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Defense & Security
Raid at the Mexican Embassy in Quito, Police capture Jorge Glas

Are embassies off-limits? Ecuadorian and Israeli actions suggest otherwise − and that sets a dangerous diplomatic precedent

by Jorge Heine

한국어로 읽기 Читать на русском Leer en español Gap In Deutsch lesen اقرأ بالعربية Lire en français It has long been held that embassies should be treated as “off-limits” to other nations. Yet in a single week, two governments – both long-established democracies – stand accused of violating, in different ways, the laws surrounding foreign diplomatic missions. First, on April 1, 2024, Iran’s embassy in Damascus was bombed, presumably by Israel, killing several high-ranking commanders of the Quds Force of Iran’s Islamic Revolutionary Guard Corps. Then, on April 5, Ecuadorian police forced their way into the Mexican Embassy in Quito to arrest a former vice president of Ecuador who was seeking political asylum. Both actions have led to claims of international law violations and accusations that the Vienna Convention, which establishes the immunity of diplomatic missions, was contravened. As someone with a fair amount of knowledge of embassy life – I have served as Chile’s head of mission in China, India and South Africa and coedited The Oxford Handbook of Modern Diplomacy – I believe the two incidents are of greater concern than much of the international community appears to be viewing them. Contrary to the famous quip from late businessman and presidential candidate Ross Perot, embassies are not just “relics of the days of sailing ships.” Rather, in an increasingly complex world where geopolitical conflict, mass migrations, pandemics and climate change require careful and stable diplomatic management, any incidents that erode the sanctity of embassy rules could have serious negative consequences. In short, they make for a more dangerous world. Curious indifference to embassy attack Of the two recent incidents, the Iranian embassy bombing is the more serious, as it involved the loss of life and resulted in warnings of retaliatory attacks. Yet, Western countries, leaders of which often voice concern over upholding the so-called “rules-based order,” have been reluctant to condemn the act. It was notable that the three liberal democracies on the U.N. Security Council – the United States, the United Kingdom and France – all refused to condemn the strike on Iran’s embassy when the issue came up before them. Israel, while not officially acknowledging responsibility, argued that the Iranian ambassador’s residence was not really a diplomatic venue but “a military building … disguised as a civilian building.” As such, to Israel it was a perfectly legitimate target. But by this logic, nearly all embassies would be seen as fair game. Almost by definition, the vast majority of embassies – particularly of the larger countries – are populated with significant numbers of military and intelligence personnel. To suggest that for that reason embassies should lose their diplomatic immunity and become legitimate targets for armed attacks would bring the whole edifice of the Vienna Convention crashing down. And with it would come the structure on which worldwide formal diplomatic interactions are based. Bedrock diplomatic principles The case of Ecuador, though less serious because it did not involve loss of life, is a bit more complex and demands some unpacking. At the center of the diplomatic spat between Ecuador and Mexico is former Ecuadorian Vice President Jorge Glas, who served four years behind bars following a 2017 conviction on corruption charges. Glas is now facing trial on different charges, prompting his December 2023 application for asylum at the Mexican Embassy. Mexico accepted the request and conveyed this to the Ecuadorian government. The latter justified its decision to send police into the Mexican embassy on the grounds that it believes Glas cannot be granted political asylum as he is a convicted felon. There is some basis to this claim: Under the Organization of American States’ Convention on the Right to Asylum of 1954, political asylum cannot be given to convicted felons unless the charges behind such conviction are of a political nature. But at the same time, Article 21 of the Vienna Convention states that diplomatic missions enjoy full immunity and extraterritoriality, meaning the host government does not have the right to enter an embassy without the authorization of the head of mission. Ecuador argues that Mexico abused its diplomatic immunity, leaving it no option other than to send police in. Yet, here a crucial distinction needs to be made. Diplomatic immunity and the extraterritoriality of foreign missions are bedrock principles of the Vienna Convention. Political asylum is a separate matter that should be handled on its own. As such, if the Ecuadorian government considered Glas not to qualify for political asylum, it could have attempted to legally block the move or refuse safe passage for the asylum-seeker to exit the embassy and leave the country. Mexico would have strong grounds to counter such measures, however, as according to the Convention on the Right to Asylum of 1954, it is up to the asylum-granting state to decide whether the case is politically motivated. Implications for the future Regardless of the merits of the asylum case, sending in the equivalent of a SWAT team to storm the embassy represents a deliberate violation of diplomatic norms. There is a long history of Latin America politicians seeking asylum who spent many years holed up in embassy buildings because governments would not grant them safe passage – the most notable being Peruvian leader Víctor Raúl Haya de la Torre, who spent five years at the Colombian Embassy in Lima. Yet, with a few exceptions, not even in the darkest hour of Latin America’s military dictatorships in the 1960s and 1970s were police permitted to storm into embassy buildings to arrest asylum-seekers. And this highlights what makes Ecuador’s actions especially worrisome. Precisely because of Latin America’s problems with political instability and a tradition of military coup, the laws surrounding political asylum and diplomatic immunity are necessary. Undermining the Vienna Convention in the way Ecuador has risks setting a precedent that other governments might be tempted to follow. Political asylum in Latin America has traditionally worked as a safety valve, allowing deposed leaders to get themselves out of harm’s way. Weakening the diplomatic structures in place supporting asylum will make the handling of democratic breakdowns more difficult. It also risks exacerbating regional disagreements. We are already seeing this with Mexico breaking relations with Ecuador as a result of the embassy raid. Making diplomacy more difficult Of course, embassy violations are not unprecedented. Guatemala’s dictatorship attacked the Spanish Embassy in Guatemala City in 1980, killing several asylum-seekers, including a former vice president. And Uruguay’s military government sent security forces into the Venezuelan Embassy in Montevideo in 1976 to arrest a left-wing militant who had sought asylum, leading to the breakdown of diplomatic relations between the two countries. But those events in the relatively distant past were widely and rightly condemned at the time as the product of authoritarian regimes with little regard for international conventions. The comparatively relaxed international attitude to the embassy violations by Israel and Ecuador reflects, I believe, a failure to grasp the significance of eroding diplomatic immunity and norms. As global challenges increase, embassies and their representatives become more important, not less so. If the takeaway from the two latest embassy incidents is that the protection of diplomatic premises can be secondary to whatever is politically expedient on any given day, then it will be of great detriment to the management of international relations. Diplomacy will become much more difficult. And given the enormity of the challenges the world faces today, that is the last thing any country needs.

Energy & Economics
Middle East Conflict. Conceptual photo

How might a wider Middle East conflict affect the global economy?

by Ahmet Kaya

한국어로 읽기 Leer en español In Deutsch lesen Gap اقرأ بالعربية Lire en français Читать на русском The world economy is underperforming as a result of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainty around the US election. An escalation of conflict in the Middle East could increase uncertainties, harming inflation reduction efforts and hurting growth. It has been over a year since the Hamas-led attack on Israel. Israel’s response in Gaza has resulted in widespread destruction and significant loss of life. The conflict has since expanded beyond Gaza, involving the Houthis in Yemen, Hezbollah in Lebanon and Iranian strikes targeting Israel. In addition to the awful humanitarian cost of the conflicts, the war and the possibility of its further expansion pose significant repercussions for the global economy. This article discusses three potential ways in which the current conflict and a wider conflict in the Middle East could affect the global economy. Increased geopolitical uncertainties First and foremost, an escalation of the Middle East conflict could lead to greater geopolitical uncertainties. Figure 1 shows the evolution of the geopolitical risk (GPR) and geopolitical acts (GPRA) indices (Caldara and Iacoviello, 2022) – these are text-based measures of heightened uncertainties due to adverse geopolitical events such as wars, terrorism and international tensions. (See this article for more discussion about these measures.) Following the Hamas-led attack on 7 October 2023, both the overall GPR index and its ‘war and terror acts’ component spiked strongly, to a level higher than that seen during the ISIS attack in Paris in November 2015. Both indices eased significantly in the months following October 2023 despite the continuation of the conflict. But they jumped again following Israel’s attack on southern Lebanon in September 2024. As of mid-October 2024, the GPR and GPRA remain, respectively, 21% and 35% higher than their historical averages.   What might be the consequences of such elevated levels of risk? Research tells us that higher geopolitical risk raises oil prices (Mignon and Saadaoui, 2024). It also reduces global investment and increases inflation (Caldara et al, 2022). Greater geopolitical risk has a significantly negative impact on business and consumer confidence in several advanced economies (de Wet, 2023). This is because consumers typically cut non-essential spending and businesses postpone investment decisions during turbulent times. This reduces firm-level investment, particularly for businesses with higher initial investment costs and greater market power (Wang et al, 2023). Higher geopolitical risks also reduce global trade and financial flows, causing greater volatility in capital flows in emerging markets (Kaya and Erden, 2023). Oil production cuts and higher energy prices The second way in which the Middle East conflict could affect the global economy is its impact on energy prices, both directly through production cuts and indirectly through greater uncertainties. In response to Israel’s actions against its neighbours, the Organization of the Petroleum Exporting Countries (OPEC) could reduce oil production to penalise countries supporting Israel. A similar action in the 1970s led to a significant jump in oil prices, which contributed to years of stagflation, with higher global inflation and recessions in major economies. Before Israel's attack on Lebanon at the end of September, oil prices had been declining due to falling demand, particularly from China. On the supply side, oil production had increased in Canada and the United States, countering the production cuts by OPEC, and Saudi Arabia was expected to increase oil production from December. But the situation quickly reversed following Israel’s attack on Lebanon. Oil prices jumped by nearly $10 per barrel within a week, before easing by around $5 per barrel. While the immediate oil price impact of Israel’s attack has mostly faded, the potential for higher oil (and other energy) prices still poses a risk to global inflation and economic activity (Liadze et al, 2022). To provide further context for the potential scale of this impact, we can show what would happen if oil and gas prices were to remain $10 higher for two years than the baseline levels projected in the Summer Global Economic Outlook from the National Institute of Economic and Social Research (NIESR), using NIESR’s Global Macroeconometric Model (NiGEM). The results demonstrate that the $10 rise in oil and gas prices increases inflation by around 0.7 percentage points in major economies in the first year (see Figure 2). The impact is higher in China, where the economy relies relatively more on oil imports for its strong manufacturing industries. The inflationary pressures persist for two years despite central banks’ efforts to curb inflation by increasing interest rates.   