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Ed Webb

How Goldman Sachs Created the Food Crisis - By Frederick Kaufman | Foreign Policy - 2 views

  • in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food
  • After World War II, the United States was routinely producing a grain surplus, which became an essential element of its Cold War political, economic, and humanitarian strategies -- not to mention the fact that American grain fed millions of hungry people across the world
  • Futures markets traditionally included two kinds of players. On one side were the farmers, the millers, and the warehousemen, market players who have a real, physical stake in wheat. This group not only includes corn growers in Iowa or wheat farmers in Nebraska, but major multinational corporations like Pizza Hut, Kraft, Nestlé, Sara Lee, Tyson Foods, and McDonald's -- whose New York Stock Exchange shares rise and fall on their ability to bring food to peoples' car windows, doorsteps, and supermarket shelves at competitive prices. These market participants are called "bona fide" hedgers, because they actually need to buy and sell cereals. On the other side is the speculator. The speculator neither produces nor consumes corn or soy or wheat, and wouldn't have a place to put the 20 tons of cereal he might buy at any given moment if ever it were delivered. Speculators make money through traditional market behavior, the arbitrage of buying low and selling high. And the physical stakeholders in grain futures have as a general rule welcomed traditional speculators to their market, for their endless stream of buy and sell orders gives the market its liquidity and provides bona fide hedgers a way to manage risk by allowing them to sell and buy just as they pleased.
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  • Every time the due date of a long-only commodity index futures contract neared, bankers were required to "roll" their multi-billion dollar backlog of buy orders over into the next futures contract, two or three months down the line. And since the deflationary impact of shorting a position simply wasn't part of the GSCI, professional grain traders could make a killing by anticipating the market fluctuations these "rolls" would inevitably cause. "I make a living off the dumb money," commodity trader Emil van Essen told Businessweek last year. Commodity traders employed by the banks that had created the commodity index funds in the first place rode the tides of profit
  • dozens of speculative non-physical hedgers followed Goldman's lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers, to name but a few purveyors of commodity index funds. The scene had been set for food inflation that would eventually catch unawares some of the largest milling, processing, and retailing corporations in the United States, and send shockwaves throughout the world
  • when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities -- including food -- seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. "You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture told me. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since
  • The average American, who spends roughly 8 to 12 percent of her weekly paycheck on food, did not immediately feel the crunch of rising costs. But for the roughly 2-billion people across the world who spend more than 50 percent of their income on food, the effects have been staggering: 250 million people joined the ranks of the hungry in 2008, bringing the total of the world's "food insecure" to a peak of 1 billion -- a number never seen before.
  • a problem familiar to those versed in the history of tulips, dot-coms, and cheap real estate: a food bubble
  • The more the price of food commodities increases, the more money pours into the sector, and the higher prices rise
  • Not only does the world's food supply have to contend with constricted supply and increased demand for real grain, but investment bankers have engineered an artificial upward pull on the price of grain futures. The result: Imaginary wheat dominates the price of real wheat, as speculators (traditionally one-fifth of the market) now outnumber bona-fide hedgers four-to-one.
  • speculation has also created spikes in everything the farmer must buy to grow his grain -- from seed to fertilizer to diesel fuel
  • from 2005 to 2008, the worldwide price of food rose 80 percent -- and has kept rising
  • I asked a handful of wheat brokers what would happen if the U.S. government simply outlawed long-only trading in food commodities for investment banks. Their reaction: laughter. One phone call to a bona-fide hedger like Cargill or Archer Daniels Midland and one secret swap of assets, and a bank's stake in the futures market is indistinguishable from that of an international wheat buyer. What if the government outlawed all long-only derivative products, I asked? Once again, laughter. Problem solved with another phone call, this time to a trading office in London or Hong Kong; the new food derivative markets have reached supranational proportions, beyond the reach of sovereign law
  • nervous countries have responded instead with me-first policies, from export bans to grain hoarding to neo-mercantilist land grabs in Africa. And efforts by concerned activists or international agencies to curb grain speculation have gone nowhere. All the while, the index funds continue to prosper, the bankers pocket the profits, and the world's poor teeter on the brink of starvation
Ed Webb

The Coronavirus Oil Shock Is Just Getting Started - 0 views

  • People in the West tend to think about oil shocks from the perspective of the consumer. They notice when prices go up. The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness, as price controls left Americans lining up for gas and European governments imposed weekend driving bans. This was more than an economic shock. The balance of power in the world economy seemed to be shifting from the developed to the developing world.
  • If a surge in fossil fuel prices rearranges the world economy, the effect also operates in reverse. For the vast majority of countries in the world, the decline in oil prices is a boon. Among emerging markets, Indonesia, Philippines, India, Argentina, Turkey, and South Africa all benefit, as imported fuel is a big part of their import bill. Cheaper energy will cushion the pain of the COVID-19 recession. But at the same time, and by the same token, plunging oil prices deliver a concentrated and devastating shock to the producers. By comparison with the diffuse benefit enjoyed by consumers, the producers suffer immediate immiseration.
  • In inflation-adjusted terms, oil prices are similar to those last seen in the 1950s, when the Persian Gulf states were little more than clients of the oil majors, the United States and the British Empire
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  • Fiscal crises caused by falling prices limit governments’ room for domestic maneuver and force painful political choices
  • The economic profile of the Gulf states is not, however, typical of most oil-producing states. Most have a much lower ratio of oil reserves to population. Many large oil exporters have large and rapidly growing populations that are hungry for consumption, social spending, subsidies, and investment
  • In February, even before the coronavirus hit, the International Monetary Fund was warning Saudi Arabia and the United Arab Emirates that by 2034 they would be net debtors to the rest of the world. That prediction was based on a 2020 price of $55 per barrel. At a price of $30, that timeline will shorten. And even in the Gulf there are weak links. Bahrain avoids financial crisis only through the financial patronage of Saudi Arabia. Oman is in even worse shape. Its government debt is so heavily discounted that it may soon slip into the distressed debt category
  • Ecuador is the second Latin American country after Argentina to enter technical default this year.
  • Populous middle-income countries that depend critically on oil are uniquely vulnerable. Iran is a special case because of the punitive sanctions regime imposed by the United States. But its neighbor Iraq, with a population of 38 million and a government budget that is 90 percent dependent on oil, will struggle to keep civil servants paid.
  • Algeria—with a population of 44 million and an official unemployment rate of 15 percent—depends on oil and gas imports for 85 percent of its foreign exchange revenue
  • The oil and gas boom of the early 2000s provided the financial foundation for the subsequent pacification of Algerian society under National Liberation Front President Abdelaziz Bouteflika. Algeria’s giant military, the basic pillar of the regime, was the chief beneficiaries of this largesse, along with its Russian arms suppliers. The country’s foreign currency reserves peaked at $200 billion in 2012. Spending this windfall on assistance programs and subsidies allowed Bouteflika’s government to survive the initial wave of protests during the Arab Spring. But with oil prices trending down, this was not a sustainable long-run course. By 2018 the government’s oil stabilization fund, which once held reserves worth more than one-third of GDP, had been depleted. Given Algeria’s yawning trade deficit, the IMF expects reserves to fall below $13 billion in 2021. A strict COVID-19 lockdown is containing popular protest for now, but given that the fragile government in Algiers is now bracing for budget cuts of 30 percent, do not expect that calm to last.
  • Before last month’s price collapse, Angola was already spending between one fifth and one third of its export revenues on debt service. That burden is now bound to increase significantly. Ten-year Angolan bonds were this week trading at 44 cents on the dollar. Having been downgraded to a lowly CCC+, it is now widely considered to be at imminent risk of default. Because servicing its debts requires a share of public spending six times larger than that which Angola spends on the health of its citizens, the case for doing so in the face of the COVID-19 crisis is unarguable.
  • Faced with the price collapse of 2020, Finance Minister Zainab Ahmed has declared that Nigeria is now in “crisis.” In March, the rating agency Standard & Poor’s lowered Nigeria’s sovereign debt rating to B-. This will raise the cost of borrowing and slow economic growth in a country in which more than 86 million people, 47 percent of the population, live in extreme poverty—the largest number in the world. Furthermore, with 65 percent of government revenues devoted to servicing existing debt, the government may have to resort to printing money to pay civil servants, further spurring an already high inflation rate caused by food supply shortages
  • The price surge of the 1970s and the nationalization of the Middle East oil industry announced the definitive end of the imperial era. The 1980s saw the creation of a market-based global energy economy. The early 2000s seemed to open the door on a new age of state capitalism, in which China was the main driver of demand and titans like Saudi Aramco and Rosneft managed supply
  • The giants such as Saudi Arabia and Russia will exploit their muscle to survive the crisis. But the same cannot so easily be said for the weaker producers. For states such as Iraq, Algeria, and Angola, the threat is nothing short of existential.
  • Beijing has so far shown little interest in exploiting the crisis for debt-book diplomacy. It has signaled its willingness to cooperate with the other members of the G-20 in supporting a debt moratorium.
  • In a century that will be marked by climate change, how useful is it to restore profits and prosperity based on fossil fuel extraction?
  • The shock of the coronavirus is offering a glimpse of the future and it is harsh. The COVID-19 crisis drives home that high-cost producers are on a dangerously unsustainable path that can’t be resolved by states propping up their uncompetitive oil sectors. Even more important is the need to diversify the economies of the truly vulnerable producers in the Middle East, North Africa, sub-Saharan Africa, and Latin America.
Ed Webb

Modern-Day Slavery: The Public Markets Selling Young Girls for $14 | Fast Forward | OZY - 0 views

