Tuesday, January 31, 2006


Energy security and democracy

President Vladimir Putin felt obliged today to defend Russia's right to the chair of the G8 for 2006. There is criticism that Moscow's record on democracy is incompatible with its membership of the club of industrialised democracies.

And Russia is an energy superpower. Mr Putin suggested that state interference in the private sector would be restrained now that it had achieved control of energy giant Gazprom.
Referring to oil firms such as LUKOIL and TNK-BP, the Russian venture of Britain's BP, he said: "Nobody is planning to nationalise them. No one is planning to interfere and they will develop according to market conditions as private firms."

Tuesday, January 24, 2006


Has NATO a role in energy security?

Today's press has a report:

The US is setting out an ambitious agenda to bolster transatlantic ties and reform the 26-nation Nato alliance . . . The alliance is seeking to carve out a place for itself in the post-cold war world, but it is going through testing times.

The [US] ambassador. . . argued that Nato should focus on deepening its co-operation with countries such as Australia and Japan and becoming a genuine globally deployable military force in the run-up to the November [Nato transformation summit]. It should also consider setting up training academies in the Middle East and Africa, she said.

She added she hoped Nato would be able to admit new members in 2008, when Nato plans a second summit. "We’ve got to become a 21st-century organisation that the population sees as keeping it safer every day."

But operations in Afghanistan and elsewhere are still hampered by Nato’s lack of funds and resources. [The ambassador argued that] Nato needed to increase its common funding for operations rather than relying on the countries sending soldiers and materiel to pick up the bill.
She said that improved funding and long-distance airlift were also essential for the future of the Nato Response Force, the rapid reaction force, which is supposed to become fully operational this year. At present she acknowledged there were "a lot of issues and problems" with the NRF.

"This is all part of a continuum of moving from a house where basically everyone had to hold their own territory to common collective deployment at strategic distances," she said. "It’s a totally different animal." Source

The way forward?

The NATO-Russia Council was established in 2002, and seems a suitable forum to advance discussion of energy security.

"The NRC will focus on specific, well-defined projects where NATO and Russia share a common goal. NATO and Russia have agreed on an initial, specific workplan, which includes projects in the following areas:
Assessment of the terrorist threat Crisis management Non-proliferation Arms Control and Confidence-Building Measures Theater Missile Defense Search and Rescue at Sea Military-to-Military Cooperation Defense Reform Civil Emergencies New Threats and Challenges (including scientific cooperation and airspace management)

Other projects may be added as the NRC develops."

Sunday, January 22, 2006


Resource Wars and the G8

"Priority issues during Russia’s G8 Presidency will be international energy security. . .", notes the host nation's website. A quote from Russia's President, Vladimir Putin: "We believe that today, we must think very seriously about ways to bridge the gap between energy-sufficient and energy-lacking countries". And at a joint news conference with German Chancellor Angela Merkel a few days ago, Mr Putin said "As to energy security, we certainly discussed it in detail and at length. Many of our European partners, especially ordinary people, were worried, if not frightened, by discussions of Russo-Ukrainian gas problems. I think we made a mistake by failing to explain to them the essence of events clearly and promptly."

Emphatically energy security is the priority for this year's G8 in Russia.

It is therefore surprising to read today that "No outsiders will be invited to this year's G8 Summit that will be held under the chairmanship of Russia." China and India will not be invited? They are rising consumers but not members of the G8 - it might be a mistake to exclude them from energy discussions. The exclusion was hinted at in November.

Wednesday, January 18, 2006


Global rule-sets and the G8

There are huge difficulties in trying to enforce rule sets: "The U.S. is overwhelmed in Afghanistan and Iraq, U.S. allies are as skeptical as ever regarding the use of force and even the government is more modest about what it "knows" after the intelligence failures since 9/11", reports the Washington Post.

However TPM Barnett's idea of official global rule-sets is worth exploring. The United States should offer to host a new Bretton Woods conference of key global leaders, recommends Clyde Prestowitz in his book Three Billion New Capitalists: The Great Shift of Wealth and Power to the East. Who will host a multinational conference that aims to prevent resource wars, which some think will be frequent in the 21st century?

Perhaps chairman Russia will put preventing resource wars and financial instability on the G8 agenda for this year.

Thursday, January 12, 2006


G8 agenda for 2006

the G8 summit in St. Petersburg will take up such traditional topics as . . . topical issues of the global economy, finances and trade

The IMF is under pressure from some quarters to address the trade imbalance around the world. A few countries are regularly running huge trade deficits, and many others have big surpluses; should global trade be balanced? If so, what steps have the IMF been taking over the years to even out the imbalances?

