foreignpolicy--2020-04-23--Why Facebook Is Betting Big on India

Why Facebook Is Betting Big on India

Why Facebook Is Betting Big on India Welcome to Foreign Policy ’ s weekly South Asia Brief .
We ’ re leading with a story that isn ’ t about the pandemic this week : Facebook ’ s $ 5.7 billion investment in India and why it matters .
Also , deadly clashes in Afghanistan threaten the peace process , Sri Lanka marks a year since its deadly Easter Sunday bombings , and garment industry layoffs disrupt Bangladesh .
If you would like to receive South Asia Brief in your inbox every Thursday , please sign up here .
Amid @ @ @ @ @ @ @ a surprising announcement on Tuesday .
It is spending $ 5.7 billion for a 9.99 percent stake in Jio Platforms , the tech subsidiary of India ’ s Reliance Industries .
The investment—the single largest in Facebook ’ s history—is a giant bet on India ’ s online growth .
The deal could also speed up Jio ’ s evolution from a cellular internet service to a broader one-stop digital universe—perhaps something like China ’ s WeChat .
News of the deal sent Reliance Industries ’ share price soaring on Wednesday , enabling @ @ @ @ @ @ @ once again surpass Alibaba ’ s Jack Ma as Asia ’ s richest man .
What ’ s in it for Facebook ?
In the announcement on Tuesday , Facebook CEO Mark Zuckerberg wrote that he wanted to thank “ Mukesh Ambani and the entire Jio team for their partnership ” —a rare sentiment from the side investing big money .
India has long been a major growth market for Facebook , but one that it has yet to successfully monetize .
There are more than 400 million WhatsApp users in India—Facebook owns @ @ @ @ @ @ @ more users in India than in any other country .
And there is still room for Facebook to grow : At least half a billion Indians remain offline .
Partnering with Jio and its influential owner Ambani may help the company navigate an increasingly protectionist Indian market .
Ambani himself has long advocated that New Delhi should take steps against “ data colonization ” by global tech giants .
The new partnership may soften his stance , as well as India ’ s trend toward protectionism .
As I ’ ve described in @ @ @ @ @ @ @ has previously been rebuffed by Indian regulators—such as when it tried to launch a free , gated version of the internet in 2016 .
Jio , now the biggest cellular internet provider in India , is a valuable friend for Facebook to have in its corner .
What ’ s in it for Reliance Jio ?
This is a bit more complicated .
Reliance has been described as India ’ s Exxon , AT & T , and Amazon rolled into one .
While it has fulfilled its goals of becoming an energy @ @ @ @ @ @ @ it has yet to seriously challenge Amazon or Flipkart as an e-commerce platform .
This is where Facebook can help .
Since 400 million Indians already use WhatsApp , a tie-in with JioMart—Reliance ’ s online retail service—would connect tens of millions of small-business owners with a larger base of potential consumers .
The partnership could upend India ’ s e-commerce market .
While Jio has its own apps for messaging , movies , and health care , it has not been able to monetize those subsidiary businesses .
Joining the country ’ @ @ @ @ @ @ @ its hopes of becoming a retail giant and speed up India ’ s transition to digital commerce .
Why it matters .
Beyond the economic implications , there is the larger question of what kind of internet India will have in the future .
Will it be free and fair , as it is in much of Western Europe ?
Or will it be gated and controlled , as it is in China ?
If approved by regulators , the Facebook-Jio deal suggests that India ’ s data localization plans may not be @ @ @ @ @ @ @ tech behemoths will continue to have an important stake in India ’ s future .
The timing of Facebook ’ s investment , while likely long in the works , may also be telling .
The coronavirus pandemic has led companies around the world to seek more local and more secure supply chains .
In Facebook ’ s case , befriending a powerful Indian partner could help it gain greater local influence in a market that remains the digital world ’ s biggest hope for growth .
Coronavirus still rising as Ramadan begins @ @ @ @ @ @ @ than 38,000 confirmed cases of the coronavirus .
As we have reported for several weeks , nationwide lockdowns have helped slow the spread of the pandemic , but they haven ’ t been able to stop it entirely .
Now , some countries are allowing certain sectors to get back to work .
In India , for example , farm and industrial activity may begin in rural areas .
One concern for South Asia , which is home to more than 500 million Muslims , is the start of the holy month of @ @ @ @ @ @ @ the government has caved in to demands from religious clerics to open mosques for prayers as long as they follow a list of rules , including maintaining a six-foot distance between worshippers .
Given the country ’ s high population density , enforcing those rules may be easier said than done .
Trump ’ s immigration plans .
With a single tweet on Monday night , U.S. President Donald Trump sent South Asian workers and many others in the United States into a panic .
“ In light of the attack from the @ @ @ @ @ @ @ referring to the coronavirus , “ I will be signing an Executive Order to temporarily suspend immigration.
” For now , Trump has not ordered a halt to specialty visas such as the H-1B program , through which tens of thousands of Indians work at U.S. tech companies and banks—but he has banned the issuance of new green cards .
Most of the 800,000 immigrants in the United States currently waiting for a green card are Indian citizens .
Sri Lanka attack anniversary .
Tuesday marked one year since the deadly Easter Sunday @ @ @ @ @ @ @ 269 people .
The country marked the anniversary with two minutes of silence , but there were no large-scale events because of the nationwide coronavirus curfew .
Colombo says the local militant group National Thowheed Jamath was responsible for the coordinated bombings , though the Islamic State has also claimed involvement .
Deadly clashes in Afghanistan .
Taliban forces killed dozens of Afghan security force members in separate clashes in the country ’ s east and north this week , threatening an already fragile peace process .
The clashes come despite recent high-level @ @ @ @ @ @ @ the commander of U.S. forces in the region and the Taliban ’ s top leadership .
The militant group has so far held off on targeting foreign troops .
The coronavirus pandemic has led to a steep drop in global demand for all kinds of commodities , including retail clothing .
In Bangladesh , factories have now furloughed or laid off more than half of the country ’ s 4.1 million garment workers , according to CNN .
What percentage of Bangladesh ’ s total exports do garments account for ?
Scroll down @ @ @ @ @ @ @ .
There ’ s an unexpected silver lining to the coronavirus-related shutdowns across South Asia : cleaner air .
One week after India ’ s lockdown was announced on March 24 , average concentrations of PM 2.5—the most harmful level of particle pollution—fell by 71 percent in New Delhi .
Once-smoggy surroundings have given way to clear blue skies .
Residents report that the air has for once lost its smoky , metallic taste .
People living hundreds of miles from the Himalayas can now see its snow-capped peaks .
The drop in @ @ @ @ @ @ @ region ’ s growing number of asthmatic patients—and perhaps set an example for industrial changes that could be put in place once the pandemic subsides .
Not only do garments account for four-fifths of Bangladesh ’ s total exports , but they are also responsible for 16 percent of the country ’ s total economic activity .
After companies such as Zara and Unimark cancelled bulk orders , more than 2 million garment workers have now lost their jobs .
Several million more workers in transportation and other parts of the garment supply @ @ @ @ @ @ @ .
That ’ s it for this week .
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Welcome to Foreign Policy’s weekly South Asia Brief. We’re leading with a story that isn’t about the pandemic this week: Facebook’s $5.7 billion investment in India and why it matters. Also, deadly clashes in Afghanistan threaten the peace process, Sri Lanka marks a year since its deadly Easter Sunday bombings , and garment industry layoffs disrupt Bangladesh.
Welcome to Foreign Policy’s weekly South Asia Brief. We’re leading with a story that isn’t about the pandemic this week: Facebook’s $5.7 billion investment in India and why it matters. Also, deadly clashes in Afghanistan threaten the peace process, Sri Lanka marks a year since its deadly Easter Sunday bombings, and garment industry layoffs disrupt Bangladesh.
If you would like to receive South Asia Brief in your inbox every Thursday, please sign up here.
Facebook Adds Asia’s Richest Man as a Friend
Amid a global economic recession, Facebook made a surprising announcement on Tuesday. It is spending $5.7 billion for a 9.99 percent stake in Jio Platforms, the tech subsidiary of India’s Reliance Industries. The investment—the single largest in Facebook’s history—is a giant bet on India’s online growth.
The deal could also speed up Jio’s evolution from a cellular internet service to a broader one-stop digital universe—perhaps something like China’s WeChat. News of the deal sent Reliance Industries’ share price soaring on Wednesday, enabling the chairman, Mukesh Ambani, to once again surpass Alibaba’s Jack Ma as Asia’s richest man.
