Sanctions against Syria hurting, Assad regime concedes

Syrian Oil Minister Sufian Allaw

In an unusual acknowledgement of the pain inflicted by Western sanctions, Syria's oil minister said Wednesday that U.S. and European curbs on its oil trade have cost the regime $4 billion and caused widespread shortages of cooking fuel and other essentials.

The concession by Oil Minister Sufian Allaw that "oppressive European and U.S. sanctions" were taking their toll surprised Middle East analysts. The government of embattled President Bashar Assad has sought to downplay the 15-month-old uprising as an annoyance provoked by outside forces.

Allaw made the disclosures at a news conference in Damascus, where he also announced that help was on the way, including a 35,000-ton shipment of fuel oil from Venezuela that docked in Syria on Monday.

Allaw said Assad's government was also negotiating with Russia to secure a long-term arrangement for fuel supplies. Until the first of two Venezuelan shipments arrived this week, Allaw said, no tankers had docked in Syria since April 2011.

U.S. and European Union officials have sought to isolate the Assad regime for its brutality against opponents by imposing an embargo on trade and international commerce.

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South Sudan may face fiscal collapse by July, leaked report says

Sudanoil

This post has been updated. See the note below for details.

South Sudan could run out of reserves and possibly face "state collapse" as soon as July after shutting off its oil, according to a confidential report leaked to news media that appears to be from the World Bank.

The March memo, first reported and later released by the Sudan Tribune, paints a dire picture of the economic crisis ahead for South Sudan, the world's newest country.

The fledgling nation shut off its oil wells in January in a dispute with Sudan, saying that it wasn’t getting its fair share of the wealth. The two sides had sparred over the transit fees that Sudan charges to get the oil to market, with South Sudan accusing Sudan of stealing "enormous volumes" of its oil.

Border hostilities between South Sudan and Sudan, which fought a 22-year independence war, have recently threatened to add United Nations sanctions to their economic woes.

Though it would not directly answer questions about the authenticity of the memo, the World Bank said it had recently assessed the economic situation of South Sudan at its request and was "deeply concerned" about the effect of the oil dispute on both countries, "particularly the most vulnerable."

The leaked memo recounts a briefing to the United States, Britain and other "key donors" by World Bank official Marcelo Giugale. According to the memo, Giugale called the shutoff "shocking" and told donors that "the World Bank has never seen a situation as dramatic as the one faced by South Sudan."

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Iran continues carrot-and-stick diplomacy ahead of nuclear talks

TEHRAN -- Iran sent out contradictory signals Wednesday on its plans for highly anticipated negotiations on its nuclear program this weekend, declaring that the Tehran delegation will be bringing "new initiatives" to the talks in Istanbul, Turkey, while announcing at the same time that is is cutting off oil exports to more of Europe.

Tehran's chief nuclear negotiator, Saeed Jalili of the Supreme National Security Council, said his delegation would put fresh proposals on the table at the talks beginning Friday and expressed hopes that the six world powers attending the meeting would arrive with "a constructive approach," Iran's Al Alam TV reported.

Jalili predicted progress at the talks only if the other side --  the five permanent U.N. Security Council members and Germany --  refrains from coercive tactics.

"The language of threat and pressure has never yielded results and only reinforces the determination of the Iranian people," Jalili was quoted as saying.

Meanwhile, Al Alam and Press TV announced that Tehran suspended oil exports to Germany and planned to stop shipments to Italy as well. Iranian media said crude exports to Spain were halted Tuesday, and oil sales to France and Britain were cut off in February. The moves are seen as preemptive retaliation for European Union trade sanctions that take effect in July.

Iran sent similar mixed signals this week when state-run media announced that the government had agreed to hold the talks in Istanbul despite its concerns that the Turkish city was an inappropriate venue because of Ankara's sympathies for rebels fighting the Syrian regime of President Bashar Assad. Iran is Assad's closest ally in the region.

Foreign Minister Ali Akbar Salehi warned the "5-plus-1" delegation shouldn't impose "preconditions" on Iran for the success of the first talks on Tehran's nuclear ambitions in 14 months. Salehi was alluding to calls from the U.S., Britain, France, China, Russia  and Germany for Iran to cease enriching uranium that Tehran says is used for energy production and medical research, and to transfer what stockpiles it has already made out of the country.

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-- Ramin Mostaghim in Tehran and Carol J. Williams in Los Angeles


Britons line up at gas stations

Britain fuel
REPORTING FROM LONDON -– There’s no fuel shortage, no strike planned, no reason to panic. But worried motorists across Britain ignored all that Thursday as they joined long lines at gas stations, intent on stocking up just in case any of those realities should change.

Fuel-tanker drivers here have threatened to take industrial action if their demands for better working conditions and wages aren’t met. But no strike has actually been called, and rules require seven days’ notice before any such job action, which would disrupt deliveries to 8,000 gas stations around the country, can take place.

That didn’t stop the British government from jumping in and adding fuel to the fire instead of calming the situation, critics say. Government ministers have been advising consumers to top off their tanks or fill extra containers, prompting a run at the pumps that’s now proving to be a political embarrassment.

Lines were reportedly so long in parts of southwest England that police asked some stations to close to keep roads from getting blocked. Automotive stores reported higher-than-normal sales of jerry cans. Frustrated motorists sat behind the wheel and waited for their turn at panic buying, despite gas prices that would make Americans cringe in horror: about $8.50 a gallon.

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What is the Strait of Hormuz? Can Iran shut off access to oil?

Hormuzmap

What is the Strait of Hormuz and why are people worried about it?

Iran has been threatening to shut down the Strait of Hormuz, a choke point between the Persian Gulf and the Arabian Sea. The waterway is bordered to the north by Iran, and its closure could cut off access to 20% of oil shipped around the world, sending fuel prices skyrocketing.

Why is Iran threatening to close it?

Iran has been under increasing pressure to stop its nuclear program. The European Union just approved an embargo on Iranian oil Monday to punish the country. Iran insists it is only working on nuclear power and medical research, but Western countries believe it is trying to create a nuclear weapon.

To counter that pressure, Iran has played up its power over the strait. A Revolutionary Guard commander was quoted in a Tehran newspaper saying government leaders would not "allow a drop of oil" to pass through the strait if "our enemies block the export of our oil."

MAP: Strait of Hormuz

Putting it even more boldly, "closing the Strait of Hormuz for Iran's armed forces is really easy ... or, as Iranians say, it will be easier than drinking a glass of water," Iran’s top naval commander said on television in December. The country has also been test-firing missiles to show control of the strait.

Why is this waterway vulnerable?

There are a few things that make the strait vulnerable. Its narrowest point is only 34 miles wide. Oil tankers can only use one channel to come in and one channel to come out, each of them roughly two miles wide. Iran has claimed sovereignty over a few islands near the western entrance to the strait.

How would Iran close the strait?

Nobody is worried that Iran would actually put a barrier in front of the Strait of Hormuz. "What most people think of -- and what the Iranians would probably do -- is a combination of things that would not really close the Hormuz Strait but make traversing it very difficult and risky so that people would not go through," said Afshon Ostovar, a senior analyst at the nonprofit research organization CNA.

Iran could do that by using everything from mines to submarines to missiles to small boats that harass ships. Political scientist Caitlin Talmadge outlines one scenario: Iran could set mines in and around the shipping channels, then attack from the air or the coast when people try to clear them.

INTERACTIVE: The world's oil

But Talmadge points out that the bluster from Iran makes any attempt to plant lots of mines without being detected “essentially impossible.” 

Could Iran really shut down the strait?

Many experts are skeptical that Iran could or would carry out the threat. In a recent article for Foreign Policy Magazine, Ostovar dubbed it a “kamikaze act” because Iran would be devastated by an all-out war with the United States, which could be triggered by closing the strait.

Defense Secretary Leon E. Panetta called it a “red line” that would spur the U.S. to react. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, says Iran could block traffic “for a period of time,” but that the United States could reopen it the strait. U.S. officials have said it could be done within a week.

Closing the strait would also hurt Iran. Most Iranian imports and exports come and go by sea, a report from the Institute of Near East and Gulf Military Analysis points out. And Ostovar adds that stopping traffic in the strait would also harm Asian countries that aren't among Iran's enemies, such as India and China.

However, a new report suggests that the Iranian threat could become more real in a decade or two. The U.S. has historically relied upon its allies in the Persian Gulf region to provide bases from which it can deploy troops and get supplies. Iran is now building weapon systems that could to stop that, possibly by threatening governments that offer bases to the U.S. military.

Deploying lots of ground forces and bombers "worked for Operation Desert Storm and for Operation Iraqi Freedom," said Mark Gunzinger, co-author of the report from the Center for Strategic and Budgetary Assessments."We need to think through -- what if we're not able to do that?"

