China, Iran and Oil

Prime Minister Netanyahu is a great admirer of Winston Churchill. Churchill spent much of the 1930’s as Britain’s lone crier of the truth as to the real intentions of Adolph Hitler. But as Gabriel Gorodetsky (Professor Emeritus of History, Tel Aviv University) aptly described in a recent interview on the BBC, WWII could probably have been prevented had the British and French Foreign Ministries listened more carefully to the voice of the Russian ambassador to London, Ivan Maisky.

Maisky, of course, was Stalin’s man, but the Russian ambassador feared Hitler with an intensity equal to Churchill’s. Maisky and Churchill spent countless hours in an attempt to forge a blocking alliance against the Third Reich. They failed. The consequences of this failure were the Molotov-Ribbentrop Pact and the start of WWII. Without British or French support, Stalin (feeling completely isolated) decided to play for time, leaving both France and Poland exposed to German arms and Hitler’s genocidal ideology.

It was the British appeasers who consistently claimed that the UK also needed more and more time in order to prepare for war. They believed that by appeasing Hitler, an attack could be postponed. The great irony was that the hypothetical diplomatic Maisky alliance of the 1930s became the actual Allied military alliance of the 1940s. But war probably could have been averted, had it not been for the lack of foresight by British and French politicians. Churchill warned and warned, but to no avail.

What about Netanyahu? He has warned and warned about Iran, but unlike Churchill he doesn’t have an alternative alliance, let alone any kind of strategic vision with regard to the Middle East. We hear a vague mention of some kind of regional solution to the Arab-Israeli conflict, but as yet the Israeli Foreign Ministry has proposed nothing. The same is true of the Labor Party. Amos Yadlin talks of regional solutions. But in eight to ten years, or not far beyond, Iran could be in possession of a nuclear weapon. Does Israel have an alternative solution? If it doesn’t, then Iran will certainly be a nuclear threshold state, if not worse.

But is Israel ready to put any skin into the game with regard to Syria or Iraq? Without some essential formula, what kind of regional solution is Israel’s leadership talking about? The fact is that no Israeli politician possesses the constituency for concrete military moves within the Arab world. The fact is that no current Sunni state would even want Israel to enter into Syria or Iraq. To allow Israel such permission would require a diplomatic breakthrough on a magnitude far greater than either Sadat or King Hussein. I would say to the Israeli political class that rumors and vagueness are not a substitute for an alternative strategic foreign policy. To bring about an Egyptian-Turkish-Saudi alliance with Israel will require an unprecedented historic strategic trade-off. Such a trade-off must entail a huge compromise on both sides of the geopolitical equation.

Enter China. More than any other country, China needs a stable Middle East. Even more so than the US and Japan (but not by much), China needs a reliable supply of oil and gas. China is essentially a status-quo power with limited (yet growing) global reach. However, both China and Russia reject US hegemony within their respective near-abroad. But this fact does not make either Beijing or Moscow unamenable to regional compromise, leading to greater international cooperation and a potential modus vivendi with regard to the secure movement of energy within the region of the Middle East. The fact is that something must be done in the Middle East to replace the vacuum left by the absence of US leadership.

Throughout the entire seven years of the Obama administration, the US has struggled to articulate a coherent foreign policy in the Middle East. In the process, it has alienated all of its allies within the region. Everyone now understands that Obama’s nuclear deal merely postpones, but does not eliminate, Iran’s nuclear potential. But this is only half the story. Iran and Saudi Arabia have been engaged in a long-standing proxy struggle for power that now has the potential to become even more dangerous by direct confrontation. This has become crystal clear within the last few weeks, as dissidents have been executed and the Saudi embassy in Tehran burned to the ground. Diplomatic relations between Gulf US allies and revolutionary Iran have been broken off, and the appearance within the Sunni world is that the US has tilted against its own allies.

Meanwhile, Washington has let the Russian entry into the Syrian civil war go unchallenged. This tilt toward Assad and Iran has now been accompanied by the release of tens of billions of dollars in sanctions relief to Tehran. These funds can only aid Iran in its attempt to overthrow the Sunni powers within the region, all of which are perceived by Tehran as agents of US imperialism. But Washington, under Obama, has all along compartmentalized its Iranian policy. Nuclear issues have been separated from the regional power struggle. This has only worked to intensify the struggle, which is now bordering on near chaos.

However, the Middle East can always get worse. And it will if something is not done. The region has become a cataclysmic failure, with more than enough problems of its own without the larger global powers reverting to some kind of 21st century Cold War. Local wars are dangerous enough for global oil supplies without the additional escalation of Russia or others.

Russia has indeed entered Syria to the detriment of the Sunni population, while China plays both sides — Sunni and Shia alike — through its economic forays on the highest presidential level. The US continues to thrash about with a diplomatic agenda that is so nebulous and incomprehensible as to engender deep suspicion throughout Israel and the Sunni world. From Cairo to Riyadh, US policy has been discounted while Israel and Sunni capitals now appear open to alternative ideas from whatever source might offer them. But will such alternative ideas be forthcoming? And what if they are not?

China (like Russia) has stepped into the Middle East regional vacuum in order to protect its vital interests. In both Israel and the Sunni Arab world, Obama is now seen as a lame duck. His policy is almost universally perceived to be based solely on the naïve hope (and miserable gamble) that Western economic penetration will somehow cause the Iranian supreme leader to embrace a form of pro-US (Indonesian-style) Islamic liberalism.

Unbelievably, the American president offers capitalist economics as an alternative to the essence of radical Shia political Islam. Nixon’s trip to China might have changed history in the early 1970s, but so far the Ayatollah Khamenei hasn’t even answered one of Obama’s letters. The Iran nuclear negotiations ended in a sweetheart threshold deal for Iran. So naturally the supreme leader agreed. But when it comes to any other issue in the Middle East, the Islamic Republic and its militant hardline leadership will always reject US entreaties. Nothing will change in Iran until the world forces it to change. Only then might the Iranian middle class reemerge as a force to overcome the revolutionary clergy and their supporters.

So where does China stand with relation to Israel, Turkey and the Sunni Arab states? As President Xi travels between Saudi Arabia, Egypt and Iran, nothing appears clear — not even the future of the Chinese economy. China remains a huge question mark. We know that Russia has tilted toward Iran and has put its own skin and advanced weapons into the game. We know that the US continues to ponder its geopolitical navel. But Beijing remains an unknown. It worries about oil, but which way will it tilt? Perhaps it might have peaceful regional alternative.

The global capitalist economy is far from healthy. And over the course of the last twenty-five years, the Chinese Communist Party has become the central player within this global capitalist economy. The last thing the world needs would be a blow-up in the Persian Gulf. This would send the price of oil skyrocketing in the face of a global crisis of consumer demand.

The Communists in Beijing must know that according to Marxist analysis, in order for capitalism to grow, it must profit from labor exploitation somewhere down the supply chain of production. The Western press (Financial Times, Wall St. Journal) likes to crow that globalization has achieved a rise in income within China and other parts of the Third World. But President Xi and his comrades know the hard truth of the real global economic situation: World income in the aggregate is NOT rising! As many Marxists correctly point out, cheap labor in plentiful supply might have benefited China’s growth prospects (along with their global corporate partners) but in the consumer markets of the US and Europe, demand has weakened because workers’ incomes have dropped.

Greater and greater instability in the Middle East would mean a certain crash in all capital markets. Even with oil prices at rock bottom, the markets are jittery (to say the least). This can only point to a long-standing crisis of demand. But neo-liberalism has run its course with the demise of Keynesian economics. Global debts are at an all-time high, as interest rates are at an all-time low. Nothing seems to work. Massive new injections of debt by central banks have only postponed the day of reckoning. Years of monetary and fiscal manipulation have modestly improved global growth rates. But at what price? Total world debt now stands at near 225 trillion US dollars. We have now reached the point of peak debt and global recession. Both Austrian economists and Marxists are in agreement: Keynes was correct about his own theory; in the end he predicted it would fail.

So now we have reached the Keynesian end. However, keeping oil prices low and stable will be essential in the crisis ahead. The crisis of demand and debt has really only been papered over during the seven years of the Obama administrations. This crisis probably had its genesis as far back as the Nixon-Mao handshake in the early 1970s.

Could there be other famous handshakes in the not too distant future? It’s really in everyone’s interest. Global security will either become a collective enterprise, or the current anarchy will have to reign through an extended transition from capitalist globalization to something new. Already the voices of nativism and jingoism are loud and politically pressing. This is especially true in the US, Russia and Europe. Times of economic bust and war go hand-in-hand. But nuclear weapons and ecological limitations have made world wars untenable. Only regional and international cooperation will suffice.

In the Middle East, Iran is both the aggressor and the aggrieved. During the Iran-Iraq War it was isolated, and it fought alone for its very survival. Now, however, it has turned that historical experience against not only the Sunni Arab world but Israel and Turkey as well. Syria cannot be allowed to become an outpost of Iranian aggression. Israel, Egypt, Turkey and the Gulf states must find a diplomatic rapprochement in order to curtail such an outcome. In this endeavor, these states must have the full cooperation of the UN Security Council.

Time is short. Whether Obama agrees or not, the Middle East nuclear clock is still ticking. The time on the wall says that it is close to midnight. WWII could have been prevented, if only the British had listened to Churchill and Maisky. Eighty years later, we find ourselves in a similar predicament. With the world careening toward economic and ecological challenge, no one knows just where the next out-of-the-box geopolitical initiative will come from. Israel needs its own version of Churchill to step forward and present a serious proposal. How else will both the Security Council’s permanent powers and potential Middle East regional allies come together?

It’s one thing to admire Churchill; it’s another to think strategically like him. It’s time for Bibi to step up to the plate and start envisioning a future for Israel and the region.

About the Author
Steven Horowitz has been a farmer, journalist and teacher spanning the last 45 years. He resides in Milwaukee, Wisconsin, USA. During the 1970's, he lived on kibbutz in Israel, where he worked as a shepherd and construction worker. In 1985, he was the winner of the Christian Science Monitor's Peace 2010 international essay contest. He was a contributing author to the book "How Peace came to the World" (MIT Press).