Image of the Day – Now that’s a basin!

black-sea-map

Assuming this map is accurate, the areas it highlights are those in which rivers flow into the Black Sea. A number of things about this may perhaps be geopolitically noteworthy:

– some countries, most notably Ukraine, lie almost completely within the Black Sea basin, whereas others, most notably Poland, lie just beyond the borders of the basin. Others still, like Bulgaria, are neatly bisected by it.

– a number of important cities, such as Istanbul, Lviv (the largest city in western Ukraine,  with the exception of Odessa), and the capital cities of Bulgaria (Sofia), Belarus (Minsk), and Bosnia-Herzegovina (Sarajevo), are situated precisely at the outer edge of the basin. Ankara, the capital of Turkey, is almost at the outer edge of the basin, meanwhile.

– the easternmost areas of Ukraine have rivers that flow into Russia’s Don River, and a coastline located along the Russian-controlled Sea of Azov rather than along the open Black Sea. Given that eastern Ukraine is relatively hilly (which this map does not show well) and is a leading producer of bulk goods like coal which are expensive to transport via truck, this Russian-oriented riverine and maritime access of eastern Ukraine is especially notable.

– The two most important rivers within this basin, namely the Danube and the Dnieper, empty into the Black Sea only about 200 km apart from one another, as a result of the fact that the Danube turns sharply north just before it reaches the sea, while the Dnieper turns southwest.

 

The Geopolitics of Cheap Energy

Oil prices have fallen again: they are now at $29 a barrel for West Texas Intermediate crude and a similar price for Brent, their lowest since 2003. Natural gas, coal, and other commodity prices have also been dropping of late, in most cases. So: what will be the geopolitical consequences of cheap energy in general and of cheap oil in particular, all other things being theoretically held equal?

One consequence of cheap energy is the weakening, possibly, of four potential great powers: Russia, Brazil, China, and Mexico. While the media has understood the Russian and Brazilian half of this list – their economies are both estimated to have shrunk by 1-3 percent druring 2015, after all, which is difficult to miss – it has largely failed to register the Chinese and Mexican half. This is because it views China as being a leading oil, energy, and natural resource importer rather than as a resource exporter like Russia or Brazil, and because it views Mexico as merely a source of drugs, migrants, resorts, and cheap goods rather than as a potential great power.

China

China may be the world’s largest energy importer, but it is has also become its second largest energy producer, and as such only relies on energy imports for an estimated 15% of its total energy consumption, in contrast to 94% in Japan, 83% in South Korea, 33% in India, 40% in Thailand, and 43% in the Philippines. In 2014 imports of oil were equal in value to just around 2.4 % of China’s GDP, according to the Wall Street Journal, compared to 3.6% in Japan, 6.9% in Korea, 5.3% in India, 5.4% in Thailand, 4% in the Philippines, and 3.3% in Indonesia.

South Korea and Japan also imported more than two and four times more liquified natural gas, respectively – the prices of which tend to track oil prices more closely than conventional natural gas prices do – than China did. China’s LNG imports barely even surpassed India’s or Taiwan’s. China’s imports of natural gas in general, meanwhile, were less than half as large as Japan’s and only around 20% percent greater than South Korea’s.

China, furthermore, tends to import energy from the most commercially uncompetitive, politically fragile, or American-hated oil-exporting states, such as Venezuela, Iran, Russia, Iraq, Angola, and other African states like Congo and South Sudan. In contrast, Japan and South Korea get their crude from places that will, perhaps, be better at weathering today’s low prices, namely from Kuwait, Qatar, the UAE, and Saudi Arabia. Similarly, China gets much of its natural gas from Turkmenistan, Uzbekistan, and Myanmar, whereas Japan imports gas from Australia and Qatar and South Korea imports gas from Qatar and Indonesia.

China’s top source for imports of high-grade anthracite coal, and its third largest source for imports of coal in general, is North Korea. China has, in addition, invested capital all over the world in areas hurt by falling energy and other commodity prices, including in South America, Africa, Central Asia, Canada, and the South Pacific.

Another mistake the media makes is looking at China as if it were a country, rather than what it really is: both a country and a continent. Continents have internal, deeply-rooted regional divisions, and China is no exception. Its main divide is between areas south of the Yangtze River, which tend to be mountainous, sub-tropical, and dependent upon importing fossil fuels, and areas north of the Yangtze, which tend to be flat, more temperate, and rich in fossil fuels.

Northern China, stretching over 1000 km from Beijing southward to Shanghai on the Yangtze, is the country’s political heartland. It is densely populated and home to most of China’s natively Mandarin-speaking, ethnically-Han citizens. When compared to southern China, the north has historically been somewhat insulated from foreigners like the Europeans, Americans, and even Japanese. Beijing’s nearest port is roughly 5000 km away from Singapore and the Strait of Malacca; Hong Kong, in contrast, is only around 2500 km from Singapore and Malacca. Beijing is rougly 2600 km from Tokyo by ship, whereas Shanghai is just 1900 km from Tokyo and Taipei is just 2100 km from Tokyo.

Japan’s Ryukyu island chain and the Kuroshio ocean currents historically allowed for easy transport from Japan to Taiwan and the rest of China’s southeastern coast; the Japanese controlled Taiwan for more than three and a half decades before they first ventured into other areas of China in a serious way during the 1930s. Even today, Japan accounts for a larger share of Taiwan’s imports of goods than do either China or the United States.

Southern China has often depended on foreign trade, since much of its population lives in areas that are sandwiched narrowly between Pacific harbours on one side and coastal subtropical mountain ranges on the other. In northern and central China, in contrast, most people live in interior areas rather than directly the along the Pacific coast. These people in the interior generally did not engage in as much foreign trade, as in the past moving goods between the interior and coast was often limited by the fact that northern China’s chief river, the Huang-he, was generally unnavigable and prone to flooding northern China’s flat river plains, destroying or damaging roads and bridges in the process.

In southern and central China, by comparison, even people living far inland could engage with the coast by way of the commercially navigable Yangtze and Pearl Rivers, which meet the Pacific at the points where Shanghai and Hong Kong are located.

Northern China, however, was most directly exposed to the land-based Mongol and Manchu invaders who ruled over the Chinese for most of the past half-millenium or so prior to the overthrow of the Manchu Qing Emperor in 1912. Today the north continues to retain the political capital, Beijing, and a disproportionally large majority of Chinese leaders were born in north China — including Beijing-born Xi Jinping and Shandong-born Wang Qishan (a former mayor of Beijing) — in spite of the fact that most Chinese political revolutionaries, including Mao Zedong, Deng Xiaoping, Chang Kai-Shek, Sun Yat Sen, Zhu De, Ye Jianying, Hong Xiuquan, and famed writer Lu Xun, hailed from southern or south-central China.

Today, out of China’s seven Standing Comittee top leaders, only seventh-ranked Zhang Gaoli was born in southern China, whereas five of the seven were born in northern China and one, Premier Li Keqiang, was born in central China. Zhang Gaoli may in fact be the first person born outside of northern or central China in thirty years to have made it to the Standing Committee. He is also the only person currently in the 25-member Politburo born outside of northern or central China. Among the 11-man Central Military Commission, meanwhile, seven were born in northern China, while two were born in north-central China and two in south-central China. Out of the 205 active members of the Party Central Committee, fewer than 15 were born south of central China.

Indeed, the southern half of China, stetching from islands in Taiwan, Hainan, Hong Kong,  Xiamen, and Macau in the east to the plateaus of Yunnan, Sichuan, and Tibet in the west, is politically peripheral. It is home to a majority of China’s 120 million or so non-Han citizens (most of whom are not Tibetan or Uyghur, though those two groups recieve almost all of the West’s attention), China’s 200-400 million speakers of languages other than Mandarin, China’s tens of millions of speakers of dialects of Mandarin that are relatively dissimilar to the Beijing-based standardized version of Mandarin, most of China’s 50-100 million recent adopters of Christianity, and most of China’s millions of family members of the enormous worldwide Chinese diaspora.

Southern China is physically closer to Southeast Asia (a region with a huge Chinese minority population) and most of the populous areas of Japan, and further away from sparsely populated Mongolia or Siberia, than northern China is. The south’s Fujian province, in particular, is linguistically and economically close to Taiwan, while the south’s Guangdong province is close to Hong Kong. A large share of China’s GDP comes from the coastal areas of China from around Shanghai south to Guangdong, particularly if you include Taiwan as part of the country. Guangdong alone accounts for an estimated 10% of mainland China’s GDP and over 25% of its exports. This creates a somewhat unbalanced dynamic: China’s political periphery is also its economic centre.

As it happens, northern China produces almost all of China’s fossil fuels (particulary in and around Shanxi province, 300 km or so inland from Beijing, where a large share of China’s coal is mined and which has seen the biggest political shakeup of any province from Xi Jinping’s anti-corruption campaign thus far), whereas southern and central China, especially if you include the neighbouring economy of Taiwan as being part of China, account for most of China’s imports of energy. Taiwan, in fact, may be more dependent on oil imports than any other significant economy in the world. Falling energy prices may weaken the Chinese political heartland relative to its periphery, in that case. Whether or not this will generate any political instability going forward remains to be seen.

If (a big if) energy prices remain low for a sustained period, then the question of China’s future dependence on imported energy also becomes relevant, as does the question of the future dependence on imported energy of China’s most important neighbours. In that case, how dependent on energy imports will countries like China, Japan, and India be in a decade or two from now?

