Peter L. Berger's Blog, page 614

Another Middle Eastern Game of Chutes and Ladders

Over the past few days a new Middle Eastern story managed to briefly squeeze its way into Western media consciousness: Tony Blair, Thursday’s al-Hayat headline proclaimed from London, has nearly succeeded in shepherding an Israeli-Hamas deal for an extended ceasefire in Gaza in return for the opening up of a sea-corridor between Gaza and Cyprus that would significantly relieve the Egyptian-Israeli embargo. The casual reader of the news here in the United States, or in Europe or South America or Asia, is liable to mutter “that’s nice” and move on. Easy to do; after all, today’s New York Times and Washington Post have nary a word to say about it, nor do any of the news wire services—possibly because the business fell through at the eleventh hour…or because it never even made it to 8 a.m. in the first place?

But there are no casual readers of the news in the Middle East; there are only those disposed toward the apoplectic, the conspiratorial, and the resigned—the followers, as it were, of Chicken Little, Rasputin, and Eeyore, respectively. And there are no causal readers here among Middle Eastern groupies whose mental positioning is perpetually aloft in some metaphysical zone bordered by Jerusalem, Mecca, and certain subcultural bubbles located on the east coast of the United States. Here too, alas, we find exilic chapters of these same three groups.The result is that when a story like this emerges in bare outline—and then fixes to all but disappear—the non-casual rush to fill in the many gaps in the emerging tale as their particular form of interpretive neurosis requires. And in this case the gaps are dramatically numerous, so much so that any effort to enumerate and link all the logical moving parts conduces first to imaginative abandon, but then quickly gives way to headache. In schematic form, the mental agitations required resemble a game of chutes and ladders, which is just another way of saying that the story implies a serious levels-of-analysis challenge: What is going on depends in large part on where one thinks it’s going on.With the reader’s kind permission, I would like to leave Chicken Little, Rasputin, and Eeyore at the entrance to the cave for the time being as I attempt to ransack the darkness within. Let us start with some hypothetical questions, moving from a low level-of-analysis to higher ones. This will give us a sense of what is, or isn’t, going on.Assuming for the sake of our interrogation that some sort of deal is or soon will be real, it means that ships will be moving back and forth from Gaza to Cyprus carrying…what? As it is, plenty of stuff already goes into Gaza from Israel (electrical current included), but the Israeli government prohibits other stuff—like concrete, say, which the Hamas government used in the past overwhelmingly not to build schools or houses but rather tunnels for use by the terrorists of its armed wing. (Yes, it is fair and accurate to call them terrorists, because when they emerged from their holes inside Israel the last time out they did not distinguish between trying to kill civilians, even children, and military personnel.) So what would come into Gaza from Cyprus that Israel does not or will not supply? Not missile parts and explosives, presumably.Obviously, then, the first thing we do not know is who exactly would monitor the contents of any commerce, and how they would do it. One account, in an Israeli paper quoting the Hamas paper Al-Resalah, in turn quoting a Turkish official associated with the Foreign Ministry, speaks of a floating port three kilometers off the coast of Gaza and of NATO representatives inspecting goods just off the Cypriot coast.Is this correct? We don’t know, and that is not all we don’t know. For example, the Blair mission dates back several months already in one form or another—and the presence of a couple of Israeli civilians unaccounted for in Gaza is part of the picture. At whose behest is he working? Let’s assume that he is not, after all, a completely unattached do-gooder, but an emissary of someone’s and of some kind—and not of the Quartet, in whose employ Blair has not been for some time. Blair has met with Hamas leaders in Qatar twice in recent months; one would have to assume that both Blair’s brief and its source are clear to Hamas. Is Blair running interference for Netanyahu, either explicitly or on spec, so to speak? For the Americans? The French?And what about the Egyptians? The embargo of Gaza, which has been pronounced legal in international law according to the United Nations, is not just Israeli—it is also partied to and enforced by Egypt. So, presumably, since the Egyptian and Israeli governments have excellent security cooperation protocols in operation these days, the Israeli government did not embark on any prospective deal without discussing it in some detail with the Egyptian government. What was that discussion about? Was Blair a party to it? We don’t know. All we do know is that a sea corridor makes sense as a notion, at least, in direct proportion to the Egyptian refusal to open the Rafah crossing—and that refusal is adamant.Whatever the case, since Israel and Egypt will want some considerable control over any flow of stuff to Gaza—Egypt as much for what military contraband implies about its problems in the Sinai as for what it implies about Gaza proper—this tale about the “end of the embargo” begins more and more to look like the