#42 A Soft Landing in Venezuela?

When it comes to oil, there is hardly ever a moment of quiet. If there is, it most likely represents the equivalent as terrestrial quiet does in an earthquake prone country: preparation for a major eruption. In that sense, the latest from Venezuela might be good news. Rather than a sudden, very damaging bang, the nationalization of Venezuelan oil projects will be gradual.

Now ruling by decree, Chavez announced that state oil company Petroleos de Venezuela SA (PDVSA) will take at least a 60 percent stake in the Orinoco river region oil projects, proclaiming that "by May 1, we will occupy these oil fields and have the national flag flying on them." Chavez is referring to four heavy oil-upgrading projects run by BP, Exxon Mobil, Chevron, ConocoPhillips, Total and Statoil. Thus far, foreign companies running smaller projects in various industries have been compensated less than they would have liked perhaps, but clearly more than they had expected. The Orinoco oil fields, however, involve a much larger sum of money.

In light of the announcement, it has not been made clear how the government expects to be able to pay for its increased share in the huge projects (the foreign companies are estimated to have invested some $17 billion). Indeed, a big issue is money. Whereas the average price for the Venezuelan “basket” of crudes in 2006 was $56 a barrel, according to the Economist, last month, that figure was about $46. Nationalization of the oil fields has been made a pertinent part of the 'Socialist Revolution,' but in order to keep the revolutionary engine running, a high oil price is absolutely essential. If prices do not stop declining, there will be a very serious problem for Chavez. The countless subsidised programs are key for popular support. Furthermore, Chavez decided that it would be worthwhile for Venezuela to sell its oil at discount prices to 'friendly' nations, in order to spread the revolution and drum up support. A halting of this philanthropic policy would quite possibly mean a loss of 'good friends.'

With comments from Chavez such as "I am going to send some sulfur to Lula for when the little gentleman comes so that he can place it out there in Brasilia" (in reference to Bush's - who he refers to as the devil - upcoming visit to Brazil), it has become evident that political tact is not his strongest point. Nevertheless, he is no idiot. He will be careful not to end up without friends and stuck with oil fields that cannot be run without help from the outside. His talk is big, but it seems the means employed on the ground will be more docile. While the revolutionary policies will most probably not yield significant positive long term results, the pain at least appears limited.

#41 Making Money From Hot Air

Ever since the implementation of phase one of the Kyoto Protocol, the right to release CO2 into the air has become commodified. In Europe alone, there were 24 billion dollars worth of CO2 deals; indicating a booming trend.

Traditional banks and brokerages have been relatively quick to follow suit, albeit with mixed success. For one, the dynamics of the CO2 market are not as straightforward as they are in other markets. CO2 prices have been volatile, arguably for the reason that these markets are not by definition efficient and mature. One major factor in CO2 pricing is weather; when the cold sets in, energy consumption goes up, and with it the need for emission rights.

The mild winter resulted in lower energy consumption, which in turn resulted in both lower energy and CO2 emission prices. CO2 prices are actually fairly correlated to a basket of fuel indexes such as Coal, Oil, Gas, etc. The relationship between coal consumption and CO2 is one of the strongest, as it produces the most CO2, thus requiring more emission rights. With Kyoto in place, there is finally a financial incentive to move towards reducing CO2 emissions. Furthermore, with CO2 pricing, there is a benchmark that can be used to calculate returns on investing in alternatives that reduce the overall CO2 emissions exposure.

There remain some issues to be worked out; notably the pricing of emission contracts remains a tricky endeavor. Part of the problem lies in the fact that the CO2 trading platform remains a young market in its adolescence, meaning there remain considerable arbitrage opportunities. Academically and professionally there is no real simple uniform pricing model for CO2 emission in the way that the financial world has embraced the Black & Scholes option pricing model or the Capital Asset Pricing Model.

Other factors bringing uncertainty to the whole affair (excluding energy dynamics) are the different political organs and processes that determine the emission ceilings of different countries. When emission ceilings move arbitrarily - for the most part downward - this creates much volatility in the market. With CO2 allowances set to tighten in Europe as we move towards phase 2 of the Kyoto Protocol, it is expected that prices are set to rise once again. Looking at the future, there is definitively money to made from hot air and, in doing so, arguably stemming global warming.

Kyoto opponents, for whatever reason or motivation, may laugh at the whole "pseudo" CO2 market phenomenon. Nevertheless, its significance (aside from scientific debate on global warming) can by no means be ignored. Non-Kyoto signatory countries are going to face significant pressure in the near future. French President Chirac was already bold enough to suggest putting an import tax on countries that have not signed Kyoto. This sends a clear message to the U.S., Australia and China, who, even without signing and accepting environmental responsibility, will face a steep price to pay for their environmental desecration.

#40 Iran as the Real Israel

The common belief around the world (with some exceptions), is that the Israeli-Palestinian conflict is the root of instability in the wider Middle East. Others go so far as to say the existence of the state of Israel is the cause of all that's wrong in the region. Indeed, Israel is used as a tool to strengthen government support in most, if not all Arab and even non-Arab Muslim countries on a daily basis. By depicting Israel as an incessant aggressor with aims of expanding from the Nile to the Euphrates and exterminating anyone that stands in its way (most notably the brave Palestinians), governments are able to draw attention away from internal societal ills and retain power. Today, however, the cracks in this flawed policy are beginning to show, as influential figures in the Middle East are openly speaking of a more serious threat; the Iranian threat.

Shiite Iran is increasingly becoming a rather aching sore in the behind of a number of predominantly Sunni nations. As duly noted by Judith Kipper, a Middle East expert at the U.S. Council on Foreign Relations, "What really concerns pro-U.S. Arab states is that Iran is setting the political agenda in the region." A rising Iran is not in the interest of regional powers such as Saudi Arabia and Egypt. This has even led to public gestures and overtures by Arab states to Israel; the sworn enemy of the Iranian regime.

Senior Egyptian journalist Youssef Ibrahim, who served for 24 years as a senior reporter for the New York Times and the Wall Street Journal, and has interviewed almost every Arab leader, recently wrote in a letter that "the Arab world can continue to stand by the Palestinians ‘until it is blue in the face,’ but most ‘clever’ Arabs have abandoned the notion of the Palestinian conflict and the eternal struggle against Israel. In other words, the notion that Israel is here to stay is slowly gaining a foothold in the upper intellectual levels of Arab society. At even higher levels - at the end of a Spanish-Arab conference in Madrid - the Foreign Ministers of seven Arab countries (Syria, Yemen, Jordan, Iraq, Saudi Arabia, the United Arab Emirates and Tunisia) issued a joint statement expressing their desire to "advance together toward recognition and normalization of relations with Israel."

The fear of a powerful and nuclear Iran has even set the stage for a possible nuclear arms race in the Middle East. Jordan's King Abdullah II followed Egypt and Saudi Arabia's lead a few months ago in saying that in light of current events, Jordan would be looking to develop a nuclear program “for peaceful purposes." Morocco, Tunisia and Algeria, as well as Gulf States such as Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman have also expressed a sudden interest in nuclear technology. In the almost 60 years that Israel has been enemy number one in the Middle East - and quite possibly already in possession of nuclear weapons - there was never such widespread talk of nuclear proliferation. This inadvertently shows the true colors of Arab leader's opinions, who apparently have always known that Israel is not a real threat to them.

Other signs that Arab nations view Israel more favorably than Iran include an incident in January this year, when Prince Turki al-Faisal, Saudi Arabia's departing ambassador to the United States, attended a Washington reception sponsored by American Jewish organizations. The appearance of a Saudi diplomat at such an event is a first in Saudi history. Besides Saudi Arabia, Qatar and the United Arab Emirates have also quietly stepped up contacts with Israel and pro-Israel Jewish groups in the USA. For example, Israeli Deputy Prime Minister Shimon Peres met the Emir of Qatar in Doha after taking part in a debate organized by the BBC in the Qatari capital.

Despite the recent signals, however, there is still a very long way to go. For one, only three of 21 Arab nations recognize Israel: Egypt, Jordan and Mauritania. Furthermore, a very real hatred for the state of Israel exists in the region, thanks to decades of indoctrination. Israel remains a unifying factor for the diverse religious factions in the Middle East. Although some Sunni leaders have equated Shiites with the lowest form of being (كفّار kuffār; unbeliever), both sects would agree that the true enemy is Medinat Yisra'el. The Eilat bombings prove this as well, for just one day after the bombing, Hamas and Fatah managed to achieve what they hadn't been able to during the relative lull with the Israelis; namely implement a cease-fire.

Despite the difficulty in fostering healthy relationships between all countries of the Middle East, one thing has become clear: the fear of Iran at the top level of Arab politics is much more real than all the chewed up rhetoric about the 'Zionist entity.'

Please also have a look at the article "Israel as a Factor of Regional Stability" for examples of how the state has unified groups and nations that otherwise have few points of agreement.

#39 Time For EU to Sit Down With Mugabe

As Zimbabwean President Robert Gabriel Mugabe turns 83 today, there is little to celebrate for the citizens of the Southern African country. Annual inflation has skyrocketed to 1,593.6 percent, food shortages are gripping many parts of the country, badly-needed professionals have left, education and healthcare services, once the best on the continent, are deteriorating. The list goes on. Yet Mugabe seems unaffected by Zimbabwe’s predicament. If anything, Mugabe doesn’t think there are any problems in Zimbabwe. If there are any, then he believes the West is to blame.

It pains to see Zimbabwe sink to such low levels. Few would doubt Zimbabwe’s potential; statistics speak for themselves. Zimbabwe had the highest literacy rate in Africa put at 95.2 percent by UNICEF in 2000. With production levels of 237 million kg, Zimbabwe was the world’s third largest tobacco producer after Brazil and the United States prior to the land invasions in 2000. It remains the fifth largest producer of gold in the world. Unknown to many, Zimbabwe also possesses two-thirds of the world’s reserves for metallurgical grade chromite and until recently, Zimbabwe was the second largest producer of floriculture in Africa after Kenya. More so, Zimbabwe remains the world’s fifth largest producer of white asbestos, after Russia, Canada, China and Brazil.

So what has gone wrong? Mugabe’s hands are dirty. That’s a fact. The EU, on the other hand, is seeking to clean those hands with clearly logical yet unworkable tactics. Angered by Mugabe’s controversial distribution of white-owned commercial farms to mainly landless blacks and his disputed re-election in 2002, the EU introduced its so-called targeted sanctions against Mugabe and his top officials. The sanctions include an arms embargo, travel ban and asset freeze on Mugabe and members of his governing ZANU PF party. In sanctioning a dictator of Mugabe’s size and magnitude, the EU is hoping to change policy in Zimbabwe.

But frankly speaking, that’s not working: five years after the sanctions were introduced, Mugabe hasn’t changed his policy. In fact, it seems to have gotten worse. What people like me will never understand is the EU’s eagerness to continuously renew the sanctions when there is no credible evidence to prove Mugabe is shifting policy.

You don’t really hurt Mugabe much by telling him “Mr. Mugabe, you are banned from coming to the EU.” In this era of globalization, Mugabe and Jan Pieter Balkanende can wear similar suits from the same chain, only that Mugabe will buy his in Kuala Lumpur or Shanghai, while Balkanende will get his in The Hague or Amsterdam. Neither do you really expect Mugabe to change policy by telling him “Robert, you are not allowed to open a bank account in the EU.” He will simply say “Okay,” before taking a flight to Singapore. Even better, considering the power he has, there isn’t any need for Mugabe to keep his money and assets in a foreign bank. For him, the state house is perhaps nearer and more convenient. Worse still, Mugabe and his officials have travelled to the EU on several occasions during the sanctions’ five-year tenure, rendering them somewhat pointless. Portugal is reportedly prepared to invite Mugabe to the EU-Africa summit in April because it fears Mugabe’s failure to attend may influence other African nations to boycott. Most recently, the South African President cancelled his plans to attend the French-Africa summit, a day after it was revealed that Mugabe wasn’t invited. Of course Mbeki gave other reasons for a no-show, but some of us who are familiar with the cordial relationship of the two, won’t buy into them.

The Western media, politicians and NGOs working in Zimbabwe at times badly underestimate Mugabe’s support. I know many people will not agree with me, but I am confident when proclaiming that Mugabe has got what it takes to easily win a free and fair election in present day Zimbabwe. Here is how he does it: brainwash people. Mugabe is in control of the media, so it’s easy to indoctrinate them. In 2002, I told my late grandmother to vote for the opposition. You can guess what kind of answer I got. “You want the British to take over Zimbabwe again?” In African politics, rural dwellers should be on your side if you want to win a national election. Nobody knows that more than Mugabe. With a bit of some intimidation, rural folks are given food to vote for Mugabe. Of course, you wouldn’t call this ‘free and fair,’ but it is a tactic which seems acceptable in African politics. While Mugabe’s support is diminishing in big cities such as Harare and Bulawayo, the same cannot be said about the rural areas, where he enjoys huge support.

Then there are those who just support Mugabe for who he is. Mugabe is seen as a liberator, a true freedom fighter who somehow, like South Africa’s Nelson Mandela, fiercely fought for racial equality in Zimbabwe. After many years of white rule, it was Mugabe who in 1980 introduced equal education and healthcare for blacks in Zimbabwe. Although I can safely say he is partially destroying what he built, Mugabe is still seen as a hero by many people in Zimbabwe and beyond. Mugabe’s fierce rhetoric against ‘Western imperialism’ attracts some sympathy and support in Zimbabwe.

In short, sanctions have only helped Mugabe become more stubborn. Buoyed by his ‘Look East’ policy, he is eager to prove to the West that his regime can last as long as those of emerging economies like China exist. I spent two months in Zimbabwe late last year, and I was quite astounded by the ubiquitous presence of Chinese products in the country. Everywhere you go in Zimbabwe, you will be greeted by what locals have termed ‘zhing-zhongs,’ a derogatory word deriding Chinese goods’ lack of quality. With most of the industries closing shop, it was hardly surprising to note that even the toilet paper was coming from Beijing. China has become one of Mugabe’s last remaining friends. Clever as he has always been, Mugabe knows that with China on his side, the UN Security Council cannot question his policy.

So what’s the benefit of talking rather than isolating Mugabe? Perhaps the EU doesn’t realize Mugabe’s influence in African politics. Zimbabwe and Mugabe in particular, was heavily involved in ending the armed conflict in Mozambique in the late 1980s. Why not use Mugabe’s experience to end other conflicts in Africa? Even so, some African leaders feel Africa is incomplete without Zimbabwe, which is why Mugabe will certainly be lobbying for an African boycott of the EU-Africa summit. He has done it before and he will do it again.

Zimbabwe, whose economy also depends on tourism, cannot afford to have negative publicity anymore. Over the years, Western tourists have shunned Zimbabwe and millions working in the industry have lost their jobs. Although he is the target of EU sanctions, Mugabe isn’t affected by that in any way. Talking to him would help improve Zimbabwe’s battered image and bring in badly-needed foreign investors.

Zimbabwe, like the Great Lakes region of Africa and stubborn Sudan in particular, is a trouble spot. The EU’s foreign chief Javier Solana has appointed special representatives in many of these these hot spots, but has left out Zimbabwe. Why? Does that make Zimbabwe less troubled?

It’s not going to be easy to talk to Mugabe, but if the EU has another solution for Zimbabwe, they should table it now. Sanctions might be logical and right, but there are no signs that they will influence policy in Zimbabwe. Instead of isolating Mugabe, the sanctions indirectly isolate the Zimbabwean people. By talking with Mugabe, the EU is at a much better position to influence Zimbabwean policy. Talk to people who have links with Zimbabwe. Most of them will tell you, Zimbabwe will stay the same as long as Mugabe is in power. Negotiating with him may pave the way for his retirement. Talking to Mugabe may also help the position of the remaining 1000 white farmers, whose future looks bleak under his rule. And finally and more importantly, with Mugabe gone, educated professionals like me and over two million Zimbabweans living abroad, will be prepared to go back and rebuild the country that we dearly love and miss.

- This article was first published in the NRC Next (a Dutch national newspaper) on February 21, 2007. It was provided to the Weekend Economist by the author, Bruce Mutsvairo.

#38 Road (Pricing) Rage

It sometimes seems as if things could not get any worse for poor Tony Blair; an endless quagmire in Iraq, embarrassing police interviews, John Prescott (need I elaborate?) and now, yet again, the British public have voiced there disapproval: over 1.65 million people have signed an online e-petition to ‘scrap the planned vehicle tracking and road pricing policy.’

The Great British Motorist, whose rage was last expressed rather visibly in the national fuel protests in 2000, is something of a civil institution in the UK to be roundly whipped into a frenzy by various tabloid and/or political forces, as and when deemed necessary. We, unlike other Europeans, have had a long history of being rather unwilling to accept that motoring and fuel prices should in fact reflect the true socio-ecological costs of the activity itself. Perhaps we feel short changed in the ‘Blood for Oil’ War, with so little to show for it at the pumps.

What startled me most, however, was to receive from my mother one of the multitude of emails urging people to sign the petition. Far from being merely the bugbear of suburban bourgeois motorists (and the Conservative Party), this policy seems to have riled the nation up and down the land – either on the grounds of cost or privacy (as Peter Roberts, author of the petition, has stated, “the idea of tracking every vehicle at all times is sinister and wrong…Road pricing is already here with the high level of taxation on fuel. The more you travel, the more tax you pay”).

The rage was perhaps inevitable. But then again, maybe the shortsightedness and intellectual papacy underpinning it was also to be expected. Yes, there are serious privacy considerations inherent with the proposal, such as who will have access to the data? How will it be regulated? What safe guards will be in place? On closer inspection, however, the fact that the overwhelming majority of people in Britain are ready to accept ID cards, phone tapping, curfews, electronic tagging, the opening of private mail and extensions to detention without charge to fight the rather ethereal threat from the Al-Qaeda bogeyman proves just how hollow this argument is in reality.

Still, bloggers screamed a call to arms, demanding answers to questions like “are we prepared to be taxed for the privilege of going about our business? At what point do we turn round and say that something is a basic right rather than a privilege, and as such not something we expect to be taxed for?” In the process, of course, such outspoken opposition actually illustrated the very reasons why such a policy must, in fact, be implemented. Motoring, at least as it has been historically conceived, really is a privilege, not a right.

Without some kind of action, congestion on Britain’s roads is set to increase by 25% in less than a decade, in a country that has already seen road transport grow by a shocking 81% since 1980. We face a major transportation crisis, made all the more significant by the Stern Report last year that underscored the very grave financial (let alone human, social and environmental) costs of unrestrained global warming - of which transport accounts for 1/5th of all CO2 emitted. The transport study, led by Sir Rod Eddington, recommended a road pricing of around £1.28 per mile in direct recognition of this fact. According to the study, the world needs to "face up to the reality of climate change, and that implies learning to live within a carbon-constrained future.” People need to "feel the consequences of their decisions" and this is, contrary to rage-blinded motorists, neither patronizing nor authoritarian. The European Carbon Trading Scheme is already in place, and it is only a matter of time before this is extended to private individuals in the form of carbon credits.

It is, quite frankly, ridiculous to assert, as Austin Williams did in the Telegraph, that transport policy should follow a ‘predict and provide’ approach. Endlessly expanding the road system is not a sustainable solution. Nor is it morally or intellectually honest to dismiss Eddington’s conclusion that “some of the best projects are small-scale, such as walking and cycling.” Indeed, such changes in habits – requiring as they do first and foremost a change in mentality – will only be achieved with both the carrot and the financial stick. As the Prime Minister's official spokesman pointed out, whilst “people did feel strongly about this issue, feeling strongly was not a substitute for coming up with practical proposals.”

The supreme irony, of course, was in accusing Eddington of ‘Stalinist’ penny pinching, asking “since when have we ever reduced politics to such simple fiscal equations?” Williams himself articulated the crassest form of financial selfishness on behalf of the British Motorist, urging them to “downplay the so-called harm that carbon does” and, despite all the scientific evidence available, stress that global warming is a “potential problem.” Whilst that approach may save many motorists money and, sure, quite possibly a significant amount thereof, it is tantamount to mortgaging our future and gambling with the very sustainability and prosperity of our children, for they are the ones who will have to deal with our legacy of an infatuation with boundless mobility and endless consumption.

