Mdulo: Ingls - Professor: Anthony Rosenberg - Class 20 TPS-type test

An axis in need of oiling - Oct 23rd 2008 Adapted from The Economist print edition
1 IT WAS one of George Bushs catchier turns of phrasethe axis of evil consisting of North Korea, Iran and Iraq. How evil, or
even menacing, they really were is debatable. And it was not much of an axis: Iran and Iraq hated each other. North Korea
exported nuclear know-how, but probably no more than other countries such as Pakistan, a supposed American ally.
Of late another trio, bound together by dislike for America, and confidence based on surging energy revenues, has appeared:
5 an axis of diesel, as some have named it, comprising Russia, Iran and Venezuela. At least before the present financial crisis,
the trio had been hobnobbing happily. Russia has sold billions of dollars worth of arms to Venezuela and blocked Western
attempts to slap tougher sanctions _____ Iran. The Kremlin is also selling air-defence systems to the Iranians.
Yet in this case, too, the idea of an axis is exaggerated. Each of the trio has different aims. Venezuela wants to create an
anti-American block in Latin America. Russia likes the idea of challenging the United States in its backyard: a suitable response
10 to what it sees as American meddling in Russias own neighbourhood, where its president, Dmitry Medvedev, claims privileged
interests. But Russias backing for Venezuela is constrained by its ties to other countries in the region, such as Brazil.
Similarly, Russia likes to play the Iran card, signalling to Mr Bush that he may have to give ground in, say, Georgia if he
wants help in the Middle East. But as far as any outsider can say, the Kremlin does not want Iran to have a bomb.
So the common interests of the three countries are mostly tactical, not strategic. The same applies to China, which is a co-
15 founder, along with Russia, of the Shanghai Co-operation Organisation, a loose security club. Having snubbed Russia ______
Georgia, Chinas top priority is not gloating or spoiling, but salvaging the world economy, including that of America, which is a
crucial outlet for its goods.
The diesel trio did gloat at first over the Wests meltdown. But they overlooked one of its effects: a plunge in oil prices, and
hence their own revenues. This unwelcome news is likely to sharpen distinctions between them. Fyodor Lukyanov, a Russian
20 foreign-policy pundit, says his country will have to prioritise. Trying to achieve everything wont fly any more. The focus, he
thinks, will be more on nearby countries and less on Latin America, not least because Venezuela will have less cash to buy
Russian weaponry.
The price of cold turkey
Oil-dependency in Venezuela has risen; nationalisation, bullying and meddling have deterred private investment; a fixed and
25 overvalued exchange rate has stoked imports. In 2006 growth was 10.3% and inflation 17%; the latest growth figure is a
7.1%; inflation is 36%. Foreign debt is up from $30 billion to $44 billion. The cost of credit has risen. Opaque statistics make it
hard to gauge Mr Chvezs room for manoeuvre. Fonden may contain some $15 billion; central bank reserves are about $27
billion. But the underlying trend is clear. A devaluation risks setting off a downward spiral of inflation and rising poverty. As Mr
Chvez scales back spending he will have to choose between losing influence abroad or losing popularity at home.
30 On the face of things, Russia looks better placed than its two friends to resist shocks; before the turmoil, it had built up the
worlds third-biggest stash of currency, at more than $500 billion. However, the Kremlin has been spending heavily to prop up
the rouble, bail out banks and plug holes in its budget. Compared with Mr Putin, Mr Chvez is less involved in the global
financial markets and even more prone to blame everything on an American-driven fiasco. Theres a spectre going round the
developed world that was of its own making, he said this month. Thanks to sanctions, Iran is the axis member least exposed
35 to the world economy. But the oil price fall will hit it hard. Some 80% of Irans government revenues come from energy. A
drop in income is unlikely to make Iran slow down its nuclear programme, or end support for Israels armed foes.
Unlike Russia, which had prepared for a rainy day, Mr Ahmadinejad has been investing Irans oil money in a different future:
his own. Energy subsidies alone are about 12% of Irans GDP; and energy revenues prop up the government budget. Inflation
is at least 30%, up from an official 20% in February. The former central bank chief, sacked for resisting populist spending
 40 policies, has accused Mr Ahmadinejad of looting the banks assets.
Fiscal constraints will make Iran and Venezuela reluctant to forgo revenue by making cuts of their own, setting the stage for a
row over quotas with Saudi Arabia. Yet, the Saudis will not be unhappy to see Iran, a regional rival, squirm. What is more, says
Leo Drollas of the Centre for Global Energy Studies, a consultancy, they are unlikely to agree to big cuts for fear of further
blighting the world economy.
45 In sum, Iran, Russia and Venezuela are all likely to be left short of cashand facing a diminution in their international clout.
Never confuse brilliance with a bull market, goes a Wall Street saying. The leaders of the oily trio may have thought high oil
prices were an adequate substitute for good governance. In many quarters, the difference is now painfully clear.

1. On line 10, meddling means 2. According to the text, judge right (C) or wrong (E) each item below.
a. ( ) criticising a. ( ) On line 15, snubbed means rebuffed.
b. ( ) interring b. ( ) On line 16, gloating means crowing.
c. ( ) interloping c. ( ) On line 42, squirm means agonize.
d. ( ) inferring d. ( ) On line 45, clout means power.
e. ( ) involvement

3. On line 41, to forgo revenue can be 4. On lines 15 and 7, respectively, the blanks can be correctly filled in with
correctly substituted with (one answer only): (one answer only):
a. ( ) to take cuts in profit a. ( ) over and on
b. ( ) to misappropriate funding b. ( ) on and by
c. ( ) to miss out on income c. ( ) over and at
d. ( ) to devalue turnover d. ( ) in and at
e. ( ) to cut back on taxes e. ( ) in and on

5. According to the text, judge right (C) or wrong (E) each item below.
a. ( ) Mr Ahmadinejad has been on a spending spree with the oil windfall revenues.
b. ( ) Russia has been financially prudent and have been attempting to balance the books.
c. ( ) Mr Chvez is looking for scapegoats.
d. ( ) The Saudis cant see the forest for the trees.

6. Based on the text, which sentence is CORRECT? (one answer only)

a. ( ) Government spending in Venezuela is inextricably linked to oil prices.
b. ( ) Fiscal policy in Venezuela has actively promoted imports.
c. ( ) Despite the poor statistics available, it is possible to estimate Mr Chavezs next play.
d. ( ) Chavez must balance, drastically reducing public spending and his desire to topple the US.
e. ( ) Domestic policy makes it impossible for the private sector to operate successfully in Venezuela.

7. According to the text, judge right (C) or wrong (E) each item below.
a. ( ) George Bush could be said to be clutching at straws with his term Axis of Evil.
b. ( ) On line 20, wont fly any more means an undesirable course of action.
c. ( ) The Axis of Diesel refers to a tight knit group of political interests.
d. ( ) The Iranian central bank chief is currently at loggerheads with the countrys president.
e. ( ) The Russians have illegally siphoned off large sums of oil revenues for emergency purposes.

8. On line 23, the paragraph title the price of cold turkey means (one answer only):
a. ( ) the cost of cold cuts b. ( ) the downside of oil dependency c. ( ) the alternatives to oil
d. ( ) the value of commodities e. ( ) domestic foodstuffs will suffer

9. Which of the options below would best make an alternative title for the article (one answer only)?
A. ( ) For Iran, mischief making and a high in oil go hand in hand.
B. ( ) Politics and oil: a slimy combination.
C. ( ) Russia, Iran and Venezuela make political hay while the sun shines.
D. ( ) Price drops in oil curb political machinations and alter policy across the board.
E. ( ) None of the above
F. ( ) All of the above