Tag Archives: Saudi Arabia

Looking Away From Japan For One Moment..

The Week:

Saudi Arabia sent 1,000 soldiers into neighboring Bahrain on Monday to help quell increasingly violent anti-government protests. While Bahrain’s King Hamad bin Issa al-Khalifah, a Sunni Muslim, has offered to start a dialogue with the mostly Shiite protesters, opposition leaders have refused, demanding that the government step down, and calling the arrival of foreign troops an invasion. Saudi Arabia has problems with its own Shiite minority, and fears the unrest in Bahrain could spill over into its own oil-rich kingdom. Will the Saudis be able to quash the unrest in Bahrain?

Bruce McQuain:

Yes it’s another fine mess.  Of course while the Japanese tragedy and the struggles with their nuclear power plants has sucked all the air out of news elsewhere, there is, in fact much news elsewhere.  And not the least of it is coming out of the Middle East where Saudi troops, as a part of the Gulf Cooperation Council (GCC), moved into Bahrain ostensibly to “guard government facilities”.

The GCC is composed of Saudi Arabia, Qatar, UAE, Bahrain, Oman and Kuwait.   It was created in 1991 (think Iraq invasion of Kuwait), the 6 members share common borders and are committed by their charter to help each other in times of need.

The action by the GCC, as you might imagine, is in direct conflict with how the White House has indicated it would prefer the situation in Bahrain be resolved.  Obviously that’s not carried much weight with the GCC.

The move created another quandary for the Obama administration, which obliquely criticized the Saudi action without explicitly condemning the kingdom, its most important Arab ally. The criticism was another sign of strains in the historically close relationship with Riyadh, as the United States pushes the country to make greater reforms to avert unrest.

Other symptoms of stress seem to be cropping up everywhere.

Saudi officials have made no secret of their deep displeasure with how President Obama handled the ouster of the Egyptian president, Hosni Mubarak, charging Washington with abandoning a longtime ally. They show little patience with American messages about embracing what Mr. Obama calls “universal values,” including peaceful protests.

The GCC move has prompted both Robert Gates, Secretary of Defense and Hillary Clinton, Secretary of State, to cancel upcoming visits to Saudi Arabia.

Again, the apparent genesis of these tensions appear to be related to the way the US handled Egypt.  It has caused the Saudis and other GCC nations to trust the US less than before:

The latest tensions between Washington and Riyadh began early in the crisis when King Abdullah told President Obama that it was vital for the United States to support Mr. Mubarak, even if he began shooting protesters. Mr. Obama ignored that counsel. “They’ve taken it personally,” said one senior American familiar with the conversations, “because they question what we’d do if they are next.”

Since then, the American message to the Saudis, the official said, is that “no one can be immune,” and that the glacial pace of reforms that Saudi Arabia has been engaged in since 2003 must speed up.

Obviously the Saudi’s have their own ideas of how to handle this and apparently aren’t taking kindly to the US attempting to dictate how it should handle it’s internal affairs.  And, given the treatment of Mubarak, the Saudi rulers can’t help but feel that they’re just as likely to be thrown under the bus if protests were to escalate as was Mubarak.

Consequently, they’ve decided to go their own way and handle it with force within the GCC  while throwing money at the problem within the Saudi Kingdom.  Speaking of the latter:

One of President Obama’s top advisers described the moves as more in a series of “safety valves” the Saudis open when pressure builds; another called the subsidies “stimulus funds motivated by self-preservation.”

Saudi officials, who declined to comment for this article to avoid fueling talk of divisions between the allies, said that the tensions had been exaggerated and that Americans who criticized the pace of reforms did not fully appreciate the challenges of working in the kingdom’s ultraconservative society.

Of course the difference between their “stimulus funds” and ours is they actually have the money.   But it is ironic to see the adviser describe “stimulus funds” in those terms isn’t it?  The actual point here should be evident though.  The GCC has rejected the “Bahrain model” as the desired method of addressing the unrest.  As you recall that was the “regime alteration” model, v. the regime change model.

