Category: Maithili Bagaria
Nuance in regional reactions to the Iran deal
On Wednesday, the Wilson Center hosted a panel on “The Iran Nuclear Deal: The View from the Region.” Speakers included Muath Al Wari, Senior Policy Analyst at Center for American Progress, Deborah Amos, International Correspondent for NPR, Shlomo Brom, Visiting Fellow at Center for American Progress and Fahad Nazer, Political Analyst at JTG Inc. The event was moderated by Henri J. Barkey, Director of the Middle East Program at the Wilson Center.
Al Wari analyzed the UAE response to the nuclear deal. He claimed the UAE concern is less about the nuclear aspect and more about the fact that Iran ran a clandestine program under the authority of a state that is willing to undermine other governments in the region. However, Emiratis have decided to look towards the future, believing President Obama secured the best deal possible. The UAE is now looking at what the deal means for future Iranian encroachment in the region and what the US and other P5 countries will do to constrain Iran. The UAE hopes that Iran will normalize its regional behavior. In the coming days, the Emiratis will study the outcomes of King Salman’s visit to the US.
Al Wari criticized the sectarian portrayal of the nuclear deal. Regional concerns about the deal are linked to the geopolitical security competition. Sectarianism is exacerbated by the competition and contributes to it. His belief is that the deal is an American tool to prevent escalation in the Middle East—the agreement is a formal check on Iranian hegemony and encroachment.
Amos explained that the deal so far is unsurprisingly irrelevant to daily life, but the consequences of the agreement will be tested on the ground. She reiterated Al Wari’s words—the Gulf States want to know if attention will be paid to non-nuclear developments that are heating up. That said, the deal unlocks significant trade potential regionally (especially for the UAE and Oman) and globally. The calculus of power has already shifted, with Europeans sending trade delegations and major American companies, such as Apple, preparing to tap into the Iranian consumer market.
Brom delved into the nuances of the Israeli stance on the nuclear deal. For Israel, Iran’s nuclear program and the possibility of it acquiring nuclear weapons has always been a central issue. Indeed, Iran’s nuclear program is the centerpiece of Netanyahu’s foreign policy. He believes he won the elections because of his strong security agenda and perceives Iran as an existential threat. Many Israelis think the combination of a religious and ideological regime with nuclear weapons could lead to Iran striking Israel. However, Netanyahu’s opinion isn’t representative of all Israelis. Many dissenters coming from the Israeli security and foreign policy community, including Brom, believe the agreement is not perfect, but still better than no agreement. A better agreement would have been unlikely.
Like Brom, Nazer also cautioned against making generalizations about regional players. He thinks it is too simplistic to assume that all Saudis think the nuclear deal will usher in an Iranian hegemony with American blessings. Instead, he thinks the Saudi position has shifted slightly. The Saudis are no longer committed to preventing the deal from being implemented. The Saudis support any agreement that prevents Iran from acquiring nuclear weapons and guarantees the reinstatement of sanctions if Iran doesn’t comply. After Saudi Foreign Minister Al Jubeir’s visit to Washingon, he openly commended the robust inspection of the verification regime and provision of “snapback” sanctions.
At the same time, the Saudis are maintaining a wary position on the deal. Saudi Arabia is not depending on the US and hoping for the best. High-level Saudi officials have had meetings with Russians, Europeans and other key leaders. Prince Faisal has also said Saudis will expect the same nuclear standards for themselves and should be permitted at least the same levels of uranium enrichment capability as Iran. Prince Bandar has compared the Iran agreement to the nuclear agreement President Clinton signed with North Korea. He feels President Obama is not keeping the lessons of Korea in mind.
The US and Saudi Arabia also have differing threat perceptions. President Obama thinks Saudis need to worry less about an external threat from Iran and focus on the internal implosion stemming from a generation of youths with few hopes for the future. Conversely, the prevailing sentiment in Saudi Arabia is that Iran constitutes a serious threat. Saudi Arabia and Iran have been on polar opposite ends in Syria, Yemen, Iraq and Lebanon. Nazer believes there is a serious credibility gap between Saudi Arabia and Iran, which could lead the Saudis to take matters into their own hands, as they have done in Yemen.
