Security, Governance and Regional Integration: Issues in today’s Africa

In this article, the authors argue that in order for Africa to attain her full development potential, it is necessary that the region’s leaders take questions of regional integration and security much more seriously, placing them at the forefront of their agendas. The role of aid dependence is also challenged and the new flirtation with China, particularly given the current non-critical embrace of Chinese support, is also seen negatively. The authors stress the need for African leaders to foster accountability and become accountable themselves – both to their citizens and to the international community. Whether or not this can be achieved depends on whether the leadership can adopt a self-critical analysis of the continent’s problems and begin to revise the current negative narratives about the continent.
Africa; regional integration; security; economic development; international relations

With vast mineral resources, a large young population and a large geographical area, Africa is a land full of immense potential that is yet to achieve modern development. Decades after the end of colonialism, many African countries still rank among the poorest in the world.

The aim of this article is to explore unique areas that the African Union (AU) and its individual member countries could give more focus to in their quest to foster development. In broad terms, these areas include security, governance and regional integration, in addition to addressing, among others, questions of fragility and international relations, notably those between China and Africa.

The humanitarian crises caused by civil wars in Africa are too large in scope for an adequate and effective continental response. The founding of the AU and the drafting of the Responsibility to Protect (R2P) doctrine – the basis for collective action against genocide, ethnic cleansing and crimes against humanity – make this a critical time to reflect on how best to address regional conflicts.
Therefore, in this context an African Security Architecture needs to assess Africa’s regional security arrangements and provide new policy recommendations for the future. Given the unpredictable nature of conflicts and instability in the current global political climate, focus should be on those tasked with overseeing the R2P. The creation of a sustainable continental security architecture is a vital component of Africa’s development and positioning on the global stage.

Fukuyama defines governance as ‘a government’s ability to make and enforce rules, and to deliver services, regardless of whether it is democratic or not’.1 Experiences vary so widely in Africa that one can only speak of democratizations in the plural. Though most African countries were granted independence under a multiparty system, military rule and one-party states typified Africa’s regimes soon thereafter. Some underwent crippling civil wars, from which only a few are beginning to emerge.

After 1989, the continent witnessed a sudden resurgence of democracy, with the vast majority holding multiparty elections, albeit of widely divergent quality. In some, dictators peacefully ceded power to elected opposition leaders; in others, ruling parties controlled the process to ensure they stayed in power; while in a few cases military coups reversed previous gains. Even if the results were often disappointing and short-lived, the continent was swept by a wave of democratization, unseen for a generation2 in the 1990s.

Some authors, such as Osabu-Kle (2000), maintain that pre-colonial African societies were largely democratic. For a century or more, the aim of colonialism was to extract wealth, which was obtained through domination and imperialism. It was, as Berman (1998) reminds us, ‘an authoritarian bureaucratic apparatus of control, not intended to be a school of democracy’ (329). Since Africans were not considered capable of rational and intelligent deliberation, colonial powers did not envisage independence for generations, and neither did they intend to give local people a say in how they were governed. It was not until after World War II that Europeans realized they could no longer maintain control over their colonies. Most African countries, especially those under French and British control, were hastily granted representative governments in the years leading to independence. With the exception of the former Portuguese colonies, ‘[f]ormal democratic institutions were part of the decolonization pact’ (Young, 1999: 16).

Though independence struggles’ ‘democratic outlook’ conferred the former colonies international legitimacy (Young, 1999: 17), nationalism was not, for the most part, a liberal movement (Chazan, 1993: 75). Independence leaders aimed more to seize the state than to reform it or to follow western political models. These new leaders initially received substantial popular support from their masses in recognition of their anti-colonial struggles, which they used to articulate a political vision far more authoritarian than initially presented. Thus, amid jubilation and hope for the future, many African countries gained their political independence in the late 1950s and 1960s with fierce ambitions of nation-building. In the early years, African countries made remarkable progress: per capita GDP grew and marked improvements were recorded in social indicators such as life expectancy, mortality rates and school enrolment (Meredith, 1985).

