Thursday, 27 September 2012

U.S. drought and Russian winter threaten global food security


The United States farming heartland is suffering amid the country’s worst drought in 25 years.

While it’s always hotter in the summer months, a drastic lack of snow caused tiny amounts of meltwater to soak into the soil. Without water the cereals simply cannot grow.

The current drought of course has many causes but the worst U.S. drought for 800 years back in 2000-4 is being blamed by some scientists as a potential amplifier.

A recent study in the journal Nature Geoscience predicts, “the situation will continue to worsen, and that 80 of the 95 years from 2006 to 2100 will have precipitation levels as low as, or lower than, this “turn of the century” drought from 2000-4.

“Towards the latter half of the twenty-first century the precipitation regime associated with the turn of the century drought will represent an outlier of extreme wetness,” the scientists wrote in this study. These long-term trends are consistent with a twenty-first century “megadrought,” they said.

This makes for some depressing reading but the evidence is clear in the brown, withering farming heartland of the United States.

More than 60 percent of the lower 48 states are in drought. The situation is so pronounced that NASA has released satellite images of the Mississippi river at around 2.4 river stage water levels, the lowest for years.

The drought is enormous. Analysis of the U.S. Drought Monitor reveals two thirds of American land area is in mild or extreme drought.

Government agencies in the United States are issuing predictions ranging from severe to the “costliest natural disaster in U.S. history” for the affected states, according to the National Weather Information Service.

The U.S. Department of Agriculture has nominated 1,297 counties across 29 states as disaster areas due to losses caused by low rainfall and extreme heat.

And of course, because the U.S. is an enormous cereals exporter, this drought will inevitably affect the rest of the world as cereal prices rise.

Field corn makes up a large part of the cereal crop produced in America. The starch created from the corn is mostly used in feeding livestock or for producing ethanol.

Less than one percent of the corn produced in the United States is canned or eaten fresh.

Over two thirds are used to produce ethanol, or around 40 percent, up from 7.5 percent in 2001. In other words, an enormous 38 million of a total 96 million acres of planted corn in the United States eventually becomes ethanol.

Ethanol consumption is only going to increase in the years ahead as ‘greener’ technologies move to diversify away from traditional fossil fuels.

United Nations Food and Agricultural Organisation (FAO) director general Jose Graziano da Silva of Brazil has called for the United States to suspend biofuel production to ease pressure on cereal resources.

Coupled with a growing demand for cereals throughout the world, especially in the developing world, the base price for corn and wheat will rise. The drought of 2012 will only exacerbate this trend.

Until cellulosic ethanol, produced from sugarcane, experiences a maturing in technology, developed countries will continue to use corn for transport fuel, even though it is a global food source.

The drought is expected to decrease 2012 corn crop yields by 3 percent in comparison to 2011 while global drops could reach 8 percent.

And the situation hasn’t been much better across the Atlantic this year.

It was reported September 25 that Russian grain prices soared by more than 1,000 rubles per ton in a single week due to low yields of the cereal crop.

Grain belts in the Volga, Krasnodar, and Black Sea regions went through a destructive seven weeks of heavy rain and major flooding.

The rains were made worse because an extreme cold snap at the beginning of the year precluded snow cover and all but cancelled the expected moisture.

The ground was left extremely vulnerable to the floods in May.

Russian President Vladimir Putin visited the area in July to assess the damage that killed 171 people and displaced 12,000.

This was just the most recent in a list of dire problems for wheat production in the former Soviet Union.
Aside from the fact that 20 percent of Ukraine’s wheat does not reach market because of poor quality silos, the transportation options for exporting the rest are equally poor.

Almost all the former Soviet Union countries and Russia have revised down their estimates of wheat production for 2012.

The United States and European Union can usually make up the difference for these countries, but they are experiencing unprecedented problems also. 

French wheat production fell by a third this spring because of biting winter conditions.

France is the world’s second largest wheat exporter and can usually be relied on to cover the deficits in case of failure in other major wheat exporters.

International food prices are expected to rise as a result.

Corn and soybean prices are likely to hit record highs as the United States is the world’s largest exporter of corn, soybeans, and wheat.

At the moment, major concerns for the United Nations are hoarding or export restrictions by food producing countries as supplies dwindle.

The United Nations have discussed a consensus to avoid a repeat of the food riots sparked in 2007-8 by high food prices.

Ultimately, many international agencies are predicting high food prices in 2013 as the pressure of drought starts to reach the world marketplace.
  



Wednesday, 26 September 2012

The world of signals intelligence and GCSB in context


The Government Communications Security Bureau (GCSB) is making headlines. This is not a common phrase, and from an intelligence perspective, neither is it a good phrase to read.

As the reader may be aware, intelligence agencies appreciate being in the media’s sunlight only as much we enjoy hospital waiting rooms. That is to say, not much at all.

Signals intelligence is not a very common expression among regular people. The contraction SIGINT might flicker some distant memories, perhaps from an old Tom Clancy book.

This is exactly the way these government agencies like it. The less the public hear about them, the more efficient their work can be, or so they say.

The nature of signals intelligence is incredibly secretive. Formed in 1977, GCSB is responsible for collecting signals intelligence or SIGINT in intelligence parlance.

Signals in this sense include communications between people, over many electronic mediums, and other electronic emissions such as radar.

The New Zealand intelligence community is small but very active in the world; its partners are some of the world’s largest agencies in terms of funding. 

It may be instructive to learn that New Zealand is part of a coalition of Western-hemisphere signals intelligence agencies called the UKUSA agreement – including Canada, the United Kingdom, New Zealand, Australia, and the United States – also known as Five Eyes.

Even though the UKUSA agreement is signed by the United States and United Kingdom, New Zealand, as part of the Commonwealth, has used it to base its alliance links and guide the GCSB for over fifty years.

The intention was to forge an intelligence bond around a common national security objective. The world was cut up into five areas of responsibility and each agency was assigned specific signals intelligence targets.

Created for the purpose of sharing intelligence between allies, especially signals intelligence, the UKUSA agreement has streamlined the collection and analysis of simply gargantuan amounts of intercepted data and communications.

There appears to be around 130 known listening stations around the world. Some are huge, such as the Menwith Hill complex in the United Kingdom, and some are small or even functioning automatically.

The agreement standardised terminology, codes, clearances, handling procedures and access to facilities. An exchange of personnel is common but New Zealand is still a secondary partner in this secretive alliance.

The UKUSA agreement is a resolve to spy on all others except the members themselves. If intelligence sharing was to flow freely, a certain amount of trust is required.

Governments of the UKUSA members are very careful to restrain their agencies from spying on their own citizens. Various media outlets this week have underlined New Zealand’s own laws for GCSB in this regard, they are extremely clear.

There is nothing, however, keeping the other members from monitoring their partner’s citizens and quietly handing over that information as part of the UKUSA intelligence sharing agreement.

James Bamford, the American author who has made a distinguished career of spying on the spies, explains in his books that the U.S. Fiscal 2000 Intelligence Authorisation Act (FISA) requires that NSA ensures the privacy of U.S. citizens.

Australian and Canadian signals agencies also go to some effort to avoid collecting their citizen’s communications.

This has left a major loophole for UKUSA partners. Other members are still able to use their colleague’s equipment and their own, to wiretap their partner’s citizens.

Because of this, according to Bamford and other authors, the world is completely monitored. There are few black spots without interception, even among the UKUSA agreement parties.

The rules governing a UKUSA member’s own agencies, including the GCSB, do not apply for another member and the agreement ensures those intercepts are passed back once collected.

New Zealand, as a secondary partner, has never acknowledged the existence of the UKUSA agreement. Wellington has no authority to publicise its existence even if it wanted to as it is, strictly speaking, a British and American agreement.

A partnership with various telecommunications industries has secured access to the internet for the UKUSA signals agencies. All traffic on the internet and via emails is reportedly captured and stored.

This monitored traffic comes from all over the world.

The National Security Agency in America is currently constructing an enormous data warehouse in Utah to store the huge volume of internet traffic. Their older storage area at Fort Meade, Maryland simply became full, although this complex is gigantic itself.

Such a Herculean task of analysing the collected material is probably beyond the various agencies’ abilities of their analysts, but having it filed could be useful in the future.

Voice over Internet Protocol (VoIP) such as Skype is apparently proving especially difficult to monitor.

Before this September, GCSB was perhaps best known for an attack by protesters on a kevlar ‘radome’ at the listening station in Waihopai Valley in 2008. Of course, GCSB itself is not widely remembered from this event.

So when the curtain is raised, however briefly, to reveal the strings behind government it is always instructive to pay attention.

The protesters certainly displayed fervour and there is understandable public curiosity to learn about intelligence agencies. But it is important to remember that intelligence agencies are full of normal people in somewhat unconventional jobs. 

While the decision makers and leaders should be questioned and held to account, the intelligence analysts and collectors are simply working. 

But think back to December 16, 2011. Recall your activities and try to remember the weather.

Somewhere in New Zealand at that time GCSB had begun intercepting Kim Dotcom’s communications and would continue to do so for at least another month.

Regardless of the legality of this particular instance, that very same spying process is happening right now. Somewhere in New Zealand the GCSB are currently monitoring the Pacific region’s communications quietly.

GCSB may not be monitoring a New Zealand citizen, and it may well be either perfectly legal or even illegal.

However, GCSB will be part of the important UKUSA agreement and it will continue surveillance unabated as long as there are communications to be intercepted and as long as our intelligence partners need New Zealand assistance.

After a few weeks at most, chances are the secretive government agency GCSB will melt back into the shadows and resume its diligent work.

Wednesday, 19 September 2012

Saudi Arabian monarchy entering troubled waters


Perhaps unsurprisingly, the conservative Islamic Kingdom of Saudi Arabia has threatened to ban the controversial anti-Islam video that has predicated so much religious outrage around the Muslim world recently.

The Saudi government September 19 requested the giant search engine Google block all YouTube links playing the film. Equally unsurprisingly Google has of course declined to co-operate.

