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Law of the Sea Treaty: A Tool to Combat Iran, China, and Russia? or Redistribution of wealth

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Posted by Doug Bandow

Every few years, the Law of the Sea Treaty rears its head as a one-size-fits-all solution to a host of current maritime problems. This time, Secretary of Defense Leon Panetta and General Martin Dempsey, chairman of the Join Chiefs of Staff, are urging the Senate to ratify the treaty. The officials claim it will act as a tool to deal with aggressive actions by Iran, China, and Russia. But as I have long argued, no matter the current rationale for the treaty, it represents a bad deal for the United States.

Panetta and Dempsey rolled out three hot issues to make their case:

  • Iran is threatening the world economy in the Strait of Hormuz? The Law of the Sea Treaty (LOST) will help solve this.
  • China is threatening the Philippines in the South China Sea? LOST is a crucial tool to prevent war.
  • Russia is claiming land in the Arctic region to extract natural resources? LOST will put the screws to Moscow.

These international controversies will be magically resolved if only the Senate ratifies the convention.

If this sounds too good to be true, it is. It is not clear the treaty would do much at all to alleviate these flashpoints. Especially since the two most important potential antagonists, China and Russia, already have ratified LOST. And it is certainly not the best option policy-wise for the United States with each issue: Iran’s bluster in the Strait of Hormuz may prove its weakness. U.S. policy in the South China Sea suffers from a far more serious flaw: encouraging free-riding by allied states. Russia’s move into the Arctic has nothing to do with Washington’s absence from LOST.

The treaty itself, not substantially altered since 1994, is still plagued by the same problems that have halted its ratification for decades. Primarily, it will cede decisionmaking on seabed and maritime issues to a large, complex, unwieldy bureaucracy that will be funded heavily by—wait for it—the Untied States.

On national security, the U.S. Navy does not need such a treaty to operate freely. Its power relative to all other navies is the ultimate guarantee. Serious maritime challengers do not exist today. Russia’s navy is a rusted relic; China has yet to develop capabilities that come close to matching ours. Moreover, it is doubtful that the United States needs to defend countries such as the Philippines when flashpoints over islands in the region affect no vital American interests.

The average American knows very little about this treaty, and rightly so. It is an unnecessarily complicated and entangling concoction that accomplishes little that the longstanding body of customary international law on the high-seas or the dynamics of markets do not account for. My conclusion in testimony before the Senate Committee on Armed Services in 2004 still holds true:

All in all, the LOST remains captive to its collectivist and redistributionist origins. It is a bad agreement, one that cannot be fixed without abandoning its philosophical presupposition that the seabed is the common heritage of the world’s politicians and their agents, the Authority and Enterprise. The issue is not just abstract philosophical principle, but very real American interests, including national security. For these reasons, the Senate should reject the treaty.

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Iran May Disrupt Hormuz Shipping, Supporting Oil, S&P Says

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By Ayesha Daya

Feb. 14 (Bloomberg) — Iran might respond to sanctions with “low-level provocation” such as slowing shipping through the Strait of Hormuz, keeping oil prices at their currently high level, according to three Standard & Poor’s reports.

Iranian authorities could disrupt supplies of oil from the Persian Gulf by imposing tanker inspections or boarding merchant ships in its territorial waters, supporting oil prices because markets would increasingly view armed conflict as “a real, if remote, possibility,” according to the reports’ authors, who include Paris-based Jean-Michel Six, S&P’s chief economist for Europe.

The likelihood of severe disruption of oil supplies through the strait, through which 20 percent of the world’s oil flows, is “very low,” though if one did occur, it might boost oil to $150 a barrel and push economies into a recession, according to the reports.

“For oil-producing sovereigns of the Gulf Cooperation CouncilSaudi Arabia, U.A.E., Qatar, Kuwait, Oman, and to a lesser extent, Bahrain — higher oil prices would actually be beneficial,” said Elliot Hentov, an S&P credit analyst in Dubai. “As oil exporters, they would receive more foreign earnings that they could either use to stimulate demand or improve their government’s balance sheets.”

The U.S. and the European Union are imposing tougher sanctions on Iran and Israel has talked of an attack on the Islamic Republic’s nuclear facilities in an attempt to halt its atomic program. Iran, which says its nuclear program is for civilian purposes, has threatened to block the Strait of Hormuz in retaliation.

The three S&P reports discuss the impact of rising Gulf tensions on Middle Eastern states seeking to borrow money, the risks that a closure of Hormuz would pose for companies looking for credit and the threats to global economic growth from an oil shock.

Iran’s Revolutionary Guard Begins Military Exercises Near The Strait Of Hormu

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AP | Feb. 4, 2012, 6:07 AM

TEHRAN, Iran (AP) — Iran’s powerful Revolutionary Guard began military exercises Saturday in the country’s south, the latest show of force after threats to close the strategic Strait of Hormuz in retaliation for tougher Western sanctions.

Plans for new Iranian naval games in the Persian Gulf off the country’s southern coast have been in the works for weeks. State media announced new maneuvers in southern Iran involving ground forces, but it was not immediately clear whether they were part of the planned naval training missions scheduled for this month or a separate operation.

The latest military maneuvers got under way following stern warnings by Iran’s Supreme Leader, Ayatollah Ali Khamenei, about any possible U.S. or Israeli attacks against Tehran’s nuclear facilities. It also comes after Western forces boosted their naval presence in the Gulf led by the American aircraft carrier USS Abraham Lincoln.

Iran officials and lawmakers have repeatedly said that their country would close the Strait of Hormuz at the mouth of the Persian Gulf in retaliation for sanctions that affect Iran’s oil exports. They have as yet made no attempts to disrupt shipping through the waterway, the route for one-fifth of the world’s crude oil, and the U.S. and allies have said they would respond swiftly to any attempts at a blockade.

Last month, Iran’s navy wrapped up 10 days of exercises in the Gulf, but the Revolutionary Guard — which is directly under control of the supreme leader — represents a significantly stronger military force and controls key programs such as missile development. Iranian state media announced the new maneuvers, but gave no further details.

Khamenei, in a speech nationally broadcast on Friday, staked out a hard line after suggestions by Israel that military strikes are an increasing possibility if sanctions fail to rein in the Islamic Republic’s nuclear program.

He pledged to aid any nation or group that challenges Israel and said any military strikes would damage U.S. interests in the Middle East “10 times” more than they would hurt Iran. The comments also may signal that Tehran’s proxy forces — led by Lebanon’s Islamic militant group Hezbollah — could be given the green light to revive attacks on Israel as the showdown between the archfoes intensifies.

The West and its allies fear Iran could use its uranium enrichment labs — which make nuclear fuel — to eventually produce weapons-grade material. Iran insists it only seeks reactors for energy and medical research.

Israel has so far publicly backed the efforts by the U.S. and European Union for tougher sanctions that target Iran’s crucial oil exports. But Israeli leaders have urged even harsher measures and warn that military action remains a clear option despite Western appeals to allow time for the economic pressures and isolation to bear down on Iran.

Iran’s oil minister repeated claims that an EU oil embargo will not cripple Iran’s economy, claiming Saturday that the country already has identified new customers to replace the loss in European sales that accounted for about 18 percent of Iran’s exports.

Rostam Qassemi also reinforced Iran’s warning to Saudi Arabia and other fellow OPEC members against boosting production to offset any potential drop in Tehran’s crude exports, saying the cartel should not be used as a political weapon against a member state.

Although Israel has raised the strongest hints that it is likely to start a military campaign, Khamenei reserved some of his strongest comments for Israel’s key U.S. ally.

“A war itself will damage the U.S. 10 times” more in the region, said Khamenei.

Khamenei claimed Iran, however, could only emerge stronger. “Iran will not withdraw. Then what happens?” asked Khamenei. “In conclusion, the West’s hegemony and threats will be discredited” in the Middle East. “The hegemony of Iran will be promoted. In fact, this will be in our service.”

On Thursday, Israel’s defense minister, Ehud Barak, suggested the world is increasingly ready to consider a military strike if sanctions fail. The head of the country’s strategic affairs ministry, Vice Premier Moshe Yaalon, also suggested Iran’s main military installations are still vulnerable to airstrikes — even as Iran starts up a new uranium enrichment facility deep in a mountainside bunker south of Tehran.

Yaalon’s comments appear to reinforce earlier suggestions by other Israel officials that the window for a possible attack is closing and Israel would need to strike by summer to inflict significant setbacks on Iran’s nuclear facilities. The officials spoke on condition of anonymity under standing guidelines.

At Ramstein Air Base in Germany, U.S. Defense Secretary Leon Panetta said sanctions remain the best approach to pressure Iran. But he told U.S. airmen Friday that Washington keeps “all options on the table and would be prepared to respond if we have to.”

Khamenei answered by repeating Iran’s declarations that it will never roll back its nuclear program, which he had earlier said was now part of the country’s “identity” and a cornerstone of its technological endeavors. On Friday, Iran said it successfully sent a small satellite into orbit in the third such launch in recent years, state media reported.

“From now on, in any place, if any nation or any group confronts the Zionist regime, we will endorse and we will help. We have no fear expressing this,” said Khamenei, using the phrase widely used by Iran’s leader to describe Israel.

Read more: BI

Energy secretary backs natural gas exports

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The low price of natural gas is hurting domestic job growth, and exporting a small amount of the fuel will boost the economy, U.S. Energy Secretary Steven Chu told a Houston audience Thursday.

Speaking at a town hall at Houston Community College, Chu said a modest increase in the price of natural gas wouldn’t significantly raise its cost to U.S. consumers who use it to heat their homes and manufacturers who need it to make products.

Natural gas futures closed at $2.55, up 17 cents, in trading Thursday on the New York Mercantile Exchange. It brings much higher prices in other countries.

“Exporting natural gas means wealth comes into the United States,” Chu said.

The Energy Department’s Office of Fossil Energy is reviewing several applications to export liquefied natural gas. The exports would relieve the glut of natural gas on the domestic market and raise revenue, but also potentially increase prices for domestic consumers.

Several U.S. energy companies have announced plans to close their natural gas wells and curb spending in natural gas fields, as its price has fallen from more than $13.50 in 2008.

In his State of the Union speech last week, President Barack Obama called for an “all-of-the-above” approach to domestic energy production, including investment in oil, natural gas and renewable energy sources.

Chu said it’s important that the United States be at the forefront of innovations and technologies in renewable energy.

“We have a choice. When all these things become cost-competitive, do you want to buy or do you want to sell?” he asked. “If we are buying, that is wealth out of the country. If we are selling, that’s wealth into the country.”

Before the hour-long session with students at the college, Chu met with oil and gas executives and explored the Texas Medical Center’s energy efficiency upgrade.

At the college, he answered questions about the Obama administration’s rejection of the Keystone XL pipeline and Iran’s threat to close the Strait of Hormuz, among other topics.

Chu said the administration is open to exploring alternate routes for the pipeline that would carry oil from Canadian tar sands to Gulf Coast refineries.

It’s become a touchstone issue for supporters who say it will create jobs and reduce U.S. dependence on oil from hostile nations, and opponents who argue it could threaten water supplies and promote use of an especially dirty form of oil.

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Photo: Melissa Phillip / © 2011 Houston Chronicle

 

Chu said he supports construction of pipelines nationwide, particularly to relieve the glut of oil at the hub in Cushing, Okla., a major price point for domestic oil.

“There is such a shortage of pipelines between Cushing and Houston,” Chu said. “There will be major construction of pipelines in the next decade or so. All the job creation from Cushing to Houston is being done now.”

