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Economy, Flashpoints, GeoPolitics, Risks May 17, 2012

Greek eurozone exit ‘could spark coup’

As markets prepare for the prospect of a Greek exit from the euro, one prominent British economist says Greece could face a military coup if it abandons the single currency.

Financial markets have been sold down amid speculation Greece will have to leave the eurozone and abandon its debts.

But Sav Savouri, chief economist at London based hedge fund Tosca Fund, says the country has little option but to remain in the 17-member currency bloc because the situation will be very bleak if it leaves.

Mr Savouri had a grim view of the outlook for the country if Greece returned to the drachma.

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Crisis, Economy, Flashpoints, GeoPolitics, News May 16, 2012

Euro fears rise as Greeks withdraw money from banks

Greeks have withdrawn billions of euros from their banks in recent days, with the country’s president warning of “panic” at the prospect of the country leaving the eurozone.

“My family already sent some €20,000 of our savings to my sister, who lives in Switzerland,” says M.S., a Greek citizen who lives in Brussels and works in the financial sector.

Like him, many Greeks are either transferring their savings abroad or taking them out of the banks, driven by fear that the country may have to leave the eurozone.

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Crisis, Economy, Flashpoints May 16, 2012

Eurozone shocked by ‘O’ percent economic growth

The 17-nation eurozone grows 0 percent in quarter as Germany remains the only large economy to post expansion. Even the Netherlands’ economy shrinks 0.2 percent, signaling no quick recovery for the euro area
Two men are the only customers of an almost empty terrace in the Plaza Mayor, in Madrid. Spain has announced that its economy is back in recession. AP photo

The eurozone just avoided recession in early 2012 but the region’s debt crisis sapped the life out of the French and Italian economies and widened a split with paymaster Germany.

Eurozone gross domestic product (GDP) stagnated in the first quarter, the EU’s statistics office Eurostat said yesterday.

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Crisis, Economy, Flashpoints, GeoPolitics, Risks May 15, 2012

Moody’s downgrades 26 Italian banks; ratings now among the lowest in Western Europe

Moody’s Investors Service downgraded the debt ratings of 26 Italian banks Monday as they struggled with the effect of the weak economy and government austerity measures.

The move means Moody’s now ranks Italy’s banks lower than most of their Western European peers.

The ratings agency said the banks are suffering because Italy is back in recession and government measures are cutting demand for loans. Banks are facing more loan losses, limited access to funding and weaker profits.

Moody’s noted, however, that support from the European Central Bank lowered the default risk of many of the banks.

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Economy, GeoPolitics, Integration May 12, 2012

ASEAN moving towards Asian Union and Monetary Fund

ASEAN is at the center of these talks. The association has long sought to use its collective structure to give member states more power in economic and political negotiations with outside parties than any state could achieve alone. But ASEAN has taken a non-interference pledge and as a group has few political or military ambitions. The association lacks the economic, political or military heft of Asia’s two likelier centers — China and Japan.

The United States remains an influential power in Asia. Washington’s perceived effort to use regional alliances to contain China does affect Beijing’s behavior. However, the region has become more dynamic, especially as the regional center of gravity has shifted from Tokyo to Beijing over the past two decades.

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Economy, Policy, Powerplay May 9, 2012

Federal Reserve Approves Expansion Of Three Chinese Banks In US

The Federal Reserve said Wednesday it approved the expansion of the U.S. operations of three of China’s largest banks, including the first acquisition of a U.S. bank by a Chinese bank.

The Fed said it had approved applications from the Bank of China Ltd. and Agricultural Bank of China Ltd. to establish new branches. The central bank also approved an application by China’s largest bank, Industrial and Commercial Bank of China Ltd., to become a bank holding company through its acquisition of The Bank of East Asia.

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Development, Economy, Resources, SuperClass May 8, 2012

Putin Entices Oil Investors to Bankroll Kremlin Return: Energy

President Vladimir Putin has begun revamping Russia’s petroleum taxes to increase government revenue in his third term and maintain oil and gas flows that underpin his power atop the world’s largest energy exporter.

He proposed the first tax breaks for pumping unconventional reserves such as shale oil at a meeting with energy officials four days before being sworn in yesterday. While shale is booming in the U.S., such harder-to-extract unconventional reserves in Russia provide just 4 percent of total production.

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Conflict, Economy, Flashpoints, Resources, Stratagem, Strategic Interests May 8, 2012

Petrodollar Warfare: Iran Accepts Renminbi for Crude Oil

Iran is accepting renminbi for some of the crude oil it supplies to China, industry executives in Beijing and Kuwait and Dubai-based bankers said, partly as a consequence of U.S. sanctions aimed at limiting Tehran’s nuclear program.

Tehran is spending the currency, which is not freely convertible, on goods and services imported from China.

Most of the oil that goes from Iran to China is handled by the Unipec trading arm of Sinopec, China’s second-largest oil company, and through another trading company called Zhuhai Zhenrong, the oil industry executives said.

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Analysis, Conflict, Crisis, Economy, Flashpoints, Resources, Strategic Interests May 8, 2012

Turkish Factor In Leviathan and Aphrodite ‘Energy Wars’

Leviathan gas field, which is located in the Mediterranean Sea in 135km from the Israeli Haifa, was discovered in 2010 by the American Noble Energy Company, which concluded contract with Israeli government back in 2008 on initiating joint gas and oil exploration in the Mediterranean. The gas reserves found in 2010 can be considered rather impressive as, according to Noble Energy the total natural gas reserves in this field are estimated up to 450 billion m3 which makes it one of the biggest gas fields in the world. The importance of Leviathan for Israel is conditioned by the fact that it will exempt the Jewish state from the energy dependence on Egypt, which imports exports gas to Israel. Taking into consideration that the political processes going on in Egypt since 2011 can bring to power “Muslim brothers”, who are of radical anti-Israeli orientation, discovering and processing of a gas field of its own has become for Israel an issue of paramount national importance.

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Crisis, Economy, Flashpoints, Risks May 7, 2012

Greeks punish main parties, risk euro exit

Greeks angry at years of austerity shrugged off the risk of a euro zone exit and punished their ruling parties, which failed to win enough votes to form a ruling coalition in Sunday’s election.

With about 95 percent of the vote counted, conservative New Democracy and Socialist PASOK, who have dominated Greece for decades and are the only two major parties supporting an EU/IMF bailout program that keeps Greece afloat, won less than 33 percent of ballots and only 150 out of 300 parliament seats.

In order to renew their uneasy partnership, they would have to woo other reluctant parties.

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Crisis, Economy, Flashpoints, Risks May 7, 2012

Euro punished after France, Greece elections

The euro sank in value on Monday as the electoral defeat of ruling parties in France and Greece stoked anxiety in Asia about the fate of austerity policies designed to end the eurozone’s debt crisis.

Among creditor nations in Asia, concern emerged in Japan andChina about the zone’s policy direction after Socialist Francois Hollande beat President Nicolas Sarkozy in France and Greek voters punished pro-austerity parties.

Sarkozy’s defeat on Sunday was not necessarily a surprise, National Australia Bank said in a research note.

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Development, Economy, News May 2, 2012

Domestic sonic warfare against the homeless

Having tried everything else, the managers of San Francisco’s Bill Graham Civic Auditorium are blasting the overnight homeless off their doorstep with the high-decibel sounds of chainsaws, motorcycles and jackhammers – topped off with an aircraft carrier alarm.

The nocturnal bombast – which runs at a steady clip between 11 p.m. and 7 a.m. – is broadcast through the Civic Center building’s outside speakers.

“I thought it was the building alarm going off,” said building manager Robert Reiter.

Concert promoter Another Planet Entertainment – which has been given exclusive rights to operate the auditorium – says it has no other choice.

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Crisis, Economy, Risks April 30, 2012

Spain confirmed in recession as austerity bites

Spain sank into recession in the first quarter and economists said spending cuts aimed at meeting strict EU deficit limits, together with a reeling bank sector, would delay any return to growth until late this year or beyond.

It is the second recession in just over two years for the euro zone’s fourth largest economy and comes as the government tries to convince investors it will not need outside aid to put its house in order.

The country is caught between pressure from its European peers to fix public finances and growing domestic resistance to austerity measures that have helped push unemployment to more than double the EU average.

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Crisis, Economy, Flashpoints, GeoPolitics, Risks April 30, 2012

EU Readying ‘Marshall Plan For Europe’: Report

The European Commission is preparing a €200 billion “pact for growth” to be presented at the next EU summit in June.

According to leading Spanish newspaper, El País, the plan aims to raise funds valued at €200 billion for investments in infrastructure, renewable energies and advanced technologies with the involvement of the private sector, in a bid to kick-start economic growth without raising public debt in the 27 member states.

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Diplomacy, Economy, GeoPolitics April 30, 2012

China-Russia relations reach new heights

Cooperation between China and Russia has huge potential, Vice-Premier Li Keqiang said in Moscow yesterday.

“The China-Russia all-around strategic partnership is unprecedented at the moment, and I believe the cooperation between the two countries could reach a new high, as there is a wide range of areas that we could jointly develop,” said Li during his meeting with Russian Prime Minister Vladimir Putin.

“Of course, the way ahead is always not smooth, but we are good neighbours, good friends and good partners.”

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Crisis, Economy, Risks April 27, 2012

Romanian government toppled, Czechs face test too

Romania’s opposition torpedoed the center-right cabinet in a confidence vote on Friday, raising the prospect of months of political turmoil and questions over a belt-tightening campaign that has caused a wave of protests against IMF-backed reforms.

Prime Minister Mihai Razvan Ungureanu’s two-month-old government is the latest in a string of austerity-minded ruling coalitions that have fallen across the European Union in disputes over spending cuts and tax hikes.

The defeat came ahead of another confidence vote, in the Czech Republic, whose budget-cutting cabinet is expected to survive but may find itself hamstrung by infighting among its scandal-plagued parties and widespread public anger over its policies.

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Analysis, Development, Economy, Flashpoints April 26, 2012

Europe’s Collapse Is Becoming Inevitable

For the first time in the history of the European Union, the collapse of the EU has become a realistic scenario. This was stated by the Chairman of the European Parliament, Martin Schulz. Speaking before the board of commissioners, Schulz drew their attention to the fact that the leaders of EU member states are not satisfied with the method of communitarian decision-making in favor of their “re-nationalization”.

Schultz expressed concern over the calls in France and Germany to restore border controls in the Schengen area and the growth of xenophobia in the EU.

Financier George Soros also predicted the imminent end of the euro and the European Union in general. In an interview with the French Le Figaro, Soros has compared the crisis in the European Zone with the collapse of the Soviet Union.

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Analysis, Conflict, Crisis, Economy, Flashpoints, Risks April 25, 2012

Civil Unrest Leads Aon to Downgrade 37 Countries on Political Risk Map

Aon Risk Solutions, the global risk management business of Aon plc, has just issued its latest political risk map, which gauges the level of risk for international business in more than 200 countries. Aon said “37 countries were downgraded in the Aon 2012 Terrorism & Political Violence Map, largely due to civil unrest.”

The principle reason for the downgrades is linked to the “continued effects of the global economic crisis,” Aon said, “as austerity measures and spending cuts took hold, civil unrest, riots, strikes and student protests were witnessed across large parts of Europe.”

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Crisis, Economy, Flashpoints, FUBAR, Risks April 25, 2012

U.K. Succumbs to First Double-Dip Recession Since 1970s: Economy

The U.K. economy shrank in the first quarter as Britain slid into its first double-dip recession since the 1970s, forcing Prime Minister David Cameron to defend his spending cuts in Parliament.

Gross domestic product fell 0.2 percent from the fourth quarter of 2011, when it declined 0.3 percent, the Office for National Statistics said today in London. The median of 40 estimates in a Bloomberg News survey was for an increase of 0.1 percent. A technical recession is defined as two straight quarters of contraction.

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Development, Economy, Public Relations, Risks April 23, 2012

Facing bankruptcy, Detroit to spend $330K on Washington lobbyists

The mayor of Detroit has signed a $330,000 contract with a team of Washington lobbyists as he tries to save the city from bankruptcy.

The office of Mayor Dave Bing has employed Clark Hill, a law and lobby firm, to work on “funding for municipal government activities, including workforce development, education, public safety, transportation and housing,” according to public documents filed last week.

The city will pay Clark Hill a set fee of $330,000 for the contract, which will run until the end of the year, Deputy Detroit Mayor Kirk Lewis told The Hill.

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Economy, Flashpoints, FUBAR, Rigging, Risks April 20, 2012

New federal agency OFR stirs ‘Orwellian’ fears

It is the most powerful federal agency you’ve never heard of — and lawmakers from both parties on Thursday vowed to keep abreast of its astonishing growth and rein it in, if necessary.

The Office of Financial Research, or OFR, was created by the Dodd-Frank financial services overhaul that President Obama signed into law in July 2010. Technically housed under the Treasury Department, the agency has until now received its funding not from the Congress, but directly from the Federal Reserve.

Starting in July, the OFR Fiscal Year 2013 budget, estimated at $158 million, will be funded entirely through assessments — also known as taxes — on bank-holding firms with consolidated assets worth at least $50 billion.

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Crisis, Economy, News April 18, 2012

Argentina’s Oil Takeover Ticks Off Spain and Mexico

Argentina’s takeover of its top energy company from Spain’s Repsol, in an effort to control its energy future, has provoked an avalanche of diplomatic protests and vows of retaliation from Spain and other affected parties like Mexico.

President Cristina Fernández de Kirchner has made Spain furious by decreeing that her government will recover YPF SA, Repsol’s Argentine oil operations, by expropriating Repsol’s majority stake in the company.

President Fernández said the company hasn’t invested enough in the South American country and has rejected Repsol YPF’s demand for $10.5 billion in compensation. Argentina is still in the process of valuing its’ 51 percent of YPF’s shares and will not use estimates from Repsol, the Deputy Economy Minister Axel Kicillof said at a Senate hearing yesterday.

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Crisis, Economy, Integration, Risks April 18, 2012

Euro on brink of collapse: IMF

The crisis-hit euro is teetering on the brink of collapse, the International Monetary Fund (IMF) has said.

In a significant vote of no-confidence, Tuesday’s report from the global financial organisation admitted the troubled European single currency had “flaws” and was at risk of a “disorderly default and exit by a euro area member”.

And it warned that a euro meltdown could be even more devastating for the world economy than the 2008 credit crunch, the express.co.uk reported.

The admission in the World Economic Outlook from the IMF came amid renewed fears that Spain could soon follow Greece, Portugal and Ireland in accepting a multi-billion pound international bail-out.

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Crisis, Economy, News, Risks April 18, 2012

More U.S. cities set to enter default danger zone

America’s swelling ranks of fallen municipal borrowers have been blamed in the past year on ‘what-were-they-thinking’ causes, be it a Taj Mahal sewer system in Alabama or an overpriced trash incinerator in Pennsylvania’s capital city of Harrisburg.

But the next series of major cities and counties in danger of defaulting on their debt can hardly point to one single decision for their malaise. Whether it be Detroit, Miami or Providence, Rhode Island, their problems have a lot more to do with financial policies that put them on course to live well beyond their means.