However, with increased internal pressure for change and demands for democratization in the 1980s, the euphoria was short-lived, as dreams of independence soon faded. According to the United Nations Economic Commission for Africa (UNECA), since the early1990s, ‘Africa has been experiencing a major ground swell of political change with the people of the continent taking resolute steps to demand participatory and democratic systems of governance’ (UNECA, 2000). Good governance and public sector management are central to development and constitute the primary means for social transformation. When combined, they constitute the cornerstone for successful economies. The realization that good governance is central to development has eventually led Africans and African leaders to acknowledge past errors, and some ‘have resolved to make governance apparatus operate better and efficiently …’ (UNECA, 2000: 1).

In the African context, while some have argued that federalism has the potential to accommodate ethnic, religious and racial diversity, others – including most of Africa’s independence heroes – have posited that federalism exacerbates division and enmity, leading to fragmentation and ultimately the collapse of the nation-state. Overall, however, it is debatable whether federalism may in and of itself contribute to accommodating diversity or exacerbate antagonism (Davis, 1978).

Regional integration
Regional integration is seen as a rational response by a continent characterized by several landlocked countries and many small national markets. With ambitious targets, many of the regional integration schemes have poor implementation records. Part of the problem lies in following the linear market integration model, and this is the reason why African scholars and policymakers generally agree on the need for African Unity, although differences exist among them on the level, strategy, ultimate goal of unification and scope of cooperation (Seidman and Anang, 1992).

The issue of African Unity has always been a contentious one among Africa’s political elite. While Pan-Africanists favored political integration as a prerequisite to economic integration, gradualists such as Jomo Kenyatta of Kenya favored a more gradual approach. They perceived regional institutions as stepping stones for the unification of the continent, and thus with the phasing out of Pan-Africanist ideas the neo-functional theory of integration has dominated Africa. The transformation of the former Organization of African Unity (OAU) into the current AU demonstrates Africa’s leaders’ determination to further integrate Africa and effectively address her challenges. Although the transition from OAU to AU showed the commitment to integration, a myriad of problems were encountered, such as the ever-present problem of uneven distribution of benefits and costs of integration. Whether real or perceived, this has been a major bone of contention in the organization. Another problem has been deficiency resulting from institutional proliferations as evidenced by 200-plus regional integration organizations – leading to overlapping and lack of coordination, incompatible and conflicting objectives and thus divided loyalties that stretched the human, administrative and financial resources.

Since independence, Africa has embraced regional integration as an important component of its development strategy and concluded a large number of Regional Integration Arrangements (RIAs). The African approach is that of linear market integration, following stepwise integration of goods, labour and capital markets, and eventually monetary and fiscal integration. The starting point is usually a free trade area, followed by a customs union, a common market, and then the integration of monetary and fiscal matters to establish an economic union. The achievement of a political union features as the ultimate objective in many African RIAs.

Africa has experienced challenges in the process towards deeper integration and even political union. Ambitious schemes with unrealistic time frames have made evident the gaps between political ambitions and economic reality. Nevertheless, African countries have contributed to a proliferation of regional trade agreements, a defining feature of global economic governance in recent decades. Despite the many ambitious integration initiatives that have not been effectively implemented, member states of SADC, EAC and COMESA have embarked on another ambitious integration programme referred as the Tripartite FTA (T-FTA).

This grand integration initiative has followed a course rather different from other regional integration initiatives in Africa. The T-FTA will be anchored on three pillars, namely, market integration, infrastructure development and industrialization. These pillars appear to capture key challenges that limit the competitiveness of African businesses, her own integration achievements and the integration of African economies into the global economy.

Other issues
Development, underdevelopment and marginalization in Africa
Development can be described as good change, the achievement of which can be regarded as a general good for the society (Chambers, 1983). It can be, in terms of general improvement or progress, modernization, social change, economic growth and development, improved living standards and people’s well-being or even satisfaction of human needs. For a nation, it may also entail low levels of unemployment and poverty, equality, good educational and literacy levels.
Owing to regional trade blocks, increased trade between African countries in recent years reduced trade tariffs and travel barriers and improved roads and infrastructure such as the Mombasa port in order to enable land-locked countries (such as Uganda) trade and access to the Indian Ocean. Liberalization of trade within Africa, as opposed to outside Africa, would substantially improve the welfare of Africans (UNCTAD, 2013).
Politically, it is evident that many African countries are embracing democracy, albeit there is still quite some way to go before they can be said to have reached an ideal stage. More and more people feel that they can air their views on matters of development and this also helps leaders have a sense of what citizens want. Civil societies and the media also play a crucial role in opening up communication channels between leaders and citizens. With increased participation of international institutions, the level of integrity among leaders is enhanced, though not to the desired level.
The international community also helps keep in check leaders who commit injustices against their people. This role cannot be underestimated as it sets the stage for globalization and hence opening up the continent to new opportunities such as increased trade with the outside world, increased Foreign Direct Investments (FDIs), more options for trade partners, and improved human welfare due to decreased injustices owing to international laws. What is still contested is the enormous inequality in resource allocation, such that certain regions are still not as advanced in terms of infrastructure or resource allocation as others. This problem can be attributed to partiality in leadership, whereby some leaders favour some regions over others as opposed to developing the entire country.

