Sunday, February 7, 2016

Fisking a UN Technocrats' Defense of the Status Quo ....

The following Fisking of a "Status Quo" article was completed by Team Skiff.  Members of Team Skiff have extensive analytical and "boots on the ground" experience in the region under discussion; one member of Team Skiff has specific and in-depth expertise in Angola.  The technocrat's positions are in regular type; Team Skiff response is in italics, in red.  Suggested "up to speed" readings are also interspersed.

The Article, by Michael Meyer: Falling Oil Prices Possible Cause for Migration
NAIROBI – The idea that oil wealth can be a curse is an old one – and it should need no explaining. Every few decades, energy prices rise to the heavens, kicking off a scramble for new sources of oil. Then supply eventually outpaces demand, and prices suddenly crash to Earth. The harder and more abrupt the fall, the greater the social and geopolitical impact. 
The last great oil bust occurred in the 1980s – and it changed the world. As a young man working in the Texas oil patch in the spring of 1980, I watched prices for the US benchmark crude rise as high as $45 a barrel – $138 in today’s dollars. By 1988, oil was selling for less than $9 a barrel, having lost half its value in 1986 alone.

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Drivers benefited as gasoline prices plummeted. Elsewhere, however, the effects were catastrophic – nowhere more so than in the Soviet Union, whose economy was heavily dependent on petroleum exports. The country’s growth rate fell to a third of its level in the 1970s. As the Soviet Union weakened, social unrest grew, culminating in the 1989 fall of the Berlin Wall and the collapse of communism throughout Central and Eastern Europe. Two years later, the Soviet Union itself was no more. 

The author is mourning the "fall of the Berlin Wall and the collapse of communism?".  The cratering of oil prices in the 1980's ushered in new possibilities for geo-political alliances, disruption of entrenched oligarchies and freedom for millions of oppressed people, something that the author should be cheering, not lamenting. 

Similarly, today’s plunging oil prices will benefit a few. Motorists, once again, will be happy; but the pain will be earth-shaking for many others. Never mind the inevitable turmoil in global financial markets or the collapse of shale-oil production in the United States and what it implies for energy independence. The real risk lies in countries that are heavily dependent on oil. As in the old Soviet Union, the prospects for social disintegration are huge. 

What the author is disingenuously deflecting from here is that the existing power structure and the elite are at risk in these countries.  An uncertain peace has been bought as long as the elite can continue to provide crumbs to the masses in terms of subsidies for basic commodities and healthcare, while their graft, corruption and diversion of national wealth into their own pockets continues unchecked.  Somehow it's not surprising that a spokesperson for the UN would be arguing for the continuation of wealth disparity and inequality policies.

But continue ....

Sub-Saharan Africa will certainly be one epicenter of the oil crunch. Nigeria, its largest economy, could be knocked to its knees. Oil production is stalling, and unemployment is expected to skyrocket. Already, investors are rethinking billions of dollars in financial commitments. President Muhammadu Buhari, elected in March 2015, has promised to stamp out corruption, rein in the free-spending elite, and expand public services to the very poor, a massive proportion of the country’s population. That now looks impossible. 

Someone better get up to speed - another arm of the UN, the UN Office on Drugs and Crime has stated that high oil revenues are behind many of Nigeria's woes and prevent necessary, systemic reinvention of the social, economic and legal structures in that country.

"Huge revenues from oil or gas reserves mean low taxes, but also low accountability and a lack of transparency, as well as limited public services."

But continue ...

As recently as a year ago, Angola, Africa’s second largest oil producer, was the darling of global investors. The expatriate workers staffing Luanda’s office towers and occupying its fancy residential neighborhoods complained that it was the most expensive city in the world. Today, Angola’s economy is grinding to a halt. Construction companies cannot pay their workers. The cash-strapped government is slashing the subsidies that large numbers of Angolans depend on, fueling popular anger and a sense that the petro-boom enriched only the elite, leaving everyone else worse off. As young people call for political change from a president who has been in power since 1979, the government has launched a crackdown on dissent.

Understanding that the petroleum industry is historically a cyclical one, are Angolans unable to grasp in advance the impact the swing in prices will have?  The inevitable unrest as fortunes ebb and the people become aware of the looming impoverishment naturally fuels unrest among all, not just the transfer payment/subsidy crowd.  The government crackdown on dissent can only go on so long, or until the kleptocrats have sufficiently strip mined the resources and capital of the nation as a whole, whichever comes first.  As usual, American multinationals will be the pinata for public anger while the Idi Amins of the world abscond with the wealth of Croesus.  That is the way it has always been, is now, and ever shall be.

On the other side of the continent, Kenya and Uganda are watching their hopes of becoming oil exporters evaporate. As long as prices remain low, new discoveries will stay in the ground. And yet the money borrowed for infrastructure investment still must be repaid – even if the oil revenues earmarked for that purpose never materialize. Funding for social programs in both countries is already stretched. Ordinary people are already angry at a kleptocratic elite that siphons off public money. What will happen when, in a few years, a huge and growing chunk of the national budget must be dedicated to paying foreign debt instead of funding education or health care?

The drop in oil price allows the banksters and corporate oligarchy to buy up assets for pennies on the dollar, leaving less astute regimes and peoples holding the development bag and on the hook for the borrowed amount. This is by design, and an establishment template of the Deep State.
The view from North Africa is equally bleak. Two years ago, Egypt believed that major discoveries of offshore natural gas would defuse its dangerous youth bomb, the powder keg that fueled the Arab Spring in 2011. No longer. And to make matters worse, Saudi Arabia, which for years has funneled money to the Egyptian government, is facing its own economic jitters. Today, the Kingdom is contemplating what was once unthinkable: cutting Egypt off.

The youth bomb was set off by the US State Department and its "color revolutions" as envisioned by Gene Sharp.

Meanwhile, next door, Libya is primed to explode. A half-decade of civil war has left an impoverished population fighting over the country’s dwindling oil revenues. Food and medicine are in short supply as warlords struggle for the remnants of Libya’s national wealth.
These countries are not only dependent on oil exports; they also rely heavily on imports. As revenues dry up and exchange rates plunge, the cost of living will skyrocket, exacerbating social and political tensions. Europe is already struggling to accommodate refugees from the Middle East and Afghanistan. Nigeria, Egypt, Angola, and Kenya are among Africa’s most populated countries. Imagine what would happen if they imploded and their disenfranchised, angry, and impoverished residents all started moving north.

This has already happened.  It is manufactured by design and funded to control the EU and destroy it as an economic competitor to the United States, and recast it as a total vassal to an imperial Presidency.

Ask yourself: Cui Bono?

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