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Analysis, Economy, GeoPolitics, Integration April 12, 2012

Will EurAsEC grow into Eurasian economic union?

The last of the EurAsEC summit in Moscow demonstrated that for all the optimistic public statements, the integration processes are not advancing well in practice.

It was predicted that the summit will announce the replacement EurAsEC with full fledged Eurasian Economic Union (EEU). However, the results of the summit were more than modest – comprehensive agreement on formation of EEU can be signed only by January 1, 2015.

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Crisis, Economy, FUBAR, News April 2, 2012

Stockton, Calif., Could Become Nation’s Biggest Municipal Bankruptcy

Stockton, Calif. is quite at home on lists of dubious distinctions.

This Northern California city has been variously listed as the city with the second-highest home-foreclosure rate of a major U.S. metropolis, the second-highest violent crime rate in California, and two times the frontrunner of Forbesmagazine’s “America’s Most Miserable Cities.”

Now Stockton is hoping to avoid its next bleak title, that of biggest municipality in U.S. history to enter bankruptcy.

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Economy, Flashpoints, Land Grab, Resources April 2, 2012

Israeli firms compete in Greece fire sale

Several Israeli firms are competing for the purchase of Greek state assets as the debt-stricken country pushes ahead with its world-record 50-billion-euro divestment program.

Mekorot Israel National Water Co. is in informal discussions to purchase the Athens and Thessaloniki water and sewage companies. One Israeli group is among 17 anonymous foreign bidders for natural-gas company DEPA. Another has expressed interest in buying weapons manufacturer Hellenic Defense Systems.

Hellenic Republic Asset Development Fund CEO Costas Mitropoulos revealed the above to reporters in Tel Aviv on Sunday, in between meetings with about 50 different potential Israeli investors.

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Analysis, Development, Economy, Resources April 2, 2012

Myanmar Wants to Be the Next Tiger

Jim Rogers is bullish on Myanmar. The Singapore-based investor, chairman of Rogers Holdings, last month compared the Southeast Asian country today with China in 1979, just as Deng Xiaoping was launching the economic reforms that helped transform China into the world’s second-largest economy. With Myanmar’s authoritarian government finally starting on the road of reform, Rogers said, there’s no end to the possibilities for the country’s economy. “It’s right between China and India, 60 million people, massive natural resources, agriculture,” Rogers said. “You could feed much of Asia, they have metals, they have energy, they have everything.”

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Conflict, Economy, Flashpoints, Resources March 30, 2012

Greek-Cypriot-Israeli ’energy axis’

Greece, Cyprus and Israel agreed on Wednesday to deepen their energy cooperation, but stopped short of signing a memorandum to seal their agreement.

The discovery of considerable reserves of hydrocarbons in the Israeli and Cypriot exclusive economic zones in the eastern Mediterranean and estimates of more reserves in Greece have brought the three countries closer together. Israel’s Energy Minister Uzi Landau spoke of “an axis of Greece, Cyprus and Israel and possibly more countries which will offer an anchor of stability.” He was addressing an energy conference in Athens organized by The Economist.

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Economy, Resources March 28, 2012

Eni makes ‘giant’ gas find in Mozambique

Italian energy company Eni estimates there is at least 40 trillion cubic feet of natural gas in place off the coast of Mozambique.

Eni said it made a “new giant natural gas discovery” in a section of its Mamba North East 1 exploration prospect in the deep waters off the coast of Mozambique. That find, the company said, increases the resource base by at least 10 trillion cubic feet, 8 trillion of which are in so-called Area 4.

“This new discovery further improves the potential of the Mamba complex in Area 4 offshore Mozambique now estimated at at least 40 tcf of gas in place,” the company said in a statement.

The company said it expects to drill at least four wells in the area to assess the potential of the offshore Mamba prospect.

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Economy, Flashpoints, News March 28, 2012

Thousands riot over fuel prices in Indonesia

Thousands of Indonesians protesting at plans to push up fuel prices by more than 30% have clashed with riot police.

Rallies were held under tight security in big cities all over the country as parliament debated the need for a rise.

Some MPs said the government had no choice but to cut budget-busting fuel subsidies, which have for years enabled motorists to fill up for roughly €1.45 per gallon. Others argued raising prices could more than double inflation to 7%.

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Economy, Flashpoints, Resources March 27, 2012

Kurds say will end oil exports

Iraq’s Kurdistan region threatened on Monday to stop oil exports if the central government does not hand over promised funds which regional authorities say have been withheld for more than a year. The move was the latest in a long-running dispute over energy contracts and revenues between Baghdad and the autonomous region, with the two sides squabbling over payments, revenue-sharing and Baghdad’s refusal to recognise dozens of contracts Kurdish officials have signed with foreign energy firms. “The MNR has reluctantly decided to reduce exports to 50,000 bpd (barrels per day) with a view to possible cessation in one month.

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Economy, Resources March 26, 2012

Tug of War: Strain in the EU-Ukraine-Russia Energy Triangle

Ukraine’s current tug-of-war with Russia over the pricing of its Russian gas imports should be watched closely by the EU, which receives 20% of its gas supply via Ukraine and which suffered record supply disruptions in 2009, the last time a similar price dispute escalated. After having accepted Ukraine into its Energy Community in 2011, the EU is rightly making further financial and diplomatic support conditional on Ukraine liberalising its domestic gas market. Those reforms, however, run counter the interests of well-connected local business magnates. Coupled, with EU concerns over the jailing of Ukrainian opposition leader Yuliya Timoshenko, Ukraine’s resistance to reforms is cornering it into a difficult negotiating position with Russian Gazprom, which may well gain a stake in Ukraine’s gas transportation system (GTS) in exchange for a discount.

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Economy, Integration, News March 19, 2012

BRICS Bank Could Change the Money Game

India’s proposal to set up a bank of the BRICS nations (Brazil, Russia, India, China and South Africa) will top the agenda at the summit of the group in New Delhi Mar. 28.

India believes a joint bank would be in line with the growing economic power of the five-nation group. The bank could firm up the position of BRICS as a powerful player in global decision-making.

“The BRICS bank does not need much capital for a start,” Alexander Appokin, senior expert at the Moscow- based Centre for Macroeconomic Analysis and Forecasting tells IPS. “What is more important is that the BRICS development bank presents a unique opportunity for indirect investment of central bank foreign reserves inside the countries.”

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Development, Economy, Flashpoints, GeoPolitics, News March 18, 2012

Argentina plans ‘civil and criminal’ actions against oil companies exploring in Falklands

Argentina is intensifying its campaign to block oil development in the Falkland Islands, announcing on Thursday it will pursue “administrative, civil and criminal” penalties against the dozens of companies involved.

“We are going to defend the resources of the South Atlantic, which are the property of all the Argentines,” Foreign Minister Hector Timerman said at a news conference. He said that includes any oil found off the shores of the islands they call the Malvinas, which have been controlled by Britain since 1833.

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Development, Economy, Military, Policy March 18, 2012

Canada bails out of NATO airborne surveillance programs

The Canadian Forces hope to save $90 million a year by pulling out of NATO programs operating unmanned aerial vehicles as well as airborne early warning planes, according to documents obtained by the Citizen.

Defence Minister Peter MacKay gave U.S. officials a heads-up last year about the withdrawal, pointing out that it will free up 142 Canadians assigned to NATO for new jobs, the documents show.

The shutdown of Canada’s contribution to NATO’s airborne warning aircraft, known as AWACS, will save about $50 million a year, according to the records obtained under the Access to Information law.

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Economy, News, Risks March 16, 2012

New Chinese central banker worth watching

With China’s economy slowing, expect the PBoC to weigh in with rate cuts and further easing on the level of assets commercial banks need to deposit with it.

In the meantime, the central bank of the world’s second biggest economy has just appointed three new members to its monetary policy committee.

All three are highly regarded economic professors from China’s most prestigious universities. One of them is Professor Qian Yingyi, a Harvard educated economist who had a tenured professorship at UC Berkeley in the ‘States.

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Economy, GeoPolitics, Integration March 7, 2012

Indonesia considers joining BRICS

Indonesia intends to join BRICS (Brazil, Russia, India, China, and South Africa), Indonesian Ambassador in Moscow Djauhari Oratmangun said on Wednesday, March 7.

He noted Russia’s activity in the international arena, placing a special emphasis on BRICS and said that his country intends to join this group.

Experts think that Indonesia will reach the high BRICS standards in many fields in the coming years. Some analysts expect BRICS to be transformed into BRIICS.

The admission of such a strong regional player as Indonesia, which has the world’s fourth largest population, can help expand the organisation’s influence to Southeast Asia and the Islamic World (Indonesia plays an active role in the Organisation of Islamic Cooperation).

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Economy, News, Policy, Risks March 5, 2012

Illinois state ‘on brink of collapse’

Illinois’ financial problems are forcing it to choose between its pensions and its teeth.

Governor Pat Quinn says the state needs to face its “rendezvous with reality” and tackle its dysfunctional budget habits. Top of the list, Mr Quinn says, is to slash spending on Medicaid, a federal programme that provides healthcare to poor Americans.

To save a system he says is “on the brink of collapse”, Mr Quinn proposes cutting $2.7bn from Illinois’ $11.5bn Medicaid bill. Few would dispute that the state needs to change its behaviour.

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Development, Economy, GeoPolitics, Resources, Strategic Interests March 4, 2012

Turkish Cyprus might be annexed to Turkey: minister

Turkish Cyprus could be annexed to Turkey if ongoing talks between Turkish and Greek Cypriots for reunification fail to produce a solution, Turkey’s minister for European Union Affairs has said.

Egemen Bağış, in remarks published in Turkish Cypriot newspaper Kıbrıs, said all options are on table regarding the fate of Cyprus, private news stations NTV reported on Sunday.

“Reunification under a deal that [Turkish and Greek Cypriot] leaders could reach, creation of two independent states after an agreement between the two leaders if they are unable to reach a deal for reunification, or annexation of the [Turkish Republic of Northern Cyprus] KKTC to Turkey. These are all options on the table,” Bağış said.

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Economy, Flashpoints, GeoPolitics, Military, Resources February 28, 2012

Eurasian Geopolitical Summary: From February 26-28

CSTO military exercises to take place in Armenia
Organizational activities of CSTO ‘Cooperation 2012’ take place in Yerevan. As the press service of Armenia’s Defense Ministry informs, in order to finalize the plan of military exercises, military-staff session will take place in Yerevan on February 28 and March 1, 2012.

New commander of the Russian military base in Armenia appointed
Under the Russian President’s decree, Colonel Oleg Smiryonov is appointed the new commander of the Russian military base in Armenia.The press service of the Southern Military District reports (SMD) that he was introduced to his personal staff by the Deputy Commander of SMD troops, Major General Andrey Kartapolov.

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Economy, Flashpoints, GeoPolitics, Interview, Powerplay, Public Relations, Sci/Tech, SuperClass February 20, 2012

Vantage Point Interview: James Corbett[Independent Journalist]

About James:
James Corbett is an independent journalist who has been living and working in Japan since 2004. He has been writing and producing The Corbett Report, an online multi-media news and information source, since 2007. His forthcoming book, Reportage: Essays on the New World Order, will be available for purchase later this year.

Michael Vail and James Corbett discuss geopolitical flashpoints, the psychology of defeatism, and terrorism. We dissect the political discourse and break down the media narratives and false paradigms. We run the gamet in this hour long commercial free interview.

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Economy, Resources February 20, 2012

‘South Stream is something of spoiler to Nabucco’

The implementation of Russian South Stream project will not affect the future Caspian gas supplies to Europe, European energy expert Neil Melvin believes.

Russian Gazprom’s Management Committee chairman Alexey Miller approved the South Stream Construction Charter this week. The South Stream project is implemented to diversify the routes of natural gas supplies to the European consumers and envisages the construction of a gas pipeline across the Black Sea to the South and Central Europe.

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Economy, GeoPolitics, Resources, Strategic Interests February 20, 2012

China Reaps Rewards of Central Asian Investment

For the Central Asian states, the importance of the pipeline goes beyond energy revenues. The first major pipeline from the region that bypasses Russia, it brings a much sought-after diversification of export routes. It secures China as a long-term buyer of Central Asian gas, and one that, unlike European countries, is a growing economy. It also opens up the prospect of sales to Japan and South Korea.

In China, the Central Asian countries have an investor that is willing to bankroll large-scale infrastructure projects – and not just in the energy sector – and that has proved effective in implementing them.

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Economy, News, Policy, Powerplay February 19, 2012

China’s War Chest: China sets up fund to bankroll takeovers

Boasting $3.2 trillion in foreign currency reserves, China has created a new fund aimed at financing takeover bids abroad. The fund also seeks to boost China’s currency in global financial markets.

In its drive to step up overseas investment, the Chinese government has set up a new fund worth 12 billion yuan ($1.9 billion), Shanghai International Group said in a statement Friday.

Shanghai International said it was responsible for running the fund, describing it as China’s “biggest ever fund of its kind.”

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Economy, GeoPolitics, Military February 19, 2012

US, Georgian nation to mull free trade deal

US President Barack Obama and his Georgian counterpart Mikheil Saakashvili on Monday discussed the possibility of sealing a bilateral free trade agreement during their talks at the White House.

“What we’ve agreed to is a high-level dialogue between our two countries about how we can continue to strengthen trade relations between our two countries, including the possibility of a free trade agreement,” Obama said.

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Economy, Flashpoints, Integration February 17, 2012

Is Greece Being Forced to Default?

We’ve known, or at least some of us have asserted, for some time now that the best thing for Greece would be a default and exit from the euro. The country simply cannot pay its current debt burden so default of some kind is the only option. And my view has been that growth won’t return until they are outside the euro and thus able to depreciate the currency.

However, we’ve all also been assuming that the powers that be (the IMF, the ECB, the EU itself) want to keep Greece inside the euro. And it may be that that assumption either has been wrong or is becoming so. For there’s an increasing suspicion that the negotiations are being manipulated to makeGreece default and leave rather than prevent it from doing so.

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Economy, Flashpoints, GeoPolitics February 9, 2012

Iran turns to barter for food as sanctions cripple imports

Iran is turning to barter – offering gold bullion in overseas vaults or tankerloads of oil – in return for food as new financial sanctions have hurt its ability to import basic staples for its 74 million people, commodities traders said Thursday.

Difficulty paying for urgent import needs has contributed to sharp rises in the prices of basic foodstuffs, causing hardship for Iranians with just weeks to go before an election seen as a referendum on President Mahmoud Ahmadinejad’s economic policies.

New sanctions imposed by the United States and European Union to punish Iran for its nuclear program do not bar firms from selling Iran food but they make it difficult to carry out the international financial transactions needed to pay for it.

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Economy, Flashpoints, GeoPolitics, Resources, Risks February 7, 2012

Kastelorizo: Mediterranean Flashpoint?

