Demands of Middle Eastern Protesters

The "Arab Spring" has a chance to really last if the protesters formulate and demand a coherent anti-imperialist and mainly economic developmental program





Some have compared the CIA backed Middle Eastern protests to the failed wave of liberal uprising around Europe in 1848. That description however may only apply to the protests against the regional monarchies and not the Arab republics.

This Pragmatist article from May of 2009 (forgive this early piece for its pro-US imperialist tone in some parts) analyzes political currents of some of the key countries and concludes that the region is similar to pre-WW1 Europe:

"The Muslim world is where Europe was in 1850-1900. Their brief "Napoleonic period" was the combination of Western world's brief occupation and Nasser's efforts. This introduced some of the wealthier Muslims to liberal values. As of today, Muslim liberals are slowly wrestling away social influence from blatant coalition of clergy, oligarchs, sub-national ethnic/tribal leadership, and Western educated authoritarian playboy aristocracy. Only these liberals provide genuine source of nationalism. They are the ones that have a real sense of moral indignation at poverty and their country's backwardness. The liberals want majority of their countrymen to be represented in broadly legitimate government, united, and have the modernization that unified national action can bring."

Genuine nationalism for most of the Muslim world is not yet possible. Large swaths of the population don't really have united societies or legitimate governments to really fight and root for. The clergy still effectively competes with state governments for people's affections. Sub-national affiliations are also very strong still. Influence of supra-national church and sub-national factions will decline as long as literacy continues to spread and college education becomes more widely available."

It was concluded that some parts of the region are now ready to begin engaging in genuine nationalism (bottom up nationalism versus top down Nasserist/Baath party efforts) and that this is dangerous within current international set up.

"It is very possible that citizens of the Middle East will become as willing to die for their artificial new countries as an average Frenchman or German was in the trenches of WW1." (The recent Robert Gates outburst that NATO cannot break the spine of western Libya betrays genuine amazement at the degree of nationalistic consolidation that Gaddafi achieved via his unifying and psychologically enriching Kaiser-esque rule)

Egypt, being at the forefront of this process, is key to the whole region. To try to avert possibilities of mass violence that genuine nationalism can unleash it was suggested that:

"United States can start promoting EU style pan-Arabism to skip the national step altogether. Free trade, common currency, and a loose confederate structure can go a long way towards confusing and splitting the energies of future Middle Eastern nationalists."

Many ethnic groups around the world have successfully skipped a nationalistic period so this is definitely doable. It appears United States is now following the advice of this magazine but perhaps for the wrong reasons (either to create exploitable chaos and deny the area to Chinese and Russians OR to eventually release pan-Arab unification energies as a bulwark against growth in Iranian influence [SCO connected country]).

If the Arab liberal protesters (children of well to do families) do not want their movements to be hijacked by the Western financial oligarchies, if they don't want to become a socioeconomic Trojan horse, then they will need a list of economic demands and not just political ones.

What can such a list look like?

1) A developmental national state owned bank that can provide large quantities of credit for infrastructure projects that bring employment to the "youth bulge"

2) Nationalization or 50%+1 control (Putin style) of key strategic heavy industries and using the profits to create solid safety nets

3) A legal framework to break the power of the landlords and to have housing cooperatives (individual tenants have shares of ownership in the housing complex, are collectively the landlord, and decide on apartment building management democratically)

4) Expulsion of Western military presence, of foreign banks (via regulation on speculators), and of parasitic structures like the IMF

5) A policy of neutrality concerning doing business with the West, Iran, China, etc.

6) A legal framework to deny corporations personhood and rights. Requiring foreign corporations to directly invest, share technologies, and find domestic partners if they want to do business (China/Russia style)

7) A legal framework for more horizontal, co-operative, and democratic corporate structures. Demand for democracy should extend to the workplace

8) Separation of church and state, separation of military and state, and separation of foreign interests and state

9) Peaceful pursuit of nuclear energy to power up agricultural projects, mass transportation projects, and other infrastructure

10) The right to unions and jump starting unionization via state help (to make sure private oligarchic interests don't overflow into the vacuum being left by the receding state power)

11) Shelter, food, medicine, and college education as a basic human right (tapping into psychological need to not only emulate aspects of other countries but to advance planetary socioeconomics via a uniquely Arab contribution)

That will definitely stick it to the tyrants. CNN, BBC, and other corporate puppets like British intelligence connected Al-Jazeera will be sure to change their tone in a heartbeat if such human centric demands are made. Maybe one of the demands should be total ban on garbage like CNN.

