KEYSTONE XL DELAY – A LESSON LEARNED FOR CANADA TO OVERHAUL ITS THINKING, POLICIES AND TO BE SELF-DEPENDENT

On 18 April the US Administration displayed yet again how pusillanimous and spineless it is on Keystone XL pipeline approval issue by punting it further down the road – any final decision is not expected before the congressional elections this year in November.

The media reports suggest following commentary from both Democrats and Republicans:

New Hampshire Democratic Sen. Heidi Heitkamp blasted the delay, calling it "absolutely ridiculous," while Sen. Mary Landrieu, D-La., called the delay "irresponsible, unnecessary and unacceptable".

From the other side of the aisle, Republican House Speaker John Boehner said “this delay is shameful"; Alaska Sen. Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee, called the delay "a stunning act of political cowardice".

Canada’s Prime Minister Stephen Harper expressed frustration over the snail like pace of the administration’s decision-making. Harper's office was "disappointed that politics continue to delay a decision," his spokesman said. Canadian ambassador Gary Doer reportedly said the State Department should focus on the international crossing between Alberta and Montana and leave it to the state of Nebraska to figure out the precise route there. Incidentally, the U.S. State Department said Friday it needs to assess the impact of a court battle in Nebraska that could force a change in the pipeline’s route.

Notwithstanding whichever way the political circus pans out on Keystone, there is one most important lesson for Canada – it’s federal and provincial politicians, the top corporate executives, the First Nations and the general public: Canada and the Canadians got to diversify, and also be self-dependent. Canada’s policy of putting all eggs in one basket (i.e. depending on US) is past its expiration date. So, what actions should follow from this lessons learned?

·       The pipeline companies in Canada must find alternative pipeline route within Canada to get the bitumen to refineries within Canada and outside;

·       In regard to alternative pipeline routes, conclude negotiations with stakeholders, namely, First Nations, the Provincial Governments ASAP;

·       The Federal and the Provincial governments got to shove aside all politics and come together to make decisions based on win-win formula – a solution that ensures the stakeholders, like, the First Nations, the Province(s) get a reasonably fair deal out of the pipeline projects;

·       The companies in Canada must think about setting up an upgrader within Canada as a complimentary/ supplementary solution, to process the bitumen from Alberta (and potentially from Saskatchewan) and selling the synthetic crude oil (light crude) to US, refineries within Canada (if they have spare capacity to process) and refineries outside Canada;

·       The refinery companies in Canada should think about expanding and/or retro-fitting their refineries in Canada in alignment with production of additional amount of bitumen and/or synthetic crude oil;

·       Align increased gas production from gas fields in BC for use in oil sands production and the refineries and LNG production;

·       Think about putting up petrochemicals complex downstream of Canadian refineries; and

·       Put in place ASAP policy frameworks, tax regimes that are required for decision making on LNG projects and oil sands industry.

Canada may be justified in being utterly frustrated with US on Keystone, but it cannot absolve itself of the pathetically slow progress on pipeline projects within Canada, LNG project in BC and so on. It’s time Canada found solutions toward harnessing its massive natural resources within Canada itself rather than depending on US.

The political parties of Canada – Federal and Provincial both – must understand the basics of Canadian economy (GDP) – the components of the GDP – and must realize the importance of natural resources like oil sands and oil and gas in Canada’s GDP and the service sectors they support. Only then they would realize the futility of having divergent opinion on oil sands and LNG development and squabbling amongst themselves. Only then some political parties would not make irresponsible, ludicrous statements about environmental record of Canada and thereby cause damage to Canadian interests.

The political parties and their leaders must understand clearly that the first world like standard of living and wellbeing of Canada, which Canada is proud of, will be in absolutely serious jeopardy if Canada fails to appreciate the nature’s blessings and harness the nature’s bounty given to it. The delay in Keystone pipeline is nature’s way of warning and providing a wake up call to all Canadians to change its old ways of thinking, policies and working. Now, it is up to the Canadians whether they pay heed to nature’s warning!

JIMMY CARTER, DESMOND TUTU ET AL OPPOSE KEYSTONE XL PROJECT – IS IT CASE OF SENILITY OR EFFECT OF SOME KIND OF CRAVING AND/OR MAMMON?

The Keystone XL pipeline project approval circus is getting more farcical with former US president Jimmy Carter weighing on this project. Carter joined some Nobel Laureates– Archbishop Desmond Tutu is one of them – in issuing an open letter to US President and Secretary of State seeking rejection of the pipeline.

Carter and the other writers have expressed their opposition in quite vehement terms; among other things saying that “Keystone XL project is the linchpin for tar sands expansion and the increased pollution that will follow, triggering more climate upheaval with impacts felt around the world.”

Let’s try to understand what these folks are trying to say. So, they are saying that this one pipeline – Keystone XL – which is supposed to transport 830,000 barrels of bitumen per day, will cause so much pollution that it will trigger climate upheaval with impact felt around the world?!!! Really?!!! Can anyone in right frame of mind make such a ludicrous, nonsensical, irrational statement?

Then why did Carter and others allowed their names to be used for such a ludicrous, nonsensical, irrational assertion? Seriously, why?

Is it senility or something else that has afflicted them? After all, one assumes that Carter et al should have this much of commonsense to realize that just one pipeline carrying less than a million barrels of crude per day which is just about one percent of current crude oil production worldwide cannot by any stretch of rational sense ‘trigger climate upheaval’. It is flat out nonsense. Yet, these so-called intellectuals have affixed their name to such gargantuan irrational, foolish statement.

Of all the persons whose names are listed in the open letter, Carter should know best the enormous advantage US stands to gain through STRATEGIC partnership with Canada of which Keystone is a major component. Advantage of being energy giants! Imagine the scenario wherein US and Canada can stand together as stable, dependable energy superpowers with massive amount of oil and gas at their disposal for export to the world in today’s global uncertainty – uncertainty in gas and oil supply from regions in Europe, Middle East, Africa. But Carter overlooks all this! Why?

Do the people who have written this letter really believe that by killing one pipeline they will make any meaningful impact in regard to the so-called pollution problem? If they do, they are dumb-asses. If these people had raised their voice against global use of fossil fuel that would have still made some sense at least. It is a different discussion though the theory propounded by some scientists, that the so-called CO₂ generated from combustion of crude oil is responsible for ‘climate change’, is total balderdash and piffle.

In the letter there is another assertion that is completely dubious. This is regarding the so-called impacts on First Nations of Northern Alberta – apparently their water, air, land and human rights are being ‘devastated’ by growth of oil sands. It appears that this kind of statement is drafted by someone who has no clue of the reality prevailing in Northern Alberta. Nothing but some sensational stuff meant to stir emotions of those unfamiliar with the ground realities!!

So, coming back to the question: what made these people to jump on this Keystone XL bandwagon? Do they also want to be included in the post-scripts of climate change ‘crusade’? Or, maybe they want to have their names included in the list of knights in shining armor who saved the world from some ‘climate change apocalypse’? On this point of climate change it must be mentioned that unfortunately the world is currently in the grip of a massive hoax predicated on climate change – a hoax similar to what history saw in Galileo’s time when people thought sun goes around earth.

So, if it’s true that the above cited letter writers are unable to control their inner cravings to have their names included in a so-called climate change crusade, well, then that can be said to be stemming from senility (or some psychological disorder) in some way or the other.  It is sad that these people failed to realize that campaigning against just one pipeline is totally meaningless – killing one pipeline will not make any dent whatsoever. If they had to really achieve anything substantive, they could have raised their voice against something on global scale, say, against all heavy oil – be it from Saudi Arabia or Venezuela or US or China, not just against Canadian heavy oil.

So, now the pressure is on President Obama. On one hand former president Clinton, Warren Buffet et al have reportedly supported Keystone XL pipeline apart from host of current Democrat Senators. As well, a former National Security Advisor of US testified before Senate recently that Keystone is INDEED in the national interests of US, rejection of Keystone would be playing in the hands of Putin.

People may be reminded that, unfortunately, Obama was ‘framed’ by the shrewd Europeans in his early days of presidency by very cleverly putting the albatross of Nobel Peace Prize around his neck. And, now Obama is continually getting crushed under its weight in the context of leaving behind a legacy.

Will Obama buckle down under the weight of misplaced phantom notion of legacy and reject the pipeline or think of larger long term interests of United States and approve the project? Perhaps Obama would care to remember that one of the signs of a person’s greatness and statesmanship is to subordinate one’s own hankering after greatness to the greater good of the people and the world. What greatness material is Obama made of?

CANADIAN OIL SANDS PLAYERS NEED TO COME UP WITH A NEW UPGRADER AND JOIN HANDS WITH BC FIRST NATIONS CONSORTIUM

A First Nations-led consortium proposed on Monday 14 April to build an alternative project (to Enbridge’s Northern Gateway project) that would link Alberta’s oil sands to the British Columbia coast. Eagle Spirit Energy Holdings Ltd. and Vancouver-based Aquilini Group say they have signed non-disclosure agreements with a “substantial number” of First Nation groups in northern B.C., including some “staunchly opposed” to the Enbridge project.

The proposed one-million barrel-per-day pipeline has a tentative start date of 2020 and it is contingent on securing a “social license” from First Nations to operate. However, the Eagle Spirit project proposes to ship synthetic crude oil (SCO) (light crude) instead of bitumen, after being refined in an upgrading project. This business model is very much on the lines of a plan outlined in my blog of 27 January 2014 (CANADIAN PIPELINE PROJECTS IN LIMBO? NO WORRIES, HERE IS AN ALTERNATIVE SOLUTION!)

The above proposal is a win-win for all parties and makes a lot of sense in view of following:

·       It would be First Nations’ headache to secure the ‘social license’ and all the required approvals to build and operate the pipeline.

·       Transportation of SCO (light crude) in the pipelines will be more acceptable to local population (in BC) than bitumen.

·       An upgrader can be suitably located in either Alberta or Saskatchewan to be able to feed SCO for shipping overseas through West Coast and/or for pumping to refineries in Quebec, Ontario and New Brunswick.  

·       Building of an upgrader will squelch the criticism that by exporting bitumen to other countries many jobs (that could have been potentially created in Canada if there was an upgrader) would also export jobs overseas.

·       There will be less worry about Keystone XL’s outcome.

Now to the question of financing the projects:

Financing of the Pipeline: The Aquilini Group is reportedly willing to underwrite the cost of the pipeline as long as it gets support of all First Nations through whose territory the pipeline would travel. To some it may seem far-fetched or unrealistic, still, once the First Nations endorse the proposed project, financial analysts would get the chance to get down to the brass tacks regarding financing.

As a suggestion, why should Enbridge not like to collaborate on this proposal? They could possibly hedge their bets by investing in this project and carry on with their efforts on their Northern Gateway project despite number of First Nations bands informing NEB that they are not in favor of the project and the unbinding rejection of the project by the Kitimat city plebiscite.

  

Financing of the Upgrader: As suggested in my above cited blog dated 27 January 2014, the Provinces of Alberta and Saskatchewan and Mr. David Black (the BC billionaire who claims to have investors ready for investing in a refinery in Kitimat) could possibly share the cost of an Upgrader. Suncor and/or Total could revisit their economic models to fit in some investment sharing for this upgrader. Even TransCanada can think of diversifying and investing in this project depending upon the outcome of KXL project clearance by the US government.

Summary: All in all, the above pipeline project proposal predicated on an upgrader (in Alberta or Saskatchewan) seems to be a viable proposition and should be pursued by the various stakeholders and potential investors with great vigor and urgency. After all, the window of opportunity for oil and gas exports from Canada will not remain open for a long time. The Federal and Provincial governments should act as facilitators and help smoothen the path forward. Mind you, running with the above proposal does not mean that other viable proposals (e.g. Kinder Morgan pipeline twinning) cannot be pursued alongside. What may happen is that other projects may have to tweak some aspects, if and as necessary. 

LATEST CLIMATE CHANGE HOOPLA – CASE OF SOME VISUALLY CHALLENGED FOLKS UNSUCCESSFULLY TRYING TO FIGURE OUT AN ELEPHANT

Ever since the latest report of IPCC has been presented some people, including the UN and IMF, have started jumping up and down in some kind of inexplicable frenzy. There are talks of gloom and doom – as if the world will come to an end within few decades if something drastic is not done soon. However, if one keeps aside one’s emotion (i.e. irrational state of mind) and rationally analyzes the information, people are basing on for their doomsday scenarios and other information germane to so-called climate change topic, one would be taken back.

A question that will come up will be: Have the scientists been able to figure out totally as to why the phenomena known as La Nina and El Nino behave the way they behave? The honest answer is that scientists still DO NOT fully understand these phenomena – the various parameters that affect them, the interactivity of the parameters, the why’s and wherefore’s of the parameters’ influences and so on.  Just so people know, La Nina and El Nino profoundly affect weather patterns for a given year.

From the above question, the next question will arise: If the scientists have not been able to fully fathom the aforementioned two very important natural phenomena, how on earth can they claim that they have figured out climate change phenomenon in totality? Very commonsensical question indeed! It brings to mind the story in which some visually challenged people who were trying to figure out an elephant made very inaccurate assessments because they were visually impaired – one person who touch the leg called it a pillar, one who touched the trunk called it a thick rope, and so on they went.

Exactly in similar manner some so-called scientists are making some very apocalyptic assessments in regard to planet earth’s future vis-à-vis climate change without having understood the REAL causes behind climate’s behavior. Based on the analogy of visually challenged men unsuccessfully trying to figure out an elephant, the idea that climate change poses an existential threat to humankind can be classified as preposterous and scare-mongering.

The current climate change doom-n-gloom monkey dance is very much akin to a misinformed notion that used to prevail in Galileo’s time when a sizable community of so-called scientists (perhaps almost all) used to think that that the sun goes around the earth. In fact, it was a heresy to say anything to the contrary, and Galileo was persecuted when he challenged the prevailing view.

At the current time if anybody challenges the climate change postulates, its apocalyptic prognostications, that person is ridiculed. This is very reminiscent of Galileo’s time. The hoax perpetrated during Galileo was sun revolves around earth; the current climate related hoax being bandied about relates to an ‘alarming’ change taking place in climate and it is all due to the villain called carbon-di-oxide (CO₂).

The climate change doom-n-gloom proponents ascribe all the apocalyptic scenarios to CO₂’s level in the atmosphere. It will take many pages to go in to the analysis of the parameters used by doom-n-gloom scientists (and its inadequacies), suffice it to say that putting all the blame on CO₂ is laughable because the theory of ‘man-made climate change’ is an unsubstantiated hypothesis – water is a much more powerful greenhouse gas and there is 20 time more of it in our atmosphere (around one per cent of the atmosphere) whereas CO₂ is only 0.04%.

The climate change doom-n-gloom scientists cite the freakish weather incidents to bolster their case. In this context one noted scientist said “The temperature of the earth has been going up and down for millions of years, if there are extremes, it’s nothing to do with carbon dioxide in the atmosphere, it’s not permanent and it’s not caused by us……. “The reason records seem to be being frequently broken is simply because we only started keeping them about 100 years ago. There will always be some record broken somewhere when we have another natural fluctuation in weather.” “It’s absolutely stupid to blame floods on climate change.”

The fact of the matter is that there is an agenda behind this climate change hoopla. Again, to quote the above scientist “If you talk to real scientists who have no political interest, they will tell you there is nothing in global warming. It’s an industry which creates vast amounts of money for some people.” So, there you go!

It has become almost a fashion for world leaders to parrot the climate change topic and pontificate without comprehending the subject in its totality. May be it provides an easy diversionary angle to their spiels. But they need to be enlightened and told not to repeat the lie and hoax situation of Galileo’s time. 

At any rate, it’s time that people who understand the game behind the nefarious, agenda driven hoax of ‘climate change’ circus should unite and lay out for the general public the truth behind climate change in easy to understand lingo.  It will not be easy to stand up to the ‘organized mob’ of climate change doom-n-gloom proponents but then Galileo stood against the ‘organized mob’ of his time and proved them wrong. The Galileos of the present time would have to rally together and bring out convincing material to prove the 21^st century hoax perpetrators on climate change wrong. It would be a hard, long road that would require perseverance. But truth shall prevail ultimately!

ALBERTA's EMPLOYMENT FIGURES IN 2014 LIKELY TO BE DRAGGED DOWN DUE TO OUTSOURCING OF ENGINEERING AND FABRICATION WORK

A report released by Conference Board of Canada last week predicts a bright outlook for Alberta’s economy in 2014 but cautions that it may be stunted by pipeline risks. As per the report, Alberta will lead the country in employment growth in 2014 at 2.8 per cent whereas Canadian employment growth is forecast for 1.4 per cent. The report also forecasts Alberta’s economy to grow more quickly than any other province in 2014, but adds that the lack of pipeline development continues to present a significant downside risk to the forecast.

Alberta’s growth is obviously predicated on momentum in oil and gas sector. According to a report by a Calgary investment bank, capital spending in the Alberta oil sands will rise to a record of about $32 billion in 2014 (more than half of which will go to in situ projects). Canadian Association of Petroleum Producers (CAPP) predicted oil sands production will grow to 5.2 million barrels per day by 2030, up from 1.8 million barrels per day in 2012.

All the above should be good news for Alberta, isn’t it? Are the employment figures going to be really that good even if the pipeline constraints (to move the bitumen from oil sands projects to refineries and/or export) get removed? Probably not! Why? What is the problem?

Here is the reason: The greater portion of engineering cost of a project and thus potential for greater employment lies in the detailed engineering phase (of the project). Unfortunately, substantial chunks of detailed engineering (DE) work is being increasingly outsourced to low cost work centres (LCWC) of Engineering, Procurement and Construction (EPC) companies operating in Alberta/Canada. The EPC companies in Alberta are under tremendous pressure from the owner companies to farm out work to their LCWCs (in China, India, Philippines and such). If an EPC company does not have a LCWC, it is scrambling to set up one because it knows it would be thrown out of the bidding race if it did not have one.

Aside from DE phase being the greater source of employment in the EPC companies, fabrication and supply of equipment and construction of modules also constitutes a huge chunk of total project cost and this area too is a major source of employment. Unfortunately, dark clouds are hovering on this area too since significant amounts of work is being parceled out to other countries, e.g., South Korea and China.

Now, the owner companies may argue that the fabrication yards in Alberta are completely loaded up hence they are parceling work to Asia. This may be partly true, but the important question to ask is: Why are the fabrication/modularization yards not being expanded and/or new fabrication/modularization yards being set up in Alberta?

The answer that one gets is: Fabrication/modularization in Alberta is more expensive than Korea and the Asian yards are sometimes faster too (in completing the work). These assertions are open to genuine challenge and may not hold water if one takes in to account the transportation costs (from Asia), owners’ project management costs (at Asian yards), on-site rectifications necessitated by engineering / fabrication lacunae, possibility of expediting the fabrication in Alberta yards with suitable incentives and so on.

One may say the EPC companies in Alberta/Canada are already full to their capacity which is why DE work needs to be outsourced to LCWCs. That was true in 2005, 2006 but NOT now at this point in time. At the present time, the EPC companies in Alberta/Canada have enough slack to absorb most of the work that is likely to be generated in 2014 and beyond.

The fact of the matter is that the mad scramble to farm out work to LCWCs is causing layoffs in Alberta because the current situation of EPC market in Alberta is sluggish and very weak. Almost every day one hears some technical and/or non-technical personnel (estimators, cost controllers, document management folks, planners, schedulers etc) being let go off. This is ironical for Alberta (with so many new projects expected); indeed it is unacceptable and downright reprehensible and condemnable!

So what should be done? Well, the Province MUST step in and put the boot on the owners neck (like US did with BP during the gulf oil spill in 2010). Some actions on the lines mentioned below must be taken ASAP:

·       60-70% of TOTAL engineering work (DBM+FEED+DE) must be carried out in Alberta. Jobs may be outsourced to LCWCs only if there no capacity in Alberta (and Canada).

·       Not only engineering must be done in Alberta, substantial amount of orders for equipment, and fabrication/modularization must be placed in Alberta first (and in Canada).

·       There should be a continual gap analysis on capacity available in Alberta for supply of equipment, modules and how much of it is utilized. Owners must explain to provincial government why they went to an outside country for supply of equipment, modules etc. if there was underutilized capacity available in Alberta and Canada.

·       There should be tax incentives given to the owner companies for engineering and material sourced from within Alberta and Canada.

Just as a background to people regarding engineering costs: As a ball park figure, contractor engineering is generally in the cost range of 8% to 14% of total project costs (TPC) for greenfield projects, 10% to 18% for brownfield projects.

So, let us consider a project of a billion dollar TPC. The LCWCs at best may provide a saving of 30-50 million dollar during the DE phase. However, anecdotally a lot of it tends to get negated due to engineering and procurement re-work, necessitated to rectify errors and omissions of LCWC engineering, during the construction phase. At the end of the day, the net saving hardly amounts to 15-25 million – a piddling saving of 1.5-2.5% of TPC. Therefore, the notion that sending DE work to LCWCs brings about substantial savings is actually grossly misplaced and overblown, this is something the owner companies need to get in to their heads.

Summary: If the tax incentives can cover some of perceived saving – owing to out sourcing work to LCWCs – the owners would feel incentivized to keep maximum amount of work within Alberta and Canada. That being said, the EPC/EPCM companies should also try to effect economies in man-hour costs as far as possible. In any case, the owner companies got to be requested, cajoled, and coaxed to make sure the EPC work is maximized in Alberta. They must remember that they have a CSR (corporate social responsibility) toward the province (Alberta) whose resources they would be exploiting to generate profit for their investors for helluva long time – after all, the oil sands projects have a pretty darn long productive life.

