Professional Documents
Culture Documents
Oil DA Index
Oil DA Index..........................................................................................................................................................................................1
OPEC Flood DA—1NC Shell................................................................................................................................................................3
OPEC Flood DA—Uniqueness—A2 US Giving Alt Energy Incentives Now......................................................................................4
OPEC Flood DA—Links—Renewables/Alternative Energy................................................................................................................5
OPEC Flood DA—Links—Reduced Oil Consumption.........................................................................................................................6
OPEC Flood DA—Links—Saudi Specific ...........................................................................................................................................7
OPEC Flood DA—Links—Saudi Specific............................................................................................................................................8
OPEC Flood DA—Link Magnifier—1 MBD Production Increase → Oil Price Collapse....................................................................9
OPEC Flood DA—Link Magnifier—Perception of Higher Supply → Price Collapse ......................................................................10
OPEC Flood DA—Link Magnifier—Oil Price Decline Snowballs....................................................................................................11
OPEC Flood DA—Impacts—Low Oil Prices Undermine Alternative Energy...................................................................................12
OPEC Flood DA—Uniqueness—Spare Capacity Now.......................................................................................................................13
OPEC Flood DA—Uniqueness—Refining Capacity ↑ Now...............................................................................................................14
OPEC Flood DA Answers—No Refining Capacity............................................................................................................................15
OPEC Flood DA Answers—No Spare Capacity.................................................................................................................................16
Generic Links—US Investments in Alt Energy → Speculation for Lower Oil Prices***..................................................................17
Generic Links—Reductions in US Oil Consumption/Demand ↓ Oil Prices........................................................................................18
Generic Links—Renewable Energy ↓ Oil Prices.................................................................................................................................19
Generic Links—US Demand Key to Global Oil Prices.......................................................................................................................20
Angolan Oil Good—1NC Impact Module...........................................................................................................................................21
Angolan Oil Good—Uniqueness—High Oil Prices → Angolan Econ Growth..................................................................................22
Angolan Oil Good—Links—US = Angola’s Biggest Oil Customer...................................................................................................23
Angolan Oil Good—Internals—Oil Key to Angola............................................................................................................................24
Angolan Oil Good—Internals—Oil Key to Angola............................................................................................................................25
Angolan Oil Good—Impacts—Key to African Stability.....................................................................................................................26
Angolan Oil Good—Impacts—Angolan Stability Key to African Biodiversity.................................................................................27
Angolan Oil Good—A2 Corruption Turns..........................................................................................................................................28
Angolan Oil Answers—Biodiversity/Ag Turn....................................................................................................................................29
African Oil Answers—Corruption Turns.............................................................................................................................................30
African Oil Answers—Corruption Turns.............................................................................................................................................31
Russian Oil Good—1NC Shell............................................................................................................................................................32
Russian Oil Good—1NC Shell............................................................................................................................................................33
Russian Oil Good—Uniqueness—High Oil Prices → Russian Econ Growth....................................................................................34
Russian Oil Good—Uniqueness—Russian Economic Growth Strong Now.......................................................................................35
Russian Oil Good—Impacts—Russian Economy Key to Global Economy.......................................................................................36
Russian Oil Good—Impacts—2NC Political Instability Module........................................................................................................37
Russian Oil Good—Impacts—2NC Proliferation Module..................................................................................................................38
Russian Oil Good—Impacts—2NC Disintegration Module................................................................................................................39
Russian Oil Good—Internals—High Oil Prices Key to Russian Economy........................................................................................40
Russian Oil Good—Internals—Every Dollar Increase in Oil Price Good for Russian Economy.......................................................41
Russian Oil Good—A2 US Recession Undermines Russian Economy..............................................................................................42
Russian Oil Good—A2 Diversification Turns.....................................................................................................................................43
Russian Oil Good—A2 Economic Reform Turns...............................................................................................................................44
Russian Oil Answers—Economic Reforms Turn................................................................................................................................45
Russian Oil Answers—Diversification Turn.......................................................................................................................................46
Russian Oil Answers—Low Oil Prices Key to Russian Economy......................................................................................................47
Russian Oil Answers—Inflation Turn.................................................................................................................................................48
Russian Oil Answers—Inflation Turn Extensions...............................................................................................................................49
Russian Oil Answers—Oil Not Key to Russian Economy..................................................................................................................50
Russian Oil Answers—Russian Economic Growth Bad 2AC.............................................................................................................51
Russian Oil Answers—Russian Economic Growth Bad Extensions...................................................................................................52
IPI Pipeline Good—1NC Impact Module............................................................................................................................................53
IPI Pipeline Good—1NC Impact Module............................................................................................................................................54
IPI Pipeline Good—Unique Internals—High Oil Prices → IPI Pipeline Cooperation.......................................................................55
IPI Pipeline Good—A2 US Opposition Blocks ..................................................................................................................................56
IPI Pipeline Good—Impacts—Key to South Asian Stability..............................................................................................................57
1
ENDI 08
IPI Pipeline Good—Impacts—Key to South Asian Stability..............................................................................................................58
IPI Pipeline Answers—Iran = Evil Turn..............................................................................................................................................59
Gabon Oil Good—1NC Shell..............................................................................................................................................................60
Gabon Oil Good—1NC Shell..............................................................................................................................................................61
Gabon Oil Good—Uniqueness—Reforestation ↑ Now/Oil Key ........................................................................................................62
Gabon Oil Good—Internals—Oil Revenue Key to Gabon..................................................................................................................63
Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation........................................................................................................64
Gabon Oil Good—Impacts—Oil Revenue Solves Deforestation........................................................................................................65
Gabon Oil Good—Impacts—2NC Biodiversity Module.....................................................................................................................66
Gabon Oil Good—Impacts—Congo River Basin Extensions.............................................................................................................67
Japanese Coal Good—1NC Impact Module........................................................................................................................................68
Japanese Coal Good—Uniqueness—Japanese Coal Production ↑ .....................................................................................................69
Japanese Coal Good—Internals—High Oil Prices ↑ Japanese Coal Production.................................................................................70
Japanese Coal Good—Impacts—Domestic Production Key to Japan Economy................................................................................71
Japanese Coal Good—Impacts—2NC Energy Conflict Module.........................................................................................................72
Japanese Coal Good—Impacts—Asian Instability Extensions...........................................................................................................73
Secessionism Bad—1NC Impact Module............................................................................................................................................74
Secessionism Bad—Links—Low Oil Prices → Ethnic Conflicts/Rebellions.....................................................................................75
Secessionism Bad—Impacts—Secessionism → Nuke War................................................................................................................76
Low Oil Prices Bad—Global War/Instability .....................................................................................................................................77
Euro Switch DA—1NC Shell..............................................................................................................................................................79
Euro Switch DA—1NC Shell..............................................................................................................................................................80
Euro Switch DA—Uniqueness—OPEC Won’t Switch From Petrodollar..........................................................................................81
Euro Switch DA—Links—US Oil Dependence → OPEC Support for Petrodollar............................................................................82
Euro Switch DA—Links—US Efforts to Reduce Oil Imports............................................................................................................83
Euro Switch DA—Impacts—Economy Extensions.............................................................................................................................84
Euro Switch DA—Impacts—US Leadership Extensions....................................................................................................................85
Euro Switch DA—A2 Partial Shift Away from Petrodollar................................................................................................................86
Euro Switch DA—Impacts—US Military Intervention.......................................................................................................................87
US/Saudi Relations DA—1NC Shell...................................................................................................................................................88
US/Saudi Relations DA—1NC Shell...................................................................................................................................................89
US/Saudi Relations DA—Uniqueness—Relations ↑ Now..................................................................................................................90
US/Saudi Relations DA—Links—Oil Key to Relations.....................................................................................................................91
US/Saudi Relations DA—Impacts—Relations Solve Saudi Nukes Extensions..................................................................................92
US/Saudi Relations DA—Impacts—2NC Nonproliferation Regimes Module...................................................................................93
US/Saudi Relations DA—A2 Saudi Won’t/Can’t Develop Nukes......................................................................................................94
US/Saudi Relations DA—A2 Relations = Resilient ...........................................................................................................................95
US/Saudi Relations Answers—Oil Not Key to Relations...................................................................................................................96
US/Saudi Relations Answers—Relations ↓ Now................................................................................................................................97
US/Saudi Relations Answers—High Oil Prices Hurt Relations Turn.................................................................................................98
2
ENDI 08
--OPEC-led oil price collapse would cripple the economies of high-cost oil producers like Indonesia,
Russia, Nigeria and others
Mohamedi 3/22/03 (Fareed, chief economist, PFC Energy, Middle East Policy, lexis)
A more aggressive strategy--and actually a better strategy for the Saudis in many ways over the longer term and for OPEC--would be to
crash oil prices and not agree to accommodate Iraq. To do what they did in '99 and inadvertently discovered had some advantages: push
the burden onto non-OPEC producers--the high-cost producers--and over time induce a decline in non-OPEC production, and then come
back and take that share of demand for themselves.
That would require a fairly low oil price, $ 14-$ 15 a barrel. You may ask, how can the oil producers' economies take that? They can barely take it at $ 30 a barrel.
If you look at the macroeconomic situation in some of the Gulf countries--Saudi Arabia and Iran, even Algeria--they have
accumulated a lot of assets and paid down a lot of their debt. Financially, they're doing a lot better than they were just a few years
ago. To a certain extent, they have the war chest to do this if they have the will and the guts. In sharp contrast, this would be
disastrous for Indonesia, Russia, Venezuela and Nigeria. None of these countries can take that type of low oil price for a period
of 18 months to two years.
3
ENDI 08
The Independent 5/2/08 (“In search of some wind in their sails” Lexis)
Yesterday ExxonMobil announced that it made $10.9bn (£6bn) in profits for the first three months of this year. It was one of the
biggest quarterly profit reports in American corporate history. The US oil giant has achieved the remarkable feat of making
earnings from Shell and BP, announced earlier this week, look modest. But as descendants of John D Rockefeller, America's
original oil magnate, are vociferously pointing out, obsolescence beckons for ExxonMobil and other energy groups if they do not
step up their search for alternative fuels and cleaner technologies. The Rockefeller family, still major shareholders in Exxon, are
backing resolutions calling for the company to fund research into how climate change will affect developing nations. They are also
demanding targets from the company for reducing carbon emissions from its output. They hope this will compel Exxon's
management to bring less-polluting products than oil and gas to market. But it looks as though the family are fighting an uphill
battle. Exxon has at least ceased to deny a link between fossil fuel emissions and climate change. But it has still invested no
serious effort in cleaner energy technologies, even though this is the area into which the oil majors should manifestly be ploughing
those vast profits. The evidence of this week suggests the energy producers need considerably firmer incentives from
governments to make the strategic shift away from environmentally destructive fossil fuels towards renewable, clean power
generation. Shell may have been concerned by the rising price of offshore wind, but it is seriously misguided if it thinks that
concentrating its efforts on extracting the remaining fossil fuels is a better bet than renewables in the medium or long term. If the
conservative-minded energy conglomerates do not stump up the necessary investment, then governments will have to intervene to
see that they do. The stakes are too high for a business-as-usual approach to the challenge of meeting the world's energy needs.
4
ENDI 08
Perceived loss of market share to renewables causes OPEC to voluntarily collapse oil prices—grinds
conservation and renewable energy programs to a halt
Zunes 93 (Stephen, Director of the Institutes for a New Middle East Policy, Mideast Policy, January, p. 107)
Despite recent setbacks, the Organization of Petroleum Exporting Countries (OPEC) is in a relatively strong position. Even the
1986 collapse of prices was not a result of splintering, but a voluntary decision based on the realization that prices were too high.
The artificially high prices of previous years had resulted in a loss of market share to non-OPEC produces such as Mexico and the
North Sea countries, as well as from efforts at conservation and alternative energy sources. This pricing strategy worked, not
only by challenging non-OPEC oil producers, but by grinding conservation programs and alternative energy research and
development in the United States to a halt.
OPEC fears shifts towards renewable energy or energy saving—they'll flood the world with cheap oil
at the flick of a switch
Campbell 02 (Colin, Analyst @ Oil Depletion Resource Centre, "Petroleum and People," Population and Environment,
November, p. ebscohost)
Oil is traded on international markets at a price set by the marginal barrel, giving rise to an unpredictable volatility that obscures the underlying trends of supply
and demand. Prices collapsed in 1998 from a combination of unseasonably warm weather; an Asian recession that reduced the demand for swing Middle East
production; the devaluation of the Russian ruble, encouraging Russian exports; and under-estimation of supply by the International Energy Agency, which misled
OPEC. Furthermore, there were more sinister motives to talk down the long-term price of oil, as oil companies and their financial advisers planned acquisitions and
mergers, which successfully concealed their real predicament from the stock market. Budgets were slashed and staffs purged in a climate of uncertainty. There was
an improvident draw on stocks as demand overtook supply. The OPEC countries, for their part, did everything possible to foster the notion
that they could flood the world with cheap oil at the flick of a switch. It was a strategy aimed to inhibit investments in gas, non-
conventional oil, renewable energy or energy saving that they feared might undermine the market for their oil, on which they
utterly depend. Their populations are growing fast in an economy dominated by oil.
5
ENDI 08
Comprehensive measures aimed at curbing fossil fuel use cause OPEC to raise production and flood
the market with cheap oil
6
ENDI 08
Morse 02 (Edward, former Deputy Assistant Secretary of State for International Energy Policy, Foreign Affairs, March/April,
ebsco)
A simple fact explains this conclusion: 63 percent of the world's proven oil reserves are in the Middle East, 25 percent (or 261 billion barrels) in Saudi Arabia
alone. As the largest single resource holder, Saudi Arabia has a unique petroleum policy that is designed to maximize the benefit of holding so much of the world's
oil supply. Saudi Arabia's goal is to assure that oil's role in the international economy is maintained as long as possible. Hence Saudi
policy has always denounced efforts by industrialized countries to wean themselves from oil dependence, whether through tax
policy or regulation. Saudi strategy focuses on three different political arenas. The first involves the ties between the Saudi kingdom and other OPEC countries. The
second concerns Riyadh's relationship with the non-OPEC producers: Mexico, Norway, and now Russia. Finally, there is Saudi Arabia's link to the major oil-
importing regions -- most importantly North America, but also Europe and Asia. Given the size of the Saudi oil sector, the kingdom has a unique
and critical role in setting world oil prices. Since its overriding objectives are maximizing revenues generated from oil exports and extending the life of
its petroleum reserves, Riyadh aims to keep prices high as long as possible. But the price cannot be so high that it stifles demand or encourages other competitive
sources of supply. Nor can it be so low that the kingdom cannot achieve minimum revenue targets. The critical balancing act of Saudi foreign policy,
therefore, is to maintain oil prices within a reasonable price band. Stopping oil prices from falling below the minimum level requires cooperation
from other OPEC countries and occasionally from non-OPEC producers. Preventing oil prices from rising too high requires keeping enough spare production
capacity to use in an emergency. This latter feature is the signal characteristic of Saudi policy. The kingdom can afford to maintain this spare capacity because of
the abundance of its oil reserves and the comparatively low cost of developing and producing its reserve base. In today's soft market, in which Saudi Arabia
produces around 7.4 mbd, the kingdom has close to 3 mbd of spare capacity. Its spare capacity is usually ample enough to entirely displace the production
of another large oil-exporting country if supply is disrupted or a producer tries to reduce output to increase prices. Not only does this spare capacity help the
kingdom keep prices in check, but it also serves to link Riyadh with the United States and other key oil-importing countries. It is a blunt instrument that
makes policymakers elsewhere beholden to Riyadh for energy security. This spare capacity is greater than the total exports of all other oil-exporting
countries -- except Russia. Saudi spare capacity is the energy equivalent of nuclear weapons, a powerful deterrent against those who try
to challenge Saudi leadership and Saudi goals. It is also the centerpiece of the U.S.-Saudi relationship. The United States relies on that capacity as the
cornerstone of its oil policy. That arrangement was fine as long as U.S. protection meant Riyadh would not "blackmail" Washington -- an assumption that is more
difficult to accept after September 11. Saudi Arabia's OPEC partners must also cooperate with the kingdom in part to prevent Riyadh from
producing a glut and having prices collapse; spare capacity also serves to pressure key non-OPEC producers to cooperate with Saudi Arabia when
necessary. But unlike the nuclear deterrent, the Saudi weapon is actively used when required. The kingdom has periodically (and brutally)
demonstrated that it can use its spare capacity to destroy exports from countries challenging its market share. This tactic is the weapon that Saudi Arabia could use
if Moscow ignores Riyadh's requests for cooperation.
7
ENDI 08
Meyer and Swartz 08 (Gregory and Spencer, Adjunct Professor @ University of Phoenix + staff writer for the Wall Street
Journal, May 5, “ENERGY MATTERS: Saudi Fears Of High Oil Prices Fade With Demand”
http://www.cattlenetwork.com/Content.asp?contentid=218898)
This shift towards a higher price floor creates openings for competing energy sources. Saudi Arabia's role in the global oil market
has sometimes been likened to the Federal Reserve, calibrating its output depending on market signals. Critical to this unique
standing has been Saudi maintenance of a cushion of "spare capacity," now estimated at about two million barrels a day. For much
of the recent period, the kingdom has refrained from tapping into all or most of its spare capacity. Within oil industry circles in
places like Houston, the Saudi power has also carried a somewhat ominous connotation. Faced with growing production from the
U.K., Mexico and other non-OPEC countries in the mid-1980s, Saudi Arabia flooded the market in an effort to drive out high-cost
production and reassert its dominant market share. The 1986 oil price crash ushered in more than 15 years of mostly-lower crude
prices, instilling a memory of economic hardship on the western oil industry that continues to be reflected in Big Oil's caution
during these heady times. The shift to lower petroleum prices also impeded the development of renewable energy for about two
decades. In his book, The Prize, Daniel Yergin compared the Saudi tactic in the 1980s to power plays by John Rockefeller and
other heavyweights in the history of oil who have used a "good sweating" to drive out competitors. "No one is worrying about
over-supply," Yergin said in an interview. Instead, the market is preoccupied with meeting growth in China, India and other fast-
developing economies. "What (the Saudis) have discovered is that the tolerance level in consumers is higher than they thought,"
said Thomas Lippman, an adjunct scholar at the Middle East Institute, a Washington research institute. Given the specter of
higher demand in Asia and the increased cost of bringing on new oil production, many analysts believe the long-term price of oil is
in the $45-$60 a barrel range. Recent comments by Naimi suggest the Saudi official sees an even higher floor than that. "A line
has been drawn now below which prices will not fall," Naimi said in March in an interview with PetroStrategies, a French energy
publication. Citing the marginal costs of biofuels and Canadian tar-sands, Naimi defined the floor as "probably between $60 or
$70." Naimi in April said Saudi Arabia was putting off a plan to expand oil capacity beyond 12.5 million barrels because of
concerns about demand growth. "Unless we see really genuine demand, we have to pause right now and see what happens," Naimi
told Petroleum Argus. Some energy analysts say the Saudi move suggested a more sober outlook on oil prices. "If they see a lot of
risk on the demand side then you could see very low prices and potentially a lot of underutilized capacity down the road," said Ken
Medlock, a fellow at Rice's Baker Institute.
