Tuesday, May 29, 2012

When is a bubble not a bubble?

Shock, horror. America to raise taxes

Needing to raise money for social programs, what does any Government do?
Either it can sell off assets or it can raise taxes.

Pakistan and the CIA

When is a vaccination program not a vaccination program?

American Treasury Bonds

In case you’d forgotten or not noticed in the first place, this year is an American Presidential election year. That’s right, it’s approaching that time when incumbent Presidents can either stop worrying about being re-elected and start worrying about how history will judge them or will be spending a lot of time writing their memoirs.

It’s also that time when Republicans will be desperately trying to demonstrate that Democrats are really ‘closet communists’, which translates into Democrats believe in radical, i.e any, social reform. The sort of reform that if any government in Europe tried to introduce it there would be people rioting in the streets. Rioting against benefit cuts.
So what has President Obama got up his sleeve that is so exercising the right? In two words, tax increases. Did I say up his sleeve? That would imply sleight of hand and the tax increases have been announced and are on the statute book, so no surprises there, surely?

Right now, American Treasury Bonds prices are, in simple terms, expensive to buy when looking at the yield. In the latest auction, seven-year bonds offered an effective yield of 1.18%. In reality, the nominal yield was 1.25% but the bonds were selling above par, at 100 14/32. Relax, that’s the end of the figures. What do they actually mean?

They mean that with the financial uncertainty in Europe, the ‘Fed’ can offer a low-yield bond and investors see them as a safe haven for their money. It’s as simple as that. The thing about ‘T Bills’ is that they are readily sale-able, unlike some stocks, which can tank and become unsaleable at almost any price. So what’s the ‘shock horror, bursting asset bubble’ story here?

America is raising the rate of Capital Gains Tax. From a current rate of 15% to 23.8% by Jan 1st 2013. That’s in law; it’s going to happen. The Right, or sections of the right-wing Republican media in America, are hopping up and down, shouting that the tax rate ‘might’ go up to 33.8% during 2013 if Obama is re-elected. Well, it might. Doubtless, he is planning to introduce some sort of welfare benefit reform during his last term, to secure his place in history as the President who actually did something for the underprivileged in American Society. Did I say the Right is hopping up and down shouting? Not strictly-speaking true. It’s only certain elements of the Republican press who think that the people who hold T Bills are incapable of reading the financial papers. Some blood-curdling figures are being bandied about. A tax-rise of 58% is already in law and it might be as high as 125%, apparently the largest tax rise in American history. Cripes, daylight robbery. Or is it?

Strictly speaking, considering the tax-rise from 15% to 23.8% already in law that represents a rise of 8.8%, and 8.8 is 58% of 15. Sounds cataclysmic doesn’t it, the end of financial civilisation as we know it. The ultimate triumph of communism over capitalism. Republicans are congenitally incapable of making any distinction between Socialists and Communists. Certainly, a rise of 58% sounds worse than saying the Capital gains Tax is going up from 15% to 23.8%.

There are predictions of a financial meltdow(n). Investors scrambling to sell T bonds before Dec 31st to avoid these extortionate ‘Goddam Commie’ tax increases. The price of T bonds plummet, the bubble bursts, worse than the property market etc etc, the final apocalyptic collapse of the American Dream. Er, not so fast. To pay capital gains tax, you have to actually make a capital gain and given that the American economy is showing signs of hesitant recovery the T Bills may not be selling above par at those yields for much longer. They’ll remain a haven for those looking for safety, but other investment opportunities may present themselves, meaning that investors and institutions change their portfolios, seeking a higher dividend yield. In other words, the price may well fall as individuals and institutions unload them irrespective of any tax increases, but of course a natural economic cycle doesn’t make a good ‘shock horror’ story, does it? And let’s not forget, taking a American-centric view, if jobs and manufacturing industries are sucked back into Europe and manufacturing output/exports rise there, the perceived safety factor of American Treasury Bills will diminish, also cutting prices. So no capital gain to pay tax on and not so much an asset bubble bursting as one deflating. Private investors might well decide to retain their holdings and take the guaraneed yield, it depends at what price they brought the bonds in the first place. Oh that’s right, they brought at above par. Not much of a bubble then, more a hedge against continuing uncertainty, except that there is no uncertainty about the tax rises. They’re not an uncertainty they’re a fact.

Some final figures and these reveal something of a surprise. China owns America, right? Everybody knows that, it’s common knowledge. Is that so? T Bills, aka American Government debt, are currently valued at US$14.3 Trillion. The value of the Chinese holding? US$1.2 Trillion or less than 10%. In fact, us dammed foreigners, long-lunch and excessive vacation taking crypto-communists to a person, hold about 31% of American Government debt. To put that another way, American individuals and institutions hold about 69%. See, I can play around with figures as well. If you compare that with France, where some 59% of Government debt is held outside of the country, it doesn’t sound so bad. And of course America is still seen as a safe haven for your money whilst France is seen as …. Insert your own word or phrase.

The CIA and the fake vaccination program

The CIA set up a fake vaccination program in Abbottabad in order to obtain DNA samples from children living in what was suspected, and eventually proved to be, Bin Laden’s lair. The vaccination program was aimed at Hepatitis B and usually it takes three doses before the vaccine has a chance of being effective. Allegedly only one dose was adminisistered.

According to various reports, not only was the CIA unable to actually obtain a DNA sample, but also they failed to complete the vaccination program. The Pakistani doctor who was apparently unwittingly recruited to run the program has recently been sentenced to thirty-three years for treason, plus another three years if he doesn’t pay a fine.
Now quite rightly the WHO (World Health Organisation) and other organisations connected with providing immunisations have pointed out the damage that this does to immunisation campaigns in areas where the motive behind them is already suspect, at least according to locals who fear that they are being sterilized or worse. A couple of questions remained unanswered. In fact as far as I can tell, they haven’t even been asked, in public at least.

What would it have actually cost the CIA to complete the vaccination program? Didn’t the doctor, a respected Pakistani surgeon who had worked in the area for a number of years, question the amount of vaccine he was given? Perhaps more interesting is why did he remain in the area after the raid on the Bin Laden compound? The CIA is not commenting, but I wonder if in the rush to condemn such apparently heartless behavior people are missing the fact that the program might have been completed? I’m certainly not an apologist for the CIA, and definitely not if the facts in this case are true, but it does seem to me that there is a bit of a shortage of facts on the ground. The trial of the doctor was held in secret and under the jurisdiction of a tribal court rather than the Pakistani High Court. Given that Abbottabad is a mere thirty- one miles from Islamabad, the capital of Pakistan, wouldn’t you have expected a highly public visible trial in a High Court?

Of course, the conventional answer to that is because the Pakistani government was complicit in hiding Bin Laden they would want to avoid a public trial. Doesn’t wash. What seems to be emerging, in general terms, is that the ISI (Inter Services Intelligence) agency, or at least sections of it, were complicit in hiding Bin laden. This was long-suspected by the Americans and had had poisoned US/Pakistan relations, aka slowed the flow of American funding to Pakistan, for a number of years. The Pakistan Government is involved in a long-running power struggle with the Military and ISI. It would have surely been to their advantage to hold a public trial. Under the Tribal court system that brought charges against him, the doctor had no access to a lawyer and was not present in court. He does have the right of appeal, but to which court? Interestingly, the Tribal Court that tried him has no jurisdiction in the area where the alleged fake program took place. As an aside, the Pakistan legal process can take years, with judges granting lengthy adjournments for seemingly minor reasons. The Tribal system is much faster in dispensing justice.