Underdevelopment in relation to development has no clear definition and can only be looked at from a comparative and economic point of view. It is a relative concept whose indicators include low production levels in a country, high unemployment levels and lack of technological advancement. Causes of such underdevelopment are varied, and include political instability (as is the case in South Sudan and Somalia) and ethnic tensions.
Humanitarian assistance vis-à-vis development aid

Humanitarian assistance is informed by the need to help out during and in the immediate aftermath of disasters through activities designed to save lives, alleviate suffering and protect human dignity. Humanitarian assistance can, however, also include reconstruction and rehabilitation, disaster prevention and preparedness. Although it ought to be guided by principles of impartiality to save lives, in many disaster situations in Africa humanitarian assistance has come to be seen as an indirect way of spreading influence by international powers at the expense of the African populace (Waters, 2001; Rogerson et al., 2004; Ames, 2008).

Whereas development aid is focused on alleviating poverty in the long term, as opposed to humanitarian aid’s short-term responses, partnership through development cooperation is an opportunity that could provide Africa with the necessary platform for development. However, critics argue that Africa should rethink its approach and do away with development aid, something that can only be achieved with the right framework in place.

The politics of aid
In the 1970s, many African countries had just received independence, and ‘with this came a strong sense of self-respect and hope for the future’ (Moyo, 2010), although this declined over the years and especially in the twenty-first century, characterized by foreign aid dependence as a mechanism for poverty alleviation. Renowned critic of foreign aid Moyo (2010) calls this syndrome ‘an unmitigated political, economic and humanitarian disaster’.
In 2005, the International Monetary Fund published a report titled ‘Aid Will Not Lift Growth in Africa’ cautioning governments, donors and campaigners to be more circumspect in their claims that increased aid would solve Africa’s problems. This does not come as a surprise because in recent times aid has been turned into an avenue for corruption within receiving governments and development agencies. These claims are evidenced in a hearing before the US Senate Committee on Foreign Relations in May 2004 in which Jeffrey Winters, a professor at Northwestern University, argued that the World Bank lost up to US$100 billion of its loan funds intended for development to corruption. At around the same time, the British envoy to Kenya, Sir Edward Clay, raised the alarm on corruption in Kenya, which was immortalized in this paraphrased quote: Kenya’s corrupt ministers were ‘eating like gluttons’ and vomiting on the shoes of the foreign donors (The Economist, 2009).
The list of corruption incidents in Africa in relation to foreign aid is endless, as political elites and their cronies divert stolen funds to foreign bank accounts leaving their nations in massive debt. This leads to the question: Should aid to Africa be abolished? Perhaps the best possible answer is better management through the establishment of control systems to verify expenditure of public funds. This would provide for greater transparency on how funds intended for development are spent.
State failure and fragility

Two broad but inter-related factors characterize state failure: conflict and slow and/or lack of development (Naudé and McGillivray, 2011: 5). Conflicts are destructive to human development (Naudé and McGillivray, 2011: 8) as they create a vicious cycle of under-development known as the ‘poverty trap’. Per capita income is what distinguishes developed, developing and least developed countries from each other. The connection between poverty and fragility is that many of the low- and middle-income countries have substantial state debt. A country’s vulnerability on the other hand refers to a state’s potential to suffer negative effects of future challenges (Naudé and McGillivray, 2011: 10).
The concept of ‘developmental state’ was coined to denote the ideal orientation and functioning required from governments to improve developmental outcomes, and hence states can fulfil a central role in development (Naudé and McGillivray, 2011: 14), despite their lack of commitment and capacity (Naudé and McGillivray, 2011: 15). The two mentioned criteria of determining a fragile state characterize most African countries, because in most cases the interest of the state is placed before that of the citizen. These issues have been widely discussed in various African regional economic blocs without much success because most counties have sought to promote cross-border trade without dismantling tariff and non-tariff barriers.
Fragility leading to state failure in Africa after the Cold War has mostly been through intra-state conflicts such as the ongoing unrest in the Central African Republic and South Sudan.