What’s in it for Facebook? In the announcement on Tuesday, Facebook CEO Mark Zuckerberg wrote that he wanted to thank “Mukesh Ambani and the entire Jio team for their partnership”—a rare sentiment from the side investing big money. India has long been a major growth market for Facebook, but one that it has yet to successfully monetize. There are more than 400 million WhatsApp users in India—Facebook owns the messaging app—and its core platform has more users in India than in any other country.
And there is still room for Facebook to grow: At least half a billion Indians remain offline. Partnering with Jio and its influential owner Ambani may help the company navigate an increasingly protectionist Indian market. Ambani himself has long advocated that New Delhi should take steps against “data colonization” by global tech giants. The new partnership may soften his stance, as well as India’s trend toward protectionism. As I’ve described in my 2018 book India Connected, Facebook has previously been rebuffed by Indian regulators—such as when it tried to launch a free, gated version of the internet in 2016. Jio, now the biggest cellular internet provider in India, is a valuable friend for Facebook to have in its corner.
What’s in it for Reliance Jio? This is a bit more complicated. Reliance has been described as India’s Exxon, AT&T, and Amazon rolled into one. While it has fulfilled its goals of becoming an energy giant and the biggest telecommunications player, it has yet to seriously challenge Amazon or Flipkart as an e-commerce platform. This is where Facebook can help.
Since 400 million Indians already use WhatsApp, a tie-in with JioMart—Reliance’s online retail service—would connect tens of millions of small-business owners with a larger base of potential consumers. The partnership could upend India’s e-commerce market. While Jio has its own apps for messaging, movies, and health care, it has not been able to monetize those subsidiary businesses. Joining the country’s most-used mode of communication could boost its hopes of becoming a retail giant and speed up India’s transition to digital commerce.
Why it matters. Beyond the economic implications, there is the larger question of what kind of internet India will have in the future. Will it be free and fair, as it is in much of Western Europe? Or will it be gated and controlled, as it is in China? If approved by regulators, the Facebook-Jio deal suggests that India’s data localization plans may not be absolute. It also suggests that Western tech behemoths will continue to have an important stake in India’s future.
The timing of Facebook’s investment, while likely long in the works, may also be telling. The coronavirus pandemic has led companies around the world to seek more local and more secure supply chains. In Facebook’s case, befriending a powerful Indian partner could help it gain greater local influence in a market that remains the digital world’s biggest hope for growth.
What We’re Following
Coronavirus still rising as Ramadan begins. South Asia has now recorded more than 38,000 confirmed cases of the coronavirus. As we have reported for several weeks, nationwide lockdowns have helped slow the spread of the pandemic, but they haven’t been able to stop it entirely. Now, some countries are allowing certain sectors to get back to work. In India, for example, farm and industrial activity may begin in rural areas.
One concern for South Asia, which is home to more than 500 million Muslims, is the start of the holy month of Ramadan on Friday. In Pakistan, the government has caved in to demands from religious clerics to open mosques for prayers as long as they follow a list of rules, including maintaining a six-foot distance between worshippers. Given the country’s high population density, enforcing those rules may be easier said than done.
Trump’s immigration plans. With a single tweet on Monday night, U.S. President Donald Trump sent South Asian workers and many others in the United States into a panic. “In light of the attack from the Invisible Enemy,” he wrote, referring to the coronavirus, “I will be signing an Executive Order to temporarily suspend immigration.” For now, Trump has not ordered a halt to specialty visas such as the H-1B program, through which tens of thousands of Indians work at U.S. tech companies and banks—but he has banned the issuance of new green cards. Most of the 800,000 immigrants in the United States currently waiting for a green card are Indian citizens.
Sri Lanka attack anniversary. Tuesday marked one year since the deadly Easter Sunday suicide bombings across Sri Lanka that killed 269 people. The country marked the anniversary with two minutes of silence, but there were no large-scale events because of the nationwide coronavirus curfew. Colombo says the local militant group National Thowheed Jamath was responsible for the coordinated bombings, though the Islamic State has also claimed involvement.
Deadly clashes in Afghanistan. Taliban forces killed dozens of Afghan security force members in separate clashes in the country’s east and north this week, threatening an already fragile peace process. The clashes come despite recent high-level meetings in Doha, Qatar, between the commander of U.S. forces in the region and the Taliban’s top leadership. The militant group has so far held off on targeting foreign troops.
Question of the Week
The coronavirus pandemic has led to a steep drop in global demand for all kinds of commodities, including retail clothing. In Bangladesh, factories have now furloughed or laid off more than half of the country’s 4.1 million garment workers, according to CNN. What percentage of Bangladesh’s total exports do garments account for?
A) 10 percent
B) 30 percent
C) 50 percent
D) 80 percent
Scroll down for the answer.
Odds and Ends
A crow flies over a deserted street near the presidential palace in New Delhi on April 2.
Clear blue skies. There’s an unexpected silver lining to the coronavirus-related shutdowns across South Asia: cleaner air. One week after India’s lockdown was announced on March 24, average concentrations of PM 2.5—the most harmful level of particle pollution—fell by 71 percent in New Delhi. Once-smoggy surroundings have given way to clear blue skies. Residents report that the air has for once lost its smoky, metallic taste. People living hundreds of miles from the Himalayas can now see its snow-capped peaks. The drop in pollution will hopefully provide respite to the region’s growing number of asthmatic patients—and perhaps set an example for industrial changes that could be put in place once the pandemic subsides.
And the Answer Is…
D) 80 percent.
Not only do garments account for four-fifths of Bangladesh’s total exports, but they are also responsible for 16 percent of the country’s total economic activity. After companies such as Zara and Unimark cancelled bulk orders, more than 2 million garment workers have now lost their jobs. Several million more workers in transportation and other parts of the garment supply chain could also find their livelihoods endangered.
That’s it for this week.


foreignpolicy--2020-04-23--Middle East Autocrats Target South Asian Workers

Qatar ’ s forceful and illegal deportation of Nepali workers on March 15 and 19 under the pretext of testing them for the coronavirus has raised new fears about the fate of South Asian migrant workers in the Middle East during the pandemic .
The expelled workers had no opportunity to collect their belongings , collect their pay or benefits , or to challenge the expulsion .
According to Amnesty International , which interviewed 20 of the victims , hundreds of workers , most of them Nepali , were coerced and detained last month in egregious conditions after officials assured @ @ @ @ @ @ @ to kick them out of the country several days later without testing everyone .
Only a small minority even had their temperatures checked .
The migrant workers were detained in Industrial Area , Barwa City , and Labour City—all parts of Doha—and deceitfully told by the police that it was only a medical checkup .
The Qatar police took biometric information from the foreign workers crammed in the detention center before putting them in over-packed accommodation without providing adequate food and water .
The Doha Industrial Area , already infamous for slum conditions @ @ @ @ @ @ @ strict police monitoring and effectively sealed off .
The area mostly hosts workers building infrastructure for the 2022 FIFA World Cup , who even before the pandemic faced poor conditions and unsafe workspaces .
The Qatari government has denied the allegations , but they ’ re part of a pattern of abuse of migrant workers not just in Qatar but across the Middle East—workers who are now dangerously exposed to the vagaries of authoritarian governments during the pandemic .
The oil-rich Middle East countries built their fortresses with the blood and sweat of @ @ @ @ @ @ @ the workers , who live in crowded dormitories , are seen as a source of infection .
The protections extended to citizens routinely exclude migrant workers , both economically and in public health terms .
Qatar itself reports so far 7,764 confirmed cases of the new coronavirus , with 10 deaths , but these numbers are likely to be an underestimate .
About 2.6 million Nepali migrant workers are spread across the Middle East , South Korea , and Malaysia .
Among them , 1.5 million Nepalis work in the Persian Gulf and @ @ @ @ @ @ @ Most of the Nepali workers are stuck abroad due to Nepal ’ s closure of its borders until April 30 , leaving them highly vulnerable—although foreign governments have forced Nepal to accept some flights of deportees .
The contribution of migrant workers to Nepal ’ s GDP is invaluable ; the country received $ 8.6 billion in remittances last year .
Many South Asian countries are equally dependent on remittances from their workers abroad , according to the World Bank ’ s 2019 data , including India ( $ 82 billion in remittances @ @ @ @ @ @ @ ) , Pakistan ( $ 21 billion ) , and Sri Lanka ( $ 7 billion ) .