Saudi Arabia, according to the Dubai School of Government, registered 90 million YouTube video views per day. This is the highest number of YouTube views in the world per internet user, so a little trepidation on the part of Riyadh is understandable.

Riyadh is not the only government coping with reactions to the anti-Islam video. Over 20 countries including Libya, Lebanon, Egypt, and Pakistan weathered protests this past week in response to the perceived offensiveness of the video.

However, it is more dangerous for Saudi Arabia; Riyadh is already experiencing an extraordinarily complex year. And this complexity is compounding with no end in sight.

Important figures in the Saudi monarchy are dying, internal instability simmers among a youthful population, and their historically proximate rival Iran is challenging the Kingdom over energy dominance in the Middle East.

Such a video may not normally have stirred such reactions in the Saudi Kingdom. But coupled with spreading access to the internet and a looming succession minefield, the monarchy elites are justifiably nervous and lashing out.

Deaths of two crown princes in the past eleven months continue to whittle down the experienced second generation elites.  As their numbers decrease, an approaching generational shift will test stability in the country with world’s second largest oil reserves.

One of this year’s landmark changes occurred with the death of Saudi Crown Prince Naif bin Abdulaziz on June 16. The Saudi prince was part of a declining legacy of Saudi elites with a chequered record of state governance.

Naif was the last major member of the Sudairi Seven. This powerful group of Saudi Princes are the full brothers and sons of Abdulaziz bin al-Saud, the founder of the modern Saudi kingdom.

However, the death of Naif is another lost member of the generation that has ruled Saudi Arabia since the 1930s. Due to the advanced age and worsening health of the senior ruling elites, the Saudi monarchy is facing challenges to a well established process of succession.

A time is fast approaching when the Saudi royals will be forced to increase the number of third generation princes into key government posts.

Five to ten years from now the kingdom will likely be in a period of political unfamiliarity as the newer, less experienced generation prepares to take power.

As this older generation shrinks – Saudi King Abdullah is nudging 90 years old and is constantly in hospital – the newer generation are still relatively behind experientially.

When, not if, King Abdullah succumbs to his illnesses he will probably be replaced by Sudairi faction member Crown Prince Salman, another second generation prince. Salman is only ten years Abdullah’s junior, hardly a spring chicken.

Many major members of the newer generation currently hold regional positions of power in 12 of the 13 Saudi provinces.

So while the experience question is not urgent, there is a possibility in the future of individual power grabs. It is not clear their allegiance is completely behind the Saudi kingdom as a traditional monarchy. An affinity with the traditional tribal structure that has nurtured them is not guaranteed.

There is at least a decade before the second generation princes cede power to the upcoming generation. A buffer like this should give the monarchy time to prepare sufficiently.

Ideally, the older princes will leave the Kingdom to a generation that places stability of the state above personal ambitions.

However, the new generation is much more educated in general than the second generation elites ever were. This buffer might just encourage factions to develop among this new breed of Saudi princes, leading to potential destabilisation in the future.

The monarchy had expected Naif’s death for some time and is coping with the power transition well. Although since Naif’s death his position as Crown Prince, Deputy Prime Minister, has remained vacant and unfilled by a third generation prince.

This potentially signifies a more formal succession process underway instead of the traditional method of royal announcement, a process that is a direct response to the shifting internal mindset among common Saudis.

Attempting to censor the anti-Islam video demonstrates an evolving approach to Saudi religious discourse, traditionally dominated by the House of Saud.

Religious leaders have dictated what is culturally acceptable for very nearly a century. Yet social media and the internet are attracting more young Saudis who utilise it to challenge the authority of the clerical elite.

Openly criticising the monarchy has historically not been tolerated. The coercive state apparatus is quick to clamp down on any fledgling dissent, something foreigners can become personally familiar with if the strict religious rules are not observed.

Aside from the digital arena there are few places to congregate in Saudi Arabia and even less chance to mobilise. Social media, as seen around the Arab world recently, is slowly making it simpler for Saudi youth to spread ideas and criticise the monarch relatively safely.

Such a new phenomenon as the internet so rapidly introduced into a deeply traditional, tribal, and familial culture will be hard to contain for the emerging third generation leaders.

An exposure to alternative worldviews can challenge anybody, but for an insular state with a large youth population coming suddenly upon the internet as they have, such exposure can potentially be deeply disruptive.

Indeed, Twitter CEO Dick Costelo explained recently that Saudis are the fastest-growing group on the social networking site. Apparently the number of Saudi Twitter users increased by 3000 percent in June alone. Some 400,000 people use Twitter, according to Time magazine, with around 4 million Facebook users also.

The incoming generation of Saudi elites will not inherit a docile, controlled populace that have been such a blessing to the current leaders for almost a century. The internet has put paid to that.  

The basis of Saudi nationalism is loyalty to the House of Saud.  A question arises for the incoming generation of leaders to see if they can manage a population willing to flex its democratic ambitions, and whether this can be achieved smoothly and without turmoil.

They will have to balance a populace with increasing exposure to and alignment with democratic ideals, and a traditional process of formulating government.

If the trends toward democratic upheaval around the region are bellwethers, the democratic urge may win out in the end. What that will do to oil prices is anyone’s guess.



