Category Archives: Markets

Private Military Firms and their Bonanzas

The past decade – particularly the U.S.-led wars in Iraq and Afghanistan – provided rich pickings for firms providing private armed guards, drivers and other services that would once have been performed by uniformed soldiers.  But as the conflicts that helped create the modern industry wind down, firms are having to adapt to survive. They must also, industry insiders say, work to banish the controversial image of mercenary “dogs of war” that bedevil many firms, particularly in Iraq, Reuters reports. “This industry has always gone up and down,” Doug Brooks, president of the International Stability Operations Association (ISOA), told Reuters on the sidelines of its annual conference in Washington. “What we’re seeing now is that it is becoming much more mature – and much more responsible.”

The free-for-all atmosphere that pervaded the industry, particularly in the early years of the war in Iraq, insiders say, appears gone for good. A string of high profile incidents – often involving armed private guards firing on sometimes unarmed Iraqis – trashed the reputation of firms such as Blackwater, a Virginia-based firm since renamed several times, as well as the wider industry.  Members of the ISOA – which include some but not all of the major contracting firms as well as smaller players – subscribe to a code of conduct that they say helps identify responsible firms.

Despite these efforts, industry insiders and other observers say quality remains mixed. Some firms providing armed guards for merchant ships passing through the Somali pirate-infested Indian Ocean, for example, only hire elite personnel who have served in the Marines or special forces. Others, however, have a reputation for being less discriminating and for unreliable staff and weapons.  In the aftermath of last month’s attack on the U.S. diplomatic mission in Benghazi, which killed the U.S. ambassador to Libya and three other Americans, critics have seized on the hiring of a little-known British private security firm now accused of providing inadequate protection at the mission….

The most vulnerable firms, many in industry say, may be those who have relied on ongoing U.S. military work that is now drying up as the Pentagon “Operational Contingency Allowance” – the additional funding earmarked for the wars – tapers off.  At its peak, the U.S. Commission on Wartime Contracting, a bipartisan legislative commission established to study wartime contracting in Iraq and Afghanistan, estimated there might have been as many as 260,000 contractors in the two countries.

“At the moment, everyone is looking for work that is not OCA-funded,” one industry executive told Reuters on condition of anonymity, saying he expected an era of mergers and even bankruptcies. “It’s going to be like when the tide goes out at the beach and you suddenly find out who has been naked.”  New Pentagon priorities, many believe, will provide fewer openings for traditional private military contractors. Washington’s strategic “pivot” to the Asia-Pacific region will involve mainly warships or uniformed Marines, with little need for extra hired muscle.  Companies that take a broader approach and also provide logistic, intelligence and other functions, however, could have a much better decade.  “If your definition of a private security contractor is only someone with a gun at a checkpoint in Afghanistan, then yes, you may be seeing a decline,” says David Isenberg, an adjunct scholar at the Cato Institute in Washington.  “But if your definition is of private contractors performing tasks that would once have been done almost exclusively by government and military, it’s a very different picture.”

When it comes to conventional security, many in the industry believe the real growth will come from serving the private sector – particularly the oil, gas and mining industries.  Even with U.S. troops gone from Iraq and the number of government contractors down, some companies say they are finding strong demand from energy firms for protection, particularly around Basra in southern Iraq.  “We are as busy as ever and the need has never been greater,” said Pete Dordal, senior vice president at GardaWorld, a global risk management and security services firm. “I don’t want to say it’s a gold rush, but business is very good.”

Private security firms, insiders say, evacuated the vast majority of the thousands of foreign nationals plucked from Libya as its civil war erupted early last year. Most were contracted by other private firms, although governments also used them heavily. London-based Control Risks told Reuters last year that China hired it directly to fly hundreds of its nationals out by airliner.

Some in the industry believe the number of contractors in Afghanistan could even rise with the planned departure of all U.S. combat troops in 2014, as mining companies exploit largely untapped mineral resources.  It’s a similar picture in Africa, where even in war-torn Somalia, a handful of companies are setting up shop. They often work with local tribes and other groups to safeguard visiting journalists, business representatives and prospectors.  Focusing on finding reliable local staff, some say, may ultimately prove both cheaper and more reliable than foreign hired guns. In Libya, some energy firms long turned to local desert tribes to protect their facilities – a tactic that proved remarkably effective during last year’s civil war after foreign security staff were swiftly withdrawn.

The trick may be to avoid having grandiose ambitions.  A handful of British firms in particular have made millions from providing on-board protection teams for Indian Ocean shipping. But those who have tried to go a step further and start their own private navies – hoping to escort merchant ships for cash – have struggled to find sufficient funding.

Within Somalia some credit the hiring of private contractors with Gulf state money to bolster the Coast Guard of the independent enclave of Puntland as being behind recent drops in pirate attacks. But it proved so controversial that funding was eventually pulled, leaving behind half-trained local fighters that some worry could prove a regional security threat in their own right.

Private contractors are increasingly central to operations such as the African Union’s AMISOM peacekeeping mission in Somalia, performing roles such as bomb disposal, logistics and technical support. ISOA and some experts argued they could do much, much more.  The few dozen foreign contractors from the now-defunct British firm “Executive Outcomes,” together with the hundreds of local fighters they trained, are often credited with turning the tide in Sierra Leone’s 2001 civil war.  But after years of discussions at the United Nations, few of the world’s governments appear enthusiastic about the idea of private security firms becoming the norm.  “In some places, contractors might be more effective than some of the troops from contributing nations,” said Edmond Mulet, U.N. Assistant Secretary General for Peacekeeping Operations.  “But the U.N. is simply the sum of its member states and some of them are opposed to the use of contractors in some roles,” he told the conference.

As Iraq and Afghan wars end, private security firms adapt, Reuters, Oct. 22, 2012

The Deadly Weapon Dumps

Taking stock of an ammunition depot can be a deadly task…Last year was the worst yet, with 442 victims from 46 explosions. One of the biggest ever happened in March this year: an accident in Congo-Brazzaville that killed 250, showering munitions over a two-mile radius.  Thousands of ill-run weapons stores are in restless parts of Africa and the Middle East, often near towns or cities. The end of the cold war left unneeded weapons all over the Soviet empire. Moldova spends a quarter of its defence budget guarding obsolete munitions. Ukraine alone has half a million tonnes.

Most high explosives are inherently stable. But the propellant that launches projectiles from gun barrels is not. Over time it eats away at the stabilising compounds—especially in hot weather—until spontaneous detonation occurs. In rich and strict countries munitions are tested and dealt with before that happens. In poorer places, the temptation is to trust to luck. Many are also reluctant to give up their arsenals, particularly if they are unsure they can be replaced. Somaliland, an independence-seeking statelet in the Horn of Africa, for example, has curbed the destruction of its ageing weapons because international sanctions stop it buying new ones.

Small slip-ups can have grave consequences. At a weapons dump in the Rajasthan desert in India, a gardener was sacked to save money. Unkempt long grass then caught fire, triggering an explosion in April 2000 that killed two soldiers and destroyed $90m of ammunition.

Bad management of weapons dumps makes life easier for thieves and dodgy customers. It is a big headache for Western countries worried about advanced weapons such as shoulder-launched missiles, or those suitable for use by insurgents or independent militias. This is a particular problem in Libya, where Muammar Qaddafi, the former dictator, spread his arms around more than 500 supply points to avoid NATO’s air strikes.

The simplest means of disposal is to blow weapons up in a hole in a remote location. But they must be expertly stacked to ensure everything explodes properly. And for big stockpiles, and in countries with tough environmental rules, that may not be possible. Alternative solutions include movable facilities that remove explosives from their casings, cut them into small pieces and burn them in a furnace. But for big munitions such schemes are costly and so far still untested.

