Keep on Rockin’ in the Free World

by Vijay Prashad / May 25th, 2024

Iri and Toshi Maruki, XV Nagasaki, 1982, from The Hiroshima Panels.

For Prabir, who is now out of jail.

On the evening of 14 May, US Secretary of State Antony Blinken climbed onstage at Barman Dictat in Kyiv, Ukraine, to pick up an electric guitar and join the Ukrainian punk band 19.99. Ukrainians, he said, are ‘fighting not just for a free Ukraine, but for a free world’. Blinken and 19.99 then played the chorus of Neil Young’s ‘Rockin’ in the Free World’, entirely ignoring the implications of its lyrics – much like Donald Trump, who, to Young’s irritation, used the chorus in his 2015–2016 presidential campaign.

In February 1989, the day after Young received the news that his band’s tour in the USSR fell through, he penned the song’s lyrics, resting on his criticisms of the Reagan years and the first month of George H. W. Bush’s presidency. While it sounds patriotic on the surface, that song – like Bruce Springsteen’s ‘Born in the USA’ (1984) – is deeply critical of the hierarchies and humiliations of capitalist society.

The three verses of ‘Rockin’ in the Free World’ paint a picture of despair (‘people shufflin’ their feet/ people sleepin’ in their shoes’) defined by the drug epidemic plaguing the poor (a woman ‘puts the kid away/ and she’s gone to get a hit’), the collapse of educational opportunities (‘there’s one more kid/ that will never go to school’), and a growing population that lives on the street (‘we got a thousand points of light/ for the homeless man’). Springsteen’s song, written in the shadow of the US war on Vietnam (‘so they put a rifle in my hand/ sent me off to a foreign land/ to go and kill the yellow man’), also captured the strangulation of the working class in the US, many of whom were unable to get a job after returning from a war they did not want (‘down in the shadow of the penitentiary/ out by the gas fires of the refinery/ I’m ten years burning down the road/ nowhere to run ain’t got nowhere to go’).

These are songs of anguish, not anthems of war. To chant ‘born in the USA’ or ‘keep on rockin’ in the free world’ does not evoke a sense of pride in the Global North but a fierce criticism of its ruthless wars. ‘Keep on rockin’ in the free world’ is pickled in irony. Blinken did not get it, nor did Trump. They want the allure of rock and roll, but not the acidity of its lyrics. They do not understand that Neil Young’s 1989 song is the soundtrack of the resistance to the US wars that followed against Panama (1989–1999), Iraq (1990–1991), Yugoslavia (1999), Afghanistan (2001–2021), Iraq (2003–2011), and many more.

Iri and Toshi Maruki, XIII Death of the American Prisoners of War, 1971, from The Hiroshima Panels.

Blinken went to Kiev to celebrate the passing of three bills in the US House of Representatives that appropriate $95.3 billion for the militaries of Israel, Taiwan, Ukraine, and the United States. This is in addition to the more than $1.5 trillion that the US spends on its military every year. It is obscene that the US continues to supply Israel with deadly munitions for its genocide against Palestinians in Gaza, including the $26.4 billion it promised to Israel in the new bills while feigning concern for the starvation and slaughter of Palestinians. It is ghastly that the US continues to prevent peace talks between Ukraine and Russia while funding the former’s demoralised military (including $60.8 billion for weapons in the new bills alone) as the US seeks to use the conflict to ‘see Russia weakened’.

At the other end of Eurasia, the US has, similarly, used the issue of Taiwan in its efforts to see China ‘weakened’. That is why this supplemental appropriation allots $8.1 billion for ‘Indo-Pacific security’, including $3.9 billion in armaments for Taiwan and $3.3 billion for submarine construction in the US. Taiwan is not alone as a potential frontline state in this pressure campaign against China: the newly formed Squad, made up of Australia, Japan, the Philippines, and the US, uses solvable conflicts between the Philippines and China as opportunities to weaponise dangerous manoeuvres with the hope of provoking a reaction from China that would give the US an excuse to attack it.

Iri and Toshi Maruki, XIV Crows, 1972, from The Hiroshima Panels.

Our new dossier, The New Cold War is Sending Tremors Through Northeast Asia, published in collaboration with the International Strategy Centre (Seoul, South Korea) and No Cold War, argues that ‘the US-led New Cold War against China is destabilising Northeast Asia along the region’s historic fault lines as part of a broader militarisation campaign that extends from Japan and South Korea, through the Taiwan Strait and the Philippines, all the way to Australia and the Pacific Islands’. The bogeyman for this build-up in what the US calls the ‘Indo-Pacific’ (a term developed to draw India into the alliance to encircle China) is North Korea, whose nuclear and missile programmes are used to justify asymmetrical mobilisation along the Pacific edge of Asia. That South Korea’s military budget in 2023 ($47.9 billion) was more than twice North Korea’s GDP ($20.6 billion) in the same year is just one example that highlights this imbalance. This use of North Korea, the dossier argues, ‘has always been a fig leaf for US containment strategies – first against the Soviet Union and today against China’. (You can read the dossier in Korean here).

Iri and Toshi Maruki, XII Floating Lanterns, 1968, from The Hiroshima Panels.

In the early years of the US development of the ‘Indo-Pacific strategy’, Chinese scholars such as Hu Bo, Chen Jimin, and Feng Zhennan argued that the term was merely conceptual, limited by the contradictions between the countries involved in the development of the Chinese containment strategy. Over the past few years, however, a new view has developed that these shifts in the Pacific pose a serious threat to China and that the Chinese must respond with bluntness to prevent any provocation. It is this situation, characterised by the US’s creation of alliances that are designed to threaten China (the Quad, AUKUS, JAKUS, and the Squad) alongside China’s refusal to bend before the hyper-imperialism of the Global North, that creates a serious threat in Asia.

The last section of the dossier, ‘A Path to Peace in Northeast Asia’, offers a window into the hopes of the people’s movements in Okinawa (Japan), the Korean peninsula, and China to find a pathway to peace. Five simple principles anchor this path: end the dangerous alliances, US-led war games in the region, and US intervention into the region, and support unity across struggles in the region as well as frontline struggles to end militarisation in Asia. The latter point is being fought on several fronts by those living near Okinawa’s Kadena Air Base and Henoko Bay as well as South Korea’s Terminal High Altitude Area Defence installation and Jeju Naval Base, to name a few.

Iri and Toshi Maruki, X Petition, 1955, from The Hiroshima Panels.

Several years ago, I visited the Maruki Gallery outside Higashi-Matsuyama city in Saitama, where I saw the remarkable murals made by Ira Maruki (1901–1995) and Toshi Maruki (1912–2000) to remember the terrible violence of the nuclear bombs that the US government dropped on Hiroshima and Nagasaki. These murals, in the traditional Japanese ink wash style sumi-e, depict the immense human toll of the ugliness of modern warfare. Thanks to the chief curator Yukinori Okamura and the international coordinator Yumi Iwasaki, we were able to include some of these murals in our dossier and in this newsletter.

In 1980, the South Korean military dictatorship arrested Kim Nam-ju (1945–1994) and thirty-five other leftists on the grounds that they were involved in the National Liberation Front Preparation Committee. Kim was a poet and a translator who brought Frantz Fanon’s Black Skin, White Masks and Ho Chi Minh’s writings into Korean. While in Gwangju Prison for eight years, Kim wrote a range of powerful poetry, which he was able to smuggle out for publication. One of those poems, ‘Things Have Really Changed’, is about the suffocation of the ambitions of the Korean people over their own peninsula.

Under Japanese imperialism, if Joseon people
shouted ‘Long Live Independence!’,
Japanese policemen came and took them away,
Japanese prosecutors interrogated them,
Japanese judges put them on trial.

Japan withdrew and the US stepped in.
Now if Koreans
say ‘Yankee Go Home’,
Korean police come and take them away,
Korean prosecutors interrogate them,
Korean judges put them on trial.

Things have really changed after liberation.
Because I shouted ‘Drive out the foreign invaders!’,
people from my own country
arrested me, interrogated me, and put me on trial.

 Vijay Prashad is an Indian historian and journalist. Prashad is the author of twenty-five books, including The Darker Nations: A People’s History of the Third World and The Poorer Nations: A Possible History of the Global South. 

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Could These Arrest Warrants Signal the Beginning of the End for the “Axis of Evil”?

Israel's stooges in the West squirm as their adoration for the apartheid state turns sour

by Stuart Littlewood / May 25th, 2024

UK foreign secretery Lord David Cameron has told peers: “I don’t believe for one moment that seeking these warrants is going to help get the hostages out, it’s not going to help get aid in and it’s not going to help deliver a sustainable ceasefire. To draw moral equivalence between the Hamas leadership and the democratically-elected leader of Israel I think is just plain wrong.”

He misses the point as usual. The warrants have nothing to do with that. They are about bringing those wanted for the most grievous war crimes to justice.

Prime minister Rishi Sunak then said that the move was “deeply unhelpful”, adding: “There is no moral equivalence between a democratic state exercising its lawful right to self defence and the terrorist group Hamas.”

Even Biden was singing off the same hymn-sheet saying there is “no equivalence – none – between Israel and Hamas” and that what’s happening in Gaza is not genocide…. a hymn of praise for Israel almost.

Of course there is no moral equivalence. As the world has witnessed, Israel’s crimes are a thousand times greater than Hamas’s and are allowed to continue without let-up, courtesy of the US and UK who dutifully carry on supplying the ordnance and weaponry. It still hasn’t penetrated enough Washington and Whitehall skulls that it is the Palestinian resistance who are exercising their lawful right to self-defence – using “armed struggle” if necessary – against Israel’s illegal military occupation, brutal 17-year blockade and decades-long murderous oppression (UN Resolutions 37/43 and 3246).

Furthermore Hamas are just as legitimate as any Israeli administration having been democratically elected under the scrutiny of international observers, a result immediately rejected at the time by the UK, Israel and the US because it didn’t happen to suit their evil purpose in the Middle East.

And why are Hamas proscribed as a terrorist organisation in the UK? Only because a group of Israel’s pimps and stooges among Westminster’s political elite say so. It would be interesting to take a vote on what the people who put them there actually think, now they know the horrendous situation in Gaza and the West Bank and the long history leading up to it. Wouldn’t it be more appropriate to proscribe Likud, Netyanyahu’s terrorist party?

Cameron also claims it’s a mistake to draw moral equivalence because Palestine is not regarded as a state. Again, he isn’t paying attention. 146 of the 193 UN member states recognise Palestine, including Ireland, Norway and Spain who announced recognition just a few days ago. 11 of these are EU states, so what is Cameron drivelling about?

Fortunately, a cross-party group of 105 MPs and Lords has called on the UK Government “to do all it can to support the International Criminal Court” after Prime Minister Sunak’s remark that its decision to seek arrest warrants for Israeli and Hamas leaders was “deeply unhelpful”. In a letter addressed to Foreign Secretary Cameron they say “there is mounting evidence that Israel has committed clear and obvious violations of international law in Gaza and we strongly believe that those responsible must be held to account”. They call on the Government “to take a clear stance against any attempts to intimidate an independent and impartial international court…. The Court, its Prosecutor, and all its staff must be free to pursue justice without fear or favour”.

One of the organisers, MP Richard Burgon, said: “At every stage, our Government has failed to fulfil its moral duty to do everything it can to help save lives and prevent suffering in Gaza. It must not fail again. It must back the ICC in ensuring that there is no impunity for war crimes and it must stand up to those seeking to impede justice.”

Almost straightaway Sunak, in a surprise move, called a general election for 4 July. This means that MPs immediately cease being MPs but ministers continue in office until a new government is formed. For the next 6 weeks, then, Sunak’s crew continue to rule without being accountable to the House of Commons and could do a lot of damage. So this is a doubly dangerous time for our nation.

Meanwhile Cameron and his ignorant friends seem to think the Gaza war only started as recently as October 7. He plays up the release of 134 Israeli hostages when, on October 6 Israel was holding 5,200 Palestinians captive, including at least 170 children, and since then has abducted some 7,350 more. Why do we never hear from Cameron about the Palestinian hostages/prisoners?

And how many Palestinians had Israel killed before October 7? Answer: 10,651 slaughtered by Israel in the 23 years up to Oct 7, including 2,270 children and 656 women (Israel’s B’Tselem figures). That’s 460 a year. In that period Israel was exterminating Palestinians at the rate of 8:1 and children at the rate of 16:1.

Israel’s friends in the West like to think of Netanyahu as the leader of a Western style democracy that shares our values. Actually he’s the head of a nasty little ethnocracy with vicious apartheid policies and a 76-year record of terrorism, pursuing an extended military campaign aimed at occupying and annexing another people’s lands and resources, and showing no respect whatsoever for British values or international norms of behaviour.

