Since the invasion began on 28 February, the US and Israel have killed nearly 2,000, injured 25,000 and displaced 3.2 million people in Iran. US Central Command claims to have carried out more than 11,000 strikes, including on an increasing amount of civilian infrastructure. Already crippled by sanctions, this country of 92 million people is being decimated, its economic foundations eroded day after day. At least one war aim is now clear: to inflict misery and poverty on Iran for years to come. If you want a precedent, look at the state of Iraq 24 years after it was “liberated” by the Americans.
Then there’s Lebanon, where the Israeli military has bombarded the capital, Beirut, and issued sweeping “evacuation orders” for all residents south of the Zahrani River—an area covering about 14 percent of the country. More than 1,100 have been killed, and one-fifth of the population has been displaced as Israeli soldiers move to occupy the south. The fascists in the Knesset are rubbing their hands with glee as village after village is set to be razed. Perhaps this will be south Lebanon’s Nakba.
As with Gaza, Venezuela and Cuba, the so-called international community isn’t lifting a finger to stop these criminal rogue states from unleashing mass violence wherever and whenever they think it is in their interests. To the extent that unease is evident and minor tut-tutting is now emanating from European governments, it has nothing to do with opposition to mass murder. It’s just their sinking feeling as the war’s economic reverberations are now being felt across the world.
Most obviously, there’s the energy shock resulting from the shutdown of the Strait of Hormuz, the narrow waterway connecting the Persian Gulf and the Arabian Sea. The world’s natural gas supply has been significantly disrupted. And the International Energy Agency says that this is “the largest supply disruption in the history of the global oil market”.
For now, South and South-East Asia are hardest hit. The Philippines has announced a state of emergency. In Laos and Cambodia, more than one-third of petrol stations have run out of fuel. Schools are closing in Bangladesh, Pakistan and Sri Lanka. Covid-style orders are proliferating to reduce consumption as rationing begins. The longer the war goes on, the more the shortages will spread, and the greater the economic knock-on effects will be. Indeed, contingency plans are being drawn up across the world.
In Australia, profiteering at the bowser began well in advance of the major oil price spike, while supply contracts were still being filled from past purchases at lower prices. The petrol companies didn’t waste any time filling their pockets and precipitating a run on supplies. Hundreds of petrol stations have now run out of at least one fuel type as industries and individuals prepare for the worst. The ALP’s response has mainly been to denounce working-class people for topping up their jerry cans—a total gaslighting operation from a government that has supported the war of aggression that has caused the crisis.
But it’s not just about energy prices. According to Greenpeace, almost half of global food production now depends on synthetic fertilisers—and one-third of them are exported from Gulf States through the Strait of Hormuz. So much for all the talk about economic “transitions” we’ve been sold by capitalist governments. The reality is that we continue not just burning fossil fuels, but eating them, too.
The World Food Programme says that 45 million people could be pushed into acute hunger due to rising food and fuel costs and supply chain disruptions. This isn’t an immediate prospect, but every day the war drags on will create greater problems with the next round of harvests. And already, some are getting wealthier at the prospect of a famine: corn, rice and wheat contract prices have increased by more than 6 percent, 7 percent and 12 percent respectively.
Jeff Currie, an analyst at the Carlyle Group, told the London Telegraph’s Ambrose Evans-Pritchard that, without a resolution in the next month or so, “We may need to ground planes, shut chemical plants and accept lower crop yields. Hydrocarbons are woven so deeply into the economy that pulling one thread unravels dozens of others”.
This is evident, for example, in the input prices of piping and concrete, among other things, which are being pushed higher in the construction industry. Forget about the housing crisis being fixed by “increased supply” and “affordable” units while Trump’s rampage, backed by Anthony Albanese, continues. And don’t expect capitalists to reduce prices to pre-invasion levels when the dust finally settles. Like the petrol companies, they put profits first and people last.
As the world’s workers face greater food insecurity, energy rationing and higher prices across the board, big oil and agribusiness companies’ share prices have jumped as expectations of bumper profits have grown. But there’s now also the prospect of potential economic crises. Central banks previously contemplating cuts to cash rates are holding or contemplating rises as inflation projections have jumped. Australia’s Reserve Bank governor, Michele Bullock, announced in mid-March that the bank is “going to have to” engineer a recession if it doesn’t like the inflation trajectory in the coming months. Again, workers will pay for Trump’s aggression and Albanese’s obsequiousness.
Sovereign bond yields have already moved sharply higher over the last month in Europe, the United States, Australia, Japan, pretty much everywhere. The yield on ten-year government debt is considered the benchmark rate for corporate credit, so borrowing costs across the world economy have risen anyway, without central bank intervention. This is basically a move by big financiers to squeeze more profits for themselves at the expense of everyone else. They, too, will be prepared to engineer an economic downturn—a massive attack on workers everywhere—to reflate the value of their bond portfolios if the crisis in the Persian Gulf continues.
Under capitalism, those at the top always find a way to profit from death, destruction and destitution. This time is no different.