Saudi Arabia will over-supply the market if they fear alternative energy
Meyer and Swartz 08 (Gregory and Spencer, Adjunct Professor @ University of Phoenix + staff writer for the Wall Street
Journal, May 5, “ENERGY MATTERS: Saudi Fears Of High Oil Prices Fade With Demand”
http://www.cattlenetwork.com/Content.asp?contentid=218898)
The Saudi national most vocal in outlining the potential threat of renewable energy has been former petroleum minister Sheikh
Ahmed Zaki Yamani, who held Naimi's job from 1962 to 1986. Perhaps Yamani's most oft-quoted statement was his prediction
that "The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil." The comment
has been cited as early as the 1970s, but Yamani has continued the mantra. Speaking last week, Yamani said his advice to OPEC
is "to increase production and lower prices because this is harmful midterm (and) long term to OPEC itself," according to a report
in Energy Intelligence. "It will increase the activities to find alternative sources of energy, and OPEC will remain helpless at that
time." Yamani was unavailable for an interview, but the Centre made available its Executive Director, Fadhil Chalabi, who was
Acting Secretary General of OPEC in 1983-1988. Chalabi said leading OPEC producers are being short-sighted in seeking ever-
higher oil prices. While demand growth has been impressive in developing countries so far, Chalabi warned that China's use of
coal, nuclear energy and other sources will displace oil. "It's a matter of time," Chalabi said.
8
ENDI 08
Morse and Richard 02 (Edward and James, Executive Adviser at Hess Energy Trading Company and was Deputy Assistant
Secretary of State for International Energy Policy in 1979 – 81 + portfolio manager at Firebird Management, Foreign Affairs,
March/April, lexis)
Then, in the 1990s, OPEC member Venezuela challenged Saudi Arabia by deciding to maximize its production. Although Venezuela
had an OPEC quota of 2.3 mbd, Caracas embarked on an ambitious policy designed to eventually triple its production capacity. Caracas knew it could not do this
on its own, so it reopened its nationalized resource sector to foreign investment. By the winter of 1996 -- 97, Caracas was producing 3 mbd, knocking Saudi Arabia
from its position as number one supplier to the United States. In response, Riyadh first tried reasoning with Caracas. When diplomacy failed,
Saudi Arabia raised its production by close to 1 mbd and induced the oil price collapse of 1998. Riyadh's actions were tough
but effective. By engineering a price drop, it had to withstand a painful drop in income -- but it achieved its main goals. Saudi Arabia
reasserted its OPEC leadership, reestablished itself as the prime supplier of oil to the United States, and induced non-OPEC producers Mexico and Norway to
support OPEC's revenue-maximizing goals.
Increased production by 1 million barrels/day can cause a price collapse—Saudi efforts during the late
90's prove
9
ENDI 08
Shiller 04 (Roberts, Prof. Econ @ Yale, The Edge (Malaysia), “The perception of declining prices triggers a massive sell-off
and price collapse”, 11/8, lexis)
But what matters for oil prices now and in the foreseeable future is the perception of the story, not the ambiguities behind it. If there is a
perception that prices will be higher in the future, then prices will tend to be higher today. That is how markets work. If it is generally
thought that oil prices will be higher in the future, owners of oil reserves will tend to postpone costly investments in exploration and expansion of production
capacity, and they may pump oil at below capacity. They would rather sell their oil and invest later, when prices are higher, so they restrain increases in supply.
Expectations become self-fulfilling, oil prices rise and a speculative bubble is born. But if owners of oil reserves think that prices
will fall in the long run, they gain an incentive to explore for oil and expand production now in order to sell as much oil as possible
before the fall. The resulting supply surge drives down prices, reinforces expectations of further declines, and produces the
inverse of a speculative bubble: a collapse in prices.
Perception of lower oil prices causes speculators to pull the plug—causes an immediate price collapse
The theory goes like this: First, there's the supposition that some portion of the spike in oil prices over the last couple of years is
speculator driven. Traders are stockpiling oil for sale to buyers at some later date, hoping that in the intervening period prices will
continue to rise. Such speculation naturally pushes the price of oil even higher. This is a classic pattern in markets, going back at
least as far as the great tulip mania of the 17th century, and there's no reason why oil should be any different from any other traded
commodity. And as with all bubbles, once traders start thinking that the price might fall, whoooosh -- the air rushes out.
Oil prices are highly volatile—even seemingly small events can have significant price impacts
10
ENDI 08
Oil and Gas Journal 00 (“OPEC eyes another output hike to cut oil prices” 7/24, lexis)
The move to boost production likely will trigger a scramble for markets that could cause a tumble of oil prices back to $
20/bbl, said Fred Leuffer, senior managing partner and oil analyst at Bear, Sterns & Co. The proposed increase would boost OPEC's total
production to 25.9 million b/d from the 25.4 million b/d that group members agreed to in June when they raised production by 708,000 b/d. Saudi officials had
earlier indicated that they would undertake an increase of 500,000 b/d -- unilaterally, if necessary -- in an attempt to drive down high prices. Under the quotas
proposed by Rodriguez, the Saudis would bear the brunt by adding 162,000 b/d of production to a total 8.4 million b/d. "The flood gates are now open. Saudi
Arabia's decision to produce more oil means OPEC unity is out the window. The race is on to see which countries can capitalize on these high oil prices while they
last," said Leuffer in a report issued last week. He said every OPEC member except Nigeria has cheated on its new production quota in the last 2 months. Saudi
officials would like to push back world oil prices to a level of $ 25/bbl to prevent the US from increasing domestic oil exploration and development of alternative
energy sources. But it is difficult to engineer a market price reduction, as other nations try to cash in before oil prices drop, Leuffer warned. "Once
oil prices start to fall, it will be hard to stop them," he said.
11
ENDI 08
Sahimi 3/9/00 (Muhammad, chairman @ chemical and petroleum engineering department at the University of Southern
California, The Record)
Finally, consider the environmental effects of cheap oil. The main culprit of air pollution is fossil fuels, mainly oil, which in the
United States accounts for 85 percent of fuel use. There are hidden costs of cheap oil, which we pay for through air and water
pollution, global warming, and acid rain.
Cheap oil induces people to overuse it and thus discourages development of alternative sources of energy that are
environmentally friendly. It affects the economy negatively. It costs us huge sums in health care. It causes social and political instability abroad. Is this the
world that we envision for ourselves and our children?
Low oil prices undermine energy conservation and alternative energy developments
Al-Chalabi 89 (Fadhil, Past Permanent Undersecretary of Oil, OPEC at the Crossroads, p. 90)
The 'confrontation' aspect of the so-called OPEC price war strategy went beyond oil production, to affect the consuming countries.
For, after the initial jubilation at the price crash, they awoke to the fact that low oil prices could jeopardize their investment
programmes in energy diversification and could well lead to greater dependence on imported oil, an eventuality they had been
fighting against for the previous 12 years. The benefits of the lower cost of oil imports could well be offset by the accompanying
slowdown, or even halt, in the drive towards more energy conservation and diversification, for the national security of supply.
Cheap oil turns the case—undermines renewable development and encourages fossil fuel consumption
Maugeri 03 (Leonardo, group senior vice president for corporate strategies and planning at Italian energy company ENI, Energy
Compass, 9/18)
In fact, cheap oil is the most elusive enemy of oil security. It constricts the development of expensive energy alternatives and new
oil regions, discourages conservation, perpetuates lax Western consumption habits, and increases dependence on the Mideast Gulf
countries with the lowest production costs. Cheap oil harms producing countries, too. Today, less than 25% of global production but 65% of the world's
proven oil reserves are concentrated in five countries -- Saudi Arabia, Iraq, the UAE, Kuwait, and Iran. Like all Opec members, they need decent oil prices, since
their economies remain heavily based on oil while their demography has changed dramatically.
Low oil prices undermine renewable energy developments and incentives to conserve energy
12
ENDI 08
The Organisation of Petroleum Exporting Countries (OPEC) members will invest US$160 billion in oil development projects in
the next three years to increase their production capacity by 15% in response to growing demand, the secretary-general of the
cartel,Abdalla Salem el Badri, has said.
The announcement by Badri came a day after British Prime Minister Gordon Brown sought to put high oil prices at the top of the agenda for a summit in July of the
Group of Eight (G8) most powerful nations.
Mr Brown had said that a lack of investment in future production capacity was the main factor driving prices to record highs, but Mr Badri disputed this.
"Even though we see no shortage of oil in the market, since the middle of 2007 we have seen a major disconnect between oil prices and market fundamentals. A
number of factors have contributed to this, but primarily [it is] the massive role that speculators now play in the oil market," Mr Badri said.
Badri was quoted to have said that OPEC countries would add five million barrels per day (bpd) of extra crude production capacity by 2012.
"Our members have already undertaken a $160 billion investment programme to expand crude production capacity by close to five
million bpd by 2012," he said in emailed responses to The National.
OPEC pumped about 32 million bpd in April, equivalent to 40 per cent of world oil consumption, and has about two million bpd of spare capacity.
OPEC has substantial spare production capacity and stands ready to act to lower prices if necessary
Forbes 5/8/08 ("OPEC says oil market well supplied; 3 mln bpd spare capacity available if needed,"
http://www.forbes.com/markets/feeds/afx/2008/05/08/afx4986536.html)
OPEC Secretary General Adbullah al-Badri said in a statement that the 13 member cartel had over 3 million barrels of spare
capacity per day if needed.
'OPEC spare capacity continues to increase, with the figure currently standing above 3 million bpd. At the same time, crude oil movements indicate that some
member countries are unable to find buyers for their additional supply,' he said in the statement.
'OPEC will continue to be proactive and monitor these developments closely. The organization stands ready to act if the
market shows a need for any further measures,' he added.
Phillips 6/5/08 (John, Analyst @ FXStreet.com, "Rate Decisions Approaching; Payrolls in Sight,"
http://www.fxstreet.com/fundamental/analysis-reports/european-market-update/2008-06-05.html)
·In energy news overnight Mexico's President noted that the declining production at Pemex is concerning. The company's production fell by 200K barrels in the
first quarter. Later the CEO of Pemex reported that the company's exports of oil will average 1.4M-1.45M bpd in 2008. OPEC's Khelil said overnight
that OPEC has 2M-3M barrels of spare capacity. Khelil said that oil prices are likely to stay around $120/barrel, and will not fall below
$100/barrel, adding that the IEA's 2008 world oil demand forecast is optimistic.
Business Day 6/3/08 ("Dollar appreciation reverses rise of crude oil prices," http://www.businessdayonline.com/economic-
watch/10760.html)
(OECD) commercial oil stocks remain above the five-year average. OPEC
The Organisation for Economic Cooperation & Development
member countries continue to produce at more than 32mb/d. In addition, a number of new OPEC crude oil projects have
started to come on-stream and OPEC spare capacity continues to increase.
13
ENDI 08
Emirates Business 24-7 reported that Saudi Arabian government is assessing plans to almost double its refining capacity regardless
of the sharp increase in investment requirements.
As per report, the Kingdom has already approved of 2 mega refining ventures with foreign partners in June 2008 despite a minimum
increase of 60% in costs. The amount of capital investment required for the 2 plants was initially estimated at around USD 6 billion each and is now expected to
have increased by at least 60% on rising cost structures.
Saudi Arabia's domestic refining capacity is estimated at around 2.1 million barrels per day, however it also controls more
than 1 million barrels per day in joint refining ventures abroad.
Saudi Arabia, China, and India are rapidly investing in substantial, new refining capacity—will be
online in the near-term
Kingsdalec 6/3/08 (James, Energy investor + analyst @ Energy Investment Strategies, "Global Net Oil Exports Have Declined
for Two Years," http://www.istockanalyst.com/article/viewarticle+articleid_2245873~zoneid_Home~title_Global-Net-Oil-
Exports.html)
1. Over half the decline is from Saudi Arabia. The Saudi’s are swing producers in the world and they claim that they could produce more oil if the markets
required it. Some suspect the Saudi’s are unable to produce more but the true facts are unknown. What seems clear is that they do have the capacity to produce a
good deal more (1 - 2 mb/d) of heavy sour crude oil on a sustained basis but there is not currently market demand for it due to lack of refining capacity for that type
of oil. The Saudi’s are well along the road to constructing substantial new refining capacity, as are both the Chinese and
the Indians, all of which will be able to use heavy sour inputs. In fairly short order - 2009 or 2010 - there will be
substantially more global capacity to refine the heavy sour crude that is in increasing surplus supply in the world, particularly from the Saudis.
14
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Zhou 6/6/08 (Moming, Writer @ Marketwatch, "Saudi Arabia plans royal treatment for heavy crude,"
http://www.marketwatch.com/news/story/weekend-edition-saudi-arabia-plans/story.aspx?guid=%7B5608C8C0-4CCF-467C-
AEE1-4D15A93E5F03%7D&dist=hplatest)
The kingdom's plans to increase its refining capacity won't necessarily alleviate high oil and gasoline prices. It will take
years before new refineries start operating. World oil demand growth, including rising consumption in Saudi Arabia itself, could
easily outstrip additional capacity, analysts say.
"The refineries [in Saudi Arabia] won't be ready in five years, and we are expecting delays on all fronts," said A.F. Alhajji, an
energy economist at Ohio Northern University and a long-time observer of Saudi Arabia. Demand is too lofty to be
accommodated by the planned increase in capacity, he said.
"I believe oil prices in the next two to three years will stay high," he said.
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THE recent oil price jump is due to rising demand in developing countries and the lack of spare supply capacity.
That means that even small disruptions to oil output drive prices higher.
Given the slow growth in oil supply, in prospect, only a world recession that cuts demand will bring oil prices down sharply.
Unfortunately, a world recession is looking increasingly likely.
The oil price is not just being driven by speculators. The underlying demand and supply balance is tight. There is very little spare capacity, with only
around two million barrels a day of spare capacity available, while demand is around 86 million barrels a day.
Most of this spare capacity is heavy crudes and refiners want lighter crudes to produce diesel where demand is booming.
Schonberger 6/5/08 (Jennifer, Smallcapinvestor.com, "Oil remains the most profitable play (Part One of Two),"
http://www.smallcapinvestor.com/articles/06052008-oil_remains_the_most_profitable_play_part_one_of_two)
Votruba said that a major factor behind high oil prices for the foreseeable future is scaled-back oil production and burgeoning
global demand for tightened supply. Mexico’s production, for example, has slipped 9.1% in the first four months of the year.
“You’ve got a lot of countries that nationalized their oil production; that leads to decreased production and now we’re paying the price,” Votruba said.
In addition to Mexico, Russia and Saudi Arabia have cut back production. China and India are also slurping up oil, as billions of both countries industrialize and
new people begin driving automobiles. Government subsidies have also come into play, as gas in the Middle East, for example, goes for a very affordable $1 per
gallon.
According to Votruba, there is currently less than 700,000 barrels of spare capacity in the market.
***Votruba, vice president and co-portfolio manager of the UMB Scout Small Cap Fund (UMBHX), told SmallCapInvestor.com
Daily Yomiuri 6/2/08 ("Govt report makes case for sectoral emissions cuts,"
http://www.yomiuri.co.jp/dy/world/20080602TDY07301.htm)
Demand for oil has continued to rise since 1990, centering on China and other emerging countries, while the spare production
capacity of the Organization of Petroleum Exporting Countries has remained at low levels--a tight demand-supply situation
that has accelerated the flow of speculative funds into oil.
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Yetiv and Feld 07 (Steve and Lowell, Professor of political science at Old Dominion University and senior international oil
markets analyst at the U.S. Energy Information Administration until March 2006, “America's Oil Market Power: The Unused
Weapon Against Iran,” World Policy Journal, p. proquest)
As is typical of world oil markets, this situation soon changed. Low oil prices and resurgent economic growth spurred rapid oil demand growth in Asia and
elsewhere. But supply couldn't keep up with demand. Oil companies' under-investment in world capacity and a series of oil crises in
Venezuela, Nigeria, and Iraq led to a reversal of the spare capacity situation by 2003. Predictably, oil prices rose sharply,
approaching $40 per barrel by the end of 2004, $60 per barrel by late 2005-when spare capacity bottomed out at 1-1.5 MMBD, the lowest it had ever been relative
to total world oil supply-and close to $80 per barrel by the fall of 2007. If oil prices rise when spare capacity falls, what about the opposite? In
fact, history shows that when spare capacity increases, as it did in the mid-1980s and in the late 1990s, oil prices fall. When spare
capacity spikes, oil prices can even collapse, as occurred after-appropriately enough-the revolution in Iran during 1978 and 1979. The oil price collapse of 1985-86
resulted from the major oil price shock of the late 1970s, combined with a severe recession in the early 1980s. This concurrence slashed U.S. oil consumption by
3.6 mmbd in just five years, from 18.8 MMBD in 1978 to 15.2 mmbd in 1983. As a result, world spare oil production capacity surged, eventually leading to the
collapse in oil prices-from nearly $40 per barrel in 1980 to just $10 per barrel by early 1986. Today, there is strong reason to believe that an increase in
world spare oil production capacity would cause oil prices to decline once again (if not to the same dramatic degree). Imagine that the
United States cut its oil consumption from currently projected levels of 24 MMBD by 2020 by 3 MMBD over the next decade.1 Eventually, the
American cut in consumption would increase world spare capacity from its current level of around 2 MMBD (almost all of which is in Saudi Arabia and
Kuwait) to more than 5 MMBD. This would return world spare oil production capacity to levels not seen since late 1998 and early
1999, when oil prices plummeted to $10 per barrel. True, it is unlikely that we will see $ 10 per barrel again, but with a major reduction in the
trajectory of U.S. oil demand and a concomitant increase in world spare capacity, we would likely see a sharp decrease from the $80-100 per
barrel prices we are currently experiencing.2 How could the United States develop its latent oil market power? First and foremost, achieving this
goal would require a serious shift in U.S. energy policy. Such a shift is achievable and could sharply decrease U.S. (and world) oil
consumption, dramatically altering oil market psychology. Oil futures traders who largely set the price of oil would have to
consider that demand for oil would drop from current expectations. As a result, they would likely decrease the purchase of oil
futures, thus causing a drop in the price of oil. Even before the impact of America's new energy policies would be felt, oil prices
would almost certainly fall on the expectation by oil traders of declining future U.S. oil demand. A major policy shift by the
United States could also move world oil markets out of the high anxiety state they have been operating in for several years now: increase
spare capacity and market anxiety almost inevitably will subside, because of the creation of a margin of error in the event of perceived threats to supply or actual
disruptions.