As I said, I am no apologist for the CIA, but there are some questions here that have not been publicly answered. Given that there was no public presentation of evidence, the statement that the vaccination program was not completed is based on hearsay evidence, obtained in an area where America and the CIA are not exactly flavour of the month. I can well believe that the CIA mounted an operation to obtain confirmation that Bin laden was present in the compound, after all the Seal team operation did amount to a gross violation of Pakistani sovereignty whichever way you look at it. Would the CIA have been so clumsy and obvious? Maybe, but it does seem to me that there has been a bit of a rush to judgement by those who are not members of the CIA supporters club. They may well be correct in their assertions. Or they may not. I think we should be told.


Sunday, May 27, 2012

Bubbles, pretty bubbles: unfortunately not in a champagne glass.

                                                       The Russian Economy

I’ve pulled these statistics from a number of sources, but most of them seem to agree. I’m assuming that most of you are no more interested in economic minutiae than I am, with the proviso that as always ‘the devil is in the details’.
Ø      Is the largest producer of oil in the World and has the eighth largest reserves.
Ø      Is the second largest producer of natural gas and has the largest gas reserves.
Ø  Has the second-largest coal reserves and is the third largest exporter of coal, mainly to the Asia/Pacific region (AIPAC)
Ø      Annual exports valued at US$429.4 Billion
Ø      Annual imports valued at US$247.7 Billion

So, they’re basically laughing and can afford, this time, to take on America in a High-Tec arms race, right? Weeeell, remember that devil lurking in the details?
Ø      80% of exports are either commodities or defense-related equipment
Ø      The biggest trading partner is the EU, 46.8% of over-all trade
Ø      Exports to the EU are 44.8%. Next is the US at 5%, yes 5%!
Ø      75% of direct foreign investment comes from the EU member states

With the EU currently enjoying some minor financial difficulties, the picture isn’t looking quite so rosy. The EU member state that trades the most with Russia is Germany, and they’re a little preoccupied with Southern Europe right now. They’ll be keen to maintain their exports but may well want or need to cut down on imports, particularly if the Euro is devalued. Gosh did I say that? Well it did just occur to me that one way of attracting manufacturing industries into Europe, and providing the  growth that Queen Angela doesn’t seem to be so keen on, would be to devalue the Euro. Hell fire, that might even make it easier for Greece to remain in the Eurozone. Maybe that’s why QA isn’t so keen on growth, because as far as I can see that’s about the only way of stimulating the European economy. Devalue the Euro, exports become cheaper and more attractive outside the EU, imports become too expensive for ‘the workers’, which also stimulates production within Europe. With wages effectively lower, foreign manufacturers might just be tempted to move back into Europe, Toyota for example. Any bets on who will be the first European politician to say ‘the Euro in your pocket is not worth any less this morning’?

Given the strong possibility of the odd Geo-political hiccup torpedoing Russian exports, gas for example, personally I wouldn’t be worrying about creating stealth ICBMs and having any sort of spending contest with America. Why did I mention gas? Well readers in Europe will remember in 2009 there were concerns about the physical supply of Russian gas. There was a spat in the Russian Federation and although they denied it, the amount of delivered gas dropped off until Moscow smacked Kiev (Ukraine) round the head.  Naturally, this occurred during a particularly cold spell in Europe, and in Ukraine as well come to that, and there were uncharitable mutterings that Ukraine had ‘siphoned off’ some of the gas from the pipeline to Europe which runs through it’s territory. The same thing happened earlier this year, so whatever the problem is (Ukraine wants more money for allowing the pipeline to go through it’s territory perhaps?) it obviously hasn’t been solved just yet.

Enter Israel and Cyprus, not such an unlikely pair as they both have problems with Turkey. There have been major gas fields discovered in Cypriot and Israeli waters. The two countries are co-operating in the development of these fields and there are estimates that these finds  potentially constitute the second biggest available supply of natural gas to Europe. Perhaps the supply will be more reliable. Perhaps Greece would like to build a pipeline across its territory, with all the attendant economic benefits. There are of course political problems with Turkey, but a deal seems to have been cut with Lebanon which had originally claimed that the Israeli Leviathan Field was partially in Lebanese waters.

Back to Russia. Apart from exporting oil, coal and gas, their manufacturing industry is in a bit of a mess and suffering from lack of investment. The Russian banking industry spent about one third of its foreign reserves, US$600 billion, in 2007 propping up the Ruble, and although it held its value, the economy has not expanded to any great extent. Reliance on commodity exports is a reliance on the price of commodities, oil in particular, and the price has swung wildly. The Russian banking industry additionally received a US$200 billion injection of liquidity during the 2008/09 global financial crisis to help non-energy or exporting businesses repay loans when foreign investments pretty much dried up. They avoided a slump but growth remains a problem, as does a shrinking workforce and a basic lack of infrastructure throughout Russia. And don’t mention the grain harvest. A look at the figures reveals that Russia periodically has a problem feeding itself.

To give but one example, there is precious little foreign investment in the Russian coal industry. Total investment in the Russian coal industry is running at US$2 billion per year, of which US$40million is direct foreign investment, around 2%. This is a representative example of the problems of attracting foreign investment. Corruption is rife in Russia and they haven’t quite got around to sorting out the laws pertaining to private property and private investment. Given time they will. Given time Putin may succeed in shifting local manufacturing over to a more High-Tec base. Given time Russia may be able to financially take on the USA in a High-Tec arms race, but not right now.

One final thought about coal. Russia is the third largest exporter behind Indonesia and Australia. In the last couple of years, the industry has shifted its export efforts from Europe, due to falling demand for coal there, to the AIPAC region. In the AIPAC region, China is the biggest importer, but China owns the Australian mining industry. China is also heading for a fall. Yes true their economy is growing at 6.7% pa, but it needs to grow at around 10% pa if it wants to provide jobs for all new entrants to the workforce. Except some of those jobs are about to be exported to Europe, with Toyota leading the charge.

Looking at the over-all picture, one might say that if Europe catches a cold then Russia is going to get a dose of flu, given that a collapsing Europe desperate to attract jobs and not able to afford imports will effect the AIPAC region’s economic performance by sucking in manufacturing industries and hence jobs. That will lead to a fall in demand for Russian exports.

Whilst Putin may not be completely convinced about democracy, nobody could accuse him of not having Russia’s best interests at heart. He just needs to realise that those interests would be best served by a period of introspective economic reform and growth promotion rather than indulging in global politics. Given the potential of the Russian economy, if he can overcome decades of inertia and resist the temptation to replay the Cold War, then in a decade or so Russia will be a High-Tec economic power to be reckoned with. Then it will be the counterweight to America that Putin would like it to be. In the meantime, America isn’t about to collapse, despite the gloom and doom merchants. More on that next time, but in the meantime…..

Made that call yet Vladi?


You might like to take a look at America's Chronicle 'Click click'
For further facts on the Russian economy dart your digit here 

Saturday, May 26, 2012

Spotted Blog?

This week I thought I’d give you a series of seemingly random dots, explore them individually then join them up in a series of articles, all a little shorter than previous ones. Sort of easily digestible bite – sized chunks if you will.

To start with though, a bit of literary news and a shameless unsolicited plug. Not actually a plug for my efforts as such, although I can tell you that one of my articles is slated for publication in Latitudes and Attitudes magazine in October or November. http://www.seafaring.com/Click here.

No, I want to mention an old chum of mine, Larry Jeram-croft who’s published a couple of cracking good books on Amazon The first one in the series, Sea Skimmer,
Is a fictional novel set during the Falklands War. Or is it? Fictional that is. This year is the 30th anniversary of the campaign and Larry, who was a helicopter pilot in the Royal Navy at the time of the conflict, is putting extracts with comments from his logbook on his blog, http://sowethereyet.blogspot.com/clickety-click.

