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Echoes of the Past: Marikana, Cheap Labour and the 1946 Miners Strike

By Chris Webb | The Bullet | August 21, 2012

On August 4, 1946 over one thousand miners assembled in Market Square in Johannesburg, South Africa. No hall in the town was big enough to hold them, and no one would have rented one to them anyway. The miners were members of the African Mine Worker’s Union (AMWU), a non-European union which was formed five years earlier in order to address the 12 to 1 pay differential between white and black mineworkers. The gathering carried forward just one unanimous resolution: African miners would demand a minimum wage of ten shillings (about 1 Rand) per day. If the Transvaal Chamber of Mines did not meet this demand, all African mine workers would embark on a general strike immediately. Workers mounted the platform one after the other to testify: “When I think of how we left our homes in the reserves, our children naked and starving, we have nothing more to say. Every man must agree to strike on 12 August. It is better to die than go back with empty hands.” The progressive Guardian newspaper reported an old miner getting to his feet and addressing his comrades: “We on the mines are dead men already!”[1]

Zumapartheid
Mike Constable union-art.com

The massacre of 45 people, including 34 miners, at Marikana in the North West province is an inevitable outcome of a system of production and exploitation that has historically treated human life as cheap and disposable. If there is a central core – a stem in relation to which so many other events are branches – that runs through South African history, it is the demand for cheap labour for South Africa’s mines. “There is no industry of the size and prosperity of this that has managed its cheap labour policy so successfully,” wrote Ruth First in reference to the Chamber of Mines ability to pressure the government for policies that displaced Africans from their land and put them under the boot of mining bosses.[2]

Masters and Servants

Mechanisms such as poll and hut taxes, pass laws, Masters and Servants Acts and grinding rural poverty were all integral in ensuring a cheap and uninterrupted supply of labour for the mines. Pass laws were created in order to forge a society in which farm work or mining were the only viable employment options for the black population. And yet the low wages and dangerous work conditions kept many within the country away, forcing the Chamber of Mines to recruit labour from as far afield as Malawi and China throughout the nineteenth and twentieth centuries. Sordid deals between Portuguese East Africa and Apartheid South Africa ensured forced labour to be recruited for the mines and by 1929 there were 115,000 Mozambicans working underground. “It has been said,” wrote First in her study of migrant Mozambican miners, “that the wealth of Reef gold mines lies not in the richness of the strike but in the low costs of production kept down by cheap labour.”[3]

When AMWU was formed in 1941 black miners earned 70 Rand a year while white workers received 848 Rand. White miners had been organized for many years, but there was little solidarity between the two groups as evidenced by the 1922 Rand Rebellion led by the whites-only Mine Workers Union. White miners went on strike against management’s attempt at weakening the colour bar in order to facilitate the entry of cheaper black labour into skilled positions. Supported by the Communist Party of South Africa under the banner of “Unite and Fight for a White South Africa!” the rebellion was viciously crushed by the state leaving over 200 dead. The growth of non-European unions in the 1940s was dramatic and for the very first time the interests of African mineworkers were on the table. Their demands threatened the very foundations of the cheap labour system, and so in 1944 Prime Minister Jan Smuts tabled the War Measure 1425 preventing a gathering of 20 or more on mine property. Despite these difficulties the union pressed on and in 1946 they approached the Chamber of Mines with their demand for wage increases. A letter calling for last minute negotiations with the Chamber of Mines was, as usual, ignored.

By August 12th tens-of-thousands of black miners were on strike from the East to the West Rand. The state showed the utmost brutality, chasing workers down mineshafts with live ammunition and cracking down on potential sympathy strikes in the city of Johannesburg. By August 16th the state had bludgeoned 100,000 miners back to work and nine lay dead. Throughout the four-day strike hundreds of trade union leaders were arrested, with the central committee of the Communist Party and local ANC leaders arrested and tried for treason and sedition. The violence came on the cusp of the 1948 elections, which would see further repression and the beginning of the country’s anti-communist hysteria.


National Union of Mineworkers Poster on Fortieth Anniversary of 1946 Strike

While it did not succeed in its immediate aims, the strike was a watershed moment in South African politics and would forever change the consciousness of the labour movement. Thirty years later Monty Naicker, one of the leading figures in the South African Indian Congress, argued that the strike “transformed African politics overnight. It spelt the end of the compromising, concession-begging tendencies that dominated African politics. The timid opportunism and begging for favours disappeared.”[4] The Native Representative Council, formed by the state in 1937 to address the age old ‘native question,’ disbanded on August 15th and ANC president Dr. A.B. Xuma reiterated the demand for “recognition of African trade unions and adequate wages for African workers including mineworkers.”[5]

The 1946 mineworkers strike was the spark that ignited the anti-apartheid movement. The ANC Youth League’s 1949 Program of Action owes much to the militancy of these workers as does the Defiance Campaign of the 1950s and the emergence of the ANC’s armed wing Umkhonto we Sizwe (Spear of the Nation) in the 1960s. It is too early to say what sort of impact the current Lonmin strike will have on South African politics, but it seems unlikely that it will be as transformative as those of the past. The National Union of Mineworkers (NUM), arguably the heirs to the 1946 strike are currently engaged in a series of territorial disputes with the breakaway Association of Mineworkers and Construction Union (AMCU). Meanwhile COSATU’s muted response has echoed the ANC’s line of equal-culpability and half-mast public mourning. The increasingly incoherent South African Communist Party has called for the arrest of AMCU leaders with some of its so-called cadres defending the police action. Former ANC Youth League leader Julius Malema’s plea for miners to hold the line and form a more militant union reek of political opportunism.

Still Dependent on Cheap and Flexible Labour

What no one has dared to say, aside from the miners themselves, is that the mining industry remains dependent on cheap and flexible labour, much of it continuing to come from neighbouring countries. This has historically been the source of most miner’s grievances. A recent Bench Marks Foundation study of platinum mines in the North West province uncovered a number of factors linked to rising worker discontent in the region. Lonmin was singled out as a mine with high levels of fatalities, very poor living conditions for workers and unfulfilled community demands for employment. Perhaps most significant is the fact that almost a third of Lonmin’s workforce is employed through third party contractors.[6] This form of employment is not new in the mining industry. In fact, since minerals were discovered in the 19th century labour recruiters have scoured the southern half of the continent for workers. The continued presence of these ‘labour brokers’ on the mines and the ANC’s unwillingness to ban them – opting instead for a system of increasing regulation – is the bloody truth of South Africa’s so-called ‘regulated flexibility.’

