Freshly brewed morning news on trade

Front page of today’s  New York Times.   “As US Steps back on Trade, Allies Move on,” Peter Goodman, correspondent from London, writes:

In the master plan advanced by President Trump, an unabashedly aggressive United States is supposed to retain its rightful perch as the center of the commercial universe, wielding its economic dominance to dictate the rules to the rest of global trade.

As it turns out, the rest of the planet has its own ideas.

Gee, what a wonderful way to say we don’t all think the same.  And what sounds good, sometimes isn’t!  Two  beautifully written sentences in the morning goes well with coffee and toast.

The rest of the article adds more details on the collaboration between the European Union and Japan on trade. It certainly adds to other stories of the day, such as the Qatar crisis,  where unintended consequences can be completely contrary to the original intent of a strategy.

Madeleine Albright got it right when she said international relationships should be considered more like a game of billiards rather than a game of chess.    The balls in billiards are all clustered together, but when hit, they go in different directions.

Stay tuned,

Dave

 

 

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The Qatar-Iran Mega Gas Field

The political world in the Middle East seems to be in continual flux,with the Iraq and Syria conflicts,  Qatar crisis and the Libyan civil war.     However, the business world seems very different and much more stable,  as investments in oil and gas must be made over decades, not timed to local or regional  politics.   It appears the business deals transcends all the political rhetoric and cultural differences, with the common goal of sound investments for the long term for the mutual benefit of all stakeholders.

The Trump administration seems obsessed with blaming everything linking terrorism to Iran.   It is a theme popular with  Saudi Arabia, the UAE, Bahrain and Egypt, but I think now, it is a pretext for their blockade of Qatar.    The only other non-Arab  country with this fixation is Israel.

The business world doesn’t see this as a problem.   Simply put, “Money talks and nobody walks away from a profitable deal.”   Even the French, who have seen more of their fair share of terror attacks.

Iran and Qatar  economically they have no choice, but to cooperate, as they are “joined at the hip”  by a mega gas field, the South Pars (belonging to Iran) and North Dome (belonging to Qatar) field. The division of the field based on maritime agreements.  Fortunately, for both countries, there is no dispute on gas ownership.

South_Pars

The South Pars  reserves account for roughly 7.5% of the world’s gas reserves and almost 40% of Iran’s total natural gas wealth. The field  is the world’s largest gas field in terms of recoverable gas with a reserves of 1235 trillion cubic feet (tcf).  The second largest gas field, Urengoy, in Russia has 222 tcf.   The field  produces both natural gas and condensed gas liquids (condensates).   See links below for more details.

The field was discovered in 1971, but first production did not occur until 1989.   With the discovery of  a mega field, why wait so long to develop?  Gas discoveries are a blessing and a curse.   Gas,  unlike oil,  can not be easily transported and sent to European and Asian markets.   Gas can be liquified  transported in specially built tankers.  The curse is that mega gas fields require mega investments, in terms of hundreds of billions of dollars.   To develop the field, Iran needed international partners from France (Total) and China (CNPC).

The French company, Total, operates South Pars, which means they are responsible for exploration, development and production, but Iran and the other partners have  approval authority on all activities.   The Pars Oil and Gas Company (POGC). a subsidiary of National Iran Oil Company, has jurisdiction over all South Pars-related projects.

Since the mid-2000s development of the field has stagnated due to a lack of foreign investment and export opportunities because of United Nations (UN) and Western sanctions against Iran.  A partial lifting of these sanctions in 2015 has enabled POGC, which was established in 1998, and the government to move forward with the 24th development phase set out for the field.

Total benefited from the lifting of sanctions as field development, aimed at increasing gas production could continue.  As Republican candidates where crisscrossing the US, denouncing the Iranian nuclear agreement  deal as the most horrible deal of the century,  Total was quietly discussing with Iran on the next development phase of the South Pars field.  By November 2016, Iran announced a memorandum of agreement, and in April 16, 2017,  President Rouhani  concluded contracts for  5 new phases of field development worth 20 billion dollars. See links below. It is expected that Iran’s production will surpass Qatar’s.

All this depends on an accessible market.  It is a big “if.”   Iran ships its gas via pipeline.   Qatar has a far reach to the rest of the world through its liquified natural gas (LNG) facilities.   Qatar exports 1/3 of all LNG worldwide.   Qatar supplies the UAE by the Dolphin pipeline and LNG shipments.

