Yesterday, Iran’s Oil Minister Rostam Qasemi told an audience at the World Energy Forum in Dubai that the Iranian government would halt all of its oil exports if the United States and other western powers strengthened their antinuclear sanctions against Tehran. “If you continue to add to the sanctions, we will stop our oil exports to the world,” Qasemi told a news conference, according to Bloomberg News, adding, “The lack of Iranian oil in the market would drastically add to the price.”
In the past, that kind of announcement might have made oil traders nervous, raising global prices. But since the international sanctions have been in place, Iranian oil exports have shrunk considerably, from 2.2 million barrels a day in 2011 to 860,000 barrels a day in September 2012. Iran’s shrinking share of the global oil market – and rising production in places like Saudi Arabia, Iraq and the United States that is offsetting supply shortages – has weakened Tehran’s ability to wreak havoc in the global oil market. That’s why oil prices fell to a three-month low, according to The New York Times: “On the New York Mercantile Exchange, the price of the benchmark grade fell $1.98 a barrel or 2.3 percent to $86.67, the lowest closing price since July 12.”
Most experts agree that Iran is unlikely to halt its oil shipments to those countries that currently have exemptions to the oil embargo, like India. The sanctions have already taken a toll on the economy. Iran’s currency has lost 40 percent of its value and sanctions against the country’s central bank prevent it from shoring up its currency with foreign reserves. Iran cannot afford to stop exporting its oil without further weakening its economy.
But even while Iran may not have as much direct influence in the global oil market, there is always the possibility that Tehran will try to indirectly raise global oil prices through more brazen efforts, like threatening or actually attempting to close the Strait of Hormuz through which 20 percent of the world's oil is shipped, which would raise global oil prices by as much as 50 percent in a few days. In that sense, Iran can still wreak havoc in the global oil market and onlookers should keep a watchful eye towards Tehran’s behavior.
Tonight is the third and final presidential debate, and it will focus exclusively on foreign policy. Viewers can expect to see significant attention given to Afghanistan, China, Iran and Libya. CNAS published a “National Security Guide to the 2012 Presidential Election” earlier this month that lays out some of the key decision points on a range of issues, such as the defense budget, cyber security and Afghanistan.
One issue that has received very little attention in the debates so far is climate change, which is disappointing when one considers that some of the most important decisions regarding U.S. policy on climate change will need to be made in the next administration in order to avoid potential climate tipping points that scientists say could “lead to increasingly rapid and irreversible destruction of the global environment.” Indeed, the International Energy Agency has already warned that – even with the recent global recession – global carbon emissions continue to rise, pushing the world closer to irreversible damage to the environment. The IEA added last year that unless serious efforts are taken in the next five years to curb global greenhouse gas emissions the world may be unable to avoid “dangerous climate change” and its attendant consequences, including more frequent and severe drought like the kind witnessed today in the American midwest.
But policymakers don’t need to wait five years or more to see how climate change may take its toll on U.S. security and foreign policy interests. One need only look to the Arctic – which recorded record low sea ice this summer – to see where climate change is already complicating U.S. foreign policy. The opening of the Arctic is placing increased pressure on U.S. policymakers to assess U.S. interests in the region and to navigate potential international challenges that could manifest from increased activity in the High North.
Yesterday, Secretary of State Hillary Rodham Clinton delivered a speech at Georgetown University on “Energy Diplomacy in the 21st Century” where she outlined three pillars of America’s energy foreign policy strategy: energy diplomacy; energy transformation; and energy poverty. (See the details of those three pillars at the State Department’s Bureau of Energy Resources.)
In her speech, Secretary Clinton made explicit ties between energy and climate change:
“[E]nergy is essential to how we will power our economy and manage our environment in the 21st century,” Secretary Clinton said. “We therefore have an interest in promoting new technologies and sources of energy – especially including renewables – to reduce pollution, to diversify the global energy supply, to create jobs, and to address the very real threat of climate change.”
Photo: Secretary of State Hillary Rodham Clinton delivers a speech on “Energy Diplomacy in the 21st Century” at Georgetown University on October 18, 2012. Courtesy of the U.S. State Department.
One of the knocks against advanced algae biofuels is that they are not cost competitive with conventional petroleum – which is true. But science may eventually offer a way around this particular challenge.
Writing recently in Yale Environment 360, Marc Gunther lays out the potential for science to revolutionize the biofuels business. “By far the biggest opportunity to reduce the costs of algal fuels lies within the algae,” Gunther writes. “Just as crop scientists have bred corn and wheat to improve yields, with spectacular results, the algae companies are using conventional breeding and genetic modification to develop strains of algae to grow faster, yield more oil, and repel pests.”
The biggest opportunity may come from synthetic genomics, a relatively nascent field that enables scientists to build living organisms with special characteristics from scratch. By closely studying strains of algae, scientists can map entire genetic sequences and identify the genes tied to specific physical properties like growth and oil yield. Using the building blocks of the genome – DNA nucleotides – scientists can then build from scratch the most efficient algae strain for producing oils that can be refined into gasoline and jet fuel, lowering the costs for producers.
In an interview with Scientific American in November 2011, J. Craig Venter, the man behind mapping the human genome, described the effort this way:
Everybody is looking for a naturally occurring algae that is going to be a miracle cell to save the world and, after a century of looking, people still haven't found it. We hope we're different. The [genetic] tools give us a new approach: being able to rewrite the genetic code and get cells to do what we want them to do.
