Center for a New American Security

Today we'll be giving you a double dose of blog-ness, with postings from Will and myself. Today, I'll recap an event I attended on Wednesday across the street at the Wilson Center on China's appetite for raw materials and energy.

Much of the discussion centered around the economics of China's foreign investments in raw materials rather than the reasons they need these resources, which was a bit of a disappointment.

I was also slightly disappointed to hear that the panel's expert on Chinese-African relations, Deborah Brautigam, respond that she hadn't thought of it, when asked whether China's investments in raw materials and infrastructure in Africa was more economic or national security based. (Though perhaps there's an argument to be made that they are one in the same given that China must maintain 8 percent economic growth just to support its growing working class.)

What did stand out to me were some investment figures. According to panel member Derek Scissors of the Heritage Foundation, China is like a state level version of Brewster's Millions: it’s not spending its money for the purpose of gaining money, as that would just exacerbate their problem. He elaborated by explaining that China has so much money currently that it is physically unable to invest in itself and has elected to invest abroad instead. Being starved for resources in many sectors, its investments are largely used to secure energy and mineral resources. Scissors stated that Chinese bond investments in energy last year alone were $60 billion, and $70 billion in metals. Mind you, he was citing statistics from the Heritage Foundation's own database.

Scissors went on to explain that China is not worried so much about an equal trade partnership, or even paying fair market values, citing that China had paid nearly $500 million too much for a Canadian oil sands investment. He argued that China has the money, needs the resources and that's all that matters to them. His overall argument was that China is not trying to buy up the world politically, they just want some resources, and have the money to get it.

• The Washington Post discusses deal-making between Ukraine and Russia for energy and basing rights.
• Egypt continues to have water disputes with its Nile basin neighbors, reports Reuters AlertNet.
• According to a recent article in World Policy Review, Pakistan secures help in building new nuclear reactors from China.
• China's People's Daily discusses the particulars of what it calls the "rare earth war." 
• RTT News reports that an EU climate directive may mean the closure of 14 power plants in the United Kingdom.

We sent our new report off to the printer at OOB yesterday (well, our fearless designer/producer, the intrepid Liz Fontaine did), so I’ve been trying to catch up on my massive reading backlog. Which reminded me of the good old PBS show in this title. Which begs an important question: does anyone else remember Run-DMC on Reading Rainbow?

When I got the new Foreign Affairs in the mail Monday night, it immediately found a spot at the top of my list for CNAS colleague Bob Kaplan’s new article, “China’s Grand Map.” Kaplan produced natural security analysis at its finest here. No, I’m not just saying that because he’s our colleague (and anyone who’s hung around here will know that normally ensures a higher level of viciousness). He’s woven resources issues into a discussion of China’s political geography and security issues masterfully. Here’s a tidbit:

China’s actions abroad are propelled by its need to secure energy, metals, and strategic minerals in order to support the rising living standards of its immense population…It seeks to developed a sturdy presence throughout the parts of Africa that are well endowed with oil and minerals and wants to secure port access throughout the Indian Ocean and the South China Sea, which connect the hydrocarbon-rich Arab-Persian world with the Chinese seaboard. Having no choice in this matter, Beijing cares little about the type of regime with which it is engaged.”

This is well known, but the art is that this is the scene-setter, not a footnote or buried text.

Yesterday, I caught a webcast of the House Committee on Science and Technology Subcommittee on Investigations and Oversight hearing over Rare Earth Minerals and 21st Century Industry. A hearing I might feel more comfortable calling “Surprise! China has all the stuff: a rare earth tale.” Witnesses included: Dr. Stephen Freimann, retired Deputy Director of the Materials Science and Engineering Laboratory at the National Institute of Standards and Technology; Dr. Steven Duclos, Chief Scientist and Manager, Material Sustainability, GE Global Research; Dr. Karl A. Gschneider, Jr., of the Ames Laboratory, U.S. Department of Energy; Mark Smith, Chief Executive Officer, Molycorp Minerals, LLC; and Terence Stewart, Managing Partner in the Law Offices of Stewart and Stewart.

Here are some of the important, though largely depressing, highlights:

*Disclaimer: I'm just highlighting what these panelists claimed; I'm not researching them or fact checking for the purpose of this post. We'll debate these perspectives and try to poke holes in the stats later among ourselves, maybe over St. Patrick's Day drinks.

Our colleagues in the Asia Program at the Woodrow Wilson International Center for Scholars recently released a comprehensive report, Land Grab? The Race for the World’s Farmlands, that looks at the increasing frequency of food-importing developed nations and private companies investing in huge tracts of arable farmland in less developed countries.

This is an area that, while we haven’t explored deeply, we are beginning to study more and more here in the Natural Security program. We’re particularly interested in the ways that these emerging economic trends are engaging other socioeconomic and political trends in developing countries, which could lead to instability in countries of geostrategic importance to the United States (e.g. Pakistan).

According to the report’s authors:

Large-scale land acquisitions may have a negative effect on the wider sociopolitical and economic context of the host country. There are documented cases, such as the Daewoo Logistics Corporation’s (ultimately unsuccessful) plan to lease 1.3 million hectares of land in Madagascar, where negotiations over deals have contributed to political instability and internal social conflict. These deals touch on the already politically contentious issue of land allocation and land rights, so they carry a possibility of exacerbating existing tensions.
…
Granted, to this point Madagascar is the only case where a land deal has contributed to widespread political instability. However, the factors at play in most host countries—land, food insecurity, and poverty—make up a combustible mix that could easily explode. In countries—such as Pakistan—where violent, extremist anti-government movements have mastered the ability to exploit land- based class divisions, the political risks are particularly high.

