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Editorial: Saudi slashing the oil price is a desperate gamble

CORONAVIRUS is not the only contagion. The price of fossil fuel has tanked. Last week’s Opec meeting with Russia — one aim of which was to shore up prices undermined by the coronavirus — failed to agree cuts in production.

Saudi Arabia is deep into a bare-knuckle fight to drive the US fracking industry into serial bankruptcy by depressing the global price of energy so low as to make this highly leveraged sector non-performing and thus end the relatively recent energy self-sufficiency of the US.

At the same time Crown Prince Mohammed bin Salman has broken with Russia and slashed oil prices in a move designed to shore up Saudi market share. It is this that has sent oil prices into a tail spin and crashed the markets.

The Crown Prince has surely borne in mind the words of Machiavelli: “… it can be said of men that they are ungrateful and inconstant, simulators and dissimulators and that they are hungry for profit and quick to evade danger. While you do them good they are devoted to you, offering their lives, their possessions, their children, as I have said before — but only as long as danger is far off. The moment danger is at hand, they turn away. A prince [or ruler] who has based everything on their word without taking other precautions is ruined…”

The lop-sided Saudi economy is in deep trouble and as a consequence the fragile oil price-sustained social contract which has kept the Saudi population quiescent is unravelling.

MbS, as he is known, has taken the precaution of banging up his rival siblings and uncle while his father, who seems to have lost the plot, is wheeled out in furtherance of the plot to ensure the succession.

This potpourri of plots is a domestic Saudi matter only in as far as the various imperial interests — principally US and Israeli — are limited in their local leverage. The prince will find out sooner or later that while he can, for the moment, outside the borders of the Kingdom, hogtie his domestic opponents, those alienated by his tactics are too big and numerous to be as easily dismembered as the critic Kashoggi.

Boris Johnson seems to regard the confluence of coronavirus and capitalist crisis with a laissez-faire indolence. He might well take more seriously the wisdom of the Florentine political theorist.

If Britain’s health and social infrastructure fails to contain and control the coronavirus epidemic the human costs will be borne by every family and every community and the political costs by a political class that in its majority composition fails to perceive the anti-human essence of a global system of ownership based on the anarchy of capitalist markets.

The people who make their living in the closed world of capital, commodity and asset markets already act on the assumption that these markets have become dysfunctional. By this they mean that the constant anarchy of these processes is usually contained with limits that permit a large measure of speculation but that under the shock of a virulent disease and the parallel pursuit of narrow self interest in the energy markets this world is in meltdown.

This is the second systemic capitalist crisis in a generation while the climate crisis is on a fast burn. This should be the point at which those who aspire to lead the labour movement into the next decade might address the pressing question of which path Britain must take to, firstly, mitigate the immediate consequences of financialised capitalism and, beyond that, to take Britain out of this sclerotic and dysfunctional system that can end these crises.

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