Posts Tagged ‘Resources’

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Fighting over Crumbs

In Economics on August 5, 2010 by AEG Tagged: , , ,

The world has not recently experienced the sort of cutthroat national competition for natural resources that was a relatively common source of conflict during the long first era of industrialization from the mid-19th to the mid-20th Centuries. As Europe and the United States developed into industrial economies, their governments quickly recognized that secure supplies of those resources vital to maintaining growth had to be found. For the U.S., this was not a problem: the vast and barely-tapped resources of the young country kept industry well-supplied with virtually all it needed to continue production. European states, however, did not generally have the luxury of ample supplies of the raw material of industry within their borders; the result was a major impetus behind late-19th Century imperialism. European governments raced each other to secure every unclaimed corner of the globe, whether or not they knew what economic value it held. The competition for Southeast Asian rubber and West African palm oil, Egyptian cotton and Arabian oil to feed the machines became a race between states whose governments believed that they must continue to grow if they were to survive in the face of their ever-expanding rivals. The European imperial powers were moving toward a collective corner of industrial demand outstripping supply by the early decades of the 20th Century.

One might be inclined to wonder if the European leaders had ever heard of simply trading for what they required rather than going to such extravagant lengths to gather it themselves. Indeed, the years preceding the First World War saw global trade rapidly expanding, as ever-larger numbers of steamships moved cargoes around the world to the massive factories of Europe and the teeming markets of Asia, Africa, and South America. Yet even as trade was providing for unprecedented economic expansion, governments worried increasingly about the potential disaster that loomed over every industrialized state: What if our supplies are cut off? Scattered pessimists argued that nothing short of an economic cataclysm would befall them, while even the more numerous optimists understood that the increasingly perilous international diplomatic situation could erupt into war, though many of the latter argued that such a conflict would be short enough that shipping would not be seriously disrupted.

Rising international tension and increasing concern for economic security among the industrial powers were two sides of the same coin, and each fed into the other. While Britain considered the merits of “imperial preference,” a system designed to create a great interlocking economic network in an era of increasing pressure for autonomy among its various imperial holdings, Germany argued that it must be allowed to pursue its rightful “place in the sun” among the world’s great empires, as befitted such an economically powerful and dynamic state. But for each, along with France and Japan, and even the free-trading United States, there was the growing realization that the existing order could only survive as long as the sources of economic stability – natural resources and access to markets – remained secure. In order to do that, military and especially naval strength had to be maintained, strategically important territories acquired, and every effort made to render trade uninterruptible in the event of war or shortage.

As it happened, the privations of the First World War were largely the result of the war itself, not the cause of its outbreak. Yet the effects were clear long before they began to tell. The Allies imposed a naval blockade on the Central Powers design to deprive both their war machine and their industries of the things they needed to survive and triumph. The Central Powers sought to isolate the European Allies from the American market that increasingly kept them supplied with the raw materials and manufactured goods that allowed them to continue the struggle. The British North Sea blockade and the German submarine offensives were the most prominent of these efforts, and the former was far more successful than the latter; the result was economic disaster for Germany, leading to the end of the Kaiser’s regime in 1918, civil disorder, insurrection, and more than a decade of political and economic instability, with complete collapse only forestalled by infusions of American cash to keep the Weimar government afloat.

The lessons were clear: those states that were able to keep open their lines of supply to those things that allowed their economies to continue functioning during war were victorious; those that could not were destined for isolation and eventual defeat. It should have come as no surprise then that when the cycle repeated itself several decades later, the new rising powers of Germany and Japan felt they had little choice but to claw their way into the first rank of Powers by force if they were not to remain forever economically, and thus politically, inferior. There would be little point in developing their economies if they could not ensure that they could be protected; another British blockade of Germany, a reduction in American supplies to Japan would be all that was needed to render them immediately vulnerable. The First World War had shown that these threats were not idle speculation; industry and trade would be targeted directly, and total economic warfare was now something with which every industrial power had to reckon. The onset of the Depression in 1929 and the tariff war that broke out soon thereafter did nothing to assuage concern.

Securing the economic basis of the nation’s prosperity and power was among the foremost considerations of the interwar period for the rising powers. The status quo Powers were focused on maintaining the system as it existed; Britain had worked to focus on securing their overseas trade (though “imperial preference” did not materialize as state doctrine) and the United States was able to thrive for years with only domestic supplies of raw materials and an ever-expanding domestic marketplace (though this slowed considerably with the closing of the frontier in 1890). While not entirely self-sufficient, American and British (and to a lesser extent French) dominance of the global economy meant that their industries were relatively safe from international disruption. For the totalitarian states of the 1930s, however, the status quo meant perpetual weakness. Without directly challenging the Powers that controlled the world’s trade, there was little hope that they too could ensure their economic survival when it came under threat. They saw security in autarky, building empires that were beyond the reach of their rivals, empires that would stand the test of war.

Hitler saw both the strength and weakness of Germany in its continental position. In order to fulfill his vision of a secure Third Reich, he looked to establish a contiguous Eurasian empire, safe from the maritime dominance of the Royal Navy and the distant United States. The vast reaches of Soviet Russia held the key to Germany’s long-term economic security; Hitler viewed it as analogous to the way that the British looked to India as the cornerstone of their global empire (in Hitler’s own words, “Russia will be our India”), and drew heavily on American westward expansion in his conception as well. He knew that Germany must be able to feed its people, supply its factories and arm its soldiers if it were to resist the challenges that lay before it. Before colonization and settlement could occur, however, Germany’s continental rivals had to be eliminated as threats, and more vital resources secured. Only then could the building of a secure empire begin in earnest.

Japan, as an island state, held its naval strength as the first precondition of securing an empire that could feed its industry, but that introduced challenges of its own: a modern navy needed steel and oil in regular supply and prodigious quantities, neither of which Japan had. The push in to mainland Asia began early, with the Sino-Japanese War at the end of the 19th Century and the Russo-Japanese War in the first years of the 20th establishing Japan as the dominant regional power. But these were merely strategic maneuvers that facilitated acquisition of the the real prizes: the mineral and agricultural wealth of China. Beginning with the Manchuria Incident in 1931, and the invasion of China in 1937, Japan moved to actively secure access to the commodities increasingly vital to its industrial growth. The attack on the United States and Britain in December of 1941 was intended primarily to cover the drive to the south to secure the petroleum supplies of the Dutch East Indies, made all the more urgent by the disruption of oil supplies from America caused by the Roosevelt Administration’s increasing concern over Japan’s activities in China.

In both cases the conundrum is obvious: rising Powers must secure the resources they need to continue to grow, but in doing so they are very likely to threaten the interests of the existing Powers. This is particularly problematic in times of global economic difficulty, as well as when shortages of particularly important commodities loom. The Cold War saw very limited competition for most resources, and the peculiarity of the bipolar power structure rendered what competition there was relatively one-sided; for all the Western conflict with the Middle East during the Cold War, there was never any serious question as to which side was the more powerful, or that oil must continue to flow to Western markets. The self-imposed exclusion of the Soviet Union from much of the global economic system rendered inappropriate the experiences of traditional competitive relationships between Great Powers.

All that has changed. With the collapse of the Soviet Union, the end of the Cold War, and the rise of China and India, the resurgence of Russia, and even the (ponderous) movement toward an actually unified European Union, the competitive nature of the international system looks poised to return with a vengeance. The only truly status quo Power remaining is the United States, and it is far less economically secure than it once was. Meanwhile, China is acquiring huge mining concerns in Australia and investing in African oil and Russia is leveraging its ample energy supplies for political advantage. Conflicts over the mineral wealth of such obscure places as the Spratly Islands (claimed by several Southeast Asian states as well as China, and thought to have significant oil deposits) are beginning to emerge as points of tension. Rising middle classes in developing states will demand greater access to manufactured goods, increasing economic pressures on their own governments as well as demand for production, and thus raw materials. Global economic development is not without risk; indeed, history suggests that the movement of states toward economic parity with the leading Powers will invariably lead to conflict. In difficult times, when there are more parties competing for limited supplies and limited markets, the pressure for success may escalate quickly and dramatically, as the alternative is not seen as anything short of existential national defeat.

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Greater East Asian Co-Prosperity Sphere Redux? (Part Two)

In Economics on June 22, 2010 by AEG Tagged: , , , ,

As noted in Part One of this topic, the rise of China as well as other powers in the western Pacific and Indian Oceans has sufficiently compelling parallels to the rise of Imperial Japan in the first half of the 20th Century that it may be instructive to revisit Japan’s ascent to power, culminating in its drive toward a regional maritime empire it euphemistically called the Greater East Asian Co-Prosperity Sphere. This entity did not simply spring from the minds of Japan’s leadership, but was in fact heavily influenced by outside thought and experience, especially of and with the two predominant maritime powers of the era: Great Britain and the United States. In particular, the work of U.S. naval officer Alfred Thayer Mahan is known to have provided much of inspiration behind the Japanese strategy underpinning its rise to power. That Mahan’s ideas are gaining traction with the strategic planners of today’s rising Asian powers lends further credence to the relevance of Japan’s example.

Japan was introduced to Mahan’s seminal work with its translation into Japanese in 1896; many of his later works were translated as well. Mahan’s book was viewed as a blueprint for national greatness through naval expansion, with a battleship fleet providing the means to secure the colonies, bases, and lines of communication necessary to achieve this triumph. Indeed, this is largely what Mahan had intended, though his intended audience clearly was not Japan; the United States had begun to look outward for a variety of reasons – the closing of the frontier, domestic overproduction, concerns over European imperialism – and Mahan felt it must not merely look, but take a sufficiently active position as to be able to develop its commercial interests, and to create a fleet strong enough to protect them. The Japanese were impressed by arguments that seemed to apply as much to their own situation as to America’s, even though Mahan would have argued against this assertion. Key officers in the Japanese Navy were sent to Britain and the United States to study the new ideas underpinning what came to be known as navalism, and they returned to Japan to instruct their fellow officers through lectures and books of their own. These officers thus spread the gospel of Mahan not only to much of the naval officer corps, but to members of the government, industry and other influential citizens, inexorably intertwining Mahan with the general arguments in favor of expansion and naval procurement.

The First World War brought another important lesson that dovetailed nicely with the Japanese interpretation of Mahan’s teachings. In a long war, economic warfare could prove vital; the experiences of Great Britain and Germany showed that naval blockades, whether using traditional methods of boarding and inspecting merchant vessels for contraband or attacking them directly using a combination of open-sea raiders and the highly effective new technology of the submarine, could have a significant, if not decisive, impact on the outcome. Germany’s severe shortages of warmaking material, consumer commodities and foodstuffs by 1918, and Britain and France’s utter reliance on support from the U.S. as the war dragged on, demonstrated beyond a doubt to Japanese planners that only self-sufficient nations could hope to survive in the worst case scenario of a long war without proximate allies. Autarky became a vital element of Japanese industrial policy, but it was acknowledged that Japan – a nation hopelessly poor in most industrial commodities – could not achieve this without an overseas empire.

It is unsurprising then that the growth of the Japanese economy based on its industrial strength and its exports was concurrent with greater calls for measures to ensure continued economic development and security. What was needed to attain this seemed to be clear: acquiring productive resource-rich colonies, gaining control of key strategic positions to protect them, and building a navy strong enough to secure both. The 1922 Five-Power Naval Treaty that emerged from the Washington Conference, with its restrictions on Japan’s fleet building, was acquiesced to in no small part because the United States agreed to a nonfortification clause that gave Japan de facto control of the western Pacific. Despite concerns among some in Japan that the restrictions on fleet building would compromise her security, the Five-Power Treaty must be considered far more beneficial to Japan’s security interests than those of the United States, her principal rival in the Pacific. This may be evidenced by the fact that U.S. naval officers denounced the treaty as having undermined their service’s global mission (as defined by Mahan); U.S. Navy planners spent the rest of the decade working on ways to resolve the problem of war with Japan (considered a strong possibility since the beginning of the century) in light of the new limitations.