While it is impossible to know what the future will be like, it is not difficult to imagine that China will remain less dependent on energy imports than India and/or Japan during the years or decades ahead, as a result of India’s still-emerging economy and Japan’s still-roboticizing economy.

China is not likely to be a major adopter of energy-intensive robots, in per capita terms, because China has a far larger cheap labour force than any country in the world apart from India. Japan, in contrast, will likely help lead the robot revolution, as its labour force is expensive and aging rapidly. This could make Japan even more dependent on importing energy, as machines that are both highly mobile and capable of sophisticated computation require an enormous amount of energy to run — and indeed, one of their main advantages over human labour is that they can and frequently will be tasked to run 24-7,  without even taking any time off for holidays or sick days.

China is not certain to increase its energy imports nearly as much as less-developed economies like India, meanwhile, as the Chinese inudstrial sector is facing challenges as a result of its past generation of energy-intensive growth. China faces rising labour costs in its cities, a pollution problem, crowded transportation infrastructure, a US that is concerned with Chinese industrial power, and countries throughout the world afraid of China’s world-leading carbon emissions. In addition, China is located much further away from the Persian Gulf and Caspian Sea oil and gas fields than the Indians and other South Asians are, and so might have difficulty accessing them in a pinch.

China may also have to face industrial competition from resource-rich or capital-rich economies such as Australia, Norway, Canada, Qatar, Texas, and maybe even Hong Kong, which will perhaps be able to use energy-intensive robots of various kinds to build up their manufacturing sectors in spite of their small labour forces. This could make China’s industrial growth rate slip, which in turn might reduce China’s resource imports and thus prevent China from becoming the leading beneficiary of low energy and commodity prices.

Such a shift will be especially likely if the United States or European economies decide to enact tariffs on goods coming from places that generate power by using coal in inefficient ways, a prospect that has become increasingly likely as a result of America’s triple-alliance between environmentalists opposed to coal consumption, shale gas producers competing with coal, and energy companies trying to pioneer more expensive but cleaner ways of consuming coal. China may then have to focus on growing its service sectors instead of its energy-intensive industrial sectors.

Japan, lastly, might benefit from Russia’s energy-related woes more than China will. This is not only because the Chinese have to a certain extent often looked to Russia as an ally against the West, but also because the areas of Russia that China is close to are mostly irrelevant to China: they are landlocked, Siberian, and for the most part located far from China’s population centres. Pacific Russia, in contrast, located next to the Sea of Japan on the East Asian side of Russia’s Pacific mountain ranges, has a far more liveable climate than the continental Siberian interior, is home to a number of useful medium-sized port cities, and accounts for much of the oil and nearly all of the Russian natural gas exports to Asia — led by energy-rich Sakhalin Island, which is just 40 km away from Japan and was partly owned and inhabited by the Japanese prior to the Second World War.

Russia may, in fact, be somewhat better prepared to fight another border war with China like it did in 1969, which might not be too different than the many other wars Russia has fought around its own borders both prior to and since then, than it would be to face off against Japan again within its far-eastern, mountainous, archipelagic and peninsular Pacific region, as it did in 1905 and then during World War Two. Of course this does not mean Japan will attack Russia — though it has certainly toyed with the idea of making more forceful moves in the Southern Kuril Islands, which both countries claim as their own. Even the unspoken possibility of conflict, however, may help grant the Japanese leverage over Russia in negotiations relating to commercial or political issues.

Mexico 

Mexico is much more than just America’s messy basement. It has the world’s 11th largest population,14th largest GDP, and, because it is in the New World, its population is in many ways much more internally unified than those of most other large countries are. It also has important ties to the rest of the Spanish-speaking world, to the Latin-based world in general, and to the 35 million or so Mexicans in the United States in particular, most of whom live in states adjacent to the Mexican border. Mexico is the clear potential leader in the Spanish-speaking world: its population is bigger than those of Colombia, Argentina, and Venezuela combined, and its economy is about to surpass Spain’s. If you include illegal transactions, Mexico already has the largest economy in the Spanish world by far. Along with (or perhaps instead of) Portuguese-speaking Brazil, Mexico could potentially help Latin America to become one of the most prominent regions in the world during the decades ahead.

Mexico may not be a major beneficiary of low energy prices, for three general reasons. First, it is a net oil-exporting economy: oil exports accounted for an estimated 2.7% of Mexico’s GDP in 2014, and Mexico had been hoping to increase its oil and gas production since its president enacted widely-touted reforms in the country’s energy sector that year. Mexico is also often a relatively high-cost oil producer, and so may be forced to cede market share to more price-competitive producers in other countries.

Second, Mexico has ties – both existing ties and potential future ties – to other countries in Latin America, a region that is highly economically dependent on exports of energy and other natural resources. Most of the South American economy is already in or flirting closely with recession as a result of the commodity crash, which on the whole is probably not a good thing for Mexico.

Third, Mexico has ties to the southwestern United States, in the areas of America that were part of Mexico prior to the 1830s-1850s, most notably California and Texas where around 25 million Hispanic-Americans live today. Like Mexico itself, this part of the US is dependent on energy exports, led by Texas (a major producer of oil, gas, coal, wind power, solar power, and refined petroleum products: Texas produces approximately one-fifth of US energy and one-third of US crude oil) but also including the surrounding energy-producing states of Oklahoma, Colorado, New Mexico, Utah, Louisiana, Arkansas and the federally-administered oil-and-gas producing waters in the Gulf of Mexico.

Nearly all of the states with a high share of Mexican-Americans are either energy-exporting states or else, in the case of California, New York, Florida, and Arizona, have the lowest per capita energy consumption of any states apart from tiny  Rhode Island, Hawaii, and Connecticut.

Even California’s energy imports do not balance out Texas’s energy exports, because California is itself the US’s third largest oil-producing state, tenth largest energy-producing state, and has the fourth lowest per capita energy consumption; its energy imports are not as large as one might expect given the enormous size of the Californian economy. They might even shrink in the future, if the Monterrey basin shale resources are developed. California is also the largest agricultural producer in the United States (Texas is fourth), a big sector that can be hit by falling commodity prices as well.

Mexico has admittedly been benefiting from cheap gas prices brought on by Texas’s shale boom.  Mexican imports of US gas have nearly tripled since 2009, which has benefited the industrial sector in northern and north-central Mexico. This gas import growth might slow going forward, however, as America’s LNG export facilities may soon be coming online, LNG import facilities in both Europe and China are expected to be opened soon, and the Panama Canal expansion which will be finised this year may allow LNG ships to traverse the canal from Texas to Asia for the first time. As LNG allows US gas to be sold worldwide, Mexico’s import growth of US gas might slow down. In any event, Mexico is the 19th largest natural gas producer in the world, so even with increasing imports from the US it will not soon become a significant net importer of natural gas.

In the future, meanwhile, somewhat similar to China, Mexico’s industrial growth may not be as strong as most people expect, which could cause it to become less dependent on energy and other commodity imports relative to other countries. Mexico is currently a major industrial economy, the result of its large and cheap labour force and proximity to US consumers. As labour and other prices in northern and to a lesser extent central Mexico are becoming more expensive due to economic growth in these areas, however, Mexico’s industrial growth rate may slow. This is because central and especially southern Mexico are separated from the US by vast areas of mountainous deserts or jungles, making the north-south roads and pipelines through Mexico expensive to build, use, and maintain, as well as potentially vulnerable to groups like the drug cartels, indigenous peoples, or local governments. Southern Mexico resembles Central America more than it resembles northern Mexico.

Mexico may increasingly also have to face industrial competition from Cuba, which is the only other sizeable Hispanic country close to the United States; from Venezuela, if it too can finally mend fences with America and leverage its energy resources to industrialize; or from Canada and the US, if they try to use robots and other technologies to re-industrialize. If, finally, domestic politics lead the US to try to make the Mexican border more of a barrier, Mexico might have to industrialize less and stick more to the many other sectors of the diverse Mexican economy, which are less resource-intensive.

Europe 

There is a fourfold division in Europe, where energy and commodity imports are concerned. First is between mainland Europe, which is a major importer of energy and oil, and the regions surrounding mainland Europe (namely Scandinavia, the North Sea, the former Soviet Union, the Middle East, North Africa, western Africa, and the Americas), which are energy and commodity producers. Even the United States has now become such a big energy producer that its energy imports account for only around 15% of its overall energy consumption, a very low share in comparison to an estimated 62% in Germany, 71% in Spain, 77% in Italy, 46% in France, and 43% in Britain.

Second is between countries which use the Euro as their currency – Germany, Spain, France, Italy, Greece, Slovakia, etc. – which tend to be significant importers of oil or other commodites, and countries that do not use the Euro – Norway, Sweden, Switzerland, Britain, Denmark, Poland, Romania, Czech Republic, Ukraine, Belarus, Russia, etc. – which tend to produce a decent amount of oil, energy, or other commodities — or else, like Switzerland, have economies that are not energy-intensive and so may not benefit as much from cheap energy. (Switzerland, the 20th largest economy in the world, also relies on imports for just 52% of its energy, according to the World Bank, which is a lower share than in all but four of the 19 countries within the Eurozone). Admitedly there are a few exceptions to this rule: most notably Turkey, which imports a lot of energy but does not use the Euro, and Estonia and to a lesser extent the Netherlands, which produce a decent amount of energy domestically yet do use the Euro. Still, even the Netherlands is a major net importer of crude oil.

