Oil Nationalization

Foreign oil companies and government-owned oil companies used to control the world’s oil sites much more equally. Today, though, most oil-producing countries have let their own, government-controlled companies take over oil production, pushing out the international companies. One problem with this is that, with 90 percent of the world’s oil reserves being government-controlled, individual oil-producing governments have a lot of say over who they sell oil to and at which price they sell it. It’s bargaining power, and, when connected to the government, political power. Unfortunately, many of the most productive oil states today are states with histories of violence, political unrest, poverty, and anti-US sentiment. Countries like China and India, however, which desperately need the oil supplies they don’t have, are willing to do almost anything to keep these countries sending oil to them, which results in international tension and plain old trouble. Just like everything else, it’s complicated.

In a piece written in 2007—just as the main article was—the Christian Science Monitor pondered many of the same issues written about in CQ Global Researcher, including (obviously) the “surging” of nationally-owned oil companies, Venezuela’s balancing act between spending oil money on its social problems and producing enough oil to justify that spending, Iran’s potential switch to oil importer from oil exporter, and the switch from developed to undeveloped nations producing the vast majority of the world’s oil. It also makes the point that government-owned oil companies often fund social programs, which help keep nations with histories of conflict out of civil wars. It’s better for everyone (including Westerners), if peace is kept. Civil war, after all, could lead to no oil output at all. This would cause prices to buy oil elsewhere to rise.

This article was written in September 2009, so it is much more up-to-date than either of the other articles. It deals with oil nationalism specifically in Latin America. Although Brazil already had its own oil companies taking on the majority of its oil work, since oil has been discovered recently off the coast, President da Silva has pushed for even more foreign companies to leave. He also has negotiated with those staying, so that they are more likely to be accepted if they use Brazilian human and technical resources. Mexico has taken a similar tactic, allowing foreign oil companies to stay, but trying to increase Mexican jobs through them. Foreign Policy in Focus calls this “soft nationalization.” This is in contrast to the straight-up hard nationalization of Ecuador and Venezuela, both of which approach foreign oil companies as the enemy. Venezuela has lately passed several policies protecting their oil companies, and Ecuador is reopening a lawsuit against Chevron for an oil spill which occurred over a decade ago. Since Latin America is so close to the US, its oil policies very definitely affect us, and it’s not good for our finances to have American/international companies bowing out for government-owned companies, as we run the risk of becoming indebted to those countries directly through their own governments. Plus, the more oil we get from Latin America, the less we need to get from the Middle East, and vice-versa, so it’s an interconnected issue.

The third article (again from 2007) reports on the US Energy Secretary Sam Bodman’s opinion of nationalized oil. Most of the article is essentially a summary of the Global Researcher article, but I found it interesting that he claimed government control will harm producing nations eventually by lessening foreign investment, as I would have thought that oil production was one thing not likely to lose investors. No matter where it is or how it’s taken out of the ground, people need it, right? Bodman surely realized that, though. He also called for more effort worldwide to be put into energy security by focusing on alternative energy development and stockpiling crude oil to be released whenever supply is disrupted. Presumably that would help oil costs from jumping too much.

While I understand that it does crazy things to Western economies and companies and puts an awful lot of power into the hands of some of the world’s less stable countries, I can’t help but feel that countries like Iran and Venezuela have the right to nationalize their oil companies and refuse to let international corporations control their oil reserves. The latter may keep prices and tensions more stable, but…it is their oil. Not ours. America has oil reserves, and it could tap those. It could even allow them to be governmentally controlled, so we had sole export power for oil out of the US. Yet we prefer to import oil from other places, and thus are subject to certain rules and even a bit of manipulation. Historically, oil money has gone to further fatten up members of the elite, but today, several of the countries producing oil right now spend their oil money on social programs. On the other side of the coin, these countries demanding that international corporations get out of their oil business are not exactly Sweden or Brazil, with smooth-running systems and little conflict with other nations. Venezuela and Iran really do not like the US, China is willing to manipulate and interfere wherever necessary to sate its tremendous thirst for foreign oil, and oil is too big a factor in economies worldwide to be messed with just because this country offended that country. That’s hardly promising. I don’t know what a solution would be, really, but I would think that maybe a little more diplomatic intervention into oil affairs might help nationalized operations to be run fairly. How, I don’t know.

Note: Despite the constant negative depiction in American media of Chavez as a monster, he seems much more human when you hear that he has donated heating oil to the US poor and worked hard to reduce poverty in Venezuela. I thought that was an interesting tidbit.

Challenges of the Falling Dollar

It seems like every time in the past few years I’ve ventured over to CNN Business or TIME Money, there are headlines about the decline of the dollar, the rise of inflation, and the competition between the dollar and the euro. Understandably, Americans worry about their currency slipping, and the rest of the world can’t help but take note. The dollar isn’t just important for Americans. It has global influence and importance. If the dollar continues on its downward slope, then it makes American exports more competitive with cheaper, foreign-made products, which is good for the US economy; however, being that most countries have conducted the majority of their international transactions and kept reserves of US dollars opposed to their own currency or other strong currencies (like the euro or the increasingly strong RMB), the lowering of the dollar’s value poses issues both in the US and abroad.

Besides worries over the dollar’s stability as a reserve currency and ability to stand against inflation, challenges currently facing the dollar include the present trend toward investing in commodities such as oil rather than the US dollar (which, since the two are tightly linked, results in a rise in oil prices as the dollar falls), the relationship between the dollar and food prices (as the dollar’s value decreases and more people invest in food rather than currency, it costs much more for developing countries to buy food products, which results in hunger spiking dramatically), and the issue of whether or not China should be pressured via trade restrictions to revalue its currency (it’s good for China to keep the RMB weaker than the dollar because it keeps the world buying Chinese-made goods, but the US says it’s unfair for China to keep their currency a jump lower than the dollar when the dollar is falling).

These concerns about China coordinate well with a TIME Business article published only a few days ago, which discusses a prominent economist’s belief that it is foreign investors that have caused the major problems in the US economy. The article doesn’t discuss the dollar’s position, but rather the surrounding economic tensions between countries, including those which the original article cited as helping to drive the dollar down. For instance, China purchased large amounts of US Treasury bonds, which “push[ed] down yields and [made] Treasuries less attractive to other foreign investors,” eventually resulting in the financial meltdown the US has been weathering for some time now.

According to an article in New York Magazine back in 2005, James Cramer takes an alternate view and lists positive outcomes of having a weaker dollar. His take is that a weaker dollar (provided China revalues its currency as discussed above) would result in Americans buying American far more often, as they might be unable to afford the alternative, and this would help the US economy and stop us from importing (and thus depending) quite so much on other countries. He recommends buying gold as a solid monetary investment (since Nixon cut the dollar-gold link in the 70s, there is no reason the price of gold can’t absolutely skyrocket), investing in Canadian real estate and oil resources, investing in US companies that export goods internationally, and investing in M&A companies. While readers must remember that some of this is quite dated—no reason to buy Canadian real estate when the real estate market here is so terrible), much of it relates closely to the original article; for instance, the link between oil and the dollar still holds true.

CNBC recently published a piece dealing with the way gold is rising as the dollar falls against the euro. Spot gold apparently rose nearly $8, to $1,136.80 per ounce. Simultaneously, the euro hit its high against the dollar, and oil prices fell to their lowest price this month. Experts say that they expect gold to continue rising in value unless the dollar “rallies,” which would lessen the attractiveness of gold as a stable investment, since dollars have been the primary stable investment for decades, and it would be easy to switch back. I thought it was interesting that oil went down; I’m not actually sure what’s going on there. Then again, the original article did make the point that the oil-dollar link was not perfect and did not always follow a simple correlation.

Personally, I feel that the dollar won’t go out of fashion quite yet; the US may be on its way out as THE major economic power, but it’s still absolutely one of the most powerful countries in the world. The exchange rates against the dollar are certainly not what they used to be. However, that doesn’t exactly make us a poor country, or a country in need of piggybacking on another country’s currency, or a country with no global influence. I don’t know how the rest of the world will view the dollar in the future, or if the euro or the RMB will replace it as the international stock money, but the dollar will exist, and it will be good enough for the US, at least.

(Note: Please keep in mind that, although I carefully read the main article and all of the secondary articles, I am really not familiar with matters of finance, so any speculation or assumption I make here could be wildly off.)

Global Food Crisis

Since this is my research topic, I just earlier today posted several links applicable to this article. It seems foolish to look up more of the exact same thing, so I hope that it will be okay to simply direct you back to the same articles, and spend the extra space discussing one or two of the “Global Food Crisis” CQ Global Researcher article’s other aspects. Which, in fact, I will be using for my paper, although I didn’t have a link for it before.

Food and water shortages are not like money shortages. Bad economic times are hard, certainly; it’s harder to purchase food and water; it’s harder to escape from poverty. But the problem implicit in food crises is that food and water are the most important substances in the world. Homelessness can be survived, even if it is dangerous. Going without food and water can kill you in a manner of days.

Because of that, it seems, at least to me, that messing with food production is one thing that really should not be played around with. In the US, there are investors who are essentially hoarding food until market prices go up—that is unacceptable. Food is not money, and expecting to make a living off the food you produce is different from playing the food market like the stock market. The US seems to be toying with poorer countries in order to make profits off their food exports. They keep high subsidies for their own farmers, but press less well-off countries to abandon their own subsidies and instead purchase US food, which is cheaper, and good for us, but makes these countries dependent on other countries and completely devastates local farmers. This seems cruel and ultimately a bad idea, although that’s just my opinion.

I would also like to address the problem with how certain types of food production seem to be pushing the world’s food supply in a downward spiral. The meat (particularly from animals like cows) industry takes up an enormous amount of energy and resources, which are, as the article discusses, not infinite. It would make for a more sustainable and healthier world if Westerners ate much less meat. However, we’re accustomed to having meat at nearly every meal. That’s a problem, but there are others like it with trickier answers than “cut back on meat consumption.” African countries are clamoring for factories to produce things like Plumpynut, which is a peanut-butter-like substance which can keep children fed and healthy for very little money. Not only would such factories help feed malnourished children and thus help the hunger problem, but they would also create jobs and help make the areas more economically healthy. The article didn’t mention it, but most factories, especially in developing countries, can’t help but create enormous amounts of pollution and CO2. Similarly, producing more food requires more land, which, according to the Brazilian official quoted, would require clearing acres upon acres of rainforest. Pollution and CO2 emissions and the destruction of forests are linked to climate change, and, as is discussed in the sidebar articles dealing with climate change and its challenges, climate change is NOT good for food production, and can lead to water scarcity and problems like more frequent natural disasters (hurricanes, floods, etc.), which devastate crops. So, in the long run, is producing food going to be a losing battle?

One more question related to that: experts said in this article that globalized food is how hunger is solved. However, is that sustainable? It takes an awful lot of fuel to transport food around the world, and we have a finite supply of fossil fuels—and there are obviously food/fuel problems with using immense amounts of biofuel to transport food around the world.

Prospectus

For my research paper in this class, I’d like to look at the Global Food Crisis.

I’ve found some really good sources from trustworthy places, and these are helping me shape my specific research question. This Washington Post series (http://www.washingtonpost.com/wp-dyn/content/article/2008/04/26/AR2008042601723.html) is absolutely fascinating and very informative about the different aspects of food shortages around the world and how they have been escalating since the 1970s. In addition to discussing global food shortages, it discusses Africa in particular, American price increases, the corn-ethanol problem, and the problem with growing less wheat, as the US is currently doing. Then, this USAID webpage (http://www.usaid.gov/our_work/humanitarian_assistance/foodcrisis/) details both the problems involved with the food crisis and current US programs and statistics, so you can get a good idea of what areas the US is most concerned about. This statement before the Senate Foreign Relations Committee (https://www.aplu.org/NetCommunity/Document.Doc?id=867) does a good job explaining the history of the Global Food Crisis and its specific causes. All of these articles date within the past two years, so it seems that if this is a representative sample, it won’t be hard to find plenty of information about this issue.

Other sources:

http://infoweb.newsbank.com/iw-search/we/InfoWeb?p_product=AWNB&p_theme=aggregated5&p_action=doc&p_docid=11D66C4381644320&p_docnum=1&p_queryname=1

“Food Prices: The End of Cheap Food” from the Economist

Just like it sounds, this article discusses how the practice of turning corn and wheat into widely subsidized biofuels is driving up food costs, and why that’s a problem. It’s not a very long article, but it’s very specific.

http://ethanol.org/

This site I’ll just be using for facts about ethanol, because I really don’t know much about it. The section on Food and Fuel is probably pretty biased, but their Ethanol 101 section is very detailed and scientific, and I think that will be helpful.

http://www.renewableenergyworld.com/rea//news/article/2008/05/ethanol-lowers-gas-prices-29-40-cents-per-gallon-52564

A news story from 2008 discussing how ethanol drove down gas prices. I don’t really have anything pro ethanol (that I’ll be using), so I thought it would be useful to point out that it does have good qualities, which is why choosing between food and fuel can be trickier than it initially seems.

http://deltafarmpress.com/markets/crop-production-0108/

A story from the Delta Agriculture news site which notes without adding much comment the ups and downs of the corn and wheat harvests for 2008, mentioning at the start that statistics “tell a troubling story for the US ethanol industry.” It’s a different look at the situation.

There are also facts in both the “Rescuing Children” document (pg. 261, briefly discusses link between malnourished children and rising food prices) and the “Looming Water Crisis” document (also CQ Global Researcher, the Outlook part, titled “Thirst and Hunger”) I plan on using, and there’s an honors thesis by Cathryn Wile, an Honors Fellow who graduated in 2008, entitled “The viability of corn, sugar, and cellulosic ethanol as alternative fuel sources: a political, social, economic and environmental analysis.” I don’t know if it will be at all helpful because I haven’t seen it, but it sounds interesting and I want to at least take a look at it, especially since I’m an Honors Fellow and was already planning a trip to the library archives to look at past theses.

Anyway, looking at these, I think that I would like to concentrate on the problem posed by the increased use of ethanol made by corn. It’s a topic that has both positive and decidedly negative consequences. Ethanol is more eco-friendly than using fossil fuels, but using so much of the world’s corn supply for fuel results in food shortages that are truly damaging. As corn is used in many, many food products, shortages result in higher prices for more items than you’d think. I would want to look into such price hikes, plus the areas most affected by corn shortages and just how they are affected, and also how food, fuel, and money interact. It would be important to find out different countries’ strategies for improving the corn/ethanol problem, and to analyze their effectiveness. I think this should be able to be shaped into a decent paper; there’s plenty of material to work with, as this is a very current and fairly well-publicized issue.

The Challenges of Darfur

Darfur is clearly an unstable and immensely dangerous area, with problems so immense it seems it would be impossible to resolve them. For one thing, there are so many questions and gray areas. Is there an ethnic component to the violence in Darfur? No ethnic component because the people mostly all look as if they belong to the same race and differentiate between Arabs and non-Arabs somewhat loosely? Is climate change (and lack of water) a deciding factor, or is that an insulting assumption? Is it President al-Bashir’s fault? Who can stop it, and why don’t they? Is the situation genocide? Does it matter if it’s genocide? Is it necessary to deploy military forces from other countries to calm things down, or just to impose economic sanctions? It gets worse. However, the hardest, most tragic facts of the matter stand: Between 200,000 and 400,000 people in Darfur have been killed, and some 2.4 million have been displaced. Hunger, theft, fire, and especially rape are all used as potent weapons.