It is the far-flung, easternmost island of Greece, 80 miles from Rhodes, 170 miles west of Cyprus, but just one mile off the coast of Turkey. Kastelorizo (in Greek, Καστελόριζο; or officially Megisti, Μεγίστη) is tiny, comprising just five square miles, plus some yet smaller, uninhabited islands. Were Athens to claim its full EEZ, Kastelorizo’s presence would make its EEZ contiguous with the EEZ of Cyprus, a factor with great import now, at a moment of massive off-shore gas and oil discoveries. Kastelorizo with an EEZ benefits the emerging Greece-Cyprus-Israel alliance by making it possible to transport either Cypriot and Israeli natural gas (via pipeline) or electricity (via cable) to Western Europe without Turkish permission.

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Economy, Sci/Tech, Think Tanks February 6, 2012

2 Billion Jobs to Disappear by 2030

When I brought up the idea of 2 billion jobs disappearing (roughly 50% of all the jobs on the planet) it wasn’t intended as a doom and gloom outlook. Rather, it was intended as a wakeup call, letting the world know how quickly things are about to change, and letting academia know that much of the battle ahead will be taking place at their doorstep.

Here is a brief overview of five industries – where the jobs will be going away and the jobs that will likely replace at least some of them – over the coming decades.

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Economy, Flashpoints, GeoPolitics, Integration February 3, 2012

Expect China to Shape the Next Bretton Woods Pact: Philip Coggan

At this juncture, an agreement on this scale would be very difficult. Bretton Woods was made possible because of the limited number of participants and the urgency of wartime. Much of Europe was under Nazi occupation and could not take part; the Soviet Union had little intellectual input; and the developing world was consulted on a fairly cursory basis. The Americans were in charge, but listened to John Maynard Keynes out of respect for his intellect.

A modern agreement would have to get consensus from the U.S., China, the European Union, India, Brazil, and so on. This would be tricky. But perhaps there could be an arrangement less formal than Bretton Woods. In November 2010, Robert Zoellick, a former U.S. Treasury official who runs the World Bank, wrote of a concept in which countries would agree on structural reforms to boost growth, forswear currency intervention and build a “co- operative monetary system.”

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Economy, GeoPolitics, News January 31, 2012

An independent Scotland could leave Elizabeth II Head of State

Queen Elizabeth II remains the head of Scotland, even in the case of gaining independence, the region, said the First Minister of Scotland Alex Salmond.

The head of the Scottish National Party (SNP) continues to promote the formulation of the question, which he proposes to make to a referendum in 2014: “Do you want to see Scotland as an independent state?”. Thus Salmond confirmed that the region will remain in the United Kingdom even if gained political independence.

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Economy, Resources, Strategic Interests January 27, 2012

Research and Markets: Turkmenistan Oil and Gas Report Q1 2012: Potential for Gas Export Bonanza

Turkmenistan could potentially benefit from a gas export bonanza, with a major reserves upgrade at the South Yolotan field alone providing the basis for long-term supply agreements that should transform the economic outlook. There are technical and commercial hurdles to overcome, but timely infrastructure investment and moves to improve international relations should guarantee that Turkmenistan becomes a key player in global gas supply.

Business Monitor International’s Turkmenistan Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkmenistan’s oil and gas industry.

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Diplomacy, Economy, GeoPolitics, Resources, Strategic Interests January 27, 2012

India, Pakistan closer to oil deal import from Turkmenistan

India and Pakistan are closer to agreeing on a transit fee and a joint strategy to develop gas fields and import the hydrocarbon via a pipeline from the Central Asian Republic of Turkmenistan, oil ministers of two countries said.

The statements came during joint press conference by Indian Petroleum & Natural Gas Minister S Jaipal Reddy and his Pakistani counterpart Dr Asim Hussain, after bilateral talks on energy cooperation here.
Turkmenistan has world’s fourth largest reserves of natural gas. India & Pakistan are both keen to tap this source through a pipeline via the Central Asian country’s eastern neighbour, Afghanistan.

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Black Market, Economy, News January 27, 2012

HSBC in new US money-laundering inquiry

US officials have run a series of investigations into how big banks have processed transactions involving countries which the US government claims support terrorism as well as those which could involve criminals or potentially corrupt foreign officials. It is not known exactly what the focus of the subcommittee’s inquiries into HSBC is.

The bank yesterday admitted it was holding “ongoing discussions” with US officials over “a number of regulatory and compliance matters”. In a sign it is taking the increasing hard line of US watchdogs seriously it recently named former top US Treasury Department official Stuart Levey (pictured) as its London-based chief legal officer.

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Economy, News, Resources January 25, 2012

India drawn to Iran’s favourable oil terms

India wants to take as much Iranian oil as it can because terms are “favourable”, Oil Minister S. Jaipal Reddy has said.

He made the remarks on Monday after talks between the two sides last week on payment options for $12 billion of crude a year following fresh US sanctions, Reuters reported.

“It will be our endeavour in future to tap the Iran source fully, because the terms are fairly favourable,” Reddy told journalists at an energy conference. He added that India was exploring all options to pay for the crude.

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Development, Economy, Flashpoints January 25, 2012

Forget Greece; it’s Portugal that’ll destroy euro

Greece is already bust — and its default is already priced into the market. But Portugal is in precisely the same position, just on a longer fuse. It too is sliding toward an inevitable default on its debts — and when it does so, it will deliver a terminal political blow to the single currency, and inflict damage on the European banking system that may well prove catastrophic.

The World Economic Forum’s annual gathering of global and corporate leaders has commenced in Davos. Tracy Corrigan, Editor-in-Chief, The Wall Street Journal Europe, tells us what the big themes are at the conference.

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Economy, GeoPolitics, Risks, Strategic Interests January 23, 2012

Arab Sheikhs fall in love with Renminbi

The short point is, the renminbi, the “people’s currency” also known as the yuan, is appearing in Doha. The China-United Arab Emirates (UAE) currency swap deal which was signed during Wen’s visit to Abu Dhabi last week already brings the yuan to the Emirates. The deal with the UAE is worth US$5.5 billion and the Chinese central bank statement said that it aims at “strengthening bilateral financial cooperation, promoting trade and investments and jointly safeguarding regional financial stability”.

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Development, Economy, GeoPolitics, Strategic Interests January 21, 2012

Saudi Arabia pivots toward Asia

Saudi Arabia’s future lies in Asia. That was the subtext of Chinese Premier Wen Jiabao’s recent visit to Riyadh. That future might arrive a lot quicker than people think, if BP is to be believed.

BP’s most recent energy outlook report predicts that the United States will become almost self-sufficient in energy by 2030, thanks to exploitation of its shale oil and gas resources.

Per The Guardian, this is a ”development with enormous geopolitical implications”. [1]

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Economy, GeoPolitics January 21, 2012

EUCFR: Four scenarios for the reinvention of Europe

Looming behind the euro crisis is a larger and more fundamental challenge: the near-collapse of the EU’s political system. The rise of anti-EU populism across Europe has prevented the continent’s politicians from grasping the political challenges.

Technocratic institutional fixes have only provoked more populism. European leaders are now unable to solve the euro crisis because they can only force inadequate solutions through loopholes in the Lisbon Treaty.

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Economy, GeoPolitics, News January 19, 2012

European Geostrategy: ‘Britain will never accept German leadership’

Over the past five years, Germany has become very powerful. Since Britain’s (hopefully temporary) economic difficulties, the German economy has emerged not only as the largest – but by far the largest – in the European Union. Consequentially, some have asked whether we are now entering a period of German hegemony, a kind of German ‘unipolar moment’. Yesterday, however, the British strategist, Julian Lindley-French, explained that this is impossible – Germany will not become a European hegemon.

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Economy, Flashpoints, News January 18, 2012

World Bank to World: ‘Prepare for the Worst’

If the euro zone finally loses its grip on its super-slo-mo meltdown, the countries paying the highest price might not be the ones confined to the euro, according the World Bank’s new morbid report on the global economy.

