Saturday, 31 March 2012

CYPRUS: EMERGING GEO-STRATEGIC KEY PLAYER IN THE EASTER MEDITERRANEAN?

CYPRUS AT ODDS WITH BRITAIN OVER SOVEREIGN BASE AREAS AND ITS GEOPOLITICAL IMPACT FOR THE REGION

In view of recent developments in the EASTERN MEDITERRANEAN, and the fact that CYPRUS for the first time openly demands the shutdown of the two BRITISH Bases, (ESBA and WSBA (Eastern and Western Sovereign Base Area) RAF Akrotiri, and Dhekelia, (http://en.wikipedia.org/wiki/Sovereign_Base_Areas ) is a direct result of the ongoing geopolitical shift in the LEVANTINE.

CYPRUS for its part is depending strongly on RUSSIA because RUSSIA bailed out CYPRUS from possible default by granting a large loan, thus the country is committed to adhere to RUSSIA’S demands, which among “offshore benefits” is eager to increase its military presence in the Mediterranean by establishing more naval and air bases. Thus CYPRUS, who traditionally holds close ties with RUSSIA (both countries are part of the Christian Orthodox faith), is the logical location for RUSSIA to set base.

Apart from the geostrategic importance CYPRUS has, recent oil and gas discoveries prompted ISRAEL to join the “quest” for CYPRUS and strengthen ties between the countries, not only for energy resource exploration, but also to establish stronger military cooperation by stationing IAF fighter jets in Paphos and be able to make use of CYPRUS airspace for military training and operational purposes. According to undisclosed intelligence sources CYPRUS and RUSSIA together with GREECE and ISRAEL are planning to expand Paphos International airport and air base facilities as well as Paphos port facilities in order to accommodate larger navy vessels and submarines.

TURKEYS HIGH GAMBLING BID

This comes at a time when TURKEY, the arch foe of CYPRUS decided to break its military and economic relations with ISRAEL for geopolitical reasons in exchange of become a key player and mentor of Arab countries in the region.

In addition to TURKEY’S Geo-political ambitions, recent offshore gas and oil findings in CYPRUS and ISRAEL have severely hampered TURKEY’S economic ambition of becoming the main transition hub for various oil and gas pipeline projects in the region. Thus tensions between TURKEY and CYPRUS have increased even further in recent past. On the other hand BRITAIN and TURKEY, both NATO member countries, traditionally are close allies, a fact that CYPRUS remembers dearly during the 1974 TURKISH invasion during which BRITAIN cordoned off its 2 Sovereign Bases, not even provided humanitarian support to the islanders.

ALLEGEDLY BRITAIN PROVIDED INTELLIGENCE DATA TO TURKEY PRIOR TO THE INVASION

Ayios Nikolaos ESBA listening and observation station

Allegedly BRITAIN, through its Dhekelia ESBA Easter Sovereign Base Area, which is home to the Royal Signal Regiment and “listening post“ for the Middle East, using state of the art listening and observation devices, provided TURKEY intelligence data regarding the 1974 GREEK Military coup which led to the TURKISH invasion of CYPRUS. http://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus
Thus it becomes evident that because of Britain’s stance before and during the Turkish invasion, the two countries are not at best terms.

As if all the current Geo-strategic reshuffling is not enough, GREECE suddenly also enters center stage after gas and oil findings in the Aegean Sea, thus making TURKEY even more nervous since ISRAEL, CYPRUS and GREECE have joint forces to strengthen ties, both economically as well as militarily. With the prospects of CYPRUS becoming a key gas exporter and distribution hub in the region it becomes obviously that they want the BRITISH to leave the island, especially since the two bases are occupying prime land which could be utilized for constructing energy distribution sights etc.

CYPRUS HAS BEEN AND STILL IS THE LARGEST NATURAL “AIRCRAFT CARRIER” IN THE MEDITERRANEAN SEA

Realistically speaking though it is rather unlikely that BRITAIN will ever abandon such Geo-strategic important base, no matter how much CYPRUS will pressure it, especially since the USA and NATO have been using RAF Akrotiri as a forward logistics and operational base when conducting operations in IRAQ, AFGHANISTAN, KUWAIT and in the not too distant future maybe IRAN. Thus once again it becomes evident as to what significant role CYPRUS plays when it comes to geopolitics and strategies.

Strategic positions of Cyprus

Talking about Geo-strategic significance, the tiny island of CYPRUS has 8 airports.

Larnaka International Airport

Ercan International Airport located in Turkish occupied northern Cyprus

Paphos International Airport and Greek and National Guard Air force base

Akrotiri WSBA (Western Sovereign Base Area) Royal Air force and NATO Air Base

Kingsfield ESBA British Military (British Army AIRCOR Base)

Lakatamia National Guard Air Base

Gonyeli Turkish Air Force Air Base

Nicosia International airport abandoned in UN Buffer Zone but can be reactivated

Thus Cyprus has been and still is the largest natural “Aircraft carrier” in the Mediterranean Sea

Friday, 30 March 2012

Argentine Shale Gas Production could alter the Southern Cones Geopolitical Landscape

http://en.wikipedia.org/wiki/Shale

ARGENTINA: OBSTACLES TO SHALE GAS PRODUCTION

Via Stratfor Global Intelligence

SUMMARY

ARGENTINA relies heavily on fossil fuels for its energy needs. They account for roughly 89 percent of the country's overall energy consumption, and more than 40 percent of that consumption can be attributed to natural gas. ARGENTINE natural gas production peaked in 2006 at roughly 46 billion cubic meters (bcm), but since then production has not kept pace with demand. In fact, production has declined by 10 percent since 2006 while overall demand has increased by 4 percent. This trend culminated in 2008, when ARGENTINA became a net importer of natural gas after having been a net exporter since 1999. As of 2010, natural gas consumption outweighed production by approximately 3 bcm per year.

But the future of natural gas in ARGENTINA may be more encouraging than recent production suggests, especially if Buenos Aires can harness the country's shale gas reserves. Estimates indicate that ARGENTINA has the third-highest recoverable shale gas reserves in the world -- roughly 22 trillion cubic meters (tcm). In addition to these potential reserves, ARGENTINA meets several other criteria that would enable it to quickly develop its resources and become a significant shale gas producer.

The problem is that the ARGENTINE energy market operates under tight government control. This control is seen most visibly with government policies that have reduced the ability and will of energy companies to invest in new production. These policies have also placed a heavy financial burden on Buenos Aires, which in the past week revoked oil concessions for Repsol YPF, the country's largest energy company, accordingly.

Comment by Geopolitical Analysis and Monitoring: The model of Government control over the energy market has proven rather successful in countries such as AUSTRIA and formally state owned oil and energy company OMV, not to mention GERMANY and other EUROPEAN countries. Privatization of state assets is an IMF doctrine which has proven negative in many parts of the word. Government interferences in energy markets did prove to be a successful concept in Europe. The results of such interventions are still visible in Europe’s energy market which has been partially privatized but where the state still has the final decision making power.

http://www.jamestown.org/single/?no_cache=1&tx_ttnews[tt_news]=33704

http://www.contrafedpublishing.co.nz/Energy+NZ/Vol.4+No.4+July-August+2010/Time+to+consider+State-owned+petroleum.html

The volatility of ARGENTINA'S regulatory environment makes the country a risky opportunity for foreign companies that could provide much-needed capital and technological investments. Given the promising geology and infrastructure associated with ARGENTINA'S shale gas basins, this regulatory environment is perhaps the only impediment for quickly producing shale gas on a large scale. If the current negotiations with YPF can be brought to a mutually acceptable end, ARGENTINA could once again achieve energy self-sufficiency and become a net exporter of natural gas.

ANALYSIS

ARGENTINA has four shale basins, the most promising of which is the NEUQUEN BASIN in central-west ARGENTINA, where a portion of the country's conventional natural gas is produced. According to a 2011 U.S. Energy Information Administration assessment, this basin contains approximately half of ARGENTINA'S recoverable shale gas reserves.

