Conflicts Forum’s Weekly Comment, 1-7 August

The Ancient philosophers perceived killing – and its opposite pole of living peacefully – as curiously closely related – they rested, these seemingly opposite poles, on a knife edge, with each able, in an instant to tip towards the other. Or, in other words, that each (the killing and the enlivening mechanism) somehow is constituted by the other, and is inherent in each other.  When human energies became distorted, they held, a vicious circle emerges: with heightened temperament producing volatility, volatility producing arbitrary and fluctuating intentions, frustrated intentions producing feelings, and inflamed feelings demanding the impulse to act (perhaps to kill).  But what we (humans) lash out against – when seized by such volatility – is not something ‘real’ – As with Heracles in Hades, attempting to slay Cerebus and the demons of the ‘otherworld’, Heracles needed to be reminded firmly by Hermes that these fearful demons he was trying to kill, were not real – they could not be killed by the sword. They were images: the ‘demons’ Heracles was trying to ‘kill’ had emerged from out of his own psyche.

The key is in ‘the reversal’: the shift from the nihilistic to the enlivening. It is not easily done, (the ancient wisdom held), but a virtuous cycle is but a knife edge away – though crucial to making the reversal, is the ability to understand the seemingly contrary polarities inherent in all things: to see with ‘two eyes’. Is this not the significance of recent fighting in Gaza?  Israel simply cannot contemplate – cannot do – the reversal into the positive: the enlivening. It is paralysed, like Heracles, by the impulse to thrash around with a sword in order to continually wound these demons from the ‘otherworld’.  But there is no guide (a Hermes), bar a few courageous individuals, to tell Israelis that these demons have become so fearsome precisely because of what is buried in their own collective psyche.  There is no reversal in view.  Muslim temperament, in response to the slaughter, will heighten; feelings – already inflamed – will demand action. The crisis will aggravate.

And in the Sunni sphere, the nihilistic mechanism is opening on several fronts: Da’ish (ISIS) has established a beachhead in Lebanon in the town of Arsal, and already the adverse dynamics from this conflict with the Lebanese army, are emanating out into Tripoli, the second largest city of Lebanon; into Accra; and into the Ain el Helewei refugee camp.  Da’ish has opened a front against the Kurds of both Syria and of Barzani in Iraq (giving Maliki the opportunity to offer air support to the Peshmerga fighting ISIS); Da’ish continues to consolidate its ‘state’ (taking further oil fields, executing dissenters and occasionally crucifying them) in Iraq and Syria; and it has opened a conflict with the Zarqawi front in Libya (provoking threats by Field Marshall Sisi to invade Libya).

And ISIS threatens Saudi Arabia too: “The kingdom is calling in favours from Egypt and Pakistan. No one is certain what ISIS has planned, but it’s clear a group like this will target Mecca if it can. We expect them [Da’ish] to run out of steam; but no one is taking any chances,” said an adviser to the Saudi government.

What we are seeing here – in the Sunni sphere – is the turning upside down of a strategy that has been the bedrock of US and western Middle East thinking for the last 60 years: the idea that Saudi Arabia could  ‘manage’ Sunni Islam to promote its interest to have ‘Islam’ attenuated down to having ‘one voice (Salafist), one authority (the King) and one reading of the Qur’an (and thereby control over the mosque) – whilst simultaneously facilitating US policy objectives in the Middle East and beyond.

Sunni Islam was ‘managed’ in order to contain Soviet influence in the Middle East; to undermine Ba’athism and Nasserism; to defeat the USSR in Afghanistan; to contain Iran; to undermine President Assad in Syria and to launch a coup against Prime Minister Maliki in Iraq.  This intimate relationship effectively tied the West closely to Gulf security, and through its diverse intersections (Sandhurst, West Point, Wall Street and the City), western governments have come to deeply assimilate the Gulf ‘narrative’.  The handing over to Europe and America of the baton of the Saudi ‘narrative’ has facilitated the painting of Saudi’s regional rival (Iran) as the dangerous ‘other’, in western eyes.

For most of this period, Saudi Arabia did indeed manage and finance the ‘genie’ of fired-up Sunni radicalism in the joint interest of Saudi Arabia and the US.  Even Al-Qae’da itself really lay still within the Wahhabist paradigm.  But Da’ish does not.  It is truly at war with the Kingdom, unlike Saudi Arabia’s faux conflict with Bin Ladenism. ISIS contemptuously dismisses the three pillars of Saudi legitimacy and authority, and has reinterpreted Islamic history in order to wage war and to seize power: and the Gulf States are squarely in its sights.  The genie has turned on the master who originally conjured it out from its bottle.

