McKinsey have just published an annual update on their resource scarcity work, which is well worth a read if you watch those issues. Key headlines as follows (in their own words):
Commodity prices have come off their previous peaks since 2011, prompting some observers to call an end to the so-called resources super cycle—the sharp price rises since the turn of the century. But talk about the death of the super cycle appears greatly exaggerated, the report finds. Despite recent declines, on average commodity prices are still almost at their levels in 2008 when the global financial crisis hit. This is striking given that the world economy is still not back to full power after the worldwide recession in 2009.
The volatility of resource prices has also been considerably higher since the turn of the century. While there are many factors influencing short-term volatility including droughts, floods, labor strikes, and restrictions on exports, there is also increasing evidence of a more structural supply issue that is likely to continue to drive volatility. Supply appears to be progressively less able to adjust rapidly to demand because new reserves are more challenging and expensive to access.
The prices of different resources have been increasingly closely correlated over the past three decades. While rapid growth in demand for resources from China has been an important driver of these increased links, two additional factors are also important. First, resources represent a substantial proportion of the input costs of other resources. Second, technology advances are enabling more substitution between resources in final demand. As a result, shocks in one part of the resource system today can transmit rapidly to other parts of the system.
With the notable exception of shale gas, long-term supply-side costs continue to increase. While the world does not face any near-term absolute shortages of natural resources, increases in the marginal costs of supply appear to be pervasive and put a floor under the prices of many commodities. In the years ahead, resource markets will be shaped by the race between emerging-market demand and the resulting need to increase supply from places where geology is more challenging, and the twin forces of supply-side innovation and resource productivity.
FYI McKinsey’s Jeremy Oppenheim, who worked on this project, is now on sabbatical to run the secretariat for the new Global Commission on the Economy and Climate (‘Stern 2’ to its friends), which was launched last week. Here’s its work programme.
Here’s more exciting Syrian news from the Security Council after last week’s chemical weapons resolution:
The president of the U.N. Security Council said Monday that many members are pressing to follow up on last week’s resolution to eliminate Syria’s chemical weapons with a demand that the government allow immediate access for desperately needed humanitarian aid.
Australian Ambassador and council president Gary Quinlan said a draft Security Council statement calls for delivering access in “the most effective ways, including across conflict lines and, where appropriate, across borders from neighboring countries …” if necessary to bypass meddling from President Bashar Assad’s regime in Damascus.
And here is the really striking news:
Russian Ambassador Vitaly Churkin told The Associated Press that Russia approved of the draft statement on humanitarian aid as well.
Now why on earth would Russia support such a proposal now? This map suggests one answer:
As the map shows, a majority of border towns and cities are held by rebels or Kurds. So if the UN tries to open up humanitarian corridors from other countries, the burden will be on the rebels to safeguard them. There are notable exceptions, like Qusayr. But Russia can support this initiative safe in the knowledge that (1) it reflects facts on the ground and (2) it may create more headaches for the rebels than for Assad. Will rebels let aid into government-held areas?
Thank you, New York Post, for finally bursting the UN General Assembly bubble:
Midtown jiggle joint Flashdancers has seen a lot of action thanks to the United Nations General Assembly.
“The place has been so packed with diplomats, they’ve had to turn away people at the door,” says a source.
But when we asked for the names of diplos dining out — and perhaps getting private lap dances on their countries’ cash — we were refused.
The source added, “None of the diplomats have been super wild, they’re all enjoying themselves but remaining very low-key.”
UPDATE: see end of this post for an important and intriguing correction.
Yesterday, Australian historian and UN-watcher Michael Fullilove took a pot-shot at Ban Ki-moon’s twittering style…
Now it’s very easy for an independent thinker like Michael to mock an official like Ban about writing dull tweets. It’s hard for the Secretary-General to be informal or snappy online, because he always risks offending people. But I think that Michael is also missing something deeper and more fundamental here. A close reading of Ban’s tweets suggests that he isn’t just trying to tell us who he is meeting or where he is. He also sees Twitter as an art form, offering moments of minimalist surrealism that verge on the poetic. Here are some examples that, to me, represent the high-points of Ban’s art-form:
Truly, this man is a Zen master of the twittered word.
UPDATE: 2 well-placed sources have pointed out that the “@secgen” account is entirely unofficial. Despite having nearly 250,000 followers, it is in fact the work of someone (reportedly in the UK) who simply tweets Ban’s official schedule hour-by-hour. Which must be quite dull. So, I am pleased to (1) say sorry to the SG; and (2) pose the question that will now surely shake global diplomacy: who is the (un)real Ban Ki-moon? [Technically, the answer is that the best accounts to follow are @UN_Spokesperson and @UN.]
I have a 3,000 word essay in Aeon, the online magazine of ideas, on the United Nations and morality. Here’s the opening…
‘We will integrate human rights into the life cycle of all staff.’ This phrase, with its strange mix of bureaucratic and moral ambitions, might sound like a piece of Orwellian doublespeak. In fact it is a sincere statement from a policy paper circulated among senior United Nations staff this summer on the need to renew the organisation’s ‘vision’ in the face of massive human rights violations. UN officials have been despondent over their failure to halt the Syrian war and the organisation’s performance in persistent trouble-spots such as Darfur, so the soul-searching is timely. But will it make any difference?
You can find the answer to that question, and the full article, here.
A coda to my post a couple of weeks back on the role of climate change and resource scarcity as conflict threat multipliers in Syria, via Tom Friedman in the NY Times:
“Our main problem that threatens us, that is more dangerous than Israel, America or political fighting, is the issue of living in Iran. Is that the Iranian plateau is becoming uninhabitable. … Groundwater has decreased and a negative water balance is widespread, and no one is thinking about this.
“I am deeply worried about the future generations. … If this situation is not reformed, in 30 years Iran will be a ghost town. Even if there is precipitation in the desert, there will be no yield, because the area for groundwater will be dried and water will remain at ground level and evaporate.
“All the bodies of natural water in Iran are drying up: Lake Urumieh, Bakhtegan, Tashak, Parishan and others … deserts in Iran are spreading, and I am warning you that South Alborz and East Zagros will be uninhabitable and people will have to migrate. But where? Easily I can say that of the 75 million people in Iran, 45 million will have uncertain circumstances. … If we start this very day to address this, it will take 12 to 15 years to balance.”
– Iran’s former agriculture minister Issa Kalantari (now an adviser to Hassan Rouhani), writing in the Iranian Ghanoon newspaper.
Snarky comments are not, I think, necessary here: