From Electoral Politics to Coronavirus Response: In Israel, Apartheid Mentality Reigns
Israel’s longstanding political crisis didn’t end due to some altruistic desire to pull together in a time of crisis, it ended because Israelis were faced with a choice, work with Arabs or throw it all away, writes Miko Peled.
Jerusalem, Palestine — Once again, Benjamin Netanyahu wins big in Israeli politics. Even as his main opponent, former Israeli army chief Benny Gantz was given a mandate to form and head a coalition government, Netanyahu, indicted and presumed to be on his way out, managed to pull in Gantz, break up the Blue and White opposition party, stop the coalition from forming, and remain on top.
Fifteen seats
In an unprecedented upset, the Arab Joint List, a coalition of four predominantly Palestinian political parties, was able to win fifteen seats in the Israeli Knesset. This made them the third largest block within the legislature. They were going to support a Gantz-led government from the outside, which means they would not be a part of the actual coalition government. This is an enormous gesture on behalf of the Joint List, whose constituents are primarily Palestinian citizens of Israel, the country’s most disenfranchised group of citizens.
It was a moment of sweet illusion when, thanks to the recommendation of the members of the Arab Joint List, Gantz was given the mandate to form a government and be the first politician to get Netanyahu out of the Premier seat in over a decade. However, that moment did not last long. It was naive to think that an Israeli politician would agree to rely on Palestinians to advance his political career – this would be a stain he could never erase. It was also naive to believe that there is anyone in Israeli politics that could not be outsmarted by Netanyahu.
General Gantz
Gantz is a good soldier, he had a long career in the service of the Israeli army, which ended after four years of being at its head. Throughout his career, Gantz was responsible for countless dead and injured Palestinians and unspeakable destruction all over Palestine and Lebanon. As army chief, he led the IDF during two bloody massacres in Gaza: one in November of 2012 and another, in the summer of 2014. The second was perhaps the worst massacre of Palestinians ever perpetrated by Israel. It lasted over 50 days in which 2,500 Palestinians were murdered and tens of thousands were injured.
Now, still a good soldier, Gantz obeyed Netanyahu, who was his boss while he was in uniform. He obediently broke up his own political alliance, Blue and White, threw his political allies under the bus, and turned his back on the voters. He also reneged on the one campaign promise that got him elected to begin with: to unseat Netanyahu.
Apartheid is a state of mind.
No Zionist political leader will rely on a Palestinian party. That is because the Israeli apartheid is not just a system of government, it is a state of mind. Israeli racism is deeply institutional and deeply personal to a point where a career politician, in this case, Benny Gantz, gave up the chance to be Prime Minister because it meant he would need to rely on Palestinian citizens of Israel.
One of the criticisms leveled at Gantz was that he was going to rely on the members of the Arab Joint List for his coalition, even though they had made it clear that if it came to a vote, they would never support another assault on Gaza. Furthermore, the members of the Joint List are opposed to the so-called Trump peace plan and are known to support Palestinian prisoners held in Israeli jails. The acclaimed Israeli author David Grossman, considered a beacon of the “Zionist Left,” called on Gantz to work with the Joint List, he added, “even though I find some of their policies reprehensible.”
Apartheid in the time of COVID-19
In light of the outbreak of Covid-19, the Israeli government has called for serious restrictions on movement, cramping the lifestyle of Israelis to levels they had never experienced. It is said that the government, using its intelligence agencies, is collecting information on Israeli citizens who have the virus, and this is raising some objections. In fact, there are several campaigns now demanding “Freedom to Move” be restored and that the intelligence agencies not be involved in collecting data. Five million Palestinians who live no more than a few short miles from Israelis, live in ghettos, not to say concentration camps, and under the shadow of the Israeli intelligence agencies and no one ever hears of Israeli demands to allow them the freedom to move or to end the repression of their rights.
