Geography appears to have destined Canada and the United States to share the largest bilateral trade relationship in the world. Three trends, however, appear to be tearing apart the vital interests of these two countries.
First is the increasing multipolarity of international relations. The economic and geopolitical rise of emerging economies makes it impossible to ignore countries such as China, India and Brazil. With the United States in a relative economic decline, it would seem to make little sense for Canada to tie its economy exclusively to the United States. In other words, Canada will be seeking to increase exports to China at a time when the United States may feel threatened by Beijing’s rise.
Second come the effects of environmental change on the Canadian Arctic, causing the thaw of the Northwest Passage and leaving Canadian interests increasingly vulnerable. This strait significantly reduces the distance between the American northeast and Asian markets, while the Arctic is a known jackpot when it comes to oil resources. Canada’s military vulnerability is likely to result in a rapprochement between Ottawa and Moscow, the latter being a strategic opponent of Washington’s in regions such as Central Asia and the Middle East.
Third, the United States is set to become energy independent by 2020, according to the International Energy Agency, in no small part thanks to its immense reserves of shale oil both in its east and west. The United States, Ottawa’s most reliable recipient of its crude, will no longer compelled to treat Canada as being of vital necessity, forcing Canada to find new (read: Asian) markets for its oil exports.
Furthermore, America’s newfound reserves of oil may allow Washington to pocket more revenue, but increased global supply is bad news for Canada’s oil producers. Simply put, there is too much oil situated within Canada’s borders for its small population to consume. Therefore, Canada must be an oil exporter. But because the Canadian economy is relatively small, there is insufficient capital in Canada’s economy to develop and export its oil resources making foreign direct investment a requirement.
Canada will be unable to end its economic dependence upon the United States, as it is more efficient to sell goods to the most accessible and largest markets. For this very reason, Canada’s interests are slowly diverging from those of the United States and this is likely to increase tensions between Ottawa and Washington.
Through a free trade agreement that was a watershed moment in Canadian history, however, Canada tied its economy to that of the United States more strongly than ever. NAFTA in the 1990s could do little to change what had already been established in 1989 between Canada and the United States and, in any event, the gravity rule in international trade stipulates that countries will trade with those economies that are largest or most proximate - and in both cases for Canada, this is the United States. As a result, nearly all Canadian energy exports are now destined for the United States.
The strategic alliance between Canada and the United States is too important to both countries for either one to bear losing. Each country is the other’s largest trading partner. Canada depends on the United States for geopolitical security, whereas the latter relies on the former’s help in achieving economic stability. The perimeter security deal being implemented between the two countries, which enhances security cooperation between them in order to expedite the flow of trade across the 49th parallel, is a step in the right direction. Yet a grander strategy will have to be devised in order to make sure that Ottawa and Washington remain best friends. That which is not valued is often lost.
That strategy will be outlined in my next article.
[co-author Admiral Leon Edney, USN (ret.) is a member of JINSA's Board of Advisors.]
subhead: Israel must be less coy about its own nuclear capabilities
U.S. News & World Report
By LOUIS RENÉ BERES, LEON (BUD) EDNEY
February 11, 2013
Louis René Beres was chair of Project Daniel in Israel, is a professor of Political Science and International Law at Purdue, and is the author of many major books and articles on nuclear strategy and nuclear war. Admiral Leon “Bud” Edney served as vice chief of Naval Operations; NATO Supreme Allied Commander, Atlantic; and commander in chief of U.S. Atlantic Command. Admiral Edney, who holds an advanced degree from Harvard, was also distinguished professor of Leadership at the U.S. Naval Academy.
A core element of Israel’s nuclear posture has always been “deliberate ambiguity,” or the so-called “bomb in the basement.” To date this policy has made eminently good sense. After all, both friends and enemies of the Jewish state now recognize that Israel possesses significant nuclear capabilities that are (1) survivable; and (2) capable of penetrating any determined enemy’s active defenses.
Further, Israel’s nuclear arsenal is plainly governed by a very sophisticated command/control system, and by a carefully conceived targeting doctrine. So, why rock the boat?
To read the rest of the article, click here.
by Roger Aronoff, FamilySecurityMatters.org Contributing Editor
This week [Dec.3] I attended an annual event put on by the Jewish Institute for National Security Affairs (JINSA), which honored six young military heroes. The six represented each of the five branches of the U.S. military and the U.S. Special Operations Command. They were honored “for having distinguished themselves through superior conduct in the War on Terrorism,” and each received a Grateful Nation Award from JINSA. JINSA is a Washington-based think tank that focuses on issues of the U.S. and Israel in national security.
The honoree of the evening was Sen. Lindsey Graham (R-SC), who was awarded the 30th Annual Henry M. Jackson Distinguished Service Award. Graham serves on the Senate Appropriations, Armed Services, Budget and Judiciary Committees. He has long been a strong advocate for the men and women of the armed services. Sen. Graham served in the Air Force for six and a half years before he first won a seat in the House of Representatives in 1994. He served as a Staff Judge Advocate during the first Gulf War, and continues to serve in the U.S. Air Force Reserves. Graham is a colonel in the Reserves, and is assigned as a Senior Instructor at the Air Force JAG School. Graham, who was introduced by a previous recipient (1997) of the Scoop Jackson Award, outgoing Senator Joseph Lieberman, reminded the audience that Congress continues to have Israel’s back. You can view all of the past recipients and the history of the award here.
To continue reading this article, click HERE.
Peter Huessy, the founder and president of the defense consulting firm GeoStrategic Analysis and a Visiting Fellow at JINSA, addressed the JINSA co-sponsored symposium on “New Technologies for the U.S. Army: Future Prospects and Policy Implications,” October 18, 2012 in Washington, DC.
The following are his edited remarks.
I want to thank JINSA and the Reserve Officers Association for their sponsorship of this event. What I’m going to talk to you about is the future of Army missile defense technology. And first I want to talk to you a little bit about the threat. I’m going to talk about these five points that I believe are the key threats, some of which the Army has laid out in testimony on Capitol Hill.
One, we have to preserve key capabilities.
Two, we have to understand the missile threats in relation to geography.
Three, we have to understand the nature of the threat we face. It is what Ahmad Shah Massoud, the former head of the Northern Alliance in Afghanistan, called a “poisonous coalition,” and that coalition consists of the terror affiliates and the terror states, and their supporters, many of which are now possessing and using missiles of all ranges.
Four, I will discuss the Army view of things; the Army and missile defense policy and role; and the threat environment; and what are the concerns of the Senate and House Armed Services Committees.
Five, I will speak about two Army technologies and future capabilities, including JLENS, and the High Energy Laser Mobile Demonstrator, that you might find of interest.
Let me start with the Congressional committees. This is a very important point, and it was made back in 1986 as well, and that was, the committee report said, do the utmost to preserve key capabilities in times of fiscal austerity.
One of the things preserved from the 1980s and 1990s drawdowns was the technology related to the Joint Direct Attack Munition (JDAM). As you know, in the 1991 Gulf War JDAMS and smart bombs made up only a small percent of all munitions. By the time of the war in Afghanistan and the war in Iraq, I believe close to 90 percent of everything we used were guided munitions similar to JDAM. And that’s the point here.
There’s a new book out, The Curse of Geography, by Robert Kaplan. In a Wall Street Journal op-ed back on the 14th of October of this year, Kaplan wrote, “Countries that make up the heartland and rim lands,” which is basically Central Asia, writ large, “are locked in a deathly geographical embrace of overlapping missile ranges.” I think it’s an extraordinarily interesting way of talking about what we are facing in the world.
And I urge you to get his book and read it because, as Kaplan was quoted back in 2006 in a Wall Street Journal article by Bret Stephens, “The United States is behind the power curve when it comes to post-launch.” It’s an interesting way of talking about missile launches. And, at that time, as you know, we were just in the process of deploying what are now over 1,000 ballistic missile interceptors of all kinds.
[The enemy is] Pakistani and Arab intelligence agencies; impoverished young students bused to their death as volunteer fighters from Pakistani religious schools; exiled Central Asian Islamic radicals trying to establish bases in Afghanistan for their revolutionary movements; and wealthy sheikhs and preachers who jetted in from the Persian Gulf with money, supplies, and inspiration.
- Northern Alliance leader Ahmad Shah Massoud
When it comes to the nature of the threat, I previously mentioned Ahmad Shah Massoud, who was a Northern Alliance leader murdered two days before 9/11. Massoud had a good read on what we would be facing in Afghanistan. His description of the enemy I cite here comes from the book, Ghost Wars, by Steven Coll:
A poisonous coalition: Pakistani and Arab intelligence agencies; impoverished young students bused to their death as volunteer fighters from Pakistani religious schools; exiled Central Asian Islamic radicals trying to establish bases in Afghanistan for their revolutionary movements; and wealthy sheikhs and preachers who jetted in from the Persian Gulf with money, supplies, and inspiration.
I think it is the single most important statement ever made in terms of for us understanding terrorism.
We’re talking about a coalition of not only states and intelligence services and militaries, but as you can see here, “impoverished young students bused to their deaths as volunteer fighters from Pakistani religious schools; exiled Central Asian Islamic radicals.”
