The U.S. Central Intelligence Agency and other international security forces “don’t fight drug traffickers”, a spokesman for the Chihuahua state government in northern Mexico has told Al Jazeera, instead “they try to manage the drug trade”.

Allegations about official complicity in the drug business are nothing new when they come from activists, professors, campaigners or even former officials. However, an official spokesman for the authorities in one of Mexico’s most violent states – one which directly borders Texas – going on the record with such accusations is unique.

“It’s like pest control companies, they only control,” Guillermo Terrazas Villanueva, the Chihuahua spokesman, told Al Jazeera last month at his office in Juarez. “If you finish off the pests, you are out of a job. If they finish the drug business, they finish their jobs.”

A spokesman for the CIA in Washington wouldn’t comment on the accusations directly, instead he referred Al Jazeera to an official website.

Accusations are ‘baloney’

Villanueva is not a high-ranking official and his views do not represent Mexico’s foreign policy establishment. Other more senior officials in Chihuahua State, including the mayor of Juarez, dismissed the claims as “baloney”.

“I think the CIA and DEA (U.S. Drug Enforcement Agency) are on the same side as us in fighting drug gangs,” Hector Murguia, the mayor of Juarez, told Al Jazeera during an interview inside his SUV. “We have excellent collaboration with the U.S.”

Under the Merida Initiative, the U.S. Congress has approved more than 1.4 billion dollars in drug war aid for Mexico, providing attack helicopters, weapons and training for police and judges.

More than 55,000 people have died in drug related violence in Mexico since December 2006. Privately, residents and officials across Mexico’s political spectrum often blame the lethal cocktail of U.S. drug consumption and the flow of high-powered weapons smuggled south of the border for causing much of the carnage.

Drug war ‘illusions’

“The war on drugs is an illusion,” Hugo Almada Mireles, professor at the Autonomous University of Juarez and author of several books, told Al Jazeera. “It’s a reason to intervene in Latin America.”

“The CIA wants to control the population; they don’t want to stop arms trafficking to Mexico, look at (Operation) Fast and Furious,” he said, referencing a botched U.S. exercise where automatic weapons were sold to criminals in the hope that security forces could trace where the guns ended up.

The Bureau of Alcohol Tobacco and Firearms lost track of 1,700 guns as part of the operation, including an AK-47 used in 2010 the murder of Brian Terry, a Customs and Border Protection Agent.

Blaming the gringos for Mexico’s problems has been a popular sport south of the Rio Grande ever since the Mexican-American war of the 1840s, when the U.S. conquered most of present day California, Utah, Nevada, Arizona and New Mexico from its southern neighbour.

But operations such as Fast and Furious show that reality can be stranger than fiction when it comes to the drug war and relations between the U.S. and Mexico. If the case hadn’t been proven, the idea that U.S. agents were actively putting weapons into the hands of Mexican gangsters would sound absurd to many.

‘Conspiracy theories’

“I think it’s easy to become cynical about American and other countries’ involvement in Latin America around drugs,” Kevin Sabet, a former senior adviser to the White House on drug control policy, told Al Jazeera. “Statements (accusing the CIA of managing the drug trade) should be backed up with evidence… I don’t put much stake in it.”

Villanueva’s accusations “might be a way to get some attention to his region, which is understandable but not productive or grounded in reality”, Sabet said. “We have sort of ‘been there done that’ with CIA conspiracy theories.”

In 1996, the San Jose Mercury News published Dark Alliance, a series of investigative reports linking CIA missions in Nicaragua with the explosion of crack cocaine consumption in America’s ghettos.

In order to fund Contra rebels fighting Nicaragua’s socialist government, the CIA partnered with Colombian cartels to move drugs into Los Angeles, sending profits back to Central America, the series alleged.

“There is no question in my mind that people affiliated with, or on the payroll of, the CIA were involved in drug trafficking,” U.S. Senator John Kerry said at the time, in response to the series.

Other newspapers, including the Washington Post and the Los Angeles Times, slammed Dark Alliance, and the editor of the Mercury News eventually wrote that the paper had overstated some elements in the story and made mistakes in the journalistic process, but that he stood by many of the key conclusions.

Widespread rumours

“It’s true, they want to control it,” a mid-level official with the Secretariat Gobernacion in Juarez, Mexico’s equivalent to the U.S. Department of Homeland Security, told Al Jazeera of the CIA and DEA’s policing of the drug trade. The officer, speaking on the condition of anonymity, said he knew the allegations to be correct, based on discussions he had with U.S. officials working in Juarez.

Acceptance of these claims within some elements of Mexico’s government and security services shows the difficulty in pursuing effective international action against the drug trade.

Jesús Zambada Niebla, a leading trafficker from the Sinaloa cartel currently awaiting trial in Chicago, has said he was working for the U.S. Drug Enforcement Agency during his days as a trafficker, and was promised immunity from prosecution.

“Under that agreement, the Sinaloa Cartel under the leadership of (Jesus Zambada’s) father, Ismael Zambada and ‘Chapo’ Guzmán were given carte blanche to continue to smuggle tonnes of illicit drugs… into… the United States, and were protected by the United States government from arrest and prosecution in return for providing information against rival cartels,” Zambada’s lawyers wrote as part of his defence. “Indeed, the Unites States government agents aided the leaders of the Sinaloa Cartel.”

The Sinaloa cartel is Mexico’s oldest and most powerful trafficking organisation, and some analysts believe security forces in the U.S. and Mexico favour the group over its rivals.

Joaquin “El Chapo”, the cartel’s billionaire leader and one of the world’s most wanted men, escaped from a Mexican prison in 2001 by sneaking into a laundry truck – likely with collaboration from guards – further stoking rumours that leading traffickers have complicit friends in high places.

“It would be easy for the Mexican army to capture El Chapo,” Mireles said. “But this is not the objective.”

He thinks the authorities on both sides of the border are happy to have El Chapo on the loose, as his cartel is easier to manage and his drug money is recycled back into the broader economy. Other analysts consider this viewpoint a conspiracy theory and blame ineptitude and low level corruption for El Chapo’s escape, rather than a broader plan from government agencies.

Political changes

After an election hit by reported irregularities, Enrique Pena Nieto from the Institutional Revolutionary Party (PRI) is set to be sworn in as Mexico’s president on Dec. 1.

He wants to open a high-level dialogue with the U.S. about the drug war, but has said legalisation of some drugs is not an option. Some hardliners in the U.S. worry that Nieto will make a deal with some cartels, in order to reduce violence.

“I am hopeful that he will not return to the PRI party of the past which was corrupt and had a history of turning a blind eye to the drug cartels,” said Michael McCaul, a Republican Congressman from Texas.

Regardless of what position a new administration takes in order to calm the violence and restore order, it is likely many Mexicans – including government officials such as Chihuahua spokesman Guillermo Villanueva – will believe outside forces want the drug trade to continue.

The widespread view linking the CIA to the drug trade – whether or not the allegations are true – speaks volumes about officials’ mutual mistrust amid ongoing killings and the destruction of civic life in Mexico.

“We have good soldiers and policemen,” Villanueva said. “But you won’t resolve this problem with bullets. We need education and jobs.”

*Follow Chris Arsenault on Twitter: @AJEchris

Published under an agreement with Al Jazeera.

The Summit of the Americas, normally a subdued tri-annual gathering of regional leaders, could be more interesting than usual this year, as right-wing governments are set to clash with their U.S. allies over the war on drugs.

An increasingly large chorus of nations – ravaged by trafficking and violence – say it’s now time to re-think international drug policy. As the corrupting power of cartels grows across Mexico and Central America, and as the body count rises, legalisation needs to be seriously discussed as an alternative to militarisation, regional leaders say.

It isn’t a message U.S. President Barack Obama wants to hear when he arrives in Cartagena, Colombia, to meet 33 heads of state on Apr. 14.

“When the word legalisation is uttered, it raises a red flag for the (U.S.) administration,” Peter Reuter, a drug policy expert at the University of Maryland, told Al Jazeera.

Legalisation, or decriminalisation, is often associated with liberal activists in North America – the pot smoking, hippy, free-love kind of crowd. Current calls, however, are coming from some of the region’s hardliners.

Conservatives want change

Guatemala’s President Otto Perez Molina, a former general during the country’s “dirty war”, came to power promising an “iron fist” against delinquency. He recently called the war on drugs a failure and argued that “consumption and production should be legalised” within certain limits.

Juan Manuel Santos, president of Colombia, and arguably Washington’s closest regional ally, has called for “a new approach” that would “take away the violent profit that comes with drug trafficking”.

“If that means legalising and the world thinks that’s the solution, I will welcome it,” said Santos, a former defence minister responsible for battling leftist rebels and drug traffickers in a war with massive human rights abuses.

Cynthia McClintock, director of George Washington University’s Latin American Studies programme, said recent statements are “the beginning of a paradigm shift”.

“I think it’s really significant that countries aligned with the U.S. are taking these positions,” she told Al Jazeera. “From Guatemala in particular, it was totally unexpected.”

Supporters of a new approach aren’t just conservatives. Military officers, many coming directly from the field “who have personally experienced the futility of fighting a war against a global commodities market”, are leading calls for reform, said Ethan Nadelmann, executive director of the Drug Policy Alliance, a U.S. group pushing for alternatives to the war on drugs.

“Social conservatism of militaries in the region had barred a broader conversation on reform,” Nadelmann told Al Jazeera. “But the opportunities for men (from security forces or militaries) to be corrupted (by drug money) and the futility of employing the military in this area” has led to a change of heart from hardened leaders including Molina and Santos, he said.

Leftists seem to support status quo

The presidents of Mexico, El Salvador and Costa Rica have also voiced support for an overhaul of the drug war, or even some form of legalisation. Others including Cuba, Panama and Nicaragua are against legalisation or a policy overhaul.

“It is leftist governments, (particularly in) Cuba and Nicaragua, who are in many respects the U.S.’ closest drug war allies,” Nadelmann said. “(Venezuelan President Hugo) Chavez tries to take every opporunity to poke the U.S., but on this issue he has been quiet. You wonder if (due to his cancer treatment) the guy is going to need medical marijuana soon,” Nadelmann joked.

On a visit to Central America and Mexico last month, U.S. Vice- President Joe Biden said: “There’s no possibility the Obama-Biden administration will change its policy on legalisation.”

He did, however, say that it was a topic “worth discussing”.

Some analysts see that caveat as a softening of the U.S. line. “That comment was widely reported throughout Latin America,” Nadelmann said. “He may not have intended to open the debate as he did, but this (legalisation) is now a legitimate topic for discussion.”

‘This is a crisis’

Drug trafficking and violence are nothing new in Latin America. But since the end of 2006, when Mexico’s President Felipe Calderon declared a frontal assault on cartels, violence has escalated to new heights.

Compounding public discontent, corruption within security forces fuelled by narco-dollars is undermining confidence in basic state institutions. In Mexico, for example, trust in local police forces has dropped from 50 percent in 2007, at the beginning of the war, to 35 percent in 2011, according to a Gallup poll.

“I don’t use the word crisis much, but this is a crisis,” Reuter said.

About 50,000 people have died in Mexico alone since 2006 and the situation in Guatemala and Honduras is far worse. Some regions have casualty rates comparable to war zones such as Afghanistan or Iraq.

This situation, where beheaded bodies are dumped in the streets, massacres are common and cartels openly flaunt the authority of state officials, could be driving the new push for legalisation or decriminalisation.

In 2010 alone, the U.S. federal government spent more then 15 billion dollars on the drug war, or about 500 dollars every second, according to the Office of National Drug Control Policy.

Changing attitudes

It was now-disgraced President Richard Nixon who coined the term “war on drugs” in 1971. Since then, the drug war has cost more than one trillion dollars, the Associated Press reported in 2010. Hundreds of thousands of lives have also been lost.

Observers are split on whether the goal of the programme was actually battling drug cultivation, or if the real aim was the projection of U.S. military power in the region.

Regardless, attitudes towards drugs are changing in the U.S. itself. In 1969, when Gallup first asked about legalising marijuana, only 12 percent favoured such a move, while 84 percent were opposed. Support for legalisation remained around 25 percent from the late 1970s to the mid-1990s. In 2011, for the first time, support for legalisation among U.S. respondents passed the crucial threshold of 50 percent, according to Gallup’s annual crime survey.

“There have been some pretty dramatic shifts in the American electorate, at least towards the decriminalisation of marijuana,” McClintock said, adding that Washington DC, where she lives, has decriminalised the drug, at least when used for its medicinal benefits.

She isn’t sure why Obama refuses to move the national discussion on drugs towards legalisation or decriminalisation, especially considering the disproportionate numbers of African American men who are currently in U.S. jails for minor drug offences as “one would think this would be an issue close to Obama’s heart”.

Three out of four in the U.S. believe that the United States’ 40-year “war against drugs” has failed, according to a 2008 poll from Zogby International and the Inter-American dialogue.

A long road

These latest calls from Guatemala and Colombia are not the first time influential leaders have challenged conventional wisdom on the drug war. They are, however, the strongest calls yet from sitting politicians.

In 2009, the Latin American Commission on Drugs and Democracy, composed of the former presidents of Mexico, Colombia and Brazil, called for marijuana decriminalisation.

“Everyone might agree that the war on drugs has failed, but that doesn’t mean there is support for something else,” Reuter said.

Currently, there is not a concrete proposal on the table for decriminalising or legalising drugs to end the war. Some observers expect a new commission to investigate the problem will be inaugurated after the Summit of the Americas.

Some analysts believe history is starting to move full circle, as 2012 marks a century since the first international anti-drug convention was signed in The Hague.

Change – if it ever happens – won’t come quickly, analysts say, but there is optimism about long-term progress. If nothing else, the taboo of discussing legalisation has been broken, they say.

“This will be the first meeting of heads of state where this (legalisation and decriminalisation) will be on the agenda,” Nadelmann said. “It’s a game changer, the pendulum is swinging in a new direction for the first time in 100 years.”

Follow Chris Arsenault On Twitter: @AJEchris

*Published under an agreement with Al Jazeera.

By - - and Chris Arsenault
DOHA, Qatar, Jan 18 2012 (IPS)

The number one rule young journalists are taught when starting radio broadcasting is simple: No dead air. Cough into the microphone if you must, but don’t allow silence to creep in.

For websites, going offline is the same premise – a definite faux pas. Despite this, Wikipedia, Reddit and other leading sites blacked out on Wednesday to protest the Stop Online Piracy Act (SOPA), the legislation which, critics say, will curtail freedom of speech by censoring internet content.

