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Oil DA Index
Oil DA Index..........................................................................................................................................................................................1 OPEC Flood DA—1NC Shell................................................................................................................................................................3 OPEC Flood DA—Uniqueness—A2 US Giving Alt Energy Incentives Now......................................................................................4 OPEC Flood DA—Links—Renewables/Alternative Energy................................................................................................................5 OPEC Flood DA—Links—Reduced Oil Consumption.........................................................................................................................6 OPEC Flood DA—Links—Saudi Specific ...........................................................................................................................................7 OPEC Flood DA—Links—Saudi Specific............................................................................................................................................8 OPEC Flood DA—Link Magnifier—1 MBD Production Increase → Oil Price Collapse....................................................................9 OPEC Flood DA—Link Magnifier—Perception of Higher Supply → Price Collapse ......................................................................10 OPEC Flood DA—Link Magnifier—Oil Price Decline Snowballs....................................................................................................11 OPEC Flood DA—Impacts—Low Oil Prices Undermine Alternative Energy...................................................................................12 OPEC Flood DA—Uniqueness—Spare Capacity Now.......................................................................................................................13 OPEC Flood DA—Uniqueness—Refining Capacity ↑ Now...............................................................................................................14 OPEC Flood DA Answers—No Refining Capacity............................................................................................................................15 OPEC Flood DA Answers—No Spare Capacity.................................................................................................................................16 Generic Links—US Investments in Alt Energy → Speculation for Lower Oil Prices***..................................................................17 Generic Links—Reductions in US Oil Consumption/Demand ↓ Oil Prices........................................................................................18 Generic Links—Renewable Energy ↓ Oil Prices.................................................................................................................................19 Generic Links—US Demand Key to Global Oil Prices.......................................................................................................................20 Angolan Oil Good—1NC Impact Module...........................................................................................................................................21 Angolan Oil Good—Uniqueness—High Oil Prices → Angolan Econ Growth..................................................................................22 Angolan Oil Good—Links—US = Angola’s Biggest Oil Customer...................................................................................................23 Angolan Oil Good—Internals—Oil Key to Angola............................................................................................................................24 Angolan Oil Good—Internals—Oil Key to Angola............................................................................................................................25 Angolan Oil Good—Impacts—Key to African Stability.....................................................................................................................26 Angolan Oil Good—Impacts—Angolan Stability Key to African Biodiversity.................................................................................27 Angolan Oil Good—A2 Corruption Turns..........................................................................................................................................28 Angolan Oil Answers—Biodiversity/Ag Turn....................................................................................................................................29 African Oil Answers—Corruption Turns.............................................................................................................................................30 African Oil Answers—Corruption Turns.............................................................................................................................................31 Russian Oil Good—1NC Shell............................................................................................................................................................32 Russian Oil Good—1NC Shell............................................................................................................................................................33 Russian Oil Good—Uniqueness—High Oil Prices → Russian Econ Growth....................................................................................34 Russian Oil Good—Uniqueness—Russian Economic Growth Strong Now.......................................................................................35 Russian Oil Good—Impacts—Russian Economy Key to Global Economy.......................................................................................36 Russian Oil Good—Impacts—2NC Political Instability Module........................................................................................................37 Russian Oil Good—Impacts—2NC Proliferation Module..................................................................................................................38 Russian Oil Good—Impacts—2NC Disintegration Module................................................................................................................39 Russian Oil Good—Internals—High Oil Prices Key to Russian Economy........................................................................................40 Russian Oil Good—Internals—Every Dollar Increase in Oil Price Good for Russian Economy.......................................................41 Russian Oil Good—A2 US Recession Undermines Russian Economy..............................................................................................42 Russian Oil Good—A2 Diversification Turns.....................................................................................................................................43 Russian Oil Good—A2 Economic Reform Turns...............................................................................................................................44 Russian Oil Answers—Economic Reforms Turn................................................................................................................................45 Russian Oil Answers—Diversification Turn.......................................................................................................................................46 Russian Oil Answers—Low Oil Prices Key to Russian Economy......................................................................................................47 Russian Oil Answers—Inflation Turn.................................................................................................................................................48 Russian Oil Answers—Inflation Turn Extensions...............................................................................................................................49 Russian Oil Answers—Oil Not Key to Russian Economy..................................................................................................................50 Russian Oil Answers—Russian Economic Growth Bad 2AC.............................................................................................................51 Russian Oil Answers—Russian Economic Growth Bad Extensions...................................................................................................52 IPI Pipeline Good—1NC Impact Module............................................................................................................................................53 IPI Pipeline Good—1NC Impact Module............................................................................................................................................54 IPI Pipeline Good—Unique Internals—High Oil Prices → IPI Pipeline Cooperation.......................................................................55 IPI Pipeline Good—A2 US Opposition Blocks ..................................................................................................................................56 IPI Pipeline Good—Impacts—Key to South Asian Stability..............................................................................................................57 1
IPI Pipeline Good—Impacts—Key to South Asian Stability..............................................................................................................58 IPI Pipeline Answers—Iran = Evil Turn..............................................................................................................................................59 Gabon Oil Good—1NC Shell..............................................................................................................................................................60 Gabon Oil Good—1NC Shell..............................................................................................................................................................61 Gabon Oil Good—Uniqueness—Reforestation ↑ Now/Oil Key ........................................................................................................62 Gabon Oil Good—Internals—Oil Revenue Key to Gabon..................................................................................................................63 Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation........................................................................................................64 Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation........................................................................................................65 Gabon Oil Good—Impacts—2NC Biodiversity Module.....................................................................................................................66 Gabon Oil Good—Impacts—Congo River Basin Extensions.............................................................................................................67 Japanese Coal Good—1NC Impact Module........................................................................................................................................68 Japanese Coal Good—Uniqueness—Japanese Coal Production ↑ .....................................................................................................69 Japanese Coal Good—Internals—High Oil Prices ↑ Japanese Coal Production.................................................................................70 Japanese Coal Good—Impacts—Domestic Production Key to Japan Economy................................................................................71 Japanese Coal Good—Impacts—2NC Energy Conflict Module.........................................................................................................72 Japanese Coal Good—Impacts—Asian Instability Extensions...........................................................................................................73 Secessionism Bad—1NC Impact Module............................................................................................................................................74 Secessionism Bad—Links—Low Oil Prices → Ethnic Conflicts/Rebellions.....................................................................................75 Secessionism Bad—Impacts—Secessionism → Nuke War................................................................................................................76 Low Oil Prices Bad—Global War/Instability .....................................................................................................................................77 Euro Switch DA—1NC Shell..............................................................................................................................................................79 Euro Switch DA—1NC Shell..............................................................................................................................................................80 Euro Switch DA—Uniqueness—OPEC Won’t Switch From Petrodollar..........................................................................................81 Euro Switch DA—Links—US Oil Dependence → OPEC Support for Petrodollar............................................................................82 Euro Switch DA—Links—US Efforts to Reduce Oil Imports............................................................................................................83 Euro Switch DA—Impacts—Economy Extensions.............................................................................................................................84 Euro Switch DA—Impacts—US Leadership Extensions....................................................................................................................85 Euro Switch DA—A2 Partial Shift Away from Petrodollar................................................................................................................86 Euro Switch DA—Impacts—US Military Intervention.......................................................................................................................87 US/Saudi Relations DA—1NC Shell...................................................................................................................................................88 US/Saudi Relations DA—1NC Shell...................................................................................................................................................89 US/Saudi Relations DA—Uniqueness—Relations ↑ Now..................................................................................................................90 US/Saudi Relations DA—Links—Oil Key to Relations.....................................................................................................................91 US/Saudi Relations DA—Impacts—Relations Solve Saudi Nukes Extensions..................................................................................92 US/Saudi Relations DA—Impacts—2NC Nonproliferation Regimes Module...................................................................................93 US/Saudi Relations DA—A2 Saudi Won’t/Can’t Develop Nukes......................................................................................................94 US/Saudi Relations DA—A2 Relations = Resilient ...........................................................................................................................95 US/Saudi Relations Answers—Oil Not Key to Relations...................................................................................................................96 US/Saudi Relations Answers—Relations ↓ Now................................................................................................................................97 US/Saudi Relations Answers—High Oil Prices Hurt Relations Turn.................................................................................................98
OPEC Flood DA—1NC Shell
--The mere perception of attempts to reduce US oil dependence causes OPEC to flood the market with cheap oil Southeast Farm Press 12/19/01 (lexis)
But just when it appears something will in fact be done toward increasing domestic energy supplies, getting serious about alternative sources, and making a long-term commitment toward reducing our dependence on foreign oil - well, miraculously, prices go down. OPEC magnanimously increases supply, refineries begin humming, and once again thoughts of a national energy policy fade like the Cheshire cat. Only the cat's grin is left. And the cat is OPEC and the energy industry. They've seen it all before. They know they have only to wait; that we in the United States have a short memory, and that as long as they toss us a sop of energy "bargains" from time to time, we'll moan and groan and pay their price the rest of the time.
--OPEC-led oil price collapse would cripple the economies of high-cost oil producers like Indonesia, Russia, Nigeria and others Mohamedi 3/22/03 (Fareed, chief economist, PFC Energy, Middle East Policy, lexis)
A more aggressive strategy--and actually a better strategy for the Saudis in many ways over the longer term and for OPEC--would be to crash oil prices and not agree to accommodate Iraq. To do what they did in '99 and inadvertently discovered had some advantages: push the burden onto non-OPEC producers--the high-cost producers--and over time induce a decline in non-OPEC production, and then come
back and take that share of demand for themselves. That would require a fairly low oil price, $ 14-$ 15 a barrel. You may ask, how can the oil producers' economies take that? They can barely take it at $ 30 a barrel.
If you look at the macroeconomic situation in some of the Gulf countries--Saudi Arabia and Iran, even Algeria--they have accumulated a lot of assets and paid down a lot of their debt. Financially, they're doing a lot better than they were just a few years ago. To a certain extent, they have the war chest to do this if they have the will and the guts. In sharp contrast, this would be disastrous for Indonesia, Russia, Venezuela and Nigeria. None of these countries can take that type of low oil price for a period of 18 months to two years.
OPEC Flood DA—Uniqueness—A2 US Giving Alt Energy Incentives Now
Status quo alternative energy incentives aren’t “firm” enough to trigger our link The Independent 5/2/08 (“In search of some wind in their sails” Lexis)
Yesterday ExxonMobil announced that it made $10.9bn (£6bn) in profits for the first three months of this year. It was one of the biggest quarterly profit reports in American corporate history. The US oil giant has achieved the remarkable feat of making earnings from Shell and BP, announced earlier this week, look modest. But as descendants of John D Rockefeller, America's original oil magnate, are vociferously pointing out, obsolescence beckons for ExxonMobil and other energy groups if they do not step up their search for alternative fuels and cleaner technologies. The Rockefeller family, still major shareholders in Exxon, are backing resolutions calling for the company to fund research into how climate change will affect developing nations. They are also demanding targets from the company for reducing carbon emissions from its output. They hope this will compel Exxon's management to bring less-polluting products than oil and gas to market. But it looks as though the family are fighting an uphill battle. Exxon has at least ceased to deny a link between fossil fuel emissions and climate change. But it has still invested no serious effort in cleaner energy technologies, even though this is the area into which the oil majors should manifestly be ploughing those vast profits. The evidence of this week suggests the energy producers need considerably firmer incentives from governments to make the strategic shift away from environmentally destructive fossil fuels towards renewable, clean power generation. Shell may have been concerned by the rising price of offshore wind, but it is seriously misguided if it thinks that concentrating its efforts on extracting the remaining fossil fuels is a better bet than renewables in the medium or long term. If the conservative-minded energy conglomerates do not stump up the necessary investment, then governments will have to intervene to see that they do. The stakes are too high for a business-as-usual approach to the challenge of meeting the world's energy needs.
OPEC Flood DA—Links—Renewables/Alternative Energy
History is on our side—OPEC floods the market with cheap oil at any sign of US development of alternative energy sources Jeffords 91 (Jim, US Senator, 3/21, FNS, lexis)
SEN. JEFFORDS: Thank you very much, Tim, and I am very pleased to be with you and excited about the programs that you have announced here, for this is the one bill right now that will bring us to a point where we can be energy independent, and by doing it in a responsible and very clean way. And I deeply commend Senator Wirth for his efforts in pulling all of these pieces together. But I'd like to talk to you about the piece that I have contributed as well as supporting the others. To me, the most important thing that we have to do is to ensure, to have an insurance policy and that's what my piece of the legislation is. It is an insurance policy that we can reach the point by 2010 where we have the option of becoming energy independent. And the only way we can do that is by isolating ourselves by the whims of OPEC and the price of oil. And how we do that, this provision, is to say okay, we just cannot allow the price to be set by OPEC. And so every time we get
excited about energy from alternative sources they lower the price below that which is competitive and run the alternative fuels businesses out of business.
Perceived loss of market share to renewables causes OPEC to voluntarily collapse oil prices—grinds conservation and renewable energy programs to a halt Zunes 93 (Stephen, Director of the Institutes for a New Middle East Policy, Mideast Policy, January, p. 107)
Despite recent setbacks, the Organization of Petroleum Exporting Countries (OPEC) is in a relatively strong position. Even the 1986 collapse of prices was not a result of splintering, but a voluntary decision based on the realization that prices were too high. The artificially high prices of previous years had resulted in a loss of market share to non-OPEC produces such as Mexico and the North Sea countries, as well as from efforts at conservation and alternative energy sources. This pricing strategy worked, not only by challenging non-OPEC oil producers, but by grinding conservation programs and alternative energy research and development in the United States to a halt.
OPEC fears shifts towards renewable energy or energy saving—they'll flood the world with cheap oil at the flick of a switch Campbell 02 (Colin, Analyst @ Oil Depletion Resource Centre, "Petroleum and People," Population and Environment,
November, p. ebscohost)
Oil is traded on international markets at a price set by the marginal barrel, giving rise to an unpredictable volatility that obscures the underlying trends of supply and demand. Prices collapsed in 1998 from a combination of unseasonably warm weather; an Asian recession that reduced the demand for swing Middle East production; the devaluation of the Russian ruble, encouraging Russian exports; and under-estimation of supply by the International Energy Agency, which misled OPEC. Furthermore, there were more sinister motives to talk down the long-term price of oil, as oil companies and their financial advisers planned acquisitions and mergers, which successfully concealed their real predicament from the stock market. Budgets were slashed and staffs purged in a climate of uncertainty. There was an improvident draw on stocks as demand overtook supply. The OPEC countries, for their part, did everything possible to foster the notion
that they could flood the world with cheap oil at the flick of a switch. It was a strategy aimed to inhibit investments in gas, nonconventional oil, renewable energy or energy saving that they feared might undermine the market for their oil, on which they utterly depend. Their populations are growing fast in an economy dominated by oil.
OPEC Flood DA—Links—Reduced Oil Consumption
OPEC will increase production to overwhelm US efforts to reduce oil consumption—responses to energy efficiency and oil competition in the 80's proves Deseret News 3/18/03 (lexis)
The only time during the past three decades that U.S. oil imports have declined substantially was between 1979 and 1983 when they
fell by 40 percent. One reason was the deepest recession since the Great Depression, which cut demand for energy. But another was that oil prices rose sharply in the wake of the Iranian revolution of 1979, when fears rose again of a cut-off in oil, and remained high for several years afterward.
Automobile and light-truck fuel efficiency increased by about 15 percent between 1979 and 1983, as the U.S. first began enforcing the standards. Many Americans dumped gas guzzlers for smaller cars. At the same time, President Reagan ended oil-price controls, setting off a boom in
domestic drilling and arresting, through the mid-1980s, the downward spiral in U.S. oil output. OPEC was spooked. Prices hit $40 a barrel in 1979 -- $100 a barrel at today's prices, after accounting for inflation -- and were expected to double during subsequent years, to the delight of Algeria, Iran and others interested in boosting revenue. But Saudi Arabia, which has the world's largest oil reserves, worried that high prices would backfire. And to reduce U.S. imports, President Carter championed an $88 billion plan to develop synthetic oil from abundant U.S. reserves of coal and shale.
So Saudi Arabia started selling oil at prices several dollars a barrel lower than the OPEC $34-a-barrel standard. Then, in 1985, as the cartel was facing increasing competition from Alaskan and North Sea oil fields, Saudi Arabia and Kuwait engineered a price crash.
After a meeting in which OPEC decided to go after market share rather than prop up prices, Sheik Yamani, the Saudi oil minister, said to several reporters, let's see how the North Sea can produce oil when prices are at $5 a barrel. At low prices, the Persian Gulf countries have an unbeatable edge. In the mid-1980s, it cost them a couple of dollars a barrel to produce oil. It cost about $15 to produce a barrel off the coast of Britain and Norway or in the U.S. The move was a warning to the U.S.: Forget about energy independence. Besides being the world's largest consumer and importer of oil, the U.S. is also one of the largest producers. The price decline, to about $12 a barrel, was so devastating to the economies of Texas, Louisiana and other oil-rich states that then-Vice President George H.W. Bush toured the Persian Gulf in 1986, urging countries to rein in their output and raise prices.
Comprehensive measures aimed at curbing fossil fuel use cause OPEC to raise production and flood the market with cheap oil Noreng 02 (Oystein, Prof @ Norwegian School of Management, Crude Power, p. 205)
Comprehensive measures aimed at curbing the use of fossil fuels could cause OPEC or the key Middle Eastern oil exporters to raise output to compensate for the price loss, aiming at market share. The temptation could be to flood the market with cheap oil, giving a strong competitive advantage to countries that do not impose high consumer taxes on crude or oil products. OPEC would lose economic rent, but some low-cost OPEC countries would gain in volume. Nevertheless, the outcome would be a transfer of income from the oil exporters to the oil importers. The effect could be a more strongly rising oil demand in developing countries.
OPEC Flood DA—Links—Saudi Specific
US efforts to wean itself from oil dependence will cause Saudi-led OPEC to engineer a price crash Morse 02 (Edward, former Deputy Assistant Secretary of State for International Energy Policy, Foreign Affairs, March/April,
A simple fact explains this conclusion: 63 percent of the world's proven oil reserves are in the Middle East, 25 percent (or 261 billion barrels) in Saudi Arabia alone. As the largest single resource holder, Saudi Arabia has a unique petroleum policy that is designed to maximize the benefit of holding so much of the world's oil supply. Saudi Arabia's goal is to assure that oil's role in the international economy is maintained as long as possible. Hence Saudi policy has always denounced efforts by industrialized countries to wean themselves from oil dependence, whether through tax policy or regulation. Saudi strategy focuses on three different political arenas. The first involves the ties between the Saudi kingdom and other OPEC countries. The second concerns Riyadh's relationship with the non-OPEC producers: Mexico, Norway, and now Russia. Finally, there is Saudi Arabia's link to the major oilimporting regions -- most importantly North America, but also Europe and Asia. Given the size of the Saudi oil sector, the kingdom has a unique and critical role in setting world oil prices. Since its overriding objectives are maximizing revenues generated from oil exports and extending the life of its petroleum reserves, Riyadh aims to keep prices high as long as possible. But the price cannot be so high that it stifles demand or encourages other competitive sources of supply. Nor can it be so low that the kingdom cannot achieve minimum revenue targets. The critical balancing act of Saudi foreign policy, therefore, is to maintain oil prices within a reasonable price band. Stopping oil prices from falling below the minimum level requires cooperation from other OPEC countries and occasionally from non-OPEC producers. Preventing oil prices from rising too high requires keeping enough spare production capacity to use in an emergency. This latter feature is the signal characteristic of Saudi policy. The kingdom can afford to maintain this spare capacity because of the abundance of its oil reserves and the comparatively low cost of developing and producing its reserve base. In today's soft market, in which Saudi Arabia produces around 7.4 mbd, the kingdom has close to 3 mbd of spare capacity. Its spare capacity is usually ample enough to entirely displace the production of another large oil-exporting country if supply is disrupted or a producer tries to reduce output to increase prices. Not only does this spare capacity help the kingdom keep prices in check, but it also serves to link Riyadh with the United States and other key oil-importing countries. It is a blunt instrument that makes policymakers elsewhere beholden to Riyadh for energy security. This spare capacity is greater than the total exports of all other oil-exporting countries -- except Russia. Saudi spare capacity is the energy equivalent of nuclear weapons, a powerful deterrent against those who try to challenge Saudi leadership and Saudi goals. It is also the centerpiece of the U.S.-Saudi relationship. The United States relies on that capacity as the cornerstone of its oil policy. That arrangement was fine as long as U.S. protection meant Riyadh would not "blackmail" Washington -- an assumption that is more difficult to accept after September 11. Saudi Arabia's OPEC partners must also cooperate with the kingdom in part to prevent Riyadh from producing a glut and having prices collapse; spare capacity also serves to pressure key non-OPEC producers to cooperate with Saudi Arabia when necessary. But unlike the nuclear deterrent, the Saudi weapon is actively used when required. The kingdom has periodically (and brutally) demonstrated that it can use its spare capacity to destroy exports from countries challenging its market share. This tactic is the weapon that Saudi Arabia could use if Moscow ignores Riyadh's requests for cooperation.
OPEC Flood DA—Links—Saudi Specific
Saudi perception of demand reduction will trigger a production and dropping prices Meyer and Swartz 08 (Gregory and Spencer, Adjunct Professor @ University of Phoenix + staff writer for the Wall Street
Journal, May 5, “ENERGY MATTERS: Saudi Fears Of High Oil Prices Fade With Demand” http://www.cattlenetwork.com/Content.asp?contentid=218898) This shift towards a higher price floor creates openings for competing energy sources. Saudi Arabia's role in the global oil market has sometimes been likened to the Federal Reserve, calibrating its output depending on market signals. Critical to this unique standing has been Saudi maintenance of a cushion of "spare capacity," now estimated at about two million barrels a day. For much of the recent period, the kingdom has refrained from tapping into all or most of its spare capacity. Within oil industry circles in places like Houston, the Saudi power has also carried a somewhat ominous connotation. Faced with growing production from the U.K., Mexico and other non-OPEC countries in the mid-1980s, Saudi Arabia flooded the market in an effort to drive out high-cost production and reassert its dominant market share. The 1986 oil price crash ushered in more than 15 years of mostly-lower crude prices, instilling a memory of economic hardship on the western oil industry that continues to be reflected in Big Oil's caution during these heady times. The shift to lower petroleum prices also impeded the development of renewable energy for about two decades. In his book, The Prize, Daniel Yergin compared the Saudi tactic in the 1980s to power plays by John Rockefeller and other heavyweights in the history of oil who have used a "good sweating" to drive out competitors. "No one is worrying about over-supply," Yergin said in an interview. Instead, the market is preoccupied with meeting growth in China, India and other fastdeveloping economies. "What (the Saudis) have discovered is that the tolerance level in consumers is higher than they thought," said Thomas Lippman, an adjunct scholar at the Middle East Institute, a Washington research institute. Given the specter of higher demand in Asia and the increased cost of bringing on new oil production, many analysts believe the long-term price of oil is in the $45-$60 a barrel range. Recent comments by Naimi suggest the Saudi official sees an even higher floor than that. "A line has been drawn now below which prices will not fall," Naimi said in March in an interview with PetroStrategies, a French energy publication. Citing the marginal costs of biofuels and Canadian tar-sands, Naimi defined the floor as "probably between $60 or $70." Naimi in April said Saudi Arabia was putting off a plan to expand oil capacity beyond 12.5 million barrels because of concerns about demand growth. "Unless we see really genuine demand, we have to pause right now and see what happens," Naimi told Petroleum Argus. Some energy analysts say the Saudi move suggested a more sober outlook on oil prices. "If they see a lot of risk on the demand side then you could see very low prices and potentially a lot of underutilized capacity down the road," said Ken Medlock, a fellow at Rice's Baker Institute.
Saudi Arabia will over-supply the market if they fear alternative energy Meyer and Swartz 08 (Gregory and Spencer, Adjunct Professor @ University of Phoenix + staff writer for the Wall Street
Journal, May 5, “ENERGY MATTERS: Saudi Fears Of High Oil Prices Fade With Demand” http://www.cattlenetwork.com/Content.asp?contentid=218898) The Saudi national most vocal in outlining the potential threat of renewable energy has been former petroleum minister Sheikh Ahmed Zaki Yamani, who held Naimi's job from 1962 to 1986. Perhaps Yamani's most oft-quoted statement was his prediction that "The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil." The comment has been cited as early as the 1970s, but Yamani has continued the mantra. Speaking last week, Yamani said his advice to OPEC is "to increase production and lower prices because this is harmful midterm (and) long term to OPEC itself," according to a report in Energy Intelligence. "It will increase the activities to find alternative sources of energy, and OPEC will remain helpless at that time." Yamani was unavailable for an interview, but the Centre made available its Executive Director, Fadhil Chalabi, who was Acting Secretary General of OPEC in 1983-1988. Chalabi said leading OPEC producers are being short-sighted in seeking everhigher oil prices. While demand growth has been impressive in developing countries so far, Chalabi warned that China's use of coal, nuclear energy and other sources will displace oil. "It's a matter of time," Chalabi said.
OPEC Flood DA—Link Magnifier—1 MBD Production Increase → Oil Price Collapse
A one million barrel/day increase in Saudi oil production can cause a price collapse—1998 proves Morse and Richard 02 (Edward and James, Executive Adviser at Hess Energy Trading Company and was Deputy Assistant
Secretary of State for International Energy Policy in 1979 – 81 + portfolio manager at Firebird Management, Foreign Affairs, March/April, lexis) Then, in the 1990s, OPEC member Venezuela challenged Saudi Arabia by deciding to maximize its production. Although Venezuela
had an OPEC quota of 2.3 mbd, Caracas embarked on an ambitious policy designed to eventually triple its production capacity. Caracas knew it could not do this on its own, so it reopened its nationalized resource sector to foreign investment. By the winter of 1996 -- 97, Caracas was producing 3 mbd, knocking Saudi Arabia from its position as number one supplier to the United States. In response, Riyadh first tried reasoning with Caracas. When diplomacy failed,
Saudi Arabia raised its production by close to 1 mbd and induced the oil price collapse of 1998. Riyadh's actions were tough but effective. By engineering a price drop, it had to withstand a painful drop in income -- but it achieved its main goals. Saudi Arabia
reasserted its OPEC leadership, reestablished itself as the prime supplier of oil to the United States, and induced non-OPEC producers Mexico and Norway to support OPEC's revenue-maximizing goals.
Increased production by 1 million barrels/day can cause a price collapse—Saudi efforts during the late 90's prove University Wire 4/22/02 (lexis)
Why did oil prices drop on Chavez's ouster? (And rise once again when he was borne back to the presidential palace by a popular uprising Sunday?) The short answer is that Chavez has not hesitated in the past few years to kowtow to OPEC in keeping oil production down and prices high. The OPEC oil cartel-which includes Venezuela and rogue states such as Libya, Iraq and Iransets quotas for its member states to manipulate the market and keep oil revenues as high as possible. Because it takes only one major oil producer breaking ranks and increasing output to send prices plunging, the world market is very sensitive to the political situation in oil producing states. The guardian of the cartel's well being is Saudi Arabia, a state the United States inexplicably calls an ally, whose ruling family has chosen not to own up to the country's complicity in promoting global terrorism. Owing to its significant spare capacity, Saudi Arabia can endure prolongs price slumps much more easily than other oil producers. Despite the Saudi advantage, Venezuela tried unsuccessfully to challenge Saudi dominance of the world oil market in the 1990s, exceeding its OPEC quota of 2.3 million barrels per day (MBD) and attempting to rapidly increase production. The Saudis increased their own output by 1 MBD and caused the price of oil to collapse in 1998, causing Venezuela to give up and return to its quota.
