Category Archives: Markets

China and Australia: the coal and iron trade

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Western Australia iron ore mining. Image from wikipedia

China’s demand for iron and coal has helped to turn it into Australia’s biggest trading partner and to keep Australia more economically robust than most other rich countries. But in some parts of the country the new relationship with China came as a reminder of the unwelcome side-effects of the boom... Chinese trade not only helped Australia survive the global downturn. It has also boosted the currency’s strength, and made it harder for manufacturers to find markets for their exports. The problem is unevenly distributed around the country. South Australia has suffered the greatest pain: in no other state does manufacturing account for such a big share of the economy.... Five years ago, Mitsubishi closed its plant in Adelaide. Australia’s remaining carmakers, Holden, Ford and Toyota, have shed jobs steadily since then. Australians are buying imported cars more cheaply than ever, especially from Japan; their dollar has risen by 26% against the yen since October.  Even wine, South Australia’s third-biggest export, has suffered: exports in fiscal 2012 dropped in value by A$62m ($65m), or 2%. Codan, an electronics company based in Adelaide, has done better. By making many high-tech products in Malaysia, it has been able to protect itself from the strong Aussie dollar.

The Australian dollar: Resources boomerang, Economist, Apr. 20, 2013, at 44

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State Capitalism at its Best: US Support for the Biotechnology Industry

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These transgenic plums called C5 contain a gene that makes them highly resistant to plum pox virus. Image from wikipedia

American diplomats lobbied aggressively overseas to promote genetically modified (GM) food crops such as soy beans, an analysis of official cable traffic revealed on Tuesday.  The review of more than 900 diplomatic cables by the campaign group Food and Water Watch showed a carefully crafted campaign to break down resistance to GM products in Europe and other countries, and so help promote the bottom line of big American agricultural businesses.

The cables, which first surfaced with the Wikileaks disclosures two years ago, described a series of separate public relations strategies, unrolled at dozens of press junkets and biotech conferences, aimed at convincing scientists, media, industry, farmers, elected officials and others of the safety and benefits of GM products..The public relations effort unrolled by the State Department also ventured into legal terrain, according to the report. US officials stationed overseas opposed GM food labelling laws as well as rules blocking the import of GM foods. The report notes that some of the lobbying effort had direct benefits. About 7% of the cables mentioned specific companies, and 6% mentioned Monsanto. "This corporate diplomacy was nearly twice as common as diplomatic efforts on food aid," the report said....

In some instances, there was little pretence at hiding that resort to pressure – at least within US government circles. In a 2007 cable, released during the earlier Wikileaks disclosures, Craig Stapleton, a friend and former business partner of George Bush, advised Washington to draw up a target list in Europe in response to a move by France to ban a variety of GM Monsanto corn.  "Country team Paris recommends that we calibrate a target retaliation list that causes some pain across the EU since this is a collective responsibility, but that also focuses in part on the worst culprits," Stapleton wrote at the time."The list should be measured rather than vicious and must be sustainable over the long term, since we should not expect an early victory. Moving to retaliation will make clear that the current path has real costs to EU interests and could help strengthen European pro-biotech voices," he wrote.

Excerpts, Suzanne Goldenberg,Diplomatic cables reveal aggressive GM lobbying by US officials, Guardian, May 15, 2013

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The Nuclear Village in Japan: restarting nuclear power

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anti-nuclear protest japan 2011. image wikipedia

After an earthquake and tsunami created a creeping nuclear catastrophe two years ago the Democratic Party of Japan (DPJ) said it would get the country out of nuclear energy by 2040. Although it quickly backtracked, almost all of Japan’s 50 commercial reactors are still lying idle.

In February this year (2013), Shinzo Abe, leader of the then incoming Liberal Democratic Party (LDP), said the new government would restart reactors after they passed a forthcoming set of new safety tests. The country’s “nuclear village”, a cosy bunch from industry and government, cheered. But now the stricken Fukushima Dai-ichi plant is starting to alarm the public once more. On April 15th, 2013 the International Atomic Energy Agency (IAEA), a UN body, flew in to investigate a series of dangerous incidents.