The third division is between countries that are in the European Union and European countries that are not in the European Union. This division is similar to the Eurozone one, except that states like Britain, Denmark, Poland, Romania, and Sweden — all of which are mid-sized energy or commodity producers – are in the European Union but do not use the Euro, which leave the continent’s major commodity and enegy producers of Norway, Russia, and Ukraine as more prominent outsiders. Turkey, meanwhile, is, unlike Russia, Switzerland, Norway, or Ukraine, a member of the quite important European Customs Union, though like them it is not part of the EU.

Finally, and in some ways most pertinently, there is a division between northern Europe and southern Europe. The further north you go, the less dependent the Europeans are on energy imports. Scandinavia and Russia are the furthest north: they are major energy and commodity producers. (Even the three Baltic states, which are generally assumed to be among the smaller countries in Europe, actually own far more land per capita – and especially forested land, which is crucial for feeding Europe’s sizeable wood-fuel industry – than any European countries to the south of them do).

These are followed by countries like Britain, the Netherlands, Romania, Ireland, the German economies, Poland, the Czech Republic, Slovakia, Hungary, Belgium, and northern France, which have economies that are also not too dependent on energy imports. (Like Switzerland, both Ireland and northern France have economies that are not at all energy-intensive, when compared to others).

In southern Europe, finally, there are the economies of Spain, Portugal, Greece, Italy, France-sans-Paris, Turkey, Cyprus, and Malta, which are highly dependent on imports of oil, natural gas, and energy in general. (While nearby Algeria remains a large energy-exporting state and Libya has energy-export potential, Morocco, Israel, Lebanon, and Jordan are highly dependent on energy imports and Egypt and Tunisia are both more or less energy neutral). Perhaps not incidentally, most of southern Europe has experienced an economic depression during the past eight years.

The biggest exception within southern Europe, meanwhile, is Italy, which produces more oil than France, Greece, Turkey, and Spain combined, slightly more oil than even Germany produces. This may in fact partly help to explain why Italy has been suffering a great deal of late, whereas the Spanish, Portuguese, and possibly even Greek economies might finally be on the mend. Even Italy is the world’s third largest gas importer, however, so as with Spain, Portugal, Turkey, and Greece, the Italians depend on imports from abroad to supply more than 70% of the energy they consume.

Turkey

Turkey is in the most interesting position of all when it comes to energy and geopolitics. It, along with its nearest European neighbour Greece, is a significant net energy importer; Turkey has a relatively energy-intensive economy and energy imports account for three-quarters of its energy consumption, while in Greece energy imports account for 60% of energy consumption. Oil imports in Turkey and Greece were estimated to be equal in value to 3.2% and 4.5% percent of GDP in 2014, respectively, both figures quite a bit higher than in most other countries within Europe.

Surrounding Turkey and Greece, however, is a ring of leading energy-producing regions: the Middle East, Russia, Ukraine, the Caspian Sea-Central Asia region, and North Africa. Even Turkey’s closest Western neighbours of note, namely Italy, Romania, and Austria, are not necessarily going to benefit much from cheap oil or cheap energy. Italy produces nearly three times as much oil as Turkey does, Romania produces nearly twice as much oil as Turkey and depends on energy imports for just 22% of its energy consumption, and Austria has the lowest oil-imports-as-a-percent-of-GDP of any country in the Eurozone. Even Israel, Cyprus, and Egypt have made major new energy discoveries of late, of natural gas within the Eastern Mediterranean.

In past years, Turkey has already seen many of its neighbours fall to shambles to one extent or another — first the Soviet Union, Yugoslavia, Lebanon, Algeria, and the Caucuses in the 1990s, now Iraq, Syria, Ukraine, Greece, Georgia, and Libya, among others. Further troubles in the regions surrounding Turkey, then, perhaps brought on by the falling price of energy, could create a serious power vaccum for the Turks to consider filling.

Turkey’s close-to-home rivals the Kurds, meanwhile, are also potential losers in a cheap energy environment. They produce a lot of oil in Iraqi Kurdistan, abut a number of hydropower facilities located within Turkey’s mountainous Kurdish regions where the headwaters of the Tigris and Euphrates rivers form, and possess ties in some cases to energy-rich Iran (as a result of the Kurdish population in Iran as well as the fact that Persians tend to be ethno-linguistically closer to most Kurdish groups than most Kurds are to either Turks or Arabs) or to energy-rich Iraq (as a result of the sizeable Kurdish population that lives in Iraq).

India 

India, like China, is both a major energy producer, the seventh largest in the world, and a major energy consumer, the third largest in the world. In India, however, oil imports were equal to 5.3% of GDP in 2014, compared to just 2.4% in China, while energy imports accounted for 33% of Indian energy consumption, compared to just 15% for China. And whereas in China the areas that benefit the most from cheap energy are located outside of the Chinese political heartland, in India the country’s political core territories — which are centred around India’s largest state by far, namely Uttar Pradesh (population 200 million), as well as parts of its neighbouring states like Bihar (India’s third largest state), Madhya Pradesh (5th largest), Rajasthan (7th largest), and Delhi (India’s capital city, population 17 million) — may benefit among the most in India from falling oil and energy prices.

Some of the other areas within India, on the other hand, such as parts of both Western India (which produces 75% of the oil from onshore fields in India, and which has close economic ties to the nearby energy-rich Persian Gulf) and Eastern India (which is where most of India’s coal and other commodities are produced or exported), might not benefit in the same way*.

[*when I say “benefit”, I mean it in the geopolitical sense of the term, not in the ethical sense. From an ethical point view, for example, the fall in energy and commodity prices is arguably great news for many of the people in Eastern India who were being exploited because of their coal and mineral wealth. Obviously, things like this are usually far more complicated in reality than can be captured in any single essay].

India’s geopolitical dream is of a prosperous, peaceful Indian Ocean basin in which it, by virtue of its size, diversity, and central location, would be far and away the most prominent and powerful country. In order to accomplish this India must have better relations with Pakistan, a country that has been backed by the United States as well as by fellow Muslim states like Saudi Arabia. With the Saudis and other Sunni Muslim countries hurt by cheap oil and energy prices, and with India’s traditional allies against Pakistan, namely the Russians and Iranians, hurt by cheap energy too, both India and Pakistan might perhaps be forced to rely more heavily on the Americans. If, then, the Americans decide to prioritize India-Pakistan peace-making as a way to maintain stability in South Asia and help to contain forces like China, Russia, and pan-Islamism, there may be some cause to be hopeful. Don’t be too sure though: there are plenty of reasons why India, Pakistan, and the United States might each find it difficult to pursue Indian-Pakistani or Hindu-Muslim reconciliation.

Within the wider Indian Ocean region, stretching 6000 km from Madagascar to Indonesia and 6000 km from Sri Lanka to Kerguelen, there is also some scope for careful optimism. In East Africa, from around Ethiopia south through the Great Lakes, most economies are not dependent on energy exports in the way that western African countries like Angola, Nigeria, Algeria, Congo, Gabon, and Equatorial Guinea are. Even South Africa, the world’s sixth largest coal exporter, is not nearly as dependent on energy exports as Nigeria, Angola, or Algeria are, and is a net importer of crude oil. Oman and Yemen, similarly, the two Arab countries with coastlines directly along the Indian Ocean, are not nearly as dependent on energy exports as other Arab countries like Saudi Arabia, the UAE, Qatar, and Kuwait are. They, especially Yemen, may also be leading importers of food.

In the eastern Indian Ocean, the Indonesian islands of Sumatra and especially Java (combined population: 195 million) tend to be energy-importing areas, in contrast to Indonesia’s Pacific islands like Kalimantan and, 3500 km to the east of the Indian Ocean, West Papua, which account for most of Indonesia’s energy production as Sumatra’s aging oil fields are declining. In Indonesia’s neighbour Malaysia, similarly, most oil production comes from around the Pacific island of Borneo, an island Malaysia shares with Indonesia and Brunei, rather than from the Malay Peninsula on the edge of the Indian Ocean where most of Malaysia’s population lives. Singapore, moreover, which is located roughly in between western Malaysia and western Indonesia, is the world’s 13th or 14th largest oil importer (it is roughly tied with Thailand, which is also located along the outer edge of the Indian Ocean); in spite of its small size Singapore now imports nearly twice as much crude oil as Indonesia and Malaysia combined export to the world.

Image of the Day – December 3, 2015 – Morocco the Outlier

As a result of the conflicts in Syria and Libya, Morocco has become the only state in the Middle East/North African region that is not or does not border a failed or semi-failed state.

Morocco’s next-door neighbour Algeria, in contrast, borders two or three such states, namely Libya, Mali, and Niger. Algeria might also be standing on politically shaky ground itself, as its economy is highly dependent upon exports of oil and gas and as its leader Abdelaziz Bouteflika, who has governed the country since 1999 (during the Algerian Civil War from 1991-2002), has now reached 79 years old and has very serious health problems but no clear political successor.

Tunisia, meanwhile, in sandwiched narrowly between Libya, Algeria, and the depressed economy of southern Italy. Egypt borders Libya and Sudan and Gaza. Saudi Arabia borders Iraq and Yemen. Iran borders Iraq and Afghanistan. Turkey borders Iraq, Syria, and the economy of Greece. Sudan borders several troubled states and also remains troubled itself. Jordan borders Syria and Iraq. Lebanon borders Syria. Kuwait borders Iraq. Oman borders Yemen.

