Over the past few days Egypt has been a focal point for all news. There has been a revolution as people have taken to the streets asking for the ousting of their current ruler. It seems eerily similar to what happened in Tunisia, another Middle Eastern State, where people ousted the current ruler and forced him into exile. The reasons for these revolts have been corruption as well as growing income inequality.
But Egypt is 3,000 miles away from India and Tunisia is about 6,000 miles away. So most Indians wonder as to how do these events affect us? It is just global news.
The truth is that these events affect everyone around the world. Middle East controls two-thirds of the world's proven oil reserves and about half of the world's natural gas reserves. Thus what happens in Middle East is of equal concern to all as it affects the prices of an essential commodity – oil. The events in Tunisia and Egypt have led the oil prices to touch US$ 100 per barrel. And this is when Egypt and Tunisia are not the largest producers of oil.
So what would happen if such revolutions were to spread to the bigger states in Middle East? Signs are already visible in Yemen, Jordan, Algeria and even in Saudi Arabia. So would a revolution be good for these countries? Nouriel Roubini has pointed out a bigger risk while writing for a leading daily. As per Mr. Roubini, a bigger risk than these revolutions is the outcome of elections in the Middle East. At present most of the Middle East states have an autocratic rule. However, in states like Iran and Lebanon, where democratic elections have taken place, the result was that a radical party has taken control. This has just led to more chaos.
Events in Middle East have a powerful impact on oil prices. This rise and its resultant impact on other commodity prices especially food is fuelling the inflation. Particularly in the emerging market economies like India where oil and food form nearly two-thirds of the consumption baskets. So the next time we switch on our TVs and pick up our newspapers and read about turmoil in the region, we should definitely be concerned.