If you remember, Benghazi was the source of more fighters in Iraq, coming through the Damascus airport, and then through the ratlines into Iraq to kill Americans and fellow Iraqi Muslims, than any other place on the globe. And yet, we often assumed those who were fighting in Iraq were in-country insurgents. We were told they were all locally grown because they didn’t like the presence of the “crusaders,” meaning the United States.
They were coming from many places, which tells you this was also organized outside Iraq. They were coming from Iran and Libya, primarily, and they were coming through Syria. As the Iraqi government said over and over again – they would write the Syrian government and request that the ratlines be shut down. And Syria would ignore them. And the U.S. government would respond that the issue is between the two governments.
The “surge” in Iraq was the response to the fact these ratlines were sending thousands and thousands of jihadis into Iraq. That is what we’re facing even now. The Arab Spring turned into an opportunity for the forces of freedom to gain power or the forces of totalitarianism. I think the latter are winning.
I also want to point out that there are other countries that are not Islamic that are part of this coalition. In 2009, Robert Morgenthau, then the attorney for the City of New York, indicted two Chinese companies for helping Iran with ballistic missile and nuclear technology transfers.
And this is what’s key, Morgenthau did not say nuclear energy. The indictment, according to Morgenthau, lists “nuclear weapons technology.” Most of the headlines in much of the media report that Iran is not seeking a nuclear weapon. Then why were these two Chinese companies indicted for supplying the very technology that you use to build a nuclear bomb?
Also in 2009, Larry Kudlow interviewed Morgenthau. In that fascinating interview it was discussed how Venezuela, Iran, and China, are working together. And I urge you to go and look up the Wall Street Journal op-ed.
For a class that I taught at the National Intelligence University as a guest lecturer on nuclear terrorism, I wrote the following:
Once we recognize that terrorism is a tool of state-craft, used by governments, intelligence services, militaries and other state entities, we can see al-Qaeda, Hezbollah, Hamas, Abu Sayef, FARC, and ELN for who they are: tools of our mortal enemies rather than as reform seeking jihadis or guerrillas looking to redress historical grievances. And terrorism, just like in the Cold War, is the most convenient weapon for governments precisely because it breaks the string of attribution that would otherwise make retaliation and deterrence possible.
Terrorism is the most convenient weapon for governments precisely because it breaks the string of attribution that would otherwise make retaliation and deterrence possible.
Why is terrorism used today? It allows states not to have anything attributed to them. And missiles happen to be one of the primary means of using or threatening the use of force, whether it’s Hamas or Hezbollah or the Taliban or al-Qaeda, as you’ve seen through all of North Africa and the Middle East. Missiles, as the former head of Israel’s Missile Defense Organization Uzi Rubin has pointed out, are the coin of the realm when it comes to these countries.
Robert Kaplan says the same thing. He says if you take every country from North Korea across the southern rim through India, Pakistan, all through the Middle East and North Africa, the one commonality in the defense establishments of these countries is the deployment and purchase and production of ballistic missiles, cruise missiles, short- and long-range. And that is the commonality of these folks.
We often hear about the Haqqani network or Taliban or al-Qaeda in Pakistan. And we’re told they’re in the Federally Administered Tribal Areas as if there is no relationship between terror group and state entities.
They get help and sanctuary and weapons and money – apart from the heroin crop – from the Pakistani governmental intelligence agency ISI. And yet, we rarely hear that Pakistan is a state sponsor of terror and is basically sending Haqqani and al-Qaeda and Taliban fighters across the border to kill Afghanis, Pashtun tribesmen, and of course coalition soldiers including Americans.
So, with that background, it is enlightening to see the massive proliferation of missiles between 1990 and 2009. If you trace where many of these rockets and missiles come from, they often come from states, governments, particularly Russia, China, North Korea, and Iran. These rockets are going all over the world and they are the proliferation we face.
Now what is the U.S. Army’s view of this? They make a kind of interesting point. They say this is an era of “persistent conflict.”
The proliferation of weapons technology includes missiles. There’s a rapid change in the arsenals. There are varied threats. They are aimed at population areas and areas as well with fixed military assets. They require the Army to be very maneuverable and have wide-area security, as opposed to just point defense.
And one of the most interesting things in the Army’s own document that recently came out on missile defense, was that the U.S. Army supports the U.S. Northern Command (NORTHCOM) to “detect, deter and prevent attacks,” against the continental United States. This gets into the issue of, who protects us: the Coast Guard, the Navy, the Army, Homeland Security, the FBI, police, first responders, which we haven’t made a very clear demarcation. And it’s one of the areas I’ll get into about some of the threats, where I see some of the emerging technologies being very helpful.
Terror groups are used by states to augment the state’s power to attack surreptitiously and without attribution, which makes deterrence very difficult.
