Obviously there is speculation, but speculation by itself will not explain the rise, its extent and its persistence. At this point we have to start thinking about this as an ongoing feature of the international system. We need to be thinking about the winners and losers in this new arrangement, while remaining open to the
possibility that we are indeed in a speculative bubble. That is a hard stance to hold, but we have to right now.

2. Food: One of the ominous things about the rise in oil prices is that it is not isolated. Food is soaring, too. Certainly the causes there are different. However, when two critical commodities rise together, that is when you look for a common underlying cause and that is when you start looking at the dual effects. Regardless of the cause, some things are obvious. The losers are those who import both food and oil. The winners are those who export both or who at least export one. Russia is one of the few countries that exports both food and energy in quantity. We need to look at how this strengthens Moscow’s hand.

3. Georgia: The Georgian opera has been sung for a long time. Last week was particularly intense, however, as Georgia claimed that war was close and the Russians charged the Georgians with massing troops. Without getting into the question of whether Georgia has enough troops to qualify as a mass, the fact remains that the rhetoric his hit a new peak. Georgia would be suicidal to attack the Russians, and we think they know it. The Russians tend not to invade as much as intimidate these days, and Georgian terrain is nasty. Still, we need to maintain watch there. At some point, this is going to have to resolve itself. We expect it will be a diplomatic capitulation by Georgia, but it remains extremely unpredictable and volatile.

4. Israel: Prime Minister Ehud Olmert looks like he will be taken down. Looks can be deceiving, so we have to follow events carefully. We also need to be looking at the positioning of all the players in the struggle for succession. The most important question will be not whether Olmert goes or not, but whether he goes quickly and is replaced quickly. If either side of the equation extends, Israel’s ability to make policy is going to be weakened. Bush is going there next week for a visit. There are already signals that this is just a formal visit, not a substantive one. That serves to smooth the way if he has no one to talk to. Let us see if Hamas uses this crisis in some way.

5. Lebanon: The internal affairs of Lebanon seem to be coming apart, with Hezbollah and its opponents facing each other in armed conflict. One theory we have is that this is the Syrians reining in Hezbollah out of hope for an agreement with Israel. Another theory could be that Hezbollah is looking at the crisis in Israel as an opportunity to cause trouble. Either way, this might represent the break point in Lebanon.

6. Iran: It has been quiet for a while — normal random statements, but none of the normally aggressive rhetoric. If this goes on much longer it will be important. The Iranians will probably ramp up the rhetoric again, but we should keep our eyes open for a shift in attitude.

7. Mexico: The head of the national police was gunned down this week. That is a pretty aggressive move by the cartels, one that shows they are being hurt and in turn lashing out. The government is going to have to hit back very hard in response. Escalations in violence usually end somewhere. The government cannot back down or appear to be backing down. Let us watch for an all out assault by the government. No matter how far the corruption goes, the government has to be seen replying to this. Plus if corruption went that far, the cartel would not have had to.

EURASIA

· May 11: Parliamentary elections will be held after Serbian President Boris Tadic dissolved parliament when his coalition with Prime Minister Vojislav Kostunica split. Currently, the Serb Radicals are in the lead in the polls

· May 12: The foreign minister of Slovenia, the European Union’s president, along with foreign ministers from a handful of states like Sweden, Poland and Lithuania (who happen to have ongoing feuds with Russia), will meet in Georgia to discuss the problems between Tbilisi and Moscow

· May 15: The Dalai Lama will pay a visit to Berlin, Germany through May 20, though it is unclear if anyone from the German government will meet with him

· May 14-15: The foreign ministers of Russia, India and China will hold their annual meeting in Yekaterinburg; to be followed by another round of meetings with Brazilian Foreign Minister Celso Luiz Nunes Amorim for the first meeting of BRIC (Brazil, Russia, India and China)

MIDDLE EAST/SOUTH ASIA

· May 13: Egyptian courts to rule on the release of opposition leader Ayman Nour because of health concerns

· May 13: Lebanese parliament to elect new president after April 22 postponement

· May 13-15: Israel to hold “Facing Tomorrow” conference hosted by Israeli President Shimon Peres. U.S. President George W. Bush and former Soviet President Mikhail Gorbachev to attend

· May 13-18: U.S. President George W. Bush to visit Israel, Egypt, and Saudi Arabia as part of his Middle East Peace Initiative. He is set to meet with leaders from Saudi Arabia, Afghanistan, Jordan, and Egypt, as well as Palestinian President Mahmoud Abbas and Tony Blair. Bush to also address Israel’s Knesset on May 13 and meet privately with Abbas at the World Economic Forum in Egypt

· May 17: Kuwait to hold second general election in less than two years for its parliament, the National Assembly

· May 18: The World Economic Forum begins in Sharm al-Sheikh. Among the planned 1,500 guests from 55 countries, 12 heads of state will attend, including U.S. President George W. Bush, Egyptian President Hosni Mubarak, and leaders from Jordan and the Palestinian Authority. Bush is set to meet with leaders from all three Arab countries

· May 21: Indian External Affairs Minister Pranab Mukherjee to visit Pakistani Foreign Minister Shah Mahmood Qureshi in Islamabad. The two leaders will restart bilateral talks

EAST ASIA

· May 10: Chinese President Hu Jintao ends 5-day visit to Japan

· May 10: Constitution referendum in Myanmar. For the 47 towns/cities worst hit by cyclone, referendum will be postponed until May 24

· May 11-20: South Korean Prime Minister Han Seung-soo will visit Uzbekistan, Kazakhstan, Turkmenistan and Azerbaijan for talks with state leaders on securing stable access to natural resources and increasing cooperation in the energy sector

· May 13-15: New Zealand Prime Minister Helen Clark will meet with Japanese Prime Minister Yasuo Fukuda and other senior members of the Japanese Cabinet

· May 16: Clark will travel to South Korea to meet with newly elected President Lee Myung-bak and senior ministers

LATIN AMERICA

· May 12: Start of bidding for contracts to construct new hydroelectric facility along Brazil-Bolivia border

· May 13-15: Prime Minister of Portugal, Jose Socrates, to visit Venezuela

·                       May14-17: German Chancellor Angela Merkel to visit Brazil, Peru, Colombia and Mexico

· May 15: Spanish Foreign Minister Miguel Angel Moratinos will start a tour of Latin America that includes Peru, Argentina and Brazil, beginning in Haiti

· May 16: Dominican Republic to hold presidential elections

· May 16-17: European Union-Latin America and the Caribbean (EU-LAC) Summint in Lima, Peru

AFRICA

·  May 10: Conclusion of ruling Popular Movement for the Liberation of Angola (MPLA) party national conference to select candidates for parliamentary elections

· May 10: Djibouti planning to host a Somalia peace conference involving Islamist leadership and Somalian government representation

SECURITY/COUNTERTERRORISM

· May 12: Pakistan’s overning coalition plans to reinstate some 60 judges sacked by President Pervez Musharraf, including Chief Justice Iftikhar Muhammad Chaudhry, whose ousting caused violent protests in 2007

· May 13: The Malay Uprising in 1969 led to fighting between Malays and ethnic Chinese and caused numerous deaths

· May 13: Pope John Paul II was shot and wounded by Mehmet Ali Agca, a Turkish fugitive, on this day in 1981 in Italy

· May 15: Palestinians mark Al-Nakbah, also known as Catastrophe Day, the 60th anniversary of the establishment of the Israeli state