My main question is why the US seems to be pressing so strongly for China to impose sanctions on Sudan. Financially, it makes perfect sense—China has more economic leverage with Sudan than any other country, and economic sanctions against Sudan could severely impact Sudan’s cash flow from its oil resources. This doesn’t mean that China is the only country with leverage, though, or that the violence in Darfur would necessarily end if China was working a bit harder against it. Now, China should, of course, do something—but when the US has been so reluctant to assign the term genocide to the situation in Darfur because the International Convention on the Prevention and Punishment of Genocide requires that states using the term genocide take responsibility and do something to stop it, it makes our telling China to step up and do something seem cowardly and, ultimately, ineffective. Similarly, it’s worth noting that the US never ratified the treaty creating the ICC, yet we expect other countries, like Sudan, to follow it, even if they didn’t ratify it, either. This seems unfair.

As the main article was written in 2008, this article (http://www.time.com/time/world/article/0,8599,1916107,00.html) is interesting as a more recent take (August 2009) on what has happened with Sudan’s President al-Bashir. In March of 2009, he was indicted of war crimes, and the ICC indictments require that he be arrested on sight by any of the world’s other nations. However, he has managed to be visible without being arrested. This is not particularly encouraging. Anyway, much of the article harks directly back to the background section of the main article.

Interestingly, I found two very recent articles dealing with the idea that Sudan (not just the Darfur region, but Sudan as a whole) is poised on the brink of a huge civil war. The first, from TIME (http://www.time.com/time/world/article/0,8599,1952418,00.html), says that Sudan is caught up in so many struggles it seems almost inevitable it will plunge into even more, and, even though it outlines some hopeful solutions or aids, ends on the note “Whatever the calls for the world to act, to a great extent the future of Sudan — war, peace, unity, disintegration — will be left to the Sudanese to decide.” The second article, from CNN (http://www.cnn.com/2010/WORLD/africa/01/07/sudan.violence.report/index.html), discusses the escalation of violence between Sudan’s northern and southern regions, and how this makes it unlikely for Sudan to resolve any of its crises, particularly that in Darfur. Both of these articles mentioned the impact of the ICC and international pressures and aid on whether or not conflict escalates into full-blown war, which reminded me of the main article’s emphasis on foreign sanctions and aid to help Darfur.

Human Rights in China vs. Women's Rights everywhere

It’s definitely interesting to connect human rights violations in China (which obviously include women, especially when dealing with issues like forced abortions) to women’s rights throughout the world. I was particularly shocked to realize just how poorly both types of rights seem to be enforced. For example, on the human rights graph in the first article, China rates below a 3 (on a scale to 7) in every category of their human rights report card, and around the world women work 2/3 of the hours worked, but earn only 10% of the income, and own less than 1% of the property. That’s deplorable. The “invisible red line” that exists in China can almost be extended to the rest of the world when applying to women: even in countries where men have more rights than do men in China, women have to be wary of saying or doing the wrong thing and being killed, harmed, or exiled because of it. There are more similarities: the China article talks about how young, educated Chinese are among the most patriotic, government-supporting people around, partly due to the fact that their schools indoctrinate them. The other article talks about how women are continually oppressed by men and tradition, which, although it isn’t necessarily a school, can be its own indoctrination. For an example, just look at the women from small, conservative tribes in Afghanistan who are voted into the women’s seats of legislature by the menfolk in their tribe, and how they are as old-fashioned about women’s rights as the men in their tribe.

I thought that this article (http://www.time.com/time/world/article/0,8599,1952552,00.html) linked well to the idea of enacting international treaties and laws to reduce mistreatment of women throughout the world. Granted, it’s a French law designed to help members of both sexes from being “psychologically abused,” but it’s clear that it is mainly aimed at preventing women from being verbally or physically abused, as it is mentioned that 10% of French women suffer some sort of domestic abuse, without even mentioning a figure for men. It seemed interesting to me that a) the French are trying to take into account women’s mental wellbeing as much as their physical (and economic, and societal) wellbeing, and that b) the French government is willing to admit that in France—France! A developed, well-respected, Western country—a tenth of all women are abused. Can you imagine how many women are being abused in countries like China, where the government would almost certainly not release such a condemning statistic?

