January 04, 2010

This Weekend’s News: Looking Back and Looking Ahead

This long holiday weekend, the plethora of commentary on the state of the economy at the beginning of 2010, dissections of the past and projections for the future all indirectly provided me with more depth than usual on one of the big-picture questions rolling around in the natural security universe: just how is the world economy is changing, and what are the resulting effects on resources and security? Most every media outlet devoted time and attention to economic change over the past year and past decade, with much wrangling over the lessons of past effects and the directions in which future winds will blow.

For a fun diversion on changing world trade, check out Time’s list of 10 exports endangered by the effects of climate change on regional agriculture. Even more fun, the guests on CNN’s Saturday afternoon Your Money special on predictions for 2010 seemed to have natural security heavily on their minds, including psychic Roxanne Usleman. She predicts that “Oil will fluctuate up and down, and then it will literally go through the roof to all-time highs, more than we've ever seen it before,” and “In 2010, it is a very good idea to invest in water because there will be problems connected to water, and anything with advanced techniques to clean the water system is a great idea. Also, food because food prices will go up so that's another stock that will be a good thing to invest in.” Non-psychic guests also focused on oil, minerals and metals; one investment advisor and author stated a belief that “there's going to be precious little silver in the world. Every time you build a gigabyte of solar energy it requires maybe 50 to 80 tons of silver. I don't think we have enough.” (Note: I didn’t verify this stat; estimates appear to vary greatly depending on what nature of solar energy is in question but it’s notable that commodities folks seem to be more and more interested in minerals consumption related to clean energy.)

In more serious trade news from Reuters UK, China set new export quotas on rare earths higher than those it set at this time last year; on the other hand, many market analysts are still projecting that within a few years China may be producing only enough rare earths to meet its own demand. Another notable trend, according to The Washington Post on Saturday, is that “Chinese lending, triple the 2008 rate…reflects a diversification in China's global economic role beyond its holdings of vast amounts of U.S. government debt.” A New York Times book review commented that “China’s already rapid emergence is changing many things, from diplomatic alliances in Africa to the status of the dollar as the world’s favorite currency,” and that it may both develop to be a greater power than the United States and recast our definitions of a “developed” country in a non-Western mold. One economist (also NYT) took the non-zero-sum approach that despite U.S. stagnation, growth in China, India, Brazil, Indonesia and elsewhere should be taken as good news for the United States, as development there will benefit the world with overall greater innovation and provide new export markets for U.S. inventions. A more specific assessment in Newsweek with a quite different outlook presents a bleak prediction that we’re beginning to enter a phase of “green trade wars” in which countries that price carbon tax imports from countries that do not.

What big picture changes to the world do such shifts add up to? One only knows in retrospect, but in my mind reality is seldom as cut and dry, and trends not as linear, as these projections seem to assume. In trying to retain a pragmatic outlook on resource and economic futures as we consider the security implications of them amidst all of the weekend’s trend-identifying, I like this description from the current Wired to add a little perspective (in a discussion on China producing its own CPUs):

Imagine that your nation is entirely dependent on a belligerent and economically unstable foreign country for a precious commodity. Imagine that without that commodity, your entire society would grind to a halt. Got it? OK, now imagine that your nation is China, the belligerent nation is the US.

No one can know for sure how international trade is going to be changing in the next year or the next decade; it appears we can hardly agree on how it has changed in the last year and decade. All this year- and decade-end reviewing and pontification, however, makes me wonder: on questions of natural security, should we focus on which indicators are most important to trace – such as supply and demand trends, policy choices such as export tariffs and quotas, etc. – rather than basing analyses on assumptions about directions of worldwide trends? I’m honestly not sure, but I’m thinking a lot about this heading into 2010, and as always I’d welcome any thoughts from all of you out there.

The Week Ahead
The main event this week will be a discussion on “Water, Conflict, and Cooperation: Practical Concerns for Water Development Projects” on noon on January 6th, hosted by Geoff Dabelko at the Woodrow Wilson Center’s Environmental Change and Security Program. If there are other good hearings or discussions shoot us an email, but I don’t see many others listed online for the first week back to work. In the coming weeks there are sure to be many events focused on the Quadrennial Defense Review; we’ll publish a policy brief on climate change and the QDR this month, and we’ll keep you posted on events we see on this important topic.