There are a number other findings from the Bench Marks study that are worth mentioning as they illuminate some of the real grievances that have been lost amid photos of waving pangas. The number of fatalities at Lonmin has doubled since January 2011, and the company has consistently ignored community calls for employment, favouring contractors and migrant workers. A visit by the Bench Marks Foundation research team to Marikana revealed:

“A proliferation of shacks and informal settlements, the rapid deterioration of formal infra-structure and housing in Marikana itself, and the fact that a section of the township constructed by Lonmin did not have electricity for more than a month during the time of our last visit. At the RDP Township we found broken down drainage systems spilling directly into the river at three different points.”[7]

In fact, the study predicted further violent protests at Marikana in the coming year. The mass dismissal of 9,000 workers in May last year inflamed already tense relations between the community and the mine as dismissed workers lost their homes in the company’s housing scheme.

Once again, these facts are hardly new in the world of South African mining. Behind the squalid settlements that surround the mine shafts there are immense profits to be made. In recent years the platinum mining industry has prospered like no other thanks to the increased popularity of platinum jewellery and the use of the metal in vehicle exhaust systems in the United State and European countries. Production increased by 60 per cent between 1980 and 1994, while the price soared almost fivefold. The value of sales, almost all exported, thus increased to almost 12 per cent of total sales by the mining industry. The price rose so dramatically throughout the 1990s that it is on par with gold as the country’s leading mineral export.[8] South Africa’s platinum industry is the largest in the world and in 2011 reported total revenues of $13.3-billion, which is expected to increase by 15.8% over the next five years. Lonmin itself is one of the largest producers of platinum in the world, and the bulk of its tonnage comes from the Marikana mine. The company recorded revenues of $1.9-billion in 2011, an increase of 25.7%, the majority of which would come from the Marikana shafts.[9]

For risking mutilation and death underground workers at Marikana made only 4000 Rand, or $480 a month. As one miner told South Africa’s Mail and Guardian newspaper that, “It’s better to die than to work for that shit … I am not going to stop striking. We are going to protest until we get what we want. They have said nothing to us. Police can try and kill us but we won’t move.” These expressions of frustration and anger could be from 1922, 1946 or today. They are scathing indictments of an industry that continues to treat its workers as disposable and a state that upholds apartheid’s cheap labour policies.

Endnotes:

1. Monty Naicker, “The African Miners Strike of 1946,” 1976.

2. Ruth First, “The Gold of Migrant Labour,” Spearhead, 1962.

3. Ruth First, “The Gold of Migrant Labour,” Spearhead, 1962.

4. Monty Naicker, “The African Miners Strike of 1946,” 1976.

5. Dr. A.B. Xuma quoted in Monty Naicker, “The African Miners Strike of 1946.”

6. The Bench Marks Foundation, “Communities in the Platinum Minefields,” 2012.

7. The Bench Marks Foundation, “Communities in the Platinum Minefields,” 2012.

8. Charles Feinstein, “An Economic History of South Africa,” Cambridge: Cambridge University Press, 2005, 211.

9. Marketline Advantage Reports on South Africa’s Platinum Group Metals, 2011.

•

Chris Webb is a postgraduate student at York University, Toronto where he is researching labour restructuring in South African agriculture. He can be reached at christopherswebb_AT_yahoo.ca.

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August 21, 2012 Posted by | Economics, Ethnic Cleansing, Racism, Zionism, Solidarity and Activism | , , , , , , | Leave a comment

Tunisia: Al-Nahda’s Failures Lead Sidi Bouzid to Rise Again

By Christopher Barrie | Al Akhbar | August 17, 2012

On Tuesday August 14, the central Tunisian governorate of Sidi Bouzid held a general strike to call for the release of several protesters detained during the demonstrations held over the preceding weeks and to demand concrete plans for development in the region.

Tuesday’s events come after a series of city-wide general strikes which, from the month of May, have swept through Tataouine, Monastir, Kasserine and Kairouan. The recent events in Sidi Bouzid, cradle of the Tunisia’s 2011 revolution, should be considered the culmination of an extended standoff, not only between the al-Nahda-led ruling coalition and Tunisia’s main trade union federation, the UGTT, but also between those in power and those who are yet to see the revolutionary demands of “work, freedom, and national dignity” realized.

Tensions in Sidi Bouzid have been mounting over a period of months. However, the origins of this most recent wave of unrest can be linked to July 26 when a large number of day workers in the region attacked the al-Nahda party offices in protest at a two-month delay in their wages being paid. The Interior Ministry estimated the numbers involved at 150 while union officials claimed more than 1,000 took part.

The response of al-Nahda to these events was typical. Refusing to recognise the genuine demands of the chronically unemployed and disenfranchised in the southern regions of Tunisia, party officials claimed that those demonstrating had been manipulated by rival political parties, seeking to sow instability and dissent for their own ends. The police fired warning shots and tear gas canisters to disperse the protest.

Tensions have been further exacerbated in recent months by ongoing water shortages in the region. Over the past six months, drinking water has commonly only been available in the evenings and has occasionally been cut off for the entire day. Mohamed Najib Mansouri, the governor of Sidi Bouzid, claimed that one of the reasons for these shortages was the failure of residents to pay their bills. It is more likely that the local infrastructure has been unable to sustain the increased consumption of water during an especially hot and dry summer.

On Thursday August 9, a protest was organised by the December 17th Progressive Forces Front in conjunction with the December 17th Committee for the Protection of the Revolution, the UGTT and a number of opposition parties.

As well as demands for a guaranteed supply of water to the region, the protesters’ demands included the settlement of the status of workers, the resignation of the regional commander of the National Guard, the resignation of Governor Mohamed Najib Mansouri and the dissolution of the Constituent Assembly, in view of its failure to respond to the legitimate demands of the residents of Sidi Bouzid.

In response to the protests, police fired tear gas and rubber bullets into the crowds. One man was hospitalised having been struck in the stomach by a rubber bullet and four others were taken to hospital after inhaling tear gas.

Following these events, al-Nahda once again ignored the grievances of those protesting, this time claiming that rival party Nidaa Tunis was behind the protests. Indeed, a spokesperson from the ruling Islamist movement went so far as to claim that Nidaa Tunis, created in June of this year by former interim prime minister Beji Essebsi, represented the political arm of Ben Ali’s defunct Constitutional Democratic Rally (RCD) party and that they had “proof that some figures within the region known to be close to Nidaa Tunis sided with criminals, thieves and alcohol vendors to spread anarchy in Sidi Bouzid”.

Despite President Moncef Marzouki’s efforts to quell the the growing tension in the region, the general strike went ahead on Tuesday with over 1,000 protesters assembling outside the court house.

