was wrongly and patronisingly assumed to have no valid lessons to teach about how to manage the intermingled ethnic and religious populations of the Middle East.   
The Ottoman system of government, while discriminatory, enabled populations of very different ethnicities, and opposed religious outlooks, to share the same cities and villages, as they did in many parts of both the Middle East and the Balkans under Ottoman rule.. This Ottoman model of qualified tolerance was bound to come under pressure once Ottoman power was removed, and free rein was given to the view that “self determination” for a single predominant ethnicity or ”nation” was the natural order of things, a view which became fashionable which before , during, and after the First World War in the western world, including in Ireland as we know only too well. 

This book shows how selfish and ill informed European interventions between 1916 and 1950, cast a long shadow today. 

BIG POTENTIAL FOR FINANCIAL SERVICES GROWTH IN THE MIDDLE EAST

I was a keynote speaker at the Middle East Banking Forum in Dubai this week, the first such event organised  by the UAE Banking federation. The forum was addressed by the Governor of the Central Bank, Sultan As Suawaidi.
I believe this part of the world has many opportunities for people with good financial knowledge.

A number of interesting points came up at the Forum

Only 20% of the overall population and 12% of women have bank accounts so there is great scope for expansion. Globally only 11% of Muslims have a bank account. Having a bank account enables people to use their money more efficiently, and is a way of escaping poverty.

Banking is growing in other parts of the world ,while it is contracting in Europe.

Of the top 1000 banks in the world in 1990, 444 were in Europe and 58 in the Middle East. Now, in 2013, only 283 European banks are in the top 1000, and 92 are in the Middle East. 257 of the top 1000 banks are now in Asia as against only 104 in 1990.

CAN WE LEARN FROM ISLAMIC BANKING ? ……  QUESTIONS ABOUT RATING AGENCIES

Islamic banking is growing at 13% per year (from a very low base) whereas conventional banking is growing at 4%. It takes a more patient approach to seeking a return on its investment, which insulates it from some of the recent errors of the Western banking model.
The role of Rating Agencies was strongly questioned.

Although they are relied upon to provide totally objective information, and are key players in deciding who can borrow and at what rates, Rating Agencies failed to see the crisis coming in US and European Banks.

One participant suggested that it was wrong that Rating Agencies seek to make a profit on their work because this creates a potential for conflicts of interest, and that they should operate on a non profit basis. A representative of a rating agency replied that the IMF is a non profit organisation and it did not foresee the crisis either!

THE FUTURE OF BANKING

I said that the banking industry worldwide needs to
1. innovate to provide the timely, accessible and secure banking
service that a young, mobile and discerning customers base needs.(There are a lot of young people in the Middle East so this will be a particular challenge there)
2. strike the right balance between face to face contact with
customers, and electronic speed and convenience (many customers still value a personal relationship with their bank and their needs should not be neglected in the rush to automate) 
and


3.  develop systems to provide finance for small and medium sized
business on the basis of good and reliable information about
creditworthiness.  Big companies may have no trouble getting credit for bad investments,  while small companies may not get finance for good ones.

COPYRIGHT JOHN BRUTON & CONTENT

Enjoy this blog? Please spread the word :)