Friday, February 24, 2006
But the real question here is why Bush is making such a stand on this issue, when it would be much easier, and more beneficial to his "public agenda," to stand behind his campaign promise and be "a uniter." There are several theories, each of which deserves some thought:
1. A Marketplace for Petrodollars: OPEC sells oil in dollars, and in turn invests those petrodollars in dollar instruments like US government bonds, US equities, US property, etc. This boosts the "growth" of the US economy and bolsters the US dollar, which in turn finances our trade deficit. They--by which I mean "Arabs"--have lots of petrodollars to spend, and to spend large quantities effectively you can't just buy mutual funds or shares of GM. You need to buy large chunks, often whole companies--just ask any i-banker. DP World (which is a petrodollar investment player) wanted to by P&O. This is a very smart move, because rather than just buying a few billion dollars in stock in P&O but keeping a politically benign minority share, they want to control the company. This creates synergy with their existing ports investments, and leverages the value of that money spent. It also leverages UAE's long-term strategy to become a regional, non-oil economic powerhouse through the wise investment of oil revenues. When the US says "no" to what is otherwise a very wise move (at least by the "generally accepted" wisdom of globalization), then the value of the OPEC's gentleman's agreement to sell oil in dollars declines. At some point it becomes necessary to divest some of your dollars to an alternative--say the euro, or even to sell oil directly in euros. That would be a major blow to the US economic system. This argument, in my opinion, holds some water, but is not entirely convincing.
2. Boeing/Airbus Reciprocity: Emirates Airlines just contracted for $8 billion with Boeing to buy their new 787 dreamliner aircraft. They could have bought the new Airbus instead. Maybe they will if DP World can't buy US ports for $7 billion. Quid pro quo is classic geopolitics for a good reason--it makes sense. I haven't seen any direct evidence of Boeing lobbyists involved in the DP World sale, but I'm always suspicious of coincidences.
3. Strait of Hormuz & Iran: Bush has mentioned that the UAE is a key partner in the "War on Terror," by which, of course, he means the geopolitical chess game to continue oil-based US economic hegemony. The UAE is also critically situated relative to the Strait of Hormuz, the key oil chokepoint at the end of the Persian Gulf through which 25% of all global oil exports pass. The US already has significant bases in the UAE, mainly al-Dhafra Air Base. It is my analysis that, in the face of a concerted Iranian effort to close the strait, a land invasion of the northern edge would be necessary to re-open it. At a minimum, the US would need to occupy the several Iranian controlled islands in the strait: Abu Musa, Greater and Lesser Tunb, just to name a few. Interestingly, these islands were seized from the UAE a few decades ago. While the strait itself is bounded by Iran and an exclave of Oman, the UAE is the better staging ground for any operation by US forces. It's a critical insurance policy to be able to base out of the UAE, and it is a prerequisite to almost any valid plan to invade Iran. With the Marine Corps Intelligence Activity (MCIA) recently contracting with SAIC to "study" ethnic minorities in Iran for possible points of leverage, this is, at a minimum, a serious long term consideration of the Bush administration. Of note, the UAE is also the bypass point of choice for an oil pipeline from the Persian Gulf to the Arabian Sea--which could minimize any Iranian trump card gained by their ability to shut down the strait. To my knowledge, no such pipeline is currently planned, although a natural gas bypass does exist. Overall, this argument seems to hold some water, but it is not yet fully formed.
4. UAE Oil Bourse v. Iranian Oil Bourse: Another concern is the upcoming euro-denominated Iranian Oil Bourse, which is tentatively scheduled to open in March, but lack of public preparations (e.g. licensing traders, publishing contract specifications) makes me wonder if it will actually happen on time? The NYMEX has contracted with UAE to open a sour, heavy crude contract bourse in Dubai, also sometime in the next year. Some have suggested that this is the US effort to counter the Iranian Bourse, but I don't buy this argument. The fundamental strength of the IOB is that it will denominate contracts in euros, providing a valuable option to many countries that don't want to maintain dollar reserves, or who's native currency is the euro. The two bourses don't seem to be direct competitors--there is room for both a bourse that trades light, sweet crude in euros and a bourse that trades heavy, sour crude in dollars. That said, I'm still suspicious of coincidences, so we'll have to wait and see...
Sunday, February 19, 2006
A few years ago I had the pleasure of spending a few days at my wife’s aunt’s farmhouse in Vaour, in the south of
A dovecote? Yes, and in this case, it was actually the recipient of a French government grant for refurbishment. Besides an excuse for sweat-suit ensconced, aging Mafiosi to tend to pigeons on
What is a dovecote? Forgive me if you consider this common knowledge, but it certainly wasn’t to be found anywhere on my school curriculum. A dovecote is a glorified bird house. It would normally house pigeons or some species of dove, but even a bat box accomplishes the same function: it’s a single point of collection for nitrogen-rich bird dropping fertilizer. And that, it turns out, is a very valuable function. A dove or pigeon will produce somewhere in the range of one pound dry weight of droppings a week—roughly the same as what they eat in the form of grains and insects. So a dovecote that houses a hundred doves will produce over the course of one year about 5000 pounds of fertilizer. Maybe these roof-top Mafiosi were on to something?
They can also be quite stylish:
But that said, a more theoretical analysis: dovecotes act as an attractor, channeling already existing natural forces to create an accumulation of energy at a place, and in a form, that is highly useable to small-scale, localized endeavors such as horticulture. In an energy descent environment, large-scale industrial farming just won’t work in the absence of petroleum-based fertilizers. Dovecotes won’t change that. However, when associated with a backyard garden, a food-forest, or similar, they can be enormously powerful. While it is certainly useful to look to our hunter-gatherer ancestors for inspiration and guidance in dealing with an energy descent world, there are still a few hidden gems like this to be found in the much more recent past…
Here's a nice little resource on dovecotes.