August 19, 2016
NEED TO KNOW
Venezuela’s Oil Troubles
Oil prices may finally be set to rise. But desperate Venezuela won’t gain much from the potential lifeline, despite holding the world’s largest crude reserves.
Shortly after Venezuela opened its border with Colombia for the first time in over a year last week to allow its frantic citizens to cross over and forage for much-needed supplies, oil prices extended their rise above $44 a barrel in the largest weekly increase since April this week. By Friday, the Brent benchmark of international crude-oil prices had topped $50 a barrel, while US crude prices topped $48 a barrel, also nearing the important psychological threshold.
The reason: Oil giants like Saudi Arabia have signaled that they may intervene to stabilize markets during informal discussions of the Organization of the Petroleum Exporting Countries (OPEC) next month, according to Bloomberg. And beleaguered Venezuelan President Nicolas Maduro has already said he will visit producer countries to lobby for price increases before the talks.
The problem is higher prices alone may not be enough to stop the bleeding.
In Venezuela’s capital of Caracas, families are having such a hard time finding food that “they’re basically spending all day in bed just to save calories,” Associated Press reporter Hannah Dreier told NPR in a recent interview. Young women are opting to undergo surgical sterilization because condoms and birth control pills have virtually disappeared from stores, and the cost of raising an infant is simply unthinkable, The Globe and Mail reported. Even reports of infanticide are increasing.
“It’s like every social norm has broken down, and it’s really shocking to see because until just recently, this was the richest country in South America,” Dreier said.
Even if oil prices rise to $50 a barrel, that will be a far cry from those days – when prices topped $100 a barrel. But almost no conceivable price increase could solve Venezuela’s most immediate crisis – there’s no food because government-controlled pricing in the high times made it unprofitable to grow it locally. Moreover, the crude-rich country is poorly positioned to capitalize on the increase, as it’s on pace to suffer its steepest annual oil output drop in 14 years, according to Reuters.
Over the past year or so, Venezuela’s crude output fell 9 percent to 2.36 million barrels per day because state-run Petroleos de Venezuela (PDVSA) didn’t have the funds to pay its suppliers or invest in equipment, the agency said. Over the same period, OPEC has boosted its output by 4 percent.
The agency quoted oil workers as saying equipment theft, maintenance delays, low salaries, and a sense of “abandonment” of some oilfields have also hit production. As a result, analysts forecast that production will not recover in the second half of the year, falling instead to its lowest level since 2003.
That production shortfall is a quandary for Venezuela, and not just because it prevents the country from maximizing revenue from crude sales. Projections of low output are actually one of the main reasons that experts think oil prices will rise, according to CNN Money. At the same time, Saudi Arabia’s moves to boost its August output to a new record in advance of the OPEC meeting is prompting skepticism that the increase will hold, writes CNBC.
Meanwhile, the ongoing humanitarian crisis has already reached America’s doorstep, Mother Jones reports.
The combination of the constant scramble to find food and medicine and a crackdown by Maduro in a last ditch effort to retain power has resulted in a surge of asylum requests from a country described as “the world’s most visibly failing state” by Venezuelan journalist Francisco Toro.
By the last count, asylum requests from Venezuela have zoomed past 10,000 in fiscal 2016, an increase of 168 percent compared with the year before, the magazine writes.
WANT TO KNOW
Russia Looming Larger
Russia is building up its military presence on its western border with Ukraine by adding tens of thousands of soldiers to newly built installations within easy striking distance of its western-leaning neighbor.
The deployment of these troops on the Ukrainian border is part of a wider military strategy to counter perceived threats from the North Atlantic Treaty Organization (NATO), said the Kremlin. At the same time, Moscow is heightening its confrontational stance over the Crimean Peninsula in the Black Sea, which it controversially annexed in 2014.
The increased number of troops is Moscow’s attempt to build a more permanent and robust military presence around Ukraine, where it continues to implement covert military operations to influence the Ukrainian government, said analysts.
Meanwhile, German Chancellor Angela Merkel said in an interview Friday that there is no reason for the European Union to lift its sanctions against Russia, as the country has not fulfilled its obligations under the Minsk peace plan to introduce a ceasefire between Russia and Ukraine.
Alliance of Foes?
Kurdish rebels from the Kurdistan Workers’ Party (PKK) are being held responsible for a series of bombings across Turkey Thursday that killed at least 14 people and wounded over 220 others, said Turkish officials.
The attacks targeted Turkey’s security forces. Two of the bombings struck police stations in eastern Turkey, while a third bomb was directed at a military vehicle carrying soldiers in southeastern Turkey.
The bombings are part of a wider campaign by the PKK against Turkey’s security forces, said Turkish authorities. Last week, the leader of the PKK threatened to increase its attacks against police in cities across Turkey.
The PKK has been fighting the Turkish government for self-determination for the country’s Kurdish minority since 1984.
The attacks come at a time when Turkey is cracking down on followers of the Gülenist movement suspected of being behind last month’s failed military coup.
Turkish officials attempted to draw connections between the PKK and the Gülen movement following Thursday’s attacks.
“The (Gülen movement) has lost its assertiveness and has handed over the duty to the (PKK),” said Turkish Prime Minister Binali Yildirim. “The intelligence that directs them is the same. When one’s duty ends, the other takes up the duty.”
Drones and Defenses
Japan wants to develop a prototype drone fighter jet within the next two decades as part of a wider technology strategy focusing on weapons communications and lasers.
The military technology plan – which incorporates help from the Japanese private sector – calls for unmanned surveillance aircraft to be developed within the next decade and unmanned fighter jets to be developed 10 years later.
Japan’s Defense Ministry will announce the plan later this month as it also unveils a request for a record $51 billion defense budget for 2017.
That budget marks the fifth annual increase sought by Japan’s Defense Ministry as it attempts to upgrade Japan’s defenses amid rising tensions in the East China Sea and the ongoing threat posed by upgrades to North Korea’s ballistic missile technology.
But some analysts say that even these record-breaking expenditures are insufficient to address these concerns.
“The security environment surrounding Japan is severe, due to neighboring North Korea and China,” one security expert told Reuters. “I personally think it’s not enough.”
Roll Around the Clock
For many Londoners and tourists alike, a night out in the British capital often ends with a frantic dash to catch the last Tube train home – even on the weekends.
But that is set to change this weekend with the long-awaited and oft-delayed launch of the Night Tube – around the clock Tube service on Friday and Saturday nights – on two lines of the London Underground.
It’s a first for the 153-year-old underground transit system – the world’s oldest – and it puts it in a league with other 24-hour systems like New York’s MTA.
New Yorkers have long enjoyed the benefits of around the clock subway service because New York’s subway runs on a four-track system, enabling trains to run 24 hours a day even as maintenance works are carried out on the system.
By contrast, the London Underground runs mainly on a single-track system, requiring entire lines to be shut down at night and on the weekends for repair work, said Transport for London, the government body responsible for the London Underground, on its website.
But the continuous modernization of parts of the Underground network have now made 24-hour service feasible, it added.
The Night Tube will be first rolled out on the Central and Victoria Lines, which serve stations at landmarks like St. Paul’s Cathedral and Oxford Circus, before being expanded to the Jubilee, Northern and Picadilly lines this autumn, according to the Telegraph.