Tuesday, January 27, 2009

Daily Sources 1/27

1. Hillary Mann Leverett, former National Security Council and State Department official who has participated in negotiations with Tehran on behalf of the United States has a guest post at the Washington Note which argues that the US ought to take up Iran's offer to allow US officials to interrogate al Qaeda operatives detained in Iran.
"In the wake of the 9/11 attacks and the U.S. invasion of Afghanistan, Tehran detained literally hundreds of suspected Al Qaida operatives seeking to flee Afghanistan into Iran. Iran repatriated at least 200 of these individuals to the new Karzai government, to Saudi Arabia, and to other countries.

The Iranian government documented these actions to the United Nations and to the United States in February 2002, including by providing copies of each repatriated individual's passport. But Iran could not repatriate all of the individuals it detained; for example, the Islamic Republic has no diplomatic relations with Egypt, and Iranian diplomats told my colleagues and me that Tehran was not able to repatriate Al Qaida operatives of Egyptian origin to Egypt.

They also said that Osama bin Ladin's son, Saad, had tried to enter Iran and that Iranian security forces had turned him away. However, these Iranian diplomats expressed concern that, if Saad bin Ladin managed to penetrate the porous Iranian-Afghan border and enter Iranian territory--as he apparently did in 2003, after the Bush Administration had unilaterally cut off our dialgoue with Iran regarding Afghanistan and Al Qaida--Tehran would encounter difficulty repatriating him to Saudi Arabia, which had already made clear it was not interested in taking either Saad bin Ladin or his father.

Instead of working to establish a framework within which Tehran could have made Al Qaida operatives detained in Iran available to U.S. interrogators--as our Iranian interlocutors requested--the Bush Administration insisted that Iran detain and deport all the Al Qaida figures we believed might be in Iran, without any assistance from or reciprocal understandings with the United States.
The post is constructed to debunk the assertions of an article published elsewhere, but still worth reading. Stephen Kinzer, formerly a journalist at the New York Times, has an opinion piece in the Guardian UK which argues that Tehran is the key to solving most conflicts in the West and that President Obama ought to choose an envoy to Iran with that in mind.
"If Iran can be brought back into the world community as a full and welcome partner, it could pressure militant groups like Hamas and Hezbollah to end their war against Israel. That, in turn, might lead Israel to stop its devastating attacks on nearby populations, which intensify hatreds, create terrorists and horrify the world.

Iran also has tremendous influence in Iraq--more, in fact, and any other country, including the US. It is the only country than can guarantee a modicum of stability in Iraq as American troops depart.

Iran's centuries-old relationship with Afghanistan means that it could also play a decisive role in calming the terrifying crisis that is engulfing that country and threatening to blow Pakistan apart. An Iran that feels safe might even agree to compromise on its nuclear program, which much of the world justifiably fears."
Kinzer goes on to suggest that Dennis Ross, rumored to be Obama's choice (see Daily Sources 1/6 #1), would be a bad selection, because he is so mistrusted by the Islamic world. Perhaps Kinzer is right, but if Iran is the key, then Israel is the lock, and the Administration is probably more interested in finding someone who has credibility in Tel Eviv than in Tehran--for obvious reasons. Although there is much talk about a "grand bargain" with Iran, my guess is that Tehran is extremely unlikely to decide that such a bargain is in its interests. (Which isn't to say that acting as if such a bargain was in its interests wouldn't be in its interests, if you see what I mean.)

As I have noted before, the government of Iran is a revolutionary government, the Supreme Leader's title is literally translated as "Leader of the Revolution," and were the US to come to terms with the government, it would lose its raison d'etre. This is not to say that we shouldn't create a formal relationship with the country, just that much of the opposition to war with Iran appears these days to be positing that solving all problems with Iran in one fell swoop is the only real alternative to acts of force, which is wishful thinking at best, in my opinion. Still, the piece is worth reading.

In the meantime, Reuel Marc Gerecht, senior fellow at the Foundation for Defense of Democracies and former CIA case officer, yesterday had an op ed in the Washington Post in which he suggests that the Obama Administration should conduct a bipartisan review of the intelligence community's operations in Iran. But the piece spends plenty of time discussing just how porous the Iranian border is and how that might be exploited by covert operatives. Without going into the false allegations made by the piece--for example Iran's relationship with al-Qaeda--I would note that it probably has to be read in the context of the warning given by the head of Iranian counter-intelligence last week in the Iranian press for the US not to spy on it. (see Daily Sources 1/20 #2.) Yes, I do believe someone felt that an essay such as this was the best possible response to such a warning.

2. Zoltan Simon and Katarzyna Klimasinska at Bloomberg report that EU Energy Commissioner Andris Piebalgs suggested today in Budapest that the EU should provide €200 (~ $259) million for initial funding for the Nabucco pipeline. The Chairman of the European Investment Bank, Philippe Maystadt, indicated at the conference dedicated to the pipeline that his bank may well find as much as 25% of the €7.9 billion in projected costs of constructing the pipeline.
"Azerbaijan, a potential supplier of gas to the pipe, will only decide whether to commit to Nabucco once questions over financing, transit fees and the construction timetable are resolved, President Ilham Aliyev said in an interview in Budapest yesterday."

3. Alan Cowell at the New York Times reports that in an interview with Al Arabiya TV of the UAE, President Obama said he wants to convince the Islamic world that "the Americans are not your enemy." Critically, he reminds his audience that America "was not born" a colonial power and suggests that the US cannot dictate the decisions of the major actors in the Middle East, but only facilitate political decisions and negotiations by the people on the ground. This is more important than some have given it. Certainly, the efforts of Karen Hughes were laudable, but she had no credibility with the target audience. The current administration does. Meanwhile, Griff Witte at the Washington Post reports that Palestinian fighters detonated a bomb by a border fence with Israel today, killing an Israeli soldier.

4. Bettina Wassener at the New York Times reports that the Japanese trade ministry today announced the outline of a plan to take equity stakes in ailing companies.
"Tuesday’s plan by the trade ministry, to be considered by the cabinet next month, reaches out beyond the banking sector to other parts of the Japanese economy. It foresees the state-owned Development Bank of Japan buying shares in companies that are having trouble raising money amid the lingering credit crunch. The government will guarantee the investments should the companies go bankrupt, the ministry said.

Although it did not specify what type of companies might be eligible for such help, the plan will probably be mainly aimed at the small and medium-size outfits that employ 70 percent of the country’s work force and are crucial suppliers to corporate giants."
5. John Kingston at the Barrel reports that the oil rig count in North America is down 99 rigs in the last four weeks, nearly 23%. Kingston quotes Barclay's Paul Horsnell's comment on this development in full:
"With the backdrop of a hail of recent announcements on capital expenditure reductions for both conventional and non-conventional oil, together with the continuing move away from investment in alternative energy, we believe that the sharp fall in industry confidence is likely to have a more lasting effect on the health of the supply-side. Indeed, for that not to represent a severe problem over the course of the following decade, the weakness in global oil demand would have to become fairly prolonged. It tends to be a far longer process to reinstate projects than it is to mothball or cancel them, and the scale of the current industry freeze and confidence loss seems likely to severely affect non-OPEC production. Further, given how much of expenditure in mature areas is directed at trying to contain decline rates, we suspect that those decline rates might now be set for another step up."
Quite. Meanwhile, Platts reports that the Centre for Global Energy Studies (CGES) in London said that OPEC's actions so far have been sufficient to stabilize Brent at about $45/b. (Special attention is paid to the views of CGES because it was founded by Ahmed Zaki Yamani, who served as Saudi Arabia's Minister of Oil from 1962 until 1986.) However, CGES warned that if prices were pushed much higher, they would likely further depress demand, undermine price advances as well as any potential recovery in world trade.

Meanwhile, Randy Fabi at Reuters reports that Mohammed Sanusi Barkindo, the head of Nigeria's national oil company NNPC, said that global prices need to remain over $40/b in order for their offshore production to remain viable. "Nearly all of Nigeria's oil production growth is expected to come from offshore, which already represents 40 percent of current output of less than 2 million barrels per day." Chris Stanton and Tamsin Carlisle at the Abu Dhabi National report that ADNOC--Abu Dhabi's national oil company--awarded $3.5 billion in contracts to expand onshore oil fields. "ADNOC is moving ahead with its long-term plans to lift capacity by 30%, to 3.5 mb/d, despite a recent dip in global oil demand." Three fields are slated for expansion, the Sahil, Asab and the Shah, and production is scheduled to increase by a total of 60 kb/d by 2012 and 400 kb/d by 2016. The emirate has pushed back the capacity increase plans several times over the years, in part because several concessions to Western oil companies are nearing expiration, meaning that they have little incentive to invest in field capacity increases at this time. Meanwhile, Platts reports that a collapse in palm oil prices has produced a remarkable 520% increase in Malaysian biodiesel exports in December 2008 from a year earlier.

6. Keith Johnson at Environmental Capital reports that Halliburton has announced on its website that it expects to pay $559 million to settle charges it violated the Corrupt Practices Act as it pursued the contract to build the Bonny Island liquefied natural gas plant in Nigeria. The post includes a link to the plea agreement made by the former head of Kellogg Brown & Root for orchestrating over $180 million in bribes to Nigerian officials.

7. Keith Johnson at Environmental Capital reports that Todd Stern, chief climate negotiator in the Clinton Administration, will be "climate envoy." In his remarks, he spoke of how American exceptionalism in this arena was over, but the details of his approach seem to illuminate a certain continuity with the old approach.
"Mr. Stern’s expressed frustration with the 'maddeningly cumbersome' UN-sanctioned process that puts almost 180 countries together at the bargaining table. His preferred venue for hashing out new climate accords is the 'E-8,' a group of eight developed and developing countries that together account for 70% of global greenhouse-gas emissions. He says that would be different from President Bush’s 20-country group of major emitters because it wouldn’t just be a talk shop, but a place to take concrete steps."
I think that there is much merit in the notion of an E-8 to discuss these issues as opposed to a huge unwieldy parliament mostly composed of nations whose efforts will have little to no practical effect upon global climate. That said, as Johnson concludes,
"China is clearly the joker in the global struggle to contain emissions. For all of Team Obama’s ambitious policies, what happens in Beijing may be a lot more important than what happens in Washington."
Worth reading.

8. Yves Smith notes that several nations are involved in bilateral discussions for barter for food, given the difficulty in finding reasonable credit terms.
"[Countries] including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil.

The revival of these trade practices, used rarely in the last 20 years and usually by nations subject to international embargoes and the old communist bloc, is a result of the countries’ failure to secure trade financing as bank lending has dried up."
Energy security is one thing. Food is another--it's all about calories, but some calories are really more equal than others.

9. Frank Jack Daniel at Reuters reports that Caracas has signaled that it is not ready to invite back an American ambassador to Venezuela.

10. Free Exchange notes that India has decided to ban imports of toys from China for six months.

11. Jane Macartney at the Dublin Independent reported yesterday that a secret meeting was recently held between Communist Party leaders and leaders of the banned underground Protestant leaders in Beijing.
"Officials privately estimate the total number [of Christians in China] at 130 million -- far outstripping the 74 million members of the Communist Party. Most are Protestants and are affiliated with unofficial house churches.

No representatives of the underground Catholic Church were invited -- the Vatican is still viewed by the Communist Party as a rival force and tentative talks yielded little progress."
Meanwhile, on Friday the Vatican launched its own youtube channel. I would imagine that this would be regarded as a serious issue in Beijing if Christians really represent 9.8% of China's population--especially given Pope John Paul II's affect on the Solidarity movement in Poland. (Timothy Garton Ash allegedly once said, "Without the Pope, no Solidarity. Without Solidarity, no Gorbachev. Without Gorbachev, no fall of Communism.")

This savvy is contrasted with the news that Pope Benedict XVI, reported Sunday by Rachel Donadio at the New York Times, has revoked the excommunications of four bishops associated with the St. Pius X Society. The Society had been formed in opposition to the Vatican II reforms, and the bishops had been consecrated by its founder, archbishop Marcel Lefebvre, in 1970 via unsanctioned ritual. They were excommunicated by Pope John Paul II after this consecration. One of them--British-born Bishop Richard Williamson--is a holocaust denier. From what I have gleaned via a short overview of St. Pius X Society materials, they take their cue from St. Pius X, Pope from 1903-1914, because he argues that church teaching cannot change, and that revelation was completed with the apostles. (Though if any readers have insight into some of the deeper intricacies of the movement, I would be obliged if they would enlighten me.) The conservative take is consistent with Benedict XVI's outlook, but seems especially indifferent to the question of husbanding the church's moral authority in the eyes of the world and likely to lose the church some followers. Worth keeping an eye on.

12. Barry Ritholtz at the Big Picture reports that the Case/Shiller report showed a 18.2% annual decline in November in the 20 city Home Price Index. Since August 2006, both the 10 city and 20 city composites have declined each and every month.

Real Time Economics published the data for each of the 20 cities here.

13. John M. Broder at the New York Times has a very useful article on how competing energy concerns are dividing Democrats in Congress. States which have large coal reserves are not especially keen on legislation which would kill its competitiveness. This is especially true of states that also have a substantial portion of their power generated by coal burning power plants. Here is a map illustrating the dilemma courtesy of the New York Times:

I would only add that this divide extends to other energy sources as well, like corn based ethanol and oil, and was one of the means by which the Bush Administration controlled the US Congress. Worth reading.

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