Daily Sources, 9/19

Paradoxes abound this week ...

1. William Branigin at the Washington Post reports that yesterday Condoleeza Rice delivered a speech in Washington which stepped up criticism of Russia. In it, she stated that Europe and the US had to stand up to Russian bullying, complained of "anachronistic Russian displays of military power" in South America, and asserted that the US "will not allow Russia to wield a veto over the future of our Euro-Atlantic community." In a strange echo of Ahmadinejad's rhetoric today regarding Israel, she made clear that the US had no issue with the people of Russia, merely its government. This comes on top of the report by Thom Shanker at the New York Times that Secretary of Defense Robert Gates said yesterday that he would adopt an approach to relations with new members of NATO bordering Russia which would speak to their security concerns without unnecessarily provoking Moscow. That day President Medvedev also said that he was hopeful that Russia and the United States would find a way to repair their relationship. But, as Vladimir Soldatkin at Reuters reports, Russian Energy Minister Sergei Shmatko said Russia will send a high-level delegation to the next OPEC meeting in Algeria on December 17. Their participation in the September meeting caused a lot of worried speculation in Europe. Meanwhile, trading on the Russian stock market was halted again today, but this time because the market was surging too quickly, not falling, as per Edward Hugh at Russia Economy Watch.

2. Barbara Powell at Bloomberg reports that John Duff, the survey manager for the EIA's Week in Petroleum, warned today that next week's report was likely to show a draw of between 6.5 and 8.5 million barrels in gasoline stocks. Jonathan Cogan, a spokesman for the DOE, stated that stock levels are at the lowest seen since November 1967. However, in a story reported by Tina Seeley at Bloomberg, another spokesperson for the DOE, Healy Baumgardner, said in a telephone interview that the US would not seek emergency fuel supplies from the International Energy Agency. This comes on top of an interview by Alex Lawler at Reuters with the head of the IEA, Nobuo Tanaka, where Tanaka said that he thought the current price environment for oil was likely to precipitate a global recession.

3. Nick Snow at the Oil & Gas Journal reports that the US Congress passed the anti-speculation bill today by a large margin. Rep. John Dingell's (D-MI) press release gives the legislation the credit for the fall in oil prices since July, arguing that it is the only factor since then which could account for the price situation. I can think of a few ....

4. Todd Benson at Reuters reports that Brazilian President Luiz Inacio Lula da Silva on Thursday said that he thought the resurrection of the US Fourth Fleet--which was decided early this year--might be because the US covets Brazilian oil supplies. Chavez also has complained about this decision. Brazil is in the process of negotiating a strategic defense alliance with France which would include the construction of a nuclear-powered submarine with which Brazil could police its shores.

5. In an important clarification reported by Nazila Fathi at the New York Times, Mahmoud Ahmadinejad made clear that when he said that "Israel will be wiped off the map" he meant that the Israeli state would cease to exist, not that Iran was working for the genocide of the Jews. He remained extremely hostile to the presence of a state based on Zionist principles, but it appears the the recognition of the holocaust and the assertion of Iranian goodwill to the people of Israel, as opposed to the government, are now state policy. This is an important shift. Ahmadinejad will be in New York next week to address the UN General Assembly.

6. Mahmoud Abbas, President of the Palestinian National Authority, has an op ed in the Wall Street Journal today which argues that peace between Palestine and Israel is still possible, but that if a modus vivendi is not arrived at soon, it will soon become much more difficult.

7. Carlotta Gall at the New York Times reports that Afghanistan had had a very poor harvest and that aid officials are warning of an acute food shortage this winter, which is likely to make an already difficult situation worse.

8. Rob Foulkes and Daniel Litvin of Critical Resource have an interesting piece in Mineweb, where they consider the situation of Areva, an uranium mining company, in Niger. The Tuareg rebel movement of the 1990s, the MNJ or Mouvement des Nigériens pour la Justice, was resurrected last year amidst calls for a fairer redistribution of resource wealth and the Niger Government has begun to allow foreign competition into the mining arena from Chinese, Indian, and Canadian firms. Paris is likely aggravated by these changes, as 80% of French electicity generation comes from nuclear power.

9. An exhausting week of financial news. Today:

The SEC banned all short selling on financial securities.

The Treasury established a temporary guaranty program for money market funds.

Secretary Paulson and Chairmans Bernanke and Cox began discussions with Congress last night on a bailout plan. Paulson's statement on a comprehensive approach to market developments was carried verbatim by the WSJ.

Brad Setser wonders why the dollar hasn't completely tanked.