“We can't solve problems by using the same kind of thinking we used when we created them.”
Albert Einstein

- This article was written for and provided to the Weekend Economist by Stuart Reeve

#37 Turkmenbashi Lives On

With the death of Turkmen "President-for-life," Saparmurat Niyazov, last December, hope emerged that maybe Turkmenistan would be able to finally get a taste of Democracy. The election as new President last Sunday of heir-apparent, Gurbanguly Berdymukhamedov - who won with the surreal number of 89.23% of the votes in a matter of only four hours of voting, with a 95% turnout according to the Central Election Commission - has put a quick damper on such hopes. On a more positive note (for Turkmenistan, that is), the continuation of Niyazov's legacy will mean that Turkmenistan will likely become neither a Russian nor a European proxy state.　

There was talk that the death of Niyazov provides a golden opportunity for the European Union to lessen its dependency on Russian gas, while also allowing for Russia to regain some of its lost Cold War influence in the hermit state. With Turkmenistan being home to the fifth-largest natural gas reserves in the world (proven reserves of 3 Trillion Cubic Meters) and substantial oil reserves as well (Turkmenistan has proven oil reserves of 546m barrels, estimated reserves of more than 2 bn barrels, and large areas that are yet to be explored), the Central Asian nation is of extreme interest particularly to the EU. It could serve as the perfect partner in the realization of an energy corridor from Central Asia to Europe.　

There are, however, doubts about Turkmenistan's oil and gas reserves, or at least the potential to make use it. Former vice Prime Minister and head of the Central Bank of Turkmenistan, Khudaiberdy Orazov, noted that "Everyone had to make do with information from Niyazov about Turkmenistan's gas reserves, which were said to be 22 trillion or even 44 trillion cubic meters. But in reality the only gas field in Turkmenistan was opened under the USSR and has been being exploited ever since...It is completely possible that Turkmenistan has a lot of gas. But first it has to be found, a gas field has to be opened, and extraction has to begin. And no one has done that for 15 years, and in the meantime the Geology Ministry has been disbanded and many specialists have left for Russia or let the profession lapse."

If we are to assume that the country is capable of becoming a major player in the world's energy market, recent signs provide no clue as to who will benefit most. Turkmenistan is scheduled to continue providing Gazprom with 50 billion cubic meters of gas a year at below-market prices through the old Soviet-era pipeline and, starting from 2009, the Chinese are to receive 30 billion cubic meters of a gas a year. On the political front, the current festivities in the Turkmen capital, Ashgabat, don't provide any hints either, as they are attended by leaders and senior diplomats from a wide range of countries, including European officials, Russian Prime Minister Mikhail Fradkov, US Assistant Secretary of State Richard Boucher, a vice-chairman of China's parliament, Turkish Prime Minister Tayyip Erdogan, the leaders of Ukraine and Georgia, and even Iranian President Mahmoud Ahmadinejad.

Turkmenbashi lives on for now, meaning little change within the country and no foreseeable near term impact on the energy and geopolitical chess boards. However, in the hopeful words of an unnamed Western Diplomat in Ashgabat who defended the policy of engagement, "You can take an obese person and tell them that they need to lose weight. Until you see the pounds coming off there's so proof they've absorbed the message...but a crash diet is bad, because you're looking for sustainable change." In other words, the West is choosing to grant Berdymukhamedov and co. the benefit of the doubt for now, allowing for time to implement the necessary changes. Or if you look at it another way, they are hoping to befriend the new leader so as not to alienate the gas-rich nation and increase their own chances of striking some juicy deals.

See also Post #5 Turkmenistan up for Grabs

#36 Average Joe and the New World Order

With the storybook ending of the Cold War that led to the disintegration of the U.S.S.R., the United States has thus far not fulfilled its potential as a unipolar world leader. Unwilling at first to be the world's policeman, it has failed to take heed of the complexity of the world beyond its borders. President Bush is more akin to a swashbuckling cowboy from a John Wayne Western movie than an eloquent, sage-like statesmen. Then again, it is these very average Joe-like qualities that made him such a likable character in the first place.

Fortunately, the current sentiment is that a growing majority of Americans have finally discovered that it takes more than an average Joe to steer America through complex domestic issues and the intricacies of international diplomacy and geopolitics. Unilateralism will most likely officially die when president Bush leaves the office, not only because it is ineffective and damaging to America, but also because America lacks the strength to pursue such an aggressive strategy.

Iraq has become America's 21st Century Vietnam and, instead of Communism, the presidency has branded terrorism as the enemy. Terrorism is not an enemy in itself; it is merely a means of aggressive, destructive diplomacy employed by those factions who lack conventional means to get what they want. What Bush really means, but dares not say in those words, is that his real enemies are various Nationalistic and Islamic fundamentalist groupings. Groups that oppose any Western (American) influence whatsoever.

The Iraq war seems more like a failed crusade, spearheaded by a political brigade of neo-cons who are politically just as backward as the enemy they are fighting. What the Holy land was for the crusaders in medieval times, is what Iraq today has become for America: a draining confrontation between East and West. Even worse is that American troops now find themselves in the crossfire of a civil war, with Iran in a perfect position to damage and pressure America without breaking a sweat.

Hopefully America will be wise enough not to elect another "average Joe," but a president with the qualities of a great statesman. In all likelihood this will be either the first female or the first African-American President of the nation, which in itself provides an interesting new development.

#35 Cold War Resurgence?

While action from Russia such as helping Tehran build a nuclear reactor in Bushehr and selling them anti-missile systems is commonplace, recent talk from Moscow has become increasingly anti-American as well.　

Of all people, Russian President Vladimir Putin blasted the United States recently for the "almost uncontained" use of force in the world, and for encouraging other countries to acquire nuclear weapons. He went on to say that, "One state, the United States has overstepped its borders in all spheres - economic, political and humanitarian, and has imposed itself on other states...this is very dangerous; nobody feels secure anymore because nobody can hide behind international law." Whether he has a point or not, the old saying "get your own house in order before preaching to others" should really carry more weight.　

U.S. reaction has been quite diplomatic, with Secretary of Defence Robert Gates commenting, "Like your second speaker (Putin) yesterday, I have a career not in Diplomacy, but in the spy business. And I guess old spies have a habit of blunt speaking…But I have been to re-education camp." U.S. Republican senator and presidential hopeful, John McCain, was a little more stern, saying "In today's multi-polar world, there is no place for needless confrontation, and I would hope that Russian leaders understand this truth."

Whether today's world is uni-polar or not is a different matter, but McCain certainly has a point when mentioning Russian confrontation. Sure, global U.S. action garners so much attention that it seems they are the instigators of countless conflicts, but other large players such as Russia and China are no angels. Where do you think the bulk of the weapons found in countries like Sudan, Zimbabwe, Uganda, Ethiopia, Eritrea, Algeria, Syria, Myanmar and Iran come from?　

As for Putin's call for honouring "international law," lest us not forget Russia's spats with countries such as Ukraine and Georgia, or even their recent gas dispute with arch ally Belarus. NATO's expansion eastward has been a major point of contention in Russia's relationship with the West, as it cannot accept the loss of any more influence in former Soviet territory. Within her own borders, the handling of the Chechen issue certainly does not pale compared to U.S. policy in the War on Terror.　

The speech brought out into the open a major Russian grievance: that the country no longer enjoys the international clout it once did. Putin touted Russia's resurgence as a major player on the international stage capable of standing up to the United States and/or being a worthy alternative to the American giant. Such talk is clear provocation, as it calls for division rather than collaboration. This is especially so since a more likely candidate for global superpower, China, is pursuing a more measured foreign policy.　

Backing up his calls for a multi-polar world, Putin, who is soon to step down as President, has become the first Russian head of state to visit Saudi Arabia, Qatar and Jordan; all traditional U.S. allies. Given the long history of warm Russia-Middle East relations, the need to visit these three states in particular is not exactly pressing. It is therefore no coincidence that these visits coincide with his increasingly vocal anti-US rhetoric.　

Putin's speech comes on the backdrop of a recent U.S-Russia space row, when deputy head of the Russian space agency Roskosmos, Vitaly Davydov, sharply criticized what he said were U.S. plans to deploy weapons in space. While the White House has stated the policy does not call for the development or deployment of weapons in space, Russian Defense Minister Sergei Ivanov threatened retaliatory steps if any country put weapons in space.　

Quite possibly what has held the U.S. and Russia together is the friendship of Bush and Putin. With both men gone in just over a year, relations might begin to sour at the top level as well. It seems the stage has been set.

#34 France not Immune to Al-Qaeda

The ever presumptuous French President Chirac has countless times stressed the point that the French are good friends of the Arab and Muslim world, that they strongly opposed the invasion of Iraq and will do everything possible to avert the escalation of the US-Iran conflict, to the point of practically siding with the Iranians. These standpoints would make it clear that France should and could never be a target of Muslim extremists. Well, dear old Chirac has clearly misunderstood the threat of such extremism and his policies have been downright foolish.

Just last Friday the London-based Arabic-language newspaper al-Hayat reported on a French intelligence report that stated France is being targeted by al-Qaeda. The report warned decision makers of a series of scenarios, including a terror attack which will take place ahead of the presidential elections in a bid to influence their results. In order to illustrate that the intelligence report was not based on thin air, a handwritten letter signed by Osama bin Laden was published, which instructed a radical Islamic organization in Algeria to "attack in eastern and southern France." The idea is reminiscent of the Madrid bombing in March 2004, which led to the election of Prime Minister Zapatero and the immediate withdrawal of Spanish troops from Iraq.

The intelligence information further points to the fact that one of the close assistants of Jordanian terrorist Abu Musab al-Zarqawi, confessed during an interrogation by the Iraqi intelligence that about 30 radical Islamic Moroccans carrying a European passport have secretly infiltrated France and several French-speaking countries in Africa in a bid to prepare terror attacks.

Once again it seems that we have to learn the hard way that appeasement really is not an option when dealing with certain types. History should have taught us this already, but with characters like Chirac, the French will possibly have to experience this first hand. France has made a noble and becoming effort to distinguish between Islamic terrorists and Islam as a whole, but the great Satan of the Islamic terrorists, President Bush, has done the same. The problem with France is that they have tried so hard to make this point, that the concept of Islamic terrorism has practically become imponderable in the French psyche. Granted, they do occasionally act on excessive incitement as in the case of the deportation of Imam Abdelkader Bouziane, but these incidents are always seen as a case in point. The idea that France could be a target of a larger international organisation that the country has not waged a war on, is unfathomable. The problem with the US, on the other hand, is that they have been poorly able to get their true intention and standpoint across to the Muslim world.

France will have to change its position if it is to retain any form of independence and not allow itself to be at the whim of terrorist petition the way the Spanish did. This means not having the knee-jerk reaction of opposing every activity and suggestion of the Americans in regard to the Middle East. This also means adopting a more critical standpoint when dealing with rogue states and organizations such as Iran and Hezbollah. Only by taking a clear and especially unbiased position on global issues can France be a worthy opponent of foreign and homegrown threats. Not through appeasement and not by "befriending" the enemy, as the intelligence report clearly shows.

#33 The Green Avalanche

It is impossible to escape the issue of climate change in the media today. Green issues central to political and cultural debate are everywhere now, in a way so vast and banal, it has almost escaped comment. Al Gore has been transformed into an international star with An Inconvenient Truth; David Cameron of the Conservative Party in the UK has made green issues a central plank of the Party’s manifesto, and has even changed the party symbol to reflect it; the recent Paris conference on climate change has clearly laid the blame at man’s feet, and President Chirac has demanded that the world pick up the gauntlet. Even President Bush has finally acknowledged both the reality and seriousness of climate change in the State of the Union address, whilst celebrities clamour over one another to demonstrate their green credentials. Following the tough, no nonsense Stern Report on the huge costs of inaction on climate change, the Economist recently reported that it is now global businesses leaders who are the ones demanding that action be taken, and fast, for hard nosed financial reasons. Unbelievable as it is, Arnie the Governator stands as an unlikely green champion with his initiatives on emissions and solar panels.

This is a remarkable change from even just one year ago. Of course, there has been plenty of doom and gloom too - meaning that many have effortlessly crossed from denial to hopeless resignation, and hence conveniently squaring the circle to write off any guilt for inaction or a sway some lingering sense of social responsibility whilst they blithely continue their carbon heavy lives. Even though Americans may be the ‘least concerned’ about climate change in the world (according to AcNielsen, just 42% considered it ‘very serious’), an amazing 91% of 25,000 people globally surveyed considered it a ‘very serious’ or ‘serious’ problem. With 1.5 billion people and growth projections indicating it will overtake the US as the world’s top CO2 emitter by 2009, the fact that China considers the problem both very serous and clearly man made counts for a lot, and cannot be ignored.

What is more, let us contemplate just one single momentous fact – whoever wins the US Presidential elections in 2008, from either party, they will almost certainly push America to take global leadership in tackling climate change. The forerunners, McCain, Obama and Clinton, have all pledged to bring the issue to the centre of their policies. And that’s not even touching on the impressive environmental measures that the newly Democratic controlled Houses have launched, starting with the repeal of Big Oil’s massive tax breaks (with the money going to a green fuels fund), and the Waxman investigation into Bush administration manipulation and suppression of scientific information on climate change. Even Dick Cheney’s own fund manager says he is "certain" that "oil substitution, energy conservation, and related environment issues will be the biggest investment issue of at least the next several decades," in a letter in which he blasted 20 years of political cowardice, inaction and greed in the face of mounting energy problems in the US.

The writing is on the wall, and people are finally starting to read it. How on earth did we reach this apparent tipping point so rapidly? A host of immediate issues spring to mind: the devastation of Hurricane Katrina; the looming conflict with Iran; the price of oil; the unsettling and disturbing weather patterns across the Northern Hemisphere; celebrity sound bites and tabloid hysteria; not to mention of course the mountains of solid scientific data. All have played a part. And yet, the current debate and momentum for rapid, dramatic change has snowballed so fast, that it is clearly far greater than the sum of these parts alone.

For, underlying these immediate causal factors, I suspect, lies a much deeper driving force – the maturing and development of the information revolution, the much vaulted ‘Web 2.0.’ Whilst hype is dangerous (Dot Com bubble anyone), and although one can legitimately question Time’s choice of ‘you’ as person of the year, something really significant has happened – and it isn’t so simple as the labels ‘user driven content,’ ‘amateur journalism’ or ‘new media’ imply. This is because these things are only facets of a much more profound democratising change that is occurring in the nature of information, and our relationship with it. The evidence, acceptance and debate on the reality of climate change (and the profoundly negative consequences associated with it) has spread and become commonplace in a grassroots virtual exchange that illustrates the fundamental dynamism of information. Data, in all its multifarious forms, has an independent, boundless and relentless desire to replicate and spread itself as far and as wide as possible. This is what we really need to be looking at to understand this rapid, complex weaving together of factors and forces.

Blogs, podcasts, video phones, YouTube, Google, P2P and all the rest, are all forming the infrastructure and tools to articulate this inherent dynamic of information to expand, replicate, network and generate. The Green Avalanche is just one byproduct of this new era we are moving towards. The information on climate change is ‘out there,’ in this new virtual civic space, and it wants to get out, irrespective of politics or business. The truth has a boundless desire to be set free, to operate in the market place of ideas, and Web 2.0 will increasingly make that manifestation real. Where does this end? A radical rethinking of just about everything from ownership, equality, relationships, intellectual property rights, are only a few things that come to mind…

- This article was written for and provided to the Weekend Economist by Stuart Reeve

#32 The Institutionalization of Peacebuilding

The last few decades (especially since the end of the Cold War), has seen a shift from traditional warfare to an increasing number of intrastate violent conflicts. With this shift, a new term has entered the dictionary of supranational organisations to join such institutions as the UN and the EU. The term I am referring to is “Peacebuilding.”

The process of peacebuilding is aimed at the restoring of positive peace on all levels (thus including the local, grassroots level), to ensure that the causes of the conflict are addressed and that the state in question can function peacefully and stable again. This trend has recently been embraced by NGOs, who are increasingly spending their time and resources on various elements of peacebuilding, such as the initiation of processes aimed at facilitating reconciliation.

However, it seems that the larger international community is not practicing what they preach when intervening in a conflict. The attainment of negative peace (the mere absence of overt conflict) seems to have become sufficient for proclaiming that an intervention has been successful. Add to that the imposition of progressive institutions such as a democratically elected government (which is often too weak to function properly) and a tribunal to try the perpetrators of war crimes, and we have been extremely successful in our peacebuilding efforts. Or so the international community shamefully seems to believe, with the US as its main advocator.

This viewpoint, which is rather simplistic even in theory, is all the more a smorgasbord of failure in practice. Peacebuilding has become an institutionalised process, in which it almost seems to be forgotten that institutions do not work without creating a situation in which the successful functioning of these institutions can be safeguarded. The international community – especially the state-actors – is taking a deductive approach to peacebuilding, focusing on what they can offer in short-term transitional measures, thereby disregarding their long-term capacity in the process of conflict resolution. The focus should rather be on an inductive approach, which is more problem-driven and works at addressing the underlying causes of a conflict to ensure the violence does not recur. As John Paul Lederach, one of the leading authors on post-conflict reconciliation, argues, peacebuilding is a structure-process, which involves the necessity of change in attitudes on all levels of society to stop violent behaviour.

The growing institutionalised approach to peacebuilding is detrimental for the attainment of positive peace; a situation in which not only the fighting has stopped, but also the root causes of the former conflict have been dealt with. By focusing too little on the inductive approach, the international community is and has been missing the opportunity to build a sustainable peace and, in fact, is often making things worse for the stability of the international political community in the long run. Take the example of the global rush for democratisation. This is producing many illiberal democracies, where popularly elected leaders disregard civil- and political rights because they act without constraint of functioning institutions or a history of law-based liberalism.

This institutionalisation of peacebuilding has partially been caused by the characteristics of the prevailing conflicts that we nowadays face. The attainment of positive peace has become far more difficult due to the intrastate- and often ethnic nature of these conflicts, which are frequently referred to as the ‘new wars.’ Also, the fact that civilians are often both the victims and the perpetrators of atrocities has made the threshold to reconciliation and the addressing of the root causes of a conflict much higher. Lastly, after these ‘new wars,’ the former conflicting parties often still share the same state or lands, which increases the chances of violence erupting yet again. Due to the fact that the attainment of a positive peace has become so much more difficult than after traditional wars, the focus of peace researchers and other people involved in the process of peacebuilding has simply shifted to focusing merely on the first step of the attainment of a positive peace: the absence of overt conflict. In doing so, the international community (with the exception perhaps of NGOs) seems to have almost forgotten that the absence of overt conflict – negative peace – should only be the first step towards attaining a situation of positive peace.

Fortunately, the situation seems to be improving. The growing attention paid by NGOs to facilitate initiatives at the grassroots level and take a bottom-up instead of a top-down approach, combined with the increasing importance that these organisations are beginning to play in peacebuilding nowadays (compare, for example, NGO involvement in the breakdown of Yugoslavia with the current war in Iraq), is a positive development in the process of peacebuilding. For a truly successful intervention in a conflict, peacebuilding needs to become highly prioritised in the decision making process. The failure of the Iraq invasion is the prefect testimony to this proposition.

- This article was written for and provided to the Weekend Economist by Leon Emmen

#31 Entertainment for a Superpower

Every superpower needs some entertainment. The Romans had their gladiators and chariot racing, the British hunted the fox and exported cricket, and the USA has baseball and the Super Bowl. Now it is China's turn.

After completing the monumental Shanghai F1 track - which was the venue of the inaugural Formula One Chinese Grand Prix on 26 September, 2004 - and the recent opening of the Hong Kong Disneyland Resort, China has begun to build on an already existing and highly popular form of entertainment among Chinese: gambling.

Macau has long been a haven for Asians eager to gamble away some money, as it is one of the few areas in the region where gambling on such a scale is legal. Today, and in the future, the main target audience is and will be mainland Chinese. Ever since Macau was handed back to the Chinese by the Portuguese in 1999, radical changes have been implemented. For one, gambling mogul Stanley Ho lost his government monopoly on the island's gaming industry in 2004. This saw his share of gambling revenue plummet from 100% to 55% and it is still falling. The new government also eased restrictions on mainland Chinese travelers to the island, allowing them to travel freely. Coupled with the incredible growth of the mainland and the increasing wealth per capita, this means an unimaginable number of potential visitors to the island and an exceedingly obscene income base.