BALOONING DEFICIT, INABILITY TO FLEX MILITARY MUSCLE, FALLING RATINGS PUT OBAMA IN TIGHT SPOT – MAY SURPRISE PEOPLE WITH A DIFFERENT PERSONA

Let’s start with President Obama’s list of predicaments regarding international issues that is enabling his political detractors to portray him as a wimp:

De-nuclearization of Iran: United States is trying its best to avoid any option of use of force. Reason: With 17 trillion dollar deficit, US is virtually broke. It simply does not have money to spend on any military excursion – even the minor ones will add to the back breaking penury of US. Moreover, there is tremendous aversion in the American public toward another direct involvement. Furthermore, in case of Iran, any military option, which should be perhaps be a recourse of last resort, to be effective would need to be at a scale which would be prohibitively expensive for America and too heavy for war-weary American people’s will.

As a result, US is trying to tough talk its way to some face saving outcome with Iran. But, unfortunately, Iran apparently knows the monetary constraints of US to engage in any military action and would take advantage of the same anticipating correctly the trajectory of American diplomatic maneuverings of Kerry and the like.

However, a lot of American politicians from both sides of the isle are apprehensive of and uncomfortable with the approach US is adopting and do not seem to be very optimistic about a meaningful outcome. The Democrat front-runner of 2016 presidential election Hillary Clinton has said (as reported by NBC News website) “The odds of reaching that comprehensive agreement are not good,” Clinton said, per the Washington Post. “I am also personally skeptical that the Iranians would follow through and deliver. I have seen their behavior over the years…”.

Syrian crisis: US policy on Syria has been predicated on being hesitant to get directly involved, again, due to virtual financial bankruptcy of the US economy and war weariness of the American people. President Obama said Syria had “red line” when Assad regime used chemical weapons against the rebels. The world thought US would take some punitive actions through air strikes but at the last moment Obama went to the Congress to seek authorization for such an action which was turned down (by the Congress) as expected. There was huge disappointment with the ‘hawkish’ elements, like, Republican Senator John McCain and others. Obama looked timid, dithering and mousy.

The Assad regime seems to be reclaiming territories lost to the rebels. However, it is said that Obama administration’s reluctance toward any deeper involvement stems from presence of Muslim extremist elements fighting against Assad’s forces. It seems Obama administrations would prefer less extremist minded Assad prevail rather than Al-Qaida or Taliban type forces to win – this may not be a bad idea but unfortunately, for Obama, his detractors do not want to see that way.

Ukraine crisis: Russians have annexed Crimea and are now seem to be consolidating their position in the newly acquired region. The US and the European allies have imposed sanctions and articulated lot of tough sounding verbiage. However, all this does not seem to have caused any perceptible impact on Putin and his coterie. Obama detractors in the US are, again, criticizing him imputing Putin’s actions to his alleged ‘weak’ stance at the international stage.

It must be said that there was simply nothing that US or the Europeans could do in Crimea because of proximity between Russia and Crimea, and logistical challenges for the western powers to undertake any preventive action militarily. The only thing that may, however, be pointed out is that West was probably too lost in the euphoria and celebration of having caused the pro-Russian President of Ukraine and his cronies to flee, and failed to anticipate Russian reaction to it. The West remained oblivious of Russia’s sensitivities to developments in Ukraine which Russia considers as their backyard and also the century old historical linkages between the two.

US troops presence in Afghanistan beyond 2014: President Obama has yet to make a decision on the size of a post-2014 US force in Afghanistan after a 13-year war that has become highly unpopular among the American public. Outgoing President Karzai surprised the international community and many Afghans in December 2013 when he ignored the recommendation of an assembly of tribal leaders and other dignitaries to sign it, saying he would leave the final decision to his successor after 5 April elections.

A bipartisan delegation of US Senators to Afghanistan called on President Barack Obama this week to announce a decision on his plans for future troop levels in the country, on the assumption a much-delayed security pact eventually will eventually be signed with Kabul. One of the delegation members, Senator Kelly Ayotte of New Hampshire, a Republican, said Obama should not wait for that to give an idea of what the US presence would look like after the Nato-led combat mission ends at the end of this year. This issue is confounding Obama and his reticence on the subject is providing ammunition to his opponents to criticize him for his indecisiveness.

Then there are some other issues that is causing headache to Obama:

Strains in relations with Israel: Israeli Prime Minister Netanyahu is not very happy with the American policy trajectory on Iran and pressure on Israel to make some hard choices before 29^th April toward resolution of Israel-Palestine imbroglio.

