Sunday, 25 January 2015

Ukranian Redux

Aftermath of the offensive at Donetsk's airport
Earlier this summer I wrote about how Russia's role in the Ukrainian crisis had escalated to the point where the two countries were in a de facto state of war.  Since then various geopolitical events have threatened to overshadow the ongoing insurgency in eastern regions of the country, but a recent renewal of an offensive against rebels in Donetsk thrust the spotlight back on both the region and Russian interference in it.  In fact, some of the images and videos coming out of Mariupol, which was first attacked this past summer but has seen renewed fighting in recent days, are a disturbing insight into daily life under what is almost certainly Russian bombardment.

This dashcam video purports to show the driver narrowly escaping an artillery strike.  The truck in front was not as fortunate.  Other videos by residents clearly convey what seems to be a city under siege. (Update: As of the 25th of January, the video has been removed due to copyright)

There is increasingly strong evidence that the western sanctions regime and plunge in oil prices have done little to impede Russian ambitions in eastern Ukraine.  As the New York Times wrote:

"With the appearance in recent weeks of what NATO calls sophisticated Russian weapons systems, newly emboldened separatist leaders have abandoned all talk of a cease-fire."

  As my previous post on the subject stated, it is very likely that the Kremlin is backing insurgents in hopes of asserting some degree of influence over the eastern and southern regions of Ukraine, host to the roads which serve as Russia's only land-based lifeline to Crimea.  A successful push along the southern coast would at best allow Russia to annex a swathe of territory which extends to breakaway regions of Moldova, or more plausibly, de facto Russian hegemony over the aforementioned territories within the framework of a federalized Ukraine.

Further implicating the Russian government were images released by the Ukrainian government which purported to show documents taken from captured Russian mercenaries.

"The National Security and Defence Council recently reported that Ukrainian artillery destroyed a column of Russian mercenaries near Donetsk airport and detained more than 10 of them" 
- Sheila Casey, State Department attache for Ukraine  

Despite strong words from the United States government, there doesn't seem to be a clear path forward.  With the United States and its allies slowly escalating their role in the fight against ISIS, there just doesn't seem to be much of an appetite for substantial action against the Russian government.  That said however, European Union economic sanctions on Russia come up for renewal soon, and if there was talk about easing them before, such talk is now gone.  Latvia and other eastern European states, citing a negotiated ceasfire signed in Minsk which was broken by rebels early last week, are in some cases now pressing for even harsher sanctions.  All the while, open warfare rages in the cities of Eastern Ukraine.  Some more photos of the recent devestation which left at least 30 dead:


Tuesday, 20 January 2015

Marie Le Pen and the NYT's Chickenhawk Stance on Free Reporting

Yesterday, readers of the op-ed section in the New York Times may have been surprised to see one of the published pieces was written entirely in french.  It was on that day that Marie Le Pen joined the ranks of countless other culturally significant (and make no mistake, controversial) figures to have been able to publish opinion pieces in such a storied paper.  While La Pen and her resurgent Front National party have been the beneficiaries of significant coverage in the EU, North American audiences for the most part are unaware of the stunning redressing of far right politics she may be on the cusp of accomplishing in France.

Established in 1972 as an amalgamation of various radical French nationalist groups, the Front National was, from its conception, a party predicated upon the principles of "pure" French identity and the rejection of non-European immigration.  While most of its policies actually aligned with those in the mainstream right, it was the party and its leader Jean-Marie Le Pen's (Marie Le Pen's father and the party's only other leader) virulent xenophobia, antisemitism and seeming fondness for dictatorial right wing regimes which drew the frequent condemnation of French politicians of all stripes.  In fact, his outrageous antics were enough that after the FN came in 2nd in the 2002 elections, the senior Le Pen essentially solidified his role as the figurehead of far right sentiments in the French political consciousness.  That a man who once referred to the occupation of France and subsequent deportation of Jews and other targeted groups during WWII as "not particularly inhumane, even if there were a few blunders, inevitable in a country of [220,000 square miles]" was very nearly elected to the Élysée Palace is a frightening reminder that a slumbering nationalist beast exists in French politics to this very day, threatening a groundswell nearly every election cycle.

If the elder Le Pen is considered the spiritual center and figurehead of the FN, he has largely conceded the brain to his daughter Marie.  Upon taking the reigns from her father in 2011, she embarked upon an ambitious redesign and airbrushing of the party's platform in the hopes on increasing its electoral chances, a gamble which so far seems to be working.  Riding a wave of Europskepticism among the EU's wealthier nations, the party has captured 23 seats in European Parliament, and has taken control of councils and mayoral offices in mainly industrial cities which have borne the brunt of the most recent economic crisis.  Even though her party only currently holds three seats in the National Assembly, many party faithful are confident Le Pen will indeed be President in 2017.  But no one has been fooled into thinking that the core message has changed; in the aftermath of the shootings in Paris two weeks ago Jean-Marie Le Pen told the Huffington Post "I am not Charlie Hebdo, I am Charlie Martel."  Martel of course, was a Frankish (de facto) king among whose many accomplishments was the successful repelling of Islamic invaders from North Africa.  Poor historical analogies aside, the racist and borderline fascist origins of the policies which continue to guide the Front National today were enough that Nigel Farage of UKIP, himself no stranger to accusations of racism, blasted Le Pen's party as "antisemetic" and "racist".

And so we arrive at Le Pen's editorial.  In it, she seems to imply that the government shied away from labelling the attack on Charlie Hebdo's offices an act of Islamist terror, a patently false accusation.  Both Le Pen and her party may seem repellent and their policies and rhetoric harmful to efforts to integrate Muslim migrants fully into French society, and yet publishing her piece was not where the Times stumbled.  While it is not surprising that the FN and other far right groups are seizing upon this opportunity to label the government as soft on Islamic terror, and laying responsibility for the attacks at the feet of Muslim immigration, it is surprising that the editorial staff at the New York Times felt that giving La Pen a soapbox with which to extol her agenda of Islamaphobia and xenophobia was of value as news, especially in light of another editorial decision at the paper to not publish the cover of Charlie Hebdo's first edition since the shooting.  In a blog post a week later, NYT Public Editor Margaret Sullivan wrote that in her opinion, the cartoon depicted on the cover, despite its potential to offend a minority of readers, was not gratuitously offensive nor was it devoid of news value.  And yet, it was shelved to avoid "offending Muslim sensibilities".

This isn't a question of journalists having the ability to publish whatever they wish, but rather one of them being restricted in their ability to best illustrate and convey stories they deem newsworthy.  For example, Executive Editorial Editor Dean Baquet's decision to not include the more graphic of the Mohammad cartoons because they were of little worth with regards to advancing understanding of the story at hand (The shooting at Charlie Hebdo's offices) was perfectly justified.  If asked to defend the publication of Marie Le Pen's editorial, the editors at the Times will no doubt point to the long history of people writing controversial and potentially inflammatory things in its op-ed pages over the years, and how ideas and speech, regardless of how morally reprehensible they may seem, should be publicly aired, lest they quietly fester on the fringes much like most of the radical policies the FN espouses; and they would be absolutely correct.  There is no doubt that op-eds critical of Marie Le Pen's views have been published, and will continue to be published.  Her policies will be subject to critical analysis and challenged based on their adherence to facts, versus distortion of them.   What the New York Times should apologize for however, is the double standard it adhered to when it decided that publishing an editorial possibly damaging to religious relations in France was alright, but that a story about a cartoon with the potential to inflame some readers could be neutered to appease that minority by removing an image of the cartoon itself.

No one should harbour any delusions that this cowardly attack in Paris two weeks ago was remotely justified, or that jihadis deserve to not feel insulted.  To suggest so would be to equate those who perpetrate such acts of terror with those who peacefully practise Islam, those who owe no more of a condemnation of terrorism than the rest of us.  The only ones who owe the people of France and generally anyone horrified by such acts anything are those who suggested that the perpetrators' actions were in any way justified.  It is Pope Francis, and those who marched in Tehran and Beirut under the banner "I am not Charlie" who owe a condemnation of radical Islam to us, and not to a rank political opportunist like Marie Le Pen and her ilk.

Sunday, 18 January 2015

Why OPEC is Prolonging Cheap Oil (And Why It May Backfire This Time)

In the face of falling oil prices, OPEC found itself under the market's microscope.  News that the cartel was holding production steady at 30 million barrels per day and revising production for 2015 lower to 28.9 million barrels did little to placate volatility-averse traders, who in turn sent US treasury bonds further south, the Dow Jones (DJIA) plunging nearly 300 points and generally had a negative impact on everything from the Canadian Dollar  (CAD) to the Norwegian Krone (KR).  By almost any metric, the markets were affixed on commodities, and specifically fossil fuels.

Seemingly serving as a reminder of just how beholden we are to the black gold, oil played a role in numerous geopolitical developments this past year.  From the thawing of relations between Cuba and the United States to the NATO and EU sanction regime meant to punish the Russian economy, 2014 saw fossil fuels once again take on the role of political flashpoint, furthering some agendas while hindering others.  But the reasoning behind why the Arab-dominated OPEC is dragging its less fortunate members through the mud has all to do with recapturing a near monopoly on oil production it enjoyed on oil exports before high prices drove investment towards U.S shale.

 OPEC was initially formed in 1960 by countries with substantial oil reserves in order to collectively better control the market for exports.  What they discovered during the Yom Kippur War in 1973 was that putting a vital resource under the control of a non-aligned cartel provided OPEC's Arab and Latin American member states with an "oil weapon" that provided them leverage with otherwise superior western powers.  In a move meant to punish the United States and its western European allies for supporting Israel in that conflict, OPEC agreed to an oil embargo.  The subsequent spike in oil prices and ensuing chaos led to a significant change in U.S energy policy, as the hardships experienced by both industry and consumers led to renewed efforts to conserve oil, increase fuel efficiency and develop alternatives to oil.  If OPEC's oil weapon was able to cause the United States and its allies significant economic hardship, why have they been loathe to use it since?