The ability to act as the dominant regional power in the western Pacific gave Japan the chance to begin the process of imperial acquisition. Beginning with the taking of Manchuria in 1931, and already controlling the important Korean peninsula and numerous islands in the southwestern Pacific (gained at Germany’s expense during the First World War, and tellingly identified by Mahan at that time as posing a serious concern to U.S. Pacific interests), Japanese policymakers, increasingly influenced by the competing leadership of the Army and the Navy, moved toward what they believed to be the Mahanian-dictated path to national greatness.

Yet it failed; Japan did not develop the increasingly stable, prosperous and defensible empire that it sought. Instead, the problem of securing resources sufficient to meet both industrial demands and the construction and operational requirements of the increasingly large naval contingent meant that Japan became increasingly desperate as its leaders realized that gaining the territory required to attain self-sufficiency would generate active opposition from Japan’s main trading partner and rival, the United States. The embargoes and financial measures taken by the U.S. in the years before Pearl Harbor reinforced the perceived requirement for creating an autarkic Japanese empire while making it harder to achieve, as the needs of the navy for steel and oil continued to increase as the U.S. threat loomed larger. American restrictions on petroleum and steel exports – put in place to protest Japanese actions in China – pushed the Japanese toward a point at which supplies of these vital commodities would run out, long before imperial territory could be extended and exploited to make up the shortfall. Rather than wait for the inevitable, the Japanese struck out for oil reserves of the Dutch East Indies, while following Mahan’s doctrine of decisive battle by concurrently attempting to knock out the only forces that could stop them, and the bases from which they would operate: the Royal Navy at Singapore, the “Gibraltar of the Pacific,” and the United States Pacific Fleet at Pearl Harbor, along with U.S. bases in the Philippines.

What went wrong? Simply put, Japan’s reading of Mahan was flawed. Japan’s devotees of Mahan’s ideas believed that a maritime empire and a strong navy were the keys to survival because they allowed the imperial power to control the resources it needed to succeed; they saw the global dominance of the British Empire demonstrated in The Influence of Sea Power upon History as an irrefutable example of this. Yet Mahan’s argument was as much about British success as it was about French failure; failure to concentrate on a maritime policy, failure to recognize the meaning of British commercial and naval strength, failure to see the dangers inherent in concentrating on the Continent. The Japanese would have done well to consider this.

While Britain was forced to be a maritime power by geography, France had a choice; in Mahan’s view, it was so indecisive in this as to give Britain de facto control over the vital seas while rendering itself unnecessarily vulnerable to commercial isolation and military impotence against its primary rival. Where Britain’s empire was remote and diffuse and her main rival close, Japan sought a regional empire and faced a distant rival; while this might seem to offer greater security, in fact the inability to restrain the United States by bottling up its merchant shipping and naval forces as Britain had those of France meant that Japan would face a far greater challenge, as Britain did in those instances where France’s navy was met in open seas rather than confined to its ports.

Britain’s maritime power was based on a large and active commercial fleet that provided what Mahan considered a necessary pre-condition for naval power; both Mahan’s France and Imperial Japan had far smaller commercial fleets, a condition that would contribute to the precariousness of their respective strategic positions rather than provide support for the navies needed to protect them. An array of sources for imports and markets for exports, within the Empire and without, gave Britain a commercial advantage that neither France nor Japan came close to matching. American sanctions against Japan further reduced her already limited commercial potential, further weakening the foundation on which her navy was being constructed, as no viable imperial alternative to this trade existed.

The considerably reduced material and technical requirements for the construction of wooden sailing ships when compared with 20th vessels meant that neither France nor Britain faced the severe problems encountered by the Japanese navy in constructing their fleet. While it is true that Mahan’s turn of the century American audience also had to meet the needs of modern technology, the U.S. had more than adequate supplies of the industrial commodities necessary, rendering the earlier conditions of the two European powers far more relevant than they were to Japan, to which fleet construction became a strategic objective itself, reversing Mahan’s order and perverting his logic.

