Category Archives: Middle East

Political Risk to Investment in Iran: Sanctions, Inflation, Protectionism, War, Bonyads, and the IRGC

Journal of Political Risk, Vol. 1, No. 7, November 2013.

Figure 1: Foreign Investment in Iran and its Neighboring Countries, March 19, 2012-March 19, 2013. Data Source: The Government of the Islamic Republic of Iran News.

Figure 1: Foreign Investment in Iran and its Neighboring Countries, March 19, 2012-March 19, 2013. Data Source: The Government of the Islamic Republic of Iran News.

By Reza Yeganehshakib

Despite a tumultuous recent political history that includes revolution, war and sanctions, relations between Iran and the West are improving and Western investors are increasingly interested. But, Iran’s politics cause sanctions, and the economy suffers from inflation. Protectionist laws are on the books, and in some cases economic crimes are punishable by death. Regardless of warming relations with the West, Iran has in the past reneged on its agreements, and war is still a risk with non-Western bordering countries and regional powers. The Iranian Revolutionary Guard Corps (IRGC) has nationalized foreign investments in the recent past, and the politically powerful revolutionary foundations known as Bonyads control large segments of the most lucrative investment sectors.

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Physical Vulnerability of the Internet

Sources: Greg’s Cable Map; Submarine Telecoms Forum, Submarine Cable Almanac (Issue 7, August 2013).

Sources: Greg’s Cable Map; Submarine Telecoms Forum, Submarine Cable Almanac (Issue 7, August 2013).

Journal of Political Risk, Vol. 1, No. 7, November 2013.

By Tom Elliott, Ph.D.

On March 27, 2013, while the technology world preoccupied itself with a sophisticated cyberattack on a spam prevention service, a low-tech assault on the Internet was taking place in shallow waters off Alexandria, Egypt. Three men with scuba gear and a fishing boat were arrested while allegedly trying to cut one of the main communications cables that links Europe to the Middle East and Africa.[1] This incident of hacking – in the most literal sense of the word – should remind us that the Internet we all rely upon depends upon physical infrastructure, much of which is easily located and relatively unprotected. Continue reading →

Stalemate in Egypt: Expect Years of Insurgency vs. Autocracy

Journal of Political Risk, Vol. 1, No. 6, October 2013.

Map of Egypt. Source: University of Texas.

Map of Egypt. Source: University of Texas.

By Anders Corr, Ph.D.

Egypt is on the verge of being engulfed by a long-term insurgency. After a brief period of democratization following the Arab Spring, the world’s most populous Arab country has returned to a popular military dictatorship. General Sisi will likely lead the country, either as power behind the President, or as President himself. The primary difference between the Egypt of Sisi and the Egypt of the pre-Arab-Spring Mubarak will be a function of the overthrow of the democratic Islamism of President Morsi. A new outraged minority with pro-democracy and pro-Islamist beliefs fielded popular protests, and was repressed with lethal force. A significant minority of that minority will now divert their energy towards terrorism and organized insurgency. Continue reading →

Russian weapons delivery in Syria likely met with cooling of East-West relations

Russian naval vessel in Sevastopol. May 2009. Credit: Pavel Parmenov.

Russian naval vessel in Sevastopol. May 2009. Credit: Pavel Parmenov.

Journal of Political Risk, Vol. 1, No. 1, May 2013.

By Anders Corr, Ph.D.

Russia has deployed at least a dozen warships near the coast of Syria in the past few months, the largest Russian naval deployment since the end of the Cold War. Yesterday, Russia delivered sophisticated radar-guided Yakhont anti-ship cruise missiles to Assad’s Syrian forces. The Russian actions are strategically offensive to the United States, as well its European and Israeli allies. They are meant to dissuade Israel, the US, and Europe from increased involvement. The anti-ship weapons, in particular, are offensive weapons that could be used by Assad’s Syrian forces to attack NATO naval platforms necessary for intervention in Syria  (WSJ, NYT).

Russian actions with respect to Syria complicate the war from a primarily internal issue, to one over international influence between aspirant global and regional hegemons. Because the weapons delivery could be seen to counter Western military actions in the region, they have already increased US congressional criticism of Russia. Such criticism will likely increase in future, especially if the weapons are used against Western assets. This strategic offense to Western military commanders will lead them to more strongly support military options. Ironically, the Russian action increases pressure on Western political leaders to order intervention. Continue reading →

Syria Strategy: Add Fuel to the Fire

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Bomb crater in Serekaneye, Syria. Photo Credit: Fatih Polat., March 22, 2013.

Bomb crater in Serekaneye, Syria. Photo Credit: Fatih Polat., March 22, 2013.

By Anders Corr, Ph.D.

The US and NATO could be pursuing a strategy of adding fuel to the fire in Syria. The Government of Syria has been allied with Iran, and irritated the US and NATO from a nonproliferation perspective, for a long time. The US has consequently wanted to destabilize the Syrian Government. Now, that wish has been met. The Syrian Government is in a counterinsurgency against rebels that are closely allied with Al Qaeda. Other than humanitarian considerations, the US and NATO should be quietly overjoyed that two enemies are fighting. Continue reading →

Biased wording in Syria Poll by CBS/New York Times

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By Anders Corr, Ph.D.

Responses of Don't Know or No Answer for 28 New York Times/CBS polls. Blocks represent the density of observed DK/NA percentages for the 28 polls. The black line represents the probability of each DK/NA rate given a poisson distribution. The green dotted line depicts the mean of the observations. The black dotted lines depict two standard deviations above and below the mean. The most recent Syria poll, with a 14% DK/NA rate, is well above 10.5 (two standard deviations from the mean). It is therefore highly likely to be invalid based on an overly-ambiguous question format.

