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Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts

Tuesday 22 November 2022

Hypocrisy's Penalty Corner

Jawed Naqvi in The Dawn


THERE’S been severe criticism, primarily in the Western media, of the gross exploitation of migrant workers in Qatar’s bid to host football’s World Cup that began in Doha last week. There’s more than a grain of truth in the accusation, and there’s dollops of hypocrisy about it.


FIFA President Gianni Infantino brought it out nicely by calling out the Western media’s double standards in what is tantamount to shedding crocodile tears for the exploited workers.

The CNN, unsurprisingly, slammed Infantino’s anger, and quoted human rights groups as describing his comments as “crass” and an “insult” to migrant workers. Why is Infantino convinced that the Western media wallows in its own arrogance?

It is nobody’s secret that migrant workers in the Gulf are paid a pittance, which becomes more deplorable when compared to the enormous riches they help produce. As is evident, the workers’ exploitation is not specific to Qatar’s hosting of a football tournament, but a deeper malaise in which Western greed mocks its moral sermons.

As their earnings with hard labour abroad fetch them more than what they would get at home, the workers become unwitting partners in their own abuse. This has been the unwritten law around the generation of wealth in oil-rich Gulf countries, though their rulers are not alone in the exploitative venture.

Western colluders, nearly all of them champions of human rights, have used the oil extracted with cheap labour that plies Gulf economies, to control the world order. The West and the Gulf states have both benefited directly from dirt cheap workforce sourced from countries like India, Sri Lanka, Pakistan, Bangladesh and the far away Philippines.

Making it considerably worse is the sullen cutthroat competition that has prevailed for decades between workers of different countries, thereby undercutting each other’s bargaining power. The bruising competition is not unknown to their respective governments that benefit enormously from the remittances from an exploited workforce. The disregard for work conditions is not only related to the Gulf workers, of course, but also migrant labour at home. In the case of India, we witnessed the criminal apathy they experienced in the Covid-19 emergency.

Asian women workers in the Gulf face quantifiably worse conditions. An added challenge they face is of sexual exploitation. Cheap labour imported from South Asia, therefore, answers to the overused though still germane term — Western imperialism. Infantino was spot on. Pity the self-absorbed Western press booed him down.

Sham outrage over a Gulf country hosting the World Cup is just one aspect of hypocrisy. A larger problem remains rooted in an undiscussed bias.

Moscow and Beijing in particular have been the Western media’s leading quarries from time immemorial. The boycott of the Moscow Olympics over the USSR’s invasion of Afghanistan was dressed up as a moral proposition, which it might have been but for the forked tongue at play. That numerous Olympic contests went ahead undeterred in Western cities despite their illegal wars or support for dictators everywhere was never called out. What the West did with China, however, bordered on distilled criminality.

I was visiting Beijing in September 1993 with prime minister Narasimha Rao’s media team. The streets were lined with colourful buntings and slogans, which one mistook for a grand welcome for the visiting Indian leader. As it turned out the enthusiasm was all about Beijing’s bid to host the 2000 Olympics. It was fortunate Rao arrived on Sept 6 and could sign with Li Peng a landmark agreement for “peace and tranquility” on the Sino-Indian borders. Barely two week later, China would collapse into collective depression after Sydney snatched the 2000 Olympics from Beijing’s clasp. Western perfidy was at work again.

As it happened, other than Sydney and Beijing three other cities were also in the running — Manchester, Berlin and Istanbul — but, as The New York Times noted: “No country placed its prestige more on the line than China.” When the count began, China led the field with a clear margin over Sydney. Then the familiar mischief came into play.

Beijing led after each of the first three rounds, but was unable to win the required majority of the 89 voting members. One voter did not cast a ballot in the final two rounds. After the third round, in which Manchester won 11 votes, Beijing still led Sydney by 40 to 37 ballots. “But, confirming predictions that many Western delegates were eager to block Beijing’s bid, eight of Manchester’s votes went to Sydney and only three to the Chinese capital,” NYT reported. Human rights was cited as the cause. Hypocritically, that concern disappeared out of sight and Beijing hosted a grand Summer Olympics in 2008.

Football is a mesmerising game to watch. Its movements are comparable to musical notes of a riveting symphony. Above all, it’s a sport that cannot be easily fudged with. But its backstage in our era of the lucre stinks of pervasive corruption.

Anger in Beijing burst into the open when it was revealed in January 1999 that Australia’s Olympic Committee president John Coates promised two International Olympic Committee members $35,000 each for their national Olympic committees the night before the vote, which gave the games to Sydney by 45 votes to 43.

The Daily Mail described the “usual equanimity” with which Juan Antonio Samaranch, the then Spanish IOC president, tried to diminish the scam. The allegations against nine of the 10 IOC members accused of graft “have scant foundation and the remaining one has hardly done anything wrong”.

“In a speech to his countrymen,” recalled the Mail, “he blamed the press for ‘overreacting’ to the underhand tactics, including the hire of prostitutes, employed by Salt Lake City to host the next Winter Olympics.” Samaranch sidestepped any reference to the tactics employed by Sydney to stage the Millennium Summer Games.

This reality should never be obscured by other outrages, including the abominable working conditions of Asian workers in Qatar.

Wednesday 29 April 2020

Airlines and oil giants are on the brink. No government should offer them a lifeline

This crisis is a chance to rebuild our economy for the good of humanity. Let’s bail out the living world, not its destroyers writes George Monbiot in The Guardian 

 
‘Governments have the oil industry over a barrel – hundreds of millions of unsaleable barrels, to be more precise – just as they had the banks over a barrel in 2008.’ Photograph: BEAWIHARTA/REUTERS


Do Not Resuscitate. This tag should be attached to the oil, airline and car industries. Governments should provide financial support to company workers while refashioning the economy to provide new jobs in different sectors. They should prop up only those sectors that will help secure the survival of humanity and the rest of the living world.

They should either buy up the dirty industries and turn them towards clean technologies, or do what they often call for but never really want: let the market decide. In other words, allow these companies to fail.

This is our second great chance to do things differently. It could be our last. The first, in 2008, was spectacularly squandered. Vast amounts of public money were spent reassembling the filthy old economy, while ensuring that wealth remained in the hands of the rich. Today, many governments appear determined to repeat that catastrophic mistake.

The “free market” has always been a product of government policy. If antitrust laws are weak, a few behemoths survive while everyone else goes down. If dirty industries are tightly regulated, clean ones flourish. If not, the corner-cutters win. But the dependency of enterprises on public policy has seldom been greater in capitalist nations than it is today. Many major industries are now entirely beholden to the state for their survival. Governments have the oil industry over a barrel – hundreds of millions of unsaleable barrels, to be more precise – just as they had the banks over a barrel in 2008. Then, they failed to use their power to eradicate the sector’s socially destructive practices and rebuild it around human needs. They are making the same mistake today.

The Bank of England has decided to buy debt from oil companies such as BP, Shell and Total. The government has given easyJet a £600m loan even though, just a few weeks ago, the company frittered away £171m in dividends: profit is privatised, risk is socialised. In the US, the first bailout includes $60bn (£48bn) for airlines. Overall, the bailout involves sucking as much oil as possible into strategic petroleum reserves and sweeping away pollution laws, while freezing out renewable energy. Several European countries are seeking to rescue their airlines and car manufacturers.

Don’t believe them when they tell you they do this on our behalf. A recent survey by Ipsos of 14 countries suggests that, on average, 65% of people want climate change to be prioritised in the economic recovery. Everywhere, electorates must struggle to persuade governments to act in the interests of the people, rather than the corporations and billionaires who fund and lobby them. The perennial democratic challenge is to break the bonds between politicians and the economic sectors they should be regulating, or, in this case, closing down.

Even when legislators seek to represent these concerns, their efforts are often feeble and naive. The recent letter to the government from a cross-party group of MPs calling for airlines to receive a bailout only if they “do more to tackle the climate crisis” could have been written in 1990. Air travel is inherently polluting. There are no realistic measures that could, even in the medium term, make a significant difference. We now know that the carbon offsetting schemes the MPs call for is useless: every economic sector needs to maximise cuts in greenhouse gases, so shifting the responsibility from one sector to another solves nothing. The only meaningful reform is fewer flights. Anything that impedes the contraction of the aviation industry impedes the reduction of its impacts.

The current crisis gives us a glimpse of how much we need to do to pull out of our disastrous trajectory. Despite the vast changes we have made in our lives, global carbon dioxide emissions are likely to reduce by only about 5.5% this year. A UN report shows that to stand a reasonable chance of avoiding 1.5C or more of global heating, we need to cut emissions by 7.6% per year for the next decade. In other words, the lockdown exposes the limits of individual action. Travelling less helps, but not enough. To make the necessary cuts we need structural change. This means an entirely new industrial policy, created and guided by government. 

Governments like the UK’s should drop their road-building plans. Instead of expanding airports, they should publish plans for reducing landing slots. They should commit to an explicit policy of leaving fossil fuels in the ground.

During the pandemic, many of us have begun to discover how much of our travel is unnecessary. Governments can build on this to create plans for reducing the need to move, while investing in walking, cycling and – when physical distancing is less necessary – public transport. This means wider pavements, better cycle lanes, buses run for service not profit. They should invest heavily in green energy, and even more heavily in reducing energy demand – through, for example, home insulation and better heating and lighting. The pandemic exposes the need for better neighbourhood design, with less public space given to cars and more to people. It also shows how badly we need the kind of security that a lightly taxed, deregulated economy cannot deliver.

In other words, let’s have what many people were calling for long before this disaster hit: a green new deal. But please let’s stop describing it as a stimulus package. We have stimulated consumption too much over the past century, which is why we face environmental disaster. Let us call it a survival package, whose purpose is to provide incomes, distribute wealth and avoid catastrophe, without stoking perpetual economic growth. Bail out the people, not the corporations. Bail out the living world, not its destroyers. Let’s not waste our second chance.

Tuesday 4 December 2018

Opec: why Trump has Saudi Arabia over a barrel

David Sheppard and Ed Crooks in The FT

ReneĂ© Earls has lived her whole life in west Texas, and watched oil booms come and go, but she has never seen anything like the buzz of activity in the industry today. “We are a hopping spot,” she says. “If you’re not working here, that’s because you’re not looking for a job, or you are unemployable . . . If you have a skill and want to work, you can name your price.” 

Ms Earls is chief executive of the chamber of commerce in Odessa, in the heart of the Permian basin, the shale formation stretching from west Texas into New Mexico that is the red-hot centre of the latest US oil boom. Production in the region rose by 1m barrels a day in the year to August, contributing to a record-breaking 2.1m b/d increase in US output that has made the country the world’s largest crude producer. 

The shale boom has not only transformed once rundown towns deep in the west Texas desert; it is increasingly reshaping the landscape of international politics. The emergence of the US as a born-again energy superpower — one of the key factors in the recent fall in oil prices — has led politicians in Washington to weigh how it might reshape some of its oldest alliances, raising uncomfortable questions for the oil producers of the Middle East .  

For Saudi Arabia, the US’s chief ally in the Arab world, the past two months have delivered a stark lesson in how its relationship with Washington has been redefined by the Texas oil revolution. 

On Thursday and Friday ministers from Opec, the oil cartel that controls roughly a third of global production, and its allies including Russia and Kazakhstan, will meet in Vienna to decide how to respond to the 30 per cent plunge in oil prices to around $60 a barrel over the past two months. With US output surging, and Russia and Saudi Arabia also producing at close to record levels, traders are convinced the market will be awash with oil next year. 

Previously such a fall would have prompted Opec and its allies to agree to cut production. But for Saudi Arabia, which remains the world’s top oil exporter and the cartel’s de facto leader, that decision has been complicated by the murder of Jamal Khashoggi. 

The gruesome killing of the Saudi Arabian journalist and Washington Post columnist, a critic of the royal family, has revealed fissures in its prized relationship with the US. 

US president Donald Trump has maintained his backing for Riyadh and Crown Prince Mohammed bin Salman, the country’s day-to-day ruler widely known as MBS, despite reports that the CIA has concluded that he ordered the operation against Khashoggi at the kingdom’s consulate in Istanbul. But his stance comes with conditions attached, one of which lies at the heart of the kingdom’s wellbeing: the oil price. 

In statements, tweets and private communications Mr Trump has made clear his support for lower oil prices and his opposition to Riyadh moving to cut production, heaping pressure on a royal court shaken by the international backlash against the Khashoggi killing. The pressure from the White House has come despite Saudi Arabia raising production this summer to help make sure the market remained well supplied as the US reimposed sanctions on Iran. Riyadh’s position as Tehran’s chief rival in the region reflects a core part of the Trump administration’s foreign policy. 

“The priority for Saudi Arabia is shoring up MBS’s position, and the key part of that is securing Trump’s backing,” says Derek Brower, a director of RS Energy Group. “Trump has clearly linked his support for MBS with several things . . . but it’s oil that seems to be at the top of his agenda.” 

For the Trump administration, the calculation is straightforward. Lower oil prices mean cheaper petrol, providing a boost for consumers. The president has hailed the recent fall in prices as a “tax cut”, giving him some good news after a stock market wobble triggered by his confrontation with China over trade. 

For Saudi Arabia, that creates a dilemma. Khalid al-Falih, its energy minister, has pushed ahead with plans to drum up support for cutting oil production by more than 1m b/d, but observers think he will be constrained by the need to appease Mr Trump. 

Bob McNally, a consultant who has advised US administrations on oil policy, says Riyadh’s position is precarious. “If they orchestrate a high-profile Opec-plus cut that boosts Brent crude back up towards $70 they risk Trump’s wrath,” he says. “[But] if Riyadh bends entirely to Trump’s will and keeps production at record levels, an inventory glut will return and the bottom will fall out of crude prices.” 

Ellen Wald, author of a history of Saudi Arabia’s oil industry, says the “ultimate success” for Riyadh from this week’s meeting would be “to quietly let people know that a cut is happening to raise the price, without drawing attention to the activity of Opec specifically.” 

Yet history suggests that kind of mixed message risks pleasing no one — angering Mr Trump while not doing much to raise prices. 

The stakes for Saudi Arabia are higher than just a single decision on output. Its alliance with the US has long been underpinned by oil supplies, with the resultant petrodollars recycled back into the American economy through the purchase of military hardware. 

After a fall in prices in 2014, Riyadh renewed its attempts to diversify and modernise both its economy and wider society, aiming to reduce its dependence on oil revenues. But for the programme to have a chance of success, Saudi Arabia needs a higher oil price in the short term to help fund the changes. 

The shale boom is eroding the foundations of one of the pillars of the alliance. US net oil imports, which peaked at about 13m b/d in 2005, have dropped to about 2.4m b/d this year. By the end of next year, they could be running at just 330,000 b/d, according to the US Energy Information Administration. 

Saudi Arabia’s crude supplies remain crucial to the world economy, and to US consumer fuel prices. But Amy Myers Jaffe, a senior fellow at the Council on Foreign Relations, says the US economy is much less vulnerable to a spike in prices than it was even a decade ago. 

The evidence of the crude price fall four years ago and subsequent recovery is that the impact of changes on the American economy is now roughly neutral. “The US is not in the position it was in 2007-08, when we were facing a rising oil price that put strain on the current account deficit and the dollar,” she says. “That’s a big change.” 

As politicians start to grasp the implications of that shift, it is strengthening the argument that the US no longer needs to shackle itself to Riyadh. 

“The atmosphere in Washington has certainly changed following the killing of Jamal Khashoggi,” says Helima Croft, a former CIA analyst who now runs RBC Capital Markets’ natural resources analysis. “Politicians see the surge in US oil production and are wondering aloud whether the alliance is as necessary as it once was.” 

Those questions are also starting to drive activity in Congress. Last week, the Senate voted 63-37 to advance a resolution demanding that the president end US armed forces’ activity “in or affecting Yemen”, where Saudi Arabia’s war against Iran-aligned Houthi rebels has exacerbated what aid groups describe as the world’s worst humanitarian crisis. 

Legislation that would allow the US to impose criminal penalties on members of Opec and their allies for acting as a cartel has also been making progress. For Saudi Arabia, which has extensive assets in the US including the largest refinery in North America, that legislation is a genuine threat. 

Tim Kaine, the Democratic senator from Virginia who was a co-sponsor of the bipartisan legislation on Yemen, suggested the Khashoggi death had been the last straw for some. “It was really important for the Senate to send a message to Saudi Arabia: ‘you do not have a free pass’,” Mr Kaine told National Public Radio last week. “The president’s signal of complete impunity is not in accord with American values.” 

In the autumn of 2014, the Saudi government tried to reassert its authority in the oil market against the nascent threat from shale. As a global glut of crude swelled up, Riyadh declined to cut production, in the belief it could drown the Texas producers in a sea of cheap oil. 

But shale proved far more resilient than Saudi Arabia — the only country with significant spare production capacity — had hoped. Two years on Opec members returned to restricting output, with the help of Russia and other non-member producers, to lay the foundations for a recovery in prices. 

As the oil price has fallen this autumn, the memories of that episode have been resurfacing. But Jason Bordoff of Columbia University’s Center on Global Energy Policy says there is at least one crucial difference. “We now know how resilient shale can be. We saw how companies could cut costs and become more efficient to keep producing. That complicates Opec’s decision-making,” he says. “This time around, Opec knows it can’t kill shale, but maybe just wound it.” 

Ms Earls says the people of Odessa have been watching as oil prices have plunged in the past two months. Fundamentally, though, they “still feel very confident”, she adds, because of the producers’ long-term commitment. The Permian Strategic Partnership, an industry-backed group that works with communities to help develop badly-needed infrastructure including roads, houses and schools, estimates a further 60,000 jobs will be createdby 2025, a huge increase for an area that had a population of about 330,000 last year. 

The rate at which new wells are brought into production in the Permian was already expected to slow, in part because of a shortage of pipeline capacity. If the fall in prices is sustained, it could mean the industry slows further across the US, raising questions too for the White House. 

The gains to consumers from lower fuel prices will be offset by the hit to investment. The oil-dependent economies of Texas and North Dakota would bear the brunt of the hit, but it would also extend to other industries such as steelmaking, which has benefited from the boom in pipeline construction. 

Bernadette Johnson, vice-president of market intelligence at Drillinginfo, a research group, says there are several oil producing regions, such as the Denver-Julesburg Basin of Colorado, Wyoming and Nebraska, where a fall in US crude from $60 to $50 would make a significant difference to the economics. 

“The companies think that it may just be a temporary thing, and that prices will rebound,” she says. “If the oil price stays where it is, we will see companies start to react.” 

Yet while there may be a temporary slowdown, there is a general confidence in the US industry that its growth can continue. US officials say they are not concerned about the impact of lower oil prices, arguing that the industry will be able to continue to grow thanks to technological improvements and efficiency gains. Others are more sceptical, noting that US production contracted in 2016 when prices were at their nadir. 

Will Giraud, executive vice-president of Concho Resources, one of the leading producers in the Permian Basin — where production is approaching 3.7m b/d — told investors last month: “I think there are several more years of very high growth, and it’s likely that the Permian gets into the 5m-6m or maybe even 7m b/d of production and then sustains that for a decent period.” 

In the face of rampant US shale output, Saudi Arabia looks like it may still decide that angering Mr Trump is a price worth paying for a production cut that props up the oil price, whatever the heightened risks from the Khashoggi affair. But regardless of what the Saudis decide, the flow of oil from places such as Odessa will keep quietly eroding one of the old certainties that underpinned their relationship with the US. As Mr Brower at RS Energy puts it: “The pressures that Saudi Arabia are under are already immense.”

Thursday 12 October 2017

Data is not the new oil

How do you know when a pithy phrase or seductive idea has become fashionable in policy circles? When The Economist devotes a briefing to it.


Amol Rajan in BBC

In a briefing and accompanying editorial earlier this summer, that distinguished newspaper (it's a magazine, but still calls itself a newspaper, and I'm happy to indulge such eccentricity) argued that data is today what oil was a century ago.

As The Economist put it, "A new commodity spawns a lucrative, fast-growing industry, prompting anti-trust regulators to step in to restrain those who control its flow." Never mind that data isn't particularly new (though the volume may be) - this argument does, at first glance, have much to recommend it.

Just as a century ago those who got to the oil in the ground were able to amass vast wealth, establish near monopolies, and build the future economy on their own precious resource, so data companies like Facebook and Google are able to do similar now. With oil in the 20th century, a consensus eventually grew that it would be up to regulators to intervene and break up the oligopolies - or oiliogopolies - that threatened an excessive concentration of power.

Many impressive thinkers have detected similarities between data today and oil in yesteryear. John Thornhill, the Financial Times's Innovation Editor, has used the example of Alaska to argue that data companies should pay a universal basic income, another idea that has become highly fashionable in policy circles.

Image copyrightGETTY IMAGESImage caption A drilling crew poses for a photograph at Spindletop Hill in Beaumont, Texas where the first Texas oil gusher was discovered in 1901.

At first I was taken by the parallels between data and oil. But now I'm not so sure. As I argued in a series of tweets last week, there are such important differences between data today and oil a century ago that the comparison, while catchy, risks spreading a misunderstanding of how these new technology super-firms operate - and what to do about their power.

The first big difference is one of supply. There is a finite amount of oil in the ground, albeit that is still plenty, and we probably haven't found all of it. But data is virtually infinite. Its supply is super-abundant. In terms of basic supply, data is more like sunlight than oil: there is so much of it that our principal concern should be more what to do with it than where to find more, or how to share that which we've already found.

