Geopolitical Quintet: Legal Status of Caspian Sea

Caspian Sea…is the world’s largest body of inland water—or what some would call a rather salty lake. The confusion has fuelled disputes over its legal status for nearly 30 years, as lakes and seas fall under different international legal regimes.

The Caspian sits at a strategic spot between Europe and Asia, and contains lucrative stores of oil, gas and fish, including the caviar-producing sturgeon. The Soviet Union and Iran had a clearly defined maritime border but, after the Soviet collapse, the appearance of independent Azerbaijan, Kazakhstan and Turkmenistan muddied the waters.

On August 12th the five littoral countries at last signed an agreement the Convention on the Legal Status of the Caspian Sea. The Caspian, says a Russian official, is to be treated as neither sea nor lake, but instead subject to a “special legal status”. While leaving some of the thorniest issues unresolved, the pact clarifies the maritime borders, enabling new oil, gas and pipeline projects to go ahead.

All five countries are to have 15 mile-wide territorial waters extending from their shores and another ten miles of exclusive fishing rights. The rest of the surface water will be common territory, but non-signatory states (e.g., the United States) may not deploy armed forces there. For Russia, this helps preserve its military dominance by retaining freedom of movement for its warships. (Russia has used the Caspian to launch missiles into Syria.)

The seabed and its resources, meanwhile, will be divided separately between the signatories. Russia, Kazakhstan and Azerbaijan already have agreements that split up the northern Caspian. Carving up the rest of the seabed will require further negotiations. The agreement also allows pipelines to be constructed with the consent only of the countries whose sectors they pass through. That might unblock a much-discussed Trans-Caspian Pipeline from Turkmenistan to Azerbaijan which Russia has long opposed.

Exceprts from Big Lake Small Sea: Russia’s Neighborhood, Economist, Aug. 18, 2018, at 44

Favorite of the West: Niger as Police State

Niger Soluxe hotel

Niger, a poverty-stricken nation perched on the southern belt of the Sahara, is rapidly being transformed into one of the world’s most strategic security hubs….“This place is a nest of spies,” said one contractor … “Below the radar, it’s become a key country for the West.”  A surge in financial assistance from European nations seeking to stem the flow of African migrants has made Niger the world’s largest per capita recipient of European Union aid…Western military forces operate from at least nine bases in Niger, government officials said…. The U.S. is finishing a large air base in Agadez, while the Central Intelligence Agency has begun flying armed drones from an airstrip outside the northern town of Dirkou, Nigerien officials said.

U.S. and European policy makers praise the government as a good partner that has welcomed foreign military personnel and slashed the migrant flow by almost 90% from 2015 highs. …Locals, nongovernmental organizations and opposition activists say the government is using international backing to neutralize dissent and embezzle millions of dollars in aid, charges the government denies. The opposition—backed by rights group Amnesty International—says President Mahamadou Idriss Issoufou, in power since 2011, is arbitrarily jailing activists and spending Western aid on bolstering his elite Presidential Guard…

Swaths of the nation’s centuries-old transportation economy—the movement of people and goods from West Africa through the Sahara—has essentially been criminalized by the EU crackdown on migration.  Some of the desert-dwelling Tuareg people, who have transported goods for centuries, are now smuggling weapons, men and money for cash-rich jihadist insurgencies. Migrants are dying in the desert in failed attempts to find new routes.

“The West is pleased because Niger’s government is a willing partner,but as Niger’s security chief, Mohammed Bazoum, says “We have become a hinge country, a geostrategic hub, but it is a disaster for us. We are known as a land of terrorism and migrant traffic.”

Across Niger’s western border with Mali, jihadist groups including Islamic State and al Qaeda franchises control stretches of territory around the northern city of Gao. Along the southern frontier with Nigeria, a rejuvenated Boko Haram is mounting intensifying attacks against security forces, including around the city of Diffa, where the U.S. has dozens of troops stationed. To the north lies Libya, which has become a hotbed of instability, weapons and radicalization.

