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Saudi Arabia Admits Defeat

“God be with the citizens, we are back to the time of poverty,” wrote Saudi Arabian blogger Rayan al-Shamri on Twitter last week. That’s a bit strong, but he and his fellow citizens are certainly no longer living in the time of plenty. Saudi Arabia is cutting back on all fronts.

The wages of government employees accounted for almost half the the Saudi Arabian government’s spending last year: about $120 billion. And the country’s budget deficit, due to the collapse of the oil price, was $98 billion. So you can see why the government would go looking for some economies in the public sector.

About two-thirds of employed Saudi citizens have public sector jobs, many of which require them to do little beyond showing up on a fairly regular basis. It’s the unwritten contract that the absolute monarchy made with its citizens decades ago, when money was not a problem: you keep quiet politically, and we will subsidise your lifestyle handsomely. But the money isn’t there any more.

A royal decree on 23 September announced that government ministers’ salaries would be cut by 20 percent. Lower-ranking civil servants will have their pay frozen and their overtime payments and annual leave capped. Crown Prince Mohammed bin Salman has announced a plan to cut the public sector to only 40 percent of the working population by 2020. (In the United States it’s 7 percent.)

If this policy sounds a little less than drastic, that’s because the Saudi regime doesn’t dare cut harder for fear of a popular backlash. It cannot afford to let the “time of poverty” come back, and citizens who are used to being coddled and subsidised will define anything short of their current living standard as “poverty”.

So if the regime can’t get its budget spending down much, then it had better start getting the oil price back up before it runs out of money entirely and the roof falls in. This requires an about-turn in the market strategy it has followed for the past two years.

The Organisation of Petroleum-Exporting Countries (OPEC) only accounts for 40 percent of the world’s oil exports, which is marginal for a cartel that seeks to control the world oil price. Moreover, some poorer OPEC members regularly pump more oil than their quotas allow. So Saudi Arabia’s traditional role, as OPEC’s biggest member, was to cut production and get the world price back up when there was a glut of oil on the market.

When the oil price collapsed two years ago, however, Saudi Arabia didn’t do that. The regime was worried that the rapid rise in American oil production, mainly due to fracking, would ultimately destroy OPEC’s ability to set the price of oil. Its response was to pump oil flat out and let the price stay low, hoping that this would drive the high-cost US fracking industry out of business.

That was a foredoomed strategy, because the US government would even subsidise its fracking industry, if it had to, rather than give up on the dream of “energy independence” (self-sufficiency in oil production). In the event, that wasn’t necessary: even with the oil price at rock bottom, American oil production actually grew last year – and by now the OPEC producers are facing budgetary disaster.

At the OPEC summit in Algiers last Wednesday, Saudi Arabia publicly abandoned its strategy. OPEC will cut production by 700,000 barrels a day, starting next month. Saudi Arabia, as usual, will take the biggest share in the cuts – and if this round of cuts doesn’t get the price back up, there will presumably be a further round early in the new year.

The Saudis have even agreed that Iran, their great strategic rival in the Gulf region, can increase its production while everybody else in OPEC is cutting. (Iran, frozen out of the market by the American embargo for so long, has been claiming its old OPEC quota back now that the embargo has been lifted, and until last week Saudi Arabia was resisting its demand.)

A number of things are not yet clear about the new strategy. In particular, how to share the pain of production cuts between the OPEC members has not yet been worked out, so the market is not yet persuaded that these cuts are real.

The world oil price jumped 7 percent on first news of the OPEC decision, but is now back down to about the level it was at before the OPEC announcement. OPEC’s promises about cuts have been broken before. But this time they probably will be kept, because a lot of the producers are truly desperate for a higher price.

So, then, three conclusions. One, Saudi Arabia’s ability to set the price of oil, and OPEC’s power in general, is seriously impaired. Two, the oil price is going back up over the next year or so, though probably not beyond $70 or $80 a barrel. And three, that is really a good thing, because we need a higher oil price to drive the shift out of carbon fuels and into renewables.
To shorten to 725 words, omit paragraphs 3 and 11. (“About…more”; and “The Saudis…demand”)

North Korea’s Deterrent

Here we go again. North Korea launched a ballistic missile of intercontinental range on Sunday (saying it was just putting up a satellite) only weeks after it carried out its fourth nuclear weapons test (which it claimed was a hydrogen bomb).The United Nations Security Council strongly condemned it, and even the People’s Republic of China, North Korea’s only ally, expressed its “regret” at what the country had done.