  • 16 Ugandans who’ve died in the Middle East over just the past year, according to a parliamentary panel report from April this year. These women — all of whom died unnatural deaths after complaining of abuse — are just the most extreme examples of a growing epidemic of an increasingly open, modern slave trade that starts in Uganda’s eastern region and culminates in closed rooms in Gulf nations.
  • Migrant workers from across Africa, South Asia and Southeast Asia have for several years complained of abuse in the Middle East
  • Uganda has emerged as the theater of a double-barreled racket. At fast-spreading weekly markets, some women are promised jobs in the Gulf only to be sold once they get there, while others — many of them girls between the ages of 10 and 18 — are directly and publicly “bought” as slaves in Uganda and then resold in the Middle East, according to Ugandan authorities, Interpol, independent experts, legislators, victims and their families.
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  • more than 9,000 girls and young women are estimated to have been bought at these markets since last year — for as little as 50,000 shillings ($14), according to Betty Atim, a member of Parliament.
  • After 22-year-old Shivan Kihembo died in Oman in October — months after she had been sold there — her father, Patrick Mugume, was asked by his daughter’s “owners” for money if he wanted her body back.
  • migrant laborers from other African countries have suffered human rights violations — and not just in the Gulf but in Southeast Asia too — in recent years that have drawn comparisons with slavery. But what’s different with Uganda, experts say, is the openness with which women are being auctioned in markets alongside domestic animals and household goods.
  • Officially, Uganda has banned its citizens from seeking work in most Middle Eastern countries — barring Saudi Arabia and Jordan — because it doesn’t have any diplomatic agreements on workers’ rights with those nations, says Uganda’s minister of gender Janat Mukwaya.That ban, though, rarely works as a deterrent when there’s a promise of significant economic gain being dangled before the downtrodden, experts say. Uganda has a per capita income of $604, so Nambereke was promised three times what the average citizen earns. It’s also no surprise that the markets where illegal traffickers find women they can dupe or buy are predominantly in eastern Uganda. It’s a part of the country that has seen far lower poverty reduction than other regions, according to the World Bank, with electricity available to only 6 percent of families, compared to 32 percent in the country’s central region. To get around the ban, traffickers take the women across the border into Kenya after fixing up their passports, and then fly them to the Middle East.
  • Because they’re traveling to countries they’re barred from legally working in, even those women who initially went thinking they were getting employed are scared to try and reach out to authorities, experts say. And their host countries — in a region not known for its defense of human rights of migrants — have little incentive to prioritize concerns for these slaves over those of nations that legally send workers there. And so the slavery mounts — as do the deaths
  • Authorities are also recording cases of abuse from countries where Ugandans are legally allowed to work such as Jordan, Juliet Nakiyemba died at the age of 31 in October. A postmortem showed her kidneys had been removed prior to her death.
  • the government is passing the buck around and hasn’t been able to stop the practice. Minister of State for Foreign Affairs Henry Oryem Okello says the ministry of labor needs to act to arrest traffickers. Mugisha says the ministry of labor has asked local governments to step in with legal remedies. And the country’s labor commissioner, Lawrence Egulu, concedes that Uganda’s law against human trafficking is routinely violated but has no clear answer as to why the government hasn’t been able to put a stop to it.
  • Herbert Ariko, the MP of the eastern Uganda region where most of these slave markets are located, says he’s drafting a law aimed at enhancing the punishment for human traffickers — currently 15 years in prison. Nonprofits such as the Uganda Association of External Recruitment Agencies are demanding that the government enter into worker-safety agreements with all Middle Eastern countries. The archbishop of the Anglican Church in Uganda, Stanley Ntagali, is also critical of the government’s inaction. “The government should ensure that the rights of children are respected and the act of selling them in markets is brought to an end,” he says.
Julianne Greco

Islamic Bonds Receive a Boost - WSJ.com - 0 views

  • Global issuance of sukuk, or Islamic bonds, rallied during the third quarter with the value of sukuk issued rising 82% in the latest sign that confidence is returning to capital markets
  • Investors are putting more faith in the sukuk market, seen as a more stable platform to raise capital, as the financial crisis eases and global market conditions improve rapidly, bankers say.
  • Sukuk comply with Islam's ban on interest and are backed by physical assets from which returns are derived and paid to bondholders instead. European and Asian investors are increasingly buying into Middle East Islamic bonds in a bid to diversify their portfolios into a market showing greater signs of recovery, according to Mark Waters, BNP Paribas's head of debt capital markets in the Middle East.
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  • Primary sukuk issued out of the Middle East and North Africa region accounted for 59% of total volume of global sukuk this quarter.
Ed Webb

OPEC Is in its Death Throes | Foreign Policy - 0 views

  • In February, OPEC called for an oil production “freeze” to raise crude prices in conjunction with Russia. But this effort collapsed at a meeting in Doha, Qatar, in April when Iran refused to join any freeze in order to regain the pre-2012 production levels of close to 4 mbpd it enjoyed before U.S. and European Union nuclear sanctions were imposed, following the removal of certain sanctions after the 2015 nuclear deal. A similar proposal failed at the OPEC meeting in June, again following Iran’s refusal, despite outreach by the Qataris.
  • OPEC again called for a form of output cut on Sept. 28 at an extraordinary meeting in Algiers. Markets bit on the news, with Brent prices rising sharply by about 15 percent in the following week, from $46 to $52 per barrel.
  • Can action by the cartel sustain higher crude prices over the long term? Probably not. Like a desert mirage, the image of an OPEC resurrection vanishes when approached.
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  • The massive fall in oil prices from over $100 per barrel in early 2014 to under $30 by January 2016 was caused primarily by then-Saudi Minister of Petroleum Ali al-Naimi’s strategy to gain market share for the kingdom and hurt the U.S. tight oil (or “shale”) industry by allowing the market, not OPEC interventions, to set prices.
  • While Riyadh has cranked up its production from mid-2014 to today by over a million barrels a day (to a peak of 10.7 mbpd in August this year), its fiscal position has taken a serious blow, with the budget deficit rising from 3 percent of GDP to 16 percent in 2015
  • The resilience of U.S. shale makes the argument that OPEC has experienced a resurrection a fragile claim. The cartel can probably raise prices in the short term through an output cut, but it will only be so long, perhaps already by mid-2017, before the U.S. shale industry revives and grabs any market share conceded by OPEC in a higher price environment. This will ultimately bring prices lower again, all else being equal.
  • Within OPEC, while other Gulf Co-Operation states, namely Kuwait and the United Arab Emirates, may be prepared to make a small cut to their production, key producers like Iraq and Venezuela are in too difficult a fiscal position to agree to any major cut.
  • Outside OPEC, Russia reached a production record of 11.1 mbpd in August, eclipsing Soviet levels. Being so close to the maximum anyway, Russia has little to lose by supporting the OPEC output cut and agreeing not to raise production further. Yet the Kremlin is unlikely to impose actual cuts on the range of oil companies that operate in the country.
  • In the short term, it seems Riyadh’s fiscal position was under such pressure from low oil prices that something had to give. While the kingdom has eased the fiscal pressure by starting to issue sovereign debt, the burn rate through its foreign reserves has been relentless (from about $740 billion in mid-2014 to $550 billion today) as it has attempted to defend the currency in the face of substantial capital flight from the country since the oil price crash in 2014.
  • Climate change will plainly be a major problem of the 21st century, and the world is moving away from fossil fuels: game over for an unreformed Saudi Arabia.
  • Saudi Arabia will face hard years ahead as the oil market increasingly looks to U.S. shale, not OPEC, as a handrail to oil prices on the supply side. However, this might well be the jolt that Salman needs to push through painful but necessary reforms
Ed Webb

Cash and contradictions: On the limits of Middle Eastern influence in Sudan - African A... - 1 views