Data can also be re-used, and the same data can be used by different people for different reasons. Say I invented a new email address. I might use that to register for a music service, where I left a footprint of my taste in music; a social media platform on which I upload photos of my baby son; and a search engine, where I indulge my fascination with reggae.

If, through that email address, a data company were able to access information about me or my friends, the music service, the social network and the search engine might all benefit from that one email address and all that is connected to it. This is different from oil. If a major oil company get to an oil field in, say, Texas, they alone will have control of the oil there - and once they've used it up, it's gone.


Legitimate fears

This points to another key difference: who controls the commodity. There are very legitimate fears about the use and abuse of personal data online - for instance, by foreign powers trying to influence elections. And very few people have a really clear idea about the digital footprint they have left online. If they did know, they might become obsessed with security. I know a few data fanatics who own several phones and indulge data-savvy habits, such as avoiding all text messages in favour of WhatsApp, which is encrypted.

But data is something which - in theory if not in practice - the user can control, and which ideally - though again the practice falls well short - spreads by consent. Going back to that oil company, it's largely up to them how they deploy the oil in the ground beneath Texas: how many barrels they take out every day, what price they sell it for, who they sell it to.

With my email address, it's up to me whether to give it to that music service, social network, or search engine. If I don't want people to know that I have an unhealthy obsession with bands such as The Wailers, The Pioneers and The Ethiopians, I can keep digitally schtum.

Now, I realise that in practice, very few people feel they have control over their personal data online; and retrieving your data isn't exactly easy. If I tried to reclaim, or wipe from the face of the earth, all the personal data that I've handed over to data companies, it'd be a full time job for the rest of my life and I'd never actually achieve it. That said, it is largely as a result of my choices that these firms have so much of my personal data.

Image copyrightGETTY IMAGESImage captionServers for data storage in Hafnarfjordur, Iceland, which is trying to make a name for itself in the business of data centres - warehouses that consume enormous amounts of energy to store the information of 3.2 billion internet users.

The final key difference is that the data industry is much faster to evolve than the oil industry was. Innovation is in the very DNA of big data companies, some of whose lifespans are pitifully short. As a result, regulation is much harder. That briefing in The Economist actually makes the point well that a previous model of regulation may not necessarily work for these new companies, who are forever adapting. That is not to say they should not be regulated; rather, that regulating them is something we haven't yet worked out how to do.

It is because the debate over regulation of these companies is so live that I think we need to interrogate superficially attractive ideas such as 'data is the new oil'. In fact, whereas finite but plentiful oil supplied a raw material for the industrial economy, data is a super-abundant resource in a post-industrial economy. Data companies increasingly control, and redefine, the nature of our public domain, rather than power our transport, or heat our homes.

Data today has something important in common with oil a century ago. But the tech titans are more media moguls than oil barons.

Saturday 11 March 2017

The Tinkerbell theory: I wish politicians would stop blaming their failures on my lack of belief

Who knew Peter Pan would become one of the key political texts of the twenty-first century?


Jonn Elledge in The New Statesman


The moment you doubt whether you can fly,” J M Barrie once wrote, "You cease for ever to be able to do it.” Elsewhere in the same book he was blunter, still: “Whenever a child says, ‘I don’t believe in fairies’, there’s a little fairy somewhere that falls right down dead.”
I would never have expected that Peter Pan would become one of the key political texts of the twenty-first century, if I’m honest. But predictions are not my strongpoint, and over the last few years, what one might term the Tinkerbell Theory of Politics has played an increasingly prominent role in national debate. The doubters’ lack of faith, we are told, is one of the biggest barriers to flight for everything from Jeremy Corbyn’s poll ratings to Brexit. Because we don’t believe, they can’t achieve.

It was in run up to the Scottish referendum that I first spotted Tinkerbell in the wild. Reports suggesting that RBS would consider relocating from Edinburgh, should independence lead to a significant rise in business costs – a statement of the bloody obvious, I’d have thought – were dismissed by then-First Minister Alex Salmond as merely “talking down Scotland”. Over the next few months, the same phrase was deployed by the SNP and its outriders whenever anyone questioned the Yes campaign’s optimistic estimates of future North Sea oil revenues.

The implications of all this were pretty clear: any practical problems apparently arising from independence were mere phantasms. The real threat to Scotland was the erosion of animal spirits caused by the faithlessness of unpatriotic unionists, who’d happily slaughter every fairy in the land before they risked an independent Scotland.

All this seemed pretty obnoxious to me, but at the time of the referendum it also all seemed to be a reassuringly long way away. Little did I realise that Salmond and co were just ahead of their time, because today, Tinkerbell-ism is bloody inescapable.

On Monday, Sir John Major made a wonkish speech laying out his concerns about Brexit. He talked about the threat to the Northern Ireland peace process, the way it would isolate Britain diplomatically, the difficulty of negotiating highly complicated trade deals on the timetable imposed by Article 50. He wanted, he said, to “warn against an over-optimism that – if unachieved – will sow further distrust between politics and the public, at a time when trust needs to be re-built”.

And how did Britain’s foreign secretary respond? “I think it’s very important that as we set out in this journey we are positive about the outcome for the very good reason the outcome will be fantastic for this country,” Boris said, probably imagining himself to be a bit like Cicero.

The problem, in other words, is not the government’s lack of a plan; the problem is its critics’ lack of faith. In a familiar phrase, the Telegraph headlined its report: “Boris Johnson criticises John Major for talking down UK’s post-Brexit prospects”.

The left is no better. In any discussion of the failings of Corbyn’s leadership of the Labour party, it won’t be long before someone blames the polls, or the by-election results, on either the lack of support from the parliamentary Labour party, or the hostility of a media that never liked him in the first place. “Of course he’s struggling,” the implication runs. “Your lack of belief is a self-fulfilling prophecy.” Dead fairies, everywhere you turn.

It’s easy to see why the Tinkerbell strategy would be such an attractive line of argument for those who deploy it - one that places responsibility for their own f*ck-ups squarely on their critics, thus rendering them impervious to attack. Corbyn’s failure becomes the fault of the Blairites. A bad Brexit becomes the fault of Remoaners, and not those who were dim enough to believe it would easy to begin with. Best of all, the more right your critics turn out to be, the more you have to blame them for.

But being impervious to criticism is not the same as being right, and to think this strategy is a recipe for good government is to mistake a closed loop of true believers for objective reality. Jeremy Corbyn is unlikely to start winning elections, no matter how hard the faithful believe. However much you talk up Scotland, that oil is still going to run out

And whatever the right-wing press do to convince themselves that Boris Johnson is right, and John Major is wrong, it is unlikely to affect the negotiating position of the 27 other states in the slightest. At the end of the day, our faith matters a lot less than the facts on the ground. There is no such things as fairies.

Wednesday 30 November 2016

Frightened by Donald Trump? You don’t know the half of it

George Monbiot in The Guardian

Yes, Donald Trump’s politics are incoherent. But those who surround him know just what they want, and his lack of clarity enhances their power. To understand what is coming, we need to understand who they are. I know all too well, because I have spent the past 15 years fighting them.

Over this time, I have watched as tobacco, coal, oil, chemicals and biotech companies have poured billions of dollars into an international misinformation machine composed of thinktanks, bloggers and fake citizens’ groups. Its purpose is to portray the interests of billionaires as the interests of the common people, to wage war against trade unions and beat down attempts to regulate business and tax the very rich. Now the people who helped run this machine are shaping the government.

I first encountered the machine when writing about climate change. The fury and loathing directed at climate scientists and campaigners seemed incomprehensible until I realised they were fake: the hatred had been paid for. The bloggers and institutes whipping up this anger were funded by oil and coal companies.

Among those I clashed with was Myron Ebell of the Competitive Enterprise Institute (CEI). The CEI calls itself a thinktank, but looks to me like a corporate lobbying group. It is not transparent about its funding, but we now know it has received $2m from ExxonMobil, more than $4m from a group called the Donors Trust (which represents various corporations and billionaires), $800,000 from groups set up by the tycoons Charles and David Koch, and substantial sums from coal, tobacco and pharmaceutical companies.

For years, Ebell and the CEI have attacked efforts to limit climate change, through lobbying, lawsuits and campaigns. An advertisement released by the institute had the punchline “Carbon dioxide: they call it pollution. We call it life.”


Former campaign manager Corey Lewandowski, like other members of Trump’s team, came from a group called Americans for Prosperity. Photograph: UPI/Barcroft Images

It has sought to eliminate funding for environmental education, lobbied against the Endangered Species Act, harried climate scientists and campaigned in favour of mountaintop removal by coal companies. In 2004, Ebell sent a memo to one of George W Bush’s staffers calling for the head of the Environmental Protection Agency to be sacked. Where is Ebell now? Oh – leading Trump’s transition team for the Environmental Protection Agency.

Charles and David Koch – who for years have funded extreme pro-corporate politics – might not have been enthusiasts for Trump’s candidacy, but their people were all over his campaign. Until June, Trump’s campaign manager was Corey Lewandowski, who like other members of Trump’s team came from a group called Americans for Prosperity (AFP).

This purports to be a grassroots campaign, but it was founded and funded by the Koch brothers. It set up the first Tea Party Facebook page and organised the first Tea Party events. With a budget of hundreds of millions of dollars, AFP has campaigned ferociously on issues that coincide with the Koch brothers’ commercial interests in oil, gas, minerals, timber and chemicals.
In Michigan, it helped force through the “right to work bill”, in pursuit of what AFP’s local director called “taking the unions out at the knees”. It has campaigned nationwide against action on climate change. It has poured hundreds of millions of dollars into unseating the politicians who won’t do its bidding and replacing them with those who will.

I could fill this newspaper with the names of Trump staffers who have emerged from such groups: people such as Doug Domenech, from the Texas Public Policy Foundation, funded among others by the Koch brothers, Exxon and the Donors Trust; Barry Bennett, whose Alliance for America’s Future (now called One Nation) refused to disclose its donors when challenged; and Thomas Pyle, president of the American Energy Alliance, funded by Exxon and others. This is to say nothing of Trump’s own crashing conflicts of interest. Trump promised to “drain the swamp” of the lobbyists and corporate stooges working in Washington. But it looks as if the only swamps he’ll drain will be real ones, as his team launches its war on the natural world.

Understandably, there has been plenty of coverage of the racists and white supremacists empowered by Trump’s victory. But, gruesome as they are, they’re peripheral to the policies his team will develop. It’s almost comforting, though, to focus on them, for at least we know who they are and what they stand for. By contrast, to penetrate the corporate misinformation machine is to enter a world of mirrors. Spend too long trying to understand it, and the hyporeality vortex will inflict serious damage on your state of mind.

Don’t imagine that other parts of the world are immune. Corporate-funded thinktanks and fake grassroots groups are now everywhere. The fake news we should be worried about is not stories invented by Macedonian teenagers about Hillary Clinton selling arms to Islamic State, but the constant feed of confected scares about unions, tax and regulation drummed up by groups that won’t reveal their interests.

The less transparent they are, the more airtime they receive. The organisation Transparify runs an annual survey of thinktanks. This year’s survey reveals that in the UK only four thinktanks – the Adam Smith Institute, Centre for Policy Studies, Institute of Economic Affairs and Policy Exchange – “still consider it acceptable to take money from hidden hands behind closed doors”. And these are the ones that are all over the media.

When the Institute of Economic Affairs, as it so often does, appears on the BBC to argue against regulating tobacco, shouldn’t we be told that it has been funded by tobacco companies since 1963? There’s a similar pattern in the US: the most vocal groups tend to be the most opaque.

As usual, the left and centre (myself included) are beating ourselves up about where we went wrong. There are plenty of answers, but one of them is that we have simply been outspent. Not by a little, but by orders of magnitude. A few billion dollars spent on persuasion buys you all the politics you want. Genuine campaigners, working in their free time, simply cannot match a professional network staffed by thousands of well-paid, unscrupulous people.

You cannot confront a power until you know what it is. Our first task in this struggle is to understand what we face. Only then can we work out what to do,

Saturday 1 October 2016

Saudi Arabia is the flagging horse of the Gulf – but Britain is still backing it as an answer to Brexit

Patrick Cockburn in The Independent


Why does the British Government devote so much time and effort to cultivating the rulers of Bahrain, a tiny state notorious for imprisoning and torturing its critics? It is doing so when a Bahraini court is about to sentence the country’s leading human rights advocate, Nabeel Rajab, who has been held in isolation in a filthy cell full of ants and cockroaches, to as much as 15 years in prison for sending tweets criticising torture in Bahrain and the Saudi bombardment of Yemen.

Yet it has just been announced that Prince Charles and Camilla, Duchess of Cornwall, are to make an official visit to Bahrain in November with the purpose of improving relations with Britain. It is not as though Bahrain has been short of senior British visitors of late, with the International Trade Minister Liam Fox going there earlier in September to meet the Crown Prince, Prime Minister and commerce minister. And, if this was not enough, in the last few days the Foreign Office Minister of State for Europe, Sir Alan Duncan, found it necessary to pay a visit to Bahrain where he met King Hamad bin Isa al-Khalifa and the interior minister, Sheikh Rashid al-Khalifa, whose ministry is accused of being responsible for some of the worst human rights abuses on the island since the Arab Spring protests there were crushed in 2011 with the assistance of Saudi troops.

Quite why Sir Alan, who might be thought to have enough on his plate in dealing with his area of responsibility in Europe in the era of Brexit, should find it necessary to visit Bahrain remains something of mystery. Sayed Ahmed Alwadei, director of advocacy at the Bahrain Institute for Rights and Democracy, asks: “Why is Alan Duncan in Bahrain? He has no reasonable business being there as Minister of State for Europe” But Sir Alan does have a long record of befriending the Gulf monarchies, informing a journalist in July that Saudi Arabia “is not a dictatorship”.

The flurry of high level visits to Bahrain comes as Rajab, the president of the Bahrain Centre for Human Rights, awaits sentencing on next week on three charges stemming from his use of social media. These relates to Rajab tweeting and retweeting about torture in Bahrain’s Jau prison and the humanitarian crisis caused by Saudi-led bombing in Yemen. After he published an essay entitled “Letter From a Bahrain Jail” in the The New York Times a month ago, he was charged with publishing “false news and statements and malicious rumours that undermines the prestige of the kingdom”.

