Institute of the Americas: XXVI La Jolla Energy Conference

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Since the early nineties, the Institute of the Americas at the University of California, San Diego campus has promoted an energy dialog bringing together top level executives, academics, consultants, hands on practitioners and journalists.  The exchange of information is always enlightening and the President and the staff of the Institute, especially Jeremy Martin, deserve kudos for promoting and organizing this important two-day meeting.

Here is the link to the event with the list of topics and of the distinguished speakers and panelists: https://www.iamericas.org/lajolla/

This year’s meeting could hardly have taken place at a better time.  The political economic crisis in Venezuela is ongoing, Brazil is in the midst of its second impeachment or presidential change in less than a year, Argentina’s new administration is seeking a more open and market oriented path for the use of its extensive oil/gas resources and suddenly, the small and often neglected Guyana is facing a surfeit of riches with the recent discovery of major offshore reserves.

The picture at the beginning of this text is of the panel: Brazil’s Energy Reset. On the left is Paulo Sotero, a journalist by trade and the Director of the Brazil Institute at the Woodrow Wilson International Center in Washington, D.C.  Seated with him are Rafael Ferreira of the state sponsored Energy Research Office and Andre Regra of Brazil’s regulatory ANP (Agencia Nacional do Petroleo).  Jay Thorseth, a Latin American Director for British Petroleum is between Andre and Rafael.

The perspectives from Brazil panel were quite representative of the other discussion at the Conference.  While each country has its particularities, representatives of the public sector, the private sector and academia or journalists showed unique perspectives.  Both Andre and Ricardo, for example, emphasized the reset of Brazil’s energy sector and hued pretty much to the government narrative.  Implicit in their presentations was the shift from a nationalistic PT (Brazilian Labor Party) perspective to greater market openness.  Both noted Brazil’s resumption of oil field auctions and the reduction of local content requirement that had previously put off many international investors and oil companies.  Jay Thorseth of BP, while polite and diplomatic, presented the private sector’s perspective, emphasizing the need for market realism.  Thorseth said governments need to favor foreign companies to be competitive and to access to capital, technology, knowledge and skills.  Auction and participation terms need to take into account Brazil’s need to be an attractive destination world-wide in terms of cost, profit and royalty payments.  If there are better deals elsewhere, then it is likely that the big oil companies or the so-called majors will favor these over a restricted Brazilian market.

Paulo Sotero started by remembering his previous writing on the major crisis and downfall of Brazil’s economic and political system.  This reminder, while obvious, became something of the elephant in the room.  Presenters with government ties were loath to recognize that their initiatives toward opening the energy sector depend not only on technocratic criteria but also on politics.  Thus, when Brazil’s President Temer departs, his replacement will reorder the chairs in the oil sector and in public companies like Petrobras and others in energy production and distribution.  Likewise in Mexico, President Pena Neto is in the last year of his term and essentially a lame duck.  If AMLO (Andres Manuel Lopez Obrador), a popular figure on Mexico’s left, is elected, Mexico’s energy reset will also certainly have a different orientation.   Representatives from Mexico’s public companies emphasized change in legislation in the hope of ongoing modernization and expansion of both oil and gas exploration and distribution in partnership with the private sector.  Optimistically speaking, resource nationalism is seemingly buried, but in Latin America it often rises phoenix like.  Private sector players must always be worried about institutional weakness as regulations and norms or the lack thereof thwart intentions.  Governments and businesses want to mobilize Latin America’s ample energy resources but this depends on the modernization, increased transparency, and durability of the rules of the game.  And these rules, in spite of promised advances, are still being negotiated.

The Conference provided a lot of detail on resources, processes, government action and private company plans.  The major discovery of oil in Guyana certainly will impact markets and already directly affects Venezuela and Brazil.

Finally, the presenters noted that even for traditional oil and gas players, alternative energy is now mainstream and has great significance and unlimited potential for development.  Nevertheless, petroleum and its derivatives will be the major source of energy for their economies for at least another generation.

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Trump: The Good, the Bad and the Very Ugly

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Good:

Republicans now own the shop.  They control the executive, the legislative and will choose the next U.S. Supreme Court justice who will unlock the current 4 to 4 balance.  The ball is theirs and they will have few excuses for any lack of success with their initiatives.

