Gaza's plight: is there hope at all?

How will Israel's assault on Gaza pan out? Will it lead to the ethnic cleansing of vast portions of Gaza, a repetition of what happened when Israel came to be founded? Or will the world rouse itself to put an end to the suffering of a helpless people?

Here's  a somewhat bleak view penned by a former UN official:

To date, only Bolivia has severed diplomatic relations with Israel to protest against the ongoing war crimes perpetrated against the Palestinians. Unless Egypt, Jordan, UAE and Morocco sever their diplomatic relations with Tel Aviv as their people demand; unless countries such as Turkey, South Africa and Brazil, which have denounced Israel’s war crimes, align their diplomacy with their own pronouncements; unless these countries emulate Bolivia’s principled diplomatic move and put pressure on their Western partners; unless Saudi Arabia, UAE, Iran, Qatar, Azerbaijan and other large exporters of oil and natural gas use their economic leverage on Israel’s blinded backers, Gaza and its population will be destroyed, inch by inch, soul by soul. And no one would be able to say: “We didn’t know.”

The view from a South African who was witness to the end of the apartheid is more hopeful:

They will do well to learn from white South Africans who, after 300 years of minority rule, realised it was an impossible political project to continue to defend so violently, and still maintain any semblance of a moral high ground.There is a tipping point when even for the defenders of such a project, the faint question rings louder and louder in the collective conscience: how far is too far? There can be no going back to the promises of security based on what was before. There can be no going forward in peace if it means more and more blood of children and civilians haunting successive generations who will have to take responsibility for the actions unfolding before our eyes today.

The most astonishing thing about the ongong carnage is much of Western Europe (UK, France, Germany) is firmly with Israel with dissenting voices being heard from the smaller countries such as Belgium and Spain. 

Gaza conflict unlikely to derail world economy

 

When the Ukraine conflict erupted in February 2022, there were all sorts of apocalyptic forecasts. The war would escalate in terrible ways, the pundits said. NATO would increase its involvement until Russia felt obliged to retaliate with strikes against NATO countries. Russia and US would confront each other directly. World War III loomed. The world economy, already reeling under massive interest rate increases effected by central banks, would go into a tailspin.

Nothing of the sort happened. The world has not ended- yet. The world economy slowed down in 2022 but it did not collapse- the threatened recession in the US did not materialise. The reason: NATO and Russia both made sure the conflict did not escalate beyond a point. The conflict remained largely localised around the borders of Russia and Ukraine.

Today, the Ukraine conflict hardly figures in the news. We hear the same apocalyptic forecasts about the Israeli assault on Gaza. The Arab world, angered by the suffering inflicted on the people of Gaza, would band together in confronting Israel- and soon the US and Russia would be drawn into the rival sides.

The 50 nation summit hosted by Saudi Arabia recently should serve to quell any such misgivings. The Arab- Muslim world is willing to bark but afraid to bite. The summit steered clear of measures such as an oil embargo against Israel and the West and cutting off of diplomatic relations. Instead, we heard words of condemnation and pious platitudes. Nobody wants a full-blown conflagration. The World Bank’s Commodities Markets Outlook sees crude oil prices at $84 per barrel, 16 per cent below the $100 per barrel average of 2022. The world economy is unlikely to be derailed by the conflict in Gaza.

I explore these themes at greater length in my recent article below.

Geopolitical risk: After Ukraine, it's Gaza

“Geopolitical risk” has been a huge buzzword since the eruption of the Ukraine conflict in February 2022. It connotes  the potential for disruption to the world economy arising from armed conflict.    “Geopolitical risk” sounds more technical and impressive than “war”.  People use it for the same reason they prefer “mindset” to “attitude”. 

In 2022, the significant geopolitical risk was an escalation in the Ukraine conflict that would derail the world economy by causing crude oil prices to spiral well above $100 per barrel. That did not happen. Will it happen now with the conflict in Gaza? 

Let us first examine how oil prices came to be contained post-Ukraine.  Oil prices touched a peak of $140 per barrel in March 2022, a month after the conflict erupted. It is not as if the supply of oil was disrupted. The markets were merely reacting to the prospect of a major disruption. They feared that $140 was the price oil would touch if there was an escalation in the conflict.  

The conflict did escalate. Nato progressively chose to supply tanks, longer-range missiles and fighter aircraft to Ukraine after initially ruling out these items.   But the significant escalation, one that would draw Nato into direct confrontation with Russia, did not happen. Oil prices fell from the peak of March 2022 and averaged $100 per barrel in 2022. In 2023, oil prices declined further to a low of $72 per barrel. 