Many other economic demands can be added based on locality's preference. The Arab elites should be overflooded with tangible economic goals so they can do their usual meeting halfway song and dance routine.

To conclude, Western efforts to amplify and redirect genuine expressions of indigenous discontent can in turn be redirected once more via an economic program that is hostile to neoliberalism. Then we'll really see an "Arab Spring".

Egypt Protests and United States

Starting a chain reaction via Egypt may backfire on Washington as the dollar and US treasuries are not outcompeting the eurozone and gold. Investor capital and revolutionary fervor may not flow where desired.


In June of 2009, I hypothesized that Obama's speech at Cairo university was an opening shot towards an effort to destabilize the Middle East. Such a move would serve not only to deny the area to Chinese and Russians as US turns inward and spends next 10-20 years economically reorganizing (harder for influence of major players to expand into a region engulfed by chaos) but it would potentially allow such reorganization. That is of course due to chaos supposedly bolstering the image of US as a fortress of investment safety via propping up the worth of US bonds and the dominance of the dollar as reserve currency. In theory, this in turn would allow continuation of funding for US dominated imperial framework. When you owe money in a reserve currency that you print and have the muscle to wage inflationary currency wars, such an insane strategy may even appear sensible at first glance.

Since the Cairo speech, US has also tried to destabilize the Eurozone via informational warfare and by using its best tools for such tasks, the credit rating agency attack dogs. Obviously there is no point in creating chaos along swaths of the globe if capital moves to competing areas of perceived safety. It is no surprise that as thousands of people went into the streets of Cairo, Standard & Poor's downgraded Japan's credit rating from AA to AA-. Today, 01/28/11, we saw a typical reaction of the dollar and US treasuries gaining as investors moved out of a relatively strong regional stock market in Egypt (that sparked sell offs in stock markets around the world) and into US treasuries. The biggest mouthpiece of the American oligarchy, the New York Times, had the timing to chip in about the Eurozone not being a good place to move one's money. American elites saw how the stock market implosions around the world in 2008 had fed the US bond market. Considering the desperate measures of quantitative easing and the federal reserve now being the biggest buyer of US debt, nothing is off the table to allow debt based funding to continue a while longer.

However, there are signs that US is not getting the timing right with its full spectrum chaos stirring. At the same time as the Tunisian revolt occurred (its people greatly helped and inspired by a wiki"leak" of US being against the former Tunisian dictator), the Euro was fighting off an incredible amount of concentrated short positions against it. Those shorting it lost and had to buy back the Euro making it rise against the dollar even quicker just as Egyptians were catching the Tunisian fever. Therefore, today's violence on the streets of Egypt (with corresponding pressure on Mubarak by the White House) occurred when not all of dollar's competitors were suppressed.

Interestingly enough, throughout January, gold and silver backed ETFs experienced a massive sell off (even as physical demand remained at an all time high) thus driving down the price of precious metals in a way that couldn't be done by shorting any longer. It is possible that even with the history of major financial structures shorting and thus suppressing the price of precious metals, the ETF sell off was just innocently due to paper holders moving into physical. Having said that, the timing is very suspicious for dollar dominated Wall Street players to be dumping gold/silver backed paper and lowering the market price just as the euro and 2 fire starter nations were being pressured as well.

Egyptian unrest was a mixed bag with dollar edging higher but gold/silver and other commodities like oil spiking up even faster. Since buying commodities currently works as a de facto bet against the future of the dollar, Washington seems to have lost with both the timing (Euro not being down and out as Cairo was burning) and commodities continuing to be seen as competitors to the dollar as a safety destination.

It is rather hilarious how smug the US political and financial class is, thinking that they can stir social unrest abroad and be immune from it at home. Gorbachev also actually seemed to have thought that he'd manage to remain in control if hardliners in satellite nations were overthrown and perestroika minded leaderships took over in their place. The sheer pathological arrogance and hypocrisy of the Obama administration (note how protesters were dispelled near G20 meeting in Pittsburgh) has no limits. Egyptians and Tunisians are protesting the same exact things that Americans are suffering from. There is little guarantee that in the future, Tunis or Cairo will not dump the dollar completely and move into the orbit of Berlin, Moscow, and Beijing.

The good news is that China and Russia are now acting as stabilizers and firemen. Throughout 2010, every time the US based credit rating agencies attacked the vulnerable Euro states, China seemed to step in and help Europe out. They invested heavily in Greece and recently began to launder their dollars by buying Spanish debt. People's Daily, the official mouthpiece of Chinese communist party, kept reaffirming the importance and health of the E.U. We also had a tit for tat move of a Chinese credit rating agency downgrading US credit rating in November, claiming 'that the U.S. government's solvency is "on the brink of collapse"'. Additionally, Russian Federation's prime minister Putin went as far as saying Russia may adopt the euro in the future.

Next few weeks will definitely be interesting. US propaganda organs are now saturating with Egypt coverage. Maybe they can attach some spiffy color to the unrest as well. I will leave with a quote from the above mentioned Cairo speech article:

"If Obama is able to utilize human rights pressure and universalist respect to destabilize Egypt, the potential chain reaction would keep Muslims busy for a while while US deals with its economic depression. By pressuring Israel and stagnant Arab Republican governments on human rights, it is theoretically possible to cheaply accomplish a chain reaction of liberalization that Bush tried to do by force. The splash damage can conceivably reach Iranian and Syrian middle classes as well."

Future of Middle Eastern Nationalism

Most Middle Eastern countries today are not socially integrated enough to have real nationalism. However, Middle East in the near future seems headed towards same conditions that existed in early 20th century Europe. (Or the real reason why we should support pan-Arabism and be better friends with the Muslim world)



The Middle East is considered volatile yet there is reason to suspect that the region will become even more dangerous as people discover genuine nationalism. By that time, American authorities should complete transition from special relationship with Israel to special relationship with key Muslim countries.

Current American knee jerk support of Israel is considered dangerous due to sheer mathematics. If only 1% of 1% of 1% of 1 billion Muslims in the world have a homicidal emotional reaction to American financial support of Israeli military, that is 1,000 dangerous individuals. Numbers of Muslim individuals with an over the top emotional reaction (to billions of dollars of military aid to Israel annually) are much higher than this tiny fraction. However, anti-Western violence so far has been only sporadic and committed by religiously influenced, the social outcasts, and the poor. Middle Eastern elites and the middle class sympathize with Palestinians only as much as western liberals sympathized with blacks fighting against the Rhodesian military. That is, very little. To Middle Eastern elites, Palestinians are just uneducated dirt poor trouble makers who provide one more wedge issue in politics.

As of today, most Muslims that manage to acquire college education in their respective countries, utilize their newfound rise in consciousness for material betterment, Western emulation (of lifestyle and/or political/business practices), or emigration. Many of the college grads are co-opted by the West to such a degree that we practically expect capitalism and political liberalism to "soften" Muslim populations. However, what is not looked on are long term trends that college education brings.

It is true that today many college educated Muslims become political liberals and serve as a cultural Trojan horse for the West. They are the ones who clearly see their fundamentalists as the uneducated peasants (since they have to live close to them) and keep them in check. They also paralyze and challenge their governments through constantly trying to soften and eliminate corruption of patrimonial and authoritarian structures.

The Muslim world is where Europe was in 1850-1900. Their brief "Napoleonic period" was the combination of Western world's brief occupation and Nasser's efforts. This introduced some of the wealthier Muslims to liberal values. As of today, Muslim liberals are slowly wrestling away social influence from blatant coalition of clergy, oligarchs, sub-national ethnic/tribal leadership, and Western educated authoritarian playboy aristocracy. Only these liberals provide genuine source of nationalism. They are the ones that have a real sense of moral indignation at poverty and their country's backwardness. The liberals want majority of their countrymen to be represented in broadly legitimate government, united, and have the modernization that unified national action can bring.

Genuine nationalism for most of the Muslim world is not yet possible. Large swaths of the population don't really have united societies or legitimate governments to really fight and root for. The clergy still effectively competes with state governments for people's affections. Sub-national affiliations are also very strong still. Influence of supra-national church and sub-national factions will decline as long as literacy continues to spread and college education becomes more widely available.

Inefficient traditionalist leaderships will be replaced with either:

A) more representative liberal democratic ones or
B) modernizing illiberal authoritarian ones.

Then, large amounts of people's productive energies can be released and the economy can grow and diversify beyond commodities. National integration and legitimate government will allow people's influence to readily flow beyond the borders. Muslim societies will be felt abroad in new ways when genuine nationalism comes to the region.

We've already seen governments use appeals to nationalism as a tool of national integration in Baathist Syria/Iraq, Algeria, Ayatollah's Iran, and Naser's Egypt. These nation building attempts were only semi-successful since they came from the top and not from genuine bottom up social pressure. The authorities, for the most part, managed to prevent Yugoslav style civil wars and successful transformative revolts against the ruling government structures. Baathist militarism has shown that people (even those recently united within borders made by Westerners) can still expand a lot of violent energies.

The Muslim power elites in leadership have failed however at truly acquiring popular legitimacy without resorting to force, welfare handouts, or external scapegoats to redirect peoples domestic discontent. The top-down nationalism was a blatantly artificial endeavor coming from elites that were often tainted by Western education and ideology. Their legitimacy was never based on solid foundations of strong moral support from the rich and the poor as well as from the uneducated and intellectuals.

Baathist Iraq and Syria were similar to Kaiser's Germany in their provisions of social safety nets, mass education, forcefulness of violence to bring multiethnic factional peace, making oligarchs/church subservient to central authority, and their independent belligerent attitudes. Iran was on the same Baathist path during the 1979 revolution but their modernizing socialists have been co-opted and browbeat by the provincial traditionalists and theocrats. Forceful modernization of infrastructure that is backed by educated nationalists is inevitable and will touch every part of the region. The only question is whether nationalism will be expressed through a developmental authoritarian manner or a democratic liberal manner.

Early 20th century France and England provide the liberal democratic alternative to developmental authoritarianism. Some Muslim countries will choose this road if their liberal elites are skillful enough to create a peaceful structural framework for factional expression and elite infighting.

Muslim developing countries (as well as many non-Muslim ones) are yet to reach a stage where the ruling ethnic group integrates others in an artificial structure of a nation to a sufficient degree. The sufficient degree refers to a point when national energies are not focused inward on stability efforts but focused outwards on physical or socioeconomic expansion. It is very possible that citizens of the Middle East will become as willing to die for their artificial new countries as an average Frenchman or German was in the trenches of WW1. Even during the height of the Iraq-Iran war stalemate, the sheer numbers of casualties proportional to total troops were not as great as in WW1. We're all familiar with the lack of total Arab commitment during wars against the collectivist and socially integrated Israelis.

Future college grads in Muslim countries will not be the gentle sell outs many in the West hope them to be. We can expect the sheer number of individuals with 5 key characteristics to rapidly increase.

The characteristics are:

1) Sufficiently psychologically empowered through indigenous high education. Confident in ability to exert oneself on the world

2) Physiologically temperamental and emotionally angered by:
-dozens of billions of dollars given to Israel by USA over the decades
-artificially drawn borders rather than borders that were fought for
-pushy regional powers like Iran, Saudi Arabia, Israel as well as their powerful backers

3) Would rather do post-materialistic activism than materialistic empowerment. Abandonment of materialistic values (alongside traditional/religious values) has the potential for dangerous new value creation.

4) Socially, ethnically, and economically integrated into their country and have sufficiently internalized the country's new values.

5) Feel a joint sense of ownership over their society with fellow citizens and think their government is legitimate. This in turn, would allow genuine feelings of nationalism to be felt.

The new wave of intellectuals in the Muslim world will want to rapidly close the modernity gap between their societies and the West. Since the focus of energy exploration is slowly switching from the Middle East to the Arctic, the future nationalist leaders of developing world will find themselves in great difficulty. Technology is allowing cultural change to happen much more rapidly than in early 20th century Europe. Subsequently, modernity will hit large swaths of the Middle East harder and quicker than it did Europe. We are looking at an entire generation of Middle Eastern intellectuals growing up with the same access to information and hedonistic desires as their Western counterparts. Once the Internet educated reach positions of power, their desire to be more forceful in modernizing cannot be overlooked. Western world cannot permanently hope that Middle Eastern nations will never socially solidify to exert themselves like Germany and Italy did. The historic multi-ethnic character of many ME's countries allows greater respect of minorities unlike a region such as South America (where minorities are noticeably different descendants of conquered peoples and slaves). Interethnic respect, combined with reduction of tribal and clergy influence allows for European style nation formation with all the risks involved.

United States must pull the financial aid plug on Israel immediately and permanently. US created a special relationship with a miniscule country in a region where national elites used sheer presence of Israel to consolidate their domestic power. United States has given over 17 billion dollars in military aid to Israel in just the past 15 years. It is time to stop counterproductive financial/moral support of a Middle-Eastern equivalent of Rhodesia. There are plenty of key Muslim states in the region to side with instead. Current fundamentalist extremist threat is nothing compared to potentiality of entire populations of integrated nation states getting very angry.

Mathematically, if US continued the dangerous and strategically masochistic support of Israel into the next 20 years, we are looking at secular nationalist hatred with up to hundreds of millions of sympathizers. The mathematics of 1% of 1% of 1% are one thing when the call to arms comes from a grown man who believes in ghosts and is conducting criminal activity on the level of pirates and the mafia. The same mathematics become much more troublesome when the anti-western call to arms comes from popularly elected leaders of legitimate governments for whom people are willing to get drafted for.

That is not to say that the new Iraq will collapse like Weimar Germany and elect a Hitler equivalent or that a modernizing anti-monarchist Arab Lenin is teaching in some university right now. It could very well be that Middle Eastern intellectuals will decide to mostly continue on a mixture of oppression and investment/emigration to Western societies indefinitely like their South American counterparts. Horrid map redrawing nationalist violence and 20th century style ideological struggles are equally possible and can be prepared for by the world's leading militaries.

United States can start promoting EU style pan-Arabism to skip the national step altogether. Free trade, common currency, and a loose confederate structure can go a long way towards confusing and splitting the energies of future Middle Eastern nationalists. Peace can be managed better as regional leaders can discuss matters of stability and extremist activity without the shadow of Israel endlessly resupplied by United States ( http://www.worldpolicy.org/projects/arms/reports/israel.lebanon.FINAL2.pdf). Pan-Arabism serves as a good counterbalance and moderator of both Israeli and Iranian meddling in the region. It can also potentially inspire net savvy Arab intellectuals more than lines on the map drawn by Westerners.

If the two world wars taught us anything, it is that we should be on the look out for social situations where such aggression can happen again. In the near future, Middle East seems to have what it takes to potentially develop key aspects of Europe before the two world wars. They are:

1) National consolidation after the founding authoritarian fathers have passed into history. Genuine bottom-up nationalism that is energetically supported by most of the population as well as the educated

2) Time of rapidly induced modernity. Corresponding social unrest and vast cultural split between the 20 somethings and 60 somethings.

3) Displacement in the power of a region wide church by secular legitimate governments. Subsequent moral vacuum.

4) Desire to redraw the national lines in a time of economic difficulty and social tensions (depletion of resources to export and thus elimination of economic base)

5) High fertility rates and populations that are on average far younger than Western populations

Time for world's major powers to work together to sidestep the Israel/Palestinian sideshow and to force Israel to accommodate the people it has surrounded in the Gaza Strip ghetto. Then work can begin in safely diffusing nationalistic energies into a productive pan-Arab economic union. Westerners need to stop pressuring Arabs to democratize or liberalize too rapidly. That pressure is already enormous from just cultural sources and is very dangerous for stability. We're better off with gradually modernizing authoritarians than a possibility of a Weimar democracy that releases popular discontent.

Price of oil explains change of violence in Iraq more than American stabilization efforts ( "The Surge" of troops in Iraq was a fig leaf to cover up surrender to some of insurgent demands )

Surging price of oil up to summer of 2008 gave Iraqi government increasing resources to buy loyalty. Sunni insurgents realized they will lose in a protracted struggle and decided to exchange the weapon of Al Qaeda for American money and protection




It seems that fluctuations in the price of oil (and Iraqi people's reaction to it) is the best determinant whether Iraqi violence falls or rises. The Surge is thus not a success and the situation in Iraq is more precarious than most people realize.