 

Trump now must perform after a campaign was based on reality TV. Trump has to figure out to address his stated priorities: healthcare, immigration and jobs.  He also has to follow through or totally back off on his trade and protectionist rhetoric.  While he can set up barriers, he cannot reverse globalization, especially when it comes to the flow of information.  The digital world will escape his control.  Ideologically, Trump, a self- confessed narcissist, will have a hard time facing up to and constructively dealing with all the multifaceted demands of the job.  There is a possibility that he could be impeached (numerous civil suits are ongoing) and, while remote, some woman could still bring evidence to press charges on sexual assault or some hidden tax fraud.

 

A final good thing that comes to mind is the absolute trashing of both the Republican and Democratic party structures.   The Democrats, expecting a relatively easy win over the unprofessional and “naïve” Trump, lost the Senate and the presidency as well as performing poorly across the country at the state and local levels.  The so-called Republican establishment is still coming to terms and like the Democrats must redefine their focus, who they represent and what they stand for.  Bernie Sanders is certainly pushing in this direction.  Trump, on the other hand, probably does not have the intellectual and political depth to reorder the Republican party.  This will be left to a struggle between the likes of say Paul Ryan, Speaker of the House, and the alt.right ringer Stephen Bannon who was Trump’s campaign CEO and now has been appointed Chief Strategist.  At any rate, the US political structure overall has lost its legitimacy especially with anyone younger than the baby-boomers and even with them so the process of rethinking could be healthy.

 

Bad: Trump’s promised economic policy of tax cuts for the rich will certainly increase the already large budget deficit (Reagan and other Republicans have done the same even though they decry debt).  His promised spending programs without increased government revenues will be inflationary.  His foreign and trade policies promise to create instability with the possibility of trade wars with China and Mexico.  Certainly his promise to slap high tariffs on imported products will inflate prices at Walmart where many of his voters like to shop.

 

Very Ugly: The Brazilian and other foreign press are already reporting assaults on minorities.  If Trump does not restrain his apparently enthusiastic support of the alt.right and their racially charged actions, things could get very ugly.  I don’t see Trump as a Fascist as he has not organized (as of yet) a party or movement to persecute those who don’t agree with him.  This could happen but it won’t take place without resistance.  It could get very ugly, but hopefully it won’t.  Trump has expressed himself as a sexist and for young women and girls this is an exceedingly poor example.  My own granddaughter reacted to him by saying: “He’s mean.”  That is not a good image for the President of the United States.

Of course, the major concern is that Trump could purposely or accidentally launch a nuclear war.  This is totally beyond the pale but when he says “bomb the shit” out of them, he fails to show restraint and responsibility.  His diplomacy thus far shows neither pragmatism nor practicality.  When people don’t have a sense of direction, guidance and response, most anything can happen.  Reportedly the Islamic State, Russia, Hungary and Zimbabwe are the foreign entities that have praised Trump as a positive, but it seems for their own cause and not let’s say world peace and commerce.

Obama, in step with the vast majority of the scientific community, signed the Paris Accord on climate change.  Trump promises to drop out.  If the scientific community is right, this will be a major setback that could have extremely negative consequences in the long term for our children and grandchildren.  Certainly, the debate is complex and convoluted and the climate deniers reflect the wider delegitimization of all things that have a waif of education, elitism, political correctness, and the traditional liberal (market economy) democratic (participatory) political structure.  American sociologist, Robert Bellah, wrote of civic religion and the “people’s” dedication to principles enshrined in the Constitution.  It is very ugly that political divisions have rent the shared values and it will be truly ugly if Trump pushes the country further in a direction of rich, white, parochial, nationalistic, racist, militaristic and macho ideas in his quest to make America “great” again.

Postscript:  I just watched Trump’s interview on 60 Minutes and if I were a supporter, I think I would be disappointed.  He backed off on Hillary, Obama, health care and even immigration and certainly had little to say about creating jobs for his rust-belt, white working class supporters.

