Tag Archives: oil prices

Five Stories You Might Have Missed

The global economic summit of the G20 countries concluded yesterday.  The meeting, intended to address the global financial crisis, concluded with a promise to take “whatever further actions are necessary” to address the crisis, but offered few concrete steps forward.  The summit was an opportunity to reconsider the international financial architecture, often referred to as the Bretton Woods system.  I’ll have a more detailed assessment of the summit tomorrow.  In the meantime, here are five other studies you might have missed:

1. Remember the timeline for withdrawal from Iraq that would have handed a victory to the terrorists?  Well, now we have one.  The Bush administration concluded a status of forces agreement with the Iraqi government that requires the complete withdrawal of U.S. forces by 2011.  The UN Security Council resolution which authorized the U.S. military presence in Iraq is due to expire in December, and without either a new Security Council authorization or an agreement with the Iraqi government, the status of American troops in Iraq would have been uncertain at best (and illegal at worst).  The timeline for withdrawal was a sticking point for approval of the Iraqi legislature. 

2.  The ceasefire between Israel and Gaza militants continued to come under strain last week.  An Israeli attack early last week resulted in the death of six Hamas militants.  Palestinian militants responded by increasing rocket and mortar attacks against Israeli towns near the Gaza Strip.  The Israeli government then closed Gaza’s borders, shutting down the flow of supplies.  The European Union on Friday called on Israel to permit the importation of food, fuel, and basic humanitarian supplies, but so far, the Israeli government has declined.

3.  The Eurozone has officially entered its first recession ever.  Established in 1999 and comprised of all European Union members which have adopted the Euro as their official currency, the 15-member Eurozone has now experienced two consecutive quarters of declining gross domestic product.  According to an FT editorial, the recession represents the first real challenge for European economic unity.  Already the European Central Bank has taken steps to address the economic downturn, cutting interest rates and increasing liquidity.  The effectiveness of these policies—and the difficulty of managing fifteen national economies through a single monetary policy—remains to be seen.

4.  Faced with oil prices declining below $55 per barrel and the lowest level of growth in demand for oil since 1985, the Organization of Petroleum Exporting Countries (OPEC) scheduled an emergency meeting for the end of the month.  Most forecasters believe OPEC will try to trim global output in an attempt to increase world oil prices.

5.  The fighting in eastern portions of the Democratic Republic of the Congo, which has resulted in the displacement of as many as 250,000 people, continued last week despite UN pressure to establish a ceasefire.  The United Nations is attempting to address the humanitarian crisis, but has so far been unsuccessful. But according to sources within the UN mission in the Congo, known as MONUC, rebel forces are attempting to force the withdrawal of UN peacekeepers from the region.

And a bonus story for this week:

6.  The Mexican Congress passed its annual budget for 2009.  In an environment characterized by the global economic downturn and tight finances, the Mexican government will increase spending by 13.1 percent in real terms in 2009.  The budget—the first in six years in which the government will run a deficit—increases spending on infrastructure, security, and social development. The new budget represents a return to Keynesian-style counter-cyclical spending which the Mexican government hopes will permit the country to avoid the worst of the global economic crisis.

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Five Stories You Might Have Missed

Not surprisingly, coverage of the campaign for the U.S. Presidency continued to dominate the headlines this week.  Obama has taken a commanding lead in many polls, and McCain is embracing his role as underdog.  This morning, Colin Powell endorsed Obama suggesting that the race may quickly be spiraling out of McCain’s reach.

In other news:

1. President Bush on Sunday announced his intention to call a global financial summit.   The move appears to be an attempt to undermine efforts by the European Union, led by French President Nicolas Sarkozy, to reconsider the foundation of the global economic order.  Meanwhile, Pascal Lamy, director general of the World Trade Organization was warned against a rise in protectionism by governments who seek to blame other countries for their financial crises.  “This is exactly what happened in the 1930s when [protectionism] was the virus that spread the crisis all over the place…This is a risk,” he cautioned.

2. New economic figures out of China this week illustrate that no country is immune from the current global crisis.  Figures due out on Monday will provide some insight in to current developments in the Chinese economy.  But economists are bracing for a continued economic slowdown in China.  Already, the Chinese government has introduced an economic stimulus package intended to boost the economy. 

3. A status of forces agreement between the United States and Iraq has been negotiated, but the agreement now faces the difficult task of garnering support from the Iraqi parliament.  The draft agreement, which was circulated on Friday, would extend the U.S. commitment to Iraq to 2012.  The agreement faces numerous obstacles, including the question of jurisdiction over American soldiers who commit crimes while in Iraq.  The agreement, which faces stiff opposition in the Iraqi Parliament, must be passed by the Iraqi parliament by the end of the year, when the United Nations mandate for the U.S. operation ends.

4. The South African political fissure continues to grow.  The ruling African National Congress ousted its sitting president, Thabo Mbeki, several weeks ago.  In more recent developments, Mbhazima Shilowa, an influential figure within the party and close ally of Mbeki, quit the party and has hinted that he will found a new party to challenge the ANC in upcoming elections.  The fissure threats to deprive the African National Congress of the two-thirds majority it has held in the parliament since the establishment of multiracial democracy in 1994.  If that happens, it would force the ANC to compromise with rival parties to effect constitutional change in the country.

5. The sharp decline in global oil prices over the last two months has led to economic problems for countries once flush with cash.  Oil has slipped under $80 per barrel on global markets.  Over the summer, oil was trading near $150 per barrel.  The decline has created problems–such as declines in government revenue and export earnings–for major oil exporters, including Russia, Mexico, and Nigeria, and the oil exporting Gulf States.

Five Stories You Mihgt Have Missed

The big stories in the United States this week were the landfall of hurricane Ike and the impact of the failure of Lehman Brothers investment bank.  Here are other important stories that you might have missed during the past week:

1. On Wednesday, the Organization of Petroleum Exporting Countries, or OPEC, announced it would cut production by 520,000 barrels per day in an attempt to keep oil prices above $100 per barrel.  The move was quickly criticized by the International Energy Agency and the White House.  The cut, OPEC’s first since December 2006, comes as oil prices have fallen to just over $100 per barrel, a decrease of more than 30% from peak prices several months ago.

2. On Saturday night, a series of bomb blasts tore through New Delhi.  The five explosions killed 25 and wounded more than 90.  An additional four explosive devices were found before they detonated.  Although no group has yet claimed responsibility, police believe that the bombings may be linked to one of India’s banned Muslim groups, such as the Students Islamic Movement or the Indian Mujahideen.

3. The longstanding political impasse in Zimbabwe appeared to be diffused last week when the ruling Zimbabwe African National Union-Popular Front (ZANU-PF) and the opposition Movement for Democratic Change (MDC) reached a power-sharing deal.  The details of the deal have not yet been released, but both sides view the new government of national unity as a victory.  Despite the agreement, concerns over the country’s political stability and economic collapse remain.  Inflation in Zimbabwe is currently estimated to be more than 10 million percent.

4. On Thursday, the Financial Times reported that the Chinese government had used its foreign exchange reserve funds to pressure Costa Rica to sever ties with Taiwan and establish relations with Beijing. If confirmed, the move would mark the most dramatic use of China’s $1.8 trillion forex reserves as a tool of Chinese foreign policy.

5. In an interview with Charlie Gibson last week, Vice Presidential candidate Sarah Palin declared on Thursday that the United States would be obligated to go to war with Russia if Georgia were a member of Nato.  McCain has advocated a more aggressive stance towards Russia over the past several months, but Palin’s announcement was the first time the idea of direct confrontation between the two Cold War rivals has been specifically mentioned.