Salmon 9 [Reuters, “Nuclear power: Going fast”, Felix Salmon, finance editor for Reuters, graduate of University of Glasgow, winner of 2010 Excellence in Statistical Reporting Award presented by the American Statistical Association, over a decade of financial reporting experience, JUNE 23, 2009]
I was offline most of yesterday attending a high-intensity series of presentations hosted by Esquire magazine in the magnificent suite of rooms at the top of the new Hearst tower. GE’s Eric Loewen was there, talking about nuclear power, and specifically what he calls a PRISM reactor — a fourth-generation nuclear power station which runs on the nuclear waste generated by all the previous generations of nuclear power stations.¶ PRISM is GE’s name for an integral fast reactor, or IFR, and it’s a pretty great technology. The amount of fuel which already exists for such reactors would be enough to power the world for millennia — no new mining needed. Fast reactors also solve at a stroke the problem of what to do with the vast amounts of nuclear waste which are being stockpiled unhappily around the world. They’re super-safe: if they fail they just stop working, they don’t melt down. And they can even literally replace coal power stations:¶ One nice thing about the S-PRISM isthat they’re modular units and ofrelatively low output (one power block of two will provide 760 MW). They could be emplaced in excavations at existing coal plants and utilize the same turbines, condensers (towers or others), and grid infrastructure as the coal plants currently use, and the proper number of reactor vessels could be used to match the capabilities of those facilities. Essentially all you’d be replacing is the burner (and you’d have to build a new control room, of course, or drastically modify the current one). Thus you avoid most of the stranded costs. If stranded costs can thus be kept to a minimum, both here and, more importantly, in China, we’ll be able to talk realistically not just about stopping to build new coal plants but replacing the existing ones, even the newest ones.¶ And best of all they’re eminently affordable: Loewen showed that they could be profitable selling energy at just 5 cents per KwH — which means that you don’t need to price carbon emissions at all to make these power stations economically attractive.
Otherwise, coal exports to Europe are inevitable
Stafford 12 [“Obama's Nuclear Power Plans”, James Stafford, editor, oilprice.org, 23 November 2012]
While nuclear is experiencing a bit of a revival in the US and coal languishes in its death throes,globally, coal is enjoying gains. Some 1,200 new coal plants are in the works worldwide—the bulk of them in China and India—as countries take advantage of cheap coal prices in the US. But even Europe is importing increasing amounts of coal from the US. US coal exports have reached a decade high.¶For Europe, this is troubling. As the European public puts increasing pressure on governments to abandon any dreams of fracking shale gas reserves over environmental concerns, the energy gap is being filled in by more polluting coal. This is the subject of our special investor piece today. There is good news—and bad. While the European Parliament has rejected a fracking ban proposal, this doesn’t mean we’re about to see a shale gas free-for-all. Hurdles and pitfalls abound.
German coal reliance kills Eurozone – European nuclear revival key to solve
Mauldin 11 [Paul, B.S. and an M.S. in electrical engineering from the University of California-Berkeley and is a registered professional engineer, worked in the energy industry for more than 25 years, developing and implementing advanced energy technologies, research director for Pacific Gas and Electric Co, national and international energy consultant, Smart Energy Portal, “Germany’s Nuclear Decisions – Maybe Not the Optimal Timing??”, Sept 27, 2011]
Germany wants to be 'green' and non-nuclear and there's no question that Germany has been setting the bar for renewable energy. At present, over 20 percent of national production is from renewables, particularly wind. The goals are lofty - by 2020 Germany plans to produce 35% of electricity from local renewables and 50% by 2030. Significant goals indeed - considering that Germany is Europe’s largest electricity market.¶ At present Germany produces more electricity than it consumes, and has considerable excess generation capacity. Although, because of some internal transmission constraints, Germany imports small amounts of power.¶ This rosy picture could change dramaticallyin a few years due to both nuclear power policy decisions and Eurozone economics.¶ Germany is the fourth largest producer of nuclear power in the world. In 2000 following the country’s pace-setting start-up of wind and solar technology, and pressure by various green organizations, the government agreed to phase out all nuclear power plants by 2021. In September 2010, however, the German government reached a hard-fought deal to allow the nation’s 17 nuclear plants to run, on average, 12 years longer than planned, with some remaining in production until the 2030s.¶ Then came the Japanese Fukushima Daiichi nuclear disaster that turned the world perception of nuclear power safety on its ear. As a result, Germany changed its mind again and now plans to close all nuclear plants in the country by 2022. A tall order considering that nuclear power now provides almost one-third of the country's electricity generation.¶ Germany plans to replace the nukes with a combination of gas-fired and coal-fired electricityand increased imports.¶ Talk about not-in-my-backyard on a national scale! Germany will end up buying a lot of imported power, particularly from the French nuclear plants, while satisfying domestic anti-nuke, anti-coal sentiments.¶ Then there’s the never-ending Eurozone economic crisis. Germany is looked to as the shining knight to rescue Greece and several other nations from defaulting on international loans. But regardless of Germany’s intervention, things could go south in a hurry and the value of the euro could collapse. If it does, economists estimate a drop of up to 25% of German GDP in the first year after a major disruption of the European Monetary Union.¶ Germany’s European neighbors aren’t optimistic.“Germany will be even more dependent on fossil fuels and imports and its electricity will be more expensive and polluting,” French Industry Minister Eric Besson said. “German households pay twice as much for power than homes in France, where 80 percent of electricity comes from atomic plants.”¶ No matter how you look at it, this is not a good timeto increase dependence on energy imports or to increase electric rates. We’ll see how much the German ratepayers are willing to shell out.¶ We may see Germany changing its nuclear power policies– again!
