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Article 1. Article 2. Article 3. Article 4. \oon c;c• pots, The as iolen 26 February, 2010 Project Syndicate The Middle East Awakening Joschka Fischer Washington Post Will Syria become more democratic? David Ignatius The Christian Science Monitor Arab revolt is a tidal wave. Does the West get what's really behind it? Kurt D. Volker NYT Listening to the Revolution Catherine Ashton Article 5 Article 6 The Economist Oil and the Arab world's unrest Foreign Policy Five questions that all oil traders are frantically trying to answer Steve Levine Article 7 Foreign Affairs Transformation in the Middle East Robert H. Pelletreau EFTA00586489 AniCIC 1. Project Syndicate The Middle East Awakening Joschka Fischer 2011-02-25 -- When the democratic revolt in Tunisia successfully ousted the old regime, the world reacted with amazement. Democracy from below in the Arab world? After the overthrow of Hosni Mubarak's 30 year-old regime in Egypt, the heartland of the Middle East, amazement has turned into certainty. The Middle East has awakened and begun to enter the globalized world of the twenty-first century. Up to now, the region (excluding Israel and Turkey) had more or less missed out on the epochal process of worldwide modernization. Whether the Arab and wider Islamic world's democratic awakening will actually prevail or produce only change at the top of authoritarian regimes, whether it will lead to a stable order or sustained chaos and radicalization, still remains unclear. One thing, however, is already clear: the era when this vast region slept while others modernized has ended. The grassroots revolt will, of course, continue. Virtually no country in the region will escape it, though when and where the next eruption will occur remains uncertain. Iran, Syria, and Saudi Arabia are all candidates, with the latter probably posing the most difficulties. Israel, too, would be well advised to prepare for epochal change in the region and try to reach a peace settlement with the Palestinians and Syria as quickly as possible. There is, however, little indication that Israel's government has the vision required for such an undertaking. The problems are the same almost everywhere (with the exception of Israel and Turkey): political suppression, economic underdevelopment and grinding poverty (except in the smaller oil states), a lack of EFTA00586490 3 education, high unemployment, and huge demographic pressures, owing to a very young and rapidly growing population. These problems have been cited, year after year, in the United Nations Development Program's reports. Moreover, the situation was exacerbated by the incompetence of the region's authoritarian regimes, which have been unable to provide their young people with any prospects beyond repression. So it was only a matter of time until this powder keg was ignited. The fuses were the new information technologies of the Internet and satellite television, such as Al Jazeera. Indeed, one historical irony is that it wasn't American hard power — as applied, for example, in the Iraq war — that furthered this democratic revolution, but rather its soft power — Twitter and Facebook — which was much maligned under George W. Bush and his neocon advisers. Silicon Valley, it seems, has more potency than the Pentagon. These digital tools from the United States became the instruments for a trans-Arabian/Iranian youth revolt for freedom and democracy. And, although many things in the Middle East are in short supply, there is no dearth of hopeless young people, whose numbers will continue to grow in the coming years. Indeed, whatever resemblance events on Cairo's Tahrir Square bear to May 1968 in Paris and the fall of the Berlin Wall in 1989, it would be premature to proclaim that freedom has prevailed. Whether it does will depend to a large degree on how the West responds now, because what is at stake is not just the ousting of tyrants, but also the profound transformation and modernization of entire societies and economies. It is a staggering task. Moreover, compared to Eastern Europe in 1989, the Middle East in 2011 lacks any stabilizing external structures, such as NATO and the European Union, that could influence domestic reforms by holding out the prospect of membership. The efforts involved in this great transformation must come from within these societies, and this in all likelihood is asking EFTA00586491 4 too much. Eastern Europe's transformation after 1989 took a lot longer and was much more costly than originally envisaged. There were many people who lost out during this transformation, and the democratic revolution's organizers were not necessarily those who could push through the democratic and economic development. And there is the experience of Ukraine's "Orange Revolution" in 2004, which failed a few years later due to the estrangement, incompetence, and corruption of its leaders. Taken together, these constraints and analogies suggest that the West, particularly Europe, should focus on long-term assistance for the democratic and economic development of the Middle East's reborn countries, and also on partnerships with all forces that support their countries' democratization and modernization. The West can no longer continue with Realpolitik as usual. These tasks call for largesse, both financial and otherwise (opportunities to travel, for example, were of vital importance in locking in the democratic aspirations of East Europeans after 1989), and they require decades, not years, of persistence. In other words, success will be expensive — very expensive — which will be anything but popular in the current economic downturn. But a democracy that does not translate into regular dinners is a democracy that is bound to fail. Economic aid, the opening of the EU and US markets, strategic energy projects, legal and constitutional advice, and cooperation between universities are among the resources that the West must supply if it wants to contribute to the success of the Middle East's democratic awakening. Should this awakening fail, the result will be a radicalization throughout the region. There can be no return to the status quo ante. The genie is out of the bottle. Joschka Fischer, Germany's foreign minister and vice-chancellor from 1998 to 2005, was a leader in the German Green Party for almost 20 years. EFTA00586492 5 Washington Post Will Syria become more democratic? David Ignatius February 27, 2011 -- Damascus, Syria -- The rise and fall of a protest demonstration here recently shows that Syrians share the yearning for dignity that's sweeping the Arab world - and also illustrates why President Bashar al-Assad so far hasn't been threatened by this tide of anger. Here's what happened on Feb. 19, according to accounts provided separately by a Western diplomat and a Syrian official: A policeman insulted a driver in downtown Damascus; when the man protested, he was beaten by the cop, who was joined by two others. It was the sort of harsh encounter with authority that Arabs swallowed, bitterly but passively, until the surge of anger in Tunisia and Egypt. A crowd of hundreds quickly gathered in the Damascus street and began chanting. According to a diplomat who has reviewed tape recordings of the incident, the chants roughly translated: "We are the people. The people don't want to be humiliated." People in the crowd videotaped the action with their cellphones and posted the drama on the Internet. It was a volatile situation. Then something interesting happened, which shows how closely the authorities are monitoring events: The minister of the interior arrived on the scene about 30 minutes after the protest started, apologized to the beaten man and took him away in his car. The police officers were reprimanded. The crowd eventually dispersed, and some (perhaps with official encouragement) began chanting in favor of Assad. The government did another sensible thing: Rather than try to suppress information about the event (which would have been futile, EFTA00586493 6 in any event), the government allowed the videos to circulate widely on the Internet. People shared their anger about police abuses, but the rage doesn't seem to have focused on the leader, as has been the case in Tunisia, Egypt, Libya and Yemen. Syria is a paradox in this Arab season of revolt. It has an authoritarian regime dominated by a corrupt Baath Party - a relic of the age of dictators that is being swept away in so many other countries. But President Assad, relatively young at 45 and wrapped in the popular banner of resistance to Israel and America, hasn't yet been affected. Is Syria next? That's impossible to predict at a time when, as an Arab proverb puts it, "the artery of shame has ruptured." The answer depends on whether the Assad regime is able to make reforms - and move as quickly as it did a week ago in responding to that street demonstration. The French, who probably know this country better than most outsiders, view Assad as relatively secure. "In the short to medium term, the probability of revolution is extremely low in Syria compared to other countries," is how one official describes the French perspective. An intriguing debate is underway among Assad's advisers about whether he should allow more democracy and openness - something he has long claimed he wants - or keep the controls fastened tight. The reformers argue that change will enhance Assad's popularity, while the security establishment counters that concessions now would be a sign of weakness - and empower the Muslim Brotherhood. Assad must decide soon whether to allow real parties - other than the Baath and its various fronts - to compete in elections this year. Syria has both municipal and parliamentary elections scheduled for this year, and the question is whether there will be real, open balloting for candidates and parties, or a Soviet-style, rubber-stamp version, as in EFTA00586494 7 the past. Another opportunity for a shake-up is a congress of the Baath Party also planned for this year. Reformers hope that Assad will amend the constitution so that it doesn't require Baath rule and instead allows inter-party competition. "If we have different political parties, it's healthy for the Baath, which is slowing down and getting distanced from the people," argues one Syrian reformer. Corruption is also a volatile issue here. The regime is vulnerable because Assad's cousin, Rami Makhluf, is the dominant shareholder of the lucrative cellphone franchise known as Syriatel. Assad is considering whether Makhluf should reduce his interest to make way for foreign investment, according to two knowledgeable people. But that reform move could trigger a rift within his family. The debate among Assad's inner circle mirrors the wider political battles that are rocking the Arab world. For now, the streets of Damascus are mostly full of shoppers, not protesters. But if the experience of