The Middle East may be riddled with political unrest and near constant warfare, but on the business end, its stock markets could not be performing better. Improving global economic and political conditions have created a conduit for the Middle East to grow into the second richest emerging market in the world.

The Middle East isn’t just a bubble. Since 2000, the Middle East has grown at a rate greater than 5% per year, without any large draw downs in growth. Higher commodity prices, including crude oil, have allowed the Middle East to profit heavily on exports while importing very little. Some investment concerns do remain, including high levels of debt that have not been reduced even in a positive economic climate, NASDAQ reports.

Two ETFs, iShares MSCI Turkey Invest Mkt Index (TUR: Quote, Profile, Advanced Chart, News) and iShares MSCI Israel Cap Invest Mkt Index (EIS: Quote, Profile, Advanced Chart, News), each show large year-to-date returns in 2009 of 30.9% and 33.5% respectively. This recent growth for both ETFs is illustrated in the following chart.

The Turkish market has overcome political turmoil to recover from a potential disaster. Trang Ho of Investor’s Business Daily explains that the market in Turkey responded favorably to a court decision allowing the country’s leaders to remain in power. Since the unveiling of IShares MSCI Turkey ETF (TUR) at the end of March 2008, the fund has increased in value by 21% and is trading at its all-time high. Interestingly, TUR didn’t take the shortest path to this growth. The Investor’s Business Daily article points out that business and consumer confidence, as well as political certainty, had been falling for several months, reaching a new low in June before a major turnaround at the beginning of July. Zach Witton, an economist at Moody’s, shares his point of view on the recovery of the Turkish market by saying, “The ruling could also encourage foreign investment, which has been on a downward trend because of the global credit crunch. Political uncertainty made it harder for Turkey to finance its large current account deficit.” The 75-stock Turkey ETF (TUR), most heavily weighted in financials (38%), grew 23% in the month of July alone to reach a new high.