OPEC Flood DA—Link Magnifier—Perception of Higher Supply → Price Collapse
Oil prices are perception based—OPEC’s actions result in a price collapse via the inverse of the current speculative bubble Shiller 04 (Roberts, Prof. Econ @ Yale, The Edge (Malaysia), “The perception of declining prices triggers a massive sell-off
and price collapse”, 11/8, lexis) But what matters for oil prices now and in the foreseeable future is the perception of the story, not the ambiguities behind it. If there is a perception that prices will be higher in the future, then prices will tend to be higher today. That is how markets work. If it is generally
thought that oil prices will be higher in the future, owners of oil reserves will tend to postpone costly investments in exploration and expansion of production capacity, and they may pump oil at below capacity. They would rather sell their oil and invest later, when prices are higher, so they restrain increases in supply. Expectations become self-fulfilling, oil prices rise and a speculative bubble is born. But if owners of oil reserves think that prices
will fall in the long run, they gain an incentive to explore for oil and expand production now in order to sell as much oil as possible before the fall. The resulting supply surge drives down prices, reinforces expectations of further declines, and produces the inverse of a speculative bubble: a collapse in prices.
Perception of lower oil prices causes speculators to pull the plug—causes an immediate price collapse Leonard 06 (Andrew, Senior Editor @ Salon.com, “The Oil Bubble, 8/21,
http://www.salon.com/tech/htww/2006/08/21/oil_bubble/index.html) The theory goes like this: First, there's the supposition that some portion of the spike in oil prices over the last couple of years is speculator driven. Traders are stockpiling oil for sale to buyers at some later date, hoping that in the intervening period prices will continue to rise. Such speculation naturally pushes the price of oil even higher. This is a classic pattern in markets, going back at least as far as the great tulip mania of the 17th century, and there's no reason why oil should be any different from any other traded commodity. And as with all bubbles, once traders start thinking that the price might fall, whoooosh -- the air rushes out.
Oil prices are highly volatile—even seemingly small events can have significant price impacts WASHINGTON POST 89 (11/12, lexis)
That means that sudden increases or decreases in the New York futures price have a strong impact on the market, even though the contracts being traded may call for delivery two or three months later. "If you see the [futures] contract price going down in New York," Murphy said, "you have an incentive to sell off inventory," thus depressing the price of real "wet barrels" along with the futures price. "Why hold and pay storage costs if the price is going to be lower two months from now? But if the futures price is going up, the price today goes up immediately. There's a dramatic and immediate effect on actual wet barrels. Expectations are reflected in price in a matter of minutes. They become fact right now because you start seeing spot trades at the higher price, so you re-price your own inventory. In the past you wouldn't have seen such immediate effects because of long-term, fixed-price contracts."
OPEC Flood DA—Link Magnifier—Oil Price Decline Snowballs
Once oil prices start to fall following increases in OPEC production, it’s nearly impossible to stop the tumble Oil and Gas Journal 00 (“OPEC eyes another output hike to cut oil prices” 7/24, lexis)
The move to boost production likely will trigger a scramble for markets that could cause a tumble of oil prices back to $ 20/bbl, said Fred Leuffer, senior managing partner and oil analyst at Bear, Sterns & Co. The proposed increase would boost OPEC's total
production to 25.9 million b/d from the 25.4 million b/d that group members agreed to in June when they raised production by 708,000 b/d. Saudi officials had earlier indicated that they would undertake an increase of 500,000 b/d -- unilaterally, if necessary -- in an attempt to drive down high prices. Under the quotas proposed by Rodriguez, the Saudis would bear the brunt by adding 162,000 b/d of production to a total 8.4 million b/d. "The flood gates are now open. Saudi Arabia's decision to produce more oil means OPEC unity is out the window. The race is on to see which countries can capitalize on these high oil prices while they last," said Leuffer in a report issued last week. He said every OPEC member except Nigeria has cheated on its new production quota in the last 2 months. Saudi officials would like to push back world oil prices to a level of $ 25/bbl to prevent the US from increasing domestic oil exploration and development of alternative energy sources. But it is difficult to engineer a market price reduction, as other nations try to cash in before oil prices drop, Leuffer warned. "Once
oil prices start to fall, it will be hard to stop them," he said.
OPEC Flood DA—Impacts—Low Oil Prices Undermine Alternative Energy
Cheap oil encourages consumption and discourages renewables Sahimi 3/9/00 (Muhammad, chairman @ chemical and petroleum engineering department at the University of Southern
California, The Record) Finally, consider the environmental effects of cheap oil. The main culprit of air pollution is fossil fuels, mainly oil, which in the United States accounts for 85 percent of fuel use. There are hidden costs of cheap oil, which we pay for through air and water pollution, global warming, and acid rain. Cheap oil induces people to overuse it and thus discourages development of alternative sources of energy that are environmentally friendly. It affects the economy negatively. It costs us huge sums in health care. It causes social and political instability abroad. Is this the
world that we envision for ourselves and our children?
Low oil prices undermine energy conservation and alternative energy developments Al-Chalabi 89 (Fadhil, Past Permanent Undersecretary of Oil, OPEC at the Crossroads, p. 90)
The 'confrontation' aspect of the so-called OPEC price war strategy went beyond oil production, to affect the consuming countries. For, after the initial jubilation at the price crash, they awoke to the fact that low oil prices could jeopardize their investment programmes in energy diversification and could well lead to greater dependence on imported oil, an eventuality they had been fighting against for the previous 12 years. The benefits of the lower cost of oil imports could well be offset by the accompanying slowdown, or even halt, in the drive towards more energy conservation and diversification, for the national security of supply.
Cheap oil turns the case—undermines renewable development and encourages fossil fuel consumption Maugeri 03 (Leonardo, group senior vice president for corporate strategies and planning at Italian energy company ENI, Energy
Compass, 9/18) In fact, cheap oil is the most elusive enemy of oil security. It constricts the development of expensive energy alternatives and new oil regions, discourages conservation, perpetuates lax Western consumption habits, and increases dependence on the Mideast Gulf countries with the lowest production costs. Cheap oil harms producing countries, too. Today, less than 25% of global production but 65% of the world's
proven oil reserves are concentrated in five countries -- Saudi Arabia, Iraq, the UAE, Kuwait, and Iran. Like all Opec members, they need decent oil prices, since their economies remain heavily based on oil while their demography has changed dramatically.
Low oil prices undermine renewable energy developments and incentives to conserve energy Renneris 03 (Michael, Worldwatch Institute, UNITED PRESS INTERNATIONAL, February 6, 2003)
Sustained low prices would critically undermine the fledgling efforts to build wind, solar, and hydrogen industries, kick away the economic incentive to use energy more prudently, and effectively destroy the Kyoto protocol. Wind power in particular has come a long way, growing by more than 30 percent annually in recent years and now cost-competitive with most conventional sources of energy. Such advances could fall victim to artificially cheap oil -- a fuel whose considerable ecological and security costs are not properly accounted for.
OPEC Flood DA—Uniqueness—Spare Capacity Now
OPEC has 2 million barrels of spare capacity AND they're investing to massively expand capacity now allAfrica.com 6/1/08 ("Nigeria: OPEC to Spend $160 Billion to Increase Capacity,"
http://allafrica.com/stories/200806021036.html) The Organisation of Petroleum Exporting Countries (OPEC) members will invest US$160 billion in oil development projects in the next three years to increase their production capacity by 15% in response to growing demand, the secretary-general of the cartel,Abdalla Salem el Badri, has said.
The announcement by Badri came a day after British Prime Minister Gordon Brown sought to put high oil prices at the top of the agenda for a summit in July of the Group of Eight (G8) most powerful nations. Mr Brown had said that a lack of investment in future production capacity was the main factor driving prices to record highs, but Mr Badri disputed this. "Even though we see no shortage of oil in the market, since the middle of 2007 we have seen a major disconnect between oil prices and market fundamentals. A number of factors have contributed to this, but primarily [it is] the massive role that speculators now play in the oil market," Mr Badri said. Badri was quoted to have said that OPEC countries would add five million barrels per day (bpd) of extra crude production capacity by 2012.
"Our members have already undertaken a $160 billion investment programme to expand crude production capacity by close to five million bpd by 2012," he said in emailed responses to The National. OPEC pumped about 32 million bpd in April, equivalent to 40 per cent of world oil consumption, and has about two million bpd of spare capacity.
OPEC has substantial spare production capacity and stands ready to act to lower prices if necessary Forbes 5/8/08 ("OPEC says oil market well supplied; 3 mln bpd spare capacity available if needed,"
http://www.forbes.com/markets/feeds/afx/2008/05/08/afx4986536.html) OPEC Secretary General Adbullah al-Badri said in a statement that the 13 member cartel had over 3 million barrels of spare capacity per day if needed.
'OPEC spare capacity continues to increase, with the figure currently standing above 3 million bpd. At the same time, crude oil movements indicate that some member countries are unable to find buyers for their additional supply,' he said in the statement.
'OPEC will continue to be proactive and monitor these developments closely. The organization stands ready to act if the market shows a need for any further measures,' he added.
OPEC has plenty of spare capacity Phillips 6/5/08 (John, Analyst @ FXStreet.com, "Rate Decisions Approaching; Payrolls in Sight,"
·In energy news overnight Mexico's President noted that the declining production at Pemex is concerning. The company's production fell by 200K barrels in the first quarter. Later the CEO of Pemex reported that the company's exports of oil will average 1.4M-1.45M bpd in 2008. OPEC's Khelil said overnight that OPEC has 2M-3M barrels of spare capacity. Khelil said that oil prices are likely to stay around $120/barrel, and will not fall below $100/barrel, adding that the IEA's 2008 world oil demand forecast is optimistic.
OPEC spare capacity continues to increase Business Day 6/3/08 ("Dollar appreciation reverses rise of crude oil prices," http://www.businessdayonline.com/economicwatch/10760.html) (OECD) commercial oil stocks remain above the five-year average. OPEC member countries continue to produce at more than 32mb/d. In addition, a number of new OPEC crude oil projects have started to come on-stream and OPEC spare capacity continues to increase.
The Organisation for Economic Cooperation & Development
OPEC Flood DA—Uniqueness—Refining Capacity ↑ Now
Saudi Arabia has plenty of refinery capacity and is making plans for capacity expansions now Steelguru 6/7/08 ("Saudi Arabia approves 2 refining ventures," http://steelguru.com/news/index/2008/06/03/NDg2Mjc
%3D/Saudi_Arabia_approves_2_refining_ventures.html) Emirates Business 24-7 reported that Saudi Arabian government is assessing plans to almost double its refining capacity regardless of the sharp increase in investment requirements. As per report, the Kingdom has already approved of 2 mega refining ventures with foreign partners in June 2008 despite a minimum
increase of 60% in costs. The amount of capital investment required for the 2 plants was initially estimated at around USD 6 billion each and is now expected to have increased by at least 60% on rising cost structures.
Saudi Arabia's domestic refining capacity is estimated at around 2.1 million barrels per day, however it also controls more than 1 million barrels per day in joint refining ventures abroad.
Saudi Arabia, China, and India are rapidly investing in substantial, new refining capacity—will be online in the near-term Kingsdalec 6/3/08 (James, Energy investor + analyst @ Energy Investment Strategies, "Global Net Oil Exports Have Declined
for Two Years," http://www.istockanalyst.com/article/viewarticle+articleid_2245873~zoneid_Home~title_Global-Net-OilExports.html)
1. Over half the decline is from Saudi Arabia. The Saudi’s are swing producers in the world and they claim that they could produce more oil if the markets required it. Some suspect the Saudi’s are unable to produce more but the true facts are unknown. What seems clear is that they do have the capacity to produce a good deal more (1 - 2 mb/d) of heavy sour crude oil on a sustained basis but there is not currently market demand for it due to lack of refining capacity for that type of oil. The Saudi’s are well along the road to constructing substantial new refining capacity, as are both the Chinese and
the Indians, all of which will be able to use heavy sour inputs. In fairly short order - 2009 or 2010 - there will be substantially more global capacity to refine the heavy sour crude that is in increasing surplus supply in the world, particularly from the Saudis.
OPEC Flood DA Answers—No Refining Capacity
Refinery capacity is low now and can't expand fast enough to allow for a collapse in oil prices Zhou 6/6/08 (Moming, Writer @ Marketwatch, "Saudi Arabia plans royal treatment for heavy crude,"
http://www.marketwatch.com/news/story/weekend-edition-saudi-arabia-plans/story.aspx?guid=%7B5608C8C0-4CCF-467CAEE1-4D15A93E5F03%7D&dist=hplatest) The kingdom's plans to increase its refining capacity won't necessarily alleviate high oil and gasoline prices. It will take years before new refineries start operating. World oil demand growth, including rising consumption in Saudi Arabia itself, could easily outstrip additional capacity, analysts say. "The refineries [in Saudi Arabia] won't be ready in five years, and we are expecting delays on all fronts," said A.F. Alhajji, an energy economist at Ohio Northern University and a long-time observer of Saudi Arabia. Demand is too lofty to be accommodated by the planned increase in capacity, he said. "I believe oil prices in the next two to three years will stay high," he said.
OPEC Flood DA Answers—No Spare Capacity
Global spare production capacity is tight AND such capacity is in largely unusable heavy crudes Melbourne Herald Sun 6/7/08 ("Global demand sees oil on fire,"
http://www.news.com.au/heraldsun/story/0,21985,23823430-664,00.html) THE recent oil price jump is due to rising demand in developing countries and the lack of spare supply capacity.
That means that even small disruptions to oil output drive prices higher. Given the slow growth in oil supply, in prospect, only a world recession that cuts demand will bring oil prices down sharply. Unfortunately, a world recession is looking increasingly likely. The oil price is not just being driven by speculators. The underlying demand and supply balance is tight. There is very little around two million barrels a day of spare capacity available, while demand is around 86 million barrels a day.
spare capacity, with only
Most of this spare capacity is heavy crudes and refiners want lighter crudes to produce diesel where demand is booming.
There's less than 700000 million barrels of spare capacity Schonberger 6/5/08 (Jennifer, Smallcapinvestor.com, "Oil remains the most profitable play (Part One of Two),"
http://www.smallcapinvestor.com/articles/06052008-oil_remains_the_most_profitable_play_part_one_of_two) Votruba said that a major factor behind high oil prices for the foreseeable future is scaled-back oil production and burgeoning global demand for tightened supply. Mexico’s production, for example, has slipped 9.1% in the first four months of the year.
“You’ve got a lot of countries that nationalized their oil production; that leads to decreased production and now we’re paying the price,” Votruba said. In addition to Mexico, Russia and Saudi Arabia have cut back production. China and India are also slurping up oil, as billions of both countries industrialize and new people begin driving automobiles. Government subsidies have also come into play, as gas in the Middle East, for example, goes for a very affordable $1 per gallon.
According to Votruba, there is currently less than 700,000 barrels of spare capacity in the market. ***Votruba, vice president and co-portfolio manager of the UMB Scout Small Cap Fund (UMBHX), told SmallCapInvestor.com
OPEC spare capacity is at low levels now Daily Yomiuri 6/2/08 ("Govt report makes case for sectoral emissions cuts,"
http://www.yomiuri.co.jp/dy/world/20080602TDY07301.htm) Demand for oil has continued to rise since 1990, centering on China and other emerging countries, while the spare production capacity of the Organization of Petroleum Exporting Countries has remained at low levels--a tight demand-supply situation that has accelerated the flow of speculative funds into oil.
Generic Links—US Investments in Alt Energy → Speculation for Lower Oil Prices***
US investments in alternative energy cause speculators to value oil lower—sharply tanks prices globally Yetiv and Feld 07 (Steve and Lowell, Professor of political science at Old Dominion University and senior international oil
markets analyst at the U.S. Energy Information Administration until March 2006, “America's Oil Market Power: The Unused Weapon Against Iran,” World Policy Journal, p. proquest)
As is typical of world oil markets, this situation soon changed. Low oil prices and resurgent economic growth spurred rapid oil demand growth in Asia and elsewhere. But supply couldn't keep up with demand. Oil companies' under-investment in world capacity and a series of oil crises in
Venezuela, Nigeria, and Iraq led to a reversal of the spare capacity situation by 2003. Predictably, oil prices rose sharply,
approaching $40 per barrel by the end of 2004, $60 per barrel by late 2005-when spare capacity bottomed out at 1-1.5 MMBD, the lowest it had ever been relative to total world oil supply-and close to $80 per barrel by the fall of 2007. If oil prices rise when spare capacity falls, what about the opposite? In fact, history shows that when spare capacity increases, as it did in the mid-1980s and in the late 1990s, oil prices fall. When spare capacity spikes, oil prices can even collapse, as occurred after-appropriately enough-the revolution in Iran during 1978 and 1979. The oil price collapse of 1985-86 resulted from the major oil price shock of the late 1970s, combined with a severe recession in the early 1980s. This concurrence slashed U.S. oil consumption by 3.6 mmbd in just five years, from 18.8 MMBD in 1978 to 15.2 mmbd in 1983. As a result, world spare oil production capacity surged, eventually leading to the collapse in oil prices-from nearly $40 per barrel in 1980 to just $10 per barrel by early 1986. Today, there is strong reason to believe that an increase in world spare oil production capacity would cause oil prices to decline once again (if not to the same dramatic degree). Imagine that the United States cut its oil consumption from currently projected levels of 24 MMBD by 2020 by 3 MMBD over the next decade.1 Eventually, the American cut in consumption would increase world spare capacity from its current level of around 2 MMBD (almost all of which is in Saudi Arabia and Kuwait) to more than 5 MMBD. This would return world spare oil production capacity to levels not seen since late 1998 and early 1999, when oil prices plummeted to $10 per barrel. True, it is unlikely that we will see $ 10 per barrel again, but with a major reduction in the trajectory of U.S. oil demand and a concomitant increase in world spare capacity, we would likely see a sharp decrease from the $80-100 per barrel prices we are currently experiencing.2 How could the United States develop its latent oil market power? First and foremost, achieving this goal would require a serious shift in U.S. energy policy. Such a shift is achievable and could sharply decrease U.S. (and world) oil
consumption, dramatically altering oil market psychology. Oil futures traders who largely set the price of oil would have to consider that demand for oil would drop from current expectations. As a result, they would likely decrease the purchase of oil futures, thus causing a drop in the price of oil. Even before the impact of America's new energy policies would be felt, oil prices would almost certainly fall on the expectation by oil traders of declining future U.S. oil demand. A major policy shift by the United States could also move world oil markets out of the high anxiety state they have been operating in for several years now: increase
spare capacity and market anxiety almost inevitably will subside, because of the creation of a margin of error in the event of perceived threats to supply or actual disruptions.
Generic Links—Reductions in US Oil Consumption/Demand ↓ Oil Prices
Abrupt reductions in US oil consumption drastically reduce world oil prices Carey 2/24/03 (John, Business Week, lexis)
Yet reducing oil use has to be done judiciously. A drastic or abrupt drop in demand could even be counterproductive. Why? Because even a very small change in capacity or demand ''can bring big swings in price,'' explains Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University's Robinson College of Business. For instance, the slowdown in Asia in the mid-1990s reduced demand only by about 1.5 million bbl. a day, but it caused oil prices to plunge to near $ 10 a barrel. So today, if the U.S. succeeded in abruptly curbing demand for oil, prices would plummet. Higher-cost producers such as Russia and the
U.S. would either have to sell oil at a big loss or stand on the sidelines. The effect would be to concentrate power -- you guessed it -- in the hands of Middle Eastern nations, the lowest-cost producers and holders of two-thirds of the known oil reserves. That's why flawed energy policies, such as trying to override market forces by rushing to expand supplies or mandating big fuel efficiency gains, could do harm.
Generic Links—Renewable Energy ↓ Oil Prices
Increasing US renewable energy market share to 10 percent would result in an oil glut Jeffords 00 (Jim, US Senator—Vermont, 2/25, FNS, lexis)
We know how to end this oil hostage crisis, and we want to end it now. For 30 years, those of us gathered here have been calling for greater investments in our nation's domestic clean energy resources. In fact, just 10 years ago, my amendment to the Energy Policy Act was adopted, and I was excited. This amendment mandated that our nation move to 10 percent use of alternative energy by the year 2000. We didn't make it. Why? Because the Senate Energy Committee just changed one word, that's all they did, from "shall" to "may." And so we have a goal but we never got the mandate. This soon-to-be-released report by the Department of Energy indicates that, if we had achieved this goal, our nation would have kicked its
addiction to foreign oil. The report clearly states that, if our nation had moved -- 10 percent alternative fuels by the year 2000, this year, our nation would be largely free of OPEC's excessive influence. We wouldn't be having an oil shortage now. OPEC nations would be having an oil glut problem. We'd have stable energy costs. We'd have booming domestic energy industries, lower trade deficits and cleaner
Generic Links—US Demand Key to Global Oil Prices
U.S. demand is the single most important factor keeping oil prices high Zakaria 04 (Fareed, phD in political science from Harvard and former managing editor of Foreign Affairs, Newsweek, “Don't
Blame the Saudis “, 9/6, http://www.fareedzakaria.com/ARTICLES/newsweek/090604.html) But the more lasting solution to America's oil problem has to come from energy efficiency. American demand is the gorilla fueling high oil prices--more than instability or the rise of China or anything else. Between 1990 and 2000 the global trade in oil increased by 9.5 billion barrels. Half of that was accounted for by the rise in U.S. imports. America is consuming more because it is growing more--but also because over the past two decades, it has become much less efficient in its use of gasoline, the only major industrial country to slide backward. The reason is simple: three letters--SUV. In 1990 sport utility vehicles made up 5 percent of America's cars. Today they make up 55 percent. They violate all energy-efficiency standards because of an absurd loophole in the law that allows them to be classified as trucks.
Any change in U.S. energy policies causes massive ripples in the oil market Roberts 04 (Paul, Columnist @ Harper’s, The End of Oil p. p. 95)
Within the oil world, no decision of any significance is made without reference to the U.S. market, nor is anything left to chance. Indeed, the oil players watch the American oil market as attentively as palace physicians once attended the royal bowels: every hour of every day, every oil state and company in the world keeps an unblinking watch on the United States and strains to find a sign of anything — from a shift in energy policy to a trend toward smaller cars to an unusually mild winter — that might affect the colossal U.S. consumption. For this reason, the most important day of the week for oil traders anywhere in the world is Wednesday, when the U.S. Department of Energy releases its weekly figures on American oil use, and when, as one analyst puts it, “the market makes up its mind whether to be bearish or bullish.”
American oil demand is the key factor driving oil markets Roberts 04 (Paul, Columnist @ Harper’s, The End of Oil p. p. 95)
At the same time, however, the sheer extent of American demand coupled with the country’s own booming production (the United States is still the number three oil producer), gives Uncle Sam a degree of influence over world oil markets and world oil politics that goes well beyond anything the U.S. might achieve militarily. America is not only the biggest oil market in the world, but the fastest-growing: in the 199os, American oil imports grew by 3.5 million barrels a day, more than the total oil consumption of any country except China and Japan, and that trend has continued in the first decade of the new millennium. After the United States, no other market offers exporters like Russia or Saudi Arabia the same opportunities for both growth and volume of sales, and no oil producer, whether country or company, can afford to miss out. Today, a producer’s share of the U.S. market is a critical measure of that producer’s political standing and future prospects. Saudi Arabia, for example, is so desperate to maintain its share of the U.S. market that it sells oil to Americans at a discount. Even oil states with profoundly anti-American sentiments — Venezuela, Libya, and until recently Iraq — are exceedingly cordial when it comes to selling or trying to sell oil to Americans.
Angolan Oil Good—1NC Impact Module
--Oil revenues are key to Angolan sociopolitical stability Hallmark 9/19/07 (Terry, Ph.D. Manager, Political Risk & Policy Assessment @ IHS Energy "Country Petroleum Risk
Environment - Angola," http://cpre.wikidot.com/angola)
The ruling People's Movement for the Liberation of Angola (MPLA) wins the presidency and a majority of the seats in the legislature as a result of the next elections. With the war slowly fading from memory, the government no longer has any excuse to siphon off oil earnings. Pressure from international watchdog organizations and the citizenry begins to restrict the flow of money to the political class. Increased hard-currency earnings from growing oil
production, exports and, at least in the very near term, continuing high crude oil prices spur reconstruction efforts and double-digit economic growth — which results in increased sociopolitical stability. Investment by foreign oil companies continues, especially in the
deepwater offshore sector, with operations safer and more secure than anytime in three decades. Faint signs of resource nationalism begin to emerge — but nothing that isn’t manageable from a risk perspective.
--Angolan instability undermines overall African stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf) Outside the continent’s crisis areas, few African countries are more important to U.S. interests than Angola. The second-largest oil producer in Africa, Angola’s success or failure in transitioning from nearly thirty years of war toward peace and democracy has implications for the stability of the U.S. oil supply as well as the stability of central and southern Africa.
Consequently, the United States has an interest in helping Angola address its numerous and significant national challenges. --African
conflicts risk nuclear escalation
Deutsch 02 (Dr. Jeffrey, Contributing Editor for Russian Politics, November 18, accessed 7/25/04,
The Rabid Tiger Project believes that a nuclear war is most likely to start in Africa. Civil wars in the Congo (the country formerly known as Zaire), Rwanda, Somalia and Sierra Leone, and domestic instability in Zimbabwe, Sudan and other countries, as well as occasional brushfire and other wars (thanks in part to "national" borders that cut across tribal ones) turn into a really nasty stew . We've got all too many rabid tigers and potential rabid tigers, who are willing to push the button rather than risk being seen as wishy-washy in the face of a mortal threat and overthrown. Geopolitically speaking, Africa is open range. Very few countries in Africa are beholden to any particular power. South Africa is a major exception in this respect - not to mention in that she also probably already has the Bomb. Thus, outside powers can more easily find client states there than, say, in Europe where the political lines have long since been drawn, or Asia where many of the countries (China, India, Japan) are powers unto themselves and don't need any "help," thank you. Thus, an African war can attract outside involvement very quickly. Of course, a proxy war alone may not induce the Great Powers to fight each other. But an African nuclear strike can ignite a much broader conflagration , if the other powers are interested in a fight. Certainly, such a strike would in the first place have been facilitated by outside help - financial, scientific, engineering, etc. Africa is an ocean of troubled waters, and some people love to go fishing.
Angolan Oil Good—Uniqueness—High Oil Prices → Angolan Econ Growth
High oil prices are driving Angola’s fast-growing economy State Department Documents and Publications 4/3/08 (p. lexis)
ECONOMY Angola has a fast-growing economy largely due to a major oil boom, but it also ranks in the bottom 10% of most socioeconomic indicators. The International Monetary Fund (IMF) estimates that Angola's real GDP increased by 23.4% in 2007. Angola is
recovering from 27 years of nearly continuous warfare, and it remains beset by corruption and economic mismanagement. Despite abundant natural resources, and rising per capita GDP, it was ranked 161 out of 177 countries on the 2006 UN Development Program's (UNDP) Human Development Index. Subsistence agriculture sustains one-third of the population. The rapidly expanding petroleum industry has reached its Organization of Petroleum Exporting Countries (OPEC) cap, producing approximately 1.9 million barrels per day (bpd), although capacity is projected to reach 2 million bpd in 2008. Angola's crude oil production is one of the highest in Africa, behind
only Nigeria, and roughly equivalent to Libya's production in 2007. Crude oil accounts for 51.7% of GNP, 95% of exports, and 80% of government revenues. Angola also produces 40,000 bpd of locally refined oil. Oil production remains largely offshore and has few linkages with
other sectors of the economy, though a local content initiative promulgated by the Angolan Government is pressuring oil companies to source from local businesses.
Angolan Oil Good—Links—US = Angola’s Biggest Oil Customer
The US is Angola’s biggest single oil customer African Oil Journal 8/14/07 ("Angola's Oil Exports Worth 29 Billion usd in 2006," http://www.africanoiljournal.com/0814-2007_angola_oil_exports_worth_29_bill.htm) Revenues from Angola’s oil exports in 2006 reached US$ 29.928 billion, an increase of 32.5 percent in a year-on-year comparison,
media reported. State news agency Angop said Monday that Angola exported some 487.8 million barrels of oil last year at an average price per barrel of US$ 61.4. The United States continued to be Angola’s biggest single oil customer, buying US$ 9.403 billion worth of oil last year, followed by China with imports worth US$ 8.966 billion, some US$ 1.4 billion more than China’s total for the whole of 2002.
Oil revenues are driving Angolan economic growth AND the US is Angola’s largest oil customer Hallmark 9/19/07 (Terry, Ph.D. Manager, Political Risk & Policy Assessment @ IHS Energy "Country Petroleum Risk
Environment - Angola," http://cpre.wikidot.com/angola)
Economic Instability (Rating: 2.7) After the civil war ended in 2002, real GDP ran just over 4% in 2003 — thanks mainly to diamond sales, which started again, and oil production that resulted in $10 billion or better per annum in export earnings, With very firm crude oil prices and oil production and exports continuing to ramp
up, real GDP growth ran over 10% during 2004. This year, the government is predicting real GDP growth in the range of 13%, thanks to still-higher crude prices and steadily increasing production. Inflation, which averaged nearly 270% in 2000, and ran over 100% in 2002, is down to double digits — somewhere between 15% and 20% — as a result of tightening the country's monetary policy and a more
stable exchange rate. All of this is good news. But not much has changed for the better in other areas of the Angolan economy. Labor costs are high and job skills remain below par. Despite the expansion of the GDP in recent years, some 10 million Angolans continue to live in poverty on just $1-$2 per day — a problem compounded by the fact that some $4.3 billion in oil revenues disappeared from state coffers late 1990s and early 2000s. Pressure from the IMF, the international community and various nongovernmental organizations has caused Luanda to run a tighter and cleaner ship of late, but the level of transparency (or lack thereof) that exists still leaves a great deal to be desired. Energy Vulnerability (Rating: 0.5) According to IHS sources, liquids production averaged 1.64 MMBOPD in July 2007. Liquids output is expected to reach 2.0 MMBOPD sometime next year. Most of the natural gas produced is associated gas and output tracks the production trend-line established by crude oil. Oil dominates Angola’s primary energy balance (71%). Oil consumption is currently in excess of 50 MBOPD — up from 31 MBOPD five years ago. If anticipated growth in oil consumption occurs as expected, domestic demand could reach 75 MBOPD by 2012. Nevertheless, there would still be an abundance of crude left for exports. Angolan exports go to a number of African countries — Mozambique, Tanzania, Zimbabwe, Cape Verde — plus Spain,
Portugal, France, Croatia, Brazil and the United States, which is Angola's largest customer (about 400,000 barrels per day).
Angolan Oil Good—Internals—Oil Key to Angola
The Angolan economy is highly dependent on oil revenues British Foreign + Commonweath Office 12/4/07 ("Sub Saharan Africa; Angola," http://www.fco.gov.uk/en/about-thefco/country-profiles/sub-saharan-africa/angola?profile=economy&pg=2) The Angolan economy is highly dependent on oil, accounting for over half of GDP and 75% of government revenue (or some US$10.6 billion in 2005) and 90% of export value. It is the second largest producer, after Nigeria, in sub-Saharan Africa. It joined OPEC at the end of 2006. The current production, all offshore, of 1.4m bpd is set to rise to over 2m bpd by 2007, as investment in deep and ultra-deep blocks comes on stream. BP is a major player. Angola’s impressive growth rate, the highest in the world at a projected 20.8% by 2007, is driven by steeply rising oil production. A project to develop LNG facilities is a political priority and will have important
environmental benefits. 85% of Angola’s gas is currently flared. An agreement with China’s Sinopec to build a second refinery has been concluded as part of the new China-Angola relationship. By early 2006, Angola had become China’s biggest source of imported oil, supplying some 15% of the total.
Oil revenues are a vital tool for promoting political stability in Angola Atkinson 06 (J.F., senior associate + alternative energy consultant at a small DC-based firm, 11/13, "Heat and Oil in Angola,"
Angola’s government has been highly centralized throughout and ever since the civil war, having been ruled by President Jose Eduardo dos Santos since 1979. Nominally a multiparty democracy since 1991, the country’s first and thus far only election was held in 1992, which only served to cement dos Santos’s rule and reinvigorate the bloody conflict with UNITA. Dos Santos has promised new presidential elections by the end of 2007, but progress has been slow, with the government insisting that elections can’t be held before more progress is made with the resettlement of refugees, the clearance of land mines, and the rebuilding of infrastructure. Despite concerns about democratic accountability, the onset of peace has been accompanied by improved economic policies that
have dramatically lowered inflation and cemented macroeconomic stability. GDP grew 15% in 2005 – the largest increase on the continent – due in large part to the oil sector, which accounts for 50% of GDP.
Angola's oil production has soared since the discovery of large deepwater reserves by Western oil companies in 1996, with reserves tripling to 5.4 billion barrels and production nearly doubling to 1.25 million barrels per day over the past decade. Although its oil sector is still dominated by Western companies, China is beginning to enter the market as a producer in a big way, with state-owned Sinopec investing in a $2.2 billion project to develop two offshore blocks containing an estimated 4.5 billion barrels of oil earlier in 2006. Indeed, most of the country’s oil production is located offshore, which allowed the sector to flourish despite the war raging in the countryside. While Angola’s resource wealth certainly played a role in prolonging its civil war, it should be noted that its oil
has become a tool for promoting political stability in recent years, as UNITA – now strictly a political party – has been increasingly incorporated into MPLA’s oil-funded patronage networks.
Angolan Oil Good—Internals—Oil Key to Angola
Oil revenues are key to Angolan stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf) In many ways, Angola is a very different place today than it was just a few years ago. It has made progress in demobilizing combatants, managing the return of internally displaced persons and refugees, incorporating UNITA into the government, and building government institutions. In January 2007, Angola formally joined the Organization of Petroleum Exporting Countries (OPEC), underlining its growing role in the global energy system. The combination of record-high oil prices, increased oil production, and Chinese loans have jump-started Angola’s development. In addition, a diverse group of foreign and Angolan actors—including political figures, civil society groups, diplomatic missions, international organizations, oil companies, international consulting firms, and bank executives—have all expressed cautious optimism that Angola is heading in the right direction regarding transparency and democratization.1 For example, the Angolan government has signed onto the UN Convention against Corruption and is updating the Ministry of Finance website regularly. In cooperation with the World Bank, Angola has established a program enabling government expenditures to be monitored in real time. International organizations operating in Angola note that civil society groups and opposition media are tolerated in Luanda, where one-third of the population lives, even though Radio Ecclesia, a notable opposition radio station, is not
permitted to broadcast in the provinces.
High oil prices are key to Angolan economic and political stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf) Angola has reached a crossroad. This moment represents a rare opportunity for Luanda to consolidate its peace and gain international standing. As a result of high oil prices, Angola has one of the fastest growing economies in the world, enabling the government to invest in equitable development should it choose to do so. With smart investments in airports and seaports, Angola could
serve the region as a transport hub. With investment in non-oil sectors, Angola could develop a diverse economy, better protected from the volatility of the oil market. By showing a strong commitment to the rule of law and transparency, Angolan leaders can encourage international investment and provide a model for other transitioning states. In the coming years, as Angola’s leaders make decisions that will have lasting consequences for Angola
and its neighbors, the world will be watching closely.
Oil is the fuel for Angola’s economy—50% of GDP, 95% of exports, 80% of government revenues Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf) At the macroeconomic level, Angola is booming. Angola’s gross domestic product (GDP) was $17.3 billion in 2004 and an estimated $24.3 billion in 2005. The IMF predicts real GDP growth of 14.3 percent for 2006 and 31.4 percent for 2007, putting Angola in the running for the fastest-growing economy in the world.4 The fuel for Angola’s economic engine is, of course, petroleum. The oil sector accounts for over 50 percent of Angola’s gross national product, 95 percent of its exports, and 80 percent of Angolan government revenues.5 Despite the ongoing smuggling of diamonds abroad, a large percentage of Angola’s reported non-oil exports and revenue comes
from the diamond industry. The mining sector has considerable untapped potential and is projected to show strong growth.
Angolan Oil Good—Impacts—Key to African Stability
Angolan stability is key to US energy security and African stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf) Peace has become a reality in Angola since the end of its bloody, twenty-seven-year civil war in 2002. However, much work remains to be done if Angola is to become a democratic state with an inclusive and prosperous society. It is in the interest of the United States to help develop a sustainable and lasting peace in Angola—not only for the security of U.S. energy supplies, but also to promote stability in southern Africa. In so doing, the United States must tread carefully, because while Angola’s leaders respect and, at heart, want a strong relationship with the
United States, there are many in Angola who—based in part on the history of U.S.-Angola relations—are suspicious of American policy.
Angolan stability is key to US energy security and African stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
The national challenges Angola faces are significant. Although Angola achieved independence in 1975, in a way it is only five years old, becoming whole only when its bloody civil war ended in 2002. Since then, the nation has embarked on a long, tough journey to become a more stable country, one that offers a ‘‘pole of stability’’ in Africa. To complete this transition successfully, Angola must rebuild its physical infrastructure, create democratic government institutions capable of providing public services, address the issues of transparency that have plagued its governance, reduce poverty and unemployment, develop its human capacity through education and training, revive its nonoil sectors, promote national reconciliation, and cultivate constructive international relationships—all of which could transform Angola into a more equitable society and prevent future instability. But while it holds the prospect of success, Angola’s future is still uncertain. It will take years of commitment and determination for Angola to prove to its own people, its neighbors, and the world that it can meet the goals it has set for itself. For these reasons the Council on Foreign Relations convened this Preventive Action Commission on Angola. After deliberation on the state of Angola’s postconflict transition and the substance of U.S.-Angola relations, this commission believes that Angola deserves much greater attention in the formulation of U.S. foreign, national security, and economic policies, particularly as the United States seeks to develop a comprehensive policy toward Africa. The United States’ relationship with Angola should receive significant diplomatic consideration and resources in recognition of its rising importance. U.S. interests in both a secure energy supply and stability in the Gulf of Guinea region require no less.
Angolan stability is key to overall African peace and stability Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign
Relations, chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
To an extent, the U.S. government’s programmatic approach toward Angola is effective. Washington maintains a working relationship with Luanda and supports a variety of helpful projects in Angola. What has been lacking, however, is a process for building a stronger strategic relationship with Angola that
would help Angola realize its full potential, both domestically and on the African continent. Such a process would also serve U.S. interests in building both a more stable region and a reliable energy partnership with one of Africa’s major suppliers. The U.S. government will always focus its attention on those African countries wracked by crisis. But among those African countries not in crisis, Angola should receive diplomatic attention and resources commensurate with its growing importance to U.S. interests and to peace and stability on the African continent.
Angolan Oil Good—Impacts—Angolan Stability Key to African Biodiversity
Instability in Angola threatens African biodiversity Vetter 01 (Susan, Analyst @ Worldwildlife.org, "Angolan Scarp savanna and woodlands (AT1002),"
http://www.worldwildlife.org/wildworld/profiles/terrestrial/at/at1002_full.html) This ecoregion is a complex area where several major African ecological zones meet, and where topographical features have resulted in a high diversity of vegetation types and significant levels of endemism. Biologically, the most important portion of the ecoregion is
the west-facing scarp that supports rain forest at higher altitudes. This forest holds a significant number of endemic birds, and some other endemic animals and plants. The long period of civil instability in Angola means that these forests and other parts of the ecoregion have never been adequately surveyed biologically, and hence more endemics can be expected with further study. However, the highly unstable civil war
means that all biological investigation, management of protected areas, or other kinds of conservation interventions are impossible at the present time. This lack of access and management may be negatively, or even positively, affecting the habitats and their biological
values, but there are no data to assess this.
Angolan Oil Good—A2 Corruption Turns
Angola is improving transparency regarding its oil revenues Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations," http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
In recent years, high-level corruption has evolved—or devolved—into cronyism, with foreign investors required to collaborate with politically well-connected local partners. At a lower level, small bribes are a part of daily life. In addition, there are concerns that ‘‘amid a partial cleanup of the oil sector, the diamond industry is growing in importance as a way of hiding private revenue flows.’’13 These practices distort the economy and hinder economic development. Although Luanda’s initial efforts to improve transparency in the management of oil revenue are encouraging, the Angolan government’s opacity continues to impede assessment of the management of public funds, contributing to the perception of persistent corruption.
Angolan Oil Answers—Biodiversity/Ag Turn
Political stability in Angola encourages the spread of agriculture—this is the greatest danger to biodiversity in the region Vetter 01 (Susan, Analyst @ Worldwildlife.org, "Angolan Scarp savanna and woodlands (AT1002),"
http://www.worldwildlife.org/wildworld/profiles/terrestrial/at/at1002_full.html) The most immediate and important threat to the ecoregion’s biodiversity is the encroachment of subsistence agriculture in the fertile escarpment forest areas (Stuart et al. 1990). These are, at present, not even nominally protected. This threat is expected to escalate once stability returns to Angola and displaced rural people return to farming areas (Hawkins 1993). It is also possible that coffee plantations
will be re-established in the escarpment forests.
African Oil Answers—Corruption Turns
Lack of international pressure ensures oil revenues only exacerbate corruption and massive unrest in Africa Boston Globe 7/31/04 (lexis)
But analysts warned in recent interviews that the United States and other nations, and multilateral groups such as the World Bank and International Monetary Fund, should insist the countries publish oil receipts and how they spend that windfall. Otherwise, massive unrest may follow and billions of dollars of oil wealth will continue to be snatched by a corrupt few. "One of the overarching concerns we have is making sure that the mistakes made in our engagement with Middle East oil producers are not repeated in Africa," said Ian Gary, Africa policy adviser for Catholic Relief Services, a Baltimore private charity.
African oil revenues fuel ethnic conflict and exacerbate poverty—Nigeria and others prove Austin American-Statesman 3/21/04 (lexis)
That's a big if, especially in Africa, where oil has been a mixed blessing. Petroleum dollars in other African countries, including Nigeria, Sudan, Angola and Equatorial Guinea, have propped up corrupt governments and fueled ethnic conflict. Seldom does the money trickle down to ordinary people, who often sink deeper into poverty as the flood of oil money raises the cost of food and fuel.
African Oil Answers—Corruption Turns
African oil revenues encourage corruption—exacerbate rich/poor gap and sparks civil strife Christian Science Monitor 7/28/04 (lexis)
Whenever oil is discovered in an African country - which happens more and more these days - a certain pattern unfolds. Vast sums of money start flowing in. Government officials divert much of it into their private bank accounts. And the masses are left nearly as poor as before - and are increasingly angry.
But this month, the nation of Chad embarked in earnest on a groundbreaking - some say foolhardy - effort, policed by the World Bank, to ensure that the benefits of the country's new oil wealth reach its 9 million people. The experiment is being watched closely by outsiders, including the US, which wants to develop sources of oil outside the volatile Middle East. If things go well in Chad - and across Africa - America could import 25 percent of its oil from this continent by 2015. Otherwise, Chad risks ending up like Nigeria, with its
rampant corruption and armed insurrections from militants who covet oil revenues.
"If it works, it's going to be a great model for other countries in Africa," says a Western diplomat here of Chad's venture. Some even see potential lessons for Iraq. The money flows This month, Chad got its first $ 38 million in oil revenues. Over the next 20 years, it's expected to get at least $ 2 billion, boosting national revenues by 50 percent, according to the World Bank. But unlike other African nations, Chad is committed to spend 80 percent of oil revenues on schools, clinics, roads, and other basic needs. Five percent goes to a fund for future generations. Another 5 percent goes to develop the southern oil region, near the Cameroon border. And 10 percent is socked away in case oil prices fall. Most of the cash is held by the World Bank in a London account to avoid "leakage." And a citizens committee, with four members from nonprofit groups and five from government, must approve all oil- revenue expenditures. Already, villagers in the hamlet of Meurmeouel, here in southern Chad's scrub-brush desert, are reaping benefits. Pumps are sucking 200,000 barrels of oil a day from beneath Meurmeouel and nearby villages, and sending it via a 670-mile pipeline through Cameroon to world markets. Last year, oil giant Esso (a local partnership between ExxonMobil, ChevronTexaco, and Malaysia's Petronas) gave some $ 3 million to individuals most affected by the project. That money has funded everything from new tin roofs to beer parties. It also spent about $ 3 million as part of a community compensation program that offered a new well, a water tower, or a primary school to some 80 villages, including Meurmeouel. The village's 760 residents overwhelmingly chose the school. Today the school's brick walls and bright-green shutters stand out amid the village's straw-roofed huts. [For a related look at "Judging a village by its huts," see http://weblogs.csmonitor.com/ notebook_africa/.] "Schools make great men," says Ellie Souleingar, a tall farmer with a broad smile, explaining Meurmeouel's education focus. When the village's best and brightest go off to high school or university, and then return home, "Everyone will listen to them" for advice and new ideas, adds Marcel Kordodjin, the brother of the village's chief. In theory, Chad's oil money will jump-start new ideas and new initiative all across the country. "People here are used to presenting their wishes to authorities," says Otto Honke, a German development specialist who runs the village compensation program here for Esso. "But instead of asking for something, we'll help them plan how to do it themselves." Bricks made locally That's what happened in Meurmeouel. Villagers were hired to help build the school. The construction firm also bought bricks from local brick makers. And after the building was finished, villagers realized they needed yet another classroom. So they pooled their profits and spent about $ 50 to build an addition to the school, a one-room building with a tin roof. Even the chief, who's a brick mason, pitched in. In Meurmeouel and elsewhere, oil revenues have sparked a great sense of possibility. But even with its new bonanza, Chad won't be rich. Per capita income is $ 250 per year - or 73 cents a day - according to the World Bank. That's expected to rise to $ 550 per year by 2005. Chad ranks 167th out of 177 countries on the 2004 United Nations Human Development Index. Electricity, paved roads, and clean water are rare. And skeptics say that despite the new revenue model, life won't change much for the masses - only the elites. They worry the citizens committee won't be independent of the authoritarian regime and point out, for instance, that President Idriss Deby's brother is on the panel. The authoritarian president is used to getting his way: He's changing the Constitution to let himself run for a third term. And in 2000 he reportedly spent $ 4 million of a $ 25 million oil-deal "signing bonus" on military supplies. But the World Bank, in a calculated gamble, figures Chad's leaders would risk too much by trying to skim money for themselves. Even with oil revenues, Chad will still rely heavily on outside aid to fund even basic services. "If they are going to renege on their commitment, it would jeopardize relations with the World Bank and other donors," says Gregor Binkert, the World Bank country director here. Meanwhile, other African nations are tilting toward the Chad model. On Africa's West coast, for instance, the island nation of Sao Tome and Principe has been debating a new law intended to bring transparency to oil revenues. The country also struck a deal with Nigeria to release regular audited financial reports for an oil-rich coastal zone both countries are developing. Driven by unrest
The driving force behind these moves is clear: Inequalities created by elites skimming oil profits can spark social strife, which interrupts the flow of oil. Oil facilities in Nigeria, Africa's largest oil exporter, are regularly attacked by militants. This often forces their shutdown, causing 10 to 40 percent declines in Nigeria's production capacity of 2.5 million barrels per day. In oil-rich Angola, watchdog groups warn that some $ 4 billion went missing because of corruption or mismanagement between 1997 and 2002, even as 3.7 million citizens are malnourished. Yawning rich-poor gaps like this set the stage for civil strife.
Russian Oil Good—1NC Shell
--High oil prices are driving Russian economic growth Marketwatch 6/16/08 ("Russia's economy grows by 8.5% in first quarter,"
http://www.marketwatch.com/news/story/emerging-markets-report-russias-economy/story.aspx?guid=%7b62BBC950-CAC24D98-B4C9-42472807EBD1%7d&dist=hplatest&print=true&dist=printMidSection) NEW YORK (MarketWatch) -- Russia's economy expanded by 8.5% in the first quarter, exceeding market expectations as soaring commodity prices and domestic demand boosted growth in the resource-rich country.
First-quarter growth in Russia, which boasts one of the best performing emerging equity markets, surpassed market expectations of 8%. However, the figure marked a slowdown from the 9.5% growth rate Russia posted in the fourth quarter of 2007. "The Street has consistently underestimated Russian GDP over the last three to four years," said Julian Mayo, co-manager of U.S. Global Investors Eastern European Fund (EUROX) "The Russian economy is extremely strong," Mayo said. "People are scrambling to upgrade their commodity-price forecasts. Domestic demand [also] remains very strong." In New York, the Market Vectors-Russia ETF (RSX) rose 0.8% at $55.92. In Moscow, the benchmark RTS stock index closed up 0.4%. The index is up 3.3% this year, making it one of the best performers among emerging markets.
Russia's stock market is dominated by oil and gas stocks, reflecting the fact that the country is a big exporter of many commodities -- including oil, natural gas, and metals -- prices of which have surged in recent months. The price of oil, for example, hit a record high of $139.89 a barrel early Monday. For the resource-driven Russian economy, soaring commodity prices have been a bonanza. "It's not a very surprising figure given the kind of prices Russia's key commodity and energy exports are commanding at the moment," said Cameron Brandt, global markets analyst at EPFR Global, commenting on Russia's first-quarter GDP growth.
--Loss of oil revenues devastates the Russian economy—20 percent of GDP/majority of revenues Maass 8/3/04 (Peter, Contributing Writer @ NYT Magazine, Analyst Wire, lexis)
MAASS: Exactly. Well, Russia has oil reserves that are about 60 billion barrels. And its production, actually, puts it just about the level of Saudi Arabia. It s the second largest exporter of oil in the world.
HAYS: So very, very important supplier. And, of course, not surprising, it s not just the world reliance on Russia, which I understand has actually had a lot to do with meeting the increasing demand from China, because China s consumption has been growing so rapidly and Russian oils has had a lot to do with feeding that. MAASS: Right. Well, Russia and China, of course, share a border. And China has increasingly become one of Russia s larger clients. And Russia s even been considering building a pipeline so that it can directly funnel oil to China through the pipeline rather than through rail shipments. HAYS: And, of course, the more somebody helps satisfy Chinese demand, the more we can consume in this gas guzzling nation and it helps take a little bit of pressure off prices. But I guess that's the issue because Russian oil is so important to the Russian economy that it has become quite a
political football. MAASS: Well, Russia's almost become something of a oil state. Oil revenues account for about 20 percent of the Russian GDP and the vast majority of its revenues overall. So, basically, if you take oil out of the Russian economy, you're almost devastating the economy.
Russian Oil Good—1NC Shell
--Russian economic collapse results in civil war, global conflict, environmental destruction, and a nuclear attack against the US David 99 (Stephen, Prof of Poly Sci @ Johns Hopkins, Foreign Affairs, Jan/Feb)
If internal war does strike Russia, economic deterioration will be a prime cause. From 1989 to the present, the GDP has fallen by 50
percent. In a society where, ten years ago, unemployment scarcely existed, it reached 9.5 percent in 1997 with many economists declaring the true figure to be much higher. Twenty-two percent of Russians live below the official poverty line (earning less than $ 70 a month). Modern Russia can neither collect taxes (it gathers only half the revenue it is due) nor significantly cut spending. Reformers tout privatization as the country's cure-all, but in a land without well-defined property rights or contract law and where subsidies remain a way of life, the prospects for transition to an American-style capitalist economy look remote at best. As the massive devaluation of the ruble and the current political crisis show, Russia's condition is even worse than most analysts feared. If conditions get
worse, even the stoic Russian people will soon run out of patience. A future conflict would quickly draw in Russia's military. In the Soviet days civilian rule kept the powerful armed forces in check. But with the
Communist Party out of office, what little civilian control remains relies on an exceedingly fragile foundation -- personal friendships between government leaders and military commanders. Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending mean inadequate pay, housing, and medical care. A new emphasis on domestic missions has created an ideological split between the old and new guard in the military leadership, increasing the risk that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being used as a national police force. Newly enhanced ties between military units and local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and wages. Draftees serve closer to home, and new laws have increased local control over the armed forces. Were a conflict to emerge between a regional power and Moscow, it is not at all clear which side the military would support. Divining the military's allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to erupt. Russia's 89 republics, krais, and oblasts grow ever more independent in a system that does little to keep them together. As the central government finds itself unable to force its will beyond Moscow (if even that far), power devolves to the periphery. With the economy collapsing, republics feel less and less incentive to pay taxes to Moscow when they receive so little in return. Three-quarters of them already have their own constitutions, nearly all of which make some claim to sovereignty. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate non-Russians to secede from the Federation. Chechnya's successful revolt against Russian control inspired similar movements for autonomy and independence throughout the country. If these rebellions spread and Moscow responds with force, civil war is likely.
Should Russia succumb to internal war, the consequences for the United States and Europe will be severe. A major power like Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian Federation might provoke opportunistic attacks from enemies such as China. Massive flows of refugees would pour into central and western Europe. Armed struggles in Russia could easily spill into its neighbors. Damage from the fighting, particularly attacks on nuclear plants, would poison the environment of much of Europe and Asia. Within Russia, the consequences would be even worse. Just as the sheer brutality of the last Russian
civil war laid the basis for the privations of Soviet communism, a second civil war might produce another horrific regime.
Most alarming is the real possibility that the violent disintegration of Russia could lead to loss of control over its nuclear arsenal.
No nuclear state has ever fallen victim to civil war, but even without a clear precedent the grim consequences can be foreseen. Russia retains some 20,000 nuclear weapons and the raw material for tens of thousands more, in scores of sites scattered throughout the country. So far, the government has managed to prevent the loss of any weapons or much material. If war erupts, however, Moscow's already weak grip on nuclear sites will slacken, making weapons
and supplies available to a wide range of anti-American groups and states. Such dispersal of nuclear weapons represents the greatest physical threat America now faces. And it is hard to think of anything that would increase this threat more than the chaos that would follow
a Russian civil war.
Russian Oil Good—Uniqueness—High Oil Prices → Russian Econ Growth
The Russian economy is booming, thanks to soaring oil prices Lydon 6/6/08 (Tom, president of Global Trends Investments and proprietor of ETFtrends.com, "Russian Expansion Extends to
Although the U.S. is hurting from high oil prices,
Russia is celebrating, as soaring oil prices, mixed with a global demand for raw materials have grown Russia's middle class and put the country into a 10-year economic boom, reports Trang Ho for Investor's Business Daily. Economists are forecasting a 6.5% GDP growth for 2008, while the government is anticipating 7.6%. GDP expanded 7.6% in 2007 to $1.7 trillion. Russia is in the midst of a 10-year economic expansion and could be one of the world's top economies by 2020. The
middle class continues to expand, and personal incomes have risen more than 12% per year, giving consumers more disposable income.
High oil prices are boosting Russian economic growth Investment Adviser 6/9/08 (lexis)
The manager of Fidelity International's GBP4.7bn European fund is finding opportunities in emerging markets, specifically Russia, through both direct and indirect investments. Tim McCarron's fund, which is top quartile over one year, is benefiting from the continued high price of oil, which is helping to boost the Russian economy.
