Ukraine’s Zelensky Nails the E.U.

On a day when “(a)pproximately 4,000 building in Kyiv lacked heating . . . as temperatures plunged to -20C amid Ukraine’s coldest winter in years, almost four years into Russia’s full-scale invasion,” Ukrainian President Volodymyr Zelenskyy “delivered a scathing critique of European inaction at the World Economic Forum . . . , declaring that the continent ‘looks lost’ and remains trapped in endless repetition of failing to defend itself or decisively support Ukraine.”  Zelensky lamented, “Repeating the same thing for weeks, months, and of course, years. And yet that is exactly how we live now.”  In particular, he was referring to the fact that just as the U.S. had been sinking drug boats, the E.U. could have been sinking Russian oil tankers even near Greenland. “We will solve this problem with Russian ships,” he said. “They can sink near Greenland just like they sink near Crimea.”  Why was Europe repeating the same “day” over and over again, as in the film starring Bill Murry, Groundhog’s Day? Zelensky had the presence of mind to identify the root problem though his wording was antiquated.

Contrasting the U.S. with the E.U., Zelensky lamented, “The fact remains, Maduro is on trial in New York. Sorry, but Putin is not on trial. . . . The man who started it is not only free, he’s still fighting for his frozen money in Europe.”  Questioning “why Trump could seize shadow fleet tankers and oil while Europe could not, noting that oil funds the war against Ukraine,” Zelensky said, “If Putin has no money, there’s no war for Europe.”  The point is that the E.U. could have acted to thwart Putin’s military might by cutting off oil revenue. Such action even years earlier seems like a no-brainer, given Zelensky’s logic: “Today they target Ukraine. Tomorrow it could be any NATO country,” he said. “Wouldn’t it be easier and cheaper to cut Russia off from components making missiles, or destroy factories making them?”  That could be done directly by bombing the factories and boycotting Russia, and indirectly by bombing Russian oil in tankers, whether Russian or not. It was, in other words, in the interest of the Europeans in the E.U. to cut off the Russian war-machine rather than appease it with inaction. 

As for the E.U.’s reliance on a few of its states to defend Greenland amid U.S. President Trump’s intention to invade or purchase the island, Zelensky noted the significance of the weak response by saying, ‘If you send 14 or 40 soldiers to Greenland, what is that for? What message does it send? What is the message to Putin, to China? And even more importantly, what message does it send to Denmark, your close ally? Forty soldiers will not protect anything.”  Even as Zelensky was insightful in drawing out these wider implications, he made a political category mistake in mischaracterizing one E.U. state, Denmark, as an ally in the E.U., for a state in a federal union is neither an ally (i.e., equivalent) to the union itself nor an ally to other such states. Unlike allies, E.U. states have delegated a portion of their respective governmental sovereignty to a federal level (e.g., exclusive competencies, as well as qualified-majority voting).  In fact, Zelensky was undercutting his own argument in so doing.

In particular, and here we get to the main point, “Zelenskyy criticized Europe’s fragmented response to global challenges, declaring the continent ‘still feels more like geography, history, tradition, not a great political power’ and ‘remains a fragmented kaleidoscope of small and middle powers.’”  Even in sending a few thousand troops from a few E.U. states rather than a federal response going beyond loose cooperation, the E.U. showed itself in relief as having succumbed to its parts (i.e., states). Zelensky actually fed the undergirding Euroskeptic, anti-federalist European ideology by referring not to states or even member-states, but to small and middle powers as if the E.U. did not even exist. If he was referring to small and large E.U. states as “small and middle powers,” Zelensky was missing the point that whether large or small, an E.U. state is an E.U. state. Mischaracterizing E.U. states as small and middle powers, and the E.U. as the unnamed large power not only ignores the E.U.’s immense weakness, especially with regard to its own states, but also ignores that in a federation, there are only two levels: the state level and the federal level. 

In short, if Zelensky wanted a stronger, more perfect Union in Europe, a “great power,” he should have said so, explicitly: the E.U. needs more competencies, or enumerated powers, in foreign policy and defense, subject to qualified-majority voting rather than unanimity in the European Council and the Council of Ministers. Instead, the way he described “small and middle” powers in his speech at Davos undermined his own goal. He claimed that Europe needed to learn at least how to defend itself, but since his last address at Davos a year earlier, “nothing has changed.”  He lamented that in Europe, everyone “turned attention to Greenland and its clear most leaders [in Europe] are not sure what to do about it.”  Meanwhile, Europe’s “small and middle” powers were reluctant to provide Ukraine with advanced weapons systems. Relying on the U.S. had become foolish, and yet the E.U. was still not stepping up to the plate (an expression from baseball) to bat in foreign policy and defense. 

It was long since time for structural change be made in the division of competencies between the federal and state systems of government in the E.U., especially with the U.S. eyeing Greenland and Russia’s invasion of Ukraine having been going on for nearly four years by early 2026 when Zelensky delivered his speech to the world’s economic and political elite in Davos. It was time, in other words, for the governors of the states to “step up to the plate” and agree to federalize more authority in foreign affairs and defense. After all, those state governments had enough direct power at the federal level in the European Council and the Council of Ministers to act as a check, even under qualified-majority vote, on federalized foreign policy and defense. The U.S. could take a lesson in this respect and replace elected U.S. senators with governors in that union’s higher legislative chamber to step federal encroachment on the retained and residual governmental sovereignty of the member-states there.  

---

1. Aleksandar Brezar, “Zelenskyy Says Europe ‘Looks Lost’ and Living in ‘Groundhog Day’ in Scathing Davos Address,” Euronews.com, January 22, 2026.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.

9. Ibid.

10. Ibid.

The E.U.’s Hungary Overreaching on Sovereignty: International Trade

Sovereignty is not a word to be casually used, especially if in overreaching. In both the E.U. and U.S., state governments have overreached at the expense of the delegated competencies or enumerated powers of the respective Unions of states. The Nullification Crisis in the U.S. and de facto unilateral refusal of the E.U. state of Hungary to observe E.U. law both demonstrate how the overreaching by state governments can compromise a federal system.[1] In the E.U. the refusal to do away with the principle of unanimity in the European Council and the Council of the E.U. enable and even invite such overreaches at the expense of the E.U. itself, and its distinctly federal officials. Even a state government’s pursuit of it’s state’s economic interests does not justify holding the E.U. hostage. The case of supporting Ukraine in the midst of the invasion by Russia is a case in point.

In part because of Hungary’s veto of the accession of Ukraine into the Union, as intimated by Ukrainian President Zelensky on August 24, 2025, Ukrainian attacks on the Druzhba oil pipeline blocked oil imports into the E.U. states of Hungary and Slovakia. “Ukraine attacked oil facilities on Russian territory with drones and rockets.”[2] This violation of Russia’s sovereignty was predicated on Russia’s long-standing invasion of Ukraine’s sovereignty. Accordingly, the main motive for the bombings of the oil facilities in Russia can be said to have been to weaken Russia’s military by reducing the revenue to the Russian state from oil exports. To be sure, Ukraine’s president himself “suggested that the attacks on the pipeline might be connected to Hungary’s veto on Ukraine’s EU accession.”[3] On the anniversary of Ukraine having broken off from the Soviet Union, Zelensky said, “We always supported the friendship between Ukraine and Hungary. And now the existence of the friendship depends on what Hungary’s position is.”[4]

The overt threat to continued imports of Russian oil was received loud and clear in Budapest, the Hungarian state capital. The state’s foreign minister, Péter Szijártó “said his government firmly rejected what he described as the Ukrainian President’s intimidation and considered those bombings on the Russian pipelines as an attack on Hungary’s sovereignty.”[5] On social media, the foreign minister puts sovereignty in terms of “territorial integrity, and, furthermore, claims that an “attack on energy security is an attack on sovereignty.”[6] I beg to differ.

Sovereignty as understood territorially and applied to the E.U. state of Hungary does not include Ukrainian bombings within the territory of Russia because the latter is not Hungarian territory. Furthermore, energy security is not sovereignty, especially when such security depends on international trade. The severing of such a contract by the inability of a counterparty to deliver product does not violate sovereignty. In fact, as pointed out by Andriy Sybiha, Ukraine’s foreign minister, the E.U. state of Hungary could have diversified and become independent of Russian oil “like the rest of Europe.”[7] Indeed, the ability to do so would have been an exercise of the governmental sovereignty retained by the Hungarian government in the E.U., and the latter may have used its portion of sovereignty to assist the state, given the consensus at the E.U. level against Russia’s invasion of Ukraine, which began in 2014 with Crimea.

The problem of the Hungarian overreach on what sovereignty means and entitles helps to explain why Viktor Orbán, the governor of Hungary, had been serially violating E.U. law and regulations even after the Commission began withholding money for the state. Orbán’s refusal to recognize that some governmental sovereignty, in the form of competencies—full and shared—had been delegated to the E.U.’s federal governmental institutions in 1993 coupled with an overreaching construal (or distortion) of what territorial sovereignty means and entitles, explains why Hungary has stymied so much at the federal level, given the power that states wield there through the European Council and the Council of the European Union. Therefore, it is ironic that Tamás Deutsch, a representative in the European Parliament representing a district that is within the state of Hungary, “said the pipeline bombings represent a military attack against an EU member state, and that the EU should not conduct [accession] talks with Ukraine as a result.”[8] So Hungary is a member-state after all, when being one is convenient.

Playing by convenience at the state level without concern for the viability of the federal level is precisely what could unravel the European Union. The irony is that without the E.U., Hungary would not have an empire-scale union at hand to push back against Russia, should Putin decide to invade Hungary after all. That would be a violation of Hungary’s sovereignty. So resisting the urge of convenience or state-rights ideology to exploit state power at the federal level could actually strengthen Hungary’s sovereignty even if international trade deals do not all go Hungary’s way. Unfortunately, the principle of unanimity at the E.U. level ultimately undermines rather than strengthens the remaining governmental sovereignty of the states if the veto power is exploited for expediency rather than to protect vital, long-term state interests against federal encroachment on the governmental sovereignty reserved by the states.

---

1. In 1832-1833, the government of South Carolina held that the U.S. tariffs of 1828 and 1832 were null and void within the state. “The resolution of the Nullification Crisis in favor of the federal government helped to undermine the nullification doctrine,” which holds that states have the right “to nullify federal acts within their boundaries.” Britannica.com (accessed August 25, 2025). I submit that the European Court of Justice could do worse than declare the same with regard to state laws, including the refusal of a governor or state legislature to implement federal directives, that are in violation of E.U. law and regulations. Monetary sanctions by the European Commission have not been a sufficient deterrent. If either de facto or de jure nullification becomes the norm, then it would only be a matter of time before the Union dissolves and the states could once again take up arms against each other.
2. Sandor Zsiros, “Hungary and Slovakia in Spat with Ukraine over Bombed Druzhba Oil Pipeline,” Euronews.com, August 25, 2025, italics added.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.

UN Climate Conferences Harbor an Institutional Conflict of Interest

Whereas people become instantly upset upon hearing that someone has self-aggrandized oneself by exploiting a conflict of interest, by, for example, embezzling funds for personal use, our species has the tendency to ignore the institutional variety of conflicts-of-interest. We don’t want to hear of another person incurring a privately-held benefit by ignoring the duties of one’s office, such as fiduciary responsibility, but we are fine with countries whose dominant industry is oil hosting the UN’s annual climate conferences. The sheer denialism entailed in assuming that the governments of such countries can be expected to steer a conference from the interests of the domestic oil companies is astounding. If there were ever a case of private benefits being at odds with the public benefit from mitigating climate change from carbon emissions by humans, this instance would be it. As had been the case of tobacco companies that promoted smoking even to minors while knowing that smoking kills or at least shortens a person’s lifespan, oil companies place their own profits, which are only a benefit to themselves, their managements, stockholders, and their external sycophants (i.e., governments) through more tax revenue and higher political contributions, above whether the planet warms more than 2C degrees—1.5, the prior limit, being passed in 2024. In other words, greed (i.e., the desire for more) can render board directors and managements oblivious to even forecasts of catastrophic impacts from global warming. In 2024, as COP29 was in progress in the Azerbaijani capital, Baku, Al Gore, who had been the U.S. vice president during the eight-year Clinton administration in the 1990s, was astonished by how blatant (and undercutting relative to the conference’s goal) the institutional conflict of interest has been in allowing petro-states to be the hosts. I’m skeptical, given the lapse that seems to be inherent in the human brain when it comes to assessing and even recognizing such conflicts of interest, whether Gore’s “wake-up” call would make more than a ripple next to the power of the oil industry, given its private wealth.

With regard to allowing oil states to host COP conferences, Gore said, “I think it’s absurd to have, for example, what we had last year with the CEO of one of dirtiest oil companies on the planet serving as the president of COP.”[1] The 2023 conference had been hosted by Dubai. As though wielding a club to knock some sense into the cognitive ability of the species’ collective mind, he stated, “It’s a direct conflict of interest.”[2] Perhaps I should use only capital letters for Gore’s last point to indicate just how incredulous the human blindness to institutional conflicts of interest is. That the governments of Dubai and Azerbaijan, in 2023 and 2024, respectively, would ever use their position as hosts to protect those countries’ respective oil companies is a point that seems to allude human thinking and consciousness.

Lest there be any doubt, the president of COP29, Mukhtar Babayev, was “very much in sync with [Azerbaijan’s] reliance on fossil fuels,” given that 90% of the country’s balance of payments was coming from the sale of oil and gas.”[3] Even though Babayev had worked at the State Oil Company of the Azerbaijan Republic (Socar) for two decades, he was chosen at the beginning of 2024 to preside over the conference in Baku. It was really Russia’s President Putin who “made this choice,” Gore said.[4] He continued, “One of the reforms that I have proposed is to give the [UN] secretary general a say in who hosts the COPs, and not just leave it to allow voices like Valdimir Putin’s to determine who gets this one, and let the petrostates of the Middle East decide.”[5] At the time, Russia itself was an oil producer, so its own interests were tied with those of the interests of oil.

How might such an institutional conflict-of-interest skew the output of a COP conference in line with the host’s domestic oil industry at the expense of the survival-interest of our species? “Gore singled out carbon capture and storage (CCS), which typically involves pumping CO2 underground or below the seabed into depleted gas fields” as being in the commercial interest of oil companies, who could then sell as much oil and gas as they like while counting only on technology to suck CO2 out of the atmosphere without having to curtain CO2 emissions, and thus sales.[6] CCS has “been proven to be completely ridiculous and totally ineffective,” Gore asserted, before crucially adding, “Of course, the fossil fuel companies want to pretend that that’s the solution—anything other than reducing the amount of fossil fuels that are burned or reducing their markets.”[7]

Considering that 2024 was the first year that the planet’s atmosphere surpassed the limit set by the Paris Conference in 2016, a “both-and” approach was required, but this assumes that the interests of our species are more important, even vital, than are oil profits, which are only privately-held rather than species-as-a-whole benefits. I contend that the good of a whole surpasses the private good, and thus interest, of a part, especially if the latter’s good is at odds with the former. Out of jealousy and puffed up moral outrage, we get so angry at individuals taking advantage of, and thus exploiting their respective positions, but no one blinks an eye when Mukhtar Babayev of Azerbaijan was steering the climate conference in Baku in 2024 towards a climate-strategy that is in the financial interest of the oil industry in Azerbaijan, which is state-related so there is another institutional conflict of interest, at the expense of biting hard to reduce CO2 emissions, especially given that the world had just sailed through the limit of warming from pre-industrial levels. With most countries having failed to reach their own targets of CO2-emission reductions, COP29 could ill-afford to be handicapped by being limited to means in line with the financial interests of oil companies. Unlike the tobacco case, it might not be merely a matter of more people dying from climate change; the species itself could conceivably go extinct. That oil CEOs and their governmental sycophants would put the financial “health” of oil companies above the survival of the species ought to lead the rest of us to discredit the oil interest to the point of sidelining it at climate conferences, which, by the way, have been inundated with oil-industry lobbyists. That the global population looks the other way, and may not even recognize the institutional conflict of interest, reflects very badly on our species, and might be its undoing while God, disgusted with our species, looks on in utter disbelief. If disbelief comes to inhabit God, then we really are in trouble.

---

1. Robert Hodgson, “Al Gore Calls for Reform of COP Climate Process,” Euronews.com, November 15, 2024.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.

India on Russia’s Invasion of Ukraine: On the Flawed Hegemony of Political Realism

India took an equivocal position on Russia’s invasion. This is surprising at first glance because India has been so concerned to protect its sovereign territory from baleful encroachments from China. What explains India looking the other way as Russia unilaterally invaded a sovereign state? I contend that the explanation supports the assertion that the world could no longer afford its system based on national sovereignty if political realism is in the driver’s seat at the national level.

According to Sumit Ganguly of Indiana University, one of my alma maters, the USSR was a vital partner of India during the Cold War. The Soviet Union was willing to sell weapons to India for cheap in order to keep China from expanding. For spare parts, India still has to go to Russia and is thus dependent on that country and the good will of its government. No country could ween itself away from a provider of military hardware quickly.

Furthermore, Ganguly noted in a talk in 2024 that India had a history of buying oil from Russia, and this continued during Russia’s invasion in spite of the Western embargos of Russian oil. The U.S. is in part to blame because it would sanction India were it to buy oil from Iran or Venezuela. At the time of the Russian War, India was still a poor country even as its high tech industry was expanding. Russian oil was relatively cheap. Also, India could point to the American hypocrisy in having relations with some sordid, autocratic regimes. This can explain why the government of India was well-aware during Russia’s war in Ukraine that by buying Russian oil and selling it to the EU and US, India was undermining the embargoes. Saudi Arabia was doing likewise, and yet the Biden administration held that both countries were allies of the United States. Everyone was looking primarily or even solely at their own interests.

Ganguly has also pointed out that in Indian culture, there is an obsession for multipolarity: there should be several global powers rather than just one biggie. Therefore, there is a willingness to work with Russia, which could serve as a check on hegemonic American power. This is not to say that Indian culture had any affinity whatsoever, Ganguly insists, with internal Russian politics. Nevertheless, India has had China as its principal long-term threat, and India’s government has recognized for a long time that Russia could act as a check on China.

All of this goes to say, political realism was alive and well as the world adjusted to Russia’s aggressive invasion of Ukraine. In realism, each government orients its foreign (and industrial) policy tightly to the national interest rather than also to cooperate with other governments in the interests of a global order in which international law can be more effectively enforced. The international system is just the aggregate of the self-interests of governments; aggregated parts make up the whole. With human rights suffering from a want of international enforcement in Ukraine as well as in Gaza, the want of international attention in a system of sovereign countries on tightening that system to enhance the enforcement of international law suggests that political realism has become insufficient. Climate change and the risk of nuclear war, which Russia has threatened in the context of Ukraine, only add to the argument that the world could no longer afford an international order that rests on national sovereignty to which political realism is the dominant operating system in governments.

Energy and Global Population

There is a temptation, especially since the global average temperature reached the 1.5C increase threshold in 2023 much faster than anticipated, to focus narrowly on the progress in renewable energy sources without placing it in perspective relative to the total amount of energy being used globally, the annual increases in energy demand, and the root cause, the explosive growth in human population since the early 20^th century. The strategic geo-political international interests of countries impacted and should thus be considered as well.  

According to Nick Butler, a former advisor at BP, a European oil company, the global use of energy increased 4-fold by 2024 since 1965. The increased use of energy commercially has led to increased trade as supply has become global. The world has thus become even more interdependent, which means that yet another basis for political instability has sprung up. Interruptions in supply led to a political push in the U.S. for energy independence. Even though as of 2024 every country still depended on the global trade in energy, the U.S. was trending towards energy independence and could eventually even be in a position of being able to export energy supplies without importing any. It’s debatable, however, whether exporting energy increases a country’s power. It had not worked for OPEC in managing prices, although the oil shocks in 1974 and 1979 gave the impression that OPEC could have considerable leverage over the U.S. As it turned out, substitution and the development of new supplies undercut OPEC’s higher prices. In contrast, Butler contends, building up sources of energy is a source of wealth, though political instability can also result as fights can break out over the new wealth.[1]

Besides being at odds with efforts to reduce carbon emissions if the stock is exported to be consumed, maximizing stocks of oil, natural gas, and coal as a source of a country’s wealth be wrongheaded. It may suffer from the same fallacy that is in mercantilism. Under that economic policy, a country minimizes imports and maximizes exports in order to accumulate as much silver and gold as possible. According to Adam Smith, “The exportation of gold and silver in trade might frequently be advantageous to the country.”[2] Historically, “the exportation of gold and silver in order to purchase foreign goods, did not always diminish the quantity of those metals in the [British] kingdom. That, to the contrary, [the exportation] might frequently increase that quantity.”[3] This still assumes that increasing the stocks represents an increase in a country’s wealth. Before critiquing that assumption, let’s look at the argument wherein exporting gold and silver to pay for imports actually winds up increasing the domestic supply of those metals to a net-increase.”

How could trading away some of those precious metals that were used as money increase a country’s wealth? If a country has gold and silver in surplus, part of it could be exchanged “for something else, which may satisfy a part of [the domestic] wants, and increase [the people’s] enjoyments” at home.[4] The benefits from the exports of the metals to pay for imports of goods extend back to domestic manufacturers being able to produce more output, given the increased demand, and thus increase the division of labor—Smith’s big thing!—and thereby produce goods more efficiently.  According to Smith, “By means of [the increased demand], the narrowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being carried to the highest perfection.”[5] The increased division of labor enhances efficiency of production, which in turn makes the pricing of exports more competitive, and thus demand increases. As exports to satisfy the increased foreign demand for the goods rise, the gold and silver that are used abroad to pay for the goods come into the home country and thus increase its supply of the two metals.