The European Development Fund last year awarded $1 billion to Niger through 2020, and unusually for a country governance watchdogs deem chronically corrupt, 75% is now infused directly into the Nigerien budget instead of through nongovernmental organizations.The money funds hundreds of off-road vehicles, motorcycles and satellite phones for Nigerien security forces as well as new infrastructure and technology along the borders and countrywide development programs.

In Niamey’s central Plateau district, tall black screens block the soaring new U.S. Embassy headquarters, which will be one of the largest in West Africa. Saudi Arabia has broken ground on its own huge mission, while buildings belonging to EU agencies occupy whole city blocks. Hotels and conference centers are rising in tandem, reconfiguring the economic and political landscape of a nation ranked the world’s second-poorest behind the Central African Republic.

The government says the building boom is creating jobs. Locals say it has stoked runaway inflation and priced them out of their neighborhoods. In the past year, the cost of a kilogram of rice has risen 29%, sending shock waves through homes where the average wage is $2.66 a day.

“The cost to live here rises with each new European coming,” lamented Abdulraham Mamoudou, repairing his motor scooter on a dusty corner near the expanding U.S. Embassy compound.

A similar pattern is playing out further north in the smuggling hub of Agadez, where the EU-coordinated migration crackdown has transformed a boomtown into a simmering bust.  The city’s jails are bursting with men who have been convicted of smuggling. Vast depots on the town’s outskirts house hundreds of trucks confiscated by authorities…“This place is now for the Americans and French,” said Sadiq, a former migrant smuggler who evaded arrest and is now unemployed. “They took our livelihood and don’t give us anything in return.”

Excerpts from ‘A Nest of Spies’: Niger’s Deserts Become Front Line of Fight Against Jihadis, Wall Street Journal, Sept. 12, 2018

One Player, Many Pawns: the thirst for nuclear technology

The Hanhikivi plant in Finland will use Russian nuclear technology. model of the plant from wikipedia

The nuclear power industry, which had been in the doldrums since the 1980s, suffered a devastating blow in 2011 when a tsunami engulfed the Fukushima power plant in Japan, ultimately causing a meltdown. The amount of electricity generated by nuclear power worldwide plunged 11% in two years, and has not recovered since. Within this declining industry, one country now dominates the market for design and export of nuclear plants: Russia.

Rosatom, Russia’s state-owned nuclear-power company,  is focused on what some call the “great grand middle”: countries that are close allies of neither the United States nor Russia. In April Russia started building Turkey’s first nuclear plant, worth $20bn. Its first reactor is due for completion in 2023. Rosatom says it has 33 new plants on its order book, worth some $130bn. A dozen are under construction, including in Bangladesh, India and Hungary…. Once completed the plants offer an obvious diplomatic lever in the form of sway over a large portion of a country’s electricty generation… The relationship betweeen exporter and customer is particularly close in a nuclear plant’s early years, when local employees are still being trained and the exporting country is direclty involved in the plant’s operation….

Russia’s nuclear programme has endured for two main reasons. Its designs are cheap, and Rosatom enjoys the backing of the state, which helps it absorb hard-to-insure risks like nuclear meltdowns. Its competitors trail hopelessly: France’s Areva (now Orano) has started building only two plants in the past ten years, in Finland and China; both are delayed and over budget. KEPCO, South Korea’s energy company, is facing a domestic backlash against nuclear power, while Westinghouse, in America, is only now emerging from bankruptcy.

Russia’s only real competitor is China..Yet although China will surely catch up, for now Russia has no serious rivals in the export of nuclear technology. In a world that needs to generate much more electricity from nuclear power if it is to take decarbonisation seriously, that is a sobering though

Excerpts from  Atoms for Peace: Russia and Nuclear Power, Economist, Aug. 4, 2018, at 43

How Rivers Die

Kapuas river: Indonesia

Kapuas, Indonesia’s longest river support somes 3m people…One reason that the water is so murky is deforestation. Since the 1970s logging has enriched locals while stripping away the vegetation that held the soil in place. The Centre for International Forestry Research (CIFOR) found that between 1973 and 2010 over 100,000 square kilometres of forest was lost on Kalimantan, or a third of the original coverage. A national moratorium that began in 2011 has done little to still the axes. As a result, torrential tropical rains wash lots of loose earth into the Kapuas.