The report is intended for a much broader (global) audience and, rightly so, is not explicit about how these trends might engage U.S. national security interests. But for researchers like us who study natural resources and economic trends and analyze their engagement with national security, the report is robust and offers useful case studies in Africa, Asia and Eastern Europe that are a great jumping off point for our further research. You should read this now!

Michael McCarthy reports from the New America Foundation event on Minding the Gap: Where Will President Obama's Energy and Climate Policies Take Us in Four to Eight Years?

Yesterday I attended an event at the New America Foundation on Minding the Gap: Where Will President Obama's Energy and Climate Policies Take Us in Four to Eight Years? The format was a series of remarks by energy consultants and Department of Energy representatives, moderated by Lisa Margonelli, director of New America’s Energy Policy Initiative. A keynote speech from Representative Bob Inglis (R-SC) capped the event in which he advocated for his revenue-neutral alternative to the Waxman-Markey cap-and-trade legislation. Here are a few highlights from yesterday’s event:

• New America President Steve Coll introduced the panel by noting that in energy policy, the era of false starts and ad hoc solutions is likely coming to an end. Coll believes the current administration is dedicated to creating a top-down, cohesive energy policy before leaving office.
• One energy firm consultant is happy to see an administration dedicated to doing something about climate change, but worries about the uncertainty over how to price carbon in the next four to eight years.
• Another panel member noted that the test of the American leadership is not only how it reduces its own emissions, but also how it helps developing nations to reduce their emissions, since these countries will be responsible for most of the emissions growth in the future.
• One panelist is helping the Department of Energy to distribute funds from the stimulus bill passed earlier this year. He noted that DOE’s new Advanced Research Projects Agency-Energy (ARPA-E), modeled after the Defense Department’s DARPA, has received 3,700 concept papers from established companies, start-ups and universities. ARPA-E is selecting about one in 100 of these project proposals to fund.
• Congressman Inglis believes in the dangers of climate change, but often sells his skeptical colleagues by reminding them that climate change legislation is good for America’s energy security as well. If U.S. energy interests were less beholden to price and availability fluctuations in volatile regions, he noted, “that’s national security.”

All in all there were some interesting ideas floating through the New America offices yesterday. While only one participant made the argument that climate change legislation is good for U.S. security, he was also the participant with the most direct political influence, and he is clearly concerned about the issue. In recent weeks we’ve seen explicit links between climate change and national security being discussed in the Senate, and it’s encouraging to see that similar ideas may be brewing in the House as well.

Amanda Hahnel reports from the Center for Strategic and International Studies (CSIS) report launch of World Energy Outlook 2009

Yesterday I ventured over to CSIS to attend the launch of the World Energy Outlook 2009 report, an annual report put on by the International Energy Agency.  Dr. Fatih Barol, the chief economist on the project, briefed us on the key takeaways, some of which I’ve captured below:

• Non-OECD countries account for all of the growth in emissions. In a reference scenario where limited action was taken to reduce carbon emissions, China would increase emissions by 6 gigatons of CO₂ by 2030.
• The current energy system is unsustainable, a revolution in how we use and supply fuel must be implemented.
• With current global population, by 2030 we will not be able to afford cheap enough energy to sustain enough economic growth to provide a minimum level of employment in the world.
• New supplies of oil will most likely be concentrated in OPEC countries. Dependence on these countries for oil will continue to challenge our energy security.
• Energy efficiency is the area where everyone has the most to gain.
• India was not listed among the emerging economies due to a lower per capita income. This, according to the report, means that sustaining growth for them is more critical than it is for China.
• The report relies heavily on carbon capture and sequestration as well as nuclear energy for sustainable energy alternatives in a new low-carbon world. Paying attention to the breakdowns of this technology in different scenarios is important.

It was a great event that provided some of the best energy data analyses available. As Dr. Barol admitted, a lot of the information is updated from what we already know, but the continuation of information collection and study is important.  If you’re in need of a great collection of energy-related data, check out their report for more in-depth findings.

• PR Newswire cites a poll that indicates that the Chinese people worry more about climate change and food and water security than traditional military threats.
• The United Nations renewed sanctions on the Congo preventing the export of minerals despite misgivings about their effectiveness, the Wall Street Journal reports.
• Uzbekistan withdrew from the Central Asian power grid citing energy security concerns, Xinhua reports.
• The U.S. Air Force has announced that they will abandon their efforts to drive the market of coal-to-liquid technology, according to the Guardian.
• According to The Washington Post, China and the United States are pressuring India to set commitments in advance of Copenhagen.

This Thanksgiving weekend, with newspapers light on news and heavy on ads, the biggest story was clearly the crashing of the White House state dinner for Indian Prime Minister Manmohan Singh. While this news was quite important for its revealing of a Secret Service lapse and for its gossip value, more important news regarding India remained somewhat under the radar.

Recently, I had the chance to correspond with Kelly Sims Gallagher, an Associated Professor of Energy and Environment Policy at the Fletcher School, where she covers energy policy both in the United States and China. She is involved with the Center for International Environment and Resource Policy (CIERP), and its Energy, Climate, and Innovation (ECI) research program. Recently she directed the Energy Technology Innovation Policy program at Harvard University. Here were my 5 questions to her: