Thursday, 29 May 2008

The world must end its addiction to oil

Johann Hari:

Thursday, 29 May 2008


This week, a battalion of angry addicts brought London to a standstill. They snarled up the traffic, then marched on 10 Downing Street to demand their fix at prices they can afford. Across the world, in countries as different as the US and Iran, fellow junkies are rising up in rage. Their addiction is to a gloopy black drug called petrol – and we are all about to go cold turkey.


In the past seven years, the price of oil has soared from $30 (£15) a barrel to $140. By the end of next year it could be at $200. No matter how much we plead or howl at our governments, it will never go back: the final act of the Age of Oil has begun.

The era that is ending began at 10.30am on 10 January 1901, on a high hill called Spindletop in south-eastern Texas. A pair of pioneer brothers managed to drill down into the biggest oilfield ever found. Until then, the dribbles of oil that had been discovered were used only for kerosene lamps – but within a decade, this vast gushing supply was driving the entire global economy. It made the 20th century – its glories, and its gutters – possible. Humans were suddenly able to use in one frenetic burst an energy supply that had taken 150 million years to build up. A species that died before the age of 40 after a life of boring, back-breaking labour spurted forward so far and so fast that today billions live into their eighties after a life of leisure and plenty.

Oil now drives everything we do. It shuttles us across the globe, we fight wars for it, and we even eat it: to farm a single cow and deliver it to slaughter burns up six barrels of oil – enough to drive from New York to LA. That's why food becomes expensive when oil becomes expensive.

It is totally understandable that most of us want to live forever in that sweet niche in history when we had seemingly infinite reservoirs of oil, and no awareness that burning it would, in time, burn us too. But, alas, we need to wake up and smell the fumes. There are three reasons why the placebos demanded by the petrol protesters and the politicians cowering from them across the world – lower taxes! find more oil! dig! burn! – are a delusion.

Reality Check One: Petrol is finite. There is a limited amount of oil in the world, and we have already burned more than 900 billion barrels of it. There is a complex scientific debate about when we will reach the point of "peak oil", when we will have used up more than half of all the supplies on earth. Some geologists think this moment has already passed. Others – mostly oil industry flunkies – think we have as long as 30 years to go. But all agree the remaining oil is harder to reach, and much of it can never be accessed.

The facts are stark. All the biggest oilfields on earth were discovered before my parents were born. The discovery of new oilfields peaked in 1965, and has been falling ever since. The last year in which humans found more oil than we burned was the year I was born: 1979.

So we have a diminishing supply – at the very moment when billions more people want access to it. Car ownership in India has trebled in the past decade, and it will treble again by 2020. In China, three-quarters of urban Chinese say they plan to buy a car in the next five years. These factors mean we are unquestionably moving from having a world with growing pools of cheap oil to dwindling supplies of expensive oil.

Reality Check Two: Even if we had infinite supplies of free petrol, we couldn't afford to use it without dramatically destabilising the climate. To use just a few examples: Spain and Australia are currently suffering their worst droughts since records began, and several cities are on the brink of running out of drinking water. The oceans are rapidly turning more acidic, to levels scientists didn't expect to see until 2050. The Arctic is now almost free of sea ice in the summer.

This is all with just one degree of global warming. The world's climatologists agree that if we burn up most of the remaining dribbles of oil on earth, we could be on course for six degrees this century. The last time the world warmed so quickly was 251 million years ago – and 95 per cent of everything on earth died.

Reality Check Three: Our addiction to oil means we can never undermine the Islamic fundamentalists who want to kill us – and often actually help them.

Most of the world's remaining oil is in the Middle East. In order to access it, we have a twin-track policy. To start with, we support the most repressive dictatorship in the region – the torturing, sharia-law enforcing House of Saud – because they keep the supply running nicely. The Saudi state then uses the money we pay at the pump to fund a vast network of extreme madrasahs and mosques across the world – including within the US and Europe – preaching that democracy is "evil", women should be subordinated, Jews are "pigs and apes", and gays should be killed. We do not query this because, as the writer Thomas Friedman put it, "junkies don't tell the truth to their dealers".

Where we cannot find a friendly local tyrant, we invade the country in order to control the oil ourselves. Even John McCain admitted this month that Iraq was about oil, arguing that energy independence would "prevent us from having ever to send our young men and women into conflict again in the Middle East." (He later claimed with a red face he was talking exclusively about the first Iraq war.)

On their own, each of these inconvenient truths would be enough to require us to begin an urgent transition away from petrol. Together, they are unanswerable.

Of course it's tempting to draw the oily covers over our head and cry for tiny little steps like cutting a few pence off petrol taxes, or squeezing out a few more barrels as Gordon Brown begged yesterday. But these measures would be at best a local anaesthetic, putting off the moment when the rapid transition to a global economy run on carbon-free energy sources must start.

The longer we delay, the harder it will be. As Paul Roberts puts in his book The End of Oil: "The real question is not whether change is going to come, but whether the shift will be peaceful and orderly or chaotic and violent because we waited too long to begin planning for it."

Every penny now should be spent not on perpetuating petrol, but on developing and disseminating alternative fuels. The addiction that began a century ago on a hill in Texas is ending – and we have no choice but to check en masse into petro-rehab.

Tuesday, 27 May 2008

Oil price mocks fuel realities

 By F William Engdahl

As business and consumers consider the implications for them of crude oil selling at US$130-plus per barrel, they should bear in mind that, at a conservative calculation, at least 60% of that price comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York Nymex futures exchanges and uncontrolled inter-bank or over-the-counter trading to avoid scrutiny (see Speculators knock OPEC off oil-price perch, Asia Times Online, May 6, 2008).
US margin rules of the government's Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex by paying only 6% of the value of the contract. At the present price of around $130 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120.

This extreme "leverage" of 16 to one helps drive prices to wildly unrealistic levels and offset bank losses in subprime and other disasters at the expense of the overall population.

The hoax of "peak oil" - namely the argument that oil production has hit the point where more than half all reserves have been used and the world is on the downslope of oil at cheap price and abundant quantity - has enabled this costly fraud to continue since the invasion of Iraq in 2003, with the help of key banks, oil traders and big oil majors.

Washington is trying to shift blame, as always, to Arab oil producers and the Organization of Petroleum Exporting Countries (OPEC). The problem is not a lack of crude oil supply. In fact, the world is in over-supply now. Yet the price climbs relentlessly higher. Why? The answer lies in what are clearly deliberate US government policies that permit the unbridled oil price manipulations.

World oil demand flat, prices boom
The chief market strategist for one of the world's leading oil industry banks, David Kelly, of JP Morgan Funds, recently admitted something telling to the Washington Post: "One of the things I think is very important to realize is that the growth in the world oil consumption is not that strong."

One of the stories used to support the oil futures speculators is the allegation that China's demand for imported oil is exploding out of control, driving shortages in the supply-demand equilibrium. Yet the facts do not support the China demand thesis.

The US government's Energy Information Administration (EIA) concluded in its most recent monthly Short Term Energy Outlook report that US oil demand is expected to decline by 190,000 barrels per day (b/d) this year. That is mainly owing to the deepening economic recession.

Chinese consumption, the EIA says, far from exploding, is expected to increase this year by only 400,000 barrels a day. That is hardly the "surging oil demand" blamed on China in the media. Last year, China imported 3.2 million barrels per day, and its estimated usage was around 7 million b/d total. The US, by contrast, consumes around 20.7 million b/d.

That means the key oil-consuming nation, the US, is experiencing a significant drop in demand. China, which consumes only a third of the oil the US does, will see a minor rise in import demand compared with the total daily world oil output of some 84 million barrels, less than half of one percent of total demand.

OPEC has its 2008 global oil demand growth forecast unchanged at 1.2 million barrels per day (mm bpd), as slowing economic growth in the industrialized world is offset by slightly growing consumption in developing nations. OPEC predicts that global oil demand in 2008 will average 87 million bpd, largely unchanged from its previous estimate. Demand from China, the Middle East, India and Latin America is forecast to be stronger, but the European Union and North American demand will be lower.

So the world's largest oil consumer faces a sharp decline in consumption, a decline that will worsen as the housing and related economic effects of the US securitization crisis in finance de-leverages. The price in normal open or transparent markets should presumably be falling not rising. No supply crisis justifies the way the world's oil is being priced today.

Big new oil fields coming online
Not only is there no supply crisis to justify such a price bubble. There are several giant new oil fields due to begin production over the course of 2008 to further add to supply.

The world's single-largest oil producer, Saudi Arabia, is finalizing plans to boost drilling activity by a third and increase investments by 40%. Saudi Aramco's plan, which runs from 2009 to 2013, is expected to be approved by the company's board and the Oil Ministry this month. The kingdom is in the midst of a $50 billion oil production expansion plan to meet growing demand in Asia and other emerging markets and is expected to boost its pumping capacity to a total of 12.5 mm bpd by next year, about 11% up from the present capacity of 11.3 mm bpd.

In April this year, Saudi Arabia's Khursaniyah oilfield began pumping and will soon add another 500,000 bpd to world oil supply of high grade Arabian light crude. In addition, the country's Khurais oilfield development, the largest of Saudi Aramco's projects, will boost the production capacity of Saudi oilfields from 11.3 million bpd to 12.5 million bpd by 2009. Khurais is planned to add another 1.2 million bpd of high-quality Arabian light crude to Saudi Arabia's export capacity.

Brazil's Petrobras is in the early phase of exploiting newly confirmed oil reserves offshore in its Tupi field that could be as great or greater than the North Sea. Petrobras says the new ultra-deep Tupi field could hold as much as 8 billion barrels of recoverable light crude. When online in a few years it is expected to put Brazil among the world's "top 10" oil producers, between Nigeria and those of Venezuela.

In the US, aside from rumors that the big oil companies have been deliberately sitting on vast new reserves in Alaska for fear that the prices of recent years would plunge on over-supply, the US Geological Survey (USGS)recently issued a report that confirmed major new oil reserves in an area called the Bakken, which stretches across North Dakota, Montana and south-eastern Saskatchewan. The USGS estimates up to 3.65 billion barrels of oil in the Bakken.

These are just several confirmations of large new oil reserves to be exploited. Iraq, where the Anglo-American Big Four oil majors are salivating to get their hands on unexplored fields, is believed to hold oil reserves second only to Saudi Arabia while much of the world has yet to be explored for oil. At prices above $60 a barrel huge new potentials become economic. The major problem faced by Big Oil is not finding replacement oil but keeping the lid on world oil finds in order to maintain present exorbitant prices. Here they have some help from Wall Street banks and the two major oil trade exchanges - Nymex and London-Atlanta's ICE and ICE Futures.

Then why do prices still rise?
There is growing evidence that the recent speculative bubble in oil, which has gone asymptotic since January, is about to pop. Late last month, in Dallas, Texas, the American Association of Petroleum Geologists held its annual conference, with major oil executives and geologists present. According to one participant, knowledgeable oil industry chief executives reached the consensus that "oil prices will likely soon drop dramatically and the long-term price increases will be in natural gas".

Just a few days earlier, Lehman Brothers, a Wall Street investment bank, had said that the current oil price bubble was coming to an end. Michael Waldron, the bank's chief oil strategist, was quoted in Britain's Daily Telegraph on April 24 saying, "Oil supply is outpacing demand growth. Inventories have been building since the beginning of the year."

In the US, stockpiles of oil climbed by almost 12 million barrels in April according to the May 7 EIA monthly report on inventory, up by nearly 33 million barrels since January. At the same time, MasterCard's May 7 US gasoline report showed that gas demand has fallen by 5.8%. And refiners are reducing their refining rates dramatically to adjust to the falling gasoline demand. They are now running at 85% of capacity, down from 89% a year ago, in a season when production is normally 95%. The refiners today are clearly trying to draw down gasoline inventories to bid gasoline prices up. "It's the economy, stupid," to paraphrase Bill Clinton's infamous 1992 election quip to daddy Bush. It's called economic recession.

The May 8 report from Oil Movements, a British company that tracks oil shipments worldwide, shows that oil in transit on the high seas is also quite strong. Almost every category of shipment is running higher than it was a year ago. The report notes that, "In the West, a big share of any oil stock building done this year has happened offshore, out of sight." Some industry insiders say the global oil industry from the activities and stocks of the Big Four to the true state of tanker and storage and liftings, is the most secretive industry in the world with the possible exception of the narcotics trade.

Goldman Sachs again in the middle
The oil price today, unlike 20 years ago, is determined behind closed doors in the trading rooms of giant financial institutions like Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citigroup, Deutsche Bank or UBS. The key exchange in the game is the London ICE Futures Exchange (formerly the International Petroleum Exchange). ICE Futures is a wholly owned subsidiary of the Atlanta Georgia International Commodities Exchange. ICE in Atlanta was founded in part by Goldman Sachs, which also happens to run the world's most widely used commodity price index, the GSCI, which is over-weighted to oil prices.

As I noted in my earlier article, ICE was the focus of a recent congressional investigation. It was named both in the Senate's Permanent Sub-committee on Investigations' June 27, 2006, Staff Report and in the House Committee on Energy and Commerce's hearing in December 2007, which looked into unregulated trading in energy futures.

Both studies concluded that the energy price climb to $128 and beyond is driven by billions of dollars' worth of oil and natural gas futures contracts being placed on the ICE. Through a convenient regulation exception granted by the George W Bush administration in January 2006, the ICE Futures trading of US energy futures is not regulated by the Commodities Futures Trading Commission (CFTC), even though the ICE Futures US oil contracts are traded in ICE affiliates in the US. And at Enron's request, the CFTC exempted the over-the-counter oil futures trades in 2000.

So it is no surprise to see in a May 6 report from Reuters that Goldman Sachs announces oil could in fact be on the verge of another "super spike", possibly taking oil as high as $200 a barrel within the next six to 24 months. That headline, "$200 a barrel!" became the major news story on oil for the next two days. How many gullible lemmings followed behind with their money bets?

Arjun Murti, Goldman Sachs' energy strategist, blamed what he called "blistering" (sic) demand from China and the Middle East, combined with his assertion that the Middle East is nearing its maximum ability to produce more oil. "Peak oil" mythology again helps Wall Street. The degree of unfounded hype reminds one of the self-serving Wall Street hype in 1999-2000 around dot.com stocks or Enron.

In 2001, just before the dot.com crash in the NASDAQ, some Wall Street firms were pushing the sale to the gullible public of stocks that their companies were quietly dumping. Or they were pushing dubious stocks for companies where their affiliated banks had a financial interest. In short, as later came out in Congressional investigations, companies with a vested interest in a certain financial outcome used the media to line their pockets and that of their companies, leaving the public investor holding the bag.

It would be interesting for Congress to subpoena the records of the futures positions of Goldman Sachs and a handful of other major energy futures players to see if they are invested to gain from a further rise in oil to $200, not forgetting that 16 to one leverage with which a hedge fund or bank can buy oil futures.

We are hit with an endless series of plausible arguments for the high price of oil: a "terrorism risk premium", a "blistering" rise in demand of China and India; unrest in the Nigerian oil region; oil pipelines' blown up in Iraq; possible war with Iran ... And above all the hype about peak oil. Oil speculator T Boone Pickens has reportedly raked in a huge profit on oil futures and argues, conveniently, that the world is on the cusp of "peak oil". So does the Houston investment banker and friend of Vice President Dick Cheney, Matt Simmons.

As noted in the June 2006 US Senate report, The Role of Market Speculation in Rising Oil and Gas Prices, "There's a few hedge fund managers out there who are masters at knowing how to exploit the peak oil theories and hot buttons of supply and demand, and by making bold predictions of shocking price advancements to come they only add more fuel to the bullish fire in a sort of self-fulfilling prophecy."

Will a Democratic Congress act to change the carefully crafted opaque oil futures markets in an election year and risk bursting the bubble? On May 12, the House Energy and Commerce Committee stated it will look at this issue in June.

F William Engdahl is author of A Century of War: Anglo-American Oil Politics and the New World Order (PlutoPress), and Seeds of Destruction: The Hidden Agenda of Genetic Manipulation (Global Research, available at www.globalresearch.ca). He may be reached at info@engdahl.oilgeopolitics.net.





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We have gone mad, Your Majesty, and only you can cure our affliction.

 

An open letter to the leader of Opec's biggest oil producer, the one man who can force Britain to cut its carbon emissions

King Abdaullah of Saudi Arabia
Your Majesty,
In common with the leaders of most western nations, our prime minister is urging you to increase your production of oil. I am writing to ask you to ignore him. Like the other leaders he is delusional, and is no longer competent to make his own decisions.
You and I know that there are several reasons for the high price of oil. Low prices at the beginning of this decade discouraged oil companies from investing in future capacity. There is a global shortage of skilled labour, steel and equipment. The weak dollar means that the price of oil is higher than it would have been if denominated in another currency. While your government says that financial speculation is an important factor, the Bank of England says it is not, so I don't know what to believe. The major oil producers have also become major consumers; in some cases their exports are falling even as their production has risen, because they are consuming more of their own output.
But what you know and I do not is the extent to which the price of oil might reflect an absolute shortage of global reserves. You and your advisers are perhaps the only people who know the answer to this question. Your published reserves are, of course, a political artefact unconnected to geological reality. The production quotas assigned to its members by Opec, the oil exporters' cartel, reflect the size of their stated reserves, which means that you have an incentive to exaggerate them. How else could we explain the fact that, despite two decades of furious pumping, your kingdom posts the same reserves as it did in 1988?
You say that you are saving your oil for the benefit of future generations. If this is true, it is a rational economic decision: oil in the ground looks like a better investment than money in the bank. But, reluctant as I am to question your Majesty's word, I must remind you that some oil analysts are now wondering whether this prudence is a convenient fiction. Are you restricting supply because you want to conserve stocks and keep the price high, or are you unable to raise production because your fabled spare capacity does not in fact exist?
I do not expect an answer to this question. I know that the true state of your reserves is a secret so closely guarded that oil analysts now resort to using spy satellites to try to estimate the speed of subsidence of the ground above your oil fields, as they have no other means of guessing how fast your reserves are running down.
What I know, and you may not, is that the high price of oil is currently the only factor implementing British government policy. The government claims that it is seeking to reduce carbon dioxide emissions, by encouraging people to use less fossil fuel. Now, for the first time in years, its wish has come true: people are driving and flying less. The AA reports that about a fifth of drivers are buying less fuel. A new study by the Worldwide Fund for Nature shows that businesses are encouraging their executives to use video conferences instead of flying. One of the most fuel-intensive industries of all, business-only air travel, has collapsed altogether.
In other words, your restrictions on supply - voluntary or otherwise - are helping the government to meet its carbon targets. So how does it respond? By angrily demanding that you remove them so that we can keep driving and flying as much as we did before. Last week, Gordon Brown averred that it's "a scandal that 40% of the oil is controlled by Opec, that their decisions can restrict the supply of oil to the rest of the world, and that at a time when oil is desperately needed, and supply needs to expand, that Opec can withhold supply from the market". In the United States, legislators have gone further: the House of Representatives has voted to bring a lawsuit against Opec's member states, and Democratic senators are trying to block arms sales to your kingdom unless you raise production.
This illustrates one of our leaders' delusions. They claim to wish to restrict the demand for fossil fuels, in order to address both climate change and energy security. At the same time, to quote Britain's Department for Business, they seek to "maximise economic recovery" from their remaining oil, gas and coal reserves. They persist in believing that both policies can be pursued at once, apparently unaware that if fossil fuels are extracted they will be burnt, however much they claim to wish to reduce consumption. The only states that appear to be imposing restrictions on the supply of fuel are the members of Opec, about which Brown so bitterly complains. Your Majesty, we have gone mad, and you alone can cure our affliction, by keeping your taps shut.
Our leaders, though they do not possess the least idea of whether the oil supplies required to support it will be sustained, are also overseeing a rapid expansion of our transport infrastructure. In the UK, we are building or upgrading thousands of miles of roads and doubling the capacity of our airports, in the expectation that there will be no restriction in the supply of fuel. The government's central forecast for the long-term price is just $70 a barrel.
Over the past few months, I have been trying to discover how the government derives this optimistic view. In response to a parliamentary question, it reveals that its projection is based on "the assessment made by the International Energy Agency in its 2007 World Energy Outlook". Well, last week the Wall Street Journal revealed that the IEA "is preparing a sharp downward revision of its oil-supply forecast". Its final report won't be released until November, but it has already concluded that "future crude supplies could be far tighter than previously thought". Its previous estimates of global production were wrong for one simple and shocking reason: it had based them on anticipated demand, rather than anticipated supply. It resolved the question of supply by assuming that it would automatically rise to meet demand, as if it were subject to no inherent restraints.
Our government must have known this, but it has refused to conduct its own analysis of global oil reserves. Uniquely among possible threats to the economy and national security, it has commissioned no research of any kind into this question. So earlier this year, I asked the Department for Business what contingency plans it possesses to meet the eventuality that the IEA's estimates could be wrong, and that global supplies of petroleum might peak in the near future. "The government," it replied, "does not feel the need to hold contingency plans." I am sure I do not need to explain the implications if its forecasts turn out to be wildly wrong.
Your Majesty, I recognise that this is not among your usual duties as the ruler of Saudi Arabia. But I respectfully beg you to save us from ourselves.
Yours Sincerely,
George Monbiot