other countries over the past two months shows anything, it's that delaying reform too long in a one-party state like Syria is potentially a fatal mistake. EFTA00586495 8 AniCIC 3. The Christian Science Monitor Arab revolt is a tidal wave. Does the West get what's really behind it? Kurt D. Volker February 25, 2011 -- One of the great challenges in intelligence analysis is predicting big changes. The safest analysis is nearly always that the forces that have shaped things until now will continue. A continuation of the status quo is thus the most likely outcome — right up to the moment that status quo disappears. This makes policymakers cautious. Even amid new developments — demonstrations, economic crises, warfare — the expectation is that the ship will right itself and things will revert to normal. It therefore pays to wait, to be cautious, to see who comes out on top, to attempt to safeguard other national security interests. Why leap into a situation to support one side, if there's a good chance the other side will come out on top? Change happens Yet big, unexpected changes do happen. The fall of the Berlin Wall. The collapse of the Soviet Union. And getting on the wrong side of change carries its own substantial costs. Moreover, when change is inevitable, caution can prolong a crisis, while action might bring about a swifter, more peaceful, and more beneficial resolution. The trick is to know when a big change is underway, and when it is business as usual. This is where the West has consistently gotten it wrong on the revolutions sweeping the Middle East. First it was Tunisia, where most observers believed that demonstrations couldn't topple a dictator. Then it was the supposed EFTA00586496 9 uniqueness of Tunisia, where most observers did not really believe that regime-change there could mean regime-change elsewhere. In Egypt, most observers didn't believe the protests could really bring down former President Hosni Mubarak. Most observers did not believe that in Libya, with a regime ready to use brute force, change was possible. Each time, we have gotten the analysis wrong. Each time, we have been slow to speak out, slow to support change, slow to take action. Those who have been willing to risk their lives for their own freedom in the Middle East can be forgiven for believing that the United States and the West have been against them. Why have we gotten it wrong? First is the belief that the autocratic regimes will prevail in the end — so why burn bridges? Second, especially for Europe, is the fear any change will lead to massive refugee and migration flows. Third is the fear that Islamist extremists will hijack the revolutions and impose a worse regime than the one they replace. Fourth is the concern that new regimes might not honor existing arrangements with Israel. Fifth is that soft bigotry that says that Arabs aren't ready for democracy. And sixth — perhaps most significantly — is that Western governments simply did not understand that this is a revolution based on human values and transformational ideas. Authoritarian Arab leaders told us for years that radical Islam was the only alternative to their rule. They used the Israeli-Palestinian conflict as a smoke-screen to mask their own thuggish regimes. They suppressed public access to information and outlets for alternative Arab voices. As a result, we in the West succumbed to the belief that democratic change was indeed impossible — our own values notwithstanding. Most government officials don't read Twitter- EFTA00586497 10 feeds. Many of those who do discount them as insignificant popular ramblings when compared with official government positions and actions. Yet all it takes is to read the tweets coming out of key participants and observers in the Middle East to understand that what is happening now is different. The people are blasting away the myths put forward for years by these authoritarian leaders. Not about Islam, Israel, or the West This tidal wave is not about Islam, nor Israel, nor the West. It is an internally driven demand for rights and freedoms from a new generation of Arabs who see the way their societies have been stolen by their own rulers. The institutions of democracy may have been denied for decades, but the human spirit's demand for freedom remains universal and unchanged. This is what our prudent intelligence analysis and policy constructs fail to understand. The demand for change in the region won't simply go away. And because it is aligned with our own most deep-rooted values, the West should have gotten behind it from the beginning. As hard as it is to predict these things, we need to see now that this isn't business as usual — this is the big change. The fears we have over stability, regional security, and Islamic extremism are more likely to be realized if we resist these changes, than if we support them. And the opportunities for genuine progress on these same issues — stability, regional peace, global security, anti-extremism — are far greater with a democratic Middle East. The implications will dwarf both the war in Afghanistan and the war in Iraq. Kurt Volker is a former US ambassador to NATO. He is now senior fellow and managing director of the Center for Transatlantic Relations at Johns Hopkins University's School of Advanced International Studies, and a senior adviser at McLarty Associates. EFTA00586498 11 AniCIC 4. NYT Listening to the Revolution Catherine Ashton February 25, 2011 -- BRUSSELS — There is a time to speak and a time to listen. After visiting Egypt and Tunisia over the past 10 days, I am convinced that the best thing we can do is to listen. What matters now is what the people of Egypt are saying, and what kind of reforms the people of Tunisia are seeking. In the era of instant communication, the temptation is always to respond instantly: to speak too much and to listen too little. I went to Tunis where I met groups that had never been allowed to be in the same room before; and to Cairo where I met the young people who had been in Tahrir Square. My aim was to listen and this is what I heard: "This is our country and our revolution. We want real change — and for the system to recognize the significance of the change." Also: "This is the beginning. We need to take time to get the transition right." And: "We want help. To ensure we get the first real election of a ruler, but more than that, to get genuine democracy — not just on the day we cast our ballots, but the weeks and months after that too." "We want jobs, economic opportunities and social justice. Only then can we be really free." Listening, of course, does not exclude the need to quickly help countries start their journey to democracy. The E.U. will support the transitions now underway — such as bringing back tourism and providing extra money for quick-impact projects — roads, schools, energy — so that people feel change is real. Some ask whether we should have acted sooner, opposing authoritarian regimes instead of cooperating with them. It is a fair EFTA00586499 12 question. There is no easy solution to the dilemma of when and how to engage with such regimes — and when and how to isolate them. For decades the general rule has been to isolate regimes that defy the international community in specific ways. Along with most of the world, the E.U. has imposed sanctions on Iran and North Korea to prevent the proliferation of nuclear weapons. On the other hand, it has been standard practice to maintain diplomatic and trading relations with countries whose domestic systems of governance we may dislike, aiming to encourage them over time to change their behavior. Indeed, in the case of Libya, the Qaddafi regime was brought in from the cold when, among other things, it abandoned its quest for weapons of mass destruction. Might Qaddafi have been brought down years ago had we not offered him the carrot of trade and investment in return for these concessions? Perhaps. But I am not convinced the world would now be safer or the people of Libya better off had the West refused to negotiate with Qaddafi. And we must calibrate our stance when circumstances change. Hence, his outrageous behavior in the past few days demands we send him back into the cold. There is a further point. Were the European Union to isolate every government that fails to live up to the principles of liberal democracy, we would face accusations of political imperialism. It is better to proclaim the principles of democracy, but deal with the world as it is. That is how the West behaved toward the Soviet empire in Eastern Europe before the fall of the Berlin Wall. At the same time we engaged governments and supported groups that promoted democratic change from within. This meant that when the Wall fell, we had the connections as well as the ambition to help the countries of Eastern Europe move rapidly toward democracy, the rule of law and greater economic prosperity. EFTA00586500 13 We have the experience to help every country that asks us now to help them make the journey to democracy, for 10 of our own members states have made precisely that journey in the past 20 years. However, if we offer help only while the world's media are paying attention, we shall fail. The European Union is in this for the long haul. We are determined to help Tunisia, Egypt and other countries not just to start their journey toward democracy, but to complete it. We are listening now not to avoid action, but to make sure the action we take over the coming months and years is effective. That will involve detailed, unglamorous, work on the ground — with civil servants, local communities, the police, army and judiciary — laying the foundations of deep democracy and then building it up, brick-by-brick. For me, nothing is more exciting than to see a new democracy emerge. But I shall have no complaints if everything goes so smoothly that the world's media, denied the drama of conflict and catastrophe, grow bored and go home. Catherine Ashton is high representative for foreign affairs and security policy of the European Union. EFTA00586501 14 The Economist Oil and the Arab world's unrest Feb 24th 2011 -- A month ago Brent crude oil stood at around $96 a barrel and Hosni Mubarak was ensconced as Egypt's ruler. Now he is gone, overthrown by a display of people power that is shaking autocratic leaders across north Africa and the Middle East. And oil has surged above $115. Little wonder. The region provides 35% of the world's oil. Libya, the scene of growing violence this week, produces 1.7m of the world's 88m barrels a day (b/d). So far prices have not been pushed up by actual disruptions to supply. Oil hit a peak even before news emerged that some foreign oil firms operating in Libya would cut production and that the country's ports had temporarily closed. As Adam Sieminski at Deutsche Bank points out, oil prices are driven both by current conditions and by future expectations. Oil markets