Friday, 14 September 2012

Violent protests challenge recovery in Libya and Egypt


The United States has dispatched two warships and a Marine unit to bulk up protection in Libya following violent protests in the country.

An attack on the U.S. Embassy in Benghazi September 12 killed four staff members including the U.S. ambassador to Libya, Christopher Stevens.

Senior officials in U.S. President Barack Obama's administration said a 50-member Marine unit from the Fleet Antiterrorism Security Team is being flown from its base in Europe and that two U.S. warships, the USS Laboon and the USS McFaul, are being redeployed to the Libyan coast.

The FBI has opened an investigation into the deaths of the four Americans, according to U.S. Attorney General Eric Holder said on September 13 in a press release.

Earlier on September 13, United States President Barak Obama both condemned the attack and promised to bring the perpetrators to justice. His condemnation has been echoed in the European Union and Russia.

The consulate attack in Libya is one in a string of recent, and ongoing violent protests around the world. The protests, so far isolated to majority Muslim countries, are reacting to a controversial anti-Islam video released earlier in the summer.

Large demonstrations in Morocco, Tunisia, Yemen, Egypt, Iraq, and the Palestinian territories have turned violent. Other demonstrations are being planned across the world in Zambia, Malaysia, India, Sudan, Kuwait, and Indonesia.

The controversial video reportedly insulting the Muslim prophet Mohammed has angered Salafist groups throughout the Arab world.

Created by an Israeli-American director, the short film was supported by the controversial Florida-based Christian pastor Terry Jones

More protests are beginning elsewhere in the Middle East. Close to 200 people in the northern Lebanese city of Tripoli on September 13 protested the anti-Islam film.

The Lebanese protesters burned U.S. flags, chanting "God is great" and carried banners with "There is no God but God, and Mohammed is his prophet."

According to sources on the ground in Tripoli Lebanese security forces have been heavily set up, even though the number of protesters is small.

The current spike in protests reflects the response in 2005 to the Danish Mohammed cartoons. Those protests killed multiple people.

The Libyan demonstrations are important for who conducted them. The relatively peaceful protests in Egypt will test Egyptian President Mohammad Morsi’s new government just as much as his Libyan counterparts in Tripoli.

Benghazi is a strong Salafist city in the East of Libya. During last year’s unrest it was the heart of the anti-Gadhafi movement.

700 dusty kilometres away in Tripoli the country’s national congress picked Mustafa Abu Shagour, the current deputy prime minister, as the country's next prime minister. Abu Shagour succeeded over former Libyan National Transitional Council foreign affairs chief Mahmoud Jibril by only two votes.

The attack in Benghazi will raise serious questions for the new government in Tripoli.

The country is already struggling to unify the disparate and belligerent tribes that patchwork the nation. A growing jihadist presence in Benghazi is not being contained and may serve to strike deeper divisions in the war-torn country.

While the Middle East and North Africa is experiencing unprecedented civil upheavals, their move toward democracy has not been straightforward.

The Islamic parties coming to power from Egypt, Tunisia and Libya are trying to balance a new-found freedom of speech and a conservative interpretation of Islamic beliefs.

If the violent protests continue to spread across the region, it could undermine the attempts to rebuild struggling economies. The unrest of the Arab Spring has not cooled in many places and stability is tenuous at best.

The attack on the U.S. Embassy raises questions about how well protected the building’s staff really was. The assailants reportedly entered the compound easily and moved unimpeded from building to building.

The infusion of more military personnel will likely deter any follow-on attacks in Libya but a serious review of embassy security will likely be underway in Washington.

Many governments have issued travel warnings to the Middle East and other majority Islamic countries.


Wednesday, 12 September 2012

Chinese offshore purchases suggest economic bubble


It is almost a reflexive negative public reaction in New Zealand whenever a Chinese company purchases an otherwise proud New Zealand business. The North Island’s controversial dairy farms and this week’s Fisher and Paykel Appliance purchases are just two recent examples.

The circulating rumour is that China is buying up large and slowly taking over the world. Beijing certainly seems to be flush with cash from years of strong export profits and is ready to throw those funds into investments.

But why do they not like to invest domestically? This trend of capital flight reveals a less-than-optimistic attitude among China’s elites about the country’s financial future and its ability to safeguard their assets.

Chinese exports increased 2.7 percent year-on-year to US$177.97 billion in August, up from 1 percent in July, according to data released Sept. 10 by the General Administration of Customs. A slowdown in these indicators may point to a larger problem China is facing economically.

It is within living memory that the Japanese behemoth caused similar levels of fear as it purchased huge foreign companies and property. Tokyo knew in the 1980’s what the rest of us didn’t. If it were to invest domestically it would lose everything because the Japanese economy was in a bubble.

When it proceeded to collapse in spectacular fashion it was clear that Japanese investors understood the inherent weaknesses of their economy.

China has bought many assets in the United States such as property in Pebble Beach, the Bank of East Asia U.S.A. located in New York City, and the American whiteware manufacturer Maytag.

Indeed it was Fisher and Paykel’s new shareholder Haier that made the crucial offer of US$16 a share to purchase Maytag in 2005.

