FAMINE: Save the Oil and the Wine (Revelation 6)

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Famine in Africa and in Yemen
South Sudan, Nigeria, Somalia and Yemen have been facing famine conditions since February 2017. A total of 20 million people are threatened by food insecurity brought on by armed conflicts and the climatic impacts of El Niño. The SDC, which already operates in these four countries, has released additional funding to deliver emergency aid and to expand its development assistance activities.
The situation is especially serious in South Sudan where almost five million people are already facing hunger. In Nigeria too, over five million people have no food security and suffer from malnutrition. In 2015 and 2016, the Horn of Africa was hit by a major drought which was exacerbated by El Niño, causing serious crop failures and livestock losses. Since then, more than 11 million people in Ethiopia, Kenya and Somalia are suffering from serious malnutrition.
Consolidation of current activities
Switzerland responds to provide aid for people suffering from famine. On 24 February 2017, Swiss Humanitarian Aid made an additional CHF 15 million available from its reserves for humanitarian emergencies to help countries severely affected or threatened by famine. This new contribution is in addition to the SDC’s current activities [in Nigeria, South Sudan, Somalia and Yemen]. It has also carried out and supported various projects in these regions for a number of years, in particular aimed at fighting food insecurity, improving means of subsistence, access to water and sanitation and protecting civilians. Experts from the Swiss Humanitarian Aid Unit (SHA) are also deployed in the field on behalf of the UN agencies and the SDC.
In anticipation of this looming catastrophe, the SDC regularly stepped up its efforts in the above-mentioned countries and provided a budget of CHF 48 million at the beginning of the year. The new funding therefore takes its contribution to humanitarian operations and development cooperation activities in Nigeria, South Sudan, Somalia and Yemen to CHF 63 million in 2017. Switzerland also contributed CHF 5 million to the UN’s Central Emergency Response Fund (CERF) for 2017 to enable it to fund emergency action in these countries.
Support for the World Food Programme’s operations
The central partner of Swiss Humanitarian Aid in the global fight against hunger is the World Food Programme (WFP), to which it gave CHF 69 million in 2016, its biggest contribution to any UN humanitarian organisation. Switzerland is not only a major donor to the WFP but also an important partner in the secondment of experts.
Swiss Humanitarian Aid regularly seconds members of the SHA to the WFP. In addition to its financial commitments, Switzerland is active in coordinating donors in the field. As a member of the humanitarian teams for these countries and as chair of the donor coordination groups in Somalia, Switzerland is involved in ensuring the efficient use of resources, crisis-response coordination and other activities.

The Third Seal: Famine (Revelation 6:6)