For those who’ve read the book this will be a fascinating insight into the truth behind the fiction (always supposing the book is fiction). For those merely interested in military history it will provide a glimpse of what it was like to sail to the South Atlantic and go to war. OK, unsolicited plug over (er, cheque in the post then Old Boy?….. just kidding, this will come as a surprise to Larry. A pleasant one I hope).
To finish the literary news on a personal note, it would seem that Emma the Agent has found an illustrator for the Trembling Tim stories. I’ve seen some initial drawings and although there’s some ‘fine tuning’ to do, it’s all looking hopeful. More news as and when I have some.

Right then, let’s explore the first random dot.

Is Russia about to repeat a historical mistake?

A recent BBC report stated that Russia has just tested a new ICBM. Apparently, they’ve tinkered around with the first stage booster to make the launch more difficult to detect. It also has multiple warheads, which will make the whole kit and caboodle more difficult to detect and shoot down. Those ‘nasty ole Merkins’ have developed an anti-missile system and are installing it in Europe and other places. THEY say it’s for protection against possible rogue nuclear states or terrorist organisations that acquire nuclear weapons (and the ICBMs to deliver them? Come on chaps, really!) Vladi Putin sees this as a threat to Russia so they’ve developed the ‘stealth ICBM’.

A threat? Well yes, if you think that a purely defensive system would allow your ‘now sort-of friend and traditional long-term enemy’ to launch a nuclear strike against you whilst being immune from a retaliatory strike. Haven’t we been here before? Vladi, do yourself and the Russian economy a favour and give Gorbie a call. I’ll come back to this, but first.

Let’s connect a couple of dots. America has heavily backed development of the Israeli ‘Iron Dome’ anti missile system. Just recently, this system has successfully destroyed 90% of the small missiles fired at Israel by Hamas, from Gaza. A connection here, you might think, as in technology transfer? You know, ‘we’ll give you guys a budget to develop an anti-missile system. The chances are that you’ll get to extensively field-test it because we can always rely on the Palestinians to make a series of militarily futile but highly irritating attacks on Israel instead of sitting down and talking. Once we know it works, we can incorporate it into our new missile shield’.

 I wonder if the new American ABM system has a snazzy name, how about ‘Strategic Defence Initiative’? Oh wait; they’ve already used that. A system which can successfully destroy a metre-long metal tube in flight probably wouldn’t have too much trouble with tracking multiple warheads, but hang on a minute; didn’t the former-Soviets trumpet their MIRV (multiple independently targetable re-entry vehicle aka 6-10 nuclear warheads on one launcher) as the answer to any anti-missile shield system? MIRV might have given a first-strike capability then because the SDI technology was ‘some years away’ from development. Now it isn’t, we are now those ‘some years away’, and Iron Dome has shown that small targets can be regularly intercepted in flight. Sure the range needs improving, but the basic technology has been proven. The former Soviet Union is the former Soviet Union because they went bust trying to match American technology, real or imagined. The ‘Third World War’ was the first war in history won by one side outspending (and out-bluffing) as opposed to out shooting another. Well, the Americans always were good poker players, that hasn’t changed. Has the Russian economy changed since the heady days of Communism? I think we should take a closer look, but not right now.


Pakistan has been complaining that America has been violating its sovereignty recently. They cite the Seal-teams’ unannounced raid on the late and in most quarter’s unlamented Bin Laden’s bijou town compound in beautiful downtown Abbottabad. Surely you remember that? The small compound situated next door to the Pakistani military academy, where presumably they train the Pakistani military to be ever vigilant, alert and watchful. Oh OKAY, it was just under a mile away, so it’s perfectly understandable that they missed it. Or knew exactly where it was, depending on whether you are the Pakistan Army, the Pakistan Government or ISI (Inter-Services Intelligence). No, let’s be fair about this, you would probably have to be in the ‘right’ department of ISI to know where Bin laden was, the other departments were busy helping the CIA look for him, on an expenses plus daily rate basis. Nothing like a unified approach to national security, is there? You just can’t beat it, unless you don’t tell them what you’re up to in their country. Anyway, Abbottabad has apparently long been a favourite tourist destination, so perhaps the Pakistan tourist authority is missing an opportunity here. Certainly visitors were attracted to Abbottabad, so what are they complaining about?

Apparently, heaven knows why, the Pakistan military is miffed that the Americans (never NATO you notice, always ‘The Americans’) manage to track down and kill Al Qaeda and Taliban members residing in Pakistan with apparent impunity. That’s both residing in apparent impunity and crossing the border with apparent impunity. Sometimes they chase them across the border in hot pursuit, sometimes they just cross the border and have a general nose round to see who they can turn up and sometimes they send drones across which have a lengthy nose around then kill people. Usually the right ones, but let’s not split hairs.

The Pakistanis are of course absolutely correct. This is a gross violation of their sovereignty but what really miffs them I suspect is there’s actually bugger-all they can do about it. Apart from actually cooperate with NATO (sorry, ‘The Americans’) in the fight against International Terrorism. Or Afghani freedom fighters, as some in ISI prefer to call them.

All this is complicated because Pakistan has nuclear weapons and if not ICBMs then launchers that can reach most of India and/or Afghanistan. India of course has just test-fired a missile that could hit parts of China, should Chinese troops ever misread their maps and cross the border into India looking for food or alternative employment. India is also a pal of the Americans, or at least was until they didn’t cut down on their imports of Iranian oil enough to keep Madame Clinton and her boss happy. Maybe if they did buy more oil from Saudi, which has ambitions of empire in the Gulf region to counter the growing Iranian military threat, then the Americans might sell them their ABM system. They don’t really need it, they ‘outgun’ Pakistan in every sense of the word but it would be handy to be able to threaten Pakistan with a first-strike that Pakistan wouldn’t successfully be able to respond to whilst not actually having to carry out the threat. After all, they might need the missiles to keep out job-seeking Chinese. What? Read on.

Castles (Toyota factories) in Spain

So, Toyota is about to build a new factory in Spain. Exporting one million cars a year they say to Europe (they’ll be cheap, economy models then) and the East coast of the USA. If things go according to plan the new plant will be operating 24/7, be the most modern cost-efficient and green –energy using plant that Japanese money (or EU subsidized funding) can buy and will provide direct employment for twenty-five thousand Spaniards. Plus no doubt associated jobs, which some estimate as high as two or three for every direct employee. This contrasts with a Toyota plant in China which currently exports to the east Coast of the USA amongst other places, which is not very energy efficient being built in the eighties and that Toyota have announced that they are closing. This plant creates NINE other related jobs according to the Chinese. Well, it did. Now it’s closing. Cheaper to manufacture in Europe now? Well there is a health care system in place in Spain, in China Toyota has to provide health care for its employees. The Chinese have occasionally gone on strike to get higher wages, and they have succeeded in their aim. The Spaniards may well be happy to get a job. Of course, the new plant will need steel to build the cars. It might be steel produced by an Indian-owned company but it probably won’t be steel produced in India because one of the rationales for building the plant in Spain is to cut down on shipping costs from China. Or India, as the case may be. Lucky the Indians have a deterrent to keep all those new Chinese job seekers out then. They’ll have enough of their own if steel manufacture moves to Europe because all those European countries have available work-forces and are now industry-friendly because they need to attract external investment. Like the sea, the tide of jobs flows one way, then after a while, it flows another.