The cripplingly low price at which manufacturing or services can be provided has been termed “The China price”. Other countries and companies simply can’t compete with the China price if they wish to make a profit.

This term could also apply, in the inverse, to the way Chinese firms are buying well-known companies around the world at a much higher price than the company is valued, and are so quick to do so.

Daniel Gross of Slate magazine explained in 2005 that purchasing an established American whiteware company carries the added bonus of a well-known and trusted brand name.

For a new entrant, especially a Chinese company, breaking into a target market in a foreign country is incredibly difficult. It is much simpler to buy into a reliable brand like Fisher and Paykel or Maytag.

Below the surface worry of sending important intellectual and agrarian property overseas to a largely opaque country lies a deeper question about the reasons why China is investing heavily in foreign countries and not domestically.

Some have pointed to the looming point where the Chinese economy will outpace the American economy as if these numbers somehow prove Chinese predominance. If this economic success exposes anything it is that China’s miracle growth is unsustainable and probably short term.

This is because China is saddled with a billion people living in poverty, most living in conditions only experienced in sub-Saharan Africa. The United States is not experiencing poverty anywhere near these levels.

What is likely a blip on the American economic radar in terms of growth is equally anomalous for China. Beijing understands the importance of moving away from a GDP growth-oriented economy.

To continue this growth China must invest more than it consumes. Beijing is struggling to do this due to lack of quality domestic businesses and poor Chinese consumption.  So cripplingly cheap have Chinese exports been and so strong has Beijing’s policy of vigorous lending practises been for citizens that they have to turn to foreign investments simply as a store of wealth.

 As it develops, China is investing less at home and consuming more as living standards increase in the rich coastal regions. The dilemma for Beijing is balancing the inflationary pressures of lending with the threatened social instability resulting from high unemployment rates if that funding dries up.

Unemployed, hungry people do not author civilised letters to their mayors, they always riot. Beijing lives in constant fear of civil instability that it suppresses by supplying cheap lending rates to small and medium Chinese enterprises. These loans are almost always non-performing.

China is also feeling less competitive globally as other developing country’s cheaper goods and services begin to contend with them. Simply put, China is not the only country these days competent enough to deliver quality services and high tech goods at a cheap price.

It is unclear whether the rising Chinese middle class, who are consuming 25 percent of luxury goods by some estimates, can be domestically satisfied with Chinese manufacturing. Chinese industry relies on export capital for survival because its profit margins are so low, in some areas consistently running at a loss.

In this context, the Fisher and Paykel share purchase is a consistent Chinese trend. Yet as they buy overseas assets they are subtly showing not how strong their economy is, but its inherent weakness. Chinese double-digit growth rates were impossible to maintain indefinitely, they are falling now as the economy contracts dangerously.

The widening prosperity gap created by the Chinese elites through offshore investment decisions will further restrain the facility of the country’s poor and middle class to develop.



Tuesday, 11 September 2012

Gazprom and Russian energy politics


Russian state-owned energy leviathan Gazprom is being seriously challenged for hegemony over Russia’s lucrative natural gas industry, a problem for both the company and Moscow.

To become more competitive, Gazprom is reconsidering its strict pricing policies both domestically and abroad.

Meanwhile, European countries are courting rival Russian energy firms to pressure Gazprom further to weaken their monopoly and secure cheaper LNG prices.

On September 5 the European Commission opened a formal investigation into whether Russian energy giant Gazprom is breaching European Union (EU) antitrust rules by obstructing competition in Central and Eastern European gas markets, according to an EU statement.

Russian Prime Minister Dmitri Medvedev echoed the response from Gazprom calling the EU probe ‘disingenuous’. Mr Medvedev, a member of Gazprom’s board of directors until 2008, plans to meet with EU officials to defend Russia’s policies on energy exports.

Unlike the Russian oil industry, the liquefied natural gas (LNG) industry has been dominated by the Gazprom monopoly for the past decade. Moreover, state-owned Gazprom has been a crucial political tool of the Kremlin both at home and abroad, especially in Eastern and Central Europe.

Gazprom accounts for more than 80 percent of Russia’s natural gas production, and close to 17% of worldwide LNG extraction totals. And like the Russian intelligence agencies, the modern company has remained largely identical to its Soviet-era manifestation no matter how many name-changes are applied. 

Due to its close relationship with the Kremlin, Gazprom secured direct access to the enormous Shtokman gas field in Siberia and the as-yet undeveloped Yamal Peninsula field. More importantly Gazprom has complete ownership of LNG pipelines flowing to Europe from Russia. 

Such complete control over the Russian natural gas sector has benefited Gazprom, and in turn Moscow, financially. But as the economic crisis continues in Europe along with uncharacteristically cold winters, Gazprom’s unique window of high revenue may be closing.

Gazprom has been under increasing pressure from its domestic rival, Rosneft, and from end-user European consumers and also from cheaper natural gas suppliers such as Qatar to increase diversification of the Russian LNG industry.

The competition simmering with Rosneft will expose Gazprom to market prices because it will be unable to use unilateral action to wrest control of mining contracts and pricing.

