In My View

‘India needs energy’

That was the refrain one heard every so often in the speeches made in Indian Parliament in the past week. Manmohan Singh made that statement, in his inimitably furtive way - if only to obfuscate the real reasons for his deal with the USA. Rahul Gandhi made it too, even though he made it sound like an advertisement for an energy potion, meant for the youth of India.

Having said that, it has to be argued that growing India has developed an enormous appetite for energy. Let us leave that tiny three per cent or futuristic eight per cent that Manmohan Singh is so bent on ensuring, for now. Let us talk about something that is virtually fifty per cent of the country’s total energy consumption – petroleum, oil and lubricants. Between April and November, 2007-08, India consumed 131.01 million metric tonnes of oil, which was almost close to the total consumption of the previous year.

Indian Oil’s website says that the Indian basket of crude oil is priced at close to 130 dollars a barrel, which is less than the price of Brent crude but close to the price of WTI (West Texas Intermediate) – the American benchmark crude.

That price could climb down substantially were India to decide to source its crude from Iran – well, not just Iranian crude, but crude that could be transacted at the newest oil exchange of the world, Iranian Oil Bourse. Situated on an island off the coast of Iran, called Kish, it is in an Iranian free trade zone.

One such action could stop the tyranny of the New York Mercantile Exchange (NYMEX), futures trade in which has contributed to 60 per cent of the total price rise of crude oil in the past two years.

Iran Oil Bourse had been in the making since 2004. It finally opened on 17 February this year. And it trades in petroleum products on Euro, Iranian Riyal and a basket of major currencies including Yen. Also, because it trades in Euro, it can sell crude at a price lower than when paid in dollars. For the sky-high dollar price of crude is not just a function of the predatory speculators of the USA, who have the president of the country in debt, but the dollar price of crude is also a victim of the eroding value of the currency.

That value would drop more when the cost of saving the US economy from the ravages of the failure of two housing mortgage companies - with $ 5 trillion in credit; yes, trillion – Freddie Mac and Fannie May gets accounted. And this also the time when the people of India should ask its political-bureaucratic class why Indians, seventy per cent of whom live on less than $ 1 a day should pay for a tanking US economy.

Meanwhile, the American establishment continues to fight a low intensity war within Iran. If Seyomour Hersh, the American journalist is to be believed, American Special Forces and CIA Covert War specialists are inside Iran right now blazing a trail of death and destruction. He wrote an expose on this a few weeks ago in the New Yorker magazine.

If anyone believes this war would stop soon as Bush is on his way out, you should take heart at the statement of a recently defeated Hillary Clinton, who threatened to bomb Iran to smithereens. She is now being touted as the vice presidential running mate of Barack Obama, a poll ticket that is being described by salivating Democratic Party faithfuls as a ‘dream ticket.’

Leaving that aside for the time being, one should acknowledge that Iran’s newest venture promise deliverance for a vast section of the world that do not have a particular love for the dollar as the currency of preference.

Iranian Oil Bourse could see curious conjunction of self-interests soon. Europe, which buys 70 per cent of Iranian crude could start frequenting the Bourse. Russia, which sells 66 per cent of its crude to Europe could sell at the new exchange in Kish Island. In April, 2002, the Organisation of Petroleum Exporting Countries (OPEC) had begun discussions on switching to Euros for their oil transactions. But that idea eventually got shelved after Bush visited the region. It is believed that US did some serious arm twisting of the Saudi princelings to help them make up their mind about maintaining the status quo.

But other countries like Venezuela are keen to trade in the bourse. So is Nigeria. The bourse would really take off if China and India are to decide that they would source their burgeoning demand from it. China, of course, has a lot of equity oil – oil from fields in which it has a equity stake. India’s Oil and Natural Gas Commission (ONGC) had been taking that route till Mani Shankar Aiyar was the minister in-charge. It stopped when Murli Deora, a friend of many American leaders replaced him. Good economics dictates that we buy from the Iran bourse.

But is it good politics? We have a civilian nuclear deal to preserve and pay obeisance to.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

In My View

For whom, Power?