Eurozone collapse leads to global trade wars – specifically involves China
Europe won’t just be exporting deflation to the rest of the world, it will exportserious trade tensionsas well: first between the United States and China, and, possibly, eventually between Europe and the United States. The austerity required to get Greece and other weak euro zone nations’ budgets in shape will exert a powerful deflationary force, as many countries which formerly imported more than they exported will be forced to cut back. As well, the euro has dropped very sharply. Germany’s quixotic campaign against speculators — banning naked short selling against government debt and government credit default swaps — gave the euro its latest shove downward, but the trend has been strong for months. The euro is now about 15 percent below where it started the year against the dollar, making U.S. exports less competitive and adding to pressure on the United States to be the world’s foie gras goose: being force-fed everyone else’s exports while its own unemployment rate remains high. That Britain is now embarking on its own round of budget cuts will only make matters worse, adding up to one more important actor trying to consume less and export more courtesy of a devaluing currency. Perhaps the best outcome is rising trade and currency tensions between the United States and China, while at worst this could set the stage for broader conflicts and a round of tit-for-tat tariffs to match similar currency devaluations. Michael Pettis, a professor at Peking University, explains the issue succinctly on his blog, in which he says: “Make no mistake, if southern European trade deficits decline, someone somewhere must bear the brunt of the corresponding adjustment. The only question is who?” The scale of the adjustment is large; taken together Spain, Italy, Portugal and Greece account for about 16 percent of global trade deficits. Add in France, which will surely share some of the pain, and we get up to about 20 percent. You simply cannot have savage recessions and budget cutbacks in these countries without it exerting a powerful force on their trade partners. Clearly the first fault lines will not be across the Atlantic. Talk of the potential for coordinated intervention to support the euro, or at least to make its fall against the dollar a two-way market, attest to the strength of U.S.-European relationships. This is a group that managed the 2007 and 2008 conflagration without ending up at each others’ throats. CHINA MAY BALK AT REVALUATION Pettis points out that within China there is an attitudethat the fall in the euro against the dollar, which has made theyuan correspondingly stronger against the euro, is an argument for caution by China in revaluing its currency. Remember too that the European Union comprises China’s largest export market, so it will suffer a double blow, once now by a rising currency and again going forward as Europe adjusts. U.S. Treasury Secretary Timothy Geithner is traveling to Beijing next week to press trade and currency issues. Expectations had been that this would lay the groundwork for some measure of a revaluation of the yuan, which is kept artificially low by the Chinese. The euro zone mess seems to have put paid to that immediate hope. Washington and Geithner are unlikely to want to make already fragile international markets even more so by talking tough next week, but, as the U.S. elections in November near, and, if U.S. unemployment fails to fall, the pressure to take action against China in the form of not just verbal battering but actual tariffs may become too much. I’d note that the U.S. primary elections on Tuesday showed voter anger is focused on incumbents in general and Washington in specific. It would not be a surprise for the administration to try to focus that anger outside the country. So, rising trade tensions with China, but there is also a meaningful chance that tensions will rise eventually between the United States and Europe. Thus far European efforts to address euro zone issues have been disorganized and riven by internal dissension. Germany did not, it appears, consult its partners about its short selling plan. While the European Central Bank’s excellent relationship with the Federal Reserve will help, there is a real chance that the euro suffers a disorganized meltdown and that Europe cannot agreeamong itself about how, or whether, to stop it. That, especially if combined with Chinese intransigence, could prove to be intolerable for the United States. Trade wars added greatly to the depth and length of the Great Depression. The world’s ability to avoid a similar fight has been one of the blessings of the last two years. Not everyone can export their way back into the black, at least not everyone at the same time. How that is resolved as Europe melts into another recession will be one of the key issues of 2010 and 2011.
That spills over into Chinese military conflict
Landy 7 (Ben, Director of Research and Strategy at the Atlantic Media Company, publisher of the Atlantic Monthly, National Journal, and Government Executive magazines April 3, http://chinaredux.com/2007/04/03/protectionism-and-war/#comments)
The greatest threat for the 21st century is that these economic flare-ups between the US and China will not be contained, but mightspill over intothe realm ofmilitary aggressionbetween these two world powers. Economic conflict breeds military conflict. The stakes of trade override the ideological power of the Taiwan issue. China’s ability to continue growing at a rapid rate takes precedence, since there can be no sovereignty for China without economic growth. The United States’ role as the world’s superpower is dependent on its ability to leadeconomically. As many of you will know from reading this blog, I do not believe that war between the US and China is imminent, or a foregone conclusion in the future. I certainly do not hope for war. But I have little doubt that protectionist policies on both sides greatly increase the likelihood of conflict–far more than increases in military budgets and anti-satellite tests.