As Iran was announcing development plans in South Pars,  Qatar followed by the announcements of further developments in the North Dome.   The withdrawals from both sides of the field must be done in a way to avoid significant migration across the maritime country boundary.  So it made sense that as Iran planned increases, Qatar would do the same.   Also,  engineers on both sides have to collaborate to avoid excessive withdrawals which could impact total recoverable gas and liquids.   This is called “reservoir management.”

So,  the GCC countries likely could see the gas supply was going to be increasing,  and both Iran and Qatar would seek ways of extending the lines of  supply either by pipeline or LNG tankers.    Interestingly,  even though the UAE has taken the extreme position that the 13 demands are non-negotiable,  the critically important gas from Qatar still flows to the UAE.

The current Qatar crisis likely came to a boil, as a number of actions taken by Qatar.  This includes the payment of ransom to Shite militants in Iraq which could be used to support the claim of terrorism.  It also saved the  lives of members of the royal family.  Others have commented on the open reporting on the 2011 Arab Spring uprising by Al Jazeera, upset many of the Arab countries.  A “respectful press” would have immediately taken the side of the government, not the dissenters.  Qatar’s willingness to accept exiled dissidents from other Arab countries angered Saudi Arabia and the other GCC country.

But, perhaps what has not received enough attention is the economic power of the tiny nation of Qatar, was on the rise.   Could it partner with Iran in the future, by processing Iranian gas for LNG  export?   Could Qatar  invest in  LNG  projects or construction companies?  This would seem to be a perfect fit.

Qatar was really understood that its hydrocarbon assets would not last forever,  and it needed to diversify into other areas.  Exactly what the Saudis are doing right now.

In sum,  Iran’s planned increases in gas production, would result in more gas development  from Qatar, and a push to increase LNG processing capacity.   The other GCC countries knew the rising economic wealth of both Iran and Qatar  would change the balance of power in the Middle East.  While Iran was too big to isolate or pressure, Qatar looked vulnerable.

Stay tuned,

Dave

Links:

Offshore Technology: Developing South Pars: a look at Iran’s mega gas field (undated but likely written prior to April 2017)

Iran opens new South Pars gas field phases worth $20 billion

Qatar crisis: Have the Saudis gone too far?

Middle East Eye:  Iran seeks stronger Ties with Qatar

(Any suggestions- I know there is a lot of discussion on these points, and I’ll add more later)

 

 

 

The Awful Libya Mess, Recent Events – Part 3

Control of Libya requires securing its export ports, as shown below:

 

Production prior to 2011 was 1,650,000  barrels of oil per day.   In 2016, it was 500,000 barrels per day. There is an enormous wealth created by the export of oil.     With 46 billion barrels of oil, these assets will create income for decades to come.

In late 2016, it looked like the beginnings of a re-unified Libya could become a reality, under the UN Peace Accords.  In concept the accords were to create a new government, the GNA government, based on the Tobruk and Tripoli based governments.    However, this could only become a reality if the Tobruk government,  principally Khalfa Haftar, believed he could not conquer the rest of Libya, and was content with sharing power with the GNA  government in Tripoli.   So, peace depends on Haftar diminished capacity to extend his reach to the west, making peace the best option.

Saudi Arabia swung open its doors to Donald Trump knowing exactly what would appeal to him- deals for more goods and services.  His ego and naivete were on full display, as he took credit for the blockade of Qatar as an extension of this anti-terrorist policies  in his tweets.  It is now spilling over to the Libyan conflict.  The Chairman of the Libyan National Oil Company, in an OpEd article in the New York Times, wrote:

The latest incident was triggered by the recent, sudden souring of relations between Qatar on the one hand and Saudi Arabia, the United Arab Emirates, Egypt and Bahrain on the other. One of the several groups that purport to be Libya’s rightful government is using that dispute as a pretext to seize control of the country’s oil and gas exports: It has accused the National Oil Corporation, the internationally recognized body responsible for managing these resources, of working in the service of Qatar by diverting oil revenues to it via an N.O.C. customer.  I am the N.O.C.’s chairman, and these allegations are false. But they shine a bright light on Libya’s current tragedy. Since the revolution of 2011, the country’s oil and gas resources have been held hostage to both its fractious politics and power struggles in the Middle East.

It is not explicitly stated, but this is a reference to the Tobruk based government.     The Chairman goes on to suggest Libya’s National Oil Company be given more authority to protect it from being involved in the political infighting.