The effect of higher oil and gas prices on real GDP is shown in Figure 3. In the scenario described above, GDP would fall by 0.1-0.2% in major economies immediately. Partly due to higher interest rates, real GDP would continue to weaken for three years following the shock. After this, economic activity would start to return to base levels as oil and gas prices revert to their levels in the baseline forecast.   Increased shipping costs and supply chain disruptions A wider conflict in the Middle East could also affect the economy through higher shipping costs and supply chain disruptions. Houthi attacks on commercial ships in the Red Sea in late 2023 showed that such disruptions can have a huge impact on global trade through shipping, which comprises 80% of world trade volume. Following the rocket attacks by the Houthi rebels, some commercial shipping re-routed from the Red Sea to the Cape of Good Hope, leading to significant delays in travel times and increased freight costs. As a result, the Shanghai Containerized Freight Index – a measure of sea freight rates – rose by around 260% in the second quarter of 2024 with additional disruptions to supply chains. Our analysis shows that an increase of 10 percentage points in shipping cost inflation can lead to import prices rising by up to around 1% and consumer inflation increasing by around 0.5% in OECD countries. As Figure 4 shows, the impact of shipping costs on inflation shows its full effects over six quarters. This means that inflationary concerns could be with us for the next year and a half as a result of higher shipping costs that may emerge from any possible escalation of the Middle East conflict.   Wider economic implications and policy responses While rising geopolitical risk and increased oil and shipping costs can each individually exert upward pressure on inflation and may slow down economic activity in the global economy, the combined impacts are likely to be greater. Countries with stronger trade and financial ties to the Middle East and those that rely heavily on oil imports as an input for domestic production would be most affected. On the monetary policy front, central banks may have to take a more hawkish stance in response to rising inflationary pressures from the Middle East conflict. This could lead to higher interest rates, which would further dampen economic activity, particularly in an environment where there are already recessionary concerns in some major economies. Beyond its immediate economic implications, an escalation of the Middle East conflict could trigger large-scale displacement of people, which would increase economic and social pressures on neighbouring countries. Many countries may also have to increase their military spending in response to growing regional tensions. Given that public debt levels are already elevated in many countries due to successive shocks to the global economy over the past decade, any additional defence spending could come at the expense of public infrastructure investments that would otherwise boost productivity growth. Overall, the global economy is already underperforming as a result of the lagged effects of tight monetary policies, weaker global trade, a slowing Chinese economy and uncertainties surrounding the upcoming US election and possible changes to US trade policy. A potential escalation of conflict in the Middle East could exacerbate the situation by increasing uncertainties, harming efforts to bring down inflation and reducing global GDP growth. Over the medium and long term, it could further damage the global economy, with the possibility of refugee crises as well as increased defence spending, making the effects more complex and longer lasting. This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.