Oct 22 2014

Kuwait’s Domestic Policy in a New Oil Price Regime

1 Comment

by Dr Hessah Al-Ojayan 

Since crude oil hit a recent high of $107.9 a barrel in June this year, the closing price has been gradually declining reaching $82.6 on October 16th. This level is the lowest since July 2012. The decline is driven by the increase in supply coupled with a weak demand. More supply is mainly coming from the the US and Libya, with the US oil production increasing by almost 14% compared to last year. Libya’s production, having recovered from the civil war, has also increased from 200,000 barrels per day (b/d) in April this year to reach about one million b/d in September. Further adding to prospective global supply, Paraguay announced this week that it has discovered oil for the first time. Weakening demand is also adding pressure on oil prices, with the Kuwait News Agency (KUNA) recently announcing that Germany cut its oil imports from the Organization of the Petroleum Exporting Countries (OPEC) by 2% this year. The International Monetary Fund (IMF) has cut its projection for global growth in 2014 from 3.4% in July to 3.3% and its forecast for 2015 from 4% to 3.8%, which also does not bode well for global energy demand.  On the back of the IMF growth forecast revisions, the International Energy Agency (IEA) had to cut its estimate for demand for OPEC crude oil by 200,000 b/d for 2015.


Kuwait City, copyright Ra'ed Qutena, 2011, flickr.com

Kuwait City, copyright Ra’ed Qutena, 2011, flickr.com


With OPEC producing 43% of the world’s oil, falling oil prices will negatively affect the revenues of many of its member countries and will eventually force them to consider cutting down production; many of them have a national budget breakeven price of above $90/barrel. Officials in Saudi Arabia, Iran, Kuwait and the UAE showed no public intention of reducing production. However, confidential information was leaked from Kuwait, stating that Al-Khafji field, a joint venture between Saudi Arabia and Kuwait that produces 300,000 b/d, is being shut down due to environmental concerns. Also, the Kuwaiti Alqabas newspaper reported on October 20 the possibility of shutting down another joint field, Al-Wafra, which produces 110,000 b/d, because the Kuwaiti Labor ministry was refusing to renew the identification cards of Saudi Chevron company employees. These shutdowns would reduce Kuwait’s oil production by around 10%. Globally, the final decision on how many barrels to produce per day will be made during OPEC’s next meeting, on November 27.

Kuwait produces between 2.5 to 3 million b/d and exports 80% of them to East Asia, with the remaining 20% going to Europe and the Americas. 90% of Kuwait’s revenues come from oil. Annually, 75% of total revenues are used for national expenditures, which amounted to about K.D 23 billion for the fiscal year 2014-2015 (approximately $80 billion), with the remaining 25% allocated to the Kuwait Investment Authority (national sovereign fund) for the purpose of supporting future generations. The breakeven oil price for the Kuwait budget is $75 per barrel. Beyond that, national expenses would exceed revenues. The current oil price of $90 per barrel is alarming and it is critical that Kuwait starts putting forward a contingency plan in order to avoid a possible financial deficit. It is time to call for a radical transformation. Continue reading

Share
Posted by: Posted on by Ribale Sleiman-Haidar Tagged with: , , , ,

Oct 16 2014

Kurdish Liberation Movement in Iraq – Interview with Dr Yaniv Voller

Leave a comment

In preparation for his talk on Tuesday 11 November at LSE, MEC research fellows Filippo Dionigi and Zeynep Kaya met with Yaniv Voller to discuss his most recent book ‘The Kurdish Liberation Movement in Iraq: From Insurgency to Statehood’. Starting from the Kurdish liberation movement in Iraq, this book analyses the concepts of sovereignty and legitimacy in international politics.


DSC_0024


Filippo Dionigi: In what ways does this book help understand the current Kurdish situation in Iraq? Does it provide a framework for the complex, historical question of Kurdistan Iraq?

Yaniv Voller: It clearly does. You cannot understand the current Kurdish situation and the way the Kurds relate to the current Iraqi government without understanding the roots of the Kurdish struggle for liberation and the evolution this struggle has gone through. In my opinion, what we see today is just another stage in this struggle of liberation. What I argue in the book is that the Kurdish liberation movement has transformed from focusing mainly on guerrilla operations to concentrating on less violent forms of resistance, more particularly statebuilding. To put it differently, I argue that statebuilding, which has been taking place since 1991, is just another liberation strategy. If you look at the way the Kurds have been armed, you can see that almost every step the Kurdish leaders have taken was driven by defining sovereignty, which also explains the title of the book: Emphasising on the fact that the Kurdish movement is still a liberation movement that moved from insurgency to statehood.

Zeynep Kaya: If we widen our perspective a bit, moving from the Kurdish Regional Government (KRG), to focus on your framework of de-facto statehood. Would that framework be applicable when trying to understand other self-determination movements, for example Palestine or South Sudan?

YV: I do not think this framework applies to the Palestinian case. The idea of a Palestinian state is already legitimate. Palestinians are not necessarily struggling to gain international legitimacy for their cause, but they have to struggle against the Israeli presence. In the case of the KRG, it’s the complete opposite situation: The KRG has managed to drive out what they identify as the ‘occupying forces’, the Iraqi army, and they have managed to build a more or less independent state, but they haven’t been able to achieve international legitimacy yet. South Sudan is a much more interesting case. When South Sudan managed to gain autonomy, it was very clear that it was on its way to statehood. I would think Western Sahar is probably the ideal analogy: It has a government which controls a certain part of the claimed territory, while the rest of the territory is still under the control of Morocco. There are many similar cases around the world as well that I use to structure my theoretical framework. Some examples include Kosovo, the Turkish Republic of Northern Cyprus and Somaliland.

FD: How does the regional context affect the capacity of the KRG to progressively gain its autonomy and perhaps its independence? Since the Kurdish people are not limited to the Kurdistan Region of Iraq (KRI) and an independent Kurdish state there would have implications for neighbouring countries.

YV: The KRG has become a very significant regional player in the last few years, especially since 2003. From being the object of intervention, where Iraqi Kurdish provinces were constantly subjected to interventions by neighbouring states, what we see today is the growing assertiveness of the KRG and its leadership. If the KRG gains its independence, then it is bound to produce shock waves around the region. However, on the other hand, it has a potential of becoming the solution for the future: if the Kurds have a state on some territory, it might ease the pressure off others in neighbouring countries to negotiate a solution. The creation of a Kurdish state, even one not covering the entire territory of historical Kurdistan, could serve as a base for settlement. Continue reading

Share
Posted by: Posted on by Ribale Sleiman-Haidar Tagged with: , , , , , ,

Sep 29 2014

US and Iran: ‘More cooperation than meets the eye’

Leave a comment

Bitter adversaries for a generation, the US and Iran now face a common enemy: the ‘Islamic State’. But, in an interview with DW, Dr Roham Alvandi argues that politics prevent Tehran and Washington from cooperating publicly. On Monday 16 October, Dr Alvandi will be presenting his most recent book ‘Nixon Kissinger and the Shah’ at LSE.


John Kerry and Mohammad Javad Zarif during direct talks, July 14 2014

John Kerry and Mohammad Javad Zarif during direct talks, July 14 2014


 

DW: What are the US and Iran’s respective interests in fighting the “Islamic State”? Are they opposed to IS for the same reasons?

Roham Alvandi: They’re not quite the same reasons. They each have their own interests in Iraq, and they each have an interest in containing and eventually defeating the Islamic State. From the US point of view, what they’re trying to do is defeat the IS threat but also create some sort of inclusive government in Iraq where you have some sort of balance between the Shi’a, the Sunni and the Kurds.

Whereas from the Iranian perspective, that’s much less their priority. They’re very much backing their allies in Iraq. But on the whole, there’s probably more cooperation going on than meets the eye. I suspect that there was a great deal of cooperation behind the scenes that has to do with the creation of the new government in Iraq, and I suspect that there’s also some cooperation in terms of the military operations that are going on. But neither side has an interest in acknowledging that openly, so they’re going to keep that very quiet.

Ayatollah Khamenei said that he rejected an offer from the US to cooperate against the Islamic State. Why would Iran oppose cooperating with Washington against a common enemy?

Iran assisted the United States in Afghanistan back in 2001. They helped defeat the Taliban; they helped create the Bonn process [to rebuild Afghanistan's political institutions]; they helped create the Karzai government. And what they got in exchange for that was “axis of evil” and more sanctions. Nothing came out of it and that was quite a gamble for President Khatami who had convinced the leadership that this was the right thing to do. So you can’t really blame them for being skeptical as to whether the US will really come through on any sort of quid pro quo as far as Iraq is concerned.

Continue reading

Share
Posted by: Posted on by Ribale Sleiman-Haidar Tagged with: , , ,

Aug 19 2014

If Iraq is to survive, then it must be divided into separate regions

Leave a comment

by Ranj Alaaldin

It is no coincidence that country’s most stable areas are those where security and governance are in the hands of locally supported groups. This piece was originally published by the Independent on Sunday 17 August 2014.


