Tag Archive: Libya


Normally, loose economic blocs do not assert their political clout in matters which are handled by UN or the group of five established powers. But it now seems that BRIC which refers to the countries of Brazil, Russia, India and China, (South Africa will join soon) which are all deemed to be at a similar stage of newly advanced economic development, has decided to come out of just economic closet and start talking politics. They see their opportunity to assert themselves in the Libya intervention of the West, which they have dared to criticize. According to a paper published in 2005, Mexico and South Korea were the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed, as they were already members of the OECD. BRIC countries are developing rapidly and by 2050 their combined economies could eclipse the combined economies of the current richest countries of the world. These four countries, combined, currently account for more than a quarter of the world’s land area, more than 40% of the world’s population, and hold a combined GDP (PPP) of 18.486 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing emerging markets.

BRICs could not organize themselves into an economic bloc, or a formal trading association, as the European Union has done. However, there are some indications that the “four BRIC countries have been seeking to form a ‘political club’ or ‘alliance'”, and thereby converting “their growing economic power into greater geopolitical clout”. These are not a political alliance (such as the European Union) or any formal trading association, like ASEAN. Nevertheless, they have taken steps to increase their political cooperation, mainly as a way of influencing the United States position on major trade accords, or, through the implicit threat of political cooperation, as a way of extracting political concessions from the United States, such as the proposed nuclear cooperation with India.

And they have demonstrated their political ambitions in their abstention failing to support UN Security Council Resolution 1973 which raises serious questions about the future functionality of the multilateral system – a system in which the BRIC countries aspire to have a stronger voice. Effectively, the BRICs sent a message of opposition to allied intervention in countries experiencing fundamental political change. Their vote was an implicit acknowledgement that such collective action often has unintended consequences, and that it can result in one side being given an undue advantage over another. But a less obvious driver for their position is also the notion that one day such a vote could be cast against one of them.

It is premature to conclude, says a report in Foreign Policy Journal that the collective opposition of the BRIC countries to allied intervention in Libya represents a formal coalition between these countries. While China and Russia have used their Security Council veto with frequency, aspiring permanent Security Council members Brazil, India, and South Africa are still finding their footing on the global stage, appear hesitant to blatantly oppose the collective will of the established five power permanent members of the Security Council. What they share is a long-held mistrust of Western-led military action and a more general stance in favor of non-intervention.

One of the major criticisms of the West’s decision to intervene in Libya by these countries has been the perceived hypocrisy of ‘selective intervention’.

One will find it quite interesting that India, together with other three countries of the bloc has found it expedient to criticize West’s intervention in Libya even though it also has a history of armed intervention in erstwhile East Pakistan. The Maldives and Sri Lanka have all experienced intervention by Indian military forces. Likewise, South Africa, the soon to be “S” in the “BRICS” has intervened numerous times in its post-independence history, most prominently in the Angolan civil war in 1975/6 and in the post-Apartheid era, and participated in multilateral intervention in Lesotho in 1998. After vocally supporting the principle of non-intervention, it eventually voted in favor of allied action in Libya.

The escalation of the Libyan conflict has surely prompted some of the BRICS countries to contemplate what is involved in having a seat at the world’s top table. The Libyan case further highlights the limitations of a global order struggling to reconcile principles of national sovereignty with principles of multilateralism. The modern history of the world has shown that there will always be crises that require multilateral action. The question has become when the BRICS will be willing to step up to the plate and place idealism above self-interest – an admittedly lofty ambition for any nation-state. Not that the U.S. and European nations have a pristine record in that regard, but they certainly do have substantial economic interests in Libya. The difference is that they have proven willing to sacrifice that interest to participate in sometimes distasteful and necessary political decisions. When was the last time the BRICS countries did that?

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Libya turmoil; Interventionism is West’s new colonialism…

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The United Nations acted swiftly to salvage the situation in Libya which could otherwise trigger economic crisis for the West. The effect of this resolution was visible when oil prices fell Friday after Libya agreed to an immediate cease-fire and stop to military operations. But did the prices plunge as a result of this decision alone? Analysts say that Libya’s decision to cease-fire was not voluntary; it was taken after the UN passed a resolution late Thursday night. According to Forbes, the heated political environment in the Middle East is still adding to uncertainty among investors in the longevity of energy prices, which have produced a 30% increase in gasoline prices for U.S. consumers from the same time last year. WTI crude oil fell 0.7% to $100.70 per barrel Friday morning.

According to a report in the Financial Times, the ceasefire with rebels was announced amid concerns in Tripoli that Thursday’s United Nations resolution calling for an end to the fighting could create a de facto partition of east and west Libya.

“Libya will accept that it is obliged to accept the UN Security Council resolution and has decided an immediate ceasefire and the stoppage of all military operations” Mr Koussa, Libyan Foreign Minister told a press conference in Tripoli on Friday.

International media, however, could not confirm if the cease-fire had actually taken place. The town of Misrata, to the east of Tripoli, was reported on Friday morning to be under attack by government forces, according to residents. Mr Koussa declined to answer reporters’ questions about what was happening in Misrata after he read a brief prepared statement. The ceasefire was greeted with jubilation in Benghazi, where crowds gathered in the streets to cheer the news.

Related story:

Financial TimesLibya declares ceasefire after UN acts

 

The upheaval in North Africa and Middle East may not actually travel to other countries but its adverse affects have already reached every nook and corner of the world. It is going to hit hard every economy but will be nightmarish for poorer economies and poor segments of all societies. Pakistan’s fragile economy will be hit even harder where political compulsions keep the government from taking difficult decisions. The surge in oil prices will push the prices upward which will life of ordinary citizen even more difficult. As predicted in these page, the Libyan turmoil has finally started showing its teeth and taking its toll; the world economies are at the brink of yet another crisis as oil surges to almost $120 a barrel and the safe-haven Swiss franc hit a record high on Thursday on fears that turmoil in Libya could spread.US equity markets also hovered near break-even after this week’s sharp slide. Analysts said it was too soon to say a long-expected sell-off on Wall Street was over with unrest in North Africa and the Middle East still alive. The escalating violence in Libya, home to Africa’s largest proven oil reserves, lifted benchmark Brent crude oil to its highest level since August 2008 and kindled concerns of an inflationary spike that might stall global recovery.

This week’s relentless surge in oil prices stung the US dollar against major currencies. The Swiss franc benefited from the turmoil in North Africa while the euro extended gains against the dollar on expectations interest rates in the euro zone will rise earlier than those in the United States. The dollar fell to a record low of 0.9240 of a Swiss franc on electronic trading platform EBS.

Copper, considered a harbinger of economic sentiment, firmed after better than expected US jobless data, but it remained under pressure on concerns that higher oil prices driven by violence in Libya could slow economic growth. Brent crude futures for April delivery spiked to $119.79 a barrel before easing to $114.55, up $3.30 on the day. US light sweet crude oil also rose but remained under the $100 mark it touched on Wednesday for the first time since October 2008. Spot gold prices rose slightly to $1,412.00 an ounce, up just $2.05.

The Financial Times quoted an unnamed official as saying Saudi Arabia was in active talks with European refiners who may be hit by a disruption in Libyan exports. Forces loyal to Muammar Gaddafi launched a counter-attack but rebels threatened the Libyan leader’s grip on power by seizing important towns close to the capital and bringing the tide of rebellion ever closer to his power base. Disruption to Libya’s output has cut at least 400,000 of the country’s 1.6 million barrels per day production, Reuters calculations show. Italian oil company, ENI said the decline was greater, estimating 1.2 million barrels of oil had been removed from the market.

Pakistan stock market also lost hope in domestic political stability amid rumors of Punjab government split and Karachi Stock Exchange (KSE) on Friday tumbled by more than 3.5 percent on foreign selling and political uncertainty. There was panic selling in the market. As reported by Business Recorder. Foreign investors sold because of the global sell-off, political un-certainty and the rise in international oil prices. KSE benchmark 100-share index was 3.59 percent, or 405.24 points, lower at 11,134.02 on turnover of 104.86 million shares by 3:32 p.m.

Upheaval in the Middle East is spreading and no one knows where it will stop. But everyone is clear about one thing; it will definitely spread into the rich industrialized world. It may stop somewhere in Europe because American continent is still out of reach. The turmoil in the Arab world is going to trigger worst-ever economic crisis for the world. And it is all about oil which, through still flows from Middle East, is getting dearer in the international market with worsening of crisis in North Africa and Arabian Peninsula. The focus of news after Egypt and Tunis is on Libya, Bahrain and Iran and by implication of Saudi Arabia. Libya is one of Africa’s largest holders of crude oil reserves, Algeria and Iran are major suppliers and Bahrain and Yemen both border Saudi Arabia on the peninsula that produces much of the world’s oil. Together, Libya, Algeria, Yemen, Bahrain and Iran represent about 10 percent of global oil production.

According to a report in The New York Times, oil markets are famously skittish, especially when there is even the possibility of disruptions in the Middle East and North Africa, which account for some 35 percent of the world’s oil production and a greater percentage of the world’s known reserves. That nervousness is likely to spread elsewhere, with so many economies still fragile in the wake of the worldwide economic downturn and with the possibility that higher crude prices could lead to further increases in food prices. The high cost of food has already led to unrest in several countries, even before political revolts began in the Middle East. The increased price of energy is a “burden that can be a detriment to the global economic recovery.

Brent is a global benchmark crude oil that is produced in the North Sea and traded in London. It is typically the benchmark that is used to set the price for most of the oil from the Middle East. Another benchmark crude, West Texas Intermediate, closed at $86.20 a barrel on Friday. Each benchmark has an impact on gasoline prices in the United States, with the East Coast more affected by the Brent prices than other regions. The reserves in the Middle East and North Africa (known as the MENA countries), while long important, have grown even more critical as demand for oil increases. Prices have risen about 30 percent since September, reaching their highest level since September 2008.

Those who track oil prices are especially worried about the renewed turmoil in Iran and the possibility of unrest spreading from Bahrain to Saudi Arabia, which could have a major impact on oil’s price and its availability. Richard H. Jones, the energy agency’s deputy executive director and a former American diplomat in the Middle East, said that about 17 million barrels of oil passed through the Persian Gulf and the Strait of Hormuz every day. “So if that shuts down, we’re in big trouble,” he said.

But so far, Mr. Jones said, the effects of the regional turmoil have been small. Egyptian production and transportation of natural gas have continued despite an explosion at a pipeline in the Sinai as the demonstrations against President Hosni Mubarak were under way. (An Egyptian investigator said four gunmen bombed the pipeline.) Although there have been labor protests among workers at the Suez Canal, so far analysts have said there is no danger of the vital waterway being affected by the country’s political upheaval.