Petrol rationing and major fuel price hikes in Iran, and the rioting that followed, have demonstrated the extent to which international sanctions are hurting the oil-rich nation.

Protests broke out in more than 50 cities and towns after the government’s announcement on 15 November that the rationing and price rises would be imposed with immediate effect. Most of the demonstrations appear to have been peaceful. However, international TV has shown scenes of destructive violence in some cities. About 1,000 people have been arrested and an unknown number of demonstrators have been killed in confrontations with security forces.

These new measures have imposed a monthly petrol ration of 60 litres, and a 50% price hike to 15,000 rials (about A$0.52, at the official exchange rate) per litre, with an additional 30,000 rials (about A$1.04) per litre for purchases in excess of the ration. Although these prices appear very low compared with most other countries, they are significant in an Iranian context. Traditionally, fuel has been heavily subsidised by the government, and given that most people are suffering the multiple effects of the US ‘maximum pressure’ program targeting Iran’s economy, they are less able to absorb higher prices.

The decision to impose these new measures was taken by Iran’s Supreme Council of Economic Coordination, its leadership comprising President Hassan Rouhani (a moderate), chief of the judiciary Ebrahim Raisi (a hardline cleric and Rouhani’s major rival in the 2017 presidential election), and speaker of the parliament (Majlis) Ali Larijani (a conservative). Supreme Leader Ayatollah Ali Khamenei publicly backed the council’s decision in a statement on 17 November.

This broad-based decision suggests the increases are irreversible and, for now, above factional politics. They were imposed without any prior public notice, although local media had been speculating about the possibility since May. But the state of the economy, and the urgent need for budget reform, indicate the increases were unavoidable.

US sanctions have hit Iran’s economy very hard. According to the International Monetary Fund, Iran’s economy is expected to contract by about 9.5% this year. Reasons include the very high loss of revenue from heavily restricted oil and other exports, and significant reductions in foreign investment and industrial activity. Tax revenue has dropped accordingly, the rial has depreciated about 60% over the past year, unemployment and underemployment have increased, and inflation is running at 35%.

Against this background the government can no longer afford to subsidise petrol to the same extent. In addition, it pays monthly cash subsidies to some 18 million families, or about 60 million of Iran’s 83 million people, and it’s looking at ways to supplement these payments with bonuses to those on low and middle incomes. It is to cease all subsidies to the wealthy, and use the revenue from higher petrol prices to fund the increased payments and some other priority development requirements.

Whether this concept will work as clinically as is proposed remains to be seen. The hope is that, combined with other budget reform measures, it will help to consolidate incomes and tide over the economy and the government until November next year, when Americans go to the polls. The favoured Iranian scenario is that President Donald Trump will not be re-elected, and Iran can negotiate the lifting of sanctions with a new US administration. This thinking assumes the Iranian economy will last the distance. If Trump is re-elected, a radical rethink will be needed.

Iran’s decision-makers must have anticipated a strong negative public response to the fuel price increases, including potentially some violence, especially given the concurrent demonstrations in Lebanon and Iraq driven by demands in those countries for less politicking and corruption, and more economic reform. That Iran’s government took the risk attests to the extent of economic damage suffered so far, and the urgency of measures now being taken in an attempt to offset that damage.

The demonstrations appear to be largely over—at least for now. It’s unclear how many were spontaneous and how many were organised through national networking. If they were nationally orchestrated, who was responsible and was that done from inside Iran or externally? The government’s decision to all but shut down the internet was intended to disrupt anti-government networking from all sources, especially overseas.

Not unexpectedly, Washington noted these events, the first real public sign its economic measures against Iran are biting, with Secretary of State Pompeo tweeting to demonstrators, ‘The United States is with you.’

Interestingly, Khamenei acknowledged the right of Iranians to protest peacefully. He attributed the violence to domestic ‘thugs’ backed by (foreign) enemies and made it clear the government would crack down on those responsible for the rioting and related threats to state security.

These demonstrations have not threatened the survivability of the Iranian regime. Nor does it appear that Tehran’s decision to hold firm against US pressure, and to refuse to renegotiate the Joint Comprehensive Plan of Action on US terms in order to get sanctions lifted, has been challenged, at least on this occasion. But the public has sent a clear message that it’s facing serious economic hardship and it expects the government to do everything it can to provide relief.

The government is on notice, and it knows that. It’s well aware of the challenges ahead if the economy, and national unity, are to survive the next 12 months. Iran’s parliamentary elections due in February will be a litmus test of interim progress.

The news that drones were likely employed in a major attack on Saudi Arabian oil facilities at Abqaiq over the weekend has highlighted how unmanned aerial technology can be exploited by state and non-state actors at range and with precision. The attack generated strategic effects by cutting 5% of global oil production in minutes. It represents a serious escalation of tensions in the Middle East. The US has pointed the finger at Iran and the attack could trigger US military retaliation if it’s determined that Iran was indeed responsible.

When considering the broader implications of this attack a reality check is important. It’s still unclear whether drones alone were used. It’s more likely that a combination of drones and cruise missiles were fired at the Saudi facilities. And they were certainly not off-the-shelf drones available to the general public but would have been military-spec systems. For example, Iran is equipped with the Shahed 129, which can carry four Sadid-345 precision glide bombs and has a combat range of 1,700 kilometres—more than enough to reach the target area from parts of Iran, Iraq or Yemen.

Such a system, if supported by advanced geospatial intelligence and effective operational analysis, could produce the level of accuracy and precision shown in the strikes on the Saudi facilities. The use of drones at Abqaiq, potentially in combination with Soumar cruise missiles, highlights the potential impact of long-range precision attacks guided by effective intelligence.

Drones can ‘swarm’ to attack a target en masse—without human control and at a much lower cost than traditional military aircraft. Chinese companies associated with the People’s Liberation Army have demonstrated swarms of more than 1,000 drones coordinating together and flying autonomously. If each drone carried an explosive charge, or could release a precision weapon, the effect of such a swarm on ground targets—or potentially naval vessels or exposed personnel—would be deadly.

The swarm is significant in how future warfare is envisaged. In the 1994, US defence analyst Martin Libicki suggested a future prospect of ‘fire-ant warfare’ in which traditional military forces would be overwhelmed by thousands of drones; we’re now seeing the early stages of that type of capability emerge.

It’s that reintroduction of massed attackers in warfare that’s the potential game changer. This is a ‘back to the future’ transformation that exploits a numbers advantage over Western military forces, which, over the past few decades, have relied on an information advantage to ensure precision, rather than a weight of numbers to win wars. An emphasis on developing technologically advanced and costly multirole manned platforms means that many Western military forces have become boutique. Militaries—like Australia’s—with small numbers of high-end manned platforms in the air, on the ground, and on and under the waves are confronting a future in which adversaries can attack using relatively cheap mass firepower.

At a more fundamental level, the emerging challenge posed by China’s anti-access/area-denial (A2/AD) capabilities and the implications of swarming in warfare indicate that our adversaries have studied the Western way of warfare that has largely stood still conceptually since the early 1990s. Our information edge is also not unassailable. In a future conflict, China and Russia could use counter-space and cyber capabilities to render the US and its allies deaf, dumb and blind from the outset, and then conduct a swarming strike via long-range cruise and ballistic missiles together with advanced drones.

For Western forces, the information edge is still important, but it’s also increasingly vital for our adversaries. Iran (if indeed it is behind the attacks) could not have delivered a precision strike against Saudi oil facilities without access to advanced intelligence, surveillance and reconnaissance capabilities.

If Iran had the support of a major global actor with such capabilities, then carrying out the Abqaiq raids becomes possible. In any future war, the use of advanced space and near-space sensors will be critical for those states wishing to employ long-range strike capabilities and swarming technologies. That means the battle for an information advantage—on earth and in space—will become ever more critical.

For Western liberal democracies, the challenge posed by drones isn’t just about the risk of technology proliferating into the hands of potential adversaries; it’s also about the ethical and legal issues associated with how we use such capabilities. These concerns become acute when we consider autonomous systems directed by artificial intelligence, which at some point could be making their own choices about the use of lethal force. There is, quite rightly, an intense debate on how to use such a capability—or whether to ban it outright.

The Australian Defence Force will soon acquire its first armed unmanned combat aerial vehicle—a variant of the US MQ-9 Reaper. These UAVs will remain under human control, with humans ‘on the loop’, especially in relation to weapons release. Political oversight and the meeting of strict requirements in terms of discrimination and avoidance of civilian risk will be of key importance in their use.

For our opponents, either in authoritarian states or terrorist organisations, it’s not at all clear that ethical and legal issues matter. Authoritarian states seeking to develop and deploy swarming drones can’t easily be prevented from doing so. The relatively low cost of drone technology and its effectiveness in providing a new type of long-range precision firepower that can circumvent Western defence advantages makes it an attractive option to our opponents.

The strike on Abqaiq demonstrates that adversaries can hit vital targets and generate quick strategic effects—evading sophisticated air defence networks in the process—at relatively low cost. Had the perpetrator of this attack launched simultaneous cyberattacks to disrupt the target’s ability to recover from drone and missile strikes, for example, the damage would have been far worse. Our defence planners need to learn the lessons the attack on Abqaiq teach us about the risks of sticking with traditional mindsets and maintaining old paradigms in the face of rapid change in warfare.

‘Man shall not live by bread alone’, says Jesus in Matthew 4:4. But biblical wisdom seems to have been lost on the organisers of the economic conference held on 25–26 June in Bahrain, where Jared Kushner, US President Donald Trump’s son-in-law and key foreign-policy adviser, finally presented the outlines of his ‘Peace to Prosperity’ plan to end the Israeli–Palestinian conflict.

The talks in Manama focused only on the plan’s ‘economic dimension’—in other words, the carrot before the stick. Over 10 years, some US$50 billion will be made available to the region (not only to the Palestinians), with wealthy Gulf states footing much of the bill. The tougher, political side of the deal is expected in the northern autumn, once a new Israeli government takes office after the election scheduled for 17 September.

Some US commentators close to the Trump administration have drawn comparisons with the US-led Marshall Plan after World War II. Having saved Western Europe from communism and Soviet imperialism during the Cold War, the argument goes, America is about to do something equally brave in the Middle East to counter the twin threats of Islamic fundamentalism and Iranian imperialism.

In launching the plan, the United States seems to be calling in favours from the Sunni Arab states that it has protected for so long. Moreover, resolving the Israeli–Palestinian conflict would be in these countries’ interests as well, because it would remove a potential source of destabilisation at home.

If this is not the art of the deal, then what is? The solution looks so rational, tempting and irresistibly simple. With real money now on the table, the participants will next discuss the political conditions, meaning the price the Palestinians will have to pay in order to receive such generosity. But there lies the snag.

The Marshall Plan sought to encourage Europeans to come together to receive American money. At the time, communist parties, supported and directed by the Soviet Union, appeared poised to take power in many Western European countries. Instead, Marshall’s visionary plan bolstered these countries’ national identities and strengthened their sovereignty.

Kushner’s plan, by contrast, would do the opposite, because it essentially ignores the issue of Palestinian sovereignty. More fundamentally, the US plan raises an existential question: can one buy the emotions and sentimental commitments that lie at the heart of people’s collective identity?

That seems highly unlikely; after all, governments find it hard enough to buy off their own people. In the aftermath of the 2011 Arab Spring uprisings in Tunisia and Egypt, for example, Algeria’s rulers spent generously to protect themselves from something similar. But although that bought the regime some time, structural problems such as corruption and incompetence didn’t go away. They simply became more acute, adding humiliation to public anger and eventually leading to the resignation in April of President Abdelaziz Bouteflika, after 20 years in power.

If buying the loyalty of one’s own people is difficult, buying others’ is much harder still. In fact, it’s probably impossible, as the Manama summit showed. The Palestinian Authority refused to take part; as a result, Israel was not represented at official level either. Arab states have often betrayed the Palestinian cause before, but never as spectacularly as now. Demonstrators have taken to the streets in Morocco, for example, to denounce what they call the ‘Summit of Shame’.

Kushner has clearly never seen the 2008 Palestinian movie Salt of this Sea, which describes the plight of a young American woman of Palestinian descent who is searching for her grandfather’s home in Jaffa in present-day Israel. The message is that a big, fat check can’t compensate for the loss of sovereignty.

The Trump administration may not even seriously believe in its own peace plan. Perhaps Kushner’s initiative, therefore, is just a ploy to prepare the ground for possible US disengagement from the Middle East—freeing the administration to pursue a new form of neo-isolationism, or, alternatively, to concentrate all its efforts on containing China’s growing global influence.

The near-certain failure of the Kushner plan could allow Trump to tell US voters before the 2020 presidential election that he did his best to bring about Israeli–Palestinian peace, but there was nothing else he could do. He might add that he had managed to cement the long de facto collaboration between Israel and Saudi Arabia, the West’s two pillars of regional security. And with the US helping in the background, these powers would be strong enough to contain Iran, should Trump’s latest economic sanctions not suffice to overthrow the regime in Tehran.

The fundamentals of Israel’s situation haven’t changed. The country’s security depends on its legitimacy, which in turn continues to require the existence of a viable, sovereign Palestinian state. Yet the current status quo is simply too comfortable for the majority of Israelis to revive the two-state solution. Contrary to what Trump apparently believes, his policies are making Israel’s future more problematic.

The Palestinians, meanwhile, still cling to the hope that demographic trends mean time is on their side. But, in the meantime, prospects for peace in the region seem vanishingly slim. And Kushner’s recent presentation in Bahrain has done nothing to change that.

The re-election of Israeli Prime Minister Benjamin Netanyahu has been described by some of his critics as a blow to democracy, or as evidence of Israel’s progression towards becoming an ‘illiberal democracy’.

However, several democracy watchdogs disagree with this assessment, as do some constitutional law experts and political analysts in Israel—and some of them are on the left.

In fact, according to a variety of benchmarks, Israel’s democratic system remains among the world’s most stable and healthiest. Its quality has actually improved in certain aspects in recent years.

Israel’s election, as always, was direct and free, and the result unambiguous. While the outcome was never assured, in hindsight there’s no shortage of reasons why Israeli voters chose Netanyahu over his challenger, political newcomer and leader of the Blue and White party Benny Gantz, regardless of whether they agreed with Netanyahu’s worldview or approved of him personally.

Political analyst Anshel Pfeffer, of Israel’s left-leaning paper Haaretz, wrote after the election, ‘[Netanyahu] has delivered a decade of uninterrupted economic growth. His last term has seen four of the calmest years in Israel’s history, and he is now on close terms with the most powerful leaders in the world’, adding, ‘The biggest surprise of this election for me was that Benjamin Netanyahu didn’t win by a landslide.’

Although a recent biographer of Netanyahu, Pfeffer is no fan. ‘I’m one of the 47 percent who voted against Netanyahu, and I’m pretty depressed he won’, he wrote. ‘But I can’t for the life of me see how the result is the death of Israeli democracy, as some are now writing in op-ed columns and on social media …[T]his election … was probably one of the most democratic we’ve had.’

Much of the angst over the risk to Israel’s democratic institutions has focused on clashes between members of Netanyahu’s governing coalition and the Supreme Court of Israel, which has occasionally made rulings they dislike.

Yet voters turned their backs on Naftali Bennett’s New Right party, which had built its campaign around returning Ayelet Shaked as justice minister and continuing her crusade against what she saw as the high court’s judicial activism against popular interests. New Right failed to cross the electoral threshold.