The impact is extinction
Straits Times 2000 (6/25, “No One Gains In War Over Taiwan”, Lexis)
THE DOOMSDAY SCENARIO THE high-intensity scenario postulates a cross-strait war escalating into a full-scale war between the US and China. If Washington were to conclude that splitting China would better serve its national interests, then a full-scale war becomes unavoidable. Conflict on such a scale would embroil other countriesfar andnear and -- horror of horrors -- raise the possibility of a nuclear war. Beijing has already told the US and Japan privately that it considers any country providing bases and logistics support to any US forces attacking China as belligerent parties open to its retaliation. In the region, this means South Korea, Japan, the Philippines and, to a lesser extent, Singapore. If China were to retaliate, east Asia will be set on fire. And the conflagration may not end there as opportunistic powers elsewhere may try to overturn the existing world order. With the US distracted, Russia may seek to redefine Europe's political landscape. The balance of power in the Middle East may be similarly upset by the likes of Iraq. In south Asia, hostilities between India and Pakistan, each armed with its own nuclear arsenal, could enter a new and dangerous phase. Will a full-scale Sino-US war lead to a nuclear war? According to General Matthew Ridgeway, commander of the US Eighth Army which fought against the Chinese in the Korean War, the US had at the time thought of using nuclear weapons against China to save the US from military defeat. In his book The Korean War, a personal account of the military and political aspects of the conflict and its implications on future US foreign policy, Gen Ridgeway said that US was confronted with two choices in Korea -- truce or a broadened war, which could have led to the use of nuclear weapons. If the US had to resort to nuclear weaponry to defeat China long before the latter acquired a similar capability, there is little hope of winning a war against China 50 years later, short of using nuclear weapons. The US estimates that China possesses about 20 nuclear warheads that can destroy major American cities. Beijing also seems prepared to go for the nuclear option. A Chinese military officer disclosed recently that Beijing was considering a review of its "non first use" principle regarding nuclear weapons. Major-General Pan Zhangqiang, president of the military-funded Institute for Strategic Studies, told a gathering at the Woodrow Wilson International Centre for Scholars in Washington that although the government still abided by that principle, there were strong pressures from the military to drop it. He said military leaders considered the use of nuclear weapons mandatory if the country risked dismemberment as a result of foreign intervention. Gen Ridgeway said that should that come to pass, we would see the destruction of civilisation. There would be no victors in such a war. While the prospect of a nuclearArmaggedonover Taiwan might seem inconceivable, it cannot be ruled outentirely, for China puts sovereignty above everything else.
Trade conflicts escalate to global war
Patrick 09 – Director of the Program on International Institutions & Global Governance CFR
(Stewart-, March 13, National Interest, “Protecting Free Trade”, http://www.nationalinterest.org/Article.aspx?id= 21084; Jacob)
President Obama has committed to working with U.S. trade partners to avoid “escalating protectionism.” He is wise to do so. As never before, U.S. national security requires a commitment to open trade.
President Obama and his foreign counterparts should reflect on the lessons of the 1930s—and the insights of Cordell Hull. The longest-serving secretary of state in American history (1933–1944), Hull helped guide the United States through the Depression and World War II. He also understood a fundamental truth: “When goods move, soldiers don’t.”
In the 1930s, global recession had catastrophic political consequences—in part because policymakers took exactly the wrong approach. Starting with America’s own Smoot Hawley Tariff of 1930, the world’s major trading nations tried to insulate themselves by adopting inward looking protectionist and discriminatory policies. The result was a vicious, self-defeating cycle of tit-for-tat retaliation. As states took refuge in prohibitive tariffs, import quotas, export subsidies and competitive devaluations, international commerce devolved into a desperate competition for dwindling markets. Between 1929 and 1933, the value of world trade plummeted from $50 billion to $15 billion. Global economic activity went into a death spiral, exacerbating the depth and length of the Great Depression.
The economic consequences of protectionism were bad enough. The political consequences were worse. As Hull recognized, global economic fragmentation lowered standards of living, drove unemployment higher and increased poverty—accentuating social upheaval and leaving destitute populations “easy prey to dictators and desperadoes.” The rise of Nazism in Germany, fascism in Italy and militarism in Japan is impossible to divorce from the economic turmoil, which allowed demagogic leaders to mobilize support among alienated masses nursing nationalist grievances.
Open economic warfare poisoned the diplomatic climate and exacerbated great power rivalries, raising, in Hull’s view, “constant temptation to use force, or threat of force, to obtain what could have been got through normal processes of trade.” Assistant Secretary William Clayton agreed: “Nations which act as enemies in the marketplace cannot long be friends at the council table.”
This is what makes growing protectionism and discrimination among the world’s major trading powers today so alarming. In 2008 world trade declined for the first time since 1982. And despite their pledges, seventeen G-20 members have adopted significant trade restrictions. “Buy American” provisions in the U.S. stimulus package have been matched by similar measures elsewhere, with the EU ambassador to Washington declaring that “Nobody will take this lying down.” Brussels has resumed export subsidies to EU dairy farmers and restricted imports from the United States and China. Meanwhile, India is threatening new tariffs on steel imports and cars; Russia has enacted some thirty new tariffs and export subsidies. In a sign of the global mood, WTO antidumping cases are up 40 percent since last year. Even less blatant forms of economic nationalism, such as banks restricting lending to “safer” domestic companies, risk shutting down global capital flows and exacerbating the current crisis.
If unchecked, such economic nationalism could raise diplomatic tensions among the world’s major powers. At particular risk are U.S. relations with China, Washington’s most important bilateral interlocutor in the twenty-first century. China has called the “Buy American” provisions “poison”—not exactly how the Obama administration wants to start off the relationship. U.S. Treasury Secretary Timothy Geithner’s ill-timed comments about China’s currency “manipulation” and his promise of an “aggressive” U.S. response were not especially helpful either, nor is Congress’ preoccupation with “unfair” Chinese trade and currency practices. For its part, Beijing has responded to the global slump by rolling back some of the liberalizing reforms introduced over the past thirty years. Such practices, including state subsidies, collide with the spirit and sometimes the law of open trade.
The Obama administration must find common ground with Beijing on a coordinated response, or risk retaliatory protectionism that could severely damage both economies and escalate into political confrontation. A trade war is the last thing the United States needs, given that China holds $1 trillion of our debt and will be critical to solving flashpoints ranging from Iran to North Korea.
In the 1930s, authoritarian great-power governments responded to the global downturn by adopting more nationalistic and aggressive policies. Today, the economic crisis may well fuel rising nationalism and regional assertiveness in emerging countries. Russia is a case in point. Although some predict that the economic crisis will temper Moscow’s international ambitions, evidence for such geopolitical modesty is slim to date. Neither the collapse of its stock market nor the decline in oil prices has kept Russia from flexing its muscles from Ukraine to Kyrgyzstan. While some expect the economic crisis to challenge Putin’s grip on power, there is no guarantee that Washington will find any successor regime less nationalistic and aggressive.
