Oil stable as resistance culture gathers momentum

Oil stable as resistance culture gathers momentum

Roshan Madaewla, Research Intelligence Unit: www.riunit.com


In addition to the Arab and Muslim world, confidence is high and rising in Latin America and indeed in all parts of the developing world that an alternative to domination by the US and its global corporations can be found. A series of meetings and conferences held during September has served as a platform for leaders from the developing and emerging world to vocalize an alternative path.

Step-off

Speaking to the UN General Assembly, Iranian President Mahmoud Ahmadinejad accused the US and UK of using the UN Security Council for their own personal advantage. Adding that whenever they had a difference with a particular nation, they would drag it to the council where they are prosecutor, judge and jury. Both the US and the UK are permanent members of the council who have veto power in the Security Council along with France, China and Russia.

In his address, he claimed that Iranian efforts to develop nuclear technology were entirely peaceful whilst the past record of some other nations was bleak and went against the laws of humanity. Nevertheless, these nations were not being held accountable by the UN. Based on this logic he asked ‘can the council in which they are privileged members address their violations?” adding ‘has it ever happened?” President Ahmadinejad further stressed that Tehran will not yield to international pressure to suspend its uranium enrichment program.

President Bush addressed a number of issues during his speech including Darfur and US occupation in Iraq while on the streets of New York, Americans held a protest against their leader. On Iran, Bush expressed a preparedness to give European diplomacy a chance to resolve the conflict with the world’s fourth largest oil producer.

Market reaction

In response, oil prices posted its biggest drop in four months. According to a Bloomberg interview with the president of Excel Futures Inc., ‘the mentality of the market has changed’ adding that ‘we’ve got rising stockpiles, the summer driving season is over and worries about Iran are falling by the wayside’.

Speculators and hedge fund managers have cut their bets on rising oil prices for each of the past four weeks reflecting rising supplies of US gasoline for five straight weeks and supplies of distillates including diesel and heating oil for six consecutive weeks.

Oil importing developing nations like Sri Lanka will find some comfort in these developments as the recent trend has hit hard on the balance sheets. Crude oil for October delivery was at $61.79 a barrel on Tuesday.


Indian attack

Witnessing its share of voting power decrease, India has criticized the new changes that have been passed at the 184th International Monetary Fund meeting in Singapore this week. Under the new reforms, the structure of the IMF is set to undergo some significant changes aimed at increasing the voting power of some emerging economies. Amongst those that got a larger share of votes were China, South Korea, Turkey and Mexico. India’s Finance Minister said the reforms were ‘hopelessly flawed’ and would like to see the entire voting system reformed within two years.

Under the temporary reform formula passed on Monday that uses a country’s GDP and market openness to give a rating, India saw its voting quota drop marginally from 1.95 per cent to 1.91 per cent.

Amongst the 23 nations that voted with India against the reforms were Sri Lanka, Maldives, Argentina, Brazil, Iran, Egypt, Venezuela and Yemen. Even so, 90.8 per cent of the voting was in favor of the changes with nations like China, South Korea, Mexico and Turkey backing the initiatives, arguing that it represents a move in the right direction, giving Asia a bigger stake in matters that have traditionally been influenced by Europe and the US.

Civil society groups have also been vocal in their criticism of the changes describing them as papering ‘over the cracks while the building collapses around them’. (Oxfam International Policy Advisor). The US will still be holding effective veto power with 17 per cent whilst small European economies like Belgium have a larger say than Mexico or South Korea.

Trojan horse

Also, in Singapore, the World Bank’s policy body asked the Bank’s President not to lose sight of reducing poverty in its fight on corruption. Whilst the Development Committee reiterated its backing for the activities geared towards reducing corruption, the statement read that the Bank should not turn its back on the poor in middle and low income countries (LBO).

The remarks came in response to plans that aim at linking future aid to good governance practices of beneficiary countries like transparent public procurements that will cut out bribery at all levels.

However, some commentators are reserved on the benefits of attaching additional conditionality to loans and aid. The French Finance Minister warned that pulling out of countries where evidence of corruption was found would prove to be even more disastrous in the fight against corruption. Christian Aid’s policy advisor claimed that the Bank’s fight on corruption could become a ‘Trojan horse for pushing controversial economic reforms and privatization through the back door.’ He also added that the Bank’s track record does not allow it to play global policemen with any credibility.
An alternative strategy of incorporating the developing world officials in the formulation and implementation of a workable and realistic governance strategy may yet work.

Define Terrorism

In Havana, the NAM leaders demanded that Israel withdraw its troops from Gaza, release jailed Palestinian Ministers and repair damage caused by its military operation.
The declaration by leaders of the NAM countries, that represents 118 developing countries, also expressed "grave concern about the deterioration of the situation ... in the occupied Palestinian territory, including East Jerusalem, as a result of the unlawful policies and practices being carried out by Israel. The document also condemned Israel for what they called "the continuing killing and injury of Palestinian civilians by excessive and indiscriminate force, targeted attacks and extrajudicial executions.” urging all members to “extend, on an urgent basis, economic and financial assistance to the Palestinian people to ease the current financial and humanitarian crisis”.
The Cuban NAM gathering also pushed for a broadening of the definition on ‘terrorism’ to include the US occupation of Iraq and the Israeli invasion of Lebanon. Members complained of a double standard where the powerful nations decide for the world who the terrorists are whiles not facing any punishments for their own acts of aggression.
The bloody occupation of Iraq has already cost the lives of over quarter of a million Iraqi lives in addition to the hundreds of thousands of children who perished as a direct consequence of the long period of economic sanctions. Additionally, some 2687 US military personnel have been killed and over $315 billion in US tax payer’s money has been spent since the start of the invasion.
The story in Afghanistan is also one of rising NATO troop causalities alongside thousands of ‘Taliban’ killed. The figures released on ‘Taliban” causalities have led analysts to comment that either thy have miscalculated the true number of resistance fighters or the NATO forces are openly killing hundreds of civilians and labeling them as rebel fighters. Dozens of NATO troops have also perished during this month.
Voting with your feet
The key position that has been taken by the developing world appears to be a strategy of voting with their feet when faced with situations that offer no hope of any gains. This reflects a bridging of the knowledge gap between the developed and the developing worlds, in terms of being better clued up and prepared at IMF, World Bank, UN and WTO negotiating tables. Moreover, the strategy of striking bilateral deals with individual developing countries that serve to undermine any collective efforts to face the industrialized nations at the negotiating table appears to be finally coming unstuck. Under such circumstances, dead-lock and intransigence can finally give way to the break-down of any multilateral entity. This is what took place with the WTO Doha round which finally collapsed earlier this year after five years of parley. Although the EU Foreign Ministers are attempting to breathe new life into the organization, nothing much is expected, at least not before the US mid-term Congressional elections in November.
As developing world markets are essential for the growth and survival of developed world producers and service providers, some type of solution is inevitable. However, WTO’ future is yet uncertain. Moreover, the recent trend has been one of greater regional trade integration and bilateral agreements that are founded on political interests.
Reality check
UK Parliamentarian George Galloway comments that “in Afghanistan, Blair, oblivious to his nation's history of military catastrophe in that proud country, has hurled his soldiers into the most unforgiving terrain, against a ferocious and growing military resistance, in a part of the world that even Alexander the Great could not occupy.
As for Bush, Galloway notes that “he has always struggled even to give the impression of having a connection with reality. Nevertheless, the reality of the last five years stubbornly remains. The world is not a safer place; it is more violent, more dangerous.”
Nevertheless, the world has also been able to see through the illusion. Whilst claiming that the fight on terror was for freedom, democracy, respect for women, prosperity and dignity, it has been a fight for the freedom of US Corporate culture, democracy of the dollar and an Arab world ruled by corrupt kings and puppet presidents.
Even so, matters have not gone according to plan and Lebanon stands as a symbol of resistance and a defeat of the plans laid in Washington and London. However, as Galloway notes, “the US is not going to tip toe away, despite its losses. To do so would mean the American establishment accepting that its power and prestige had been thrown back to before 1989, when it faced a rival power. It is going to take the power of the popular resistance from Caracas to Cairo to throw back that behemoth and settle accounts with all the quislings who it depends upon but who crucially also depend on it”.
Copyrights Reserved (RIU 2006). Prepared exclusively for the Business Standard.