Archive for the ‘Global economy’ Category

Both Venezuela and Greenland are part of the Great US-China Game

January 20, 2026

I have been amazed at the stupidity of the European response to Trump’s rhetoric about Greenland. They seem to have no clue as to the game that is being played. While Trump is negotiating they are reacting to tactics and red herrings and have no idea what the end goal is and even which game is being played. It is not that Trump is conferring idiocy upon the clueless European leaders – they have been self-harming themselves!

For the US (Trump) the motive in both regions is not personal pique or detest for Maduro. It is not either about resources for just their own sake.  This is part of the Great Game between the US and China for the coming 100 years. It is about strategic leverage against China’s growing global footprint. That is the thread tying them together. In another century it was the Great Britain and Russia. The US and China are taking the Great Game to new regions. The serious geo-political analysts see it. I am afraid that the European leaders get bogged down and utterly distracted by Trump’s injection of red herrings which they just cannot discern.


Venezuela – Yes oil but not only oil

Venezuela’s primary strategic value is its natural resources, above all oil. It has the world’s largest proven oil reserves. The recent U.S. intervention and pressure campaign explicitly cites oil access and disruption of adversarial influence as motives.

  1. China has deep financial and commercial ties with Venezuela, long providing loans and buying Venezuelan energy and commodities.
  2. Venezuelan rare earths and critical minerals are potential future assets — but currently underdeveloped, lacking infrastructure and clear exploitation plans.

The U.S. objectives are no secret and have been discussed so openly that I wonder why reporters of the lower kind and one-note politicians so easily forget.

  1. Deny China Easy Access to Resources
    Even if Venezuela isn’t a top rare-earth producer today, Washington sees value in preventing Beijing from locking up any potential resources or influence that could reduce U.S. leverage. This jibes with official U.S. rhetoric about countering “non-hemispheric competitors.”
  2. Break China’s Growing Footprint in the Region
    Latin America isn’t neutral territory anymore. China is a major trading partner across many states, and U.S. strategy now frames this as a geostrategic threat – something that could give Beijing leverage deep in the Western Hemisphere.
  3. Strategic Oil Supply and Energy Security
    Oil still matters as base strategic power: controlling Venezuelan oil limits Beijing’s access to energy markets, which could constrain China’s industrial or military trajectory in a crisis.
  4. Supply Chain & Rare Earth Sentiment
    Some U.S. policy thinkers argue the future of tech and defence depends on diversifying supply chains away from China – and Venezuela’s minerals could play into that if infrastructure and political stability were achieved.

My assessment is that the U.S. wants to disrupt Chinese access. This fits with how Washington/Rubio/Trump are now framing their moves. This is a long-term geo-political play about material resources and influence. A not insignificant part is the rare earths  potential in Venezuela even if they are not yet a fully realized asset.

Greenland: Raw Materials and Strategic Geography

Greenland doesn’t fit exactly the same profile as Venezuela, but it does fit the same pattern. It is about access to strategic resources and a denial of geo-political access to China. Greenland hosts some of the richest deposits of rare earth elements outside China. U.S. strategic planners see this as a way — someday — to dilute China’s dominance in critical raw materials that power everything from electric vehicles to missiles. Besides minerals, Greenland is a gateway to the Arctic — territory increasingly contested by Russia and China. U.S. military interest there reflects broader strategic positioning. Rather than wait for China (or Russia) to embed itself economically or militarily, the U.S. has pushed aggressive diplomacy, investment deals, and even territorial rhetoric, explicitly meant to keep rival influence out.

Extracting rare earths in Greenland is currently expensive, technically difficult, and far from market scale. Greenland’s harsh climate and lack of infrastructure make mining a long-term project. But from a strategic viewpoint, that doesn’t matter much — the U.S. wants to lock in preferential access and preclude China from doing so first.


The Great Game: supply chain security 

Both cases tie into a bigger story about critical minerals, supply chains, and great-power competition:

  1. China still controls a vast share of refining and processing for rare earths and other minerals, not just mining.

  2. The U.S. has made securing alternative sources, both domestic and allied, a declared priority, often written and described in the language of national security.

  3. Latin America and the Arctic are the competitive regions for the next century where access to resources and influence matters as much as traditional military positioning.

  4. Within the next century new off-Earth regions of supply chain competition and security will be opening up with the moon (China present and US playing catch-up) and Mars (US first) already included within strategic planning

This not about gestures and virtue signalling and personal pique. It is plain and simple geopolitics.

Who is going to have control of critical raw materials and whose military or economic reach will have dominance in key regions?

That is the game being played not whether the Peace Prize can be legally shared or not!!


Afterword

U.S. actions in Venezuela and Greenland are partly about denying China access to strategic resources and partly about securing their own access:

  • Venezuela: important for oil access and preventing Chinese economic dominance in the hemisphere; rare earths are a secondary but growing part of that calculus.

  • Greenland: a long-range bet on critical materials, strategic geography, and preemptive advantage over China and Russia.

