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Arabia ablaze: Global economy shaken

Imtiaz A. Hussain | Published: September 19, 2019 21:22:58


Since fingers were pointing from the very start, where the drone that hit Saudi Arabia oil facilities originated may become a lesser concern than the ripples it sparked across the global economy. Contextually hitting stock markets, more so east of Saudi Arabia than west, it exposes where vulnerabilities run higher in an age that is transiting from fossil fuels, even if lamely through earth-damaging shale (as in the United States) but far more conspicuously through solar energy (even if in fits and starts across the rest of the world). These are the oil-starved kingpins of the global economy, from Japan far away and still the world's third largest economy, to nearby India just when the country opens its foreign investment doors wider, and a drove of other dynamic economies in between, particularly the world's second-largest economy, China. Already reeling with unwarranted U.S. tariffs or threats, the three specific ones mentioned provided the spark to keep the global economy lubricated. It is not, as if, they will wake up tomorrow and start business-as-usual: fear of war has been instilled deep into this arena, and it seems only the gravity of the plunge might keep trigger-happy fingers from clicking.

There is something about trigger-happy fingers. Israel, Saudi Arabia, and the United States have been zeroing in on Iran for quite some time, each with ample nefarious credentials to raise hypotheses about connivance and contrivance. Israel, the biggest beneficiary of the Syrian civil war, since it decimated a string of actual and potential rivals ranging from Bashar Assad's Syria to a still tottering Iraq, not to mention imposing a huge burden upon a Turkey already strained by Syrian refugees like never before (and increasingly at odds with Israel, unlike in the past). Whetting these developments is the pregnant thesis that the ISIS (Islamic State of Iraq and Syria) entity, or some splinter faction of it, is an Israeli creation, precisely to weaken Arab allies. A bitterly divided and undecided election supplies Benjamin Netanyahu the very opportunity to invoke the security card, reaffirms Iran as the greatest threat to his country, to salvage his re-election chances. Watch if this theme is more accented in the post-election coalition-building than weeding corruption out, in which Netanyahu is too deeply implicated.

Saudi Arabia has been in need of global reputational salvation even more urgently. It was not just the Jamal Khashoggi killing in the Saudi embassy in Istanbul, but the very direct royal fingers upon the heinous plot to eliminate him that indelibly scarred the Crown Prince everywhere, save Tel Aviv and the White House. It exposed the external adventurism the hermit kingdom has adopted under the brash, yet brain-dead Crown Prince:  bombing Houthi rebels in Yemen, who purportedly reciprocated, climaxing with the oil facilities last week, did not produce results, but it was Iran's healthier intervention all around Saudi Arabia's land borders, particularly in Iraq, Lebanon, and Syria that rattles Saudi Arabia the most. Against the non-negotiable support from Netanyahu and U.S. President Donald Trump, Muhammad bin Salman and the Saudis could afford to stick a finger at Iran, its nemesis from as far back as one would like to trace: this is as good an opportunity to strike as any, and although blaming Iran for the drone attack is unraveling all too slowly in Riyadh, the larger game-plan will evaporate if Iran is not blamed. Iran's regional tentacles seem positioned to strangulate Saudi Arabia, and Saudi Arabia could not have found a more propitious moment, what with the ascent of a maverick, rather than conservative, leader potential, and the right supporters in Israel and the United States.

Yet, it was the United States that threw the first ball in this game. This was its abandonment of the P5+1 agreement with Iran in July 2015, a 'roadmap', meant to eliminate Iran's nuclear threat. Blaming ex-President Barrack Obama for cowing in to Iran's ostensible concessions, Trump even campaigned against this treaty in 2016. What it is he wants from Iran is hard to specify: even the other P5+1 partners split with the United States over its accusations and belligerence, with European partners standing aloof neutrally in the Iran-U.S. tussle but China and Russia cautioning the United States from any hasty reaction upon Iran because of the oil-facility drone attack. Still, if one reflects upon what the United States wanted in Iraq earlier this century, one might be closer to understanding the U.S. itch. "He tried to kill my dad," was President George W. Bush's first (and most honest) explanation for why the Afghanistan war had to be extended to Iraq in 2003. Many years, deaths, and damage later, Iraq's pique has been punctured, perhaps permanently, but the elusive U.S. victory left more liabilities than it lifted: Muslim countries have been crippled, but the anarchy sweeping right across the Middle East, from the Mediterranean to the Himalayas, cannot but destabilise the world, particularly the United States for being the most antagonist of all countries.

If in the same vein Trump launches any war, he will have exposed how myopic policy-planning has become in Washington, DC: John R. Bolton, the most hawkish advocate of war against Iran, has been relieved of his stewardship of the National Security Council, but Trump's own itch has not; and besides, China and Russia intertwining with Iran could become a crucial deterrent as Iran drawing in NATO's (the North Atlantic Treaty Organization's) most active member since 1949, Turkey. Iran also has its own fifth columns inside and around Saudi Arabia: more potentially suicidal Shi'ite jihadis than Saudi Arabia can summon, from Bahrain to Yemen.

If that trigger is pulled, the United States would inflict massive costs upon itself, even though the rest of the world would suffer more, especially east of Saudi Arabia. Tariff war against China would intensify more, and if that were to happen, U.S. trade with Asia would be hurt far more than China's trade with the rest of the world. China's economy would, no doubt, worsen, but India's would aggravate seriously that could turn out to be a Narendra Modi nightmare, while Japan would be close to capitulating, much like it did after the 1974 oil price-hikes given its enormous Middle-East energy-dependence. Either as market, supplier of inputs, or investment playground, India would but cry out loud, in turn, disseminating the malaise far and wide, while Japan's recalibration efforts may suddenly halt.

A tottering global economy did not need such an external catalyst to dive; but any hint of such diving would drive investors far away from their drawing-room deals, thus shaking the global economy even further. Other Asian countries dependent upon exports, like Bangladesh, would also have to face spiralling transportation costs: war-zone or war deployment belts may have to begin rearranging commercial relations, a slow and too exorbitant policy option.

Even worse than the 1974 quadrupling of oil-prices, which made the commodity so critical and Saudi Arabia so pivotal to global-minded players, nothing else has imposed as much of dire apprehension as the Saudi drone attack last week. This is a country too closed to admit people to handle a crippling drone-attack. Reprisals are in the order of expected Middle East outcomes, but clearly the fear-factor is taking too high a toll to quickly fade.

One hopes saner leadership is not far away, but also the toxic contemporary Middle East configurations gets hastily redrawn.

 

Dr. Imtiaz A Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh. imtiaz.hussain@iub.edu.bd

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