Energy

New Approaches to Enduring Issues: Welcome and Keynote Address

Tue, 14 Nov 2006 01:00:00 -0500

In his keynote address at the Middle East Institute's 60th Annual Conference, US Secretary of Energy Samuel W. Bodman discussed the need for diversifying energy sources in order to sustain global growth. Without diversification, developing nations will struggle to access increasingly costly fuel and environmental degradation will worsen. The private sector and government play a critical role in providing new energy solutions. In addition, states must transcend their narrow national interests and create cooperative solutions to overcome today's energy challenges.

US Well-Served by Saudis

Wyche Fowler, Jr and Mark Weston — Mon, 7 Jan 2008 10:44:38 -0500

Of the six Arab nations President Bush is visiting this week, four are monarchies: Saudi Arabia, Kuwait, Bahrain and the United Arab Emirates. Three of the royal families control over 40 percent of the Earth's oil reserves: the al-Saud of Saudi Arabia, the al-Sabah of Kuwait and the al-Nahayan of Abu Dhabi in the UAE. We are fortunate that all three families are American allies.

It is natural for Americans to be suspicious of kings because our nation began by rebelling against one in 1776, but if the U.S. is to have any Arab friends at all, we cannot spurn the support of monarchies.

By far the most powerful royal family is the al-Saud, the rulers of Saudi Arabia, the world's only country named after a family. Saudi Arabia is easy to criticize. Women cannot drive, work with men or travel without a man's permission, and the religious police, though less assertive than they used to be, still harass women if they see the slightest bit of hair, arm or ankle.

Worse, until 2001 the Saudi people carelessly sent millions of dollars abroad to schools that taught Muslim extremism and to charities that turned out to be fronts for al-Qaida. In November 2007 a Saudi court sentenced a female victim of gang rape to 200 lashes and six months in jail because prior to the rapes she had been in a car with a young man who was not her relative, a verdict overturned only when King Abdullah issued a pardon.

Yet Saudi Arabia has also been a steadfast ally of the West since 1915, first of Britain and then of the United States. Even during the Arab oil embargo of 1973-74, when relations were at their worst, the Saudis still sent oil to the U.S. military forces in Vietnam.
Saudi Arabia has modernized much faster than people realize. Sixty years ago, most Saudi men and nearly all Saudi women were illiterate and lived in mud-brick houses. Now most Saudis enjoy modern conveniences and have at least a high school education. Under King Abdullah, newspapers, the Internet and satellite television have ended the monopoly on discussion that Muslim clerics enjoyed until recently. Abdullah has also enacted more than 40 commercial laws to help improve the country's business climate and expand its nonoil economy.

Social progress slow
Women today outnumber men almost three-to-two at Saudi universities. Nearly every Saudi agrees that women will have more rights soon, but even educated women seem content to move cautiously because their goal, many say, is not to free themselves from men, but with men. Few of the Saudi women we talked with would trade places with their American sisters and give up the protection of their extended families. To women in Saudi Arabia, the possibility of raising children as a single mother without any money from brothers, uncles and cousins seems even more demeaning than having to wear a full veil and not being able to drive.

Whether or not we are pleased with Saudi Arabia's social progress, the kingdom is central to the pursuit of peace in the Middle East. King Abdullah's 2002 proposal, endorsed by the Arab League, to establish normal relations with Israel in return for a withdrawal to Israel's pre-1967 borders, remains the basis of the peace initiative renewed by the Bush administration at Annapolis. No peace in Israel and Palestine can succeed unless it has the approval of the Saudi monarchy; President Bush would do well to heed the advice he will hear from King Abdullah this week, something he did not do before our invasion of Iraq in 2003.