The second article (http://www.guardian.co.uk/uk/2009/dec/17/honour-killing-tulay-goren) is about an honor killing that took place in London in 1999. The father who killed his daughter has just now been sentenced. On one hand, it’s encouraging to see this man sentenced to life with minimum of 22 years in prison and to see the girl’s mother testifying against her father; on the other, it took ten years to get to this point. This hasn’t got much to do with the China article, but it reminds me of the Islam article from a few days ago and also relates to the article just about women’s rights.

The third site (http://china.hrw.org/) is not a news article, but rather a website devoted specifically to articles about how China’s current policies do not align well with the ideas of human rights. I thought it was especially interesting that there is a website like this when the China article discussed both how the internet has forced/is forcing China to loosen up in some ways and how China cracked down on controversial internet usage prior to and during the Beijing Olympic games in 2008.

The role different countries’ economies play in liberating or oppressing women is also very interesting, but this is getting quite lengthy.

US Policy on Iran

In this article, it is made clear just how tricky and difficult it is to argue with Iran. It’s a bit like the video we watched in class yesterday about how to go about winning the war in Afghanistan: everything is painted shades of gray, and it appears nearly impossible to get anything of consequence accomplished. The two most significant questions here are a) whether or not the US can successfully and/or safely try to intervene in Iran for whichever reasons, and b) whether or not Iran has or is developing nuclear weapons, and whether that’s a problem or not.

The US is not at war with Iran right now, but as of 2007, when this article was published, one could describe the tension between the countries as a “war of words.” Judging from recent news stories, I would say that the amount of distrust between Iran and the US has not diminished. We don’t like or trust them. They don’t like or trust us. We are highly alarmed by their nuclear research facilities, both for ourselves and for US allies like Israel, because the idea of Iran with a nuclear weapon is terrifying if you think of our sanctions against them, their current dislike of us, and our diminished bargaining power against a country possessing nuclear weapons. However, the other side of the issue reveals that Iran has had nuclear ambitions since before the 1980s (when we were friendly with Iran), that nuclear energy would indeed be helpful for Iran’s economy, and that, as Ahmadinejad said, the Islamic religion is against the possession of nuclear weapons. This is significant, considering that Iran is strongly Islamic (98% Muslim, mostly Shiite), with a government in which final decisions are made by a clergyman. Still, Iran has acted suspiciously in the past, and the government is pretty strongly anti-American and anti-Israeli. Many Iranians even refuse to accept foreign funds, especially from America. Therefore, America’s persistence in trying to fund Iranian human rights movements, etc., could very well be doing more harm than good.

This CNN article rather reminded me of this problem and the way the Iranian government reacted to it: http://www.cnn.com/2010/WORLD/meast/01/04/iran.banned.groups/index.html. Iran has listed sixty groups, many of them based in America, as “soft war” agents against Iran. The list includes the BBC, Human Rights Watch, and Voice of America. Iran does not like the influences any of these groups may be trying to use on its people, and has thus called them out as being war mongers, essentially. Personally, I think this makes Iran look rather paranoid. So does this article: http://www.cnn.com/2010/WORLD/meast/01/06/iran.press.freedom/index.html. Iran has jailed more journalists than any other country. This is a reminder of how Iran feels about free media and non government-sanctioned ideas. I can’t help but think that these sorts of incidents result in US suspicions of Iran that only increase tensions between both countries.

This last article has few direct links to the original article, but I thought it was very interesting to get a look at the Obama administration’s take on nuclear weaponry around the world, and how the somewhat cautious US-Russian relationship could foreshadow how we could work with an Iran possessing nuclear weapons. http://www.time.com/time/world/article/0,8599,1951850,00.html