Wednesday, December 06, 2006

The state is dead. Long live the state!

William Lind comments that IEDs will be seen in the United States, calling it the 'boomerang effect'.

I disagree with him entirely. IEDs have long been made in the United States. Kids with copies of 'The Anarchists' Cookbook' (aka 'The Jolly Roger Cookbook') have made IEDs for years. According to Wikipedia, the kids who perpetrated the Columbine massacre built 99 IEDs of various shapes and sizes.

It's unlike Lind to succumb to millenarian sensationalism. Plus ça change, plus c'est la meme chose - the power of non-state actors is not new, but an atavism. The state's monopoly of force has always been tenuous - the totalitarian turn of the mid-20thC was the fruit of the convergence of nationalism and industrialisation. Now that we are reverting to tribal affiliations, the state is weakening once more.


Wednesday, November 29, 2006

Happy Jacques

But they couldn't stop Jacques, 'or the waters lapping,
And they couldn't prevent Jacques from being happy.

(Apologies to The Who)

Thursday, November 23, 2006

There is no god but beer?



Yes, that is indeed a beer stein reading La ilaha ilAllah in graff-style text.

From Khalifa Klothing, a Hizb ut Tahrir-linked online shop run out of BC, Canada.

Thursday, September 14, 2006

Dodgy dossier 2.0

The IAEA has branded a report published by the US House Intelligence Committee "outrageous" and "dishonest". The US report appears to distort the IAEA's findings to imply that the Iranian nuclear programme is far more advanced than it actually is, according to the BBC's account of the IAEA's letter.

Here we go again...

Monday, August 07, 2006

the social construction of reality

currently extant institutions depend on current legitimating arguments which re-parse history to build justification. those legitimating arguments shape our world-views. hence europeans, through the narrative of nationalism, forget that 1000/1500 years ago they looked like lebanon, just with swords and spears instead of bombs and guns.

Tuesday, July 11, 2006

implicit taxation

This paper is interesting - basically the authors argue that China's system of channelling private money through state-run banks into public works is a more efficient form of taxation than income tax, given the disparities of income and the low level of banking participation amongst the poorest in the country.

It puts me very much in mind of the IPO frenzy in the Gulf. Raising money for government-controlled companies through IPOs may not have been the most efficient in terms of the transaction costs, but given the lack of democratic participation income taxes are politically untenable. Raising the cash through IPOs helped engender a sense of participation and accountability, and it's hard not to see that the social/political value of those feelings would outweigh the social/political costs of taxation (though the Dubayyi govt does play with the idea of VAT quite often).

Of course, that begs the question of what impact the stock market collapse has had on Gulfi politics. It would be nice to find the time to do a properly structured survey of investor sentiment and of political sentiment and see how that correlates, but it would be pretty hard to conduct the latter part. That might have to be reliant on analysis of press coverage and interpretation of the significance of elite political acts, which is always quite difficult to pull off robustly.


Friday, June 23, 2006

Unity and Division in Islamic Discourse

Abdullah tells Saudis they must accept diversity By Khalid al-Dakhil

Khalid al-Dakhil's excellent article picks up on a speech made by King Abdullah in Buraidah, the main city in the conservative Nejdi province of Qassim.

Here's the money shot:

"I have said, and will repeat here before you, that there are two things on which leniency would not be acceptable: Islamic Shari'ah, and our national unity. I would say to you quite frankly that it is not in tune with either the principles of the benevolent Shari'ah, nor the requirements of national unity that some should – out of ignorance or in bad faith – divide our citizens into categories that have no authority whatsoever, saying this person is a secularist, this one is a liberal, this one is a hypocrite and this one is an Islamic extremist, and so on."

"The truth of the matter is that all citizens are, God willing, loyalist. We do not doubt the religious faith, or national loyalty, of any person, until we are presented with absolute evidence that there are – God forbid – reasons for doubt."

"I plead with all citizens, and students, journalists and writers in particular, to rise above such conduct and recall God's words in the Quran: 'Believers, no people should deride other people, for the latter may be better than the former; nor should any woman deride other women, for these could be better than the former. Do not slander one another or assign to one another scornful nicknames; cursed be a scornful nickname once one has accepted the Faith. Those that do not recant are indeed transgressors.' The Prophet, God's peace and blessings be upon him, said: 'When someone calls another 'infidel', one of them shall be so'."


Al-Dakhil's excellent article argues that Abdullah sees no conflict between pluralism and Shari'ah, provided that all are good Muslims and good Saudis. Those who seek to label others, to accuse them of being bad Muslims, are sowing discord. I don't know if Abdullah used the term 'fitna', but that would appear to be the concept he's alluding to.

I'm going to get a little theoretical here - I will try to keep my language simple, but it might get a little abstruse.

Basically what appears to be at stake here is two different instrumentalisations of Islamic discourse, each the product of different points in the religion's history.

On the one hand, we have Islam used to advocate unity in pluralism. The paradigm for this kind of discourse is the hejira, Mohammed's flight to Mecca, where he developed the Shari'ah as a means for the warring tribes of that town to live together. The ability of Islam to achieve such unity was its great strength as an organisational principle on a landmass whose prior political structure had been based on a dynamic equibilibrium between sedentary pastoralists and traders on the one hand and raiding Bedu nomads on the other. Once all stopped fighting one another and joined in a communal project - which, granted, was a long process in which much blood was spilt - they were almost unstoppable, creating a Caliphate that spread from Persia to al-Andalus.

Which brings me on to the second instrumentalisation: Islam as a differentiator. During Islam's expansionary phase, it was necessary to establish a clear us/them divide so that the cohesion of the organisation, the umma, could be maintained and the proper martial attitude adopted towards foes. Behind the frontlines of the expansion,  non-Muslims were obliged to pay jizya, essentially a protection tax. Many converted to Islam, to the consternation of the Arab elite who saw that their privileges would be diluted by such mass conversions. Arguing that the conversions were motivated by tax-avoidance rather than through belief, the Umayyads forced the conquered to continue paying the jizya, inspiring a wave of rebellions that eventually destabilised the Umayyad Caliphate and ushered in the era of the Abbasids.

The Saudi Arabian state, as political structure based on the hegemony of a Saudi/Wahhabi alliance, has long exploited these two discourses to shore up its legitimacy and to discredit opposition. That much is self-evident: what is particularly interesting about it, though, is how the discourses are being used by people outside the state apparatus to preserve their privileges. It is worth noting that the most conservative sentiments in the country appear to emanate from Qaseem, in the Nejd. It is an area that appears to contribute very little to the economy: they have no oil, they have no trade routes. What can they offer the state, then, in return for access to oil wealth? Unflinching loyalty about sums it up.

The problem with these kind of clientelistic relationships - ones that are based on attitude rather than on material exchange - is that they quite soon turn into craven brown-nosing competitions. You may remember that during the Egyptian presidential elections, local businessmen took out ads supporting Mubarak, with their own names displayed prominently. It's a very dangerous prisoner's dilemma. If you defect, you are cast out: no more access to state patronage, no more access to crucial business networks, no more access to cheap cash from friendly banks. But because you're competing with other people for preferential treatment, and because ultimately the state's judgment of your loyalty is entirely subjective, you have to continually outdo yourself and others in your expressions of loyalty. In Saudi Arabia, it has turned into a game of "I'm a better Muslim than you". Before you know it, you're having to deal with a bunch of takfiri zealots.

Of course, it gets even more complicated. I'm reminded of Vaclav Havel's Soviet grocer with a sign in his window saying 'Workers of the World, Unite!'. Havel wrote that the shopkeeper fools himself into believing that he is displyaing the slogan sincerely, for otherwise he would simply be admitting that he was afraid and obedient. Similarly in the Middle East: the emotional investment of clients in their relationships with power mean that they cannot simply switch views overnight. They must be persuaded and cajoled in a way that preserves their dignity, which means appealing to them in a way that does not conflict with the underlying logic of the relationship.

So, to my mind, that's the context for King Abdullah's speech. By reviving the hejira discourse, by pointing out that the Shari'ah and pluralism are not incompatible - that, in fact, pluralism is made possible through Shari'ah - the arguments of the takfiris can be undermined while allowing conservative Muslims to preserve their dignity. It's an incredibly nuanced discursive strategy. It will be interesting to see if it works.


Friday, June 09, 2006

Made-up illness #211565154

Anger disorder is common in US population - New Scientist

More than 7% of people in the US have experienced "intermittent explosive disorder" (IED) at some point in their lives, says Ronald Kessler of the Harvard Medical School in Boston, Massachusetts, US, who led the study.

This means they will respond to certain situations with inappropriate levels of anger, for example resulting in road rage or irrational, violent acts such as throwing a television out of a window during an argument with a spouse or parent.

Now that having a short temper is a medical condition - treatable by doping oneself up to the eyeballs, naturally - what comes next? Intermittent unconsciousness syndrome?

Tuesday, April 25, 2006

US$70 oil for the rest of the year?

Some of the economists at Morgan Stanley are saying that they are now expecting prices to stay around the US$70 mark for the rest of the year.
 
 
The price of crude has broken the $70/b line, crack spreads in the US are close to their post-Katrina peak and geo-political tensions are rising. We are thus revisiting the underlying fundamentals of our price baseline, extend it to 2008 and we look at alternative scenarios.  In a nutshell, our conclusions are:

·We think that crude prices (WTI/Brent) are likely to range between $70 and $80/bl for the reminder of this year; we raise our 2006 annual average forecast from $61 to $73/bl (+19%);

·We believe that markets will remain tight next year, as new refinery capacity is coming slower than we had thought; We raise our 2007 annual average forecast from $48 to $68/bl (+43%);

·We continue to believe that price signals matter and that slower demand and stronger supply will ease tensions in the markets at some point. With the information we have in hand, we do not see that happening before 2008.

·In the short term, markets will remain highly sensitive to the mismatch between marginal demand and marginal supply, to possible supply-side shocks, political (Iran, Nigeria) or natural (Hurricane season)

I've been following their analysis of the oil markets for a couple of years now, and generally find them to be on the money.

What's particularly interesting is the mismatch between marginal supply and marginal demand. For the last couple of years, OPEC has been repeating like a mantra: oil demand may be high, but oil supply is in sync - it's just that refining bottlenecks mean that the oil isn't getting downstream in sufficient quantities. Most of the Gulfi states have taken steps to widen the bottleneck, and are investing heavily in refining capacity at home and abroad to help boost throughput (they're not averse to capturing a larger proportion of the added value that comes with refining and petrochems operations, either). They have also been oversupplying OECD countries so that they can build their inventories, which are now at record highs (as I pointed out last year).

OPEC is now taking on a much more worried tone. Prices prior to 2005 seemed to be largely driven by how much spare production capacity was left in the world, and the cartel tweaked production to keep OECD inventories large enough to sustain a supply shock but small enough to sustain reasonable prices. As prices increased, the linkage between production and pricing began to break down, and the cartel started building OECD inventories so that they could maintain a linkage between prices and inventories.

Now that linkage is breaking down too. Oil prices are continuing to rise despite high crude stocks, partially because of the refining bottleneck and partially because of the political risk premium. And OPEC isn't entirely sure what to do next:

"This price rise occurred despite the fact that the market continues to be well-supplied," OPEC official Adnan Shihab-Eldin told a meeting of the International Monetary Fund's policy committee on behalf of the oil cartel.  . ..

He drew a distinction between the ample supplies on the crude side and tight supplies of refined products.

"The picture on the products side remains tight, given the persistently low levels of refinery spare capacity and more stringent products specifications" in the United States, the OPEC official said.

"As a result, any shortage caused by technical or logistic problems will continue to have a significant impact on the global market, affecting products prices and, consequently, crude oil prices," he added.

Shihab-Eldin lamented that ample crude stocks had failed to tamp down oil price volatility stemming from unexpected supply disruptions or geopolitical concerns.

"Unfortunately the upward rising trend indicates that healthy market fundamentals have been unable to outweigh fears of possible future supply disruptions," he said.

He said the breakdown in the link between inventories and prices had led to an "urgent" need to identify more-reliable signals of price trends. He also said OPEC was concerned over the impact lofty oil prices could have on developing countries, and would monitor development closely.

For their part, the Americans appear to finally understand that OPEC has been doing what it can to bring prices down:

[US Energy Secretary Sam] Bodman said record oil prices of around $75 were causing great "dislocation" in the United States and the rest of the world but there was little producers could do. "We have encouraged producing nations to keep oil markets well supplied – I think they've done that. I would encourage them to do more if they can," he said. "We are in a situation where supply is roughly equal to demand today."

So what next?

Unusually for any future scenario, the long term is clearer than the short term. High oil prices have already sparked investment in refining capacity, which should over the medium term help to minimise throughput disruptions like the ones we have today. They have inspired massive investment in renewable energy - a finance journo friend tells me that at a recent conference he went to, the bankers were falling over themselves to find decent investment opportunities in renewables - which in the long term should bring energy prices down in the aggregate and allow more hydrocarbons to be re-purposed for petrochemicals. And they are bringing about the demise of environment-killing SUVs - no bad thing in my book.

The short term is fraught, however. Uncertainty regarding Iran, potential environmental shocks to the oil supply chain, have created lucrative information arbitrage opportunities to young traders (generally under 25 at the International Petroleum Exchange in London). Take, for example, the unexplained blast in Iran on Feb 16, 2005 - traders at the IPE "were disappointed with security for allowing [Greenpeace activists to invade the trading floor] just at a time when the [crude] market was pushing higher on the back of reports that a missile had been fired at Iran. I kept on trading electronically but I could see the [Greenpeace] guys coming on to the viewing gallery and then they were pushed back."

With near-instantaneous information flows, we are pushing up against the limits of human cognition to deal with the massive volume of data to parse and intepret. Enterprising young traders can exploit the commonly-held belief (true or false) that an attack on Iran is imminent to manufacture a brief spike in oil prices, which, in the full knowledge that it's a micro-bubble, they can make large amounts of money from by using a mixture of put and call options.

The great problem with that is that the media then seizes on the rise in oil prices as evidence of greater instability. A mutual feedback loop then kicks in, with the both the traders and the journalists assuming that the one knows something the other doesn't. Prices spiral upwards, fed by people arbitraging the emotional responses of their peers to over-hyped information.

This is where the self-fulfilling prophecy of all the doom-mongering kicks in. While in the short term the feedback loop appears to have reached some kind of Nash equilibrium - i.e. it makes little sense for market participants to change their strategies in the short term - ultimately the game is one of chicken, in that having both people not swerving (ie continuing to hype prices) is going to result in them crashing into each other (massive reductions in fuel consumption through fuel substitution, efficiency increases or just plain old global recession) and the equilibrium is unstable.

Of course, once that happens the doom-mongers will say 'we told you so all along'...

 

 



UPDATE -

I've just noticed that Bush has announced that environmental regulations are going to be relaxed and additions to the Strategic Petroleum Reserve deferred until the end of the summer.



US gasoline stocks have plummeted over the course of April. Lower sulphur limits were introduced this year - bear in mind that most of the spare oil capacity in the world is quite sour - and refineries in the US have been undergoing their usual seasonal maintenance cycle. Moreover, after a particularly warm, dry March, especially on the East coast, it seems that the US driving season may have started early.

Bush's decision is likely to take some of the edge off the markets by reducing the pressure on refiners, though how much of an edge it will take off is anyone's guess. I think that it may be a finger-in-the-dyke tactic - it will improve the fundamentals and may bring oil prices down a few clicks, but the spike activity is riding off risk speculation, particularly about Iran, and I don't see that changing just yet.

Wednesday, April 12, 2006

Exploitation for dummies

It's a perennial problem. Your economy is built on extracting the surplus value from a more-or-less indentured labour force, the human resource equivalent of opencast mining. Rape-and-run tactics, as the environmentalists call them, consist on extracting profits short term using morally questionable and environmentally damaging methods - dousing rocks in cyanide to extract tiny amounts of gold, for example, and leaving the accumulated chemicals to seep into the ecosystem; or piling tailings behind fragile dam and hoping that the dam doesn't breach, flooding the rivers and homes beneath it with water rich in heavy metals toxic to most forms of life. In human resource terms, the tools and techniques are intangible, hence harder to discern, but they largely work the same way. Build a dam - be it with guns or law - stop people from organising, take away their liberties by confining them with prison guards or by taking away their passports. Invest the bare minimum in the resource you are mining and extract from it surplus value that will make you rich and powerful. Pile up all your problems behind the dam, and hope that they won't come back to bite you.
 
Every now and again, though, the dam breaks. In the UAE, there have long been signs that the dam was under strain, but it was when workers blocked Sheikh Zayed Road that the first cracks appeared. The government stuck a thumb in the dyke, creating a meaningless 'black list' of companies that had not paid their workers and then backing down quickly on its initial promises to make the company pay immediately and in full. Then it went back to business as usual.
 
The riot at the Burj, though, has shown that the dam is in serious need of structural reinforcement. So the government has decided to co-opt the labour movement to buttress the dam.
 
"Labourers will be allowed to form unions. We're going to have one union, with separate representatives for the construction, fishing, agriculture and other industries," Labour Minister Ali Al Kaabi told The Associated Press.
 
It is a tactic with a long pedigree. The Soviet Union only allowed state-sanctioned and -controlled unions; Egypt's trades unions have long been a means for the state to force its will upon labour movements. In Mexico, the Partido Revolucionario Institucional's co-option of labour movements helped perpetuate its institutional dictatorship for 80 years. Italy's Syndical Laws of 1926 meant that only fascist trade unions would be recognised; in Nazi Germany, only fascist civil society organisations were tolerated, and collective bargaining was only mediated through the state - that is, not mediated at all. Third Reich Germans didn't have the right to move jobs without express permission from their employers, either.
 
I'm not saying the UAE is some neo-fascist dictatorship - far from it. But the government could damned well take a better inspiration for its labour policy.