As the crow flies, the distance between New Delhi and Kathmandu is 802 kms. Yet, the ‘bourgeois’ power elite – as the communists are wont to call some - in the two capitals are so similar in their approach and desire for power. First let’s see Nepal, where I was a fortnight ago.

The main communist party there, the CPN (Maoist) has won in a general election so handsomely that they have emerged as the single largest party. Since the election is for a Constituent Assembly of the country – to frame a new Constitution – the CPN (Maoist), whose ‘democratic’ credentials are being questioned there everyday, said that they wanted a government of national consensus to govern in the interim period, while the country’s constitution is drafted.

But to do that, the previous government needed to resign. That government is led by Nepal’s old war-horse, GP Koirala of the Nepalese Congress (NC). And he refuses to resign. Why? Because he says that the interim constitution by which he was positioned as the prime minister in 2006 did not have an explicit provision calling for the government to resign to pave way for the victors in the popular polls.

If that piece of logic seems impossible, his apologists have some more. For, a senior editor in Nepal who calls himself ‘left liberal’ – one can recall how many people turned ‘left liberal’ in New Delhi soon after the Congress-led UPA government came to power with the support of the left – told this writer that Koirala is “not resigning because he wants to own up for the past mistakes.” That is the reason why he wants to become a president of the new republic. How ludicrous can you get?

So the Maoists now have pushed Koirala’s hands. Their ministers have resigned from Koirala’s cabinet. And they are making one last ditch effort to form a government with the CPN (United Marxist Leninist) – the third largest party - keeping the recalcitrant NC out. Last fortnight they seemed like a party straining at the leash of Parliamentary politics, trying to deal with sobriety a situation that ‘bourgeois democratic politics’ in that country has handed out.

But Baburam Bhattarai, the CPN (Maoist) leader had told me that if their attempts at forming a government is foiled by the so called ‘democrats’ they would go to the people and mobilise them while allowing the Constituent Assembly to frame the new constitution. Thereby hangs one tale.

The other story is now being played out in New Delhi which has similar cast of characters. Here is a group of communist and left parties who support the Congress-led UPA government from outside of government, differing with the latter vehemently about what kind of a country India should be. Should India become a strategic (read military) partner of the USA that has wreaked havoc in this part of the world – Asia – since the 1950s? The Indian left parties also fear that if India gets locked into that kind of a relationship with the USA it would for a long time be in an antagonistic relationship with a giant next door neighbour, China, all for the sake of a partner 14,000 kms away. And finally, the left parties are not sure what the Indian power elite would do next for their constituents in Washington if the deal went through.

One may ask the question that hey, this is just a deal for civilian nuclear power. That question today is really moot. For had it been just about nuclear power, would a Congress prime minister stake his all on that deal. A story is being touted around the country that the Indian nuclear power programme is facing severe shortage of uranium, hence we need the deal. But doesn’t the Nuclear Suppliers’ Group (NSG) have a ‘safety clause’ emergency provision by which even a non-NPT country can seek Uranium from one of the member countries. Just in 2006 Russia gave India Uranium under that provision for Tarapur and later informed the NSG.

So this is not about just ‘a’ nuclear deal. There is more to it and the Congress leadership knows it. But did they contest the 2004 election on the issue of forging a strategic relationship with the USA? They did not. Shouldn’t they have held a referendum in the country before concluding such a deal and got a popular verdict beforehand? What do the democrats say, social or otherwise? Or does the Congress leadership in India like GP Koirala want to ‘own up past mistakes,’ thus be in power?

For the past few days I had been reading declassified exchanges between Henry Kissinger and Richard Nixon on the one side and the Chinese leadership on the other. These took place in 1971-2. And at one place, Nixon argues for establishment of a relationship with the Chinese on the fact that the latter could be attacked by India, backed by the Soviet Union!

How time changes, but people don’t.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in

Tributes to Tim Russert

In My View

How to Fix the Oil Spigot?

We knew that the US president, George W Bush had bills to pay to the oil majors. They had bankrolled him for long. But what we do need to know is: that those paying the cash are Us. And what are we paying for? To finance the inflating coffers of some of the most regressive entities the world over.

That A-list includes the Salafist Saudi regime; their other equally regressive cousins ruling other oil producing West Asian nations. The list also has with top billing the American oil companies, who are earning hyper-profits at the cost of the consumers right down to the bottom level of the pecking order.