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Peace picks July 27-31
1. Chemical Safety and Security: TSCA Legislation and Terrorist Attacks | Monday, July 27th | 2:00 – 5:00 | CSIS | REGISTER TO ATTEND | Chemical safety and security is one of the fundamental pillars of the Chemical Weapons Convention (CWC), but the recent and ongoing use of dual-use chemicals such as chlorine in the Syrian conflict, several recent chemical accidents in the US, and congressional updating of the Toxic Substances Control Act (TSCA) have all raised these goals to a much higher level. This seminar will address three related safety and security issues: (1) new TSCA legislation in the House and Senate; (2) the Chemical Facility Anti-Terrorism Standards (CFATS); and (3) Global Partnership efforts to improve chemical safety and security of industry and transportation. The Proliferation Prevention Program will co-host this event with Green Cross International and International Center for Chemical Safety and Security (ICCSS). Speakers include: Ambassador Krzysztof Paturej, President of ICCSS Board, Michael P. Walls, Vice President, American Chemistry Council, Michal Ilana Freedhoff, Director of Oversight & Investigations, Office of Senator Edward J. Markey, United States Senate, Todd Klessman, Senior Policy Advisor, Infrastructure Security Compliance Division, Department of Homeland Security, Ambassador Bonnie Jenkins, US Department of State, Ali Gakweli, Deputy Government Chemist, Government Chemist Division, EU CBRN National Focal Point National Authority (CWC), Nairobi, Kenya. Moderators include: Paul Walker, Director of Environmental Security and Sustainability, Green Cross International and Sharon Squassoni, Director of the Proliferation Prevention Program, CSIS.
2. Hearing to Examine Iran Nuclear Agreement | Tuesday, July 28th | 10:00 – 2:00 | Rayburn House Office Building | REGISTER TO ATTEND | Chairman Ed Royce (R-CA) on the hearing: ‘This Iran deal is one of the most important in decades. It reverses decades of bipartisan nonproliferation and regional policy, has several shortcomings, and demands the closest scrutiny. Secretary Kerry and the other Administration officials will face tough questions before the Committee, as we continue our comprehensive review of the Iran deal and the Administration’s overall regional policy.’
Ranking Member Eliot Engel (D-NY) on the hearing: “I look forward to hearing from Secretaries Kerry, Lew, and Moniz to discuss the Iran agreement. I have serious questions and concerns about this deal, and input from the Administration will be critical as Congress reviews the proposal.”
Speakers include: John Kerry, Secretary of State, Department of State, Jacob Lew, Secretary of Treasury, U.S. Department of the Treasury and Ernest Moniz, Secretary of Energy, U.S. Department of Energy.
3. Discussing American Diplomacy at Risk and the Second Quadrennial Diplomacy and Development Review| Tuesday, July 28th | 11:00 – 12:30 | The Stimson Center | REGISTER TO ATTEND | Government reform is an open ended process; large institutions that conduct our national security and foreign policies need to continually evolve, to adapt to changing realities in the international landscape, and to changes in our own society. Two recent reports address the challenge of aligning the internal structures and personnel practices of the Department of State to the 21st century world. The American Academy of Diplomacy has recently released American Diplomacy at Risk, examining how the professional foreign service is weakened by politicization and by failures to sustain relevant training and professional development for the work force. The State Department itself has released its second Quadrennial Diplomacy and Development Review, looks at recent reforms and innovations to make the department more responsive in an age of partnerships and collaboration with diverse state and non-state civil society players. Speakers include: Ambassador Ronald Neumann, President, American Academy of Diplomacy, Caroline Wadhams, Acting Director in the Office of the QDDR, State Department , Ambassador Barbara Bodine, Director, Institute for the Study of Diplomacy and Julie Smith, Senior Fellow and Director of the Strategy and Statecraft Program, Center for New American Security . Moderators include: Ellen Laipson, President and Chief Executive Officer, the Stimson Center .
4. Can the P5+1’s Vienna Deal Prevent an Iranian Nuclear Breakout| Tuesday, July 28th | 11:45 – 1:30 | Hudson Institute | REGISTER TO ATTEND | The Joint Comprehensive Plan of Action (JCPOA) signed earlier this month in Vienna is the culmination of a longstanding Obama administration effort to resolve the international community’s nuclear standoff with Iran through diplomatic means. A host of serious questions surround the agreement, including the complexities of international law and politics necessary to enact its provisions, and the strategic calculations that Iran’s regional rivals will make in its aftermath. But the key question remains the most practical one: Will the JCPOA, advanced by its proponents as a far-reaching and robust arms agreement, actually prevent Iran from acquiring a nuclear weapon?
