Daily Archives: May 8, 2011
“We export more than three times as much to Latin America as we do to China; more to Latin America than to Europe; and more to Chile or Colombia than to Russia,” says US Assistant Secretary of State Arturo Valenzuela, explaining to Congress why Latin America matters. “The U.S. foreign assistance request for FY 2012 for the Western Hemisphere totals $1.98 billion. “
By Arturo Valenzuela
U.S. Assistant Secretary of State for Western Hemisphere Affairs
WASHINGTON, D.C. — I am delighted to have this opportunity to testify before you today on the Department of State’s budget priorities in the Western Hemisphere. I look forward to continuing to work with this committee to advance U.S. interests in the hemisphere
President Obama’s recent visit to Brazil, Chile, and El Salvador highlighted U.S. vital national interests in the Americas. The President used his trip to build on the pledge that he made at the Summit of the Americas to create a relationship of “equal partners” based on mutual interests and shared values. He had particularly productive and substantive meetings with the leadership of these three countries and also engaged with representatives of the private sector and civil society. The president’s message, and the dozens of agreements completed during the trip, underscored how tremendously significant the region is for the United States on issues including our economic competiveness, our global strategic interests, our core values of democracy and human rights, and the richness and diversity of our society and culture.
In this year’s State of the Union address, President Obama shared his vision for how America will win the future. And as Secretary Clinton recently stated, “enhancing our competitiveness, accelerating innovation, achieving energy security, and expanding our exports – all of these require robust engagement with Latin America.”
The countries of the Americas are helping the global economic recovery, and the combined economies of Latin America grew six percent last year, which some observers believe will herald the start of a “Latin American decade.” The size of Latin America’s economies and its young demographic are especially important to the United States – and our economy is tied closely to that of our neighbors. We export more than three times as much to Latin America as we do to China; more to Latin America than to Europe; and more to Chile or Colombia than to Russia.
Even in this inter-connected world, geography still matters. This administration believes that it is a comparative advantage we should embrace, and we neglect it at our own peril. Our opportunity with Latin America derives from the “power of proximity” – proximity that is geographic, economic, and reflects the common history of the Americas. President Obama’s visit underscored our growing recognition that the hemisphere stands to gain from greater cooperation premised on shared values, which can lead to the rise of even more capable partners who can help us accomplish our strategic objectives, from promoting clean energy to improving security in the region.
The President’s trip coincided with the 50th anniversary of President Kennedy’s announcement of the “Alliance for Progress,” which represented a commitment by the United States to help address the region’s staggering development challenges. The landscape today is vastly different. While old challenges persist in some countries, and we are all grappling with new ones like climate change, most nations in the region are clearly on the path toward stable, democratic societies with modern economies and a growing middle class. Today, the countries of the Americas are becoming less polarized, which allows us to better address our shared objectives. This progress makes them invaluable partners in addressing the remaining problems in our own hemisphere, advancing key global priorities, and fostering strong economic growth at home. Our partners in the hemisphere are global actors and increasingly becoming aid donors in their own right. For example, after the 2010 earthquake in Haiti, nations throughout the hemisphere contributed resources to the relief efforts and subsequent reconstruction.
U.S. assistance represents only one component of the total economic engagement between the United States and the other nations of the Western Hemisphere. Last week, President Obama announced that we are moving forward with the U.S.-Colombia and U.S.-Panama Trade Promotion Agreements, which we expect will create thousands of American jobs and increase U.S. exports by more than a billion dollars. These trade agreements are an integral part of the Administration’s overall strategy to deepen our ties within the Western Hemisphere and promote our collective prosperity. The Administration recently resolved a longstanding dispute over Mexican trucking that will further strengthen our economic relationship with this key partner. Total two-way U.S. trade with Latin America and the Caribbean in 2010 amounted to $636 billion, a 27% increase over the prior year. U.S. trade capacity-building assistance supports the effective implementation of our free trade agreements and helps provide a level playing field that ensures our trading partners respect fundamental labor rights. In addition, remittances from the United States to the region totaled $69 billion in 2010, which was an increase of two percent from the previous year.
U.S. foreign assistance in Latin America and the Caribbean supports our overall policy goals of advancing U.S. economic and security interests through the promotion of effective democratic governance, citizen safety for all, expanded economic and social opportunity, and a clean energy future for the hemisphere. Our budget priorities for FY 2012 are to strengthen the institutions of democratic governance, combat threats to citizen security, leverage emerging economic opportunities, and support the emerging potential for global and regional leadership by the countries of the Americas.
The U.S. foreign assistance request for FY 2012 for the Western Hemisphere totals $1.98 billion. We believe this request will help us meet the challenges and opportunities we face. At the same time, it is lean and responds to the fiscal constraints that we all recognize.
Sufficient personnel, and support for the Embassies and Consulates that are the operational platforms for our diplomatic work and engagement, remain essential. Our dedicated people strive every day to defend human rights, enhance democracy, protect our citizens, and increase trade and exports that create jobs. Our FY 2012 State Operations request provides resources sufficient to meet the needs we face while reflecting current fiscal constraints, but full funding is vital to ensure we can achieve our goals for the American people.
The success of the Western Hemisphere will continue to support the growth of vibrant democratic institutions that respond to their citizens, expand the boundaries of freedom, and create greater economic and social prosperity. It is important to note that the Obama administration’s strategy of engagement has contributed to a shift in Latin American public opinion. According to the 2010 poll by Latinobarometro, two-thirds of the population in most countries had favorable attitudes towards the United States – an increase of 10 to 20 points from 2008 levels. The role of the United States in Latin America is also overwhelmingly viewed as positive. This suggests that the Obama administration’s strategy has reversed the dangerous depletion of good will toward the United States that had occurred during the prior decade.
Yet in order to sustain this important progress, we must prioritize citizen security. Last year’s poll by Latinobarometro confirmed one of the core precepts of the Obama Administration’s policy towards the Americas: that the greatest concern of citizens throughout the hemisphere is achieving safety and security and combating the rise of international crime. We share this priority with our regional partners, and our FY 2012 funding request targets the issue of citizen safety, accounting for just less than half of the total request for the Western Hemisphere.
In order to oversee effectively the citizen security programs in Latin America and the Caribbean, I have asked Principal Deputy Assistant Secretary Roberta Jacobson to assume responsibility for ensuring necessary and appropriate programmatic coordination on the planning and implementation of citizen security programs throughout the region. This critical role will ensure that we learn which programs are most effective and that we reduce duplication of efforts.
Particularly in Mexico and Central America, narcotics trafficking and transnational crime pose threats to citizen safety. Our efforts, including U.S. assistance, seek to build host government capacity to protect their citizens and administer the rule of law effectively.
The United States and Mexico have built an especially close partnership through the Merida Initiative to fight organized criminal groups and associated violence while respecting human rights and the rule of law. Our FY 2012 request of $282 million for the Merida Initiative will continue the progress we have made, which is fundamentally based on the realization that our countries share responsibility for combating transnational criminal networks and protecting our citizens from the crime, corruption, human exploitation, and de-humanizing addictions these networks generate. It is also based on mutual respect and an understanding of the tremendous benefits the United States and Mexico can offer our citizens through this collaboration. We have four goals: disrupting organized criminal groups; institutionalizing reforms to sustain rule of law and respect for human rights; creating a 21st century border; and building strong and resilient communities. To achieve these goals, we are accelerating our efforts to support stronger democratic institutions, especially police, justice systems, and civil society organizations; expanding our border focus beyond interdiction of contraband to include facilitation of legitimate trade and travel; and cooperating in building strong communities resistant to the corrupting influence of organized crime.
The United States is working with other partners (including the European Union, Spain, Colombia, Canada, and Mexico, among others) to address threats to security in Central America. During his recent trip, President Obama announced the Central American Citizen Security Partnership, which will build upon and complement existing efforts aimed at enhancing citizen security in the Americas.
Our FY 2012 request for the Central America Regional Security Initiative (CARSI), the U.S. component of that international partnership effort, is $100 million. CARSI assistance is designed to yield high and sustainable impacts on crime, gangs, and trafficking. Simultaneously, we are working to rebuild the law enforcement, judicial, and prison systems, while addressing the underlying economic and social causes of violence and insecurity. We are also working with partners to ensure that Central America is both a development and foreign policy priority, so that donor resources can collectively have a greater positive impact on the security trajectory in this crucial sub-region. CARSI also serves to promote greater respect for human rights and the rule of law.
To ensure that traffickers and transnational crime elements do not simply shift routes, we are also addressing citizen security in the Caribbean. The Caribbean Basin Security Initiative (CBSI) reflects the Administration’s effort to establish a sustainable security partnership with Caribbean countries – a region that comprises half of the southern border of the United States. The FY 2012 funding request of $73 million will promote regional security cooperation throughout the Caribbean. Rising crime and violence, largely related to the drug trade, threatens regional security and stability. Individual Caribbean nations are ill-equipped to handle these issues on their own, and we have agreed on a partnership to develop national and regional capacities to address the myriad of transnational criminal issues throughout the region. This funding is essential to build on the work that we have begun with our regional partners.
The funding for CARSI and CBSI is requested under the Western Hemisphere Regional account – a single budget line item that contains critical citizen security funding for these regions. Full funding of the FY 2012 request for these initiatives is vital to ensure continued progress against rule of law challenges to these regions that threaten U.S. national interests.
Sustaining recent security and governance gains remains the top U.S. assistance priority in Colombia. The FY 2012 request for Colombia reflects a decrease that has been made possible due to the growing capacity of Colombia’s national authorities to respond directly to the challenge facing their country. In addition, we continue to adjust the balance of security and counter-narcotics activities toward justice sector efforts, alternative development, and humanitarian assistance, and this trend is reflected in our request. We are working closely with the Colombian government to support the ongoing nationalization process, while also working to promote human and labor rights, protect human rights advocates, ensure access to justice, and end impunity. Our investments in Colombia’s capacity are succeeding, and this expertise can now benefit others in the region encountering similar challenges to citizen safety.
Assessing the region as a whole, we recognize that governing institutions are still weak in some places where the danger of populism still exists, whether from the left or the right. The key distinction is between countries with solid institutions and those where leaders dominate through the personalization of politics. In addition to strengthening democratic institutions, the administration recognizes the importance of supporting democratic processes that meet international and hemispheric standards of transparency, sustaining political parties from across the political spectrum, and strengthening the foundation of civil society. Credible electoral observation is critical to safeguarding democratic process, as we recently witnessed in Haiti.
In some instances, we see challenges posed by leaders who seek to consolidate power through extra-constitutional means, often suppressing minority rights, coupled with weak institutions of government. We are also concerned about the targeting of independent media through a variety of means, ranging from intricate legalistic maneuvers to brute force and intimidation. We must guard against these trends, because history teaches us that challenges to freedom of expression can quickly lead to pressure on other core freedoms as well. That is why the administration continues to support civil society and freedom of expression advocates in countries like Venezuela and Cuba. U.S. assistance for Cuba and Venezuela seeks to support the desire of citizens to express themselves freely.
We are also continuing to help the Haitian people rebuild after the terrible earthquake that struck the country more than a year ago. As President Obama emphasized shortly after the earthquake, U.S. commitment to Haiti will be sustained, as is evidenced in our request for FY 2012. Since the earthquake, the U.S. government has provided over $1 billion in humanitarian relief assistance and an additional $406 million in recovery assistance toward job creation, rubble removal, shelter solutions, health, and other priorities. To date, we have disbursed more than $332 million to provide debt relief and contribute to the Haiti Reconstruction Fund. This has allowed the Haitian government to use its resources to support the construction and repair of houses, remove rubble in critical areas of Port-au-Prince, establish funds to finance private sector activity, and provide education assistance. The United States has also provided more than $45 million in assistance since the onset of the cholera crisis in October 2010 for medical supplies and services, and cholera treatment facilities and information campaigns to increase public awareness of prevention and treatment of the disease.
Beyond citizen safety and assistance for Haiti, U.S. assistance addresses key development challenges in the region, including good governance, education, health, the environment, and trade competitiveness, consistent with U.S. policy toward the hemisphere. These sectors include funding for the Administration’s core development initiatives – Feed the Future, Global Health, and Global Climate Change – that address key global threats and leverage U.S. development expertise and strengths in these targeted areas.