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Thursday, 22 May 2008

They're wrong about oil!

Rip up your textbooks, the doubling of oil prices has little to do with China's appetite

Just as the credit crunch seemed to be passing, at least in the US, another and much more ominous financial crisis has broken out. The escalation of oil prices, which this week reached a previously unthinkable $130 a barrel (with predictions of $150 and $200 soon to come), threatens to do far more damage to the world economy than the credit crunch.
Instead of just causing a brief recession, the oil and commodity boom threatens a prolonged period of global "stagflation", the lethal combination of high inflation and economic stagnation last seen in the world economy in the 1970s and early 1980s. This would be a disaster far more momentous than the repossession of a few million homes or collapse of a couple of banks.
Commodity inflation is far more lethal than a credit crunch for two reasons. It prevents central banks in advanced economies from cutting interest rates to keep their economies growing. Even worse, it encourages the governments of developing countries to turn their backs on global markets, resorting instead to price controls, trade restrictions and currency manipulations to protect their citizens from the rising costs of energy and food. For both these reasons, the boom in oil and commodity prices, if it lasts much longer, could reverse the globalisation process that has delivered 20 years of almost uninterrupted growth to America and Europe and rescued billions of people from extreme poverty in China, India, Brazil and many other countries.
That is the bad news. The good news is that the world is not as impotent as is often suggested in the face of this danger, since soaring commodity prices are not the ineluctable outcome of some fateful conjuncture of global economic forces, but rather the product of a typical financial boom-bust cycle, which could be deflated - especially with some help from sensible political action - as quickly as it built up.
The present commodity and oil boom shows all the classic symptoms of a financial bubble, such as Japan in the 1980s, technology stocks in the 1990s and, most recently, housing and mortgages in the US. But surely, you will say, this commodity boom is different? Surely it is driven by profound and lasting changes in global supply and demand: China's insatiable appetite for food and energy, geopolitical conflicts in the Middle East, the peaking of global oil reserves, droughts caused by global warming and so on. All these fundamental points are perfectly valid, but they tell us nothing about whether the oil price will soon jump to $200, stay at $130 or fall back to $60 next month.
To see that these "fundamentals" are all irrelevant, we have merely to ask which of them has changed in the past nine months. The answer is none. The oil markets didn't suddenly discover China's oil demand nine months ago so this cannot explain the doubling of prices since last August. In fact, China's "insatiable" demand growth has decelerated. In 2004 it was consuming an extra 0.9 million barrels a day; in 2007 it was consuming just an extra 0.3 mbd. In the same period global demand growth has slowed from 3.6 mbd to 0.7 mbd. As a result, the increase in global demand growth is now well below last year's increase of 0.8 mbd in non-Opec production, according to Mike Rothman, of ISI, a leading New York consulting group.
Why, then, are commodity prices still rising? The first point to note is that many no longer are. Rice, wheat and pork are 20 to 30 per cent cheaper than they were two months ago, when financial pundits identified Asian and African food riots as the first symptoms of a commodity "super-cycle" that would drive prices much higher. And the price of industrial commodities such as lead, zinc and nickel, supposedly in short supply a year ago, has now dropped by 40 to 60 per cent. In fact, most major commodity indices would already be in a downtrend were it not for the dominance of oil.
But oil is the commodity that really matters and surely the latest jump in prices proves that demand really does exceed supply? Not at all. In the late stages of financial bubbles, it is quite normal for prices to become completely detached from economic fundamentals. House prices in Florida and Spain kept rising even after property developers built far more homes than they could possibly sell. The same thing happened in credit markets: mortgage securities kept rising even while banks created "special purpose vehicles" to acquire vast "inventories" of bonds for which there were no genuine buyers - and dozens of similar examples can be cited from the bubbles in internet stocks and Japan. Similarly, the International Gold Council reported this week that gold demand for commercial uses and investment fell 17 per cent in January, just as the gold price surged through $1,000 for the first time.
Now consider the situation today in oil markets: the Gulf, according to Mr Rothman, is crammed with supertankers chartered by oil-producing governments to hold the inventories of oil they are pumping but cannot sell. That physical oil is in excess supply at today's prices does not mean that producers are somehow cheating by storing their oil in tankers or keeping it in the ground. All it suggests is that there are few buyers for physical oil cargoes at today's prices, but there are plenty of buyers for pieces of paper linked to the price of oil next month and next year. This situation is exactly analogous to the bubble in credit markets a year ago, where nobody wanted to buy sub-prime mortgage bonds, but there was plenty of demand for "financial derivatives" that allowed investors to bet on the future value of these bonds.
In short, the standard economic assumption that supply and demand drive prices is only a starting point for understanding financial markets. In boom-bust cycles, the textbook theory is not just slightly inaccurate but totally wrong. This is the main argument made by George Soros in his fascinating book on the credit crunch, The New Paradigm for Financial Markets, launched at an LSE lecture last night. In this book Mr Soros explains how financial bubbles always start with some genuine economic transformation - the invention of the internet, the deregulation of credit or the rise of China as a commodity consumer.
He could have added the Netherlands' emergence as a financial centre triggering Tulipmania or Britain's global dominance as a naval power before the South Sea Bubble of 1720. The trouble is that these initial perceptions of a new paradigm tell us nothing about how far financial prices will adjust in response - will Chinese demand drive oil prices to $50 or $100 or $1,000?
Instead they can create a self-fulfilling momentum of rising prices and an inbuilt bias in the way that investors interpret the world. The resulting misconceptions drive market prices to a "far from equilibrium position" that bears almost no relation to the balance of underlying supply and demand.
The people who tell you that commodity prices today are driven by "economic fundamentals" are the same ones who said that house prices in Britain were rising because of land shortages. The amazing thing is that just months after losing hundreds of billions in the housing and mortgage bubbles, investors and governments around the world have reverted to the discredited fallacy that financial markets always reflect economic reality, instead of the boom-bust cycles and misconceptions that George Soros's book vividly describes.



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Why bananas are a parable for our times

 

Johann Hari

Thursday, 22 May 2008

Below the headlines about rocketing food prices and rocking governments, there lays a largely unnoticed fact: bananas are dying. The foodstuff, more heavily consumed even than rice or potatoes, has its own form of cancer. It is a fungus called Panama Disease, and it turns bananas brick-red and inedible.

