President Trump as a “Neutral Guy” in the Palestinian-Israeli Conflict: On the Conflict of Interest

In the absence of an international arbitrator with teeth, the nations of the world must at times have recourse to others in service to the resolution of disputes—even longstanding ones. This, I submit, is a major drawback to a world of sovereign nation-states, for rare is one that can genuinely serve as an honest broker, hence with credibility to the disputants rather than just one side.  Conflicts of interest all thus allowed, and even ignored as if they had no bearing. In the context of the longstanding Palestinian-Israeli conflict, the United States has been plagued with having to surmount the conflict between the interest of being an ally of Israel and a neutral peacemaking with credible standing as such to both sides. 

In recognizing Jerusalem as the capital of Israel by announcing that the American embassy would be moved to that historic city, U.S. President Trump explicitly took sides in the broader dispute, such that the Palestinians in reaction were “no longer on speaking terms with the president.”[1] Two years earlier, in the midst of his 2016 presidential campaign, Donald Trump had said, “Let me be sort of a neutral guy [in that conflict].”[2] Sitting with the Israeli prime minister in the Oval Office in early March, 2018, the American president insisted that he would still be an active participant in proffering a peace proposal. Yet without credibility as a neutral guy to the Palestinians, President Trump risked having his eventual proposal being viewed as merely an extension of the Israeli interests.

President Trump found himself in a conflict of interest—that of being Israel’s strongest ally and a neutral peacemaker with credibility on both sides. Taking a stand firmly in favor of Israel could not simply be dismissed as if taking such a decision could have no bearing on the assumption of neutrality ignores the conflict of interest itself. Such conflicts are never missed by the party on the losing end. An ally of one disputant simply cannot also be a “neutral guy.” In such a case, another nation-state must be found to inhabit the neutral role, yet such a nation-state may be difficult to find, given the networks of alliances that proliferate in a nation-state system of international relations. That a neutral party would have to be powerful enough in the world for the neutrality to be effectively leveraged—i.e., garnering the attention of both disputants rather than dismissed—decreases the likelihood that such a neutral party could be found. The E.U., for instance, typically sided with the Palestinians over Israel—perhaps with a motive to counterbalance the influence of the U.S.

Perhaps absent a global neutral arbitrator powerful enough to implement a peace settlement, an ally of one disputant could together with an ally of the other disputant act as a neutral pivot around which negotiations could proceed. The U.S. would not be able to make a proposal that is objectionable to the E.U. on peace in Israel. Yet this presumes that the Americans and Europeans could work together as a united mediator credible to both the Palestinians and Israelis. The basic problem, I submit, is that the world puts too much on nation-states as the sole or at least hegemonic actors on the global stage.

For more on conflicts of interest, see Institutional Conflicts of Interest.

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[1] Peter Baker and David Halbfinger, “Trump’s Hopes ofBeing the ‘Neutral Guy’ in the Mideast Seem Long Gone,” The New York Times, March 5, 2018.

[2] Ibid.

A Critique of Corporate Political Risk Analysis and U.S. Foreign Policy: The Case of Libya

Even though people the world over instinctively recoiled as reports came in of Gadhafi's violent retaliation against Libyan protests on February 21, 2011, the official reaction from the US Government was muted at best. The refusal to act on an intuitive response to immediately remove the Libyan dictator's ability to wantonly kill people resisting his right to rule may have come from concerns that the mounting tumult of a change of government in a major oil-producing region of North Africa could cause even just a disruption in the supply of crude. Indeed, even the mere possibility was prompting a spike in the price of oil (and gas)--what one might call a risk premium. Even the prospect of an ensuing nasty electoral backlash from consumers having to face a possible increase in their largely non-discretionary gas expense was not lost on their elected representative in chief at the White House. 

Even five days later, after some serious press on the rising price of gasoline hitting American consumers, the most the president would do is proffer a verbal "demand" from afar that Gadhafi leave Libya.  "When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now," the White House said in a statement. The dictator must have been shaking in his boots.  In actuality, Gadhafi had lost his legitmacy to rule five days earlier, and by the day of the statement the American administration could have been actively involved with willing EU states in stopping him inside Libya. Given the progress of the protesters-turned rebels and the behavior of Brent crude that week, the interests of the American consumer (and Western oil companies, as well as the business sector over all) were by then firmly in line with an enforced regime change in Libya.  Oddly, the old dogma of an absolute governmental sovereignty was colluding with an inherently excessive risk-averse corporate political risk methodology to hold America back from acting as midwife to a new political awareness breaking out in the Middle East.

On the day of Gadhafi's self-vaunted shooting spree, Brent crude benchmark vaulted past $108 a barrel (settling at $105.74, a two-year high).  On the following day, it rose to $111.25. On the first day of March, the Dow Jones Industrial Average dropped 168.32 points, or 1.38%, to finish at 12058.02, its third triple-digit decline in the past week. Oil futures on the New York Mercantile Exchange, already up 6% this year, jumped 2.7% to settle at $99.63 a barrel.  Brent Crude in London hit $115.42 a barrel, the highest settlement since Aug. 27, 2008.The graph below shows the change in oil, though the change looks astounding in part simply because the graph only goes to 15%; were it to go to 100 percent, the picture might seem less dramatic.

The Wall Street Journal had reported already on February 21st that the rise was "driven by increasing unrest in the Middle East." Specifically, worries that the turmoil in Libya was curtailing output of that country's oil were said to be driving the price climb. However, USA Today cites Darin Newsome, an energy analyst at DTN, as pointing to the role of speculators around the world as propelling the price of oil. "The flow of money plays an enormous role in the direction, speed and volatility of these markets." In fact, the market mechanism itself may be flawed because speculators could push commodity prices out of sync with the underlying supply of the respective commodities. Turmoil in Libya cannot be blamed for the ensuing “creation” of artificial value (such an increase, by the way, had fueled the housing bubble in the US that came in for a hard landing in 2008). In fact, the rise in world oil prices began before the final third of 2010—before the prospect of widespread popular protest in the Middle East was realized. Indeed, the climb during the last third of 2010 looks a lot like that which took place in the first third of 2009 (during a recession). It was not until well into February, 2011, that the turmoil in the Middle East appeared, according to MSNBC, “to pose limited risk to global oil supplies. Neither Tunisia nor Egypt produce oil or gas.” Such “limited risk,” besides being mitigated, cannot very well be projected back well into 2010 to explain the rise in the price of gas.

Incidentally, another interesting feature of this graph is the sustained drop in 2008, before the financial crisis in September (and the U.S. Presidential election in November!).  The “V” pattern at the end of 2008 is classic “electoral.” It suggests that the price of gas may be very attuned to the electoral interests of those in power, and therefore to government policy. My contention in this essay is that this dynamic was alive and well in Washington when Gadhafi was turning on his own people.

Sources:

Jerry DiColo and Brian Baskin, "A Stealth Comeback for $100 Crude Oil," The Wall Street Journal, February 22, 2011, pp. C1, C3.

http://online.wsj.com/article/SB10001424052748704506004576173961240139414.html?mod=ITP_moneyandinvesting_0

Gary Strauss, "If Unrest Spreads, Gas May hit $5", USA Today, February 22, 2011, p. AI.

http://www.msnbc.msn.com/id/41739499/ns/business-personal_finance/

http://www.nytimes.com/2011/02/24/business/energy-environment/24oil.html?_r=1&hp

http://www.nytimes.com/2011/02/23/business/global/23oil.html?ref=todayspaper

http://www.msnbc.msn.com/id/41785849/ns/world_news-mideastn_africa/

http://www.nytimes.com/2011/03/18/world/africa/18nations.html?hp