They can't drink oil

      The collapse of the oil price has several major implications. It is an economic tsunami. For the oil-producing developing countries, in Africa and elsewhere, it means an extraordinary loss of revenue. That’s the case for Nigeria, Angola, Congo, South Sudan, Algeria, Libya, Indonesia, Mexico, Brazil, Venezuela, Iraq, Iran, and so on. It adds fuel to social instability in those countries. It brings, at least, a new level of poverty and hardship to their populations. For the developed countries, it carries serious capital losses for the pension funds and other sovereign funds that were heavily invested in oil corporations and all the other companies that deal with bits and pieces of the oil industry. For all of us, it discourages new investments in renewable sources of energy. The bottom rock oil price makes any renewable too expensive to contemplate at this stage. 

The oil consumption is at present very low, because of the lockdowns that are implemented all over. But also, because the United States has continued to pump vast amounts of oil. They are now the largest producer, with 12.3 million barrels per day. President Trump could have compelled the industry to reduce daily production. There was a recommendation to cut it by 2 million barrels per day. He decided not to act because he saw this branch of the economy as a key pillar of his political basis. There are 10 million oil and gas sector jobs in the US, plus many billionaires that inject money in the Republican camp.   Now, he is promising them billions of dollars in subsidies. Public money being wasted when the solution was to reduce exploitation. His political choice has a huge impact on the domestic taxpayers’ money and on the world economy. It is inexcusable.

They say that misfortunes never come alone. Indeed.

IMF and the EU's ambivalence

The best people that could compete for the leadership of the IMF, following Christine Lagarde's departure, are not from Europe. They are from Mexico – Agustin Carsten, who is currently the General Manager of the International Bank of Settlements –, from Singapore –Tharman Shanmugaratnam, Chairman of the Singapore Monetary Authority and Senior Minister –, and from India – Raghuram Rajan, former Governor of the Indian Central Bank.  These three are head and shoulders above the names the European are putting forward as their candidates. In a better system of global governance, one of them should be the next Managing Director of the IMF.

But, again, it will be a European. This has been the game for the last seven decades. The US gets the top job at the World Bank and Europe goes for the IMF. The European will be chosen because of EU’s political considerations – the balance between the different regions of the Union – and that will be it. It might end up by being someone competent. But certainly, if we give credence to the short list that is under consideration, an intellectual pygmy compared with the names I mention above, from other parts of the globe.

This would have been an opportunity for the EU to show to the world that it means business when it talks about the reform and the strengthening of the institutions of global governance. But the EU leaders do not want to walk the talk. They prefer a narrower view and respond to their EU internal politics first.

It is a bit of a shame, isn’t it?

Maduro and Guaidó must accept mediation

Venezuela remains at the top of today’s international agenda. People on both sides of the conflict are convinced that the solution to the current national crisis must come out of an open confrontation. That’s where we are now. It would be a serious mistake. The country is deeply divided. Violence can only lead to death and destruction. It will not address the deep causes of conflict.

I continue to insist on dialogue through mediation. Both leaders must accept this approach. The work of the international community should focus on convincing Nicolas Maduro and Juan Guaidó to accept an agenda for dialogue. This is an urgent task to be accomplished.

Unfortunately, the UN is not in a position to play a role, for reasons that I mentioned in my previous post. The UN Secretariat is afraid of Donald Trump. It is paralysed. It cannot master the courage to tell President Trump that there is no other way out but through a conflict resolution process. Through peace.

The European Union has excluded itself from the solution. It has taken sides.

The Latin American States have also aligned themselves with one position or the other. They are too close to the conflict to be impartial.

The only Latin American country that has remained neutral is Mexico. It could be part of an international mediation group. The other two States I see as able of mediating and facilitating are Switzerland and the Vatican.

My proposal is to encourage the Swiss to take the lead and get the other two countries on board. They would approach Maduro and Guaidó to obtain their commitment to the process. They could get it. Particularly if the mediation is accompanied by a serious effort to provide humanitarian aid to the people of Venezuela. True humanitarian aid, of course.

Maduro's days

The Venezuela standoff goes on. Time plays against Nicolás Maduro. He sees what remains of his authority being eroded with the passing of the days. He knows that, I believe, and is certainly preparing a heavy-handed response. And that’s the main danger at this stage: serious loss of lives.

Maduro also understands that the current context is different and not very favourable to him. The opposition is united. They have a charismatic and widely accepted leader. There is regional and international support to the new leader. Moreover, the regional rapport of forces is no longer what it used to be: now there is Bolsonaro next door, and the countries of the region are against him, except for Mexico, Cuba and Bolivia. And there has been a serious deterioration of the hardships most of the population is confronted with. The circumstances are playing against Maduro.

But he is still in the Miraflores Presidential Palace. And he has the support of his generals and admirals. That is important. The question is about the support of the lower ranking officers within the armed forces. That’s one of the keys to unlock the crisis.

EU is meeting the Latin American States

As I am about to witness another summit meeting in Brussels, this time with Latin American leaders, I also realise that Latin America does not feature high in terms of the EU priorities. As such, I wonder what will come out of such meeting. Is it more than a mere diplomatic move?

In the meantime, I take note that the EU-Latin America consultation will be immediately followed by a summit with Mexico. And again, I am curious about the possible outcome of that conference.

In any case, enhanced relations with Latin America will give leverage to Spain´s position with the EU. Somehow, Portugal will gain a bit as well. That’s not a bad thing as it contributes to a greater balance between the different nations in Europe. 

Prying eyes

President Dilma Rousseff of Brazil said that her planned visit to the US can only go ahead if she receives a clear explanation from President Obama regarding the spying accusations. Indeed, the US seems to have been snooping on the Brazilian President –and others, such as the Mexican head of State. This is certainly a very unfriendly action and one understands Dilma’s position. It is the only acceptable response.

But in diplomacy realism tends to prevail. She will receive some type of assurances from Obama. Then, she will say the US has apologised and the visit will move on. That’s fine. By then, the point would have been clearly stated. The question will however remain: one cannot envisage an American administration that is not “watching” under cover what the two main rivals of the US in Latin America are cooking. Washington will say sorry, and then change the system and will continue the old practise. It is in their blood and in their own interest, as they see it.

It is up to Brazil and others to keep protesting and keep saying this is not acceptable.  And to try to protect itself from prying eyes.