Spencer Ackerman at Danger Room at Wired:

It’s a move that undercuts the Obama administration’s rosy portrayal of the monarchy. Despite a paroxysm of violence in February when security forces attacked protesters in the capitol city of Manama, “today, the Pearl Roundabout in Bahrain is a place of nonviolent activism,” Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, assured reporters on March 1. After a visit last week to Bahrain, home to the U.S. Navy’s Fifth Fleet, Gates said he was convinced the royals “are serious about real reform.”

If so, that lasted until about when Gates’ plane went wheels-up. Security forces are now trying to clear Manama’s financial district of protesters, firing tear gas canisters into demonstrators’ chests. About 1000 Saudi troops entered Bahrain on Monday, ostensibly to protect government installations, but protesters at the Pearl Roundabout set up barricades in preparation for the Saudis attacking them. The leading Shia opposition party, Wefaq, called it a “declaration of war and an occupation.”

And it’s not just the Saudis. Hussein Ibish of the American Task Force on Palestine tweeted that forces from the United Arab Emirates are also entering Bahrain, fulfilling a mandate from the Gulf Cooperation Council to protect the royals.

Matthew Yglesias:

I wish folks urging the United States to start a war in Libya would think a bit more about the situation in Bahrain: “The king of Bahrain declared a three-month state of emergency on Tuesday as more than 10,000 protesters marched on the Saudi Arabian embassy here to denounce a military intervention by Persian Gulf countries the day before.”

I don’t think the US military should attack Bahrain’s forces or Saudi Arabia’s any more than I think we should attack Libyas. But it seems overwhelmingly likely to me that if the Secretary of Defense were to call the relevant royal families and say that the United States does not intend to sell weapons in the future to countries that use them to crack down on peaceful democratic protestors, that this would be an important spur to political change. It’d be radically cheaper than a war with Libya and more effective than a war with Libya. If the answer is “well, America likes its client states just fine and doesn’t actually care about human rights in Arab countries” then maybe that’s all there is to say about it, but for people to run around the op-ed pages talking about no-fly zones in North Africa seems to me like it’s dodging the real question here. My view is that despotism can hardly be expected to last in the Gulf forever so getting on the right side of inevitable change will serve any meaningful conception of interests just as well as trying to prolong the inevitable will.

Ed Morrissey:

This will put a new wrinkle in the American reaction to the unrest.  Bahrain has a constitutional monarchy, as noted above, with a more liberal political environment than Saudi Arabia.  Both, however, are American allies; Bahrain has a free-trade agreement with the US.  Women have the right to vote and to seek education, which is much different than the Saudis.  The people have demonstrated peacefully for the most part in the Pearl Roundabout in the capital of Manama, but government forces used live ammunition to attempt to drive them out on at least two occasions last month.  They claim to want a republic based on representative democracy, exactly as protesters in Egypt, Libya, and Tunisia demanded — and which the US endorsed in those instances, to vacillating and varying degrees.

Now that one US ally has more or less invaded another, Grenada-style, at the request of a monarchy that has fired on its own people to maintain its power, what will Barack Obama do?  The Saudis clearly see the threat in Bahrain as a potential destabilizing force in their own country as well as fearing a growth of Shi’ite power in the region with the takeover of Bahrain.  Will Obama tell the Saudis to stand down and let the people of Bahrain settle their own accounts despite their probably-legitimate fears, or will he side with the Saudis for the status quo while the rest of the Arab world gets turned upside down?  Frankly, there aren’t a lot of great options here.

Dov Zakheim at Foreign Policy:

It should come as no surprise that Saudi Arabia has come to the aid of Bahrain’s royal family with about one thousand troops crossing the causeway between the two countries. If more troops are needed to ensure that the al-Khalifa regime does not fall, the Saudis will oblige. Put simply, Riyadh cannot tolerate Shiite domination of its offshore island, whether or not the al-Khalifas remain in power.