By using synthetic genomics to create novel strains of algae, engineers can focus not just on making the algae more efficient oil producers, but also making them resistant to viruses that destroy whole ponds of algae and can drive up production costs. “The same genetic engineering and genome engineering we have, we can make cells that are resistant to viruses,” Venter told Scientific American. “Getting algae that are really robust and can withstand true industrial conditions on a commercial basis. You can't afford to shut down a plant for contamination. Most algae growers have to do that at a fairly frequent pace.”
On Sunday, Afghanistan’s Mining Minister Wahidullah Shahrani took steps to improve transparency in the country’s extractive resources industry by disclosing roughly 200 mining contracts that had previously been kept secret.
According to The New York Times, the move is “likely to please his supporters in the West, including the United States, who made greater openness in the Afghan government’s financial dealings a condition of billions of dollars in development assistance and aid money pledged earlier this year.”
Just two years ago, Afghanistan’s mineral wealth – estimated to be worth potentially a trillion dollars –promised hope to a torpid economy plagued by generations of war. “The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world,” The New York Times reported in June 2010.
But corruption and a lack of transparency has plagued the country’s mining industry. Reports say that there are ongoing disputes within the government over contracts to Afghans with ties to the Karzai family, including accusations that the government is steering lucrative deals to companies with ties to the Karzai family to develop the countries oil and natural gas reserves. Last month, The New York Times claimed that the country’s mineral sector had been “increasingly imperiled by corruption, violence and intrigue, and has put the Afghan government’s vulnerabilities on display,” and may even be helping fund Afghan insurgents. “A recent Defense Department analysis said criminal mining syndicates were smuggling chromite over the border, paying protection money to the Pakistani Taliban and the Haqqani insurgent network,” The New York Times reported.
In a speech last night aboard the USS Intrepid in New York, Secretary of Defense Leon Panetta warned a meeting of Business Executives for National Security about the cyber challenges the United States faces.
“A cyber attack perpetrated by nation states or violent extremist groups could be as destructive as the terrorist attack of 9/11,” Panetta said. “Such a destructive cyber terrorist attack could paralyze the nation.”
Panetta recalled a recent attack against the Saudi Arabian state oil company ARAMCO caused by a computer virus known as “Shamoon” that he described as “probably the most destructive attack that the private sector has seen to date.” In that attack, Secretary Panetta said, the virus self-executed itself and “replaced crucial system files with an image of a burning U.S. flag. It also put additional ‘garbage’ data that overwrote all the real data on the machine. The more than 30,000 computers it infected were rendered useless, and had to be replaced.”
The challenges create a “profound new sense of vulnerability,” Panetta noted. “An aggressor nation or extremist group could gain control of critical switches and derail passenger trains, or trains loaded with lethal chemicals,” he said. “They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country.”
To learn more about America’s cyber challenges, check out CNAS’s Election 2012 National Security Guide to the Presidential Election.
Over the summer, Nancy Brune and I contributed to the National Intelligence Council’s Global Trends 2030 blog, a forum to discuss a range of issues ahead of the NIC’s forthcoming Global Trends 2030 study, to be released after the presidential election this fall.
What is interesting about the NIC’s study is that it focuses on emerging trends and their implications for the security and geopolitical environments. But rather than explore these trends in isolation of each other, the NIC examines different scenarios, and how trends engage one another. Urbanization and climate change are among the trends that the NIC has looked at closely. In separate posts, Nancy and I both examined the security implications of urbanization and climate change for the NIC’s blog.
Urbanization – the shift of populations from rural to urban communities – presents challenges and opportunities for policymakers in developed and developing countries. As I wrote in July:
On the one hand, urban cities have the potential to serve as engines of change, driving economic growth in some of the world’s least developed countries and pulling more people out of poverty than at any other time in history. On the other hand, climate change could undercut all of this by exacerbating resource scarcity and putting vulnerable communities at risk from sea level rise and more frequent and intense storms.
But of course, climate change is not the only other trend that touches urbanization. A range of trends, such as globalization and emerging diseases, combine with urbanization to present dilemmas for policymakers.
Last week, Yale Environment 360 published a piece that explored the challenges that could manifest from urbanization, globalization and emerging diseases coming together in novel ways. See: “The Next Pandemic: Why It Will Come from Wildlife.”
We are still on holiday and won’t be posting any new content to the blog today.
But we did want to remind our readers that on Wednesday, October 10, CNAS will hold its final Election 2012 event from 1 PM to 2:30 PM at the Willard InterContinental Hotel in Washington.
CNAS, wtih the New America Foundation and the American Enterprise Institute, will host a debate between top-level surrogates of the Obama and Romney presidential campaigns. Dov S. Zakheim, Special Advisor on Foreign Policy and National Security for the Romney campaign, will join Rich Verma, member of the National Security Advisory Committee for the Obama campaign, to discuss the defense and foreign policy agendas of the two candidates.
Also, before the Vice Presidential debate on foreign policy this Thursday, don’t forget to check out our new National Security Guide to the 2012 Presidential Election and learn a bit more about the foreign policy and national security issues that the next administration faces.