When there is a crisis like a civil war in an African country it becomes a part of the last page of a newspaper. But if the same crisis were to happen to oil exporting countries like Iraq it hits the front pages and the entire world watches the development with fear and anguish.
Currently the Sunnis in Iraq joining hands with the Sunnis of Syria have formed an insurgent group called ISIS and have started a civil war in Iraq which is spreading across the country rapidly. There is a growing perception among the Sunnis that they are being persecuted by the Shia dominated government led by Prime Minister Nauri-al-Maliki. ISIS army has made significant advances and currently controls hundreds of square miles and the local army have run away seeking shelter. This is not the first time. In 2006, al qaeda in Iraq under the leadership of Abu Musab al-Zarqawi ignited a war against the Shia majority. They bombed Al-Askaria mosque, an important Shia place of worship but the leader was killed by the American forces. The US army correctly evaluated that this movement will revive and come back later as a bigger force which has happened. Currently the objective of ISIS (Islamic State in Iraq and Syria) to create an Islamic state across Sunny areas of Iraq and Syria. Will the ISIS succeed? What do they want?
- It wants to establish an Islamic caliphate or state stretching across the region.
- It wants to establish Sharia laws.
- Boys and girls must be separated at school.
- Women must wear the NIQAB or full veil in public.
- Music is banned.
- The Fast is enforced during Ramadan.
To finance its activities ISIS will use the cash reserves from Mosul banks, which it has taken over. They will use the military equipment from seized military and police bases and release the 2500 Sunny fighters who have been kept in the local jail. The entire free world is in a quandary. How powerful is the ISIS? CNN says ISIS has significant weakness and has no skill to govern and are generally unpopular. But in the opinion of Soufan group, a major political risk consultancy “ISIS has become indisputably effective and a ruthless terrorist organization in the world. It has attracted significant number of fighters not only from Syria and Iraq but also from Saudi Arabia and other states including Jordan”.
Currently the Brent crude is hitting $ 115 a barrel and WTI is around $ 108 a barrel. Indian oil import bill in the last financial year exceeded 165 bln $. With the price moved up to nearly 15 percent, our import bill will move up at least by 10-15 billion dollars. If this cost is passed on to the public, CPI will move into the double digits. RBI has no choice but to push up the interest rates and this will slow-down the economy. PM Modi’s job has already been made difficult by the poor country’s finances; thanks to the UPA and the Iraq situation will only make it more painful.