  • In Sudan, the revolutionaries who overthrew President Omar al-Bashir and who continue to organise are well aware of the threat posed by neighbouring Arab countries. Protesters’ murals show the people rejecting the interfering hands of Saudi Arabia and the United Arab Emirates (UAE). One of the most popular chants is “Victory or Egypt”, voicing activists’ determination not to succumb to a military counter-revolution as happened in their northern neighbour.
  • many Sudanese believe that the 3 June crackdown in which scores of protesters were killed only came after the green light from Saudi Arabia, the UAE and Egypt
  • In this struggle between the “Pax Africana” and Arab authoritarians, there’s no doubt that the democrats have the weaker hand. But not everything is going the Arab troika’s way.
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  • Sudan wasn’t following the script of Bahrain, where the demonstrators dispersed after a single crackdown, or Egypt, where the army took control through co-option and repression.
  • A major split between Saudi Arabia and the UAE was on show in July when the latter abruptly withdrew most of its forces from Yemen. No official explanation was given, but the decision was evidently not coordinated with Saudi Arabia, which remains bogged down in an intractable war. The UAE’s decision also shows it can be mercurial and that its policies towards the Horn of Africa may be less strategic and more opportunistic than commentators have assumed.
  • Egypt prides itself on understanding Sudan and sees Saudi Arabia and UAE as newcomers seeking influence solely by dispensing money. Egypt limited its demands on Sudan to handing over Egyptian Islamists in exile, suspending the deal for Turkey to develop a naval base, and ceding its territorial claim to the Halaib Triangle.
  • As Arab countries find themselves pulled in to the internal negotiations among the Sudanese, they will face another potential point of contention. Sudan doesn’t just need democracy, but peace. This means a role for the Islamists both in Khartoum and the provinces. For a decade, the custodian of the Darfur peace process has been Qatar, the troika’s arch rival, and it will be impossible to ignore Qatar’s role or that of Sudan’s diverse constituency of Islamists. Some of these dynamics are already playing out and reveal the lack of a common strategy among the Arab troika
  • After the secession of South Sudan in 2011, Sudan lost 75% of its oilfields and an even greater proportion of its hard currency earnings. The following year, it literally struck gold and within a few years, gold was providing 40% of Sudan’s exports. As much as a third of it, however, came to be smuggled to Libya, Chad or directly by plane to the region’s biggest gold market in Dubai. The government in Khartoum, desperate to control the commodity, responded by using the Central Bank of Sudan as its sole buying agent, paying above the market price to gold traders and printing money to cover this outlay. Buying gold to convert to hard currency became the engine of Sudan’s inflation, which skyrocketed. By 2018, the price of essential commodities such as bread and fuel was so high relative to stagnant wages that the people across the country took to the streets to protest.
  • Hemedti. His RSF militia controls the gold mines and he personally owns a number of concessions. Through Sudan’s monetary policy, vast resources were transferred from wage earners in the centre of the country to militiamen and gold traders in the peripheries
  • Hemedti has also benefited massively from providing mercenaries, which may be Sudan’s second biggest source of foreign exchange today. A few months after the Saudis launched their war in Yemen in March 2015, Sudan volunteered to send troops. The first contingent was a battalion of the regular army, but then Hemedti struck a parallel deal to dispatch several brigades of RSF fighters. Within a year, the RSF comprised by far the biggest foreign contingent fighting in Yemen with at least 7,000 militiamen. Hemedti was paid directly by Saudi Arabia and the UAE for this service. He says he deposited $350 million in the Central Bank, but has not said how much he kept to himself for his own enrichment or political spending.
  • the Central Bank of Sudan has become an instrument for Hemedti’s political finance. And since becoming the central actor in Sudan’s ruling cabal in April, he has exerted an even tighter grip on gold production and exports while moving aggressively into other commercial areas. He has increased the RSF’s deployment in Yemen and sent a brigade to fight in Libya alongside General Khalifa Haftar, who is backed by Egypt and the UAE, almost certainly in return for Emirati financial rewards. Hemedti is also expanding his family business conglomerate, the Al-Junaid companies, and running his political business on the basis of personally handing out cash to key constituents such as tribal chiefs, the police, and electricity workers.
  • none of this addresses Sudan’s macroeconomic crisis: its rampant inflation, rapidly increasing arrears on international debt, and ostracism from the dollar-based international financial system
  • Sudan’s Gulf patrons are bailing out the country with a $200 million monthly subsidy in cash and commodities, but the bailout amounts needed will quickly become too big even for the oil-rich Gulf States’ deep pockets
  • a clash between Hemedti’s political market logic and Sudan’s macroeconomy is looming.  The Sudanese technocrats associated with the FFC are well aware of this, which is why the economists called upon to put themselves forward for cabinet positions have been reluctant to agree. There is a race between Hemedti’s consolidation of power and a re-run of the economic crisis and protests that led to al-Bashir’s downfall.
  • as Sudan’s economic crisis deepens, they will have to turn to the IMF and western creditors for assistance
Ed Webb

Growing demand for Russian arms in the Middle East: The Syria Effect? - 1 views

  • For Russia, the military and political engagement in Syria is an opportunity not only to showcase the operational capabilities of their weapons but also the political “muscle” behind them. 
  • A quick look on arms transfers databases reveals a growing demand for Russian arms in the Middle East. In 2012, Russia delivered weapons to four countries (Algeria, Egypt, Jordan and the UAE – in addition to Syria and Iran). Five years later, in 2017, it delivered weapons to eight countries (Algeria, Bahrain, Egypt, Iraq, Jordan, Qatar, the UAE and Turkey – in addition to Syria and Iran), and sales grew in variety, size and value. Compared to 2012, the sales, according to announced figures and estimates, at least doubled in size, both because of the expansion to new markets and increased sales to traditional partners
  • The Russian military industrial complex showcased the best it has to offer in Syria, deploying a vast array of naval, air and ground weapon systems. Furthermore, the conflict has served as a major testing ground
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  • “Combat-proven” is in itself a major marketing argument
  • the heavy supersonic strategic bomber Tu-160, new generation fighter jet Su-34 or the first Russian stealth fighter ever constructed, the Su-57
  • The S-400 air defense system is not just another advanced piece of equipment. The decision to acquire it is the basis or starting point of a strategic relation between the provider, Russia, and the client.
  • most of the contracted weapons, such as air defense systems or fighter jets, are highly advanced pieces of technology and there is only a handful of producers capable of supplying them. Generally speaking, Russian weapons are highly efficient and cost-effective. Where Russia lags in technological innovation, it makes up for in costs. At the same time, American (and Western) companies go through a much stricter process of arms export control, and arms deals to third countries often involve some form of political conditionality. Middle Eastern countries might therefore prefer, under certain circumstances, to avoid the uncertainty and bureaucracy and choose the straightforward option of dealing with other providers, such as Russia, which also puts forward the time factor and its ability to deliver supplies quickly
  • At the end of 2017, it was announced that a deal was reportedly reached allowing Russia to use Egypt’s air space and air bases
  • As a member of NATO and U.S. ally, the decision to purchase the S-400 air defense system puts a strain on Ankara’s relations with its western allies. Specifically, the U.S. is exerting strong pressures on Turkey, threatening to cancel the planned sale of F-35 jets, in order to discourage it from moving forward with the S-400 deal, but with little success so far
  • Algeria is a regular client. Algiers is the largest military spender in Africa, and despite efforts to reduce military imports, it continues to import Russian weapons and remains one of Russia’s most important clients in the region.
  • a number of countries in the region have recently signed MoUs with Russia for closer military cooperation, in anticipation of future arms deals
  • arms deals are generally lengthy processes. Some of the deals concluded lately have been years in the making, before even the start of the Russian intervention in Syria. Not all can be solely attributed to the “marketing effect of war”. That said, the “combat-proven” label is an undeniable marketing argument. In Russia’s case, the massive military engagement in Syria, coupled with increased influence in the region, allowed Russia to position itself as a desired political and military partner
Ed Webb

Mohammed bin Salman Isn't Wonky Enough - Foreign Policy - 1 views

  • Like Western investors, the kingdom’s elites are uncertain about what the new order means for the country’s economy. The new Saudi leadership has indeed created new opportunities, but many of the deep structural barriers to diversification remain unchanged. The bulk of the public sector remains bloated by patronage employment, the private sector is still dominated by cheap foreign labor, and private economic activity remains deeply dependent on state spending. Addressing these challenges could take a generation — and it will require patience, creativity, and a clearer sense of priorities.
  • While a band of Al Saud brothers used to rule collectively with the king as a figurehead, decision-making has now become centralized under one man
  • ruthlessness and willingness to take risks radically at odds with the cautious and consensual political culture of the Al Saud clan
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  • Saudi Arabia has tackled fiscal reforms more vigorously than most local and international observers expected, introducing unprecedented tax and energy price measures, including the introduction of a 5 percent value added tax, new levies on foreign workers, and increases in electricity and transport fuel prices. The government is now experimenting with new non-oil sectors with an increased sense of urgency, including information technology and defense manufacturing.
  • While space for political opposition arguably has narrowed, women will soon be allowed to drive and the religious police force that once harassed them has been almost entirely neutered. By relaxing religious controls over the public sphere, the crown prince is seeking to attract more foreign investment and facilitate diversification into tourism and entertainment
  • New policies and programs are announced constantly, while the delivery capacity of the sluggish Saudi bureaucracy continues to lag. Below the upper echelons, the Saudi state remains the deeply fragmented, bloated, and slow-moving machine that I described in my 2010 book. The government seems to have no clear strategy for reforming this bureaucracy
  • Local economic advisors fear that the majority of private petrochemicals firms — the most developed part of Saudi industry — would lose money if prices of natural gas, their main input, increase to American levels.
  • public sector employment remains the key means of providing income to Saudi nationals. Cheap foreign labor dominates private sector employment, thereby keeping consumer inflation at bay and business owners happy. Citizens, however, are parked in the overstaffed public sector. Out of every three jobs held by Saudis, roughly two are in government. The average ratio around the world is one in five. Public sector wages account for almost half of total government spending, among the highest shares in the world
  • As limits on government employment kick in, young Saudis will increasingly have no choice but to seek private jobs. But they will face tough competition on the private labor market where employers have become accustomed to recruiting low-wage workers from poorer Arab and Asian countries
  • Saudi wage demands will have to drop further if private job creation is to substitute for the erstwhile government employment guarantee. For the time being, private job creation has stalled as the government has pursued moderate austerity since 2015 in response to deficits and falling oil prices
  • The government has also underestimated how dependent private businesses are on state spending. The share of state spending in the non-oil economy is extremely high compared to other economies. Historically, almost all private sector growth has resulted from increases in public spending
  • As long as oil prices remain below $70 per barrel, the goal of a balanced budget will cause pain for businesses and limit private job creation. This will pose a major political challenge at a time when an estimated 200,000 Saudis are entering the labor market every year. More than 60 percent of the population is under 30, which means that the citizen labor force will grow rapidly for at least the next two decades.
  • It would be far more prudent to gently prepare citizens and businesses for a difficult and protracted adjustment period and to focus on a smaller number of priorities
  • The key structural challenge to non-oil growth is the way the Saudi government currently shares its wealth, most notably through mass public employment — an extremely expensive policy that bloats the bureaucracy, distorts labor markets, and is increasingly inequitable in an era when government jobs can no longer be guaranteed to all citizens. A stagnating economic pie that might even shrink in the coming years must be shared more equitably.
  • A basic income would not only guarantee a basic livelihood for all citizens, but also serve as a grand political gesture that could justify difficult public sector reforms. A universal wealth-sharing scheme would make it easier to freeze government hiring and send a clear signal that, from now on, Saudis need to seek and acquire the skills for private employment and entrepreneurship. The government could supplement this scheme by charging fees to firms that employ foreigners while subsidizing wages for citizens to fully close the wage gap between the two.
  • Focusing on such fundamentals might be less exciting than building new cities in the desert or launching the world’s largest-ever IPO — but they are more important for the kingdom’s economic future. No country as dependent on petroleum as Saudi Arabia has ever effectively diversified away from oil
Ed Webb

At Banque Havilland, Abu Dhabi's Crown Prince Was Known as 'The Boss' - Bloomberg - 0 views

  • A trove of emails, documents and legal filings reviewed by Bloomberg News, as well as interviews with former insiders, reveal the extent of the services Rowland and his private bank provided to one of its biggest customers, Mohammed bin Zayed, better known as MBZ, the crown prince of Abu Dhabi and de facto ruler of the United Arab Emirates. Some of the work went beyond financial advice. It included scouting for deals in Zimbabwe, setting up a company to buy the image rights of players on the Abu Dhabi-owned Manchester City Football Club and helping place the bank’s chairman at the time on the board of Human Rights Watch after it published reports critical of the Persian Gulf country.
  • a 2017 plan devised by the bank for an assault on the financial markets of Qatar, a country that had just been blockaded by the UAE, Saudi Arabia, Egypt and Bahrain for allegedly sponsoring terrorism
  • a coordinated attack to deplete Qatar’s foreign-exchange reserves and pauperize its government
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  • One of Rowland’s sons, a senior executive at the Luxembourg-based bank, emailed the plan to Will Tricks, who had swapped a career in the U.K.’s foreign intelligence service MI6 for a job advising MBZ. Tricks, who acted as a go-between for the Rowlands, was paid as a contractor by Banque Havilland. The presentation found its way to the UAE’s ambassador to the U.S., who stored it on his computer under “Rowland Banque Havilland.”
  • Last year, Qatar sued Banque Havilland in London, accusing it of orchestrating a campaign that cost the country more than $40 billion to shore up its banks and defend its currency peg against the U.S. dollar. While the lawsuit has received attention in the media, the extent of other work Banque Havilland did on behalf of MBZ hasn’t been previously reported. Nor has the role of Tricks.
  • Havilland is facing a criminal investigation in Luxembourg for, among other things, its dealings with the family of another head of state, Azerbaijan’s President Ilham Aliyev. It has also had communications with regulators in Luxembourg and the U.K. about the Qatar plan
  • Devising a plan for economic sabotage, whether implemented or not, is beyond the remit of most private banks. But Banque Havilland is no ordinary financial institution. The firm specialized in doing things others might balk at, the documents and emails show. Its clients included kleptocrats and alleged criminals in corruption hotspots including Nigeria and Azerbaijan. Its owners solicited business in sanctioned countries such as North Korea and Zimbabwe.
  • Not all of its clients were pariahs, and none was as important as MBZ, people with knowledge of the matter say. The crown prince, 59, is one of the Arab world’s most powerful leaders. A graduate of Britain’s Royal Military Academy Sandhurst, he commands one of the best-equipped armies in the region and has waged wars in Yemen, Libya and Somalia. He’s not as well-known as his protégé and neighbor Mohammed bin Salman, Saudi Arabia’s crown prince. And he isn’t president of the UAE, a title held by a half-brother.
  • When MBZ wanted to develop a foothold in southern Africa’s commodities market in 2011, Tricks worked with the Rowlands on sourcing potential investments, documents and emails show. They picked Zimbabwe as a hub for the region, but there was a problem. The country was subject to U.S. and European Union sanctions that banned dealings with President Robert Mugabe’s inner circle and many of its state-owned companies. Tricks passed on advice about setting up a trust in Abu Dhabi for any Zimbabwe deals to hide the identities of investors from the U.S. Treasury Department, which oversees sanctions enforcement
  • the UAE is now a major trading partner with the country despite continuing U.S. sanctions, and it opened an embassy there in 2019
  • Robeson, the foundation’s chairman, was elected to the Human Rights Watch board a few months later, in April 2012. He was named to the advocacy group’s Middle East and North Africa advisory committee. “We have been given the complete list of projects currently being undertaken by Human Rights Watch in the Middle East and North Africa,” Robeson wrote soon after joining the board, in a memo he emailed to Jonathan Rowland that he asked him to share with his father. Robeson also said he’d been given detailed notes of a meeting between the group and Britain’s then-Secretary of State for International Development Andrew Mitchell, along with other private briefings.
  • The foundation appears to have had no other purpose than making the Human Rights Watch donations. It was registered in Guernsey after the first gift and wound down when Robeson left the board in 2016.
  • Emma Daly, a spokeswoman for Human Rights Watch in New York, said the organization vetted Robeson at the time he was being considered for the board and couldn’t find any conflicts. She said the group didn’t know about Rowland’s or the bank’s connections to MBZ. Its most recent report on the country noted that, “Despite declaring 2019 the ‘Year of Tolerance,’ United Arab Emirates rulers showed no tolerance for any manner of peaceful dissent.”
  • The presentation is now a key part of the case in which Qatar accuses the bank of orchestrating an illegal UAE-backed campaign to create false impressions about the country’s stability. The UAE is not a defendant. The plan called for setting up an offshore vehicle into which the UAE would transfer its holdings of Qatari debt before buying more of the securities. The fund would also purchase foreign-exchange derivatives linked to the Qatari riyal and buy enough insurance on its bonds—a barometer of a country’s creditworthiness—to “move the price sufficiently to make it newsworthy.” Working with an affiliated party, it would then flood the market with the bonds to create the impression of panicked selling. The presentation also described a public relations drive to “add more fuel to the fire” and suggest Qatar might be struggling to access U.S. dollars.
  • Within weeks of the plan being sent to Tricks, the riyal—under pressure since the beginning of the blockade in June 2017—went into freefall and hit a record low. The yield on Qatar’s 10-year bonds also soared, as did the cost of insuring the country’s debt against default. The currency didn’t recover until November of that year, after the Intercept reported on the Banque Havilland plan.
Ed Webb

Liberal peace transitions: a rethink is urgent | openDemocracy - 1 views

  • It is widely accepted among those working in, or on, international organisations, from the UN to the EU, UNDP, NATO or the World Bank, that statebuilding offers a way out of contemporary conflicts around the world: local, civil, regional and international conflicts, as well as complex emergencies, and for developmental issues. Most policymakers, officials, scholars and commentators involved think that they are applying proven knowledge unbiased by cultural or historical proclivities to the conflicts of others. This is not the case.
  • The broader idea has been that liberal democratic and market reform will provide for regional stability, leading to state stability and individual prosperity. Underlying all of this is the idea that individuals should be enabled to develop a social contract with their state and with international peacebuilders. Instead - in an effort to make local elites reform quickly, particularly in the process of marketisation and economic structural adjustment - those very international peacebuilders have often ended up removing or postponing the democratic and human rights that citizens so desired, and which legitimated international intervention in the first place. A peace dividend has only emerged for political and economic elites: the vast bulk of populations in these many countries have failed to see much benefit from trickle-down economics, or indeed from democracy so far.
  • this liberal peace is itself in crisis now
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  • What began as a humanitarian project has turned into an insidious form of conversion and riot control which has had many casualties. It has been profoundly anti-democratic in many cases, including in Bosnia, Afghanistan, and Iraq. From the ground, for many of its recipients, the various iterations of this liberal peace project have taken on a colonial appearance. It has become illiberal
  • local actors are reframing what they require from a viable, just, and durable peace, often quietly and in the margins, drawing on the liberal peace as well as their own customs and interests.
  • Talk of ‘human security’, ‘responsibility to protect’, ‘do no harm doctrines’ and ‘local ownership’ seems very empty from the perspective of most of the peoples these concepts have been visited upon. This in turn has often elicited from subject communities a 'post-colonial response', criticising peace interventions as self-interested, imperialistic, orientalist, and focusing on the interveners' interests rather than local interests. A local (transnational and transversal) attempt is under way to reclaim political agency and autonomy from the new post-Cold War 'civilising mission', which has over the last twenty years, shown itself unable to provide for basic needs, rights, security (state or human) at levels local actors expect, or to respect or understand local differences and non-liberal, and even non-state patterns of politics. Non-liberal and non-western forms of politics, economics, society, and custom, are clamouring for discursive and material space in many post-conflict zones, with mixed implications for sustainability and for the purpose of achieving a normatively (to liberals at least) and contextually acceptable, locally sustainable peace.
  • In some cases, as in Kosovo and Timor Leste this has led to a modified form of state emerging, heavily influenced by both liberal norms and local customs, practices, identities, and national agendas. Very difficult issues arise here for 'international planners' of peace and world order, not least in how they respond to such confrontations between very different political systems, customs, and agendas. But, it is also the case that synergies may arise, where these are sensitively handled and properly understood.
  • peace requires well-being via human needs stemming from rights defined by their contexts, (where context may mean local, customary, state, market, regional or international, not merely the 'local' it is often taken to mean). These contexts are of course connected to the ambit of liberal state and international institutions, but they are not defined by them. As a result, millions of people around the world do not have adequate rights or needs provision, nor proper access to representation, despite the best intentions of liberal peacebuilders.
  • To achieve this the ethically and methodologically dubious privatisation of security and peacebuilding and its connection to neoliberal marketisation strategies in the context of a classically sovereign state should be abandoned. The privatisation of peacebuilding means that no accountability is possible until after a specific development project has failed, and only then by refusing funding often to those who need it most. Such strategies have attracted to this sector a dangerous fringe of arrogant bureaucrats, 'ambulance chasers' and 'cowboys' rather than imbuing peacebuilding with the dynamics of grounded reconciliation.
  • democracy is rarely resisted other than by the most extreme of actors, but it is often criticized for being distant in outcome to local communities.
  • At the moment the impulse appears to be to illiberalise, to postpone democracy, to open markets further, and to depoliticise because a lack of local agency is seen to be the cause of these failures, rather than faulty international analytic and policy approaches and mistaken idealism.
Ed Webb