The events of recent weeks mark a significant development in the mounting levels of anger at the failures of the majority Islamist party. More than the ruling coalition as a whole, it is now al-Nahda which is perceived to be behind the lack of real progress in Tunisia. What’s more, one should not be surprised at the police’s violent handling of these protests. Prime Minister Hamadi Jebali and Interior Minister Ali Larayedh have previously made it clear that they are willing to use force in order to maintain order in the country. Sadok Chourou, a prominent figure within the al-Nahda ranks claimed in January that strikers were “enemies of God” and that they should suffer the same fate as apostates.

It is the protesters themselves who are blamed for the ongoing instability within Tunisia and not the failures of the ruling coalition and, specifically, al-Nahda. And yet, one need only look at actions of the ruling parties in order to see the falsity of such a claim. Negotiations up until now have been dogged by political outbidding and brinkmanship which has severely hindered the transitional process, as seen in al-Nahda’s attempts to prevent the transition to an independent judiciary, its decision to level a sentence of up to two years for attacks on “sacred values” or its recent rewording of the draft constitution to define the status of women as “complementary to men.”

Furthermore, the economic alternatives being proposed will likely do little to alleviate the situation of many in the southern regions of Tunisia which have traditionally suffered from high levels of unemployment and a lack of investment. Relying principally on foreign and private investment, the government aims to to provide 100,000 more jobs in Tunisia and predicts a level of 3.5 percent GDP growth for 2012. The latter of these two predictions seems increasingly unlikely considering that Tunisia has, to date, experienced four consecutive quarters of negative growth. With levels of unemployment at 18.1 percent, the aim to create 100,000 jobs will also do little to abate social unrest in a country which counts over 709,000 (of an active workforce of 3.9 million) unemployed.

With Minister for Investment Riadh Bettaib announcing last Friday that Tunisia can expect to receive a further $1 billion in World Bank loans alongside his continued insistence on boosting foreign direct investment (FDI) and tourism revenues, it is clear that the proposed model for economic development differs very little from the neoliberal agenda of the former regime.

Of course, alongside the social context of these protests, one must also take into account the political dimension of what is occurring. Tuesday’s general strike was called by the UGTT and the protests of the past week have found support among a broad range of opposition political parties, including the centrist Republican Party, al-Watan (The Nation), and several leftist parties, including the Workers’ Party. While it is important not to discount the role played by opposition political forces in these mobilisations, it remains the case that the principal drivers of this spell of popular contestation have been the young and unemployed in the region whose demands, as has commonly been the case, are channeled through the UGTT. Malek Khadraoui, a writer and activist who has been present throughout the latest wave of strikes and protests in Sidi Bouzid, further comments that, while some opposition parties may be seeking to capitalize on recent events, “the youth in the region harbour a deep distrust towards political parties” and the real cause of these events is the inability of the ruling coalition, and particularly al-Nahda, to respond to their demands.

It is difficult to predict where this latest spell of social upheaval is headed. An International Crisis Group report published this June remarked that it would be an exaggeration to “raise the spectre of a second insurrection,” but that the continued political instability within Tunisia alongside sustained levels of socioeconomic insecurity could “negatively feed on each other and risk snowballing into a legitimacy crisis for the newly elected government.”

In the same report, economist Lotfi Bouzaiane comments that one of the principal demands of the revolution was “the right to work.” Prior to the revolution, he says, it was Ben Ali who insisted that “to find work you just had to wait for the economy to grow!”

Following this latest wave of strikes and demonstrations, it is becoming ever more difficult to distinguish between the rhetoric of the former regime and Tunisia’s new ruling coalition, so committed is it to denouncing any expression of popular dissent in the name of national stability and economic growth. In the absence of any real answers to the demands of those in Sidi Bouzid and elsewhere, the government is increasingly having recourse to violent means of repression. It appears that Tunisia’s uncommonly hot summer may precede an even hotter Autumn.

Christopher Barrie is a student and journalist currently working in Tunisia at Nawaat.

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August 17, 2012 Posted by | Civil Liberties, Economics, Solidarity and Activism | , , , , , | Leave a comment

Top 10 Myths of the Jobs Argument Against Military Cuts

By Miriam Pemberton | IPS | August 14, 2012

Members of Congress, led by the team of Senators McCain, Graham and Ayotte, are touring military contracting plants, bases and defense-dependent communities this summer raising the alarm about “sequestration.” This is the part of the current budget deal that will force $1.2 trillion in across-the-board cuts to federal spending, unless Congress comes up with the same amount of money some other way. Half is supposed to come from the military, half from domestic programs, beginning January 2.

It is true: cutting everything indiscriminately is no way to run a government. But this alarm-raising campaign, buttressed by defense industry spending to buy and promote “independent”studies, and mount lobbying campaigns, is focused not on federal spending in general, but on military cuts in particular. And the centerpiece of their pitch against these cuts is not the standard line that we need to spend ever more on the Pentagon because it needs every penny to keep us safe. Instead the focus is: jobs.

MilitaryWe’re in the process of ending two wars. Since 9-11, spending on the Pentagon has nearly doubled. Clearly we’re due for a military budget downsizing.

And the urgent need for job creation is on everyone’s mind.

That’s why the military contractors and their congressional allies are departing from the usual script to argue for more military spending. Instead of saying, as usual, that the Pentagon needs every penny to keep us safe, they’re saying it needs every penny to preserve jobs.

From the crowd that wants to shrink government because this will create jobs, we are now hearing that we can’t shrink the Pentagon because that would cost jobs.

Here are main points of their case, rebutted one by one.

Myth # 1: The military cuts will cost a million (or, according to the Pentagon, a million and a half) jobs.

You don’t need to get into the details of the many reasons to question these figures to recognize the big flaw: Cutting military spending will only cost jobs if nothing else is done with the money. As economists from the University of Massachusetts have shown, (findings recently corroborated by economists at the University of Vienna [i]) military spending is an exceptionally poor job creator.  Taking those cuts and investing them in other things—clean energy, education, health care, transportation—will all result in a net gain in jobs. Even cutting taxes creates more employment than spending on the military.[ii]

Myth # 2:  More Pentagon spending will create more jobs.

A researcher at the Project on Government Oversight recently exposed the shaky foundation of this argument. He found that since 2006 the largest military contractor, Lockheed Martin, has increased its revenues from military contracts, even as it was cutting jobs.[iii]

Myth # 3: Defense sequestration will gut our military industrial base.

Hardly. The Pentagon cuts contained in the budget deal will bring the military budget, adjusted for inflation, to where it was in 2006. Close to its highest level since World War II. More than the next 17 countries (most of them our allies) put together.[iv]

These cuts are easily doable, with no sacrifice in security, because they are being made to a budget that has nearly doubled since 2001.

Myth # 4:  The public is buying the myth.

President Obama is actually running an ad criticizing his opponent for advocating military spending increases. The clear pattern in recent polling shows that this is a smart move. Majorities agree military spending is too high.[v]

Myth # 5:  The military economy is part of the bedrock of our jobs base.

