Wednesday, January 10, 2007

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The energy follies, continued

I might need to create a new category for the blog: file under Utterly Stupid Moves by Energy-Abundant Regimes.

First, there's Venezuela. Simon Romero and Clifford Krauss explain in the New York Times:

Investors reacted with alarm here and in markets in the United States and throughout Latin America on Tuesday as they measured the impact of the plan by Mr. Chávez to nationalize crucial areas of the economy. Memories of past nationalizations during another turbulent era, in places like Cuba and Chile, helped drive down the Caracas stock exchange’s main index by almost 19 percent....

Owners of Venezuelan steel, banking, cement and hotel companies — even the cable car operator that takes tourists to the top of the Ávila mountain here — could be affected by the push toward nationalization, analysts said.

“Chávez is deepening his revolution, but in doing so will he follow the law and compensate the companies whose assets will be nationalized?” said Miguel Octavio, executive director of BBO Servicios Financieros, a brokerage firm, who calculated the costs of taking over companies in the telecommunications, electricity and oil industries, as well assuming their debts, at more than $15 billion.

“It doesn’t seem like the government has thought this project out yet,” Mr. Octavio said.

Tony Snow, a White House spokesman, said on Tuesday, “Nationalization has a long and inglorious history of failure around the world. We support the Venezuelan people and think this is an unhappy day for them.”

Mr. Chávez further intensified worries with his request for vastly enhanced presidential authority from his Congress. If successful, those new powers would allow him to decree measures into law for one year, bypassing any debate in the legislature, where in any case all 167 deputies are his supporters. On top of that, he made a request to abolish the autonomy of Venezuela’s central bank. The Venezuelan government did not immediately contact the American companies, which declined to discuss details.

Then there is Russia. [For forcing Belarus to pay higher prices for energy?--ed.] No, and let's be clear about this -- as with Ukraine last year, Russia is perfectly justified in switching to market rates for their energy exports. It's the way in which they go about trying to do this that's so wrong-footed. In the International Herald-Tribune, Judy Dempsey and Dan Bilefsky explain why Europe is so ticked off:
Chancellor Angela Merkel on Tuesday publicly rebuked Russia for not consulting its European partners before suspending oil shipments destined for Poland and Germany in a dispute with Belarus.

"It is unacceptable when there are no consultations over these actions," Merkel said during a joint news conference with the European Commission president, José Manuel Barroso, in Berlin. "That hurts trust and it makes it difficult to build a cooperative relationship based on trust."

Russia on Monday halted shipments to Belarus after Minsk imposed a tariff on Russian oil in retaliation for an increase in the price of Russian oil exports to Belarus. Belarus, one of Russia's main routes for piping its oil to Europe, admitted that it had siphoned off some oil destined for European customers after Russia cut the shipments through the Druzhba, or Friendship, pipeline.

Barroso said it was "not acceptable for suppliers or transit countries to take measures without consultation," adding, "Of course this is a matter for concern."

Germany depends on Russia for a third of its natural gas and a fifth of its oil. Russia supplies a quarter of the EU's gas and about a fifth of its oil.

I don't understand the lack of consultation on this one. It's not like the European Union is going to be upset about squeezing the Belarusian leadership -- and with sufficient preparation, this could have been handled much more smoothly. Why not consult?

Finally, we have Iran. As the United States ratchets up its own sanctions, the Iranian leadership seems surprised that, like, they have alienated a lot of countries. In the Financial Times, Daniel Dombey and Gareth Smyth explain the confusion in Tehran:

[T]he new UN regime - which took months to negotiate in New York - appears to have surprised parts of Iran's leadership, with differences emerging on how best to respond. After a period in which Iran saw its regional influence increase at relatively little cost, Tehran now faces greater isolation....

A regime insider told the FT last week there was no chance Iran would accept the resolution within the 60-day deadline, and would go ahead with plans to extend the number of centrifuges - devices for enriching uranium - in the research plant at Natanz.

But pragmatists in Tehran have become bolder in pronouncements, because of their concern at the scope of the UN resolution and because of the reverse suffered by President Mahmoud Ahmadi-Nejad last month in elections for local councils and for a top clerical body. "The mood has shifted but not yet policy," the insider said. "There may well be changes in the leadership's approach, but not immediately."....

Iran's Fars news agency yesterday ran a long interview with Hossein Mousavian, a former nuclear negotiator close to former president Akbar Hashemi Rafsanjani, in which he described the UN Security Council as the "highest international legislative authority" and criticised the government of Mr Ahmadi-Nejad for attacking the council's resolution as "illegal".

But yesterday, Ayatollah Ali Khamenei, Iran's supreme leader, reiterated that nuclear energy was "a source of pride for the Iranian nation and Islamic world" and that Iran would not give up its "right".

Even the Nelson Report observes that, "there’s no question that, along with the EU, Washington and Beijing are simultaneously taking a tough line on Iran. And the implicit 'message' of the arrival in China of Israeli Prime Minister Olmert, today, is clear to all concerned."


posted by Dan on 01.10.07 at 08:47 AM


implicit 'message' of the arrival in China of Israeli Prime Minister Olmert, today, is clear to all concerned." ....US military technology for sale!!!!!
Hey we aint squeezing our energy supplier for nothin'.

posted by: J. Pollard on 01.10.07 at 08:47 AM [permalink]

No doubt our men and women in the USAID , VOA , and the other alphabet soup of agencies are hard at work nipping 'resource nationalism' in the bud.

For our sake, I hope all this works out better than all the other neolib/neocon projects

1) The invasion of Iraq
2) The subsequent wave of democratization in the Mid East
3) The Cedar Revolution
4) The Orange Revolution (A Who song comes to mind here)

posted by: Mitchell Young on 01.10.07 at 08:47 AM [permalink]

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