It is ironic that while everyone in the world is talking about inflation and price rise, there is a sense of inevitability that shrouds the runaway increase in oil prices. A neo-liberal media has created this environment of impending oil shortage on account of rise in demand from China and India to fuel price expectancy of the consumers. They have even used every scrap of bad news to explain the spikes in oil prices.

The real reasons lay elsewhere. A school textbook economic sense tells us that the prices are determined by supply and demand. But is also tells us that this would occur in a perfect market condition. The oil market is rigged to such an extent that only a few like the American energy economist, Matthew Simmons, believe that oil has economics related to it.

Instead, oil is about politics. Ever since 1938, when the American Standard Oil of California first struck oil in Saudi Arabia, and later formed Aramco (Arab-American Oil Compnay) with Texas Oil, politics governed the price of oil and its so called economic. On the one hand it enriched the enclaves of retrograde Arab princelings who ruled the countries of the oil-producing West Asian region, in turn oil also helped establish the domination of dollar as the world’s reserve currency, thus creating an American economic suzerainty.

The rise of the nationalist left in West Asia, signaled by the victory Mohammad Mossadegh in Iran, put enough pressure on these medieval regimes to scramble for some vestiges of modernism. Simultaneously, they tried to approproiate the pan-Arab nationalism of the leftist forces by staging an opposition to the existence of Israel on Palestinian lands. Hence, the price shock of 1970s that eventually led to the price of oil in 1980 - in the wake American hostages crisis in Iran - to close nearly at $ 100 per barrel of crude.

In March this year that highest level was breached. Today, oil is selling at close to $ 130 per barrel, which in inflation adjusted dollar is higher than the highest rate of the 1970s oil shock period and the 1979 crisis. What are the causes for this seemingly inexorable rise?

Considering that the dismal science has an overwhelming influence on our minds, the first cause had to be supply. The total oil supply is two million barrels per day short of the global demand of 87 million barrels per day. And you might laugh aloud at this, the US Congress has decided to sue the Organisation of Petroleum Exporting Countries (OPEC) – its primary client – for defaulting on production!

But the more important cause is what the Christian Democratic government in Berlin seems to have suddenly discovered only this week: speculation in oil futures. Traders in the New York Minerals Exchange (NYMEX) have made hundreds of billion dollars trading in oil futures almost since George W Bush invaded Iraq.

Traditional futures trading is price speculation based on economic fundamentals of given situation. But the current investors driving oil prices up in NYMEX are the ‘index’ speculators. These are people who invest in commodity indices, not on commodities themselves. They invest in the indices not to wait for the time when they would go up following the logic of a capitalist development. But instead, they actually first invest in the indices, which then re-invest the index funds to acquire the commodity futures contracts commensurate with the value of the original investment. This thus creates a vicious cycle of escalation as pernicious as the sub prime mortgage boom on the USA that went bust.

In simpler terms they are 21^st century’s hi-tech giant hoarders who today, by some calculation, hold as much oil as China’s current annual demand of 920 million barrels of oil. Need we to go look anywhere else for reasons behind the oil price leap?

The Germans have now demanded a ban on the futures trading of oil. But it is the governments of China and India who need to break up the party. They can for one shift to spot buys in a cartelized manner - instead of long term contracts - at whatever is the current rate. That would stop the speculative cycle based upon longer term price expectations on oil.

Another strategy would be to diversify the source of oil away from the dollar denominated areas to the euro areas like Venezuela and Iran. Even Nigeria could be made to fall in line if the two big sources of demand co-operate amongst themselves. Of course, we have to keep in mind that only a month ago, India’s Foreign Minister, Pranab Mukherjee had gone and paid obeisance to the Saudi royals. This visit was quite out of the blue, even after the Organisation of Islamic Countries only recently raised the Kashmir stick to beat India with. Strange are the ways of politics.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhum, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in .

In My View

For a fistful of rice

Such are the signs of the times. The US president, George W Bush blames China and India for rice rationing in US stores. He claims that rising demand for food in newly prosperous China and India is cutting down the supplies to the developed world. If one thought, this was one of his famous gaffes, read what his staunch ally, European Union was saying. The European Union’s commissioner for agriculture and rural development echoed the same sentiments only a few days after Bush said his piece.

