Can Europe’s Oil Boycott Really Sink Iran?

Posted on 01/24/2012 by Juan

The European Union threatened Iran on Monday with cutting off petroleum imports into the 27 EU member states, and announced sanctions on Iranian banks and some port and other companies.

Iran sells 18 percent of its petroleum to Europe, and Greece, Italy and Spain are particularly dependent on it. Europe also sells Iran nearly $12 billion a year in goods, which likely will cease, since there will be no way for Iran to pay for these goods. Some in Europe worry that the muscular anti-Iran policy of the UK, France and Germany in northern Europe will worsen the economic crisis of southern Mediterranean countries such as Greece.

Others think that Iran’s nuclear enrichment program is still primitive and that allegations that Iran is seeking a nuclear warhead are hype.

About 60% of Iran’s petroleum now goes to Asian countries, especially China, India, South Korea and Japan. China and India have no announced plans to reduce purchases of Iranian crude, and South Korea says it will seek an exemption from the US so as to continue to import. Japan says it plans only very slowly to reduce imports from Iran. Iran and India have just reached an agreement whereby some trade with Iran will be in rupees, to sidestep US sanctions. Indian firms are considering whether to fill the $8 billion gap in exports to Iran left by the Western sanctions (many do not want to be cut off from also exporting to the US, as they would be if third party sanctions were applied to them).

Europe’s squeeze on Iran will not take place until June, and there will be a meeting in May to assess the situation (i.e. to make sure Greece won’t be sunk, along with the European economy, by these steps). There is some indication that much of Europe hopes Iran will be more forthcoming on the nuclear issue with Europe by then, so as to forestall these drastic steps.

Although a European boycott of Iranian oil will increase the cost of doing business for Iran, will hurt the Iranian public, and is already harming the value of the Iranian currency, it is highly unlikely to cut Iran off from exporting to the world market or to put so much pressure on the government that it will change its policies.

In order for Iran to find it impossible to sell its petroleum, world supply would have to exceed world demand by roughly 2.5 million barrels a day. That outcome could be produced either by a fall in world demand (typically as a result of a further economic turn-down) or by an increase in world supply (which would require that all current producers continue to export at at least the same rate, and that some of them export much more than they are currently doing).

The Organization of Petroleum Exporting Countries expects world demand for petroleum actually to increase in 2012 by about 1 million barrels a day, up to 89 million b/d over-all. There is probably slightly more demand than supply in the world market, with China and other Asian countries still growing strongly, and the number of cars and trucks driven in Asia increasing rapidly. If Iran’s 2.5 million barrels a day really could be taken off the world market, that would be a total shortfall of 3.5 million barrels a day (if one counts the expected increase in demand), which would cause petroleum prices to skyrocket.

Europe seems to hope that Saudi Arabia will pump an extra 2.5 million barrels a day to keep prices stable if everyone stops buying Iran’s petroleum. But since demand will likely increase this year, Saudi Arabia would have to pump 3.5 million barrels a day to meet the total shortfall. That kind of increased production on a sustained basis is probably beyond Saudi technical capacities, and much of that extra production will likely be “sour” (full of sulfur and other impurities and expensive to refine). Saudi Arabia already is pumping nearly 10 million barrels a day, which is unusually high. That it could do 13.5 million barrels a day is frankly fantastic.

Moreover, there is a lot of evidence that Saudi Arabia does not want to cause prices to fall below $100 a barrel for a while. The kingdom forestalled Arab Spring style protests by much increasing its welfare spending, essentially bribing its population to remain quiet. But to pay for all that extra kindness to its population, it needs its petroleum to sell at historically high prices. If Riyadh increases its production, and Iran continues to find customers around the world for its own petroleum, then the price would fall, creating massive budget shortfalls in Saudi Arabia and making it impossible for the kingdom to follow through on its promises to its people. That course would be, to say the least, dangerous.

Moreover, some current world supplies cannot be counted on. South Sudan is threatening to turn off its spigots to protest high tolls (35%) imposed on its pipeline exports via Sudan proper. There is some danger that the pipes will be ruined if they are not used for a while, so getting that petroleum on line again may be difficult.

Indeed, a lot of oil producers are unstable or face labor actions. Oil workers in Nigeria are threatening to take its 2 million barrels a day of exports off the world market.

Other major producers and exporters face problems of increased domestic consumption, as populations drive more, and of poor management or lack of investment in the sector. Mexico has seen its oil exports fall by 25% since 2004, and may export no petroleum at all in a decade unless there is a lot of new investment in its petroleum industry.