“Developing countries need to prepare for the worst,” the Bank said, describing how the European sovereign debt crisis could spread to every corner of the globe. “In this highly uncertain environment, developing countries should evaluate their vulnerabilities and prepare contingencies to deal with both the immediate and longer-term effects of a downturn.”

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Analysis, Economy, GeoPolitics, News January 18, 2012

EU in uncharted legal waters on Scottish independence

Last week’s announcement by Scottish First Minister Alex Salmond that he intends to hold a referendum on Scotland’s independence in 2014 implies uncharted legal territory for the EU.

A newly independent Scotland would raise a number of thorny questions around its relations with the European Union – including whether it would have to fully renegotiate membership and whether it would be obliged to become a member of the euro.

For the EU itself, the issue would present a political and legal conundrum.

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Development, Economy, Land Grab, Strategic Interests January 17, 2012

Ethiopia forcing thousands off land: US rights group

Ethiopia is forcing tens of thousands of people off their land so it can lease it to foreign investors, leaving former landowners destitute and in some cases starving, Human Rights Watch (HRW) said on Tuesday.

The Horn of Africa state has already leased 3 million hectares — an area just smaller than Belgium — to foreign farm businesses and the US-based rights group said that Addis Ababa had plans to lease another 2.1 million hectares.

The United Nations has increasingly voiced concern that countries such as China and Gulf Arab states are buying swathes of land in Africa and Asia to secure their own food supplies, often at the expense of local people.

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Development, Diplomacy, Economy January 17, 2012

Gulf states show rising confidence to rattle Iran

The Iranians have watched as frustrated bystanders while the leader of its most influential ally, China, began a tour of Gulf Arab states with talks in Tehran’s top regional rival Saudi Arabia. Two other major Iranian oil customers – South Korea and Japan – also had high-level delegations in the Gulf to discuss supply guarantees if they fall in line with U.S.-led pressures to cut back on Iranian imports.

Iran sharply warned its neighbors about making any deals that could undercut its critical oil income. The Gulf rulers barely blinked.

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Economy, GeoPolitics, News January 17, 2012

Scotland gears up for breakaway vote

In 2010, the United Kingdom produced 2.2 million barrels of oil and gas equivalent (boe) per day, making it the second largest oil, and third largest gas producer in Europe. The industry employs 440,000 people, 45% of them in Scotland.

- In a geographical calculation, any oil or gas produced within Scotland’s sea area is claimed as Scottish, and, according to this calculation, Scotland produced 5.9 billion pounds) of the UK’s 6.5 billion pounds of North Sea oil revenues in 2009-2010, or 91.4%.

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Economy, Integration, News January 16, 2012

QE3 has already begun in Europe

Most Americans associate a covert action with the CIA, not the Fed. But that’s exactly what Ben Bernanke did at the end of November.

The Fed chief authorized a coordinated action that lowered pricing on US “dollar swaps” by 50 basis points (0.5 percent) to its key allies in central banking. The Bank of England, the ECB, the Swiss National Bank, the Bank of Japan and the Bank of Canada are each a party to the agreement.

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Development, Economy, Military Buildup, News January 13, 2012

Iran ‘steps up military aid to Syria’

Even though Iran’s locked in a confrontation with the West in the Persian Gulf, it appears to be stepping up its military efforts to save its strategic Arab ally, President Bashar al-Assad of Syria, as he battles an insurrection aimed at toppling his regime.

Maj. Gen. Aviv Kochavi, head of Israel’s Military Intelligence, claimed Wednesday Tehran’s main Arab proxy, Hezbollah in Lebanon, is also “providing Assad with intelligence, weapons and other means, recently with active involvement.”

On Tuesday, Turkish customs officials, acting on a tipoff, intercepted four trucks allegedly carrying “military equipment” from Iran to Syria on the Iranian border.

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Development, Economy, GeoPolitics, Integration January 13, 2012

Chinese yuan could become second world currency

China and Japan will soon conduct bilateral trade directly in yuan. In 2010, trade between the two countries amounted to 260 billion euros. Could the Chinese yuan emerge as the second world currency after the dollar?
All signs point to the Chinese yuan emerging as a second world currency after the US dollar. A key step in this development was taken in late December when China and Japan agreed to conduct future bilateral trade directly in the Chinese currency.

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Analysis, Economy, Flashpoints, Risks January 9, 2012

U.S. debt is now equal to entire economy

The amount of money the federal government owes to its creditors, combined with IOUs to government retirement and other programs, now tops $15.23 trillion.

That’s roughly equal to the value of all goods and services the U.S. economy produces in one year: $15.17 trillion as of September, the latest estimate. Private projections show the economy likely grew to about $15.3 trillion by December — a level the debt is likely to surpass this month.

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Development, Economy, Flashpoints January 3, 2012

Greece: Clinch bailout or face euro exit

Greece will have to leave the euro zone if it fails to clinch a deal on a second, 130 billion euro bailout with its international lenders, a government spokesman said on Tuesday.

It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves.

“The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro,” spokesman Pantelis Kapsis told Skai TV. “The situation will be much worse.”

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Development, Economy, Flashpoints, Risks, Sanctions January 2, 2012

Report: Iranian riyal hits record low as US sanctions batter currency

Iran’s currency hit a new record low to the U.S. dollar on Monday, two days after President Barack Obama signed into law a bill targeting Iran’s central bank as part of the West’s efforts to pressure Tehran over its nuclear program.

State radio said the Iranian currency’s exchange rate hovered around 16,800 riyals to the dollar, marking a roughly 10 percent slide compared to Thursday’s rate of 15,200 riyals to the dollar. The riyal was trading at around 10,500 riyals to the U.S. dollar in late December 2010.

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Economy, Flashpoints, Military, News January 2, 2012

The New Great Game: impending economic collapse in Afghanistan and Pakistan’s choices

Donor aid flows are already declining and in the absence of a legitimate export base or centrally collected tax flows, there will be a substantial decline in aggregate demand leading to a contraction in the gross domestic product (GDP). Estimates by US Treasury officials put the estimated GDP contraction anywhere between 13% (best case and same as that occurred in the US during the Great Depression) and 41% (worst case). After the Isaf drawdown, any magnitude of recession inside 13%-41% will create significant unemployment, ballooning crime rates and, in the absence of international peacekeepers, full-scale social unrest.

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Economy, News, Strategic Interests December 27, 2011

Afghanistan, China to sign first oil contract

Afghanistan will sign a deal Wednesday allowing China’s state-owned National Petroleum Corporation to become the first foreign firm to produce oil in the country, the Ministry of Mines said.

The deal will allow the Chinese firm to work oil blocks in the northeastern provinces of Sari Pul and Faryab. The area, known as the Amu Darya River Basin, is believed to have reserves of about 87 million barrels of oil.

Minister Wahidullah Shahrani will sign the accord with the director of the Beijing-based company, ministry spokesman Jawad Umer said Tuesday. The contract calls for CNPC to form a joint venture with a local partner, the Watan Group.

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Analysis, Economy, Flashpoints, GeoPolitics, Military December 26, 2011

Potentially explosive movements on a volatile Asian chessboard

A new era of increasing instability is opening in East Asia.

The death of North Korean leader Kim Il-Jong is only adding another, if explosive, element to an already volatile equation:

China enters a period of substantially slower economic growth, if not a crash, on the eve next autumn of a takeover by a new generation of undistinguished Communist Party leaders.
Japan wrestles with efforts to remake its domestic politics, but buoyed by its always magnificent; if constipated; bureaucracy, pursues a security buildup despite, ironically, a left-leaning governing party precariously clinging to power.

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Economy, News, Risks December 22, 2011

US Cities Going Bankrupt In Economic Crisis

With less than a year to go until America elects its next president, the country has been warned of a looming new economic crisis.

Major cities across the United States are declaring themselves bankrupt in the face of huge debts and declining revenues.

Birmingham, in Alabama, and Harrisburg, the state capital of Pennsylvania, are the latest high-profile cities to file for bankruptcy. Analysts warn as many as 100 American cities are at risk.

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Economy, News, Resources, Strategic Interests December 19, 2011

Iran’s Caspian Discovery Could Change the Regional Gas Game

Iran’s recent announcement that it has found a huge new gas field in the Caspian has been touted as a major event, which will “will change the energy and political balance around the Caspian Sea”, according to President Mahmoud Ahmadinejad. With estimated reserves of 1.4 trillion cubic metres of natural gas and 8 billion barrels of oil, the find is undoubtedly significant, but perhaps not for the reasons which Iran means.

First is the legal issue. Iran has not yet revealed the exact location of the field, which is unusual.

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Diplomacy, Economy, News December 18, 2011

UK Isolation: France Says Agencies should downgrade ‘Greece-like’ UK

Relations between France and the UK plumbed new depths on Thursday when the head of the French central bank said ratings agencies should downgrade the UK before France and the country’s finance minister compared the British economy to that of Greece.

“A downgrade does not strike me as justified based on economic fundamentals,” French central bank chief Christian Noyer said in a interview with a French local newspaper.

“Or if it is they should begin by downgrading the UK, which has a bigger deficit, as much debt, weaker growth and where bank lending is collapsing.”

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Economy, News, Risks December 15, 2011

Hunger up in U.S. cities, more to come: mayors

A survey of 29 U.S. cities shows hunger has risen in most of them in the last year and is largely expected to increase in 2012, the U.S. Conference of Mayors said on Thursday.

Eighty-six percent of the survey cities reported requests for emergency food aid had increased in the last year, the study by the mayors’ group said. Two cities said they had stayed the same.

Unemployment led the list of causes of hunger, followed by poverty, low wages and high housing costs.

No survey city expected requests for emergency food aid to drop over the next year, and 93 percent expected a rise.

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Crisis, Economy, Flashpoints, Risks December 15, 2011

IMF warns that world risks sliding into a 1930s-style slump

The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe’s deepening debt crisis, the head of the International Monetary Fund has warned.

On a day that saw an escalation in the tit-for-tat trade battle betweenChina and the United States and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of “retraction, rising protectionism, isolation”.

She added: “This is exactly the description of what happened in the ’30s and what followed is not something we are looking forward to.”

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Crisis, Economy, Flashpoints, Risks December 6, 2011

Standard & Poor’s warns of mass eurozone downgrade

Standard & Poor’s has warned it may carry out an unprecedented mass downgrade of euro zone countries if EU leaders fail to deliver a convincing agreement on how to solve the region’s debt crisis in a summit on Friday.

The ratings agency’s threat to downgrade 15 countries all the way up to AAA-rated Germany and France came hard on the heels of a Franco-German initiative, to be discussed on Friday, to enforce budget discipline across the 17-member zone through EU treaty changes

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Analysis, Economy, Flashpoints, History, Integration December 5, 2011

Thinking the Unthinkable: How to Break Up the Euro Area

The unthinkable is becoming possible. Until recently, the breakup of the euro area seemed nothing but an illusion, but suddenly this possibility is a clear and evident danger. If the euro area is to be broken up, it should be done as amicably, cleanly, symmetrically —and as fast as possible.

A collapse of the euro only a dozen years after its introduction would be a great folly. But as Wolfgang Munchau of the Financial Times has pointed out, such a risk is steadily rising and policymakers need to consider how to minimize the damage of such an economic disaster.

Collapses of currency zones are usually very painful, and a dissolution of the euro area will be no exception.

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Development, Diplomacy, Economy, Military, Powerplay December 5, 2011

US-Australia-India Cooperation: An Anti-China Axis?

A recent multi think-tank publication entitled “Shared Goals, Converging Interests: A Plan for U.S.–Australia–India Cooperation in the Indo–Pacific,” has apparently been the source of an about-face by Australian Foreign Minister Kevin Rudd.

Co-published by Australia’s Lowy Institute, India’s Observer Research Foundation, and the U.S. Heritage Institute, the authors called for a tripartite defense pact between the United States, Australia, and India in a world where “the rise of China…is posing the first serious challenge to U.S. military preeminence in Asia in half a century.”

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Economy, Flashpoints, Protest December 4, 2011

China to prepare for social unrest as the economy takes a slide

Beijing has underlined its concern that an economic slowdown could lead to social unrestin China, with the country’s security chief urging local officials to do more to prepare for the “negative effects of the market economy”.

Zhou Yongkang, a member of the politburo, told provincial officials that they needed to find better methods of “social management” – a euphemism which can include everything from better internet censorship and strategic policing of violent unrest, to a better social safety net.

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Development, Economy, Population December 3, 2011

Japan to set up Asian disaster insurance plan / Scheme covers South Pacific states, ASEAN

The government plans to jointly establish a large-scale insurance system encompassing the Asia-Pacific region to cover developing countries hit by devastating earthquakes, typhoons and other disasters, The Yomiuri Shimbun has learned.

The scheme will be established jointly by the Japanese government, the World Bank and the Asian Development Bank, officials said Saturday.

For this purpose, funds will be drawn from premiums collected from countries and territories taking part in the insurance scheme and monetary contributions from Japan and other industrial countries, they said.

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Economy, Integration, News, Strategic Interests December 2, 2011

Chavez touts new Latin America, Caribbean bloc

What if they threw a giant party for the Americas and didn’t invite the United States or Canada? That’s what Venezuelan President Hugo Chavez is doing with a two-day, 33-nation summit starting Friday, welcoming nations from Brazil to Jamaica in what he hopes will be a grand alliance to counter U.S. influence.

Many presidents have less sweeping goals in mind, seeing the new Community of Latin American and Caribbean States mainly as a forum for resolving regional conflicts, building closer ties and promoting economic development.

Yet the bloc’s creation is also a sign that for many countries, the United States is no longer seen as an essential diplomatic player in regional affairs.

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Economy, FUBAR, History, News November 29, 2011

What happens when a currency collapses: ask Bulgaria

According to the International Institute of Finance, inflation in Bulgaria hit 174.4 percent in 1996 and a record of 1,077.5 percent the next year. Its curency, the lev, went from 500 per US dollar in late 1996 to 2,200 per US dollar in February 1997.

Food shortages and a harsh winter drove people to despair, with mass rallies ultimately forcing out the post-Communist government largely blamed for the disastrous policies that led to the currency collapse.

“For the average people, it was just terrible. Nobody really understood what happened, the only thing we could see was that it all ended in disaster,” says Komneva.

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Economy, Flashpoints, Integration November 29, 2011

All of EU ‘in danger of credit rating downgrade’

All European governments are in danger of having their credit ratings slashed due to the eurozone debt crisis, the influential agency Moody’s has warned.

Several countries could end up having their ratings cut to so-called ‘junk’ status — a highly risky rating usually only given to heavily indebted companies.

Moody’s said the credit standing of all European governments was under threat, adding that while it believed the eurozone would remain intact, countries could still lose their prized credit ratings.

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Development, Diplomacy, Economy, Resources November 28, 2011

Major events in Caspian countries’ oil and gas industry for last week (Nov. 21-26)

Azerbaijan, EU discuss cooperation on energy prospects

Azerbaijani Minister of Industry and Energy Natiq Aliyev received a delegation headed by the European Commission’s Vice-President in charge of transport Siim Kallas. Both sides discussed the prospects of energy cooperation between Azerbaijan and the EU, Baku’s role in the EU energy security and of importance the recently signed agreement on transit of Azerbaijani gas through Turkey. The two sides also discussed the possibility of transiting Azerbaijan’s infrastructure on energy transportation from the east coast of the Caspian Sea to Europe.