Can the JCPOA’s inspection and verification regime, which allows Iran a 24-day window to prepare – or “sanitize”—any suspected site for on-site review, provide an effective guarantee against violations? What will it mean when the JCPOA expires in 15 years under the “sunset clause” and Iran becomes a “normal” nuclear power? And how, in the meantime, will the deal’s removal of existing sanctions against currently designated terrorists and terror-connected entities – like the Iranian Revolutionary Guard Corps (IRGC) and Qassem Suleimani, commander of IRGC’s expeditionary unit, the Quds Force – complicate efforts to constrain Sunni Arab states from pursuing nuclear arms programs of their own?
Speakers include: Senator Tom Cotton, U.S. Senator from Arkansas, Michael Doran, Senior Fellow, Hudson Institute, William Tobey, Senior Fellow, Belfer Center for Science and International Affairs and Hillel Fradkin, Senior Fellow and Director, Center on Islam, Democracy and the Future of the Muslim World, Hudson Institute. Moderators include: Lee Smith, Senior Fellow, Hudson Institute.
5. Hearing: Women Under ISIS Rule: From Brutality to Recruitment| Wednesday, July 29th | 10:00 – 1:00 | Rayburn House Office Building | REGISTER TO ATTEND | Speakers include: Sasha Havliceck, CEO, Institute for Strategic Dialogue, Ariel Ahram, Assistant Professor, Virginia Tech School of Public and International Affairs and Kathleen Kuehnast, Director, Gender and Peacebuilding, Center for Governance, Law and Society, United States Institute of Peace.
6. Panel: Scorecard for the Final Deal with Iran| Wednesday, July 29th | 12:00 – 1:30 | JINSA | REGISTER TO ATTEND | In Vienna on July 14, the P5+1 and Iran agreed on a final deal, formally known as the Joint Comprehensive Plan of Action (JCPA). This report will analyze whether the JCPA addresses the Task Force’s questions and concerns about the framework agreement. Overall, the JCPA rolls back Iran’s breakout time and allows for broader verification, but only in exchange for key restrictions being removed in 8-15 years, R&D on advanced centrifuges, front-loaded sanctions relief – including up to $150 billion in unfrozen assets – with no automatic “snapback” mechanism, an end to the U.N. arms embargo against Iran and no anytime, anywhere inspections. Speakers include: John Hannah, Former National Security Advisor to the Vice President Senior Fellow at the Foundation for Defense of Democracies Iran Task Force Member, Dr. Michael Makovsky , CEO, JINSA, Dr. Ray Takeyh, Senior Fellow, Council on Foreign Relations .
7. From Ocean of War to Ocean of Prosperity| Wednesday, July 29th | 4:15 – 5:15 | Carnegie Endowment for International Peace | REGISTER TO ATTEND | Over the past two hundred years, the Western Pacific has been the stage for war, peace, development, modernization, and prosperity. Its rich resources and vital shipping lanes are essential to the well-being of all countries within its bounds. Admiral Tomohisa Takei, chief of staff for the Japan Maritime Self-Defense Force, will discuss the development of the U.S.-Japan relationship, Japan’s role in the region, and the future of a rules-based international order in the Indo-Pacific. Carnegie’s vice president for studies, Thomas Carothers, will moderate. Speakers include: Admiral Tomohisa Takei, Chief of Staff, Japan Maritime Self Defense Force, Thomas Carothers, Vice President for Studies, Director of Democracy and Rule of Law Program, Carnegie Endowment.
8. Empowering America: How Energy Abundance Can Strengthen US Global Leadership| Thursday, July 30th | 8:30 – 9:45 | Atlantic Council | REGISTER TO ATTEND | Please join Senator Lisa Murkowski, Chairman of the Senate Energy and Natural Resources Committee, and Senator Mark Warner as they launch the task force report: Empowering America: How Energy Abundance Can Strengthen US Global Leadership. Over the past few months, with the Senators as the Co-Chairs, the Atlantic Council convened foreign policy, defense, and energy experts to assess the foreign policy considerations of the US energy boom. The task force details the nature of our energy abundance, the importance of deploying our prowess in energy innovation and technology to others, and the ways in which we can pursue our responsibilities as a global leader on energy and the environment, while leveraging our supply abundance at the same time. It unequivocally determines that America must embrace this new tool to advance our global leadership on trade and security. Speakers include: Richard Morningstar, Director, Global Energy Center, Atlantic Council, Lisa Murkowski, Senator of Arkansas and Mark Warner, Senator of Virginia. Moderators include: David Goldwyn, Chairman of the Energy Advisory Group, Atlantic Council.
9. Threat of ISIS in Iraq: Views from the Ground| Thursday, July 30th | 10:30 – 12:00 | Stimson Center | REGISTER TO ATTEND | From enflaming sectarian tensions to undermining governance and economic development, the expansion of ISIS continues to pose grave risks to Iraq and the broader Middle East. Stimson and the American University of Iraq, Sulaimani (AUIS) invite you to join us for a discussion featuring views and perspectives from AUIS scholars and students examining the nature of the ISIS threat, and the related territorial, demographic and socio-economic consequences. Students from Kurdistan and other parts of Iraq will join us through video links.
10. Reviving Citizenship in Turkey through Citizen Journalism| Friday, July 31st | 1:30 – 2:30 | Freedom House | REGISTER TO ATTEND | Engin Önder is the co-founder of the Turkish citizen journalism initiative 140journos. Founded in 2012, 140journos is a collaborative information-gathering and dissemination project that has responded to the censorship and self-censorship of the official media in Turkey by taking matters into its own hands. After huge success as a Twitter-based livefeed that helped document the 2013 Gezi Park protests, in 2015 the project has transformed itself with a new approach that embraces interactive mapping, data visualization, and long-form reportage across multiple social media platforms. Önder will describe how the new 140journos is using citizen journalism to change the information ecosystem and restore the meaning of citizenship in Turkey. Speakers include: Engin Önder, Co-Founder, 140journos.
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Energy markets: US up, Middle East down
Thursday, the Atlantic Council hosted a talk on energy policy entitled “The Future of Energy Markets: The Other Middle East Revolution.” The event featured Majid Jafar, Chief Executive Officer of Crescent Petroleum as the key speaker. Richard Morningstar, Founding Director of the Global Energy Center at the Atlantic Council moderated the event.
Jafar recounted the changes in the energy markets in the past 15 years. In 2000, the price of oil was in the low teens and natural gas was $10. The US was an importing country, which meant it was building LNG terminals everywhere. The Middle East was relatively stable. More than a decade later, the price of natural gas has plummeted again, but the US has become an exporting country. The shale oil and gas boom has led the US to convert its LNG terminals for export. Equally if not more importantly, the Middle East has become very unstable.
US Private Sector
Jafar also emphasized the power of US private sector. He claimed the energy breakthrough was despite rather than because of government policy and lauded the US for its long-term strategic energy planning. The US has experienced a large drop in carbon emissions while seeing huge job creation in the oil and gas sector. In contrast, European countries, such as Germany, set ambitious targets like zero fossil fuels and made a mad dash for renewable energy sources. This move stifled the Germany economy and inflicted huge costs on Germany households and industries. Ironically, Germany is experiencing rising emissions and is having to import coal from the US.
Lessons Learned
The CEO shared three lessons he had learned from his experience in the energy industry:
- Do not underestimate the power of the US private sector, especially in the energy industry. Huge innovation can drive many changes.
- Never underestimate the ability of the Chinese public sector to complete their plans. The East-West pipeline is a classic reflection of the Chinese capability in completing large-scale projects.
- Never underestimate the ability of the Middle East public sector to get things wrong.
Jafar added that the unique US ecosystem cannot be replicated elsewhere. It includes infrastructure, capital markets, energy trading hubs, many small companies and a system of mineral rights. However, other countries can learn to provide better access to finance, encourage competition and transparency, and expand their private sectors.
The Middle East
The Middle East contains half the world’s proven oil and gas resources but accounts for less than a 1/3 of global oil exports and less than a 1/6 of global gas exports. The region has experienced a declining market share due to numerous conflicts, years of Iran sanctions and poor policies. Energy subsidies in particular pose major problems. The region has lost $225 billion to subsidies, which do not even help the poor people who are supposed to be the beneficiaries. The good news is that the current low oil prices provide many countries the opportunity to reform subsidies, because the gap between the market price and subsidized price is small.
