Category Archives: Algeria

Low Oil Prices, High Geopolitical Risk

There are times when an infographic is so compelling I take a screen shot of it. Previously such an image would have been the ‘seed crystal’ for an article here, but now I’ve found one I want to duplicate using Tableau. This came from a LinkedIn post entitled Welcome to the new normal. Clock’s ticking, Venezuela, by Eurasia Group.

 

LowOilHighRisk.png

So what are we looking at here? I see the following:

  • An X-Y graph of log population vs. years to deplete oil reserves AND sovereign wealth funds.
  • Pie charts of oil and other income per nation
  • Pies sized by government revenue in billions.
  • A dividing line separating those who are stressed from countries which are considered more robust.

There are some textual or implicit characteristics of this infographic:

  • Oil prices are $50/bbl over the long haul.
  • Each country’s break even cost per barrel known, but unstated.
  • Countries maintain export to internal use ratio, avoiding the Export Land Model trap.

 

There are some other issues that matter when considering the implications of $50/bbl oil. Sixteen years of oil prices and oil rig count are an instructive visualization.

OilPriceRigCount-2000-2016.png

The global oil industry has crashed hard, down to less than $30/bbl this spring. The reasons are more geopolitical than economic – Syria, Saudi Arabia, Russia – go nose around and see if you can detect the calculus behind prices and production volume.

Another interesting graph is the long term Baltic Dry Index, and we’re going to start watching the container oriented HARPEX, too. All we need for the moment is the BDI, which is a proxy for global trade. The DJIA is a measure of investor sentiment and we’ve all seen multiple bubbles in our lives, but it takes a really big one like 2008 to drag the BDI higher. As a rule, people don’t rent dry bulk freighters and pay in advance, hoping to rent them to others at a higher rate.

BalticDryIndex-2000-2016.png

 

What does that infographic tell us? It separates those with small sovereign wealth funds OR oil that is costly to produce from those who are either savers or cheap producers. But I really question its accuracy, because …

  • Why is Libya in the safe zone, when it basically no longer exists as a country?
  • Oman’s government leans heavily on oil, but it’s diversified aggressively.
  • Why isn’t Algeria listed, because they’ve got ISSUES.

I’m not suggesting this is a bad infographic, to the contrary, it neatly sums up some serious issues from the perspective of an analyst that knows oil production. But it does show the hazards in trying to abstract nearly a dozen dimensions of information into a flat 2D representation.

My initial thought was to replicate this work, but having critiqued it, I’m not sure I’m willing to spend the time, given how quickly things are moving in the Ethereum realm.

U.S. Consulate Attacks 2002 – 2012

U.S. Consulate Attacks 2002 - 2012

U.S. Consulate Attacks 2002 – 2012

I have seen a surprising amount of ill informed editorializing about the death of Ambassador Christopher Stevens and three other U.S. citizens in Benghazi, Libya on September 12th, 2012. I thought adding some context to the situation might be helpful.

Benghazi was not unique. There have been eights attacks on six different U.S. consulates in and around the Mideast since the 9/11 attack. They include:

  1. Karachi, Pakistan, 2002, 2003, and 2006
  2. Tashkent, Uzbekistan, 2002
  3. Jeddah, Saudi Arabia, 2004
  4. Damascus, Syria, 2006
  5. Sana’a, Yemen, 2008
  6. Benghazi, Libya, 2012

 

The events in Benghazi are complex; we don’t have full knowledge of everything U.S. forces may have been doing in Libya due to the chaos resulting from the overthrow of Gaddafi. The 2012 Benghazi Attack Wikipedia entry cites many sources with varying views on the pre-conditions, the actual attack, and the response.

One thing is certain, convicted bank fraud artist Nakoula Basseley Nakoula bears some of the blame for the outburst of violence on the 11th anniversary of the 9/11 attack. A Coptic Christian of Egyptian descent, Nakoula is thought to be the source of Innocence Of Muslims, a crudely made trailer for a non-existent movie. Egypt’s population is about 10% Coptic Christians and they face persecution at the hands of the Muslim majority. Nakoula’s intent appeared to be calling attention to the injustice, but instead four Americans in Benghazi and about seventy others in the region died during violence touched off during protests of this insult.

Congress also shares a portion of the blame for the fate of Ambassador Stevens and the three others killed:

The State Department is still reeling from deep cuts made by Senate and House appropriations panels to the Obama administration’s budget requests for next year, with some officials warning of national security risks. (2011-10-01)

The quote seems particular damning, but read the whole article. There was an 22% across the board cut, but a separate request for spending on Iraq, Afghanistan, and Pakistan was approved. Including the separate request the State Department budget was still down $3.5 billion from the prior year, a very short sighted move given that Arab Spring was only ten months old at the time the decision was made.

Arab Spring: Revolutions & Reform

Arab Spring: Revolutions & Reform

Three autocratic governments blown away, two countries sliding into sectarian conflict, two others facing massive protests, and four that were compeled to introduce reforms by their restive population. And the response from Congress to this seismic shift? Budget cuts.

I have written before about the massive imbalance between our preventative State Department ($52 billion) and reactive Defense Department ($711 billion) budgets in Foreign Policy Futures. We typically cut spending between 25% and 35% when we finish a war. Every time we take a dollar from the Pentagon we should be slipping a dime to Foggy Bottom to ensure we don’t get sucked into some avoidable future conflict.

Algeria: Whodunnit?

Al-Qaida-linked militants seize BP complex in Algeria, take hostages in revenge for Mali (WaPo, 2013-01-16)

The group — called Katibat Moulathamine or the Masked Brigade — phoned a Mauritanian news outlet to say one of its affiliates had carried out the operation at the Ain Amenas gas field, located 800 miles (1,300 kilometers) south of Algiers, the Algerian capital, and that France must cease its intervention in Mali to ensure the safety of the hostages.

Algeria troops surround militant hostage-takers (BBC, 2013-01-17-0619)

Two groups led by Belmokhtar – the Khaled Abu al-Abbas Brigade and the Signed-in-Blood Battalion – said they were behind the incident.

Google for Abu al-Abbas and you find a variety of historic figures share this name, but this seems to be a reference to the Abbasid Caliphate. Adding the first name Khaled to the search yields a November 2011 report:

The Nouakchott News Agency (Agence Nouakchott d’Information) published on its website on November 9, 2011, an interview with al-Mukhtar bin Muhammad Belmukhtar AKA Khalid Abu al-Abbas, who is an official in al-Qaeda in the Islamic Maghreb (AQIM).

Khaled means ‘eternal’ or ‘immortal’, so he has selected as an alias a heroic sounding name.

Signed in Blood Brigade yields a single Google result this morning.

So we have the real name and alias for a man who is organizing attacks in Algeria. The man claims to be an AQIM official fourteen months before this attack. Someone is releasing information through Mauritanian media and it isn’t clear what the source is. There are conflicting reports on the name(s) of the group(s) involved, but it doesn’t seem like a struggle for credit, like we might see with a bombing or other hard to trace act.

WaPo got the location and motivation for the attack correct in their headline, but tying it immediately to al-Qaeda? I think they wander from objective reporting and in to editorial by jumping to a conclusion like that. There are a lot of non-state actors out there ranging from tribal militias to actual transnational problems, and lumping them under one label that ought to be saved for the worst of the worst makes it harder for us to talk about sensible policy response.

Algeria: Operators Are Standing By

Yesterday a group known as Katibat Moulathamine, Algeria’s Masked Brigade, staged an attack on a British Petroleum natural gas facility. They took hostages and the linked report indicates 35 of them were killed by an Algerian air strike, along with 15 of their captors.

This came via a Foreign Policy magazine situation report.

As many as 25 hostages may have escaped from the In Amenas natural gas complex in Algeria. But reports do not indicate if any Americans are among them. ABC News, quoting intelligence officials, has reported that three of the hostages are Americans. The group of workers were taken yesterday in bold move by what appears to be the al Qaeda offshoot group in North Africa, al Qaeda in the Islamic Maghreb, apparently in response to recent French action against Islamic extremists in neighboring Mali. A U.S. “Commander’s in Extremis”, stood up Oct. 1, in the wake of the attack in Libya, is on a four-hour alert status should it be asked to deploy to the region, CNN is reporting. Africom Commander Gen. Carter Ham is, naturally, the lead military officer in the matter.

I noticed AFRICOM commander Carter Ham due to the personality oriented coverage that happens only via Foreign Policy, but I’d never heard the phrase “Commander’s in Extremis”. This link provided some background.

Every Special Forces Group (Airborne) (SFG(A)) includes a Combatant Commanders In-extremis Force (CIF) Company. The CIF is a specially-trained and resourced element that is focused on Direct Action (DA) / Counter Terrorism (CT) missions. This role includes both training foreign tactical units in DA / CT techniques and carrying out DA / CT operations themselves, often with partner nation forces.

Based on a quick read this appears to be several small direct action teams, able to be delivered by one or two MH-60 helicopters, and a logistics and support unit. Prior to this all my reading and writing regarding special forces has focused on their close air support systems – our tired gunship fleet, our expanding drone fleet, and the Super Tucano close air support turboprop plane.

Our military doctrine has changed steadily in response to our war of necessity in Afghanistan and Bush’s adventure in Iraq. The Division as a unit of military organization is an artifact of the massive ground actions of World War II. The eight wheeled Stryker vehicles were organized into Stryker Brigades, with a brigade being the smallest unit that has the integrated logistics necessary for long term deployments.

The Expeditionary Strike Group moves a 2,200 man Marine Expeditionary Unit. The future deployment size may be two or more littoral combat ships guarded by a single Arleigh Burke class destroyer, delivering mechanized infantry companies containing a mix of Strykers and MRAPs.

I had not intended to focus on systems, as I have in the past, but I think the doctrine changes are something only an intent, long term watcher would notice. I may have to retrieve writings from other places and spend some time doing a survey of current practices.

French Intervention In Mali

Africa Colonial State Borders

I found this map a few days ago and I’ve been wanting to make a post just so I can get it into my media collection. Understanding French intervention in Mali seems a good first use of it.

European powers controlled just 10% of Africa in when Germany was formally unified in 1871. Thirty years later the entire continent had been partitioned in the Scramble for Africa, with the exception of Abyssinia, which we now call Ethiopia. France itself is 213,000 square miles. The blue are on the map covers their holdings in Africa – 3.4 million square miles.

The United States freed itself of British rule over two hundred years ago, but the French colonies of Africa mostly exited as a group in 1960. Algeria took eight years to free itself, from 1954 to 1962, collapsing the Fourth French Republic as a consequence of their struggle.

As I mentioned in my initial post on Algeria, the U.S. and France both attempted to steer them into counterinsurgency activities against the various Islamist groups operating in North Africa, which they declined. The Algerians did permit French aircraft to cross their territory, and they’ve had a rare internal problem because of this:

British Petroleum Facility In Algeria Attacked

A militant group (Katibat Moulathamine) claimed responsibility for the rare attack on one of oil-rich Algeria’s energy facilities, saying it came in revenge for the North African nation’s support for France’s military operation against al-Qaida-linked rebels in neighboring Mali. The militants said they were holding 41 foreigners from the energy complex, including seven Americans.

Notice that I retitled the Washington post article, removing “the A word”. This is the first I’ve ever heard of Katibat Moulathamine, which translates to the Masked Brigade. Even though this U.N. report indicates the group’s leader is tied to al-Qaeda, the name has become a catch-all for Islamist groups, and I am going to resist using it on principle. I have seen a couple of instances where local Islamist groups, relatively mild, homegrown efforts at self determination, have been smeared with the al-Qaeda label. Things are a bit more nuanced that Americans are willing to absorb, and our collective ignorance is leading to bad policy choices.

So there’s a map and a complex, rapidly evolving policy problem. More will be revealed tomorrow, whether we are ready or not.

Algeria

Algeria

I went in search of maps for Algeria and the offerings are surprisingly thin. I was unable to find a map of ethnic groups, not even searching using the group names. Alergia, the largest African nation now that the Sudan has been partitioned, is ruled by an authoritarian regime dependent on oil revenues. I think this section of the Algerian constitution is a good hint as to why there aren’t good ethnic maps available.

According to the constitution, no political association may be formed if it is “based on differences in religion, language, race, gender, profession or region”. In addition, political campaigns must be exempt from the aforementioned subjects.

Africa Partition-1885-1914

Alergia was part of the massive French holdings in west Africa, taken under some slight pretext in 1830. They freed themselves via the Algerian War from 1954 to 1962, triggering the collapse of the Fourth French Republic in 1958.

I found Algeria & Morocco: Natural Gas Cartels, Fertilizer Mercantilism, and Rising Tensions while digging for a map of oil production areas and it immediately jumped out at me. Algeria has the oil, two million barrels a day, while neighboring Morocco is the world’s phosphate king, holding some two thirds of known reserves of this vital fertilize component.

The two countries have fought over both their mutual border and Western Sahara. This is another post-colonial oddity – a Texas sized chunk of land with just half a million residents, formerly controlled by Spain, but now the coast is controlled by Morocco, after having prevailed over a Mauritanian attempt to seize the territory in the 1970s, and the interior is under the loose control of Algerian sponsored rebels.

Both the United States and France have tried and failed to get Algeria engaged in counterinsurgency work against al-Qaeda in the Islamic Mahgreb (AQIM). Consider this quote from TRANSCRIPT: AFRICOM Commander in Algeria dated September 9th, 2011:

“There are no plans whatsoever to establish any … U.S. military bases in Africa,” Ham said.

Versus U.S. Deploying Troops To 35 African Countries, dated December 24th, 2012.

Citing a growing threat from extremist groups, including those with ties to al-Qaeda, the Department of Defense is hoping to install American soldiers overseas in order to prepare local troops there for any future crises as tensions escalate.

A finely tuned mix of cash and crackdown, money and repression — a mix unique to the region — has muted demands for change and allowed the ruling elite to retain its grip. In Algeria a young person can easily get a government loan of up to $300,000 to start a small business, on terms beyond generous. Like the oil-rich nations of the Persian Gulf, Algeria has been able to neutralize calls for reform with oil-generated cash reserves — $180 billion — and a government program to dole out money to restive youth.

Algeria is avoiding unrest with a mix of political repression and economic stimulus. The people accept this; they had an Islamist adventure during the entire decade of the 1990s that resulted in 200,000 dead. This will work as long as their oil production supports this policy. They appear to have peaked in 2008, but this could be an artifact from the global credit crunch that year, rather than any geological or local investment constraint. Near term they appear to be in good shape and this may hold true over the longer haul – if they can keep oil production stable Algeria stands to be one of the countries that benefit from the expected bilateral oil/food trade.

Algeria Oil Production