The Tel-Aviv marathon was held recently, just as the coronavirus issue was beginning to spread, and all the foreign runners were prohibited from participating. 40,000 Israeli runners participated in the event and not a word was said about the closures, arrests, water restrictions and lack of rights of millions of Palestinians who live a few miles from there.
It gets worse. Even with the outbreak of the coronavirus, Israeli authorities continue to demolish homes, arrest minors, and shoot protestors and Israeli settler gangs continue to terrorize Palestinians. This video, taken by a photographer from the human rights group, B’tselem shows settlers and soldiers shooting at Palestinians who were defending their home from an attack by settler thugs. The army arrested the photographer and took his camera.
In the Naqab, where over 100,000 Palestinian Bedouin citizens of Israel live in “unrecognized towns,” COVID-19 turned a terrible situation into a potential disaster. Because the Israeli authorities do not recognize these towns, they have no access to the basic most services like clean water, access roads or electricity, much less to health and medical services.
Palestinian Bedouin in the Naqab are all citizens of the state of Israel. They live in crowded conditions because they are prevented from building. The ones who dare to build are under constant fear of demolition and expulsion from their lands. These conditions make it impossible to adhere to the basic most safety precautions needed to stop the spread of Corona.
Schools are now closed and the Israeli Ministry of Education is providing lessons to Israeli citizens via the internet, but over 50 percent of Palestinian citizens of Israel live below the poverty line and have no internet access. In the Naqab, 70 percent of the students don’t even have access to electricity, much less wifi.
Apartheid Israel is alive and well, and at least for now, so is the man leading it.
Feature photo | Armed Israeli police patrol deserted street in Jerusalem’s Old City, in Jerusalem, March 23, 2020. Mahmoud Illean | AP
Miko Peled is an author and human rights activist born in Jerusalem. He is the author of “The General’s Son. Journey of an Israeli in Palestine,” and “Injustice, the Story of the Holy Land Foundation Five.”
The views expressed in this article are the author’s own and do not necessarily reflect MintPress News editorial policy.
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Coronavirus: After the EU Failed to Deliver, Italy Looks to Russia for Help
The current global political scene is changing rapidly as a result of the coronavirus. New super-powers are emerging and former power-houses are weakening in the face of the crisis.
ROME (Mideast Discourse) — More than 15 military transport planes flew from Russia to Italy delivering disinfection units, 180 doctors, 100 personnel which include specialists in biological protection, nurses, ventilators, and masks. The experts sent to Italy have worked on international epidemics including African Swine Fever and in developing an Ebola vaccine. Italy’s Prime Minister Guiseppe Conte had requested help from Russia, and the government commissioner for the coronavirus emergency, Domenico Arcuri, confirmed the help had arrived. Luigi Di Maio, Italy’s Foreign Minister, personally welcomed the first Russian plane to arrive on Sunday. Videos emerged online of the trucks on their way to northern Bergamo near Milan, the hardest hit by the virus.
Lombardy regional councilor for health services, Giulio Gallera, announced the arrival of Russian doctors at Papa Giovanni Hospital in Bergamo. Moscow has a tradition of international solidarity that dates back to the Soviet era. “Never had so many Russian planes and personnel landed before in a NATO country,” reported the Italian daily ‘La Repubblica’.
Italy imports gas to fuel their power plants, and Rome has previously called on the EU sanctions against Russia to be relaxed, even though the plea has not been heeded, and sanctions have been repeatedly renewed.
Italy’s Civil Protection Agency Facebook page was full of grateful comments, and some anger at the US, which was seen as not forthcoming with aid in the darkest hours of Italy’s need.
New alliances emerging
The current global political scene is changing rapidly as a result of the coronavirus. We are seeing new super-powers emerging, such as China and Russia, and former power-houses weakening, such as the US and NATO.
The shifting sands of alliances remind us of a similar situation before WW2. Italy, and several other EU members, may find themselves forging new alliances that are headed east. The current US domestic political chaos gave Russia and China the chance to offer an alternative to nations who may be ready to wrest-free of the former US domination. This situation leads to a new version of the old ‘Cold War’ era, in which the world was split into West and East camps of influence.