Conditions for Recovery

To recover these reserves quickly, five conditions must be met. There must be high concentrations of shale gas; technical expertise in extraction techniques and working knowledge of the local geography; established pipeline infrastructure; access to fresh water (to complete the hydraulic fracturing treatments); and huge amounts of capital.

ARGENTINA appears to be in good shape on most of these fronts. Though exploration is not complete, the shale formations of the NEUQUEN BASIN are believed to contain 11 tcm of recoverable reserves. Moreover, ARGENTINA has a robust pipeline system. Decreased conventional natural gas production has left ARGENTINA with extra pipeline capacity, and the NEUQUEN BASIN, where the preliminary shale gas exploration efforts are taking place, is already a production site for traditional natural gas extraction. In other words, most of the necessary pipeline infrastructure is already in place. Also, several rivers, including the Limay and Neuquen rivers, are close enough to the NEUQUEN BASIN to provide the requisite fresh water for hydraulic fracturing.

To gain the necessary expertise and technology for exploiting its shale gas resources, ARGENTINA likely will need both domestic and foreign companies to participate in exploration. Already REPSOL YPF and CANADA'S AMERICA PETROGAS have drilled several exploratory wells in NEUQUEN. Additionally, EXXONMOBIL, TOTAL SA and ROYAL DUTCH/SHELL have invested or plan to invest in ARGENTINE basins but have not drilled any wells. Notably, the geology of the NEUQUEN BASIN is thought to be similar to several U.S. basins, likely making the adaptation of current extraction techniques a simpler task.

Getting financing may be the most difficult condition for ARGENTINA to meet. YPF has stated that developing the NEUQUEN BASIN'S VACA MUERTA field alone will cost $25 billion per year. To that end YPF is seeking foreign partners, including EXXONMOBIL, ITALY'S ENI and major CHINESE and RUSSIAN companies, to finance the operations. But YPF is the major player in existing oil and natural gas production, and regardless of new investment, it will remain important for the development of the energy sector, both as a partner and as the company that controls the majority of ARGENTINA'S energy infrastructure.

But the nature of Argentina's energy markets will complicate YPF's ability to attract investment partners. Low consumer prices have cut into energy companies' revenues, and in YPF's case, the company has been allowed to return 90 percent of its profits to stockholders, leaving little for investment into more exploration at a time when domestic production is in decline. Because demand outstrips production, the government has been forced to subsidize natural gas and fuel oil to ensure that domestic demand is met. As a result, the government has directly engaged YPF in a battle to push the company to invest in new energy production, most recently using the provincial governments to revoke oil concessions.

The ultimate goal for the ARGENTINE government is to keep fuel prices low domestically while forcing companies to increase energy production. Buenos Aires may be willing to provide some money to achieve that goal, but the majority of technology and financing will have to come from foreign sources, including YPF. Some foreign companies may be put off by price controls and the ARGENTINE government's erratic behavior. However, with only 2 bcm of additional natural gas needed to satisfy domestic consumption, the prospect of being able to export the natural gas may be enough of an incentive for foreign companies to brave the political winds of ARGENTINA.

Regional Implications

It is unclear whether ARGENTINA can overcome its own regulatory environment and produce shale gas on a large scale. If successful, the implications for ARGENTINA and the region are extensive. Shale gas has the potential to eliminate ARGENTINA'S natural gas deficit, which means the SOUTH AMERICAN country could resume exporting its natural gas -- if it can garner enough investment to move beyond the current stage of basic exploration.

Buenos Aires would apply any initial production toward meeting domestic consumption. This will take at least an additional 3 bcm per year of production from the shale gas fields to eliminate the natural gas deficit and at least another 3 bcm per year from shale gas to increase overall natural gas production back to peak levels. Over the past decade, the UNITED STATES has increased shale gas production by more than 100 bcm per year. ARGENTINA would have to produce less than 10 percent as much as the UNITED STATES to regain export status.

CHILE and BRAZIL are natural gas importers, and much of the natural gas they import comes from BOLIVIA and ARGENTINA. Given ARGENTINA'S decline in production and the 2007 nationalization of the natural gas sector in BOLIVIA, BRAZIL and CHILE have supplemented their natural gas imports with liquefied natural gas (LNG) from global markets -- a much more expensive operation than piping natural gas. CHILE would welcome lower natural gas prices brought on by increased ARGENTINE production, and BRAZIL would likewise benefit from increased production in the region.

If ARGENTINA produced enough shale gas to exceed its own demands and the demands of neighboring states, ARGENTINA could look toward the global LNG market. Argentina already has two import terminals, which could be expanded to include export capabilities with time, planning and money. It is the opportunity for global expansion that will attract foreign capital.

Despite ARGENTINA'S potential reserves, the extent of ARGENTINE shale gas production will not be realized for at least five years. Additional natural gas production would first liberate ARGENTINA from its own energy dependence and eliminate its natural gas deficit. From there, Buenos Aires could begin looking outward. But to do so, ARGENTINA must overcome its own obstacles to attract and then retain foreign investment.

Reading headlines such as:

The Next Big Shale gas Boom

How To Invest in Argentina’s Emerging Shale Oil & Gas Play

indicate that energy demand and subsequent investment opportunities will have oil companies accept even government control, simply because there is too much money involved and the profit margins big enough for all parties involved the rest is a "tug of war" between politics and oil companies.

http://www.investmentu.com/2011/October/shale-gas-boom-in-argentina.html

http://oilandgas-investments.com/2011/oil-stocks/how-to-invest-in-argentinas-emerging-shale-oil-gas-play/

MALVINAS: 30 YEARS ON

Controversial Coffee mug sold in Malvinas souvenir-shops at the eve of the 30th anniversary of the Malvinas war

ARGENTINA: CORPORATE INTEREST VERSUS IMPARTIALITY

Reading STRATFOR GLOBAL INTELLIGENCE analysis regarding the MALVINAS conflict between ARGENTINA and the UK one cannot avoid noticing certain bias towards ARGENTINA, for she does not adhered to the “Anglo Saxon” eco – political doctrines.

For example STRATFOR writes: A couple of recent developments have aggravated the countries' long-running dispute over ownership of the islands. First, significant offshore oil and natural gas reserves have been discovered near the FALKLANDS. Second, as the economic situation in ARGENTINA has deteriorated over the last decade, rhetoric regarding the MALVINAS has served as a useful tool for promoting nationalistic sentiment in the country.

Comment: First of all the economic situation in ARGENTINA has not deteriorated over the last decade, (interesting that STRATFOR focuses on the last 10 years, the time the Kirchners’ took office and implemented unorthodox but successful fiscal policies which seemed to upset the International Financial Institutions eco political agenda) other then limited growth which was subject to the worldwide finance crisis. According to foreign economic sources, ARGENTINE 'S economy retracted only slightly, and thus is in good shape especially when compared with key industrial nations. Despite CHINA'S economic slowdown ARGENTINA still profits from never ending demand on agriculture products, thus the country is not endangered of run short of money.

Here are some facts and figures on Argentine's Economy, one hardly will read in Argentine mainstream newspapers such as Clarin and La Nacion

GDP - PURCHASING POWER PARITY 2012 COUNTRY RANKS, BY RANK

Argentina ranks No. 22 out of 226 countries

http://www.photius.com/rankings/economy/gdp_purchasing_power_parity_2012_0.html

GDP - OFFICIAL EXCHANGE RATE 2012 COUNTRY RANKS, BY RANK

Argentina ranks No. 28 out of 215 countries

http://www.photius.com/rankings/economy/gdp_official_exchange_rate_2012_0.html

GDP - REAL GROWTH RATE(%) 2012 COUNTRY RANKS, BY RANK

Argentina ranks No. 11 out of 214 countries

http://www.photius.com/rankings/economy/gdp_real_growth_rate_2012_0.html

To view the entire statistics see:

http://www.theodora.com/wfbcurrent/argentina/argentina_economy.html or

http://www.auswaertiges-amt.de/DE/Aussenpolitik/Laender/Laenderinfos/Argentinien/Wirtschaft_node.html

To reiterate above: Soybean has reached a higher market price, reaching almost U$S 510 a ton. These results are explained by the strong demand from ASIA – since they are increasing meat demand and feed livestock with soybean. http://www.indexmundi.com/commodities/?commodity=soybeans

This seems to be a trend that will remain stable despite any decrease in general demand and consumption around the globe, since food will remain in demand by markets. This has a positive impact for ARGENTINA as it ensures a consistent flow of dollars.

MALVINAS DISPUTE: STRATFOR NEGLECTS TO MENTION ANTARCTICA AND FISHING INDUSTRY

Secondly STRATFOR mentions that recent oil and gas discoveries on the islands have aggravated ARGENTINA but fail to mention that the dispute is not only about gas and oil but also about ANTARCTICA and the FISHING INDUSTRY. See http://geopoliticsrst.blogspot.com.ar/2012/02/from-mediterranean-persian-gulf-to.html

STRATFOR further writes: Furthermore, ARGENTINA remains isolated from international credit markets and, with troubles meeting its own budgetary needs at home, it likely cannot afford a war. Nevertheless, Buenos Aires, aware of significant cuts to the UNITED KINGDOM'S defense budget, may sense an opportunity to challenge the UNITED KINGDOM'S stance.

ARGENTINE S NEW PILLAR: MINING INDUSTRY

Economically Argentina has done rather well, considering that the country is expelled from international credit markets; something the IMF, World Bank and the Paris Club simply can’t accept. For reasons explained previously, Argentina is still in the position to meet its budgetary needs, much to the despair of the orthodox International Financial Initiations, who would like to see Argentina depending on their doctrines and demands, in order to get an even larger slice of the “agricultural and natural resources cake” the country has to offer. Last but not least one should not forget that mining in Argentina is only just beginning to evolve and for which foreign enterprises are fighting over in order to obtain the best deals for the future. See: http://geopoliticsrst.blogspot.com.ar/2011/10/corporatocracy.html

The full Article from STRATFOR GLOBAL Intelligence reads as follows:

CHILE'S INTEREST IN THE FALKLAND ISLANDS DISPUTE

Via Stratfor

Summary

ARGENTINE President Cristina Fernandez de Kirchner met with CHILEAN President Sebastian Pinera on March 15, just days after her meeting with BRITISH Minister of State for Foreign Affairs Jeremy Browne. In both meetings, ARGENTINA'S claim of sovereignty over the BRITISH FALKLAND Islands (known in ARGENTINA as the MALVINAS) was the topic of discussion. The UNITED KINGDOM and ARGENTINA have been courting CHILE'S support in the longstanding bilateral dispute because CHILE is the only country in the Southern Cone with a vested interest in the UNITED KINGDOM'S maintaining control over the FALKLANDS.

Tension has been rising between ARGENTINA and the UNITED KINGDOM in the run-up to April 2, the 30th anniversary of the FALKLANDS War. CHILE, which has its own territorial disputes with neighboring countries, does not wish to see border changes in its region, but it also must take care not to upset relations with a regional player.

Analysis

A couple of recent developments have aggravated the countries' long-running dispute over ownership of the islands. First, significant offshore oil and natural gas reserves have been discovered near the FALKLANDS. Second, as the economic situation in ARGENTINA has deteriorated over the last decade, rhetoric regarding the MALVINAS has served as a useful tool for promoting nationalistic sentiment in the country.