A temporary fall in petroleum prices from time to time is possible, but the US Energy Information Agency expects there to be upward pressure on petroleum prices in the next few years, predicting a price of $120 per barrel by 2016. (This is despite an expected rise in US oil production, which will probably be eaten up by increased US demand as the economy improves).

A secular trend toward higher petroleum prices indicates demand outpacing supply for the foreseeable future, which is exactly the circumstance under which an attempted boycott of Iranian petroleum would fail.

All Europe would be doing is importing petroleum from, say, the United Arab Emirates, which now mainly supplies Japan, and forcing Japan to import instead more Iranian oil– whether Washington likes it or not. It is a shell game, unless world supply exceeds demand by 2.5 million barrels a day for several years, allowing the world to leave Iran’s petroleum in the ground.

Eventually a combination of renewable energy and better automobile batteries may allow the world to fuel automobiles in a less destructive way than via petroleum. But that day is too far off to be relevant to Iran’s progress in closing the nuclear fuel cycle.

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Tomgram: Ellen Cantarow, An Environmental Occupy Fracks Corporate America

Posted on 01/23/2012 by Ellen Cantarow

Ellen Cantarow writes at Tomdispatch.com

Shale-Shocked
Fracking Gets Its Own Occupy Movement
By Ellen Cantarow

This is a story about water, the land surrounding it, and the lives it sustains. Clean water should be a right: there is no life without it. New York is what you might call a “water state.” Its rivers and their tributaries only start with the St. Lawrence, the Hudson, the Delaware, and the Susquehanna. The best known of its lakes are Great Lakes Erie and Ontario, Lake George, and the Finger Lakes. Its brooks, creeks, and trout streams are fishermen’s lore.

Far below this rippling wealth there’s a vast, rocky netherworld called the Marcellus Shale. Stretching through southern New York, Pennsylvania, Ohio, and West Virginia, the shale contains bubbles of methane, the remains of life that died 400 million years ago. Gas corporations have lusted for the methane in the Marcellus since at least 1967 when one of them plotted with the Atomic Energy Agency to explode a nuclear bomb to unleash it. That idea died, but it’s been reborn in the form of a technology invented by Halliburton Corporation: high-volume horizontal hydraulic fracturing — “fracking” for short.

Fracking uses prodigious amounts of water laced with sand and a startling menu of poisonous chemicals to blast the methane out of the shale. At hyperbaric bomb-like pressures, this technology propels five to seven million gallons of sand-and-chemical-laced water a mile or so down a well bore into the shale.

Up comes the methane — along with about a million gallons of wastewater containing the original fracking chemicals and other substances that were also in the shale, among them radioactive elements and carcinogens. There are 400,000 such wells in the United States. Surrounded by rumbling machinery, serviced by tens of thousands of diesel trucks, this nightmare technology for energy release has turned rural areas in 34 U.S. states into toxic industrial zones.

Shale gas isn’t the conventional kind that lit your grandmother’s stove. It’s one of those “extreme energy” forms so difficult to produce that merely accessing them poses unprecedented dangers to the planet. In every fracking state but New York, where a moratorium against the process has been in effect since 2010, the gas industry has contaminated ground water, sickened people, poisoned livestock, and killed wildlife.

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Sharp-Elbowed Politics in the New Arab World

Posted on 01/23/2012 by Juan

What are the big stories in the Arab world today? A newly elected parliament is being seated, and a deposed president is leaving the country. But beyond that, the remarkable thing is that there are any political stories at all. There weren’t, a year and a half ago. The political stories of today are not about the advent of paradise, but about the politics of transitions.

It was never acceptable to assert glibly in an op-ed that things have happened “Because Arabs are… ” such and such. It has the form of a racist argument. Arabs are only united, if at all, by a common language (and even it is diverse). Things happen because “Arabs do…”, because of actions they take for reasons of their social interests, not because of what they supposedly “are.”

The new Arab world created by the people power movements of 2012 is not suddenly Sweden. No one should have expected it to be. The Arab world had been stuck in a stagnating rut, of dictatorship, family cartels, embezzlement, corruption, and stagnation. Where economic growth of 5% a year began being reported, as in Tunisia or Egypt, it was either a lie or was mostly captured by a small economic elite, the Arab 1%.

What began in some of these countries in 2011 was a transition, a transition that activists hoped would be toward regular, free and fair parliamentary elections and ways for students, workers, office workers, women, religious activists, and religious minorities to have an impact on policy. None of these things would have been possible in the least under the old regimes. There was no hope. Now there is hope but no certitude.

In Tunisia and Egypt, that transition has begun. In Yemen, less stark change is afoot, but some sort of transition seems at least to be beginning. In Libya, the dictator was overthrown but elections are still some six months off. In Syria, a popular movement is still attempting to kick off the transition. In Bahrain, the movement was crushed, but village demonstrations bravely continue.

In Morocco, Algeria, and Jordan, there have been at least some reforms to forestall the outbreak of a more vigorous movement. In the oil rich states of the Gulf, the monarchs and emirs have attempted to bribe their publics into quiescence.

The transitions may fail. They involve politics, the working of social conflict among large social groups into political speeches, elections and policies. Sometimes a democratic transition begins and stalls out. Sometimes it is incomplete (one thinks of Russia). Sometimes it remains incomplete for a long time. Sometimes dictatorship returns (Ukraine?). Sometimes longstanding democracies themselves deteriorate politically (think of Italy under Silvio Berlusconi with high levels of corruption and a form of press censorship).

The success or failure of transitions depends on many things. It helps to have a wealthy country, but perhaps only Tunisia fits the bill even a little bit in the Arab region. It helps not to have strong ethnic divisions and grievances. It helps to have a strong middle class and institutions such as labor unions and chambers of commerce. Religion is probably irrelevant as an explanatory consideration.

Those who throw up their hands over the rise of Muslim religious parties in Egypt or the continued instability in Libya are not looking at what has happened as a set of processes. If anything good came out of the uprisings of 2011 it is precisely this flux, this opening toward possibilities, this politics. Because in Hosni Mubarak’s Egypt or Muammar Qaddafi’s Libya there was no politics of an ordinary sort, only secret police and massive embezzlement and arbitrary arrest and torture.

If some of the transitions don’t get off the ground or if they fail, there are concrete economic and political reasons for it. Those need to be investigated and understood. The day when bigots could say that Arabs or Muslims are incapable of a certain kind of politics has passed. But the day when we can understand in detail why their politics evolves as it does is still not here.

So here are the stories of the transitions today, the stories of politics in a region formerly beset by censorship, secret police, domestic spying, and deadening silences.

1. On Monday, the newly elected lower house of parliament met. The last elected parliament, of fall, 2010, had been almost completely dominated by members of the corrupt National Democratic Party of Hosni Mubarak, and clearly all challengers to his regime had been excluded from winning seats by the police who counted the ballots. Public rage at a clearly phony electoral outcome fed into the uprising of Jan. 25-Feb. 11. The new parliament is dominated by Muslim religious parties, with the Muslim Brotherhood, at 47% of seats, the largest. It met with three other parties to choose the new speaker of the house, Mohammed al-Katatny, who is resigning from his position in the Muslim Brotherhood to take this post. That is, al-Katatny’s appointment was passed by the Wafd Party, which has a lot of Coptic Christians and secular Muslims in it, and the Egyptian Social Democratic Party, as well as the Salafi Nur Party (the second-biggest). Nur and the Wafd will supply the two deputy speakers.

The Muslim Brotherhood has been attempting to become a central actor in Egyptian society and politics for many decades, so its dominance of this parliament is historic. As AP points out, they are avoiding triumphalism or extreme policies because they don’t want to provoke the kind of social conflict that occurred in Algeria in the 1990s after a Muslim religious party came to power at the polls there but was deposed by military intervention. Some 150,000 persons are said to have died in that fighting.

2. Thousands of political prisoners have been released in Tunisia, a year after dictator Zine El Abidin Ben Ali was overthrown. In addition, 122 prisoners on death row had their sentences commuted to life imprisonment by President Moncef al-Marzouqi, a human rights activist who had been exiled to France by his predecessor. He has pledged to work to abolish capital punishment.

3. Yemeni President Ali Abdullah Saleh has left Yemen for Oman on his way to the United States for medical treatment. (He had been wounded in a bombing in summer, 2011). Before he departed, he gave a speech asking the people to pardon him for any mistakes committed during his three decades of rule. Saleh’s opponents have opposed the immunity from prosecution granted him by the plan of the Gulf Cooperation Council. He had said that he turned power over to his vice president, Abed Rabbo Mansour Hadi, who, however, complained that Saleh continued to interfere in the political process. On Sunday, Saleh is said to have finally relinquished all prerogatives to Hadi. Saleh says that he will return in February, as head of the General People’s Congress Party, which will contest the presidential election scheduled for that month. Hadi will be the standard bearer for the ruling party.

The Arabic press reports that on Sunday, tens of thousands of demonstrators came out at Change Square in Sanaa to demand that Saleh be tried for crimes he committed in the course of trying to put down the rallies of winter-spring, 2011.

4. Libya’s Transitional National Council is facing protests from activists in the country’s second largest city, Benghazi. That city was crucial to the movement that overthrew Qaddafi, but its residents say that they are the victims of neglect by the transitional government, which has a lot of former regime officials in it. In both Tunisia and Egypt, transitional prime ministers had to resign under pressure from democratic activists not satisfied with how much continuity there was from the old regime.

