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Oil: Blind-sided by Technology

“The price of oil will hit its floor and it will rise again,” President Nicolas Maduro assured Venezuelans, whose shaky economy depends critically on a high oil price. “Venezuela will continue with its social plans. Venezuela will move forward.”

No it won’t, and neither will Russia, Iran, or Nigeria. The only major oil exporters that are not in deep trouble are the Arab countries, whose governments have some room for manoeuvre because of low production costs, relatively small populations, and big foreign currency reserves.

Since June the cost of a barrel of Brent crude, the benchmark for world oil prices, has fallen by almost a quarter, from around $110 a barrel (where it was stuck for the past four years) to just above $80 a barrel. Last month, for the first time in decades, Nigeria exported no oil at all to the United States. Even at a big discount, Americans just don’t need it. And the main reason for all that is fracking.

American production has almost doubled in the past five years thanks to the new drilling technologies, and the United States overtook Russia last year to become the world’s largest producer of oil and gas combined. (Saudi Arabia comes a distant third.) With production soaring and world demand for oil stalling due to slow economic growth, a collapse in prices was inevitable. The question is how far they will collapse, and for how long.

The answer is probably not much further, for the moment – but they could easily stay down in the $75-$85 range for a couple of years. The reason for that is that the “swing” producers (mostly Arab), who could theoretically push prices back up by cutting their own production, have clearly decided not to do so.

Their concern is for the long-term power of the OPEC cartel, which used to be strong enough to set the price of oil. That never will be true again unless they can drive the (mainly American) frackers who are causing the over-supply of oil out of business.

Saudi Arabia and its allies are hoping that a prolonged period when the price of a barrel of oil is lower than the cost of getting that barrel out of the ground by fracking will ruin this new industry and bring back the Good Old Days. Dream on.

The Saudi strategy won’t work because some 98 percent of US crude oil and condensates has a break-even price of below $80 per barrel. Indeed, 82 percent of American production would still be turning a profit at $60 per barrel.

Even with its massive foreign currency reserves, Saudi Arabia probably cannot afford to keep the oil price low enough for long enough to break the American frackers. (Its own break-even price for conventional oil is $93 per barrel.) And the Iranians, Nigerians, Venezuelans and Russians, who depend on oil revenues for at least half of their national budgets, will be screaming for higher prices before they face riots in the streets.

So this is not a transient event; it’s a revolution. The Organisation of Petroleum-Exporting Countries (OPEC) came into its own when the United States ceased to be the dominant global producer in the early 1970s. With the re-emergence of the United States as the biggest producer, OPEC’s clout is bound to shrink – so oil prices will probably stay well below $100 a barrel for the foreseeable future.

This will be a great boon for countries that depend heavily on imported oil, like India and China. It may eventually liberate the United States from its compulsion to intervene repeatedly in Middle Eastern disputes that are really none of its business. And it may be a disaster for repressive and/or corrupt regimes in countries like Russia (break-even price $105 per barrel), Nigeria ($119), Venezuela ($121) and Iran ($140).

It also means that worries about “peak oil”, and the underlying calculation that the world had only about forty years’ worth of proven oil reserves left, can be set aside for a while. We are already up to 53 years of reserves, and we are finding new oil faster than we are using existing reserves.

Of course, a broader view of our situation would find little reason for rejoicing in all this. Our global civilisation depends on fossil fuels for 85 percent of its energy, and our annual emissions of carbon dioxide and other greenhouse gases are still rising.

Just another twenty-five years of that will deliver us to the “point of no return”: 450 parts per million of CO2 equivalent in the atmosphere. That would raise the average global temperature by 2 degrees C, and trigger natural sources of warming that it will be impossible for us to turn off again. Runaway warming is not a happy prospect, so it is unseemly to celebrate the news that we have even more oil to burn – and cheaper oil, at that.

On the other hand, it would be entirely appropriate to celebrate the news that other new technologies may open up a better escape route from fossil fuels. Solar power, wind power, nuclear fission, and hydro power all have a role to play in that task, but the Holy Grail for half a century has been fusion power. It may be much closer than we thought.
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To shorten to 725 words, omit paragraphs 11, 12 and 15. (“This will…reserves”; and “On the other…thought”)

Gwynne Dyer is an independent journalist whose articles are published in 45 countries.

THIS ARTICLE MAY ALSO BE USED AS THE FIRST OF A TWO-PART PIECE CALLED “GLOBAL ENERGY: BLIND-SIDED BY TECHNOLOGY”. In that case, this part would be sub-titled “FRACKING”, and the second part “NUCLEAR FUSION”. If you wish to use it that way, but still want the shorter length, THEN OMIT PARAGRAPHS 6, 11 AND 12 from this article..  (“Their…concern”, and “This will…reserves”

Recognising Palestine

It’s a slow process, this business of getting recognised as an independent state, but the Palestinians are making progress. In September of last year, Mahmoud Abbas, the long-overdue-for-an-election president of the Palestinian National Authority, was given permission to sit in the “beige chair”, the one that is reserved for heads of state waiting to go to the podium and address the UN General Assembly.

And now, another Great Leap Forward. On Monday, the British Parliament voted by 274 to 12 to recognise Palestine as a state. It was a private member’s bill, however, and ministers in Prime Minister David Cameron’s cabinet were ordered to abstain. The bill cannot compel Cameron to actually recognise Palestine, a decision which the British Government will only take “at a moment of our choosing and when it can best help bring about peace.”

More hot air and empty symbolism, then, or so it would seem. But the parliamentary vote is better seen as a very large straw in the wind. After half a century when Israel could count on reflexive support from the United States, Canada and the big Western European countries no matter what it did, public opinion in the countries of the European Union is shifting.

Until recently, the only EU members that recognised the State of Palestine were ex-Soviet satellites in Eastern Europe that had done so when they were Communist-ruled. But early this month the newly elected Swedish government declared that it would recognise Palestine, and other parliamentary votes on the question are coming up in Ireland, Denmark, Finland and, most importantly, France.

They will probably all vote yes. As Matthew Gould, UK ambassador to Israel, said on Israeli radio after the vote in London: “I am concerned in the long run about the shift in public opinion in the UK and beyond towards Israel. Israel lost support after this summer’s conflict (in Gaza), and after the series of announcements on (expanding Israeli) settlements (in the West Bank). This parliamentary vote is a sign of the way the wind is blowing.”

Official Israel is busily pretending that this does not matter, but it does, in two ways. One is the diplomatic reality that soon nothing may stand between Palestine and full membership of the United Nations except a lone, naked US veto in the United Nations Security Council, which may have to be repeated on an annual basis.

That will be one consequence of the way the wind is blowing, but much graver for Israel is the reason why it is blowing in that direction: patience with Israeli Prime Minster Binyamin Netanyahu’s perpetual delaying tactics is close to exhausted in most Western electorates. Among the young it has already run out completely.

Most people in Israel believe that Netanyahu has absolutely no intention of allowing the emergence of a genuinely independent Palestinian state in the West Bank and the Gaza Strip, the one-fifth of colonial Palestine that was not already incorporated into Israel at the end of the 1948 war. Indeed, much of his electoral support comes from Israelis who trust him to prevent such an outcome.

Netanyahu can never state his purpose openly, of course, because that would alienate Israel’s supporters abroad, who generally believe that peace can only be achieved by the “two-state solution” that both sides signed up to 22 years ago in the Oslo Accords. Those supporters used to be willing to turn a blind eye to his actions so long as he gave lip-service to the Oslo goals – but that faith is now running on fumes in the British House of Commons.

Sir Richard Ottaway, the chair of the Select Committee on Foreign Affairs and a lifelong supporter of Israel, told the House: “Looking back over the past twenty years, I realise now Israel has been slowly drifting away from world public opinion. The annexation of the 950 acres of the West Bank just a few months ago has outraged me more than anything else in my political life. It has made me look a fool and that is something I deeply resent.”

The erosion of support for Israel has been slower in the United States, where open criticism of Israeli actions in the media is rare and Congress is still (in the crude phrase of Washington insiders) “Israeli-occupied territory.” But it is happening even there – and among the younger generation of Americans the decline has been very steep.

In a Gallup poll conducted last July, in the midst of the most recent Gaza war, more than half of Americans over the age of 50 said that Israel’s actions (which eventually killed over 2,000 Palestinians) were justified. Just a quarter of those between 18 and 29 years old agreed.

In both cases these generations will probably stick to their convictions all of their lives – but generational turnover will ensure that the opinions of the younger group ultimately prevail. It was presumably Israel’s actions and positions over the past ten years that shaped the opinions of the younger Americans. Another ten years like that, and even the United States may have a majority that wants to recognise Palestine.
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To shorten to 725 words, omit paragraphs 3 and 10. (“More…shifting”; and “Sir…resent”)

Terrorism 101

There was a time, as recently as 25 years ago, when military staff colleges around the world taught a reasonably effective doctrine for dealing with terrorism. Then it was forgotten, but we need it back. It would be especially useful in dealing with the terrorist state that has recently emerged in northern Iraq and eastern Syria.

The doctrine was painfully worked out back in the decades of the 1960s, 70s and 80s, when terrorism was one of the world’s biggest problems. Most of the time, the strategy worked, whether the threat was the urban terrorists who plagued most Latin American countries and a number of big developed countries, or the rural guerillas who fought the government in many African and Asian countries.

The key insight was this: Terrorist movements always want you to over-react, SO DON’T DO IT. The terrorists usually lack the popular support to overpower their opponent by force, so they employ a kind of political jiu-jitsu: they try to use the adversary’s own strength against him. Most domestic terrorism, and almost all international terrorism, is aimed at provoking a big, stupid, self-defeating response from the target government.

The Red Army Faction terrorists, for example, hoped that their attacks would provoke West Germany’s democratic government into severe repression. This was known, in the works of philosopher Herbert Marcuse, as “unmasking the repressive tolerance of the liberal bourgeoisie” – and once the West German government had dropped its mask, the RAF terrorists believed, the outraged workers would rise up in their millions and overthrow it.

But we never found out if the workers would actually do that, because the West German government refused to panic. It just tracked down the terrorists and killed or arrested them. It used violence, but only in legal, limited and precisely targeted ways. The same approach ended the terrorist campaigns in Italy (the Red Brigades), Canada (the Quebec Liberation Front), Japan (the Japanese Red Army) and the United States (the Weathermen).

In Latin America, by contrast, the “urban terrorists” did succeed in the first stage of their strategy. Their attacks drove the military in Argentina, Brazil and a number of other countries to seize power and create brutally repressive regimes. But even this did not cause the population to revolt, as the terrorists had expected.

Instead, “the people” kept their heads down while the military regimes destroyed the revolutionaries (together with many innocent bystanders). Extreme repression can also eventually succeed as a counter-strategy to terrorism, but it imposes a terrible cost on the population.
International terrorism has a somewhat better record of success, mainly because these terrorists are not actually trying to overthrow the government they attack. They are merely trying to trick that foreign government into using massive violence against the countries where they really do want to take power. The attacks of the foreigners will outrage and radicalise the local population, who will then give their support to the local revolutionaries.

The most successful operation of this kind was 9/11, a low-cost attack that incited the United States to invade two entire countries in the region where the revolutionaries of al-Qaeda hoped to replace the local governments with Islamist regimes. The local population has been duly radicalised, especially in the Sunni-majority parts of Iraq, and thirteen years later an “Islamic Caliphate” has taken power in the northern and western parts of that country.

Osama bin Laden would have condemned the extreme cruelty that the new Islamist state has adopted as its modus operandi, but in essence it is the fulfilment of the grand strategy that he worked out after the Russians left Afghanistan a quarter-century ago. He could not have predicted that the strategy’s greatest success would be in Iraq, for he had no allies or followers there before the US invasion, but he would still take credit for it.

So now that Osama bin Laden’s vision has finally taken concrete shape, how should we deal with it? (“We” in this case is practically every regime in the Arab world, most of the other Muslim countries, and all of the NATO countries, with Russia and China in supporting roles). ISIS’s behaviour is abominable, but is there any better option than simply bombing it from a great height?

Rule one in the old anti-terrorism doctrine was DON’T OVERREACT, and it still applies. That means as little bombing as possible, and only of strictly military targets. Preferably, it would mean no bombing at all except in specific areas where ISIS troops are on the offensive.

It means not letting yourself be lured into more extreme action by the public beheading of innocent hostages and the other atrocities that ISIS stages to attract a certain kind of recruit. Indeed, it means not launching a major ground offensive against ISIS (for which the troops are not available anyway), and waiting for events to take their course within the ‘Islamic State’.

Regimes as radical and violent as this one rarely survive for long. The revolution will eat its children, as so many have before, and it will happen a lot more quickly if they don’t have a huge foreign military threat to hold them together.
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To shorten to 725 words, omit paragraphs 6, 7 and 10.  (“In Latin…population”; and “Osama…it”)

Imperfect Afghanistan

“We have to recognise that Afghanistan will not be a perfect place, and it’s not America’s responsibility to make it one,” said President Barack Obama last May. No, it isn’t, and Afghanistan is a strikingly imperfect society in almost every respect: politics, economy, security and human rights. But it isn’t entirely a lost cause, either.

President Hamid Karzai, who was given the job of running Afghanistan after the United States invaded in 2001 and subsequently won two deeply suspect elections in 2004 and 2009, finally left office on Monday, although he didn’t move very far. (His newly built private home backs onto the presidential palace.) On the way out, he took one last opportunity to bite the hand that fed him for so long.

“The war in Afghanistan is to the benefit of foreigners,” he said. “Afghans on both sides are the sacrificial lambs and victims of this war.” The US ambassador, James Cunningham, said that “his remarks, which were uncalled for,…dishonour the huge sacrifices Americans have made here,” but they were, of course, true.

Karzai’s remarks, though undiplomatic, are just common sense. The United States did not invade the country to bring democracy, prosperity and feminism to the long-suffering Afghan people. It did so because some of the senior planners of the 9/11 attacks had been allowed to set up camps there by members of the Taliban regime who shared their religious ideology.

You could argue (and I would) that luring the US military into the quagmire of a long guerilla war in Afghanistan that would drive millions of Muslims into the arms of al-Qaeda was precisely what Osama bin Laden was hoping to achieve with the 9/11 attacks. The United States simply fell into the strategic trap that he laid.

Even so, and despite all the rapidly changing reasons for “staying the course” in Afghanistan that Washington deployed in later years, the original and abiding motive in Washington was the perception, accurate or not, that who rules Afghanistan is a matter of great importance for the national security of the United States.

Over 1,400 American soldiers have been killed in Afghanistan (together with 400 British soldiers, 150 Canadians, and sundry others), and they all basically died for a particular US official vision of how American security might be best be assured. How else could the 13-year US military commitment in Afghanistan possibly be justified to the American people?

As to whether the long occupation was also in Afghanistan’s interest, that depends very much on the stability and success of the two-headed potential monster of a government that is now being created in Kabul.

Karzai has handed over the reins of power to two very different men, after five months of bitter disagreement over which one of them had really won last April’s presidential election. It was not as blatantly rigged as either of the two elections that maintained Karzai in the presidency, but it was still pretty dodgy.

In the first round of voting, when there were eleven candidates, the leader was Abdullah Abdullah, with 45 percent of the vote, and the runner-up was Ashraf Ghani, with only 31 percent. In the second round, Abdullah Abdullah’s vote actually dropped two points to 43 percent, while Ashraf Ghani’s almost doubled to 56 percent. The age of miracles truly is not past.

Even more suspiciously, the number of people voting in some of the districts that supported Ashraf Ghani tripled between the first and second rounds of voting. So Abdullah Abdullah cried foul, and the inauguration of a new president was endlessly postponed while the ballots cast were “audited” by an electoral commission that had been chosen by Hamid Karzai.

There was never going to be a clear answer to the question of who really won the election, and so after months of drift and delay a deal was struck. Ashraf Ghani, a former senior official at the World Bank, will be president. Abdullah Abdullah, a former resistance fighter during the Soviet occupation in the 1980s and later foreign minister under Karzai, will nominate a “chief executive officer” who will act more or less as prime minister.

It is, in other words, a traditional Afghan carve-up, with a proportional slice of power for every one of the country’s ethnic groups. Ghani will ensure that Pashtuns get the biggest share of the good jobs, and look after the Uzbeks as well. Abdullah will take care of the Tajiks and Hazaras. But compared to your average Afghan warlord or Taliban fanatic, both men look pretty good.

Indeed, Afghanistan’s government and nascent democratic system might actually survive and prove to be fit for purpose. After three decades of Russian and American occupation, a significant minority of Afghans (certainly several millions) have been exposed to many examples of how post-tribal societies run their affairs.

Afghanistan is still a tribal society, so this carve-up of power on an ethnic basis may be a better option for the country than winner-takes-all politics. And if the United States and its allies do not abruptly cut off the foreign aid that keeps the whole show on the road, post-occupation Afghanistan may at least avoid a rerun of the disastrous civil war that followed the Soviet withdrawal and the sudden ending of Soviet subsidies in 1992.
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To shorten to 725 words, omit paragraphs 4, 5 and 6. (“Karzai’s…States”)