A researcher at the Project on Defense Alternatives looked at this one. He cited a Congressional Research Service study of aerospace employment. More than 500,000 Americans are employed in aerospace manufacturing. About two-thirds of this is commercial, however. Though the defense industry has worked hard to spread itself around for maximum political effect, more than half (61%) of the nation’s aerospace industry jobs are concentrated in six states.[vi]

By contrast, more than 8 million Americans are employed in education, law enforcement, fire fighting, and other emergency and protective services — working in every community in America.

The effects on the jobs base from cuts on the domestic side of the budget, in other words, will be much larger and more widespread than the effects of military cuts.

Myth # 6:  The military economy is part of the bedrock of our overall economic health.

Alan Greenspan, among many others, has contrasted spending on infrastructure, education, and health care with military spending. The former, he noted, strengthens the productivity—the performance—of the economy as a whole; the latter does not.

Military spending is like a family’s insurance policies, he said. The family should spend enough to insure against disaster, but not a penny more, because that family should put as much as possible toward increasing its well-being through education and other enhancements to its quality of life.

Myth # 7:  Military workers have already taken their share of the hits.

No. The global outplacement firm Challenger, Gray and Christmas tracks layoffs month by month. For the past three years, while military spending has absorbed more than half of the discretionary budget (the part Congress votes on every year), the private sector contractors it supports have absorbed an average of only 4% of the nation’s job loss. See this spreadsheet (docx).

During those three years, the defense industry laid off a total of 106,000 workers. During the same period, state and local governments laid off more than 500,000 workers.

Myth # 8:   The political campaign against sequestration is consistent with the dominant economic philosophy of the politicians doing the campaigning.

No again. The free marketeers who think shrinking government will create jobs are preaching that the Pentagon budget can’t be shrunk because this will cost jobs.

Congressman Barney Frank has summed up nicely what they are asking us to believe: “that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation.”

Myth # 9:  The contractors have their workers’ interests at heart.

If they did, they might narrow the gap a bit between the CEO’s and the average worker’s salary.  For Lockheed Martin (CEO: $25 million[vii]; average worker: $58,000[viii]) this gap is more than 400 to 1.

Myth # 10:  Sequestration will force contractors to warn most of their workers of an impending layoff. 

Lockheed is threatening to send these notices a few days before the November election.  The argument for this bit of political blackmail is that since the cuts aren’t specified, all workers are at risk.  While Lockheed claims these notices are required by law, the Labor Department, i.e. the controlling legal authority, says they are not.

In fact, as researchers from Win Without War and the Center for International Policy recently pointed out,[ix] the defense and aerospace industry is sitting on a pile of cash from yet another year of record revenue and profits in 2011.[x] Lockheed alone has $81 billion in backlogged orders, and more coming in.[xi] They have it a lot better than most companies.

And this cushion gives them time to plan for the downsizing, and keep the workers they profess to care about employed, by developing new work in other areas. See Fact Sheet: Replacing Defense Industry Jobs for some ideas on how.

Footnotes

[i] https://www.dropbox.com/s/6s4ix8muj2kmhhx/a%20non%20linear%20defense%20growth%20nexus.pdf

[ii] http://www.peri.umass.edu/236/hash/0b0ce6af7ff999b11745825d80aca0b8/publication/489/

[iii] http://pogoblog.typepad.com/pogo/2012/08/defense-contractor-time-machine-less-spending-more-jobs-analysis-reveals.html#more.

[iv] http://www.usnews.com/debate-club/should-congress-repeal-the-scheduled-cuts-to-defense-spending/7-reasons-to-keep-the-defense-budget-sequestration-cuts

[v] http://www.slate.com/articles/news_and_politics/frame_game/2012/08/obama_s_ad_against_military_spending_have_polls_shifted_on_the_defense_budget_.html?utm_medium=referral&utm_source=pulsenews

[vi] “US Aerospace Manufacturing: Industry Overview and Prospects,” Congressional Research Service, December 3, 2009. http://www.fas.org/sgp/crs/misc/R40967.pdf.

[vii] http://www.businessinsider.com/the-highest-paid-ceos-at-the-largest-us-based-financial-companies-2012-6#2-george-roberts-kkr-49

[viii] http://www.peri.umass.edu/236/hash/0b0ce6af7ff999b11745825d80aca0b8/publication/489/

[ix] http://www.huffingtonpost.com/william-hartung/lockheed-martin_b_1625183.html

[x] http://www.pwc.com/en_US/us/industrial-products/assets/pwc-aerospace-defense-review-and-forecast.pdf

[xi] http://online.wsj.com/article/BT-CO-20120620-709424.html

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August 17, 2012 Posted by | Deception, Economics, Mainstream Media, Warmongering, Militarism, Timeless or most popular | , , , | Leave a comment

India joins Japan to resume shipping of Iranian oil

MEHRNEWS | August 15, 2012

India has joined Japan in offering government-backed insurance for ships carrying Iranian crude in order to bypass European sanctions, the Washington Post reported.

The first Indian ship to carry oil from Iran with Indian insurance is scheduled to load up in Iran on Wednesday, a shipping company executive said. This is a breakthrough for the Indian government, which has scrambled to maintain vital Iranian oil imports after European sanctions blocked third-party insurance in July.

The MT Omvati Prem — a tanker contracted to carry 85,000 metric tons of crude oil from Iran for Indian state refiner Mangalore Refinery and Petrochemicals Ltd. — is scheduled to arrive in India by Aug. 25, said Kowshik Kuchroo, president of shipping for Mercator Ltd., an Indian shipping company.

“This being a government of India cargo, it has a different sense of importance. We’re not doing it just for business,” Kuchroo said Monday. “India is in definite need of the crude. At a short notice, we can’t just snap the supply.”

Mercator is insuring the ship with $50 million in hull and machinery insurance, which covers physical damage to the ship, from state-owned New India Assurance Co. It’s insuring the vessel with another $50 million in protection and indemnity insurance, which covers a broad range of liabilities, including environmental pollution and cargo damage, from government-backed United India Insurance.

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August 15, 2012 Posted by | Economics, Wars for Israel | , , | Leave a comment

‘Unilateral sanctions against Iran could damage Russian-US ties’ – Foreign Ministry

RT | August 13, 2012

The Foreign Ministry has warned of a possible blow to Russian-American relations if the US pursues unilateral sanctions against Iran that affect Russian economic interests there.

“Washington should understand that our bilateral relations will suffer considerably if the American restrictions affect Russian economic entities cooperating with partners in the Islamic Republic of Iran in strict compliance with our legislation and UN Security Council resolutions,” the ministry said on its website on Monday.

Late Friday, US President Barack Obama signed into law new sanctions against Iran which aims to penalize those parties aiding Iran’s insurance, financial, petroleum, petrochemical and shipping sectors.

Moscow considers US sanctions against Iran unacceptable, Foreign Ministry spokeswoman Mariya Zakharova said on Monday.

“Russia is fully committed to the restrictions on cooperation with Iran that were established by the UN Security Council,” the spokeswoman said. “However, we do not recognize the unilateral sanctions that were imposed by Washington on the plea of serious concern about Iran’s nuclear program and run counter to international law.”

Zakharova called US efforts to punish countries that do business with Tehran “blackmail.”

“We refute methods of undisguised blackmail,” she said, “which is used by the US towards banks and companies of other countries.”

Earlier, the US passed legislation that targets any party doing business with Iran’s central bank.

Russia has cooperated with Iran in economic projects in the past, including in the Bushehr nuclear plant, which started adding energy to Iran’s electricity grid in September, 2011.

The United States is one of several countries, including Israel, that is concerned that Iran may be trying to develop a nuclear weapon under the cover of a civilian energy program.

Tehran has strongly rejected the accusations, saying it is pursuing nuclear energy for civilian purposes only.

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August 13, 2012 Posted by | Economics, Progressive Hypocrite, Wars for Israel | , , , , | Leave a comment

Iraqi ambassador to Iran calls for closer economic ties

Press TV – August 12, 2012

Iraqi Ambassador to Iran Mohammad Majid al-Sheikh says there is a huge capacity for development of financial transactions between the two countries.

“Given the friendly and brotherly relations between the two neighboring countries and hundreds of kilometers of shared borders, there are many potentials for boosting bilateral trade ties,” he told IRNA on Sunday.

He noted that Iran-Iraq trade transactions amounted to $7 billion in 2011, and hoped that the number would rise to $10 billion in the near future.

He said that a high-ranking Iraqi delegation is to visit Tehran this Tuesday in order to further commercial relations.

Headed by Deputy Prime Minister Rozhi Nouri Shawis, the delegation will include Finance Minister Rafe al-Essawi, Trade Minister Khairullah Hassan Babakr, Industries and Mines Minister Ahmad Nasser Deli, and Governor of the Central Bank Sinan Al-Shabibi, the ambassador stated.

Al-Sheikh added that setting up an Iraqi bank in Iran will be on the delegation’s agenda.

“Establishing an Iraqi bank [in Iran] can greatly help enhance bilateral economic and commercial relations,” he underlined.

August 12, 2012 Posted by | Economics | , | Leave a comment

Resolving the Budget and Debt Crises

By Ron Forthofer | Dissident Voice | August 10th, 2012

There is a looming double whammy threatening the economy beginning in 2013. These two threats are: 1) the expiration of the Bush tax cuts; and 2) implementation of $1.2 trillion in automatic spending cuts over a ten-year period, an outcome of the 2011 debt ceiling debacle.

These threats raise the specter of driving the U.S. back into recession or depression. Many people might question the phrase ‘back into recession’ since they feel we are still in the Great Recession.

Unsurprisingly, in most of these negotiations over the deficit and long-term debt, corporate-funded pundits and politicians focused on the need for more budget cuts. However, some strong special interests are now raising concerns about the agreed upon cuts. In particular, the Congressional-military-industrial (CMI) complex strongly opposes the additional $600 billion in cuts to the military budget that are mandated over a ten-year period. Given that the U.S. spends as much on its military as most of the rest of the world combined, these cuts certainly seem justifiable. The CMI complex now wants more cuts to programs benefiting the public instead of cutting unnecessary weapons programs or closing many of the hundreds of unnecessary military bases spread worldwide.

Instead of the politicians’ focus on budget cutting, numerous polls of Americans support raising revenue by increasing taxes on the wealthy. Despite our clear wishes, increasing the federal revenue has received relatively little attention from the pundits and politicians. However, at least the White House is pushing for elimination of the Bush tax cuts for those making over $250,000. The elimination of this cut would be a start along a path that could eliminate the deficit and shrink the debt.

Most Americans don’t realize how changes in the tax code affected our nation’s fiscal health. For example, the corporate share of federal taxes went from an average of roughly 28% in the 1950s to an average of about 10% over the 2001 to 2010 period. In addition, the top marginal individual tax rate dropped from 91% in 1954 to 35% today. Cuts in the top capital gains taxes for long-term gains from 28% to 15% also primarily benefited those at the top of the income ladder.

These huge cuts pushed by the extremely wealthy have done immense damage to our nation’s financial outlook as well as greatly increasing inequality. For example, the top 1% now hold about 35% of the nation’s wealth compared to the bottom 50% holding about 1.1%.

Some steps that would go a long way towards restoring our nation’s fiscal health and reducing our shameful inequality are the following:

  • implementing a small tax on the wealth of the top 1%;
  • adding a small fee on financial speculation;
  • creating a highly progressive income tax with many categories and a top marginal rate of at least 70% on incomes over $1,000,000;
  • restoring the estate tax with estates under $3.5 million exempted;
  • removing loopholes in the corporate tax code that allow many large global corporations either to get refunds, to pay no taxes, or to pay effective tax rates far lower than the official rate of 35%;
  • eliminating corporate welfare at the federal and state levels that basically benefit large global corporations at the expense of small businesses and the public;
  • removing the cap on wages taxed for Social Security and also subjecting unearned income to taxes for Social Security;
  • enacting Medicare for all;
  • stopping illegal aggression against other nations;
  • withdrawing from Afghanistan in a timely manner;
  • ending the harmful, costly and failed war on drugs; and
  • cutting military spending, particularly for weapons programs, unnecessary military bases and the costly privatization of many tasks.

Some may view these steps as class warfare against the wealthy. However, if you examine these proposals, you can see that the wealthy have already been engaged in class warfare against the rest of us for well over thirty years. According to the media though, it is not class warfare if the wealthy do it. Warren Buffet addressed this idea a few years ago: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

The Congressional Progressive Caucus has also proposed a less daring plan, “The Peoples’ Budget”, as another way of eliminating the budget deficit. For related information, read the just published The Betrayal of the American Dream by Donald Barlett and James Steele.

~

Ron Forthofer is a retired professor of biostatistics from the University of Texas School of Public Health in Houston and was a Green Party candidate for Congress and also for governor of Colorado.

August 10, 2012 Posted by | Economics | , | Leave a comment

Judge Begrudgingly OKs Morgan Stanley Derivatives Price-Fixing Settlement

By Noel Brinkerhoff | AllGov | August 09, 2012

Morgan Stanley got off easy, according to consumer advocates, when a federal judge reluctantly approved a $4.8 million settlement involving price fixing in the electricity market.