In fact, Macau is already the biggest single gambling market in the world according to Morgan Stanley. In 2006, Macau casino's brought in an estimated $6.8 billion, versus an estimated $6.5 in Las Vegas. US gambling billionaire Sheldon Adelson of Las Vegas Sands even opened the world's largest casino in Macau in 2004; the Sands Macao. The Sands is equipped with 740 gaming tables and has recouped Adelson's $260 million initial investment in just eight months. Other gaming moguls investing heavily in the island are Steve Wynn of Wynn Resorts Ltd. and Kirk Kerkorian of MGM Mirage, to name but a few.

Important differences between Macao and Las Vegas is the fact that Macau earns over 70% of its revenue from casino taxes, while more than 50% of Las Vegas's tourism revenues come from non-gaming activities. In other words, Macau is highly dependent on gamblers spending their income in one of the countless casinos, whereas Las Vegas has something to offer non-gamblers as well. Indeed, in terms of tourism revenue, Las Vegas still easily outdoes its Asian counterpart. Furthermore, according to Bloomberg, the average length of stay in Macau is 1.17 nights, compared with 3.5 in Las Vegas. This dependency on gambling could spell trouble for the island, as other popular destinations such as Singapore have recently begun to issue licences to casinos as well. Nevertheless, the head start and strategic location (near 250 million Chinese, 128 million Japanese, 75 million Thai and 24 million Taiwanese potential visitors) of Macau should give it the edge over possible regional competitors.

It is interesting to note that both Disneyland and the gambling industry are located on the two islands that fall under the "one country, two systems" policy. This way China can continue 'preserve' her healthy Communist/Socialist "ideals," while simultaneously raking in big bucks and giving her citizens a much desired entertainment scene. Sure, both Disney and the Asian Las Vegas are little more than copies of US forms of entertainment, but China will be sure to try and beat the Americans at their own game. When it comes to sports, it seems highly likely that the Chinese will do just that at next years Beijing Olympic Games.

If entertainment and the size thereof is a pretty good indicator of status, then the US should be very weary of the recent unfolding of events in the Middle Kingdom.

#30 Predictable Failures of Global Warming

Future generations will not remember us for what we did for them; rather they will remember us for what we failed to do for ourselves.

Have we achieved a moral high ground and cultural superiority that has allowed us to concern ourselves not with our problems, but with the potential problems of the future? Are we so inclined to believe that future generations will be incapable of helping themselves to the point that we must sacrifice our weak, our poor and our disadvantaged today in order to “save” the future? With our selective amnesia we have relegated ourselves to ignoring the real problems that face our planet and instead focusing our time and resources on the “potential” problems of the future.

Global warming theorists, and those who follow their lead, are in the inevitable position of being the most likely to promote the continued death of the underprivileged and underrepresented societies. They are the most willing to believe in the fallacy and incompetence of man, and are most likely to conclude that man will, by the very nature of existence, destroy the planet.

The premise behind global warming is that in the future, due to human lifestyles and consumption rates now, we will irrevocably harm the earth. The assumption is the brainchild of global warming theorists who maintain that the future of the world is doomed because of the burning of fossil fuels, which is leading to a rise in CO2 emissions, which is causing a rise in global temperatures. These theorists believe that the warming of the globe will ultimately cause a catastrophic climate change that will lead to hundreds of thousands, perhaps millions of people, suffering the consequences. We are our own messengers and the message is loud and clear: we are going to destroy the globe because of our reckless lifestyle. These are the doomsday warnings that the global warming theorists are bringing to the rest of us.

Why am I under the impression that these global warming theorists are hastening the destruction of the planet? Is it not their hysteria that has alarmed the rest of the world to the dangers of human consumption? Or, as they would like us to believe, are they in fact providing a tremendous service to mankind by alarming us to the dangers of global warming and therefore helping us to overcome the inevitable dangers? In a perfect world, perhaps yes, but have the global warming theorists conveniently forgotten about the true perils facing our world today? Have they forgotten about the 10 million children who die yearly of preventable diseases? Have they forgotten about the global scourge of HIV/AIDS and its 40 million sufferers? I maintain that they have--but have you?

If we are placing “global warming,” and the unsubstantiated fears at the top of the list, then we have in fact forgotten about them. We have given up on the unglamorous and challenging task of facing these problems, and instead shifted our attention to wasting precious resources in a vain attempt to solve an imagined problem. In the process, we are left only to hope that our efforts will afford us the pains and guilt of failing to prevent the real disasters that are unfolding on a daily basis.

Which touches on a sensitive topic: Who is actually worried about global warming? Certainly a child in sub-Saharan Africa who has lost both her parents to disease--and will herself eventually succumb to AIDS--is not worrying about global warming. Similarly, are the wealthy nations with their vast resources and innovative technologies really concerned about their future generations? Are they not confident in the resourcefulness and wealth afforded to their off-spring? In fact, global warming theorists are, ironically enough, more concerned with their impact as wealthy nations on the poor, developing world of the future.

It is not only our responsibility to save and protect future generations, but our responsibility and moral duty to save and protect our current generation.

Global warming theorists will have you believe that the problems facing the world today are by no means comparable to the eventual problems that global warming might bring. Unfortunately, their insistence has paid off, and public opinion has shifted, making the fight against global warming a top priority. The money, resources, and international public opinion needed in the fight against the real problems facing the world will slowly be reallocated to the imaginary problem of global warming. The consequences of these actions will have severe and long lasting affects on the disadvantaged societies of the world. These callous and insouciant attitudes represent a failure of mankind akin to the atrocities committed by the most tyrannical despots and sadistic leaders.

- This article was written for and provided to the Weekend Economist by Westbrook Sullivan

#29 The Oil Tsars Part 2

In an oblique way, Russia stands to benefit from an escalated crisis in the Middle East. As long as the U.S.-Iranian standoff continues, Russia's military industrial complex stands to pocket handsomely from Iranian fears of US invasion. Indeed, Iranians are well received customers of Russia's bargain bin defence industries.

Another positive by-product of Middle East tension is high energy prices: 30% of Russia's budget comes from the export of energy products. It is no surprise that, besides the economic benefits, high oil prices fill both government and oligarch coffers substantially. Russian oligarchs and Kremlin officials must be asking themselves "why deescalate the crisis when we profit so handsomely from it?" consequently, it is not in Russia's interest to resolve the American-Iranian standoff.

Most significant Russian enterprises, military-industrial firms, banks and energy giants such as Gazprom are so closely tied to the state that there are in fact almost no boundaries between business and the Kremlin. In fact, you could go as far as to coin an entirely new term for these enterprises, namely "Kremlinprises:" the money machines of Russia's well connected oligarchic elite.

Turning to the political perspective, America's desperation in the Middle East has given Putin a carte blanche to deal with his own pestering fundamentalist problems in Russia's caucus powder keg of Islamic nationalists. For a country as large as Russia, remarkably little news finds it way to the press, unless it concerns energy of course.

The Russian bear seems to finally be waking up from its democratic and free market hangover of the wild 90's. The current nationalist and authoritarian reflex is one that has gone by with remarkable support, albeit at the expense of freedom and equality. Nonetheless, Putin has managed to charm much of the world, using not only his own charm, but borrowing heavily from the grandeur and symbolism of old Tsarist times as well.

With new splendor, power and determination, Russia is once again present on world stage as a worthy global power. Within this reborn diplomatic fervor, Putin is striking deals and renewing bonds with old allies such as India. If during the cold war Russian alliances and diplomatic interests where based on ideology, today they are based on business. With business and state affairs so closely connected in the Kremlin, Russia is basically one giant state enterprise, though one in which top level managers reap a significantly larger portion of the benefits. Russia's neighbors are feeling the pinch of the surgent Kremlin corporatism. Tough renegotiated oil contracts show that the regime favors money more than it does old compatriots (witness the recent standoff with arch ally Belarus).

The US would be wise to take heed of this new transformation and understand the novel role Russia is playing not only in Europe, but also in the Middle East and Asia. While the US is seemingly wasting its resources in a futile bid for control and stability in the Middle East, Russia is biding its time, patiently rebuilding its domestic, political, industrial and economic power base. After nearly a century, Russia has a new Tsar. Funny enough, the pawns, as well the stakes, are the same (if not greater).

Please click here for The Oil Tsars Part 1

#28 The Oil Tsars Part 1

Their regimes might change, but the Russian psyche manages to remain remarkably uniform no matter what. Russians are tough, enduring people, who have proved themselves admirably in the face of countless foes such as the Tartars, Swedes, French, Poles and Germans. Interestingly enough, their biggest enemy has always been from within, irrespective of the form of government (be it Communism, Democracy, Tsarism, etc.). The following paragraphs will uncover some of the putrescent aspects of Russian society, while "The Oil Tsars Part 2" will examine the effect this has on the current global state of affairs.

Democracy stems from the Greek word "demos," which means rule by the people. Sure, Russia is ruled by people; a pretty small group of people, that is. Due to the dangerous collusion between political and economic power in the Kremlin, few people truly have much to say. The real power rests in the hands of a small group; often ex-KGB oligarchs who profited handsomely through the prostitution of state companies and resources during the shock transition to free markets in the 1990's.

Although it seems that the Russian economy is back on track with a vengeance after contracting an estimated 40% between 1991 and 1998, the benefits of the economic recovery are not shared by the majority of Russian citizens. This is in large part due to the inefficiency of the economic system which, due to the corrupt nature of governance, disenfranchises the majority of Russian citizens. This very engine of inequality is polarizing Russian society and sowing the seeds of future instability.

The streets in Russia are also becoming poisoned with ultra right wing nationalism, where gangs and organized crime contest for control. State owned media is for a large part responsible for fueling this nationalist sentiment. The atmosphere is reminiscent of 1930's Nazi Germany, with minority groups being openly blamed and targeted for the social economic turmoil. In the past, being a dissident would get you deported to the Gulag somewhere far away in Siberia. In the new Russia, if you speak out or are perceived to be a threat or nuisance by the ruling elite, you could get the bullet. A professional assassination will only set you back about US$10.000, which for high-rolling criminals, gangs, oligarchs, agents, etc., is really not such a steep price to pay.

Gangsters are not only found in the street. In fact, the biggest gangsters are sitting comfortably in the Kremlin. With no respect for free markets, Russia is bullying out foreign companies who have significant stakes in Russia's oil wealth. Although this is arguably part of a global trend of energy nationalization, it must be said that those countries partaking in such measures are democratically bankrupt.

High oil prices will continue to beguile Russia to nationalize her natural resources. 30% of the Russian state budget comes from exporting energy wealth. Without it, Russia could never keep its expensive, corrupt bureaucracy intact. By using her oil wealth as a strategic state asset, Russia has turned around its economy from being a net debtor to becoming a creditor nation. However, if Russia remains a country where justice, conscience and power is for sale, its citizens will never reap the true potential of mother Russia and her abundant resource wealth.

Please click here for The Oil Tsars Part 2

#27 A not so Imperial USA

The issue of global US hegemony and/or imperialism is one that instantly generates heated debates when addressed. The divide generally lies between pro-US and anti-US "debaters," with discussion between them usually going along the following lines:

Moe: "The US sucks!"

Joe: "No, the world sucks!"

Moe: "You think you are so much better than everyone else, but you don't even know the difference between Malawi and Kazakhstan! You just force your ways on the world through force!"

Joe: "Well, we bring the world Democracy! If it weren't for us you'd be kissing Nazi ass or getting raped by the Japanese imperial army!"

Moe: "You suck, you ignorant asshole American"!

Joe: "You suck, you dimwitted hippie"!

If we get past the name calling and take a closer look at the situation on the ground today and compare it to recent superpowers, a relatively benign picture of the USA prevails. Take Britain at its imperial peak for example. Wherever they were present, be it in Kenya or in India, every aspect of public life - ranging from taxes and laws to external relations - were controlled by the British. Other great powers of afore such as France and Russia also exhibited what renowned Political Scientist Joseph Nye considers to be "the core feature of imperialism," namely political control. Certainly unequal relationships between the US and most of the rest of the world exist and, yes, the US does exert her influence when she feels it is necessary, but this does not equate to political control.

The 'occupation' of Western Europe and Japan provide two perfect examples where US influence is clearly visible on the one hand, but it is equally obvious that these areas are entirely sovereign. The US rebuilt Western Europe and Japan, leaving a clear American footprint, but when it comes to making any decision of significance, the US has no role to play. This is especially the case now that the EU has solidified itself as a powerful unit. Granted, militarily the US is the world's sole superpower and, if they choose to do so, they could bring down any government in the world. But, as the case of Iraq has shown, even the world's sole superpower cannot succeed alone, as a military victory is only one of many steps needed to attain true victory.

Indeed, the USA has shown itself to be a severely poor occupier in the aftermath of the Iraq War. Bringing down the Baathist government and Saddam Hussein was a cinch, but managing the occupation has thus far been a total disaster. Up until the two World Wars devastated the power of the British and the French to subdue any form of revolt in their colonies through force, these two countries had been masters at occupation. The reason the US succeeded in Europe was because they had been welcomed as liberators. In Japan I believe they had both grown tired of war and the sheer devastation allowed for an environment in which the victors could leave their mark without much opposition. In areas where the US has not been welcomed (e.g. Vietnam and Iraq), they have been unable to deal even a fraction as efficiently with occupation as the British, French and Russians managed.

Furthermore, while the US might be the world's military hegemon, in terms of issues such as economics it is nothing more than an equal power. If the EU, Japan, or even China or India are engaged with the US in trade talks, they generally have to meet halfway. Imperial Britain would have accepted no such thing. They would have simply forced their way. In today's world, however, this is not the case and would probably not be possible or at least not sustainable either. The world order is defined by more than just military might and, with this in mind, the US has positioned itself as the world's primal player, but not an imperial one.