Beyond generating great power antagonism, misguided protectionism could also exacerbate political upheaval in the developing world. As Director of National Intelligence Dennis Blair recently testified, the downturn has already aggravated political instability in a quarter of the world’s nations. In many emerging countries, including important players like South Africa, Ukraine and Mexico, political stability rests on a precarious balance.Protectionist policies could well push developing economies and emerging market exporters over the edge. InPakistan, a protracted economic crisis could precipitate the collapse of the regime and fragmentation of the state. No surprise, then, that President Obama is the first U.S. president to receive a daily economic intelligence briefing, distilling the security implications of the global crisis.
What guidance might Cordell Hull give to today’s policymakers? To avoid a protectionist spiral and its political spillovers, the United States must spearhead multilateral trade liberalization involving all major developed and developing countries.
Coal locks in European energy dependence
Wynn 12 [“Coal poses EU power price risk: Wynn”, Gerard Wynn, Reuters market analyst Senior Environmental Markets Correspondent, Nov 20, 2012]
A return to rising world coal prices next year would underscore the European Union's energy dependence, given global gas prices also appear on a long-term upward trend.¶ European coal import prices have this year fallen following a shale gas boom which suppressed U.S. power prices and coal demand.¶ But the forward curve projectssteadily rising benchmark prices, presumably based on expectations of returning demand from Asian emerging economies including China where government stimulus efforts are expected to kick in (see Chart 1).¶ The forward curve suggests a return to levels seen either side of peak European coal import prices in 2011.¶ That is bad news for European wholesale power prices recently suppressed in countries able to substitute gas for cheaper coal.¶Higher coal prices would remove a bufferagainst higher gas prices and expose the EU vulnerability to globally traded energy.¶Global traded LNG prices have risen on the back of demand from Japan (following the Fukushima nuclear crisis) which has replaced a U.S. collapse (following a domestic shale gas boom).¶ That rising trajectory in LNG prices may now be a long-term trend, reversing a previous dip.¶ "There is no guarantee that with recovering demand for natural gas in the EU, relatively cheap LNG ... will continue to be as easily or cheaply available as in recent years," said the EU quarterly market report.¶ "The significant falls in imports of LNG currently being observed in the EU (in excess of falling consumption) could be a first warning sign," it said.
That causes Russian aggression
Zenyo Baran, Autumn 2007. Senior fellow and director of the Center for Eurasian Policy at the Hudson Institute in Washington, D.C. “EU Energy Security: Time to End Russian Leverage,” Washington Quarterly 30.4, http://mes.reviewhudson.org/files/publications/07autumn_baran.pdf.
Much has been made of President Vladimir Putin’s recent aggressive posturing against Europe and the United States. In the past few months, the Russian leader imposed a “moratorium” on the Conventional Armed Forces in Europe (CFE) Treaty, compared U.S. government policies to those of the Third Reich, and threatened to aim nuclear-tipped missiles at European targets again. These developments are certainly troubling, but the days when NATO troops looked warily across the Folda Gap in Germany for signs of invading Soviet tanks are long gone. Russian power and influence is no longer measured in ballistic missile accuracy or bomber production but in miles of pipeline constructed and barrels of oil per day exported, and for Europe, this energy invasion has already begun. Questions regarding the security and sustainability of energy supply have mostly been left to individual EU member states and to the invisible hand of the market. Many European leaders preferred not to discuss the geopolitics of energy, instead delegating this portfolio to their economic ministries. Moreover, there is little unity among member states’ energy policies. Russia, the European Union’s primary oil and gas provider, hasdeliberately taken advantage of this lack of cohesion to gain favorable energy deals and heighten European dependence on Russian supplies. Moscow is pursuing a divide and conquer strategy of amassing bilateral deals with member states. This disunity has also allowed Moscow to preemptively block European attempts to construct transport routes for Caspian and Central Asian oil and gas that do not involve Russia. Given Russia’s high-level political involvement in energy issues, the EU needs a corresponding degree of intensity. Specifically, Europe must realize the very real foreign and security policy ramifications that the supply of energy has. Enhancing cooperation on energy security within the EU is essential to withstand Russian pressure. Europe’s Troubling Dependence The lack of reliable and sustainable European access to energy represents a clear threat to the continent’s security. Under the leadership of Putin, the Kremlin has pursued a strategy whereby Europe’s substantial dependence on Russian energy is leveraged to obtain economic and political gains. If this situation continues, the EU will find itself in further danger, as its dependence leaves it beholden to Russian interests. There simply is no readily available alternative to the supplies the EU receives from Russia, particularly natural gas. Unlike oil, gas is extremely difficult and costly to ship via tankers; pipelines are the preferred method of transportation. Thus, if a supplier refuses to provide gas or charges an unreasonable price, the consumer cannot quickly or easily turn to another source. The consumer state would have no choice but to accept the supplier’s conditions or go without natural gas, an option that is all but unacceptable for most. The unjust manipulation or interruption of energy supplies is as much a security threat as military action is, especially since the EU relies on Russia for more than 30 percent of its oil imports and 50 percent of its natural gas imports. 1 This dependence is not distributed evenly. As one heads eastward, Russia’s share of the energy supply grows ever larger. No fewer than seven eastern European countries receive at least 90 percent of their crude oil imports from Russia, and six EU nations are entirely dependent on Russia for their natural gas imports. The Ukrainian gas crisis in January 2006 catapulted energy security to the forefront of the EU agenda. On the very day it took over the presidency of the Group of Eight (G-8)—a presidency that had announced energy security as its key theme—Russia halted natural gas deliveries to Ukraine. Because the gas pipelines crossing Ukraine carry supplies destined for EU markets, this shutdown resulted in significant supply disruptions for several member states, raising awareness that dependence on Russia has increased Europe’s geopolitical vulnerability. Several EU states have experienced the misfortune of Russian supply cuts directly. Disputes between Russia and the Baltic states have led to the halt of pipeline deliveries of oil multiple times. In January 2003, Russia ceased supplying oil via pipeline to Latvia’s Ventspils Nafta export facility. This embargo, which followed Riga’s unwillingness to sell the facility to a Russian energy company, continues to this day. In July 2006, Moscow shut down a pipeline supplying Lithuania’s Mazeikiu Nafta refinery, which is the largest company in Lithuania and one of the biggest oil refineries in central and eastern Europe. As with Ventspils Nafta, this shutdown came after a Russian company failed to obtain the energy infrastructure it coveted. Moscow has further sought to increase Europe’s dependence on Russian energy supplies by acquiring significant stakes in the energy distribution companies and infrastructure of EU member states, typically through its proxy, Gazprom. This massive energy company—the world’s largest—has control over the Russian gas pipeline network and consequently handles all Russian and Central Asian exports, either directly or through wholly owned subsidiaries. Such a preponderance of power would be troubling enough if the company were transparent, privately owned, and played by the rules of the free market, but Gazprom is none of those things. It is majority state owned and has deep ties to the Russian government. Many of the company’s executive management and board members also occupy or previously occupied key positions within the Kremlin. For many years, Gazprom has owned significant portions of energy companies throughout the former Soviet Union. It is the largest or second-largest shareholder in the gas utilities of Estonia, Latvia, and Lithuania. Recently, Gazprom has been expanding its influence even further into the domestic gas distribution networks of western Europe. In the past two years, Gazprom has signed deals with Eni (Italy), Gasunie (the Netherlands), BASF (Germany), E.ON Ruhrgas (Germany), and Gaz de France. Desperate for access to energy and the profits it brings, European companies are played against each other by the Kremlin in order to secure more advantageous conditions for Russia. If one company does not want to agree to Moscow’s terms, a competitor will gladly accept them, leaving the first company with nothing. In addition to the economic disadvantages of such dependence, the broader foreign policy goals of EU states also suffer. Specifically, EU members limit their criticisms of Moscow, lest they be given a raw deal at the negotiating table. Russia’s increasingly tainted record on transparency, responsible governance, and human rights is thus allowed to stand unchallenged and unquestioned. Dependency also erodes EU support for key allies in Europe and Asia. Azerbaijan, Georgia, Kazakhstan, Turkmenistan, and Ukraine—all crucial energy producers or transit countries—have each been subject to intimidation by Moscow. Instead of standing up to this harassment, Europe’s dependence compels its leaders to look the other way. Most disturbing of all is that this dependence even leads the EU to turn a blind eye when Moscow utilizes these tactics against fellow EU members. The July 2006 shutdown of the Lithuanian pipeline, for example, drew little protest outside of Poland and the Baltic states. Russia claimed that this cutoff was the result of technical difficulties yet refused all offers from third parties to examine the damaged pipe or assist repairs in any way. Although this incident is suspicious enough on its own, it becomes a clear case of political manipulation given Russia’s status as a repeat offender. Many times over the past decade, Moscow has utilized near-identical tactics in countries it considers to be its near abroad. It has repeatedly cut off energy supplies during a political dispute, smugly blamed technical difficulties for the problem, and eventually shifted supplies to another destination unless the victim acceded to the Kremlin’s demands. Despite this history and repeated pleas from President Valdas Adamkus, the response from most western European countries was rather muted during the Lithuanian shutdown. The countries of the West have never experienced these strong-arm tactics firsthand and fail to view it as anything more than an economic dispute. Moreover, they were too concerned that standing up for Lithuania would ruin their chances to get preferential access to Russian oil and gas resources. By design, the Russian strategy is driving a wedge between eastern and western Europe, exacerbating the challenges the EU faces in devising a common energy policy, as was seen during the dispute between Poland and Germany ahead of the June EU summit. This diplomatic row was ostensibly over Russia’s failure to remove its embargo on Polish meat products but more broadly involved the perceived reluctance of Berlin to stand up to Moscow on a whole host of issues, not the least of which was energy. The EU’s inability to take Russia to task for its illiberal market actions threatens European energy security in another way. It decreases efficiency in an already inefficient Russian energy industry, raising costs for consumers. Russia’s increasingly state-owned energy industry is largely unregulated. Without competitive market forces, companies such as Gazprom have no reason to behave like commercially minded entities. The absence of market stimuli is having detrimental effects on Russian productivity. Between 1998 and 2005, output in Russia’s then-mostly privately owned oil sector rose by 50 percent. 2 During that same period, production in the gas sector (Gazprom) barely grew at all. Since 2004, when the Kremlin began its consolidation over the oil sector in earnest, Russian oil production has leveled off as well. 3 Due to the extremely close relationship between the energy industry and the Kremlin, Russia’s oil and gas companies can pursue strategies that make little economic sense but that serve the long-term interests of the Russian state, namely, ensuring European dependence on Russian energy supplies. For example, Russia’s undersea Nord Stream pipeline will cost at least three times more than a proposed overland route through Lithuania and Poland would have. Given the environmental sensitivity of the Baltic Sea, some industry insiders are predicting costs as high as $10 billion or even $15 billion. 