Despite the massive contribution made by their migrant workers , South Asian countries have either ignored the plight of these workers during the pandemic or made no significant plans to ease their hardships .
In part , that ’ s because the workers tend to be from the poorest and least politically powerful groups at home .
The situation of Nepali migrant workers in Saudi Arabia , the United Arab Emirates , and Bahrain need @ @ @ @ @ @ @ Nepali workers have been laid off in those nations , and some companies have not even provided proper housing and food for even the workers they keep on .
Janak Raj Sapkota , the author of Kahar , a book on Nepali migrant workers , told Foreign Policy : “ In the Gulf and Malaysia alone there are 1.5 million legal workers .
The number of undocumented workers is also going up .
The government has consulted with Nepalese ambassadors in those countries to see what can be done .
… But this @ @ @ @ @ @ @ millions of workers .
What to do if a worker returns ?
The government does not seem to have made serious preparations to isolate them.
” As coronavirus cases rise in the Middle East , migrant workers from around the world , and particularly from South Asia , will be the worst-hit .
Both local governments and South Asian nations need to step up their plans to protect workers in Qatar and elsewhere , from protecting them from police brutality to ensuring they are properly compensated for the labor they ’ ve already @ @ @ @ @ @ @ Nepal and other South Asian countries must repatriate the workers or face the suspension of bilateral labor agreements .
There is no guarantee that other Middle Eastern countries won ’ t follow suit .
Middle Eastern countries should protect migrant workers regardless of their legal status amid the pandemic by providing health support , an extension of visas , and announcing financial aid .
But they are unlikely to do so , given their record of exploitation and abuse .
South Asian countries also need to brace themselves to absorb the effects of @ @ @ @ @ @ @ come up with a concrete plan to protect their citizens abroad and lay out an emergency plan to bring back workers when needed and help them to adapt in this volatile time .

Qatar’s forceful and illegal deportation of Nepali workers on March 15 and 19 under the pretext of testing them for the coronavirus has raised new fears about the fate of South Asian migrant workers in the Middle East during the pandemic. The expelled workers had no opportunity to collect their belongings, collect their pay or benefits, or to challenge the expulsion.
Qatar’s forceful and illegal deportation of Nepali workers on March 15 and 19 under the pretext of testing them for the coronavirus has raised new fears about the fate of South Asian migrant workers in the Middle East during the pandemic. The expelled workers had no opportunity to collect their belongings, collect their pay or benefits, or to challenge the expulsion.
According to Amnesty International, which interviewed 20 of the victims, hundreds of workers, most of them Nepali, were coerced and detained last month in egregious conditions after officials assured them they could return to their accommodations—only to kick them out of the country several days later without testing everyone. Only a small minority even had their temperatures checked.
The migrant workers were detained in Industrial Area, Barwa City, and Labour City—all parts of Doha—and deceitfully told by the police that it was only a medical checkup. The Qatar police took biometric information from the foreign workers crammed in the detention center before putting them in over-packed accommodation without providing adequate food and water.
The Doha Industrial Area, already infamous for slum conditions and overcrowded camps, is now under strict police monitoring and effectively sealed off. The area mostly hosts workers building infrastructure for the 2022 FIFA World Cup, who even before the pandemic faced poor conditions and unsafe workspaces.
The Qatari government has denied the allegations, but they’re part of a pattern of abuse of migrant workers not just in Qatar but across the Middle East—workers who are now dangerously exposed to the vagaries of authoritarian governments during the pandemic.
The oil-rich Middle East countries built their fortresses with the blood and sweat of foreign laborers, but during the pandemic the workers, who live in crowded dormitories, are seen as a source of infection. The protections extended to citizens routinely exclude migrant workers, both economically and in public health terms. Qatar itself reports so far 7,764 confirmed cases of the new coronavirus, with 10 deaths, but these numbers are likely to be an underestimate.
About 2.6 million Nepali migrant workers are spread across the Middle East, South Korea, and Malaysia. Among them, 1.5 million Nepalis work in the Persian Gulf and Malaysia, and 400,000 in Qatar. Most of the Nepali workers are stuck abroad due to Nepal’s closure of its borders until April 30, leaving them highly vulnerable—although foreign governments have forced Nepal to accept some flights of deportees.
The contribution of migrant workers to Nepal’s GDP is invaluable; the country received $8.6 billion in remittances last year. Many South Asian countries are equally dependent on remittances from their workers abroad, according to the World Bank’s 2019 data, including India ($82 billion in remittances), Bangladesh ($17 billion), Pakistan ($21 billion), and Sri Lanka ($7 billion).
Despite the massive contribution made by their migrant workers, South Asian countries have either ignored the plight of these workers during the pandemic or made no significant plans to ease their hardships. In part, that’s because the workers tend to be from the poorest and least politically powerful groups at home.
The situation of Nepali migrant workers in Saudi Arabia, the United Arab Emirates, and Bahrain need to be addressed immediately. Thousands of Nepali workers have been laid off in those nations, and some companies have not even provided proper housing and food for even the workers they keep on.
Read More A general view shows an almost deserted street with closed shops and restaurants during a government-imposed nationwide lockdown as a preventive measure against the coronavirus in Lukla, northeast of Kathmandu, on March 28. A general view shows an almost deserted street with closed shops and restaurants during a government-imposed nationwide lockdown as a preventive measure against the coronavirus in Lukla, northeast of Kathmandu, on March 28. Nepal May Escape the Coronavirus but Not the Crash The remote mountain country has only five confirmed coronavirus cases. Dispatch | Arun Budhathoki Iranian President Ebrahim Raisi waves as he walks through the 77th United Nations General Assembly at U.N. headquarters in New York City. Iranian President Ebrahim Raisi waves as he walks through the 77th United Nations General Assembly at U.N. headquarters in New York City. Iran’s Grand Strategy Has Fundamentally Shifted Tehran has shifted to using carrots in the region—and reserving sticks for the United States and Israel. Analysis | Kenneth M. Pollack Raisi speaks into a bank of microphones. Raisi speaks into a bank of microphones. There Are No Good Deals With Iran But the Biden administration’s latest negotiations with Tehran are still the best option available. Analysis | Aaron David Miller
Janak Raj Sapkota, the author of Kahar, a book on Nepali migrant workers, told Foreign Policy: “In the Gulf and Malaysia alone there are 1.5 million legal workers. The number of undocumented workers is also going up. The government has consulted with Nepalese ambassadors in those countries to see what can be done. … But this is not enough for the management of millions of workers. What to do if a worker returns? The government does not seem to have made serious preparations to isolate them.”
As coronavirus cases rise in the Middle East, migrant workers from around the world, and particularly from South Asia, will be the worst-hit. Both local governments and South Asian nations need to step up their plans to protect workers in Qatar and elsewhere, from protecting them from police brutality to ensuring they are properly compensated for the labor they’ve already done.
The UAE has threatened that Nepal and other South Asian countries must repatriate the workers or face the suspension of bilateral labor agreements. There is no guarantee that other Middle Eastern countries won’t follow suit.
Middle Eastern countries should protect migrant workers regardless of their legal status amid the pandemic by providing health support, an extension of visas, and announcing financial aid. But they are unlikely to do so, given their record of exploitation and abuse. South Asian countries also need to brace themselves to absorb the effects of the decline in remittances, and to come up with a concrete plan to protect their citizens abroad and lay out an emergency plan to bring back workers when needed and help them to adapt in this volatile time.


foreignpolicy--2020-04-23--The Coronavirus Oil Shock Is Just Getting Started

The idea of a negative price for any commodity is outlandish , implying the seller is prepared to pay a buyer .
But for oil , the largest commodity market in the world , the basic fuel of modernity , to be trading at negative prices is nothing short of mind-boggling .
In the early afternoon EDT of April 20 , the May contract for West Texas crude touched negative $ 40.32 .
It was a succinct demonstration of how severe the impact of the COVID-19 crisis has been .
What triggered the inversion of prices on April 20 was @ @ @ @ @ @ @ tank farms of Cushing , Oklahoma , where U.S. oil futures are settled .
But the collapse in oil prices has sent shockwaves rippling around the world .
People in the West tend to think about oil shocks from the perspective of the consumer .
They notice when prices go up .
The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness , as price controls left Americans lining up for gas and European governments imposed weekend driving bans .
This was more than @ @ @ @ @ @ @ power in the world economy seemed to be shifting from the developed to the developing world .
The same thing happened more gradually in the early 2000s when oil prices surged and remained at elevated levels until 2014 .
