SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?


To: Peter Dierks who wrote (15087)11/28/2006 2:03:27 AM
From: White Bear  Read Replies (1) | Respond to of 71588
 
Published on Monday, November 27, 2006 by A Theory of Power

Energy Mercantilism on the March
By Jeff Vail

Just over a year ago I wrote about the New Energy Mercantilism, the set of geopolitical phenomena emerging as nations realize that, in the future, there will not be enough energy to go around to sustain projected demand. A market-economy solves this problem by increasing the price of energy until demand inelasticity is overcome and the energy is allocated to where the market says it is most valuable. Mercantilism, rather than trying to distribute shares of the pie more efficiently, aims to lock down as large a share of the pie as possible for your own needs.

A year later, it is clear that mercantilism is on the march.

Joseph Stroupe has written a fascinating article in Asia Times Online about the rise of energy mercantilism. Specifically, he outlines the mechanism by which nations like China, Russian, and India are embracing the mercantilist approach. All three nations are rapidly moving toward an energy market dominated by long-term, bi-lateral supply contracts. This might not sound like a major change, but consider that today energy is supplied to high-liquidity trading bourses where the person willing to pay the most gets the energy. This is significant for two reasons: 1) it ensures that everyone around the world pays roughly the same price for energy (after transport costs are accounted for), and 2) it reduces the ease for deploying the "oil weapon" through an embargo because such action has very dispersed effect--holding 4 million barrels of Iranian oil per day off the free markets increases the price for everyone, forcing your enemies and allies to bear the diminished effects.

Long-term, bi-lateral supply contracts (where, for example, Angola commits to supply China with 200,000 barrels per day of crude oil at $60/barrel for the next 10 years) fundamentally alter this dynamic. First, by locking in future energy prices (at quantities far higher than can be achieved on the futures exchanges), everyone will not pay the same price for oil in the future. Second, by exiting the open market through such contracts, the precsion-targeting of future oil embargos increases dramatically.

Increasingly, significant portions of China and India's energy supplies are being locked into such long-term, bi-lateral contracts, as are the majority of Russian gas shipments to Western Europe. As a result, much less of the world's energy needs are being met through freely-traded market instruments. It is especially significant when we consider who remains primarily dependent on the free market for their energy supplies: the US, Western Europe, and Japan.

As traditional and swing producers (who's production is expected to decline rapidly over the coming years) begin to export less oil to the open exchanges, the price impact on the "West" will be diproportionate. Similarly, the "West's" vulnerability to oil embargos will increase dramatically.

Participants in bi-lateral agreements will not be exposed to the same risks to their supplies--they can always resort to the market exchanges to make up for shortfalls (though at higher prices), but the reverse is not true--the "West" cannot quickly resort to bi-lateral agreements to guarantee supplies in times of crisis.

Long-term, bi-lateral agreements also remove energy supplies from dollar-denominated exchanges far more effectively than does opening a non-dollar-denominated exchange. Russian supply contracts to Europe are already non-dollar denominated, even though Russia's ruble-denominated exchange is not yet in full operation. China pays in yuan for oil from Africa--which doesn't harm the petrodollar system for now, as long as that currency remains pegged to the dollar. But the tipping point when domestic Chinese consumption becomes the prime driver of their economy is fast approaching, and at that point the benefits of maintaining the dollar peg will have evaporated.

Peak oil, when it hits world markets with full force in an unknown number of years, will only exacerbate this trend. I'm not so sure about freedom, but energy mercantilism is definitely on the march.

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Check out Jeff's posts over at A Theory of Power for comments:
The New Energy Mercantilism
Energy Mercantilism on the March (This article)
Article found at :
energybulletin.net

Original article :
jeffvail.net



To: Peter Dierks who wrote (15087)12/1/2006 10:24:10 AM
From: Peter Dierks  Read Replies (1) | Respond to of 71588
 
More on the Russian security service murder of expatriates:

Message 23060234



To: Peter Dierks who wrote (15087)3/30/2007 9:07:26 AM
From: Peter Dierks  Respond to of 71588
 
Why is Putin now getting tough on Iran?

BY BRET STEPHENS
Tuesday, March 27, 2007 12:01 a.m. EDT

"This is very easy to understand," said Russian President Vladimir Putin last year, explaining his idea of an energy policy. "Just think back to childhood when you go into the street with a sweet in your hand and another kid says, Give it to me. And you clutch your little sweaty fist tight around it and say, What do I get then?"

So why, when it comes to the Iranian nuclear file, has Mr. Putin finally opened his little sweaty fist, signing on--with no apparent compensations--to additional U.N. sanctions on the Islamic Republic while calling a halt to Russia's construction of the nuclear reactor at Bushehr?

That's the $64,000 question to which nobody seems to have anything better than a partial answer. Nearly from day one of his presidency, Mr. Putin has been Iran's best friend at the U.N. and, not so coincidentally, the leading supplier of its advanced conventional weapons. In 2000, the Kremlin tore up the so-called Chernomyrdin Agreement, a secret protocol negotiated by then Vice President Al Gore, in which Russia pledged to stop selling arms to Iran within five years. In 2002, deputy foreign minister Vyacheslav Trubnikov went out of his way to state that "Russia does not accept President George W. Bush's view that Iran is part of an 'axis of evil.'"