“Imagine you are a merchant selling things and the government could walk into your store, take your cash register without warning, notice or due process and you wouldn’t know they had taken it until it was already gone,” Nick Farr, an IT consultant who advises start-up internet firms, told Al Jazeera. “That is basically the equivalent of what they are trying to do online.”

The White House recently joined founders of the internet and other cyber activists to denounce SOPA – which it says “reduces freedom of expression, increases cyber security risk or undermines the dynamic, innovative global internet”.

Andrew McDiarmid, a policy analyst with the Centre for Democracy and Technology who has been following the legislation, called the White House statement a “major development” and a “strong signal” that the legislation “has not been fully examined”. Some analysts believe the bill will be killed with the White House’s newfound opposition, but others – including the founder of Wikipedia – aren’t so sure.

“We have no indication that SOPA is fully off the table…” Jimmy Wales tweeted. “We need to send Washington a BIG message.”

Other media and technology companies, including Google, Facebook, Yahoo, Twitter, eBay and AOL have also spoken out against the legislation, although they will not be blacking out in protest. The blackout of Wikipedia’s English language site will last 24 hours.

‘Rogue’ sites

While SOPA is floundering politically, another piece of controversial internet legislation – the Protect IP Act (PIPA) – is still being considered by the U.S. Senate.

Supporters, including the film industry, say the legislation is designed to protect intellectual property rights on the internet by allowing law enforcement officials to shut down “rogue” websites associated with piracy and copyright infringement.

Michael O’Leary, a spokesperson for the Motion Picture Association of America, an industry trade group, called Wikipedia’s shutdown part of a campaign of “gimmicks and distortion”, distracting from the real problem “which is that foreigners continue to steal the hard work of Americans”.

Critics of the legislation charge that definitions are overly broad and the U.S. is mimicking governments, such as China and Iran which censor the internet. Legitimate fears over piracy, critics say, could be used as a smokescreen to take down certain material.

“The requirements that search engines remove certain sites from their results set a dangerous precedent internationally, undermining U.S. advocacy against the use of exactly these same tactics to suppress online free expression,” McDiarmid told Al Jazeera.

Representative Lamar Smith, a Republican from Texas, and one of SOPA’s biggest supporters, said on Friday that he plans to remove the legislation’s DNS-block requirement, which would give the Justice Department the power to disappear sites.

How it works

Under proposed legislation, anyone found guilty of streaming copyrighted material more than 10 times within six months could face up to five years in jail. Companies such as PayPal and MasterCard would also be forced to stop sending payments to sites alleged to host pirated content.

Suppose the lawyer for Justin Bieber, a tween singer, found out that a young filmmaker used a 20-second Bieber video clip in a web movie, rather than 16 seconds which is allowed, Farr said, in explaining how the bill could affect content production.

The lawyer simply has to call the FBI or Justice Department to allege piracy and – without a formal investigation from a judge – the entire site which hosted the video could be taken down.

“In one fell swoop, a start-up company could have its website, funds and earnings all cut off,” Farr said. “The way the law is written, there is no chance to appeal and there is an immediate injunction – the (takedown of a site) can be approved by a magistrate, which is basically a rubber stamp.”

Politicians who support the legislation often do not understand basic issues of how the internet works, critics say.

“It is tragic to have policy being made by people who think it is cute to boast about their lack of knowledge of the technology they are regulating,” James Boyle, a professor of law at Duke University who studies online issues, told Al Jazeera. “It is scandalous.”

In their current forms, the proposed laws undermine the internet’s fundamental architecture, Boyle said.

Take www.aljazeera.com, for example. Across the internet – whether you log on in the U.S., China or Kenya – the domain name (or DNS entry) takes the user to the same site. The proposed law could change this basic tenet, creating what Boyle calls a “Tower of Babel problem”, making the internet a “fractured” place where “everyone has their own language and no-one can communicate”.

Sites which host pirated material are often contained within the same domains as licit content. “There were concerns that entire sites would be blocked – in other words, disappearing constitutionally protected speech,” Boyle said.

Copyright as censorship

The Diebold scandal in 2003 offers an example of how companies can use intellectual property rules as a smokescreen for censorship, critics charge.

Diebold produced electronic voting machines for U.S. elections – kind of an important job in a democracy. The machines were not working properly. Hackers unearthed a series of 15,000 internal company emails in 2003, showing that company officials knew about the problems and were not owning up.

Two sophomores from Swarthmore College, Nelson Pavolsky and Luke Smith, published the e-mails on their university-hosted website. Diebold sent the university an ultimatum, demanding the site be taken down for copyright infringement, invoking the Digital Millennium Copyright Act of 1998. The university initially complied.

After a legal and public relations battle, the company decided it would no longer try to stop the web distribution of its memos. But the case raised troubling questions for whistleblowers and freedom of information activists. And SOPA would give companies more power for these kinds of actions, critics say.

“We should hope we don’t live in a world where the first recourse of someone who wants to censor someone is to claim copyright infringement,” Boyle said.

Analysts worry that SOPA, in its extreme form, was just a political manoeuver – a way to prepare the public for slightly less severe legislation which includes many of the same tenets.

“The system eventually worked,” as the White House and other leading politicians came out against the “disastrous bill”, Boyle said. “But many people think the technique was designed to make the next bill look more attractive by comparison.”

*Published under an agreement with Al-Jazeera.

Excerpt:

China has more than 75 billion dollars in financial investments across South America. Credit: Chris Arsenault/Al Jazeera

By Chris Arsenault
BUENOS AIRES, Dec 21 2011 (IPS)

The small restaurants and shops selling plastic sandals, tacky umbrellas, kitchen wares and paper lanterns in Buenos Aires’s Chinatown do not give the impression of impending economic dominance.

Away from this small urban area, however, China has been not-so- quietly buying up agricultural products, companies and minerals around South America.

“Across Latin America we are seeing that China is having an increasing importance in trade and investment,” Ricardo Delgado, director of Analytica Consulting in Buenos Aires, told Al Jazeera.

“Brazil and Argentina produce and export many raw materials: soy, sugar, meat and corn… China is a very important driver of demand for these commodities.”

Since 2005, China’s development bank and other institutions have spent an estimated 75 billion dollars on financial investments in South America, said Boston University professor Kevin Gallagher. This is, he points out, “more [investment] than the World Bank, U.S. Export Bank and the Inter-American Development Bank combined”.

Chinese private investment, often coming from large state-supported firms that set-up operations in the region or buy local companies, has been about 60 billion dollarrs, Gallagher said.

In the past five years, Bilateral trade between China and South America jumped more than 160 per cent, rising from 68 billion dollars in 2006 to 178 billion dollars in 2010. In Peru, Chinese mining giant Chinalco spent three billion dollars buying “copper mountain” – an entire rock formation containing two billion tonnes of the precious metal. The firm expects a 2,000 percent profit on its investment.

The Chinese state lent Petrobras, Brazil’s national oil company, 10 billion dollars in 2009. And a plan from China’s Beidahuang food company to lease more than 300,000 hectares of land to grow genetically modified soya, corn and other crops in Argentina’s Patagonia region has locals furious about potential environmental damage.

As director of Mercampo, an agricultural consulting firm based in Rosario, Argentina, Gabriel Perez has seen the increase first hand. More trade delegations are coming from China, and tycoons from the world’s second largest economy are eager to invest in agriculture and commodities.