don't like surprises. The sudden ousting of Mr Mubarak and the unrest in Libya, Bahrain, Yemen, Iran and Algeria (which between them supply a tenth of the world's oil) had added 20% to oil prices by the middle of this week. The big worry is that spreading unrest will culminate in another shock akin to the oil embargo of 1973, the Iranian revolution or Iraq's invasion of Kuwait. Oil is more global than it was during those previous crises. In the 1970s production was concentrated around the Persian Gulf. Since then a gusher of non-OPEC oil has hit markets from fields in Latin America, west Africa and beyond. Russia overtook Saudi Arabia as the world's biggest crude supplier in 2009; OPEC's share of production has gone from around 51% in the mid-1970s to just over 40% now. Yet the globalisation of oil supply has not diminished OPEC's clout as the marginal supplier of crude. Markets are tight at the moment. Bumper inventories, built up during the downturn, are EFTA00586502 15 running down as the rich world recovers and Asia puts on a remarkable growth spurt. Demand rose by a blistering 2.7m b/d last year, according to the International Energy Agency, and is set to grow by another 1.7m b/d this year by Deutsche Bank's reckoning. Many other producers are already running at full capacity; OPEC has its hands on the only spare oil. If Libya's oil stopped flowing importers would look to Saudi Arabia to make up the shortfall. The oil could probably flow to fill the gap in Europe, Libya's main market, in a matter of weeks. OPEC claims that it has 6m b/d on tap but that looks wishful. Analysts think the true number is nearer 4m- 5m b/d, with 3m-3.5m b/d in Saudi hands. That is ample to plug a Libyan gap but would hasten the day when growing world demand sucks up all spare production capacity. Analysts at Nomura reckon that it would only take a halt of exports from Algeria as well to absorb all the slack and propel oil to a terrifying $220 a barrel. Despite saying it stands ready to produce more oil, Saudi Arabia has so far been reluctant to turn its stopcocks. OPEC claims that the world is amply supplied with oil and seems content with a price around $100 a barrel. Traders hope that Saudi Arabia will boost production stealthily or that OPEC will call a special meeting to raise quotas and calm markets. The worst-case scenario for oil prices would be some kind of disruption to Saudi supply itself. That concern has become livelier given the unrest in neighbouring Bahrain. The tiny island kingdom produces little oil but is of vital strategic importance in the Persian Gulf, a seaway that carries 18% of the world's oil. America's 5th Fleet uses the country as a base. The Saudis may also fear that protests by Bahrain's Shia population could spill over their own borders. Saudi Arabia's eastern provinces are home to both its oil industry and most of its Shias, who may also have cause for grievance with their Sunni rulers. The king this week announced $36 billion in benefits for his people. One crumb of EFTA00586503 16 comfort is that oil facilities across the region are generally located far from the population centres, where protests tend to be concentrated, and are well defended against anything but a concerted military assault. What might be the effects of a more general supply crisis in the Middle East and north Africa? The oil shocks of the 1970s spurred the world to build stockpiles, such as the 727m barrels of crude oil in America's strategic petroleum reserve, to be drawn on in the event of upheaval in the Middle East and elsewhere. China is building up a strategic reserve of its own. America's Energy Information Administration puts total rich-world stocks in the hands of governments and industry at 4.3 billion barrels, equivalent to nearly 50 days of global consumption at current rates. The impact of a crisis would therefore depend on how much oil production was lost and for how long. Even seismic shocks in oil- producing countries might not cut off supplies for very long. Yet the example of Iran shows what can go wrong. Leo Drollas of the Centre for Global Energy Studies, a think-tank, points out that pre- revolutionary Iran pumped 6m b/d. The new regime ditched Western oil experts and capital, and it has never come close to matching that level of output since; it now produces just 3.7m b/d. Middle Eastern oil is largely state-controlled but, as Amrita Sen of Barclays Capital observes, foreign investment remains vital to north Africa's oil industry. If new regimes emerged that were more hostile to outsiders, that might have a lasting effect on production. The world could probably weather a short-lived crisis. But the damage if oil prices spiked and stayed high for a long time could be severe for the recovering economies of the rich world. As for the prospects of reducing the importance of the Middle East to global oil supplies, forget it. Strong Asian demand is likely to mean that OPEC's share of oil production rises again as it pumps extra output eastward. A troubled region's capacity to cause trouble will not diminish. EFTA00586504 17 Foreign Policy Five questions that all oil traders are frantically trying to answer Steve Levine February 25, 2011 -- The turbulence across the Middle East provides us with unique insight into the behavior of a rare and unusual species: The oil trader. Over the last several weeks, traders have bid up and down the price of oil by almost $20 a barrel, earning millions of