Egypt is a good example. It has committed to reforming energy subsidies, because they are unsustainable and divert money from important areas of investment that create jobs. Egypt’s spending has been divided between debt service, salaries and subsidies, which left the government with little to spend on investment, infrastructure and jobs.
Another problem with the region is the dominance of national oil companies, which hinder competition and positive performance. When an energy minister is also the chairman of the oil company, there is no difference between the regulator and the regulated, which hurts policymaking. Some countries, such as Kuwait, Iran and Saudi Arabia, have realized this and partnered with private investment companies. Jafar said he is not calling for complete privatization, merely a bigger role for the private sector in developing state assets.
Iraq
Jafar also detailed Iraq’s important role in the energy world. The failing state is responsible for 40% of global oil export growth despite failure to pass hydrocarbon legislation, a lack of internal consensus on energy policy and the ISIS presence. Iraq’s production is nevertheless at an all-time high, making it the second biggest producer in OPEC. If Iraq gets its act together, it could produce 6-12 million barrels of oil per day. Iraq may have larger oil reserves than Saudi Arabia—at least 300 undrilled structures lie in the Western desert.
The Kurdistan Regional Government (KRG) has done well in passing legislation, working with private companies and essentially getting the policy right. But it faces implementation challenges because the Baghdad government is unable to pay the KRG for its oil. In southern Iraq, the latest market methods have been used with transparent bidding rounds involving private companies. However, the decision to sign service contracts was a bad one, because it means southern Iraq has to pay private oil companies a fixed fee regardless of the price of oil. With the oil price collapse, southern Iraq can no longer afford to pay the companies and is discouraging investment. A new contract model is needed where companies receive a percentage of the government’s oil profits, as opposed to a fixed fee. More importantly, a stable security environment is needed to encourage continued investment.
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Women in countering violent extremism
Countering violent extremism (CVE) has become vital to national security. On Tuesday, the United States Institute of Peace explored women’s role. The panel included Zainab Hawa Bangura, Special Representative of the UN Secretary General on Sexual Violence in Conflict, Ambassador Anwarul K. Chowdhury, former Under-Secretary-General and High Representative of the United Nations, Chantal de Jonge Oudraat, President of Women in International Security, Susan Hayward, Director of Religion and Peacebuilding at USIP and Jacqueline O’Neill, Director of the Institute for Inclusive Security. Kathleen Kuehnast, Director of Gender and Peacebuilding at USIP, moderated the event.
O’Neill talked about the importance of keeping our response to violent extremism in perspective. We often emphasize a securitized response, which undoubtedly is necessary. But a securitized response should not occur at the expense of solving broad, structural issues. We should not allow ourselves to be radicalized when countering extremism. A more appropriate approach would be to work on countering the “violent exclusion” of women and how that feeds into other problems.
Hayward explained the role of religion in CVE. She claimed it was critical to engage religious leaders and actors and use their authority to counter religion-based messages that legitimate and fuel extremism. In particular, she called for more women religious leaders to get involved. They can provide important psychosocial support, recognize radicalization and bridge religious divides.
Oudraat addressed three problems that dominate discussions on women and CVE:
- They ignore the gendered nature of security and are oblivious to the relationship between gender equality and status of women on one hand and violent conflict on the other hand.
- Many people have a misguided idea of the role and power of women in societies. There is a widespread idea that women are not visible in the public sphere, but are powerful in the private sphere, at home with their families, which makes them great agents for CVE. This is not true—a lot of women lack power even inside their families.
- Most of the discussions on women and CVE are not linked to the UN’s Women, Peace and Security (WPS) agenda. Gender equality is core to sustainable peace, so if we’re not linking CVE to the agenda, then we’re not taking the agenda seriously.
Chowdhury echoed Oudraat’s words and reiterated the importance of CVE as a component of the WPS. He said the agenda is centered on three pillars: participation, prevention and protection of women in conflict situations. The most important pillar is the first one, because if we have participation at all decision-making levels, it will ease the need for protection and prevention. Chowdhury emphasized maintaining a longer-term perspective in CVE. We often take the “hardware” approach to CVE by relying on military efforts. But we must also concentrate on promoting a culture of peace in which children grow up learning that they can resolve problems through non-violent means.
Chowdhury also called for a more determined and forceful approach towards inclusion of women. The world has paid “lip service” to women’s equality, but patriarchal attitudes have set us back time and again.
Bangura focused on women in ISIS, which understands better than state actors the importance of recruiting women and including them in governance. While the radical Islamic organization actively enlists smart women, we are still debating whether to include women in counterterrorism strategies. ISIS understands that when it targets women, it degrades, humiliates and destroys a society. In order to fight ISIS, we need to develop creative solutions, because our current tools are not sufficient. One solution is providing space for women in the counterterrorism effort, such as mothers who can provide insight on the radicalization process their children go through in order to join ISIS.
The panelists agreed that the international community must develop a more sophisticated understanding of gender dynamics as part of CVE. O’Neill and Oudraat pointed out that extremist groups’ ability to appeal to a man and woman’s sense of agency drives recruitment.
Chowdhury and Oudraat also stressed the value of National Action Plans (NAP) in future CVE efforts. These are plans that all UN member states are obligated to prepare, but so far only 43 out of 193 member states have prepared a plan. NAPs include each country’s comprehensive CVE strategy and bridge the distinction between what’s happening domestically and what’s happening internationally. These plans allow the international community to hold governments accountable for their CVE efforts, which is one way to extract national-level commitment. Tangible change should begin with serious treatment of women’s issues. Chowdhury warned that so long as millions of women are marginalized and impoverished, violent extremism will continue to spread.
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The path of civil resistance
Thursday the United States Institute of Peace held a talk on “Civil Resistance and Peacebuilding: How They Connect.” The panelists included Maria Stephan, USIP Senior Policy Fellow, Manal Omar, Acting Vice President for USIP’s Center for Middle East and Africa and Kerri Kennedy, Associate General Secretary for International Programs at American Friends Service Committee. The event was moderated by Nancy Lindborg, President of USIP.
Stephan introduced the concept of non-violent civil resistance by comparing it to traditional peacebuilding. The former intensifies conflict in an attempt to shift power so as to get to a point of meaningful negotiation. Civil resistance ripens conflicts for conflict resolution. The latter mitigates and deescalates conflicts using techniques such as dialogue, mediation and problem-solving. Both approaches are different but fall under means of conflict transformation.
Stephan also produced empirical data on the efficacy of non-violent resistance compared to armed struggles. She looked at 323 campaigns in 1900-2006 in which at least 1000 people were involved in fighting against dictatorships and for territorial self-determination. She held constant any thing that would determine the conflict’s outcome, such as GDP, military might of the opponent or regime and socioeconomic divisions in society. The results showed that non-violent resistance campaigns outperformed their armed competitors by 2:1.
Additionally Stephan’s empirical research showed society is better off after the struggle if non-violent methods are employed. Non-violent campaigns are strongly correlated with democratic consolidation. The probability a country will be a democracy five years after a campaigns ends is 57% among non-violent movements against less than 6% among successful violence campaigns. Also, the likelihood of recurrence to civil war for violent campaigns is almost double that for non-violent campaigns.
Kennedy spoke about the relationship between civil resistance, peacemaking and peacebuilding. Although there may be tension among the three elements, Kennedy believes a strategy works best when all the elements are incorporated. She added that often peacebuilding and civil resistance are happening at the same time, as opposed to sequentially. For example, in Egypt it wasn’t just a quick social movement that lead to the fall of Mubarak’s regime—decades of effort led to the large social movement. Kennedy also advocated dialogue first to bring about a solution, but warned that it’s rare for dialogue to work on its own without the pressure of mobilization.
Omar elaborated on the challenges of civil resistance as a form of conflict transformation. One issue is redirecting people’s anger towards productive efforts. A person who uses his or her anger to call for social justice is a good thing, but it’s difficult to prevent that anger from morphing into violence. Similarly, defectors from the security apparatus don’t want to put their arms down when they join non-violent resistance movement, which leads to the lines blurring between violence and non-violence. Omar called for the international community to provide people more alternatives, so they don’t turn to violence. Too many people have been disillusioned with the failure of the “ballot box over bullet,” but lack peaceful, constructive options for conflict transformation.
Omar also commented on the importance of transitional justice in post-conflict situations. Many countries in transition begin state building without ensuring accountability, which prompts these countries to slide back into civil wars. Sometimes the international community pushes transitional states towards creating a constitution, holding elections and essentially meeting indicators of success without addressing transitional justice. The consequence is the loss of support from people who were dedicated to the non-violent cause from the beginning because they don’t see justice served.