Iraqi Kurdish Peshmerga fighters look on as smoke billows from the town Makhmur, about 175 miles north of the capital Baghdad, during clashes with Isis militants. AFP/Getty Images

Iraqi Kurdish Peshmerga fighters look on as smoke billows from the town Makhmur, about 175 miles north of the capital Baghdad, during clashes with Isis militants. AFP/Getty Images


Since ordering US airstrikes against jihadist group the Islamic State of Iraq and Syria (who now call themselves the Islamic State, or IS) in Iraq’s Kurdistan region, President Obama has gone one step further by arming Kurdish forces and helping them in their fight against the group.

The UK is also expected to provide the Kurds with arms and has already deployed SAS forces to the Kurdistan region as well as a fleet of Chinook helicopters to airlift Yazidi refugees besieged on Mount Sinjar, where they have had to choose between dying of dehydration or descending and facing inevitable slaughter at the hands of Isis militants.

All this should be welcomed. The West has been relatively muted in its response since Isis took control of Mosul, Iraq’s second largest city of 2m people and other parts of Iraq’s north. It has established a self-declared caliphate in territory stretching between Iraq and Syria. Left alone, Isis will expand further; it will garner far greater resources than it currently enjoys and, as an organized, disciplined and resource-rich organisation will continue to recruit local Iraqis, Syrians and other jihadists from around the world to its cause.

The decision to become actively and directly involved in the fight against Isis acknowledges a number of realities that policymakers have for too long ignored: firstly, that the Kurds are a reliable, organized and moderate force capable of countering Islamic radicals in Iraq as well as the region; secondly, that the Kurds will declare independence sooner or later; finally, that Iraq, with or without the Kurds may disintegrate anyway.

Except, Iraq has already disintegrated. Baghdad no longer has any control over its Sunni Arab north. Its Shia-dominated government presides over the capital Baghdad, as well as the Shia south. Baghdad may still retake the north and it should be helped by the international community to achieve this but although it may do so and although Iraq could recover from the current crisis, it is unlikely to progress to such an extent that makes a recovery irreversible.

Continue reading

Share
Posted by: Posted on by Ribale Sleiman-Haidar Tagged with:

Aug 12 2014

Book Review: The Struggle for Iraq’s Future by Zaid Al-Ali

Leave a comment

by Dr Zeynep Kaya

In this piece, originally published on the LSE Review of Books, Zeynep Kaya reviews Zaid Al-Ali’s latest book The Struggle for Iraq’s Future: How Corruption, Incompetence and Sectarianism Have Undermined Democracy.  Zaid gave a public lecture at LSE launching his book on Wednesday 7 May; you can listen to the podcast here.


The Struggle for Iraq’s Future: How Corruption, Incompetence and Sectarianism Have Undermined Democracy. Zaid Al-Ali. Yale University Press. 2014.

The Struggle for Iraq’s Future: How Corruption, Incompetence and Sectarianism Have Undermined Democracy. Zaid Al-Ali. Yale University Press. 2014.

The rise of ISIS in parts of Northern Iraq and the possibility of a breakaway of the Kurdish region from the central Baghdad government make questions about Iraq’s future more prescient than at any stage since the 2003 invasion. If Zaid Al-Ali’s central claim in his book The Struggle for Iraq’s Future is accepted, Iraq’s position today could be entirely different if the artificiality of sectarianism was understood and if today’s political elites could act beyond their short-term interests. Al-Ali provides a detailed account of the downward progression of the state of affairs in Iraq, offering readers illuminating explanations of the political, economic and social context of the increasing sectarian rift that has led to today’s turmoil.

Al-Ali, a lawyer who specialises in comparative constitutional law and international commercial arbitration, explains how hopes for Iraq to become a freer and more prosperous country faded over a ten-year period following the collapse of Ba‘ath regime. Particularly focusing on the period since 2005 when the Iraqi constitution was drafted, he provides a forensic and compelling account of the constitution-making process and the substantial issues within the constitution that set the ground for the political turmoil which followed. In more general terms, Al-Ali compares pre-2003 and post-2003 Iraq, which helps the reader to identify the long-term and short-term problems Iraqi politics and society have been experiencing.

There can be little doubt that this book is more suitable for those who already have a relatively good understanding of Iraqi politics and society, the political divisions among parties, and the process of intervention. Having said that, the opening two chapters, ‘A legacy of oppression and violence’ and ‘The origins of the political elite’, offer a lucid and accessible background for the general reader. Combined, these chapters cover Iraqi politics before the collapse of Saddam Hussein’s regime and outlines the origins of the new political elite (who are mostly once exiled Iraqis), and the design of the Iraqi constitution. This background frames subsequent discussions of the rise of al-Maliki and his return to sectarian-style politics after 2010. The remainder of the book, however, is aimed at readers interested in an in-depth look into the thinking and actions of the key actors, the working of the newly established government and its ministries, and the events that took place within the last decade.

Continue reading

Share
Posted by: Posted on by Ribale Sleiman-Haidar Tagged with: