The Economist - USA (2019-11-23)

44 Middle East & Africa The EconomistNovember 23rd 2019

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dence. Mr Rouhani has boasted that it has

fended off America’s campaign to exert

“maximum pressure” on Iran, after Presi-

dent Donald Trump’s ditching of the deal to

curb Iran’s nuclear programme. Iran’s cur-

rency, the rial, has recovered a bit, after

plummeting by 60% when Mr Trump im-

posed sanctions on countries that buy Ira-

nian oil. Tax rises, land sales and petro-

chemical exports have partly compensated

for the loss of oil revenues. Last month the

World Bank predicted that inflation would

fall by almost a quarter in the year ahead

and that an 8.7% fall in gdpthis year would

be followed by a return to modest growth.

Iran is still the Middle East’s second-big-

gest economy after Saudi Arabia.

All the same, Mr Trump’s sanctions are

hurting. Mr Rouhani had budgeted to ex-

port oil this year at a rate of 1.5m barrels per

day, but Iran is struggling to find buyers for

a third of that. Revenues should have cov-

ered the subsidy bill, estimated at $25bn

(5% of gdp), but are 70% below budget, says

an Iranian finance official. So the people

are paying the price. The fall in the rial’s

value and soaring inflation have sharply

cut the purchasing power of public-sector

workers. A senior civil servant on the

equivalent of $2,000 a month at the start of

this year may now be earning $400. Food

prices are rising faster than inflation, hit-

ting the poorest hardest. Middle-class fam-

ilies, too, are slipping into penury as they

exhaust their savings. Poverty has soared.

The clerics know they must somehow

dampen the anger. Parliamentary elections

are due early next year. Mr Rouhani says

that the savings from the reduction in pet-

rol subsidies will be distributed as welfare.

Some 18m households (three-quarters of

Iran’s population) will qualify, say officials,

acknowledging the extent of deprivation.

But few Iranians trust the government to

keep its promise. Mr Rouhani previously

cut the welfare payments his predecessor,

Mahmoud Ahmadinejad, made after rais-

ing fuel prices a decade ago. Moreover,

many fear that rising transport costs will

push up the price of groceries, wiping out

the benefits of additional welfare.

Mr Trump is sure to proclaim Iran’s

troubles as an American foreign-policy

success. “The United States is with you,”

tweeted Mike Pompeo, America’s secretary

of state, to the protesters. But it is unclear

whether the latest bout of unrest will spur

the regime to reform, let alone topple it.

Previous protests have faded. Repression

may curb the latest ones. The authorities

have kept city centres under control. Oil

workers have not gone on strike to back the

protesters. The opposition is incoherent.

Meanwhile, the regime is toughening

up. It has become more belligerent abroad,

crueller at home and less democratic. So

far, the protests have failed to make it

change course. 7

T

he announcementon November 18th

by Mike Pompeo, the American secre-

tary of state, was unscheduled but not un-

expected. After a legal review by his depart-

ment, Mr Pompeo said, Israeli settlements

in the West Bank were found to be in line

with international law. That declaration

was just the latest in a series of gestures by

the Trump administration benefiting Israel

over the past two years.

The move is wholly in tune with Donald

Trump’s tendency to disregard diplomatic

norms, as he did when he recognised Isra-

el’s sovereignty over the occupied Golan

Heights and Jerusalem as Israel’s capital.

Despite some dissenting views, the inter-

national consensus for decades has been

that the settlements Israel has built in the

territories it captured in its war with Arab

states in 1967 are indeed illegal. They are

deemed to contravene the Fourth Geneva

Convention, which says “the occupying

power shall not deport or transfer parts of

its own civilian population into the territo-

ry it occupies”.

Israel, undeterred, has clung to its own

interpretation of international law. Over

the past 52 years it has built scores of settle-

ments, both in East Jerusalem, which it for-

mally annexed in 1967, and in the wider ar-

eas of the West Bank (which Israel calls

Judea and Samaria). Palestinians, and

much of the rest of the world, regard these,

as well as the Gaza Strip, as belonging to a

future Palestinian state.

Settlements have been built and ex-

panded under every Israeli government of

the past half-century, whichever party was

in power. Labour regarded the occupied

territories as bargaining chips in negotia-

tions over a future peace deal with Jordan

or the Palestinians. Likud, the party of the

present prime minister, Binyamin Netan-

yahu, sees the West Bank as the ancient

Jewish homeland, never to be relin-

quished. According to Peace Now, an Israeli

advocacy group, 428,000 Israeli settlers

live in the West Bank (not including East Je-

rusalem), alongside 2.6m Palestinians.

The timing of the announcement may

well have been engineered by pro-settler

elements in the Trump administration.

Chief among them is David Friedman, Mr

Trump’s former bankruptcy lawyer and his

current ambassador to Israel, who has been

pushing for such a shift. It was partly in re-

sponse to a ruling on November 12th by the

European Court of Justice, reinforcing

European Union guidelines that food pro-

ducts exported from the West Bank settle-

ments should not be labelled “Made in Isra-

el”, but specify that they were processed in

the occupied territories.

Mr Pompeo’s announcement is unlikely

to have any immediate impact on the

ground. The settlements have been grow-

ing at a steady clip anyway; in the three

years since Mr Trump took office, 30,000

new settlers have arrived. Although Mr

Netanyahu’s government has in this period

officially added only one new settlement,

settlers have independently opened 26 new

“outposts”, with the government usually

turning a blind eye.

For the Palestinians, whose leaders

were swift to condemn the move, it will not

change much either. They cut off all talks

with the Trump administration two years

ago, after it recognised Jerusalem—the pu-

tative capital of a future Palestinian

state—as Israel’s capital. Mahmoud Abbas,

the Palestinian president, had already re-

jected Mr Trump’s much-vaunted peace

plan (the “deal of the century”), though it is

unclear whether it will ever actually be pre-

sented. The administration has since or-

dered the closure of the Palestinian mis-

sion in Washington and cut nearly all the

funding it provided to the Palestinian Au-

thority, which runs parts of the West Bank

JERUSALEM

America says Israeli settlements in the

West Bank are legal. Others disagree

Israel and the Palestinians

Unsettled status

TelAviv

Jerusalem

East

Jerusalem

(municipalboundary)

WESTBANK JORDAN

ISRAEL

D e a d

S e a

Me

diterranean Sea

Dead

Sea

Pre-1967 border

“Green line”

Source:PeaceNow

Israelicontrol(AreaC)

Jointcontrol(AreaB)

Palestiniancontrol(AreaA)

Israelimunicipalareas

Israelisettlements

Built Planned

Separation barrier

10km

Jordan River

ISRAEL

Gaza

Strip

Med.

sea

West

Bank

Golan

Heights