The Kremlin does anticipate a restructuring of Gazprom if its monopoly weakens.

Any diminishing of Gazprom’s political utility by limiting their energy sector control would be unappreciated in the Kremlin. This is exemplified by Russian Prime Minister Dmitri Medvedev’s decision to intervene on Gazprom’s behalf with the EU.

Russia has struggled to break from a poor economic situation for much of its existence. The country is huge but largely inaccessible and arctic weather drastically limits the spread of human habitation. Tundra and frozen ground create expensive heating needs and costly resource extraction, something the Czarist, Soviet, and the modern state have struggled to overcome.

As the Soviet state collapsed, rolling back conventional Russian influence in Eastern Europe and Central Asia, the Kremlin has leant heavily on its vast resource wealth to gain control over old satellite countries. Aside from the Volga grain belts, Russia’s natural gas reserves are its most important.

Russia has positioned itself as Europe’s primary energy supplier. Russian natural gas supplies total 25 percent of Europe’s total imports and 40% of European Union imports.

Gazprom’s hold on the European energy market allowed it to increase its natural gas prices from the high of NZ$300 per thousand cubic metres (mcm) to between NZ$550 and NZ$700 mcm in recent years. This remarkable rise was achieved by both the subtle manipulation of European energy markets, and the not-so-subtle.

In 2009, Russia displayed an inclination to leverage control over European LNG imports by closing gas supplies to Ukraine over prices disputes and thereby disrupting flow to 17 other European countries.

Ukrainian President Viktor Yanukovich hopes that Russia and Ukraine will change their relationship in the natural gas sector, he said in an Aug. 25 meeting with Russian President Vladimir Putin in Sochi, Russia.

But the bond between Moscow and Kiev has changed. The completed Nord Stream project is viewed by Moscow as a secure pipeline, removing an unpredictable intermediary like Ukraine and assuring Central Europe of steady natural gas supplies from Russia.

The undersea pipeline runs through the cold Baltic Sea from Vyborg near St Petersburg to Greifswald in Germany, is owned by a partner of Gazprom and is a lynchpin in the warming relations between Moscow and Berlin.

Indeed, uninterrupted supply of LNG to Central Europe is a conscious political decision by Moscow calculated to increase reliance and therefore dependence on Russia for European energy.

With German nuclear plants scheduled to close, an increased dependence on natural gas for energy is predicted to bring these two countries closer together.

Yet as foreign sources of LNG begin to take larger bites of the European market away from Russia, and the artificially low domestic natural gas price ceiling is expected to climb, Moscow and Gazprom are facing a dilemma.

On the one hand Russia needs to supply its population with heavily subsidised natural gas (currently charged out at NZ$100mcm), a price-capping legacy from the Soviet era. But on the other hand, Russian LNG exports to Europe can fetch over NZ$650mcm.

Gazprom's exports of natural gas to Europe fell 17 percent year-on-year, to 71.93 billion cubic meters, in the first six months of 2012, according to a statement by Gazprom.

The company's total exports during that period amounted to 104.4 billion cubic meters. So Gazrpom may have to make some tough decisions as European energy supplies clearly continue to diversify.

Gazprom’s European market share may also decrease when the cheaper American LNG super fields come fully online in the next few years.

Coupled with rising domestic demand, shifting European consumer patterns, and a low profit margin due to subsidisation, Gazprom may not be able to continue funding future projects on the Yamal Peninsula and will lose the utility the Kremlin has depended on.

But the energy giant is not without its counters to the forces arraying against it. Gazprom announced September 10 that it would suspend purchases of natural gas from independent producers in Russia. This is important because independent firms have to sell the majority of their extracted LNG to Gazprom because of its monopoly.

In a very Russian way, Gazprom is sending a message to these recalcitrant independent energy firms, reminding them of the real power balance in the Russian natural gas sector. And with a full monopoly on natural gas distribution Gazprom is still a useful leveraging tool for the Kremlin in political relations with Europe.

As foreign gas supplies come online in the European market and Russian gas prices increase domestically, Gazprom and the Kremlin are facing mounting competition.





Thursday, 6 September 2012

Juror's injurious adjudication of justice


Most people defer Jury Service because it simply gets in the way of one’s “normal” life.
That letter arrives in the mail and suddenly our lives overflow with important tasks and commitments. There are so many crucial things to do that there’s no way we can fit in that duty right now. If only they’d ask at an appropriate time!
But there probably won’t be an appropriate time. And of course, no matter how one battles the Ministry of Justice, if they’ve sent you that dastardly letter they’re bound to get you in the end.
Some of us really do have commitments we physically cannot be away from, and that’s fine. But as I eavesdropped early in the process when a juror approached the judge’s throne bench asking to be excused for work responsibilities, “everybody has responsibilities, and no, I can’t excuse you”.
I’ll be honest; I applied to be excused when I first got the letter last year. I was granted leave that time (see, it is possible, you just have to plead your case with deft precision).
Something about my second deferral request didn’t smell kosher to whichever poor soul reads such correspondence.
Either the Ministry gets tougher each time they call on you or I lacked my earlier “precision” sentence structure and couldn’t convince the gatekeepers to reject my attendance. I’ll console myself in believing it was the former.
Somewhat frustratingly, I was caught in their net, dragged as it is through the law-abiding Auckland adult population. It was time to take another approach, plan B if you will.
Immediately my mind began to flash through methods of speedily becoming corruptible.
I’ve always thought the death penalty was archaic but was now the time to introduce a sudden morbid attraction to the idea and channel Thanatos?
Good plan, extremely unworkable.
I planned to attend the initial day and discuss obnoxiously loud my impatience with the corrupt New Zealand justice system while exasperated Justice Officials loitered nearby.
Or perhaps I could quickly be educated in an almanac of racial slurs.
So many thoughts; so little time.
How long could Jury service realistically last? Five days? Maybe a week and a half? I’d be back in my offices before I knew it. So I steeled my resolve and prepared to complete my summons.
Much to the disappointment of my colleagues I trudged off to do my democratic duty.
I couldn’t promise them my plans for freedom would be successful, but I have been known to act as a convincing moron from time to time.
The judge might take pity on my act and grant me glorious freedom from the chains of Jury Service so I could return to work.
Judges are after all only human, prone to making mistakes and being fooled by convincing acts. Admittedly these performances are usually of innocence, a string tragically not attached to my acting bow, and generally performed by the masters of criminal theatre: the criminals themselves.
Arriving at the courtrooms deep in the heart of Auckland early on the Monday, I at once assumed I was mistaken. Maybe the correct building was elsewhere.
This address definitely displayed the expected garden ornaments of scruffy-looking humans and a distinct air of recidivism. I just couldn’t believe it was a house of justice.
The entrance to this structure resembled a U.S. Embassy (post-9 11) replete with a total of six enormous security guards sporting buzz-cuts and body armour.
My few belongings already being x-rayed on the conveyor belt I passed under the foreboding metal detectors.
My tongue moved slightly to the left to avoid the inevitable beeping of discovery. But it was in vain, the detectors detected and my mischievous metal coat buttons gave me away.
I braced myself for the inevitable assault from the nearby guards, but they were extremely cordial and let me pass.
Sitting in the processing room with the other hundred or so potential jurors, all equally gloomy, we were shown a charming little video of what we could expect as we became the very pillars of constitutional society.  
The instructional video was absolutely perfect, no information was neglected or forgotten but all of it was repeated. Just in case we didn’t hear it the first three or four times.
As I sleepily drifted off thinking of Orwell, a ballot was produced and names read out. Having just been clearly shown what to expect in this formal process, I left my seat calmly and without haste as soon as I heard my name.
Alongside my increasingly curious fellow jurors, I proceeded upstairs to court, barely containing my excitement.  When we arrived, the whittling down of the thirty or so jurors to the correct quota of twelve began.
This involved a curious method by which the defence lawyer could, quite discriminatorily I must say, deny a position to any juror he wished by simply hearing their name and looking at them.
Such judgment and prejudice in a courtroom! I had been forewarned of this action, so it was with real trepidation that I moved to take my seat. Apparently “Smith” is fairly generic name and didn’t ring any alarm bells.
Finally, I was on the jury. Such a feeling of success! How quickly the judicial process had knocked aside my devious plans of escape. I believe learned men in spectacles call this process institutionalisation.
My eleven fellow jurors were as yet still unknown to me, but the courtroom officials wanted to make sure the defendant was equally opaque. The entire courtroom turned accusing eyes on the jury as the defendant’s name was read out. None of my co-jurors indicated association, but the distinct feeling of judgment lingered. Who exactly was on the stand again?
The trial was fairly straightforward; although I have an N size of 1 for comparison (an insignificant data-set for a robust conclusion) I assume it was reasonably traditional.
Witnesses were called, some more interesting than others. I was catching an emerging theme however (a keen pattern-seeking mind is imperative for sound deliberation after all).
The expert witnesses, almost all of whom were government employees, displayed the identical knack for unnecessary repetition as their earlier colleagues. Is this attribute natural or nurtured I wondered?  
When the first break was called the jurors shuffled quietly in our imagined shackles to a special, isolated room. Here I got my first good look at the forlorn faces of the jury. There were no cries of recognition. Drawn from all over Auckland it would have been a miracle if we had ever driven past each other.
I looked from one face to another seeing only the unemployed, the student, the disabled, and the elderly. I was warned of this. A trial by one’s peers they promised! Each face reinforced my disdain for the judicial system.
Then one of these “citizens” suggested we introduce ourselves, no surnames. Marvellous! Let’s hear how each of you bludgeons society, attending jury service because it gives you something to do.
