Center for a New American Security

Yesterday, China’s nationalist newspaper Global Times published a report arguing that Beijing should make the Philippines pay for increased cooperation with the United States, what Chinese officials perceive as a balancing act unfolding in the region. According to the Global Times:

Given the recent active maneuvers of the US military in China's neighboring area, the lack of a response from China would be inappropriate, though it is also impossible to react strongly toward every move by the US. It is thus necessary to single out a few cases and apply due punishment.

The Philippines is a suitable target to impose such a punishment. A reasonable yet powerful enough sanction can be considered. It should show China's neighboring area that balancing China by siding with the US is not a good choice.

The report adds that Beijing should use economic coercion to compel the Philippines into suspending its ongoing activities with the United States: “China may consider cooling down its business ties with the Philippines. One step forward in military collaboration with the US means a step backward in economic cooperation with China. In the long run, China may also use its economic leverage to cut economic activities between ASEAN countries and the Philippines.”

The call from the Chinese national newspaper comes on the heels of increased military cooperation between the United States and the Philippines. In November 2011, the United States agreed to transfer a second Hamilton-class cutter to the Philippines to provide additional resources for the Philippine Navy to conduct maritime security activities, including in the South China Sea where China and the Philippines have ongoing territorial disputes. Earlier this month, the United States announced that its annual exercise with the Philippine marines will be conducted off of Palawan island instead of the main island Luzon. (Increased Chinese oil and natural gas exploration 50 miles off the island of Palawan has exacerbated tensions between the Philippines and China in recent months.) Most recently, the United States and the Philippines agreed last week to closer military cooperation moving forward. According to The Washington Post on Sunday, “The Philippines said it is considering more joint military exercises and a greater presence by American troops.”

Yesterday, The Wall Street Journal reported that the Obama administration has decided to withdraw its demand for countries pursuing nuclear energy development to relinquish their right to produce nuclear fuel domestically. This is a significant shift from a 2009 agreement between the United States and the United Arab Emirates (UAE) that prohibits the UAE from enriching uranium domestically or reprocessing spent nuclear fuel.

According to The Wall Street Journal report, administration officials cited concerns that U.S. nuclear plant developers could lose a share of the market with a stringent requirement attached to nuclear-cooperation agreements that bound countries from developing domestic sources of nuclear fuel. “U.S. companies once controlled at least 50% of the world market for building nuclear reactors,” The Wall Street Journal reported. “This share has dwindled to around 20%, U.S. officials say, with Russian, French and South Korean companies gaining dominance,” and officials have cautioned that “Washington risked losing business for American companies seeking to build nuclear reactors overseas” if the United States continued to push the nuclear-cooperation agreement requirement.

Moreover, U.S. officials cited concerns that losing nuclear plant development to non-U.S. developers could weaken U.S. efforts to encourage countries to promote stronger nonproliferation safeguards and policies. “To the extent we lose market share, we lose nonproliferation controls and hurt national security,” a senior U.S. official told The Wall Street Journal.

Last week, the Center for Strategic and International Studies (CSIS) released its report, “A New Security Architecture for the Arctic: An American Perspective."  The report provides concise summaries of the existing governance regimes for the Arctic and touches on many of the reasons the United States and other nations should care about the Arctic.  It reprises the role of the Law of the Sea Convention, Arctic Council and the North Atlantic Treaty Organization.  The authors also argue for creation of an Arctic Coast Guard Forum to address security concerns with membership comprised of the eight Arctic Council countries, plus other countries willing to contribute resources to the region. 

Two of the key takeaways for me were the emphasis on the failure of the United States to create a comprehensive “large scale economic development plan for the region” and the lack of existing military assets suited to operate in this complex environment to protect, enforce and ensure our interests.  From my perspective, the lack of a serious national discussion and investment in Arctic resources, coupled with the continued failure to ratify the Law of the Sea Convention, signals to other nations that we are willing to forfeit our leadership role in the Arctic.  The longer we wait to engage in a national dialogue and set a firm course to implement a strategy, the more options we foreclose in the future.  As we delay implementation and investment, others gain leverage through the development of critical infrastructure or assets needed to exploit resources in the region, including shipping ports to take advantage of potentially shorter trade routes, ice breakers to keep open sea lanes or allow development of oil and gas fields and patrol vessels to protect fish stocks. 

Ideally, we should enter critical international negotiations over governance, use and protection of resources within the Arctic from a position of strength rather than weakness.  That is not to suggest that partnerships are bad, or that the United States must have enough government assets to go it alone.  Partnerships can be incredibly productive when they are mutually beneficial.  Partnerships that are completely one sided in nature have little appeal and are difficult to sustain.  Perhaps if we could afford to continue to build assets and infrastructure with nominal concern for costs we could make up for the lack of a comprehensive development strategy through sheer numbers of assets or breadth of capabilities.   Yet in a time of financial austerity it would seem far better to invest in assets or partnerships that support a well developed national strategy.

President Obama will deliver his third State of the Union Address tonight. With the focus on the economy and jobs creation, we’re not likely to hear much from the president on the need for the United States to get serious about the Arctic or for Congress to ratify the Law of the Sea Convention. But there are some issues I think the president has an opportunity to address, and I expect we’ll hear much from him tonight on his vision for a clean energy future as it relates to economic security.  

In particular, I think President Obama has an opportunity to make the case for doubling down on clean energy investments, despite recent criticisms of the administration’s handling of Solyndra. President Obama has many success cases to point to in making the case for why these investments are good for the U.S. economy and long-term prosperity. For example, last year the administration announced that the Departments of Agriculture, Energy and Navy would match up to $510 million dollars in private sector investments in renewable biofuel projects. This initiative has already helped develop a larger market for alternative fuels and infused confidence in investors.

I don’t believe the president should have much trouble explaining why investing in alternative fuels and renewable energy projects are good for the United States. Most Americans have fresh memories of $5 a gallon gasoline and the toll it took on the U.S. economy in 2008. Moreover, there’s a larger vision that can be achieved through investments in renewable energy and non-petroleum fuels, and the president should press this message: that these government investments will help spur continued private sector investments in alternative liquid fuels, help move the United States away from its outsized dependence on petroleum and provide the foundation for a more resilient economy. Indeed, this is especially important at a time when ratcheting tensions in the Persian Gulf and instability in Nigeria are generating some uncertainty in the global oil market - and the United States certainly cannot endure another shock to the global oil market. The faster we move away from petroleum dependence, the more resilient our economy will be.

As I wrote in last weekend’s roundup, there is a lot of uncertainty looming in Nigeria that could impact the global oil market. A weeklong row between the government and labor unions over the government’s fuel subsidy cost Nigeria about $1.3 billion dollars. Labor unions suspended the strike early last week after Nigerian President Goodluck Johnson agreed to partially reinstate his government’s fuel subsidy.

Despite the brief respite from political turmoil, the country was rocked by a series of bombings throughout the week that reportedly left 256 dead. “The militant Muslim group Boko Haram, which is fighting for rule by Islamic law in the north, said it was responsible for blasts at eight government buildings in Kano on Jan. 20,” according to Businessweek. The same report said that:

The attacks by Boko Haram haven’t affected oil from Nigeria’s Atlantic coast, where companies including Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA pump more than 90 percent of the country’s crude output. Similarly, the financial markets in the southwestern commercial capital, Lagos, haven’t been disrupted by the violence.

Nevertheless, Nigeria’s instability may have long-term implications for the global oil market if violence affects the country’s oil sector. Already, “Brent oil for March settlement advanced as much as 59 cents, or 0.5 percent, to $110.45 a barrel on the London-based ICE Futures Europe exchange,” according to Businessweek.

Energy analysts will need to be watchful of developments in Nigeria as the government continues to grapple with unrest. Moreover, the fuel subsidy issue may again surface as a point of tension if fuel prices rise. According to a report from The Wall Street Journal, “Analysts worry that the [fuel] subsidy cut played into Boko Haram's antigovernment stance, helping it to channel the anger of Nigeria's young disaffected Muslims.” Thus, the issue could continue to affect stability in Nigeria.  

An interesting story in The New York Times describes the tensions between states and the federal government over nuclear regulatory authority.

The New York Times Green blog revisits the issue of agriculture and climate change.

According to Reuters, Turkey is working to reduce its dependence on Iranian oil.   

Beijing makes a rare concession on pollution, The Washington Post reports.

Also from The Washington Post, French President Sarkozy urges much tougher sanctions against Iran, including an oil embargo. 

• President Obama rejected the proposed Keystone XL oil pipeline on Wednesday, The New York Times reports.
• Antinuclear protest disrupt a panel in Japan as the government approves plans to extend nuclear plant operations up to 20 years, The Wall Street Journal reports.
• According to The Washington Post, the United States and the Philippines are planning combat drills at an oil rig in the South China Sea.
• United Press International reports that the La Nina weather event is increasing the odds of U.S. drought.
• Also from UPI, cleanup efforts at a closed Washington state nuclear site have run into technical problems.  

• The New York Times explores a new proposal to address climate change by focusing on efforts that would provide immediate benefits over long-term sacrifice.
• Iran issued a warning to Saudi Arabia following an offer from the Kingdom that it would increase oil output in order to make up for global oil shortfall caused by U.S.-sponsored sanctions against the Iranian regime, The Wall Street Journal reports.  
• Also from The Wall Street Journal, China is – for the first time in its history – a predominately urban society.
• According to The Washington Post, Japan will allow nuclear plants to operate up to 20 years beyond an originally planned 40-year limit.
• The Pentagon is still struggling to define and achieve “energy security,” according to a report from Greenwire.  

Building on yesterday’s blog post with recommendations for how U.S. policymakers can encourage cooperation around energy in the South China Sea, here are some quick thoughts on steps policymakers should take to help states in the region adapt to climate change, which, as I point out in my chapter on natural resources in our new report, Cooperation from Strength: The United States, China and the South China Sea, exacerbates the resource issues countries must confront. 

Broadly speaking, the United States must help states in the South China Sea region adapt to climate change by supporting humanitarian and disaster relief training, science and technology sharing and climate finance programs. Many South China Sea states are preparing to deal with the effects of climate change, including agricultural destruction, flooding, sea level rise and more frequent and severe storms. With the lack of U.S. legislation to curb greenhouse gas emissions, there is an increasing view that the United States is not a credible leader to help these states confront the climate challenges that await them. Yet, the United States does not need to pass “Cap & Trade” or other controversial legislation in order to help states adapt to global climate change.

Yesterday, the Center for a New American Security (CNAS) released its new report, Cooperation from Strength: The United States, China and the South China Sea, a six-chapter volume featuring a capstone chapter authored by Patrick M. Cronin, CNAS Senior Advisor and Senior Director of the Asia-Pacific Security Program, and Robert D. Kaplan, CNAS Senior Fellow, to help U.S. policymakers understand the trends affecting American interests in the South China Sea. It includes insightful chapters on U.S. strategy in the South China Sea, maritime security, diplomacy and the rule of law, natural resources and partnership building by some of the world’s leading experts on the Asia-Pacific region. 

This morning at 9 AM, CNAS will host the launch event at the Willard Hotel in Washington. To view the live webcast, tune in at http://www.cnas.org/LIVE.

We’ll have more on the actual report later.

Despite a warning from the Iranian military that the U.S. carrier should not return to the Persian Gulf, the USS John C. Stennis continued businesses as usual this week, conducting maritime security operations with the U.S. 5th Fleet in support of military operations in Afghanistan. In this photo taken on January 4, 2012, an F/A-18F Super Hornet launches from the deck of the Stennis. Energy analysts are keeping a watchful eye on tensions between the United States and Iran, and the potential effects on global oil prices.

Photo: Courtesy of Mass Communication Specialist 3rd Class Kenneth Abbate and the U.S. Navy.