#8
The Russia Journal
August 9-15, 2002
Forging a comprehensive global energy-security policy
By GORDON M. HAHN

The separate components of a comprehensive policy for a U.S. and global energy-security policy are beginning to emerge. The Bush administration would do well to put these now-disparate ideas together to ensure energy security, now and in the future. This is especially true as it prepares to move against Iraqi President Saddam Hussein – a move that is likely to strain, perhaps to the breaking point, our relations with the oil-exporting Persian Gulf oil sheikdoms.

Last month, the New York-based East-West Institute scholar and former U.S. assistant secretary of energy, David Goldwyn, proposed a series of measures to help secure energy supplies, price stability and Eurasia’s economic and governance development.

First, he proposed the creation of a Global Strategic Petroleum Reserve (GSPR) founded largely on Russian and other Caspian oil supplies and initially financed through the G-8. This would protect the United States if a prolonged crisis in the Mideast or Persian Gulf regions were to drain U.S. reserves, and would also save Asian countries fully dependent on oil from these volatile regions, precluding the need for the United States to step in to prevent a global economic crisis and chaos in the Asia-Pacific region.

Second, Goldwyn suggested constructing an Asia-Pacific Emergency Response System through the cooperation of the United States, Europe and Russia. They would organize systematic planning and coordination among Asia-Pacific states in the event that a crisis disrupts oil supplies and increases competition for scarce energy supplies – since a competition could lead to interstate tensions in a region not without sources of potential conflict.

Goldwyn recommends that, by 2003, the G-8 should commission the International Energy Agency (IEA) to prepare recommendations toward creation of the GSPR. The U.S.-Russia energy summit in Houston and the APEC summit in Mexico, both in October, should endorse these steps.

This dovetails with proposals regarding the IEA made by Ira Straus in The Russia Journal last Nov. 30. He argued persuasively for inviting Russia into the IEA and reforming that body so that it becomes an effective counterweight to the oil price monopoly of the Organization of Petroleum Exporting Countries.

Straus’ measures for transforming the IEA included, first, the adoption of a rule that members could not simultaneously be in OPEC or coordinate production levels with OPEC. Also, a "price-compensation scheme" would be established under the IEA to entice oil-exporting members to limit prices. Under the scheme, when petroleum prices go below an IEA-member-negotiated price floor, oil-exporting members would be compensated by the other members.

Russia now has an interest in higher oil prices or at least going along with OPEC to some extent on maintaining high prices. Under the Straus scheme, Russia would be guaranteed price stability and become a competitor of OPEC. Russian membership in IEA, and cooperation with the West and its allies on oil trade, would be a key component of energy-security policy and would also draw Russia into the Western fold.

Straus also urged that the West, in parallel with the new IEA mechanisms, increase its imports of and investments in Russian oil and gas. In my view, part of this effort should include facilitating transport infrastructure, first for the trade of Russian oil and gas and, later, other goods, trade and tourism from the Russian Pacific coast to North America. The Goldwyn and Straus reforms would serve as a platform from which there could develop a new transportation infrastructure for the export of Russian and other Eurasian energy supplies to the United States (and other Western and oil-consuming states).

In this space, weeks ago, I proposed that investments in energy and transport in Russian Asia include building pipelines to Russian Far Eastern ports such as Nakhodka and/or Vladivostok, to be connected later to export pipelines. This would allow sea oil transport across the Pacific.

The United States should then support the formation of an international consortium that would include itself, Russia, Canada, Japan, South Korea and perhaps others, to build an electric high-speed rail tunnel across the 88-km-wide Bering Strait. The costs of a trans-Bering rail-tunnel link are projected not to exceed $40 billion, a mere fraction of an annual U.S. budget.

Alaska’s two senators have expressed an interest in the idea of a trans-Bering line. Alaska’s one U.S. congressman, Don Young, chairman of the U.S. House Transportation and Infrastructure Committee – the largest committee in the House – has made favorable statements about such a project. Sources tell me both that Russia’s Railroad Ministry includes the trans-Bering rail project on its list of development plans and that the Transportation Ministry may be interested in the project.

These three projects can form the basis of a U.S. and global energy-security policy for the 21st century. It behooves the United States to exercise leadership in marshalling the political and financial backing to begin these important endeavors. It’s a vision thing.

One hopes that the old American penchant for vision, innovation, "can-do-ism" and global leadership in the interests of its own security and the mutual economic benefit of willing partners survives and will now serve us well again. Let’s roll.

Dr. Gordon M. Hahn is The Russia Journal’s political analyst and a visiting research fellow at the Hoover Institution, Stanford University.

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