By Chris Trotter*
Capitalism is changing. Twenty years ago, the sole obligation of a capitalist enterprise (other than abiding by the laws of the states in which it operated) was to generate a return on its shareholders’ investment. So entrenched was this notion that it was specifically referenced in the legislation giving effect to the free-market reforms of the 1980s and 90s. Not anymore. In today’s climate, the interests of shareholders are expected to give way to the moral convictions and/or objections of journalists and politicians. The pursuit of profit now comes second to the quest for ethical perfection.
The current furore engulfing Air New Zealand’s commercial relationship with the Saudi Arabian Navy illustrates the many problems associated with mixing money and morality.
A quick Google search established that, in the words of the Sanctions Scanner website, “there are no formal international sanctions implemented against Saudi Arabia”. Following the gruesome assassination of the journalist, Jamal Khashoggi, in 2018, the US Congress briefly considered imposing unilateral sanctions, but nothing came of it. (In matters relating to “The Kingdom” nothing usually does.) Put simply, there was and is no legal impediment to Air New Zealand entering into a commercial relationship with the Saudis. The company saw an opportunity to make money for its shareholders – and took it.
Yes, but, the Saudi navy is blockading the war-torn nation of Yemen, a country constantly teetering on the brink of humanitarian catastrophe. Refurbishing the gas turbine engines of its warships places the national carrier in the invidious position of at least appearing to be aiding and abetting the perpetrators of acts which some critics of the Saudi regime have alleged to be war crimes.
Some critics? Therein lies the problem. Yemen finds itself in the unfortunate position of being caught up in the struggle for regional supremacy between the Kingdom of Saudi Arabia and the Islamic Republic of Iran. By means of its naval blockade, and intermittent bombing sorties, the Saudi regime has been able to prevent Iran’s proxies – the rebel Houthi militias – from over-running completely what remains of the Saudi-friendly forces associated with the government of President Abdrabbuh Mansur Hadi. The Saudis’ extremely restricted military options in this ferociously complex civil war leave them acutely vulnerable to accusations of war crimes. To date, however, international opprobrium has been deemed preferable to an Iranian ally controlling the geopolitically critical entrance to the Red Sea.
Not that the most vocal critics of Air New Zealand’s association with the Saudis have much to say about geopolitics. For the Greens’ Golriz Ghahraman, the fact that people (many of them children) die in wars is sufficient reason for New Zealand to have nothing to do with them. For Valerie Morse, one of the most outspoken critics of New Zealand’s small but innovative arms industry, there can be no excuse for even the most peripheral involvement of Kiwi companies in the production or refurbishment of military equipment – especially a company whose majority shareholder is the New Zealand state.
All very noble and principled of this outspoken duo, whose political stance, in addition to being high-minded, is also (dare we say it?) guaranteed to attract massive support on Twitter, Instagram and Facebook.
Less ethically lustrous, perhaps, is the consideration owed to Air New Zealand’s highly skilled engineering workforce. With their usual flow of contracts stemmed by the Covid-19 pandemic, the Saudi refurbishment job was likely seen as a godsend. That nobody asked too many questions about what these refurbished engines might be powering is entirely understandable. Air New Zealand’s engineering capabilities are an important contributor to its international success. Management had every right to assume that, as the company’s majority shareholder, the New Zealand state has a vested interest in keeping one of its airline’s most efficient operations economically viable.
It would have been equally understandable if those involved in, and associated with, the contract saw the whole exercise as part of a much bigger picture. New Zealand is, when all is said and done, still a member of what John Key called the Five Eyes “club”. With the two biggest exporters of arms to the Saudi kingdom being fellow Five Eyes members the United States and the United Kingdom, and with the Aussies revving-up their own arms industry in sympathy, New Zealand pitching-in to the geopolitical working-bee may well have been seen as the shrewdest move – diplomatically-speaking.
The Iranians already possess the capability of closing the Strait of Hormuz at the entrance to the Persian Gulf. Allowing them to close-off the entrance to the Red Sea would be greeted with alarm and dismay by all those nations dependent on the oil and natural gas reserves of the Arabian peninsula. That’s not just us, by the way, but also our biggest trading partners China and Australia.