It is distressing today to see the tragedy of Sept. 11, 2001 aggravated by uninformed commentary about Saudi Arabia in many Western publications and broadcasts, often by people who have never been to the country. One mistake people make is to attribute al-Qaida's violence primarily to the Saudi form of Islam, Wahhabism. This religious movement, which dates from the 1740s, is mainly motivated by monotheism, not jihad, for it emerged as a reaction to the idolatry and superstition of the times. It is just one of several Muslim puritanical movements, including the Muslim Brotherhood of Egypt, the Deobandi movement in India and the Janiat-ul-Ulema-e-Islam political party in Pakistan. To lump them together and condemn Wahhabism as the key influence behind global terrorism is a common but serious error.

No good alternative
After 9/11, it took the Saudi government more than a year to fully appreciate the fact that homegrown terrorism had become a major problem. Since 2002, however, the Saudis have killed over 150 terrorists and captured 1,000 more. They have shared valuable information with the FBI and CIA, stopped all Saudi public and private charities from sending money abroad, and fired or retired 1,300 militant clerics and forbidden them to preach. The Saudis have also begun the lengthy process of replacing millions of religious schoolbooks that contain hostile references to Christians and Jews.

To cite cultural differences, however great, as a reason to end America's longstanding alliance with the Saudi kingdom makes no sense, for the prospect of another government friendlier to the United States assuming power in Saudi Arabia is nil. The royal family mediates between conservative clerics and Western-educated businessmen and reformers. Neither group is satisfied. Clerics warn of the danger of changing too fast, liberals warn of the peril of moving too slowly — which suggests the royal family performs its mediation with care and skill.

Americans on both the right and the left who want the Saudi monarchy to fall are shortsighted and naïve. They ignore the hard fact that the Saudi people are more conservative, anti-Israeli and anti-American than the ruling family. The alternative to Saudi Arabia's royal family today is not some Arabic-speaking version of the Swedish parliament, but a Sunni version of Iran's Shi'ite theocracy.

America's 60-year friendship with the Saudi government needs to be nurtured, not censured. Without Saudi Arabia as an ally, the world's oil supplies would be less secure, and peace between Israel and Palestine is improbable.

Can America Prevent a Nuclear Iran?

R.K. Ramazani — Fri, 4 Feb 2005 12:00:00 -0500

Both President Bush and Vice President Dick Cheney managed on Inauguration Day to focus world attention on Iran.

Bush appeared to have Iran, among other countries, in mind when he said he was committed to "the ultimate goal of ending tyranny in our world," and Cheney publicly raised the possibility that Israel "might well decide to act first" to prevent Iran from acquiring nuclear weapons.

Yet neither clarified America’s Iran policy, partly because of the division of opinion within and outside the Bush administration.

The hawks favor the invasion of Iran, arguing that logistically it would be easier to pull off than the invasion of Iraq because the US could launch land-based attacks on Iran from adjacent Afghanistan, Iraq and Central Asia. They also allege that Iran is a "rogue" state that has sponsored terrorist bombings in Beirut and in Saudi Arabia, and is sheltering al-Qaida terrorists.

In contrast, the doves see tremendous difficulties in attacking Iran as compared with Iraq. Iran, they point out, is four times the size of Iraq and has a population three times that of Iraq. It has missiles capable of reaching Israeli and European targets as well as American interests in the Middle East, and the capacity to instigate Hezbollah in Lebanon and Hamas and Islamic Jihad in the Israeli-occupied territories against both American and Israeli interests.

Facing the American and Israeli threat of military action, Iranian hawks and doves have closed ranks. They mock the threats as scare tactics, invoke their millennial history of resistance to foreign invasions from Alexander of Macedonia to Saddam Hussein of Iraq, consider obtaining nuclear weapons to be un-Islamic, insist on their right under the Non-Proliferation Treaty to develop nuclear energy for peaceful purposes, point out their ongoing cooperation with International Atomic Energy Agency inspectors, who testify that so far there is no sign of Iranian militarization of nuclear facilities, and warn Israel of dire consequences if it attempts to strike Iranian nuclear facilities, as it did Iraq’s Osirak in 1981.

The Bush administration’s gross misunderstanding of the Iraqi political culture got us involved in the intractable Iraqi situation in which we find ourselves today. This should not be repeated. Iran and the United States must stop demonizing each other, as must Iran and Israel.

The United States should recognize the dynamic social and political changes in Iran that eschew religious extremism, favor a pragmatic approach to international relations, aspire to democracy and opt for relations with America.

Besides acknowledging this, Israel should realize that, contrary to public perception, Iranian leaders do not seek to destroy Israel. I know first-hand from on-site interviews that the Iranians would accept a two-state solution that would provide for the creation of a viable Palestinian state living side-by-side with Israel.

The Bush administration should join the European efforts to deal with the Iranian nuclear situation. Perhaps this is more feasible now that both Bush and Cheney have begun to focus on diplomacy.

Bush has already acknowledged that we do not have "leverage" with Iran and that "diplomacy must be the first choice" in resolving international issues, including "nuclear armament."

Despite Dick Cheney’s apparent concern with possible Israeli military action against Iran, he said clearly, "We don’t want a war in the Middle East, if we can avoid it. In the case of the Iranian situation, I think everybody would be best suited or best treated and dealt with if we could deal with it diplomatically."

If this apparent retreat from the previous focus on military action goes beyond rhetoric, then there is some hope for resolving the Iranian nuclear situation peacefully.

A real test for this would be whether the Bush administration will get off the sidelines and join the Europeans in dealing with Iran, a move which Britain, France, Germany and the European Union have urged. They say their diplomatic efforts could become more effective if America were to join them. Mohammad ElBaradei, the head of IAEA, as well as such ranking senators as John McCain, call for joint US-EU diplomacy.

A joint American-European diplomatic approach would make it far more difficult for Iran to renege on its commitment to Europe. Iran has promised to refrain temporarily from uranium enrichment while discussions for European technological, economic and commercial aid to, and political and security cooperation with, Iran make steady progress.

More important, such a joint approach would redound to the benefit of reformist and secular nationalist forces within Iran. It would deprive the hard-line conservatives of the opportunity to exploit American and Israeli threats to repress pro-democracy forces.

If President Bush is true to his commitment to expand freedom worldwide through diplomacy, support for democratic transition should go beyond Iraq to neighboring Iran, where centuries-old aspirations for democracy have been transformed into a relentless grassroots democratic movement, despite mounting repression.

Finding the Fulcrum? Euro-Atlantic Relations and Iran

John Calabrese — Wed, 21 Jul 2004 12:00:00 -0400

Over the past year, the Bush administration has prodded the International Atomic Energy Agency (IAEA) and Tehran to clarify the details of the Iranian nuclear program. The fact that the United States chose a multilateral approach to address this issue was welcomed by European officials, who, like their American counterparts, are concerned about the proliferation of weapons of mass destruction, as they are about the deficiencies of the nuclear non-proliferation regime. European officials, like their US counterparts, also desire a non-nuclear Iran, and hope to avoid yet another traumatic Euro-Atlantic policy dispute. These shared concerns have led to an unprecedented degree of US/EU policy coordination with respect to Iran as well as to an uncharacteristically unified and assertive European diplomacy.

Yet, the IAEA investigative process has yielded troubling discoveries and omissions about the nature and extensiveness of the Iranian nuclear program, casting doubt on the veracity of Iranian claims that their nuclear activities are dedicated exclusively to civilian purposes. With each successive turn of the IAEA reporting and Board of Governors deliberation cycle, frustration on all three sides – US, European, and Iranian – has been mounting. With the next round of IAEA reports and negotiations just weeks away, observers are pondering doomsday scenarios and idealized eleventh-hour outcomes. Both are plausible, but neither seems likely. Unless either Washington or Tehran stumble into a confrontation, the three sides will probably find it in their interests to defer the issue to a second Bush administration or its successor.

In the meantime, it may be useful to explore both where we are and how we got here. This paper develops three arguments. First, the EU has made substantial progress in building an institutionalized framework for relations with Iran that, in its current form, addresses some of the key concerns voiced by critics of engagement. Second, the US and EU approaches to Iran, specifically regarding the nuclear issue, have narrowed significantly, mainly as a consequence of a European course adjustment. Third, despite this convergence, it appears that Washington and Brussels have yet to find the fulcrum – Iran remains immovable.

Dragon by the Tail: China's Energy Quandary

Dr. John Calabrese — Tue, 16 Mar 2004 12:00:00 -0500

The breakneck pace of China's economic expansion has the dragon by the tail: oil demand and dependence on foreign sources of supply have skyrocketed. The Chinese leadership recognizes that sustaining economic growth hinges on continued access to large quantities of imported oil. As a result, energy security occupies center stage in China's approach to modernization and in its foreign policy decision-making and conduct.

China's efforts to offset the risks of increasing dependence on foreign oil consist mainly of state-mandated and state-supported energy industry initiatives aimed at secure long-term access to oil supplies through broadening the scope of its energy partnerships and by diversifying energy suppliers both within, and away from, the Middle East and North Africa (MENA) region. Yet, these efforts have thus far yielded mixed results. China remains tethered to the Persian Gulf.

Because in recent years China has cast its net ever more widely to meet its energy requirements, Chinese interests have perforce intersected with those of the United States - in the Middle East, in Central Asia, in Russia, and in East Asia. Given its global strategic supremacy and the fact that Sino-American relations have been largely positive and constructive since 9/11, the United States should resist the temptation to undercut China's efforts to satisfy its energy requirements.

The Future of the Iraqi Oil Ministry

Issam Al Chalabi — Fri, 29 Apr 2005 13:00:00 -0400

MEI is pleased to host former Iraqi Oil Minister Dr. Issam Al Chalabi. Prior to serving as Iraq’s oil minister from 1987 to 1990, he worked as an engineer and held various posts in both upstream and downstream production in the Iraqi oil sector. Following his retirement from public service and his leaving Iraq, Dr. Al Chalabi established a consulting firm in Amman, Jordan where he offers advice on global energy with emphasis on oil prospects and geopolitics of the Middle East.

Appreciation Lunch for Sec. Spencer Abraham

Spencer Abraham — Wed, 29 Sep 2004 12:00:00 -0400

MEI is proud to join the National US-Arab Chamber of Commerce (NUSACC) in co-sponsoring an Appreciation Lunch for US Secretary of Energy Spencer Abraham.

Secretary Abraham is expected to address an array of issues, including: US energy security, US relations with the Arab world (including commercial ties), and the increasing importance of liquefied natural gas (LNG) to the United States.

The Honorable Spencer Abraham assumed office as US Secretary of Energy on January 20, 2001, following service as a US senator from Michigan (1995-2001). Before his election to the Senate, Abraham served as co-chairman of the National Republican Congressional Committee (NRCC) from 1991 to 1993. For more biographical details, please click here for his USDOE bio and click here for his White House bio.

NB:

Special Thanks to David Hamod, President, National US-Arab Chamber of Commerce

Of Pipelines and Homelands: The Meskhetian Turks

J. Otto Pohl — Thu, 11 Mar 2004 12:00:00 -0500

The Meskhetian Turks were deported from Georgia to Central Asia for supposedly pro-Turkish sentiments and orientations during the Stalin era. As a condition for membership in the Council of Europe in 1999, the Georgian government agreed to allow the Meskhetians, whose population is estimated at 200,000 - 300,000, to return within twelve years to their homeland -- land that will encompass the Baku-Ceyhan pipeline. J. Otto Pohl, a PhD candidate at London's School of Oriental and African Studies, will describe the plight of the Meskhetian Turks and trace the importance of even the tiniest ethnic groups to geopolitical oil, energy and power.