There is no cure. They all die as it spreads, and it spreads quickly. Soon – in five, 10 or 30 years – the yellow creamy fruit as we know it will not exist. The story of how the banana rose and fell can be seen a strange parable about the corporations that increasingly dominate the world – and where they are leading us.
Bananas seem at first like a lush product of nature, but this is a sweet illusion. In their current form, bananas were quite consciously created. Until 150 ago, a vast array of bananas grew in the world's jungles and they were invariably consumed nearby. Some were sweet; some were sour. They were green or purple or yellow.
A corporation called United Fruit took one particular type – the Gros Michael – out of the jungle and decided to mass produce it on vast plantations, shipping it on refrigerated boats across the globe. The banana was standardised into one friendly model: yellow and creamy and handy for your lunchbox.
There was an entrepreneurial spark of genius there – but United Fruit developed a cruel business model to deliver it. As the writer Dan Koeppel explains in his brilliant history Banana: The Fate of the Fruit That Changed the World, it worked like this. Find a poor, weak country. Make sure the government will serve your interests. If it won't, topple it and replace it with one that will.
Burn down its rainforests and build banana plantations. Make the locals dependent on you. Crush any flicker of trade unionism. Then, alas, you may have to watch as the banana fields die from the strange disease that stalks bananas across the globe. If this happens, dump tonnes of chemicals on them to see if it makes a difference. If that doesn't work, move on to the next country. Begin again.
This sounds like hyperbole until you study what actually happened. In 1911, the banana magnate Samuel Zemurray decided to seize the country of Honduras as a private plantation. He gathered together some international gangsters like Guy "Machine Gun" Maloney, drummed up a private army, and invaded, installing an amigo as president.
The term "banana republic" was invented to describe the servile dictatorships that were created to please the banana companies. In the early 1950s, the Guatemalan people elected a science teacher named Jacobo Arbenz, because he promised to redistribute some of the banana companies' land among the millions of landless peasants.
President Eisenhower and the CIA (headed by a former United Fruit employee) issued instructions that these "communists" should be killed, and noted that good methods were "a hammer, axe, wrench, screw driver, fire poker or kitchen knife". The tyranny they replaced it with went on to kill more than 200,000 people.
But how does this relate to the disease now scything through the world's bananas? The evidence suggests even when they peddle something as innocuous as bananas, corporations are structured to do one thing only: maximise their shareholders' profits. As part of a highly regulated mixed economy, that's a good thing, because it helps to generate wealth or churn out ideas. But if the corporations aren't subject to tight regulations, they will do anything to maximise short-term profit. This will lead them to seemingly unhinged behaviour – like destroying the environment on which they depend.
Not long after Panama Disease first began to kill bananas in the early 20th century, United Fruit's scientists warned the corporation was making two errors. They were building a gigantic monoculture. If every banana is from one homogenous species, a disease entering the chain anywhere on earth will soon spread. The solution? Diversify into a broad range of banana types.
The company's quarantine standards were also dire. Even the people who were supposed to prevent infection were trudging into healthy fields with disease-carrying soil on their boots. But both of these solutions cost money – and United Front didn't want to pay. They decided to maximise their profit today, reckoning they would get out of the banana business if it all went wrong.
So by the 1960s, the Gros Michel that United Fruit had packaged as The One True Banana was dead. They scrambled to find a replacement that was immune to the fungus, and eventually stumbled upon the Cavendish. It was smaller and less creamy and bruised easily, but it would have to do.
But like in a horror movie sequel, the killer came back. In the 1980s, the Cavendish too became sick. Now it too is dying, its immunity a myth. In many parts of Africa, the crop is down 60 percent. There is a consensus among scientists that the fungus will eventually infect all Cavendish bananas everywhere. There are bananas we could adopt as Banana 3.0 – but they are so different to the bananas that we know now that they feel like a totally different and far less appetising fruit. The most likely contender is the Goldfinger, which is crunchier and tangier: it is know as "the acid banana".
Thanks to bad corporate behaviour and physical limits, we seem to be at a dead end. The only possible glimmer of hope is a genetically modified banana that can resist Panama Disease. But that is a distant prospect, and it is resisted by many people: would you like a banana split made from a banana split with fish genes?
When we hit up against a natural limit like Panama disease, we are bemused, and then affronted. It seems instinctively bizarre to me that lush yellow bananas could vanish from the global food supply, because I have grown up in a culture without any idea of physical limits to what we can buy and eat.
Is there a parable for our times in this odd milkshake of banana, blood and fungus? For a hundred years, a handful of corporations were given a gorgeous fruit, set free from regulation, and allowed to do what they wanted with it. What happened? They had one good entrepreneurial idea – and to squeeze every tiny drop of profit from it, they destroyed democracies, burned down rainforests, and ended up killing the fruit itself.
But have we learned? Across the world, politicians like George Bush and David Cameron are telling us the regulation of corporations is "a menace" to be "rolled back"; they even say we should leave the planet's climate in their hands. Now that's bananas.
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Wednesday, 21 May 2008

Gresham’s Law in Present day India


 


If one looks at India's post-Independence scenario in political, social, cultural, academic, literary, journalistic, religious or any other sphere, one comes across the phenomenon of the inferior elements pushing out, by and large, the superior competent ones.

 

To understand the change, let us take, for example, the politics of the Nehruvian days and cite a few representative instances. A member of parliament was thrown out by unanimous vote because he had, knowingly, given a false statement. Acharya Narendra Dev, a leading socialist leader voluntarily resigned his membership of the U.P. state assembly as he had left the Congress on whose ticket he was elected. The Acharya fought on the Socialist Party ticket and he was defeated by the Congress candidate. He had no regrets because his was a principled stand. One must remember that, during those days, it was not legally binding on the Acharya to resign his seat in the assembly as there was no law, making it obligatory for a defector to quit. Take another instance, Harihar Nath Shastri, president of the Indian National Trade Union Congress and an M.P. was killed in an air crash soon after the first general election. Nehru and the Congress offered to make his wife Shakuntala Devi, their candidate in the by-election, but she refused because she was a member of the Socialist Party and not willing to desert it for a sure win. She contested as a Socialist candidate and lost, but had no regrets for turning down the offer from Nehru.

 

Look at the present scenario. Members of central and state legislature frequently defect from one party to another but do not resign their seats. They try to cling to them by exploring some loophole or the other in the anti-defection law. The instances of mass defection by members of Bihar legislature, led by B.P. Mandal in 1967-68 and by Haryana legislators under the leadership of Bhajan Lal are widely known. In both the cases, the defectors formed the government and ruled over their respective states. Only recently, when K. Natwar Singh, a former foreign minister of India, was thrown out by the Congress as his and his son's names figured in the "food for oil" scandal, concerning Iraq, he did not resign his seat in the upper house of the Parliament and lobbied for a seat from the BJP, after his term expired, notwithstanding his self-proclaimed loyalty to secularism and the Nehruvian thinking. H. D. Devegoda, a former prime minister, who heads a party, called Janata Dal (Secular), entered into an alliance with the BJP that has never taken kindly to secularism, just to make his son chief minister of Karnataka, but when the turn of the BJP for heading the government came, he, all of a sudden, woke up to the fact that his party was secular while the BJP was not! Only the other day, a Congress M.P., after being dropped from ministership, crossed over to Mayawati's party, as if ideology was just a shirt to be put on according to one's convenience. The same can be said of a number of politicians who don secular or Hindutva caps, according to expediency.

 

During Nehru's days, K. D. Malviya, then minister for oil and natural gas, had to resign from the cabinet because he had openly recommended the name of a Muslim freedom fighter for some assistance to a nationalist businessman. No quid pro quo was involved. Around the same time Lal Bahadur Shastri, the railway minister resigned, owning moral responsibility for railway accidents.

Those days are long past. Today, ministers cling to their positions even though there are corruption cases against them going on in courts of law. There are members of parliament and assemblies, convicted in the cases involving heinous crimes like murders, thefts, robberies, human smuggling and so on, yet none of them have quit their posts. The list is too long.

 

Very few parliamentarians and legislators have any interest in reading and writing. The latest report from U.P. points out that legislators rarely visit the rich library of the legislature. If one goes through the records of parliament library showing the books borrowed by honourable members, one will not reach any different conclusion. The declining standard of debates is another indicator.

 

If one turns one's attention to academic and literary world, one reaches the same conclusion. By and large, inferior elements, pushing aside the qualified and meritorious ones, have come to occupy dominant positions. If one prepares the lists of all those persons who have been occupying positions of importance in academic institutions or have been nominated to the upper house of parliament or state legislature as "distinguished persons" or awarded literary prizes or Padma decorations, the point will be obvious. The proximity to the people in power, sycophancy, corruption, etc. have been playing no mean role. To give a concrete example, the list of "literary" people, sponsored by various government and semi-government organizations to attend the World Hindi Conference last year, contained quite a sizable number of inferior and fake writers. Pulls and pressures had played a significant role in the preparation of this list.

 

Lately, by floating two fashionable nonsensical concepts, namely, bazaarwad (marketism) and global realism, some inferior writers have been trying to climb up the ladder of eminence. In fact, bazaarwad has been brought in to replace capitalism so that its exploitative character is covered up. Bazaarwad cannot have any place for exploitation because unrestrained market forces assign every commodity whether material or capacity to labour its true value and no one is cheated. Obviously, the champions of this concept serve the interests of capitalism.

If one observes carefully the quality of programmes on electronic media and the character of comments, articles and dispatches in print media over time, the deterioration becomes crystal clear.

 

The phenomenon or tendency, illustrated by the above examples, is not a novel one. It was first mentioned two and a half centuries ago in Greek literature. Aristophanes (456 BC - 386 BC) in his well-known comedy the Frogs underlined it. The play tells the story of the god Dionysus who despairs the plight of Athens as a result of the disastrous Battle of Argiusae. Athens was defeated because the inferior, dishonest, and unqualified people had become dominant after pushing aside superior ones.

To quote the relevant lines:

"The course our city runs is the same towards men and money.

She has fine new gold and ancient silver,

Coins untouched with alloys, gold or silver,

Each well minted, tested each and ringing clear

Yet we never use them!
Others pass from hand to hand,

Sorry brass just stuck last week and branded with a wretched brand.

So with men we know for upright, blameless lives and noble names.

These we spurn for men of brass."

 

Centuries later, in 1858, British economist Henry Dunning Macleod termed this phenomenon "Gresham's Law". Since then this has been in common parlance. In his book Elements of Political Economy. Macleod claimed to have brought to light "a great and fundamental law of currency" that showed the disappearance of good money from circulation with increasing preponderance of bad one. He christened it as Gresham Law on the basis of a letter by Sir Thomas Gresham to Queen Elizabeth I. Sir Thomas, an English merchant, was working as the Crown's financial representative in Antwerp. He informed the Queen that gold coins were disappearing from the circulation as a result of the entry of debased coins, introduced by Henry VIII. The latter had reduced the gold content of coins from six ounces fine to three ounces fine of gold.

 

History shows that the phenomenon that bad money drives good money from circulation was widely known during the earlier periods too. For example, it occurs in the writings of astronomer Copernicus (1473-1543).

 

In the course of time, it has been found that Gresham's Law may be applied to other fields too. People accept inferior goods in place of genuine ones for lack of correct information or the deception created by high voltage advertisement. In the market for second hand cars, lemon automobiles that are analogous to bad money drive out the good cars. Similarly, it is quite dominant in management science. While honest and devoted managers and business leaders take a long time to bring in tangible results while sly ones show good results by employing all kinds of tricks and manipulations. Thus, in the short run, investors and clients are lured by them. It is a different matter that they, ultimately, come to grief when such companies collapse. In India, non-banking financial institutions, only a few years ago, duped large number of gullible investors and then vanished in thin air.

 

In India, even in civil and police administration, a number of incompetent and dishonest people have risen by manipulation and nexus with corrupt politicians. One may look at the startling facts that have emerged after some of them have been caught indulging in corrupt practices and brought before courts of law. One senior officer of civil administration has been found to have a huge real estate besides tens of bank accounts all over the country. In political parties, too, manipulators have risen pushing out the loyal and competent workers and leaders. The Samajwadi Party, led by Mulayam Singh Yadav is a typical example where racketeers with no ideological and political commitments have pushed aside the old ideologically committed workers and leaders.



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Tuesday, 20 May 2008

This week, I've been ashamed to be a woman


 

Yasmin Alibhai-Brown

Cherie still defends the war in Iraq. Hillary would go nuke Iran

Monday, 19 May 2008

In 1988 I was on BBC TV debating politics with an all-female audience. For most guests, the 1979 election of Margaret Thatcher had marked an optimistic turn of history. I disagreed vehemently. Our leaderine made me biliously ashamed to be a woman.

Today that old shame heaves again, and stomach acids fill my throat as two more grasping women betray themselves and rob us of our ideals. Hillary Clinton and Cherie Blair would refute the charges. Heed not their denials, not after this week. The two mates are covetous of clout and wealth, rapt in cringing marital dotage, above all, morally questionable and beholden to none. God is always on their blessed side to exonerate any (tiny) trespasses. From those who share their chromosomes, they expect, nay demand, infinite sympathy and fulsome appreciation.
Is this where it leads to, our long road towards gender parity? It might have been better for us not to have started the journey. I don't mean that really. Blame the gloom which is set to deepen as we get a whole week of chirpy Cherie on Radio 4 reading from her (allegedly) million-pound memoir, a well spun tale – Scouse lass from a broken family gets to marry a British PM, just like that assistant in Love Actually... In reality, Mrs Blair's example is less than inspirational. As soon as she stepped over that famous threshold, she turned, like fresh milk left out overnight in the summer. She blames her embarrassing photos after election night, when, bleary and dishevelled, she opened the door to receive flowers. What tosh. All those years building up a reputation as a respected human rights lawyer and champion of equality, her passion and purpose, the luminous intelligence and warmth were jacked in as she fell into the perfidious embrace of power. It was glitzy and wildly exciting, never mind the political corruption that came with the privilege.
Meanwhile, Hillary carries on a noxious, malignant campaign covered in pustules of lies, expediency and congealing ambition. Though she tries hard to wash herself clean, to deodorize the air around her, the stench of forgery lingers on. Five years ago, Hillary wrote her own self-aggrandizing memoir and was paid eight million for the sentimental drivel. Both ex First Ladies have studied law and should know the inviolability of facts and evidence. Hillary misspeaks involuntarily, as if she suffers from a strange brain disease that twists out falsehoods and forces them to be uttered. She pretended to be shot at in Bosnia and insists her name comes from Edmund Hillary, who at her christening had not yet climbed Everest. Observers say both Clintons will tell a big lie when a small one will do and a small lie when the truth would suffice.
But hey, men who rule over us or want to are natural born fibbers so why this level of ire? Are women commentators always bitchy to other women? Because both Cherie and Hillary have used womanhood to get on, but only when it suits.
Over the nomination campaigns, Hillary has come across as a man in bad frocks, a "ventriloquist" says Jane Fonda. Arguably, you have to be a manly woman to get elected – but then she and Cherie climbed up through marriage to stand on the shoulders of husbands with lethal defects and judgements. Though unelected, the wives sought illegitimate influence over national politics and policies. Cherie wanted not only more money, more things, more foreign trips, more kudos, but a vastly more important role. So did Hillary and the claims to "experience" come from exactly that pushy presence she exerted in the White House.
Cherie still defends the war in Iraq. Then she believed New Labour women "should be supporting our men in these difficult decisions, not making it worse by nagging them". So being a sweet little wifie was more important than the law, deaths of innocents, human rights. WHAT? Today those Iraqi wives and mothers who are not grieving are being suppressed, veiled, killed for the freedoms they once had.
After tortuous obfuscations, Hillary now wants to distance herself from her old war-mongering self, but still would go nuke Iran. Both have defended laws curtailing fundamental civil rights and yet both are drawn to back frightfully worthy charities to help womankind.
Finally, the two women lack political conscience. Cherie is no better than John Prescott and, like him, has damaged the Labour party this difficult week. By not stepping aside, Hillary will destroy the Democrats and possibly let the Republicans back in. As women, they ought to know and act better. We should have higher standards otherwise what is the point?



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This government has been the most rightwing since the second world war,

The prospect of a Tory in No 10 does worry me - but no more so than another term for this cabinet of war criminals

George Monbiot The Guardian, Tuesday May 20 2008 Article historyAbout this articleClose This article appeared in the Guardian on Tuesday May 20 2008 on p27 of the Comment & debate section. It was last updated at 00:04 on May 20 2008. You can hear the wringing of hands and tearing of cloth all the way down Farringdon Road. Dismayed by the local election results, convinced that Labour will be crushed in Thursday's byelection, afraid that this will presage disaster in the next general election, my fellow columnists are predicting the end of the civilised world. But I can't understand why we should care.

Yes, I worry about what the Tories might do if they get in. I also worry about what Labour might do if it wins another term. Why should anyone on the left seek the re-election of the most rightwing government Britain has had since the second world war?

New Labour's apologists keep reminding us of the redistributive policies it has introduced: Sure Start children's centres, reductions in child poverty, raising the school leaving age, the national minimum wage, flexible hours for parents and carers, better conditions for part-time workers, the decent homes programme, free museums, more foreign aid. All these are real achievements and deserve to be celebrated. But the catalogue of failures, backsliding and outright destruction is much longer and more consequential.

One fact alone should disqualify this government from office: we have a cabinet of war criminals. The Nuremberg tribunal characterised a war of aggression as "the supreme international crime". It is not just that Britain's Labour government launched and sustained an unprovoked war, it also sabotaged all means of achieving a peaceful resolution. In April 2002 it helped the Bush administration to sack José Bustani, the head of the Organisation for the Prohibition of Chemical Weapons, in order to prevent him settling the dispute over Iraq's alleged weapons of mass destruction. In two separate offers before the invasion, Saddam Hussein agreed to meet the terms the US and Britain were demanding. But they slapped him down and concealed his offers from their electorates. (All references are on my website.)

Cluster bombs can be legally used because the British government helped to block an international ban in 2006: it is still holding out against an outright ban at the current talks in Dublin. The government has undermined another international peace agreement - the nuclear non-proliferation treaty - by deciding to renew the Trident missile programme. It was the first administration to announce a policy of pre-emptive nuclear attack: even the great nuclear enthusiast Harold Macmillan never went this far. In 2007 the defence secretary, without parliamentary debate, revealed that the US would be allowed to use the listening station at Menwith Hill for its missile defence system.

Labour appears to be prepared to meet any demand the Bush administration makes, however outrageous. In 2003 the government signed a one-sided extradition treaty, permitting the US to extract our citizens without producing prima facie evidence of an offence. In the same year the defence secretary announced that he would restructure the British armed forces to make them "inter-operable" with those of the United States, ensuring for the first time in British history that they became functionally subordinate to those of another sovereign power.

Labour's foreign policy is as unethical as Margaret Thatcher's. It provides military aid to the government of Colombia, whose troops are involved in a campaign of terror against the civilian population. It granted an open licence for weapons exports to the government of Uzbekistan, and sacked the British ambassador when he tried to draw attention to the regime's human rights abuses. It has collaborated with the US programme of extra-judicial kidnapping and imprisonment, left our citizens to languish in Guantánamo Bay, and made use of Pakistani torture chambers in seeking to extract testimony from British suspects. Until 2005 it tied its foreign aid programme to the privatisation of public utilities in some of the world's poorest countries. Last year it held out against reform of the International Monetary Fund's unfair allocation of votes.

The proportion of the British population in prison has risen by a fifth since the Tories left office. Today Britain locks up 151 out of every 100,000 people. The Chinese judiciary, by contrast, which is notorious for its willingness to bang up anyone and everyone, jails 119 people per 100,000; Burma imprisons 120; Saudi Arabia 132. The Serious Organised Crime and Police Act, passed in 2005, contains clauses that permit the police to ban any demonstration, however peaceful. It is one of a long series of bills the Labour government has passed that restrict the right to protest.

The citizen has been re-regulated; business has been deregulated. Last year deaths caused by serious injuries at work rose by 11%: a predictable result of the sacking of 1,000 staff at the Health & Safety Executive and a 24% reduction in workplace inspections. In 2006 the government instructed the Serious Fraud Office to drop its corruption case against the arms manufacturer BAE Systems. It has obstructed efforts by other states to investigate the company.

Labour has shifted taxation from the rich to the poor, cutting corporation tax from 33% to 28% and capital gains tax from 40% to 18%, and introducing a new entrepreneurs' relief scheme, taxing the first million of capital gains at just 10%. It tried to raise the income tax paid by the poorest earners from 10% to 20%. Labour has lifted the inheritance tax threshold from £300,000 to £700,000, and maintained the cap on the highest rates of council tax. While vigorously prosecuting benefits cheats, it has allowed tax avoidance, mostly by the very rich, to reach an estimated £41bn. Inequality today is slightly worse than it was when Labour took power in 1997 (the Gini coefficient which measures it has risen from 0.33 to 0.35).

Both as chancellor and prime minister, Gordon Brown has forced the private finance initiative into almost all public services. His privatisation schemes have crept into places where the Conservative government never dared to tread. Labour has waged war against our planning system and overseen a disastrous decline in social housing: under Thatcher an average of 46,600 social homes were built every year; under Tony Blair the average was 17,300. Labour is closing post offices, small schools and GPs' surgeries, while overseeing a doubling of airport capacity and the construction of 4,000km of trunk roads. These developments ensure that even the modest targets in the climate change bill are likely to be missed. Carbon dioxide pollution fell faster under the Conservatives than under Labour.

Above all, the Labour government has destroyed hope. It has put into practice Thatcher's dictum that "there is no alternative" to a market fundamentalism that subordinates human welfare to the demands of business. Labour has created a political monoculture that kills voters' enthusiasm, and has delayed electoral reforms that would have given smaller parties an opportunity to be heard. All we are left with is fear: the fear that this awful government might be replaced by something slightly worse. Fear has destroyed the Labour party, but people keep supporting it in trepidation of letting the other side win.

Save this government? I would sooner give money to the Malarial Mosquito Conservation Project. Of all the causes leftist thinkers might support, New Labour must be the least deserving.

The Cyclone Disaster In Myanmar And The Human Tragedy Of Global Capitalism

By Li Onesto

20 May, 2008
Countercurrents.org

On May 2, 2008, Cyclone Nargis swept through the country of Myanmar, leaving in its wake a catastrophic human disaster. Deaths are estimated as high as 100,000 people, and at least one million are now homeless. Entire towns and villages have been washed away. 10,000 people died in one coastal town alone.

The densely populated Irawaddy Delta of 6 million people, with many fishing communities, was hit hard. Yangon (the former capital) on the edge of the Delta, where another 6.5 million people lived, was completely flooded. Flimsy houses in the poor shantytowns around cities were demolished. Some 24 million people in the five disaster-hit states—almost half of Myanmar’s population of 57 million—were affected by the cyclone with its 120 mph winds and 12-foot waves that surged up to seven miles inland.

Even areas not hit as hard are now running out of food and water. Crops, livestock, and fish have been ruined, along with irrigation systems, rice mills, and storage barns. The areas hit by the cyclone make up half of the irrigated farmland in Myanmar—which had produced 65 percent of Myanmar's rice. Millions of people who survived are now facing hunger, disease and lack of shelter.

*****

People around the world are witnessing the terrible plight of the Myanmar people unfold before their eyes. In the face of such immense human tragedy, there is hope that everything possible will be done to provide aid and relieve the terrible suffering.

There is tremendous wealth, resources, and technology in the world that could be used to respond to this disaster. There is no shortage of people with skills and compassion that could be mobilized to help. But clearly, this is not happening.

The Western mainstream media says this is because: The U.S. and other countries are trying to help but a despotic regime in Myanmar is refusing to cooperate and is therefore to blame for the high death toll and continuing suffering.

This article will break down this storyline, look at what’s behind it and compare it to reality.

To understand the situation in Myanmar today you have to examine two interpenetrating contradictions. One is the relations between the world imperialist system and Myanmar as a poor country oppressed and dominated by global capitalism. The other dynamic is the geostrategic importance of Myanmar to imperialism and the rivalry between different capitalist countries in the region. These larger factors have deeply influenced the extent and character of the destruction caused by the cyclone, as well as the rescue and relief efforts.

Natural Disasters and Man-Made Conditions

The official storyline argues: In the face of natural disasters like Cyclone Nargis, humanitarian aid trumps everything. Condoleezza Rice says: “What remains is for the Burmese government to allow the international community to help its people. It should be a simple matter. It is not a matter of politics.”

In reality: There are terrible natural disasters human beings have little control over. But what happens in the face of such catastrophes is profoundly affected by the organization of human society. So, to answer Condoleezza Rice: It is NOT a “simple matter” of relief efforts. It IS very much a matter of politics, economic relations, and power relations, from beginning to end.

Disaster relief and aid—both within a particular country, and between particular countries—doesn’t take place in a vacuum.

We live on a planet where human life is susceptible to tornados, tsunamis, cyclones, and earthquakes. Scientific understanding exists to predict and prepare, to a certain degree, for such acts of nature. But whether and how this works and what happens in the wake of such disasters is profoundly imprinted with and goes through the workings of the world capitalist system.

Look what did and did not happen before, during, and after Hurricane Katrina. Everyone saw how power relations in society, poverty, and the oppression of Black people affected who got out and who didn’t; who died and who survived. Everyone saw how all the inequalities that already existed affected what happened as the floodwaters rose.

Natural disasters do not “discriminate”—people all over the world are hit by tornados, hurricanes, and earthquakes. But different people and different countries are not affected equally.

We live in a hugely lopsided world where a handful of rich, imperialist countries dominates the rest of the planet. The U.S. sits at the top of a global capitalist system driven and shaped by the maximization of profit. The majority of people live in poor countries oppressed and dominated by imperialism and by social-economic structures that reflect and reinforce the interests of local elites who are subordinate to imperialism. Development of these countries has been stunted and distorted by imperialism. And all this profoundly affects the capacity and ability of governments and people to respond to a natural disaster.

Myanmar already faced rising costs for basic foods, commodities, and especially fuel. 10 percent of the population did not receive enough food to meet its basic daily needs. In many rural areas 70 percent lived under the absolute poverty line. Shantytowns surrounded the cities.

What we see now is a vivid example of how the poverty and distorted development that comes from being dominated and oppressed by foreign powers can turn a natural disaster into catastrophic human tragedy. As Debarati Guha-Sapir, Director of the Centre for Research on the Epidemiology of Disasters in Brussels, said: “The villages are in such levels of desperation — housing quality, nutritional status, roads, bridges, dams — that losses were more determined by their condition rather than the force of the cyclone.”

It is also the case that international political relations—where Western imperial powers are generally hostile to the military regime in Myanmar—are behind the contentiousness over aid getting into Myanmar. China’s economic interests and political relationship with Myanmar have factored into international relief efforts. And Myanmar’s economic and political relationships with other countries in South Asia have also figured into what aid has been offered.

“Isolated” from the World?

The official storyline says: Myanmar is run by a bunch of dictators who chose to isolate themselves from the rest of the world.

Reality: Myanmar society is repressive and relatively closed off from the outside world. The reactionary military regime seeks to maintain power and control society through brutal force and by limiting contact with the rest of the world. But this is not why the U.S. criticizes Myanmar.

What the U.S. really means when it says Myanmar has “isolated” itself is that Myanmar has not fully opened its doors to U.S. imperialism. The military regime has not been completely pliable, compliant, and subservient to the United States. And now it has refused to accept aid from the U.S. that has all kinds of conditions and potential “strings attached”—such as Bush’s insistence that Myanmar open its borders to U.S. officials, aid workers and military personnel.

It is not surprising that Myanmar hesitated to accept U.S. help, given there is open speculation and discussion about the use of U.S. military aircraft, troops, and warships to deliver aid. A Time magazine headline read: “Is It Time to Invade Burma?” And France is pushing to invoke a UN “responsibility to protect” doctrine to deliver aid without Myanmar’s permission.

U.S. sanctions on Myanmar (that began in 1997 and have since been extended) ban new investments in the country and prohibit imports into the U.S. from Myanmar. The U.S. says it maintains these sanctions because of human rights abuses. But in fact, this U.S. “isolation” of Myanmar is aimed at undermining and destabilizing the government and creating conditions to bring to power a regime more subservient to the United States.

Reality: In fact, Myanmar is not “isolated” and cut off from the rest of the world. Historically and up to today, Myanmar’s development has been conditioned by its integration into and subordination tothe global system of imperialism.

Burma (which changed its name to Myanmar in 1989) was a colony of British imperialism for over 60 years. In fact the commercial production of oil in Myanmar dates back to 1871 when British colonialists set up the Rangoon Oil Company.

Since formal independence in 1948, different imperialist powers have exploited the country’s people and plundered its resources. It is beyond the scope of this article to review this history. But an example of imperialist control and development of Myanmar’s energy resources provides a picture of the country’s relationship to the world capitalist system.

Myanmar has the world's tenth largest gas reserves. It has been producing natural gas since the 1970s. Today, gas exports are Myanmar's most important source of national income.

In the 1990s Myanmar granted gas concessions to foreign companies from France and Great Britain. Later Texaco and Unocal (now absorbed into ChevronTexaco) gained rights to Myanmar’s gas as well.

In 2005 other countries in the region, including China, Thailand, and South Korea invested in Myanmar’s oil and gas industry.

What did this mean for the masses of people in Myanmar?

In 1996 a human rights suit was filed against the American-based Unocal Corp. A group of villagers accused Unocal of using forced labor conscripted by Myanmar soldiers. Villagers were raped, murdered, and brutally relocated during the construction of a $1.2 billion gas pipeline to Thailand, started in 1990.

The suit, which Unocal settled in 2004, brought to light the kind of horrible crimes that were being committed by a consortium of foreign companies, including Unocal, all of which were receiving support and protection from the military regime.

One woman testified how soldiers came to her home, shot her husband, and killed her baby. Other villagers recounted how their neighbors were executed because they refused to leave the area Unocal wanted. Two girls said soldiers raped them at knifepoint (The Nation, June 30, 2003). Human Rights Watch interviewed hundreds of villagers who were driven from their homes and farms, many forced to work at gunpoint and beaten by guards.

The UN issued warnings of serious human rights abuses in 1995. After such embarrassing evidence came out, Texaco left the country in 1997. But Unocal retained 28 percent interest in the pipeline.

The U.S. State Department even acknowledged forced labor was being used. But still the U.S. government openly defended Unocal in this suit. Then Attorney General John Ashcroft filed a brief denouncing the villagers' attempt to sue Unocal, arguing that the suit (and similar suits) should be dismissed because they interfere with U.S. foreign policy and undermine the U.S. “war on terrorism.”

Today, on the blood and bones of the Myanmar people, the Unocal pipeline transports some 700 million cubic feet of gas per day.

This story provides a window into Myanmar’s relationship to world imperialism – how the development of Myanmar has been conditioned by its integration into and subordination tothe global system of imperialism.

*****

Beyond the interest of imperialism in profiting off the resources and people in Myanmar there is the geostrategic importance of this in the world. And this is a big factor in how the U.S. and various international forces look at their relationship with Myanmar and how they have responded to the current disaster.

U.S. Geostrategic Interests in Myanmar

The official storyline: Laura Bush joined the chorus of U.S. critics calling the Myanmar government “inept” for failing to alert people about the cyclone and standing in the way of getting humanitarian aid to people.

Reality: It is shameless and utter hypocrisy for the U.S. to be criticizing any government for not helping people in the face of a natural disaster. The U.S. has more money and resources than any other country in the world—many, many times those of a poor country like Myanmar. But when Hurricane Katrina hit New Orleans, the Bush regime was responsible for horrible humanitarian crimes. It failed to evacuate people to safety, abandoned thousands to die in the rising floodwaters and then subjected tens of thousands, overwhelmingly African-Americans, to the most inhuman and degrading treatment.