What do all these disparate Middle East conflicts have in common?  They are all deeply anti-system in their different ways.  They are all trying to bring down the old order.  In Gaza, the people had had enough of their suffocation.  They want to break the siege – even at huge cost to themselves in terms of personal suffering.  Hamas’ (the military wing which was calling the shots) stance was clear: no more ‘fixes’ handed down by Egypt or western mediators: ‘just end the Gaza prison’.  Israel might, in some ways, want to do this; but it can’t.  ISIS too is trying to break the old order (the Arab Order) and to seize power violently, using the harsh methods of the first two Caliphs Abu Bakr and Omar (or, the Ghengis Khan tactics of using absolute fear to tumble the ramparts of power effortlessly).  Iran and Syria are challenging the global order – and sense a powerful partner in Russia and China in this enterprise.

The ‘old order’ is fraying visibly – and, as one of Conflict Forum’s seminar guests recently perceptively noted, the ‘new order’ will be forged by those states whose people still exude vitality; who still retain their sovereignty; or have regained it – and who sit on energy and other resources.

No wonder Washington does not know what to do about Gaza, ISIS, Syria, Libya, Egypt, etc., etc.  America is in decline, the global order has failed; and Saudi Arabia and Israel (America’s two hommes d’affaires in the region) are both at odds with the Administration, and plainly incapable of any ‘reversal’ that would allow them to emerge from crisis.  To be fair, there is little that America can do.

What is the importance of all this Byzantine Middle East turmoil to the average European or American then?  Why should he or she not just ignore it?  The answer is that the global financial system’s greatest risk is not recession, but its exposure to political risk.  The Gulf States’ pool of real liquid money is absolutely integral to a financial system leveraged, and up to its eyes, in debt.  This – the Gulf – is essentially the only big pool of ‘free money’ that is left in the world.  The rest is a top-heavy, Ponzi edifice of globalised credit leveraged on a tiny base of European and American ‘mortgaged money’.  The global system simply cannot afford a Gulf or regional meltdown.  This now a real risk: Gaza, ISIS, a major confrontation in Iraq pulling-in Saudi Arabia and Iran – all this is possible.

And it is this ‘thread’ of political risk and the nature of our globalised financial system that ties the two risks of the Middle East conflicts and Ukraine together – as a single category of ‘political exposure’.  A global financial system may give the US unheralded powers to ‘discipline’ other states, but precisely by it being global, the system makes itself highly vulnerable to Middle East crises that threaten – or even cause turmoil through fear – to this Gulf money pool.  This ‘pool’ has become inherent to Wall Street, the City, and the West’s financial stability.

It is the global financial system too – in its present US and dollar centeredness – which directly connects the Ukraine to the main Middle East conflicts.  Sanctions have been imposed on Russia; but in so sanctioning Russia, Europe and America have provided the impetus to Russia and China to develop multi-currency trading in parallel to the dollar, and to push the renminbi towards being a parallel reserve currency.  The extent and the determination by which Russia and China pursue this path will have profound implications for the Middle East.

The conflict in Ukraine resonates strongly across the Middle East.  Syria and Iran (and others) easily read western intervention in Ukraine as mirroring earlier western-led interventions mounted against them.  As Ukraine-related sanctions have been imposed on Russia, so Russia has moved closer strategically to Iran, Syria, Iraq and Egypt in riposte.

The inception of any parallel financial system will allow Iran to ease itself out from the US Treasury’s tentacles and to bypass the dollar-based financial system:  Ditto for Syria. And any shift in the global financial system will not leave the Gulf States unaffected either.  Already the dollar share of global reserves has shrunk to 61% from more than 72% in 2001.  If Russia and China start trading energy outside of the dollar-based system, OPEC will not be able to ignore this development.

In short, the ripples from the sanctions on Russia will do much to define the region:  to the degree to which Russia will emerge ahead in this conflict, Saudi and Gulf States will be weakened; to the degree to which the US prevails over Russia, Iran and Syria will be weakened. To the degree that Russia re-orientates its energy policy as a consequence of the sanctions, so too will be defined the direction of the future pipelines of the Iraq-Iran basin and the energy orientation of the region. (Iraq will not forget Russia’s prompt assistance following the Da’ish thrust into Iraq).

Of this wide category of political risk within the global financial system, the effect of the Ukraine conflict’s potential to escalate (and its knock on effect on the Middle East) is the most dangerous.  The situation of the ground in East Ukraine is that of a precarious stalemate:  the two opposing forces are asymmetric.  Kiev has possibly 45,000 troops in Dunbass; whereas the militia numbers perhaps 18,000.  The latter are simply too small to hold all the ground everywhere. In one location, the ‘southern cauldron’, the resistance has been able to take the initiative and surround the Kiev forces (with many of the Kiev forces fleeing into Russia) – and the resistance has succeeded to keep open the corridor to Russia, albeit now a somewhat narrowed corridor. But the Resistance simply does not have the manpower to mount a full assault on the Ukrainian army.

Kiev, taking advantage of its superior numbers, has concentrated on mounting simultaneous attacks on all fronts (knowing that the militia cannot hold positions across the board) – and using heavy armour to lead a thrust into militia held territory – with regular units with sweeping up behind the armour.  The resistance has responded asymmetrically by rapidly moving its artillery from position to position; by engaging in ambushes, attacks from the flank, and trying to draw in the junta forces into ‘fire pockets’, and then surrounding and killing them.  It has imposed heavy casualties on the Kiev forces in this way.  More recently, the Kiev forces have been using heavy artillery and rockets against the civilian populations of Dunbass.  The UN is increasingly alarmed at the humanitarian situation: to date 1,367 people, combatants and civilians have been killed (on a par with Gaza); 285,000 have been displaced in Eastern Ukraine; 4,000 wounded and 168,000 have fled into Russia, John Ging reported to the UNSC on Tuesday.

There is no doubt that just as the resistance cannot overcome the Kiev forces, the latter’s military thrusts have petered out into nothing.  It is perhaps a sign of frustration at this lack of success, that the Kiev forces have taken to shelling Luhansk and Donetsk. Russia’s U.N. Ambassador Vitaly Churkin said the situation in the east, particularly in Luhansk and Donetsk, is “disastrous.” He accused the Ukrainian military of indiscriminate shelling of houses. In many small towns, he said, 80 per cent of the houses have been destroyed and hundreds of buildings have collapsed.

Overall, there are some signs of Kiev’s military effort imploding.  There have been three mobilisations of conscripts, who have been deployed with just a lick of training.  Their military efficiency is low (in an army already known for its ineptness and indiscipline).  Protests are growing against the military draft, and the cost of Kiev’s war on the east of its country will be taking its toll.  Where to now?  Will NATO enter the scene to bolster Kiev’s military capacities?  (NATO exercises are scheduled for September in Ukraine and Bloomberg reports that Canada’s Defence Minister has announced that Canada – a NATO member – will be sending military assistance to Kiev).

In spite of the deteriorating humanitarian situation in Dunbass, President Putin seems (for now) to be trying to balance strong nationalist pressures on him to protect the people of East Ukraine against the countervailing advice from commercial interests to try to avoid direct intervention – and the escalation of economic warfare that would ensue from such intervention.  Putin seems to be playing it long: Russia’s announced countermeasures have clearly been carefully crafted.  It is notable that they fall more on agricultural products than on the type of high-value engineered products, which represents Germany’s export strength.

Europe seems to have been taken aback and surprised by Russia’s response to sanctions (see here) with Bloomberg reporting  “sanctions against Russia are undermining a euro-area recovery that the European Central Bank president already describes as weak”.  In Germany, we understand that the government came under intense pressure to accede to sanctions on Russia, with the Baltic States and Poland used by the US to ‘discipline’ Germany, and to bring it into line (there is considerable bitterness between Germany and Poland in consequence).

The ‘Black Swan’ in the European context however could still be the MH17 attack. No evidence has been produced to account for its downing (still). Were the evidence to point to a different source of responsibility than the pro-Russian militia (and suggestions to this end are circulating in Germany (see here and here) – it would not of course shift America’s narrative (as Professor Stephen Walt noted recently, “neoconservatives have always been willing to play fast and loose with the truth in order to advance political goals”), but it might well affect German opinion. After the NASA scandal, many Germans are still a sour in respect to evidence of America’s economy in veracity.