Tag Archives: China

Stratfor: The Geopolitics of Energy

By Robert D. Kaplan
Chief Geopolitical Analyst
Stratfor Global Intelligence

Geopolitics is the battle for space and power played out in a geographical setting. Just as there are military geopolitics, diplomatic geopolitics and economic geopolitics, there is also energy geopolitics. For natural resources and the trade routes that bring those resources to consumers is central to the study of geography. Every international order in early modern and modern history is based on an energy resource. Whereas the Age of Coal and Steam was the backdrop for the British Empire in the 18th and 19th centuries, the Age of Petroleum has been the backdrop for the American Empire from the end of the 19th to the early 21st centuries. And indeed, just after other countries and America’s own elites were consigning the United States to a period of decline, news began to emerge of vast shale gas discoveries in a host of states, especially Texas. The Age of Natural Gas could make the United States the world’s leading geopolitical power well into the new century.

Mohan Malik, a professor at the Asia-Pacific Center for Security Studies in Honolulu, has for years been studying the geopolitics of energy. He has drawn, in conceptual terms, a new world map dominated by a growing consumer market for energy in Asia and a growing market for production in the United States.

“Asia has become ‘ground zero’ for growth” as far as the consumption of energy is concerned, writes Malik. His research shows that over the next 20 years, 85 percent of the growth in energy consumption will come from the Indo-Pacific region. Already, at least a quarter of the world’s liquid hydrocarbons are consumed by China, India, Japan and South Korea. According to the World Energy Outlook, published by the International Energy Agency, China will account for 40 percent of the growing consumption until 2025, after which India will emerge as “the biggest single source of increasing demand,” in Malik’s words. The rate of energy consumption growth for India will increase to 132 percent; in China and Brazil demand will grow by 71 percent, and in Russia by 21 percent. Malik explains that the increase in demand for gas will overtake that for oil and coal combined. Part of the story here is that the Indo-Pacific region will become increasingly reliant on the Middle East for its oil: By 2030, 80 percent of China’s oil will come from the Middle East, and 90 percent in the case of India. (Japan and South Korea remain 100 percent dependent on oil imports.) China’s reliance on the Middle East will be buttressed by its concomitant and growing dependence on former Soviet Central Asia for energy.

While the Indo-Pacific region is becoming more energy dependent on the Middle East, in the other hemisphere the United States is emerging as a global energy producing giant in its own right. Malik reports that U.S. shale oil production will more than triple between 2010 and 2020. And were the United States to open up its Atlantic and Pacific coastlines to drilling, he says oil production in the United States and Canada could eventually equal the consumption in both countries. Already, within a decade, shale gas has risen from 2 percent to 37 percent of U.S. natural gas production. The United States has now overtaken Russia as the world’s biggest natural gas producer. Some estimates put the United States as overtaking Saudi Arabia as the world’s largest oil producer by the end of the current decade, though this is unlikely.

Malik observes that this would mark a return to the pre-1973 Yom Kippur War period of American energy dominance. When combined with Canadian oil sands and Brazil’s oil lying beneath salt beds, these shifts have the potential to make the Americas into the “new Middle East” of the 21st century, though we need to remember that U.S. oil production may be in decline after 2020.

At the same time, Russia is increasingly shifting its focus of energy exports to East Asia. China is on track to perhaps become Russia’s biggest export market for oil before the end of the decade, even as Russian energy firms are now developing a closer relationship with Japan in order to hedge against their growing emphasis on China.

We are thus seeing before our eyes all energy routes leading to the Indo-Pacific region. The Middle East will be exporting more and more hydrocarbons there. Russia is exporting more and more hydrocarbons to the East Asian realm of the area. And North America will soon be looking more and more to the Indo-Pacific region to export its own energy, especially natural gas.

As the Indo-Pacific waters — that is, the Greater Indian Ocean and the South China Sea — become the world’s energy interstate, maritime tensions are rising in the South China Sea and in the adjacent East China Sea. The territorial tensions over which country owns what geographical feature in those waters is not only being driven by potential energy reserves and fish stocks in the vicinity, but also by the very fact that these sea lanes and choke points are of growing geopolitical importance because of the changing world energy market.

Europe, because of its aging population, will probably not grow in relative importance in world energy markets, while the Indo-Pacific region of course will. Though northeast Asia, like Europe, is home to aging populations, that is not the case — or at least is less the case — in the Indian Ocean world.

Economic importance often leads over time to cultural and political importance. Thus, the current tension between an economically and demographically stagnant European Union and a troubled, autocratic Russia — energy rich, but less so in comparative terms going forward — may actually expose the decline of Greater Europe, while North America and the Indian Ocean world become the new pulsating centers of commerce. At the same time, however, we may see, at least in the short term, an alliance of sorts between Russia and China, undergirded by a growing energy relationship, as these two massive Eurasian states come into conflict and competition with the democratic West.

Power in Eurasia would, therefore, move to more southerly latitudes, while the United States would have its own power reinvigorated by an even closer economic relationship with Canada and Mexico (which is also energy rich). The Europe-centric world of the past millennium may finally be passing as North America and the Greater Indian Ocean take center stage.

Read more: The Geopolitics of Energy | Stratfor
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Stratfor: The Geopolitics of Shale

By Robert D. Kaplan
Chief Geopolitical Analyst
Stratfor Global Intelligence

According to the elite newspapers and journals of opinion, the future of foreign affairs mainly rests on ideas: the moral impetus for humanitarian intervention, the various theories governing exchange rates and debt rebalancing necessary to fix Europe, the rise of cosmopolitanism alongside the stubborn vibrancy of nationalism in East Asia and so on. In other words, the world of the future can be engineered and defined based on doctoral theses. And to a certain extent this may be true. As the 20th century showed us, ideologies — whether communism, fascism or humanism — matter and matter greatly.

But there is another truth: The reality of large, impersonal forces like geography and the environment that also help to determine the future of human events. Africa has historically been poor largely because of few good natural harbors and few navigable rivers from the interior to the coast. Russia is paranoid because its land mass is exposed to invasion with few natural barriers. The Persian Gulf sheikhdoms are fabulously wealthy not because of ideas but because of large energy deposits underground. You get the point. Intellectuals concentrate on what they can change, but we are helpless to change much of what happens.

Enter shale, a sedimentary rock within which natural gas can be trapped. Shale gas constitutes a new source of extractable energy for the post-industrial world. Countries that have considerable shale deposits will be better placed in the 21st century competition between states, and those without such deposits will be worse off. Ideas will matter little in this regard.

Stratfor, as it happens, has studied the issue in depth. Herein is my own analysis, influenced in part by Stratfor’s research.

So let’s look at who has shale and how that may change geopolitics. For the future will be heavily influenced by what lies underground.

The United States, it turns out, has vast deposits of shale gas: in Texas, Louisiana, North Dakota, Pennsylvania, Ohio, New York and elsewhere. America, regardless of many of the political choices it makes, is poised to be an energy giant of the 21st century. In particular, the Gulf Coast, centered on Texas and Louisiana, has embarked upon a shale gas and tight oil boom. That development will make the Caribbean an economic focal point of the Western Hemisphere, encouraged further by the 2014 widening of the Panama Canal. At the same time, cooperation between Texas and adjacent Mexico will intensify, as Mexico increasingly becomes a market for shale gas, with its own exploited shale basins near its northern border.

This is, in part, troubling news for Russia. Russia is currently the energy giant of Europe, exporting natural gas westward in great quantities, providing Moscow with political leverage all over Central and particularly Eastern Europe. However, Russia’s reserves are often in parts of Siberia that are hard and expensive to exploit — though Russia’s extraction technology, once old, has been considerably modernized. And Russia for the moment may face relatively little competition in Europe. But what if in the future the United States were able to export shale gas to Europe at a competitive price?

The United States still has few capabilities to export shale gas to Europe. It would have to build new liquefaction facilities to do that; in other words, it would have to erect plants on the Gulf of Mexico that convert the gas into liquid so that it could be transported by ship across the Atlantic, where more liquefaction facilities there would reconvert it back into gas. This is doable with capital investment, expertise and favorable legislation. Countries that build such facilities will have more energy options, to export or import, whatever the case may be. So imagine a future in which the United States exports liquefied shale gas to Europe, reducing the dependence that European countries have on Russian energy. The geopolitics of Europe could shift somewhat. Natural gas might become less of a political tool for Russia and more of a purely economic one (though even such a not-so-subtle shift would require significant exports of shale gas from North America to Europe).

Less dependence on Russia would allow the vision of a truly independent, culturally vibrant Central and Eastern Europe to fully prosper — an ideal of the region’s intellectuals for centuries, even as ideas in this case would have little to do with it.

This might especially be relevant to Poland. For Poland may have significant deposits of shale gas. Were Polish shale deposits to prove the largest in Europe (a very big “if”), Poland could become more of an energy producer in its own right, turning this flat country with no natural defenses to the east and west — annihilated by both Germany and the Soviet Union in the 20th century — into a pivot state or midlevel power in the 21st. The United States, in turn, somewhat liberated from Middle East oil because of its own energy sources (including natural gas finds), could focus on building up Poland as a friendly power, even as it loses substantial interest in Saudi Arabia. To be sure, the immense deposits of oil and natural gas in the Arabian Peninsula, Iraq and Iran will keep the Middle East a major energy exporter for decades. But the shale gas revolution will complicate the world’s hydrocarbon supply and allocation, so that the Middle East may lose some of its primacy.

It turns out that Australia also has large new natural gas deposits that, with liquefaction facilities, could turn it into a principal energy exporter to East Asia, assuming Australia significantly lowers its cost of production (which may prove very hard to do). Because Australia is already starting to emerge as the most dependable military ally of the United States in the Anglosphere, the alliance of these two great energy producers of the future could further cement Western influence in Asia. The United States and Australia would divide up the world: after a fashion, of course. Indeed, if unconventional natural gas exploitation has anything to do with it, the so-called post-American world would be anything but.

The geopolitical emergence of Canada — again, the result of natural gas and oil — could amplify this trend. Canada has immense natural gas deposits in Alberta, which could possibly be transported by future pipelines to British Columbia, where, with liquefaction facilities, it could then be exported to East Asia. Meanwhile, eastern Canada could be the beneficiary of new shale gas deposits that reach across the border into the northeastern United States. Thus, new energy discoveries would bind the two North American countries closer, even as North America and Australia become more powerful on the world scene.

China also has significant deposits of shale gas in its interior provinces. Because Beijing is burdened by relatively few regulations, the regime could acquire the land and build the infrastructure necessary for its exploitation. This would ease somewhat China’s energy crunch and aid Beijing’s strategy to compensate for the decline of its coastal-oriented economic model by spurring development inland.

The countries that might conceivably suffer on account of a shale gas revolution would be landlocked, politically unstable oil producers such as Chad, Sudan and South Sudan, whose hydrocarbons could become relatively less valuable as these other energy sources come online. China, especially, might in the future lose interest in the energy deposits in such low-end, high-risk countries if shale gas became plentiful in its own interior.

In general, the coming of shale gas will magnify the importance of geography. Which countries have shale underground and which don’t will help determine power relationships. And because shale gas can be transported across oceans in liquid form, states with coastlines will have the advantage. The world will be smaller because of unconventional gas extraction technology, but that only increases the preciousness of geography, rather than decreases it.
 
The Geopolitics of Shale is republished with permission of Stratfor.”

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The Russian Veto

Syria to Russia: If Assad goes down, his state secrets (along with those of his father) will almost certainly become exposed; the degree to which this will compromise the variously held secrecies of Russia and other former Soviet states is unknown and probably unknowable.

Russia to China: Let’s work together to stop western adventurism in Eurasia.

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China advises against Iran sanctions

Excerpt from BBC story, “Russia ‘rethinks’ Iran sanctions“.

But the Chinese foreign ministry has said that increasing pressure on Iran would not be effective.

“Sanctions and exerting pressure are not the way to solve problems,” said spokeswoman Jiang Yu.

She said sanctions “are not conducive for the current diplomatic efforts on the Iran nuclear issue”.

Russian President Medvedev may be considering a more pliant position on Iranian sanctions, but the Chinese are cautioning restraint. While this would likely not entail a Chinese veto on any sanctions agreeable to Moscow, it will strengthen Russia’s position in arguing for weaker constraints on the Iranian military-industrial-financial complex during upcoming Security Council debates on Iran’s nuclear intransigence.

The Chinese foreign ministry is being somewhat disingenuous in its assertion that trade sanctions are not an effective means of dealing with rogue nuclear programs. They have no experience in the matter. Had they flexed any sort of financial fortitude during the run-up to North Korea’s nuclear weaponisation, then we might not be dealing concurrently with those consequences as well — not to mention that Iranian nuclear development would probably be at least five years behind where it is right now.

Can sanctions dissuade a country from developing nuclear weapons?

Ask Libyan leader-for-life, Moammar Gadhafi. He received the same “care” package from the A.Q. Khan network as both Iran and North Korea — but he turned his bundle over to the IAEA because he knew that the US and Europe meant business.

China was in a perfect position to influence North Korea with respect to its nuclear objectives, but they let their non-proliferation responsibilities slide.

What a crying shame.

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A Moment for Tiananmen

tiananmen2

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BRIC to Discuss New World Currency

Sampled from this Bloomberg article:

[snip]

Russian Proposal

Russian President Dmitry Medvedev may discuss his proposal to create a new world currency when he meets counterparts from Brazil, India and China this month, Natalya Timakova, a spokeswoman for the president, told reporters by phone today. Medvedev first proposed seeking alternatives to the U.S. dollar as a reserve currency in March.

[/snip]
 

Together, the four countries comprise 42% of the world’s population and hold the majority of US foreign debt. 

 

      Read more about this issue in our April 2, 2009
      blog entry, “
On the Current State of Currency”…
 
 

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China’s Strategic Modernisation

An interesting report on US-Sino relations and competition from the US State Department’s International Security Advisory Board (ISAB) – October 1, 2008.

China’s Strategic Modernization
Report from the ISAB Task Force

The Secretary’s International Security Advisory Board (ISAB) was asked to examine China’s strategic modernization, including the principal underlying motivations. Based on this review, the Board was asked to recommend approaches that~could “move the U.S. China security relationship toward greater transparency and mutual confidence, enhance cooperation, and reduce the likelihood of misunderstanding or miscalculation that can contribute to competition or conflict.”

Continue here…

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