This is part of the Great Game between the US and China for the coming 100 years. It is about strategic leverage against China’s growing global footprint. That is the thread tying Venezuela and Greenland together.


Strategic Importance of Greenland | SOF News


Oil price drop fuelling a surge in Indian car sales

March 18, 2016

It has taken a while coming, but the drop in oil price since mid-2014 is finally making its way into the Indian economy. Fuel consumption is growing at 10%. India has now passed Japan and is now the third largest oil consumer. Soon India will pass even China for energy consumption growth. Refineries which were intended for the export of oil have shifted to production for domestic consumption. Car sales which grew by 6% in the last year are now expected to be 12% in the next fiscal year (April – March).

Hindustan Times:

Underpinned by annual economic growth of 7-8 per cent, India’s fuel demand is seen as a key oil price support over 2016-2017, eating into a supply overhang that has pulled down global crude as much as 70 percent since mid-2014.

India has already pipped Japan as the world’s third-largest oil consumer. By 2040, India will have more than doubled its current oil use to 10 million barrels per day (bpd), according to the International Energy Agency (IEA), about on par with China’s consumption last year.

This roar of motor – as well as power and household – fuel use means some refineries initially planned for exports, such as the 300,000 bpd Paradip refinery on India’s east coast, have been flipped to serve domestic oil demand. …… Reflecting India’s rising importance as a buyer, Igor Sechin, chief executive of the world’s biggest listed oil company Rosneft, was in New Delhi this week to sign several deals with Indian companies such as IOC, Oil India Ltd and Bharat PetroResources Ltd.

…. Over April-February – the first 11 months of India’s current fiscal year – fuel demand rose 10 per cent to about 170 million tonnes (4 million bpd), according to a report this week by the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).

For the next fiscal year through March 2017, the PPAC has forecast fuel demand growth at 7.3 per cent. …. India plans to spend Rs 97,000 crore ($14 billion) in 2016-2017 on expanding and improving the country’s road network, which at 4.7 million km is already vying with China as the world’s second-longest after the United States, although highways make up less than 2 per cent of that figure.

A 23.55 per cent increase in the salaries, allowances and pensions of millions of government employees later this year is also expected to shore up consumer spending, boosting purchases of cars and motorcycles. Sales of passenger cars and utility vehicles in India are expected to grow by as much as 12 per cent in the next fiscal year, up from an estimated 6 percent this year. That translates to around 230,000 new passenger vehicles hitting the roads each month.

The main impact has been on gasoline demand, which the PPAC expects to grow to 24.2 million tonnes (560,000 bpd) by next year, up more than 12 per cent from 21.5 million tonnes estimated for this fiscal year. “Gasoline demand has been growing in double digits and we expect this to continue as it depends on sales of two-wheelers and cars,” said Indian Oil Corp’s Singh.

Other fuels are seeing growth as well, and for similar reasons. To meet rising demand, state refiners are planning a 1.2 million bpd plant on the country’s west coast, adding to current overall capacity of 4.6 million bpd, although a fixed timeline has not been set.

I expect India and China to be key contributors to the recovery of the global economy and

Historically – though it is a relatively crude generalisation – low oil price has usually given – or coincided with – consumer-led growth and stability.

crude oil price history 1970-2014

crude oil price history 1970-2014


 

Russia losing the shale gas wars

October 1, 2012

The advent of shale gas is not only a game-changer regarding power generation but also a game-changer in the area of energy and geopolitics. The Russian dominance in the European gas markets is being threatened and they are now joining forces with various environmental groups in an unholy alliance to restrain the development of shale gas production in Europe.

But in the long-term I expect Russia will join the shale-gas movement. They have larger resources of oil and gas bearing shales  than most others.

Wall Street Journal (Associated Press):

The Kremlin is watching, European nations are rebelling, and some suspect Moscow is secretly bankrolling a campaign to derail the West’s strategic plans. It’s not some Cold War movie; it’s about the U.S. boom in natural gas drilling, and the political implications are enormous. Like falling dominoes, the drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.

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Sarkozy attacks Cameron – much to Cameron’s delight

October 24, 2011

While European leaders are struggling to put together a rescue package for Greece which will not have a domino effect for Italy and Spain or drown too many European banks, David Cameron is facing renewed opposition to membership in the EU from within his own party. But it is not only in the UK that opposition to the growing exercise of powers by Brussels is increasing. Almost every EU member which has not adopted the Euro (Sweden, Denmark, Norway and the UK along with some of the newer members) has rising voices calling for the limitation of European power and a return of powers to the country parliaments. Voices against the Euro can even be heard in Germany where there is a widespread feeling ( not entirely wrong) that German taxpayers are paying twice for the spendthrift ways of Southern Europe; first directly by subsiding these countries and secondly by the devaluation of their savings in Euro. The Swiss are just thankful that they were never a part of this experiment.

In hindsight, what has become obvious is that the Euro-zone has few built in sanctions to prevent the profligacy of some countries which has to be paid for by others. What is also becoming clear is that without a fiscal uniformity – which would seem like being taxed from Brussels – the possibility of  “bad” members being spendthrift will always remain.

France has always seen the Euro as part of a long-term move towards a European political and fiscal uniformity in which France would be the centre of political power. A return to the glory days of the Holy Roman Empire which lasted over 800 years, except of course that the centre would be in France rather than in what today is Germany. Sarkozy could certainly see himself as the first Emperor.

Yesterday, as the Telegraph reports:

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German exports at all time high – proof of two-speed Eurozone

May 9, 2011

No doubt the value of the Euro which is being held back by the economically weak countries helps but it does not explain the strength of the recovery in Germany led by exports. It is not surprising that there are many Germans who are troubled by the burden placed on the European currency by Greece, Portugal and Ireland and begin to yearn for the return of the Deutschmark. There is a real fear among German savers that the achievements will be diluted by the weaker countries which in turn will destroy the value of their savings. The growth rate in Germany is second only to Sweden in Europe but the sheer size of the German economy makes it the real motor in Europe.

There is also an attempt by the German media to create a narrative that it is not unthinkable for a country to leave (or be pushed out from) the Euro. Last Friday’s media rumours about Greece leaving the Euro generally started in Germany. Even though the rumours were hastily denied by everybody, just the fact of bringing it up makes it less unthinkable.

Returning to the Deutschmark?

BBC: 

German exports surged in March to their highest level since records began, as the growing global economy lifted demand for its products and services. The country’s exports for the month totalled 98.3bn euros ($142bn; £87bn), 7.3% higher than February.

Its imports also reached an all-time high, up 3.1% to 79.4bn euros. Both imports and exports are the most since data started to be collected in 1950.

Germany is the world’s second-largest exporter.

Only China exports more than the European nation, and the latest monthly figure for German exports was much higher than market expectations.

“Germany is on the verge of a ‘golden decade’,” said Christian Schulz of Berenberg Bank. Fellow analyst, Carsten Brzeski at ING, said the German economy was now “cruising along smoothly”.

The latest German export figures provide yet more evidence of a “two speed” eurozone, with the German and French economies continuing to grow strongly, while others, such as Greece and Portugal are struggling against a backdrop of high national debt levels. 

G 20 ends: “We know we must do something but we don’t know what …”!

November 12, 2010

Everybody agreed that a currency war was a “bad thing” but each country – of course – denied that it would ever indulge in such a thing. All agreed that the world was a dangerous place and that there were “grave imbalances”. The US blamed China and China blamed the US but they did try to engage and tone down the earlier rhetoric. It started a little acrimoniously but ended with fine words and a task passed on to the IMF to set “indicative” guidelines.

It is no doubt a “good thing” that the leaders do meet and at least try to think a little outside the box but few have the ability to look much beyond immediate domestic issues and domestic politics. The European leaders did at least have a “break out” meeting to address the problems in Ireland.

Reuters –

G20 leaders closed ranks Friday and agreed to a watered-down commitment to watch out for dangerous imbalances, yet offered investors little proof that the world was any safer from economic catastrophe.

The developing and emerging nations agreed at the summit in Seoul to set vague “indicative guidelines” for measuring imbalances between their multi-speed economies but, calling a timeout to let tempers cool, left the details to be discussed in the first half of next year.

Leaders vowed to move toward market-determined exchange rates, a reference to China’s tightly managed yuan that the United States has long complained is undervalued.

They pledged to shun competitive devaluations, a line addressing other countries’ concern that the U.S. Federal Reserve’s easy-money policy was aimed at weakening the dollar.

In a nod to emerging markets struggling to contain huge capital inflows, the G20 gave the okay to impose “carefully designed” control measures. They also agreed that there was a critical, but narrow, window of opportunity to conclude the long-elusive Doha round of trade liberalization talks launched in 2001.

After weeks of verbal jousting, the United States and China sought to bury the hatchet over rows about China’s “undervalued” currency and the global risks created by the U.S. printing money to reflate its struggling economy. “Exchange rates must reflect economic realities … Emerging economies need to allow for currencies that are market driven,” Obama said. “This is something that I raised with President Hu (Jintao) of China and we will closely watch the appreciation of China’s currency.”

Tim Condon, head of research at ING Financial Markets in Singapore said it was “hard to disagree” with the vows of the leaders but they had fallen short of the progress hoped for going into the summit.

“They decided just to put down a lot of laudable objectives as the conclusion of the meeting and hope that they can do better, that more can be accomplished in future meetings,” he said. The G20 has fragmented since a synchronized global recession gave way to a multi-speed recovery. Slow-growing advanced economies have kept interest rates at record lows to try to kickstart growth, while big emerging markets have come roaring back so fast that many are worried about overheating.

But at least the G20 spouses apparently had a good time  in what looks like sunny autumn weather!

Main Image

The spouses of G20 world leaders walk through a park in Seoul November 12, 2010. Credit: REUTERS/Yonhap/Pool SOUTH KOREA