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.