Globalia Magazine 15th Edition

Quarterly - Issue 15 Februrary 2013

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MAGAZINE

Alcohol The drug of the century A special report

The New Egypt

Interview with Hazem Elleithy

Baku

What would it be like to live there?

Peak Oil

Is it relevant?

The Alphen Boutique Hotel A five-star boutique hotel set on our 16-acre national heritage site includes 19 luxurious suites and three quality restaurants Discover us in the Constantia Valley in the beautiful city of Cape Town www.alphen.co.za

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Contents 6

8 12 16 20 GLOBALIA is published by IZ Medien GmbH Beilsteinerstr. 12 12681 Berlin - Germany Editor-in-Chief Abu Bakr Rieger

24 26 42

Editor Jason Ferriman Associate Editor Sulaiman Wilms Cover Image & Photo Essay Yasser Booley mierkat@gmail.com Contributors D.H. Hurrel, Douglas McClure, Dr. Julius G. Goepp, Harun Sidorov, Dr. Habib Siddiqui, Francois James, Sarah Mart, Jacob Mergendoller and Michele Simon.

30 35 38 46

Contact Us Phone +49(0)30 240 48974 Fax +49(0)30 240 48975 Email info@globaliamagazine.com Website www.globaliamagazine.com To subscribe to GLOBALIA magazine and receive more information on how you can have it delivered to your door, e-mail us on info@globaliamagazine.com

49 51 52

Editorial

Abu Bakr Rieger

Special Report

Money and intoxication Facebook and alcohol promotion The Russian spiritual collapse

Photo Essay

Drinking in Cape Town – a tale of two worlds

Interview

The Rohingya Issue: Globalia speaks to Tun Khin A brief history of the Rohingya The New Egypt: Globalia speaks to Hazem Elleithy

Economy

Is Peak Oil relevant?

Southern Comfort – the future strategic value of African petroleum Goethe and Money

Medicine

Dionysus Redeemed – the benefits inside of the grape

Reviews

‘The Man without a Face: The Unlikely Rise of Vladimir Putin’ by Masha Gessen ‘Lincoln’ by Steven Spielberg

Travel

Baku – what would it be like to live there?

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EDITORIAL

Editorial

By Abu Bakr Rieger, publisher of Globalia Magazine I come from an area in ­Germany known for its good food and even better known for its wine. But when I ­became Muslim over 20 years ago, I bid ­farewell to the old habits – a beer at lunch or a glass of wine in the ­evening was ­relegated to the past. This, however, was not ­ without ­ consequence. ­Alcohol is very much a central part of the ­European way of life, and ­ whoever abstains from alcohol, whatever the reason, can all too easily drift from the social life of certain friends or c­ olleagues.

In many regions of Europe, the moderate consumption of ­alcohol, the production of wine and its associated customs have been part of the culture for centuries, and millions of Europeans today consume alcohol without in any way ­being dependent on it. But it was several years before I acquired any tangible understanding of the limits on alcohol. I had been invited to give a lecture in Almaty, the largest city and former capital of Kazakhstan. I was speaking about the ­European Muslims and their significance in the modern age when I mentioned, just as an aside, the prohibition of alcohol ­consumption. At that moment, and to my surprise, a swathe of Russian women spontaneously applauded. I later asked the women why this particular part of Islamic law would elicit such a v­ ehement response given that they were not Muslims, and they asked me if I really wanted an answer. I said yes.

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So the next morning found us in their neighbourhood where I immediately y realized what those ladies meant: dozens of young men lying on benches sleeping off their druken stupor, alongside them their cheap and now empty vodka bottles.

“That’s the reason!” the anxious women exclaimed.

But the problem of alcohol is not limited to the countries of the former Soviet Union. The social significance of prohibiting alcohol consumption should be understandable all over the world. In the West, there has been a marginalised debate over alcohol use, mostly because the alcohol industry is a ­powerful lobbyist and counts on their commodity remaining a subtly non-questioned part of the Western way of life.

The pernicious effects of alcohol consumption on the health and general well-being of whole populations across the world are well-known and documented, but an area of particular ­concern extends to people of leadership. The ­acquisition of drugs and not, as Marx argued, religion, ­distract many ­today from a sober evaluation of our ­contemporary ­political situation. Alcohol is now increasingly used. The financial crisis makes clear – one only has to think of the ­crisis of ­ parliamentarianism – that the political sovereignty of ­Western ­societies is ­threatened. Many citizens no longer ­actively ­concern ­themselves with ­politics. The Roman ‘Bread and Games’, rather, seems still to be the ­general slogan.

Alcohol is basically a narcotic that distracts from the threat of the c­ urrent f­inancial system. Allow us in this edition of­ GLOBALIA to call ­a ttention to the ­p rominence of this ­century’s drug.

Money and Intoxication Sulaiman Wilms investigates the alcohol industry and its capitalisation

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Artwork by Garcya.us 2012

Special Report

Special Report

Recently I was forced to make an unplanned stop-over in the UAE. With the intention of organising my thoughts, I walked into one of the restaurants that apparently had everything on offer; but, according to the manager, I needed to order something to drink.

My coffee order was not only denied, but I was also informed that I should leave immediately. The humourless manager resolutely stated that I had to order something alcoholic if I wanted to stay.

This irritating experience not only demonstrates the levelling-out effect of globalisation but also the reach of the alcohol industry today.

Although developing countries like Brazil, China, India and South Africa have experienced growth in their alcohol markets, Eurasia – the EU, eastern Europe, Russia and Kazakstan – today remains the motherland of alcohol. As far as per capita consumption is concerned, Eurasia has long since overtaken North America. Of the developing countries, India, according to Netscribes, is on track to become one of the key alcohol markets by 2015.

There is no simple explanation for the development of this phenomenon.

Historically, many civilisations have had a tradition of alcohol consumption. Yet something changed in early modern times that led to Europe and its offshoot’s prominence in the abuse of alcohol.

The European Middle Ages did not experience the massive consumption of spirits as seen later, even though there was a familiarity with the process of distillation. The chemists of the time practically had a monopoly on highly-distilled alcohol which was sold for medicinal purposes well into the 16th century. The average European, usually a farmer, drank beer. This was due to the high production of grain, a staple crop from which, for example, soup was made. Beer, or ‘liquid grain’, as a source of fluid was so widespread that even children drank it. Today it may

seem inconceivable, but at that time water were not always the main source of liquid due to the lack of filtration.

Beer and wine produced through fermentation was considered, in fact, more beneficial by some doctors due to the fact that it often contained fewer germs.

With the exception of the monasteries (famously in Bayern and Bohemia), beer was a domestic product with no economic function. For northern and eastern Europeans, wine was imported, drunk only in churches and available mostly for the nobility. Southern and some central European regions maintained the original Roman viticulture. In terms of the inter-regional trade of wine (international trade was still rare in Europe), the regions of south-western France, areas of Portugal and Spain, as well as the lower Rhine Valley were of importance.

The mass-production of wine required large areas of land and came with the costs of large capital and workers.

Not only did the berries need to be harvested and cultivated, but there was also a need for experts to oversee the fermentation, workmen to farm the land, as well as transport in order to move these valuable goods to the Baltic Sea and Russia.

In England, the importance of wine from Bordeaux, the Rhineland and Portugal certainly does not prove the existence of good trade relations between England and those areas. Some historians even suggest that the English nobility fought wars in areas from which they got their wine. It was socially unacceptable for hereditary noblemen to make money from anything other than land. Barbara Tuchmann argues in ‘Practising History’ that this did not prevent the English ruling classes from making a profit from the import and sale of French wine.

Contrary to what is populary believed, so-called ‘binge drinking’ is not a

recent phenomenon. As early as the 17th and 18th centuries there were reports of revellers drinking themselves into oblivion. Binges not only comprised hard liquor but also cheap wine which, according to the famous French historian Fernand Braudel in his ‘Civilisation and Capitalism – 15th -18th Century’, was seen as a “cheap staple” in Spain and France. Liquor was often consumed in taverns before the gates of the cities in southern Europe and resulted in rude drunkenness. For seamen in the ports of England and the colonies, or Dutch mercenaries, for example, hard liquor – and hard drinking – was a key element of everyday life. Rum or brandy rations were guaranteed to soldiers in the first standing armies.

The capitalisation of alcohol The early-modern period of the 17th and 18th centuries was the time in which the alcohol industry boomed.

Several factors led to the transition of alcohol from a domestic product, based on monastic tradition and wineries, to a capital-intensive, but profitable industry.

Innovations in agriculture, the building of large industrial-scale distilleries, as well as the flourishing ‘Triangle Trade’ between Europe, Africa, the Americas and then back to Europe were contributing factors. Even after the drinking of tea and coffee had become established customs among the middle classes, beer and wine remained the staple sources of liquid, even more so than water.

It was also at this time that the Dutch developed new methods of cultivating grain. This, the ability to develop new cultivated land, the growth in the importing of grain from the Baltic regions, as well as the introduction of potatoes ended the regular bad harvests and starvation. Large sources of starch were also discovered, and beyond what was necessary as a source of food.

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“The revolution in Europe was the appearance of marked brandy and spirits made from grain – in a word – alcohol. The sixteenth century created it: the eighteenth popularised it,” asserts Braudel on the significance of the production of alcohol in the early modern period.

Between the early 16th century until the middle of the 19th century, millions of Africans were enslaved and transported to the European colonies in the Caribbean. Sugar was produced on an industrial scale on the Caribbean islands, of which molasses was a by-product.

This was then shipped to New England (and also Europe), where it was distilled into rum. The planting, harvesting and processing of sugarcane was laborious and dangerous work involving enormous costs and large numbers of slaves.

By the 1660s, Dutch companies had begun producing rum on Staten Island in New York. The English were even quicker off the mark. By 1627 they had begun distilling the sugar industry © Stephen Gerken 2007

The “Triangle Trade” and slavery in America

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German monks having a bit of fun

© German Beer Institute 2008

Then came the innovation of distilling wine into ‘burnt wine’ or brandy. The first centres of brandy production developed on the west coast of France. In the early decades of the 18th century the drink dominated the European markets.

By the middle of that century, famous companies which are still important brands on the books of large alcohol concerns, were beginning to rise in prominence.

by-product in one of their colonies, Barbados. In the 1770s, New England’s distilleries produced millions of barrels of rum per year. It is estimated that the slave-traders in Newport alone exchanged more than 106,000 slaves in return for rum, making the liquid not just a colonial export but an essential commodity. Rum was not simply one of many colonial exports. “[Rum] nourished the trade in slaves from Africa and gave commercial impetus to European manufacturers and traders.

Accordingly, Caribbean colonies were of central importance to economic development during the 18th century and became a focal point of international political conflict as colonising powers vied with one another for domination over the region’s control of its sugar industry,” so states Dale W. Tomich. Without this, the future wealth of Europe and the north-eastern territories of what would go on to become the United States would have been unthinkable.

Through the increasing profits from the rum-slave trade, the circulation of capital around Europe was considerably accelerated, creating capital for the expansion of speculative business models and the development of new methods of production.

The losers in Europe, among others, were the poorest class of landowning nobility as well as wage-labourers who worked as farmhands. At the same time, there was a growth of the middle class. To the present day, the simplistic worldview has persisted: Europe and her Anglo-Saxon colonies achieved their economic triumph through ‘diligence’

Special Report

and ‘ingenuity’. Tzvetan Todorov and others have proved that a considerable proportion of the original share-capital of European businesses originated from the transatlantic trade in slaves and rum.

Several years ago, Swiss politician and author, Jean Ziegler, found himself on the wrong side of prominent and wealthy Swiss families, when he discovered just how much of the foundation of their later wealth came from this type of business.

Acceptable poison As published in an industry report, the two biggest markets for strong alcoholic drinks are the Asian-Pacific region and Europe. Remarkably, in 2010, the global conglomerates sold more alcohol in Latin America than they did in North America. The sales and turnover of the worldwide leading distilleries and wineries were not included in the available statistics. In the same year the global spirit producers made a total of €198 billion and despite the financial crisis of 2010. In one report it was predicted that by the year 2015, this amount would increase to €230 billion.

At the end of 2011, the companies Anheuser-Busch InBev and SABMiller were the market leaders in the massorientated brewery business. With a €27 and €21 billion turnover respectively, the two industry giants control hundreds of breweries across the globe. SABMiller is controlled by the same holding company, Altria Group, which owns

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Alcohol’s global balance sheet is composed of at least three elements: high corporate profits, high tax revenues and enormous economic costs for the state.

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more than 27 percent of the cigarette producer, Phillip Morris.

Alcohol’s global balance sheet is composed of at least three elements: high corporate profits, high tax revenues and enormous economic costs for the state. According to the World Health Organisation (WHO) in 2004, 10 to 14 percent of all illnesses in Russia and parts of eastern Europe are linked to alcohol consumption. In the rest of Europe as well as Turkey, Central Asia, China and Latin America the figure rested at between five to 10 percent.

Clearly the individual and social costs of these illnesses, the loss of productivity, as well as disability and death must be contrasted against the profits generated by the alcohol companies.

It is also impossible to put a figure on the psycho-social damage inflicted on millions of individuals, families and local communities. But in the face of such damage, the autonomous, selfimposed constraints implemented by the industry amount to nothing more than a well-orchestrated PR campaign.

Forward to 2011 and a corresponding WHO report, and the facts speak for themselves: “The harmful use of alcohol

results in more than 2.5 million deaths each year. 320,000 young people between the age of 15 and 29 die from alcoholrelated causes, resulting in nine per cent of all deaths in that age group. Alcohol is the world’s third largest risk factor for disease burden; it is the leading risk factor in the Western Pacific and the Americas and the second largest in Europe.

Alcohol is associated with many serious social and developmental issues, including violence, child neglect and abuse, and absenteeism in the workplace. The harmful use of alcohol is a global problem that compromises both individual and social development [...] it harms the well-being and health of people around the drinker. [...] Thus, the impact of the harmful use of alcohol reaches deep into society.”

Despite a short period of alcohol prohibition in the US and the fierce debates over alcohols’ legitimacy in 18th and 19th century Europe, modern societies have come to terms with alcohol, much the same as many diverse cultures embraced the cigarette in the early 20th century.

The intoxicating substance of alcohol has been dealt with in much the same way as famine and armed-conflict: the effects are known, but nothing is done to interfere or change the modus operandi.

The gains for the global players and the national states with alcohol are far too tempting.

© Versova 2012

A bar in Mumbai: the alcohol corporations are ready for the emergent Indian market

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Special Report

Sarah Mart, Jacob Mergendoller and Michele Simon offer a brief study on the social media platform and its relationship to alcohol W e explored the prevalence of alcohol -related content found in popular aspects of Facebook profiles. We also identified aspects of Facebook that contain a great deal of alcohol content and are accessible by anyone, regardless of age. Although Facebook states publicly that it is “committed to protecting our user experience by keeping the site clean, consistent, and free from intrusive advertising”, the Facebook Ads, Pages, Applications, Events, and Groups promoting alcohol products and alcoholrelated drinking behaviour tell a different story.

The provisions of Facebook’s Alcohol Advertising Guidelines are similar to the voluntary, self-regulatory codes that the alcohol industry trade-groups maintain for advertising and marketing alcohol.

Its Platform Guidelines Alcohol Content Policy advises developers who create third-party Facebook Applications that they are “required to use Demographic Restrictions so that Facebook users can view, be presented with, or have access to alcohol-related content only to the extent permitted by local laws in the

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country from which the Facebook user is accessing the application.”

The Facebook Statement of Rights and Responsibilities (for users and others who interact with Facebook) includes a section on safety, with the directive that those who use Facebook will not develop or operate a third-party application containing, advertising or otherwise marketing alcohol-related or mature content without appropriate age-based restrictions. In this statement, the Special Provisions Applicable to Advertisers also says that Facebook may reject or remove any ad for any reason.

What We Did To examine the various ways that alcohol is promoted on Facebook, we conducted searches and set up two different user profiles. We did not conduct an exhaustive systematic review; rather, we conducted a limited, qualitative examination of the most prevalent alcohol messaging on the Facebook platform.

Toward that end, we searched for five Facebook features associated with the ten top-selling beer brands in the US: Bud Light, Budweiser, Coors Light, Miller Lite, Natural Light, Busch Light, Busch, Miller High Life, Keystone Light, and Michelob Ultra, and the ten top-selling spir-

its brands: Smirnoff, Bacardi, Captain Morgan, Absolut, Jack Daniels, Crown Royal, Jose Cuervo, Grey Goose, Jim Beam, and Jagermeister, as well as alcohol brands popular with youth and young adults, such as Mike’s Hard Lemonade and Malibu. We also searched for unbranded terms such as ‘alcohol’, ‘binge’, and ‘shots’. We created two user profiles using fictitious names, birthdates and personal information. One user profile was over the age of 21, the other was under that age.

In order to become a target for alcohol companies utilising Facebook’s Ads, we listed a number of alcohol-related terms such as ‘drinking’, ‘partying’, ‘nightlife’, ‘bars’, and ‘shots’ under Interests and Activities on both profiles.

What We Found A great deal of alcohol-related content is contained in the Facebook features. We examine some of these features below.

After ‘alcohol’ and ‘bars’ were listed in the users’ interests and the users became fans of several alcohol-related Pages, one alcohol-related advert appearing out of every eight regular ones.

Several non-alcoholic product adverts

Special Report

made strong references to nightlife, partying, and extreme intoxication. For example, an advert for the University of Andy, a fictional university, displayed an image of an attractive, seductively dressed young woman with the caption, ‘Love to Party? If so, you’ll want to get party tips from University of Andy...’ Another banner for a non-alcohol product­ had the title ‘Wow, that was some party!

But now that term paper’s due. Don’t sweat plagiarism. Check your paper now before the prof does. Click here:’ A third banner promoted the product Rohto Eye Drops which displayed an eye drop container with the caption, ‘When the party’s over, get the red out and wake up tired eyes with a kick’. These Ads for nonalcohol products using messages about drinking and partying were accessible to all users.

An abundance of Facebook ­Applications involve alcohol. More than 500 ­separate Applications are currently ­ associated with eight general alcohol terms:­­alcohol’, ‘tequila’, ‘whisky’, ‘vodka’, ‘rum’, ‘beer’, ‘wine’, and ‘shots’. We reviewed six Facebook Applications. Four of the six alcohol Applications we found were accessible to the under-21 user. This user was able to send ‘shots’ to ­Facebook friends, collect different types of alcohol and display actions taken and related

drinks chosen on the user profile for ­others to view.

According to our brief review, it ­appears that paid alcohol Ads (subject to at least some guidelines) are relatively few ­c ompared to the tens of thousands of alcohol-related Pages, Appli­ cations, Events, and Groups (hardly subject to any guidelines). Such Facebook f­eatures with alcohol-related content are de facto free advertising for the ­ respective brands. As key parts of a comprehensive viral marketing plan, these other promotional Facebook features­are just as important as traditional Ads, if not more so. Viral marketing­ content must be i­nteresting, useful, or entertaining enough to invite­ the consumer to pay attention, as opposed­to content that intrudes or disrupts­ the user’s online experience.

The alcohol-related content on Facebook overwhelmingly fits the description of viral marketing.

Despite Facebook’s Alcohol ­Advertising Guidelines requiring age restrictions on alcohol Ads, only 50 percent of the ­ Pages we reviewed restricted access based on age. Facebook users of all ages could become fans, view ­ photos of individuals consuming alcohol, post and read comments and

receive updates from the Pages.

Applications advertised alcohol with specific brand names, ­p hotos, graphics, descriptive content including excessive drinking behaviours and links to brand ­websites, none of which were restricted by age. Events advertised alcohol not only by ­ advertising their sponsors (alcohol brands or bars) but also by displaying­event information and attendee­ c­ omments describing e ­ xcessive and dangerous drinking behaviours and specific alcohol brands. No age ­restrictions on Events were indicated in our review, and the Facebook Advertising Guidelines do not include Events.

The Groups that we reviewed advertised alcohol with specific product photos, hyperlinks to brand websites, events sponsored by alcohol companies and applica­ tions using product information with no age restrictions.

Facebook’s policies regarding alcohol­ Ads and alcohol-related content in P ages, Applications, Events, and ­ Groups do not effectively protect its ­users from exposure as it purports to do. Facebook does not appear to monitor or ensure compliance with its own alcohol advertising rules, despite Facebook’s claim that it reserves the right to reject or remove advertising that it

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deems contrary to its advertising philosophy. Despite policy requiring age restrictions on alcohol-related Pages and Applications, under-21 users are able to access many of them. And because no official policy requires age restrictions on alcohol-related Events or Groups, under-21 users are able to access many of these Facebook features as well.

However, requiring age restrictions on Facebook features does not fix the entire problem with alcohol-related content on Facebook unless the company extends its restrictions to Events and Groups and is more diligent in monitoring and enforcing the restrictions overall. Alcohol corporations enjoy viral marketing through Facebook because it allows them to promote their products through multiple features: an alcohol company (or third-party marketing firm) can create a Page with information about its brand where users post Events, Applications, and Groups; users create Groups with brand-related content and messages where they post Pages, Appli cations, and Events; the brand and users create brand-sponsored or related Events where brand websites, Pages, Applications, and Groups are posted; third-party developers and users create Applications using the brand Facebook watches the world but who watches Facebook??

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name and embed the Applications in the Pages, Groups, and Events; and Ads promoting any of these features as well as specific products can be purchased by both corporate and individual users.

In other words, it’s the wild west of the Internet, which Facebook’s current policies cannot possibly effectively control.

Those policies, with their associated lack of monitoring and compliance, are also problematic because they do not ensure that the parties Facebook intends to maintain certain features (for example brand owners) are the ones actually doing so. It appears unlikely that alcohol companies are responsible for every single one of the hundreds of alcohol brand-related Pages on Facebook.

Indeed, many Pages for specific brands displayed typos, bad grammar, curse words, and fuzzy graphics, not quite the usual slick promotion we see from alcohol producers.

Alcohol-related Pages for general alcohol terms such as ‘vodka’ are prevalent, yet they do not meet Facebook’s definition of or purpose for Pages and were likely created by individual users. Alcohol-related Events and Groups, while seemingly generated by individual users, often contain brand web addresses, slo-

gans, photos, and promotional messages. In true viral marketing fashion, the line between corporate advertising and user-generated content is almost completely blurred. This lack of clarity as to who’s doing what creates monumental challenges to regulate content.

At the same time that Facebook must address the inadequacies of its policies, the alcohol industry must also question its affiliation with Facebook as a marketing tool when content so blatantly violates many of the industry’s own advertising guidelines. Pages, Applications, Events and Groups all contained numerous posts about harmful behaviours associated with specific brand names of a variety of beer and spirits, many accessible to users of all ages. These Facebook formats also displayed content containing alcohol products that are prohibited by Facebook Advertising Guidelines, such as photos of guns alongside bottles of alcohol. As the alcohol industry continually states that it is capable of regulating its own advertising, it should carefully examine the ways its products are promoted on Facebook in violation of its own codes. Another question that must be asked is: why doesn’t Facebook just be straight and stop the pretence of being morally correct?

Serving the Muslims of Europe

www.emunion.eu THE EUROPEAN MUSLIM UNION 10, Place du Temple Neuf, 67000 Strasbourg. FRANCE Tel.: +33-38-8357520, Fax: +33-1-57317454 Email: office@emunion.eu

Special Report

Image from a reprint of the original poster 2012

This 1929 poster reads “a river begins with a small stream” and “drunkenness with just a glass”

Russia’s spiritual collapse Harun Sidorov explores how vodka and its industry have debilitated the Russian people 16

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Special Report

© Evgheny Mikaylov 2012

The legendary Cristall vodka distillery of Moscow

Key to understanding the relationship between Russia and vodka is the research of the Russian historian, Ivan Pryzhov, in his book ‘The history of kabaks in Russia in relation to the history of the Russian people’. Pryzhov shows in it that the traditional alcohol culture of Russians was changed by Russia’s political transformation. There is an important historical distinction between medieval ‘Rus’ which literally means ‘Russian land’ and what is now known as ‘Russia’: the time of ‘Rus’ is an epoch marked by the arrival of Ivan IV Vasilyevich – known by the English as Ivan the Terrible – who was Grand Prince of Moscow from 1533 to 1547 and the ‘Tsar of all of Russia’ from 1547 until his death in 1584.

Pryzhov notes that during the Rus epoch, Russians used to drink weak alcohol, 5-20%, made of natural ingredients like honey and berries, but distinctly not vodka. Publically they drank in places called korchma – the Slavic equivalent to a pub – with their families. Privately, men made their traditional weak alcoholic drinks like sbiten and medovukha at home, and these were offered to houseguests or drunk during religious and festive holidays.

Tsar Ivan IV forged the Russian Empire and created the state Orthodox Church through the ‘Council of the Hundred

Chapters’. The korchma became forbidden and was soon replaced by the kabak, whilst traditional drink production became forbidden and was replaced by retail vodka. Vodka, a far stronger drink at 40% alcohol content, is essentially composed of water mixed with ethanol derived from grains or potatoes. The korchma, noted for its family orientation and socialising, had now become the kabak: that place where people drank to get drunk and nothing more.

The primary thesis of another Russian historian Petrishev in his book, ‘History of Taverns in Russia’ was to prove that the origins of alcoholism were already established within Russia society before the formation of the Russian Empire, a pro-state thesis. But in it the author confirms two key points: he agrees that at that time of Rus, people drank low-alcoholic beverages; and that the proliferation of the drinking establishments – the kabaks – grew simultaneously with the expansion of the influence of the Orthodox Church. This was basically because the church had the rights to sell alcohol, a tradition deriving from the ancient time of Byzantium.

In his article ‘Alcohol in Russia’, Martin McKee writes: “From the 1540s, Ivan IV began to establish kabaks (where spirits were produced and sold) in all major towns, with revenues

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­going directly to the royal treasury. These gained ­monopoly status in 1649 and continued through periods in which they were effectively franchised to local merchants until the ­revolution. By the early 20th century, income from alcohol constituted at least a third of all government revenue.

“The first Bolshevik government reduced alcohol production but by about 1921 consumption had returned to very high ­levels, in particular spirits distilled illicitly. By 1925, ­restrictions imposed after the revolution were rescinded, after which ­alcohol-related deaths exceeded their pre-war level, [and] in some cities, such as Moscow, by as much as 15-fold. This decision, together with that to re-establish a state monopoly, was taken, quite explicitly, by Stalin, to raise money and thus avoid the necessity of seeking foreign investment capital. By the 1970s, receipts from alcohol were again constituting a third of government revenues.”

Sobriety Movements in Russia In his interview with the anti-alcohol magazine ‘Thanksgiving’, academic Zhdanov goes so far as to declare that, “­Generally speaking, Russia is not known for drunkenness, but for ­sobriety,” and describes three major milestones in the struggle for sobriety in Russia.

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Stalin re-established the state monopoly money and thus avoid the necessity of foreign investment capital. By the 1970s, from alcohol were again constituting a government revenues.

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to raise seeking receipts third of

The first was a powerful movement between 1858 and 1861. For three years the peasants of the western ­p rovinces flatly refused to drink alcohol. Barkeepers even started to offer vodka for free, but people poured it down the drains, beat the innkeepers – even killing some of them – and burnt down taverns. The tsar was forced to suppress these anti-alcoholic marches, not only to pacify the peasants but also to protect the interests of the state as it was the main distributor and seller of vodka. In 1858 alone, there were over 110,000 trials of peasants, many of them deported to prison for taking part in these riots which became known as the ‘alco riots’. The people who p rotested during those three years became the social ­ base for one of Russia’s most powerful social reforms, the ‘Abolition of Serfdom’ in 1861.

The second wave of the sobriety movement in Russia was led by the Russian intellectuals. Writers like Dostoevsky and ­Tolstoy wrote many articles against alcohol, even though at that time the use of alcohol was ten times less than it is today.

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The third notable movement started in 1905 with The ­Sobriety Congress. This promotion of sobriety achieved a landmark ­victory in 1914 when, on the eve of military preparation for World War I, the tsar gave provincial governments the right to shut down taverns. In honour of the people, every single store was closed across the country. After three months when military mobilisation was completed, the alcohol ­ ­ traders ­lobbied for the return of alcohol sales, but failed, and the ­closure of the drinking houses was extended. Later, there was discussion to continue this permanently and in 1916 peasant deputy ­Makagon Evseev and the State Duma even proposed a bill for ‘the establishment of sobriety in Russia for ever and ever.’

