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Why global oil prices seem likely to remain low throughout 2016

iran-oil
Iran is looking forward to ‘implementation day,’ when its nuclear energy deal takes effect and global sanctions are relaxed, allowing it to export oil more easily. (Reuters)

In 2015, we saw how falling oil prices affected world politics from Alberta to Nigeria. Net exporters like Venezuela, Russia and the oil-rich Middle Eastern countries are feeling the drop in revenues, and that could accelerate political agitation as oil prices force budget cuts. USflagIran Flag Icon

As Brad Plumer wrote yesterday for Vox, explaining the fall in oil prices is simple. Supply has outstripped demand, and while global demand is still growing, it’s growing at about half the rate that it was even in mid-2015.

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RELATED: Sixteen global elections to watch in 2016

RELATED: Could Norway benefit from the oil price decline?

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The difference between $30 oil (about the current price level), $20 oil or $50 oil could make or break incumbents seeking reelection — lower oil prices mean fewer goodies at election time.

In 2016, that means oil prices could affect Scotland’s May regional elections by dampening the economic case for Scottish independence and, therefore, the electoral support for the Scottish National Party. It means that Russia’s September legislative elections could engender the same kind of political protests (or worse) that met the last elections in 2011. Lower oil prices are already endangering Ghanian president John Dramani Mahama’s hopes for reelection in December, given how much Mahama has staked on Ghana’s oil potential. It could even push Venezuela’s opposition, newly empowered as the majority in the National Assembly, to seek chavista president Nicolás Maduro’s recall even more quickly.

More generally, it could make life difficult for Nigeria’s new president Muhammadu Buhari. Not only will lower oil revenues hurt his capacity to deploy resources across Africa’s most populous country, but Buhari must find a way to deliver to Nigeria’s impoverished Muslim north, where Boko Haram continues to pose a security challenge, and Nigeria’s southeastern Igbo population, including Rivers state and Delta state, where much of Nigeria’s oil reserves are located. The southeastern challenge is particularly precarious, in light of the fact that Buhari defeated Goodluck Jonathan, the first president to come from Nigeria’s oil-rich southeast. A wrong step by Buhari could catalyze long-simmering demands for greater political autonomy or even secession.

On the demand side, the European Union (as a whole) imports more oil than any other country in the world — by a longshot. Lower prices could bring about the kind of truly robust economic growth that has eluded the eurozone for decades. That, in turn, could ameliorate the pressures of democratic backslide among the central European Visegrad Group, and it could goose economic activity in Mediterranean countries like Portugal, Spain and Greece, where no single political party has enough support for a majority government. That, in turn, could reduce support for radical leftist parties and bolster more moderate coalitions. It could, marginally, benefit incumbent governments in Ireland, Romania and elsewhere in 2016 and France in 2017. (The same effect, by the way, relieves a lot of pressure on faltering ‘Abenomics’ policy in Japan, too).

In his final state of the union address last night, even US president Barack Obama bragged about lower oil prices. If prices stay consistently low throughout 2016, it could marginally help Obama’s Democratic Party win the November general election.

Autocratic countries, including Saudi Arabia, the United Arab Emirates, Qatar, Angola, Algeria and Kazakhstan, could face popular protests.

So where are oil prices going? No one knows, but here’s what you have to believe if you think oil prices are going to rise substantially anytime in 2016: Continue reading Why global oil prices seem likely to remain low throughout 2016

Mahama wins reelection in Ghana over Akufo-Addo; parliamentary results still unknown

Despite howls of protest about fraud from the opposition, John Dramani Mahama (pictured above) has won reelection as Ghana’s president in what appears to be an impressive victory for the National Democratic Congress (NDC).

Although Mahama ascended to the presidency only in July upon the untimely death of John Atta Mills, his election victory against Nana Akufo-Addo of the New Patriotic Party (NPP) exceeded Mills’s own victory against Akufo-Addo in 2008.

Mahama won 50.70%, giving him a margin of victory sufficient for a first-round victory and avoiding a potential runoff on December 28, unlike in 2008, when Mills defeated Akufo-Addo in an incredibly tight contest (and after Akufo-Addo actually won the first round).