The inadequacies and failures of the Myanmar government in responding to the cyclone disaster have everything to do with two defining facts: its reactionary nature, and larger geo-political dynamics.

The military regime in Myanmar is an oppressive and corrupt force that has ruled the country since 1962. It has not hesitated to use the most brutal methods to crush any popular resistance and is widely hated by the people.

The military dominates and administers major aspects of the country’s economy. Only military personnel are allowed to own shares in the military-run corporations that form a significant part of the economy. Military officials occupy top positions in almost every government agency. It oversees a society and economy of great inequality and savage capitalist and semi-feudal exploitation.

In the last 15 years, the economy has in fact become more integrated with the world capitalist economy, especially through the development of the country’s oil and natural gas industries. The military has entered into various kinds of joint ventures with foreign energy companies—and, as in the case of Unocal [[see Part 1]], even provided these companies with brutally conscripted forced labor.

The reality is: The US criticism of the Myanmar government has nothing to do with concern for the victims of the cyclone. It has everything to do with cold calculations about how to use this disaster to further U.S. interests—to pry open the country, to weaken the military regime, and to create more favorable conditions for a full-out regime change. The U.S. wants to bring to power a government in Myanmar that more fully serves U.S. economic and political interests, including in relationship to U.S. contention with other capitalist powers. To understand this, we need to first of all look at the geostrategic interests the U.S. is pursuing in Myanmar.

Three great regions of Asia come together where Myanmar sits on the planet—China in the north, Southeast Asia in the south, and India in the west. Looking at a map, it becomes clear how Myanmar is key to establishing land-links between Central Asia in the west, Japan in the east and Russia in the north.

Off the coast of Myanmar is the Strait of Malacca. This waterway between Malaysia and Indonesia is one of the world’s most strategic water passages. It links the Indian and Pacific Oceans and is the shortest sea route between the Persian Gulf and China. Each and every day, supertankers carrying more than 12 million barrels of oil pass through this strait. More than 80% of all China's oil imports are shipped through this waterway.

Since 9/11, the U.S. has been trying to strengthen its military influence in this region—arguing that this is part of the “war on terror.” The U.S. has set out to further and deepen its empire in the world. The focus of the U.S. right now is dominating and controlling the Middle East. At the same time there is a whole complex of world contradictions in which control in Southeast Asia is highly important.

The U.S. has been virulently critical of the military government in Myanmar—not because of the regime’s reactionary nature. The real reason for U.S. hostility towards Myanmar is because its government is not the kind of pliant pro-U.S. neo-colonial state the United States wants and needs in the region.

It is no secret that the U.S. wants a “regime change” in Myanmar. It plays the “human rights card,” backs pro-U.S. anti-government movements, and aims to demonize and strangle the regime through sanctions and other measures. The military regime in turn has responded by seeking closer ties with China and other countries in the region. And part of the reason the U.S. wants greater influence and control in Southeast Asia (including in Myanmar) is that it wants to counter China’s growing regional strength.

Capitalist China has invested heavily in countries in Southeast Asia and has looked to profit off of Myanmar’s timber, minerals and natural gas. Myanmar provides an overland route for Chinese goods to the Indian Ocean. Trade between the two countries has grown. Since 1989 China has given the Myanmar regime some $1.5 billion worth of military hardware.

For the U.S., Myanmar is a strategically important choke point in relationship to economic and geo-strategic interests. And now the U.S. is looking for ways to exploit the devastating tragedy in Myanmar to step up its maneuverings for a “regime change” in Myanmar. Bush stated: “We're prepared to move U.S. Navy assets to help find those who have lost their lives, to help find the missing, to help stabilize the situation. But in order to do so, the military junta must allow our disaster assessment teams into the country.”

Economist and author F. William Engdahl has written about U.S. efforts to bring about “regime change” in Myanmar and the particular role of the National Endowment for Democracy, an entity funded by the U.S. government and designed to support U.S. foreign policy objectives. Engdahl says:

“The U.S. State Department has recruited and trained key opposition leaders from numerous anti-government organizations in Myanmar. Since 2003, the U.S. has provided the NED with more than $2.5 million a year for activities that promote a regime change in Myanmar. The NED funds key opposition media including the New Era Journal, Irrawaddy and the Democratic Voice of Burma radio... In reality the U.S. State Department has recruited and trained key opposition leaders from numerous anti-government organizations in Myanmar. It has poured the relatively huge sum (for Myanmar) of more than $2.5 million annually into NED activities in promoting regime change in Myanmar since at least 2003.”

All this is behind the scenes and clearly at play now as the U.S. offers assistance and aid to Myanmar in the wake of Cyclone Nargis. Such “humanitarian help” comes with political strings and a whole imperialist agenda. The Bush administration says a condition for aid is that U.S. officials, aid workers and military personnel be allowed to come into Myanmar and directly handle emergency relief operations—rather than let the authorities in Myanmar administer and deliver the aid.

In 1997 the U.S. imposed sanctions against Myanmar, which prohibited new investments in the country. In 2003 the U.S. banned Myanmar imports into the U.S. and restricted financial transactions with named government officials. In 2007 Bush imposed new financial sanctions against Myanmar, freezing U.S. assets of additional members of the military government. One week before the cyclone hit Myanmar, the U.S. ban on trade and investment and the freezing of assets for the country was strengthened even further. Then on May 17, two weeks after the cyclone, Bush ordered the sanctions to remain in effect. This has only further exacerbated the economic plight of the people in Myanmar. Meanwhile ChevronTexaco continues to operate its gas pipeline project in Myanmar, which is the single largest foreign investment project in the country and the single largest source of income for the military regime.

*****

When a terrible natural disaster strikes a country like Myanmar, millions of people are affected; many lives hang in the balance. Humanity’s knowledge and resources need to be brought together. People need to be mobilized to save lives, provide medical care and deliver food. But in the world today—dominated by the global system of capitalism—the driving interests of profit, not the needs of the people, are put first and foremost.

Today in such human catastrophes, the outmoded economic, political and social relations of imperialism stand out in stark relief. The world needs revolution, and things could be a different way. In a whole new socialist society power would be in the hands of the people. Society’s resources and knowledge and, most especially, the compassion, creativity, and political consciousness of the masses, could and would be fully mobilized to build a whole new emancipating society that will be able to figure out and solve all kinds of problems, including how to deal with natural disasters.


Li Onesto is a writer for Revolution and author of the book, Dispatches from the People's War in Nepal, (Pluto Press and Insight Press, 2004)

Monday, 19 May 2008

Cricket's Corporate Crackdown

Game Theory? Zero Sum

A corporate stranglehold over cricket may mean that no one wins. Star players in the IPL can only chafe at the new rulebook.

ROHIT MAHAJAN
At the end of the day, people need to understand that the IPL has a corporate side to it, and a very definite corporate side. It's not at all cricket in the traditional sense.
—Vijay Mallya, owner of Bangalore Royal Challengers



Pundits say the Indian Premier League is not cricket at all, and that's debatable. But one thing's certain—it certainly doesn't answer to tradition. IPL is an unprecedented, brazen marriage of money and cricket, pitting corporate values against those that define cricket. The cold pursuit of profit plays by a logic that demands predictability, and on the cricket field it's often luck that decides if a snick would go for a four or result in a dismissal. Worse, T20 is cricket's most perilous form, with suicidal batsmen and scapegoat bowlers. Ironically, it's bankrolled by corporate czars who make money out of industrial and market certitudes. It's this world of certainties they want to recreate on the cricket ground, a place that derives its buzz and drama from the very mercurial nature of sport. But they believe it's their right to expect returns on their investments. It's a clash of cultures that's becoming overt: in the form of marketing men officiously proffering knowledge of cricket basics to grizzled professionals in team meetings.

But this has become rampant in the IPL, most conspicuously in the Bangalore Royal Challengers team. Its owner, Vijay Mallya, is a man nurtured on success. Much he's touched has turned into gold, except in big sport. His Force India team is an also-ran in Formula One, but because F1 isn't a big draw in India, the ignominy is not crushing. In contrast, cricket is stronger than faith in India. And the Challengers' poor show—seven defeats in nine games so far—has hurt Mallya's ego; his bouquet of spirits was to suffer the scorn that's the lot of a loser whose bark is worse than the bite.

Mallya then made the first corporate-style intervention, pulling out the pink slip on team CEO Charu Sharma. They said he resigned due to personal reasons; Sharma insisted he was fired. Bowling coach Venkatesh Prasad was also in the line of fire, but was reportedly spared by captain Rahul Dravid interceding on his behalf. But long before the hire and fire syndrome hit home, over-enthusiastic executives of Mallya's UB Group had descended on the team. Dravid and Martin Crowe, the chief cricket officer, had to reluctantly put up with it.

Insiders say meddling in the Bangalore team has reached ridiculous proportions. "They join the team meetings and point out mistakes to the coach and players," a Royal Challengers source told Outlook . "They even berate the video and statistics analyst for not providing enough data to the team to form its plans." Besides this piecemeal cricket analysis, the corporate minders even insisted players must double their practice time, arguing that "when we fail to meet our targets, we work doubly hard".

Even before the team began to stumble during its campaign, Mallya treated the players as he would treat staff. For instance, he expected them to grace his parties late into the night. "They'd say these guys (cricketers) have a good time at our expense and don't do enough on the field," says another source.

Pounded by rivals onfield and besieged by UB executives off it, the embattled team thought it fit to take a break. The wilds of Ranthambhore was elected as an escape from the cricket. Hotel bookings were done. Then the omnipotent bosses stepped in. They decided the team hadn't earned the right to a holiday and cancelled the bookings. (An ITC Welcomgroup source confirmed this to Outlook.) A punitive approach reminiscent of a stern parent taking away candy from an errant child—is it appropriate for a team of high-profile cricketers?

After Charu's exit, Mallya turned the heat on Dravid."I want from Rahul Dravid to do the best for the team and to produce good results for us because I don't think Rahul Dravid enjoys being at the bottom of the league tables, and certainly I don't," he said. Mallya regretted not playing a bigger role during the player auctions. "I was tempted to bid for players I wanted but they (Dravid and Sharma) held me back.... When Rahul Dravid was not present at the second auction, I wanted to get some players but Charu Sharma was tentative about them. I mean I bought Misbah-ul-Haq because I was determined to do it. There were other players I was discouraged about."

But team insiders say Misbah was never an issue and Mallya's wishlist couldn't be purchased because of the cap ($5 million) on the amount an owner could spend at the auction. Cricket requires a team of at least 11 players; one expensive player has to be at the expense of a few. Nor was the selection of the team without logic. A source familiar with the thought behind the choice says, "The idea was to shore up the bowling; the logic was that batsmen would be likely to perish at the first mistake, but bowlers would have 24 balls to bowl. The team was thus packed with top bowlers." Unfortunately, problems cropped up. Nathan Bracken got injured, ditto Anil Kumble, and Dale Steyn was not released by Cricket South Africa for the first three games. And Jacques Kallis, among the world's best allrounders, performed below par. This source says Mallya was indeed keen on some other players. "Obviously, in an auction, you cannot always get the players you want," he added.

Firm grip: Unlike Dravid, Warne is firmly in control in Jaipur

But men with fat wallets and fatter egos want their money's worth. "IPL is cricket, but the foundation of this is money," says a senior Delhi Daredevils official. "The owners spent millions of dollars on teams, and they want to have their say. And whether you like it or not, you have to listen." Having bought a 'commodity', they're stomping with self-importance on turfs where the game's biggest administrators tread softly. "Even Sharad Pawar has never attended a team meeting," says a Daredevils insider. "But these corporate people attend meetings, and fools among them even try to tell players and coaches how to play!"

Corporate interference is, understandably, less when the team is racking up victories. For instance, when there were attempts to include the son of a powerful bcci administrator in Shane Warne's Rajasthan Royals, Warne put his foot down. The young man would never have made it to the playing XI, but could have been richer by Rs 1.8 lakh through daily allowance. "Warne said he was not good enough to be even among the irregulars," says a Royals source. "Warne had to warn them off, saying, 'You handle the administration and we handle the cricket,'" says the source. "Else, he said, he and other Australians in the team would walk away."

Another team with minimal meddling is Mumbai Indians. "That's because of two factors—Mukesh Ambani's restrained style and the presence of Sachin Tendulkar," says a source. "No one would dare try to tell Tendulkar how to play cricket!" Mumbai's coach, Lalchand Rajput, confirmed this to Outlook: "Even after four defeats, we were not put under pressure. Even I was a bit surprised by this, but they only said as long as you put in your best efforts, it is fine."

Likewise with Kolkata Knight Riders. Co-owner Shahrukh Khan, who dons the mantle of a cheerleader, works the fans to a frenzy but when it comes to the cricket, he keeps out. Being a filmstar helps, for he's aware of the capricious nature of the nation's two obsessions, cricket and cinema.

On the face of it, sport lends itself beautifully to some of the basic tenets of corporate culture—dispassionate evaluation, for instance.Who could argue against tons of runs or wickets? Corporate culture has also helped market cricket and earn big bucks for players. But it can also be a bane. Cold corporate logic cannot comprehend a perfect outswinger from an opponent, an umpiring error or a stunning catch. There are also excessive checks and balances. "I'm tired of the red-tape involved, the need to keep a 100 people in the loop on every small decision or action I take," an official of the Jaipur team told Outlook.

From the corporate world has also come the dreaded trait of layoffs. Kolkata released five of their players since they had little chance of playing the remaining six games; they remain contracted, though, and would not lose monetarily. But Ranadeb Bose, the most prominent of the five, declared he was disappointed. The decision to release the five was taken by coach John Buchanan, insisted Joy Bhattacharya, the team director. He claimed it was not an exercise in cost-cutting—it would have cost the team about Rs 70,000 a day to keep the five. But others say that with profits still very far in the horizon, IPL teams are under pressure because of the billions invested in the game.

IPL has turned sport into a commodity. And though its votaries cite European football leagues as their model, there's a crucial difference, say critics. Unlike IPL, massive salaries in English football are for a game that's very serious: football, not a crossbreed—not, say, a 20-minute game that's played by five people with a goal double the actual size. "The owners must understand the nature of the beast," says a Bangalore insider. "You might be a champion parrot trainer, but that doesn't make you a champion lion trainer. You must understand the nature of the beast, else the lion will eat you."

But, for now, it's the game that's changing its colour in the face of a predator.







 
 
Trust the compulsive showman to trump it all: Shah Rukh Khan's Pied Piper act, Rajasthan Chief Minister Vasundhara Raje Scindia's custommade leheriya sari with Jaipur's IPL colours and Preity Zinta's wide-eyed enthusiasm.
With a spectacular display of toy-flinging petulance, Vijay Mallya, beer baron, airline magnate, tycoon-atlarge, F-1 team owner, managed to turn the spotlight onto himself.
As his Rs 445-crore Bangalore Royal Challengers Indian Premier League (IPL) team hit the rock bottom, Mallya sacked his CEO Charu Sharma and then distanced himself from the team selection, dishing out low blows to captain Rahul Dravid in the bargain.
The Challengers have lost seven matches out of nine and have little to play for now other than Mallya's ire and the increasing amusement of his sniggering social set.
For Indian cricket, this has been an illuminating episode. After all, even before the IPL, the corporate world was its most snuggly bedfellow.
Mallya's swift abandonment of his struggling team has shown just how far big business' attachmentto cricket goes—only until the next victory, exactly like the fickle, effigy-burning fan.
Except that this fan wields a fat cheque book that few inside Indian cricket have been able to resist.
The Challengers and their soreloser boss may be at the extreme end of this phenomenon, but IPL's cricketers have all felt the heavy breath of corporate impatience after a few defeats.
In his newspaper column, M.S. Dhoni noted how supportive his management at the Chennai Super Kings was.
Even so, after Kings lost three in a row, sources say the team received a firm speech to remind them of just what the stakes were and how there were investors to answer to.
As the Delhi Daredevils slid down the points table, its directors looked through the team personnel they had engulfed in bear hugs after victory. "A message has been sent out to the team, you can sense the nervous edge," said a Delhi Daredevils squad member.
With every reverse, franchises see their operational expenses of anything between Rs 30-50-crore this season going down the tube, taking their brand value with it. To them, leaning on players is like cracking down on underperforming departments.
Mallya's sacking of CEO Sharma certainly cranked up the anxiety levels. As Bangalore lost, Sharma had become the buffer between the increasingly badtempered "Company" and the players.
With Mallya turning the heat on his subordinates, executives began to sit in on Challengers team meetings, once reportedly button-holing the team data analyst to crunch numbers for them.
Challengers' Chief Cricketing Officer Martin Crowe then presented the executives' statistical theories to flummoxed players. The next day, the batting collapsed and the team lost again.
A Challengers insider says, "Corporate guys think if you practice four hours instead of having the normal two-hour net, you will play twice as well." Coach Venkatesh Prasad only narrowly saved his job when Dravid hinted he too would walk out if Prasad was removed.
Not everyone's public facade has cracked as openly as Mallya's but in private the franchise business has shown up its less attractive face.
One boss demanded an explanation from a cricketer as to why their team was dropping catches. When a captain tried to assuage an angry management man by saying that the players were trying their damnedest, he had his head bitten off.
The cricketers are not amused. An India player says, "The franchises are being obnoxious. We wouldn't dream of telling them how to run their businesses. The last thing you need is them telling you how to play cricket."
The freemarket cheerleaders claim that corporate accountability is IPL's biggest gift to Indian cricket. It could have been had those making calls on cricketers been experts or master practitioners of the sport they now own.
A Mumbai Indians senior executive sat up in panic during a game, saying he thought his team were a man short. Quickly, two minions launched on a panicky head-count to reassure the boss.
When rousing cheers for Lasith Malinga rang out, it was pointed out that the man being cheered was not the unmistakable Malinga with the curly bottle-blond tints, but Dilhara Fernando.
The end of IPL on June 1 will signal the beginning of the franchise's own financial reckoning. Already there are rumblings about cutbacks: Delhi has got rid of its cheerleading squad saying they were no longer needed.
Two teams—the King's XI Punjab and the Kolkata Knight Riders (KKR)—'released' their contracted players, on grounds that they needed to concentrate on the core team as the semi-finals drew close.
KKR team director Joy Bhattacharjya denied cost-cutting. Keeping six more players on the squad until the end of IPL he said, would have amounted to an expense of Rs 1.2 lakh more.
"That's peanuts. Why would we do something that would cause a major PR issue in order to save peanuts? That would not be ruthless, that would be stupid."
King's XI CEO Neil Maxwell said his team had taken on an extended player pool to give locals a chance to work with the world's leading cricketers for a specific period. "We were trying to do the right thing and had to deal with a backlash instead."
For overseas players—and the vast cast of foreign coaches—IPL is just an opportunity to swirl right in with India's cricketing circus, earn generous pay packets and enjoy the late-night postgame parties.
India's stars, though, feel the change in temperatures acutely. When Sourav Ganguly's KKR lost three matches in a row, a teammate watching him in his next game remarked, "The only time I've seen Sourav so much under pressure was in the World Cup final."
Indian cricket's biggest names are feeling the weight of their enormous salaries, dealing with bean counters rather than selectors as judges and playing the fastest and least familiar format of the game, with its low comeback rate.
A franchise executive says, "It's almost as if the players are more tense in IPL than with India— this is cricket at its most commercial and every one is feeling jumpy."
Inadvertently, Vijay Mallya's I-was-robbed routine has put the franchise's alter ego on mainstage. Cricketers are discovering that the smiling fan with the fat cheque book can also become the cry-baby boss with the pink slip.


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