The West Bank Palestinian Territory, like Morocco, does not have failed-state neighbours: it is directly bordered only by Israel and Jordan. Still, Palestine cannot be said to be on this list with Morocco, since it is not independent and since it includes the more troubled Gaza Strip. Qatar, the United Arab Emirates, and Bahrain, meanwhile, are no longer truly majority-Arab economies, as non-Arab foreign workers now significantly outnumber their own citizen labour forces.

Morocco is an outlier also in terms of its economy (it is a net importer of fossil fuels, unlike most other Arab economies) and in its geographic location at the outer edge of Africa and Europe. Though Morocco has not been able to capitalize much on these traits in the past – the country’s per capita GDP is under $4000 –  there are reasons to think that it will begin to outshine most other nations in the coming years.

Here are 5 factors to keep an eye out for:

1.  Ties to the Americas

Morocco has closer connections to the Western Hemisphere than do most other countries in the Arab world, for a number of reasons. One is geography: Morocco is an Atlantic country, and most people in North and South America live within the Atlantic basin. Marrakesh is 5900 km from Manhattan, 6900 km from Miami, and 4900 km from the easternmost edge of Brazil. By comparison, Marrakesh is 5400 km from the Saudi capital Riyadh, 4900 from Baghdad, and 3700 km from Cairo.

Another is language: millions of Moroccans can speak French, Spanish, or  (increasingly) English, which along with Portuguese are the languages spoken most often in the Americas.

Another is history: Morocco was not a British colony, so it does not have the same resentment against the English-speaking world that many other countries do. Also, it was liberated by the US and Britain relatively early on in the Second World War (insert Casablanca reference here).

And another is politics: the US wants at least one stable, large, non-Wahabbist political ally in the Arab world, and as a result it is views Morocco favourably. In addition, the US and British navies continues to require passage through the narrow Strait of Gibraltar between Morocco and Spain in order to access the Mediterranean.

(Morocco and the US struck a Free Trade Agreement in 2006. Outside of Canada, Australia, South Korea, Israel, Jordan, Oman, and some countries in Latin America, Morocco is the only country to have such an agreement with the US)

As the economies of Europe, East Asia, and most of the developing world are simultaneously struggling at the moment, whereas the economy of the United States remains relatively vibrant, Morocco’s linkages to the US and other countries in the Americas could provide it with a significant advantage over its peers.

2. Oil and Food Imports 

Falling commodity prices in recent years have left most Middle Eastern countries panicking, depending as they do upon energy export to maintain their economies. Morocco too could be hurt by the falling price of energy, as it has benefited in the past from tourism, investment, and financial transfers coming from oil-rich states like Saudi Arabia. Still, Morocco is not a net commodity exporter itself. Quite the opposite, in fact: as a share of GDP Morocco is one of the world’s biggest net oil importers among countries with significant-sized populations, and it is also one of the bigger food importers.

Morocco does not even trade much with its energy-exporting neighbour Algeria, as the two have been rivals of one another because of Morocco’s ongoing control of Western Sahara. Morocco does trade, however, with Spain and with Portugal, both countries that could benefit significantly should cheap oil and gas prices persist.

(Source: The World Bank; Wall Street Journal)

3. Spain’s Economic Recovery

Spain and Portugal have been in a very deep economic recession since the “global financial crisis” hit. The southern regions of Spain, meanwhile, have been in a Depression in which as recently as 2015 they had formal unemployment rates of well over 30 percent, higher even than in Greece. This has not been good for Morocco at all, which sits just 14 km across the Straits of Gibraltar from southern Spain. The two Spanish “ex-claves” in Morocco, Cueta and Melilla (which have a combined population of 165,000), have similar unemployment rates.

Since the beginning of 2015, however, Spain is thought to have been the fastest growing significant economy in “Western Europe” apart from Sweden or Ireland, and Portugal has also been doing much better than in previous years.  Meanwhile the heart of the “Eurocrisis” seems to have moved to Italy, which could be very bad for neighbouring Tunisia and so make Morocco even more of an outlier in terms of being a stable economy within the Arab world.

(Source: Eurostat)

(Morocco exports slightly more to France than to Spain, however given that France’s GDP is more than twice as large as Spain’s, this indicates Morocco’s closer economic ties to Spain)

4. Modern Communications

Morocco is a semi-rural country. According to the World Bank, 40% of Morocco’s population live in rural areas, compared, for example, to 57% in Egypt, 33% in Tunisia, 30% in Algeria, 31% in Iraq, 27% in Iran and Turkey, and just 17% in Saudi Arabia. Morocco is also the most mountainous country in the Arab world outside of Yemen, making many of its inhabitants – in particular its rural inhabitants –  somewhat isolated from one another as well as from the outside world. Morocco’s population could benefit from Internet and mobile phone access helping it to overcome this isolation, then.

Morocco might also benefit from modern communications because of its unique linguistic abilities: its population speaks four different prominent languages, namely Arabic (which is spoken not only in Arab countries, but also by at least tens of thousands of people in almost every Muslim country), French, Spanish, and (increasingly) English. Morocco is in fact one of the few countries outside of Spain or the Western Hemisphere in which significant numbers of people are capable of speaking Spanish. Moreover, if Spain and Portugal benefit from being able to forge closer connections with Spanish and Portuguese speakers in the Americas as a result of the Internet, Morocco could benefit indirectly from their success.

The Internet could be particularly useful in helping Morocco to connect usefully with the rest of the Arab world, which until now Morocco has been somewhat cut off from as a result of its faraway location – it is a five hour flight from Morocco’s biggest city Casablanca to Cairo, and nearly an eight hour flight from Casablanca to Dubai – and as a result of its poor political relationship with its next-door neighbour Algeria. Given that most of the Arab world’s population and almost all of the Arab world’s economic activity occurs in the Middle East (including Egypt) rather than in North Africa (excluding Egypt), the distance-shrinking effects of the modern Internet could be of special assistance to Morocco.

 

 

 

 

 

 

 

 

 

(above: Population by country; below: The Moroccan diaspora)

 

 

 

 

 

 

 

5. Self-Driving Vehicles 

Morocco is located at the front door of Western Europe. It has to cross just one border to reach Spain, two borders to reach France, and three borders to reach Germany, Britain, or Italy. (By comparison, Turkey has to cross at least five borders to reach Germany or Italy by land, six to reach France, and seven to reach Britain or Spain). Still, Morocco cannot yet seamlessly access these countries.

It is, for example, 2350 km from Casablanca to Paris by land, a route which crosses the Strait of Gibraltar as well as a number of mountain ranges in Morocco, Spain, and southern France. This can make transport difficult, particularly by train. Trains cannot easily drive on and off of ships like trucks can, and they cannot handle steep inclines and sharp curves in mountainous areas as easily as trucks (particularly small trucks) can.

Indeed Morocco has only the 71st largest railway network in the world, according to the CIA World Factbook, smaller even than Tunisia’s. Spain has a much larger rail network, of course, just not once you account for Spain’s economic size. Moreover, few lines cross the Pyrenees Mountains on Spanish-French border, and Spain’s railways mostly use a different rail gauge as France’s, so the two systems to do not always link up quickly.

Smarter cars and trucks — and, eventually perhaps, self-driving cars and trucks — would be a boon for countries in the mountainous Mediterranean region, notably Morocco but also Algeria, Spain, Italy, southern France, Greece, Turkey, and the Balkans. They could make it safer and cheaper for cars and trucks to navigate difficult mountain roads. For Morocco, they could also make it easier to manage the long delay trucks typically face in crossing the Strait of Gibraltar, a body of water that is often too stormy to cross. If this happens, then the lack of national borders separating Morocco from large economies in Western Europe could become a significant economic advantage.

Over the longer-term, self-driving vehicles could also help Morocco to leverage its location as the sole land bridge between Western Europe and the huge region of Western Africa.

Economies in Western Africa often have a difficult time reaching European markets by sea. Either they are landlocked (approximately 70 million people live in landlocked countries in Western Africa, and many more are part of landlocked groups within non-landlocked countries, like the nearly 60 million Hausa or Fulani of Muslim-majority northern Nigeria), or they have to sail all the way around West Africa to reach Europe (most notably in countries like Nigeria — see map below — where most of the population of Western Africa lives), or they lack access to good natural harbours and ports (in the Nigerian megacity of Lagos, for example, “the [shipping] terminals are both practically in the city centre, so it can take an entire day for a lorry to get [through traffic] from the terminal to a warehouse“, according to the Economist), or their ships are subject to piracy.

(http://blog.crisisgroup.org/africa/nigeria/2015/12/04/nigerias-biafran-separatist-upsurge/)
The alternative to maritime shipping is to cross the Sahara Desert. That is, of course, far easier said than done: the routes across the Sahara are long, difficult, and dangerous. Still, they have a shot to become economical, given the challenges involved in the the sea route. Driverless trucks, which are both safer and cheaper than having a human driver risk crossing both the Sahara Desert and Morocco’s Atlas Mountains, could perhaps tilt the balance (in some cases, at least) between the land and sea routes. If this occured, it would reverse the process that began in the 1400s, when it first became easier to reach this region by ship than by caravan.

