Terror in the Middle East: Scarcity, Poverty and Cultural Change

I always remember the early scene in the infamous film Lawrence of Arabia. Omar Sharif sees at a great distance, someone stealing water from his well. He shoots the person and asks questions later.

In a desert society, everything is scarce… especially water. Everyone fights over it and no one trusts their neighbors. It’s a kill or be killed environment… survival of the fittest at its most extreme.

Even after Lawrence united the Arabs against, and defeated, the Ottoman Empire with the help of the British, the Arabs still couldn’t agree and left the scene not united as Lawrence envisioned.

No wonder there is so much hate and civil war in this most volatile region of the world economy.

But that is only the first reason…

The second is that this is the only region that is more than 90% Muslim. It’s the most concentrated in the world, more so than the largest Muslim populations in larger countries like Indonesia or Bangladesh.

But these non-Arab countries don’t have radical insurgencies or major civil wars as what we’re seeing occurring throughout the Middle East and North Africa!

The third and, perhaps most important, is that most of this Arab region saw one of the most extreme shocks in inequality of wealth as well as the collision of western and ancient cultures when these more backward societies suddenly saw the influx of oil wealth.

Other Muslim countries, like Indonesia, have gradually progressed and become more third world middle-class.

And then there is poverty where the correlation is crystal clear. It’s clearly the poorest countries with high Muslim populations that have insurgencies and radical jihad Islam groups like ISIS in Syria, Boko Haram in Nigeria and Al-Qaeda in Yemen as the chart below shows.

insurgency countries

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Somalia is the poorest at $600 per GDP capita and known for its piracy. Yemen at $2,500 has now become the new headquarters for Al-Qaeda. Nigeria appears to be less Muslim and less poor, but the rural northeastern area where Boko Haram has emerged, is much more like Niger with $800 per capita GDP and 99% Muslim.

Afghanistan and Pakistan clearly fall into this poor and highly Muslim category.

The richer countries inside, and even more outside, the Middle East and North Africa are more middle-class while still highly Muslim. You can see Indonesia at $5,200 and Turkey at $15,300, despite being 99% Muslim.

These countries don’t have insurgencies but in the Middle East and North Africa they are rich enough to revolt and have civil wars as in Libya, Tunisia, Egypt, Syria and Iraq. Countries like Indonesia, Bangladesh and Turkey with high Muslim populations don’t have insurgencies or civil wars to speak of, and for that matter, nor does Iran.

I spent weeks in Java and Bali in Indonesia. The town of Borobudur in central Java was 98% Muslim. They were the nicest people I’ve met anywhere in the emerging world with no anti-western attitudes.

At first, kids or adults approached me, and quite honestly, I expected they would want to beg. No.

They just wanted to know what movie stars we were, as we were obviously from America. They thought I was the Highlander guy and my wife was Sharon Stone… they were a lot closer on my wife.

So Islam is not the primary problem. It’s the clash of civilizations and poverty. It’s the same inequality and dominance of that 1% that we face here in the U.S.

Globally 1% of households control 46% of the wealth, almost as extreme in the U.S. at 51%.

So, here’s the crucial question…

What causes radical Islam terrorist insurgence?

  1. The fierce tribal history of scarcity and mistrust in the Arab world of deserts.
  2. The sudden clash of West vs. Islam when oil wealth suddenly emerged.
  3. The Middle East and North Africa are the one region that is more than 90% Muslim.
  4. The poorest Muslim countries have insurgencies, and not in the middle-class ones.

The more middle-class countries inside the Middle East and North Africa have civil wars, but not insurgencies. The more middle-class countries outside of the Middle East and North Africa don’t have insurgencies or substantial civil wars — and that is the great majority of Muslims in the world.

It’s the most extreme income inequality and culture clashes that are causing growing problems everywhere. And when you get down to it… the central bank’s quantitative easing only exacerbates that.

It doesn’t matter what country it’s in. Free money only worsens the situation. It cannot and will not improve it.

With our proprietary Geopolitical Cycle continuing to point down into late 2019, expect things to get worse on the terror front as they obviously already are with the recent attacks in Europe and now the call for attacks on malls in North America. The implosion will be sudden and violent.

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Harry

P.S Follow me on Twitter @harrydentjr

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About Author

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.