January 07, 2013

Top Five International Trends to Track in 2013

Natural resource trends topped international headlines in 2012 – from illicit resource trade in Afghanistan to energy competition in the South China Sea. Which ones should readers track in 2013? Here’s a list of the five international trends I’ll be watching in 2013, in no particular order.

  1. China’s technological development in deepwater drilling. China made great strides in strengthening its technological edge in deepwater drilling last year. In May 2012, the state-run China National Offshore Oil Company, CNOOC, began operating the country's first deepwater drilling rig, putting CNOOC in a position to transform its reach by moving away from solely shallow water operations to new depths, including deepwater blocs of the South China Sea. (Chinese estimates place 70 percent of recoverable natural gas and oil deposits in deepwater of the South China Sea.)

    In December 2012, the Canadian government paved the way for CNOOC to acquire the Calgary-based energy giant, Nexen Inc., including the company’s high-tech ultra deepwater drilling technology, which would add to CNOOC’s technological edge in deepwater drilling. The deal still faces some scrutiny from the U.S. Congress over Nexen's Gulf of Mexico assets. Regardless though, as China continues to develop its edge in deepwater drilling technology, it could speed up the country’s efforts to unilaterally drill in deepwater blocs of the South China Sea.

  2. An increasing focus on energy development in the South China Sea as part of India’s “Look East Policy.” India shares many of the same energy vulnerabilities as other countries in East Asia, particularly a growing reliance on petroleum imports from the Middle East and North Africa. Those same vulnerabilities have contributed to New Delhi’s interest in exploring for energy in the South China Sea, which some countries, including China, view as a potential “second Persian Gulf.” 

    India’s foray into the South China Sea has drawn China’s ire, which has protested India’s recent joint ventures with Vietnam. In December 2012, Chinese fishing boats blocked a Vietnamese seismic vessel, causing the ship’s cables to snap. The episode provoked a response from the Indian government, which said it would “consider sending navy vessels to protect its interests in the South China Sea.” This may lay the groundwork for a greater Indian naval involvement in the South China Sea in 2013; it is something worth watching. 

  3. Greater transparency in Afghan minerals trade. Afghanistan’s Mining Minister Wahidullah Shahrani made great strides in 2012 to improve transparency in the country’s extractive resources industry by disclosing roughly 200 mining contracts that had previously been kept secret. The move was in part an effort to help the Afghan government meet its obligations for greater openness, a condition that many western countries, including the United States, have tied to billions of dollars in aid money. 

    The Afghan government has yet to fully institutionalize some of the best practices needed to transform its mining industry. Much of the effort is indeed individually driven by officials like Shahrani who remain politically weak. And it is increasingly clear that the country cannot afford to rely on individuals alone to transform the mining sector. But watch to see if the Afghan government adopts some changes in how it forms contracts with domestic and foreign companies, including by passing a law requiring public disclosure of those contracts. 

  4. Piracy’s role in driving Nigerian political instability. The West African country was plagued by increased political instability in 2012 tied to the government’s changing policy on fuel subsidies and bombings by the militant Muslim group Boko Haram. Now Nigeria appears to be dealing with increased piracy off its coast, where suspected Nigerian pirates have seized oil tankers and stormed drilling platforms. Last week, The Wall Street Journal reported that Nigeria has emerged as the new center for African piracy, rivaling Somalia; attacks off Nigeria’s coast jumped from 10 in 2011 to 27 in 2012.

    The growing instability in Nigeria could contribute to higher energy prices globally. Nigeria is Africa’s largest crude oil producer (and fourth largest exporter of crude oil to the United States). The government aims to increase oil production from around 2 million barrels a day to 2.5 million barrels a day in 2013. But production could be halted by increased political instability driven in part by increased attacks from Boko Haram and piracy. Moreover, continued political instability could drive away foreign investment in the country’s energy sector. A report in December 2012 found that Nigeria could experience an estimated 40 percent decline in oil production by 2020 unless international energy companies sustain their investments in the country’s oil and gas sector.

  5. Japan continues to walk back its nuclear phase out policy. Japanese leaders began to walk back the government’s goal of phasing out nuclear power by 2040 just a week after officials declared the policy back in September. Tokyo’s nuclear phase out policy has stirred concerns among businesses leaders and others worried that retreating from nuclear energy could hurt Japan’s economy over the long term. Indeed, Japan recorded a record trade deficit in 2012, linked in part to increased energy imports from the Middle East and elsewhere that are helping Japan compensate for the lack of electricity generation from nuclear power.  

    Economic and security concerns could give the Japanese government continued cover to walk back its nuclear phase out policy in 2013. In December, The Wall Street Journal reported that Tokyo could “reopen nuclear plants that pass stringent safety tests and consider allowing 40-year-old plants to remain open.” Watch for this policy to continue to take shape in 2013.

These are just some of the international trends I'll be continuing to watch in 2013. There are other important trends to watch as well, such as the effectiveness of continued sanctions against Iran and Baghdad's efforts to mend its relationship with Kurdistan, to name just a few. 

Tune in Wednesday for a look at the top U.S. policy issues to watch in 2013. I will take a look at some important U.S. policy trends, including continued progress from the national security community to incorporate climate change into a range of national security and defense policy documents, as well as congressional efforts to ratify the Law of the Sea Convention. More to come. 

  • Commentary
    • World Politics Review
    • July 7, 2020
    Why Stopping Environmental Crime Is a Matter of National Security

    Last week, the presidency of the Financial Action Task Force, the global intergovernmental standard-setter for combatting illicit financial threats, passed from China to Germa...

    By ​Neil Bhatiya

  • Commentary
    • World Politics Review
    • July 9, 2019
    Can Tariffs and Sanctions Lead to a Better Climate Change Strategy?

    A little more than two years since he announced in the Rose Garden that the United States was “getting out” of the Paris climate change agreement, President Donald Trump was i...

    By ​Neil Bhatiya

  • Commentary
    • The Diplomat
    • October 30, 2017
    Climate Change: The New Asian Drama

    When the Swedish economist and sociologist Gunnar Myrdal wrote his magisterial three volume study of postwar economic and political development in Asia, he questioned whether ...

    By ​Neil Bhatiya

    • Commentary
    • Foreign Policy
    • June 1, 2017
    Why Abandoning Paris Is a Disaster for America

    Ever the showman, President Donald Trump tweeted Wednesday about his soon-to-be-announced decision on whether or not to pull out of the Paris Climate Agreement with the air of...

    By Julianne Smith

View All Reports View All Articles & Multimedia