Islamic State Could Unintentionally Be Greece’s Commodity Price Boom

The Islamic State group (still strangely refered to as “ISIS” by many American media outlets despite its increasing presence outside of Iraq and Syria) continues to horrify the world with its barbarism, by for example launching terror attacks in 3 countries (Kuwait, Tunisia and France) in the same day, the Tunisian one being the bloodiest, with at least 39 people being murdered (and more being wounded) by the Islamic State terrorist.

But the fact that more people were killed in the terror attack in Tunisia than in the other attacks isn’t the only reason why it’s the most interesting. It is also interesting because until now, Tunisia has been pretty much the only country affected by the “Arab spring” that has seen its situation improve. In other countries, things have at best gone back to the original situation (like in Bahrain and Egypt), or at worst, as in Libya, Yemen and Syria, things have gotten far worse, with chaos and civil war that has paved the way for expansion of the Islamic State in these countries (particularly in Syria). Though Islamic State unlike in the aforementioned countries and Iraq, doesn’t hold any territory in Tunisia (at least not yet) this attack, as well as a previous one earlier this year, indicates that even Tunisia may lose from the indirect effects of “the Arab spring”.

Also, the intented effect of the Tunisian terror attack is of course mostly to scare away tourists from Tunisia, so as to weaken Tunisia’s economy and thereby better enable the Islamic State to later establish itself there and ultimately overthrow the Tunisian government. While they’re a long way from achieving that ultimate goal, the short-term tactical goal of weakening the Tunisian economy will no doubt succeed. Already, most travel agencies have cancelled flights of tourists to Tunisia, with some even evacuating existing tourists (even though the short-term danger is almost certainly over).

Which brings us to next interesting aspect. With tourists being increasingly afraid to visit Tunisia, they are instead likely to go to other tourist resorts, including for example Greece. Which means that Greece, now that it faces potential Argentina-style potential collapde, could benefit from an external factor that they had nothing to do with, just like Argentina did after 2002.


Update On Greek Crisis

One of the best columns about the Greek crisis that I’ve seen recently is this one from George Will. A fex excerpts:

“Voters chose Syriza because it promised to reverse reforms, particularly of pensions and labor laws, demanded by creditors, and to resist new demands for rationality. Tsipras immediately vowed to rehire 12,000 government employees. His shrillness increasing as his options contract, he says the European Union, the European Central Bank, and the International Monetary Fund are trying to “humiliate” Greece. How could one humiliate a nation that chooses governments committed to Rumpelstiltskin economics, the belief that the straw of government largesse can be spun into the gold of national wealth? Tsipras’s approach to mollifying those who hold his nation’s fate in their hands is to say they must respect his “mandate” to resist them. He thinks Greek voters, by making delusional promises to themselves, obligate other European taxpayers to fund them. Tsipras, who says the creditors are “pillaging” Greece, is trying to pillage his local governments, which are resisting his extralegal demands that they send him their cash reserves….

….If Greece so cherishes its sovereignty that it bristles at conditions imposed by creditors, why is it in the EU, the perverse point of which is to “pool” nations’ sovereignties in order to dilute national consciousness? The EU has a flag no one salutes, an anthem no one sings, a president no one can name, a parliament whose powers subtract from those of national legislatures, a bureaucracy no one admires or controls, and rules of fiscal rectitude that no member is penalized for ignoring. It does, however, have in Greece a member whose difficulties are wonderfully didactic.

It cannot be said too often: There cannot be too many socialist smashups. The best of these punish reckless creditors whose lending enables socialists to live, for a while, off other people’s money. The world, which owes much to ancient Athens’s legacy, including the idea of democracy, is indebted to today’s Athens for the reminder that reality does not respect a democracy’s delusions.”

Read more at:

And while we’re on the subject, it could be noted that while Greece before it elected the Marxists in Syriza (whose formal name is “the Coalition of the Radical Left”) because of an irrational constitutional clause, were recovering rapidly, it has now started to contract again while its primary surplus has turned into a deficit again and the bank system is showing signs of collapsing. This is while other former crisis nations are recovering (For example, while Spain’s unemployment rate is still painfully high, it is dropping faster than anywhere else in the EU), just like Greece did before they elected Syriza.

I have of course no idea how the negotiations between Greece and their creditors will end. But it should be clear that Greece has more to lose from a breakdown than its creditors.