The Army also sees global threats from “empowered non-state actors.” That’s a quote. I would turn it around. The terror groups empower terror master states and vice versa. My view is that terror groups are used by states to augment the state’s power to be able to attack surreptitiously and without attribution, which makes deterrence very difficult.
And even in the case of Hamas and Hezbollah, where their rockets rain down on Israel. I don’t know if any of you have been in Israel and have been to Sderot or Ashkelon. When I was there last, in Sderot, the police chief showed me a large shed filled with nothing but the parts of hundreds of rockets that had been launched from Gaza.
And you can see the rockets were made in all different sizes and shapes, all different technologies and talent. Some of them looked like they’d been made in your backyard. Some of them looked like they are more sophisticated with help from places like China and Iran.
But what’s interesting is these rockets often are fired by Hamas from Gaza. And the schoolyard, for example, which is a popular target of Hamas, the children no longer go to school there. The school is empty. The children go to school in private homes, which are much less able to be targeted. So, we are dealing with not only terrorism and coercion and blackmail, but also criminality and regular and irregular warfare, says the Army.
And these are asymmetrical threats, include ballistic and cruise missiles and unmanned drones. As you noticed, Hezbollah launched a couple of drones over Israel, primarily to see, I think, what the Israelis would do. And the Israelis shot it down. But, I think that was part of what you were seeing there. And whether the drone was produced by Iran or Syria, we’re not sure yet.
The Army needs systems that have a very fast decision time and without a single point of failure where if the enemy destroys one element the ability to see, sense and, hence, to intercept the incoming missiles is lost. Future systems should be joint and integrated with existing systems and must deal with the full range of air and missile threats.
And what’s interesting is that the Army says in Operation Iraqi Freedom we used 41 of 50 Patriot batteries deployed in seven countries. And today, we have seven of our 50 Patriot batteries and three of our three AN/TPY-2 radars that are deployed. And the Army then concluded that, in their view, there are three key areas in which this threat is very, very serious: the Korean peninsula and North Korea, the Persian Gulf, and the maritime environment. The Army said that maritime areas, particularly those where American forces are, but also the continental United States.
The Army needs systems that have a very fast decision time and without a single point of failure where if the enemy destroys one element the ability to see, sense and, hence, to intercept the incoming missiles is lost. Future systems should be joint and integrated with existing systems and must deal with the full range of air and missile threats.
Now what about Congress? I went through the House and Senate Armed Services Committee reports and this is what they suggested we do – buy more AN/TPY-2 radars.
See, it would be beneficial to share kill vehicles - the maneuvering warhead that actually intercepts the incoming missile – between the Navy’s Aegis system and the Army’s Ground-Based Midcourse Defense. Two committees said deploy an East Coast defense, which the House Armed Services Committee said could be the Standard Missile 1A or 1B, though there is no reason it cannot be the Standard Missile2Block III-B. It could be two- or three-stage Ground Based Interceptors (GBI). The committee estimated the cost to be between $1.2 and $3.6 billion. [Ed. Note: There is no reason such a deployment cannot be a compliment to the planned deployment of Standard Missiles in Europe for the purpose of defending the United States east coast and our NATO partners from Iranian missiles].
The House Armed Services Committee also said that GBI should be sustained, enhanced and upgraded, what they called “well-hedged.” The committee said that there’s a highly inadequate testing pace, that the two most important things to achieve are discrimination and kill assessment. And, finally, the committee reported that, given the pivot to Asia, there is particular interest in the Standard Missile and its applicability to the Pacific.
Also mentioned were the Israeli missile defense systems Iron Dome, David’s Sling, and Arrow – both issues of co-production as well as make an emphasis that the systems in Israel defend against specific threats from a particular geographic area that is known, as opposed to what the Army is looking at is 360-degree coverage in any place on globe.
Additionally, the committee was looking at how to achieve long-term modernization of Patriot through 2025, emphasizing the insertion of technology and what was referred to as “harvesting” technology improvements.
One of the assumptions is that Iran is not yet a threat to the United States because they have not built a nuclear warhead – that we know of. And that Iran has no delivery vehicle or an ICBM to attack the United States if launched from Iranian soil.
If you remember the threat reports from the CIA to President Clinton in 1997, which became the basis of the famous August 2001 threat assessment, is that al-Qaeda was interested in hijacking airplanes. And the assumption was they were going to hijack airplanes overseas and use them as bait or ransom to get back prisoners, which they have done historically. The PLO practically invented that.
And that was true. That’s what hijackers have always done, until they didn’t. They flew the airplanes into buildings. And so my view is, interestingly, it took America how long to figure out that airplanes can become missiles? In a matter of minutes that morning, for the folks over Pennsylvania who took down that airplane because they understood the terrorists weren’t hijacking the airplane in order to have a prisoner swap anymore.
And so it is with missiles. That people assume that there’s always a return address for an attack and therefore deterrence will work, always fascinates me. Yes, there is a return address until there isn’t one! Until, of course, rockets are either launched from the ocean or from crowded urban settings. It’s interesting. We know where the rockets come from in Gaza. We know they come from Hezbollah in Lebanon. But, does that deter them from launching them? No. In short, we have a return address, which is problematical because they hide the rocket launchers in the midst of civilian urban populations in order to deter counter strikes.
And if the attack comes out from the ocean, which is my worry about Iran, then the question is, when it does happen, will we know where it comes from? Will we know the freighter from which the missiles were launched? Maybe. It could be sunk. But how do we know who the patron of the attack is? And, so the question is, the deterrence connection in terms of attribution breaks down.
The Russian Club K cruise missile system is a missile launcher that looks like a standard shipping container like you see stacked on freighters at sea and in all the ports of the world. They open up and an erector pops up and the cruise missile shoots out of it. And they are relatively cheap. The Russian government says it has no intention of selling this system to any bad guys.
What future specific technology might assist to deal with this threat? There is a system called JLENS. It’s the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System. It has completed two tests, April 25 and September 21, where it demonstrated the ability to work with both Navy and Army systems, specifically the Patriot and the Standard Missile 6 (SM-6). The SM-6 mates the legacy Standard Missile airframe and propulsion elements with the advanced signal processing and guidance control capabilities of the Advanced Medium-Range Air-to-Air Missile (AMRAAM).
JLENS is a pair of tethered aerostats carrying aloft highly accurate long distance radars. You could have two systems deployed over the Persian Gulf. You could deploy one over the Korean peninsula. You’d have a 550 kilometer 360 degree coverage.
JLENS can detect missiles, aircraft, and ships. It also can detect swarming small boats, which is one of the problems we’re facing in the Persian Gulf from Iran. And the fire control radar is integrated with a whole host of systems, both Army and Air Force, as well as Navy.
And what’s interesting is that JLENS can see over the horizon, which is, I think, critical. It can track low flying cruise missiles, 24/7, 360 degrees. The aerostats are tethered to a fuel supply so the weight of the JLENS is very little, compared to other technologies.
The area that [the commander of U.S. Pacific Command] wants to protect from ballistic missiles is not just the Straits of Hormuz, but also the Malacca Straits. Far more trade and oil traffic goes through the Straits of Malacca than Hormuz yet piracy from the coast of Somalia has now reached this key region east of India.
One of the points the Army made it that the system would give U.S. commanders the capability to engage threats such as road mobile short-range missile launchers to shipping in strategic waterways. And what’s interesting is yesterday the head of U.S. Pacific Command (PACOM), who spoke at the conference down in Eglin Air Force Base, said the area that he wants to protect from ballistic missiles is not just the Straits of Hormuz, but also the Malacca Straits. Far more trade and oil traffic goes through the Straits of Malacca than Hormuz yet piracy from the coast of Somalia has now reached this key region east of India.
And if you’ve ever seen it, you have to go north towards Singapore and then down through this area of over hundreds of kilometers, and then back up through Java and then into the Pacific. That area is now becoming a hotbed of what off the coast of Somalia we saw six years ago, which is piracy, 90 percent of which is commercial.
These pirates have law firms that they have contracted with, which will call up the ship owners and say this is what the ransom is. You can wire it to this bank account, which is done on a regular basis.
I think 10 percent of the piracy is political. One expert says you have to understand the pirates of Somalia are not pirates. They’re not sailors. They’re desert tribesmen. And they see tankers as nothing more than lost camels at sea. So it makes a lot of sense, given the tradition, of grabbing those things because they’re not owned by anybody except for whoever owns that portion of the desert or, in this case, the oceans.
Could JLENS help deal with an EMP threat? Could it help with a missile launched 300 to 500 kilometers off our coast in an EMP mode?
And I want to tell a story that occurred back in 1999. Twelve members of the House Armed Services Committee, six Democrats and six Republicans, met with Russian officials in Vienna. They were talking about Kosovo. The Russians were not happy about what was going on, as many of you know.
And the senior Russian leader at the meeting had said nothing over the entire day’s meeting. And Congressman Curt Weldon asked the individual if he would like to say something. And he said, “Yes, you’ve treated us terribly since the end of the Cold War. We live in tents. We have no money. We’re trading vodka and potatoes for food.” And then he said, “Just remember, we can launch a missile from a submarine off your coast. You will not know what happened. And we can explode a warhead 70 to 100 miles above your country and it will generate an electro-magnetic pulse (EMP) that will kill tens of millions of your people, and you won’t know what happened.