Finally, self-driving vehicles could perhaps make it easier for Morocco to access markets in Latin America. Most people in Latin America live in southern Brazil,  around Sao Paolo, and in neighbouring northern Argentina, around Buenos Aires. (The state of Sao Paolo alone accounts for an estimated 32% percent of Brazil’s GDP, without even taking into account neighbouring Rio de Janeiro). Yet this is a long sail from Morocco. It would instead be much quicker for ships to land somewhere around the eastern tip of Brazil and then drive overland to cities like Sao Paolo (see map below). Thus far it has been difficult to drive the more than 2000 km that this route is made up of, however, as it crosses long distances through Brazil’s eastern coastal mountains. Brazil’s traffic jams and road conditions are notoriously difficult to deal with; this route could certainly use a big boost from technology.

(Morocco controls Western Sahara)

Image of the Day – December 2, 2015 – Motor Vehicle Production

Motor Vehicle Production

The non-per capita vehicle production stats came from wikipedia: https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production

Note: there are countries which have higher per capita motor vehicle production than some of the countries on this list. Belgium, for example, which is not shown on this list, has a much higher per capita motor vehicle production than many of the countries that are shown on this list. The countries on this list were simply the ones with the highest overall motor vehicle production as of 2013, according to the source above.

 

 

 

 

Image of the Day – December 1, 2015 – The Turkish-Bulgarian Border

Topographic_Map_of_Bulgaria_English.png

The land border between Bulgaria and Turkey currently serves as the southeastern frontier of the European Union, and it also Turkey’s most vulnerable one. Whereas Turkey’s eastern borders are separated from the majority of its population by over a thousand kilometres of hills and mountains, the distance between Istanbul and the Turkish-Bulgarian border is less than 200 kilometres, and the terrain is relatively flat the whole way.

Not incidentally, it was from the area that is today Bulgaria that the Romans conquered Byzantium (today’s Istanbul) in 173 BC, and that European forces conquered Constantinople (also today’s Istanbul) during the Fourth Crusade in 1204 AD. In fact the Turks themselves conquered Constantinople from this direction, in 1453 AD, though in their case they approached the city from both east and west simultaneously.

If Turkey were to formally or informally dominate even just the southern half of Bulgaria, as its Ottoman predecessors did for nearly five hundred years between 1396 and 1885, the distance between its western border and Istanbul would double. Even more important, Turkey would then be able to anchor itself on the Balkan Mountains instead of on the flat lowlands which currently comprise much of the border between the two countries.

This would give Turkey a defensible buffer in the north, while also allowing it to outflank any theoretical threat that might emerge on its border with Greece, its long-time rival, which like Bulgaria has a border located near to Istanbul. In addition, it would allow Turkey to prevent the Russians from circumventing the Turkish Straits by sending their goods to the Mediterranean by way of Bulgaria and Greece. Obviously the Turks would find such a state of affairs to be quite beneficial, all other things being held equal.

This is important, because Turkey could probably dominate Bulgaria if it wanted to, unless the Bulgarians were receiving support from an outside power like the United States, Russia, or the Europeans. Turkey is a much larger and wealthier country than Bulgaria is. Its gross domestic product is thought to be 20 times larger than Bulgaria’s, and its population is more than 10 times larger than Bulgaria’s. There is, in addition, a large Turkish diaspora living within Bulgaria, accounting for more than 10 percent of the country’s total population and more than half of the population in two of its 28 provinces.

You can read the full article here.

Image of the Day — November 26, 2015 — Clash of “Civilizations”

Clash of %22Civilizations%22

(Eastern Christian Orthodox countries include Russia, Ukraine, Romania, Bulgaria, Greece, Serbia, etc.; Turkic Muslim countries are Turkey, Kazakstan, Uzbekistan, Turkmenistan, Azerbaijan, Kyrgyzstan, and Northern Cyprus. For Turkey, the two most important Christian Orthodox countries are Russia and Greece.           …take these numbers with a grain of salt though, it’s hard to be sure of these things, particularly when going back a few decades and looking at large closed-off economies like the former Soviet Union)

Image of the Day, November 24, 2015: Turkish-Russian Geopolitics

black-sea-map

(above — Black Sea drainage basin; below — Volga river drainage basin)

volga

 

Russian-Turkish Geopolitics:

The economies of Russia and Ukraine depend on exporting bulk goods like oil, coaliron oregrainuranium, and manufactured goods. The easiest way for Russia and Ukraine to transport these goods is via ship or barge rather than by truck or train, for a number of reasons:

  • ships are generally the most efficient way of moving bulk goods long distances
  • the railways of Russia and Ukraine use a different gauge than those of other European countries and so do not directly connect to one another in most cases
  • most of the import markets for grain are in North Africa, the Middle East, or South Asia, and most of the import markets for goods like coal, iron ore, and Russian-made or Ukrainian-made weapons are in Asia
  • relying on land transport would make Russia and Ukraine dependent on Eastern and Central European nations like Poland, Romania, Italy, and especially Germany. It might also make Russia reliant on Ukraine or Belarus, which sit in between Russia and European markets.
  • The Volga-Don river system (the two rivers are connected to one another via a canal, next to Volgograd – formerly Stalingrad – which solves the problem of the Volga flowing into the landlocked Caspian Sea) is where nine of Russia’s sixteen largest cities are located, including Moscow
  • The Volga and Don rivers in Russia and the Dnieper and Dniester rivers in Ukraine are wide, deep, long, and relatively slow-flowing, and as such can be used by large vessels. Moreover, their extreme width – they are often about 5 km across, and far wider than that in many places – has made building bridges across them expensive, further constraining land transport alternatives.The Volga and Dnieper are especially visible in the satellite image below:

Russia and Ukraine have two main options for their water transport: via the Baltic Sea or via the Black Sea. The Baltic route has a number of crucial limitations too:

  • Ukraine does not border it directly, and Russia barely borders it directly
  • It generally freezes over a lot during the winter, particularly the Gulf of Finland where Russia’s main access to it, next to St Petersburg, is located
  • The populations of Russia and Ukraine mainly live in areas where the rivers flow towards the Black Sea rather than the Baltic
  • Accessing the Atlantic Sea via the Baltic would make Russia dependent on Baltic Sea powers like Germany, the Scandinavians, and perhaps even Poland, Finland, or Britain
  • The Baltic is an extraordinarily out-of-the-way route for exporting grain to the Middle East and Asia, or other goods and commodities to Asia
  • Most of landlocked central and eastern Russia and all of Russia’s sphere of influence in Central Asia are located much closer to the Black Sea than to the Baltic

If Russia and Ukraine are to use the Black Sea to reach international markets, however, they must be able to ensure passage through the gulfs on either side of the Crimean Peninsula, as well as through the narrow Turkish Straits next to Istanbul and through the Aegean Sea occupied by Turkey, Greece, and the Greek islands. Given that in recent years Russia has seized Crimea from Ukraine, involved itself militarily in south-eastern Ukraine, and built up the area around Sochi along the Black Sea, while at the same time Turkey’s economy has expanded and Greece’s has practically collapsed, the relationship between the Russians and the Turks has now become of particularly great importance.

Some other Turkish-Russian issues to watch:

  • The Syrian Civil War, which Russia has entered into more directly in recent weeks, and in which Russia and Turkey generally find one another on opposite sides
  • Turkey has become Russia’s main vacation destination. With Russia’s population aging and desiring to get away from Russia’s dark, cold, long winters, and with the recent Sinai peninsula attack on the Russian plane flying out of the resort haven of Sharm el Sheik threatening Russian tourism to Egpyt, which is Russia’s second largest vacation destination, this is a big issue.
  • More than 10 percent of Russia’s population is Muslim, and Russia also has a sphere of influence in Muslim Central Asia, in resource-rich Turkic countries like Kazakstan (where very large numbers of Russians live), Uzbekistan, and Turkmenistan.
  • Turkey wants to wean itself off its dependence on importing Russian energy, and then eventually supplant Russia as Europe’s energy supplier by connecting European markets to the energy producers in the Middle East, Eastern Mediterranean, and Central Asia
  • Turkey and Russia have both historically wanted influence in Bulgaria, a Slavic Christian Orthodox country, and Greece, a Christian Orthodox country. Russia has  looked to these countries as a source of leverage over Turkey, since the city of Istanbul is exposed to the borders of both and reliant on passage through the Greek Aegean. Bulgaria and Greece could also provide Russia with a winter vacation destination and, if intermodal transportation can become more efficient, a way to access the Mediterranean without passing through the Turkish Straits.
  • The Balkans continues to have tensions between Orthodox, Catholic, and Muslim groups – with the Orthodox closer to Russia and the Muslim ones to Turkey – and between Slavic and non-Slavic groups. Meanwhile, the Caucasus continue to have serious tensions between Christian Armenia, which is close to Russia and despises Turkey, and Turkic Muslim Azerbaijan, which is close to Turkey. Turkey and Russia are also the only two countries apart from Azerbaijan and Armenia to border Georgia, and in the past Russia has accused Georgia and Turkey of helping groups in the Russian Caucasus in places like Chechnya.

Europe and Arabia: A Geopolitical Perspective

As different as the Quran is from the New Testament, or the Constitution of France is from the Constitution of Saudi Arabia (which is, in fact, the Quran), these differences are arguably less important than those which seperate the geography of Europe from the geography of the Arab world.

