By Diane Katz

The Export–Import Bank (Ex–Im) funnels billions of taxpayer dollars each year to overseas businesses for the purchase of American products. This subsidized financing is supposedly a win-win proposition for exporters and their customers abroad. But rare is a subsidy that does not produce disparity elsewhere. In the case of Ex–Im, the losers include domestic companies that are left to compete against foreign firms bankrolled by the U.S. government.

This and other drawbacks of Ex–Im are important to acknowledge as Congress considers whether to reauthorize the bank before its charter expires on September 30. The decision should be an easy one. Ex–Im effectively ignores the impact of its actions on American workers, as well as the risks to taxpayers, while exaggerating the benefits of those actions.

Government authorities have documented a variety of problems with bank operations,[1] but the fact that Ex–Im financing handicaps at least some American businesses is sufficient reason to end it. Recently, for example, the bank approved $694 million in financing for U.S. equipment to develop an open-pit iron ore mine in Australia (owned by the country’s richest woman).[2] The deal was consummated despite warnings from the United Steel Workers, the Iron Mining Association, and all four Senators from Minnesota and Michigan that the subsidies would jeopardize thousands of U.S. mining jobs.[3]

Global trade benefits the U.S. economy, but Ex–Im subsidies confer a competitive advantage to a select group of favored firms. Rather than perpetuate this cronyism, Congress should allow the bank’s charter to expire and undertake tax and regulatory reforms that would strengthen the competitive position of all U.S. businesses.

Economic Impacts Ignored

Foreign firms receive Ex–Im financing to purchase U.S. equipment for manufacturing and resource extraction or to provide commercial services. However, the bank’s charter[4] prohibits financing under three conditions:

1. The recipient’s production is likely to create a surplus in world markets;
2. The recipient competes with U.S. production of the same, similar, or competing commodity; or
3. The financing would cause “substantial injury” to American producers of the same, similar, or competing commodity.

These statutory prohibitions are intended to balance the interests of U.S. exporters and the domestic firms that would compete against subsidized businesses overseas. But there is a major loophole: The charter allows the bank’s board of directors to override the constraints if they decide that a transaction would produce a “net benefit” to the U.S. economy.

In order to determine the potential effects of an export subsidy, the bank is supposed to perform an economic impact analysis, but a review by Ex–Im’s inspector general (IG) of the analyses conducted between 2002 and 2009 found that the bank

did not address directly several elements of economic impact contemplated by the Charter, omitted relevant data and analysis beyond that considered necessary to support the staff’s recommendation, did not state the limitations and qualifications of the data, assumptions, estimates, methods and analysis, did not fully address the sensitivity of the staff’s conclusions to possible changes in assumptions and estimates that could be reasonably anticipated.[5]

Indeed, none of the Ex–Im personnel interviewed by the IG’s office possessed professional training or expertise related to economic impact analysis. Moreover, the bank does not consider the impact of any finance deal involving less than $10 million, which excludes some 80 percent of Ex–Im transactions.

All of this means that bank officials dole out billions of taxpayer dollars to foreign firms without a meaningful consideration of the impacts on American workers and the businesses that employ them.

Distorting Competition

Every type of industry undergoes booms and busts. Neither one typically results from a single cause but instead is a product of myriad factors, including changes in demand, currency fluctuations, and innovation. But government policy can dampen gains and exacerbate losses, which is the case with export subsidies. Ex–Im financing of coal mining in Colombia, copper excavation in Mexico, and airplanes for India has been identified as contributing to losses among domestic firms.[6]

The following Ex–Im deals have been cited by lawmakers and industry experts as examples of just some of the billions of dollars in taxpayer subsidies that put domestic firms at a competitive disadvantage:

• Australia’s Roy Hill mine ($694 million). The mine’s expected output (over the life of the financing) is expected to displace nearly $600 million worth of U.S. iron ore exports and cause a reduction of some $1.2 billion in U.S. domestic sales.[7]
• South Africa’s Kusile Coal power plant ($805 million); India’s Sasan coal power plant and mine ($917 million). Notwithstanding the Obama Administration’s war on coal,[8] Ex–Im has been a generous source of public financing for coal projects abroad.[9] These and other projects have exacerbated a 70 percent decline in coal prices since 2008.[10]
• Mongolia’s Oyu Tolgoi copper mine ($500 million). The copper from this open-pit and underground mine competes with excavations in Arizona, Utah, New Mexico, Nevada, and Montana just as global refined copper production is expected to exceed demand by more than 390,000 metric tons this year.[11]
• Papua New Guinea’s Liquid Natural Gas Project ($3 billion). Despite regulatory challenges faced by U.S. producers of liquid natural gas, Ex–Im approved $3 billion in financing for development of gas fields, on-shore and off-shore pipelines extending 400 miles, a gas liquefaction plant, and marine export facilities.
• Air India ($3.4 billion). The financing will guarantee the purchase of 27 Boeing aircraft intended for international service, including U.S. destinations. According to the Air Line Pilots Association, Air India will enjoy rates and terms that are not available to U.S. airlines, giving it a cost advantage of about $2 million per airplane. Surplus seat capacity resulting from Ex–Im airline subsidies—totaling about $50 billion between 2005 and 2011—has resulted in the loss of approximately 7,500 U.S. jobs.[12]

A No-Brainer

Ex–Im beneficiaries argue that export financing preserves American jobs, but the vast majority of bank subsidies benefit very large corporations that could self-finance or obtain private investment—as is the case for 98 percent of all U.S. exports. Rather than perpetuate these subsidies, Congress should help all American businesses by reducing corporate tax rates and regulatory burdens.

Allowing the bank’s charter to expire should be a no-brainer for lawmakers. (Even Barack Obama, as a presidential candidate, endorsed its end.[13]) With strong growth in privately financed exports, there is no justification for maintaining this Depression-era relic.

—Diane Katz is a Research Fellow for Regulatory Policy in the Thomas A. Roe Institute for Economic Policy Studies, a department of the Institute for Economic Freedom and Opportunity at The Heritage Foundation.

Notes:
[1] For details on other drawbacks of Ex–Im (e.g., mismanagement and risk), see Diane Katz, “U.S. Export–Import Bank: Corporate Welfare on the Backs of Taxpayers,” Heritage Foundation Issue Brief No. 4198, April 11, 2014, http://www.heritage.org/research/reports/2014/04/us-exportimport-bank-corporate-welfare-on-the-backs-of-taxpayers, and Diane Katz, “The Export–Import Bank: A Government Outfit Mired in Mismanagement,” Heritage Foundation Issue Brief No. 4208, April 29, 2014, http://www.heritage.org/research/reports/2014/04/the-exportimport-bank-a-government-outfit-mired-in-mismanagement.

[2] Simon Casey and Elisabeth Behrmann, “U.S. Ex–Im Bank Votes to Support $694 Million Loan for Roy Hill,” Bloomberg.com, November 14, 2013, http://www.bloomberg.com/news/2013-11-14/u-s-Ex–Im-bank-votes-to-support-694-million-loan-for-roy-hill.html (accessed May 29, 2014).

[3] Comments to ExIm Bank on Roy Hill Mine, EIB-2013-0054-0004, December 13, 2013, http://www.regulations.gov/#!documentDetail;D=EIB-2013-0054-0004 (accessed May 29, 2014).

[4] The Charter of the Export–Import Bank of the United States, updated August 30, 2012, www.exim.gov/about/whoweare/charterbylaws/upload/Updated_2012_EXIM_Charter_August_2012_Final.pdf (accessed May 29, 2014).

[5] Export–Import Bank of the United States, Office of Inspector General, Evaluation Report Relating to Economic Impact Procedures, September 17, 2010, http://www.exim.gov/oig/upload/EIB_Report_Final_Complete_Web.pdf (accessed May 29, 2014).

[6] Ibid.

[7] Senators Amy Klobuchar (D–MN), Al Franken (D–MN), Carl Levin (D–MI), and Debbie Stabenow (D–MI), letter to Export–Import Bank chairman Fred Hochberg, July 12, 2013, https://www.franken.senate.gov/?p=press_release&id=2505 (accessed May 29, 2014).

[8] Nicholas D. Loris, “War on Coal: A House Bill to Stop the Regulatory Assault,” Heritage Foundation Issue Brief No. 3733, September 19, 2012, http://www.heritage.org/Research/Reports/2012/09/War-on-Coal-A-House-Bill-to-Stop-the-Regulatory-Assault.

[9] In 2013, the bank authorized $633.6 million in financing related to four new fossil-fuel power plants.

[10] Thomson Reuters, “Thermal Coal Prices to Drop Further on Oversupply, Weak Demand,” March 20, 2014, http://uk.reuters.com/article/2014/03/20/energy-coal-prices-idUKL6N0MH30Y20140320 (accessed May 29, 2014).

[11] Press release, “Copper Market Forecast 2013–2014,” International Copper Study Group, October 2013, http://www.icsg.org/index.php/press-releases/finish/113-forecast-press-release/1605-2013-10-icsg-forecast-press-release (accessed May 29, 2014).

[12] Air Line Pilots Association, “Leveling the Playing Field for U.S. Airlines and Their Employees,” http://www.alpa.org/publications/ALPA_White_Paper_Leveling_the_Playing_Field_June_2012/ALPA_White_Paper_Leveling_the_Playing_Field_June_2012.html (accessed May 29, 2014).

[13] Ashe Schow, “Pres. Obama Was Against ExIm, Before He Was for It,” Heritage Action for America, The Forge, March 28, 2012, http://heritageaction.com/2012/03/pres-obama-was-against-exim-before-he-was-for-it/.

The post Export–Import Bank: Cronyism Threatens American Jobs – Analysis appeared first on Eurasia Review.

Chinese authorities were keeping a close watch on artists, college students and other activists ahead of Wednesday’s 25th anniversary of the military crackdown on the 1989 pro-democracy movement at Tiananmen Square, activists said.

On the eve of the anniversary, United Nations human rights chief Navi Pillay asked Beijing to reveal the truth about the army’s violent suppression of Tiananmen protests and to release dozens of people held in the run-up to the June 4 event.

“It is in the interests of everyone to finally establish the facts surrounding the Tiananmen incidents,” Pillay said, noting that Chinese authorities had clamped down on social media, traditional media and Internet users to block discussions on the tragedy.

More than 10 members of Beijing’s iconic Songzhuang contemporary arts community have been placed under surveillance by state security police after creating works to commemorate the crackdown by the People’s Liberation Army (PLA), residents said on Tuesday.

“They have been very nervous about the art world, and more than 10 households have been put under house arrest or surveillance,” Songzhuang artist Zhui Hun told RFA.

“Artists like us with a certain viewpoint or cultural attitude will turn our attention to historical problems,” said Zhui.

“Anyone who does something for justice, or with a social conscience, has to pay the price here,” he said, adding that controls were much stricter this year than in previous years around the sensitive anniversary.

“Last year they put only me under house arrest, but this year the number has risen to more than 10 households,” Zhui said.

‘High-pressure tactics’

Meanwhile, Hong Kong-based poet Meng Lang said a number of his friends across the internal border in mainland China were being targeted by the authorities.

“A lot of friends in mainland China have been targeted by the authorities in this crackdown this year, and some have even been detained, just because they commemorated June 4,” Meng said.

“I think such high-pressure tactics are insulting,” said Meng, who recently published a book of poems to mark the anniversary in Hong Kong and Taiwan.

Meng, whose poem “Death is Under Way” speaks of guns targeting “glorious faces” with the purpose of exterminating them, said he wanted to mark the anniversary as an act of public memorial.

“I chose 25 poems as a memorial, because it’s the 25th anniversary,” he said.

Meng’s collection comes just days after a group of 23 Chinese artists put out a book of prints of artistic works to mark the crackdown in Hong Kong, which has traditionally been a focus for Tiananmen-related memorial events.

Beijing-based artist Huang Rui, whose work is based on the 64th hexagram of the ancient Chinese “Book of Changes” divination system, said he felt compelled to revisit the scene of the crackdown in his imagination.

“June 4 has become a taboo subject in China, and so this hexagram of the I Ching is also taboo,” Huang said. “It is aimed at this historical event, as well as being aimed at a tragic reality suffered by the human race.”

Sheng Qi, a second contributor to the book, titled “Blood-red Crossroads,” said even violence had a rightful place in art.

“This is a wake-up call, a reminder that we shouldn’t forget, and that we should face up to history and shouldn’t hide from it,” said Sheng, who is currently living in the U.K.

Universities

The authorities are also targeting Beijing’s universities, the seat of the 1989 student movement, as the anniversary draws near.

A directive issued by the China University of Politics and Law’s international education department and circulating on the Chinese Internet this week called on international students to take an out-of-town trip to “enjoy the natural scenery” on June 3-4.

The all-expenses-paid trip would include a number of activities, with a choice of the countryside near Beijing, or Inner Mongolia, the directive said.

A student at the university contacted by RFA confirmed that the directive was genuine, but said students were still unsure whether the trip would go ahead.

“The details aren’t very clear, so I’m not really sure. I think it might have been canceled,” the student said.

Beijing-based rights activist Hu Jia said the authorities had also stepped up controls on Chinese students at the capital’s major universities, many of which are clustered together in the west of the city.

“For the past 25 years, there has been a tight surveillance program targeting Qinghua, Beijing University, Beijing Normal University and other schools like that on June 4,” said Hu, who launched a bid to commemorate the crackdown this year with his “Return to Tiananmen” online campaign.

“There are large numbers of police cars and patrols on the campuses, particularly Beijing University,” he said. “This has now been extended to some of the offices of overseas news organizations now, as well.”

“State security police are now going directly to their offices and telling them that they mustn’t carry out any interviews relating to June 4, nor must they go anywhere near Tiananmen Square,” Hu said.

He said many Internet users had reported problems using Google services, including Gmail, ahead of the anniversary.

“You can’t open it at all unless you use circumvention software,” he said. “And if you use Google to search for ‘June 4′ or ‘Tiananmen massacre’, the screen just goes blank and white immediately.”

“Also, you can’t view any video or photos originating from IP addresses in Hong Kong and Taiwan.”

