Myanmar recently awarded 10 onshore oil and gas blocks.
“We had bid for two blocks. They have offered us one, but we are keen for both. We are still negotiating,” Chief Financial Officer Vipul Agarwal told Reuters.
The production sharing contract for the block will likely be signed in two to three weeks, he said.
- Bangladesh: Looks to joint oil-gas exploration with Myanmar (Burma) (mb50.wordpress.com)
- Burma’s oil and natural gas sectors eyed by Malaysia (mb50.wordpress.com)
- ASEAN gambles on Myanmar’s regional leadership (mb50.wordpress.com)
To resist Beijing’s maritime claims, Asean members will have to compromise and form a common front.
Ownership of the islands, seabed resources and navigation rights in the South China Sea is now very much on the international agenda. The Association of Southeast Asian Nations is more united on this issue than it has been for about a decade, and the U.S. is turning more attention diplomatically and militarily to the Pacific. Nevertheless, sustaining the coalition of interests disputing China’s claimed hegemony over the sea will not be easy.
In fact, the wonder is that the Chinese leadership managed to get itself into this predicament by so clumsily arousing neighboring countries’ fears. Having suffered constant Chinese provocations over the preceding few years, Hanoi used its chairmanship of the Association of Southeast Asian Nations in 2010 to first bring the issue of Chinese aggression to the table. Vietnam and the Philippines encouraged the U.S. to make clear its own interest in freedom of navigation and settlement of territorial disputes according to international principles.
At that point Beijing could have backed off and allowed the subject to fade from view. Instead, the People’s Liberation Army tried to punish Vietnam and the Philippines by harassing their exploration ships. Under the confident new administration of President Benigno Aquino, Manila responded with unprecedented vigor, carrying on exploration and offering new blocks for drilling.
Even this has not given China’s nationalists second thoughts. Recently the Global Times newspaper, owned by the People’s Daily, warned those who dispute Chinese claims to be “mentally prepared for the sound of cannons,” a threat that was noted around the world.
There is a sense that China’s provocations have been driven by the military, probably against the advice of its diplomats. If wiser heads among Beijing’s civilian leadership can reassert control, they will re-adopt Deng Xiaoping‘s maxim about keeping a low profile. If so, China will tone down its rhetoric and offer economic benefits on a larger scale to increase its neighbors’ dependence. It will likely quietly offer bilateral exploration deals which would divide the Asean claimants who are just starting to work together.
China has tried this before and nearly succeeded with Manila. Although the Philippines has relatively little reliance on China trade, its need for investment and pervasive corruption are vulnerabilities. The preoccupation of its armed forces—who are anyway poorly equipped—with insurgencies at home limits its ability to police the seas and protect exploration.
However, democracy can be a powerful force when it comes to protecting national interests. The Philippine public’s determination to stand up to bullying can be stronger than that of elites with business deals with China or autocracies reliant on good relations.
Vietnam’s nationalistic instincts are sure enough but Vietnam is still a relatively small and weak nation quite dependent on trade with China and likely to become more so. Good ties with India, Japan and Russia and emerging ones with the U.S. are an offset but China’s threats have already deterred some exploration on the continental shelf.
China’s efforts to divide the littoral states by pressing for bilateral negotiations have so far not met with success. But they could do so if Vietnam, the Philippines, Malaysia and Brunei do not resolve their own differences. Significantly, China has refrained from overt threats against Malaysia even though oil and gas wells off Borneo are within its claimed territory. Malaysia in return has urged caution and cooperation with China. If Vietnam and the wider Malay world do not hang together they will surely be hung separately.
The difficulty lies in sacrificing some overlapping claims to form a united front. Vietnam claims all the Spratlys, the Philippines most but not all of them, Malaysia just a few, and Brunei only a couple of banks. Many of the islets, rocks and reefs lie outside their 200-mile exclusive economic zones and none qualifies for its own EEZ as none is capable of independently supporting permanent habitation.
Vietnam’s claim is as successor to its French colonial rulers as well as Vietnamese imperial assertions and the legacy of the Cham trading kingdom which flourished in central Vietnam until about 1500. The U.S. never claimed the Spratlys but an independent Philippines did so on the basis of proximity and as part of the Philippine archipelago. Malaysia and Brunei make claims based on rights to the continental shelf off Borneo.
Compromise among these four countries, who together own two-thirds of the coastline, is essential to prevent China from establishing hegemony over Southeast Asia. If the Asean nations cannot agree among themselves they could ask the International Court of Justice for a ruling, as did Malaysia, Singapore and Indonesia in previous island disputes. The court could also be asked to adjudicate the EEZ boundaries. China would object, but that would only underline its unwillingness to agree to arbitration based on the U.N. Law of the Sea Convention.
In the end, only leadership from Indonesia, the largest Malay state and the cornerstone of Asean, can resolve this conflict. It can do more to refute China’s history-based claims, which ignore centuries of Malay trading across the sea a thousand years before the Chinese. And Jakarta can be the honest broker in finding a compromise to share resources that lie outside the EEZs of the claimants.
Vietnam, the Philippines and the other smaller states are never going to be able to remove China from the Spratly Islands that it now occupies, let alone the Paracels that it seized from Vietnam in 1974. But if they can maintain a common front with backing from Indonesia, they should be able to defend their interests in the South China Sea and their future sovereignty.
- Tensions rise on South China Sea dispute (mb50.wordpress.com)
- The disputes over the Spratly Islands (louisadheen.wordpress.com)
- Showdown in the South China Sea (gulfnews) (thuytinhvo.wordpress.com)
- China Rejects U.S. Bid for Sea Dispute Talks in East Asia Summit (International Business Times) (thuytinhvo.wordpress.com)
November 22, 2011
Evolved from the colonial poems of Kipling to the specter of nuclear weapons, world leaders are taking a renewed look at provocative Burma.
“Come you back to Mandalay, Where the old Flotilla lay:
Can’t you ‘ear their paddles chunkin’ from Rangoon to Mandalay on the road to Mandalay,
Where the flyin’ fishes play,
An’ the dawn comes up like thunder outer China ‘crost the Bay!”
Kipling’s poem became a song for Paramount’s first “Road “picture, with Bing Crosby and Bob Hope. The Road to Mandalay was renamed The Road to Singapore. Frank Sinatra made the song a hit in his Come Fly With Me album.
Songs and laughter are not the reality of Burma today. Myanmar was renamed after the brutal uprising in 1998. Yangon, formerly Rangoon, means “End of Strife.” This name is an antonym to Burmese life. Pervasive government control, electricity and food shortages, corruption and rural poverty abound. State assets have been “privatized” to military families and government cronies. In spite of abundant natural resources, Burma remains one of the world’s poorest countries.
Human trafficking of women and children for commercial sexual exploitation; conscription of child soldiers, and forced labor camps are found. Extreme human rights violations cause the United States, the European Union, and Canada to impose financial and economic sanctions.
Myanmar sits at the crossroads of Asia’s great civilizations between India, Bangladesh, Laos, China, and Thailand. Strategically located on the vast Indian Ocean; she stretches to the Eastern Himalayan Mountains, but is smaller than Texas.
Ancient cities, spectacular monuments, well preserved pagodas, stupas, and temples make Myanmar a rich archaeological find. People communicate in their own languages, wear their own style of clothing, celebrate festivals, and perform rituals that have existed since time immemorial. Buddhism is influential. Most boys, and many girls, take part in novitiation which is a temporary monastic life; which includes a shaved head, wearing a robe, and staying in a monastery (a nunnery for girls). Monks in yellowish robes hold alms bowls, heads bowed, humbly asking for whatever food is offered.
Aung San Suu Kyi is a Burmese national hero, a Noble Laureate, and head of the pro democracy movement. She was under house arrest for most of the last 20 years; during this time her husband died in England. At the age of 65, she was released in November 2010 and saw her son for the first time in ten years. Bono wrote the song “Walk On” for Kyi. She has millions of supporters worldwide.
Former First Lady Laura Bush, an advocate of Suu Kyi, worked with 16 women senators to draft a letter to the UN to secure Kyi’s release. Mrs. Bush wrote an op-ed piece in the Wall Street Journal, was interviewed in Time Magazine, and personally called General Secretary Ban Ki Moon asking him to pressure the Burmese regime to release Suu Kyi. In 2010 Laura Bush made a U Tube video about Suu Kyi. Happily Laura Bush spoke by phone with the recently freed pro democracy activist. Encouraged by recent developments, Aung San Suu Kyi announced a return to politics. She had meetings with President Thein Sein.
Burma remains a close ally of China. China and Myanmar have multibillion dollar joint venture pipelines to transport oil and gas. It will link refineries in Western China across Myanmar. Offshore natural gas will go to China. Under civilian control since March 2011, Myanmar has embarked on a series of reforms; released 220 political prisoners, relaxed media control, and legalized trade unions. Association for Southeast Asian Nations (ASEAN) has named Burma as the Chair starting in 2014. UN Secretary General Ban Ki Moon has accepted an invitation to visit the country as soon as possible.
Troubling aspects of Sein’s new government include their nuclear ambition, and their military relationship with North Korea. Norway based “Voice of Burma” broadcast this in a one hour documentary film on Aljazeera television in the Middle East. A young Burmese military specialist on rocket engines shows that Burma has components for a nuclear weapons program, including technology for uranium enrichment and long range missiles.
President Barack Obama and Secretary of State Hillary Clinton are climbing on the Burma bandwagon. Mr. Obama called Aung San Suu Kyi during his visit to Australia last week. Hillary Clinton is scheduled to visit next month.
Let us pray that the Obama Administration does better with nuclear weapons in Burma than it has done with nuclear weapons in North Korea and Iran.
- China, Burma To Strengthen Military Cooperation (voanews.com)
- Clinton aims to bring Burma into fold (smh.com.au)
- China urgers closer Myanmar military ties (upi.com)
- Hillary Clinton prepares for Burma trip (news.smh.com.au)
- US faces down China with much-trumpeted Burma visit | Simon Tisdall (guardian.co.uk)
- Hillary Clinton to visit Burma to check on ‘flickers of progress’ (guardian.co.uk)
- Clinton seeks ally on China’s doorstep (dvb.no)
- China and Burma reaffirm strained ties (dvb.no)
- Bangladesh: Looks to joint oil-gas exploration with Myanmar (Burma) (mb50.wordpress.com)
- Burma ‘considering’ poll monitors (bbc.co.uk)
- Tantalized but Cautious, Filmmakers Capture Myanmar (nytimes.com)
- Dissidents’ New Fear in Myanmar: Irrelevance (nytimes.com)
- Suu Kyi’s party complains of campaign restrictions (alternet.org)
- REVIEW: The Lady and the Peacock: The Life of Aung San Suu Kyi (macleans.ca)
By Ben Blanchard NUSA DUA, Indonesia
(Reuters) – Southeast Asian nations endorsed Myanmar Thursday for the chairmanship of a key regional grouping, gambling that the isolated country can stick to reforms begun this year that could lead it out of half a century of isolation.
But U.S. President Barack Obama cautioned that Myanmar, also known as Burma, must still demonstrate improvements in human rights in his first remarks since the authoritarian regime freed hundreds of political prisoners in October and vowed more reforms in the weeks ahead.
“Some political prisoners have been released. The government has begun a dialogue. Still, violations of human rights persist,” Obama said in a speech to the Australian parliament
ahead of joining Asian leaders in Bali for an East Asia Summit.
“So we will continue to speak clearly about the steps that must be taken for the government of Burma to have a better relationship with the United States.”
The United States has said that freeing political prisoners is one of several preconditions to lifting sanctions that have isolated Myanmar and driven it closer to China. Other conditions include peace with restive ethnic groups after years of unrest.
But Southeast Asia has moved quickly to embrace change in the resource-rich former British colony, whose strategic location between rising powers India and China, and vast, untapped natural-gas resources, have drawn investor interest.
The 10-member Association of South East Asian Nations (ASEAN) — of which Myanmar is a member — formally gave Myanmar the chairmanship of the Southeast Asian regional bloc in 2014, two years ahead of schedule, said Myanmar government officials at an ASEAN summit on the Indonesian resort island of Bali.
“Be assured that we are now growing into a democratic society and we will do all our responsibilities and duties as a responsible government, reflecting the desires of the Myanmar people,” Ko Ko Hlaing, chief political adviser to the Myanmar president, told reporters.
“We will do what we have to do as a democratic government and a democratic society,” he said. “As a family, ASEAN nations have welcomed Myanmar to be a responsible chairman.”
U Sit Aye, a senior Myanmar presidential legal advisor, said more reforms were in store.
“It is . a continuing process,” he said, adding that ASEAN leaders had formally backed Myanmar’s chairmanship at a closed-door meeting in Bali.
Countries across Southeast Asia welcomed the chairmanship as a critical milestone after years frustration over Myanmar’s isolation as the region approaches a European Union-style Asian community in 2015.
“We believe that with the positive improvements in Myanmar right now, this has shown that Myanmar would like to come back to the democratic way,” Thai Foreign Minister Surapong Towijakchaiku told reporters on the sidelines of the ASEAN summit in Bali.
“MOMENTUM FOR REFORMS”
Recent overtures by Myanmar’s government have included calls for peace with ethnic minority groups, some tolerance of criticism, the suspension of an unpopular Chinese-funded dam project and the legalization of labor unions.
President Thein Sein has also reached out to democracy leader Aung San Suu Kyi, who was freed last year from 15 years of house arrest. Her National League for Democracy (NLD) is expected to decide on Friday whether to re-register as a political party to contest imminent by-elections.
An official in Suu Kyi’s party said Myanmar’s expected ASEAN chairmanship would help to drive more political change.
“Their decision is tantamount to encouraging the present Myanmar government to step up the momentum for reforms,” Nyan Win, a senior NLD official, told Reuters. “Myanmar’s political activities will become more vibrant after assuming the chair.”
Indeed, Indonesia’s foreign minister, Marty Natalegawa, said the chairmanship would likely open Myanmar further. “I am quite convinced this will have a huge multiplier effect.”
The United States has had strained relations with Myanmar since the former military junta, which took power in a 1962 coup, killed thousands in a crackdown in 1988. The junta was replaced by a military-dominated civilian government in March after the first elections in two decades last year.
U.S. Secretary of State Hillary Clinton said last Friday that Myanmar appeared to be making some “real changes” to its political system but needs to pursue more reform.
Myanmar’s government has responded by urging the United States to lift sanctions, describing its reforms as genuine.
The country, as big as France and Britain combined, is developing ports on the Indian Ocean and Andaman Sea that, if combined with proposed rail and pipeline projects, would allow cargo ships to bypass the Straits of Malacca.
That would open the way for faster delivery of oil from the Middle East and Africa to China and other countries in the region straddling the Mekong River.
India, Japan and Southeast Asia have sought to ramp up engagement, largely to counterbalance China’s influence and to gain a toehold in a country whose proven gas reserves have tripled in the past decade to around 800 billion cubic meters, equivalent to more than a quarter of Australia’s, BP Statistical Review figures show.
- ASEAN set to gamble on Myanmar reform path – Reuters (reuters.com)
- A look at the top issues at Southeast Asia meeting (seattletimes.nwsource.com)
- Burma to chair Asean bloc in 2014 (bbc.co.uk)
Tom Allard November 17, 2011
TENSIONS over the oil-rich and strategically important South China Sea escalated yesterday, as Chinese state media accused the US and the Philippines of planning a ”grab” for its resources and a senior foreign ministry official said it did not want the issue discussed at this week’s East Asia Summit in Bali.
Meanwhile, US Secretary of State Hillary Clinton said yesterday in Manila that the US ”will certainly expect and participate in very open and frank discussions” on the topic at the summit, which will be attended by US President Barack Obama, Chinese President Hu Jintao and Prime Minister Julia Gillard.
The looming confrontation over the South China Sea threatens to overshadow the East Asia Summit, a grouping of nations based on the south-east Asian countries of ASEAN that has emerged as the prime forum for security and political discussions in the Asia-Pacific region.
The South China Sea is a potential flashpoint between the US and China as the two powers seek to assert their interests in Asia, the fastest-growing region in the world.
The US has leapt on nervousness among smaller Asian nations about China’s growing military might and bellicose diplomacy to reassert its long-standing role as an anchor of security in Asia, even as its economic importance wanes. Before Mrs Clinton’s visit to Manila and the East Asia Summit, which the US will attend for the first time, China’s state-run Xinhua news agency said: ”Now that Obama is scheduled to appear at the ASEAN Summit, the Philippines will embrace the ‘golden chance’ to get back at China, again churning up the South China Sea.”
The Global Times, another Chinese government mouthpiece, said the Philippines, aided and abetted by the US, was intent on ”grabbing resources from Chinese water”. ”We hope the South China Sea will not be discussed at the East Asia Summit,” Chinese Vice-Foreign Minister Liu Zhenmin said.
Mrs Clinton yesterday signed a declaration with her Philippines counterpart, Albert del Rosario, aboard the guided missile destroyer USS Fitzgerald in Manila Bay, to boost defence co-operation between the two countries and calling for multilateral talks on the South China Sea.
The Philippines is one of six countries claiming part or all of an archipelago in the South China Sea known as the Spratly Islands, which are believed to lie above significant oil and gas reserves. The area is also of high strategic value as a vital sea lane for much of the world’s trade.
This year, Chinese and Philippines naval ships have had skirmishes with fishermen and other vessels each country believed had been encroaching on its territory.
While many of the claimants – which also include Vietnam, Malaysia, Taiwan and Brunei – want multilateral talks to solve the dispute, China insists on one-on-one negotiations.
Burma is set to chair the 2014 ASEAN and East Asian summits after members said its political reforms meant it was now a suitable candidate for the role.
The US, Australia and other participants still have sanctions in place against Burma but have cautiously welcomed the release of political prisoners and other reform in a country that was run by a military junta for decades until elections this year.
ASEAN foreign ministers ”all recognize the important and significant developments taking place in [Burma]”, Indonesian Foreign Minister Marty Natalegawa said.
- Clinton warns against intimidation in South China Sea dispute – Reuters (reuters.com)
- U.S. boosts military presence in Australia (macleans.ca)
By Manuel Mogato and Paul Eckert
(Reuters) – The Philippines criticized fellow Southeast Asian nations on Tuesday for failing to take a united stand against China over maritime rights in the South China Sea, a crucial commercial shipping lane thought to contain valuable oil and minerals.
The comments by Philippine Foreign Secretary Albert del Rosario coincide with the arrival of U.S. Secretary of State Hillary Clinton in Manila for a two-day visit in which the Philippines is likely to press Washington to help resolve disputes in the sea lanes claimed by China.
“They’re concerned from a security point of view and are looking at us to identify ways to work together,” a senior U.S. defense official travelling with Clinton told reporters. “We’re very sensitive to making sure that this does not in any way alarm or provoke anybody else.”
Regional leaders gather in Bali, Indonesia, this week for back-to-back summits of the ASEAN and East Asia groupings where the issue is also expected to be raised.
The summits follow a meeting in Honolulu this past weekend of leaders of the Asia-Pacific Economic Cooperation forum.
Beijing claims that entire maritime region, which contains rich energy and fisheries resources, pitting it against coastal states Vietnam and the Philippines in a test of wills that erupted in violent clashes in recent years.
Diplomats in Vietnam and the Philippines have privately expressed concern that Beijing is using its economic influence on some members of the 10-state Association of South East Asian Nations (ASEAN) to prevent the regional bloc from steering negotiations over conflicting claims.
The Philippines has proposed a “Zone of Peace, Freedom, Friendship and Cooperation”, or ZoPFFC, to define which areas are disputed and which are under the sovereignty of a country. That would pave the way for a joint cooperation area.
In the first sign of discord as regional foreign ministers met on the Indonesian resort island of Bali, del Rosario reprimanded Southeast Asia, suggesting it was failing to flex its diplomatic muscle in the face of pressure from China.
“We have been given the impression that political and economic considerations have hindered a fruitful and mutually acceptable outcome on the discussions of the ZoPFFC,” Rosario said in a statement in Manila on Tuesday that was read by his deputy at an ASEAN foreign ministers meeting in Bali.
“ASEAN must play a decisive role at this time if it desires to realize its aspirations for global leadership.”
Indonesian Foreign Minister Marty Natalegawa, whose country holds the rotating ASEAN chairmanship, said the Philippine proposal failed to find traction in the region.
“The core problem is to define which areas are in dispute and which areas are not,” he told reporters in Bali. “So to many countries, this almost appeared to be a non-starter.”
OBAMA TO ADDRESS SECURITY
Maritime security will be front and centre when U.S. President Barack Obama attends the East Asia Summit in Bali this weekend, the first U.S. leader to join the annual meeting of Asian leaders and dialogue partners.
Obama is expected to respond to China’s territorial sea claims which the Philippines and other U.S. allies regard as economically and militarily threatening.
Taiwan, Malaysia and Brunei are other claimants to parts of the South China Sea. Those countries, along with the United States and Japan, have pressured Beijing to try and seek some way forward on sovereignty, which has flared again this year with often-tense maritime stand-offs.
But China, growing in confidence and military power, sees no reason to back down.
Countries such as the Philippines are increasingly concerned and fear their Asian allies will succumb to Beijing’s influence on the issue.
Del Rosario said there was no full participation of ASEAN member states in an ASEAN Maritime Legal Experts’ Meeting, making it difficult to reach consensus on the issue.
Manila hosted the legal experts’ meeting in September but Laos and Cambodia — both of which have benefited from waves of Chinese investment in recent years — did not turn up despite indicating they would, preventing a joint position.
“ASEAN is now at a critical junction of playing a positive and meaningful role to contribute in the peaceful resolution of the disputes in the South China Sea,” del Rosario said.
China and Taiwan also claim the whole of the world’s second-busiest sea lane, which has rich deposits of oil and gas and is also a major fisheries resource.
Beijing wants to resolve the dispute through bilateral negotiations and has rejected calls for United Nations arbitration, but other claimants prefer a multilateral approach, including an indirect role for the United States.
Washington has supported Manila’s multilateral and rules-based approach to resolve the issue and has pledged military assistance to upgrade the Philippines’ ability to patrol its maritime borders in the area.
Clinton will sign a partnership agreement to mark 60th anniversary of the countries’ Mutual Defence Treaty.
Briefing journalists travelling with Clinton, a senior U.S. state department official said Washington will continue efforts in the country’s restive south to help fight Islamic militants but “are focusing more on maritime capabilities and other aspects of expeditionary military power.”
“We are working on a whole list of things that improve their own indigenous capabilities to be able to deal with maritime challenges,” he said, adding the U.S. has provided the Philippines with a destroyer and a second ship will come soon.
- Philippines seeks summit on sea row; China cool (seattletimes.nwsource.com)
- Regional disputes delay large-scale drilling of oil in South China Sea (Oman Time) (thuytinhvo.wordpress.com)
- Philippines rejects new Chinese territorial claim (seattletimes.nwsource.com)
- Philippines rejects new Chinese territorial claim (sfgate.com)
- Cambodia: Dispute in South China Sea should be solved between China, concerned countries (xinhua) (thuytinhvo.wordpress.com)
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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