McKee writes in his article that, “In 1985, Mikail Gorbachev, the newly appointed General Secretary of the C ­ ommunist Party of the Soviet Union, instituted a large-scale anti-­alcohol ­campaign. Within a few years, as the Soviet Union was ­collapsing, the campaign faltered and eventually gave way to a rapid rise in consumption fuelled by widespread illicit ­production on a massive scale.”

Russia Today According to World Health Organisation statistics, 15.2 litres of pure alcohol are consumed per person annually in ­Russia today. Alexander Nemtsov, the head of the Moscow Research Institute of Psychiatry believes the figure to be even higher: “According to our estimates, the consumption is 18 litres per person per year.” In contrast, in the 19th century the average levels of alcohol consumption was two to four litres per person per year, the same figure as at the beginning of the Soviet era.

The present situation is nothing short of a tragedy and since the 1990s, there is a negative growth of Russia’s Slavic ­population due to high mortality. According to a joint-­ investigation conducted by Russian, British and French health professionals (1991-2001) 52 percent of all deaths are related to alcohol abuse while the global average sits at four per cent.

Young contemporary Russians who have tried to call the youth to “moto” (this in Russian means sobriety) have ­generally come into trouble from the state government. Whether this is because of what they are doing or the manner in which they do it is not clear. In St. Petersburg recently, one such ­organiser, Maxim Kalinichenko, was arrested and is still ­imprisoned for ‘extremism’. This incident does have its logic: while ­mainstream Russian culture promotes an ideal of the Russian as one who loves to drink vodka and do it a lot, to declare that Russia can be and must be sober is, presently, quite extreme.

Infographic

Global Alcohol Consumption

Alcohol Marketing in Sports

Issue Issue15 15–- February February 2013 2012 –-

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Photo Essay

Unemployed and desperately waiting for something to happen while slugging a few beers in a Township bar.

Bright guy but grim prospects.

Drinking in Cape Town

A tale of two worlds, photography by Yasser Booley

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Photo Essay

The real face of alcohol in the Townships that is not depicted on the billboards. Sponsored clothing is an ingenious marketing tool in the Townships because many people living there are in need clothing and will wear anything.

Issue Issue15 15–- February February 2013 2012 –-

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Photo Essay

Living the dream portrayed on TV adverts. Parts of Cape Town during the summer months do offer the setting that can allow a person believe that they are part of some glamorous movie.

The bar is a place where many tourists and locals ‘hook-up’.

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Photo Essay

Friday evening on Long street. Later on, the effects of excessive drinking are not so alluring.

Issue Issue15 15–- February February 2013 2012 –-

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Interview

© Muhammad Zulfadhli Zaki 2012

Rohingya protestors at a rally supplicating for a change in their situation.

The Rohingya Issue

All crises are equal, some crises are less equal than others Tun Khin, the President of the Burmese Rohingya Organisation UK, continues to raise public awareness of the desperate situation created for the estimated 800,000 Rohingyas by the Buddhist-majority Myanmar government of Burma.

They are regarded in the country as illegal immigrants from Bangladesh rather than one of the country’s 135 official ethnic groups, and are also denied citizenship. The Rohingya live in western Burma, in what is today known as Rakhine State or ‘Arakan’, the name given by the British colonialists. Globalia spoke to him.

Globalia: It has been reported that there have been clashes between the Rohingya people and the Burmese government. What do you say about this?

Tun Khin: Well, it stopped after a few days but we do not have any security. This is because the government security forces are acting with Rakhine State. They are working together.

There is no protection for us, at anytime we can be killed. About

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200-300,000 Rohingyans are trapped. They cannot go to the central market. They cannot buy any food. They cannot go to school. If they go out to buy something some people are beaten and even killed.

Globalia: Would you describe the violence as ‘anti-Muslim’?

Tun Khin: We are Muslims. The Rohingya people, our religion is Islam. Even though we are a minority religion in Burma, we are still Muslim. We are being killed and removed because of our culture and our religion. I don’t know if we are being killed because we are Muslim or because we are Rohingya, but we are being killed. But even many of those expelled from Kyaukpyu are not even Rohingya but Muslims from the officially recognised Kaman minority. So, can you say [it’s] not anti-Muslim?

Globalia: There were reports that farmers from the region of Arakan have been driven off their lands.

Interview

Tun Khin: In Kyauk Phyu [a major city in Rakhine State] this is what they are trying to do. So many Rohingyas’ houses were burnt down. And they were forced out of their hometowns.

They want to get rid of them. They want to own our land.

Globalia: Would you describe the situation as an ethnic cleansing?

Tun Khin: Not an ethnic cleansing. I should say that it is more than that more like genocide. Because the intention is there.

The president of Burma [Thein Sein], he told publically this year to UN on July 11 that the Rohingya are not citizens of Burma but are illegal immigrants who have infiltrated into the country. Burmese need to skip them into the camps and send them back to their countries. That is the only solution. This is what he mentioned in his meetings with the UN. Globalia: What is the reaction of Burma’s political opposition to this matter?

Tun Khin: Unfortunately she [Aung San Suu Kyi, the N ­ obel Peace Prize winner] is very quiet. She never speaks up about Rohingya. Even though she has a moral responsibility to speak up but she never speaks. We are very surprised. We are shocked. [The Economist reported that Suu Kyi, when asked if the Rohingyas are Burmese citizens, said she, “did not know”.]

Globalia: Is anything more being said?

Tun Khin: No. It is an anti-Muslim campaign and it is [an] anti-Rohingya racist campaign. Despite signing with the OIC [the Organisation of Islamic Cooperation] a MOU memorandum of understanding, they block it and the government incite the public to block it. The public came out and said we do not want OIC office in Burma. Get out OIC. And president straight away he announced, okay, we cannot allow the OIC office to open in Burma. That’s how they play the game. [An aside, the World Bank in August 2012 was allowed to open its new office in Myanmar, Burma.]

Globalia: Is this violence extending to other Muslims in ­Burma?

Tun Khin: This is the big danger here that this spreads to other parts of Burma.

Globalia: During the military dictatorship of the 60s the ­Rohingya were not even considered second-class citizens. Is this policy still in effect or has it become an infor­ mal policy?

information. Rohingya were recognised as an ethnic group during the democratic period; after we got independence from the British in 1948. So until 1962, the Rohingya have rights like other nationals in Burma. So, 1962 when military took power, they started the anti-Muslim campaign. It is here that they started the plan to get rid of Rohingya Muslims from Arakan. So this has still been going on. So in 1988, [there was] the uprising and again military took power as situation got worse. Then came restriction of movement, of marriage etc. So then this ­government is coming up, and saying, okay, you get out of our country you are illegal immigrants. So you can see the situation and how it is moving on.

Globalia: It appears that even Muslim countries around ­Burma such as Indonesia and Bangladesh are not helping the ­Rohingya. What is your reaction to this?

Tun Khin: Well, very frustrated, very frustrated. Bangladesh government has a big role in this issue because they say that the Rohingya are not from Burma, they are illegal immigrants from Bangladesh. So Bangladesh has to stand up with other International Communities and say look these people are, you are doing this, you are killing these people that is why they are leaving from their country. You can’t simply say these people belong to us.

Globalia: What is the situation of Rohingya refugees in neighbouring countries?

Tun Khin: Well, situation is very hard to render. They live in squalid situation.

Globalia: What would you say to those who wish to ­understand the current situation in Burma?

Tun Khin: One thing is to go look at history and understand our part in this country. And let people know about this. Not many people know about this terrible situation. The news only shows other things.

Globalia: Thank you for your time Mr. Khin.

Tun Khin: I would like to mention something here to get b ­ etter

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Interview

A brief history of the Rohingya

Dr. H. Siddiqui documents the validity of their historical roots The Arakan State in Myanmar (the country also known as Burma) borders Bangladesh and is mostly inhabited by two ethnic communities: the Rakhine Buddhists and the Rohingya Muslims. The Rakhine Buddhists are close to the Burmese in religion and language, whereas the Rohingya Muslims are ethnically and religiously related to the people from the region of Chittagong in south-eastern Bangladesh.

The original inhabitants of this region were Hindus, Buddhists and Animists. But before the region’s time of Muslim rule, it was familiar with Arab seafarers who settled in the Arakan area, mixed with the locals and parented what is the present stock of people known as ethnic Rohingya. Some historians believe that the first Muslims to settle in the Arakan were Arabs under the leadership of Muhammad ibn Hanafiya (son of Ali ibn Abi Talib) in the late 7th century. He married the local queen named Kaiyapuri who had converted to Islam and whose people then embraced Islam en masse. The peaks where they lived are still known today as ‘Hanifa Tonki’ and ‘Kaiyapui Tonki’.

The second major influx of early Muslims into the area dates back to the 8th century. The British Burma Gazetteer in 1957 reported that, “in about 788 Mahataing Sandya ascended the throne of Vesali, founded a new city named after himself on the

site of old Ramawadi and died after a reign of twenty two years.

In his reign several ships were wrecked on nearby Rambree Island and the crews, said to have been Mohammedans [Muslims], were sent to Arakan proper and settled in its villages.

They were Moor-Arab Muslims.”

The third major influx came after 1404 when the Arakan king, dethroned by the Burmese, took asylum in Gaur, the capital of Bengal, and pleaded for help from Jalaluddin Muhammad Shah, Sultan of Bengal, to regain the lost throne. The Sultan sent tens of thousands of soldiers to conquer Arakan, and many of these Muslim soldiers subsequently settled there.

The spread of Islam in Arakan (and along the southern coastal areas of Bangladesh) mostly happened through the sea-borne traders and merchants. The Burmese historian U. Kyi writes that, “The superior morality of those devout Muslims attracted large number of people towards Islam who embraced it en masse.”

The Rohingya Muslims do not therefore descend from one tribal affiliation or racial stock but from quite diverse origins, culminating in a distinct culture and civilization.

The second dominant group living in Arakan are the Rakhine

The procession of the Mughal ruler Bahadur Shah Zafa to celebrate the feast of the Eid 1843 (ink and colours on paper by Thomas Theophilus Metcalfe)

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Interview

Buddhists. In 957, a Mongolian invasion swept over Vesali, the region’s capital city at the time, and killed Sula Chandra, the last Hindu king of the Chandra dynasty. Mohammed Ashraf Alam writes that, “Within a few years the Hindus of Bengal were able to establish their Pala Dynasty. But the Hindus of Vesali were unable to restore their dynasty because of the invasion and migrations of Tibeto-Burman people who were so great that their population overshadowed the Vesali Hindus. They cut Arakan away from Indians and mixed with the inhabitants of the eastern-side of the present Indo-Burma divide and created that Indo-Mongoloid stock now known as the Rakhine.” Although the emergence of this new race was not the work of a single invasion, the year 957 may be said to mark the appearance of the Rakhine in Arakan, and the beginning of a new epoch.

“

Under the military regime of General Ne Win, beginning in 1962, the Muslim residents of Arakan were labeled ‘illegal immigrants’

”

After the Portuguese established their settlements in Chittagong, Sandwip and Arakan during the Mughal rule of the Subcontinent, the Rakhine Maghs entered into a scheme of plundering Mughal territory in Bengal by making an alliance with Portuguese pirates. The Magh-Portuguese piracy was such a menace to the peace and security of Bengal that the Mughals had to step in. In 1666, Shaista Khan (16641688), the Mughal governor of Bengal, forced Chittagong from Arakanese control marking the beginning of the decline of the Arakanese Empire. The Arakanese (Rakhine) Maghs

left Chittagong never to reoccupy it, and despite MaghPortuguese plundering throughout the 18th century, it became part of Bengal.

Historian G.E. Harvey writes that, “A map of Bengal published in 1794 marks the area south of Backergunge deserted on account of the ravages of the Mughs [Arakanese]. The Arakan pirates, both Magh and Feringhi, used to come by the water-route and plunder Bengal. Mohammedans [Muslims] underwent such oppression, as they had not to suffer in Europe [sic]. As they continually practiced raids for a long time, Bengal daily became more and more desolate and less and less able to resist them. Not a house was left inhabited on their side of the rivers lying on their track from Chittagong to Dacca. The district of Bakla [Backergunge and part of Dacca], which formerly abounded in houses and cultivated fields and yielded a large revenue as duty on betel-nuts, was swept so clean with their broom of plunder and abduction that none was left to tenant any house or kindle a light in that region.

When Shayista Khan asked the feringhi deserters what salary the Magh king had assigned to them, they replied, ‘Our salary was the Mughal Empire. We considered the whole of Bengal as our fief. We had not to bother revenue surveyors and ourselves about court clerks but levied our rent all the year round without difficulty. We have kept the papers of the division of the booty for the last forty years.’” Because of their centuries of savagery, the Maghs of Arakan earned such a bad name that they started calling themselves the Rakhines.

As mentioned earlier, in 1404 the Arakan king, dethroned by the Burmese, took asylum in Gaur and pleaded for help to

© The British Library 2009

Issue Issue15 15–- February February 2013 2012 –-

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Interview

regain­his lost throne. Jalaluddin Muhammad Shah, the ­Sultan of Bengal, sent General Wali Khan at the head of 50,000 ­soldiers to conquer Arakan. Wali Khan drove the Burmese out and took control of power over Arakan for himself, introduced Persian as the court language of Arakan and appointed ­Qadis.

Jalaluddin then sent a second army under General Sandi Khan to overthrew Wali Khan and restored the exiled monarch (Mong Saw Mwan who took the name of Sulayman Shah) to the throne of Arakan in 1430.

Mong Saw Mwan’s Muslim soldiers settled in Arakan and even established the Sandi Khan mosque in the region.

They e ­ ventually became the kingmakers during the Mrauk-U dynasty. The practice of adopting a Muslim name or title by the ­ Arakanese kings continued until 1638. Bisveswar ­Bhattacharya sums up the position thus: “As the M ­ ohammedan influence was predominant, the Arakanese kings, though Buddhist in religion, became somewhat Mohammedanised in their ideas.”

