Recently in Middle East Category

According to Iraqi Council of Representatives Oil and Energy Committee member Furat al-Sharei, the 10 oil fields that spread across the Iraqi-Kuwaiti frontier are still waiting to have a line drawn through them to delineate the border, more than eight years after a coalition led by U.S. forces toppled the regime of Iraqi President Saddam Hussein.

According to al-Sharei, the two countries must first collaborate in developing legislation for equitably sharing the fields before oil extraction can begin, noting, "The problem of the common fields can be resolved by developing legal mechanisms."

While Iraq and Kuwait are now at peace, many of the border issues that led to conflict two decades ago remain, which no amount of diplomatic bonhomie can completely paper over.

In 1993 the United Nations Security Council Resolution 833 precisely delineated the previous borders between Iraq and Kuwait following Saddam Hussein's invasion of his neighbor in August 1990. Iraqi forces were summarily expelled by a 34-nation coalition led by the United States during Operation Desert Storm, which began in February 1991. That conflict left Iraq with a $22 billion reparations bill to Kuwait that it is still struggling to pay off, tithing 5 percent of its oil revenue to its tiny plutocratic southern neighbor.

What were some of Saddam Hussein's grievances against Kuwait? By the time Iraq signed the ceasefire in its punishing eight year war with Iran in August 1988, Iraq was virtually bankrupt, owing $80 billion in debt to Saudi Arabia and Kuwait, which now pressured Baghdad for repayment with interest. Iraq pressured both nations to forgive the debts, but they refused. Iraq also accused Kuwait of exceeding its OPEC quotas and driving down the price of oil, thus further hurting the Iraqi economy, as collapsing oil prices further decimated the Iraqi economy.

Baghdad also repeatedly protested to no avail about what it claimed was economic warfare waged by Kuwait's slant-drilling into disputed border regions, which reached as far as Iraq's Rumaila oil field.

Despite the overthrow of Saddam Hussein's regime in March 2003, two years later Kuwait began the construction of a 125-mile metal barrier along its land borders with Iraq in early 2005.

But with a new administration in Baghdad, on 23 November 2006 Kuwait's Foreign Ministry Undersecretary Khaled al-Jarallah told reporters following talks with Iraq's Foreign Ministry Undersecretary Mohammad al-Haj, "We have signed a deal ... after which Kuwait will be able to complete the construction of the security fence," noting that as the arrangement calls for the payment of "compensation to Iraqi farmers" on the border, the requisite amount "had been deposited with the United Nations." Al-Haj added, "We have completed the practical requirements for the demarcation of borders," based on UN Security Council Resolution 833.

As the U.S.-led Afghan campaign lurches into its second decade, the country's vast untapped mineralogical resources are again emerging in the Western media, seemingly underpinning the benefits of International Security Assistance Force troops "staying the course" and defeating the insurgency, after which these resources can be tapped, both providing the administration of Afghan President Hamid Karzai with a source beyond drugs for reconstruction and Western companies who develop the reserves a handsome profit.

The latest discovery is that Afghanistan is rich in rare earth elements (RREs). China currently has a near monopoly on the global production of RREs, and the price for a ton of unprocessed ore has soared to a dizzying $100,000 a ton.

So, what's wrong with this picture?

Western venture capitalists should consider the following points before whipping out their checkbooks to underwrite any mining projects.

First and most obvious, Afghanistan has been in a civil war for thirty years, with Western forces intervening only in the last decade. The country is torn by tribalism and religious divides and Karzai's administrative control is largely limited to the larger cities. Mao Tse Tung in his 1947 work "The Present Situation and Our Tasks" wrote, "Concerning attacking cities, resolutely seize all enemy fortified points and cities that are weakly defended. At opportune moments, seize all enemy fortified points and cities defended with moderate strength, provided circumstances permit. As for all strongly defended enemy fortified points and cities, wait until conditions are ripe and then take them," a strategy the Taliban are apparently following to the letter, unconcerned with election cycles and opinion polls. The Taliban know that they have time on their side - as one Taliban commander told a U.S. military officer, "you have the watches, we have the time."

