When it comes to its public messaging on the Iran war, the Luxon government is talking optimistically, while trying to ease the public gradually into a sense of crisis. Yes, current fuel supplies are OK, for a little while longer. But the outlook beyond mid-April looks grim if the war drags on and the Strait of Hormuz remains effectively closed, as seems entirely possible.
Right now, if the government brought in sensible fuel conservation measures – free or half price public transport, work from home mandates, wide-ranging fuel subsidies, the easing of sanctions on Russia so that we could seek access to Russian oil etc – the political perception is that these responses might still trigger panic buying, and drain our stocks of petrol and diesel even before mid-April.
For now, the Really Bad Times – planes not flying, carless days, exports piling up on the dock etc – are being fenced off somewhere in the middle distance. Panic yesterday and panic tomorrow, but not today.
Phoney Times
For now, New Zealanders are living in the equivalent of what WWII historians called the Phoney War. (September 1939 until April 1940.) War had been declared, but fighting hadn’t yet started in earnest. As yet, neither have the major oil price shocks.
New Zealand’s basic problem is simple. If you ignore our dependency on fertiliser, this country is largely self-sufficient up to the farm gate. From then on, trucking and processing is heavily dependent on diesel, which we import from refineries in Singapore and South Korea that, in turn, get much of their crude oil via the Strait of Hormuz.
The measures we have adopted so far – a lowering of fuel standards to allow some Australian oil in here, and the “timely, temporary and targeted” fuel subsidy scheme based on tweaking the likes of the In Work Tax Credit– will be welcomed by those low and middle income members in the paid workforce lucky enough to access the help. (Beneficiaries pay tax on their incomes, but in this fuel crisis they, and their kids, are being treated as expendable.)
The moves so far have been largely cosmetic. At best, they won’t fully compensate for the diesel price increases and added costs of trucking goods to the supermarket. The consumer will be paying those added costs at the checkout. The cost-of-living crisis will deepen. The help that Willis is offering may be limited and “temporary” – a year at most, or until 91 octane petrol sits consistently at below $NZ3 a litre – but the core problem of not enough crude oil reaching the Asian refineries, is likely to continue.
For now, Singapore – which provides 31% of our refined fuel – is promising to maintain supply to us. Yet even if the conflict is resolved tomorrow, officials are expecting the high oil/diesel prices to endure for the next three months or more.
As Spain’s El Pais newspaper recently noted, “There’s a lag of a few weeks where tankers from before the war are still arriving. Soon there will be an air pocket when those shipments stop arriving, where demand far exceeds the available supply; at which point the price is going to get bid up a lot higher.”
Footnote One: Israel has made it clear that it wants the war to continue. Yesterday, when the US postponed attacking Teheran’s power grid, Israel bombed it anyway. As the American Prospect columnist Robert Kuttner said yesterday:
“It’s not clear whether Trump was letting Israel do his dirty work with his tacit consent, or whether Israel was once again deliberately trying to undermine the prospect of any cease-fire….Despite their close alliance, the interests of Trump and Israel’s Netanyahu diverge. Bibi wants to prolong the war, while Trump would like some kind of exit, if he can find one that he can spin as some kind of victory.
A clear majority of Israelis may be locked in behind Netanyahu, but few Americans see this war as necessary, let alone desirable. Israel and the US have different aims, and they differ on their readiness to sustain a long conflict. This split is one of the few advantages that Iran has, and it will be doing all it can to drive Trump and Netanyahu further apart.
Footnote Two: Why do those supposedly canny Wall St investors believe anything that Donald Trump says? Trump’s latest attempt to quell market anxiety (and to talk down oil prices) is based on a claim that Iran called him and offered a deal whereby Iran would agree not to pursue nuclear weapons. Hello? Iran signed a deal to that effect 11 years ago (in return for the easing of economic sanctions) and Trump tore it up. This U-turn motivated Iran to start seriously enriching uranium.
Last year and again this year, Iran was in the middle of negotiations aimed at curtailing its nuclear programme when Trump and Benjamin Netanyahu started bombing Iran and assassinating its leaders.
To claim that this war can be resolved by Iran once again offering to forego nuclear weapons – without being given any assurances that Israel and the US won’t resume bombing them whenever they feel so inclined – makes little sense.
Iran may want to offer Trump an off ramp, but it would be on terms that Trump would be very unlikely to accept, let alone Netanyahu.
If there were any such talks taking place, the usual broker – Oman – would be involved. In all likelihood, Trump is probably just buying himself five days without headlines about Wall St anxiety, and soaring oil prices. The war must be playing hell with his opportunities for pulling the old golf clubs out of the bag.
Iran runs marathons, not sprints
Back before the war, the White House was probably betting that Iran would prove to be a typical authoritarian regime where, once the head is killed or flees, the edifice of power quickly collapses. That’s pretty much what we saw with Gaddafi in Libya, Assad in Syria, Saddam Hussein in Iraq and in Iran previously, with the Shah.
The Islamic Republic of Iran is proving to be different. Yes, the Supreme Leader has been killed, and so have almost the entire top tier of military/security leaders. Yet to all outward appearances, the regime in showing no sign of imminent collapse. You have to ask why – if only because the answer is key to how long the war might last, and how serious its impact will eventually be on us, and on the rest of the global economy.
The Islamic Republic has a religious leader at its apex, and he is vested with more than symbolic authority. Beneath him there is, as Al Jazeera recently noted, “a network of solid institutions – some constitutional, some security-related, some bureaucratic and economic.” Crucially, these interlocking parts are “all working to preserve the entity itself, not merely the individual.”
Therefore, the head can be removed, but this alone will not cause the body of the regime to fail. Indeed, the country’s constitutional document had been careful to stipulate (via explicit protocols) how a succession process would kick in immediately, so that the system could survive, even when placed under maximum external pressure.
The processes of succession have been one factor in protecting the regime from collapse. Al Jazeera also pointed to three linked layers of authority:
(a) religious legitimacy layer (in less perilous times, this realm also had its own internal theological, administrative and political struggles for ascendancy, similar to what occurs in the Vatican)
(b) the military-security layer, headed by the Islamic Revolutionary Guards Corps (IRGC)
(c) the political bureaucracy – ie. the president, the judiciary and the general apparatus of day-to-day governance.
Unlike the situation in most other countries, the IRGC stands apart, as the independent guardian of religious integrity. It is not even nominally subordinate to the politicians. Therefore, its leaders also control much of the national economy – partly for their own gain, but also to ensure that the regime itself can continue to survive the economic sanctions imposed on Iran by its enemies.
In other words, economic hardship and a sense of isolation within a hostile world are nothing new for Iran, and for ordinary Iranians. In the 1980s, the country fought a long and bloody war of survival initiated by the Iraqi leader Saddam Hussein who- at the time – enjoyed the full backing of the United States, Europe and regional powers. The Iraq/Iran war lasted for nearly a decade before ending in a stalemate, at an estimated cost of one million lives.
Given this structure of governance, and given Iran’s recent history, the US and Israel should have recognised the ability of the regime to withstand the decapitation of its leadership. Why would anyone expect this entrenched regime to crumble overnight, or in a matter of weeks? It should come as no surprise to anyone that Iran’s leaders seem to be gearing up to fight a long, asymmetrical war of survival, as an independent nation.
Ultimately, if there is an invasion of foreign troops, the IRGC would lead a guerrilla campaign of attrition aimed at extracting a death toll beyond what the United States could sustain, politically. Al Jazeera’s guesstimate at the conclusion leaves no room for good news:
In sum, the Iranian regime, up to this moment, does not appear headed for a rapid fall, but it also does not seem capable of emerging from this war unscathed, as it was before. The most likely outcome is that it will endure, but at a high price: greater reliance on the IRGC, less space for politics, heightened sensitivity toward opposition, and a stronger inclination toward internal security contraction.
Everyone stands to lose in this war.
Afroman Rules
These days, there aren’t many good news stories coming out of the USA. The saga of Afroman (aka Joseph Foreman) is one of them. Briefly, Afroman’s home in southern Ohio was ransacked by local Adams County police. They kicked in his door looking for drugs and evidence of an alleged kidnapping. On both counts, they had the wrong guy in mind.
In the wake of the police raid, about $400 of Afroman’s money (and a slice or two of his mother’s delicious lemon pound cake) went missing. On entering the house, the police carefully cut the wires to the internal security system, but not before Afroman got enough footage to create a few songs and videos about the incident.
Those videos have gone vital, racking up millions of views on YouTube. Since the videos contain slurs and allegations about the integrity and competence of the Adams County police force, the police were unamused and – this being America – they decided to sue Afroman for defamation, claiming $US4 million in damages. The trial has just concluded. The jury delivered a smashing victor for Afroman, on free speech grounds.
If you want to follow down the rabbit hole and look at some of the evidence presented and the amusing cross-examinations carried out at the trial, go here. Afroman clearly knows what a great platform the cops have been foolish enough to provide for him. But as he says, none of this would have happened to them if they hadn’t kicked in his door.
Here’s Afroman’s major opus:
In an earlier, lighter work, he sang/rapped about Mama’s missing lemon pound cake, to the tune of the Drifters’ classic “Under the Boardwalk.” What’s impressive about the live footage is the degree of public support Afroman has earned, in the course of his uphill fight against the police. Great. But it is also hard to imagine – if our police sued a musician here in similar circumstances – that there would be such a happy outcome for the artist.