Former Saudi Oil Minister Sheik Ahmed Zaki Yamani perhaps stated his country's oil policy most eloquently 40 years ago when he said "''The Stone Age didn't end for lack of stone."  His prediction was eerily precinct, because the following decade saw various factors conspire to create a situation which at a glance may seem similar to the period of "cheap oil" in which we find ourselves right now.  A plunge in the demand for oil (to the tune of five million barrels per day) coupled with a rise in production in non-OPEC states created enough of a surplus that prices continued to fall, capping a 46% decline in 1986.  OPEC countries, historically known for exceeding quotas and inflating estimated reserves, responded to the successful campaigns aimed at reducing global dependency on oil by cutting production several times, by nearly half.  This did little to staunch the bleeding as non-OPEC states stepped in to pick up the slack, and as a result OPEC's market share fell from a peak of roughly 50% in the 1970s to around 30% by 1985.  While Saudi Arabia initially led the charge by throttling production, it found its less economically secure partners largely unwilling to engage in a price war at the expense of much needed revenue.  Fed up with essentially subsidizing excess production in other OPEC countries, Saudi Arabia pioneered the same strategy which it is applying here today, albeit with different targets in mind.

  Back then, Saudi Arabia's primary goal was to make it too expensive for OPEC's more undisciplined members to continue overproducing by dumping the price of oil long enough to run other producers out of business until it once again held major sway on the price of oil.  This time the ultimate goal is the same, but the Saudis are taking aim at the American shale producers whose torrid levels of production have been a large reason (along with the still-precarious economic position of Japan, China and the Eurozone) why prices have taken a nosedive over the past year (even with ongoing instability in Libya and Iraq.  And yet while Saudi Arabia was successful in reigning in its OPEC partners, it was helped at least in part by the fact that the Bush (Sr.) administration made a decision to to double down on Gulf-supplied oil, ramping up military aid to allies on the peninsula and scrapping policies which had been quite effective in reducing demand for oil.  If the United States actually declining to seriously invest in efforts to increase energy efficiency seems ludicrous, take a comparative look at Japan's efforts in the same area.  At the height of the oil embargo, Japan's energy security was even more compromised than that of the United States.  Consisting of a series of generally resource poor islands,  it both did and continues to import 92% of its oil.  At the time of the embargo, roughly 71% of the country's imports were derived from the middle east.  As such, when crisis struck Arab states labelled Japan an "unfriendly country" for its refusal to get involved in the Palestinian-Israeli conflict and slapped it with a 5% production cut.  Very vulnerable to disruptions in oil supply, it was forced to reorient its energy policy with an eye towards minimizing susceptibility of the economy to oil shocks.  As a result, Japanese energy efficiency today is such that it uses less than half the energy that the United States does to produce a dollar of GNP.

American strategic interest in the Middle East is waning
Those days of a Stockholm Syndrome-esque relationship between the Saudis and Americans with regards to energy policy are over.  From the toppling of Iran's Shah in 1979 up until the 2003 invasion of Iraq, the United States was heavily invested in the region and as such was willing to incur instability-induced spikes in the price of oil.  Following a prolonged economic recession which served as the culmination of a decades long decline in the prosperity of the American middle class as well as the election of a President who ran on a platform predicated upon extricating America from the Middle East, both the government and public no longer have the stomach nor faith in the ability of America to sort out a region so fiercely sectarian, conflict ridden and seemingly resentful of American assistance.  If President Bush's eight years in office were about Middle Eastern foreign policy, the electorate has demanded that President Obama's be about the economy.  To that end, his most highly touted legislative achievements have almost entirely served a domestic agenda, through major overhauls of healthcare policy (ACA), financial regulation (Dodd-Frank) and the Justice Department's tackling of social issues such as marriage equality and police violence.  If anything, this administration's most prominent foreign policy move was arguably its much discussed "Asia shift", which essentially served as a way for the President to fulfil his election promise to end the two wars started by his predecessor while at the same time not giving ammunition to critics who accused the Obama administration of retreating from a leadership role the United States had held since WWII.  Even when the United States has found itself inevitably dragged into one Middle Eastern conflict or another, it has been loathe to get directly involved, instead extolling the necessity of coalition building and Middle Eastern countries taking on a larger role in conflicts that involve them.

Saudi Arabia very well may stamp out frackers, and once again gain some degree of control over oil prices.  Fracking is expensive, with a break even price of around $50 per day.  Already western producers are laying off workers and slashing exploration budgets, as petrodollar economies adjust for a rough landing.  But Saudi Prince Alwaleed bin Talal agreed that the days of high oil prices are essentially over.  Electric cars are on the verge of going mainstream, and just about every country has launched ambitious plans to cut carbon emissions and increase the share of renewables in energy consumption.  Oil will continue to be an important commodity for years to come, but the point has come where countries such as Venezula, Russia, Libya and Iraq who failed to diversify their economies while prices were high can no longer hope to nearly entirely fund their governments from royalty proceeds.  The world has finally become serious about pushing alternatives to fossil fuels in a bid to cut carbon emissions, and  falling oil prices might finally topple the last big obstacle to achieving that goal.  One can only hope so, at least.