The Tobruk government did not have complete control of Benghazi.  The UAE, in violation of the UN Peace Accords, has supplied Haftar with military equipment to defeat Benghazi Defense Brigades (BDB).   One can see why the UAE would want to shut down Al Jazeera, as they seem to be the only ones with correspondents on the ground to observe the fighting in Benghazi.  According to the article (see links below):

The UN’s Libya Sanctions Committee report, released on Friday [23-Jun-17} , reveals the UAE has supplied attack helicopters and other military aircraft to Haftar’s forces. “The United Arab Emirates have been providing both material support and direct support to LNA, which have significantly increased the air support available to LNA,” said the report by a UN panel of experts.  The report provides rare insight into foreign funding of armed groups in Libya, which many say has exacerbated the conflict.

The US and the EU countries have pledged support to eventual re-unification through the UN efforts.  The selection of an impartial and highly experienced UN Special Envoy to Libya, is typically done through discussions among representatives of the Security Council, and then announced by the Secretary General, after everyone is in agreement.   Nikki Haley, the US Ambassador to the UN, rejected the selection of special envoy based on nationality, as she stated on February 11, 2017:

“For too long the U.N. has been unfairly biased in favor of the Palestinian Authority to the detriment of our allies in Israel,” Haley said.

It was a very strange and antagonistic statement.   But, Trump was scheduled to meet with Israel PM Netanyahu at the White House on the following day.    The Secretary-General quickly responded, stating they were interested in the best negotiator for the conflict, irrespective of their country, and neither the Israels nor the Palestinians had any participation in the talks.  Fortunately, another very qualified  special envoy has been selected.   It seemed like Washington politics had meddled in what should have been a routine appointment.  That’s just my opinion.

If the conflict in Libya is seen, not just as the Tobruk-based east government, verses GNA/GNC west side government, but as a larger conflict of Saudi Arabia, the UAE, Egypt, Bahrain, Yemen and others verses Qatar, Iran, Turkey and Russia,  where does this leave the US and our allies?

— Human Suffering

The administrative breakdown in Libya has created enormous human suffering.    During Gaddafi’s era,   immigrants received work visas as applied by their sponsors, with set wages  and approved by the government.  This system has broken down, and employers are now taking advantage of workers, charging them for expenses, equal to their wages.

Also, migrants are being lured across the Libyan sounthern boundary  with the false promise of being able to migrate to Europe, only to be sold as slaves or ransomed.   See  BBC link.

— The Path Forward

The only path forward is re-unification through UN Negotiations.   On the Tobruk side, Chief of the Army, Haftar must not be allowed to purchase arms and escalate the war.    The conflict in Libya will only become worse if the US turns a blind eye towards the arming of the Tobruk government by the Saudi supporters.  Washington and the EU need to work jointly on the  the massive refugee problem.

This is a rapidly developing story.   To follow it, it is best to do a Google search on the news.   The latest story to appear, is the release of Saif al-Islam Gadaffi and   some discussion that he could play a some leadership role.  I have very serious doubts.   The areas under control by the various rival groups seems to change regularly.  The New York Times, The Guardian and Al Jazeera seem to be the best sources of information.

Stay tuned,

Dave

Links:

June 24, 2017: Haftar’s forces make gains in Libya’s Benghazi

New York Times: How to Save Libya From Itself? Protect Its Oil From Its Politics, Mustafa Sanalla, Chairman of the Libyan National Oil Company

BBC- I thought I was going to die

TheHill.com Nikki  Haley Rips UN for Picking a Palestinian as Envoy

 

The Paris Accords Exit

The announcement will be made at 3:00 pm today (June 1, 2017).    It has been widely rumored that Trump will pull out of the Accords.  The Agreement was a very major step forward in acceptance of a global problem.

CNN outlined three options that Trump has: (1) The Normal Exit- by withdrawing from the Accords by 2020 (2) The Radical  Exit- by withdrawing from the UN organization (UNFCCC) under which the Accords were agreed upon and (3) The non-exit, which Trump simply ignores the provisions of the Accords.

The radical exit is the one supported by conservative groups,  such as the Heritage group.  The coal companies such as Peabody and Cloud Peak Coal, want Trump not to exit the Accords, as this puts the EU in a leadership role in setting targets.

Options

A final option (“death in the legislature” option)  is for Trump to  state the Accord is really a treaty, which must be ratified by 2/3 of the Senate.  With the Republican controlled Senate, the treaty would be “dead on arrival.”   This would change the issue to one of Obama overstepping his authority, and Trump might just go for it.

The Paris Agreement is more of an “agreement in principal”  rather than a treaty, as it lacks any penalties for countries who do not reduce their carbon emissions. It is an important first step as it is an  agreement of mutual commitment  to a global problem.   As it is structured,  the US could stay in the Accords,  do nothing to reduce these emissions and not be sanctioned by the UN.