Since then, Russia has openly supplied Iran with sophisticated surface-to-air missiles. There are reliable reports that Russia has also assisted Iran covertly with its ballistic-missile technology. The Bushehr deal, itself valued at $1 billion, was intended as just the first of five planned reactors, worth $10 billion. Russian diplomats have diluted to near-insignificance the sanctions imposed so far by the U.N. In January, Russian Security Council Secretary Igor Ivanov paid a call on Iran's Supreme Leader Ali Khamenei. It seems the meeting went well: "The Islamic Republic," said the Ayatollah, "welcomes all-out promotion of relations with Russia, believing the capacity for expansion between the two sides is higher than expected."

And then, on March 19, Iranian, European and U.S. sources reported that Russia had informed Iran that it would not supply the reactor with the uranium it needs to function unless Iran complied with U.N. resolutions calling on it to suspend its enrichment program. And citing a payment dispute, the Russians also began pulling some of their 2,000 personnel from the site, while officially claiming it was a routine staff rotation. At the Security Council, U.S. diplomatic sources confirmed that Russia had been remarkably cooperative in negotiating Saturday's unanimous resolution on Iran, going so far as to blunt an attempt by some of the nonpermanent members to insert language calling for a nuclear-free Middle East--code for disarming Israel.

What gives? Past experience suggests the answer may yet turn out to be not much at all. At the 2003 G-8 summit in Evian, France, Mr. Putin reportedly assured other leaders that Russia would not supply the Iranians with nuclear fuel unless they agreed to snap U.N. inspections of their nuclear facilities. A later "clarification" from Russia's atomic energy minister indicated that Russia would provide the fuel no matter what Iran chose to do about the inspections. Similarly, Vitaly Churkin, Russia's ambassador to the U.N., has recently insisted that "there has been no Russian ultimatum to Iran of any kind," while adding that the deal with the Iranians "was on track." Put simply, the (easily resolved) payment dispute may be all the "fire" there is here, and not smoke to cover a sweeping change in Russian policy.

For their part, U.S. diplomats are sticking to their story that the Russian-Iranian split is real--as do the Iranians, who in the last week have publicly accused Russia of being an "unreliable partner" practicing "double-standard stances." The words are carefully chosen. As Victor Yasmann of Radio Free Europe writes, "Russia cares about its commercial supplier . . . [and] in preserving its political reputation within the Islamic world." That's especially the case now that Russia's once-failing military exporters are doing a thriving business selling bottom-of-the-shelf weapons to Syria, Libya, Venezuela, Yemen, Algeria and other bottom-of-the-shelf states. If Russia is seen to succumb to international pressure on Iran, other dubious regimes may be less inclined to attach themselves to it as clients.

Yet another reading of events suggests the mixed signals coming from Russia reflect policy schizophrenia within the Kremlin itself. "There is clearly an active pro-Iranian lobby in Moscow," says Pavel Felgenhauer, defense correspondent for Novaya Gazeta. He adds, however, that Moscow's change of policy is "the result of an assessment that a nuclear Iran is a major danger to Russia and its national interests." Among other indicators, Mr. Felgenhauer points to Russia's naval buildup in the oil- and gas-rich Caspian Sea.

The Russian leadership may also have started to notice that it is increasingly in bad odor with a West that, at some level, it longs to be considered a part of. "There is a compact pro-Western group who think that cooperation with the major industrial states, primarily the United States, could benefit Russia much more than murky dealings with questionable partners like China, Iran, Iraq or Libya," writes former Russian diplomat Victor Mizin in a perceptive analysis in the Middle East Review of International Affairs.

Finally, there is the "little sweaty fist" hypothesis. Critics of the Putin government were dismayed last year when the Bush administration agreed to Russian membership in the World Trade Organization, apparently for nothing in return. The Bushehr volte face may be the delayed (and disguised) payoff. Alternatively, Russia may expect that its sudden pliancy on the Iranian file may yield dividends on the things it cares about most, particularly in what it considers its rightful sphere of influence. In a recent Los Angeles Times op-ed that may have also served as a trial balloon, the Nixon Center's Dimitri Simes proposes two prospective giveaways: The breakaway Georgian "republics" of Abkhazia and South Ossetia, which Mr. Putin has long regarded as rightfully Russian, and the looming question of Kosovo's independence, to which Russia is vehemently opposed.

In the meantime, the Kremlin preserves all its options, a reminder, as Glen Howard of the Jamestown Foundation observes, of an old KGB maxim: First create a problem, and then offer to be part of the solution. On that score, at least, Mr. Putin is nothing if not true to type.

Mr. Stephens is a member of The Wall Street Journal's editorial board. His column appears in the Journal Tuesdays.

opinionjournal.com