Landmines get far more money and legal scrutiny than ammunition dumps, because of their dire effects. But perhaps too much. Adrian Wilkinson, a UN explosives specialist, reckons landmines have killed roughly five times as many people, but at least 100 times more is spent on dealing with them.

Ammunition depots: Storing up risk, Economist, Sept. 29, 2012, at 66

Water/Oil/Gas Wars: the Stans of Central Asia

Tajikistan’s president, Emomali Rakhmon, likes things big. He has built the world’s tallest flagpole. Last year he opened the region’s largest library (with few books in it so far). But one gigantic project is proving contentious with the neighbours: building the world’s tallest hydroelectric dam.

Islam Karimov, the strongman who rules downstream Uzbekistan, says the proposed 335-metre Rogun dam, on a tributary of the Amu Darya, will give Tajikistan unfair control over water resources and endanger millions in the event of an earthquake. On September 7th, he said such projects could lead to “not just serious confrontation, but even wars”.  Mr Karimov wasn’t talking only about Tajikistan. Upstream from Uzbekistan on a tributary of the region’s other major river, the Syr Darya, Kyrgyzstan is seeking investment for a project of its own, called Kambarata. The two proposed dams (Rogun at 3.6 gigawatts and Kambarata at 1.9) would theoretically end their respective countries’ frequent power shortages and provide badly needed export earnings.

Both were conceived in the twilight of the communist era and stalled when subsidies from Moscow evaporated at independence. Soviet leaders envisioned managing the region’s water flows, energy trades and competing interests, and their Russian successors still maintain an interest. During a visit to Bishkek on September 20th, Russia’s president, Vladimir Putin, promised help with Kambarata in exchange for, among other things, an extension of military-basing rights in Kyrgyzstan. Tajikistan has sought Russian help for Rogun, too. Mr Putin promised $2 billion for the dam in 2004. But that deal fell apart three years later, when the two countries could not agree about the dam’s height.

Spurring on both projects is Uzbekistan’s bad behaviour, egregious even in a tetchy region. Unlike Uzbekistan, neither Tajikistan nor Kyrgyzstan, the two poorest former Soviet republics, has reliable access to oil or gas. Uzbekistan’s Mr Karimov has a habit of changing gas prices and cutting deliveries during the coldest months. He has prevented electricity supplies to his indigent neighbours from transiting his country’s Soviet-era grid. Uzbekistan has also unilaterally closed most border checkpoints with both upstream countries, set mines along parts of the boundary with Tajikistan, and often holds up commercial traffic. When a rail bridge in southern Uzbekistan mysteriously exploded last autumn, depriving southern Tajikistan of its rail connections, few believed Uzbek claims of a terrorist attack. Indeed, rather than fix the track, the Uzbeks dismantled it. Tajikistan calls the actions a blockade.

Though it seems unlikely Mr Karimov will drive his tanks over the border just yet, shoot-outs on the disputed borders are not uncommon. All of this worries NATO officials. All three countries help supply the war in Afghanistan and will be crucial for NATO’s withdrawal.

Excerpt, Water wars in Central Asia: Dammed if they do, Economist, Sept. 29, 2012, at 44

One the international agreements between states on water and electricity exchanges, see Elli Louka International Environmental Law

Nuclear Waste Island, Orchid, Taiwan

Most people on the windswept outpost, 62 kilometres east of Taiwan’s mainland, would love to see the 100,277 barrels of nuclear waste gone. But many admit they are concerned about their livelihoods if that day comes.  Orchid Island has been a flashpoint for Taiwan’s environmental movement since nuclear waste was first shipped there in 1982. Local residents, mostly members of the Tao aboriginal group, say the waste was put on the island without their consent. Periodic protests have claimed negative health and environmental effects.

In response, Taiwan Power Co has showered the community with cash handouts, subsidies, and other benefits.  Orchid Island received subsidies worth 110 million Taiwan dollars in 2011, according to company data. That doubled local government spending, according to township secretary Huang Cheng-de.  “The current situation, basically, is that Taipower gives us quite a bit of money, and our people are becoming pretty reliant,” Huang said.  Most of the funds are divided into government-managed accounts for each of the island’s 4,700 residents, who can apply for it if they have a business or career-oriented need. Residents also receive free electricity, health-related emergency evacuations, scholarships for higher education and a 50-per-cent discount on all transportation costs to Taiwan’s mainland.  Statistics indicate local residents are taking advantage of the benefits. In 2011, they used nearly twice as much electricity per household as the national average, according to company data.

Protests have weakened and for many residents, including Chou the restaurant owner, the existence of nuclear waste has become more acceptable.  “Most people here are against the nuclear waste, but since its already here, they should pay us for using our land,” Chou said. “For now, I’m okay with it as long as they don’t add any more barrels.”  The utility plans to move the waste off the island by 2021, but only if another township in Taiwan agrees by referendum to take it, according to Huang Tian-Huang, a company deputy director.  If it goes to plan, “so goes the compensation,” Huang said, although he acknowledged that gaining consent from another community will be difficult.  Questions remain on what would support Orchid Island’s economy if those subsidies end.

For Taiwan aborigines, nuclear waste is blessing and curse, http://www.timeslive.co.za, Sept. 16, 2012

WTO and the Level Playing Field: Europe v. Russia

Europe’s trade chief threatened to take Russia to the World Trade Organization over a string of restrictive practices saying Moscow needed to play by the rules now it was a member of the global body.  Trade Commissioner Karel De Gucht singled out Russia’s ban on European live animal imports, plans to levy fees on imported vehicles, two anti-dumping cases and another trade defense case launched by Moscow against Europe in recent months.  In the same week that the European Commission opened an investigation into Russia’s Gazprom and China’s solar panel exports, De Gucht said the measures sent “the wrong signal”, Reuters reports.

“Membership of the WTO means a country is subject to the dispute settlement mechanism of that organization,” he told an EU-Russia seminar in Helsinki. “Russia should understand that Europe takes that mechanism very seriously and that we will not hesitate to enforce our rights where they are violated,” he added.

Russia joined the WTO last month after an 18-year wait. President Vladimir Putin said on Wednesday the country would use its membership to try to develop freer trade across the world, but he’ll also be hoping it will further boost the energy-driven $1.9 trillion economy.  De Gucht said Russia was violating WTO rules by keeping its markets closed to competitors.  “What these and other measures … have in common is that they affect products where significant market opening is due to take place under Russia’s WTO commitments,” De Gucht said.  “This is the wrong signal to send at a time when liberalization is supposed to be moving forward.”

Russia and the EU are deeply intertwined, with Europe relying heavily on Russian energy exports and Russians hungry for EU products and access to its 500 million consumers.  But the two sides argue over issues ranging from energy supplies, trade and market access to human rights. While relations are at times frosty, both refer to each other as “strategic partners” and meet for twice-yearly summits.  Negotiations between Russia and the EU towards closer economic and political ties have also stalled, and Brussels is concerned by Putin’s plan to develop a “Eurasian union” of ex-Soviet states, including Kazakhstan and Belarus.

EU warns Russia to play by WTO rules or face action, Reuters, Sept. 7, 2012

Russian President Vladimir Putin signed a decree giving the government the right to protect its natural gas-export monopoly, OAO Gazprom (GAZP), from an anti-trust inquiry by the European Union.  Putin’s measure bans strategic companies from disclosing information, disposing of assets or amending contracts without government approval in case claims are made by foreign states or entities, the president’s office said in an e-mailed statement from Moscow today. The Russian leader on Sept. 9 warned the EU, which relies on Russia for a quarter of its gas needs, that there would be “losses on both sides” if the issue isn’t resolved. He accused the 27-nation bloc of trying to shift responsibility for subsidizing former communist EU members onto Russia by forcing Gazprom to cut prices for customers in eastern and central Europe.

Excerpt, By Henry Meyer, Putin Moves to Protect Gazprom From EU Pricing Dispute, Bloomberg, Sept. 11, 2012

The iPhone, radioactive waste and rare earths: the Lynas case

Lynas Corporation, an Australian based mining company are constructing a rare earth processing plant, known as the Lynas Advanced Materials Plant (LAMP) in Gebeng industrial estate in Kuantan, Malaysia. The LAMP will process lanthanide concentrate which will be trucked from the mine site in Mt Weld Western Australia to the Port of Fremantle where it will be shipped to Malaysia. This report provides an assessment of the emissions from the LAMP plant rather than Lynas Corporation‟s activities in Western Australia. The LAMP plant will have significant atmospheric, terrestrial and waterborne emissions of toxic chemicals and radionuclides including uranium, thorium and radon gas.

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A Malaysian high court put on hold until October 4 a temporary operating license granted to Lynas Corp Ltd’s controversial rare earth plant near the eastern city of Kuantan, prompting an 8 percent fall in the Australian firm’s shares on Tuesday (Sept. 24, 2012).  The rare earth plant – the world’s biggest outside China – has been ready to fire up since early May, but the company has been embroiled in lengthy environmental and safety disputes with local residents since construction began two years ago [regarding the handling of radioactive waste at the plant].

The plant is considered important to breaking China’s grip on the processing of rare earths, which are used in products ranging from smartphones to hybrid cars.

Lynas confirmed the Kuantan High Court’s decision on Tuesday, but said it would not affect production at the plant and that it plans to strongly assert its rights at the next court hearing…Lynas shares plunged more than 8 percent after the court order to A$0.795, their lowest close in almost three weeks as investors closely track each move in the sensitive case. Earlier this month they rose up to 50 percent when Malaysia approved the license.

Activists linked to the environmental group, Save Malaysia Stop Lynas, want the court to suspend the temporary license until two judicial review cases challenging the government’s decision allowing the plant to operate are heard.  “It’s a small victory, but there is still a long way to go,” Tan Bun Teet, a spokesman for the group, told Reuters after the court decision. “We will fight tooth and nail. We have a lot at stake,” he added.  The group’s previous attempts to legally stop the plant had failed.

Lynas received a temporary operating license for its long-delayed $800 million rare earth plant earlier this month, enabling it to start production as early as October.  The Malaysian Atomic Energy Licensing Board (AELB) issued the permit following an earlier recommendation from a government committee.  Protests over possible radioactive residue have drawn thousands of people and the project has become a hot topic ahead of an election that must be held by early next year.

Sources

Lee Bell, Rare Earth and Radioactive Waste: A Preliminary Waste Stream Assessment of the Lynas Advanced Materials Plant, Gebeng, Malaysia, National Toxics Network. April 2012

Siva Sithraputhran, Malaysian court puts license on hold for Lynas rare earth plant, Reuters, Sept. 25, 2012

Nuclear Protests in India and Foreign-Funded NGOs

This week police in Kudankulam, in southern Tamil Nadu, fired at thousands of anti-nuclear protesters on the beach, killing a fisherman. The locals were opposing a new, Russian-designed, 2,000MW nuclear plant, India’s biggest, which is now being filled with fuel. The 2004 Indian Ocean tsunami killed over 10,000 Indians. Now fears grow of another big wave that could bring a Fukushima-style disaster.  Protesters also claim harassment, saying officials have slapped sedition notices against 8,000 who have dared speak out. Opposition has flared before. The state’s chief minister, Jayaram Jayalalitha, once backed the protests but has now swung in favour of the plant—perhaps betting that anger over power shortages trumps anti-nuclear outbursts.

The reaction of the national government, under the prime minister, Manmohan Singh, has been mixed. Committees of investigation called the plant safe. The High Court in Chennai heard, and ruled against, a petition by locals over safety. The Supreme Court will hear an appeal.  The government’s argument that politicians not protesters should decide the country’s energy mix is reasonable. But, twitchy at criticism, it veered off in suggesting opponents merely did the bidding of a foreign hand. Mr Singh, in an interview with a science magazine in February, blamed protests on NGOs, “mostly I think based in the United States”. A tough new law is in force, severely restricting foreign money going to local NGOs.  Mr Singh’s frostiness is best understood in the context of America’s moans that a civil-nuclear deal signed with India has not led to American investors getting energy contracts. Strict liability laws scare its private investors, whereas government-backed ones, such as Russians, feel more secure. Could Mr Singh be implying that American activists are stirring the trouble in Kudankulam because the plant is Russian-built?

Nuclear Power in India: The Kudankulam conundrum, Economist, Sept. 15,2012, at 39

The Swiss Nuke Smugglers, CIA and Libya

Three Swiss engineers are set to escape jail for nuclear smuggling, in part because they helped the CIA bust a global ring that was supplying Libya’s atomic weapons program.  Urs Tinner, his brother Marco, and their father Friedrich are accused of aiding the smuggling network of Pakistani nuclear scientist Abdul Qadeer Khan.  But according to Swiss prosecution documents released Tuesday setting out a plea bargain deal, the three also cooperated with U.S. authorities who were able to seize a shipment of nuclear equipment destined for Libya in 2003.  The CIA operation ultimately destroyed the Khan network and Libya gave up its efforts to acquire nuclear weapons.

Prosecutors say their work was hampered by the Swiss government’s decision to destroy key evidence in the case.  The plea bargain will be put before a Swiss court for approval next week.

Swiss nuke smugglers who helped CIA to escape jail, Associated Press, Sept. 18, 2012

How to Avoid the Carbon Tax

According to the Union of Concerned Scientists (UCS),  a Climate of Corporate Control, statements and actions on climate science and policy by 28 U.S. companies, shows how these contributions can be problematic, and suggests steps that Congress, the public, the media, and companies themselves can take to address the problem.  Corporations have the right, of course, to weigh in on public policy issues that affect their interests. But too often they do so irresponsibly, misrepresenting and misusing science at the public’s expense, and in recent years their influence has grown.

Corporations skew the national dialogue on climate policy in a variety of ways—making inconsistent statements across different venues, attacking science through industry-supported organizations, and taking advantage of the secrecy allowed them by current legal and regulatory structures.

Inconsistency: Having It Both Ways–Some corporations are contradictory in their actions, expressing concern about the threat of climate change in some venues—such as company websites, Security and Exchange Commission (SEC) filings, annual reports, or statements to Congress—while working to weaken policy responses to climate change in others.  For example, ConocoPhillips has acknowledged on its website that “human activity…is contributing to increased concentrations of greenhouse gases in the atmosphere that can lead to adverse changes in global climate.” Yet in its comments on the 2009 EPA Endangerment Finding, the company claimed that “the support for the effects of climate change on public health and welfare is limited and is typified by a high degree of uncertainty.”

Using Outside Organizations: Contrarians By Proxy–One way a company can work against effective climate policy while avoiding accountability for that work is to provide funding to outside groups that lobby against climate legislation and regulation or engage in advocacy campaigns against climate science. Such groups range from business associations such as the National Association of Manufacturers to front groups like the Heartland Institute.

Echoing the inconsistency in their other statements and actions on the issue, many companies belong to groups lobbying on both sides of the climate policy debate. For example, Caterpillar is affiliated both with the World Resources Institute and Nature Conservancy, which advocate global warming solutions, and with the Cato Institute and Heritage Foundation, which oppose them.  Of course, corporations may point out that the organizations they support work on many issues besides climate—but the fact remains that many of these groups take starkly anti-science positions on climate change and work aggressively to challenge science-based climate policies.

