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Politics and economics - Jun 21

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Bush wrongfooted as Iran steps up international charm offensive

Simon Tisdall, The Guardian
Bush administration officials like to describe Iran as a country isolated from the outside world. Its outlaw government's policies, and especially its nuclear activities, have earned it the distrust of the international community, the fear of its neighbours and, they say, the rightful label of a "rogue state".

But in recent weeks, as Tehran's uranium enrichment dispute with the US, Britain and other western European countries has moved towards a denouement, Iran's president, Mahmoud Ahmadinejad, has launched an energetic diplomatic counter-offensive. Defying US containment efforts, Iran is pursuing its own policy of regional engagement. And to Washington's growing unease, it seems to be working.

"The Americans are making a big push to isolate Iran. But they are making a big mistake. We are not Burma," said Vahid Karimi of the government-funded Institute for Political and International Studies. "We have plenty of friends."

Mr Ahmadinejad's latest success came at last weekend's meeting of the Shanghai Cooperation Organisation, a pan-Asian economic and security grouping dominated by China and Russia. Iran hopes to win full SCO membership soon.

The Iranian leader said his talks with China's president, Hu Jintao, and Russia's president, Vladimir Putin, were "very fruitful". Iran has the second largest natural gas reserves in the world and is second only to Saudi Arabia in Opec as an oil exporter.
(20 June 2006)


Shanghai surprise

Dilip Hiro, Comment is Free (The Guardian)
The summit of the Shanghai Cooperation Organisation reveals how power is shifting in the world.
--
At the one day annual summit of the six-nation Shanghai Cooperation Organisation (SCO) on June 15, more limelight fell on the leader of an observer country than on any of the main participants. That figure happened to be the controversial president of Iran, Mahmoud Ahmadinejad.

Despite the lowly observer status accorded to his country, Ahmadinejad went on to publicly invite the SCO members to a meeting in Tehran to discuss energy exploration and development in the region. And the Russian president, Vladimir Putin, proposed that the SCO should form an "energy club".

While making a plea that his country should be accorded full membership of the SCO, the Pakistani president, Parvez Musharraf, highlighted the geo-strategic position of his country as an energy and trade corridor for SCO members. "Pakistan provides a natural link between the SCO states to connect the Eurasian heartland with the Arabian Sea and South Asia," he said.

Given this, the old adage "money talks" ought to be modified to "oil talks".

Founded in 1996 primarily to settle frontier problems between China and its post-Soviet neighbors - Russia, Kazakhstan, Kyrgyzstan, and Tajikistan - the SCO expanded three years later to include Uzbekistan, which does not share common borders with China or Russia, the two countries at the core of the SCO.

Since then SCO has developed as an organization concerned with regional security, thus focusing on counter-terrorism, defense, and energy cooperation.

Energy-hungry China has its eyes fixed on the large oil and gas reserves that Russia and Kazakhstan possess, and even the modest gas reserves of Uzbekistan.

Another energy-hungry mega-nation, India, which shares a disputed border with China, has been keen to join the group.
(16 June 2006)


Saudis to Supply Oil to China Strategic Reserves

David Winning, Schlumberger
China is in talks with Saudi Arabia over importing oil to fill its planned strategic reserves - building on an April meeting between their two heads of state, Chinese and Gulf sources familiar with the situation said.

A deal would see large volumes of Saudi crude imported by China, although the first shipments would be unlikely to take place before the end of this year, a senior Chinese industry official told Dow Jones Newswires.

A Gulf source confirmed that Saudi Arabia and China were discussing details of a possible agreement under which the kingdom would supply oil for China's strategic petroleum reserve.

But this source, who is close to the negotiations, declined to comment on how much Saudi crude oil China may take, and at what price.
(20 June 2006)


Venezuela, Colombia to Build Pipeline

FABIOLA SANCHEZ, Houston Chronicle
The construction of a natural gas pipeline to connect Colombia with Venezuela and eventually offer access to markets in Asia will begin next month, officials said Thursday.

Venezuelan Deputy Foreign Minister Pavel Rondon, speaking on the sidelines of talks between Venezuelan Foreign Minister Ali Rodriguez and his Colombian counterpart, Carolina Barco, said work on the pipeline _ part of a regional energy network _ would start on July 8.

Venezuelan Oil Minister Rafael Ramirez told state television that the pipeline "is very important for Venezuela because it's going to mean access to the Pacific, where we have the expanding Asian markets."
(15 June 2006)


Mexico's energy future hinges on elections

AP, Washington Post
In the midst of Mexico's biggest oil boom since the 1970s, the nation's top two presidential candidates are debating whether to turn outward and open oil to private investors -- or inward by exporting less crude and giving Mexicans subsidized gasoline.

The question involves nationalist pride as well as pump prices, but the real challenge lies elsewhere: finding new deposits to replace Mexico's rapidly declining Cantarell field off the Gulf Coast. If Mexico doesn't act quickly, the question of what to do with the oil wealth may be moot -- in a decade, there may not be enough oil left to supply the economy.

The best hope for new discoveries appears to be in deep-water exploration in the Gulf of Mexico, but the state-owned Petroleos Mexicanos, or Pemex, oil company has little experience in such projects. Mexican law has long prohibited private investment in anything other than minor subcontracts, too small to interest most major energy companies.
Conservative Felipe Calderon, President Vicente Fox's former energy minister, and the third major candidate, Roberto Madrazo, propose loosening the rules and allowing private companies to explore deep waters through joint ventures with Pemex.

Leftist Andres Manuel Lopez Obrador, who is running about even with Mr. Calderon in the polls, opposes private investment and isn't very interested in deep-water exploration. One of his advisers, Rogelio Ramirez, calls it "beyond our reach" and prefers onshore projects.
(19 June 2006)

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