The rise of the Kurdish gun market - Al Jazeera English - 1 views

  • Mahmood said he would sell "without hesitation" to Yazidis, Christians or foreign fighters aiding the Kurds in their fight against ISIL.
  • Members of the Kurdish Peshmerga, including foreign fighters, have been among the most frequent customers at the gun markets in Sulaimania
  • One shop owner estimated at least 20 percent of his clientele were members of the Kurdish military force. Peshmerga, who receive a 25 percent discount at some shops, supplement their issued equipment with their own salaries
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  • Russian and Chinese AK-47s, which were standard issue in the Iraqi army under Saddam, are the cheapest and most popular weapons among the Peshmerga, selling for $450 a piece, vendors said. M16s, issued to the Iraqi army by the US via Iraq's interim government, are also plentiful and popular, but cost around $2,500
Ed Webb

Picking up the pieces - 0 views

  • Syrians have shown relentless ingenuity in adapting to every stage of a horrendous conflict, salvaging remnants of dignity, solidarity and vitality amid nightmarish circumstances
  • The decimation of Syria’s male population represents, arguably, the most fundamental shift in the country’s social fabric. As a generation of men has been pared down by death, disability, forced displacement and disappearance, those who remain have largely been sucked into a violent and corrupting system centered around armed factions
  • 80 of the village’s men have been killed and 130 wounded—amounting to a third of the male population aged 18-50. The remaining two-thirds have overwhelmingly been absorbed into the army or militias
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  • “If you want to protect yourself and your family, you join a militia,” remarked a middle-aged man in the Jazmati neighborhood. “The area is infested with crime associated with the National Defense militias. Each group has control over a certain quarter, and they sometimes fight each other over the distribution of spoils. Shop owners must pay these militias protection. One owner refused, and they torched his store.”
  • Another resident of the same area explained that he and his family could scrape by thanks to his two sons’ positioning in the Iran-backed Baqir Brigade—which provides not only monthly salaries, but also opportunities to procure household items through looting.
  • Most who can afford to leave the country do so; others benefit from an exemption afforded to university students, while another subset enjoys a reprieve due to their status as the sole male of their generation in their nuclear family. Others may pay exorbitant bribes to skirt the draft, or confine themselves within their homes to avoid being detected—making them invisible both to the army and to broader society. Some endure multiple such ordeals, only to remain in an indefinite state of limbo due to the contingent and precarious nature of these solutions
  • An industrialist in Aleppo put it simply: “I talk with factory owners and they say they want to reopen their factories, but they can’t find male workers. When they do find them, security services or militiamen come and arrest those workers and extort money from the owners for having hired them in the first place.” With no large scale returns on the horizon for local industries, this economic impasse will take years to resolve.
  • Although virtually every problem that sparked Syria’s 2011 uprising has been exacerbated, society has been beaten down to the point of almost ensuring that no broad-based reformist movement will be able to coalesce for a generation to come
  • the unraveling of Syria’s productive economy, and its replacement by an economy of systematic cannibalization in which impoverished segments of Syrian society increasingly survive by preying upon one another
  • a new term—taafeesh—to describe a practice that goes far beyond stealing furniture to include extremes such as stripping houses, streets and factories of plumbing and electrical wiring
  • active surveillance, intimidation and repression are not the only contributors to this leaden atmosphere. A pervasive exhaustion has settled over Syrians ground down and immiserated by war, disillusioned with all those who purport to lead or protect them, and largely reduced to striving for day-to-day subsistence
  • I returned to my apartment just to retrieve official documents and some hidden pieces of gold. I did so, and then destroyed my own furniture and appliances because I don’t want these people making money at my expense. I was ready to burn down my own apartment, but my wife stopped me—she didn’t want me to cause harm to other apartments in the building.
  • micro-economies in their own right—from the recycling of rubble to the proliferation of taafeesh markets, where people buy second-hand goods stolen from fellow Syrians. Many have no choice but to use these markets in order to replace their own stolen belongings
  • Syrians also dip into precious resources to pay officials for information, for instance on disappeared relatives or their own status on Syria’s sprawling lists of “wanted” individuals. For those wishing to confirm that they won’t be detained upon crossing the border to Lebanon, the going rate is about 10 dollars—most often paid to an employee in the Department of Migration and Passports.
  • This cannibalistic economy, which encompasses all those who have come to rely on extortion for their own livelihoods, extends to the cohort of lawyers, security officials and civil servants who have positioned themselves as “brokers” in the market for official documents such as birth, marriage and death certificates
  • Today, even the most senior lawyers in our practice are working as document brokers. A well-connected broker makes 30 to 40,000 pounds [60 to 80 dollars] per day; this roughly equals the monthly salary of a university-educated civil servant. As a result, many government employees resign and work as brokers to make more money.And this truly is a business, not a charity: Every broker takes money, even from his own brothers and sisters. Last week a colleague brought me his brother-in-law. I asked him why he needed me, when he could make all the papers himself. He explained that he can’t take money from his own brother-in-law, but I can do so and then give him half.
  • “I watched uniformed soldiers using a Syrian army tank to rip out electrical cables from six meters underground,” remarked a fighter with a loyalist Palestinian faction, who was scrambling to retrieve belongings from his apartment before it could be pillaged. “I saw soldiers from elite units looting private hospitals and government offices. This isn’t just looting—it’s sabotage of essential infrastructure.”
  • Syria’s predatory wartime economy is slowly but surely turning into a predatory economy of peace
  • As some Syrians put it, Damascus has been particularly effective in reconstructing one thing amidst the immeasurable destruction: the “wall of fear” which characterized the regime before 2011 and which momentarily broke down at the outset of the uprising
  • Multiplying forms of predation have accelerated the outflow of Syria’s financial and human capital, leaving behind a country largely populated by an underclass that can aspire to little more than subsistence
  • At one level, the war has wrenched open social and economic fractures that existed long before the conflict. The city of Homs stands as perhaps the starkest microcosm of this trend. A Sunni majority city with sizable Christian and Alawi minorities, Homs was the first major urban center to rise up and the first to devolve into bitter sectarian bloodletting
  • While vast swathes of Syria’s Sunni population feel silenced and brutalized, Alawi communities often carry their own narrative of victimhood, which blends legitimate grievances with vindictive impulses vis-à-vis Sunnis whom they regard as having betrayed the country
  • crude divisions based on sect or class fail to describe a complex and fluid landscape. Some fault lines are less dramatic, all but imperceptible except to those who experience them first-hand. Neighbors, colleagues, friends and kin may have come down on opposing sides, despite having every social marker in common. Each part of the country has its own web of tragic events to untangle.
  • Many Islamic State fighters swapped clothes and joined the [Kurdish-led] Syrian Democratic Forces to protect themselves and their families. But they haven’t changed; those people are bad, and will always be bad. There will be vengeance. Not now, while everyone is busy putting their lives together. But eventually, everyone who suffered under ISIS, whose brother was killed by ISIS, will take revenge.
  • A native of a Damascus suburb remarked: “Charities typically want to help those who fled from elsewhere. So, when I go to a charity, I say I’m displaced.”
  • The divide between conservative and more secular Sunnis has calcified, manifesting itself even in differential treatment at checkpoints. “I have an easier time driving around because I don’t wear the hijab,” remarked a woman from the Damascus suburbs. “If you veil, security assumes you’re with the opposition.”
  • While dialogue is sorely needed, some Syrians warn against emphasising dialogue for its own sake—even at the cost of burying the most substantive issues at stake. A businessman from Damascus described his own abortive experience with talks proposing to link disparate elements of Syria’s private sector: “There’s this whole industry around ‘mediation,’ including between sides that don’t actually disagree on anything. Meanwhile, all the problems that caused the uprising have gotten worse.”
  • Just as Syrians are forced to be more self-reliant, they have also come to depend evermore on vital social support structures. Indeed, extreme circumstances have created a paradox: Even as society has splintered in countless ways, the scale of deprivation arguably renders Syrians more closely interdependent than ever before.
  • remittances from relatives who live abroad
  • The country’s middle and upper classes have long extended vital forms of solidarity to their needier compatriots, with Syria’s merchant and religious networks playing a leading role. What is unique, today, is the scale of hardship across the country, which is so vast as to have changed the way that Syrians conceptualize the act of receiving charity. A businessman from central Syria noted the extent to which dependency, which once demanded some degree of discretion, has become a straightforward fact of life. “People used to hide it when they were reliant on charity. Not anymore. Today you might hear workers in a factory wondering, ‘Where is the manager?’ And someone will say that he’s out waiting for his food basket. The whole country is living on handouts.”
  • People still do charity the Islamic way, based on the premise that you must assist those closest to you. If there’s someone you should help—say, a neighbor—but you’re unable, then it’s your responsibility to find someone else who can. These circles remain very much intact, and the entire society lives on this. Seven years of war didn’t destroy that aspect of Syrian culture, and that’s something Syrians are proud of.
  • There will be no nationwide recovery, no serious reform, no meaningful reconciliation for the foreseeable future.
Ed Webb