Oil: Market Fundamentals Versus Geopolitical Realities

Dr. Herman Franssen — Thu, 5 Feb 2004 12:00:00 -0500

In 2003, market fundamentals pointed toward lower oil prices, which instead rose to an average of almost $30 per barrel due to disturbances in Venezuela and the war in Iraq. Oil expert Dr. Herman Franssen of International Energy Associates will look ahead five years, weighing future market pressures on oil prices versus continued uncertainties in the Middle East and the impact of both on OPEC and non-OPEC production. He will pay particular attention to the resumption of Iraqi oil production and trade, as well as Saudi Arabia's ongoing role as market stabilizer and the importance of the Saudi political future through the end of the decade and beyond.

MEI Annual Conference 2008: Panel II

Susan Bastress; Nabil Ali Alyousuf; Amr Awadh al Rawass; Aamir Rehman — Tue, 25 Nov 2008 16:22:30 -0500

Nabil Ali Alyousuf cites the UAE as an example of major regional trends toward development and openness in the Gulf. In the past, he says, Gulf countries spent their vast oil revenues outside of the region. In recent years, they have learned to invest internally, improve local government structures, and open markets to outside investors. Alyousuf advises developing countries to encourage inward investment to take advantage of a larger share of the world's economic growth.

The UAE Minister explains that market driven reform has allowed businesses to prosper. Government has played a transparent and objective role as regulator. He suggests economic regulations, which establish a rule of law, will trickle down to the general public. If the private sector sees that the government is serious about regulations and openness, companies will be more likely to make large investments in the country. He cites a recent survey that ranked the UAE in first place for its desirability as a place to live and for the perception that hard work will be duly rewarded.

Alyousuf considers the UAE a model for other countries when it comes to diversifying economies. In the UAE, only five percent of the GDP comes from oil revenues. Other sectors play a larger role. Saudi economic cities, tourism throughout the GCC, and the real estate markets of UAE, Qatar and Bahrain are other examples of regional economic diversification. Dubai has created new sectors like tourism out of virtually nothing. Now tourism contributes to over 20 percent of the GDP. Dubai took in over eight million visitors this past year; more than India or Egypt, two widely recognized tourist attractions.

Amer Awadh Al Rawas describes changes in the GCC's development strategies. In the past, he says, investments were made outside the region or in the oil and gas sector. Gulf countries were susceptible to declines in oil prices, as witnessed in 1986 and 1997. GCC countries learned from these downturns. They began increasing their sovereign wealth funds, selling more oil when prices were high, investing in oil exploration and production, and using prudent fiscal balancing. Today, small countries like Qatar are enjoying huge surpluses. The recent spike in growth has allowed for large investments in infrastructure to take place, which supports the many immigrants and tourists coming to GCC countries. However, Al Rawas also mentions a downside of rapid growth: a spike in inflation rates, difficulties for the GCC's low income population, and lower immigrant worker remittances.

Al Rawas says the global financial crisis will cause companies to fire some workers and rehire them at lower prices. Competition will increase, and the government must play an increased role in the economy. Al Rawas reiterates the point that Gulf countries must move toward more diversification. Oman has done so by branding itself as a tourist destination, building several airports throughout the country, and investing in indigenous resources.

Aamir Rehman identifies three factors that will continue to make the GCC attractive for international business. The first is sustainable prosperity and growth, which the GCC economy has achieved with wealthy emerging markets.

Second is the GCC's attractive demographic, which includes a young population and two generations of an educated public.

Third is the regulatory reform by GCC governments, where Dubai is a clear front-runner. Rehman assures that surpluses in GCC economies will allow for a quick bounce back from the global financial crisis. And the attractive regional demographics are long term trends. The biggest challenges will be providing employment to the young population, and avoiding a policy of protectionism. Another development to watch closely in the region is the opening of Saudi Arabia's free economic cities.

Rehman advises economic stakeholders in the GCC to expand prudently, as surpluses are not what they used to be. Stakeholders should buy through private equity and other sophisticated investment tools. Finally, Rehman counsels GCC governments to keep capital within the region, to diversify revenue sources – possibly through taxation. He explains that taxation will positively alter how the public and government interact. Although the GCC is facing many challenges, all three panelists identified ways for the GCC to grow and become more competitive in the long run.