Last month, UN agencies declared a famine in parts of South Sudan, making it the first country since Somalia in 2011 to be declared famine hit. The world’s youngest nation is in the throes of a civil war that has not only created one of the pressing global internal displacement and refugee crisis, but also actively precipitated the famine.
As pictures of jubilant celebrations in the streets of its capital, Juba, were splashed across global newspapers a day after the country’s birth in 2011, few would have imagined that the country would be reduced to such a sorry state a mere six years later. Independence was seen as a great victory for the people, who for generations were brutally oppressed by the Arab-dominated north Sudan.
What went wrong? The answer lies in the violent, decades-long freedom struggle waged by the people of South Sudan, power lust among its principal leaders and the commodity that has made and unmade nations—oil.
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There is an old Sudanese proverb, “When god made Sudan, he laughed.” Meant to refer to the incredible riches and beauty of the land, the country’s violent history imbues it with dark irony.
Known to be home to valuable materials such as ebony and ivory since the 25th century BC, it had been a major trading partner of Egypt since Biblical times. In the following centuries, it saw the rise of Christianity, which gave way to Islam in the wake of Arab invasions.
Over time, the northern region, famed for its gems, saw the settlement of Arab miners and merchants. The area was laid claim to by the Ottomans in the early 19th century, and subsequently, by the great European powers, particularly the British, after the opening of the Suez Canal.
All through this, the nomadic tribes of South Sudan were taken captive by the merchants and sold, forming the crux of the Arab slave trade from the horn of Africa. Samuel Baker, a British explorer in 1862, vividly noted the role the slave trade played in the keeping Khartoum going as a bustling town. The British, who ruled Sudan jointly with the Egyptians, focused primarily on maintaining power over the north. Little interest was paid to the south, where the missionaries were allowed to operate freely.
While the British and the Egyptians finally ceded control in 1956, the prospect of Arab-led domination of the south, which comprised mainly Christians and tribes following traditional beliefs, led to a massive revolt in 1955, a year before the formal declaration of Sudanese independence.
This bloody uprising, known the first Sudanese civil war, lasted 17 years until 1972. After maintaining a fragile peace accord for a decade, Sudanese government’s declaration of the country as an Islamic state under the Sharia law sparked the descent into chaos again.
The second Sudanese civil war, led by the Sudan People’s Liberation Movement and its military wing, the Sudan People’s Liberation Army, lasted 22 years until 2005, making it among the longest civil wars of the modern era.
The southern faction, led mainly by the Dinka and the Nuer, raged internal fratricidal wars as well. However, the all-consuming need to fight for independence pushed the conflict to the backburner.
International pressure on the Sudanese government and the mounting costs of war led to a comprehensive peace agreement being adopted in 2005, which promised a referendum to the people of South Sudan after a period of six years. In 2011, when the referendum was held, the south overwhelmingly—98.83%—voted in favour of secession. On 9 July 2011, the world’s newest country was born.
As celebrations went through the night in Juba, the newly anointed capital, there was an outpour of diplomatic euphoria. “It is a reminder that, after the darkness of war, the light of a new dawn is possible,” said then US president Barack Obama, granting the newly formed country immediate recognition.
Yet South Sudan—with its ethnic divisions, chief among them between the Dinka (~35% of the population) and the Nuer (~16% of the population), dependence on oil to sustain the economy (about 60% of the GDP and 95% of government revenues), minimal infrastructure and high levels of militarization—was prone to falling into a conflict trap.
In July 2013, Riek Machar, the deputy president and a member of the Nuer tribe, was dismissed by Salva Kiir, the president and a member of the Dinka tribe, on charges of plotting a coup. Efforts to disarm the Nuer presidential guards suspected of being close to Machar led to the outbreak of hostilities.
Dinka soldiers ran amok in Juba and reportedly indulged in mass slaughter of Nuer civilians. The Machar camp retaliated and, soon enough, the country was in a state of civil war.
Since the outbreak of hostilities, the fight has often centred on oil, leading to large-scale displacements in the two oil producing regions of Unity and Upper Nile.
The human toll of the civil war has been punishing. According to data from the UN High Commission for Refugees, Upper Nile had about 140,000 registered refugees, followed by the Unity region where the count stood at about 100,000. However, the total number of internally displaced people is an order of magnitude higher at 1.85 million (one-sixth of the population) as per the UN Office for the Coordination of Humanitarian Affairs.
The Unity region, which is Nuer dominated and the home of Riek Machar, has been at the forefront of this violence. It alone accounts for about 45% of the total internally displaced population.
While the world’s attention has focused on Syria and the concerns of leaders of Europe and the US, the horn of Africa, among the poorest regions in the world, is facing a particular strain by catering to almost a million refugees, mainly arising from South Sudan and Somalia.
Ethiopia has borne a lion’s share of this burden, hosting close to 750,000 refugees, making it the fifth highest refugee destination in the world.
The human toll of the war in South Sudan has been compounded by the economic consequences which has been disastrous for the country.
With the government’s resources rapidly drying up, exchange rates have deteriorated sharply, sending prices soaring and the economy into a tailspin (see chart below). The hyperinflationary conditions have ensured basic necessities are either unavailable or simply unaffordable to the locals.
Large-scale displacement due to conflict has worsened the impact of soaring inflation. Unity, Upper Nile and Jonglie (another critically affected province) contain 40% of the country’s total cropland.
With the population almost entirely dependent on agriculture, large-scale displacement has wreaked havoc in local ecosystems and the agricultural economy, affecting supply and access.
The geographic, economic and political conditions have created the vortex that has thrown South Sudan towards this man-made famine.
As seen in this figure, the situation is grim across the country, with 100,000 people in Unity state facing starvation due to famine. Close to a million are on the brink of a famine and almost half the population, 5 million, is at crisis levels of food insecurity and worse.
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The declaration of famine is not a straightforward act. It is made collectively by multiple parties: the affected country’s government, agencies of the UN and the Famine Early Warning Systems Network, set up by the US government in 1980s to collect and analyse data from various sources.
Given the multiplicity of parties, there are always multiple viewpoints to contend with. Moreover, the declaration itself contains political undertones and implications. Countries often find it hard to outlive the international stigma of a famine. A case in point is Ethiopia. Famine in 1980s and its media coverage has saddled the country with a misplaced reputation of mass poverty, even though it is presently the fastest growing economy globally.
The second challenge is that of data itself. Officially, famine is declared when the following three criteria are met:
• At least one in five households face extreme lack of food
• Thirty per cent or more of the population suffers from acute malnutrition
• At least 2 in every 10,000 people are dying each day
Given the specificity of the requirements and challenges of data collection in an unstable region, UN agencies and the country’s government have to be convinced that the situation has indeed escalated enough to deserve worldwide attention. This happens to be the case in South Sudan. The fact that famine has been declared implies that people have already started dying of starvation.
The response has been on expected lines, with relief agencies stepping up their involvement. WFP (the World Food Programme) has been airdropping supplies in affected areas, the Food and Agriculture Organization is giving survival kits and Unicef has set up hundreds of feeding centres to cater to kids facing malnutrition using ready to use therapeutic foods such as peanut-based wonder snack Plumpy’nut.
President Kiir has promised unimpeded access to humanitarian efforts to ensure that supplies reach the ones in need. Yet, the humanitarian agencies are nowhere close to reaching their target of $1.6 billion to provide lifesaving assistance to an identified population of 5.8 million. The conflict itself shows no sign of abating, with Riek Machar, currently exiled from South Sudan, continuing to direct opposition forces remotely from South Africa.
Amartya Sen in his seminal work Development as Freedom made a powerful argument that functioning democracies do not see famines due to the pressures of electorate faced by democratic governments.
The idea went on to change the prism through which famines were viewed. An example in India illustrates the contours of this argument. Bihar faced a situation of food shortage in 1966. Monsoon failure led to harvest season yields being only 50% of what was estimated.
In response, the government declared a state of famine. Keeping in mind the general elections scheduled for the next year, the government and the state machinery mounted an impressive response.
Large-scale feeding, income-assistance programmes and work-for-food initiatives were undertaken. At the end of it, a major catastrophe was averted and the number of recorded deaths stood at about 2,300, a remarkable achievement for a poor and relatively nascent state.
In 1974, political upheavals faced by the Awami League in Bangladesh, following the initial years of independence, led the economy into a decline and caused a sharp spike in in prices of basics. Flooding in the same year led to massive food shortages, and eventually, famine was declared.
Multiple coup attempts were made and, by 1975, Bangladesh was under a martial law. Limited state capacity, low levels of accountability, and political instability led to an insufficient response which resulted in a loss of about 40,000 lives from starvation and famine-related diseases.
State capacity and functioning political system in a way, proved to be the ultimate differentiator. As conflict continues unabated in South Sudan, its leaders have the choice of the path they want to lead their country towards. One hopes that the right choice is made soon. Millions of lives hang in the balance.

Save The Oil And The Wine (Revelation 6:6)

Summary

Last week Saudi Arabia, Venezuela, Qatar, and Russia reached an historic agreement to cap oil production at mid-January levels.

Absent an improbable cut in global production, oil prices will stay low as the current glut lingers on.
One of the reasons Saudi Arabia orchestrated a drop in prices was to challenge the nascent U.S. shale revolution.

Coupled with sanctions wreaking havoc on the Kremlin’s budget, the longer Saudi Arabia can keep prices down, the more it will compound Russia’s economic pain.

Saudi Arabia is also using low oil prices as a means of upending on its traditional rival, Iran.

Last week Saudi Arabia, Venezuela, Qatar, and Russia reached an historic agreement to cap oil production at mid-January levels. The pact – the first between OPEC and a non-OPEC member in 15 years – aims to halt the precipitous fall in oil prices that has wreaked havoc around the world.
While news of the deal sparked some optimism, any bullishness quickly faded as reality began to set in: the deal will not take a single barrel off the market. Absent an improbable cut in global production, oil prices will stay low as the current glut lingers on.
The decision to freeze rather than cut production seems counterintuitive; producers have been under incredible financial strain, with some seeking assistance in a bid to keep their economies afloat. But for Saudi Arabia, the chief architect of the current crisis, there are several reasons for keeping prices low. These include: halting the U.S. shale revolution, making Russia pay for its Syria incursion, and undercutting Iran and Iraq.
With these strategies now beginning to bear fruit, Riyadh will resist calls to cut production. Moreover, without OPEC cooperation, other producers will also pump at near record levels, desperate not to concede market share. Low oil prices will therefore continue, at least for the foreseeable future.