High oil prices are the driving force behind Russian economic growth The Economist 6/7/08 (lexis)
But there is one country where the high oil price is powering the expansion of the market, rather than painful restructuring. Thanks to abundant natural resources, Russia's economy has grown by an average of 7% a year for the past decade. Real disposable income has nearly doubled in the past five years and is growing by more than 10% a year. That means a lot of Russians can suddenly afford to buy cars.
Russian Oil Good—Uniqueness—Russian Economic Growth Strong Now
Russian economic growth remains strong and Medvedev is pressing ahead with reforms Prime-Tass English-language Business Newswire 6/16/08 (lexis)
MOSCOW (Dow Jones) — Strong inflows from international investors, robust economic growth and relative underperformance in 2007 should carry Russian stocks higher in the second half of this year, according to the head of the $150 million Third Millennium Russia Fund. John Connor, who manages the New York-based fund, also believes Russian equity markets will increasingly ignore what's happening elsewhere in the world - a phenomenon known as decoupling - because of the country's attractive investment case.
"People always want equity exposure and when they ask the question 'where?' Russia's going to one of the answers," Connor told Dow Jones Newswires. "It's at the top of the emerging market list this year." Fund flow data certainly support that last idea, with year-to-date investments in Russian funds totaling $2.7 billion as of early June, according to Moscow-based investment bank UralSib. That compares with $785 million arriving in Brazilian funds and net outflows from Indian and Chinese funds, the other members of the so-called BRIC group of the world's biggest emerging economies. Among the reasons for Russia's popularity, which helped make it the world's best-performing market in May, Connor cited a relatively subdued 2007, when a liquidity-sapping glut of initial public offerings and poor performance by oil stocks acted as a drag on the dollar-denominated RTS index. The RTS rose by just 19% in 2007 after surging 80% the previous year, while the MSCI emerging markets index climbed 37%. The RTS has gained 2.9% since January.
Despite an ongoing battle with inflation - a problem currently dogging much of the developing and developed world - Connor also highlights Russia's 7% economic growth and the recent shift to a new president. "The macroeconomic performance is extremely positive, while the transition has gone well - there's another stable hand at the wheel."
Former president Vladimir Putin officially handed over the reins to protege Dmitry Medvedev in May, accepting a new job as prime minister at the same time. Many have questioned how that relationship will actually work, calling Putin's position as the country's most popular politician a threat to Medvedev's own authority.
But the early signs show the new setup is aimed at continuity: Russia is continuing to push ahead with reforms, with Medvedev vowing to improve civil liberties, strengthen the legal system and cut red tape for smaller businesses.
Russian economic growth is stable now—lots of currency reserves and stability funds Canberra Times 6/12/08 (lexis)
As one of the major oil producing countries, how is the fuel crisis affecting Russia? Well yes, Russia is one of the major oil suppliers, but Russia nowadays is integrated into the world economic structure and that means basically anything happening in the economic field affects Russia, just like any other major economic players. Of course the growth of world oil prices affects the internal market, but because the overall economic
situation in Russia is very stable now, we have a lot of currency reserves and stability funds and the economy is growing, the world oil prices have affected Russia less than many other countries, at least nothing has changed the current stable situation in general terms.
Russian Oil Good—Impacts—Russian Economy Key to Global Economy
Energy revenue-related growth is driving the Russian economy—the Russian economy is now acting as a motor of global growth Gilman 1/16/2008 (Martin, former senior representative of the IMF in Russia and professor at the Higher School of
Economics in Moscow. “Well-Placed to Weather an Economic Storm,” Moscow Times, http://www.moscowtimes.ru/stories/2008/01/16/008.html.
Faced with this gloomy global outlook,
Russia is well placed to weather the storm. In fact, not only is the Russian economy likely to decouple largely from a sagging United States and even Europe, but its continuing boom -- mostly but not solely fueled by high energy revenues -- is sucking in both consumer and investment goods, and so acting as a motor of world growth. And the
planned $1 trillion public investment program over the next decade should ensure that the country remains decoupled for years to come.
Russian Oil Good—Impacts—2NC Political Instability Module
Oil-generated economic growth is critical for averting Russian nationalism and destabilization Starobin 7/3/04 (Paul, National Journal, lexis)
Calling Rodina "a mini-monster," a senior U.S. diplomat in Moscow voiced worries that nationalism "could be destabilizing for Russia." Also worrisome is the prospect of a return of anti-Semitism, a staple of both czarist Russia and the Soviet Union. "This seeking of a new national idea could turn dangerous," says Beryl Lazar, chief rabbi for Russia. A rising living standard for ordinary Russians should temper nationalist extremism -- and in that respect, the country is aided by high oil prices, which have helped produce a 30 percent growth in the economy over the last four years. Still, chauvinistic pressures are coming from so many different quarters that Putin may find them difficult to resist. The
prospect is for a Russia that is less xenophobic than the Soviet Union was, but is nevertheless suspicious of the West and that insists on distinctive Russian traditions, including authoritarianism. For Washington, which had high hopes that post-Soviet Russia would turn into a Western-style democracy, this path would be a large disappointment.
Internal instability in Russia risks nuclear miscalculation and use Pry 99 (Peter Vincent, Professional Military Advisor to the US House of Representatives, War Scare, p. 274)
Russian internal troubles—such as a leadership crisis, coup, or civil war—could aggravate Russia's fears of foreign aggression and lead to a miscalculation of U.S. intentions and to nuclear overreaction. While this may sound like a complicated and improbable chain of events, Russia's story in the 1990s is one long series of domestic crises that have all too often been the source of nuclear close calls. The war scares of August 1991 and October 1993 arose out of coup attempts. The civil war in Chechnya caused a leadership crisis in Moscow, which contributed to the nuclear false alarm during Norway's launch of a meteorological rocket in January 1995. Nuclear war arising from Russian domestic crises is a threat the West did not face, or at least faced to a much lesser extent, during the Cold War.
Russian Oil Good—Impacts—2NC Proliferation Module
--Russian economic collapse shakes global financial markets and risks proliferation Blair 99 (Bruce, Center for Defense Information, Brookings Review, Summer, lexis)
Western policymakers appear not to recognize that the fate of Russia's economy is neither exclusively Russia's problem nor exclusively an economic problem. Although Russia, with its nearly $ 200 billion of foreign debt, still has the ability to shake global financial markets--and likely will do
so--the unquestionably bigger threat posed by its weak economy concerns national security. Russia's economic woes increase the nuclear threat to the United States. --Impact
is global nuclear war
Utgoff 02 (Victor, Deputy Director of the Strategy, Forces, and Resources Division of the Institute for Defense Analysis,
Survival, “Proliferation, Missile Defense and American Ambitions” p. 90) In sum, widespread proliferation is likely to lead to an occasional shoot-out with nuclear weapons, and that such shoot-outs will have a substantial probability of escalating to the maximum destruction possible with the weapons at hand. Unless nuclear proliferation is stopped, we are headed toward a world that will mirror the American Wild West of the late 1800s. With most, if not all,
nations wearing nuclear 'six-shooters' on their hips, the world may even be a more polite place than it is today, but every once in a while we will all gather on a hill to bury the bodies of dead cities or even whole nations.
Russian Oil Good—Impacts—2NC Disintegration Module
oil prices results in Russian disintegration
Glazov 04 (Jamie, Staff @ Frontpagemagazine.com, "KGB Resurrection," 4/30, http://www.borrull.org/e/noticia.php?id=32565)
Is the Russian economy so much better now that they can sustain the cost of a second Cold War? Hardly. The Russian economy has changes considerably less than the Western observers think. It was not thoroughly restructured during Yeltsin's decade and still remains suitable mainly for a large-scale military production, or for gigantic projects of socialist Utopia (and it will remain so as long as the oil prices are high, while Americans provide $ billions a year for its "conversion"). Once those two factors change, once the oil price goes down and Americans wisen up, Russia will experience a second bankrupcy, far more devastating than the first one. And if the first one has led to disintegration of their empire, the second is most likely to lead to fragmentation of Russia proper.
--Russian disintegration risks nuclear conflict and environmental disasters Simes 94 (Dmitry, Senior Associate @ Carnegie Endowment for Intl Peace, Foreign Affairs, Jan/Feb, lexis)
For the United States, neither Yeltsin's political future nor even the future of Russian democracy should be ends in themselves. What the United States needs most in its greatly weakened but still potentially formidable superpower rival is a combination of domestic stability and a system of checks and balances. Stability is
important for a nation with thousands of nuclear weapons and continuing territorial tensions with its newly independent neighbors. Too much disunity in Russia (as appealing as it is to those who "love" that country so much that they would prefer to see several Russias) increases the likelihood of a civil war that could easily engulf most, if not all, of the post-Soviet states, creating not only nuclear and environmental disasters but a grave threat to world peace as well. Thus, it is in the U.S. interest to have a government in Moscow that is strong
and determined enough to draw the line and to prevent centrifugal, separatist trends from going out of control.
Russian Oil Good—Internals—High Oil Prices Key to Russian Economy
High oil prices are critical to the Russian economy—facilitate improved fiscal policy, offset high-risk premiums, remove balance-of-payment constraints, cause sharp reductions in external debt Kekic 8/4/04 (Laza, director for Central and Eastern Europe at the Economist Intelligence Unit, Moscow Times, lexis)
The OECD, a club of 30 wealthy nations including the United States and Britain but not Russia, argues that Russian growth over the medium term will inevitably depend on the natural resources sector and that policymakers should accept this fact. To underpin its case, the OECD downplays the role that high oil prices play in Russia's strong economic recovery. Instead, the OECD
emphasizes -- in part on the basis of a highly dubious growth-accounting exercise -- the role of allegedly oil price-insensitive efficiency improvements, especially in the private oil sector. If this were correct, and Russian growth were insensitive to the level of oil prices, then the inevitable decline in international oil prices would have far less of an impact on growth than is usually supposed. The OECD accepts that Russian growth is sensitive to changes in oil prices, but argues that growth is not -- or is only very weakly -- dependent on the level of oil prices. The distinction is not esoteric. It is of fundamental significance for future prospects. For example, Russian growth next year should fall as a result of a likely sharp fall in the average oil price from the high 2004 average. If oil prices more or less stabilize at a permanently lower level, however, there is nothing as such that affects subsequent output growth. The OECD accepts that growth is sensitive to the price of oil only at very low price levels that render oil production completely unprofitable. But this relationship operates along a continuum. The empirical link between levels of oil prices and output dynamics in Russia has been extremely strong for
the last decade. It is not difficult to trace some of the channels through which oil price levels have most likely affected growth. High oil prices have facilitated improved fiscal policy, which is emphasized by the OECD as a prime source of improved economic performance since 1998, and not merely through the direct effect of oil prices on budget revenue. High prices offset high-risk premiums and encouraged measures to extract more oil from the ground; removed any balance-of-payments constraint on growth; and facilitated sharp reductions in external debt (the OECD itself appeals to recent evidence that links growth to debt/GDP levels).
Russian Oil Good—Internals—Every Dollar Increase in Oil Price Good for Russian Economy
The Russian economy is heavily dependent on high oil prices—every $5/barrel drop equals 1% loss of GDP Prime-Tass English-language Business Newswire 12/23/04 (lexis)
The Stabilization Fund comes from extra revenues from Russia's progressive oil export taxes coming from Urals oil blend prices exceeding USD 20 per barrel. A sharp drop in oil prices could negate this income, however. If oil prices drop far from 2004's record highs, analysts expect Russia's economic growth to be even further retarded. 'Every USD 5 that the price of oil drops could relate to around a 1% drop in Russia's GDP,' Lissovolik of UFG said. Analysts added that while this dependence on oil has dropped recently as the Russian economy has diversified, Russia is still quite dependent on high oil prices.
High oil prices are critical to the Russian economy—every dollar increase in price generates billions in revenue McCormack 03 (David, 4/9, Member of Chicago Council on Foreign Relations, Wash Times)
The Russian economy, and hence government, has been rescued over the last four years almost solely by high oil prices, as demonstrated by a strong statistical correlation linking these increases to the economic growth experienced in Russia over that period. Indeed, estimates suggest that every dollar increase in the price of a barrel of oil results in $1.5 billion-$2 billion in additional yearly export revenue for that country. In absence of a system capable of generating economic expansion, Russia will continue to depend on commodities namely oil to sustain what growth it has realized.
$6 dollar fall in the price of oil cuts Russian economic growth in half Brzezinski and Wolosky 1/17/03 (Mark and Lee, Directors of Eurasian + Transnational Threats @ National Security
Council under Clinton, IHT, lexis) Russia's oil-dependent economy cannot afford a decline in world oil prices due to a glut of Iraqi oil on world markets. Analysts estimate that a $6 fall in the price of a barrel could reduce Russian economic growth by half. The Russians remember the Saudi oil glut of 1985, when Saudi Arabia allowed its excess capacity to flood the market and drive oil prices down to $12 a barrel, ruining any hopes of a Soviet economic revival.
Russian Oil Good—A2 US Recession Undermines Russian Economy
US recession wouldn't undermine Russian economic growth due to oil-driven growth Emerging Europe Food and Drinks Insights 5/31/08 (lexis)
Looking at the Russian example we can see that the recession's impact is fairly limited due to Russia's strong trading ties with Asian countries such as China and Korea, as well as with the former Soviet republics. Although a deep recession would knock off a cumulative $13US.6bn, this figure looks much smaller when we see that the size of the Russian food and drink market in 2012 alone, even factoring the recession, would be an estimated $366US.8bn. The difference for 2012 would $4US.2bn, which represents just 1.15% of the post-recession market. While the Russian economy would no doubt feel somewhat of a
knock-on effect, with the US recession having a clear impact on the Chinese economy, this would not be a direct impact, thanks to Russia's own oil-driven domestic economic growth.
Russian Oil Good—A2 Diversification Turns
Tax revenue from oil sales create economic incentives for diversification of Russia's economy Wash Post 3/16/02 (lexis)
Russia's whole strategy for economic revival is based on the assumption that the nation's oil production will expand and that the government's budget will expand with it. The government plans to use the extra tax revenue to create economic incentives that will help diversify the economy and reduce the nation's dependence on petroleum.
Oil revenue fuels growth in multiple sectors of the Russian economy—construction, real estate, retail, financial services Schneider 6/8/04 (Andrew, Kiplinger Business Forecasts, lexis)
Energy will remain the key factor underpinning Russia's economy, with oil and natural gas exports bringing in billions of dollars annually in foreign income. This is providing the fuel for booms in construction and real estate as well as in several service-sector industries ranging from financial services and telecommunications to retail. "Oil revenues are fueling growth in all these sectors," says Caren Gaboutchian, a London-based economist with ING Financial Markets. He notes that the link is particularly visible with regard to the construction boom. "Oil companies pay their employees. The employees want to invest their cash, and one of the best investments is the real estate sector in Moscow, either residential or commercial," he points out.
Russian Oil Good—A2 Economic Reform Turns
Oil revenues empower the Russian leadership to successfully carry out genuine reforms Sharma 6/28/04 (Ruchir, co-head of emerging markets at Morgan Stanley Investment Management, Newsweek, lexis)
While Putin undoubtedly wants to settle some political scores with Khodorkovsky, his overarching objective remains to turn Russia into an economic power. That came through in his speech on Thursday. Putin's track record and reform initiatives decisively show that he is one of the few emerging-market leaders in the world today who understand the connection between economic and political success. Little wonder that Russia's macroeconomic fundamentals have never looked stronger. Russia should once again be one of the fastest-expanding economies in the world this year, with GNP growth north of 7 percent. Inflation is the lowest in recent memory. Russia's twin surpluses--a 4 percent budget surplus and an 8 percent current-account surplus--mark a new high for any emerging market and should help Russia further reduce its shrinking debt burden. To be sure, the high price of oil has played a significant role in improving Russia's economic profile. Still, Putin's policies and emphasis on stability have been more important contributors to the country's economic transformation. After all, Saudi Arabia and much of the Middle East have never been able to make much out of oil booms. Putin has focused on carrying out genuine reforms and maintaining fiscal rectitude to strengthen Russia's economy instead of using the windfall from Russia's oil exports as an excuse for inaction.
Russian Oil Answers—Economic Reforms Turn
Oil revenues discourage Russian economic reforms which are key sustainable growth Channel NewsAsia 8/8/04 (lexis)
Stephen O'Sullivan of the investment group UFG said: "Record oil prices are good for the state's coffers but they do not encourage reforms" that are key to the development of Russia's economy. The international ratings agency Standard and Poor's stressed in mid July that there was a growing risk of Russian reforms slowing down as they ran into resistance from political and industrial interests as well as from public opinion. A government awash in oil revenue could easily be tempted to delay unpopular structural economic reforms.
Russian Oil Answers—Diversification Turn
--High oil prices create massive Russian revenues—discourage diversification of the economy Molchanov 6/11/04 (Pavel, Financial Analyst, National Business Review, lexis)
Russia's most central obstacle to building a sustainable, industrialised economy is its excessive dependence on petroleum. It is an unfortunate reality that almost 15 years after the end of the command economy, raw commodities are about the only product Russian businesses can successfully sell abroad. Crude oil and natural gas represent nearly 30% of GDP - higher even than in some Opec countries - and an even greater proportion of government revenue. With world oil prices near an all-time high, the Kremlin's coffers are bulging. This may explain why the government seems content with the economy's lack of diversification. With the exception of setting up a "rainy day" fund with some of the oil windfall, the
government is doing virtually nothing to encourage expansion of other sectors.
--Diversification of sources key to the Russian economy Moscow News 6/23/04 (lexis)
Gref also forecasted a decrease in world oil prices that may have a negative impact on the Russian economy, if it does not relinquish its dependency on export of raw materials such as oil. Oil exports in 2001 and 2002 totaled $ 30 billion (six to seven percent of GDP) and in 2003 totaled $ 50 billion (about nine percent of GDP). The Minister also expressed confidence that the current structure of the Russian economy presupposes that the actions of the government are "critical" for diversifying and accelerating the economy.
Russian Oil Answers—Low Oil Prices Key to Russian Economy
Falling world oil prices makes nonoil sectors of the Russian economy more competitive—spurs doubledigit economic growth rates Illarionov 6/8/04 (Andrei, Presidential Economic Adviser, Official Kremlin Int'l News Broadcast, lexis)
A: The impact of high oil prices on the rate of economic growth is twofold. On the one hand, high prices do ensure an inflow of financial resources into the sector of the Russian economy engaged in production, transportation and export of oil and petroleum products. That sector generates about 20 percent of the GDP and employs 1.7 percent of the working population (2.1 percent if one counts in the pipelines). On the other hand, a fall of world oil prices suspends the growth of the real exchange rate of the ruble. As a result, other sectors of the Russian economy which employ about 98 percent of the working-age population and produce 80 percent of GDP become more competitive. So, the high growth rate begins to spread to sectors other than oil. The whole economy begins to grow at two-digit rates. Because growth is spread more evenly through the economy, the average growth rates ends up being higher. This is what is happening in many CIS countries that are not oil exporters: their growth rates are 1.5-2 times higher than in Russia.
Falling oil prices are key to Russian economic growth—depress the value of the ruble to make nonoil sectors more competitive and encourage policymakers to enact necessary reforms Illarionov 6/2/04 (Andrei, Presidential Economic Adviser, Official Kremlin Int'l News Broadcast, lexis)
Q: Do you see any real threat to the Russian economy, like a sharp fall of oil prices or a banking crisis? Illarionov: As for a fall in oil prices, I think it would not a threat but a present to the Russian economy. And I have said this many times. Numerous studies, thorough and diligent econometric studies indicate that the Russian economy developed faster when oil prices were lower, including in the last decade, than when they were high. The mechanism is clear because high oil prices are one of the factors leading to the growth of the effective exchange value of the ruble. The growth of the effective value of the ruble raises economic costs in general and makes the economy less competitive. If oil prices decrease, the effective value of the ruble will either not grow at all or will grow very slowly, allowing the country to remain competitive not only in a narrow segment of industries geared to the production and sale of oil, oil products, gas and nonferrous metallurgy, but in a broader spectrum of sectors and the entire economy in general. It's a choice between having several industries growing successfully, while other sectors will be in a state close to stagnation, and having the whole economy developing in a balanced way. Russia had the highest rate of industrial growth in 1999 when oil prices were at their absolute minimum -- $8-9 per barrel. At that time industrial growth for the whole industry was 17 percent and even 50 percent in machine building and light industry. But we don't say anything like that when oil prices are high. This is why I must say that we will face the biggest threats to our economic growth when oil prices are high. They will translate both in lesser competitiveness and poorer quality of decisions, as well as poorer quality of the economic policy because high oil prices do not require authorities to adopt painful but absolutely necessary decisions.
Russian Oil Answers—Inflation Turn
--High oil prices contribute to Russian inflationary pressures Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html) The major factor causing inflation is the massive increase in oil prices since 2002. In the last six years there has been an increase from
approximately $20 a barrel to $125. Furthermore, there has been speculation that oil prices will continue to rise and according to Goldman Sachs and the Iranian oil minister, they could hit $200 a barrel in two years. Russia's economy is highly dependent on natural resources, with 28 percent of exports to the U.S. last year being oil and gas products. The high oil prices have helped the Russian economy to grow, while even permitting for the creation of a massive stabilization fund. The downside is that the
influx of petrodollars contributes to inflationary pressure.
--Inflation poses a greater threat to Russian economic growth than a possible plunge in oil prices RIA Novosti 6/11/08 (lexis)
- The International Monetary Fund said in its report that inflation, fuelled by an erroneous economic policy pursued by the Russian government, is more dangerous for the country's GDP growth than a possible plunge in oil prices.
Russian Oil Answers—Inflation Turn Extensions
Low inflation and diversification is key to Russian economic stability and sustainable, future growth Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html) Lowering inflation would create a stable economy which would encourage investment and fuel future growth. Furthermore, diversification is needed to ensure long term growth and protect against shocks in the energy market. As Chizhov suggested, developing
high tech industries would allow for substantial growths in GDP and productivity, extending beyond 2020.
Empirically, rising inflation causes Russian economic instability Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html) Russia's biggest task is to balance economic growth while keeping inflation low. During the 1990s, inflation sometimes soared to over 10 percent a month, wiping out people's savings and triggering mild panic in the economy. Although the inflation dragon
has been tamed, it continues to be stuck at over 10 percent annually. This year the inflation target has been revised up to 10 percent after price increases at the beginning of the year. Meanwhile, the IMF predicts that inflation will finish at 11.4 percent for the year.
Increased inflation rates result in Russian economic slowdown via overheat Nicholson 6/1/08 (Alex, "Russia 2008 Inflation May Accelerate to 14%, IMF Says (Update2),"
http://www.bloomberg.com/apps/news?pid=20601087&sid=axKBXVsNZZzM&refer=home) June 2 (Bloomberg) -- Russian inflation may accelerate to 14 percent this year and the risk of the economy overheating is mounting, an International Monetary Fund official said.
Consumer prices rose an annual 14.3 percent in April, a five- year high, stoked by global food price increases and rising domestic wages. The economy grew 8 percent in the first quarter, the Economy Ministry said in a preliminary estimate on April 17. Gross domestic product rose 8.1 percent for all of 2007.
``The risk is that inflation gradually increases to such a level that it requires a sharp tightening of monetary policy that could cause a slowdown in growth,'' Poul Thomsen, head of the IMF mission in Russia, told reporters in Moscow today. The risk of the economy ``overheating'' is increasing, he said.
Russian Oil Answers—Oil Not Key to Russian Economy
Russia could survive a drop of oil prices to $55 a barrel*** Russia & CIS Business & Financial Daily 6/9/08 (lexis)
Russia would be able to withstand a drop in oil prices to $55 per barrel without any serious consequences, Deputy Prime Minister and Finance Minister Alexei Kudrin said. "Russia is prepared for oil prices to drop to $55 per barrel," he told journalists in St. Petersburg on June 7. The Russian government has devoted a great deal of work to preparing the country for such a reduction in oil prices, he said. "Such a reduction would have a small effect on economic growth, but it wouldn't be very significant," he said. Russian GDP is currently growing on the back of other industries besides oil and gas, he said.
A 50% drop in oil prices won't destroy the Russia economy—oil is only 15% of GDP Pravda.RU 4/8/03 ("Opinion: Russian Economy Will Not Suffer Even if Oil Prices Fall by 50%,"
http://english.pravda.ru/comp/2003/04/08/45732.html) 'The Russian economy will not suffer even if oil prices fall by half,' announced President of YUKOS oil company Mikhail Hordovsky at a meeting with journalists in Moscow yesterday. As a Rosbalt correspondent reports, Mr Hordovsky pointed out that oil extraction in Russia only accounts for 15% of GDP and therefore this industry is not of critical importance for the country as a whole. 'The Russian economy is relatively steady at present and this is unlikely to change,' said Mr Hordovsky.
Russian Oil Answers—Russian Economic Growth Bad 2AC
--Economic growth results in Russian neo-imperialism Pirchner and Berman 04 (Herman and Ilan, President and Vice President for Policy @ American Foreign Policy Council,
"Russia Revived," American Spectator, September, www.afpc.org/russiarevived.shtml) Russians, in fact, have a lot to cheer about. On Putin’s watch, their country has made a dramatic economic turnaround. In February of 2002, Russia surpassed Saudi Arabia to become the world’s largest energy exporter, and today, less than six years after its catastrophic 1998 economic meltdown, Russia boasts close to $100 billion in hard currency reserves. Putin, for his part, has managed to translate these soaring economic fortunes into real fiscal progress. Via measures like the imposition of a flat tax (accomplished in 2001), the subsequent softening of long-standing restrictions on land ownership, and the start of rudimentary mortgage programs (heretofore missing in post-Soviet Russia), the Kremlin has succeeded in devolving economic power and empowering ordinary Russians in a way not imaginable just a decade ago. Putin’s plans don’t stop there. Capitalizing on Washington’s post-September 11 focus on energy security, he has announced Russia’s intention to provide the United States with fully 10 percent of its oil by the end of the decade. And in his 2004 State of the Federation address, the Russian president articulated the exceedingly ambitious goal of doubling his country’s GDP by 2010. Putin also is thinking big on the foreign policy front. Buoyed by economic and social successes, Russia’s international maneuvers have grown increasingly assertive. Russia, once adrift, is now trying to regain its place as a “Great Power.” Russia’s efforts abroad are animated by an old concept: the idea of Russia as empire. A little over a decade after the end of its last imperial experiment, rising economic and political prospects are making the idea—and the ideology—of Russian expansion a topic of growing currency in the Kremlin.
