Most investors know what an emerging market is. Some might even be able to offer a pretty good definition of what puts the “emerge” into emerging markets. But ask about the Middle East, and no one really knows what it is.
Geographically, it’s the region that stretches from the eastern Mediterranean and southern Turkey to the Iran-Afghan border. The region, however, is far more complex than lines on a map...
The region, however, is far
more complex than its borders.
The Middle East is the Arab
core of the Muslim world. But
thinking about the region as
exclusively Arab excludes
Turkey, Iran, and a very large
Viewing it as exclusively Muslim
would exclude the Jews,
Christians, Druze, Yazidis,
Zoroastrians, Bahai, and other
religious groups in the region.
The idea of the Middle East has
become quite vague, but in our
view, it’s where perhaps the
world’s most complex war is
Now, let’s dig deeper into the
demographics and history of
the region to understand its
The Middle Eastern Population Is
Concentrated in the Mountains
Mountainous terrain is typically
less populated than lowlands
due to obvious factors like ease
of making a living.
Not so in the Middle East…
since much of the lowlands lack
water and offer a rather
inhospitable quality of life.
As a result, most of the
population clusters in the
mountains of Iran, Iraq, and
The Mountainous Northern Region Has a
Wide Religious Diversity
Religious divisions are
particularly important for
understanding the Middle East .
Note the division between
Sunnis and Shiites and the
Christian and Jew mix.
But an understanding of these
many religious factions is still
Ethnic Subgroups Complicate the Religious
The Kurds, for example, are
largely Sunni Muslims. They are
hostile to Arab Sunnis and
The Druze are neither Muslim
nor Christian, but can find
themselves allied with either.
To understand the origins of
this ethnic complexity, we need
to look back to the times of the
The Ottoman Empire Left the Old Middle
East Highly Fragmented
The Ottomans dominated this
region for centuries.
But unlike Muslims and
Christians, they didn't use force
to impose their religion on
The Ottomans, therefore, left
the Middle East in a chaotic
jumble of ethnic and religious
groups after World War I.
Cultural differences resulted in
endless battles in the region,
but the aggression was limited
to low-level conflicts.
Each group had the strength to
survive, but lacked capabilities
to conquer the others.
Plus, the mountainous terrain
gave the advantage to the
defender and made it difficult
for conquerors to take full
The result has been inherent
instability in the region.
The Europeans Divided the Middle East
After World War I, the
victorious powers divided the
Middle East region into entities
that had never existed before.
The French took the northwest
portion and consolidated it into
one large state, Syria.
The British had a relationship
with the Hashemite patriarch,
Sharif Hussein, and they gave
his elder son, Faisal I, the
kingdom of Iraq.
What is most important,
however, is to understand how
artificial these entities were.
Now the Modern Middle East Can’t Hold
The point is that there is
nothing natural about any of
the Middle Eastern borders.
Some of the states were
created on a more solid
foundation than others, but
they were all invented over the
In this context, the rise of the
Islamic State in the Middle East
is not surprising, as almost all
the states in this region were
IS is just reshaping a shapeless
area that external powers
created and left to its own
Record-low oil prices have pushed the Middle East into a serious
economic crisis. Saudi Arabia’s economy, however, takes the most pain in
the region. Before the end of this decade, the country could be broke…
ISIS could be entrenched across the Middle East… and the cost of oil could
be shockingly different from today.
The special report from renowned economic analyst John Mauldin and
world-leading geopolitical expert George Friedman reveals what the Saudi
Arabian crisis means for the Middle East and the rest of the world.
Grab your free copy
Free Special Report
George Friedman provides unbiased assessment of the global outlook in
his free publication, This Week in Geopolitics.
Subscribe now and get an in-depth view of the forces that will drive
events and investors in the next year, decade, or even a century from