When such conflicts erupt, they can be contained only if individual states uphold the principle of the R2P and act quickly to prevent further escalation as opposed to depending on the international community.

China–Africa relations
China’s continued economic growth in the last 30 years has seen it transform especially in the manufacturing sector from an underdeveloped country to an emerging global power,3 with its economic growth and increase in revenue trickling down to State Owned Enterprises (SOEs). This growth was triggered by the Chinese government’s actions of closely monitoring shifts in the global market (which was leaning more towards manufacturing) and thereby aligning the SOEs in accordance with the changes. This meant equipping SOEs with the right resources as well as backing them diplomatically in order for them to venture into markets outside of China. As a result, China became the world’s largest holder of capital, with over $1 trillion in foreign reserves in 2006.

With this strategy, the Chinese expressed interest and put in place a strategy to engage from an economic perspective, hence serving as a development model for Africa while at the same time doubling up as an alternative source of trade and capital – complementing the traditional western development partners. The natural and energy resources sectors have been on top of China’s continued interest in the continent, something that has contributed to increased bilateral agreements with African governments translating to an increase in FDI.

According to the Chinese Ministry of Commerce, China’s FDI in Africa has increased by 46 percent per year over the last decade. The stock of foreign investment stood at $21.23 billion in 2012 compared with $1.6 billion in 2005. Strategic sectors of Chinese interests include oil, minerals and infrastructure through SOEs that receive grants or loans from the government or state-owned banks.

Following these developments, China’s relations with Africa were enhanced and eventually 2006 was even dubbed by the Chinese leadership as China’s ‘Year of Africa’, leading to the 50th anniversary commemoration of formal Sino-African diplomatic ties at a forum called Forum on China-African Co-operation (FOCAC) hosted by Beijing, during which the first white paper on China’s Africa Policy was released. China’s growing footprint in Africa has raised important questions regarding its win–win partnership formulae, which the Chinese leadership maintains to be of mutual benefit.
The question, however, is: For how long can Beijing keep its political and economic face towards the continent in return for access to Africa’s markets and resources?

If African countries expect Beijing to expand on its 2006 FOCAC commitments to ensure that gains are mutual, it must set the rules of engagement with China and not the other way round. This means developing terms or consensus regarding the relationship with China, ensuring that the rule of law and an effective monitoring and regulatory framework are in place to see that investment practices are conducted appropriately and legally, and that, above all, the people of Africa are the main beneficiaries of the partnership as opposed to only economic elites.

This article looked at some contentious issues facing Africa today, such as security, governance and regional integration, which call for more research and policy analysis in order to fortify the foundations of Africa’s state institutions. This includes the need to redefine the term security so as to move beyond militaristic thinking and embrace the concept of human security. African leaders need to foster accountability and be accountable – first to their citizens before moving to the level of the international community. However, this can only be achieved if the current leadership approaches the continent’s problems from a self-critical point of view and questions the negative narrative about Africa – whether it is substantive or not.

The next step will be to face the problem with a ‘we want change’ mindset that sets aside old norms and stereotypes about Africa. By doing this, it will be possible to identify gaps existing between other continents and Africa and enable the continent to regain its dignity in the international arena. The time has therefore come for the continent to drive itself through good leadership rather than simplistic responses to donor regulations, something that can only be realized through self-criticism as opposed to the current ‘us’ versus ‘them’ accusations between Africa and the West. China–Africa relations must also be reviewed so that they are based on goodwill and mutual understanding, while adhering to strict regulations that will prevent exploitation – perhaps through an AU policy towards China.

1 See Fukuyama’s definition of the term democracy.
2 This series of events is part of the worldwide process that Huntington (1991) refers to as the ‘third wave’ of democratization.
3 See Naidu (2006). See also President Thabo Mbeki’s speech to the 2006 FOCAC Summit, as well as President Hu Jintao’s speech delivered at the same conference. For a detailed discussion on China–Africa relations, see Alden and Alves (2009).
1. Alden, Chris and Cristina Alves (2009) China and Africa’s Natural Resources: The challenges and implications for development and governance. South Africa: South African Institute of International Affairs.
2. Ames, Eric (2008) Managing Humanitarian Relief: An operational guide for NGOs. Rugby: Practical Action.
3. Berman, Bruce J. (1998) ‘Ethnicity, Patronage and the African State: The politics of uncivil nationalism’, African Affairs 97(388): 305–341. | Article |
4. Chambers, Robert (1983) Rural Development: Putting the last first. Harlow: Longman.
5. Chazan, Naomi (1993) ‘Between Liberalism and Statism: African political cultures and democracy’, in Larry Diamond (ed.) Political Culture and Democracy in Developing Countries. Boulder & London: Lynne Reiner.
6. Davis, S. Rufus (1978) The Federal Principle: A Journey through time in quest of a meaning. London: University of California Press.
7. Huntington, Samuel (1991) The Third Wave: Democratization in the late twentieth century. Norman: University of Oklahoma Press.
8. Meredith, Martin (1985) The First Dance of Freedom: Black Africa in the post war era. London: Abacus.
9. Moyo, Dambisa (2010) DEAD AID: Why aid is not working and how there is a better way for Africa. New York: Farrar, Straus and Giroux, LLC.
10. Naidu, Sanusha (2006) ‘China–African Relations in the 21st Century: A “win–win” relationship’, Declaration of the Beijing Summit of the Forum on China-Africa Co-operation, November.
11. Naudé, Wim and Mark McGillivray (2011) ‘Fragile States: An overview’, in Wim Naudé, Amelia U. Santos-Paulino and Mark McGillivray (eds.) Fragile States: Causes, costs and responses. New York: Oxford University Press.
12. Osabu-Kle, Daniel T. (2000) Compatible Cultural Democracy: The key to development in Africa. Peterborough, Ontario & Orchard Park, NY: Broadview.
13. Rogerson, Andrew, Adrian Hewitt and David Waldenberg (2004) ‘The International Aid System 2005–2010 Forces for and against Change’. Overseas Development Institute Working Paper 235.
14. Seidman, Ann and Frederick Annang (1992) 21st Century Africa: Towards a new vision of self-sustainable development. Trenton, NJ: Africa World Press.
15. The Economist (2009) ‘Corruption in Kenya: How to ruin a country’ 26 February.
16. UNCTAD (2013) Economic Development in Africa Report 2013-Intra-African Trade: Unlocking private sector dynamism.
17. UNECA (2000) Progress in Good Governance since the Social Summit. Addis Ababa: United Nations Economic Commission for Africa.
18. Waters, Tony (2001) Bureaucratizing the Good Samaritan: The limitations of humanitarian relief operations. Boulder: Westview Press.
19. Young, Crawford (1999) ‘The Third Wave of Democratization in Africa: Ambiguities and contradictions’, in Richard Joseph (ed.) State, Conflict, and Democracy in Africa. Boulder& London: Lynne Reiner.

The African Renaissance is a farce without de-westernizing ‘truths’.

The African Renaissance is a farce without de-westernizing ‘truths’.
Posted on April 6, 2014 by nawiri nerima

Reflections of a pan-Afrikanist

Without de-westernizing ‘truths’, the African Renaissance would be nothing but farcical, to say the least. This rebirth should be alive to the fact that those who cannot remember the past are condemned to repeat it. But how do we remember this past if we cannot even authoritatively describe/define it? In the 16th century, Spanish missionaries judged and ranked human intelligence and civilization by whether the people practiced alphabetic writing. Towards the end of the 18th century and the beginning of the 19th century, the measuring stick for human intelligence and civilization was history and no longer alphabetic writing. That ‘people without history’ were located in a time ‘before’ the ‘present’. Thus people with history could write the history of those without.[1]This has fostered the notion of equating history, with writing about history as if before writing there was no history. [2] Wa Thiong’o notes that…

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Rwanda and endogenous development.

