WASHINGTON, March 9 (UPI) -- President Bush and the U.S. markets have benefited from recent events in the Middle East. And, up until now, Mr. Bush has acted with skill -- speaking softly and allowing events to play out largely on their own momentum.
In recent days, however, at least the prospect of an American over-reach has emerged. By no means have the forces of darkness achieved a reversal. There are, however, some early signs that should cause investors in the region to be alert, less a slip become a trend.
"All Syrian military forces and intelligence personnel must withdraw before the Lebanese elections for those elections to be free and fair," Bush blurted out on March 8. Leave aside for the moment the obvious infelicity.
The president's demand that Syrian troops withdraw from the country by May, begs the obvious question, "what if we don't?" In response, Bush tacitly answered, Syria will then become "more isolated."
My own guess is, if choosing between (1) giving up is cash cow in Lebanon while suffering humiliation abroad and at home, or (2) being "more isolated," Syria's Bashar al-Assad will choose "being more isolated."
More to the point, Bush's comments threatened at least marginally to take the onus off of Syria, and put the focus on the U.S. and Mr. Bush himself. Events were playing out nicely without a sabre rattle (let alone an ineffective one) from America. Syrian meddling is opposed not just by Bush, but by a coalition of the willing that in recent days had brought on France, the Saudis, and Egypt -- all wonderfully without American arm-twisting.
The rally of pro-Syrian forces in Lebanon this week, with its unexpectedly high turnout, may have irritated and surprised the president. Such is the way of most real revolutions in people power, however, from the Philippines to Yeltsin's Russia to the Ukraine. There are always government sympathizers, with money and guns to rally others. They can be beaten with a modicum of unity and tough-minded patience.
All this has happened, ironically, just as many observers have begun, at long last, to concede the force of the president's democratic imperative.
At such a time, it must be sorely tempting for Mr. Bush to pile on, keep the momentum going, to jawbone up the early (but highly tentative) success in the Middle East. Yet as victors from Lincoln to Churchill to Reagan knew -- and as Woodrow Wilson only learned the hard way -- in victory, magnanimity and humility.
Paradoxically, the more events seem to unfold naturally, with little pressure or bombast from the Americans, the greater the victory will be for Bush and his ideas. In dominoes, one need not micro-manage the fall of a dozen blocks. You just push the first one over, and, pprrrrbbb, krrr--rooolll, down go the rest.
THE BOTTOM LINE
Middle East markets have at once benefited from the hopeful trend of ideopolitical events and, at the same time, from nervousness over the price of oil.
The good trends are bound to hit some bumps in the road -- not only in a potential confrontation with Syria, but in wrangles over the Israeli budget, U.S. frustration over the presence of Al Qaeda in Pakistan and Iran, possibly in a second and more contested round of elections in Afghanistan. Israel and Turkey face domestic policy challenges as well.
And the latter -- $54 oil, which lifts all the economies of the region -- is likely to moderate. Major disruptions are already priced into the market.
In short it's time to take gains of 200 to 500 percent in Middle East stocks, depending on how long you've been invested, and put a 10 percent stop loss in below some more of your holdings.
The long-term trend remains strong, which is why "Bottom Line" and its clients are keeping a significant position in the Middle East. We would buy back on a spring correction. But no one ever lost money cashing in part of a gain. In, but lightening up.
(Gregory Fossedal is an advisor on global markets and ideopolitical risk to international investors, and a research fellow at the Alexis de Tocqueville Institution. His clients may hold long and short positions in many of the investment securities and opportunities mentioned in these reports. Investors should perform their own due diligence and consult their own professional advisor before buying or selling any securities. His opinions are entirely his own, and are not necessarily those of his clients, UPI, or AdTI. Furthermore, they are subject to change without notice.)