The agreement resolved accusations that Morgan Stanley had gotten into a complex swap arrangement with KeySpan Corp. through which it gained a stake in the profits of its competitor Astoria Generating Company Acquisitions. The scheme allowed KeySpan to bump up the cost of electricity in New York, taking approximately $300 million out of consumers’ pockets.

Other than paying just under $5 million, which represented less than a quarter of its earnings from the scheme, Morgan Stanley did not have to admit any wrongdoing.

Judge William H. Pauley III said he had “misgivings” about the size of the penalty, saying, “$4.8 million is a relatively mild sanction.”

“There is a risk that a large financial services firm like Morgan Stanley could view such a modest penalty as merely the cost of doing business,” Pauley added.

Peter Vallone, a councilman who represents the Queens district that hosts KeySpan’s facilities, was irate over news of the settlement. “Here, they’re allowed to keep what they stole,” Vallone told Courthouse News. “That is ridiculous…. This is pocket change for them.”

The AARP and New York’s Public Service Commission objected to the settlement. They said Morgan Stanley should have been forced to admit what they did was wrong and pay $21.6 million, the amount it made off the deal with KeySpan Corp.

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August 10, 2012 Posted by | Corruption, Economics | , , , | Leave a comment

Adam Davidson’s Journalistic Corruption: NPR Host Boosts for Wall Street, While Taking Undisclosed Banking Money

By Yasha Levine and Mark Ames • S.H.A.M.E. • August 8, 2012

“I feel like the voice of business journalism is sort of, it’s an authoritative voice of God.”

—Adam Davidson

Adam Davidson is the co-creator and host of the popular economic news radio program Planet Money. On air, Davidson plays the role of an earnest, brainy reporter who’s doing his best to make sense of the complicated, jargon-filled world of finance to report business news in a way that NPR listeners can understand. However, behind the dweeby, faux-naive facade Adam Davidson presents to his listeners, is a shrewd propagandist with a long, consistent history of shilling for powerful and destructive interests—and failing to disclose his financial ties to the companies and industries he reports on.

Over the years, Davidson has boosted for the Iraq War and whitewashed the occupation of Iraq, praised sweatshop labor and “experimenting on the poor,” attacked the idea of regulating Wall Street, parroted libertarian propaganda about the government’s inability to directly create jobs, argued for “squeezing the middle class,” and shamelessly fawned over Wall Street for allegedly blessing Americans with “just about anything that makes you happy.” (Read Adam Davidson’s full S.H.A.M.E. profile.)

While Adam Davidson has recently come under increasing scrutiny for using his NPR platform to promote the narrow interests of the super-wealthy in this country, little attention has thus far been given to Davidson’s corruption—his numerous financial conflicts of interest that seriously undermine his claims to being a journalist, and instead reveal Davidson as a glorified product spokesman for his Wall Street sponsors.

Adam Davidson gained national media recognition as an on-air personality in 2008, after co-producing an episode for This American Life called “The Giant Pool of Money” about the implosion of subprime lending. Although Davidson’s segment was praised for making the murky world of finance easier to understand, his framing of the subprime housing debacle served another purpose: It let Wall Street off the hook for its role in rampant criminal mortgage fraud and predatory lending.

“This was a crisis that was caused by willing participation of every single person. Nobody was coerced,” said Davidson’s co-producer and partner in Planet Money, Alex Blumberg. “And there was fraud. But that was not what caused the crisis. What caused the crisis was something bigger and more systemic that required the involvement of everybody at every step.”

This evasion-by-exaggerating-the-complexity strategy is one that Davidson and Planet Money have deployed often to whitewash and deflect the role of criminality in the housing crisis. Among the show’s fans was Treasury Secretary and former New York Federal Reserve Bank chief Timothy Geithner: “Yeah, they did a good job.”

As a piece of journalism, Davidson’s report on the subprime fraud was a failure bordering on journalistic malpractice. By absolving the role of rampant predatory criminality and spreading blame in a grand false equivalency, Davidson provided a narrative frame that comforted the American Establishment at a time when it badly needed comforting, and was duly rewarded for his services. The mainstream media joined Timothy Geithner in lavishing praise on Davidson’s subprime fraud whitewash, and awarded him and his partner with the prestigious “Peabody Award” while New York University’s Journalism Institute named the segment one of the “Top Ten Works of Journalism of the Decade.”

Thanks to this broad acceptance and praise of Davidson’s whitewash, he was given his own show, which launched just as the entire financial system began to meltdown.

The new show, called Planet Money, was a partnership between NPR and Chicago Public Media’s This American Life, and was molded on Davidson’s successful subprime episode. Not surprisingly, Planet Money was compromised almost from the very start.

In early 2009, just a few months after Planet Money was launched, NPR announced it had secured Ally Bank (formerly GMAC) as the show’s exclusive sponsor. It was an unusual setup for NPR, and unusual (and highly dubious) for anything that called itself journalism, because it meant  that a major, troubled financial institution was the only source of money for a news program about finance. At the time that the unusual agreement was signed, Planet Money was the only NPR program underwritten by a single exclusive sponsor. The arrangement raised eyebrows and would have been unthinkable before the crisis—but even by post-crisis funding arrangements, Planet Money’s deal with Ally Bank stood out as such an obvious violation of basic journalism standards that even Ad Age, the advertising industry’s trade publication, was taken aback by the “close alignment of message and news program.”

To understand why Davidson’s arrangement with Ally Bank is so odious, a little background is needed. Ally Bank is a subsidiary of Ally Financial, a giant financial services company formerly known as GMAC. There’s a good reason why GMAC would have wanted to change its name to “Ally Financial” after the financial collapse: The bank is one of the biggest mortgage servicers in the country, and has been one of the very worst offenders in foreclosure fraud and in the very same subprime fraud that Davidson whitewashed as a “blameless” phenomenon. GMAC deserves far more blame—and jail time—than any of the subprime borrowers it fleeced and ruined. Since GMAC collapsed in late 2008, it has received more than $17 billion of taxpayer bailout funds in a series of bailouts. As of August 1, 2012, 74% of Ally Financial was still owned by the U.S. Government. [ 1 ]

At the time Ally signed its sponsorship agreement with Planet Money, the bank was being investigated across the country for foreclosure fraud, robo-signing fraud, and student loan fraud. Even as bad bailed-out banks go, GMAC/Ally is considered one of the worst, most tainted of them all.

GMAC goes from thief to Ally…

Planet Money‘s relationship with Ally is a textbook example of “conflict of interest” of the sort every journalist is taught to shun. The bank had a clear and demonstrable interest in Planet Money‘s coverage of the financial industry, especially issues that affected the bank’s bottom line. As Planet Money‘s sole sponsor at a time when NPR funds were falling, Ally obviously wielded considerable power.

After Davidson sprang a vicious and bizarre smear-attack on Elizabeth Warren in 2009, some NPR listeners started to get wise to Planet Money‘s corruption problem, and made their concerns known. Following months of complaints from readers pointing to the conflict-of-interest and the way Planet Money‘s segments dovetailed with the banking lobby’s own propaganda—and with Ally’s interests—NPR’s Ombudsman was forced to issue a public statement on the Ally-Planet Money relationship. Perhaps not surprisingly, the NPR Ombudsman decided that listeners’ concerns over the conflict-of-interest were “cynical”—as if the problem lay in listeners’ psychology, rather than in Planet Money’s violation of basic journalism ethics. The NPR Ombudsman went further, arguing essentially that if listeners who complained about corruption weren’t cynical, then they were ignorant.

Despite Davidson’s long experience in sales and underwriting for public radio, he claimed he was out of the loop when it came to the deal his own show, Planet Money, cut with its sole sponsor, Ally Bank: “I have nothing to do with the underwriting stuff. We don’t pay any attention to the fact that they are a sponsor. We wouldn’t for a second give them any special treatment — positive or negative.”

And yet, the actual record proves that NPR readers were right to suspect and criticize the arrangement, and that Davidson was wrong in claiming that Planet Money has not consistently pushed a narrative so in synch with Ally Bank and the financial industry that it boggles the mind how he has gotten away with it. Planet Money coverage hasn’t just been friendly to banks and the finance industry in general—some of it has been suspiciously lined up and in synch with specific policy priorities of its exclusive sponsor, Ally Bank.

One example: In 2009, just as Planet Money inked its exclusive sponsorship deal with Ally Bank, Davidson began broadcasting a number of segments critical of the proposed Financial Consumer Protection Agency Act of 2009, questioning the need  to regulate consumer financial products like mortgages and credit cards in order to protect people against bank fraud. “Will it work at all?” Davidson asked in one of his fake “gee-whiz” questions. “Is this just one more layer of regulation in a regulatory system that fundamentally broke down?”

In May 2009, in the heat of the banking industry’s massive pushback, Davidson essentially mugged Elizabeth Warren, the chief architect of the financial consumer protection bill, in an interview that took a sharp and bizarre hostile turn early on. Davidson surprised Warren and his own listeners with uncharacteristic personal smears, trying to portray her as a clueless, power-hungry ideologue. Davidson’s attack on Warren was so out-of-line and uncharacteristically hostile that it sparked a torrent of criticism from NPR listeners who couldn’t understand why Davidson or NPR would do such a thing. Keep in mind, this was in the spring of 2009, when unemployment was still shooting through the roof, the future of the economy was in doubt, and talk of a 1930s style Great Depression-2 was still front-and-center.

It’s worth going back and listening to the interview to get a sense of just how malevolent Davidson really was, and is. Here’s an excerpt, courtesy of Corrente:

ADAM DAVIDSON: What it feels to me is what you are missing is that — I think we put aside your pet issues. We put them aside. We put them aside until this crisis is over.

ELIZABETH WARREN: The cr– What you’re saying makes no sense. Now come on. [interpolate Davidson sputtering and attempting to interrupt throughout.] It makes no sense. On an emergency basis, on one day, one week, one month, there’s no doubt in my mind we’ve got to step in, we’ve got to make sure we have a functioning banking system. I think I’ve said that like nine times now. Of course we’ve got to have a functioning banking system.

DAVIDSON: Wait a minute. I want to make you go farther. I want to make you madder before I —

ELIZABETH WARREN: No no no. [Davidson snickers] We’re now at what — we’re now seven, eight months into this. And it’s the second part of what you said. We can’t do anything about the American family until this crisis is over? This crisis will not be over until the American family begins to recover. [More Davidson sputtering.] This crisis does not exist independently —

DAVIDSON: That’s your crisis.

ELIZABETH WARREN: No it is not my crisis! That is America’s crisis! If people cannnot pay their credit card bills [Davidson tries to interrupt] if they cannot pay their mortgages —

DAVIDSON: But you are not in the mainstream of views on this issue. You are not —

ELIZABETH WARREN: What, if they can’t pay their credit card bills the banks are gonna do fine? Who are you looking at?

DAVIDSON: The [sputters]–

ELIZABETH WARREN: Who says a bank a bank is going to survive — Who is not worried about the fact that the Bank of America’s default rate has now bumped over 10%? That’s at least the latest data I saw. So the idea that we’re going to somehow fix the banks and then next year or next decade we’re going to start worrying about the American family just doesn’t [Davidson talking over] make any sense.

DAVIDSON: The American families are not — These issues of crucial, the essential need for credit intermediation are as close to accepted principles among every serious thinker on this topic. The view that the American family, that you hold very powerfully, is fully under assault and that there is — and we can get into that — that is not accepted broad wisdom. I talk to a lot a lot a lot of left, right, center, neutral economists [and] you are the only person I’ve talked to in a year of covering this crisis who has a view that we have two equally acute crises: a financial crisis and a household debt crisis that is equally acute in the same kind of way. I literally don’t know who else I can talk to support that view. I literally don’t know anyone other than you who has that view, and you are the person [snicker] who went to Congress to oversee it and you are presenting a very, very narrow view to the American people.

The Columbia Journalism Review described the Planet Money interview as a “disaster” and  “really cringeworthy stuff from Davidson,” who was so rude and unprofessional that NPR’s Ombudsman was forced to issue a public apology for his behavior. Davidson’s excuse: he had been traveling for a NPR fundraiser and was “very, very tired.”

What Adam Davidson did not disclose to the public was that at the same time he was smearing Elizabeth Warren and attacking legislation that would protect consumers against the sort of bank fraud that has devastated millions of Americans, Ally Bank, the sole sponsor underwriting Davidson’s Planet Money show and his salary, was simultaneously spending hundreds of thousands lobbying against the  Financial the Consumer Protection Agency Act of 2009.

Evidence: Here’s just one of GMAC’s lobbying disclosure forms mentioning the Consumer Financial Protection Agency Act of 2009

Ally Bank is not the only financial company funding Adam Davidson’s career, and filling up his bank accounts.

On top of Ally Bank’s exclusive sponsorship of Planet Money, Davidson earns lucrative speaking fees from banks and financial companies, including J.P. Morgan, Well Fargo, Bank of America and Goldman Sachs—the same companies he covers as a journalist. Davidson is frequently the only journalist/reporter booked to speak at these events; other speakers usually work in finance.

Davidson has yet to disclose his corporate clients and how much they pay him, but here is a partial list of Davidson’s speaking gigs from the last two years compiled from various publicly available sources:

  • In April 2011, Davidson was the headlining speaker at the 9th Annual “Women’s World Banking” Microfinance and the Capital Markets Conference. The conference was hosted by J.P. Morgan, but the organization itself is funded by the world’s biggest banks and corporations, including BP, Morgan Stanley, Pfizer, Barclays Capital, VISA, ExxonMobil—just to name a few.
  • In 2011, Davidson spoke at another microfinance conference, this once was also funded by Morgan Stanley, Citi, Bank of America, Deutsche Bank and CapitalOne.
  • In 2012, Davidson spoke at the 27th Annual Conference for the Treasury & Finance Professional. Sponsors of the event included Bank of America, BlackRock, BNY Mellon, Bloomberg, Citibank, Findelity Investments, Goldman Sachs, J.P. Morgan, Morgan Stanley, Well Fargo and about a dozen of the most powerful financial the largest financial companies in the world.

These speaking fees are a huge unaddressed problem in news media and academia. As explained by Charles Ferguson, director of Inside Job and author of Predator Nation, the problem with speaking fees is that they are “sometimes used to launder or disguise payments . . . for lobbying and policy advocacy.” That is why, for example, Obama’s former economy czar Larry Summers was roundly criticized for taking hundreds of thousands of dollars in speaking fees in 2008 from the same banks he was bailing out in 2009.

Chicago Public Media, which co-owns “Planet Money” through its ownership of “This American Life”, explicitly bars conflicts-of-interest: “WBEZ journalists must uphold the trust of the public by not overlapping individual interests with professional responsibilities. WBEZ journalists may not accept any form of compensation from the individuals, institutions or organizations they cover.”

Neither NPR nor This American Life would comment on S.H.A.M.E.’s investigation into Adam Davidson’s conflicts of interest. We will be seeking to get comment from Davidson’s other employer, The New York Times, about their policy on journalists having conflicts-of-interest.

Notes

See Naked Capitalism’s coverage of GMAC/Ally’s mortgage fraud.

August 8, 2012 Posted by | Corruption, Deception, Economics, Mainstream Media, Warmongering, Timeless or most popular | , , , , , , | Leave a comment

South Korea resumes Iranian oil supplies

RT | August 8, 2012

South Korea, the fourth largest importer of Iranian crude, plans to resume purchases after a two-month pause due to a European Union embargo.

­South Korean refiners and the National Iranian Tanker Company (NITC) are negotiating the details of a deal, which would allow supplies to restart from September, Reuters reported citing government sources. Tehran offered to deliver crude in its own tankers and provide up to $1 billion shipment insurance cover.

SK Energy and Hyundai Oilbank – the only two South Korean refiners that import Iranian crude, have confirmed that they are involved in negotiations with NITC. Though it’s unclear whether Iran had offered South Korea a discount for crude.

South Korea, India, Japan and China are the biggest importers of Iranian crude, accounting for more than half of its oil exports. In May, Seoul announced it would halt crude import from the Islamic Republic, becoming the first major importer of Iranian oil to give up supplies due to the EU sanctions.

EU sanctions banning Iranian oil as well as insurance affect Asian customers as they rely on EU companies to insure their shipments. Nearly 90% of the world’s tanker fleets are covered by 13 international P&I clubs from the EU.

Meanwhile Japan approved providing $7.6 billion insurance coverage for Iranian tankers, while China offered to use its own vessels for delivery. India has given permission to its state-run refiners to import Iranian oil on condition Tehran arranges insurance.

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August 8, 2012 Posted by | Economics, Wars for Israel | , , , , , | Leave a comment

Sudan, South Sudan agree on oil deal

Al Akhbar | August 4, 2012

Sudan and South Sudan have hammered out a deal on how to share their oil wealth, one of a series of disputes that brought the rivals to the brink of all-out war earlier this year, it was announced on Saturday.

“The parties have agreed on all of the financial arrangements regarding oil, so that’s done,” African Union (AU) mediator Thabo Mbeki said early on Saturday after talks in the Ethiopian capital.

The two countries had faced an August 2 deadline set by the United Nations to resolve their differences on oil and borders, and Mbeki said they would meet next month to try to find a compromise on the disputed region of Abyei, whose status was the most sensitive issue left unresolved before South Sudan’s independence.

The former South African leader said a timetable would now be drawn up for the resumption of oil production and exports, which are vital to the economies of both deeply impoverished countries.

“What will remain, given that there is an agreement, is to then discuss the next steps as to when the oil companies should be asked to prepare for resumption of production and export,” he said.

The AU has been mediating long-running talks to try to resolve a series of disputes that have flared since South Sudan became independent in July 2011 following a 2005 peace deal that ended one of Africa’s longest civil wars.

Landlocked South Sudan took with it three-quarters of the oil held by the previously united nation, but the pipelines and processing facilities remained in Sudan.

And the two sides were unable to agree on how much Juba should pay to export its crude through a northern pipeline and port, leading the South to shut down production in January after Khartoum began seizing the oil in lieu of payment.

Oil generates about 98 percent of South Sudan’s revenue and the move crippled the economies of both countries.

Ahead of the agreement announced by Mbeki, Sudan had lowered its demand for oil fees from South Sudan. Sudan had been seeking up to $36 a barrel in fees, but in a position paper released on Thursday said it was proposing $22.20 a barrel, compared with $7.61 offered by South Sudan.

Despite the oil agreement, South Sudan’s chief negotiator Pagan Amum accused Khartoum of violating a peace plan drawn up by the African Union in April urging both sides to reach a comprehensive deal on all outstanding issues.

“The government of Sudan continues to violate the road map and continues to bomb South Sudan,” Amum told reporters.

“The (AU) peace and security council in its road map and resolution decided that they would impose sanctions on Sudan if they fail to comply, Sudan has failed to comply,” he said.

Mbeki’s announcement came hours after US Secretary of State Hillary Clinton called on the two Sudans to strike an urgent compromise on outstanding issues such as oil revenue sharing, security, citizenship and border demarcation, saying the countries “remain inextricably linked”.

Clinton’s comments came after a meeting with South Sudan’s President Salva Kiir in Juba as part of her tour of Africa.

Sudan accuses South Sudan of supporting insurgents on its territory, a charge that analysts believe despite denials by Juba, which in turn accuses Khartoum of backing rebels south of the border.

The two countries fought along their undemarcated frontier in March and April, sparking fears of wider war and leading to a UN Security Council resolution that ordered a ceasefire.

Mbeki said an agreement had also been reached between Sudan, the United Nations, the AU and the Arab League to allow for humanitarian access in the conflict-wracked Blue Nile and South Kordofan states.

Prolonged clashes between Sudanese forces and rebel groups in the two disputed territories have left thousands in a “desperate state” and in need of emergency aid, according to the United Nations.

(AFP, Al-Akhbar)

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August 4, 2012 Posted by | Economics | , , , , , | Leave a comment

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