As for the need to increase the holdings of gold and silver as much as possible, the assumption that this enhances a country’s ability to fight a war is something else that Smith contests in his text. Regarding the need for stocks of silver and gold from which to be able to send abroad some in order to pay for the home army while it is fighting abroad, “(t)he commodities most proper for being transported to distant countries, in order to purchase there, either the pay and provisions of an army, or some part of the money of the mercantile republick (sic) to be employed in purchasing them, seem to be the finer and more improved manufactures.”[6] These, rather than sending silver and gold, have the benefit of increasing the demand of manufactures. “The enormous expense of the late war,” Smith contends, “must have been chiefly defrayed, not by the exportation of gold and silver, but by that of British commodities of some kind or other.”[7] So the need to accumulate silver and gold by minimize the imports of manufactured goods while maximizing exports—the key tenet of mercantilism—is, according to Smith, less beneficial than free-trade. Moreover, he holds that the market mechanism is much better than government fiat in allocating goods, services, and even metals used as money and wealth.

Similarly, perhaps exporting other commodities than coal, liquified natural gas, and oil might benefit the U.S. more by enhancing the efficiency of domestic producers of other goods (and services), especially if economies of scale exist, and increasing employment since more workers would be required and each could be more efficient and thus valuable to the companies. Additionally, carbon emissions would not be as high were the U.S. to sit on, rather than export, its stockpiles of “dirty” energy sources.

Admittedly, the pressure from unmet energy demand in other countries that are not energy-independent would tempt the U.S. Government and American companies to respectively allow and make more exports of coal, liquified natural gas, and oil because such sales would be lucrative. Behind this pressure is the relationship between a steeply growing global population and the ongoing prevalence of the “dirty” energy sources in meeting the increasing demand from an exponentially growing population. Indeed, because of shale, the US had become the largest exporter of natural gas in the world by 2024.

As of February, the world had 4 billion more people than in 1970. That translates into a 10,000 increase per hour, which in turn means 200 million new customers for commercial energy supplies every year.[8] Along with the increased global population, oil consumption increased by 150% since 1970. Because renewables were still focused on electricity, which was only one fourth of energy demand globally in 2023, the “dirty” sources were still supplying most of the increased demand.[9] Put another way, the increased supply of renewables was not even keeping up with the annual increases in demand for energy. In spite of the carbon-emission targets, oil and gas still accounted for 80% of global energy in early 2024.[10]

Most of the increase in energy demand and all the increase in carbon emissions during the previous 20 years was in Asia Pacific (esp. China).  By 2024, China was importing a lot of energy supplies—even markedly changing the patterns of global trade away from the U.S. being the dominant import market—and accounted for about a third of total global emissions.[11] Crude oil imports doubled from 2013 and 2023.[12]

Unfortunately, forecasts did not include a dramatic reduction in oil and coal use. In China, 300 million poor people in China were projected in 2024 to move into the middle class by 2050. This means more energy use, and thus more oil and gas. Nuclear energy was being developed there, but coal was still a major source of employment in 2023, and fit the Party’s goal of shifting wealth inland. Also, wanting to be the world’s leading industrial power is not in the direction of decreasing the commercial demand for energy.[13]

It is important to include the impact on international relations. As of the start of 2024, China was dependent on imports from Russia and the Middle East. As the U.S. strategic oil-imports interest in policing the Middle East diminishes as the U.S. gets closer to energy independence, the increased interest of China in exercising control in that region meant that a new conflict-zone might open up between the two empires. 

With the world going from over 8 billion people in late 2023 to a projected nearly 10 billion in 1045, we can anticipate more demand for energy, and with it, more international (and domestic) instability. With plenty of oil still in the ground and decreased demand due to substitutes such as electric cars and nuclear energy, the world won’t run out of oil.[14] This is bad news for our species as the planet continues to warm. Even as the press highlights the increase in renewable energy sources, the default is much, much larger and thus diminishing the share of “dirty” sources will not come as quickly as we might think. In short, we are in quite a mess as a species both because it isn’t easy to reduce our sluggish reliance on sluggish oil and invisible gas, and our global population grew so fast and so much in the 20^th century and has continued to increase in the first two decades of the next century that, as biological organisms needing external sources of energy, the energy demand of our species is likely to keep on increasing even if we become more efficient. The expediential increase in population can be so large that its baleful effects outweigh any gain from increased efficiency. Again, the baseline is so massive that changes from greater efficiency merely mitigate the increased harm done. 

Similarly, the large amount of energy consumption from “dirty” sources relative to the increased supply from renewables renders any shift very gradual. The Titanic could not turn fast enough to avoid the iceberg in 1912 because the rudder was too small for the mass, and thus momentum, of the ship. We would like to turn away from “dirty” sources of energy, but our rudder pales in comparison to the magnitude (and proportion) of those sources. We need a bigger rudder, or we too may flounder. The global economy does not “turn on a dime.”

---

1. Nick Butler, Lecture on Energy and Security, Yale University, February 15, 2024.
2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 4^th edn., R. H. Campbell, A. S. Skinner, and W. B. Todd, ed.s (Oxford, UK: Clarendon Press, 1776/1976), sec 9, p. 433.
3. Ibid., sec 7, p. 431.
4. Ibid., sec 31, p. 446.
5. Ibid., sec 31, pp. 446-47.
6. Ibid., sec 29, p. 444.
7.  Ibid., sec 27, p. 443.
8. Nick Butler, Lecture on Energy and Security, Yale University, February 15, 2024.
9.  Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.

A Critique of Corporate Political Risk Analysis and U.S. Foreign Policy: The Case of Libya

Even though people the world over instinctively recoiled as reports came in of Gadhafi's violent retaliation against Libyan protests on February 21, 2011, the official reaction from the US Government was muted at best. The refusal to act on an intuitive response to immediately remove the Libyan dictator's ability to wantonly kill people resisting his right to rule may have come from concerns that the mounting tumult of a change of government in a major oil-producing region of North Africa could cause even just a disruption in the supply of crude. Indeed, even the mere possibility was prompting a spike in the price of oil (and gas)--what one might call a risk premium. Even the prospect of an ensuing nasty electoral backlash from consumers having to face a possible increase in their largely non-discretionary gas expense was not lost on their elected representative in chief at the White House. 