continuation of the embargo by the advent of other means (to paraphrase a certain dead German guy). After all, even if NATO types (mainly Turks, one wonders?) are checking stuff near the Cypriot coast, it defies logic that Israel, with Egypt, would not be the ultimate arbiters of what goes in and what doesn’t.So allow some skepticism here, please. There is a big chute in this story, one that might land the reader the all the way back at the bottom of the board. Maybe that’s why the Israeli Prime Minister’s office is now (as of 1 p.m. EST today) leaking tweets that there is in fact no deal in works, no direct contacts with Hamas.But this is too much fun to leave as is, so we might as well finish up the “what if?” possibilities. Assuming some very experienced and clever people have worked all this out, or soon will finish doing so, what would Israel gain or lose—again hypothetically—from a deal with Hamas to adjust the embargo? Plenty, in theory, in both directions.Israel would gain, again in theory, an assurance of no more “grass-mowing” operations in Gaza for reportedly seven to ten years—though how anyone could trust an under-institutionalized, penurious, and increasingly fractious organization like Hamas to keep any promise for that length of time is a puzzlement unto itself. It would be swell if it were true, because every time one of these operations goes forward, an international orgy of hypocrisy breaks forth that damages Israel’s reputation and deepens its symbolic isolation, which in turns puts more pressure on the U.S.-Israeli relationship to rise to a level of specialness that strains strategic logic, and which also deepens the siege mentality within Israel to no good long-term end whatsoever.It would also gain what amounts to a policing promise by Hamas to make sure Islamic Jihad and self-propelled ISIS types do not shoot missiles across the border into Israel. Getting different groups of “bad guys” to square off against one another has a certain value to most Israelis, after all.Israel would also get off the hook for the embargo itself, which, although legal, is deemed otherwise by a lot of regimes—including especially the one resident in Ankara. Talk about a chute or a ladder, here comes the Turkish angle.The Turks are likely to figure heavily in any business conducted between Israel and Hamas, from both sides. Khalid Mashal was in Ankara last week, and he was photographed smiling alongside a clearly preening President Erdogan. The Turks (and the Qataris, for what it’s worth) have been both lawyers and bagmen for Hamas for a while, also for the Muslim Brotherhood in Egypt (and elsewhere) and, until it began to backfire really badly, for ISIS as well. That’s the kind of U.S. ally Turkey has become under the aging AKP regime. Ever since Hamas’s relationship with Iran began to suffer badly thanks to the sectarian outpouring from the Syria civil war, Turkey has become a much more important potential patron. Hamas has been broke and bereft of good choices for patrons lately, which is one reason it started the July 2014 fighting in the first place: To get noticed and attract support, you do the one thing you do best, which is to try to kill Jews, the more the better.Ah, but Turkey is not Iran. The AKP, and especially its President, is no friend of Israel, to be sure. That said, for most of the AKP term in power—in the years before Erdogan’s outburst against Shimon Peres at Davos in 2009 following the Cast Lead operation of 2008–09, and before the May 31, 2010 Mavi Marmara incident—the bilateral relationship was pretty good. Even since May 2010, though Turkey downgraded its diplomatic relationship with Israel in early 2011 after a UN report found the embargo legal, the relationship has not gone entirely cold. The Turks know how to ring-fence their bilateral relationships so that, in this case, while the significant military-to-military relationship of the pre-2008 period has languished, commerce and tourism between the two economies has proceeded unperturbed.It is also worth noting that efforts to patch up the wound over the Mavi Marmara incident essentially succeeded in March 2013, aided by U.S. mediation. But at the last minute things fell apart, with Prime Minister Netanyahu rejecting the paper his own diplomats laid before him. It was a complicated moment, what with Turkish support for the Morsi government in Egypt and, supposedly, Turkish intelligence outing some Israeli agents working inside Iran. The point is that Turkey’s relationship to Israel is mixed, nuanced, and potentially restorable; that means that there are limits to what Turkey will do for Hamas without getting something in return, and Turkey’s extant and potential ties to Israel constitute leverage on Hamas should Turkish leaders wish to use it. This is, then, a very different situation from Hamas’s dealings with Iran.Now, just as soon as Tony Blair’s latest gambit became known, we heard about a renewed effort to put the Mavi Marmara incident finally (again) to rest. That would presage the re-establishment of full Turkish-Israeli relations and the return of an Israeli Ambassador to Ankara. The Iranians would notice and not like that. They also notice that Ankara is out gunning, still, for Iran’s only real ally—Syria—and that for all the hubbub about the recent U.S.