Systemic risks: Russia vs. the Middle East

Aggravation of Russian-Ukrainian conflict – not a systemic risk, believe analysts warning that political tensions in the Middle East and Africa deserves more attention.

“The Middle East and Africa, no doubt, pose a serious systemic risk.

Exacerbations in Nigeria, Syria, Iraq and, potentially, in Libya, Saudi Arabia and Kuwait, are more important than the tension between Russia and Ukraine, “- says Viktor Shvets, head of the Asian Department of Strategic Studies Macquarie.

It’s not just the fighters of the Islamic State, which capture all new territory in northern Iraq and Syria. In Libya, as the conflicts began, after last month Islamist group “Libyan rise” seized power in Tripoli. Meanwhile, Nigerian extremists «Boko Haram» Baram captured the city in the north-east of the country, trying to create an Islamic state.
News or risks

“For investors, it is important to share news and systemic risks. In my view, the Russian-Ukrainian conflict – this news, “- says Shvets, adding that the key to assessing systemic risk is justified if the action of the parties or not.

“The Russian-Ukrainian crisis – not the system. The Russian authorities are not obliged to act in accordance with the opinion of the public, but, in any case, their actions – are rational, “- he said, highlighting the fact that the Russian state for 1000 years. On the other hand, the Middle East is experiencing a “power vacuum”, being a tribal society in which there is no adequate, domestic leadership.

Ineffective management is often called the main cause of most political conflicts and economic instability in the region, such as the Movement for Democracy in 2011, known as the “Arab Spring.”
Meanwhile, Putin’s popularity as a leader, for 6 months of the Russian-Ukrainian conflict has only grown. Latest public opinion poll showed that his policy is supported by 84% of the population.

“Wherever there is a” power vacuum “, all will be present systemic risks, especially if the region is rich in resources such as oil and gas. Here are the differences between the conflicts in the Middle East and Africa from the Russian-Ukrainian, “- says Shvets.

Organization does not necessarily mean systemic convinced Vishnu Varatan, senior economist at Mizuho.

Systemic risk encompasses the whole system, he said.

Different views of the majority of experts as to which of the crises considered more significant.
“Both of the crisis are systemic risk. Tensions in the Middle East could spark a second round of “Arab Spring”, while the economic impact of sanctions against Russia are just beginning to emerge in Europe. We will see increased economic pressure against the backdrop of mutual sanctions and potential aggravation of the military conflict, “- explains Varatan.

Meanwhile, last week, a retired United States Army General Wesley Clark, said in an interview with CNBC, that Putin’s actions in the east of Ukraine and their influence on the future of NATO and the West – are much more serious problem than Islamist militants who are “localized threat” .