Once again , consumers were squeezed—and not only in the West .
The poorest developing countries were particularly hard-hit .
The flip side of this was the enormous wealth accumulated by oil producers .
Emerging-market fossil fuel companies such as Brazil ’ s Petrobras and Malaysia ’ s Petronas were lionized in global financial @ @ @ @ @ @ @ Gazprom , Lukoil , and Rosneft , Vladimir Putin ’ s Russia reemerged as a geopolitical force .
For the vast majority of countries in the world , the decline in oil prices is a boon .
If a surge in fossil fuel prices rearranges the world economy , the effect also operates in reverse .
For the vast majority of countries in the world , the decline in oil prices is a boon .
Among emerging markets , Indonesia , Philippines , India , Argentina , Turkey , and South Africa all @ @ @ @ @ @ @ big part of their import bill .
Cheaper energy will cushion the pain of the COVID-19 recession .
But at the same time , and by the same token , plunging oil prices deliver a concentrated and devastating shock to the producers .
By comparison with the diffuse benefit enjoyed by consumers , the producers suffer immediate immiseration .
Though they are less well remembered in the West , such counter-shocks have happened before .
The first came in 1985 when Saudi Arabia began a price war to reconquer market share it had @ @ @ @ @ @ @ second came in 1997 when the Asian financial crisis led to a collapse in demand .
The third began in June 2014 as surging production from U.S. shale fields fundamentally altered the balance between demand and supply .
That slide was halted temporarily in September 2016 by an agreement between OPEC and Russia to limit production .
We are now facing a fourth counter-shock .
Faced with the unprecedented collapse in demand due to COVID-19 , talks between Russia and Saudi Arabia broke down in early March .
Russia refused to limit production @ @ @ @ @ @ @ dumping oil on global markets at steep discounts .
Despite the effort to patch together an agreement on production restriction in recent weeks , the overhang of supply is massive .
A fleet of up to 20 supertankers loaded with Saudi oil is bearing down on American oil ports .
Even if the negative prices for oil in May were the result of technical factors in the futures market , the prices for June are also historic lows .
In inflation-adjusted terms , oil prices are similar to those last seen in the @ @ @ @ @ @ @ were little more than clients of the oil majors , the United States and the British Empire .
All of this raises the question of what the impact will be on today ’ s global producers .
The economic profile of the Gulf states is not , however , typical of most oil-producing states .
Most have a much lower ratio of oil reserves to population .
Many large oil exporters have large and rapidly growing populations that are hungry for consumption , social spending , subsidies , and investment .
Whereas such @ @ @ @ @ @ @ earn more in revenue than they can sensibly invest at home , even at the height of OPEC ’ s power in the 1970s , the shah ’ s regime in Iran not only consumed all its oil revenue but used its oil assets as collateral for borrowing .
It is therefore not surprising that counter-shocks to oil prices often trigger political upheaval .
The sudden shift in the terms of trade undercuts export revenues , budget stability , and growth prospects .
Fiscal crises caused by falling prices limit governments ’ room @ @ @ @ @ @ @ choices .
The dilemma of defaulting on debt owed to foreign creditors and imposing austerity on populations has been the cause of grave political crises , some with serious geopolitical consequences .
In the late 1980s , falling oil revenues undercut Mikhail Gorbachev ’ s efforts to reform Soviet communism , accelerating the end of the Soviet Union .
Both Hugo Chávez in Venezuela and Vladimir Putin in Russia were able to rise because their predecessors failed to stabilize domestic politics in the wake of the price plunge of the late 1990s .
@ @ @ @ @ @ @ has once again applied huge pressure to the regime of Chávez ’ s successor , Nicolás Maduro , in Caracas .
While U.S. economic sanctions against Russia and Venezuela have been prominent in the news , aggressive competition from U.S. shale producers has been as important in shaping their economic fortunes .
So who is vulnerable now ?
Under Putin , Russia overhauled its economic policy after the 2014 price collapse .
Its budget was pared by a sustained austerity drive .
When it launched the current oil price war in March by @ @ @ @ @ @ @ reductions , Moscow probably did not anticipate the collapse that would ensue .
But Russia started with an exchange reserve of just shy of $ 570 billion , and due to its budgetary consolidation , it only began running up deficits once oil prices fell below $ 42 .
Other emerging-market oil producers , by contrast , have to deal with large debt loads .
Petrobras in Brazil has $ 78.9 billion of net debt as of the end of 2019 and one of the highest debt burdens of all oil firms .
@ @ @ @ @ @ @ But there have so far been few signs of panic .
In Malaysia , Petronas has accounted for more than 15 percent of the government ’ s total revenue over the last five years .
It was put on a negative outlook by Fitch .
But like its government , it maintains a solid A- bond rating .
These are resilient businesses with deep pockets in diversified economies .
After Venezuela , Ecuador is the Latin American oil producer facing the most urgent problems .
In February 2019 , it obtained a $ @ @ @ @ @ @ @ of multilateral lenders led by the IMF .
But to unlock this funding it had to push through painful reforms .
By last October , the government ’ s plans to abolish fuel subsidies had to be halted because of enormous popular protests .
Ecuador was already in this unstable condition when the oil price shock hit .
This weekend , the government announced it had agreed with investors to delay $ 800 million in interest payments on its $ 65 billion foreign debt .
This means that Ecuador is the second Latin @ @ @ @ @ @ @ default this year .
Populous middle-income countries that depend critically on oil are uniquely vulnerable .
Iran is a special case because of the punitive sanctions regime imposed by the United States .
But its neighbor Iraq , with a population of 38 million and a government budget that is 90 percent dependent on oil , will struggle to keep civil servants paid .
Not paying the state administration is a recipe for instability at a time when the country is the theater of a shadow war between Washington and Tehran .
Populous @ @ @ @ @ @ @ are uniquely vulnerable .
In North Africa , Algeria—with a population of 44 million and an official unemployment rate of 15 percent—depends on oil and gas imports for 85 percent of its foreign exchange revenue .
In the late 1980s , the oil shock triggered by Saudi Arabia wreaked havoc in Algeria , destabilizing its state-dominated economy .
As harsh austerity measures were implemented , the Islamic Salvation Front grew as the main organization opposition to the National Liberation Front regime .
When the Algerian military denied the Islamists their electoral victory in @ @ @ @ @ @ @ raged until 2002 and cost an estimated 150,000 lives .
The oil and gas boom of the early 2000s provided the financial foundation for the subsequent pacification of Algerian society under National Liberation Front President Abdelaziz Bouteflika .
Algeria ’ s giant military , the basic pillar of the regime , was the chief beneficiaries of this largesse , along with its Russian arms suppliers .
The country ’ s foreign currency reserves peaked at $ 200 billion in 2012 .
Spending this windfall on assistance programs and subsidies allowed Bouteflika ’ s @ @ @ @ @ @ @ protests during the Arab Spring .
But with oil prices trending down , this was not a sustainable long-run course .
By 2018 the government ’ s oil stabilization fund , which once held reserves worth more than one-third of GDP , had been depleted .
Given Algeria ’ s yawning trade deficit , the IMF expects reserves to fall below $ 13 billion in 2021 .
A strict COVID-19 lockdown is containing popular protest for now , but given that the fragile government in Algiers is now bracing for budget cuts of @ @ @ @ @ @ @ calm to last .
One thing that Algeria has going for it is that it has virtually no foreign debt .
Even if borrowing in the current moment is unattractive , the tough domestic choices it will need to make will not be compounded by an external squeeze .
The same can not be said for the two major producers of sub-Saharan Africa : Angola and Nigeria .
Angola ’ s President João Lourenço came into office in 2017 , succeeding the country ’ s longtime ruler José Eduardo dos Santos , who @ @ @ @ @ @ @ .
Lourenço has struggled to contain Angola ’ s debt burden , which has surged from about 30 percent of GDP in 2012 to 111 percent of GDP in 2019 .
Before last month ’ s price collapse , Angola was already spending between one fifth and one third of its export revenues on debt service .
That burden is now bound to increase significantly .
Ten-year Angolan bonds were this week trading at 44 cents on the dollar .
Having been downgraded to a lowly CCC+ , it is now widely considered @ @ @ @ @ @ @ .
Because servicing its debts requires a share of public spending six times larger than that which Angola spends on the health of its citizens , the case for doing so in the face of the COVID-19 crisis is unarguable .
Last month Nigeria overtook South Africa as the largest African economy .