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Zakaria 04 (Fareed, phD in political science from Harvard and former managing editor of Foreign Affairs, Newsweek, “Don't
Blame the Saudis “, 9/6, http://www.fareedzakaria.com/ARTICLES/newsweek/090604.html)
But the more lasting solution to America's oil problem has to come from energy efficiency. American demand is the gorilla
fueling high oil prices--more than instability or the rise of China or anything else. Between 1990 and 2000 the global trade in
oil increased by 9.5 billion barrels. Half of that was accounted for by the rise in U.S. imports. America is consuming more because
it is growing more--but also because over the past two decades, it has become much less efficient in its use of gasoline, the only
major industrial country to slide backward. The reason is simple: three letters--SUV. In 1990 sport utility vehicles made up 5
percent of America's cars. Today they make up 55 percent. They violate all energy-efficiency standards because of an absurd
loophole in the law that allows them to be classified as trucks.
Any change in U.S. energy policies causes massive ripples in the oil market
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Hallmark 9/19/07 (Terry, Ph.D. Manager, Political Risk & Policy Assessment @ IHS Energy "Country Petroleum Risk
Environment - Angola," http://cpre.wikidot.com/angola)
The ruling People's Movement for the Liberation of Angola (MPLA) wins the presidency and a majority of the seats in the legislature as a result of the next
elections. With the war slowly fading from memory, the government no longer has any excuse to siphon off oil earnings. Pressure from international watchdog
organizations and the citizenry begins to restrict the flow of money to the political class. Increased hard-currency earnings from growing oil
production, exports and, at least in the very near term, continuing high crude oil prices spur reconstruction efforts and double-digit
economic growth — which results in increased sociopolitical stability. Investment by foreign oil companies continues, especially in the
deepwater offshore sector, with operations safer and more secure than anytime in three decades. Faint signs of resource nationalism begin to emerge — but nothing
that isn’t manageable from a risk perspective.
Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
Outside the continent’s crisis areas, few African countries are more important to U.S. interests than Angola. The second-largest
oil producer in Africa, Angola’s success or failure in transitioning from nearly thirty years of war toward peace and
democracy has implications for the stability of the U.S. oil supply as well as the stability of central and southern Africa.
Consequently, the United States has an interest in helping Angola address its numerous and significant national challenges.
Deutsch 02 (Dr. Jeffrey, Contributing Editor for Russian Politics, November 18, accessed 7/25/04,
http://www.rabidtigers.com/rtn/newsletterv2n9.html)
The Rabid Tiger Project believes that a nuclear war is most likely to start in Africa. Civil wars in the Congo (the country formerly known as
Zaire), Rwanda, Somalia and Sierra Leone, and domestic instability in Zimbabwe, Sudan and other countries, as well as occasional brushfire and other
wars (thanks in part to "national" borders that cut across tribal ones) turn into a really nasty stew . We've got all too many rabid tigers and
potential rabid tigers, who are willing to push the button rather than risk being seen as wishy-washy in the face of a mortal threat and overthrown.
Geopolitically speaking, Africa is open range. Very few countries in Africa are beholden to any particular power. South Africa is a major exception in
this respect - not to mention in that she also probably already has the Bomb. Thus, outside powers can more easily find client states there than, say, in Europe where
the political lines have long since been drawn, or Asia where many of the countries (China, India, Japan) are powers unto themselves and don't need any "help,"
thank you.
Thus, an African war can attract outside involvement very quickly. Of course, a proxy war alone may not induce the Great Powers to fight each
other. But an African nuclear strike can ignite a much broader conflagration , if the other powers are interested in a fight. Certainly, such a
strike would in the first place have been facilitated by outside help - financial, scientific, engineering, etc. Africa is an ocean of troubled waters, and some people
love to go fishing.
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African Oil Journal 8/14/07 ("Angola's Oil Exports Worth 29 Billion usd in 2006," http://www.africanoiljournal.com/08-
14-2007_angola_oil_exports_worth_29_bill.htm)
Revenues from Angola’s oil exports in 2006 reached US$ 29.928 billion, an increase of 32.5 percent in a year-on-year comparison,
media reported.
State news agency Angop said Monday that Angola exported some 487.8 million barrels of oil last year at an average price per barrel of US$ 61.4.
The United States continued to be Angola’s biggest single oil customer, buying US$ 9.403 billion worth of oil last year, followed by China
with imports worth US$ 8.966 billion, some US$ 1.4 billion more than China’s total for the whole of 2002.
Oil revenues are driving Angolan economic growth AND the US is Angola’s largest oil customer
Hallmark 9/19/07 (Terry, Ph.D. Manager, Political Risk & Policy Assessment @ IHS Energy "Country Petroleum Risk
Environment - Angola," http://cpre.wikidot.com/angola)
Economic Instability
(Rating: 2.7)
After the civil war ended in 2002, real GDP ran just over 4% in 2003 — thanks mainly to diamond sales, which started again, and oil production that resulted in
$10 billion or better per annum in export earnings, With very firm crude oil prices and oil production and exports continuing to ramp
up, real GDP growth ran over 10% during 2004. This year, the government is predicting real GDP growth in the range of
13%, thanks to still-higher crude prices and steadily increasing production. Inflation, which averaged nearly 270% in 2000, and ran
over 100% in 2002, is down to double digits — somewhere between 15% and 20% — as a result of tightening the country's monetary policy and a more
stable exchange rate.
All of this is good news. But not much has changed for the better in other areas of the Angolan economy. Labor costs are high and job skills remain below par.
Despite the expansion of the GDP in recent years, some 10 million Angolans continue to live in poverty on just $1-$2 per day — a problem compounded by the
fact that some $4.3 billion in oil revenues disappeared from state coffers late 1990s and early 2000s. Pressure from the IMF, the international community and
various nongovernmental organizations has caused Luanda to run a tighter and cleaner ship of late, but the level of transparency (or lack thereof) that exists still
leaves a great deal to be desired.
Energy Vulnerability
(Rating: 0.5)
According to IHS sources, liquids production averaged 1.64 MMBOPD in July 2007. Liquids output is expected to reach 2.0 MMBOPD sometime next year. Most
of the natural gas produced is associated gas and output tracks the production trend-line established by crude oil.
Oil dominates Angola’s primary energy balance (71%). Oil consumption is currently in excess of 50 MBOPD — up from 31 MBOPD five years ago. If anticipated
growth in oil consumption occurs as expected, domestic demand could reach 75 MBOPD by 2012. Nevertheless, there would still be an abundance of crude left for
exports. Angolan exports go to a number of African countries — Mozambique, Tanzania, Zimbabwe, Cape Verde — plus Spain,
Portugal, France, Croatia, Brazil and the United States, which is Angola's largest customer (about 400,000 barrels per day).
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British Foreign + Commonweath Office 12/4/07 ("Sub Saharan Africa; Angola," http://www.fco.gov.uk/en/about-the-
fco/country-profiles/sub-saharan-africa/angola?profile=economy&pg=2)
The Angolan economy is highly dependent on oil, accounting for over half of GDP and 75% of government revenue (or some
US$10.6 billion in 2005) and 90% of export value. It is the second largest producer, after Nigeria, in sub-Saharan Africa. It joined
OPEC at the end of 2006. The current production, all offshore, of 1.4m bpd is set to rise to over 2m bpd by 2007, as investment in
deep and ultra-deep blocks comes on stream. BP is a major player. Angola’s impressive growth rate, the highest in the world at a
projected 20.8% by 2007, is driven by steeply rising oil production. A project to develop LNG facilities is a political priority and will have important
environmental benefits. 85% of Angola’s gas is currently flared. An agreement with China’s Sinopec to build a second refinery has been concluded as part of the
new China-Angola relationship. By early 2006, Angola had become China’s biggest source of imported oil, supplying some 15% of the total.
Oil revenues are a vital tool for promoting political stability in Angola
Atkinson 06 (J.F., senior associate + alternative energy consultant at a small DC-based firm, 11/13, "Heat and Oil in Angola,"
http://chiasm.blog-city.com/heat_and_oil_in_angola.htm)
Angola’s government has been highly centralized throughout and ever since the civil war, having been ruled by President Jose Eduardo dos Santos since 1979.
Nominally a multiparty democracy since 1991, the country’s first and thus far only election was held in 1992, which only served to cement dos Santos’s rule and
reinvigorate the bloody conflict with UNITA. Dos Santos has promised new presidential elections by the end of 2007, but progress has been slow, with the
government insisting that elections can’t be held before more progress is made with the resettlement of refugees, the clearance of land mines, and the rebuilding of
infrastructure. Despite concerns about democratic accountability, the onset of peace has been accompanied by improved economic policies that
have dramatically lowered inflation and cemented macroeconomic stability. GDP grew 15% in 2005 – the largest increase on the
continent – due in large part to the oil sector, which accounts for 50% of GDP.
Angola's oil production has soared since the discovery of large deepwater reserves by Western oil companies in 1996, with reserves tripling to 5.4 billion barrels
and production nearly doubling to 1.25 million barrels per day over the past decade. Although its oil sector is still dominated by Western companies, China is
beginning to enter the market as a producer in a big way, with state-owned Sinopec investing in a $2.2 billion project to develop two offshore blocks containing an
estimated 4.5 billion barrels of oil earlier in 2006. Indeed, most of the country’s oil production is located offshore, which allowed the sector to
flourish despite the war raging in the countryside. While Angola’s resource wealth certainly played a role in prolonging its civil war, it should be noted that its oil
has become a tool for promoting political stability in recent years, as UNITA – now strictly a political party – has been
increasingly incorporated into MPLA’s oil-funded patronage networks.
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Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
In many ways, Angola is a very different place today than it was just a few years ago. It has made progress in demobilizing
combatants, managing the return of internally displaced persons and refugees, incorporating UNITA into the government, and
building government institutions. In January 2007, Angola formally joined the Organization of Petroleum Exporting Countries (OPEC), underlining its
growing role in the global energy system. The combination of record-high oil prices, increased oil production, and Chinese loans have
jump-started Angola’s development. In addition, a diverse group of foreign and Angolan actors—including political figures,
civil society groups, diplomatic missions, international organizations, oil companies, international consulting firms, and bank
executives—have all expressed cautious optimism that Angola is heading in the right direction regarding transparency and
democratization.1 For example, the Angolan government has signed onto the UN Convention against Corruption and is updating the
Ministry of Finance website regularly. In cooperation with the World Bank, Angola has established a program enabling government
expenditures to be monitored in real time. International organizations operating in Angola note that civil society groups and
opposition media are tolerated in Luanda, where one-third of the population lives, even though Radio Ecclesia, a notable opposition radio station, is not
permitted to broadcast in the provinces.
High oil prices are key to Angolan economic and political stability
Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
Angola has reached a crossroad. This moment represents a rare opportunity for Luanda to consolidate its peace and gain
international standing. As a result of high oil prices, Angola has one of the fastest growing economies in the world, enabling
the government to invest in equitable development should it choose to do so. With smart investments in airports and seaports, Angola could
serve the region as a transport hub. With investment in non-oil sectors, Angola could develop a diverse economy, better protected from the volatility of the oil
market. By showing a strong commitment to the rule of law and transparency, Angolan leaders can encourage international investment and provide a model for
other transitioning states. In the coming years, as Angola’s leaders make decisions that will have lasting consequences for Angola
and its neighbors, the world will be watching closely.
Oil is the fuel for Angola’s economy—50% of GDP, 95% of exports, 80% of government revenues
Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
At the macroeconomic level, Angola is booming. Angola’s gross domestic product (GDP) was $17.3 billion in 2004 and an estimated
$24.3 billion in 2005. The IMF predicts real GDP growth of 14.3 percent for 2006 and 31.4 percent for 2007, putting Angola in the
running for the fastest-growing economy in the world.4 The fuel for Angola’s economic engine is, of course, petroleum. The oil
sector accounts for over 50 percent of Angola’s gross national product, 95 percent of its exports, and 80 percent of Angolan
government revenues.5 Despite the ongoing smuggling of diamonds abroad, a large percentage of Angola’s reported non-oil exports and revenue comes
from the diamond industry. The mining sector has considerable untapped potential and is projected to show strong growth.
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Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
Peace has become a reality in Angola since the end of its bloody, twenty-seven-year civil war in 2002. However, much work remains to
be done if Angola is to become a democratic state with an inclusive and prosperous society. It is in the interest of the United States to help develop a
sustainable and lasting peace in Angola—not only for the security of U.S. energy supplies, but also to promote stability in
southern Africa. In so doing, the United States must tread carefully, because while Angola’s leaders respect and, at heart, want a strong relationship with the
United States, there are many in Angola who—based in part on the history of U.S.-Angola relations—are suspicious of American policy.
Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
The national challenges Angola faces are significant. Although Angola achieved independence in 1975, in a way it is only five years old, becoming whole only
when its bloody civil war ended in 2002. Since then, the nation has embarked on a long, tough journey to become a more stable country, one
that offers a ‘‘pole of stability’’ in Africa. To complete this transition successfully, Angola must rebuild its physical infrastructure, create democratic
government institutions capable of providing public services, address the issues of transparency that have plagued its governance, reduce poverty and
unemployment, develop its human capacity through education and training, revive its nonoil sectors, promote national reconciliation, and cultivate constructive
international relationships—all of which could transform Angola into a more equitable society and prevent future instability. But while it holds the prospect
of success, Angola’s future is still uncertain. It will take years of commitment and determination for Angola to prove to its own people, its neighbors,
and the world that it can meet the goals it has set for itself.
For these reasons the Council on Foreign Relations convened this Preventive Action Commission on Angola. After deliberation on the state of Angola’s
postconflict transition and the substance of U.S.-Angola relations, this commission believes that Angola deserves much greater attention in the
formulation of U.S. foreign, national security, and economic policies, particularly as the United States seeks to develop a comprehensive policy
toward Africa. The United States’ relationship with Angola should receive significant diplomatic consideration and resources in recognition of its rising
importance. U.S. interests in both a secure energy supply and stability in the Gulf of Guinea region require no less.
Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign
Relations, chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
To an extent, the U.S. government’s programmatic approach toward Angola is effective. Washington maintains a working relationship with Luanda and supports a
variety of helpful projects in Angola. What has been lacking, however, is a process for building a stronger strategic relationship with Angola that
would help Angola realize its full potential, both domestically and on the African continent. Such a process would also serve U.S.
interests in building both a more stable region and a reliable energy partnership with one of Africa’s major suppliers. The
U.S. government will always focus its attention on those African countries wracked by crisis. But among those African countries not in crisis, Angola should
receive diplomatic attention and resources commensurate with its growing importance to U.S. interests and to peace and
stability on the African continent.
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Vetter 01 (Susan, Analyst @ Worldwildlife.org, "Angolan Scarp savanna and woodlands (AT1002),"
http://www.worldwildlife.org/wildworld/profiles/terrestrial/at/at1002_full.html)
This ecoregion is a complex area where several major African ecological zones meet, and where topographical features have
resulted in a high diversity of vegetation types and significant levels of endemism. Biologically, the most important portion of the ecoregion is
the west-facing scarp that supports rain forest at higher altitudes. This forest holds a significant number of endemic birds, and some other endemic animals and
plants. The long period of civil instability in Angola means that these forests and other parts of the ecoregion have never been
adequately surveyed biologically, and hence more endemics can be expected with further study. However, the highly unstable civil war
means that all biological investigation, management of protected areas, or other kinds of conservation interventions are
impossible at the present time. This lack of access and management may be negatively, or even positively, affecting the habitats and their biological
values, but there are no data to assess this.
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Mai and Wisner 07 (Vincent and Frank, Commission Chairs @ Center for Preventative Action, Council on Foreign Relations,
chairman of AEA Investors LLC, a global private equity firm + vice chairman of external affairs at American
International Group, Inc/former US Ambassador to India, May, "Toward an Angola Strategy: Prioritizing U.S.-Angola Relations,"
http://www.cfr.org/content/publications/attachments/Toward%20an%20Angola%20Strategy.pdf)
In recent years, high-level corruption has evolved—or devolved—into cronyism, with foreign investors required to collaborate with politically well-connected local
partners. At a lower level, small bribes are a part of daily life. In addition, there are concerns that ‘‘amid a partial cleanup of the oil sector, the
diamond industry is growing in importance as a way of hiding private revenue flows.’’13 These practices distort the economy and hinder economic
development. Although Luanda’s initial efforts to improve transparency in the management of oil revenue are encouraging, the
Angolan government’s opacity continues to impede assessment of the management of public funds, contributing to the perception of persistent corruption.
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Vetter 01 (Susan, Analyst @ Worldwildlife.org, "Angolan Scarp savanna and woodlands (AT1002),"
http://www.worldwildlife.org/wildworld/profiles/terrestrial/at/at1002_full.html)
The most immediate and important threat to the ecoregion’s biodiversity is the encroachment of subsistence agriculture in
the fertile escarpment forest areas (Stuart et al. 1990). These are, at present, not even nominally protected. This threat is expected to escalate
once stability returns to Angola and displaced rural people return to farming areas (Hawkins 1993). It is also possible that coffee plantations
will be re-established in the escarpment forests.
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African oil revenues fuel ethnic conflict and exacerbate poverty—Nigeria and others prove
30
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NEW YORK (MarketWatch) -- Russia's economy expanded by 8.5% in the first quarter, exceeding market expectations as
soaring commodity prices and domestic demand boosted growth in the resource-rich country.
First-quarter growth in Russia, which boasts one of the best performing emerging equity markets, surpassed market expectations of 8%. However, the figure
marked a slowdown from the 9.5% growth rate Russia posted in the fourth quarter of 2007.
"The Street has consistently underestimated Russian GDP over the last three to four years," said Julian Mayo, co-manager of U.S. Global
Investors Eastern European Fund (EUROX)
"The Russian economy is extremely strong," Mayo said. "People are scrambling to upgrade their commodity-price forecasts. Domestic demand [also]
remains very strong."
In New York, the Market Vectors-Russia ETF (RSX) rose 0.8% at $55.92.
In Moscow, the benchmark RTS stock index closed up 0.4%. The index is up 3.3% this year, making it one of the best performers among emerging markets.
Russia's stock market is dominated by oil and gas stocks, reflecting the fact that the country is a big exporter of many commodities
-- including oil, natural gas, and metals -- prices of which have surged in recent months. The price of oil, for example, hit a record
high of $139.89 a barrel early Monday.
For the resource-driven Russian economy, soaring commodity prices have been a bonanza.
"It's not a very surprising figure given the kind of prices Russia's key commodity and energy exports are commanding at the
moment," said Cameron Brandt, global markets analyst at EPFR Global, commenting on Russia's first-quarter GDP growth.
