A Dangerous Neighborhood

Will increased terrorism and faltering economies prompt Europe to boost its presence in North Africa and the Middle East?
People chant slogans at a weekly anti-government demonstration in the capital Algiers on March 13.
Billal Bensalem/NurPhoto via Getty Images)
From the May 2020 Watch Jerusalem Print Edition

The Middle East and North Africa are in transition. America’s willingness to keep war-torn nations out of the hands of terrorists can no longer be taken for granted. At the same time, record low oil prices are severely hurting countries dependent on energy exports.

Entire economies and governments are close to collapse. If this happens, Israel’s neighborhood could become far more volatile and dangerous. As the United States withdraws and the region grows more unstable, a new power will be forced to deepen its involvement in this vital, oil-rich region of the world.

Factset/Reese Zoellner/Watch Jerusalem

On February 20, the price of Brent Crude, a common benchmark for oil prices, peaked at $58.80 a barrel. Throughout March, as the oil war between Russia and Saudi Arabia heated up, prices dropped to as low as $26.69. From then on, the price declined to record lows, reaching $19.33 on April 21. On the same day, United States oil prices fell to negative territory. In Canada, a barrel of oil from the province of Alberta was selling for less than a cup of coffee.

This rapid drop has especially hurt poorer oil-producing nations reliant on the commodity. The World Bank predicts that economic growth in sub-Saharan Africa will fall to –5.1 percent by the end of 2020. “The oil slump could not have come at a worse time for African countries. They are too dependent on oil for revenue,” an energy consultant based in Angola told Fin24 on April 24.

An oil shortage affects the world’s highest consumers most of all, but overproduction does the opposite: It drives down the price, hitting high producers hardest. Many of these nations and their regimes rely on oil sales for survival. When the economy reels amid a price crash, social unrest develops, which often leads to political change.

Several African and Middle Eastern countries are in danger of this right now.

Iran

In theory, increased pressure on Iran’s economy could force the nation down one of two paths. It could precipitate a nationalist movement that seeks to overthrow the Iranian regime. The more likely result, however, is that Iran’s leaders will lash out against Israel or its allies. Not only could this help restore Supreme Leader Ayatollah Ali Khamenei’s damaged popularity, but it could also have the added benefit of raising the price of oil.

“Facing crude oil prices below $19 a barrel, Iran is very likely to cause an incident in or around the Persian Gulf,” wrote the Washington Examiner on April 21. Oil is critical to the regime’s survival. Iran’s main goal is, therefore, to raise prices. If Iran’s economy keeps contracting, its leaders may decide to force a spike in prices by violent means. This could entail an attack in the Persian Gulf, either by piracy against tankers or by laying mines, sealing off the strait to commercial traffic and temporarily affecting Israel’s seaborne trade. Saudi or Iraqi oil fields could also come under attack.

Iran is the world’s largest state sponsor of terror. It could have its proxy militias ignite conflict in impoverished oil-producing nations, either to seize control of these resources or simply to drive prices up. This tactic makes use of a powerful force that routinely pushes oil prices up and down: fear.

To some extent, Iranian proxies are already doing this.

Algeria

Algeria normally produces almost 1.7 million barrels of oil per day; it is the third-largest oil producer in Africa. It relies on oil for 95 percent of total exports and 60 percent of its budget. Before the price crash, it had a surge in debt. In 2017, total public debt stood at 27 percent. At the end of 2019, it had reached 45 percent—before the worst of the oil crisis hit. On May 3, Algerian President Abdelmadjid Tebboune announced that the national budget would be cut by 50 percent this year. To avoid unrest, his government raised the minimum wage from $140 per month to $155.56 and waived income tax for low earners. Whether these measures will be enough to preserve peace remains to be seen.

“In the short term, Algeria can resist the consequences of what is happening on the oil market. …
But this exceptional situation requires urgent structural, economic and financial reforms,” a member of the Parliament’s finance committee told Reuters.