A Bahrain that is ruled by its Shiite majority is one-third of the ultimate nightmare for the Sunni rulers of the desert kingdom. The other two-thirds are a revolt by the Shiite majority in Saudi Arabia’s oil-rich Eastern Province, which could spill over from the troubles in neighboring Bahrain and a massive influx of Yemenis, many of whom are adherents of the Zaidi branch of Islam, and have little in common with Saudi Wahhabism.

Stability in Bahrain is therefore crucial for the long-term future of the al-Saud family as rulers of their eponymous kingdom. Indeed, Saudi Arabia’s rulers fully recognize that because memories in the Middle East are very long, the fact that the Hejaz was a separate Arabian kingdom as recently as the 1920s until it was conquered by Ibn Saud and merged with his kingdom of the Nejd means that the break-up of their country is hardly impossibility.

Other Gulf States, notably Kuwait, whose rulers are close to the al-Khalifa, may join the Saudi effort to stabilize Bahrain. So might the UAE, which shares Saudi fears of Iranian domination of the island, which was once an Iranian province, and which continues to smart over the Iranian seizure of its islands of Abu Musa and the Tunbs in 1971.

Blake Hounshell at Foreign Policy:

But outside of Tunisia and Egypt, Arab dreams are fast becoming Arab nightmares. In Libya, a spontaneous popular uprising is turning into a civil war — one that the rebels are rapidly losing. In Bahrain, protests that began as a call for civil rights and constitutional reform have devolved into ugly sectarian street battles; and as Saudi forces intervene to protect the ruling Sunni monarchy, the situation risks sparking a proxy struggle between Saudi Arabia and Iran. Yemen is kicking out foreign journalists as tribes cowboy up and activists talk of an impending bloodbath. Iraq’s hapless government is clamping down on political freedom. And all of this is taking place against the backdrop of rising oil prices, a hopelessly stalled Middle East peace process, and an epic natural disaster in the world’s No. 3 economy.

There are some bright spots: Morocco’s King Mohammed VI seems to understand at some level that he needs to embrace change lest he be swept up by it; Jordan has remained surprisingly calm even though its monarch, King Abdullah II, has thus far only pretended to get it; Kuwait already had a relatively vibrant political scene; and quiescent Qatar and the go-go United Arab Emirates don’t seem at risk of any unrest whatsoever. But in general, the region’s autocrats are responding as they always have to popular anger: with a combination of brute force, comically half-baked reforms, and economic bribes.

What will happen next is anybody’s guess, but I find it hard to be optimistic in the short term. Much depends on how the democratic transitions in Tunisia and especially Egypt go, but it will be many months before the dust settles there. In the meantime, the rest of the region is ablaze. And as they did with Iraq, Arab leaders will now eagerly point to Libya and Bahrain as cautionary examples of what happens when citizens to the streets.

Meanwhile, the region’s two traditional problem children — Lebanon and Palestine — haven’t even joined the fray yet. Burgeoning youth protest movements in both places are calling on their bickering, ineffective leaders to get their acts together in the name of national unity, but the forces of the status quo are far stronger. It’s hard to imagine Hezbollah and Lebanon’s March 14 movement in Lebanon, or Fatah and Hamas in Palestine, putting aside their differences and coming together for the common good. And Iran and its pal Syria haven’t begun to make trouble yet. Now that Saudi Arabia has thrown down the gauntlet in Bahrain, the gloves may come off — especially if the U.N. special tribunal ever gets around to indicting Hezbollah figures for the murder of former Lebanese prime minister Rafiq al-Hariri.

None of this is to say that there is some magic formula that the United States could have employed to avoid this dangerous state of affairs. U.S. influence in the region is fast evaporating, as evidenced by the fact that its ostensible allies — Israel and Saudi Arabia — are now flaunting their rejection of Washington’s advice: Benjamin Netanyahu is reportedly about to debut an absurdly disingenuous peace initiative, and Saudi troops just rolled into Bahrain a day after U.S. Defense Secretary Bob Gates urged King Hamad to compromise and embrace political reform. The Pentagon didn’t even get a courtesy call.