40 years after the oil crisis: Could it happen again? - 2 views

  • Forty years ago today, the Organization of the Petroleum Exporting Countries (OPEC) voted to raise the posted price of their oil by 70 percent.  The next day, several Arab oil producers decided to impose an embargo on oil sales to the United States to punish it for supporting Israel in the unfolding Yom Kippur War.  While the two decisions were not formally linked, policymakers have worried ever since that OPEC could again restrict the global supply of oil. A lot has changed since 1973.  Oil embargoes used to happen fairly frequently: There was one in 1956, and another in 1967.  Until 1973, they didn’t attract much attention.  But due to structural changes in the oil market in the early 1970s, the one in 1973 had a huge impact.  Since that time, there hasn’t been a single international embargo. (The current sanctions against Iran are an importers’ boycott, not an exporters’ embargo.)  What happened?
  • Even without an embargo, policymakers worry that OPEC manipulates the oil market. For example, James Woolsey, a former CIA director and self-proclaimed energy hawk, argues that OPEC has a grip on global oil and gasoline prices so tight that the U.S. will never be free of its influence.  Like most people, Woolsey wrongly believes that OPEC is a powerful cartel. Many economic studies cast doubt on that idea, but there are still some scholars who support the proposition. OPEC rarely if ever influences its members’ oil production rates.  It has almost no impact on prices.  My research looked at OPEC’s behavior since 1982, when it first adopted formal production quotas for its members.  I found that joining OPEC has little influence on new members’ oil production rates; members cheat on their quotas a whopping 96 percent of the time; changes in OPEC quotas have little impact on changes in production; and members of OPEC produce oil at about the same rate as non-members of the group, all else equal.  Any of these findings would cast doubt on OPEC’s status as a cartel; collectively they are damning.
  • Most OPEC members – from Venezuela to Nigeria to Iraq – are pumping their oil as fast as they can, with no spare capacity
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  • OPEC is a political club.  It perpetuates a “rational myth” about its cartel power to generate political benefits and prestige for its members, both at home and abroad.  As long as OPEC is viewed as powerful, its leaders can falsely claim credit at home for “managing the economy.”
  • the world would be better off if it stopped assuming that OPEC drives world energy markets.  It does not.  Most of the credit or blame for rising oil prices in recent years rests with the energy demands of Asian customers, not diabolic moves by OPEC
Ed Webb

Russia's future in Iran looks brighter as Europe, US fade - 0 views

  • To ease the isolation and economic pressure, Iran is looking to strengthen trade and financial relations with Russia as well as China and neighboring countries such as Turkey, Iraq and Afghanistan.
  • Iran has been seeking to conclude banking agreements and establish non-dollar and SWIFT-free financial mechanisms with these countries. Iran's efforts in this regard in relation to Iraq, the United Arab Emirates and Turkey have been somewhat fruitful.
  •  trade between Iran and Russia grew 24.6% in the first seven months of 2019, reaching $1.33 billion. Russian exports to Iran reached $999.3 million (39.3% growth) and Iran’s exports to Russia stood at $333.7 million — a 6.2% decrease compared with the same period in the preceding year. Iran's share of Russia's total foreign trade rose from 0.3% to 0.4%.
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  • Iran said earlier this month that it has connected its Financial Electronic Messaging System (SEPAM) to the financial messaging system developed by the the Bank of Russia, SPFS, and trade is increasing and expected to continue growing in the coming months.
  • But the economic capacity of Iran-Russia relations is limited and Moscow doesn’t want to jeopardize its interests in a confrontation between Iran and the United States. So, although launching a special financial channel could boost bilateral trade, the increase wouldn’t be all that significant. For Iran, the regional aspect of launching this channel is more important than its bilateral dimension.
  • the transport capacity between the Far East, India, Russia and Europe is 30 million tons of cargo, expandable to 100 million tons. Mohammad Eslami, Iranian minister of roads and urban development, emphasized Iran will increase its share of cargo transported between the East and West. One of Iran's options for achieving this goal is the INSTC. According to Eslami, Iran, Russia and Azerbaijan will launch their integrated transport system by the end of 2020
  • boosting trade and financial ties with Iran could help fulfill Russia's political goals of reducing US pressure on Iran, saving the Iran nuclear deal and maintaining long-term regional relations with Iran
  • Russia doesn’t want to lag behind its rivals in taking advantage of Iran's large market. Iran and China recently updated a 25-year, $400 billion economic agreement signed in 2016. Europe hopes to expand trade with Iran through INSTEX. If the European and Chinese plans are realized, Russia's access to the Iranian market will decline and Moscow’s political goals will be challenged.
Ed Webb

Three Decades After his Death, Kahane's Message of Hate is More Popular Than Ever - MERIP - 0 views

  • on November 5, 1990, Rabbi Meir Kahane was assassinated in New York City, a seminal event in the annals of American and Israeli history. Years after his death, Kahane’s killing is considered the first terror attack of the group that would later coalesce into al-Qaeda.
  • Many of Kahane’s American acolytes followed him to Israel, including top JDL fundraiser and Yeshiva University provost Emanuel Rackman, who took over as rector, and then chancellor, of Israel’s Bar Ilan University. Under Rackman’s tutelage, Bar Ilan’s Law School became an incubator for the Israeli far-right. The most infamous of these students was Yigal Amir. Inspired by the Goldstein massacre, Amir assassinated Prime Minister Yitzhak Rabin in 1995, dealing a death blow to Israel’s liberal Zionist camp. Amir carried out the murder on the five-year anniversary of Kahane’s killing.
  • The victims of JDL-linked terrorist attacks in the United States were usually innocent bystanders: the drummer in a rock band who lost a leg when a bomb blew up the Long Island home of an alleged Nazi war criminal; the Boston cop who was seriously injured during his attempt to dispose of another bomb intended for the American-Arab Anti-Discrimination Committee; the elderly lady who died of smoke inhalation in her Brooklyn flat above a Lebanese restaurant torched after its owners were accused of sympathies with the Palestine Liberation Organization (PLO); the young Jewish secretary who was asphyxiated when another fire burned through the Manhattan office of a talent agency that promoted performances of Soviet ballet troupes.
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  • Kahanists are the FBI’s prime suspects in the 1985 assassination of popular Palestinian-American activist Alex Odeh who died in a bombing outside Los Angeles because he called for a two-state solution (which became the official policy of the US government less than a decade later).[2] Odeh’s murder had far-reaching implications, scaring off a generation of Arab-American activists from advocating on behalf of Palestinians.
  • even many sectors of the Israeli right were embarrassed by Kahane’s shameless racism, and by the end of his first term in 1988 he was banned from running again.
  • Six years later, in 1994, the Israeli government, then led by the Labor Party, declared his Kach party a terrorist organization. But by that point, the Kahane movement had already been active for over a quarter of a century, leaving a wake of destruction. To date it has produced more than 20 killers and taken the lives of over 60 people, most of them Palestinians.[3] Credible allegations put the death toll at well over double that number, but even the lower confirmed figure yields a higher body count than any other Jewish faction in the modern era.
  • For decades, Kahanists—as followers of Kahane are called in Israel—have repeatedly attempted to leverage their violence to trigger a wider war and bog Israel down in perpetual armed conflict with its neighbors. And once Israel’s military might is truly unassailable, Kahanists say, Jewish armies must march across the Middle East and beyond, destroying churches and mosques and forcing their Christian and Muslim worshippers to abandon their beliefs or die at the sword.
  • Just months after the Oslo Accords were signed in Washington, DC on the White House lawn, a former candidate for Knesset in Kahane’s Kach party, Baruch Goldstein, committed the largest mass murder by a single person in Israeli history, shooting dead 29 Palestinians and wounding over 100 more at a mosque in Hebron. During the protests that followed, the Israeli Defense Forces killed perhaps two dozen more Palestinians. Exactly 40 days later, at the end of the traditional Muslim mourning period, Hamas began its retaliatory campaign of suicide bombings. Over the next three years this campaign would claim over 100 Israeli lives and harden many Jewish hearts against the prospect of peace with Palestinians. Today, Kahanists can convincingly claim credit for crippling the fragile peace process while it was still in its infancy.
  • In Hebron in 1983, on the Jewish holiday of Purim, Kahanist Israel Fuchs sprayed a passing Palestinian car with bullets. In response, Israel’s defense minister ordered Fuchs’s Kahanist settlement razed to the ground. A decade later in 1994, when Goldstein carried out his massacre, also on Purim, Israel’s defense minister put Hebron’s Palestinian residents under curfew and ordered the local Palestinian commercial district locked and bolted. The market has been shuttered ever since. Last year, Israel’s defense minister announced that the market would be refurbished and repopulated—by Jewish residents. On the same day, the state renovated nearby Kahane Park, where Goldstein is entombed, and where Kahanists gather every year to celebrate Purim and the carnage Goldstein wrought.
  • Kahane had spent the previous 22 years calling for Israel’s parliament to be dissolved and replaced with rabbinic rule over a Jewish theocracy, based on the strictest interpretations of the Torah and Talmud. He openly incited the ethnic cleansing of Palestinians—and all other non-Jews who refused to accept unvarnished apartheid—from Israel and the territories it occupied. He outdid all other Israeli eliminationists with his insistence that killing those he identified as Israel’s enemies was not only a strategic necessity, but an act of worship.[1] His ideology continues to resonate: In the September 2019 elections to Israel’s parliament the explicitly Kahanist Jewish Power Party (Otzma Yehudit) got 83,609 votes, putting it in tenth place in a crowded field of over 30 parties.
  • Both American-born followers of Kahane, Leitner and Ben Yosef went from armed attacks against Palestinians to court room advocates for their fellow religious extremists. Both enlisted at Bar Ilan Law School after serving short prison sentences. Together with his wife Nitzana Darshan, who he met there, Leitner established the highly profitable Israel-based lawfare group Shurat HaDin or Israel Law Center (ILC). After Ben Yosef earned his law degree at Bar Ilan, his American allies founded the Association Center for Civil Justice (ACCJ), a US-based lawfare group that has earned millions of dollars and has for years funneled significant sums to Fuchs, Ben Yosef and other Kahanists.
  • After Israeli Prime Minister Yitzhak Rabin was assassinated in 1995, his Labor-led government was replaced by the secular right-wing Likud party, led by Benjamin Netanyahu, who promptly appointed ex-Kahanists Tzahi HaNegbi and Avigdor Liberman to cabinet positions. But that did not satisfy the appetite of the Kahanists, who resolved to coax the Likud even further to the right. Founded by longtime Kahane supporter Shmuel Sackett, the Likud’s Jewish Leadership faction succeeded in catapulting its candidate Moshe Feiglin into the role of deputy speaker of the Knesset where he called on the government to “concentrate” the civilian population of Gaza into “tent camps” until they could be forcefully relocated.
  • Today, prior membership in the Kahanist camp no longer carries any stigma within the Likud.
  • the original Kach core group has rebranded itself to sidestep Israeli law, now calling itself Jewish Power, and are consistently courted by the rest of the Israeli right
  • Kahanists have had even greater success penetrating the halls of power at the local level where their representatives on Jerusalem city council have been included in the governing coalition since 2013. In 2014, Kahanist Councillor Aryeh King—now deputy mayor—used widely-understood religious references to incite an assembly of religious Jews to kill Palestinians. Later that very night, a group of religious Jews did exactly that, kidnapping and beating Palestinian teen Mohammad Abu Khdeir, forcing gasoline down his throat and torching him to death from the inside out.
  • After Kahane’s death, top Chabad rabbi Yitzchak Ginsburgh, also an American immigrant to Israel, inherited Kahane’s position as the most unapologetically racist rabbi in the country. In 2010 Ginsburgh helped publish an influential and vicious religious tract authored by one of his leading disciples called The King’s Torah, which sanctions organ harvesting from non-Jews and infanticide (if a Jew suspects that the child will one day constitute a threat).[9] Ginsburgh’s frequent tributes to Kahane’s memory, including repeated proclamations that “Kahane was right” have cemented the loyalty of third-generation Kahanists, including the latter’s namesake grandson, settler youth leader Meir Ettinger.
  • Thirty years ago, even if Israeli rabbis thought like Kahane and Ginsburgh they would not dare to speak these sentiments out loud, much less publish and promote them. Under Netanyahu’s rule, however, such sentiments are routinely supported financially and politically by the institutions of the Israeli state. In 2019, Israel’s education minister presented Ginsburgh with the Torah Creativity award at an annual event sponsored by his ministry.
  • The principles that Rabbi Meir Kahane popularized—that liberal democracy is an undesirable alien idea and that non-Jews must be driven down, and preferably out of Greater Israel altogether—have seeped deep into mainstream Israeli society.
Ed Webb