Despite aggressive rhetoric and the bitter memories ARGENTINES harbor from the war, a military confrontation over the disputed islands is unlikely. ARGENTINA has not modernized its armed forces since the military dictatorship fell in 1983, in part because of the extremely poor relationship between the military and the current administration. Furthermore, ARGENTINA remains isolated from international credit markets and, with troubles meeting its own budgetary needs at home, it likely cannot afford a war. Nevertheless, Buenos Aires, aware of significant cuts to the UNITED KINGDOM'S defense budget, may sense an opportunity to challenge the UNITED KINGDOM'S stance.

To push the UNITED KINGDOM toward a settlement, ARGENTINA has threatened to appeal to the UNITED NATIONS and has used the UNION OF SOUTH AMERICAN NATIONS (UNASUR) to impose a blockade against FALKLAND-flagged maritime vessels. ARGENTINA has also threatened to declare as illegal any oil activity in the waters surrounding the islands. BRAZIL, URUGUAY and CHILE have all agreed to the blockade. BOLIVIA, ECUADOR, PERU, PARAGUAY and VENEZUELA have all expressed support. Of these countries, BRAZIL and CHILE are the most important.

BRAZIL has many reasons to support Buenos Aires. BRAZIL is not only a major trading partner of ARGENTINA'S, but it is also the creator of UNASUR and has an interest in proving that the multilateral forum can be effective. BRAZIL'S support of ARGENTINA'S claims, however, likely will not extend to approval of military action. With major offshore oil projects in the works, a conflict in the South Atlantic could risk key strategic interests that BRAZIL'S military is not yet prepared to defend. BRAZIL has thus hedged its agreement to the blockade on FALKLAND-flagged vessels by saying it will allow any BRITISH-flagged vessels through the blockade, regardless of their origin.

Though BRAZIL is a much larger country, CHILE is in many ways more important regarding this issue. Currently, CHILE is the only South American country with direct flights to the FALKLAND Islands. Any blockade would thus require CHILE to go beyond merely restricting port access. Furthermore, CHILE has undermined ARGENTINA'S claim to the islands in the past: During the war in 1982, CHILE supplied intelligence about ARGENTINE military and radar systems to the UNITED KINGDOM.

CHILES NEVER-ENDING TERRITORIAL CLAIMS (title added by Geopolitical Analysis and Monitoring)

In addition to a longstanding rivalry with ARGENTINA, CHILE has an interest in preventing any border shifts in the region because the country has territorial disputes with BOLIVIA and PERU. The UNITED KINGDOM established its rule over the Falkland Islands in 1833; by agreeing that the islands belong to ARGENTINA, CHILE would set a precedent that could affect BOLIVIA and PERU'S territorial claims over the region of northern CHILE, which CHILE conquered in the 1879-1883 War of the Pacific. The war left BOLIVIA landlocked and created 37,900 square kilometers (14,600 square miles) of contested territory along the maritime border with PERU. BOLIVIA plans to bring a lawsuit against CHILE at THE HAGUE this year, claiming sovereign access to the Pacific coast. PERU presented its case against CHILE at THE HAGUE in 2008, and a decision on the case may be made in 2012. CHILE appears to have a never-ending thrive for “land grabbing”.(comment in blue added by Geopolitical Analysis and Monitoring)
See: http://en.m.wikipedia.org/wiki/File:Map_of_the_War_of_the_Pacific.en.svg

Realizing the regional interests in this issue, the UNITED KINGDOM over the last six months has sent top diplomats to BRAZIL and CHILE to seek support -- or at least neutrality -- from regional players as London attempts to settle its dispute with ARGENTINA. Although BRAZIL has no interest in a South Atlantic war, CHILE has an active interest in the FALKLANDS' remaining BRITISH. Though Pinera has publically said that CHILE supports ARGENTINA, he has at the same time asserted that CHILE has a special relationship with the UNITED KINGDOM. Going forward, CHILE will continue to be stuck in the middle of this dispute, supporting the BRITISH while trying to soothe relations with an increasingly confrontational ARGENTINA.

Saturday, 24 March 2012

GOLDMAN SACHS AND THE VATICAN:

TWO CULTURES OF INFALLIBILITY

By Stephan Richter via The Gobalist

Greg Smiths tell all resignation from Goldman Sachs last week was evidence that the culture of greed is alive and well in one of the world’s top investment banks, He wrote of a “toxic and destructive” culture and a “decline in the firm’s moral fiber.” But Goldman has a lot in common with another global institution, the Catholic Church and its doctrine of infallibility

From the perspective of Goldman's management, the recent path of the Catholic Church is probably the most nightmarish thing to think about — assuming their imagination and sense of seriousness reaches this far.

Look at the long list of parallels: None, of course, is more powerful — and disastrous — than Goldman's and the Vatican's unceasing belief in the doctrine of infallibility.

The rot, one says, starts at the top — and in the age of democracy and participatory learning, no organization can successfully hold onto the belief that, as far as dealings with the outside world are concerned, its staff members are really incorrigible.

I am not suggesting that there isn't plenty of rigorous debate about the organizations' direction and business (or spiritual) practices — but it occurs strictly in the inner sanctum.

The instrument of doubt plays a role in both organizational learning cultures. However, it is viewed solely as a method of rigorous inquisition to come to a decision internally, which — once made — is upheld externally with a united front. One for all, all for one.

With regard to interactions with the outside, such a frame of mind can quickly result in presenting a fiercely clannish, if not secretive, front. That unquestioned commitment to the cause, 24x7x365, surely breeds a strong internal culture, but it also makes the organization as a whole ripe for systemic denial. In short, wrongdoing simply cannot occur because we are perfect, aren't we?

What Goldman must realize is that the Vatican had tried to hush things up. It simply could not happen here, it argued. But the harder and longer it tried, the more pushback there was among the victims.

It is simply inconceivable that a firm with the breadth and depth of Goldman's client dealings in the markets — and its relentless hunger for profit maximization — did not leave behind a lot of broken china.

The second applicable lesson for Goldman which the Vatican's troubles foreshadow is this: While child molestation and sexual abuse are definitely qualitatively different charges than manipulating financial markets, the ultimate fallout of denial on one's reputation, financial well-being and inner morale may well be the same.

It all starts with the inner logic of the real temptation — "overlooking" the respective crime in question. Regarding the internal culture of the two organizations, there are stunning parallels.

Both cultures are rooted in an intense sense of loyalty to the "company." Both firms' staff members have a strong sense of mission, even though one is very much focused on the immaterial, while the other is very material-minded.

Selection into the ranks of upper management is generally very much merit-based, although it happens in a manner that is totally non-transparent to outsiders. As a result, the selectees' devotion to the organization's cause is unparalleled compared to their peers in the respective "industries."

For all those qualities, high potential and performance, the evidence seems overwhelming that both Goldman and the Vatican, inside their high walls, suffer from a serious organizational birth defect, which is at the root of their respective troubles today.

The archaic, anti-modern and perhaps anti-human vow of celibacy for the Vatican finds its equivalent in the out-of-this-world God-like self-perception of many senior Goldman staffers.

They clearly feel as anointed — and selected — inside the financial world of today as were the prominent clergy in the Middle Ages and into the early modern era. Appointment to "the firm" came — and comes (in Goldman's case) — with immense social status and access to immense economic wealth.

True, in the case of the Catholic Church's senior leaders, that wealth was, in effect, "rented" and temporary — and definitely not transferable to one's heirs (hence the requirement for celibacy!). But one could live on the Church's "dime" in a splendor that would make even many a modern hedge fund manager go pale with envy.

Ultimately, it is all a function of an overbearing internal corporate culture. If you put yourself on the pedestal this much, if you promote a sense among the staff that they are the anointed ones, such zeal is bound to come crashing down sooner or later.

In fact, once you are no longer considered untouchable, the whole litany of past transgressions will come to haunt you. Outsiders, previously oppressed and hunted, will come out of the woodwork and contribute to taking you down for all those past sins.

In conclusion, in the age of democracy and reason, no culture rooted in a doctrine of infallibility will survive. They must adapt. In both Goldman's and the Vatican's case, the lawsuits are the last wake-up call.