-Turkish accord concerning Incirlik and ISIS, there is still no evidence that the Turkish military has yet to drop so much as a rock on any ISIS military formation. The Iranians will notice that, too.All this has led some observers to vault to a very high level of analysis, to claim that what we are seeing is a response to the Iran deal in the form of the coalescence of anti-Iranian forces in the region into some kind of messy, tentative, and inchoate but still real front to oppose Iranian hegemony. Maybe, but back to ground level for a moment more.Clearly, Israel would gain something, potentially, from a long-term ceasefire deal with Hamas: reduced risk of security issues from Gaza, a Hamas obligation to coerce other salafis in Gaza, reduced international isolation, and the resuscitation of its relationship with Turkey at least to some degree. Is that all there is?Not necessarily. Presumably, if it proves real—whether now or soon—this would be something the Obama Administration would like, all else equal, and all else is equally terrible between the U.S. and Israeli governments about now. But that has to be a minor-to-negligible concern compared to Israel’s presumably deepening its all-but-direct engagement with Hamas. Is that wise, since doing so would help legitimate worldwide an organization that has vowed to destroy Israel? And would that not harm the PA and the PLO in the West Bank. That’s bad, isn’t it? Doesn’t that mean making a deal with the devil at the expense of Palestinian moderates?Well, it may not seem so bad—this Israeli government might reason—if Hamas is showing signs of terminal weakness, of a real split between its political and military wings, and a real form of de facto moderation under duress. After all, what has the PA/PLO complex under Mahmud Abbas been willing and able to deliver? And it’s especially not so bad if the Prime Minister is not actually interested in a peace process that could lead to Israel’s ever really leaving the West Bank, and if he is interested in deepening the alienation of the two parts of a potential independent Palestinian state. This is what the PA/PLO types fear and they are furious at Blair as a result.Perhaps, too, a deal with Hamas—or the prospect of one—could translate into a kind of lesser leverage against Mahmud Abbas; say, to deter him from running to the ICC seething with complaint about Israel. And perhaps seeming signs of progress, represented (again in theory) by this deal, can be manipulated to delay or kill a French-sponsored gambit to hoist the peace process up on some UN-sponsored petard, when it would inevitable explode of course—but not before causing a lot of awkwardness and unpleasantness all around.That’s all, right? Not right.At the risk of sending you, oh patient reader, down another unexpected chute, one has to think of the Leviathan. No, not Hobbes’s Leviathan, and not the one mentioned in Isaiah, Job, and Psalms; but the gas field.There is a large undersea gas field in the Mediterranean between Israel and Cyprus, with the potential to change economic realities and possibly aspects of political life as we know it in the region. And in the face of this godsend for Israel, what has the Israeli political system managed to do? Thanks to the inscrutabilities of Israeli coalition politics and the legal rigidities of Israel’s anti-trust office in the person of David Gilo, the main investors and jobbers involved in the project to bring Leviathan on line—Noble Energy and others—got knocked on their heels in December of this past year. The government declared the arrangements too monopolistic, too wired, and too closed. It was impossible to imagine that this blockage would not in due course be cleared away—way too much is at stake—and it now seems as though it has. Just yesterday the Israeli cabinet approved a revamped arrangement to get the gas developed flowing. The new arrangement seems promising.Now, just consider the energy volumes here and their meaning. The consortium developing the Leviathan field needs to be able to sell about eight billion cubic meters (BCM) annually to justify the up-front investment of some $6.5 billion—a big number for fairly small economies. But that seems a synch. Egypt is a key customer—if the pipelines can be kept secure. So is Jordan (maybe 3.5 BCM per year), whose economic stresses would be much alleviated by a cheap source of energy. But above all there is (again) Turkey, which has no natural gas resources of its own and which pays high prices now for what it imports. Turkey could be a customer for seven or perhaps all eight of the minimally necessary BCMs per annum.Is there a connection between the possible easing of Israeli-Turkish tensions and the prospects of a major, mutually beneficial deal over energy supplies? Could this be the case even without reference to Blair, Hamas, or a ceasefire? And would a deal involving Cyprus in some shape or form help to allay legal and security worries about exploiting the field, which of course must rely to an extent on a sharing and boundary delimitation agreement between the Israeli and Cypriot governments? Oh, perhaps.So what’s really going on here—if anything? Is this prospective now-you-see-it/now-you-don’t deal mainly about Hamas in Gaza? About the so-called Israeli-Palestinian peace process, or Israeli maneuvers to derail its fulsome return? About the repercussions of the Iran deal? About Turkey’s relations with Israel (and never mind for now the amazingly complex U.S. angle in all this)? About Leviathan? How about, perhaps, “all of the above”? Or maybe, “very little of the above”? Hey, it’s the Middle East; so look out for that chute, and careful on that ladder!