“Algeria no longer has the choice of delaying economic reforms. They are going to be difficult to implement, but this is the time to diversify the economy,” said a former Algerian energy minister. Reforms would tighten already difficult living conditions in the country, possibly leading to riots.

The situation is made all the more precarious because President Tebboune lacks widespread support. His December 2019 election was seen as illegitimate, with low turnout. He was only elected after the country’s largest protests since the Arab Spring ousted longtime President Abdelaziz Bouteflika. More protests could bring another change in leadership and another opportunity for radical Islam.

Terrorists are poised on the southern and eastern borders, ready to take advantage of internal chaos. Al Qaeda in the Islamic Maghreb has posed a persistent threat since 2007, carrying out over 600 terrorist attacks to date inside Algeria.

“Algeria has a long history of combating domestic violent extremism,” wrote the Counter Extremism Project. “Beginning with the outbreak of the Algerian Civil War in 1992, the government has worked to quash militant Islamist groups operating within in its borders, including the Armed Islamic Group and the Salafist Group for Preaching and Combat, among others.” After the Arab Spring, Algeria once again began to experience an increase in violence, with radical Islam playing a role.

A cash-starved government, unable to maintain a level of social spending that the population expects, could invite an Islamist revival.

Nigeria

Nigeria is Africa’s largest oil producer. Oil accounts for 9 percent of its gdp, 60 percent of its revenue, and 90 percent of its foreign exchange. It now faces an “existential threat,” according to the Wall Street Journal. When the crisis hit, the Nigerian economy had not recovered from a 2014 price crash. Goldman Sachs estimates the country will lose more than $9 billion as oil prices continue falling. Nigeria’s 2020 budget had been based on oil selling for $57 a barrel. Now, the best it hopes for is $30 per barrel. It will take in 45 percent less revenue than planned. Oil producers in Nigeria already contend with one of the highest break-even points in the world due to government corruption and high refining costs.

As overproduction floods the market, storage capacity is running out. Nigerian oil companies are racing to access and fill the last remaining tankers at sea. “When there’s no more vessels to load the crude, then the entire world collapses,” said Kola Karim, chairman of Nigeria’s third-largest oil producer. “You will have serious, serious security implications. Unrest.”

According to Energy Industry Review, unemployment could rise by 25 percent. That’s in addition to 20 million people already unemployed.

These economic woes will have severe effects on everyday life. Inflation and currency devaluation could make essential products nearly impossible to afford. This is a recipe for social unrest and potentially even the overthrow of the government. Boko Haram has sought exactly that outcome from its inception in 2002. Since it began regular attacks in 2009, its members have killed 30,000 people. It would surely take advantage of anger against the government to achieve its aim of toppling Nigerian President Muhammadu Buhari and establishing a caliphate.

Tradingeconomics.com, National Bureau of Statistics, Nigeria/Reese Zoellner/Watch Jerusalem

Iraq

Oil accounts for 95 percent of the Iraqi economy. The country is the world’s sixth highest oil producer, generating 4.4 million barrels daily. Consequently, it has been one of the hardest hit by the oil crash. The price of one barrel of Iraqi oil went from $74.80 on January 6 to $20.59 on April 21. The country lost roughly $11 billion in oil revenues over four months.

Mudher Saleh, a financial adviser to Iraqi Prime Minister Mustafa al-Kadhimi, told Egypt Independent, “If we calculate the damages with the fall of oil prices, it’s no less than $120-130 million per day.”

Protests have shaken Iraq in recent months, and economic hardship has forced the government to cut social benefits, further angering citizens.

Nearly 1 in 10 Iraqis works in state-owned agencies, where the vast majority of income is derived from oil. There is hardly an alternative at present. Energy Industry Review wrote that “the pandemic effectively closed the Iraqi private sector economy” from March onward. Iraq does not have nearly enough money in reserve to deal with the crisis. Like Nigeria, Iraq now faces “a potentially existential threat.”

