It seems nothing escapes the death-grip of rising inflation these days. The NYT has a very nice story today about how rising inflation is hitting the oil-rich middle east.

The middle-eastern countries are really in trouble. They’re sandwhiched on one side, by the falling dollar. Their curriencies, which are usually pegged to the dollar are bearing the brunt of the falling dollar, fuelling inflation in their local economies. On the other hand, the rising oil price is making the rulers rich, but at the cost of the local people.

The “Dutch Disease”, as it’s called, is deadly. Basically, the rising price of fuel is making the oil industry very lucrative, and that means the rules/dictators are getting lots of money from selling oil, and they don’t need to pay attention to the local economy any more. This means widespread perception of corruption and nepotism, as the regular people see the rich rulers and their friends get richer while they slip more and more into poverty.

This presents a real problem for the stability of the middle east. As the poor people see that they are not getting any spoils of the rich oil wealth, it presents a ripe oppurtunity for revolution and bloodshed, as the people strive to get a more “fair share” of the countries riches.

This is basically the situation in oil-rich African countries like Nigeria. This is not looking good for the world.

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