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Mgt112 Middle East


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Mgt112 Middle East

  1. 1. Revolt & Revolution in the Middle East<br />Karen ZhangRichard La<br />Benjamin Rodriguez<br />Thomas Duzan<br />MGT 112 | Professor Soma <br /> Winter 2011<br />
  2. 2. Overview<br />What’s going on<br />Politics & Economics<br />Oil<br />OPEC<br />
  3. 3. Unrests in the Middle East and North Africa<br />Overall Report<br />
  4. 4. Tunisia: Jasmine revolt<br />Initial uprising, sparking protests in other countries<br />Roots: unemployed man set himself ablaze, causing protests in all the country<br />Complaints about high unemployment, corruption, rising prices and political repression<br />Results: Autocratic President Zine El Abidine Ben Ali leaves the country on January 14, after 23 years.<br />Now: Mr Essebsi unveiled a new interim government <br />
  5. 5. Egypt<br />Began on January 25 at Tahrir Square.<br />Demonstrations against police corruption and abuses, lack of free elections and economic issues, such as high food prices, low wages and high unemployment.<br />Led to the removal of Hosni Mubarak from power on February 11, after 30 years in power.<br />Now: Essam Sharaf is the new leader, after the resignation of Ahmed Shafiq<br />
  6. 6. Lybia<br />Began in February<br />Roots: lack of freedom, high unemployment rate, violation of human rights<br />Rebels and Moammar Gadhafi’s military forces are fighting, causing deaths of civilians<br />International leaders all condemn Gadhafi but can’t decide whether to act militarily or not<br />A no-fly zone over Lybia is discussed<br />
  7. 7. Other countries<br />Common roots: lack of political and speech freedom, corruption, high unemployment, call for reform and democracy<br />Demonstrations in Yemen, Bahrain, Saudi Arabia, Morocco, Iran <br />
  8. 8. Political & Economic Impact<br />
  9. 9. Within MENA<br />Middle East & North Africa<br />Increase G; <br />GDP = C + Inv + G + NE<br />Increased national debt (excl. Saudi Arabia)<br />more freedom in contracts / hiring decisions<br />t<br />Lower economic output  GDP<br />Pressure on fiscal budget<br />Bahrain & Kuwait: 1-time payoffs to leave demonstrations<br />Saudi Arabia: wage rate increase 15%<br />Kuwait: free food for 14 months<br />
  10. 10. Globaloutlook<br />Companies<br />Consumers<br />Oil<br />Economic Growth<br />
  11. 11. government contracts<br />multi-nationals<br />indirect business <br />dependencies <br />Companies<br />
  12. 12. existing increase in food<br />prices + inc oil prices<br />impact spending &<br /><ul><li>growth</li></ul>Consumers<br />
  13. 13. stagflation<br />= -GDP & inflation<br />eurozonedebt<br />emerging markets:<br />inflation & decreased output<br />Economic<br />Growth<br />
  14. 14. short term & localized<br />persistence in North Africa<br />persistence through ME<br />Economic<br />Growth<br />
  15. 15. Politics<br />“Arab Paradox”<br />Government<br />
  16. 16. “Arab Paradox”<br />Human Development Report: 83 “high development” countries – 64 are democracies <br />“demographic bulge” – very young population<br />high unemployment (~25%) vs. 8% worldwide, event amongst well-educated <br />
  17. 17. influence of Islam – Iran (heavy) or Turkey (moderate) <br />Government<br />
  18. 18. Oil<br />
  19. 19. Disruptions in Middle East and oil supply<br /><ul><li>Too many disruptions in Middle East during history:
  20. 20. Last disruption in the Middle East:
  21. 21. 2003 Invasion of Iraq (Iraq War)</li></li></ul><li>Disruptions in Middle East and oil prices<br />
  22. 22. How the present Middle East civil unrest is affecting oil supply?<br />If Egypt is not a major oil producer how their situation can affect?<br /><ul><li>By its Location
  23. 23. By its Influence (For Example: Libya)</li></ul>Obvious consequence:<br /> Spike in Oil Prices!<br />
  24. 24. Possible impacts on US Industries<br />Increase in Transportation Costs<br />People/firms wait to see how permanent change in price is<br /><ul><li>Delay purchase of automobiles
  25. 25. Other energy using consumer durables
  26. 26. Delay new buildings
  27. 27. Delay new energy intensive plant and equipment</li></li></ul><li>Oil Reserves <br />Oil Reserves – A region’s amount of crude oil that can be extracted using current technology<br />
  28. 28.
  29. 29. OPEC Overview<br />"Organization of the Petroleum Exporting Countries"<br />Twelve developing countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela <br />Collectively hold 79% oil reserves and 44% production<br />Competitors: OECD have reserves of 23.8% and produce 14.8% of oil<br />OPEC Nations<br />OPEC Goals:<br /><ul><li>Determines oil production and prices
  30. 30. Stabilizes prices in international oil markets with a view of eliminating harmful and unnecessary fluctuation
  31. 31. Provide regular supply to consuming nations</li></li></ul><li>2010 Civil Unrest in OPEC nations<br />OPEC nations + Top Oil Reserves:<br />Iraq, Iran, Kuwait, Venezuela, United Arab Emirates, Libya, and Nigeria, Saudi Arabia <br />OPEC nations + Top Reserves + 2010 Civil Unrest:<br />Kuwait, Libya, Iraq, Iran, Saudi Arabia<br />
  32. 32. OPEC Oil Prices<br />Question: Why are prices rising? <br />Answer: Fear<br />Major oil transit “choke points”<br />OPEC’s next meeting is in June 2011 at Vienna <br />Risk Premium<br />Oil Minister of S.A. says the “spike in oil costs stems more from financial speculation and unwarranted investor sentiment than industry fundamentals.”<br />
  33. 33. Questions?<br />
  34. 34. Thank You<br />