Iraqi election workers count ballot papers March 7, 2010 at a polling station in Baghdad, Iraq.

Majid Jafar, CEO of Crescent Petroleum, suggests in an article titled “What can the Middle East learn from the US shale boom?” three ways for regional policymakers to bring interconnectivity to the Middle East’s oil and gas market as well as accompanying infrastructure. These steps are intended – in his words – to “unleash a huge transformation in the energyindustry in the Middle East region [thereby instilling] the confidence [in private sector investors] to make energy investments using thetransparent and EU-linked energy pricing.” He calls for:

1. Swift liberalization of Middle Eastern energy markets along with the establishment of a mid-point gas hub in Turkey between Asian and European gas markets as an expression of energy connectivity between the regions.

2. Further deregulation of energy infrastructure access, construction and expansion by dismantling the state monopoly structure, which is in place across the Middle East.

3. A much bigger role for the private sector in the energy industry by shifting the state’s role from a player to a regulator.

In general, Mr. Jafar argues for greater energy integration with obvious benefits for participating countries. It gets interesting, however, when he frames his argument around geographic scale and market access/development while attempting to draw a parallel with the US shale revolution. Mr. Jafar identifies the “combination of entrepreneurialism and technology applications” as main drivers for the US shale gas and shale oil revolutions resulting in “cheaper energy and massive domestic supply security.” Most importantly, he elaborates:

“[V]ery similar conditions apply to Europe and the surrounding energy-rich regions. (…) While we accept the great energy interconnectivity and the highly liquid energy markets in North America, including Canada, we still debate the doability of such connectivity and market development in the context of the Europe-Middle East-Caspian-North Africa-Russia circle. (…) Within a radius of 2,000- 3,000 km – the typical length of major oil and gas pipelines – the EU, mainly via Turkey, could connect to more than 50% of global proven oil and gas reserves, excluding Russia.”

While his view constitutes a laudable long-term vision for tighter linked and more efficient energy markets helping both the EU to diversify crucial energy supplies away from Russia and the Middle East to achieve sustainable economic growth for a predominantly young population, it would have to overcome one main roadblock: political reality on the ground. Before addressing this reality, let’s first turn to at least two other factors – equally important and well documented – conducive to the US shale boom that deserve to be mentioned: mineral rights on private lands in the US belong to the respective landowners and, above all, geopolitics play no role in investment decisions.

Emphasizing that “from the Middle East region’s perspective, (…) [e]nergy trade and interdependency underpinned by long-term import agreements and infrastructure connectivity does indeed deliver huge prosperity as well as geopolitical stability,” appears to represent in the case at hand a phenomenon of ‘the tail wagging the dog’. Security and (geo)political stability on the ground are prerequisites for trade-related, cross-border infrastructure investments; especially, if existing infrastructure connecting from the Middle East via Turkey to Europe is inadequate. Crucial pipelines from production centers would have to cross Northern Iraqi and Syrian territory. Much of this territory is currently held by ISIL, which entails a plethora of security concerns. Moreover, many governments in the region are autocratic in nature – and therefore appreciate state monopolies – and even if some kind of democracy is detected, it has nothing to do with what we regard as Jeffersonian democracy. Consequently, Mr. Jafar’s above suggestions do not align with current and/or medium term political realities in the Middle East. Moreover, there are less politically volatile regions for new investment across the globe.

Granted that the Middle East holds 48.4 per cent and 43 per cent of global oil and gas reserves, respectively, while, for example, supplying 24 per cent of respective global crude oil, which suggests that the Middle East would benefit from new market access.

Top Proven World Oil Reserves, 2013

However, it is also important to remember that domestic energy demand in those countries is growing rapidly – eventually allowing for less oil and gas to be exported to international markets. Nevertheless, Mr. Jafar’s suggestion to connect a major energy demand center to a major production center via Turkey is in line with his company’s strategy. In this respect, it is helpful to understand Crescent Petroleum. Crescent Petroleum is a Sharjah-headquartered (United Arab Emirates) and the oldest privately owned independent petroleum company in the Middle East – a region dominated by national oil companies (NOCs) and international oil majors. Further, it is not an entirely new idea to link up Europe with the Middle East. This finds expression in the fact that Europeans continue to refer to the region as “Near East” in contrast to “Middle East”. The latter dates back to at least 1902 when the American naval historian and geostrategist Alfred Thayer Mahan used the term “Middle East” to describe the Gulf region.

In sum, it seems that by consciously trading geopolitical stability in crucial Middle Eastern countries for ‘messy’ democracy – with many countries having no democratic track record throughout history – security conditions on the ground will hinder closer interconnectivity of adjacent energy markets for the time being.