My CNAS colleagues Melissa Dalton and Nora Bensahel published a policy brief recently assessing the state of U.S. policy toward Iraq a year after U.S. military forces completed their withdrawal from the country. Although U.S. policy toward Iraq has been drifting since the withdrawal, Dalton and Bensahel argue in Revitalizing the Partnership: The United States and Iraq a Year after Withdrawal that the United States has strategic interests in a strong, unified and sovereign Iraq.
Among some of the common interests shared by Iraq and the United States include Iraq’s continued progress in producing the country’s oil resources. According to Dalton and Bensahel:
Iraq’s substantial petroleum resources could rejuvenate the country’s economy if Iraq’s leaders can navigate the dispute between the KRG and the central government on oil-rich territory and enact critical hydrocarbon legislation. Iraq possesses an estimated 43 billion barrels of crude oil, the world’s fifth-largest oil reserves, and it surpassed Iran in terms of output in July. Iraq’s output could stabilize or agitate the global market, directly affecting the U.S. economy in the near term, although the United States may be less vulnerable to shocks as additional domestic oil resources come on line. Iraqi oil exports could help offset the negative impact on the global market of oil sanctions on Iran (as exports from Saudi Arabia have), but such exports may face stiff pressure from Iranian allies in Iraq.
Read more at CNAS.org.
Russia’s Zarubezhneft oil company has moved to shallower waters to continue drilling exploratory oil wells off Cuba’s coast, according to a report in the Washington Post on Saturday. The company’s new project comes after several failed attempts earlier this year to drill commercially-viable ultra-deep water oil wells off the Cuban coast. According to some estimates, there could be potentially 5 billion to 9 billion barrels of crude oil in deepwater off Cuba’s coast, a tenth of which may be commercially viable according to industry standards.
With fresh memories of the Gulf Coast Deepwater Horizon accident, U.S. government officials – including the U.S. Coast Guard – have been increasingly worried about offshore oil drilling in non-U.S. waters that could impact the U.S. coast if an accident occurs. Increased activity in Cuban waters is a particular concern for U.S. officials. A March 2012 The Washington Post report noted that Cuba’s capacity to respond to an offshore oil spill is extremely limited, with “only 5 percent of the resources needed to contain a spill approaching the size of the Deepwater Horizon disaster.” These concerns have also raised the question of how the United States could respond to an oil spill in Cuban waters given the state of U.S.-Cuba relations, including export restrictions that prohibit U.S. companies from providing equipment or otherwise performing response functions that could be construed as aiding the Cuban government.
In particular, the half-century old Cuban embargo obliges any company operating in Cuba to use only equipment that contains less than 10 percent U.S.-made parts in order to avoid sanctions. This means that companies operating in Cuba’s deepwater may not necessarily be using the most sophisticated or the safest tools and techniques shared by U.S. drilling companies. This might not be a concern in shallow water (several hundreds of feet deep), but in ultra deep water (depths beyond 1,500 meters), U.S. companies have a comparative advantage over many other international drilling companies. Moreover, deepwater drilling remains risky, even for U.S. companies. And while Zarubezhneft plans to drill in shallower water for its next project, it is still drilling in deep water: 6,500 meters.
The National Intelligence Council (NIC) published its Global Trends 2030: Alternative Worlds on Monday, a quadrennial analysis of the major trends shaping the global security environment. The report is intended to provide a framework for a new presidential administration to think about the threats and opportunities that lie ahead in the future security landscape.
The report examined four medgatrends that analysts believe will shape the world of tomorrow: individual empowerment; diffusion of power; demographic patterns; and the food, water, energy nexus.
The latter two trends directly affect each other. According to the NIC’s analysis, “Demand for these [food, water and energy] resources will grow substantially owing to an increase in the global population [demographics].”
Climate change is inextricably linked to the growing food, water and energy nexus. According to the report:
Demand for food, water, and energy will grow by approximately 35, 40, and 50 percent respectively owing to an increase in the global population and the consumption patterns of an expanding middle class. Climate change will worsen the outlook for the availability of these critical resources. Climate change analysis suggests that the severity of existing weather patterns will intensify, with wet areas getting wetter and dry and arid areas becoming more so. Much of the decline in precipitation will occur in the Middle East and northern Africa as well as western Central Asia, southern Europe, southern Africa, and the US Southwest.
We are not necessarily headed into a world of scarcities, but policymakers and their private sector partners will need to be proactive to avoid such a future. Many countries probably won’t have the wherewithal to avoid food and water shortages without massive help from outside.
Technology will play an interesting role in the future security landscape, particularly when it comes to energy, according to the NIC’s analysis. Technological breakthroughs in unconventional natural gas and oil production are contributing to an energy revolution in North America.
International trade in natural gas has been turned on its head. In 2005, the United States was on track to import nearly 20 percent of its natural gas by 2020. That forecast led to major U.S. investments in liquefied natural gas (LNG) import terminals in the American northeast, where hundreds of tankers a year were expected to offload LNG shipped from Europe and elsewhere. But the gap between U.S. consumption and production has been closing quickly as a result of hydraulic fracturing that has contributed to a glut in U.S. shale gas production. Now the United States is expected to be a net exporter of LNG by the end of the decade. And investors are looking for ways to modify the LNG terminals to reverse the flow of LNG trade that promises to usher in new opportunities for U.S. energy producers and foreign policy practitioners. [See: “The natural gas revolution reversing LNG tanker trade,” The Washington Post (December 7, 2012)]
Officials in Washington have been consumed by the question of whether or not the United States should prepare to export LNG. Policymakers are asking when and under what economic conditions would exporting LNG provide the best economic returns for the U.S. economy. A report released last week by the Department of Energy concluded that exporting LNG would help the U.S. economy across all the scenarios that economists forecasted, and that those benefits would increase as LNG exports grow in the future.
Many worry that exporting LNG could raise U.S. natural gas prices and hurt downstream consumers, like petrochemical companies and electricity consumers. But based on the models produced for the DOE study, natural gas prices are not likely to sharply increase in the near term. According to the study, “The largest price increases that would be observed after 5 more years of potentially growing exports could range from $0.22 to $1.11 (2010$/Mcf).” That would be about a 30 percent increase from today’s prices, which are around $3.70.
Yesterday, Admiral Samuel J. Locklear, Command of U.S. Pacific Command, briefed the Pentagon press corps on the U.S. military’s rebalance to the Asia Pacific. Admiral Locklear spoke specifically to the ongoing territorial disputes in the East and South China Seas, saying, “We call on all the parties there, including the Chinese, to ensure that, as they approach these problems, that they do so in a way that avoids conflict, that avoids miscalculation, that uses the vehicles available today through diplomacy and through those legal forums that allow them to get to reasonable solutions on these without resorting to coercion or conflict.”
Admiral Locklear was also asked about the growing concerns surrounding China’s aircraft carrier. He responded: “My assessment is that if I were China and I was in the economic position that China is in, and I was in a position of where I have to look after my global security interests, I would consider building an aircraft carrier. And I might consider building several aircraft carriers. So the real question is whether we should be concerned with them or not. Like any other country that builds aircraft carriers is whether or not those types of platforms will be successfully integrated into a global security environment that's a peaceful one. And they have a role in maintaining the peaceful global security environment. If the issue is that they are not part of that global security environment, then I think we have to be concerned about them.”
Read the full transcript from the press briefing here.
Photo: Courtesy of Glenn Fawcett and the Department of Defense.
India’s interest in the South China Sea is getting more attention. Last year, The Times of India reported that India’s offshore Oil and Natural Gas Corporation (ONGC) Videsh would work with Vietnam to jointly explore for oil and natural gas resources in the South China Sea. Despite warnings from China – which has made sovereign claims to the entire South China Sea and its energy resources – India and Vietnam have pressed ahead with joint development, leading to increased tensions between China, India and Vietnam.
Last Friday, Vietnam lodged a complaint with China when two Chinese fishing boats reportedly blocked a Vietnamese seismic survey vessel that caused the ship’s cables to snap. The latest episode is just another in a string of incidents where Chinese fishing boats have blocked attempts by Vietnam and other countries to survey for natural gas and oil deposits. (Track these incidents using the CNAS Flashpoint timeline feature here.) The latest incident also comes on the heels of an announcement from China’s Hainan Province last week warning that provincial police would be permitted to board and search vessels violating China’s territorial waters, including in contested areas.
In response to the most recent attempt by Chinese fishermen to block Vietnam’s seismic surveying, Vietnamese officials said that the government would step up defensive patrols, including deploying marine police, to protect against future Chinese encroachment. India seemed to respond in kind, according to a New York Times report, saying “it would consider sending navy vessels to protect its interests in the South China Sea.”
New climate data published in the journal Nature Climate Change on Sunday show that global carbon emissions hit a record high in 2011 and could increase in 2012 without a concerted international effort to reduce emissions. According to the analysis published by the study’s authors, the prospect for keeping global warming below 2 ⁰C – the threshold above which scientists expect irreversible climate change to take effect – is increasingly dim. “A shift to a 2 °C pathway requires immediate significant and sustained global mitigation, with a probable reliance on net negative emissions in the longer term,” the authors concluded.
The climate data were released as international delegates meet for four final days of negotiations at the UN Framework Convention on Climate Change (UNFCC) Conference of Parties 18 in Doha, Qatar. According to a report from The New York Times on Monday, those negotiations are not expected to result in meaningful international progress: “Their agenda is modest this year, with no new emissions targets and little progress expected on a protocol that is supposed to be concluded in 2015 and take effect in 2020.”
The executive secretary of the UNFCC Christiana Figueres said in an interview that countries need to do more at the domestic level in order to build momentum toward a comprehensive global agreement. “We won’t get an international agreement until enough domestic legislation and action are in place to begin to have an effect,” Figueres said in an interview, according to The New York Times. “Governments have to find ways in which action on the ground can be accelerated and taken to a higher level, because that is absolutely needed.”