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Arab central banks move assets out of dollar
Philip Thornton, The Independent
Middle Eastern anger over the decision by the US to block a Dubai company from buying five of its ports hit the dollar yesterday as a number of central banks said they were considering switching reserves into euros.
The United Arab Emirates, which includes Dubai, said it was looking to move one-tenth of its dollar reserves into euros, while the governor of the Saudi Arabian central bank condemned the US move as “discrimination”.
Separately, Syria responded to US sanctions against two of its banks by confirming plans to use euros instead of dollars for its external transactions.
The remarks combined to knock the dollar, which fell against the euro, pound and yen yesterday as analysts warned other central banks might follow suit.
(14 March 2006, Donal at TOD, TPM)
China rivalry fuels Japan’s FTA drive
Masaki Hisane, Japan Focus
Japan is revving up its drive toward free-trade agreements, or FTAs, with trading partners, largely fueled by an intensifying rivalry with China, a rapidly ascendant economic as well as military power.
As the World Trade Organization’s trade talks falter, countries all over the world are pursuing their own separate FTAs with trading partners. Bilateral or regional integrations, especially in the form of FTAs, have popped up all over the world since the early 1990s. They include the North American Free Trade Agreement (NAFTA), the European Union (EU) and Mercosur, a Latin American customs union initially comprised of Argentina , Brazil, Paraguy and Uruguay. In East Asia, too, many countries are now competing for FTAs with trading partners in and outside the region.
… Beneath the recently accelerated Japanese FTA strategy lies an intensifying rivalry with China over energy resources as well as over political and economic influence in Asia.
Japan has been competing over scarce energy resources with China. The two energy-hungry Asian powers have been locked in a simmering dispute over gas reserves in the East China Sea. Furthermore, they have each lobbied hard for alternative routes for a pipeline from eastern Siberia’s oilfields to Pacific Rim nations. The Sino-Japan rivalry over energy resources shows signs of spreading to the Middle East.
In early 2004, Japan and Iran signed a $3 billion deal to develop Iran’s massive Azadegan oilfield. But with international tensions rising over Iran’s nuclear program, there are growing concerns in Japan about how the nuclear crisis will play out. China has recently won rights to the Yadavaran oil field in Iran. Many analysts point out that should Japan be forced to give up the Azadegan project as part of international sanctions against Tehran, China would step in to replace Japan. Japan imports almost all of its oil, and the GCC, the customs union comprised of Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, accounts for more than 70% of Japanese oil imports. Japan plans to seek the inclusion in the proposed FTA a GCC pledge to preferentially supply crude oil to Japan, even in emergencies, like war. China started FTA talks with the GCC in April last year.
Masaki Hisane is a Tokyo-based journalist, commentator and scholar on international politics and economy.
This is an expanded version of an article that appeared at Crisscross on March 8, 2006.
(12 March 2006)
For more articles by Masaki Hisane, see his website E-News Today.
Ecuador oil workers agree to return to work after strike
Oil workers in the Ecuadorean Amazon whose six-day strike caused a sharp drop in oil production and millions of dollars in losses agreed Sunday to return to work, an official said.
Strikers and government officials agreed that workers from companies contracted by state-run Petroecuador will be paid their back wages, Ecuadorean Undersecretary of State Felipe Vega told reporters.
On March 6, about 4,000 workers walked off the job demanding payment of three months of back pay and direct hiring by Petroecuador.
(13 March 2006, Leanan at peakoil.com)
International oil industry: ‘our biggest risk is the US administration’
Jerome a Paris, Daily Kos
I know that many of you here on the site see mostly the oil industry through the lense of the obscene profits they are making, and their much too close relationship with the Bush administration and the consequences this has on how they are regulated domestically, but you have to believe me when I tell you that internationally, it’s not the same thing at all, and the oil industry is not really happy with the trigger-happy Bush administration. Here’s an article in the Financial Times about what the industry, and other players think about the Iran policy of the Bush administration, summarised by this quote:
“*The general perception in the oil industry is that the biggest risk to the oil industry is the US administration*,” commented Fareed Mohamedi, chief economist with PFC Energy consultants. *This was China’s perception too*, he said, following the destruction of Iraq’s oil industry after the US invasion and the long-standing US embargo that has hobbled Iran’s energy sector.
…And that’s the story with oil: you cannot solve the problem partially: you have to solve it in full. If there is a shortage for anybody, then the whole market will suffer. The heart of this story is that our civilisation’s dependence on oil is making a mockery of any attempts at trying to influence the regional powers in the Middle East. So long as we guzzle oil, they hold us by the balls. And the oil industry, and the main other oil consumers, are basically saying to Bush: stop pissing these guys off, they are beginning to squeeze, and it hurts. And that’s not even taking into account the fact that peak oil may be around the corner, and that supply is not increasing fast enough to cover the current increasing demand… So Bush’s links to oil inside the US, and thus his lack of willingness to do anything about the country’s dependence on the stuff, kills off any capacity for action in oil production regions (apart from that of breaking things up, which only worsens the problem), unites other countries in their opposition to US policies, and ends up terrifying the oil industry. Yep, it would be funny if it weren’t so scary.
(13 March 2006)
Iran faces petrol dilemma
Reuters via Aljazeera
Iran’s finance minister says the country faces a tough choice between rationing petrol from 21 March or raising the price of heavily subsidised petrol imports later this year.
Iran’s conservative government, which draws its support from the poor who regard cheap petrol as a right, proposed spending $4 billion on petrol imports in the budget for the 12 months to 20 March 2007. However, parliament cut this to $2.5 billion, leaving the government with a tough choice.
…Iran holds the world’s second-largest oil reserves after Saudi Arabia but lacks the refining capacity to meet its own petrol demand, importing more than 40% of its colossal 60 to 70 million litres-per-day of consumption.