Luckily, India has a friend who at a pinch has an ABM system available. They just have to cut down on oil imports from Iran, which is trying to develop ICBMs and nuclear weapons. They, Iran,  won’t succeed, probably because of sanctions and because their air-defence system (ADS) couldn’t cope with a determined aerial bombardment, launched by somebody who is determined that they won’t get nuclear weapons. Israel say, who has developed the Iron Dome anti-missile system with funding from America, so they can incorporate the technology in their new AMB missile shield that has Vladi Putin so worked up. Make that call Vladi, NOW!
The Iranian ADS might have posed a credible threat IF they had the Russian SA300 Surface to Air Missile system (SAM). They signed a contract with Russia in 2007, or not depending on which version of events you believe, and are anxiously, or futilely, awaiting delivery. They hope before the Americans repair their F22 Raptor aircraft that have allegedly been deployed to the Middle East.

In the meantime

Queen Angela (Merkel) is not enjoying the French revolution and wishes the revolting French could afford to buy their own damn cake and preferably eat it somewhere else.
America has a new investment bubble bulging. It’s actually a Government inspired one, but it does throw up some interesting statistics which give lie to a couple of urban myths.

Next time let’s take a look at the Russian economy and who knows, if Greece succeeds in staying in the Eurozone Chinese companies might be opening up new manufacturing plants there instead of in Guangdong.


Saturday, May 19, 2012

Dog bites man. Or did it?

Every journalist knows that ‘dog bites man’ is not a story whereas ‘man bites dog’ makes a great one. I was reminded of this when reading about the banking crisis in Spain, and that in turn sparked off a memory of a half-remembered event.

I was going somewhere by ferry, I think it was to France or just possibly Guernsey, but I really can’t remember for sure and it’s not important. There was a delay of several hours, due to a mechanical fault with the ferry, and we were all offered refreshment vouchers, for which there was the inevitable queue. Some people were extremely disgruntled but most, like myself, were quietly philosophical about it. A local TV news team turned up, slightly pushy female interviewer, cameraman, sound recordist and a large van with the station logo plastered all over it. She, Daphne Blonde-Paddedshoulders, prowled up and down the various lines of people and for some reason thrust her microphone under my nose.
“Terrible isn’t it? How are you coping?”
Coping with what? I gave my considered reply.
“Actually they’ve given us plenty of information, are going to feed us and it’s not so much a problem as a minor inconvenience”.
Not what Ms Blonde-Paddedshoulders wanted to hear so she moved on and tried again.
“It’s terrible. They’re not telling us anything. I’ve been queuing for hours and my family are going to be frantically worried, I’m really stressed out by this horrible experience etc etc etc.”
Bingo. An interview was duly recorded and for all I know duly broadcast. Others who obviously wanted to appear on TV also obligingly gave vent to their newly acquired spleen. Long on emotion but a bit short on facts, never mind, man had obligingly bitten dog.

Fast forward to the run on the bank in Spain, conveniently for those with a bad memory named Bankia, that seemingly never was. Or might have been, depending on your interpretation of what may or may not have happened. Conchita Helena Maria de la Vegas and her team of intrepid, battle-hardened technicians pounce on unsuspecting Bankia employees as they leave work.
“Eh Juan. Tough day, si?”
“Not really, pretty average I’d say…”
Pick another one.
“Juanita, busier than usual today si?”
“Si, a bit. More withdrawals than usual, a few accounts closed….”
“You’d say that people were panicking?”
“I’d say that they were concerned but…”
“But some might have panicked enough to close their accounts and withdraw their money?”
“I suppose some might have been but…”
Bingo! Never mind the ‘buts’. An unstated number people on hearing that the bank was to be partly nationalised had decided to move an unsubstantiated amount of their money elsewhere. Man munches hapless mutt.

So was there a run on the bank or not? When there was a run on the Northern Rock in the UK, there were news-clips of queues stretching around the block. There was no doubt that people were closing their accounts in large numbers. I must have missed those in the reports that I’ve looked at about recent events in Spain. However, shares in Bankia did fall by thirty percent, so bearing in mind the bank has been partly nationalised perhaps a good time to consider buying. It might be instructive to see who buys when that inevitably occurs. Manipulation, surely not.

Queen Angela

Fresh from her successful intervention in the French presidential elections, ‘Iron’ Chancellor Angela Merkel apparently decided to give a few helpful suggestions to beleaguered Greek President Karolos Papoulias, or not, depending on whose version of events you believe. Of course it’s unlikely that a foreign head of government would intervene in the internal electoral affairs of another country… sorry that was a typo, I meant to say that it WAS unlikely, ‘was’ as in used to be. Apparently, Frau Merkel has rewritten the rules. Given her recent track record, President Obama is probably praying nightly that she publicly endorse Republican candidate Mitt Romney in the November elections. To be fair, and why not, it’s more than likely that she just mentioned in passing that the forthcoming Greek elections might be seen in some quarters as a vote on whether the Greek electorate wanted to stay in the Euro or not. That in itself reveals a slight disconnect from reality though as none of the aspiring Greek prime ministers are saying they want to leave the Eurozone, they just don’t want to repay their debts. Well who does, but sometimes you just have to. Of course, if you are unemployed, exist on dwindling state handouts and have no expectations of things improving then it has to be conceded that repaying debts is somewhat problematic. This is where perhaps a combined austerity/growth approach might be the best long-term bet. However, ‘sie wollen sie, die dame is nicht fur das drehen’. That may or may not translate into the immortal words of Queen Maggie the first (you turn if you want to, the lady is not for turning). Fairly shortly after that there was a palace coup and the UK bid farewell to La Thatcher. Queen Angela might have noticed that her loyal subjects, aka the German electorate, aren’t proving to be quite so loyal just at the moment. Either she’ll turn or they will, turn her out that is.

Meanwhile Italian technocrat, unelected Prime Minister ‘Super Mario’ Monti has asked journalists to stop asking so many questions about the Italian economy. They have problems but it’ll be OK in the end. It probably will, but ‘Super Mario’ needs to remember the old adage, dog bites man no story but man munches mutt is big news. The folks who strive to bring you ‘breaking news’ 24/7 can’t just sit in front of the cameras and say ‘nothing has happened in the last ten minutes’, they have to say something, even if they later change the story to fit the facts. In the meantime, the moneymen circle like interested vultures seeking an opportunity for a quick snack, but you can’t only blame them, own any shares do you? It’s nice to see them increase in value (remember that?) and the dividends can come in handy.

Now here’s an interesting thought. Given that most commentators now seem to agree that Greece ‘cooked the books’ when applying to join the euro and most if not all of the ‘gang’ already in decided to turn a blind eye, who is actually to blame for this mess? Well you certainly can’t accuse former Icelandic Prime Minister Geir Haarde, although he was accused and convicted of complicity in the 2008 Icelandic banking crisis. Perhaps there’ll be a choice of demonstrations in Europe this summer. ‘What do you think we should do today, play ‘pass the tear gas canisters’ with the local gendarmerie or shall we converge on Brussels and see how many politicians we can get into the dock?’


On the other side of the World, newly appointed Australian Foreign Minister Bob Carr was having difficulty remembering which Chinese Government official said what to him during a series of meetings in Beijing.

Australian Foreign ministers seem to have difficulty with their memories. The last incumbent. Kevin Rudd, seemed to forget that he was no longer Prime Minister, having previously been effectively knifed in the back by Prime Minister Julia Gillard. Knifed or did she use a stiletto? Never mind, Foreign Minister Carr finally decided that it was probably his Chinese counterpart, Yang Jiechi, who told him that that “the time for 'Cold War alliances' has long since passed."

No doubt he was also subtly reminded that twenty five percent of Australia’s exports go to China, which also appears to own most of the Australian mining industry. Be a shame if China went broke then, wouldn’t it, but I’m sure that that wasn’t mentioned. No, what prompted the comment was the recent deployment of American marines to Darwin. Under a recently signed defence agreement, America can station troops in Northern Australia, conveniently or inconveniently close to places where China currently enjoys economic dominance. Particularly handy if America ever decided that they were fed up with long-tern friend the Philippines being pushed around by China over the Scarborough Shoals, a collection of coral atolls about one hundred and twenty-odd miles away from the Philippines, Subic Bay in fact, and five hundred away from the Chinese mainland. 