Grand Bargain Afoot Between Turkey, Israel, and Gulf Arabs?

Relations between Turkey and Israel took a turn for the worse in 2010, when an IDF raid on the Turkish ship Mavi Marmara left nine dead. The ship was trying to get past Israeli’s blockade of Gaza. But things may now be warming a bit between the two countries as Jerusalem contemplates a ceasefire with Hamas, a move which was reportedly in the works as of last Friday. The Times of Israel:

“The negotiations surrounding Marmara are proceeding gradually and are interlaced with Hamas’s negotiations on a ceasefire,” Yasin Aktay, an adviser to Turkish Prime Minister Ahmet Davutoglo, told Hamas daily al-Resalah, which called the Gaza blockade “a Turkish matter.” […]

In the extensive al-Resalah interview, held on the heels of a visit by Hamas political chief Khaled Mashaal to Ankara last week, Aktay said Turkey is discussing with the government of Greek Cyprus the establishment of a waystation sea port, meant to deliver goods to the Gaza Strip under international supervision. He predicted that an agreement would be reached early next year.[…]He noted that Turkey has committed itself to building Gaza’s seaport and airport once Israel agrees to their construction.

Something’s afoot. Negotiations for a truce between Israel and Hamas appear to be gaining momentum, and now we have the prospect that the truce could lead to improved Israel-Turkish relations. The big losers here would be Iran and its Assad clients. With Saudis also warming to Hamas, the elements of a regional anti-Iran coalition are coming into focus.

This would be very tough to pull off—it would not be just herding cats, but herding cats and dogs together. How, for instance, would the putative grand coalition manage cooperation between the Egyptian and Turkish governments, who loathe each other? Much less, how would one square years of virulent anti-Israel propaganda among the populations of Turkey and the Arab nations with the sharp pivot to Israel. It’s a sign of how worried the region is that something so-far fetched is being considered.

Minimum Wage Spurs Restaurants to Automate?

The political successes of the $15 dollar minimum wage movement may be intensifying the interest restaurant chains have in automating their businesses. The Washington Post reports on the buzz about turning more restaurant work over to robots:

Dave Brewer is chief operating officer with Middleby Corp., which owns dozens of kitchen equipment brands, and is constantly developing new ways to optimize performance and minimize cost.

“The miracle is, the wage increase is driving the interest,” Brewer said. “But the innovation and the automation, they’re going after it even before the wages go up. Why wait?”The labor-saving technology that has so far been rolled out most extensively — kiosk and ­tablet-based ordering — could be used to replace cashiers and the part of the wait staff’s job that involves taking orders and bringing checks. Olive Garden said earlier this year that it would roll out the Ziosk system at all its restaurants, which means that all a server has to do is bring out the food.

In other words, the unprecedented push for a $15 minimum wage, which is winning over city councils and wage boards on both coasts, might begin to cost fast-food workers their jobs even before anyone even gets a raise. The trend toward automation would take place even without minimum wage hikes, but the Post piece suggests that the $15 minimum movement could accelerate the process.