Tight security

Asked about the June 4, 1989 crackdown at a regularly scheduled news conference, Chinese Foreign Ministry spokesman Hong Lei did not refer directly to Tiananmen Square or the military action.

“Regarding the political incident which happened in the late 1980s in China, as well as issues related to it, the Chinese government reached a conclusion a long time ago,” Hong said before launching into a defense of Beijing’s economic reforms.

Hong also denied cases of political persecution, saying: “In China, there are only law offenders. The so-called dissidents as you mentioned do not exist,” the Associated Press reported.

The tight security on the ground isn’t limited to Beijing, activists said on Tuesday.

“Sichuan is under tight security right now, with people being taken ‘on vacation’ or put in detention,” Tianwang rights website founder Huang Qi said.

“I would say there are at least 300 people affected, and at least 100 from Chengdu,” he said, referring to Sichuan’s provincial capital.

“It’s because we’re approaching June 4, so there’s a huge stability maintenance operation going on,” Huang Qi said.

“Some petitioners have been getting text messages from the local government warning them they’ll have a fight on their hands if they think of telling tales on them in Beijing.”

Death toll

China’s leadership has ignored growing calls for a public reappraisal of the 1989 student protests, which the party once styled a “counterrevolutionary rebellion.”

The number of people killed when PLA tanks and troops entered Beijing on the night of June 3-4, 1989 remains a mystery.

Beijing authorities once put the death toll at “nearly 300,” but has never issued an official toll or list of names, and has always maintained that the violence was necessary to end the unrest.

Reported by Xin Yu and Yang Fan for RFA’s Mandarin Service, and by Grace Kei Lai-see for the Cantonese Service. Translated and written in English by Luisetta Mudie.

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By Theogene Rudasingwa

The African and international elite have just concluded the African Development Bank’s 50th anniversary celebrations and annual meeting under the theme: “The Next 50 Years: The Africa We Want”. Over 3,500 delegates, seven African Heads of State, the Governor of the Central Bank of China and U.S Deputy Secretary of Treasury were among the dignitaries to grace the occasion. The guests and the host were in an upbeat and hopeful mode, predicting that the next five decades will be far better than the preceding ones.

There are enough grounds to celebrate some of Africa’s political, economic and social achievements since 1957, when Ghana blazed the trail to become the first to gain political independence from British colonial rule. Africa can now boast of a total population that exceeds one billion, it has 54 sovereign states and a rich endowment of natural resources. There is every reason for Africa to celebrate its shining moments, the founding fathers of the post-colonial order who shaped them, and the African people who make them happen.

Beneath the confident calm, Africa is on edge and the participants in Kigali were aware of that. After five decades of political independence, thousands of reports on human development, tons of advice from mainly Western consultants, and trillions of aid dollars, the condition of the majority of African people remains precarious. Africa remains the continent of peasants, and increasingly of urbanized populations living on the margins of squalid slums bursting at the seams.

Africa’s silent emergency comes in the form of pernicious killers in like poverty, hunger, disease, illiteracy and unemployment. These preventable conditions claim millions of African lives every year because they target Africa’s heart and soul: children, women, the elderly and peasants. Though the statistics do not capture the full and often intangible extent of human suffering and lost opportunities, they are nevertheless shocking. According to UNICEF, 3.2 million under-five die annually in Sub-Saharan Africa from preventable conditions; Africa is the most dangerous place to have a baby in the whole world (800 women die every day during pregnancy and child delivery, and half of these deaths are in sub-Saharan Africa). Over 11 million Africans under the age of 25 enter the labour market every year, only to swell the ranks of the unemployed.

Africa’s loud emergencies are exemplified by the hundreds of missing Nigerian girls still in their captors’ hands, another terrorist attack in Kenya last Friday, civil war in Central African Republic and Southern Sudan, continuing conflict in the Democratic Republic of Congo, a failed state in Somalia, Rwanda and Burundi sliding into civil war, Uganda’s long-running battles with Joseph Kony, a stand-off in Egypt and uneasy peace in Libya to cite a few examples. The report “Africa’s Missing Billions” by the international charity Oxfam showed that “between 1990 and 2007 the cost of armed violence and conflict to Africa was $300 billion – approximately the same as the aid money that flowed into the continent during that time. Losses continue at around $18 billion a year. Conflict shrinks the economies of affected African countries by at least 15% a year”

Hence, as the elite in Kigali concludes the summitry and deliberations, there is the other part of Africa that is on fire, dying, burning silently and occasionally bursting into deadly conflict and tragedies.

Unable to find hope, jobs, inspiration and the reason to live, Africa’s youth have become easy victims of war-lords, rabble rousers, demagogues and modern day slave traders. Africa’s youth, which should be the continent’s present and future, have been turned into pirates, terrorists, rebel child soldiers, and sex slaves. Dreading the conditions in their own countries, they take dangerous voyages into uncertain worlds and they perish on high seas as they did last October, 2013 in Lampedusa, Italy- or like the 15-year old Somali boy who stowed away in an airplane last month from San Jose, California bound for Hawaii, in search of his mother in a refugee camp in Ethiopia.

If Nigeria (population approximately 174 million, largest oil producer in Africa and annual defence spending of $2.3 U.S.) cannot rescue its own young girls from Boko Haram, and Uganda cannot defeat a three-decade old menace from Joseph Kony and his Lord’s Resistance Army, will a handful of U.S. Marines and aircrafts save them?

Africa has a crisis of leadership. Many of Africa’s rulers have, by and large, betrayed African people for too long.

If this is the diagnosis, what is the treatment plan?

First, Africa’s ruling elite must admit that they are mostly to blame for Africa’s problems. They must stop the opportunistic habit of depending on the West’s help (East as well during the Cold War) and denouncing the same benefactor when Africa’s self-inflicted wounds become too obvious. Unless there is a change of mindset, African elites will continue to act like a herd, yesterday behind the West or East, today the West or China and tomorrow, God knows who. Africa must follow its conscience and its peoples’ interests.

Second, African leaders must recognize that the interests of African people are sovereign and therefore, a first priority. Of these interests, nothing is more important than the right to life, security, health, education and livelihoods. It is in this context that Africa must spend less on armies and armaments, because African countries do not generally fight each other. Africa’s armies fight their own people, and record shows that they generally do an exceedingly poor job at that. African leaders must stop denying fundamental human rights to their population. Freedom and equal opportunity will unleash entrepreneurial energy that has historically transformed other societies. They must invest in education, health, rural and urban areas where the majority of poor Africans live as well as small and medium enterprises. In all these areas, women and youth should be given priority.

Third, Africa’s leaders must have a clear and robust strategy to exit from being the dependent patient, in and out of rehab or intensive care of aid. Africa’s natural wealth must beget value. Africa’s export of natural resources, national revenues, foreign investments and aid money must be deployed and recycled into developing capital, knowledge and skills to create value-added products and services. This is the trajectory of wealth creation that the rich aid-givers of today follow. Africa is not an exception.

Fourth, African leaders must prevent and cure the recurrent epidemics of self-inflicted conflicts. The current fire-fighting demonstrated in international peacekeeping, drones, and ad hoc arrangements for U.S and Western armies to intervene in Africa can be temporary relief but are not sufficient to ensure lasting security and peace. Conflicts within African countries remain matters of unresolved problems because of the cut-throat competition for power among the elite. It is a life-and-death struggle to capture state power and in turn use it to access and hoard resources and/ or dispense a victor’s justice to the losers. The winner takes it all and often the losers must accept their losses or otherwise organize for the next round of bloody conflict since the status quo rarely yields power peacefully. The antidote to this is to democratize and enlarge the circle of people’s participation in governance, strengthen the rule of law and nurture a culture of dialogue, power-sharing and peaceful resolution of conflicts.

Last, but not least, African rulers must heed the wisdom from all cultures of the world. Human progress is not solely about building material abundance and registering GDP growth, important as they are for human survival. Creative imagination, innovation, science, technology and entrepreneurship proceed from human’s quest to improve their lot. To do this, they discover that co-operation is both a pre-condition for survival, and an opportunity to demonstrate what Bantu-speaking peoples of Africa call Ubuntu (or human-ness). Africans must learn from their own achievements and flaws and those of other societies to nurture the wellbeing and resilience of individuals, families, communities and nations.

A mind rich on Ubuntu peels away clan, tribe, gender, race, class, religion and nation identities to see the brother and sister in the other. Such a mind is not quick to kill and plunder. It does not commit genocide or easily go to war. It is a mind that shares and weeps when others suffer. It is a mind that sees dialogue, respect of others and humility as strengths. It is a mind that is happy because it fosters happiness in others.

In a stampede to become like the West and of late like China, Africa’s ruling elite have lost their African-ness, and yet they get frustrated when they cannot exactly emulate the West’s and China’s ingenuity.

African leaders must change their own mindsets; put women and children at the centre of all national and continental endeavours, create an enabling environment for growth of institutions, freedom and the rule of law, champion Made-in-Africa value-added products and services for consumption and exchange, prevent and cure violent conflicts and above all, embrace Ubuntu as a central organizing philosophy in African societies.

African societies must liberate themselves from chaos, suffering and dependency.

African leaders must redeem themselves from scorn, shame and condemnation before it is too late.

Africa, be and heal yourself!

Dr. Theogene Rudasingwa is the former Ambassador of Rwanda to the United States and Author of ‘Healing A Nation: A Testimony’. The article was first published in May 2014 in Black Star News.

THE VIEWS OF THE ABOVE ARTICLE ARE THOSE OF THE AUTHOR/S AND DO NOT NECESSARILY REFLECT THE VIEWS OF THE PAMBAZUKA NEWS EDITORIAL TEAM

The post Africa’s Betrayal By Its Leaders – OpEd appeared first on Eurasia Review.

In the United States the debate around gun ownership often focuses on teenagers; however, research shows that elderly Americans are the most likely to own a gun and that presents both medical and legal problems for physicians and carers.

Writing in the Journal of the American Geriatrics Society, Dr. Ellen Pinholt explores these issues and proposes a series of ‘red flag’ questions which caregivers must ask.

While there is no upper age limit on owning a firearm, Americans aged over 65 have the highest prevalence of dementia, depression and suicide. Federal law prohibits mentally incompetent persons from possessing a gun; however, this only applies to a formal finding by a court and not necessarily to a physician’s diagnosis of dementia.

Using a series of case studies to explore the medical and legal dimensions of the issue, Dr Pinholt suggests ’5 L’s’, questions about gun ownership which should be asked as routinely as questions about driving.

If there is a gun present is it Locked? Is it Loaded? Are Little children present? Does the gun owner feel Low? Is the gun owner Learned?

The post Dangers Of Gun Ownership In Elderly Explored appeared first on Eurasia Review.

The United Kingdom (UK) is the sixth largest economy in the world, as well as the largest producer of oil and the second-largest producer of natural gas in the European Union (EU). Following years of exports of both fuels, the UK became a net importer of natural gas and crude oil in 2004 and 2005, respectively. Production from UK oil and natural gas fields peaked around the late 1990s and has declined steadily over the past several years as the discovery of new reserves and new production has not kept pace with the maturation of existing fields.

The UK became a net importer of petroleum products in 2013, making it a net importer of all fossil fuels for the first time. The UK government, aware of the country’s increasing reliance on imported fuels, has developed key energy policies to address the domestic production declines. These include: using enhanced recovery from current and maturing oil and gas fields, promoting energy efficiency, decreasing the use of fossil fuels and thus reliance on imports, promoting energy trade cooperation with Norway, and decarbonizing the UK economy by investing heavily in renewable energy. However, for the UK to decarbonize its economy, huge investments in the energy infrastructure are needed.

Renewable energy use, particularly in the electric power sector, has more than tripled between 2000 and 2012. However, petroleum and natural gas continue to account for the vast majority of UK’s energy consumption. In 2012, petroleum and natural gas accounted for 37 and 33%, respectively, of total energy consumption. Coal also continues to be a significant part of total energy consumption (16% in 2012).

Energy use per unit of gross domestic product (GDP) in the UK is one of the lowest among western economies. The UK has seen total primary energy consumption decline by 16% between 2004 and 2012. This decline resulted from smaller contribution of energy-intensive industry to the economy, economic contraction, and improvements in energy efficiency.

Petroleum and other liquids

Although aggressive targets for renewable energy are in place, oil remains important to the UK energy balance and contributed 37% of total energy consumption in 2013.

Although aggressive targets for renewable energy are in place, oil remains important to the UK energy balance and contributed 37% of total energy consumption in 2013. Once a major producer of oil from the North Sea, aging reservoirs and infrastructure have affected UK’s oil production over the past few years with production declines and widespread outages as a result of technical problems. Falling production has made the UK increasingly reliant on imports of both crude oil and petroleum products, and the UK became a net importer of petroleum products for the first time in 2013.

Sector organization

Recent increases in tax rates for the oil and gas sector, coupled with technical issues, have contributed to sharp declines in UK oil production. Higher tax rates have made the UK fields less competitive, which were already strained by high operating and decommissioning costs.

The UK government does not hold a direct interest in oil production, but this sector remains important to the government because Corporation Tax and Supplementary Tax income from the sector accounts for about 25% of UK corporate tax receipts, according to the offshore industry association Oil & Gas UK.

Since 2011, there have been a number of tax changes that affected production (or investment) in the United Kingdom Continental Shelf (UKCS), including the change in the rate of supplementary charge (an addition to the corporate tax) and the capping of relief for decommissioning costs at 20% of the supplementary charge. In addition, the tax rate for fields that are subject to petroleum revenue tax (PRT) increased to 81% of their profits (from the previous 75-percent rate), and fields that are not subject to PRT now pay a 62-percent tax (compared with the 50-percent rate in the past).

As a result of the significant increases in taxes, the UKCS projects have become even less competitive. Increases in operating costs coupled with higher taxes have resulted in decreased investment in both brownfields and new exploration. Even without the increased taxes, operating costs in the UKCS were prohibitively high, exacerbated by the high decommissioning costs of old facilities, which also discourage investors.

Almost immediately after the new tax rates were implemented, development on several start-ups was suspended, including Statoil’s Mariner and Chevron’s Bressay fields. In addition, Centrica launched a review of all of its exploration activities, as many projects were deemed uneconomical under the new rates. Given a nearly 16-percent decline in production following the implementation of the new tax rates, the UK government has introduced new incentives for producers to counter some of the increase in taxes.

The sector, which includes the administration of licensing, is regulated and overseen by UK’s Department of Energy and Climate Change (DECC). DECC licensing-related activities are outlined in the 1934 Petroleum Act and the 1964 Continental Shelf Act. Six types of licenses, the so-called “Seaward Production Licenses,” can be awarded in the UK, which differ in length of time awarded and cost of license.

In March 2013, the UK government outlined plans to encourage continued development of the oil and gas sectors because the latest trade statistics indicated that net energy imports rose to the highest level since the 1970s. These plans included providing the industry with tax certainty, supply-chain support, and workforce skills development.

Exploration and production

Although a number of new fields are expected to come online in 2013, UK production will continue to decline as new production will not be sufficient to offset the declines.

UK oil production had peaks in the mid-1980s and late 1990s after oil companies developed a number of oil fields in the North Sea. However, oil production in the United Kingdom has been gradually declining since the 1990s. In 2013, UK produced approximately 0.8 million barrels per day (bbl/d) of crude oil, almost all of it from offshore fields.

EIA’s Short-Term Energy Outlook expects UK oil production to continue to decline through 2015. The main reason for this decline is the overall maturity of the country’s oil fields and diminishing prospects for new substantial discoveries in the future. Although its proximity to major consuming markets makes UK exploration attractive, recent increases in taxes will continue to affect the attractiveness of the UK fields in the longer term.

According to the Oil & Gas Journal (OGJ), the UK had 3.0 billion barrels of proven crude oil reserves as of January 2014, the most of any EU member country but 4.6% below the January 2013 level. This drop marks a major downward trend in oil reserves in the UKCS because of cost increases (making some projects uneconomic) and re-appraised key projects, according to Oil & Gas UK. The major project that will offset some of this decline is the Mariner field, which was discovered in 1981. DECC approved development of the field in February 2013, and Statoil expects production to start in 2017, rising to 55,000 bbl/d before 2020.

The vast majority of UK’s reserves are located offshore in the UKCS, and most of the oil production occurs in the central and northern sections of the North Sea. Reserves are generally found in smaller fields, with only a third of fields having more than 50 million barrels of oil. Although there is a modest amount of oil produced onshore, in 2013 more than 90% of total UK production took place offshore. However, despite record investments of 14 billion pounds (23 billion USD) in 2013 to new projects, UK Continental Shelf production continues to decrease at a steady rate. Offshore crude oil production decreased by 9% between 2012 and 2013.

In addition to production declines from maturing fields, constant storms and adverse weather conditions also hamper production in the North Sea. A number of oil fields, including the key Buzzard field, had reduced production in 2013 because of maintenance and unplanned outages.

Oil grades

Three main grades of oil are produced in the UK: Flotta, Forties, and Brent blends. They are generally light and sweet, which makes them attractive to foreign buyers. Flotta is the smallest and lowest quality stream produced in the UK. The stream is made up of very small amounts of oil from the Claymore and Piper fields, as well as production from the North Tartan, Duart, Tweedsmuir, and Tweedsmuir South fields. The Flotta blend total production in 2012 was approximately 50,000 bbl/d. Talisman Energy operates all of the producing fields with the exception of the MacCulloch, which is operated by ConocoPhillips. Flotta crude is loaded at the Talisman Energy-operated Flotta terminal, in the Orkney Islands.

Forties blend is made up of oil from 70 fields spread over a large area of the North Sea, the biggest of which is the Buzzard oil field. Buzzard produced an average of 179,000 bbl/d in 2013, according to DECC. Forties contributes about half of the total UK North Sea production (approximately 425,000 bbl/d in May 2014, according to operator BP), although the output varies significantly because of production volatility in the Buzzard field. These various fields contribute condensate, medium-gravity oil, and moderately sour crude. The Forties system occupies most of the Central North Sea, located south of the Brent complex and east of Flotta. The Forties system has 15 field operators, according to Energy Intelligence Group, including BP, Shell, Talisman Energy, CNOOC, Apache, and Suncor. Once produced, Forties blend is shipped via the 170-kilometer pipeline to Cruden Bay, where it is pumped another 200 kilometers to Hound Point, at the Forties’ loading port.

Brent stream is a light, sweet crude. Nearly 40 UK fields contribute to the blend, although very little production comes from the once-prolific Brent field, after which the stream was named. According to Energy Intelligence, at its peak in 1984, the Brent field alone produced 400,000 bbl/d, with the other five major contributing fields (Thistle, Dunlin, Cormorant North, Ninian, and Magnus) peaking at a total of over 100,000 bbl/d in the mid-1980s. In 2012, all of these fields combined produced about 70,000 bbl/d, according to DECC. Despite the declining physical volumes associated with the Brent blend, its importance as a financial benchmark is increasing. The Brent blend is transported to the Sullom Voe terminal via pipelines. This terminal, located in Shetland, is operated by BP on behalf of a consortium of companies.

Brent, the global oil benchmark

Brent, the oil stream, is different from Brent, the price. Brent (the price) serves as a benchmark for many different internationally traded types of crude oil. As a benchmark, Brent is used by producers, refiners, and traders for establishing long- and short-term contracts in both physical and financial markets for oil deliveries around the world.

The Brent crude oil price reflects not only the UK Brent stream, but also three other streams that are included in the trading and pricing at this location: Forties, Oseberg, and Ekofisk streams. The latter two are produced in the Norwegian part of the North Sea. The four streams that make up the Brent benchmark produce a light, sweet crude oil.

Despite declines in physical production volumes, the popularity of the Brent futures contracts has increased as evidenced by its exchange volume. Brent is primarily traded on the Intercontinental Exchange and, more recently, was also listed on the New York Mercantile Exchange. Futures contracts are exchange-traded contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future, allowing crude oil market participants to hedge their risks months or years in advance. Brent does not require physical delivery upon contract expiration, but rather is settled financially.

UK’s oil fields and operators

Nexen was the largest operator in the UK in terms of oil production, with a total of approximately 188,000 bbl/d produced in the five fields it operated in 2013, according to DECC. Nexen-operated fields accounted for about 24% of total UK production in 2013.

BP is also a significant operator in the UK, although its production has declined over the last few years as the company refocused its exploration and production elsewhere. It operates 18 fields in the UK, which are located offshore with a total output of approximately 72,300 bbl/d in 2013, according to DECC.

The UK’s largest producing field in 2013 was the Nexen-operated Buzzard oil field, which produced an average of 178,900 bbl/d during the year. This production volume was short of its production capacity of more than 200,000 bbl/d, as the field continued to experience technical and operational issues during the year. Buzzard field came online in 2007 and reached full capacity in 2008. Average annual production at the field has declined every year until 2013, when Nexen was able to reverse some of the declines.

Consumption and imports

In 2013, the UK consumed 1.5 million bbl/d of petroleum and other liquids. The transportation and industrial sectors account for over 90% of petroleum consumption. Consumption has been declining steadily since a high of 1.8 million bbl/d in 2005, although consumption was roughly flat between 2012 and 2013.

Demand for middle-distillates, in particular diesel and aviation fuel, has steadily increased in the UK. Distillate fuel oil accounted for 36% of UK consumption, and kerosene jet fuel accounted for 19% in 2013. Motor gasoline was another 19%. Demand for motor gasoline has fallen gradually since1990 as more drivers switched to diesel vehicles and as vehicle efficiency increased.

In 2013 the UK became a net importer of petroleum products by about 40,000 bbl/d. This is the first time the UK had been a net importer since 1984 when demand for petroleum products increased as a result of industrial action in the coal industry. According to DECC, domestic refiners met 61% of demand for oil products in 2012, with imports supplying the remaining 39%.

The United Kingdom is also a significant crude oil importer for its domestic refining sector and received just under 1 million bbl/d in 2013. Norway supplied 42% of the United Kingdom’s imports of crude oil in 2012, although most of what the UK classifies as imports from Norway is North Sea production comingled between the UK and Norway. African countries, particularly Algeria and Nigeria, supplied 41% of crude oil imports. Russia supplied 7%, and the Middle East (particularly Saudi Arabia) supplied 4%.

Exports

Despite the large declines in oil production over the last few years, the UK is still one of the largest petroleum producers and exporters in Europe and exported 576,000 bbl/d of crude oil in 2012.

Once a major exporter of oil, the UK exports have dropped in tandem with decreasing domestic production. However, despite being a net importer of crude oil and petroleum products, the UK is still one of the largest petroleum producers and exporters in Europe and exported 576,000 bbl/d of crude oil in 2012.

UK customs export data show that the vast majority of crude oil exports (over 80%) were destined to EU countries, mainly Germany and Netherlands. Most of the non-EU export trade was with South Korea and the United States. The UK’s two largest markets in the EU are Germany and the Netherlands; the bulk of the exports to Germany are for refining and consumption there, while the exports to the Netherlands include oil destined for onward trade to other countries.

Pipelines

There is an extensive network of pipelines in the UK that carry oil extracted from North Sea platforms to coastal terminals in Scotland and northern England.

• BP operates the 110-mile, 36-inch Forties-Cruden Bay pipeline, linking fields in the Forties system to the oil terminal at Cruden Bay, Scotland. The company also operates a 110-mile, 36-inch pipeline connecting the Ninnian system to the Sullom Voe oil terminal on Shetland Island.

• Britoil Plc operates a 150-mile, 24-inch pipeline linking the Bruce and Forties fields to Cruden Bay and Talisman operates a 130-mile, 30-inch pipeline connecting the Piper system with Flotta on Orkney Island.

• Shell and Esso jointly operate a 93-mile, 36-inch connection between the Cormorant oil field and Sullom Voe. There are also many small pipelines that connect each North Sea oil platform to these major backbone lines.

• The UK has a few onshore crude oil pipelines, including a 90-mile, underground pipeline operated by BP that links the Wytch Farm field to the refinery at Fawley and the nearby oil export terminal at Southampton.

• The UK has a single international crude oil pipeline, the 220-mile, 34-inch Norpipe operated by ConocoPhillips. With a capacity of 900,000 bbl/d, Norpipe connects Norwegian oil fields in the Ekofisk system to the oil terminal and refinery at Teesside.

Refining sector

The UK had 1.5 million bbl/d of refining capacity at the end of 2013, according to Oil & Gas Journal, a decline of 0.2 million bbl/d from the previous year. Essar operates the single-largest refinery in the country, the 272,000-bbl/d Stanlow facility. Other companies with sizeable refining capacity in the UK include ExxonMobil (260,000 bbl/d), Phillips (221,000 bbl/d), and Valero (210,000 bbl/d).

Refinery production in 2013 decreased by 5.2%, partly because the Coryton refinery closed in July 2012, and also because other refineries experienced disruptions. There were large decreases in the production of diesel fuel, gas oil, fuel oil, and aviation fuel and lower exports of petroleum products in 2013.

UK refineries generally produce motor gasoline and residual fuel oil and so cannot meet domestic demand for distillate fuel oil and aviation fuel. According to a 2014 government review of the UK refining sector, imports supplied 44% of diesel and 64% of aviation fuel demand in 2012.

The European Union has suffered from a refining overcapacity, leading to several refinery closures in recent years. As the United States has increased production of light, sweet oil from shale and other tight formations, EU refiners have lost their traditional export market for products like motor gasoline. The review concluded that while investment in UK import capacity is strong, there will continue to be downward pressure on refinery margins in the European Union.

Natural gas

UK’s natural gas production has been on a long-term declining trend, although the country continues to produce sizeable natural gas volumes. In 2013, domestic natural gas production accounted for just over a third of the UK’s natural gas supply.

The UK’s natural gas production has been on a long-term declining trend, although the country continues to produce sizeable natural gas volumes. Since domestic production of natural gas peaked in 2000, the UK has become increasingly reliant on imports to satisfy its demand. In 2013, domestic natural gas production accounted for just over a third of the UK’s natural gas supply, according to DECC.

Sector organization

The UK natural gas sector is fully privatized, including production, transmission, and distribution. The largest gas distributor in the UK is Centrica, a spin-off of the distribution assets of formally state-owned British Gas. Centrica had a 40% market share in the UK natural gas market in 2013, according to Ofgem. There are five other large suppliers (E. On, NPower, SSE, Scottish Power, and EDF) that each have between 10-16% market share in 2013.

The UK gas distribution sector underwent a major change in 2005, when National Grid Gas sold four of the eight gas distribution networks to Scotia Gas Networks, Wales and West Utilities, and Northern Gas Networks. Prior to this sale, National Grid controlled the domestic gas distribution system.

Exploration and production

According to Oil & Gas Journal, the UK held an estimated 8.6 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2014. Most of these reserves occur in three distinct areas: 1) associated fields in the UKCS; 2) nonassociated fields in the Southern Gas Basin, located adjacent to the Dutch sector of the North Sea; and 3) nonassociated fields in the Irish Sea. The UK government has encouraged the use of natural gas as a substitute for coal and oil in industrial consumption and electricity production.

The UK produced 1.3 Tcf of dry natural gas in 2012, and preliminary estimates by DECC show natural gas production falling by 6% in 2013. UK natural gas production has been declining every year since 2000. The largest concentration of natural gas production in the UK is the Shearwater-Elgin area of the Southern Gas Basin. The area contains five gas fields: Elgin, Franklin, Halley, Scoter, and Shearwater. Most of the leading oil companies in the UK are also the leading natural gas producers, including BP, Shell, and ConocoPhillips.

UK’s largest share of natural gas production among all fields and gathering systems comes from the Scottish Area Gas Evacuation (SAGE) system, which produced a total of 246 billion cubic feet (Bcf) in 2011. In addition to SAGE, the Shearwater-Elgin Area Line (SEAL) produced more than 200 Bcf of natural gas during the year.

Shale gas

The United Kingdom has substantial volumes of prospective shale gas and shale oil resources within shale formations distributed broadly in the northern, central and southern portions of the country. The risked, technically recoverable shale resources of the UK are estimated at 26 Tcf of shale gas and 0.7 billion barrels of shale oil and condensate in the two regions assessed by the 2013 EIA/ARI shale gas and oil report.

Compared with North America, the shale geology of the UK is considerably more complex. Shale testing is still at an early phase in the UK. In a temporary setback, the first shale well triggered a series of minor earthquakes related to a nearby fault. Following an 18-month moratorium, the government concluded that the environmental risks of shale exploration are small and manageable. The government allowed shale drilling to resume in December 2012, albeit with stricter monitoring controls. Current shale operators include Cuadrilla Resources, IGAS, Dart Energy, and others.

Consumption and imports

Natural gas consumption in the UK was 2.6 Tcf in 2013, a 1% decline from the prior year. Natural gas for electricity generation, heat, and the residential sector accounted for 64% of total natural gas consumption. The industrial sector accounted for 24% of natural gas consumption.

In 2004, the UK became a net importer of natural gas. The UK imported about 1.3 trillion cubic feet (Tcf) of natural gas in 2013, with about 84% via pipeline and the rest from liquefied natural gas (LNG). EIA estimates that almost 60% of the UK’s pipeline imports in 2013 came from Norway, with additional gas coming from the Netherlands (16%) and Belgium (7%). According to projects from UK’s DECC, the UK will have be 76% dependent on natural gas import by 2030.

Liquefied natural gas (LNG)

In 2011, the UK demand for LNG surpassed that of Spain for the first time, and UK became the largest market for LNG imports in the EU. That year, UK imported a total of 892 Bcf of natural gas. However, in 2012 the UK LNG demand fell behind Spain’s at 504 Bcf, according to PFC Energy. LNG imports in 2012 fell as pipeline imports rose, mainly those from Norway, as LNG cargoes were diverted to higher-priced markets in Asia.

LNG imports, particularly from Qatar, fell by 30% between 2012 and 2013 because of declines in UK gas demand and strong competition for LNG in global market, particularly from Japan after the country closed its nuclear facilities following the Fukushima plant meltdown. LNG imports accounted for 18% of the total in 2013, down from 28% in 2012. Qatar accounted for virtually all LNG imports in 2013.

Currently, the UK has four LNG import terminals:

• The country’s longest-operating LNG terminal is National Grid’s Grain LNG terminal on the Isle of Grain. The facility originally became operational in 2005, and following a number of expansions, the terminal can receive and process 1.9 Bcf per day of LNG, according to PFC Energy.

• Teesside LNG, operated by the U.S.-based Excelerate Energy, commenced commercial operation in February 2007. This was the first dockside regasification port and the second operational LNG facility in the UK. Teesside LNG can deliver up to 400 million cubic feet (MMcf) per day of natural gas to the UK market.

• The Dragon LNG terminal, a collaboration of BG, Petronas, and 4Gas, began operating in September 2009. The import, storage, and regasification terminal is located in Milford Haven in South Wales with a regasification capacity of 580 MMcf per day.

• The South Hook LNG terminal, also located in Milford Haven, Wales, is owned and operated by Qatar Petroleum, ExxonMobil, and Total. Europe’s largest LNG terminal became commercially operational in October 2009 with an initial capacity of 1.1 Bcf per day. Following the expansion in Phase II, the terminal’s capacity has expanded to 2.1 Bcf per day.

In March 2013, Centrica signed a 20-year agreement with Cheniere to import LNG from the Sabine Pass LNG facility in Louisiana. Although Cheniere still needs to receive necessary approvals for exports, export volumes would total approximately 85 Bcf of LNG per year and would begin in 2018.

Pipelines: Domestic system

There are four main pipeline systems in the UK that carry natural gas from offshore platforms to coastal landing terminals. The responsibility for transporting natural gas throughout the country once it is brought onshore belongs to the utilities operating in the UK, including National Grid and Scotia Gas Networks.

• The Shearwater-Elgin Area Line (SEAL), operated by Shell, transports gas from the Shearwater-Elgin area to the landing terminal at Bacton, England.

• ExxonMobil operates the 200-mile, 30-inch Scottish Area Gas Evacuation (SAGE), which transports associated natural gas from UKCS fields to the landing terminal at St. Fergus, Scotland.

• The 250-mile, 36-inch Central Area Transmission System (CATS), operated by BP, links fields in the Central North Sea to Teesside.

• Shell operates the 283-mile Far North Liquids and Gas System (FLAGS) linking associated gas deposits in the Brent oil system with St. Fergus.

International pipelines

A consortium of companies operates the Interconnector pipeline between Bacton, England and Zeebrugge, Belgium. The Interconnector, inaugurated in 1998, is capable of bi-directional operation, meaning either it can export natural gas from the UK to continental Europe (“forward mode”), or it can import natural gas into the UK (“reverse mode”). Since it began operating, the Interconnector has mostly operated in forward mode, however during late fall and winter seasons, the pipeline has tended to operate in reverse mode. The pipeline has undergone three phases of expansion, with additional capacity and compression added between 2005 and 2007. The interconnector is currently capable of transporting 2.0 Bcf per day in forward mode and 2.5 Bcf per day in reverse mode.

The UK also imports natural gas through the Frigg pipeline system, operated by Total. Frigg connects the St. Fergus gas terminal with the Frigg gas field in the Norwegian sector of the North Sea. The UK-Eire Interconnector connects the UK with Ireland, running from Moffat, Scotland to Dublin. On December 1, 2006, the Balgzand-Bacton Line (BBL), the first pipeline to link the Netherlands and the United Kingdom, began operating and supplying the UK with natural gas from the Dutch mainland. The 147-mile pipeline has a capacity of approximately 1.5 Bcf per day.

Three pipelines connect the UK with Norway. The Langeled pipeline, which began operating in 2007, is a 729-mile line that can transport approximately 2.5 Bcf per day. This line links Norway’s Ormen Lange gas field and Easington, England via the Sleipner Riser platform in the North Sea. The Vesterled pipeline runs between the Heimdal Riser platform in the North Sea and St. Fergus in Scotland. The pipeline can transport up to approximately 1.3 Bcf per day. Finally, the Tampen pipeline that connects the Stratfjord field to FLAGS can transport up to 880 MMcf per day, according to PFC Energy.

Coal

Coal production in the UK is declining because of falling consumption, relatively cheap natural gas that competes with coal for power generation, and a surge of low-cost imports.

Coal production in the UK has declined steadily and dramatically since the early 1990s, falling to its record low level in 2012 at 18.0 million short tons (MMst) in 2012. Preliminary data from DECC suggests that coal production fell by 25% in 2013. Decreasing domestic consumption and a surge of low-cost imports have been the principal causes of the production decline, although in 2013 the decline was particularly severe because several mines closed.

UK hard coal consumption has fallen by about one quarter over the last four years because of relatively low natural gas prices and higher CO2 emission allowance prices, according to Euracoal. Coal use in electricity generation fell 9% in 2013. Meanwhile, total imports increased by 4% to 11.9 MMst in 2013; 41% of imports came from Russia, 25% from the United States, and 23% from Colombia. In 2013, 43.0 million tons of the coal imported (87%) was steam coal, largely for the power stations market.

The UK had an estimated 228 million short tons (MMst) of recoverable coal reserves in 2012, according to BP’s Statistical Review of World Energy 2013. The UK’s coal mines are mainly located in central and northern England, south Wales, and central and southern Scotland, where there is the highest concentration of surface mines.

Electricity

Electricity generation from fossil fuels accounts for the majority of electricity produced in the UK, with coal occupying the top spot among all sources. Renewable energy, especially wind, continues to grow and reached almost 15% of total generation in 2013.

The UK has become one of the most competitive electricity markets in Europe after privatizing the sector in 1990, according to IHS Energy. The UK had 89 gigawatts (GW) of installed electricity generation capacity of in 2012, according to DECC. Capacity had fallen since 2010 as several plants closed. Preliminary data published by DECC show that in 2013, the UK generated 357 billion kilowatthours (kwh) of electricity while consuming 351 billion kwh. This level of consumption was slightly lower than the year before at 354 billion kwh.

Most electricity generation comes from fossil fuels (64%), particularly coal (36% of total generation), followed by nuclear (20%), hydroelectricity (2%), and other renewables (15%). Although coal’s share of electricity generation decreased in 2013, it is still high compared to the period between 2008 and 2011, when it contributed about 30% of the UK’s electricity generation.

The industrial sector’s share of electricity demand has declined since 2005. This decline was mainly the result of the economy’s continued shift toward a service-based economy but also to some extent as a result of improved efficiency. Following the global recession, growth in gross domestic product slowed and contributed to further declines in demand, which dropped by 13% between 2008 and 2012, according to PFC Energy.

Sector organization

The UK has a privatized electricity sector, where generators and distributors trade electricity in a wholesale power market. The market has six major producers. The largest power producer in the country is Électricité de France (EdF) Energy, which controls all of the nuclear power. Other important generating companies include E.ON UK, RWE, Scottish and Southern Energy (SSE), and ScottishPower (SP). National Grid owns and operates the national transmission system in England and Wales; SSE and SP operate the grid in Scotland; and Northern Ireland Electricity (NIE) operates the grid in Northern Ireland.

Fossil fuel generation

Although natural gas-fired power stations were replacing coal as the principle source of the UK power supply for a number of years, this trend seems to have reversed in 2012 because of the relative cost of natural gas in the UK.

Electricity generation plants using fossil fuels continue to provide the bulk of the electricity supply in the UK. Most of the fossil fuel generation is powered by coal at 36% in 2013, down 3%age points from 2012. Coal-fired generation in the UK had experienced somewhat of a comeback, as it overtook natural gas in 2012 following years of declining shares.

In 2013, natural gas generation fell 4.3% to its lowest level since 1996, displaced by cheaper coal because of a relatively high natural gas price in the UK. Oil-fired plants continue to provide only marginal amounts of electricity, accounting for approximately 1% of total generation in 2013. Even at such a low level, oil-fired electricity continues to decline each year as old plants retire and the capacity is replaced by renewable sources.

Nuclear

Currently accounting for about one-fifth of total electricity generation, nuclear power plants are central to the UK government plans for future generation. Much of the additional generating capacity will new nuclear units.

There are 16 nuclear reactors in the UK, providing about 20% of the country’s total net generation in 2013, according to DECC. According to World Nuclear Association, all but one of these reactors are scheduled to be retired by 2023.

All of the seven twin-unit plants are operated by EdF Energy, which include seven stations that use advanced, gas-cooled reactors (AGR) and one (Sizewell B) that uses a pressurized-water reactor (PWR). Wylfa, a first-generation magnesium non-oxidizing (Magnox) nuclear power plant, will shut down when its fuel runs out in December 2015.

In 2008, the UK government announced its support for additional nuclear power plants to meet projected energy needs. According to a series of papers published since 2009, the UK government projects that an additional 60 GW of net generating capacity will be necessary by 2025. Although 35 GW are expected to come from renewable energy, much of the remainder is expected to be fueled by nuclear power.

Since 2008, several utilities have begun planning construction of new power plants. Current policy discussions surrounding nuclear power in the UK include wide-ranging incentives for new nuclear plants, such as feed-in tariff and a carbon floor price. Although feed-in tariffs currently are only available to renewable generation, these mechanisms may be extended to nuclear power and would refer to payments to electricity generators that use nuclear power. In June 2011, the government designated eight sites for the development of nuclear power stations. Given the pace of new nuclear plant development, the first of the new units is expected to come online in 2018.

Renewables

The UK government has introduced a number of regulations to increase the amount of renewable energy in the country. These regulations call for an increase in the use of renewables to 30% of total electricity generation in 2020. While these plans include hydropower, wind resources are central to the government’s plans.

Renewables accounted for nearly 15% of total generation in 2013. Renewable electricity generation increased by 28% from 2012, with wind generation up by 40%. The UK is a world leader in offshore wind capacity, and the government approved plans for the 1.2 GW Triton Knoll offshore wind farm in summer 2013.

Notes

Data presented in the text are the most recent available as of June 3, 2014.
Data are EIA estimates unless otherwise noted.

The post UK Energy Profile: Second-Largest Producer Of Natural Gas In EU – Analysis appeared first on Eurasia Review.

A species of bee from Europe that has stronger resistance to parasite infections than native bumblebees has spread across the UK, according to new research at Royal Holloway, University of London.

The study, published today in the Journal of Animal Ecology, shows that tree bumblebees have rapidly spread despite them carrying high levels of an infection that normally prevents queen bees from producing colonies. The species arrived in the UK from continental Europe 13 years ago and has successfully spread at an average rate of nearly 4,500 square miles – about half the size of Wales – every year.

Researchers collected tree bumblebee queens from the wild, checked them for parasites and then monitored colony development in a laboratory. Despite the bees having low genetic diversity and high levels of a nematode parasite that usually castrates other species, 25 per cent of the queens were able to produce offspring. Scientists believe the spread of tree bumblebees could have both positive and negative impacts on native bees.

“Since its arrival to the UK, the tree bumblebee has been rapidly spreading despite high levels of this castrating parasite”, said researcher Catherine Jones, from the School of Biological Sciences at Royal Holloway. “Bees are essential to our food chain and the populations of our native bumblebees have declined in recent decades. The arrival of tree bumblebees could be hugely beneficial to us by absorbing parasite pressure from our native species, as well as helping to pollinate wild plants and crops.”

Professor Mark Brown, from the School of Biological Sciences at Royal Holloway, added: “While these findings show promising signs for bee populations in the UK, we still don’t know whether there could be any negative impacts if the bumblebees compete for food or nesting sites. Further research should focus on how our native bees are affected and the pollination services that this new species provides.”

The post Parasites Fail To Halt European Bumblebee Invasion Of UK appeared first on Eurasia Review.

By Firouzeh Mirrazavi

Iran and the six world powers have been discussing ways to iron out differences and start drafting a final deal that would end the West’s dispute with Iran over the country’s nuclear energy program. The two sides wrapped up their fourth round of nuclear talks in Vienna on Friday May 16, 2014. Iran says there has been no tangible progress on drafting the text of a comprehensive nuclear deal. However, President Hassan Rouhani has expressed optimism that the nuclear negotiations with the Sextet of world powers will result in a final agreement. Iran’s Foreign Minister Mohammad Javad Zarif also said a comprehensive nuclear deal between Iran and the six world powers is “possible” if the parties to the talks with the Islamic Republic set “illusions” aside.

Iran Review.Org conducted an exclusive interview with Shahir Shahidsaless, an Iranian-Canadian political analyst and freelance journalist, about the latest round of nuclear talks between Iran and the P5+1 group in Vienna, the prospects for the resolution of the nuclear standoff, existing problems between Iran and the United States and the main steps that Iranian and American officials can take to dispel the current atmosphere of mistrust. His latest book, that he co-authored with former Iranian diplomat, Seyed Hossein Mousavian is Iran and the United States, An Insider’s View on the Failed Past and the Road to Peace published by Bloomsbury Academic. What follows is the text of the interview.

Q: What is your viewpoint about the latest round of nuclear talks between Iran and the P5+1 group in Vienna? Do you believe that the current deadlock in negotiations is quite natural or it is just a beginning for the end of the optimism that existed in the past six months about the possibility of finding a solution to Iran’s nuclear issue and sanctions through negotiations?

A: Last summer, I conferenced with Kenneth Katzman, a senior analyst and Iran expert at the Congressional Research Service, during which I asked his opinion about the US seriousness for ending the crisis over Iran’s nuclear program. Katzman said that President Obama was determined to take the issue off his table. The developments that followed, starting from Obama’s call to President Hassan Rouhani and then the historical Geneva interim agreement between Iran and the P5+1, provided compelling evidence that Katzman’s assertion was accurate. So, here we have an administration that is determined to bring the issue to its end. But the question that needs to be addressed is “how far, in terms of concessions, would the US administration be prepared to go?”

Obama has serious constraints when it comes to dealing with Iran. It would be unrealistic to underestimate the power of a Congress that is heavily anti-Islamic Republic and subject to the influence of different lobby groups, first and foremost the Israel lobby. Obama and his administration cannot ignore the hawks in the US establishment, including elements such as influential Chairman of the Senate Foreign Relations Committee Robert Menendez who is a Democrat but fiercely leads and advocates paralyzing sanction bills against Iran.

On the Iranian side, there are also several red lines drawn by the nezam (political system) that Zarif and his team cannot cross. Iran is not prepared to surrender to the US’ coercive policies for a variety of reasons: first because of the significant role that the notion of pride plays in Iran’s foreign policy. In fact, even many American experts argue that pride is the driving force behind Iran’s nuclear program. Second, because one of the pillars of the revolution has been and still is rejection of foreign domination. Finally, because Iran’s Supreme Leader argues that if they take one step back under bullying and intimidation of the US, Americans would reuse the same tactics (for example, imposing tough sanctions) until the Islamic nezam is toppled.

As the news emerges, it becomes apparent that there are major differences between Iran and the US on a number of issues. Mr. Araghchi, Deputy Foreign Minister, said in an interview after the recent discussions in Vienna that there were many cases of differences. I must add that on some of those differences, as news has revealed, there is a large gap between the two sides. The six powers (read the US), according to the news, want Iran to scale back its uranium enrichment activities including the number of centrifuges that spin. Iran does not agree, and apparently the difference between the two sides on this issue is in the range of tens of thousands.

There are other major issues that divide the two parts significantly: for instance, the duration of any limitations on Iran’s nuclear activities, the speed of lifting sanctions, and whether or not the final agreement should cover the scope of Iran’s ballistic missile program.

These are the bad sides of the story. The good side is that on both sides of the fence, there is the will to bring this issue to an end. President Rouhani’s grand policy is to reduce tensions in Iran’s foreign policy and reverse the trend of the economy, thus ensuring tranquility and progress. In this respect, Rouhani, being the Supreme Leader’s representative at the Supreme National Security Council for 23 years, is one of his most trusted personnel and has his support. This places Rouhani in a unique position to simultaneously negotiate inside and outside of Iran.

The US, on the other hand, is trapped in a dangerous trend in the Middle East, which is an unprecedented rise of jihadists in the region from Syria to Egypt to Iraq, coupled with an uncertain and threatening Afghanistan. Obama and top US intelligence officials categorize the situation as a major threat to the security of the US: first, because this trend threatens the stability of the US Arab allies and the region as a whole, which is one of the most strategic regions in the world for the US interests, and second, because jihadists are the sworn enemies of the US and their rise can potentially make the US and the West vulnerable to terrorist attacks. Any chance to stop and reverse this trend would be possible only if the US cooperates with Iran and collaborates in combatting the Takfiri forces.

Last but not least, the choice that the two sides make is not only about whether or not they agree to bring Iran’s nuclear crisis to an end. This is a very very sensitive issue that I want to emphasize on. The choice, in my view, is about peace and war. Why? Because if the talks fail, the US will go for de facto oil embargo on Iran. In such an eventuality, it is hard to believe that Iran would remain as an uninvolved spectator. Once patience wanes, Iran will retaliate to make life difficult for the US. Be it by the interruption of the flow of oil in the Persian Gulf or other means, the outcome of that would be an inadvertent or planned military confrontation.

What would be the bottom line? I would answer this question with one caveat—that the two sides act rationally. In that case, because the stakes are too high, I would say that even by July 20, and in the very last moments, an agreement may materialize. I agree with a US official, who after the recent talks in Geneva, said, “This has, candidly, been a very slow and difficult process and we are concerned with the short amount of time that is left. But let me be very clear: we believe we can still get it done.”

Q: Do you think that nuclear negotiations can form a basis for the resolution of the existing problems between Iran and the United States, or do you believe that these are entirely different topics in nature and should be addressed within a suitable time frame for each issue? To what extent do you believe is the possibility of final resolution of Iran-US problems?

A: I believe that a satisfactory solution to the nuclear issue will most likely create a platform upon which the two states can broaden their cooperation. The common interests such as security and stability of the region, safe passage of oil through the Persian Gulf, and combatting the rise of jihadist groups could potentially push the two countries toward détente once the nuclear issue is resolved.

Iran seeks non-hostile relations with America based on non-interference and recognition of Iran as a regional power. This has been the Islamic Republic’s ongoing demand since its inception; however, in practice and not in words, these demands have been rejected by the United States. In that framework, I believe Iran would consent to establish non-hostile relations with the US. However, there are convincing reasons that Iran would reject normal diplomatic relations with the US in the near future, to say the least. Here are the primary reasons.

First, the Iranian leadership has repeatedly expressed its deep mistrust toward the notion of the restoration of diplomatic relations with the US. Documents seized by students after the seizure of the US embassy reinforced the Iranian government’s mistrust of the US, which originated in their historical experience of the involvement of the US embassy in the 1953 coup. According to those documents, the embassy was involved in espionage and the expansion of its covert links with members of the new government and army.

Mistrust toward the restoration of full diplomatic relations is echoed in the speeches of Ayatollah Khamenei, who contends, “Any relations [with the US] would provide the possibility to the Americans to infiltrate Iran and would pave the way for their intelligence and spy agents.” The major concern has been that official diplomatic relations will enable the creation of covert links between the Americans and Iranians who are prepared to cooperate with the Americans to undermine the Iranian nezam.

Second, the Iranian nezam, based on Islamic values, claims that the US deliberately encourages liberal values (Iran’s Supreme Leader calls it tahajom-e farhangi, or cultural intrusion) among the Iranian youth both to erode their religious beliefs and to undermine the influence of Iran’s Islamic establishment. Observations reveal that there is some merit to this claim: The US has invested (and still invests) in the promotion of the American culture through the media, which is under its control or financed by them. Joseph Nye, the American political scientist who developed the concept of “soft power,” views American culture as one of the pillars of US power and instrumental to the projection of that power. It is a reality that many young people across the globe find American culture attractive and are influenced by it.

Based on this assumption, the Iranian nezam’s assessment could be that normal relations with the US would facilitate cultural exchanges, which may result in the Westernization of the country and the weakening of the ideological foundation of the Iranian society and political system.

To sum up, my view is that the Iranian leadership welcomes better and non-hostile relations with the US but not normal diplomatic relations—at least not at this moment and not in the foreseeable future. That said, a peaceful resolution to the nuclear crisis will pave the path for cooperation between the two states grounded on serious common interests that I mentioned earlier.

Q: Suppose you are asked to list three main steps that Iranian and American officials should take in order of priority to dispel the current atmosphere of misunderstanding toward each other. What would be your suggestions for each country?

A: I can suggest many steps, considerable in importance—but then the question would be whether or not they are practical. Under the circumstances, I would suggest the following:

First, the two states cease hostile rhetoric against each other at the official level. Neither government can control individuals, political currents, and/or the media outside their authority, but state-controlled entities and institutions could be regulated. This would be a significant move, which is an indication of goodwill while at the very least would prevent the escalation of conflict. Halting negative propaganda can certainly change the environment, preparing it for negotiations aimed at easing tensions.

Second, because the element of mistrust is at the core of the Iran-US hostile relations, it must be addressed by some bold moves. The US can allow the resumption of the sale of civilian aircraft to Iran. Not a big sacrifice but this is a move that would certainly crack the wall of mistrust.

Third, a meeting at the leaders’ level of the two countries would be a historical, groundbreaking event that could ease tensions. Let us not forget that Nixon’s visit to China in 1972, when China was under the rule of radical Mao Zedong, marked the turning point in China-US relations.

Q: The book, Iran and The United States: An Insider’s View on the Failed Past and the Road to Peace, jointly written by you and Seyed Hossein Mousavian, came out on May 22nd . What is the main subject of the book and what goal(s) does it pursue?

A: Through sharing Dr. Mousavian’s memoirs as a top ranked diplomat and an Iranian foreign policy expert, the book employs historical facts, analyses, and arguments to answer to the question of “Why Iran and America have become locked in a rare escalatory and reciprocal conflict spiral?” Dr. Mousavian’s firsthand knowledge about the intricacies of Iran’s politics provides valuable insights and interesting conclusions on the matter. The current Iran-America pattern of conflict is very rare and was not seen even during the Cold-War era between the US and its adversaries. America had full diplomatic relations with the communist bloc even at the peak of the Cold-War. The book, at the end, based on its findings, attempts to propose a realistic, workable roadmap to resolving the Iran-US conflict.

Numerous books are written by Western, mainly American, experts looking at conflictual relations between Iran and the US from a variety of angles. However, none have presented an immediate look at this complex relationship from within the Iranian policy-making system, examining the way the Iranian nezam views its old and protracted hostilities with the US. This is the gap in the literature on Iran-US relations that this book intends to fill.

The book does not refute the mainstream explanations for the conflict between Iran and the US such as competition over interests, clash of cultures, hostile relations between Iran and Israel, and the role of domestic politics on foreign policy. In fact, it extensively discusses and sheds light on these theories. However, it argues that Western experts lend very little credence to some factors that have played a major role and operate as a barrier to establishing enduring dialogue and communication between the two states. And if the factors that have perpetuated this state continue to go ignored, it is unreasonable to expect a negotiated solution to the protracted and complex conflict between Iran and the US.

Let us take the hostage crisis as an example: The incident that, as tagged in the book, was the “big bang”—the beginning of the hostilities between Iran and America—occurred when many of today’s points of contention between Iran and the US either did not exist or were insignificant at that time. There was no competition over hegemony in the region between the two countries, cultural differences had not emerged, the issue of Israel was a non-factor, and there was no dispute over Iran’s nuclear program. As demonstrated in the book, a combination of profound mistrust, misperceptions, and misanalysis of the situation on both sides were principle causes of the formation of the crisis.

Have these elements been addressed in the policies of the two sides toward each other? The answer is definitely no. They are discussed by many western experts but never drew the attention that they deserve during the process of policy-making. In fact, the adopted policies almost entirely have ignored these factors and that is, as we argue in the book, the main cause of the failure of the US policies as well as the intensification of the hostilities to a perilous level. This primarily applies to the American side, which rests in the driver seat and adopts coercive policies based on an unsubstantiated rationale that the Iranian government will eventually surrender to pressure. The book argues that due to a number of reasons, coercive policies have been unable to force the Iranian government to bow and will not in the future either.

The book identifies another major element that has obstructed the formation of a long-lasting negotiation process: the role of spoilers within and without the two countries. We identify a pattern of intensification of efforts to neutralize attempts at reconciliation between Iran and the US at the moments when hopes for the betterment of relations appear in the horizon. With the increasing likelihood of reaching a deal on Iran’s nuclear crisis, the harsh reactions of the Israeli government and pro-Israel lobbying group American Israel Public Affairs Committee (AIPAC) urging the US Congress to pass new a sanctions bill, as well as the emergence of “WE are worried” movement in Iran, are clear examples of such efforts.

The post Iran Nuclear Talks: The Choice Is About War And Peace – Interview appeared first on Eurasia Review.

Yemeni warplanes have carried out fresh airstrikes against Shia Houthi fighters in the northern city of Amran.

The Tuesday attacks occurred on the second day of the army’s air raids against the Houthis. Sources have reported casualties without specifying exact numbers.

Clashes erupted on Monday after Yemeni army soldiers, backed by warplanes, attempted to remove Houthis from a strategic position controlling the road to the capital Sana’a.

Local officials say at least 120 people were killed in the violence. Fighters from Islah (reform) party have been backing the army in its fight against Houthis.

In February, Houthi fighters seized areas of Amran in fighting with Salafi tribesmen.

Yemen’s Houthi movement, which draws its name from the tribe of its founding leader Hussein Badreddin al-Houthi, has been fighting against the central government for years.

The Shia fighters blame the government for political, economic, and religious marginalization of the country’s Shia community and violating their civil rights.

In February, the Yemeni government agreed to transform the impoverished Arab state into a federation as part of a political transition. This would create four regions in the north and two in the south.

But the government’s plan was flatly rejected by both the separatists in the south and the Houthi fighters, who argue that the initiative would divide Yemen into rich and poor regions.

The Houthi movement also played a key role in the popular revolution that forced former dictator Ali Abdullah Saleh to step down in February 2012.

Original article

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By Jill Richardson

In the past 15 years, China has gone from being a relatively insignificant economic partner in Latin America to the number-one trading partner of some of the largest economies in the region.

