Oil industry and global politics – an inevitably explosive mix

 

S. Salgado - Worker in the oil fields set on fire by Iraq in Kuwait, during the 1991 war

 

“Energy is the life-blood of the world’s economy.”

Abdallah S. Jum’ah, President and CEO, Saudi Aramco

Although the oil (& gas) industry is the fuel of today’s booming and ever integrating world economy, and although it is the world’s biggest industry in value, it is paradoxically the least globalised, in the sense of being driven by cross-border market forces. I have four things to say:

1) Despite wide-ranging privatization and de-regulation in the world in the last 20 years, the oil industry is and remains largely state-controlled or under strong political and government influence.

2) Oil is increasingly used for power politics – domestically and on the international scale. Otherwise, oil compounds international conflicts. Only democratic and clean government can limit the damage.

3) For structural physical and economic reasons, this fundamental oil problem is there to stay. It might even worsen given growing scarcity.

4) Well, the only way out is: less reliance on oil. And that one’s a real challenge.

Therefore:

The next emerging market financial crisis: when, where, how? Reflections around Ecuador’s surprise on-time debt repayment.

The 1990s and early 2000s witnessed spectacular and catastrophic financial crises in so-called emerging markets. The Tequila crisis in Mexico in 1994/1995, the Asian crisis in 1997/1998, the Russian default in 1998, a crisis in Brazil the same year, the the slide into crisis and eventual devaluation and default in Argentina in 2001/2002.

Since then, financial flows into emerging markets have more than recovered – they’ve surpassed pre-Asian crisis levels. According to the Institute of International Finance, in 2006 net capital flows to emerging markets reached “$502 billion (…), just below the record of $509 billion in 2005”. This little slide in 2006 is probable to be explained by the 2006 emerging market stock-market turbulence, which, however, seems to already have been forgotten. Global investors are having a big party at the moment. Investment bank Goldman Sachs bonuses averaging around $600.000 per employee last year are one of the manifestations of this global money binge.

The questions are:

1) When will the party end? 2) Why could it happen? 3) Where will it come from? 4) And: Is there a risk of a major contagion?

Au-delà de la performance économique - l’Europe a besoin de laisser libre cours à la créativité.

Je me suis souvent demandée pourquoi, malgré le degré élevé de protection de l’emploi, de culture égalitaire et sociale, de « pouponnage social » (35 heures, emplois-jeunes, cheques-resto, CDI ultra-réglementé, droit à ceci, droit à cela), les gens, en France et en Europe continentale sont si peu contents de leur vie, et, plus précisément, du volet qui détermine beaucoup tout le reste, leur vie professionnelle.

Ceci alors que mon expérience récente d’un Capitalisme Sauvage tel que pratiqué au Royaume-Uni, me dit qu’en général, les gens sont plus satisfaits, plus sereins, et plus optimistes. Je ne parle pas des Etats-Unis, d’où beaucoup d’Européens qui y émigrent pour travailler ne veulent plus revenir – sauf en vacances. Ce que je ressens là instinctivement est difficile à prouver, pas quantifiable et n’intéresse personne. Et pourtant, le fait est bien là.

Fort heureusement, Edmund Phelps, Lauréat du Prix Nobel d’Economie 2006, est venu à ma rescousse. Il a parlé au Forum de Paris lundi dernier, et publié un fascinant article dans le Wall Street Journal (thanks Fredrik Erixon et merci Econoclastes).

Dubai or: “Die Nation ist tot”

Europe broods over its national identities, is shattered by “Europehood”, post-colonial immigration, the prospect of having Turkey into the EU. National identities all over the world are put into question by global economics, technology, & the web. In the meantime, there is a form of society emerging that does not give a damn about what it is to live outside your cherished nation-state where you as individual only count in the sense that you are a free citizen shaping public life. The preoccupations of eminent German philosopher Juergen Habermas, author of books such as “Die Postnationale Konstellation”, in which a new sense of open, multicultural and inclusive togetherness can be created at supra-national level such as Europe on the basis of a set of commonly agreed upon constitutional values (”constitutional patriotism”) are very very far away from people who thrive in places such as …Dubai