4 By divorcing western Europe’s gas supply from eastern Europe’s, however, the undersea route grants Moscow the ability to manipulate the European energy market more effectively. Needless to say, the unnecessarily high cost of the pipeline’s construction will be passed on to European consumers. Many industry experts have expressed concern that corruption and inefficiency, coupled with Moscow’s refusal to allow significant foreign investment in the energy sector, will soon lead the Russian oil and gas industry to burn out. 5 Instead of developing new oil and gas fields or investing in its energy infrastructure, Russia has utilized windfall profits to pursue the aggressive policy of expansion and acquisition described above. Unless Moscow is able to secure additional gas supplies from fields in Central Asia, it may struggle to meet its commitments to Europe, which is why maintaining full control over Central Asia’s export routes is so critical for the Kremlin. Engaging the Caspian Enshrined as the second of the three pillars of the EU, the Common Foreign and Security Policy (CFSP) states that the EU should seek to promote democracy, rule of law, and respect for human rights within its borders and abroad. Yet, dependence on Russian energy supplies undermines Europe’s efforts to foster the ideals of good governance, market transparency, and democracy both in Russia and in Russia’s neighbors. Although the establishment of these principles in energy suppliers is a worthy goal in its own right, doing so will also create a more stable environment for energy sector development, thereby improving European security. Diversifying oil and gas supplies by constructing pipelines directly from the Caucasus and Central Asia to Europe would not only decrease Russia’s influence on EU countries but would also loosen Moscow’s grip on Europe’s neighbors. If the EU wishes to foster true reform within former Soviet states, it must offer them a non-Russian perspective, which can best be done through cooperation on joint energy projects. In the Caspian region, this strategy has been pursued with success by the United States. In the late 1990s, the United States pushed hard for the construction of several oil and gas pipelines that would carry Caspian energy westward without transiting Russia. It did so to break Russia’s monopoly on the region’s energy transportation system, thereby giving the Caspian countries greater economic and political independence from Moscow. Naturally, this proposal prompted strong objections and highpressure tactics by the Russian government.
That’s key to EU-Russian stability.
Ronald Asmus, Jan/Feb 2008. Executive Director of the Transatlantic Center at the German Marshall Fund of the United States, in Brussels. From 1997 to 2000, he served as U.S. Deputy Assistant Secretary of State for European Affairs. “Europe's Eastern Promise; Rethinking NATO and EU Enlargement,” Foreign Affairs 87.1, http://digilib.lib.unipi.gr/ket/bitstream/ket/739/1/Europe's_Eastern_Promise_Asmus.pdf.
In light of these new circumstances in Russia, enlargement needs to be rethought from the ground up, starting with its strategic rationale. After the accession of a band of countries from the Baltic states in the north to Bulgaria and Romania in the south, many in the West assumed that the enlargement project was almost complete, with the western Balkans constituting the last piece of unfinished business. They were surprised to suddenly find new countries from Eurasia, and specifically the wider Black Sea region, starting to knock on the doors of NATO and the EU -- and unsure how to respond. In dealing with these new candidate countries, the West must stick to the values and diplomatic principles it laid down in the 1990s, including the notion that countries are free to choose their alliances. But that alone is unlikely to be enough, because although these countries clearly consider themselves European, many Europeans do not feel the same historical or moral commitment to them or see a compelling strategic need to integrate them. Thus, in addition to moral and political arguments, the United States and Europe need to articulate a strong strategic rationale for anchoring them to the West. That argument is straightforward. The challenge of securing Europe's eastern border from the Baltics to the Black Sea has been replaced by the need to extend peace and stability along the southern rim of the Euro-Atlantic community -- from the Balkans across the Black Sea and further into Eurasia, a region that connects Europe, Russia, and the Middle East and involves core security interests, including a critical energy corridor. Working to consolidate democratic change and build stabilityin thisareais as importantforWestern security today as consolidating democracy in central and eastern Europe was in the 1990s. It is not only critical to expanding the democratic peace in Europe but also vital to repositioning the West vis-à-vis both Central Asia and the Middle East. This strategy presents an opportunity to redraw the strategic map of Europe and Eurasia in a way that enhances the security of countries on Europe's periphery as well as that of the United States and Europe. The United States and Europe also need to rethink what anchoring means in practice. In the 1990s, it meant pursuing membership in NATO and the EU roughly in parallel. Now the West needs to be more flexible and take a long-term view. The goal is to tie these countries as closely to the West as politics and interests on both sides allow. For some countries, this may mean eventual membership in both NATO and the EU; for others, it may mean membership only in NATO; and for the rest, it may mean membership in neither but simply much closer relations. Policy will have to be much more à la carte than prix fixe. The link between NATO membership and EU membership should be relaxed, if not dropped. The EU has enough on its plate sustaining its commitments to the western Balkans and Turkey; anything beyond that is probably a nonstarter for the time being. NATO will once again have to take the lead in anchoring countries such as Georgia and others in the wider Black Sea region. The West must also rethink how it should engage and reach out to these countries. If membership is less plausible as a short-term option, then the quality of ties short of membership must be improved to compensate. Outreach must grow in importance and may increasingly become the centerpiece of U.S. and European strategy. At the moment, the fear of future enlargement is one factor actually holding allies back, with institutions afraid of taking even small steps down what some fear could be a slippery slope. Yet precisely because the countries in question are weaker and more endangered, NATO and the EU should actually be reaching out and engaging them earlier. They need the security umbrella and engagement of the West as much, if not more, than the countries of central and eastern Europe did. The way out of this dilemma is to consider membership a long-term goal and focus in the mean time on strengthening Western outreach and engagement. This means recasting policy tools to address the different needs of the countries that are less developed politically and economically. Tools such as NATO's "membership action plan" should be extended earlier and tied less closely to actual membership commitments, thus allowing these countries to benefit from guidance and engagement while downplaying the question of the end goal. At the same time, the EU needs to enhance its own tools, such as the Common Foreign and Security Policy and the European Neighborhood Policy, as well as reach out to these countries more directly