As a large and diversified economy , it is not a petrostate in the sense that Iraq and Algeria are .
But most of Nigeria ’ s economic activity is informal , untaxed , and unconnected to the world economy @ @ @ @ @ @ @ responsible for the lion ’ s share of the government budget and 90 percent of foreign exchange earnings .
The oil price downturn of 2014 already inflicted serious pain .
Faced with the price collapse of 2020 , Finance Minister Zainab Ahmed has declared that Nigeria is now in “ crisis.
” In March , the rating agency Standard & Poor ’ s lowered Nigeria ’ s sovereign debt rating to B- .
This will raise the cost of borrowing and slow economic growth in a country in which more than 86 million @ @ @ @ @ @ @ , live in extreme poverty—the largest number in the world .
Furthermore , with 65 percent of government revenues devoted to servicing existing debt , the government may have to resort to printing money to pay civil servants , further spurring an already high inflation rate caused by food supply shortages .
If this lack of order in itself marks an important historical caesura , it raises the question of what comes next .
The giants such as Saudi Arabia and Russia will exploit their muscle to survive the crisis .
But the @ @ @ @ @ @ @ for the weaker producers .
For states such as Iraq , Algeria , and Angola , the threat is nothing short of existential .
What is the long-term horizon for them ?
Many of the commodity producers hit hardest by the oil price shock will be in line for financial assistance from the IMF and the World Bank .
The priority right now is immediate assistance .
But in the background of the spring meetings lurked the question of whether China would cooperate with other international creditors .
Since 2004 , Beijing has @ @ @ @ @ @ @ to African , Asian , and Latin American economies .
The Chinese state now owns large parts of both Venezuela ’ s and Angola ’ s external debt .
Is China systematically reshaping the commodity supply chains of the world by using its financial and political influence ?
If so , one might expect the COVID-19 crisis to be a moment in which it would put its foot down .
But Beijing has so far shown little interest in exploiting the crisis for debt-book diplomacy .
It has signaled its willingness to cooperate @ @ @ @ @ @ @ in supporting a debt moratorium .
This is helpful in that it facilitates the negotiation of debt relief .
Western creditors will worry less that whatever concessions they make will help to repay debts owed to China .
While debt relief can provide breathing room , this does not answer other fundamental questions .
In a century that will be marked by climate change , how useful is it to restore profits and prosperity based on fossil fuel extraction ?
With the possibility that the coronavirus might lower global carbon emissions by 5 @ @ @ @ @ @ @ the moment for a reenvisioning of the world economy toward a horizon of energy transition and decarbonization ?
The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can ’ t be resolved by states propping up their uncompetitive oil sectors .
Before the crisis struck , many political and economic analysts were already concerned about vulnerable fossil fuel producers .
The question was not how they would respond to negative oil prices but how they would be affected by the renewable energy transition and carbon taxes .
@ @ @ @ @ @ @ fare in a world beyond carbon , a world in which energy prices were depressed and yet oil consumption was slashed ?
That constellation is unlikely to occur under normal circumstances , as low prices will generally stimulate fresh demand .
But demand repression is what a concerted decarbonization drive would produce .
It is also exactly what we are seeing today .
The shock of the coronavirus is offering a glimpse of the future and it is harsh .
The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable @ @ @ @ @ @ @ by states propping up their uncompetitive oil sectors .
Even more important is the need to diversify the economies of the truly vulnerable producers in the Middle East , North Africa , sub-Saharan Africa , and Latin America .
If that is not made a priority both by national governments and international agencies , deep decarbonization will become a formula for social crises affecting hundreds of millions of people .
If their states are not already fragile , they are doomed to become so .
It would be a failure of vision to @ @ @ @ @ @ @ on the horizon .
A series of makeshift interventions may assist vulnerable oil-producing countries in rapid recovery , but what they need is a concerted strategy to wean themselves off their dependence on fossil fuel exports .
Otherwise , the oil counter-shock of 2020 will be no more than the first step on a path toward terminal crisis .

The idea of a negative price for any commodity is outlandish, implying the seller is prepared to pay a buyer. But for oil, the largest commodity market in the world, the basic fuel of modernity, to be trading at negative prices is nothing short of mind-boggling. In the early afternoon EDT of April 20, the May contract for West Texas crude touched negative $40.32. It was a succinct demonstration of how severe the impact of the COVID-19 crisis has been.
The idea of a negative price for any commodity is outlandish, implying the seller is prepared to pay a buyer. But for oil, the largest commodity market in the world, the basic fuel of modernity, to be trading at negative prices is nothing short of mind-boggling. In the early afternoon EDT of April 20, the May contract for West Texas crude touched negative $40.32. It was a succinct demonstration of how severe the impact of the COVID-19 crisis has been.
What triggered the inversion of prices on April 20 was the overflow of unsellable oil in the tank farms of Cushing, Oklahoma, where U.S. oil futures are settled. But the collapse in oil prices has sent shockwaves rippling around the world.
People in the West tend to think about oil shocks from the perspective of the consumer. They notice when prices go up. The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness, as price controls left Americans lining up for gas and European governments imposed weekend driving bans. This was more than an economic shock. The balance of power in the world economy seemed to be shifting from the developed to the developing world.
The same thing happened more gradually in the early 2000s when oil prices surged and remained at elevated levels until 2014. Once again, consumers were squeezed—and not only in the West. The poorest developing countries were particularly hard-hit. The flip side of this was the enormous wealth accumulated by oil producers. Emerging-market fossil fuel companies such as Brazil’s Petrobras and Malaysia’s Petronas were lionized in global financial markets. Backed by the power of Gazprom, Lukoil, and Rosneft, Vladimir Putin’s Russia reemerged as a geopolitical force.
For the vast majority of countries in the world, the decline in oil prices is a boon.
If a surge in fossil fuel prices rearranges the world economy, the effect also operates in reverse. For the vast majority of countries in the world, the decline in oil prices is a boon. Among emerging markets, Indonesia, Philippines, India, Argentina, Turkey, and South Africa all benefit, as imported fuel is a big part of their import bill. Cheaper energy will cushion the pain of the COVID-19 recession. But at the same time, and by the same token, plunging oil prices deliver a concentrated and devastating shock to the producers. By comparison with the diffuse benefit enjoyed by consumers, the producers suffer immediate immiseration.
Though they are less well remembered in the West, such counter-shocks have happened before. The first came in 1985 when Saudi Arabia began a price war to reconquer market share it had sacrificed to fellow OPEC members. The second came in 1997 when the Asian financial crisis led to a collapse in demand. The third began in June 2014 as surging production from U.S. shale fields fundamentally altered the balance between demand and supply. That slide was halted temporarily in September 2016 by an agreement between OPEC and Russia to limit production.
We are now facing a fourth counter-shock. Faced with the unprecedented collapse in demand due to COVID-19, talks between Russia and Saudi Arabia broke down in early March. Russia refused to limit production, and Saudi Arabia doubled down by dumping oil on global markets at steep discounts. Despite the effort to patch together an agreement on production restriction in recent weeks, the overhang of supply is massive. A fleet of up to 20 supertankers loaded with Saudi oil is bearing down on American oil ports. Even if the negative prices for oil in May were the result of technical factors in the futures market, the prices for June are also historic lows.
In inflation-adjusted terms, oil prices are similar to those last seen in the 1950s, when the Persian Gulf states were little more than clients of the oil majors, the United States and the British Empire. All of this raises the question of what the impact will be on today’s global producers.
Against the backdrop of the Petronas Twin Towers, a drone sprays disinfectant in Kuala Lumpur, Malaysia, as a preventive measure against the spread of the coronavirus March 31. Petronas has accounted for 15 percent of Malaysia’s total revenue over the past five years.
We tend to think of oil states as rich oligarchies serviced by armies of foreign workers, and the image applies to the Gulf states. Lower prices will certainly require them to tighten their belts. In February, even before the coronavirus hit, the International Monetary Fund was warning Saudi Arabia and the United Arab Emirates that by 2034 they would be net debtors to the rest of the world. That prediction was based on a 2020 price of $55 per barrel. At a price of $30, that timeline will shorten. And even in the Gulf there are weak links. Bahrain avoids financial crisis only through the financial patronage of Saudi Arabia. Oman is in even worse shape. Its government debt is so heavily discounted that it may soon slip into the distressed debt category. At that point it will most likely be forced to turn either to Riyadh or to the IMF for help. The sudden shift in the terms of trade undercuts export revenues, budget stability, and growth prospects.