As we’ve said before, you cannot defy the laws of economic gravity; if labor becomes very costly, employers will do their best to cut back. Thanks to the rapid advance of technology, they have more, and more sophisticated, options than ever before.

Abenomics on the Rocks

Japan’s economy contracted at an annualized rate of 1.6 percent during April–June of this year, in what is looking like a blow to Prime Minister Shinzo Abe’s economic reform policy, known as Abenomics. As exports fall and consumer spending contracts (at least in part due to the effects that China’s current economic woes are having on its Asian neighbors), one analyst told the AP that these economic trends could make another stimulus more likely:

The contraction in gross domestic product (GDP) compared with a median market forecast of a 1.9 percent fall and followed a revised expansion of 4.5 percent in the first quarter, Cabinet Office data showed on Monday.

“If weak private consumption persists, that would be a further blow to Abe’s administration, which is facing falling support rates ahead of next year’s Upper House election,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse.“This could raise chances of additional fiscal stimulus.”

For its part, the Abe government says it has no intention of putting together another stimulus package, but rather is encouraging firms to raise wages and increase capital expenditures. Thanks to the Chinese slump, however, any recovery in Japanese growth through September is expected to be minimal.

This quarter’s news shuts out the ray of light that last quarter’s 2.4 percent annualized growth rate provided, and it raises serious longterm questions about the prospects for Japan’s famously stagnant economy if China’s bubble is really bursting.

What to Make of the Mexico Crude Swap Deal

Late last week the White House announced it would temporarily allow oil firms to swap crude with Mexico, a move that was hailed by the American Petroleum Institute’s executive vice president as “a long overdue step that will benefit our economy and North American energy security.” The head of the commercial arm of Mexico’s state-owned oil company Pemex praised the U.S. decision to allow crude exports to its southern neighbor as “great news” that would “allow refining in both countries to be more efficient.”

The fracking boom has unleashed a flood of production of light, sweet crude, but America’s Gulf coast refineries were built with a heavier variety of oil in mind. Many of Pemex’s refineries are configured for those lighter grades and the oil it produces is generally of a heavier variety, so a swap makes sense for both countries. In the previous issue of our magazine, Arthur Herman explains why exporting that light, tight oil (fracked from shale) could help firms better turn a profit:

Because domestic refiners don’t relish their product, [light tight oil (LTO)] producers have had to sell at a discount, sometimes as much as $28 below world prices. Ending the ban means ending the discount—which is in effect a non-market subsidy provided by the 1975 law—that allows refiners to buy LTO cheaply and sell it as gasoline on the world market.

While this is more an exception rather than a new rule, it does look like an erosion of the 1970s-era U.S. ban on crude oil exports, a policy that looks increasingly archaic as our oil production outlook continues to brighten. “It’s pretty clear, directionally, where things are headed. This ban becomes more and more awkward and ill-fitting. It doesn’t fit reality,” said oil guru Daniel Yergin.

With this latest swap agreement, it looks like we’re moving towards a more rational crude export policy, though it may not be as easy a fix as simply opening up fracked crude to the global market all at once. For a nuanced look at our policy options—and the strategic potential selectively selling our oil could produce—take the time to read Herman’s piece in full.

Libya: Bomb Us, Please

Things have gotten so bad in Libya, wrecked by the U.S.-and-European-led love-them-and-leave-them intervention in 2011, that the government is now asking for outside intervention to stop the spread of ISIS. Libya, aside from ISIS-held territory, is currently split between an Islamist government in Tripoli and a vaguely nationalist government in Tubruq. The latter is more widely recognized, and it’s calling on other nations to bomb ISIS positions in the country. The AP reports:

The statement late Saturday came after the IS affiliate seized control of a new neighborhood in Sirte […]

“The Libyan government, unable to ward off these terrorist groups because of the arms embargo, and out of its historic responsibility toward its people, calls on brotherly Arab countries … to launch airstrikes against specific targets of (IS) locations in Sirte in coordination with our concerned bodies,” the statement said […]The Arab League said it will hold an emergency meeting on Libya on Tuesday.

Arab League involvement would likely take the form of bombings or even an incursion led by the Egyptians. The last time this was tried, when Egypt and the U.A.E. bombed Libya last summer, the U.S., France, Germany, and UK all made their displeasure known.  And yet, what are the other options? The Europeans, Washington, or the “international community” writ large, have yet to put together a credible alternative for the North African state. Instead, we get mush like this, via the UN News Centre:

Strongly condemning attacks in Sirte by the so-called Islamic State (Daesh), the United Nations Support Mission in Libya stressed today it is “high time” that Libyans agree a unity government to address the country’s challenges and “join together to confront the scourge” of the group, also known as the Islamic State of Iraq and the Levant, or ISIL.

While UNSMIL noted Libyan calls for swift action to save Sirte and its people from Da’esh’s hold and prevent atrocities, the Mission urged the Libyan stakeholders to urgently finalize a political agreement and establish a Government of National Accord that, in partnership with the international community, can address the threat of Daesh and other challenges facing the country.

But hand-wringing statements will not bring Libya together. The options that would restore order to the country range from bad (another Western intervention) to worse (backing a strongman, or an Egypt-led Arab League incursion). Unfortunately, the worse options seem more likely to happen than meaningful Western intervention, which is almost unthinkable right now. In the meantime, ISIS is festering and Libya’s disorder is fueling the European migration crisis. Until something gives, the grim Libyan afterparty continues.

Beijing Struggling with Tianjin Response

Last week’s widely-broadcasted explosions in the Chinese port city of Tianjin—home to more than 7.5 million people—were catastrophic, and the CCP is now dealing with popular blowback. Chinese premier Li Keqiang—who has been called the country’s “comforter in chief” for his habit of traveling to disaster locations—visited victims yesterday afternoon, but his visit took place four days after a tragedy that occurred no more than an hour away from Beijing. The people are not pleased with the government, and Chinese authorities are having trouble managing the PR fallout from the disaster. WSJ:

Censorship of traditional and social media is common in China after disasters and has actually been looser this time than in some other recent tragedies. Whereas China’s local newspapers turned into clones after the capsizing of a ship on the Yangtze River in June, Chinese media reports on the explosion in Tianjin’s Tanggu district have been more varied. Discussion of the topic has also been widespread on social media.

50 websites and 360 social media accounts were reportedly shuttered for spreading allegedly “irresponsible” rumors, including speculation that the exploded warehouse’s owner might be related to Party officials. Additional questions, like why a warehouse full of dangerous chemicals was located so close to residences, or whether there is any danger of contamination from chemicals spread by the massive explosions, or simply how many lives were lost in the tragedy, will also need to be handled in the coming days.

With China’s stock market slump still a live issue, Beijing will be hard pressed to minimize the damage done to its reputation for competence by this crisis.

The World Is Not Flat

Rather than flat, the world is radically uneven. A new WSJ report on African and Middle Eastern migrants to Europe underlines the terrible reality of global inequality. Driven to extremities simply to survive and feed their families, desperate migrants throw every last penny together to get passage in a leaky boat. How well they are treated—by both smugglers and, if they survive the journey, Europeans themselves—can depend on their countries of origin, wealth, or religion. A snippet:

The starkly differing conditions of migrants pouring into Europe are causing mounting friction. Over the weekend, fights broke out among different nationalities of asylum seekers on [the Greek island of] Kos over the little attention they were getting from authorities and the seemingly better treatment of Syrians. […]

In Libya, the hub for the lucrative trade in migrant smuggling from Africa to Italy, the system determining migrants’ survival is based primarily around wealth, migrants said. […]“Syrians have put more money together, they are able to pay more so they’re placed at the top level of the boat and sometimes even buy life jackets,” said Ms. Malakooti of Altai Consulting.“Sub-Saharans are put in the hulls. If the boat takes water, they’re the first to drown,” she added.

Many of these refugees aren’t so much fleeing poverty in the abstract as they are fleeing failures of American policy—in Libya, Syria, Iraq, and Afghanistan. History will not judge us well for the part we have played in this crisis. The liberal humanitarians of the Obama Administration and the self-confident neoconservatives of the Bush years have together left quite a mess behind them.

This isn’t all America’s fault, of course, and in many ways the breakdown of these societies predates any policy mistakes Washington made. Nevertheless, those of us who believe in a just God, and those of us who believe in an abstract principle of justice, should think hard about what we are doing in response to the wave of wretchedness overtaking so many people. One way to help would be to send money to reputable charities that work on this issue, like the Red Cross or to religious or other charities; suggestions welcome in the comments about worthy causes and organizations.