“China has the strategic vision to ensure food security and energy in their country [as they worry] that long-term problems will be the supply of raw materials,” Perez told Al Jazeera. “This is undoubtedly the primary reason for China’s investments in South America.”

Debt and dependency

Throughout South America’s history, economists and politicians have worried about dependency created by countries exporting raw materials and then depending on industrialised nations for high-end manufactured goods and technology.

“An economy organised around the export of resources often dampens economic diversification and the development of value-added industries, so there is a way in which China could be as much of a problem as the U.S.,” said Gregg Grandin, professor of history at New York University and author of “Empire’s Workshop: Latin America, the United States and the rise the new imperialism”.

China has, however, given Latin American countries a “more diversified set of options to negotiate prices and interest rates” than what the U.S. would offer, Grandin told Al Jazeera.

Raul Prebish, an Argentinean economist and former director of the U.N.’s Economic Commission for Latin America (ECLAC), argued that nations on the “periphery” of world trade were doomed to be primary commodity exporters unless they developed by building a domestic manufacturing base and closing trade links.

“In Brazil, China is an important competitor in low labour cost industries. Chinese prices are low and problems of dumping and subsidised exports are common,” Delgado said. “Our industries are not prepared very well for this competition.”

China is frequently accused of keeping its currency artificially low to boost exports.

Brazil’s real and other South American currencies have risen drastically due to the commodities boom in recent years. Brazil’s former finance minister went so far as to warn of a “currency war” as countries around the world tried to lower their currencies to boost exports.

“You hear lots of complaints from the industrial sector that competition has become very hard, because the exchange rate is misplaced,” Eliana Cardoso, a World Bank economist and former MIT economics professor based in Sao Paulo, told Al Jazeera, adding that she thinks such concerns are minor compared to the country’s growth.

Plenty of economists who do not have strong positions in debates about dependency think it’s wrong to worry about Chinese investment because the terms of trade are squarely in South America’s favour, as countries maintain large trade surpluses with China.

The values of basic products have changed dramatically since the 1960s when “dependency” became a fashionable topic of discussion.

High prices

More importantly, Chinese loans, representing the bulk of investment, do not come with the same strings as aid from the International Monetary Fund (IMF) or Inter-American Development Bank, which are seen as Washington’s fiscal agents.

Through the IMF and World Bank, U.S. policy makers demanded privitisation and low inflation rates, often at the expense of growth, on Latin American through the 1970s and 80s, critics say.

Governments in the region have discarded that advice in recent years, looking instead to a mixed economy, in which the state is actively involved in setting monetary policy and managing natural resources. Brazil’s government-backed oil giant Petrobras is the clearest example of South America’s new form of hybrid capitalism.

Critics charge that the IMF offered one set of prescriptions for developing countries: cut social spending, lower inflation at the cost of job creation and raise interest rates. During crisis at home, the fund’s U.S. backers did the opposite, relaying on government stimulus programmes and low interest rates to boost growth.

“Unlike the Americans, the Chinese do not have all sorts of draconian policy conditions on their finance,” Gallagher said. Other experts have echoed this sentiment – China is more concerned with getting the goods, rather than changing the structure of economies with which it trades.

After defaulting on its massive debt in 2002, following street protests and a bitter economic crisis, Argentina settled its debts with the IMF in 2006 and has ignored its advice ever since.

Back in Buenos Aires’ Chinatown, a young Cantonese waitress carried trays of fresh orange juice and sparkling water, chatting in imperfect Spanish to eager Portenos (residents of Buenos Aires) who sit outside in the summer air. While it does not glisten, Chinatown is increasingly becoming fashionable, with young Argentines. Some local libraries even offer free Mandarin language classes, financed with Chinese money, as part of the country’s quiet “soft power” in the region.

In recent weeks, Chinese officials have expressed concerns about an economic slow-down, linked to the crisis in European export markets. That could spell trouble for growth in South America.

“Seventy-two percent of Argentina’s soy goes to China,” Gallagher said. “If China’s demand slows by a few percentage points, you could have an unwinding.”

He worries commodity exporters have put “too many eggs in the China basket”.

*Published under an agreement with Al-Jazeera.

The rapid rise in prices for food, fuel and commodities has been disastrous for the world’s poor, including Indonesian market vendor Lia Romi. But it’s a bonanza for multinational trading firms such as Glencore.

While Romi has trouble feeding her family, Glencore – the world’s largest diversified commodities trader – is planning a $11 billion dollar share sale, likely the largest market debut ever seen on the London Stock Exchange.

“The price for our daily food has at least doubled in the past two years,” Lia Romi told Al Jazeera through a translator. “Food costs 100 per cent of my family’s daily income [of about $3]. I have nothing saved and I owe [money] from my [market stall] business.”

While Romi, and millions like her, worry about feeding their families, the initial public offering from the commodity speculating giant will create at least four billionaires, dozens worth more than 100 million dollars and several hundred old fashioned millionaires. Chief Executive Ivan Glasenberg is set to make more than nine billion from the share sale. And speculating on food prices is an important part of his wealth.

Controlling prices

Valued at about 60 billion dollars, Glencore controls 50 percent of the global copper market, 60 per cent of zinc, 38 per cent in alumina, 28 per cent of thermal coal, 45 per cent of lead and almost 10 per cent of the world’s wheat – according to information the firm disclosed prior to its share sale. It also controls about one quarter of the world market in barley, sunflower and rape seed.

“They are possibly one of very few mining companies that are price makers, rather than price takers,” said Chris Hinde, editorial director of Mining Journal magazine. “They are the stockbrokers of the commodities business [operating] in a fairly secretive world. They are effectively setting the price for some very important commodities,” he told Al Jazeera.

The firm employs about 57,000 people, generated a turnover of 145 billion dollars in the past year and has assets worth more than 79 billion. Glencore’s media department refused interview requests from Al Jazeera.

Based in Baar, Switzerland, where regulation is minimal, the company’s sprawling interests span Bolivian tin mines, Angolan oil, zinc producers in Kazakhstan, Zambian copper mines and Russian wheat operations.

“Glencore’s vertical integration really is unprecedented,” said Devlin Kuyek, a researcher with GRAIN, a non-profit international organisation working on food security.

“Glencore owns almost 300,000 hectares of farm land and it is one of the largest farm operators in the world. They are engaging in speculation on the grain trade and have immense market power,” he told Al Jazeera.

Global food prices have climbed recently, returning close to their 2008 peak, when bread riots swept parts of the Middle East, Africa and the Caribbean.

“A disturbing amount of price increases, I fear, is being driven by speculative activity,” Marcus Miller, a professor of international economics at the University of Warwick, told Al Jazeera. “Bets [on future price rises or declines] can become self-fulfilling if you are big enough to affect the market.”

In March 2011, the World Bank’s global food index was 36 per cent above levels from a year earlier, although prices for commodities have dropped in the past few weeks.

Some analysts believe price increases have more to do with a growing global population and rising middle classes, particularly in India and China, who are eating more meat and thus driving up prices for corn and other animal feed.

Duncan Green, the head of research at development organisation Oxfam Great Britain, said international markets for food and other commodities can be compared to the shape of a champagne glass. “There are a lot of people producing, and a lot of people consuming, but there is a pinch point in the middle, controlled by corporations who can walk away with the final value,” he told Al Jazeera. “Many of the world’s poor are -bizarrely – people growing food.”

In 2010, investment bank Goldman Sachs warned of “violent price spikes” in commodities markets, and that prediction has more or less come true.

Knowledge and power

To make money betting on food, metals and energy, Glencore – like other trading houses and hedge funds – relies on one crucial commodity: Information.

“They have offices all over the world and unique access to information about production and distribution,” said food security researcher Kuyek. “When the people who have that information are also the ones speculating, there is grave cause for concern; they can purchase forward contracts when they know prices are going up.”

In August 2010, for example, Russia issued a ban on grain exports, after droughts ravaged crops. On Aug. 3, the head of Glencore’s Russian grain unit encouraged the government to halt exports. The government followed his advice on August 5, causing prices for cereals to rise 15 per cent in two days.

“Days before the export ban went into place, Glencore made huge bets,” said Kuyek. “They had some kind of information there; companies with information are in the best place to capture profits from volatility.” Glencore, for its part, said it also lost money as a result of the ban, because it had to fulfill delivery obligations to clients outside Russia at the new, higher price.

In addition to manipulating food prices – potentially with insider information – the trading giant appears to have broken laws on several continents.

Prosecutors in Belgium charged Glencore employees with criminal conspiracy and corruption, alleging they illicitly sought confidential information on European export subsidies from a public official. The case will be heard in Brussels on May 12.

Shady deals

During Saddam Hussein’s rule in Iraq, and the U.N. sanctions which accompanied its final years, Glencore made handsome profits marketing embargoed oil. In February 2001, Glencore bought one million barrels of Iraqi crude oil destined for the US and diverted the black gold to Croatia, where it was sold for a premium of 3 million dollars, according to a U.N. Security Council report.

When the news broke, the Sunday Times newspaper in the UK headlined their investigation “Secretive Swiss trader links City to Iraq oil scam”.

Glencore’s founder and lifelong commodities hustler Marc Rich was dubbed the “face of scandal”, by Vanity Fair magazine. After founding the company in 1974, Rich rose to prominence by pioneering “combat trading” -aggressive deal making in countries facing turmoil.

He traded oil for Ayatollahs when Iran was blacklisted by the US, did business with South Africa’s apartheid government and skirted US trade embargoes on Cuba and Libya to make trades under the motto: Do whatever it takes.

“There will always be allegations that they [Glencore] are dealing with some unsavory folks,” said Chris Hinde from Mining Journal magazine. “But I wouldn’t say that makes them unusual for traders.”

Tony Hayward, the disgraced former BP CEO who presided over the worst oil spill in US history, has been approached by Glencore to become a non-executive director on the board of the company when it becomes public.

While Rich sold the company in 1993, his take-no-prisoners approach to the commodities business lives on in today’s traders and speculators, including the South African CEO Ivan Glasenberg, who gave Rich’s trading empire the name Glencore.

In a January interview with the Financial Times newspaper, his first in 20 years, Rich supported the share sale, although he acknowledged that it is “much more convenient” for a trader not to be a public company as mandatory disclosure and regulatory oversight “limits your activity”.

Perhaps, Glencore is going public to increase its size, allowing it to acquire large competitors, particularly the mining giant Xstrata. “They are so big now, that they cannot get any bigger unless they are listed,” Hinde said, adding that some of the firm’s 800 partners might want to take the company public with the hope of cashing out their millions over the next few years.

Food insecurity

Regardless of the firm’s reasons, institutional investors from the U.S., East Asia and the Middle East have all committed to buying.

Aabar, the sovereign wealth fund from the United Arab Emirates, controlled by Abu Dhabi’s oil-rich monarchs, is expected to become the largest “cornerstone investor”, pledging to buy about one billion dollars’ worth of stock.

“It seems that they are buying a stake to strengthen the UAE’s control over the global grain trade, for their own food security,” said Kuyek. “In the absence of anything meaningful being done at the international level, – except for the same prescriptions of open markets and trade liberalisation.” Food insecure countries in the Gulf, Northeast Asia, Korea and other regions are attempting to gain more direct control over food, as the market economy “can’t guarantee decent prices”, he said.

Back in her hut in Indonesia, on the front lines of the global food crisis, Lia Romi hasn’t been following Glencore’s stock flotation. She is worried about how to feed her three kids.

“I’ve sacrificed several times not to buy books or clothes for my daughter and son, just for our daily food because I have no savings at all,” she said.

As Glencore’s directors prepare to pocket their millions, it’s unlikely that they will bet on Romi’s future, as fluctuations in the global market could push her family over the edge.

“Stability is to be prized,” said Oxfam’s David Green. And that is the last thing Glencore wants, as it’s instability which is most profitable – for those who have the inside knowledge to exploit it.

* Published under an agreement with Al Jazeera.

With or without a binding deal at the climate talks in Copenhagen this month, it seems the world may have to cut its oil consumption, as emerging geological and economic trends limit the availability and affordability of petroleum.

Peak oil theory predicts that production will reach a maximum point and then fall fairly sharply as demand outpaces possible supply. Credit: wikimedia commons

Back in the 1970s, Saudi Arabia’s flamboyant oil minister Sheik Ahmed Zaki Yamani articulated what has become conventional wisdom for policymakers around the planet: ”The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.”

Today, an increasing chorus of voices is challenging that prediction. While the world isn’t running out of oil in any absolute sense, a daunting picture on the availability and thus affordability of supply compared with expected demand increases is beginning to emerge.

“In 2015, the world’s consumption of oil will likely be closing in on 100 million barrels per day, roughly 22 percent higher than the current level – which is a relatively high annual growth for the oil industry,” states a briefing marked “confidential” from Canada’s Royal Canadian Mounted Police (RCMP), obtained by IPS a Freedom of Information Request.

The censored briefings, created in collaboration with other Canadian government agencies, paint a troubling picture of future energy security that has recently been corroborated by other sources.

In 2005, the International Energy Agency (IEA), the Paris-based multinational information centre created after the 1973 energy crises, predicted that world oil production could rise to 120 million barrels per day by 2030, up from 85 million bpd in 2008.

The IEA “was forced to reduce” its predictions on possible world supply “to 116 million and then 105 million last year,” according to a senior official in the organisation, who spoke with the Guardian newspaper in early November on the condition of anonymity.

The U.S. Department of Energy, through its International Energy Outlook (IEO), has also been quietly scaling down its numbers on possible supply. In 2007, the agency predicted that the world would be able to pump 107.2 million barrels per day in 2030. In summer 2009, it drastically reduced its supply predictions to 93.1 million barrels per day.

In its latest forecast, released Nov. 10, the IEA predicted that world oil supply would hit 105 million barrels per day by 2030. Even with those figures, which many analysts, including some inside the IEA, consider overly optimistic, there is likely to be a shortfall of some 11 million barrels per day by 2030.

“Every year we lose four million barrels a day [of production due to depletion],” said Jeff Rubin, the former chief economist with CIBC World Markets.

“Over the next five years, we are going to have to find 20 million barrels a day of new production, just so that we can [continue to] consume what we consume today,” Rubin told IPS in June.

Rubin is a believer in the peak oil theory – the idea that oil production will reach a maximum point and then fall fairly sharply as demand outpaces possible supply.

M. King Hubbert, a geologist with Shell oil in the United States, correctly predicted that U.S. domestic oil production would peak in the 1970s.

“Shell isn’t a believer in the peak oil theory,” said company spokesperson Janet Annesley during a 2008 interview with IPS at the company’s Calgary office tower.

Other multinational oil companies, however, are beginning to disagree with the current position of Shell, M. King Hubbert’s former employer.

