Analysis of the Current Situation in North Africa ＆ the Middle East

Analysis of the Current Situation in North Africa & the Middle EastAnalysis of the Current Situation in NorthAfrica & the Middle EastLin Hongyu Li Xiaosan'Abstract: After the upsurge of domestic turmoil in Tunis last December,unrest spread rapidly through North Africa and the Middle East, having aprofound effect on current international relations. It will continue to affectrelations between the major powers and the international system as awhole for some time to come. The regional turmoil of North Africa and theMiddle East is of particular interest to International Political Economy (IPE)studies. It seems to embody a geostrategic conflict between the US andthe EU in contending for leadership in North Africa and the Middle East. Itis also an expression of the competition for dominance of the globalfinancial structure between the major powers during a period of transitionin the international system. Lastly, it is a manifestation of America'sstruggle to maintain its global economic hegemony.ince the first outbreak of turmoil in Tunis last December, the Ben AliSiregime in Tunisia and Mubarak regime in Egypt have beenoverturned. Protests and turmoil spread successively to Algeria, Syria,Yemen, Bahrain, Jordan and Morocco, and Libya has collapsed into civilwar. The regional situation in North Africa and the Middle East hasbecome extremely unstable.Geostrategic Conflict between the US and the EU inContending for Leadership in North Africa and theMiddle EastThe Middle East (including some parts of North Africa) is the area of中国煤化工* Dr. Lin Hongyu is a Professor at the Univ二lations, Beijing.Li Xiaosan is a postgraduate in interMYHCN MH G University ofInternational Relations.CIR Jul./Aug. 201193Lin Hongyu Li Xiaosanmost important geostrategic significance for the US. Since the collapse ofthe Bretton Woods System in the 1970s, the economic underpinning ofAmerican hegemony has been transferred from a Gold-Dollar to anOil-Dollar base. Controlling the politics of the Middle East was the basisfor the Oil-Dollar system. When the Cold War ended, the significance ofthe Middle East increased further, as manifested by the two wars againstIraq initiated by the Bush family. America's geopolitical barycenter shiftedfrom Westerm Europe to the Middle East in the post-Cold War era. Afterthe 9/11 terrorist attacks, the Bush administration exploited the War onTerror to advance its Greater Middle East Project. While the Marshall Planhad aimed at maintaining control of Western Europe in the bipolar ColdWar global system, the purpose of this Greater Middle East Project is tomaintain America's dominance in the Middle EastNorth Africa region.North Africa, lying across the Mediterranean from Europe, is theEU's backyard, and its gateway into the rest of Africa. It is also one of thethree main sources of the EU's oil imports. To boost its influence in thisregion, France, on behalf of the EU, took the lead in proposing the Unionfor the Mediterranean (UfM) in 2008, which also includes some parts ofthe Middle East. After the Treaty of Lisbon was passed by the EU memberstates in 2009, the EU accelerated its implementation of the UfM. Americafelt its own position in the region threatened by this initiative. Geostrategicconflict between the US and the EU helped to make the recent turmoil inNorth Africa and the Midle East inevitable.Libya was always a likely intersection between the Greater MiddleEast Project and the Union for the Mediterranean. It was one of the onlycountries to refuse to support the Greater Middle East Project (FormerEgyptian President Hosni Mubarak and the King of Saudi Arabia alsoopposed the plan), and also opposed the Ufm. The Libyan leader, Gaddafi,publicly denounced the UfM, saying that it attempted to undermine theunity of the Arab world and the African countries. Therefore, the US andthe EU found a common cause in attacking the Gaddafi administration.Due to the impact of the international financial crisis and the EU'ssovereign debt crisis, France and thMYH中国煤化工vere anxious tostabilize the Mediterranean region ac N M H Gus, France took94CIR Vol.21 No. 4Analysis of the Current Situation in North Africa & the Middle Eastthe initiative in launching a military bombing attack on the Gaddafiadministration and in recognizing the Libyan opposition. The militaryoperation against Libya served as a preparation for the EU's militarydefense integration, as well as reasserting France's traditional stronginfluence in North Africa, and consolidating the claims of the UfM project.Alain Juppe, France's new Foreign Minister, enumerated these strategicconsiderations in his inaugural speech in Paris on March lst, when heclaimed that France would revive the UfM project, strengthen the commonsecurity policy of the EU, enhance its partnerships with the emergingcountries, and prioritize the promotion of A frican development as a mainobjective of French diplomacy. He also emphasized that French PresidentSarkozy's proposal to establish a Union for the Mediterranean regionalorganization was very forward-looking, and that the time was now ripe tobuild such a regional organization. France's taking the initiative inlaunching a military attack on Gaddafi can be seen as a planned element inthe implementation of the UfM project.The US viewed the turmoil in the Middle East and North Africa as a .possible repeat of the Central Asian Color revolutions. The unrest seemedto present another opportunity to further its Greater Middle East Project.The US hoped to exploit the turmoil in North Africa and the Middle Eastto reverse its decline in geopolitical status, before the EU furtherweakened US influence in the Middle EastNorth Africa by achieving itsUnion for the Mediterranean. Although the US nominally transferredleadership of the operations against Libya to NATO on March 27th, 2011,in fact, it continued to play a dominant role itself, though direction of theoperation was transferred from its European Command to the AfricanCommand. Although the US had initially supported calls for a no-fly zoneagainst Gaddafi, US Secretary of Defense Robert Gates stated on March20th that the US was against any expansion of the military operationagainst Libya, including a proposed decapitation operation against theLibyan leader, Gaddafi. Retaining Gaddafi could give the US a counter to中国煤化工1马里， “法国新外长将重建地中海联盟作I on line, 2 Mar.2011, Web.20 May 2011, http://gb.cri.cnMYH. CNM ! G168678 htm>.CIR Jul./Aug. 201195Lin Hongyu Li Xiaosanbalance against the EU-backed Libyan opposition. Moreover, prolongingthe Libyan war and the turmoil in North Africa would consume thestrength of France and the EU, undermine their geopolitical influence, andperhaps force them to relapse into a more passive diplomacy. USintervention in Libya is concerned with constraining the advancement ofthe Union for the Mediterranean, while promoting its own Greater MiddleEast Project. The fine balance of power between Gaddafi and the Libyanopposition could give create a long-running dilemma for the EU in NorthAfrica, and might start to show it in a worse light than the US in its Libyaninvolvement.The current seesaw battle between Gaddafi and the opposition is akind of proxy war between the US and the EU, a spark generated by thecollision between the Union for the Mediterranean project and the GreaterMiddle East Project.Competition for Financial Power in the Transition to aNew International SystemBefore the era of globalization, the major powers relied on theircomprehensive strength to compete with each other, but now they rely onfinancial power. As economic globalization and regional competitionevolves, three “currency zones”are taking shape. The first is the EuroZone, which may expand into the Union for the Mediterranean. It is led bythe core EU nations, and enjoys advantages in low-carbon technologiesand low-carbon industry. The second is the Dollar Zone, or the Free TradeArea of Americas, led by the US, which has advantages in information andnetworking technology. The third is the future Asian Dollar Zone in EastAsia, which will be led by China and Japan with their advantages intraditional industries.When the financial crisis broke out in 2008, the Dollar Standardbecame a focus of conflict among the major powers. The construction of anew world monetary system and international financial order - beforeDollar Standard collapses - has become an yont nrinritv The US used toenjoy a decisive advantage in中国煤化工but since theexplosion of the network economyMHCNMH Gst century, thatCIR Vol. 21 No. 4Analysis of the Current Situation in North Africa & the Middle Eaststrategic dividend has gradually diminished. Even worse, the US haslagged behind the EU in low-carbon technologies to combat global climatechange. Thus, the ingredients of American hegemony are slowly beingtransferred to the EU. In the long term, the Dollar is destined to lose itsstatus as the base currency of the world, and the international financialstructure will shift from a Dollar hegemony to a“balance of multiplecurrencies, with“three currency kingdoms," the US Dollar, the Euro, andthe Asian Dollar.The US seems likely to retain its leadership of the world financialorder for some time, but the EU is contending for a Euro hegemony in theworld, and China is striving to realize the RMB's internationalization. TheGreater Middle East region plays a central role in the Oil-Dollar system,and will exert a significant impact on the formation of a new internationalfinancial order. The turmoil in the Middle East/North Africa can beregarded as a reflection of this conflict over currency power in thetransition to a new international system.The Libyan civil war continues to consume the strength of Franceand the EU, causing further deterioration of the EU's economy, andthreatening the domestic stability of France and Italy, in particular. The USis taking advantage of this situation to unsettle the economies of thesmaller countries in the Eurozone, exacerbating the EU's financial crisis asthe sovereign debt crises of individual members start to threaten theviability of the Euro itself. Thereby, the US may achieve its goal ofsuppressing the Euro. American rating agency Moody's downgraded therating of Spanish government bonds from Aal to Aa2 on March. 1Standard & Poor's lowered Greece's long-term sovereign rating from BB+to BB- and downgraded Portugal rating from BBB to BBB- on March30th.2 Fitch Ratings announced the lowering of the long term sovereigncredit rating of Portugal three grades to BBB- (only one grade above1“穆迪 下调西班牙政府债券评级”, Ministry of Commerce of the People's Republicof China, 14 Mar.2011, Web. 20 May 201 1, http://www.mofcom. gov.cn/aarticle/i/jyj/m/201 103/201 10307445710.html>.中国煤化工2“标普下调葡萄牙和希腊评级”，MinistryEple's Republicof China, 31 Mar. 2011, Web. 20 May 20MYHC N M H Gr.cn/article/jyj/m/201103/20110307476669.html>.CIR Jul./Aug. 201197Lin Hongyu Li Xiaosan“junk") on April lst, and labeled the outlook was negative.' Moody'slowered the Irish sovereign credit rating to Baa3 on April 15th, 2011, andrated the outlook as negative." Standard & Poor's downgraded thelong-term credit rating of Greece from BB- to B on May 9th, 2011.3These negative messages caused a deterioration in the internationalcurrency status of the Euro.Meanwhile, the turmoil in North Africa and Middle East will driveglobal financial capital back to the United States, enabling it to continuewith its monetary policy of QE2. If the global economy and worldinflation continue to deteriorate as a result of the unrest in North Africaand the Middle East, the US will become the safe haven for internationalfinancial capital, and this will help to promote the recovery of the USDollar. .America's Struggle to Maintain Its Hegemony in theWorld EconomyThe US is attempting to make use of the unrest in North Africa andthe Middle East to push international oil prices higher and higher, whichwill prolong the recovery of the European economy and slow down theRMB's internationalization. The US may be able to repair the Oil-Dollarsystem and consolidate the global status of the US Dollar, which willpreserve its hegemony in the world economy.The turmoil in North Africa and the Middle East has caused a surgein international oil prices, reaching $107 per barrel on April 1st, 2011.Standard & Poor's latest analysis predicts that the price of oil is likely to“惠誉连续下调三级葡萄牙长期主权信用等级至BBB-” ，Ministry ofCommerce of the People's Republic of China, 7 Apr. 2011, Web. 20 May 2011,.2“穆迪警告爱尔兰主权信用评级可能被下调至垃圾级”，Ministry