And Netanyahu’s incoming government will likely be more moderate than the previous one. Parties to the right of Netanyahu’s Likud party have gone from 14 seats in the previous Knesset to 10.

Meanwhile, the robust state of Israel’s democracy and freedoms holds up to scrutiny and compares well with other democracies in the eyes of impartial and respected watchdog groups.

For the past two years, Israel has placed 30th in the Economist Intelligence Unit’s Democracy Index. Its ranking in 2018 placed it ahead of Belgium and just behind France.

In 2017, the Israel Democracy Institute’s annual survey found that ‘the international indicators suggest that, on the whole, Israel has been a stable democracy over the past decade’. Last year’s report, the most recent, only continued the trend.

Some of Israel’s respected academics have also assessed the condition of the nation’s democracy as robustly healthy.

In December 2018, Pnina Sharvit Baruch, an expert in international law and senior research fellow and head of the program on law and national security at Tel Aviv University’s Institute for National Security Studies published a paper on the topic ‘Is Israeli democracy at risk?’

In her paper, Shavit Baruch narrowed her focus to four spheres in which Israeli democracy is tested: protection of human rights, control over the West Bank, critics of the government and civilian activists, and checks and balances and the status of gatekeepers.

‘At the bottom line’, she concluded, ‘it appears that Israeli democracy remains strong and rests on solid foundations’.

While Shavit Baruch cautioned against ‘complacency’ and added that ‘steps aimed at eroding democratic values should be countered’, she lashed out at those who would overstate the threat to Israeli democracy. ‘The tendency on the part of some critics to portray any view contrary to their political position as undemocratic is dangerous in itself’, she wrote, ‘because “crying ‘wolf’” makes it difficult to distinguish between legitimate, albeit politically controversial measures and measures that are truly undemocratic by nature.’

Shavit Baruch’s opinion has been shared by others.

For Israel’s democracy to be considered illiberal, it would have to compare poorly with other democracies on major benchmarks such as freedom of the courts and the press and on civil liberties. And yet these are precisely the areas in which Israel continues to excel.

The World Economic Forum’s 2017–18 Global Competitive Index ranked Israel 14th out of 137 countries globally in terms of judicial independence, an improvement of four places over the previous report.

Freedom House’s 2019 Freedom in the World report gave Israel 13 out of 16 points for ‘political pluralism and participation’, a perfect score for ‘electoral process’, and 10 out of a possible 12 for ‘functioning of government’.

Freedoms for the press, religion, minorities, women and LGBTQ communities are broad, enshrined in law and embraced and protected by Israel’s national institutions. The country’s culture of freedom and open debate of sometimes radically opposing ideas is a hallmark of its political culture within and outside of the Knesset.

In a 2016 poll by the Ramallah-based Palestinian Center for Policy and Survey Research, 68% of Palestinian respondents (73% in the West Bank and 59% in the Gaza Strip) expressed admiration for Israel’s democracy, describing it as either good or very good.

Given the healthy state of Israel’s democracy and civil liberties, to characterise the country as ‘illiberal’ or anything close to it is a pejorative exaggeration and a distortion.

It has been nearly 60 years since the philosopher and historian Thomas Kuhn wrote his influential book The structure of scientific revolutions. Kuhn’s thesis was simple but heretical: breakthroughs in science occur not through the gradual accumulation of small changes to existing thinking, but rather from the sudden emergence of radical ideas that cause existing models to be replaced with something fundamentally different. As was the case when astronomers determined that the earth revolves around the sun and not vice versa, these ‘paradigm shifts’ usher in an entirely new model that becomes the basis for ‘normal’ scientific study and experimentation until it, too, is replaced.

I mention Kuhn because his idea is as relevant for social science as it is for natural science. The example I have in mind is the contemporary Middle East, where the current paradigm between Israel and its neighbours has prevailed for more than half a century.