The critics
The saying “don’t look a gift horse in the mouth” means that you shouldn’t criticize a gift, but that didn’t stop the Italian daily ‘La Stampa’ from reporting an unnamed high-level political source that most of the Russian supplies sent to Italy were ‘useless’.
Russia’s Ambassador to Italy Sergei Razov dismissed the report as perverse. “Such assertions are the product of a perverse mind. A selfless desire to help friendly people in trouble is seen as insidious,” Razov told Russian media.
When asked if Russia expected Italy to return the favor by trying to get EU sanctions lifted, Kremlin spokesman Dmitry Peskov described the notion as absurd. “We’re not talking about any conditions or calculations or hopes here,” he said on Monday. “Italy is really in need of much more wide-scale help and what Russia does is manageable.”
Besides the desire to help a neighbor in need, there is the fact that the majority of the 658 people with confirmed cases in Russia have recently flown back from western Europe, making the case for Russian self-protection as well as Italian friendship.
Russian administration is well-organized and able to impose strong measures in such a crisis, as compared to other countries that have been slow to institute strict measures and precautions.
The EU response
European Union countries have been slow to help their fellow members. Italy, France, and Spain have urged a massive response; however, the EU is divided on a potential rescue plan for the region’s economy, with Germany, the Netherlands, Austria, and Finland opposed to what they see as unreasonable expectations. Nine EU countries including France, Italy, and Spain have called for a common debt plan administered by a European institution to raise funds on the market; but, Germany and the other tight-fisted members stress that all EU countries can finance themselves.
Matteo Salvini, former deputy prime minister, speaking to the Italian Senate, said “In Brussels, it is clear they are yet to understand the situation. If the German Government keeps talking about the European Stability Mechanism (ESM) without conditions which provides that funds are given to Italy but have to be paid back in the future, Berlin and Brussels got it wrong,” clearly furious at the German and EU stance.
The origins of the Italian crisis
Mario Di Vito is a correspondent for the Italian daily, “Il Manifesto.” He compares the coronavirus crisis in Italy to that of a world war. In explaining how the virus moved rapidly he points to Confindustria, the association of Italian industrialists, who pressured the government to not shut down production, and the Mayor of Milan, Beppe Sala, continued to tell people to leave their houses and to live a normal life; however, once the number of dead and infected spiked it was apparent those early decisions were deadly. The stay-at-home order from PM Conte came much too late, and the weakness of the Italian healthcare system was exposed as the sick and dying rose into the thousands.
Two weeks of military-enforced stay-at-home orders have paid off with signs of the slowing down of new infections and deaths since Italy’s first positive test on February 20. Italy has by far the most virus deaths of any nation in the world, numbering 8,165. While the official count of positive cases is 80,539, experts assume the actual number may be much higher. At least 33 doctors have died and 6,414 medical personnel have tested positive in Italy.
“We know it before we go into battle, and we accept it,” Dr. Luca Lorini, head of intensive care in a hospital in Bergamo told the Associated Press.
Feature photo | A military truck with stickers reading “From Russia with love” loads Russian aid bound for Italy on a board of an Il-76 cargo plane in Chkalovsky military airport outside Moscow, Russia, March 22, 2020. Photo | Alexei Yereshko via Russian Defense Ministry
Steven Sahiounie is an award-winning Syrian American journalist.
Stories published in our Daily Digests section are chosen based on the interest of our readers. They are republished from a number of sources, and are not produced by MintPress News. The views expressed in these articles are the author’s own and do not necessarily reflect MintPress News editorial policy.
The views expressed in this article are the author’s own and do not necessarily reflect MintPress News editorial policy.
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Doctors “Strongly Condemn” UK Decision to Keep Assange Imprisoned During COVID-19 Pandemic
Assange’s treatment in the UK’s Belmarsh Prison has been so poor that convicted murderers and other high-security inmates had to stage a mass protest to secure his transfer to the hospital wing.
Doctors4Assange, a group of 195 medical professionals from 30 countries, released a statement today “strongly condemning” a British court decision to keep Wikileaks co-founder Julian Assange incarcerated, despite a possible outbreak of COVID-19 at Belmarsh Prison in London where Assange is being held. The group argued that, due to his history of medical neglect, extremely fragile health, and his chronic lung condition, he was at particular risk of both contracting and dying from the virus.
Despite acknowledging he was at increased risk, District Judge Vanessa Baraitser denied him bail because she considered him a flight risk. “There are substantial grounds to believe if I released him today he would not return to face his extradition hearing,” Baraitser said. Assange previously sought refuge in the embassy of Ecuador in London.
The Australian publisher’s hearing played out in bizarre circumstances on Wednesday. The court, like the rest of the United Kingdom, was on lockdown, meaning only 15 people were in attendance. One of his lawyers, Edward Fitzgerald QC, wore a large facemask, while the other, Mark Summers QC, participated remotely via audio, as did the American government attorneys seeking his extradition. Not only was Assange not physically present, but his video connection was also terminated early meaning he was not even able to follow proceedings, let alone participate in them. He was also unable to communicate with his legal team.
Mrs Christine Assange@MrsC_AssangeASSANGE DEATH RISK RISES in US/UK political persecution
*2 UK prisoners now dead from #Covid19
*19 inmates/4 prison officers/3 staff test positive
*100 staff/ Belmarsh Prison in isolation
My ill son detained w/out charge in Belmarsh
Doctors warn he’ll die #ReleaseJulian https://twitter.com/DEAcampaign/status/1242844608289099776 …
Don’t Extradite Assange@DEAcampaign@wikileaks editor-in-chief @khrafnsson condemns the decision not to release Julian #Assange on bail in light of the #Coronavirus crisis. More than 100 staff from Belmarsh are off sick.
Baraitser also claimed that Belmarsh Prison was a safe place for Assange to be kept, as no one had yet tested positive for COVID-19. But testing kits are notoriously hard to come by in the United Kingdom, with only 113,777 people tested across the entire country by Friday (less than 0.2 percent of the population). Worse still, over 100 Belmarsh employees are currently off work after self-isolating with coronavirus symptoms or coming into contact with a confirmed case. Two British prisoners have already died from the virus, with 19 more testing positive.
Thus, Doctors4Assange argues, it is more a question of when, rather than if, Belmarsh is infected. “Julian Assange is just such an unsentenced prisoner with significant health vulnerability. He is being held on remand, with no custodial sentence or UK charge in place, let alone conviction,” they wrote, pointing to the United Nations Human Rights Council’s pronouncement on prison clemency.
“With outbreaks of the disease, and an increasing number of deaths, already reported in prisons and other institutions in an expanding number of countries, authorities should act now to prevent further loss of life among detainees and staff,” UN Human Rights High Commissioner Michelle Bachelet said. “Now, more than ever, governments should release every person detained without sufficient legal basis, including political prisoners and others detained simply for expressing critical or dissenting views,” she added.
All prisons in England are now indefinitely closed to visitors. Iran, in an effort to stem the spread of coronavirus, has released tens of thousands of prisoners from its jails. Poland is expected to follow suit and send up 12,000 prisoners home early. Yet the United Kingdom has yet to follow suit, despite the pleas, even from its own prison governors. Andrea Albutt, the head of the Prison Governors Association, warned of an “unprecedented risk” to the overcrowded prison system, recommending the immediate release of many inmates. Meanwhile, in the U.S., there is growing concern that “a storm is coming” – that prisons will be hotbeds of contagion. Disgraced media mogul Harvey Weinstein has already contracted COVID–19 while in Rikers Island jail.
Assange’s extradition trial began in late February. He faces 18 U.S. charges of hacking and breaches of the Espionage Act, specifically for the publication of evidence leaked by Pvt. Chelsea Manning that detailed evidence of American war crimes in the Middle East. If found guilty, he faces up to 175 years in prison. He had been granted asylum by the progressive Ecuadorian administration of Rafael Correa. However, after Correa was replaced by the pro-American administration of Lenin Moreno in 2017, his welcome in the Ecuadorian embassy in London waned. Since his removal from the building in 2019 he has been held at Belmarsh Prison, a high-security penitentiary, often in solitary confinement. His treatment was so poor that convicted murderers and other high-security inmates staged a mass protest, managing to secure his transfer to the hospital wing.
Current Wikileaks boss Kristinn Hrafnsson also “condemned in the strongest possible terms” Judge Baraitser’s decision. “COVID-19 is bringing forth the best in people and the worst in people. Today’s decision by the judge was an example of the latter,” he said.
Feature photo | Demonstrators gather outside Australia House to protest against the extradition of Wikileaks founder Julian Assange, in London, Feb. 22, 2020. Alberto Pezzali | AP
Alan MacLeod is a Staff Writer for MintPress News. After completing his PhD in 2017 he published two books: Bad News From Venezuela: Twenty Years of Fake News and Misreporting and Propaganda in the Information Age: Still Manufacturing Consent. He has also contributed to Fairness and Accuracy in Reporting, The Guardian, Salon, The Grayzone, Jacobin Magazine, Common Dreams the American Herald Tribune and The Canary.
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With a Quarter of the World’s Population Under US Sanctions, Countries Appeal to UN to Intervene
Eight countries, representing around one-quarter of all humanity, say that Washington’s actions are undermining their response to the COVID–19 pandemic sweeping the planet.
The governments of China, Cuba, Iran, Nicaragua, North Korea, Russia, Syria, and Venezuela – all under sanctions from the United States – sent a joint statement to the United Nations Secretary-General, the UN’s High Commissioner on Human Rights and the Director-General of the World Health Organization calling for an end to the unilateral American economic blockade, as they are, “illegal and blatantly violate international law and the charter of the United Nations.”
The eight countries, representing around one-quarter of humanity, say that Washington’s actions are undermining their response to the COVID–19 pandemic sweeping the planet. “The destructive impact of said measures at the national level, plus their extraterritorial implication, together with the phenomenon of over-compliance and the fear for ‘secondary sanctions,’ hinder the ability of national governments” in procuring even basic medical equipment and supplies, including coronavirus test kits and medicine. It is a “hard if not impossible deed for those countries who are currently facing the application of unilateral coercive measures,” to cope, they conclude.
The letter was shared on Twitter by Joaquin Perez, Venezuela’s Permanent Ambassador to the UN.
Joaquín A. Pérez Ayestarán@japerezveToday
,
,
,
,
,
,
,
addressed the #UNSG on the negative impact of sanctions on nat’l efforts to fight COVID19. We cannot allow a zero-sum game in the midst of a pandemic. #SanctionsAreCriminal & must end now! Political calculations cannot get in the way of saving lives!
That U.S. sanctions are “blatant violations of international law,” the letter states, is not in doubt. As the American Special Rapporteur to the UN, Alfred de Zayas, notes, only sanctions expressly verified and imposed collectively by the UN Security Council can be considered legal; any unilateral punishment is, by definition, illegal. De Zayas, a legal scholar, notes that sanctions are tantamount to a “collective punishment” against a population, an explicit violation of multiple articles of the UN Charter, the foundation of international law.
De Zayas traveled to Venezuela last year, describing the U.S. sanctions as akin to a medieval siege and accusing the Trump administration of “crimes against humanity.” The United Nations Human Rights Council formally condemned the U.S., called on all member states to break the sanctions, and even began discussing the reparations Washington should pay to Venezuela, noting that Trump’s sanctions were designed to “disproportionately affect the poor and most vulnerable.” None of this was reported in any major American media outlet at the time.
The sanctions meant that Venezuela was unable to import key medicines for conditions like cancer and diabetes, leading to scores of deaths. A 2019 report from the Washington-based Center for Economic Policy Research conservatively estimated the sanctions killed 40,000 Venezuelans between mid-2017 and 2018.
Yesterday, the Trump administration turned the screw tighter, putting out a bizarre hit on President Nicolas Maduro, offering $15 million to anybody who could bring him to them in chains. Other key figures like Minister of Defense Vladimir Padrino and Head of the Constituent Assembly Diosdado Cabello also had bounties placed on their heads, supposedly because they were part of a drug trafficking ring.
The U.S. is also turning up the heat on COVID-19 plagued Iran. Senior Washington insiders like Newt Gingrich are dreaming that their sanctions will finally bring about regime change in the Islamic Republic. Sanctions led to the Iranian rial losing 80 percent of its value, with both food prices and unemployment doubling. While medicine is technically exempt from sanctions, in reality, Washington has frightened away any nation or corporation from doing business with Tehran. Even as coronavirus was raging through the country, no nation was willing to donate even basic supplies to Iran. Eventually, the World Health Organization stepped in and directly supplied it with provisions. An October report from Human Rights Watch noted that “the overbroad and burdensome nature of the US sanctions has led banks and companies around the world to pull back from humanitarian trade with Iran, leaving Iranians who have rare or complicated diseases unable to get the medicine and treatment they require.” At least 2,378 Iranians have died of COVID-19, many of them needlessly.
Despite the embargoes they are under, many countries on the sanctioned list have contributed greatly to the world’s fight against COVID-19. Despite facing a shortage of basic supplies like soap, Cuba continues to export doctors and other medical staff around the world, often to the worst affected areas. Meanwhile, China, the original epicenter of the outbreak, appears to have come to grips with the pandemic and is now exporting its battle-hardened medical staff as well as huge quantities of crucial supplies. This has been presented in the U.S. as a dastardly plot to “curry favor” and shift blame away from their supposed mishandling of the virus in the first place.
The United States has long had a fractious relationship with the UN, constantly using its veto power to sink progressive legislation that would weaken its military, cultural or economic hegemony. In 2017, the U.S. formally pulled out of the UN’s scientific and cultural organization, UNESCO, in response to the group admitting Palestine. American sanctions are not popular at all in the world; in November, for instance, the UN voted 187-3 (U.S., Israel, Brazil) to condemn Washington’s embargo on Cuba. It was the twenty-eighth consecutive year with vote totals varying little from year to year.
The sanctioned countries warn that Trump’s actions are killing not only Americans at home but people all over the world. “We cannot allow for political calculations to get in the way of saving human lives,” they conclude. However, precisely because the U.S. has so much power on the world stage, it is unlikely their protestations will get them very far.
Feature photo | A person in protective clothing walks through a temporary 2,000-bed field hospital for COVID-19 coronavirus patients set up by the Iranian army at the international exhibition center in northern Tehran, Iran, March 26, 2020. Ebrahim Noroozi | AP
Alan MacLeod is a Staff Writer for MintPress News. After completing his PhD in 2017 he published two books: Bad News From Venezuela: Twenty Years of Fake News and Misreporting and Propaganda in the Information Age: Still Manufacturing Consent. He has also contributed to Fairness and Accuracy in Reporting, The Guardian, Salon, The Grayzone, Jacobin Magazine, Common Dreams the American Herald Tribune and The Canary.
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Has Saudi Arabia Shot Itself in the Foot With Its Oil Price War?
The impact of coronavirus has destroyed the demand for oil and neither Saudi Arabia, Russia or the United States will escape the resulting price war unscathed.
Faced with an escalating crisis brought on by the global outbreak of COVID-19, Saudi Arabia made a conscious decision to increase oil production in order to avert a potential oil-price collapse. The move sent an already faltering global economy into a tailspin.
The trouble began at the beginning of March, after Russia rejected an ultimatum from Saudi Arabia to cut oil production in light of falling prices. The Saudi response was to effectively flood the oil market with an additional 2.6 million barrels a day at a dramatically discounted price.
History has taught us that the Saudi response has been a common experience. Between 1981 and 1985, the Kingdom cut oil production drastically in light of rising supply from the North Sea, Siberia and Mexico. When the move amounted to little benefit, Saudi Arabia slashed their prices and increased production. It did the same in November 2014 after asking Russia to cut oil production, leading to yet another depression in the oil industry. At the time, Saudi Arabia’s deputy economic minister said “if we don’t take any reform measures, and if the global economy stays the same, then we’re doomed to bankruptcy in three to four years.” The statement was a telling indication that the Saudi leadership was well aware of the devastating consequences of such a strategy.
Oil markets have faced rising and falling prices since the start of 2020. In fact, days after the new year began, oil prices dipped sharply and then rose after the United States assassinated Iranian General Qasem Soleimani, bringing the world to the brink of a major war. This was always going to be short-lived however, in light of the long-term impacts of the COVID-19 crisis.
“Price action in the oil market is testament to some of the challenges we face,” economist Cameron Bagrie told MintPress News via email.
The oil industry is obviously facing a demand shock and is in trend decline. But the responses are testament to that old adage: where push comes to shove it’s ‘every man (or woman) for themselves.’”
Bagrie added:
We need group interest as opposed to self-interest around the globe in response to rising economic and health challenges.”
Saudi chickens are coming home to roost
Initially, the Saudi sentiment appeared to be to “allow this thing to go on for a while to bring structural change to the industry,” according to one Saudi source. That sentiment, however, may not continue in the long run.
The impact of coronavirus has destroyed the demand for oil. A consumer-based economy is doomed to struggle when there are no more consumers. As domestic and international flights across the globe grind to a halt and as many countries impose lockdowns and self-isolation procedures, both personal and commercial demand for oil has dissipated.
Saudi Arabia announced this week that it would reduce government expenditures by $13.2 billion USD, or close to five percent of its budget spending for 2020. According to the state-run Saudi Press Agency (SPA), the Minister of Finance and Acting Minister of Economy and Planning took the measures “in light of the noticeable development in the public finance management, and existence of the appropriate flexibility to take measures in the face of emergency shocks with a high level of efficiency.”
The real reason for this move though (as stated by the Saudi government itself) was to take measures to “reduce the impact of low prices of oil” with additional precautions to be taken to deal with the expected drop in prices.
According to Reuters, Saudi Arabia was already well aware of this pending situation. Before the OPEC+ talks fell through, Saudi Arabia asked government agencies to propose a 20 to 30 percent cut in their budgets due to the decline in oil prices, anticipating that talks with Russia were always going to be problematic.
Economists are expecting Saudi Arabia’s budget deficit to grow significantly from 4.7 percent of its GDP in 2019 to well into the double-digits. As it stands, the International Monetary Fund (IMF) has said Riyadh needs oil at $80 a barrel in order to balance its current 2020 budget. Flitch Ratings goes one step further and assesses that the Kingdom will need oil prices at $91 a barrel, assuming everything else runs as normal. As of writing, Brent crude oil is barely at $30 a barrel.
In order to cope, the Saudi government announced it will put a stop to major projects and investments and the Saudi wealth fund will diminish at an astonishing rate. One must bear in mind that Saudi Crown Prince Mohammed Bin Salman (MBS) had only recently unveiled his Vision 2030 plan, a symbolic move to diversify the Saudi economy away from oil. It is difficult to see how this vision would be realized at the current rate, given the plan relies on enormous government spending.
Further, Aramco, the Saudi national oil company that recently went public for the first time in its history, is unlikely to convince investors to bank on Saudi oil. The Saudi kingdom may have no choice but to pick up the slack, and to do so as soon as possible.
On the other hand, analysts are far more confident that Russia can weather the storm to a greater extent than Saudi Arabia can. By all accounts, Russia is in a stronger financial and political leadership position than its Saudi counterpart. According to Oil Price, Russia’s budget breakeven price is $40 USD and can produce over 11 million barrels per day without facing many repercussions.