Paa Kwesi Nduom of the Progressive People’s Party (PPP), who also ran in 2008, finished with 0.59% of the vote, much less than his 2008 total.

Akufo-Addo has not yet conceded defeat, however, and the NPP is considering legal action to annul the election result.  In particular, the NPP is charging that Mahama’s government manipulated the results of two constituencies, one in the north and another in Accra, Ghana’s capital, to deliver 25,000 extra votes to Mahama, and it has called for an audit of the ballots counted in the presidential election.  Although Mahama’s margin of victory was around 326,000 votes, balloting was extended from Friday into Saturday in some regions because of voting glitches.  So while it seems doubtful that Akufo-Addo will prevail, electoral irregularities are not necessarily outside the realm of possibility, and NPP supporters demonstrated outside Ghana’s electoral commission over the weekend in protest.

Akufo-Addo’s familiarity to voters and his status as a veteran politician made him an incredibly effective challenger, especially because of his seductive platform for improvements to Ghana’s primary education system and a promise for universal secondary education and health care for all Ghanaian children.  Ultimately, however, Mahama inherited a government from Mills that grew last year at a staggering rate of 14.4% — Ghana’s economy was already doing very well when oil was discovered in 2007 (and first extracted in 2010), and it would have been quite a feat for Akufo-Addo to have defeated an incumbent in a country that marked Africa’s highest growth rate last year.

The NDC, under longtime president Jerry Rawlings, stabilized Ghana’s once-disasterous economy in the 1980s and 1990s and set the stage for Ghana’s transformation into a democracy.

The weekend’s election marked the fourth consecutive free and fair election since Rawlings peacefully transferred power after the 2000 election to the NPP’s John Kufuor.

What’s more striking than the total vote, however, is the regional result (set forth below in an election map– red for Mahama, blue for Akufo-Addo).  Unlike in 2008, when Akufo-Addo won essentially all of the south of Ghana (except for the greater Accra region in the southeast and the Volta region that runs in a narrow strip along Ghana’s eastern border), Mahama made inroads in what’s been traditionally NPP territory.  It’s worth noting, however, that in the dense Ashanti region (the deep blue region on the map), the heartland of the Akan ethnic group (Ghana’s largest), Akufo-Addo won 71.2% of the vote to just 28.0% of the vote for Mahama, and in the Eastern Region (the only other blue region), Akufo-Addo won 56.3% to 42.6% for Mahama.  Within the greater Accra region, Mahama won a steady 53% of the vote to 46.2% for Akufo-Addo.

We don’t have the full results of the parliamentary elections, which were held simultaneously with the presidential election, but the current count shows the NDC with 84 seats and the NPP with 79 seats.  Ghana’s unicameral parliament currently has 230 seats and is controlled (narrowly) by Mahama’s NDC, but Friday’s election featured an expanded parliament with 275 seats.  Given the closeness of the election and the flexibility of 45 new parliamentary seats, there’s still a chance that the NPP could control the parliament, despite Mahama’s presidential win, an outcome that would be unique in Ghana’s political history.

Ghana votes today

Voters in Ghana are at the polls today!

They’re choosing a new president — the leading candidates are the incumbent, John Dramini Mahama of the National Democratic Congress (NDC), and Nana Akufo-Addo, the candidate of the New Patriotic Party (NPP), who only narrowly lost the previous presidential election in 2008.  Polls and other evidence indicate that either candidate could realistically lead today’s vote.  If no candidate wins over 50%, a runoff will be held on December 28.

They’re also choosing 275 members of Ghana’s unicameral parliament.  Currently, the NDC holds a narrow majority, but the number of seats will be increased from 230.

Simultaneous parliamentary elections could lead to split Ghanaian government

Although much of the international (and national) attention has been on Ghana’s presidential election tomorrow, it’s important to note that Ghana will also conduct its parliamentary elections as well.

The elections are conducted, rather straightforwardly, in 275 separate single-member constituencies — it’s a first-past-the-post system, so the winner of a plurality of support is elected as a member of parliament.

With the presidential race still incredibly competitive (some polls show incumbent president John Mahama leading, and others show challenger Nana Akufo-Addo with a lead), it’s likely that the parliamentary result will likewise be tight as well, though if no presidential candidate wins over 50% of the vote, the race will go to a runoff on December 28, which would mean that Ghanaians will know which party will control the parliament when they decide who will go to Jubilee House as Ghana’s president.  That could strongly influence whether Mahama or Akufo-Addo win a potential runoff.

Currently, Mahama’s National Democratic Congress (NDC) controls 114 seats in Ghana’s unicameral parliament, while Akufo-Addo’s New Patriotic Party controls 107, with seven additional parliamentarians who are either independents or represent smaller parties.  The NDC won control of the parliament in the 2008 elections that saw the NDC’s presidential candidate, John Atta Mills, triumph over Akufo-Addo in an incredibly tight presidential race.  Previously, the NPP held 128 seats and the NDC just 94 seats.

So whatever happens tomorrow, it seems unlikely that either the NPP or the NDC will sweep to a lopsided victory in the parliamentary elections.

That’s especially true given Ghanaian voting patterns over the past decade — the NPP’s traditional support comes from the south of the country, the heartland of the Akan ethnicity group that’s the largest ethnic group in Ghana (nearly 11 million out of a population of over 24 million people).  In fact, the maps of where the NPP led in 2008 in both the presidential and parliamentary election, and the map of the Akan heartland within Ghana, are nearly interchangeable.  The NDC has traditionally won its greatest support in the more Muslim north and along all of Ghana’s eastern border — namely, those areas that are not dominated by the Akan.

Indeed, if either Mahama or Akufo-Addo narrowly emerge with a lead of over 50% tomorrow, it’s even possible that Ghana could elect one party to control the Ghanaian presidency and another party to control the parliament.

The election will also feature a 45-member increase in the number of seats in Ghana’s parliament (from 230 to 275) in order to balance population growth, which could also create additional variability with respect to the ultimate result.  Continue reading Simultaneous parliamentary elections could lead to split Ghanaian government

Who is Nana Akufo-Addo? And how would he govern Ghana?

Ghanaians go to the polls to elect a president and a parliament Friday, and there’s a good chance they will elect to send a new president to Jubilee House.

Although he’s technically the challenger in the race, Nana Akufo-Addo of the New Patriotic Party (NPP) is a narrow favorite to oust John Dramini Mahama, the incumbent and candidate of the National Democratic Congress (NDC), who was elevated to Ghana’s presidency only in July after the death of John Atta Mills, who narrowly defeated Akufo-Addo in the 2008 election by the narrowest of margins.

This time around, Akufo-Addo seems even better placed to succeed in a campaign that has featured spirited debate about how best to provide education and health care to Ghana’s youth, how to approach ongoing tensions and instability in Côte d’Ivoire, and how to continue Ghana’s economy, the strongest in all of Africa.

Akufo-Addo has a strong pedigree in Ghanaian politics — his father, Edward Akufo-Addo, was the third chief justice of Ghana and served as Ghana’s chiefly ceremonial president from 1969 to 1972, as well as one of the ‘Big Six’ leaders of the United Gold Coast Convention that fought for Ghana’s independence and were arrested for their efforts.  Akufo-Addo’s great uncle and uncle were also members of the ‘Big Six.’

Like Mills before him, Akufo-Addo has the advantage of having run in a prior presidential race.  In the 2008 election, Akufo-Addo actually won the first round with 49.13% of the vote to just 47.92% for Mills, but lost the runoff, taking just 49.77% to 50.23% for Mills.

Before the 2008 election, Akufo-Addo, previously an attorney, served in the administration of former NPP president John Kufuor, first as attorney general, where he worked to repeal the criminal libel law that earlier Ghanaian administrations had used to inhibit free speech, and later as justice minister and foreign minister.

As African legal studies scholar Andrew Novak has written earlier this autumn for Suffragio, Mahama has at times looked amateurish and untested against the experienced Akufo-Addo.

Although the NPP is seen as traditionally more of the center-right and the NDC of the center-left, it’s Akufo-Addo who has called for a more activist role for Ghana’s government in the current campaign, including free basic and secondary high school education for all Ghanaians as well as free health care for all Ghanaian children.  Free primary education is enshrined as a fundamental right in Ghana’s constitution, but quality often falls far below acceptable standards, especially in rural Ghana.

Akufo-Addo has repeatedly and forcefully defended his plan against NDC skepticism that the NPP won’t be able to enact such sweeping reforms; Akufo-Addo, in turn, has criticized the NDC for failing to keep its promises from the 2008 election on health care.

Continue reading Who is Nana Akufo-Addo? And how would he govern Ghana?

New ruling parties face strong challenges in Ghana and Sierra Leone

Guest post by Andrew Novak.

Following the upset wins by the All People’s Congress (APC) in Sierra Leone in 2007 and the National Democratic Congress (NDC) in Ghana in 2008, both countries experienced tense but peaceful transitions of power from the ruling party to the opposition, two successes in sharp contrast to the contemporaneous electoral violence in Kenya and Zimbabwe.  In the midst of a worldwide economic recession, voters in both West African countries will return to the polls — in Sierra Leone on November 17 and Ghana on December 7 — to determine whether the new ruling parties deserve a second term.  With emboldened challengers, both contests are likely to again be close.

In the 2007 Sierra Leonean general election, the APC’s Ernest Bai Koroma (pictured above) narrowly defeated Solomon Berewa of the Sierra Leone People’s Party (SLPP), then vice-president of Sierra Leone under the term-limited president Ahmad Tejan Kabbah.  With overwhelming support from the north of the country and a strong showing in Freetown, the capital, Koroma was elected in a runoff as the first president from the Temne ethnic group, one of the two main ethnic groups in the country.  This year, he will face another strong challenge from Julius Maada Bio, a former military ruler of the country.  As head of state, Bio organized the elections that resulted in the peaceful transfer of power to Kabbah in March 1996, before the country’s descent into civil war. Continue reading New ruling parties face strong challenges in Ghana and Sierra Leone

In Mills’s passing, Ghana remains a touchstone for African democracy

Guest post by Andrew Novak.

Ghanaian President John Atta Mills, 68, passed away on July 24, 2012.

The former vice president of Jerry Rawlings, the longtime, charismatic military ruler of Ghana turned democratically-elected head of state, Professor Mills was deferential to and often overshadowed by Rawlings throughout his political career.  The modest and scholarly Mills, who taught law at the University of Ghana, first ran for the presidency himself in 2000, when Rawlings was term-limited, but lost to opposition leader John Kufour of the New Patriotic Party (NPP) in Ghana’s first peaceful change of power since independence.

In 2008, when Kufour himself was term-limited, Mills ran against Kufour’s vice president, Nana Akufo-Addo, whom he trailed after the first round by a margin of 47.92% to 49.13%.  However, Mills ultimately defeated Akufo-Addo in the second round, with a margin of 50.23% to 49.77%, making it the closest peaceful election of its scale in modern African history.  Perhaps even more surprising, closely following the 2007 elections in Zimbabwe and Kenya, the vote led to Ghana’s second peaceful transition of power without a single life lost.

Professor Mills, said to have been at heart an academic rather than a politician, was a stickler for the constitutional rule of law.  By the end of his term Ghana was the fifth least corrupt country on the African mainland according to Transparency International.

When Ghana began offshore oil production for the first time in 2010, Mills vowed to avoid the waste and corruption associated with the oil industry in nearby Nigeria.  Last month, Mills accepted nearly all of the recommendations of the Constitutional Review Commission (CRC) to comprehensively update Ghana’s constitution, with proposed amendments to be submitted to popular referendum.  The CRC’s White Paper called for, among other issues, abolition of the death penalty, protection of consumer rights, constitutionalization of the right to a healthy environment, and establishment of a comprehensive legal aid scheme.  Whether the CRC’s recommendations will be implemented remains to be seen should Mills’s ruling party, the National Democratic Congress, lose the upcoming elections in December 2012 to the NPP.

Even at his death, the rule of law triumphed in Ghana when Vice President John Dramani Mahama was sworn in within hours.  In this way, Ghana avoided the same uncertainty as when Malawian President Bingu wa Mutharika passed away in office last April, sparking speculation that Vice President Joyce Banda would be passed over for the presidency in defiance of the constitution.

But unlike Ghana, Malawi’s change in power was dramatic — Mutharika ran an unpopular regime, one bleeding support from foreign donors and dogged by street protests, and Banda had previously been expelled from the ruling party.

Nonetheless, the peaceful transfers of power across the continent over the past year in Zambia, Senegal, Malawi, and Lesotho may well prove that democracy is maturing in Africa for one simple fact: three of these four countries, like Ghana, have experienced not just one but two peaceful transitions of power since independence.

Andrew Novak is the adjunct professor of African Law at American University Washington College of Law.  He has a J.D. from Boston University and an M.Sc. in African Politics from the London School of Oriental and African Studies—President John Atta Mills’s alma mater.

Death of Ghana’s president John Atta Mills leaves December election unsettled

John Atta Mills, the president of Ghana, died yesterday somewhat unexpectedly, leaving Ghana’s future less clear in advance of December’s presidential election.

His vice president, John Dramani Mahama, has been sworn in as his replacement, and according to the Daily Graphic, will likely be the presidential candidate of Mills’s National Democratic Congress in December.

A longtime crusader for constitutional reform in the West African country of nearly 25 million people, and a symbol of a peaceful, democratic tradition still relatively rare throughout sub-Saharan Africa, Mills was elected in December 2008 in a very close election against Nana Akufo-Addo.

Mills, a quiet-mannered law professor, previously served from 1997 to 2001 as vice president to Jerry Rawlings.  Rawlings initially took power in a 1979 coup, but subsequently retired from the military and managed Ghana’s largely successful transition to democracy following a 1992 constitutional referendum.  He was elected president in his own right in 1992 and 1996.  That transition, two decades years ago, has held up relatively well — Rawlings transferred power peacefully to his political rival, John Kufuor, in 2001, who transferred power peacefully in 2009 to Mills.

The strength of Ghana’s institutions was on display yesterday, with no significant hitches in Mahama’s swearing-in:

Analysts took that smooth transition as reassurance of the robustness of Ghana’s institutions. “The constitutional process kicked into gear pretty well,” said Antony Goldman of the Africa-focused group PM Consulting. Razia Khan, head of Africa research at Standard Chartered bank, said: “The smooth inauguration of Mahama as President is an encouraging sign of strength of Ghana’s democratic institutions.”

Mills oversaw the first-ever oil production in Ghana in 2010 on the appropriately-named Jubilee oilfield, which has sparked maginificent double-digit growth rates — Ghana’s economy previously rested on gold mining, cocoa and other exports.  While its GDP per capita (even with newly discovered oil reserves) remains small in comparison to South Africa or Botswana  — or even Angola — Ghana has outpaced per capita GDP per capita of other West African countries like Sengal by 150% and countries like Mali and Burkina Faso by 200% to 300%.

In contrast to other countries in sub-Saharan Africa, including neighboring Côte d’Ivoire, Ghana has not been torn apart by ethnic or sectarian or tribal strife.  Unlike central and southern Africa, it does not have outrageously high HIV/AIDS rates and life expectancy lags not far behind that in Europe or the United States.

The spotlight now turns to Mahama, especially if, as expected, he becomes the standard-bearer of the NDC, the party that Rawlings founded and the more social democratic of two major parties in Ghana (the other main party in Ghana’s two-party system is the more center-right New Patriotic Party of Kufuor and of Akufo-Addo).

Presidential and legislative elections are scheduled for December 7 of this year, with runoffs to follow as necessary on December 28.  Like in the United States (and unlike, say, parliamentary systems in Germany or the United Kingdom), Ghana’s president is both head of government and head of state, so the presidential race will be a huge prize. Continue reading Death of Ghana’s president John Atta Mills leaves December election unsettled