Obama signed the agreement as an Executive Order.  Trump can legally exit the agreement, but has to comply with the set schedule if he wants to do the normal exit.

I predict that many countries will be looking more at the “non-exit” or “non-compliance” option, which means climate change is something leaders of the countries are concerned about, but  nobody does much about it.

This will leave the US as the only one of 193 countries to exit the Accord.

Stay tuned,

Dave

Don’t you worry ’bout a thing

Stevie Wonder,  released 1973.

I talked to someone about Trump, and he tells me we are in good hands.  He listens to Fox News and plays golf 3 times a week.   Not a bad life.

There are some real tough questioning coming up on Trump’s cabinet positions.   I guess the most troublesome is our future relations with China.  We can not have a trade war with China, and expect their help in stopping North Korea’s nuclear plans.

I would think there is nothing more urgent than a united front against North Korea.  Trump would be wise to remember that a majority of Americans voted for Hillary Clinton, whose campaign slogan was “stronger together.”

There was a great discussion on Fareed Zakaria show (GPS)  with James Baker, saying that what previous republican presidents (Reagan & HW Bush) have favored was free trade agreements, and Trump’s new cabinet tends more towards protectionism.   Baker said Trump as candidate, or now president-elect is not the same as when he actually moves into the White House with the staff making recommendations.

Baker may be right.  He’s not yet our president.  However, the more Trump goes after Mexico stealing our jobs  and their citizens pouring over the border, the more I worry that it’s the same old Trump,  always playing politics with an incoherent foreign policy strategy.

 

Trump – a nightmare for foreign policy

Republicans who served under George W. Bush recognized that the US had to play a leadership role in the world.  I like to say, “what goes around, comes around.”

Stronger together- really does work.  Make American Great through insults to our fiends (Mexico) doesn’t work.

Enough.  Donald Trump should not be President. He should withdraw.  As a Republican I hope to support someone who has the dignity and stature to run to the highest office in the greatest democracy on earth.

Condoleezza Rice,  Former Secretary of State under George W. Bush.

Nicholas Burns was undersecretary of state for political affairs under Bush.  Here is what he said today on CNN:

I hope she’s  [Clinton] going to be the president.  If it’s Donald Trump, I think all bets are off given his unorthodox and I think, very weak and very dangerous views about Russia.  I think we can say with some certainty that Vladamir Putin and the Russian government would like Donald Trump to be elected president because Trump has been denegrating NATo; he’ll make NATPO weaker. He won’t be the strong American leader in Europe that Europeans are accustomed to.  It is clear by their actions and words that the Russians support a Donald Trump candidacy.  Every other European government, and I’ve talked to a lot of them, desperately want Hillary Clinton to be elected because they want stability and a traditional American leader and a leader who is sophisticated enough to know how the US can be effective in that region.

 I think for most Europeans and East Europeans,  Trump is a real danger to them.

Republicans working for President Bush have either remained quiet or turned their back on Trump.  Here’s a sampling:

“If Donald Trump wins, he will, by definition, have created a new template of success for Republicans,” said Ari Fleischer, Mr. Bush’s first White House press secretary. “But if he loses, and particularly if he is crushed, it will reset the party back more in the direction of President Bush.”

Because Mr. Trump represents something far greater in the eyes of the Bush veterans than just an unfortunate party nominee, their determination to defeat him has become more intense.

The vast majority of the approximately three dozen veterans of Mr. Bush’s administration contacted for this article indicated that they would not cast a ballot for Mr. Trump.

“I can count on one hand the number of people I worked with who are supporting Trump,” said R. Nicholas Burns, a former Bush State Department official who has been calling his onetime colleagues to solicit support for the presumptive Democratic nominee, Hillary Clinton.

R. Nicholas Burns :

Nicholas Burns (born January 28, 1956) is a university professor, columnist, lecturer and former American diplomat. He is currently Professor of the Practice of Diplomacy and International Politics at Harvard’s John F. Kennedy School of Government and a member of the Board of Directors of the school’s Belfer Center for Science and International Affairs. At the Harvard Kennedy School, he is Director of The Future of Diplomacy Project and Faculty Chair for the programs on the Middle East and India and South Asia. He is Director of the Aspen Strategy Group, Senior Counselor at the Cohen Group and serves on the Board of Directors of Entegris, Inc. He writes a biweekly column on foreign affairs for the Boston Globe and is a senior foreign affairs columnist for GlobalPost.