--Loss of oil revenues devastates the Russian economy—20 percent of GDP/majority of revenues
Maass 8/3/04 (Peter, Contributing Writer @ NYT Magazine, Analyst Wire, lexis)
MAASS: Exactly. Well, Russia has oil reserves that are about 60 billion barrels. And its production, actually, puts it just about the
level of Saudi Arabia. It s the second largest exporter of oil in the world.
HAYS: So very, very important supplier. And, of course, not surprising, it s not just the world reliance on Russia, which I understand has actually had a lot to do
with meeting the increasing demand from China, because China s consumption has been growing so rapidly and Russian oils has had a lot to do with feeding that.
MAASS: Right. Well, Russia and China, of course, share a border. And China has increasingly become one of Russia s larger clients. And Russia s even been
considering building a pipeline so that it can directly funnel oil to China through the pipeline rather than through rail shipments.
HAYS: And, of course, the more somebody helps satisfy Chinese demand, the more we can consume in this gas guzzling nation and it helps take a little bit of
pressure off prices. But I guess that's the issue because Russian oil is so important to the Russian economy that it has become quite a
political football.
MAASS: Well, Russia's almost become something of a oil state. Oil revenues account for about 20 percent of the Russian
GDP and the vast majority of its revenues overall. So, basically, if you take oil out of the Russian economy, you're almost
devastating the economy.
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David 99 (Stephen, Prof of Poly Sci @ Johns Hopkins, Foreign Affairs, Jan/Feb)
If internal war does strike Russia, economic deterioration will be a prime cause. From 1989 to the present, the GDP has fallen by 50
percent. In a society where, ten years ago, unemployment scarcely existed, it reached 9.5 percent in 1997 with many economists declaring the true figure to be
much higher. Twenty-two percent of Russians live below the official poverty line (earning less than $ 70 a month). Modern Russia can neither collect taxes (it
gathers only half the revenue it is due) nor significantly cut spending. Reformers tout privatization as the country's cure-all, but in a land without well-defined
property rights or contract law and where subsidies remain a way of life, the prospects for transition to an American-style capitalist economy look remote at best.
As the massive devaluation of the ruble and the current political crisis show, Russia's condition is even worse than most analysts feared. If conditions get
worse, even the stoic Russian people will soon run out of patience.
A future conflict would quickly draw in Russia's military. In the Soviet days civilian rule kept the powerful armed forces in check. But with the
Communist Party out of office, what little civilian control remains relies on an exceedingly fragile foundation -- personal friendships between government leaders
and military commanders. Meanwhile, the morale of Russian soldiers has fallen to a dangerous low. Drastic cuts in spending mean inadequate pay, housing, and
medical care. A new emphasis on domestic missions has created an ideological split between the old and new guard in the military leadership, increasing the risk
that disgruntled generals may enter the political fray and feeding the resentment of soldiers who dislike being used as a national police force. Newly enhanced ties
between military units and local authorities pose another danger. Soldiers grow ever more dependent on local governments for housing, food, and wages. Draftees
serve closer to home, and new laws have increased local control over the armed forces. Were a conflict to emerge between a regional power and Moscow, it is not
at all clear which side the military would support.
Divining the military's allegiance is crucial, however, since the structure of the Russian Federation makes it virtually certain that regional conflicts will continue to
erupt. Russia's 89 republics, krais, and oblasts grow ever more independent in a system that does little to keep them together. As the central government finds itself
unable to force its will beyond Moscow (if even that far), power devolves to the periphery. With the economy collapsing, republics feel less and less incentive to
pay taxes to Moscow when they receive so little in return. Three-quarters of them already have their own constitutions, nearly all of which make some claim to
sovereignty. Strong ethnic bonds promoted by shortsighted Soviet policies may motivate non-Russians to secede from the Federation. Chechnya's successful revolt
against Russian control inspired similar movements for autonomy and independence throughout the country. If these rebellions spread and Moscow responds with
force, civil war is likely.
Should Russia succumb to internal war, the consequences for the United States and Europe will be severe. A major power like
Russia -- even though in decline -- does not suffer civil war quietly or alone. An embattled Russian Federation might provoke
opportunistic attacks from enemies such as China. Massive flows of refugees would pour into central and western Europe. Armed
struggles in Russia could easily spill into its neighbors. Damage from the fighting, particularly attacks on nuclear plants, would
poison the environment of much of Europe and Asia. Within Russia, the consequences would be even worse. Just as the sheer brutality of the last Russian
civil war laid the basis for the privations of Soviet communism, a second civil war might produce another horrific regime.
Most alarming is the real possibility that the violent disintegration of Russia could lead to loss of control over its nuclear arsenal.
No nuclear state has ever fallen victim to civil war, but even without a clear precedent the grim consequences can be foreseen. Russia retains some 20,000 nuclear
weapons and the raw material for tens of thousands more, in scores of sites scattered throughout the country. So far, the government has managed to prevent the
loss of any weapons or much material. If war erupts, however, Moscow's already weak grip on nuclear sites will slacken, making weapons
and supplies available to a wide range of anti-American groups and states. Such dispersal of nuclear weapons represents the
greatest physical threat America now faces. And it is hard to think of anything that would increase this threat more than the chaos that would follow
a Russian civil war.
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Lydon 6/6/08 (Tom, president of Global Trends Investments and proprietor of ETFtrends.com, "Russian Expansion Extends to
ETF," http://seekingalpha.com/article/80403-international-etf-update-japan-russia-switzerland)
High oil prices are the driving force behind Russian economic growth
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Russian economic growth is stable now—lots of currency reserves and stability funds
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Gilman 1/16/2008 (Martin, former senior representative of the IMF in Russia and professor at the Higher School of
Economics in Moscow. “Well-Placed to Weather an Economic Storm,” Moscow Times,
http://www.moscowtimes.ru/stories/2008/01/16/008.html.
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Pry 99 (Peter Vincent, Professional Military Advisor to the US House of Representatives, War Scare, p. 274)
Russian internal troubles—such as a leadership crisis, coup, or civil war—could aggravate Russia's fears of foreign aggression and
lead to a miscalculation of U.S. intentions and to nuclear overreaction. While this may sound like a complicated and
improbable chain of events, Russia's story in the 1990s is one long series of domestic crises that have all too often been the source
of nuclear close calls. The war scares of August 1991 and October 1993 arose out of coup attempts. The civil war in Chechnya
caused a leadership crisis in Moscow, which contributed to the nuclear false alarm during Norway's launch of a meteorological
rocket in January 1995. Nuclear war arising from Russian domestic crises is a threat the West did not face, or at least faced to a
much lesser extent, during the Cold War.
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Blair 99 (Bruce, Center for Defense Information, Brookings Review, Summer, lexis)
Western policymakers appear not to recognize that the fate of Russia's economy is neither exclusively Russia's problem nor exclusively an economic problem.
Although Russia, with its nearly $ 200 billion of foreign debt, still has the ability to shake global financial markets--and likely will do
so--the unquestionably bigger threat posed by its weak economy concerns national security. Russia's economic woes increase
the nuclear threat to the United States.
Utgoff 02 (Victor, Deputy Director of the Strategy, Forces, and Resources Division of the Institute for Defense Analysis,
Survival, “Proliferation, Missile Defense and American Ambitions” p. 90)
In sum, widespread proliferation is likely to lead to an occasional shoot-out with nuclear weapons, and that such shoot-outs will
have a substantial probability of escalating to the maximum destruction possible with the weapons at hand. Unless nuclear
proliferation is stopped, we are headed toward a world that will mirror the American Wild West of the late 1800s. With most, if not all,
nations wearing nuclear 'six-shooters' on their hips, the world may even be a more polite place than it is today, but every once in a while we will all gather on a hill
to bury the bodies of dead cities or even whole nations.
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Simes 94 (Dmitry, Senior Associate @ Carnegie Endowment for Intl Peace, Foreign Affairs, Jan/Feb, lexis)
For the United States, neither Yeltsin's political future nor even the future of Russian democracy should be ends in themselves. What the United States needs most
in its greatly weakened but still potentially formidable superpower rival is a combination of domestic stability and a system of checks and balances. Stability is
important for a nation with thousands of nuclear weapons and continuing territorial tensions with its newly independent neighbors.
Too much disunity in Russia (as appealing as it is to those who "love" that country so much that they would prefer to see several Russias) increases the
likelihood of a civil war that could easily engulf most, if not all, of the post-Soviet states, creating not only nuclear and
environmental disasters but a grave threat to world peace as well. Thus, it is in the U.S. interest to have a government in Moscow that is strong
and determined enough to draw the line and to prevent centrifugal, separatist trends from going out of control.
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Kekic 8/4/04 (Laza, director for Central and Eastern Europe at the Economist Intelligence Unit, Moscow Times, lexis)
The OECD, a club of 30 wealthy nations including the United States and Britain but not Russia, argues that Russian growth over
the medium term will inevitably depend on the natural resources sector and that policymakers should accept this fact. To underpin
its case, the OECD downplays the role that high oil prices play in Russia's strong economic recovery. Instead, the OECD
emphasizes -- in part on the basis of a highly dubious growth-accounting exercise -- the role of allegedly oil price-insensitive efficiency improvements, especially
in the private oil sector. If this were correct, and Russian growth were insensitive to the level of oil prices, then the inevitable decline in international oil prices
would have far less of an impact on growth than is usually supposed.
The OECD accepts that Russian growth is sensitive to changes in oil prices, but argues that growth is not -- or is only very weakly -- dependent on the level of oil
prices. The distinction is not esoteric. It is of fundamental significance for future prospects. For example, Russian growth next year should fall as a result of a likely
sharp fall in the average oil price from the high 2004 average. If oil prices more or less stabilize at a permanently lower level, however, there is nothing as such that
affects subsequent output growth.
The OECD accepts that growth is sensitive to the price of oil only at very low price levels that render oil production completely unprofitable. But this relationship
operates along a continuum. The empirical link between levels of oil prices and output dynamics in Russia has been extremely strong for
the last decade. It is not difficult to trace some of the channels through which oil price levels have most likely affected growth.
High oil prices have facilitated improved fiscal policy, which is emphasized by the OECD as a prime source of improved
economic performance since 1998, and not merely through the direct effect of oil prices on budget revenue. High prices offset
high-risk premiums and encouraged measures to extract more oil from the ground; removed any balance-of-payments
constraint on growth; and facilitated sharp reductions in external debt (the OECD itself appeals to recent evidence that links
growth to debt/GDP levels).
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High oil prices are critical to the Russian economy—every dollar increase in price generates billions in
revenue
McCormack 03 (David, 4/9, Member of Chicago Council on Foreign Relations, Wash Times)
The Russian economy, and hence government, has been rescued over the last four years almost solely by high oil prices, as
demonstrated by a strong statistical correlation linking these increases to the economic growth experienced in Russia over that
period. Indeed, estimates suggest that every dollar increase in the price of a barrel of oil results in $1.5 billion-$2 billion in
additional yearly export revenue for that country. In absence of a system capable of generating economic expansion, Russia
will continue to depend on commodities namely oil to sustain what growth it has realized.
$6 dollar fall in the price of oil cuts Russian economic growth in half
Brzezinski and Wolosky 1/17/03 (Mark and Lee, Directors of Eurasian + Transnational Threats @ National Security
Council under Clinton, IHT, lexis)
Russia's oil-dependent economy cannot afford a decline in world oil prices due to a glut of Iraqi oil on world markets. Analysts
estimate that a $6 fall in the price of a barrel could reduce Russian economic growth by half.
The Russians remember the Saudi oil glut of 1985, when Saudi Arabia allowed its excess capacity to flood the market and drive oil
prices down to $12 a barrel, ruining any hopes of a Soviet economic revival.
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42
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Oil revenue fuels growth in multiple sectors of the Russian economy—construction, real estate, retail,
financial services
43
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Sharma 6/28/04 (Ruchir, co-head of emerging markets at Morgan Stanley Investment Management, Newsweek, lexis)
While Putin undoubtedly wants to settle some political scores with Khodorkovsky, his overarching objective remains to turn
Russia into an economic power. That came through in his speech on Thursday. Putin's track record and reform initiatives
decisively show that he is one of the few emerging-market leaders in the world today who understand the connection between
economic and political success.
Little wonder that Russia's macroeconomic fundamentals have never looked stronger. Russia should once again be one of the
fastest-expanding economies in the world this year, with GNP growth north of 7 percent. Inflation is the lowest in recent
memory. Russia's twin surpluses--a 4 percent budget surplus and an 8 percent current-account surplus--mark a new high for any
emerging market and should help Russia further reduce its shrinking debt burden.
To be sure, the high price of oil has played a significant role in improving Russia's economic profile. Still, Putin's policies and
emphasis on stability have been more important contributors to the country's economic transformation. After all, Saudi Arabia and
much of the Middle East have never been able to make much out of oil booms. Putin has focused on carrying out genuine
reforms and maintaining fiscal rectitude to strengthen Russia's economy instead of using the windfall from Russia's oil
exports as an excuse for inaction.
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45
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Illarionov 6/8/04 (Andrei, Presidential Economic Adviser, Official Kremlin Int'l News Broadcast, lexis)
A: The impact of high oil prices on the rate of economic growth is twofold. On the one hand, high prices do ensure an inflow of
financial resources into the sector of the Russian economy engaged in production, transportation and export of oil and petroleum
products. That sector generates about 20 percent of the GDP and employs 1.7 percent of the working population (2.1 percent if one
counts in the pipelines). On the other hand, a fall of world oil prices suspends the growth of the real exchange rate of the ruble. As
a result, other sectors of the Russian economy which employ about 98 percent of the working-age population and produce 80
percent of GDP become more competitive. So, the high growth rate begins to spread to sectors other than oil.
The whole economy begins to grow at two-digit rates. Because growth is spread more evenly through the economy, the
average growth rates ends up being higher. This is what is happening in many CIS countries that are not oil exporters: their
growth rates are 1.5-2 times higher than in Russia.
Falling oil prices are key to Russian economic growth—depress the value of the ruble to make nonoil
sectors more competitive and encourage policymakers to enact necessary reforms
Illarionov 6/2/04 (Andrei, Presidential Economic Adviser, Official Kremlin Int'l News Broadcast, lexis)
Q: Do you see any real threat to the Russian economy, like a sharp fall of oil prices or a banking crisis?
Illarionov: As for a fall in oil prices, I think it would not a threat but a present to the Russian economy. And I have said this
many times. Numerous studies, thorough and diligent econometric studies indicate that the Russian economy developed faster
when oil prices were lower, including in the last decade, than when they were high.
The mechanism is clear because high oil prices are one of the factors leading to the growth of the effective exchange value of the
ruble. The growth of the effective value of the ruble raises economic costs in general and makes the economy less competitive. If
oil prices decrease, the effective value of the ruble will either not grow at all or will grow very slowly, allowing the country to
remain competitive not only in a narrow segment of industries geared to the production and sale of oil, oil products, gas and non-
ferrous metallurgy, but in a broader spectrum of sectors and the entire economy in general. It's a choice between having
several industries growing successfully, while other sectors will be in a state close to stagnation, and having the whole economy
developing in a balanced way.
Russia had the highest rate of industrial growth in 1999 when oil prices were at their absolute minimum -- $8-9 per barrel.
At that time industrial growth for the whole industry was 17 percent and even 50 percent in machine building and light industry.
But we don't say anything like that when oil prices are high.
This is why I must say that we will face the biggest threats to our economic growth when oil prices are high. They will
translate both in lesser competitiveness and poorer quality of decisions, as well as poorer quality of the economic policy
because high oil prices do not require authorities to adopt painful but absolutely necessary decisions.
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Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html)
The major factor causing inflation is the massive increase in oil prices since 2002. In the last six years there has been an increase from
approximately $20 a barrel to $125. Furthermore, there has been speculation that oil prices will continue to rise and according to Goldman Sachs and the Iranian oil
minister, they could hit $200 a barrel in two years.
Russia's economy is highly dependent on natural resources, with 28 percent of exports to the U.S. last year being oil and gas products. The high oil prices
have helped the Russian economy to grow, while even permitting for the creation of a massive stabilization fund. The downside is that the
influx of petrodollars contributes to inflationary pressure.
--Inflation poses a greater threat to Russian economic growth than a possible plunge in oil prices
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Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html)
Lowering inflation would create a stable economy which would encourage investment and fuel future growth. Furthermore,
diversification is needed to ensure long term growth and protect against shocks in the energy market. As Chizhov suggested, developing
high tech industries would allow for substantial growths in GDP and productivity, extending beyond 2020.
Bentley 6/6/08 (Ed, The Moscow News Weekly, "Russia's Roaring Economy not out of the Forest,"
http://mnweekly.ru/business/20080606/55331949.html)
Russia's biggest task is to balance economic growth while keeping inflation low. During the 1990s, inflation sometimes soared
to over 10 percent a month, wiping out people's savings and triggering mild panic in the economy. Although the inflation dragon
has been tamed, it continues to be stuck at over 10 percent annually. This year the inflation target has been revised up to 10 percent after price increases at the
beginning of the year. Meanwhile, the IMF predicts that inflation will finish at 11.4 percent for the year.
Nicholson 6/1/08 (Alex, "Russia 2008 Inflation May Accelerate to 14%, IMF Says (Update2),"
http://www.bloomberg.com/apps/news?pid=20601087&sid=axKBXVsNZZzM&refer=home)
June 2 (Bloomberg) -- Russian inflation may accelerate to 14 percent this year and the risk of the economy overheating is
mounting, an International Monetary Fund official said.
Consumer prices rose an annual 14.3 percent in April, a five- year high, stoked by global food price increases and rising domestic wages. The economy grew 8
percent in the first quarter, the Economy Ministry said in a preliminary estimate on April 17. Gross domestic product rose 8.1 percent for all of 2007.
``The risk is that inflation gradually increases to such a level that it requires a sharp tightening of monetary policy that
could cause a slowdown in growth,'' Poul Thomsen, head of the IMF mission in Russia, told reporters in Moscow today. The
risk of the economy ``overheating'' is increasing, he said.
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A 50% drop in oil prices won't destroy the Russia economy—oil is only 15% of GDP
Pravda.RU 4/8/03 ("Opinion: Russian Economy Will Not Suffer Even if Oil Prices Fall by 50%,"
http://english.pravda.ru/comp/2003/04/08/45732.html)
'The Russian economy will not suffer even if oil prices fall by half,' announced President of YUKOS oil company Mikhail
Hordovsky at a meeting with journalists in Moscow yesterday. As a Rosbalt correspondent reports, Mr Hordovsky pointed out that
oil extraction in Russia only accounts for 15% of GDP and therefore this industry is not of critical importance for the
country as a whole. 'The Russian economy is relatively steady at present and this is unlikely to change,' said Mr Hordovsky.