In many cases, China has unseated the United States in its own backyard. As a whole, Latin American exports to China have risen massively since 2000, averaging a 23-percent annual export growth rate.

However, this relatively rosy picture obscures the fact that in recent years this rate has dropped precipitously, slowing to a growth rate of just 7.2 percent in 2012. Much of this slowdown can be attributed to falling commodity prices. Despite Latin American exports to China growing in volume, price volatility has allowed for stagnant, or even declining, export values.

The Latin American reliance on commodity-based exporting to China has allowed for regional vulnerability to price fluctuations. Over 50 percent of Latin American exports are in just three sectors: copper, iron, and soy. This lack of diversification is problematic, as copper and iron prices have both experienced a double-digit percentage global decline in recent years while global soy prices have also begun stagnating.

Additionally, these three main commodity exports are concentrated in Argentina, Brazil, and Chile, further demonstrating a lack of regional diversification in exporting to China. This lack of diversity in exports as well as exporting nations leaves Latin America as a whole vulnerable to unforeseen future disruptions or trends.

Conversely, Chinese exports to Latin America are growing in both volume and valuation, owing mostly to the diversity and relatively high-skilled nature of the exported goods. The majority of Chinese exports to Latin America are in the manufacturing sector, with a heavy emphasis on electronics and vehicles. Such industries, compared to raw materials, are much less prone to price volatility, thus preserving much of the overall value of Chinese exports.

The impact of these trends is that since 2011, a growing Latin American trade deficit in goods has opened up with China. Despite the fact that the volume of exports to China is increasing, the fundamental nature of Latin American exports is undermining growth and creating an impending balance-of-payments problem. As long as commodity price values remain on a downswing, this trend will continue through 2014.

As China continues to overtake the United States as the key trading partner of the region as a whole, U.S. influence may decline in Latin America. A heavier reliance on Chinese demand for commodity exports will likely drive many Latin American foreign policy moves in the near future. Already China has used its economic leverage in the region to diminish the political influence of Taiwan in Latin America. Chinese nationalists view the tiny island nation as a rebellious extension of the mainland, and consequently many Chinese leaders seek to circumscribe any international support for an independent Taiwan. Should the issue ever reach the United Nations or World Court, China has already locked down support from nearly every country in the Latin American region.

Some of Latin America’s traditionally leftist countries are cozying up to China for political reasons (viewing China as an alternative to the hegemony of the United States), and perhaps more significantly, for economic reasons. Oil-producing nations such as Venezuela, Brazil, and Ecuador are hugely dependent on and influenced by their economic ties to China and, as a result, tend to follow China’s lead on the international diplomatic stage.

Indeed, one recent study concluded that the more a nation trades with China, the more inclined that nation will be to vote in China’s favor at the United Nations. That will place limits on international scrutiny of the Chinese human rights record, and it could mean a boon for proxy powers in world conflicts supported by China as opposed to the United States.

Ultimately, as China continues its expansion of political and economic influence in Latin America, the United States may find itself less and less at home in what Washington once considered “America’s Backyard.”

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By Dr Kumar David

Thomas Piketty has done a splendid job validating one of Marx’s key expectations that relatively the rich will get richer and the poor poorer.  However, after saying ‘thank you very much’ many Marxists are savaging him. Maybe they feel reinvigorated these post-2008 days and show little mercy to deviants.

An unknown guy comes out of nowhere and establishes something the Master’s disciples have been saying for 150 years but found hard to establish conclusively empirically. A data savvy young group, after 10 years labour, proves sustained and growing wealth-inequality in the UK and Germany over 150-200 years; that’s a contribution to knowledge. Though Piketty admits he is weak on theory and abstraction Capital in the Twenty-first Century is outselling everything on Amazon’s list, pulp fiction, do-it-yourself, even thrillers, which is remarkable for a 600 page tome on economics.

The excitement is because Piketty, a youngish French economist and his team, have amassed a mountain of data about the English and German capitalist economies from the Industrial Revolution two hundred years ago to the present and processed it to come up with an unremarkable finding. It is as well known as the sun setting in the west that inequity grows ever more acute when capitalism is left to itself without the heavy hand of state intervention, war or revolution. Feeling it in the bones is one thing, but pages of empirical proof is another. That’s Piketty’s contribution; he shows from raw data that capitalism, if allowed to function normally and undisturbed, possesses a natural tendency that swells wealth inequality between the very rich and the rest of society. The cynic will say this has been known all along; but the book establishes it from raw data. Chris Giles of the Financial Times tried to pick holes in Piketty’s inequality findings but only managed to point at minor errors that do not shake the basic thesis at all.

Today, current data is available in company reports, government and multilateral agency statistics (the data in US Federal and State statistical sites is gigantic) as well as university research output. What is more, data, going back decades and centuries, is being uncovered, published and the Internet makes access easy. Marx would have given an arm and a leg for this detail of information; instead he toiled for thirty years in the British Museum Reading Room poring over parliamentary reports, factory inspector’s bulletins, trade journals and newspapers. Darwin similarly sailed around the world collecting specimens and laboured for a quarter of a century visiting animal breeders and scientists at great museums and laboratories. Finally, both arrived at ground-breaking conceptual revolutions. It is amazing that to see farther we still stand on their shoulders, fitting in the findings of thousands of new researchers and volumes of new data, and pushing frontiers onward.

Maito says Piketty made a silly blunder

Argentinian Esteban Ezequiel Maito and a phalanx of other Marxists have shot down Piketty’s critique of Marx’s “Tendency of the Rate of Profit to Fall” (TRPF) thesis. I make no attempt to recap Marx’s detailed workings in Capital Volume 3 but his conclusion was this. In general, under normal circumstances, as capitalism goes through its life cycle, the rate of profit declines. It may go up or down or fluctuate for a year or two, but in the long-term a secular decline is the theoretical norm. Marx said this was so for reasons to do with labour-capital relationships, accumulation, expansion and competition, and that this is a natural feature of the capitalist process. Therefore Marxists see TRPF as a natural Law of capitalism.

It’s a Law, and it’s a Tendency; now isn’t that a contradiction? No! Newton’s Law of Gravitation says that an apple will fall to the ground with a known acceleration. However, it does not deny that if you stand under the tree and catch it, or if you bounce it back with a tennis racket it will behave differently. A Law and contingent differences that occur if something violates the assumptions of the Law (e.g. Marx’s normal evolution of capitalism, Newton’s not interfering with the motion of the apple) are theoretically compatible. This is why Marx used the qualifier “Tendency” to preface TRPF because he granted that: (a) If there were new inventions that caused a spurt in productivity, (b) harsh political changes (a military coup for example) crushed workers and drove down wages, (c) new markets (colonies, globalisation today) or production centres (China in recent decades) were opened, then the rate of profit may go up for a while. But when things settled down again to normal hum-drum capitalism, the tendency of the rate of profit to decline would return.

Piketty claimed that his data showed that Marx was wrong; the rate of profit did not decline over the secular long-term but remained steady, he said. Estaban Maito in 13 pages in Piketty against Piketty (http://mpra.ub.uni-muenchen.de/55839/) shows that Piketty blundered; that he was comparing apples with oranges. A little simplified, his “proof” goes like this. Piketty defines rate of profit as [Total national profit of capitalist enterprises] divided by [Total wealth of the rich classes], say P/W. However, Marx and most economists, Smith and Ricardo included, define the rate of profit as [Total national profit of capitalist enterprises] divided by [Total capital in action in the production process], say P/C. Piketty shows that P/W has remained steady, but what about P/C? His own data set is so rich, says Maito, that one could take Piketty’s W data, subtract from it non-production assets like private houses and private financial savings, and treat the remainder as capital in production; that is C. What Maito says he did was to use data called ‘total business assets’, which he could ferret out of Piketty’s book, as a stand in for C. Maito also seems to have collated this with data from other sources.

The graph in fig 1 (attached as a file) (fig 2 in Maito’s paper) comparing Marx’s steeply declining P/C as computed by Maito, with Piketty’s steady P/W for the UK, makes the point clear. Maito has another graph replicating this for Germany over the same time period but I am not reproducing it because the relationships are similar.

There is a serious unresolved problem in this graphic for the UK (it is not present in Maito’s graphic for Germany). How is it that from about 1980 onwards the two graph lines in the figure converge? Wouldn’t W always be larger than C and, since the numerator is the same, wouldn’t P/C always be bigger than P/W? I contacted Maito by e-mail but his explanations were unsatisfactory.

Another graph from Maito (my fig. 2 – attached as a file) details the world rate of profit. The secular decline in the global rate of profit over the last 130 years is abundantly clear; a fact that could not have been proved except by using the data that Piketty himself made available.

There are two breaks in the graph during the two World Wars when no sense can be made of the data, and there is a sharp rise in the rate of profit during the Great Depression when masses of poor quality capital (C) was destroyed followed by the New Deal when Roosevelt intervened with a heavy hand upsetting free market capitalism. It is also quite interesting to observe the slow steady rise in capitalist profitability from 1980 to 2007. Initially this was the period when neo-liberalism intervened and imposed politically driven repression on the working class and lowered real wages and living standards. This was followed by the post mid-1990s phase when China entered the global production chain revitalising production economics and boosting the profitability of Western companies that had invested heavily in the Dragon’s economy.

Critique of Pikkety on fundamentals

Unrepentant Marxists have another problem with Piketty; he is made out to be a Marxist but he is not; he doesn’t claim to be one. The crucial difference is that for Marx and Marxists capitalism is a process, a system, an arrangement of the relations between classes. Piketty has no such depth; that is all too hard to understand he is likely to say.

Capital, Marx’s masterwork is not a book on economics nor as often described is it about political-economy. One could say it’s about man, his material world and the refection of that world in men’s minds. Wages, prices, profits, the working day, production activities, capital outlaid and revenue recovered, what are all these things? Marx held a mirror to the world and saw more a skewed reflection in men’s minds of real social relations present in the real world; classes, struggles, power, exploitation, state and the structures and processes of society. Men’s true relations in society seem to them to be economic categories. There is this famous passage about reification in Capital Volume 1, Chapter 1, Section 4 (Fetishism of Commodities).

“A commodity, therefore, is a mysterious thing simply because in it the social character of men’s labour appears to them as an objective character stamped upon the product of that labour; because the relation of the producers to the sum total of their own labour is presented to them as a social relation, existing not between themselves, but between the products of their labour. This is the reason why the products of labour become commodities”.

This would all be Greek to the non-Marxist Piketty. Marxists find it ridiculous that Piketty is passed off as a second Marx by an untutored bourgeois world despite his own strenuous insistence that he is not. Piketty exposed the inequality and the inequity of the capitalist world during the last 200 years. Why not say thank you and leave it at that?

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By Amit Gupta

After denying Mr Narendra Modi a visa for nearly a decade the US saw the writing on the wall and started changing its tune just before the 2014 elections were held. Mr Modi is now officially welcome in the Washington but it will be a long time before the US-India relationship will reach the same levels it was at during the second term of George Walker Bush.

Obama’s Compulsions

The US, once again, has had its focus shifted from China to a series of brush fires around the world – Syria and Ukraine being the most prominent. The Bush administration when it came to power named China as a strategic competitor but was forced to shift its attention to Afghanistan because of the September 11 attacks. These traditional battlegrounds have their constituents in Washington. The bottom line is that quite a few American strategic analysts are obsessed with the Middle East and would like to revive the Cold War even though President Obama quite correctly dismissed Russia as a regional power. Because brush fires have overridden grand strategy in Washington, the Obama Administration’s Pivot to Asia and enhanced ties that go with it have been put on the backburner and, instead, the focus is on regions that both present unsolvable problems and provide little reward to the US. The Middle East, after its flirtation with the so-called Arab Spring, has swung back to soft authoritarianism, and Russia will never be in the US camp. Nor will challenging Russia, a much diminished power, bring the sort of global rewards that the Cold War did to the US’ position in world affairs. Now, challenging Russia does not lead to a rise in military budgets or in a national rejuvenation as happened with the race to the moon. But the Obama administration is likely to be caught up in putting out these brush fires till the end of its term.

Coupled with the shift from a strategic to a tactical focus is the fact that the three trends in the short to medium term are going to make US foreign policy take a less proactive role in world affairs. First, the country is tired of wars and, therefore, there is a real dislike for foreign intervention. President Obama recognised this when he put the Syrian issue in the hands of Congress knowing fully well that the legislature was unlikely to authorise American troop commitments. Secondly, at a time when the American economy has yet to fully recover from the economic crisis of 2008, it is difficult to tell the American people to spend more on defense and external military commitments. Third, the bills of the Iraq and Afghan wars are now starting to pile up with the need for new equipment as well as taking care of tens of thousands of walking wounded. Given these facts, the US is quite happy in pursuing a foreign policy where, as in Libya, it leads from behind unless its security interests are threatened (President Obama has argued that a terrorist attack remains the most direct threat to the US). President Obama’s domestic critics see all this as a sign of weakness but he has made a more careful exercise of American military power as a centerpiece of the last two and a half years of his presidency as stated in his speech at West Point on 28 May 2014.

Along with this preoccupation with short term crises and the exhibition of caution in exercising military power is the fact that the Pivot to Asia has not been concretised in an economic plan of action for Asia. Consequently, it is China that is making major economic inroads in the region as some of the US’ major allies – South Korea and Australia – now have China as their largest trading partner. The fact that the Trans Pacific Partnership – the Obama Administration’s economic centerpiece for Asia – does not include China or India means in fact that it will have a limited impact on the US role in Asia.

All these trends should mean that the US takes the initiative to build a stronger relationship with Asia since as President Obama stated at West Point, “On the other hand, when issues of global concern do not pose a direct threat to the United States, when such issues are at stake — when crises arise that stir our conscience or push the world in a more dangerous direction but do not directly threaten us — then the threshold for military action must be higher. In such circumstances, we should not go it alone. Instead, we must mobilise allies and partners to take collective action. We have to broaden our tools to include diplomacy and development; sanctions and isolation; appeals to international law; and, if just, necessary and effective, multilateral military action. In such circumstances, we have to work with others because collective action in these circumstances is more likely to succeed, more likely to be sustained, less likely to lead to costly mistakes.” Instead, for several reasons, the two countries will likely take some time to warm up to each other.

US businesses ranging from the commercial to the defense sectors, for example, now suffer from a bad case of India fatigue. The last five years of the UPA government saw Indian decision-making move at a glacial pace and simple attempts to open up the economy were stymied by corruption charges and coalitional infighting. The Modi government, therefore, will have to recreate the kind of excitement that existed in business quarters about India in the early 2000s in order to generate renewed interest from Western and particularly US firms. Given the economic focus of the new Indian government, however, this is likely to happen sooner than later as witnessed by the move to allow 100 per cent foreign direct investment in the defense sector.

A more difficult issue will be to see if India and the US can develop complementary world views especially on the issue of the rise of China and how to balance Beijing with a pivot to Asia. While New Delhi sees the value of a US that balances China in Asia it is not keen on being part of an anti-Chinese alliance as some in the US and Asia would want it to be. This is especially the case with Mr Modi who has made several trips to China and quite clearly recognises the role Beijing could play in the economic development of India. Moreover, as long as the word expeditionary is taboo in New Delhi it is doubtful that the Indian government will agree to participate in coalitional efforts with the US (unless of course it is under the aegis of the United Nations).

And there is the simple fact of personalities. Mr Modi, in his years as chief minister, spent time cultivating the nations of East Asia because he was not permitted to visit the West. He is likely to use that friendship to bring quick investment to India, something that the West will not be willing to do. Consequently, an India that finally adopts a true Look East policy and for a while at least adopts a wait and see approach with the US may be seen.

Having said that, such an approach cannot be maintained in the long run since India’s development will require technological inputs from the West and that means at some time either Mr Modi goes to Washington or Mr Obama comes to Delhi. It will happen but not any time soon.

Amit Gupta
Associate Professor, Department of International Security, USAF Air War College, Alabama

The views expressed in this article are the author’s own and do not necessarily reflect those of the US Air Force or the Department of Defense.

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The US has pledged additional military help to Ukraine as well as potential training of its law enforcement and military personnel. President Obama’s vows comes as Kiev continues air strikes as a part of its military operation in southeastern Ukraine.

Since March, the White House has approved more than $23 million in security assistance to Ukraine. Now the US is providing additional $5 million aid for “the provision of body armor, night vision goggles and additional communications equipment.”

The White House said other aid for Ukraine has included 300,000 ready-to-eat meals and financing for medical supplies, helmets, hand-held radios and other equipment.

“The United States is absolutely committed to standing behind the Ukrainian people not just in the coming days, weeks, but in the coming years,” Obama said.

Obama said it was critical that other countries also support Poroshenko and Ukraine’s new government, including by training its military and police.

Obama’s statement comes a day after he pledged to invest $1 billion in stepping up the US military presence in Eastern Europe amid the Ukrainian crisis.

So far the US has deployed 600 troops for military drills in Estonia, Latvia, Lithuania, Estonia and Poland.

“As allies, we have a solemn duty – a binding treaty obligation – to defend your territorial integrity. And we will,” Obama said, according to Reuters. “Poland will never stand alone. Estonia will never stand alone. Latvia will never stand alone. Lithuania will never stand alone. Romania will never stand alone.”

At a separate meeting in Brussels, NATO has said that as an alliance it will not provide military assistance to Ukraine, although individual member states can do so.

NATO said it would “will finalize a comprehensive package of long-term measures to make Ukraine’s reforms more effective and its armed forces stronger” later this month.

“We agreed that we will continue to reinforce NATO’s collective defense with more air and sea patrols and more exercises and training from the Baltic Sea to the Black Sea and the Mediterranean,” NATO Secretary-General Anders Fogh Rasmussen said.

President Obama has called Poroshenko’s victory in the May 25 election a “wise selection.”

Speaking to reporters after the meeting, Obama said the two discussed Poroshenko’s plan to restore peace, increase GDP and reduce the country’s economic dependence on Russia.

“In my discussions with him today it’s clear he understands the hopes and aspirations of the Ukrainian people,” Obama said.

Billionaire Petro Poroshenko won Ukraine’s May 25 presidential election and will be sworn in as the country’s new leader on Saturday.

Poroshenko announced that Kiev would step up its military operation shortly after exit polls predicted his victory in the election, saying that Kiev’s activities in the southeast of the country “will be more effective and military units must be better equipped.”

Following Poroshenko’s statement, the situation in the Donetsk and Lugansk regions significantly deteriorated as clashes between self-defense forces and Kiev troops intensified. In the course of the following two days, Kiev deployed fighter jets and helicopters to attack Donetsk International Airport.

In Lugansk, Kiev admitted firing “more than 150 missiles” from fighter jets on Monday alone.

The total death toll as a result of the so-called “anti-terrorist” operation has so far been put at 181 people, including 59 of the ruling regime’s troops. Another 293 injured people were injured. These figures were stated by the country’s Prosecutor General, Oleg Makhnitsky, on Tuesday. However, it is unclear if the number of fatalities includes self-defense forces as well.

On Wednesday, the spokesman for the anti-terrorist operation, Vladislav Seleznev, said that 300 self-defense fighters had been killed in the last 24 hours. However, self-defense units denied these numbers, saying their losses in the last day were far fewer – two killed and 45 injured.

The post US Could Train Kiev’s Military, Obama Tells Ukraine’s President-Elect appeared first on Eurasia Review.

Speaking in Beirut Wednesday, Secretary of State John Kerry said that the U.S. does not recognize the new unity government of Palestine, as that would imply it recognized the Palestinian state.

“We do not recognize the government of Palestine – that would mean we recognize a state,” he said.

But Kerry also said the U.S. would continue to work with the new Palestinian unity government “as we need to” and will monitor daily its policies to ensure it “doesn’t cross the line.”

The new unity government in Palestine will see President Mahmoud Abbas’ Fatah work alongside Gaza-based Hamas, which is designated as a terrorist group by the U.S. The two groups have been divided since 2007.

Israeli Prime Minister Benjamin Netanyahu said Tuesday he was “deeply troubled” by the U.S. decision to maintain ties with the new unity government.

Original article

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By Aakash Brahmachari

India’s Department of Industrial Policy and Promotion has proposed raising the bar on foreign direct investment (FDI) in India’s defence sector from the current 26 per cent to 74 per cent and possibly 100% in select high-technology areas. The latest bid to revive India’s stagnating defence sector is characteristic of the new government’s urgency to revive investor confidence. The defence sector in particular has been hampered by policy paralysis, that, the ruling Bharatiya Janata Party has been openly critical of. The decision to boost FDI in the sector, if approved, will be marked as an example of the new government’s commitment to implement important reforms at a quicker pace.

Old Wine in a New Bottle?

In 2010, the United Progressive Alliance government had considered the same proposal. At that time, the consensus from the defence industry was that the 26 per cent FDI cap had done more harm than good. It had deterred foreign investors who did not see any financial incentives and had limited control over their joint ventures (JV) with Indian partners. This implied less control over intellectual property – which is a key differentiator in the defence sector and is often developed at great expense.

Shortly after the proposal was tabled, a survey by the Confederation of Indian Industry found that over half its members preferred a 49 pe cent FDI cap along with an Indian JV partner for foreign firms. Though the companies surveyed favoured raising the FDI cap to 74 per cent for select projects, they felt restricting it to 49 per cent would ensure a level playing field for domestic manufacturers.

Given that the Indian defence sector was opened to private companies only in 2001, most domestic firms in a JV with a foreign partner benefitted from access to technology without heavy investments in research and development (R&D). With the new proposal, there is a real concern that Indian firms will be unable to compete with international corporations that have much deeper pockets and an established R&D base. Instead of benefitting from a JV, Indian companies may find themselves crowded out of the market.

Foreign firms will now be able establish their own manufacturing base in the country without the need for an Indian partner. Resultantly, Indian firms could be relegated to ancillary suppliers for international corporations. A desire to protect domestic industry likely prevented the proposal’s implementation earlier with former defence minister AK Anthony expressing his confidence that the 26 per cent FDI cap was sufficient at the moment.

Implications for the Domestic Manufacturing Sector

Is 100 per cent FDI the only cure for India’s ailing defence manufacturing sector? The answer is less than obvious. In the east, China’s defence industry has grown despite no foreign access; but there are indications that private domestic firms may be granted entry. India’s approach is markedly different from China’s. While India prefers to develop technologies and weapon platforms with foreign support, China’s government-run defence sector has been adept at replicating and mass-manufacturing foreign technology. India’s focus on development instead of replication has led to prolonging of projects such as the Light Combat Aircraft. Conversely, within a few years of purchasing the Sukhoi Su-27 fighters from Russia, China proceeded to develop their own fighter – the J-11 – based on the Su-27’s airframe. In many ways, this approach has helped China’s defence manufacturing sector outpace and outgrow India’s.

Unrestricted FDI in defence may be a non-traditional approach for India, but it does have its advantages such as revitalising the moribund sector. Experienced international firms can establish manufacturing and integration facilities in India without the fear of losing valuable intellectual property due to a lack of managerial control. This will raise the levels of technology in the sector, promote competition, and boost business for ancillary domestic industries. Though domestic firms will face stiffer competition, over time, this promises to form the basis for a modern defence industrial complex.

An efficient and broad manufacturing base, even in private hands, allows for greater reliability of supplies in the event of war when products can be manufactured locally instead of being imported at exorbitant prices. A further corollary is greater transparency with a diminishing role for middlemen. However, if the US defence industry is a yardstick to go by, we may expect the emergence of cartels and lobbies which collude to raise defence expenditure.

Increasing the FDI Cap Should Complement Other Defence Sector Reforms

In the larger scheme of things, increasing the FDI limit is only part of the battle won. India is the world’s largest arms importer, but a closer look at our purchases reveals gaps and inconsistencies. Expensive platforms such as the Boeing P-8I Poseidon maritime reconnaissance aircraft and the C-130J Hercules medium-lift aircraft have undoubtedly strengthened capabilities, but glaring gaps remain. The Indian Army urgently requires new field artillery and the Indian Air Force’s ground-based air defence systems are largely obsolete. Repeated tenders and isolated contracts have failed to address these shortcomings. To be effective, the proposed increase in FDI needs to be harmonised with procurement policies to address the armed forces’ requirements in a sustained manner instead of the piece-meal efforts we have witnessed in the past decade.

Although increasing the FDI limit will almost certainly have several riders, this may be the most opportune time to implement such a decision. The new government’s economic growth-oriented policies have boosted business sentiment and this, combined with the demand generated by the modernisation and expansion of one of the world’s largest armed forces, may prove to be the wind in the sail for India’s defence sector.

Aakash Brahmachari
Defence Risk Consultant
E-mail: aakash@cantab.net

Views expressed are the author’s own

The post Can 100% Foreign Investment Help India’s Defence Sector? – Analysis appeared first on Eurasia Review.

The Arab uprisings were sparked and fuelled by the justified demands of impoverished, oppressed peoples. The world’s media almost entirely missed this narrative

Irrespective of how one feels about the direction taken by various Arab revolutions in the last three years, a few facts remain incontestable. Arab revolts began in the streets of poor, despairing Arab cities, and Arabs had every right to rebel considering the dismal state of affairs in which they live.

Few disagree with these two notions. However, the quarrel, in part, is concerned with the cost-benefit analysis of some of these revolutions, Syria being the prime example. Is it worth destroying a country, several times over and victimising millions to achieve an uncertain democratic future?

The cost for Egypt was high as well, although not as high in comparison to Syria. The conundrum that Egyptians have been forced to contend with is that of “stability” – based on the same old paradigm of powerful elites and a majority fighting for crumbs to survive on – versus “instability” within a relatively democratic system.

Although one must insist on appreciating the uniqueness of every collective Arab experience, one can hardly deny the parallels that began to emerge over the course of months and years.

Historical, religious, cultural and linguistic bonds unite millions of Arabs, even if only at an emotional level , and they form part of the similarity between the various Arab experiences. But the other part matters too, and that has to do with comparable strategies applied by Arab governments to control their peoples – the psychological manipulation, the fear mongering, the intense degree of violence and oppression, the readiness to go to any length to ensure total control, and so on. There have been more examples of such repression in the last three years than there have been in decades. The so-called Arab Spring has morphed into a model of state violence unequalled in modern Arab history.

While for journalists and reporters, the story is perplexing and too involved to explain with any degree of intellectual integrity, future historians are likely to have less difficulty deciphering the seemingly befuddling events. Some of us wrote with a measure of clarity from the revolutions’ very early days, warning of the possibility of mixing up the complex narratives from Tunisia and Morocco to Yemen and Bahrain. We contended that if the “Arab Spring” were to be a triumph of any kind, it would mean that it brought back the “people” factor to the Middle East’s political equation, which has been continually dominated by two competing, and at times harmonious parties: the local, ruling elites and regional and international foreign powers.

True, the “people” were finally back as an integral part of that equation, but that alone is just not enough to guarantee that the wheel of history would start turning into the desired direction, based on a preferred speed. It simply meant that the future nature of conflicts in the Middle East and North African region would be more multifarious than ever.

From a historical point of view, the current conflict in the Middle East – the devastating war in Syria, the utter chaos and recurring coups in Libya, the push and pull involving the military in Egypt and the state of bedlam in Yemen, etc – are not in the least unanticipated outcomes of an unprecedented historical conversion in a region associated with hopeless stagnation.

But historians have the benefit of time. They can sit in their reclusive offices and reflect on substantial phenomena, compare and contrast as they please and only regard their conclusions as serious when time attests to their academic realisations.

Reporters on the ground and media commentators hardly have such leverage. They are forced to react instantaneously to developing events, and quickly draw conclusions. Considering the lack of depth and understanding of the Middle East that many Western reporters had to begin with – their interests in the region were mostly augmented and surrounded by US-Western intervention in Iraq and elsewhere – reporting on the “Arab Spring” was greatly lacking, if not at times outright embarrassing.

True, many reporters agreed that it all began when a despairing Tunisian street vendor, Mohamed Bouazizi, immolated himself on December 17, 2010. That could have been the start of an intelligent discussion if it had been coupled with an authentic understanding of Arab culture, language, history and political dynamics unique to every society. Unfortunately, there was little of that.

When then-Tunisian President Zine El Abidine Ben Ali decided to step down on 14 January, 2011, soon to be followed by Hosni Mubarak of Egypt, the reporting moved from the street back to the same tired circle of self-serving political elites, Western-funded NGOs, English-speaking social-media buffs and the like.

What could have been an equal revolution in the media’s understanding of the Middle East became a failed attempt at understanding what Arab people in the street truly aspire to achieve. If a regular Fatima or Mostafa does not speak English or tweet all-day long because they are busy surviving and all, they won’t receive funds from some EU-affiliated financier to sustain their NGO; then they are forgotten about and of no consequence to the story.

But the problem is a regular Fatima and a Mostafa stand at the heart of the story. The failure to respond to their pleas, understand their language, value or their aspirations is not their problem, but ours, in the media. It might have been too inconvenient for some to chase Fatima and Mostafa’s story because doing so can be dangerous, because they are not reachable by phone or because their social-media presence is too dismal.

It might be out of sheer laziness, or complete ignorance of what matters and what doesn’t. It might also be that Fatima and Mostafa’s story doesn’t fit nicely into the fictitious discourse that we knitted on behalf of the media organisations for which we work. Fatima might be Shiite, or Sunni and Mostafa might be Christian or anti-intervention, and that too can be too inconvenient to report.

Now that sham democratic elections are bringing dictators back to power, and that sanctioned intellectual elites of Arab countries have been proven to be no more than lackeys to existing regimes, it is time to go back to the streets, this time with true understanding of language, culture and people.

Unlike Mohamed Bouazizi, the Fatimas and Mostafas of the Middle East should not have to set themselves ablaze to become worthy of a news report. Their constant struggle and resistance is a story that must be told. In fact, it is the only story that should have mattered in the first place.

The post The Lost Voices Of The Arab Revolutions – OpEd appeared first on Eurasia Review.

By Ömer Faruk Topal

The Emir of Kuwait Sheikh Sabah al-Ahmad al-Sabah paid a visit to Iran along with a high-ranking delegation including his country’s foreign, oil, finance, commerce, and industry ministers. The Kuwaiti emir arrived in Tehran on June 1 and met with Supreme Leader Ali Khamenei and President Hassan Rouhani.

This visit which came at the invitation of the Iranian President is the first visit of the Emir Sabah to Iran since his inauguration in 2006. Since Rouhani’s election, the Emir of Kuwait is the second Gulf leader to visit Iran after Oman’s leader Sultan Qaboos bin Said. The two parties signed six agreements in the areas of security, customs, transportation, environment, tourism, and sport.

Some important regional issues such as the Syrian War and Iran’s involvement in Syria, the Egyptian elections, the situation in Iraq and Palestine, and the rapprochement between Iran and Saudi Arabia were also discussed during the meeting.

According to the Kuwaiti state-owned news agency KUNA, “the two sides, during the meeting, held cordial conversation and exchanged good sentiments, in an atmosphere that depicted the spirit of friendship and depth of the distinctive ties bonding the two friendly countries and peoples.” Iranian Foreign Minister Mohammed Javad Zarif also said that “our ties with Kuwait are very important to us and we hope this trip would be a new chapter to boost cooperation.”

KUNA quoted Iran’s ambassador to Kuwait, Ali Riza, as saying that “the visit comes in the midst of delicate developments and complex changes in the eventful region that resulted in the political turmoil in some countries. Iran is keen on enhancing mutual trust and political relations with neighboring countries, especially Kuwait.” Kuwait’s ambassador in Tehran, Majdi Al Dhafiri, said to KUNA that Sabah’s visit to Iran was “vital in tackling issues connected with the region. Iran is an important country in the region and Kuwait’s relation with Iran is based on mutual respect and cooperation.”

The Emir invited Rouhani to visit Kuwait and it was announced that the scheduling of a meeting would be set through diplomatic channels.

Supreme Leader Khamenei stressed that “regional security depends on good relations among all countries of the region” and “differences between them will only benefit their common enemies.”

In a final declaration of the Riyadh meeting, foreign ministers of the Gulf Cooperation Council stated that they hoped the Kuwaiti emir’s visit to Tehran would further enhance the relations between Iran and the Gulf Countries. They also emphasized the seriousness of interference in internal affairs, good neighborliness and refraining from the use of force, and mutual respect between themselves and Iran.

Whether or not this visit can alleviate the distrust between the Gulf countries and Iran is uncertain. Relations between Iran and the Gulf monarchs, who rule over Shiite minorities, have always been problematic. Iran’s nuclear program, its involvement in Syria, and its influence on Gulf Shiites are considered security threats by the Gulf countries. Both parties also have different stances on the Palestinian issue. The Saudi Arabian-Iranian rivalry is not limited to Syria; it extends to Yemen, Bahrain, and Lebanon. Nonetheless, efforts to enhance stability and promote relations have been present. In December, the Iranian foreign minister visited all Gulf countries except for Saudi Arabia and Bahrain. Early last month, Saudi Arabia also extended an invitation to prominent Iranian officials including former president Rafsanjani and Foreign Minister Zarif.

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The only place in all of China where for 25 years the memory is marked of the Tiananmen Square student protest crackdown, also today Hong Kong hosts a large demonstration that will culminate in a vigil this evening.

The organizers are expecting some 200,000 people to attend, also from mainland China, to show that despite the strong pressures of authorities to erase the events and the fact that 30% of the population was born after that 4 June 1989, the memory of Tiananmen remains vivid for those who believe possible a change in trend of the political system to meet the demands of development, rights and democracy, alongside those of enrichment and wellbeing.

Hong Kong’s civil society has fought for years to maintain the level of rights and freedoms recognized by the Law, under China-UK accords, which on 1 July 1997 consigned the former colony to Beijing with the agreement of it maintaining its autonomy for 50 years. Also today, its semi-autonomous statute, though threatened especially in regard to freedom of information, education and political representation, renders the small territory on the Pearl River Delta and its 7 million inhabitants an oasis of civil liberties.

The small Tiananmen memorial museum opened only last April in Hong Kong has footage and photos of the days of the crackdown, and also a copy of the Goddess of democracy symbol-statue of the brief 1989 spring of freedoms.

“The emotions around the 1989 democracy movement represented a beacon of hope and then the massacre represented despair. When people go through that, you can never forget”, said Lee Cheuk-yan, politician and activist of the Alliance in Support of Patriotic Democratic Movements of China. Chinese authorities over the past months have prepared to prevent any demonstrations or initiatives to mark today’s anniversary.

For seven weeks, starting on April 15, day of the death of the party secretary, the reformist Hu Yaobang, tens of thousands of students, intellectuals and simple citizens, in some instances with open backing of some political figures, occupied the immense Tiananmen Square, in the center of the capital, symbol, with the nearby forbidden city, of Chinese powers. The attempt was to seek spaces of freedom and dialogue with the Communist Party that on June 3 instead decided – in name of the “immortals”, or better the elders of the party, mostly even without any government post, to end what was perceived as a challenge to the rulers with hundreds dead, thousands of arrests and the exile of a large number of dissidents.

The wave of preventive arrests that also this year marked the approaching date of June 4th, was accompanied by particular focus on initiatives of the Muslim minority and the Uiguri, concentrated in the large autonomous western region of Xinjiang. The string of attacks of the past months attributed to the two groups was a pretext to crackdown on dissidents, mass media and social networks.

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The Abbott Government has made a point to shock more than awe in its short time in office. (It is hard to be awed by the Prime Minister, whose behaviour has been expected.) It has taken the program of the previous Labor government further in chastising and banishing asylum seekers. It has created seemingly insuperable legal barriers in arriving, legitimately, to Australia. It has grovelled and fawned before US power interests while dismissing concerns of unwarranted mass surveillance. It has taken the hammer to affordable education, proposed increases in the costs of medical services and funnelled more money into defence.

Then came the announcement, made in somewhat hushed tones, that 500 Afghans, many of them involved in interpreting duties for the Australian Defence Force, have been resettled in Australia. For Immigration Minister Scott Morrison, “This policy reflects Australia’s fulfilment of its moral obligation to those who provided invaluable support to Australia’s efforts in Afghanistan.”

The move is tantamount to saving a group of individuals from slaughter in an uncomfortable historical situation. (One interpreter awaiting his departure to Australia was killed in a Taliban attack last year.) It is axiomatic occupations breed collaborators and necessary opportunism. Others do not necessarily take kindly to the effort. A collaborator is fodder for those who feel that the book of grievance needs to be balanced in the wake of the occupier’s departure. Local scores will always be settled.

While many Afghans who have fled their ruined state are finding themselves in Australia’ broader Pacific network of camps, those who assisted the very forces of the Coalition occupation have been given flowers of welcome, a smorgasbord of gifts from housing to medical services. Fortress Australia, on this occasion, will make a grand dispensation – you helped us fight a war that we lost, or at never rate never won, and now, we will repay you.

It is a fact that has escaped commentary in Australian media and political sources. These people, surely, would never have needed resettlement had the mission, if you want to call it that, been competently, and successfully, executed. There would be schools, institutions, a peaceful regime of order. Instead, in what can only be an admission of veiled defeat similar to Iraq and Vietnam, those helping foreign forces must leave in fear. The Taliban forces are closing in.

The Abbott government’s approach to the relocation program is similar to the amenable police agency who relocates individuals under a witness protection program. There might be a cloud over your reputation, and your life – after all, we helped put it there. “Many of these employees,” explains Defence Minister David Johnston, “were placed at significant risk of harm by insurgents in Afghanistan, due to the highly visible and dangerous nature of their employment.” While it happily defames Afghans who arrive by boat, slandering their credentials and condemning them for non-existent offences on the high seas, the Abbott government will give those complicit in Australia’s war effort a helping hand.

This is not to draw a fine line under matters of allegiance – all is fair, and unfair, in brutal love and vicious war. Conflicts produce pressing interests in survival. Constellations of loyalties form, less to do with genuine fidelity than the need to get by. (How quickly did the Australian authorities forget those Afghan recruits they trained who fired and killed their own personnel.) Children need to be fed; the family needs protection.

It is, for all of this, fitting to point out the instinctive hypocrisy in dealing with a war torn country whose refugees are treated under different regimes. Those loyal to the occupation program have stolen a march. Those fleeing that very same conflict have received the opprobrium of their receiving country. That this distinction be drawn by governments who were childishly keen participants in the invasion, and continued occupation, of Afghanistan, suggests a greater picture on where culpability lies.

The Abbott government has taken the steps of its predecessors, following an Australian history that distinguishes between good and bad immigrants, even if they come from the same loose ethnicity. In the late 1930s, there was a fear that only “bad” Jews were heading for Australia’s shores, the sort of unassimilable central and eastern Europeans who might, according to authorities, rile an otherwise well-tempered populace. No Sir John Monash among them. He, after all, was one of us.

An electorate hardened and fed on the rhetoric of turning back boats might well be puzzled with such gestures of “humanitarianism”. As if making a point, Social Services Minister Kevin Andrews was keen to point out that the arrivals were good future citizens who had fought the good fight. “Many have already commenced employment of vocational training opportunities and their children are enrolled in school.”

A curious unfolding of events has taken place. Afghans subjected to the withering, and fictitious label, of “queue jumper” will no doubt be puzzled by the momentous leap made by those warm with Australian Defence personnel. Some get the steaming, brutal conditions of Manus Island, with privatised security forces and psychologically wearing facilities. Others get accommodation, health services and household assistance. War always pays, for some.

The post The Benefits Of War – OpEd appeared first on Eurasia Review.

An Alaska volcano that has been spewing ash and lava for years began erupting with new intensity this week, pushing a plume of smoke and ash as high as 24,000 feet (7,315 meters) and prompting scientists to issue their highest volcanic alert in five years, authorities said today.

But the intense action at the Pavlof Volcano, located in an uninhabited region nearly 600 miles (966 km) southwest of Anchorage, has so far not disrupted any regional air traffic, thanks to favorable weather that has made it easier for flights to navigate around the affected area.

Still, the eruption was intense enough for Alaska Volcano Observatory scientists to issue their first red alert warning since 2009, when the state’s Mount Redoubt had a series of eruptions that spewed ash 50,000 feet (15,240 meters).

“This means it can erupt for weeks or even months,” observatory research geologist Michelle Coombs said of the warning. “I don’t think we will be at red for that long, but we are expecting it to go for a while based on its past.”

Coombs said affected areas are uninhabited except for some hunting destinations.

Geologists first issued the alert late on Monday. Since then plumes reached as high as 24,000 feet (7,315 meters) on Tuesday morning.

Plumes are created when lava bursts from the crater of the 8,261-foot (2,517-meter) volcano, then falls back on glacier ice, Coombs said.

“Right now, with the weather clear, it’s just putting on a good show,” Coombs said. “We’re getting a lot of pilot reports and a lot of good photos, so we’re able to keep a good eye on it.”

Pavlof lies below a route frequently used by jetliners flying between North America and Asia, but those planes generally fly at elevations of 30,000 feet (9,144 meters) and likely would be unaffected by ash at lower elevations, observatory scientists have said.

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By Nana Kirtzkhalia

The Georgian government expresses readiness for a direct meeting with the Russian leadership, Georgian Prime Minister Irakli Garibashvili told reporters on June 4.

He said that it is early to talk about the time, place and the format of the meeting.

“On the one hand, Georgia establishes constructive relations with Russia and on the other hand, it is preparing for signing the association agreement with the European Union,” the prime minister stressed.

Garibashvili underscored that improvement is observed in the Georgian-Russian relations and it is evident in the trade sphere.

“We have already begun to trade with Russia and this process is expanding. Our citizens profit from this,” the prime minister said.

He went on to add that Georgia will continue to make every effort to improve its relations with Russia, stressing that these relations were deteriorated under the previous government of the country.

Large scale military action was launched between Georgia and Russia in South Ossetia on August 8, 2008.

Later, Russian troops occupied Tskhinvali and expelled the Georgian military.

Russia recognized the independence of South Ossetia and Abkhazia in late August.

In response, Tbilisi ended diplomatic relations with Moscow and has called the two unrecognized republics of Abkhazia and South Ossetia occupied territories.

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