This I promise you will be my very last post until after the election.   I also will post all comments on these issues.

Stay tuned,

Dave

 

Trump Lies on the Benghazi

Republicans prepared a report  in June 2016 which none of the Democrats supported.  They issued their separate report.   But both Democratic and Republican reports and prior investigations state that the embassy in Benghazi was inadequately protected.  Hillary Clinton agrees with this assessment and as Secretary of State accepted all recommendations made at the time to improve security.  Of course, you are not going to hear this from Trump.

The big lie is that Secretary Clinton did nothing while 4 Americans were killed in Benghazi. Not even the Republican version of the Benghazi has any conclusion remotely similar to this.  The Republican report states it was impossible to save the two lives in the embassy.  The discussion is on the two lives while guarding the CIA annex.    This is all about an attack that lasted a total of 11 minutes.

Here’s the reporting from the New York Times, June 28, 2016:

“The Republican-led committee found no evidence of culpability or wrongdoing by Hillary Clinton, then the secretary of state.”

What the Republican version did, was to suggest, just possibly, more could have been done militarily to save the two lives and  suggest Leon Panetta and the Department of Defense.   acted too slow.  NYT reports:

 Senior Pentagon officials have consistently said that they were constrained by the “tyranny of time and distance” — that is, that the military could not have sent troops or planes in time to have made a difference.

NYT reports:

Even the report acknowledges the challenges facing the so-called FAST teams: These troops did not have their own planes, which meant delays waiting for flights; did not travel with their own vehicles (they would need to find some in Benghazi when they landed); and were designed to deploy before a crisis hit, not during hostilities.

Essentially, the hypothetical rescue mission would have been sent to save the lives of two servicemen guarding the CIA Annex.  More lives could have been lost in this mission.  And then the Pentagon, Obama, or even Secretary Clinton would have come under serious attack.

Full NYT article

The best summary I’ve seen on Benghazi is from Wikipedia:

https://en.wikipedia.org/wiki/2012_Benghazi_attack

Stay tuned,

Dave

 

 

 

 

 

Hillary Clinton- Best Choice for President

As President, she will have a lot to deal with.  The most critical will be international policy, with the crises in Syria, being number 1.   Syria is a complex mess, and can only be put back together by cooperation from many countries, including Turkey, Iran and Russia.  Her slogan,  “Stronger Together”,  is the right path forward.

Obama and Bush have never found a way to persuade North Korea’s leader Kim Jung-un to halt his quest for nuclear weapons.   He is truly a scary leader.  Libya is battling ISIS, yet the country still in broken into various factions.

Donald Trump has demonstrated his ineptness with his insulting comments to Mexico.  It doesn’t take much to be friends with Mexico- but he blew it big time.  He seems to start little wars at the drop of a hat.  Even insulting Marco Rubio, Jeb Bush, Ted Cruz’s father  and many other Republicans.

It is not the time to elect a president who has zero knowledge of diplomacy.  This is not the job who calls our elections rigged when he’s behind in the polls. There is no on-the-job training program.

Vote for Hillary to keep our nation great by working with others to find solutions.

Stay tuned,

Dave

 

 

This election is a total fraud!

Ok- did I get your attention?

I’m not talking about the 2016 election here in the US.   I’m going all the way back to 1992, in a very different part of the world,  in the country of Angola in their very first open election since independence from Portugal.

These six words were uttered by  a representative for Jonas Savimbi,  the losing candidate in the Angolan  election in 1992.   I was in Angola, and I understand Portuguese, so as I heard this on national television,  it frighten me.  I knew it was untrue.  The UN had monitored the election, and while there were irregularities, it was, on balance, a fair election.

What came through on that day in 1992, was the intense  anger in place of a concession speech.    Savimbi’s representative blasted away at the government,. declaring the entire election system was rigged.   All election results were false.  To Savimbi’s supporters,  the government had stolen the election.  If someone steals something, the natural reaction is revenge.

Savimbi did not blast away at the election results. He let others do the dirty work  for him.

Lost in all of this was the respect for  the people who worked to make sure fair elections were held in Angola.   The Carter organization had helped to monitor the elections, along with UN monitors.  My friend was one of the election monitors.  It was a dangerous voluntary work.

The trust we have in our election system,  can also be undermined by politics.   Hateful and dishonest rhetoric is dangerous.  Volunteers from the Women League of Voters, help keep our elections fair and honest.

What followed in Angola, was a resumption of a civil war, which lasted until year 2002.   So people died believing in hateful lies.

Stay tuned,

Dave