Saudi Turnabout on Egypt: When geopolitical chess players observe the uprising in Egypt, they don't see Egypt and Hosni Mubarak, who has now stepped down from power. They see Saudi Arabia and the rest of the big Persian Gulf oil producers, and the question mark of whether they are immune to the Tunisian Contagion, the popular uprising ignited by the ouster of Tunisian President Bine Zine El Abidine Ben Ali (who incidentally received refuge in Saudi Arabia). After all, Saudi Arabia alone produces 10 percent of the world's oil supply, and through its ability to produce a few million barrels a day on top of that singularly influences whether or not oil traders go into panic.
It turns out that the Saudi regime sees the same thing. So in recent days, the kingdom toned down its categorical support for Mubarak's continuation as president, reports Abeer Allam at the Financial Times. Specifically, Allam points out the recently more measured reporting on the Egyptian events on Saudi-owned al-Arabiya TV. Allam quotes one expert close to the Saudi regime: "They do not want to be seen as against the [Egyptian] people."
Meanwhile one wonders at the role of the Egyptian Army in edging Mubarak out. In recent days, Mohamed ElBaradei, the Nobel laureate and former international arms inspector, called on the Army to step in and stave off a situation that he says may otherwise "explode." This was almost certainly an ElBaradei blunder -- one thing a popular uprising does not want is a record of reliance on military force, because, historically speaking, once an army senses it's responsible for a fellow or movement being in power, it cannot resist later issuing reminders of it in the form of requests (read: demands) for more power and privileges.
In Tunisia, Ben Ali left in the face purely of the popular uprising. In Egypt, the uprising in Tahrir Square was the technical cause of Mubarak's abdication. But if it was the Army that ultimately pushed him out -- with the request of the uprising's leaders -- the opposition may come to regret it.
Egypt and oil prices: No sooner did Hosni Mubarak step down then oil prices continued their slide of recent days. Immediately, prices dropped to about $86 a barrel in New York. The price of U.K.-based Brent crude, traded abroad, continued its very strange, unanchored trajectory upward; one presumes that later today European traders will realize that there is still a glut in global oil.
Whatever the case, at least for now we are looking at stable oil prices in the $80-$100 per-barrel range, more toward the lower end. The Paris-based International Energy Agency continues to remind us that global demand continues to rise, so that supplies are becoming tighter. But that is to worry about next year.
Grandiosity on the Silk Road: At Oil and Glory, we keep receiving emails from current and former U.S. diplomats unhappy with our skepticism about a plan to turn Afghanistan and all the surrounding nations including China, the former Soviet Union and South Asia (excluding Iran of course) into one, big, happy Silk Road family. The people suggesting this idea, meaning a spider's web of interconnected electric lines, roads, energy pipelines and other projects, believe possibly rightly that only trade and infrastructure -- a connection with the rest of the world in every direction -- will ultimately bring peace to the region. Their most recent announcement is a two-lane, U.S.-financed highway straight through the militant stronghold of South and North Waziristan in Pakistan's trial belt, abutting Afghanistan, reports Matthew Green at the FT.
Is this region truly ready for expensive infrastructure projects imposed from the outside that they themselves cannot -- according to the people sending me emails -- plan, build or manage themselves? How about some food for thought -- yesterday in the Pakistani city of Quetta, near the Afghan border, Baluch rebels for the second time in a week blew up the biggest natural gas pipeline in the province, leading to the Pakistani gasfields at Sui. Virtually all the trans-Afghan pipeline plans I've seen call for transit through Baluchistan. So do the trans-Afghan road networks. Are these Baluch on board with you?
More food for thought: China meanwhile is again going where the West fears to tread. It has agreed to build $13 billion in railroads in Iran, Reuters reports.
they had spilled electric-car secrets to China. Two of the accused have since filed defamation suits against the company, denying they were doing any such thing. One of the executives said the whole matter must be the result of dirty tricks by rivals in the high-stakes electric-car race. So what is really going on?Spying and batteries: A month ago, Renault filed a criminal complaint against three executives claiming that
In an interview with the Wall Street Journal's Sebastian Moffett and David Pearson, Renault CEO Carlos Ghosn suggests that it comes down not to specific evidence of why the trio had Swiss bank accounts, the proceeds of which were allegedly traced to China. Instead, Ghosn said, there was an unacceptable risk that, given the allegations of an appearance of financial impropriety, he could not gamble that they had divulged secrets, for example, on the cost of Renault's battery.