So, putting aside for a moment our dislike of Hamas’s methods, shouldn’t we be asking our politicians to explain why exactly Hamas must be eliminated and the Palestinians’ homeland pulverised in the process, seeing as it is they who are under illegally military occupation and they who have the ultimate right of self-defence?

It’s easy to see where Cameron is coming from. After 3 months of genocide in Gaza, he denied Israel had broken international law. He also said it was “nonsense” to suggest that Israel intended to commit genocide. Asked if he thought Israel had a case to answer at the ICJ, he said: “No, I absolutely don’t. I think the South African action is wrong, I think it is unhelpful, I think it shouldn’t be happening…. I take the view that Israel is acting in self-defence after the appalling attack on October 7. But even if you take a different view to my view, to look at Israel, a democracy, a country with the rule of law, a country with armed forces that are committed to obeying the rule of law, to say that that country, that leadership, that armed forces, that they have intent to commit genocide, I think that is nonsense, I think that is wrong.”

So says this self-declared zionist and key stooge for Israel, one of many at Westminster who are desperate to maintain the shady US/UK-Israel alliance. Do Sunak, Cameron & co really want victory for the genocidists? It seems they do. Because they’ve pledged their undying adoration and support for that rotten apartheid regime and now the world has seen it for what it really is and their position is turning sour.

On the face of it the Hamas trio — Haniyeh, Sinwar and Dief — with competent legal representation seem likely to survive the legal process. And although many are questioning why arrest warrants are being considered for them at the same time as the mega-maniac Netanyahu there is reason to hope that, if they do come to trial, a lot of bad stuff about Israel, the US and the UK will come out. The world will then be much wiser and the ‘axis of evil’ behind it all will collapse under the weight of its own lunacy.

The UK general election will likely rid us of Sunak, Cameron and the rest of the Tory nitwits. But sitting in the waiting room is Labour’s Keir Starmer, another Israel stooge. Yes, the zionists have all angles covered.

Stuart Littlewood, after working on jet fighters in the RAF, became an industrial marketeer in oil, electronics and manufacturing, and with innovation and product development consultancies. He also served as a Cambridgeshire county councillor and a member of the Police Authority. He is an Associate of the Royal Photographic Society and has produced two photo-documentary books including Radio Free Palestine (with foreword by Jeff Halper). Now retired, he campaigns on various issues, especially the Palestinians' struggle for freedom.

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Colombia Aims to Boost Oil Production to

 1 Million Bpd

ONE STEP FORWARD TWO STEPS BACK

By Julianne Geiger - May 24, 2024

Despite a bold climate stance, Colombia is looking to increase its oil production to 1 million barrels per day by encouraging drillers to ramp up activity in underutilized exploration blocks, according to the country's energy ministry.

Energy Minister Andrés Camacho emphasized the government's strategy to revitalize "lazy contracts"—agreements signed 10 to 15 years ago that have so far seen minimal exploration efforts. Camacho believes this approach can elevate production to approximately 800,000 bpd by year-end, a rise from the Q1 average of 774,000 bpd.

Colombian President Gustavo Petro has made bold commitments to combat climate change by halting new drilling licenses in country and moving away from oil and gas in favor of green alternatives—a stance that would seem in opposition to the push to eke out oil from existing contracts.

But according to Camacho, "Increasing the number of contracts does not necessarily lead to more exploration," Camacho stated in Bogotá, highlighting the policy to boost exploration within current agreements. Nevertheless, if successful, it will lead to more output for the country that already has oil and coal accounting for half of its total exports.

The National Hydrocarbons Agency has implemented stringent requirements for contract compliance to prevent companies from signing contracts just to resell them at higher prices without conducting any actual exploration—a practice that could stifle future oil production.

State oil company Ecopetrol SA is contributing to the output increase through enhanced oil recovery techniques, improving extraction volumes from reservoirs. Colombia's current oil recovery rate averages 27 percent, according to Camacho.

The National Hydrocarbons Agency vowed to release a report today on the country's oil and gas reserves, noting that as of the end of 2022, proven oil reserves stood at the equivalent of 7.5 years and natural gas reserves at 7.2 years.