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Pirchner and Berman 04 (Herman and Ilan, President and Vice President for Policy @ American Foreign Policy Council,
"Russia Revived," American Spectator, September, www.afpc.org/russiarevived.shtml)
Russians, in fact, have a lot to cheer about. On Putin’s watch, their country has made a dramatic economic turnaround. In February
of 2002, Russia surpassed Saudi Arabia to become the world’s largest energy exporter, and today, less than six years after its
catastrophic 1998 economic meltdown, Russia boasts close to $100 billion in hard currency reserves. Putin, for his part, has
managed to translate these soaring economic fortunes into real fiscal progress. Via measures like the imposition of a flat tax
(accomplished in 2001), the subsequent softening of long-standing restrictions on land ownership, and the start of rudimentary
mortgage programs (heretofore missing in post-Soviet Russia), the Kremlin has succeeded in devolving economic power and
empowering ordinary Russians in a way not imaginable just a decade ago.
Putin’s plans don’t stop there. Capitalizing on Washington’s post-September 11 focus on energy security, he has announced
Russia’s intention to provide the United States with fully 10 percent of its oil by the end of the decade. And in his 2004 State of the
Federation address, the Russian president articulated the exceedingly ambitious goal of doubling his country’s GDP by 2010.
Putin also is thinking big on the foreign policy front. Buoyed by economic and social successes, Russia’s international
maneuvers have grown increasingly assertive. Russia, once adrift, is now trying to regain its place as a “Great Power.”
Russia’s efforts abroad are animated by an old concept: the idea of Russia as empire. A little over a decade after the end of its
last imperial experiment, rising economic and political prospects are making the idea—and the ideology—of Russian expansion a
topic of growing currency in the Kremlin.
Cohen 96 (Ariel, Senior Policy Analyst @ Heritage, Heritage Foundation Reports, 1/25, lexis)
Much is at stake in Eurasia for the U.S. and its allies. Attempts to restore its empire will doom Russia's transition to a democracy
and free-market economy. The ongoing war in Chechnya alone has cost Russia $ 6 billion to date (equal to Russia's IMF and
World Bank loans for 1995). Moreover, it has extracted a tremendous price from Russian society. The wars which would be
required to restore the Russian empire would prove much more costly not just for Russia and the region, but for peace, world
stability, and security.
As the former Soviet arsenals are spread throughout the NIS, these conflicts may escalate to include the use of weapons of mass
destruction. Scenarios including unauthorized missile launches are especially threatening. Moreover, if successful, a
reconstituted Russian empire would become a major destabilizing influence both in Eurasia and throughout the world. It would
endanger not only Russia's neighbors, but also the U.S. and its allies in Europe and the Middle East. And, of course, a neo-
imperialist Russia could imperil the oil reserves of the Persian Gulf. n15
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Pirchner and Berman 04 (Herman and Ilan, President and Vice President for Policy @ American Foreign Policy Council,
"Russia Revived," American Spectator, September, www.afpc.org/russiarevived.shtml)
Solzhenitsyn is hardly alone. A widening number of politicians of all political stripes are gravitating to the idea of a “Greater
Russia.” These include not only people like Aleksandr Dugin, one of Russia’s most prominent—and controversial—political
scientists, but also ascendant statesmen like Dmitry Rogozin, a deputy chairman of the Russian Duma. Rogozin, in his 2003 book
We Will Reclaim Russia for Ourselves, makes the case that Russians “should discuss out loud the problem of a divided people that
has a historic right to political unification of its own land,” and are obliged over time to “create conditions” necessary for such a
union.
This stance has found fertile soil, both within Russia itself and in Russia’s “near abroad.” According to a December 2000 domestic
poll, the results of which were carried by Russia’s RIA Novosti news agency, no less than 61 percent of Russians, 53 percent of
Ukrainians, and 69 percent of Belarussians favor unification of their states into one country. And, under Putin, this urge has found
expression. Through a series of political and legislative maneuvers, his government is laying the groundwork for an imperial
revival.
Just such a restoration was on the mind of Putin and his key supporters in late 2001, when they pushed a remarkable new law
through the Russian parliament. That bit of legislation defines the parameters by which a foreign state or territory can become part
of the Russian Federation—providing the legal basis for a peaceful, or not so peaceful, territorial expansion. Moreover, it is hardly
an isolated incident. The newly selected prime minister, Mikhail Fradkov, in his March 2004 address to the Russian State Duma,
confirmed that territorial expansion is now being given new attention by the Kremlin. “In light of economic growth and
questions of demography,” Fradkov said, the Russian government would “in the future simplify grants of citizenship to
Russians living abroad.”
Russian economic prosperity empowers Putin to carry out his neo-imperialist plans
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Zaidi 6/7/05 (Mazhar, Columnist @ BBC Urdu, "Why Pakistan-India pipeline matters,"
http://news.bbc.co.uk/1/hi/world/south_asia/4070916.stm)
The agreement between India and Pakistan on a project to pipe gas to India from Iran via Pakistan is being termed by some
observers as historic.
Though both countries have as yet only agreed in principle, officials say work on the project could start as soon as within six months.
So why is this pipeline project so important and what does it mean for South Asia as a region?
In a world where politics is increasingly driven by battles for energy resources and everyone seems to be talking about 'pipeline politics,' this project could
be vital for the economic prosperity and political stability of sub-continent.
Take-off
In recent years Pakistan's economy has shown signs of improvement. That's thanks mostly to developments post 11 September and Pakistan's role as a front state in
the United States' war on terror.
The economy of India has been booming for many years now and according to many market analysts it is in a 'take-off' stage and could start influencing the world
market in a major way. But despite these improvements, both economies are facing a looming crisis - deficiency of energy resources.
"The Indian economy will not be able to sustain for long if the issue of energy deficiency is not resolved." says M Ziauddin, editor
of the Pakistani daily Dawn.
"Pakistan also badly needs additional sources of energy as it can neither afford the costs of further exploration and nor can it fulfil its requirement by
any other way."
'Hugely benefit'
Mr Ziauddin believes that the pipeline from Iran will not only provide the much needed boost to the Indian economy but it will
also become a source of revenue for Pakistan.
"If without investing much Pakistan can start getting $500m-$600m in annual revenue because of the pipeline, there is nothing like it for Pakistan. It will hugely
benefit the economy and resolve the energy crisis also."
The implications of the proposed pipeline are not limited to the economic field.
Analysts believe that the laying down of the gas pipeline from Iran to India will also bring about a new set political rules.
Lahore-based political analyst and writer Khalid Ahmed thinks the proposed project is truly a historic opportunity for both the
countries to change the politics of the region forever.
"This is the first time in the history of South Asia that such an occasion has arrived. Pakistan can redefine its identity as a transit
state in the region and can pave the way for peace and prosperity." According to Mr Ahmed such a project would go a long way
in changing the nature of political relationships in the region.
"Instead of basing its identity on animosity towards India, when Indian economic prosperity will also mean prosperity for Pakistan,
things will definitely change." That indeed would be a historic change in relations between India and Pakistan.
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Afrasiabi 4/30/08 (Kaveh, political scientist/author, "Iran holds key to India's energy insecurity,"
http://www.atimes.com/atimes/Middle_East/JD30Ak02.html)
With oil prices skyrocketing, India's thirst for cheaper imported gas has acquired a greater urgency than ever before,
considering what the Hindustan Times has termed as the growing "supply-demand mismatch" reflected in the recent news that "as against an overall requirement of
77 million standard cubic meters per day (mmscmd) of gas between April 2007 and January 2008, only 37 mmscmd was supplied".
Sure, India has other prospects besides Iran and, in addition to investing in Yemeni oil fields and negotiating with Saudi Arabia, Oman and Qatar, questing for a
piece of the Iraqi energy market and scouting various African countries (such as Nigeria, Chad, Angola, Cameron and Congo), Indian officials have also been
playing catch-up with China in Central Asia lately, seeking deals with Kazakhstan and Turkmenistan.
But with the Turkmenistan's proximity to Iran and Iran's ability to act as an energy corridor for the sub-continent, the salient
importance of Iran is indisputable.
In addition to the US$7.6 billion Iran-Pakistan-India (IPI) pipeline, India has set its eyes on a Turkmenistan-Afghanistan-Pakistan-
India (TAPI) pipeline that is, for now at least, more of a pipedream because of growing insecurity in Afghanistan, reflected in the bold
assassination attempt on President Hamid Karzai in Kabul this week.
High oil prices are spurring Indo-Pak cooperation over the IPI gas pipeline
Khan 4/26/08 (Mubarak, "Energy crisis forces India to join Iran gas pipeline project," DAWN Media group,
http://www.dawn.com/2008/04/26/top1.htm)
ISLAMABAD, April 25: Differences between Pakistan and India over the Iran-Pakistan-India (IPI) gas pipeline project were
resolved on Friday and the two countries agreed to start work on laying pipelines next year for procuring gas from Iran by
December 2012.
Talks between the two countries to resolve the differences, mainly relating to transit fee and transportation tariff, failed in June last
year, putting the $7.5 billion ‘peace pipeline’ project into cold storage. But the current energy crisis and spiralling oil prices
brought them back to the table.
Skyrocketing oil prices compels India to pursue gas pipeline cooperation with Pakistan and Iran
Stanley 5/5/08 (John, research scholar with the Centre for West Asian Studies at Jawaharlal Nehru University, "Ahmadinejad’s
visit - India intensifies global energy game (Commentary)," http://www.thaindian.com/newsportal/uncategorized/ahmadinejads-
visit-india-intensifies-global-energy-game-commentary_10045103.html)
New Delhi’s decision to welcome Ahmadinejad must have taken at least a few of India watchers by surprise. It was just two years ago
that India, under pressure from Washington, voted twice against the Iranian nuclear programme in the International Atomic Energy Agency (IAEA). Since then
India’s ties with Iran had not been as warm as they used to be. The United Progressive Alliance (UPA) government has often been criticised
both at home and abroad for not showing real interest in the proposed India-Pakistan-Iran (IPI) gas pipeline. Besides, bilateral ties
between the two countries hit a new low earlier this year as Israel blasted off a spy satellite with the help of India. Iran’s envoy to India even went public criticising
New Delhi over the issue.
Then why this turnaround?
This could be seen as part of India’s changing energy policy. According to a recent New York Times report, cosy relations with Iran are important
for India at least for three reasons. Iran is India’s second largest oil supplier after Saudi Arabia, is a potential source of natural gas in the future and wields influence
in Afghanistan, a gateway for New Delhi to enter Central Asia’s rich oil and gas fields. Still, India had been reluctant to engage Iran, particularly after the US
intensified its campaign to isolate the Islamic Republic. The rumours of a possible US attack on Tehran have also pulled India back from going ahead with its
ambitious energy plans.
Now, with the US bogged down in Iraq and the possibility of an attack on Tehran looking remote, New Delhi is back on front-foot in the energy
game. With oil prices skyrocketing, India does not have many options but to enter into comprehensive energy cooperation
with resource-rich countries. The supply-demand mismatch in India has already sent out warning signals across the ruling class.
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Maleki and Afrasiabi 8/17/07 (Abbas and Kaveh, Director of the International Institute for Caspian Studies in Tehran and a
visiting senior research scholar at International Security Program, Kennedy School of Government, Harvard University + political
scientist/author, ""Saving the Peace Pipeline,"
http://belfercenter.ksg.harvard.edu/publication/17453/saving_the_peace_pipeline.html)
In addition, in light of the IPI’s potential contribution to regional development, complementing the North-South corridor under
consideration by the member states of the Economic Cooperation Organization (ECO), it may be a good idea to revamp the IPI into a consortium that
opens the possibility of a future role by other regional parties, both in terms of investment as well as linkage with the regional gas network. Thereby, for instance,
Turkmenistan’s gas could also be exported to Pakistan and India through the IPI pipeline. In fact, by forming a consortium and allowing a role for other ECO
countries — Iran and Pakistan, together with Turkey, are the founding members of this regional organization of ten member states (which could induct India as an
observer) — the regional dimension of IPI becomes immediately more pronounced.
These recommendations would not only ensure that the IPI does not devolve into endless intra-state wrangling, but materializes as it has been envisioned. Also,
they add to its significance and reduce the impact of future shocks that may be of political or geo-strategic in nature.
By increasing the pool of regional participants through a consortium, the IPI project glues the three countries into a greater web of cooperation
and cements this cooperation through the positive input of the other participants. As the experience of the BTC (Baku-Tblisi-Ceyhan)
pipeline clearly demonstrates, cooperative pipelines contribute to the sustainable growth and stability of the region. By all
indications, the IPI would be no different.
The IPI serves as a durable CBM that fosters stability in South Asia
Luft 1/12/05 (Gal, Executive Director of the Institute for the Analysis of Global Security, "Iran-Pakistan-India pipeline: the
Baloch wildcard," http://www.iags.org/n0115042.htm)
A land based pipeline would be four times cheaper than any other option, even after taking into account transit fee payments to Pakistan. But for
a long time political tensions between India and Pakistan made it difficult for Delhi to accept an energy project that would create dependence on a neighbor with
whom its relations are far from stable. Recent improvement in the relations between the two neighbors has bought India to finally consider joining forces with
Pakistan for the mutually beneficial pipeline project, estimated to cost around $4 billion. A third of the gas would be delivered to Pakistan and the rest to India.
For Iran, India’s participation in the project is of paramount importance. In addition to a broader market for its gas Iran hopes to gain political support from India as
it is facing strong international pressure to terminate its nuclear program. In return for India's agreement to buy large quantities of gas, Iran has awarded Indian gas
companies major service contracts and also granted them participation in refining and other energy related projects to the tune of $40 billion. Iran’s relations with
Pakistan are also strategically important. With American troops stationed in neighboring Afghanistan and Iraq, Iran is trying to check U.S. influence in the region
by strengthening its ties with Pakistan, one of America’s most needed allies in the war on terror. The Pakistanis, for their part, would like to see their
territory used as a transit route to export natural gas to India. This would not only guarantee a source of income for them but also
increase stability in the region. Pakistani Prime Minister Shaukat Aziz said the Iran-Pakistan-India gas pipeline is "a win-win
proposition for Iran, India, and Pakistan," that could serve as a durable confidence-building measure, creating strong
economic links and business partnerships among the three countries.
The gas pipeline serves as a confidence-building measure that fosters regional security via mutual
cooperation
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Kronstadt 10/1/07 (Alan, Specialist in South Asian Affairs @ Congressional Research Service, Congressional Research
Service (CRS) Reports and Issue Briefs, lexis)
The "IPI" Pipeline Project. Islamabad insists it is going forward with a proposed joint pipeline project to deliver Iranian natural
gasto Pakistan and possibly on to India. In January 2007, officials from the three countries resolved a long-running price-mechanism dispute, opening the
way for further progress. In February, the fourth meeting of the Pakistan-India Joint Working Group on the Iran-Pakistan-India (IPI) pipeline was held in
Islamabad, where the two countries agreed to split equally expected gas supplies. In June, Pakistani and Indian officials reportedly reached an
agreement in principle on transportation charges, and officials from all three countries suggested a final deal was imminent. Prime
Minister Aziz has described the pipeline as being critical to Pakistan's economic growth and political stability. Doubts about
financing the approximately $7 billion project combined with concerns about security in Pakistan's Baluchistan provincehave some analysts skeptical about
fruition. Some independent observers and Members of Congress assert that completion of the pipeline would represent a
major confidence-building measure in the region and could bolster regional energy security while facilitating friendlier
Pakistan-India ties (see, for example, H.Res. 353 in the 109th Congress).
Indo-Pak energy trade is a confidence-building measure that sparks cooperation in other areas
Pandian 05 (S.G., Development Research Reporting Service, " Energy trade as a confidence-building measure between India
and Pakistan: a study of the Indo-Iran trans-Pakistan pipeline project," Contemporary South Asia, September,
http://www.ingentaconnect.com/content/routledg/ccsa/2005/00000014/00000003/art00004;jsessionid=1cpa4obt08bh8.alice?
format=print)
To date, there has been no confidence-building measure capable of locking India and Pakistan into an irreversible relationship and acting as a powerful catalyst for
bilateral development, prosperity and regional stability. In the absence of mutual trust, confidence and cooperation between these two
countries, it becomes imperative to identify potential areas of cooperation to reduce threat perceptions in the region. Although
the economic relationship alone does not play a pivotal role in strengthening the foundation on which the political relationship is built, it could be argued that
economic factors have a considerable leverage in influencing the political relationship. In this regard, a focus on energy trade
gains significant attention. The energy trade between India and Pakistan has enormous potential to lock them into an
irreversible economic interdependence, thereby reinforcing their efforts to intensify relations in other potential areas of
cooperation. This paper is an effort to identify the scope for energy trade to act as an economic confidence-building measure in Indo-Pakistan by studying the
cost–benefit analysis of Pakistan's inclusion in an Indo-Iran natural gas pipeline project. It analyses in detail India's energy strategy and the economic rationale for
trans-Pakistan pipeline. Finally, the paper analyses the potential benefits of a trans-Pakistan pipeline for both India and Pakistan, and its possible impact in creating
political constituencies essential for reducing regional conflict.
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Cohen, Curtis, and Graham 5/30/08 (Ariel, Lisa, and Owen, Senior Research Fellows @ Heritage, "Executive Summary:
The Proposed Iran-Pakistan-India Gas Pipeline: An Unacceptable Risk to Regional Security,"
http://www.heritage.org/Research/AsiaandthePacific/bg2139es.cfm)
Conclusion. Iran's support of terrorism, hostile policies in the Middle East, pursuit of nuclear weapons, and mismanagement of its
economy make it a dangerous and unreliable business partner and call into question its capacity to supply natural gas to Pakistan
and India through the IPI. Potential transit problems in Baluchistan also make this project inherently risky.
As major energy consumers, the U.S. and India share strategic interests in the Persian Gulf and Central Asia. Building the IPI
would be contrary to these interests, would destabilize the Persian Gulf, and would strengthen Russia's grip over Central
Asia, decreasing both regional and global energy security. Accordingly, the U.S. should fully back TAPI to increase India's and Pakistan's
energy security and reduce Russia's leverage in Central Asia.
