Tag Archives: OPEC

Five Stories You Might Have Missed

The major news story this week was the nomination of Sonia Sotomayor to replace David Souter on the U.S. Supreme Court. If confirmed by the Senate, Sotomayor would be the first Hispanic and only the third woman appointed to the highest court in the United States. Politically, Sotomayor’s nomination was a brilliant move on the part of the Obama administration. While President Obama did not take advantage of the opportunity to appoint a liberal counter-weight to the conservative ideologues of Justice Antonin Scalia, the President did manage to force Republicans into a difficult spot. Republicans had been gearing up for a protracted fight against any Obama nomination as a way to mobilize their softening political base and increase fundraising in anticipation of next year’s Congressional elections. But in nominating Sotomayor, Obama forces Republicans to balance their desire to mobilize their base against their need to expand the base of the party to include the country’s largest and fastest growing minority group.

In news from outside Washington DC last week:

1. The United States is still struggling to figure out how to deal with the challenges posed by North Korea’s increasingly belligerent policy stance. Over the past two weeks, North Korea has engaged in a nuclear warhead test (on Monday) and several missile test fire operations. While the United States has officially downplayed the situation, describing North Korea’s actions as “nothing out of the ordinary” and dismissing it as mere “posturing,” it has discussed the need for a tougher approach. Meanwhile, the United Nations Security Council seems unlikely to moved on fresh sanctions against the North Korean regime.

2. After a week of intense fighting, the Pakistani military has regained control of Mingora, the main town in the disputed Swat valley. The government of Pakistan has been fighting against Taliban militants, who have turned to terrorist  bombings in their fight against the Pakistani government. On Thursday, for example, four bombs exploded in Peshawar, a city in north-west Pakistan. Observers are speculating that the Pakistani government may turn its attention to the Waziristan region along the Afghanistan border once operations in the Swat valley are completed. But the ability of the Pakistani government to continue to exercise sovereignty over the border regions will depend on its ability to establish governmental institutions and expand the reach of the country’s central institutions into the border regions—something the central government has not been able to do so far.

3. Political tensions within the Palestinian Authority intensified on Sunday after forces loyal to Palestinian President Mahmoud Abbas (from the Palestinian Liberation Organization faction) raided a safe house belonging to Hamas, the other party in government. The clash–the bloodiest since the Abbas government revived peace talks with Israel in 2007, resulted in six deaths, including two high-ranking Hamas officials. The attack came just four days after Abbas met with President Barack Obama in Washington, DC. Obama encouraged Abbas to improve his efforts to fulfill his obligations under the road map for peace, including maintaining law and order in the West Bank. Observers believe this attack was part of that effort, intended to demonstrate to the United States that the Palestinian Authority is following through on its promises.

4. Fighting in the Niger River Delta region continued over the past week, as the government of Nigeria continued its attacks on militants in the region. The government is hoping to reopen oil wells in the Ogoniland region. But observers fear that the government’s increasingly militarized efforts to address the crisis may backfire. Groups in the Niger Delta region claim that they have received few benefits from the country’s oil wealth, suffering from severe environmental degradation and severe human rights violations resulting from oil production, but seeing little benefit from the industry. Militants in the region have already launched attacks against some oil production facilities, hoping to cut off production and increase the cost of operating. Activists in the United States have taken a different approach, attempting to sue in U.S. courts the multinational oil giant Royal Dutch Shell for their alleged involvement in the death of Ken Saro-Wiwa and other human rights activists in the region.

5. Oil prices reached a six-month high on Friday, trading at $66 per barrel. OPEC is projecting that oil should reach $70-$75 per barrel by the end of the year. While the fighting in the Niger Delta region certainly contributed to increasing prices, observers also believe that speculators are coming back into commodities markers, leading to price increases. In a move certainly linked to the higher prices, the government of Brazil announced that it would reopen its vast offshore oil fields to international bidders. Meanwhile, the oil giant Chevron is being sued in Ecuadorian courts, facing damage liabilities as high as $27 billion for alleged damage to the environment and human health caused by their operations in the country.

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Five Stories You Might Have Missesd

Efforts to rescue the failing auto industry continue, as President Bush last week announced a $17.4 billion package targeting the big three American auto manufacturers.  The Canadian government has stepped in with a C$4 billion package of its own, and pressure is growing on the British government to follow suit.

Here’s five other stories important from the previous week:

 1.  Despite the announcement of a record production cut by OPEC last week, oil prices continued to slide, falling below $34 per barrel—a four year low—on Friday.  Many analysts have raised concerns about the stability of oil prices, though oil producers and oil consumers remain at odds over precisely what the price should be.  In an interesting side note, falling oil prices have also undermined the ability of Venezuela to pursue its policy of supporting like-minded governments in Latin America.  Chavez’s government has pledged $30 billion in direct payments, oil financings, and other initiatives developed through the Bolivarian Alternative for the Americas, whose members include Venezuela, Cuba, Bolivia, Dominica, and Honduras.

2.  Prime Minister Yves Leterme’s government in Belgium resigned on Friday after the country’s supreme court found signs that the government had attempted to exercise undue influence over the country’s courts.  The resignation of Leterme’s government is the most recent indication of political instability in the country, sharply divided along linguistic lines and perpetually in danger of dissolution.  The government has been in office since March, after taking more than nine months to cobble together his five-party coalition.  As head of state, King Albert II must now decide whether to accept the resignation and schedule new elections, or try to form a new coalition out of the country’s sharply divided parliament.

3.  Palestinians living in the Gaza Strip and Israelis living near it are bracing for a renewal of violence this weekend as the Egyptian-negotiated ceasefire between the Israeli government and the Hamas-led government in Gaza ended on Friday.  The fragile ceasefire has been in place for six months, but both sides have regularly violated the agreement.  In response to rocket attacks against Israeli settlements, the Israeli military has closed all entry-points into Gaza, effectively cutting the region off from the outside world and creating severe shortages of key materials, including food and fuel.  The Hamas government asserts that it will not stop the rocket attacks until the blockage is lifted.

4.  On Thursday, a United Nations court found Colonel Theoneste Bagosora guilty of genocide, crimes against humanity, and war crimes in Rwanda and sentenced him to life in prison.  Bagosora assumed leadership of the military, and became the de facto leader of Rwanda after President Huvenal Habyarimana’s plane was shot down in April, 1994.  The downing of the plane marked the beginning of the mass killings, which resulted in the murder of more than 800,000 Tutsis in Rwanda.  The conviction makes Bagosora the highest-ranking member of the Hutu-dominated Rwandan government to be convicted. 

5.  The United States is preparing to expand its mission in Afghanistan, projecting an increased force commitment of between 20,000 and 30,000 soldiers by next summer.  The extra troops are necessary to fight a growing Taliban insurgency centered in the east and south of Afghanistan.

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.

Five Stories You Might Have Missed

The American presidential race is finally entering its final stretch.  With a little more than a week left in the campaign, both candidates are sharpening their attacks against one another, and the news coverage has largely devolved into a horse race in Pennsylvania, Colorado, and a handful of other tossup states.  From a global perspective, perhaps the most interesting story from the campaign trail this week was Joe Biden’s warning that the next American president would be tested early in his new administration.  The McCain campaign seized on the comments, quickly producing an apocalyptic commercial warning of the dangers facing the United States and hinting that McCain was the only candidate who could successfully navigate those dangers.  Despite the gaffe, Obama seems well-poised to win the presidential election next Tuesday.

But enough on the American election.  Here’s five stories you might have missed with all the attention on the race for the presidency: 

1.  Responding to sharp declines in global oil prices over the past few weeks, the Organization of Petroleum Exporting Countries (OPEC) announced it would cut its output by 4.5 percent from November.  On Friday, oil fell to $62.25 per barrel, its lowest level since June 2007 and a sharp decline from the nearly $150 per barrel over the summer.  Oil prices have fallen dramatically as a result of the global financial crisis, which has resulted in sharp declines in demand for oil.

2.  A 43-nation meeting of Asian and European leaders on Friday met to consider a range of issues, including a new system of global financial regulation.  As home to the world’s largest foreign currency reserves, China has come under increasing pressure to help address the global financial crisis.  So far, China has avoided making any public commitments regarding the crisis.  But according to Charles Grant, director of the London-based Centre for European Reform, “All countries with current account surpluses have people knocking on their doors at the moment and China with the biggest surplus will be the most courted.”  A global summit scheduled fro next month will address global financial regulation in greater detail, and China looks to be a key player there.

3.  Israel appears to be headed towards early elections as Tzipi Livni, who replaced Ehud Olmert as leader of the governing Kadima party, was unable win the support of the ultra-orthodox Shas party.  The differences between the two parties center largely on the status of Jerusalem in negotiations with the Palestinians.  Shas demands that Jerusalem be the undisputed capital of Israel and maintains that the status of Jerusalem is off limits in negotiations.  But by refusing to even consider the status of Jerusalem as part of a broader settlement of the Israeli-Palestinian dispute, Shas’ position undermines the likelihood of a negotiated settlement.

4.  Iceland became the first western country since the United Kingdom in 1976 to seek a rescue package from the International Monetary Fund.  Facing an economic contraction as large as 10 percent next year and a decline in currency value of 70 percent during the crisis, the government of Iceland requested a $2 billion loan from the IMF as part of a larger $6 billion rescue package provided by other Nordic countries.   As part of the IMF package, the government of Iceland will have to impose severe financial restrictions, including curtailing government spending with a goal of balancing the structural budget in the medium term.

5.  The government of Mexico has pushed through changes in the country’s oil sector intended to make the country energy independent and halt declining production.  The changes would grant greater flexibility to Pemex, the national oil company of Mexico but imposes strict limits on the ability of private or foreign oil companies from tapping Mexican oil resources.