--Russian neo-imperialism undermines global stability and risks WMD use Cohen 96 (Ariel, Senior Policy Analyst @ Heritage, Heritage Foundation Reports, 1/25, lexis)
Much is at stake in Eurasia for the U.S. and its allies. Attempts to restore its empire will doom Russia's transition to a democracy and free-market economy. The ongoing war in Chechnya alone has cost Russia $ 6 billion to date (equal to Russia's IMF and World Bank loans for 1995). Moreover, it has extracted a tremendous price from Russian society. The wars which would be required to restore the Russian empire would prove much more costly not just for Russia and the region, but for peace, world stability, and security. As the former Soviet arsenals are spread throughout the NIS, these conflicts may escalate to include the use of weapons of mass destruction. Scenarios including unauthorized missile launches are especially threatening. Moreover, if successful, a reconstituted Russian empire would become a major destabilizing influence both in Eurasia and throughout the world. It would endanger not only Russia's neighbors, but also the U.S. and its allies in Europe and the Middle East. And, of course, a neoimperialist Russia could imperil the oil reserves of the Persian Gulf. n15
Russian Oil Answers—Russian Economic Growth Bad Extensions
Economic growth empowers Russia's neo-imperialist plants Pirchner and Berman 04 (Herman and Ilan, President and Vice President for Policy @ American Foreign Policy Council,
"Russia Revived," American Spectator, September, www.afpc.org/russiarevived.shtml) Solzhenitsyn is hardly alone. A widening number of politicians of all political stripes are gravitating to the idea of a “Greater Russia.” These include not only people like Aleksandr Dugin, one of Russia’s most prominent—and controversial—political scientists, but also ascendant statesmen like Dmitry Rogozin, a deputy chairman of the Russian Duma. Rogozin, in his 2003 book We Will Reclaim Russia for Ourselves, makes the case that Russians “should discuss out loud the problem of a divided people that has a historic right to political unification of its own land,” and are obliged over time to “create conditions” necessary for such a union. This stance has found fertile soil, both within Russia itself and in Russia’s “near abroad.” According to a December 2000 domestic poll, the results of which were carried by Russia’s RIA Novosti news agency, no less than 61 percent of Russians, 53 percent of Ukrainians, and 69 percent of Belarussians favor unification of their states into one country. And, under Putin, this urge has found expression. Through a series of political and legislative maneuvers, his government is laying the groundwork for an imperial revival. Just such a restoration was on the mind of Putin and his key supporters in late 2001, when they pushed a remarkable new law through the Russian parliament. That bit of legislation defines the parameters by which a foreign state or territory can become part of the Russian Federation—providing the legal basis for a peaceful, or not so peaceful, territorial expansion. Moreover, it is hardly an isolated incident. The newly selected prime minister, Mikhail Fradkov, in his March 2004 address to the Russian State Duma, confirmed that territorial expansion is now being given new attention by the Kremlin. “In light of economic growth and questions of demography,” Fradkov said, the Russian government would “in the future simplify grants of citizenship to Russians living abroad.”
Russian economic prosperity empowers Putin to carry out his neo-imperialist plans Glazov 04 (Jamie, Staff @ Frontpagemagazine.com, "KGB Resurrection," 4/30, http://www.borrull.org/e/noticia.php?id=32565)
I used to believe that anything, including a strong oil market, that bolstered the Russian economy and produced prosperity would be likely to cause the growth of a middle class and, in time, more pressure for economic and political liberalization. The events of the last eighteen months or so have convinced me that such is not correct. Putin has used the economic prosperity produced by a strong oil market to consolidate his power and lead Russia toward a form of fascism -- oil prices have given him the idea that he can do anything he wants. Oil can tend to centralize power in any society except in a mature democracy such as Norway.
IPI Pipeline Good—1NC Impact Module
--High oil prices are driving Indian support for the IPI gas pipeline Hindustan Times 4/26/08 (lexis)
Apr. 26--NEW DELHI -- The good news is that the $7 billion Iran-Pakistan-India (IPI) gas pipeline project is very much alive and kicking, contrary to the widespread impression that it will be shelved due to relentless American opposition. Taking things one step further, India has also
formally joined the Washington-backed $7.6 billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project that would stretch across 1,680 km to deliver gas from the Dauletabad gas field in Turkmenistan to Fazilka on the Indo-Pakistan border by 2015. On Friday, oil ministers of Pakistan and India announced that they had made "significant progress" in bilateral talks on a number of outstanding issues on the IPI gas pipeline project and predicted that the project would start supplying natural gas by 2012. Construction work on this project will commence in 2009 and the project would supply natural gas from the South Pars gasfield in Iran on a 50-50 sharing basis between India and Pakistan. The project would supply 2.06 billion cubic feet of gas per day. The announcement comes a day after the 10th steering committee of oil ministers from Turkmenistan, Afghanistan, Pakistan and India on Thursday agreed to start construction work on the much-delayed TAPI project. It is, however, premature to uncork the bubbly. India's security concerns have not gone away for both projects as both pipelines traverse through volatile regions. The three possible routes for the IPI pipeline, for instance, pass through insurgent Balochistan. India has had an on-off relationship with this project thanks to its tensions with Pakistan. As for TAPI, the Afghan government has not been able to establish its authority beyond Kabul, and the risk of pipeline being sabotaged by the resurgent Taliban is an ever-present danger.
Since mid-2007, India has not participated in trilateral talks on the IPI project. But there are compelling reasons for New Delhi to rejoin talks on IPI and formally become a full member of TAPI. Although the Indian government formally denies the 'China factor', it was only after Beijing
expressed an interest in this project --with Pakistan's President Pervez Musharraf stating that IPI can well be an Iran-Pakistan-China pipeline--that New Delhi bestirred itself to restart negotiations with both Islamabad and Teheran.
India's compulsions are basically economic. "As far as India is concerned, we want to settle and activate both [the pipelines] because energy demand in India is so much and oil prices are shooting up," says Petroleum Minister Murli Deora. India will need to import
as much as 75 billion cubic metres (BCM) of gas by 2024-25 for rising power generation, fertiliser production, industrial uses and household consumption. Thanks to domestic shortages, 13,444 mw of gas-based capacities in the power sector are now generating less power than they can. As both these pipeline projects become viable with India's participation, New Delhi should leverage its position to get the best possible price for gas. Gas pricing has indeed been a sticking point for the highly controversial IPI project.
IPI Pipeline Good—1NC Impact Module
--The IPI pipeline is vital to the economic prosperity and political stability of South Asia Zaidi 6/7/05 (Mazhar, Columnist @ BBC Urdu, "Why Pakistan-India pipeline matters,"
http://news.bbc.co.uk/1/hi/world/south_asia/4070916.stm) The agreement between India and Pakistan on a project to pipe gas to India from Iran via Pakistan is being termed by some observers as historic.
Though both countries have as yet only agreed in principle, officials say work on the project could start as soon as within six months. So why is this pipeline project so important and what does it mean for South Asia as a region? In a world where politics is increasingly driven by battles for energy resources and everyone seems to be talking about 'pipeline politics,'
this project could
be vital for the economic prosperity and political stability of sub-continent.
Take-off In recent years Pakistan's economy has shown signs of improvement. That's thanks mostly to developments post 11 September and Pakistan's role as a front state in the United States' war on terror. The economy of India has been booming for many years now and according to many market analysts it is in a 'take-off' stage and could start influencing the world market in a major way. But despite these improvements, both economies are facing a looming crisis - deficiency of energy resources.
"The Indian economy will not be able to sustain for long if the issue of energy deficiency is not resolved." says M Ziauddin, editor of the Pakistani daily Dawn. "Pakistan also badly needs additional sources of energy as it can neither afford the costs of further exploration and nor can it fulfil its requirement by
any other way." 'Hugely benefit' Mr Ziauddin believes that
the pipeline from Iran will not only provide the much needed boost to the Indian economy but it will also become a source of revenue for Pakistan. "If without investing much Pakistan can start getting $500m-$600m in annual revenue because of the pipeline, there is nothing like it for Pakistan. It will hugely benefit the economy and resolve the energy crisis also."
The implications of the proposed pipeline are not limited to the economic field.
Analysts believe that the laying down of the gas pipeline from Iran to India will also bring about a new set political rules. Lahore-based political analyst and writer Khalid Ahmed thinks the proposed project is truly a historic opportunity for both the countries to change the politics of the region forever. "This is the first time in the history of South Asia that such an occasion has arrived. Pakistan can redefine its identity as a transit state in the region and can pave the way for peace and prosperity." According to Mr Ahmed such a project would go a long way in changing the nature of political relationships in the region. "Instead of basing its identity on animosity towards India, when Indian economic prosperity will also mean prosperity for Pakistan, things will definitely change." That indeed would be a historic change in relations between India and Pakistan.
--South Asian instability risks global nuclear winter Washington Times 7/8/01 (lexis)
The most dangerous place on the planet is Kashmir, a disputed territory convulsed and illegally occupied for more than 53 years and sandwiched between nuclear-capable India and Pakistan . It has ignited two wars between the estranged South Asian rivals in 1948 and 1965, and a third could trigger nuclear volleys and a nuclear winter threatening the entire globe. The United States would enjoy no
IPI Pipeline Good—Unique Internals—High Oil Prices → IPI Pipeline Cooperation
Record-high oil prices are driving Indian participation in the IPI gas pipeline Afrasiabi 4/30/08 (Kaveh, political scientist/author, "Iran holds key to India's energy insecurity,"
http://www.atimes.com/atimes/Middle_East/JD30Ak02.html) With oil prices skyrocketing, India's thirst for cheaper imported gas has acquired a greater urgency than ever before,
considering what the Hindustan Times has termed as the growing "supply-demand mismatch" reflected in the recent news that "as against an overall requirement of 77 million standard cubic meters per day (mmscmd) of gas between April 2007 and January 2008, only 37 mmscmd was supplied". Sure, India has other prospects besides Iran and, in addition to investing in Yemeni oil fields and negotiating with Saudi Arabia, Oman and Qatar, questing for a piece of the Iraqi energy market and scouting various African countries (such as Nigeria, Chad, Angola, Cameron and Congo), Indian officials have also been playing catch-up with China in Central Asia lately, seeking deals with Kazakhstan and Turkmenistan. But with the Turkmenistan's proximity to Iran and Iran's ability to act as an energy corridor for the sub-continent, the salient
importance of Iran is indisputable. In addition to the US$7.6 billion Iran-Pakistan-India (IPI) pipeline, India has set its eyes on a Turkmenistan-Afghanistan-PakistanIndia (TAPI) pipeline that is, for now at least, more of a pipedream because of growing insecurity in Afghanistan, reflected in the bold
assassination attempt on President Hamid Karzai in Kabul this week.
High oil prices are spurring Indo-Pak cooperation over the IPI gas pipeline Khan 4/26/08 (Mubarak, "Energy crisis forces India to join Iran gas pipeline project," DAWN Media group,
http://www.dawn.com/2008/04/26/top1.htm) ISLAMABAD, April 25: Differences between Pakistan and India over the Iran-Pakistan-India (IPI) gas pipeline project were resolved on Friday and the two countries agreed to start work on laying pipelines next year for procuring gas from Iran by December 2012. Talks between the two countries to resolve the differences, mainly relating to transit fee and transportation tariff, failed in June last year, putting the $7.5 billion ‘peace pipeline’ project into cold storage. But the current energy crisis and spiralling oil prices brought them back to the table.
Skyrocketing oil prices compels India to pursue gas pipeline cooperation with Pakistan and Iran Stanley 5/5/08 (John, research scholar with the Centre for West Asian Studies at Jawaharlal Nehru University, "Ahmadinejad’s
visit - India intensifies global energy game (Commentary)," http://www.thaindian.com/newsportal/uncategorized/ahmadinejadsvisit-india-intensifies-global-energy-game-commentary_10045103.html) New Delhi’s decision to welcome Ahmadinejad must have taken at least a few of India watchers by surprise. It was just two years ago
that India, under pressure from Washington, voted twice against the Iranian nuclear programme in the International Atomic Energy Agency (IAEA). Since then India’s ties with Iran had not been as warm as they used to be. The United Progressive Alliance (UPA) government has often been criticised both at home and abroad for not showing real interest in the proposed India-Pakistan-Iran (IPI) gas pipeline. Besides, bilateral ties between the two countries hit a new low earlier this year as Israel blasted off a spy satellite with the help of India. Iran’s envoy to India even went public criticising New Delhi over the issue.
Then why this turnaround? This could be seen as part of India’s changing energy policy. According to a recent New York Times report, cosy relations with Iran are important
for India at least for three reasons. Iran is India’s second largest oil supplier after Saudi Arabia, is a potential source of natural gas in the future and wields influence in Afghanistan, a gateway for New Delhi to enter Central Asia’s rich oil and gas fields. Still, India had been reluctant to engage Iran, particularly after the US intensified its campaign to isolate the Islamic Republic. The rumours of a possible US attack on Tehran have also pulled India back from going ahead with its ambitious energy plans. Now, with the US bogged down in Iraq and the possibility of an attack on Tehran looking remote, New Delhi is back on front-foot in the energy
game. With oil prices skyrocketing, India does not have many options but to enter into comprehensive energy cooperation with resource-rich countries. The supply-demand mismatch in India has already sent out warning signals across the ruling class.
IPI Pipeline Good—A2 US Opposition Blocks
US opposition won't block the IPI pipeline Hindustan Times 4/27/08 (lexis)
NEW DELHI, India, April 27 -- The $ 7 billion Iran-Pakistan-India (IPI) pipeline project - together with the Turkmenistan-AfghanistanPakistan-India (TAPI) pipe-line - is finally taking shape and is not all gas, after all. The recent talks between the oil ministers of India and Pakistan registered 'significant progress' on the IPI proposal. Significantly, both countries appeared determined to go ahead with it regardless of the US's reservations on this proposal. America's concerns are largely over Iran's nuclear programme and it has held out the threat of sanctions if non-US companies invest in oil and gas worth $ 20
million in that country. But this sort of pressure
appears to have had no bearing whatsoever on fast-growing developing econo-mies like India and Pakistan that need access to oil and gas supplies.
IPI Pipeline Good—Impacts—Key to South Asian Stability
Cooperative pipelines like the IPI are key to sustainable growth and stability in South Asia Maleki and Afrasiabi 8/17/07 (Abbas and Kaveh, Director of the International Institute for Caspian Studies in Tehran and a
visiting senior research scholar at International Security Program, Kennedy School of Government, Harvard University + political scientist/author, ""Saving the Peace Pipeline," http://belfercenter.ksg.harvard.edu/publication/17453/saving_the_peace_pipeline.html) In addition, in light of the IPI’s potential contribution to regional development, complementing the North-South corridor under consideration by the member states of the Economic Cooperation Organization (ECO), it may be a good idea to revamp the IPI into a consortium that
opens the possibility of a future role by other regional parties, both in terms of investment as well as linkage with the regional gas network. Thereby, for instance, Turkmenistan’s gas could also be exported to Pakistan and India through the IPI pipeline. In fact, by forming a consortium and allowing a role for other ECO countries — Iran and Pakistan, together with Turkey, are the founding members of this regional organization of ten member states (which could induct India as an observer) — the regional dimension of IPI becomes immediately more pronounced. These recommendations would not only ensure that the IPI does not devolve into endless intra-state wrangling, but materializes as it has been envisioned. Also, they add to its significance and reduce the impact of future shocks that may be of political or geo-strategic in nature. By increasing the pool of regional participants through a consortium, the IPI project glues the three countries into a greater web of cooperation and cements this cooperation through the positive input of the other participants. As the experience of the BTC (Baku-Tblisi-Ceyhan)
pipeline clearly demonstrates, cooperative pipelines contribute to the sustainable growth and stability of the region. By all indications, the IPI would be no different.
The IPI serves as a durable CBM that fosters stability in South Asia Luft 1/12/05 (Gal, Executive Director of the Institute for the Analysis of Global Security, "Iran-Pakistan-India pipeline: the
Baloch wildcard," http://www.iags.org/n0115042.htm) A land based pipeline would be four times cheaper than any other option, even after taking into account transit fee payments to Pakistan. But for
a long time political tensions between India and Pakistan made it difficult for Delhi to accept an energy project that would create dependence on a neighbor with whom its relations are far from stable. Recent improvement in the relations between the two neighbors has bought India to finally consider joining forces with Pakistan for the mutually beneficial pipeline project, estimated to cost around $4 billion. A third of the gas would be delivered to Pakistan and the rest to India. For Iran, India’s participation in the project is of paramount importance. In addition to a broader market for its gas Iran hopes to gain political support from India as it is facing strong international pressure to terminate its nuclear program. In return for India's agreement to buy large quantities of gas, Iran has awarded Indian gas companies major service contracts and also granted them participation in refining and other energy related projects to the tune of $40 billion. Iran’s relations with Pakistan are also strategically important. With American troops stationed in neighboring Afghanistan and Iraq, Iran is trying to check U.S. influence in the region by strengthening its ties with Pakistan, one of America’s most needed allies in the war on terror. The Pakistanis, for their part, would like to see their
territory used as a transit route to export natural gas to India. This would not only guarantee a source of income for them but also increase stability in the region. Pakistani Prime Minister Shaukat Aziz said the Iran-Pakistan-India gas pipeline is "a win-win proposition for Iran, India, and Pakistan," that could serve as a durable confidence-building measure, creating strong economic links and business partnerships among the three countries.
The gas pipeline serves as a confidence-building measure that fosters regional security via mutual cooperation BBC 4/29/08 ("Indian leader upbeat on pipeline," http://news.bbc.co.uk/1/hi/world/south_asia/7372646.stm)
The pipeline will transport gas from Iran to India through Pakistan, and is seen as crucial to Indian energy needs. Analysts say the pipeline could contribute to regional security as Iran, Pakistan and India would depend on each other more and benefit from mutual co-operation.
Hold-ups After talks with Mr Singh at the end of his tour of South Asia, Mr Ahmadinejad said he was optimistic about a deal on the 2,600-km (1,620-mile) pipeline, which would initially transport 60m cubic metres of gas (2.2bn cubic feet) a day. "The two sides are very close to each other. We will finalise the gas pipeline soon," he told reporters in Delhi. Mr Ahmadinejad said a firm proposal on the pipeline would be formulated in the next 45 days and then put before the leaders of the three countries involved. The Indian government said the project was feasible, but needed to be financially viable with assured supplies. India has boycotted trilateral meetings since mid-2007, saying it wanted to first resolve the issues of transit fees and transportation tariffs with Pakistan, its longstanding regional rival.
"This pipeline is not just a commercial deal. It is a part of confidence-building measures," Indian Foreign Secretary Shivshankar Menon said on Tuesday. 57
IPI Pipeline Good—Impacts—Key to South Asian Stability
IPI pipeline is key to Pakistani economic and political stability and constructive Indo-Pak relations Kronstadt 10/1/07 (Alan, Specialist in South Asian Affairs @ Congressional Research Service, Congressional Research
Service (CRS) Reports and Issue Briefs, lexis) The "IPI" Pipeline Project. Islamabad insists it is going forward with a proposed joint pipeline project to deliver Iranian natural gasto Pakistan and possibly on to India. In January 2007, officials from the three countries resolved a long-running price-mechanism dispute, opening the
way for further progress. In February, the fourth meeting of the Pakistan-India Joint Working Group on the Iran-Pakistan-India (IPI) pipeline was held in Islamabad, where the two countries agreed to split equally expected gas supplies. In June, Pakistani and Indian officials reportedly reached an
agreement in principle on transportation charges, and officials from all three countries suggested a final deal was imminent. Prime Minister Aziz has described the pipeline as being critical to Pakistan's economic growth and political stability. Doubts about
financing the approximately $7 billion project combined with concerns about security in Pakistan's Baluchistan provincehave some analysts skeptical about fruition. Some independent observers and Members of Congress assert that completion of the pipeline would represent a
major confidence-building measure in the region and could bolster regional energy security while facilitating friendlier Pakistan-India ties (see, for example, H.Res. 353 in the 109th Congress).
Indo-Pak energy trade is a confidence-building measure that sparks cooperation in other areas Pandian 05 (S.G., Development Research Reporting Service, " Energy trade as a confidence-building measure between India
and Pakistan: a study of the Indo-Iran trans-Pakistan pipeline project," Contemporary South Asia, September, http://www.ingentaconnect.com/content/routledg/ccsa/2005/00000014/00000003/art00004;jsessionid=1cpa4obt08bh8.alice? format=print)
To date, there has been no confidence-building measure capable of locking India and Pakistan into an irreversible relationship and acting as a powerful catalyst for bilateral development, prosperity and regional stability. In the absence of mutual trust, confidence and cooperation between these two countries, it becomes imperative to identify potential areas of cooperation to reduce threat perceptions in the region. Although the economic relationship alone does not play a pivotal role in strengthening the foundation on which the political relationship is built, it could be argued that
economic factors have a considerable leverage in influencing the political relationship. In this regard, a focus on energy trade gains significant attention. The energy trade between India and Pakistan has enormous potential to lock them into an irreversible economic interdependence, thereby reinforcing their efforts to intensify relations in other potential areas of cooperation. This paper is an effort to identify the scope for energy trade to act as an economic confidence-building measure in Indo-Pakistan by studying the
cost–benefit analysis of Pakistan's inclusion in an Indo-Iran natural gas pipeline project. It analyses in detail India's energy strategy and the economic rationale for trans-Pakistan pipeline. Finally, the paper analyses the potential benefits of a trans-Pakistan pipeline for both India and Pakistan, and its possible impact in creating political constituencies essential for reducing regional conflict.
IPI Pipeline Answers—Iran = Evil Turn
Iran can’t be trusted—the IPI pipeline would destabilize the Gulf, empower Russia, and decrease regional and global energy security Cohen, Curtis, and Graham 5/30/08 (Ariel, Lisa, and Owen, Senior Research Fellows @ Heritage, "Executive Summary:
The Proposed Iran-Pakistan-India Gas Pipeline: An Unacceptable Risk to Regional Security," http://www.heritage.org/Research/AsiaandthePacific/bg2139es.cfm) Conclusion. Iran's support of terrorism, hostile policies in the Middle East, pursuit of nuclear weapons, and mismanagement of its economy make it a dangerous and unreliable business partner and call into question its capacity to supply natural gas to Pakistan and India through the IPI. Potential transit problems in Baluchistan also make this project inherently risky. As major energy consumers, the U.S. and India share strategic interests in the Persian Gulf and Central Asia. Building the IPI would be contrary to these interests, would destabilize the Persian Gulf, and would strengthen Russia's grip over Central Asia, decreasing both regional and global energy security. Accordingly, the U.S. should fully back TAPI to increase India's and Pakistan's
energy security and reduce Russia's leverage in Central Asia.
Gabon Oil Good—1NC Shell
--Revenues from US oil imports are key to Gabon's economy EIA 04 ("Gabon Country Analysis Brief," http://www.eia.doe.gov/emeu/cabs/gabon.html)
Gabon is almost wholly dependent on oil revenues to fund its economy. Exports of crude oil account for approximately 60% of the government’s budget and more than 40% of GDP. In an effort to decrease reliance on oil exports, the government has raised export taxes on
timber and manganese. Similarly, the government increased the value-added tax (VAT) from 18% to 25%, but threats of strikes in September 2004 by oil workers ensured that the increase would apply only to luxury goods. Gabon has committed to tighter fiscal policy and a more transparent budget to relieve its debt burden, expected to reach 66.2% of GDP by 2006. The International Monetary Fund (IMF) introduced a structural reform plan in 1998, and the African Development Bank (AfDB) loaned Gabon US$14.7 million to encourage privatization. Although the IMF allowed a Gabonese line of credit to collapse in 2002, its support helped Gabon achieve a debt-rescheduling agreement of $862 million with the Paris Club of international creditors, now due by June 2005. Gabon was instrumental in forming the Central Africa Economic and Monetary Community (CEMAC), a consortium of six nations hoping to merge their macroeconomic policies and create a common market. The movement culminated in the creation of the Gulf of Guinea Commission, established in 2000 to encourage settlement of conflicts threatening natural resource development. Gabon and Equatorial Guinea disagree regarding oil exploration rights to territories (the Mbagne, Cocotiers and Congas Islands and surrounding waters) in the Bay of Corisco. Gabon temporarily occupied Mbagne in March 2003. In response, Equatorial Guinea sought international support for its sovereignty over the area. In July 2004, the nations agreed to explore jointly in the area until the quarrel is settled by United Nations (UN) meditation. OIL Gabon has sub-Saharan Africa’s third largest oil reserves (2.5 billion barrels) and is its fourth largest producer. The country produced approximately 289,700 barrels per day (bbl/d) in 2003, a significant decrease from its 1997 high of 371,000 bbl/d. Declines in production have occurred despite the expansion of Gabon’s proven oil reserves to 2.5 billion barrels in 2004 from 1.3 billion barrels in 1996. Gabon officially left OPEC in 1996, citing the organization’s high annual dues. Without the discovery of new fields, however, current production will deplete Gabon’s oil reserves by 2012. Over half of Gabon’s crude oil shipments are exported to the United States. Much of the rest of Gabon’s crude oil goes to Western Europe and occasionally the Far East. Along with diversifying its economy, the government has emphasized further oil exploration by attracting new investment to the energy sector. Both the legal and tax systems are structured to favor expatriate investors, and certain aspects of oil exploration are exempt from the VAT.
--Oil revenue is the single most important factor in preserving Gabon’s forested areas Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf) Gabon’s oil wealth coincides with the fact that it is one of the most forested countries in Africa; about four-fifths of its land area is covered by forests. But this is not really a coincidence. The central hypothesis of this report is that oil rents have enabled a series of policies that, together with the low demographic pressure, have been key in protecting forests from degradation and deforestation. Most probably, oil has helped expand forest cover in absolute terms, and reduce forest degradation, compared to what would likely have happened without oil (see Section 2). This has occurred through a number of economy-wide market and policy responses to oil wealth that have in combination been extremely favourable to forest conservation. Yet, none of the policies has been implemented because the government cared particularly about forests. Rather, the policies accompanying oil wealth have caused agriculture to decline. This misfortune has enabled forests to expand by default. Gabon’s unintentional, ‘blind’ conservation policies have been far more successful in conserving forests than most of those designed consciously by governments that actively strive to protect their forests through direct conservation measures. This underlines the potential strength of underlying factors in affecting forests (Contreras-Hermosilla 2000).
--Gabon's forests are key to the Congo Basin rainforest Panafrican News Agency (PANA) Daily Newswire 9/6/02
Libreville, Gabon (PANA) - The protection of Gabon's forest, which is part of the tropical forest belt of the Congo basin, is the major feature during the visit of US Secretary of State Colin Powell in the country. After his participation Wednesday in Johannesburg, South Africa in the launch of a broad partnership on the protection of the forest heritage of the Congo basin, Powell flew to Gabon, considered as the richest in flora and fauna species of the entire African rain forest. The national unit of the World Forest Observatory (GFWG) estimated in a 2000 report that 8,000 plant species, 200 species of mammals and 600
bird species exist in the forest of Gabon. The ministry of forestry has also reported that Gabon's forest is a significant reservoir of carbon, storing between 0.94 and 5.24 gigatonnes of carbon. 60
Gabon Oil Good—1NC Shell
is planetary extinction
Boukongou 05 (Jean Didier, Professor at the Central African Catholic University (Cameroon), "The Protection of the Congo
basin: A multilateral CHALLENGE," www.african-geopolitics.org/show.aspx?ArticleId=3836#_ftn1) the forests of the Congo basin is the entire humanity’s precious “lung.” Beyond the traditional quarrels1 of the sycophants of environmental protection and the relevance of advocated public
This is not a revival of “good savage” ideology which is useful for the “civilized world,” but it is simply a matter of understanding that programs2, one notices the intensification of multilateral initiatives, which try to respond both to the stakes of protecting the Congo basin as well as to the challenge of preserving life on Earth. Nevertheless, even the advocates of sustainable development cannot forget that “bio-humanity” is a naturally complex vision of society. As far as one can go back in time, and on the principle of the divine message, man will always return to nature. This implies an organization and structuralization of spaces, which cannot be strictly limited to the protection of the fauna and flora. Consequently, international concern about the ecosystem of the Congo basin is neither the result of sudden philanthropy, nor the outcome of triumphant environmentalism. The region is a dynamic geopolitical area, where forests are a source of oil and conflicts. I think that it is fundamental not to separate the issue of forests from the less media-covered question of the rich oil and mineral resources in the hinterland and maritime zones of Central Africa. The predators are in the forests and on the political scene, and they are searching for democratic legitimacy3. Thus, I’m calling for combining the “green” debate with the “political” debate in order to promote better governance of the geopolitical basin of the Congo, give rise to concrete and multilateral awareness of the problems of Central Africa which aren’t only environmental but also political. It is a matter of emphasizing political and civil implications, on one hand, and legal instruments and institutional frameworks, on the other, in order to assure a better progressive transition in Central Africa from “Black governance” (in other words, oil-based governance) to “green governance”. A Geopolitical Basin The geographic entity called the “Congo basin” includes territories extending from the end of the Sahelian areas of Chad and Sudan and the edge of the plains along the Zambezi. The voluntarily extensive vision of this basin challenges the thesis that this forest area is confined to narrow post-colonial zones in Central African States, which doesn’t challenge the principles of international law relating to boundaries.
