I don’t blog on foreign policy but I don’t discount the importance of world events nor their impact on economies. Events in Syria and throughout the Middle East are taking a decidedly ugly turn which could make the crash of 2008 look like a walk in the park. Walter Russell Mead has a moderately lengthy post in which he discusses policy and economic consequences of a regional conflict.
This administration appears to start from the assumption that the only really bad thing that can happen to the United States in the Middle East is that we can get sucked into its wars if we aren’t careful. It’s an understandable error given what happened to George W. Bush, but it is an error nonetheless. The worst thing that can happen to the United States in the Middle East is that the Persian Gulf melts down and the oil flow stops, wrecking the global economy (and, despite our healthy domestic supplies, our own), bringing down the world financial system, causing mass unrest in country after country, and creating a messy situation in which a variety of ugly and expensive US interventions are absolutely required. The administration has been zealously guarding against the Little Satan of unnecessary involvement in a regional war while ignoring or even facilitating the rise of the Great Satan of full-blown regional strategic disaster. Its poor handling of an escalating series of regional problems is increasing the chance that those problems will cascade into a major global crisis.
No one is anxious for another adventure in this region of the world, and the President’s reluctance to venture in is understandable. One would hope that somehow a lid can be put on this simmering brew. In the meantime it’s probably not a bad idea to put the Middle East on your radar and adjust your portfolio as things move along.