By Julianne Geiger for Oilprice.com

Saudi Aramco Eyes Minority Stake in Repsol’s Renewables Business

By Tsvetana Paraskova - May 24, 2024

Saudi oil giant Aramco has approached Repsol to express interest in buying a minority stake in the Spanish energy firm’s renewables business, Spain’s business daily Expansion reported on Friday, quoting several market sources.

The entire Repsol Renovables, or Repsol Renewables, is valued at around $6.5 billion (6 billion euros).   

Aramco has approached Repsol about a potential acquisition of a minority stake in Repsol Renewables but hasn’t filed a formal offer yet, according to Expansion’s sources.

Repsol has recently received an unsolicited approach from an investor willing to buy a minority stake in its renewables unit. The Spanish firm is in talks to sell a small stake in Repsol Renovables, sources familiar with the discussions told Reuters earlier this month.  

Repsol has also retained Spanish banking giant Santander to act as an advisor for the potential sale, the sources told Reuters.

At any rate, Repsol will keep more than 50% of its renewables business.

Two years ago, Repsol sold 25% of Repsol Renovables to Crédit Agricole Assurances and Energy Infrastructure Partners (EIP) for $979 million (905 million euros).

Last month, Repsol said it would invest $3.2 billion to $4.3 billion (3 billion euros to 4 billion euros) net to organically develop its global portfolio of renewable projects and reach between 9,000 MW and 10,000 MW of installed capacity by 2027. Of this figure, 30% will be in the United States. 

Saudi Aramco, for its part, is currently eyeing potential investments in new energies outside Saudi Arabia, the state oil giant’s chief executive officer Amin Nasser said at the end of April.

Apart from deals in the refining and petrochemicals segment, especially in its key crude export market, China, Aramco is looking to invest in the development of new technologies and new energies, including in collaboration with partners outside the Kingdom.  

Early this year, Aramco more than doubled funding to its venture capital arm by injecting an additional $4 billion funding. The fresh funding is raising Aramco’s total investment allocation to its unit Aramco Ventures from $3 billion to $7 billion.  

By Tsvetana Paraskova for Oilprice.com

EVs Twice As Likely To Hit Pedestrians As Gasoline Vehicles

By Alex Kimani - May 23, 2024

• 
  
• The London School of Hygiene and Tropical Medicine has found that pedestrians are twice as likely to be hit by an electric or hybrid car than by a gasoline- or diesel-powered vehicle.
• 
  
• The scientists have hypothesized that the relatively quiet operations of an electric vehicle as well as high pedestrian density in noisy urban areas could be major reasons.
• 
  
• The study uncovered a pedestrian casualty rate of 5.16 per 100 million miles driven for electric and hybrid vehicles, more than double the 2.4 per 100 million miles recorded for traditional gasoline-powered cars.
• 
  

For years, the transition from ICE vehicles to EVs has been viewed as a critical element of reducing the more than seven billion metric tons of carbon dioxide (GtCO?) the global transport sector emits each year. The Biden-Harris administration has set an ambitious goal to have up to half of all new vehicle sales in the country electric by the year 2030 as part of the government’s mission to achieve a net-zero emissions economy by 2050. 

This gargantuan effort might be worth it:  A 2021 study conducted by the International Council on Clean Transportation (ICCT) comparing lifecycle emissions of ICE vs. EVs concluded that “emissions over the lifetime of average medium-size [BEVs] registered today are already lower than comparable gasoline cars by 66%–69% in Europe, 60-80% in the United States, 37%–45% in China, and 19%–34% in India.’’ 

However, as is usually the case with every technology, EVs have their drawbacks, too. 

Not only does your average EV come with a higher sticker price than a comparable gasoline car but also an EV can lose as much as 12% of its range when temperatures drop to 20 degrees, a figure that shoots up to 40% if you turn on the cabin heater.

And now researchers have come up with yet another reason why you might want to rethink trading in your gas-guzzler for a shiny new EV: electric vehicles are more accident-prone. To wit, a study conducted by lead researcher Dr. Phil J. Edwards at the London School of Hygiene and Tropical Medicine has found that pedestrians are twice as likely to be hit by an electric or hybrid car than by a gasoline- or diesel-powered vehicle.

e study uncovered a pedestrian casualty rate of 5.16 per 100 million miles driven for electric and hybrid vehicles, more than double the 2.4 per 100 million miles recorded for traditional gasoline-powered cars. Insisting that the study is not meant to bash EVs, Dr. Edwards notes that "Electric cars are definitely a thing for the future. They are a wonderful way to reduce air pollution. But we must mitigate the danger" to pedestrians. EV drivers need to be extra cautious of pedestrians,’’ he added.

