encourages energy efficiency as
resources become more dear), but also because it
transforms all essential resources into
commodities, which makes their particular physical
location less important than the overall
functioning of the commodity market. All that
will, in turn, make resource wars even less likely
because it will create common interests among all
the countries with the greatest demand for
resources. It will transform the resource
problem from a zero-sum
struggle to the common task of managing markets.
Most policymakers agree with such general
statements, but the actual practice of US policy
has largely undercut this goal. Saber-rattling
about CNOOC's attempt to buy Unocal - along with
similar fear-mongering around foreign control of
ports and new rules that seem designed to trigger
reviews by the Committee on Foreign Investment in
the United States when foreigners try to buy
American-owned assets - sends the signal that
going out will also be the American approach,
rather than letting markets function freely.
Likewise, one of the most important
actions in the oil market is to engage China and
other emerging countries fully in the
International Energy Agency - which is the world's
only institution for managing the oil commodity
markets in times of crisis - yet despite wide
bipartisan consensus on that goal, nearly nothing
is ever done to execute such a policy. Getting
China to source commodities through markets rather
than mercantilism will be relatively easy because
Chinese policymakers, as well as the leadership of
state enterprises that invest in natural resource
projects, already increasingly think that way.
The sweep of history points against
classic resource wars. Whereas colonialism created
long, oppressive and often war-prone supply chains
for resources such as oil and rubber, most
resources today are fungible commodities. That
means it is almost always cheaper and more
reliable to buy them in markets.
At the
same time, much higher expectations must be placed
on China to tame the pernicious effects of its
recent efforts to secure special access to natural
resources. Sudan, Chad and Zimbabwe are three
particularly acute examples where Chinese (and in
Sudan's case, Indian) government investments,
sheltered under a foreign-policy umbrella, have
caused harm by rewarding abusive governments. That
list will grow the more insecure China feels about
its ability to source vital energy and mineral
supplies. Some of what is needed is patience
because these troubles will abate as China itself
realizes that going out is an expensive strategy
that buys little in security.
Chinese
state oil companies are generally well-run
organizations; as they are forced to pay the real
costs of capital and to compete in the
marketplace, they won't engage in these
strategies. The best analog is Brazil's
experience, where its state-controlled oil company
has become ever smarter - and more market oriented
- as the Brazilian government has forced it to
operate at arm's length without special favors.
That has not only allowed Petrobras to perform
better, but it has also made Brazil's energy
markets function better and with higher security.
Beyond patience, the West can help by
focusing the spotlight on dangerous practices -
clearly branding them the problem. There's some
evidence that the shaming already underway is
having an effect - evident, for example, in
China's recent decision to no longer use its veto
in the UN Security Council to shield Sudan's
government. At the same time, the West can work
with its own companies to make payments to
governments (and officials) much more transparent
and to close havens for money siphoned from
governments. Despite many initiatives in this
area, such as the Extractive Industries
Transparency Initiative and the now-stalled
attempt by some oil companies to "Publish What You
Pay", little has been accomplished. Actual support
for such policies by the most influential
governments is strikingly rare. America is notably
quiet on this front.
With regard to the
flow of resources to terrorists - who in turn
cause conflicts and are often seen as a circuitous
route to resource wars - policymakers must realize
that this channel for oil money is good for
speeches but perhaps the least important reason to
stem the outflow of money for buying imported
hydrocarbons. Much more consequential is that the
US call on world oil resources is not sustainable
because a host of factors - such as
nationalization of oil resources and insecurity in
many oil-producing regions - make it hard for
supply to keep pace with demand. This yields tight
and jittery markets and still-higher prices.
These problems will just get worse unless
the United States and other big consumers temper
their demand. The goal should not be
"independence" from international markets but a
sustainable path of consumption. When the
left-leaning wings in American politics and the
industry-centered National Petroleum Council both
issue this same warning about energy supplies - as
they have over the last year - then there is an
urgent need for the United States to change
course. Yet Congress and the administration have
done little to alter the fundamental policy
incentives for efficiency. At this writing, the
House and Senate are attempting to reconcile two
versions of energy bills, neither of which,
strikingly, will cause much fundamental change to
the situation.
Cutting the flow of
revenues to resource-rich governments and
societies can be a good policy goal, but success
will require American policymakers to pursue
strategies that they will find politically toxic
at home. One is to get serious about taxation. The
only durable way to rigorously cut the flow of
resources is to keep prices high (and thus
encourage efficiency as well as changes in
behavior that reduce dependence on oil) while
channeling the revenues into the US government
treasury rather than overseas.
In short,
that means a tax on imported oil and a
complementary tax on all fuels sold in the United
States so that a fuel import tax doesn't simply
hand a windfall to domestic producers. And if the
United States (and other resource consumers) made
a serious effort to contain financial windfalls to
natural-resources exporters, it would need - at
the same time - to confront a more politically
poisonous task: propping up regimes or easing the
transition to new systems of governance in places
where vacuums are worse than incumbents.
Given all the practical troubles for the
midwives of regime change, serious policy in this
area would need to deal with many voids.
Finally, serious thinking about climate
change must recognize that the "hard" security
threats that are supposedly lurking are mostly a
ruse. They are good for the threat industry -
which needs danger for survival - and they are
good for the greens who find it easier to build a
coalition for policy when hawks are supportive.
Building a policy on this house of cards is no way
to muster support for a problem that requires
several decades of sustained effort. One of the
greatest hurdles in the climate debate - one that
is just now being cleared, but will reappear if
policy advocates seize on false dangers - has been
to contain the entrepreneurial skeptics who have
sown public doubt about the integrity of the
science on causes and effects of climate change.
The false logic now runs in both
directions. Not only will climate change multiply
threats by putting stress on societies, but a
flood of articles warns of new territorial
conflicts as warming opens the formerly ice-bound
Arctic for exploration. Russia recently planted a
flag on the seabed at the North Pole. In fact, the
underlying causes of this exploration rush are
ambiguous property rights and advances in undersea
drilling that are unrelated to climate change. A
similar pattern unfolded in the 1950s in
Antarctica, which led to a standoff of territorial
claims and no real harm to the region, no
production of usable minerals and no resource
wars.
The real dangers lie in the growing
risk that climate change could be a lot worse than
the likely scenarios, which could create severe
and direct harm to societies that is much more
worrisome than the indirect and remote risk of
climate-induced resource wars. Yet politicians
give more attention to imagined insecurities from
climate change and rarely talk about climate as a
game of odds and risk management. They talk even
less about the resource war that nobody should
want to win - mankind's domination of nature. For
the real losers in unchecked climate change will
be natural ecosystems unable, unlike humans, to
look ahead and adapt.
David G Victor
is a professor of law at Stanford Law School
and the director of the Program on Energy and
Sustainable Development. He is also a senior
fellow at the Council on Foreign Relations, where
he directed a task force on energy security. A
frequent writer on natural resources policy, he is
the author of The Collapse of the Kyoto
Protocol and the Struggle to Slow Global Warming
(Princeton University Press, 2001) and the
co-editor of Natural Gas and Geopolitics.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