To Ms Ghahraman and her Green colleagues, the prospect of so dramatically exposing the world’s dependence on fossil fuels was, no doubt, an alluring one. Unfortunately, the global economy is nowhere near being able to do without coal, oil and natural gas. For many years to come, the strategic criticality of Middle East oil will drive the decision-making of nations much larger and more ruthless than New Zealand.
That the very existence of the Air New Zealand-Saudi relationship came to light at all may be related very closely to the recent political shifts in the biggest and most ruthless nation of them all – the United States of America. On 4 February 2021, America’s new president, Joe Biden, delivered a foreign-policy speech in which he signalled the USA’s unwillingness to let the bloody stalemate in Yemen continue.
“This war has to end,” said Biden. “And to underscore our commitment, we’re ending all American support for offensive operations in the war in Yemen, including relevant arm sales.”
Those words should not be interpreted as an indication of the USA’s willingness to let the Iranians claim victory – far from it. What Biden’s announcement portends is Washington’s impatience with the Saudi regime’s military inadequacies. Donald Trump may have taken its Crown Prince’s assurances that his armed forces were more than a match for Houthi militiamen, but Biden is much more willing than his predecessor to believe the evidence of his military and diplomatic experts on the ground. Uncle Sam is getting ready to butt some intransigent heads together. Mohammed bin Salman’s ambitions will be put on ice, while the Iranians will be offered an end to crippling US sanctions if they undertake to help broker a lasting peace in Yemen.
Those wondering why our Prime Minister was so willing to countenance a reputationally damaging breaking of the gas turbine contract should wonder no longer. Pieces are in motion on the Middle East chessboard. The interests of the majority shareholder in Air New Zealand are, accordingly, in flux. Jacinda Ardern has sniffed the wind and smelled Joe Biden’s aftershave.
Maybe capitalism hasn’t changed that much after all?
*Chris Trotter has been writing and commenting professionally about New Zealand politics for more than 30 years. He writes a weekly column for interest.co.nz. His work may also be found at http://bowalleyroad.blogspot.com.
33 Comments
Almost certainly the US can stop the war in Yemen by dangling a large carrot but that will just move the next act to another theatre. Which country will Iran and Saudi Arabia hold their next proxy war in? Yemen seems like about the least worst option to me.
As net oil importers we are at least complicit because we fund these military adventures of course. No amount of air brushing will change historians view of this
CT is astute to recognise that the USA’s attitude to the Saudi’s “skirmishing” is now coming to a set of cross roads. More or less a sea change but pretty significant nonetheless. Either go in and get it done or get out. The USA developed an all out policy based on the command of high level WW2 officers Marshall, LeMay, King, Patton at al, of hitting hard and flat out with overwhelming forces. Didn’t succeed in Vietnam but it hasn’t been forgotten. Also need to remember Operation Desert Storm gathered in as allies, considerable arabic military forces, even including Syria, against Iraq but it was almost entirely the western forces that turned push into shove when it was needed.
The international relationship between the US and Saudi Arabia has hinged on oil prices. The current situation will change again when US consumers feel the pinch at the pumps.
Ditto the KeystoneXL pipeline and freeze on federal fracking leases, The Biden administration is making the most of an over-supply/low price situation. Of course the cure for low oil prices is low oil prices so Saudi Arabia will be riding high again soon.
Golriz Ghahraman and co. aren't going to be satisfied with ending this contract, far from it, they are evil people hell bent on eliminating the airline industry all together, along with the best parts of modern society. If it were up to them we would be walking along overgrown cycleways, covered in weeds we can't mow (fossil fuels) and can't spray (big agri). I don't think anyone should take them too seriously, given how hard they work against having a prosperous NZ.
If only that was the case. Presently the government has created a dichotomy by declaring a "climate emergency" while simultaneously subsidising the company that is responsible for about 4% of New Zealands greenhouse gas emissions. They are sending very mixed messages about what, if anything, they hope to actually achieve.
W/J - your 'prosperity' was totally temporary; I'd suggest that your offspring will lament your comment. It was based on best-first draw-down from finite stocks, done at exponentially-increasing rates. Only the very ignorant could have though that regime would go for long. Read this, read all of it:
https://www.interest.co.nz/opinion/104187/murray-grimwood-says-its-time…
Capitalism can't change; doesn't look like Trotter can either.
The debt-wedge (between claimed 'GDP' and real underwrite, is widening exponentially. The reason is a lack of energy (and resources to apply it to). There is no other. The growth is all delusion; the biggest artificial bubble of all time.
But where Trotter gets it wrong, is that the 'economies' of the world won't go on demanding oil, coal and gas beyond the implosion. They were all growth-assuming, and by the time they are cranked back to fit the lesser energy supply, their narrative becomes totally unbelievable.
pdk,
"The reason is a lack of energy". What evidence can you produce to support that statement? Leaving aside many hundreds of years of coal supplies-most of which I sincerely hope will be left in the ground- we have at least 47 years of oil at current rates of usage and as with previous estimates of 'peak oil', that will almost certainly be pushed out. Do you really believe that as the Arctic continues to heat up, that there won't be drilling round Greenland and elsewhere-however unwise that may be in climate terms?
"Beyond the implosion". When and from what cause? Not once in your many almost identical posts, have I seen you produce Any evidence for your assertion of imminent financial and societal collapse.
I've put up many links, including today. I suggest perhaps that you don't read them? Ever asked why? I come across avoidance and denial all the time; the more I research the more I realise the truth diverges from what we tell ourselves. The interesting thing is how many need to believe/deny/hide. It may be that socially, we cannot all be lookers-ahead and warners, that most have to be Breakfast-Flockers (Jonathan Livingston Seagull).
https://surplusenergyeconomics.wordpress.com/
Take the time. Spend a day on that site, see where it leaves you (I'm betting you'll find a reason not to, or a reason to decry the source :)
Nice article. Joe Biden is between a rock and a hard place. I'd suggest what he'd like to do, what he says and what will happen are entirely different. Don't think POTUS at the sweep of an executive order can stop US arms sales to Saudi Arabia. Doubt whether the senate will ratify any arms embargo. Daresay a few Dem senators will vote against an arms embargo. Existing contracts probably running into a few years can't be turned off easily. UK, France and other will only be too willing to fill the arms gap left by the US if it actually goes ahead.
Its unfortunate the Greens with JA trying to be kind and not letting the Greens take too much of the limelight is a Jane come lately.
"Jacinda Ardern has sniffed the wind and smelled Joe Biden’s aftershave." Unfortunately JB's aftershave was more like dung when she smelled it. She needs to be more discerning in her smell test.
All the Greens and Labour have done or will do is run a division of AirNZ into the ground.
Agreed nigel, it was a complete photo op moment by Ardern and Ghaharamaran(?) for internal consumption. Don't see them bailing up our meat companies or other exporters to Saudi. Certainly won't do AIR's engineering division any good - especially sending the turbine back in bits. Foran and Walsh should have grown a backbone, finished the contract and said "sorry about that - won't happen again"
Remember the Saudi sheep farm fiasco? - didn't hear js from the Greens about that nor anything from Labour.
Ardern needs to keep her nose to the NZ grindstone and stay out of AIR's commercial business
Ooops - nice dodge by Mahuta at the end..
https://www.rnz.co.nz/news/national/436433/mfat-approved-exports-for-mi…
Lets see what the grinning great white has to say about it IF she's bailed by MSM??
I skimmed through your link posted above. The writer seems to have manipulated the occurrences to fit his narrative and is missing a basic knowledge of practical engineering and actual economic history (or he's choosing to ignore it). His reasoning around the 1930's Depression and 20009 GFC would be a case in point, followed by his assertion we can have "direct powered" transport - not many solar powered freight trains running or wind powered airliners or container ships being promoted at this stage.
Try reading it. Properly.
I have more than a basic knowledge of practical engineering - more than you I suspect - and can't fault him. Perchance you could back up your throwaway claim? Likewise re your 'reasoning' comment; no rebuttal, I note. And your last sentence is self-justification. take it from an old transocean sailor.... Just because you want something, doesn't mean you can have it, nor does it mean the pursuing of it is the best move available to you.
You are so full of sh#t I wish you could roll around on my paddocks!! So you are a transocean sailor - sailed from Raglan to the Mount - big deal. If you had even a passing knowledge of engineering (installing solar panels doesn't count) you'd see the holes in the argument - that you can't speaks volumes - both to your qualifications and to your myopic views.
Get your facts right. In fact, don't bullshit. It's a higher threshold, I know.
What you suffer from is pre-disposition. Pure and simple. Most folk do, but that's no excuse. There are no holes in ab argument that energy underwrites money - none whatever. Try not using any and see how far you get. First-principles, without prejudice.
And Ive never been to Raglan....... :) Don't know where you get your info from but it's skew-wiff in more ways than one...
Similar ethical dilemma is when a NZ University enters into a formal partnership agreement with co-delivery with a Mainland China university (always close CCP involvement) - sharing research, IP, co-teaching NZ labelled qualifications, & subjugation of academic freedom. Is this then co-sharing responsibility for China's: Uyghurs genocide, Hong Kong crackdowns, hostility to Australia (our closest Ally), military provocations in the South Sea, citizen surveillance with imprisonment of Political & religious targets, etc ?
That is such a fallacious and ill informed comment it barely rates a reply. Farmers are worried about trying to pay the bills. That you would even infer that they have control over where their produce goes is the height of ignorance.
BTW I'm assuming you filled your vehicle up with Saudi derived fuel at some stage recently??
I have no problem with using Saudi petrol - or worrying about how much the guy in the developing world who picked the bananas that I bought in Countdown is paid per hour. But Hook, while you are on the topic of ignorance, I suggest you get a dictionary out and look up the definitions of infer and imply before you start trying to use either in a sentence.
Farmers have become price-takers; have been for a long time. Added to that, they were cannon-fodder for the '80's sharemarket bubble, cannon-fodder for the hype that growth will go forever (so bet on capital gains forever) and they pushed the land past - way past - what is maintainable. They didn't even get to debate monoculture, debate resource draw-down, debate the fossil-dependency of their activity.
Good folk underneath it all, no doubt, but physics and biology and chemistry (together, ecology) don't really care about attitude.
Really?? The Primary Produce export returns would tend to debunk your theory. Farmers aren't interested in your jibberjabber - they just get on and produce what NZ needs - export returns and local foodstuffs. Somewhat more important than your esoteric and debatable chanting about impending ecological/economic collapse. People like you have been running around saying "the sky is falling" for decades - last time I looked it's still there, and humanity is still progressing. Believe what you want.. but please don't tell the rest of us we're delusional. There was a bloke that tried that a couple of 1000 years ago - didn't turn out too well for him personally and ultimately he was proven wrong
Export returns?
Is that like Jack swapping the family cow for some magic beans?
What you are doing is food production in an entirely un-maintainable manner - and arguing myopically for yourself every step of the way. Can you not see that? Is it not a surprise to you that it all falls your way 100%? Could there be a reason for this? Nobody being always right, after all.....
Hook for your enlightenment. https://dictionary.cambridge.org/grammar/british-grammar/imply-or-infer
But you miss the point, I was not having a dig at farmers. The world is too complex to leave the moral judgements on foreign regimes to individual producers/businesses and consumers. What is moral for some entities is not moral for others. Governments should make those decisions. So you can buy a chinese made toy without needing to research China's record on human rights. Air NZ was singled out because it is a big company and a traditional whipping horse in NZ. It is a storm in a teacup that could only happen in NZ. BAE systems has major operations in Saudi Arabia selling major defence systems to the Saudis and the british (people and government) do not bat an eyelid.
Good plug for the Greens Chris. Giving them some political kudos on their part is badly needed. However, with their millennial track record in achievement, they're more than likely to squander any measurable merit with their usual 'over' hyperbolic vitriol of simply pointing out a known fact, as some kind of long lost 'Ark' buried for a millennium.
The PM's gotta up her game not only on Yemen but Syria and Palestine too if she really means it.
JA populism, wait until those mid eastern start to boycott NZ products, citing internal interference, try talk more about Kashoggi case, animal welfare, female role. Not just a gas turbine overhaul, plenty things can be tied up if you want to look deeper, the devil is in details. Hell, you can even shifted those Navy turbines into civilian company contract (then shifted in the background), point is.. NZ, those turbines were not made by Russia or China, yip have a guess again.. Do NZ really want to upset it's allies? - Saudi military stuff came from.. where?
I'm just floored at the pile on, when our govt has been turning a blind eye and sucking up to the CCP for how long. In consideration of the CCPs clear persecution of minority groups, the Wuhan lab, the disappearance of countless Hong Kong citizens, the Taiwan situation, the financial takeover of our Pacific neighbours by increasing their debt....well, its a bit ripe seeing Golriz and JA holier than thou on this issue. Its all just smoke, mirrors and posturing. Total hypocrisy!
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