Oil prices were nicely on the downturn for over three weeks when two commercial tankers were apparently damaged by mines in the Gulf of Oman, just off the very tense Strait of Hormuz.
The incident caused oil prices to take a U-turn. A significant portion of the world’s oil supplies passes through the Strait of Hormuz.
Fortunately, none of the crewmembers of either ship was injured in the incident, although one tanker was so seriously damaged the crew had to abandon it. No one claimed responsibility for the apparent attack.
This is the second time in the last two months that commercial vessels were attacked in the vicinity of the Strait. In both cases, mines or torpedoes appear to have been used.
Tensions in the area have been simmering since the US escalated economic sanctions against Iran. A large US naval force was sent to the Straits of Hormuz to deter any hostile move by the Iranian naval forces, particularly the fast patrol boats controlled by the more radical Revolutionary Guards.
Also fueling the tensions are the antagonistic relations between Iran and Saudi Arabia. The Saudis have been financing a coalition effort to suppress the Houthi rebels in neighboring Yemen. The Houthis, supported by Iran, have been firing ballistic missiles into Saudi Arabia. The latest round of missile attacks hit an international airport.
The brutal civil war in Yemen has taken a tremendous human toll. It is not about to subside anytime soon. Meanwhile, the two rival regional powers involved in it could come to blows because of it.
The US blames Iran for the most recent attack on the two ships. They have released video of what appears to be an Iranian patrol vote retrieving an unexploded mine from the side of one of the damaged ships.
The most plausible theory does indicate that radical forces in the stormy domestic politics of Iran could be involved. The attacks happened just as Japanese Prime Minister Abe Shinzo was meeting with the most senior Iranian leaders in Tehran.
Abe is trying to broker a relaxation of the tensions. All of East and Southeast Asia, after all, depend on oil supplies passing through the Strait of Hormuz. Any outbreak of hostilities in that area will likely constrict our supplies and torpedo our economies.
Flag
Keep your hands off our flag please.
Senator-elect Francis Tolentino lit a social media wildfire when he proposed another star be added to our flag. The fourth star, he said, would denote the Benham Rise, which is rising from the sea. The Philippines was recently awarded sovereign rights over this underwater plateau.
Someone ought to have informed Tolentino that it will take many million years for this underwater geological formation to rise above the surface. If the global ice caps continue to melt, causing the sea level to rise, we might add a few million years more for Benham’s emergence. By that time, humanity might have made itself extinct by stupidly ruining the natural habitat.
Every now and then, someone enamored with their own power comes up with a proposal to add something to the Philippine flag, often to add rays to honor other provinces that rose in revolt against Spain or to honor the Muslim Filipino communities who never succumbed to colonialism. If we yield to all these proposals, our flag will be as cluttered as our jeepneys – or our minds.
The Japanese flag is homage to the elegance of minimalism. If Filipino politicians were unleashed on that flag too, they would add so many new suns to that flag it would soon resemble a polka-dot bikini.
Our flag is a timeless relic to a heroic moment in our history. It is not a slum book for every new power-holder to write on.
Public diplomacy
The business community is generally happy with Benjamin Diokno as BSP Governor. The lifelong economist is clear about his bias for expansionary monetary policies.
As soon as inflation began to cool, Diokno pushed for lower policy rates and a reduction in bank reserve requirements. The first measure will lower the cost of money and encourage investments. The second measure will free liquidity otherwise trapped unproductively in central bank vaults.
Both high interest rates and high reserve requirements stymie business activity – even as they may be necessary tools to fight any sign the economy is overheating. High interest rates constitute a barrier to business expansion. High reserve requirements prevent banks from fully using their liquidity to lend some more.
Diokno’s bias for economic expansion contributes to the effort to restore the momentum of high GDP growth. That momentum was interrupted when legislative politicking caused the delay in passing the 2019 budget. That delay pulled down our first quarter growth rate.
Our economic managers have pledged to step up public spending in order to ensure our growth rate will be higher than 6% by the second half of the year. In this catch-up game, the economic managers will get strong supporting fire from the BSP. Unless we grow strongly at 6% or better, the administration cannot pull off its ultimate goal of bringing down the poverty rate to only 14% by 2022.
The BSP’s pro-growth disposition will have to be effectively communicated to the wider public, beyond the bankers and businessmen, in order to ensure popular support for expansionary policies. Public diplomacy has not been the BSP’s strong suit.
According to the grapevine, Diokno is considering appointing Margaux Salcedo to handle the BSP’s corporate affairs. A respected public relations person, she could indeed help the institution.