October 28th, 2014
10:46 AM ET

What I'm reading: Cutting off ISIS' cash flow

By Fareed Zakaria

“Disrupting ISIS’ oil income is more of a challenge than might meet the eye,” writes Charles Lister for Brookings. “Thus far, a great deal of focus has been placed on an erroneous assessment that ISIS is deeply reliant on selling its oil to foreign customers (in Turkey, Iraqi Kurdistan, Jordan and elsewhere). Instead, while this market focus does exist, it is decreasing. Since the summer, ISIS has been increasingly focused on establishing a durable internal market for its oil produce, thereby ensuring a reliable source of fuel for its own fleets of vehicles but crucially creating a source of dependence between civilians and its capacity to provide them cheap oil. In this respect, the fact that recent coalition strikes have targeted oil at its source — rather than its means of transport or sale, for example — may prove deeply damaging to the international community’s efforts to counter ISIS.”

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“If you're reading this, it's possible you'll live for a few hundred years. Maybe even thousands. Even better: you could live those years at your peak physical state,” writes Nicholas Warino for The Week. “At first glance, that's an absurd statement, going against the experience of all human history. However, Oxford University's Aubrey de Grey, a leading theoretician of aging, believes there is a 50 percent chance that someone alive today will live for 1,000 years.”

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“Russia would be hard pressed to survive the loss of the European gas market. Gazprom’s European revenues have already fallen from $60 billion to $55 billion, and European sales account for one third of Gazprom’s revenue,” writes Paul Roderick Gregory for Forbes. “If deprived of this revenue, Gazprom would run a loss of $25 billion and not a profit of $33 billion. Rather than contributing profits to a federal budget, 55 percent reliant on energy taxes, Gazprom would require subsidies. Its once-proud share price would collapse, and it would be hard pressed to obtain funding from any sources including China, with or without sanctions.”

“Putin understands that he is playing the highest of risks game.”

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“So why, given such potent reminders of the importance of money management, has China’s government in the past five years swerved so much off the financial straight and narrow? Total debts owed by the government, companies and households have ballooned to 240 percent of gross domestic product, virtually double the level at the time of the global financial crisis,” writes James Kynge in the Financial Times.

“This ratio, it is true, remains modest next to some in the west; US debts stand at 322 percent of GDP, Ireland’s at more than 400 per cent, while Greece and Spain are at about 300 percent each. But the speed of increase in China’s leverage has been beyond parallel, and because of elevated Chinese interest rates (estimated by Fitch, a credit-rating agency, to average 7 percent) the cost of debt servicing has risen much faster than in other indebted countries.”

 


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