Quartet, Pakistan, Saudi Arabia, EU -- Mideast peace week

February 7, 2007

Over the weekend, four separate factions all moved to decrease volatility in the Middle East situation.

The Quartet reaffirmed their commitment to lead the Israeli-Palestinian peace process by agreeing to:

• Meet regularly themselves and with both parties,
• Support the agreements between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas at their meeting December 23,
• Support upcoming meetings with Secretary of State Condoleeza Rice and both parties,
• Call on Palestine to recognize Israel and commit to previous agreements, including the Roadmap for Peace.

Pakistan President Pervez Musharraf will visit Iran and Turkey next week to discuss an integrated Muslim solution to the situations in Palestine and Iraq. Last week, Musharraf visited the Muslim countries of Indonesia and Malaysia, and had previously visited Egypt, Jordan, Syria and the United Arab Emirates, as well as speaking to Saudi Arabia’s King Abdullah by phone.

Saudi Arabia's King Abdullah invited Palestinian President Mahmoud Abbas and exiled Hamas political leader Khaled Meshaal to meet on February 6 in the holy city of Mecca. The two immediately declared a ceasefire in the Gaza Strip, followed by a sniper fire attack on an Egyptian mediation team.

EU President and German Chancellor Angela Merkel is visiting the Middle East this week, as a continuation of her effort, begun with her meeting with President Bush, to restart the peace talks between Israel and Palestine. She is also seeking to restart negotiations for a free trade zone between the EU and the Gulf Cooperation Council. She is meeting with the leaders of Saudi Arabia, Egypt, Kuwait and the United Arab Emirates.

What the renewed Middle East peace initiatives mean:
Muslim leaders are concerned that the escalation of tension between the U.S. and Iran could lead to increased divisiveness between Shia’s and Sunni’s, at best, and a U.S.-led attack on Iran’s nuclear facilities that could lead to radioactive contamination of neighboring oil fields, at worst.

Leaders see that the recent U.S. leadership in the Middle East is declining, particularly with a Democratic Congress set to limit military spending in Iraq. Therefore, world leaders in the region and in Europe are seeing the need to fill the vacuum, perhaps as a way to increase their own position at the expense of Persian-Shiite-Iraq, or to forestall an expansion of the chaos that has overtaken Iraq and Israel/Palestine and possibly even Lebanon.

The leadership of Saudi Arabia, which exports about 10% of the world’s oil, is particularly interesting. If they gain regional political power in conjunction with the economic power they wield at OPEC, oil prices could become much more stable.

Action steps:
Peace in the Middle East would reduce a large element of volatility that threatens the world economy. Watch for success for these efforts, but be prepared for economic turbulence if efforts fail by making sure your personal finances are well-diversified.

Source: EU web site, “Middle East Quartet Statement”, 2/1/2007; Asia Pacific News, 2/3/2007; RadioFreeEurope / RadioLiberty web site, “Iran: Pakistani President Seeks Support to Curb Mideast Conflict,”2/5/07; Al-Jazeera, “Merkel Focuses on GCC Free Trade,” 2/5/2007.