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--Oil revenue is the single most important factor in preserving Gabon’s forested areas
Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf)
Gabon’s oil wealth coincides with the fact that it is one of the most forested countries in Africa; about four-fifths of its land area is
covered by forests. But this is not really a coincidence. The central hypothesis of this report is that oil rents
have enabled a series of policies that, together with the low demographic pressure, have been key in protecting forests from
degradation and deforestation. Most probably, oil has helped expand forest cover in absolute terms, and reduce forest
degradation, compared to what would likely have happened without oil (see Section 2). This has occurred through a number
of economy-wide market and policy responses to oil wealth that have in combination been extremely favourable to forest
conservation. Yet, none of the policies has been implemented because the government cared particularly about forests. Rather, the
policies accompanying oil wealth have caused agriculture to decline. This misfortune has enabled forests to
expand by default. Gabon’s unintentional, ‘blind’ conservation policies have been far more successful in conserving forests
than most of those designed consciously by governments that actively strive to protect their forests through direct
conservation measures. This underlines the potential strength of underlying factors in affecting forests (Contreras-Hermosilla
2000).
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Boukongou 05 (Jean Didier, Professor at the Central African Catholic University (Cameroon), "The Protection of the Congo
basin: A multilateral CHALLENGE," www.african-geopolitics.org/show.aspx?ArticleId=3836#_ftn1)
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Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf)
Generally speaking, there are no motivations for large-scale deforestation in Gabon; rather, the decline in land-using sectors since
the start of the oil era is likely to have triggered natural net reforestation over the past three decades. This
evidently belies the FAO’s FRA 1990, which had suggested there was an annual rate of deforestation of around 100 000 ha. Net
current deforestation is probably either zero or of negligible size. Land use has generally declined, and because of the
greater concentration of the population, it has also become more intensive. Table 4 summarises how oil wealth has triggered a
series of market- and policy-induced changes. Ten partial pathways are classified according to their economic intensity,
and to the strength with which they are linked to forests. These two criteria then jointly determine the intensity with which
deforestation is either curbed or accelerated by that pathway.
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Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf)
Gabon is not a common representative of Sub-Saharan Africa. The country has been called the ‘African Emirates’—the ultimate
rentier state depending heavily on a single wealth-generating export commodity: oil. Where most of Sub-Saharan
Africa over the last two decades has suffered from low and stagnating incomes, chronic balance of payment problems and foreign
exchange shortages, high per capita oil revenues have been the key to make Gabon a rich country. At more than
US$6000, per capita income was in 1998 more than four times that of neighbouring Cameroon. Petroleum exports have totally
dominated and transformed Gabon’s economy over the last three decades. Throughout the history of Gabon, other
rentgenerating extractive sectors have also been important, such as manganese, uranium and, notably, the export of timber, mainly
okoumé (Aucoumea klaineana), a valuable timber species. Yet, none of these commodities has generated rents
that are comparable to oil. This richness in extractive resources, distributed among the small population of around 1 million, has
implied that agriculture has remained underdeveloped. A traditional hunting-gathering culture of a forest-dwelling people
has transformed into a society harvesting natural resource rents, where agriculture (as other types of commodity production) has
remained underdeveloped.
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Center for International Forestry Research 03 ("The oil industry-bête noire or friend of the forest?,"
http://www.cifor.cgiar.org/docs/_ref/publications/areports/english2003/oil_industry.htm)
There is no denying that in some places oil installations have led to the pollution of waterways and the loss of wildlife. Indigenous
people have seen oil developments encroach on their ancestral lands, and access roads have opened up forests to other forms of
exploitation. But Wunder's research suggests that oil revenues can, in certain circumstances, prove beneficial for the forests. 'In
some places the oil industry has undoubtedly done harm,' says Wunder, 'but in countries like Gabon and Venezuela, oil revenues
have actually saved primary forest and increased the area under forest.'
The mechanism responsible for this seemingly strange state of affairs is known as 'Dutch disease'. During the 1960s and 1970s the
rapid expansion of the natural gas industry in the Netherlands led to an increase in exchange rates, public spending, labour costs
and inflation. This led to a boom for private and government services and the construction industry, especially in urban areas, but
made trade-exposed, commodity-producing sectors less competitive on the international market, and these went into decline.
Similar trends have been observed in some oil-producing developing countries, with oil booms having a negative impact on
agriculture and the forestry sector. The oil boom in Gabon coincided with a significant regrowth of forests in the interior, as
people in the countryside abandoned their fields and moved to the city, attracted by the promise of jobs and a better living. In five
of the eight countries studied by Wunder - in Cameroon, Papua New Guinea, Mexico, Nigeria and Indonesia - oil wealth has not
entirely stopped deforestation, but it has helped to slow it down during periods of high oil prices. When oil prices have fallen, in
contrast, people have drifted back to the countryside and converted more forest to farmland. Ecuador was the only country studied
where oil wealth accelerated deforestation. This was because Ecuador's government used its oil revenues to fund specific policies
which promoted land colonisation and forest conversion.
Gabonese oil revenues solve deforestation by triggering a rural exodus to urban areas
Center for International Forestry Research 03 ("The oil industry-bête noire or friend of the forest?,"
http://www.cifor.cgiar.org/docs/_ref/publications/areports/english2003/oil_industry.htm)
Thanks to oil - production rose from 1.4 million tonnes in 1966 to 18 million tonnes by 1998 - the small central African state of
Gabon now has the second highest per capita income in Africa, and it has experienced a rapid growth in public employment,
wages, urban infrastructure and transport.
Gabon's oil boom triggered a rural exodus to urban areas, especially of young people of working age. As one village elder put it:
'Nobody lives here anymore. The young are leaving, and the elephants and gorillas run freely through our gardens, destroying what
little we grow to eat.' This is a familiar lament in rural Gabon. But agriculture's loss of long-term competitiveness has been a
blessing for the forests. Over 80 per cent of the country is still clothed in tropical forest, and deforestation here - in contrast to
many other Congo Basin countries - is negligible.
The full story of how Gabon's oil wealth has helped to save its forests, and what policies could help to retain the forests now
that oil revenues are declining, is told in When the Dutch Disease Met the French Connection: Oil, Macroeconomics and Forests in
Gabon, by Sven Wunder (CIFOR 2003).
Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf)
On the whole, Dutch Disease impacts on real exchange rate competitiveness from oil wealth were a prime factor in the
performance of other primary sectors, which in turn affected Gabon’s forests. Policies tended to accentuate market factors
rather than stabilise them, due especially to a pronounced anti-agricultural bias that hit small producers particularly. Our regression
results show that price competitiveness was even more important for logging, which is almost entirely an
export sector, though there are elasticity differentials between timber species. But the overall results clearly confirm the core
hypothesis of this report: oil wealth has protected forests in Gabon from conversion and exploitation by shifting relative
prices against these activities.
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Wunder 03 (Sven, Economist @ Center for International Forestry Research, "When the Dutch Disease Met the French
Connection," www.cifor.cgiar.org/publications/pdf_files/Books/Macroeconomics.pdf)
What effect would agricultural expansion have on forests? Periurban landintensive production of vegetables and fruits causes only
negligible deforestation,68 but other cash and food crops would have a more significant impact. If the above scenarios imply that
Gabon will become more like its neighbours, perhaps we should look to them for similar development scenarios. What experiences
can we draw on? From Cameroon, we know that the severe economic crisis in the decade after 1986 halted the trend towards
urbanisation and triggered some return migration to the countryside. This demographic change caused a large expansion in food
crops, with a strong rise in forest clearing in the humid forest zone that was clearly related to the macroeconomic shifts (Mertens
et al. 2000; Ndoye and Kaimowitz 2000). Nigeria, another Dutch Disease country, also experienced a strong reagriculturisation
once oil incomes dropped, and probably an upsurge in deforestation that was basically led by import-protected food crops (Wunder
2003:ch.9).
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Major David N. Diner , JAG – US Army, Winter 1994 ("The Army and the Endangered Species Act: Who's Endangering
Whom?" – Military Law Review) p. 1exis
By causing widespread extinctions, humans have artificially simplified many ecosystems. As biologic simplicity increases, so does the risk of
ecosystem failure. The spreading Sahara Desert in Africa, and the dustbowl conditions of the 1930s in the United States are relatively mild examples of what
might be expected if this trend continues. Theoretically, each new animal or plant extinction, with all its dimly perceived and
intertwined effects, could cause total ecosystem collapse and human extinction. Each new extinction increases the risk of
disaster. Like a mechanic removing, one by one, the rivets from an aircraft's wings, mankind may be edging closer to the abyss.
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Guoala 2/3/05 (Joseph, Staff, "Summit to tackle threats to Africa's rainforests," Mail and Guardian online,
http://www.mg.co.za/articlePage.aspx?articleid=196783&area=/breaking_news/breaking_news__africa/)
Tropical forests in the Congo Basin stretch over 2,3-million square kilometres, making up a third of the forests across Africa.
As the planet's second-biggest timber resource and its second lung for survival, after the Amazon basin in Latin America, the fate
of Central Africa's forests is of vital interest not only to the region but also to the rest of the world.
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--Reducing its dependence on energy imports is vital for the Japanese economy
Lesbirel 04 (S. Hayden, Assoc Prof of Poly Sci @ James Cook University, "Diversification and Energy Security Risks: The
Japanese Case," Japanese Journal of Political Science 5(1), http://journals.cambridge.org/download.php?file=%2FJJP
%2FJJP5_01%2FS146810990400129Xa.pdf&code=0e56caac956f3a1667d2aaa56a4c8e16)
Energy security is a continuing concern for nations such as Japan which are heavily reliant on imported energy sources. The
ability to be able to secure adequate access at reasonable prices to energy imports to satisfy the needs of the economy has a major
impact on Japan’s overall security position. It has profound implications for the health of the Japanese socio-economy and
the political structures underpinning that economy. Yet, the risks of disruptions in energy markets are many. They include politically and market
induced disruptions as well as accidents. There is little predictability in the probabilities of these risks, their possible interactions and their cumulative effects.
Every policy statement of the Japanese government since the 1970s has stressed Japan’s dependence on imported energy
sources and the need to manage the risks associated with that structural dependence to ensure Japanese security. Energy
security risks matter.
--Japanese economic strength is essential for the global economy and prevents nuclear war with China
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Masaki 6/5/08 (Hisane, Tokyo-based journalist, commentator and scholar on international politics and economics, "Japan looks
to other oil sources," Japan Today, http://archive.japantoday.com/news/jp/e/tools/print.asp?content=comment&id=1081)
Japan, which has striven for decades to reduce its dependence on oil from the volatile Middle East
This in itself must be good news for
and thereby ensure stable supplies by diversifying oil sources. Japan imports almost all of its oil, and is the world's third-largest oil consumer after
the United States and China.
After switching some of its imports to those from outside the Middle East, such as Indonesia, Mexico and China, Japan saw its dependence on Middle Eastern oil
decline to 67.9% in 1987 from more than 80% in 1972, the year before the first oil crisis shook the world and sent panicked Japanese
consumers rushing to stock up on toilet paper and detergent, among other goods, amid rumors that they would run out of stock.
A result of the first oil crisis, the Japanese economy experienced its first negative growth since the end of World War II in
1974 after years of high-flying growth from the early 1960s. Japan survived the two oil crises of the 1970s through strenuous energy-saving efforts and
technological innovations. The oil crises are commonly remembered as "oil shocks" by Japanese people.
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Saunders 5/22/08 (Paul, Executive Director @ Nixon Center, CQ Congressional Quarterly, lexis)
Japan, a key U.S. ally in Asia, has thus far resisted similar pressures but is clearly interested in a deeper energy relationship with Iran if it becomes possible.
Dependent on imports for nearly 90% of its energy needs, Japan is highly vulnerable to instability in global energy markets and
reluctant to pursue policies that complicate its relationships with key suppliers. While the Japanese government plans to increase sharply its reliance on nuclear
power to strengthen energy security, in a world of rising demand driven by Asian economic growth Japan seems likely to be drawn into
competition with China and others to secure access to essential oil and natural gas imports. This may strengthen the U.S.-Japan
bilateral security relationship even as it further limits Japan's ability to support the United States elsewhere.
Liao 07 (Xuanli, Lecturer @ Center for Energy, Petroleum, and Mineral Law/Policy @ University of Dundee, "The petroleum
factor in Sino–Japanese relations: beyond energy cooperation," International Relations of the Asia Pacific 7(1),
http://irap.oxfordjournals.org/cgi/content/abstract/7/1/23)
China and Japan used to have good energy cooperation before China switched into a net oil importer in the mid-1990s, but the recent years have witnessed
an increasingly intensive competition between the two countries over petroleum supplies. While many saw such competition as inevitable
with China's growing energy demands, the paper argues that the energy relationship between the two countries was never separated from political and strategic
concerns, and heavily affected by the concern of ‘relative gains’, as suggested by the neorealists. Like the case prior to the mid-1990s when the non-energy factors
underpinned the Sino–Japanese energy cooperation, the key factors that prevented the two from continuing energy cooperation today also lay in political and
strategic aspects. Being two regional powers in East Asia, China, and Japan need to recognize the fact that their lack of energy
cooperation due to mutual political distrust will not only impair their own energy security, but may also have negative
implications on regional stability.
--Asianinstability sparks nuclear conflict, destroys the nonproliferation regime, and cripples the US
and global economies
Jonathan S. Landay, Writer for Knight Ridder/Tribune News Service, 3/10/2000 ("Top Administration Officials Warn Stakes
for US are high in Asian Conflicts" – Knight Ridder/Tribune News Service) p. lexis
WASHINGTON _ The 3,700-mile arc that begins at the heavily fortified border between North and South Korea and ends on the glacier where
Indian and Pakistani troops skirmish almost every day has earned the dubious title of most dangerous part of the world.
Few if any experts think China and Taiwan, North Korea and South Korea, or India and Pakistan are spoiling to fight. But even a
minor miscalculation by any of them could destabilize Asia, jolt the global economy and even start a nuclear war . India, Pakistan
and China all have nuclear weapons, and North Korea may have a few, too. Asia lacks the kinds of organizations, negotiations and diplomatic relationships
that helped keep an uneasy peace for five decades in Cold War Europe. "Nowhere else on Earth are the stakes as high and relationships
so fragile ," said Bates Gill, director of northeast Asian policy studies at the Brookings Institution, a Washington think tank. "We see the convergence
of great power interest overlaid with lingering confrontations with no institutionalized security mechanism in place. There are
elements for potential disaster ."
In an effort to cool the region's tempers, President Clinton, Defense Secretary William S. Cohen and National Security Adviser Samuel R. Berger all will hopscotch
Asia's capitals this month. For America, the stakes could hardly be higher. There are 100,000 U.S. troops in Asia committed to defending Taiwan,
Japan and South Korea, and the United States would instantly become embroiled if Beijing moved against Taiwan or North Korea attacked South
Korea. While Washington has no defense commitments to either India or Pakistan, a conflict between the two could end the global taboo against using
nuclear weapons and demolish the already shaky international nonproliferation regime. In addition, globalization has made a stable Asia
_ with its massive markets, cheap labor, exports and resources _ indispensable to the U.S. economy. Numerous U.S. firms and millions of American jobs
depend on trade with Asia that totaled $600 billion last year, according to the Commerce Department.
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Jaffe and Manning 00 (Amy and Robert, Senior Economist @ Petroleum Intelligence Weekly + Senior Fellow of Asian
Studies @ Council on Foreign Relations, Foreign Affairs, Jan/Feb)
Neither, frankly, is Washington. The political reverberations of a sustained oil glut should not be underestimated. Several important regimes -- in the
Gulf states, Russia, the former Soviet republics, and such key Latin American countries as Venezuela, Mexico, and Colombia -- count on
healthy oil revenues for calming restive populations, assuaging social tensions, and in some cases, nation-building writ large.
Without the salve of rising oil revenues, many of these nations can expect to see heightened political instability, social unrest,
or even civil wars, which could be grimly reminiscent of recent Balkan slaughters. In the Gulf, such instability could trigger the next oil
shocks in the form of short-term disruptions. The 1991 Gulf War demonstrated the West's capacity to defend important oil regions from traditional external threats
like the Iraqi invasion of Kuwait. But America's painful experiences with revolutionary Iran in the late 1970s and the Balkans in the 1990s are grim reminders of
how hard it can be to cope with internal instability. The new dynamics of the global oil market have profound implications for U.S. national security policy.
Washington had better gird itself.
Secessionism causes spiraling escalation and makes every other global problem worse—turns the case
Gottlieb 93 (Gideon, Director of the Middle East Peace Project, Nation Against State, p. 26-7)
Self-determination unleashed and unchecked by balancing principles constitutes a menace to the society of states. There is simply
no way in which all the hundreds of peoples who aspire to sovereign independence can be granted a state of their own without
loosening fearful anarchy and disorder on a planetary scale. The proliferation of territorial entities poses exponentially greater
problems for the control of weapons of mass destruction and multiple situations in which external intervention could threaten the
peace. It increases problems for the management of all global issues, including terrorism, AIDS, the environment, and
population growth. It carries conditions in which domestic strife in remote territories can drag powerful neighbors into local
hostilities, creating ever widening circles of conflict. Events in the aftermath of the breakup of the Soviet Union drove this point
home. Like Russian dolls, ever smaller ethnic groups dwelling in large unites emerged to secede and to demand independence.
Georgia, for example, has to contend with the claims of the South Ossetians and Abkhazians for independence, just as the Russian
Federation is confronted with the separatism of Tartaristan. An international system made up of several hundred independent
territorial states cannot be the basis for global security and prosperity.
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High oil revenues solve civil strife, insurrection, and ethnic war in oil exporting countries
McKillop 4/19/04 (Andrew, energy economist and ounding member of the Asian chapter of the International Association of
Energy Economists, Oil and Gas Journal)
Higher revenues for many low-income oil exporter countries -- notably for the special cases of
Can this be done without higher oil prices?
Nigeria, Saudi Arabia, and especially Iraq -- may be the only short-term way to stop these countries from falling into civil strife,
insurrection, or ethnic war, let alone making vast investments to maintain or expand their current export capacity. In the case of
Iraq, increased oil revenues are a question of life or death because higher revenues might prevent the country from becoming ungovernable and
might give it some potential for stability.
No immediate and instant recession can occur with oil at $ 50/bbl or even $ 60/bbl. Vastly higher oil prices than that would be needed to abort the worldwide
mechanism of higher oil, energy, and real resource prices driving faster economic growth. Conversely, low oil and energy prices entraining low real
resource prices, combined with rising population numbers, surely aggravate the cycle of poverty in low-income commodity
exporter countries. Deprived of sufficient revenues, such countries can become "basket case" indebted countries, subjected to draconian conditions by the Club
of Paris, World Bank, and International Monetary Fund for debt refinancing and restructuring. The ability and capacity for investing huge amounts of capital into
oil, gas, and other energy production infrastructures by low-income, indebted countries is realistically very low or zero. Yet estimates for world investment needs of
the oil and gas industry through the next 10-15 years extend into the range of several thousand billion dollars.