A power outage in March (2013) left four underground pools that store thousands of the plant’s nuclear fuel rods without fresh cooling water for several hours. A rat, it later emerged, had gnawed through a cable. Workmen laying down rat-proof netting caused another outage. Then this month regulators discovered that thousands of gallons of radioactive water had seeped into the ground; the plant’s operator had installed a jerry-rigged system of plastic sheeting, which sprang leaks. The quantity of contaminated water has become a crisis in its own right, the manager has admitted. And now the pipes used to transfer water to safer storage containers are leaking too.

Experts who examined the causes of the 2011 catastrophe reckon the LDP has paid too little attention to what went wrong. Kiyoshi Kurokawa, the chairman of a parliamentary investigation, says the country may be moving “too hastily back towards nuclear power, without fully regaining the trust of the Japanese public and the international community”. Yoichi Funabashi, a former editor of Asahi Shimbun newspaper who headed a private-sector investigation, says it is unfortunate that the 2012 election, which brought the LDP back to office, did not include a proper debate about the future of nuclear energy.

Now the set of policies known as “Abenomics” is making a return to nuclear power ever more pressing. The LDP is expected to push hard to restart plants if it wins a crucial election for the upper house of parliament this summer. Mr Abe’s focus on the economy has given greater say to the voice of business, including the big utilities whose plants are idle. Smaller firms clamour for cheaper power too.

Japan’s broader economic future may be at stake... [the deterioration of  overall current-account balance]  could affect Japan’s ability to keep funding its huge public debt domestically. A big cause is the cost of energy imported to fill the gap left by nuclear power. A weaker yen, the result of the central bank’s radical loosening of monetary policy, is further pushing up the price of imported oil and gas...[T]he public is still afraid of nuclear power. A nationwide poll  in February 2013 found that around 70% of respondents wanted either to phase out all the plants, or to shut them down immediately. Opposition is likely to be strongest at the local level, as regions move to switch their reactors back on. This week an Osaka court ruled on a suit brought by local residents to have Japan’s only two operating reactors, at the Oi plant in Fukui prefecture, shut down. They lost, but their suit looks like only the first of many battles

Japan’s nuclear future: Don’t look now, Economist, Apr. 20, 2013, at 44.

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The Lure of Impossible: Choking Uranium Markets

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The Rössing Uranium Mine in Namibia

Making nuclear weapons requires access to materials—highly enriched uranium or plutonium—that do not exist in nature in a weapons-usable form.   The most important suppliers of nuclear technology have recently agreed guidelines to restrict access to the most sensitive industrial items, in the framework of the Nuclear Suppliers Group (NSG). Nevertheless, the number of countries proficient in these industrial processes has increased over time, and it is now questionable whether a strategy based on close monitoring of technology ‘choke points’ is by itself a reliable barrier to nuclear proliferation.  Time to tighten regulation of the uranium market?

Not all the states that have developed a complex nuclear fuel cycle have naturally abundant uranium. This has created a global market for uranium that is relatively free—particularly compared with the market for sensitive technologies....

Many African states have experienced increased investment in their uranium extractive sectors in recent years. Many, though not all, have signed and ratified the 1996 African Nuclear Weapon Free Zone (Pelindaba) Treaty, which entered into force in 2009. Furthermore, in recent years, the relevant countries have often worked with the IAEA to introduce an Additional Protocol to their safeguards agreement with the agency...

One proliferation risk inherent in the current system is that inadequate or falsified information connected to what appear to be legitimate transactions will facilitate uranium acquisition by countries that the producer country would not wish to supply....

A second risk is that uranium ore concentrate (UOC) is diverted, either from the site where it was processed or during transportation, so the legitimate owners no longer have control over it. UOC is usually produced at facilities close to mines—often at the mining site itself—to avoid the cost and inconvenience of transporting large quantities of very heavy ore in raw form to a processing plant.,,,UOC is usually packed into steel drums that are loaded into standard shipping containers for onward movement by road, rail or sea for further processing. The loss of custody over relatively small quantities of UOC represents a serious risk if diversion takes place regularly. The loss of even one full standard container during transport would be a serious proliferation risk by itself. There is thus a need for physical protection of the ore concentrate to reduce the risk of diversion at these stages.

A third risk is that some uranium extraction activity is not covered by the existing rules. For example, uranium extraction can be a side activity connected to gold mining or the production of phosphates. Regulations should cover all activities that could lead to uranium extraction, not only those where uranium extraction is the main stated objective.

Restricting access to natural uranium could be an important aspect of the global efforts to obstruct the spread of nuclear weapons...

Excerpts, from  Ian Anthony and Lina Grip, The global market in natural uranium—from proliferation risk to non-proliferation opportunity, SIPRI, Apr. 13, 2013

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Suing Multinational Corporations in US Courts: Kiobel v. Shell

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oil pollution

The Alien Tort Statute (ATS)... grants American district courts jurisdiction over “any civil action by an alien for a tort only, committed in violation of the law of nations or of a treaty of the United States”. At the age of 190 it sprang back to life on April 6th 1979, when it was used to allow two Paraguayans to sue a former Paraguayan policeman in an American court for acts of torture committed in Paraguay.Since then, roughly 150 lawsuits have been filed against American and foreign corporations for actions committed around the world. Four local plaintiffs used the ATS to sue Unocal in a federal court in Los Angeles for human-rights violations allegedly committed during the construction of an oil pipeline in Myanmar. A human-rights organisation used it to sue Yahoo on behalf of two Chinese democracy activists for actions committed in China by a subsidiary. ATS suits against DaimlerChrysler and Rio Tinto, among others, are pending. Though most ATS cases have been dismissed or settled, the costs of settlements can be high and the negative publicity damaging.

Multinational companies will therefore cheer the Supreme Court’s unanimous decision in Kiobel v Royal Dutch Petroleum (Shell), released on April 17th, 2013. It dramatically limits the ability of plaintiffs to file suit against corporations in American courts for actions committed abroad.  The ruling stems from a case brought in New York by 12 Nigerian plaintiffs living in America. They allege that Shell was complicit in human-rights violations—including murder, rape, theft and destruction of property—committed by Nigeria’s armed forces in the region of Ogoniland. A federal appeals court dismissed their suit, arguing that the ATS provides no grounds for corporate-liability lawsuits. But as the 150 ATS suits show, other courts have disagreed. The Supreme Court agreed to hear the case in order to settle the question.

In an earlier ruling, in 2004, the court cautiously ruled that the ATS permitted lawsuits for “a modest number of international law violations”, such as piracy and crimes involving ambassadors, which would have been recognised when it was adopted. The court’s Kiobel ruling goes much further. It holds that the ATS does not apply to actions committed by foreign companies, and noted a strong presumption against applying American law outside the United States, “There is no indication,” wrote John Roberts, the chief justice, “that the ATS was passed to make the United States a uniquely hospitable forum for the enforcement of international norms”.  In a separate concurrence, four of the court’s liberals took a slightly softer tack, arguing that the ATS should allow suits that prevent America from becoming “a safe harbour…for a torturer or other common enemy of mankind”. But that reasoning still does not permit foreign nationals to use American courts to sue foreign companies for acts committed on foreign soil.

Extraterritoriality: The Shell game ends, Economist, Apr. 20, 2013, at 34

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How to Write History: CIA Deletes Scenes from Zero Dark Thirty film

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ZeroDarkThirty2012Poster

In January (2013) the US Senate intelligence committee launched an investigation into whether Bigelow and screenwriter Mark Boal were granted "inappropriate access" to classified CIA material following concern from high-profile members over the film's depiction of torture in the search for the al-Qaida chief. The probe was dropped in February....

However according to Gawker it has now emerged that the CIA did successfully pressure Boal to remove certain scenes from the Zero Dark Thirty script, some of which might have cast the agency in a negative light. Details emerged in a memo released under a US Freedom of Information Act request. It summarises five conference calls held in late 2011 for staff in the agency's Office of Public Affairs (OPA) "to help promote an appropriate portrayal of the agency and the Bin Laden operation".

Several elements of the draft screenplay for Zero Dark Thirty were changed for the final film upon agency request, according to the memo. Jessica Chastain's Maya, the film's main protagonist, was originally seen participating in an early water-boarding torture scene, but in the final film she is only an observer. A scene in which a dog is used to interrogate a suspect was also excised from the shooting script. Finally a segue in which agents party on a rooftop in Islamabad, drinking and shooting off an AK47 in celebration, was also removed upon CIA insistence. This was agreed to despite the documented use of aggressive dogs in US interrogations of terror suspects at Guantánamo Bay in the early days of George W Bush's war on terror, and despite some of the photographs from the later Abu Ghraib scandal featuring dogs menacing naked prisoners.

The memo appears to confirm suspicions of a cosy relationship between the CIA and Boal, with the agency confident it would be portrayed positively due to the level of help it had provided to the film-makers. "As an agency, we've been pretty forward-leaning with Boal," a CIA staff member wrote to colleagues in documents released last year. "He's agreed to share scripts and details about the movie with us so we're absolutely comfortable with what he will be showing."

Excerpts, Ben Child, CIA requested Zero Dark Thirty rewrites, memo reveals, Guardian, May 7, 2013

CIA Memo

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United States Special Operations in 30 African Countries

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burkina faso

The United States Army's Transportation Command (US-TRANSCOM) is looking for private flight contractors to transport commandos from the Joint Special Taskforce Trans-Sahara as they conduct 'high risk activities' in 31 African countries.The pre-solicitation notice, issued by the US-TRANSCOM on 1 April, says the contractor will need to conduct air drops, fly commandos in and out of hostile territory and carry out short notice medical evacuation between 12 August 2013 and 27 June 2017. A 10.5 month base period will start in August this year to be followed by three one-year option periods.  [This is]  under the auspices of the US military’s Africa Command, under which the Joint Special Operations Task Force – Trans Sahara (JSOTF-TF) falls.

TRANSCOM is looking for aircraft able to carry at least six passengers and 2 500 pounds of cargo. From the US intelligence hub located in a military airfield in Ouagadougou, Burkina Faso....."Services shall be based at Ouagadougou, Burkina Faso, with services provided to, but not limited to, the recognized political boundaries of Algeria, Burkina Faso, Cameroon, Central African Republic, Chad, Democratic Republic of the Congo, Ethiopia, Kenya, Libya, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, Sudan, South Sudan, Tunisia, and Uganda, as dictated by operational requirements. It is anticipated the most likely additional locations for missions from the above list would be to: Algeria, Burkina Faso, Cameroon, Chad, Libya, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, and Tunisia," the Transcom work statement reads.

The expansion of US commando operations is focused on confronting the threat posed by Sahelian and sub-Saharan terror groups which include Al Qaeda in the Islamic Maghreb (AQIM), Ansar al Dine and the Movement for Oneness and Jihad in West Africa (MUJAO), which operate in nearly all north and north-west African countries. The operations are also aimed at confronting Al Qaeda inspired Nigerian Islamist militant groups Boko Haram and its more radical splinter movement Jamā atu Anṣāril Muslimīna fī Bilādis Sūdān (Vanguard for the Protection of Muslims in Black Africa), better known as Ansaru.

In East and Central Africa, the US special forces operations will target renegade rebel groups such as the Lord's Resistance Army (LRA) and its leader Joseph Kony, Al Shabaab in Somalia, Islamic militant sleeper cells in the coastal areas of Kenya and Tanzania and various regional rebel groups operating in the eastern Democratic Republic of Congo. In yet another sign of intensifying US military and security interest in Africa, the US Defence Logistics Agency on April 12 issued a request for bids to provide the US Air Force with 547,500 gallons of No. 2 diesel fuel “for ongoing deliveries to Niamey Airport, Niger, (Africa)."The fuel is intended for a fleet of unarmed US Predator drones which are presently flying intelligence and surveillance missions from a military airport in Niamey into Mali, Niger, Nigeria, Mauritania, Algeria and other suspected terrorist locations in the Sahel.

Since 2009, private flight contractors engaged by US special operations forces have been operating Pilatus PC-12s on intelligence gathering and image collection missions over Uganda, Sudan, South Sudan, Central Africa Republic and other Central African states from a small airport located near the Ugandan city of Entebbe. 

Excerpt, Oscar Nkala, US Army seeking private contractors for African commando transportation, www.defenceweb.co.z, May 7, 2013

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Lethal Autonomous Robotics (LARs) a.ka. Drones: the nanosecond decision to kill

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harpy fire and forget

These are excerpts from the report of the UN Special Rapporteur Christof Heyns,  Apr. 9, 2013

What are Lethal Autonomous Robotics?

Robots are often described as machines that are built upon the sense-think-act paradigm: they have sensors that give them a degree of situational awareness; processors or artificial intelligence that “decides” how to respond to a given stimulus; and effectors that carry out those “decisions”. ...   Under the currently envisaged scenario, humans will at least remain part of what may be called the “wider loop”: they will programme the ultimate goals into the robotic systems and decide to activate and, if necessary, deactivate them, while autonomous weapons will translate those goals into tasks and execute them without requiring further human intervention. Supervised autonomy means that there is a “human on the loop” (as opposed to “in” or “out”), who monitors and can override the robot‟s decisions. However, the power to override may in reality be limited because the decision-making processes of robots are often measured in nanoseconds and the informational basis of those decisions may not be practically accessible to the supervisor. In such circumstances humans are de facto out of the loop and the machines thus effectively constitute LARs.

Examples of  Lethal Autonomous Robotics

  • The US Phalanx system for Aegis-class cruisers automatically detects, tracks and engages anti-air warfare threats such as anti-ship missiles and aircraft.
  • The US Counter Rocket, Artillery and Mortar (C-RAM) system can automatically destroy incoming artillery, rockets and mortar rounds.
  • Israel‟s Harpy is a “Fire-and-Forget” autonomous weapon system designed to detect, attack and destroy radar emitters.
  • The United Kingdom Taranis jet-propelled combat drone prototype can autonomously search, identify and locate enemies but can only engage with a target when authorized by mission command. It can also defend itself against enemy aircraft.
  • The Northrop Grumman X-47B is a fighter-size drone prototype commissioned by the US Navy to demonstrate autonomous launch and landing capability on aircraft carriers and navigate autonomously.
  • The Samsung Techwin surveillance and security guard robots, deployed in the demilitarized zone between North and South Korea, detect targets through infrared sensors. They are currently operated by humans but have an “automatic mode”.

Advantages of Lethal Autonomous Robotics

LARs will not be susceptible to some of the human shortcomings that may undermine the protection of life. Typically they would not act out of revenge, panic, anger, spite, prejudice or fear. Moreover, unless specifically programmed to do so, robots would not cause intentional suffering on civilian populations, for example through torture. Robots also do not rape.

Disadvantages of Lethal Autonomous Robotics

Yet robots have limitations in other respects as compared to humans. Armed conflict and IHL often require human judgement, common sense, appreciation of the larger picture, understanding of the intentions behind people‟s actions, and understanding of values and anticipation of the direction in which events are unfolding. Decisions over life and death in armed conflict may require compassion and intuition. Humans – while they are fallible – at least might possess these qualities, whereas robots definitely do not.

Full Report PDF

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Foreign Corporate Immunity: Chevron/Canada against Ecuador

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A Toronto judge halted on May 1, 2013 an effort to enforce a $19 billion Ecuadorean judgment against U.S. oil company Chevron Corp in Canada, finding that his Ontario provincial court was the wrong place for the case.  The action is the latest skirmish in a two-decade conflict between Chevron and residents of Ecuador's Lago Agrio region over claims that Texaco, which Chevron acquired in 2001, contaminated the area from 1964 to 1992.

Citing Chevron's promise to fight the plaintiffs until "hell freezes over, and then fight it out on the ice," Justice David Brown of the Ontario court foresaw a "bitter, protracted" battle that would be costly and time consuming.  "While Ontario enjoys a bountiful supply of ice for part of each year, Ontario is not the place for that fight," Brown wrote in his ruling on Wednesday. "Ontario courts should be reluctant to dedicate their resources to disputes where, in dollars and cents terms, there is nothing to fight over."

Alan Lenczner, principal lawyer in Toronto for the Ecuadorean plaintiffs, said they would definitely appeal, arguing that a multinational company could not be immune from enforcement in a country where it earns so much. "Chevron Corp itself earns no money," he said in a statement. "All its earnings and profits come from subsidiaries including, importantly, Chevron Canada."  Chevron Canada's assets are worth more than $12 billion, the plaintiffs had said, and alongside separate actions in Argentina and Brazil, they had sought to persuade the Ontario court to collect the damages awarded to them by the South American court.

Chevron, the second-largest U.S. oil company, has steadfastly refused to pay, saying the February 2011 ruling by the court in Lago Agrio was influenced by fraud and bribery. A related fraud case goes to trial in New York in October.  The Supreme Court of Canada has ruled that the country's courts can recognize and enforce foreign judgments in cases where there is a "reasonable and substantial connection" between the cause of the action and the foreign court. Chevron called Brown's ruling a "significant setback" to the Ecuadoreans' strategy of seeking enforcement against subsidiaries that were not parties to the Ecuador case.  "The plaintiffs should be seeking enforcement in the United States - where Chevron Corporation resides. In the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial tainted by fraud," Chevron said in a statement. Last month, a consulting firm whose work helped lead to the $19 billion award against Chevron disavowed some environmental claims used to obtain the judgment.

Excerpt, Judge halts Chevron-Ecuador enforcement action in Canada, Reuters, May 1, 2013

See also how Chevron Destroyed the Paper Trail

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The Politics of Fighting Biopiracy: European Union

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Pelargonium Sidoides. Image from wikipedia

The European Union is debating a biopiracy law requiring industry to compensate indigenous people if it makes commercial use of local knowledge such as plant-based medicines.  Under the law - based on the international convention on access to biodiversity, the Nagoya protocol - the pharmaceuticals industry would need the written consent of local or indigenous people before exploring their region’s genetic resources or making use of their traditional know-how. Relevant authorities would have the power to sanction companies which failed to comply, protecting local interests from the predatory attitude of big European companies.

A German pharmaceutical company's dealings in South Africa [is an example of biopiracy].  Pelargonium sidoides, a variety of geranium known for its antimicrobial and expectorant qualities, has been used traditionally by indigenous communities in South Africa for centuries to treat bronchitis and other respiratory diseases. It also stimulates the nervous system, so has been used in the treatment of AIDS and tuberculosis.  In 2000, the German company Schwabe made significant profits on Umckaloabo, a product derived from the geranium, without compensating local communities. It then filed patents claiming exclusive rights to the medical use of the plant.

But in 2010 the patents were cancelled following appeals from the African Centre for Biosafety in South Africa and the Bern Declaration in Switzerland, calling the patents “an illegitimate and illegal monopolization of genetic resources derived from traditional knowledge and a stark opposition to the Convention on Biodiversity.”...[The] law would help protect biodiversity and ensure that the people from the region are adequately compensated for their resource and their traditional know-how. ...The need to ensure the property rights of indigenous populations becomes more pressing as industry looks more and more to plant and animal-based cures to common diseases.Only 16 countries have ratified the Nagoya protocol. The European Union and its 24 of its 27 member states have signed the convention, but are yet to ratify it. When they do, Nagoya should soon reach the 50 states needed for it to come into force...  “The 16 states are countries in the South...

Excerpts, EU ponders biopiracy law to protect indigeneous people, EurActiv, April 26,  2013

See also EU portal on Biodiversity and Benefits Sharing

See also article on Alice v. Schwabe

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