Since the global powers reached an interim agreement with Iran last November, Netanyahu’s warnings about Iran have been largely ignored. A frustrated Israeli leadership now appears to be ratcheting up the pressure on the international community to take a tough position in its negotiations with Iran. A front-page headline in the daily Haaretz this week reported that Netanyahu has ordered “to prep for strike on Iran in 2014” and has allocated US$2.87 billion for the groundwork. Earlier this week, Defence Minister Moshe Yaalon hinted that Israel would have to pursue a military strike on its own, with the U.S. having chosen the path of negotiations.

Whether Israel would translate its rhetoric in action remains to be seen and seems improbable, nevertheless the above mentioned developments were meant to jolt the global powers as a wake-up call.

Drop in approval ratings: Wall Street Journal/NBC News poll in March shows President Obama's job approval moved down to 41% in March from 43% in January, marking a new low. Some 54% disapproved of the job he is doing, matching a previous high from December, when the botched roll-out of his signature health law played prominently in the news. The latest survey also showed the lowest-ever approval in Journal/NBC polling for Mr. Obama's handling of foreign policy.

Democrats’ worry about losing Senate in November elections: As per NBC News, prominent figures still associated with President Obama and his White House team are sounding the alarm bell that the Democratic Party could lose the Senate -- if not more -- in November. Former White House Press Secretary Robert Gibbs said that the Democrats’ control of the Senate was “definitely” in danger.

NBC News also reports that due to falling approval rating of Obama some vulnerable Democrats are already shunning Obama’s assistance. The president reportedly acknowledged his lackluster approval ratings during his meeting with Senate Democrats at a retreat recently.

The Democrat candidates Mark Begich in Alaska, Mark Pryor in Arkansas, Mary Landrieu in Louisiana, and Kay Hagan in North Carolina are especially keen on distancing themselves from Obama because of his overt opposition to Keystone XL pipeline project. The above mentioned four senators joined the Canadian Ambassador to US, labor union leaders and others in February this year to express support for this project. Obama has stated that he would give his decision by end of April. If he rejects this project, these four senators’ political future and Democrats’ hopes of retaining majority in Senate would be almost surely be compromised.

‘Weight’ of Nobel Peace Prize: President Obama seems to be continually weighed down by Nobel Peace Prize conferred on him – he seems to be struggling with himself on every issue that involves potential of military option; he seems to feel hand cuffed and suffer from dissonance within himself due to this prize (and unsaid expectation that came with it). As well, Obama seems to be very worried about the legacy he would leave behind and how history would judge him on various issues – be it US interventionism, or stand on environment, or bipartisanship at Capitol Hill and so on.

So, what might Obama do now? It is quite clear that President Obama needs to do something different to shake off the following perception:

·       Professorial, less of a man in command at helm

·       Speaks too much (from scripted speeches)

·       More words, less of actual action (esp. regarding international matters)

·       Afraid of re-calibrating his stance on issues (which explains his being fearful of environmental lobby)

·       Paralysis by over analysis

·       Unreliable, shifty, dithering, indecisive

·       Worried about legacy and Nobel Peace Prize expectation

In order to deal with the above mentioned perception issues and not get relegated to being a lame duck president for two years, Obama needs to change tack, take decisive stands (e.g., he should okay Keystone XL instead of being cowed down by some of his so-called donors). Hopefully, the Democrats would see an invigorated, crisp, concise, bold person who is not worried about how history will judge him. After all, two years is too long a period to remain in a semi-retired ineffectual state waiting for the term to be over. One is remembered in history not because one shied away from unpopular stands but because one overcame one’s shyness to take a right stand.

WITH CRIMEA ALREADY DE-FACTO OCCUPIED BY RUSSIA, WHAT ARE THE OPTIONS FOR WESTERN WORLD?

Not sure whether it is living in denial or utter stupidity, the Western media (TV channels) is still NOT characterizing the situation of Crimea as of Saturday 01 March as de-facto occupation by the Russian forces - the situation is being described as “so many thousands of Russian military personnel are reported to be present in that peninsular region of Ukraine”. Anyway, the fact of the matter is that, for all intents and purposes, Crimea is now under de-facto occupation of the Russian forces.

One reason for being in state of denial could be that if the Western media reports that Crimea is under de-facto occupation of the Russian forces, it would in the same breath convey admission of failure of western world to protect that region. It would be embarrassing, obviously.

Be that as it may, the question is: What can the western world do? It is to be kept in mind that Russian President Putin has obtained backing of the upper house of his Parliament to use force in Ukraine (not just in Crimea) to ‘protect Russian people in that country’, so, any use of force has been validated by the Russians never mind that the such a permission may not have admissibility in the eyes of international law.

Why Crimea is important for Russia?

·       This region provides only warm water port to the Russians. Mind you, for centuries Russians have felt handicapped by unavailability of warm water ports. The Russians were very clever in having an agreement with Ukraine allowing them to station a naval fleet in Crimea; Russia keeps a major naval base in the Crimean city of Sevastopol, where its Black Sea Fleet is based. Apparently, Russia's lease on the Sevastopol base lasts until 2040’s.

·       Also keep in mind, the majority of the Black Sea coastline is held by NATO allies except for Georgia on the east, which is actively seeking NATO membership, and Ukraine in the north. Therefore, without a naval base in Crimea Russia is severely crippled as a global military power.

·       The Russians have a historical wound too in regard to Crimea. Many will have heard of Crimean War of 1853-1856 – the war was a result of rival imperial ambitions, when Britain and France, suspicious of Russian ambitions in the Balkans as the Ottoman Empire declined, sent troops to Crimea to peg them back. Russia had lost; they have not forgotten that humiliation.

How the de-facto occupation of Crimea helps Putin?

·       It gives him a reason to be part of any negotiations that Ukraine might have to undertake to resolve the current crisis.

·       The de-facto occupation of Crimea would potentially embolden the pro-Russia population in the Eastern regions of Ukraine, namely, Kharkiv, Luhansk, Donetsk, Zaphorizia, Odessa and to some extent, Kherson, Dnepropetrovsk, and Mykolaiv to rally and consolidate. This would also help Putin in having a stronger hand and leverage at the negotiating table.

·       The above-mentioned regions and Crimea may have to be given more autonomy in any eventual negotiated settlement which will work in Russia’s favour. Furthermore, the above mentioned regions would provide counterbalance to pro-western regions of Ukraine.

·       Russia would also like to have some guarantee for the safety and security of the gas lines passing through Ukraine to Europe. Having a strong indirect foothold in Ukraine would potentially provide Russians that assurance. These pipelines are a source of revenue for Russia as well as they are a lever for keeping pressure on the end user countries too, albeit, in a limited manner (remember, Russia had threatened to turn off the gas supply to some countries few years back due to gas price disagreement).

Options of western countries:

The western countries do not seem to have any effective short-term leverage against the Russians. The Security Council meeting on 1^st March practically yielded nothing. It does not seem it would be possible to get any stronger sanction like clearance from the UN Security Council because of veto power of Russia.

Some symbolical actions were taken by western countries, e.g., Canada recalled its ambassador from Moscow on 1^st March and suspended its engagement in preparations for the G8 Summit. President Obama spoke for 90 minutes with Putin wherein apparently he made clear that Russia's continued violation of Ukraine's sovereignty and territorial integrity would negatively impact Russia's standing in the international community

But the above are generally jejune demonstration that the western countries are doing something.

However, some long term measures may be viable:

·       Economic/Trade sanctions: This would require cooperation amongst western economic powers and the international institutions, like, IMF.

·       If alternative supplies of gas could be arranged for the European consumers, in that case the gas supply from Russia can be refused permission by Ukraine. This would hurt the Russians surely. However, this would take time.

·       Western powers can engender a military buildup in Putin’s backyard.  NATO membership for Georgia, with the advanced weapon systems and training it will bring, will contribute toward degrading Russian national security. The port of Batumi could also serve as an important military asset for the western powers.

Opportunity for Canada:

The Ukraine crisis is the best time for Canada to make a case to the end user European countries (of Russian gas supply) to import LNG from Canada and move away from Russian dependency. If the Europeans agree to this alternative, which would take 6-7 years to put in place, would give additional/alternative market for Canadian LNG (aside from potential Asian customers). Of course, for this to happen, British Columbia and the Federal agencies would need to hasten the process of approvals and policies in place so that the investing companies can make final investment decisions within 2014.  

Summary:

The Ukraine crisis looks like going to be a long drawn chess game between the Russians and the western bloc. There is a potential that Ukraine may exist as a divided country in the coming years. The western powers would have to work in concert and chalk out long term social, economic, and military strategy to checkmate the Russians. Unfortunately, Ukraine would be a pawn in this geo-political chess game.

The intelligence apparatus of the western countries seem to have been caught napping at the present time, however, they will have to pull their socks up for the long haul. It would not be easy to outflank, outwit the Russians, but if the western countries cooperate and play their cards well, they would be able to gain upper hand eventually. Patience and some guts would definitely be needed on the part of the western bloc in all this.