In 1660, the Mughal Prince Shah Shuja fled to Arakan. This important event brought a new wave of Muslim immigrants to the kingdom of Arakan. From 1685 to 1710, the political power of Arakan was completely in the hand of the Muslims. ­Muslim rule or influence lasted for approximately 350 years until it was invaded and occupied by the Burmese king Boddaw Paya in 1784. He oversaw the end of Islamic rule in ­Arakan

and sowed the seed of distrust between the Rohingya and Rakhine ­peoples.

Arakan had managed to retain its independent or semi-­ independent status for most of its existence and was neither a Burmese nor a Moghul territory. But in 1784 thousands of Arakanese – Rohingya and Buddhists alike – were killed, and their mosques, dargas and temples destroyed by the ­Burmese soldiers. During the 40-year Burmese rule, 1784-1824, nearly two-thirds or 200,000 Arakanese were forced to take refuge in Chittagong.

The First Anglo-Burmese War (1824-26) ended on 24 F ­ ebruary 1826 when Burma ratified the Treaty of Yandabo and ceded Arakan and Tenasserim to British India. At that time, ­nearly a third of the population of Arakan was Muslim. Burma was separated from British India on 1 April 1937 under the Government of India Act of 1935. Arakan was made a part of British Burma against the wishes of its people and finally became a province of independent Burma in 1948.

For centuries, the Rohingya Muslims coexisted ­ relatively peacefully with the Rakhine Buddhists. However, this changed around the Second World War when communal riots ­erupted between the two ethnic groups at the instigation of third parties, most notably the British Raj. The bitterness was fuelled by the violence of 28 March, 1942 when ­approximately 100,000 Rohingyas were massacred, 80,000 forced from their ancestral homes and 294 Rohingya villages destroyed.

Since then the relationship between the two communities ­ eteriorated to the extent that there remained little option has d for the Rohingya other than to seek self-determination as an ­autonomous territory.

© Galerie Michael Herrfurth 2012

After Burma’s independence in 1948, Muslims carried out an unsuccessful armed rebellion demanding an autonomous state within the Union of Burma. This resulted in a backlash that led to their removal from civil posts, restrictions on ­movement, and the confiscation of property.

A hand-coloured steel engraving of a Map of Burma ca. 1836

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Under the military regime of General Ne Win, beginning in 1962, the Muslim residents of Arakan were labeled ­‘illegal ­immigrants’ settled in Burma during British rule. Their ancestry was conveniently ignored. The Burmese ­central ­ urma, ­government then made efforts to drive them out of B starting with the denial of their citizenship. The 1974 ­E mergency I­ mmigration Act took away Burmese nationality ­ esignating them foreigners in their own from the ­Rohingyas, d country. The ­f ollowing Burma Citizenship Law of 1982 effectively reduced the ­ R ohingya race to a stateless ­people.

© Galerie Michael Herrfurth 2012

Economics

Is Peak Oil relevant?

D.H. Hurrel explores the concept of peak oil, its protagonists and detractors, and how this relates to the global oil economy 30

– Issue – Issue 15 – 15 February – February 20132013

Economics

In 2009, Christophe de Margerie, the chairman and CEO of Total stated that, “We are running the risk of ­another oil crisis when demand outstrips supply around 2014 or 2015. There won’t be enough oil and gas by the middle of the next decade.” This ­alarming statement by a CEO of one of the world’s largest oil companies reflects the thinking of a group of oil-watchers who maintain that global oil production has, or will soon ‘peak’ (reach maximum production) leading to the gradual then rapid decline in output, with the ­ resultant economic distress and geopolitical tensions­as ­nations compete for access to diminishing reserves.

The concept of peak oil was first ­proposed by Shell geologist, M. King Hubbert in 1956. His fame was gained by using his model to accurately predict the peak of US oil production. Using his bell-shaped graph he stated that US oil production would reach maximum ­output between the late ‘60s and early ‘70s. In 1970 the US oil output stood at a high of 10.2mbd (million barrels per day), ­followed by a gradual decline in production for decades thereafter, reaching a lowly 5mbd in 2008.

and co-founder of the Oil ­ Depletion ­Analysis Centre (ODAC), ­Campbell has done much to draw ­attention to the looming crisis promoted by the ­peakists. He has declared that ­calculating the rough time of global peak is a relatively straightforward procedure. With a known value of reserves, and a consumption and production pattern both historic and projected, the point at which which the cumulative output of the world’s oilfields will start to taper off can be calculated. Campbell notes that, “it’s a quite simple theory and one that any beer drinker understands.

The glass starts full and ends empty and the faster you drink it, the quicker it’s gone.”

“

There are a few hedge fund managers out there who are masters at knowing how to exploit the peak oil theories and hot buttons of supply and demand, and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of­­­ self-fulfilling prophecy.

”

to new price shocks re-imposing recession in a vicious circle.”

In 2005 Campbell explained that, “About 944bn barrels of oil has so far been ­ extracted, some 764bn remains extractable in known fields, or reserves, and a further 142bn of reserves are classed as ‘yet-to-find’, meaning what oil is expected to be discovered. If this is so, then the overall oil peak arrives next year.” World oil did not peak in 2006 and although Campbell’s projections were made in good faith, many have taken these failures as evidence that the peak oil model is flawed. To defend himself, Campbell quotes the economist Lord Maynard Keynes who replied to accusations of inconsistency with “when I have new information, I change my ­conclusions. What do you do sir?”

Peak oil’s opponents

Campbell wrote in his 2002 paper ‘Peak Oil: an Outlook on Crude Oil ­Depletion’ Hubbert did not, however, stop there.­ that conventional oil is responsible Applying his model globally, he ­calculated for about 95% of all oil that has been that world oil output would peak produced so far and will continue to ­somewhere between the years 1995 and dominate supply for a long time to 2000. He was to be proven wrong. By come. Oil discovery peaked in the ‘60s 2000, global oil output stood at 66mbd and we now find one barrel for every and rising. This did not put his ideas to four we consume. Middle East share rest however. Followers of ­Hubbert have of oil production is set to rise while the advanced his theory ­using u ­ pdated figrest of the world (“peaked in 1997”) is ures of global proven oil ­reserves, output in terminal decline. Non-conventional and consumption levels, and ­ projected oil production from tar sands and the future discoveries. These efforts have like might delay peak by only a few led to wild ­ predictions of the date of years, but will only help to ameliorate global peak oil, many of which have now ­ atural Gas will likely peak the decline. N passed. around 2020. He asserts that, “­Capacity limits were breached late in 2000 Oil expert Colin J. Campbell has ­causing prices to soar and leading to ­conti­nued the work of M. King ­Hubbert world recession. The recession may be through his involvement in the peak oil permanent because any recovery would debate. As founder of the ­Association for lead to new oil demand until the limits the Study of Peak Oil and Gas (ASPO) were again breached which would lead

The peak oil hypothesis has its opponents. The most obvious place to find disbelievers is in the oil industry itself.

In a recent interview with oil expert Duncan Clarke, author of ‘The Battle for Barrels’, which dealt a heavy blow to the claims of the peak oil movement, I asked how the oil industry can argue with the geological claims made by the peakists. His reply was that, “the peak oil model is highly static, ­deterministic and teleological – its outcomes are ­preor­ dained by its numeric fixities and predictable parametric linearity. At best it is a crude input/output model of sorts. It does not correspond to the ­complexities of the world oil and gas game, market and non-market oil and energy dynamics, shifting ­ geopolitics, the vexed issues of above-ground ­r eserve access, continuous additions to reserves that come from a range of interfaces both above and below ground, and the manner in which the petroleum industry has functioned for the last century over space and time (and will continue to do so in the 21st century). In essen­ce it looks backwards not forwards and denies the nature of evolutionary

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Economics

Perhaps this disbelief on the part of the oil majors is natural since most oil companies would no doubt feel very anxious to learn the futility of carrying out exploration activities if these finite reserves are known and documented.

To admit to a future of declines will surely break the adventurous spirit of the oilmen, not to mention dire consequences for the market capitalisation of these companies. Oilmen describe the ‘oil frontier’ as constantly widening, with new discoveries in Africa, South America and other regions adding to global supply as well as new technologies increasing output from existing wells.

Different perspectives As previously indicated, part of the problem that peak oil theorists have to deal with is the availability of reliable data. Oil reserve growth is reported only on an annual basis by many of the oil majors, which complicates the static core of the Hubbert model. Critics would point out that the rules set down by the Securities and Exchange Commission (they regulate the legal declaration of oil reserve figures based upon existing oil wells and equipment on the ground) allows companies the ability to declare new reserve growth by simply drilling new wells, thus providing the illusion of annual reserve growth without new fields actually being discovered. The point is that oil output is increasing in response to demand.

Another problem lies in the methodology used by the peakists. The first issue is that of finite reserves; conventional geological theory suggests that the earth contains x amount of oil in known and mostly explored locations, based upon the unique physical features indicating crude deposits. In other words, we cannot expect any new great discoveries, the proof of which is the

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decline in sizable discoveries in recent decades which could match the massive fields found during the first six decades of the 20th century. Secondly, the technology used to extract oil is indeed getting better but won’t see any major technological transformation resulting in game-changing levels of extraction over and above normal levels. Thirdly, economic considerations in oil production are secondary to geological reality.

Should global oil production peak, the global consequences will be catastrophic as a result of the inability to adapt. The last point is based upon the claim that oilfields, once passing the threshold point of maximum production, begin a rapid decline, which if charted looks like the downward curve of Hubbert’s bellcurve. In most cases, oil output follows a more gradual decline preceded by a lengthy plateau where production is relatively constant.

© U.S. Dept. of Commerce

change and the power of the geological and human imagination. Basically, it is pre-Darwinian.”

Marion King Hubbert Peak oil-related crisis scenarios have been taken seriously enough that a number of western militaries have conducted studies on the phenomenon.

The US military’s 2010 Joint Operating Environment (JOE) report stated that, “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day.” In 2010 the German

military conducted a study outlining the economic and political consequences of such an event. Der Spiegel’s ‘Market Failures and International Chain Reactions’ notes the key findings of the Bundeswehr study as outlined by Steffen Bukold.

It is significant that the implications of global peak oil have been addressed at a military level. The strategic value of oil is well known. In 1916 Lord Curzon stated that, “The Allies floated to victory on a wave of oil.” The modern military comprises of tanks and vehicles and are highly dependent upon, and thus vulnerable to oil supply shortages.

The exception would be the nuclear powered submarine and aircraft carrier, although the aircraft on board it use jet fuel. Many pundits have constructed elaborate theories of how the unspoken recognition of the looming crisis has provided the secret agenda of United States foreign policy since the ‘70s.

The 2003 invasion of Iraq is a case in point. Critics have pointed out that since the United States has a virtually unlimited credit card by virtue of issuing the world’s reserve currency, why not just purchase the oil from the world ‘market’? The occupation of Iraq was a failure in terms of oil seizure since most of the large oilfields were auctioned off to non-American companies in 2009.

On the other hand, transnational oil companies are just that, trans-national, and thus occupy a sphere outside the narrow gamut of national affiliation both politically and economically. In this sense, Shell’s billion-dollar project on the Iraq Majnoon field is as American as it is Anglo-Dutch.

Oil and Finance On the ASPO website one cannot help but notice the amount of material published in 2008 compared to 2012.

One could say that ASPO itself ‘peaked’ in 2008. It is no coincidence that in July of that year, crude oil prices reached $147 a barrel, aggravating economic

Economics

conditions in the US and around the world. It is also telling that the global financial crisis ‘began’ in 2008 with the symbolic collapse of Bear Stearns. This begs the question as to the link between oil, scarcity concerns and the economy.

The classic macroeconomic theory of supply and demand suggests that in July 2008 worldwide demand for crude oil was significantly higher than available supply. The market was unable to efficiently allocate the needed resources and as a result prices rose in order to incentivise the needed reallocation of resources. The problem with the supply-and-demand theory is that there is in absolute terms no price equilibrium for any resource. Price is influenced by such a multitude of factors that suggesting a ‘price range’ for a commodity is problematic and of a temporary duration. In 1969 the price of nickel shot up to $7000 a pound, today a pound of nickel costs roughly $7.

The 1969 upshot had less to do with the supply or demand of nickel on the world market, but more the stock market flurry as investors drove up the price after the Poseidon Company announced a promising nickel find in Australia amid a shortage caused by a strike at a major Canadian nickel mine.

A price range of $18-22 per barrel of oil was seen as ‘natural’ since the late ‘80’s.

Deviation from the course due to unforeseen circumstances would be rectified in due course by market forces. Yet this observation fails to take into consideration the relationship that the interests that ‘dominant capital’, to use Jonathan Nitzans term, have with the price of crude oil. The oil industry, whether private companies like the giant Exxon-Mobile or a national oil company such as Rosneft, does not feel the pain associated with high oil prices. On the contrary, these entities thrive amidst high market prices for hydrocarbons.

In 2008 Exxon-Mobile reported profits of $45.2 billion, which translates into $1,433.28 profit per second. Oil prices also translate into increased power for oil producing countries. There is no doubt, for example, that ‘Resurgent Russia’ owed its pre-Financial Crisis political momentum to the vastly inflated price of hydrocarbons. Oil companies, both national and private, therefore have an intrinsic interest in high oil prices.

Marshal Goldman, author of the book ‘PetroState’, believes that Russia would have enjoyed such unprecedented economic and strategic vitality regardless of who was in power thanks to the price of crude.

Where did that upsurge in demand preceding the July 2008 price spike come from? The answer lies not in thirsty Asian economies nor the peaking of global oil supply, but rather in the failure of ‘the market’ to correctly set prices in response to supply and demand, bowing

‘Market Failures and International Chain Reactions’ by Steffen Bukold Oil will determine power: the Bundeswehr Transformation Centre writes that oil will become one decisive factor in determining the new landscape of international relations: “The relative importance of the oil-producing nations in the international system is growing. These nations are using the advantages resulting from this to expand the scope of their domestic and foreign policies and establish themselves as a new or resurgent regional, or in some cases even global leading power.”

Increasing importance of oil exporters: for importers of oil, more competition for resources will mean an increase in the number of nations competing for favour with oil-producing nations. For the latter this opens up a window of opportunity which can be used to implement political, economic or ideological aims. As this window of time will only be open for a limited period, ‘this could result in a more aggressive assertion of national interests on the part of the oil-producing nations.’