One factor has turned out to be crucial in putting a lid on oil prices: The imposition of a crude oil price cap by the G7 and the European Union (EU), referred to as the Coalition. The Coalition was keen to curtail the flow of oil revenues to Russia so that it lacked funds for its operations in Ukraine. 

The G7 countries decided to phase out and altogether ban oil imports for themselves. They then thought of prohibiting other economies from buying Russian oil through the threat of sanctions. However, they realised that if Russian oil supplies were removed from the oil market, the price of oil could shoot up to as high as $150 per barrel. That would have crippled several economies (including India) and dragged down the world economy.  How was the G-7 to keep Russian oil flowing into the world market while hurting Russian revenues? 

The answer was the oil price cap. The G7 insisted that nobody should purchase crude oil from Russia at above $60 per barrel. They hit upon a mechanism for ensuring this outcome. All companies in the Coalition that provided shipping, insurance or finance related to oil would have to observe the cap or face punitive action. 

Since the countries within the coalition provided 90 per cent of all maritime services related to oil, the price cap turned out to be largely effective. Russia continued to export oil to countries outside the Coalition. China and India increased their imports of oil from Russia. However, the use of Western maritime services meant that Russia had to sell oil at close to $60 per barrel. The OECD economies had been procuring roughly a third of their oil imports. They were able to shift to other sources of oil. The geopolitical risk from Ukraine did not materialise.  

What does Gaza now bode for the world economy? The first thing to note is that Opec and other oil producers announced cuts in production in October 2022. This was followed by further cuts in production through 2023. Oil prices have risen as a result.

Secondly, Russia has found ways to circumvent the oil price cap. It has developed its own “dark fleet” of oil tankers that can operate without Western maritime services such as insurance. The Financial Times (September 25, 2023) estimates that as much as three-quarters of Russian oil travelled without Western insurance last August. As a result of these two developments, oil prices currently hover around $80 per barrel. FT reports that virtually no Russian crude was sold at below $60 per barrel last October.

Will the conflict in Gaza make things worse? The World Bank is surprisingly sanguine about the prospects. After factoring in the Gaza conflict, the Bank’s Commodities Market Outlook (October 2023) sees oil prices at $84 per barrel in 2023 – or 16 per cent below the level in 2022- in its baseline scenario. It sees the commodities index as a whole at 24 per cent below the level in 2022. Oil at $84 per barrel will hurt the world economy, but it is not be  crippling.

Only if the conflict in Gaza morphs into a regional conflict does the World Bank see oil prices shooting up to $150 per barrel. Military analysts say that would be a conflict that draws in the Hezbollah group in Lebanon along with its backer Iran (and possibly Syria and Turkey). In that event, the US will weigh in on the side of Israel.  Such a prospect looks unlikely at the moment. 

As more than one commentator has pointed out, Israel’s responses to provocations in the neighbourhood typically involve a race between the clock and the casualties it can impose. The US will back Israel to the hilt for a certain length of time. Then the clock stops. Once it has exacted a certain price, Israel will be told to call off its offensive. Both sides will claim victory. 

There is every indication that the same script is being played out this time. The most recent utterances from the White House and the US Secretary of State suggest that time is running out for Israel. Other players are also adhering to this script. For all its belligerent noises, Iran is holding its proxy, the Hezbollah militia in Lebanon, on a tight leash. Prominent Muslim nations such as Egypt, Jordan, Turkey, and Saudi Arabia will not go beyond condemnation. Nobody wants a full-blown conflagration. 

That is what we have seen happen in the Ukraine conflict.  It is also what happened through much of the Cold War years that followed World War II. The great achievement of nuclear deterrence was that the world’s two leading military powers, the US and Russia, learnt to keep conflicts strictly local. They never got into a direct shoot-out. World War III was often predicted but it never happened. The world, it seems, has learnt to live with geopolitical risk. Financial crises and pandemics pose greater threats to the world economy than geopolitical risk.  

IIM Bill 2023- new rules notified

The government has notified new rules for the IIMs consequent to the IIM Bill 2023 being passed in Parliament last July, that is, within four months of the Bill having been passed.

That is quite striking. It is not common for bills to be passed or notified so quickly. In the case of IIMs, any changes to rules would take a fairly long time to happen. First, there would be consultations with the directors of the leading IIMs, if not all IIMs. Then a discussion paper would follow with the public invited to respond. After that changes would be negotiated with the IIMs.

Not so with the IIM Bill 2023. It was introduced in Parliament in July 2023. The next week, the Lok Sabha passed it. The following week the Rajya Sabha passed it. The changes were duly notified in the government gazette mid- August. No discussion, no negotiation, no waffling.

This is decisiveness of an order not seen in government. What could be the explanation? I believe the government sensed that a governance emergency had arisen in the IIM system, one that required a swift response if the IIM brand was not to suffer lasting damage.

Ever since the IIM Act came into force in January 2018, accountability in the IIM system had flown out of the window. Directors and boards at various places behaved as though they were accountable to none. At least two leading IIMs, IIMA and IIMC, witnessed turmoil of a sort not seen during the long years when government had better control over the IIMs.

In the new scheme of things, the government, through the Visitor (the President of India), can dissolve an IIM board on three grounds- if it was satisfied the board was not performing its duties, failed to carry out directions given by the Visitor or in the public interest. It can also remove any director without reference to the board. It will have the final say in the appointment of Chairmen and directors of IIMs.

I believe the government has grounds to proceed against several of the IIM boards under the powers it has assumed. The overwhelming majority of the IIM boards have failed to comply with the requirement under the IIM Act of having an independent review done within three years of the passing of the IIM Act. The couple of review reports I have seen are pathetic documents- they sound more like official brochures than an independent management audit. Many IIMs have been non-compliant with the Constitutional requirement of reservations for designated categories in faculty recruitment.

We have to wait and see. In the meantime, the ushering in of a modicum of accountability into the IIM system deserves three cheers.

 

 

Israel's war on Gaza: assorted links

 An article in Aljazeera has an interesting take on some of the top people in Israel's government starting with PM Benjamin Netanyahu:

Kimhi, who teaches at Tel Aviv University, has studied Netanyahu’s mind for almost a quarter of a century. In 1999, the same year that Netanyahu’s first term as premier would end, Kimhi’s behavioural analysis of the leader found a concerning pattern of behaviour. Some of his conclusions: Netanyahu was narcissistic, entitled and paranoid, and he reacted poorly under stress.

Kimhi revisited Netanyahu as a subject in 2017 but found not much had changed. As people age, Kimhi said, their behaviours tend to become more extreme. For Netanyahu, his paranoia and narcissism have grown. He trusts no one, except maybe his immediate family, and prioritises his “personal future” over all else, Kimhi’s research found.

         ....National Security Minister Itamar Ben-Gvir has been convicted of incitement to racism, destroying property, and joining a “terror” organisation when he was 16 years old. Finance Minister Bezalel Smotrich leads the hardline Religious Zionist Party that not only rejects Palestinian statehood but denies the existence of the Palestinian people and has condemned LGBTQ activists. Interior and Health Minister Aryeh Deri is an ultraorthodox rabbi who was sentenced to three years in jail for taking bribes.

 A senior official at the UN has resigned his post in protest against what he calls Israel's 'genocide' in Gaza:

The director of the New York office of the UN high commissioner for human rights has left his post, protesting that the UN is “failing” in its duty to prevent what he categorizes as genocide of Palestinian civilians in Gaza under Israeli bombardment and citing the US, UK and much of Europe as “wholly complicit in the horrific assault”.

Craig Mokhiber wrote on 28 October to the UN high commissioner in Geneva, Volker Turk, saying: “This will be my last communication to you” in his role in New York.

Mokhiber, who was stepping down having reached retirement age, wrote: “Once again we are seeing a genocide unfolding before our eyes and the organization we serve appears powerless to stop it.”

 Heartening to see there are still a few people in high positions with conscience left in them.

And finally, South American countries have chosen to express their outrage over what is going in in various ways. Bolivia has cut off diplomatic relations, others have recalled their envoys. In the Arab world, only Jordan has reacted in such a fashion, choosing to recall its envoy:

Bolivia said on Tuesday it had broken diplomatic ties with Israel because of its attacks on the Gaza Strip, while neighbors Colombia and Chile recalled their ambassadors to the Middle Eastern country for consultations.

The three South American nations lambasted Israel's attacks on Gaza and condemned the deaths of Palestinian citizens.

Bolivia "decided to break diplomatic relations with the Israeli state in repudiation and condemnation of the aggressive and disproportionate Israeli military offensive taking place in the Gaza Strip," Deputy Foreign Minister Freddy Mamani said at a press conference.

....."What we have now is the insanity of Israel's prime minister, who wants to wipe out the Gaza Strip," said Brazilian President Luiz Inacio Lula da Silva on Friday.