Why drilling in American waters is good for the environment

As much as I despise big oil survives for it reliance on government transportation policies and not market forces, all things equal, I think it's best for the environment to drill in American waters. Why? Because if you don't, things like this happen:

BP will start deep-water drilling off the coast of Libya within weeks in spite of concerns about the UK group’s environmental and safety record after the Gulf of Mexico oil spill disaster. [...]

Barack Obama’s imposition of a moratorium on deep-water drilling in the Gulf of Mexico has highlighted the growing importance of new exploration across the Mediterranean. Diamond Offshore, a US deep-water driller, is moving a rig from the Gulf of Mexico to Egypt, while Australia’s APX started drilling last week between Tunisia and Italy. Shell plans to start exploring soon off western Sicily.

Italy has speeded up its procedures and granted 21 new exploration permits. New limits imposed on near-shore drilling in response to the Gulf of Mexico spill apply only to future operations and barely affect the most promising areas off Sicily.

With cash-strapped governments courting Libya’s oil-fuelled sovereign wealth funds, countries such as Italy, Greece and Malta – all within a radius of 500km (310 miles) of the Gulf of Sirte – have refrained from commenting on Libya’s plans.

However, environmentalists and politicians have expressed concerns. A proposal by Günther Oettinger, Europe’s energy commissioner, for a moratorium on deep-water drilling in European Union waters failed to get a response from Mediterranean states.

If a rig like Deepwater Horizon exploded and started spewing oil off the coast of Libya, I doubt it would be contained within three months. Apparently oil has been leaking into the Niger Delta for decades and shows no signs of slowing. It's possible that environmentally-minded northern EU countries would step in and force Gaddafi and Berlusconi to take an oil spill seriously, but if BP thought that way, I'm not sure they would have bothered moving.

Sardinia as a staging ground for Soviet-backed terrorists

In an interesting TED Talk on the economics of terrorism, Italian economist Loretta Napoleoni relates a story told to her by a "part-timer" in the Red Brigades, a leftist Italian terrorist organization active in the '70s:

He was sailing every summer back and forth from Lebanon, where he would pick up Soviet weapons from the PLO and then carry them all the way to Sardina, where other armed organizations in Europe would go and take their share of the arms. For that service, the Red Brigades were actually paid a fee, which went to fund the organization.

She leaves some ambiguities. Were the weapons just manufactured in the USSR, or was the Soviet leadership actually directing the weapons through the PLO? (Others have claimed that the Soviet Union was directly responsible.) And were they being sold in some sort of market to all comers, or were the Red Brigades merely transporting them to groups pre-selected by the PLO (or Czechs/Soviets)? Her wording ("take their share") and the fact that they were paid a fee (as opposed to earning profit from the sales) hints at the latter.

This all happened decades ago, but Italy still hasn't escaped from the influence of Russian spies. As late as 2006, a British MEP gave a "one-minute speech" in the European Parliament where he quoted the late Russian defector Alexander Litvinenko as saying that he was warned:

Don’t go to Italy, there are many KGB agents among the politicians. Romano Prodi is our man there.

Romano Prodi, in fact, has a history of shady ties with the Red Brigades. In 1978, he was somehow privy to the location of a prominent politician kidnapped by the Brigades (and later killed), which he explained as having been revealed to him in a séance.

PS, this is my 500th post. Happy birthday, blog!

Italian underemployment

Tyler Cowen the other day remarked about the perhaps increasing irrelevance of unemployment figures, given the apparently rising phenomenon of "underemployment," where workers are counted as employed despite the fact that they work much fewer hours and earn much less money than they have in the past.

Perry Anderson, in a fascinating recap in the London Review of Books of Italy's history since the beginning of the Second Republic in 1992, gives a good example of underemployment-in-action:

Redeeming this desolation has, to all intents and purposes, been just one improvement, in job creation. Unemployment, which stood at 12 per cent in the mid-1990s has dropped to 6 per cent today. But most of this work – half of all the new posts in 2006 – involves short-term contracts, and much of it is precarious employment in the informal economy. No counteracting dynamism has resulted. In the formula of the Neapolitan sociologist Enrico Pugliese, Italy has gone from growth without jobs in the last years of the First Republic to jobs without growth under the Second, blocking productivity gains.