Countering the U.S. shale revolution

One of the reasons Saudi Arabia orchestrated a drop in prices was to challenge the nascent U.S. shale revolution. The next few years will see the U.S. set to become the world’s largest producer, while reports also suggest its shale output could double from 4 to 8 million barrels per day by 2035.
This may seem insignificant; the IAE forecasts worldwide demand at around 96 million barrels this year. But analysts claim that even a 5% cut in global output – around 4.8 million barrels – would raise prices by between 50 to 100% today. So, shale will almost certainly heap downward pressure on prices in the long term.
Just as important, the limited time and money needed to construct wells mean they can be capped on and off relatively easily. This provides Washington a flexible lever to balance price shocks and weakens Saudi Arabia’s influence as a “swing” producer.
Not surprisingly, Saudi Arabia has plotted shale’s downfall. With the high costs of shale production, Riyadh figured a dramatic fall in prices would drive these new players out of business, thereby preserving the status quo.
The strategy has produced mixed results. Despite dozens of companies going bust, many have proved resistant, tightening belts and digging in their heels. Slowly, however, these companies are succumbing to market forces, with a wave of bankruptcies expected this year.
While many doubt Saudi Arabia’s ability to hold off the shale revolution indefinitely – especially since procuring shale is becoming much cheaper – the House of Saud is unlikely to cut production soon, given the relief it would offer its U.S competitors.

Reacting to Russia’s incursion into Syria

Vladimir Putin’s incursion into Syria in September last year has changed the facts on the ground, entrenching Bashar al-Assad’s regime and diminishing the influence of Saudi Arabia and other Gulf nations. Whereas Assad’s rule had looked shaky at the war’s start, Moscow’s involvement now all but ensures his survival.
Furthermore, as Russia continues to strike at opposition rebels, many of them sponsored by Saudi Arabia, Riyadh’s clout is beginning to fade. Moreover, as its influence in Syria wanes, so too will its role in further peace talks and discussions about the country’s future.
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Dismayed at what they perceive as U.S. inaction in the face of Russian aggression in Aleppo and other flash points in the north, Saudi officials are becoming increasingly frustrated. Though the de facto OPEC leader is unlikely to get involved militarily without Washington’s consent, keeping prices low is one way to hurt Moscow’s fragile economy.
Coupled with sanctions wreaking havoc on the Kremlin’s budget, the longer Saudi Arabia can keep prices down, the more it will compound Russia’s economic pain. In fact, Russia’s finance minister, Anton Siluanov, recently claimed that the country needs $82 oil to balance the budget, with many analysts claiming that a default is now a possibility.
That might not change Putin’s calculations in Syria, but low oil prices will at least serve a costly reminder that Russia’s actions come with consequences.

Undercutting Iran and Iraq

Saudi Arabia is also using low oil prices as a means of upending on its traditional rival, Iran. True, the Saudi economy is heavily reliant on oil, with shipments accounting for 90 percent of its export earnings and 80 percent of government revenues. But it still enjoys a favorable financial position over its adversary across the Persian Gulf, with greater reserves and a smaller debt ratio. Meanwhile, Iran needs higher oil prices to break even.
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In terms of regional influence, therefore, Saudi Arabia is likely to keep oil prices low in a bid to outlast Iran. Eventually, Riyadh hopes the financial pressure will mean Iran is unable to maintain its proxies in Syria, Yemen and elsewhere.
Having made huge military and diplomatic strides recently, which includes a recent nuclear deal with the U.S., Tehran may be forced to adopt a less expansive foreign policy, allowing the Saudis to reconfigure alliances in the region and regain much of their lost influence.
Similarly, Riyadh sees low prices as a means of further destabilizing the impotent Shia regime in Iraq, which has been an Iranian ally since the overthrow of Saddam. The alliance between the two has stoked Saudi fears of a coming “Shia Crescent”, with Saudi Arabia’s rulers keen to ensure Iran’s neighbor remains bitterly fragmented. As an added bonus, in the longer term, continued instability may also mean Iraq is unable to develop its remaining oil reserves.

Man Refuses To Save The Oil And The Wine (Rev 6:6)

  
From Venezuela to Iraq to Russia, Oil Price Drops Raise Fears of Unrest

By CLIFFORD KRAUSS and RICK GLADSTONE
AUGUST 24, 2015

Oil, the lifeblood of many countries that produce and sell it, appears to be rapidly turning into an ever-cheaper economic curse.

A year ago, the international price per barrel of oil was about $103. By Monday, the price was about $42, roughly 6 percent lower than on Friday.

In oil-endowed Iraq, where an Islamic State insurgency and fractious sectarian politics are growing threats, a new source of instability erupted this month with violent protests over the government’s failure to provide reliable electricity and explain what has been done with all the promised petroleum money. In Russia, a leading oil producer, consumers are now paying far more for imports, largely because of their currency’s plummeting value. In Nigeria and Venezuela, which rely almost completely on oil exports, fears of unrest and economic instability are building. In Ecuador, where oil revenue has fallen by nearly half since last year, tens of thousands of demonstrators pour into the streets every week, angered by the government’s economic policies.

Even in wealthy Saudi Arabia, where the ruling family spends oil money lavishly to preserve its legitimacy, the government has been burning through roughly $10 billion a month in foreign exchange holdings to help pay expenses, and it is borrowing in the financial markets for the first time since 2007. Other Arab countries in the Persian Gulf that are dependent on oil exports, including Kuwait, Oman and Bahrain, are facing fiscal deficits for the first time in two decades.
While the price has been declining for months, forecasts have always been hedged with the assumption that oil would eventually stabilize or at least not stay low for long. But new anxieties about frailties in China, the world’s most voracious consumer of energy, have raised fears that the price of oil, now 30 percent lower than it was just a few months ago, could remain depressed far longer than even the most pessimistic projections, and do even deeper damage to oil exporters.
“The pain is very hard for these countries,” said René G. Ortiz, former secretary general of the Organization of Petroleum Exporting Countries and former energy minister of Ecuador. “These countries dreamed that these low prices would be very temporary.”

Mr. Ortiz estimated that all major oil exporting countries had lost a total of $1 trillion in oil sales because of the price decline over the last year.

The apparent weakness in the Chinese economy is radiating out into the world,” said Daniel Yergin, the vice chairman of IHS, a leading provider of market information, and the author of two seminal books on the history of the oil industry, “The Prize” and “The Quest.”

“An awful lot of producers who enjoyed good times were more dependent on Chinese economic growth than they recognized,” Mr. Yergin said. “This is an oil shock.”

Although the price drop has most directly hurt oil exporters, it also may signal a new period of global economic fragility that could hurt all countries — an anxiety that already has been evident in the gyrating stock markets.

The price drop also has become an indirect element in the course of Syria’s civil war and other points of global tension. Countries that once could use their oil wealth as leverage, like Russia, Iran and Saudi Arabia, may no longer have as much influence, some political analysts said. Iran, which once asserted it could withstand the antinuclear embargo of its oil by the West, appeared to have rethought that calculation in reaching an agreement on its nuclear activities last month.

Of course, lower oil prices confer economic benefits, too. The average American household, for instance, buys 1,200 gallons of gasoline every year. And gasoline, on average, has sold for most of this year by roughly a dollar a gallon less than in 2014.

But even while lower oil prices stimulate economies of consuming countries, a protracted decline carries many unanticipated consequences — starting with the economic weakness in developing countries that buy increasing amounts of goods from the United States and others in the industrialized world.

A supply glut has been evident for some time, driven partly by a vast increase in Saudi production and a growing energy self-sufficiency in the United States, which was once heavily reliant on Middle East oil.

Saudi Arabia not only is producing a record amount, but also is increasing the number of rigs drilling for future production. And its Gulf allies, the United Arab Emirates and Kuwait, are following suit. Even with the turmoil wrought by the Islamic State, Iraq’s production has jumped nearly 20 percent since the beginning of the year.

The surge in production may seem counterintuitive, since lower prices can cause self-inflicted economic wounds and potentially incite more political and social trouble. But all the exporters in the Middle East are struggling with each other to protect Asian markets, now that the United States is using much less of their oil.

The Gulf states, said Sadad I. Al-Husseini, former executive vice president of the Saudi Aramco oil company, “don’t want to take on the role of oil price regulators because the market is far too big and too political for them to manage it.”

Had these producers curtailed their production late last year, he said, “a flood of new oil supplies from the U.S., Canada, the deep offshore and other basins would have continued to undermine the oil markets, and prices would have collapsed to where they are now in any case.”

The global glut is likely to worsen if the nuclear deal with Iran is approved, potentially releasing as much as one million more barrels onto the 94-million-barrel-a-day global market in a year or so.
Iran’s oil minister, Bijan Namdar Zanganeh, has made no secret about his country’s intentions. “We will be raising our oil production at any cost, and we have no other alternative,” he was quoted Sunday in Iran’s state-run news media as saying.

The big change in recent years has been the surge of United States oil production, adding more than four million barrels a day to global supplies. But in recent months the oversupply has been driven primarily by the Saudis, who have flooded the market in what economists regard as a deliberate attempt to drive down the price so that other high-cost producers can no longer compete — most notably the Americans.

Still, production in the United States has not declined as much as foreseen by the Saudis, who thought the price of oil would stabilize at about $50 a barrel. Now it may be headed to $30, the lowest level since the 2008 global economic recession.

The Saudis, the most important member of OPEC, have resisted calls by other members to reduce output. The result is that nearly all OPEC members, who together control much less of the global market than they once did, are pumping more oil.

“We are witnessing competition between member states over market share, and most of these countries are dependent on oil as a primary source of income,” said Luay Al-Khatteeb, a nonresident fellow in foreign policy at the Brookings Doha Center. If prices do not recover to the $60 a barrel level, he said, “and countries in the Arab region continue to rely on oil revenue heavily, we could see decades of decline.”

David L. Goldwyn, who was the State Department special envoy and coordinator for international energy affairs in the first Obama administration, said that if the Brent global oil benchmark price stays below $45 a barrel, that is “a red flag for stability issues across the oil producing world.”
“The hemorrhaging of government budgets reliant on oil will force dramatic cuts in spending or dangerous increases in borrowing, if not both,” Mr. Goldwyn said. “The countries without significant foreign exchange reserves are most at risk, and they include Nigeria, Angola, Algeria, Venezuela and Iraq. The countries which need to sustain investment to maintain political legitimacy need to be worried, and that’s Brazil, Russia and even Iran.”

Meghan L. O’Sullivan, director of the Geopolitics of Energy program at Harvard’s Kennedy School, said she was most immediately concerned about the impact of extended low oil prices on Iraq.
“Not only is fighting ISIS an expensive endeavor, but many of the political deals that need to be done to keep different groups supportive of the Iraqi government require money to sustain,” she said.
But Ms. O’Sullivan expressed a longer-term worry about possible miscalculations by Saudi Arabia, on both the duration and magnitude of the oil price drop.

“With a burgeoning population looking for jobs, education and health care every day,” she said, “the expensive social contract between the royal family and Saudi citizens will get more difficult, and eventually impossible, to sustain if oil prices do not recover.”

Save the Oil: Why the Iran Deal Won’t Happen (Rev 6:6)


Why Does Russia Fear Iran’s Nuclear Deal?

Posted By: Polina TikhonovaPosted date: May 19, 2015 09:25:17 AM

The framework deal on Iran’s nuclear program is far from being realized and has numerous hiccups and enemies attached to it. However, most of media and political experts discuss it as a sealed deal. They even talk about its consequences. Most of them are talking about Saudi Arabia and Israel’s fate. And, of course, there are some analysts who have concerns over the relations between Iran and Russia.

Russia would like to keep Iran under sanctions

Most of the experts believe that the deal itself is unfavorable for Russia, and that Moscow would like to keep Iran under sanctions. Undoubtedly, Russia is interested in keeping the current status quo for as long as it’s possible, which had a lot of limitations imposed on Iran and Moscow was the only partner for Tehran.

However, it must be pointed out that such status quo was extremely volatile and the situation could spiral to either a direct war between the US and Iran or a war in Syria. And no matter how the war would have ended, it would destabilize the Middle East and the global economy as a whole. That’s why the framework deal is the least evil of all for Russia.

It must be understood, however, that the Iran framework deal doesn’t mean a Russia’s sudden rapprochement with Iran from one side, and with the West from the other. As for the US, it’s difficult to predict any sudden renewal of economic relations as they have been deteriorated ever since the Iranian revolution.

And the two countries can’t really establish relations anew as it must be first approved by the Congress, while the lifting of economic sanctions against Iran is not even in the cards now. The US President Barack Obama will consider himself lucky if he can at least convince the Republican Congress to not halt the nuclear deal.