Responses of Don’t Know or No Answer for 28 New York Times/CBS polls. Blocks represent the density of observed DK/NA percentages for the 28 polls. The black line represents the probability of each DK/NA rate given a poisson distribution. The green dotted line depicts the mean of the observations. The black dotted lines depict two standard deviations above and below the mean. The most recent Syria poll, with a 14% DK/NA rate, is well above 10.5 (two standard deviations above the mean). The question is therefore highly unlikely to be valid and should be clarified for future polls.

CBS News and the New York Times released a poll yesterday on opinions regarding Syria. The poll posed a question to 965 adults nationwide worded as such: “Do you think the United States has a responsibility to do something about the fighting in Syria between government forces and anti-government groups, or doesn’t the United States have this responsibility?” Answers included “Yes” by 24% of respondents and “No” by 62% of respondents. CBS headlines interpreted the poll as “Americans Against Intervention in Syria.” The New York Times stated, “Americans are exhibiting an isolationist streak, with majorities across party lines decidedly opposed to American intervention in North Korea or Syria, according to the latest New York Times/CBS News poll.”

While the wording of the poll question on North Korea was acceptable, the question on Syria was ambiguous due to usage of the word “responsibility” and the phrase “do something”. It would be very possible to think that the US has no responsibility to act in Syria, but should do something nonetheless. It is also possible to think that the U.S. has a responsibility to do something, but should nevertheless refrain from acting. Finally, “doing something” is ambiguous, and does not necessarily mean “intervention” as asserted in the reporting of the poll by the New York Times. The biases are countervailing, and lead to ambiguity. Continue reading →

GDP Per Capita and Democracy Explain 87% of the Social Progress Index

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Model 1: Effect of GDP Per Capita on the Social Progress Index

Figure 1. Effect of GDP Per Capita on the Social Progress Index (Model 1)

Journal of Political Risk, Vol. 1, No. 1, April 2013.

By Anders Corr, Ph.D.

Social Progress Imperative, a global group that produces well-being data for 50 countries, released their Social Progress Index (SPI) today. The index compares countries not on GDP, but rather on a single quality of life metric as a function of housing, health, education, and environmental sustainability. The index is backed by Harvard Business School professors and the Skoll Foundation (WSJ).

Sweden, Britain, and Switzerland have the best Social Progress Index scores, because these countries have some of the highest GDPs per capita of the fifty countries in the index. It is no coincidence that the three lowest SPI scores – Ethiopia, Nigeria, and Uganda, have very low GDPs per capita. The best way to understand SPI is therefore to control for GDP per capita. Corr Analytics did simple regression analysis on SPI. Approximately 84% of the index is explained by gross domestic product (GDP) per capita (see technical details below). Countries with large economies relative to their populations will have more wealth that can be channeled to the basic necessities measured by SPI. Therefore the simpler standard used by economists for decades — GDP per capita — works quite acceptably for well-being. Continue reading →

Increased risk of religious violence in, and refugees from, Egypt, as well as consolidation of President Morsi’s power

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Egyptian riot police in Cairo, January 28, 2013. Photo credit: Jackq, Dreamstime.

Egyptian riot police in Cairo, January 28, 2013. Photo credit: Jackq, Dreamstime.com.

By Anders Corr, Ph.D.

A muslim mob attacked the seat of Egypt’s Coptic Orthodox Church on Sunday, resulting in Christian-Muslim riots and an anti-government outburst by the Coptic Pope yesterday (WSJ).

This religious strife significantly increases the probability of additional attacks on Christians, greater cohesion between Muslim factions, and domestic consolidation of President Morsi’s Islamist administration and Muslim Brotherhood power-base. Continue reading →

New US peace initiative for Israel and the Palestinian Territories unlikely to yield quick gains, if any

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By Anders Corr, Ph.D.

A new Israeli-Palestinian peace initiative promoted by Secretary of State John Kerry today in Israel is unlikely to bear fruit, especially in the short-term. Secretary Kerry unveiled the plan, which is purposefully non-specific. It includes meager US-funded economic incentives, and a call for supporting the Arab League’s 2002 proposal for Israel to accept the pre-1967 border in exchange for recognition (WSJ).

Israel will not accept the 1967 borders, and any proposal for the same is an attempt to solicit Arab nations on other issues. Likewise, Palestinians will not be influenced by scarce development funding available from the Department of State. Such development funding is the price of admission for a new peace initiative, another in a string of de rigueur Israeli-Palestinian peace processes led by successive US Secretaries of State. Continue reading →

Risk of NATO overstretch in Syria

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By Anders Corr, Ph.D.

The Obama administration is currently under pressure by certain US lawmakers, as well as Britain, France, and Israel, to take limited military action in Syria. These actions could include securing a humanitarian corridor into the country, providing military equipment to the non-Al Qaeda affiliated Free Syrian Army (FSA) and Syrian Opposition Coalition (SOC), and destroying the Syrian Air Force (WSJ).

Such measures might remove a bit of pressure from rebels and provide a public opinion boost to current participating governments in the US, France, and Britain, in that voting publics in those countries would feel that their governments were doing something positive to end the Syrian crisis. However, due to the limited nature of the proposed military measures, they would not alter the balance of forces on any side of the complex conflict and could lead to notable negative consequences. Continue reading →