by offering them political and economic support. When communism collapsed, NATO and the EU had little idea how to reach out to postcommunist countries and anchor them to the West. Bureaucrats in both institutions said it could not be done. But political will and strategic imagination prevailed, and fresh approaches were developed. Political will can do the same today. As for Russia, neither Washington nor Brussels wants a confrontation with Moscow at a time when they face daunting challenges beyond Europe. But this does not mean the West should abandon its belief that the spread of democracy along Russia's borders contributes to peace and stability just because the current authoritarian rulers in Moscow disagree. Nor should the West abandon its principles and succumb to the sphere-of-influence thinking currently emanating from Moscow. If the United States and Europe still hope that democracy will eventually take root in Russia, they must recognize that consolidating a proWestern, democratic Ukraine would indirectly encourage democratization in Russia. Of course, antidemocratic forces in Russia will oppose such a move. After all, Moscow only acquiesced in previous rounds of NATO and EU enlargement because it concluded that the United States and Europe were determined to carry them out and that its efforts to oppose the West would be futile. Western unity on issues such as the future of Ukraine is therefore of the utmost importance. Still, holding true to NATO's and the EU's core principles and expanding these organizations' reach does not mean starting a new Cold War. The West and Moscow should look for other areas in which their interests are more aligned, such as expanding trade and investment or controlling nuclear proliferation and building a new arms control regime. The key question is whether Russia -- when faced with a unified West -- will start to look for common ground. As strong as Russia may appear at the moment, it remains a country with real long-term structural weaknesses and problems. It, too, needs friends and allies, and the United States and Europe should be among them. UNCERTAIN FUTURES Three very different scenarios for the future of Western policy toward Europe's periphery reveal just how high the stakes are in this region. In the bestcase scenario, the United States and Europe would regroup under the next U.S. president and launch a new era of transatlantic cooperation by overcoming differences on Iraq, avoiding disagreements over Iran, and stabilizing Afghanistan. This renaissance would include a new and ambitious democratic-enlargement strategy, and the results would be significant. Securing independence for Kosovo without turning Serbia against the West would facilitate the successful integration of the western Balkans into NATO and the EU. In Turkey, the AKP-led government would continue democratic reforms, bringing the country closer to EU accession. Georgia and Ukraine would continue to move closer to the West as well. That prospect would help create positive pressure for democratic change in Azerbaijan and encourage Armenia's reorientation toward the West. By 2012, a reunified West would have begun to build an arc of democratic stability eastward into Eurasia and especially the wider Black Sea region. Realizing that its real adversaries lie elsewhere, Russia would eventually have no choice but to reassess its policy and seek a new rapprochement with the West. A less optimistic scenario is stagnation. In this case, the United States and Europe would regain some political momentum after 2008 but fail to achieve any significant democratic breakthroughs. A new U.S. administration would manage to stabilize and then extricate itself from Iraq, but transatlantic tensions over Iran and other Middle Eastern issues would persist. Kosovo would achieve independence, but in a manner that leaves Serbia alienated and unable to find its way back onto the path toward EU accession. In the western Balkans, only Croatia would remain on track for both EU and NATO membership. Turkey's prospects for joining the EU would fade, and reforms in Georgia and Ukraine would stall. Azerbaijan would remain an autocratic pro-Western ally increasingly vulnerable to growing radicalization from within. By 2012, the West would have patched up relations across the Atlantic but without breakthroughs in the Balkans or Turkey -- let alone in Ukraine or the wider Black Sea region. All of this would lead to a more competitive relationship with Russia, resulting in stalemate and a new chill in relations with Moscow. In the worst-case scenario, rather than the West consolidating new democratic breakthroughs, Russia would succeed in a strategy of rollback. The United States and Europe would not achieve a meaningful rapprochement, and they would fail to consolidate democracy in the western Balkans. Kosovo would become independent, but without agreement from all sides. This would launch Serbia on a new nationalist trajectory, bringing further instability to the region. U.S. failure in Iraq would lead to partition, estranging Turkey and prompting Ankara to invade northern Iraq and further loosen its ties to the West. This, in turn, would badly damage Turkey's already strained relations with both Washington and Brussels. Ukraine would drift back to autocracy, and Georgia, the one liberal democratic experiment in the Black Sea region, would lose reform momentum and teeter toward failure. Last November's declaration of a state of emergency in Tbilisi was a reminder of how fragile and vulnerable this experiment is. Using its energy supplies and influence, Russia would emerge as an authoritarian capitalist alternative to the West, attracting autocratic leaders throughout Europe and Eurasia. Rather than a renaissance of the transatlantic alliance, the result would be a retreat of democracy and a further splintering of the democratic West. As these scenarios make clear, the western Balkans, Georgia, Ukraine, and the wider Black Sea region are less stable and more at risk today than central and eastern Europe were a decade ago. And the stakes are high. A world in which Ukraine has successfully anchored itself to the West would be very different from one in which it has failed to do so. A world in which Georgia's success has sparked democratic progress in the region and helped stabilize the southern flank of the Euro-Atlantic community would be a much safer one than a world in which Georgia has become an authoritarian state in Russia's sphere of influence. And a world in which the democratic West is ascendant would be very different from one in which an autocratic, nationalist Russia is on the rise.
Roger McDermott, 12/6/2011. Honorary senior fellow, department of politics and international relations, university of Kent at Canterbury and senior fellow in Eurasian military studies, Jamestown Foundation. “General Makarov Highlights the “Risk” of Nuclear Conflict,” Eurasia Daily Monitor, http://www.jamestown.org/programs/edm/single/?tx_ttnews%5Btt_news%5D=38748&tx_ttnews%5BbackPid%5D=27&cHash=dfb6e8da90b34a10f50382157e9bc117.
In the current election season the Russian media has speculated that the Defense Minister Anatoliy Serdyukov may be replaced, possibly by Dmitry Rogozin, Russia’s Ambassador to NATO, which masks deeper anxiety about the future direction of the Armed Forces. The latest rumors also partly reflect uncertainty surrounding how the switch in the ruling tandem may reshuffle the pack in the various ministries, as well as concern about managing complex processes in Russian defense planning. On November 17, Russia’s Chief of the General Staff, Army-General Nikolai Makarov, offered widely reported comments on the potential for nuclear conflict erupting close to the country’s borders. His key observation was controversial, based on estimating that thepotential for armed conflict along the entire Russian periphery had grown dramatically over the past twenty years (Profil, December 1; Moskovskiy Komsomolets, November 28; Interfax, November 17). During his speech to the Defense Ministry’s Public Council on the progress and challenges facing the effort to reform and modernize Russia’s conventional Armed Forces, Makarov linked the potential for local or regional conflict to escalate into large-scale warfare “possibly even with nuclear weapons.” Many Russian commentators were bewildered by this seemingly “alarmist” perspective. However, they appear to have misconstrued the general’s intention, since he was actually discussing conflict escalation (Interfax, ITAR-TASS, November 17; Moskovskiy Komsomolets, Krasnaya Zvezda, November 18). Makarov’s remarks, particularly in relation to the possible use of nuclear weapons in war, were quickly misinterpreted. Three specific aspects of the context in which Russia’s most senior military officer addressed the issue of a potential risk of nuclear conflict may serve to necessitate wider dialogue about the dangers of escalation. There is little in his actual assertion about the role of nuclear weapons in Russian security policy that would suggest Moscow has revised this; in fact, Makarov stated that this policy is outlined in the 2010 Military Doctrine, though he understandably made no mention of its classified addendum on nuclear issues (Kommersant, November 18). Russian media coverage was largely dismissive of Makarov’s observations, focusing on the idea that he may have represented the country as being surrounded by enemies. According to Kommersant, claiming to have seen the materials used during his presentation, armed confrontation with the West could occur partly based on the “anti-Russian policy” pursued by the Baltic States and Georgia, which may equally undermine Moscow’s future relations with NATO. Military conflict may erupt in Central Asia, caused by instability in Afghanistan or Pakistan; or western intervention against a nuclear Iran or North Korea; energy competition in the Arctic or foreign inspired “color revolutions” similar to the Arab Spring and the creation of a European Ballistic Missile Defense (BMD) system that could undermine Russia’s strategic nuclear deterrence also featured in this assessment of the strategic environment (Kommersant, November 18). Since the reform of Russia’s conventional Armed Forces began in late 2008, Makarov has consistently promoted adopting network-centric capabilities to facilitate the transformation of the military and develop modern approaches to warfare. Keen to displace traditional Russian approaches to warfare, and harness military assets in a fully integrated network, Makarov possibly more than any senior Russian officer appreciates that the means and methods of modern warfare have changed and are continuing to change (Zavtra, November 23; Interfax, November 17). The contours of this evolving and unpredictable strategic environment, with the distinctions between war and peace often blurred, interface precisely in the general’s expression of concern about nuclear conflict: highlighting the risk of escalation. However, such potential escalation is linked to the reduced time involved in other actors deciding to intervene in a local crisis as well as the presence of network-centric approaches among western militaries and being developed by China and Russia. From Moscow’s perspective, NATO “out of area operations” from Kosovo to Libya blur the traditional red lines in escalation; further complicated if any power wishes to pursue intervention in complex cases such as Syria. Potential escalation resulting from local conflict, following a series of unpredictable second and third order consequences, makes Makarov’s comments seem more understandable; it is not so much a portrayal of Russia surrounded by “enemies,” as a recognition that, with weak conventional Armed Forces, in certain crises Moscow may have few options at its disposal (Interfax, November 17). There is also the added complication of a possibly messy aftermath of the US and NATO drawdown from Afghanistan and signs that the Russian General Staff takes Central Asian security much more seriously in this regard. The General Staff cannot know whether the threat environment in the region may suddenly change. Makarov knows the rather limited conventional military power Russia currently possesses, which may compel early nuclear first use likely involving sub-strategic weapons, in an effort to “de-escalate” an escalating conflict close to Russia’s borders. Moscow no longer primarily fears a theoretical threat of facing large armies on its western or eastern strategic axes; instead the information-era reality is that smaller-scale intervention in areas vital to its strategic interests may bring the country face-to-face with a network-centric adversary capable of rapidly exploiting its conventional weaknesses. As Russia plays catch-up in this technological and revolutionary shift in modern warfare capabilities, the age-old problem confronts the General Staff: the fastest to act is the victor (See EDM, December 1). Consequently, Makarov once again criticized the domestic defense industry for offering the military inferior quality weapons systems. Yet, as speed and harnessing C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) become increasingly decisive factors in modern warfare, the risks for conflict escalation demand careful attention – especially when the disparate actors possess varied capabilities. Unlike other nuclear powers, Russia has to consider the proximity of several nuclear actors close to its borders. In the coming decade and beyond, Moscow may pursue dialogue with other nuclear actors on the nature of conflict escalation and de-escalation. However, with a multitude of variables at play ranging from BMD, US Global Strike capabilities, uncertainty surrounding the “reset” and the emergence of an expanded nuclear club, and several potential sources of instability and conflict, any dialogue must consider escalation in its widest possible context. Makarov’s message during his presentation, as far as the nuclear issue is concerned, was therefore a much tougher bone than the old dogs of the Cold War would wish to chew on.