Most days, Chris Hipkins and James Shaw seem a bit like the Seals and Crofts of the centre-left: Earnest, inoffensive, and capable of quite nice harmonies at times. They blow gently through the jasmine in your mind, but you know they’re never going to rock your world.

Back in 2020, Labour and the Greens could both make a credible pitch to voters that - once liberated from the shackles of Winston Peters - they might do great things together, especially while National were in such disarray.

Those hopes withered long ago. Instead of treating its unprecedented-under-MMP outright majority as a golden opportunity to lead from the front and take the country with them, Labour has treated its mandate as a grenade that might explode in their face at any moment.

On issue after issue – capital gains tax, wealth tax, windfall tax on excessive profits, structural change to stop the banks and supermarkets from taking obscene levels of profit from consumers etc - Labour has all but sprinted to the surrender table.To that end, Cyclone Gabrielle has been an ideal cover for a retreat that was already in train. When did the Labour decide that being as inoffensive to as many voters as possible was one of its main existential purposes?

Inadvertently, the socio-environmental policies that Hipkins has pushed to one side to focus on Labour’s new “bread and butter” priorities has illustrated just how difficult it has been for the Greens to win significant gains out of its liaison with Labour. Among the Green causes Hipkins has deemed surplus to requirements:

…..the clean car upgrade, social leasing scheme, alcohol reform, a container-return scheme, speed limit reviews, a public transport improvement programme, Auckland light rail and the Vote 16 legislation - most were supported by the Green Party.

This is not earth-saving stuff. Auckland light rail was already headed for the slow lane. Changing the voting age to 16 in general elections was (primarily) an exercise in virtue signalling. Justified to be sure, but unlikely to become law before the end of this decade, given the change would need the support of 75% of MPs to become a reality. And this is before the Greens have to cope with Labour’s backdowns on Three Waters and co-governance.

By gutting the modest agenda still remaining to the Greens and publicly humiliating Shaw, Hipkins has - among other things – jeopardised the survival chances of a partner that Labour still needs in order to govern. Back in the 1970s, plenty of songs contemplated Labour’s current dilemma (What’s it all about, Chippy?) but even Seals and Crofts had their moments of doubt:

Footnote: All this week, it has been grimly amusing to hear the apologists for the Australian banks argue that look, their returns on investment are not that great, only 13% or so, while some NZX companies are making higher returns. Yikes. Do the pundits really think it is legitimate to compare the giant Aussie banks and their regular annual profits to the encouraging early returns from a Kiwi start-up? At times, the apologists make it sound as if the Aussie banks are actually doing us a service by ripping us off so comprehensively. Allegedly, we want them to be “resilient” in case a crisis ever arrives, the poor things.

When banks get as big as the four Aussie banks, their double digit annual profit returns are way out of line. Consider this: over the past five years, the Bank of America’s returns on investment have been 0.9% last year, 5.8% in 2021, 3.34% in 2020, 5.4% in 2019, and 5.6% in 2018.

Quite a different story here. Look at the annual profits being funnelled offshore, look at their increasing margins, see how assiduously they pass on their costs while not passing on in full their wholesale gains, look at the feeble returns they’ve been offering to depositors. And no, we don’t need to keep on being exploited so that we can be sure the banks stay “resilient” if and when the promised short and shallow recession ever finally gets here.

Labour though, has no appetite for a windfall tax on bank profits, or the stomach for structural reform of the banking industry. It seems we may get another Commerce Commission inquiry instead, and the longer it takes the better, reportedly. Because that approach worked so well in breaking up the concentration of pricing power in the supermarket duopoly, right?

China wins again

Diplomacy makes bad television. That still doesn’t explain why one of the most significant deals in the recent history of the Middle East has flown below the radar. But here’s the thing. Two of the Middle East’s bitterest enemies – Saudi Arabia and Iran – have just signed a mutual respect deal in which they agree to restore diplomatic ties and open embassies while promising to “respect” each other’s sovereignty and vowing not to interfere in each other’s “internal affairs.” The deal was put together by China and by Oman, an influential neutral player in the region for decades.

The Saudi-Iran deal is a serious setback for Israel, and for the US. For a decade or more, Israel has been wooing the Saudis to sign a mutual recognition agreement that would have created a common front between Israel, the US and the House of Saud against Israel’s arch enemy, Iran. Instead, Saudi Arabia has gone in the opposite direction. Once more, the US insistence on viewing its own interests through the lens of Israel has been its undoing. That approach has turned the US into a mere bystander in the current events roiling the Middle East.

At the apex of America’s power in the Middle East, it was US President Jimmy Carter who brokered the Camp David deal between Israel and Egypt. Those glory days of US influence have long gone. In Syria’s civil war, it was Russia and Iran that prevailed, and kept the Assad regime in power.

By doing Israel’s bidding, all that the US-led aggression against Iran has achieved (besides the suffering imposed on tens of millions of ordinary Iranians) has been to push Iran right into the arms of China. As a result, Beijing has been given a dependent proxy through which it can advance its interests in a region where it formerly had no power, and no influence at all. Iran’s oil, which China has got at a bargain price thanks to the US sanctions, will now drive the post-Covid recovery of the Chinese economy

Killing the messenger

Most – but not all -- of the blame rests with Donald Trump, who tore up the 2015 nuclear deal that would have opened Iran up to trade with the West. However, it needs to be said that neither Israel nor the hard-line mullahs in Teheran really wanted the Iran nuclear deal to succeed. Neither wanted to see Iran become more socio-politically liberal, as a result of it swapping its pursuit of nuclear defences for the promise of trade with the West. Even so, Iran kept its side of the deal. The US did not.

Instead, the US acted on Israel’s bidding, torpedoed the nuclear deal and blindly expected the Saudis to hold the line against Iran. That wasn’t the only US mistake. The current Iran/Saudi agreement was actually the very same deal that the legendary Iranian general Qassem Soleimani was negotiating when he was murdered by the Americans at Baghdad airport in 2020, on Trump’s orders. In reality, Soleimani’s assassination was a sign of America’s impotence. Killing the other side’s negotiators isn’t usually an indication that you have much faith in your own side’s diplomatic efforts.

Saudi Crown Prince Mohammed bin Salman has seen the way the wind is blowing, and has evidently concluded that China – not the US – is the coming superpower in the region. That’s one reason why the Saudis have been lukewarm about aiding the West’s efforts in Ukraine.

For China, the trade sanctions against Iran and the US killing of Soleimani – the one figure in Iran who might have resisted China’s influence – have been golden gifts. China has not only won unlimited access to Iran’s oil on the cheap, but can also now exploit its access to Iran’s newly discovered deposits of lithium, which have almost overnight turned Iran into the world’s second biggest source of a metal essential to the batteries in electric vehicles.

President Joe Biden can share the blame. On gaining office, Biden could have decisively reversed Trump’s mistake, and resurrected the nuclear deal with Iran. For a variety of reasons – including the fear of blowback from Israel before the US midterm elections – Biden chose to fold his cards. Another example of how the US is just a bystander in the Middle East.

Footnote: While diplomacy is war by other means, the reverse is also true. Given the scale of his domestic problems right now, Israeli PM Benjamin Netanyahu must be feeling tempted to create a distraction by launching an attack on Iran’s nuclear facilities.

If and when that happens, Iran would quickly find out that its new best friend, China, would not do much to assist it. Perversely though… Given the seething public discontent on the streets of Teheran and other cities, the mullahs themselves would probably welcome the unifying effect of having the country come under external attack, especially by Israel.

At this point it remains unclear whether Iran has – or hasn’t – taken its nuclear enrichment programme up near to weapons-grade levels. International Atomic Energy Agency director Rafael Grossi has been in the country recently, to try and find out.

Grossi who will report to the International Atomic Energy Agency (IAEA) board of governors travelled to Iran for discussions over the origins of uranium particles enriched to 83.7% purity, which was identified after Iran implemented a new configuration in cascade of centrifuges at Fordow enrichment plant about 100 kilometers (60 miles) south of the capital.

Until Grosso reports back, Iran is adamant that its programme is at only the 60% enrichment stage, which would be still well short of nuclear weaponization levels. If the IAEA says otherwise, that might be when Netanyahu chooses to strike.

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