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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (59920)	2/3/2005 10:40:42 AM
From: TobagoJack	Read Replies (3) \| Respond to of 74559

Elmat, <<Russia China announce strategic partnership to counter expanding Western military and fiscal influences. India and Brazil will be invited to join the alliance>> ... You are not suggesting that there should be yet another convolution of evil or axis of doom, are you? Stratfor apparently believes that Russia, with all them nuke, resources, and people, is quaking in its boots ... Geopolitical Diary: Wednesday, Feb. 2, 2005 stratfor.com Feb 03, 2005 U.S. President George W. Bush delivered the first State of the Union address of his second term on Wednesday, just days after the Iraqi election. The speech focused on several contentious domestic issues -- including Social Security reform, stem cell research, alternative energy and a constitutional ban on gay marriage. On the international front, Bush pressed his administration's agenda for spreading democracy as a guard against the rise and spread of terrorism. With his re-election behind him, Bush is shifting focus in efforts to free himself from the constraints of hunting Osama bin laden and al Qaeda. In fact, al Qaeda drew only a single mention in the address, and bin Laden rated not even that. Instead, Bush touted a proactive program based on encouraging -- actively or otherwise -- the change of regimes around the world, echoing comments made by Secretary of State Condoleezza Rice during her confirmation hearing. Bush made it clear that "tyranny" was the new evil out there. The intent is to shift the international perception of the United States, which is seen as fighting a war of revenge against al Qaeda, to that of a standard-bearer of freedom for people the world over. And this, according to Bush, is all about coalitions. The president touched on the cooperation of Pakistan, Saudi Arabia and nine other countries in tracking down terrorists, and mentioned the six-way talks to solve the North Korean nuclear situation. But he also threw out some clear threats toward governments in the Middle East. Bush called on the Saudis to have free elections and on the Egyptians to show the path to democracy. He was less reserved in his comments on Syria and Iran, however. Bush accused Syria of providing sanctuary for terrorists, calling on Damascus to end support for terrorism and open the door to freedom. As for Iran, he said it remained the world's primary sponsor of terrorism, and told the Iranian people that if they stood for their own liberty, America would stand with them. The clear call in the Middle East was for regime change -- peaceful and internally directed in Saudi Arabia and Egypt, but perhaps forcefully or through subversion in Syria and Iran. Perhaps most interesting was the place Ukraine took in the speech -- in opening remarks and as a case study in democracy arriving in an undemocratic nation. Bush tried to bask in the glow of the outcome of the Ukraine election almost as much as he did for the Iraqi election. Ukraine is obviously the preferred model for regime change -- internally funded and directed, relatively peaceful, and needing the United States for rhetorical backing and perhaps some covert planning and coordination. This is the method the administration would like to see spread to other places, from Europe to the Middle East, Africa, Latin America and Asia. The focus on Ukraine, however, is significant in another way. It allows Bush to be given credit for stripping from Russia a key buffer and piece of the Russian near-abroad. Moscow's greatest fear -- of the United States pressing the borders of the "West" right up to the Russian border and leaving Russia vulnerable -- is apparently now a reality. The administration already has mentioned Belarus in the same sentence as other "outposts of tyranny" such as Iran and North Korea, and Moscow is growing nearly as nervous as Damascus. When Bush took office four years ago, his administration was looking at long-term strategic threats -- primarily from countries with the potential to arise as regional or global challengers. That put China at the top of the list and Russia not far behind. The Sept. 11 attacks altered Washington's more immediate focus, but things are shifting back to the core concerns as the U.S.-jihadist war becomes more routinized. Washington apparently is seeking to ensure that the post-Cold War order -- that of a single superpower with no viable challengers -- becomes the new stable paradigm. Copyright 2005 Strategic Forecasting Inc. All rights reserved. Reprint Rights: Articles from Stratfor may not be reproduced in multiple copies, in either print or electronic form, without the express written permission of Strategic Forecasting, Inc. For mass reprint permission or content licensing, please e-mail marketing@stratfor.com for more information.