The economic profile of the Gulf states is not, however, typical of most oil-producing states. Most have a much lower ratio of oil reserves to population. Many large oil exporters have large and rapidly growing populations that are hungry for consumption, social spending, subsidies, and investment. Whereas such countries as Saudi Arabia and Kuwait routinely earn more in revenue than they can sensibly invest at home, even at the height of OPEC’s power in the 1970s, the shah’s regime in Iran not only consumed all its oil revenue but used its oil assets as collateral for borrowing.
It is therefore not surprising that counter-shocks to oil prices often trigger political upheaval. The sudden shift in the terms of trade undercuts export revenues, budget stability, and growth prospects. Fiscal crises caused by falling prices limit governments’ room for domestic maneuver and force painful political choices. The dilemma of defaulting on debt owed to foreign creditors and imposing austerity on populations has been the cause of grave political crises, some with serious geopolitical consequences.
In the late 1980s, falling oil revenues undercut Mikhail Gorbachev’s efforts to reform Soviet communism, accelerating the end of the Soviet Union. Both Hugo Chávez in Venezuela and Vladimir Putin in Russia were able to rise because their predecessors failed to stabilize domestic politics in the wake of the price plunge of the late 1990s. Since 2014 the fall in oil prices has once again applied huge pressure to the regime of Chávez’s successor, Nicolás Maduro, in Caracas. While U.S. economic sanctions against Russia and Venezuela have been prominent in the news, aggressive competition from U.S. shale producers has been as important in shaping their economic fortunes.
So who is vulnerable now?
Under Putin, Russia overhauled its economic policy after the 2014 price collapse. Its budget was pared by a sustained austerity drive. When it launched the current oil price war in March by refusing to cooperate with OPEC in supply reductions, Moscow probably did not anticipate the collapse that would ensue. But Russia started with an exchange reserve of just shy of $570 billion, and due to its budgetary consolidation, it only began running up deficits once oil prices fell below $42.
Other emerging-market oil producers, by contrast, have to deal with large debt loads. Petrobras in Brazil has $78.9 billion of net debt as of the end of 2019 and one of the highest debt burdens of all oil firms. Its bonds trade at junk levels. But there have so far been few signs of panic. In Malaysia, Petronas has accounted for more than 15 percent of the government’s total revenue over the last five years. It was put on a negative outlook by Fitch. But like its government, it maintains a solid A- bond rating. These are resilient businesses with deep pockets in diversified economies.
An Ecuadorean waves a national flag in Quito on Oct. 12, 2019, during the 10th day of protests over a fuel price hike ordered by the government to secure an IMF loan. The government’s plans to abolish fuel subsidies had to be halted because of the enormous popular protests.
After Venezuela, Ecuador is the Latin American oil producer facing the most urgent problems. In February 2019, it obtained a $10.2 billion loan package from a group of multilateral lenders led by the IMF. But to unlock this funding it had to push through painful reforms. By last October, the government’s plans to abolish fuel subsidies had to be halted because of enormous popular protests. Ecuador was already in this unstable condition when the oil price shock hit. This weekend, the government announced it had agreed with investors to delay $800 million in interest payments on its $65 billion foreign debt. This means that Ecuador is the second Latin American country after Argentina to enter technical default this year.
Populous middle-income countries that depend critically on oil are uniquely vulnerable. Iran is a special case because of the punitive sanctions regime imposed by the United States. But its neighbor Iraq, with a population of 38 million and a government budget that is 90 percent dependent on oil, will struggle to keep civil servants paid. Not paying the state administration is a recipe for instability at a time when the country is the theater of a shadow war between Washington and Tehran.
Populous middle-income countries that depend critically on oil are uniquely vulnerable.
In North Africa, Algeria—with a population of 44 million and an official unemployment rate of 15 percent—depends on oil and gas imports for 85 percent of its foreign exchange revenue. In the late 1980s, the oil shock triggered by Saudi Arabia wreaked havoc in Algeria, destabilizing its state-dominated economy. As harsh austerity measures were implemented, the Islamic Salvation Front grew as the main organization opposition to the National Liberation Front regime. When the Algerian military denied the Islamists their electoral victory in 1991 it unleashed a civil war that raged until 2002 and cost an estimated 150,000 lives.
The oil and gas boom of the early 2000s provided the financial foundation for the subsequent pacification of Algerian society under National Liberation Front President Abdelaziz Bouteflika. Algeria’s giant military, the basic pillar of the regime, was the chief beneficiaries of this largesse, along with its Russian arms suppliers. The country’s foreign currency reserves peaked at $200 billion in 2012. Spending this windfall on assistance programs and subsidies allowed Bouteflika’s government to survive the initial wave of protests during the Arab Spring. But with oil prices trending down, this was not a sustainable long-run course. By 2018 the government’s oil stabilization fund, which once held reserves worth more than one-third of GDP, had been depleted. Given Algeria’s yawning trade deficit, the IMF expects reserves to fall below $13 billion in 2021. A strict COVID-19 lockdown is containing popular protest for now, but given that the fragile government in Algiers is now bracing for budget cuts of 30 percent, do not expect that calm to last.
One thing that Algeria has going for it is that it has virtually no foreign debt. Even if borrowing in the current moment is unattractive, the tough domestic choices it will need to make will not be compounded by an external squeeze. The same cannot be said for the two major producers of sub-Saharan Africa: Angola and Nigeria.
The Kaombo Norte, a floating production storage and offloading vessel operated by a multinational oil company, sits off the coast of Angola on Nov. 8, 2018. The arrival of the platform ship, which belongs to French oil giant Total, was a timely lifeline for the Angolan government.
Angola’s President João Lourenço came into office in 2017, succeeding the country’s longtime ruler José Eduardo dos Santos, who had been in power for 38 years. Lourenço has struggled to contain Angola’s debt burden, which has surged from about 30 percent of GDP in 2012 to 111 percent of GDP in 2019. Before last month’s price collapse, Angola was already spending between one fifth and one third of its export revenues on debt service. That burden is now bound to increase significantly. Ten-year Angolan bonds were this week trading at 44 cents on the dollar. Having been downgraded to a lowly CCC+, it is now widely considered to be at imminent risk of default. Because servicing its debts requires a share of public spending six times larger than that which Angola spends on the health of its citizens, the case for doing so in the face of the COVID-19 crisis is unarguable.
Last month Nigeria overtook South Africa as the largest African economy. As a large and diversified economy, it is not a petrostate in the sense that Iraq and Algeria are. But most of Nigeria’s economic activity is informal, untaxed, and unconnected to the world economy. As a result, oil is responsible for the lion’s share of the government budget and 90 percent of foreign exchange earnings. The oil price downturn of 2014 already inflicted serious pain. Faced with the price collapse of 2020, Finance Minister Zainab Ahmed has declared that Nigeria is now in “crisis.” In March, the rating agency Standard & Poor’s lowered Nigeria’s sovereign debt rating to B-. This will raise the cost of borrowing and slow economic growth in a country in which more than 86 million people, 47 percent of the population, live in extreme poverty—the largest number in the world. Furthermore, with 65 percent of government revenues devoted to servicing existing debt, the government may have to resort to printing money to pay civil servants, further spurring an already high inflation rate caused by food supply shortages.
Swings in oil prices mark epochs in the development of the world economy. The price surge of the 1970s and the nationalization of the Middle East oil industry announced the definitive end of the imperial era. The 1980s saw the creation of a market-based global energy economy. The early 2000s seemed to open the door on a new age of state capitalism, in which China was the main driver of demand and titans like Saudi Aramco and Rosneft managed supply. But the price collapse of 2014 created problems for this model of petrostate capitalism. China’s demand growth is no longer as rapid as it once was. America’s shale producers have upset the efforts of OPEC and Russia to manage the market. As the failure of efforts to stabilize oil prices in the face of the COVID-19 crisis has demonstrated, there is currently nothing one could call an order in the oil market. The diplomacy of supply agreements is fragile. The geopolitics are haphazard. It is unclear whether the U.S. administration prefers a low or a high price for oil. The financial foundations of the shale boom are precarious. The physical infrastructure to store oil is inadequate. And all the while the futures markets react with merciless speed. For states such as Iraq, Algeria, and Angola, the threat is nothing short of existential.
If this lack of order in itself marks an important historical caesura, it raises the question of what comes next. The giants such as Saudi Arabia and Russia will exploit their muscle to survive the crisis. But the same cannot so easily be said for the weaker producers. For states such as Iraq, Algeria, and Angola, the threat is nothing short of existential. What is the long-term horizon for them?