Is Iran the Real Target of Saudi Oil Inaction?

At this time last year, oil was trading just above $100 per barrel. Today, Brent crude is selling for just $49 per barrel, a staggering 50 percent drop that’s put producers around the world under pressure. Saudi-led OPEC hasn’t intervened to stop the price slide, choosing instead to weather the bear market. The Times of London reports:

Saudi Arabia is burning through its foreign reserves at an unprecedented rate as it struggles to cope with plummeting oil prices and the soaring costs of waging war in both Yemen and Syria. […]

Many observers believe that Saudi Arabia has brought the oil crisis on itself by refusing to curb production to drown out competition from fracking by the US. As a result, the price has fallen from $104 a barrel a year ago to less than $50 now, and the effect is reverberating around the world — from the slums of Caracas to the battlefields of Syria and Iraq; from the Russian Arctic to the Pearl River Delta in China.

Nobody outside the house of Saud knows what the future plans of the oil rich kingdom are, but there are some good reasons why it may be less likely to cut production (thus raising prices) than some think. True, the Saudis are fighting two wars. They also need to appease their public, and they have had to borrow money from the bond markets. But none of that means they are about to break.

The main reason for thinking they might keep production high is that the primary target of the Saudi attempt to cut oil prices—or, maybe, more accurately, Riyadh’s refusal to shore up those prices—isn’t those pesky U.S. frackers; it is Iran. The Saudis figure that keeping Iran from making windfall profits on oil is the best way to keep the pressure up on the country. Moreover, the Saudis may be figuring that U.S. foreign policy will change in January 2017. They are probably hearing from Democrats close to Hillary that a Clinton administration will take a higher profile in the region—they know that she, like Secretary Gates and National Security Advisor Susan Rice, thought that President Obama’s failure to stand up to Assad in Syria was a major blunder. And as long as the GOP nominee isn’t Rand Paul or Donald Trump, a Republican president would also take a tougher line against Iran and its allies than the current team.So the Saudis may be thinking that if they can maintain their current strategy for 17 more months, there will be light at the end of the tunnel. In the meantime, they will stick to high production levels to keep as much money as possible out of the hands of the mullahs, and they will continue spending—even if that means going to the bond markets. Interest rates are at historic lows these days and the Saudis are good credit risks. If you have cards, why not play them?

Costs and Benefits Amid Rapid Technological Change

The tools we traditionally use measure economic progress are badly outdated in today’s world. Case in point:

Americans spent more at retailers selling everything from cars to camping gear in July, but they spent less at electronics stores.

How can this be when gadget-head consumers are equipped with everything from Fitbitsto Beats by Dre headphones?  One answer is that websites and general-merchandise stores are stealing sales from traditional electronics purveyors such as Best Buy and the struggling Radio Shack.Another reason is that electronics are getting cheaper.Sales at electronics and appliance stores fell 2.5% from a year earlier in July, according to the Commerce Department’s retail sales report released Thursday.But adjusting for inflation, that’s not a bad result. The price of products sold at those stores was down 6% in June from a year earlier.

It’s not just that electronics are getting cheaper, its also that they are getting better. The item that is 33% cheaper is often also 2x better—and can do 10x as much because of the pervasive connectivity, and advanced software and customizability (think ‘apps’) that make these gadgets more useful overall.

GDP stats, real wage stats and many others just don’t capture this.They also don’t fully capture how different parts of the economy are behaving differently. Health care costs are going up very fast, but results are also getting better. Doctors can cure many more conditions and extend quality life spans more than ever before, even it it all costs much more. How do you quantify the difference between a $30,000 heart procedure that lets you live miserably for another two years against one that costs $150,000 and extends your lifespan indefinitely? Or a lousy $20,000 hip replacement with the kind that lets you play tennis for another 20 years and costs $200,000? And yet in education, the costs go up but the output seems stagnant, or is even declining…There was a lot of naive chatter from the usual well-intentioned but misguided cohort about revising GDP stats to take ‘national happiness’ into account. Good luck with that. But there is a serious case for thinking much harder about how to measure living standards, real incomes, and inequality in a world of rapid technological change.