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Sunday, February 04, 2007

U.S. Faces 'Axis of Oil'

U.S. interests over the next 25 years will be challenged by strategic and political consequences of ongoing structural shifts in global energy markets, especially the global oil market -- most notably, cooperation between China and Russia on energy matters, an expert has told lawmakers.

"Most notably, cooperation between China and Russia on energy matters is bolstering Sino-Russian cooperation on strategic issues, effectively creating a Sino-Russian 'axis of oil' as the principal counterweight to America’s global hegemony," says Flynt Leverett, a former senior analyst at the CIA and former senior director at the National Security Council.

Today Leverett is director of the Geopolitics of Oil initiative at the New America Foundation.

The global oil supply has grown steadily in recent years, and there is considerable evidence that it will continue to grow for many years to come, Leverett notes. However, global demand for crude oil has been growing faster than supply—particularly due to burgeoning energy demand from emerging economic powerhouses in Asia, particularly China and India.

The second important structural shift in the global oil market is the progressive concentration of the world’s oil reserves under the control of national governments and national oil companies, especially in the Middle East and the former Soviet Union, Leverett says.

"Taken together, these two trends are generating strategic and political responses on both the supply side and the demand side of the global oil market," he says.

The new axis of oil is also reflected in Sino-Russian cooperation to frustrate a significant segment of U.S. policy objectives regarding the Iranian nuclear issue, Leverett says.

"Both Russia and China have complicated policy agendas toward the Islamic Republic," he says. "To be sure, neither Moscow nor Beijing sees Iranian acquisition of a nuclear weapons capability as a Iran as a desirable turn of events. But both are prepared to tolerate a higher-level of Iranian nuclear development than the present U.S. administration. Moreover, each has other interests that it wants to pursue with Iran."

It is "intellectually and politically facile" to answer these challenges by simply advocating “energy independence” for the United States, according to Leverett.

"Unfortunately, this is not a serious response to the strategic challenges facing our country," he says. " Simply put, there is no economically plausible scenario for a strategically meaningful reduction in the dependence of the United States and its allies on imported hydrocarbons during the next quarter century. Reducing our dependence on domestically produced and imported hydrocarbons has many attractions as a policy goal, but we should have no illusions about how rapidly this can be achieved or how soon it can provide meaningful relief to the strategic challenges I have described."

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