We had it drilled into our heads that correlation is not causation so why does everyone automatically think that a few thousand extra troops did the trick in Iraq? Lets dissect the surge of these 20,000 troops. They were prudently put into more spread out urban checkpoints instead of the previous strategy of being sitting ducks in bases or patrolling ducks in humvees. They also came at a time when ethnic cleansing in Baghdad had made neighborhoods more homogeneous and thus better defended. Troops involved in the surge arrived past the peak oil equivalent of ethnic cleansing when it became increasingly costlier and more energy intensive for Shiites and Sunni kidnappers to get at each other with electric drills. Whereas before nationalist Moqtada Al Sadr could send out squads of people (and use the quantitative advantage of Shiites in Baghdad) to net maybe 50 bodies a day, now more planning and energy was required for same amount of kidnappers to kill say 30-40 a day. Nationalist Sunni insurgent leadership faced a similar problem as they exploited a religious ally of Al-Qaeda to inflict damage on numerically superior neighbors (think of it as Bronx using suicide bombers to stop hordes from Queens from overtaking them). The economics of ethnic cleansing began to work against it and it began to fizzle out just like many American oil wells in the 50s and 60s. Al-Sadr seemed to have gained the upper hand however.

Lets not forget the maze of concrete walls that was finally erected to further defend the repartitioned parts of the capital. Iraqis did rather brazen things but they're still humans and cant walk through walls. Reinforced concrete barriers work as Israelis have been showing for a while. The spirit of Cold War Berlin has finally found rest in a new host. So did adding extra troops to reinforce the police city state modeled on Fallujah end the scourge of ethnic cleansing and insurgency?

They did contribute in speeding up reduction of inter-ethnic violence that was already occurring by providing additional barriers. However, that's like saying that Americans won WW1 by themselves. Bush administration was keen to point to incredible drop in troop deaths in Anbar province but the extra troops in Anbar were not a significant force by any measure. They were even smaller than the tiny amount sent to patrol the capital of over 5 million people. England had 30,000 troops for years to guard against violence from IRA (whose active insurgent numbers were always in a few hundreds) and Russia had dozens of thousands to prevent isolated bands of rebels in Chechnya. The American surge of 20,000, split between a vast province and a populous city, was a laughable concept from the beginning.

But isn't the divide and conquer strategy of paying off former insurgents to not fight the Shiite dominated puppet government part of the bells and whistles that is "The Surge"? Isn't giving a few hundred dollars a month to destitute Sunni rebels (with a promise of more) a part of the Surge strategy to split the Sunni coalition of nationalist/secular fighters and the vicious foreign ideologues? That depends on the definition of the surge one is working with. If having a surge of money, to give to a former enemy so they fight a less negotiable common enemy, is all that was needed, then why send 20 thousand additional exhausted Americans in harms way? Couldn't some troops already there be shuffled around to bring bags of cash to those Arab tribes willing to become traitors and collaborators? Alright perhaps that was harsh. If anything, active co-operation with most of the insurgent leadership was a sign that Americans have lost against the rebellion and were honoring them as partners whose input was taken into account. You don't bargain with the head of a local rebel faction on how much to pay his men if you think you have a chance at killing him and his men or sending them off to prison. Perhaps the insurgent leadership thought it was more patriotic/less collaborationist to humiliate Americans with taking their money in return for not killing American soldiers at a rate of 5 a day. It's unfortunate that when US leadership finally decided to listen to advice of making alliance with former enemies against worse enemies it took nationalist Sunni leadership (rather than British leadership) to get such open ears.

Why would this be less collaborationist for Sunnis strategically speaking? Sure, Al-Qaeda fighters were getting too big for their breeches, terrorizing many Sunnis and imposing religious extremism in some areas that would never be tolerated under Saddam. But the net strategic benefit of them using psychologically weak young men as suicide bombings against Americans, Kurds, Al-Sadr's men, and Maliki's men outweighed the inconvenience of having them around. There was a more troubling development occurring globally that made Sunni insurgents betray their best ally of convenience and thus painfully sacrifice their most effective weapon. The price of oil spiked between 2005 and 2008 to levels not seen in a long time. Maliki's puppet regime began acquiring sufficient funds to pay off not just loyal police/army forces but also funds to start divide and conquering Sunnis without American assistance. Salaries of collaborators and armed men working for Maliki started to increase. 95% of Iraq's economy is oil based. The central government, that was formerly weak and dependent on Americans for protection, began to be able to increasingly not only protect itself but expand its influence. As the price of oil rose to over 140 dollars a barrel, Iraq has accumulated almost 80 billion dollars by the summer of 2008. Of which 30 billion are safely locked up in Manhattan,  