dollars in profits. And they have done so based almost solely on one, single fact: No one, apart from perhaps the royal family itself, knows what is really going on in Saudi Arabia. Are the Saudis truly immune to an uprising in their oil-rich, Shiite- majority Eastern Province? Even if Saudi Arabia is safe for now, can it be counted on to increase its oil production to make up for output lost from other OPEC countries, such as Libya, that go up in flames? Will they do so if two OPEC countries, such as Libya and Algeria, go up in flames at once? Because virtually no one outside Saudi Arabia knows the true answer to these questions, we will almost certainly suffer a rise in the price of gasoline at the pump in the coming weeks. That means, when tallying up the beneficiaries and victims thus far of the turmoil in the Middle East, we must include the world's oil consumers -- meaning every person on the planet. One of the few apparent certainties of the upheaval is that it's not over. As we head further into this uncharted territory, Foreign Policy compiled a short list of the most pressing questions about the upheaval in the Middle East's effects on the oil and energy market. Not surprisingly, most revolved around the Persian Gulf petro- EFTA00586505 18 monarchies, although there are two interesting ones for the United States: 1. Can Saudi Arabia's tradition of ultra-secretiveness survive the highly unpredictable unrest? The Saudis are so guarded that they will barely tell you the weather from last week. Foreigners who do business with them, who know that they risk effective banishment should they be seen to violate any perceived bounds of discretion, are equally cautious. The combination of these factors means that we simply do not know what is going on in the minds of the royal family, nor in the kingdom's oil industry. While the Saudis are never going to be as garrulous as Americans, their inscrutability could wear thin the closer the turbulence reaches home. In just the last few days, for example, the Saudis finally went around and told important energy officials to stop demanding that they increase their oil output -- they had already been pumping more than anyone suspected, Saudi officials said. The result? The oil markets were calm by the end of the week. 2. Can the Persian Gulf petro-monarchies remain stable with turmoil all around them? Put another way: If money can't buy you love, can it at least buy you fealty? When oil traders watch the chaos on the streets of Libya on their TV screens, they are really seeing the oilfields of Saudi Arabia (and Qatar and Kuwait). Meanwhile, we're assured that the rich Gulf states are not like the run-of-the-mill dictatorships surrounding them, such as Egypt, Tunisia, and Yemen; they have staying power because of loyalty to the crown, cemented by generous socialized economies. But is this true? Until we know with reasonable certainty that calm will persist -- and it's almost impossible to prove that something won't happen -- oil EFTA00586506 19 markets will remain on edge. "With the genie out of the bottle in various [Middle East and North African] countries, the uncertainties surrounding this region are paramount and those qualms concerning the oil market and its impact on oil prices are almost limitless," Barclays Capital said in a note to investors. 3. Can Saudi Arabia truly compensate for any expectable shortfall in the oil market and, if so, for how long? The price in the global oil market for now depends on Saudi assurances that its 4 million barrels a day of spare capacity are sufficient for any probable occurrence. But haven't all the major events of recent weeks in the Middle East been improbable? Everyone wants to know the Saudi strategy in the event of regional Armageddon. Cameron Hanover, a strategic analyst for hedge funds investing in the energy markets, puts it this way: "At this stage, the Saudis seem to have Libyan shortfalls covered. The kingdom could cover Libya and the loss of one other large producer (like Algeria, the United Arab Emirates or Kuwait), but not any more than that. The $64 million question is whether the Saudis can maintain their sea of calm while the waters roil around them. If they can, we may see rationality return [to the market]. But, it is just too early to bet that the unrest has stopped spreading anywhere else at all, yet." 4. Will traders ever have to risk more in order to bid up the price of crude oil during such crises? Oil trading is a casino business. Traders sit at their computers, and lay down their bets that the price of oil will go up or down in a given month. Uncertainty is the air in which they act -- without it, there is no casino. But a gigantic, multi-dimensional event such as the Middle East unrest is a feast of uncertainty. Traders pile in, so that when the price swings $8 or $9 in a single day, which has happened during the current crisis, there is the chance for substantial profits. EFTA00586507 20 Trading houses such as Goldman Sachs and JPMorgan have thus far argued successfully that they are a stabilizing force, rationing scarce commodities, and hence should be relatively unfettered in the casino. That's a nice narrative, but the alternate perspective is that stabilizing and rationing are not rights, but privileges, and should be more costly. In other words, they say, Goldman Sachs should be forced to contemplate longer before buying a big cargo of oil on the whim that it will fetch a higher