Chu touted government investment in wind, solar and other renewable energy sources, as well. He said he expects the cost of solar power to fall by 50 percent within six to eight years.

Chu also dismissed Iran’s threats to close the Strait of Hormuz, a key oil shipment channel, in retaliation for international sanctions aimed at the nation’s nuclear program.

“I don’t think they can really shut down the Strait of Hormuz,” Chu said. “We certainly have capabilities to reopen it.”

simone.sebastian@chron.com @SimonesNews

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Obama’s dishonest energy promise

imageDespite pledge, government hasn’t allowed drilling on 97 percent of coast

President Obama’s ambiguous call to “open” 75 percent of the country’s potential offshore oil and natural gas resources to exploration may sound generous, but the truth is, the areas containing those resources are technically already included in the upcoming 2012 to 2017 offshore leasing plan, and they are virtually the same areas where exploration and production have been allowed for decades.

Look beyond the president’s rhetoric to his record and it becomes clear that jobs and energy security are not high priorities for this administration. The shortsighted decision to deny the Keystone XL pipeline and the unnecessarily long moratorium on drilling in the deep waters of the Gulf of Mexico are but two examples.

Political uprisings and social unrest over the past year have highlighted the instability of oil-producing regions in the Middle East and North Africa, and the situation shows no signs of improvement. Just a few weeks ago, Iran threatened to shut the Strait of Hormuz, a critical transport route for 40 percent of the world’s oil. A robust domestic oil and natural gas industry can shield the U.S. market from such events and protect the American consumer. Unfortunately, our current policies have failed.

Around the same time as the Iranian announcement, the American Petroleum Institute unveiled a Quest Offshore Resources study showing that the deep-water drilling moratorium and subsequent permit slowdown forced 11 deep-water rigs to leave the Gulf of Mexico since 2010, taking their jobs and investments to the shores of Brazil, Africa and elsewhere. Those moves translated to a loss of $21.4 billion for our economy and an estimated 72,000 jobs in 2010 and 90,000 jobs in 2011, according to the study. We must do better.

An earlier Quest study rolled out by the National Ocean Industries Association showed that if permitting rates surpassed pre-2010 levels, 190,000 offshore industry-supported jobs could be created nationwide within the next two years without a single dime of government stimulus. The positive benefits of returning the Gulf-permitting rates to higher, more consistent levels are clear. But the Gulf represents only a portion of our nation’s offshore resources. Alaska’s outer continental shelf holds immense potential, with almost 10 billion barrels of oil and 15 trillion cubic feet of natural gas lying untapped beneath the ocean floor. Approval of exploration permits would mean 55,000 new jobs and $145 billion in new wages. The federal government would also see a significant amount of new revenue – approximately $193 billion.

There are also considerable resources off the coast of Virginia, where residents and state leadership support exploration. Unfortunately, the Department of the Interior has yet to allow the industry to move forward there. In addition to denying Virginia’s desire for an offshore lease sale, the department’s 2012 to 2017 proposed oil and gas leasing program keeps the eastern Gulf and the Atlantic and Pacific coasts off-limits to exploration and delays development in Alaska. This sends job creation elsewhere, and closes the door on economic growth.

Despite the vital revenue generated, jobs created, wages paid and increased energy security, less than 3 percent of the federal outer continental shelf is leased, leaving more than 97 percent of these resource-rich areas devoid of any permits. I cannot think of a more glaring, missed opportunity. We simply cannot continually place our nation at the mercy of hostile nations while we ignore our own energy potential. Significant oil and natural gas resources lie off our coasts and across our northern border, waiting to enhance our energy security and help stabilize fuel prices. We need to go get them. The time has come for Congress and the president to put aside rhetoric and ideological debates, pass meaningful legislation that will open our offshore domestic resources for exploration and development, stop sending our hard-earned dollars to hostile and unfriendly nations, and invest in America’s future.

Randall Luthi is president of the National Ocean Industry Association

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