Tag Archives: oil prices

Overshadowed by scandal, Trump calls for López’s release in Venezuela

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Before Thursday’s jaw-dropping 77-minute free-form press conference, US president Donald Trump made a rare foray into Latin American politics on Wednesday night, publicly calling for the release of Leopoldo López, a Venezuelan opposition leader imprisoned by the chavista government since 2014. Venezuela Flag Icon

It was a surprising move by Trump, who was having dinner Wednesday night with López’s wife, Lilian Tintori, and Florida senator Marco Rubio. Trump joins many figures from across the political spectrum over the last three years, including former US president Barack Obama and Spanish prime minister Mariano Rajoy, who renewed calls to release López on Thursday.

López, on the third anniversary of his arrest, is now at the heart of the Venezuelan opposition struggle in its daunting task of removing an increasingly undemocratic chavista regime through democratic means. Despite Trump’s call on Twitter to free López, a Venezuelan appeals court upheld the opposition leader’s sentence Thursday morning, and foreign minister Delcy Rodríguez chided Trump in response.

In February 2014, when protestors were already taking to the streets against Maduro’s government (and when the economic situation, though dire, was far better than today), López was leading the way calling for peaceful protests in hopes of toppling the government through show of popular disapproval. Those protests, however, turned deadly when police deployed lethal force against the protesters and 43 people died. López was promptly arrested and, months later in September 2015, found guilty of public incitement of violence.  His imprisonment is widely considered to be politically motivated by international groups and figures ranging from the United Nations to the Dalai Lama, and his arrest was one of the reasons why the South American trading bloc, MERCOSUR, suspended Venezuela’s membership in December 2016, citing problems with human rights and the rule of law.  Continue reading Overshadowed by scandal, Trump calls for López’s release in Venezuela

Buhari takes Trump call from London as Nigerians ponder president’s health

Nigerian president Muhammadu Buhari, who spoke with Donald Trump on Monday, has been in London indefinitely for nearly a month. (Facebook)

It was something of a surprise to Nigerians to learn that their president was well enough to discuss global matters with US president Donald Trump on Monday, as much of the country has wondered for weeks if Nigeria’s leader is on his deathbed. 

Muhammadu Buhari, a longtime opposition figure who defeated sitting president Goodluck Jonathan in March 2015, on a promise to curtail widespread corruption, left Nigeria for a holiday in London on January 19. But he has not yet returned, pending the results of medical tests. His administration is incredibly opaque about the nature of Buhari’s illness and his medical tests, and in the absence of any real information about the president’s health, Nigerians are increasingly speculating that Buhari is being treated for grave illness or possibly already dead, at a time when Buhari’s administration is struggling to cope with economic and security challenges.

Buhari, in a cryptic letter on February 5, said that he would stay in London indefinitely ‘until the doctors are satisfied that certain factors are ruled out.’

No one knows whether Buhari scheduled the original London holiday in January for medical reasons, but it’s noteworthy that the 74-year-old Nigerian president skipped trips to neighboring African countries last summer while he made time for a 10-day trip last June to see his London-based doctors about an alleged ear infection.

Nevertheless, Buhari is apparently healthy enough to take a call from Trump, and a Buhari aide said that the new US president had kind words for Buhari’s work in tackling Boko Haram and other radical terrorist groups in Nigeria. Insofar as the presidential call provided Nigerians with some secondhand news as to the health of their president, the news is perhaps one of the nascent Trump administration’s top foreign policy accomplishments. Continue reading Buhari takes Trump call from London as Nigerians ponder president’s health

Why global oil prices seem likely to remain low throughout 2016

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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

Suffragio’s live-blog of Canada’s French-language leaders debate

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Earlier this evening, I live-blogged the third debate among Canada’s major party leaders. It was the first French-language debate and the only one (so far) to include all five leaders: Conservative prime minister Stephen Harper, Liberal leader Justin Trudeau, New Democratic Party leader Thomas Mulcair, Green leader Elizabeth May and the pro-independence Bloc Québécois leader Gilles Duceppe.Canada Flag IconQuebec Flag Iconpng

Long-ruling PNM returns to power in Trinidad and Tobago

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What does Trinidad and Tobago have in common with Alberta?
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In elections in both places, voters are punishing governments for tanking oil prices, a global trend that Alberta’s 44-year-long Tory government was no less powerless to halt than prime minister Kamla Persad-Bissessar, the first female leader of the Caribbean nation of Trinidad and Tobago. Her party, the United National Congress (UNC), lost its bid for reelection after parliamentary elections on the dual-island state on September 7.

Instead, the People’s National Movement (PNM), the party that has controlled government in the Caribbean nation for all but 16 years since its independence from the United Kingdom in 1962, will return to power. The country’s new prime minister, Keith Rowley (pictured above), is a 65-year-old geologist who served in the House of Representatives in 1991 and has held several ministerial portfolios, including agriculture, housing, and trade and industry. Though Manley comes from the same generation as Patrick Manning, who served as prime minister from 1991 to 1995 and, for the second time, from 2001 to 2010, Manning fired Rowley from the cabinet in 2008 for ‘hooligan behaviour.’

Like many countries in the Caribbean, the years since the global financial crisis of 2008-09 have been met with sluggish economic growth, rising unemployment in the face of already-high joblessness and rising public debt levels. Since 2010, Trinidadian debt has nearly doubled from around 26% to just over 50%. Nearly one-third of its exports come from natural gas and, together with petroleum, energy accounts for 60% of the country’s exports. So falling prices for both commodities are already taxing what had been tepid growth during Persad-Bissessar’s term in office. Rowley inherits the thankless task of cutting the country’s budget in the two months ahead at a time when oil prices show now signs of improvement.

Combined with the Alberta precedent, Trinidad’s election matters as another data piece suggesting that incumbents in states with energy-dependent economies are in trouble — a foreboding thought for Canada’s prime minister Stephen Harper and for ruling classes in Turkey, Azerbaijan and Venezuela who face elections later in 2015. Continue reading Long-ruling PNM returns to power in Trinidad and Tobago

One chart that explains Obama era Middle East policy

BoA ChartChart credit to Bank of America.

Within a half-century, the most important fact of the Obama administration might well be that it presided over an energy boom that de-linked, for the first time in many decades, US dependence on Middle Eastern oil and foreign policy.USflagIran Flag Icon

No other fact more explains the deal, inked with the Islamic Republic of Iran, that brings Iran ever closer into the international community — and no other fact brings together so neatly the often contradictory aspects of US president Barack Obama’s policy in the Middle East today.

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RELATED: Winners and losers in the Iran nuclear deal

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With the exception of a small peak in the mid-1980s, when prices tanked after the oil shocks of the 1970s, US imports of foreign oil are lower than ever — and that’s a critical component to understanding Tuesday’s deal between the P5+1 and Iran. Thanks, in part, to the shale oil and fracking revolutions, US oil reserves are at their highest levels than at any point since 1975. Bank of America’s chart (pictured above) shows that US dependence on foreign oil — net imports as a percentage of consumption — dropped to 26.5% by the end of 2014.

Making sense of the Obama administration’s Mideast contradictions

One of the sharpest criticisms of the Obama administration is that it has no overweening strategy for the region. On the surface, the contradictions are legion. To take just three examples: Continue reading One chart that explains Obama era Middle East policy

Alberta election results: Conservatives lose 44-year hold on power

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For the first time since 1935, Albertans will have a government that is led neither by the Progressive Conservative Party or by its socially conservative and agrarian predecessor, Social Credit — and in its place will be a social democratic government that will not be quite as friendly to the province’s oil industry.Canada Flag IconAlberta Flag Icon

Ironically, when the Progressive Conservative government was supposed to lose an election in Alberta in April 2012 to the upstart right-wing Wildrose Party, it actually won a landslide victory instead, delivering a mandate to then-premier Alison Redford. When the New Democratic Party of British Columbia was projected to win a victory in Alberta’s neighboring province of British Columbia, would-be NDP premier Adrian Dix actually lost seats to Liberal premier Christy Clark in the May 2013 provincial election.

Pollsters took their hits for both Alberta’s 2012 vote and British Columbia’s 2013 vote. But they were correct in Alberta’s 2015 election, which brought to an end a record 44-year streak in government for the center-right Progressive Conservative Party.

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RELATED: Alberta’s Prentice could fall prey to oil price collapse

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But instead of Wildrose, it was Alberta’s New Democratic Party (NDP) that emerged victorious in a landslide ‘orange wave,’ validating late polls that gave the NDP a runaway win. It’s a staggering victory for a party that’s never held more than 16 seats in the province’s 87-seat legislative assembly.

It’s also a staggering victory for Rachel Notley, who’s served as the NDP leader only since October 2014, but whose father, Grant Notley, was a popular NDP leader between 1968 until his death in an airplane crash at the age of 45 in 1984. Notley’s death came just two years before his party became the official opposition for the first time in Alberta. Sharp-tongued and competent, Notley held her own in a leader’s debate last week, demonstrating to Albertan voters that she could be trusted as their next premier.

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With oil prices still depressed at around $60 per barrel, Progressive Conservative premier Jim Prentice previewed a pre-election budget that called for tough spending cuts and income tax increases in response to an anticipated $5 billion deficit for the budget. His call for snap elections now seems like a moment of hubris for a new premier that returned to politics after four years in the private sector. The decision will push the Progressive Conservatives into third place, truncating Prentice’s potential premiership by a year.