Even five days later, after some serious press on the rising price of gasoline hitting American consumers, the most the president would do is proffer a verbal "demand" from afar that Gadhafi leave Libya.  "When a leader's only means of staying in power is to use mass violence against his own people, he has lost the legitimacy to rule and needs to do what is right for his country by leaving now," the White House said in a statement. The dictator must have been shaking in his boots.  In actuality, Gadhafi had lost his legitmacy to rule five days earlier, and by the day of the statement the American administration could have been actively involved with willing EU states in stopping him inside Libya. Given the progress of the protesters-turned rebels and the behavior of Brent crude that week, the interests of the American consumer (and Western oil companies, as well as the business sector over all) were by then firmly in line with an enforced regime change in Libya.  Oddly, the old dogma of an absolute governmental sovereignty was colluding with an inherently excessive risk-averse corporate political risk methodology to hold America back from acting as midwife to a new political awareness breaking out in the Middle East.

On the day of Gadhafi's self-vaunted shooting spree, Brent crude benchmark vaulted past $108 a barrel (settling at $105.74, a two-year high).  On the following day, it rose to $111.25. On the first day of March, the Dow Jones Industrial Average dropped 168.32 points, or 1.38%, to finish at 12058.02, its third triple-digit decline in the past week. Oil futures on the New York Mercantile Exchange, already up 6% this year, jumped 2.7% to settle at $99.63 a barrel.  Brent Crude in London hit $115.42 a barrel, the highest settlement since Aug. 27, 2008.The graph below shows the change in oil, though the change looks astounding in part simply because the graph only goes to 15%; were it to go to 100 percent, the picture might seem less dramatic.

The Wall Street Journal had reported already on February 21st that the rise was "driven by increasing unrest in the Middle East." Specifically, worries that the turmoil in Libya was curtailing output of that country's oil were said to be driving the price climb. However, USA Today cites Darin Newsome, an energy analyst at DTN, as pointing to the role of speculators around the world as propelling the price of oil. "The flow of money plays an enormous role in the direction, speed and volatility of these markets." In fact, the market mechanism itself may be flawed because speculators could push commodity prices out of sync with the underlying supply of the respective commodities. Turmoil in Libya cannot be blamed for the ensuing “creation” of artificial value (such an increase, by the way, had fueled the housing bubble in the US that came in for a hard landing in 2008). In fact, the rise in world oil prices began before the final third of 2010—before the prospect of widespread popular protest in the Middle East was realized. Indeed, the climb during the last third of 2010 looks a lot like that which took place in the first third of 2009 (during a recession). It was not until well into February, 2011, that the turmoil in the Middle East appeared, according to MSNBC, “to pose limited risk to global oil supplies. Neither Tunisia nor Egypt produce oil or gas.” Such “limited risk,” besides being mitigated, cannot very well be projected back well into 2010 to explain the rise in the price of gas.

Incidentally, another interesting feature of this graph is the sustained drop in 2008, before the financial crisis in September (and the U.S. Presidential election in November!).  The “V” pattern at the end of 2008 is classic “electoral.” It suggests that the price of gas may be very attuned to the electoral interests of those in power, and therefore to government policy. My contention in this essay is that this dynamic was alive and well in Washington when Gadhafi was turning on his own people.

Sources:

Jerry DiColo and Brian Baskin, "A Stealth Comeback for $100 Crude Oil," The Wall Street Journal, February 22, 2011, pp. C1, C3.

http://online.wsj.com/article/SB10001424052748704506004576173961240139414.html?mod=ITP_moneyandinvesting_0

Gary Strauss, "If Unrest Spreads, Gas May hit $5", USA Today, February 22, 2011, p. AI.

http://www.msnbc.msn.com/id/41739499/ns/business-personal_finance/

http://www.nytimes.com/2011/02/24/business/energy-environment/24oil.html?_r=1&hp

http://www.nytimes.com/2011/02/23/business/global/23oil.html?ref=todayspaper

http://www.msnbc.msn.com/id/41785849/ns/world_news-mideastn_africa/

http://www.nytimes.com/2011/03/18/world/africa/18nations.html?hp

The Kurds Betrayed: Iraq Retakes Kirkuk with U.S. Backing

For some reason, people tend to assume that the status quo has been around for a very, very long time—that it enjoys the perk of longevity. To mess with it even in part is typically assumed to “upset the apple cart.” The fear is excessive. A century after World War I, the fact that many of the extant countries in the Middle East had been artificially crafted by Britain and France paled under the presumption that those countries had been around for much, much longer. Accordingly, the fact that the Kurds voted overwhelmingly in 2017 to secede from Iraq was ignored or dismissed not only by Iraq, but also by other countries in the region and the United States. “Baghdad and most countries in the region had condemned the vote, fearing it would fuel ethnic divisions, lead to the breakup of Iraq and hobble the fight against the Islamic State.”[1] I submit that the fear was overblown and mistaken.

Firstly, ethnic divisions had been crippling Iraq since the United States toppled Saddam Hussain. An independent Kurdistan in the northern third of Iraq would have relieved the pressure such that the Iraqi government would only have to deal with the Sunni-Shiite struggle for power.

Secondly, even if Iraq itself would break-up completely, even this outcome would not be so much to fear, as Iraq itself had been artificially formed by the British after World War I. Put another way, the salience of the ethnic divisions in Iraq can be taken as an indication of the sheer artificiality of the state itself. The very notion of a nation goes along with ethnic clusters rather than forcing such clusters to form one political culture (to say nothing of getting along).

