What price defence of liberty?

Yes, Jim Chalmers, war can be such an expensive inconvenience. More so when it is happening a long way from home in a part of the world that colludes with Putin’s Russia to restrict supplies of oil to maximise the price. But what price the defence of Israel, the one liberal democracy in a troubled region that stands as a bulwark to an even bigger assault on the freedoms we take for granted? This is the calculation that must be made.

It is the defence of values we share, together with long-term stability, both in security and the economy, that matters. Instead, the federal Treasurer used his speech to finance ministers and economic leaders gathered in Washington DC for annual International Monetary Fund, World Bank and G20 meetings to bemoan that a broader Mid-East war could put upward pressure on oil prices, prolong the fight against inflation and threaten the soft landing we all seek.

Dr Chalmers said an escalation in the Middle East risks persistent inflation for the global middle class. “Within a week of tensions re-escalating in October, oil prices spiked 10 per cent,” he said. “And over the past year, demand for safe haven assets has seen the price of gold rise by around 48 per cent.” Dr Chalmers said while the focus on a ceasefire and de-escalation was on the human catastrophe, there were economic consequences too. “None of us will escape the economic consequences of an escalating war in the Middle East,” Dr Chalmers said.

The remarks show that Dr Chalmers, like Anthony Albanese and Penny Wong, is blind to what is really at stake for the West in Israel’s fight to defend itself. Insisting on an early ceasefire in Gaza or Ukraine would be the same sort of naive calculation that led British PM Neville Chamberlain to declare “Peace in our time” after signing the Munich Agreement that gave part of Czechoslovakia to Nazi Germany. Within a year, Germany had invaded Poland and started World War II. Given the building axis between China, Russia, Iran and North Korea, the global stakes are no less stark today.

In its World Economic Outlook, released this week, the IMF noted the impact of geopolitical events but, unlike Dr Chalmers, stayed clear of the politics and calls for a ceasefire. Rather, it said “sudden eruptions in financial market volatility could tighten financial conditions and weigh on investment and growth, especially in developing economies in which large near-term external financing needs may trigger capital outflows and debt distress”.

The IMF said “further disruptions to the disinflation process, potentially triggered by new spikes in commodity prices amid persistent geopolitical tensions, could prevent central banks from easing monetary policy, which would pose significant challenges to fiscal policy and financial stability”.

Dr Chalmers should stick to the real lesson for Australia from the IMF report, that our economic growth has been downgraded from 1.4 per cent to 1.2 per cent and the 2025 consumer price index projections revised up from 2.8 per cent to 3.6 per cent. He must focus on his day job, which requires budget management and a plan to lift productivity rather than continue to expand the recurrent demands on consolidated revenue through higher levels of government-funded employment in the care economy.

On the difficult topic of war, Israel has clearly been right to resist calls for an immediate ceasefire without the return of hostages because it would only prolong the fight. The fact that Israel has been successful in decapitating the terrorist heads of both Hamas and Hezbollah underscores the foolishness of calls by the UN and others to call for a ceasefire. It would only have meant that terror groups would have been able to re-arm to fight another day. The economic burden would only be higher and more disruptive.

What must never be forgotten is that Hamas could end the war in Gaza tomorrow by releasing the hostages taken in the brutal and indefensible actions taken by terrorists on October 7, 2023. Iran could stop a bigger conflict by stopping its funding and support for the terrorist proxies that destabilise governments and make life miserable for the innocent citizens in the Middle East.

If it is the oil price that really matters, Saudi Arabia and other Mid East producers could pledge to make up any supplies lost from Iran because of war. Better than that, they could push Russia out of OPEC, modernise and together with Egypt build bridges with Israel and transform the politics and economics of the Middle East. This is what is needed to secure an enduring peace for the millions of people caught in the ideological crossfire in Gaza, the West Bank and Lebanon.