The Europeans are going to attempt entering the Iranian market and drive out the Russian as well as Chinese companies. However, the Iran’s interest of having close cooperation with Europe should not be exaggerated.

The majority of Iranian establishment backs the talks efforts only because it wants the economic sanctions to be lifted. The Iranian conservators are not interested in building close political-economic relations with the West. They believe that the more Iran opens up to the Western world, the more chances for the country to have a ‘color revolution’, which would bring down the current regime in place.

Iran’s entering of external markets would lower the prices of crude oil

According to other political experts, another Russia’s fear is that lifting the sanctions against Iran would result in entering of external markets by the Iranian fossil fuels, which therefore would lower their prices.

And the experts are partially right – well, at least when it comes to crude oil – the Iranians have promised to dramatically increase the export of crude oil right after the sanctions are lifted.

As of now, Iran exports about 1 million barrels of oil a day and after the sanctions are lifted, it plans to double the number and even come back to the pre-sanction number of exporting 2.5 million barrels of oil a day.

According Mohsen Qamsari, the director for international affairs of the National Iranian Oil Company (NIOC), Iran can ship almost half of the supplies of oil that it provided to the European market before.

“The contracts will be clinched on the basis of spot deals until the European clients finish their existing annual import contracts and are ready for new contracts,” Qamsari said.

However, the only possible hiccup for the crude oil export might be a gradual, not the ‘full and at once’, lifting of the sanctions as well as Iran’s unwillingness to sell oil at such a low price.

Iran might try destabilizing the situation in the Middle East

As a matter of fact, as Saudi Arabia privatized the Iranian quota, Iran might try to take it back either through the process of talks or through destabilizing the situation in Yemen as well as Saudi Arabia.

As for the export of the Iranian oil to EU through the Nabucco-West pipeline, which is an ‘enemy’ to Gazprom, experts claim that it would become possible only in a decade or so.

Iran must build a pipeline network from its South deposits to the Turkish border, normalize its relations with Turkey, improve energy efficiency of its production sector in order to not consumer so much gas. However, a lot might change within the next 10 years, especially given the fact that this is the Middle East we are talking about.

And finally, another Russia’s fear is that after Iran is liberated from the sanctions, Russia is going to lose a significant share of its influence in the Middle East. Until recently, it really seemed so: Iran was the main partner of Russia in the region, and the inevitable worsening of the relations between Moscow and Tehran after Russia stopped being a single-source partner, would decrease Russia’s presence in the Middle East.

The number of nuclear clients of Russia is also decreasing by the second. Ukraine, which has been the top client of the Russia’s nuclear sector, is posed to develop a cooperation with the US companies in order to upgrade its own nuclear infrastructure.

However, during the last couple of years, Russian authorities have managed to find alternative partners largely thanks to its unhinged position on Syria’s matters. Russia has been reached out by countries – such as Egypt – that are looking to diversify their relations with the US. Furthermore, Russia has managed to improve its diplomatic relations with Saudi Arabia and the Persian Gulf countries.

So now, Iran is particularly not interested in ending relations with Russia and letting it freely operate in the region.

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Save The Oil: Petroleum Hegemony (Revelation 6:6)

The Middle East oil/nuclear puzzle

oil-iran
Pepe Escobar
Published time: March 17, 2015 16:03
Reuters

US Secretary of State John Kerry may be starting to enjoy the brinkmanship, as he says it’s “unclear” whether the US and Iran would reach a political framework nuclear deal before the end of this month.
Loud applause may be heard in corridors ranging from Tel Aviv to Riyadh.

As negotiations resume in Lausanne, the fact is a potential nuclear agreement between Iran and the P5+1 (US, UK, France, BRICS members Russia and China, and Germany) is bound to open the possibility of more Iranian oil exports – thus leading oil prices to fall even further. As of early this week, Brent crude was trading at $54.26 a barrel.

Assuming the US and the EU nations that are part of P5+1 really agree to implement the suspension of UN sanctions by the summer (Russia and China already agree), not only will Iran be exporting more energy – that should take a few months – but also OPEC as a whole will be increasing its oversupply.

The EU badly wants to buy loads of Iranian energy – and invest in Iranian energy infrastructure. Beijing, a key yet discreet member of the P5+1, is also watching these developments very carefully.
Whatever happens, for China this is a win-win situation, as Beijing keeps actively building up its strategic petroleum reserves profiting from low prices. And even as oil prices also remain under pressure from the strong US dollar – which makes oil way more expensive if you are paying with a different currency – that’s certainly no problem for China, with its mammoth US dollar reserves.
The oil price war essentially unleashed by Saudi Arabia has hit Iran with a bang. The country may be down, but not out. There were no good options for Tehran except to try to keep its market share by offering the same discounts – especially to Asia – the Saudis are offering.

Tehran has been under a tsunami of nasty Western sanctions for years, which limit its ability to export oil and increase production. It’s extremely difficult for the Iranian governments to reduce the gap of the expected revenue based on previous high oil prices.

Now the name of the game among major oil producers is to keep market share at all costs. Iran can’t escape it – as it needs to keep in check at all times the fear of oversupply and its desire to increase production. Some oil producing countries are definitely keeping upcoming oil supplies out of the market. The result is Iran will have serious trouble going for more production and more exports while trying to regain its pre-sanctions market share.

While a sort of undeclared “oil war” is still far from reaching an endgame, the nuclear front promises some eye-popping breakthroughs.

Powerful – if sometimes conflicting – ‘Empire of Chaos’ factions in Washington are actively entertaining the dream of transferring US military assets from the Middle East to Europe to keep ratcheting up the pressure on Russia, under the pretext of the “aggression” on Ukraine.

That might happen only after “control” of the Middle East is somewhat shared between Turkey, Iran, and to a much lesser extent, the House of Saud. For the notoriously wobbly “Don’t Do Stupid Stuff” Obama administration’s foreign policy, this development would be a key rationale behind the push for a successful P5+1 nuclear deal with Iran to be reached this summer.

Iran has already cultivated – and blossomed – its own sphere of influence. It’s the Turkey-Saudi case that is way more complicated.

As much as Ankara is well aware of the fierce catfight for regional power between Tehran and Riyadh, it tries to maintain good relations with both.

Crucially it’s in Syria that Ankara and Riyadh are almost on the same “Assad must go” page. Almost – because in fact a pro-Muslim Brotherhood Turkey-Qatar alliance has found itself for four years in direct competition with a Salafi-boosting House of Saud.

Anyway, when Turkey’s President, also known as ‘Sultan’ Erdogan, visited the new Saudi King Salman in early March, they reached an understanding; they will both turbo-charge “support” – weaponized and otherwise – for the Syrian opposition. Problem is there is no credible Syrian opposition; virtually everyone that knows how to fight has migrated to the fake Caliphate of ISIS/ISIL/Daesh.

What this means in a nutshell is once again a Sunni against Shi’ite set up; a classic Divide and Rule gambit that is the perennial House of Saud priority.

The ’Empire of Chaos’, in theory, should but be pleased. But it’s not. The Obama administration’s objective – on the record – is“[prioritizing] the Islamic State, not Assad.”

But that may also change in a heartbeat. New Pentagon supremo Ashton Carter has just admitted, “the forces that we train in Syria, we will have some obligation to support them after they’re trained.” But that would also “include the possibility that, even though they’re trained and equipped to combat ISIL, they could come into contact with forces of the Assad regime.”

No wonder Damascus is weary, and will wait for US “actions” before any possible negotiation with Washington. One day Kerry says talks with Damascus are necessary to end the Syrian civil war. The next day he repeats, “Assad must go.”

As for a no-fly zone over northern Syria – heavily pushed by Erdogan, and a wet dream of neo-cons in Washington – it won’t fly. One extra reason for Ankara to stay away from this new Saudi anti-Iran push.
To complicate things further, power within the House of Saud remains diffused. Both the CIA and BND – German intelligence – agree, and there have been constant rumblings in Washington that the House of Saud eventually should go.

The House of Saud still has not understood that Syria is not the main “threat” against them. They are freaking out about their border with Iraq – as well as their borders with Yemen and Bahrain. On top of it they picked a fight with Russia via the oil price war. The Saudis say they are pumping only 9.5 million barrels of oil a day out of their 12.5 million barrels a day; Moscow is essentially saying they are pumping their entire capacity.

If the oil price war delights the Russia-demonizing ‘Masters of the Universe’, they are at the same time deeply enraged because it is decimating the US shale oil “revolution”. What’s left for masses of unemployed US workers? Find a job in Saudi Arabia. Still one more reason for the ‘Masters of the Universe’ to dump the House of Saud anytime they feel like it.

Predictably, House of Saud paranoia remains the norm. Former Saudi intelligence capo di tutti i capi (and former great pal of Osama bin Laden), Prince Turki, is on overdrive, charging Iran with being “a disruptive player in various scenes in the Arab world, whether it’s Yemen, Syria, Iraq, Palestine or Bahrain”; accusing Iran of “expanding its occupation of Iraq”; insisting “the enemy” is both Assad and ISIS/ISIL/Daesh; and last but not least unequivocally blasting any possible nuclear deal with Iran.

What’s even more worrisome is that King Salman brought Pakistani Prime Minister Nawaz Sharif to Riyadh – rushing to meet him at the airport – to confirm a key strategic, secret nuclear agreement before any Iran/P5+1 deal is clinched. The bottom line: the House of Saud does not trust the American nuclear umbrella anymore. They are making their own nuclear power play with the help of nuclear power Pakistan. The connection does exist, but remains extremely mysterious.
No need to outline the upcoming maze of ominous consequences. Demented nuclear Wahhabis, anyone?

A Nuclear Deal With Iran Will Cause Chaos With Oil (Rev 6:6)

A Nuclear Deal with Iran: The Impact on Oil and Natural Gas Trends

iran_oil_and_gas

January 27, 2015

In last week’s State of the Union Address, President Obama threatened to veto new legislation affecting five issues, four of them in the domestic policy arena and just one covering foreign policy. The foreign policy issue in question involved the prospect of new sanctions legislation targeting Iran. Correspondingly, the administration has recently ramped up efforts to conclude a nuclear deal with Iran.

Should the United States and its partners in the P5+1 — Britain, China, France, Russia, and Germany — strike a deal with Iran, the global oil and gas markets would no doubt be affected. Indeed, several leading oil and gas companies are already preparing for a return to business in Iran in the event sanctions are lifted. Such jockeying would only intensify once the Iranian oil and gas sector became fully available to international markets.

Oil

In mid-2012, sanctions were imposed against Iran’s oil exports, precipitating a drop from 2.5 million exported barrels a day to close to 1.4 million a day. If sanctions were lifted now, Iran might need a full year to bring its production to pre-sanctions levels. Moreover, given current market conditions, only limited international investment will likely be available to help restart its production. For one thing, Iran has not offered particularly attractive terms to investors, and at today’s oil prices, investors are cutting back everywhere. Such realities cast major doubt on Iranian oil minister Bijan Zanganeh’s recent claim that if sanctions were to end, “Iran will double its oil exports within two months.”

However, the announcement alone of an agreement with Iran that removes international sanctions would accelerate the current steady downward trend of the global oil price. Thus, the oil price would be affected even before increased physical supplies of Iranian oil reached the market. And more oil would gradually return to the market, helping keep global oil prices low and perhaps depressing them even further. Burdened by sanctions, Tehran has offered discounts to regular buyers such as China, India, Japan, South Korea, and Turkey. The end of sanctions would most likely mean that such consumers would pay a price more in line with global prices. Accordingly, this could create an opportunity for Saudi Arabia and other Gulf producers to increase their market share.

Natural Gas

Since the Russia-Ukraine crisis erupted last year, Tehran has tried to position itself as a reliable alternative to Russia as a gas supplier to Europe. Indeed, Iran is the only state close to Europe’s borders that possesses enough natural gas to rival Russia’s dominance in most European gas markets. Iranian president Hassan Rouhani even stated recently that “Iran can be a secure energy center for Europe.” And Iran’s deputy oil minister, Ali Majedi, boasted in official Iranian media that “Iranian natural gas is Russia’s only competitor for Europe.” He continued that European countries could import Iran’s gas through three separate routes: Turkey, Iraq, or a pipeline running through Armenia and Georgia, and then under the Black Sea.

The notion of Iran as a future alternative gas supplier for Europe is acknowledged by European officials as part of their recent drive to lessen dependence on Russian imports. In April, the EU’s foreign policy arm — the Directorate-General for External Policies — published a study of the EU’s natural gas import options in light of the Ukraine crisis and concluded that “Iran is a credible alternative to Russia.”

However credible an option Iran might be for supplying Europe, two main obstacles would slow Iran’s entry into Europe’s gas markets: one, the need to produce more gas and, two, the need to build infrastructure to get it to Europe. To be sure, Iran is a significant natural gas producer, generating 160 billion cubic meters a year, third globally behind just Russia and the United States. Its output constitutes about 35 percent of annual EU gas consumption. Iran also has vast reserves. Yet interestingly, Iran is a net gas importer, with the country consuming a larger proportion of natural gas than any other country in the world. Iran’s high natural gas consumption rate is due in part to its very low domestic gas prices and thus low energy efficiency. Iran imports gas from Turkmenistan and Azerbaijan, while it exports a bit less to Turkey and Armenia.

In Turkey, energy industry sources have reported that Ankara is preparing its pipeline infrastructure to enable transit of Iranian gas to Europe once sanctions are removed. However, natural gas production requires much larger investments than oil production, and concluding a supply contract generally takes a number of years. In addition, either long-distance pipelines or liquefied natural gas (LNG) facilities cost billions of dollars, with these costs recovered only over many years. Such investments are therefore not undertaken lightly. Accordingly, after sanctions are removed, it will probably take at least five years, and possibly much longer, until meaningful volumes of Iranian gas hit European markets. Europe will also compete with Asia for Iran’s gas exports, since LNG exports into lucrative Asian markets may be more attractive to Tehran than European markets. If Iran seeks to sell LNG to Asia, U.S. LNG exports to the region could find themselves challenged by a new competitor. However, this would take close to a decade to play out.

Geopolitical Impact

A lifting of sanctions on the Iranian oil and gas industry would have a number of geopolitical ramifications. Regarding the export of oil in particular, the strongest effect would undoubtedly be heightened tensions with Saudi Arabia, including on OPEC policy. Recently, Iranian president Rouhani explicitly criticized Saudi Arabia for what he views as Riyadh’s intentional policy to keep oil prices low and threatened that “[the Saudis] will suffer.”

On gas, Russia would take steps to block Tehran’s entry into European markets, as it has done in the past. In 2007, when Tehran inaugurated gas supplies to neighboring Armenia, Russia’s Gazprom immediately bought up the pipeline project within Armenia and built it with a small circumference to preempt its future use for transiting gas to European markets.

Moscow and Tehran could also find themselves competing for gas market share in neighboring Turkey. Already Russia’s second largest gas export market, Turkey’s role in Russia’s gas export strategy has recently grown with Russia’s proposed route change of the South Stream export pipeline from Bulgaria to Turkey.

Overall, cooperation between Russia and Iran rests on a rocky basis, and once Iran is released from sanctions and its conflict with the West, many issues of strategic competition between Tehran and Moscow will resurface, including in the sphere of gas markets.

Another potential conflict that may emerge once sanctions are removed and Iran’s natural gas industry revives is with Qatar over the delimitation of their shared South Pars/North Dome field. This natural gas field is one of the world’s largest and the main source of Qatar’s massive LNG exports as well as the main area where Iran has been investing in new gas and oil capacity. Conflict between Doha and Tehran over delimitation has been forestalled somewhat by sanctions and the corresponding lack of investment in Iranian production in the contested field.

Conclusion

If the United States and its partners can reach a deal with Iran, all players must understand the potential consequences of Iran’s reentry into the global oil and regional gas market. Most immediately, tensions could surge with other energy producers, such as Russia, Saudi Arabia, and Qatar. The downward spiral of global oil prices would also be reinforced. Tehran, it must be noted, could face serious difficulties finding markets for expanded output and attracting the needed investment in production and gas transit facilities. But in the long term, expanded Iranian output could create more supply options for European and Asian gas markets.

Brenda Shaffer, a specialist on international energy issues, is currently a visiting researcher at Georgetown University’s Center for Eurasian, Russian and East European Studies (CERES), on sabbatical from the University of Haifa, where she is a professor in the School of Political Science. She authored the Washington Institute study Partners in Need: The Strategic Relationship of Russia and Iran.

India Will Have To Contend With The Four (Pakistan) and Ten Horned (China) Beasts Of Daniel

India should be ready for a nuclear war: Chief of Integrated Defence Staff

ChinaIndiaborder

IndiaToday.in  New Delhi, January 5, 2015 | UPDATED 19:51 IST
Air Marshal PP Reddy Air Marshal PP Reddy has said that India will have to be prepared for a war on two fronts as the country is surrounded by two nuclear-capable adversaries–Pakistan and China.  
“We are in a difficult neighbourhood with two nuclear armed adversaries. Our primary external security challenges arise from our immediate neighbourhood that is to the north and west. And to some extend neighbourhood in areas of terrorism,” he said in a ASSOCHAM function.
He also raised question on military cooperation between Pakistan and China.

“China’s growing assertiveness and cooperation with Pakistan complicates external security environment and we have to be prepared for a two front war,” he said.

The comments came amid the ongoing skirmishes between India and Pakistan forces along the International Border.

Pakistan on Monday resumed heavy mortar shelling targeting scores of Border Out Posts (BoPs) and civilian areas along International Border (IB) in Samba and Kathua districts, killing a BSF jawan.
“Pakistan Rangers resorted to heavy mortar shelling on BoPs and civilian areas along IB in Samba and Kathua sectors around 2 PM today,” a senior BSF officer told PTI, as the fresh ceasefire violation by Pakistan triggered another round of heavy exchanges.

One BSF jawan was martyred in the shelling, he said, adding the force was retaliating in equal measure.

Save the Oil: ISIS Financed By Oil (Revelation 6:6)

Death, Chaos, And Destruction Aren’t As Bad For Companies As You’d Think

The Economist

Reuters/Ahmed SaadSupporters of Shi’ite cleric Moqtada al-Sadr burn a U.S. flag during a protest demanding the government prevent the entry of U.S. troops into Iraq at Al-Tahrir Square in Baghdad, September 20, 2014.

Islamic State may be a geopolitical threat, but it has not yet posed much of a danger to business. A day’s drive from the fighting, in Kurdish-run Iraq, three Western oil firms, Genel Energy, DNO and Gulf Keystone, continue to pump out crude that is piped or sent by road to Turkey.
Their combined market value plunged after IS seized the city of Mosul in June, but has recovered to $8.3 billion, down 29% from the start of the year–a hefty fall, but not so bad for firms on the front line of fanaticism.

“We’ve gone from a place that was a bit tricky in terms of security to a full-on war,” says the chief of one firm. But he is confident that the Kurdish region’s well-armed militia will protect his business. So far investors have tweaked their financial models, not run for the door. Analysts now assume a cost of capital of 15%, up from 12.5% before IS struck, he says.

That mix of instability and business-as-usual is true of the world at large. In a new book Henry Kissinger, the doyen of foreign-policy strategists, describes a world in which disorder threatens, and violence in Ukraine and the Middle East and tensions in the South China Sea vindicate him. In theory, after 20 years of global expansion, multinationals are more vulnerable than ever.

Listed Western firms have 20-30% of their sales in emerging markets, about double the level in the mid-1990s. It is not just oilmen but tech wizards and sellers of fancy handbags who face political risk. It can range from currency instability, vindictive regulation, curbs on remitting cash back home and production disturbances to sanctions or even nationalisation.

Yet none of the recent geopolitical turmoil has had much impact on firms or financial markets. There have been yelps of pain. Carlsberg, Adidas, Société Générale and others have had share-price falls or made write-offs due to Russia. Overall Russian losses by Western firms amount to $35 billion, based on announced write-offs and the value of a basket of ten companies most exposed to Russia.

But that is a drop in the multinational ocean. An index of political risk calculated by Dun & Bradstreet, an analysis firm, is at its highest level since 1994 (partly as a result of the euro-zone crisis). But the VIX index, which measures the implied volatility of America’s stockmarket, and is also known as the “fear gauge”, is near a 20-year low.

One explanation is obvious: the places suffering conflict are politically important but economically small. The Middle East, north Africa, Russia and Ukraine together produce just 7% of world economic output. They are mere “flesh wounds”, says the head of a Wall Street bank. Only 2% of the stock of foreign investment by American, Japanese and British firms is in these places.

Many bosses are more worried by American lawyers than jihadis. Multinationals’ central nervous systems–their financial operations and computer servers–are still typically based in the West, Singapore or Japan. In 1973, 1979 and 1990 the oil price transmitted unrest in the Middle East across the world, but the world’s energy mix has shifted away from oil since then, and America has lots of shale gas. Loose monetary policy has also buoyed markets.

Companies have so far proved better than expected at absorbing risk. This has little to do with the advice of political pundits and a lot to do with common sense. One boss says there is no substitute for getting directors to visit operations. “You get a sense of what is going on. It’s a lot better than sitting in a boardroom with nice charts and the latest 30-year-old analyst telling you what is happening in Africa.”


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Crisis, or opportunity?

For a start, it is possible to grind out profits in troubled places. Lafarge, a French cement giant, has operations across the Middle East and north Africa. Sales there have risen slightly since 2009 and gross operating profits are now $1.5 billion a year. MTN, a South African mobile-telecoms firm with a thirst for danger, has a division in Syria (and in Sudan and Iran) where gross operating profits rose by 56% in the first six months of this year.

Most multinationals have reduced their risks. The subprime and euro-zone crises inadvertently helped: big firms typically carry more cash than before, making them less exposed to a credit-market freeze. GE has twice as much cash as it had in 2006. And most big firms have pursued a policy of geographic diversification. An excessive concentration on one country is a classic mistake.

After China’s revolution in 1949 HSBC, then a purely Asian bank, lost half its business. Iran’s nationalisation in 1951 of the Anglo-Iranian Oil Company’s assets devastated the firm, a precursor of BP.

There are modern echoes of these episodes. Repsol, a Spanish oil firm, fell in love with Argentina, leaving it vulnerable when YPF, the firm it bought there, was nationalised in 2012. First Quantum, of Canada, had made a third of its profits from a mine that the Democratic Republic of Congo nationalised in 2009. But as they have expanded over the past two decades, multinationals have spread themselves more.

Only a dozen big, global, listed firms have over a tenth of their sales in Russia. BP is the country’s largest foreign investor but gets only about 10% of its value from its stake in Rosneft, an oil giant. McDonald’s Moscow outlets, once a symbol of détente, are temporarily shut, victims of a diplomatic tit-for-tat. Even so, the burger giant makes less than 5% of its profits in Russia.

This picture is true in other hotspots. Telefonica, a Spanish firm, and Procter & Gamble (P&G), together have billions of dollars trapped in Venezuela, which has introduced capital controls. But it represents less than 5% of their sales. Ben van Beurden, the boss of Royal Dutch Shell, recently said diversification is “the only way to inoculate yourself”.

As well as boosting their liquidity and hedging their bets, firms have got cleverer at running their production networks. The cliché of a rickety global supply chain that fails if a single link breaks is still sometimes true. Floods in 2011 in Thailand, a hub for making hard drives, disrupted the global computer industry.

But whereas emerging countries were once just a source of production for rich ones, now they are a source of demand, too, allowing production to be organised into more robust regional cells and providing a natural currency hedge. Alan Lafley, the boss of P&G, has said 95% of its production is in the region where the goods in question are sold.

Very large firms can reallocate output around the world. ArcelorMittal, which paid $5 billion for a steel mill in Ukraine in 2005, is now selling its slabs outside that country.

William Fung of Li & Fung, the world’s biggest sourcing company, serving big retailers such as Walmart, says that since Lehman Brothers’ collapse, most firms have become more careful to ensure that they have backup plans.”People wound their supply chains up too tight, until it became dangerous. What they have learned in the past five years is that you need some slack in your supply chain–you are not aiming for 100% efficiency…You need resilience, too.”

Is geopolitical risk exaggerated? Executives admit there are catastrophic scenarios that keep them awake at night. Tensions with Russia could escalate, leading to much tighter sanctions and prompting Russia to turn off the supply of gas to Europe. An overthrow of Saudi Arabia’s geriatric monarchy could make oil prices soar. And everyone is scared of political instability or an economic slump in China. It is simply too large, both as a centre of production and as a market, to ignore.

The Wall Street boss says, “This is China’s century but not every year will be its year. When it has a bad year, everyone will panic.” Another bank chief says a China blow-up is “inevitable”. The head of a huge multinational says he fears a war between China and Japan.

Although geopolitics might not destroy today’s multinational corporations, they may alter their investment plans. After a row over the Senkaku/Daioyu islands in 2012, Japanese firms faced boycotts in China and their exports to it fell by a fifth.

They recovered, but Japanese firms have cut investment in China: the share of Japanese foreign direct investment going there has halved since 2010, to 7%.

Likewise, Russia’s conflict with the West over Ukraine has impaired its ability to attract capital to upgrade its creaking energy industry. And strife in Libya and Egypt has damaged north Africa’s hopes of becoming a production hub for Europe. Like countries, multinational companies have no permanent allies–only permanent interests.