The researchers have conceded that current crash statistics aren't yet robust enough to reach scientific conclusions. However, they have hypothesized that the relatively quiet operations of an electric vehicle as well as high pedestrian density in noisy urban areas could be major reasons, with pedestrians almost three times as likely to be hit by an electric or hybrid car in these areas. Dr. Edwards suspects that demographics could also play a role, noting that “Younger, less experienced drivers are more likely to be involved in a road traffic collision and are also more likely to own an electric car.”

Driverless Cars Safer Than Human Drivers

EVs currently account for less than 1% of vehicles on U.S. roads, implying human casualties associated with the industry are still much lower compared to those attributable to the fossil fuel industry. But with bold predictions that EVs could make up 60-70% of the U.S. fleet by 2050, the significantly higher propensity of electric propulsion to cause accidents could prove highly problematic.

Luckily, there’s a handy solution: driverless cars. For years, autonomous driving buffs and experts claimed that driverless vehicles have the potential to be safer than humans. Unfortunately, those claims have remained unverified for the simple fact that there’s not enough data available. That is, until now. 

Last year, Google’s Waymo analyzed 7.13 million fully driverless miles in Phoenix, Los Angeles and San Francisco cities. Waymo touts itself as the world’s first autonomous ride-hailing service, and its cars are fully electric.  Waymo then compared the data to human driving benchmarks, marking the first time the company studied miles from fully driverless operations only, rather than a mix of autonomous and human-monitored driving.

The conclusion is very encouraging. Waymo’s driverless cars were 6.7 times less likely than human drivers to be involved in a crash resulting in an injury, good for a respectable 85% reduction over the human benchmark. These vehicles are also 2.3 times less likely to be in a police-reported crash, or a 57% reduction. Overall, this translates to ~17 fewer injuries and 20 fewer police-reported crashes compared to if a human driver would have driven the same distance in the cities where Waymo operates.

There seems to be little consensus regarding the time when autonomous vehicles will finally become an everyday reality on U.S. roads, with public distrust of autonomous driving technology a major hurdle. A Forbes Advisor report found that as many as 93% of U.S. citizens have concerns about some aspect of self-driving cars. However, the ongoing AI boom might help accelerate this technology and lower adoption timelines from decades to maybe less than a decade. 

According to Micron Technology, “AI is a critical technology required to realize autonomous driving. The extreme compute performance required for an autonomous vehicle based on AI requires an innovative memory and storage system to process and hold the vast amount of data necessary for a computer to make decisions like a human.”

Even baby steps might help make EVs safer, with one McKinsey study showing that the growing adoption of advanced driver-assistance systems (ADAS) in Europe could reduce the number of accidents by about 15% by 2030.

By Alex Kimani for Oilprice.com

What’s Really Wrong with Thames Water?

By Leonard Hyman & William Tilles - May 22, 2024

Thames Water again? We’re not in the water business. But this story has a moral, so read on. There are many reasons for the current predicament in the UK’s water utility business. This situation resembles one of those detective stories where almost everyone is a suspect. The victim, of course, is the British public suffering under boil water alerts and facing increasingly polluted beaches, lakes, and rivers. But who is to blame? The question itself is complex and difficult to answer. Each day another news article appears expressing outrage about excessive management compensation, capital misallocation, or regulatory malfeasance while concluding with a somber note about worsening pollution in some local lake or stream. Making these problems seem overly complex and difficult to resolve has a numbing effect on the public and encourages a kind of learned helplessness. This also permits politicians to avoid accountability for the mess that they or their predecessors created.

But let’s get back to Thames Water. Their obvious problem is water pollution. The equally obvious solution is a much higher level of capital spending on sewage treatment and related facilities. And that’s where the easy answers end. Why? First, because no one trusts the existing management and board, who are ultimately responsible for the dire state of corporate affairs, to properly supervise the billions in needed remedial capital expenditures. Second, no one trusts the regulator either. Ofwat has shown a profound indifference to its public responsibilities while permitting a grotesque overleveraging of its utilities. This excessive debt has financially crippled these once solidly investment grade companies. Dealing with this excessive debt is a big part of what has to be resolved. Bankrupting the holding company, Kemble, and all related non operating entities, would be simplest. But there's another problem. Lastly, the public seems to have lost faith in the private sector’s ability to handle this but it’s even less clear how a re-nationalization of this industry would occur. That’s why these water utility issues are difficult. We have simultaneous problems with misguided management still focused on capital extraction, wildly incompetent regulators, and a public increasingly convinced that privatization was a big mistake and that renationalizing these industries is the best outcome. And all of these issues are linked.

Of all the institutional failures here, the apparent abdication of Ofwat from even rudimentary capital structure regulation is to us the most baffling. As we’ve written before, the water industry is one of the safest and least risky types of utility. Everyone needs their product and demand is predictable. But from an analytical perspective, low business risk implies the ability to take on more financial leverage and vice versa. High-risk businesses should have very little leverage, if any. Said differently, business risk and financial risk are inverse correlates. The Thames Water management seems to have taken this idea of a low-risk water utility business and pushed it to its logical, leverage-able limit. And now they, and the British public, are stuck.

Lastly, the problem regulators have is one of public trust, or the lack of it. Why should people in the UK trust them to properly supervise a large remedial capital program for improved water quality when they have basically ignored all semblance of regulatory propriety in the past? To us that’s the true appeal of renationalization. It gets around a dysfunctional British regulatory body.

Here’s the lesson for us. Years of disregard for the public service function, allowed by a permissive regulator, finally reached the point where even politicians took notice and denounced the market-embracing setup they had previously championed. Who loses? Probably the utility’s owners. Now imagine, across the pond, American electricity customers without service for days in sweltering heat, or in severe cold, and it keeps happening, while regulators sit by helplessly. Can the public trust the regulators or the management to correct the situation? Maybe the key lesson from the Thatcher era of utility privatization is simply that private enterprises can’t provide public services. Or at least not without vigilant regulators. These deregulated utilities keep malfunctioning and it keeps happening. When does an enterprising politician turn this into an election issue?  So far not yet.  But the summer has not yet begun.  Maybe Thames Water should be a case study at some Edison Electric Institute management retreat. Learn what not to do.

By Leonard Hyman and William Tilles for Oilprice.com

 

Two of Europe’s Biggest Banks to Stop Underwriting Oil and Gas Bonds

By Tsvetana Paraskova - May 24, 2024

French banks BNP Paribas and Credit Agricole, two of Europe’s top three banks by assets, are no longer underwriting bond issues for oil and gas development in the latest policy shift of financing for the industry in Europe.

The banks made clarifications on the matter in documents for their annual general meetings this month.

BNP Paribas indicated at its AGM last week that it would not participate in bond issues for companies in the oil and gas sector.

Environmental group Reclaim Finance said that it “welcomes this change at a time when the bank is reducing its financing for major companies in the sector, and calls on BNP Paribas to formalize this approach by including this rule in its climate policy and extending it to other financial services likely to contribute to oil and gas expansion.”   

BNP Paribas said in May 2023 that it would no longer provide any financing for developing new oil and gas fields, regardless of the financing methods. The bank also pledged to reduce its oil exploration and production financing by 80% by 2030 as part of its energy transition goals.

Another major French bank, Credit Agricole, also said it had effectively ceased bond issues for oil and gas. At the bank’s AGM on Wednesday, director general Philippe Brassac, said “We no longer participate in [bond] issues that are not clearly green, or at least that do not correspond to our green framework,” as cited by Reclaim Finance. 

In recent years, European banks have been limiting their exposure to oil and gas.

Under pressure from ESG trends and shareholders, major European banks have announced tougher rules on financing fossil fuels over the past two years.

UK’s HSBC said at the end of 2022 that it would stop funding new oil and gas field developments and related infrastructure as part of a policy to support and finance a net-zero transition.

UK-based Barclays announced in February 2024 that it would drop direct funding for new oil and gas projects, joining other major European banks in halting the financing of fossil fuel expansion. 

Barclays is also looking to avoid claims of greenwashing with a new set of guidelines about what ‘transition finance’ is and how its new transition finance team should apply it.

By Tsvetana Paraskova for Oilprice.com