Arab Spring Uprisings Lose Momentum as ‘Status Quo’ Fights Back

Bombs and tear gas are threatening to smother the “Arab Spring” that toppled the leaders of Egypt and Tunisia and promised to spread democracy in the Middle East.

Already fighting two wars in Muslim countries, the U.S. and Europe were reluctant to engage in a third, enabling Muammar Qaddafi to turn the tide against Libyan rebels. In Bahrain, security forces today used tear gas to drive protesters from their main rallying point in the capital Manama, two days after Saudi Arabia sent troops to bolster the ruling family.

“When the guns are all on one side and being used, that side has a distinct advantage,” said Cliff Kupchan, a senior analyst at Eurasia Group, a New York political-risk consulting firm. “What we’re seeing now is the first really hard pushback from status quo forces since this year’s unrest in the Middle East began.”

The crackdowns are tempering optimism about an “Arab Spring” spreading through a region that holds more than 60 percent of the world’s known oil reserves. While protests have toppled the regimes of Tunisia’s Zine El Abidine Ben Ali and Egypt’s Hosni Mubarak in the past two months, the west’s reluctance to take action is emboldening other authoritarian regimes to resist the push for more democracy.

Oil prices surged to a 2 ½ year high on March 7 as protests sweeping the Arab world turned bloody. Refusing to give into to the popular momentum that toppled Mubarak and Ben Ali, Qaddafi instead turned his guns on his own people. Just 10 days after his capital was surrounded by opposition forces, his troops are now 100 miles (160 kilometers) from Benghazi and more than 400 people have been killed in the eastern part of the country.

Lost Opportunity

France said an opportunity to overthrow Qaddafi’s 41-year rule had been lost after Germany, Russia and the U.S. failed to back a push for a no-fly zone.

“If we had used military force last week to neutralize a number of air strips and a few dozen of their planes, perhaps the opposition’s reversal of fortune wouldn’t have happened,” French Foreign Minister Alain Juppe said yesterday.

Divisions between the U.S. and its European allies have enabled the Libyan leader to avert the most serious challenge to his regime, said Shada Islam, a Middle East and Asia expert at the Brussels-based Friends of Europe policy advisory group.

“The message being sent to Qaddafi is that Western resolve is weakening and this has emboldened him,” she said. “We’ve been talking about a no-fly zone for three weeks and if we’d acted three weeks ago we wouldn’t be where we are now.”

Saudi Supply

Qaddafi’s intensifying campaign comes as Saudi troops, backed up by forces from the United Arab Emirates, move into Bahrain to help stamp out persistent protests led by the Shiite Muslim majority. The island state, like the other U.S.-allied Arab Gulf countries, is ruled by Sunni Muslims.

While Libya accounts for just 3.3 percent of global reserves, the risk for investors is that a conflagration on Saudi’s borders will spark concerns about the security of the Gulf state’s reserves, keeping prices high.

While democracy in Egypt won’t threaten oil prices, “the situation on the Arabian Peninsula is very different,” said John Winsell Davies, lead fund partner at Moscow-based, Wermuth Asset Management, which manages about $315 million in emerging markets, said by phone. “Our oil-rich vassals in the Persian Gulf are probably sitting on terra firma for now, but with both the Saudis and Iranians now in potential conflict on the streets of Manama, oil prices are firmly supported.”

U.S. Rift

The price of crude traded at $98 per barrel at 9:01 a.m. in London today. Saudi Arabia holds 20 percent of the world’s oil.

Shiites comprise as much as 70 percent of the Bahraini population and many retain cultural and family ties with Iran and Shiites in eastern Saudi Arabia. Bahrain’s ruling family has close links with its neighbor, which holds 20 percent of global oil reserves and is Iran’s main regional rival.

The Saudi intervention in Bahrain reflects a rift between the U.S. and its Gulf state allies over their failure to respond to the pressure for change, said Simon Henderson, a Gulf expert at the Washington Institute for Near East Policy.

U.S. Defense Secretary Robert Gates told reporters March 12 after meeting Bahraini King Hamad bin Isa Al Khalifa that “baby steps” towards reform would not be enough. Gates received no indication during that meeting that Saudi forces would deploy 48 hours later, said Marine Corps Colonel Dave Lapan, a Pentagon spokesman.

Iranian Bulwark

“These states are angry that Washington has let staunch allies such as President Hosni Mubarak of Egypt be forced from power while doing little to push Qaddafi of Libya from his position,” Henderson said. Bahrain is host to the U.S. Fifth Fleet.

Gunfire was heard in Bahrain’s capital today and riot police fanned out into the city streets after Pearl Roundabout, the epicenter of month-long protests, was emptied.

As Bahrain unrest intensifies, the U.S. is unwilling to risk a violent overthrow of such key allies, said Marina Ottaway, director of the Middle East program at the Carnegie Endowment for International Peace, a Washington policy group.

A change in regime might disrupt what the U.S. sees as a bulwark against Shiite-led Iran’s attempts to expand its influence in the Persian Gulf, said George Friedman, chief executive officer of Austin, Texas-based intelligence-consulting group, Stratfor. It also could trigger severe unrest among neighboring Saudi Arabia’s Shiite minority in its eastern oil- producing hub.

Crackdown

In Yemen, where government forces have killed protesters against President Ali Abdullah Saleh’s rule, there is cooperation with the U.S. in fighting al-Qaeda.

“These are countries where we have clear vested interests in the continuation of the current regimes,” said Ottaway.

Over the next few years, even if Bahrain succeeds in keeping the lid on unrest, there risks being a long-term radicalization of Shiite youth in Bahrain that could be exploited by Iran, according to Kupchan from Eurasia Group.

The crackdown by the region’s authoritarian regimes will only reinforce anger that has built up for decades at high youth unemployment and poverty, said Ottaway from Carnegie.

With calls for democracy unlikely to recede and Gulf allies digging in, the Obama administration may be put in an awkward position after publicly backing the reform movements in Egypt and the rebels of Libya.

“What the U.S. wants is to see reforms from the top that makes these governments more responsible,” said Ottaway. “So the question is what it is going to do when reform at the top doesn’t take place. A lot of those countries will see a second round at some point.”

To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net.

To contact the editors responsible for this story: Willy Morris at wmorris@bloomberg.net; Andrew J. Barden at barden@bloomberg.net.

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