Crisis in the Mideast and Wall Street

By Paul Erdman, CBS.MarketWatch.com Last Update: 3:47 PM ET Oct 12, 2000 NewsWatch Latest headlines

SAN FRANCISCO (CBS.MW) -- Like it or not, the future of the American economy, and of your investments in that economy, might be decided not in Washington or New York but rather in Riyadh. Because who controls the oil fields in the Eastern Province of Saudi Arabia controls the chief source of the oil that fuels the economy.

Since the presidency of Franklin Delano Roosevelt, we have been allied with the rulers of that nation, the House of Saud, in order to protect that strategic source of petroleum from falling into the "wrong" hands. We fought the Gulf War to prevent Saddam from gaining control of those Saudi oil fields.

What is now happening in the Mideast cannot help but undermine the Saudi/American relationship. The breakdown of any chance for peace between Israel and the Palestinians is just what the radicals in the Arab world have been waiting for.

It demonstrates, once and for all, that it is us against them - the "them" being both Israel and America, since the two nations are bound together in an unholy alliance designed to suppress the Arab world.

Thus the killing of Israeli solders and the attack on an American warship in the Gulf on the same day.

Heretofore the House of Saud has managed to remain above the fray.

It has been able to balance its accommodating relationship with the United States by acting as the chief financial backer of the Palestinians. It now finds itself between a rock and a hard place, as do we.

Should the House of Saud continue to increase output in order to meet the demands of the United States, it now runs the increasing risk of coming under direct attack from Islamic radicals who likely were responsible for the attack on the American warship.

Should the House of Saud fall, it would have unthinkable consequences for the economies of the industrialized world.

So what we could have in the making is the mother of all external shocks.

For once the violent reaction on Wall Street to these events in distant places seems logical. For it shows that the degree of our vulnerability to events in the Middle East is finally sinking in.

http://cbs.marketwatch.com/news/current/erdman.htx?source=blq/isynd

-- Martin Thompson (mthom1927@aol.com), October 13, 2000

Answers

Pure logic.

-- Loner (loner@bigfoot.com), October 13, 2000.