Gasoline and transportation oil can be manufactured from coal and other petroleum sources, meaning the world will not run out in any absolute sense, but the costs – both economic and environmental – will be far higher than conventional crude.

“Groups and individuals speaking out about forthcoming world oil supply challenges are frequently stereotyped as a fringe element with little knowledge about the oil industry,” said the Sweden-based Association for the Study of Peak Oil and Gas in a Nov. 24 news release. “But their warnings are increasingly supported by some surprising allies: senior petroleum industry officials, consultants and analysts.”

Christophe de Margerie, CEO of Total SA, Europe’s third largest oil company, believes the world will never be able to produce more than 89 million barrels per day.

ConocoPhillips’ chief executive Jim Mulva told a conference in London last month that he doubted producers would be able to meet long-term oil demand. Both oil executives challenged IEA predictions.

The senior IEA official who blew the whistle on the organisation’s tendency to overstate supply says the group is manipulating data in order to placate financial markets.

“Many inside the organisation (IEA) believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible, but there are fears that panic could spread on the financial markets if the figures were brought down further,” a senior IEA official told the Guardian.

According to the confidential RCMP documents, “[censored]… a market psychology of fear will continue to place a ‘geopolitical premium’ on crude oil, keeping prices for oil products higher than market fundamentals along would dictate.”

It is this fear that the IEA is trying to placate. However, many believe a binding deal at Copenhagen seems like a more reasonable approach to reduce oil dependency than the current policy of fudging the numbers.

By Chris Arsenault
VANCOUVER, Canada, Nov 20 2009 (IPS)

In the aftermath of national elections widely condemned as fraudulent, the United States and its allies are wondering what to do about Afghanistan.

Malalai Joya Credit: Chris Arsenault/IPS

Malalai Joya, an Afghan parliamentarian deemed “the bravest women in Afghanistan” by the BBC, has some unsolicited advice for Gen. Stanley McChrystal and other U.S. commanders. “They must leave my country today, it is much better than tomorrow,” she said.

McChrystal is reportedly advising the Barack Obama administration to send 40,000 more troops into Afghanistan, on top of some 68,000 already in the country.

“They say a civil war will happen [if the foreigners leave],” said Joya between sips of green tea, “but nobody talks about today’s civil war.”

The Afghan conflict claimed 1,000 civilian lives in the first half of 2009, a 24-percent increase from the previous year, according to the Human Rights Unit of the United Nations Assistance Mission to Afghanistan (UNAMA). October 2009 was the bloodiest month for U.S. troops during eight years of war.

Joya is the youngest woman ever elected to Afghanistan’s parliament. An unflinching critic of both foreign occupation and Taliban-style fundamentalism, she has escaped five separate assassination attempts.

“I’m a little tired,” she confessed as we sat down in a hotel restaurant, “but we must be tireless.”

Joya spoke with IPS Canada correspondent Chris Arsenault prior to the Vancouver launch of her memoir, “A Woman Among Warlords: the Extraordinary Story of an Afghan Who Dared to Raise Her Voice”.

IPS: In the West, the standard debate on Afghanistan goes something like this: If foreign troops leave, the Taliban will return to power, girls won’t go to school and the country will become a launching pad for extremist attacks around the world. How do you respond to this? MALALAI JOYA: Democracy never comes from war, from the barrel of the gun, from cluster bombs. Liberation never comes from occupation. After the 9/11 tragedy, the U.S. and its allies pushed us from the frying pan into the fire. They replaced the Taliban with Northern Alliance fundamentalists who are a photocopy of the Taliban.

They occupied our country in the name of women’s rights, but today the situation for women is as catastrophic as under the Taliban. The only difference is that all these crimes are happening under the name of democracy, freedom, human rights, and women rights. Women’s rights can’t be donated from abroad or forced at gunpoint.

They [occupying forces] say if troops leave, the Taliban will eat us. But they are supporting the Taliban today, supporting warlords. Both of them are eating us. To fight against one enemy is easier than two. We are between two enemies [the occupiers and the extremists].

IPS: The New York Times recently reported that Ahmed Wali Karzai, President Hamid Karzai’s brother and a well-known drug trafficker, has been on the CIA’s payroll for years. Foreign troops indirectly fund the Taliban by paying them to protect supply routes, according to The Nation. Do average people in Afghanistan talk about this sort of collusion? MJ: People know very well. Many others, including Dr. Abdullah Abdullah, who ran for president in the election, their bums are on the lap of the CIA. Gulbuddin Hekmatyar [another warlord] is said to be using his old CIA-generated [drug] trafficking network to fund the current insurgency.

If [Canadian Prime Minister Stephen] Harper is honest, why is he silent in supporting this mafia system? These people are criminals; but with suits and ties they are in power.

If this [CIA funding war-lords] isn’t bad enough, [President Karzai] appointed Izzatullah Wasifi as Afghanistan’s anti-corruption chief [in 2007]. Wasifi is a convicted drug trafficker who spent almost four years in Nevada state prison for selling heroin, but he was an old friend of the Karzai family. As Afghans often say, “Karzai assigned a rabbit to take care of the carrot.”

IPS: In March 2001, Rahmatullah Hashimi a top aide to then Taliban leader Mullah Omar, reportedly met officials in Washington to discuss the proposed Trans-Afghan Pipeline or TAP, which would carry natural gas from Central Asia through Afghanistan to India, bypassing U.S. adversaries Iran and Russia. Negotiations between the U.S. and Taliban broke down over a dispute over transit fees, according to Asia Times reporter Pepe Escobar. How important are Central Asian energy reserves in motivating the current occupation? MJ: They occupied my country because of geopolitical aims: Afghanistan is in the heart of Asia. China and Russia are becoming more powerful and the U.S. doesn’t want that. Afghanistan is a good transit point to easily access the gas and oil resources of Central Asia. The superpower is using and occupying our country as part of a big chess game. Afghanistan has many other natural resources: China recently successfully bid billions of dollars for the right to exploit our copper deposits, estimated to be worth 88 billion dollars.

IPS: Canadians and some Europeans pride themselves for not formally invading Iraq. While touring these NATO countries with your new book, how does this sentiment strike you? MJ: When your government says the war in Iraq is a bad war and the one in Afghanistan is good, you should ask them the difference.

The war in Afghanistan has fostered terrorism, even though the stated goal is to fight it. The biggest beneficiaries of the conflict have been extremist groups who take advantage of legitimate grievances against NATO.

I send condolences to those Canadian moms who lost their sons and daughters in Afghanistan under the name of the so-called war on terror. They are the ones who must put pressure on the government; change their fears and sorrows to strength and raise their voices against this war crime. They themselves are victims of wrong policies of their government.

Excerpt:

The once serene road to Tim and Linda Ewert’s organic farm near Tomslake in northeastern British Columbia has become a mess of dust clouds, drilling rigs and hordes of pick-up trucks as the area transforms into the newest frontier of Canada’s natural gas boom.

Schoolteacher Rick Koechl worries about sour gas wells near his home. Credit: Chris Arsenault/IPS

Someone, or a group of people, is unhappy with area’s petroleum-fuelled transformation. In the last year, six attacks have blown up pipelines near the Ewert’s farm, drawing attention to a region rarely discussed by Canada’s urban chattering classes.

“Use your excessive earnings to install green energy alternatives instead,” wrote the alleged bomber in a Jul. 15 letter, the most recent communique. “That can be negotiated here but there will be no negotiation with you on fossil fuel activities.”