Earlier this week the 'Economic Counselor' of the International Monetary Fund gave a speech:

"Let me start with the disclaimer that what follows are my personal views only. I will focus on a familiar issue, the U.S. current account deficit, or more broadly, global current account imbalances, and will describe how financial system reform can play a part in their resolution."

"The United States is running a current account deficit approaching 6 1/4 percent of its GDP this year and over 1.5 percent of world GDP. And to help finance it, the United States pulls in 70 percent of all global capital flows. Clearly, such a large deficit is unsustainable in the long run. . . . demand has to shift from countries running deficits to countries running surpluses".

"Some politicians claim that all it would take for the U.S. current account deficit to disappear is for China to revalue the yuan by a substantial amount. This is nonsense. Without a fundamental change in the factors driving savings and investment, a substantial revaluation could merely alter who the U.S. imports from rather than how much it imports."

The will to tackle the global imbalances is suspect. With the result that the author of 'Three Billion New Capitalists' writes: "several key central bankers are saying. . .that the United States may not be able, or may not intend, to make good on its international financial obligations. . . And since the United States is at present the world's only major net importer, all the exporters that depend on it for their economic stability would suffer severely as well."

Russia wants to address topical issues of the global economy? The serious instability in the global economy might therefore be discussed at this year's G8.

Plea for IMF action

"Let me enter a plea for the fund to take a bold initiative in [sorting out trade imbalances]," said Michel Camdessus, a former IMF managing director, in a lecture Sunday attended by many top economic policymakers. Recalling the coordinated agreements during the mid-1980s among the major industrial powers that helped deal with the global economic stresses of that era, Camdessus said: "Now is the time for a similar effort, led this time by the IMF . . . because there is no other -- I insist, no other -- legitimate, global forum to tackle such a systemic problem." Source

Wednesday, January 04, 2006


Russia's energy security

Russia plans to supply both East and West with energy. However a discussion today on BBC radio revealed that this will be ephemeral. It was said that Russia has forecast that it will no longer be able to rely on indigenous oil and gas for its own use by 2050 - never mind exports; accordingly it will have to move to nuclear power to meet domestic energy needs.

The interview also considered UK energy needs, observing that 40% of our electricity is provided by gas; and this will be 80% by 2020. The recommendation from one participant was that we need to rebuild our nuclear industry and "a slice of our coal industry"; he favoured an electricity mix of 10% renewable, 30% coal, 30% gas, and 30% nuclear.

NB: The mix in 2004 is reported: 1% hydro, 33% coal, 40% gas, 19% nuclear, 1% oil, 4% 'other' fuels, 2% imports (nuclear from France?) - per DTI.

Monday, January 02, 2006


Russia - Challenge

The Chairman of the Russian Council on Foreign and Defense Policy questions whether economic globalisation should continue. He gives his recommendations in 'Russia in Global Affairs'. The article is titled 'New Contours of the World Order'.

It is pointed out that the centre of international politics is steadily shifting eastwards; this is natural, because political power follows economic power around the world.

But should the new leader of the G8 promote something as wide as globalisation? The article recommends that Russia should "reorient and diversify energy exports to Asia or the world market as a whole"; the choice of economic patriotism, resisting the world market, led to WW2 last century. Moreover, there is the question of who is prepared to be an importer of last resort in a system that encourages every nation to have a trade surplus. It seems to have been left to Russia to solve horrendous problems in its G8 presidency

Sunday, January 01, 2006


Russia is chair of G8 in 2006

Here is the official website for Russia's chairmanship of the G8 in 2006. The member states account for 49% of global exports, 51% of industrial output, and 49% of assets in the International Monetary Fund.

"A successful first Presidency in the Group of Eight is one of Russia's foreign policy priorities. The work on the contents and organization of the summit is progressing successfully. Priority issues during Russia’s G8 Presidency will be international energy security, fight against contagious diseases and education.

"At the same time, the summit in St. Petersburg will take up such traditional topics as counterterrorism, WMD non-proliferation, fight against organized crime and drug trafficking, environmental and other global problems, topical issues of the global economy, finances and trade, and escalating regional conflicts."

The detailed proposal from President Putin for improving international energy security, and at the same time sustaining economic growth in the world (see below), will be eagerly awaited.

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