All three panelists emphasized that the civil resistance path is long and obscure at times. Kennedy claimed the importance of small community steps should not be dismissed. It is necessary to debunk the myth that violent intervention is fast and effective, when it’s actually very messy. Omar added that the regime changes in Egypt and Tunisia were the result of years of mobilizing, organizing groups, training, making mistakes and learning from them. They weren’t merely 25-day struggles. Stephan said that civil resistance encompasses more than protests, demonstrations and boycotts, it also involves social audits, community monitoring and creating parallel structures and institutions, which can empower the nation-building process.
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Global implications of the oil price crash
The steep decline in oil prices has been one of the most significant global economic developments over the past year. On Tuesday, the Carnegie Endowment held an event on “Oil Price Trends and Global Implications” to address the consequences. The panelists included Aasim M. Husain, Deputy Director in the Middle East and Central Asia Department of the IMF and Chair of the IMF Interdepartmental Oil Group, Uri Dadush, Senior Associate at the Carnegie Endowment and Mark Finley, General Manager for Global Energy Markets and US Economics at BP. The event was moderated by Michele Dunne, Senior Associate in Carnegie’s Middle East Program.
Husain assessed that the drop in oil prices will persist in the medium-term. Initially, when oil prices fell, futures prices did not fall with spot prices. Instead, spot prices fell around mid-year while futures prices started to fall in October. Markets expect some recovery of spot prices, but because of decline in long-term oil prices, the recovery will not be full—oil prices will not go back to $90-$100 per barrel, but they can go back to $70-$75 per barrel. Futures prices are predicted to remain in the $40-$100 range.
The drop in price was a result of decrease in demand as well as increase in supply. Unlike in 1986, when Saudi Arabia’s sudden increase in supply crashed oil prices, in 2014 the world experienced the shale gas revolution, lower extraction costs for oil and lower demand. Basically, a combination of factors led to the oil price crash, although supply factors played a larger role.
Unsurprisingly, “pass-through”—the change in oil price passed on to consumers—was minimal worldwide. Since many countries regulate or fix petroleum prices, consumers did not get the entire benefit of the oil price decline. The biggest pass-throughs were in Europe at 80% and in North America at 50%. Husain claimed that if oil prices were fully passed through, global growth would increase by 1% in a year.
The beneficiaries of the low oil prices have been governments and state-owned enterprises. What they do with revenue determines the consequences of the oil price shock. Some may increase government spending, while others may save more. The losers have been oil-producing countries that are receiving lower oil revenues and therefore have less to invest in global financial markets. Fortunately, many of these countries have accumulated large buffers that will give them time to make adjustments to the price decline.
Finley attributes lower oil prices mainly to changes in supply. In 2014, global consumption was in line with the long-term historical average, but supply was exceptionally strong—global oil production grew at almost twice the historical rate. All the net growth came from outside the OPEC countries, with the US shale gas revolution leading the way. In 2014, the US surpassed Saudi Arabia and Russia to become the world’s largest oil producer since 1985. Both Canada and Brazil also saw record increases in oil production and achieved all-time record levels on average in 2014. Global demand and non-OPEC production have begun to respond to lower oil prices, but the substantial increase in oil production means that the market remains significantly oversupplied.
Like Husain, Finley believes the persistent decrease in oil prices will continue through the medium-term. However, one must keep in mind ongoing supply disruptions in the Middle East and North Africa. Finley warned that any policy must be robust across a range of prices or be able to adapt to significant and unexpected price changes in the future.
Dadush believes oil price shocks stimulate economic activity in the short-run by redistributing income towards people who consume more with a high propensity to consume. But this effect lasts only so long. There will be—and already are—significant cutbacks in energy investment. Oil is only 2% of the world GDP when one looks at production, so an oil price change even by 50% doesn’t have a huge stimulatory effect on world supply. This means the stimulus from the oil shock is short-lived even if there is high pass-through.
With regard to the Iranian nuclear deal, the panelists agreed that the return of Iranian oil will increase supply, but it is unclear by how much because of uncertainty about Iran’s capabilities and the response of other OPEC producers. Any volume of incremental Iranian production would simply add to an already oversupplied market.
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