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The Wall Street Journal: A World Dancing To Energy’s Tune

THE MORNING BRIEF
By JOSEPH SCHUMAN
January 25, 2007

Energy-security worries have long headlined policy confabs, political promises and investor worries. But this week — even beyond dialogues at the White House and Davos — happens to be a good time to watch some of the subject’s geopolitical algorithms at work.

For instance, Chinese President Hu Jintao is a man whose government doesn’t often feel the need to justify its actions. But there officials were yesterday, defending Beijing’s economic ties to Sudan ahead of an African trip by Mr. Hu that includes a stop in Khartoum, as the Financial Times reports. Mr. Hu’s visit comes at time when China has broken with the U.S. and Europe over attempts to make Sudan let U.N. troops help quell the violence in Darfur. But Foreign Ministry official Zhai Jun made clear his government sees nothing shameful when it comes to Sudan. “With Sudan we have co-operation in many aspects, including military cooperation. In this, we have nothing to hide,” he said.

China, whose petroleum thirst played a big role in the rising price of crude over the past four years, gets almost a third its oil imports from Africa, as well as other raw materials. (The latest attack on a Nigerian oil facility — today in Bayelsa state — didn’t target Shell, but rather employees of the Chinese National Petroleum Company.) And it doesn’t seem coincidental that Beijing has made serious efforts to court the continent. More-vocal criticism about such ties from the U.S. may be muted by Washington’s reliance on the likes of Saudi Arabia.

Across the Indian Ocean, energy was playing a role in relations between Russia and India. Vladimir Putin, in New Delhi on a two-day trade visit, today signed a memorandum with Indian counterpart Manmohan Singh that would see Russia build four new nuclear reactors for India, whose economic growth is beginning to rival China’s in its need for fuel. The deal comes at a time when India is about to gain access to U.S. nuclear technology, and when the U.S is also trying to sell more military hardware to India, historically an important client for Soviet and then Russian arms sales. But President Putin’s trip also included a new agreement on Russian aircraft engines and another on joint development of a military transport plane, the Associated Press reports. And India’s incentive to make deals with Moscow is increased by its desire for access to Russia’s oil reserves, as the New York Times points out. Also on Mr. Putin’s agenda is a proposed joint venture for oil exploration in Siberia, the Times adds.

India may now be a major power in its own right, but it’s also just one country among many in Western, Southern and Central Asia where Russia is playing or trying to play a dominant economic and political role tied to its muscle in energy markets. (Iran is part of the same petro-political equation.) And if this is just the latest chapter in Russian regional aspirations that hail back to the Great Game, it also comes at a time when energy is again a big source of global anxiety. “The quest for energy security, in short, is a global scramble of power, money and ideas,” The Wall Street Journal says, adding: “the worry is that the geopolitical and economic equilibrium that long enabled the oil industry to smoothly supply customers is a thing of the past.” The Journal predicts events this year — the rise or decline of turmoil in exporting nations and whether large consumers like the U.S. and China can curb their consumption — will test that view.

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Cheney Slams Senate Opposition on Iraq
A day after President Bush asked Congress to back his decision to send 21,500 more U.S. troops to Iraq, the Senate Foreign Relations Committee voted 12-9 for a nonbinding resolution that criticizes the new plan and declares: “It is not in the national interest of the United States to deepen its military involvement in Iraq.” More than four-and-a-half years after the U.S.-led invasion, the vote moves the Senate closer to what would be its first official repudiation of Mr. Bush’s leadership of the war, as the Los Angeles Times puts it. Only one Republican, Chuck Hagel, joined the panel’s Democrats to pass the measure. But, as The Wall Street Journal notes, the vote gives Chairman Joseph Biden “a solid foothold from which to begin talks with Republicans who share his concern about sending more U.S. troops to try to quell sectarian violence in Baghdad.” These include Sen. John Warner, ranking Republican on the Armed Services Committee, who introduced an alternative resolution that also challenged the president’s new plan.

The senate resolutions were denounced yesterday by Vice President Cheney, who complained that administration critics and the media “are so eager to write off this effort or declare it a failure” that they’re undermining the war effort, as the Washington Post reports. Congressional opposition “won’t stop us” from deploying more troops, Mr. Cheney said, adding that it will only “validate the terrorists’ strategy.” The notion that Iraq has become a “terrible situation” is just wrong, Mr. Cheney argued, declaring that in fact the administration had achieved “enormous successes” there.

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Also of Note…

Washington Post: After the bloodiest year in Afghanistan since the U.S. invasion, the Bush administration is preparing a series of new military, economic and political initiatives aimed partly at preempting an expected offensive this spring by Taliban insurgents, according to senior U.S. officials.

Financial Times: The U.S. government put more pressure on Europe this week to extend financial sanctions to punish Iran for refusing to halt uranium enrichment, but the U.S. is meeting European resistance. The effort comes amid indications that U.S.-only financial sanctions are having a bigger economic impact than expected.

New York Times: As many as four big states — California, Florida, Illinois and New Jersey — are likely to move up their 2008 presidential primaries to early February, further upending an already unsettled nominating process and forcing candidates of both parties to rethink their campaign strategies, party officials said. The changes, which seem all but certain to be enacted by state legislatures, would appear to benefit well-financed and already familiar candidates.

Variety: The blooming presidential campaigns of Democratic Sens. Hillary Clinton and Barack Obama have set fund-raising swings through Los Angeles, as they tap entertainment industry donors for campaign money. The DreamWorks trio of Steven Spielberg, Jeffrey Katzenberg and David Geffen are holding a $2,300-per-person event for Mr. Obama, while industry mogul Haim Saban plans to host an event for Ms. Clinton.

Boston Globe: An emotional Sen. John F. Kerry today said in an unusual speech on the Senate floor that he will not run in the 2008 presidential race and vowed to use his Senate perch to hasten an end to the war in Iraq.

Dow Jones Newswires: China’s economy expanded faster than forecast in the fourth quarter, bringing full-year growth to 10.7%, its fastest pace since 1995, the government said today. Consumer inflation in China came in at a 2.8% annual pace.

Wall Street Journal: The not-for-profit American Stock Exchange has hired Morgan Stanley to advise it on plans to become a for-profit company in preparation for a potential stock offering or merger with another exchange.

San Jose Mercury News: EBay reported a 24% year-to-year increase in fourth-quarter earnings that exceeded analysts’ expectations, with good performances for the company’s three main business units: marketplaces, PayPal and Skype.

Detroit News: The United Auto Workers is upset over the possibility that Ford Motor may pay bonuses to some managers and top executives, and the issue is threatening to delay progress on competitive operating agreements at some Ford factories, according to sources familiar with the situation.

Women’s Wear Daily: Looking to grow beyond its core customer, Wal-Mart appointed chief marketing officer John Fleming to the new post of chief merchandising officer, making him responsible for almost everything the $210 billion U.S. division sells under a new structure that puts all apparel, home, entertainment and grocery products under his supervision.

BBC: Senior international officials are gathering in Paris for a major donors’ conference to help rebuild Lebanon, with the U.S. and France already pledging $1.4 billion in aid and loans. Lebanon hopes to raise up to $9 billion to help it recover from last summer’s conflict with Israel and a massive public debt.

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Quote of the Day
“A lot of these earnings are because these companies are able to buy a lot of goods cheaply abroad. … If the dollar starts falling, this thing could really blow up,” billionaire financier Carl Icahn tells Bloomberg, in arguing that U.S. stocks and corporate earnings are vulnerable to a continued decline of the dollar.

Write to Joseph Schuman at [email protected]

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