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Why The Fiscal Cliff Matters To The Middle East

Nov 25, 2012
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As we've heard, there's a lot of political energy going into the fiscal cliff negotiations in the U.S. at the moment. Since all of our economies are linked in a global network, we thought we'd see how the U.S. fiscal conundrum is being viewed from elsewhere. Yesterday, my colleague Scott Simon got the perspective from Europe. This morning, I'm joined by Borzou Daragahi, the Financial Times correspondent in the Middle East.

Mr. Daragahi, thanks for joining us.

BORZOU DRAGHAHI: It's my pleasure.

MARTIN: As we've already heard in this morning's show, there are obviously tense situations across the Middle East right now. So why does the current American financial crisis matter in this part of the world?

DRAGHAHI: Well, I think one of macroeconomic level it matters very much so. Large parts of the region are very dependent on oil revenues. And, you know, we've even seen over the last couple of weeks, every time there's been hope for resolving this sort of fiscal cliff issue in the U.S., price of oil and other commodities has gone up. And every time there seems to be another impasse and the hopes go down, the price of oil and other commodities appears to go down. And so, you know, on a very fundamental level there is an impact.

But also, what you've had in the Arab world over the last few years is a proliferation of satellite news channels. And I think people would be surprised at just how well-informed people in the Arab world are, especially about American politics. People have a very sophisticated understanding.

They know that Obama has had this long fight with the Congress. They know that there is a bifurcated system in the U.S., where you have these two parties that have been at it for a long time; that there is a sort of balance of power. And, you know, this is something that some of the people aspire to and some of them see as just a recipe for chaos.

MARTIN: I mean, there are a lot of countries in the Middle East, in that part of the world, that looked to the United States for guidance when it comes to their own economies, as some kind of steadying hand in a way.

Are they surprised that the United States may end up being a destabilizing factor for their own economy?

DRAGHAHI: I think there is a little bit of surprise when people find out just how deep of a hole the U.S. is in economically in terms of the debt and the deficit. That is not, you know, something that's commonly known. On the other hand, there are policymakers who are somewhat gloating at the dire straits that not just the U.S. - Europe as well - has gotten itself into because of the financial crisis.

MARTIN: Are there political leaders in the region who have been trying to frame the financial crisis in the United States to their own advantage?

DRAGHAHI: What you have seen is people taking the metaphor of the fiscal cliff and it's really interesting how it translates. In Arabic, it would be the (Foreign language spoken), financial cliff. But it can also mean the financial abyss, which is a lot more of a darker way of putting it.

And people talk about, you know, the financial abyss in Egypt, for example. What they're referring to is the drain on revenues because of subsidies and the lack of income because of the global economic crisis, and what that means and how they need to step on the gas in terms of getting the economy in order. Otherwise, you're going to fall into the financial abyss.

And that sort of interesting, this metaphor of a looming deadline, has taken on its own life in the region.

MARTIN: The United States and Iran obviously have such a complicated political dynamic. I'm wondering how you have seen Iran react to the U.S. financial crisis. How are they framing it?

DRAGHAHI: Oh my, I mean I think the Iranian media has been covering the fiscal troubles in the United States more closely and better than any of the other countries' media. And they've been covering it with like a mixture of glee and schadenfreude, because they are suffering their own big economic problems. And so, to the extent that they can, they often in their media focus on big, huge stories about the economic troubles in the West, while ignoring the economic troubles in Iran.

And this has been a bonanza for them, talking about the irresponsibility of the Americans, the trouble they're in economically, how their economic model is an utter failure because of this fiscal cliff which they, you know, at any given opportunity try to exaggerate the impact and the significance of.

MARTIN: Borzou Draghahi reporting on the fiscal abyss, as it's called in the Middle East. He is a Middle East correspondent for the Financial Times.

Thanks so much for talking with us.

DRAGHAHI: It's been such a pleasure. Thank you. Transcript provided by NPR, Copyright NPR.