But what happens next will have huge repercussions for U.S. national security, and will present President Obama will terrible dilemmas in the region. If Saudi troops kill Shiites in Bahrain using American weapons, what will he say or do? Iran wasn’t behind any of these uprisings, but if it starts creating mischief, how should he respond? What if Yemen turns into another Somalia? What if Palestinians rise up against Israel in a third intifada? If Egypt’s transition goes badly? Right now, coming up with tough questions is a lot easier than providing answers.

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Let’s Go Back To WikiLeaks And Learn Something Interesting!

John Vidal at The Guardian:

The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as “peak oil“.

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

One cable said: “According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.”

It went on: “In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.

“Al-Husseini disagrees with this analysis, believing Aramco’s reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output.”

Kevin Drum:

This won’t come as a surprise to anyone who’s been following the oil industry over the past few years. Matthew Simmons’ Twilight in the Desert, which I reviewed six years ago, made a detailed case that Saudi Arabia’s production capacity had pretty much maxed out already, and Business Week published an article three years ago based on internal Saudi documents that said much the same: the Saudis could pump 12 million barrels a day in short spurts but only 10 million barrels on a steady basis — and that’s all there is. Production capacity just isn’t going up.

Steve LeVine at Foreign Policy:

The issue is pivotal. Put simply, the price of oil — the price you are paying at the pump, indeed the cost of everything in your home — is wholly determined by what oil traders think Saudi reserves and production capability really are. As an example, oil plunged yesterday to their lowest price of the year — $87.87 a barrel — when Saudi Arabian Oil Minister Ali al-Naimi (pictured above) suggested that the kingdom will put new oil supplies on the market to compensate for any uptick in global demand.

The thing is, the Saudis are highly secretive about these figures — unlike almost every important petro-state on the Earth outside the Middle East, the Saudis will not permit their oilfields to be independently audited. One might wonder why that would be the case, and the late Matt Simmons, for example, made much hay suggesting that the reason is that the Saudis simply don’t have as much oil as they claim. I myself got ahold of documents back in 2008 suggesting the same. Sensible voices, however, said such are the thoughts of the conspiratorial-minded, and that the Saudis genuinely possess what they claimed — they were denying the right to verify because … well because that’s just what they do.

Ryan Avent at Free Exchange at The Economist:

It’s interesting to look at recent production data with this kind of news in mind (to see production numbers you can download  this PDF, or check out charts at the Oil Drum). What we observe is that from around 2004, oil production hasn’t increased very much, even as prices have soared. Now, one reason for this plateau may be the lag in bringing new supply online. During the cheap oil 1990s, production growth and exploration were limited. As prices rose in the early 2000s, producers brought existing, high-cost facilities online, adding to supply. But once existing production was running at capacity, the industry had to wait to get new facilities up to increase supply, and that process doesn’t happen overnight. So it could be that, globally, we’re experiencing a temporary period of high prices and stagnant supply while new extraction is set up.

Of course, in an environment of growing demand, a temporary supply limit can be costly.

But let’s think about one other potential dynamic. In the old days, OPEC attempted to use its cartel status to artificially limit supply and raise prices. This, however, was difficult to orchestrate; there was always the incentive to cheat and sell more than one’s quote of oil at the artificially high price, and as more participants cheated the supply limit fell apart. But as global supply runs against natural limits, incentives begin shifting the other way.

If an individual gains information suggesting that oil reserves are overstated, then they’re likely to expect an increase in future prices. Such an individual could bet on this outcome by buying oil futures, but this behaviour is limited by the nature of the contract; at some point traders may need to take delivery of actual oil, in which case they’ll need a place to store it, and that storing activity would be highly visible in the form of rising inventories.