A Lack of Transparency–When business interests can hide their influence on policy-making processes from public view, it becomes easier for them to manipulate perceptions of science and skew policy discussions. There are several areas in which greater transparency is needed:  Charitable contributions. Current law only requires corporate foundations to disclose their donations to the IRS; companies can get around this requirement by making their donations directly, bypassing their foundations. This information is also hidden from shareholders: several corporations have received proposals from their shareholders demanding access to the company’s charitable contributions, and legislation to require such disclosure has been proposed in Congress.  Lobbying and political expenditures. While companies are legally required to report their total expenditures on political contributions and lobbying, they are not required to disclose the particular issues for which these contributions are targeted. So it is not possible to determine how much lobbying corporations are doing on climate issues. Business risks from climate change. Publicly traded companies are required to discuss risks that might materially affect their business in their annual SEC filings. The report shows that compliance with this requirement with regard to climate change is not consistent; some companies address climate-related risks fully, some discuss only the possible impacts of climate regulation, neglecting the physical impacts of climate change, and others ignore the issue entirely.

Good and Bad Behavior–It’s not all bad news out there: The report shows that some companies, such as NIKE, appear to be consistently constructive in their climate-related statements and actions.  At the other extreme, some companies appear to be almost uniformly obstructionist on climate issues. This list is dominated by fossil-fuel companies such as Peabody Energy and Marathon Oil.  But because of the lack of disclosure, it is impossible to say for sure whether companies are completely constructive or obstructionist.  Inappropriate corporate influence on the national dialogue on climate science and policy is a large-scale, complex problem requiring large-scale, complex solutions.

Excerpt from A Climate of Corporate Control

Right to Participate: Indigenous Peoples of Peru

Peru’s official human rights ombudsman, Defender of the People Eduardo Vega, is set to convene the first the first “prior consultation” with Amazonian indigenous peoples on oil development in their territory, under terms of a new law passed earlier this year setting terms for the process. The consultation concerns a planned new round of oil contracts planned for Bloc 1AB, currently held by Argentine firm Pluspetrol, in the watersheds of the Pastaza, Corrientes and Tigre rivers in the northeast of Loreto region. The Regional Organisation of Indigenous Peoples of the East (ORPIO), with an office in the city of Iquitos, it to represent the impacted indigenous peoples. Vega pledged the process would be carried out “with the utmost clarity so that rights of the indigenous peoples will be respected and the same process can serve for other consultations that will subsequently be carried out.”  But after years of conflict over resource extraction in the region and accusations of broken promises by the government, many indigenous residents remain skeptical about the process.

Peru: first “prior consultations” on Amazon oil development, WW4 Report, Sept. 15, 2012

BP: Culture of Corporate Recklessness

The Obama administration has accused BP of gross negligence and willful misconduct in causing the Deepwater Horizon oil spill of 2010. In a new court filing, the Department of Justice appears bent on blaming BP for the worst oil disaster in U.S. history.  The court document blasts BP’s leadership in no uncertain terms. Referring to “A Culture of Corporate Recklessness,” it states that “The behaviour, words and actions of these BP executives would not have been tolerated in a middling size company manufacturing dry goods for sale in a suburban mall.” It criticizes “the utter lack of any semblance of investigation of the systemic management causes deeply implicating the corporate managers and leadership who caused and allowed the rig-based mechanical causes to fester and ultimately explode in a fireball of death, personal injury, economic catastrophe, and environmental devastation.”

Referring to a “negative pressure test” performed by BP and Transocean hours before the blowout, the report states, “That such a simple, yet fundamental safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence.”  The designation of “gross negligence” under the Clean Water Act, is an important distinction because it would mean the company could face $21 billion in civil damages alone—almost quadruple the penalty if “gross negligence” is not confirmed. BP also faces criminal charges.

The case may not go to trial, which is scheduled to begin January 14. Both sides are negotiating to reach a settlement to resolve both civil and criminal violations.  The Justice Department reportedly sought a $25 billion agreement from BP, but now may be willing to settle for $15 billion.

Justice Dept. Accuses BP of “Gross Negligence” over Gulf Oil Spill, AllGov.com, Sept. 7, 2012

Canada and its Nuclear Waste

Since the 1960s,  Canada’s nuclear power plants have generated more than two million bundles of highly radioactive used fuel. And they’re all still stored on the sites of the plants that produced them.But the pace of finding a site to store Canada’s most potent radioactive waste permanently is about to pick up.  Twenty Canadian communities have said they’ll consider volunteering to host the storage site.  That list is about to close. The Nuclear Waste Management Organization, whose job it is to find and build the site, will stop taking new names on Sept. 30, 2012.  The impending cut-off is ratcheting up the pressure on the technocrats charged with selecting a site; on the boosters who want to snare the multi-billion-dollar repository for their community; on the activists who harbour deep suspicions about safety; and on the aboriginal leaders who say they’ve been cut out of the process….

A fuel bundle for a Candu nuclear power reactor is about the size of a fireplace log. As of June 30, 2011, Canada had 2,273,873 used fuel bundles stored at its nuclear plants in Ontario, Quebec and New Brunswick.  Another 85,000 or so have been added since then.  In total, they’d fill about six NHL hockey rinks, stacked up as high as the boards.

The Nuclear Waste Management Organization, formed by the three electric utilities that run nuclear reactors, wants to bury the waste deep underground in caverns excavated from stable rock, where it can lie undisturbed forever.  The depth will probably depend on the site’s geology. A facility proposed to hold less-potent radioactive waste at the Bruce nuclear site near Kincardine will be 680 metres deep. By comparison, the CN Tower is 553 metres tall.  The NWMO is looking for a “willing” community to agree to take the $16-to-$24-billion project. The host community itself will decide how to define “willing.” Candidate communities will have multiple opportunities to withdraw if they get cold feet, the NWMO says.  As it moves through a nine-stage selection process, the NWMO hopes to have narrowed the field to one or two communities by 2015, then spend until about 2020 deciding on a specific site within the chosen community.  After that, it will take three to five years to do an extensive environmental assessment of the site. The proponents will also have to satisfy the Canadian Nuclear Safety Commission that their plan makes sense, and obtain a license to construct and operate the facility.  Then, it will take six to 10 years to build. The NWMO doesn’t expect the first bundles to be stored until 2035.  The plan is to seal the waste in sturdy, radiation-proof containers and store it deep in a stable rock formation where — even if the containers were to crack and leak — there’s be no danger of contaminating groundwater used by humans. (Although that’s the current strategy, the NWMO says it would consider a different plan if compelling evidence emerged that another technique is superior.)

Current designs call for surface buildings and facilities to cover about 100 hectares (250 acres), says the NWMO’s Michael Krizanc.  “As well, there may be a need to limit activities in the immediate area surrounding the surface facilities in order to meet regulatory or other requirements.”  Underground, the excavated caverns will cover an area of about 2.5 kilometres by 1.5 kilometres. That’s 375 hectares, or 930 acres.  “The NWMO would need to have rights to the land above the repository,” says Krizanc, but “alternative uses could be considered, with the community, for portions of the land.”….

Meanwhile in Saugeen Shores, a lively battle is under way as members of a citizens group dubbed save Save Our Saugeen Shores, or SOS, fights what they see as an attempt to impose the waste site on their community on the shore of the Great Lakes….SOS also worries that U.S. power plants might be able to force Canada to take U.S. nuclear waste in a Canadian waste site, through terms of the free trade agreement between the countries…..Up in Elliot Lake, contractors Stephen Martin and Marc Brunet can’t wait for the project to start….Elliot Lake has been identified with uranium since its founding, he shrugs: “We’re the uranium capital of the world…. This thing will be a tourist attraction. I think it’s the best thing that could happen.”