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Shehadi 93 (Kamal, Research Associate @ IISS, December, Adelphi Papers #283, p. 82)
This paper has argued that self-determination conflicts have direct adverse consequences on international security. As they begin
to tear nuclear states apart, the likelihood of nuclear weapons falling into the hands of individuals or groups willing to use them,
or to trade them to others, will reach frightening levels. This likelihood increases if a conflict over self-determination escalates into
a war between two nuclear states. The Russian Federation and Ukraine may fight over the Crimea and the Donbass area; and India
and Pakistan may fight over Kashmir.
Ethnic conflicts may also spread both within a state and from one state to the next. This can happen in countries where more than
one ethnic self-determination conflict is brewing: Russia, India, and Ethiopia, for example. This conflict may also spread by
contagion from one country to another if the state is weak politically and militarily and cannot contain the conflict on its doorstep.
Lastly, there is a real danger that regional conflicts will erupt over national minorities and borders.
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Broad-based development of renewable energy collapses oil prices—destroys the economies of oil-
producing states, unleashing global violence and destroying global financial markets
Low oil prices undermine fuel efficiency and alternative energy developments via greater consumption
—the result is global conflict
Paehlke 89 (Robert, Prof of Public Policy + Environmental Politics @ Trent Univ., Environmentalism and the Future of
Progressive Politics, p. 240-1)
The second environmental comment on the threat of war concerns dependence on "strategic" materials of all kinds. Lower world
oil prices are leading to renewed North American dependence on the energy resources of the unstable Middle East. Our efforts
toward energy self-sufficiency are collapsing on almost every front." In its advertising the auto industry has replaced fuel
efficiency with an emphasis on the "pinch" growing families may feel in small cars. The drilling rigs in Texas and Alberta have gone into
mothballs, and many other energy supply initiatives have fallen apart. Many of these projects are environmentally doubtful, but progress toward an SEP is equally
vulnerable to lower oil prices. And all efforts toward energy self-sufficiency help ease the military anxiety to which so many nations are
so prone. Environmentalists could stress that these dilemmas can be solved by establishing steady oil price increases, set in
periodically negotiated settlements between producers and consumers or in an evolving system of contingent agreements." In such a context long-term
investments in energy conservation would be more secure. The environmental impacts of hard path energy projects could also be softened, because
such projects could be planned and developed with greater care. (Without a stable regime of price increases energy projects are alternately
economically hopeless or conceived and executed within a crisis mentality.) Most important perhaps, a deliberate and gradual
increase in oil prices might help the world feel more secure. Presently the world as a whole is often forced to be as unsettled as its most unstable
region. If a new pricing regime assured prices even marginally in excess of those the market might deliver, there would be a considerable pressure on OPEC
nations to remain within the system.
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Leverett and Leverett 6/16/08 (Flynt and Hillary Mann, former senior director for Middle East affairs at the National
Security Council/ senior fellow and director of the New America Foundation’s Geopolitics of Energy Initiative + former director
of Gulf affairs at the National Security Council/chief executive officer of Stratega, a political risk consultancy, "US economic
decline top issue," http://www.thenational.ae/article/20080615/FOREIGN/441776822/-1/ART)
Although the GCC states are beginning to diversify their reserve assets, a wholesale move by the GCC away from the dollar as the
basis for currency pegs and the transactional currency for international oil trading seems unlikely for now. Saudi Arabia is
staunchly opposed to these steps, on what Saudi officials candidly describe as “strategic” rather than economic grounds.
Other GCC states are constrained to follow the Saudi lead to avoid damaging prospects on currency pegs for eventual monetary
union. Even Kuwait, which shifted the peg for its dinar last year to a “basket” of currencies, gives the dollar disproportionate
weight in that basket. And the kingdom carries sufficient weight within Opec to block precipitous shifts in the currency regime
for international oil trading.
B. US oil imports ensure oil payments and pricing are based on the dollar
Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy,
lexis)
In his scenario, Jarjani identifies a set of conditions under which the OPEC countries might be inclined to shift to pricing in euros. Given his influential position in
OPEC, this scenario carries considerable weight. In this regard, Jarjani feels that the critical developments bearing on OPEC's future pricing
decisions will center around ten major developments: (16)
1. In the longer term, the euro will be more on a par with the U.S. dollar. This is especially the case with regard to economic size, especially given the EU's
enlargement plans. Most important, he feels that the euro zone will have a bigger share of global trade than the United States, and while the United States tends to
run a large current-account deficit, the euro area has a more balanced, external-accounts position, thus increasing the attractiveness of the euro.
2. One of the more compelling arguments for keeping oil pricing and payments in dollars has been the fact that the United
States remains a large importer of oil, despite being a substantial crude producer itself. On the other hand, the euro zone, especially in light of
enlargement, imports even more oil and petroleum products than the United States.
C. The emergence of the petroeuro would cripple the US dollar and destroy US hegemony
Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy)
Put differently, proponents of this view contend the dollar-priced oil system creates a virtuous cycle for the United States, making
the country's massive trade deficit tolerable and its foreign military operations financially bearable. In effect, the existing dollar/oil
system allows the U.S. government to run up a massive deficit without raising interest rates as foreign dollars are used to purchase
U.S. government debt. The economy thrives because the U.S. private sector is not crowded out of the financial markets. The net result is to allow
strong levels of consumption and investment despite extraordinarily low rates of savings. Meanwhile, the United States can pursue
overseas military operations without being encumbered by the resource constraints facing all other countries. The United States
can have both guns and butter. It follows that breaking the dollar/ oil link would drastically reduce the role of the U.S. dollar
as an international reserve currency, and thus the military/economic power of the United States.
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Zalmay Khalilzad, Consultant @ RAND, Spring 1995 (“Losing the Moment?” - The Washington Quarterly) p. lexis
Under the third option, the United States would seek to retain global leadership and to preclude the rise of a global rival or a return to multipolarity for the
indefinite future. On balance, this is the best long-term guiding principle and vision. Such a vision is desirable not as an end in itself, but because a world in
which the United States exercises leadership would have tremendous advantages. First, the global environment would be more open and more receptive to
American values -- democracy, free markets, and the rule of law. Second, such a world would have a better chance of dealing cooperatively with
the world's major problems, such as nuclear proliferation, threats of regional hegemony by renegade states, and low-level conflicts.
Finally, U.S. leadership would help preclude the rise of another hostile global rival, enabling the United States and the world to avoid
another global cold or hot war and all the attendant dangers, including a global nuclear exchange. U.S. leadership would therefore
be more conducive to global stability than a bipolar or a multipolar balance of power system.
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MacDonald 5/23/08 (Elizabeth, Analyst @ FOX Business, "Why Suing OPEC Won't Work,"
http://emac.blogs.foxbusiness.com/2008/05/23/why-suing-opec-wont-work/)
The blogosphere in Saudi Arabia is hot with debate over inflation in Saudi Arabia and talk of pushing the royals to de-peg the
riyahl from the US dollar.”The dollar has totally been removed from Iran’s oil transactions,” Iran’s oil ministry official Hojjatollah Ghanimifard has already
said. “We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies.”Iranian president Mahmoud Ahmadinejad called the
depreciating dollar a “worthless piece of paper” at a summit last year in Saudi Arabia attended by state leaders from OPEC countries.
Iran has been pressuring other OPEC countries to price oil in a basket of currencies, but it has not succeeded as a number
of members, including Saudi Arabia, are firm U.S. allies.
Chandler 6/11/08 (Marc, chief currency strategist at Brown Brother Harriman, "Marc Chandler Examines Changing
Currencies," http://www.istockanalyst.com/article/viewarticle+articleid_2277491~zoneid_Home~title_Marc-Chandler-
Examines.html)
HardAssetsInvestor.com (Norman): Welcome back to HardAssetsInvestor.com’s interview series. I’m Mike Norman, your host, and I’m here with Marc Chandler,
chief currency strategist at Brown Brother Harriman. Marc, in our last interview, we were talking about the relationship between the weak dollar and oil prices.
Many people out there say that because the dollar is going down and because oil is priced in dollars, that OPEC producers are
going to start shifting out of the dollar into another currency; say the euro, or a basket of currencies. Is this going to happen, in your
opinion?
it’s always possible that something like this could
Marc Chandler, chief currency strategist at Brown Brother Harriman (Chandler): I think
happen, but we think that the odds of it are very slim. In fact, when you look at the Saudi peninsula and the six gulf community
council members, only one of them has shifted out of the dollar, and they really shifted to a basket Kuwait. They shifted to a
basket where the dollar played a very large role.
What these countries are doing, they got a lot of their income, of course, by selling oil and getting dollars. A lot of their investments are
in dollars, so for them to break the peg with the dollar, for them to see a major revaluation of the old currencies would cause some hardship out of their holdings.
Most recently, the gulf community has reiterated that they will stick to the dollar pegs, and what they’re playing for is in 2010, adopting a
single currency. It’s interesting; what happened is, a Saudi official, who runs their central bank called the Monetary Authority, went to Europe in the middle of
February, and it was a perfect forum for him to say, “I’m going to be adopting your currency,” but instead he said, “We thought the dollar was a good purchase,”
and the Kuwaitian investment authority, which is the second-largest sovereign wealth fund, said the same thing.
Saudi Arabia and Gulf states are continuing to refuse to de-peg oil pricing from the dollar
Arnold 6/1/08 (Wayne, Columnist, The National, "Oil price a burden, says Paulson,"
http://www.thenational.ae/article/20080601/BUSINESS/532802036/-1/SPORT)
Asked to comment on the region’s dollar peg, Mr Paulson told reporters: “The dollar peg, I think, has served his country and this region well.” Mr Assaf
reaffirmed Saudi Arabia’s support for the peg, saying: “We have no intention of de-pegging or revaluation.”
Speculation has been rife in the past year that the region might be ready to revalue its currencies or otherwise drop their dollar peg. While the US has been cutting
interest rates to counter a slowing economy, the Gulf is in the midst of an oil-fuelled economic boom. Keeping their currencies pegged to the dollar requires that
Gulf central banks cut rates along with the US, stoking inflation that has risen regionally to an estimated 7.4 per cent. Letting their currencies rise, economists have
said, would help alleviate inflation by lowering import costs, particularly of key commodities such as food.
Merrill Lynch, the US brokerage, revived speculation recently with a May 22 report entitled “US green light for the GCC” that cited a semi-annual
Treasury report to Congress on foreign exchange rate policies as having given tacit approval for the GCC members to de-peg. “We believe that the US is
helping to lift the political barriers to exchange rate regime changes in the region,” the report said, justifying its recommendation that
investors buy Gulf currencies.
Some analysts believe the peg is losing support among Treasury officials, who fear its inflationary impact could destabilise America’s Gulf allies. But others say
the US has exerted pressure on Gulf nations to keep the peg out of fear that dropping it could accelerate the dollar’s decline.
Several analysts, therefore, have since cast doubts on Merrill’s conclusions, particularly its assertion that the latest Treasury report focused
on GCC currencies for the first time “in recent history”. Standard Chartered Bank, for example, pointed out that the GCC currencies figured in the Treasury’s
previous report. Besides, said Brad Setser, a former Treasury official and fellow at the Council on Foreign Relations in New York, “the FX report wouldn’t be a
vehicle for communicating with the Gulf”.
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Brockway 01 (George, economics columnist for The New Leader, Journal of Post Keynesian Economics, lexis)
The question remains, why did the OPEC nations chose the dollar instead of the pound sterling, the yen, the euro, or no single
currency? There are several possible reasons. The single currency scheme has the great advantage of shielding OPEC from the irrational frenzy of the
international money markets. Although there is coolness between OPEC and the United States because of the latter's support of Israel, the United States is
OPEC's largest customer and the world's largest exporter and largest importer. It is therefore easier, both for OPEC and for
its customers, to deal with the United States than with anyone else. In addition, the United States is the largest producer of goods the OPEC nations
need, or think they need--namely agricultural products and military materiel.
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Gause 94 (Gregory, Prof @ Univ. of Vermont, Oil Monarchies: Domestic and Security Challenges in the Arab Gulf,
http://www.arts.mcgill.ca/programs/icas/gause/chapter7.html)
Such investments and purchases are, of course, but a small percentage of the overall American economy. Their absence would be
felt, no doubt, but would not be enormously damaging for American economic health. What could be immediately damaging to
the U.S. economy would be any efforts to denominate the world price of oil in anything but dollars. As the world oil price is
now set in dollars, the United States is buffered from the effects of currency fluctuations on its energy imports. If, for example, oil
prices were denominated in Japanese yen, America's energy bill would increase as the value of the dollar against the yen fell, even
though nominal oil prices remained unchanged. During another episode where the dollar fell in relation to other major currencies,
in the mid-1970's, there was much talk in OPEC about changing the basis of oil pricing from the dollar to a basket of currencies.
Loud complaints could be heard from the Gulf about the decline in returns from oil sales because the dollar was not worth as much
as it used to be. The Iranian Revolution put a halt to such talk by re-emphasizing the security dependence of the Gulf monarchies
on the United States. The recent fall of the dollar since the Gulf War has not elicited similar comments. Were the security link
between the United States and the Gulf monarchies to be broken, their incentives to maintain the dollar as the benchmark
currency for oil pricing would be reduced.[5]
Financial and oil questions are likely to be the only areas of serious dispute between the United States and the Gulf monarchies in
the context of their current relationship. The Clinton Administration's proposed carbon tax elicited very public criticism from
Gulf oil ministers, who saw it as aimed exclusively at oil imports. They implicitly threatened to defer plans for increasing
production capacity until the issue was settled.[6] The involvement of political elites in the UAE and Saudi Arabia in the BCCI
scandal now unfolding in American courts is also an irritant. American concerns about Saudi creditworthiness nettle Riyad, while
at the same time Washington pushes the Saudis to buy more arms and to help underwrite Middle East peace efforts. Such issues
are not enough to threaten the common security and economic interests seen by both sides in the relationship, but they point out
the extent of the economic interconnections of the parties.
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OPEC switch to the euro destroys the US economy—dollar crashes, foreign investment flight, massive
inflation, account + budget deficits become unservicable
Looney 3/22/04 (Robert, professor of economics at the Naval Postgraduate School, Monterey, California, Middle East Policy)
One of the best articulations of this scenario--the war with Iraq was not so much over oil as it was over the pricing of oil in euros
by Saddam Hussein--has been developed by W. Clark: (13)
1. The Federal Reserve's greatest nightmare is that OPEC will switch its international transactions from a dollar standard to a
euro standard. Iraq actually made this switch in November 2000 (when the euro was worth around 82 cents), and has actually
made out like a bandit, considering the dollar's steady depreciation against the euro (the dollar declined 17 percent against the euro
in 2002).
2. The real reason the Bush administration wants a puppet government in Iraq--or, more important, the reason the corporate-
military-industrial network conglomerate wants a puppet government in Iraq--is so that it will revert back to a dollar standard and
stay that way (while also hoping to veto any wider OPEC momentum towards the euro, especially from Iran, the second-largest
OPEC producer, which is actively discussing a switch to euros for its oil exports).
3. The effect of an OPEC switch to the euro would be that oil-consuming nations would have to flush dollars out of their (central
bank) reserve funds and replace them with euros. The dollar would crash anywhere from 20-40 percent in value, with
consequences predictable from any currency collapse and massive inflation (like Argentina's currency crisis, for example). You'd
have foreign funds stream out of the U.S. stock markets and dollar-denominated assets; there'd be a run on the banks much like the
1930s; the current-account deficit would become unserviceable; the budget deficit would go into default and so on.
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Ibrahim 03 (Youssef, group editor of Energy Intelligence, was most recently a senior fellow for Middle East affairs at the
Council on Foreign Relations, 4/1, Institutional Investor International Edition, lexis)
In the meantime, the U.S.-Saudi relationship has been deteriorating for several reasons. Some in the U.S. blame the Saudis for helping to finance terror globally
although not officially (15 of the 19 September 11 terrorists were Saudis), and the kingdom declined to help the U.S. as much as it wanted in the war. (Although
recently the kingdom allowed the U.S. to send cruise missiles over its territory to attack Iraq.) The Saudis are talking to the Chinese and the French about buying
missiles and tanks, respectively, not wanting their armed forces to be too beholden to U.S. military suppliers. The Saudis have already reached the conclusion that
China is likely to supersede the U.S. as their biggest customer for oil within a decade. One danger for the U.S. is whether the kingdom will accede
to pressure from other members of OPEC, including the Iranians, Algerians and Iraqis, who have been pushing to price oil in
euros, not dollars. Even a partial shift in the traditional terms of payment could deal a heavy blow to the dollar and to the U.S.
economy. Rising hostility to the U.S. among Muslims could take other unexpected economic tolls. U.S. companies could find it more difficult to conduct or
expand their business in the Islamic world.
Even a partial switch to oil pricing in euros causes a sudden and steep decline in the dollar
Makhijani 03 (Arjun, President @ IEER, "A Looming Monetary Collision: Oil, the Dollar, and the Euro,"
www.ieer.org/comments/econ/oil$euro.pdf)
There might be monetary chaos if key countries start denominating their oil in euros, or if OPEC changes its oil pricing strategy to
euros, in the midst of a global crisis. Countries and individuals currently tend to hold their foreign reserves in dollars, in part
because dollars buy oil. A dumping of dollars arising from even a partial switch to oil pricing in euros could cause a sudden
and steep decline in the value of the dollar. In that context, countries and corporations may decide to convert their monetary
reserves, now held mostly in dollars, to euros and to commodities such as gold or oil. In 1979, the sharp decline of the dollar
relative to European currencies occurred in parallel with
skyrocketing prices of oil and gold.
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Clark 03 (W., Independent Media Center, "THE REAL REASONS FOR THE UPCOMING WAR IN IRAQ,"
http://www.rense.com/general34/realre.htm)
It would appear that any attempt by OPEC member states in the Middle East or Latin America to transition to the euro as their oil
transaction currency standard shall be met with either overt U.S. military actions or covert U.S. intelligence agency
interventions. Under the guise of the perpetual "war on terror" the Bush administration is manipulating the American people about
the unspoken but very real macroeconomic reasons for this upcoming war with Iraq. This war in Iraq will have nothing to with any
threat from Saddam's old WMD program. This war will be over the global currency of oil.
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Murphy 5/15/08 (Caryle, Foreign Correspondent, The National, "Saudi-US relations hit rocky road,"
http://www.thenational.ae/article/20080514/FOREIGN/946458903/1011/SPORT&Profile=1011)
Saudis are uncharacteristically blunt when asked about George W Bush, the US president, and what his two-term administration has brought
to the Middle East. Most see an abysmal legacy: a dangerous mess in Iraq, a deepening Israeli-Palestinian conflict and a volatile tug-of-war between Washington
and Tehran, most recently on display in the embattled boulevards of Beirut.
“We love and admire the United States, I can assure you, and I speak for many people on this matter,” said Saeed al Farha al Ghamdi, a retired government
employee in Jeddah. “But, unfortunately their foreign policy is disastrous.”
