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Stephen Craig: "Tamed Tiger or Restless Beast? German Foreign Policy in the Post-Unification Period"

Clay Ramel: “Reconsidering the Roots of Crude Coercion: a Policymaking Analysis of “the Oil Weapon””

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Mark C. Thurber, David R. Hults

National oil companies (NOCs) often behave in strikingly different ways from one another and from private, international oil companies (IOCs). Given that NOCs control about three-quarters of world oil reserves by equity share, their variation in corporate strategy has important implications for the world oil market. The recently released book Oil and Governance: State-owned Enterprises and the World Energy Supply, which we co-edited (along with our colleague, David Victor) and contributed to, explores the variation among NOCs through 15 detailed case studies and several cross-cutting pieces. Building off the research in that book, our aim in this essay is to discuss the differences among NOCs in their approach to risk

As described by Nolan and Thurber in Chapter 4 of our book, the notion of risk encapsulates both the likelihood of a negative outcome (e.g., of drilling a dry hole) and the loss that such an outcome would entail (e.g., the investment in an exploration well). Risks are pervasive in the oil industry because of the enormous sums of money on the line and the significant uncertainty around whether investments will prove successful. In this article we suggest that the goals of the state and its tools of governance may cause an NOC to tend towards one of three types of behavior: risk avoidance, risk taking, or risk management. Each of these three approaches to risk, we find, can be useful or counterproductive for the state depending on the context.

It can be useful for an NOC to avoid risk, as Sonangol has done, if its government is highly dependent on oil revenue, but this approach usually means that it must allow IOCs to shoulder risks if the oil sector is to thrive. Intelligent risk taking by the NOC, on the other hand, can help build domestic technological capability and may be a reasonable approach if the government has less need to maximize hydrocarbon revenue in the short term. Finally, commercial risk management by the NOC may be an appropriate model where the NOC has developed some competitive advantages and its government has few remaining expectations for the NOC apart from revenue generation. There is no “right” or “wrong” approach to risk for NOCs in a general sense. The goal of each government and its NOC should be to make sure that the way the NOC takes, avoids, or manages risk is of benefit to both the country and the NOC itself.

 

Link to article (free trial subscription available) => http://www.worldoil.com/June-2012-Risk-attitudes-shape-national-oil-company-strategies.html

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Mark C. Thurber
David Hults
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Special CISAC Seminar 

Stephen Craig

Recipient of The Firestone Medal for Excellence in Undergraduate Research 

Tamed Tiger or Restless Beast? German Foreign Policy in the Post-Unification Period

 

&

 

Clay Ramel

Recipient of The William J. Perry Prize 

Reconsidering the Roots of Crude Coercion: a Policymaking Analysis of “the Oil Weapon”

CISAC Conference Room

Stephen Craig Recipient of The Firestone Medal for Excellence in Undergraduate Research Speaker
Clay Ramel Recipient of The William J. Perry Prize Speaker
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In October 2006, only a few short months after John Everard, a former Pantech Fellow with Stanford’s Korean Studies Program, arrived in Pyongyang to serve as the British ambassador, North Korea conducted its first-ever nuclear test. Everard spent the next two-and-a-half years meeting with North Korean government officials and attending the official events so beloved by the North Korean regime. During this complicated period he provided crucial reports back to the British government on political developments.

He also traveled extensively throughout North Korea, witnessing scenes of daily life experienced by few foreigners: people shopping for food in Pyongyang’s informal street markets, urban residents taking time off to relax at the beach, and many other very human moments. Everard captured such snapshots of everyday life through dozens of photographs and detailed notes.

Only Beautiful, Please: A British Diplomat in North Korea, released in June from the Shorenstein Asia-Pacific Research Center, recounts Everard’s experiences during his stay in North Korea. The book goes beyond official North Korea to unveil the human dimension of life in that hermetic nation. Everard recounts his impressions of the country and its people, his interactions with them, and his observations on their way of life. He provides a picture as well of the life of foreigners in this closed society, considers how the DPRK evolved to its current state, and discusses the failure of current approaches to tackle the challenges that it throws up. The book is illustrated with striking and never-before-seen photographs taken by Everard during his stay in North Korea.

Related Events

  • June 25, 2012, 2:00 p.m. to 3:30 p.m. 
    Brookings Institution, Falk Auditorium, Washington, DC 
    More details 
    Audio podcast and transcript 
     
  • June 19, 2012, 6:00 p.m. to 8:00 p.m. 
    Korea Society headquarters, New York City 
    More details 
    Video 
     


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In an article for Foreign Policy, Karl Eikenberry argues that the drifting Taiwan-U.S. relationship puts the stability of the Asia-Pacific region at risk. He observes that other regional allies are hedging their bets against a rising military power in China because of skepticism that the United States can keep its commitments, and outlines key weaknesses that Washington must overcome with Taipei.
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The government’s far-reaching health care foreign aid program has contributed to a significant decline in adult death rates in Africa, according to a new study by Stanford researchers. 

Between 2004 and 2008, the U.S. President’s Emergency Plan for AIDS Relief was associated with a reduction in the odds of death of nearly 20 percent in the countries where it operated. The researchers found that more than 740,000 lives were saved during this period in nine countries targeted by the program, known by its acronym, PEPFAR.

“We were surprised and impressed to find these mortality reductions,” said Eran Bendavid, an affiliate at Stanford Health Policy, part of the university’s Freeman Spogli Institute for International Studies.

“While many assume that foreign aid works, most evaluations of aid suggest it does not work or even causes harm,” said Bendavid, an assistant professor of medicine at Stanford’s School of Medicine. “Despite all the challenges to making aid work and to implementing HIV treatment in Africa, the benefits of PEPFAR were large and measurable across many African countries.”



The study is the first to show a decline in all causes of death related to the program. It appears in the May 16 issue of the Journal of the American Medical Association.

Bendavid is the lead author of the study. It was co-authored by Grant Miller and Jay Bhattacharya, who are both core faculty members of Stanford Health Policy and associate professors of medicine. The study was funded by the National Institutes of Health and the Dr. George Rosenkranz Prize for Health Care Research in Developing Countries.

PEPFAR began in 2003 under the Bush administration with a five-year, $15 billion investment in fighting AIDS around the world and a focus on treatment and prevention in 15 countries. It was reauthorized by Congress in 2008 and has expanded its reach to 31 countries.

To measure the impact of the program, Bendavid and his colleagues analyzed health and survival information for more than 1.5 million adults in 27 African countries, including nine countries where PEPFAR has focused its efforts. The researchers examined data available in the Demographic and Health Surveys, a USAID-funded project that involves a representative sampling of in-person interviews among women in which they discuss their health and the health of their family members. These surveys form the foundation of many health measurements in developing countries.

They found the odds of death from any cause among adults were 16 to 20 percent lower in the PEPFAR-targeted countries.

To bolster the results, the scientists did a separate analysis using specific data on PEPFAR programs in Rwanda and Tanzania. They compared regions of the two countries where PEPFAR’s investments led to widespread increases in the number and size of sites providing antiretroviral therapy, with areas where PEPFAR had fewer services available.



“We observed a similar reduction in mortality when exploring PEPFAR’s effects using a different lens,” Bendavid said.

In Tanzania, the odds of death were found to be 17 percent lower and in Rwanda 25 percent lower in the districts with greater support from PEPFAR.

Bendavid speculates that the program’s commitment to building an infrastructure that includes drug distribution systems, clinics, pharmacies, laboratories and testing facilities has been an important factor for its success.

“The scale of PEPFAR’s investment was unprecedented,” Bendavid said. “People working in PEPFAR’s focus countries describe working supply chains, stocked pharmacies and staffed clinics.”



Although the program was targeted to address HIV, these services could have benefitted patients with a variety of other health concerns. For example, one study found that some uninfected, pregnant women in Ethiopia, Rwanda and Tanzania chose to deliver their babies in facilities supported by PEPFAR, Bendavid said.

Some have argued that focusing resources on a specific disease, such as AIDS, may detract efforts from other diseases and activities, undermining some of the benefits of such programs. But the latest study does not support this argument. Rather, it suggests that PEPFAR helped prevent additional deaths from causes other than HIV/AIDS.

“Whether disease-specific programs like PEPFAR have synergies with other health improvement efforts – or instead undermine them, as some have worried – is really an open question,” Miller said. “There are reasons to think either scenario is possible, and more research is needed. We don’t find much evidence of PEPFAR undercutting other initiatives. If anything, we see hints of synergies.”



Bendavid said the program managed to accomplish the reduction in mortality in the face of enormous challenges – from persuading people to go for HIV testing and treatment to dealing with problems of drug shortages and drug resistance.

Historically, few other large-scale health initiatives have succeeded to such an extent. Smallpox, which was eradicated by 1979, is among the rare and more notable examples.

“PEPFAR’s success with HIV … may be considered the clearest demonstration of aid’s effectiveness in recent years,” the researchers concluded.

In 2009, PEPFAR was folded into a new Global Health Initiative that calls for a broader agenda, with some resources redistributed to other programs, such as maternal and child health.

Its budget, which rose dramatically in the early years, has remained relatively flat or declined slightly since then. It peaked at $6.8 billion in fiscal year 2010, then declined to $6.7 billion and $6.6 billion in fiscal years 2011 and 2012, respectively, according to figures from the Kaiser Family Foundation. The Obama administration’s budget request for the 2013 fiscal year is $6.4 billion.

While the program appears to have had an impact within a few years of its implementation, Bendavid noted that reduced investments in fighting AIDS, both through PEPFAR and other international aid programs, could have implications for the future of the epidemic.

“We are transforming the face of the epidemic but funding shortfalls will change the road ahead,” he said.



Ruthann Richter is Director of Media Relations for the Stanford School of Medicine.

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