If closing the strait is an extreme or unlikely step, what else could Iran do?

Iran has a wide range of other ways to use its power in the gulf, from seizing ships to raiding facilities offshore. It can also use small ships to damage or detain tankers or board merchant ships to slow down shipping, harassment that falls short of war. Those minor attacks could reduce traffic or raise insurance costs for shippers. And those attacks don't need to be at or near the Strait of Hormuz.

“Everyone uses ‘close the gulf’ as sort of a slogan,” said Anthony Cordesman, a strategy expert with the Center for Strategic and International Studies. “But Iran has demonstrated that it would look at a whole range of different ways to put pressure on the Arab Gulf states and the West.

“It wouldn’t make any sense at all for Iran to concentrate all of its assets around one narrow point and make it extremely easy to attack them,” he added.

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-- Emily Alpert

 

 

 

 


Russia slams EU boycott of Iranian oil

Sergei Lavrov; Russia slams EU boycott of Iranian oil

REPORTING FROM YAROSLAVL, RUSSIA -- Russia slammed the new package of sanctions against Iran approved Monday by the European Union, saying it was unlikely to make the Islamic Republic give up its nuclear program and may prove counterproductive.

The 27-member EU, the second-largest market for Iranian oil, announced a boycott to pressure the Islamic Republic to resume negotiations. Iran says its nuclear program is for peaceful purposes. The U.S. and many of its Western European allies suspect it of trying to build atomic weapons.    

In a tough-worded statement, the Russian Foreign Ministry called the EU move “deeply erroneous." 

“Under such kind of pressure Iran will make no concessions and no correction of its policy,” it said. Foreign Minister Sergei Lavrov told reporters that there was nothing to prove that Iran was trying to build an atomic weapon.

Experts say Moscow's policy on Iran, as well as its opposition to increased international pressure against Syria's crackdown on opponents of President Bashar Assad, reflects a eagerness to confront the West because of its criticism of irregularities in voting for parliament last month. Prime Minister Vladimir Putin is trying to reclaim the presidency in March elections.  

“What is quite clear is that Russia doesn’t want to act on the issue in accord with the West,” said Viktor Kremenyuk, deputy head of the USA and Canada Institute think tank. "As the presidential election in Moscow is getting closer, the anti-Western rhetoric is increasing.”

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-- Sergei L. Loiko

Photo: Russian Foreign Minister Sergei Lavrov arrives at his annual news conference in Moscow on Jan. 18. Lavrov warned that an attack on Iran would cause a catastrophe and said U.S. and European Union sanctions against Tehran were aimed at fomenting popular discontent by strangling the economy. Credit: Maxim Shipenkov / European Pressphoto Agency


European Union bans Iranian oil

 

The European Union has adopted an embargo on Iranian oil over the Tehran regime's nuclear program

 

REPORTING FROM LONDON -- The European Union formally approved an embargo on Iranian oil Monday to punish the regime in Tehran for its nuclear program.

The boycott takes effect immediately, canceling any new or proposed oil contracts between EU countries and Iran. Existing contracts can run through the end of June but then must be suspended.

The tough new round of sanctions was adopted by EU foreign ministers at a meeting in Brussels after weeks of discussion and preparation. The U.S. already has a similar embargo in place.

"This shows the resolve of the European Union on this issue and of the international community," British Foreign Secretary William Hague said in Brussels. "It is absolutely right to do this in view of Iran's continued breach of U.N. Security Council resolutions and refusal to come to meaningful negotiations on the nuclear program."

Hague called it "an unprecedented set of sanctions" that should encourage other nations to ban Iranian oil as well.

The EU is Iran's second-largest oil market after China. European officials hope that the crackdown will cause enough economic pain to force Tehran back to the negotiating table over its nuclear program, which Western countries believe is aimed at developing a weapon and not just nuclear power, as Iran insists.

Tehran has threatened to shut down the Strait of Hormuz, at the mouth of the Persian Gulf, in retaliation against boycotts of its oil.

But analysts regard such a drastic step as unlikely. The U.S. has warned against it and sent an aircraft carrier through the narrow strait Sunday. The carrier was accompanied by ships from the British and French navies.

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Photo: European Union foreign ministers at the start of their meeting Monday in Brussels. Credit: Julien Warnand / EPA


U.S. aircraft carrier sails through strategic Strait of Hormuz

U.S. aircraft carrier John C. Stennis transits the Straits of Hormuz in November.

REPORTING FROM WASHINGTON -- A U.S. aircraft carrier sailed through the Strait of Hormuz on Sunday, the first transit since Iran warned American ships this year against using the strategic waterway.

The Navy’s 5th Fleet said in a statement that the carrier Abraham Lincoln passed through the narrow waterway into the Persian Gulf “without incident.”

The ship was accompanied by British and French naval vessels, a move that officials said was intended to show international support for keeping open the strait, a choke point through which 20% of the world’s oil passes.

Tensions with Iran have intensified in recent months as the U.S. and its allies have imposed new sanctions aimed at forcing Tehran to abandon its nuclear program. Iran has responded by conducting naval maneuvers and threatening to close the strait.

When the carrier John C. Stennis departed the gulf in late December, the head of Iran’s army warned the ship not to return, and other Iranian officers advised all U.S. Navy vessels to stay out of the Persian Gulf, where they have patrolled for decades. The headquarters of the 5th Fleet is in the gulf kingdom of Bahrain.

The U.S. and its allies are trying to pressure Iran to halt its nuclear program, suspecting that the Islamic Republic is trying to develop weapons. Iran says its nuclear program is for peaceful purposes only.

The Lincoln and its strike group of other Navy ships arrived in the Arabian Sea this month, joining the Carl Vinson, another U.S. carrier now in the north Arabian Sea. Pentagon officials are planning to keep two carriers and their battle groups assigned to the 5th Fleet for an indefinite period, giving commanders major naval and air assets.

Fighters from the Vinson have been conducting air operations over Afghanistan, leaving the Lincoln free to patrol in the Persian Gulf in case of a crisis with Iran.

Navy officials say Iran might be able to temporarily block tanker traffic through the strait using mines and anti-ship missiles and other weapons, but U.S. commanders say they could probably reopen the waterway within a week.

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-- David S. Cloud

Photo: In this Nov. 12 photo provided by the U.S. Navy, the Nimitz-class aircraft carrier John C. Stennis transits the Straits of Hormuz. Credit: Petty Officer 3rd Class Kenneth Abbate / U.S. Navy

 


Gas for 37 cents? Why fuel costs more or less elsewhere

Nigerians in Lagos protest the end of fuel subsidies.
REPORTING FROM LOS ANGELES -- Soaring fuel prices are souring Nigerians on President Goodluck Jonathan, Robyn Dixon reports. But how do gas prices in Nigeria compare with those elsewhere? And why does the price of gasoline differ so much around the world?

Nigeria historically has enjoyed some of the lowest gas prices in the world. Recent World Bank data pegged the price at $1.67 a gallon in 2010. Prices in many Arab countries were even lower: Iranian drivers could fuel up for just 37 cents a gallon.

Although there are variations within the United States as well, a gallon cost the average American $2.88 that year. But before you get outraged about how much you paid for gasoline, take a look at pump prices in the Netherlands ($8.06 a gallon) or Eritrea ($9.61 a gallon).

How can it be so much cheaper to buy gas in Nigeria than the Netherlands?

Nigeria -- along with  many of those Arab countries and Iran -- is an oil producer. Nigeria has a shortage of refining capacity, so it exports crude oil but must import refined petroleum products, such as gasoline. Some analysts say it is also part of the unwritten social contract for some countries that produce oil, particularly Arab states, to provide cheap gas to their citizens, so they subsidize it.   

Other countries tax it. A German government group that tracks gasoline prices divides countries into four categories based on how heavily they tax or subsidize gasoline, correlating those choices to their fuel prices. 

Nigeria has subsidized its gasoline; now it is trying to cut back on those subsidies to bring fuel to the market rate. But as the president has found, getting rid of fuel subsidies is rarely popular. Last year, Bolivian President Evo Morales had to backtrack on a similar plan after massive protests.

For more on why you pay what you pay at the pump, check out this helpful  explainer from the Atlantic, which breaks down what goes into gas prices.  You can also view the World Bank data on a map.

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-- Emily Alpert

Photo: Lt. Col. A.A. Alabi tries to calm protesters at Ojota district in Lagos, Nigeria, on Jan. 16, 2012. Nigerian security forces fired tear gas and shot into the air to disperse about 300 protesters in Lagos. Credit: Pius Utomi Ekpei / Agence France-Presse


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