Boom in the Iran Crude Tanker Business

Journal of Political Risk, Vol. 4, No. 10, October 2016

By Reza Yeganehshakib, Ph.D.

Oil-tankers docking in Rotterdam, Holland.

Oil-tankers docking in Rotterdam, Holland.

The oil industry has experienced numerous fluctuations in crude prices during its history. Falling prices in 2014 developed into a historic downturn by 2016, reaching lows that were last seen in the 1990s. As a result, several oil giants were forced to decommission almost two thirds of their rigs, while also dramatically decreasing their investment in the upstream oil industry.[1] Counter-intuitively, the crude shipping industry did not go through the same catastrophic loss as its upstream counterpart. Iran, one of the world’s biggest oil exporters and crude shipping operators, experienced this firsthand.[2] While the country’s oil revenue sharply declined, its crude shipping industry grew. This situation was not without problems, however, as explained herein.

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Reconsidering Political Risk In Developed Economies

Journal of Political Risk, Vol. 4, No. 8, August 2016

By Julian M. Campisi

Introduction: A Macro Analysis of Political Risk

Nigel Farage, leader of Britain's UK Independence Party laughs as he points to a UKIP poster, before delivering a speech on the forthcoming EU referendum, in London, Friday, April 29, 2016. (AP Photo/Kirsty Wigglesworth)

Nigel Farage, leader of Britain’s UK Independence Party laughs as he points to a UKIP poster, before delivering a speech on the forthcoming EU referendum, in London, Friday, April 29, 2016. (AP Photo/Kirsty Wigglesworth)

The concept of political risk has landed at the forefront of media and scholarly outlets in the fields of international politics and economics after a turbulent first half to 2016. Exposure to a number of recent global ‘shocks’, including the latest waves of terrorist attacks, Brexit, and a failed coup d’état in Turkey, has led to a renewed sense of political and economic instability across the globe. However, until recently, the majority of scholars and practitioners working in the sub-field of political risk have mainly engaged with the political and economic factors that affect investments in developing economies—albeit for good reason. In many such countries, the stability and profitability of foreign investments or business ventures is more difficult to guarantee and to predict due to concerns related to political volatility, social upheaval, expropriations, and regulatory uncertainties. Yet developing nations are at the forefront of political risk analysis precisely because of the potentially lucrative business opportunities that accompany fairly rapid economic growth and development in frontier markets. Indeed, recent global foreign direct investment (FDI) flows to developing countries, spurred by growth in Asia, significantly outweighed those to developed ones as table 1 shows below.

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Prudence in International Strategy: From ‘Lawyerly’ to ‘Post-Lawyerly’

Journal of Political Risk, Vol. 4, No. 7, July 2016

By Jeremiah S. Pam

Remarks at a symposium on ISIS: Navigating Conflict with Non-State Actors / The University of Texas School of Law, 15 April 2016

‘Prudentia’ sculpture on roof of 16th century town hall, Gross-Umstadt, Germany. Photo by: Frank Rumpenhorst/picture-alliance/dpa/AP Images

‘Prudentia’ sculpture on roof of 16th century town hall, Gross-Umstadt, Germany. Photo by: Frank Rumpenhorst/picture-alliance/dpa/AP Images

I. Introduction

In considering this conference’s subject of how the international community should respond to the challenge of ISIS, I suspect we can all agree that it is imperative that we be informed by our recent experiences with interventions in Iraq and Afghanistan. Of course, the difficult question is how those experiences should inform us. Given my own time in Iraq and Afghanistan, it is perhaps not surprising that I have a few observations from those cases that strike me as potentially relevant, to which I will turn very briefly in a moment.

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China’s One Horse Race in the South China Sea

Journal of Political Risk, Vol. 4, No. 6, June 2016

By Peter Solomon

Flag atop a Chinese Coast Guard vessel near Panatag/Scarborough Shoal in the South China Sea. As seen from a Philippine fishing boat on Philippine Independence Day. June 12, 2016. (Photo credit: Anders Corr and Kalayaan Atin Ito.)

Flag atop a Chinese Coast Guard vessel near Panatag/Scarborough Shoal in the South China Sea. As seen from a Philippine fishing boat on Philippine Independence Day. June 12, 2016. (Photo credit: Anders Corr and Kalayaan Atin Ito.)

China is cruising toward the finish line in what has become an uncontested race for power in the East Asia-Western Pacific region. There is no question China’s leadership understands that in order to retain the reins of power it must keep pace with the demands of its population, which is the largest in the world. After three decades of at least 10 percent GDP growth, however, the 2010s have proven difficult for China to attain that level of achievement. China’s transition to a consumer-driven economy, moreover, means that China’s growth rates will likely continue to contract as the middle class expands and cheap labor-intensive jobs move elsewhere.

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Chinese Investments in the Philippines

Journal of Political Risk, Vol. 4, No. 6, June 2016

By Dr. Tom K. Stern

In this May 17, 2013 photo, trading continues at the Philippine Stock Exchange at the financial district of Makati city, east of Manila, Philippines. As the Philippine economy skyrocketed 7.8 percent in the first quarter, outpacing China, the middle class in the Southeast Asian nation that has been held back by widespread poverty, political strife and corruption is for the first time in decades reaping the profits of an economic boom. (AP Photo/Bullit Marquez)

In this May 17, 2013 photo, trading continues at the Philippine Stock Exchange at the financial district of Makati city, east of Manila, Philippines. As the Philippine economy skyrocketed 7.8 percent in the first quarter, outpacing China, the middle class in the Southeast Asian nation that has been held back by widespread poverty, political strife and corruption is for the first time in decades reaping the profits of an economic boom. (AP Photo/Bullit Marquez)

Introduction

On June 30, 2016, Rodrigo Roa Duterte will be sworn in as President of the Republic of the Philippines. How he handles the tensions over Chinese land-grabbing, a regional arms race, plus brushes with danger when American and Chinese forces grate against one another will decide how well the Philippine economy can perform during President Duterte’s term.

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Condemned to repeat it: a retrospective on US Presidents without elected office experience

Journal of Political Risk, Vol. 4, No. 6, June 2016

By Bhakti Mirchandani

Counting electoral votes after the contested 1876 Tilden-Hayes Election, February 1877. Hand-colored woodcut of a 19th-century illustration. (North Wind Picture Archives via AP Images)

Counting electoral votes after the contested 1876 Tilden-Hayes Election, February 1877.
Hand-colored woodcut of a 19th-century illustration. (North Wind Picture Archives via AP Images)

Abstract

Popular resentment of changes in the economy and of the political elites administering some of those changes is palpable during this year’s presidential campaign.[1]  Public distrust is rife: the electorate views narrow moneyed interests as increasingly driving public policy and the legislative process as broken.[2]  At the same time that American voters are “tired of Washington politicians,”[3] the legacies of Presidents without elected office experience before being sworn into the Oval Office demonstrates the difficulty for outsiders to be effective Presidents.  Numerous academics, such as Arthur Schlesinger, have dedicated decades and thousands of pages to presidential backgrounds and legacies, and every four years the media examines the credentials of prospective and prior Presidents.  This article is a short opinion piece about the shortcomings of past outsider Presidents.  Their flaws ranged from cognitive bias to tolerance of corruption and from excessive use of clandestine plots to lack of political skill.  Only two of the five outsiders–Dwight Eisenhower and Ulysses Grant–were reelected to second terms.

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The South China Sea Dilemma: A Political Game of International Law

Journal of Political Risk, Vol. 4, No. 6, June 2016

By Nong Hong[1]

In this file photo from Wednesday, June 15, 2016, an F/A-18 Hornet takes off the deck of the nuclear-powered aircraft carrier the USS John C. Stennis during joint military exercise between the United States, Japan and India off the coast 180 miles east of Japan's southernmost island of Okinawa. The U.S. says at least one Chinese ship tailed the USS John C. Stennis daily during its recent cruise through the South China Sea, although no hostile incidents were reported. (AP Photo/Shizuo Kambayashi, File)

In this file photo from Wednesday, June 15, 2016, an F/A-18 Hornet takes off the deck of the nuclear-powered aircraft carrier the USS John C. Stennis during joint military exercise between the United States, Japan and India off the coast 180 miles east of Japan’s southernmost island of Okinawa. The U.S. says at least one Chinese ship tailed the USS John C. Stennis daily during its recent cruise through the South China Sea, although no hostile incidents were reported. (AP Photo/Shizuo Kambayashi, File)

Abstract

The existing territorial and maritime disputes in South China Sea have been pending for decades. Despite tremendous efforts on conflict management, the settlement of the decades-old maritime dispute in the South China Sea seems to be politically deadlocked. The Philippines, losing patience and confidence on negotiations on various levels, has stepped forward by utilizing the arbitration procedures under the United Nations Convention on the Law of the Sea and sued China on January 22, 2013. This paper attempts to answer such questions as, will the arbitration case resolve the dispute between the Philippines and China; what is the political and legal consequence following this; what is the impact of the Philippine’s arbitration initiative for the negotiation and drafting process of the Code of Conduct; what is the value and role of the UNCLOS in maritime dispute settlements in the South China Sea; and, in a broader sense, is the recent escalating tension in the South China Sea a consequence, explicitly or implicitly of the arbitration case. The author argues that despite the value ascribed  to the compulsory dispute settlement under UNCLOS, the South China Sea Arbitration Case does not resolve the problem between the two countries. Even more complicated, some have blamed the Philippines for triggering the negative reaction from China, which will lead to an uncertain post-arbitration situation. The author raises a question: Is the Philippines’ use of UNCLOS arbitration a genuine attempt to resolve its maritime dispute with China? Or is it merely a political game of international law?

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Geopolitical Risks and the International Business Environment: Challenges for Transnational Corporations and their Global Supply-Chain

Journal of Political Risk, Vol. 4, No. 6, June 2016

By Braz Baracuhy

Abstract

Traditional Geopolitical Risks for GSCs (Source: PWC – Transportation & Logistics 2030 [p. 17])

Traditional Geopolitical Risks for GSCs (Source: PWC – Transportation & Logistics 2030 [p. 17])

The geopolitical underpinnings of economic globalization are changing. Transnational corporations (TNCs) and their network of supply-chains have to operate in a business environment in which emerging geo-economic forces are interacting with shifting geopolitical realities. The challenges for geopolitical risk management will increase in a world of multiple poles of economic power.  TNCs and firms operating globally will need to develop a sense of strategic awareness of the new geo-economic spheres of influence and the systemic geopolitical risks reshaping the interdependence of countries and companies in the global marketplace. Corporate geopolitics need to be an essential component of business strategy.

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U.S. Strategy in the South China Sea

Journal of Political Risk, Vol. 4, No. 5, May 2016

By Sean R. Liedman

In this Sept. 17, 2015, file photo, Adm. Harry B. Harris, Jr., U.S. Navy Commander, U.S. Pacific Command walks past a photograph showing an island that China is building on the Fiery Cross Reef in the South China Sea, as the prepares to testify on Capitol Hill in Washington before the Senate Armed Services Committee hearing on maritime security strategy in the Asia-Pacific region. The U.S. Navy's challenge to China's sovereignty claims in the South China Sea was not designed as a military threat, Harris said Tuesday, Nov. 3, 2015, in a mostly upbeat speech about prospects for preventing U.S.-China disputes from escalating to conflict. Speaking in the Chinese capital, Harris cited a recent statement by U.S. Defense Secretary Ash Carter that the international order "faces challenges from Russia and, in a different way, from China, with its ambiguous maritime claims," including Beijing's claim to nearly all of the South China Sea. (AP Photo/Cliff Owen, File)

In this Sept. 17, 2015, file photo, Adm. Harry B. Harris, Jr., U.S. Navy Commander, U.S. Pacific Command walks past a photograph showing an island that China is building on the Fiery Cross Reef in the South China Sea, as the prepares to testify on Capitol Hill in Washington before the Senate Armed Services Committee hearing on maritime security strategy in the Asia-Pacific region. (AP Photo/Cliff Owen, File)

Abstract:  

Since the end of World War II, U.S. strategy towards China has tacked between three central policy themes: containment, cooperative engagement, and competition. Additionally, a fourth unstated strategic theme undergirds the above: prevailing in the event of conflict. Even though they are fundamentally conflicting ideas, the principles of cooperation and competition remain central tenets of the U.S. strategy versus China today, and the tension between those two principles has been on full display in the South China Sea since 2012. Looking to the future, the United States has three broad policy options vis-à-vis recent Chinese activities in the South China Sea: 1) “Continued concession” to Chinese territorial expansion in the South China Sea in the interest of achieving broader strategic objectives, 2) “Freeze the status quo”, or 3) “Roll back” Chinese expansion and excessive sovereignty claims. Key observable metrics will indicate which of these policy options is being followed, the range of diplomatic and military strategies to achieve those policy aims, and their likely outcomes.

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Financial Innovation to Provide Life Support for Jordan-Based Syrian Refugees

Journal of Political Risk, Vol. 4, No. 3, March 2016

By Bhakti Mirchandani

Syrian refugee students wave to welcome United Nations Secretary-General Ban Ki-moon, unseen, to Zaatari Syrian refugee camp, in Mafraq, Jordan, near the Syrian border, Saturday, Dec. 7, 2012. U.N. Secretary-General Ban Ki-Moon on Friday called on the Syrian government to "stop the violence in the name of humanity", during a visit to the Zaatari refugee camp in Jordan, close to the Syrian border. (AP Photo/Mohammad Hannon)

Syrian refugee students wave to welcome United Nations Secretary-General Ban Ki-moon, unseen, to Zaatari Syrian refugee camp, in Mafraq, Jordan, near the Syrian border, Saturday, Dec. 7, 2012. U.N. Secretary-General Ban Ki-Moon on Friday called on the Syrian government to “stop the violence in the name of humanity”, during a visit to the Zaatari refugee camp in Jordan, close to the Syrian border. (AP Photo/Mohammad Hannon)

As the war in Syria hit its five-year mark this past Tuesday, the European strategy for managing the nearly 1 million Syrian refugees[1] seeking asylum in Europe is not working.  While most of the refugees that arrived in Europe in 2015 left Syria last year, others are leaving countries of first asylum Jordan, Turkey, and Lebanon for Europe after years of hardship.[2]  By way of background, first asylum countries are those that allow refugees to enter their territory for temporary asylum while waiting for resettlement or repatriation.  The European Commission is hoping that another deal with Turkey and stronger Schengen Area external border controls will tackle the biggest European refugee crisis since World War II.  As long as Syrian refugees lack the assistance they need in Syria and countries of first asylum, they will continue to make perilous journeys to Europe[3] on unseaworthy boats.[4]  While the EU and Turkey negotiate a controversial refugee exchange program and the European Commission weighs the establishment of a “European Border and Coast Guard” with a larger budget and more authority than current EU management agency Frontex,[5]  the US should fund financially sustainable relief and development to Jordan in parallel with its extensive humanitarian and military aid.  Jordan’s commitment to peace and moderation in the Middle East and cooperation with the US on security matters and counterterrorism make it a vital US ally.

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