Many government officials share these sentiments but in true Arab tradition, they will accord Mr Bush the utmost in hospitality
when he arrives here on Friday for his second visit in four months – even though they are not sure why he is coming.
Bilateral ties between the two countries have rebounded from the nadir to which they sank after Sept 11 2001. And as long
as oil and security are top priorities, the long-standing US-Saudi relationship will remain an important one to both.
B. Saudi Arabia opposes any substantial changes in energy policy, especially changes aimed at
reducing CO2 emissions or oil imports
Roberts 04 (Paul, Columnist @ Harper's, The End of Oil: On the Edge of a Perilous New World, p. 286-7)
Because energy is critical to national power, producers have traditionally enjoyed close ties to national governments, and thus have
been able to shape national energy policies. Whereas the United States might otherwise regard Saudi Arabia, with its anti-Western attitudes and its links
to terrorist elements, as a legitimate political enemy, the kingdom's vast oil reserves and especially its enormous surplus capacity have for decades ensured that
Washington would overlook such criminal behavior. As one political analyst told me, "the fact that a U.S. president can call up the Saudis and say, 'Something
major is going to happen tomorrow and we desperately need you to pump more oil to reassure the market' has given the Saudis a level of access in Washington that
is pretty much unparalleled."
Such influence isn't likely to diminish anytime soon. Because hydrocarbons will play a central role in any transitional energy economy, and because
producers alone have the capital and resources to build the next energy infrastructure, they will also have considerable say in when and how quickly we move to a
new energy economy. In fact, many oil-producing states have worked assiduously to prevent any change, either by trying to keep prices
low (not always successfully) or by attacking competing energy sources. The Saudis, for example, have gone so far as to file complaints with
the World Trade Organization claiming that European programs to cut CO2 emissions unfairly constrain the Saudi oil
trade. "We are against any policy that unfairly discriminates against oil," one top Saudi oil official told me bluntly. "We
want to keep oil the fuel of choice."
Levi 03 (Michael, Science and Technology Fellow, Foreign Policy Studies @ Brookings, “Would the Saudis Go Nuclear?,”
http://www.brookings.edu/views/articles/fellows/levi20030602.htm)
Why would Riyadh want nukes now? Because of a potentially dangerous confluence of events. The rapidly progressing nuclear
program of traditional rival Iran has no doubt spooked the Saudi leadership. Last fall, dissidents revealed the existence of a covert Iranian
uranium-enrichment program, forcing analysts to drastically revise down their estimates of how long it might take Iran to obtain nuclear weapons. Reacting to that
development, Patrick Clawson, deputy director of the Washington Institute for Near East Policy, recently wrote that "Saudi Arabia is the state most likely to
proliferate in response to an Iranian nuclear threat" because, he argued, the Saudis fear a nuclear-armed Iran could have designs on Saudi Arabia, a Sunni monarchy
that is home to a large number of oppressed Shia. After all, Tehran has for years allegedly supported Shia terrorist groups operating in Saudi Arabia and was
blamed by many analysts for the 1996 Khobar Towers bombing. Holding back the Saudi nuclear program, of course, has been the
kingdom's relationship with the United States. Though America has never signed a formal treaty with Riyadh, since World War II the United States
has made clear by its actions—most notably, by protecting Saudi Arabia during the 1991 Gulf war—and by informal guarantees given to Saudi leaders by
American officials that it will protect the monarchy from outside threats. Since the September 11 attacks, though, that relationship has grown increasingly frail.
When a RAND analyst last summer told the Defense Policy Board, then chaired by Richard Perle, that Saudi Arabia was "the kernel of evil, the prime mover, the
most dangerous opponent" in the Middle East, he not only raised hackles in Riyadh, he reflected the opinion of many close to the Bush administration. R. James
Woolsey, former CIA director and White House confidant, was even more emphatic in a speech last November, referring to "the barbarics [sic], the Saudi royal
family." The recent decision by Washington to pull most of its forces out of Saudi Arabia, reducing its deployment from 5,000 to 400 personnel and moving its
operations to Qatar, has added facts on the ground to the rhetorical barrage. This recent decline in U.S.-Saudi relations can hardly make the Saudi royal family feel
secure. Suddenly removing the U.S. security blanket just as regional rivalries are intensifying could push the Saudis into the
nuclear club. That's a scary prospect, particularly when you consider the possibility of Islamists overthrowing the monarchy. Instead, the United States should
be careful to maintain Saudi Arabia's confidence even as the two nations inevitably drift apart. The United States might even extend an explicit security guarantee
to the Saudis, the kind of formal treaty it gave Europe to keep it non-nuclear during the cold war-and the kind of formal arrangement Washington and Riyadh have
never signed before. Such a formal deal could raise anti-American sentiment in the desert kingdom. But the alternative might be worse.
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Steinbach 02 (John, Hiroshima/Nagasaki Peace Committee + Centre for Research on Globalization, "Israeli Weapons of Mass
Destruction: a Threat to Peace," www.globalresearch.ca/articles/STE203A.html)
Meanwhile, the existence of an arsenal of mass destruction in such an unstable region in turn has serious implications for future arms control
and disarmament negotiations, and even the threat of nuclear war. Seymour Hersh warns, "Should war break out in the Middle East again,... or
should any Arab nation fire missiles against Israel, as the Iraqis did, a nuclear escalation, once unthinkable except as a last resort, would now be a
strong probability."(41) and Ezar Weissman, Israel's current President said "The nuclear issue is gaining momentum(and the) next war will not be
conventional."(42) Russia and before it the Soviet Union has long been a major(if not the major) target of Israeli nukes. It is widely reported that the principal
purpose of Jonathan Pollard's spying for Israel was to furnish satellite images of Soviet targets and other super sensitive data relating to U.S. nuclear targeting
strategy. (43) (Since launching its own satellite in 1988, Israel no longer needs U.S. spy secrets.) Israeli nukes aimed at the Russian heartland seriously complicate
disarmament and arms control negotiations and, at the very least, the unilateral possession of nuclear weapons by Israel is enormously destabilizing, and
dramatically lowers the threshold for their actual use, if not for all out nuclear war. In the words of Mark Gaffney, "... if the familar pattern(Israel refining its
weapons of mass destruction with U.S. complicity) is not reversed soon- for whatever reason- the deepening Middle East conflict could trigger a
world conflagration." (44)
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Saudi-US Relations Information Service 5/16/08 ("President Bush in Saudi Arabia: Agreements Bolster Regional
Security," http://www.saudi-us-relations.org/articles/2008/special-reports/080516-strengthening-ties.html)
Today, President Bush met with King Abdallah to commemorate the 75th anniversary of formal diplomatic relations between the
United States and Saudi Arabia. Since 1933, these two nations have enjoyed formal relations. In 1945, during the waning months of
World War II, King Abdallah's father – King Abd al-Aziz – met with President Franklin Delano Roosevelt aboard the U.S.S. Quincy
in the Red Sea, and the two leaders chose to deepen the strategic relationship between the two countries. The President's visit
today builds on this tradition of friendship and close cooperation.
US-Saudi ties are improving now—recent diplomacy and bilateral agreements prove
Hadley 6/8/08 (Stephen, National Security Advisor, White House Press Office, lexis)
I'd like to start, if I can, to say a little bit about some of the strengthening and diplomatic ties between the United States and
Saudi Arabia that they were able to witness here today. As we've noted, this is the 75th anniversary of the formal establishment of
diplomatic relations between the United States and the Kingdom of Saudi Arabia. And it is certainly fitting that these two leaders
were able to reach some understandings and agreements that will further strengthen the ties between the two countries.
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Teslik 5/16/08 (Lee Hudson, Assistant Editor @ Council on Foreign Relations, "A Complicated Alliance,"
http://www.cfr.org/publication/16255/complicated_alliance.html?breadcrumb=%2F)
Seventy-five years ago this month, California’s Standard Oil Company closed a deal with the finance minister of Saudi Arabia, a
country the United States had only officially recognized two years earlier. The agreement granted the oil firm an exploration contract and
initiated a multifaceted and sometimes thorny bilateral economic relationship. Today, oil still dominates U.S.-Saudi ties, which
went on display May 16 when President Bush met Saudi’s King Abdullah. But the fairly straightforward buy-sell dynamic between the world’s
leading importer and leading exporter of crude is increasingly complicated by a host of other issues, from security cooperation to currency concerns.
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Dvali 04 (Akaki, Graduate Research Assistant @ Center for Nonproliferation Studies, " Will Saudi Arabia Acquire Nuclear
Weapons?," www.nti.org/e_research/e3_40a.html)
Saudi Arabia has several reasons to consider acquiring nuclear weapons: the current volatile security environment in the Middle
East; its ambition to dominate the region; and the growing number of states (particularly Iran and Israel) with weapons of mass
destruction (WMD) in the region. According to the British newspaper The Guardian, for example, the Saudi Arabia worries about
an alleged Iranian nuclear program and the absence of any international pressure on Israel (estimated to have up to 200 nuclear
devices) to disarm.[1] Richard L. Russell, a research associate at Georgetown University's Institute for the Study of Diplomacy,
also mentions the insecurity and regional proliferation of WMD as a major motivation for Riyadh's steps toward procuring a
nuclear deterrent. Russell notes Saudi Arabia's clandestine purchase of long-range CSS-2 ballistic missiles (capable of delivering
nuclear weapons) from China in the 1980s as an indication of Saudi ambitions to acquire nuclear weapons.[2] Also, given the
Saudi's growing hostilities toward the United States and the evident deterioration of U.S.-Saudi security ties, particularly
after the September 11 terrorist attacks, it is likely that the Saudi government would consider alternative security arrangements,
including a nuclear option.
Levi 03 (Michael, Science and Technology Fellow, Foreign Policy Studies @ Brookings, “Would the Saudis Go Nuclear?,”
http://www.brookings.edu/views/articles/fellows/levi20030602.htm)
Realists counter that the United States needs Saudi oil and Saudi military bases. But there's a less obvious argument for making
sure the long-standing Washington-Riyadh partnership doesn't fracture: If it does, the Saudis might well go nuclear.
Saudi Arabia could develop a nuclear arsenal relatively quickly. In the late '80s, Riyadh secretly purchased between 50 and 60
CSS-2 missiles from China. The missiles were advanced, each with a range of up to 3,500 kilometers and a payload capacity of up
to 2,500 kilograms. What concerned observers, though, was not so much these impressive capabilities but rather the missiles'
dismal accuracy. Mated to a conventional warhead, with a destructive radius of at most tens of meters, these CSS-2 missiles would
be useless—their explosives would miss the target. But the CSS-2 is perfect for delivering a nuclear weapon. The missile itself
may miss by a couple of kilometers, but, if the bomb's destructive radius is roughly as large, it will still destroy the target. The
CSS-2 purchase, analysts reasoned, was an indication that the Saudis were at least hedging in the nuclear direction.
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Russell 01 (Richard, Research Associate at the Institute for the Study of Diplomacy,
Georgetown University, “A Saudi Nuclear Option,” Survival, Summer, p. 77)
More broadly, the recognition of a Saudi nuclear deterrent would be a major blow against international proliferation regimes. The
global community would be forced to see that despite the best of intentions and efforts, the ‘nuclear genie’ will not be put back
into its bottle. The West and the United States will have to squarely face the fact that weapons of mass destruction and ballistic
missiles will be an ever-present reality of the post-Cold War world. Despite the arguments from some quarters that the
proliferation of nuclear weapons will enhance international security by bolstering deterrence and lessening the chances for inter-
state war prudent, statecraft would assume that deterrence in practice is unlikely to be as effective as envisioned in theory.32 The
United States should continue efforts to contain the spread of nuclear weapons, but, in the end, should recognise that nuclear
proliferation will occur and that nuclear deterrence is unlikely to be a perfect safeguard against inter-state war. The United States
and its allies must be prepared to deter and to fight, if need be, nuclear-armed adversaries. Ballistic-missile defences will
necessarily play a role in the calculus, notwithstanding reservations about them within the transatlantic community.
Muller 00 (Harald, Director of Peace Research Institute—Frankfurt + Prof of Int'l Relations @ Goethe University, "Compliance
Politics: A Critical Analysis of Multilateral Arms Control Treaty Enforcement," Nonproliferation Review, Summer, p. 78)
At the global level, arms limitation or prohibition agreements, notably in the field of weapons of mass destruction, are needed to
ban existential dangers for global stability, ecological safety, and maybe the very survival of human life on earth. In an age of
increasing interdependence and ensuing complex networks that support the satisfaction of basic needs, international cooperation is
needed to secure the smooth working of these networks. Arms control can create underlying conditions of security and stability
that reduce distrust and enable countries to commit themselves to far-reaching cooperation in other sectors without perceiving
undesirable risks to their national security.
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Russell 1/5/04 (Richard, adjunct assistant professor in the Security Studies Program at Georgetown University, Wash Times)
The Saudis have a pool of strategic interests that likely put them at odds with American counterproliferation policy. Riyadh's major
regional rivals are capable, or soon will be, of threatening the Saudi kingdom with nuclear brinkmanship; Israel has the most
formidable nuclear weapons capabilities in the region; Iran appears bent on acquiring nuclear weapons; and Iraq might resurrect a
nuclear weapons program after the Americans depart Baghdad. The Saudi royals might also worry that the United States could
become a threat to the kingdom. The Saudis, for example, might consider a scenario in which relations between Riyadh and
Washington deteriorate into conflict over the methods and means to combat al Qaeda. The Saudis realize that their conventional
military capabilities-notwithstanding their modern weapons inventories-would be hard-pressed to defend against the larger military
manpower pools in Iran or Iraq or against the sophisticated technological capabilities of the Israeli or the American militaries. In
short, the Saudis would be strategically sensible to look to nuclear weapons as a potential "quick fix" to keep rivals at bay.
The Saudis already have in place a foundation for building a nuclear weapons deterrent. In the mid-1980s, they clandestinely
negotiated the purchase of about 50 to 60 Chinese CSS-2 missiles. The Chinese and Saudis were able to complete the deal before
American intelligence was wise to the relationship. The Saudis paid handsomely, with about $3 billion to $3.5 billion dollars for
the Chinese missiles capable of reaching up to about 4,000 kilometers [2,500 miles]. The CSS-2s had been armed with nuclear
warheads when they were operational in the Chinese force structure, but Riyadh and Beijing claim that the missiles delivered to
Saudi Arabia were armed with conventional warheads and rebuffed U.S. requests to inspect the missiles. The CSS-2 missiles,
however, are too inaccurate to be militarily effective with conventional munitions, but more than accurate enough for the delivery
of nuclear weapons. It is well past time for Washington to renew calls for independent inspection of the Saudi missiles to ensure
that they are armed as the Chinese and Saudis claim, and that ballistic missile modernization efforts are not underway.
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Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html)
I also think that Americans don’t appreciate the difficulty of managing the US-Saudi bilateral relationship. This is really
hard to do. It’s hard because our systems are extraordinarily different and because there are many things we don’t agree
on. But none of those differences or disagreements negate the first part that this is a very important relationship. That’s a hard balance to maintain,
both understanding the importance, but appreciating the difficulty of keeping this on track.
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Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html)
Alterman: There are two issues. First I don’t think people appreciate how much we do with Saudi Arabia. It’s just not understanding the
importance of Saudi Arabia to the U.S. in a myriad of ways. It’s not just energy. It’s not just security. It comes to economic issues,
counterterrorism issues, regional diplomacy issues. There’s a centrality and importance to Saudi Arabia that I think most Americans don’t have an
appreciation for.
Energy doesn’t control the US-Saudi relationship AND there are considerable differences on both
sides
Alterman 5/22/08 (Jon, Director of Middle East Program @ CSIS, "Understanding Saudi-US Relations: A Conversation with
Jon Alterman," http://www.saudi-us-relations.org/articles/2008/interviews/080521-alterman-interview.html)
Jon B. Alterman: What’s striking is just how rich the US-Saudi relationship is. It’s not just an energy relationship. It’s not just a
security relationship. It has to do with virtually everything the U.S. does in the Middle East. The relationship has gone from being a
comfortable relationship to one with considerable sensitivities on both sides, and many more sensitivities in public than officials
have in private.
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CBC News 5/16/08 ("Saudi Arabia announces small boost in oil production," http://www.cbc.ca/world/story/2008/05/16/bush-
saudi.html)
Bush's Saudi stop was intended, in part, to celebrate 75 years of formal U.S.-Saudi relations and strengthen ties that, once strong,
have frayed over the perception Washington favours Israel too much in the dispute with the Palestinians, the Iraq war and the
Sept. 11, 2001 attacks. Fifteen of the 19 airline hijackers were Saudis, and Americans blamed Saudis for allowing the religious extremism that gave rise to
them.
Loven 5/16/08 (Jennifer, Associated Press, "Bush, Saudis to discuss soaring gas prices,"
http://ap.google.com/article/ALeqM5hkf--m78S6F3LZAcz4sVHGGCQSTgD90MKBIO0)
Jon Alterman, director of the CSIS' Middle East program, said the Saudis, with a public that doesn't like Bush and a ruling
monarchy with growing interests elsewhere, are not likely "to put themselves out to help this president."
"The Saudis don't have an alternative to keeping the U.S. in its corner, but their reliance on the United States, their confidence in the United
States is extremely shaken," Alterman said.
US-Saudi relations are fraying now—high oil prices, Iraq war, Palestinian issue
Richter 6/8/08 (Paul, Staff, LA Times, "New forces fraying U.S.-Saudi oil ties,"
http://www.latimes.com/news/nationworld/washingtondc/la-fg-ussaudi8-2008jun08,0,4762521,print.story)
WASHINGTON — For decades, Saudi Arabia worked with its dominant customer, the United States, to keep world oil markets
stable and advance common political goals.
But the surging price of oil, which soared more than $10 a barrel Friday to a record-high $138.54, has made it plain that those days are over.
New forces, including a weak dollar and an oil-thirsty Asia, have blunted the United States' leverage and helped sour the two
countries' relationship.
As gasoline prices have risen, the White House has unsuccessfully exhorted the Saudis to step up production, and Congress has
threatened retaliation. But the situation now is a far cry from the days when the U.S. economy dominated the direction of the petroleum market.
"That gave us leverage," said Greg Priddy, an oil analyst at the Eurasia Group, a New York-based risk assessment firm. "There's certainly a perception that the
power equation has changed."
The weakening of the economic relationship comes when the vital U.S.-Saudi security relationship also has been fraying.
In the 1980s, the U.S.-Saudi bond that kept oil prices low was credited with helping weaken the Soviet Union during the waning days of the Cold War. And it
helped keep markets stable after Iraq's 1990 invasion of Kuwait.
But the Saudi government has been dismayed by the consequences of the war in Iraq and by what it sees as a weak Bush
administration commitment to the Palestinians.
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