The Sunday Times
July 15, 2007
Energy: the new cold war
Liam Fox
Since the close of the cold war, we have been growing used to threats such as terrorism where the enemy has no state or territory. But soon we will have to get used to new strategic challenges, such as energy security, where fossil fuels will be used as weapons to achieve political ends. Energy security will be synonymous with national security and economic security.
Two weeks ago Russia announced its intention to annex a 460,000-square mile portion of ice-covered Arctic. Scientists claim that the area, on which Russia has audaciously set its sights, may contain an estimated 10 billion tonnes of gas and oil deposits. While this ridiculous claim has no legitimate legal basis, the West must take threats like this from Russia seriously.
Russia is rivalling Saudi Arabia as the world’s largest oil producer and is estimated to have the world’s largest natural gas supplies with 1,680 trillion cubic feet - nearly twice the reserves in the next largest country, Iran. If military might and nuclear weapons formed the core of Soviet cold war power, Russian elites view its energy resources as the basis of its power now.
Russia has demonstrated that it will use its energy resources to promote a broader foreign policy agenda. This was illustrated when Russia reduced gas supplies to the Ukraine as part of a bilateral dispute and when it doubled the price of gas to Georgia in 2005.
Russia’s petrodollars are financing a $189 billion overhaul of its armed forces between now and 2015. They will purchase more than 1,000 new aircraft and helicopters, 4,000 new tanks and armoured vehicles and a new submarine fleet. New missiles will carry nuclear warheads. Western addiction to oil and gas is causing us to fund the threat against us.
Reports that Russia is now withdrawing from the Conventional Forces in Europe Treaty will only fuel suspicions about Putin’s defence posture.
The stand-off over Litvinenko is another source of tension.
Unfortunately, the threats do not stop with Russia. Terrorism poses a major threat to world energy supplies, transport and infrastructure especially. Osama Bin Laden has described refineries as the “hinges” of the world’s economy. Al-Qaeda’s failed attack last year on the Abqaiq oil facility in Saudi Arabia is a reminder of the threat.
Future attacks could disrupt the world economy far more. An assault on a super-tanker in the Straits of Malacca could send the oil price rocketing, and tip economies which have just about coped with higher oil prices over the edge. If Japan’s maritime supplies of crude oil were choked, even temporarily, a crisis of confidence could reverberate around the world. For developing countries, a sudden rise in fuel prices could wipe out the benefits of aid or debt relief. Fuel poverty would be a brutal reality.
Fear of terrorism is justified. In 2002, Al-Qaeda terrorists rammed a boat rigged with explosives into a French tanker off Yemen but fortunately it did not sink.
The distribution of global energy supplies means we are particularly vulnerable to the “choke points” in transport routes around the globe. These are far more numerous than the days when we simply patrolled the Strait of Hormuz. They are scattered from the Panama Canal to the entrance to the Red Sea to the seas of southeast Asia.
So what can be done to ensure the security of energy resources, including the refining and transport of such resources?
The EU has an important role to play, especially in countering the difficulties posed by Russia. An end needs to be brought to the divide and rule which the Kremlin operates through single nation “sweetheart deals”. The commission must act to remove protectionism and national monopolies, creating a genuine free market in energy. Better interconnections will reduce the risk of supplies being cut off to those who displease the Kremlin.
But the EU will not be a sufficiently strong vehicle. Nato must play a key role in ensuring energy security for the West. The EU lacks the military capability and the political will to undertake any ambitious energy security agenda. Politically the EU’s hand is weak against Russia, militarily it is even weaker. Jose Socrates, Portugal’s prime minister and current EU president, recently made it very clear that he would avoid confronting Russia.
Norway and Turkey, both of which are valuable Nato members, are not members of the European Union. No energy security strategy can work without the support and cooperation of these two states. Both played a vital role in Nato during the cold war by being the only Nato members that bordered the Soviet Union. After the cold war their geo-strategic importance is just as valid. In the south, Turkey is the gateway to the resource-rich Caucasus and Caspian Basin. In the north, Norway is located near the resource-rich Arctic Ocean. Giving a greater role in energy security to Nato will provide added prestige to Turkey and allow reformers a breathing space given the shortsighted attitude taken to EU membership by some prominent members.
The complexity of energy security makes it too easy to look the other way and hope that someone else deals with the problems. Dealing with energy security issues will involve the protection of maritime supplies and pipelines. New international arrangements will be required to safeguard supply in an interdependent global economy with shared risks.
Nato is a logical partner in such a project, possessing both military and political strengths. The threat is real and the implications are great.
Liam Fox is shadow defence secretary