Thirdly, the pesh merga forces of the Kurds had fought quite well against the Islamic State, so invigorating the Kurds by supporting the formation of their own state would have been in the interests of the United States. Betraying the Kurds by enabling the Iraqi forces to take Kirkuk and its valuable oil region could be expected to have the opposite effect. In ignoring the clear will of the Kurds as per the decisive result of the referendum for secession, the United States betrayed itself, moreover, given that country’s preachments on behalf of democracy, which entails the self-determination of We the People.

A century after World War I, the world had an opportunity to remember that victorious European powers redrew the political map in the Middle East without taking into account the ethnic clusters that are naturally so integral to having nation-states. That such states enjoy a monopoly of power in international relations—the international realm literally being inter-national—suggests that the crafting of coherent rather than artificial nations is very important. Hence, a century out from WWI, the world of nations need not simply assume that even the break-up of a Middle Eastern country would somehow be the collapse of something that has always been around and would therefore be catastrophic. Put another way, a country formed by a European power should not enjoy default status because the formation itself can be viewed as problematic, evidenced by the ensuing ethnic strife. Admittedly, this does not hold in every country formed by Britain or France (e.g. Jordan), but where a country is strife-ridden, the application of nation itself is problematic; ethnic pushes for independence should not have to face the inertia of the status quo in such a case.

---

[1] David Zucchino, “Iraqis Capture Key Kurdish City with Little Fight,” The New York Times, October 17, 2017.

Backing a Bear into a Corner: Falling Oil Prices Hit Russia Hard

Falling oil prices and economic sanctions in 2014 put the pressure on the Russian economy and its currency. The overall question may have been geo-political, however. Namely, would the twenty-first century see economic tools replace military response as the dominant means to “walk back” international aggressor states and restrict their further exploits? Such a question may be too broad, as even a newly-discovered devise that suddenly works is not likely to be applicable in every case. Even so, obviating war in the nuclear age would be no small feat.

On December 15, 2014, crude oil for February delivery fell $1.82, or 3.2 percent, to settle at $56.26 a barrel on the New York Mercantile Exchange; oil had been as high as $107 the previous June.[1] The increase in American consumers’ disposable income was expected to boost the economy. Additionally, manufacturing output in the previous month “surpassed its prerecession peak as auto production rose.”[2] This proffered an “encouraging sign that America's factories are somewhat insulated from the global economic slowdown.”[3] The U.S. Government could afford to lead its informal coalition, including Saudi Arabia, against the Russian government’s incursions into Ukraine.

The Russian economy was not least among the contributors to the downturn. “Given Russia's huge dependence on oil revenues, the . . . sharp falls in the price of oil has hit the Russian economy hard. That's exacerbated by the fact that the Russian economy [was not at the time] diversified enough to withstand the shock.”[4] In other words, “the drop in crude prices . . . hurt Russia since the country [was at the time] a major oil exporter and [thus depended] heavily on oil for tax revenue.”[5] In refusing to reduce its supply of oil, OPEC was squeezing Russian competitors particularly hard, as well as the Russian government (and that of Iran).

That E.U. and U.S. officials were “contemplating tougher economic sanctions against Moscow” for geo-political reasons centering on Russia’s incursion into Ukraine suggests that the Russian economy might have more to worry about than lower oil prices and a weakening currency.[6] The situation in Ukraine was not getting any better, suggesting that further sanctions could come to pass. The United Nations human rights office had just announced its findings of a "very close link" between the inflow of fighters and sophisticated weaponry, "including from the Russian Federation," and a total breakdown of law and order in eastern Ukraine.[7] According to Gianni Magazzeni, head of the division of the United Nations human rights office that deals with Europe and Central Asia, “the situation around the self-proclaimed People's Republics of Donetsk and Luhansk, under the control of pro-Russian armed groups,” could be characterized in terms of "killings, abductions, torture, ill treatment, sexual violence, rape, forced labor, ransom, extortion,".[8] Considering that even all of this does not take into account the fate of Crimea, which Russia had invaded and absorbed, the prospect of any sort of overall geopolitical resolution with a let-up on the economic vice-grips on Russia seemed dismal at the time.

The toll on Russia’s currency, the ruble, could not be missed. In its steepest drop in 16 years, the currency sank more than 10 percent to about 64 to the dollar on December 15, 2014.[9] The rise of inflation pressures from more expensive imports had already prompted Russia’s central bank to gradually increase its main interest rate from 5.5 percent early in 2014 to 9.5 percent. On December 11th, the central bank “tried unsuccessfully to stem the ruble's slide by boosting its key rate by 1 percentage point to 10.5 percent. The decision to raise the rate to 17 percent from 10.5 percent on December 15th “represented a desperate attempt to prop up the troubled currency,” according to the Associated Press.[10] Of course, the currency itself was not the real problem. Accordingly, the attempt fell on its face, at least initially. “In the first hours after the increase, the ruble staged a rebound, recovering almost all of its [previous day] losses. But the optimism soon dissipated and the ruble was down another 20 percent to 77 to the dollar by 3.30 p.m. in Moscow (1230GMT).”[11] The next day, FXMC, an online trading company, halted ruble trades—anticipating capital controls on the enervated currency.

Moreover, although the higher interest rate could eventually have a positive impact on the ruble, especially as long as the rates on the E.U. euro and U.S. dollar stay near zero, the higher rate was also “likely to cause much hardship in an economy [that was] already heading for recession.”[12] Americans need only remember Paul Volcker’s rate hikes in 1981 and the subsequent harsh recession to get this point. Indeed, Russian stocks were “moderately declining” on the morning after the rate hike to 17 percent, “with the MICEX benchmark 1.5 percent lower, reflecting the rate hike's pressure on businesses.” [13] Neil Shearing, chief economist for emerging markets at London-based Capital Economics, predicted "a further tightening of credit conditions for households and businesses and a deeper downturn in the real economy in 2015."[14] Such tightening—and Americans need only look back to September 2008 to grasp the seriousness of this move—could easily outweigh any increase in exports from the lower currency.

In conclusion, this case study presents us with an interesting intersection of international relations and international political economy. One major lesson may be that the coordinated economic policies of a coalition of states can effectively replace war as a means of going after governments that are militarily aggressive internationally. Of course, the geo-political and economic strategy is not full-proof, as a hegemon may still be able to get away with such behavior (e.g., the U.S. invading Iraq with impunity). Also, pushing a bear into a corner may have unanticipated consequences both within Russia and in its foreign policy. That is to say, applying such strident pressure, whether financial or militarily, is risky in a nuclear world.

---

[1] The Associated Press, “Oil Still Falling, and So Are the Markets,” The New York Times, December 16, 2014.

[2] Ibid.

[3] Ibid.

[4] The Associated Press, “Russia’s Ruble Slides to Historic Lows,” The Huffington Post, December 16, 2014.

[5] The Associated Press, “Oil Still Falling.”

[6] Nick Cumming-Bruce, “Hardships Grow in Ukraine, U.N. Says,” The New York Times, December 16, 2014.

[7] Ibid.

[8] Ibid.

[9] The Associated Press, “Oil Still Falling.”

[10] The Associated Press, “Russia’s Ruble Slides.”

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] Ibid.

Cheaper Driving on an Uninhabitable Planet

By the end of November 2014, the price of oil had declined about 40 percent since its peak back in the previous June.[1] Expanding American fracking, a steady supply of oil from OPEC, and a weak global economy are the major factors behind the trend. Saving $630 million on gas as compared with what they had been paying in June, American drivers found themselves with more disposable income.[2]  Besides uses such as Christmas presents, groceries, and clothing, more consumers were buying SUVs and Hummers in spite of their low gas mileages. William Dudley, president of the Federal Reserve Bank of New York, pointed to the benefits, saying “falling energy prices are beneficial for our economy and should be a strong spur to consumer spending.”[3] With OPEC countries and Russia hit disproportionately, the U.S. Government had a geo-strategic interest in a further drop in the price of oil. It is no wonder that a major disconnect existed between these benefits and a startling, albeit largely hidden downside.

As American drivers were finding they had more money available to buy Christmas presents, United Nations negotiators gathering in South America were expressing a new optimism that they may finally achieve a deal to stop the increasing rate of greenhouse gas emissions. Meanwhile, scientists were warning that even with an international deal that includes China and the U.S., the Earth would still become increasingly unpleasant; without a deal, and here’s the stunner, “the world could eventually become uninhabitable for humans.”[4] Even with a deal taking effect only in 2020 and relying on governments to hold themselves to their own targets and timeframes, a large body of scientific research in 2014 pointed to “into a near-term future of drought, food and water shortages, melting ice sheets, shrinking glaciers, rising sea levels and widespread flooding — events that could harm the world’s population and economy.”[5] Such a drag on the global economy would likely exceed expansion of between 0.5 percent and 1 percent from the decline in oil prices.[6]

Dwarfing calculations of the net impact on the global economy is the word itself, uninhabitable. The prospect of our species taking itself out of existence even as we cheer cheaper (and thus more) gas and buy larger cars again—as if no learning curve could have been applied—presents our species with the unhappy enigma that is so much a part of human nature. That we could have been so easily distracted by instant gratification is not news; the realistic possibility that our descendants might die off before the turn of the next century is—at least to those people willing and able to notice. In other words, 2014 brought the dark news that the planet being uninhabitable for humans may come sooner than anyone distracted by the oil would believe.

To be sure, the astounding technological advances that took place in the twentieth century, such as putting human beings on the Moon, could mean that further advances in the twenty-first century could remove enough carbon from the atmosphere to pull us back from the brink. Moreover, the future is not simply a projection of a given trend into a trajectory; unforeseen factors are almost certain to kick in between 2014 and the end of that century.

Even so, the risk taken on by humanity in the 2010s is considerable—even astonishing—given what we knew even in 2014. Drivers pleased to death with lower gas prices dismissed the risk—missing the connection between the rising carbon emissions from their increased driving (and flying) from the lower cost of fuel, and the increasing likelihood that their children or grandchildren might realistically find the Earth to be uninhabitable in their lifetimes. Young children riding in the SUVs could live to see the Titanic sink unexpectedly quickly. The loop could be that tight, and yet it got scarcely any air-time as gas prices lowered during the last half of 2014. Crucially, drivers and the media alike were glued like addicts to a constricted perspective centered on the daily downward ticks in the price of gas as if pennies dwarf uninhabitability. Is it to be said shortly before the final curtain that our species died off for pennies?

---

[1] Steven Mufson, “As Oil Prices Plunge, Wide-Ranging Effects for Consumers and the Global Economy,” The Washington Post,  December 1. 2014.

[2] Ibid.

[3] Ibid.

[4] Coral Davenport, “Optimism Faces Grave Realities at Climate Talks,” The New York Times, November 30, 2014.

[5] Ibid.

[6] The statistics are from Steven Mufson, “As Oil Prices Plunge, Wide-Ranging Effects for Consumers and the Global Economy,” The Washington Post,  December 1. 2014.