Asia Rising: The Increasing Relevance of East Asia in Foreign Policy

In late May, Putin and Xi Jinping signed a massive 400 billion dollar natural gas deal in Shanghai. For the next thirty years, new pipelines will pump trillions of cubic feet of natural gas from Russia’s Gazprom, the world’s largest natural gas extractor, to the China National Petroleum Company (CNPC). While the agreement certainly comes at a critical time for Putin strategically as he counters US and EU sanctions, it is representative of a larger global trend: an economic, political and defensive shift toward the East.

Putin has been pushing for an energy deal with China for nearly ten years, and rightfully so. China, and Asia more broadly, has a vast market for oil and natural gas with its megacities and booming economy. The deal between Gazprom and CNPC gives Russia a foot in the door of this profitable energy market. Providing up to 20% of China’s natural gas needs, the deal finally solidifies the Sino-Russian alliance that Putin has been advertising. What’s more, the two countries will be paying with their own currencies, the ruble and yuan, completely bypassing the American dollar, which is traditionally used in energy transactions. Although the dollar has long been the international reserve currency of choice, Russia’s VTB and the Bank of China’s decision to trade in domestic currencies stresses the exclusivity of the Eurasian trade deal; the US is not welcome. Although this alone does not significantly destabilize the petrodollar, it certainly undermines American relevance in the deal and indicates Putin’s increasing focus on relations with Asia.

Putin’s meeting with Xi Jinping also comes on the heels of Obama’s four-country Asia tour in April. After a canceled trip to Asia during the October government shutdown, Obama’s tour demonstrates the president’s desire to make good on his foreign policy goal to “pivot to Asia.” In his visit to Japan, South Korea, Malaysia and the Philippines, Obama focused on strengthening economic and military relationships. The trip resulted in increased numbers of American military personnel and equipment stationed in the region; yet, thus far, Obama’s plans for future economic partnerships have not been realized.

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President Obama is the first American president to visit Malaysia since Lyndon B. Johnson in 1966. 2014. (Flickr Creative Commons/The White House)

Neither the Malaysian nor Japanese leadership approved Obama’s Trans-Pacific Partnership (TPP) to increase connectivity between the Asian and American economies. Despite domestic backlash from Democratic Senators and Congressmen, Obama has continually pushed for more economic cooperation across the Pacific. Obama, like Putin, hopes to benefit from the expanding Asian markets; the TPP would eliminate tariffs between the US and several Latin American and Asian states. According to Don Emmerson, a political scientist at Stanford, “Americans cannot afford to deny themselves…the opportunities for trade and investment” present in Asia, but Asian leaders, however, seem less enthusiastic. In Japan, Abe refused to join the partnership due to the protected five sacred areas of Japanese agriculture. In Malaysia, political “sensitivities” and economic concerns also halted progress. The TPP has major implications for American and Asian economies (Japan is America’s biggest trading partner in Asia aside from China). Thus, although no agreement was reached during the tour, the American, Japanese and Malaysian leaders promised to continue negotiations. These promises give President Obama a glimmer of hope that soon the Asian governments will be more receptive to the partnership. It should be Obama’s mission, then, to adjust the TPP to be more beneficial for all states involved, especially those with heavily protected domestic industries.

TPP negotiations were also designed to reestablish American’s military presence in East Asia. The US military will continue to maintain operational control of the Demilitarized Zone between North and South Korea. This agreement gives the US command of South Korean troops in the event of war with North Korea. In Japan, Obama reassured Prime Minister Shinzo Abe that the Senkaku Islands (or the Diaoyu Islands, as they are known in China) would fall under American protection in the case of a threat. These uninhabited islands have long been disputed by Japan and China, who both claim ownership of them. Obama’s declaration of support for Japan’s sovereignty in the maritime dispute is a signal of disapproval to China, whose military actions in the East and South China Seas concern many Asian states. As expected, China was not pleased by Obama’s remarks.

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The Senkaku/Diaoyu Islands, located in between Japan and China. 2012. (Wikimedia Commons/Voice of America)

Obama’s actions in the Philippines were also bad news for China. The United States and the Philippines, which has experienced their own territorial disputes with China, responded with a 10-year defense treaty, the first since the 1990s. The treaty again serves as a counterweight to China. Yet, none of Obama’s military agreements should come as a surprise considering the staggering growth of China’s military budget. In 2014, China plans to spend $132 billion on defense, a 12.2% increase from 2013 – although most critics agree that the real number is significantly higher.

These figures make China impossible to ignore. Combine the country’s military expansion with its rapidly growing GNP and it becomes one of the greatest forces in the world today. China’s enormity and consequent impact on its neighbors, from Japan to the Philippines to Russia, have forced other world powers to readjust. Putin and Obama have played their hands, each trying to get ahead in the Asia-Pacific. Putin’s natural gas deal has created a buffer for conflicts in Europe and Obama’s efforts to increase economic cooperation and American military presence in Asia also indicate increased interest in Asia. It remains to be seen how other world leaders will react to the growing relevance of East Asia in global issues.

In early May, European Union (EU) leaders met with Shinzo Abe to reaffirm their positive relationship. At the meeting, the leaders discussed further economic and political ties, although no specific agreements were signed. The leaders of the EU and the Association of Southeast Asian Nations (ASEAN) will also hold a summit in October. Will Europe, like Russia, turn to China, Asia’s largest power, or invest in ties with other East Asian nations alongside President Obama? Regardless, it is clear that the “turn to Asia” is a legitimate and global phenomenon.

The views expressed by the author do not necessarily reflect those of the Glimpse from the Globe staff and editorial board.

Unlocking America’s Potential Energy

United States Shale gas plays, May 2011

Map of U.S. shale gas plays. May 2011, U.S. Energy Information Administration (Wikimedia Commons).

America is in the midst of one of the most significant energy revolutions in modern history. Due to the recent discoveries of vast reserves of shale oil and natural gas, the U.S. is in a position to become the world’s largest energy producer by 2015, surpassing both Saudi Arabia and Russia – combined. This momentum, however, can only continue if U.S. firms are allowed proper flexibility to explore, extract, and export shale oil and natural gas from U.S. territories. Government regulations covering drilling practices, such as fracking, must be re-examined and equitably altered such that energy companies may pursue their energy interests while satisfying environmental concerns. The energy revolution has critical implications for U.S. domestic and foreign policy with the potential to transform America’s economic prowess and energy self-sufficiency for years to come.

Current estimates for America’s resource endowment and extraction rates are very promising. Natural gas production is experiencing a momentous boom due to recent breakthroughs in unlocking natural gas trapped in shale. With these advances, shale gas production is forecast to increase from 42% of total U.S. gas production in 2007 to 64% in 2020. This level of growth is unprecedented, with the U.S. Government estimating there will be a 44% increase in total shale natural gas production from 2011 to 2040. With regards to oil production, the International Energy Agency predicts that U.S. oil production will rise to 11.6 million barrels per day in 2020, up from 9.2 million just a few years ago. This increase in oil production is orthogonal to trends in Saudi Arabia and Russia, which will see their production levels decline from 11.7 million to 10.6 million barrels and from 10.7 million to 10.4 million barrels, respectively. Leonardo Maugeri at Harvard has estimated that shale oil production alone could reach 5 million barrels per day by 2017. These statistics stand as a dramatic reversal from discussions in the energy community even 5 years ago when talk focused on declining fossil fuel reserves and the need to explore alternative forms of energy. Fossil fuels now dominate the energy game, and rightfully so.

Natural Gas Production from US Shales 2000-2013

Graph of natural gas production for U.S. shale plays. September 16, 2013 (Wikimedia Commons).

While sound environmental concerns do exist regarding shale oil and natural gas extraction, such as pollution of groundwater and the effect of mining towns on surrounding communities, they are often overblown. For example, in Pennsylvania only 3% of all wells were cited for flawed construction from 2008-2013. Fracking has been a successful extraction method since 1940, and new technologies – waterless fracking is a good example – have only made the process safer and more efficient. The most legitimate environmental concern associated with fracking has to do with the well casings that surround the fracking apparatus. Since fracking pumps water and sand into the ground at a high pressure, improperly made well casings and other sealants can crack causing leaks which pollute the surrounding environment. This problem could be solved by using stronger and properly fitted well casings. Simple environmental regulations at the state level requiring proper well construction, specifically emphasizing casings, could ameliorate many of the environmental concerns associated with fracking. There is also a surprising lack of publicly available data regarding the effects of fracking operations on the surrounding environment. Increasing the availability of this data by setting mandatory reporting requirements would fully inform nearby communities and government authorities. Fracking to extract shale oil and natural gas can be done safely; such has been the trend thus far. If a more relevant, simple, and fair regulatory regime were to be established by state governments, and perhaps the federal government, to address issues such as well casing construction and reporting requirements, fracking’s safety and efficacy would only be further reinforced. Regardless, fracking – as it stands today – is a no-brainer.

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Fracking Site in Warren Center, Pennsylvania. August 23, 2013 (Wikimedia Commons).

Why is fracking already a no-brainer? Because the shale boom, which has been enabled by fracking methods, is having tremendous economic benefits for the U.S. Natural gas prices in the U.S. are some of the lowest in the world – half the price of gas in Europe and less than one-third the price of gas in Asian countries. Surging shale oil extraction has overloaded Gulf refineries and revived East Coast refineries. This increased supply is so shocking that domestic oil prices have lately fallen out of sync with global oil prices, and experts predict a U.S. oil “glut” if U.S. firms are not allowed to export crude oil. This abundance has critical implications for manufacturing in the U.S. Indeed, The Economist claims that the energy revolution is resulting in a “Factory North America.” This “Factory” is resulting in more domestic jobs across all industries, especially in the growing energy industry. Energy jobs in nearly every state have doubled since 2005. Some equate the fracking boom as being similar to a gold rush, with energy jobs offering high salaries for basic work in rural areas. David Petraeus seems to be on track when he claims we are about to enter the “North American Decades” powered by our new-found energy endowments.

While the macroeconomic benefits of America’s increased energy output are clearly tremendous, expectations for the average American consumer should be tempered. Though the price of natural gas has fallen in recent years due to our ability to tap into previously inaccessible shale reserves, the cocktail of booming transportation, a recovering economy, and rising exports have raised prices in the past year. In addition, the need for further fracking R&D is likely to drive costs up in the coming years. Shale oil is experiencing a similar phenomenon. Although the price of gasoline has fallen beyond global pricing levels in the U.S. for the short-term due to surging supply, the price of oil is determined on a global energy market and is projected to increase for the long-term as global demand continues to increase. The increased supply of natural gas and oil certainly has lowered costs for the American consumer for the time being, and will continue to do so when contrasted to an America without new-found energy reserves. However, Americans should not be expecting $2.00 per gallon gasoline prices anytime soon.

So what does this energy revolution mean for U.S. foreign policy? Many good things. America’s increased self-sufficiency will change the U.S.’ relationship with many other countries. Because of surging domestic supply, the U.S. will be less dependent on other nations for energy; in turn, this freedom will afford the U.S. greater flexibility in pursuing foreign policy interests because it will not be as constrained to secure energy resources abroad. Strategic relationships with nations such as Saudi Arabia and the United Arab Emirates are likely to change because there will be less of a need for their oil imports. Perhaps the U.S. will now be more forceful in advocating for democratic reforms within these non-democratic states now that it has greater autonomy on the energy front. In addition, the decreasing need to secure energy resources abroad may prevent the U.S. from becoming involved in regional disputes and conflicts to secure those interests.

America’s surplus of energy could also be an excuse for a more active role in foreign policy. America could gain more influence over other nations if U.S. firms are allowed to export energy resources. As we have seen in Europe, Russia’s domination of energy resources in Eastern Europe has enabled it to turn build new allegiances at the EU’s loss and expense. Consider the notable cases of Armenia and the Ukraine becoming part of Russian-led Eurasian Union. Please note that this author is not advocating for the U.S. to pursue an overbearing approach to energy exports like Russia, but rather a stable level of influence to help the U.S. realize its foreign policy objectives. If, for example, the U.S. could export to Central Asian states, it could gain more influence in the region and build a relationship that could allow these states to become closer to the West rather then being forced into a Eurasian Customs Union led by Russia. In a state like Japan, where natural gas sells for $17 compared to $3 in the U.S., greater exports from the U.S. could enhance a trade relationship with a major partner. Unfortunately, the U.S. is not reaping the benefits of energy exports because antiquated laws are in place that prohibit U.S. firms from exporting crude oil. In addition, the EPA has been very slow to grant export license requests for liquefied natural gas. These regulations are contrary to free market principles and concepts of free trade that America has advocated for since its inception. The U.S. government needs to allow U.S. firms to export and pursue their global energy interests more freely. The potential results of this policy change would provide more flexibility in U.S. foreign policy and would afford the U.S. even greater influence on the international stage.

Natural Gas Price Comparison

Comparison of natural gas prices in the United States, Japan, and the United Kingdom. September 30, 2011, U.S. Energy Information Administration (Wikimedia Commons).

This energy revolution will change America’s game, and for the better. Domestically, the U.S. will be more self-sufficient and experience the growth of an industry while boosting employment numbers (and therefore jobs) and observing lower energy prices. Internationally, America’s influence will extend to the importers of our energy, and there will be less dependency on other states for energy. These benefits, however, cannot be fully experienced under the current structure. State governments, and perhaps the federal government, need to formulate a simple and fair regulatory regime that will allow U.S. energy firms flexibility in fracking to unlock shale oil and natural gas while addressing legitimate environmental concerns such as well casing construction. The U.S. must also break its own barriers to exporting energy, such as the obsolete laws that currently prohibit U.S. firms from exporting crude oil from U.S. territory and the slow process of obtaining export licenses for natural gas. Only if these policy measures are implemented can America’s full energy potential be unlocked.

A Response to the Pentagon’s Arctic Strategy

Last month, the Department of Defense (DOD) issued an “Arctic Strategy” white paper along with a positioning statement by Secretary of Defense Chuck Hagel. Major newspapers such as the Wall Street Journal and the New York Times ran stories summarizing the strategy, but the authors of this response feel that those analyses lacked context and stake. The Pentagon release on an Arctic strategy is not a hot news item, and the terms “Arctic security” do not figure much in public discourse. Arctic security encompasses the international agreements for search and rescue, environmental and ecological security, international agreements on border delimitation, Arctic military capability, as well as the economics resource extraction and the potential for trans-Arctic maritime trade. While a good start, the policy paper produced by the Pentagon is lacking substance. The authors of this piece seek to apply our diversity of knowledge studying Arctic politics – in the field – to provide context and recommendations in response to the Department of Defense. While we will discuss the politics of political and military security, the other issues of ecological security and Arctic governance will be addressed in kind.

International Security Cooperation Forum Proposal:

Although the Pentagon emphasizes the need for greater international cooperation as a way to prevent the Arctic from becoming a militarized zone, it falls short in identifying effective means of multilateral security cooperation. The Pentagon’s Arctic strategy document supports cooperative efforts via the Arctic Council as well as regional military training exercises as ways to maintain peace. However, there still does not exist a multilateral forum for the five Arctic littoral states to discuss hard security issues. The Arctic Council is prohibited from engaging in security discussions, and Arctic nations seem reticent to mention these sensitive issues. Given the fact that each littoral Arctic state is gradually increasing its military presence in the region, it is crucial for the U.S. to engage Arctic nations on hard security issues to prevent a conflagration that could result in an arms race – one the public would likely not notice. Although conversations on hard security issues have occurred bilaterally, it is time to discuss these issues multilaterally. A potential forum could be a recurring Arctic security summit where both civilian and military representatives from each Arctic state meet to discuss the role of each nations’ military in the Arctic. This summit would be a step toward preserving the Arctic as a peaceful zone through meaningful dialogue and addressing the sensitive issues head-on. Without an honest and recurring dialogue on both hard and soft security issues, the possibility of the Arctic becoming further militarized would increase dramatically.

The Arctic, a region that has only recently seen a spike in interest and development, requires fresh governing structures. The proposed security summit and other potential means of hard security cooperation could serve as models for existing international security governance structures that do not function as effectively. In this regard, the Arctic represents an opportunity for the international community to explore more effective and transparent ways to conduct international security cooperation.

UNCLOS and Arctic Governance

The decision by the US Congress to postpone, delay, and ignore the UN Convention on the Law of the Seas (UNCLOS) is beyond counterproductive. UNCLOS is de facto law in the Arctic Ocean since the US is the only state in the region that has yet to ratify the law. Ratifying UNCLOS will allow the US to make larger maritime claims in the Arctic. It will also allow the US to contest and petition Article 76, which allows nations to extend their maritime borders on the basis of how far their continental shelf extends. The Russian Federation currently has an outlying claim that would extend their claims as far as the North Pole. Considering an estimated 15% of the world’s oil and 30% of the world’s natural gas is in the Arctic region, it would be wise for the US to join other states in signing on to this international law. Furthermore, the potential opening of the Northern sea route to shipping means that the designation of Exclusive Economic Zones (EEZs) now has expanded political-economic significance.

