News & Current Affairs

August 20, 2008

McCain and Obama spar over taxes

McCain and Obama spar over taxes

John McCain and Barack Obama

The economy and oil have been key issues for both candidates

Barack Obama’s senior economic adviser Austan Goolsbee has accused John McCain of proposing huge tax cuts for rich people and large corporations.

Mr Obama’s tax cuts for “ordinary Americans” would be three times larger than Mr McCain’s, he promised.

Mr McCain’s economic adviser, Doug Holtz-Eakin, countered that Mr McCain’s tax cuts would help firms create jobs.

Speaking to the BBC World Service, both advisers clashed on how to end the US dependence on foreign oil.

In a debate between both advisers on the Business Daily program, Mr Goolsbee said: “Barack Obama’s tax cuts for ordinary Americans are three times larger than John McCain’s.””The way that John McCain’s package ends up being three to four trillion dollars more is that they give humungous tax cuts to high income people and large corporations.”

Small firms

In fact John McCain has no plans for cuts in personal income tax. But he does propose to cut the rate of corporation tax from 35% to 25% in an effort to revive the ailing US economy.

Mr Holtz-Eakin told the BBC: “In this economy in the past six months with over 400,000 jobs lost we’ve seen the small businesses – those with less than 50 employees – add 283,000 jobs.”

He underlined the importance of not damaging those small businesses: “keep them in a position where they don’t have onerous health care costs and mandates to provide expensive benefits to their employees.”

Barack Obama says he will spend $50bn immediately to jump start the economy and introduce tax credits for working families.

He is also proposing to invest $150bn in clean energy over the next decade, creating 5 million new jobs.

Energy policies

Mr Goolsbee said the US had to make a commitment to wean itself off its dependence on oil.

John McCain believes that we have a dangerous exposure to imported oil
Doug Holtz-Eakin, economic adviser to John McCain

“It is the mentality of the past eight years to listen to the oil companies that got us into this mess and we have to have a different energy policy to get out of it.”

Mr Holtz-Eakin denied that John McCain would follow the same energy policy as George W Bush.

“John McCain believes that we have a dangerous exposure to imported oil,” he said.

“It is his primary objective to put the United States in a position where it is no longer strategically exposed by this dependence.

“The first and foremost objective is to change the way Americans drive,” he added.

Foreclosures

Mr Goolsbee warned that more Americans would lose their homes unless there were tighter controls on the mortgage industry.

He said failure to address the fundamental challenges of oversight of the housing market – an issue that Senator Obama identified 18 months ago – could prompt “a second wave of the foreclosure crisis in the United States.”

Mr Holtz-Eakin said that John McCain would not be afraid to speak out in favor of free trade, even at a time when American jobs were being lost.

“Globalization is an opportunity.”

However he added: “Not everyone automatically gains from globalisation, and we do have an obligation to help those workers who do not instantly benefit to get an opportunity for the future.”

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August 15, 2008

Nigeria cedes Bakassi to Cameroon

Nigeria cedes Bakassi to Cameroon

Bakassi villagers

Thousands of people have moved from their homes in Bakassi

Nigeria has handed over the potentially oil-rich Bakassi peninsula to Cameroon, bringing an end to a long-standing dispute over the territory.

The handover ceremony was moved from the peninsula’s main town to Calabar in Nigeria amid security concerns.

Over the past year about 50 people have been killed in clashes.

The majority of the local population considers itself Nigerian, but an international court ruled in favor of Cameroon in 2002.

There are unconfirmed reports that militants have attacked a boat traveling to Abana, the main town on the Bakassi peninsula.

Unresolved pain at Bakassi handover

Nigerian security sources said between three and seven people were killed when militants ambushed the boat as it made its way from Cameroon.

Correspondents say security had been beefed up ahead of the ceremony.

On the Cameroonian side, there have been celebrations as people moved back into the peninsula.

In recent years, at least 100,000 people have moved from the peninsula to Nigeria, local leaders say.

The International Court of Justice ruling was based on an early 19th century colonial agreement between Britain and Germany.

Nigeria challenged the ruling, but finally agreed to relinquish the territory two years ago.

“The gains made in adhering to the rule of law may outweigh the painful losses of ancestral homes,” said the head of the Nigerian delegation at the ceremony, Attorney General Mike Aondoakaa.

Part of the territory was handed over to Cameroon two years ago.

Revellers

A spokesman for Nigerian President Umaru Yar’Adua said the process was “painful… for everyone including the president”, but added that Nigeria had made “a commitment to the international community and we have a responsibility to keep it”.

Map

Cameroon said the final handover would mark “the end of a crisis”.

On the beaches of the northern part of the island there were parties and celebrations as Cameroonians prepared to go into the last section to be turned over to them.

“We are going straight to the place, and we’re going to be happy,” one reveller told in Bakassi.

But in Nigeria there is still bitterness about the deal.

“The government has abandoned its duties,” said Kayode Fasitere, the lawyer acting for some displaced from Bakassi who sought to have the handover delayed.

The transfer of Bakassi had been described by UN Secretary General Ban Ki-Moon as “a model for negotiated settlements of border disputes”.

A group of Bakassi leaders have been seeking compensation from the Nigerian government.

About 90% of the area’s population, estimated at up to 300,000, is made up of Nigerian fishermen.

About 30,000 of the residents have moved out to an area in Cross Rivers State set aside for them, but it has no access to the sea, campaigners say.

Bakassi has a rich fishing culture and people say the handover has destroyed their way of life.

The Bakassi peninsula juts out into the Gulf of Guinea close to the Niger Delta.

Its offshore waters are thought to contain substantial oil fields – untapped because of the border dispute – which Nigeria and Cameroon will now work together to explore.

August 8, 2008

Oil ‘could hit $200 within years’

Oil ‘could hit $200 within years’

Petrol pump

Rising oil prices push up the cost of other items such as petrol and plastics

A serious oil supply crisis is looming, which could push prices above $200 a barrel, a think tank has warned.

A “supply crunch” will affect the world market within the next five to 10 years, the Chatham House report said.

While there is plenty of oil in the ground, companies and governments were failing to invest enough to ensure production, it added.

Only a collapse in demand can stave off the looming crisis, report author Professor Paul Stevens said.

“In reality, the only possibility of avoiding such a crunch appears to be if a major recession reduces demand – and even then such an outcome may only postpone the problem,” he said in The Coming Oil Supply Crunch.

Lack of funding

Prof Stevens warned that investment in new oil supplies has been inadequate as oil firms prefer to return profits to shareholders rather than reinvest it.

Furthermore, oil producing cartel Opec has failed to meet plans to expand its capacity since 2005.

He also argued that a “resurgence of resource nationalism” means that governments are “starving” their national oil companies of investment by excluding international oil firms from helping to develop capacity.

“While the forecast is controversial and extremely bullish, even allowing for some increase in capacity over the next few years, a supply crunch appears likely around 2013,” he added.

“The implication is that it will quickly translate into a price spike although there is a question over how strategic stocks might be used to alleviate this.”

Unpopular measures

However, Prof Stevens does conclude that only “extreme policy measures could achieve a speedy response” in boosting supplies and lowering oil prices – a move that is likely to be “politically unpopular”.

Other, longer-term moves suggested by the report include offering support to help oil-exporters to manage “resource curse” – where an abundance of natural resources can damage a country’s economy – and allowing Opec to join the International Energy Authority’s emergency sharing scheme.

The report comes just days after oil prices slipped from peaks near $150 a barrel.

August 6, 2008

Arctic Map shows dispute hotspots

Arctic Map shows dispute hotspots

VIEW THE MAP
Durham University)
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British scientists say they have drawn up the first detailed map to show areas in the Arctic that could become embroiled in future border disputes.

A team from Durham University compiled the outline of potential hotspots by basing the design on historical and ongoing arguments over ownership.

Russian scientists caused outrage last year when they planted their national flag on the seabed at the North Pole.

The UK researchers hope the map will inform politicians and policy makers.

“Its primary purpose is to inform discussions and debates because, frankly, there has been a lot of rubbish about who can claim (sovereignty) over what,” explained Martin Pratt, director of the university’s International Boundaries Research Unit (IBRU).

“To be honest, most of the other maps that I have seen in the media have been very simple,” he added.

“We have attempted to show all known claims; agreed boundaries and one thing that has not appeared on any other maps, which is the number of areas that could be claimed by Canada, Denmark and the US.”

Energy security is driving interest, as is the fact that Arctic ice is melting more and more during the summer
Martin Pratt,
Durham University

The team used specialist software to construct the nations’ boundaries, and identify what areas could be the source of future disputes.

“All coastal states have rights over the resources up to 200 nautical miles from their coastline,” Mr Pratt said. “So, we used specialist geographical software to ‘buffer’ the claims out accurately.”

The researchers also took into account the fact that some nations were able to extend their claims to 350 nautical miles as a result of their landmasses extending into the sea.

Back on the agenda

The issue of defining national boundaries in the Arctic was brought into sharp relief last summer when a team of Russian explorers used their submarine to plant their country’s flag on the seabed at the North Pole.

A number of politicians from the nations with borders within the Arctic, including Canada’s foreign minister, saw it as Moscow furthering its claim to territory within the region.

Mr Pratt said a number of factors were driving territorial claims back on to the political agenda.

“Energy security is driving interest, as is the fact that Arctic ice is melting more and more during the summer,” he told BBC News. “This is allowing greater exploration of the Arctic seabed.”

Data released by the US Geological Survey last month showed that the frozen region contained an estimated 90 billion barrels of untapped oil.

Mr Pratt added that the nations surrounding the Arctic also only had a limited amount of time to outline their claims.

“If they don’t define it within the timeframe set out by the UN Convention on the Law of the Sea, then it becomes part of what is known as ‘The Area’, which is administered by the International Seabed Authority on behalf of humanity as a whole.”

August 5, 2008

US Gulf states prepare for storm

Weather forecasters in the US have warned that a tropical storm could gain near-hurricane strength winds before reaching Texas or Louisiana.

The National Hurricane Center (NHC) said Tropical Storm Edouard was crossing the Gulf of Mexico and could make landfall by Tuesday morning.

The governor of Louisiana declared a state of emergency as winds reached sustained speeds of 45mph (75 km/h).

Oil workers have left some offshore rigs but no damage has been reported.

Evacuations

A hurricane watch is in place from west of Intracoastal City, in western Louisiana, to Port O’Connor in Texas, south-west of Galveston.

About 6,000 residents of two communities in western Louisiana had been asked to evacuate low-lying coastal areas.

The mayor of Galveston has not ordered an evacuation but has asked residents and visitors to be prepared.

A storm is considered to be a hurricane once its winds reach an average speed of at least 74mph (119 km/h), according to the NHC.

The Louisiana Offshore Oil Port has stopped offloading tankers and two oil firms were evacuating workers from platforms, Reuters news agency said.

Chevron and Royal Dutch Shell said they were removing employees from rigs as a precaution, but both insisted that production had not been affected.

Oil prices dropped below $120 a barrel on Monday for the first time since early May as it appeared unlikely that the storm would significantly affect oil and gas facilities.

The Houston Ship Channel has also closed.

Hurricane Dolly

At 1300 CDT (1900 BST) Edouard was 145 miles (230km) south-southeast of Lafayette, Louisiana and 240 miles (390km) east-southeast of Galveston, Texas, a statement by the NHC said.

“Edouard could be nearing hurricane strength before reaching the coastline,” it added.

Rainfall of 3ins to 5ins (7.6cm to (12.7cm) was predicted in Louisiana, and up to 10 inches (25.4cm) in Texas.

With winds extending outwards from the centre of a tropical storm for 35 miles (56km), residents were braced for the second bout of severe weather to batter the Gulf’s coastline in a month.

On 24 July, a state of disaster was declared in 14 Texas counties when Hurricane Dolly lashed the state’s coast with winds of 100mph (161km/h).

The Gulf of Mexico supplies about 25% of the US’s crude oil.


Are you in Texas or Louisiana? How are you preparing for Tropical Storm Edouard? Send us your comments

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