Britain needed to commit few resources to her army, as the presence of the Royal Navy, the “wooden walls of Britain,” rendered Britain secure regardless of the size of the armies of her Great Power rivals, while France was forced to face them on the Continent; by the time Japan sought her empire, she too was forced to face the Great Powers not only at sea but on land, as well as the comparatively limitless manpower of Great Power-supported China, if she hoped to gain the territory she needed.

In short, despite outward appearances and the perceived universality of the doctrines espoused in The Influence of Sea Power upon History, Japan met few of the criteria set out by Mahan. Thus when it set out to construct a maritime empire, an act which would necessarily challenge the United States – a nation far better suited to succeed in attaining Mahan’s vision of global strength – it did so with a deeply flawed strategy that misunderstood the tenets of one of its primary influences. In light of this, the outcome was hardly surprising.

The objective of the final part of this discussion will be to identify the relevance of Mahan’s ideas to the situation in East Asia today, and specifically to determine if the rising powers there – primarily China, but also India – are similarly misinterpreting these ideas, and what this in turn means for the United States and other powers that will be forced to accommodate or confront these powers.

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The Real Dangers of the BP Oil Spill

In Politics on June 16, 2010 by AEG Tagged: ,

The oil spill in the Gulf of Mexico caused by the sinking of the BP offshore drilling platform Deepwater Horizon has proven to be a very difficult problem to address. The short- and medium-term effects of the spill are likely to encompass not only the environmental issues associated with the clean-up, but the changed regulatory climate is likely to impose new limitations on drilling, backed by a very vocal public. Corporate costs will rise due to increased risk exposure, not only because of new equipment and procedures, but also the need to prepare funds to deal with potential contingencies.

The immediate consequences notwithstanding, the situation in the Gulf points up the extreme vulnerability of the United States in the energy sector. With widespread calls for increased regulation and oversight, it is very likely that offshore drilling, especially in deep water, will be slowed well beyond the six-month moratorium recently imposed. Opponents of drilling in areas like the Arctic National Wildlife Refuge, long a controversial proposal, will certainly receive a boost, as will alternative energy advocates. Without a doubt, there are risks involved in oil drilling, particularly as the reserves become more remote and difficult to tap, and their locations increasingly coincide with both sensitive ecological areas and human habitation.

What remains unmentioned here is the strategic vulnerability of the U.S. economy to interruptions in oil supplies, and the longer term problem of dependency on petroleum imports. While a case can certainly be made for reducing dependency on oil, potential implementation of any such solution is so far in the future as to render any shift in the strategic situation so distant as to be almost irrelevant. In March of 2010 (the latest figures available), the U.S. imported 288 million barrels of crude oil while producing 150 million barrels (U.S. Energy Information Administration, U.S. Crude Oil Supply & Disposition), with a significant proportion arriving from countries whose governments have rather unfavorable views of America; Hugo Chavez’s Venezuela, for example, was responsible for delivering almost one million barrels per day. Other locations are beset by domestic volatility; Mexico, Nigeria, Angola, and Iraq all ranked within the top ten exporters of crude to the U.S. in that month (US EIA, Crude Oil and Total Petroleum Imports Top 15 Countries). The disruption of supply from any of these sources would create significant problems for the U.S., with price spikes and uncertainty fed by disproportionate public fear as well as real reduction in supply. With domestic supplies of just over one billion barrels (of which two-thirds is held in the Strategic Petroleum Reserve and the remainder in commercial storage) representing almost four months worth of imports, the time available to resolve a worst-case supply crisis is frighteningly brief, and even lesser crises pose a real challenge.

The oil business is extremely complicated, and the above figures represent a single very simplified measure of U.S. dependence on foreign petroleum. Once the problems of refining, shipping, storage, as well as ongoing research and exploration costs and market fluctuations are considered, it quickly becomes clear that American vulnerability is extremely high, higher even that these numbers suggest. Alternative energy sources will be developed, and as they become economically viable they will eventually supplant petroleum, much as petroleum replaced coal; government subsidies cannot sustainably offset the currently increased cost of these options. Simply put, however, for now and the foreseeable future, the United States will continue to be utterly dependent on importation of foreign petroleum for its survival. This means that American foreign policy must continue to focus of securing these supplies, and that it is very much in the strategic interest of the nation to develop such domestic resources as are available to at least provide a hedge against turbulence in markets and foreign supplies. Leadership in this instance must recognize that, public outcry notwithstanding, it is in the interest of the country’s security to minimize its exposure to disruptions in supply of oil, which remains the single most vital commodity to its economic and strategic well-being.

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Greater East Asian Co-Prosperity Sphere Redux? (Part One)

In Economics on June 2, 2010 by AEG Tagged: , , , , ,

Writing in June of 2009, The Economist’s correspondent, having attended a security conference in Singapore, noted that “(f)or China’s strategic planners, securing sea lanes against hostile powers has become perhaps the chief preoccupation.” (The Economist, “Chasing Ghosts”, 11 Jun 2009) It is no wonder – China’s continued economic growth is utterly dependent on the seaborne importation of huge quantities of of oil, coal, iron ore, and other raw materials necessary for continued industrial expansion. The quantities of these required, especially those fulfilling China’s burgeoning energy needs, are only expected to rise in coming years. China’s strategists would be foolish to think that securing these supply routes was anything short of a necessary precondition of China’s continuing rise.

Interestingly, the aforementioned author notes that the predominant influence on current strategic thought in maritime Asia – not just China, but India and other concerned nations as well – is the American naval theorist who contributed so much to the strategic developments of the first half of the 20th Century, Alfred Thayer Mahan. Captain Mahan’s The Influence of Sea Power upon History, 1660-1783, published in 1890, was enormously influential, positing that command of the sea, which was of vital importance for the survival and success of empires which aspired to global power, was best obtained by effecting the destruction of the enemy fleet. When the time came to do so, the fleet must be ready, able and concentrated; the time necessary to build such a fleet and train its crews being measured in years if not decades, Mahan argues that such a fleet must be maintained at all times, not just when war appears imminent. Having achieved decisive victory, the ability of one’s opponent to meaningfully interdict what are referred to as “lines of communication” will be severely impaired, ensuring the security of the geographic and material sources of one’s own economic power while starving rivals of theirs.

Perhaps more important, however, is the tantalizing promise Mahan offers: that naval power and success are the key to national greatness on a global scale.Though intended primarily for an American audience, and utilizing the successes of the British Royal Navy (mostly at the expense of the French) as evidence to support its conclusions, The Influence of Sea Power upon History was and is often seen to be offering a set of truths far more universal than is perhaps the case; note, for example, Mahan’s linkage of success with a representative system of government supported by a free commercially-active populace: “History has proved that such a purely military sea power can be built up by despot, as was done by Louis XIV; but though so fair seeming, experience showed that his navy was like a growth which having no root soon whithers away.” Such distinctions were and are easily glossed over (Mahan, like Clausewitz, is often paraphrased to the point of non-recognition) when the prospect of a formula for success on the scale of the 18th and 19th Century Britain or the United States in the 20th Century presents itself. For ascendant maritime powers, this is a difficult lure to resist.

This is not the first time Mahan has contributed to the strategic thought of a rising and resource-dependent Asia industrial power: Japan’s early 20th Century navy was home to many of Mahan’s committed disciples. The foundations of Japan’s naval strategy at the height of its power were at least as much the product of Mahan’s theory as they were of conditions particular to Japan and of the experiences of the Sino-Japanese War (1894-5), the Russo-Japanese War (1904-5), and the First World War (1914-8). Aspiring to greatness, the Japanese Navy took Mahan’s ideas and used them to attempt to focus the attention of the nation on the sea, with all the prospects for success that it seemed to offer, and away from the Asian mainland (primarily China and Far Eastern Russia), which was the primary objective of the rival Japanese Army faction. The lessons of history were clear: focus on the land offered only limitations and resistance; the sea promised abundance and power, if control of its vital routes could only be secured. It is not hard to see how modern Chinese strategists might draw the same conclusions.

Part Two will examine the specific influence of Mahan on Japanese strategy, as well as the importance of resource availability on the economy, and the extent to which these elements combined to move Japan inexorably toward conflict with the United States.