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The Venezuelan-Russia-USA Dance

We should all be noting a few things about escalating dance between the USA and Venezuela.

A few months ago, after 58 years of being a part of the larger US Second Fleet, the USA reconstituted its Fourth Fleet to enhance its presence in its traditional sphere of influence: Latin America, perhaps the most successful political opposition to the USA’s imperial positions of late, with an electoral machine opposing US hegemony virtually consistently.

And as much as Venezuela is increasing its trade relations with China, the next economic superpower after the USA economically implodes, Chavez has been talking with Russia about getting technology to become the third South American country to develop nuclear energy capacity, while working on joint naval operations with Russia.

Hawks in the USA spins this as reminiscent of one to three generations ago of the Russian Bear infiltrating the USA’s sphere of influence, the sphere itself being an inherently arrogant and imperialist assertion. The Soviet Union’s involvement in Cuba and elsewhere in Latin America freaked out the USA during the Cold War. Russian-Venezuelan cooperation on the military and nuclear energy has the potential to either provoke an increasingly desperate and declining empire to rash actions, or more hopefully, to let the increasingly more introspective and protectionist USA know that just because they are part of the Americas doesn’t mean they’re in charge.

And unlike the first 9/11 in Chile in 1973 where the Americans coordinated a coup of the democratically elected government and installed Pinochet, the hemisphere won’t go quietly.

How Many More Wars Do You Want, Anyway?

Pick a number, then vote McCain:

Some context:

Sarah Palin said two things which can be pegs for an attack ad of this kind:

1. War with Russia could happen over the Georgia conflict

2. Soldiers going to Iraq are fighting the people who killed thousands of Americans on Sept. 11.

The End of Globalization–Can You Smell it Yet?

A few years ago I was sitting in the pub at Simon Fraser University with the usual suspects…a gang of mostly political science graduate and undergraduate students for our weekly 4-hour lunch consisting of political debate and movie reviews.

I can’t remember the details but I had just been learning about peak oil. Petrochemicals have a large role in the fertilizers that enable the population of the industrialized [OECD, minority] world to eat food to the degree that supports our massive population. Apparently there was something in Harpers about that some time ago. I’m still scared to read it.

And since most of us at the lunch were generally political economists, we often discussed how to derail the global trade regime: IMF/WB/WTO. Since Hugo Chavez has spayed and neutered the IMF by paying off most of Latin America’s loans to it and since the WTO Doha “Development” (sic) round of negotiations has stalled leading to neoliberal defections toward regional trade initiatives, the regime may be collapsing on its own, thank you very much.

But one thing came up that day at lunch when I was trying to address how to cripple neoliberal globalization, and that was how peak oil will make prohibitive the costs of transporting materials around the world to be processed by workers in jobs outsourced from the industrialized world into products shipped to us in containers on those big boats. The economics of it all depends on a price of oil that is not quite so high as today’s $135/barrel. Or not even so high as the $70 barrel 2 years ago [yes, the cost of a barrel of oil has doubled in the last 24 months].

When peak oil grabs us by the throat and prices rise, the global supply chain will become less cost effective. Our runners and bananas will begin to have costs that assert them as the luxuries they really are. Economics will become more local, both in food from bioregions, but also products and services.

One friend at lunch that day said they’d just find another way to power the big boats. Nuclear power perhaps. Or maybe clean (sic) coal. Ok, he didn’t mention clean coal, but both it and atomic manipulation are somewhat impractical for varying reasons.

So we’re left with the end of globalization that comes not from policy decisions based on educating the populace to demand our representatives (sic) alter the global trade regime. It comes from the end of cheap fossil fuels.

My friend’s nuclear answer sounded plausible, but I had a hard time being truly swayed by its possibility.

So yesterday I read at Report on Business [see below] that I was on the right track.

And while the piece mentions that NAFTA could encourage outsourcing to Mexico instead of Asia, and by implication that a fully mercantilist, protectionist Canada may not be imminent, our latest globalization prime minister did recently scuttle a deal to sell off MDA’s Radarsat to an American firm. In the end, realists are realists.

And while we may not all be ready to go out and buy our yurts and embrace a bioregional lifestyle outside of metropolitan centres, we are one step closer. And if oil hits $200/barrel this Christmas, we’ll have to re-assess the situation with a little more intensity.

Oil’s cargo cushion

MARCUS GEE

May 27, 2008 at 8:53 PM EDT

The soaring cost of fuel is whittling away at the cheap-labour advantage enjoyed by Asian exporters, giving Canadian firms a welcome edge in their fight to win back business from Asian competitors.

Two bank economists argue in a report released Tuesday that because of higher fuel costs, shipping a standard 40-foot container from Shanghai to the east coast of North America now costs $8,000 (U.S.), up from $3,000 in 2000 when oil was just $20 a barrel.

That higher cost is passed on to North American consumers, making goods from China and other Asian places more costly compared to the offerings of domestic North American producers.

Some Canadian manufacturers are already noticing the effect.

High fuel costs are expected to have a dramatic impact on trade patterns, as businesses look for supplies closer to home

“It’s helped us because it’s harder for the Asians and others to ship over here,” said Barry Zekelman, chief executive officer of Atlas Tube Inc. of Harrow, Ont.

He said that after taking 30 to 40 per cent of the North American market for some steel tubing products, the Chinese have now “virtually disappeared” – partly, though not exclusively, because of the costs of transporting a heavy product such as steel across the Pacific.

Jeffrey Rubin and Benjamin Tal of CIBC World Markets Inc. say higher oil prices are reversing the world-is-flat effect, in which lower trade barriers and new technologies like the Internet made it cheaper to move goods and services from developing Asia to the markets of the rich world.

“In a world of triple-digit oil prices, distance costs money,” they write. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”

Mr. Rubin and Mr. Tal say the steel sector is a prime example of the world-is-round effect.

Chinese steel exports to the United States are falling by more than 20 per cent year over year. China’s costs have risen because Chinese producers have to bring in their iron ore from faraway places such as Australia and Brazil, then ship the finished steel to the United States. As a result, U.S. steel producers actually have an advantage over Chinese rivals.

“Rising transport costs have already more than offset China’s otherwise slim cost advantage, giving U.S. steel a competitive advantage in its own market for the first time in over a decade,” the economists write.

They say higher transport costs are affecting other “freight-intensive” sectors such as furniture and industrial machinery, too. These goods now account for 42 per cent of total Chinese exports to the United States, down from 52 per cent in 2004.

In fact, if oil prices had not risen so quickly and transport costs had not soared so dramatically, growth in Chinese exports since 2004 would have been 30 per cent stronger than the actual figure.

Of course, the rising cost of goods from China is hardly happy news for many Canadian companies that source parts from Chinese factories, sell imported goods from China or have their products assembled by Chinese workers.

They suggest that “instead of finding cheap labour half way around the world, the key will be to find the cheapest labour force within reasonable shipping distance of your market.”

While Canadian companies could benefit, the bigger winner will be Mexico, they say. “Look for Mexico’s maquiladora plants to get another chance at bat when it comes to supplying the North American market,” they write.

Shipping costs to and from Asia have risen so much that they have eclipsed tariffs as a barrier to global trade, Mr. Rubin and Mr. Tal say, calling the cost of moving goods “the largest barrier to global trade today.”

“In fact,” they say, “in tariff-equivalent terms, the explosion in global transport costs has effectively offset all the trade liberalization efforts of the last three decades.”

When oil was $20 a barrel, transport costs were equivalent to a 3-per-cent tariff rate; now it’s above 9 per cent.

Aggravating the problem is the fact that modern new container ships travel faster than old bulk carriers and so use up more fuel, doubling fuel consumption per unit of freight over the past 15 years.

“This is an environment in which shipping from the Pacific Rim may not make sense any more,” Mr. Tal said in an interview.

“If you’re thinking, ‘maybe we should bring in a container from China,’ you should think again.”

Why Celebrities Should Be Political Reporters

Today I read an interesting commentary on the negative reaction people have against Oprah Winfrey endorsing Barack Obama. People seem to think she shouldn’t be all that partisan. I think that’s an interesting–and ignorant–point of view that undermines democracy.

These days in Alberta, teachers are not allowed to run for school board, even in districts where they don’t teach. Absurdly, the Supreme Court of Canada supports that decision because a democracy should ensure participation for all, but not necessarily all kinds of participation [like running for public office] for all. In Alberta, then, there are two classes of citizens.

Oprah Winfrey, despite her fame, should not be equally disenfranchised. We all know…actually we don’t really have a clue of the extent…that rich and often famous conservatives [unlike Oprah] support right wing politicians. We don’t express shock at that. No double standards should be allowed.

Then today, as I was preparing my other piece on Vancouver’s private thug corps, the Downtown Ambassadors, I found this poll on the 24 Hours website.

Luckily I was the first to answer the poll. Maybe I’ll set the sane trend. But, who do we think we are that we think it’s fine to stop celebrities from addressing political causes? Should they not be political reporters? Based on the often atrocious reporting in not just the free “newspapers” in town, many celebrities could do no worse than what the “professionals” are pumping out.

And the logical extension of this is that celebrities shouldn’t make political movies. George Clooney will be stuck in Oceans 14+ forever and Leonardo DiCaprio cannot discuss environmental policy ever again.

In the end, when schlock media like 24 Hours even entertains the notion that celebrities are not legitimate political reporters, their goal is to devalue whatever they may be able to contribute. Naomi Campbell may be awful at political reporting, as may other celebrities. But to negate their contribute based on their celebrity status is just foolish. It also serves the purpose of devaluing their critique if they happen to hit a nerve that the corporate media is not interested in being hit.

And when you take a google at what she’s up to, you can see why they’re after her, that Bush hating supermodel: “Campbell meets Chavez” in the Guardian. And now she’s off to meet Castro, which I suppose is what all the buzz is about.

In the end, when we pre-emptively limit people’s participation in political affairs of any sort, we do a disservice to the notion of democracy. Let her try. If she can make a difference, great. If she fails, she will still have succeeded at trying to participate in a democracy. And if she fails, she’ll do no worse than many who are already “professional” political reporters.