Illegal gold-mining compounds the problem. Locals tear up the riverbed with diggers or blast the banks with high-pressure hoses, then sieve the mud for gold. Mercury, which the miners use to separate gold from sediment, but which is poisonous to humans and fish alike, leaks into the river.

The riverbank is punctuated with corrugated-iron towers, which emit birdsong from loudspeakers. These are designed to lure swiftlets, who make their nests with saliva. The nests of swiftlets  are considered a delicacy and aphrodisiac by many Chinese.* Deane, a shop owner, built his tower last December after seeing others do the same. He sells the nests to a wholesaler for about 15m rupiah ($1,025) a kilogram…

In Kapuas Hulu, an upstream district, half the population rely on the river for drinking water. A quarter have no toilet. Even where bathrooms do exist along the river, they are often floating cubicles with a hole in the floorboards. Cows and goats, living in wooden riverside cages, also defecate straight into the Kapuas

The Kapuas passes through seven districts. Midstream ones, such as Sintang and Sanggau, earn hefty tax revenues by encouraging palm-oil plantations. But downstream districts suffer from the resulting silt, traffic and run-off without receiving any of the benefits. The same problem occurs at a village level. Mr Hadi says that fishing by sprinkling poisonous leaves on the water (the stricken fish float to the surface) is forbidden but other village heads do not enforce the rules…

A study by CIFOR on the income of villagers living near the Kapuas river found that the best-paid palm-plantation workers earned 50% more than the most successful fishermen. (Gold miners made three times as much—and spent more on education.)…But the environmental damage is plain to see. The river here is brown, clouded by silt. A study published in 2016 found that levels of phosphates in the water, from fertilisers and villagers washing themselves with soap, are highest near urban areas and palm plantations.

Down in Pontianak, the river water is darker still, occasionally brightened by oil slicks. Water bottles and instant-noodle packets cling together to form plastic islands.

Excerpts from  Indonesia’s Longest River,  Economist, Aug. 25, 2018

*According to Wikipedia: Authentic bird’s-nest soup is made from nests of some species of swiftlet.  Instead of twigs, feathers and straw, these swiftlets make their nest only from strands of their gummy saliva, which hardens when exposed to air. Once the nests are harvested, they are cleaned and sold to restaurants. Eating swiftlet nest material is believed to help maintain skin tone, balance qi (“life energy”) and reinforce the immune system… (Dictionary of Traditional Chinese Medicine, The History of Chinese Medicine and the Nutrition Table).

An Epiphany Moment: useful waste-water

image from http://www.solarismidstream.com/midstream-solutions

Fledgling companies, many backed by private equity, are rushing to help shale drillers deal with one of their trickiest problems: what to do with the vast volumes of wastewater that are a byproduct of fracking wells.

When producers blast a mix of water, sand and chemicals to release oil and gas from rock formations miles underground, they not only unlock oil and gas, but also massive quantities of briny water long buried beneath the surface. Drillers in the Permian Basin in New Mexico and Texas currently generate more than 1,000 Olympic-size swimming pools full of this murky, salty water every day. Handling it amounts to up to 25% of a well’s lease operating expense, according to analysts.

Investors have expressed interest in this corner of the U.S. shale industry as oil production in the Permian soars to record levels. Analysts said the region could produce more than five million barrels of oil a day by 2023, more than the current daily production of Iran.

Sensing a chance for a big return, private-equity firms have invested more than $500 million into wastewater-disposal companies such as Solaris Water Midstream LLC, WaterBridge Resources LLC, Goodnight Midstream LLC and Oilfield Water Logistics LLC. There are roughly a dozen of these water-focused companies that analysts said could each be worth hundreds of millions of dollars.

These companies are building pipelines to transport the wastewater and dispose of it deep underground, hoping to displace the trucks that currently do the job. Some companies have a longer-term plan: recycling the wastewater to sell it back to drillers to reuse. Most of the companies are currently private;….

Apache Corp. , one of the largest producers in the Permian, wants to reuse more water to reduce the millions of barrels it must dispose of and limit the freshwater it purchases for fracking, according to a company presentation earlier this year. Apache recycled more than 22 million barrels of water from 2013 to 2016 in just one subsection of the Permian.

Excerpts from The Next Big Bet in Fracking: Water, WSJ, Aug. 12, 2018

How Many Uranium Mines Do We Need?

Retired well heads used for ISL at Uranium One's operations in Johnson County., Wyoming

At the height of activity in 1980, U.S. companies produced nearly 44 million pounds of uranium concentrate and provided most of the supplies purchased by nuclear power plants. In 2017, American miners produced 2.4 million pounds and supplied just 7 percent of the uranium bought by domestic plants.  The industry, which once supported nearly 22,000 jobs, now employs just a few hundred people each year…

In July 2018, the U.S. Commerce Department opened an investigation to determine whether the nation’s growing dependence on foreign uranium supplies poses a risk to national security….The two miners that petitioned Commerce to conduct the review, Energy Fuels and UR-Energy, want the United States to take steps to ensure U.S. producers control 25 percent of the market. They say they can’t compete with subsidized supplies from places like Russia, Kazakhstan and Uzbekistan.

To be sure, nearly half of the uranium used in the United States comes from allies like Canada and Australia. From the moment they lost trade protections, U.S. miners had trouble competing with these foreign supplies.
“It’s been government-sponsored, government-subsidized just since the beginning. Trying to sort that out and find where there’s a free market in uranium — I find that very questionable.”-Luke Danielson, Sustainable Development Strategies Group president

The U.S. uranium mining industry is relatively young. It went through a brief golden age between about 1955 and 1980, beginning when the United States offered generous incentives to shore up its stockpiles of the nuclear weapons fuel during the Cold War….By the 1960s, the program had packed U.S. storehouses so full of uranium stockpiles that the government stopped paying the incentives. However, it left in place rules barring the use of foreign uranium until 1975, when it began to allow a growing percentage of overseas supplies into the market.  That opened the door to high-quality, low-cost supplies from Canada and Australia. By 1987, the United States was importing nearly 15 million pounds of uranium, and domestic output fell by about a third to roughly 13 million pounds.

While competition weighed on U.S. uranium production, the excitement around nuclear energy in the 1970s kept mines busy. However, the American love affair with atomic power proved short-lived. The 1979 meltdown of a reactor at Three Mile Island in Pennsylvania sparked fierce backlash against nuclear energy. Seven years later, the Chernobyl nuclear disaster turned a Ukrainian city into a ghost town…

By the early 2000s, U.S. uranium production was at its lowest in a half century.  Around that time, the former Soviet state Kazakhstan was ramping up uranium mining. In just a few short years, it would become the world’s top uranium producer and the second biggest supplier to the United States.
The Central Asian nation accomplished that feat in large part by exploiting a process called “in situ leaching” (ISL) or in situ recovery  (ISR)*** increasingly being used to extract uranium.  Along with countries like Niger, Mali and Mongolia, Kazakhstan has an advantage: lax regulations that allow it to process uranium cheaply from in situ leaching, which involves pumping chemicals into uranium reserves and carries serious risks to the environment if it’s not carried out responsibly…

And then in 2011, the Fukushima nuclear disaster in Japan created a backlash unlike anything seen since Three Mile Island and Chernobyl. In the aftermath, Japan shut down all of its nuclear reactors, and Germany decided to phase out nuclear energy by 2022.  The U.S. nuclear renaissance has also fizzled as flagship projects have turned into costly boondoggles. The venerable Westinghouse Electric Company filed for bankruptcy last year under the weight of billions of dollars in losses tied to its troubled nuclear power plant projects in Georgia and South Carolina. “There’s such a glut of inventory in the market that it’s just not profitable for some of the mines to produce, so the price has just really plummeted as a result of that,” said Sean Davis, a research analyst at IHS Markit who tracks the chemicals used in uranium mining.

Since their peak in 2007, uranium prices have crashed from nearly $140 per pound to $20-$25.

Excerpts from Nuclear wasteland: The explosive boom and long, painful bust of American uranium mining, CNBC, Aug. 4, 2018

***”No remediation of an ISR operation in the United States has successfully returned the aquifer to baseline conditions.”