Market failures: the authors paint a bleak picture of the consequences resulting from a shortage of petroleum. As the transportation of goods depends on crude oil, international trade could be subject to colossal tax hikes. As a result, “Shortages in the supply of vital goods could arise,” for example in food supplies. Oil is used directly or indirectly in the production of 95 percent of all industrial goods. Price shocks could therefore be seen in almost any industry and throughout all stages of the industrial supply chain. “In the medium term the global economic system and every market-oriented national economy would collapse.”

Relapse into planned economy: since virtually all economic sectors rely heavily on oil, peak oil could lead to a “partial or complete failure of markets,” says the study. “A conceivable alternative would be government rationing and the allocation of important goods or the setting of production schedules and other short-term coercive measures to replace market-based mechanisms in times of crisis.”

Crisis of political legitimacy: the Bundeswehr study also raises fears for the survival of democracy itself. Parts of the German population could perceive the upheaval triggered by peak oil “as a general systemic crisis,” creating, “room for ideological and extremist alternatives to existing forms of government.” Fragmentation of the affected population is likely and could “in extreme cases lead to open conflict.”

With the permission of the author

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Economics

to the manipulation of hedge funds and trader banks such as Goldman Sachs and JP Morgan who artificially bid up the price of oil through the murky and largely unregulated world of the oil-futures market. In other words, no increase of physical demand drove up the price of crude.

In June 2006 a US Senate Permanent Subcommittee on Investigations report titled ‘The Role of Market Speculation in Rising Oil and Gas Prices: A need to put the cop back on the beat’ noted that, “there is substantial evidence supporting the conclusions that the large amount of speculation in the current market has significantly increased prices.”

Earlier last year Forbes reported that, “speculation in crude oil adds $23.39 to the price per barrel.” Others estimate that up to 60% of the current price of oil is due to oil-futures speculation.

Author and political analyst William Engdahl writes that, “The large purchases of crude oilfutures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that

results from the purchase of a futures contract by a refiner or other user of petroleum.” In other words, Wall Street, not peak oil is creating the illusion of scarcity and using it to justify high prices. The Forbes report also noted that, “As of February 23 2012, ‘managed money’ held positions in NYMEX crude oil contracts equivalent to 233.9 million barrels of oil – the equivalent of about one year’s crude from Iran to Western European nations.”

What this indicates is that the oil price is a weak indicator of global oil supply pressures. Recent International Energy Agency (IEA) reports suggest that oil supplies are rising faster than demand, partly as a result of lower consumption rates in economies hit by recession, alongside a host of new oil fields coming online in response to higher price. If there was any doubt on the matter then consider the words of Exxon Mobile CEO Rex Tillerson who under question during a Senate Finance Committee hearing said: “If the ‘normal economic forces’ dictated price then oil, which at the time was trading at $100 a barrel would cost a lot less. If you were to use a pure economic approach… it’s gonna be somewhere in the $60-$70 range.”

Peakists would argue that the $60$70 range is bad enough, far higher than the $22 average in the preceding decade. To this, one could point out that commodities in general have greatly © U.S. Department of Commerce 1980

The use of the famous “Hubbert Curve” as an original sketch drawn by Hubbert himself

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risen in the past decade due to the declining value of the dollar.

One needs only plot the relation of gold, the ultimate reflection of currency value, to the price of oil. Historical data shows that there is an almost 100% correlation between the price of gold and oil. As Michael Jaeger has noted, “We can say that 0.602 ounces of gold times the price of gold produces the price of a barrel of oil, with the standard error of 0.421% [...] For the last 26 years, the price of gold dictated the price of oil with 99.579 percent accuracy.” What this means is that failing currencies and unregulated financial institutions are obfuscating the ‘view to the peak’.

The 2006 US Senate report also states that, “There are a few hedge fund managers out there who are masters at knowing how to exploit the peak oil theories and hot buttons of supply and demand, and by making bold predictions of shocking price advancements to come, they only add more fuel to the bullish fire in a sort of self-fulfilling prophecy.”

Most thinking people should welcome the idea of peak oil simply because there is a point at which the devastating environmental damage caused by excessive carbon-consumption will outweigh the benefits thereby accrued. The final word should belong to M. King Hubbert: “We are in a crisis in the evolution of human society. It is unique to both human and geological history [...] The monetary system has no […] constraints [...] and continues to grow by compound interest. This disparity between a monetary system which continues to grow exponentially and a physical system which is unable to do so leads to an increase with time in the ratio of money to the output of the physical system [...] The result in either case would be large-scale financial instability.”

© U.S. Navy 2004

Economics

Looking to new shores: with petroleum discovery comes state military security

Southern Comfort

Future strategic value of African petroleum, by Douglas McClure In the context of the international strategic environment and the incessant demand for new hydrocarbon resources, the African connection is thought provoking for a number of reasons. The world is confronted by multidimensional challenges on a variety of levels but when distilled to their core elements they comprise security, energy, population management and economics. Southern Africa is a microcosm of the global strategic dynamic. In the case of security and energy one country in southern Africa may hold the ace – South Africa.

The world’s largest energy consumer, the US, is increasingly looking to African

states such as Nigeria, Equatorial Guinea and Cabinda amongst other places to beef up its hydrocarbon sources in the event of a reduction in supply from the Middle East, attributable either to political instability or dwindling supplies. Nigeria generates 14% of foreign-sourced US hydrocarbon requirements and the Gulf of Guinea which is growing.

China’s demand for oil grows by the month. Indeed, China with its 1.3 billion inhabitants accounts for more than a third of the global increase in oil demand. It has overtaken Japan to become the world’s second largest importer of oil after the US. Russia,

which accounts for 10% of world production, broke up its oil giant Yukos, putting the firm under administration and halting production. Social and political instability in the Middle East is hampering supply and problems are evident in other major producers such as Venezuela.

The US appears to be running out of sufficient domestic supplies at a flat 6.3m-bpd (barrels per day) and looking to reduce international imports from traditional suppliers. How much of that is attributable to restrictive exploration and exploitation practices based on environmental and other concerns inside the US remains a debatable

Issue 15 – February 2013 –

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Economics

point but what is incontestable is that America consumes one quarter of the world’s oil production and the gap between production and consumption is 9m-bpd. The problem is that its own oil production languishes at the lowest levels since the 1950s having peaked in 1970 at 10m-bpd. Prudhoe Bay, the largest oil in North America, reversed the decline for nine years and shale oil has reversed the decline for eighteen months at the time of writing. Resources do not constitute reserves and reserves should not be misinterpreted as supplies. Even if oil production is increasing in the US – as claimed by Washington – it is unlikely to become energy-independent. The fact of the matter is that US reserves comprise a very small sub-set of resources and can take years of development-drilling to become recognised supplies.

Arthur E. Berman said in his October 2012 report titled ‘Oil Prone Shale Plays: The Illusion of Independence’ that “Proven undeveloped reserves may never be developed.” While shale reservoirs may prove attractive they do not perform as well as conventional reservoirs. And while crude oil, petroleum products and petroleum liquids are often grouped together, they are not the same since natural gas liquids (NGLs) have a lower heat content than oil and Ocean explorer on the hunt for deep sea oil ressources

are not exploitable for transportation purposes.

This impending turning point is compounded by the fact that all over the world the oil fields that have pumped life into the industrialised countries for the last 80 years – from the famous Ghawar oil field in Saudi Arabia to Prudhoe Bay in Alaska – are said to be approaching the end of their productive lives. According to James Meyer at the Oil Depletion Analysis Centre, the writing was on the wall with the advent of the new millennium seeing as there were 16 large oil discoveries at the turn of the century, eight in 2001, three in 2002 but not one in 2003. There have been few inspirational announcements since then.

Much play is made with the discovery of shale oil but these wells have high decline rates. Just to maintain production levels requires excessive investment.

The International Energy Agency predicted peak extraction somewhere around 2008, as did petroleum geologist Colin Campbell. Duncan and Youngquist of the World Oil Forecasting Programme predicted 2007. But in August 2003, the geophysicist Kenneth Deffeyes told the New Scientist periodical that he was ninety percent certain that the date of maximum production would be between © Vantage Drilling

2004 and 2005. Production did in fact dip but then rose again slightly. Rough estimates indicate that out of an available two trillion barrels of oil in the world, roughly half has been so far consumed and current estimates put global peak production at the year 2020.

Based on these views, it no wonder that Washington and London are looking to Africa as part of a future solution.

Experts believe that current tensions in the Middle East are substantially adding to barrelled oil already. The whole of Africa now falls under the US European Command (USEUCOM) based in Stuttgart, Germany, which covers all Europe from the Atlantic through the eastern European former Soviet satellites to the Russian frontier, the Mediterranean and parts of the Middle East. Africa is within USEUCOM’s ‘Arc of Crisis’ and will receive considerably more attention from Washington than ever before.

“

This vast hydrocarbon corridor stretches from Norway’s northern frontier through the North Sea, under France, emerging in North Africa in Algeria and Nigeria and continuing down the midAtlantic where it is being drilled with state-of-the-art technology in Brazil, across to Guinea, Cabinda and Namibia, adjacent to South Africa, across to the Falkland Islands and penetrating as far south as the Antarctic.

”

But what is it about Africa that western strategic interests find so compelling?

Whilst the recent BP blow-out proved an understandable source of concern to US authorities, it uniquely demonstrated the existence of vast ‘un-trumpeted’ maritime oil resources in the Gulf of Mexico and further afield in the Atlantic.

What BP discovered, according to Vladimir Kutcherov, Professor at the Royal Institute of Technology in Sweden, was a form of migration channel which

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© Government of Ras Al Khaimah

Economics

Will there be a shift from Arab sand to African soil?

comprises a vast and deep fault hugely recessed in the planet’s crust akin to the Ghawar oil field of Saudi Arabia. The latter has been generating millions of barrels per day for almost seventy years. In the Gulf, BP was no longer pumping a field but actually a volcanic-type oil geyser roughly the size of Mount Everest and linked to the massive north-south oil belt of the north and south Atlantic oceans.

Extrapolating from Kutcherov, this reservoir comprises a subterranean maritime oil ‘ocean’ belt of gargantuan proportions, whose exploration and exploitation has so far been limited by technical sophistication in terms of physical access and technology coupled to costs that are all linked to international oil prices. This vast hydrocarbon corridor stretches from Norway’s northern frontier through the North Sea, under France, emerging in North Africa in Algeria and Nigeria and continuing down the mid-Atlantic where it is being drilled with state-ofthe-art technology in Brazil, across to Guinea, Cabinda and Namibia, adjacent to South Africa, across to the Falkland Islands and penetrating as far south as the Antarctic. It is potentially the greatest hydrocarbon bonanza in history, making

previous oil discoveries comparatively insignificant.

Britain went to war over it in the Falklands, Brazil is already drilling it in some of the deepest offshore wells in the world and Norway, Britain, Algeria, Nigeria and Cabinda Province are already benefitting from it. But the only country in southern Africa with the infrastructural support-base to underwrite such exploration and exploitation on a commercially viable scale in the South Atlantic region is the Republic of South Africa.

The security implications of these oil fields developments have already been seriously examined by strategists.

Indeed, the United States is so concerned with the possible threat to its present and future hydrocarbon interests in the continent as well as the implications of what it terms ‘resurgent militant Islam’ that the second of two conferences was held in December 2004 in Stuttgart attended by top-level military representatives from the US, Canada and Europe. Known as the ‘African Clearing House’ it was a two-day affair designed to co-ordinate strategy, achieve consensus on tactical battle doctrine and define policy with a

view to create five operational brigades for rapid deployment anywhere in Africa.

Strangely, there were to be no African representatives at this conference!

Discreet meetings have however been held in subsequent years with selected representatives from the African theatre.

The themes remain invariably the same – socio-economic-political stability and the protection of defined spheres of mutual interest.

Much will depend on the rate at which global oil-extraction technology develops and advances. The international oil price should then be allowed to stabilise at a cost-effective level for the exploitation of this bonanza at which point technology will, or may have already been, developed to enable the drilling of the region using the South African infrastructural base for finance, development and maintenance.

South Africans must come to terms with these realities and adopt appropriate measures to protect themselves and their industrial and financial resource-base for ensuring global hydrocarbon supplies well into the middle of the twenty-first century. There is no time like the present to initiate this process.

Issue 15 – February 2013 –

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Artwork by Jasin Brown 2013

Economics

Goethe and Money

Abu Bakr Rieger visited the exhibition ‘Goethe und das Geld’ and reflects on its significance 38

– Issue 15 – February 2013

Economics

Germany’s financial capital, Frankfurt, was ­recently host to a series of ­lectures, exhibitions, and even a specially presented theatre ­ ­ programme ­ during its “Goethe und das Geld Week” (Goethe and Money Week) in ­September. After the Occupy Movement and the “strife” that the banking quarter had had to deal with in recent times, things appeared far more cultured in the ­hallowed halls of the metropolis. Just a stone’s throw away from the ­headquarters of ­G ermany’s banking ­i nstitutions, theatre ­e nthusiasts, philosophers, ­economists, ­bankers and the ­educated middle ­c lasses could ­g ather and ­reflect on the subject of Goethe and money, and the key ­question therein implied: could someone from history – even ­Germany’s ­greatest poet – offer any ­relevant ­meaning to our present ­economic situation?

Given the backing of the German ­banking industry, and amidst the ­current ­monetary crisis, it is a surprisingly short step into the depths of German ­intellectual ­history. Goethe’s ‘Faust’ is being staged at the city’s ­magnificent theatre. You can either watch the ­poet’s masterpiece in two comfortable parts, or, if you wish for more ­efficiency in ­today’s hurried times, then the ­e ight-hour marathon in which the entire work is ­performed in a ­single day. Short or long version, Goethe expert and ­ ­ economist Hans Christoph Binswanger quite ­r ightly ­c onsiders the drama a ­c ontemporary piece that is ­ ermany ­theatres ­today. Theatre ­itself was consid­relevant in G ered a ­revolutionary ­institution in Goethe and ­Schiller’s time, but things have been quiet around Frankfurt’s theatre-house in modern times.

It was Jens Weidmann – ­Bundesbank’s director – who in his keynote ­address at the start of the charming ­programme pointed out the force that Goethe can still exert today. ­Reflecting on Goethe’s work and his timeless ­ruminations, ­Germany’s most important ­economist was wanting to consider a range of ­ s ystem-level questions which, ­remarkably, the Frankfurt-born genius of old thought about throughout his whole life.

In the world of Faust it was f­amously Mephistopheles who enticed the ­political leadership to break taboo and ­issue money in paper form – creating it out of nothing, so to speak – and, thus equipped with a devilishly competitive edge, ­attempted the conquest of the whole planet. This ambitious strategy worked at first to the surprise of those involved, since people still believed in the ­promise of the new money-­issuing banks that their ­colourful notes were backed up by natural resources. Amid the stunning prospect of a new and mighty economy with ­access to vast amounts of ­money, the modern ­tragedy and ­inevitable ­downfall of Faust ­emerges. If they were to avoid blatantly inflationary conditions ad ­absurdum then the new technique, and the conquest by new money, were ­unfortunately based on a principle that is contra natu-

rum – in other words, the expectation of ­endless growth and the endless ­creation of wealth is against the natural order of things. At the end of the second part, Faust has to concede that he does not possess the magical p ­ owers that this would require.

In his speech in Frankfurt, ­Weidmann picked up on the theme of Faust, not as a historian or self-proclaimed ­Bildungsbürger of the educated ­classes, but as President of the Bundesbank ­discussing the current disaster of ­unfettered paper-money production. The creation of endless stocks of m ­ oney from no tangible assets, national debt, inflation – all of these still leave a nasty taste – explained the banker to ­Frankfurt’s intellectual elites in true ­Goethian spirit. “Alchemy by other means” is how economist Binswanger sums up today’s economic doctrines that since Goethe’s day have cast their spell over the world of finance.

By paying homage to the poet, the Bundesbank hopes to show that it is ­committed to that very ­Germany ­tradition of caution towards the ­dangers of ­inflation and state finance.

The Bundesbank sees itself as the ­incorruptible guardian of Germany’s financial institution, ­especially now at the peak of the dramatic Euro Crisis and the Mephistophelian temptations to which the political class are apparently subjected.

Weidmann, a keen reader of Goethe, is not the only one to have been ­captivated by the poet’s relevance. In the ­Bundesbank’s museum there is a special exhibition entitled Goethe Auf Geld containing traces of a tentatively self-critical analysis of the history of money. In fact, the bank has long told the history of money in its museum rooms in WilhelmEpstein-Strasse. The exhibition shows trade using old coins alongside the high-speed commerce of modern stock brokers. The European Monetary Union is put ­forward – ­politically ­correctly as is to be e ­ xpected – as a kind of crowning glory of ­European monetary history, and that in spite of the fact that inside the bank ­certain people already think that the euro itself will soon be nothing more than a historical episode.

“

No one is more enslaved than he who considers himself free without being so.

”

Looking at the exhibition in honour of Goethe you can easily understand how an economy based on paper money can quickly veer into absurdity. A ­curious ­example is provided by the­ emergency monetary notes from ­Germany’s ­inflationary period of the 1920s, some of which even have ­written on them things that Goethe wrote about the ­creation of paper money. On the back of one of these notes, nominally worth a ­b reathtaking Faustian character of ­ Gretchen is billion marks, the ­ ­quoted as she sighs in the first part of the play: “­Towards gold throng all, to gold cling all, yes, all! Alas, we poor!”

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Economics

In East Germany there were also bank notes bearing the image of the Master, similarly mindless usurpations of the great man. After your visit to the museum, in its shop at the main entrance you can purchase a series of consumer products which come across as very strange: deutschmark notes made into memo blocks, shredded euro notes which are guaranteed to be genuine but which have been pressed into briquettes, as well as the latest 50 euro note offered as a colourful serviette.

Frankfurt’s Goethe House is more serious. Its small but finely presented exhibition shows many aspects of how Goethe dealt with money issues large and small, private and public, at different times in his life. A universal thinker, Goethe confidently broached all of the fundamental economic questions of his time, including the central theme of the legitimacy of a technique that created wealth out of nothing in the form of paper money.

It was part of his genius that he foresaw the extraordinary strength of possibility that the radical creation of new money would bring about, and that this would fuel the impending industrial revolution massively. The nature of money in Germany’s small principalities at the time tended to have the reverse effect. It is worth noting that in the time of Goethe’s youth there were 26 different kinds of gold coin and 14 different silver coins in Frankfurt alone, which meant of course that there was considerable temptation to change those monetary customs.

The Industrial Revolution, which Goethe anticipated with a mixture of hope and anxiety, created not only an enormous need for capital. The authorities, who were known to him personally, wished to equip themselves technically and

expand into new realms, planning among other things to wage their wars using the new techniques of finance. The magic of paper-money acquisition, which Goethe so expertly expresses in Faust, certainly affected Goethe as a political being, but he had serious doubts. He feared nothing short of the repression of art and culture by a mediocre world of technology and trade.

He had the foreboding that the absolute commercialisation of life would be the consequence of the marriage of capital and technology. But of course, Goethe knew that resistance to the onwards march of technology was useless. In 1825 he wrote to Georg Nicolovius with melancholy: “...just as steam engines cannot be silenced, so too will moral insulation be an impossibility: the vigour of trade, the torrents of paper money, the swelling of debt to pay for other debt – these are all the mighty elements to which a young man is today exposed...”

When his friend Prince Carl August also turned to the idea of a paper currency for his starving town in the year 1810, Goethe, who was acting as the Prince’s finance minister, was thrown into a dilemma. He had received a stately home from the Prince in 1794 and spent a small fortune simply renovating and furnishing the place, so he well knew the need for money demanded by an ambitious lifestyle.

Goethe knew how difficult it could be to get by on limited means when you had to demonstrate public largesse and dignity. But in the end, Goethe rejected the introduction of paper money on the basis of his convictions. He held to what he had already said in his coinage report of 1793, “that money is only money if it carries intrinsic value, not just on account of its stamp.” The functioning system of precious metal currencies, according to Goethe, could not simply be replaced by paper money without consequence.

© German Press office 2012

The short tour through the different phases of Goethe’s life illustrating his relation to money ends at a video installation in the centre of the room. The images there remind us of our own crisis: the political squabbling, the flood of fast, changing pictures which rain down on us from our media, and flanked by burning bank notes and flickering stock market figures. Standing here in Frankfurt, venerating Goethe along with the rest, one cannot but think of another of his propositions: “No one is more enslaved than he who considers himself free without being so.”

Two German banknotes depicting Goethe

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– Issue 15 – February 2013

Interview

The New Egypt

Hazem Elleithy gives insight into Egypt after the referendum Hazem Elleithy is a successful professional engineer and oil & gas consultant from Egypt. He has worked internationally at the highest level and specialises as an advisor for transnational oil corporations’ entry into the Egyptian petroleum market. From his work he has a deep understanding of contemporary big business, its intimate relationship to politics and the present unfolding situation of his country. Born and bred in Cairo, he graduated from the American University of Cairo, is a documented amateur archeologist and a student of history and how it relates to the present. Globalia spoke with this interesting man to learn from his views on present day Egypt.

Globalia: How is Cairo today, the Monday after the referendum?

Elleithy: It is very silent. Everybody still has to digest the new reality of what’s happening. Everybody, over the last few weeks, was really into trying to debate and to convince as many people as possible with their views.

People were around the clock either chatting on social media or talking with their neighbours or co-workers. You would find that at work that a lot of the day was no longer used for business but for political debates. People were

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all into the hype of these events and when the referendum finally ended on Saturday, the next two days have been very still and quiet. Half of the people are obviously still in shock.

Let me explain more about this. The final result of the constitution more or less says that 64 percent of the population supports the new constitution and 34 percent refuses it. This is the overall result for the two rounds of voting which were this last Saturday and the one before. But you need to look deeper into the demography of how this happened. Cairo, being Egypt’s largest city, the majority voted ‘no’. The Nile Delta region, Alexandria and so on, were almost 50-50, although three of the governors of the Nile Delta voted ‘no’. Looking at Upper Egypt – which is south of Cairo as you go down all the way in the direction of Sudan and west of the Nile – this was a majority ‘yes’ vote. The other governorates [Egypt is divided into 27 administrative governorates] of Upper Egypt there was also a clear ‘yes’ – some of them were almost 85 or 90 percent.

These are the least developed, the poorest governorates and the ones with the least modernisation, mainly the people working in agriculture and living the simple life. North Egypt, all of these were a clear ‘yes’. This gives you more un-

© Hossam el-Hamalawy 2010

Interview

derstanding why did these people more or less vote ‘yes’ and the others mostly ‘no’.

are wasting resources and energy. And the poor will continue to pay the price for this.

Globalia: Would you say that the referendum was a significant event in the recent history of Egypt?

Globalia: Can the political class and a new constitution help the poorer Egyptians south of Cairo?

Elleithy: For sure. For us in Egypt this was the first time that we have our own constitution and the ability to debate and have a say in how we would like to live here in our country. So irrespective of the result, just going through that experience makes one feel proud.

Elleithy: I think yes because the new constitution is really trying to fight corruption, trying to have a better distribution of wealth. I think that if you look at Egypt’s resources, it should be one of the richest countries in the world. We have everything: perfect weather, perfect geographic location for trade, lots of human manpower – we have 90 million people living here – and lots of mineral resources. We have gold, natural gas, petroleum, natural gas, iron ore, phosphates, manganese and others. Our historical heritage is well suited for world tourism and we have the Suez Canal. If there had been no corruption, Egypt should have been a very wealthy country and with not so much poverty.

Globalia: With so much emphasis on the political in the last two years, where do you see Egypt heading economically?

Elleithy: I feel that we still have to hit rock bottom. I believe that Egypt will have to economically get worse before it gets better. Egypt is split down the middle. You have two clear groups with different agendas. This means that rather than everybody working together they will first be working against each other. Thus the economy will continue to suffer and get worse. Being an engineer, when you have two opposing forces the net force is zero. So we are not moving at all. We

Globalia: What is your view of Egypt borrowing from the IMF? Elleithy: The IMF is bad news for Egypt. I believe that the IMF, what they eventually do is concentrate the wealth and

Issue 15 – February 2013 –

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Interview

power in the hands of a very few. I am against it. Allah has told us that the IMF and World Bank are based on usury.

Unfortunately, the argument of the Muslim Brotherhood is that that specific loan has a low interest rate that could be looked at as the administrative expenses of the IMF, the people giving the loan, and not usury. This is also the fault of Egypt’s Muslim scholars because they endorse this even though it is against Islam. They have to take the blame for a lot of things that have happened to Egypt. They have given the fatwa that it is alright to deposit your money into a bank and now we have Citibank and the like. The IMF interest rate is one percent or less than one percent and is then considered not to be interest but administrative expenses. A lot of unsophisticated people simply believe the scholars and what they say. It is not just a matter of the interest rate. It is also the interference. The IMF has conditions attached to the loan, and one of the conditions for a country to be a recipient-member of the IMF is that they agree that they will not base their currency in anything but fiat currency. This is tyranny.

Globalia: Has there been a change of wealth ownership since the events of the last two years in Egypt?

© Ellen Geerlings 2010

Elleithy: No. The poor people are still poor. The rich people are still rich. The rich people have smuggled out their wealth – not even smuggled, as it was easier than that – right after the revolution. There was a deliberate delay in imposing a ban on the transfer of wealth abroad. So although a ban was installed, the few month’s delay gave ample time for the corrupt people who have grown this corrupt wealth over the last thirty or forty years to smuggle most of their savings and wealth abroad. A lot of these people even moved abroad. You would find that a lot of the people who were making benefit from the Mubarak regime, after the revolution, they simply left the country. They are now living in Europe or the Gulf where the law cannot even reach them. Some of them even managed to get foreign passports. A good example is a man named Hussain Salem, ex-military intelligence, who used to front all the energy deals for Mubarak. When the revolution broke out he escaped to

Spain – he somehow had obtained a Spanish passport – and now the Spanish government refuses to return him to Egypt and even refuses to give back his wealth. They say it is Spanish wealth. Lots of those people have done this and now are sipping on their margaritas while many of the Egyptian people can’t even find bread.

With the emergence of the new order in Egypt [the Muslim Brotherhood or people in alliance with them] they are trying to install themselves as the decision-makers on all economic and political matters. Until today, I have not seen any corruption or misuse of their authority but my view is that this will eventually turn into the same corruption that we have seen before. What needs to happen is that the system itself must change, not just taking out the old Mubarak clan and replacing it with Muslim Brotherhood or their allies. There needs to be a change in the present economic system that ensures that there is economic justice.

Globalia: What about the oligarchal families of Egypt?

The Sawiris, the Mansours and the Mohamed Al Fayad family? Where are they positioned now?

Elleithy: They are very aware that with the new constitution and the new government, their businesses will not flourish as before so they are using their wealth and their influence – particularly as they collectively own most of the media – to lobby the ‘no’ vote in the referendum. In the last couple of weeks you have an advert aired simultaneously on all television channels that the new constitution is bad for the people and that they should go down and vote ‘no’. Just the cost of these adverts aired on prime-time television was into the billions of pounds. It turns out that it is the old businessmen who are still trying to protect their interests.

Globalia: Thank you very much for your insights into present day Egypt. We hope that we can speak further in the near future.

Two Egyptian girls chat while waiting for the bread to cool down, but will Egypt ever cool down?

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– Issue 15 – February 2013

Medicine

Dionysus Redeemed

© Agricultural Research Service 2005

Dr. Julius G. Goepp investigates inside the grape Scientists continue to uncover a wealth of impressive nutrients contained in the red grape. The latest findings ­indicate that full-spectrum grape extract can help support cardiac health by ­ maintaining youthful endothelial function, ­regulating platelet aggregation, and reducing ­inflammation.

Nowhere are the ‘blessings of the grape’ so evident as in the ­prevention of ­ c ardiovascular disease. While many ­ factors – ranging from ­ vitamin K ­ deficiency to elevated glucose levels – contribute to cardiovascular ­ risk, ­perhaps one of the most insidious ­triggers is inflammation.

An ever-growing body of evidence shows that components of red grapes can have powerful effects on vascular health, reducing platelet aggregation and lipid peroxidation while improving endothelial function. The ability of red grape constituents to fight inflammation is opening new doors in the treatment of chronic age-related disorders, ­including both the prevention and treatment of cancer.

When inflammation is present, oxidant stress damages blood vessel walls and oxidizes low-density lipoproteins (LDL).

These processes cause immune ­system cells to release inflammatory mediators called cytokines, which in turn produce changes in the walls of blood vessels, eventually resulting in the accumulation of diseased tissue known as plaques. The same cascade causes platelets, the tiny cell-like fragments responsible for blood

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– Issue 15 – February 2013

clotting, to cluster together ­ excessively, increasing the risk of clot formation that can produce ischemic heart attacks and strokes.

In just the past decade, new findings have been made on how components of red grapes (including both skin and seeds) affect vascular health, ranging from increasing vital nitric oxide (­critical in maintaining endothelial ­ function) to protecting against heart muscle ­damage.

Preventing lipid peroxidation Cardiovascular disease involves a cascade of aberrant biological processes, but one area of interest even amongst the medical establishment is LDL ­oxidation. LDL transports lipids (fats)

Medicine

from the digestive system to tissues.

Comprising both lipid and proteins, LDL particles are particularly vulnerable to the effects of oxygen free radicals. The process, known as lipid peroxidation, is a powerful stimulant of inflammation in blood vessels, eventually leading to plaque formation.

Scientists are therefore keenly interested in finding ways to reduce lipid peroxidation by lowering LDL levels directly and by reducing the rate at which these molecules become damaged by reactive oxygen species.

Many of the antioxidant molecules in grapes work to reduce that LDL lipid peroxidation process.

The components of red grapes prevent the consequences of oxidant damage in a large number of human tissue models far better than vitamins C, E, and beta- carotene. This protection has been credited with preventing medication-induced liver and kidney damage, heart muscle damage following heart attack, and inducing programmed cell death (apoptosis) in a variety of human cancer cells.

One of the most detailed human studies of grape seed extract and oxidative stress in humans comes from a group of Italian researchers. In a study published in 2002, human volunteers consumed a lipid-rich meal, either with or without

300 mg of a proanthocyanidin-rich grape seed extract. The researchers measured the quantity of oxidized fats circulating in the bloodstream following the meals. The unsupplemented group had a one-and-a-half fold increase in circulating oxidized fats after the meal, compared with those who took the extract. The researchers concluded that even a single dose of grape seed extract can minimize after-meal oxidant stress, both by decreasing oxidants and by increasing the blood’s own antioxidant capacity. Grape seed extract provides the overall effect of reducing the deadly load of oxidized fats that can trigger atherosclerosis.

Healthy endothelial function Blood vessel lining cells (endothelial cells) are charged with the critical tasks of maintaining muscle tone and smoothness of arterial walls, thereby controlling blood pressure and the propensity for plaques to form and platelets to congregate. It’s becoming increasingly clear that reducing lipid peroxidationinduced damage to delicate endothelial cells is an important way to maintain vascular health. There are several mechanisms at work here, including the production of the important signaling molecules nitric oxide and endothelin1, both of which are beneficially affected by grape seed polyphenols. Clinical studies are showing the effects of grape

seed extracts on important measures of vascular health.

Sadly, smokers provide researchers with ample opportunities to study the impact of oxidative stress on endothelial function. In a basic but powerful demonstration of how red grape components can battle even the worst oxidant-induced endothelial damage, Greek researchers tested flow-mediated dilation (a measure of endothelial cell-mediated blood vessel relaxation) following either a cigarette alone, or a cigarette along with either red wine or alcohol-free red wine.

Flow-mediated dilation decreased significantly (a bad sign) after smoking alone, but remained at baseline when the cigarette was accompanied by either red grape beverage. This simple result demonstrates the power of grape polyphenols to preserve vascular function, even in the face of severe oxidant stress.

Of course, a high-fat diet is another major cardiovascular risk factor. Chilean scientists studied endothelial function as measured by flow-mediated dilation in a group of healthy volunteers who consumed either a controlled diet rich in fruits and vegetables, or a high fat diet, for 30 days with red wine and again after 30 days without wine. Flow-mediated dilation adversely decreased in the high-fat group compared with the control group

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when no wine was ­consumed. ­However, when both dietary groups drank a glass of red wine each day, there was no adverse decrease. It ­appears, then, that red wine or its constituents (remember that red wine includes many grape seed-derived compounds) can dramatically reduce the impact of bad lifestyle choices that increase cardiovascular risks.

But it’s not just smokers or highfat c­onsumers who can receive the ­vascular health benefits of red grapes and their extracts. Swedish scientists measured flow-mediated dilation in 12 healthy subjects less than 40 years old who had no known cardiovascular risk f­actors, following consumption of red wine with or without alcohol. The red wine caused the arteries to dilate, increasing blood flow (many people ­ experience a ‘flush’ with red wine). But even the ­alcohol-free version ­significantly ­increased ­flow-mediated dilation, which is the ­important measure of endothelial f­ unction. The ­researchers concluded ­ ntioxidant ­properties of the red that the a grape protect against ­ cardiovascular ­ romoting healthy ­endothelial ­disease by p function. The next natural step would ­ be to examine the effects of a pure red grape extract.

“

Not to be outdone, researchers in France’s Bordeaux region showed that it didn’t even have to be red wine, so long as the source of the beverage was the whole grape.

”

Greek scientists recently did just that, conducting a controlled study of red grape extract alone among 30 men with coronary artery disease. The men ­received either a grape polyphenol ­extract (600 mg) dissolved in w ­ ater, or pure water as a placebo. ­Flow-­mediated dilation increased (a positive ­ finding) in the men who took the extract, values both c­ompared with their own ­ at baseline and compared with the placebo group. These scientists point ­

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out that “polyphenolic compounds from red grapes acutely improve endothelial function in patients with coronary heart disease.”

Keeping platelets slippery The formation of abnormal arterial blood clots (thrombosis) is a primary cause of heart attack and stroke. Thrombosis is the pathological clumping together of platelets, the tiny cell fragments in blood normally responsible for healthy blood coagulation after injury. There are many chemical triggers that cause platelets to clump, or aggregate, and laboratory studies have d ­emonstrated how the polyphenols found in red grape ­ products (including grape seed e xtracts) act ­ ­ powerfully to regulate platelet a ­ ggregation.

In humans, strong support for the ­ olyphenols ­health-promoting effect of p from red grapes comes both from ­s tudies of large populations and from clinical trials. People who live in ­cultures where red wine is consumed regularly have lower rates of illness and death from coronary heart disease, and that effect has been tracked in part to ­decreased platelet activity.

Researchers in Chile determined the coagulation-related risk reduction more specifically when they studied two groups of 21 healthy young men ­given a ‘Mediterranean’ diet or a ­h igh-fat diet for 90 days. For one month in the middle of that period, the men drank ­ eight ­ ounces of red wine daily, and various blood ­ ­ factors associated with clotting were ­determined throughout the study. Regardless of whether the men ate the healthful Mediterranean diet or the riskier high-fat diet, when red wine was added to the mix, clotting factors decreased substantially.

Not to be outdone, researchers in France’s Bordeaux region showed that it didn’t even have to be red wine, so long as the source of the beverage was

the whole grape. In a study that can only be described as sophisticated, these scientists randomly ­ assigned healthy volunteers to drink either one ounce of vodka (no polyphenols) Armagnac, a ­ distilled brandy deor ­ rived from ­poly­phenol-rich grapes. The researchers found that after 14 days, ­ platelet a ­ggregation in the Armagnac group was reduced by 31%, ­compared to only 11% in the vodka group.

Equally importantly, two weeks after the ­ alcohol consumption stopped, the ­vodka ­drinkers ­experienced a ­‘rebound’ ­increase of platelet aggregation, which was not seen in the Armagnac group.

These results point to the importance of grape polyphenols as the source of the benefits.

Some skeptics have suggested that the effects of extracts are only seen in the laboratory where they can be directly applied to the cells ­ being studied. It has been convincingly ­ d emonstrated, ­ ­ h owever, that the grape-extract c­omponents are in fact absorbed from the human intestinal ­ tract in large enough quantities to cause reduction in the risk of ­atherosclerosis.

This ­effect can be enhanced when the extracts are high in the ­ polyphenols ­extracted from grape seeds, and ­contain a large ­ proportion of the short-chain ­polyphenols known as oligomers.

As cardiovascular disease claims more lives than ever before, g ­ rape seed ­extract may offer much-needed ­ protection.

Grape polyphenols fight ­ several key t riggers of deadly ­ ­ c ardiovascular ­disease – lipid ­peroxidation, ­endothelial d ysfunction and ­ ­ a berrant platelet ­aggregation. ­Further, grape ­polyphenols show ­ promise in ­ protecting against the ­effects of ­oxidative stress and poor ­dietary choices. By ­incorporating grape seed extract in your daily wellness ­program, you can help ­ensure ­optimal protection for your cardiovascular ­system.

Book Review

Russian Power

Artwork by Jasin Brown 2013

‘The Man without a Face: The unlikely Rise of Vladimir Putin’

by Masha Gessen, reviewed by Jason Ferriman Masha Gessen’s book offers insights not only into Vladimir Putin, but also into the key political incidents of her country between the early 1990s and 2011 and is a valuable account of the Russian political l­andscape during that time.

Gessen is a seasoned journalist who was born in Moscow in 1967, lived and worked in the US between 1981 and 1991 and then returned to the city of her birth where she presently lives.

She holds both US and Russian citizenship and has worked as journalist, editor and contributor for various print and ­online publications within these two countries. The book ‘The Man Without a Face’ was originally a commissioned article for ­Vanity Fair in 2008 entitled ‘Vladimir Putin: The Grey Cardinal of Russia’. Upon the recommendation of her agent, Gessen expanded the article into this book.

Key to Gessen’s writings on this subject is her being part of the professional faction of journalists in Russia as well holding personal relationships with the oligarch Boris Berezovsky and the émigré (and Soros employee) Alexander ‘Alex’ Goldfarb.

There are four clear parts to this book: the need for a ‘clean slate’ elective- leadership-replacement for Boris Yeltsin to protect himself from potential state prosecution and how this unlikely replacement, Putin, turned out to be, in essence, an unremarkable leader; Putin’s life and development within the KGB/FSB; his establishment of political and economic power in Leningrad (present day St. Petersburg) and its expansion into Moscow; and, finally, how he harnessed, shaped and swiftly commanded political power over the Russian l­ andmass.

In the account of Russia in general from the period of the 1990s until 2011, the book moves through this epoch’s key events: the arrival of the oligarch class; the three explosions in September 1999; the Kursk submarine disaster; the Beslan school hostage disaster; the Alexander Litvinenko affair, the 2004 re-election campaign; Mikhail Khodokovsky; the Andrei

Babitsky affair, the consistent murder of Russian journalists, and Russia’s extended military oppression in Chechnya along with its highly questionable treatment of the Chechen peoples.

Gessen was actually a war correspondent in Chechnya and her accounts are at once insightful and sickening: “I had covered the 1994-1996 war in Chechnya from ­beginning to end. The first time I ever heard a bomb explode within yards of where I was standing, I was in the stairway of an apartment building on the outskirts of Grozny, the Chechen capital. It was January 1995, the first month of the war, and I had gone to that particular quarter of the city because the Russian army claimed that it was not bombing civilians there; I could imagine no one who fits the very definition of civilian better than the residents of that building: blind, helpless, unable to leave the city. When I stepped outside the building, I saw the bodies and body parts strewn around.

“The many children I saw on the street of Grozny on that day and on subsequent days had seen the same thing. They were the children who would be hanging around the open fires on Grozny’s sidewalks in the coming weeks, watching their ­mothers prepare food. These were the same children who would then spend years cooped up in tiny apartments – packed half a dozen to a room, because so many of the ­buildings had been bombed out of existence – and forbidden to go outside for fear of hitting a landmine, or of a Russian soldier, who might rape a girl or detain a boy. And still they went outside and were raped, detained, tortured, disappeared – or saw it happen to their sisters, brothers and friends. These children were young adults now, and I had no trouble believing some of them would be capable of horrific revenge.”

Gessen’s key is Berezovsky; both personally and also ­because of his commission of a team of writers to produce a biography of Putin in 2000, a political act to make this ­unknown man known. Gessen writes, “The group Berezovsky had

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assembled to write Putin’s biography had only three weeks to produce a book. Their list of sources was limited: They had Putin himself – six long sit-down interviews – his wife, his best friend, a former teacher, and a former secretary from St. Petersburg’s city hall. They were not there to investigate the man; their job was to write down a legend. It turned out to be the legend of a postwar Leningrad thug.” Gessen had access, through Berezovsky, to this biography team and was able to glean information from them that they were unable to publish in their commissioned book. “…the fact that the team of biographers found no one who remembered knowing the boy [Putin] before he reached school age reinforced her suspicions. It is, however, not only impossible to prove or disprove the adoption theory but also unnecessary: the indisputable fact is, whether biological or adopted, Vladamir Putin, by the standards of his time, was a miracle child. Because Vladamir Putin was catapulted to power from obscurity, and because he spent his entire adult life within the confines of a secret institution, he has been able to exercise greater control over what is known about him than almost any other modern politician – certainly more than any modern Western politician. He has created his own mythology.” Her conversations with Berezovsky also offers information from within Yeltsin’s faction – known as ‘The Family’ and which included Abramovich who ‘got in on it’ through the daughter – as well as his own personal perceptions which in many instances were clouded by his excessive self-importance. Without Berezovsky this work may well not have existed. The price of such access is that a rather light assessment of him is made – along with the rest of the oligarch class – and their role in what has become present day Russia. To her credit she does, however, recognise that Berezovsky is “a man who exaggerates his own influence”.

Here is her assessment of Berezovsky’s rise to the oligarch class: “Berezovsky was made in the same mould as other early Russian entrepreneurs [also? oligarchs]. Like all of them he was very intelligent, well-educated and a risky lover.

Like most of them he was Jewish, which had marked him as an outsider from the time he was a small child. Like all of them, he had an outsized ambition and boundless energy.

