Thursday, October 30, 2014

UN sees foreign jihadists swarming Iraq, Syria; Russia, Ukraine agree on gas deal; The good and bad of falling oil price; India red tape gets longer

1 UN sees foreign jihadis swarming Iraq, Syria (Spencer Ackerman in The Guardian) The United Nations has warned that foreign jihadists are swarming into the twin conflicts in Iraq and Syria on “an unprecedented scale” and from countries that had not previously contributed combatants to global terrorism.

A report by the UN security council finds that 15,000 people have travelled to Syria and Iraq to fight alongside the Islamic State (Isis) and similar extremist groups. They come from more than 80 countries, “including a tail of countries that have not previously faced challenges relating to al-Qaida”. The UN said it was uncertain whether al-Qaida would benefit from the surge. Ayman al-Zawahiri, the leader of al-Qaida who booted Isis out of his organisation, “appears to be maneuvering for relevance”, the report says.

“Numbers since 2010 are now many times the size of the cumulative numbers of foreign terrorist fighters between 1990 and 2010 – and are growing,” says the report, produced by a security council committee that monitors al-Qaida. In recent months, Isis supporters have appeared in places as unlikely as the Maldives, and its videos proudly display jihadists with Chilean-Norwegian and other diverse backgrounds.

The UN report, an update on the spread of transnational terrorism and efforts to staunch it, validates the Obama administration’s claim that “core al-Qaida remains weak”. But it suggests that the decline of al-Qaida has yielded an explosion of jihadist enthusiasm for its even mightier successor organizations, chiefly Isis. Those organisations are less interested in assaults outside their frontiers. But the report indicates that more nations than ever will face the challenge of experienced fighters returning home from the Syria-Iraq conflict.


2 Russia, Ukraine agree on gas deal (BBC) Russia has agreed to resume gas supplies to Ukraine over the winter in a deal brokered by the European Union. The deal will also ensure gas supplies to EU countries via Ukraine are secure. "There is now no reason for people in Europe to stay cold this winter,'' said European Commission President Jose Manuel Barroso.

The deal follows months of talks between EU officials and the Russian and Ukrainian energy ministers. The terms include the EU acting as guarantor for Ukraine's gas purchases from Russia and helping to meet outstanding debts. The total package is worth $4.6bn, with money coming from the International Monetary Fund as well as the EU. The total includes funds from existing accords with the EU and IMF.

Gas supplies were halted over late payments when Russia scrapped subsidies given to Ukraine for importing gas, meaning the price paid by Ukraine rose sharply. However, the backdrop to the row is Russia's conflict with Ukraine and Western sanctions on Moscow. Ukraine has relied on Russia for around 50% of its gas. Despite storage facilities Ukraine has a winter shortfall of around 3 billion to 4 billion cubic metres of gas, analysts say.


3 The good and bad of falling oil price (Talmiz Ahmad in Khaleej Times) In October, oil prices plunged to below $ 85/barrel in the first fortnight, yielding a cumulative fall of nearly 30 percent since June. The global economic slowdown is the principal culprit: with China’s growth projected at around seven percent next year, increase in oil demand is negligible.

The fall in prices has triggered two competing “grand strategy” scenarios. One scenario emerges from the negative impact of the price falls on the economies of US adversaries Russia and Iran. The advocates of this scenario believe that the pressures generated by low prices would make them more accommodative in their engagements with western interlocutors.

The other scenario sees a deliberate Saudi attempt to retard the further development of the US shale oil industry, which is crucially dependent on high oil prices of $ 80-90/barrel to sustain production. This explanation is also not convincing.

The simplest explanation is perhaps the most plausible: like most analysts, Saudi Arabia was surprised by the dramatic fall in prices. It realised that the fall was not a short term seasonal blip but emerged from changing market fundamentals. The Kingdom has opted to give priority to retaining its foreign markets, including through discounts for its Asian customers who buy two-thirds of its exports. There is no ‘’grand strategy”, merely the Kingdom coping with difficult market conditions.

The fall in oil prices constitutes a windfall for consuming countries. For consumers, the price fall will generate revenues of $1.8 billion per day or $660 billion per year. According to the IMF, this will increase global GDP by 0.5 percent; if business confidence is also boosted, the rise may be 1.2 percent. This will set the stage for increased business investment and consumer spending, and overall greater economic activity. The fall in oil prices may just pull the global economy out of its doldrums.


4 India red tape gets longer (Shefali Anand in The Wall Street Journal) Red tape in India is long and getting longer. The country has slipped again in the annual ease of doing business rankings compiled by The World Bank, which also said that last year, running a business in India was even tougher than they had originally thought.

In the 2014 report, published in October last year, India stood at 134th position. But, in its report published Wednesday for 2015, that ranking was revised down to 140th place. In other words, doing business in India last year was harder than the World Bank originally estimated.

The take home message is: India fares poorly as a place to do business. Its neighbors and other smaller nations are far ahead. Pakistan is ranked 128th, Bhutan is 125th, Indonesia is at 114. The tiny island nation of Sri Lanka stands at 99th position in the rankings and Ghana in Africa is 70th.

Consider why India ranks 184th in the category of “dealing with construction permits”. It takes an average of 186 days – or six months – in India’s major cities to get all the approvals needed to build a warehouse with basic utilities like a water and sewerage connection. In comparison, it takes only 26 days to get such a permit in Singapore, the easiest country in the world to do business. To enforce a contract in India, it takes about 1,420 days. Of this, 1,095 days, or three years, are spent in “trial and judgment” and nearly a year is spent in enforcing the judgment, says the report.

One area where India seems to have shown improvement is in protecting investors. Under its revised methodology, the report looks at how well a country protects minority investors and finds that India stood at 7th among 189 countries in the 2015 report, versus 21st in 2014.

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