Without a doubt, Prentice will become the first political victim of the massive drop in oil prices in the past nine months.

But Prentice had always based his career in federal politics as a minister in Stephen Harper’s Conservative government, not in Albertan politics. By the time he returned, he was running at the head of a badly tarnished Progressive Conservative brand in the province after Redford was forced to resign amid scandals over the level of her spending as premier. After Redford and her predecessor Ed Stelmech seemed to pale in comparison to Ralph Klein, the 14-year premier, Prentice appeared like a return to form — especially after Wildrose leader Danielle Smith and eight other Wildrose MLAs crossed the aisle to join the PCs in support of the Prentice government. Smith, who failed to win re-nomination among the voters of her new party, will leave politics; her successor as Wildrose leader, Brian Jean, has surpassed Prentice’s PC to become the leader of the opposition. That’s an amazing result for a party that was written off as a zombie movement just months ago.

‘Grim Jim,’ as he became known in the final days of the campaign, had already conceded that Alberta is in store for a fiscal adjustment — voters decided, however, that they preferred Notley’s version to Prentice’s. Moreover, after 44 years, the damage to the PC brand in the post-Klein era was already done long before Prentice, a capable public servant, took the reins of government. Prentice, in brief remarks after the outcome, resigned not only as Progressive Conservative leader, but also as the newly elected MLA from the Calgary-Foothills constituency just minutes after Canadian news networks declared him the victor.

Notley’s NDA is expected to pursue slightly more progressive policies than the Progressive Conservatives, and they will still have to face a tricky budget deficit. With a plan to raise corporate taxes from 10% to just 12%, and with a plan to resurrect a royalty review (last enacted by Stelmech) to determine whether Alberta’s government should be entitled to a greater share of the province’s mineral wealth. In contrast to the rhetoric that painted Notley and the NDP as wild-eyed leftists, the plan is only marginally more progressive than the PC budget. Nevertheless, Notley will struggle to achieve a balance among placating business interests, raising revenues to plug the budget gap and stimulative spending as the oil-dominated economy stumbles. She’ll begin by facing a skeptical opposition, especially among Wildrose stalwarts, that believes there is still plenty of room to cut Alberta’s budget before raising taxes on corporations or individuals.

Everyone expected the NDP to do well in Edmonton, but in the tripartite nature of Albertan politics, polls as recently as 10 days ago showed that the Progressive Conservatives would hold ‘fortress Calgary’ and Wildrose would dominate in the rest of Alberta in largely rural constituencies. The reason that Notley will lead a majority government is due to the inroads that she was able to make against the PC in both Calgary and the rest of Alberta.

Notably, Notley’s opposition to the ‘Northern Gateway’ pipeline, the issue that tanked Dix’s hopes to lead an NDP government in British Columbia, didn’t harm her in Alberta. Onlookers in the United States will note that she’s ambivalent about the construction of the Keystone XL, too — while she doesn’t necessarily oppose its approval by the US government, she’s made clear that her government will not prioritize Keystone, instead focusing on the Energy East and other more feasible pipelines. Nevertheless, the promise of tighter scrutiny on the oil industry will mean a tougher regulatory environment.

Provincial politics, as a rule, are much different than Canadian federal politics, and provincial results don’t necessarily predict future national results. Prentice’s defeat is a minor blow to Canadian prime minister Stephen Harper, who appointed Prentice as one of his top ministers until Prentice resigned from federal politics in 2010. Moreover, it leaves Newfoundland and Labrador as the only province with a Conservative or Progressive Conservative premier — and Paul Davis’s Tories are trailing by 20 to 30 points in polls as the September 2015 provincial election approaches.

It will certainly bring to an end speculation that Prentice could one day succeed Harper as the federal Conservative leader. Taken together with foreign secretary John Baird’s resignation in March, it’s good news, perhaps, for Peter MacKay, the justice minister and former defence minister.

But the NDP, which is now the official opposition at the national level, has fallen behind both Harper’s Tories and Justin Trudeau’s Liberal Party. So many provincial factors contributed to the NDP victory in Alberta, including a presumably wide swing from Alberta Liberal Party supporters to Notley, mean that you should draw with caution any conclusions from the Alberta election for the October federal vote.

Alberta’s Prentice could fall prey to oil price collapse

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When former federal minister Jim Prentice (pictured above), once among the closest allies of prime minister Stephen Harper, took on the office of Alberta’s premier last September, there was a sense that the province’s long-ruling Progressive Conservative Party was back on track.Canada Flag IconAlberta Flag Icon

In the nine years since the indefatigable Ralph Klein left office, the PC held onto power under a series of increasingly ineffective leaders. The well-meaning Ed Stelmach, one of Canada’s leading officials of Ukrainian descent, lasted five years, and responded to the province’s first budget deficit in a generation by trying to tax the corporate oil interests that command so much power in both Alberta’s public and private sectors. Alison Redford, who won a poll-defying landslide in the 2012 provincial elections against the populist, right-wing Wildrose, so alienated voters with extravagant expenses, including a $45,000 bill for her trip to attend former South African president Nelson Mandela’s funeral, that she was forced out by her own caucus in March 2014.

So Prentice’s return to provincial politics, after a successful stint in the Harper administration and a detour to the private sector, signaled that the responsible adults had returned. There’s nothing particularly flashy about Prentice, But he oozes the quiet competence of a business consultant, and he has the Tory instincts of a rare Western Canadian politician who was never part of the Reform/Alliance (like Harper), but instead the old Progressive Conservative Party that merged into the Alliance to form today’s Conservative Party.

Just a few months into the Prentice era, the sometimes controversial leader of Wildrose, Danielle Smith, resigned the leadership and caucused with the Progressive Conservatives, bringing half of Wildrose caucus with her.

Even as oil prices started a precipitous fall last autumn, Prentice appeared like a premier in command, even if the sudden change in global oil markets suddenly left Alberta with a gaping hole in its budget. Prentice, who spent his first months in office shaking up the Albertan bureaucracy, seemed as much up to the challenge as anyone, and he promised his government would take the hard choices to close the budget deficit in three years, taking care not to raise corporate taxes to chase away potential business at a time of uncertainty for an economy so dependent on natural resources. Continue reading Alberta’s Prentice could fall prey to oil price collapse

Why the West shouldn’t root for Russia’s rouble freefall

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It might be tempting today for policymakers in Berlin, Washington, Brussels and London to have a moment of schadenfreude at the Russian currency crisis, which seems to deepen by the hour.Russia Flag Icon

But as Russia’s economy significantly weakens, those same officials might regret their glee if it causes Russian president Vladimir Putin to double down on the nationalist rhetoric and geopolitical aggression that’s characterized his third term in office. The Guardian‘s Larry Elliott declared that with today’s collapse, the West has won its ‘economic war’ with Russia and otherwise christened it ‘Russia’s Norman Lamont moment,’ a reference to the British pound’s collapse in 1992:

Back in September 1992, the then chancellor said he would defend the pound and keep Britain in the exchange rate mechanism by raising official borrowing costs to 15%, even though the economy was in deep trouble at the time.

European and US governments slapped economic sanctions against several top Russian officials earlier this year, largely in retaliation for Russia’s annexation of the Crimean peninsula in March and the Kremlin’s continued role supporting separatists in eastern Ukraine. Even today, US president Barack Obama indicated that he would support even more economic sanctions against Russian weapons producers and other companies tied to the Russian defense industry after the US Congress overwhelmingly passed a new anti-Russia bill with bipartisan support.

The last Russian financial crisis in 1998 coincided with slowdowns across the developing world, an ominous sign for the struggling Brazilian, Indian and Chinese economies. It may have even precipitated the 1998-99 Asian currency crisis.

Much of Putin’s support in the last decade and in his first stint as president from 2000 to 2008 rested on the economy’s strong performance. After the embarrassing and impoverishing experience of the Soviet Union’s collapse, the Putin era brought an end to the grinding poverty that characterized the presidency of his predecessor, Boris Yeltsin. Buoyed by rising demand for Russian oil and gas, Putin presided over a boom in the mid-2000s that materially raised incomes across Russia, especially in cities like Moscow and Saint Petersburg.

That continued even through the presidency of Dmitry Medvedev, when Putin, barred from a third consecutive term, instead served as prime minister. But since returning to the Kremlin in 2012, Putin has faced an increasingly precarious economy, and as Max Fisher and other commentators have convincingly argued, the political basis for Putin’s government has shifted from economic grounds to increasingly nationalist and populist rhetoric. That explains the Kremlin’s machinations in Ukraine and its growing political standoff with Europe and the United States, a stand that’s boosted Putin’s previously flagging approval ratings.

If that’s true, though, the risk of Russian aggression is actually rising as its economy deteriorates. There are now several potential catalysts — the currency crisis could easily engender a wider economic recession, oil prices might continue their drop, or the United States and Europe could implement deeper sanctions. In such case, Russian president Vladimir Putin may respond by intensifying his saber-rattling against not only Ukraine, but the Baltic states, southern Europe, Moldova and Kazakhstan, to say nothing of Belarus, Georgia or elsewhere. Continue reading Why the West shouldn’t root for Russia’s rouble freefall