Arctic Claims

This map shows current borders in the Arctic as well as claims made by Russia. Recently, Canada made claims that extend as far as the North Pole. Map by Ahnode (Own work) [Public domain], via Wikimedia Commons

Ecological Security and why it should matter to the Pentagon:

In the twentieth century, global air temperatures rose an average 1-2°C. This is nothing compared to the Arctic where temperatures rose 5°C. This comparison illustrates the importance of the Arctic environment as a climate change barometer. In 2012, scientists measured a 97% surface melt of Greenland’s ice sheet. This exceeded most accepted models and scientists are re-evaluating at what point in this century we may expect no summer Arctic ice. The questions of whether we will witness the disappearance of the polar caps is not one of ‘if,’ but ‘when.’ Since Arctic ecosystems are impacted more rapidly by climate change, understanding these changes is crucial to managing the effects on the world’s interdependent ecosystems. While climate change might not affect the DoDs daily operations, a dialogue between scientific research and political-military objectives should inform the overall strategy. The Arctic Council is an institution that already seeks to bring dialogue to the vast array of information, scientific or otherwise, relevant to the Arctic region and climate change discussions in general. Heightened dialogue between the Department of State and the Arctic Council would be a good place to start.

Need for Investment in Arctic Capabilities:

Although the Pentagon states its intention of increasing its presence in the Arctic, it also makes clear that the current fiscal environment may stunt further investment. Not asserting American interests would be a mistake insofar as an image of disinterest will be perceived as American weakness in the Arctic. Indeed, other Arctic nations already perceive a strong US disinterest in the region. The lack of an American presence in the region would also prevent US military and law enforcement entities such as the Navy and Coast Guard from protecting the integrity of territorial claims, carrying out search and rescue missions, executing law enforcement functions, and responding to environmental disasters. As of now, the US lacks sufficient dedicated Arctic resources for security and humanitarian purposes. While other US military equipment, such as nuclear submarines and aircraft carriers, have the capability of traversing the Arctic, the US does not have Arctic-specific resources to effectively respond to a disaster or other threats.For example, the US possesses only 5 icebreakers in its fleet and has had to lease icebreakers from Russia and Sweden in the past.This small number of icebreakers stands in stark contrast to Russia’s 37 vessels. Even small Sweden outdoes the US with 7 icebreakers. Due to climate change, the region will likely see increases in resource extraction, shipping, fishing, and tourism. This increase in activity in the Arctic would likely be accompanied by an increase in emergency situations. The US currently lacks effective Arctic capabilities severely limiting the ability to respond to emergency situations or security threats.

In order to mitigate these threats and to enhance US military and rescue personnel in the region, the US needs to invest more in developing Arctic-specific technology and infrastructure. For starters, the US should build a dedicated Arctic icebreaker fleet to better navigate the frigid terrain. Additionally, the US should explore the option of pursuing joint search and rescue exercises with all of the littoral Arctic states, especially Russia. These search and rescue and/or environmental disaster relief exercises would not be as controversial as conventional military exercises and would allow each nation’s military/law enforcement services to become more familiar with one another. Actively working to break the divisions of yesterday by building collaborative relationships today could ameliorate the potential for conflict in the Arctic.

Concluding Remarks:

The US is faced with the enormous challenge of increasing its Arctic presence while convincing other Arctic states that its intentions are peaceful. The US cannot afford to see the Arctic escalate into a zone of conflict and thus must handle this situation very delicately. The DoD’s Arctic strategy is a welcome policy document to a country that has historically lacked a significant interest in the region when compared to the other littoral Arctic states. However, the Pentagon’s strategy needs to incorporate more pragmatic and effective means of international cooperation to accomplish its objectives. In addition, the current fiscal environment should not influence the US’ ability to help secure and develop a region that will likely see a heavy increase in activity due to climate change. Both US military and civilian units need to invest more resources into developing superior Arctic capabilities to better respond to disasters while protecting American interests in a region that is growing in significance and accessibility.

In the 19th century, the established nations of Europe met in Berlin to carve up Africa with the intent of extracting from it resources and riches upon which empires were built. The social, political, and human costs of this are still being felt today. In the 21st century, the established nations of the Europe, Asia, and North America are prepared to, and in certain instances already have, descended upon the Arctic for similar motivations: resource wealth, trade, and power. It would be foolish to think that because Arctic states are politically stable or economically developed that somehow this translates into regional stability. If history is any indication of what is to come, we should actually be all the more alarmed that “established” states are scrambling for the Arctic. Granted, the “Scramble for Africa” involved a large landmass and the intent of colonizing large populations, thus the forthcoming “Scramble for the Arctic” will not be a carbon copy of the past. In sum, there is an opportunity for the Arctic to be used to and for the benefit of all nations, and this begins with a sustainable governance regime.