Many of the commodity producers hit hardest by the oil price shock will be in line for financial assistance from the IMF and the World Bank. The priority right now is immediate assistance. But in the background of the spring meetings lurked the question of whether China would cooperate with other international creditors. Since 2004, Beijing has made $152 billion in resource-backed loans to African, Asian, and Latin American economies. The Chinese state now owns large parts of both Venezuela’s and Angola’s external debt. Is China systematically reshaping the commodity supply chains of the world by using its financial and political influence? If so, one might expect the COVID-19 crisis to be a moment in which it would put its foot down. But Beijing has so far shown little interest in exploiting the crisis for debt-book diplomacy. It has signaled its willingness to cooperate with the other members of the G-20 in supporting a debt moratorium. This is helpful in that it facilitates the negotiation of debt relief. Western creditors will worry less that whatever concessions they make will help to repay debts owed to China.
A motorist rides April 2 along a deserted street in New Delhi, which is regularly listed as one of the world’s most polluted cities but has seen periods of clean air as a result of the coronavirus lockdown.
While debt relief can provide breathing room, this does not answer other fundamental questions. In a century that will be marked by climate change, how useful is it to restore profits and prosperity based on fossil fuel extraction? With the possibility that the coronavirus might lower global carbon emissions by 5 percent this year, is this not the moment for a reenvisioning of the world economy toward a horizon of energy transition and decarbonization?
The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can’t be resolved by states propping up their uncompetitive oil sectors.
Before the crisis struck, many political and economic analysts were already concerned about vulnerable fossil fuel producers. The question was not how they would respond to negative oil prices but how they would be affected by the renewable energy transition and carbon taxes. How would the most vulnerable oil producers fare in a world beyond carbon, a world in which energy prices were depressed and yet oil consumption was slashed? That constellation is unlikely to occur under normal circumstances, as low prices will generally stimulate fresh demand. But demand repression is what a concerted decarbonization drive would produce. It is also exactly what we are seeing today. The shock of the coronavirus is offering a glimpse of the future and it is harsh.
The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can’t be resolved by states propping up their uncompetitive oil sectors. Even more important is the need to diversify the economies of the truly vulnerable producers in the Middle East, North Africa, sub-Saharan Africa, and Latin America. If that is not made a priority both by national governments and international agencies, deep decarbonization will become a formula for social crises affecting hundreds of millions of people. If their states are not already fragile, they are doomed to become so.
It would be a failure of vision to separate the current crisis from the one on the horizon. A series of makeshift interventions may assist vulnerable oil-producing countries in rapid recovery, but what they need is a concerted strategy to wean themselves off their dependence on fossil fuel exports. Otherwise, the oil counter-shock of 2020 will be no more than the first step on a path toward terminal crisis.


foreignpolicy--2020-04-23--Netanyahu’s Annexation Plan Is a Threat to Israel’s National Security

Four days after the White House reiterated its resolve to pursue U.S. President Donald Trump ’ s “ deal of the century , ” Israel ’ s ongoing political turmoil ended on Monday with a coalition agreement that may doom prospects of Israelis and Palestinians ever returning to the negotiating table .
The agreement between Benjamin Netanyahu ’ s Likud party and Benny Gantz ’ s Blue and White bloc sets July 1 as the date when unilateral Israeli annexation of large chunks of West Bank territory , a significant element of the Trump plan , kicks in .
If @ @ @ @ @ @ @ plan ’ s other features will be rendered irrelevant .
This is happening despite 220 retired Israeli generals , admirals , and leaders from the Mossad , Shin Bet , and the police—members of Commanders for Israel ’ s Security ( CIS ) —signing a full-page ad in Israeli newspapers on April 3 urging their erstwhile colleagues in government—namely Gantz and Gabi Ashkenazi , both of whom are former chiefs of staff of the Israel Defense Forces—to insist on blocking unilateral annexation of West Bank territory .
A few days later , 149 @ @ @ @ @ @ @ Policy Forum in a similar call , and soon thereafter , 11 members of the U.S. Congress issued another warning about the negative consequences of such a move .
Regardless of their—and our—serious reservations about elements of the Trump plan , all three groups agreed on the adverse effects of annexation on prospects for an eventual Israeli-Palestinian two-state solution and the risk of undermining another major pillar of U.S. regional strategy : Israel ’ s peace treaties with Egypt and Jordan .
Annexation could undermine a major pillar of U.S. regional strategy : @ @ @ @ @ @ @ and Jordan .
Egypt is a major regional player and acts as the primary intermediary between Israel and Hamas in preventing rounds of violence or ending them once they erupt .
Cairo is also an important partner for Israel in fighting the Islamic State and al Qaeda affiliates and other terrorists operating in and from the Sinai Peninsula ; annexation of the West Bank may trigger a popular reaction in Egypt that could force the administration of Abdel Fattah al-Sisi to reconsider these relations .
The situation is even more precarious in Jordan @ @ @ @ @ @ @ the Jordan River from the West Bank and has a substantial Palestinian population .
It has therefore always been more sensitive to adverse developments in the West Bank .
Israel ’ s border with Jordan has been more secure than other frontiers for decades .
Moreover , the kingdom ’ s vast territory has provided Israel with irreplaceable strategic depth allowing for the deterrence , detection , and interception—on the ground and in the air—of hostile forces , primarily from Iran .
Another objective of the Trump plan may also fall victim to @ @ @ @ @ @ @ the administration ’ s early achievements in encouraging greater cooperation between Israel and U.S. regional partners in the Gulf and elsewhere .
Just as the coronavirus pandemic and collapsing oil prices have contributed to concerns about internal stability in the Gulf monarchies , these regimes will also be forced to preempt public anger by reacting publicly to Israeli annexation lest their adversaries—primarily Iran and Turkey—use their inaction to undermine those regimes ’ popular legitimacy .
Risking all that for the annexation of territory over which Israel already has full security control makes no @ @ @ @ @ @ @ States need to reconsider before the damage is done .
This reckless move won ’ t just have adverse consequences for Israel ’ s security ; it also has implications for Israel ’ s future as a Jewish democracy .
The U.S. Jewish leaders and the members of Congress emphasized the danger to the bipartisan U.S. support it has long enjoyed—another important pillar in Israel ’ s national security equation .
Like most Israelis , many U.S. policymakers and opinion shapers were unaware , as we learned from discussions with them , of @ @ @ @ @ @ @ the whims of a negligible messianic right-wing minority to a high-priority action item on Netanyahu ’ s agenda for the coalition government he has just managed to form .
Now all doubt is erased .
The dramatic public appeal by the 220 retired senior Israeli security officials was designed to stiffen the resistance to annexation by Netanyahu ’ s would-be coalition partners , led by Gantz , at the very moment when Netanyahu was being subjected to ( or orchestrating ) pressure from hardcore annexationists to not yield on the issue .
Anticipating @ @ @ @ @ @ @ years CIS has been sharing its findings concerning the full ramifications of unilateral annexation with members of Israel ’ s Knesset and cabinet as well as with the Israeli public .
It has also been frequently invited to brief White House officials , members of Congress , U.S. diplomats , and U.S. Jewish leaders .
This irreversible step , once taken , is likely to trigger a chain reaction beyond Israel ’ s control .
In brief , this irreversible step , once taken , is likely to trigger a chain reaction beyond @ @ @ @ @ @ @ point might well be the termination of Palestinian security coordination with Israel .
Once hailed as a symbol of aspirations for statehood , the Palestinian security agencies lost public support as statehood appeared less and less likely .
Worse yet , both junior and senior officers report encountering accusations of treason and charges that they no longer serve Palestinian national aspirations—only the Israeli occupation .
During tense moments , with popular pressure more pronounced , absenteeism from duty among the agencies approached 30 percent .
It is our view ( as well as @ @ @ @ @ @ @ generals ) that a Knesset vote on annexation might shred the residual legitimacy of security coordination .
Whether the Palestinian Authority ( PA ) itself survives this moment or not , and whether its leadership would still wish for security coordination to continue , might be irrelevant .
If those currently serving in the security agencies refuse to show up for work , one can only hope that they do not show up with their weapons in mass protests against the annexation .
If Palestinian security coordination ceases to be effective , and @ @ @ @ @ @ @ exploit the ensuing security vacuum , Israel will have no choice but to reoccupy the entire West Bank—all Palestinian population centers currently under PA administration included .
