To launch drones and other missiles is a serious mistake

I do not know yet who is behind the destructive action taken against the Saudi oil facilities on Saturday. I see many fingers pointing in the direction of Iran. They might be right. We will see. But what I certainly know is that the attacks must be considered acts of war and very serious political mistakes. Whoever took the decision to launch the drones and the missiles must be made to understand that conflict escalation can only bring further destruction and misery to the region. Our condemnation of such decision cannot be ambiguous. It must be as strong as they make them, which does not necessarily mean military retaliation. It means isolation and sanctions.  

Our reaction to the drone attacks

The drone attacks against the Saudi oil refineries brought a new level of danger and complication to the complex conflict involving, among others, Yemen, Iran and, of course, Saudi Arabia as well as an external actor such as the United States. 

The reactions we have seen in the key markets go beyond the oil supply issue. They indicate there is a deep concern about the crisis in that part of Middle East and its geopolitical consequences. 

I can understand the fears. Anything can happen. However, as long as there is a tiny hope of a summit between the US President and the Iranian one, I think we can expect our side to hesitate and avoid extreme actions. Am I right? I hope so. The opposite would take us into a much deeper conflict of unimaginable proportions.

Europe and the Iranian situation

Iran announced yesterday it intends surpass the uranium stockpile limit set under the 2005 nuclear agreement. They want to do it by 27 June.

Obviously, this is no good news. It brings the region to a new level of tension. For Europe, it makes the EU’s political position on Iran untenable.

Actually, the European position had already reached a dead end. Now, that is indisputable.  

Today, Federica Mogherini is on her way to Washington. I do not know what she will bring to the discussions with Mike Pompeo and Jared Kushner, the trusted son-in-law of President Trump. But she has no room left. On one side, she is confronted with an Administration that is determined to further tighten the sanctions already in place against Iran. Not to mention, of course, the additional military deployments to the Gulf region. On the other side, she sees a regime and a leadership that are placing themselves against the wall, when the wise move would have been to remain committed to the implementation of the nuclear agreement.

In my opinion, Mogherini, on behalf of the EU, has no choice but to be frank and direct. Direct means diplomacy with clear words. Here, the message should be that all sides must show restraint and accept to return to the negotiating table. EU and China, with the support of Russia, could be the conveners of such a negotiation.

On her return from Washington, Mogherini should also travel to Beijing and Moscow. Before that, she could meet the UN Secretary-General. That would send an appropriate signal. And it is something the UN needs.

Oil and diplomacy

Last year, in the US, the number of shale oil wells has doubled. The American production is now 9.29 million barrels a day. That is about 47% of the country's daily consumption. And it takes significant pressure out of the international oil market.

It also brings the value of the barrel down.

It has consequently a major strategic impact on oil revenues in Russia and other key producers. The economic strength of such countries is seriously affected. And that will be the case in the foreseeable future. More so, as many developed economies are steadily moving out of fossil fuels into renewable sources of energy.

One of the lessons we should extract from these developments is that, when it comes to deal with adversarial countries, economic factors are at present much more effective – and acceptable – than the military ones.

A related lesson is that your adversaries will not take this matter lightly. Therefore, you must be prepared to confront them on the political field as well. And that means, among other things, promoting the appropriate public information campaigns, keeping your own citizens aware of the challenges at stake, and responding to hostile propaganda. But it also means to open dialogue lines of communication with those antagonistic countries. That´s the role of diplomacy. It is as important as ever.

Getting closer to 2015

In my regular opinion piece for the Portuguese weekly magazine Visão, a text I wrote this afternoon, I share my view that 2015 will be a year of great uncertainty.  The geopolitical tensions are on the increase. This time they involve major players, such as Russia, China, Japan and the US. This is no small fry. Furthermore, the economic and financial variables are more and more unpredictable. The oil price and its impact on the international financial flows as well as on the stability of countries such as Venezuela, Russia, Angola and Nigeria, and the entire Middle East, the diminished availability of cash for stocks and bonds, the trade restrictions as a result of political confrontations, the unemployment rates and the low paid jobs because of automation, and the dwindling of the middle classes in Europe and elsewhere, all these dimensions will bring new variables into a very complex economic equation. If you put on top of that activities of the international crime syndicates, and the mass immigration of young people, you are adding fuel to the fire.

That´s why we have to make the coming year a time of deep reflection about the common future of mankind. It´s time to think about the big picture again. 

OPEC is moribund

OPEC, the oil countries organization, is less and less relevant. It´s deeply divided, it´s unable to attract new member states to join the 12 that make it, and its total production is less than one third of the overall oil production figure.

Today´s meeting has shown the impasse the organization is in. And the price of oil has tumbled as a result. 

Oil, economic recovery and key geopolitical areas of interest

The price of Brent Crude Oil has been relatively stable during the last 12 months. It has oscillated around US $105 and $108. During the last five days or so, it has even decreased slightly. I take this as an indicator that there is more serenity out there, among those who know what´s going on, than the events in Ukraine let us believe. This is certainly good news. We need calm waters out there. The economic recovery is still very precarious, particularly in the EU, and we can´t afford major disruptions. Oil remains an important factor in terms of the recovery and its price can have a critical impact on economic and social stability in Europe.

That´s why we have to pay more attention to the situation in Libya, Iraq, Nigeria, and also make sure that Iran plays ball as agreed and can be back in the oil market as an important supplier.

These are some of the countries that would call for more focus within the EU machinery. 

A new situation in North Africa

The hostage situation in Algeria, with the kidnapping of many foreigners, from different nationalities, by an al-Qaeda inspired group, opens a new phase in the security crisis in that part of North Africa as well as other areas surrounding Mali. All of sudden governments from outside the region are realising that their interests in the gas and oil fields in Algeria and the vicinity could be under very serious threat. This can deeply affect the functioning of the many fields and lead to a significant decrease in the production levels.