And he spoke that in Russian, and Curt then translated it for the other 11 members of the House Armed Services Committee, at which point most turned white. Congressman Roscoe Bartlett, who was one of the participants in the meeting, said right after they got that bad news the individual’s deputy said, “If that one doesn’t work we have plenty of spares.”
Interestingly, the House then two years ago passed what’s called the Grid Protection Act. Rep. Yvette Clarke from New York, Rep. Trent Franks from Arizona, Rep. Roscoe Bartlett from Maryland, and Rep. Bennie Thompson from Mississippi – two Democrats and two Republicans – got this bill passed unanimously. It has even been brought up in the Senate. But it was to protect America’s electric grid against an EMP. But you could help do this with missile defense with JLENS because it would give you that wide area view of the oceans and protect us.
I think it’s pretty important that the Army sees these emerging threats. It’s very similar to what’s going on with Iran. Iran, as you know, has tested in an EMP mode, rockets launched in the Caspian off a barge, and they also did it in the Indian Ocean. And they exploded it 70 miles above the earth’s surface.
And our intelligence community said that must have been a failure. The Air Force said no. When they testified and gave the information to the Rumsfeld Commission, they said no, it wasn’t a failure. This was an EMP-mode test.
It has been reported and was included in Morgenthau’s brief that Iran is helping build ballistic missile bases in Venezuela. And it just so happens that the Iranian Shahab-3 ballistic missile, if launched from Venezuela, can reach Miami, some 2,000 kilometers distant.
And so, you put two and two together.
When I look at the major key requirements for what the Army says it needs in the Persian Gulf, the Korean peninsula and maritime protection, JLENS fits the bill exactly. And it is ready to go. They need to do a real world test that they’ve done in this country, with the Navy and the Army elements.
My plea is for those of you to take a look at this, even in an era of downsizing and reduction in the defense budget, this is a technology that ten years from now when it’s deployed, I hope, we will look back and say thanks, I’m really glad we sustained it and maintained it and produced it.
Thank you all.
Journal of International Security Affairs author David P. Goldman, now a JINSA Fellow, just posted an update to his outstanding article, Egypt’s Perfect Economic Storm. Carried by PJ Media, Egypt Food Crisis Update provides the latest information on the disaster facing the Morsi government.
“Government on alert as wheat crisis looms” was the headline in today’s Egyptian Gazette. Ahmed Kamel writes:
As wheat prices shoot up worldwide, Egypt, the world’s top grain importer, is squeezed between price hikes and growing demand. There are 2.9 million tonnes of grain reserves, enough to cover 117 days, Abu Zeid Mohamed Abu Zeid, Minister of Supply and Home Trade, was quoted by local media as saying when commenting on the possibility that Ukraine could ban grain exports.
Last June, the government claimed to have 4.7 million tonnes of wheat, or six months’ supply. It appears that Egypt has been running on reserves and failing to replenish stockpiles, mainly because the country remains desperately short of foreign exchange. A chronic shortage of diesel fuel and electricity, as well as shortages of vaccines for children, has plagued the Egyptian economy for the past year. The butane cylinders with which most Egyptians cook are in short supply, and the black market price has risen to ten times the subsidized official price. Egypt is billions of dollars in arrears to suppliers of diesel, butane, foodstuffs and other essential imports.
By Terry Glavin
A bid by a massive Chinese government-owned energy conglomerate for one of Canada’s largest energy extraction companies threatens to radically undermine U.S.-led sanctions on Iran.
Lost in the dust-up over the Obama administration’s decision to delay approval of a portion of the Keystone XL pipeline from the Alberta oil patch to the Texas Gulf coast, in July the China National Offshore Oil Corporation (CNOOC) tendered a jaw-dropping $15.1 billion for the $6.5 billion Calgary-based Nexen Inc., a major Canadian energy extraction firm with holdings in Alberta, the Gulf of Mexico, the North Sea and elsewhere. Few in Washington are paying attention to the national security implications.
Canada’s official review of the CNOOC bid is expected to conclude next month. Because of Nexen’s minor American holdings, the White House also has to approve the deal. No Chinese government entity has attempted anything as audacious as this since CNOOC’s failed 2005 attempt to devour Unocal for $18.5 billion.
The Oil and Gas Journal puts Canada’s crude oil reserves at 173 billion barrels, ranking behind only Saudi Arabia and Venezuela. Almost all that oil comes in the form of bitumen, in Alberta’s oil sands. Canada’s National Energy Board reckons bitumen production will triple over the next 25 years and crude oil available for export will more than triple. Canada’s Conservative government intends to exceed even those expectations, and Ottawa knows full well it will need Beijing’s money to make that happen.
The CNOOC jumble should be understood in light of a dangerous confabulation making the rounds in Canada and the United States, which goes something like so: The American-led campaign of sanctions on the oil-rich Khomeinist regime in Iran is posing an effective encumbrance upon the ayatollahs’ efforts to acquire nuclear-weapons capability; thus, any Israeli consideration of unilateral military action against Tehran is just crazy talk.
The most obvious fly in that ointment is that Tehran hasn’t stopped trying, and sanctions aren’t biting. The Obama administration has issued Iran-sanctions oil waivers to Japan, India, Taiwan, Turkey, Malaysia, South Africa, ten European countries, Sri Lanka, South Korea, and to China. If it seems a mystery that American sanctions aren’t making any difference, it shouldn’t. The main reason is Beijing. China is Iran’s main trading partner. Beijing is Tehran’s biggest oil buyer. Oil is the Tehran regime’s main source of revenue.
If it seems a mystery that American sanctions aren’t making any difference, it shouldn’t. The main reason is Beijing. China is Iran’s main trading partner. Beijing is Tehran’s biggest oil buyer. Oil is the Tehran regime’s main source of revenue.
CNOOC’s Nexen bid has even ended up contributing to another urban legend making the rounds – the one that would have us believe that Obama is recklessly disregarding his oil-rich Canadian suitors. But the hard truth of it is that Canada decided to grant Beijing the privilege of developing Alberta’s oil sands years before Obama’s non-decision on Keystone. Ottawa has given fervent and concurrent support for the proposed $6 billion Enbridge Inc. pipeline from Alberta to Canada’s west coast. Prime Minister Harper has called the Enbridge plan Canada’s gateway to energy prosperity in Asia, even though Enbridge is all about multi-billion-dollar intimacies with the same Chinese state-owned enterprises that are Tehran’s gateway to a nuclear bomb.
Inconveniently for everyone concerned, what all this is likely to mean is that the splendid Canadian oil that Americans are expected to buy will have to be purchased from Beijing-owned multinationals that also happen to be deeply embedded in Tehran’s secrecy-shrouded energy sector, which could fatally weaken North American and European sanctions.
Before its way-above-market bid for Nexen Inc., CNOOC Ltd. was already entrenched in Canada’s oil patch while its parent company, the CNOOC Group, was pursuing arrangements with Tehran to develop Iran’s North Pars gas fields. Petro-China is doing a roaring business in Alberta while a sister subsidiary is attending to multi-billion-dollar arrangements with the National Iranian Gas Export Company. Sinopec (the China Petroleum and Chemical Corp.), Iran’s biggest oil customer, took possession of a $4.65 billion veto-holding position on the board of Canadian oil sands giant Syncrude before the Keystone pipeline was much more than a glimmer in Prime Minister Harper’s eye.
There are only two clear Canadian voices of opposition on the subject. One is Green Party leader Elizabeth May, who objects to China’s undemocratic and Tehran-bankrolling government exacerbating Canada’s already-overheated oil sands expansion (which will only further accelerate greenhouse gas emissions). The other is the former Canadian justice minister Irwin Cotler, a prominent international champion of the proposition that the way to avoid war with Iran is to enforce crippling sanctions against the Khomeinist regime. “To the extent that we’ve now got sanctions-violating companies here in Canada that are doing business in Iran, the implications are serious,” Cotler says. “They are very, very serious.” There are also members of Prime Minister Harper’s own cabinet who aren’t happy with any of this, but they’re not complaining in public.
Canada’s sanctions laws are easily evaded. There is nothing to stop Beijing from setting up one state subsidiary to do business in Calgary and another to do business in Tehran. And what to do when the United States doesn’t take its own ideas seriously? “You can do business with Tehran or with Texas” is the way American sanctions on Iran are supposed to work. But they’re not working that way.
The “unmistakable message” the Canadian government is giving the United States: “You’re yesterday, China is today, and if you want to do any oil business with us then you’ll have to be prepared to do business with the Canadian subsidiaries of Beijing’s overseas acquisitions arms, which also happen to be the most notorious Iran sanctions-busters in the world.”
“The Obama administration’s decision earlier this summer to exempt all 20 of Iran’s major oil customers from biting new sanctions has sent the unmistakable message to Asian nations that—despite the official bluster emanating out of the White House—it is still possible to do business with both Washington and Tehran simultaneously.” That’s how Iran expert Ilan Berman put it, writing in the Wall Street Journal.
And here’s the “unmistakable message” the Canadian government is giving the United States: “You’re yesterday, China is today, and if you want to do any oil business with us then you’ll have to be prepared to do business with the Canadian subsidiaries of Beijing’s overseas acquisitions arms, which also happen to be the most notorious Iran sanctions-busters in the world.”
Here’s how this state of affairs has come to pass. Before the crash of 2008, American demand for Canadian crude had already reached its peak. American markets were already taking more than 90 per cent of Canada’s oil exports – more than two million barrels a day, roughly double what it had been 20 years earlier. Canada is still the United States’ largest foreign oil supplier and the United States still takes the bulk of Canada’s production. But a technological revolution in hydrological fracturing and the sudden accessibility of huge domestic American shale oil deposits have further dampened U.S. appetites for Canadian crude.
For Canada, the “emerging economies” were always where the growth was going to be. India and China eclipse everything else. But Beijing has something more than merely a voracious appetite for energy: money.
Five years before the White House delayed its approval of TransCanada’s Keystone XL pipeline and two years before the crash of 2008, Canada’s Conservative government had already settled on a policy predicated on the obvious: the American economy isn’t big enough to accommodate any serious expansion of Canada’s oil sands. It will have to be Chinese markets, and it will have to be Beijing’s money. In fact, the whole point of the Keystone XL pipeline is to transport Canadian crude to energy terminals on the U.S. Gulf Coast for export to the world market and not to bring the price of gasoline down for American consumers.
The whole point of the Keystone XL pipeline is to transport Canadian crude to energy terminals on the U.S. Gulf Coast for export to the world market and not to bring the price of gasoline down for American consumers.
It was back in 2006 that Prime Minister Stephen Harper declared his intention to turn Canada into an “energy superpower.” It was going to take a lot of money to get all that bitumen out of the ground and it would take high oil prices to make the whole thing work. Conveniently, Beijing happened to be sitting on an immense pile of foreign-exchange reserves. The latest data suggests that Beijing holds about $1.73 trillion in U.S. securities alone.
Canada’s oil companies have been largely foreign-owned for decades, but since 2004, Beijing’s state-owned enterprises have been easily outpacing American companies in their investments in Canada’s oil sands. Petro-China, Sinopec, CNOOC and their sister corporations – all run by the Chinese Communist Party, which is adamantly opposed to U.S. led sanctions – have acquired at least $30 billion in Canadian energy-sector properties.
These takeovers include Canadian companies operating mainly overseas. The China National Petroleum Corporation got its hands around the throat of Petro-Kazakhstan by taking over a Canadian exploration company in 2005 – last December, the repression of a strike by Kazakh oil workers left 14 protestors dead. Sinopec Syria, which is a key means by which Bashar al-Assad finances his ongoing slaughter of Syrian rebels, gained its foothold in Syria’s Oudeh oilfields by purchasing a Canadian company for a mere $2 billion in 2008. And so on.
Beijing’s buying spree in Canada’s oil fields is a function of the “going out (zouchuqu) strategy” adopted by the Chinese Communist Party in 2000. CNOOC’s $15.1 billion bid for Nexen Inc. would be Beijing’s biggest takeover attempt to date. U.S. Democratic House leader Nancy Pelosi’s cautious expressions of concern about the deal contain far more gravitas than anything Prime Minister Harper’s ostensibly pro-American government has had to say on the subject.
Canadians and Americans are perfectly entitled to circulate amusing urban legends amongst themselves if that’s what it takes to make politics interesting. But if it’s a war with Iran we’d rather avoid and a nuclear-armed Khomeinist tyranny we’d prefer not to have to confront, the CNOOC-Nexen bid might present an opportunity to stop telling ourselves fairy tales and start getting serious for once about sanctions, and about Beijing.
Terry Glavin is a columnist with the Ottawa Citizen. His most recent book is Come From the Shadows: The Long and Lonely Struggle for Peace in Afghanistan (Douglas & McIntyre, 2011).
JINSA extends its heartfelt condolences to the families, friends, and loved ones of Ambassador Chris Stevens, Foreign Service Information Officer Sean Smith, former Navy SEAL Glen Doherty, and another American whose name has yet to be released who were murdered in Libya yesterday. This horrific attack evokes grief, sorrow, rage, and disgust. A country that was beginning to show promising signs for a brighter future following putatively free and fair elections now finds itself staring into the depths of evil, hatred, and the most insidious kind of intolerance. The United States supported the revolution and put its people at risk to protect the Libyans from a brutal murderer. It is our hope and expectation that the Libyan Government takes concrete action against those responsible for the attack to deter similar incidents in the future. It is the responsibility of our government to the families of our fallen diplomats to ensure that Tripoli takes all necessary measures.
By all accounts, Amb. Stevens loved Libya and it was with enthusiasm that he assumed the mantle of envoy to that country. It is a bitter irony that Amb. Stevens, an early champion of the Libyan revolution, was struck down by those for whose freedom he cared so deeply. In a short video introducing himself to the Libyan people, he states “I was thrilled to watch the Libyan people stand up and demand their rights.” We sincerely hope the Libyan people will stand up and demand justice for him.