price a few hours or a few days later. There is something to the latter view. 5. Can't the United States create its own spare capacity? Ever since last summer's oil spill in the Gulf of Mexico, drilling permits in the area have been effectively frozen. It's generally clear why -- no one wants another ecology-tarnishing spill lapping up in Florida, Louisiana, and Mississippi. Moreover, politically speaking, if a similar spill occurred before the 2012 elections, President Barack Obama could face a serious backlash. Yet is the answer zero new drilling in the Gulf? If a new set of rules were devised that enabled new drilling in the Gulf, one way of looking at the result is an effective buffer of, say, 1 million or 2 million barrels a day of capacity above and beyond global demand. Advocates of such drilling suggest issuing tough but clear new rules, and establishing a mechanism to efficiently administrate the applications for drilling permit requests that are submitted. Considering what we now know about the Middle East, is that such an outrageous proposition? Steve LeVine is a contributing editor at Foreign Policy, where he writes The Oil and the Glory. EFTA00586508 21 AniCIC 7. Foreign Affairs Transformation in the Middle East Robert H. Pelletreau February 24, 2011 -- The Middle East is boiling. Unprecedented popular uprisings have rocked a number of countries, especially the three where I served as U.S. ambassador -- Tunisia, Egypt, and Bahrain. Demonstrators, taking to the streets to protest their dismal living conditions, refused to be beaten back, swelling until the autocratic presidents in Tunisia and Egypt were driven from power. As of this writing, the family-run government in Bahrain is fighting back, hoping its security forces and hold on power will be strong enough to outlast the protests. The uprisings in the three countries have had many similarities, but there have also been significant differences. All three face rising unemployment as a result of the global recession. They were experiencing growing gaps between rich and poor, stifled free speech, repression of the opposition, widespread corruption, and continuing autocratic control behind a veneer of democratic openings. Tunisia had not seemed particularly shaky. It was a country that seemed to be doing many things right: universal education for men and women, low military spending, and positive economic growth. A large middle class was developing, and the country had become a popular tourist destination for Europeans. The government was authoritarian but also determinedly secular and pro- Western. The cracks, however, were larger than anyone thought: President Zine el-Abidine Ben Ali had carefully hidden the extent to which illness had weakened his control of the government; his ties with other centers of power, such as the military and police, had withered; and corruption within his family had become more flagrant. EFTA00586509 22 Although the percentage of youth looking for work was lower than in neighboring countries, more were university graduates with higher expectations. Their frustration and anger became unbearable. The desperate act of one of them, Mohamed Bouazizi, who set himself on fire in front of a police station in a sad town in Tunisia's interior, became the symbol and catalyzing spark for the whole generation. His act of self-immolation might have passed unnoticed, but it was captured on a cell-phone camera, and soon the rest of Tunisia -- and the whole world -- knew. Technology, therefore, played a role, as did the intrepid Arabic news channel Al Jazeera, whose reporters blended in with the demonstrators and sent out regular reports to electrifying effect. Activists used Twitter and Facebook to mobilize street demonstrations and spread warnings on police tactics and concentrations. WikiLeaks, moreover, had weeks earlier published the U.S. ambassador's confidential reports of corruption within the president's family. These had the effect of turning gossip and rumor into fact and fueling popular anger. In this case, then, I would argue that some benefits have been gained: a dictator has fallen, and reporting from U.S. embassies has gained new credibility. Still, foreign leaders will be less candid with American diplomats in the future. Tunisia's small but professional army had always stayed out of politics. When Ben Ali ordered it to reinforce the security police in putting down the riots, the army refused to deploy or fire on fellow citizens. The United States, to its credit, was ahead of Arab and European governments in expressing unambiguous support for the protests, quickly shifting from calling for calm to recognizing the legitimacy of demonstrators' demands. In his State of the Union address, President Barack Obama stated, "Tonight, let us be clear: the United States of America stands with the people of Tunisia and supports the democratic aspirations of all peoples." His words both affirmed and encouraged the protesters. Sparked by coverage of EFTA00586510 23 Tunisians' success in ousting their dictator, Egyptians poured into the streets of all of the country's major cities, demanding that President Hosni Mubarak, 82 and pharaoh for 30 years, step down. The specter of another 30 years under his son added to their anger. Still, the regime could not have been expected to collapse as easily as Tunisia's had, and indeed, it did not. Mubarak was not as alone and isolated as Ben Ali, and his family was not so visibly