The Oil for Security Myth and Middle East Insecurity - MERIP - 0 views

  • Guided by the twin logics of energy security and energy independence, American actions and alliances in region became a self-fulfilling prophecy. The very thing the United States sought to eliminate in the Middle East—insecurity—became a major consequence of America’s growing and increasingly militarized entanglement.
  • In effect, the essential relationship of dependency between the United States and the Middle East has never been “oil for security.” It has in fact been oil for insecurity, a dynamic in which war, militarization and autocracy in the region have been entangled with the economic dominance of North Atlantic oil companies, US hegemony and discourses of energy security.
  • Although the destabilizing contradictions of this dependency have now undercut both American hegemony and the power of the North Atlantic hydrocarbon industries, the oil-for-insecurity entanglement has nonetheless created dangerously strong incentives for more conflict ahead.
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  • Oil’s violent geopolitics is often assumed to result from the immense power its natural scarcity affords to those who can control it. Recent developments in global hydrocarbon markets, which saw negative prices on April 20, 2020 have once again put this scarcity myth to bed
  • In a series of studies that began in late 1980s, economists Jonathan Nitzan and Shimshon Bichler charted the extent to which the world’s leading oil companies enjoyed comparatively handsome rates of returns on equity—well ahead of other dominant sectors within North Atlantic capitalism—when major wars or sustained unrest occurred in the Middle East.
  • When oil prices began to collapse in the mid-1980s, the major oil companies witnessed a 14-year downturn that was only briefly interrupted once, during the 1990-1991 Gulf War.
  • The events of September 11, 2001, the launching of the global war on terror and the 2003 Anglo-American invasion of Iraq reversed the fiscal misfortunes of the North Atlantic oil companies in the previous decade. Collectively, they achieved relative returns on equity several orders of magnitude greater than the heyday of 1979 to 1981. As oil prices soared, new methods of extraction reinvigorated oil production in Texas, North Dakota, Pennsylvania and elsewhere. In effect, war in Iraq made the shale oil revolution possible
  • fracking—not only benefitted from sky-high oil prices, generous US government subsidies and lax regulation, but also the massive amounts of cheap credit on offer to revive the economy after 2008
  • In response to the Soviet invasion of Afghanistan and the Iran hostage crisis, the Carter Doctrine declared America’s intent to use military force to protect its interests in the Gulf. In so doing, Carter not only denounced “the overwhelming dependence of the Western democracies on oil supplies from the Middle East,” but he also proposed new efforts to restrict oil imports, to impose price controls and to incentivize more fossil fuel extraction in the United States, all in conjunction with solidifying key alliances (Egypt, Israel and Pakistan) and reinforcing the US military presence in the region.[5] In effect, America would now extract geopolitical power from the Middle East by seeking to secure it.
  • In denouncing certain governments as “pariahs” or “rogue states,” and in calling for regime change, American policy has allowed those leaders to institute permanent states of emergency that have reinforced their grip on power, in some cases aided by expanded oil rents due to heightened global prices
  • A 2015 report by the Public Accountability Initiative highlights the extent to which the leading liberal and conservative foreign policy think tanks in Washington—the American Enterprise Institute, Atlantic Council, Brookings, Cato, Center for Strategic and International Studies (CSIS), Council on Foreign Relations and Heritage Foundation—have all received oil industry funding, wrote reports sympathetic to industry interests or usually both
  • For some 50 years, the United States has been able to extract geopolitical power from Middle Eastern oil by posing as the protector of global energy security. The invention of the concept of energy security in the 1970s helped to legitimate the efforts of the Nixon, Ford and Carter administrations to forge new foundations for American hegemony amid the political, economic and social crises of that decade. In the wake of the disastrous US war efforts in Korea and Southeast Asia, Henry Kissinger infamously attempted to re-forge American hegemony by outsourcing US security to proxies like Iran under what is referred to as the Nixon Doctrine. At the same time, regional hegemons would be kept in check by “balancing” competing states against each other.
  • The realization of Middle Eastern insecurity was also made possible by the rapid and intensive arms build-up across the region in the 1970s. As oil prices skyrocketed into the 1980s, billions of so-called petrodollars went to purchase arms, primarily from North Atlantic and Soviet manufacturers. Today, the Middle East remains one of the most militarized regions in the world. Beyond the dominance of the security sector in most Middle Eastern governments, it also boasts the world’s highest rates of military spending. Since 2010, Middle Eastern arms imports have gone from almost a quarter of the world’s share to nearly half in 2016, mainly from North Atlantic armorers.
  • For half a century, American policy toward the Middle East has effectively reinforced these dynamics of insecurity by promoting conflict and authoritarianism, often in the name of energy security. High profile US military interventions—Lebanon in 1983, Libya in 1986 and 2011, the Tanker Wars in the late 1980s, the wars on Iraq in 1991 and 2003, Somalia in 1993, Afghanistan since 2001, the anti-Islamic State campaign since 2014 and the Saudi-Emirati war on Yemen since 2015—have received the most scrutiny in this respect, alongside the post-2001 “low intensity” counterterrorism efforts worldwide
  • cases abound where American policy had the effect of preventing conflicts from being resolved peacefully: Trump’s shredding of the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear agreement with Iran comes to mind; the case of the Israeli-occupied Palestinian territories and the Moroccan-occupied Western Sahara have likewise become quintessential “peace processes” that have largely functioned to prevent peace.
  • the myth of authoritarian stability
  • A year after the unexpected 2011 uprisings, the IMF’s former director Christine Lagarde admitted that the Fund had basically ignored “how the fruits of economic growth were being shared” in the region
  • What helps make energy security discourse real and powerful is the amount of industry money that goes into it. In a normal year, the oil industry devotes some $125 million to lobbying, carried out by an army of over 700 registered lobbyists. This annual commitment is on par with the defense industry. And like US arms makers,[9] the revolving door between government, industry and lobbying is wide open and constantly turning. Over two-thirds of oil lobbyists have spent time in both government and the private sector.[10]
  • From 2012 to 2018, organized violence in the Middle East accounted for two-thirds of the world’s total conflict related fatalities. Today, three wars in the region—Syria, Iraq and Afghanistan—now rank among the five deadliest since the end of the Cold War. Excluding Pakistan, the Middle East’s share of the worldwide refugee burden as of 2017 was nearly 40 percent at over 27 million, almost double what it was two decades prior.
  • profound political and financial incentives are accumulating to address the existing glut of oil on the market and America’s declining supremacy. A major war in the Middle East would likely fit that bill. The Trump administration’s temptation to wage war with Iran, change Venezuela’s regime and to increase tensions with Russia and China should be interpreted with these incentives in mind.
  • While nationalizing the North Atlantic’s petroleum industries is not only an imperative in the fight against climate change, it would also remove much of the profit motive from making war in the Middle East. Nationalizing the oil industry would also help to defund those institutions most responsible for both disseminating the myths of energy security and promoting insecurity in the Middle East.
Ed Webb

The Islamic State Isn't Behind Syria's Amphetamine Trade, But the Regime Could Be - 0 views