Europe is a region of islands, peninsulas, mountains, rivers, forests, and marshes: natural barriers that have historically hindered the development of a unified European identity. The Arab world, on the other hand, is in effect an enormous coastal desert, stretching for nearly 8000 km from the Atlantic to the Indian Ocean and yet, with the exception of some notable mountain ranges around its edges, containing few internal barriers of any sort. This comparatively open landscape of the Arab world has allowed it to achieve a level of linguistic, religious, and cultural unity that Europe has rarely if ever been able to match.

europe-medium

While the Desert and its coastal seas act as unifying force within the Arab world, the fact that significant supplies of freshwater can be found in just a few scattered areas within its gigantic territory (mostly in mountains, as in Morocco, Algeria, and Yemen, or in rivers, as in Egypt, Sudan, and Iraq) has meant that the pan-Arab identity it has fostered must compete with a wide assortment of intra-Arab identities, which in most cases have been far better than pan-Arabism at winning the allegiances of their inhabitantsIn addition, the geographic division between the Middle East and North Africa has led to sharp ethno-linguistic and political divisions between Arab and Berber peoples within countries like Morocco and Algeria.

The desert geography has also tended to make the Arab world relatively poor. This too is in stark contrast to Europe, which has become rich as a result of the commercial navigability provided by its numerous slow-flowing rivers, long coastlines, and sheltered seas and fjords, as well as by its luck in possessing a temperate climate and natural resources like freshwater, farmland, timber, and coal — and proximity to the natural riches of the Americas that it was able to access and exploit.

These opposing geographies have underlain the great historical contest between the “civilizations” Europe and the Arab world have cultivated for themselves. The advantage was first with Europe, arguably, as Italy, led by Rome, was able to conquer the entire Mediterranean basin as well as Mesopotamia, defeating the Carthaginians (a powerful Semitic empire based out of what is now the Arab state of Tunisia, which had controlled much of North Africa and Spain and was ethnically linked to the Phoenicians in the Eastern Mediterranean) and other African and Middle Eastern groups in the process. Even following the decline of the Christian Roman Empire, most of the inhabitants of the Middle East and North Africa continued to be ruled by Rome’s successor, the Greek-led Byzantine Empire (which was also Christian), for several hundred years.

Eventually the tables turned, however, and around 600 CE the Arabian Peninsula united under Muhammad and then expanded its control outward during the rule of his immediate successors, quickly conquering Spain, most of France (for a very brief period), and a large part of Asia. In turn, the Arabs were invaded and occupied by Central Asian groups like the Mongols and Turks; however, in a sign of Arab influence, most of the conquering Turks ended up adopting the religion of the conquered Arabs, and long outlasted the Mongols.

While the Arabs then lost their beloved Spain after a more than 700 year long struggle with Christian forces to keep hold of it, the Muslim Ottoman Turks made up for the loss by conquering all of southeastern Europe as far as the Austrian capital of Vienna, which they besieged in 1529 and again in 1683. Muslims also continued to spread the faith into Southeast Asia: many of the ancestors of people living in what is now Indonesia, which today has the largest Muslim population of any country in the world by far, adopted Islam during the 1400’s, almost a millennium after the death of Muhammad.

Of course, the Europeans ultimately regained the advantage over their Muslim neighbours. During the late 1400’s the Portuguese first sailed a route to India which avoided passing through Turkish or Arab-held territory, while, around the same period, the Spanish reached the Americas and the Russians surged into Muslim Turkic Central Asia, conquering territory they mostly continue to hold today. The greatest blow to Islam then fell in the 1700’s and 1800’s, as the Muslim Mughal Empire, which at its height had governed over almost a quarter of the world’s population, lost its hold on the Indian subcontinent to the British. The colonizing Europeans also took over Muslim populations in places like Africa and Southeast Asia.

During the 1800’s and early 1900’s, the Ottoman Turks forfeited southeastern Europe and the Arab world in a series of assaults aimed at them by European powers like the British, French, Russians, and Austrians. The Persian empire was heavily intruded upon by both the British and Russians. Finally, in the 1970s, the last super-sized Islamic state, Pakistan, was divided into two separate countries, Pakistan and Bangladesh, which do not even border one another anymore since India lies between them. Today Pakistan and Bangladesh are the world’s sixth and eighth most populous countries, respectively.

For many people, the battle between Europe and Arabia, or between the West and Islam, continues to this day. After losing its main source of wealth when Europe stole the control of trade with India and China away from it, most of the Middle East seemed likely to become somewhat irrelevant to global politics. Instead, it gained a new source of wealth in the modern era: oil. As recently as 2010, more than 15 percent of world oil production occurred in Saudi Arabia alone, while an additional 15 – 20 percent occurred in other Arab countries and 40-50 percent occurred in the Muslim world as a whole.

The Muslim world also accounts for close to a third of world natural gas production (led by Iran, Qatar, Saudi Arabia, and Algeria), and is estimated to possess over 60 percent of the world’s “conventional” proven reserves of natural gas (not including gas from shale) as well as over 50 percent of non-shale oil reserves and over 75 percent of oil reserves that are neither from shale nor from oil sands.

Today, partly as a result of the energy wealth it has gained during the past century, the Arab world has a population of approximately 380 million (in contrast to a century ago, when its population was significantly smaller than even any of the major European nation-states were at the time, without even counting the Europeans’ overseas empires) and a nominal gross domestic product of just under 3 trillion dollars. This means that, if the Arab world could somehow reunite politically, it would have the third largest population and fifth largest economy in the world. It would, in other words, become a Great Power again.

Needless to say, few of the Arab world’s neighbours want to see any serious pan-Arab union come into being. Arab unification was in fact very briefly attempted in modern times, in a formal sense, with the joining of Egypt and Syria to form the United Arab Republic, which lasted from 1958 to 1961. From a purely geopolitical perspective, the potential of such cooperation between Arab countries is especially worrying to regions like Europe because of the Arab world’s shared religious identity – and to a lesser extent, shared cultural traditions and linguistic affiliations – with other parts of the Middle East and Muslim world.

(The “classical” version of the Arab language, which is understood by scholars and clerics in every country of the Islamic world –  and by many other people too, to varying extents – because it is the language of the Quran, is one potentially important example of a unifying factor throughout the Middle East).

If combined with non-Arab Middle Eastern neighbours Turkey and Iran, the population of the Arab world would rise to more than 530 million and its GDP would rise to more than 4 trillion dollars. The states that comprise the Organization of Islamic Cooperation, meanwhile, have a combined population of approximately 1.6 billion and a GDP of approximately 7 trillion dollars — and they do not even include the estimated 180 million Muslims living in India, 25 million living in China, 16 million in Russia, or 20 million living in the European Union.

While in the West there is much talk of the Muslim world being stuck in an economic decline, Muslims actually continue to have a higher per capita income than Hindus do, or than Christians in Sub-Saharan Africa do. Many Muslim countries have a higher per capita income than China does, even today following decades of rapid Chinese economic growth. The past decade has in fact been a terrific one for most Muslim economies, with oil and gas prices rising sharply, the developing world as a whole growing solidly, and a number of countries with large Muslim populations, most notably Indonesia, Turkey, India, and Nigeria, growing very quickly.

Apart from economic growth, the Muslim world’s geopolitical trajectory has also been positive in the past generation, mainly as a result of the collapse of the Soviet Union having freed about 60 – 90 million Central Asian Muslims (the exact number depends on whether or not you count  Afghanistan as part of Soviet-occupied Central Asia) from Russian rule, along with the resource-rich, centrally-located region of Eurasia they inhabit.

Since then, some Muslims have been hoping or pushing for a further Islamic geopolitical revival, which many non-Muslim countries would obviously not be happy to see. Pan-Islamic sentiments have, to varying extents, found their way into local and regional disputes between Muslims and non-Muslims throughout the world, in places like Kashmir, western China, Palestine/Israel, various African countries, various Southeast Asian countries, the Caucuses (both within Russia and without), and the Balkans. Arguably, technologies like the Internet have been strengthening pan-Islamic identities as well.

The West has, of course, generally aimed to gain influence within the Arab world, in part to prevent it from ever becoming too closely united. Europe, Russia, and the US have historically been focused on gaining influence in Egypt, for example, as Egypt has by far the largest population of any Arab country, is more internally stable and united than any other large Arab country, and is strategically located, sitting directly in the centre of the Arab world and encompassing the Suez Canal.

The West has also focused on gaining influence in the Persian Gulf, in particular by allying itself closely with the tiny energy-rich Gulf monarchies (Kuwait, the UAE, Qatar, Oman, and Bahrain), as well as with  the royal family of Saudi Arabia and, not too far away, the Israelis, the Iraqi Kurds, and the royal family of Jordan. Given that the West is in some ways more powerful today than at any time in history (largely as a result of the rise of the US, which was completed with the fall of the Soviet Union), and that the Persian Gulf region is sharply divided between Arabs and Iranians, Sunnis and Shiites, and Iraqis and Saudis, gaining influence there has not been too difficult for the West to achieve.

And so, even leaving aside social values or issues explicitly tied to religious belief, many Arabs believe the West is acting unjustly or aggressively towards them. Most believe that the current political borders of the Middle East are artificial, imposed on them a century ago by ignorant or sinister British and French politicians. There is certainly truth to this, though, in defence of the British and French, some of the borders that were drawn actually did accurately reflect some of the existing social and geographic divisions within the Arab world.

With a number of possible exceptions, such as Kuwait and Lebanon (which arguably should not have been created as independent states), Israel and Palestine (which arguably should have been created as a single state, perhaps even including neighbouring Jordan as well), and Kurdistan (which arguably should be created out of parts of Turkey, Iran, Iraq, and Syria, though even this is more complicated than it is often portrayed), it is not clear that the borders in the Middle East could actually be all that improved upon. But of course, this is a topic worth debating in much greater detail.

It is also not only the Christian world that has been responsible for messing with the “natural” borders of Arab lands. Iran and Turkey, for instance, both refuse to give up Arab-inhabited regions of the Fertile Crescent they possess; a more consistent geographic or cultural rendering of Middle Eastern borders should perhaps have included Turkey handing over its province of Hatay to Syria (as Syria still officially claims it should) and Iran handing over its province of Khuzestan to Iraq.

Yet most people who complain of Western-imposed artificiality among the borders of the Arab world are not concerned with either of these areas, even though both are significant to the politics of the region (especially Khuzestan). Indeed, while Arab bitterness toward Europe’s past imperialism remains wholly justifiable, complaints of imperialistic European map-drawing in the Arab world nevertheless tend to be somewhat exaggerated. If you want to see truly unfair and dangerously-drawn borders the Europeans were responsible for, you should not even begin to think of the Middle East, but look instead to regions like West Africa or Central Asia.

west-africa-map

cas923

The Other Greek Economy

Four months ago, Greek politics dominated the news. Even the Chinese stock market downturn, in which the Shanghai index dropped by over 30 percent in the month leading up to the Greek referendum, took a far backseat to Athens on every broadcast. Greece’s own stock market fell nearly to 26-year lows at the time, was shut down for five weeks in July, and then, immediately upon reopening, set a modern record by losing more value in a day than even Wall Street had on Black Monday in 1987. Even today the Athens index remains 11 percent lower than it was during its midsummer hiatus.

(All graphs compiled by author unless otherwise stated)

The media’s focus has completely flipped since then: it is now China’s economy and its impact on commodity prices that has the world’s attention. Even the re-election of Greek Prime Minister Alexis Tsipras and his political party Syriza a month ago barely made a blip in American news coverage; it fell well behind other stories like the visits of Pope Francis and Xi Jinping to the United States, the ongoing migrant and refugee flows into Europe, and the Volkswagen emissions-hiding scandal. One wonders if the Greek economy will soon grab the global spotlight once more as it has periodically been doing for almost a decade now, or if new media and economic patterns are emerging instead.

This article is not just about Greece, however. It is also about the world’s only other Greek-speaking state, Cyprus. The Greeks and Greek Cypriots have a lot in common with one another, financially speaking. Both use the euro as their currency, both have been struggling with severe bailout-related crises, and both depend quite heavily on imported oil. (See the two graphs below; also, notice in the graph above how the Athens stock market index responded to the two US invasions of Iraq, which many investors worried would cause the price of oil to spike in the short-term).

This dependence on imported energy, like that of other struggling European countries such as Spain and Portugal – and in stark contrast to Scandinavia, Britain, the Netherlands, and most of Eastern and Central Europe, which produce a lot more of their own fossil fuels or else have less energy-intensive economies- has generally been overlooked in the popular narrative of the Eurozone crisis, which has instead tended to emphasize cultural differences that exist between northern and southern European countries. Yet while it has been much more common to explain Europe in terms of thrifty, efficient Germans and nifty (or shifty) tax-dodging Greeks, the cost of importing energy was perhaps even more significant a factor in weighing down Europe’s Mediterranean economies relative to northern Europe when crude oil was still at well above $100 per barrel.

[Even Italy, which unlike other southern European economies is a mid-sized oil producer in its own right, with a slightly higher oil production than Germany or than the combined oil production of France, Spain, Turkey, and Greece, has still been hurt by energy economics: it is the world’s third largest natural gas importer, and was a leading customer of Libya before Gaddafi was overthrown. Still, Italy’s unemployment rate has not been nearly as high as Spain’s or Greece’s in the past decade (though notably, when oil prices were low around the turn of the millennium their unemployment rates were roughly the same), and indeed, Italy’s unemployment rate has even been lower than that of southern France].

This year, in contrast, when oil and gas prices have plunged, Spain has been the fastest-growing economy in Western Europe, experiencing a bigger GDP gain than it has in any year since 2007. Portugal and France are also thought have grown by a relatively decent amount, and Italy to have avoided recession. The two Greek economies are looking at Spain and hoping for a similar much-needed bounce.

Cyprus – or, more accurately, the 63 percent of Cyprus’s territory and 76 percent of Cyprus’s population that is governed by Greeks rather than by Turks – retains close ties to mainland Greece. Cyprus and Greece tried to unite formally in 1974 under the control of a Greek military junta, prompting a Turkish invasion of the island, and today Cyprus remains dependent on Greece for an estimated 20 percent of its trade as well as  for much of its foreign investment. Had the Eurozone Grexit actually occurred as many expected it would, it could probably have triggered a “Cyprexit” as well, which doesn’t have quite the same ring to it.

Cyprus’s relations with Turkey remain poor, meanwhile, and Turkish-inhabited Northern Cyprus continues to go diplomatically unrecognized by every country in the world outside of Turkey. That said, in 2008 the wall between Greek Cyprus and Turkish Cyprus that ran through the largest city on the island, Nicosia, was taken down, and in 2014, a decade after a failed reunification referendum in 2004, reunification talks were renewed between the two sides.

Now could be a good time to think about investing in Cyprus, not only because of how un-repeatably poorly it has done in recent years or because of the “White Swan” possibility that it could surprise the world by signing a deal that would finally reunify its two estranged halves, but also because its economy could perhaps benefit more than any other in Europe from today’s lower oil prices.

Indeed, Greece too, as well as other nearby countries like Serbia, Bulgaria, Croatia and to a lesser extent Turkey, could similarly benefit from the mix of relatively low oil prices and extremely low expectations. Growth in these countries could also benefit Cyprus, particularly if technology increasingly allows Cyprus to become even closer with its fellow Greeks in Greece and Turks in Turkey.

(Cyprus is located about 900 km from Athens, where around a third of Greece’s 11 million people live, and 750 km from Istanbul, which is the world’s fifth largest city by some measures. Cyprus is, in fact, located closer even to Moscow, Lahore, or Addis Ababa than it is to its fellow Eurozone members in Dublin or Lisbon).

Cyprus’s general stock market index has already fallen by 24 percent in the past year and by over 90 percent since 2011, so it might now be possible to pick up some valuable Cypriot assets for a cheap price.

Here are ten other things about Cyprus and Greece to consider:

1. Cyprus speaks English better than most other European states (with the exception of Scandinavia, the Netherlands, Switzerland, and Austria, which are also excellent at English) because it was controlled by Britain from 1878 until 1960, maintains a British air force base today where over 8,000 Brits continue to live along with their families and thousands of Cypriot employees, and has a large international tourism sector. Cyprus’s neighbors, namely Greece, Israel, and Lebanon, are also great at English. Egypt, another former British-ruled neighbor that attracts lots of tourists, is not too bad at English either, and is getting better because its population is still extremely young.

english %

Note: Second-language statistics are difficult to be certain of, so you should take this graph with a large grain of salt.

2. Cyprus and Greece are both not too dependent on exports of goods and services, compared to other European countries. In fact, as the graph below shows, Greece is the only small economy not to be dependent on exports; the other six countries closest to the top of this list are Europe’s six largest economies. Not being too dependent on exports is probably a good thing for Greece and Cyprus right now, considering that economic growth in Europe and the world has not been strong this year.

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(You will notice, for example, that Ireland is by far the most dependent on exports, which may be part of the reason it was hit especially hard during the global financial crisis and recession around 2008. In contrast, Turkey, which may be the least export dependent, bounced back strongly from the global recession, notching an estimated nine percent GDP growth in both 2010 and 2011).

3. Cyprus, even more than Greece, is economically dependent on tourism. Going forward, both hope to attract aging northern Europeans – including Russians, who like Greeks are Christian Orthodox – fleeing the winter and now being able to vacation abroad more easily because of technologies like the Internet. With Russia having frigid winters, a population of 144 million (by far the largest in Europe), and a Baby Boomer cohort that is now almost 60 years old on average and mostly cannot afford to travel to more distant and more expensive summer vacations in places like Spain, Italy or France, both Cyprus and Greece are hoping for a big tourist increase in the years ahead.

tourism

One area to look to here is Turkish-Russian relations. Turkey has become the biggest destination for Russian tourists in recent years, but if the relationship between the two regional powers deteriorates again as historically it has on many occasions (in fact they have already begun to deteriorate in the past week), more Russians could be steered toward Greece, Cyprus, and the Balkans instead, as well as toward countries like Egypt which has been Russia’s second most popular tourist destination in recent years.

Another place to look is the Caucasus, both within Russia and without: any renewed militancy in that region could threaten Russia’s tourist infrastructure build-up around Sochi along the coast of the Black Sea. The same is true for the Balkans, where dormant conflicts in tourist havens like Croatia could, if they were to turn violent once again, make Cyprus and Greece more appealing alternatives.

4. It is difficult, and in a certain sense effectively impossible, to find good statistics on the length of countries’ coastlines, as a result of the coastline paradox. That being said, I have given it a rough shot, and come up with the following stats:

coastline

It shows that, along with the remote New Zealand-Australia-Papua New Guinea region in the southern Pacific, the Greece-Cyprus-Croatia region has by far the world’s longest warm-climate coastline per capita. In fact, even Turkey, with a population of 74 million, does not do too badly in this respect since it has lengthy coasts along the Mediterranean, Aegean, and Black Sea. Considering how much people like owning seaside land, this could be a good characteristic to have. Nearby Italy also does somewhat decently, because of its long peninsular shape and its islands of Sicily and Sardinia, which are the only two Mediterranean islands with a larger population than Cyprus.

5. According to the World Bank, Cyprus has one of the lowest “total age dependency ratios” in the world and, with the exception of Slovakia, the lowest total age dependency ratio in all of Europe. The total age dependency ratio measures the number of people in a country aged 15 and under or 65 and older relative to those aged 15-65. Cyprus has very few children or seniors relative to the size of its working-age population, which is arguably a very good thing to have. Greece, on the other hand, does not have this, as you will notice on the graph below.

Total Age Dependency Ratio

Cyprus also has the lowest share of its population aged 80 years old or older in Europe with the exceptions of Slovakia and Ireland. Cyprus’s neighbors – Israel, Lebanon, Turkey, and Egypt – have even smaller shares of their population aged 80 years or older. Greece, in contrast, has the highest share above 80 in Europe with the exception of Italy, which is likely part of the reason its public finances are so strained. Other troubled economies like Spain, Portugal, and France are at the very bottom of this 80-and-up list, along, interestingly, with Germany.

80+ ratio

The same is true of the “Old Age Dependency Ratio”, which is the number of people a country has aged 65 years and older relative to those it has aged 15-64.

old age ratio

6. Outside of Scandinavia or the former Soviet Union, both Greece and Cyprus have some of the most land per capita in Europe, as can be seen in the graph below. So too do some of their neighbors, like Turkey and other Southeast European countries. This relative wealth of land could be good for Greece and Cyprus, but there is also a catch: Greece, and especially Cyprus, are lacking in freshwater. Indeed as the second graph below shows, Cyprus is the most water-strained country in Europe.

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Graph Source: European Environment Agency

And of course, many of Cyprus’s Middle Eastern neighbors are in very poor shape on this front as well, though some, like Israel, are trying to come up with technological solutions for their freshwater shortages – and both seawater desalination and wastewater treatment are significantly cheaper to do when energy prices are low as they have become in the past year.

Two months ago, by the way, Turkey finished constructing a freshwater pipeline to Northern Cyprus which, at 80 km in length, is the longest underwater water pipeline in the world. It is supposed to have a significant effect upon Northern Cyprus’s agricultural production. Greek Cypriots are wary of becoming dependent on this pipeline, however, and Turkey is far from being rich in freshwater itself.

7. This graph below shows that Cyprus’ economy performed abysmally in 2014 and especially in 2013, yet is expected to finally start growing again in 2016. Greece, meanwhile, already started growing again in 2014 and is forecast to do so even more in 2016 while Cyprus’s closest neighbors, Lebanon, Israel, Turkey, and Egypt, are expected to grow quite quickly in 2015 and 2016.

gdp growth europe

Other Mediterranean economies, particularly Spain, are also expected to recover from their poor performances in recent years, and Russia is expected to start growing again in 2016 after the sharp contraction it has been experiencing in 2015. Three other countries in Cyprus’s general neighborhood, Syria, Ukraine, and Libya, have of course also been doing horribly in recent years, and will hopefully recover as well.

8. Britain has had very strong economic growth this year compared to many other countries in Europe or the developed world. This could help Cyprus since the two countries retain ties in a number of different ways, even beyond the tourist or banking sectors. Britain is in fact home to a large Greek Cypriot diaspora, most of (the first generation of) whom left the island when the Turks invaded in the mid-1970s. Today the Cypriot population in Britain is about 20-25 percent as large as that of Greek Cyprus itself. With London and Cyprus over 3,000 km apart from another, British economic growth as well as distance-shrinking technologies like the modern Internet could help the Cypriots benefit from their British connections.

Another country with potentially close ties to Cyprus, as we have already discussed, is Russia. Russia’s economy had a bad year as oil and other commodity prices fell, but it is nevertheless expected to start growing again at a fairly decent pace in the years ahead, at least relative to more developed Western European economies.

Moreover, it is not impossible that Russia’s slowdown could actually benefit Cyprus, if wealthy Russians worried about their domestic situation decide to start parking more of their assets abroad in these countries. That said, Russians may be less likely to do so than they used to be, because in 2013 the Cypriot government used the excuse “it’s just the money of shady Russians” in order to help justify its seizure of cash from Cypriot bank deposits in accounts with over 100,000 euros in order to pay off Cypriot debts.

9. Cyprus has resources it can use to play a role in the global battle against coal production. As of 2011, it generated more solar power per capita to heat space or water than any other European country: 611 W per capita, compared, for example, to 385 W for Austria and 253 W for Greece, and 120 W for Germany, which were some of the other top solar producers in the region. Cyprus and Greece also potentially have wind power because of their long coastlines per capita and because of their many windy cliffs and hilltops.

Cyprus, and perhaps Greece as well, may also have large reserves of offshore natural gas. The Eastern Mediterranean around Cyprus has been the site of some of the world’s largest discoveries of late, not only in Cyprus, but also in neighbouring waters off the coast of countries like Israel. Less than a month ago, in fact, the Italian energy company ENI may have found the Mediterranean’s largest discovery ever in Egyptian waters not too far from Cyprus’s. The Egypt gas find could put Cyprus’s gas production dreams at risk, though in theory it could also help justify the construction of an underwater pipeline to Europe that both countries could feed their gas into.

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At present, Cyprus faces logistical challenges in exporting its gas to Europe, particularly if it does not want to be dependent on exporting via a yet unbuilt pipeline that would run underwater to Turkey, which has an estimated construction cost of 3 billion dollars, in comparison to the estimated 10 billion dollar gas liquefaction and export terminal that it has been considering building instead.

Still, its gas could ultimately prove valuable if, for example, Western Europe’s relationship with Russia continues to deteriorate, if gas production in fields in the North Sea continues to drop, if its gas supplier Algeria undergoes any political instability like it faced in the 1990s as its leader Abdelaziz Bouteflika (who has ruled since 1999 and is now thought to be 78 years old) continues to age or passes away, or if government pricing of carbon emissions rise a lot and thus make gas ever more desirable when compared to coal.

10. Cyprus’s position next to the Suez Canal, which was expanded this year, puts it in a position astride some of the world’s major shipping lanes. By sea, Cyprus is halfway between Mumbai and London, and halfway between New York and Kuala Lumpur. Cyprus’s ability to leverage its central shipping position to become a significant manufacturing economy has thus far been limited by its lack of a sizeable labour force, as its population is barely more than a million. Going forward, however, as machines become used more and more in industry in place of human labour, Cyprus’s manufacturing output could perhaps take off, if – a very big if – it can produce a skilled workforce to run its industries and cheap energy to power them.

Greece, similarly, has an enviable position near Suez and at the point where the Black, Adriatic, and Mediterranean seas converge, and has more natural harbours and sheltered seas than perhaps any other country in the world. It is in fact these protected coasts which allowed its city-states and kingdoms to dominate regional commerce throughout most of antiquity, and to have more registered merchant vessels in the present day than any other country in the world apart from China.

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In theory, Greece could save ships traveling between Asia and Europe from taking their usual lengthy detour through the western Mediterranean and northern Atlantic. The Greek port of Piraeus next to Athens already handles more containers ever year than all but three other ports among Mediterranean EU countries and eight other ports in the EU as a whole. By 2016 it may become the Mediterranean’s largest port. As of 2013, according to Eurostat, Greece handled approximately 5 percent of the European Union’s “gross weight of seaborne goods handled”, which is a lot considering that Greece only accounts for an estimated 1.3 percent of the EU’s overall GDP.

mediterranean-relief-map-4578708

Similarly, Russia could be likely to look to Greek ports as a way of carrying out trade that bypasses the Turkish Straits that separate the Black and Mediterranean seas and the Skagerrak Strait that separates the Atlantic from the Baltic Sea. Given Russia’s escalating involvement in the Syrian civil war, which is hurting Russia’s relationship with Turkey while at the same time making it need to send supplies into the Mediterranean through Turkish waters, Russian access to Greek ports could become especially important.

In order to do this, however, Greece would need to overcome the political and geographical challenges of transporting goods overland between Greek ports and European (or Russian) markets via Southeastern Europe. In addition to logistical challenges, doing so would also represent a direct challenge to the established megaports of the Netherlands and Belgium, as well as to the hopes of Italy which would like to achieve a similar goal for the coast along its own southern heel.

That said, there may actually be some reasons for Greece to be hopeful in this area. Greece’s ports are roughly 20-40 percent closer the Suez Canal by ship than southern Italy is, and Greece has far more and better sheltered harbours than southern Italy does. What Greece really needs, however, is a much cheaper way of transporting goods via its rugged mountain roads, as well as a cheaper way of transporting goods intermodally so that it would not be too expensive to unload goods at Greek ports, take them by land to the Danube River (which is 400 km from Thessaloniki and 850 km from Athens), and then load them back on to barges or trains in order to get them to their final destinations in Europe. (The Danube-Main-Rhine canal was completed in 1992, and can handle barges up to 190 metres long and 11.5 metres wide, with a depth of 2.7 metres).

I don’t want to dig in to this topic here, but I suspect there are technological reasons to think that both of these challenges might actually be overcome in the not-too-distant future. In fact it may wind up being the political factors, rather than the purely logistical ones, that are more difficult for Greece to get past. In particular, Bulgaria, Romania, or Hungary could put up formal or informal trade barriers that make it difficult for such a trade corridor to become prominent, and the former Yugoslavian countries in the Balkans could be too unreliable to provide alternative overland routes.

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