Ghosn said: "The most interesting information I can have about a competitor is the cost. For a battery, the most important element is the cost per kilowatt. From the cost per kilowatt, I may guess what kind of technology you're developing."
There is no modern autocrat's handbook, no hard-and-fast rules. When their people pour into the streets in opposition, strong leaders behave generally according to personal form, in my own decade and a half of experience living and working in autocratic and military-run countries. For a taste of what that means, consider Georgia's Eduard Shevardnadze and Uzbekistan's Islam Karimov (pictured above). In 2003, demonstrators broke into the Georgian Parliament, and made it clear that violence was the next step in their efforts to remove Shevardnadze as president; he resigned. Two years later, angry protesters gathered in the central square of the Uzbek city of Andijan, among other things demanding Karimov's ouster. That evening, soldiers mowed them down with automatic weapons; several hundred Uzbeks died. Karimov remains president.
Shevardnadze and Karimov are two different people - the former was Mikhail Gorbachev's statesmanlike foreign minister before he went home and took a different turn; Karimov is a vicious and slightly twisted strongman, and pretty much always has been in public life. But that's precisely the point - given broadly similar situations (people in the streets), they responded in alignment with how we have come to know them over the years. No one can be surprised by either of their responses to challenge.
Alexander Zemlianichenko AFP/Getty Images
Hundreds of thousands of Egyptians are in the streets, Bedouins are threatening the Suez Canal, and one of the West's most reliable Arab allies is on his way out. As a result, oil prices soared last week by ... 23 cents a barrel.
That's right, folks. Oil traders turned Friday into a manic scene of futures buying -- trading on the U.S. side of the Atlantic was at an all-time high, according to Bloomberg -- yet did not push the oil price through $90 a barrel. In the United Kingdom, Brent crude butted up against $100 a barrel, but again did not penetrate the psychological barrier. As of this morning, oil prices are down.
The takeaway: We are again seeing the intersection of so-called "spare capacity" -- how much surplus oil can be produced above and beyond current demand -- and the base desire of oil traders to earn really big money really fast.
A lot of traders did do well on Friday by pushing up the price by 4 percent (which compensated for losses earlier in the week), though they did so by hammering hedge funds that had earlier bet the other direction, Bloomberg reports.
Officially, the world's oil producers have about 6 million barrels a day of spare capacity -- their daily productive ability above and beyond what the market needs. But a lot of observers think the official number is exaggerated - they think spare capacity is more like 4.5 million barrels a day. The belief in the lower number is what is allowing traders sometimes to push up prices in a crisis such as Egypt.
Over at OPEC, there is consternation over prices. In a speech in the United Kingdom, OPEC secretary general Abdalla el-Badri noted that oil inventories are above their five-year average, and repeated a complaint of other OPEC officials in recent years -- in effect, oil traders drive up the price, and OPEC gets the blame. Bloomberg quotes him:
OPEC has consistently said in recent times that prices are disconnected from the physical oil market and are increasingly subject to the paper market. Consequently the market is dominated by financial players, which is misleading when it comes to understanding the behavior of the oil market.
Few oil traders are actually worried about the Suez Canal, through which about 1.8 million barrels a day of oil and oil products flow. Here is a snippet from a note to clients sent by Helima Croft and Amrita Sen of Barclays Capital:
We believe the Canal does not appear to be under immediate threat from the current political crisis in Egypt. Although the industrial city of Suez has witnessed some of the worst violence during the past week, there have been no reported attempts to target ships. Even if Western companies become a major target for the protestors, we believe that shipping traffic through the Canal is unlikely to be seriously imperiled, though some individual ships docked in port might be at risk of attack if the situation deteriorates further. Even in the unlikely event that the there is an attempt by some groups to disrupt shipping traffic, it would not necessarily be easy to accomplish. There are no indications that the protesters in Egypt have yet developed the intent or capabilities to carry out organized attacks on tankers like that seen in the case of the USS Cole.
That final sentence of course refers to the 2000 al-Qaeda attack on a U.S. naval vessel in Yemen.
Instead, we are seeing classic casino behavior. Here is Frank Verrastro, director of the energy at the Center for Security and International Studies in Washington, in an email conversation over the weekend: "Even if no barrels were impacted, the bullish run on oil will use this or any other supply threat to push prices up. "
There has been so much instant punditry over the last several weeks predicting the fall of various Middle East governments that I wondered - if Tunisia is so important, why hasn't it inspired uprisings elsewhere in the tyrannical world as well? Russell Zanca, a long-time Tashkent hand and a professor at Northeastern Illinois University, examines the question in the former Soviet space.
Given the outbreak of Middle East unrest, the Obama administration has warned the region's autocrats against continuing to ignore the popular aspirations of their constituents. Yet while it's been easy to draw a straight line from Tunisia to Egypt, Yemen and perhaps even Algeria, one wonders why the dictators of Eurasian countries such as Belarus, Turkmenistan and Uzbekistan fear no such public protests. Almost the same men have led these republics for 20 years, have brutalized their citizenry, rigged elections, imprisoned and drugged opponents, and left much of their populations in poverty while a slender elite lives lavishly. Yet there is no evidence that any stands a shred of a chance of being thrown out of power by his people.
Ousting stubborn leaders is not a function of how fed up people are, nor how well developed opposition forces are. To be sure, these factors can better the chances of a dictator's demise, but they will not necessarily push him over the edge. Rather, people must have the sense that they can rid their country of the despised one by risking their lives in the streets and staying united.
So why are those conditions not present in former Soviet Eurasia? Last month, it looked as if Belarusian masses were united, and willing to take the big risks with a worthy assortment of capable, committed opposition forces following dubious presidential elections. However, what the Belarusians on the streets obviously underestimated was President Alexander Lukashenko's security forces; they were better united and more committed than the masses, and violently put down street protests, arresting and beating up rival candidates.
In Turkmenistan, people may be dissatisfied with their lot under the Berdymukhamedov dictatorship, but we have seen almost no demonstrations or unrest since independence in 1991. Turkmen dissidents in exile have almost no impact on the folk back home, especially when local access to foreign media is severely limited.
Similarly, it is unlikely that Uzbeks will rebel against President Islam Karimov, who has ruled Uzbekistan since 1990. If Uzbeks think it could be better under a different president, they have not unified under that thought in the numbers necessary to face down the enormous risk of public protests. It is not hard to recall that just six years ago, Karimov's troops shot dead hundreds and possibly thousands of protesters in the city of Andijan. This policy of maximum bloodshed proved extremely effective. Uzbeks have been so terrorized that since then there have been no significant public expressions of discontent.
As a cultural anthropologist, I am often asked if Karimov's continued reign isn't attributable to some aspect of Uzbek culture. For example, there is the idea that Uzbeks are meek by nature, and that their "cult" of respect for elders extends to an unquestioning respect for those holding political power. Even Uzbeks themselves occasionally suggest that people are much more concerned about the need to have something good cooking on the stove, that they steer clear of openly criticizing the regime because they are just too focused on surviving till the next day. While there may be grains of truth to each suggestion, they are just that -- grains of truth.
Modern Uzbek history (from at least the mid-19th century) is replete with Uzbeks offering up their rebellious spirits, overthrowing amirs in the process as well as sacrificing themselves against tsarist and Soviet infidels into the 20th century.
They are not massing in the streets today despite mass anger toward the regime, because the risks simply are too great. Instead, Uzbeks have channeled dissatisfaction, for the time being at least, into a non-confrontational and apolitical path known as labor migration to other countries such as Kazakhstan and Russia. These physical movements entail risks as well, but people don't see them as futile in the way demonstrating would be. After all, protesting on public squares earns one less money than road-building in Moscow's suburbs.
Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.