The Pandemic and Oil

The Pandemic & Oil

Dispatches From The Edge

Conn Hallinan

Sept. 6, 2020

During the reign of the Emperor Justinian I (527-565 AD), a mysterious plague spread out of the Nile Valley to Constantinople and finished off the Roman Empire. Appearing first in China and North India, the “Black Death” (Yersinia pestis) radiated throughout the Mediterranean and into Northern Europe. It may well have killed close to half the world’s population, some 50 million people.

Covid-19 is not the Black Death, but its impact may be civilizational, weakening the mighty, raising up the modest, and rearranging axes of power across the globe.

The Middle East is a case in point. Since the end of World War II, the wealth of the Persian Gulf monarchies—Saudi Arabia, the United Arab Emirates (UAE), Kuwait and Qatar—has overturned the traditional centers of power that dominated the region for millennia: Turkey, Egypt and Persia. While those civilizations were built on agriculture, industry and trade, the monarchs were fabulously wealthy simply because they sat on a sea of oil.

The monarchies—Saudi Arabia in particular—have used that wealth to overthrow governments, silence internal dissent, and sponsor a version of Islam that has spawned terrorists from the Caucasus to the Philippines.

And now they are in trouble.

The Saudi owned oil company, Aramco, just saw its quarterly earnings fall from $24.7 billion to $6.6 billion, a more than 73 percent drop from a year ago.

Not all the slump is due to the pandemic recession. Over the past eight years, Arab oil producers have seen their annual revenues decline from $1 trillion to $300 billion, reflecting a gradual shift away from hydrocarbons toward renewable energy. But Covid-19 has greatly accelerated that trend.

For countries like Saudi Arabia, this is an existential problem. The country has a growing population, much of it unemployed and young—some 70 percent of Saudis are under 30. So far, the royalty has kept a lid on things by handing out cash and make-work jobs, but the drop in revenues is making that more difficult. The Kingdom—as well as the UAE—has hefty financial reserves, but that money will not last forever.

In the Saudi case, a series of economic and political blunders have worsened the crisis.

Riyadh is locked into an expensive military stalemate in Yemen, while also trying to diversify the country’s economy. Crown Prince, Mohammed bin Salman, is pushing a $500 billion Red Sea mega project to build a new city, Neom, that will supposedly attract industry, technology and investment.

 However, the plan has drawn little outside money, because investors are spooked by the Crown Prince’s aggressive foreign policy and the murder of journalist Jamal Khashoggi.  The Saudis are borrowing up to $12 billion just to pay Aramco dividends of $75 billion a year.

The oil crisis has spread to Middle Eastern countries that rely on the monarchs for investments, aid and jobs for their young populations. Cairo sends some 2.5 million Egyptians to work in the Gulf states, and countries like Lebanon provide financial services and consumer goods.

Lebanon is now imploding, Egypt is piling up massive debts, and Iraq can’t pay its bills because oil is stuck at around $46 a barrel. Saudi Arabia needs a price of at least $95 a barrel to meet its budgetary needs—and to feed the appetites of its royals.

When the pandemic ends, oil prices will rise, but they are very unlikely to reach the levels they did in the early 2000s when they averaged $100 a barrel. Oil prices have been low ever since Saudi Arabia’s ill-conceived attempt to drive out smaller competitors and re-take its former market share.

In 2014, Riyadh deliberately drove down the price of oil to hurt smaller competitors and throttle expensive arctic drilling projects. But when China’s economy slowed, demand for oil fell, and the price has never recovered.

Of the top 10 oil producers in the world, five are in the Middle East: Saudi Arabia, Iraq, Iran, the UAE and Kuwait. All of them are in dire straits, although in Iran’s case this is exacerbated by US sanctions. With the exception of Iraq—where massive demonstrations have shaken the country’s leadership—most of those countries have been politically quiet. In the case of the monarchies, of course, it is hard to judge the level of dissatisfaction because they do not tolerate dissent.

But how long will the royals be able to keep the lid on?

“It is a transformation that has speeded up by the corona virus cataclysm,” says Middle East expert Patrick Cockburn, “and will radically change the politics of the Middle East.”

There is no region untouched by the current crisis. With the exception of the presidents of Brazil and the US, most world leaders have concluded that climate change is a reality and that hydocarbons are the major culprit. Even when the pandemic eases, oil use will continue to decline.

The virus has exposed the fault lines among the mighty. The United States has the largest economy in the world and is the greatest military power on the globe, and yet it simply collapsed in the face of Covid-19. With 4 percent of the world’s population the United States accounts for 22 percent of the pandemic’s fatalities.

And the US is not alone. The United Kingdom has more than 40,000 dead, and its economy has plummeted 9 percent. In contrast, Bangladesh, the world’s most crowded country, with twice Great Britain’s population, has around 4,000 deaths and its economy has contracted by only 1.9 percent.

“Covid-19 has blown away the myth about ‘First’ and ‘Third’ world competence,” says Steven Friedman, director of the Center for the Study of Democracy in Johannesburg.

Turkey, Vietnam, Cuba and Nigeria all have far better records fighting the virus than Great Britain and the European Union.

Partly this is because Europe’s population is older. While Europe’s average age in 43, Africa’s is 19. Younger people infected with corona virus generally have better outcomes than older people, but age doesn’t fully explain the differences.

While Turkey developed sophisticated tracking methods to monitor measles, and Nigeria did the same for Ebola, the US and United Kingdom were systematically starving or dismantling public health programs. Instead of stockpiling supplies to deal with a pandemic, Europe and the US relied on countries like China to quickly supply things like personal protection equipment on an “as needed” basis, because it was cheaper than producing their own or paying for storage and maintenance,

But “need” doesn’t work during a worldwide pandemic. China had its own health crisis to deal with. The lag time between the appearance of the virus and obtaining the tools to fight it is directly responsible for the wave of deaths among medical workers and first responders.

And while the Chinese economy has re-bounded—enough to tick the price of oil slightly upwards—the US, Great Britain and the EU are mired in what promises to be a painful recession.

The neo-liberal model of low taxes, privatization of public resources and reliance on the free market has demonstrated its incompetence in the face of a natural disaster. The relationship between wealth and favorable outcomes only works when that wealth is invested in the many, not the few.

The Plague of Justinian destroyed the Roman Empire. The pandemic is not likely to do that to the United States. But it has exposed the fault lines and structural weaknesses that wealth papers over—until  something like Covid-19 comes along to shake the glitter off the system.

                                    —30—

Conn Hallinan can be read at dispatchesfromtheedgeblog.wordpress.com and middleempoireseries.wordpress.com

India & the Corona Virus: Independent Press Fights Back

India & The Corona Virus

Dispatches From The Edge

April 12, 2020

 

 

While the corona virus has focused much of the world on Europe and the United States, India promises to be the greatest victim of the disease. But other than a slick public relations campaign, the government of Prime Minister Narendra Modi has done little to confront the crisis. Indeed, a number of policy moves by Delhi have likely fed the spread of the dangerous virus.

 

When Modi announced a 21-day nationwide shutdown on March 24, he did so without any warning. Almost before the Prime Minister had finished talking, panicked city residents—mostly middle class—poured into the streets to stock up on food and medicines, almost certainly accelerating the spread of COVID-19.

 

The shutdown instantly made tens of millions of people jobless, setting many of them in motion toward their home villages. Since public transportation has been shut down, that involved journeys of over 300 miles. And because many villages are blocking outsiders, where migrants will get food and water is anyone’s guess.

 

Except for a few independent news sources, much of the chaos set off by the March 24 orders has gone unreported. Using a combination of financial pressure and outright censorship, Modi and his rightwing Bharatiya Janata Party (BJP) have silenced much of the media. Newspapers and broadcast outlets are finding that criticism of Modi or the BJP results in the loss of government advertising, a major source of revenue. Modi has also filed expensive and difficult to fight tax cases against opposition media outlets.

 

In the case of the corona virus, the government got the Supreme Court to order all media to “publish the official version” of the health crisis, which, in practice, has meant feel-good stories.

 

The success that the BJP has had in corralling India’s 17,000 newspapers, 100,000 magazines, and 178 television news channels has been sharply condemned by media organizations. Reporters Without Borders rates India a lowly 140 out of 180 countries on its freedom index.

 

Modi has led a high-profile campaign to create a regional response to the COVID-19 crisis. On March 15, Modi convened a teleconference of the South Asian Association for Regional Cooperation (SAARC) to create a corona virus emergency fund and exchange medical information. On March 26, Modi expanded the effort to draw in the G-20, an international forum of wealthy governments and banks that includes the European Union.

 

But there is suspicion that Modi’s regional and international efforts have more to do with repairing his government’s reputation than confronting the health crisis.

 

Modi’s unilateral seizure of Jammu and Kashmir in violation of the Indian constitution—and subsequent crackdown on any and all opposition to the takeover—was widely condemned internationally. The recent move by the Modi government to redefine “citizenship” in a way that excludes Muslims has also been wide criticized. The United Nations High Commissioner for Human Eights, Michelle Bachelet, called the law a violation of several international agreements that India is a party to.

 

There has been scant follow through with the SAARC or the G-20, and the government has done little at home. India’s public health system is fragile at the best of times, with only 0.5 hospital beds for every 1,000 people. In contrast, Italy has almost seven times that figure.

 

One important independent outlet reporting on the Covid-19 crisis has been Rural India Online, part of the People’s Archive of Rural India (PARI), a network of reporters and photojournalists who report on India’s rural dwellers who make up 70 percent of the population.

 

P.Sainath, PARI’s founder and editor—a winner of the prestigious Ramon Magsaysay Award and Amnesty International’s Global Award for Human Rights—is sharply critical of the Modi government’s actions, and PARI’s reporters have covered what the mainstream media has been intimidated from reporting: the massive number of poor who have taken to the roads to return home, cancer patients sleeping outside of hospitals in the hope of getting treatment, and day laborers who cannot afford to miss any work. One told PARI reporter Shraddha Agarwal, “Soap won’t save us if we die of hunger first.”

 

PARI reporters have also done a number of stories on India’s sanitation workers, few of whom have been provided with gloves or masks. “The government is saying clean hands constantly,” Mumbai sanitation worker Archana Chabuskwan told PARI reporter Jyoti Shinoli. “How do we do that?” Hand sanitizers are too expensive—Chabuskwan makes $2.63 cents a day—water supplies are iffy and social distancing is impossible. “We have to share a public toilet with hundreds of people.”

 

If sanitation workers do get sick—or, for that matter, any of Mumbai’s 20 million residents—they are in trouble. Government hospitals currently have 400 ventilators and 1,000 intensive care beds available for the entire city.

 

India’s health crisis is longstanding, and while the actions of the Modi government will almost certainly worsen the current crisis, for the past 30 years Indian governments—right and center—have cut back on health care and privatized much of the system. “We have one of the lowest health expenditures—barely 1.2 percent (as a share of the GDP) in the world,” writes Sainath. Almost a quarter of a million Indians die each year of tuberculosis and 100,000 children from diarrhea.

 

The US spends about 17 percent of its GDP on health.

 

According to Sainath, “Health expenditures across India today are possibly the fastest growing component of rural family debt.” A study by the Public Health Foundation of India found that in 2011-12 some 55 million people had been impoverished by health costs, 38 million by the cost of medicine alone.

 

That is what a substantial part of India’s 1.3 billion people face as COVID-19 ramps up, and they are unlikely to get much help from the BJP or Modi. When China finally went public with the dangers posed by the corona virus, India was convulsed with sectarian riots touched off by some of Modi’s cabinet members. Over 50 people were killed in New Delhi and hundreds injured as rightwing mobs organized by the Rashtyria Swayamsevak Sangh (RSS) rampaged through the streets.

 

The RSS—an organization that philosopher and political commentator Aijaz Ahmad describes as the “oldest, largest and most successful far-right group in the world today”—is the real power behind Modi. The BJP is largely a front for the RSS, a Hindu fundamentalist organization that is “profoundly hierarchical and secretive,” according to Ahmed.

 

The top-down, no warning decree on the corona virus is typical of the way the RSS functions. In 2016—again, with no warning—Modi unilaterally canceled all 500 and 1,000 rupee notes, throwing the country into currency chaos and further impoverishing large numbers of poor Indians.

 

The RSS’s major goal is the creation of a Hindu-centered state, and it is not shy about using violence to do that, either of the mob variety, or by assassination. Gunmen have killed several prominent opponents of the RSS over the past several years, killings that have never been solved.

 

The focus on religion has skewed the government’s priorities. The chief minister of India’s most populous state, Utter Pradash, spent $91 million to build a huge statue of the god Ram, while short changing emergency medical facilities.

 

With much of India’s mainstream press either co-opted or cowed, it is alternative sources like the People’s Archive of Rural India that has picked up the slack and reported what is happening to the vast majority of Indians that live outside the huge metropolises, as well as what slum dwellers and city sanitation workers are facing.

 

So far, Modi and the RSS have avoided having to answer for the increase in violence and the social priorities that have widened the gap between rich and poor. But COVID-19 may change that.

 

The PARI has put forth a series of demands to address the current crisis, including the immediate distribution of surplus grains, a shift from cash crops to food crops, and the nationalization of private medical facilities nationwide.

 

The COVID-19 crisis is the third disease to go pandemic since the great 1918-20 flu, which may have killed up to 100 million people. But climate change is producing conditions that favor the growth of diseases like the corona virus and vector-driven pathogens like dengue and malaria. The next pandemic is just around the corner, and unless there is a concentrated effort to make health care a human right, it is only a matter to time before the next mega-killer strikes.

 

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How Austerity and Anti-immigrant Politics Left Italy Exposed

The Corona Virus & Immigration

Dispatches From the Edge

Mar. 25, 2020

 

As the viral blitzkrieg rolls across one European border after another, it seems to have a particular enmity for Italy. The country’s death toll has passed China’s, and scenes from its hospitals look like something out of Dante’s imagination.

 

Why?

 

Italy has the fourth largest economy in the European Union, and in terms of health care, it is certainly in a better place than the US. Per capita, Italy has more hospital beds—so-called “surge capacity”—more doctors and more ventilators. Italians have a longer life expectancy than Americans, not to mention British, French, Germans, Swedes and Finns. The virus has had an especially fatal impact on northern Italy, the country’s richest region.

 

There are a number of reasons why Italy has been so hard-hit, but a major one can be placed at the feet of former Interior Minister Matteo Salvini of the xenophobic, rightwing League Party and his allies on the Italian right, including former prime minister Silvio Berlusconi.

 

Italy has the oldest population in Europe, and one of the oldest in the world. It did not get that way be accident. Right-wing parties have long targeted immigrants, even though the immigrant population—a little over 600,000—is not large by international standards. Immigrants as a “threat to European values” has been the rallying cry for the right in France, Germany, Hungry, Poland, Greece, Spain, the Netherlands and Britain as well.

 

In the last Italian election, the League and its then ally, The Five Star Movement, built their campaigns around resisting immigration. Anti-immigrant parties also did well in Spain and certainly played a major role in pulling the United Kingdom out of the EU.

 

Resistance to immigration plays a major role in “graying” the population. Italy has one of the lowest birthrates in the world, topped only by Japan. The demographic effects of this are “an apocalypse” according to former Italian Health Minister Beatrice Lorenzin. “In five years, we have lost more than 66,000 births [per year]” equal to the population of the city of Siena. “If we link this to this increasingly old and chronically ill people, we have a picture of a moribund country.”

 

According to the World Health Organization, the ideal birth-death replacement ratio in advanced countries is 2.1. Italy’s is 1.32., which means not only an older population, but also fewer working age people to pay the taxes that fund the social infrastructure, including health care.

 

As long as there is no a major health crisis, countries muddle though, but when something like the Corona virus arrives, it exposes the underlying weaknesses of the system.

 

Some 60 percent of Italians are over 40, and 23 percent are over 65. It is demographics like these that make Covid-19 so lethal. From age 10 to 39, the virus has a death rate of 0.2 percent, more deadly than influenza, but not overly so. But starting at age 40, the death rate starts to rise, reaching 8 percent for adults age 70 to 79, and then jumping to 14.8 percent over 80. The average age of Corona virus deaths in Italy is 81.

 

When the economic meltdown hit Europe in 2008, the European Union responded by instituting painful austerity measures that targeted things like health care. Over the past 10 years Italy has cut some 37 billion euros from its health system. The infrastructure that could have dealt with a health crisis like Covid-19 was hollowed out, so that when the disease hit, there simply weren’t enough troops or resources to resist it.

 

Add to that the age of Italians, and the outcome was almost foreordained.

 

The US is in a very similar position, but for somewhat different reasons. As Pulitzer Prize-winning medical writer Laurie Garrett points out, it was managed care that has derailed the ability of the American health system to respond to a crisis. “What happened with managed care is that hospitals eliminated surplus beds and surplus personnel. So, far from being ready to deal with surge capacity, we’re actually understaffed and we have massive nurse shortages across the nation. “

 

Much of that shortage can also be attributed to managed care. Nurses are overloaded with too many patients, work 10 and 12 hour shifts on a regular basis, and, while initially well paid, their compensation tends to flatten out over the long run. Burn out is a major professional risk for nursing.

 

Yet in a pandemic, nursing is the most important element in health care according to John Barry, author of the “The Great Influenza” about the 1918-19 virus that killed up to 100 million people, including 675,000 Americans. A post mortem of the pandemic found “What could help, more than doctors, were nurses. Nursing could ease the strain of a patient, keep a patient hydrated, calm, provide the best nutrition, and cool the intense fevers.” Nurses, the study showed, gave victims “the best possible chance to survive.”

 

The issues in Italy’s 2018 election were pretty straightforward: slow growth, high youth unemployment, a starving education system and a deteriorating infrastructure—Rome was literally drowning in garbage. But instead of the failed austerity strategy of the EU, the main election theme became immigration, a subject that had nothing to do with Italy’s economic crisis, troubled banking sector or burdensome national debt.

 

Berlusconi, leader of the rightwing Forza Italia Party, said “All these immigrants live off of trickery and crime.” Forza made common cause with the fascist Brothers of Italy, whose leader, Giogia Meloni, called for halting immigrants with a “naval blockade.”

 

The main voice of the xenophobic campaign, however, was Salvini and the League. Immigrants, he said, bring “chaos, anger, drug dealing, thefts, rape and violence,” and pose a threat to the “white race.”

 

The Five Star Movement leader Luigi Di Mario joined the immigrant bashing, if not with quite the vitriol of Berlusconi, Salvini and Meloni. The center-left Democratic Party ducked the issue, leaving the field to the right.

 

The outcome was predictable: the Democratic Party was routed and the Five Star Movement and League swept into power. Salvini took the post of Interior Minister and actually instituted a naval blockade, a violation of International Law and the 1982 Law of the Sea.

 

Eventually the League and Five Star had a falling out, and Salvini was ousted from his post, but the damage was done. The desperately needed repairs to infrastructure and investments in health care were shelved. When Covid-19 stuck, Italy was unprepared.

 

Much the same can be said for the rest of Europe, where more than a decade of austerity policies have weakened health care systems all over the continent.

 

Nor is Italy is facing a demographic catastrophe alone. The EU-wide replacement ratio is a tepid 1.58, with only France and Ireland approaching—but not reaching—2.1.

 

If Germany does not increase the number of migrants it takes, the population will decline from 81 million to 67 million by 2060, reducing the workforce to 54 percent of the population, not enough to keep up with current levels of social spending. The Berlin Institute for Population and Development estimates that Germany will need 500,000 immigrants a year for the next 35 years to keep pensions and social services at current levels.

 

Spain—which saw the rightwing anti-immigration party do well in the last election—is bleeding population, particularly in small towns, some 1500 of which have been abandoned. Spain has weathered a decade and a half of austerity, which damaged the country’s health care infrastructure. After Italy, Spain is the European country hardest hit by Covid-19.

 

As populations age, immigrants become a necessity. Not only is new blood needed to fill in the work needs of economies, broadening the tax base that pays for infrastructure, but, too, old people need caretaking, as the Japanese have found out. After centuries of xenophobic policies that made immigration to Japan almost impossible, the Japanese have been forced to accept large numbers of migrants to staff senior facilities.

 

The United States will face a similar crisis if the Trump administration is successful in chocking off immigration. While the US replacement ratio is higher than the EU’s, it still falls under 2.1, and that will have serious demographic consequences in the long run.

 

It may be that for-profit health care simply can’t cope with a pandemic because it finds maintaining adequate surge capacity in hospital beds, ventilators and staff reduces stockholders’ dividends. And public health care systems in Europe—which have better outcomes than the American system’s—only work if they are well funded.

 

To the biblical four horsemen—war, famine, wild beasts and plague—we can add two more: profits and austerity.

 

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