There will certainly now be more UN sanctions against Kim Jong-un’s isolated regime. But there have already been four rounds of UN military and economic sanctions since North Korea’s first nuclear test in 2006, and Pyongyang just ignores them.

Clearly, this is something that the North Korean regime wants so badly that it is willing to endure considerable punishment in order to get it. But why is this very poor country spending vast sums in order to be able to strike its neighbours – and even the United States, for that is what the intercontinental ballistic missiles (ICBMs) are about – with nuclear weapons?

Well, here’s a clue. What the North Korean government said after last month’s hydrogen bomb test was this: “The DPRK (Democratic People’s Republic of Korea) is a genuine peace-loving state which has made every effort to protect peace on the Korean Peninsula and security in the region from the vicious US nuclear war scenario.”

“The US is a gang of cruel robbers that has worked hard to bring even a nuclear disaster to the DPRK….By succeeding in the H-bomb test…the DPRK proudly joined the advanced ranks of nuclear weapons states…and the Korean people demonstrated the spirit of a dignified nation equipped with the most powerful nuclear deterrent.”

Never mind the stilted rhetoric and gutter abuse; North Korean propagandists always talk like that. Listen to the key words that are almost buried under the surrounding invective. North Korea’s nuclear weapons programme, they say, is meant to “protect…the region from…the US …nuclear war scenario” by creating a “most powerful nuclear deterrent.”

Really? Do they actually fear that the United States might use nuclear weapons on them, and that they can only be safe if they have their own hydrogen bombs and ICBMs? Are they doing all this purely as a defensive measure?

Of course they are. However bad-tempered and impulsive they sounded, the men of the Kim family, father, son and grandson, who have ruled North Korea in dynastic succession for the past 68 years, were not crazy. They never started a war, because they knew they would lose it, and the current incumbent is certainly not going to start a nuclear war.

He would have to be crazy to do that. North Korea lacks the resources to build more than a few bombs a year, and it does not have the technologies to ensure that the missiles it may one day have won’t get shot down. It will probably never be able to guarantee that it can strike even South Korea or Japan with nuclear missiles, let alone the United States.

Everybody in the North Korean hierarchy (along with some millions of other North Koreans) would certainly be dead only hours after the regime launched nuclear weapons at any of those countries. The United States has literally thousands of nuclear weapons. It would take only a few dozen quite small ones to virtually exterminate the entire ruling elite, and North Korea would have no way of stopping them.

A few not-very-high-tech nuclear weapons would give Pyongyang no usable ability to launch a nuclear attack against the United States or its allies. They would, however, give it a pretty credible nuclear deterrent.

Launching a few nuclear weapons against a major nuclear power is suicidal, but those same few weapons can be a perfectly good deterrent against a nuclear attack by that same power, because they give the weaker party a capacity for “revenge from the grave.” Even a country as powerful as the United States will behave very cautiously when faced with the possibility that an opponent might land even one or two nuclear weapons on its territory.

North Korea has lived under the implicit threat of US nuclear weapons for almost seven decades, and the United States has never promised not to use those weapons against it. It’s almost surprising that we haven’t seen North Korean nuclear weapons before now.

North Korea is just doing the same thing that Pakistan did in the 1980s and 90s out of fear of Indian nuclear weapons, and that Iran was doing in fear of both Pakistani and Israeli nuclear weapons in the last fifteen years.

The Security Council is quite right to try to block North Korea’s nuclear weapons programme, and the successful use of international sanctions to stop Iran offers some hope that it may succeed. But North Korea is not a crazy state plotting a nuclear holocaust at the cost of its own extinction. Its nuclear weapons programme is a perfectly rational – although highly undesirable – policy for a small country with a big problem.
To shorten to 725 words, omit paragraphs 9 and 13. (“He would…United States”; and “North Korea…now”)

The Islamic Wars of Religion

On Friday, Saudi Arabia’s Sunni Muslim rulers beheaded their country’s leading Shia Muslim cleric, Sheikh Nimr Baqr al-Nimr, on charges of seeking “foreign meddling” in the kingdom.