Should this scenario materialize in the West Bank , one must assume that in Gaza , Hamas is unlikely to respect its cease-fire understandings with Israel .
Should Hamas join the confrontation , Israel may have no option but to reoccupy the Gaza Strip as well .
Consequently , what might start after July 1 with a Knesset vote on a partial annexation may soon thereafter @ @ @ @ @ @ @ a complete Israeli takeover of the West Bank and Gaza , meaning that Israel ’ s military would be the sole entity ruling over millions of Palestinians—with no exit strategy .
What might start after July 1 with a Knesset vote on partial annexation could spin out of control and lead to a complete Israeli takeover of the West Bank and Gaza—with Israel ’ s military ruling over millions of Palestinians—with no exit strategy .
In such a situation , any hope the Trump team might have had for its “ deal of @ @ @ @ @ @ @ and Palestinians together would evaporate .
Likewise , no other diplomatic effort is likely to resurrect prospects for a two-state deal anytime soon .
Rescuing Israel from the impossible dilemma of giving up its Jewish identity by granting annexed Palestinians equal rights or forfeiting its democracy by depriving them of those rights may turn out to be a mission impossible .
The awakening of many here in Israel and some in the United States to the imminence of this danger offers some hope that steps might be taken during the coming 10 weeks @ @ @ @ @ @ @ .
Deterring unilateral annexation is both urgent and essential .
Those who care for Israel ’ s future as a secure Jewish democracy that upholds the values enshrined in its declaration of independence must act now .

Four days after the White House reiterated its resolve to pursue U.S. President Donald Trump’s “deal of the century,” Israel’s ongoing political turmoil ended on Monday with a coalition agreement that may doom prospects of Israelis and Palestinians ever returning to the negotiating table.
Four days after the White House reiterated its resolve to pursue U.S. President Donald Trump’s “deal of the century,” Israel’s ongoing political turmoil ended on Monday with a coalition agreement that may doom prospects of Israelis and Palestinians ever returning to the negotiating table.
The agreement between Benjamin Netanyahu’s Likud party and Benny Gantz’s Blue and White bloc sets July 1 as the date when unilateral Israeli annexation of large chunks of West Bank territory, a significant element of the Trump plan, kicks in. If their joint government acts accordingly, the plan’s other features will be rendered irrelevant.
This is happening despite 220 retired Israeli generals, admirals, and leaders from the Mossad, Shin Bet, and the police—members of Commanders for Israel’s Security (CIS)—signing a full-page ad in Israeli newspapers on April 3 urging their erstwhile colleagues in government—namely Gantz and Gabi Ashkenazi, both of whom are former chiefs of staff of the Israel Defense Forces—to insist on blocking unilateral annexation of West Bank territory. A few days later, 149 prominent American Jewish leaders joined the Israel Policy Forum in a similar call, and soon thereafter, 11 members of the U.S. Congress issued another warning about the negative consequences of such a move.
Regardless of their—and our—serious reservations about elements of the Trump plan, all three groups agreed on the adverse effects of annexation on prospects for an eventual Israeli-Palestinian two-state solution and the risk of undermining another major pillar of U.S. regional strategy: Israel’s peace treaties with Egypt and Jordan.
Annexation could undermine a major pillar of U.S. regional strategy: Israel’s peace treaties with Egypt and Jordan.
Egypt is a major regional player and acts as the primary intermediary between Israel and Hamas in preventing rounds of violence or ending them once they erupt. Cairo is also an important partner for Israel in fighting the Islamic State and al Qaeda affiliates and other terrorists operating in and from the Sinai Peninsula; annexation of the West Bank may trigger a popular reaction in Egypt that could force the administration of Abdel Fattah al-Sisi to reconsider these relations.
The situation is even more precarious in Jordan. The kingdom is located just across the Jordan River from the West Bank and has a substantial Palestinian population. It has therefore always been more sensitive to adverse developments in the West Bank. Israel’s border with Jordan has been more secure than other frontiers for decades. Moreover, the kingdom’s vast territory has provided Israel with irreplaceable strategic depth allowing for the deterrence, detection, and interception—on the ground and in the air—of hostile forces, primarily from Iran.
Another objective of the Trump plan may also fall victim to unilateral annexation: the hope of solidifying the administration’s early achievements in encouraging greater cooperation between Israel and U.S. regional partners in the Gulf and elsewhere. Just as the coronavirus pandemic and collapsing oil prices have contributed to concerns about internal stability in the Gulf monarchies, these regimes will also be forced to preempt public anger by reacting publicly to Israeli annexation lest their adversaries—primarily Iran and Turkey—use their inaction to undermine those regimes’ popular legitimacy.
Risking all that for the annexation of territory over which Israel already has full security control makes no sense. Both Israel and the United States need to reconsider before the damage is done.
This reckless move won’t just have adverse consequences for Israel’s security; it also has implications for Israel’s future as a Jewish democracy. The U.S. Jewish leaders and the members of Congress emphasized the danger to the bipartisan U.S. support it has long enjoyed—another important pillar in Israel’s national security equation.
Like most Israelis, many U.S. policymakers and opinion shapers were unaware, as we learned from discussions with them, of the swift progression of unilateral annexation from the whims of a negligible messianic right-wing minority to a high-priority action item on Netanyahu’s agenda for the coalition government he has just managed to form. Now all doubt is erased.
The dramatic public appeal by the 220 retired senior Israeli security officials was designed to stiffen the resistance to annexation by Netanyahu’s would-be coalition partners, led by Gantz, at the very moment when Netanyahu was being subjected to (or orchestrating) pressure from hardcore annexationists to not yield on the issue.
Anticipating such pressure, for well over two years CIS has been sharing its findings concerning the full ramifications of unilateral annexation with members of Israel’s Knesset and cabinet as well as with the Israeli public. It has also been frequently invited to brief White House officials, members of Congress, U.S. diplomats, and U.S. Jewish leaders.
This irreversible step, once taken, is likely to trigger a chain reaction beyond Israel’s control.
In brief, this irreversible step, once taken, is likely to trigger a chain reaction beyond Israel’s control. The tipping point might well be the termination of Palestinian security coordination with Israel. Once hailed as a symbol of aspirations for statehood, the Palestinian security agencies lost public support as statehood appeared less and less likely. Worse yet, both junior and senior officers report encountering accusations of treason and charges that they no longer serve Palestinian national aspirations—only the Israeli occupation.
During tense moments, with popular pressure more pronounced, absenteeism from duty among the agencies approached 30 percent. It is our view (as well as the view of hundreds of other retired generals) that a Knesset vote on annexation might shred the residual legitimacy of security coordination.
Whether the Palestinian Authority (PA) itself survives this moment or not, and whether its leadership would still wish for security coordination to continue, might be irrelevant. If those currently serving in the security agencies refuse to show up for work, one can only hope that they do not show up with their weapons in mass protests against the annexation.
If Palestinian security coordination ceases to be effective, and with Hamas well organized and prepared to exploit the ensuing security vacuum, Israel will have no choice but to reoccupy the entire West Bank—all Palestinian population centers currently under PA administration included. Should this scenario materialize in the West Bank, one must assume that in Gaza, Hamas is unlikely to respect its cease-fire understandings with Israel. Should Hamas join the confrontation, Israel may have no option but to reoccupy the Gaza Strip as well.
Consequently, what might start after July 1 with a Knesset vote on a partial annexation may soon thereafter spin out of control and lead to a complete Israeli takeover of the West Bank and Gaza, meaning that Israel’s military would be the sole entity ruling over millions of Palestinians—with no exit strategy.
What might start after July 1 with a Knesset vote on partial annexation could spin out of control and lead to a complete Israeli takeover of the West Bank and Gaza—with Israel’s military ruling over millions of Palestinians—with no exit strategy.
In such a situation, any hope the Trump team might have had for its “deal of the century” to eventually bring Israelis and Palestinians together would evaporate. Likewise, no other diplomatic effort is likely to resurrect prospects for a two-state deal anytime soon. Rescuing Israel from the impossible dilemma of giving up its Jewish identity by granting annexed Palestinians equal rights or forfeiting its democracy by depriving them of those rights may turn out to be a mission impossible.
The awakening of many here in Israel and some in the United States to the imminence of this danger offers some hope that steps might be taken during the coming 10 weeks in time to prevent this dire outcome.
Deterring unilateral annexation is both urgent and essential. Those who care for Israel’s future as a secure Jewish democracy that upholds the values enshrined in its declaration of independence must act now.