Investors Can’t Take Security for Granted as Chaos, Competition Intensify

Growing chaos in the Middle East, economic tension in Europe and geopolitical competition in Asia signal the world is currently living through dangerously interesting times.

So says the Center for a New American Security’s Robert Kaplan at ETF.com’s annual Inside ETFs conference.

Back by popular demand — last year’s 1,500 attendees ranked Kaplan highest among a lineup of speakers including fund managers and economists — the geopolitical analyst spun his trademarked fast-paced web of international actors grasping for power against sweeping forces of history and geography.

In the Middle East, Kaplan foresees two decades of relative anarchy ahead.

The key historical force driving this dissolution is the end of imperialism. It is fashionable for Westerners to view European colonialism as the original sin of the West, but Kaplan explains that “imperialism has governed the planet since antiquity,” and pointedly, that European colonialists merely took over for previously existing empires.

In every part of the world, groups blessed with greater resources and more power imposed sovereignty — and order — on other groups and regions.

Even when European colonialism, which began in the 1840s, ended in the 1960s, other “empires” — namely the U.S. and Soviet Union — assumed responsibility for world order during the Cold War.

When the Soviet Union collapsed and the Cold War ended, the U.S. was able to project its power through air and sea power, but could not usually manage actors on the ground. That job was left to strongmen, and it is their current fading from the scene — think Iraq’s Saddam Hussein, Libya’s Muammar Qaddafi, Yemen’s Ali Abdullah Saleh — that is exposing the region to the chaos of war and terror.

Kaplan explains that the rule of these strongmen was brutal but they brought order to regions that were more geographic expressions, with colonially imposed artificial borders, than they were places with history and a sense of poplar legitimacy.

“They ran mukhabarat states,” he says, using the Arabic word used for intelligence and security apparatuses. When the Arab Spring swept these authoritarian states away, “there was nothing between the regime at the top and the tribes at the bottom,” he says.

In other words, there was no civil society, no mediating institutions between state and society such as garbage collection or agricultural extension services.

“The Arab Spring was not about democracy,” he says, so much as a quest for order amid collapsed authority.

The ensuing void has opened the way for sectarian and religious leaders to seek power, often through the prism of violent doctrinal battles about the proper way of Islam, the analyst says.

Historic power centers such as Egypt and Tunisia (known millennia ago as Carthage) can hold up better amid these political storms as their state identities are recognized, with the only question remaining being who will govern.

But unravelling in Yemen, Libya, Pakistan, Afghanistan, Syria and Iraq require much more extreme forms of autocracy to hold power over the region’s disparate groups.

“When Qaddafi was toppled, there was nothing to fill the void. Tripoli is just a central negotiation point for rival gangs,” Kaplan says.

Were Syria’s Bashar al-Assad to fall, the ensuing bloodbath would claim far more lives than the current toll in that civil war-wracked country, mainly among Assad’s ethnic Alawite clan. “There are no good choices there,” Kaplan says.

In the current Saudi-Iranian rivalry for power in the Persian Gulf, Kaplan thinks the latter has greater ability to impose order. The Saudi monarchy has ruled Arabia for a couple of centuries, whereas Iran has been a state since antiquity, he argues.

While the Middle East is mainly a theater of outright dissolution, Kaplan argues that we cannot take even European security for granted, and drew particular attention to the continent’s dynamic north versus its lethargic south.