This is not 1989 when the Berlin Wall came down and democracy sprouted in Central Europe. North Africa and the Middle East are facing convulsions and it is more likely that perpetual conflict and civil war will be the future rather than stable democracies. As Professor Niall Ferguson points out, countries like Libya and Egypt have more in common with Pakistan than Poland. The populations are highly illiterate and there is sectarian conflict. This has been the pattern of history in the region from the beginning. Dictators arose in the Middle East and were embraced by elements of the population because they brought relative stability to the country.
Ferguson is highly pessimistic about what we are witnessing, and believes that $200 barrel oil is around the corner. I fear he might be correct. What will the global economy look like if there is fighting in Libya three years from now? There is a lot of money at stake and a lot of people who want to take control in Libya and Egypt. After all, Mubarak and Gaddafi got extremely rich by running their countries. Why wouldn’t others be motivated to follow their path?
President Barack Obama, who has been a destructive activist when it comes to health care and regulation, is now suddenly passive. Why not unleash the domestic energy industry?