"The Baghdad government has about $30 billion deposited in the Development Fund for Iraq at the Federal Reserve Bank of New York"

Insurgents tried for a time to prevent such funding by continuously sabotaging the oil pipelines. It worked for a time but the price of oil kept rising and it even became profitable to start shipping oil by truck in armed convoys. The bulk of the efforts of the government, as well as the Americans, was focused to ensure protection of the export. Maliki, being an incredibly good strategist realized short term considerations, such as the quelling the rebellion and provision of social services, could wait and would be solved eventually through acquisition of sufficient funds. The rush to export as much as possible led to not only increase in corruption (resulting in occasional ludicrous events) but also brutalization and reduction in quality of loyalist forces.

Although many insurgents made money off the oil themselves to fund their operations, the government continued to make disproportionately more and gain a foothold in the minds of its numerically superior voting blocks. Central government could now stop pretending to be a puppet and start exerting itself to push Americans out so it could wipe out Baathist remnants. The current ruling Dawa party in Iraq started off as a terrorist organization and actively supported Iran during Iraq's war with it. The party that was for years protected by Americans actively and continuously betrayed Iraq nation state even as hundreds of thousands of Iraqis died and were maimed on the battlefield in the 80s. It was for years funded by Iran and is still indirectly helped by it. Such an impudent and now domestic power with the backing of many educated Shiites and friendliness to Iran was a far graver long term threat to Sunni nationalists than the 20 year old Americans occasionally venturing from their bases.

For the Bush administration, negotiating with insurgents who until the moment of negotiating were branded as mostly terrorists was a humiliating politically dangerous act that needed a good pitch to the American people. Admission of defeat against the rebels was marketed and sold as a change in American tactics and ordinary Iraqis rising up and throwing off the yoke of al-Qaeda. 20,000 extra troops were a fig leaf for this turning point in relations with the rebellion. Sunni insurgents bargained away their best weapon but gained more power, temporary peace, and better public relations by exterminating large quantities of foreign fighters.

Continuing to fight American forces (even with al-Qaeda's help) would keep weakening Sunni nationalists and allow Maliki to further consolidate, grow, and win. That was deemed unacceptable by insurgent leadership and they created a temporary alliance with the Americans to not only re-organize and humiliate Americans but also to make Maliki seem weaker and less popular in the minds of his supporters. Maliki appeared to be cutting a deal with Sunni militias through tacit consent of American plan and thus inability to shake off the image of a puppet.

Maliki successfully countered his pubic relations reversal by invading and occupying Sadr city. Why wasn't Muqtada al-Sadr able to prevent government's invasion of his home turf and the key Baghdad neighborhood of his power base? Before, when the price of oil was lower and the government less consolidated, Sadr effectively provided for some welfare and social needs of his supporters by creating a de-facto area of governance. He competed with Maliki's political faction by showing that he is 1) more nationalistic and determined to expel the Americans by having actually fought them twice 2) better able to protect Shiites from Sunni/al-Qaeda attacks and 3) more focused on improving quality of life for areas under his control. Times have changed and Maliki had more money to play around and offer to supporters so Sadr bowed to pressure to re-organize. Fighting Maliki was not an option at the time.

What does this mean in terms of the surge? It means that the possibility is there that the surge in the price of oil has done a lot more for Iraq's seeming drop in violence than extra 20,000 Americans. Now that the price of oil has fallen dramatically and might remain so indefinitely as the recession continues, Maliki is burning through his reserves (that he saved for a rainy day) at an incredible rate. Obama seems to realize how dangerous Iraq is to being destabilized again and that explains the slowness of the troop withdrawal. Sunni insurgents increasingly see American soldiers as good allies for protecting them during this period and are waiting for the oil based economy to come crashing down so they can exploit a weakness in Maliki's coalition. Recent increase in bombings and violence seems to indicate that just 6 months of low oil prices are already destabilizing the situation somewhat. It is not known how fast the billions of dollars to pay off loyalists will be spent. It's possible that Obama will try to use sudden reversal in Maliki's strength to force through major agreements between Sunnis and Shiites. Such an agreement was more difficult before without the drastic act of retaking Baghdad with American/formerly Baathist forces. Keeping a lid on the civil war from resuming earlier than Obama's re-election is key if Obama is to implement his long term agenda over 8 years and to choose his successor.