The country was without a head of government for six months; it only agreed on a prime minister on May 7. In the interim, Islamic State militants exploited the chaos, increasing attacks: These doubled in April, reaching 113, compared to an average of 49 the previous three months. Added to this, the United States is threatening to withdraw; it began handing over bases to the government and evacuating troops in March. This presents greater opportunity for terrorists to increase attacks on the war-torn country.

Unrest in Iraq directly concerns Israel. Iranian- backed Shiite forces have threatened to use Iraqi territory to fire missiles at Israel. Earlier this year, Reuters reported that Iran was moving missiles to western Iraq for this purpose. A weakened Iraq also allows Iran to move forces to Syria to directly attack Israel.

Reese Zoellner/Watch Jerusalem

Filling the Void

Many similar situations are playing out across Africa and the Middle East.

With America declaring its desire to leave the region, other nations are ready to fill a power vacuum. Iran and other radical Islamic powers are always close at hand, eager to move in as they did in Iraq, Libya and Afghanistan.

But another power is being primed to replace the United States in the region—one that is already heavily involved in Africa and is gradually getting more active in the Middle East.

A European Union Foreign Service report from May 8 shows that Europe knows the potential for dangerous changes in the Middle East. It stated that falling oil revenues “may result in increased risk of social upheavals, jeopardizing security and stability in the region” and increased “tensions between secularists and Islamists.” The EU expects that “[t]he plummeting oil price will have huge impact in Algeria.” Lebanon’s regime has been at risk from “growing popular discontent for months.” This report said, “Iraq, due to the combination of political instability, insecurity and low oil prices, stands out as a country the EU should focus its attention on.”

Germany’s inroads into Africa and the Middle East position it perfectly to get more involved. It has established small training missions in Djibouti, Mali, Niger and Somalia. It sends funds, advisers and training staff to Tunisia and Libya. The Luftwaffe has flown missions out of Jordan and may remain there indefinitely. And a secret Bundeswehr deployment, of which there may be more, was revealed last year in Cameroon.

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Most would not expect Germany or its European allies to become the region’s next policeman. But one source predicts it will be.

In March 2019 we wrote, “Every important biblical prophecy that takes place in the Middle East occurs in a power vacuum created by America’s exit. In fact, Bible prophecy indicates that the U.S. will have vacated so entirely from the Middle East that it will not impact it at all.”

One of these prophecies is found in Daniel 11:40: “And at the time of the end shall the king of the south push at him; and the king of the north shall come against him like a whirlwind, with chariots, and with horsemen, and with many ships; and he shall enter into the countries, and shall overflow, as he passes through.”

“The king of the south” refers to radical Islam led by Iran. But this prophecy does not discuss a war between America and Iran. Instead, it describes an Iranian provocation against the “king of the north.” Who is this? Prophecies in Isaiah 10, Habakkuk 1 and Hosea 5 identify the “king of the north” as a united European superpower led by Germany (the descendant of the Assyrians; to prove this, request our free booklet Germany and the Holy Roman Empire).

Watch Jerusalem editor in chief Gerald Flurry explained the significance of the term “whirlwind” in Daniel 11:40, writing, “Germany has expected to clash with Iran, and it has been working on a strategy for a decade or more. That strategy is almost complete. Germany has surrounded Iran” (Trumpet, July 2013).

The effects of the oil price crash could hasten the descent of these oil-dependent nations into social unrest, riots or even regime change. Iran and its terrorist proxies recognize the opportunity this will present, but so do Germany and Europe. Bible prophecy shows that Europe will establish a much greater military presence to secure access to necessary resources.

The prophesied clash between Europe and Iran will not bring peace. In fact, the Bible shows that Israel will look to Germany at that time for safety, only to find itself at the receiving end of a deadly double cross (Hosea 5:13). At the very moment Germany attacks Iran, it will ignite the worst conflict mankind has ever experienced. This clash is clearly prophesied in your Bible as part of a series of events that will put an end to the cycle of conflict forever.