Report

Help, I'm a British Philosophy Professor With the Same Name as a Burmese Heroin Kingpin!

...and banks keep getting us confused.

The U.S. sanctions blacklist is meant to stop terrorists, drug lords, and weapons traders from getting access to their money. Unfortunately, it also ensnares a lot of people who just happen to have the same name as one of those alleged criminals. Professor Stephen Law, who shares the name of a prominent Burmese heroin dealer, has discovered that firsthand.

The British Stephen Law is a soft-spoken professor at the University of London where he has taught philosophy for 17 years and plays the drums in a band called The Heavy Dexters. He's also the author of books like Believing Bullshit: How Not to Get Sucked Into an Intellectual Black Hole. The Burmese one is a wealthy drug kingpin who was sanctioned by the Treasury Department in 2008 and again in 2010 because of his ties to the country's ruling junta. Treasury officials said Law's company, Asia World, received lucrative government construction contracts because of his close ties to the regime. The second Law uses several aliases and is believed to split his time between Burma and Singapore.

The two Laws have little in common except their name, and the fact that it appears on the Treasury Department sanctions list has hit each of them hard. The British Law said that bank transfers from Europe take weeks to get to him and that packages from abroad often fail to arrive. When an American friend sent him a drum, it was held up at customs and then sent back to the United States. When he asked his bank why a travel reimbursement from Austria was held up, they wouldn't tell him.

"I've been having these problems for years but I never understood what it was or why it was happening to me," Law said.

Law, who describes himself as a "fairly well-known atheist in the UK," first thought his religious views might have somehow landed him in hot water. But then someone on Twitter alerted him to the Treasury Department list, which includes the name Stephen Law.

Law recently wrote a letter to the Treasury Department complaining about his problems accessing his own money or receiving gifts from abroad, but the department has yet to respond or take steps to ensure he isn't confused with the Burmese Law.

The British Law's troubles are the inadvertent byproducts of the U.S. government's ongoing push to cut off alleged drug kingpins, war criminals, and nuclear weapons proliferators from the international financial system. Washington uses targeted sanctions to single out individuals and companies and make it illegal for U.S. banks and companies to interact with them. While broad trade embargoes against countries like Cuba haven't worked, freezing the assets of individuals has proven a successful tool for pressuring them into doing what the U.S. government wants, whether that's ending support for terrorists or giving up ties to narcotics trafficking.

When the Treasury Department adds a new name to the list, it issues a press release that includes their reason for the new designation. Banks and companies are responsible for making sure they don't do business with the sanctioned person. Because the fines can be so high -- the Treasury Department raked in $137 million for sanctions violations in 2013 -- companies are often extremely cautious about handling transactions for people whose names are at all similar to those on the list. Most major banks check transactions against rosters maintained by outside companies like Thomson Reuters. If a name is too similar to those on the sanctions list, the transactions will be held up while banks methodically check the person's address and birthdate to make sure they're not aiding an alleged wrongdoer.

Treasury officials declined to comment on Law's case, but a spokeswoman said they "always endeavor to make public all available bio-identifier information -- including addresses, dates of birth, places of birth, and passport numbers, among other information." Law, for his part, has taken to the Internet to express his exasperation.

"This has proved frustrating, time-consuming and also costly to me personally," Law wrote in a blog post. Its incredibly subtle title: "How the US Treasury imposes sanctions on me and every other 'Stephen Law' on the planet."

Courtesy of Stephen Law, Treasury Department

Photo Illustration by FP

Report

California's Green Energy Drought

The water shortage hammering California is bad news for power prices - and for the state's emissions goals.

Among all the terrible things that California's historic drought promises to bring this year - fallow farm land, dead livestock, more wildfires - there are a couple more nasty treats in store: higher electricity prices and rising greenhouse-gas emissions.

That's because the drought is hammering California's ability to generate electricity from hydroelectric power, which will push the famously green state to burn even more natural gas, which is both pricier and dirtier. It underscores yet again just how vulnerable green energy sources such as hydropower can be to the vagaries of the weather, an issue that will vex not just the U.S., but also Brazil, China and other countries that have bet heavily on hydropower to run their growing economies.

California's drought is unrelenting. The latest information from the United States Drought Monitor shows more than 98% of the state facing some degree of drought; for the first time, nearly 10% of the state is deemed to be suffering "exceptional drought," the worst category. Since mid-January, California has been in an official drought emergency, with Gov. Jerry Brown calling for voluntary reductions in water use. But the biggest impacts are yet to be felt.

In a normal year, with average rainfall, California relies quite heavily on electricity generated from hydroelectric dams; hydropower can provide anywhere from one-tenth to one-quarter of the electricity generated in the state. But when the rain and snow stops falling during the relatively short wet season, it doesn't just affect California's ski industry or the rich farmlands of the Central Valley. It chokes the entire water system that underpins the state's dams.

Federal monitors show nearly that all of California's water resources are essentially half-empty. Usually, melting snowpack from the Sierra Nevada provides a shot in the arm for hydropower in the spring and summer, but California's sparse snowpack is currently only 16% as deep as it normally is this time of year.

But wait - it gets worse. Since California uses more electricity than it generates, it relies on imports from nearby states, including hydroelectric power from the normally rainy Pacific Northwest. But the drought is also hammering Washington, Oregon, and Idaho, where precipitation is in many cases about half the normal level. And that will limit California's ability to fix its own shortfalls. The only easy answer is to use more natural gas, which costs more and is significantly dirtier.

"There will be rate impacts, because we'll be using more expensive fuel, and there will be air-quality impacts in terms of greenhouse-gas emissions," Robert Weisenmiller, the chairman of the California Energy Commission, told Foreign Policy.

California knows what happens when it has to turn to more natural gas. In 2012 and 2013, thanks to dry years (and the shutdown of one nuclear power station) hydroelectricity's contribution to the electricity mix fell sharply. Gas came to the rescue.

In 2011, California generated about 42 million megawatt-hours of electricity from hydropower, and about 89 million megawatt hours of electricity from natural gas. The next year, hydroelectric generation plummeted to less than 26 million mWh, while gas-fired generation soared to 121 million mWh.

Through November 2013, the latest statistics available, hydroelectric generation fell even further, though natural-gas generation also slipped.

The outlook for 2014 in California, then, could be one where the state increasingly turns to natural gas to supplement the lack of both in-state and out-of-state hydroelectricity. Weisenmiller said that in particularly dry years, like 2014, hydroelectricity generation could plummet a further 40 percent.

That would be bad news in two ways: Higher power prices, and rising greenhouse gas emissions.

It's actually a delicate moment for natural-gas markets right now. The polar vortex drove record levels of natural-gas demand across much of the country. The prices at Henry Hub, the main physical pricing point for U.S. natural gas, prices spiked 50% in the last week, to levels not seen since 2008. Higher demand has drained U.S. natural-gas storage, which is currently well below average levels, which means that even as winter temperatures retreat in coming months, that storage will have to be replenished. That promises stubborn gas prices. Hedge funds are already betting on gas prices going higher.

The situation is so dire, in fact, that California's electric system operator asked customers across the state on Thursday to turn off lights and shut down big appliances in order to save scarce supplies of gas.

As California relies more on natural gas to keep the electricity running, it will mean higher average wholesale power prices, which means residential electricity bills will likely rise this year. Add that to the list of other economic woes from the drought, from lost farm jobs to shrinking herds of cattle and other livestock.

But for California, which famously leads the nation in aggressive environmental rules and regulations, that's not the worst of it. Replacing clean electricity from hydroelectric dams with electricity from natural gas means more greenhouse-gas emissions, exactly what the state has spent years trying to avoid.

This already happened to a dramatic degree in 2012, when a weak year for hydropower and the loss of some nuclear energy pushed California into the arms of natural-gas fired power plants in a big way. For most states, and for the United States as a whole, relying more on natural gas is good for the environment. Since it normally displaces coal-fired electricity, natural gas actually helps reduce emissions.

But California already had a clean power sector. So relying more on natural gas has had the opposite impact there. That year, California's greenhouse-gas emissions from the electric power sector jumped 50%, making it the biggest laggard nationwide in reducing greenhouse-gas emissions, as The Rhodium Group documented. A hydropower deficit this year won't help matters any.

"In terms of reducing emissions at the rate they need to meet their target over time, just holding steady and not getting worse than last year is going to be a challenge," Kate Larsen, the director of climate change at Rhodium, told FP.

California's cautionary tale has echoes overseas, too. Brazil and China have bet big on hydroelectric power to provide large amounts of clean electricity. Indeed, both countries feature mega hydro projects - Belo Monte in Brazil and the Three Gorges Dam in China- that are at once the backbone of future power supplies and un ugly source of social strife in the present. And in both countries, droughts in recent years have hammered hydroelectricity's ability to contribute a reliable amount of power to the national grid.

For China in particular, which faces worries about a structural shift in rainfall patterns due to climate change, the potential loss of a big source of clean energy represents a huge headache for Beijing. The Chinese regime is desperately trying to clean up the coal-dependent electricity sector, because air pollution is becoming both an environmental burden and a threat to regime stability.

For now, California officials believe they've got enough options to weather a tough year. But a fourth year of extreme drought, with the severe impacts it is having on the power system, would be a different story.

"If this drought were to continue as bad into next year, then I would get nervous," Weisenmiller said.

Justin Sullivan - Getty