Speaking of Subic Bay, the former US navy base in the Philippines, China didn’t press its claim on the Scarborough Shoals until after the US navy had vacated the base. Funny old thing that. It’s all about fishing of course and just recently Beijing’s least favourite client state, North Korea, has detained twenty-nine Chinese fishermen for illegally fishing in their territorial waters. You can’t really blame the Chinese fishermen for being confused; they fish everywhere else in the Pacific region.

Meanwhile, back at the Scarborough Shoals the Philippines has suggested UN mediation over the sovereignty issue whilst China has suggested that they have a bigger navy than the Philippines.

Beginning to join some dots up? I can’t verify this but I believe that Lee Kuan Yew, Singaporean elder statesman and regional realist, once remarked that you could say what you liked about America, but if they were asked to leave a country they left, unlike some others who refused to go. I wonder to whom he was referring?

All in all

A bit of a mess all round. Nothing a good war wouldn’t sort out though, which is a worrying thought. That brings me on to my next short topic.

I was slightly amused to read reports that two Turkish Air force fighters were scrambled to intercept an Israeli reconnaissance flight over Northern Cyprus. Just to join up a couple of dots, nobody except Turkey recognises The Turkish Republic of Northern Cyprus (TRNC) as an independent state. Israel and Greek Cyprus, if I may put it like that, have recently begun joint development of offshore gas fields, which of course Turkey would rather like to get their hands on. Allegedly the Israeli aircraft penetrated TRNC airspace ‘four or five times’, but the intercepting Turkish aircraft were unable to visually confirm the Israeli Aircraft type. Strange then that they should be so certain that it was an Israeli aircraft. Equally strange, given that non-friendly air forces frequently intercept each other’s aircraft and film them that the Turks didn’t get close enough to do the same.
Maybe the Israeli aircraft was under orders to avoid any possible confrontation.
Maybe the Turkish aircraft were under orders to avoid any possible confrontation in case the Israeli aircraft wasn’t (think about that for a moment).
Maybe it wasn’t an Israeli aircraft, but you can always blame them, everybody does.
Maybe, if any of Turkish Prime Minister Erdogan’s senior military officers, or at least those who aren’t in the slammer accused of plotting a military coup, dare mention it, maybe Israel was testing Turkish air force reaction times.

                                                                And Finally

To end on a literary note. Emma the Agent has found an illustrator for the ‘Trembling Tim’ stories. Negotiations are ongoing as are sample illustrations. More next time, if there are developments.

Really finally, I’m setting up (OK, daughter Pauline is setting up) my personal domain name (whatever that is….now  you know why Pauline is doing it)
I’ll let you know when it’s up and running. There’ll be a notice on here and a redirecting link.


Sunday, May 13, 2012

The Winds of Change are a-blowin'

Are they a  fully blown hurricane of a mere zephyr?

I decide to remain, metaphorically speaking, in the Middle East for this article because although interesting events are unfolding in Europe, it’s still too soon to make any assumptions about what may or may not arise phoenix-like from the ashes. Make no mistake though, the European project is in tatters. It will survive in some shape or form, of that I am certain, but for the moment, as they used to say on a childrens TV program, ‘anything can happen in the next half hour’.

Most of the news concerning the Middle East tends to be reported from a ‘Western-centric’ perspective, so I thought that it might be instructive to take a slightly sideways look at what’s happening in the region, seen from a variety of Middle-Eastern sources. Dominating the Western media is of course the upcoming presidential elections in Egypt, so why don’t we start there?

One aspect that has received some comment in the Western media is the fact the Islamist candidates are suffering a backlash at the moment. Ostensibly this has been caused by a demonstration organised by the Salafists, ultraconservative Islamists, outside the Egyptian Ministry of Defence building in Cairo, which resulted in the death of one soldier and injuries to others. Footage of gunmen seemingly firing from the minaret of a mosque at the soldiers was broadcast on Egyptian television and has received much negative comment. Predictably the Supreme Council of the Armed Forces, in effect the current Egyptian Government, has been using this footage to tap into the average Egyptians respect for the army and promptly and loudly blamed the Muslim Brotherhood for the violence. In point of fact they weren’t involved in that particular demonstration and reportedly disbanded one that they had organised. However several Egyptian commentators have expressed the view that the Egyptian electorate doesn’t distinguish between Islamic organisations. That might be so and as we all know the outcome of revolutions can turn on a single event, but I suspect there is more to this than is immediately apparent. Perhaps what we are seeing is the Egyptian electorate realising exactly who, or what, they did elect to parliament and are having second thoughts about the desirability of Sharia law and all its implications.

Related to this is a decision by Egypts highest administrative court which ruled that the presidential elections must proceed as scheduled on may 23rd. Additionally they upheld the right of the Election Commission to challenge a law barring some former members of the Mubarak administration from standing for president. The same Election Commission had previously barred the Muslim brotherhood’s preferred presidential candidate from standing in the up coming election, which sparked off the protests outside the Ministry of Defence buildings. The Military Government of course appointed the Election Commision, so predictably and possibly quite accurately the Islamist parties who form the largest group in the recently elected parliament have accused the Military of trying to retain power. Also predictably, Israeli commentators in particular and Western commentators in general are focussing on the fact that the Islamists will control the parliament no matter which candidate wins the presidential election, but in the rush to be concerned they have missed a few interesting ‘straws in the wind’.

The first straw that blew passed my window had one Mahmoud Zahar clinging to it. Zahar, described by various sources as a ‘top Hamas official in Gaza’, has just taken an interesting step that possibly has wider-reaching implications. He’s claimed Egyptian citizenship under a law allowing the children of Egyptian mothers to obtain an Egyptian passport. This law has been either in existence for some time but the Mubarak regime wouldn’t allow such claims or it’s been passed since the fall of the former regime, the background is a little unclear. Zahar has proudly announced his intention to vote for an Islamist presidential candidate who he feels will be more pro-Palestinian than the Mubarak Government was. Well that’s fine, he’s entitled to vote now that he is an Egyptian citizen, and he’s not alone. Several hundreds of Palestinians with Egyptian mothers have also been granted citizenship and reportedly there are thousands of Egyptian families with Palestinian children. This does mean of course that they are no longer refugees and they have a country of residence. Nobody is making much of this at the moment, but sooner or later somebody will ask an embarrassing question about UN funding for the now former refugees. That might lead to a look at the number of Palestinians on the West Bank who hold Jordanian passports. Previously, these individuals could claim that Jordanian law discriminated against them in the matter of land and property ownership in Jordan, but following recent legislation in that country this is no longer the case. So in effect, they are no longer refugees either. Anybody say anything about unforseen consequences? Remember you read it here first folks.

The second straw had a report from that stronghold of liberal thought and progressive social policies Saudi Arabia, tied to it. King Abdullah has just fired Sheikh Abdelmohsen al-Obeikan. Who? Formerly an advisor to the Royal Court and now spending more time with his family, al-Obeikan was very definitely not of a progessive bent and opposed amongst other things the relaxation of gender segregation. I take that to mean that he wasn’t keen on the idea of men and women meeting socially or at work, God forbid that they should actually talk to each other, the women might actually express an opinion or two. According to the former advisor, not actually quoted in the Saudi press but he was elsewhere, there were moves afoot by "influential people to corrupt Muslim society by trying to change the natural status of women". As one of those ‘influential people’ just happened to be his former boss King Abdullah, there was no way that opposition to this radical, shameful idea was a good career move. So this ‘corruption of Muslim society’ is just a blatant attempt by the Saudi monarchy to prevent another outbreak of the ‘Arab Spring’ and hang on to absolute power then? Just possibly not, but you’ll have to follow me whilst I join up the dots. In the meantime, just to prove that al-Obeikan himself is a bit of a closet reformer, this was his vision of how to go about relaxing gender-segregation. Several years ago he issued a decree suggesting that unrelated Saudi men and women could mix so long as the man drank the woman's breast milk, thus creating a maternal bond between them. He didn’t specify as to whether this should be done before they met and did not propose a method of drinking of the breast milk. And that some people think that men and women shouldn’t shake hands!

King Abdullah is not your average repressive absolute monarch, he has some strange ideas. He thinks that eventually women should be allowed to vote in elections, whatever they are, has opened a co-educational university in Saudi Arabia and has introduced measures against domestic violence, presumably this refers to violence against women and not other domestic animals. Additionally, last January he replaced the head of the Mutawa, the religious police, with somebody regarded as being more liberally-minded. More liberally-minded probably being a comparison and not a comment on the present-incumbents actual views. At this rate, they’ll be allowing Princess Basma Bint Saud back home. Who? A journalist now living in London, she is the youngest daughter of the late King Saud. Taken by her Syrian mother to live in Beirut, when the civil war broke out in 1975 they went to London. Obviously a close-knit family then. She had attended a Christian missionary school whilst in Beirut (which might explain going to London not Riyad) and after finishing her education off in Switzerland at some point returned to Saudi Arabia and married. Despite her early education by French Missionary nuns, she is a committed Muslim. After her divorce and subsequently starting a chain of restaurants in Saudi Arabia, she moved back to London with three of her children. Unusual for a divorced Saudi woman to have custody of her children, nethertheless she managed it. She gave several interviews and wrote articles about the status of women in Saudi Arabia whilst in Saudi Arabia, particularly in favour of the reform reform of divorce laws, and her writing was censured.  She says this had nothing to do with the decision to return to London, where she has also commented publicly on Sharia law, the role of women in Saudi society and perhaps tellingly the relaxation of the rules governing the segragation of men and women. She is careful to not blame the Saudi royal family for any repression; rather she blames ‘govenors and middle managers.’ Such as al-Obeikan perhaps. All in all, her comments are thoughtful and dare one say respectful but critical of certain aspects of the current Saudi interpretation of Islam. If she were to ask my advice I’d say buy a smart new set of luggage but don’t buy the airline ticket home just yet.

So what’s going on? Obviously there’s an attempt to loosen the reins, but I feel there is more to it than that. Most people know, even if it’s not a topic of daily conversation, that the brand of Islam in Saudi Arabia is Wahhabism. This is a very strict branch of Sunni Islam, and doesn’t have many other adherents in the Arabian peninsular. Now it starts to get interesting. The current king, Abdullah, received a traditional religious education but is not known to share the puritanical view of Islam espoused by the religious authorities in Saudi Arabia. He does however have an empathy with the traditional Saudi way of life, and in that context is cautiously embarking on reform, believing that it will prevent internal strife. Another straw in the wind, the ruling Al Saud family, rulers of the area known as the Hejaz, were exiled to Kuwait in 1891 following a power struggle, before returning in 1902 and over a period of time seizing and consolidating power in what would become Saudi Arabia, with the help of the Ikwahan or brotherhood, a sect based on Wahhabism. The sect and the Al Sauds fell out in 1912 and what is happening now is possibly Abdullah finally starting to cut the remaining ties.

All very interesting, but where is this taking us? How about the tribal ties between the Gulf States (excluding Oman) and Saudi Arabia? The inhabitants of the remaining Gulf States, Kuwait, UAE, Qatar and Bahrain share a tribal heritage. Most of the populations originate from either what is now Saudi Arabia or Yemen and as we know, tribal alliegences are still strong in the Arab world. So what? Well you might have heard of the Cooperation Council Gulf for the Arab States of the Gulf (CCASG). Maybe you weren’t sure exactly what it was called, but now you know. This organisation has been in existence since 1981.
Its major objectives included:
Passing similar legislation in various fields such as economy, finance, trade, customs, tourism, legislation, and administration.
Encouraging scientific and technical progress in industry, mining, agriculture, water and animal resources.
Establishing scientific research centers.
Establishing joint ventures.
Creating a unified military presence (Peninsula Shield Force).
Encouraging cooperation of the private sector.
Strengthening ties between their peoples.
Establishing a common currency by 2010.

The latter objective has fallen by the wayside. Oman pulled out in 2006 and the UAE was miffed when it was proposed that the central bank be located in Saudi Arabia.

The Gulf region had a rapidly growing economy and most of the Gulf countries had an eye to establishing sufficient currency reserves to cushion falling revenues as the oil begins to run out. Unfortunately, when confronted with an economic downturn, most of the countries resorted to what amounted to bribing their citizens to maintain internal stability. A fine example of this occurred in Saudi Arabia itself when the local stock market took a dive, along with every other stock market worldwide. A member of the Royal Family stepped up to the plate and injected several hundred million US dollars into the market by purchasing tanking stock. Predictably the price of the stock rose and everybody's portfolio recovered in value. Saudis thought their Royal family was wonderful. For now. This is not a workable long-term economic strategy. Most of the Gulf States import cheap labour. This means that citizens either do nothing or occupy senior management positions whilst still enjoying State handouts, based on the oil revenues. Saudi Arabia must have the highest number of Phds in Islamic studies per head of population in the entire world, perhaps good for the spiritual side of life but when you need doctors, engineers and scientists it’s a drag on the economy rather than a stimulant.

Faced with a variety of external and internal problems, the CCASG countries announced in March 2012 that the organisation would be evolving from a regional bloc to a confederation. Now the word confederation has two meanings, but in 21st century political terms it has come to mean a permanent union of several political entities to deal with other political entities. This will eventually lead to a central government, but in the early stages of development will mean joint economic and military endeavours. So purely hypothetically, let’s say that the Gulf States were becoming concerned about, oh I don’t know, Iran, just mentioning a country off the top of my head for no particular reason. Let’s just say that they, the Arab Gulf countries, decided to form a regional power block of Arab Monarchys, some more liberal and quasi-democratic than others, but all enjoying greater or lesser tribal links and similar cultures and the same language. And lets suppose that this regional bloc had had to intervene militarily in a member state, which for the purposes of this article we’ll refer to as Bahrain, to preserve internal order. Or supress a revolt by the oppressed Shia majority, depending on your point of view. Let’s further suppose that the largest of these countries, having control over the holy city of Mecca, regarded itself as the de facto leader of the Islamic World. If you were the absolute monarch of such a country,  the strongest military and economic entity in the evolving confederation, wouldn’t you sit in your desert palace and dream dreams of empire, or in modern 21st century terms, being the strong central government of a confederation? And of course, as an absolute monarch, you might feel moved to make your country more attractive to the citizens of the other confederation members by liberalising certain aspects of day to day life. You might even reflect on the fact that Switzerland is officially a confederation. Hmm, SaudGulfAbia? Switzerland sans cookoo clocks, chocolate and Alpenhorns. Dubai has a ski resort though.

Straws in the wind?
Perhaps not.


Wednesday, May 9, 2012

Iran part two

                                                           Will they or won’t they?

If you haven’t got around to reading the IAEA fifteen page report, I think it’s fair to summarise it as; smoking gun not found, but there was a whiff of cordite in the air. Certainly the report could find no credible reason for enriching uranium to twenty percent, as Iran is currently doing, when the centrifuges work that is. They also were unconvinced of the need for Iran to investigate a trigger mechanism, whilst conceding that it could have some civilian applications. Iran did not appear to be pursuing any of those applications.

