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Conflict In North Africa Threatens Gas Supply To Europe

November 8, 2021

Conflict In North Africa Threatens Gas Supply To Europe

  • A diplomatic crisis between Morocco and Algeria threatens gas supply to Spain
  • Spain considers importing more (expensive) LNG
  • Algeria faces a number of problems in expanding its gas market share in Europe

European natural gas supplies are not only waning because of lower Russian supply. Brussels, Berlin and even the Hague are keeping a keen eye on the statements made by Russian President Vladimir Putin and market reports about reduced flows through the Yamal pipeline and Ukraine. At the same time, it seems that Fort Europe is being besieged from all sides. The market is also being confronted by the negative implications of a political crisis between Morocco and Algeria, negatively impacting the latter’s gas supplies to the Iberian Peninsula.

For a few weeks a full-out political, economic and possibly security crisis has been building up between Algeria and Morocco, mainly caused by the still continuing Western Sahara-Mauritania conflict. For decades, Morocco has exerted control over the Western Sahara, fighting a military conflict with rebel movement Polisario, which is backed by Algiers. Until now, Morocco has controlled most of the Western Sahara territory, considering it to be Moroccan. And since August 2021, when Algeria severed its diplomatic relations with Morocco, the conflict has spread to gas pipeline politics too.

Algeria is facing a struggling economy, which has been hit hard by COVID-19, endemic corruption, mismanagement and internal political strive. Algeria’s leaders are also increasingly worried about Morocco’s growing political influence in the region, and even its improving relations with Israel. Internal instability, especially after the death of its former leader Bouteflika, has caused economic mayhem, and has led its oil and gas sector, the major source of income, to decline.

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The Next Geopolitical Flashpoint For Oil

April 13, 2019

The Next Geopolitical Flashpoint For Oil

Sudan Coup

The removal of long-time Sudanese dictator Omar Bashir by the Sudanese army has been hailed by some as a sign of a new “Arab Spring”.

From a Western point of view, the removal of president Bashir of Sudan, after several weeks of mass protests in Khartoum and other cities, is in line with the exit of Algeria’s long-time leader Abdelaziz Bouteflika. Optimism in the press, especially in the West, over both developments seem to be based on emotions and not on facts. As the Arab Spring has shown, don’t ever count out the existing power structures of the respective regimes, and specifically the armed forces. The Egyptian revolution was the first example, shortly after the ‘democratic revolution’ the military took over and reinstated the status quo.

The sudden intervention by the Sudanese forces, led by Sudanese defense minister, Awad Ibn Auf, to remove President Bashir from office is again fully in line with the Egyptian and Algerian examples. So-called democratic protests on the street have culminated in a showdown. Internal assessments by the Sudanese armed forces, and security forces have shown that the position of Bashir was unsustainable. International pressure and internal dissent have totally undermined the position of the Bashir clan, and Arab states didn’t bother to rescue the embattled dictator. These assessments have not been made in the Western press, as Europeans and Americans always seem to focus on the narrative of protesters chanting for freedom.

The facts on the ground are different. The current developments could well be qualified as a second “Arab Spring”, as it follows the same political and security story that we have seen before. President Bashir has been removed from office without a military confrontation between the Sudanese armed forces and the militant supporters of Bashir, the Janjaweed.

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Algeria Officially Launches Helicopter Money Amid Sliding Oil Revenue, Budget Crisis

September 17, 2017

Algeria Officially Launches Helicopter Money Amid Sliding Oil Revenue, Budget Crisis

One year ago, the imminent arrival of helicopter money among endless discussions of pervasive lowflation was all the rage within high-finance policy circles. Then, everything changed as if on a dime, and in recent months the dominant topic has been global coordinated tightening – and in some cases even revisions to central bank mandates and the lowering of inflation targets – perhaps as a result of central banks’ realization that monetizing debt by central banks leads to bad outcomes, not to mention global asset bubbles.

But not everywhere.

On Sunday, Algeria’s prime minister unveiled a plan to plug the country’s budget deficit as the the OPEC member state looks to offset lower oil revenue by directly borrowing from the central bank, while avoiding international debt markets. In other words, direct monetization of debt, which bypasses commercial banks as a monetary intermediate, and is better known as “helicopter money.”

According to Bloomberg, the five-year plan presented by Prime Minister Ahmed Ouyahia aims to balance the budget by 2022, and reverse a deficit that ballooned with the plunge in global crude prices, which also cut foreign reserves by nearly half.

“If we turn to external debt, as the IMF suggests, we will need to borrow $20 billion a year to repay the deficit and within four years we will be unable to repay the debt,” Ouyahia said. “This is what made the government look at non-traditional financing.”

With domestic debt currently around 20 percent of gross domestic product, Algeria has room to take on additional borrowing, the IMF has said. Earlier this month, the cabinet authorized the central bank to lend money to the Treasury to narrow the deficit. Businesses and importers would stand to benefit from a cash injection from the regulator, but analysts say the plan has risks.

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Low Oil Prices Could Break The “Fragile Five” Producing Nations

August 20, 2015

Low Oil Prices Could Break The “Fragile Five” Producing Nations

Persistently low oil prices have already inflicted economic pain on oil-producing countries. But with crude sticking near six-year lows, the risk of political turmoil is starting to rise.

There are several countries in which the risks are the greatest – Algeria, Iraq, Libya, Nigeria, and Venezuela – and RBC Capital Markets has labeled them the “Fragile Five.”

Iraq, facing instability from the ongoing fight with ISIS, has seen its problems compounded by the fall in oil prices, causing its budget to shrink significantly. The government is moving to tap the bond markets for the first time in years, looking to issue $6 billion in new debt.

Revenues have been bolstered somewhat by continued gains in production. Iraq’s oil output hit a record high in July at 4.18 million barrels per day, up sharply from an average of 3.42 million barrels per day in the first quarter of this year. But with Brent crude now dropping well below $50 per barrel, Iraq’s finances are worsening. According to Fitch Ratings, Iraq may post a fiscal deficit in excess of 10 percent this year, and all the savings accrued during the years of high oil prices have been depleted.

Related: EPA Cracking Down On U.S. Methane Waste

Other political problems loom for Iraq. The central government and the semiautonomous region of Kurdistan have been unable to resolve a dispute over oil sales. With revenues running low for the central government, it has failed to transfer adequate funds to the Kurdish Regional Government (KRG). That led to the breakdown of a tenuous deal between the two sides that saw Kurdish oil sold under the purview of the Iraqi government. The KRG is selling oil on its own now in an effort to obtain much needed revenue in order to pay private oil companies operating in its territory.

 

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Ron Paul Decries “Obscene” Paris Attack: Blames Bad Foreign Policy

January 8, 2015

Ron Paul Decries “Obscene” Paris Attack: Blames Bad Foreign Policy

“This is pretty obscene,” exclaims Ron Paul with regard the massacre in Paris, “libertarians are pretty annoyed by anybody who initiates violence.” But, he adds, “I put blame on bad policy that we don’t fully understand,” pointing out Western inability to see foreign policy from the attackers’ perspective, as “they see us killing innocent people… that doesn’t justify it… but it does explain it.”

As Breitbart notes, on Wednesday’s “The Steve Malzberg Show” on NewsMax TV, former Rep. Ron Paul (R-TX) tied the Paris shooting, along with other Western domestic terrorist attacks to the bad foreign policies of those countries.

“Partially what the Secretary of State said is true,” Paul said. “This is pretty obscene, when it comes to violence, and libertarians are pretty annoyed by anybody who initiates violence.

“The context of things, France has been a target for many, many years, because they’ve been involved in foreign affairs in Libya, and they really prodded us along in — recently in Libya, but they’ve been involved in Algeria, so they’ve had attacks like this, you know, not infrequently,” he added.

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