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”Venezuela Moves to Nationalize its Oil Industry”
Michael Piskur, Power and Interest News Report (PINR)
Latin America’s shift from the Western sphere of influence and toward an independent path is a major current of the recent years. Venezuela, the world’s fifth largest oil producer, has spearheaded this change by exploiting soaring global oil prices in order to pursue a “Bolivarian” economic model detached from the Washington Consensus. [See: “Venezuela’s Hugo Chavez Makes His Bid for a Bolivarian Revolution”]
Venezuelan President Hugo Chavez’s power and vision for a united South America depends on oil, which accounts for half of state revenues and about one-third of G.D.P. Caracas, however, has attempted to balance any potential liability by shrewdly positioning itself as a pivotal player in the global energy market. Increasing revenues have translated into political influence that allows Chavez to undermine decades of Western-mandated neoliberal reforms and begin to effectively nationalize the Venezuelan oil industry.
Last month, Chavez ordered a state takeover of several major oil operations that had been controlled by foreign-owned corporations.
…The tenets of neoliberalism — open markets, privatization, deregulation — taken as gospel by economists, governments and industry for the past 30 years, are facing a direct challenge from the model proffered by Hugo Chavez and his fellow Latin American leaders. Seeking to bypass the United States and instead tap into the thriving Asian market, the Bolivarian Revolution stands to undermine the existing economic order. Time will tell whether it is a viable economic plan or merely a short-lived trend.
(19 May 2006)
Russia’s energy sector hides weaknesses behind powerful facade
Stephen Blank, EurasiaNet
In late April, representatives of Russia’s Kremlin-controlled gas conglomerate, Gazprom, threatened to reduce exports to Europe after the EU blocked the company’s attempts to obtain several European energy entities. EU officials dismissed the threat, believing that the Russian energy industry could not survive without generating a hefty European cash flow. They were right. Behind its mighty facade, Russia’s energy sector, which the Kremlin has used in recent months to bully its neighbors and expand its geopolitical reach, suffers from a decaying infrastructure and a dependence on Western technology and cheap Central Asian energy.
Russian exporters are able to ship large quantities of energy to Europe and Asia today only because of its unique relationship to Central Asian oil and gas producers. And the future of this relationship is crucial to understanding the global energy game.
The Kremlin has significantly enhanced its control over Central Asian energy in recent years, book-ended by a 25-year natural gas supply deal with Turkmenistan in 2003 and a massive oil supply agreement with Kazakhstan last month. [For background see the Eurasia Insight archive]. To many outside observers, the Russian energy sector has assumed an aura of a juggernaut. Statistics seem to support this impression: Russia has been responsible for fully half of the increase in global crude oil supplies over the past five years. The image has also been fueled by the Kremlin’s use of conglomerates as instruments of geopolitical policy. [For background see the Eurasia Insight archive].
Appearances can be deceptive, however, at least when it comes to Russia’s energy sector. There are numerous signs that Russia is in danger of overextending itself, while dawdling on investing in its energy infrastructure.
Stephen Blank is a professor at the US Army War College. The views expressed this article do not in any way represent the views of the US Army, Defense Department or the US Government.
(16 May 2006)
Related in UK Times:
Russia holds all the aces in gas confrontation.
Kremlin threatens to block US role in giant gas project
Middle America: Welcome to the Centre of the USA
Rupert Cornwell, UK Independent via Common Dreams
The United States used to be so sure of its place in the world. To come from the land of the free was truly to be blessed. Not any more. Disillusionment with the President is growing. American self-confidence is draining away. There’s a malaise gnawing at the nation’s soul. Where did it all go wrong?
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…This is the Kansas of the movies – of the fairy tale of The Wizard of Oz, and of the nightmare of the The Day After, the 1983 drama that remains the cinema’s most terrifying depiction of life after nuclear war, for which the state served as location. In good times and in the worst of times, Kansas is symbol of the nation. But visitors must not be deceived by the stillness of the empty prairie.
This is a state in turmoil, at the heart of a country plagued by self doubt. Barely 15 years ago, the collapse of the Soviet Union seemed to usher in an age of American supremacy, for which no end was in sight. The US accounts for just 5 per cent of the world’s population, but a quarter of its economic output. The US spends more on its military than the next dozen countries combined. No less irresistible has been America’s “soft power” – the global reach of US science, education and culture, from the discoveries of Nobel prize-winners to Hollywood movies and chart-topping pop music, from its corporate brands and sports logos to the crassest social trends.
But suddenly, that supremacy seems anything but boundless. US economic prosperity is now built upon debt and deficits, and the fate of the dollar rests with central banks in Beijing, Tokyo and Seoul as much as with the Federal Reserve in Washington, DC. The limits of US military power are being exposed by Iraq today, and perhaps tomorrow by Iran. America is used to being loved. To its bewilderment, it now finds itself detested across the Islamic world and beyond. Closer to home, soaring petrol prices are an affront to the order of the universe – not to mention the sprawling suburban lifestyle that is the American way.
Not surprisingly, discontent with the country’s institutions grows, along with bilious arguments over who, or what, is to blame. Is the problem too much government, or too little? Too much God, or too little? Is it foreigners, with their cheap labour and cheap goods that are driving America’s doughty middle class into penury? Or, some wonder, is the fault within themselves, in a society in which the old-fashioned virtues of thrift, self-reliance and a sense of community seem to be withering away? The anxiety gnaws at Kansas, and at the whole of America.
(12 May 2006)
Not directly to energy, this long piece captures the feel of Middle America at our strange juncture of history. It puts some flesh on the bones of the thesis of Kevin Phillips’s recent book: American Theocracy. -BA
Norway: the country that’s got it all – but is still saving for tomorrow
Patrick Collinson, The Guardian
Exporting oil at $70 a barrel has turned Norway into the wealthiest nation on earth. So what does it mean to have the highest GDP per head on the planet?
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Maureen Baird moved to Oslo in 1960 from Scotland. In her native city of Glasgow, times were hard, but she found they weren’t much better in Norway. “People forget just how poor the country was. Its history was about getting out on the boat to America. We had two pairs of shoes, one for summer and one for winter. No one had any money.”
Today she lives in a society which, on paper at least, enjoys the greatest affluence the world has ever seen. Its GDP in 2005 rose to £35,800 per head (that’s for every one of its 4.5 million population) leap-frogging past both Switzerland and the United States, and way ahead of Britain’s £21,000.
This year it will reach dizzier new heights. Forget public borrowing and the national debt – there isn’t one. Instead, there’s a huge tax surplus, and the national debt has been paid off.
But what do these figures mean? Are Norwegians basking in incomparable affluence? What’s it really like to live in the wealthiest country on earth?
… visitors are still left scratching around for signs that they’re really in the richest place on earth. Where are the Ferraris and Porsches? Why, in a country almost smug about its superior welfare standards, are there an uncomfortably large number of beggars and rough sleepers around the central station?
The answer lies in a remarkable decision taken many years ago to ringfence the flood of oil revenues from the North Sea. Every dollar earned is swept straight into what was once called the State Petroleum Fund but is now called the Government Pension Fund. The truth is that Norwegians are simply not spending their oil windfall, but putting it aside for the future. What’s more, none of the money is allowed to be invested in Norway.
(20 May 2006)
