August 5th, 2015

Groovy Kol

Iran, oil, and the game of the big players

Remember a year ago when the Brent Crude used to be 110 dollars a barrel? Well, now it's half of that, 55 dollars. And the WTI recently even reached 50. Way earlier than Iran had exported even one extra barrel of the black gold.

There'll be a lot of time before Iran starts exporting noticeable quantities of crude oil. First the drilling facilities and pipelines that've been shut down due to the embargo will have to be reopened. The experts estimate that Iran will be able to produce up to half a million barrels of crude daily by the end of 2016. To put this into perspective, OPEC produces 30 million. So don't count on Iran tiling the game any time soon.

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Godzilla, default

For a classic of two economic examples:

Two countries in the same overall region of Africa, both affected by the policies and misjudgments of British and Afrikaner Imperialism emerged in the wake of the Wars of National Liberation in the region. One of them, Botswana, is a country that was dirt poor and includes as much desert as a predictable analogy to Southwest Asian states. Yet, in the period since independence, Botswana capitalized on its human and natural resources to be one of the greatest economic success stories in Africa, and one of the few countries to actually leap up economic tiers. Botswana also to a much greater degree than in Zimbabwe relied on the free market and got out of the imperialist era with minimal warfare and dislocation caused by same, as well as rapidly transitioning to the rule of the people who actually lived there.

By comparison, Rhodesia cursed Zimbabwe with a legacy of ruinous warfare to establish an independent state and where the failure ended in promoting the rise of a hardline advocate of an old-model command economy, complete with central planning bureau, mass expropriation and expulsion of unliked residents, and has a dictator who uniquely among modern leaders actually has a Hitler mustache. Mugabe's Zimbabwe is a museum piece of old-school Stalinist methods as much as North Korea, but like North Korea is subsidized by neighbors who tend to prefer it limping along to cleaning up its mess after it totters over.

Given both started from relatively undesirable positions and that one is a unique globally case of splendid success and the other is a memorial to the older model societies usually shoved under the rug and accepted as no longer really existing today, why did one succeed and the other fail?

To me the questions of success and failure usually tend to be appraised on very relative terms at best, and the questions of standards of freedom and prosperity are applied more strictly to poor countries than they are to rich ones. Analyzed with the same kind of scrutiny applied to either Botswana or Zimbabwe, both the USA and EU would have major holes in their economy, so would Russia or China. As with a later post I intend to do on North and South Korea, I believe most of these questions also presume a single standard of evolution where people determine their own destinies, which as with Zimbabwe isn't entirely true of everywhere on the planet.

Where outside forces act with malevolent intent to people who live in countries, their fate is seldom happy in any legitimate sense.