This basin is a vast forest area that covers approximately 2,300,000 sq. km., or 26 percent of the world’s rainforests4. The forests are well known for their exceptional biodiversity and contribute, in an important way, to countering the greenhouse effect by absorbing the carbon dioxide which is emitted into the atmosphere5. This is the natural environment of more than half of the world’s wildlife and vegetable species. Some consider it the compost of numerous diseases, such as the terrible
Ebola fever.The Congo basin regroups several countries (Cameroon, the Congo, the Democratic Republic of the Congo, the Central African Republic, Equatorial Guinea, Gabon, Burundi, Rwanda, Angola and Chad), which form (with Sao Tome e Principe) the Economic Community of Central African States (ECCAS). On the one side, one may identify the Congo basin area itself to the ECCAS, and on the other, consider it as the logical construction of a regional area where sustainable governance of ecosystems should contribute, via the mobility of people, to economic links and ecological flows, to restoring and strengthening peace. One must remember that during the Millenium Summit held in New York in 2000 the Heads of State and Government declared their intention not to spare “any effort in order to assure that the entire humanity, and especially our children and grandchildren, will not live on a planet irreversibly degraded by human activities whose resources can no longer meet their requirements6.” This appeal is in line with the dynamics of building the concept of sustainable development, advocated by the UICN7 in 1980 and resumed in the Bundtland report in 19878. States have to cooperate in a spirit of world partnership in order to preserve, protect and restore the integrity of the ecosystem. Of course, according to Resolutions 1803 (XVII) and 1514 (XV)9 of the United Nations General Assembly and Principle 2 of the Rio Declaration, “States have the sovereign right to exploit their own resources according to their environment and development policies.” In other words, they can implement their proper environmental policies. But these actions do not produce concrete effects. The degradation of the environment and certain natural or industrial disasters directly affect the Earth as a continuous portion of space. It is only on this scale that adequate initiatives can be taken in order to obtain durable and adequate results. International CooperationActually, environmental protection has become one of the most important issues in contemporary world relations. International cooperation is necessary to protect humanity’s common heritage. No country can do it on its own, because this is a common responsibility. Therefore, the quality of air and the atmosphere depends on world coordination in many domains. The protection of the quality of the waters of a boundary river, or of a lake common to several countries, requires international coordination and cooperation. As the International Court of Justice reminded in the case Gabcikovo-Nagymaros: “During ages, man did not stop influencing nature for economic and other purposes. In the past it often accomplished this without taking into account the effects on the environment. Due to the new horizons opened by science and the increasing awareness of the risks of these interventions for humanity – whether it is for the present or for future generations – new standards and requirements have been put in place, enounced in a substantial number of instruments over the past two decades. These new standards must be taken in consideration and these new requirements appropriately appreciated, not only when States envisage launching new activities, but also when they pursue projects that have already been launched. The concept of sustainable development expresses the need for reconciling economic development and environmental protection10.” Since the Earth Summit in Rio in 1992 the pressure exercised by NGOs and the international financial backers prompted governments to adjust their institutional frameworks and to work out coherent policies, in particular environmental action plans relating to the national, regional and international dimension. At the subregional level, such initiatives led to setting up mechanisms and processes such as the Conference of Ministers for Forests of Central Africa (COMIFAC)11, Conference on Central Africa’s Moist Forest Ecosystem (CEFDHAC) and the Africa Forest Law Enforcement and Governance Process (AFLEG)12. Organized in March, 1999 in Yaoundé, the summit of leaders of Central African States on the conservation and sustainable management of rain forests confirmed the Rio commitment to lead common policies for sustainable management of forested ecosystems. This regional dynamics led to the elaboration and adoption of a “convergence plan” for the Congo basin, whose main objective is the “conservation, restoration, development and durable use of biologic resources in the framework of management adapted to the social and cultural economic development of populations and the protection of the global environment13.” This convergence plan covers a ten-year period (2004-2013 and will globally cost an estimated US$ 1.5 billion, or 840 billion CFA Francs14. Regional dynamics led to international participation in efforts to respond to this universal concern, and the Johannesburg summit on sustainable development in September 200215 paved the way to a
the Congo basin. Considered as the left lung of the earth, these forests are a vegetable and wildlife reserve inextricably bound to human life16. According to Walter Kansteiner, they are a “world treasure,” a “world lung” necessary for preserving biologic diversity.
multilateral initiative: the United States of America and South Africa inspired, along with many other actors, the idea of a multilateral partnership for the protection of forests in
Gabon Oil Good—Uniqueness—Reforestation ↑ Now/Oil Key
Gabon is experiencing net reforestation now—oil revenues are the key factor Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf) Generally speaking, there are no motivations for large-scale deforestation in Gabon; rather, the decline in land-using sectors since the start of the oil era is likely to have triggered natural net reforestation over the past three decades. This evidently belies the FAO’s FRA 1990, which had suggested there was an annual rate of deforestation of around 100 000 ha. Net current deforestation is probably either zero or of negligible size. Land use has generally declined, and because of the greater concentration of the population, it has also become more intensive. Table 4 summarises how oil wealth has triggered a series of market- and policy-induced changes. Ten partial pathways are classified according to their economic intensity, and to the strength with which they are linked to forests. These two criteria then jointly determine the intensity with which deforestation is either curbed or accelerated by that pathway.
Gabon Oil Good—Internals—Oil Revenue Key to Gabon
Oil revenues are the lynchpin of Gabon’s economy Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf) Gabon is not a common representative of Sub-Saharan Africa. The country has been called the ‘African Emirates’—the ultimate rentier state depending heavily on a single wealth-generating export commodity: oil. Where most of Sub-Saharan Africa over the last two decades has suffered from low and stagnating incomes, chronic balance of payment problems and foreign exchange shortages, high per capita oil revenues have been the key to make Gabon a rich country. At more than US$6000, per capita income was in 1998 more than four times that of neighbouring Cameroon. Petroleum exports have totally dominated and transformed Gabon’s economy over the last three decades. Throughout the history of Gabon, other rentgenerating extractive sectors have also been important, such as manganese, uranium and, notably, the export of timber, mainly okoumé (Aucoumea klaineana), a valuable timber species. Yet, none of these commodities has generated rents that are comparable to oil. This richness in extractive resources, distributed among the small population of around 1 million, has implied that agriculture has remained underdeveloped. A traditional hunting-gathering culture of a forest-dwelling people has transformed into a society harvesting natural resource rents, where agriculture (as other types of commodity production) has remained underdeveloped.
Oil revenues are driving Gabonian economic growth Global Insight 5/16/08 (p. lexis)
According to Angolan Deputy Finance Minister Job Gracain in an interview with Thomson Reuters, the government is expecting Angola's real GDP to grow by 16.5% in 2008 on the back of soaring oil production. Indeed, according to the deputy minister of planning, Carlos Alberto Lopes, as quoted by Anglo Press, oil production has had a profound effect on stimulating the economy, with bank order deposits multiplying 13 times between 2002 and 2007, and private consumption rising to 39% of GDP in the 2004-2007 period. Significance: Global Insight projects the country's growth at 16.1% in 2008. Angola's economic growth--one of the fastest in the world--should continue to outperform regional peers, driven primarily by continued strength in its key oil sector. Ongoing investment inflows to the petroleum sector should ensure further production increases over the near term. Indeed, growth will continue to be driven by oil-sector developments over the medium term. Production has the potential to increase to 2 million barrels per day (b/d) by the end of the decade. The country's dependence on oil revenue does expose it to some downside risk from global price volatility, but these increases will help to offset any slippage in global oil prices. After the oil and gas sector, which accounts for roughly half of Angola's GDP, the biggest contributions to GDP come from wholesale and retail trade, agriculture, forestry, and fisheries. Performance in these sectors should be relatively strong, although any weakness in
the oil sector would be felt rather quickly in the wholesale and retail trade sector.
Gabon’s economy is dominated by oil revenues State Department Documents and Publications 5/15/08 (p. lexis)
ECONOMY Gabon's economy is dominated by oil. Oil revenues comprise 65% of the Government of Gabon budget, 43% of gross domestic product (GDP), and 81% of exports. Oil production is now declining rapidly from its high point of 370,000 barrels per day in 1997. In spite of the decreasing oil revenues, little planning has been done for an after-oil scenario. Gabon public expenditures from the years of
significant oil revenues were not spent efficiently. Overspending on the Transgabonais railroad, the oil price shock of 1986, the CFA franc devaluation of 1994, and low oil prices in the late 1990s caused serious debt problems. Gabon has earned a poor reputation with the Paris Club and the International Monetary Fund (IMF) for the management of its debt and revenues. Successive IMF missions have criticized the government for overspending on off-budget items (in good years and bad), over-borrowing from the Central Bank, and slipping on the schedule for privatization and administrative reform. In September 2005, Gabon successfully concluded a 15-month Stand-By Arrangement with the IMF. Following this, Gabon sought a multi-year successor arrangement.
Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation
Gabonese oil revenue is key to preventing deforestation Center for International Forestry Research 03 ("The oil industry-bête noire or friend of the forest?,"
http://www.cifor.cgiar.org/docs/_ref/publications/areports/english2003/oil_industry.htm) There is no denying that in some places oil installations have led to the pollution of waterways and the loss of wildlife. Indigenous people have seen oil developments encroach on their ancestral lands, and access roads have opened up forests to other forms of exploitation. But Wunder's research suggests that oil revenues can, in certain circumstances, prove beneficial for the forests. 'In some places the oil industry has undoubtedly done harm,' says Wunder, 'but in countries like Gabon and Venezuela, oil revenues have actually saved primary forest and increased the area under forest.' The mechanism responsible for this seemingly strange state of affairs is known as 'Dutch disease'. During the 1960s and 1970s the rapid expansion of the natural gas industry in the Netherlands led to an increase in exchange rates, public spending, labour costs and inflation. This led to a boom for private and government services and the construction industry, especially in urban areas, but made trade-exposed, commodity-producing sectors less competitive on the international market, and these went into decline. Similar trends have been observed in some oil-producing developing countries, with oil booms having a negative impact on agriculture and the forestry sector. The oil boom in Gabon coincided with a significant regrowth of forests in the interior, as people in the countryside abandoned their fields and moved to the city, attracted by the promise of jobs and a better living. In five of the eight countries studied by Wunder - in Cameroon, Papua New Guinea, Mexico, Nigeria and Indonesia - oil wealth has not entirely stopped deforestation, but it has helped to slow it down during periods of high oil prices. When oil prices have fallen, in contrast, people have drifted back to the countryside and converted more forest to farmland. Ecuador was the only country studied where oil wealth accelerated deforestation. This was because Ecuador's government used its oil revenues to fund specific policies which promoted land colonisation and forest conversion.
Gabonese oil revenues solve deforestation by triggering a rural exodus to urban areas Center for International Forestry Research 03 ("The oil industry-bête noire or friend of the forest?,"
http://www.cifor.cgiar.org/docs/_ref/publications/areports/english2003/oil_industry.htm) Thanks to oil - production rose from 1.4 million tonnes in 1966 to 18 million tonnes by 1998 - the small central African state of Gabon now has the second highest per capita income in Africa, and it has experienced a rapid growth in public employment, wages, urban infrastructure and transport. Gabon's oil boom triggered a rural exodus to urban areas, especially of young people of working age. As one village elder put it: 'Nobody lives here anymore. The young are leaving, and the elephants and gorillas run freely through our gardens, destroying what little we grow to eat.' This is a familiar lament in rural Gabon. But agriculture's loss of long-term competitiveness has been a blessing for the forests. Over 80 per cent of the country is still clothed in tropical forest, and deforestation here - in contrast to many other Congo Basin countries - is negligible. The full story of how Gabon's oil wealth has helped to save its forests, and what policies could help to retain the forests now that oil revenues are declining, is told in When the Dutch Disease Met the French Connection: Oil, Macroeconomics and Forests in Gabon, by Sven Wunder (CIFOR 2003).
Oil wealth is key to preserving Gabon’s forests Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf) On the whole, Dutch Disease impacts on real exchange rate competitiveness from oil wealth were a prime factor in the performance of other primary sectors, which in turn affected Gabon’s forests. Policies tended to accentuate market factors rather than stabilise them, due especially to a pronounced anti-agricultural bias that hit small producers particularly. Our regression results show that price competitiveness was even more important for logging, which is almost entirely an export sector, though there are elasticity differentials between timber species. But the overall results clearly confirm the core hypothesis of this report: oil wealth has protected forests in Gabon from conversion and exploitation by shifting relative prices against these activities.
Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation
Falling oil revenues spurs deforestation in Gabon—Cameroon and Nigeria prove Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf) What effect would agricultural expansion have on forests? Periurban landintensive production of vegetables and fruits causes only negligible deforestation,68 but other cash and food crops would have a more significant impact. If the above scenarios imply that Gabon will become more like its neighbours, perhaps we should look to them for similar development scenarios. What experiences can we draw on? From Cameroon, we know that the severe economic crisis in the decade after 1986 halted the trend towards urbanisation and triggered some return migration to the countryside. This demographic change caused a large expansion in food crops, with a strong rise in forest clearing in the humid forest zone that was clearly related to the macroeconomic shifts (Mertens et al. 2000; Ndoye and Kaimowitz 2000). Nigeria, another Dutch Disease country, also experienced a strong reagriculturisation once oil incomes dropped, and probably an upsurge in deforestation that was basically led by import-protected food crops (Wunder 2003:ch.9).
Gabon Oil Good—Impacts—2NC Biodiversity Module
--The Congo Basin rainforest is a key source of global biodiversity and vital for the world's carbon cycle Africa News 2/15/05 (lexis)
The Congo Basin - considered the world's second ecological lung; the other being the Amazon basin - constitutes a huge reservoir of biodiversity. Its forests are now subject to excessive exploitation and some animals are threatened with extinction. The Congo River Basin area covers some 520 million ha, according to the UN Food and Agricultural Organization. The forests within it account for 200 million ha, or 38.4 percent of vegetation cover. This is 30 percent of Africa's vegetation cover and 18 percent of the world's tropical forests.
These forests have wood and non-wood products. In this gigantic reservoir, there are officially 10,000 species of plants, of which some 3,000 are endemic to the Congo Basin. The Congo Basin also accounts for 440,000 ha of cultivated forests of rapid growing species such as eucalyptus and pines. Moreover, it offers one of the greatest potentials for economic and ecological development. In terms of biodiversity, the Congo Basin is
incontestably the richest area of Africa. It is a gigantic reservoir of carbon.
--Massive biodiversity loss risks extinction
Major David N. Diner , JAG – US Army, Winter 1994 ("The Army and the Endangered Species Act: Who's Endangering Whom?" – Military Law Review) p. 1exis
By causing widespread extinctions, humans have artificially simplified many ecosystems. As biologic simplicity increases, so does the risk of ecosystem failure. The spreading Sahara Desert in Africa, and the dustbowl conditions of the 1930s in the United States are relatively mild examples of what might be expected if this trend continues. Theoretically, each new animal or plant extinction, with all its dimly perceived and
intertwined effects, could cause total ecosystem collapse and human extinction. Each new extinction increases the risk of disaster. Like a mechanic removing, one by one, the rivets from an aircraft's wings, mankind may be edging closer to the abyss.
Gabon Oil Good—Impacts—Congo River Basin Extensions
Congo Basis is a key sources of global biodiversity and vital for the world's carbon cycle Kansteiner 03 (Walter, Assistant Secretary of State African Affairs, FDCH, 3/11)
The Congo Basin forest is a global treasure in a region of both great challenge and great opportunity. The forest is not only a "global lung" but a rich store of biodiversity and a source of livelihood for millions. The fate of Africa's forests and natural resources is
inextricably linked to questions of governance, national and regional peace, security and economic growth. Poor conservation practices and conflict over resource use has the potential to undermine stability and hamper prospects for growth. Conversely, sound natural resource management will help promote sustainable trade and economic growth, transparency and openness, and mitigate health threats. That is why we consider conserving Africa's irreplaceable natural resources as one of our central priorities in Africa.
The Congo Basin forest is the second largest area of contiguous tropical forest in the world; the Amazon Basin is the largest. Much of the forest remains relatively intact but pressures and threats to the forest are growing, including from rapid urbanization, uncontrolled timber exploitation and logging, and unsustainable commercial bushmeat hunting. The lack of capacity and resources for enforcement leave even protected areas vulnerable to poaching and illegal logging.
The Congo Basin is the "second lung" of the planet Panafrican News Agency (PANA) Daily Newswire 5/24/04
The purpose of this new partnership is to sustainably protect and manage
the Congo Basin's forest resources which, according to experts, constitute the
"second lung" of the planet, after the Amazon forest.
The said partnership is meant to back up, in the long run, a network of about 10 million hectares of efficiently managed national parks and protected areas and 20 million developed forestry concessions.
The Congo Basin covers a huge forest zone of 2,300,000 square kilometres, or 6 per cent of the world's forest area. Its forests are known for their exceptional biological diversity and substantially contribute in the fight against greenhouse effects by absorbing the carbon in the air.
Destruction of the Congo Basin rainforest risks planetary extinction Guoala 2/3/05 (Joseph, Staff, "Summit to tackle threats to Africa's rainforests," Mail and Guardian online,
http://www.mg.co.za/articlePage.aspx?articleid=196783&area=/breaking_news/breaking_news__africa/) Tropical forests in the Congo Basin stretch over 2,3-million square kilometres, making up a third of the forests across Africa. As the planet's second-biggest timber resource and its second lung for survival, after the Amazon basin in Latin America, the fate of Central Africa's forests is of vital interest not only to the region but also to the rest of the world.
Japanese Coal Good—1NC Impact Module
--High energy prices have sparked Japanese coal production—this is key to reducing Japan’s heavy reliance on imported energy International Herald Tribune 5/23/08 (lexis)
While Japan's coal industry remains tiny, its revival is an example of how higher commodity prices are driving a search for resources even in some of the world's most urbanized and developed nations.
In recent months, South Korea has experienced calls to create a domestic coal industry to reduce dependence on imports. In Britain, where coal's decline became a symbol of withered industrial might, companies are increasing production and considering reopening at least one closed mine. ''It's now the perfect storm, with demand for our coal from South Africa to China and Australia,'' said Rhidian Davies, president of Energybuild, an operator of mines in South Wales. In Japan, higher commodity prices have also unleashed soaring demand for this heavily populated country's other limited natural resources, including lumber and natural gas, where production has risen nearly 20 percent this year to a three-decade high.
But coal is the most potentially plentiful fossil fuel in Japan, and companies have been quick to embrace domestic supplies, now affordable, out of deep-rooted anxieties about Japan's heavy reliance on imported energy.
While there are no national figures yet, mining communities report sharply higher production in the last two years. For example, in Bibai, the city's last two mines, both small strip mines, produced just 34,961 tons of coal in 2005. This year, they expect to surpass 150,000 tons, the highest production since 1973, when the city's last large underground mine was shutting down.
For decades, Japanese coal, at $100 or more a ton, was simply too expensive because of high wages and extraction costs. But with global prices now reaching the same heights, Japanese coal is looking more attractive.
--Reducing its dependence on energy imports is vital for the Japanese economy Lesbirel 04 (S. Hayden, Assoc Prof of Poly Sci @ James Cook University, "Diversification and Energy Security Risks: The
Japanese Case," Japanese Journal of Political Science 5(1), http://journals.cambridge.org/download.php?file=%2FJJP %2FJJP5_01%2FS146810990400129Xa.pdf&code=0e56caac956f3a1667d2aaa56a4c8e16) Energy security is a continuing concern for nations such as Japan which are heavily reliant on imported energy sources. The ability to be able to secure adequate access at reasonable prices to energy imports to satisfy the needs of the economy has a major impact on Japan’s overall security position. It has profound implications for the health of the Japanese socio-economy and the political structures underpinning that economy. Yet, the risks of disruptions in energy markets are many. They include politically and market induced disruptions as well as accidents. There is little predictability in the probabilities of these risks, their possible interactions and their cumulative effects. Every policy statement of the Japanese government since the 1970s has stressed Japan’s dependence on imported energy sources and the need to manage the risks associated with that structural dependence to ensure Japanese security. Energy
security risks matter.
--Japanese economic strength is essential for the global economy and prevents nuclear war with China The Guardian 2/11/02 (lexis)
the west cannot afford to be complacent about what is happening in Japan, unless it intends to use the country as a test case to explore whether a full-scale depression is less painful now than it was 70 years ago. Action is needed, and quickly because this is an economy that could soak up some of the world's excess capacity if functioning properly. A strong Japan is not only essential for the long-term health of the global economy, it is also needed as a counter-weight to the growing power of China. A collapse in the Japanese economy , which looks ever more likely, would have profound ramifications; some experts believe it could even unleash a wave of extreme nationalism that would push the country into conflict with its bigger (and nuclear) neighbour.
Japanese Coal Good—Uniqueness—Japanese Coal Production ↑
Japanese coal production is experiencing a Lazarus-like resurgence New York Times 5/22/08 (lexis)
After decades of steady decline, Japan's coal industry is experiencing a Lazarus-like return. While that might be an exaggeration, as no one is expecting self-sufficiency in coal anytime soon, production has been infused with new life. Prices have hit record highs, making the high-cost mines competitive again. Communities like Bibai have started scouting for second mine locations, and have had to turn down
large customers after years of struggle. Page C1
Japanese Coal Good—Internals—High Oil Prices ↑ Japanese Coal Production
Record high energy prices have sparked the revival of Japanese coal production International Herald Tribune 5/23/08 (lexis)
But after decades of seemingly terminal decline, Japan's coal country is stirring again. With energy prices reaching record highs - oil traded above $135 a barrel Thursday - high-cost Japanese mines are suddenly competitive again, and demand for their coal is booming. Production has jumped to its highest level in nearly four decades, creating a sensation rarely felt in these mining communities: hope. ''We are seeing a flicker of light after long darkness,'' said Michio Sakurai, who is mayor of Bibai, on the northern Japanese island of Hokkaido. ''We never imagined coal would actually make a comeback.'' Soaring commodity prices have had distorting effects across the global economy, driving up food prices and prompting fears of future energy shortages. But they have been an unanticipated boon to the coal producing regions of countries like Japan that had written off coal mining as a relic
of the Industrial Revolution.
Japanese Coal Good—Impacts—Domestic Production Key to Japan Economy
Domestic energy production is key to Japanese economic independence and economic growth Sunday Times 4/20/08 (lexis)
Critically for Japan, which imports 99.7% of the oil, gas and coal needed to run its vast economy, the new-found lumps of energy-filled ice offer the tantalising promise of energy independence.
Environmentalists, though, are horrified by the idea of releasing huge quantities of methane from beneath seabeds. Although methane is a cleaner-burning fossil fuel than coal or oil, the as yet untapped methane hydrates represent ''captured" greenhouse gases that some of them believe should remain locked under the sea. The mining of methane ice could also wreak havoc on marine ecosystems.
Japan is growing more and more desperate to secure energy sources because once-reliable suppliers such as Indonesia and Australia have begun to either cut back exports of their natural gas and coal, or charge crippling prices.
Dependence on oil imports threatens Japanese economic growth—empirically proven Masaki 6/5/08 (Hisane, Tokyo-based journalist, commentator and scholar on international politics and economics, "Japan looks
to other oil sources," Japan Today, http://archive.japantoday.com/news/jp/e/tools/print.asp?content=comment&id=1081) Japan, which has striven for decades to reduce its dependence on oil from the volatile Middle East and thereby ensure stable supplies by diversifying oil sources. Japan imports almost all of its oil, and is the world's third-largest oil consumer after
This in itself must be good news for the United States and China. After switching some of its imports to those from outside the Middle East, such as Indonesia, Mexico and China, Japan saw its dependence on Middle Eastern oil decline to 67.9% in 1987 from more than 80% in 1972, the year before the first oil crisis shook the world and sent panicked Japanese
consumers rushing to stock up on toilet paper and detergent, among other goods, amid rumors that they would run out of stock. A result of the first oil crisis, the Japanese economy experienced its first negative growth since the end of World War II in
1974 after years of high-flying growth from the early 1960s. Japan survived the two oil crises of the 1970s through strenuous energy-saving efforts and technological innovations. The oil crises are commonly remembered as "oil shocks" by Japanese people.
Japanese Coal Good—Impacts—2NC Energy Conflict Module
--Continued Japanese dependence on energy imports sparks energy competition with China Saunders 5/22/08 (Paul, Executive Director @ Nixon Center, CQ Congressional Quarterly, lexis)
Japan, a key U.S. ally in Asia, has thus far resisted similar pressures but is clearly interested in a deeper energy relationship with Iran if it becomes possible. Dependent on imports for nearly 90% of its energy needs, Japan is highly vulnerable to instability in global energy markets and reluctant to pursue policies that complicate its relationships with key suppliers. While the Japanese government plans to increase sharply its reliance on nuclear power to strengthen energy security, in a world of rising demand driven by Asian economic growth Japan seems likely to be drawn into competition with China and others to secure access to essential oil and natural gas imports. This may strengthen the U.S.-Japan bilateral security relationship even as it further limits Japan's ability to support the United States elsewhere.
--This undermines regional security Liao 07 (Xuanli, Lecturer @ Center for Energy, Petroleum, and Mineral Law/Policy @ University of Dundee, "The petroleum
factor in Sino–Japanese relations: beyond energy cooperation," International Relations of the Asia Pacific 7(1), http://irap.oxfordjournals.org/cgi/content/abstract/7/1/23) China and Japan used to have good energy cooperation before China switched into a net oil importer in the mid-1990s, but the recent years have witnessed an increasingly intensive competition between the two countries over petroleum supplies. While many saw such competition as inevitable
with China's growing energy demands, the paper argues that the energy relationship between the two countries was never separated from political and strategic concerns, and heavily affected by the concern of ‘relative gains’, as suggested by the neorealists. Like the case prior to the mid-1990s when the non-energy factors underpinned the Sino–Japanese energy cooperation, the key factors that prevented the two from continuing energy cooperation today also lay in political and strategic aspects. Being two regional powers in East Asia, China, and Japan need to recognize the fact that their lack of energy
cooperation due to mutual political distrust will not only impair their own energy security, but may also have negative implications on regional stability. --Asian
instability sparks nuclear conflict, destroys the nonproliferation regime, and cripples the US and global economies
Jonathan S. Landay, Writer for Knight Ridder/Tribune News Service, 3/10/2000 ("Top Administration Officials Warn Stakes for US are high in Asian Conflicts" – Knight Ridder/Tribune News Service) p. lexis
WASHINGTON _ The 3,700-mile arc
that begins at the heavily fortified border between North and South Korea and ends on the glacier where Indian and Pakistani troops skirmish almost every day has earned the dubious title of most dangerous part of the world. Few if any experts think China and Taiwan, North Korea and South Korea, or India and Pakistan are spoiling to fight. But even a minor miscalculation by any of them could destabilize Asia, jolt the global economy and even start a nuclear war . India, Pakistan and China all have nuclear weapons, and North Korea may have a few, too. Asia lacks the kinds of organizations, negotiations and diplomatic relationships that helped keep an uneasy peace for five decades in Cold War Europe. "Nowhere else on Earth are the stakes as high and relationships so fragile ," said Bates Gill, director of northeast Asian policy studies at the Brookings Institution, a Washington think tank. "We see the convergence of great power interest overlaid with lingering confrontations with no institutionalized security mechanism in place. There are elements for potential disaster ."
In an effort to cool the region's tempers, President Clinton, Defense Secretary William S. Cohen and National Security Adviser Samuel R. Berger all will hopscotch Asia's capitals this month. For America, the stakes could hardly be higher. There are 100,000 U.S. troops in Asia committed to defending Taiwan, Japan and South Korea, and the United States would instantly become embroiled if Beijing moved against Taiwan or North Korea attacked South Korea. While Washington has no defense commitments to either India or Pakistan, a conflict between the two could end the global taboo against using nuclear weapons and demolish the already shaky international nonproliferation regime. In addition, globalization has made a stable Asia _ with its massive markets, cheap labor, exports and resources _ indispensable to the U.S. economy. Numerous U.S. firms and millions of American jobs depend on trade with Asia that totaled $600 billion last year, according to the Commerce Department.
Japanese Coal Good—Impacts—Asian Instability Extensions
Asian instability risks nuclear conflict
Straits Times 6/5/04 (lexis)
In Asia, as in Europe, unease over America's overwhelming global dominance is high. But Asia is more keenly aware than Europe of the vital role that the US plays in maintaining global stability. No matter what their misgivings, only a few Asian countries, and certainly no major US ally, opposed the US on Iraq. There is a clearer appreciation in Asia than in Europe that the fundamental issue in Iraq now is the credibility and resolve of the US.
This is because Asia still faces many serious security challenges. Kashmir, North Korea and cross-strait relations between Beijing and Taipei are potential flashpoints. If things go terribly wrong, the conflicts could even turn nuclear.
The US is central to the management of all three potential flashpoints. All three conflicts also have a direct impact on the global struggle against terrorism. The India-Pakistan dispute over Kashmir is a long-standing one, difficult to resolve because of religion and history. If a conflict breaks out, it is not difficult to imagine Kashmir becoming a new theatre for jihad and a fertile ground for breeding terrorists. The US holds the ring. The desire of both Islamabad and New Delhi to maintain good relations with the US gives Washington leverage that it exercised in 2001 to avert a possible nuclear war. North Korea is another potential trouble spot. The terrorists could try to exploit the situation to acquire materials for weapons of mass destruction. Fortunately, the six-party talks have lowered tensions and the issue is being managed. I have been told by several leaders who have met Mr Kim Jong Il that he is a rational, well-informed man who calculates his moves. He must know that an outbreak of conflict with the US will lead to the very outcome that he fears most: regime change or even the disappearance of North Korea as a sovereign state. He may go to the brink but not step over the edge. The credibility of the US military option is vital to maintaining peace. A GATHERING STORM THE dangers of miscalculation are highest over Taiwan. The issue is extremely complex because it involves the domestic politics of China, the US and Taiwan and relations between the three parties. Economic forces are integrating Taiwan with the mainland but this trend conflicts with Taiwan's desire for a separate identity. Mr Chen Shui-bian's inauguration speech took a conciliatory tone. He must have taken into account US concerns about maintaining stability in cross-strait relations. But he did not renounce independence. Yet independence for Taiwan is a non-starter. No Asian, and I believe, no European government, would recognise Taiwan's independence. To do so would earn China's permanent enmity. And China is the economic story of this century. No Chinese leadership can lose Taiwan and still survive. If Taiwan pushes beyond a certain red line, the Chinese leaders must respond or be rejected by their people. The result will be war and a permanent rise in Chinese nationalism and hostility. The consequences of such a war will make Iraq seem a small problem. The US has no reason to open another front with China over Taiwan, given its strategic priorities in Iraq, the Middle East and the global fight against terrorism.
Secessionism Bad—1NC Impact Module
Falling oil revenues destabilizes oil-dependent states globally—results in Balkan-like ethnic conflict and secessionism Jaffe and Manning 00 (Amy and Robert, Senior Economist @ Petroleum Intelligence Weekly + Senior Fellow of Asian
Studies @ Council on Foreign Relations, Foreign Affairs, Jan/Feb)
Neither, frankly, is Washington. The political reverberations of a sustained oil glut should not be underestimated. Several important regimes Gulf states, Russia, the former Soviet republics, and such key Latin American countries as Venezuela, Mexico, and Colombia --
-- in the count on healthy oil revenues for calming restive populations, assuaging social tensions, and in some cases, nation-building writ large. Without the salve of rising oil revenues, many of these nations can expect to see heightened political instability, social unrest, or even civil wars, which could be grimly reminiscent of recent Balkan slaughters. In the Gulf, such instability could trigger the next oil shocks in the form of short-term disruptions. The 1991 Gulf War demonstrated the West's capacity to defend important oil regions from traditional external threats
like the Iraqi invasion of Kuwait. But America's painful experiences with revolutionary Iran in the late 1970s and the Balkans in the 1990s are grim reminders of how hard it can be to cope with internal instability. The new dynamics of the global oil market have profound implications for U.S. national security policy. Washington had better gird itself.
Secessionism causes spiraling escalation and makes every other global problem worse—turns the case Gottlieb 93 (Gideon, Director of the Middle East Peace Project, Nation Against State, p. 26-7)
Self-determination unleashed and unchecked by balancing principles constitutes a menace to the society of states. There is simply no way in which all the hundreds of peoples who aspire to sovereign independence can be granted a state of their own without loosening fearful anarchy and disorder on a planetary scale. The proliferation of territorial entities poses exponentially greater problems for the control of weapons of mass destruction and multiple situations in which external intervention could threaten the peace. It increases problems for the management of all global issues, including terrorism, AIDS, the environment, and population growth. It carries conditions in which domestic strife in remote territories can drag powerful neighbors into local hostilities, creating ever widening circles of conflict. Events in the aftermath of the breakup of the Soviet Union drove this point home. Like Russian dolls, ever smaller ethnic groups dwelling in large unites emerged to secede and to demand independence. Georgia, for example, has to contend with the claims of the South Ossetians and Abkhazians for independence, just as the Russian Federation is confronted with the separatism of Tartaristan. An international system made up of several hundred independent territorial states cannot be the basis for global security and prosperity.
Secessionism Bad—Links—Low Oil Prices → Ethnic Conflicts/Rebellions
Low oil prices spur ethnic conflicts and violent rebellions throughout oil-dependent states Newsweek 9/22/03 (lexis)
The hotly contested World Trade Organization summit that just concluded in Cancun failed to finish the one big deal that could have saved lives in Africa. By refusing to cut billions in support for agribusiness exporters, the United States ensured that millions of African farmers will continue struggling to sell their produce at home, much less abroad. Worse, there is no solution in sight, given the power of the U.S. farm lobby and the approaching presidential election. According to a growing body of opinion, however, there is another big pot of money that could help save Africa. It's oil. Africa's oil revenue will far exceed the sums it now earns from farm exports (about $12 billion a year). With Western multinationals pouring
money into African oil projects, their partners in African government expect about $200 billion per year in oil revenue over the next 10 years. If that money went into health, education, roads and new industries, it could go a long way toward turning the continent around.
So far, however, Africa's oil boom has not fed the greater good. Average GDP growth fell from 4.3 percent in 2001 to 3.2 percent in 2002, and a recent study by Catholic Relief Services concludes that African petrodollars have actually worsened poverty. Oil money tends to discourage investment in other industries, hurt exports by inflating the local currency and create a trove of easy money that leaders use to buy off opponents and pacify the populace with civil-service jobs and low taxes. When oil prices crash, oil economies fall too, often helping trigger rebellions, says Oxford economist Paul Collier,
who has documented a correlation between natural-resource dependence and civil wars.
High oil revenues solve civil strife, insurrection, and ethnic war in oil exporting countries McKillop 4/19/04 (Andrew, energy economist and ounding member of the Asian chapter of the International Association of
Energy Economists, Oil and Gas Journal) Higher revenues for many low-income oil exporter countries -- notably for the special cases of Nigeria, Saudi Arabia, and especially Iraq -- may be the only short-term way to stop these countries from falling into civil strife, insurrection, or ethnic war, let alone making vast investments to maintain or expand their current export capacity. In the case of Iraq, increased oil revenues are a question of life or death because higher revenues might prevent the country from becoming ungovernable and
Can this be done without higher oil prices? might give it some potential for stability. No immediate and instant recession can occur with oil at $ 50/bbl or even $ 60/bbl. Vastly higher oil prices than that would be needed to abort the worldwide mechanism of higher oil, energy, and real resource prices driving faster economic growth. Conversely, low oil and energy prices entraining low real
resource prices, combined with rising population numbers, surely aggravate the cycle of poverty in low-income commodity exporter countries. Deprived of sufficient revenues, such countries can become "basket case" indebted countries, subjected to draconian conditions by the Club
of Paris, World Bank, and International Monetary Fund for debt refinancing and restructuring. The ability and capacity for investing huge amounts of capital into oil, gas, and other energy production infrastructures by low-income, indebted countries is realistically very low or zero. Yet estimates for world investment needs of the oil and gas industry through the next 10-15 years extend into the range of several thousand billion dollars.
Secessionism Bad—Impacts—Secessionism → Nuke War
Secessionist conflicts risk nuclear war, proliferation, and spill over from state to state Shehadi 93 (Kamal, Research Associate @ IISS, December, Adelphi Papers #283, p. 82)
This paper has argued that self-determination conflicts have direct adverse consequences on international security. As they begin to tear nuclear states apart, the likelihood of nuclear weapons falling into the hands of individuals or groups willing to use them, or to trade them to others, will reach frightening levels. This likelihood increases if a conflict over self-determination escalates into a war between two nuclear states. The Russian Federation and Ukraine may fight over the Crimea and the Donbass area; and India and Pakistan may fight over Kashmir. Ethnic conflicts may also spread both within a state and from one state to the next. This can happen in countries where more than one ethnic self-determination conflict is brewing: Russia, India, and Ethiopia, for example. This conflict may also spread by contagion from one country to another if the state is weak politically and militarily and cannot contain the conflict on its doorstep. Lastly, there is a real danger that regional conflicts will erupt over national minorities and borders.
Low Oil Prices Bad—Global War/Instability
Loss of oil revenues destroy the global economy and result in social breakdowns and wars that destroy civilization Gelbspan 95 (Ross, Pulitzer Prize Winning Reporter/Journalist, Harper's, December, lexis)
That resistance is understandable, given the immensity of the stakes. The energy industries now constitute the largest single enterprise known to mankind. Moreover, they are indivisible from automobile, farming, shipping, air freight, and banking interests, as well as from the governments dependent on oil revenues for their very existence. With annual sales in excess of one trillion dollars and daily sales of more than two billion dollars, the oil industry alone supports the economies of the Middle East and large segments of the economies of Russia, Mexico, Venezuela, Nigeria, Indonesia, Norway, and Great Britain. Begin to enforce restriction on the consumption of oil and coal, and the effects on the global economy--unemployment, depression, social breakdown, and war--might lay waste to what we have come to call civilization. It is no wonder that for the last five or six years
many of the world's politicians and most of the world's news media have been promoting the perception that the worries about the weather are overwrought. Ever since the IPCC first set out to devise strategies whereby the nations of the world might reduce their carbon dioxide emissions, and thus ward off a rise in the average global temperature on the order of 4 or 5 degrees Celsius (roughly equal in magnitude to the difference between the last ice age and the current climatic period), the energy industry has been conducting, not unreasonably, a ferocious public relations campaign meant to sell the notion that science, any science, is always a matter of uncertainty. Yet on reading the news from the IPCC, I wondered how the oil company publicists would confront the most recent series of geophysical events and scientific findings.
Broad-based development of renewable energy collapses oil prices—destroys the economies of oilproducing states, unleashing global violence and destroying global financial markets Newsday 4/7/04 (lexis)
IF SCIENTISTS discovered tomorrow that a clean and safe source of infinitely renewable energy could be cheaply derived from,
say, ordinary sea water, we all know it would be an unmitigated boon for mankind. Well, not exactly. Because any such invention would necessarily cause a collapse of oil prices, and Texas, Louisiana and Oklahoma would become basket states. In Mexico, where petroleum is the chief national patrimony, the floor under a fragile economy, would
disintegrate. The Middle East would become a destabilized mess as oil-rich regimes lost the resources through which they now control their populations. Russia and the many former constituent republics of the Soviet Union would lose export earnings critically important to the survival of their democracies. Billions invested in the extraction of North Sea oil would lose its value. Ripple effects running through the financial system as a result of the downsizing and bankruptcy of much of the existing oil industry are simply too terrifying to contemplate. Still, I don't know any sane person who lies awake at night praying we won't discover cheaper, cleaner, safer
Low oil prices undermine fuel efficiency and alternative energy developments via greater consumption —the result is global conflict Paehlke 89 (Robert, Prof of Public Policy + Environmental Politics @ Trent Univ., Environmentalism and the Future of
Progressive Politics, p. 240-1) The second environmental comment on the threat of war concerns dependence on "strategic" materials of all kinds. Lower world oil prices are leading to renewed North American dependence on the energy resources of the unstable Middle East. Our efforts toward energy self-sufficiency are collapsing on almost every front." In its advertising the auto industry has replaced fuel efficiency with an emphasis on the "pinch" growing families may feel in small cars. The drilling rigs in Texas and Alberta have gone into
mothballs, and many other energy supply initiatives have fallen apart. Many of these projects are environmentally doubtful, but progress toward an SEP is equally vulnerable to lower oil prices. And all efforts toward energy self-sufficiency help ease the military anxiety to which so many nations are so prone. Environmentalists could stress that these dilemmas can be solved by establishing steady oil price increases, set in periodically negotiated settlements between producers and consumers or in an evolving system of contingent agreements." In such a context long-term investments in energy conservation would be more secure. The environmental impacts of hard path energy projects could also be softened, because such projects could be planned and developed with greater care. (Without a stable regime of price increases energy projects are alternately
economically hopeless or conceived and executed within a crisis mentality.) Most important perhaps, a deliberate and gradual increase in oil prices might help the world feel more secure. Presently the world as a whole is often forced to be as unsettled as its most unstable
region. If a new pricing regime assured prices even marginally in excess of those the market might deliver, there would be a considerable pressure on OPEC nations to remain within the system.
Euro Switch DA—1NC Shell
A. Saudi Arabia and OPEC are unlikely to move away from the dollar as the transactional currency for oil now Leverett and Leverett 6/16/08 (Flynt and Hillary Mann, former senior director for Middle East affairs at the National
Security Council/ senior fellow and director of the New America Foundation’s Geopolitics of Energy Initiative + former director of Gulf affairs at the National Security Council/chief executive officer of Stratega, a political risk consultancy, "US economic decline top issue," http://www.thenational.ae/article/20080615/FOREIGN/441776822/-1/ART) Although the GCC states are beginning to diversify their reserve assets, a wholesale move by the GCC away from the dollar as the basis for currency pegs and the transactional currency for international oil trading seems unlikely for now. Saudi Arabia is staunchly opposed to these steps, on what Saudi officials candidly describe as “strategic” rather than economic grounds. Other GCC states are constrained to follow the Saudi lead to avoid damaging prospects on currency pegs for eventual monetary union. Even Kuwait, which shifted the peg for its dinar last year to a “basket” of currencies, gives the dollar disproportionate weight in that basket. And the kingdom carries sufficient weight within Opec to block precipitous shifts in the currency regime for international oil trading.
B. US oil imports ensure oil payments and pricing are based on the dollar Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy,
In his scenario, Jarjani identifies a set of conditions under which the OPEC countries might be inclined to shift to pricing in euros. Given his influential position in OPEC, this scenario carries considerable weight. In this regard, Jarjani feels that the critical developments bearing on OPEC's future pricing decisions will center around ten major developments: (16) 1. In the longer term, the euro will be more on a par with the U.S. dollar. This is especially the case with regard to economic size, especially given the EU's enlargement plans. Most important, he feels that the euro zone will have a bigger share of global trade than the United States, and while the United States tends to run a large current-account deficit, the euro area has a more balanced, external-accounts position, thus increasing the attractiveness of the euro.
2. One of the more compelling arguments for keeping oil pricing and payments in dollars has been the fact that the United States remains a large importer of oil, despite being a substantial crude producer itself. On the other hand, the euro zone, especially in light of
enlargement, imports even more oil and petroleum products than the United States.
C. The emergence of the petroeuro would cripple the US dollar and destroy US hegemony Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy)
Put differently, proponents of this view contend the dollar-priced oil system creates a virtuous cycle for the United States, making the country's massive trade deficit tolerable and its foreign military operations financially bearable. In effect, the existing dollar/oil system allows the U.S. government to run up a massive deficit without raising interest rates as foreign dollars are used to purchase U.S. government debt. The economy thrives because the U.S. private sector is not crowded out of the financial markets. The net result is to allow strong levels of consumption and investment despite extraordinarily low rates of savings. Meanwhile, the United States can pursue overseas military operations without being encumbered by the resource constraints facing all other countries. The United States can have both guns and butter. It follows that breaking the dollar/ oil link would drastically reduce the role of the U.S. dollar as an international reserve currency, and thus the military/economic power of the United States.
Euro Switch DA—1NC Shell
D. US leadership prevents global nuclear war and is key to solving global problems
Zalmay Khalilzad, Consultant @ RAND, Spring 1995 (“Losing the Moment?” - The Washington Quarterly) p. lexis
Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in which the United States exercises leadership would have tremendous advantages. First, the global environment would be more open and more receptive to American values -- democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing cooperatively with the world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts. Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States and the world to avoid another global cold or hot war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would therefore be more conducive to global stability than a bipolar or a multipolar balance of power system.
Euro Switch DA—Uniqueness—OPEC Won’t Switch From Petrodollar
OPEC is currently rejecting Iran’s demands to price oil in a basket of currencies MacDonald 5/23/08 (Elizabeth, Analyst @ FOX Business, "Why Suing OPEC Won't Work,"
http://emac.blogs.foxbusiness.com/2008/05/23/why-suing-opec-wont-work/) The blogosphere in Saudi Arabia is hot with debate over inflation in Saudi Arabia and talk of pushing the royals to de-peg the riyahl from the US dollar.”The dollar has totally been removed from Iran’s oil transactions,” Iran’s oil ministry official Hojjatollah Ghanimifard has already
said. “We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies.”Iranian president Mahmoud Ahmadinejad called the depreciating dollar a “worthless piece of paper” at a summit last year in Saudi Arabia attended by state leaders from OPEC countries.
Iran has been pressuring other OPEC countries to price oil in a basket of currencies, but it has not succeeded as a number of members, including Saudi Arabia, are firm U.S. allies.
OPEC is presently unlikely to switch away from the petrodollar Chandler 6/11/08 (Marc, chief currency strategist at Brown Brother Harriman, "Marc Chandler Examines Changing
HardAssetsInvestor.com (Norman): Welcome back to HardAssetsInvestor.com’s interview series. I’m Mike Norman, your host, and I’m here with Marc Chandler, chief currency strategist at Brown Brother Harriman. Marc, in our last interview, we were talking about the relationship between the weak dollar and oil prices.
Many people out there say that because the dollar is going down and because oil is priced in dollars, that OPEC producers are going to start shifting out of the dollar into another currency; say the euro, or a basket of currencies. Is this going to happen, in your
opinion? Marc Chandler, chief currency strategist at Brown Brother Harriman (Chandler): I think
it’s always possible that something like this could happen, but we think that the odds of it are very slim. In fact, when you look at the Saudi peninsula and the six gulf community council members, only one of them has shifted out of the dollar, and they really shifted to a basket Kuwait. They shifted to a basket where the dollar played a very large role. What these countries are doing, they got a lot of their income, of course, by selling oil and getting dollars. A lot of their investments are
in dollars, so for them to break the peg with the dollar, for them to see a major revaluation of the old currencies would cause some hardship out of their holdings. Most recently, the gulf community has reiterated that they will stick to the dollar pegs, and what they’re playing for is in 2010, adopting a single currency. It’s interesting; what happened is, a Saudi official, who runs their central bank called the Monetary Authority, went to Europe in the middle of February, and it was a perfect forum for him to say, “I’m going to be adopting your currency,” but instead he said, “We thought the dollar was a good purchase,” and the Kuwaitian investment authority, which is the second-largest sovereign wealth fund, said the same thing.
Saudi Arabia and Gulf states are continuing to refuse to de-peg oil pricing from the dollar Arnold 6/1/08 (Wayne, Columnist, The National, "Oil price a burden, says Paulson,"
Asked to comment on the region’s dollar peg, Mr Paulson told reporters: “The dollar peg, I think, has served his country and this region well.” Mr
reaffirmed Saudi Arabia’s support for the peg, saying: “We have no intention of de-pegging or revaluation.”
Speculation has been rife in the past year that the region might be ready to revalue its currencies or otherwise drop their dollar peg. While the US has been cutting interest rates to counter a slowing economy, the Gulf is in the midst of an oil-fuelled economic boom. Keeping their currencies pegged to the dollar requires that Gulf central banks cut rates along with the US, stoking inflation that has risen regionally to an estimated 7.4 per cent. Letting their currencies rise, economists have said, would help alleviate inflation by lowering import costs, particularly of key commodities such as food. Merrill Lynch, the US brokerage, revived speculation recently with a May 22 report entitled “US green light for the GCC” that cited a semi-annual Treasury report to Congress on foreign exchange rate policies as having given tacit approval for the GCC members to de-peg. “We believe that the US is helping to lift the political barriers to exchange rate regime changes in the region,” the report said, justifying its recommendation that investors buy Gulf currencies. Some analysts believe the peg is losing support among Treasury officials, who fear its inflationary impact could destabilise America’s Gulf allies. But others say
the US has exerted pressure on Gulf nations to keep the peg out of fear that dropping it could accelerate the dollar’s decline. Several analysts, therefore, have since cast doubts on Merrill’s conclusions, particularly its assertion that the latest Treasury report focused
on GCC currencies for the first time “in recent history”. Standard Chartered Bank, for example, pointed out that the GCC currencies figured in the Treasury’s previous report. Besides, said Brad Setser, a former Treasury official and fellow at the Council on Foreign Relations in New York, “the FX report wouldn’t be a vehicle for communicating with the Gulf”.
Euro Switch DA—Links—US Oil Dependence → OPEC Support for Petrodollar
US oil dependence ensures OPEC's continued support of the dollar as the pricing mechanism for oil Brockway 01 (George, economics columnist for The New Leader, Journal of Post Keynesian Economics, lexis)
The question remains, why did the OPEC nations chose the dollar instead of the pound sterling, the yen, the euro, or no single currency? There are several possible reasons. The single currency scheme has the great advantage of shielding OPEC from the irrational frenzy of the international money markets. Although there is coolness between OPEC and the United States because of the latter's support of Israel, the United States is OPEC's largest customer and the world's largest exporter and largest importer. It is therefore easier, both for OPEC and for its customers, to deal with the United States than with anyone else. In addition, the United States is the largest producer of goods the OPEC nations
need, or think they need--namely agricultural products and military materiel.
Euro Switch DA—Links—US Efforts to Reduce Oil Imports
Gulf oil ministers will perceive the plan as an attempt to weaken the US/Gulf security link—loss of the security link causes OPEC to switch from pricing oil in dollars and cripples the US economy Gause 94 (Gregory, Prof @ Univ. of Vermont, Oil Monarchies: Domestic and Security Challenges in the Arab Gulf,
http://www.arts.mcgill.ca/programs/icas/gause/chapter7.html) Such investments and purchases are, of course, but a small percentage of the overall American economy. Their absence would be felt, no doubt, but would not be enormously damaging for American economic health. What could be immediately damaging to the U.S. economy would be any efforts to denominate the world price of oil in anything but dollars. As the world oil price is now set in dollars, the United States is buffered from the effects of currency fluctuations on its energy imports. If, for example, oil prices were denominated in Japanese yen, America's energy bill would increase as the value of the dollar against the yen fell, even though nominal oil prices remained unchanged. During another episode where the dollar fell in relation to other major currencies, in the mid-1970's, there was much talk in OPEC about changing the basis of oil pricing from the dollar to a basket of currencies. Loud complaints could be heard from the Gulf about the decline in returns from oil sales because the dollar was not worth as much as it used to be. The Iranian Revolution put a halt to such talk by re-emphasizing the security dependence of the Gulf monarchies on the United States. The recent fall of the dollar since the Gulf War has not elicited similar comments. Were the security link between the United States and the Gulf monarchies to be broken, their incentives to maintain the dollar as the benchmark currency for oil pricing would be reduced. Financial and oil questions are likely to be the only areas of serious dispute between the United States and the Gulf monarchies in the context of their current relationship. The Clinton Administration's proposed carbon tax elicited very public criticism from Gulf oil ministers, who saw it as aimed exclusively at oil imports. They implicitly threatened to defer plans for increasing production capacity until the issue was settled. The involvement of political elites in the UAE and Saudi Arabia in the BCCI scandal now unfolding in American courts is also an irritant. American concerns about Saudi creditworthiness nettle Riyad, while at the same time Washington pushes the Saudis to buy more arms and to help underwrite Middle East peace efforts. Such issues are not enough to threaten the common security and economic interests seen by both sides in the relationship, but they point out the extent of the economic interconnections of the parties.
Euro Switch DA—Impacts—Economy Extensions
OPEC switch to the euro destroys the US, Chinese, and global economies Dyer 5/19/04 (Gwynne, The Daily News)
That doesn't just mean angry American voters. It also means we are sitting on the brink of a global recession. It would probably take an even higher spike in price to push us over the brink, but that is distinctly possible. It could be caused by violence that interrupts Saudi oil exports, for example -- the terrorist attacks at Yanbo on foreign oil-industry employees on May 1 have already started an exodus from the kingdom -- or by a decision by Opec to demand payment in euros rather dollars. The recession would start in the United States, where a massive budget deficit (over $ 500 billion and rising), an equally big balance of payments deficit, and the soaring cost of the war in Iraq make a collapse of confidence quite likely. Recession in America would quickly spread to China, whose growth is heavily dependent on US ability to take its exports. The US and China together accounted for two-thirds of global economic growth last year: if they go, everybody goes.
OPEC switch to the euro destroys the US economy—dollar crashes, foreign investment flight, massive inflation, account + budget deficits become unservicable Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy)
One of the best articulations of this scenario--the war with Iraq was not so much over oil as it was over the pricing of oil in euros by Saddam Hussein--has been developed by W. Clark: (13) 1. The Federal Reserve's greatest nightmare is that OPEC will switch its international transactions from a dollar standard to a euro standard. Iraq actually made this switch in November 2000 (when the euro was worth around 82 cents), and has actually made out like a bandit, considering the dollar's steady depreciation against the euro (the dollar declined 17 percent against the euro in 2002). 2. The real reason the Bush administration wants a puppet government in Iraq--or, more important, the reason the corporatemilitary-industrial network conglomerate wants a puppet government in Iraq--is so that it will revert back to a dollar standard and stay that way (while also hoping to veto any wider OPEC momentum towards the euro, especially from Iran, the second-largest OPEC producer, which is actively discussing a switch to euros for its oil exports). 3. The effect of an OPEC switch to the euro would be that oil-consuming nations would have to flush dollars out of their (central bank) reserve funds and replace them with euros. The dollar would crash anywhere from 20-40 percent in value, with consequences predictable from any currency collapse and massive inflation (like Argentina's currency crisis, for example). You'd have foreign funds stream out of the U.S. stock markets and dollar-denominated assets; there'd be a run on the banks much like the 1930s; the current-account deficit would become unserviceable; the budget deficit would go into default and so on.
Euro Switch DA—Impacts—US Leadership Extensions
Switch away from the petrodollar undermines the US dollar and causes massive central bank flight from the US—destroys the US economy and US global leadership Monbiot 4/22/03 (George, The Guardian)
The only serious threat to the dollar's international dominance at the moment is the euro. Next year, when the European Union acquires 10
new members, its gross domestic product will be roughly the same as that of the US, and its population 60% bigger. If the euro is adopted by all the members of the union, which suffers from none of the major underlying crises afflicting the US economy, it will begin to look like a more stable and more attractive investment than the dollar. Only one further development would then be required to unseat the dollar as the pre-eminent global currency: nations
would need to start trading oil in euros.
Until last week, this was already beginning to happen. In November 2000, Saddam Hussein insisted that Iraq's oil be bought in euros. When the value of the euro rose, the country's revenues increased accordingly. As the analyst William Clark has suggested, the economic threat this represented might have been one of the reasons why the US government was so anxious to evict Saddam. But it may be unable to resist the greater danger. Last year, Javad Yarjani, a senior official at Opec, the oil producers' cartel, put forward several compelling reasons why his members might one day start selling their produce in euros. Europe is the Middle East's biggest trading partner; it imports more oil and petrol products than the US; it has a bigger share of global trade; and its external accounts are better balanced. One key tipping point, he suggested, could be the adoption of the euro by Europe's two principal oil producers: Norway and the United Kingdom, whose Brent crude is one of the "markers" for international oil prices. "This might," Yarjani said, "create a momentum to shift the oil pricing system to euros."
If this happens, oil importing nations will no longer need dollar reserves to buy oil. The demand for the dollar will fall, and its value is likely to decline. As the dollar slips, central banks will start to move their reserves into safer currencies such as the euro and possibly the yen and the yuan, precipitating further slippage. The US economy, followed rapidly by US power, could then be expected to falter or collapse.
Euro Switch DA—A2 Partial Shift Away from Petrodollar
Even a partial shift in pricing oil towards the euro deals a heavy blow to the dollar and the US economy Ibrahim 03 (Youssef, group editor of Energy Intelligence, was most recently a senior fellow for Middle East affairs at the
Council on Foreign Relations, 4/1, Institutional Investor International Edition, lexis)
In the meantime, the U.S.-Saudi relationship has been deteriorating for several reasons. Some in the U.S. blame the Saudis for helping to finance terror globally although not officially (15 of the 19 September 11 terrorists were Saudis), and the kingdom declined to help the U.S. as much as it wanted in the war. (Although recently the kingdom allowed the U.S. to send cruise missiles over its territory to attack Iraq.) The Saudis are talking to the Chinese and the French about buying missiles and tanks, respectively, not wanting their armed forces to be too beholden to U.S. military suppliers. The Saudis have already reached the conclusion that China is likely to supersede the U.S. as their biggest customer for oil within a decade. One danger for the U.S. is whether the kingdom will accede
to pressure from other members of OPEC, including the Iranians, Algerians and Iraqis, who have been pushing to price oil in euros, not dollars. Even a partial shift in the traditional terms of payment could deal a heavy blow to the dollar and to the U.S. economy. Rising hostility to the U.S. among Muslims could take other unexpected economic tolls. U.S. companies could find it more difficult to conduct or
expand their business in the Islamic world.
Even a partial switch to oil pricing in euros causes a sudden and steep decline in the dollar Makhijani 03 (Arjun, President @ IEER, "A Looming Monetary Collision: Oil, the Dollar, and the Euro,"
www.ieer.org/comments/econ/oil$euro.pdf) There might be monetary chaos if key countries start denominating their oil in euros, or if OPEC changes its oil pricing strategy to euros, in the midst of a global crisis. Countries and individuals currently tend to hold their foreign reserves in dollars, in part because dollars buy oil. A dumping of dollars arising from even a partial switch to oil pricing in euros could cause a sudden and steep decline in the value of the dollar. In that context, countries and corporations may decide to convert their monetary reserves, now held mostly in dollars, to euros and to commodities such as gold or oil. In 1979, the sharp decline of the dollar relative to European currencies occurred in parallel with skyrocketing prices of oil and gold.
Euro Switch DA—Impacts—US Military Intervention
OPEC moves towards pricing oil in euros ensures US-led military conflict—Iraq proves Clark 03 (W., Independent Media Center, "THE REAL REASONS FOR THE UPCOMING WAR IN IRAQ,"
http://www.rense.com/general34/realre.htm) It would appear that any attempt by OPEC member states in the Middle East or Latin America to transition to the euro as their oil transaction currency standard shall be met with either overt U.S. military actions or covert U.S. intelligence agency interventions. Under the guise of the perpetual "war on terror" the Bush administration is manipulating the American people about the unspoken but very real macroeconomic reasons for this upcoming war with Iraq. This war in Iraq will have nothing to with any threat from Saddam's old WMD program. This war will be over the global currency of oil.
US/Saudi Relations DA—1NC Shell
A. US-Saudi relations have rebounded—oil remains central to the overall relationship Murphy 5/15/08 (Caryle, Foreign Correspondent, The National, "Saudi-US relations hit rocky road,"
http://www.thenational.ae/article/20080514/FOREIGN/946458903/1011/SPORT&Profile=1011) Saudis are uncharacteristically blunt when asked about George W Bush, the US president, and what his two-term administration has brought
to the Middle East. Most see an abysmal legacy: a dangerous mess in Iraq, a deepening Israeli-Palestinian conflict and a volatile tug-of-war between Washington and Tehran, most recently on display in the embattled boulevards of Beirut. “We love and admire the United States, I can assure you, and I speak for many people on this matter,” said Saeed al Farha al Ghamdi, a retired government employee in Jeddah. “But, unfortunately their foreign policy is disastrous.”
Many government officials share these sentiments but in true Arab tradition, they will accord Mr Bush the utmost in hospitality when he arrives here on Friday for his second visit in four months – even though they are not sure why he is coming. Bilateral ties between the two countries have rebounded from the nadir to which they sank after Sept 11 2001. And as long as oil and security are top priorities, the long-standing US-Saudi relationship will remain an important one to both.
B. Saudi Arabia opposes any substantial changes in energy policy, especially changes aimed at reducing CO2 emissions or oil imports Roberts 04 (Paul, Columnist @ Harper's, The End of Oil: On the Edge of a Perilous New World, p. 286-7)
Because energy is critical to national power, producers have traditionally enjoyed close ties to national governments, and thus have been able to shape national energy policies. Whereas the United States might otherwise regard Saudi Arabia, with its anti-Western attitudes and its links
to terrorist elements, as a legitimate political enemy, the kingdom's vast oil reserves and especially its enormous surplus capacity have for decades ensured that Washington would overlook such criminal behavior. As one political analyst told me, "the fact that a U.S. president can call up the Saudis and say, 'Something major is going to happen tomorrow and we desperately need you to pump more oil to reassure the market' has given the Saudis a level of access in Washington that is pretty much unparalleled." Such influence isn't likely to diminish anytime soon. Because hydrocarbons will play a central role in any transitional energy economy, and because producers alone have the capital and resources to build the next energy infrastructure, they will also have considerable say in when and how quickly we move to a new energy economy. In fact, many oil-producing states have worked assiduously to prevent any change, either by trying to keep prices low (not always successfully) or by attacking competing energy sources. The Saudis, for example, have gone so far as to file complaints with
the World Trade Organization claiming that European programs to cut CO2 emissions unfairly constrain the Saudi oil trade. "We are against any policy that unfairly discriminates against oil," one top Saudi oil official told me bluntly. "We want to keep oil the fuel of choice."
C. Strong US/Saudi relations prevent Saudi nuclearization Levi 03 (Michael, Science and Technology Fellow, Foreign Policy Studies @ Brookings, “Would the Saudis Go Nuclear?,”
http://www.brookings.edu/views/articles/fellows/levi20030602.htm) Why would Riyadh want nukes now? Because of a potentially dangerous confluence of events. The rapidly progressing nuclear program of traditional rival Iran has no doubt spooked the Saudi leadership. Last fall, dissidents revealed the existence of a covert Iranian
uranium-enrichment program, forcing analysts to drastically revise down their estimates of how long it might take Iran to obtain nuclear weapons. Reacting to that development, Patrick Clawson, deputy director of the Washington Institute for Near East Policy, recently wrote that "Saudi Arabia is the state most likely to proliferate in response to an Iranian nuclear threat" because, he argued, the Saudis fear a nuclear-armed Iran could have designs on Saudi Arabia, a Sunni monarchy that is home to a large number of oppressed Shia. After all, Tehran has for years allegedly supported Shia terrorist groups operating in Saudi Arabia and was blamed by many analysts for the 1996 Khobar Towers bombing. Holding back the Saudi nuclear program, of course, has been the kingdom's relationship with the United States. Though America has never signed a formal treaty with Riyadh, since World War II the United States has made clear by its actions—most notably, by protecting Saudi Arabia during the 1991 Gulf war—and by informal guarantees given to Saudi leaders by American officials that it will protect the monarchy from outside threats. Since the September 11 attacks, though, that relationship has grown increasingly frail. When a RAND analyst last summer told the Defense Policy Board, then chaired by Richard Perle, that Saudi Arabia was "the kernel of evil, the prime mover, the most dangerous opponent" in the Middle East, he not only raised hackles in Riyadh, he reflected the opinion of many close to the Bush administration. R. James Woolsey, former CIA director and White House confidant, was even more emphatic in a speech last November, referring to "the barbarics [sic], the Saudi royal family." The recent decision by Washington to pull most of its forces out of Saudi Arabia, reducing its deployment from 5,000 to 400 personnel and moving its operations to Qatar, has added facts on the ground to the rhetorical barrage. This recent decline in U.S.-Saudi relations can hardly make the Saudi royal family feel secure. Suddenly removing the U.S. security blanket just as regional rivalries are intensifying could push the Saudis into the nuclear club. That's a scary prospect, particularly when you consider the possibility of Islamists overthrowing the monarchy. Instead, the United States should be careful to maintain Saudi Arabia's confidence even as the two nations inevitably drift apart. The United States might even extend an explicit security guarantee to the Saudis, the kind of formal treaty it gave Europe to keep it non-nuclear during the cold war-and the kind of formal arrangement Washington and Riyadh have never signed before. Such a formal deal could raise anti-American sentiment in the desert kingdom. But the alternative might be worse.
US/Saudi Relations DA—1NC Shell
D. Saudi nuclear proliferation ensures conflict escalation in the Middle East Morning Star 9/19/03 (lexis)
A strategy paper, which is allegedly being considered at the highest levels in Riyadh, suggests either acquiring a nuclear capability
as a deterrent or entering an alliance with an existing nuclear power. CND chairwoman Kate Hudson said: "The war on Iraq has created
greater instability in the Middle East. The acquisition of nuclear weapons by Saudi Arabia will further destabilise the area and could lead to a new nuclear arms race.
E. The impact is global nuclear conflict Steinbach 02 (John, Hiroshima/Nagasaki Peace Committee + Centre for Research on Globalization, "Israeli Weapons of Mass
Destruction: a Threat to Peace," www.globalresearch.ca/articles/STE203A.html) Meanwhile, the existence of an arsenal of mass destruction in such an unstable region in turn has serious implications for future arms control and disarmament negotiations, and even the threat of nuclear war. Seymour Hersh warns, "Should war break out in the Middle East again,... or should any Arab nation fire missiles against Israel, as the Iraqis did, a nuclear escalation, once unthinkable except as a last resort, would now be a strong probability."(41) and Ezar Weissman, Israel's current President said "The nuclear issue is gaining momentum(and the) next war will not be conventional."(42) Russia and before it the Soviet Union has long been a major(if not the major) target of Israeli nukes. It is widely reported that the principal
purpose of Jonathan Pollard's spying for Israel was to furnish satellite images of Soviet targets and other super sensitive data relating to U.S. nuclear targeting strategy. (43) (Since launching its own satellite in 1988, Israel no longer needs U.S. spy secrets.) Israeli nukes aimed at the Russian heartland seriously complicate disarmament and arms control negotiations and, at the very least, the unilateral possession of nuclear weapons by Israel is enormously destabilizing, and dramatically lowers the threshold for their actual use, if not for all out nuclear war. In the words of Mark Gaffney, "... if the familar pattern(Israel refining its weapons of mass destruction with U.S. complicity) is not reversed soon- for whatever reason- the deepening Middle East conflict could trigger a
world conflagration." (44)
US/Saudi Relations DA—Uniqueness—Relations ↑ Now
Bush’s recent visit to Saudi Arabia has strengthened US-Saudi cooperation Saudi-US Relations Information Service 5/16/08 ("President Bush in Saudi Arabia: Agreements Bolster Regional
Security," http://www.saudi-us-relations.org/articles/2008/special-reports/080516-strengthening-ties.html) Today, President Bush met with King Abdallah to commemorate the 75th anniversary of formal diplomatic relations between the United States and Saudi Arabia. Since 1933, these two nations have enjoyed formal relations. In 1945, during the waning months of World War II, King Abdallah's father – King Abd al-Aziz – met with President Franklin Delano Roosevelt aboard the U.S.S. Quincy in the Red Sea, and the two leaders chose to deepen the strategic relationship between the two countries. The President's visit today builds on this tradition of friendship and close cooperation.
US-Saudi ties are improving now—recent diplomacy and bilateral agreements prove Hadley 6/8/08 (Stephen, National Security Advisor, White House Press Office, lexis)
I'd like to start, if I can, to say a little bit about some of the strengthening and diplomatic ties between the United States and Saudi Arabia that they were able to witness here today. As we've noted, this is the 75th anniversary of the formal establishment of diplomatic relations between the United States and the Kingdom of Saudi Arabia. And it is certainly fitting that these two leaders were able to reach some understandings and agreements that will further strengthen the ties between the two countries.
US/Saudi Relations DA—Links—Oil Key to Relations
Oil dominates the US-Saudi relationship Teslik 5/16/08 (Lee Hudson, Assistant Editor @ Council on Foreign Relations, "A Complicated Alliance,"
http://www.cfr.org/publication/16255/complicated_alliance.html?breadcrumb=%2F) Seventy-five years ago this month, California’s Standard Oil Company closed a deal with the finance minister of Saudi Arabia, a country the United States had only officially recognized two years earlier. The agreement granted the oil firm an exploration contract and initiated a multifaceted and sometimes thorny bilateral economic relationship. Today, oil still dominates U.S.-Saudi ties, which went on display May 16 when President Bush met Saudi’s King Abdullah. But the fairly straightforward buy-sell dynamic between the world’s
leading importer and leading exporter of crude is increasingly complicated by a host of other issues, from security cooperation to currency concerns.
US/Saudi Relations DA—Impacts—Relations Solve Saudi Nukes Extensions
Deteriorating US/Saudi ties force the Saudi government to consider nuclear weapon acquisition Dvali 04 (Akaki, Graduate Research Assistant @ Center for Nonproliferation Studies, " Will Saudi Arabia Acquire Nuclear
Weapons?," www.nti.org/e_research/e3_40a.html) Saudi Arabia has several reasons to consider acquiring nuclear weapons: the current volatile security environment in the Middle East; its ambition to dominate the region; and the growing number of states (particularly Iran and Israel) with weapons of mass destruction (WMD) in the region. According to the British newspaper The Guardian, for example, the Saudi Arabia worries about an alleged Iranian nuclear program and the absence of any international pressure on Israel (estimated to have up to 200 nuclear devices) to disarm. Richard L. Russell, a research associate at Georgetown University's Institute for the Study of Diplomacy, also mentions the insecurity and regional proliferation of WMD as a major motivation for Riyadh's steps toward procuring a nuclear deterrent. Russell notes Saudi Arabia's clandestine purchase of long-range CSS-2 ballistic missiles (capable of delivering nuclear weapons) from China in the 1980s as an indication of Saudi ambitions to acquire nuclear weapons. Also, given the Saudi's growing hostilities toward the United States and the evident deterioration of U.S.-Saudi security ties, particularly after the September 11 terrorist attacks, it is likely that the Saudi government would consider alternative security arrangements, including a nuclear option.
Erosion of US/Saudi ties spurs Saudi acquisition of nuclear weapons UPI 7/23/04 (lexis)
Even Saudi Arabia, outwardly a leading advocate of a nuclear-free zone in the Middle East, might feel the need to counter-balance a nuclear Iran, said Thomas W. Lippman -- adjunct scholar at the Middle East Institute and former Middle East correspondent for the Washington Post -- speaking at CSIS. The kingdom does not appear to be seeking nuclear weapons at present, said Lippman, though it is a very closed society with decisions made by a
small group of people, the inner-circle of the royal family. Even American officials, he said, do not seem to know what Saudi Arabia's nuclear policy really is.
Amid Saudia Arabia's internal turmoil, security relations with the United States could erode further, Lippman continued, leading the Saudi government to conclude they need another security arrangement, perhaps by purchasing or "renting" nuclear weapons from Pakistan or North Korea. There has been increasing speculation about Saudi aspirations to a nuclear deterrent while the crisis in the Middle East mounts. In
September 2003, London's Guardian newspaper reported on a secret strategy paper allegedly considered at the highest levels, which laid out three strategy options: developing nuclear capability, establishing a protection alliance with another nuclear state, or reaching an agreement on a non-nuclear Middle East.
Fractured US/Saudi relations causes Saudi Arabia to go nuclear Levi 03 (Michael, Science and Technology Fellow, Foreign Policy Studies @ Brookings, “Would the Saudis Go Nuclear?,”
http://www.brookings.edu/views/articles/fellows/levi20030602.htm) Realists counter that the United States needs Saudi oil and Saudi military bases. But there's a less obvious argument for making sure the long-standing Washington-Riyadh partnership doesn't fracture: If it does, the Saudis might well go nuclear. Saudi Arabia could develop a nuclear arsenal relatively quickly. In the late '80s, Riyadh secretly purchased between 50 and 60 CSS-2 missiles from China. The missiles were advanced, each with a range of up to 3,500 kilometers and a payload capacity of up to 2,500 kilograms. What concerned observers, though, was not so much these impressive capabilities but rather the missiles' dismal accuracy. Mated to a conventional warhead, with a destructive radius of at most tens of meters, these CSS-2 missiles would be useless—their explosives would miss the target. But the CSS-2 is perfect for delivering a nuclear weapon. The missile itself may miss by a couple of kilometers, but, if the bomb's destructive radius is roughly as large, it will still destroy the target. The CSS-2 purchase, analysts reasoned, was an indication that the Saudis were at least hedging in the nuclear direction.
US/Saudi Relations DA—Impacts—2NC Nonproliferation Regimes Module
--Saudi nuclear acquisition destroys global nonproliferation regimes Russell 01 (Richard, Research Associate at the Institute for the Study of Diplomacy,
Georgetown University, “A Saudi Nuclear Option,” Survival, Summer, p. 77) More broadly, the recognition of a Saudi nuclear deterrent would be a major blow against international proliferation regimes. The global community would be forced to see that despite the best of intentions and efforts, the ‘nuclear genie’ will not be put back into its bottle. The West and the United States will have to squarely face the fact that weapons of mass destruction and ballistic missiles will be an ever-present reality of the post-Cold War world. Despite the arguments from some quarters that the proliferation of nuclear weapons will enhance international security by bolstering deterrence and lessening the chances for interstate war prudent, statecraft would assume that deterrence in practice is unlikely to be as effective as envisioned in theory.32 The United States should continue efforts to contain the spread of nuclear weapons, but, in the end, should recognise that nuclear proliferation will occur and that nuclear deterrence is unlikely to be a perfect safeguard against inter-state war. The United States and its allies must be prepared to deter and to fight, if need be, nuclear-armed adversaries. Ballistic-missile defences will necessarily play a role in the calculus, notwithstanding reservations about them within the transatlantic community.
--These regimes are critical to human survival Muller 00 (Harald, Director of Peace Research Institute—Frankfurt + Prof of Int'l Relations @ Goethe University, "Compliance
Politics: A Critical Analysis of Multilateral Arms Control Treaty Enforcement," Nonproliferation Review, Summer, p. 78) At the global level, arms limitation or prohibition agreements, notably in the field of weapons of mass destruction, are needed to ban existential dangers for global stability, ecological safety, and maybe the very survival of human life on earth. In an age of increasing interdependence and ensuing complex networks that support the satisfaction of basic needs, international cooperation is needed to secure the smooth working of these networks. Arms control can create underlying conditions of security and stability that reduce distrust and enable countries to commit themselves to far-reaching cooperation in other sectors without perceiving undesirable risks to their national security.
US/Saudi Relations DA—A2 Saudi Won’t/Can’t Develop Nukes
Saudi Arabian nuclear breakout is highly possible—they're fearful of regional security threats, possess the necessary CSS-2 missiles, and deteriorating US/Saudi relations could be the catalyst Russell 1/5/04 (Richard, adjunct assistant professor in the Security Studies Program at Georgetown University, Wash Times)
The Saudis have a pool of strategic interests that likely put them at odds with American counterproliferation policy. Riyadh's major regional rivals are capable, or soon will be, of threatening the Saudi kingdom with nuclear brinkmanship; Israel has the most formidable nuclear weapons capabilities in the region; Iran appears bent on acquiring nuclear weapons; and Iraq might resurrect a nuclear weapons program after the Americans depart Baghdad. The Saudi royals might also worry that the United States could become a threat to the kingdom. The Saudis, for example, might consider a scenario in which relations between Riyadh and Washington deteriorate into conflict over the methods and means to combat al Qaeda. The Saudis realize that their conventional military capabilities-notwithstanding their modern weapons inventories-would be hard-pressed to defend against the larger military manpower pools in Iran or Iraq or against the sophisticated technological capabilities of the Israeli or the American militaries. In short, the Saudis would be strategically sensible to look to nuclear weapons as a potential "quick fix" to keep rivals at bay. The Saudis already have in place a foundation for building a nuclear weapons deterrent. In the mid-1980s, they clandestinely negotiated the purchase of about 50 to 60 Chinese CSS-2 missiles. The Chinese and Saudis were able to complete the deal before American intelligence was wise to the relationship. The Saudis paid handsomely, with about $3 billion to $3.5 billion dollars for the Chinese missiles capable of reaching up to about 4,000 kilometers [2,500 miles]. The CSS-2s had been armed with nuclear warheads when they were operational in the Chinese force structure, but Riyadh and Beijing claim that the missiles delivered to Saudi Arabia were armed with conventional warheads and rebuffed U.S. requests to inspect the missiles. The CSS-2 missiles, however, are too inaccurate to be militarily effective with conventional munitions, but more than accurate enough for the delivery of nuclear weapons. It is well past time for Washington to renew calls for independent inspection of the Saudi missiles to ensure that they are armed as the Chinese and Saudis claim, and that ballistic missile modernization efforts are not underway.
US/Saudi Relations DA—A2 Relations = Resilient
US-Saudi relations aren’t resilient—maintaining the relationship is a delicate balance Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html) I also think that Americans don’t appreciate the difficulty of managing the US-Saudi bilateral relationship. This is really hard to do. It’s hard because our systems are extraordinarily different and because there are many things we don’t agree on. But none of those differences or disagreements negate the first part that this is a very important relationship. That’s a hard balance to maintain, both understanding the importance, but appreciating the difficulty of keeping this on track.
US/Saudi Relations Answers—Oil Not Key to Relations
Oil isn’t key to the US-Saudi relationship Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html)
Alterman: There are two issues. First I don’t think people appreciate how much we do with Saudi Arabia. It’s just not understanding the importance of Saudi Arabia to the U.S. in a myriad of ways. It’s not just energy. It’s not just security. It comes to economic issues, counterterrorism issues, regional diplomacy issues. There’s a centrality and importance to Saudi Arabia that I think most Americans don’t have an appreciation for.
Energy doesn’t control the US-Saudi relationship AND there are considerable differences on both sides Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html) Jon B. Alterman: What’s striking is just how rich the US-Saudi relationship is. It’s not just an energy relationship. It’s not just a security relationship. It has to do with virtually everything the U.S. does in the Middle East. The relationship has gone from being a comfortable relationship to one with considerable sensitivities on both sides, and many more sensitivities in public than officials have in private.
US/Saudi Relations Answers—Relations ↓ Now
US-Saudi relations are fraying now—Israel/Palestine, Iraq, Sept. 11 CBC News 5/16/08 ("Saudi Arabia announces small boost in oil production," http://www.cbc.ca/world/story/2008/05/16/bushsaudi.html) Bush's Saudi stop was intended, in part, to celebrate 75 years of formal U.S.-Saudi relations and strengthen ties that, once strong, have frayed over the perception Washington favours Israel too much in the dispute with the Palestinians, the Iraq war and the Sept. 11, 2001 attacks. Fifteen of the 19 airline hijackers were Saudis, and Americans blamed Saudis for allowing the religious extremism that gave rise to
The Saudis are losing faith in the US-Saudi relationship Loven 5/16/08 (Jennifer, Associated Press, "Bush, Saudis to discuss soaring gas prices,"
http://ap.google.com/article/ALeqM5hkf--m78S6F3LZAcz4sVHGGCQSTgD90MKBIO0) Jon Alterman, director of the CSIS' Middle East program, said the Saudis, with a public that doesn't like Bush and a ruling monarchy with growing interests elsewhere, are not likely "to put themselves out to help this president." "The Saudis don't have an alternative to keeping the U.S. in its corner, but their reliance on the United States, their confidence in the United States is extremely shaken," Alterman said.
US-Saudi relations are fraying now—high oil prices, Iraq war, Palestinian issue Richter 6/8/08 (Paul, Staff, LA Times, "New forces fraying U.S.-Saudi oil ties,"
http://www.latimes.com/news/nationworld/washingtondc/la-fg-ussaudi8-2008jun08,0,4762521,print.story) WASHINGTON — For decades, Saudi Arabia worked with its dominant customer, the United States, to keep world oil markets stable and advance common political goals. But the surging price of oil, which soared more than $10 a barrel Friday to a record-high $138.54, has made it plain that those days are over. New forces, including a weak dollar and an oil-thirsty Asia, have blunted the United States' leverage and helped sour the two countries' relationship. As gasoline prices have risen, the White House has unsuccessfully exhorted the Saudis to step up production, and Congress has threatened retaliation. But the situation now is a far cry from the days when the U.S. economy dominated the direction of the petroleum market.
"That gave us leverage," said Greg Priddy, an oil analyst at the Eurasia Group, a New York-based risk assessment firm. "There's certainly a perception that the power equation has changed."
The weakening of the economic relationship comes when the vital U.S.-Saudi security relationship also has been fraying.
In the 1980s, the U.S.-Saudi bond that kept oil prices low was credited with helping weaken the Soviet Union during the waning days of the Cold War. And it helped keep markets stable after Iraq's 1990 invasion of Kuwait. But the Saudi government has been dismayed by the consequences of the war in Iraq and by what it sees as a weak Bush
administration commitment to the Palestinians.
US/Saudi Relations Answers—High Oil Prices Hurt Relations Turn
Turn—rising oil prices have soured the US-Saudi relationship Global Insight 6/10/08 (lexis)
Significance:The volatility and price surges have been blamed by many consumer nations on the unwillingness of the producer nations--in particularly the OPEC states--to provide full third-party witnessed evaluations of their reserves, or on their lack of sufficient investment to end tight supply balance. The producers for their part have blamed financial speculation--in particular caused by capital flight from the weak U.S. dollar into commodities--saying that there is ample supply for the moment and a healthy stock build-up. Saudi Arabia, as OPEC's leading producer and a key U.S. ally in the Middle East, has taken the
brunt of U.S. political criticism over the rising prices, souring previously close personal relations between the U.S. presidential administration and the Saudi royal family in recent years. Launching the conference should be an opportunity for the Kingdom either to deflect
some of the criticism onto other producers, or to be able to place some blame on what producers regard as unhelpful tax policies, especially in the developed consumer nations.
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