November 5th, 2010

[LINK] "Phosphate: Morocco's White Gold"

Over at Bloomberg Businessweek, By Brendan Borrell and Daniel Grushkin have an extended article taking a look at how new discoveries of phosphates are increasing Morocco's dominance in that sector of the global economy.

In May 2009 a petite brunette from Paris wearing black heels scrambled up a pile of mine tailings on the outskirts of the Moroccan town of Khouribga. From up there, Béatrice Montagnier, a hotel specialist with the hospitality consulting firm Horwath, took in the view: parched plains scoured by bulldozers; an old warehouse baking in the sun; a jumble of two-story concrete block homes with a rectangular minaret beyond them. She spun around 360 degrees snapping photos with her pink cell phone and imagining the future: a planned 800-acre resort project that would attract visitors from around the world. How many hotel rooms would they need? she wondered. Should it be three stars or four? And where would the museum be going? There was one issue—project funding—about which Montagnier had no questions. The estimated $1 billion needed to build the resort would come from the ground beneath her feet.

Miners have been working in Khouribga for almost a century, but only now is the area poised to become central to the global economy. Back in the 1920s pioneers started tunneling through the earth here, digging through layers of sediment formed under an ancient sea, looking for phosphate-rich rock and occasionally plucking out the tooth of a 30-million-year-old shark. The phosphate extracted from the rock, used in fertilizer, detergent, food additives, and more recently lithium-ion batteries, sold for decades in its raw state for less than $40 per metric ton. Those days are gone. It's currently trading at about $130.

This is good news for King Mohammed VI, 47, who owns more than half the world's phosphate reserves. James Prokopanko, chief executive officer of Plymouth (Minn.)-based fertilizer giant Mosaic (MOS), has called Morocco the Saudi Arabia of phosphate, with all that implies about the King's power to influence prices and economies. Mohammed's strategy, by most accounts, is to drive the commodity's price higher yet—which means the cost of making everything from corn syrup to iPads will be going up as well.

People following Canadian economic news may have heard that the Canadian government recently defeated an Australian bid to take over Saskatchewan-based Potash Corp, itself a major producer of (along with potash) phosphate.

Phosphate, when used as fertilizer, is the irreplaceable engine powering modern agriculture, and its reserves are in decline almost everywhere except Morocco. Most phosphate mines, including those in the U.S., which produces 17 percent of the global supply, have been in a downward spiral for the last decade, running out of quality rock and hindered by environmental regulation. That has forced companies to look farther afield for additional supplies. Earlier this year, Mosaic spent $385 million for a 35 percent stake in a Peruvian mine to supply rock to its phosphate operations in the U.S. and South America. Meanwhile, Australia's mining giant BHP Billiton (BHP) has been threatening to take over Canada's PotashCorp (POT), a major supplier of both potash and phosphate.

[. . .]

The scale of Morocco's phosphate wealth was officially verified in September, when the International Fertilizer Development Center released its long-awaited update on global phosphate resources. Morocco's portion went from the 5.7 billion metric tons still cited in U.S. Geologic Survey reports, to 50 billion metric tons—85 percent of the world's total. Even with 170 million metric tons of concentrated phosphate changing hands each year, the Moroccans likely have at least 300 to 400 years of rock available. Talal Zouaoui, OCP's director of communications, won't agree or disagree with estimates, but says in an e-mail that Morocco has "significant reserves," and notes that reserves denote only those quantities that countries have discovered and deem economically viable to extract.

The article examines at length the relationship of phosphates to the Western Sahara issue. Quite apart from Morocco's imperial claims to that territory, the location of so many phosphate reserves on Western Saharan territory creates a disincentive for the Moroccan state to withdraw from that territory, and potential economic incentive for continued Moroccan settlement in that region. The potential impact of so much phosphate wealth on Morocco is also examined; one only hopes that it won't distort the economy overmuch.

Go, read.

[LINK] "The lightness of history in the Caucasus"

Over at Open Democracy, Thomas de Waal has an acute analysis about the ways in which the selective use of history is used to fuel conflict in the Caucasus, and the ways in which a broader, more accurate reading, could make things better.

I have been writing about the Caucasus for years but when I started in 2009 to research a short book about the region - which became The Caucasus: An Introduction (Oxford University Press, 2010) - even I was surprised by how some of the historical facts I learned challenged many of today’s dominant political narratives. Three examples make the point.

First, in Russia’s wars of 1820s against the Ottomans, Armenians and Azerbaijanis fought side by side in the Tsarist army. At that historical juncture, the Shi’a-Sunni divide overrode any notions of Turkic brotherhood. Alexander Pushkin himself witnessed the “Karabakh regiment” composed of Azeri cavalry in action outside Kars, and wrote an admiring poem dedicated to one of its officers, Farhad-Bek. That should caution against making any instant assumption about an eternal Azerbaijani-Turkish alliance, which often fuel political attitudes over the Nagorny Karabakh conflict (and which the Armenian-Turkish normalisation process, albeit thus far unsuccessful, has also somewhat shaken).

Second, the way that the Abkhaz-Georgian-Russian interrelationship has reshuffled since the 1850s challenges conventional wisdom. In the decades after Georgia fell was annexed by Russia in 1801, and increasingly throughout the 19th century, the Russian authorities ensured that Georgian aristocrats became loyal servants of the Tsar by allowing them to ascend the imperial career-ladder while keeping their noble status. At the same time, the Russians regarded the Abkhaz as wild pro-Turkish tribesmen and implacable enemies.

[. . .]

“Why should we care?”, you may ask. “Aren’t these historical examples merely interesting but irrelevant anecdotes when set against the immediate tensions and problems of the region?” I don’t believe so, for two reasons.

[... T]hese historical shifts suggest that there is nothing culturally determined about the smouldering conflicts of the Caucasus. It shows that they have nothing to do with “ethnic incompatibility” or “ancient hatreds”, but rather arise - and can fade - according to changes of interest or calculation; and it usefully refocuses our attention on the Soviet period and the two decades immediately preceding it.

[... T]he roots of the Caucasian conflicts lie here (or so I believe): not in the distant past but in the way the Soviet system stored up problems by smothering the political grievances amongst its constituent peoples with bribes and the threat of force, rather than genuinely arbitrating between them (which might have led to a culture of accommodation and flexibility). When the policeman from Moscow abandoned his post, everyone was left in a chronic sense of insecurity - and some saw the opportunity to grasp hold of deadly historical narratives that Soviet Caucasian intellectuals had been nurturing for decades. Bad history became the ammunition for feuding regional elites.

Go, read.

[LINK] "Yemen's ‘youth bulge’, unemployment: explosive mix"

As airlines and countries around the world subject Yemenis to intensified screening for fear of Yemeni-mounted terrorist attacks, it might be worth noting the underlying economic reasons for Yemen's parlous state.

Southern Yemen erupted again this past week - another flash in an ongoing, low-level rebellion against the government. International news reports have focused on the government’s siege of an alleged al-Qaeda stronghold, occurring against a backdrop of steady anti-government violence throughout the south.

[. . .]

In an office building in the capital Sanaa 20 young Yemenis sit in a circle, discussing their future. The men and women are all in their twenties, and have university degrees. Despite their enthusiasm and educational achievement, most are unemployed. These graduates of a vocational training programme run by the Yemen Education for Employment Foundation (YEFE) speak optimistically about their hopes of finding personally and financially rewarding employment, but they are also visibly frustrated by their lack of success thus far.

One student with a degree in civil engineering has applied to nearly every engineering firm in the capital, and hasn’t been able to find an internship, much less a job. Having faced repeated rejection, students describe themselves as “destroyed”, “pessimistic”, and “disappointed”.

Maeen al-Eryani, head of YEFE, explains that while the unemployment rate in Yemen is a staggering 35 percent, the reality is even harsher for youth.

[. . .]

Yemen’s high fertility rate, with an average of 5.4 children born per woman translates into one of the world’s largest population growth rates, at about 3 percent. About a quarter of Yemenis are aged 10-19, suggesting that the unemployment crisis for youth could get even worse in the medium term, and with 46 percent of the population under 16, the long-term picture is equally bleak.

“By 2020 there will have to be two million jobs created just to keep unemployment rates at controllable levels,” said al-Eryani. He said the “youth bulge”, combined with increasing unemployment, could destabilize the country. “Young people with no hope can be very volatile.”

In recent years the “youth bulge” theory has become a more common lens through which social scientists study conflict. In a report for the Council on Foreign Relations, Lionel Beehner wrote that countries with youth bulges “often end up with rampant unemployment and large pools of disaffected youths who are more susceptible to recruitment into rebel or terrorist groups. Countries with weak political institutions are most vulnerable to youth bulge-related violence and social unrest.”

Go, read.

[REVIEW] Dan Gardner, Future Babble

Dan Gardner, Future Babble
Originally uploaded by rfmcdpei
I wish i'd made it to Ottawa Citizen writer Dan Gardner's University of Toronto Scarborough event in support of his new book Future Babble: Why Expert Predictions Fail - and Why We Believe Them Anyway. It's one of those books that points out the obvious that needed explanation, pointing to an issue--here, the tendency of futurologists of all kinds to make predictions which turn out false but whose opinions and methods are still valued--and explaining why this tendency exists.

The central problem Gardner deals with is this. I like to know about what will happen in the future, you like to know what will happen, we all want to know. Will the Earth be deterraformed by climate change and other environmental catastrophes? What fashions will be in vogue in Paris and Moscow and New York City next year? Will nuclear war raze the Northern Hemisphere? Are the French really going to outnumber the Germans by 2050? When will we send a manned mission to Mars? Using ostensibly scientific frameworks, any number of smart people have created systems which aim to explain the future: Arnold Toynbee created a theory of civilizations that claimed to describe the past and predicted the creation of a totalitarian world-state, for instance, and Paul Ehrlich predicted mass famines in the 1970s. Neither prediction came to pass, and any number of other predictions by other people (smart or not) have also failed to come true. Why?

Chaos theory, Gardner points out, makes predictions which go too far out into the future impossible. As the Depeche Mode song goes, "everything counts in small amounts." I zig, here, and the next mayoral election in Toronto goes one way; I zag, there, I get hit by a car and never get elected ward councillor. Accounting for all the variables involved is impossible at the best of time, while the simplified theories used by these futurologists are even less capable. Certain predictions can be made in certain broad contexts--Gardner cites the knowledge that, based on births and migration this year, we know how many people will be 30 years old in 30 years time, and we can speculate on their marital behaviour and fertility regimes--but that's it. This is not a new fact.

Why do we believe the people who claim to know what will happen? Put it down to our primate brains. We just aren't as perfectly rational as we'd like to think we are, with tendencies to overlook inconvenient facts. Toynbee had to hack his schema to account for the fact that Islamic civilization began--not ended--with a universal empire, while Ehrlich kept postponing his doomsday, saying that it will come. How did these gentlemen get away with this? They had tremendous charisma, with the population at large if not with people with enough knowledge to critique their theories, with excellent presentation skills and good connections and the certainty that, in a confusing world full of threats, they knew what would happen. And they themselves believed that they'd know, again discounting inconvenient facts, indeed becoming upset if people pointed out their contradictions.

All this is a serious problem for people. Acting on the basis of mistaken theories could cause catastrophe: Ehrlich's suggestion that food-exporting countries stop exporting food to countries "doomed to fail" like Egypt and India would have created horrors where none happened. It is possible, Gardner emphasizes, to learn ways to think critically about the future, particularly by adopting the practice of radical doubt. George Soros did a good job predicting the world financial crisis, but in numerous interviews Soros has emphasized the fact that he looks not for proof that he's right, but rather for proof that he's wrong. (These critical thinking skills would be useful in domains apart from predicting the future, too, but that falls somewhat outside the scope of Future Babble.

I wish that I'd made it. It would have been great to hear Gardner speak, maybe even chat with him, perhaps even get my copy signed. I didn't, and I regret this. Future Babble still stands up quite well without his physical presence. Engagingly written, very well-sourced, and well-argued, I'd recommend this book for anyone who's interested in what we think about the future and how we can do better.

[DM] "On projections and predictions and their flaws"

I've a post up at Demography Matters, exploring the numerous flaws that Future Babble by Dan Gardner has indicated in long-term demographic projections. I'd like to think that we've made good, careful predictions--projections using numbers for the medium-term, predictions based on cultural patterns more useful for the longer term--but, mistakes aside, what will happen to our predictions when unexpected revolutions occur?

Go, read.