Thursday, June 19, 2014

Roubini on Middle East, War and more

The Middle East remains a region mired in backwardness. The Arab Spring — triggered by slow growth, high youth unemployment and widespread economic desperation — has given way to a long winter in Egypt and Libya, where the alternatives are a return to authoritarian strongmen and political chaos. 

In Syria and Yemen, there is civil war; Lebanon and Iraq could face a similar fate; Iran is both unstable and dangerous to others; and Afghanistan and Pakistan look like failed states.

In these cases, economic failure and a lack of opportunities and hope for the poor and young are fueling political and religious extremism, resentment of the West and, in some cases, terrorism.

In the 1930's, the failure to prevent the Great Depression empowered authoritarian regimes in Europe and Asia, eventually leading to the Second World War. This time, the damage caused by the Great Recession is subjecting most advanced economies to stagnation and creating structural growth challenges for emerging markets.

This is ideal terrain for economic and political nationalism to take root and flourish. Today’s backlash against trade and globalization should be viewed in the context of what, as we know from experience, could come next.