He had a Ph.D. in mathematics and had started out with a car import-export and service company. By leveraging credit against hyperinflation, he had essentially swindled Russia’s largest carmaker out of millions of dollars. In the early 1990s he got into banking, continued to keep a hand in the car business, acquired part of a large oil company, and, most importantly, placed himself at the helm of Russian Public Television, or Channel One, the country’s most watched television channel, giving him unfettered access to 98 percent of Russia’s households. Like other oligarchs, Berezovsky invested in Yeltin’s 1996 re-election campaign. Unlike the rest

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of them, he parlayed his access into a series of political appointments. ” As quoted by H.S. Hurrel in this edition’s article ‘Peak Oil Theory’, “Marshal Goldman, author of the book ‘PetroState’ notes that Russia would have enjoyed such unprecedented economic and strategic vitality [when it did] regardless of who was in power thanks to the price of crude.” But by moving beyond the moral absurdity of Putin, it should be recognised that once given power he did take it. And this once lowly KGB employee and his faction presently have power over the great Russian landmass. Gessen writes, “Putin continued to talk a good economic line to the public and the media, and continued to appear to listen to his sterling team of liberal advisors while consistently broadsiding them with decisions that consolidated all the country’s resources into the hands of his cronies, that is, his KGB/FSB/St. Petersburg faction.

“Is this what happened with Khodorkovsky?” asks Gessen.

“Did Putin have him arrested because he wanted to take possession of his company rather than for reasons of political and personal competition? Not exactly. He put Khodorkovsky behind bars for the same reason that he abolished elections or had Litvinenko killed: in his continuing attempt to turn the country into a supersize model of the KGB, there can be no room for dissidents or even for independent actors. But then, independent actors are inconvenient in part because they refuse to accept the rule of the mafia. And once Khodorkovsky was behind bars, the opportunity to rob him presented itself.

In seizing this opportunity, Putin, as usual, failed to distinguish between himself and the state he ruled. Greed may not be his main instinct, but it is the one he can never resist.”

Gessen’s ‘The Man Without a Face – The Unlikely Rise of Vladimir Putin’ is an interesting and insightful account of the Russia’s political landscape. But as a biography of Putin alone, it would be better to read her excellent seven-page Vanity Fair article. Her agent was wrong.

Book published in 2012

by Riverhead Books available in all major book stores

© DreamWorks Studios 2012

Film Review

Inside the Political Machine Spielberg’s ‘Lincoln’ reviewed by Sulaiman Wilms

Steven Spielberg’s new Hollywood epic ‘Lincoln’ offers ­unexpectedly s­erious insights into one of the ­earlier periods of the creation of the political class, and their ­domination over ­significant issues.

into legally binding amendments of the US constitution. If the South had capitulated before this, Lincoln would not have had the executive and legislative power to abolish slavery since it was still a constitutional right of individual states and their citizens.

September 17, 1862 – 5:30 pm. After the fog of war stopped blowing over the battlefield of Antietam (also known as Sharpsburg), America has suffered the bloodiest single ­ day in her militarised history. Deadlier than Bunker Hill, the ­adventure in Mexico, Gettysburg, Little Big Horn and even the meat-grinders of modernity: Iwo Jima, D-Day, the Battle of the Bulge, Korea’s Chosin Reservoir or the useless bloodshed in the La Drang Valley of Vietnam.

Even as commander-in-chief, Lincoln ultimately depended on the political process of Congress, the party system and the big ‘bosses’ like the famous Democrats in New York. Slavery, US style, was despite latter day apologist of the ”Lost Cause“ by far the biggest source of wealth and power in the ­United States, bigger even than the industrial power of the New ­England and Mid-West states.

Despite being a strategic draw, Antietam stopped the ­c onfederate offensive in the east, buried any hope of the ­rebels in Richmond for European recognition and gave ­president ­Lincoln the military weight for the preliminary Emancipation Declaration on September 22. James McPherson, today’s leading historian of the civil war, declared Antietam the turning point in the history of the US civil war (at least in the Eastern theatre), which would in today’s terms cost the lives of more than 20 million people.

Despite annoyingly unnecessary detours into Pathos and his mainstream visualisation of history, perhaps ­unintentionally, Spielberg presents the devastating effect of the political ­machine – inside and outside of Congress – on Lincoln. ­Despite being the President, and most likely the last true ­American leader and commander-in-chief, Lincoln was ­subservient to a political process that comprised large amounts of lobbying and corruption since he and his administration were in need of Yes-vote Democrats (read anti-war and racist.)

Steven Spielberg’s film ‘Lincoln’, along with the superb ­performance of Daniel Day-Lewis as the president in his last four months of power does not touch on the events of this ­colossal struggle, or on the political biography of Lincoln as such. It is not a bio-pic in the usual sense. Day-Lewis ­portrays a president with a constantly contrary administration who tries to fulfill his highest goals: the reconstruction of the Union and the abolishment of America’s ‘peculiar institution’ – the mass, c­ apitalistic enslavement of African blacks and ­ escendants. their d

In two-and-a-half hours of gripping screenplay, ‘Lincoln’ ­depicts how those votes were secured. Spielberg expressly sets out – analog to Drew Kearn’s ‘Team of Rivals’ – the final processes in the abolishment of slavery in the United States.

Ironically, the seemingly most powerful man in this film, ­Lincoln, is the most powerless.

Lincoln, most likely the greatest US president, was as a ‘war president’ able to free slaves by several decrees which all lay in an undefined zone of his ‘war powers’. As supreme ­commander during this fight, he had no qualms to partially abandon basic constitutional guarantees like Habeas Corpus or the Right to Due Process in order to persecute the enemies of his cause.

Spielberg’s drama begins in the final phase of the civil war when Lincoln and his administration were forced to transfer those war decrees which were both improvised and limited

Abraham Lincoln and, one might add, the leading Northern General Ulysses S. Grant were watersheds: Lincoln as ­leader and president beyond a political system that turned within less than two decades into the fully fledged corruption of ‘robber barons’ like Vanderbilt and the party bosses of ­Tammany Hall; whilst Grant, the decisive commander, was the last supreme general in the Western world who commanded at the front. While he was still fighting in Petersburg and ­Wilmington in Prussia, a military revolution precipitated the system of ­general staff and field commanders.

‘Lincoln’ will not disappoint those who desire to understand the system and processes of the now defunct political class or who enjoy a provocative dabble in recent history.

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Baku

Francois James explores what it would be like to live there

Azerbaijan is regarded by some as the ‘Jewel of the South Caucasus’, and rightly so. It is home to several ancient sites and has a rich cultural heritage with both eastern and western influences. Neither Europe nor Asia, it has always been a meeting point between east and west and a key geopolitical power in the region Over the centuries, Azerbaijan has been part of several regional empires – Ottoman, Persian and Russian – and only acquired its independence after the Soviet Union’s collapse in 1991. Bordered by partial desert on the oil-rich Caspian Sea, Baku, the capital city, has grown to become a thriving and cosmopolitan town where lavish cars and ever-proliferating skyscrapers surround its ancient picturesque centre. But only a few hours drive away you will find a completely different world, where life is lived at a slower pace in small villages which lay scattered around the Caucasus Mountains to the north and lush green valleys to the south. With a tourist industry barely established, visiting the country calls for an open mind and a little creativity.

Along with winds for four months of the year, Azerbaijan’s climate is semi-arid, with temperatures averaging 25°C during the summer and reaching below zero during the winter which although can be mild along the Caspian shores, is remarkably bitter inland. Leyla Aliyeva, editor of Baku magazine and daughter of the country’s president, who has lived in the Azerbaijani capital all her life said in an interview with Condé Nast Traveller magazine: “It depends what you

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come for! Spring has beautiful blossoming trees, flowers and cool temperatures. Summer is full of events: theatre and street performances, art exhibitions, and the annual pilgrimage to the beach. In autumn the air is crisp for walking in the mountains; and winter is a good time to come and ski.”

So why would you be living in Baku? It would most likely be because of business. Azerbaijan’s economy is thriving, particularly since the BP-operated Baku-Tbilisi-Ceyhan pipeline started pumping oil to Europe in 2006. You would be using Baku as a base for all your work in Central Asia (because of its temperate weather) or even simply doing business in Azerbaijan.

2012 was the year when the country really reached out to promote itself. It hosted the Eurovision contest, the International Press Institute’s two-day ‘Oil, Gas and Media’ conference, the ‘Seventh Internet-Governance Forum’, the women’s FIFA U-17 World Cup and concerts of pop icons Shakira, Rihanna and J-Lo. But despite all this, most of your friends will still need to check Google Maps to confirm where you live.

Living in Baku, the city offers a choice of small apartments and houses. Many of the apartment buildings are left over from the Soviet era and there are unpredictable power cuts, low gas pressure or a lack of hot water on a daily basis. However, Baku also has many new developments. These multistory buildings all have lifts and reliable water systems, with half of them ser-

© Samir Cabbarov 2012

Tr a v e l

viced by central-heating and the other half by ‘combi’ heating.

There are over 50 internet service providers in Azerbaijan to choose from. Each provider offers numerous packages and connection options with varying prices so that internet connectivity in your new apartment or house is relatively straightforward.

“

Spring has beautiful blossoming trees, flowers and cool temperatures. Summer is full of events: theatre and street performances, art exhibitions, and the annual pilgrimage to the beach. In autumn the air is crisp for walking in the mountains; and winter is a good time to come and ski.

”

The public healthcare system has worsened since the Soviet times, making it hard to determine a doctor’s level of expertise. However, it does provide free medical treatment for all citizens. Comprehensive medical insurance is strongly advised and there are also private medical clinics and services where doctors are more likely to speak a foreign language – it is rare here to come across people who speak a foreign language, although numbers are on the rise.

The cost of living in Azerbaijan is high compared to other places. The prices have tripled since the currency change and inflation is a real problem in the country, making the cost of living for locals quite pricey.

While Azeri is the official language of Azerbaijan, it is also spoken in numerous other countries in south-western Asia.

Russian is also widely spoken. Azeri, as it is spoken and written today, grew from the eastern Oghuz dialect which spread to the region during medieval Turkic migrations, and was profoundly influenced by Persian and Arabic. Belonging to the Turkic family, it is closely related to Turkmen, Turkish and Quashqai. Although it is often perceived as a challenging language to master, its Latin script with only a few additional characters makes it easier to learn than Russian for instance.

And with the right course and a large dose of determination it can be done, especially for those familiar to other Turkic languages. Just learning the basics such as ‘Hello’, ‘Goodbye’ and ‘Thank you’, a few numbers and simple phrases will help you get by on a daily basis and reward you with smiles from your neighbours and friends.

The school system is taught predominantly in Azeri. At the end of the Soviet governance about a fifth of instruction was in Russian but this has been in decline since 1988. This means that the only alternative is to send your children to private schools or have them attend boarding schools overseas.

There are four international schools which are based on the American or British curricula: the British School in Baku, the International School of Azerbaijan, the Baku International School and the Baku Oxford School.

Tourism is at best under-developed. With some creativity, however, you will never be short of things to do in and around Baku

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during your stay. Southern Azerbaijan is one of the country’s nicest regions, both inland and along the coast. Masalli and its surroundings is a springboard to exploring the Talysh Mountains, while Lenkeran is a picturesque seaside town famed for its flowers. The Caucasus Mountains to the north and the remarkable villages of Xinaliq offer jaw-dropping views and a charming mountain lifestyle. Sheki, another beautiful town, has numerous well-preserved 18th century mosques and caravansary. If you are looking for something a little different, you can visit remote Nagorno-Karabakh region or the intriguing mud volcanoes of Qobustan.

Baku thrives at night. By and large the restaurants cater to a wealthy business clientele and the expatriate community. But there are relatively cheap and highly popular entertainment options such as concerts, the theatre, opera and ballet. Most Azeris prefer to spend the evenings sitting in cafes, sipping tea and playing backgammon and you will see many on their doorsteps chatting to friends and neighbours. Day or night, one of the most enjoyable things to do is to wander through the ancient walled city of the fabulous Içeri Seher. Along its narrow streets lined by impressive mansions you will discover delightful nooks and niches, myriad mosques and talkingpoint architecture.

Leyla Aliyeva says about the city’s food: “Evda, which means ‘home’ in Azerbaijani, is one of my favourite restaurants for a cosy night out. I love the classic Azerbaijani cuisine that is served at the new restaurants popping up along the [Baku] Boulevard, including Sahil. Traditional dolma (grape leaves stuffed with minced meat, or tomatoes, bell peppers and eggplants stuffed with ground lamb) and qutabs (pancakes stuffed with minced meet or spinach) are my personal favourites […] Azerbaijani people are very fond of music and there are always concerts happening in the city […] Baku Jazz Centre for jazz, funk and blues, the Azerbaijan State Philharmonic for classical music – and the Mugam Club is a must for anyone who wants to hear local folk music.

Mugam is a national traditional music genre, a mix of musical composition and performance. And in the mountains outside Baku, the city of Gabala welcomes participants and guests from all over the word for its annual music festival.”

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In order to be comfortable amongst the locals a few customs are worth taking into account. Handshaking is the normal form of business greeting while a kiss on the cheek is customary as an informal greeting. It’s a hospitable country which for some may come across as intrusive inquisitiveness. It’s always a good idea to give gifts to people you meet or when invited to someone’s home, and when entering a household, take off your shoes and wear slippers instead.

Do not be surprised to see large posters or billboards of the ruling leader on building facades and other public places. And one more thing, Karabakh and Armenia are delicate issues and better not mentioned.

“In my opinion,” says Aliyeva, “the best thing about Baku is its people. Alexandre Dumas wrote about hospitality that customs are very revealing of the culture and the spirit of the world we live in. I think the warmth and kindness shown by the Azerbaijani people, and the buzz and atmosphere of the city, is an experience like nowhere else.”

A scene from an alleyway inside the city

© Sandra Iseman 2009

Aliyeva says the five things in the city not be missed are “the Old Town surrounded by fortress walls with its maze of narrow streets and ancient buildings – a living museum. One can imagine travelling back in time; almost see and hear the people who lived and worked here and their devotion to their crafts and livelihoods. Within it, Shirvanshah’s Palace was the last residence of the rulers of the powerful Shirvan State and has a 1000-year history. The spectacular 12th-century Maiden Tower, the symbol of Baku, which is known for its inaccessibility, although today you can climb to the top and

look out over the Caspian Sea. The Azerbaijani State History Museum, which invites visitors to examine the nation’s past and imagine its future; it’s housed in an historic building built in 1895 as a residence for an entrepreneur and philanthropist.

If you love art like I do, you should spend some time in the Azerbaijan State Museum of Art; its collection ranges from ancient times to the present day. Or there is national and international contemporary art at the newest museum in Azerbaijan, the Museum of Modern Art in Baku.”