In case you're curious about Anderson's verdict on the so-called "reforms" of the Second Republic, here's the last paragraph:

Growth was not liberated, but asphyxiated. Export shares have fallen, and the public debt, the third largest in the world, has remained stubbornly above 100 per cent of GDP, mocking the provisions of Maastricht. When the Second Republic started, Italy still enjoyed the second highest GDP per capita of the big EU states, measured in purchasing power parity, after Germany – a standard of living in real terms above that of France or Britain. Today it has fallen below an EU average now weighed down by the relative poverty of the East European states, and is close to being overtaken by Greece.

Overtaken by Greece?! That's saying something...

Old Cold War friends are reunited once again, and it feels so good

Aside from Russia and points eastward, Europe's only true alternative for natural gas is North Africa. And Russia is apparently acutely aware of that, as they've begun courting Libya, initially for its gas and pipeline, but in the future probably for its vast oil reserves, too:

Gazprom is expected to sign a deal with Eni to acquire the Italian company’s stake in Libya’s Elephant oil field. But Gazprom is really after Eni’s stakes in the Greenstream natural gas pipeline, which runs from Libyan fields to Sicily and would give Russia another potential energy lever to use against the Europeans.

In exchange for the Libyan oil fields, Gazprom has theoretically given Eni access to some of the energy reserves along Russia's Arctic coast.

As the Stratfor article mentions, Libya was very close to the Soviet Union during the Cold War. Through its own apparatus and through the security services of other Eastern bloc nations, the Soviets channeled weapons and expertise to Libya, whose leaders dutifully carried out Soviet foreign policy. They armed the PLO and the Iranians after the Revolution, backed the terrorists at Munich, employed Carlos the Jackal at various points (but really – who didn't?), and generally acted as staid proxies for Soviet malevolence. After the end of the Cold War, Libya saw the writing on the wall and jumped sides, resolving tensions over the Pan Am bombing and accepting billions in western development aid. But obviously, Libya has no favorite in this fight, and is up for whatever as long as it gets security and compensation.

Once an KGB agent, always a KGB agent

Departing Italian Prime Minister Romano Prodi has been offered a job shilling for Russia's energy interests in Europe, but has turned it down. This would seem to be a good thing on the face of it: outgoing German Chancellor Gerhard Schröder took the bait just weeks after pushing through legislation favorable to the company, and became the chairman of the Gazprom division that was to build the very pipeline that he had just pushed through. He has been a reliable shill for the Russians ever since, even defending the Russians during the row over the Bronze Soldier statue in Tallinn.

But, Romano Prodi is unfortunately not so innocent. In 1978, amidst what the Italians called the "Years of Lead," during which many terrorist attacks were carried out by far-left and far-right organizations, the prominent Christian Democrat Aldo Moro was assassinated by the Red Brigade before he could negotiate a political truce between the Communists and the Christian Democrats. But before he was killed, while he was being held hostage, Romano Prodi at the time claimed to have taken part in a séance on a whim with a few Italian intellectuals, during which time the place where Moro was being held hostage appeared to him. The police searched the village named Gradoli, but didn't find anything. However, after Moro's death, it turned out that he was being held on via Gradoli, outside of Rome – Prodi either received the information correctly in a séance, or was tipped off by a source in the leftist terrorist organization, the Red Brigade.

The story that Prodi received the correct name in a séance is pretty absurd, but it makes sense if you consider the allegations against him by the Mitrokhin Archives (a series of documents about the KGB's external operations obtained by an FSB double agent). Romano Prodi was accused of being the "KGB's man in Italy." There was an investigation, but nothing ever came of it. The controversy was rekindled in 2006 when it was revealed that assassinated former FSB agent Alexander Litvinenko was told by assassinated former FSB deputy director Anatoly Trofimov that Romano Prodi was "one of ours" – that is, an FSB agent. Funny how they both happen to have been assassinated.