Sitting around me was a teacher and a horticulturalist, a scientist and a journalist, an electrician and a managing director, an accountant and a banker, a cashier and a government worker, and a physiotherapist.
I was stunned. Here I was seated with the very essence and colour of society. The naïve expectation of a split spectrum of charming but reckless rejects was soundly punished.
We were all of us sitting here under some duress, having left behind jobs and families to uphold the reverent values of the New Zealand constitution. I had found my affinity.
One juror had attempted, unsuccessfully I might add, to parade his importance and therefore his unsuitability for jury service by wearing a neatly pressed suit.
I have never understood the connection between a business suit and importance, but he did, and he gave it the old college try.
Aside from his example, the jury dressed somewhere between Sunday best and Sunday worst. The women still clung to traces of self-respect but the men appeared to have just arrived from a long day on the couch.
Needless to say, the suit fell into line the next day donning a hoody and jeans. For law-abiding citizens the jury certainly understood the intricacies of protesting with their wardrobe.
The defendant dressed with much more respect, treating the courtroom with the gravity it possibly deserved.
I had quietly anticipated (hoped?) for an exciting murder or conspiracy case, but I was to have no such fortune.
The offence was white-collar in nature and could have been thoroughly tedious if not for the Shakespearian characters. Of course, if Romeo were alive today he would probably have asked for counselling.
As the trial progressed I found myself fascinated with the professionalism and cinema of the lawyer for the defence.
A classic, comic-book lawyer with a square jaw and imposing stature, the lawyer pointed and prodded the air more animatedly than an evangelical preacher.
The lawyer’s slicked back hair occasionally releasing a strand from strict hair-gel incarceration to fall casually across his furrowed brow as he peered at mountains of notes on the desk.
He seemed to get along quite well with the judge, albeit extremely professionally, but clearly not with the Crown prosecutor. For no matter how often they referred to each other as “my learned friend”, I harboured doubts the two lawyers ever played mini-golf together.
In fact, as we wrote down intriguing pieces of information on our specially supplied ‘Juror Notepads’, the heavy details of the first few days gave way to human drama.
The always-entertaining defence lawyer made it obvious when we should write details down. A sentence closing with a surreptitious, but poignant, glance towards the jury would signal the clicks of engaged pens. He made things so much easier.
As the week wore on the court hours blurred. The juror seats becoming harder and more uncomfortable as the witnesses grew stranger.
Although I was treating the experience as a pseudo-holiday, I was heading back to the office during each lunch break and again for a few hours once the court broke up for the day.
After only two days of mostly awkward silence in the juror room, we began to discuss the case together, stopping only when a juror left the room (we had to discuss as one group, according to the rules).
Between mouthfuls of lavish chocolate biscuits, spared no expense, my fellow jurors pieced together the evidence trying to decide one person’s fate.
Responsibly, we collectively delayed our decision until all the evidence was presented. Although the evidence swayed our private conclusions, we righteously refused to pass premature judgement lest our conscience be tarnished when a person is led to the cells forever (or at least a few years until parole is offered).
We discussed as a jury the upcoming inevitable deliberation process. Some were optimistic about making a good decision, others were worried that the evidence would be ambiguous and our decision impossible. All of us were hoping we wouldn’t turn out to be “that guy”.
Legend speaks of the lone juror stubbornly holding to a precious detail, belligerently shaking their head just when others are nodding.
We laughed about this terrible prospect once or twice. But the laughs were hollow, suspiciously trailing off into a faintly hysterical mirth as our gaze focused intensely on interesting pieces of fluff on the ground.
But our fortified resolve was ultimately unnecessary. The judge, in all his wisdom, decreed that the Crown case had collapsed and stayed the defendant on all counts. Our hopes and fears were alleviated. The atmosphere in the room dropped appreciatively as we breathed a collective sigh of relief.
Turning to the jury bench, our esteemed judge explained why he made his decision. Having immersed himself in the evidence long before the trial date, his pre-determined decision was simply reinforced by the witnesses.
I couldn’t help but notice the duplicity of such a remark. The jury was instructed to keep an open mind, but the verdict was confirmed before we sat down. Perhaps His Honour is entitled to such a decision, but then why assemble a jury? It’s all very confusing and smacked of a waste of precious court time.
Continuing, the judge reiterated that, even without making a decision on the case, our presence is greatly appreciated, ensuring the judicial system remains fair and balanced.
Twelve people unknown to each other just seven days prior were free at last. Like the 10,000 Greeks we cried, “The sea, the sea!” and awkwardly crammed into an elevator for the last time.
Stepping over the detritus of society and pushing through the great unwashed crowds outside, the members of the jury departed the dreary court building. A sunny day shone brilliantly as I filled my free lungs with crisp, exhaust-filled Auckland air. My Kafkaesque ordeal had finished.
Glancing behind me at the end of the street I thought I glimpsed a familiar figure of a juror. But like wraiths and shadows they departed from whence they came, never to be seen together again.
Perhaps someday I will look over a crowd and recognise a familiar face. Will I remember their name? Could our experience ever be relived? Or would we simply smile and nod as we passed like jurors in the night.
I expect all members of my jury enjoyed their experience. None of us volunteered our services, yet heroically we shouldered the burden expected of all fair-minded citizens and rolled up our sleeves.
There is no comparison for jury service. One must experience the task to fully appreciate just how rigidly traditional such a pillar of our society really is.
Next time your name appears on a Ministry of Justice letter, think not of your extra pressure on the car accelerator last week. Instead, hope the correspondence contains the magical words, ‘Jury Service’. You will not regret it.