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As Inflation Soars, Zimbabwe Economy Plunges

Michael Wines, NY Times
For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline. They are still declining this year, people there say, with one notable difference: the pace is no longer so slow.

…In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment. In Chitungwiza, just south of Harare, electricity is supplied only four days a week.

In the past eight months, “there’s been a huge collapse in living standards,” Iden Wetherell, the editor of the weekly newspaper Zimbabwe Independent said in a telephone interview, “and also a deterioration in the infrastructure – in standards of health care, in education. There’s a sort of sense that things are plunging.”

…The trigger of this crisis – hyperinflation – reached an annual rate of 1,281 percent this month, and has been near or over 1,000 percent since last April. Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.

…The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished.

… Efforts to suppress dissent are rising: in recent weeks, trade union officials were seriously injured in police beatings, arsonists burned the home of a leading pro-democracy activist and church leaders were arrested while meeting to discuss the economic crisis. Foreign journalists remain barred from the country under threat of imprisonment, and harassment of Zimbabwean journalists has sharply increased.

But hyperinflation is eroding the government’s control over every aspect of public life and, by extension, over its own future.
(6 Feb 2007)
What collapse can look like. -BA

Nuclear plans in chaos as Iran leader flounders

Peter Beaumont, The Guardian
Despite Iran being presented as an urgent threat to nuclear non-proliferation and regional and world peace – in particular by an increasingly bellicose Israel and its closest ally, the US – a number of Western diplomats and technical experts close to the Iranian programme have told The Observer it is archaic, prone to breakdown and lacks the materials for industrial-scale production.

The disclosures come as Iran has told the UN nuclear watchdog, the International Atomic Energy Agency [IAEA], that it plans to install a new ‘cascade’ of 3,000 high-speed centrifuges at its controversial underground facility at Natanz in central Iran next month.

The centrifuges were supposed to have been installed almost a year ago and many experts are extremely doubtful that Iran has yet mastered the skills to install and run it. Instead, they argue, the ‘installation’ will more probably be about propaganda than reality.

The detailed descriptions of Iran’s problems in enriching more than a few grams of uranium using high-speed centrifuges – 50kg is required for two nuclear devices – comes in stark contrast to the apocalyptic picture being painted of Iran’s imminent acquisition of a nuclear weapon with which to attack Israel. Instead, say experts, the break-up of the nuclear smuggling organisation of the Pakistani scientist Abdul Qadheer Khan has massively set back an Iran heavily dependent on his network. ..
(28 Jan 2007)

Uganda’s energy crisis continues

Barbara Among, The East African via
Uganda’s crippling energy crisis is expected to continue for at least another half-year, following reports that the construction of the new 250-megawatt hydropower dam at Bujagali will be delayed by seven months.

Sources familiar with the project – which is at the heart of major efforts to end the power shortage – say the delay is due to a failure to complete bidding for the dam. Negotiations with various parties, including financiers is also said to be behind schedule. ..

This is the second time that the Ugandan government is attempting to build a dam at Bujagali. The first effort, under which construction was supposed to have started in 2003, was mired in allegations of corruption and protests from environmentalists opposed to the destruction the dam would cause to the Bujagali Falls, a popular tourist destination for white-water rafters.

The construction was eventually suspended and the World Bank Group withheld its financing after corruption investigations by the US Justice Department and by the World Bank’s Fraud and Corruption Unit. In 2003, AES Nile power – then the main developer, announced that it was pulling out of the project for economic reasons.

However, following the escalation of the power crisis in Uganda, in which a prolonged drought has cut hydropower production by more than half to about 120MW, against a peak-hour demand of 380MW, the government decided to rescue the Bujagali proposals. ..

Currently, the government has been forced to resort to emergency thermal power, whose high tariffs have been passed on to consumers. Electricity tariffs went up by 79 per cent last year and experts have warned of further increases this year. ..
(6 Feb 2007)

Learning From Chaco: P2P Risk Networks?

Jeff Vail, A Theory of Power
Here’s a longer potential title, for what may one day become a white paper: “Peer-to-Peer Risk Allocation Strategies: Learning From the Failure of Chaco Canyon to Improve the Resiliency of the Modern Financial System”

For those not familiar with what I mean by “risk-allocation,” see my previous post “Financial Wizardry & Collapse.”

– Chaco Canyon developed as a centralized marketplace to facilitate the distribution of the risk of crop failure among a system of producers

– The Chacoan System (as best understood) failed for two reasons: 1) The maintenance costs of the central structure created excessive inefficiency in the risk-allocation mechanism, and 2) The centralized and hierarchical topology of the system reduced its resiliency to recover from systemic shock

– The risk allocation mechanisms within our modern financial system (hedge funds, credit default swaps, volatility indeces, etc.) exhibit the same vunerabilities to systemic collapse as the Chacoan System.

– High-maintenance, hierarchical systems for centrally pooling and re-allocating risk developed because centralization allows for the accumulation of surpluses by an elite, who then protected that system against alternatives.

– Today, the legal and communications framework exists to facilitate the development of an alternative risk allocation system based on a peer-to-peer topology.

– Peer-to-peer risk allocation can enhance systemic resiliency by elminating the potential for central place failure.
(6 Feb 2007)
Chaco Canyon was a center of culture for the Ancient Pueblo Peoples. By the 1300s, it had been abandoned, leading to the questions about why the civilization there fell.

In a previous post, Jeff says a little more about it:

Consider the Chaco Canyon scenario–a classic example of hierarchal civilization serving as the redistributor of risk. Because the central Chacoan complex gathered and redistributed agricultural product from a surrounding network of producers, when one or a few producers failed because of drought, the system could absorb the shock–the central Chacoan complex would redistribute some of the excess to the failed sites. But at some point, when population demands had grown enough and a sufficiently severe series of droughts hit the whole network, the redistributive mechanism actually ensured that the whole complex collapsed, not just those sites hard hit by drought…

Jeff’s post may appear cryptic to people who haven’t been following the discussion about the limitations of centralized systems, and the possibility that our civilization is vulnerable to the forces that brought down previous civilizations. For examples of similar views, see the work of Joseph Tainter and just recently, The Upside of Down: Catastrophe, Creativity and the Renewal of Civilization by Thomas Homer-Dixon.