rapacious. He was from and of the armed forces, the largest and most cohesive institution in Egypt, and part of the proud military tradition that overthrew King Farouk, ended British colonial influence, and brought independence under Gamal Abdel Nasser, Anwar el-Sadat, and Mubarak. Senior military officers initially stood with him, quietly supporting his transfer of governing power to his newly appointed vice president and longtime confidant, Omar Suleiman. But when strong-arm tactics by security irregulars failed to suppress the massive demonstrations in Tahrir Square, the senior officer corps, who regarded themselves foremost as guardians of the first Egyptian revolution, sent Mubarak into retirement. Egypt is now undergoing two transitions: the first from Mubarak to a more inclusive government; the second from direct military rule to a diluted but still powerful military influence in Egyptian affairs. Finding the right strategy in Egypt has been a more delicate and complicated task for the United States than in the Tunisian case. Whereas U.S. interests in Tunisia are limited, U.S. interests in Egypt are vast and include maintaining the 1979 peace treaty between Egypt and Israel as the guarantee against another major war in the Middle East; preserving access to the lines of communication across Egypt, which are the major supply routes for U.S. forces in Iraq, the Gulf, and farther east; keeping the oil transit routes open through the Suez Canal and the SuMed pipeline; continuing cooperation against al Qaeda and other terrorist groups; and encouraging moderate forces within the region. EFTA00586511 24 Of great psychological importance is also having a secular, non- Islamist government in power in Egypt, the cultural capital and center of gravity of the Arab world. The Obama administration has had to adapt its policy to changing conditions on the ground, combining behind-the-scenes contact with megaphone diplomacy, all the while working in Washington's partisan atmosphere and dealing with alarmed Middle Eastern capitals. It has had to protect its substantial interests while staying on the right side of history. It is too soon to know whether a democratic Egyptian regime, committed to a moderate foreign policy, will emerge. I believe, however, that the president's deft handling of the Egyptian crisis so far has strengthened his foreign affairs record. For those who worry that U.S. influence in the region is in free fall, it is worth noting that the only outside country that matters in the Egyptian drama -- for the government, for the transition leaders, and for most of the protesters - - is the United States. As Tunisia cooled and Egyptian smoldered, Bahrain -- facing many of the same social and economic problems of the other two -- ignited. The Sunni Khalifa dynasty, headed by King Hamad bin Isa al-Khalifa, is fighting an uprising, stoked by the island nation's Shia majority, which is demanding that a true constitutional monarchy replace the current government. Hamad is supported by an oligarchy of Sunni and Shiite business interests, but he can give into Shia demands only so much without his family running the risk of being totally swept away by a Shia-dominated government. With its survival at stake, the regime has already offered a dialogue between the opposition and the crown prince, while at the same time promising to use force to quell protests if necessary. The security forces, composed largely of South Asian mercenaries and backed by a Sunni-led army, will not have the same reluctance to fire on citizen demonstrators as the Tunisian and Egyptian militaries. Moreover, neighboring monarchies, particularly Saudi Arabia, with its own EFTA00586512 25 restive Shia population in the Eastern Province, see Bahrain's current government as their first line of defense against unrest in their own countries and may try to help Hamad retain control. Much has been made of Bahrain being home to the U.S. Navy's Fifth Fleet as the reason why the United States has apparently been reluctant to back the protesters as readily as it did in Tunisia. In fact, the United States has host-nation support agreements with all the Gulf states; Bahrain does not stand out in that regard. It has hosted a U.S. naval presence since the late 1940s. At any rate, Obama has called on Bahrain's leaders to forswear violence, respect the people's right to protest, and hasten reforms. It appears that the administration will more or less follow its same playbook as for Egypt. The noise and sweep of mass demonstrations and the fall of autocrats are what has made headlines, but the hard work of transitioning to more open political systems is equally important. This process is under way in Tunisia and Egypt. In Tunisia, a civilian transitional government is in charge. In Egypt, the military high command is supervising both the transitional government and the reform process. In Bahrain and elsewhere where protest movements have sprung up, the outcome is still uncertain. This, however, is a threshold moment across the entire region. Governments old and new will henceforth be obliged to pay more attention to public opinion, be more responsive to citizens' aspirations, and allow greater participation in national decision-making. ROBERT H. PELLETREAU is former United States Ambassador to Bahrain (1979-80), Tunisia (1987-91), and Egypt (1991-93). From 1994 to 1997, he was Assistant Secretary of State for Near Eastern Affairs. EFTA00586513