of Commerceof the People's Republic of China, 10 May 2011， Web. 20 May 2011,.3“希债危机升级西班牙等欧盟市场再次受压”，MinistryofCommerceofthePeople's Republic of China,中国煤化工20 May. 2011,http://www.mofcom.gov.cn/aarticle/iv14475.html>.4赵乐欢:“NYMEX原油期约升至两:YHcNMHGveb.20May2011,.98CIR Vol.21 No. 4Analysis of the Current Situation in North Africa & the Middle Eastexceed its previous highest point of $ 148 per barrel in 2008, and may evenreach $200 per barrel if the turmoil in Middle East and North Africacontinues.' The advent of high oil prices once again is hindering therecovery of the global economy and boosting global inflation. Accordingto statistics from the US Department of Energy, Asian countries accountfor half of the global top 10 oil-importing countries: Japan, China, SouthKorea, India and Singapore. Japan imports 90% of its crude oil from theMiddle East, Singapore 85%, and South Korea 82%.2 The rising oil priceis already pushing up the price of food and other commodities in Asiancountries. China's economy is thus facing a difficult internationalenvironment, and it is not possible to press forwards toward the goal ofrealizing the RMB's internationalization.Similarly, the EU is highly dependent on oil imports from the MiddleEast, consuming about 60% of Libya's exports. Oil shortages are causingfurther inflation in the EU, and damaging the recovery of its economy.Jean-Claude Trichet, President of European Central Bank (ECB), saidrecently that the ECB could do nothing about the international oil pricesand commodity prices, but the EU must avoid a second round of inflationin the Euro area.'Since the international financial crisis in 2008, the US has beenseeking to suppress the influence of Europe, China, Russia, and Japan inthe field of finance and trade ,and has been stirring up trouble in EastermEurope, Central Asia, Northeast Asia, the South China Sea, and South Asiato create geopolitical conflicts to distract the EU, Russia, and China fromattacking the Dollar Standard. However, the US has not been able to curethe problems of its domestic financial market, and the Dollar Standard hasbecome the target of public criticism after two rounds of quantitativeeasing. In order to maintain its economic hegemony in the world, the US“亚洲高度关注油价走势中东乱局能否左右油价?”China News, 2 Mar. 2011,Web. 20 May 2011, .2 lbid.3“2011年通胀威胁下的资金走向”,《国中国煤化工，Web. 20 May2011, http://www.ibtimnes.com.cn/articles/2jizouxin_ 1.htm>.CNMHGCIR Jul./Aug. 201199Lin Hongyu Li Xiaosanmust use every means to repair the battered Dollar Standard. The greatestthreat to the current Oil-Dollar settlement system comes from the EU'sUnion for the Mediterranean project, which is a strategic framework thatcould connect the Middle East, the EU and Africa, and may gain a largemeasure of control over the oil of North Africa and the Middle East. Theproject might dismantle the Oil-Dollar system and create an Oil-Euromodel in its place. To reinforce the Dollar's dominance, the US needs tocomplete its Greater Middle East Plan and eliminate the potentiallynegative impact of the Union for the Mediterranean. The crisis in NorthAfrica and the Middle East has provided a golden opportunity for the USto do this. In summary, the turmoil in North Africa and the Middle East isa manifestation of the geostrategic conflict between the US and the EU incontending for leadership in the region. It is also a by-product of the majorpowers' competition for dominance of the world financial structure in atime transition for the intermnational system. Finally, it is part of the USstruggle to maintain its hegemony in the world economy. The US isunwilling to relinquish its hegemony and accept the end of the“AmericanCentury." It will exploit every opportunity to create disturbances andconflicts to exacerbate competition between the other major powers. Theturmoil in North Africa and the Middle East in 2011 can be seen as anelement of the US strategy for maintaining its hegemony and underminingits rivals, just as it exploited the military conlict between Russia andGeorgia in 2008, the Greek crisis debt crisis in 2010, and the KoreanPeninsula crisis in 2010 to try to weaken Russia, the EU, and China.中国煤化工MHCNMHG100CIR Vol. 21 No. 4