geopolitical issue

[kuldeep49]

If Syria or Iran attacks Israel, by definition, a regional war will be under way. They remain the key. At this point, it doesn't look as though Syria has any desire to attack Israel, so the odds of conflict expansion from the former appear low. However, Iran appears more open to expanding the conflict but may be unable to do so without using Syrian proximity to Lebanon. Thus, Iran may be willing to expand the conflict but may be thwarted by Syrian fears. If Syria is the "weak link" in Iranian plans, it would behoove the West and the Arab states to lean on Syria to remain neutral.

The ramifications
For the financial markets, the primary conduit of risk is the oil market. A regional war increases instability and will boost already elevated risk premiums. The fact that oil prices have passed $75 per barrel with $80 prices seen in the winter months suggests fears are growing. This is especially true because there is a tendency for weaker gasoline prices after Independence Day.

Thus, we expect the equity markets to be affected by oil prices. The current environment of tightening monetary policies in the industrialized world amplifies the impact of higher oil prices. Therefore, world economic growth is at risk for a regional war.

At this point there is near certainty of an incursion by Israel into southern Lebanon. If this is the extent of the war, the risk premium in oil will likely ease and we will see at least a modest rebound in the equity markets. Of course, the equity markets have other issues, such as the economy and midterm elections, to grapple with as well so any rebound may be modest.

If the war expands we expect equity markets to come under further pressure and flight-to-safety instruments, such as gold, the dollar and Treasuries, to rally. Oil prices will likely rise, although oil equities may not because of fears about the economy. Thus, oil equities may not act as a proxy for crude oil; a better protection for investors is a general defensive posture.


Ahmed

Ahmed,

My personal views are that:

1. Syria will hesitate to attack Israel openly ... the gains (if, any) may not be worth the effort. All said & done, Syria is a poor country and war is expensive.

2. Iran, too, has had its taste of the long and devastating war it fought with Iraq and would have little stomach to repeat this again especially against the Israelis. Iran's course will be to let the Palestinians do their fighting so the focus will remain on the guerilla warfare with skirmishes such as those taking place today becoming more frequent.

This will cause long term instability in the region and result in economic uncertainty to prevail for long. That would be their aim, whereas, war would be resolved one way or the other in a matter of weeks or even days. Where would that leave them? At the losing end whatever the outcome.

I really sympathise with the Palestinians ... they are being used left & right as pawns in the game played by others ... yet they seem oblivious!

The world has to come to terms in fighting terrorism (state sponsored or due to religious extremists) and learn to tackle this innovatively. Then only can any meaningful economic prosperity can be hoped for. Remember an extreme requires the other extreme, too, to define itself.

Kuldeep

 

[pkjha30]

Ahmed,

My personal views are that:

1. Syria will hesitate to attack Israel openly ... the gains (if, any) may not be worth the effort. All said & done, Syria is a poor country and war is expensive.

2. Iran, too, has had its taste of the long and devastating war it fought with Iraq and would have little stomach to repeat this again especially against the Israelis. Iran's course will be to let the Palestinians do their fighting so the focus will remain on the guerilla warfare with skirmishes such as those taking place today becoming more frequent.

This will cause long term instability in the region and result in economic uncertainty to prevail for long. That would be their aim, whereas, war would be resolved one way or the other in a matter of weeks or even days. Where would that leave them? At the losing end whatever the outcome.

I really sympathise with the Palestinians ... they are being used left & right as pawns in the game played by others ... yet they seem oblivious!

The world has to come to terms in fighting terrorism (state sponsored or due to religious extremists) and learn to tackle this innovatively. Then only can any meaningful economic prosperity can be hoped for. Remember an extreme requires the other extreme, too, to define itself.

Kuldeep

Hi Kuldeep

Your observation is appropriate that Syria would hesitate to attack Israel.In fact having learnt a bitter lesson in war with Israel,ARABS counted on America, none of the other countries in the region are willing to stick their neck out. They are happy with what they have.So they pay lip service to palestinian cause. In fact they don't want this problem to be solved as it would threaten their sheikhdom. Remember palestinians are very intelligent and beautiful people and have proved themselves in all endeavours of life.Similarly Israel is also full of Such intelligent people. If both come to terms Arab regimes are the threatened lot. The oppress their people and enjoy the oil wealth with not much to show.

Lebenon was the only country in the region which had three comun ities living in peace and harmony. Beirut was once international financial hub which was distroyed after the Arab war with Israel.

As for Iran. they have been effectively checkmated by America and UNSC has to take cognisance of resolution to isolate it further.Any misadventure on the part of Iran will have severe repurcussion.

Therefore, they all will fight proxy war like Pakistan does. But victims are poor palestinians who have none to turn to. Only both Israel and palestinians come to terms with each other will the designs of Arab sheikhs will be exposed, who doesn't want modernity to prevail.

Terrorism is not the root cause but the consquence. I remember one of my friend told me if it had happened to him probably he would have become a terrorist.(he is a seniror officer in the Govt now.If you face the unjust oppression the same will happen sooner or later.What happened in several rounds of rioting in India is to give way to disaffection .I could never imagine that we could go killing Sikhs after Indira Gandhi's Assasination.We cried on hereing the news and then immediately took a peace march as a student. Nothing happened in the town with substantial population. Later in the evening we learnt of carnage and were so shocked. Rioting in the wake of Rath Yatra by one of the leader led to rioting after 30 years and the horrors could not be imagined. So we must identify the causes and try to eliminate them as much as possible. We must talk about these things in open dialog and see how bad these things are. Many of my best friends belong to diffrerent religions.

No , we must stop to see religion as root cause. The cause is something else. Power, oil money. Unless these issues are sorted out Middle East Crisis would not go away.

Similarly, India and Pakistan joins together, no country can put us down.Both are in a bleeding proxy war. If they merge politically the issue of Kashmir will vanish in thin Air saving lot of life and money.
pankaj

 

[amitt29]

Pankaj,
very aptly put,if just someone cud take initiative to make ppl have some sense.
Amit.

 

[mahmeds2000]

http://www.wtrg.com/prices.htm

Ahmed

 

[mahmeds2000]

http://www.nytimes.com/2006/06/20/o...e55e5f8375c5f3&ei=5088&partner=rssnyt&emc=rss

ahmed