Rwanda and endogenous development.

By Nawiri Nerima First published on Pambazuka News

Centre for International Security Analysis

By Nawiri Nerima

First published on Pambazuka News

The 21st Century has been touted as Africa’s to claim. In fact, at the risk of sounding like an Afro-pessimist, there has been many an encomium such as ‘Africa Rising’, a narrative notably fostered by Western publications.[1] At the centre of this ‘Africa rising’ debate, is the subject of development.[2] In view of the subject that is development, it is vital to take into account that all conceptions of development reflect a particular set of social and political values.[3] The debate has been what constitutes the hallmark of development with a number of paradigmatic oppositions emerging: traditional versus modern; agrarian subsistence economies versus highly productive industrialized economies. On the continent, consideration of what ‘development’ is to a large extent is accorded to the evolution implied and promised by the passage from the former paradigms to the latter.[4]Rwanda’s (endogenous) development model has…

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WORLD POLITICS 2014: EVENTS THAT SHAPED THE YEAR by The Center for International and Security Affairs

The Center for International and Security Affairs

This coverage of these events seeks to highlight the key events that changed conventional political systems and chat new systemic ways. These events cut across all continents from Cuba to Hong Kong, War and Peace time events, young and old led events. This year has been a dynamic and interesting one especially in its politics.
The Analysis
December 2013- January 2014
• Russia and Ukraine
The event that began with a street action demanding a partnership with the European Union from Ukraine Government, metamorphosed into a national awakening and rejection of the Post-Soviet State. Later on Mr. Putin and Mr. Yanukovych agreed on a Payment to Ukraine worth $15 Billion and a price of $268 per thousand cubic metres instead of $400 for gas price- a good deal from Mr. Putin. On the 22nd of January- The Ukraine Day of Unity, protests broke out leading to the loss…

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Oil Markets: “Trouble Ahead, Trouble Behind”

Oct 10, 2014

On the surface, the easy and conventional explanation for the recent drop (20% since June) in oil prices – even in the face of heightened geopolitical risk/unrest in key oil producing regions – has focused mainly on the growth in supply (especially in the United States), lackluster global demand, and sizable global inventories.  In combination, this trifecta has led market analysts to be both complacent (to date, this unrest has not impeded production volumes) and more recently, bearish. U.S. liquids production continues to grow; Russian exports, even in the face of sanctions remain high, and Iraq and Iran continue to export even as Libyan volumes go up and down.

Given that the market had already factored in the continued U.S. tight oil surge, the “real surprise” has come in the form of demand loss. At the beginning of the year, many analysts predicted that non-OPEC supply gains would cover the majority of new demand growth, which though viewed as tepid, was still projected to be over 1.2 million barrels per day (mmb/d). Newer forecasts, however, show appreciably weaker growth (on the order of 700-800mb/d) and the reduction so far is concentrated in the second and third quarters, setting up potential problems for a well-supplied market, especially in a slow or no growth global scenario going forward.

For the past several years, this confluence of factors has largely explained why oil prices have remained in a predictably stable price “band” of around $100/barrel – in spite of an unprecedented spate of global disruptions and new geopolitical unrest. The continued demand for oil and price stability has been good for consumers and recovering economies. It has also been keenly beneficial for producer/investors in the United States and elsewhere.

Today, however, we may be on the cusp of a much more volatile and unpredictable era, where prices may plummet or spike, where political unrest can both impact and be impacted by such adjustments, where lower demand and supply and inventory overhangs can lead to future underinvestment, and where reinvestment is likely to lag new demand growth, triggering a new round of price spikes and troughs out into the future.

In order to fully appreciate this changing landscape, one only need examine the following:

–  Demand vs. consumption and the impact of inventories. Simply put, large stock accumulation (whether the result of hedging against broader political crises or a symptom of having no market for unsold barrels) may be leading analysts to continue to “overstate” demand growth. To the extent this is the case, once storage capacity is full (including line fill in the case of pipeline projects), even if demand strengthens as a consequence of lower oil prices, inventory draw may be used to match that consumption, giving producers little near term price relief.

– The real elasticity of demand. In addition, under such conditions, the income effect of a weakened global economy is unlikely to quickly “correct” the downturn when it occurs, thereby pushing lower prices into 2015. That correction mostly comes from discretionary OECD demand and non-OECD exporters that serve the OECD.

– Price sensitivity of new drilling. While drilling efficiency in the United States, in particular, has been remarkable, unconventional production costs still exceed those of conventional onshore projects. They also have much steeper decline rates and lower recovery rates (at least to date). Sustained low prices are likely to deter/delay new investments and the churning (i.e. continuous drilling) required to keep volumes high could, at some point, be overtaken by declines.

– The impact of sanctions. Sanctions targeting the oil output from major producing regions or nations may ultimately have the desired effect of modifying regime behavior, but it can also adversely impact global supply, prices and continued economic growth. In the near term, however, given current market conditions, keeping additional oil off the market may actually prevent more precipitous price declines.

– The capex/opex conundrum. Between 2008-2013, scores of independents and larger companies as well, sought to take advantage of the shale boom in the United States and undertook substantial capital investments to secure large parcels of lease acreage. These expenditures constituted sizable upfront costs and led to debt accumulation. With lower commodity prices, delayed or reduced operating income makes that model difficult to sustain. And while it is true that farm-ins, new equity participation and property sales may reinvigorate/renew the cycle, shedding of unproductive properties and asset write downs are also possible and increasingly likely.

– Greater regulatory pressures. Reduced prices and increased costs compress profit margins and make new investment decisions tougher.  Policy decisions that restrict market choices and create distortions (e.g., export restrictions) add to that uncertainty.

– The prospect of a continued U.S. bonanza. This may be the trickiest impact to “quantify,” but the prospect/perception of global oil (and gas) markets being flooded by a continued and growing stream of American unconventional exports eventually will lead competitors to second guess the commercial viability of new investments elsewhere – either in non-U.S. refining, East African gas efforts, international light oil development, or high cost and complex frontier projects. And with global consumption expected to grow over the next several decades, we will need a plethora of new and large scale efforts to meet that demand, especially as conventional and unconventional output declines take hold.

In the short term, over supply and lower oil prices clearly have some positive impacts. They are good for economies and consumers, helpful for sanctions efforts against rogue states, and serve as buffers against continued political unrest and supply disruptions around the globe.

But they also carry the seeds for future troubles, including underinvestment in efficiency and alternative energy forms as well as in future oil and gas, potential instability in resource rich nations dependent on oil and gas revenue, have mixed climatic impacts, and eventually lead to higher prices.

A number of pre-eminent foreign policy scholars have described the current geopolitical environment as one of unprecedented risk and uncertainty, with conflicts and realignments that make take years/decades to sort out. And while this note has laid out a case for the disruptive impacts of sustained lower prices, the prospect of near term price spikes and temporarily higher prices (given underlying conditions in Yemen, Russia/Ukraine, Iran, Iraq, Syria, Libya, etc.) clearly cannot be discounted.

What is clear is that the energy landscape continues to change, and when coupled with the range of implications of a reordered/realigned world, the troubles of the past may look tame compared to the possible troubles that lie ahead.

Frank A. Verrastro is senior vice president and James R. Schlesinger Chair for Energy & Geopolitics at the Center for Strategic and International Studies in Washington, D.C; Guy Caruso is senior advisor at the Energy & National Security Program at CSIS; and Lawrence Goldstein is a non-resident senior associate with the CSIS Energy & National Security Program.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2014 by the Center for Strategic and International Studies. All rights reserved.

Carrying on the legacy of Afro Music – #Felabration with @Afromysterics NYC


In honor of Fela Kuti, his music legacy and in commemoration of his birthday, Felabration! an annual celebration is taking place in various cities all around the world during the month of October. (October 15, 2014 would be Fela Kuti’s 76th birthday). 

“The idea and concept of Felabration as an annual celebration of Fela’s music, life and times, originated from his eldest child Yeni who conceived it in 1998”. …Read more here

The impact of Fela’s Afrobeat music cannot be overemphasized and his musical legacy surely lives on, greatly influencing the works of the today’s crop of Afro artists.

And so I am honored to be a part of Harlem-New York’s Felabration concert as a  special guest of Laolu and The Afromysterics , also featuring the Super Yamba Band, where I’ll be doing some favs and a couple of originals. See you there if you are in NYC!

Click on…

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