Cyprus and the Eastern Med Heating Up

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Yesterday in Washington the House of Representatives voted to end the thirty-two year old US arms embargo on Cyprus. The move came as part of the annual defense authorization bill, which has already made it through the Senate. Later in the afternoon the House passed a compromise foreign aid package that increases security aid for Cyprus, and censures Turkey for its oil, and natural gas exploration activities off the coast of Cyprus. The Turkish foreign ministry  responded with a statement warning that the US move “will have no outcome other than hampering efforts towards a settlement on the island and creating a dangerous escalation.” US-Turkish relations are at their lowest point in years and threaten to deteriorate further as a result of Turkey’s activities in Libya, Cyprus, and in the waters of the Eastern Mediterranean.

The settlement mentioned in the foreign ministry’s statement refers to the fact Cyprus has been a divided island since 1974 when Turkey invaded in response to a coup backed by the Greek government. Cyprus has been gaining international attention recently as oil, and gas exploration off its coast threatens to bring about a new crisis. Turkey has been at odds with Greece, Cyprus, and Israel since signing an agreement with Libya that claims extensive areas of sea between the two nations for Turkey. This deal violates international law, and undercuts claims made by Greece, and Cyprus. On Monday, a Turkish UAV landed in northern Cyprus, known as the Turkish Republic of Northern Cyprus. This comes after an Israeli research vessel was intercepted in Cypriot waters by Turkish warships and escorted out of the area.

The deal between Turkey and Libya has raised tensions in the region. If the Libyan government collapses it will be interesting to see how Ankara responds, and how it will affect the oil and natural gas scramble now going on in the Eastern Med.

Will Venezuela Become Another Libya?

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The past weekend’s violence on Venezuela’s borders with Colombia, and Brazil has prompted some analysts, and journalists to openly wonder if the time is coming for US military intervention in Venezuela. At first glance, this does appear to be a fair question to ask given the positions the Trump administration has taken on the Venezuelan crisis, and the Maduro regime. Venezuela is approaching the status of being a ‘Failed State.’ The economy is in ruins, citizens are fleeing the country by the tens of thousands, and just beneath the surface a civil war is brewing. As the pressure on Caracas rises, Maduro’s actions are becoming more violent, and less predictable. Citizens who openly defy him and attempt to bring relief supplies into the country are being targeted by paramilitary squads. This led to the bloodshed and violence over the weekend.

The US has a history of using the ‘Failed State’ argument to justify intervening militarily in the affairs of nation-states that were, for lack of a better term, about to go down the tubes and potentially take its neighbors down with them. Libya is the best recent example. The US spearheaded diplomatic efforts aimed at gaining UN authorization for NATO to intervene militarily in the First Libyan Civil War in 2011. The US also spearheaded the NATO military effort that came shortly afterward. President Obama took action to save the lives of innocent protesters, and other Libyan civilians who were being targeted by Libyan dictator Muammar al-Qaddafi. Along with terrorizing his own people, he also posed a threat to the progress of Arab Spring, which was sweeping away authoritarian regimes in the region at the time.

Obama’s intervention helped rip Qadaffi from power and for a short time Libya settled down. However, Qaddafi’s ouster eventually created a power vacuum in Libya that touched off a second, even deadlier civil war, and also led to the waves of Libyan refugees swamping Southern Europe.

Libya in 2011, and Venezuela of the present day share a number of similarities. Both fit the definition of a Failed State. Oil was unable to save the Qaddafi government from ruin, and it doesn’t seem to be of much help to Maduro’s regime either. Venezuela is fast becoming the pariah of South America, much in the same way Libya was treated by most of North Africa and the Middle East.

Despite these common traits, Venezuela is not Libya. Maduro doesn’t pose a threat -real or perceived- to the United States and the Western world. Venezuela is not being used as a base of operations by international terrorist groups. The Venezuelan military, while having a handful of advanced US and Russian aircraft and weapons in its inventory, is not a force capable of aggression beyond its borders. The humanitarian crisis that Maduro’s actions have created are a tragedy, but not strong enough to act as the platform for military intervention by the US, and other Western powers.

If change is going to come to Venezuela, it will have to come from within. The US, most of South America, and Europe are content with limiting their responses to recognizing Juan Guaido as the legitimate president of Venezuela, donating relief supplies to Venezuela’s impoverished citizens, and imposing economic sanctions on Maduro’s government. Unless something dramatic happens, this will not change.

Crude Politics

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Saudi Arabia and the United Arab Emirates are spearheading an OPEC effort to extend oil cooperation with Russia for at least three years and perhaps longer. OPEC and Russia have been cooperating closely over the past two years. Initially, the ad hoc partnership was intended to support oil prices which were experiencing a dramatic plunge at the time. This transformed into a market-control push to curb the influence of the United States as top crude producer in the world. As the US position has risen, its ability to affect international markets, and oil prices has grown.

Russia has rejected earlier efforts by OPEC to make it a permanent member of the cartel. Russian officials have pointed to increased bureaucracy as the reason for remaining outside of OPEC. There may be some truth to this, but the main reason for Moscow’s reluctance is probably the fact that Russia is not as dependent on oil revenue as many of OPEC’s other members. Therefore, it can survive economically even with oil prices remaining low. Geopolitics is probably another factor in Russia’s decision. Iran is a close ally of Russia, as well as the archenemy of Saudi Arabia. Tehran would not want to see a situation develop where Saudi Arabia and Russia as economic allies.

Other OPEC members may not be as open to Russia joining the cartel either. Russia and Saudi Arabia are the world’s #2 and #3 oil producers respectively. Those two nations would effectively hold the decision-making power for the entire cartel, marginalizing the smaller nations, their contributions, and positions. The Saudis also need to carefully consider the ramifications it could potentially face in the future if its efforts to woo Russia are successful. It could strain relations with the United States at a point in time when the House of Saud is enjoying a close, fruitful relationship with the Trump administration. In the aftermath of the Khashoggi affair the Saudis need to be a little more thankful to the US for its support. Bringing Russia into OPEC would not be seen as the act of a grateful ally.

Sunday 20 May, 2018 Update: Iran, Sanctions, & Saving the Nuclear Deal

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The past few weeks have been a challenging period for Iran, both at home and abroad. The regime is facing a variety of obstacles and growing opposition to its policies, actions, and to its rule. This is not the first time that Iranian leaders have faced this sort of situation, however, the present geopolitical climate does not favor Iran. Unless Tehran moves swiftly and favorably on at least one front, the trend will not change.

Iran’s leadership is pinning its hopes on salvaging the Iran nuclear deal, believing that this will help reverse its fortunes of late. The future of the deal is very much up in the air at the moment. In spite of the European Union striving to keep the current deal alive, there’s no guarantee that anything substantial will stem from the effort. The US withdrawal from the deal has complicated matters for both Iran and the EU. Tehran has said it will live up to the terms of the nuclear deal if the EU is able to counteract US sanctions. A prime concern for Iran is that sanctions will have an adverse effect on its oil industry, and subsequently, on its economy as a whole.

With the US giving consideration to imposing new sanctions on Iran, a number of European companies are thinking hard about pulling back from Iran. This has led to claims by Iranian government officials over the weekend that the EU is clearly not doing enough to keep the nuclear deal alive. Next Friday, a meeting will be held in Vienna between representatives from Britain, Germany, France, China and Russia to discuss the future of the deal after the US withdrawal. According to Iranian Deputy Foreign Minister Abbas Araqchi, his nation will also be taking part in Friday’s talks.

Time is working against Iran at the moment. On Monday US Secretary of State Mike Pompeo is expected to lay out a potential US plan to force Iran back to the negotiating table. The plan will address not only Iran’s nuclear program, but its activity in other areas such as involvement in Syria, Yemen, and its escalating proxy war with Israel. If a US plan comes to fruition and gains traction, Iran’s options will narrow, forcing the regime to contend with the rising amount of international pressure in a less cooperative fashion.

Wednesday 7 February, 2018 Update: US Oil Sanctions Against Venezuela Appear More Likely

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While in Argentina over the weekend, Secretary of State Rex Tillerson remarked to reporters that the imposing of oil sanctions and restrictions against Venezuela’s oil sector is now on the table. US oil sanctions are considered the nuclear option and would close off Venezuela’s economy to the single source of dependable income it has left. US and international sanctions already in place against Venezuela have not had the intended effect. If anything, the moves have emboldened Venezuelan strongman Nicolas Maduro to dig in his heels and go for broke. In January, 2018 Maduro announced he will be seeking a new term in office. The presidential election has been scheduled for 30 April of this year and with the majority of opposition candidates and leaders banned from running, Maduro is expected to skate to an easy victory.

If the presidential election proceeds, and the Trump administration imposes an oil embargo in response, the impact on markets, supply, and output will be significant. 2018 has seen an overall tightening in the oil market and a supply disruption now is sure to cause reverberations that weren’t felt when there was a crude superabundance. If Venezuela faces an oil embargo its economy will collapse entirely and that could cause an undesirable chain of destabilization among its neighbors, and other Latin American nations. The prospects of sanctions bringing a scenario like this to life are real. Caribbean nations rely heavily on cheap Venezuelan oil and have resisted Tillerson’s calls for a hemisphere-wide effort to challenge Maduro. US, Mexican, and Canadian oil officials, and diplomats are forming a working group to try and find an alternative to Venezuelan oil for nations in the Western Hemisphere that are reliant on it at the present time.

President Trump favors harsher sanctions against Venezuela, though its uncertain if he’s willing to turn to his nuclear option just yet. As mentioned above, the current sanctions in place have not motivated Nicolas Maduro to begin the reform process. If US efforts to create an anti-Maduro coalition show signs of success between now and the end of April, expect the Trump administration to begin thinking seriously about oil sanctions, or an outright embargo against Venezuela by 1 May.