ALL governments and leaders would like people to believe that, under their control, the world is a harmonious place. Thanks to their wisdom, it has become like team-building for a multilevel marketing company, where everyone holds hands and tells each other how great he or she is.
Don’t believe it? Just look at the “team” pictures taken at any global meeting, from the Seventh Bali Democracy Forum to the Asia-Pacific Economic Cooperation (Apec) conference. Remember the 1996 Apec Ministerial Meeting in Subic, Zambales province, where all the leaders were wearing barong Tagalog made of piña fiber? The Philippines gets to host it again in 2015; maybe each leader will wear a golden salakot this time.
Global geopolitics is more like a fraternity hazing: It’s just as brutal and vicious, and has the same motives: the power and wealth that goes with it.
The Middle East has been about oil since its initial discovery in 1908 in Iran and in 1938 in Saudi Arabia. It is interesting that those two countries are the major players in the regional conflicts. The civil war currently raging in Syria, which now also involves the Islamic State (IS), is still about oil.
Qatar has been trying to overthrow the Syrian government for years, as it wants free access and control of a pipeline running through that country, so that it would be able to sell directly to Europe. Russia has been supporting the Syrian government in stopping that pipeline. Saudi Arabia used to be opposed to the pipeline, but is now in favor of it, as they see an opening, thanks to the United States, to take control from Qatar.
But since the Russians took Crimea from Ukraine, which took the US out of the eastern European-influence picture, the situation has become like “the enemy of my enemy is my friend.” By this, I mean the US is using Saudi Arabia (and vice versa) to get back at Russia.
Crude-oil prices are collapsing. You would think that Saudi Arabia would be doing everything it can to move prices higher, since it depends on oil for its existence. The same can be said of Russia. Low oil prices will soon severely damage the Russian economy, more than the problems it already has as a result of the sanctions imposed by the US and European Union. European Brent crude oil is now at about $86 a barrel. Russia really needs oil over $100 to meet its production costs and government-spending needs.
In return, Saudi Arabia is being supported by the US in its quest to control the Syrian pipeline.
But there are always side effects. Over the last three years the US has been producing more oil than it has since 1972, thanks to shale-oil extraction. Except that US shale-oil producers need oil at $75, at least, to break even on production costs and over $84 to continue spending for more wells and more exploration efforts.
Meanwhile, Qatar and the United Arab Emirates are trying to figure out how to counter the US-Saudi Arabia alliance and make sure their mercenaries in the IS remember that it is supposed to be a Qatari pipeline, if and when they take over Syria. The US is hoping that Russia will “fall” before its own shale-oil industry does.
While the big boys fight over oil, prices may collapse even further, which is very good for the Philippines. Local gasoline prices are down 10 percent in the last few months. That is a major reason inflation—which is critical to the economy—will continue to drop.
Sometimes, though, the best thing to do is to not join any fraternity. Taking sides can be dangerous and difficult.
During the Cold War, the Non-Aligned Movement saw India effectively play the Soviet Union against the US, with China in the middle. India received funding from both the US and the Soviet Union to keep China under control.
The Philippines recently decided to use the US to counter the Chinese with the Enhanced Defense Cooperation Agreement. Now the killing of a transgender woman in Olongapo City, allegedly by a US Marine, adds a new dimension to that agreement. China is probably very pleased.
The country has improved and is becoming more economically mature. Philippine businesses are no longer afraid to compete globally and are expanding abroad, like what the major multinational companies in the West have done.
But when it comes to some government policies and far too many political leaders, maturity is a distant goal.
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E-mail me at mangun@gmail.com. Visit my website at www.mangunonmarkets.com. Follow me on Twitter at @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.