John Spears, Nuclear waste seeks a home, Toronto Star, Sept. 1, 2012

Oil, Somalia and the Fnal Frontier

Canadian oil and gas exploration company Horn Petroleum said  it had encountered only water in a well it drilled in Somalia’s semi-autonomous Puntland region earlier this year, the first to be sunk in the country since civil war erupted two decades ago.  The well, Shabeel North-1, reached a total depth of 3,945 metres and is now being plugged, Horn said.  Because there were no shows of oil and gas, Horn Petroleum determined a second well it drilled earlier in the year, Shabeel-1, also was dry and said the company would not test it further for hydrocarbon potential

“While we were disappointed that we were not able to flow oil from the first two exploration wells in our Puntland (Somalia) drilling campaign, we remain highly encouraged that all of the critical elements exist for oil accumulations, namely a working petroleum system,” Horn’s chairman Keith Hill said in a statement.  While there has been speculation about finding oil in the anarchic Horn of Africa country for decades, it has no proven hydrocarbon reserves. The prospect of oil beneath Dharoor’s sandy, arid plains has elicited excitement among officials of the impoverished region. The companies estimated there could be as much as 300 million barrels of recoverable oil in the northern part of Somalia.  Somalia, mired in conflict since warlords in the early 1990s and then Islamist militants reduced the government to impotence, represents one of the final frontiers in Africa to be explored.

Horn Petroleum’s Somali wells come up dry, Reuters, Aug. 28, 2012

UNESCO World Heritage: Failed States and Kleptocratic Elites

UNESCO’s World-Heritage regime began life 40 years ago, when dozens of countries signed up to the idea that the world’s cultural and natural patrimony was under threat not only from “traditional causes of decay” but also because of “changing social and economic conditions”. Among those who endorsed the principle was the Republican administration of Richard Nixon, which gave remarkably high priority to conservation and the environment. (Since then, America has had a stormy relationship with UNESCO; it cut off payments to the agency last year, under a law which denies funding to any body that admits Palestine.)

In many poorer countries which host heritage sites, the biggest changes since 1972 have been exploding populations and a huge rise in global tourism, combined with a lack of the governance needed to cope with both phenomena. Angkor Wat, a temple complex in Cambodia, and the Inca fortress of Machu Picchu in Peru (pictured above) are often cited as places of world-historical importance where a vast influx of tourists may be causing serious damage. By recognising and thus publicising individual sites, UNESCO and other cultural watchdogs risk harming the cause of conservation, which would be better served if visitors to the country were spread around a broader range of places.

But there are no easy ways to maintain heritage sites in relatively poor countries; it requires delicate balancing acts, much local diplomacy and long-term engagement, according to organisations that work in that field. Even a well-functioning state, be it democratic or authoritarian, will fail to conserve monuments unless local people see an interest in maintaining their heritage and using it rationally, says Vincent Michael, new chairman of the Global Heritage Fund (GHF), based in California. The effort will collapse if cultural heritage is seen either as a pesky impediment to making money, or as something to be exploited for short-term gain. Nor should local economies ever be too reliant on tourism, which can fall as rapidly as it rises….

But in many places where sites are at risk, government either does not operate at all, or functions only in the interest of a kleptocratic elite. In some such places, so-called non-state players (from warlords to private firms to religious leaders) are about the only things that really function at all…

One of the biggest global challenges to conservation, says the WMF’s president, Bonnie Burnham, is that national agencies which control precious places (culture ministries, for example) often have no say over what goes on—in terms of development, transport or sanitation—in the surrounding areas. That is one of the obstacles to conserving Inca sites in Peru…

As part of her agency’s [UNESCO] effort to stop the traffic in stolen art, Ms Bokova  [UNESCO’s director-general]has started a dialogue—a constructive one, she says—with commercial auction houses. Perhaps she should also be talking more to tour operators, and even darker forces, from the conservationists’ viewpoint, like road-builders and mining companies.

Excerpts, The Heritage Debate: Living Treasure, Economist, July 14, 2012, at 73

Indigenous Peoples Rights and Energy Projects: the Inter-American Court of Human Rights

Deep in the rainforest, the village of Sarayaku is two days by river from the nearest town. But its 1,200 Kichwa Indians are now in the spotlight. On July 25th the Inter-American Court of Human Rights ruled that Ecuador’s government had ignored the rights of Sarayaku’s residents when granting permission for an energy project—putting governments in the Americas on notice that big physical investments are not legal until the indigenous people they affect have had their say.

The dispute began in 1996 when Petroecuador, the state oil firm, signed a prospecting deal with a consortium led by Argentina’s Compañía General de Combustibles (CGC). Much of the area it covered was the ancestral land of Sarayaku’s residents, who were not consulted. CGC later offered locals medical aid for their consent. Some villages signed up, but Sarayaku held out.  Nonetheless, by early 2003 CGC had drilled 467 boreholes around the town for seismic surveying, and packed them with 1,433kg of high explosives. They were never detonated, and remain buried in the forest. As well as felling trees and destroying a sacred site, the company ruined some of Sarayaku’s water sources. Work ceased in 2003, and CGC’s contract ended in 2010.

The court found that the state had breached the villagers’ rights to prior consultation, communal property and cultural identity by approving the project, and that CGC’s tests had threatened their right to life. It ordered the government to pay damages, clear the remaining explosives and overhaul its consultation process. In future affected groups must be heard in a plan’s “first stages…not only when the need arises to obtain the approval of the community.” However, the judges did not ban prospecting on Sarayaku lands. The right to consultation does not grant a veto.

The ruling will be studied closely in the myriad Latin American countries struggling to balance big investments with local rights. A narrow reading of the decision suggests that governments must tiptoe around indigenous concerns, but can act more boldly when other groups protest, since the ruling was based partly on the International Labour Organisation’s Indigenous and Tribal Peoples Convention.

The ruling also shows that the regional justice system has not lost its mettle. In 2011 the Inter-American Commission on Human Rights, which litigates cases at the court, asked Brazil to halt work on the huge Belo Monte dam because its neighbours were not given a sufficient chance to speak up. Brazil’s government, which had authorised the dam only after a long public debate, saw this as a violation of its sovereignty. It did not comply, and stopped contributing money to the commission.  The commission was weakened by angering the region’s biggest country and by the criticism that it had exceeded its mandate. After Brazil presented new evidence in the case, the commission reversed its stance on Belo Monte. Moreover, last month the Organisation of American States voted to draft a reform plan for the commission, which some fear could strip it of important powers. Ecuador was among the commission’s loudest critics.

The Sarayaku case was not as heated as Belo Monte, since Ecuador’s government had already promised to pay damages. However, the court’s decision did strongly reassert its right to intervene in development cases. Moreover, Ecuador’s government plans to tender a big chunk of the Amazon for oil exploration later this year, despite indigenous opposition. If neither side backs down and the protesters appeal, the court’s next ruling on development in Ecuador may be far more contentious.

Indigenous rights in South America: Cowboys and Indians, Economist,July 28, 2012, at 32

For the Fear of Iran: The Nuclear Power in the Gulf

Saudi Arabia is pressing ahead with its ambitious plans to develop nuclear power to meet rising electricity demand and save oil for export.  But the outlook for other Arab states is less promising because of political turmoil and a lack of financial resources.  The Saudis have built a foreign assets cushion of around $500 billion from oil exports. It has used this immense wealth to buy its way out of trouble; for instance, heading off pro-democracy protests with massive social spending in recent years.  But, the Middle East Economic Digest observed, “a more serious set of challenges now faces the kingdom that threaten to be even more destabilizing.  “Inefficient and wasteful energy consumption, coupled with a rising population, is leading the kingdom to burn even more of its natural resources at home rather than selling them abroad and adding to the proceeds of the half-trillion-dollar cash pile.  “Unless action is taken, the kingdom could find it needs the oil price to be $320 a barrel by 2030 just to balance the budget,” the weekly, published in the United Arab Emirates, warned.  Nuclear power is seen as the solution. But, as MEED stressed, “time is of the essence.”