To: elmatador who wrote (59920)	2/3/2005 10:43:59 AM
From: TobagoJack	Read Replies (3) \| Respond to of 74559

Elmat, according to Stratfor, China is opting out of OPEC dominated world order, without commenting that China is one of the few nations that has both the imperative and the political wherewithal to do like so ... China: The Costs of Using -- Or Not Using -- Alternative Fuel stratfor.biz Feb 02, 2005 Summary China's Shenhua Group has partnered with U.S. company Headwaters Inc. to build a coal liquefaction plant, which will process coal into gasoline and diesel fuel. The plant is experimental and costly, but China is willing to make the investment to lessen the country's dependence on foreign oil. For an investment in China's long-term fuel supply, there is no time like the present -- when the country is not in a financial crisis. Analysis Production is expected to start this year at a coal liquefaction plant built by the Shenhua Group, China's largest coal company, and U.S. firm Headwaters Inc. As per the companies' agreement signed in June 2002, Shenhua Group put up the money for the $3.3 billion plant built in China's Inner Mongolia Autonomous Region, while Headwaters Inc. provided the catalyst technology to convert coal into gasoline and diesel fuel. China sees this investment in coal liquefaction technology as imperative. The country was the world's third-largest oil consumer until 2004, but growing demand has pushed it into second place, behind the United States. With China's economy not in crisis, the time is ripe for investment in alternative energy technology that could provide more long-term economic stability and less long-term dependence on foreign fuels. Construction of the coal liquefaction plant's infrastructure is nearly complete. Once it goes online, the facility is expected to produce 1 million tons of gasoline and diesel fuel a year. Until the experimental liquefaction process's success is determined, the project's second phase -- anticipated to bring total investment to $7.3 billion and include two more plants to be built in Yunnan and Heilongjiang provinces -- has been postponed. Should production continue according to plan, China will open four more production lines by 2008. Eventually, China hopes its coal liquefaction plants will produce 50,000 barrels per day (bpd) of gasoline and diesel fuel. The coal liquefaction process breaks coal down into smaller molecules that are enriched with hydrogen to produce oil, which can then be refined into gasoline and diesel products. This process is extremely expensive, and in order to make the technology economically profitable, the price of oil must remain above $32 per barrel -- which the New York Mercantile Exchange futures index projects will be the case for the next 60 months. However, there is still much debate over whether oil prices will drop to more traditional levels of around $20 per barrel once the political and military situations in the Middle East are more stable and refining imbalances are more resolved. China spends about $100 billion annually on oil imports, and for every $1-per-barrel increase in the price of oil, China's total import costs rise by about $1.6 billion a year. Therefore, while China is not facing any monetary crises in the short term, the experimental, expensive coal liquefaction technology seems like an investment in China's long-term ability to manufacture its own fuel -- an ability that could lend some stability to the country's economy while weaning China from imported oil. Still, the Chinese are banking on the risky assumption that oil prices will remain above the break-even point of $32 per barrel and liquefaction will remain an economically viable option throughout a five-year projection. It costs about $25 per barrel to produce one ton of coal-liquefied oil, with 3 to 5 tons of coal used in the production. To compare, a project of similar scale upgrading tar sands (bitumen) to oil costs $970 million to produce 50,000 bpd. All told, the $7.3 billion coal liquefaction project is approximately seven times as expensive as bitumen refining. The cost of China's coal liquefaction plants could be reduced by using domestically made equipment. About 60 percent of the equipment in the first phase of the plant's construction is domestically made; that figure is expected to increase to 80 percent when the second phase starts. Copyright 2004 Strategic Forecasting Inc. All rights reserved. Reprint Rights: Articles from Stratfor may not be reproduced in multiple copies, in either print or electronic form, without the express written permission of Strategic Forecasting, Inc. For mass reprint permission or content licensing, please e-mail marketing@stratfor.com for more information.