The impact on US-Saudi relations
The United States has just recently become the largest oil producer in the world. Saudi Arabia’s decision to tinker so heavily with global oil markets is therefore sure to hurt U.S.-based oil companies. As the Financial Times explained, “the Russian-Saudi crude war threatens America’s growing shale industry, hurts debt-burdened US oil majors and exacerbates the pressure on collapsing stock markets.” Despite this, the Trump administration is unusually silent about this particular topic. Given how outspoken Donald Trump can be, and given his pledge to put “America first”, his turning a blind eye to what Saudi Arabia is doing to global oil markets is noticeable, to say the least.
One reason for this inaction may be that while U.S. companies will suffer, the U.S. strategy of deterring nations from forming meaningful alliances with adversarial nations, such as Russia, will always take precedence over anything else. What this current Saudi-Russia oil spat appears to confirm is that the in-roads Saudi-Russian relations were making over the last three years have been brought to a complete standstill. As one senior Washington-based legal source said, “we were concerned anyway that the Saudis were becoming too dependent on Russia because of the OPEC-plus deals and were listening too much to its [Russia’s advice].”
In 2018, when the world demanded answers from the Saudi leadership over the killing of Washington Post contributor Jamal Khashoggi, Russian President Vladimir Putin smiled as he high-fived MBS before taking a seat next to him. The two countries appeared to be set to start a new era of Saudi-Russian relations which would center around maintaining the stability of oil prices, as well as defense and arms sales. The damage done by this recent feud may be enough to undo prospective developments between the two nations, solidified when Putin’s spokesperson said that the Russian president has “no plans” to speak to MBS or his father anytime soon.
The other factor to bear in mind is that the Saudi strategy is to absolve itself of any fault and lay the blame squarely at Russia’s feet. As a Saudi source close to the royal court said, “the beauty of this is you can blame it on the Russians.” As the corporate media and the Trump administration are far too hesitant to irk Saudi Arabia too much, the belief that the Saudis can place the burden on Russia may end up being a valid one.
That being said, thirteen Republican senators did send a letter in mid-March urging MBS to reverse his decision, stating “the added impact of unsettled global energy markets is an unwelcome development.” The senators also questioned the notion that the Saudi Kingdom “is a force for stability in the global markets.”
NOPEC: the US could use to intervene if it wanted to
The U.S. has open to it a ‘No Oil Producing and Exporting Cartels Act’ (NOPEC) bill, which, if passed, could render it illegal to artificially cap oil and gas production, or to set prices, something Saudi Arabia has routinely done in recent history. The law would also pave the way for Saudi Arabia to be sued in U.S. courts.
In the past, Donald Trump vetoed the bill, presumably under Saudi pressure. As such, there are no real indications that Trump’s sentiment on this issue is set to change anytime soon. However, Trump may not make it through to the end of 2020 without being unseated, and the incoming president may have other plans for the U.S.-Saudi relationship.
Saudi Arabia, Russia and the United States will not escape this price war unscathed. However, the real victims of these tit-for-tat games of chicken are nations like Iran, who have seen at least a quarter of its oil rigs idled and the never-ending decline of its currency.
This may very well be another reason we can expect the United States not to intervene, given the situation may help Washington to achieve its long-standing goal of crippling the Iranian economy in a bid to implement regime change in Tehran.
In the meantime, the U.S. is continuing to edge closer toward a war with Iran in Iraq, with multiple attacks taking place even throughout this month. If that war happens, the least of anyone’s worries will be cheaper oil prices.
Feature photo | A Saudi trader talks to others in front of a screen displaying Saudi stock market values at the Arab National Bank in Riyadh, Saudi Arabia, Dec. 12, 2019. Amr Nabil | AP
Darius Shahtahmasebi is a New Zealand-based legal and political analyst who focuses on US foreign policy in the Middle East, Asia and Pacific region. He is fully qualified as a lawyer in two international jurisdictions.
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