Our FY 2012 request also includes small amounts of economic growth and climate change assistance designed to leverage host country and regional partnership contributions. We use targeted funding to build partnerships with our closest neighbors to promote renewable energy and manage the effects of climate change, through the Energy and Climate Partnership of the Americas. Similarly, we are working with 14 other countries in the Hemisphere through the Pathways to Prosperity in the Americas initiative to identify the best ways to share the benefits of trade and economic growth more broadly. These innovative, flexible partnerships among equals reflect President Obama’s new vision for our changing hemisphere. Economic opportunity is an essential component of the democratic social contract, and it is clear that we all have a stake in each others’ success.
In FY 2010, we invested more than 1.2 million dollars to promote racial equality, social inclusion, and youth/civil society empowerment for indigenous peoples and people of African descent. Under bilateral agreements like the Action Plans with Brazil and Colombia, we provide technical assistance and expand on public diplomacy programs, like academic exchanges, to promote equality and access to opportunity. We are building on this work in 2012, leveraging host country support and inter-agency coordination to promote the strengthening of democratic institutions, economic opportunities, cultural preservation, and access to education for historically excluded groups. When discussing security challenges in the Western Hemisphere we cannot forget marginalized populations who are most vulnerable to violence affecting the region. As just one example, the number one issue affecting women in the Hemisphere is gender based violence, with domestic violence and trafficking persons rankings second and third respectively. Therefore, we have made certain that critical issues like preventing youth violence and combating violence against women and other marginalized groups — including the indigenous, Afro-descendants, LGBT persons, and people with disabilities — have become increasingly incorporated into our assistance programs.
In conclusion, we believe our budget priorities for the Western Hemisphere focus on achieving high impact in areas vital to U.S. interests and laying the groundwork for deeper and more productive partnerships with the region as a whole. Our engagement with our neighbors has powerful implications for trade and jobs, energy, and security, and will influence our ability to meet acute challenges and essential goals both at home and around the world. I thank you for your attention.
Dr. Arturo Valenzuela was previously Professor of Government and Director of the Center for Latin American Studies in the Edmund A. Walsh School of Foreign Service at Georgetown University.
- Latin America Is the Most Dangerous Region in the World (By Far) [Violence] (gawker.com)
- Ahmadinejad in Latin America: What’s Iran’s Agenda in the Western Hemisphere? (globalspin.blogs.time.com)
- Former State Department Official Valenzuela Joins Covington & Burling (legaltimes.typepad.com)
- Nikolas Kozloff: Ahmadinejad in Managua: WikiLeaks Reveals U.S. Fears of Nicaraguan-Iranian Rapprochement (huffingtonpost.com)
May 7, 2011 – 6:16 pm EST
From the Communist Party of China website, May 03, 2011.
Chinese Foreign Minister Yang Jiechi met with Arab League Secretary General Amr Moussa on Monday to discuss cooperation between China and the Arab world.
China and the Arab countries decided last year to promote the strategic relationship of cooperation, which marked a new era of bilateral ties, Yang said.
China is willing to join hands with the Arab world to promote the China-Arab Cooperation Forum and deepen bilateral cooperation in all sectors, Yang said.
Moussa said the Arab League is happy to see the progress made in collective cooperation between China and Arab countries in fields such as politics, economy and culture.
The pan-Arab body expected to enhance the level of bilateral ties with the joint efforts from China, Moussa added.
Yang arrived in Cairo on Monday on a two-day visit. On Tuesday, he will meet Egypt’s Supreme Council of the Armed Forces chief Hussein Tantawi.
Of course the West has nothing to fear from closer collusion between China and the Arab world.
They both have our best interests at heart.
Friday, 6 May 2011, 9:20 am
Speech: US State Department
Good morning. Let me begin by expressing my appreciation to Meredith Miller, Bryce Wakefield, and NBR for inviting me to speak this morning about the critical issues of energy and resource security in Asia. I would also like to recognize Mikkal Herberg for giving us a strong basis for today’s conference in his paper titled Asia’s Rising Power and America’s Continued Purpose.
As Mr. Herberg’s paper notes, if Asia continues its current growth trajectory, the region will likely account for nearly ¾ of the growth in the expected growth in world oil demand between 2008 and 2030. With those countries’ oil imports from outside the region approaching 30 million barrels per day, we are looking at a figure that would account for just a bit less than the total current production of all OPEC countries.
There are similar trends when one looks at figures for Asian imports of coal, gas, ores, rare earths, and other resources. The numbers, however, represent something extremely important and positive – economic growth and expanded prosperity for hundreds of millions of people in the region. At the same time, though, they raise questions about how best to promote sustainable growth, not just for the economies of Asia, but the world as a whole.
Secretary Clinton has noted often that much of the history of the 21st century will be written in Asia. The region’s influence is growing and holds the key to our shared future. Asian countries are vital partners in a growing and more prosperous global economy. Their opinions and decisions have profound influence from Latin America to the Middle East and Africa on addressing complex and emerging transnational challenges, like energy and resource security, climate change, and transition to a low carbon economy. I doubt anyone in this room would disagree that it is essential to our long-term national interests that the United States remains true to its identity as a Pacific power.
On our economic engagement with Asia, let me highlight two significant bilateral strategic dialogues. Next week, we will hold the third round of the U.S.-China Strategic and Economic Dialogue, led by Secretary Clinton and Secretary Geithner, to continue pursuing a positive, cooperative, and comprehensive relationship with China. As Secretary Clinton has stated, “we are firmly embedding our relationship with China within a broader regional framework because it is inseparable from the Asia-Pacific’s web of security alliances, economic networks, and social connections.”
Later this year, at the third round of the U.S.-India Strategic Dialogue led by Secretary Clinton, we will continue to advance what President Obama has stated is a “defining partnership” with India – “bound by shared interests and our shared values.” The United States has also played a leading role in helping discussions move from the G8 major industrialized economies forum to the improved G20 forum, which reflects today’s global economy and recognizes the importance of the emerging Asian economies of China, the Republic of Korea, India, and Indonesia.
Within this context of a rising and prosperous Asia, one with which the United States wants and needs to be closely engaged, let me turn to the conference’s theme of Asia’s rising resource demands and the increasing nationalism by some countries to pursue needed energy and resources for energy security and economic growth. On issues of energy and resource security, the United States is pursuing a comprehensive strategy for cooperating with the Asian region – bilaterally, regionally, and multilaterally – with three key elements:
a) Energy and resource diversification,
b) Market-based solutions and increased transparency, and
c) Enhanced bilateral, regional, and multilateral cooperation.
Energy and Resource Diversification
First, there is no getting around the reality that energy and resources are vital for today’s economies. The world runs on energy – natural gas, coal, oil, nuclear, biofuels, wind, sunlight, or hydro. Energy is not a luxury; instead, as noted in the State Department’s Quadrennial Diplomacy and Development Review (QDDR), it is essential for economic growth. Energy is needed to run factories, to support agriculture, and for transportation. It is essential for human development, whether in terms of enabling a child to do her homework, to connect to the Internet and communicate, or to have a warm home and food on the table.
The growth in energy demand may slow or even decline in the developed industrialized economies, but demand for energy will likely skyrocket in China and India, just as it is expected to rise in other emerging market and developing countries – many of which are in Asia. China is expected to account for over one-third (36%) of the projected growth in global energy use, with demand rising by 75% between 2008 and 2035. Today, China accounts for 17% of global energy demand; by 2035, it will account for 22%. India is expected to account for about one-fifth (18%) of the rise in world energy consumption by 2035.
By comparison, the OECD developed industrialized economies, from which the IEA has drawn its membership, now account for less than 50% of global energy demand. When the IEA was established in 1974, these countries accounted for 75% of global energy demand. Propelled by rising populations and, perhaps more importantly, brisk economic growth in developing countries, there are those who wonder whether the increasing energy demand could outpace our capacity to produce and deliver needed energy supplies. Dire predictions have been around the energy world for decades, but the rise we are seeing in non-OECD energy consumption represents a watershed event. The developing (rather than the developed) world is expected to account for the lion’s share of global energy demand growth for the next several decades. These figures underscore an important truth – we will need to engage emerging economies, not just OPEC members, as influencing our energy security now and into the future.
To promote energy security and to be assured of access to other resources, we will all need to work with key Asian countries – traditional close allies like Japan and the Republic of Korea and the emerging powerhouses, such as China and India.
An essential aspect of promoting energy and resource security internationally as well as here in the United States is working towards greater energy and resource diversification. For the United States to lead this effort in Asia and globally, we must also lead at home. On March 30, President Obama outlined a comprehensive national energy policy called the Blueprint for a Secure Energy Future. As part of the U.S. plan, the Administration aims to cut dependence on oil imports by one third by 2025. To achieve this target, the President focused on the consumption side of oil, particularly in the transportation sector, which accounts for 70% of U.S. petroleum consumption. Steps outlined strengthened fuel efficiency standards for cars and trucks that will save 1.8 billion barrels of oil. Other steps include acting so that all purchased federal cars, one of the largest fleets in the country, will be hybrid or electric by 2015.
Moreover, the Administration has committed over $80 billion in clean energy technology through the Economic Recovery Act. However, the Government recognizes traditional fossil fuels will still be required, even as we make the transition to cleaner alternatives. The Administration looks, therefore, to boost oil supply through increased offshore drilling with appropriate safety regulations. Since access to oil alone is no longer synonymous with energy security, the Administration is supporting environmentally sound development of huge potential natural gas supplies, including through extraction from shale rock formations.
The United States is also developing stringent efficiency standards for appliances, buildings and motor vehicles, setting reduction targets over the next decade and providing incentives to help meet them. Similarly, we are making efforts to encourage energy efficiency beyond our borders, particularly with China and India, through our joint cooperation on clean energy research centers and through the International Partnership on Energy Efficiency Cooperation (IPEEC).
Like other countries, Americans cannot achieve energy security on our own. We need to engage emerging markets and developing countries, finding ways to include them in mechanisms that develop and maintain strategic petroleum stocks, foster understanding of the importance of sound investment regimes, and other aspects of market-based systems that can develop and supply needed oil and gas, and also supply new, innovative low carbon and other clean technologies. The United States is strengthening relationships with the future group of energy and resource producers. In 2009, the State Department launched the Energy Governance and Capacity Initiative (EGCI), which provides a wide range of technical assistance to the governments of some of the world’s next generation of oil and gas producers, helping them build the financial and regulatory capacity essential to manage these resources responsibly for their long term development and resource needs.
We are also taking a lead on helping to diversify energy sources through our robust clean energy cooperation. Under the President’s Global Climate Change Initiative, a wide range of U.S. government agencies are working together to accelerate the deployment of clean energy technologies and mobilize private-sector clean energy financing. This effort includes multilateral programs like the Clean Technology Fund, and dozens of regional and bilateral programs. The United States also launched and participates actively in the Clean Energy Ministerial process, an annual series of meetings devoted to accelerating the transition to clean energy technologies. To date, this process has served as a catalyst for important initiatives on carbon capture, electric vehicles, energy efficiency, smart grids, hydropower, solar, and wind.
With both India and China, our energy and climate change cooperation includes comprehensive MOUs for working together on clean energy development and deployment, and climate change mitigation. To promote cleaner energy, particularly in the developing world which relies so heavily on coal, the State Department has launched the Global Shale Gas Initiative (GSGI) to help countries assess their shale gas potential and provide regulatory guidance on its development. Under GSGI, the U.S. Geological Survey (USGS) will complete at least two additional resource assessment workshops in China and India, and release the results of the shale gas resource data analysis. State has also set up visits of technical experts from China and India as part of a U.S. Trade and Development Agency reverse trade mission. In 2010, the Department of Energy hosted the 5th U.S.-China Energy Policy Dialogue and the 10th U.S.-China Oil and Gas Industry Forum, bringing together government and private industry.
Indeed, natural gas has tremendous potential to help Asian countries and the rest of the world meet energy needs over the next 25 years. Even though China will depend heavily on coal to generate most of its electrical power, efforts are under way to increase the share of natural gas, nuclear power, and renewable energy. China is now one of the world’s fastest-growing liquefied natural gas importers, embarking on a major expansion of its gas pipeline infrastructure. As China develops policies and regulations to promote greater and more efficient use of natural gas, it can not only have a significant and beneficial impact on global energy security, but also on cleaner energy and reduction of greenhouse gas emissions goals.
We support a the continued safe expansion of nuclear energy as clean energy – including our long-running cooperation with China and incipient cooperation with India – while we all take a look at the lessons of the Japan’s nuclear emergency. Let us remember too, that cleaner energy is essential for helping us meet the challenges, not just of providing needed energy, but of mitigating greenhouse gases and climate change.
Asian countries – and the rest of the world – are looking not just at access to energy, but at questions about affordable access to metals and other commodities as well. Businesses and consumers seek secure access to these resources at a reasonable market price. Access to rare earth metals has been in the news, particularly since China’s dispute with Japan over the Senkaku Islands and China’s consolidation of its rare earths industry. While the action last fall was short-lived and had limited economic impact on the United States and other countries, it raised questions in the press about whether we could continue to take the availability of these metals, essential for computer and telecom technology and some clean energy technologies, for granted. A reduction in overall production coupled with an increase in domestic demand does not increase global energy security.
China may produce over 90, perhaps over 95% of the world’s rare earth metals, but China only has approximately half of global reserves. Therefore, progress continues to be made in bringing on-line additional mining and processing capacity in the United States as well as in Australia and Malaysia. I also have seen reports of South Africa looking to open mines and processing facilities for these metals, and it seems highly likely the new technologies coming on-line for processing will be more efficient and have reduced environmental impacts. Moreover, it is important to remember, resource diversification will also need to include new technologies and substitute materials that can provide alternative means of meeting growing market demand.
Market-based Solutions and Transparency
This brings me to the second element of the United States’ strategy on furthering energy and resource security – market-based solutions and increased transparency. In examining the drive for resources as Asian economies develop as well given continued demand in other parts of the world, it is essential to work to boost transparency in energy markets. Indeed, increased transparency will help reduce price volatility and encourage the move toward well-informed, functioning markets driven by international standards of supply diversity, moderate prices, and fair competition.
One way we have already done this is through the G20. Within the G20 framework, countries have pledged to reduce inefficient fossil fuel subsidies and to promote transparency in energy consumption and supply data. These efforts are crucial to reducing market price volatility and removing market distortions and barriers to trade. While some in the Chinese government have argued against more transparency, claiming that it aided speculators, the experience in the United States and elsewhere has repeatedly demonstrated that transparency allows market actors to make sound economic choices. With the growing demand for energy and resources to fuel economic growth and rising populations, it is critical that we work with the Chinese, Indians, and others in Asia and around the world to provide more timely and accurate production, consumption, and stock data for improving the functioning of oil markets and avoiding excessive price volatility. We are promoting global standards of data collection, analysis, and forecasting with China and India through bilateral cooperation with the U.S. Energy Information Agency. Multilaterally, we are working through the IEA and similar bodies to assist government officials with data training and opportunities to work in these organizations The U.S. is also setting the example for improving oversight of financial and energy-related markets through efforts by the U.S. Congress and the Commodity Futures Trading Commission (CFTC) and working with the International Organization of Securities Commissions (IOSCO) to harmonize approaches internationally.
As President Obama has stated, while we work towards making the transition to renewable sources of energy, we will still need traditional energy sources of oil, gas, and coal. This involves both supporting investment in existing markets and seeking to open up new markets. Most here would probably agree that global players like China and India should make safe investments for their resource demand and not invest in countries like Iran or Burma. We have discussed with their governments that their energy and resource security goals would be better served in other countries that can provide a reliable return on investment and help ensure reliability of resource supplies.
As Secretary Clinton has stated, we are encouraging the Chinese to “embrace internationally recognized standards and policies that ensure transparency and sustainability” while noting that Beijing’s activities have raised serious concerns in places such as Africa. Over the last decade, China has signed a string of multibillion-dollar deals to build highways, schools, hospitals, and other infrastructure while securing rights to African minerals and oil reserves. Sino-African bilateral trade has grown steadily at impressive rates since 2002, topping $115 billion last year. South Africa’s Standard Bank projects this trade to reach $350 billion in 2015. Chinese aid to African countries has grown so much in recent years that it has already surpassed aid provided by the World Bank. We welcome China’s commitment to development assistance, and we would like to work more closely to have common standards and approaches. For the United States, we think Africa will provide up to one-third of our total energy needs in the next decade. For China, too, Africa is an important source of oil, gas, and minerals. So it is in the interest of our mutual economic and resource security goals and of Africa’s development objectives.
Also, a key part of our message on market-based solutions is that countries, meaning both government and private sector actors, should consider making value-chain based investments in the energy sector, rather than foreign equity investments. Let me explain. In the oil sector, a value-chain investment includes putting financial resources in exploration and development, unconventional oil, refining, tankers, and pipelines. Some may argue growing equity production is essential to ensuring affordable and reliable supplies of energy; however, experience shows the international market will remain the main source of oil imports. Related to this, investments in new pipelines will also be important for the Asian region to diversify supplies, promote regional development, and realize the energy security countries in that part of the world seek.
Enhanced Bilateral, Regional, and Multilateral Cooperation
Turning to the third element for furthering energy security and cooperation with Asia, enhanced bilateral, regional, and multilateral links, let me highlight some of the key forums within the Asia region to promote resource security. Bilaterally, we have key energy and climate change dialogues with China, India, Japan, Indonesia, and other countries. These fora enable both sides to continue a dialogue on resource security issues as well as to promote tangible commitments, including with MOUs and Joint Statements. Regionally, we are striving to continue with the Five Party Energy Ministerial – originally proposed by China – and a focused discussion on energy security issues with the key economies in Asia (China, India, Japan, and the Republic of Korea). Also, as the United States hosts APEC this year, we continue our efforts in the Energy Working Group to promote mutual goals of energy security and the transition to a low carbon economy. We are also working to advance programs to enhance energy efficiency, increase water conservation and productivity, develop renewable electric power resources, and manage water-energy relationships. All of these efforts will help to reduce conflict and ensure sustainable growth.
A key part of my work has been on the efforts of the IEA to engage key non-member countries, especially China and India and increasingly other growing Asian energy-consumer countries such as Indonesia and Thailand. As we have discussed, the world’s energy markets have changed since the establishment of the IEA. To be effective in this new landscape, and to realize its mission, the IEA must be prepared to evolve, aligning strategies and priorities to reflect these new realities. With China and India having increasing influence and impact on world energy markets, we are working hard to promote their enhanced engagement with the IEA. This includes training and programs on emergency response exercises, data collection and analysis, and sharing world energy trends and policy recommendations. As part of the IEA’s outreach with Asia, this week, IEA colleagues and member country representatives are holding the first multilateral emergency response exercise with APEC countries in Bangkok. These efforts are significant in laying the groundwork to promoting an open dialogue among consumer countries towards furthering collective energy security. Equally important for furthering our energy cooperation with Asia are other international energy forums, including IRENA, IPEEC, Clean Energy Ministerial, IEF, and others.
In closing, let me stress that we see this as a time of exciting opportunities, of possibilities. The United States government is developing thoughtful, realistic, and creative policies that balance and embrace goals of economic growth, resource security, and sustainable development. We are working with a range of partners in the region on these challenges in Asia and other parts of the world. Transformation will not happen immediately; what is key is managing the transition. As the President has stated, both at home and globally, it is important to develop a comprehensive energy policy. The United States is seizing opportunities to transition to a low carbon economy by supporting technology, research, efficiency, and lower carbon technologies, while simultaneously ensuring that the international energy system remains robust.
As you engage in discussions today on the rise of energy and resource nationalism in Asia and implications for U.S. energy policies, I would stress that U.S. energy diplomacy is robust and is promoting reliable, affordable, and diverse supplies of energy and resources.
Thank you and I look forward to your questions and comments.
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