But what if you’re an oil producer, and you learn this information? Well, obviously you’d like to make the same bet, and hold on to your oil until you can sell it at a higher price. Fortunately for you, oil producer, nature has provided a natural storage tank. All you have to do to make your bet is not produce any more oil than you need to sell to cover costs.

All of which is to say, the world doesn’t need to experience declines in potential oil production to see a rise in oil prices. All it needs is for oil producers to see that such limits loom and begin betting on the near-certainty of rising prices. Of course, different countries will face different liquidity constraints; some leaders may find themselves producing full out in order to sustain their socialist paradise, particularly when prices temporarily dip thanks to recession. But at those times, other countries with fiscal room to spare should cut back their production further—to buy more, essentially, when prices are low in order to sell more when prices are high.

Ariel Schwartz at Fast Company:

Even Jeroen van der Veer, the chief executive of Royal Dutch Shell, has admitted that oil supply may no longer keep up with demand by 2015. But the just-released cables, which detail a back-and-forth between the U.S. consul general and geologist Sadad al-Husseini, the former head of exploration at Saudi Aramco, confirms that the situation is serious.

Weasel Zippers

Israel Matzav:

If this is taken seriously, it should accelerate the search for alternative energy sources and reduce the influence of ‘our friends the Saudis.’ Both those results would be blessings.

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Count How Many Blog Posts Had The Word “Chutzpah” In Them

uptonsinclairoil

Michael O’Hare:

If you’re still collecting evidence that a society built on extractive wealth is liable to moral pathology, put this one in your dossier.  The Saudis are demanding that if we use less of their climate-toxic export, we should pay them (and the other oil-exporting countries) for what we don’t buy.

Let us pause in awe at the nerve of this idea.  The citizens of Gulf oil states toil not, neither do they spin, yet Solomon in all his glory was not coddled as one of these privileged lottery winners, swanning around the lobbies of ridiculous hotels and airconditioned shopping centers in spotless white dishdashis, never carrying anything bigger than a cellphone with which to check on the steady inflow of unearned money from a no-work government job, or his brokerage account, or the current price of his pied-a-terre in Mayfair. If something actually needs to be, like, done (cook dinner, build a hotel, look for oil, drill for oil, pump it) they hire expats from around the world and watch. What the government doesn’t pay its men for knowing nothing and doing nothing, it spends to abuse its women, and to spread ignorance, superstition, and savagery through the land and maybe some terror amid the overseas suckers who found, extract, refine, and buy the oil.

They have had more than half a century to accumulate wealth beyond the wildest imagination of people who work for a living, simply because they were struck by underground magic lightning where they happened to have pitched their tents.  That wealth could have made them the most educated, productive, creative, fixed-for-centuries society in the world, but they chose to spend it becoming the most incompetent, dependent, and primitive.  Now these parasites propose that the world owes them this lifestyle even if our taste for oil changes to a taste for planetary survival?

Alex Massie:

Good luck with that.

Andrew Sullivan:

This is, of course, somewhat encouraging. It means the Saudis have a tiny feeling the West might finally get its act together and wean itself off their oil, and all the imperial weight it carries. I sure hope they’re right.

Daniel Drezner:

If Saudi Arabia was serious about diversifying its economy, it would open up its spigots and let the price of oil fall to the point where there were market incentives for economic diversification.  Somehow, I don’t see that happening.

So, this isn’t really going to go anywhere — but what I do find particularly amusing is that if one thought about compensating dirty energy producers for the costs of climate change mitigation, then oil producers would be close to the back of the line.  Coal-producing economies — like China and the United States — would be justified in demanding much greater levels of compensation, since coal is a much dirtier energy source.  Oil would be in front of natural gas producers, and that’s about it.

Readers are encouraged to proffer their own proposals in the comments that would seem more outlandish than the Saudi one.  Creativity counts!!

Matthew Yglesias:

It’s interesting to look at the range of policy responses different countries have had to oil wealth. Norway has been incredibly far-sighted, while Abu Dhabi and Qatar also score quite well. All the way on the other end of the spectrum are Nigeria and Equatorial Guinea. And then there’s Saudi Arabia, kind of the oil exporters and apparently world champions in chutzpah.

Tyler Cowen

Free Exchange at The Economist:

If the billions of dollars per day the world has been sending oil producers for years now haven’t been enough to fund diversification, I’m not really sure what will be.

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Joe Biden, Saudi Arabia, Israel and Iran

What did Joe Biden say about Israel and Iran?

Marc Lynch:

It’s hard to tell exactly what Joe Biden was trying to say this morning on “This Week” with George Stephanopolous.  But his remarks are being widely interpreted as a green light for an Israeli strike on Iran. If that isn’t the case, Biden needs to issue a strong clarification immediately.  If it is, then he has just committed the worst foriegn policy blunder of the Obama administration.

Robert Farley:

I read this as Biden distancing the United States from any Israeli attack; this is to say that, if the Israelis do attack Iran, that the United States had nothing to do with it. I don’t really see it as the US giving Israel a green light; why would such a message ever been given in public? I probably wouldn’t have used the phrase “entitled” but the point seems to be to draw a distinction between Israel and the US, rather than to indicate a preferred course of action to the Israelis.

Matthew Yglesias:

This is being read by some, including Marc Lynch, as a “green light” for an Israeli attack. Like Robert Farley I think the most straightforward reading of what Biden said is rather different, he’s trying to distance the United States from any possible Israeli military action by making it clear that what Israel does or doesn’t do is decided in Israel rather than in Washington.

The main problem with this, I think, is that probably nobody’s going to believe it. Already you see many Americans taking Biden’s statement that the U.S. doesn’t control Israeli policy to “really” mean that the U.S. is encouraging Israel to attack.

But what about Saudi Arabia? Times says they are giving a tacit green light to Israeli strikes on Iran.

John Hinderaker has both linked together at Powerline.

Jeffrey Goldberg

Ed Morrissey:

The model for this attack is Syria, where the Israelis destroyed a nascent nuclear facility built by North Koreans.  Unfortunately, that model may not be a good predictor of success in Iran.  The terrain in Iran is much different than in Syria, where the facility stood out like a sore thumb on satellite recon images.  The Iranians have reportedly dispersed their nuclear work so that an attack on one or two sites won’t cripple their work.  The Israelis would have to have excellent intel in order to succeed — but then again, the Israelis usually have excellent intel, and if they’re working with the Saudis, that makes the odds better.

However, the Iranian regime looks on shaky ground at the moment.  An Israeli attack now would almost certainly stop the momentum of the opposition, boosted today by the mullahs in Qum declaring the rigged presidential election illegitimate, and by extension also the regime that rigged it.  A military strike would unite Iranians against the world and could set back the effort at real reform by 30 years, unless the Israelis attempted to decapitate the Guardian Council and Ali Khamenei.

If the Times has this right, the Israelis may want to bide their time to see what transpires next in Iran.  They can’t wait forever, but the overthrow of the mullahs would be more likely to accomplish what Israel wants than an air strike.

Jennifer Rubin in Commentary:

While the Saudis may be looking around for Plan B, Obama is plainly stuck on Plan A. There is no hint of the most “realistic” policy available being to tip the balance away from the current regime, deny legitimacy and recognition to the current crew, round up international organizations, and impose an array of sanctions to aid in those efforts. You know, just like the Obama team is trying out in Honduras (where the military and legislature were merely attempting to preserve their own constitution).

The president is willing to recognize no set of facts or moral considerations that will dissuade him from pursuing “engagement” with Iran. This is the triumph of blind ideology over reason, facts, history, and common sense.

UPDATE: Jennifer Rubin

David Hazony

Rubin again

UPDATE #2: Kevin Drum

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