On Saturday, an angry crowd of Iranians – all Shia Muslims, of course – attacked the Saudi Arabian embassy in Tehran. And Iran’s Supreme Leader, Ayatollah Ali Khamenei, put a cartoon on his website comparing Saudi Arabia’s head-chopping orgy on New Year’s Day (46 other executions on the same day) to the mass executions carried out by the Sunni extremist ‘Islamic State’ group.

So on Sunday, Saudi Arabia broke diplomatic relations with Iran – and all the pundits started talking about the Sunni-Shia “war of religion” that is about to engulf the Middle East.

This raises two questions. First, what would a Sunni-Shia war of religion actually look like? And second, has everybody in the Middle East taken leave of their senses?

The first question is best answered by looking at the history of the Christian wars of religion, ca. 1520-1660.

The Muslim world now, like “Christendom” in the 16th century, is made up of many independent countries. And the current phase of the Muslim wars of religion is being fought out between Shias and Sunnis in Iraq, Syria and Yemen, just as the first phase of the Christian wars of religion was fought out mainly between Catholics and Protestants in individual countries.

From the start of the conflict in Europe, however, each European state tried to help its co-believers in neighbouring countries as well, and alliances were increasingly shaped by religious considerations. In the second phase, these alliances dragged most of Europe into the catastrophic Thirty Years’ War (1618-1648), fought mostly in the middle of Europe but involving armies from as far apart as Sweden and Spain.

The main battleground, Germany, lost between one-third and one-half of its population. Nobody won, of course, and in the very long run everybody just lost interest in the question. But it was a very great waste of lives, time and money.

The Muslim world is already caught up in the first phase of a comparable process, but it is not condemned to go the whole distance. One big difference is that the Sunni-Shia split is ancient – more than 1,350 years old – whereas the Catholic-Protestant split was new and still full of passion at the time of the Christian wars.

More than 99 percent of today’s Muslims were simply born Sunni or Shia, whereas many 16th-century Christians had made a conscious choice about their religion. The current killings in the Muslim world are mostly driven by state policy, so maybe Muslims will not throw away a couple of generations following the same foolish, bloody road that the Christians took 500 years ago.

Those who live at the geographical extremes of the Muslim world – Indonesia, Malaysia, and Bangladesh in the East; Morocco, Algeria, Tunisa and even Egypt in the West – will certainly not suffer the same fate, for there are only tiny Shia minorities in these countries. But for those who live in the heart of the Muslim world, from Yemen to Turkey and from Lebanon to Iran, the future may be much darker.

And so to the second question: has everybody in the Middle East taken leave of their senses? Not exactly, but many players have lost sight of the bigger picture.

George W. Bush’s invasion of Iraq in 2003 unleashed the sectarian demon in the region. The “Arab Spring” of 2011 frightened the region’s dictatorships and absolute monarchies into increased repression and greater reliance on appeals to sectarian loyalty. Then King Abdullah of Saudi Arabia died a year ago, and the kingdom spun out completely.

Saudi Arabia under its previous monarchs was very cautious and conservative in its foreign policy. It subsidised various extreme Sunni groups in other countries, but it clung tightly to its American alliance and never engaged directly in adventures abroad

The new Saudi king, Salman, is 80 years old and infirm, so in practice most decisions are made by his nephew, Crown Prince Muhammad bin Nayef (aged 56), or his son, Deputy Crown Prince Muhammad bin Salman (aged only 30). There is intense competition between the two men for the succession to the throne, and the decisions coming out of Riyadh have been much bolder than ever before.

The past nine months have seen a major Saudi Arabian military intervention against the Shia side in the Yemeni civil war, the creation of a Saudi-led alliance of almost all the Sunni-majority Arab states, and now the execution of a Shia leader in Saudi Arabia that was clearly calculated to cause a diplomatic breach with Iran.