5. On Sunday, the Arab League called for President Bashar al-Assad to step down and to allow a government of national unity to guide the country to a new system. This plan sounds very much like the one adopted (or partially adopted) in Yemen. Al-Assad angrily rejected the suggestion as undue interference in Syria’s internal affairs.

It isn’t surprising that the Baath government castigated the Arab League for interfering. What is amazing is that the Arab League is attempting to suggest a way forward for Syria, out of its crises and gridlock. For decades the Arab League was a cypher. But under Secretary-General Nabil Alaraby, it has become an international organization of some importance. It called for the intervention against Qaddafi in Libya. Al-Assad has blown it off, treating it as if it was still divided and toothless, as in the past. He may be making a mistake. His strong alliance with Iran and the unsavory sight of all those sniping attacks on his own civilians has turned a lot of the Arab League against him.

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Posted in Arab World, Bahrain, Democracy, Egypt, Elections, Libya, Syria, Tunisia, Uncategorized, Yemen | 6 Comments

South Carolina & Gingrich, Egypt & the Muslim Brotherhood

Posted on 01/22/2012 by Juan

The election results for Egypt’s lower house have been announced, and the Muslim religious parties appear to have gained over 70% of the seats. The Muslim Brotherhood is claiming its Freedom and Justice Party took 47% of the 498 seats in the lower house of parliament.

The hard line fundamentalist Nur Party won 29% of the seats contested on a party basis.

To have 51%, the Muslim Brotherhood party needs a coalition with another party. Its leaders have at least said that they prefer to make that alliance with a secular party like the Wafd rather than with the hard line Salafis.

The other big political news is that Newt Gingrich won the Republican primary in South Carolina. I have noticed a big difference in the coverage of these two events in the US press. American journalists noted that 60-65% of Republican voters in South Carolina are evangelicals. But they did not then add reaction to this statistic. They did not then immediately quote pro-choice women or secularists as saying that they were afraid South Carolina’s church-goers have a dispropotionate influence on US politics (South Carolina’s population is only 4 million.). In contrast, US journalists who reported an MB win immediately added that women and secularists were worried about it.

Then, you don’t see much in the US press as to why Egyptians voted as they did.

Gingrich’s win is attributed to good debating skills. To Romney’s gaffes and inability to escape the image of a spoiled rich kid. To the state’s high unemployment rate. To evangelical discomfort with Romney’s Mormonism.

No similar reasons are given for the Muslim Brotherhood’s win in Egypt. Were their opponents good or bad debaters? Weren’t a lot of the candidates they defeated from the old rich elite?

Class resentments are seen as fuelling the defeat of Romney, but are seldom mentioned as a motive for voters in Egypt. But isn’t it likely that many secularists and persons with ties to the Mubarak regime who ran for office lost because they are thought to be rich and to have stolen people blind under Mubarak.

The result of this difference in approach is that it is implicitly deemed illegitimate for Egyptians to be religious or vote for a religious party. But it is legitimate for South Carolinians to be religious, to vote on a religious basis, to seek to impose their religious laws on all Americans.

But what if Egyptians voted for the religious parties because they saw them as uncorrupt and despite their religious platforms, not because of them? Polling shows a big increase in 2011 in the proportion of Egyptians who say they are Egyptians first and Muslims second– from 8% earlier in the decade to 50% today. Likewise almost no Egyptians think that the revolution against Mubarak was made to establish a religious state.

It is therefore probable that religious motivations actually played a larger role in the primary in South Carolina than in the election in Egypt! Likewise, an MB leader like Essam El-Erian is the voice of reason compared to Gingrich and is no worse in his own way than Gingrich’s sugar daddy, Sheldon Adelson.

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Posted in Democracy, Egypt, Elections, Uncategorized, US Politics | 42 Comments

Can Solar Energy in Mideast Stop a Gas War?

Posted on 01/21/2012 by Juan

The Emirates Solar Industry Association says that solar energy is competitive with natural gas already, without the need for more subsidies.

Solar panels are rapidly falling in price, making solar ever more inexpensive. It can already compete with Liquefied Natural Gas, ESIA says.

This is good news because there are looming military conflicts over natural gas fields deep under the Mediterranean, which span more than one national border.

There is a war of words between Cyprus and Turkey on undersea gas near Cyprus.

Likewise, Israel and Lebanon share a big offshore field, and they are squabbling over where to draw the line.

These gas field disputes could be avoided if the countries involved turned to solar energy, which the UAE group thinks is perfectly plausible and economical even now, and getting more so all the time..

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