“The pace of the development hit us like a tsunami,” said Tim Ewert, an organic farmer living near Tomslake.

“There were never any baseline studies done on air or water. They never checked to see what size or how deep the local aquifers were before starting the whole drilling programme,” Ewert told IPS over hot coffee and hand-rolled cigarettes at his family farmhouse.

The lack of baseline data makes it difficult, if not impossible, to analyse the cumulative impacts of gas activity.

“We counted 82 trucks pass the house one day before noon,” said Woody Ewert, Tim’s son, who came into the house fresh from plowing the fields.

“The amount of dust that traffic generates on our gravel road is incredible. Our lawn would look like we were in a fog bank but it was just dust,” Woody told IPS.

Farmers in the area frequently complain about excessive noise, dust, bullying from company land agents, environmental contamination and other irritants from the gas industry.

“It’s like the Wild West out here,” said Ken Vause, a farmer who says unlicensed land agents from a gas company are hounding him into accepting a sour gas pipeline on one of his fields that could pose harm and hurt the land’s value.

“I don’t condone what this person [the bomber] is doing,” said Rick Koechl, a junior high school teacher living some 40 minutes from the bombed sites. “But at least it’s bringing attention to the situation up here. We’ve had legal organisations help us with this fight, but that’s not very sexy, is it?”

Koechl thinks new wells producing dangerous sour gas, which is contaminated with hydrogen sulfide, should have to be at least one kilometre from people’s homes. He also wants the companies to stop flaring sour gas as the wasteful process creates carbon disulfide, a neural toxin, and other dangerous by-products.

“We have people in the neighbourhood who work in the industry, but they fought alongside us to keep companies at a reasonable distance,” said Koechl. “They know how dangerous this stuff [sour gas] is.”

While several gas companies operate in the region, the bomber has exclusively targeted EnCana. That company has been a better neighbour to the Ewerts than other firms, says Tim.

“We’ve put together a programne called ‘courtesy matters’ to deal with some of the nuisance issues residents have complained about,” says EnCana’s Brian Liverse. The company also sponsors plenty of charitable organisations in the area, including hospital associations; minor sports teams, youth groups, and the Salvation Army.

Farmers like Ewert and Koechl think the provincial government refuses to enact fair environmental legislation because it is dependent on gas revenue. Woody Ewert thinks British Columbia should double the royalties it charges gas companies.

“When I’m my dad’s age, I’d like to be able to burn gas. At the rate we’re going, there won’t be a drop left,” Woody Ewert told IPS.

“The B.C. government has some excellent programmes to stimulate their economy and oil and gas activity in the area,” said EnCana’s Liverse, noting that drilling rigs are moving to B.C. from neighbouring Alberta, the traditional heart of Canada’s petroleum industry.

Alberta’s environmental regulations are notoriously lax. An article in the Journal of Environmental Management argues that the province is a “first world jurisdiction” with a “third world analogue” in its treatment of the oil industry. That companies would move across the border in part because they find the political climate more favourable is troubling, say the Ewerts.

Attacks near Tomslake aren’t the first case of high-profile sabotage against Canadian sour gas pipelines. On Apr. 20, 2000 an Alberta court convicted Wiebo Ludwig, a farmer and preacher, of bombing gas wells owned Alberta Energy Co. Ltd. (AEC). Ludwig claimed his wife miscarried a child because of sour gas exposure.

During their investigation of Ludwig and his associates, police admitted to blowing up a gas well themselves in order gain credibility for an informant. In 2002, AEC merged with PanCanadian to form EnCana, initially valued at 30 billion dollars. EnCana reps refused to comment on what, if anything, the company learned from the Ludwig saga.

In Alberta alone there were “more than 160 incidents of sabotage” against resource industries (oil, gas, hydro and forestry) between 1997-1999 causing “millions of dollars in damages”, according to documents released to IPS from a freedom of information request to CSIS, the Canadian Security Intelligence Service.

The heavily censored documents did not provide figures for 21st century sabotage. Sources familiar with the issue say the numbers are far higher than 160 incidents.

While sabotage against EnCana has drawn significant attention to northeastern British Columbia, residents say the government is still listening to industry at their expense. Even Tom Flanagan, a conservative professor at the University of Calgary, the brain trust of Canada’s petroleum industry, thinks grievances from farmers may be legitimate.

“My wife thinks so, she grew up in rural Alberta and says oil companies don’t give farmers a fair shake,” Flanagan told IPS.

*This is the second of a two-part series on the sabotage of gas pipelines in Northern Canada, and the impacts of energy development in the region.

North America’s largest natural gas corporation hopes a one-million-dollar bounty will take down the saboteur who is blowing up their pipelines in northern Canada.

Unknown saboteurs have blown up six sour gas pipelines in northern Canada. Credit: Chris Arsenault/IPS

Since October 2008, six controlled explosions have rocked sour gas pipelines operated by EnCana energy around the Tomslake area in the province of British Columbia. EnCana’s reward is thought to be the largest in Canadian history.

While Calgary-based EnCana is the largest player in the area, a boom in unconventional gas extraction has transformed the rolling hills and sleepy farmland in this sparely populated region to a bustling hub of activity.

“We really ramped things up in 2003,” Encana spokesperson Brian Liverse told IPS during an interview at the company’s field office.

The corporation has several hundred wells in British Columbia, and between 150 and 200 in the area facing sabotage, says Liverse.

Much of the region’s gas is sour, or contaminated with hydrogen sulfide, a “highly toxic gas” which can cause death within a few breaths, according to the U.S. Agency for Toxic Substances and Disease Registry.

“The gas rigs are like Christmas trees, they just dot the landscape,” said Lyman Clark, the mayor of Pouce Coupe, the village nearest to attacked sites.

On Jul. 15, days after the most recent attack, the Dawson Creek Daily News received a handwritten letter, allegedly from the bomber, demanding that EnCana cease operations in area.

“Return the land to what it was before you came every last bit of it… before things get a lot worse for you and your terrorist pals in the oil and gas business,” wrote the bomber.

In a rare move, the Integrated National Security Enforcement Team (INSET), a mix of top law enforcement officials tasked with investigating the attacks, have posted the bomber’s handwritten letters on their website.

At least 250 members of INSET – including masked men with high-powered machine guns and a sniper flown back directly from Afghanistan – have descended on the Peace River region of northeastern British Columbia.

In the Jul. 15 letter, the saboteur promised to suspend attacks for three months so “We can all take a summer vacation including your security personnel and the RCMP who have not helped you to date anyway.”

EnCana admits to hiring private security, but Brian Liverse wouldn’t say how many or what kind of agents the company is employing.

The point of the attacks was “to let you [EnCana and the rest of the gas industry] know that you are indeed vulnerable, [and] can be rendered helpless despite your megafunds, your political influence, craftiness, and deceit,” wrote the alleged bomber.

World demand for natural gas is expected to climb 51 percent by 2030 and British Columbia’s provincial government, which owns subsurface petroleum rights, is pushing hard for increased investment. Since 2000, companies have drilled more than 10,000 oil and gas wells in the region.

In 2008, the province reaped a record 2.7 billion dollars from selling natural gas drilling rights. But as sour gas lines cut into fields of canola, companies flare toxic chemicals lighting up the night sky with an eerie glow, and trucks kick up dust on previously tranquil dirt roads, some local residents say increased production is coming at their expense.

“Billions of dollars leave our community every year, yet our elders have to travel to Vancouver when they get sick,” said Cliff Calliou, Chief of the Kelly Lake First Nation, an indigenous community of some 500 residents 30 minutes from the bombed sites.

Industry’s incursions are “changing the way of life in the community, our hunting, trapping, berry picking – even just going camping,” Calliou told IPS during an interview at Kelly Lake’s community centre, where several dozen residents attended a conference on strategies for dealing with the petroleum industry.

Despite the region’s oil wealth, many houses in Kelly Lake are ramshackle trailers.

Unlike other native groups, there is no official treaty between Kelly Lake and the Canadian government. Natives say the gas is being stolen from unceded land and have launched a 5.2-billion-dollar claim for recompense.

After the first attacks last fall, police and media speculated – without evidence – that the bomber came from the Kelly Lake First Nation. “They [police] threw two people in jail with no charges,” Calliou told IPS. He describes police actions in the community as a “witch hunt”.

Natives aren’t the only ones claiming police harassment. Members of INSET loudly accused local businessman Dennis MacLennan of being the bomber as he sat in a diner. The public accusations have severely impacted his business, according to media reports.

Police also accused 76-year-old Regina Mortensen, a grandmother recovering from hip surgery, of sabotaging the pipelines.

Police spokesperson Rob Vermeulen refused to comment on specific allegations of abuse. “One of our goals is to eliminate persons of interest and we can only do that by talking to people,” Vermeulen told IPS. Some residents complain they have been interviewed more than four times.

At a July press conference, police accused the saboteur of “terrorising these communities of Pouce Coupe and Dawson Creek” and labeled the attacks “eco-terrorism”.

But the mayor of Pouce Coupe, an ardent supporter of the gas industry, doesn’t see it that way.

“I have discussed this [sabotage] with some pipeline workers,” Mayor Lyman Clark told IPS at the village’s office. “One just frankly told me ‘I am more afraid of the bears.’ ”

Accessing gas in northern British Columbia isn’t easy or cheap compared with other jurisdictions. Companies use a technique called horizontal drilling where rigs dig down around 2.3 kilometres and then sideways for another 2 kms, according to EnCana’s Brian Liverse.

Geologically, Canada is at a disadvantage compared to other petroleum producers, but companies value political stability. That, more than anything, is what the bomber is attacking. And the companies are scared.

*This is the first of a two-part series on the sabotage of gas pipelines in Northern Canada, and the impacts of energy development in the region.

By Chris Arsenault
VANCOUVER, Jun 15 2009 (IPS)

Sitting in the restaurant of Vancouver’s posh Fairmount Waterfront Hotel, the former chief economist for one of Canada’s largest banks doesn’t seem like the typical apocalyptic peak oil theorist.

Jeff Rubin Credit: Chris Arsenault/IPS

But in his new book, “Why Your World is About to Get a Whole Lot Smaller”, Jeff Rubin argues that globalisation, fuelled by cheap oil, is finished. In the book, Rubin contends the current global recession is a result of expensive oil, rather than subprime mortgages in the U.S.

Frequently ranked as Canada’s top economist, Rubin predicts that one barrel of oil will cost 225 dollars by 2012. Other analysts consider that number outlandish; the conservative National Post newspaper, where he was frequently quoted as an economic expert before leaving his job at CIBC World Markets, accuses him of “anti-materialism” and “Big oil paranoia.”

But in 2000, Rubin correctly predicted that oil would top 50 dollars per barrel by 2005. And, in 2005 he got it right again, forecasting prices would top 100 dollars per barrel in 2007.

Rubin sat down with IPS at his hotel after giving a lunch address to the Vancouver Board of Trade.

IPS: If Iraq’s security situation improves, and its cheap oil comes back online for export, could that stop your prediction of 225 dollars per barrel by 2012? Jeff Rubin: Not even close. Nor would it stop the prediction that exports from OPEC (the Organisation of Petroleum Exporting Countries), instead of growing, are likely to fall by about one to one and a half million barrels per day over the next four or five years.

It’s not just about depletion [of OPEC oil fields], though depletion is playing a key role. It is also about the explosive growth of oil consumption in OPEC countries themselves. This is the reason why exports have not grown from OPEC in the last five years; they are in effect cannibalising their own exports.

IPS: If the world economy can function with oil at 140 dollars a barrel, are there not huge reserves of unconventional petroleum – oil shale in Utah, heavy oil in Venezuela’s Orinoco belt and deep offshore deposits – that become viable to exploit? JR: What happened to the world economy when oil hit 140 dollars? Is this deepest recession in the post-war period really about the U.S. subprime mortgage market? Or is it about 140-dollar a barrel oil? I’d argue it is about a 140-dollar barrel of oil.

What blew up Jeff Rubin’s bonus last year? That was about [subprime mortgages in] Cleveland. But blowing up Jeff Rubin’s bonus and blowing up global GDP are two very different gigs.

IPS: At what point does the price of oil make export-driven globalisation untenable? JR: The model as we know it peaked in 2007. If we measure globalisation by the percentage of world GDP that is an export or an import, 2007 will mark the peak of a past age.

You are going to see less and less container ships. All of those containers are about one thing: a wage arc. Moving your factory from someplace where you pay folks 30 bucks an hour to somewhere where you pay folks 30 bucks a week is great, if it’s just about wages.

But what moves those container ships is oil. At 150-200 dollars per barrel, the wage arc becomes pennywise and a pound foolish because what you save on a wage bill you more than spend on bunker fuel.

IPS: Some analysts estimate that 25 percent of the world’s hydrocarbons are located in the Arctic and will soon be open to exploitation due to, ironically, global warming. JR: The stuff in the Arctic is a drop in the bucket. You are losing sight of what the Cambridge Energy Research Associates and Exxon don’t tell you about. They hold big press conferences to talk about ‘oh we just discovered the Jack Field – 10,000 feet under the hurricane ravaged waters of the Gulf of Mexico, isn’t that fantastic’.

They don’t hold press conferences [to announce] ‘see this field here? It has been producing for 50 years. It’s about to run dry.’

Every year we lose four million barrels a day [of production due to depletion]. Over the next five years, we are going to have to find 20 million barrels a day of new production, just so that we can [continue to] consume what we consume today.

IPS: Even if you are correct that supplies of cheap oil are dwindling, couldn’t increased efficiency make up for shortfalls in production? JR: We think that efficiency leads to conservation but history has shown that is not what happens.

The average engine today is 30 percent more efficient than the engines produced before the OPEC oil shocks [of the 1970s]. Yet, the average [North American] vehicle consumes just as much gasoline in the course of a year.

Back in the 1970s, we [North Americans] used to drive about 9,000 miles a year, now we drive 12,000. Back in the 1970s, we weren’t living in the far-flung suburbs. All those gains in efficiency have led us to, ever more efficiently, consume more and more oil.

IPS: What do you think is a bigger threat, peak oil or peak water? JR: Peak water is a whole other ballgame. But let me tell you a place where peak oil and peak water intersect: the Canadian oil sands. To produce one barrel of synthetic oil, you have to burn 1,400 cubic feet of natural gas, schlep two tonnes of sand [and] pollute 250 gallons of water.

Just like carbon emissions, water is free. If you are an oil sands operator and you pollute 250 gallons of water, it is costless.

*Not for publication in Italy

Excerpt: