Middle East

A Scary Ratio

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Barrons (7/14) contains the following sentence:

Even more impressive is the value of the oil reserves of petroleum-exporting countries, which now total an estimated $140 trillion, nearly three times the size of global equity markets, which have a combined market value of around $50 trillion. (emphasis added)

There are a couple of things wrong with this comparison. It is not correct, IMNSHO, to compare a cash flow stream which will be recognized over years/decades to a current market value–the cash flow stream should be discounted to present value. (Equity market values already represent, at least in theory, the discounted present value of their corresponding free cash flow streams.) Also, I’m pretty sure reserve value is a gross value, which doesn’t take production costs into account. For a place like Saudi Arabia, these may be minimal at present, but they will not remain minimal over the life of the asset.

But even after these adjustments are applied, you will probably come out with something like:

The value of the oil reserves of petroleum-exporting countries is equal to the size of global equity markets.

Think about what this means. Ownership of the land under which oil resides is roughly equal in value to ownership of the equity interest in all the world’s publicly-traded companies, with their factories, mines, brand values, and intellectual capital…the accumulated work and knowledge of centuries.

This represents in a sense a return to the pre-industrial age, in which the ownership of land was the predominant form of wealth. If this situation is sustained, it will represent a tremendous change in the world economic order, and not at all a positive one.

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Quote of the Day

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THESE OBAMA skeptics recall a similar time, 1973, when Israel also faced extermination. Prime minister Golda Meir had miscalculated Anwar Sadat’s willingness to go to war and decided against a first strike against Egypt. The Arab nations attacked in October 1973, and within days Israel was facing defeat.
 
The Israelis went to president Richard Nixon with a request for a massive infusion of arms. The Defense and State Departments squabbled. Our European allies, who feared an oil embargo (and would refuse us bases to refuel our planes), inveighed against it, and the Soviets blustered. Many on Nixon’s staff wanted to deny the request, or offer only token assistance. Don’t antagonize the Arab states, they counseled.
 
Nixon persisted and, according to some accounts, doubled the amount of aid Israel had requested. Riding herd on the bureaucrats, Nixon repeatedly intervened to push the transports along. Informed about a dispute regarding the type of air transportation, Nixon at one point exclaimed in frustration: “Tell them to send everything that can fly.” Over the course of a month US airplanes conducted 815 sorties with over 27,900 tons of materiel.
 
Israel was saved due to this massive infusion of military aid. Meir referred to Nixon with enormous affection for the rest of her life. Nixon, despised by many in the US, was hailed as a hero in Israel. And Nixon (who had garnered a minority of the Jewish vote in 1972) received little or no political benefit at home for his trouble, leaving office the following year.

-Jennifer Rubin, “Why more Jews won’t be voting Democrat this year”

Friends

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Iraqi boy with American soldier, Sadr City, June 20.

Found here, via Neptunus Lex.

The Networked Jihad: Parasitic on Developed World Technology, Information, Ideas

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I recently posted about Jihadi theorist and practitioner Abu Musab al-Suri, in response to a recent review essay about a biography of al-Suri.

Zenpundit opined that al-Suri appears to be the Islamic terrorist movement’s “John Arquilla, William Lind and Louis Beam rolled into one”, and that “he probably would have made a fine blogger had he not also been – well – a sociopathic nihilist.” Agreed, though I would expressly add “homicidal, sociopathic nihilist”.

Several facts stood out about as-Suri. One was that his politico-military thought is not so much Islamic, and certainly not traditionalist, as a mélange of Islamic themes mixed with other revolutionary and radical thinking originating in the West. Also, he encouraged a massively decentralized Jihad, cell-based, self-starting, networked but not hierarchical, with al Qaeda as a source of inspiration and doctrine but not command and control. Only such a hyper-dispersed effort could wage a bottom-up struggle against the USA and its allies, which enjoy so many advantages in terms of surveillance and destructive power.

With this on the mind, I was therefore struck by the following passage from a review-essay which discusses Olivier Roy’s Globalized Islam: The Search for the New Ummah (which I have not read):

Islamic militancy has become infused with Third World theories, Marxism, fascism, and nationalism. It cannot escape the whirlwind of ideas that has drifted over the decades into the Middle East. All militant websites seemed to urge for a peripheral jihad in the frontiers (Chechnya, the Philippines island of Mindanao, Afghanistan, Bosnia, Kashmir) and for an imaginary ummah (Islamic society) in which they hold dominion under the guise of piety. He points out that many of these websites originate not from the periphery but from Europe, Malaysia and even North America areas in which there is access to technology. This is a key observation: for the Islamic militants, a cell requires access to free societies and western technologies to propagate and acquire tools for their rejectionist movements.

The Jihad cannot be based in the lands of the existing Ummah. If it is limited to the technical means, and even the intellectual means, available there, it is doomed. First, it would be trapped in a backwater, waging a struggle against the ruthless police states of the “Near Enemy”, where it has already repeatedly suffered defeat. Second, without the network-enabling technology which is densely available in the developed world, as well as useful non-Islamic-derived ideas, an effective strategy such as the one al-Suri was seeking cannot be developed and executed.

The developed countries can only be effectively attacked to the extent their enemies are permitted a lodgment within their own borders.

Sending Western troops to fight Jihadis in Waziristan may or may not make the USA and its Allies more secure. But rooting out the Jihadis in New York, Detroit, Los Angeles, London, Paris and Munich is essential.

UPDATE: My copy of Architect of Global Jihad: The Life of Al Qaeda Strategist Abu Mus’ab Al-Suri just arrived. Flipping through it, I must say it looks very good. Perhaps, once I’m done with it, yet a third post will be in order.

My Kind of Guy

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(via Steve and Aaron)