Secondly, the administration of Karzai is increasingly viewed by the Afghan population as illegitimate, foisted on them by foreign forces, and extremely corrupt to boot. During the August 2009 presidential election, Karzai, in an election reported by foreign observers as riven with fraud, received less than 50 percent of the popular vote, triggering a runoff. Two months later, after Karzai agreed to a runoff election, tentatively scheduled for 7 November, but five days later his main opponent Abdullah Abdullah withdrew and Afghan officials canceled the election, leaving Karzai in power for a second term, despite the provisions of the Afghan constitution, alienating many Afghans from democratic principles.

Third, Afghanistan's rich mineral base has been known for a long time. Following disastrous December 1979 Soviet invasion, extensive Soviet exploration in Afghanistan produced detailed geological maps and reports that listed more than 1,400 mineral outcroppings, along with about 70 commercially viable deposits. The USSR subsequently committed more than $650 million for resource exploration and development in Afghanistan, which included a smelting complex for the Ainak deposit that was to have produced 1.5 million tons of copper per year. In the wake of the Soviet withdrawal a subsequent World Bank analysis projected that the Ainak copper production alone could eventually capture as much as 2 percent of the annual world market. Afghanistan's Hajigak iron deposit, in the Hindu Kush mountain range west of Kabul, is assessed as one of the largest high-grade deposits in the world.

As for the recent announcement about gigantic deposits of rare-earth metals, including lanthanum, cerium and neodymium, being discovered in Afghanistan, it is worth bearing in mind that the U.S. geologists who surveyed the sites were airlifted by Black Hawk helicopters to the Khan Neshin Village in a desert area of Helmand Province, where they worked under military protection. If such deposits are to be developed, then given the lack of security forcing geologists to be airlifted to the site, then how is the mining infrastructure to be conveyed?

Fourthly, the stupendous rise in RRE ore prices has led to a frenzied search for deposits around the world, from Estonia to Mongolia, some of which will doubtless pan out. Given Afghanistan's instability, why would an investor risk his capital there, especially when neighboring Central Asian nations like Mongolia represent a far more stable and investor-friendly environment? Mongolia recently signed off on a massive $7 billion mining project, allowing Rio Tinto and Ivanhoe Mines a majority 67 percent share.

While Afghanistan's mineralogical potential is vast, the country's crippling economic and insurgency problems remain, and it's worth nothing here that despite the 2010 joint report by the Pentagon, the U.S. Geological Survey and U.S. Agency for International Development that Afghanistan possesses "previously unknown" and untapped mineral reserves worth up to $1 trillion, two-thirds of Afghanistan's population live on less than $2 a day.

So, even though Afghan Ministry of Mines adviser Jalil Jumriany said of the RRE discoveries, "This will become the backbone of the Afghan economy," the question, not only for foreign investors but the Afghans themselves remains, "qui bono?"

There are no clear answers emerging to this question from Kabul anytime soon.

Source: http://oilprice.com

By. John C.K. Daly of Oil Price

Nothing gets oilmen more excited than the idea of building pipelines from exotic, hard to reach places to seaports where the product of their endeavors can be shipped to lucrative foreign markets.

These reveries have been most pronounced with the opening since 1991 the riches of the Caspian Sea basin.

Previously divided between the USSR and Iran, now five nations rim its shore-Azerbaijan, Kazakhstan, Russia, Turkmenistan and charter member of the axis of evil, Iran.

Of the quintet, all for the former Soviet Socialist republics have benefited from selling their wares to hungry Western investors.

This leaves Iran as the odd man out, which has been subjected to the US sanctions since the Islamic revolution of 1979 overthrew the Shah, placing the country in direct confrontation with Washington, a situation heightened by the takeover of the US Embassy in Tehran.

While the mullahs of Iran have stridently maintained that the U.S.-led sanctions have had little effect on their economy, the reality is that they have been extremely notable in their impact on the country's energy industry, where a relative lack of investment has severely dampened the country's ability to increase output.

Iran is currently OPEC's third largest exporter, with an output of roughly 4.5 million barrels per day. Many analysts believe that Iran could easily double this output if US sanctions were lifted and foreign investment was allowed freely into the country's energy industry.

Of all the countries hydrocarbon assets sidelined by the imposition of sanctions in 1979 none has suffered more than the country's nascent natural gas industry, which has been largely stymied by a lack of investment and access to advanced Western technologies capable of exploiting the country's vast natural gas firms reserves.

The Caspian basin has used more pipeline reveries than any other part of the world. Some of these have come to fruition, most notably the Baku-Tbilisi-Ceyhan (BTC) pipeline, which now pumps roughly one million barrels a day of Azeri crude oil to Turkey's Mediterranean deep water port at Ceyhan.

Two other pipeline projects exploiting Caspian reserves remain as yet unfulfilled - the grandiosely named Nabucco natural gas pipeline, designed to bring Caspian natural gas to lucrative markets of eastern and central Europe, and the Trans-Afghan-Pakistan-India (TAPI) pipeline, designed to bring the riches of Turkmenistan's vast natural gas fields to the booming Pakistani and Indian energy markets.

Both pipelines are a long shot at best. The Nabucco pipeline, designed to transmit roughly 30-35 billion cubic meters (bcm) of natural gas per year, at present has promised throughput of only 7 billion bcm per year of Azeri natural gas, produced by Azerbaijan's Shah Deniz offshore Caspian field. None of Nabucco's myriad numerous supporters have yet to explain where the remaining deficit of throughput will come from. Many optimists believe that somehow an undersea Caspian natural gas pipeline will be constructed from Turkmenistan to Azerbaijan conveniently overlooking the fact that the Caspian seabed, 20 years after the collapse of the USSR, has yet to be definitively divided among the five coastal states.

TAPI sufferers from similar dreams of grandiosity. A pipeline across Afghanistan and Pakistan, good luck.

But, apparently, the mullahs in the Tehran are and drinking the Caspian Kool-Aid is well.

The newest proposed pipeline from the Caspian is, according to the Teheran Times, Iran, Iraq, and Syria signing a deal for the construction of the Middle East's largest gas pipeline, which would transit Iranian gas from Iran's South Pars gas field to Europe via Lebanon and the Mediterranean.

A pipeline from Iran (quiescent) via Iraq (rather less so) through Lebanon (a fragile state at best), or via Syria ) if al-Bashar survives in Damascus.)

Reveries apparently run from East to West as well.

Source: http://oilprice.com/

By. John C.K. Daly of OilPrice.com

The last three years of global recession have dealt a major blow to American capitalist ideas trumpeted throughout the world on the value of "free markets." Wall St has been revealed as a form of casino economy, with the bankster insiders gambling with other people's, and eventually, the government's money in the form of bailouts. As the Republicans in Congress, scenting victory in the 2012 presidential elections, hold a gun to the Obama administration's head and rating agencies consider downgrading U.S. government bonds in light of Washington's possible defaulting, many ideas around the world that previously seemed implausible because of the dominance of the U.S. economy are garnering renewed interest.

Not surprisingly, many of these concepts originate in countries not enamored with Washington's influence, perhaps none so more than "Axis of Evil" charter member Iran, which has seen its economy hammered by more than three decades of U.S.-led sanctions. Now Iran is working a program, that, if it succeeds, could help undermine the dollar's preeminence as the world's reserve currency more effectively than a Republican filibuster.

Iran's sly weapon against the Great Satan's currency? An oil bourse on Kish Island in the Persian Gulf, which has now begun selling high-grade Iranian crude oil.

Mohsen Qamsari, deputy director for international affairs of the Iranian National Oil Company was modest about the exchange's initial capabilities, saying, "The commodity stock exchange has been pursuing a mechanism for offering crude oil on the stock exchange for a long time, and it has taken the preliminary steps, to the extent possible. Considering the existing banking problems, foreign customers are not expected to be taking part in the first phase of offering crude oil on the stock exchange, and this will be done on a trial basis. Today Bahregan heavy, high quality, low sulfur crude oil with less sourness will be offered on the stock exchange for the first time. In the first phase, a 600,000 barrel shipment will be offered."

Given that the world currently consumes roughly 83 million barrels of crude oil each day, the initial oil offerings at the Iranian stock exchange are hardly going to make or break the market, but they do represent an attempt by a significant oil producer to divert revenue streams from New York Mercantile Exchange, the world's largest physical commodity futures exchange, which handles West Texas Intermediate benchmark futures, and London's Intercontinental Exchange, which deals in North Sea Brent. All trades are in dollars, effectively giving the U.S. currency a monopoly.

On Thursday, May 12 at 12 noon at the National Press Club, Jellyfish Intelligence will announce a private sector initiative created by a team of former civilian and military intelligence operatives, seasoned business executives and corporate strategists that will provide sophisticated intelligence operations services to Chief Executive Officers who wish to execute their business strategies with complete awareness of the international business environment.

With increasing global geopolitical tensions, rising energy and commodities prices and complex foreign policy decisions being made in capital cities around the world, international corporate executives are turning to Jellyfish Intelligence to help protect and grow market share. Without reliable intelligence regarding shifting political, social and macroeconomic conditions, CEOs would be running their firms blindly where strategic plans would not be executable and companies would fail.

Unique to the Jellyfish team is that several members have been involved with either Blackwater Worldwide through its Total Intelligence Solutions division or with the military intelligence program known as "Operation Able Danger." Blackwater felt compelled to change its name to Xe Services after several lawsuits and controversies in Iraq and Afghanistan, while Able Danger brought the Bush Administration under scrutiny when it was learned that the operation's state-of-the-art "data mining" methods had revealed the names of a number of 9/11 hijackers prior to the September 2001 terrorist attacks in New York and Washington.

"While we understand that both issues have their respective reasons for being controversial, we are using the talent of our team's experience on the battlefield to bring insights and advice to the boardroom," said Jellyfish CEO Keith Mahoney, a private sector executive formerly with Blackwater's intelligence division, Total Intelligence Solutions. "We have found a home in the C-Suites of the Fortune 500 by providing a clear predictive analysis of future expected threats to our client's revenues, costs, and profits."

The extraordinary events in Tunisia, Egypt and Libya are the initial high tides of an eventual tsunami that will impact the world that globalists have so fervently promoted for decades, in ways not necessarily to their liking. The first wave has struck and is now retreating from the shore, but will shortly return with redoubled force, and what and who will be swept away and what will be left standing is anyone's guess.

Per usual, America's intelligence agencies on which $60 billion a year is lavished, or $200 for every man, woman and child in the U.S., have given zero benefit to the American citizenry in anticipating events in the North African Magreb, as the CIA along with America's 15 other federal intelligence agencies were completely blindsided by events, if public information is to be believed. If any comfort can be had in this, it is the fact that America's favorite bête noire, al Qaida, much less other Islamic fundamentalists such as the Islamic Brotherhood in Egypt, were apparently caught flatfooted as well.

As "Beltwayistan" frantically tries to conceptualize events in North Africa now threatening the larger Muslim world, Washington's pundit class has tried a number of insta-definitions to explain events.

First, it was an "Arab' thing. Secondly, a "Muslim' thing, where dark forces, epitomized by the Muslim Brotherhood and Al Qaida lurking in the wings, were standing poised to hijack events and turn Egypt and now Libya into an Islamic state, with de facto hostility to the West and in particular, towards America's client state Israel, threatening the 1979 Camp David accords.

To use an American English cliché, the "bottom line" is that what's happened in Tunisia, Egypt and now Libya represent an ominous turn for Western (read American) interests in the Middle East. Like a Greenland glacier weakened by global warming, the Middle East system of stability carefully crafted by Western interest focused on the region's energy reserves over the last 50 years has begun suddenly to fracture and crumble, and what will replace it is uncertain at best.

In reality, complex as the origins for the North African unrest are, major aspects of them are simply incomprehensible to American GS-17 "specialists" in Washington earning six-figure salaries, along with the hordes of denizens of the Dilbert cubicles cloistered in the NSA's Fort Meade and the CIA's Langley environs, sifting through the massive amounts of data hoovered in each day by the Echelon intelligence network.

What these "experts" have overlooked in their analysis over events are two critical issues - the massive poverty and income disparity of the states undergoing protests, but even more importantly, the presence of an aware youth, plugged into the digital age since childbirth, questioning the status quo.

Interestingly, and also largely overlooked by Western commentators, is that the region's favorite bête noirs has been apparently totally blindsided by the recent events in the Magreb. For the Arab world, this includes the CIA and Israel's Mossad, which are usually seen behind every political event in the region. While such information is tightly held, there is every indication at this stage that both intelligence agencies, vaunted for their abilities, particularly in their native countries, were caught totally flatfooted by the recent events in North Africa.

For the aforementioned two agencies, their initial attempts along with the Western media to portray events in Tunisia, Egypt, Libya and now destabilizing Jordan, Yemen and Bahrain as part of a nefarious, long developed part of a master plan by Islamists to topple their respective regimes have similarly proven to be as false as those peddling them.

Islamic militants in recent events have been conspicuous by their absence, not in the vanguard of events mobilizing popular support streaming into the streets, nor taking advantage of the resultant political chaos to bring the masses over to their side in proclaiming that whatever succeeds the newly toppled old regime will have a predominantly Islamic tinge. Nowhere have these Western and Israeli fears been more assiduously stoked than in Egypt, where the deep rooted and long banned Islamic Brotherhood maintains a formidable presence.

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From Israel, there is good news and bad news.

The good news - and it is huge - is that Israel will soon be awash in natural gas. Gas discovered on the country's outer continental shelf will turn the country from being hydrocarbon-deprived to being a net exporter.

Indeed, Israel is set to become so rich that it is laying the groundwork for creating a sovereign wealth fund for overseas investments in order to protect the country from inflation and the shekel from getting too strong.

The bad news is that with Hezbollah poised to control Lebanon's government, Iran has de facto arrived on Israel's northern border. Even without an Iranian nuclear weapon, this is a grave deterioration in Israel's security.

Already Lebanon has asked the United Nations to guarantee that Israel does not violate the integrity of Lebanon's outer continental shelf, where Iran plans to help Lebanon drill for gas.

Geology is about to change the political geography of the world's most combustible neighborhood.

The two huge gas discoveries are in the Tamar and Leviathan fields. Taken together, the gas reserves are estimated at 26 trillion cubic feet or 10 times larger than Britain's North Sea discoveries.

Since its creation in 1948, Israel has drilled on land for oil and gas with very little success. While the Arab Gulf countries have found and produced massive quantities of oil and gas, Israel has scrounged in the international markets for its hydrocarbons, including coal.

Israel's isolation made this difficult and expensive. In recent years, it has bought gas from Egypt. But Egypt will lose its good customer.

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The killing of former Lebanese Prime Minister Rafik Hariri was until recently widely believed to have been perpetrated by the Syrians, or at least on their behalf. It was the assassination of Mr. Hariri that led to the forced departure of Syrian troops from Lebanon as a result of international pressure and wide-ranging opposition from the Lebanese street.

Blame for much of the political dirty games that have taken place in the country, such as the assassination of the former Lebanese prime minister was directed at Syria. Mr. Hariri was known for having stood up to Syrian meddling in Lebanese affairs.

As any Lebanese politician will attest, blaming Syria is not as easy as it sounds and the consequences for implicating Damascus can be deadly, to say the least. Lebanese politicians openly opposed to Damascus tend to face turbulence along their political careers as Damascus has always had its say in Lebanese affairs.

So is it coincidental or reality that more recently accusing fingers have begun pointing at Lebanon' s other neighbor, Israel?

Indeed, both of Lebanon's neighbors, Israel to the south and Syria to the east and north, have never shied away from crossing the border into much weaker Lebanon by taking matters into their own hands and resorting to the physical elimination of political opponents, as with the Hariri assassination on February 14, 2005.

It was an Israeli raid in the heart of Beirut in 1971 when a commando team led by Ehud Barak landed in the Lebanese capital and assassinated three prominent Palestinian leaders, Kamal Nasser, Kamal Adwan and Abu Youssef, that laid the groundwork for the civil war that was to erupt four years later. Claiming that the Lebanese state was not able to defend them, the Palestinians began arming in earnest and before too long the Palestine Liberation Organization became a state within a state.

This time, whether real or fictitious, blaming Israel is very convenient for everyone, except Israel, of course. The latest scandal involving Israel's intervention in Beirut's politics has emerged with the dismantling of an Israeli spy ring operating in Lebanon in which more than 70 people have been arrested in the last 18 months.

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If anyone still harbored any doubts that there is an urgent need to resolve the Middle East crisis one needs only look at the events that unfolded two weeks ago off the coast of Gaza when Israeli commandos stormed a Turkish relief vessel heading for the besieged Palestinian territory.

The end result of that operation, one which turned out to be a monumental public relations fiasco for Israel, was that it raised the level of animosity between Israel and Turkey, a level which was already dipping well into the red zone - pushing it another notch deeper into the danger zone.

One must not forget that Turkey is a full-fledged member of the North Atlantic Treaty Organization and that further schism between the Jewish state and a NATO country could have serious implications on the Alliance.

The North Atlantic treaty stipulates very clearly that an attack against one member of the Alliance is equal to an attack on all members. It is this unshakable tenet that has kept Western Europe - and Turkey - safe during the Cold War, acting as a strong deterrence and a reminder to the Warsaw Pact countries that any act of aggression against any member state would be regarded as an act of aggression against the entire Alliance. In essence NATO offered all its members the unwavering support military and political support of the United States of America.

So what would be the consequences in the unfortunate event that Israel found itself in an armed confrontation with Turkey? In which directions would the loyalty of the United States likely to turn? Will the United States respond to the obligations of the NATO charter, one which Washington was instrumental in establishing and rush to defend a country engaged in a military confrontation with a country which every administration has described as America's staunchest ally in the region, or would the United States risk fracturing NATO and offer assistance to Israel?

This is the dilemma which the Obama administration today could very well face should the situation in the Middle East continue to deteriorate as it has been doing so gradually, ever since the start of this crisis some 60 years ago.

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Middle East oil countries should increase production of heavy oil as oil prices remain higher and improved technology makes it easier, those attending an industry conference in Bahrain were told.

Bahrain's oil minister, Abdulhussain Mirza, told the Heavy Oil World MENA conference that heavy oil reserves in the region were estimated at 1 trillion barrels, or 28% of total world reserves, but historically accounted for little more than 10% of production.

"The vast reserve demonstrates the importance of heavy oil as a future energy source, one that cannot be overlooked and, therefore, companies that position themselves early in the heavy oil business are likely to win the game," Mirza said, according to local news reports.

Bahrain recently signed an agreement with Mubadala Development, an Abu Dhabi state-owned firm, and Occidental Petroleum of the U.S., to boost heavy oil production in the Awali field, one of the oldest in the region and Bahrain's only oilfield.