Nearly everything said and written about the issue reflects the outcome of the June 1967 Six-Day War, which left Israel in control of territories that had previously belonged to Jordan (East Jerusalem and the West Bank), Egypt (the Sinai Peninsula and Gaza) and Syria (the Golan Heights). Since then, the ‘normal’ diplomatic model (enshrined in UN Security Council resolution 242 and subsequent resolutions) has assumed that Israel would trade this territory in exchange for security and peace.

For some time, the paradigm appeared to have validity. Israel returned the Sinai to Egypt, allowing the two countries to sign a peace treaty that has endured to this day. Years later, Israel and Jordan normalised their relationship. Negotiations between Syria and Israel came close to succeeding, but failed in the end, largely because Syria’s president, Hafez al-Assad (the father of current Syrian President Bashar al-Assad), was unwilling to sign on to a compromise.

It is no longer possible to imagine peace talks, much less agreements, between Assad’s government and that of Israeli Prime Minister Benjamin Netanyahu. The Israeli government long ago annexed the Golan Heights, and now Assad’s government increasingly depends on Israel’s archenemy, Iran, for its survival, and instead of negotiations, we see Israel attacking Iranian forces and equipment on Syrian territory.

Diplomatic progress between Israel and the Palestinians is equally difficult to imagine. This wasn’t always the case. Negotiations came close several times to establishing a Palestinian state alongside Israel under terms that both sides could accept. But at the last minute, Palestinian leaders baulked, fearing that agreeing to less than what they had historically claimed to be Palestine would leave them politically vulnerable to hardliners who believed that compromise was unnecessary because time and world opinion were on the Palestinians’ side.

This was a historic error. What was on offer in the past is no longer. Israeli politics has shifted decisively rightward. Jewish settlements on the West Bank have grown dramatically in terms of both area and population. Netanyahu explicitly promised during the recent election campaign to begin annexation of the West Bank. US President Donald Trump, whose administration moved the American embassy from Tel Aviv to Jerusalem and reversed nearly 40 years of US policy by recognising Israel’s authority over the Golan Heights, may well support further Israeli annexation.

Much of the world has grown weary of the conflict. Quite a few Arab governments, worried about Iran or internal threats more than Israel, are prepared to work with Israel quietly, and in some cases openly. Splits within the Palestinian leadership are exacerbating persistent divisions on what to ask of Israel and what to accept.

The Trump administration may well unveil a peace initiative in this context. But its proposal is unlikely to deal with the territorial, political and refugee issues that are central to the creation of a Palestinian state. A Trump plan is more likely to focus on offering economic incentives to Palestinians in an effort to encourage them to compromise. It is unlikely to succeed.

The most likely future is thus one of drift. Palestinians will continue to have limited autonomy in parts of the West Bank and Gaza. At some point (one we have neared, if not reached), the potential for a viable Palestinian state will cease to exist.

All of this poses a risk to Israel as well. There is an unresolvable tension between Israel remaining a Jewish state and a democratic one if it continues to exercise political control over millions of Palestinians who are not Israeli citizens. Avoiding this choice and maintaining the status quo will frustrate Palestinians and increasingly isolate Israel in the region and the world (especially if annexation occurs).

Some will argue that this assessment is too bleak. I hope they are right. But even if they are, the benefits of progress between Israelis and Palestinians will not spread. Closely associated with the territory-for-peace paradigm was the belief that, by ushering in peace between Israel and its Arab neighbours, an Israeli–Palestinian settlement would enable the region to flourish. But resolving the Israeli–Palestinian conflict will not end the civil war in Syria or the slaughter in Yemen, curtail Iran’s nuclear ambitions, restrain Saudi Arabia’s leaders, or ameliorate the repression and corruption that are commonplace throughout the region.

So even if the Israeli–Palestinian conflict were to end, the Middle East’s problems would not. And there is no reason to predict the Israeli–Palestinian conflict will end. It is time for a paradigm shift in how we think about the Middle East, not because a better diplomatic model has presented itself (it has not), but because the current paradigm is increasingly at odds with reality.