 

Homicide in Brazil

Here is something to think about.  Personally, I recognize prudence in Brazil but have never let this be an invasive/pervasive concern in my day to day activities.  Violence while at times random is also largely predictable.  In that sense, yes you are at a greater risk in Brazil than say in Cape Cod.  Here is the article copied from the Huffington Post.

Robert Muggah

How to End Brazil’s Homicide Epidemic

Posted: 01/07/2014 4:56 pm

Co-authored by Daniel Mack*

As Brazilians hastily prepare for the 2014 World Cup, there is one competition the country has already won by a landslide: homicides. Almost one out of every ten people violently killed each year on the planet were residents of Brazil. With over 47,000 reported homicides in 2012, it is one of the most violent countries on earth. The homicide rate has risen steadily since the 1980s, reaching 21 per 100,000 people in recent years, with some analysts claiming it is likely higher. The latest polls indicate that up to three quarters of Brazilians fear they could be victims of murder in the coming year. Strangely, the government lacks a national strategy to tackle this epidemic.

As disconcerting as they are, national statistics conceal hugely diverging variations in victimization at the state and city levels. A recent seminar on gun homicides found that residents of the northeastern state of Alagoas die in much greater numbers than in the rest of the country – some 110 per 100,000, an increase of 185% over the past few years. If Alagoas were a country, it would surpass Honduras as the most violent nation in the world. Meanwhile, states like São Paulo, while still experiencing severe violence, witnessed dramatic reductions in homicide – over 70% in the last decade.

While the exact proportion varies by state, at least three quarters of all murders are committed with firearms, an overwhelming majority of which involves revolvers and pistols made in Brazil. Other characteristics of homicide and criminal violence remain constant across Brazil. For one, the vast majority of victims – over 90% – are poor young men, the majority of color. And most of the known perpetrators are also males between 18-30 years of age heralding from low-income settings, including favelas.

Disturbingly, in 80% of solved cases, both victims and perpetrators knew one another. Most victims were also killed close to home. Perhaps most disconcerting is the fact that Brazilian (military) police kill more citizens than in virtually any other country in the world. Far from being dispersed and spontaneous, violence is geographically and demographically concentrated – and thus predictable.

The good news is that there are concrete steps that Brazilian decision-makers, business leaders and civil society can take to reverse this violence epidemic. As frightening a scenario as this is, lethal violence is preventable. Just like an illness, it can be diagnosed, treated and cured. What is needed is a comprehensive approach informed by evidence rather than ideology. Such a strategy must incorporate data-driven, law enforcement and preventive strategies. And to be sustainable, they should be accorded genuine political support and resources among federal and local decision-makers. If pursued with seriousness and enthusiasm, they would elevate citizen security as both a means and an end in itself.

A comprehensive approach would include intelligence-led “smarter” policing focused on hot spots where violence concentrates. Strategies would be based on credible information and analysis, including the sources, trafficking routes, and misuse of illicit firearms and ammunition. Preventive and proximity-oriented policing strategies would also need to tackle areas where young people agglomerate, not least nightclubs and bars. While intuitive, smarter interventions cannot emerge out of thin air. They will require a major shift in the organization, management and training of the police.

Just as important, an integrated strategy needs to privilege violence prevention as core priority of public security and safety. Alongside policing, social and economic policies must be developed that targeted young people who make up the largest share of perpetrators and victims of homicide. Preventive interventions should include efforts to manage excessive alcohol consumption and programs to treat and rehabilitate those involved with drugs (rather than incarcerating them as currently the case). They will also require engaging with new information technologies, together with old ones, including improved street lighting and neighborhood watch campaigns.

Homicidal violence is a barometer of the wider health of a society and the commitment of governments to guaranteeing its safety and well-being. By almost every measure, Brazil is a sickly patient and its public authorities are errant doctors. Yet Brazilians can end this tragedy. To do so will require the construction of a comprehensive and forward-looking public security policy in 2014. If Brazilians decide to face-up responsibly to the scale of the problem and start a mature discussion, the healing can begin.

*Robert Muggah is the research director of the Rio de Janeiro-based Igarapé Institute and is also a Fellow of the Canadian Defence and Foreign Affairs Institute. Daniel Mack is a senior adviser to the São Paulo-based Instituto Sou da Paz.