The alarming turn of events in recent weeks in the Middle-east should be cause for serious concern. Yet, the world and world leaders seem to be carrying on as if nothing untoward has taken place. Crude oil prices shot up to well over US$ 100 a barrel – Brent went up to near US$110 – and started trending down in a matter of days. All because the Houthis, armed proxy of Iran, started attacking Saudi Arabia including its oil infrastructure. The Saudis responded by shutting down the East-West pipeline for fear of further attacks and this sent Brent prices soaring sky-high. Then, media also reported that the Saudis have decided to reopen the East-West pipeline but allow only half of the earlier supply through. This decision seemed to bring the oil prices down a tad, but it’s still well above US$ 100 a barrel.
The question is how many more days and months of this will the world economy have to endure, before we can all go back to our normal, pre-war lives. Some like the experts at Brookings think that this US-Iran war may have already changed the world in ways that make it hard to return to pre-War days. In some ways, one has to agree, but I think it’s also the duration of the conflict that is leaving a lasting impact on the entire world. If it had ended in four to six weeks as Trump promised at the start of the war back in February of this year, perhaps it wouldn’t have been so damaging in its impact on the world.
Trump and the US administration are too caught up with the US mid-term elections to really make much of a difference right now, which means we can be sure that this war drags on well into 2027 as well. They are very concerned about oil prices rising at the pump before elections, especially diesel which has hit record highs, but beyond expressing dismay there is very little they seem to be willing to do to end the conflict soon.
I say that the situation is worsening because with the Houthi attacks on Saudi Arabia, and the potential closure of the Bab-el-Mandeb strait which international experts have been anticipating from the early days of the war, we are looking at another blockage of global trade through the region, especially of oil and other chemicals and commodities. This implies that even the restart of the East-West pipeline will mean little, as the oil tankers will not be able to pass the strait on the Red Sea.
One hopes it will not come to that, but in the escalation of the conflict and the fog of war, even warring parties can’t see too clearly. The only other route left is the Suez, which means a really long and circuitous journey before Gulf oil can reach South and East Asia, the regions most dependent on crude oil and other commodities that used to pass through the Strait of Hormuz. Those who compare strategy with chess aren’t far from the truth. To start with, Trump and company ought to have anticipated that the Strait of Hormuz would be used as leverage by the Iranians. Second, they should have done something to secure the Bab-el-Mandeb strait, knowing that this would be next in line to be closed; this objective can still be pursued but it is up to the US and the Saudis to work on it, and quickly.
It would also be worthwhile to start working on securing the Suez before this too goes out of control, which means working with Egypt to keep the Suez Canal open to trade traffic and protecting it militarily. I don’t see any effort being made in this direction yet, nor any preparation for the eventuality that all trade from the Gulf region may have to travel through the Suez in the near future, provided it can be secured and kept open. Else, all of the Middle-East will be under a blockade, and the effects will be felt around the world.
As is only too evident, the US-Iran war is already a regional conflict and threatens to engulf the entire Middle-east. Not just militarily, but in terms of economic growth as well for which most of the countries in the region depend on trade. As it is, the war has taken a huge toll on many of these economies, which I have written about recently. The countries that represent the more vibrant and prosperous parts of the Middle-East are now under a cloud of conflict, instability and uncertainty.
All this escalation is taking place at a time when the UN General Assembly is meeting in New York city and one wonders how many of these countries will summon the courage to tell their great ally and patron, the United States, to stop the attacks on Iran and instead get to the negotiating table. Last year, the leader of the PA, Mahmoud Abbas was refused a visa to address the UNGA in person and it is reported that this year too he will not be allowed to travel for the UNGA. For the sakes of their own economies and the well-being of their own people Middle-Eastern countries need to be able to take the initiative and find a way out of this crisis and more that could threaten the region in future.
At the height of the Israel-Gaza conflict and war, I had thought that the rich middle-eastern countries ought to pull their weight and lead the effort for peace in the region. That they ought to do more for the Palestinian cause and the two-state solution. But it appears from the situation now in the Middle-East that they cannot even help themselves, and this is a very sorry state to be in. They have been so coddled by decades of western patronage, money, arms deals and more that they have lost the capacity to even come together to bring peace to the region. Even now, Trump is promising F-35s and nuclear technology to Saudi Arabia, as if to buy Arab silence and acquiescence. On the other hand, the US and some other western nations have also benefitted hugely from billions of dollars-worth of investments from prosperous Middle-east countries, especially in the aftermath of the 2008 Financial Crisis.
Unfortunately, business deals have their limits. They cannot solve problems of an intrinsically political nature, when issues of sovereignty are involved. That requires political solutions arrived at through talks and patient diplomacy, as US businessmen, Steve Witkoff and Jared Kushner are probably discovering the hard way.
Time for the world powers to break the Catch-22 in the Middle-East, as the global economy and the lives of 8 billion people depend on it.
The animated owl gif that forms the featured image and title of the Owleye column is by animatedimages.org and I am thankful to them.