It’s just dynastic politics, in other words, not some inevitable geopolitical juggernaut. But it was similar dynastic politics half a millennium ago that triggered the worst phase of the Christian wars of religion.
To shorten to 725 words, omit paragraphs 9 and 10. (“The Muslim…ago”)

After the Iran Nuclear Deal

The thing to bear in mind about Tuesday’s deal between Iran and the P5+1 countries (the United States, Britain, France, Germany, Russia and China) is that without it Iran could get nuclear weapons whenever it wants in a short tme. It has the technologies for enriching uranium, it could make the actual bombs any time it likes (every major country knows how), and the sanctions against Iran could not get much worse than they are now.

If you don’t like the current deal, and you really believe that Iran is hell-bent on getting nuclear weapons, then your only remaining option is massive air strikes on Iran. Not even the Republican Party stalwarts in the US Congress are up for committing the US Air Force to that folly, and Israel without American support simply couldn’t do it on its own.

Then what’s left? Nothing but the deal. It doesn’t guarantee that Iran can never get nuclear weapons. It does guarantee that Iran could not break the agreement without giving everybody else at least a year to respond before the weapons are operational. Sanctions would snap back into place automatically, and anybody who thinks air strikes are a cool idea would have plenty of time to carry them out.

So the deal will survive. Israel’s Prime Minister Binyamin Netanyahu can fulminate about how it is a “an historic mistake” that will give Tehran “a sure path to nuclear weapons,” but he cannot stop it.

Netanyahu is obsessive about Iran, but even his own intelligence services do not believe that Tehran has actually been working on nuclear weapons in the past decade. The Israeli prime minister has burned all his bridges with US President Barack Obama, and his Republican allies in the US Congress cannot stop the deal either.

John Boehner, the speaker of the House of Representatives, said that the deal will “hand a dangerous regime billions of dollars in sanctions relief while paving the way for a nuclear Iran,” and he can probably muster a majority in Congress against it. (Congress, as Washington insiders put it, is “Israeli-occupied territory.”) But he cannot muster the two-thirds majority that would be needed to override Obama’s inevitable veto.

There will be a 60-day delay while Congress debates the issue, but this deal will go through in the end. So far, so good – but this is not happening in a vacuum. What are the broader implications for Middle Eastern politics?

Ever since the victory of the Islamic revolution 36 years ago, Iran and the United States have been bitter enemies. They have not suddenly become allies, but they are already on good speaking terms. Since almost all of America’s allies in the Arab world see Iran as a huge strategic threat, they are appalled by the prospect of a US-Iran rapprochement.

That is not a done deal yet. While Iran strongly supports Bashar al Assad’s beleaguered regime in Syria, Washington still advocates Assad’s overthrow and arms some of the “moderate” rebels. It even supports Saudi Arabia’s bombing campaign against the Houthi rebels who now control most of Yemen, and publicly accepts the Saudi claim that the Houthis are mere pawns who are being armed and incited to revolt by Iran.

But nobody in the White House, the State Department or the Pentagon really believes that the civil war in Yemen is an Iranian plot. Very few believe any longer that Assad can be overthrown in Syria without handing the country over to the Islamist fanatics who dominate the insurgency there. And the most powerful force among those fanatics is “Islamic State”, whose troops are already being bombed by the United States in both Syria and Iraq.

The highest US priority in the Middle East now is to prevent Iraq and Syria from falling into the hands of Islamic State and its equally extreme rival, the Nusra Front. Iran is giving both the Syrian and the Iraqi governments military support that is essential to their survival, so there is obviously the potential for closer US-Iranian cooperation here.

By contrast Saudi Arabia and Turkey, currently America’s two most important allies in the region, are pouring money and weapons into the Nusra Front in Syria, which is why it has been winning so many battles against the Assad regime in recent months. The prospect of an Islamist regime in power in Damascus is acceptable to Riyadh and Ankara, but it is deeply unwelcome in Washington.

So yes, a grand realignment of American alliances in the Middle East is theoretically possible now that the long cold war between the US and Iran is over. In practice, however, it is most unlikely to happen. The long-standing military and economic ties between Washington and its current allies will probably triumph over cold strategic logic, and American policy in the Middle East will continue to be the usual muddle.
To shorten to 725 words, omit paragraphs 9 and 10. (“That is…Iraq”)