This “prestige” has taken a battering since 2011 when pro-democracy protesters, largely belonging to the Shia majority on the island, were savagely repressed by the security forces. Ever since, the Sunni monarchy has done everything to secure and reinforce its power, not hesitating to inflame Sunni-Shia tensions by stripping the country’s most popular Shia cleric, Sheikh Isa Qassim, of his citizenship on the grounds that he was serving the interests of a foreign power.

Repression has escalated since May with the suspension of the main Shia opposition party, al-Wifaq, and an extension to the prison sentence of its leader, Sheikh Ali Salman. The al-Khalifa dynasty presumably calculates that US and British objections to this clampdown are purely for the record and can safely be disregarded. The former Foreign Secretary Philip Hammond claimed unblushingly earlier this year that Bahrain was “travelling in the right direction” when it came to human rights and political reform. Evidently, this masquerade of concern for the rights of the majority in Bahrain is now being discarded, as indicated by the plethora of visits.

There are reasons which have nothing to do with human rights motivating the British Government, such as the recent agreement to expand a British naval base on the island with the expansion being paid for by Bahrain. In its evidence to the Select Committee on Foreign Affairs, the Government said that UK naval facilities on the island give “the Royal Navy the ability to operate not only in the Gulf but well beyond in the Red Sea, Gulf of Aden and North West Indian Ocean”. Another expert witness claimed that for Britain “the kingdom is a substitute for an aircraft carrier permanently stationed in the Gulf”.

These dreams of restored naval might are probably unrealistic, though British politicians may be particularly susceptible to them at the moment, imagining that Britain can rebalance itself politically and economically post-Brexit by closer relations with old semi-dependent allies such as the Gulf monarchies. These rulers ultimately depend on US and British support to stay in power, however many arms they buy. Bahrain matters more than it looks because it is under strong Saudi influence and what pleases its al-Khalifa rulers pleases the House of Saud.

But in kowtowing so abjectly to Saudi Arabia and the Gulf kingdoms, Britain may be betting on a flagging horse at the wrong moment.
Britain, France and – with increasing misgivings – the US have gone along since 2011 with the Gulf state policy of regime change in Libya and Syria. Saudi Arabia and Qatar, in combination with Turkey, have provided crucial support for the armed opposition to Bashar al-Assad. Foreign envoys seeking to end the Syrian war since 2011 were struck by British and French adherence to the Saudi position, even though it meant a continuance of the war which has destabilised the region and to a mass exodus of refugees heading for Western Europe.

Whatever the Saudis and Gulf monarchies thought they were doing in Syria, it has not worked. They have been sawing off the branch on which they are sitting by spreading chaos and directly or indirectly supporting the rise of al-Qaeda-type organisations like Isis and al-Nusra. Likewise in their rivalry with Iran and the Shia powers, the Sunni monarchies are on the back foot, having escalated a ferocious war in Yemen which they are failing to win.

In the past week Saudi Arabia has suffered two setbacks that are as serious as any of these others: on Wednesday the US Congress voted overwhelmingly to override a presidential veto enabling the families of 9/11 victims to sue Saudi Arabia. In terms of US public opinion, the Saudi rulers are at last paying a price for their role in spreading Sunni extremism and for the bombing of Yemen. The Saudi brand is becoming toxic in the US as politicians respond to a pervasive belief among voters that there is Saudi complicity in the spread of terrorism and war.

The second Saudi setback is different, but also leaves it weaker. At the Opec conference in Algiers, Saudi Arabia dropped its long-term policy of pumping as much oil as it could, and agreed to production cuts in order to raise the price of crude. A likely motivation was simple shortage of money. The prospects for the new agreement are cloudy but it appears that Iran has got most of what it wanted in returning to its pre-sanctions production level. It is too early to see Saudi Arabia and its Gulf counterparts as on an inevitable road to decline, but their strength is ebbing.

Saturday 14 May 2016

Corrupt elites will fight hard to stop the dismantling of the looting machines from which they draw their vast wealth

States that get all their revenues from selling their oil, gas and minerals could easily turn into kleptocracies where the majority stay poor

Patrick Cockburn in The Independent

A shooper at the Olaya mall in the Saudi capital of Riyadh. Ordinary citizens may be hit by efforts to tackle global corruption and patronageGetty


Can corruption be controlled by reform or is it so much the essential fuel sustaining political elites that it will only be ended – if it ends at all – by revolutionary change?

The answer varies according to which countries one is talking about, but in many - particularly those relying on the sale of natural resources like oil or minerals - it is surely too late to expect any incremental change for the better. Anti-corruption drives are a show to impress the outside world or to target political rivals.

The anti-corruption summit in London this week may improve transparency and disclosure, but it can scarcely be very effective against politically well-connected racketeers, busily transmuting political power into great personal wealth.

This is peculiarly easy to do in those countries in the Middle East and Africa which suffer from what economists call “the resource curse”, where states draw their revenues directly from foreign buyers of their natural resources. The process is described in compelling detail by Tom Burgis in his book, The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth. He quotes the World Bank as saying that 68 per cent of people in Nigeria and 43 per cent in Angola, respectively the first and second largest oil and gas producers in Africa, live in extreme poverty, or on less than $1.25 a day. The politically powerful live parasitically off the state’s revenues and are not accountable to anybody.


READ MORE
This is the essay on corruption that Cameron didn't want you to read

Burgis explains the devastating outcome of a government acquiring such great wealth without doing more than license foreign companies to pump oil or excavate minerals. This “creates a pot of money at the disposal of those who control the state. At extreme levels the contract between rulers and the ruled breaks down because the ruling class does not need to tax the people – so it has no need for their consent.”

He writes primarily about Africa south of the Sahara, but his remarks apply equally to the oil states of the Middle East. He rightly concludes that “the resource industry is hardwired for corruption. Kleptocracy, or government by theft, thrives. Once in power, there is little incentive to depart.” Autocracy flourishes, often same ruler staying for decades.

Most, but not all, of this is true of the Middle East oil producers. A difference is that most of these have patronage and client systems through which oil wealth funds millions of jobs. This goes a certain way in distributing oil revenues among the general population, though the benefits are unfairly skewed towards political parties or dominant sectarian and ethnic groups.

In Iraq there are seven million state employees and pensioners out of a population of 33 million who are paid $4bn a month or a big chunk of total oil income. Often these employees don’t do much or, on occasion, anything at all, but it is an exaggeration to imagine that Iraq’s oil money is all syphoned off by the ruling elite.

I remember in one poor Shia province in south Iraq talking to local officials who said that they had just persuaded the central government to pay for another 50,000 jobs, though they admitted that they had no idea what these new employees would be doing.

Reformers frequently demand that patronage be cut back in the interests of efficiency, but a more likely outcome of such a change is that a smaller proportion of the population would benefit from the state income.



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Saudi is about to attempt its own version of Mao's Great Leap Forward

This could be the result of Deputy Crown Prince Mohammed bin Salman’s radical plans to transform the way Saudi Arabia is run and end its reliance on oil by 2030. He may well find that the way Saudi society works has long gelled and face strong resistance to changing a system in which ordinary Saudis feel entitled to some sort of job and salary.

The “resource curse” is not readily reversible, because it eliminates other forms of economic activity. The price of everything produced in an oil state is too expensive to compete with the same goods made elsewhere so oil becomes the only export. Migrants pour in as local citizens avoid manual labour or employment with poor pay and conditions.

A further consequence of the curse is that the rulers of resource rich states – like many an individual living on an unearned income – get an excessive and unrealistic idea of their own abilities. Saddam Hussein was the worst example of such megalomania, starting two disastrous wars against Iran and Kuwait. But the Shah of Iran was not far behind the Iraqi leader in grandiose ideas, blithely ordering nuclear power stations and Concorde supersonic passenger aircraft.

Muammur Gaddafi insisted that Libyans study the puerile nostrums of the Green Book, and those failing that part of the public examinations about the book, were failed generally and had to re-take all their exams again.

Can “the looting machine” in the Middle East, Africa and beyond be dismantled or made less predatory?



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Catholic leaders are undoing the good work of Pope Francis on migrants

Its gargantuan size and centrality to the interest of ruling classes probably makes its elimination impossible, though competition, transparency and more effective bureaucratic procedures in the award of contracts might have some effect. The biggest impulse to resistance locally to official corruption has come because the fall in the price of oil and other commodities since 2014 means that the revenue cake has become too small to satisfy all the previous beneficiaries.

The mechanics and dire consequences of this system are easily explained though often masked by neo-liberal rhetoric about free competition.

In authoritarian states without accountability or a fair legal system, this approach becomes a license to loot. Corruption cannot be tamed because it is at the very heart of the system.

Friday 29 April 2016

Tony Blair: the former PM for hire

Randeep Ramesh in The Guardian


Emails show oil firm questioned complex structure of Blair’s company, and reveal his closeness to Chinese leadership


 

Tony Blair meets China’s then vice-premier, now premier, Li Keqiang in Beijing in 2011. Photograph: Rex/Shutterstock



When Jonathan Powell, the gatekeeper to the corporate empire of Tony Blair, sat down to lunch with the former Saudi intelligence chief Prince Faisal Al Turki in June 2010 he could not have known how lucrative it would turn out to be for the former British prime minister.

As the high-profile mediator of the stuttering peace process in the Israeli-Palestinian conflict, Blair had to be careful not to mix business with pleasure. However, one of those lunching with Powell at the annual “global mediator’s retreat”, organised by the Norwegian Ministry of Foreign Affairs, was looking to make a deal.

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Bird and Fortune on Blair's socialism





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Nawaf Obaid, a security analyst who accompanied Prince Faisal, emailed Powell a week later, according to documents seen by the Guardian, with a suggestion to work with his brother Tarek’s company, PetroSaudi, which he “co-founded and co-owns with Prince Turki bin Abdullah, son of King Abdullah”.

“They have several projects that [they] are working [on] and I think it would [give] a very interesting perspective to see if we could establish a strategic partnership with former PM Tony Blair and yourself,” he wrote.


 
Tarek Obaid

Tarek Obaid was a former banker who styled himself as an adviser to members of the Saudi royal family and a director of a joint venture with Malaysia’s multibillion-dollar development fund, 1MDB. This fund had put $300m through PetroSaudi and as the latter’s chief executive, Obaid was on the lookout for deals.

On paper PetroSaudi looked impressive: its chief investment officer was a former Goldman Sachs banker, Patrick Mahony. The chief operating officer was listed as Rick Haythornthwaite, a City insider who was also chairman of Network Rail and MasterCard.

Blair’s team sold the former prime minister as someone who could help “unlock situations which might otherwise be blocked by political factors” in places such as China and Africa. PetroSaudi was interested in Beijing’s appetite for oil and how Blair’s firm could help.

The role assumed by Blair shows his influence in one of the most important areas of global economic cooperation this century: between the oil sands of the Middle East and hydrocarbon-hungry China.

While in office, Blair oversaw the handover of Hong Kong to China, but visited the latter just five times. His sixth visit in 2007 – when he earned £200,000 for a speech in the industrial city of Dongguan – marked a turning point in how he viewed the rising power.

Since then Blair has been back two dozen times and has built a reputation for befriending the rising stars of Chinese politics. In March 2010 he secured a meeting with Li Keqiang, now China’s premier.

PetroSaudi signed up Blair’s team to lobby Beijing in the summer of 2010 and internal PetroSaudi correspondence reveals there were questions raised about the apparently opaque nature of Blair’s businesses and the role he could play.



Tony Blair courted Chinese leaders for Saudi prince's oil firm



PetroSaudi executives warned in early September 2010 that they had “no contractual nexus with TB” and were anxious about “the lack of apparent employment or other involvement of TB in the corporate structure”.

To convince PetroSaudi that if it paid it would get Blair, his executives revealed for the first time how his complex web of companies worked. Blair’s businesses are split into two wings: Firerush, which was governed by the then City regulator the Financial Services Authority, and Windrush, which was not.

What bothered PetroSaudi was that it was paying roughly $55,000 to Firerush and about $10,000 to Windrush. Both firms trade as Tony Blair Associates (TBA).

From early on in their relationship PetroSaudi executives admitted they knew “very little” about Blair’s firms. In an email in August 2010, the company’s executives said they “would like to understand more about the structure and the relationship between Firerush, TB Associates and TB. In particular, the engagement letter mentions the provision of services by employees of Firerush which seems, like a number of concepts in the engagement letter, inappropriate given we are only looking to engage with TB.”

To allay concerns in November 2010, Varun Chandra, a former Lehman Brothers banker and director of TBA, told PetroSaudi that Blair was the “ultimate owner of all this and owns all the share capital” of all the companies. He told PetroSaudi it was not relevant which company got paid “given where the cash ultimately ends up”.
Chandra explained that Firerush executives handled the day-to-day conversations about “specific opportunities and making the arrangements to drive negotiations forward. Tony, procured by Windrush, is involved at higher level but on an ongoing basis, meeting with senior political leadership and business heads in order to discuss PetroSaudi at a strategic level and to speak highly of your management.”

PetroSaudi, he said, had already seen the benefit as “the man in charge of China’s economic policy is now supportive of working with PetroSaudi, and … he has spoken with CNPC [China National Petroleum Corporation] to ensure a proper working dialogue”.


By November 2010 TBA was hired and, according to the documents, Blair had found time to put PetroSaudi’s case to Lou Jiwei, the then chairman of the China Investment Corporation and now the nation’s finance minister.


 Lou Jiwei, centre, arrives for a G20 finance ministers’ and central bank governors’ meeting at the IMF on 15 April. Photograph: Mandel Ngan/AFP/Getty Images

Questions could be raised about why Blair was allowed to promote the interests of the son of the then ruler of Saudi Arabia in China while also working as the Middle East peace envoy for the Quartet – the US, UN, EU and Russia. Blair had also faced criticism for halting a Serious Fraud Office inquiry in 2006, while prime minister, into alleged corruption over a multibillion-pound arms deal with Saudi Arabia. He denies any conflict of interest.

PetroSaudi had made it clear it wanted to hire Blair. In an internal 2010 document entitled “story for Blair”, PetroSaudi sold itself as a “vehicle of the Saudi royal family” that could count on the “full support from the kingdom’s diplomatic corps” and was set up by Prince Turki bin Abdullah and Obaid, who hailed from a “prominent business family”.

PetroSaudi’s pitch in the document was that it claimed “many countries will get a company in but then bully it around once it is there and has sunk billions of dollars in the ground. This will not happen with [PetroSaudi] because these nations do not want to get on the wrong side of the Saudi royal family.”

But access to the legendary Blair contacts book does not come cheap. In July TBA’s then chief operating officer, Mark Labovitch, emailed Mahony to say he had “discussed your strategy and objectives with Tony and believe strongly that we can add value to PetroSaudi’s business development … We would propose a retainer fee of $100,000 per month.”

The documents reveal that even before Blair’s company was hired, he was already promoting the oil firm. In late July 2010 Blair was in Shanghai to celebrate the planting of 1m trees in north-west China to combat climate change. A few days later, Labovitch emailed the London-based oil firm to say: “Tony has just been in China and informally sounded out a number of people.”

Tarek Obaid and Blair did meet privately in early July 2010, and apparently discussed a working relationship. A month later Blair’s company was on a retainer fee of $65,000 and a “success fee equal to 2%” of any deal that TBA brought to the company – which PetroSaudi admitted could “potentially be a very large sum”.

In the following months a picture emerges of corporate bonhomie underwritten by spiky internal exchanges over the cost of hiring the former prime minister, his apparent obsession with privacy and a whirl of phone calls with global leaders.

By August 2010, according to documents, PetroSaudi raised concerns internally that TBA’s proposed contract was “more appropriate to an investment bank (eg they can record our phone calls)”. In an email, Mahony described the contract offered by Blair’s lieutenants as “a very aggressive first draft with almost total limitation of liability for TB”. He wrote: “I should note that the aggressive starting position of his engagement letter most probably is cynically reliant on counterparties taking a passive approach to secure his services.”

But at the end of the month Blair was in the Chinese capital for the signing of a partnership agreement between Peking University and his Faith Foundation, and managed to squeeze in some time with the Chinese oil giants CNPC and China National Offshore Oil Corporation, as well as China’s supreme economic council, the National Development and Reform Commission.

Tony Blair gives a speech at Peking University in Beijing in 2012. Photograph: China Daily/Reuters

“The latter effectively ‘blessed’ your engagement with Chinese companies, and the former were both very keen to meet you and work out how you might collaborate,” Blair’s then chief operating officer told PetroSaudi. “We clearly articulated the benefits of partnership with you to them, which they grasped immediately.”

In November, Blair was back in Beijing to give a speech for his Faith Foundation. He also had a meeting with China’s vice-premier, Wang Qishan, who Blair’s firm told PetroSaudi was “crucial – inter alia in order to highlight the wider benefits of a partnership with PetroSaudi in terms of putting Chinese companies in pole position for Saudi infrastructure tenders”. Wang is now a member of the Chinese Communist party’s politbureau, the country’s highest decision-making body.

Blair’s relationship with PetroSaudi appeared to give him access to the Saudi elite. In December 2010 an executive of PetroSaudi said the company could arrange a dinner for Blair with Prince Turki. Blair’s office say this never took place.

The next month Blair’s office emailed PetroSaudi because he was keen to meet the King of Saudi Arabia and Prince Bandar, the secretary general of the country’s national security council, before the February 2011 Quartet meeting to discuss Middle East peace after the Egyptian revolution.

Tuesday 9 February 2016

Global markets are no longer obeying economic common sense

Mark Blyth in The Guardian


The financial markets no longer know what is good for them or what is bad for them – so how can they know who to blame when things go increasingly wrong


 
‘Financial markets are becoming increasingly odd, wanting more expensive money and oil to restore confidence’ Photograph: Daniel Roland/AFP/Getty Images


 
One of the oddest things about 2016, so far at least, is how economic “common sense” is being twisted in all sorts of ways to explain what’s going on in the global economy.

By the end of 2015 market “commentators” were clamoring for an interest rate rise from the Federal Reserve to “restore confidence”. Normally, the only reason to raise rates is if there is inflation in the economy and you want to squeeze it out.


Problem: there was no inflation in the US, or almost anywhere else, at the end of 2015.



World markets in turmoil for a second day


So despite that rather obvious fact, the markets got the rise that they wanted and … it helped lower economic activity, precisely as one would expect, which has had a decidedly negative impact on confidence.


Generally speaking, when you make something more expensive – in this case, money – people buy less of it. But in this world, “the markets” were arguing that people would buy more of something if you made it more expensive, and that would produce “confidence”, so they would buy more, which is a bit odd, to say the least.


The next bit of oddness, apparent as we entered into 2016, was that the fall in commodity prices, especially oil, was not good news. Yet falling commodity prices means that everyone who is not a commodity producer or an oil company pays less for their inputs, and can then spend more on other stuff, which has to be good – right?


But “the markets”, once again, figured different. Falling oil prices were now seen as a bad thing, with markets in January having a mini heart attack as oil prices fell below $30 a barrel. When pressed as to why this was a bad thing, no one in these markets seemed to have a clear answer. But the markets freaked out anyway.


A cause for this volatility had to be found, and it was, by the middle of January, in the form of China’s banking sector. And so for the past month the markets have been fretting about the non-performing Loans (NPL’s) in China … and their “dodgy” economic statistics.


But just last year the IMF, who has plenty of data on NPL’s everywhere, brought the yuan into its basket of reserve currencies, which is hardly what you would do if you thought it was all going to pot. After all, China’s statistics and loan book have been questionable for years … but so has Italy’s and Ireland for that matter. And China has literally trillions of dollars (and other currencies) in reserves to throw at the problem – not to mention a decidedly non-democratic state that can, and often does, just make things “go away”.


So why is China now the cause of all ills? Along with China, cheap money, and everything else? Quite possibly because the world has changed, fundamentally, and financial markets are incentivised not to recognise this.

Today there is no inflation anywhere that isn’t due to a currency collapse brought on when the country that issues the currency is heavily dependent on imports, such as Russia and Brazil.


Globalisation, and concerted action for 30 years by the political right, has killed the ability of labour to demand higher wages, hence record inequality and super low inflation. Meanwhile, yields on assets, and interest rates in such a world, will stay “long and low” well beyond 2016 as global savings outpace global investment, and everyone except the US tries to run an export surplus.

This is an ugly world for financial markets, used to delivering the types of returns that people thought normal before the crash: 6 to 8%, liquid, and abundant. That money was made in a period when interest rates and inflation rates across the world fell year on year from abnormally high levels. In that world it was hard not to make money.


But now we find ourselves in a post-crisis world in which the old tricks no longer work despite growth at 1.5%, inflation at 0.5% and interest rates in some places at minus 0.25%.

Rather than face this fact, “the markets” blame China, this week, or it’s the Fed’s rate policy, last month, or its quantitative easing (another bĂȘte noir for markets of long standing).


But here’s the bad news. It’s not their fault. “Long and low as far as you go” driven by ageing populations in developed countries that save more than they spend pushing down interest rates and consumption to the point of deflation as everyone tries to run a surplus is the reality of the world today.


So what will the rest of 2016 look like?


Just like we have seen so far – periodic “inexplicable” and “what the heck” moments as markets everywhere hunt for causes to explain away something very inconvenient. That the game has changed for financial markets – that there is no going back to the boom times – and that the world going forward is a much more boring, and much less “finance friendly” place, than “the markets” want to admit. Most of all to themselves.