  • Scientists first produced Captagon, the brand name of the drug fenethylline, in the 1960s to treat depression and children with attention deficit hyperactivity disorder. Two decades later, the World Health Organization banned the substance due its high potential for addiction, abuse, and other adverse health effects. But counterfeit Captagon—which is sometimes just a cocktail of amphetamines with no fenethylline—remains in demand on the black market in the Middle East.
  • pills intercepted in Salerno arrived on three ships from Latakia, a Syrian port, and Italian police quickly announced that the Islamic State was responsible for their production and shipment—allegedly to fund its global terrorism operations.
  • Global media outlets disseminated the information provided by the Italian police without questioning it, replicating misinformation without considering how a scattered group of Islamic State members could pull off such an operation—but the truth is, they probably didn’t
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  • more likely that the regime of Syrian President Bashar al-Assad has a hand in producing Captagon, reaping a profit that it can invest into its armed campaigns against civilians and damaging the health of many Syrians who are now addicted to amphetamines after years of war
  • “When Syria invaded Lebanon in the ’90s there were many reports showing the Syrian military were aiding and abetting hashish and opium production in the Bekaa Valley,”
  • Captagon production flourished in Syria after 2013, when a crackdown in neighboring Lebanon likely forced Hezbollah to relocate its drug production operations next door. The shift came at an opportune time for the Syrian regime, as it needed money to fund its military campaign against rebel groups
  • The majority of Syria’s Captagon production sites are in regime-held areas, according to Abu Ja’far, a former truck driver who worked between Homs, Rif-Dimashq, and Aleppo. “You only need some deserted homes and a few workers supervised by someone with strong connections,”
  • International organizations are unable to conduct research on the ground, meaning there is no concrete evidence linking the Assad regime to the Captagon trade. But sources say that strong protection would be required to produce, sell, and export the drugs from regime-held areas. “It was always possible in a country at war that those best placed to safely manufacture a drug in large quantities would be people in the regime … or in areas the regime were guaranteeing security,”
  • Last year, more than 33 million Captagon pills were seized in Greece after being shipped from regime-held Latakia. And in April this year, Saudi customs seized more than 44 million pills hidden in tea packaging from a company close to the Assad family.
  • At the height of its territorial control, the Islamic State was involved in the black market, trading looted antiquities, arms, and oil. But there is little evidence that the group ever produced Captagon—even if individual fighters used the drug on the battlefield. It would not have been sanctioned at the institutional level because of the group’s Salafism: Islamic State leaders punished people caught smoking or selling tobacco, making it unlikely they condoned the manufacturing of amphetamines.
  • Saudi Arabia has long been the No. 1 consumer of Captagon, which is popular among young and affluent partygoers. As conflict drags on in Libya, it is also possible the large shipment was destined for the port of Benghazi, with Europe as a transit point.
  • While much of the Captagon produced in Syria is destined for overseas markets, Syrians themselves suffer some of the worst damage from the trade. The worst-quality Captagon tablets are sold within Syria for as cheap as $1 per pill
  • Captagon is known to inhibit tiredness, hunger, and fear. But its use is now common among all demographics in Syria, not just fighters. The most common side effects include extreme depression, insomnia, malnutrition, and heart and blood toxicity
Ed Webb

Biden rebuffed as US relations with Saudi Arabia and UAE hit new low | US foreign polic... - 0 views

  • The UAE and Saudi Arabia continue to rebuff the US president as he attempts to counter soaring oil prices prompted by Russia’s invasion of Ukraine. And both countries have been unusually frank about their refusal to step in.
  • The Saudi and Emirati refusal to bail Biden out – or even to take his calls – has pushed relations between the Gulf states and Washington to an unprecedented low. The extraordinary flow of Russian wealth to Dubai, just as the US and Europe try to strangle Putin’s economy, has inflamed things further.
  • Usually opaque and often inscrutable, officials in Abu Dhabi and Riyadh have in recent weeks been uncharacteristically blunt to visiting diplomats about the nature of their grievances, and how far they are prepared to take them. One western diplomat told the Guardian that a Saudi counterpart had said: “This is the end of the road for us and Biden, but maybe the US also.”
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  • “While American policy is beset by baffling contradictions, Chinese policy is simple and straightforward. Beijing is offering Riyadh a simple deal: sell us your oil and choose whatever military equipment you want from our catalogue; in return, help us to stabilise global energy markets.“In other words, the Chinese are offering what increasingly appears modelled on the American-Saudi deal that stabilised the Middle East for 70 years.”
  • The former al-Arabiya editor-in-chief, Mohammed al-Yahya chose the previously unlikely forum of the Jerusalem Post to publish his views on the standoff.“The Saudi-US relationship is in the throes of a crisis,” he wrote. “I am increasingly disturbed by the unreality of the American discussion about the subject, which often fails to acknowledge just how deep and serious the rift has grown.
  • “Why should America’s regional allies help Washington contain Russia in Europe when Washington is strengthening Russia and Iran in the Middle East?”
  • The naked transactional diplomacy of Donald Trump was a formula more familiar to both, and had been readily deployed by China, to whom each is looking towards for closer trade, energy and even security ties.
  • “The UAE has invested a lot in its relations with Washington. We allocated the bulk of our investments of huge sovereign wealth funds in the American markets, excluding Asian and European markets, and had wanted to increase trade with Washington.”Abdulla said the UAE felt snubbed by Washington not signing a deal to supply new F-35 fighter jets.It was also angered by Biden’s distance following a deadly Houthi drone and rocket strike on Abu Dhabi.“What made matters worse was the Biden administration’s objection to sovereign Emirati decisions, such as receiving Bashar al-Assad … and putting pressure on Abu Dhabi to increase its oil production outside the context of the Opec agreement.“All this comes at a time when America is no longer the only superpower in the world, which prompted the UAE and other countries to diversify partners.”
Ed Webb

Indoor farms are energy hogs, a test for their climate credentials - The Washington Post - 0 views

  • As the effects of climate change intensify, bringing more severe droughts, flooding and pest infestations, some growers are wresting control of their crops away from nature. Huge high-tech greenhouses and smaller vertical farms — windowless warehouses that typically grow plants stacked in trays — hold the promise of letting farmers grow almost anywhere.But all that control comes with an environmental cost. Inside these facilities, farmers are creating the perfect growing conditions with power generated mostly by burning fossil fuels, and lots of it.
  • “There’s extraordinary water efficiency in these facilities, but energy is really the Achilles’ heel.”
  • In colder climes, indoor farm operators heat their greenhouses with natural gas or propane, since these fossil fuels are often the cheapest option. Vertical farms are a smaller slice of the market, but they typically consume much more electricity than greenhouses to replace natural sunlight and to power cooling and dehumidifier systems.
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  • Between 2017 and 2022, land used to grow vegetables and herbs in greenhouses increased by more than 20 million square feet, an 18 percent jump, according to the federal government’s latest agriculture census, released last month
  • In New England today, about 20 percent of the leafy greens for sale come from controlled-environment agriculture outfits
  • A study of 12 indoor farms by the nonprofit Resource Innovation Institute found that five of them used as much energy per square foot as a hospital. One vertical farm, an outlier, was guzzling as much energy per square foot as a data center.
  • These companies advertise their produce as safer, more nutritious and fresher than field-grown produce, since their operations typically skip pesticides and are within a few hours’ drive of major cities. They boast of using one-tenth of the water, a claim backed up by independent research. But they don’t often talk about their energy use; most states don’t require them to report it, and researchers said many are reluctant to share this data.
  • In Westbrook, Maine, Vertical Harvest is building a four-story, 52,000-square-foot vertical farm and is negotiating a deal to supply it with renewable energy. However, company leaders said they can’t apply the same strategy to their next project, in Detroit, where the state’s energy mix is heavy on fossil fuels and the company can’t choose its electricity provider.
  • At a time when consumers are seeking more year-round vegetables and berries, and many still have grim memories of the pandemic’s supply-chain crises, states are courting indoor farms that can be built wherever there’s a market for fresh produce.
  • Pennsylvania Agriculture Secretary Russell Redding said the state has created a “concierge service” to ease the permitting process and help indoor-farm operators with site selection. His agency is focusing on locations in the Lehigh Valley and the south-central region, where there’s proximity to major energy infrastructure and desirable markets in New York, New Jersey and D.C. Some of the state’s top universities are working on technology to speed automation inside vertical farms and greenhouses, he said, while its colleges are training workers for jobs in these facilities.One of Pennsylvania’s selling points is its abundance of energy, most of which is generated by burning natural gas.“These facilities are energy-intensive,” Redding said, “but Pennsylvania is the second-largest net energy supplier to the nation, and we think that’s a differentiator for us.”
  • Gretchen Schimelpfenig, a civil engineer who has worked to track indoor farms’ energy use, said many American greenhouses could cut their energy use in half. Dutch greenhouse technology has proved that this is possible, she said, but in the United States, there’s little pressure on indoor food growers to do things differently.
  • Little Leaf Farms, the dominant controlled-environment producer of packaged greens in New England, uses natural gas to heat its greenhouses. To get around this problem, CEO Paul Sellew said the company buys renewable-energy certificates, each of which corresponds to a set amount of energy generated by cleaner sources such as wind or solar. Little Leaf is also planning to build a large solar array on its 180-acre site in McAdoo, Pa., and Sellew said he’s keen on eventually switching to geothermal energy, which is already being used in the Netherlands to heat greenhouses but hasn’t caught on in the United States.
  • A few vertical-farm companies, like Texas’s Eden Green, have responded to the problem of dirty energy by focusing on efficiency. Eden Green’s hybrid model uses natural light, and the company lessens the burden on its cooling system by using programmed vents to control heat and humidity. Badrina estimated his two farms use about a quarter of the electricity consumed by a typical vertical farm growing leafy greens, which has allowed the company to plant other crops, such as herbs, that are more energy-intensive.
  • as some companies look to build vertical farms in the swampy Southeast, Badrina said they are likely to face even higher power bills from all the energy needed to counter the region’s heat and humidity.
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