Those statements can be viewed in more ways than one. One such view would be to see it as a grudging acceptance of the changing global reality. The current issue of the venerable Foreign Affairs journal carries an apologia on the US, shoring up its waning power. Fareed Zakaria argues in that piece that while during Queen Victoria’s times, the Sun did not set on British Empire, it did set within a century. But he argues, the Sun might not set on the US Empire for a few reasons.

Zakaria, like all first generation immigrant converts, has an abiding faith in the USA’s continuing economic supremacy. He also believes that the country’s ever expanding GDP would be able to sustain the nation’s key leverage, the ever expanding military adventures, thus upholding its political suzerainty on much of the globe.He also believes that the USA’s ability to attract immigrants gives it an edge over, say, Europe. He feels that though manufacturing has left American shores, the country’s competitiveness would be continued on the back of research, innovation and design. Zakaria says that the US’s lead in quality higher education would give it an edge over countries like China and India. Ironically, he sees the US’s bane in its politics being captured by “special interests, a sensationalist media, and ideological attack groups.”

Each of these points are belied by a separate set of facts. A recent survey by the US’s Northwest Area Foundation says that one in two Americans say that there are a “lot” of people in their immediate communities who are struggling to make ends meet. Four in ten Americans say there are a lot of people working full-time jobs, yet still struggling economically.

Half of the American public says that they personally know someone who works two jobs, but still is struggling. But the study argues that poverty and a lack of development in the USA is a “local issue.” And there lies the rub.

For, the crisis of the USA today is systemic. It is an accumulation of sins committed by successive governments riding on the back of an extreme rightward shift of a dominant section of the population – the chauvinistic white working class of the American South. Robert Brenner writes in New Left Review that the US’s Republican Party under the likes of George W Bush’s chief henchman, Karl Rove, made political inroads in this traditional Democratic Party vote bank by pandering to racism and patriarchy. He writes, “Southern workers were politically atomized, individualized in the extreme, and therefore unusually open - not to say historically prepared - to embrace non-class forms of solidarity: race, the patriarchal family, nationalism-cum-militarism, and Protestant fundamentalism, now linked to Zionist expansionism.”

Much like the rise of the BJP in India on the back of the new middle class steeped in conservatism in the country’s politically sterile Hindi belt, the American white working class was on the rebound from the entitlement battles of the Blacks. Here again lies the similarity with the BJP’s electorate, which had its political ideology honed on the reaction to the entitlement struggles of the Indian Muslims.

Much like India this politics of reaction laid the foundation of private corporation driven economic liberalism in the USA beginning with the Ronald Reagan phase. Brenner writes that because the American South saw enormous growth in the 1970s but had the “weakest trade union and welfare infrastructure,” the white, working class backed the American Republican Party’s project “to construct an anti-statist individualist ideology founded on white supremacy, defence of the patriarchal family and Protestant fundamentalism.”

The result has been the decimation of the ‘left’ faction of the Democratic Party that was born on the crucible of labour rights agitations of the American trade unions since the 1920s and that had come into its own during Lyndon Jhonson’s “Great Society” experiment, which had as its goal a large “welfare state,” albeit based on high state spending in the midst of high corporate profitability.

Brenner writes that the folly of the Democratic Party of not reining corporate power resulted in the loci of politics shifting further to the right and its eventual marginalisation in the 1970s and 1980s. In the 1990s, under Bill Clinton, the Democratic Party re-emerged sans the ‘left,’ after it moved to the right and emulated the Republican Party.

He concludes by saying that the US economy has been growing on the basis of economic bubbles – first the stock market bubble of the 1990s, then the asset-price bubble as seen in the housing boom. This has led the country into the current crisis. Add to that free trade capitalism that corporate America has imposed on the country, and the dimensions of American misfortune appear bigger than Bush’s plaints about rising food and fuel prices. It signals the tectonic shifts taking place in world politics.

Pinaki Bhattacharya, currently located in Kolkata, is a Special Correspondent with the Mathrubhumi, Kerala. He writes on Strategic Security issues. He can be contacted at pinaki63@dataone.in