Turkmenistan and China sign agreement on additional gas supplies

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Black Market, Crisis, Economy November 16, 2011

Vultures feed when economies are turned into rotting carcasses

Grossman is a “vulture”, the name Wall Street gives, with an affectionate smile, to those who can get their hands on old, forgotten debts of desperately poor nations – Congo, Zambia, Peru and Liberia are cases I’ve investigated – that they pick up for pennies on the pound of face value.

When – usually after a Bono concert – western nations forgive debts owed by these poor countries, the nation receiving this aid is now ripe enough, and flush enough, for attack by a vulture, who demands many a pound of flesh for the debt he suddenly brandishes.

In Grossman’s case, his company paid about $3m for a debt Zaire (now Congo) owed Yugoslavia (now Bosnia). A court on the tiny island of Jersey, a tax haven in the Channel, has ordered Congo to turn over the $80m it has in a bank account there, the payment for the cobalt. Furthermore, Congo must pay an additional $20m to Grossman if the country can find the money.

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Crisis, Economy, Hard Power, Powerplay November 16, 2011

Frankfurt Group, Europe’s hit squad

The Old Opera House in Frankfurt – once Germany’s most beautiful postwar ruin and now its most stunning recreation – has become a symbol of European rebirth. And it was here, last month, that Angela Merkel and Nicolas Sarkozy met the EU’s bureaucratic elite in what would, in another era, be described as a putsch. They had grown tired of eurozone summits, with leaders flying here and there but getting nowhere. A smaller group needed to be formed, who would wield power firmly but informally. That evening, as they gathered to hear Claudio Abbado conduct the Mozart Orchestra of Bologna, a new EU hit squad was born.

As Silvio Berlusconi has now found out, this so-called Frankfurt Group means business. Only a few months ago, it would have been unthinkable that the head of one European government would try to destabilise or depose another.

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Crisis, Economy, News November 13, 2011

Germany ‘draw up secret plan for euro with no Greece’

Finance ministers have become increasingly concerned that Greeks could reject the austerity programme demanded by the EU, according to Der Spiegel magazine.

The confidential ‘Plan B’ also includes a contingency plan if the economies of both Italy and Spain collapse.

The magazine suggested Germany could benefit from a pull-out by Greece.

‘Without the weakest link, the chain of member states in the zone would be strengthened,’ it stated.

The claims contradict German chancellor Angela Merkel’s insistence on Thursday that it was opposed to any member state pulling out of the eurozone.

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Crisis, Economy, GeoPolitics, Powerplay November 10, 2011

Europe’s shadowy new parallel government

The Cannes G20 summit was marked by the emergence of a new “political-economic lobby”, reports El Mundo: the Groupe de Francfort, or Frankfurt Group (GdF), which is composed of eight public figures:

German Chancellor Angela Merkel, French President Nicolas Sarkozy – increasingly dubbed ‘Merkozy’ in the European press – but also Eurogroup President Jean-Claude Juncker, IMF Managing Director Christine Lagarde, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy, ECB President Mario Draghi, and Olli Rehn, the EU Commissioner for Economic and Monetary Affairs. The group was born from a chance meeting at the Frankfurt Opera House on 19 October, where all of its members attended a ceremony to mark the end of Jean-Claude Trichet’s tenure as President of the ECB.

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Crisis, Economy November 10, 2011

Analysis: Euro zone failure could be vast geopolitical shock

Any euro zone failure would send shock waves around the globe, shifting the balance of geopolitical power and perhaps prompting a fundamental reassessment of what the world’s future might look like.

EU sources told Reuters that officials of France and Germany, since the 1950s the driving forces of European integration, had held discussions on a two-speed Europe with a smaller, more tightly integrated euro zone and a looser outer circle.

Estimates of how likely the currency bloc is to break up, how damaging it might be and what might remain afterwards vary wildly. But with European leaders still struggling to find a credible response to the crisis, the prospect of one or more countries leaving — and effectively defaulting on their sovereign debt as they do so – is seen rising by the day.

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Economy, News November 7, 2011

Britain could be forced to hand over £40billion to the IMF

The latest bombshell to hit the eurozone came as David Cameron was poised to hand over £40billion of taxpayers’ cash to help bail the single currency out.

Ministers say the Government can transfer the extra contribution to the International Monetary Fund without MPs even voting on it – which will infuriate struggling families here.

The amount works out at about £600 for every man, woman and child in Britain.

The prospect of the huge increase came as speculation in Athens suggested the Greek coalition could be led by finance minister Evangelos Venizelos.

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Economy, GeoPolitics, Integration November 7, 2011

Reunified Korea Would Be a Better Partner for Russia, China

The Institute of World Economy and International Relations (IMEMO), Russia’s foremost national policy think tank, forecast in a special report that North Korea will be absorbed by South Korea between 2021 to 2030, entering a de facto stage of reunification. The IMEMO report, which projects global trends until 2030, was published in September.

The report says that the transfer of power from North Korean leader Kim Jong-il to his third son Jong-un will lead to a power struggle between “bureaucrats” with foreign business connections and “military and security officials” with no outside links. This will result in the creation of an interim government in North Korea under the control of the international community, leading to steps to disarm the North and modernize its economy.

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Economy, Flashpoints, Integration, Policy November 7, 2011

Britain has drawn up plans for collapse of the euro, admits Treasury minister

Pressed on the preparations, Mr Hoban added that the Treasury was “contingency planning for a whole range of outcomes”.

Asked if the Coalition would rule out ever joining the euro, Mr Hoban replied: “I don’t think there is any intention for us to join the euro at a time when it is breaking up.”

Treasury officials insisted that he had been speaking conditionally and had not meant that the euro was fragmenting.

However, eurozone leaders publicly admitted that the exit of some euro members was now possible.

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Economy, News November 7, 2011

Property Prices Collapse in China. Is This a Crash?

Residential property prices are in freefall in China as developers race to meet revenue targets for the year in a quickly deteriorating market. The country’s largest builders began discounting homes in Shanghai, Beijing, and Shenzhen in recent weeks, and the trend has now spread to second- and third-tier cities such as Hangzhou, Hefei, and Chongqing. In Chongqing, for instance, Hong Kong-based Hutchison Whampoa cut asking prices 32% at its Cape Coral project. “The price war has begun,” said Alan Chiang Sheung-lai of property consultant DTZ to the South China Morning Post.

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Diplomacy, Economy, GeoPolitics, Intelligensia November 4, 2011

Dark days for Taiwan’s spies

When Taiwan’s government last month announced budget cuts in military intelligence, the Ministry of National Defense (MND) insisted operations against mainland China would not be affected.

It’s only administrative expenses being whittled down, said the MND, and if anything, Taiwan’s strength in intelligence warfare will be boosted. However, media paint a vastly different picture, suggesting Taiwan’s future leaders will be completely deaf and blind to secretive developments across the Taiwan Strait.

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Crisis, Economy, Flashpoints, Military November 2, 2011

Coup Fears During Greek Meltdown

The CIA warned in May that austerity measures risked provoking a military coup. A military junta ruled Greece between 1967 and 1974.

Two socialist MPs defected, cutting the government’s majority to one. A further six leading socialists called for Papandreou’s replacement. Finance minister Evangelos Venizelos was hospitalised after stomach pains, missing crisis talks.

“No one will be able to doubt Greece’s course within the euro” after the referendum, Papandreou insisted last night. A confidence vote is set for Friday, and the opposition from within Papandreou’s own party may cause the government to fall, prompting an election.

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