Let’s consider why Iran would want a civilian nuclear power program. Why would any country want to pursue a nuclear power program? The two most obvious answers are little or no access to fosil fuels for a variety of reasons and a forecast increase in power demand which existing power generation facilities will not be able to meet. In fact, let’s take a brief overview of Iran as a country. I’ll give you some bald facts, most valid as of January 2012 and drawn from a variety of sources. Naturally, I can make no claim for the veracity of these figures, which in many cases are estimates (not mine).
The population was 77,891,220 as of July 2011.
Of these, 70.9% were in the age group 14-64.
The median age was 26.8 years
Population growth estimated at 1.24% pa
Life expectancy at birth 70.06 years (don’t you just love statistics)
 The literacy rate of fifteen to twenty four year olds is claimed as 98.7%.
HIV/AIDS adult prevelance rate 0.2% (2009 estimate)
For those like me who didn’t know, the prevelance rate is found by dividing the number of those living with HIV/AIDS by the total number of population.
So all in all, apart from a low life expectancy, a reasonable picture. Not an aging population and population growth is reasonable but hardly explosive.

Ethnic groups: Persian 61%, Azeri 16%, Kurd 10%, Lur 6%, Baloch 2%, Arab 2%, Turkmen and Turkic tribes 2%, other 1% (2008 est.)
OK, well I can see some potential problems there, bearing in mind that Iran is still a fairly tribal society outside of the major cities. The Kurds are a potential source of conflict because of pan-Kurdish aspirations to an independent Kurdistan and for anybody who might have been unsure, Iran is very definitely NOT an Arab nation.
Religions: Muslim (official) 98% (Shia 89%, Sunni 9%), other (includes Zoroastrian, Jewish, Christian, and Baha'i) 2%. No surprises there, I’m sure.
Taking a brief overview of the economy, we find that most industries are state owned and run, inefficiently by all accounts, and there is an over- reliance on the oil industry. Inflation is high and no doubt getting higher whilst unemployment is in double-digit figures. There is an ongoing-problem with people leaving the country to seek employment.
 There are state subsidies on food and energy, which Ahmadinejad has been trying to cut for a number of years, no doubt why the Majlis (parliament) summoned him to explain the state of the economy.
There is not much publicly available information on manufacturing industries, the inference being that these are small-scale family-run affairs. This is important when we come to look at the energy sector. What this does mean is that things like ‘white goods’ have to be imported and this is where sanctions will be biting.
Agriculture: products listed are wheat, rice, other grains, sugar beets, sugar cane, fruits, nuts, cotton; dairy products, wool; caviar. I could find no mention of meat production or fishing, but they must exist, if only on a family-enterprise level.
Natural resources: petroleum, natural gas, coal, chromium, copper, iron ore, lead, manganese, zinc, sulfur

The picture I have is of a non-industrial country, probably able to feed itself but nor particularly well or reliably. There have been reports of Iran trying to buy rice from other countries. Beef and veal imports have been falling quite dramatically since 2010. I can find nothing to suggest that Iranian meat production has risen to meet the drop in imports, so the implication is that meat consumption must be falling, probably either as a result of sanctions or lack of foreign currency.
Let’s take a look at the energy sector, again sorry for a stream of figures, but they tell an interesting story.
Oil - production: 4.252 million bbl/day (2010 est)
Oil - consumption: 1.845 million bbl/day (2010 est)
Oil - exports: 2.523 million bbl/day (2009 est.)
Oil - imports: 297,100 bbl/day (2009 est.)
These figures include oil products. They do not take into account any fluctuation in oil reserves. Overall, a healthy picture one would say, provided of course the oil exports continue. But remember the question, why would Iran want to develop a civilian nuclear industry?
Proven Oil reserves: 137 billion bbl based on Iranian claims.
 Iran has about 10% of world reserves (1 January 2011 est.)
My maths is not of the highest calibre, but I reckon that’s about one hundred years worth of oil in the ground, assuming they don’t find any more. For a democratically elected government, not a real looming problem but for a theocracy with perhaps a longer view, well maybe. Oil of course is not everything.
Natural gas reserves: 41.41 Trillion (yup, trillion) cu m
Natural gas production: 138.5 billion cu m (2010 est.)
Natural gas consumption: 137 billion cu m  (2010 est)
I’m beginning to think that Iran might just possibly be in great shape, from an energy perspective, particularly when a further gas reserve estimated at 1.42 trillion cu m was discovered in the Iranian part of the Caspian Sea in late 2011. Then there’s renewable energy sources, which brings us to the final set of figures, electricity (or electrickery if you prefer). These figures show the annual electricity generated expressed in kilowatt-hours. There are figures available which show estimated losses in power transmission and electricity exported, but let’s keep it simple.
Electricity generated: 212.8 billion kWh (2009 est.)
Electricity - consumption: 206.7 billion kWh (2009 est.)
Electricity from renewable sources: 7.46 billion kWh (2009.)
My friends, Iran needs nuclear energy with all its associated problems like a hole in the head. There is no push for rapid industrialisation hence no plausible claim of a dramatic future increase in demand for power. If, a big if, a decision had been taken to leave the oil and gas in the ground and look for other energy sources then why would you re-invent the wheel and go for old nuclear technology? You’d want the latest, safest most future-proof ‘kit’ that you could buy or persuade somebody to give you and if that meant you had make a few new friends in order to lay your hands on this equipment without upsetting a lot of people then you’d do that. As we all know, Iran has not chosen to do this, so there are two possible conclusions:
     1) The new friends that they would have to make are unnaceptable to them.
2)      They are developing nuclear weapons and need the cover of a civilian nuclear industry.

                                    The Great Satan and The Little Satan.

Just in case you’ve been holidaying off the planet for the last thirty-three years, the above is how Iran refers to America and Israel respectively. Now America has nuclear weapons and a civilian nuclear energy program. Israel has a 1950s nuclear plant at Dimona, built with the French, which is widely believed to produce weapons grade plutonium. To avoid reliance on imported coal and seeking a clean form of electricity, they proposed a joint civilian nuclear program with Jordan, under French supervision, but this was rejected by Jordan as inapropriate until the question of a Palestinian state had been resolved. Currently both Israel and Jordan import Egyptian natural gas, but recently Israel has accelerated development of off-shore gas fields and has large reserves of Shale Oil, but there are environmental concerns connected with developing those.
So, if you were Iran you’d probably turn to France for nuclear expertise if you didn’t want to talk to America. Nope, impressed by the technology of Chernobyl they went to Russia. If you believe the CIA, and I mean who wouldn’t, they also sought advice from Pakistan and North Korea, both of whom have nuclear weapons but not much in the way of a civilian nuclear power industry. Hmmm. It certainly looks like a duck as it waddles and quacks its way across the farmyard, but why would Iran want  nuclear weapons?
The conventional answer to that would be to make themselves safe from attack, but attack by whom? Well, America and Israel obviously, but would having nuclear weapons, or trying to acquire them, actually make them safer? Iran would probably point to North Korea as proof that having some sort of nuclear capability would mean they were safe from attack. I would direct your and their attention to Pakistan, whose sovereignty is regularly ignored by American ground forces and drones in pursuit of Taliban forces and the odd remaining Al Qaeda figure. I am saying that Pakistan having nuclear weapons hasn’t prevented American incursions whether in hot pursuit, intelligence gathering operations or targeted assasinations. Given that American /Iranian relations since the 1979 revolution in Iran have been rocky to put it mildly, I can see that the Iranians would be looking over their shoulders much of the time. There have been armed clashes between the two countries (America and Iran) and of course Iran sponsors both Hezbollah and Hamas. The former has directly attacked American forces in Lebanon whilst they were there and both organisations launch attacks against Israel. There is absolutely no love lost between either Iran and America and Iran and Israel. I won’t detail all the clashes, they’re in the public domain. Iran offered an olive branch after the invasion of Iraq and Bush (2) rejected it. Obama offered an olive branch and Iran rejected it. Round and round we go and it might be tempting to be slightly sympathetic to Iran’s desire to obtain a credible deterent except for one thing.

                                            Iranian regional ambitions and Religion.

OK I know, that’s two things. Let’s look at Religion, as that and regional ambitions are closely linked.
The Iranian vesion of Islam is Shia. The split between Shia and Sunni Islam occurred roughly eleven hundred years ago and they’ve been at each others’ throats ever since. For those interested there is much information readily available about this and I don’t intend to rehash it here. It is true to say that Shia hate Sunni almost as much, occasionally more, than they hate Christians and Jews. It’s also true to say that more Muslims have been killed by Muslims than anybody else combined and this can lead to some interesting although largely under-reported problems in the Persian Gulf area.
 Kuwait. Predominantly Sunni, 15-20% Shia, many Farsi speaking.
Bahrain. The Royal family is Sunni but the Muslim population is predominantly Shia (66-70%).
Qatar. Sunni, but 10% of the population are ethnically Iranian
UAE. Mainly Sunni.
Iraq. 60% of the population is Shia, government is Sunni.
Although Iran can and does ferment trouble in Arab countries with Shia minorities, one has to realise that there is no love lost between Iranians and Arabs in general. The chances of Iran establishing a Shia ‘empire’ in the Gulf area are slim, but that doesn’t stop them trying. One reason why they were unable to export their 1979 revolution was that there is a long-standing suspicion, historically correct, that Iran (previously Persia) wanted to establish leadership of the Muslim world. 88% of the Muslim World is Sunni, so this is unlikely to happen, but there are regular clashes. Probably the only thing that prevents the Arabs and Iranians having a re-run of the 1980s Iran/Iraq war is a mutual hatred of Israel, but sometimes it is a close-run thing. The Muslim world is adept at keeping these internal divisions out of the public gaze, again usually by attacking Israel in some way or other. For those who might be tempted to think that if Israel suddenly ceased to exist, or that suddenly the Palestinians achieved statehood all would be sweeetness and light in the Middle East, think again.
Iranian Shias are ‘twelvers’, that is they believe that the Twelth Iman, Muhhamad ibn al-Hassan never actually died and exists in what is referred to as the Occultation. They expect his return, as the Mahdi, at the end times. I suggest you Google these terms to gain a deeper understanding as I’ve decided that this is not going to be a three-part posting, and as I’m no Islamic scholar I have no wish to misinform in my ignorance.
Now I’m going to make a bit of a sweeping generalisation here for the sake of brevity. Most religions have some version of ‘end times’, with a variety of signs and portents, but most seem content for God to work in his own time. The Iranian Shias however, whilst believing that one of the signs of the approaching end of times is widespread destruction and death, in common with other adherents of the general belief, also believe that Mankind can hasten the arrival of the Mahdi by actually causing this widespread destruction. They, in the form of Ahmadinejad who is only a mouthpiece remember and the Supreme Leader Ali Khamenei, have on occasions publicly called for the destruction of the State of Israel, the physical destruction that is. There is an annual ‘Holocaust Denial Day’ in Iran and public demonstrations against both Israel and America, but more of that in a moment. Perhaps most chillingly, given that he is the real power, Supreme Leader Ali Khamenei was quoted by Iranian state television as saying, in 2006,
“The Islamic Republic of Iran has made its own decision and in the nuclear case, God willing, with patience and power, will continue its path.”

In a public address in 2008 Khamenei claimed that in the event of war against “enemies,” Iran  
 “will strike at them with all our capabilities”

Others in the Iranian government structure regularly make calls for war against Israel and war against America. Given the nature of the government, one might assume that they are not going out on a limb by making such statements.
There are glimmers of hope. Ali Khameni is not known as a radical cleric, despite the above quotes and has shown himself capable of holding the more conservative clerics in check. He is clearly concerned about Irans’ economic woes, not the concern one would associate with a man who is both prepared and preparing to pull the house down on his own head. Countering that, in 2008 he implied that Iran would use nuclear weapons in a war and was vague as to whether their use would depend on Iran being attacked or if they would be used if Iran initiates the war. If you couple that with the calls for the destruction of Israel, Iran’s logistical support for Hamas, a Sunni organisation which ideologically they detest, in their fight against Israel and the support for Hezbollah, it’s no wonder that Israeli leaders are losing sleep. They aren’t the only ones in the region either. Sunni and non-Shia Muslim countries view Iran with the deepest suspicions.

So would they or wouldn’t they? I’m afraid it really comes down to can any country afford to take the chance. In Israel’s case, they physically cannot absorb a nuclear attack. In America’s case, although the ‘homeland’ might not be directly physically threatened, most certainly American interests in the region are vulnerable. Arab states worry about ‘nuclear blackmail’ and local Shia populations causing internal trouble.

Up to now, Israel has employed a sort of ‘good cop/bad cop’ routine in order to convince the rest of the World of the urgency of pressing Iran to cease weapons development. Both a former head of the Mossad and a former head of Shin Bet (internal security) have publicly cautioned Prime Minister Netanyahu against precipitate action, stating that an attack on Iran would provoke a wider regional conflict. They also both stated that Iran’s leadership (unspecified as to who they were referring) was ‘logical’. Although there might have been a degree of internal politics intruding, both presented a sound case for doing nothing right now. Neither said ‘don’t’, they really said ‘not yet’. A former head of the IDF has spoken in general terms about the problems in mounting an attack on Iran and also spoke of causing a wider conflict. President Obama has acknowledged that Israel’s timetable for possible action is shorter and more urgent than America’s, but has shown no signs of easing up the pressure on Iran. On the contrary, air ‘assets’ have reportedly been moved into SW Asia. The war drums are beating, with many saying better sooner, before they have any chance of developing a weapon.

Will Israel attack alone? I could easily be proven wrong here but I think the answer is probably not, or at least not yet. Israel would face formidable logistical challenges in mounting an effective attack and would not want to be seen as dragging America into an escalating conflict that Obama is not seeking. Or at least not seeking yet. America has a long memory and the humiliating 1979 hostage situation still rankles. In the meantime there is an election for Obama to win.

I’ll end with some random thoughts.
Post 9/11 Iranian women spontaniously held a candle-lit vigil for the victims. The vigil was dispersed.

The ‘possibly up to 20 million’ Basjid Militia indicate where the security concerns of the Iranian government  actually lay.

Iran could not hope to win in a military confrontation with America, so why give the Americans a ready-made excuse to attack them? Maybe a way of unifying the country? Wearing America down by repeated conflicts?

If America attacks, it had better be ready, and plan, for ‘boots on the ground’ and regime change. Both sides must know this, so is Iran preparing for a climb-down after playing brinkmanship?

Are sanctions causing internal problems of such magnitude that the Iranian government is actually fearful of a counter-revolution and wishes to provoke an attack, thus unifying the people against an external threat?
Israeli President Shimon Peres addressed the Iranian people in an Iranian new years’ message. He said there was a long history of friendship between the Iranian/Persian people and the Jews and Israel did not seek a conflict with the Iranian people  . The point about the history of friendship is actually quite true and I have not added any emphasis.

There is growing evidence of internal unrest in Iran, probably encouraged by both Israel and America. An ‘undeclared cyber way’ is also being played out.

There is a long history of mutual misunderstanding between America and Revolutionary Iran and it could just be that Iran has overplayed their hand. Time will tell, but I fear the sands of time are rapidly running out.