For one thing, Saudi Arabia and other Arab states, including the United Arab Emirates, Kuwait, Qatar and Egypt, have no wish to lag any further behind Iran and Israel in developing nuclear technologies.  In 2010, the King Abdallah Center for Atomic and Renewable Energy, known as KAcare, was established to oversee the gulf state’s nuclear program under its president, Hashim bin Abdullah Yamani, who was accorded ministerial powers.  KAcare consultant Ibrahim Babelli said in 2010 it took 3.4 million barrels of oil equivalent a day — known as boe/d — to power electricity generation. This is expected to more than double by 2028 to 8.3 million boe/d.

The aim of the Saudis’ $100 billion nuclear program is to achieve an electricity output of 110 gigawatts by 2032.  The Financial Times reports that in 2009, the latest data available, Saudi electricity capacity was 52GW from 79 power stations.  At least 16 nuclear reactors, each costing around $7 billion, are planned, with the first producing by 2019.  Some estimates state the kingdom, the world’s largest oil exporter, will burn as much as 1.2 million barrels of oil daily on electricity production, almost double the 2010 total, to meet domestic and industrial demand.  This is crucial, as the Saudis are driving to build an industrial infrastructure to sustain the economy when the oil fields run down. Some have already begun to decline.  For total reliance on nuclear power, Babelli says, 40-60 reactors would be needed by 2030. That’s four-six reactors per year from 2020.  “That’s stretching it,” he said. “The answer is an energy mix.”

That means fossil fuels will still be needed, probably as the primary energy source, while wind, solar and nuclear power capabilities are developed. KAcare is developing solar power projects that MEES estimates should produce 41GW within 20 years with geothermal and waste-to-energy systems providing 4GW.  The Emirates, which launched its nuclear energy program in 2009, is the most advanced in the Arab world, with Saudi Arab running second.  The United Arab Emirates’ $30 billion program — $10 billion more than originally planned — is smaller in scale than that in Saudi Arabia.  Both states benefit from political stability and vast financial reserves. Other regional states are less fortunate.

Bahrain, Qatar, Kuwait, Egypt and Jordan all have announced plans to invest in nuclear energy to crank up electricity generation but all have lagged behind or scrapped their programs because of lack of funds or foreign investment.  “Kuwait has the cash,” MEED reported, “but it’s been through eight governments in the past six years.”  Sunni-ruled Bahrain, an island state neighboring Saudi Arabia, “continues to face destabilizing protests by its majority Shiite population and its budget is already in deficit.”  Egypt remains convulsed by the political turmoil that ensued following the February 2011 overthrow of President Hosni Mubarak, its economy sagging dangerously.  In Jordan, heavily reliant on foreign aid, parliament recently scrapped nuclear plans as “hazardous and costly.”  Failure to start boosting electricity generation for burgeoning populations in the coming decades almost certainly will mean more political upheavals.

Saudis, Emirates push nuclear power plans, UPI,July 26, 2012

The Essence of Imperialism: Australia in the Pacific

Nor is it the first time Vanuatu has clashed with the Australian Federal Police (AFP). In 2004 its government closed down the AFP offices in the capital, Port Vila, and expelled officers, after allegations that they were spying and interfering with domestic politics. The AFP’s main concerns in Vanuatu have been over the country marketing itself vigorously as an international tax haven, and over the risk posed by the volatile Vanuatu Mobile Force, the paramilitary wing of the local police force. Protecting Australia’s national interests under the guise of so-called capacity-building can quickly lead to tensions.

The AFP’s activities in Vanuatu have been part of a broader expansion over the past decade of Australian policing across the Pacific. Peacekeeping missions to Timor-Leste since 1999 and to the Solomon Islands, beginning in 2003, boosted police numbers. In the past decade, the AFP has trebled in size and increased its budget fivefold. The AFP commissioner now has an influential role on the Australian cabinet’s national-security committee. In Australia most domestic policing is carried out by state police forces, leaving the federal force largely free, outside aboriginal communities in the Northern Territory, to focus on international deployments.

Their efforts have often led to accusations of heavy-handedness. In 2005 a mission to Papua New Guinea was abandoned after that country’s Supreme Court ruled that legal immunities granted to AFP officers were unconstitutional. In 2006 the Solomon Islands’ police chief, Shane Castles, an Australian, was sacked and declared an “undesirable immigrant” after a raid by his police officers on the office of the prime minister. That raid was connected with the AFP’s long-standing pursuit of the Solomon Islands’ then attorney-general, Julian Moti, on charges of sex with an underage girl. Mr Moti was deported to Australia in 2007, arrested and brought before the courts. In December 2011 the High Court threw the case out, finding that Australian officials had colluded in Mr Moti’s illegal deportation.

The Australian Federal Police in the Pacific: Booting out big brother, Economist, May 19, 2012, at 49

Resuscitating Collapsed Fisheries: catch shares

For American fish, this is a good time to be alive. On May 14th, 2012 the National Oceanic and Atmospheric Administration (NOAA) reported that a record six federal fisheries returned to health last year. After a decade of similar progress, 86% of America’s roughly 250 federally monitored commercial fish stocks were not subject to overfishing; 79% were considered healthy…

In the late 1980s cod fisheries in the Gulf of Maine and Georges Bank collapsed. This led to efforts to improve the fishery act, in 1996 and 2006, which forced the eight regional bodies that manage federal fisheries to introduce science-based quotas and ten-year recovery programmes for depleted fisheries. The recent recovery of species, including New England scallops, mid-Atlantic bluefish and summer flounder and Pacific lingcod, is the result. This signals another truth: given a break, the marine environment can often replenish itself spectacularly.

America’s fisheries are probably now managed almost as well as the world’s best, in Norway, Iceland, New Zealand and Australia. Yet there is plenty of room for improvement. State-run fisheries, which tend to be close to shore and dominated by small-scale and inefficient fishermen, are less well funded and well managed and much poorer for it. New England groundfish stocks, including cod, have also not recovered: they account for 13 of the remaining depleted populations. This appears to be partly the result of environmental change, climatic or cyclical.

And the politicians are still interfering. On May 9th the House passed legislation forbidding NOAA from developing an innovative means of apportioning fishing quotas, known as catch shares. These are long-term, aiming to give fishermen a stake in the future of their fisheries; market-based, since they can be traded; and, in practice, good for fish. Sadly, the two Republican congressmen behind the ban consider they have been designed “to destroy every aspect of American freedom under the guise of conservation”.

Fish stocks: Plenty more fish in the sea, Economist, May 26, 2012, at 32

What is In-Q-Tel? Technology Branch of CIA

Throughout its lifetime, the CIA has operated at the cutting edge of science and technology. From the U-2 spy plane to the CORONA satellite, CIA’s “wizards of Langley” earned a reputation for bold innovation and risk taking, working in advance of the private sector and other branches of government. Much of CIA’s technology success was a result of identifying gaps and opportunities.  By the late 1990s, the pace of commercial innovation had overtaken the ability of government agencies to develop and incorporate new technologies. Private industry represented technical insights and innovation far too important to ignore. Driven by private sector R&D investment, these commercial technologies addressed many of the same information technology, biotechnology, communications, and energy challenges that faced the Intelligence Community.

In 1998, CIA identified technology as a top strategic priority, and set out a radical plan to create a new venture that would help increase the CIA’s access to private sector innovation. In-Q-Tel was chartered in February 1999 by a group of private citizens at the request of the Director of Central Intelligence and with the support of the U.S. Congress. IQT was tasked with building a bridge between the Agency and a new set of technology innovators.

From the website IQT (2012)

Industrial Revolution in Genetic Engineering: Military

From DARPA’s Website: Living Foundries

Current approaches to engineering biology rely on an ad hoc, laborious, trial-and-error process, wherein one successful project often does not translate to enabling subsequent new designs. As a result, the state of the art development cycle for engineering a new biologically manufactured product often takes 7+ years and tens to hundreds of millions of dollars (e.g. microbial production of artemisinic acid for the treatment of malaria and the non-petroleum-based production 1,3-propanediol).

[DARPA Goal]

Transforming biology into an engineering practice would enable on-demand production of new and high-value materials, devices and capabilities for the Department of Defense (DoD) and address complex challenges that today have no or few solutions.

The Living Foundries Program seeks to create the engineering framework for biology, speeding the biological design-build-test cycle and expanding the complexity of systems that can be engineered. The Program aims to develop new tools, technologies and methodologies to decouple biological design from fabrication, yield design rules and tools, and manage biological complexity through abstraction and standardization. These foundational tools would enable the rapid development of previously unattainable technologies and products, leveraging biology to solve challenges associated with production of new materials, novel capabilities, fuel and medicines. For example, one motivating, widespread and currently intractable problem is that of corrosion/materials degradation. The DoD must operate in all environments, including some of the most corrosively aggressive on Earth, and do so with increasingly complex heterogeneous materials systems. This multifaceted and ubiquitous problem costs the DoD approximately $23 Billion per year. The ability to truly program and engineer biology, would enable the capability to design and engineer systems to rapidly and dynamically prevent, seek out, identify and repair corrosion/materials degradation.

Accomplishing this vision requires an approach that is more than multidisciplinary – it requires a new engineering discipline built upon the integration of new ideas, approaches and tools from fields spanning computer science and electrical engineering to chemistry and the biological sciences. The best innovations will introduce new architectures and tools into an open technology platform to rapidly move new designs from conception to execution.  Performers must ensure and demonstrate throughout the program that all methods and demonstrations of capability comply with national guidance for manipulation of genes and organisms and follow all guidance for biological safety and Biosecurity.

A Broad Agency Announcement (BAA) solicitation for phase one, Advanced Tools and Capabilities for Generalizable Platforms (ATCG), closed in November, 2011. The BAA called for the development of the advanced, translatable tools and capabilities that will make up an end-to-end technology platform for rapidly, safely and predictably engineering biological production systems. The goals of these advanced tools and capabilities are to compress the biological design-build-test cycle by at least 10x in both time and cost while increasing the complexity of the systems that can be designed and executed by orders of magnitude. These advancements should enable the ability to rapidly design and build new systems to create novel capabilities and to address complex challenges.

Kamikaze Drones: Shortening the Kill Chain

The 2-foot-long Switchblade drone [unmanned aerial vehicle (UAV)] is so named because its wings fold into the fuselage for transport and spring out after launch. It is designed to fit into a soldier’s rucksack and is fired from a mortar-like tube. Once airborne, it begins sending back live video and GPS coordinates to a hand-held control set clutched by the soldier who launched it.  When soldiers identify and lock on a target, they send a command for the drone to nose-dive into it and detonate on impact. Because of the way it operates, the Switchblade has been dubbed the “kamikaze drone.”

The Obama administration, notably the CIA, has long been lambasted by critics for its use of combat drones and carelessly killing civilians in targeted strikes in Pakistan, Afghanistan, Iraq, Yemen and Somalia. In 2010, a United Nations official said the CIA in Pakistan had made the United States “the most prolific user of targeted killings” in the world.

The Switchblade drone appears to be an improvement as an alternative to traditional drone strikes, in terms of minimizing civilian harm, but it also raises new concerns, said Naureen Shah, associate director of the Counterterrorism and Human Rights Project at Columbia Law School.  She pointed out that when a drone strike is being considered there are teams of lawyers, analysts and military personnel looking at the data to determine whether lethal force is necessary. But the Switchblade could shorten that “kill chain.”  “It delegates full responsibility to a lower-level soldier on the ground,” she said. “That delegation is worrisome. It’s a situation that could end up in more mistakes being made.”  Arms-control advocates also have concerns. As these small robotic weapons proliferate, they worry about what could happen if the drones end up in the hands of terrorists or other hostile forces.

The Switchblade “is symptomatic of a larger problem that U.S. military and aerospace companies are generating, which is producing various more exotic designs,” said Daryl Kimball, executive director of the Arms Control Assn. “This technology is not always going to be in the sole possession of the U.S. and its allies. We need to think about the rules of the road for when and how these should be used so we can mitigate against unintended consequences.”

The Switchblade is assembled in Simi Valley by AeroVironment Inc., the Pentagon’s top supplier of small drones, which include the Raven, Wasp and Puma. More than 50 Switchblades will be sent to the war zone in Afghanistan this summer under a $10.1-million contract, which also includes the cost of repairs, spare parts, training and other expenses. Officials would not provide details about where the weapons would be used, how many were ordered and precisely when they would be deployed.  AeroVironment, based in Monrovia, developed the weapon on its own, thinking the military could use a lethal drone that could be made cheaply and deployed quickly by soldiers in the field, said company spokesman Steven Gitlin.

“It’s not inexpensive to task an Apache helicopter or F-16 fighter jet from a base to take out an [improvised explosive device] team when you consider fuel, people, logistics support, etc.,” he said.

About a dozen Switchblades were tested last year by special operations units in Afghanistan, according to Army officials, who said the drone proved effective.  The Army is considering buying $100 million worth of the drones in a few years under a program called the Lethal Miniature Aerial Munition System, Nichols said. The Air Force and the Marine Corps have also expressed interest in the technology.

AeroVironment is not the only company pursuing small, lethal drones. Textron Defense Systems is also working on a small kamikaze-style drone. Named the BattleHawk Squad-Level Loitering Munition, the drone is being tested at an Army facility in New Mexico.

Excerpts, W.J. Hennigan, Pentagon to soon deploy pint-sized but lethal Switchblade drones, LA Times, June 11, 2012

Drug Markets, Patents and the Developing World

Sales of antiretroviral drugs in America and the five biggest European markets reached $13.3 billion in 2011, according to Datamonitor, a research outfit…. Publicly funded research has played a larger role in developing drugs for HIV than for other diseases. A study published last year in Health Affairs found that HIV drugs were three times as likely to involve a patent from the public sector. HIV also has special status among regulators. America’s Food and Drug Administration (FDA) created a faster way to review HIV drugs, allowing them on the market before the most expensive stage of clinical trials.

In total, public and private investment has yielded more than two dozen HIV drugs. In 1987 Burroughs-Wellcome (now part of GlaxoSmithKline) introduced the first one, tackling an enzyme that helps the virus progress inside human cells. In 1995 Hoffmann-La Roche, a Swiss drug firm, launched the first protease inhibitor, which interrupts the virus at a later stage of replication….One company stands out: Gilead, of California. A late entrant to the HIV race, Gilead quickly took the lead. Its strategy was simple: the more convenient the treatment, the better. In 2004 Gilead launched Truvada, a once-a-day, one-pill combination of two drugs. In 2006 it introduced Atripla, a once-a-day, one-pill combination of Truvada and another treatment. Atripla’s average wholesale price in America is nearly $25,000 per patient, per year. In 2011 its global sales reached $3.2 billion.  More good news for Gilead has come in recent weeks. An FDA panel recommended Truvada for preventive use: ie, to protect healthy people from contracting the virus. Another FDA panel endorsed Gilead’s new Quad pill, which is the simplest, most effective combination drug to date.

If the process for developing HIV drugs has been unusual, selling them has been even more so. America is the rich world’s biggest market, with 841,000 patients diagnosed—ten times as many as in Britain. More than 60% of HIV drugs in America are bought with public money. Insurers give HIV special treatment: patients are rarely pressed to buy the cheapest pills, as they might be if they had another disease.

Distributing drugs in poor countries is harder. A decade ago, hardly any poor people could afford them. At first, drugs firms handled this badly. In 1998, 39 big Western firms sued South Africa to protect their HIV patents. Global uproar ensued; the firms backed down in 2001.  Then two things changed. First, rich countries started donating vast sums to fight AIDS in poor ones. In 2000 there was less than $2 billion for HIV programmes each year; by 2010 there was $15 billion, thanks to the Global Fund to Fight AIDS, Tuberculosis and Malaria and George Bush junior’s President’s Emergency Plan for AIDS Relief (PEPFAR).

Second, the price of AIDS drugs plunged. In May 2000 a year’s “triple cocktail” therapy cost $10,000 or so. By 2011 the same pills sold for $62 in poor countries. PEPFAR cash buys generic versions of patented drugs, which may be supplied only to poor countries. Last year two drugmakers won most of PEPFAR’s contracts: Aurobindo, an Indian firm, and Matrix, an Indian firm acquired in 2007 by Mylan, an American one. PEPFAR’s bidding system keeps margins slim even by the standards of the generics industry, says Rajiv Malik, the president of Mylan. But volumes are huge.

Can treatment expand further? Despite the subsidies and the plunge in prices, less than half of those infected with HIV take HIV drugs. Those who do, however, live a long time, and they have to keep taking the pills. What’s more, new studies show that it helps to start treating patients early, so demand is sure to rise.  Alas, aid dipped in 2009 and 2010, thanks to the financial crisis. To make matters more complicated, there is a trade-off between more drugs and better ones. Most patients in poor countries get outdated pills, according to Médecins Sans Frontières. Allowing generics firms to copy yet more patented drugs might help. Since 2006 Gilead has licensed drugs to generics firms for 5% royalties. Last year it went further, agreeing to license drugs to a “patent pool” to centralise royalty deals for a range of firms. So far, however, Gilead is the only Western company to join….

There are two distinct HIV markets. In rich countries, many good treatments jostle for market share. The best will generate fat profits, since patients have to take their pills every day. But Datamonitor predicts that growth will slow after 2017, as many drugs lose patent protection and prices crash. In poor countries, by contrast, Big Pharma makes very little money but the most efficient copycats thrive. Meanwhile, the world still waits for a cure.

The business of HIV: Battling the virus, Economist, June 2, 2012,at 80

China and its Collaborators in Africa

Congolese critics accuse Sassou-Nguesso [President of Congo] of using the Chinese-backed building boom to move from his ‘authoritarian-authoritarian’ model to something nearer the ‘developmental authoritarian’ style of Rwanda’s President Paul Kagame. However, Sassou-Nguesso was in triumphant mode as he inaugurated a spate of Chinese construction projects in the country’s hinterland on 14-18 May. These projects are intended to bring the benefits of oil-backed growth to regions previously isolated from the bustling cities of Brazzaville and Pointe-Noire.  Now known locally as ‘The Cutter of Ribbons’, Sassou-Nguesso is using oil money and plans to develop Congo-Brazzaville’s mineral resources to shape a new relationship with China. Once a key commercial and diplomatic ally of France, Sassou-Nguesso’s headlong rush to Beijing coincides with the election of President François Hollande. Hollande’s African policy team promises to break with the old Françafrique networks. Among their advisors is the activist lawyer William Bourdon, who has been pursuing a case against Sassou-Nguesso in France for stealing Congolese state assets…..

From fibre-optic installation and new dams to more than 1,000 kilometres of paved roads, companies like China Road and Bridge Corporation and China State Construction Engineering Corporation have quietly landed most of the major contracts issued by the Brazzaville government.  That means large profits and more deals to come.

Congo-Brazzaville, for so long the preserve of European companies, is drawing serious attention from China. The two countries have signed deals to develop special economic zones, build a new oil port and revamp an ageing refinery. For the Chinese investors, the lure is Congo-Brazzaville’s rich but under-exploited resource base. Having relied for decades on offshore oil riches and forestry, the country has until recently made little effort to exploit its mineral deposits, develop its more remote regions or diversify the economy into commerce and services. That could change if the new Asian relationships live up to their billing. For Sassou-Nguesso, the big attraction is an engagement based purely on economic and financial criteria, with a partner who does not impose awkward governance or human rights conditions.

This is not Congo’s first encounter with Asian investment. South Korean and Malaysian companies, via the Consortium Congo Malaisie Corée, had proposed a huge resources-for-infrastructure deal that would build new rail lines in exchange for access to forestry and mining permits in 2008. That deal didn’t work out but the Chemin de Fer Congo Océan received part of its order of engines and cars from Korail in August 2011. Malaysian investors have looked at opportunities in the hydrocarbons sector and – building on their experience of rural Congo in the timber business – palm oil production. In 2010 Atama Plantation agreed to invest $300 million in new oil palm plantations and processing capacity.

The most recent interest from Chinese entities takes the engagement a step further. Alain Akouala Atipault, a Minister in the Presidency, was China’s guest at an international infrastructure and investment forum in Macau where, on 24 April, he signed an agreement with the China Friendship Development International Engineering Design and Consult Corporation (FDDC) – an offshoot of the Trade Ministry in Beijing.  FDDC will seek out Chinese investors interested in setting up operations in four special economic zones, which Congo plans to establish in Brazzaville, Pointe- Noire, Ouesso and the Oyo-Ollombo area. FDDC will also help to mobilise financing for the zones, build their infrastructure and carry out feasibility studies……

China’s engagement in Congo is typical of its strategy elsewhere in Africa. Beijing often takes a long-term view of whether projects will generate an economic return. Viability is seen in broad terms, encompassing not just the specific project’s concerns but also the wider trade and political benefits of partnership and the political goodwill that could open up access to valuable natural resources. Congo has both major reserves of high-value timber – a sector where Congo Dejia Wood Industry, Jua Ikié, Million Well Congo Bois, Sino-Congo Forêt and Société d’Exploitation Forestière Yuan Dong are already active – and reserves of minerals such as iron ore and potash, which are largely untouched.

China National Complete Plant Import & Export Corporation is developing the potash reserves at Mengo with Canada’s MagIndustries; Australia’s Sundance Resources relies on finance and expertise from Hanlong Mining and other Chinese infrastructure companies to make its designs on iron-ore projects in Cameroon (Mbarga) and Congo-Brazzaville (Nabeba) viable. Sundance is waiting for final approvals from Yaoundé and Brazzaville and expects all the paperwork to be signed before the end of 2012.

Beijing’s policy of ignoring questions of democracy and human rights is certainly helpful to Sassou-Nguesso’s regime – which has a poor human rights record, is marred by widespread corruption and remains fundamentally authoritarian despite the trappings of a multiparty system.

Excerpt, Congo-Brazzaville: Sassou Draws in Beijing,AllAfrica.com, June 2, 2012

Chevron and Amazon: the $18 billion Ecuador Liability

The D.C. Circuit Court of Appeals  on June 12, 2012  (pdf) dealt another setback to Chevron over its $18 billion Ecuador liability, reversing a lower court decision that allowed the oil giant access to documents from a prominent consulting group for the Amazon rainforest communities that sued the company.