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OIL DISADS
Consortium 2004
1
ALGERIA DISAD
INC SHELL
(A) ALGERIAN ECONOMY RELIES ON OIL REVENUES – IT IS
SUSCEPTIBLE TO PRICE SHOCKS
AFRICA REVIEW WORLD OF INFORMATION, 2003
(Sept. 23, l/n)
Despite the civil war,
the economy improved during 2002, with GDP reaching 3.1 per cent.
Algeria remains vulnerable to oil price fluctuations and depends heavily on
oil and gas exports for revenue. This dependency has attracted the attention of the IMF which is
encouraging Algeria to develop the growing non-hydrocarbon sector.
(B) LINKS
1. HIGH OIL PRICES ARE KEY TO THE ALGERIAN ECONOMY
HUNTER, 2004
(Catherine, staff, World Markets Analysis, "Algeria calls for maintenance of current
OPEC output ceiling," January 8, l/n)
Given that Algeria has been pushing for an increase in its quota for some time, and
is consistently producing above its quota to the tune of some 200,000 bpd, Khelil's
comments seem out of key. However, high prices have been extremely good for the
Algerian economy, boosting earnings by a third in 2003 (see Algeria: 7 January
2004: Algerian Oil Revenues Up One-Third in 2003 to US$24bn). This has obviously
swayed Algeria in favour of the status quo where it can break its production quota
with virtual impunity and reap the rewards of collective restraint. In addition,
producers remain wary of the effects of increased Iraq output and slackening
demand from Q2 2004, as well as the depressed dollar exchange rate.
2. [insert specific link]
(C) IMPACTS
1. OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence.
Oil instability promotes political instability, which may cause more oil instability.
OIL DISADS
Consortium 2004
2
ALGERIA DISAD
INC SHELL
2. SMALL-SCALE AFRICAN CONFLICTS CAN IGNITE A NUCLEAR WAR
DEUTSCH, 2002
(Jeffrey – Macroeconomics prof at Keiser College, Rabid Tiger Newsletter, vol. II, no. 9, Nov. 18,
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.
OIL DISADS
Consortium 2004
3
ALGERIA DISAD
Uniqueness: Oil production increasing
OIL OUTPUT IS INCREASING – AND NOT DEPENDENT ON OPEC PRICING
TOWNSEND, 2002
(David, staff, Petroleum Economist, "pressing ahead," May, wilsonselect)
Meanwhile, in Algeria, oil and gas output are expected to rise rapidly over the next
decade. Crude capacity of 1m barrels a day (b/d) will reach 1.5m b/d by 2005, Khelil
predicts. "We are on target for this; in fact, we are ahead of schedule." Gas output is
130bn cubic metres a year (cm/y), of which 62bn cm/y is exported. Khelil is "hopeful"
exports will reach 85bn cm/y by 2005, mainly because of new fields due on stream by
that date, almost all in the In Salah region. These alone will add over 9bn cm/y of export
capacity over the next three years. Algeria's adherence to its Opec oil output target,
Khelil says, has no bearing on the future growth potential of crude production. He notes
that oil produced "in association" in the country -- by Sonatrach in partnership with
foreign operators -- accounts for around 25% of total output. "But that doesn't mean 25%
of the oil belongs to the foreign companies; it's around only 6%." By 2005, he adds, 50%
of Algerian crude production will be from "associated" fields, "but even then, their [the
foreign operators'] share of that will be only a minor part", and this is unlikely to be
affected by quota cuts, which can be made by Sonatrach.
OIL DISADS
Consortium 2004
4
ALGERIA DISAD
Uniqueness: Econ improving
ALGERIAN ECONOMY IS IMPROVING
BBC MONITORING INTERNATIONAL REPORTS, 2004
("French minister meets Algerian president," July 27, l/n)
Thus, this is an agreement between two great countries where everybody is the
winner as it is an honour for France to participate in the construction of Algiers
underground and after participating in the electrification of Algiers outskirts, (France
will participate) in the installation of new trains; then 700m of low-interest loans and
1bn Coface credit, then France's determined support within the framework of the
Paris Club so that Algeria - whose economic situation is improving - can repay its
debt quicker and ease debt servicing and find the political support from France which
it needs.
ALGERIAN ECONOMY IS IMPROVING
KOREA HERALD, 2003
("envoy celebrates Algerian president's visit," Dec. 10, l/n)
During the last few years, the Algerian government has made tremendous efforts to
improve the economy and achieved outstanding results. Indeed the country, now
back on the right track, is building up determinedly an efficient and performing
economy. The market economy has taken root and is growing steadily. Algeria
offers new attractive perspectives for its foreign partners for the promotion of
business relations and investments.
OIL DISADS
Consortium 2004
5
ALGERIA DISAD
I/L: Oil key to the econ
THE ALGERIAN ECONOMY EMPIRICALLY GETS TANKED WHEN OIL PRICES
PLUMMET
EVANS, 2003
(Martin, staff, History Today, "transition, history and human rights," Nov. 1, l/n)
Undoubtedly this younger generation has a different relationship with the colonial
period because they themselves had no direct experience of colonial exploitation.
What concerned them was post-independence, especially given that this new
generation had borne the brunt of the economic hardship during the 1980s when the
Algerian economy was hit very hard by the collapse of oil and gas prices. By 1990
unemployment was as high as 30 per cent among this sector of the population, and
in the face of this protracted social crisis many became deeply cynical about the way
in which the anti-colonial struggle was constantly invoked by the older generation to
smother criticism.
OIL IS KEY TO THE ALGERIAN ECONOMY
AFRICA NEWS, 2003
("US energy official testifies on US oil and gas imports," Oct. 27, ln)
Energy from West Africa plays an increasingly important role in our energy security
as we diversify our sources of oil supply. Currently, more than 12 percent of
imported U.S. oil is from Africa. However, Africa's oil exports to the U.S. are set to
rise. African oil is a key engine for economic development in Africa.
OIL DISADS
Consortium 2004
6
ALGERIA DISAD
I/L: Algeria key supplier to the US
ALGERIA IS A KEY OIL EXPORTER TO THE U.S.
CHICAGO TRIBUNE, 2003
("an olive branch to North Africa," December 13, l/n)
In Algeria, he praised the government's cooperation on terrorism and said he looked
forward to "free, fair and transparent elections" next year. But Powell avoided
references to the thousands who died in a slaughterhouse of political repression and
civil war in the 1990s. Algeria, a major supplier of oil to the U.S., is on the right
track and that's good enough for Powell, at least for now.
ALGERIA IS A KEY OIL EXPORTER TO THE U.S.
SLAVIN, 2003
(Barbara, staff, USA Today, "N. Africa may test U.S. on rights," Dec. 1, l/n)
In all three countries, governments have justified their authoritarian practices as
necessary to combat Islamic fundamentalism. All three have been staunch
supporters of the U.S. war on terrorism. They have assisted in tracking down North
African members of the al-Qaeda terrorist network. The Pentagon announced in July
its desire for closer military ties with Morocco and Tunisia. The Bush administration is
quadrupling economic aid to Morocco to $ 40 million and doubling military aid to $ 20
million next year. Algeria, meanwhile, is a major supplier of oil and natural gas
to the USA and has received $ 4 billion in U.S. investment.
OIL DISADS
Consortium 2004
7
ALGERIA DISAD
Impact Extensions: Genocide
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
OIL DISADS
Consortium 2004
8
ALGERIA DISAD
Impact Extensions: Terrorism
Oil is the foundation for American military commitment to Algeria – fear of
terrorist attack on Oil interests results in creation of US listening posts
Barth, Senior analyst Global Network Against Weapons and Nuclear Power in Space, 12-16-2k3
(Mustafa, “Sand Castles in the Sahara: US military basing in Algeria,” p. http://www.globenet.freeonline.co.uk/articles/african_base.htm)
<From Algeria’s perspective, this was stark proof that ‘terrorism’ was not only far from eradicated in
Algeria, but that militant Islamists (terrorists) were now established in the hitherto peaceful Sahara. Algeria
also made much ado of blaming the long time (3 months) spent in locating and freeing the first group of
hostages and the further three months involved in engineering the release of the second group on the fact
that its army lacked the sophisticated military equipment that it had been seeking from the Americans.
From the US perspective, this was firm evidence that a network of al-Qaida links not only stretched from
the Horn of Africa across the Sahel to Mali and Mauritania, but now straddled the Sahara from Mali (and
perhaps elsewhere in West Africa) to northern Algeria, providing a major threat to US oil
and gas interests in Algeria, the southern Mediterranean rim and Europe itself. This was the
background to General Jones’s dramatic statements in May and July. The gloves were now off. In May, the
State Department appeared to give the green light to Algeria when it confirmed that Algeria had
demonstrated its commitment as a US ally against Al-Qaida and that an improvement in its commitment to
human rights would prompt sales of lethal combat systems. By July, with one group of hostages in their
fifth month of captivity, the US asked Algeria for military basing rights, saying that it wanted to ‘employ
Algerian military bases for counter-insurgency missions and the protection of oil interests.’ By early
September, barely two weeks after the freeing of the second group of hostages, General Jones was at Arak
discussing the establishment of what is believed would be a US listening post and forward helicopter attack
base.>
OIL DISADS
Consortium 2004
9
ALGERIA DISAD
Impact Extensions: Terrorism
US-Algeria relations are critical to the overall success in the War on Terror
Barth, Senior analyst Global Network Against Weapons and Nuclear Power in Space, 12-16-2k3
(Mustafa, “Sand Castles in the Sahara: US military basing in Algeria,” p. http://www.globenet.freeonline.co.uk/articles/african_base.htm)
<Washington’s ability to ‘keep an eye’ on these ‘bad people’ depends above all on collaboration with
Algeria in the form of basing or access rights of one sort or another, and better intelligence of what
precisely is happening in the ‘large uncontrolled, ungoverned swaths of the Sahara’. Following the
cancellation of the 1992 elections and the ensuing violent struggle between the Algerian army and Islamic
militants, both the US and EU countries have been reluctant to sell arms to Algeria for fear of Islamist
reprisals (as experienced in France) and criticism from human rights groups. The result has been that the
Algerian army has become increasingly under-equipped. A major preoccupation of the Algerian army for
some years now has therefore been to acquire modern, high-tec weapon systems, notably night vision
devices, sophisticated radar systems, an integrated surveillance system, tactical communications equipment
and certain lethal weapon systems. The Clinton administration kept its distance from Algeria. However, in
July 2001, Algeria’s President Bouteflika was invited to Washington. He told President Bush that Algeria
was 'seeking specific equipment which would enable us to maintain peace, security and stability in Algeria.'
Bouteflika’s visit to Washington was followed less than three weeks later by a visit by Algerian army chief
of staff, General Lamari, to US military HQ Stuttgart at which he sought further support for the army’s
modernisation effort. The 9/11 attack on the World Trade Centre heralded a new era in US-Algerian
military relations. Bouteflika, who made a second visit to Washington in November, was one of the first
Muslim leaders to offer help and support to the USA in its War on Terror. He hoped that the US would now
see Algeria’s struggle against Islamic militants as comparable to its war against al-Qaida and thus be more
willing to sell lethal weaponry.>
American listening posts in Algeria critical to breaking down terror-cells
Barth, Senior analyst Global Network Against Weapons and Nuclear Power in Space, 12-16-2k3
(Mustafa, “Sand Castles in the Sahara: US military basing in Algeria,” p. http://www.globenet.freeonline.co.uk/articles/african_base.htm)
<The abductors split into two groups, holding their hostages in mountainous locations (Gharis and
Tamelrik) roughly 300 kms apart. The two groups maintained radio contact. However, their radios,
according to the hostages’ reports, were ex-Soviet stock, long since discarded by the Algerian military who
were consequently unable to intercept their conversations. Members of the Algerian military intelligence
services who de-briefed the hostages told the hostages that they had been able to locate them thanks to the
Americans who had made their listening facilities available.>
OIL DISADS
Consortium 2004
10
ALGERIA DISAD
Impact Extensions: Terrorism
American listening posts in Algeria critical to breaking down terror-cells
Barth, Senior analyst Global Network Against Weapons and Nuclear Power in Space, 12-16-2k3
(Mustafa, “Sand Castles in the Sahara: US military basing in Algeria,” p. http://www.globenet.freeonline.co.uk/articles/african_base.htm)
<The abductors split into two groups, holding their hostages in mountainous locations (Gharis and
Tamelrik) roughly 300 kms apart. The two groups maintained radio contact. However, their radios,
according to the hostages’ reports, were ex-Soviet stock, long since discarded by the Algerian military who
were consequently unable to intercept their conversations. Members of the Algerian military intelligence
services who de-briefed the hostages told the hostages that they had been able to locate them thanks to the
Americans who had made their listening facilities available.>
TERRORISM RISKS EXTINCTION
JOHNSON, 2002
(Reed, staff writer, Los Angeles Times, June 18, l/n)
the phantom menace of nuclear catastrophe has come back
with a vengeance--stalking our imaginations, confounding our leaders, confronting us with a host of atomic
terrors hitherto barely imagined: hijacked airliners rammed down the throats of nuclear power
plants; "dirty bombs" spraying lethal radiation and rendering huge swaths of cities
uninhabitable for years to come. Looming over these lesser catastrophes is the
threat of an actual nuclear weapons attack. After the lull of the '90s, we're learning to start worrying and
fear The Bomb all over again. Only now America must face the possibility of dealing with more
than just one or two mega-adversaries capable of sending our entire country up in a
mushroom cloud. Now we're conjuring up visions of a suitcase bomb detonated at Times Square, a 10-kiloton dose of
But in the bleak months since Sept. 11,
megadeath delivered in a truck to downtown Los Angeles or Chicago. Or a regional conflict, like the present one pitting India against
nuclear rival Pakistan over the disputed Kashmir territory, escalating into global Armageddon. On the one hand ,
we're being
confronted anew with the sublime terror of extinction; on the other, with the
banality and ridiculousness of a threat to our lives and our civilization from
something that may be lurking in a briefcase, a pair of Hush Puppies or, as in the new Hollywood
blockbuster "The Sum of All Fears," a cigarette-vending machine.
OIL DISADS
Consortium 2004
11
ALGERIA DISAD
Impact Extensions: Basing Rights
( A ) US OIL NEEDS MAKES TROOP PRESENCE IN ALGERIA CRITICAL TO
BASING RIGHTS
TREMLET. SENIOR STAFF WRITER, 3-15-2K4
(GILES, “PENTAGO FEARS GROWTH OF TERRORIST HAVEN, “ THE GUARDIAN P.LN)
<One carried by Voice of America said US troops on the ground in Mali helped track and drive into the
arms of the Algerian army a big haul of weapons due to be delivered to a radical Islamist group there. The
report also suggested they had requested a US air strike against a suspected terrorist target in the desert
region of northern Mali and that, although this was turned down, the Pentagon did not rule out such air
strikes. A separate report said a US navy P-3 Orion aircraft guided Chad troops during a two-day battle on
the border with Niger last week in which 43 suspected members of Algeria's Salafist Group for Preaching
and Combat were killed. States previously shunned by the international community, such as Algeria, are
being provided with arms and military training and may become a cornerstone of US military interests in
the region. "We are interested in being able to land at bases in Algeria with our aircraft, or train together,"
Gen Wald said. "We think we have a lot to learn from the Algerians." Gen Wald even speculated that
Colonel Muammar Gadafy's Libya might one day join the new alliance. "Who knows? Libya could be a
part of this in the not too distant future now that they've come back into the western world." Britain is being
brought into the north African alliance as part of a joint European operation called the African Clearing
House, he said. gather in Stuttgart for a meeting with the Americans next week. The focus on Africa also
comes amid a push by some in the US, especially conservative thinktanks, to do more to secure alternatives
to oil from the volatile Middle East. West Africa supplies 15% of US oil and the figure is growing. A need
for the US European command to concentrate harder on north and west Africa may explain why the US
Sixth Fleet is considering moving its main base from Gaeta, in Italy, to the southern Spanish port of Rota. >
( B ) US hegemony is critical to preventing nuclear war
Zalmay Khalilzad, RAND Defense Analyst, THE WASHINGTON QUARTERLY, Spring
1995, p. 84
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 lowlevel 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.
OIL DISADS
Consortium 2004
12
ALGERIA DISAD
Impact Extensions: Basing Rights
Oil is the foundation for American military commitment to Algeria – fear of
terrorist attack on Oil interests results in creation of US listening posts
Barth, Senior analyst Global Network Against Weapons and Nuclear Power in Space, 12-16-2k3
(Mustafa, “Sand Castles in the Sahara: US military basing in Algeria,” p. http://www.globenet.freeonline.co.uk/articles/african_base.htm)
<From Algeria’s perspective, this was stark proof that ‘terrorism’ was not only far from eradicated in
Algeria, but that militant Islamists (terrorists) were now established in the hitherto peaceful Sahara. Algeria
also made much ado of blaming the long time (3 months) spent in locating and freeing the first group of
hostages and the further three months involved in engineering the release of the second group on the fact
that its army lacked the sophisticated military equipment that it had been seeking from the Americans.
From the US perspective, this was firm evidence that a network of al-Qaida links not only stretched from
the Horn of Africa across the Sahel to Mali and Mauritania, but now straddled the Sahara from Mali (and
perhaps elsewhere in West Africa) to northern Algeria, providing a major threat to US oil
and gas interests in Algeria, the southern Mediterranean rim and Europe itself. This was the
background to General Jones’s dramatic statements in May and July. The gloves were now off. In May, the
State Department appeared to give the green light to Algeria when it confirmed that Algeria had
demonstrated its commitment as a US ally against Al-Qaida and that an improvement in its commitment to
human rights would prompt sales of lethal combat systems. By July, with one group of hostages in their
fifth month of captivity, the US asked Algeria for military basing rights, saying that it wanted to ‘employ
Algerian military bases for counter-insurgency missions and the protection of oil interests.’ By early
September, barely two weeks after the freeing of the second group of hostages, General Jones was at Arak
discussing the establishment of what is believed would be a US listening post and forward helicopter attack
base.>
Algerian oil assets ensure American military commitment
World Tribune 7-22-2k3
(“US Requests Basing Rights in Algeria,”
CAIRO — The United States has asked Algeria for military basing rights.
Algerian government sources said the Algerian Defense Ministry and the U.S. Defense Department are
discussing basing rights for U.S. aircraft and troops in Algeria. The sources said the discussions do not
include the prospect of a permanent U.S. military presence in the North African state. On Sunday, the
Algerian Le Quotidien d'Oran daily reported that the United States wants to employ Algerian military bases
for counter-insurgency missions and the protection of oil interests in North Africa. >
OIL DISADS
Consortium 2004
13
ALGERIA DISAD -- AFF
General
ALGERIA DIVERSIFYING INTO NATURAL GAS
TOWNSEND, 2002
(David, staff, Petroleum Economist, "pressing ahead," May, wilsonselect)
ENERGY OFFICIALS are expected to launch a major new Algerian integrated gas
project imminently. This will become the largest hydrocarbons project of its kind in the
country's energy history says Chakib Khelil, the minister for energy and mines. It will
consolidate its traditional role as a crude supplier and its newer position as a gas and
power exporter to the energy-hungry European Union (EU). In addition, Khelil expects
Algeria to play a pivotal role in the creation of an integrated Mediterranean energy
market, covering the southern countries of the EU and North Africa. Furthermore, Khelil
continues to lobby for improved energy and infrastructure links across the whole of
Africa and support the ambitious gas pipeline plan to link Nigeria and Algeria. The
integrated gas project, Khelil says, will be opened to international energy firms, which
will also be involved in the design of the project. "We want bids from major companies -such as Shell and BP," he tells Petroleum Economist. Potential candidates include "those
that are interested in mega-projects that can integrate big gas developments, including
exploration and production (E&P), field development, pipelines and liquefied natural gas
(LNG) facilities."
ALGERIA DIVERSIFYING INTO NATURAL GAS
TOWNSEND, 2002
(David, staff, Petroleum Economist, "pressing ahead," May, wilsonselect)
there is "major" interest in Algeria not least because of the country's great gas
potential. He notes that around 40% of national revenues come from gas, "not from oil". Gas,
he says, offers "more stability in terms of contracts and it is directed at different markets.
[Foreign] companies that come to Algeria know that if they find gas they won't be stuck with it." He adds: "There will be a
ready market for this gas, because we are building infrastructure to export it."
Khelil claims
ALGERIA IS FACING POLITICAL AND ECONOMIC INSTABILITY, DESPITE HIGH OIL
PRICES
LUXFORD, 2004
(Kate, staff, World Markets Analysis, "social tensions boil over as riots hit Northern
Algeria," March 10, l/n)
Although government revenues from oil and gas exports have reached record highs
in recent years, social and economic conditions in Algeria have continued to
deteriorate and unemployment is estimated to be as high as 30%. Despite growing
anger at politicians, however, Bouteflika is expected to be re-elected in next month's
poll.
OIL DISADS
Consortium 2004
14
ALGERIA DISAD -- AFF
General
EMPIRICALLY HIGH OIL PRICES DON'T GUARANTEE POLITICAL AND ECONOMIC
STABILITY IN ALGERIA
ADDI, 1995
(Lahouari – prof of sociology at Univ d' Oran in Algeria, Oil in the New World Order, ed by Gilllespie & Henry, p. 91-2)
Armed with large financial resources from oil exports, Algeria chose to invest in a vast
industrialization program. The objective was to regain the investment and, in time, to move away
from hydrocarbons as a source of revenue. This objective was not achieved. First, many industries
were established in the absence of necessary infrastructure such as water, communications, transportation, and
skilled labor. Second, market equilibrium was not respected as industrialization was realized. Decision
makers, thinking only in terms of technical networks, ignored the balance between production and consumption, and political
authorities refused to acknowledge – and fueled – inflation by paying high salaries without respect for monetary constraints. Inflation
reduced the value of salaries but supported the accumulation of vast private fortunes in business. The accumulated deficit of Algerian
state businesses, the source of these economic difficulties, can be explained essentially in political terms. The government
refused to face up to fiscal limitations; it failed to pressure workers to increase production; and it
failed to pressure management to expand markets and improve product quality. Such confrontational
actions might lead, at least temporarily, to the shutting down of state enterprises. Algeria's rulers, concerned with their
own interests and not with the nation's economy, sidestepped these difficulties, preferring to finance
the deficit and to import consumer goods, thus wasting the oil wealth for their own political
preservation.
OIL DISADS
Consortium 2004
15
INDONESIA DISAD
1NC SHELL
(A) INDONESIA IS A KEY OIL EXPORTER TO THE U.S. – AND IT HELPS THEIR ECONOMY
AFX EUROPEAN FOCUS, 2004
(april 20, l/n)
The World Bank said growth projection for world trade volume this year has been revised upwards to 8.2
pct from the previous projection of 7.9 pct. Exports are expected to benefit from the recent economic
recovery of Indonesia's major trading partners, the US and Japan. Along with this, oil prices are now seen
at 25 usd per barrel this year against 22 usd projected earlier, it said, adding that these factors could push
Indonesia's growth rate higher by 0.3 percentage points.
(B) LINKS
1. THE PLAN CAUSES A SEVERE BLOW TO OIL PRICES
[insert specific link]
2. NOW IS A CRITICAL TIME – INDONESIA NEEDS REVITALIZATION IN ITS OIL
EXPORTS TO BOOST THE ECONOMY
MULJADI, 2002
(Kartini – energy attorney, International Financial Law Review, "the Indonesian oil and gas sector," v. 21, wilsonselect)
When the Petroleum and Natural Gas Law No 22 of 2001 passed Parliament in November 2001
it was greeted with mixed emotions. The government team who drafted the law prioritized the transition of
Pertamina from a state-owned corporation established by a special law to a state-owned company like any other, based on general
legislation applying to state enterprises. No more special privileges, no more monopolies, no more control over foreign oil companies.
The purpose of the new law was, mainly, to set Pertamina on the road to restructuring. Little in the law provided encouragement to the
foreign oil companies (also known as the PSCs), who are the major investors Indonesia's oil and gas industry that things were going to
be better for them from this point onwards. What the PSCs were looking for was, and still is, assurances that a greater degree of
control over their operations would be restored to them, incentives to spur much-needed exploration, procurement procedures and
personnel procedures especially for the use of expatriates to be simplified, and better protection to be provided for PSC field
operations from dangers ranging from harassment by local hooligans to outright armed insurrection like in Aceh province. It was soon
realized that the new law had left many gaps to be filled and that further clarification would be required before the investors could say
that the new law presented a definitive improvement over the status quo. The good news is that these investor woes are understood by
the Minister of Energy and Mineral Resources, who has stated that the gaps will have to be closed in the forthcoming implementing
regulations. The minister authorized the formation of a broad forum almost immediately following the enactment of Law 22, called
the Bimasena Forum (under the auspices of the Bimasena Energy Club chaired by the former Secretary General of OPEC, Professor
Subroto). The Bimasena Forum embraced all "stakeholders", including but not limited to the Indonesian Petroleum Association, the
Indonesian Gas Association, Pertamina, all oil companies, all oil field support companies, law firms, government agencies and
academia, to provide the ministerial team working on the implementing regulations of Law 22 with technical advice on how to fill the
gaps in the law. These efforts resulted in the completion by the Bimasena group of two documents presented to the ministerial team in
June 2002. The documents contain the industry's technical advice to the government team, one document each for the upstream and
downstream sectors of the industry. The government team is digesting all input and is expected to issue both the upstream and the
downstream implementing regulations shortly. The ministerial team is also working on implementing regulations relating to the new
Pertamina. The new executive agency (Badan Pelaksana Migas) has taken over Pertamina's control of the PSCs since July 2002. The
new regulatory agency (Badan Pengatur Migas) will coordinate the efforts to convert downstream operations from a Pertamina
given the present dire situation of the
Indonesian economy, it is of utmost importance that changes contemplated in Law
22 really work. There is simply too much at stake. Investors will need to give the whole package, ie Law
22 and its implementing regulations, a nod of approval evidenced by their willingness to make new investments in exploration.
Only with the influx of large amounts of capital will the industry be able to generate
a renewed momentum that will, over time, provide the incremental production to
keep the country from becoming a net importer. The latter is a doomsday scenario
that even today is not fully anticipated in Indonesia. The transition of the downstream sector to fully
market-driven operations could also be fraught with disaster if not handled carefully. The bad news is that politics could enter the
monopoly to a fully market-driven operation by 2005. Needless to say,
picture, and that badly needed reforms in the investment environment do not come to pass due to vested interests of the political elite
relating to the 2004 elections. By that time, the country could already be a net importer of crude oil, having to pay for the barrels it
refines into oil products. For the country to be forced to pay for imported barrels while the country maintains among the richest oil
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1NC SHELL
(CON'T)….
reserves in the world would be tragic indeed. To mitigate this unfortunate development, the necessary changes in the investment
climate need to be made now. It is, therefore, essential that the new executive agency and regulatory agency be non-political,
consisting of business oriented people with an impeccable track records over many years of experience, not as government officials
but as business people. They will need to be able to relate to the interests and concerns of present and prospective investors and vice
versa. The establishment of agencies having credibility with industry investor is a crucial step for the revitalization of the industry.
The bottom line is that the oil and gas sector
could still be one of the few if not the only industrial sector to supply a steady source
of sorely needed revenue to the state.
The country cannot afford any mistakes in this effort.
(C) THE IMPACT
1. OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their
existence. Oil instability promotes political instability, which may cause
more oil instability.
It's this roller coaster that OPEC wants to avoid.
2. INDONESIAN STABILITY IS KEY TO REGIONAL STABILITY
PacNet Newsletter, 2001
(#30, July 31, "Indonesia: US policy issues," CSIS, http://www.csis.org/pacfor/pac0130C.htm)
Southeast Asia is more volatile today than at any time since the Vietnam war. The
region, which is home to 530 million people and ranks as our fifth or sixth largest
trading partner, is plagued by political turbulence and economic fragility. Throughout
recent American history, when we have not paid sufficient attention to Southeast Asia, we have paid a price for it. As recent events
there can be no stable and developing Southeast Asia without a stable
and developing Indonesia. This would go without saying were it not for the lack of knowledge of Indonesia that is
have made clear,
widespread in U.S. government, particularly in the Congress, but also in parts of the executive branch.
3. ASIAN INSTABILITY RISKS USE OF WEAPONS OF MASS DESTRUCTION
KUNIHIKO, 1996
(Saito – former Japanese ambassador to the US, Fordham International Law Jnl, June, ln)
Since the end of the Cold War, the possibility of global armed conflict has
receded. The last few years have seen expanded political and security dialogue among countries of the
region. Respect for democratic principles is growing. Prosperity is more widespread than at any other time
in history, and we are witnessing the emergence of an Asia-Pacific community. The Asia-Pacific
region has become the most dynamic area of the globe. At the same time,
instability and uncertainty persist in the region. Tensions continue on the Korean
Peninsula. There are still heavy concentrations of military force, including nuclear arsenals.
Unresolved territorial disputes, potential regional conflicts, and the
proliferation of weapons of mass destruction and their means of delivery all
constitute sources of instability.
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Uniqueness: Econ improving
INDONESIA'S ECONOMIC GROWTH IS SLOWING
Xinhua General News Service, 2004
("Indonesian economic growth slows in second quarter," august 18, ln)
The Indonesian economy grew at a slower rate in the second quarter, compared to the first quarter of the
year as consumer spending weakened due to rising inflation, a local newspaper reported Wednesday. The
economic growth in the April-June period of this year was 4. 32 percent compared to the same period last
year while year-on- year growth in the first quarter was 5 percent, reported The Jakarta Post.
The rising inflationary pressures during the past three months due to weakening of the rupiah (the local unit
has declined by nearly 10 percent against the dollar) reduced consumer spending as purchasing power
weakened. Inflation hit a 15-month high of 7.2 percent in July, higher than the government's annual rate
target of 6.5 percent, due to soaring prices of food and other basic commodities.
INDONESIA ANTICIPATES CONTINUED ECONOMIC GROWTH
Xinhua General News Service, 2004
("Indonesia projects higher economic growth in 2005," august 16, l/n)
Indonesia's economic growth is projected to reach 5.4 percent in 2005 to fare better than the targeted 4.8
percent this year, which is estimated to be achievable.
"This growth is estimated to remain supported by the increase in domestic consumption, in addition to the
increase in exports and the improving investment climate," President Megawati Soekarnoputri said while
addressing the House of Representatives Monday.
INDONESIA'S ECONOMY WILL IMPROVE
ANTARA, 2004
("RI economy to improve despite world slow-down in 2005," august 13, ln)
Finance Minister Boediono said although the world's economic growth is expected to slow down in 2005,
Indonesia's economy will improve, especially if its presidential election runs well. "If the election as well
as the transfer of power run well and smoothly, they could compensate the weakening of the global
economic situation," the minister said here Friday. With social and economic conditions in Indonesia
improving, investment could be expected to enter the country and revitalize the economy.
INDONESIAN ECONOMY IS A MAGNET FOR FOREIGN INVESTORS
BHASKARAN, 2004
(Manu -- partner and member of the board of Centennial Group Inc, an economics consultancy, The Edge,
"Indonesia: Getting Better," July 19, l/n)
It's been a long time since Indonesia received such positive exposure in the international media. Foreign
observers are now recognising the political progress Indonesia has made in the past few years, something
which the just-concluded first round of presidential elections underlined. Is it time to become much more
bullish about Indonesia? Indonesian democracy maturing, reducing political risks for investors
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Uniqueness: Econ improving
INDONESIA'S ECONOMY WILL IMPROVE
BHASKARAN, 2004
(Manu -- partner and member of the board of Centennial Group Inc, an economics consultancy, The Edge,
"Indonesia: Getting Better," July 19, l/n)
Is the improved political stability sufficient to propel the economy to higher growth? We believe there is a
good chance of Indonesian economic growth surprising on the upside for at least a year or two for the
following reasons:
. The Indonesian rupiah has strengthened significantly in the past week as the initial results of the
presidential elections came in, reversing the sizeable depreciation of around 10% in the early part of the
second quarter. This will help reverse inflationary expectations and allow Bank Indonesia to continue with
policies to boost growth rather than focus on inflation - which had risen recently partly because of rupiah
weakness.
. We think domestic firms will step up capital spending significantly, now that the political uncertainty has
cleared a lot. In fact, trade data for January to May suggest that capital goods imports are already rising
strongly - indicating that many Indonesian businesses are not waiting for the final round of presidential
elections to step up expansion plans. Also encouraging are indications that investment in the vital oil and
gas sector will rise substantially this year.
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I/L: Oil key to the econ
OIL REVENUE IS KEY TO THE INDONESIAN ECONOMY
MENON, 2001
(Rajan, staff, The National Interest, "another year of living dangerously," Oct 24, ln)
The 1997 East Asian economic crisis illustrated globalization's power as both opportunity and vulnerabilitythis everyone by now understands. What remains unclear is why Indonesia alone has been rocked to its
foundations when every other Asian country hurt by the 1997-98 crisis has recovered its balance to one
degree or another. The basics of its economy were sound, and for nearly three decades Indonesia
experienced an economic and social transformation that bettered the lives of most of its people. Between
1970 and 1997 the percentage of those in poverty fell from 60 percent to 15 percent, life expectancy and
literacy increased significantly, and an urban middle class arose. Revenue from oil exports
enabled the expansion of infrastructure and social services, and the share of
GDP accounted for by the production of natural resources then shrank as
industrialization advanced. Non-Javanese peoples in outlying areas and students, workers, and
democrats chafed, the disparities in wealth and power among classes and regions were wide, and
cronyism, nepotism, and corruption were rife. But the "New Order" (the authoritarian edifice
promoted growth and kept order. The 1997
economic crisis was its death knell. Indonesia's GDP plummeted from $250
billion to below $100 billion at the end of 1998, and inflation rocketed to 60
percent. Capital fled abroad, millions were pushed deeper into poverty, and
the dreams of others whose lives had improved during the decades of rapid
growth were dashed. The absence of democratic institutions led simmering
dissatisfaction to boil over onto the streets.
Suharto built after taking power in 1965)
OIL IS KEY TO INDONESIA'S ECONOMY
INTERNATIONAL OIL DAILY, 2003
("Indonesia plans security decree," august 13, l/n)
Indonesia plans to issue a decree on security for energy firms that may include deploying a special force to
guard their operations after last week's bombing of a hotel in Jakarta. Energy Minister Purnomo
Yusgiantoro said mining, oil, and gas operations were vital to Indonesia's economy and hoped the
presidential decree would be issued as soon as possible, Reuters reported.
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I/L: Indonesia key supplier to the US
INDONESIA IS A KEY OIL EXPORTER TO THE U.S. – AND IT HELPS THEIR ECONOMY
AFX – Asia, 2003
("Outlook," January 31, l/n)
The US is Indonesia largest trading partner followed by Japan and Singapore.
With this export profile, GK's Song estimates Indonesia GDP growth to be around 3.5 pct this year
compared to a government forecast of 4.0 pct. "It will very much depend on how much oil will remain a
key contributor to the economy over the coming months," he said.
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I/L: high risk of collapse
INDONESIAN COLLAPSE FROM ECONOMIC DECLINE IS A SERIOUS RISK
RICHARDSON, 2002
(John, staff, Chemical Market Reporter, "if only…" May 6, l/n)
Indonesia is the prime example. The country has plenty of oil and gas, but in the case of gas, it
is in the wrong location for use by domestic petrochemicals in Indonesia. And in the case of
political risk, the risks of the collapse of another government, social unrest
and even the breakup of Indonesia remain substantial. In Indonesia, dodgy business
practices, as to a lesser extent is the case in Thailand, are a significant hindrance. It used to be the
case in Indonesia that would-be investors in small businesses would
literally have to queue outside the homes of generals first thing in the
morning to 'incentivise' them to grant approvals. The queues, literal and
metaphorical, may be shorter these days because of the country's long-term
economic decline, but until they vanish altogether, the more ethical of investors will continue to
shy away from Indonesia.
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Impact Extensions: Terrorism
INDONESIAN INSTABILITY WILL TRIGGER MASSIVE TERRORISM
DJALAL, 2001
(Dino Patti – Counselor/Head of the Political Department at the Indonesian Embassy in Washington, D.C., PacNet Newsletter #16,
April 20, CSIS, http://www.csis.org/pacfor/pac0116.htm)
preventing the disintegration of Indonesia is infinitely better than curing it
once it happens. Indonesia's break-up would open a Pandora's box which will
unleash protracted ethnic conflicts even more difficult for Jakarta and the
international community to control. In such a situation, the country's transition would
descend from a matter of managing change to managing chaos, especially as
secessionist regions become a breeding ground for terrorism, anarchy, and extremism.
Second,
TERRORISM RISKS EXTINCTION
JOHNSON, 2002
(Reed, staff writer, Los Angeles Times, June 18, l/n)
the phantom menace of nuclear catastrophe has come back
with a vengeance--stalking our imaginations, confounding our leaders, confronting us with a host of atomic
terrors hitherto barely imagined: hijacked airliners rammed down the throats of nuclear power
plants; "dirty bombs" spraying lethal radiation and rendering huge swaths of cities
uninhabitable for years to come. Looming over these lesser catastrophes is the
threat of an actual nuclear weapons attack. After the lull of the '90s, we're learning to start worrying and
fear The Bomb all over again. Only now America must face the possibility of dealing with more
than just one or two mega-adversaries capable of sending our entire country up in a
mushroom cloud. Now we're conjuring up visions of a suitcase bomb detonated at Times Square, a 10-kiloton dose of
But in the bleak months since Sept. 11,
megadeath delivered in a truck to downtown Los Angeles or Chicago. Or a regional conflict, like the present one pitting India against
nuclear rival Pakistan over the disputed Kashmir territory, escalating into global Armageddon. On the one hand ,
we're being
confronted anew with the sublime terror of extinction; on the other, with the
banality and ridiculousness of a threat to our lives and our civilization from
something that may be lurking in a briefcase, a pair of Hush Puppies or, as in the new Hollywood
blockbuster "The Sum of All Fears," a cigarette-vending machine.
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Impact Extensions: Indonesian instability = regional instability
TURMOIL IN INDONESIA CAUSES REGIONAL INSTABILITY
DJALAL, 2001
(Dino Patti -- Counselor/Head of the Political Department at the Indonesian Embassy in Washington, D.C.,
PacNet Newsletter, "Indonesia: Not There Yet, But Getting There," April 20,
http://www.csis.org/pacfor/pac0116.htm)
Second, preventing the disintegration of Indonesia is infinitely better than curing it once it happens.
Indonesia's break-up would open a Pandora's box which will unleash protracted ethnic conflicts even more
difficult for Jakarta and the international community to control. In such a situation, the country's transition
would descend from a matter of managing change to managing chaos, especially as secessionist regions
become a breeding ground for terrorism, anarchy, and extremism. The most sensible way to deal with
Indonesia's troubled nationhood is simply to preserve and heal it. Nationalism now ranks among the most
important factors shaping Indonesia's domestic and foreign policies. While Indonesians were willing to
tolerate the 1999 secession of East Timor (which was not part of the Republic in 1945), they are much
more sensitive and protective of the existing nationhood, which was conceived by the founding-fathers at
the time of independence. Which explains why the secessionist movements in Aceh and West Papua are
seen as issues of national survival as much as of national unity and identity.
Third, given its strategic position and size -- it is the largest state in Southeast Asia -- Indonesia's problems
matter to regional order and stability. Unless democratic transition brings stability, prosperity, and unity,
Indonesia would not be at peace with itself and one way or another this may adversely impact the region
and beyond. A stable, united, and prosperous Indonesia best serves the region's interests.
ASIAN REGIONAL INSTABILITY RISKS TOTAL COLLAPSE INTO WAR
CAMPBELL, 2001
(Kurt – sr vp & dir of the int'l security program at CSIS, Orbis, "the cusp of strategic change in Asia," June 22, l/n)
Asia embarks upon the new century with a dubious distinction. While the much-overused phrase "the
Pacific Century" conjures up images of commercial promise and political dynamism, the reality is that
Asia is a dangerous place. For the first time in modern political history, every major
challenge to peace and stability in the international arena is currently found
in greater Asia. Any of three situations could trigger a major conflagration
virtually overnight: the still-dangerous division of the Korean peninsula, the increasingly tense and
unpredictable situation across the Taiwan Strait, and the volatile nuclear competition between India and
Pakistan. Europe by comparison seems absolutely peace loving-ongoing troubles in the Balkans
notwithstanding. Indeed, every major state in Asia is in the midst of profound
change. China is rising (or at least is perceived to be by its neighbors), Japan continues to languish in
the economic doldrums, the Koreas have embarked on a diplomatic course of historic significance, Russia
is still struggling with market reforms as its international reputation suffers, and Indonesia teeters
precariously close to collapse. Furthermore, a number of recent developments
among Asian states create further unpredictability, such as the high-profile diplomatic
initiatives between North and South Korea and the increasingly troubling machinations between China and
Russia. It is important to review briefly some of these trends to gain a clearer picture of the shifting
strategic landscape.
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Impact Extensions: Indonesian instability = regional instability
INDONESIA IS KEY TO REGIONAL STABILITY
DJALAL, 2001
(Dino Patti – Counselor/Head of the Political Department at the Indonesian Embassy in Washington, D.C., PacNet Newsletter #16,
April 20, CSIS, http://www.csis.org/pacfor/pac0116.htm)
given its strategic position and size -- it is the largest state in Southeast Asia -- Indonesia's
problems matter to regional order and stability. Unless democratic transition brings
stability, prosperity, and unity, Indonesia would not be at peace with itself and one
way or another this may adversely impact the region and beyond. A stable, united,
and prosperous Indonesia best serves the region's interests.
Third,
INDONESIAN INSTABILITY DEVASTATES THE ENTIRE REGION
MONTAPERTO et al., 2000
(Ronald, "Indonesian democratic transition," Strategic Forum, April, http://www.ndu.edu/inss/strforum/sf171/forum171.html)
Indonesia is important to U.S. military strategy. The largest nation in Southeast Asia, covering some 2 million square kilometers and
the Indonesian archipelago straddles the critical
sea lines of communication that run from the Persian Gulf to Northeast Asia.
More important, Indonesia has provided the political and strategic center of gravity for
Southeast Asia. In an area that defines interstate relations hierarchically, Indonesia's location, size, and
resources have made it the acknowledged leader of the subregion. For more than
three decades, Jakarta has used its clout to help achieve and maintain regional
stability and to support economic development. A linchpin of the Association of Southeast Asian
Nations (ASEAN) and the ASEAN Regional Forum (ARF), Indonesia also made major contributions
to the diplomacy of the Paris Accords on Cambodia and the territorial disputes of
the South China Sea, resisting strong pressures in the late 1970s and early 1980s from Vietnam, Russia, and China.
stretching nearly 5,000 kilometers from east to west,
Indeed, Southeast Asian opposition to Chinese assertiveness in the South China Sea has served as a restraining influence on Beijing.
Indonesia's future is critical to the stability
of Southeast Asia and a matter of vital national interest to two U.S. allies, Australia
and the Philippines, and to friendly Thailand and Singapore. Positive U.S. relations with a stable
Jakarta also has supported the U.S. regional military presence.
Indonesia help Washington manage its position in the region.
Southeast Asia is already becoming less cohesive and more sensitive to external influences, in part due to uncertainties in Indonesia.
Should Indonesia become unstable or fragment, the consequences would ripple
across the region. The effects probably would include a destabilizing refugee exodus
and could strengthen Islamist opposition in Malaysia and the Philippines and, in
some cases, separatist movements. An increase in piracy also would be likely.
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Impact Extensions: Indonesian instability = regional instability
OTHER COUNTRIES MODEL INDONESIA'S REACTION TO POLITICAL AND
ECONOMIC CHALLENGES
MENON, 2001
(Rajan, staff, The National Interest, "another year of living dangerously," Oct 24, ln)
Indonesia's neighbors have other worries, as well, as they watch this wobbly
behemoth. For Malaysia, one is that the Malaysian Islamic Party, already powerful in
northern Malaysia, could receive a fillip were militant Islam to become more
significant in Indonesia's politics as a result of the turmoil-or were it to dominate its
successor states. Thailand and the Philippines, which have breakaway Islamist
groups in their southern regions, fear that Indonesia's collapse could produce an
undesirable demonstration effect. Papua New Guinea, which borders West Papua,
could be swamped by refugees and also face an older problem: incursions from the
Indonesian military in hot pursuit of Papuan guerrillas. Singapore and Malaysia have
invested in pipelines carrying energy from Riau and from Indonesia's Natuna gas
fields (located in the South China Sea between peninsular Malaysia and Sarawak)
and are watching nervously. ASEAN, whose economic and political clout has fallen
short of members' hopes, will be reduced to a salon if Indonesia, its keystone,
crumbles.
OTHER COUNTRIES MODEL INDONESIA'S REACTION TO POLITICAL AND
ECONOMIC CHALLENGES
DALPINO, 2001
(Catharin – analyst at the Brookings Institute, "Indonesia at the Crossroads," Brookings Policy Brief #89, Sept.,
http://www.brookings.org/comm/policybriefs/pb89.htm)
Once a critical 'domino' in the cold war Asian security arena, Indonesia has new
significance in the post-cold war world as a model for other countries in the process of
rapid political and social change. As a Muslim-majority country, Indonesia's democratic
experiment offers lessons for other societies with significant Muslim populations that are
emerging from authoritarian rule. As the most ethnically diverse country in Asia,
Jakarta's ability (or failure) to accommodate communal differences while maintaining
national unity will influence stability in its neighbors with sharp internal divisions. If the
fundamentalist province of Aceh withdraws from Indonesia, it will embolden separatist
groups in the Philippine province of Mindinao and leaders of Malaysia's Islamic Party,
which is gaining strength at the local level. Indonesia's experience in establishing
democratic civil-military relations could have some influence on the course of political
development in Burma, where the military is hinting it may restart political dialogue with
the civilian opposition. The junta in Rangoon has publicly drawn parallels between the
Indonesian and Burmese systems.
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Impact Extensions: Global Economy
INDONESIAN ECONOMIC INSTABILITY AFFECTS THE GLOBAL ECONOMY
BOLTON, 2000
(John – VP of the American Enterprise Institute, "Indonesia: Asia's Yugoslavia?" January 1,
http://www.aei.org/news/newsID.10178,filter./news_detail.asp)
Although worlds apart, does Yugoslavia provide any lessons for the contending factions within Indonesia, and especially for its government? And does it
likewise provide lessons for interested international powers, especially the U.S.? Indonesia's January announcement that it could accept independence for
East Timor seems unquestionably to have had the unintended consequence of bolstering separatist movements in Aceh and Irian Jaya. Dissatisfaction in
those provinces stems largely from disputes with Jakarta about the allocation of economic returns from their natural resources. And while this might seem
The risk of fiercer confrontation is
exacerbated by Indonesia's economic turmoil, ethnic and sectarian strife, the
continuing struggle for national political power and demands for greater
democracy. To the military and other remaining power centres from Suharto's regime, these diverse pressures appear as an overall threat, and
amenable to compromise, it could also lead to far more intense disputes.
may provoke a predictable response. For now, however, even the key Indonesian players cannot clearly see the way forward. In Indonesia's
neighbourhood, there is nothing comparable to the EU, certainly not Asean. Australia obviously has critical interests, especially with respect to East
China could gain enormously
from the confusion and disunity entailed by a long, painful disintegration of
Indonesia. For the United States, which has enormous interests in the region, the alternatives are
Timor, and Portugal, a former colonial power, can claim a limited role. Most disturbingly,
perplexing. Inexplicably, until recently at least, the level of political attention paid to Indonesia in Washington has not matched the economic attention
Indonesia receives there. While there is no tangible American interest in the ultimate political relationships of Indonesia's pieces -- central control,
There is a critical American interest in the
manner in which the political outcome in Indonesia occurs: That it not be through
force by any party; further disrupt the regional (and global) economy; cause a
massive humanitarian trauma or refugee flows; or allow mainland-Chinese
adventurism to prosper. A piecemeal approach to Indonesia, as in Yugoslavia, almost guarantees that the process will be
autonomy or independence -- this imbalance in focus must change.
unacceptable, whatever the actual outcome.
ECONOMIC COLLAPSE CAUSES EXTINCTION
BEARDEN, LIEUTENANT COLONEL IN THE U.S. ARMY, 2000
[TOM, JUNE 24, HTTP://WWW.FREEREPUBLIC.COM/FORUM/A3AAF97F22E23.HTM]
As the
collapse of the Western economies nears, one may expect catastrophic stress on the
160 developing nations as the developed nations are forced to dramatically curtail
orders. International Strategic Threat Aspects History bears out that desperate nations take
desperate actions. Prior to the final economic collapse, the stress on nations will
have increased the intensity and number of their conflicts, to the point where the
arsenals of weapons of mass destruction (WMD) now possessed by some 25 nations, are almost
certain to be released. As an example, suppose a starving North Korea launches nuclear
weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or suppose a
desperate China-whose long-range nuclear missiles (some) can reach the United States-attacks Taiwan. In addition to
immediate responses, the mutual treaties involved in such scenarios will quickly draw other
nations into the conflict, escalating it significantly. Strategic nuclear studies have shown for decades that, under
such extreme stress conditions, once a few nukes are launched, adversaries and potential
adversaries are then compelled to launch on perception of preparations by one's
adversary. The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without effective defense, the only
Bluntly, we forsee these factors- and others not covered-converging to a catastrophic collapse of the world economy in about eight years.
chance a nation has to survive at all is to launch immediate full-bore pre-emptive strikes and try to take out its perceived foes as rapidly and massively as
rapid escalation to full WMD exchange occurs. Today, a great percent of the
WMD arsenals that will be unleashed, are already on site within the United States itself. The resulting great Armageddon
will destroy civilization as we know it, and perhaps most of the biosphere, at least for many
possible. As the studies showed,
decades.
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Impact Extensions: Civil War
INSTABILITY WILL SPARK A CIVIL WAR
ROTBERG, 2002
(Robert – dir of the Kennedy School's Program on Intrastate Conflict and president of the World Peace
Foundation, Washington Quarterly, "the new nature of nation—state failure," summer, l/n)
The civil wars that characterize failed states usually stem from or have
roots in ethnic, religious, linguistic, or other intercommunal enmity. The
fear of "the other" that drives so much ethnic conflict may stimulate and
fuel hostilities between ruling entities and subordinate and less-favored
groups. Avarice also propels antagonism, especially when discoveries of new, frequently contested
sources of resource wealth, such as petroleum deposits or diamond fields, encourage that greed.
There is no failed state without disharmonies between communities. Yet,
the simple fact that many weak nation-states include haves and have-nots,
and that some of the newer states contain a heterogeneous collection of
ethnic, religious, and linguistic interests, is more a contributor to than a
root cause of nation-state failure. In other words, state failure cannot be ascribed primarily
to the inability to build nations from a congeries of ethnic groups. Nor should it be ascribed baldly to the
oppression of minorities by a majority, although such brutalities are often a major ingredient of the
impulse toward failure.
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
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INDONESIA DISAD
Impact Extensions: Civil War
ECONOMIC INSTABILITY IN INDONESIA RISKS LARGE-SCALE VIOLENCE AND DEATH
FUKUDA-PARR, 2003
(Sakiko – dir of human development report at UN development programme, Journal of Human Development, "New threats to human
security in the era of globalization," v. 4, July, EbscoHost)
Uneven globalization also divides communities, nations and regions,
Social tensions and conflicts are ignited when
there are extremes of inequality between the marginalized and the powerful.
Indonesia shows what can happen when an economic crisis sets off latent
social tensions between ethnic groups — or between the rich and poor.
More people have died or suffered from violent conflict between groups
within countries than in wars between countries in the past two decades.
impacting on human security.
In the 1990s, almost 3.6 million people died in conflict within states, while
220 000 have died from wars between states. The number of internally
displaced persons has increased dramatically, accounting for six million
people by the end of 2000 (United Nations Development Programme, 2002).
INSTABILITY STILL A RISK IN INDONESIA
BHASKARAN, 2004
(Manu -- partner and member of the board of Centennial Group Inc, an economics consultancy, The Edge,
"Indonesia: Getting Better," July 19, l/n)
First, while Indonesian security agencies appear to have succeeded in dismantling a good part of the
terrorist network responsible for the Bali and Marriott bombings, risks remain. There are credible reports
that smaller groups of terrorists, who can mount assassinations and one-off bombings, have entered the
country and could disrupt political stability as well as hurt Indonesia's recovery.
OIL DISADS
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INDONESIA DISAD
Impact Extensions: SLOCs
SUSTAINED ECONOMIC INSTABILITY THREATENS TO BOTTLENECK KEY SOUTHEAST
ASIAN SLOCS WHICH WOULD DECIMATE THE GLOBAL ECONOMY
MENON, 2001
(Rajan, staff, The National Interest, "another year of living dangerously," Oct 24, ln)
Indonesia may survive the combined assault of an ailing economy, deepening
separatism, and a failing state. Such an outcome is certainly desirable, but it is not
likely. American leaders must therefore brace for the possibility that Indonesia could
still collapse in chaos and disintegrate in violence. Alternatively, the current
instability could continue until economic recovery and political compromise give rise
to a country of a rather different shape and size. With Wahid gone and Megawati in
place, this is now somewhat more likely. Even the loss of Aceh and West Papua need
not spell national disintegration; without such provinces Indonesia would still retain
the critical mass to endure as a state. The second of these denouements is
preferable to the first, but both will create strong shock waves. Indonesia's size and
location are the reasons why. The three major straits that slice through it are pivotal
passages for the global economy. Malacca is by far the most important, particularly
for energy shipments. Some 450 vessels and about 10 million barrels of oil pass
through daily, and East Asian demand, driven by China, is expected to rise from 12
million barrels a day in 2000 to over 20 million barrels in twenty years. Japan, China,
Taiwan and South Korea would suffer severely and soon if fallout from turmoil in
Aceh (at its northern end) or Riau (at its southern end) blocked this passage. Its
narrowness, 1.5 miles in the Phillips Channel in the Singapore Strait, and ten miles
between Singapore and the Riau archipelago, adds to the danger. The Lombok Strait,
which ships use to sail to northeast Asia through the Strait of Makasar between
Borneo and Sulawesi, is next in importance, although it handles a far smaller volume
of traffic than Malacca and is of negligible importance for energy shipments. The
Lombok-Makasar route is, however, a critical corridor for Australia's coal and iron ore
exports to northeast Asia and for manufactured exports moving south from there. It
is also the most likely detour were Malacca rendered impassable or hazardous. By
comparison, Sunda is a minor shipping channel; the consequences of its closure
would be minimal for transcontinental trade. Rerouting Malacca traffic through
Lombok would strain the capacity of the world's merchant fleet, increase
transportation costs, and create severe bottlenecks. The problems would be even
worse if all three straits were unusable and ships had to transit northeast Asia by
skirting Australia's northern coast. Market signals would eventually add other
carrying capacity but the question is how quickly and smoothly the adjustment
occurs, and what the economic and political consequences would be in the
meantime. The ramifications of blocked or delayed maritime traffic, or even just
panic over the possibility, would spread speedily throughout globalization's many
circuits. Insurance rates would rise; coverage may even be denied if underwriters
deem the risks excessive. The effects of obstructed energy, machinery and
manufactured goods would register in capital markets, short-term investors would be
scared off, and the flow of much-needed foreign direct investment into a region still
convalescing from the blows of 1997 would slow.
OIL DISADS
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INDONESIA DISAD
Impact Extensions: SLOCs
DISRUPTION IN THE SLOCs CREATES MASSIVE ASIAN INSTABILITY
CALDER, 1996
(Kent – dir. of the Program on U.S.-Japan Relations, Woodrow Wilson School of Public and International
Affairs, Princeton University, Foreign Affairs, "Asia's empty tank," March/April, l/n)
since oil shock began to recede, energy has had remarkably
low priority in global policy councils. The time has come for a reevaluation,
and nowhere is one more urgent than in the Pacific. Major changes in East
Asian energy patterns are creating both danger and opportunities for
troubled trans-Pacific relations chronically oriented toward the past.
FOR NEARLY 5 years,
Asia's emerging energy problems cut subtly across the conventional boundary between economics and
security. They have been further masked by the temporary collapse of demand in many markets, such as
eastern Europe, since 1990. But they are no less perilous for their obscurity.
economic growth continues in Asia, as seems likely -as regional oil markets tighten
while contenders for supplies grow more diverse and competitive. China,
Japan, the Koreas, and most Association of Southeast Asian Nations (ASEAN) members will be
vigorously bidding for imports in energy markets that until recently were
much simpler and more relaxed.Changing supply routes for northeast Asian
importers may spark geopolitical rivalries along the vulnerable sea-lanes
that link Asia with the Middle East. Countries have already come to blows over their
The coming decade -- if buoyant
holds the potential for severe strains between Asian powers
conflicting claims to offshore areas that may be rich in oil and gas. n1
INDONESIAN INSTABILITY RISKS CHOKING OFF KEY SEA-LINES OF COMMUNICATION
(SLOCS)
SHERRILL, 2004
(Clifton – prof at Florida State, Military Review, "the military and democracy in Indonesia," May 1)
American security interests in Indonesia include developing a cooperative partner in
prosecuting the Global War on Terrorism and maintaining a stable government capable
of preventing internal unrest from threatening adjacent maritime
chokepoints that link the Pacific and Indian Oceans. Previously, Indonesian armed
forces (TNI) helped perpetuate stability under the autocratic government of Suharto; however, postSuharto democratic reforms seek to phase out the TNI's formal political role.
OIL DISADS
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INDONESIA DISAD
Impact Extensions: Prolif
INSTABILITY RISKS INDONESIAN NUCLEAR PROLIFERATION
POPHAM, 2003
(Peter, staff, The Independent, "nuclear war risk grows as states race to acquire bomb," April 29,
http://members.shaw.ca/cvpeace/riskgrows.html)
More and more states are likely to buy the argument that the only way to be secure in a unipolar
world is to go down the nuclear road – "to pre-empt pre-emption", one analyst said. "People look at the different ways
that the 'Axis of Evil' states – Iraq and North Korea – have been treated and they draw their own conclusions."
"What other countries are going to sit around after dinner saying, if Pakistan's got the bomb why
haven't we?" said Mr Plesch. On the list of those likely to be holding such conversations, he said, are Egypt,
Indonesia, Turkey and perhaps pre-eminently Japan, North Korea's uneasy neighbor.
OIL DISADS
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INDONESIA DISAD -- AFF
General
N/U – THE ASIAN FINANCIAL CRISIS DEVASTATED INDONESIAN SOCIETY
FUKUDA-PARR, 2003
(Sakiko – dir of human development report at UN development programme, Journal of Human
Development, "New threats to human security in the era of globalization," v. 4, July, EbscoHost)
Net financial inflows to Indonesia, Korea, Malaysia, the Philippines and
Thailand totalled US$93 billion in 1996. In 1997, as turmoil hit financial
markets, these flows reversed in just weeks to a net outflow of US$12 billion,
a swing of US$105 billion, or 11% of the pre-crisis Gross Domestic Product
(GDP) of the five countries. In Indonesia, the country that experienced the
most extreme reversal of economic and social achievements in just one year,
GDP growth fell from 4.7% in 1997 to a negative 13.2% in 1998. Bankruptcies
spread all over the region. Over 13 million people lost their jobs. Real wages
fell sharply, down to 40% or even 60%. Economic difficulties triggered or
exacerbated social tensions between ethnic groups as well as rich and poor,
resulting in erosion of the social fabric, rise in crime, violence and conflict.
The global repercussions of the East Asian crisis meant an estimated US$2
trillion drop in global output between 1998 and 2000.
POLITICAL STABILITY IS INCREASING IN INDONESIA
DILLON, 2004
(Dana – Senior Policy Analyst in the Asian Studies Center at The Heritage Foundation, "Elections in Indonesia," WebMemo #469,
April 2, http://www.heritage.org/Research/AsiaandthePacific/wm469.cfm)
There are also indications that Indonesia’s civil society continues to mature. In the past,
election violence was a major problem in Indonesia. Hundreds of people were killed in 1997, the last election under Suharto, and
This year, little election related violence is expected and
only 10 deaths have been directly attributable to election violence. Another favorable indicator is that the
police have been able to enforce order at political campaign rallies. During the 1999 elections,
about 175 were killed in the 1999 elections.
the police and military, associated with Suharto-era repression, were reluctant to approach campaign rallies for fear of inciting riots.
This year, reports
are that the police, detached from the military in 2000, were able to
enforce traffic regulations and good order at rallies.
OIL DISADS
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INDONESIA DISAD -- AFF
General
INDONESIA IS SWITCHING TO GAS PRODUCTION
WORLD OIL, 2003
("Energy demands spur oil/gas developments," August, wilsonselect)
The country has oil and gas reserves of 5.9 Bbbl, and over 70 Tcf. It is considered the
world's largest LNG exporter. However, oil production has fallen, averaging 1.265
MMbopd. There is a continued evaporation of foreign funds. Total oil wells drilled were
5.2% less than 2001; however, offshore drilling increased to a new high of 240. For
exploration, ConocoPhillips will test the Suban-8 delineation. BP Bawean and Santos
Group will abandon Titan BP 1 well, located 100 km NE of Kepodang gas field. Its
Calypso BP 1 was also P/A'd. Santos (Madura Offshore), as operator of the Madura
Offshore PSC located SE of Madura, flow tested the Maleo-1 wildcat, 140 km east of
Surabaya. And CNOOC of China, successfully appraised the KE 40-2, on the KE 40
discovery in Madura block. In development drilling, Pertamina and Bumi Siak Pusako,
will maintain crude oil output at a field run by ChevronTexaco. Pertamina will drill five
wells to keep production at 40,000 bopd, after taking over from PT Caltex Pacific. The
Clough Group won an $80 million bid for the first deepwater oil production field, West
Seno, in the Makassar Straits. Production was to commence in first quarter, 2003. And
Unocal's Indonesian subsidiary, Unocal Rapak, has drilled its fifth successive well on the
deepwater Ranggas oil field, testing 8,158 bopd.
OIL DISADS
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IRAN DISAD
Link: Iran wants stable oil prices
IRAN SEEKS STABLE OIL PRICES
AMIRAHMADI, 1995
(Hooshang– prof of urban planning and policy development & dir of Middle Eastern Studies at Rutgers Univ, Oil in the New World
Order, ed by Gilllespie & Henry, p. 211-212)
"price stability and revenue predictability," I was told by an Iranian official in Tehran,
"constitute the government's major areas of concern." Iran will focus on the actual
market situation and will seek a stable price rather than a higher unstable price. For
To begin with,
stability to be achieved, the Iranian official argued, OPEC must cooperate with market forces in determining a "fair price" for oil, the
so-called invisible hand concept.
The OPEC marker price of $21 per barrel is considered by
Iran as a "reasonable" price and should be protected. Iran needs to cooperate with
Saudi Arabia and international oil companies ("consumers") if this price level is to be
maintained. Therefore, depoliticizing OPEC has been a major aspect of Iran's new oil policy. The new pricing policy also
accounts for economic growth in the West. Accordingly, oil prices should be set at a level commensurate with the affordability level
of Western, industrialized, commercial, and residential consumers. Finally,
the oil price should be set in
relation to exports so that a minimum level of oil revenue is guaranteed for Iran.
Given its current revenue needs, at $21 per a barrel of oil Iran can observe its OPEC quota of 3.41 million b/d.
IRAN SEEKS STABLE OIL PRICES
AMIRAHMADI, 1995
(Hooshang– prof of urban planning and policy development & dir of Middle Eastern Studies at Rutgers Univ, Oil in the New World
Order, ed by Gilllespie & Henry, p. 222)
Consequently, more than at any other time in recent history, the politico-economic
interests of the GCC countries are in line with those of Iran. They need the security of
stable foreign exchange earnings that come primarily from oil exports. Accordingly, the
relative success of OPEC meetings since 1991 – especially the cordial and cooperative
relations between the two largest producers, Iran and Saudi Arabia – should have come as
no surprise. The Islamic Republic's foreign policy establishment has taken advantage of
the present trend in the politics of oil in the region and has consequently made overtures
to Saudi Arabia, Kuwait, the UAE, and others as a basis for expanded regional
cooperation.
OIL DISADS
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IRAN DISAD
I/L: oil key to econ
OIL IS KEY TO IRANIAN ECONOMY
AMIRAHMADI, 1995
(Hooshang– prof of urban planning and policy development & dir of Middle Eastern Studies at Rutgers Univ, Oil in the New World
Order, ed by Gilllespie & Henry, p. 185)
Oil is indisputably Iran's lifeline. During the 1970s and 1980s, an average of 90
percent of the country's foreign exchange was earned through oil. This hard
currency has paid for Iran's sizable imports of industrial inputs, consumer goods,
defense procurement, and food. Iranian industry requires $8 billion a year in foreign currency to operate a zerogrowth level. Iran currently lays out over $5 billion a year for food and related imports, about $2 billion for peacetime defense
procurement, and around $2 billion for miscellaneous expenses relating to foreign operations of the government. Based on these
figures, the sum total for a scenario of no growth comes to about $17 billion a year. Another $7 billion to $8 billion will be needed for
5 to 6 percent economic growth.
OIL DISADS
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IRAN DISAD
I/L: oil key to Iran's status
OIL REVENUE KEY TO IRANIAN PROMINENCE IN THE MIDDLE EAST
AMIRAHMADI, 1995
(Hooshang– prof of urban planning and policy development & dir of Middle Eastern Studies at Rutgers Univ, Oil in the New World
Order, ed by Gilllespie & Henry, p. 209)
As Aghazadeh, minister of petroleum, stated in a meeting with the ruling clergy in Qum
in September 1991: "If the Islamic Republic is to maintain its regional preeminence, it
must improve its economy by increasing its [oil] production." In 1992, the minister
insisted that "we are more concerned with the level of revenue than the number of barrels
of oil exported." Thus, once again, as under the Shah, oil revenue would be used to spur
economic growth and military strength to ensure a prominent role for the Islamic
Republic within OPEC and in regional security matters.
OIL DISADS
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37
IRAN DISAD – AFF
General
IRAN'S OIL EXPORTERS HAVE BEEN DWINDLING STEADILY
ENERGY, 2004
("OPEC still declining," January 1, l/n)
Today, Iran accounts for about 10 percent of total OPEC net oil export revenues, down
from 17 percent-19 percent in the 1970s. Third, Iraq's oil export revenue share has
fluctuated sharply, from a high of around 14 percent in the late 1980s, to basically 0
percent for several years following its August 1990 invasion of Kuwait (and the
subsequent U.N. oil embargo, which continues to this day). Iraqi oil export revenues
increased since late 1996 under the U.N. "oil-for-food" deal, which permitted Iraqi oil
exports to buy food and medicine, for war reparations, and for other U.N.-authorized
purposes. For 2003, Iraq's share of total OPEC oil revenues was about 4 percent, with the
share expected to reach 7 percent in 2004 and 9 percent in 2005.
OIL DISADS
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KUWAIT DISADS – AFF
General
TURN: low prices cripple their Kuwaiti economy
Prusher, CSM staff writer, 3-28-2k
(Illene, “Kuwait wrestles with insecurity as oil-based economy As OPEC nations
yesterday met to raise output, Kuwaitis ponder reforms to generous governmental perks,”
Christian Science Monitor p.ebscohost)
<Ten years after Iraq's invasion, an air of insecurity still rides close to the surface of
Kuwaiti life.
But with US troops stationed in this oil-rich emirate, it is obsolescence, not the threat of
invasion, that most worries Kuwaitis. The looming threat of cleaner, cheaper energy
sources, a gargantuan public sector, and a burgeoning populace - over 60 percent of it
under 18 and expecting government jobs upon graduation - is summoning calls for
reform. "There are worries that high prices may encourage investment in alternative
energy sources, and for us, that's the only incentive for preventing prices from going too
high," says Abdalla al-Nibari, a left-wing member of parliament. Today, with the Clinton
administration pressing OPEC members meeting in Vienna to boost production by about
2 million barrels a day in order to force prices lower, Kuwaitis are growing increasingly
concerned that their oil wealth could eventually tap itself out. While Americans may be
grimacing at gas prices each time the needle hovers near "E", Kuwaitis say they are yet to
recover from the last year's low revenues when a barrel of oil sold for $10, compared to
$34 two weeks ago. In this tiny Gulf state, oil is the largest source of state revenue and
higher oil prices are good news for sustaining the public sector, which employs 97
percent of the Kuwaiti workforce.
Indeed, in the halls of the Gulf's only elected parliament there's increasingly sharp
criticism of its one-commodity economy and its munificent welfare state. "We are very
lucky that oil prices are going up. We were saved by this rise in oil prices," says Hamed
al-Jasr, an economic advisor to the parliament's finance committee for the Islamic bloc,
one of several groups critical of the government.
"This government used to solve all its problems by signing checks. They just bury
mistakes with money, but that won't work forever," says Mr. Jasr. "We don't feel
confident about what will happen to Kuwait five years from now."
Electric cars, though slow to catch on, run shivers up the spines of all but the most
environmentally correct Kuwaitis. "Even if it replaces only 10 percent of the market, it
will probably push prices down tremendously," says Mr. al-Nibari. "That could be
disastrous for us.">
OIL DISADS
Consortium 2004
39
MEXICO DISAD
1NC SHELL
(A) MEXICAN ECONOMY IS GROWING STEADILY
FINANCIAL TIMES, 2004
("jo'burg steelmaker bucks falling market," august 19, l/n)
Mexico's economy grew 3.9 per cent in the second quarter compared with
the same period a year earlier, on a surge in industrial output, higher exports to the US and
strong consumer spending. It was the ninth straight quarter that the economy grew
on an annual basis and the biggest jump since the last quarter of 2000.
(B) LINKS
1. THE PLAN DEALS A BLOW TO OIL PRICES
[insert specific link]
2. LOW OIL PRICES FACILITATE INSTABILITY
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "saving America from the coming civil wars," Jan/Feb., l/n)
The Mexican economy provides a second source of civil conflict. The country
still has not recovered from its 1994 economic crisis, when the devaluation of the
peso sparked fear of total financial collapse. Disaster was averted by the extraordinary intervention of the
United States and the International Monetary Fund, which provided a $ 50 billion bailout. Despite this
assistance, inflation climbed to 52 percent (up from 7 percent the year before), real earnings dropped by
as much as 12 percent, the GDP shrank 6 percent, and over 25 percent of Mexicans fell seriously behind in
debt repayment. Though conditions have improved slightly in the years since,
the basic problems that caused the devaluation in the first place remain -such as reliance on foreign investment to finance growth. These problems,
combined with crushing Mexican poverty (85 percent of Mexicans are either unemployed or not
earning a living wage), falling oil prices, and the widening gap between the prosperous north and
the impoverished south, together form the basis for future unrest.
OIL DISADS
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40
MEXICO DISAD
1NC SHELL
(C) IMPACTS
1. OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their
existence. Oil instability promotes political instability, which may cause
more oil instability. We have no interest in fostering this cycle among big
producers (Saudi Arabia, Kuwait, Mexico). If OPEC doesn't push prices too high--choking
It's this roller coaster that OPEC wants to avoid.
economic growth--producers and consumers share common interests. What's too high? Hard to say. But
OPEC's target range ($22 to $28 a barrel) seems reasonable. Prices slightly exceed this now, although
after adjusting for inflation, they're lower than in 2000 and much lower than in the 1973-85 period.
2. CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
OIL DISADS
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MEXICO DISAD
Uniqueness: Econ is improving
MEXICO'S OIL SECTOR IS ENJOYING FINANCIAL GROWTH
BAEZA, 2004
(Gonzalo, staff, United Press International, "Latin American markets roundup," August 12, l/n)
Manufacturing continues to spearhead growth in Mexico's industrial output as
rising demand in the United States, which buys nearly 90 percent of Mexican
exports, boosts domestic production. Industrial output grew 5.2 percent in June
compared to the same month last year. Mexico's industrial production index includes
energy, construction, mining, and manufacturing, which experienced a 6.1 percent
increase in June.
HIGH OIL DEMANDS BOOST MEXICO'S ECONOMY
Business Wire, 2004
(august 6, l/n)
Mexico's ratings are supported by the reduction in its external debt burden ,
the country's prudent policy framework and liability management, and the continued integration of the
country with the U.S. The ratings remain constrained by the structural weaknesses in public finances, slow
progress on structural reforms, and weak social indicators. Mexico's short-term indicators
point to an economic rebound after three years of sluggish growth. Its
economic recovery has gained momentum in recent months, underpinned by
higher industrial production, and rising exports. Although higher oil prices
are contributing to improved export performance, the higher U.S. demand
has also fueled Mexico's manufactured exports. Despite the economic dynamism,
external imbalances have not deteriorated: trade deficit during the fist half of 2004 is more than 30%
lower, compared with the same period last year. However, sustaining this recovery beyond the upswing in
the U.S. economy would require additional structural reforms in Mexico.
Mexican economy is up and running – 2k4 will see high rates of growth driven by
corporate confidence
Poloz, 8-2-2k4
(Stephen, “Mexico’s Outlook: Partly Sunny,” London Free Press p.ln)
<Mexico's economy has caught the global wave and is likely to grow by more
than four per cent this year.
The fundamentals will remain positive, but there are some cautionary notes
for 2005. Mexico's economy has taken off in 2004 after three lackluster years. This
pattern is essentially that followed by the world, which is not surprising given
Mexico's high dependence on international trade.
In the first quarter of this year, Mexico's GDP posted growth of 3.7 per cent
compared to the same period a year ago.
This is well up from average growth of 1.3 per cent in 2003. Every sector has
accelerated, but the big swings are in mining, manufacturing and transportation.
A key driver is increased investment spending, as companies are increasingly
confident about the future.>
OIL DISADS
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MEXICO DISAD
Uniqueness: Econ is improving
Mexican economy is in full recovery mode
Poloz, 8-2-2k4
(Stephen, “Mexico’s Outlook: Partly Sunny,” London Free Press p.ln)
<Mexico is participating fully in the global recovery, but Mexican growth will
moderate over the next 12 to 18 months, along with the world.
Moving Mexico onto the outperformance plane will require further
competitiveness-enhancing economic reforms.>
Debt problems in Mexico are a thing of the past – economic indicators are on the
upswing
The Main Wire 7-30-2k4
<Excessive debt, the high costs of financing that debt and lack of
confidence in countries' monetary systems are all symptoms of past
failings in monetary policies, both central bankers agreed.
Vulnerabilities and risks in the region's macroeconomic systems can
only be overcome through continued vigilance by monetary and economic
authorities to ensure sustainable levels of inflation and interest
rates, Ortiz said. "Mexico's monetary and fiscal discipline has helped the country
adjust to the recent world economic slowdown, especially that seen in
the United States, in an orderly manner," he said.>
Mexican inflation is under control – enables successful economic recovery
The Main Wire 7-30-2k4
<Ortiz added that inflationary stability in Mexico over the
last few years had allowed the country to substantially reduce its
sovereign debt levels and issue long term spread, fixed-rate debt.
"This in turn has lead to a healthier credit system, opening
possibilities for banks such as the granting of mortgages and business
loans," Ortiz said. "This is proof that we are finally seeing the
results of a prudent monetary and fiscal policy in Mexico.">
Internal Mexican reforms create necessary structural reform for stable economy
The Main Wire 7-30-2k4
<Mexico's economy suffered a crushing financial crisis in 1994-95,
leading to a devaluation of the currency and hyperinflation. Massive
loan default lead to the collapse of the country's banking system, and
banks have only begun to return to granting personal and business loans
in the last couple of years. Ortiz agreed with Caruana that secondary reforms
institutions would help increase sustained growth, and added that
structural reforms aimed at greater competitiveness and capital
investment -- such as in education -- as well as the reduction of
corruption and political instability and the relaxation of labor
rigidities would all lead to "significant advances in economic
stability.">
of financial
OIL DISADS
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MEXICO DISAD
Uniqueness: Econ is improving
No risk of inflation – Mexican growth rate is steady
Lange, AP writer, 7-29-2k4
(Jason, “Mexico Cent Bank Sees no Inflation Pressure,” The Main Wire p.ln)
<Mexico's central bank Wednesday raised its projection for 2004 GDP
growth by a quarter point to 3.75%-4.25%, though it said the extra
growth should not put pressure on inflation.
Bank of Mexico's chief economist Manuel Ramos Francia told
reporters at a conference to release the bank's second quarter inflation
report that more growth was expected given the rise in U.S. imports of
Mexican manufactured goods and "vigorous" domestic consumption.
The United States buys around 85% of Mexican exports.
"GDP grew well below potential in recent years, so there still is a
certain amount of unutilized capacity -- which implies there could be
still be more growth without pressuring inflation," he said.
However, Ramos said the central bank is ready to act in the event
inflationary pressures emerged.>
Mexican economic indicators show green light for growth
Baeza, 7-29-2k4
(Gonzalo, “Latin American Markets Roundup,” UPI p.ln)
<Optimism runs high among Mexican economic authorities as the Bank of Mexico
rose Wednesday its growth forecast for the country's gross domestic product
(GDP). Whereas the bank had stated before that the Mexican economy would expand
within a range of 3.5 percent to 4 percent in 2004, it now forecasted an
expansion between 3.75 percent and 4.25 percent.
The assessment by Mexico's central bank comes after Finance Ministry raised
its own GDP estimate to 4 percent in view of the country's high 3.7 percent
growth during the year's first quarter.
Mexico's economy is expected to experience a substantial recovery after
three years of virtual stagnation, culminating in 2003's meager growth of 1.3
percent.>
OIL DISADS
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MEXICO DISAD
Uniqueness: Oil production increasing
PEMEX is increasing Oil exploration and production
Feld, senior analyst department of Energy, 3-2k4
(Lowell, “Mexico,” p. http://www.eia.doe.gov/emeu/cabs/opecnon.html)
<In May 2003, President Fox unveiled two multibillion-dollar projects for Pemex. The first project focuses
on the development of the Chicontepec field, northeast of Mexico city, where hydorcarbon reserves are
expected to total an estimated 18 billion barrels of oil equivalent (including all liquids and natural gas).
Over 15 years, Pemex is expected to spend $29.8 billion to develop a planned 13,500 wells a Chicontepec.
Pemex already has signed a $500 million oil-field services contract with ICA Flour Daniels and
Schlumberger to drill 250 wells in the field. The second project, the Marine Platform Building Program,
will build 47 offshore platforms, 111 miles of pipeline, plus separation and compressor facilities to develop
the Ku-Maloob-Zaap complex and the Lankahuasa natural gas find and other light crude projects. Once
completed in 2006, these projects are expected to produce 1.5 million bbl/d of crude oil and 1.5 billion
cubic feet (Bcf) per day of natural gas. As Mexico's existing fields mature, some observers consider Pemex
to be unequipped to discover and monetize new natural resources. President Fox has made efforts towards
modernizing Pemex by proposing that the company open itself increasingly to foreign involvement in
Mexico, not only to increase operational efficiencies, but also to assist the company in exploring frontier
areas, such as deepwater regions in the Gulf of Mexico.>
OIL DISADS
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MEXICO DISAD
Uniqueness: Oil revenue increasing
MEXICO OIL-EXPORT REVENUE IS ON THE RISE
ENERGY 1-1-2K4
(“OPEC Still Declining: Export revenues still lag far behind peak years,” Energy Journal vol. 29 no. 1)
<As with OPEC oil producers, major non-OPEC producers also are affected by
fluctuating world oil prices. Russian oil export revenues, for instance, surged
sharply after reaching a low point in 1998. This was the result of increases
both in oil prices as well as production. Russian net oil export revenues surged
by 38 percent in 2003 over 2002, to $ 60 billion. Russia's oil export revenues
for 2004, at $ 63.2 billion, are projected to be over three times greater than
their low point in 1998. Mexico's oil export revenues, at $ 16.0 billion in
2003 (and a projected $ 15.9 billion for 2004) are more than double their 1998
low point.>
Increase Mexican oil output propels Mexican economy; curbing trade deficit
World Market Analysis 7-20-2k4
<The Mexican state oil company Pemex has released a statement saying that its
average crude oil output rose by 2.1% to 3.402m bpd in H1 2004, compared to the
previous year. The company said that the increase was mainly due to increased
production of the heavier Maya oil, which rose by 4.4% to 2.475m bpd in H1 2004.
Production of the light Isthmus oil rose by 35.2% to 797,000 bpd. The Campeche
field accounted for around 83% of total oil production. Meanwhile, the company's
average natural gas production rose by 2.8% to 4.564 Bcfd in H1 2004, compared
to the first six months of 2003, due to higher volumes of associated gas
produced with oil. In a separate statement this week, Pemex said that total oil
export revenues reached US$9.7bn in the first half of the year. The results
reflect higher international oil prices during the first six months of 2004,
with the price for Mexican oil averaging US$28.57 per barrel during that period,
US$3.83 higher per barrel than between January and June 2003. Pemex's crude oil
exports averaged 1.863m bpd in June.
Significance: Increased oil export revenues have had a positive effect on the
country's overall trade balance, allowing Mexico to record a US$57m trade
surplus in May - its first positive balance for seven years.>
OIL DISADS
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MEXICO DISAD
Links: US oil imports key to Mexican econ
American energy diversification strategy favors Mexican oil – this is critical to their
economy
Felmy, Director of Policy Analysis and Statistics API, 1-15-2k3
(John, “API’s Year-End Statistical Report,” FNS p.ln)
<Q According to the chart, the Venezuela and Mexico share in the U.S. market
-- (inaudible) -- percent. Do you have an explanation for that?
MR. FELMY: Well, what we have seen is continued diversification of our
supplies in several different areas. We saw the United Kingdom also increase.
The industry is very intent on diversifying our supplies as much as possible.
Also, in the case of Venezuela and Mexico, oil is very important to their
economies, and so developing that as a resource is the incentive for them to
expand production. And the United States is the largest buyer in the world and
it's close by, so we are a convenient source -- convenient destination for oil. >
OIL DISADS
Consortium 2004
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MEXICO DISAD
Links: Low oil prices
Low oil prices will push the Mexican economy in the red
Lange, AP writer, 7-29-2k4
(Jason, “World Bank Off: Oil Price Drop Fiscal Trouble for Mexico,” The Main Wire p.ln)
<An eventual drop in oil prices would put Mexico in fiscal trouble
if the country fails to enact tax reform, a World Bank official said Wednesday.
"(Current) high oil prices have to a certain extent been covering
the need for more fiscal revenue," Isabel Guerrero, the World Bank's
director in Mexico, said at a news conference following the presentation
of a World Bank study on poverty in Mexico.
Guerrero said Mexico's economy and fiscal outlook should be stable
over the next two or three years without tax reform, "but if prices drop
the fiscal situation could turn delicate."
Mexico is the world's eighth-largest oil exporter, and its
state-run oil industry provides one-third of federal revenue. The high
oil prices since 2003 have provided a windfall in government revenue.
OIL DISADS
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MEXICO DISAD
Links: US oil imports key to Mexican econ
American oil revenues to Mexico are critical to their economic growth
Feld, senior analyst department of Energy, 6-2k4
(Lowell, “Major Non-OPEC Countries Oil Revenues,” p. http://www.eia.doe.gov/emeu/cabs/opecnon.html)
<Another mitigating factor is that the vast majority of Mexico's exports go to the United States, which on
balance is harmed by high oil prices. Thus, an increase in oil prices tends to hurt Mexico's main customer
for its non-oil exports, which in recent years have represented a rapidly growing sector of Mexico's
economy. Higher oil prices also tend to increase inflationary pressures and interest rates in Mexico, while
reducing pressures for important economic reforms. On the other hand, despite the fact that Mexican oil
export revenues make up only about 7% of total export revenues, they account for around one-third of
government income, meaning that the oil sector plays a major (even disproportionate) role in Mexican
economic policy. For 2003, EIA estimates Mexican oil export revenues of about $16 billion, up 23% from
2002, on net oil exports of 1.7 million bbl/d and an average price for Mexican oil -- mainly heavy Maya
crude -- of $24.74 per barrel. For 2004, Mexico's oil export revenues are expected to increase by about 15%
(to $18.1 billion) on higher oil prices, then decline slightly (1%) in 2005. >
70 % of Mexican oil goes to America; oil is critical to their economy and federal budget
Cordova and Cevallos, staff writers and oil analysts, 8-10-1999
(Diego and Luis, “Oil-Mexico: Yesterday’s Threat is Today’s Guarantee of Stability,” IPS p.ln)
<Mexico was forced to cut its budget several times last year due to the
collapse of oil prices, which plunged below $ 10 a barrel. And local authorities
warned of the need for additional "sacrifices" if the trend continued.
Although oil accounts for less than 10 percent of Mexico's total exports, it
finances one-third of the budget.
The Commerce Department rejected a petition yesterday filed by a group of
small independent U.S. oil producers who accused Mexico, Venezuela, Saudi Arabia
and Iraq of selling oil to the United States at prices that were undercutting
their industry. The Oklahoma-based group, Save Domestic Oil (SDO), was demanding steep
tariffs on oil imported from those four countries. But the Commerce Department
concluded that the group had "insufficient industry support" to merit a formal
investigation. According to Energy Secretary Tellez, the complaint was "ridiculous," but
could have had serious commercial, political and economic repercussions. More
than 70 percent of Mexico's oil sales go to the United States (around 1.1
million barrels a day). Indeed, Saudi Arabia, Mexico and Venezuela are the biggest
suppliers of imported oil to the United States, the world's top consumer of oil, which covers
55 percent of its needs with imports.>
OIL DISADS
Consortium 2004
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MEXICO DISAD
I/L: Oil key to econ
MEXICO'S ECONOMY DEPENDS ON MORE OIL EXPORTS
BROWER, 2003
(Derek, staff, Petroleum Economist, "Reform or Bust," May, wilsonselect)
MEXICO'S ENERGY sector needs investment of $20bn a year if the economy is to
continue growing, says Fernando Alonso, a senior official in the country's energy ministry. To ease chronic poverty and
reduce state subsidies -- which find their way to 75% of Mexicans one way or another -- the economy must strengthen. Says Eduardo
Andrade, president of the Mexican electricity association: "We need reform of an energy sector that, in its present state, is a brake on
Oil has long been the country's dominant industry. Proved crude reserves
-- estimated at about 26.9bn barrels -- are the fourth largest in the Western Hemisphere. Output
has consistently been more than 3m barrels a day (b/d) for the past decade. About 1.7m
development."
b/d is exported to the US.
OIL IS VITAL FOR THE MEXICAN ECONOMY
Business News Americas, 2004
("Fox administration adds 8,900MW capacity," August 13, l/n)
"With economic modernization underway and its renewed growth, and the
population growth over the next few years, it is necessary to make progress
in future electricity requirements," Fox said, calling for an electricity reform that will increase
private sector participation without privatizing the CFE. Electric power, oil and gas are key
to Mexico's economic growth, Fox emphasized, adding that power sector spending this year
would be US$5bn with oil and gas spending at US$13bn.
OIL IS KEY TO THE MEXICAN ECONOMY
CAMPBELL, 2002
(Ian, staff, United Press International, "Latin America bad to worse?" Dec 8)
The oil sector, the heart of the economy, is controlled by the monopoly of
the state-owned Pemex, a corrupt, inefficient company that squanders Mexico's oil wealth while
charging Mexicans exorbitant prices for fuel. The electricity sector is also state-run and
in need of huge investments if Mexico is to grow. Telephone service, a virtual
monopoly of the privatized Telmex, is ridiculously expensive and poor. Public education is disastrous. Only
half the population has health insurance. Millions of Mexicans enter the United States illegally to seek
work.
OIL IS VITAL FOR THE MEXICAN ECONOMY
Channel NewsAsia, 2002
("APEC members must work on long-term energy plan," July 24, ln)
investment and cooperation in the
energy sector was vital to economic growth. Mexico, which has large oil
reserves, relies heavily on the energy sector to provide 40 percent of its
income.
Mr Fox, speaking at an APEC meeting in Mexico City, said
OIL DISADS
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MEXICO DISAD
I/L: Oil key to econ
Mexican oil revenues critical to economic stability and growth
Mexico Business Monthly 10-1-1999
(“Mexico Economic Outlook p.ln)
<Overview: Mexico heads toward steady and continuous economic progress. It is
on target in abating domestic inflation; in July monthly inflation was 0.66%,
vs. 0.96% a year ago. Recent oil price recovery provides needed resources to
public finances (oil revenues account for more than a third of fiscal income).
The Financial Strengthening Program 1999-2000 (a US$ 23.7 billion package), was
set in place to improve Mexico's economic resilience to confront periodic
volatility in international financial markets and the world economy. The
recovery of oil prices has further stabilized Mexico's economy. While the
price of Mexican oil blend averaged US$ 8.6 per barrel in January, by the end
of July it had gone up to US$ 16.5 per barrel. (The federal budget was set
considering oil prices at US$ 9.3 per barrel)>
Oil key to stabilize Mexican economy and budget
Cordova and Cevallos, staff writers and oil analysts, 8-10-1999
(Diego and Luis, “Oil-Mexico: Yesterday’s Threat is Today’s Guarantee of Stability,” IPS p.ln)
<The oil market, recently considered a threat to Mexico's economic stability,
was described today as a guarantee against future financial turbulence, in
the wake of a decision by the U.S. Department of Commerce.
After the Commerce Department yesterday threw out a complaint alleging that
Mexico, Venezuela, Saudi Arabia and Iraq were dumping cheap oil on the U.S.
market, the price of a barrel of oil rose to $ 18.21 today, the highest level
seen since 1997. Local analysts remained skeptical, however, warning that Mexico's state
coffers continued to rely too heavily on oil, which finances 30 percent of the
budget.>
OIL DISADS
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MEXICO DISAD
I/L: Oil key to econ
Mexican inflation is in check because of high revenues from oil exports
Baeza, 7-29-2k4
(Gonzalo, “Latin American Markets Roundup,” UPI p.ln)
<Mexico's inflation goals are primarily threatened by the growth of China and
the consequent pressure it exerts on commodities. Rising interest rates are
likewise expected to weigh heavily on the country's inflationary policies.
Pressure on the domestic financial market has likewise been ameliorated by
revenue from oil exports and the often-overlooked remittances from Mexicans
living in the United States. Remittances to Mexico reached $7.8 billion during
the first half of the year, a 25.9 percent increase compared to the same period
in 2003. Mexicans residing in the U.S. poured a record-high $13.2 billion into
Mexico's economy last year.>
Mexican oil critical to overall government revenues
Feld, senior analyst department of Energy, 3-2k4
(Lowell, “Mexico,” p. http://www.eia.doe.gov/emeu/cabs/opecnon.html)
<Mexico's federal government relies on Pemex for approximately one-third of its budget, with Pemex and
its subsidiaries turning over an estimated 60% of their annual revenues. This financial obligation can make
it difficult for Pemex to make the necessary capital expenditures to maintain its production levels and to
increase Mexico's hydrocarbon reserves. Pemex is also reliant on the Mexican Congress for its budget,
making it difficult for the company to set its own priorities for reinvestment. In addition, the money
allocated to Pemex can be affected by world oil prices. In 1998, for example, low oil prices resulted in
Pemex generating lower revenues and thus paying less in taxes to the Mexican government. In response,
the Mexican government imposed federal budget cuts that resulted in an 11% decrease in Pemex's capital
expenditures budget.>
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
Iraq war and instability in the Mid-East has resulted in America increasing Oil imports
from Mexico – sustained American import will continue to drive Mexico’s economy
Xinhua News Agency 3-30-2k3
<Eighty-nine percent of Mexico's export goods are sold to the US markets.
Since the Iraq war broke out, the lower consumer demands there have produced
grave impacts on the export of Mexico's non- petroleum products.
According to statistics by Mexico's economic research center, the auto
industry, civil aviation, machine and equipment manufacturing, cement and mining
sectors, which all heavily depend on the US market, have seen their export
falling by about 5 percent since the beginning of the war.
Meanwhile, due to higher oil prices in international markets and lower crude
oil supply from the Middle East, the United States has had to increase oil
imports from Mexico. Oil exports, which account for 30 percent of Mexico's
budget revenues, have generated extra foreign exchanges for the Latin American
country. Regarding the Mexican economy, a German bank predicts that if the war in Iraq
goes on longer than expected, foreign investments would continue to flow in the
country in larger amount than ever before and the macroeconomic situation would
remain stable. >
MEXICO IS A MAJOR OIL SUPPLIER TO THE U.S.
RIA Novosti, 2004
("Russian president to pay first official visit to Mexico," june 7, l/n)
Presidents of the two countries Vicente Fox and Vladimir Putin will conduct
negotiations together with their ministers and other officials. The talks will focus on
bilateral cooperation, interaction between Russia and Latin American countries, the
situation in Iraq and on global oil markets (like Russia, Mexico is a major nonOPEC crude oil producer; Mexico is also a major supplier of light oil to the
southern part of the U.S.).
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
Mexico is a key oil exporter to America – they supply a majority of our oil
Kay and Quispe-Agnoli, research analyst’s at the Atlanta Latin America Research Group, 2k2
(Stephen and Myriam, “A Mixed Blessing: Oil and Latin American Economies,” Vol. 4, no. 3 EconSouth
p. http://www.frbatlanta.org/invoke.cfm?objectid=1B0BDCE0-904D-43E4BF7E42DC3F12D06F&method=display)
<Latin America’s role as a key supplier of crude oil to the United States has received renewed attention as
this country seeks to reduce its dependence on crude-oil imports from the Middle East. But within Latin
America, many countries struggle to deal with the effects of volatile oil prices. The United States depends
on Latin America for a significant portion of its oil. In 2001 Mexico and Venezuela were respectively the
second- and fourth-largest suppliers of U.S. oil imports, and for the month of May 2002, Mexico surpassed
Saudi Arabia as the largest single supplier of crude oil to the United States. Yet only a few Latin American
countries — Venezuela, Mexico, Ecuador and Colombia — are large net oil exporters. Some countries, like
Argentina, have become self-sufficient and have begun to export oil while others, including Brazil, seek
self-sufficiency in the coming decade. The rest of the region, however, resembles the United States in its
dependency on oil imports. The bottom line is that oil has a significant effect on the economy of every
Latin American country.>
Mexico is the center-piece for America’s new energy diversification strategy
Abraham, Secretary of NRG, 6-20-2k2
(Spencer, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<The national energy plan also places great emphasis on identifying and
developing energy opportunities around the world. With respect to the global
market, we're moving in a variety of directions. We believe that while we must
maintain and strengthen our friendships around the world, we must begin to work
in the first instance, as the chairman indicated in his remarks, with our
neighbors here in our own hemisphere to build a stronger partnership. The
centerpiece of our hemispheric partnership is a new program with Canada and
Mexico, called the North American Energy Initiative or Working Group, which was
launched by President Bush and quickly supported by President Fox and Prime
Minister Chrtien. This group has already begun to develop the policies needed to
enhance North American energy trade and interconnections and most of all energy
security.>
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
American energy imports come primarily from Mexico and other non-OPEC nations
Felmy, Director of Policy Analysis and Statistics API, 1-15-2k3
(John, “API’s Year-End Statistical Report,” FNS p.ln)
<MR. FELMY: Well, what we are trying to frame that is to note that unlike what
some folks believe, not all the oil of the world comes from those limited areas;
that the oil around the world comes from many different sources. Recently in the
past month we've seen that Mexico was the number one supplier to the U.S., as an
example; that we had of the top three suppliers to the U.S. non-OPEC sources.
So there are a wide variety of sources. Russia is interested in expanding their
production, as -- has expanded production from the Caspian. So what we are
trying to make a point there is just try to clarify the situation in terms of
what the sources of oil are in the world.>
Latin America and African oil sources key to diversifying and meeting America’s energy
needs
McManus, Acting Director Office of International Energy and Commodity, 10-21-2k3
(Matthew,” US NRG Security: West Africa and Latin America,” FNS p.ln)
<In summary, new energy resources from existing producers such as Canada,
Venezuela, Angola, combine with those from emerging producers of oil and gas
such as Equatorial Guinea, Chad, among others, are helping to meet our energy
security goals by diversifying world oil supplies. And the State Department
remains deeply engaged in each case. I've noted throughout the testimony we are
working with host governments, both in Washington and through our embassies
overseas to build and support open and stable business environments for U.S.
firms to play a role in developing these energy resources.>
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
AMERICAN ENERGY POLICY IS FOCUSING ON DIVERSIFYING OIL AND ENERGY
IMPORTS FROM MEXICO AND LATIN AMERICA
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<Turning to our hemisphere and to Latin America. As you know, the United
States, Canada and Mexico are working together to create ways to facilitate the
development of a true North American energy market that will deliver reliable,
affordable energy to the citizens of all three countries. The president's
National Energy Policy also recommends ongoing energy consultations with other
countries in Latin America to improve the energy investment climate. The
energy sector requires capital inflows to achieve adequate growth, especially in
the oil and natural gas sectors.
Latin America, Mexico and the Caribbean currently account for 10.5 million
barrels a day of global oil production, which could rise to 13 million barrels a
day or more, in the next decade. If we add Canada to this equation, 52 percent
of U.S. crude oil imports and 54 percent of U.S. petroleum product imports come
from the Western Hemisphere. Of the top five exporters to the United States,
three, Canada, Mexico and Venezuela are in our hemisphere. These three countries
account for a large percentage of the 314 billion barrels of proven oil reserves
in the region, a level of over 10 times the current U.S. oil reserves.>
BUSH ADMINISTRATION IS PURSUING POLICIES TO OPEN MEXICO’S HYDROCARBON
SECTOR
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<In Mexico on the other hand, there are positive signs for the long term.
In the recent past, the current administration has come out in favor of greater
private sector participation in Mexico's oil and gas development.
While this is just the first step in recognizing that there are immense
political obstacles and hurdles to be overcome for Mexico to reach its goal, it
is nevertheless the first positive sign of the opening of the Mexican
hydrocarbon sector since nationalization occurred more than 60 years ago.>
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
CURRENT AMERICAN ENERGY POLICY REVOLVES AROUND DIVERSIFYING OIL
SOURES – THIS IS CRITICAL TO SUPPLY SECURITY
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<MR. BRODMAN: Thank you. President Bush's national energy plan recognizes that
the United States cannot address its energy concerns alone, that our energy
security is intricately linked to international markets as a result of our
increasing dependence on external sources of supply. We recognize that energy
policy has a strong role to play in assuring that our energy supplies represent
a diverse set of energy resources from a diverse set of energy suppliers.
Therefore, security of supply is the driving force behind our policy
engagement on energy issues with many countries. While our policy of supply
diversity has been successful to some degree, the development of many frontier
oil provinces carries with it, its own set of political, economic and security
risks. Our policy of diversifying supplies relies on commercial investment and
energy projects. We don't tell our companies where to invest or where to buy
oil, it's up to them. And there are a considerable number of obstacles to
realizing this commercial investment, directly related to economic, political
and security risks.
We have seen that an unfavorable business climate may keep needed energy
resources locked away from development for a long time. The emerging threats to
energy security in many new producing countries and regions, and indeed as
recent developments in Venezuela and Nigeria have demonstrated in older
producing regions as well, are somewhat different than those we have faced in
the past.>
OIL DISADS
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MEXICO DISAD
I/L: Mexico key supplier to the US
MEXICO IS A KEY OIL SUPPLIER TO THE U.S.
REDDY, 2003
(Sudeep, staff, Dallas Morning News, "a powerful connection," Dec. 11, l/n)
The PUC already has a pre-existing relationship" with Mexico utility Comision Federal de Electricidad.
Officials and companies have been slowly building new energy relationships
between Texas and Mexico for years. Mexico is a major supplier of oil to the
United States, while it imports some natural gas from Texas as it seeks foreign companies to
develop its own natural gas fields.
MEXICO IS A KEY OIL SUPPLIER TO THE U.S. – AND OIL EXPORTS ARE KEY TO
THEIR ECONOMY
Latin America News Digest, 2004
("oil drilling in Gulf of Mexico to start soon," June 23, l/n)
Mexico is to shortly start oil drilling in the Gulf of Mexico, the President Vicente Fox
said on June 22, 2004. Drilling in the depths of the Gulf of Mexico will be aimed at ensuring enough oil
reserves for Mexican state monopoly Petroleos Mexicanos (Pemex), Fox added. Oil sector is key
for Mexico's economic growth and budget revenue, Fox said. The president did not
provide any details on the oil drilling initiative. Foreign and private investments in Mexican oil and energy
sector are limited by the state legislation. Yet the oil sector provides some 60 pct of the
total budget revenue of Mexico. The country is also one of the main oil
producers worldwide and among the main importers of oil to the USA.
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MEXICO DISAD
Impact Extension: Civil War
MEXICO NEEDS OIL REVENUE TO PREVENT A CIVIL WAR
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
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.
CIVIL WAR IN MEXICO WILL ESCALATE
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "Saving America from the Coming Civil Wars," Jan/Feb, ln)
A civil war would
endanger the 350,000 Americans who live south of the border. Direct American
Conflict in Mexico threatens a wide range of core American interests.
investments of at least $ 50 billion would be threatened, as would $ 156 billion in bilateral trade and a
major source of petroleum exports. Illegal immigrants would swarm across the 2,000-
mile frontier, fleeing civil conflict. And armed incursions might follow; during the
Mexican Revolution of 1910, fighting spilled over the border often enough
that the United States had to deploy roughly half its armed forces to contain
the conflict. In a future war, the millions of Americans with family in Mexico
might take sides in the fighting, sparking violence within the United States.
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MEXICO DISAD
Impact Extensions: Global Economy
Collapse of Mexican economy sinks the global economy into depression
Rangel, editor Monterrey Bureau of the Dallas Morning News, 11-28-1995
(Enrique, “Mexico: Caught Between Oil and New,” The Dallas Morning News p.ln)
< Mexico's role in the global economy goes beyond the continent, said Noel
Nava, an economist at the Mexico City campus of Monterrey Tech.
"The peso troubles are having a major impact in Europe and in Asia as well,"
Dr. Nava said. "Many countries in those continents have a lot at stake in
Mexico." In Germany, for example, Volkswagen announced shortly after the Mexican
currency was devalued that it would temporarily stop manufacturing automobiles
in Mexico. And in Asian countries such as India, Indonesia and Malaysia, financial
markets suffered losses of up to 30 percent because U.S. and European investors,
fearful that the peso woes would spread to other Third World countries,
temporarily withdrew their money from those emerging markets.
"That was a big blow for those emerging markets of Asia," said Dr. Lpez of
Monterrey Tech. "They were indirect victims of the peso's troubles."
And that's unfortunate because most Asian countries are prospering because
they have avoided Mexico's main mistake, which is borrowing heavily, Dr. Lpez
said.>
ECONOMIC COLLAPSE CAUSES EXTINCTION
BEARDEN, LIEUTENANT COLONEL IN THE U.S. ARMY, 2000
[TOM, JUNE 24, HTTP://WWW.FREEREPUBLIC.COM/FORUM/A3AAF97F22E23.HTM]
Bluntly, we forsee these factors- and others not covered-converging to a catastrophic collapse of the world economy in about eight
As the collapse of the Western economies nears, one may expect catastrophic
stress on the 160 developing nations as the developed nations are forced to
dramatically curtail orders. International Strategic Threat Aspects History bears out that
desperate nations take desperate actions. Prior to the final economic collapse, the
stress on nations will have increased the intensity and number of their conflicts, to
the point where the arsenals of weapons of mass destruction (WMD) now possessed by some 25
nations, are almost certain to be released. As an example, suppose a starving North Korea
launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic
suicidal response. Or suppose a desperate China-whose long-range nuclear missiles (some) can reach the United States attacks Taiwan. In addition to immediate responses, the mutual treaties involved in such
scenarios will quickly draw other nations into the conflict, escalating it significantly.
Strategic nuclear studies have shown for decades that, under such extreme stress conditions, once a few nukes are
launched, adversaries and potential adversaries are then compelled to launch on
perception of preparations by one's adversary. The real legacy of the MAD concept is this side of the
years.
MAD coin that is almost never discussed. Without effective defense, the only chance a nation has to survive at all is to launch
immediate full-bore pre-emptive strikes and try to take out its perceived foes as rapidly and massively as possible. As the studies
showed, rapid
escalation to full WMD exchange occurs. Today, a great percent of the WMD arsenals that
will be unleashed, are already on site within the United States itself . The resulting great Armageddon will
destroy civilization as we know it, and perhaps most of the biosphere, at least for many
decades.
OIL DISADS
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MEXICO DISAD
Impact Extensions: Global Economy
Mexican economic collapse will wreck the global economy
Rangel, editor Monterrey Bureau of the Dallas Morning News, 11-28-1995
(Enrique, “Mexico: Caught Between Oil and New,” The Dallas Morning News p.ln)
<This time, the world is keeping a close eye on Mexico's unfolding financial
crisis for one simple reason: Mexico is a major international player.
If its economy were to collapse, it would drag down a few other countries and
thousands of foreign investors. If recovery is prolonged, the world economy
will feel the slowdown.
"It took a peso devaluation so that other countries could notice the key role
that Mexico plays in today's global economy," said economist Victor Lpez
Villafane of the Monterrey Institute of Technology.
"I hate to say it, but if Mexico were to default on its debts, that would
trigger an international financial collapse" not seen since the Great
Depression, said Dr. Lpez, who has conducted comparative studies of the Mexican
economy and the economies of some Asian and Latin American countries.>
Mexican economic collapse spills over throughout the world
Rangel, editor Monterrey Bureau of the Dallas Morning News, 11-28-1995
(Enrique, “Mexico: Caught Between Oil and New,” The Dallas Morning News p.ln)
< Mexico's role in the global economy goes beyond the continent, said Noel
Nava, an economist at the Mexico City campus of Monterrey Tech.
"The peso troubles are having a major impact in Europe and in Asia as well,"
Dr. Nava said. "Many countries in those continents have a lot at stake in
Mexico." In Germany, for example, Volkswagen announced shortly after the Mexican
currency was devalued that it would temporarily stop manufacturing automobiles
in Mexico. And in Asian countries such as India, Indonesia and Malaysia, financial
markets suffered losses of up to 30 percent because U.S. and European investors,
fearful that the peso woes would spread to other Third World countries,
temporarily withdrew their money from those emerging markets.
"That was a big blow for those emerging markets of Asia," said Dr. Lpez of
Monterrey Tech. "They were indirect victims of the peso's troubles."
And that's unfortunate because most Asian countries are prospering because
they have avoided Mexico's main mistake, which is borrowing heavily, Dr. Lpez
said.>
OIL DISADS
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MEXICO DISAD
Impact Extensions: US economy
Mexican economic collapse will derail the US economy
Rangel, editor Monterrey Bureau of the Dallas Morning News, 11-28-1995
(Enrique, “Mexico: Caught Between Oil and New,” The Dallas Morning News p.ln)
<No country understands better the importance of Mexico to the global economy
than the United States, said Jorge Gonzlez Dvila, an economist at Trinity
University in San Antonio.
"Despite the rhetoric that you hear in Washington, I think that most people
agree - even those who oppose any aid to Mexico - that when Mexico sneezes,
everybody catches a cold," Mr. Gonzlez said.
"That's why nowadays any talk of aid to Mexico or trade with Mexico gets a
lot of attention," he said.
Most economists, analysts and business leaders on both sides of the border
agree that the biggest impact abroad of a prolonged Mexican fiscal crisis may be
on the U.S. economy, especially in Texas and in cities bordering Mexico.
From El Paso to Brownsville, retailers along the Texas-Mexico border have
seen their sales drop as much as 70 percent, prompting layoffs of thousands of
workers. Mexican customers whom the stores had depended on for years can no longer
afford to shop in the United States because the peso has lost more than half its
value.>
Mexican economic woes threaten to spillover and damage America’s economy
Goldwyn, President Goldwyn International Strategies, 10-21-2k3
(David, “US energy Security: West Africa and Latin America,” FNS p.ln)
<Let me start with Latin America. Latin America is more important than
Africa right now in terms of how much oil it provides to the United States. And
Venezuela and Mexico, as you pointed out, Mr. Chairman, are the two most
important suppliers. But they and the entire region are in pretty deep trouble.
Mexico is still deadlocked over the desirability of foreign investment,
particularly in the energy sector, and as a nation, Mexico is
de-industrializing. It doesn't have the energy to compete for manufacturing with
other developing companies. And if Mexico has economic problems, we have
economic problems, and we have other kinds of problems as well.>
OIL DISADS
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MEXICO DISAD
Impact Extensions: US economy
Mexican economic downturn affects American economic growth
Lugar, former Senator Indiana and Chair of CSIS, 2004
(Richard, March 23, “THE UNITED STATES AND MEXICO: IMMIGRATION POLICY AND THE
BILATERAL RELATIONSHIP,” FNS p.ln)
<SEN. RICHARD LUGAR (R-IN): This hearing of the Senate Foreign Relations
Committee is called to order. Today the Senate Foreign Relations Committee
meets to examine the United States-Mexico bilateral relationship with a special
focus on the role of immigration. The relationship between Mexico and the
United States is complex and wide ranging. Every day the bilateral agenda deals
with trade, management of our common border, water distribution, energy
cooperation, transportation, communication, tourism, the environment, human
rights and the struggle against drugs and organized crime.
Americans and Mexicans must understand that the fate of our two nations is
inextricably intertwined. Mexico is the second largest trading partner of the
United States. An economic downturn in either economy will affect the health of
the other. >
OIL DISADS
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MEXICO DISAD
Impact Extensions: Regional economies
Mexican economic collapse spills over into other Latin American countries
Rangel, editor Monterrey Bureau of the Dallas Morning News, 11-28-1995
(Enrique, “Mexico: Caught Between Oil and New,” The Dallas Morning News p.ln)
<"I think that in the near future, perhaps as early as next year, we are going
to see Texas exports to Mexico grow again," Mr. Bush said after meeting with
business and civic leaders.
“A strong Mexico is important to any state in the U.S.," he added, "and a
strong Mexico is important to the future of Texas."
A strong Mexico also is important to the future of other nations,
particularly to those in Latin America, said Macario Schettino, an economist
at El Colegio de Mxico and author of a recent book on the history of peso
devaluations.
We trade heavily with Argentina, Brazil, Chile, Colombia and Central
America," he said. "If we collapse, the economies of those countries will
suffer a major blow, too."
In 1994, Mexico had a gross domestic product of $ 350 billion.
Trade between the country and other Latin America countries has more than
doubled since Mexico opened its economy in 1987 by signing the General
Agreements on Tariffs and Trade, or GATT.
Only Brazil, with $ 510 billion, had a larger GDP than Mexico.
Argentina, with a GDP of $ 275 billion, was third, and the GDP of other Latin
American countries such as Chile, Colombia, Peru and Venezuela - which all trade
heavily with Mexico - ranged from $ 50 billion to $ 75 billion.
For Latin America, trade with a healthy Mexico is key to growth of the entire
region, Dr. Schettino said.>
OIL DISADS
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MEXICO DISAD
Impact Extensions: Trade
NAFTA key to Energy trade between Canada/Mexico and America
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<MR. BRODMAN: I don't -- yes, Mr. Chairman, I'm not sure I could quantify my
answer in any exact way, but I believe NAFTA and just the negotiation of NAFTA
itself was a very important milestone in creating the kind of environment that
we see today between Canada, the United States and Mexico. Mexico and Canada are
our two most important trading partners and I think if we take those two
countries together, they're responsible for a large portion of the energy that
we import and export.
And I think a lot of the activities that we have underway today in the North
American Energy Working Group are in fact an outgrowth of the North American
Free Trade Agreement. There are a number of challenges still ahead of us, that I
think will have to be undertaken in a broader context such as the WTO especially
in the area of the energy services trade and those kinds of things, but I think
NAFTA overall has had a very positive development on the relationship and the
development of trade and energy between our three countries.>
AMERICA IMPORTS OVER 30 % OF OIL FROM MEXICO AND VENEZUELA – THIS IS THE
CORNERSTONE OF BILATERAL AND TRADE RELATIONS
Hagel, R-Senator NE, 10-21-2k3
(Chuck, “US NRG Security: West Africa and Latin America,” FNS p.ln)
< Both Latin America and West Africa are regions rich in resources but
bedeviled by instability and conflict. Both regions can also play even greater
roles as major suppliers of energy to the United States over the years to come.
Approximately 30 percent of America's crude oil and petroleum imports come
from Latin America, primarily Mexico and Venezuela. This energy relationship
cannot be separated from our bilateral relationships, including trade and
immigration. >
OIL DISADS
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MEXICO DISAD
Impact Extensions: US-Mexico Relations
Oil is the foundation for current Mexico-American relations
McManus, Acting Director Office of International Energy and Commodity, 10-21-2k3
(Matthew,” US NRG Security: West Africa and Latin America,” FNS p.ln)
<First, we've made strengthening our relations with Canada and Mexico a real
pillar of our energy policy. We have established a North American Energy Working
Group to serve as a forum for exchanging information and pursuing joint
strategies. In an unprecedented step the three governments jointly published a
North American energy picture that we've asked our staffs to provide you that
measures the energy reserves, trading flows and energy infrastructure for all of
North America. This is the first time that the three governments have looked
at the resources of all of North America at one time and cooperatively.
And We plan to build on this energy picture as a common basis to explore new
ways that the three North American nations can work together to expand
interconnections and maximize trade, and our group will meet again in December. >
US-Mexican relations critical to American national security and economic stability
Hagel, Senator Nebraska (R), 2004
(Chuck, March 23, “THE UNITED STATES AND MEXICO: IMMIGRATION POLICY AND THE
BILATERAL RELATIONSHIP,” FNS p.ln)
<A strong bilateral relationship with Mexico, as you have noted in your
opening comments, Mr. Chairman, is important to our national security interests
as any bilateral relationship we have today. And with nearly 100 million people
and a 2,000 mile border with the United States, strong relations with Mexico are
critical to enhancing our national security, our political stability, our
economic growth and free trade throughout the Western Hemisphere. America's
security and vitality depend on policies that are based on the strengths of
America, not our insecurities. Adjusting to the global economy requires
immigration policies that consider those seeking to live and work in the United
States as assets to and not burdens on, our national economy. >
OIL DISADS
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MEXICO DISAD
Impact Extensions: War on Terrorism
Mexico is a key ally in the war on terror – geographic proximity makes them a critical
security state
Latin American Weekly Report 9-16-2k3
<Fox chooses 11 September anniversary to tailor anti-terrorism legislation to
the needs of the US.
President Vicente Fox has been making efforts to convey to Washington the
message that Mexico's reservations about the war against Iraq are not extensive
to the war on terror', and that in this latter area Mexico is a reliable
ally. The most recent gesture in this regard came on the anniversary of the 11
September 2001 attacks on New York and Washington, when Fox submitted to
congress a bundle of legislation designed to fine-tune' the provisions on
terrorism in the penal code and the federal law on organised crime.
Mexico is not considered a target for international terrorism, but fears
have repeatedly been aired about its potential role as a launching-pad for
attacks on the US. Thus, apart from classifying terrorism as a grave' crime and
stiffening penalties, the Fox package makes provision for the preparation in
Mexican territory of a terrorist act committed or intended to be committed
abroad.'>
Mexican immigration loopholes enable Al-Qaida to sneak in – US-Mexico cooperation
critical
Peters, Staff Writer CSM, 1-16-2k3
(Gretchen, “Mexican migration moves off fast track,” CSM p.ln)
<There are currently 8.5 million undocumented workers in the US, about half of
them Mexican. Fox argues that a broad migration deal would save Washington
billions of dollars spent annually policing the border and earn more by taxing
registered migrant workers.
The current setup, they argue, promotes a black market system that helps to
smuggle migrants in, get them false identification, and funnel their money back
out. Groups such as Al Qaeda might use it to get a foothold on US soil.>
OIL DISADS
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MEXICO DISAD
Impact Extensions: War on Terrorism
US-Mexican cooperation critical to counter-terrorism and successful war on drugs
Noriega, ASSISTANT SECRETARY, BUREAU OF WESTERN HEMISPHERE
AFFAIRS, DEPARTMENT OF STATE, 2004
(Roger, March 23, “THE UNITED STATES AND MEXICO: IMMIGRATION POLICY AND THE
BILATERAL RELATIONSHIP,” FNS p.ln)
<Mr. Chairman, I should note that each of the five principles that you
outlined this morning are very much at work in our relationship with Mexico. I
think President Bush and President Fox have converted this relationship in a
short period of time into a win-win equation. We understand that when we work to
secure our border for honest commerce that we both benefit. When we accommodate
legal migration and fight against illegal migration, we both benefit. When we
encourage trade and economic development, both of our countries stand to
benefit. And when we fight drugs and work together to -- in the region and in
the world, we both benefit. This is very much a partnership with Mexico, one of shared responsibilities
in confronting and dealing with the issues between our two countries and in the
world we share, and we do so in a very constructive way. That was underscored
at the meeting between the two presidents in Crawford at the President's ranch
on March 5 and 6, which was an excellent opportunity to discuss these bilateral
relations in a very informal personal, friendly setting. And I was inspired by
the commitment demonstrated in those meetings by the two presidents to work
together to enhance an already strong relationship in ways that will benefit our
people. I'd like to discuss very briefly some of those key bilateral issues. As my
colleagues in the Department of Homeland Security can attest, Mexico has offered
outstanding cooperation in improving border security and counterterrorism
efforts. During the recent threat to aviation security at the end of the year
2003, Mexico worked closely with the United States canceling flights and
increasing security and screening in Mexican airports as the situation required.
Under the Border Partnership Accord signed by both presidents in March of
2002, we are increasing security for both countries in speeding the movement
of legitimate goods and travelers across our border. During the last three
years the U.S. and Mexican officials have developed unprecedented levels of
cooperation on law enforcement, including information sharing and even joint
investigations. The Mexican government has achieved impressive records in
capturing leaders of the major drug trafficking organizations that operate on
both sides of our borders. The Mexican attorney general's office and the
Mexican military conduct extensive eradication operations.
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MEXICO DISAD
Impact Extensions: War on Terrorism
US-Mexico cooperation key to strict immigration standards for border checkpoints this is
critical to Homeland Security and WOT
Verdery ASSISTANT SECRETARY, OFFICE OF POLICY AND PLANNING, BORDER
AND TRANSPORTATION SECURITY DIRECTORATE, 2004
(Stewart, March 23, “THE UNITED STATES AND MEXICO: IMMIGRATION POLICY AND THE
BILATERAL RELATIONSHIP,” FNS p.ln)
< MR. C. STEWART VERDERY: Chairman Lugar and members of the committee, thank
you for the opportunity to be here today to testify about the Department of
Homeland Security's participation in our very important U.S.-Mexico bilateral
relationship. As you mentioned, I'm Stewart Verdery, assistant secretary for
Policy in the department's Border and Transportation Security Directorate.
As my written testimony details, a sensible immigration policy begins with
security at our nation's borders and enforcement of our laws. Our homeland will
be more secure when we can better account for those in our country, instead of
the current situation in which millions of people are unknown. Reforming our
immigration laws to strengthen our economy, while bringing integrity to our
immigration system, is a worthwhile goal consistent with our homeland security
needs. However, following on the comments of my fellow panelists I'd like to
concentrate my brief oral remarks today on several important initiatives DHS,
and particularly our BTS Directorate, are developing that impact our
relationship with Mexico. The U.S. and Mexico signed a border partnership plan
nearly two years ago and to facilitate progress under that accord, last month
Secretary Ridge led a team from DHS to Mexico City which included Director
Aguirre. At that meeting Secretaries Ridge and Creel signed two important and
companion agreements: a memorandum of understanding on the repatriation of
Mexican nationals, and a 2004 border plan of action.
These agreements provide a framework for ensuring a secure, safe and orderly
border, especially during the upcoming summer months when dangers to migrants
are most acute. We have agreed with Mexico to focus our efforts on the
Arizona-Sonora corridor with a combination of resources, equipment, training
and law enforcement cooperation. Last Tuesday, on March 16, Undersecretary Asa
Hutchinson announced the Arizona Border Control Initiative, or the ABC, a first
of its kind integrated operation aimed at saving migrant lives, enhancing border
security, disrupting smuggling operations and reducing violence in border
communities. The announcement launching ABC alerted a community and those who would seek
to exploit our borders that we are beginning to build our operational capacity
to deal with the unprecedented flow of aliens through this dangerous terrain.
Together with our Mexican counterparts, we're strengthening joint public safety
campaigns and intensifying remote surveillance along high risk routes into the
U.S. We provided search, rescue and lifesaving training to DHS and Mexican
officers to respond to migrants who are lost or stranded by smugglers in a
dangerous terrain.>
OIL DISADS
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MEXICO DISAD
Impact Extension: War on Terrorism
Porous border and NAFTA ensure growth in drug trade
Sharpe and Spencer, professor of political science at Swarthmore College and deputy director of the
Washington Office on Latin America, 2001
(Kenneth and William, Nov. 1, “Refueling a doomed war on drugs: Flawed policy feeds growing
conflict; Report on U.S. policy,” NACLA Report on Americas Vol. 35 no. 3 p.ln)
<U.S.-Mexican relations regarding drug control policy have always been
sensitive. Mexico's 2,000 mile land border with the United States, and its
surrounding sea lanes, are a natural draw for those seeking to traffic illicit
drugs--particularly cocaine and heroin--north toward the $ 50 billion U.S.
market. Officials are able to inspect only a fraction of the tens of thousands
of vehicles and commercial trucks that daily cross the border, taking advantage
of the international free trade encouraged by NAFTA. It is virtually impossible
to seal such a border against the flow of drugs. The situation is made worse
because Mexico's police forces and judicial system have been historically
ineffective and corrupt--and their corruption has been deepened by their
involvement, at U.S. insistence, in the drug war.>
War on Drugs critical to successful war on terror
Sharpe and Spencer, professor of political science at Swarthmore College and deputy director of the
Washington Office on Latin America, 2001
(Kenneth and William, Nov. 1, “Refueling a doomed war on drugs: Flawed policy feeds growing
conflict; Report on U.S. policy,” NACLA Report on Americas Vol. 35 no. 3 p.ln)
Within days following September 11, the international chorus of heartfelt
concern for the victims and their families was followed by troubling and
calculated moves for advantage by advocates of measures which could serve to
escalate the war on drugs. The Bush administration floated and then withdrew a
proposal for a broad five-year waiver of human rights restrictions on U.S.
security assistance to other countries, an ominous proposition for Latin
America. House Speaker Dennis Hastert (R-IL) argued that the war on drugs in
Latin America should be expanded, because it is integrally linked with
protecting the United States against terrorism. The Colombian Army sought to
bolster its standing by taking out newspaper ads highlighting destruction
wrought by Colombian insurgents. U.S. backers of a bold counterinsurgency policy
there have issued grave new warnings about the threat of "narcoterrorism." Even
the Ecuadorian Foreign Minister made a case to editors of The Washington Post
that the Bush administration's prop osal for new drug war spending in the Andes
(as well as Andean trade preferences) should be attached to the anti-terrorism
bill moving at the time through Congress.>
OIL DISADS
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MEXICO DISAD
Impact Extensions: US dependence on Mid-East Oil
Mexico is a critical centerpiece to America’s oil independence strategy
Hyde, representative R-IL, 6-20-2k2
(Henry, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<Our imports of energy from Mexico are at a much lower level, but Mexico's
potential export capacity is enormous, especially in the area of petroleum.
Thus, many of the pieces needed for our energy security are already in place,
waiting to be assembled. There is no reason why we cannot work with our North
American friends in the immediate future to share expertise and investment in
creating an integrated energy market, with the adoption of a common vision of
energy security, a commitment to removing the obstacles that hinder the
development of the continent's vast energy resources and the creation of an
integrated energy infrastructure. Energy resources can be used for the common
good between Canada, Mexico and the United States. This North American energy
alliance would provide our three nations with energy security. Maybe in just
five years time we would be in a much better position than we are today.>
Increased American investment in Mexican oil is critical to remove OPEC’s death grip
on global oil
Ramesh, staff-writer, 7-11-2k3
(Randeep, “Oil Shocked,” Guardian p.
http://www.guardian.co.uk/economicdispatch/story/0,12498,996303,00.html)
<If Lagos were to leave Opec or even argue America's case, then Mr Bush's African expedition would have
yielded a significant gain for America. Another triumph would be if Mexico, whose president is in political
trouble, allowed foreign investment into its inefficient, state-owned petrol industry. Helping Mexico to
pump more oil will help loosen the grip that Opec has on the current oil price. Perhaps the most interesting
American advance is that which is least talked about. US oil companies are reckoned to have brought rights
to almost 75% of the oil and gas output from the Caspian, which potentially contains tens of billions of
barrels of oil.>
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MEXICO DISAD
Impact Extensions: US dependence on Mid-East Oil
Mexico’s vast oil supplies, geographic proximity, and NAFTA partnership make them a
vital source for American energy security
Larson, Under Secretary for Economic, Business, and Agricultural Affairs Dept. of State, 4-8-2k3
(Alan, “Energy Concerns Cannot Constrain US Policy,” State Department p.ln)
<Mexico is one of our leading energy and trading partners, and has, with other
major producers, surged production in recent months to reduce market volatility.
The U.S. is also the leading market for Mexican manufactured exports, which
are now about 10 times the value of Mexico's oil exports. Energy trade with
Mexico is not a one-way street. We import crude oil and electricity from Mexico,
and are a net exporter of refined petroleum products and natural gas to Mexico.
Mexico will make its own decisions on whether or how it wants to liberalize
its energy sector to attract investment, and whether that investment will be
domestic or foreign. Mexico has already liberalized transportation,
distribution, and storage of natural gas, and has successfully attracted
domestic and foreign investment to that sector. In the last few years, Mexico
has also begun to allow independent power producers (IPPs) to sell power to the
public grid.
The reliability of North American energy trade is also enhanced, of course,
by geographic proximity. But more important than geography alone is the rule of
law and predictable investment conditions created by NAFTA [North American Free
Trade Agreement], integrated pipeline networks, closer cooperation between our
governments and energy companies and long-term reliable supply relationships.
Our policy is to deepen further this framework of rule of law and predictable
investment conditions in North America and to use it as an example as we seek to
build similar frameworks in other regions. For example, the North American
Energy Working Group has five expert sub-groups that have harmonized certain
appliance standards to facilitate trade and established a mechanism for
scientific and technical cooperation.
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MEXICO DISAD
Impact Extension: Military Readiness
( A ) Post-Iraq war America gets oil from Mexico and Canada to support the economy
and conduct military operations
Lubricants World 4-1-2k3
<API has developed this section to respond to inquiries it has been receiving
about how the oil and natural gas industry will continue to meet the nation's
energy needs during the current situation in Iraq. "Our industry has a strong
record of commitment in providing the nation with energy even during times of
national crisis and natural disasters," the new section says. "Drawing upon
oil and natural gas reserves from countries such as Canada and Mexico,
Americans should feel confident that the industry will make every effort to
provide the nation with the fuel needed to conduct military operations, support
the economy, get people where they want to go, and keep their homes warm, and
families comfortable and secure.">
( B ) Readiness critical to rapid response and hegemony
James L. George, 5/29/99 ,Cato Institute, former congressional staff member for
national security affairs
Readiness, the capability to respond quickly to a conflict with the appropriate force,
is considered one of the most important elements in defense planning. From onethird to well over one-half of the defense budget goes towards maintaining
readiness. Few people questioned the need for readiness, especially after the attack
by North Korea against South Korea in 1950 and during the Cold War, when the
Soviet-led Warsaw Pact was poised to quickly thrust into Western Europe without
much warning.
( C ) US hegemony is critical to preventing nuclear war
Zalmay Khalilzad, RAND Defense Analyst, THE WASHINGTON QUARTERLY, Spring 1995, p. 84
(MHBLUE1242)
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 lowlevel 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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MEXICO DISAD
AT: Diversification
OIL STILL SUPERCEDES MEXICO'S ENERGY FOCUS
ASH, 2004
(Nigel, staff, Petroleum Economist, "Mexico: A foot in the door," March, wilsonselect
Mexico is
still very much an oil-based economy. The MSCs are directed exclusively towards gas and Pemex will continue
to put almost all its funding into oil, which is the backbone of the Mexican economy. Gas has always taken a bit of
a back seat, as it has in many countries." Mexico has for some time imported a
small amount of gas from the US. However, the need to stimulate domestic gas production comes from rapidly
As Shaw explains: "Pemex does not have the resources within exploration and production (E&P); especially with gas.
rising demand, including the requirement to fuel planned clean-burn power stations.
Mexico diversifying economy now, but oil is still critical to the Mexican economy
Kay and Quispe-Agnoli, research analyst’s at the Atlanta Latin America Research Group, 2000
(Stephen and Myriam, “A Mixed Blessing: Oil and Latin American Economies,” Vol. 4, no. 3 EconSouth p.
http://www.frbatlanta.org/invoke.cfm?objectid=1B0BDCE0-904D-43E4-BF7E42DC3F12D06F&method=display)
<For governments that are highly dependent on oil export revenue, fluctuations in the price of oil can have
a major impact on the fiscal balance. As oil prices rise, governments are able to finance public
expenditures. However, when export revenues decline, there will inevitably be a fiscal shortfall. Oil
stabilization funds represent one effort to compensate for oil price volatility (see the sidebar), but a basic
fact of political economy remains that governments find it far easier to raise expenditures than to cut them.
In Venezuela, Ecuador and Bolivia a strong relationship exists between fiscal balance and oil export
revenues as a percentage of GDP (the impact of oil revenue on fiscal balance in Venezuela is highlighted in
chart 1). In contrast, Mexico’s economy was once highly dependent on oil export revenues, but the country
has seen its fiscal accounts improve even as oil export revenue as a percentage of GDP has declined
Mexico’s government remains dependent on the state-owned oil company, Pemex, for 37 percent of its
revenue; however, the government has made significant strides in reducing fiscal deficits in the 1990s (see
the sidebar). Mexico’s successful export diversification and consequent reduced dependency on oil is due
in part to its implementation of structural reforms in the late 1980s and 1990s. By comparison, reforms in
Venezuela and Ecuador have lagged behind the rest of the region.>
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AT: No oil reserves
Mexico's proven Oil reserves rank amongst the highest in the world
Feld, senior analyst department of Energy, 3-2k4
(Lowell, “Mexico,” p. http://www.eia.doe.gov/emeu/cabs/opecnon.html)
<As of January 2004, Mexico had the fourth largest proven crude oil reserves in the Western Hemisphere
after Canada, Venezuela, and the United States. In September 2002, Pemex had revised its proven crude oil
reserve estimate downward 53% to 12.6 billion barrels, reducing Mexico’s proven reserves at its lowest
point in the last decade, but subsequently raised it to 15.7 billion barrels. This revision was done in order to
comply with U.S. Securities and Exchange Commission (SEC) filing guidelines, which require that
hydrocarbon reserves qualifying as "proven reserves" be under commitment for exploration in the short
term. According to Pemex's Statistical Yearbook 2003, Mexico's ultimate potential reserves (including
crude oil, condensate, natural gas liquids, and refinery gain) are significantly larger, at an estimated 40.6
billion barrels. In 2003, Mexico produced an estimated 3.8 million barrels per day (bbl/d) of oil (including
crude oil, condensate and natural gas liquids), of which 3.4 million bbl/d was crude (below Mexico's
government targeted end-year production of 3.5 million bbl/d). Nonetheless, crude oil production jumped
6.1% year-on-year, mainly due to increased production from Mexico's revived oilfield, Cantarell.
In 2003, Mexico consumed 2.05 million bbl/d of oil, resulting in approximate net exports of 1.75 million
bbl/d. The United States imported about 1.6 million bbl/d of these exports, making Mexico the third largest
foreign supplier of petroleum to the United States, behind Canada and Saudi Arabia. During 2003, Mexico
ranked as the world's fourth-largest oil producer (including crude, lease condensate, natural gas liquids, and
refinery gain), behind Saudi Arabia, Russia and the United States.>
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MEXICO DISAD – AFF
General
No internal link: Drug trade makes Mexican civil war inevitable
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<MEXICO TODAY faces a future more uncertain than at any other point in its
modern history. Pervasive corruption financed by drug traffickers, the end of
one-party rule, armed revolt, and economic disaster have all surfaced over the
past few years. In response, the Mexican army has begun to question its
decades-old record of non-interference in politics. Should Mexico collapse into
chaos, even for a short period of time, vital American interests will be
endangered. This, in turn, raises the specter of U.S. intervention.
The growing influence of drug money is the greatest single source of Mexican
instability. The narcotics industry has worked its way into the fabric of
Mexican society, to the extent that it is now Mexico's largest hard currency
source (estimated at $ 30 billion per year) and is probably the country's
largest employer. As in Colombia, drug dealers threaten to take control of the
state. More worrying, senior Mexican officials -- including those in charge of
the antidrug effort -- are routinely found to be working for drug cartels.
Major drug traffickers have assembled their own private armies and operate
without fear of prosecution. Crime, much of it drug financed, runs rampant
throughout the country, particularly in Mexico City. In 1995, then-CIA director
John Deutch signaled his concern for the impact of drugs on Mexico by making
that country a strategic intelligence priority for the first time. It may,
however, already be too late for help from Washington. The control of Mexico by
drug traffickers will be hard to reverse, especially since, given the central
role the drug lords play in Mexican life, doing so might further destabilize the
country.>
Internal instability makes Mexican oil a risky proposition
Goldwyn, President Goldwyn International Strategies, 10-21-2k3
(David, “US Energy Security: West Africa and Latin America,” FNS p.ln)
<Let me start with Latin America. Latin America is more important than
Africa right now in terms of how much oil it provides to the United States. And
Venezuela and Mexico, as you pointed out, Mr. Chairman, are the two most
important suppliers. But they and the entire region are in pretty deep trouble.
Mexico is still deadlocked over the desirability of foreign investment,
particularly in the energy sector, and as a nation, Mexico is
de-industrializing. It doesn't have the energy to compete for manufacturing with
other developing companies. And if Mexico has economic problems, we have
economic problems, and we have other kinds of problems as well.
And none of the things that have been talked about today, not a new energy
minister, not multi-service contracts, not even a record high level of
investment for PEMEX are very likely to change this in Mexico because they are
so politically deadlocked, and that's a problem.>
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MEXICO DISAD – AFF
General
MEXICAN OIL PRODUCTION IS PEAKING
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “Energy Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<Oil reserves have fallen 20%, lining up Pemex with SEC booking rules; giant
oil producer Cantarell may have peaked; and capital spending needs to rise
substantially from here. Mexico, not an OPEC player but a key element of
previous OPEC/non-OPEC alliances, has little incentive to chase a growth
strategy, or play for US market share. The real decision rests in whether or not
to bring in the IOCs.>
Mexican oil prices are falling despite hot 2003 earnings
Xinhua General News 7-28-2k3
The prices of Mexican petroleum would fall to 19 US dollars per barrel in
2004, down some 5 dollars from the average price of 24.72 dollars in 2003, the
International Consultant firm predicted on Sunday.
Mexico would lose 680 million dollars in foreign exchange earnings if the oil
price drops next year, the firm said.
The oil price was originally set at 18.35 dollars per barrel in the country's
financial budget, but the real average price was 24. 72 dollars, generating a
34- percent rise in revenues.
As a major source of revenue for the country, the oil export earnings
increased by 29 percent in the first five months of this year, up 6 percent from
the same period last year.
The oil prices on the international market have been on the rise in recent
months, fueled by the Iraq war, Venezuela's nationwide strike by oil workers
and the shrinking oil storage in the United States.
As normal production is beginning to resume in Venezuela and Iraq and
non-OPEC members will keep their current production quotas, Mexico is expected
to see a fall in its oil export prices next year.>
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MEXICO DISAD – AFF
General
No Internal Link: Oil is not critical to the Mexican economy – export diversification
proves
Kay and Quispe-Agnoli, research analyst’s at the Atlanta Latin America Research Group, 2000
(Stephen and Myriam, “A Mixed Blessing: Oil and Latin American Economies,” Vol. 4, no. 3 EconSouth p.
http://www.frbatlanta.org/invoke.cfm?objectid=1B0BDCE0-904D-43E4-BF7E42DC3F12D06F&method=display)
<Mexico’s diversification of exports and consequent reduced dependency on oil revenue stands in marked
contrast to Venezuela’s lack of diversification. As the process of economic reform was implemented in the
region and Latin American markets became more open, Mexico pursued a strategy that led to a
diversification in exports. Oil exports as a share of total exports began to fall in the mid-1980s as Mexico’s
manufactured exports increased rapidly, in part through the expansion of the maquiladora sector.
Maquiladoras are assembly plants, often located near the U.S.-Mexico border, where finished products
made of imported parts are assembled and exported; they flourished during much of the 1990s under the
North American Free Trade Agreement (NAFTA). A dramatic increase in Mexico’s total exports led to a
decline in the share of oil exports. During the same time period Venezuela’s dependence on oil shrank only
marginally because the country never diversified its export base.>
No Internal Link: PEMEX cant produce enough oil to meet demands – nationalization
hampers oil-output
Kay and Quispe-Agnoli, research analyst’s at the Atlanta Latin America Research Group, 2000
(Stephen and Myriam, “A Mixed Blessing: Oil and Latin American Economies,” Vol. 4, no. 3 EconSouth p.
http://www.frbatlanta.org/invoke.cfm?objectid=1B0BDCE0-904D-43E4-BF7E42DC3F12D06F&method=display)
<Mexico’s 1938 nationalization of its oil industry is an enduring symbol of national sovereignty and
independence. The constitution grants Mexico’s national oil company, Pemex, the exclusive right to
produce and explore oil and gas and prohibits it from selling such rights to a third party. As Mexico seeks
to expand exploration, however, these restrictions on foreign investment become an increasing burden.
Mexico has proven oil reserves of 24 billion barrels compared to 22 billion barrels in the United States. Yet
Pemex by itself lacks the financial capacity to fund a rapid expansion in the exploration of these resources.
Because the federal government receives 37 percent of its revenue from Pemex, the company is further
limited by its crucial role in financing the public sector. For example, some analysts argue that with
sufficient foreign investment, Mexico could begin exploiting its gas-rich Burgos Basin within two years,
but Pemex would need seven years to carry out the project by itself.>
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MEXICO DISAD – AFF
General
Energy supply isn’t critical to NAFTA – Mexican sovereignty issues block liberalization
McManus, Acting Director Office of International Energy and Commodity, 10-21-2k3
(Matthew,” US Energy Security: West Africa and Latin America,” FNS p.ln)
<MR. McMANUS: Well, I was fortunate 13 years ago to have been a negotiator on
the NAFTA Energy Chapter and the first word of Chapter 8 I believe was that each
party will respect each party's constitution. So, oil and gas is largely hived
off in NAFTA for reasons of sovereignty obviously from Mexico, but with Canada
we have a much broader free trade agreement that does touch on security of
supply and on the margins in NAFTA it does provide liberalization in independent
power projects, but I would say fundamentally, it hadn't altered the energy
landscape and that was very much at the insistence of the government of Mexico.
NAFTA regulations restrict Mexican production capabilities
West, Chair PFC NRG, 10-21-2k3
(J. Robinson, “US Energy Security: West Africa and Latin America,” FNS p.ln)
<A couple of other points again. I'll try and be brief. In terms of looking at
the various regions, Mexico is an area that has enormous potential and it has a
role to play in the U.S. It's an important supplier but there is a contradiction
in their policy. Discussed NAFTA. NAFTA has encouraged a great deal of inward
investment and more economic activity but it was earlier pointed out, investment
in the energy sector is precluded and the government of President Fox has been
unable to liberalize their investment framework in oil and gas. And this has
really damaged Mexican production.>
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MEXICO DISAD – AFF
Link Turn
High oil prices risk derailing Mexico's export economy
Wilson, staff writer Washington Post, 9-26-2k
(Al, “OPEC Energized and Unified By Rising Prices,” The Washington Post p.ln)
<Around the globe, the price rise has resurrected troubled economies, funded huge
public expenditures and allowed new leaders to put off potentially damaging
political choices." The Post added, "In the Persian Gulf, for instance, the
extra money has prompted not only investment in roads and pipelines, but also
in government workers who have gone years without significant pay increases. The
oil-money infusion in Russia has given President Vladimir Putin breathing room
as he tries to push through tax reforms. In Mexico, where oil once dominated
the economy, fears that high crude prices may damage its new, broader-based
export economy in the long run have been tempered by the new oil revenue.">
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MEXICO DISAD – AFF
AT: War on Terror Impact
TURN: Supply Side – War on Drugs fuels corrupt governments increasing demands for
drugs and creating false promise of security and success in the War on Drugs
Sharpe and Spencer, professor of political science at Swarthmore College and deputy director of the
Washington Office on Latin America, 11-1-2k1
(Kenneth and William, “Refueling a doomed war on drugs: Flawed policy feeds growing
conflict; Report on U.S. policy,” NACLA Report on Americas Vol. 35 no. 3 p.ln)
<But those assumptions remain deeply flawed, and guarantee continued failure.
Despite the war rhetoric, the "enemy" in supply-side drug control is not this
cartel or that drug lord but a market system. Drug prohibition policies in the
context of stubborn demand create a black market that ensures extraordinarily
high profits for traffickers: Drugs sell in the United States for over ten times
the cost of their production in Latin America. Inflated black market prices
never approach a level that might significantly curb drug abuse and addiction in
the United States. But the tremendous profits they generate finance criminal
organizations, spur often-violent competition for market share, provide billions
of dollars to bribe ill-paid law enforcement and security forces, and ensure
that new producers and traffickers will readily step forward to replace those
who are taken down. The fatal flaws in the drug war create a chicken-little dynamic: The sky is
always falling. The crisis of the moment--the discovery of a new smuggling
route, the spread of coca cultivation to new countries or new parts or old
countries, the emergence of a new drug trafficking organization--always demands
an emergency response. Unwilling to question the fundamental assumptions and
risk appearing "soft on drugs," the Bush administration is following the classic
alternatives: escalation and tinkering with the policy mix (a little more for
alternative development and democratic institution-building; a little more for
Colombia's neighbors).>
TURN: Supply side – War on Drugs fuels civil wars and expands drug trade ensuring
instability, jeopardizing free-trade agreements, and economic stability
Sharpe and Spencer, professor of political science at Swarthmore College and deputy director of the
Washington Office on Latin America, 11-1-2k1
(Kenneth and William, “Refueling a doomed war on drugs: Flawed policy feeds growing
conflict; Report on U.S. policy,” NACLA Report on Americas Vol. 35 no. 3 p.ln)
<Meanwhile, the policy not only fails to solve drug problems here in the
United States, but also wreaks damage in the region. Pressing Latin American
governments to fight the drug trade corrupts the very police and security forces
that do the fighting. It increases the power of the military to threaten fragile
civilian democracies, exacerbates civil conflict, threatens the livelihood of
peasant farmers, and spills the violence and the drug trade to neighboring
countries. The drug war also threatens to undermine broader U.S. interests--both
economic (trade and investment, access to natural resources and fostering
sustainable development) and political (strengthening democracy, human rights,
demilitarization, and stability). Dispatches from the two main fronts in the
drug war, Mexico and Colombia, suggest mixed but dubious prospects for the Bush
team as it pursues a conservative strategy in the long shadow of September 11.
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NIGERIA DISAD
1NC SHELL
(A) NIGERIAN ECONOMY IS GROWING, AND IT'S FUELED BY OIL EXPORTS
VANGUARD, 2004
(in Africa News, "Nigeria: external reserves up," August 17, l/n)
The Central Bank of Nigeria (CBN) disclosed this in its monthly economic report for
June, released yesterday. According to the report "provisional data showed that
Nigeria's gross external reserve at end-June, 2004 amounted to $11.412 billion,
indicating an increase of 13.2 per cent over the preceding month's level. At current
level of foreign exchange commitment, the reserves could finance about 8.7 months
of foreign exchange disbursement. During the month, the nation recorded $1.55
billion net inflow of foreign exchange with aggregate inflow rinsing by 5.1 per cent
from the preceding month to $2.918 billion while aggregate outflow rose marginally
by 1.3 per cent to $1.368 billion. The report indicated that the nation recorded
about $2.2 billion earnings from crude oil export during the month. Total crude oil
export for the month stood at 62.7 million barrels, at an average price of $35.55 per
barrel. When compared to the $25 per barrel which is the bench mark for the 2004
budget, this indicates a surplus of $661 million from crude oil export for the month.
(B) LINKS
1. HIGH OIL PRICES ARE VITAL FOR NIGERIAN ECONOMIC RECOVERY
DAILY TRUST, 2004
(in Africa News, "Nigeria targets 36bn barrel oil reserves," April 28, ln)
Meanwhile, Nigeria's economy may be on its way to revival as oil prices in the
international market have boosted the nation's foreign reserves which fell to critical
levels last year to $9.78 billion. Speaking to Daily Trust on the development
yesterday, Oceanic Bank International Limited's, Mrs Cecilia Ibru said that the strong
showing of the reserves as was declared by the Central Bank of Nigeria (CBN) in its
April report was a sign that the dark days may be over, and hoped that the positive
trend was maintained in the overall interest of the nation.
2. THE PLAN CAUSES THE PRICE OIL TO PLUMMET
[Insert Specific Link]
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1NC SHELL
(C) IMPACTS
1. PLUMMETING
OIL PRICES WILL IGNITE A MASSIVE CIVIL WAR
EVIATAR, 2003
(Daphne, staff, Newsweek, "how to save Africa," Sept. 22, l/n)
When oil prices crash, oil economies fall too, often helping trigger rebellions, says
Oxford economist Paul Collier, who has documented a correlation between naturalresource dependence and civil wars. Nigeria is the most oil-dependent economy
in the world, and suffers constant conflict in its oil-rich Niger Delta. It has earned
$340 billion from oil over the past 40 years, but the percentage of Nigerians living on
less than a dollar a day has risen to 70 percent from 36 percent in 1970.
2. SMALL-SCALE AFRICAN CONFLICTS CAN IGNITE A NUCLEAR WAR
DEUTSCH, 2002
(Jeffrey – Macroeconomics prof at Keiser College, Rabid Tiger Newsletter, vol. II, no. 9, Nov. 18,
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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NIGERIA DISAD
Uniqueness: Oil production increasing
NIGERIA IS INCREASING ITS OIL PRODUCTION
FORD, 2003
(Neil, staff, African Business, "OPEC's runaway horses," March, wilsonselect)
The quota increases are not expected to have a major impact upon production in the three African Opec member states (Algeria, Libya
and Nigeria) because of the culture of quota breaking by almost all members of the cartel over the past year. Nigerian
production at the start of 2003 was 2.1m b/d, still above its new quota of 2.018m b/d. Libyan production in
January 2003 was 18,000 b/d above its new quota, while Algerian output was 168,000 b/d over its allowance. Indeed, coupled with
the threat of a war in Iraq that could drive price up still further, member states may now be so used to exceeding their quotas that they
could feel secure enough to increase output still further where possible. Even using Opec estimates of production capacity, Nigeria
could increase output by 200,000 b/d, Algeria by 150,000 b/d and Libya 70,000 b/d. In reality, however, Nigeria in
particular could probably increase production by much more and for some in West Africa, the shadow of Opec
quotas continues to hang over the expanding Nigerian oil sector. The recent quota rises merely help to cancel out overproduction and
does nothing to assuage Nigeria's insistence that its share of the overall Opec pie needs to be increased.
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Uniqueness: Econ improving
NIGERIAN ECONOMY IS IMPROVING
BOHNSTEDT, 2004
(Andrea, staff, World Markets Analysis, "Nigeria's non-oil exports reach five times
1999 volume," August 16, l/n)
The chief executive of the Nigerian Export Promotion Council (NEPC), David
Adelugba, has said that Nigeria's non-oil exports increased to more than N95bn
(US$735m) in 2003 from N19bn in 1999. He attributed this increase to government
incentives, such as the abolition of qualitative restrictions, the upward revision of
export promotion incentives, the establishment of an export processing zine in
Calabar and the strengthening of the Nigeria Export-Import Bank (NEXIM).
HIGH OIL PRICES DRIVE NIGERIAN ECONOMIC GROWTH
BOHNSTEDT, 2004
(Andrea, staff, World Markets Analysis, "Nigeria's non-oil exports reach five times
1999 volume," August 16, l/n)
Due to the high oil prices, Nigeria banked US$470m in excess oil revenues in June
2004 alone, which clearly dwarfs the 2003 non-oil exports (see Nigeria: 26 July
2004: Nigeria Adds US$470m to Excess Crude Oil Account in June 2004).
NIGERIAN INDUSTRIAL GROWTH IS IMPROVING
THIS DAY, 2004
(in Africa News, "Nigeria: UNIDO hails Nigeria's industrial growth," Aug 13)
The United Nations Industrial Development Organization, (UNIDO) has described as
optimistic, the level of industrial growth in Nigeria, saying the country was heading
towards the right direction in its industrialisation effort.
NIGERIAN ECONOMY IS IMPROVING
THIS DAY, 2004
(in Africa News, "Nigeria: UNIDO hails Nigeria's industrial growth," Aug 13)
The UNIDO representative said although for several years Nigeria witnessed decay
in the industrial sector, in the last five years there has been a noticeable upward
movement. Minister of Industry, Ambas-sador Magaji Muhammed, in a speech at
the occasion said all major economies that have followed the industrial route to
prosperity identified manufacturing as the main factor in the successful
transformation of their economies. In this direction, he disclosed that the Federal
Government has identified and tackled some of the impediments hindering the
country's industrial growth and performance.
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NIGERIA DISAD
I/L: Oil key to econ
OIL IS VITAL FOR NIGERIAN ECONOMY
AFRICA NEWS, 2003
("US energy official testifies on US oil and gas imports," Oct. 27, ln)
West Africa is currently producing about 4 million barrels of oil per day. Production in
West Africa could rise to 7 million barrels per day or more by 2010, and even higher
in subsequent years if the geology and investment climates are favorable. West
Africa is one of the world's fastest growing sources of oil and gas. Oil production
generates a large share of government revenue in countries such as Nigeria, Angola,
Gabon, Equatorial Guinea, Republic of Congo, and Cameroon. Much oil remains to be
discovered and developed in some of these countries. Additionally, emerging
potential producers, such as Mauritania, and Sao Tome and Principe, will soon begin
producing significant new oil supplies. Chad began producing oil for the first time this
summer and production could reach 150,000 bpd in 2004.
OIL IS KEY TO THE NIGERIAN ECONOMY
AFRICA NEWS, 2003
("US energy official testifies on US oil and gas imports," Oct. 27, ln)
Energy from West Africa plays an increasingly important role in our energy security
as we diversify our sources of oil supply. Currently, more than 12 percent of
imported U.S. oil is from Africa. However, Africa's oil exports to the U.S. are set to
rise. African oil is a key engine for economic development in Africa.
NIGERIAN ECONOMY RELIES ON OIL REVENUE
ACHEBE & EPSTEIN, 2004
(Chidi Achebe is the Medical Director of Whittier Street Health Center in Boston, & Paul R. Epstein is
Associate Director of the Center for Health and the Global Environment at Harvard Medical School in Africa
News, "Oil: Prize or Curse?" July 15, l/n)
Nigeria depends on oil for 90-95% of export revenues, and over 90% of foreign
exchange earnings. A similar story can be told of several other African oil producers.
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I/L: Oil key to econ
OIL REVENUE IS KEY TO NIGERIAN ECONOMIC RECOVERY
BOHNSTEDT, 2004
(Andrea, staff, World Markets Analysis, "IMF cautiously endorses Nigeria's reform
programme," August 4, l/n)
On his first visit to Nigeria, new IMF Managing Director Rodrigo de Rato gave a
cautious endorsement of Nigeria's ambitious reform programme, regarding it as a
significant step towards achieving macroeconomic stability and ending Nigeria's
boom and bust cycles. Rato also commended the Nigerian government for its efforts
to improve governance and transparency, expressing his hope that the Fiscal
Responsibility Bill would be signed into law soon. However, Rato urged the
government to use the excess oil revenues from higher than budgeted oil prices
cautiously to stabilise the economy and improve Nigeria's credit worthiness. He
particularly warned that the rising inflation rate, a key issue in macroeconomic policy
making, would have to be addressed. In 2003, already high oil prices did not
prevent Nigeria's external debt rising by US$2bn to US$32.8bn. Annual inflation
accelerated to 19.4% in May 2004 (see Nigeria: 15 July 2004: Nigeria's May Inflation
Accelerates to 19.4%).
OIL IS KEY TO THE NIGERIAN ECONOMY
THIS DAY, 2004
(in Africa News, "Why there's violence in Niger-Delta," May 7, l/n)
Speaking at a book presentation in Abuja recently, the former head of the defunct
interim government noted that since oil is a critical source of revenue to all the
governments in Nigeria and also serves as the engine of growth of the economy,
the nation cannot afford to continue to ignore the plight of the people while
depending on the resources produced from their soil.
OIL IS CRUCIAL FOR NIGERIAN ECONOMY
DAILY TRUST, 2003
(in Africa News, "international finance corporation," Nov. 26, l/n)
Nevertheless, in a seminar in Lagos the president of Issuing Houses Association of
Nigeria, Mr. A.O. Okumagba stated effectively that the banks are still unable to play
well in the upstream oil sector which he described as a key sector of the economy.
Hence his position that the banks may embrace the strategy of mergers and
acquisitions in order to have the deep pockets needed to play effectively in the key
sectors of the economy, such as the oil sector.
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NIGERIA DISAD
I/L: Nigeria a key supplier to the US
NIGERIA IS KEY TO U.S. OIL NEEDS
DOUGLAS et al., 2003
(Oronto – environmental rights action, "Alienation and Militancy in the Niger Delta," Foreign Policy In
Focus, http://www.fpif.org/papers/nigeria2003.html)
The geopolitical significance of Nigerian oil to the U.S., particularly against the global backdrop of rising
prices, tight markets, and political instability in the Persian Gulf, Indonesia, and parts of Latin America, is
widely understood. Even before the September 11th attacks, the Petroleum Finance Company (PFC),
testifying in Congress before the International Relations Subcommittee on Africa, reported on the strategic
and growing security significance of West African oil. In the view of the PFC, West Africa's high-quality
reserves and low-cost output, coupled with massive new deep-water discoveries, required serious attention
and substantial foreign investment. In the wake of the Al-Qaeda attacks and the Gulf War, Nigeria and
West African producers have emerged as "the new Gulf oil states."3 By January 2002 the Institute for
Advanced Strategic and Political Studies provided a forum for the Bush administration to declare that
African oil is "a priority for U.S. national security."4 In the last year, the ugly footprint of Africa's black
gold in Gabon, São Tomé, Angola, and Equatorial Guinea has rarely been off the front pages. It is also
haunted by the specter of terror; the "nightmare" as the New York Times noted of "sympathizers of Osama
bin Laden sink[ing] three oil tankers in the Straits of Hormuz."5
NIGERIA IS A MAJOR OIL SUPPLIER TO THE U.S.
THE MONITOR, 2004
(in Africa News, "US looks to Africa for oil," July 24, l/n)
Currently Africa, which produces 4.5 million barrels per day, accounts for a
comparatively impressive 18 percent of US's net oil imports and pumps a total of 11
percent of the world's oil production. Nigeria and Angola - the continent's two
leading oil producers, pouring out 2.5 and 1.07 million barrels per day -are among
the US's ten top suppliers, marking out the increasingly key position of Africa in
America's energy sector.
NIGERIA IS A KEY OIL SUPPLIER TO THE U.S.
AFRICA NEWS, 2004
("West Africa plays key role in US energy security policy," july 16, l/n)
The Administration recognizes Nigeria's role as a major energy supplier and the
anchor of West Africa. Nigeria has been the fifth largest supplier of crude oil to
the U.S., contributing more than one million barrels per day (b/d) so far this year,
some 10 percent of U.S. crude oil imports. Approximately 65 percent of Nigerian
crude oil production is light and sweet, making it particularly suited for U.S.
refineries since it yields high volumes of gasoline. Nigeria has the potential to
increase its crude oil production significantly in the next few years as recent deepwater discoveries come on stream.
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NIGERIA DISAD
I/L: Nigeria a key supplier to the US
NIGERIA IS A KEY OIL SUPPLIER TO THE U.S.
AFRICA NEWS, 2003
("US energy official testifies on US oil and gas imports," Oct. 27, ln)
Nigeria supplied 621,000 barrels per day of oil to the U.S. in 2002. This represents
over 5 percent of U.S. imported oil in 2002. Also in 2002, Nigeria was the fifth
largest foreign supplier of crude oil to the U.S.
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NIGERIA DISAD
Impact Extensions: Econ instability = political instability
OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence.
Oil instability promotes political instability, which may cause more oil instability.
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Impact Extensions: Nigeria at risk of civil war
NIGERIA AT RISK FROM DOMESTIC TURMOIL
RUBIN, 2000
(Barnett – dir of Center for Preventive Action at Council on Foreign Relations, "Stabilizing Nigeria,"
http://www.cfr.org/pub2973/barnett_r_rubin_pearl_t_robinson_peter_m_lewis/stabilizing_nigeria_sanctions_incentives_and_support_
for_civil_society.php)
Nigeria poses one of the globe's greatest challenges and risks. It is Africa's most
populous country and a major exporter of oil and potentially of natural gas, but its
people's efforts to realize their potential have been frustrated by internal conflicts and misrule. The country was nearly torn apart by a
secession movement and civil war during 1967-70. Recent
crises, set off by the annulment of the June 12, 1993 presidential
election, once again raise the specter of internal conflict. The current military regime's carefully controlled
political transition plan and intermittent economic reforms do not confront the real problems facing the country and may in fact
aggravate them.
OIL DISADS
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Impact Extensions: Nigerian instability = regional instability
NIGERIA IS VITAL FOR AFRICAN STABILITY
ROUGHTON, 2000
(Bert, staff, Atlanta Journal and Constitution, "Clinton visit to Nigeria aims to push democracy," Aug. 25,
ln)
Susan Rice, the assistant secretary of state for African affairs, said earlier this week that the Clinton
Administration is working overtime to support Obasanjo. "Across the spectrum, we are cooperating with
and coordinating with Nigeria in a way that is unprecedented," Rice said. "We view Nigeria as an
indispensable partner to pursue our shared goals of democracy and stability
and conflict resolution, not only in West Africa and on the African continent
but globally," she said. Because of its location and economic potential, Nigeria
could be a key in containing the violence that has crippled Africa's attempts
to develop itself, the administration believes. The government recently announced plans to assist in
training and equipping up to five Nigerian battalions for service in peacekeeping, particularly in Sierra
Leone. The first American trainers arrived in Nigeria earlier this week.
NIGERIAN CIVIL WAR WILL CAUSE REGIONAL INSTABILITY
GORDON, 1996
(David – overseas development council, Federal News Service, Dec. 26, ln)
For many African countries, it clearly makes little. sense to think long-term as they face political,
economic, or social crises. The U.S. clearly has a role in these situations in providing humanitarian and
emergency assistance, but the question is how can the-U.S. decide where and when to act, beyond
emergency relief, in crisis or potential-crisis situations? The cold realities are that in most instances the
U.S. will not be able to successfully engage or intervene. But there are a number of cases
where the U.S. will not be able, and should not, disengage. What specific criteria
justifies intervention? * The first is large states that hold the key to regional
stability. This would only include a few countries, most notably Nigeria and
Zaire (as well as Kenya and South Africa, should a major crisis arise). While the disintegration of the
Togolese state would be a tragedy for Togo, it would have no regional implications and pressure for
external assistance would fall into the lap of the intimately engaged French. But the collapse of
Nigeria into chaos or civil war would likely have regional repercussions that
could unleash waves of instability and mass migration throughout West
Africa.
OIL DISADS
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NIGERIA DISAD
Impact Extensions: Regional instability impacts
AFRICAN REGIONAL INSTABILITY RISKS MASSIVE USE OF WEAPONS OF
MASS DESTRUCTION
LANCASTER, 2000
(Carol -- professor at Georgetown University, September/October, Foreign Affairs, p. 74.)
The end of the Cold War
eliminated a potential threat to American security, but it did not eliminate conflict.
In 1998 alone there were 27 significant conflicts in the world, 25 of which involved violence
within states. Nine of those intrastate conflicts were in sub-Saharan Africa, where poor
The most basic challenge facing the United States today is helping to preserve peace.
governance has aggravated ethnic and social tensions. The ongoing war in the Democratic Republic of the Congo has been particularly
nightmarish, combining intrastate and interstate conflict with another troubling element: military intervention driven by the
Such motives could fuel future conflicts in other
weak states with valuable resources. Meanwhile, a number of other wars -- in Colombia,
the former Yugoslavia, Cambodia, Angola, Sudan, Rwanda, and Burundi -- have reflected historic enmities or
poorly resolved hostilities of the past. Intrastate conflicts are likely to continue in
weakly integrated, poorly governed states, destroying lives and property, creating
large numbers of refugees and displaced persons, and threatening regional security.
commercial motives of several neighboring states.
The two interstate clashes in 1998 -- between India and Pakistan and Eritrea and Ethiopia -- involved disputes over land and other
with the spread of weapons of mass
destruction, these wars could prove more dangerous than ever.
natural resources. Such contests show no sign of disappearing. Indeed,
AFRICAN OIL REVENUES CRITICAL TO GREATER AFRICAN STABILITY – SOLVES WAR
AND CONFLICT
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<Democratization and the development of responsible governing institutions are
particularly important in reducing oil related conflicts and promoting African
supply stability. Accountability and transparency are necessary to ensure that
oil revenues benefit the population and support economic and social development.
Managed effectively, revenues from expanding oil and gas production could be the
engine for national and regional economic development and political stability in
West Africa.
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Impact Extensions: Regional instability impacts
African oil is an engine for social and economic development – critical to stabilize
nations
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<Africa is currently producing a little more than eight million barrels of oil
per day. Africa currently supplies the United States with about 12 percent of
our oil import requirements and production in Africa could rise to 11 to 13
million barrels per day in the next 10 years, and even higher in subsequent
years if the geology and investment climates are favorable. West Africa is one
of the world's fastest growing sources of oil and gas. Oil production
generates a large share of government revenue in many African countries. There
are also several potential producers who will soon begin producing new oil
supplies and several perspective oil producing countries, which are currently or
soon hope to be exploring for oil
Africa is important to us because it is an important source of the marginal
barrels and because African oil is a key engine for economic and social
development in Africa.>
OIL DISADS
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NIGERIA DISAD
Impact Extensions: Prolif
INSTABILITY CAUSES NIGERIA TO NUCLEARIZE
LEVI AND RICE, 2004
(Michael Levi & Susan Rice – Brookings Institute, The International Herald Tribune, "don't overlook the unusual suspects,"
April 6, l/n)
Investigators should pay special attention to those countries that have the
following four characteristics:
* Resource-rich. It costs a lot of money to purchase nuclear capability. Two of
Pakistan's clients, Iran and Libya, had ample oil supplies to pay for it. (North Korea is a strange case -- its
resource is ballistic missiles.) To be sure, Pakistan has made acquiring a nuclear weapon cheaper than
before and analysts should be careful not to exclude all low and middle-income countries.
* Undemocratic. States that may have done business with Khan are also likely to have had undemocratic
governments. Autocratic leaders of resource-rich governments that lack
transparency can more easily divert resources to an illicit arms program.
* Threatened. Beyond opportunity, a state needs a motive for seeking nuclear arms.
Traditional security concerns are the most obvious. In the 1980's, Iran sought nuclear arms in part to
deter Iraq. Repressive regimes, such as North Korea's, may fear that powerful outsiders are trying to
topple them. Analysts should consider not only states that perceive external
security threats but also those that face armed internal opposition or civil
conflict. Apartheid South Africa developed nuclear weapons while facing both international isolation
and an internal threat. States confronting lengthy civil wars might also seek weapons to shock their
opponents into surrender.
* Islamic. States with Islamic governments or military establishments may have been more likely
customers for Khan. This is not because Islamic states are more inclined to seek the bomb, but because
Khan appears to have been inclined towards selling it to them. Khan says what he did was for Islam.
Nevertheless, his dealings with North Korea underscore that money, not Islam, may have been his
principal motive. By our conservative estimate, at least 15 states believed to lack nuclear technology
combine all these characteristics. Seven more make the list if we include non-Islamic governments. The
countries are in sub-Saharan Africa, Southeast Asia, Central Asia, North Africa and the Middle East, and
Latin America. Take Nigeria as an example. It sits on the world's 10th largest oil
reserves and was long governed by military dictators from its Muslim north.
The country has a history of internal conflict and has historically
traditionally viewed itself as a regional superpower. While it is doubtful that
Nigeria's current elected civilian leaders seek nuclear weapons, the
possibility that elements of Nigeria's military might have sought such
weapons before democracy returned in 1999 cannot be excluded.
NUCLEAR CAPABLE NIGERIA RISKS DEADLY ARMS RACES AND RISKSING JACKING
US-NIGERIAN RELATIONS WHICH ARE THE LYNCH PIN TO STABILITY IN THE REGION
ALTSCHUL, JINSA ANALYST, 4-15-2K4
(JESSICA, “PAKISTAN-NIGERIA NUKE DEAL..” JINSA REPORT #351 P.
http://www.jinsa.org/articles/articles.html/function/view )
<Speaking to reporters in Washington D.C., Richard Norton, a national security expert at the U.S. Naval
War College said, “If the Nigerians go through with this purchase, they will have earned the unenviable
distinction as the first sub-Saharan African state to introduce ballistic-missile technology to the region.
They will become the initiator of a supremely wasteful and potentially deadly arms race. Nigeria’s motives
would be questioned and its moves viewed with suspicion. And the Nigerian-U.S. relationship would be
damaged, perhaps badly. Substantial amounts of U.S. military and law enforcement aid given to Nigeria
might be placed in jeopardy.”>
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Impact Extensions: Prolif
NIGERIA COULD PROLIFERATE, RISKING A HIROSHIMA-STYLE IMPACT
SCHMEMANN, 2003
(Serge, staff, New York Times, "Nuclear war strategists rethink the unthinkable," Jan. 19,
http://www.mindfully.org/Nucs/2003/Rethink-NuclearWar19jan03.htm)
To a world conditioned by the cold war to think of a nuclear exchange as Armageddon, it may appear somewhat comforting that the
minor powers that have acquired (or may have acquired) the Bomb — India, Pakistan, North Korea, Israel — at least don't have
enough Bombs to wipe out the world. Yet among the professionals whose job it is to contemplate the actual use
of these things, the initial complacency that came with the end of the United States-Soviet arms race
has been shaken by the notion that even the relatively minuscule arsenals of the new generation of
nuclear powers may pose a very serious threat, although of a very different kind. With North Korea's aggressive
rejection of any restrictions on its nuclear programs, the old war-gamers are swarming back to their computers. For most of them, the
best area to look at is South Asia, where India and Pakistan both have nuclear weapons that could easily be used against each other.
Even the fact that a nuclear exchange between them would not end the world, the professionals argue, could undermine the taboo on
nuclear weapons that the threat of apocalypse engendered. "This was probably the most important taboo in the history of warfare,"
said Michael Krepon, the president of the Henry L. Stimson Center, which studies ways of reducing military threats. "If President
Truman or President Eisenhower had used nuclear weapons in the Korean War, and Lord knows they got that advice, the whole
subsequent history of warfare and the rules of warfare would have been changed." The argument is not another manifestation of the
curious nostalgia that has cropped up for the simplicities of the cold war. Lest anyone forget, that was a time when legions of very
serious people in the United States and the Soviet Union spent their time devising ways to ensure that whoever shot first would die
second. The doctrine was called MAD "mutual assured destruction" — and it came with a package of equally cute ideas like "use 'em
or lose 'em" (unleash your nukes if you think they might be destroyed) — or Richard M. Nixon's "madman theory," which consisted of
projecting an image of himself as dangerously unpredictable. The real name of the game, of course, was deterrence. If judged by the
fact that Earth is still under us, it worked. Not only was there no nuclear exchange, but over time the very notion of one became
unthinkable, and the world came to think of nuclear attacks as taboo. "The devastation that would be visited upon all mankind by a
nuclear war" was the guiding thought, and the opening line, of the nuclear nonproliferation treaty drafted at the United Nations in the
1960's. The treaty envisioned limiting nuclear arsenals to the acknowledged powers — the United States, Russia, Britain, France and
China. Israel covered its program by not acknowledging it, and Iraq, Iran and North Korea were singled out as threats to be monitored.
But it was only with the multiple nuclear tests conducted by India and Pakistan in 1998 that the notion of a new nuclear threat struck
home. And now North Korea has intensified the concern. The doomsday the old war-gamers now envision, however,
is not the rain of missiles with massive payloads crisscrossing over a dying world. Rather it is a local
nuclear exchange with an impact more like the American bombing of Hiroshima and Nagasaki in
1945. "The general assumption that the first nuclear war will be an end-of-the-world event is much less likely with the countries that
are likely to do it," said Richard K. Betts, a professor of political science at Columbia. "But once they use their nuclear
weapons, everything comes up for grabs." One possibility is that the world would be so horrified that it would redouble
efforts at nuclear disarmament. The other, Mr. Betts said, was that a lot of countries would conclude that there is no reason they
shouldn't have their own nukes. "Twenty years ago who would predict that Iraq and North Korea would be
the biggest problem?" Mr. Betts said. "The next might also be those with the biggest security problems
and the fewest allies, or rising powers which want to be taken seriously. Taiwan? South Korea? Japan? Egypt?
Syria? Nigeria?" Some of these already have the know-how or plutonium to develop nuclear weapons
quickly, as do many European or former Soviet states.
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Impact Extensions: Prolif
NORTH-AFRICA IS THE MOST UNSTABLE PLACE IN THE WORLD – PAKISTAN
COOPERATION ENSURES A NUCLEAR NIGERIA
ALTSCHUL, JINSA ANALYST, 4-15-2K4
(JESSICA, “PAKISTAN-NIGERIA NUKE DEAL..” JINSA REPORT #351 P.
http://www.jinsa.org/articles/articles.html/function/view )
<With border disputes, warring tribes, widespread disease and famine, and political instability, Africa may
be the most dangerous place in the world for nuclear weaponry. Yet according to statements issued by
Nigeria’s Defense Ministry, certain countries may be on the road to helping Nigeria develop the first
nuclear weapons program on the continent. On March 3, 2004, Nigeria’s Defense Ministry issued a
statement that indicated that Pakistan would help the poverty-stricken African nation produce or acquire
nuclear weapons. General Muhammad Aziz Khan, chairman of Pakistan’s Joint Chiefs of Staff, according
to the statement, told Nigeria’s Defense Minister Rabiu Musa Kwankwaso in talks in Abuja that Pakistan
“is working out the dynamics of how they can assist Nigeria’s armed forces to strengthen its military
capability and to acquire nuclear power.” If true, this may raise questions about Pakistan’s intentions for
nonproliferation, especially in regard to Abdul Qadeer Khan’s illegal nuclear sales to Iran, Libya and North
Korea that have come to light in recent months. >
EVEN IF YOU DON’T BELIEVE THAT NIGERIA IS BUDDYING UP WITH PAKISTAN –
DOCUMENTATION PROVES NORTH-KOREAN COOPERATION FOR A NUCLEAR
ARSENAL
ALTSCHUL, JINSA ANALYST, 4-15-2K4
(JESSICA, “PAKISTAN-NIGERIA NUKE DEAL..” JINSA REPORT #351 P.
http://www.jinsa.org/articles/articles.html/function/view )
<This is the second time in only two months that Nigeria has claimed that nuclear-capable countries have
extended an offer of assistance. In early 2004, a spokesman for Nigerian Vice President Atiku Abubakar
announced that he had discussed acquiring nuclear technology with his North Korean counterpart, Yang
Hyong-sop. The weaponry would only be used for “peacekeeping” purposes, said the spokesman. A few
days later, Professor Ibrahim H. Umar, Director General of Nigeria’s Energy Research Commission,
declared, “Today is a day of commemoration ending our 28 years of search for a nuclear research reactor, it
is a day of celebration because it is a day that marks Nigeria’s acquisition of its own nuclear research
reactor aimed at using it for the good of humanity.” Shortly thereafter, North Korea denied the claim. >
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Impact Extensions: Civil War = Genocides
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
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Impact Extensions: Genocide Impacts
WE ALL MUST TAKE A STAND TO STOP GENOCIDE- FAILURE TO ACT
MAKES US COMPLICIT
VETLESEN, 2000
(Dept of philosophy at Univ of Oslo, Journal of Peace Research, " Genocide: A case for the responsibility of the bystander," p. 520521)
Most often,
in cases of genocide, for every person directly victimized and killed there
will be hundreds, thousands, perhaps even millions, who are neither directly
targeted as victims nor directly participating as perpetrators. The moral issues
raised by genocide, taken as the illegal act par excellence, are not confined to the nexus of agent
and victim. Those directly involved in a given instance of genocide will always form
a minority, so to speak. The majority to the event will be formed by the contemporary
bystanders. Such bystanders are individuals; in their private and professional lives, they will belong to a vast score of groups
and collectives, some informal and closely knit, others formal and detached as far as personal and emotional involvement are
concerned. In the loose sense intended here,
every contemporary citizen cognizant of a specific
ongoing instance of genocide, regardless of where in the world, counts as a
bystander. Bystanders in this loose sense are cognizant, through TV, radio, newspapers, and other publicly available sources of
information, of ongoing genocide somewhere in the world, but are not – by profession or formal appointment – involved in it. Theirs
is a passive role, that of onlookers, although what starts out as a passive stance may, upon decision, convert into active engagement in
the events at hand. I shall label this category passive bystanders. This group should be distinguished from bystanders by formal
appointment: the latter bystanders have been professionally engaged as a 'third party' to the interaction between the two parties directly
involved in acts of genocide. The stance of this third party to an ongoing conflict, even one with genocidal implications, is in
principle often seen as one of impartiality and neutrality, typically highlighted by a determined refusal to 'take sides.' This manner of
principled non-involvement is frequently viewed as highly meritorious (Vetlesen, 1998). A case in point would be UN personnel
deployed to monitor a ceasefire between warring partied, or (as was their task in Bosnia) to see to it that the civilians within a UNdeclared 'safe area' are effectively guaranteed 'peace and security,' as set down in the mandate to establish such areas. By virtue of
their assigned physical presence on the scene and the specific tasks given to them, such (groups of) bystanders may be referred to as
bystanders by assignment. What does it mean to be a contemporary bystander? To begin with, let us consider this question not from
the expected viewpoint – that of the bystander – but from the two viewpoints provided by the parties directly involved in the event.
To put it as simply as possible: From the viewpoint of an agent of genocide, bystanders are persons possessing a potential (one
needing to be estimated in every concrete case) to halt his [sic] ongoing actions. The perpetrator will fear the bystander to the extent
that he [sic] has reason to believe that the bystander will intervene to halt the action already under way, and thereby frustrate the
perpetrator's goal of eliminating the targeted group. That said, we immediately need to differentiate among the different categories of
bystanders introduced above. It is obvious that the more knowledgeable and otherwise resourceful the bystander, the more the
perpetrator will have reason to fear that the potential for such resistance will translate into action, meaning a more or less direct
intervention by military or other means deemed efficient to reach the objective of halting the incipient genocide. Of course, one
should distinguish between bystanders who remain inactive and those who become actively engaged. Nonetheless, the point to be
stressed is that, in principle,
even the most initially passive and remote bystander possesses a
potential to cease being a mere onlooker to the events unfolding. Outrage at what
comes to pass may prompt the judgment that 'this simply must be stopped' and
translate into action promoting that aim. But is not halting genocide first and foremost a task, indeed a duty,
for the victims themselves? The answer is simple: The sheer fact that genocide is happening shows
that the targeted group has not proved itself able to prevent it. This being so,
responsibility for halting what is now unfolding cannot rest with the victims alone; it
must also be seen to rest with the party not itself affected but which is
knowledgeable about – which is more or less literally witnessing – the genocide that
is taking place. So whereas for the agent, bystanders represent the potential for resistance,
for the victims they may represent the only source of hope left.
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Impact Extensions: Genocide Impacts
INACTION DURING GENOCIDE MAKES US COMPLICIT AND RISKS EXTINCTION
KETELS, 1996
(Violet – prof of English at Temple University, November, The Annals of the American Academy of Political and Social Science, l/n)
Even though, as Americans, we have not experienced "by fire, hunger and the sword" n19 the terrible disasters in war overtaking
other human beings on their home ground, we know the consequences of human hospitality to evil. We know about
human perfidy: the chasm that separates proclaiming virtue from acting decently. Even those of us trained to linguistic
skepticism and the relativity of moral judgment can grasp the verity in the stark warning, "If
something exists in one place, it will exist everywhere." n20 That the dreadful something warned
against continues to exist anywhere should fill us with an inextinguishable yearning to do something.
Our impotence to action against the brutality of mass slaughter shames us. We have the historical record to
ransack for precedent and corollaries--letters, documents, testaments, books--written words that would even "preserve their validity in
the eyes of a man threatened with instant death." n21 The truths gleanable from the record of totalitarian barbarism cited in them may
be common knowledge; they are by no means commonly acknowledged. n22 They appear in print upon many a page; they have not
yet--still not yet--sufficiently penetrated human consciousness. Herein lies the supreme lesson for intellectuals, those who have the
projective power to grasp what is not yet evident to the general human consciousness : it is possible to bring down
totalitarian regimes either by violence or by a gradual transformation of human consciousness; it is
not possible to bring them down "if we ignore them, make excuses for them, yield to them or accept
their way of playing the game" n23 in order to avoid violence. The history of the gentle revolutions
of Poland, Hungary, and [*51] Czechoslovakia suggests that those revolutions would not have
happened at all, and certainly not bloodlessly, without the moral engagement and political activism
of intellectuals in those besieged cultures. Hundreds of thousands of students, workers, and peasants joined in the final
efforts to defeat the totalitarian regimes that collapsed in 1989. Still, it was the intellectuals, during decades when they
repeatedly risked careers, freedom, and their very lives, often in dangerous solitary challenges to power, who formed the
unifying consensus, developed the liberating philosophy, wrote the rallying cries, framed the politics,
mobilized the will and energies of disparate groups, and literally took to the streets to lead nonviolent
protests that became revolutions. The most profound insights into this process that gradually penetrated social
consciousness sufficiently to make revolution possible can be read in the role Vaclav Havel played before and during
Czechoslovakia's Velvet Revolution. As George Steiner reflects, while "the mystery of creative and analytic genius . . . is given to the
very few," others can be "woken to its presence and exposed to its demands." n24 Havel possesses that rare creative and analytic
genius. We see it in the spaciousness of his moral vision for the future, distilled from the crucible of personal suffering and
observation; in his poet's ability to translate both experience and vision into language that comes as close as possible to truth and
survives translation across cultures; in the compelling force of his personal heroism. Characteristically, Havel raises local experience
to universal relevance. "If today's planetary civilization has any hope of survival," he begins, "that hope lies
chiefly in what we understand as the human spirit." He continues: If we don't wish to destroy ourselves
in national, religious or political discord; if we don't wish to find our world with twice its current population, half of it
dying of hunger; if we don't wish to kill ourselves with ballistic missiles armed with atomic warheads or eliminate ourselves with
bacteria specially cultivated for the purpose; if we don't wish to see some people go desperately hungry while others throw tons of
wheat into the ocean; if we don't wish to suffocate in the global greenhouse we are heating up for ourselves or to be burned by
radiation leaking through holes we have made in the ozone; if we don't wish to exhaust the nonrenewable, mineral resources of this
planet, without which we cannot survive; if, in short, we don't wish any of this to happen, then we must--as humanity, as
people, as conscious beings with spirit, mind and a sense of responsibility--somehow come to our
senses. n25 Somehow we must come together in "a kind of general mobilization of human
consciousness, of the human mind and spirit, human responsibility, human reason." n26
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IT IS OUR DUTY TO BEAR WITNESS TO THE TRAGEDY OF GENOCIDE – WE CAN USE THE
BALLOT TO RESIST HUMAN SUFFERING – INACTION IS COMPLICITY TO ITS HORROR
SMOLIN, 1999
(David -- prof of law at Cumberland Law School at Samford University, December, Fordham International Law Journal, p. 461-462)
Much has been written about the failure of bystanders in the Holocaust.
The tendency of human beings to turn away
from grave human suffering and do nothing has been lamented. 2 The abandonment of the Jews by
allied governments during World War II has been criticized. 3 We have worried about the propensity
of human beings to remain passive in the face of extreme evil and suffering. Currently, bystanders are
often tuning in rather than turning away. Instead of worrying about what happens to human beings
who deliberately turn away from evil and suffering, we now must be concerned with what happens to
human beings who deliberately choose to observe such suffering. Those who view a significant crime
are, of course, witnesses. Witnessing a crime has a moral significance that brings with it a corollary set
of obligations, such as the duty to affirmatively give testimony (i.e., bear witness), the duty to the truth, the duty to the deceased
victims, and the duty to warn others. 4 Bystanders who turn in by electronic media will have no such duties, because electronic
technology will itself provide a clear and true record of the event. Electronic bystanders will thus become, potentially at least, mere
spectators. And genocides, particularly where they are broadcast more or less contemporaneously with the event, could become
spectacles.
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Impact Extensions: Succession/Refugee conflicts
NIGERIAN INSTABILTIY RISKS SECCESSION, MASS REFUGEE FLUX, AND
WAR
CSIS TASK FORCE REPORT ON AFRICA, 10-2-1998
(“STRATEGIC ENERGY INITIATIVE,” P. http://csis.org/sei/work/AFRtfreport.html)
<The Task Force considered two short-term options for Nigeria's future both revolving around the
transition to civilian rule: failure of transition and success of transition. Failure of transition: Should the
transition fail, Nigeria will be thrown into chaos. Violent confrontations between civilian and military
forces, or between ethnic groups, could be expected. Some sections of the country, particularly the Yorubadominated southwest, may make a bid for succession. The economic disruption alone could impact
neighboring states. Nigerian refugees could also place heavy strains on the country's neighbors. A
consolidation process could take months. >
GREATER INTERNAL INSTABILITY IN NIGERIA RISKS JEOPARDIZING GLOBAL OIL
MARKET AND PROTRACTED ANGOLAN CIVIL WAR
CSIS TASK FORCE REPORT ON AFRICA, 10-2-1998
(“STRATEGIC ENERGY INITIATIVE,” P. http://csis.org/sei/work/AFRtfreport.html)
<Nigeria's smooth economic and political transition to civilian rule is critical to the stability of the Gulf of
Guinea. The transition will be difficult in a country already facing severe unemployment and social unrest.
The future role of the military is unclear and needs to be resolved if transition is to be successful. Further
destabilization within Nigeria could pose a major threat to regional stability. Despite efforts to reform, there
is still severe corruption, political instability and ethnic rivalry (religious, tribal.) The oil sector is replete
with corruption and bad management, and suffers from lack of investment. Political instability in the
Ogoniland oil region has already cut production. Although much of Nigeria's oil is produced offshore and
insulated from local violence, further disruption which could impact global markets cannot be ruled out.
Angola could return to civil war. No long-lasting settlement is likely while Savimbi remains as leader of
UNITA. UNITA has been weakened but still controls enough assets to fight almost indefinitely. The
current rift between Angola and South Africa significantly reduces prospects for peace in Angola.>
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NIGERIA DISAD
AT: No Oil Reserves
NIGERIA OUTPACES GLOBAL OIL RESERVES
COHEN AND SCHAEFER, 2004
(Ariel Cohen – research fellow in Russian and Eurasian affairs at the Kathryn and Shelby Cullom Davis Institute for International
Studies, and Brett Schaefer – fellow in International Regulatory Affairs in the Center for International Trade and Economics at The
Heritage Foundation, Heritage Foundation Reports, "Addressing Nigeria's Economic Problems and the Islamist Terrorist Threat,"
executive memorandum #933, May 19, ln)
Nigeria is the most populous country in Africa, with a population of 133 million in 2002. It is also home
to the world's sixth largest Muslim population. It has estimated oil reserves of 27 billion
barrels (over 2.6 percent of global proven reserves). Given Nigeria's location and
ports, the country could be an economic hub for western and central Africa. Regrettably, political
instability and military coups, combined with inept economic governance and endemic corruption, have
squandered Nigeria's advantages.
NIGERIA HAS PLENTY OF OIL RESERVES
AFRICA NEWS, 2004
("West Africa plays key role in US energy security policy," july 16, l/n)
The Administration recognizes Nigeria's role as a major energy supplier and the
anchor of West Africa. Nigeria has been the fifth largest supplier of crude oil to
the U.S., contributing more than one million barrels per day (b/d) so far this year,
some 10 percent of U.S. crude oil imports. Approximately 65 percent of Nigerian
crude oil production is light and sweet, making it particularly suited for U.S.
refineries since it yields high volumes of gasoline. Nigeria has the potential to
increase its crude oil production significantly in the next few years as recent deepwater discoveries come on stream.
NIGERIA HAS AMPLE OIL RESERVES
AFRICA NEWS, 2003
("US energy official testifies on US oil and gas imports," Oct. 27, ln)
Nigeria, an OPEC member, has proven oil reserves of 24.0 billion barrels and
currently produces nearly 2.2 million barrels per day. The largest U.S. oil producing
companies in Nigeria are Exxon Mobil and Chevron Texaco, but many other
companies are involved as well.
NIGERIA IS INCREASING ITS OIL RESERVES
DAILY TRUST, 2004
(in Africa News, "Nigeria targets 36bn barrel oil reserves," April 28, ln)
Nigeria is poised to boost its crude oil reserves from 33 million barrels to 36 billion
barrels by 2007, the group managing director (GMD) of the Nigerian National
Petroleum Corporation (NNPC), Engineer Funsho Kupolokun has said. "By the year
2007, when the tenure of this administration would terminate, NNPC hopes to
increase crude reserves from 33 million to 36 billion barrels," he said, adding that
the current daily production level of three million barrels would by then be increased
to four million barrels per day.
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AT: Human rights turn
OIL COMPANIES PLAY A CRITICAL ROLE IN PREVENTING HUMAN RIGHTS ABUSES
MAMOY, 1999
(Bronwen – researcher on African human rights, The Price of Oil, p. 3)
In addition to these general responsibilities, the oil companies operating in
Nigeria have specific responsibilities in respect of the human rights
violations that take place in connection with their operations. There
responsibilities must be seen against the context of oil production in Nigeria
and the fact that the security provided to keep the oil flowing benefits both the
Nigerian government and the oil companies, since disputes which threaten
production affect the revenue of both.
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AT: Terrorism turn
AFRICA IS A BREEDING GROUND FOR AL-QAEDA AND GLOBAL TERRORIST GROUPS –
GROWING POVERTY RATES AND ISLAMIC FUNDAMENTALISM RISKS GREATER ACTS
OF TERRORISM AGAINST AMERICAN INTERESTS
ALTSCHUL, JINSA ANALYST, 5-14-2K4
(JESSICA, “WASHINGTON REVISITS AFRICA’S STRATEGIC IMPORTANCE” JINSA REPORT
#351 P. http://www.jinsa.org/articles/articles.html/function/view )
<After September 11, terrorist groups such as al-Qaeda and Hezbollah were traced to African states such as
Nigeria, Sudan, Ethiopia, Uganda, Morocco, Guinea, Egypt, Liberia, Libya, Rwanda and Tanzania. At a
recent conference on Africa’s strategic importance held at the American Enterprise Institute, a Washington
D.C. think tank, former U.S. ambassador to Ethiopia David Shinn discussed the rapid growth of Islamic
fundamentalism in Africa. “Poverty, civil war, dictatorship, and lawlessness among what are mostly
Muslim populations have all contributed to this condition,” he said. Additionally, a lack of development
provides an ideal environment for elite and well-educated terrorists to exploit the populations of the region.
Jennifer Cooke, Deputy Director of the Africa Program at the Center for Strategic and International Studies
(CSIS), a Washington, D.C.-based think tank, asserted that in the past, Africa was a “humanitarian
afterthought,” whereas particularly after 9/11 the significance of the continent has “grown to vital strategic
importance.” Cooke also stressed that Africa is a “permissive environment” for terrorist groups and has
proved itself an easy environment to operate against American interests. In addition to being a breeding
ground for fundamentalist Islamists, East Africa has been a center for corrupt charities and money
laundering schemes for decades. Not only do most businesses and organizations go unchecked by the
governments, but also the governments themselves many times participate in funneling money to al-Qaeda
and other terrorist organizations and providing terrorists with a safe haven in their countries.>
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AT: N/U – conflict now
American demo-promo in Nigeria solving internal conflict now
McManus, Acting Director Office of International Energy and Commodity, 10-21-2k3
(Matthew,” US NRG Security: West Africa and Latin America,” FNS p.ln)
<The administration recognizes Africa's important role, not only
diplomatically but in energy and our secretary of State is there today. Nigeria
has been in fact, the fifth largest supplier of crude oil to the United States.
And we also recognize that Nigeria's oil producing Niger Delta remains volatile,
with intermittent communal violence and labor disputes that have disrupted
production in some areas. Our mission in Nigeria remains committed to supporting
democracy, economic reform and poverty alleviation in Nigeria and we have
dedicated a new embassy position to working with oil companies, NGOs and
indigenous groups on these issues and corporate responsibility.>
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General
HIGHER OIL PRICES DON’T GUARANTEE POLITICAL STABILITY
WEYER, 2004
(Martin Vander, staff, The Spectator, "big is not therefore ugly," June 12, l/n)
Nigeria, for example, is 'a country ruined by an abundance of oil', because mineral
wealth tends to lead to corruption and instability. And one reason why Asia has
largely benefited from globalisation while Africa and the Middle East have not is that,
ahem, 'some countries possess within them a stock of values, behaviours and
institutions that are better adapted to running a modern economy than others'. Put
another way, 'if the population of Iran were, overnight, to replace Germany's, how
long would one expect it to remain among the richest countries in the world?'
THE OIL INDUSTRY IS A PRODUCT OF COLONIALISM AND A DEPENDENCY
THAT GENERATES MASS VIOLENCE
ADEBANWI, 2001
(Wale – economic affairs bureau at the Gale Group, Dollars and Sense, "Nigeria: A Shell of a State," July 1, l/n)
The history of the oil industry, scholar Jean-Marie Chevalier has observed, is the
history of imperialism. In 1956, Shell British Petroleum (now Royal Dutch Shell)
discovered crude oil at Oloibiri, a village in the Niger Delta, and commercial
production began in 1958. These developments changed Nigeria's relationship to the
global capitalist order. Previously, Nigeria had been mainly a producer of cocoa,
groundnuts, and other agricultural items. These goods, representing the country's
major source of external revenue, were exported principally to the West. As the
exploitation of oil resources continued in the postcolonial era, Nigeria became
increasingly reliant on oil, and its reputation as an agricultural producer disappeared.
Oil revenue now accounts for 90% of Nigeria's export earnings (almost $ 300 billion
in the past 40 years). In turn, reliance on a single source of revenue distorted the
relationship between successive (mostly military) regimes in the country, and the
citizenry. Oil exploration introduced an entirely new element into the structure of the
Nigerian state -- an internal predatory elite that saw the new commodity as God-sent
and so saw itself as unaccountable to the communities that produced it. This lack of
accountability has continued in the post-colonial period. As Nigerian scholar Femi
Taiwo has argued, the discovery of petroleum in commercial quantities, and its
emergence as the primary fuel of the Western industrial economies, combined to
ensure that the post-colonial Nigerian state did not cultivate its own citizenry. Nor
did it put into place appropriate infrastructure that would have helped to create local
wealth and provide a strong local tax base for its operations. As for the wealth
derived from oil exploration, both the Nigerian state and the multinational oil
companies believe that what they owe the oil- yielding communities is minimal, and
that even this must be given at their own pleasure.
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NIGERIA'S ECONOMY IS DIVERSIFYING – OIL ISN'T KEY
GOLDMAN AND WALLIS, 2000
(Antony Goldman & William Wallis, staff, Financial Times, "survey: Nigeria," March 30, ln)
For the best part of four decades harnessing Nigeria's vast natural gas reserves
seemed little more than a boardroom dream, forgotten in the quest for the easier
money associated with the oil sector. However, recent developments have made the
gas industry a reality, in a process that marks the most significant diversification of
the economy away from oil since the decline of the agricultural sector in the 1970s.
The commissioning last October of the Dollars 3.8bn Nigerian Liquefied Natural Gas
(NLNG) plant at Bonny Island - one of the most expensive single engineering
projects in the history of Africa - is a physical representation of confidence in the new
industry and of a determination to exploit a resource that has hitherto simply been
flared off, at some considerable cost to the local environment. It is, however, only
the beginning of one among several projects now under development that could see
Nigeria become a global operator in gas products in the medium-term. "Gas is a
very exciting area," says Rilwanu Lukman, special petroleum adviser to President
Obasanjo. "We are now working on a strategy for its long-term development,
harnessing reserves for power, fertilisers, LNG, and the West Africa gas pipeline."
The private sector, which acts as operators of the various schemes in partnership
with the government, is equally bullish. "We have an Dollars 8.5bn integrated
development strategy to increase production and provide a vehicle to end routine
gas flaring by 2008," said Ron van den Berg, chairman of Royal Dutch Shell in
Nigeria. "There will be a total change of scene in Nigeria. We used to produce oil.
Now we will produce oil and gas. It will transform the industry." Shell-led
developments alone could yield the government an additional Dollars 20bn alone in
revenue over 25 years. Mobil is also pressing ahead with its Dollars 800m gas-toliquids plant at Oso, while the Chevron gas project at Escravos has also made
significant progress. The facility opened in 1997, processing 165m cubic feet per day
of natural gas for domestic and international markets.
OIL DEVELOPMENT DESTROYS NIGERIA ENVIRONMENT
WALLIS, 2001
(William, staff, Financial Times, "Nigeria protests prompt development moves," Feb. 22, ln)
Perched on the edge of the Atlantic on a strip of palm groves and marsh outside the
delta town of Akassa are the ruined headquarters of the British trading company that
drove Nigeria's colonisation in the nineteenth century. The old cannons that
controlled the estuary may be relics of the past now decomposing in the grass, but
for the Akassa clan of ethnic Ijaws the memory of corporate colonisation is very
much alive. Today, the illegal trawlers from Asia and elsewhere sweep the coastline.
Up the rivers and creeks, pollution from oil spills and drilling chemicals have depleted
fish stocks. Where oil has not done damage, population pressure, over-fishing,
logging and erosion have. When the multinational oil companies struck deals, they
did so far from where they struck the oil. Moreover, deals were struck with a
succession of military and civilian governments that proved largely indifferent to the
fate of the Nigerian minority tribes whose land it came from.
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OIL DEVELOPMENT DESTROYS NIGERIA ENVIRONMENT
FARAH, 2001
(Douglas, staff, Washington Post, "Nigeria's oil exploitation leaves delta poisoned, poor," March 18, ln)
The swamp and palm trees surrounding Well 19 are still black, seven months after
thousands of barrels of crude oil spilled into the jungle and caught fire, fouling the
water and scorching the tropical forest. Nearby, a stream of natural gas hisses from
a pipe that has recently been sabotaged. Not far away is an immense natural gas
flare that shoots a flame 300 feet into the sky, noticeably raising the temperature at
the nearby village of Oshie by several degrees. The scenes are repeated all around
the Niger River Delta, a fragile wetland of about 42,000 square miles that produces 2
million barrels of crude oil a day and that is worked by five multinational firms. It is
home to about 7 million Nigerians. Abandoned by the government, hostile to the oil
companies and ecologically ravaged, the delta is in a dismal state that sometimes
seems impossible to remedy, one perpetuated by a seemingly endless cycle of
distrust and violence. By any measure, the delta is an environmental basket case.
Whether caused by carelessness, human error or sabotage, oil spills have dumped at
least 2.5 million barrels of oil -- equal to 10 Exxon Valdez disasters -- into the delta
from 1986 to 1996, according to a recent unclassified study commissioned by the
CIA. Oil companies acknowledge that at least 100,000 barrels were spilled in 1997
and 1998.
And every day, 8 million cubic feet of natural gas are burned off in flares that light
the skies across the delta, not only driving off game, hurting the fishing and
poisoning the agriculture, but contributing to global warming. The CIA study found
that while oil extraction has "generated immense profits, the delta's inhabitants have
suffered increasing poverty and a general decline in the quality of their lives due, in
part, to the environmental impact of oil extraction. Corruption and bureaucratic
incompetence have led to an almost total absence of schools, good drinking water,
electricity or medical care." Around Eriemu, ethnic Ijaw communities blame the oil
companies for the August spill and months-long delay in cleaning up. The villagers,
who said cleanup efforts did not begin until last month, want economic compensation
for the ruined lands and water, as well as more oil-company investment in health,
education and water systems.
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NIGERIA IS UNDERGOING MASSIVE VIOLENCE NOW
DYER, 2004
(Gwynne, staff, Straights Times, "A war-torn world? Not so much now," May 26,
http://globalsecurity.com/global_security/a_war-torn.htm)
THE worst killing in the world this month was in Nigeria, which isn't officially at war. At least 600
Muslims were murdered in the central state of Plateau earlier this month, in a steep escalation of tit-for-tat
killings between Fulani cattle-herders (Muslim) and Tarok farmers (Christian) over land and cattle.
Revenge came a week later, although not against those guilty of the murders. Between 500 and 600
Christians were killed in the Muslim-majority city of Kano in northern Nigeria by gangs of Muslims youths
armed with machetes and clubs. Many of the bodies were burned and mutilated, and as in the town of
Yelwa in Plateau, even children were killed. It has been a particularly bad month in Nigeria - but about
10,000 people have been killed in this kind of Christian-Muslim violence in the past five years. So is this
war, or do we just treat it as a very bad case of civil disorder? The answer matters, because it shapes our
perception of what kind of world we live in.
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TURN – NIGERIAN OIL DRILLING THREATENS MASSIVE SPECIES
EXTINCTION AND BIODIVERSITY LOSS
ACHEBE & EPSTEIN, 2004
(Chidi Achebe is the Medical Director of Whittier Street Health Center in Boston, & Paul R. Epstein is
Associate Director of the Center for Health and the Global Environment at Harvard Medical School in Africa
News, "Oil: Prize or Curse?" July 15, l/n)
"The Oil Industry has had devastating effects. Our report found 'badly maintained
and leaking pipe lines, polluted water, fountains of emulsified oil pouring into
villagers' fields, blow outs, air pollution.' Farms and fisheries are spoiled, and the
mangrove swamps, which provide people with building and other materials and are a
vital part of the ecosystem, are disappearing. At the same time the people get little benefit
from the immense wealth being generated." Pollution caused by the oil and natural gas industry has been
mind-boggling and extensive. It has led to ground water pollution, which in turn has caused outbreaks of
diarrhea epidemics. Birth deformities are on the rise as are certain soft tissue cancers. Environmental
pollution has led to the displacement of farmers and their families into surrounding urban centers already
ill equipped to deal with the economic, social and health requirements of their burgeoning populations.
Most of the new migrants in these urban centers become trapped in cycles of poverty and penury.
LAND AND SOIL DEGRADATION
One of the major causes of the 'rural flight' is the pollution of the soil and land and
the concomitant, progressive reduction in crop yields in the Niger River Delta. The oil
industry has caused soil and land degradation through multiple mechanisms. Soil
pollution has led to a decline of soil fertility through the dumping and build up of toxic substances. There
has been a deterioration of soil physical properties as a result of reduced organic matter (the structure,
aeration and water holding capacity of soil is affected), and reduction of soil organisms. There has also
been an associated decline in soil biological activity. Other devastating effects of polluting activities include
water logging, increase in salt or starch soil content, sedimentation or "soil burial", loss of vegetation
cover through deforestation, and soil erosion.vvvv Nigeria lost approximately 469 square miles annually
to deforestation between 1990 and 1995 according to the World Bank figures. This value, however,
includes only those areas lost due to shifting cultivation, permanent agriculture, ranching, settlements,
and infrastructure development, and does not include the areas of land loss due to fuel wood
gathering.vvv Be as it may, 96% of Nigeria's pristine forests have been cut down!
BIO-DIVERSITY LOSS
One of the immediate consequences of this form of human intrusion is significant
loss of biodiversity. Under this strain, species may be pushed to extinction. The
ecological benefits forests provide to the environment, such as watershed protection,
nutrient recycling and climate regulation are lost with deforestation of this
magnitude. Other consequences include decreased species diversity, due to
reduced habitable surface area, which corresponds to a reduced "species carrying
capacity". Genetic diversity diminishes as the size of habitats shrink. This phenomenon
also drastically affects the populations of species living in these environments. Smaller habitats can only
accommodate smaller populations; this results in an impoverished gene pool. Flexibility and
evolutionary adaptability to changing situations is severely hampered as the genetic
resources of a species diminish. This has significant negative impacts on species
survival.
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EACH SPECIES EXTINCTION RISKS UNRAVELLING COMPLEX ECOSYSTEM
BIODIVERSITY -- THREATENING PLANETARY EXTINCTION
DINER, of jag, 1994
(David, Military Law Review, winter, v. 143, l/n)
Biological Diversity. -- The main premise of species preservation is that
diversity is better than simplicity. As the current mass
extinction has progressed, the world's biological diversity generally has
decreased. This trend occurs within ecosystems by reducing the number of
species, and within species by reducing the number of individuals. Both trends
carry serious future implications.
n78
[*173] Biologically diverse ecosystems are characterized by a large number
of specialist species, filling narrow ecological niches. These ecosystems
inherently are more stable than less diverse systems. "The more complex the
ecosystem, the more successfully it can resist a stress. . . . [l]ike a net, in
which each knot is connected to others by several strands, such a fabric can
resist collapse better than a simple, unbranched circle of threads -- which if
cut anywhere breaks down as a whole."
n79
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 affects, 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.
NIGERIA IS DIVERSIFYING ITS ECONOMY TO BE LESS DEPENDENT ON OIL EXPORTS
BOHNSTEDT, 2004
(Andrea, staff, World Markets Analysis, "Nigeria's non-oil exports reach five times
1999 volume," August 16, l/n)
The diversification of Nigeria's economy is seen as an important strategy for
weaning Nigeria off its oil-dependence and increasing the productive sector to
provide broader employment opportunities outside the typically capital-intensive
enclave petrol industry. The Nigerian government is currently focusing on ensuring
fiscal stability with regards to the use of oil revenues (see Nigeria: 11 August 2004:
Latest Revenue, Debt Figures Show Returns on Nigeria's Prudence Policy).
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NIGERIA IS DIVERSIFYING ITS ECONOMY
AGBO, 2004
(Malachy, staff, This Day (in Africa News), "NLNG targets," Aug 7, l/n)
A revenue target of $ 4 billion (about N800 billion) has been set, between now and
2006, by the Nigeria Liquefied Natural Gas (NLNG) Limited. Industry sources
yesterday said the outfit's current investment in the Nigerian economy stands at $
12 billion, and its board of directors as well as shareholders only last weekend gave
the nod for the construction of NLNG's sixth train (NLNGSix Project) following the
Final Investment Decision. NLNG Managing Director, Dr. Andrew Jamieson, said
during a meeting of the board of directors and shareholders that the additional train
will bring the overall production capacity of Nigeria LNG Limited to 22 million tonnes
of LNG and five million tonnes of natural gas liquids (LPG and condensate) yearly.
According to him, the NLNGSix Project will provide further outlet for Associated Gas
and contribute to helping the oil producers curtail flaring from their operations, in
line with the Federal Government's policy of 'Flares Out' by the year 2008. Nigeria
NLNG is pivotal to government's economic diversification policy, as well as being a
key element in its quest to attract direct foreign investment into the country.
TOO MANY SUPPLY DISRUPTIONS PREVENT MEETING INCREASED DEMAND
PEEL, 2004
(Michael, staff, Financial Times, "Nigeria plans 25% boost to oil output," Aug 17)
Production may also be held back by deteriorating social conditions in the oilproducing Niger Delta, a network of creeks that has suffered much pollution and
experienced little development since Royal Dutch/ Shell shipped its first oil in 1958.
Output is frequently disrupted by the activities of community protesters, armed
ethnic militias and criminal gangs that steal up to an estimated 300,000 b/d from
pipelines and wellheads.
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1NC SHELL
(A) NORWEGIAN ECONOMY IS IMPROVING DUE TO HIGH OIL PRICES
RYARD, 2004
(Thomas, staff, World Markets Analysis, "may new registrations soar," June 2, l/n)
New registrations of passenger cars edged up 12.2% to 9,161 units in May 2004, according to figures
released by the Norwegian Registrations Office (OFV). On a cumulative basis, new registrations reached
46,055 units in the first five months of the year. This corresponds to a 29.2% rise over the same period in
2003. Toyota held on firmly to its leading position in the Jan-May 2004 period, with a total 7,264 units
sold giving the Japanese carmaker a 15.8% market share. Volkswagen (VW) and Peugeot followed with a
13.3% and 7.2% market share respectively. Significance: The Norwegian economy has
grown steadily in the past six months supported by rising oil prices and
strong consumer spending. Demand has also been stimulated by a series of
new model launches and a slight reduction in retail prices.
( B ) LINKS
1) The plan crushes the price of oil
[insert specific link]
2) NORWAY IS A KEY OIL EXPORTER, AND IT IS VITAL TO THEIR ECONOMY
WOOD, 2002
(Tony – sr economist with Royal Bank of Scotland Group, Aberdeen Press and
Journal, March 18, l/n)
Security Norway is a major oil producer with 9.5billion barrels of oil reserves.
As well as being the world's third largest oil exporter, it holds gas reserves that are key to future security
of supply for Europe. Successive Norwegian governments have sought to guard
the interests of both the Norwegian oil industry and the Norwegian people
through controls on the rate of development of Norwegian oil and gas
reserves. Norwegians sensibly consider that, with an economy heavily
reliant on finite oil and gas revenues, it is best to share the benefits across a
number of generations rather than simply exploit it all today.
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(C) IMPACTS
1. Oil is critical to Norway’s ability to be a global peacemaker and diplomatic powerhouse
Conman, Staff Writer London Daily Telegraph, 12-12-1996
(Julian, “How Little Norway Makes big Peace,” The European P.ln)
<What is it about this small cold country at Europe's northern edge? If its
representatives are not pioneering peace processes in Latin America, the Middle
East and elsewhere, they are busy giving prizes to those who are doing the job
for them. The Nobel award is just the most topical example of how Norway, population
just 4.3 million, has become a world market leader in the politics of virtue.
First presented in 1901, the Peace Prize has a prestige and influence that its
100 or so rivals cannot hope to match, as the outbreak of panic diplomacy by the
Indonesians in the lead-up to this year's award testified.
Geir Lundestad, secretary of the five-man Nobel committee, agrees that
Norway is peacemaking well above its weight. "It is a most amazing thing," he
said. "We Norwegians are less than one tenth of a per cent of the world's
population. Why should we play a peace and development role at all? Yet we do,
and a disproportionately large one at that."
The explanation is that Norway is small and inoffensive enough to squeeze
through the tightest diplomatic doors and, thanks to its oil, rich enough to pay
the bill. As a diplomatic actor in peace negotiations, Norway has the priceless
qualities of being well off, well liked and discreet.
"We have no specific interests to promote, we have a history of activism
stemming from social democratic and Christian traditions, and we have the money
to conduct active diplomacy," said Lundestad.>
2. Norway diplomacy critical to peaceful resolution of Sri Lanka crisis
Agence France Presse 12-23-2k2
<Agence France Presse COLOMBO, Dec. 22. - Sri Lanka will mark a full year
without major bloodshed as government forces and Tamil Tiger rebels maintain
their longest ceasefire in the decades-old separatist war, officials said today.
The truce, initially declared by the Liberation Tigers of Tamil Eelam (LTTE)
on the eve of Christmas last year and reciprocated by the Ranil Wickremesinghe
government, was holding well, military spokesman Mr Sanath Karunaratne said.
"We have not had any major incidents of violence in the past year," Mr
Karunaratne said. "The ceasefire should lead us to a final settlement and
permanent peace." He said barring a sea battle with Tiger rebels in May, guns
remained silent across the island's embattled northeast as Norway helped upgrade
the truce to a foreign-monitored ceasefire in February. Following navy action in
May, a rebel boat blew up just before sailors could board it for a search and
among the debris were several heavy mortar bombs and rocket-propelled grenades.
One rebel craft was sunk by the navy.
The LTTE denied the incident but the US ambassador to Sri Lanka Mr Ashley
Wills warned the guerrillas not to scuttle the bilateral truce.
The USA, which is strongly supporting Norway's attempts to peacefully end
Sri Lanka's conflict has warned that the international coalition against
terrorism could be extended to the LTTE if they jeopardise the peace bid.>
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3. Failure of Sri Lanka Peace Process risks genocide and sets a precedent for secession
O’Sullivan, research analyst for foreign affairs Brookings Institute and staff writer WSJ, 1-13-2k
(Meghan, “Sri Lanka Needs a Peace Process,” p. www.brook.edu/views/op-ed/osullivan/20000113.htm)
<Sri Lanka may seem of little strategic importance to the rest of the world, but there are many reasons why
the U.S. and others should commit to this level of diplomatic involvement. First and foremost, the
consequences of continued violence for the citizens of Sri Lanka are severe. Already, the war has exacted
grave costs in terms of lives lost, economic growth foregone, opportunities squandered and optimism
shattered. These costs will only increase as the conflict progresses. Moreover, this ceaseless violence
threatens the survival of Sri Lanka's democratic institutions, which, however fragile, have distinguished it
from other states where senseless violence has raged. As the cases of Rwanda and Bosnia clearly
demonstrate, once these institutions are undermined, ethnic tensions and societal pressures can fuel
violence on a scale even greater than has yet been seen in Sri Lanka—even to the point of genocide. When
the horrors finally abate, reconstruction and reconciliation in societies bereft of democratic institutions are
far more problematic than where these structures have survived.>
4. This Risks Nuclear War in the Kashmir
Fai, Executive Director Kashmiri American Council, 7-8-2k1
(Ghulam Nabi, “The Most Dangerous Place,” The Washington Times p.ln)
<The foreign policy of the United States in South Asia should move from the
lackadaisical and distant (with India crowned with a unilateral veto power) to
aggressive involvement at the vortex.
The most dangerous place on the planet is Kashmir, a disputed territory
convulsed and illegally occupied for more than 53 years and sandwiched between
nuclear-capable India and Pakistan. It has ignited two wars between the
estranged South Asian rivals in 1948 and 1965, and a third could trigger nuclear
volleys and a nuclear winter threatening the entire globe. The United States
would enjoy no sanctuary.
This apocalyptic vision is no idiosyncratic view. The director of central
intelligence, the Defense Department, and world experts generally place Kashmir
at the peak of their nuclear worries. Both India and Pakistan are racing like
thoroughbreds to bolster their nuclear arsenals and advanced delivery
vehicles. Their defense budgets are climbing despite widespread misery amongst
their populations. Neither country has initialed the Nuclear Non-Proliferation
Treaty, the Comprehensive Test Ban Treaty, or indicated an inclination to ratify
an impending Fissile Material/Cut-off Convention.>
OIL DISADS
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NORWAY DISAD
Uniqueness Extensions: Oil production increasing
NORWEGIAN OIL PRODUCTION INCREASING
BARNARD, 2002
(Bruce, staff, Europe, "Norwegian Crude," Feb., wilsonselect)
Norway is consolidating its position as the key player in the European energy markets as it steps
up oil and gas production from the icy depths of the North Sea. Norway's rising output,
which contrasts with the declining production of the other main North Sea producer, the United Kingdom, has also made it
a major force in the global market where it is the second-largest exporter after
Saudi Arabia. Norway's status in the world oil business was underscored late last year when a procession of top officials
from the Organization of Petroleum Exporting Countries (OPEC) visited Oslo seeking its support for coordinated production cuts to
halt the slide in oil prices. The government's decision to back the cartel intensified pressure on a reluctant Russia, the world's second-
Norwegian oil production rose to around 3.3 million barrels
per day in 2001, almost double the rate in 1991, while it is supplying an increasing volume of the
European Union's consumption of natural gas.
largest producer, to follow suit.
OIL DISADS
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Uniqueness Extensions: Econ improving
Oil is propelling Norway’s economy back to strength
Nordic Business Report 8-6-2k4
<Norwegian finance minister Per-Kristian Foss reportedly said on Friday (6
August) that Norway's oil -backed economy was still in an early stage of
recovery and that the current crown exchange rate was competitive.
"We are still just in the beginning of an economic upturn," the minister
reportedly told Reuters. When asked if the government stood by its prognosis for economic growth and
unemployment given in a revised 2004 budget in May 2004, the mister reportedly
said: "Yes, I do".>
NORWEGIAN ECONOMY IMPROVING
AFX.COM, 2004
("dollar slumps across the board," august 13, l/n)
Additionally, the Norwegian Krone, which has outperformed recently due to the
rising oil prices and to Norway's strong economic fundamentals, reached twomonth highs against the dollar.
NORWAY'S ECONOMY IS SLOWLY IMPROVING
The Swedish Economy, 2004
("development of the international economy," June 1, l/n)
Norway's economy grew by only 0.2 percent last year. Household consumption
provided the principal contribution to the increase in GDP, while the contributions of inventories,
investment and net exports were negative. The main explanation for the substantial increase in household
consumption was lower interest rates. With the inflation rate declining, the official interest rate was
lowered from 7 percent at the end of 2002 to 1.75 percent in March of this year. These reductions in
interest rates contributed to a weakening of the Norwegian krone, but since March the krone
has strengthened again.
Norway’s economy is gaining steam
Nordic Business Report 8-6-2k4
<Norwegian finance minister Per-Kristian Foss reportedly said on Friday (6
August) that Norway's oil -backed economy was still in an early stage of
recovery and that the current crown exchange rate was competitive.
"We are still just in the beginning of an economic upturn," the minister
reportedly told Reuters. When asked if the government stood by its prognosis for economic growth and
unemployment given in a revised 2004 budget in May 2004, the mister reportedly
said: "Yes, I do".>
OIL DISADS
Consortium 2004
118
NORWAY DISAD
I/L: key exporter to the US
NORWAY IS A KEY OIL SUPPLIER TO THE U.S.
Fuel Cell Technology News, 2004
("U.S., Norway agree on H2," July, l/n)
U.S. Energy [1000 Independence Ave., S.W., Washington, DC 20585; Tel: 800-dial-DOE] Secretary
Spencer Abraham signed a Memorandum of Understanding [MOU] with Norwegian Minister of Petroleum
and Energy Einar Steensnaes that will enhance each country's research in a number of areas of mutual
benefit. These include carbon sequestration, hydrogen and clean fuels, among other energy topics.
Norway is the world's third-largest exporter of both oil and natural gas, and
a major supplier to the Northeast corridor of the U.S.
NORWAY IS A KEY OIL SUPPLIER TO THE U.S.
BERRIGAN, 2004
(Frida – sr researcher with the Arms Trade Resource Center at the World Policy
Institute, In These Times, "oil and democracy don't mix," March 1, l/n)
There are a few exceptions to the "oil and democracy don't mix" maxim, and they are instructive.
Norway, the United Kingdom and Canada are major oil suppliers to the
United States, but were established democracies with diversified economies
before getting into oil exploration. Replicating these successes in other oil-rich countries will
require a radical revision of U.S. military and energy policy. Now would be a good time to start.
OIL DISADS
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NORWAY DISAD
I/L: oil key to the econ
OIL IS IMPORTANT TO THE NORWEGIAN ECONOMY
THE ADVOCATE, 2004
(june 25, l/n)
The Norwegian government has traditionally been quick to order an end to strikes
through binding arbitration when they threaten oil production crucial to the national
economy. However, it did not immediately reveal its plans. The strike has already
disrupted about 400,000 barrels a day in oil production in Norway.
Oil is the backbone for the Norwegian economy
Hartzok, analyst US Basic Income Guarantee Network, 2-22-2k4
(Alanna, “Citizen Dividends And Oil Resource Rents A Focus on Alaska, Norway and Nigeria,” p.
http://www.earthrights.net/docs/oilrent.html)
<Norway, one of the world's richest economies, is a model of prudent economic management of resource
wealth. So states the IMF 2000 Article IV consultation with Norway. Norway is the top non-OPEC oil
exporter, the world's third-largest exporter of oil, and pumps about 3.2 million barrels per day. Norway's oil
and gas industry underpins the economy, providing up to 25% of the country's gross domestic product. This
country of nearly four and one half million people has a steady growth rate, almost no poverty, and
negligible unemployment. >
OIL DISADS
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120
NORWAY DISAD
I/L: oil key to the econ
Oil revenues is the lifeblood of the Norwegian economy
Esser, senior analyst IEA, 11-2k3
(Charles, “Norway,” p. http://www.eia.doe.gov/emeu/cabs/norway.html)
<Norway’s economy is largely linked to its offshore oil and natural gas sector, which provides the
government with the largest single source of revenue, as well as the largest contributor to gross domestic
product (GDP). Norway's oil and natural gas extraction sector represented about 18% of the country's GDP
in 2002. Over the past years, high oil prices have made for government budget and current account
surpluses, as well as for rising disposable income. In 2002, the country enjoys one of the highest levels of
GDP per capita in the world, at around $42,000.
Despite relatively high oil prices, Norway’s economy has struggled somewhat over the past few years,
falling into a technical recession during the first half of 2003. In 2002, real gross domestic (GDP) growth
was 1.0%, with 2003 growth estimated at –0.1%. In 2002, total exports contracted 0.5% over 2001, with
crude oil and natural gas exports growing only 0.2%. The importance of petroleum in the Norwegian
economy presents long-term challenges to the country, as it is difficult to predict when reserves will run
out. Associated with declines in production is a loss of petroleum revenues flowing into the country. In
response, the Norwegian government created the Petroleum Fund in 1990. The Fund serves two purposes:
1) to act as a buffer to smooth short-term variations in the oil revenues (a means of reducing the
inflationary impact of oil revenues); and 2) to serve as a tool for coping with the financial challenges
connected to an ageing population and the eventual decline in oil revenues, by transferring wealth to future
generations. In 1996, the government made its first contribution to the Fund. Revenue from the Fund is also
expected to be phased in through additional government spending and reduced taxation, which is expected
to stimulate consumer spending. >
Oil is the backbone for the Norwegian economy
Hartzok, analyst US Basic Income Guarantee Network, 2-22-2k4
(Alanna, “Citizen Dividends And Oil Resource Rents A Focus on Alaska, Norway and Nigeria,” p.
http://www.earthrights.net/docs/oilrent.html)
<Norway, one of the world's richest economies, is a model of prudent economic management of resource
wealth. So states the IMF 2000 Article IV consultation with Norway. Norway is the top non-OPEC oil
exporter, the world's third-largest exporter of oil, and pumps about 3.2 million barrels per day. Norway's oil
and gas industry underpins the economy, providing up to 25% of the country's gross domestic product. This
country of nearly four and one half million people has a steady growth rate, almost no poverty, and
negligible unemployment. >
OIL DISADS
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NORWAY DISAD
I/L: oil key to diplomacy
Oil revenues are critical to Norway’s powerful diplomatic peace-making agendas
Conman, Staff Writer London Daily Telegraph, 12-12-1996
(Julian, “How Little Norway Makes big Peace,” The European P.ln)
< The latest budget proposals put the squeeze on all spending except aid
funding, which rose by a staggering 7.4 per cent against an average spending
increase of 0.75 per cent. Anywhere else there would have been howls of dismay.
This being Norway, Frode Forfang, the state secretary responsible for
development programmes, received no criticism at all. The richer Norwegians
become, the more money they want to give away.
The sense of a rather different set of priorities is reinforced by
Norwegians' attitudes towards the United Nations. Where else is the UN's flag
considered an acceptable alternative to the national colours on the days of
major street parades? "In many countries," said Forfang, "the UN is seen as
corrupt and overly bureaucratic. But in Norway, the UN is a sacred
institution." The diplomatic successes of the 1990s and the continuing significance of
the Nobel Peace Prize suggest that Norway's oil money windfall has given a
small nation the means and confidence to fulfil an internationalist vocation
that has long been apparent.>
Norwegian oil is vital to Oslo’s ability to mediate international conflict
Hartzok, analyst US Basic Income Guarantee Network, 2-22-2k4
(Alanna, “Citizen Dividends And Oil Resource Rents A Focus on Alaska, Norway and Nigeria,” p.
http://www.earthrights.net/docs/oilrent.html)
<Norway has a diverse economy based on agriculture, forestry, fishing and manufacturing, among other
things, and its oil industry has developed amid much planning, bargaining, and public debate.
The most recent U.N. Human Development Report ranks Norway the number one place in the world to
live, based on a cocktail of indicators about health, wealth and social outlook. Nearly 1% of GDP is spent
each year to fight global poverty and enhance peace. Oslo often plays a mediating role in foreign conflicts,
from efforts to reconcile North and South Korea to the now foundering Middle East peace process. Norway
has created an economy that retained its progressive tax structure, re-invested its oil profits throughout the
economy, and saved money to cushion future market shocks. >
OIL DISADS
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122
NORWAY DISAD
I/L: oil key to diplomacy – honest broker
Norway was integral to brokering the Israeli-Palestinian and Guatemalan peace accords –
large budget ensures
Conman, Staff Writer London Daily Telegraph, 12-12-1996
(Julian, “How Little Norway Makes big Peace,” The European P.ln)
<It was the Oslo peace accords of 1993, bringing together the PLO and the
Israelis, which sealed the city's reputation as a broker of the impossible deal.
After a series of secret meetings just outside the city, a peace bargain was
struck and eventually ratified in Washington. President Bill Clinton got the
final photograph opportunity, but there was a Norwegian on the White House lawn
beside him. The latest Guatemalan success only confirmed that the country
provided the world's top-ranking smooth talkers.
Jan Egeland, the youthful secretary of state at the ministry of foreign
affairs which negotiated both accords, brings the mindset of an entrepreneur to
the business of making peace. "Non-governmental organisations, church
organisations and other groups know that it is more possible to find venture
capital in Norway for peace than anywhere else in the world," he said,
explaining Norway's role in the Guatemalan process which began when a Lutheran
church group requested that the government become involved.>
Norway is a global peace maker; honest broker status gives them the upper hand
Conman, Staff Writer London Daily Telegraph, 12-12-1996
(Julian, “How Little Norway Makes big Peace,” The European P.ln)
<Like Lundestad, Egeland also emphasises that Norway is in a unique position
to mediate between the apparently irreconcilable. "Norway has few economic
interests related to its peace agenda. We have no legacy of empire. As a trusted
do-gooder we can quickly gain a country's confidence.
"Norway has only four million inhabitants and, of course, we are not members
of the EU. But we enjoy remarkable access to the European Commission, the
Japanese prime minister and so on. That's because Norway is seen as a genuine
international player. Making peace opens doors."
Even the most sceptical observer could hardly describe this virtuous circle
as the naked pursuit of self-interest. The truth is that Norwegians are simply a
little more internationally minded than most. The government's development aid
programme is pursued with as much energy as its more high-profile peacemaking.>
OIL DISADS
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123
NORWAY DISAD
I/L: peacemaking
Norway’s deep-pockets make it a critical player in international conflict negotiation
Greer, staff writer Medill News, 5-9-2k3
(Mark, “Norway’s Peace Role,” Medill News Service p. http://www.medillnewsdc.com/cgibin/ultimatebb.cgi?ubb=get_topic&f=35&t=000020)
<Back at Petersen’s Ministry of Foreign Affairs in Oslo, Tore Hattrem is excited as he takes out of his desk
drawer one of the final drafts of a report. It doesn’t look like much, but it means a great deal for Hattrem,
an official in the ministry. The report analyses Norway’s efforts at facilitating peace in civil conflicts
worldwide, extrapolating lessons from what worked – and what didn’t – in an attempt to make future
diplomatic efforts more successful. But the new report represents more than the sum total of a decade of
diplomatic experience. It, like Petersen’s visit, also illustrates the emergence of Norway’s new role: from a
happenstance and humble peace facilitator to an involved peace broker that owns an exemplary
humanitarian record and isn’t afraid to challenge more powerful countries.
Certainly the home of the Nobel Peace Prize has plenty of experiences to draw from, and not simply from
the famous but ultimately failed 1993 Israeli-Palestinian Peace Accords. Since then, Norway has played a
variety of peace-making roles in some 15 conflicts around the globe, from Guatemala to Colombia, Cyprus,
Sudan and Sri Lanka. “It’s a very large portfolio,” said Hattrem, who worked extensively with in Sri Lanka
process. But the recent proactive approach is a marked change from Norway’s traditionally reluctant tenor.
The country’s peace-brokering efforts date only to the Oslo Accords, (and it wasn’t the first country
contacted to host the talks), and Norway usually comes into these affairs through individual efforts, church
groups or other NGOs, said Stein Tønnesson, director of the International Peace Research Institute in Oslo.
For example, the efforts for a cease-fire between the government and rebels in Guatemala came about
through the work of Petter Skauen in Norwegian Church Aid.
Even then, the government takes an unassuming “do what we can” approach. “It is striking that small
Norway has been able to contribute in such a way,” said Geir Lundestad, executive director of the
Norwegian Nobel Committee. “Establishing peace is very difficult. It is remarkable such a small country
will undertake these attempts, but we should not overestimate success.” Many in the Scandinavian country
of 4.5 million people take this view and are quick to humbly mention the small size and moderate influence
Norway has on international peace. But that attitude itself has proven quite the bargaining tool.
“We see ourselves as facilitators, not mediators,” Hattrem said. “We won’t come in with a large amount of
carrots and sticks. We go into this process with a very small carrot, such as money to oil the machinery and
get things done faster, and the stick is absolutely not there. We can’t threaten the parties with anything.”
“We come about as a small, neutral, dependable, objective country without vested interests,” adds Janne
Haaland Matlary, a professor of international politics at the University of Oslo. But now those seemingly
Norwegian qualities are in high demand as parties in other conflicts are looking toward Oslo for help. “The
Oslo agreement combined with the peace image of Norway traditionally through the Nobel Peace Prize,
and all of it went to Norway’s profile,” Tønnesson said. “And now when people who are engaged in
conflicts around the world want to take possibilities for contacting their enemies, they always think of
Norway.” “Once you prove you can do something, there is a considerable demand for it,” Lundestad adds.
“Now we have a reputation.” In a time of international conflict, once-timid Norway has become a leading
exporter of peace. How is the Nordic nation able to do it? >
OIL DISADS
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NORWAY DISAD
I/L: peacemaking
Norway peace-mediation is critical to increasing it’s international soft-power
Greer, staff writer Medill News, 5-9-2k3
(Mark, “Norway’s Peace Role,” Medill News Service p. http://www.medillnewsdc.com/cgibin/ultimatebb.cgi?ubb=get_topic&f=35&t=000020)
<Two additional factors help create this image: Norway’s money and social-democratic, missionary
history, Matlary said. Norway’s gross domestic product ranks among the best in the world, and the country
isn’t afraid to help out with its funds. In fact, the ministry is structured so that finances are very flexible and
can be distributed to needy areas quickly, Hattrem said. Nearly one percent of the Norwegians gross
national product goes to international aid (making Norway the world’s largest per capita aid donor) and
nearly one percent of its population has served in U.N. peacekeeping efforts. “It is in the culture to go for
some compromises, since there’s a tradition of non-alignment that is seen as something that is appreciated,”
said Sverre Lodgaard, director of the Norwegian Institute of International Affairs. “We have seen that
people that have been involved in these processes in successful ways have gotten a high status in the public
domain. There could be some resonance in the culture that helps to explain this.” But Norway’s peace
efforts are not completely altruistic affairs either. On the surface, spending time and money in far-flung
corners of the globe where Norway has no apparent interest is a waste. But helping in these countries is
diplomatically rewarding, Tønnesson said, and gives Norway what can be termed “soft power,” a moral
authority that the little country can use as a sort of influential capital in international affairs. “When the
Cold War ended, we were no longer interesting to the U.S. So what could replace it as a product? What do
we get out of this do-goodism? We get access,” Matlary said. “For Norway, the road for Brussels [the
headquarters of the European Union] goes through places like Colombia.” This has also helped gain
Norway an ear in Washington, where Norway is able to discuss national issues while working on
international diplomacy. For example, Norway’s involvement in Afghanistan, while controversial in Oslo,
gave the Nordic nation access to the United States. “Norway counted for something in Washington because
Norway had that role in Afghanistan,” Tønnesson said. “The Norwegian diplomats wanted to speak with
the Americans about something that was in the Norwegian interest, such as fish or oil. It was easier because
you had Afghanistan to talk about, so you could also talk about other topics in the same meeting.”
“For the U.S., we have been like a useful handmaid,” Lundestad added. “As a small country, we can do
what the big power cannot do. We have staying power; we are resilient, money-wise and person-wise.
We’re thought of as 100 percent dependable in the State Department.”>
OIL DISADS
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NORWAY DISAD
I/L: peacemaking
Norway is a international power-house in peace-making and conflict resolution
Nye, professor of government Harvard University, 4-5-2k4
(Joseph, “Soft-Power: The Means to Success in World Politics,” Wielding Soft Power: Chapter Four, p.
http://bcsia.ksg.harvard.edu/BCSIA_content/documents/Joe_Nye_Wielding_Soft_Power.pdf)
<Some countries accomplish almost all of their public diplomacy through actions rather than broadcasting.
Norway is a good example. It has only 5 million people, lacks an international language or transnational
culture, is not a central location or hub of organizations or multinational corporate brands, and is not a
member of the European Union. Nonetheless, it has developed a voice and presence out of proportion to its
modest size and resources “through a ruthless prioritisation of its target audiences and its concentration on
a single message – Norway as a force for peace in the world.” xli The relevant activities include conflict
mediation in the Middle East, Sri Lanka, and Colombia, as well as its large aid budget, and its frequent
participation in peacekeeping forces. Of course, not all Norwegian actions are on message. The domestic
politics of whaling sometimes strike a discordant note among environmentalists, but overall, Norway shows
how a small country can exploit a diplomatic niche that enhances its image and role. >
OIL DISADS
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NORWAY DISAD
I/L: Sri Lanka peace
Norway is integral to the Sri Lankan peace-efforts
Agence France Presse 12-23-2k2
<Agence France Presse COLOMBO, Dec. 22. - Sri Lanka will mark a full year
without major bloodshed as government forces and Tamil Tiger rebels maintain
their longest ceasefire in the decades-old separatist war, officials said today.
The truce, initially declared by the Liberation Tigers of Tamil Eelam (LTTE)
on the eve of Christmas last year and reciprocated by the Ranil Wickremesinghe
government, was holding well, military spokesman Mr Sanath Karunaratne said.
"We have not had any major incidents of violence in the past year," Mr
Karunaratne said. "The ceasefire should lead us to a final settlement and
permanent peace." He said barring a sea battle with Tiger rebels in May, guns
remained silent across the island's embattled northeast as Norway helped upgrade
the truce to a foreign-monitored ceasefire in February. Following navy action in
May, a rebel boat blew up just before sailors could board it for a search and
among the debris were several heavy mortar bombs and rocket-propelled grenades.
One rebel craft was sunk by the navy.
The LTTE denied the incident but the US ambassador to Sri Lanka Mr Ashley
Wills warned the guerrillas not to scuttle the bilateral truce.
The USA, which is strongly supporting Norway's attempts to peacefully end
Sri Lanka's conflict has warned that the international coalition against
terrorism could be extended to the LTTE if they jeopardise the peace bid.>
Tamil conflict reverberates into India – it’s considered a threat to the territorial integrity
of India
Miriam, the executive director of the Asia Pacific Center for Justice and Peace, 10-4-2k
(Young, “Problems with Current U.S. Policy,” Foreign Policy in Focus Vol. 5 No. 35)
<The crisis in Jaffna has brought India back onto the scene for the first
time since the late 1980s, when it unsuccessfully attempted to make peace in Sri
Lanka through the Indo/Lanka Accords. Events in Sri Lanka, particularly the
outcome of the conflict, will have an impact on India's complex domestic scene.
Although the LTTE has the sympathy of many of India's Tamils in the state of
Tamil Nadu, the LTTE's leader, Velupillai Prabhakaran, stands accused of the
assassination of Rajiv Gandhi. India faces a number of its own separatist
movements and would view a newly formed Tamil state to its south as a threat to
its territorial integrity.>
OIL DISADS
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NORWAY DISAD – AFF
General
Norway’s economy is diversified beyond oil revenues
Hartzok, analyst US Basic Income Guarantee Network, 2-22-2k4
(Alanna, “Citizen Dividends And Oil Resource Rents A Focus on Alaska, Norway and Nigeria,” p.
http://www.earthrights.net/docs/oilrent.html)
<Norway has a diverse economy based on agriculture, forestry, fishing and manufacturing, among other
things, and its oil industry has developed amid much planning, bargaining, and public debate.
The most recent U.N. Human Development Report ranks Norway the number one place in the world to
live, based on a cocktail of indicators about health, wealth and social outlook. Nearly 1% of GDP is spent
each year to fight global poverty and enhance peace. Oslo often plays a mediating role in foreign conflicts,
from efforts to reconcile North and South Korea to the now foundering Middle East peace process. Norway
has created an economy that retained its progressive tax structure, re-invested its oil profits throughout the
economy, and saved money to cushion future market shocks. >
Turn: Norwegian oil is in cahoots with Iran for energy development
Gulf States Newsletter 7-10-1999
<Norway's oil industry is working on a new Middle East strategy which
targets Iran for investment opportunities, according to reports in the Norwegian
media. The Iranian news agency IRNA said that the Intsok Foundation, which
worked in cooperation with 55 Norwegian oil companies to develop international
relations, was presenting the market strategy in what it regarded as the most
important oil region in the world.
The outgoing Director, Sven Svedman, was quoted as sayingl that it was "in
Norway's economic interest to gain a foothold in Iran". Intsok is jplanning to
hold seminars in both Tehran and Oslo on oppportunities that exist and is also
arranging for a delegation of oil companies to visit Iran in the autumn.
The development came just a week after the Norwegian Foreign Ministry lifted
restrictions on investing in Iran, following on the resumption of full
diplomatic relations between the two countries.>
OIL DISADS
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General
STABLE OIL PRICES ARE KEY FOR NORWAY – NOT HIGH ONES
INTERNATIONAL OIL DAILY, 2004
("Norway sees oil prices remaining strong through next year," Aug. 25, l/n)
Oil prices are likely to remain very high for the rest of 2004 and through
2005, but there is nothing that Norway can do to prevent high prices from
hurting the world economy, the country's Energy Minister Thorhild Widvey said on Tuesday.
"I don't think the price is going to stay at current levels in the future, but I do think it will remain at a high
level at the end of 2004, and probably also in 2005," Widvey said during a briefing at the Offshore
Northern Seas conference in Stavanger. "Of course they could hurt the world economy, the very high
prices. [But ] there's nothing Norway can do. We are producing at full capacity, at about 3.3 million
barrels per day, and our oil production is expected to remain at this level for the next couple of years."
Addressing the conference later in the day, Norwegian Prime Minister Kjell Magne Bondevik said high oil
prices could also hurt Norway's economy because of their effect on the country's currency. "Some may
believe that for Norway it's only a great advantage, with the extremely high prices we have nowadays,"
Bondevik said. "But it may have an effect on the value of our currency, which is not good for us . With
an open economy, Norway depends on a stable world economy. What we
want is ever more stable oil prices. High energy prices pose a threat to the
development of the global economy, and they hit the least developed
countries hardest."
NORWAY INCREASING ITS NATURAL GAS PRODUCTION
QUINLAN, 2004
(Martin, staff, Petroleum Economist, "Pushing out to the frontiers," April, wilsonselect)
Norway's gas production, in contrast, is growing strongly. With last year's 12.1% increase
to 73.4bn cm, Norway became a larger gas producer than the Netherlands for the first
time. Within a few years it will probably surpass the UK -- certainly by 2007, when
deliveries from the 375bn cm Ormen Lange field are due to start. According to the
Norwegian Petroleum Directorate's forecast, production will build up to 110bn cm/y by
2008 and will continue at that level.
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AT: Sri Lanka impact
NO INTERNAL LINK: Thailand is considered a honest broker and is attempting to
resolve the Sri Lanka crisis
Macan-Markar, staff writer, 3-27-2k2
(Marwaan, “Thailand’s Neutrality Ideal for Sri Lankan Peace,” IPS p.ln)
<Thailand's reputation as a neutral player on the global stage strengthens its
case as an ideal venue for the first round of imminent peace talks between the
Sri Lankan government and the Tamil Tiger rebels.
Yesterday, a ranking member of the Liberation Tigers of Tamil Eelam (LTTE),
as the Tamil rebels are formally known, virtually confirmed the story doing the
rounds in Colombo's diplomatic and government circles -- that the Southeast
Asian kingdom was the chosen venue.
There has been no official announcement of the venue for the talks as yet.
But the statement by Anton Balasingham, the LTTE's chief negotiator, that
Thailand is the preferred venue for peace talks put to rest speculation that Sri
Lanka's closest neighbors -- India and the Maldives -- would host discussions to
end the more than two decades of ethnic conflict in the South Asian
island nation. >
No Internal Link: Norway is in the back-seat compared to Thailand
Macan-Markar, staff writer, 3-27-2k2
(Marwaan, “Thailand’s Neutrality Ideal for Sri Lankan Peace,” IPS p.ln)
<Balasingham returned to Sri Lanka this week from Britain, where he has been
living in self-imposed exile for three years. His arrival is expected to spur
the groundwork being prepared by the recently elected United National Front
(UNF) government in Colombo and the Tamil Tiger leadership for the talks, which
may begin early May. While Norway's imprimatur also matters, given the Scandinavian country's role
as the peace broker in this effort at conflict resolution, it is Colombo that
would make the formal request to Bangkok to permit the peace talks to be held in
Thailand. Thai foreign policy experts are already beaming at the diplomatic windfall
that lies ahead for the country as host of the talks.>
No Internal Link – Norway isn’t key to Lanka peace accords, India’s taken over
Miriam, the executive director of the Asia Pacific Center for Justice and Peace, 10-4-2k
(Young, “Problems with Current U.S. Policy,” Foreign Policy in Focus Vol. 5 No. 35)
<Given the growing U.S. relationship with India and its secondary interest in
Sri Lanka, Washington has had no problem deferring to India as the regional
power. The escalation on the battlefield and Sri Lanka's turn to India for help
has tended to shift the attention away from Norway's peace initiative to power
politics and has set up a Norway -India-U.S. triangle.>
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1NC SHELL
(A) WEAK THREATS ENSURE OPEC MARKET CONTROL
Saunders, Vice President and Energy Analyst Deutsche Bank, 2004
(Jay, “Energy Information Administration 2004 Energy Outlook Report,” FDCH , March 24, p.ln)
<World oil markets are caught in a vicious cycle of rampant demand, a
cohesive OPEC, the weak US dollar, a consequent increase in speculative froth on
oil futures markets, production instability in Iraq and Venezuela, and global
terrorism. It's no mistake that WTI oil prices have neared the $38/bbl level of
a year ago, in advance of the Iraq invasion, which itself was the highest level
since the Persian Gulf War. -The largest influences on the oil markets are OPEC, which has
been tweaking supply to keep prices at a higher level than in the past, and demand
as the economy recovers. Together these have kept global oil inventories low and
prices high. –Low threats to OPEC's market share leads me to expect that it can
maintain prices at a relatively high level through next year.>
(B) ALTERNATE ENERGY PRODUCTION RISKS OPEC FLOODING THE
MARKET IN RETALIATION
Stelzer, dir of economic policy studies at the Hudson Institute, 2004
(Irwin, “Soaring Oil Price Lubricates the advance of Kerry,” Sunday Times (London), Aug. 1, p.ln)
<Government officials in Europe point out in private conversations that they
fear Russia's exports will be curtailed by continued government intervention.
That leaves the Middle East, which experts in the region say will have to
meet two-thirds of future increases in the demand for oil. My conversations with
executives from companies and countries around the world turned up several
reasons why high prices seem unable to elicit more oil. One British executive repeated what several
Americans told me at a private dinner in Washington: "Prices go up, and prices go down." The fear of a
price collapse induced by a decline in demand, the outbreak of peace and the
consequent removal of the $ 7-$ 10 per barrel risk premium, or a move by Opec to
open the taps to deter investment in alternative energy, is a real deterrent
to long-term investment.>
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1NC SHELL
(C) STABLE OIL MARKETS ARE KEY TO THE GLOBAL ECONOMY
BINGAMAN, 2002
(Jeff – democrat senator from New Mexico, April 22, Federal News Service, l/n)
Fundamentally,
we all recognize that energy is critical to the world market, to
the world economy; that Saudi Arabia is playing a critical role in maintaining
stable energy markets; and if the world economy is to prosper, then stable
energy markets are an essential prerequisite. Both the U.S. and Saudi Arabia have a
major responsibility to the world community to help bring this about.
(D) COLLPASE OF THE GLOBAL ECONOMY RISKS MULTIPLE
SCENARIOS FOR GLOBAL NUCLEAR WAR
Bearden 2000 (Tom; Lt. Col. U.S. Army – Retired, “The Unnecessary Energy Crisis: How to Solve It Quickly” 6/24
http://www.freerepublic.com/forum/a3aaf97f22e23.htm accessed 8/6/04 wdc/wbw)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the stress on nations will
have increased the intensity and number of their conflicts, to the point where the arsenals of weapons of mass destruction
(WMD) now possessed by some 25 nations, are almost certain to be released. As an example, suppose a starving North Korea
launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or
suppose a desperate China-whose long-range nuclear missiles (some) can reach the United States-attacks Taiwan. In addition to
immediate responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict, escalating
it significantly. Strategic nuclear studies have shown for decades that, under such extreme stress conditions, once a few nukes
are launched, adversaries and potential adversaries are then compelled to launch on perception of preparations by one's
adversary. The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without effective
defense, the only chance a nation has to survive at all is to launch immediate full-bore pre-emptive strikes and try to take out its
perceived foes as rapidly and massively as possible. As the studies showed, rapid escalation to full WMD exchange occurs.
Today, a great percent of the WMD arsenals that will be unleashed, are already on site within the United States itself. The resulting
great Armageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for many decades.
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OPEC DISAD
Uniqueness: OPEC Cohesion High
OPEC COHESION HIGH – ENSURES HIGH OIL PRICES
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<World oil markets are caught in a vicious cycle of rampant demand, a
cohesive OPEC, the weak US dollar, a consequent increase in speculative froth on
oil futures markets, production instability in Iraq and Venezuela, and global
terrorism. It's no mistake that WTI oil prices have neared the $38/bbl level of
a year ago, in advance of the Iraq invasion, which itself was the highest level
since the Persian Gulf War.
-The largest influences on the oil markets are OPEC, which has been tweaking
supply to keep prices at a higher level than in the past, and demand as the
economy recovers. Together these have kept global oil inventories low and prices
high. -Low threats to OPEC's market share leads me to expect that it can
maintain prices at a relatively high level through next year.>
IRAQ AND WEAK NON-OPEC OUTPUT GIVES OPEC THE UPPER HAND TO
CONTROL THE OIL MARKET
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<Aiding OPEC's cause, non-OPEC production decline rates
remain a key oil industry challenge. Larger publicly-traded IOCs are slowing
investments in mature basins and shifting into replacement infrastructure-led
plays. That shift takes time, and is leading to downward pressure on estimates
for non-OPEC supply. West Africa deep water and Russia remain the core non-OPEC
growth regions, and these plays, combined with base declines elsewhere, take us
to a total non-OPEC growth estimate of 1.1mmb/d in 2004 (less aggressive than
the EIA's 1.4mmb/d). That rate of non-OPEC growth is 400kb/d below our
expectations for oil demand growth in 2004.
That, combined with limited growth potential this year from Iraq, plays
firmly into the hands of OPEC's price hawks, and points to strong oil prices in
2004. Robust oil demand. Estimated global oil demand growth of nearly 2.0% in
2003 looks relatively healthy after three years of sub-par performance averaging
only 0.7% per year 2000-2002. >
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OPEC DISAD
Uniqueness: Non-OPEC Countries Weak
NON-OPEC OIL PRODUCTION IS SLOW
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “energy Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<Non-OPEC production is growing only slowly as companies struggle to move from
declining production in mature areas, like the US and North Sea, to more politicallysensitive regions, like West Africa and
the Caspian. Further, Iraq's problems are taking longer-and-longer to fix, and
the risks of renewed civil unrest are rising into the summer's power transition.>
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OPEC DISAD
Uniqueness: Demand High Now
FAST OUTPUT NOW ISN'T NOT COST EFFICIENT
GATELY, 2004
(Dermot, staff, The Energy Journal, "OPEC's incentives for faster output growth," Apr 1)
The issue is whether OPEC countries would have sufficient incentive to increase their production as rapidly as projected by DOE and
IEA--not whether the demand for OPEC oil will rise so rapidly. Of course, rapid increases in OPEC output would increase OPEC's
the key question is whether slower increases in OPEC output
would increase their profits even more. We can expect such rapid output increases from OPEC and its key
revenues and profits. However,
producers only if they would benefit more from that strategy than from slower increases in output. With the assumptions made in this
if OPEC acts collectively then it has no incentive to increase its output as
rapidly as DOE and IEA project, because faster increases in output would be more than offset by lower prices. The faster
it increases its market share above its current level (37%), the lower will be its likely
payoff. If OPEC were to increase its market share as rapidly as projected by DOE
and IEA, then its payoff would be lower than if OPEC had just maintained its
market share. OPEC would have substantial incentives for increasing its production
as rapidly as projected only if demand and Non-OPEC supply were significantly
more price-responsive than is assumed here.
paper,
DEMAND SUPERCEDES SUPPLY
WORLD OIL, 2000
("price does matter," August 1, l/n)
Global oil prices have risen to, and remained in, a decidedly higher "band" during the last
year. However, they have been periodically erratic. In June 1999, the spot price for West
Texas Intermediate (WTI) crude was an average $ 17.90/bbl, according to the
International Energy Agency (IEA). By September 1999, the WTI spot price had jumped
33%, to $ 23.85/bbl. It then rose to $ 26.06/bbl in December, $ 27.40/bbl in January and
$ 29.78/bbl in March. Fearing that they had pushed prices too high, too fast, and hearing
complaints from the U.S., OPEC members in late March hiked their output by 1.7 million
bopd, to 24.69 million bopd (excluding Iraq). In addition, non-OPEC producers, such as
Mexico and Norway, boosted their output by 400,000 bopd. In the short run, prices came
down. TEA'S spot price average for April 2000 was $ 25.69/bbl, down 14% from March.
Yet, the reduction was short-lived; growing global oil demand, coupled with seasonal
U.S. increases, strained supplies. By May, the WTI spot average was up to $ 28.92/bbl,
and it breached the $ 30/bbl mark in June. In response, OPEC members added a 71
0,000-bopd output hike, to raise collective output to 25.4 million bopd (excluding Iraq).
However, because some members were already exceeding previous quotas; output was,
in reality, 25.3 million bopd.
OIL DISADS
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OPEC DISAD
Links: Anti-Oil Policies
OPEC WATCHES CLOSELY FOR ANTI-OIL POLICIES – THEY'LL RESPOND TO
THE PLAN
ISMAIL, 1996
(Ibrahim, staff, Oil & Gas Journal, " OPEC Middle East plans for rising world demand amid uncertainty," May
27, ln)
Until recently, taxes have been imposed mainly to raise money for consumer-nation governments and, to
some extent, shift the financial burden of social programs from employment to energy consumption. But
taxation is increasingly proposed as a tool of environmental protection. This is especially so in
the area of climate change, where even nontax measures aim at cutting
global consumption of oil to reduce emissions of carbon dioxide. Depending
on the CO[2] target, environmental taxation could reduce projected oil
demand by 2-6 million b/d by 2000, 6-12 million b/d by 2010, and 7-18 million b/d by
2020. For OPEC, under shares predicted here, these cuts could reduce
cumulative revenues by $ 43-252 billion by 2000, $ 516 billion-S1.245 trillion by 2010,
and $ 1.168-3.403 trillion by 2020. Revenue hazards like these create huge
uncertainties for OPEC and the Middle Eastern members that must account
for most future production growth at the very time that they need to be
planning their investments and financing strategies. In Middle East OPEC, therefore,
opportunities are available and likely to grow, but governments will remain wary of political developments
in the key market regions.
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OPEC DISAD
I/L: OPEC Closely Watches Oil Prices
OPEC WATCHES OIL PRICES CAREFULLY
CAREY et al., 2004
(Glen, staff, Platt's Oilgram News, "Naimi says new Saudi fear is flooded market," June 3, l/n)
The Saudi minister said last month Riyadh was prepared to raise output to its full capacity of 10.5-mil b/d if its customers needed
more oil. Naimi did not repeat that pledge in the same manner June 2, saying instead he feared saturating the market. "The kingdom
currently has spare capacity of around 2-mil b/d and we have absolutely no objection and we are absolutely ready to raise the
kingdom's production. But our main fear is flooding the market. We have to be wary of [this] because this is what happened in 199899," Naimi said. "The kingdom of Saudi Arabia, together with producers inside and outside OPEC, is working together to guarantee
there are sufficient supplies of oil on the market. But at the same time, we want to avoid oversupply which could lead to the market
collapsing." "We need to reduce this perception of a potential shortage in the market...Eventually people will see that fundamentals
Saudi Arabia and other cartel members
were all watching oil prices carefully, he said. "I can assure you the kingdom, and all
OPEC members, are concerned by the oil price issue.
are in balance and that prices will hopefully stabilize," Naimi said.
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OPEC DISAD
I/L: OPEC will flood market
OPEC WILL FLOOD THE MARKET IF ITS SHARE IS THREATENED
MOSCOW TIMES, 2002
("OPEC Tells Russia Not to Be Foolish," July 22, l/n)
OPEC President Rilwanu Lukman said Friday that Russia would be foolish to think OPEC would
continue to sacrifice market share to it and warned Moscow that OPEC exporters would
win any price war. OPEC hopes to see room to increase output toward the end of the year as the
world economy recovers, but Lukman said any future output cuts would be conditional on other countries,
including Russia, joining in. "The Russians would be foolish to expect us to
continuously reduce our market share in order to support higher volumes for them. That
would not be acceptable, certainly not in the long term, and they know that," Lukman said at a
London conference. Lukman said OPEC had 6 million barrels of spare oil output
capacity and lower production costs than Russia.
UPSETTING OPEC RISKS THEM FLOODING THE MARKET
SHELLEY, 2001
(Toby, staff, Financial Times Online, "OPEC target price affected by sickly economy," Dec 14,
http://specials.ft.com/yir2001/FT3S8QO48VC.html)
It can be argued that Opec's adoption of a strategy aimed at supporting both prices
and its own market share, backed by an implicit threat to flood the market if
cooperation was not forthcoming, is another example of a more single-minded and
business-like approach to its task since the disastrous price slump of 1997-98.
OPEC IS KEY TO AVOID PRICE SHOCKS AND ECONOMIC MELTDOWN
NIXON, 2003
(Simon, The Spectator, "it's not the oil, stupid," June 21, l/n)
But he doesn't believe it will happen. Opec is in the political interests of the US, he says, which is why
successive US governments - Republican and Democrat - have been intervening to support Opec for
decades. The first President Bush helped broker a deal restoring the quota system after Saudi Arabia
triggered a price war in the mid1980s. There is no reason to expect his son to act any differently. Not only
has Opec's pricefixing helped promote global energy security, making exploration and production in other
higher-cost parts of the world, such as the Caspian and Africa, economic but, more importantly, without
Opec, the oil price would soon fall below $10 a barrel, rendering uneconomic most US domestic
production and causing meltdown in the Bush political heartland of Texas.
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OPEC DISAD
I/L: Flooding Market = Price Wars
FLOODING THE MARKET DRIVES PRICES DOWN, DEVASTATING OPEC
ECONOMIES
OAPEC MONTHLY BULLETIN, 2003
(Organization of Arab Petroleum Exporting Countries, January, "The Discipline Program,"
http://www.oapecorg.org/Editorial%20Januay%202003.htm)
OPEC’s decision seems appropriate for the current state of relatively weak demand for oil. It will encourage
we
hope that certain non-OPEC producers will not seize the
opportunity to boost their production to unreasonable levels and
flood the market, bringing prices crashing down. This apprehension
is fueled by the memory of what happened following OPEC’s meeting
in Jakarta in 1997. At that meeting OPEC raised its production ceiling 10%, so as to absorb the
stability in supply/demand mechanisms and help keep prices within a reasonable band. However,
quota excesses, and urged member states to exert more discipline. However, there followed a sharp decline in
Everyone will remember that the
OPEC economies suffered badly and prices were only brought back
to a reasonable level in 2000. Since then they have remained stable with slight fluctuations
global demand for oil and prices dived below $10.
that have had little economic impact either locally or globally.
IF THREATENED, OPEC CAN FLOOD THE MARKET, CAUSING A PRICE WAR
WALL STREET JOURNAL, 2003
("OPEC decides against cuts," Sept 26, http://myphlip.pearsoncmg.com/cw/mpviewce.cfm?vceid=3858&vbcid=5479)
is
attempting to avert a market glut that would push crude oil prices lower. The non-OPEC
The Organization of Petroleum Exporting Countries (OPEC), a cartel that controls about one third of the world's oil,
countries of Russia, Mexico, and Norway have been increasing production while OPEC has been decreasing output to maintain
current price levels. But OPEC is nearing the end of these price cuts, as members grow angry at the free ride of non-members. And
many fear that prices will plummet as more Iraqi sources come back on line.
The cartel continues to attempt to sway the non-OPEC producers through fear of price wars, their only weapon against non-OPEC
members. If Russia and Mexico do not restrain output before prices fall too low,
OPEC could flood the market
with cheap crude oil and push prices so low that production in many areas becomes
unprofitable. Since a price war is the last resort, for now OPEC is content to
verbally protest and encourage non-member countries to cooperate with the cartel.
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OPEC DISAD
I/L: Price Wars Crush Econ
PRICE WAR WILL DEVASTATE OPEC ECONOMIES
ALEXANDER'S GAS & OIL CONNECTION, 2002
("GCC leaders to send strong signal to global crude markets," Jan. 23, http://www.gasandoil.com/goc/news/ntm20403.htm)
Experts, however, see room for a compromise as a price war could have damaging
effects on all producers. "It is like a tug of war, a muscle-flexing game or, in other words, a
psychological war," said Dr. Manouchehr Takin of the London-based Centre for Global Energy Studies, which is owned by former
Saudi oil minister Sheikh Ahmed Zaki Al Yamani. "It is like who gives in first... it appears both parties are bluffing because both
of them do not want a price war... we expect them to reach a compromise that could include cuts but not as much as they are
looking for."
Gulf oil sources believe GCC oil ministers will recommend production
cuts at the GCC summit in Muscat. The recommendation will be based on the fact that the oil market will grow by only half a
million bpd next year because of the slowdown in the global economy following the September 11 attacks on the US "The
GCC leaders will reaffirm their commitment to oil market stability but will stress
again they want fair prices to avert another economic crisis," one source said. "I expect
them to extend an olive branch to producers and consumers but it will be veiled
with a threat that the market stability must be the responsibility of all." Experts
said that in the unlikely event of a prolonged price war, oil prices could collapse to
below $ 10 a bbl. While oil companies in Russia and other producers will be hurt, the impact will be
stronger in the Gulf producers given their heavy reliance on crude sales.
OIL PRICE INSTABILITY JEOPARDIZES THE GLOBAL ECONOMY
WILLIAMS, 2002
(Bob – exec editor, Oil & Gas Journal, "PDVSA's Rodriguez wars of non-OPEC threat to oil market stability," Sept 16, l/n)
Rodriguez also cited the threat from the growing incursions by natural gas into oil's market share. He
estimated natural gas will hike its overall share of the primary energy mix in the "medium term" to 29%
from 23%. ", , , The oil industry can look forward to excellent long-term prospects but will have to face
hurdles in the short term," Rodriguez said. "To limit these effects, it is important that
producers and consumers work hand in hand towards market stability and
realistic price levels. "Otherwise, short-term policies will impact the future
development of the industry with negative consequences for the world oil
economy."
OIL PRICE INSTABILITY AFFECTS THE GLOBAL ECONOMY
JIJI PRESS TICKER SERVICE, 2002
("EC energy official concerned on high oil prices," Sept 20, l/n)
De Palacio's comments came after the Organization of Petroleum Exporting Countries decided to peg
member nations' crude oil production quotas for October-December at 21.7 million barrels per day at their
general meeting in Osaka Thursday. The OPEC meeting was held prior to the International Energy Forum,
designed to promote dialogue between oil producers and consumers, which will be attended by delegates
from 70 economies and 13 international organizations. De Palacio said, "Global economic
welfare can never be achieved without stability in energy markets; stability
requires collaboration and dialogue among all energy players." "Rising
energy demand, volatile energy markets and the pressures of environmental
commitments have an impact on energy security."
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I/L: Price Wars Crush Econ
STABLE OIL MARKETS ARE KEY TO THE GLOBAL ECONOMY
JOHNSON, 2001
(Michael – co-head of Energy Banking in the Americas, PR Newswire, March 21, l/n)
"The energy sector is a vital part of the global economy and faces a number
of important structural changes in the coming years. Companies within the
sector will require creative and insightful investment banking advice to help
them adapt to changing market conditions," said Rob Gray. "Michael's expertise adds
greatly to our advisory capabilities and he rejoins a team with whom he has had a very successful track
record in the sector."
OIL PRICE WAR WILL DEVASTATE THE GLOBAL ENERGY SECTOR
HESS, 2001
(Amanda, staff, Drip Advisor, "AHC," Nov. 27, http://www.dripadvisor.com/dripinvesting/dripoftheweek/112701_1.asp)
There's also the potential for an oil price war among the major exporting
and producing countries. The Organization of Petroleum Exporting Countries (OPEC)
recently agreed to a production cut in an attempt to limit supply and boost
the price of crude oil. But Russia, another major player in the global oil market, said it wouldn't
cut production. Price wars among oil exporting and producing countries have
historically had a negative impact on the energy sector just as price wars in
other businesses generally lead to negative consequences.
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OPEC DISAD
I/L: OPEC key supplier to the US
OPEC IS THE KEY SUPPLIER TO THE U.S. – SAUDI ARABIA ALONE EXPORTS
43% OF U.S. OIL
STELZER, 2004
(Irwin – sr fellow & dir of economic policy studies for the Hudson Institute, American Outlook Today, "The President's Oil Strategy,"
May 24, http://www.hudson.org/index.cfm?fuseaction=publication_details&id=3329)
the top prize for dissembling goes to Saudi Arabia, the leader of the cartel
the members of which account for about 43 percent of America’s oil supply. It was the
Kingdom that induced OPEC to cut output just a few months ago, allegedly for fear of a price-busting market glut. Now, it is
urging members to raise the quotas they are already ignoring as they pump oil as
fast as they can to profit from high prices. The Saudis say they could produce enough more oil to bring prices
But perhaps
down, and have informally promised President Bush that they will do so. But they know that their high-sulfur oil is not of the type
U.S. refineries can easily handle, and that even if they started loading tankers tomorrow those supplies would not reach the U.S. until
too late to effect gasoline prices at the height of the driving season.
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OPEC DISAD
I/L: Oil prices key to OPEC econ
OIL PRICE DECLINE DEVASTATES OPEC ECONOMIES
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
The world has been turned on its head again, and what's most striking is
that oil has regained the central focus of the world and national
economies' focus. And all this because a small group of oil producers have
Go back to 1997 when
Opec's oil production was sky-high and oil prices were collapsing.
Critical revenue (read supernormal profit) was being lost. Despite their
vast foreign currency reserves, Opec governments were claiming lost hard
currency was affecting their countries social and economic development and
so fermenting political instability within their borders.
changed the pattern of oil production and flows. Why?
OIL IS KEY TO THE ECONOMIES OF OPEC COUNTRIES
DUODU, 2004
(Cameron, staff, New African, "we must to the OPEC way," Feb. 1, l/n)
OPEC was able to do it not only because oil is such a crucial
commodity in the modern industrial world, but also because the oil giants that make
huge profits from oil have a big political clout in the G7 countries and would not
want their governments to do anything that would set the OPEC countries on a path
of anti-Western defiance that could wreck the OPEC oil-fields. Whatever the motives, the
The answer is political.
lesson is glaring for all to see: a change in the attitude of a hitherto "weak" producer can artificially alter the price-determining
mechanism for any product in demand, whose price had hitherto been unilaterally decided by the purchasers alone. OPEC, in the
twinkling of an eye, became transformed from price taker to price giver. As a result,
"the contribution of the OPEC
countries to world trade" has quadrupled in value, though the quantity of oil pumped out has not
reduced that drastically. Many OPEC countries now possess the capability to move out of
underdevelopment, if they choose to, though the availability of petrodollars has not necessarily liberated the minds of
those to whom harems, war-planes and overseas mansions have a stronger attraction than the demands of social development.
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OPEC DISAD
I/L: Saudi Arabia Impacts
SAUDI ARABIA IS THE KEY COUNTRY IN OPEC
CSNEWS.COM, 2004
("oil prices decrease on OPEC move," July 7, l/n)
Oil prices retreated Wednesday after nearing $40 a barrel and a one-month high Tuesday, on indications
that OPEC is committed to boosting production in August, reported TheStreet.com. The benchmark U.S.
crude fell 57 cents, or 1.4 percent, to $39.08, while gasoline prices slipped less than 1 cent to $1.264 a
gallon. Saudi Arabia -- the cartel's dominant member and the world's largest
oil exporter -- said OPEC would go ahead with a plan to increase production
by another half-million barrels per day, according to media reports.
SAUDI ARABIA IS THE KEY COUNTRY IN OPEC
HOYOS, 2004
(Carola, staff, Financial Times, "Opec's source of energy," June 5, l/n)
This week, Ali Naimi, Saudi Arabia's energy minister, is feeling the glare of the spotlight - possibly more
than at any other time in his 56-year career, which began at the age of 12 in an oil company office.
Saudi Arabia is the world's largest exporter of crude oil and the de facto
leader of [OPEC] the Organisation of Petroleum Exporting Countries, the cartel that
controls 38 per cent of the world's oil supplies. More importantly, the country that sits
on more than 20 times the reserves of ExxonMobil, the world's largest listed energy group, is also the only
one that has the spare capacity to boost its production and pull oil prices back from the record highs that
have begun to threaten the global economy.
SAUDI ARABIA IS THE KEY COUNTRY IN OPEC
KANELL, 2004
(Michael, staff, Atlanta Journal and Constitution, "oil closes just 6 cents shy of record," June 2, l/n)
Oil prices could fall in coming days if traders decide they overreacted or if they become convinced that
supplies are plentiful and secure. But Tuesday's spike proved the power of fear in the global market --- a
power that overrode last week's efforts by the Saudi Arabian government. As the price of oil
flirted with record highs, Saudi Arabia, the dominant member of [OPEC] the
Organization of Petroleum Exporting Countries, pledged to pump more oil. Moreover, the Saudis
last week backed an increase in --- or elimination of --- OPEC quotas. The Saudis' pledge eased prices
below $40 a barrel last week.
SAUDI ARABIA CONTROLS OPEC
HENDERSON, 2004
(Simon Henderson is a London-based associate of The Washington Institute, The Washington Institute for Near East Policy,
PolicyWatch #872, June 2, "OPEC policy,"
http://www.washingtoninstitute.org/)
Currently, OPEC decisionmaking is dominated by Saudi Arabia, the only member with significant, quickly
available spare production capacity. This capacity gives Riyadh a potential disciplining measure if quotas
are broken. Riyadh's recent verbal pledge to increase its production by 1.5 million barrels per day (a move
that must be confirmed at the Beirut meeting) would be one of its largest-ever production changes within an
OPEC context. (The kingdom had previously increased production at times of international political crisis,
e.g., after the terrorist attacks of September 11, 2001, and the 2003 invasion of Iraq.) In effect, such an
increase would constitute an admission of a previous policy error. This perception could exacerbate rather
than diminish the sense in the world oil market that Saudi Arabia is politically unstable, especially after the
latest terrorist attacks against expatriates working in the Saudi oil industry. Ahead of the Beirut meeting,
Saudi oil minister Ali al-Naimi repeatedly blamed high oil prices on speculators who recently began trading
in oil futures as a hedge against the declining value of the dollar.
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IMPACT: SAUDI ARABIA
A) OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence. Oil
instability promotes political instability, which may cause more oil instability.
B) CIVIL WAR IN GCC STATES RISKS CUTTING OFF SAUDI OIL FLOWS
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<Most Middle East experts think that a revolution or civil war in any of the GCC states within the next few
years is unlikely, but few say so now as confidently as they once did. In fact, even the Persian Gulf
regimes themselves are increasingly fearful of their mounting internal turmoil, something that has
prompted all of them to announce democratic and economic reform packages at some point during
the last ten years. From Crown Prince Abdullah of Saudi Arabia to the emir of Qatar to the new king of
Bahrain, the Persian Gulf rulers recognize the pressure building among their populations and the need to let
off some of the steam. If the reforms do not succeed and revolution or civil war ensues, the United
States might face some very difficult security challenges. Widespread unrest in Saudi Arabia, for
example, would threaten Saudi oil exports just as surely as an Iranian invasion.>
C) SAUDI POLITICAL INSTABILITY WILL DEVASTATE THE GLOBAL
ECONOMY
COHEN, 2003
(Ariel – Heritage Foundation, Washington Times, "energy security at risk," May 23, l/n)
Al Qaeda's recent attacks in Riyadh, Saudi Arabia, and the closure of the U.S. Embassy
there, have exposed the weaknesses of the kingdom's security apparatus.
These developments also further one of Osama bin Laden's goals to drive the "infidels" from the "Land of
the Two Mosques" and topple the monarchy. Clearly, the global economy and the United
States are at risk. If the Saudi regime falters, if the kingdom's vast oil
infrastructure is damaged, or if a prolonged civil war erupts, oil prices are
likely to skyrocket. A deep economic recession would be triggered by the
high cost of energy, with devastating consequences, particularly in an election
season. The United States must draw the obvious conclusions and take precautions, and it has to act now.
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D) COLLPASE OF THE GLOBAL ECONOMY RISKS MULTIPLE SCENARIOS
FOR GLOBAL NUCLEAR WAR
Bearden 2000 (Tom; Lt. Col. U.S. Army – Retired, “The Unnecessary Energy Crisis: How to Solve It Quickly” 6/24
http://www.freerepublic.com/forum/a3aaf97f22e23.htm accessed 8/6/04 wdc/wbw)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the stress on nations will
have increased the intensity and number of their conflicts, to the point where the arsenals of weapons of mass destruction
(WMD) now possessed by some 25 nations, are almost certain to be released. As an example, suppose a starving North Korea
launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or
suppose a desperate China-whose long-range nuclear missiles (some) can reach the United States-attacks Taiwan. In addition to
immediate responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict, escalating
it significantly. Strategic nuclear studies have shown for decades that, under such extreme stress conditions, once a few nukes
are launched, adversaries and potential adversaries are then compelled to launch on perception of preparations by one's
adversary. The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without effective
defense, the only chance a nation has to survive at all is to launch immediate full-bore pre-emptive strikes and try to take out its
perceived foes as rapidly and massively as possible. As the studies showed, rapid escalation to full WMD exchange occurs.
Today, a great percent of the WMD arsenals that will be unleashed, are already on site within the United States itself. The resulting
great Armageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for many decades.
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GENOCIDE IMPACT:
A) OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence. Oil
instability promotes political instability, which may cause more oil instability.
B) CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the
last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries
that are environmentally stressed, overpopulated, or both are at risk of becoming
politically stressed, and of seeing their governments collapse. When people are
desperate and undernourished, they blame their government, which they see as
responsible for failing to solve their problems. They try to emigrate at any cost. They
start civil wars. They kill one another. They figure that they have nothing to lose, so
they become terrorists, or they support or tolerate terrorism. The results are
genocides such as the ones that already have exploded in Burundi, Indonesia, and
Rwanda; civil wars, as in Afghanistan, Indonesia, Nepal, the Philippines, and the
Solomon Islands; calls for the dispatch of First World troops, as to Afghanistan,
Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty,
as in all of the countries on these lists.
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AT: OPEC Wants Stable Prices
OPEC DOESN'T WANT STABLE OIL PRICES – ONLY PROFIT-MAXIMIZING
ONES
SAEFONG, 2003
(Myra, staff, CBS MarketWatch, "OPEC cut act of price gouging," Sept 24, l/n)
And the decision comes at a time when the global economy is in a "delicate situation, with a potentially
imminent recovery that is... dependent on favorable circumstances and thus far from a done deal," said
Thorsten Fischer, an economist at Economy.com. So ultimately, the "cartel's signal that it will
rein in production may very well upset the delicate balance and delay the
recovery," he said. Person sees it "as an act of price gouging, especially now as
we are trying to rebuild inventories entering the winter months." It's a
"longer-term negative as OPEC clearly is demonstrating an uncooperative
and less friendly stance with the concerns of America," he said. Fischer also called
it a "reality check for those who believed the cartel's mantra is guided by a
desire to ensure stable oil prices for the benefit of both producers and
consumers." OPEC's mission is clearly to "maximize revenue for its
members and to extract as high a price as possible from oil-importing
nations," he said.
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General
No risk of Arab Oil embargo – America will circumvent via non-OPEC sources and
experts agree high gas prices don’t effect the economy
Taylor, director of natural resource studies at CATO, 8-27-1998
(Jerry, “Oil is no Reason to Stay in the Persian Gulf,” p. http://www.cato.org/dailys/827b-98.html)
<But once oil is in the global marketplace, there is no way to keep it from the United
States, even in the teeth of a direct boycott. As MIT's Thomas Lee, Ben Ball, Jr. and Richard Tabors have
written, "it was no more possible for OPEC to keep its oil out of U.S. supply lines [in 1973]
than it was for the United States to keep its embargoed grain out of Soviet silos several
years later. The embargo was circumvented by simply rerouting through the international
system. The significance of the embargo lay in its symbolism." Moreover, the world's
economy is far less dependent on Middle Eastern oil today than it was in the 1970s. In 1973,
37 percent of the world's oil came from Persian Gulf nations; today, only 28 percent does . Fully 82 percent of
America's imported oil comes from nations outside of the Persian Gulf. We would have
plenty of other sources to turn to in case of any Persian Gulf boycott or temporary
regional supply disruption, particularly given the increasing amount of unutilized oil
production capacity in non-OPEC countries. The world, furthermore, is swimming in an
historic glut of oil. Due to exponential advances in production technology and energy efficiency, the price of gasoline today - after adjusting for inflation -- is less than it was in the late 1960s. It takes far less oil to produce a dollar's worth of goods and
Contrary to popular
opinion, oil prices are simply not that important to the overall economy. Only 2 percent
of our gross domestic product (GDP) is spent on petroleum. >
services in today's economy than ever before. Simply put, oil in the ground is a depreciating asset.
NEITHER OPEC NOR THE SAUDIS WILL DISRUPT GLOBAL OIL FLOWS
Bandow, senior fellow @ CATO, 12-12-2k2
(Doug, “Is Terrorism the Price of Saudi Oil?” p. http://www.cato.org/dailys/12-1202.html)
<Nor need the U.S. step gently because of oil. Contrary to popular wisdom, the Saudis'
trump hand is surprisingly weak. True, with 262 billion barrels in proven reserves, Saudi
Arabia has about one quarter of the world's resources and 8.7 times America's supplies.
Riyadh is not only the world's leading supplier, but as a low-cost producer can easily
augment its daily exports, eight million barrels a day last year. However, the reserves
figure vastly overstates the importance of Middle Eastern oil to the U.S. (and Western)
economy. Saudi Arabia accounted for about 10.5 percent of production last year (and so far
under ten percent this year); Riyadh plus Kuwait and the various sheikdoms came to 26.6 percent; OPEC produced 39.2 percent of the
world's supplies. Were
Saudi Arabia to fall, prices would rise substantially only if the
conquerer, whether internal or external, held the oil off of the market, especially if the
other Gulf states also collapsed. The result then would be severe economic pain in the
short-term, though the Strategic Petroleum Reserve, which the president has vowed to
fill, would help moderate prices. >
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STRONG DOLLAR WILL SPARK MARKET SELL-OFF OF CRUDE – OPEC
MUST MAINTAIN HIGH PRICES TO PREVENT MARKET SELLOFF
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 Energy Outlook Report,” FDCH p.ln)
<A strengthening of the US dollar could spark a dramatic sell-off in crude
futures markets. Further, a major psychological deterioration in perceived
market fundamentals could do the same. Cognizant of this risk, OPEC has chosen
to at least voice an intent to maintain currently-high crude prices, reflected
in two consecutive surprises in quota reductions last September and early
February. OPEC quota pressures low. Most of the OPEC countries have plans for
capacity expansion, but the general trend for upstream capital spending within
OPEC seems to have mirrored the "modest" pattern set by the international oil
companies. Last September we estimated that OPEC's capacity to produce would
total some 37mmb/d in 2006. Our current estimate for 2006, following on Iraq's
slow recovery, is more than 3mmb/d lower.
Development of Iraq's reserves is
almost certain to take longer than we anticipated last year, and although we
still think Saudi Arabia can increase its capacity, we now see that rising at a
slower rate.>
SPR solves Saudi’s ability to control the market, and gives America the upper hand in
energy security
Woolsey, former CIA director, 8-2k2
(James, “Defeating the Oil Weapon,” Commentary Vol. 114, iss. 2 p. ebscohost)
an
aggressive use of our Strategic Petroleum Reserve (SPR) is essential. Otherwise, the Saudis can try
to use their swing capacity and the threat of economic recession to prevent us from
reducing our use of oil. The Saudis do not enjoy infinite flexibility in wielding their oil
weapon. The kingdom has been living beyond its means for many years: the government
has run deficits since 1983, domestic debt substantially exceeds gross domestic product,
and in spite of runaway spending, the per-capita standard of living has dropped by half
since 1980. The royal family rightly fears severe social unrest if there are further
reductions in its welfare programs. So lengthy cutbacks or reductions in basic output are
not really tolerable. And there are also logistical problems: much Saudi infrastructure, including electricity and desalination
plants, requires a steady supply of the natural gas that is produced in association with the production of oil. All of these
factors enhance the utility of our SPR as a counterweapon. By selling from it and then
replenishing it in a timely fashion, we could limit the Saudis' ability to use their own
reserve capacity to manipulate the market. We could, for example, sell SPR oil on the
spot market to counter any actual Saudi cut, or any refusal to increase production in a
crisis (when the spot price typically rises). >
<WHICH BRINGS US to the fourth and most crucial component of the strategy. Even as we implement the rest of the program,
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SPR critical to offset Saudi swing production capability
Woolsey, former CIA director, 8-2k2
(James, “Defeating the Oil Weapon,” Commentary Vol. 114, iss. 2 p. ebscohost)
<More: a number of energy experts have pointed out that if we sold oil drawn from the
SPR to offset Saudi cutbacks, we could use the funds received to buy oil futures, which
are ordinarily priced below the current spot market. Thus, if a crisis caused the spot
price to rise to $39 a barrel and we sold 10 million barrels, the proceeds from this sale
might purchase as much as 15 million barrels for delivery two years later at, say, $26 a
barrel. Alternatively, we could replace exactly the amount we had sold and use the
remaining cash for some other purpose. It is true that spot oil prices cannot be kept
completely stable, but aggressive management of the SPR nevertheless holds out the
possibility of denying to the Saudis the ability to cause severe recessions here as they did
in 1973-74 and 1978-80. We could exercise even greater leverage if we added several hundred million barrels to the
current SPR or, following Jeffrey Garten's advice, doubled its size to a billion barrels, perhaps giving Russia a preference in selling us
the oil and proposing that other energy importers like China, India, and Brazil accumulate substantially larger reserves as well.
A
total reserve in oil-consuming countries approaching 2 billion barrels would constitute
about two years of Saudi swing production and effectively deprive the Saudis of their
principal oil weapon. >
OIL PRICES ARE TOO HIGH – OPEC CAN'T COMPENSATE FOR ANY
DISRUPTIONS
CHICAGO TRIBUNE, 2004
("disruption fears grease continuing price surge," Aug. 20, ln)
the Organization of Petroleum
Exporting Countries, and Saudi Arabia in particular, do not have the ability
to swiftly raise production high enough in the event of a major global supply
disruption. "The oil price is firmly in the danger zone," Stephen Roach, chief
Underpinning the market's nervousness is the belief that
economist at Morgan Stanley in New York, said in a note to clients. Should prices reach $50 and stay
there for several months, this would be "in the ballpark with full-blown oil shocks of the past" that have
caused recessions, he said.
NON-OPEC OIL IS CRITICAL TO LIMITING OPEC-MARKET CONTROL
Brodman, Deputy Assistant Secretary DOE, 10-21-2k3
(John, “US NRG Security: West Africa and Latin America,” FNS p.ln)
<We have learned from experience that it is the marginal barrels that are the
important factor in determining conditions in the oil market. Over the past
decade non-OPEC oil production has on average more than kept pace with the rise
in world oil demand, thereby limiting OPEC's share of the market. This trend is
expected to continue in the years ahead, and Africa and Latin America together
could contribute five to seven million barrels a day of additional oil to the
market in the next 10 to 15 years.>
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OPEC cheating is inevitable –cant prevent it
Singer, senior fellow at the Hudson Institute, 8-13-2k3
(Max, “audi Arabia's Overrated Oil Weapon,” The Weekly Standard p.ln)
<If, because investment was sufficient, worldwide production capacity is
comfortably above demand (as it was a few years ago, but is not today), then
producers rarely have the ability to restrict production enough to raise prices.
It is too hard to prevent "cheating" on OPEC quotas. They are lucky if they can
restrict supply enough to keep prices from falling to low levels.
Since there is more than enough oil in the ground (at least for the next 20
years), the amount of oil supply from 2006 to 2020 doesn't depend on what nature
has created; it depends on how much money oil producers decide to invest. If
Western oil companies invest enough, there is nothing the Gulf countries can do
to make supply tight enough to sustain high prices. The Gulf countries have
the opportunity to create shortages and high prices by restricting their own
sales only when there has been a prior failure by companies from the consuming
countries to make the necessary investments.>
OPEC DOESN'T WANT OIL PRICES TO RISE TOO QUICKLY
MACWHIRTER, 2004
(Iain, staff, The Herald, "Iraq is becoming a disaster movie," June 2, l/n)
The problem with the oil weapon is that it tends to damage the people who use it. Opec
found that the collapse of western economic growth precipitated by their price hike in the
1970s reduced demand and caused the price of oil to collapse. Producing less oil actually
made it cheaper. Consequently, Arab countries are now very cautious about increasing
the price of oil. They don't want the price to rise too fast, which is why Saudi Arabia
agreed last week to increase production, and why it will do so again at the Opec summit
in Beirut tomorrow.
OPEC IS LESS EFFECTIVE AT MANIPULATING OIL PRICES
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
The Organization of Petroleum Exporting Countries [OPEC], meanwhile, has also
found it harder to manipulate prices due to its thin margin of spare production
capacity. OPEC estimates its spare capacity at just 1 percent of total global demand,
whereas a 4 percent cushion is generally viewed as the minimum necessary to affect
prices. And even with large OPEC projects coming on stream, analysts predict it will
take 18 months before producers reach sufficient capacity to restore the cartel's pricesetting ability.
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OPEC DOESN'T CONTROL GLOBAL OIL PRICE
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
Yet, Opec also knows it's no longer in control of world oil markets and
trading patterns. Even meeting production quotas, much less global demand
across some 200 oil consuming countries, is an awesome juggling act. By
and large, it has failed in regulating the world's oil trade, and the
speculators know this. They've have taken positions against Opec.
OPEC WANTS STABLE, MODERATE OIL PRICES
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
Opec has a target price of between US$ 22 and US$ 28 a barrel which
analysts say should bring prices at petrol stations down by about US$ 0.05
a litre. Some Opec states own calculations show that this price range is
probably the most optimum in sustaining medium-term price stability and
revenue. So, why has Opec sought to cut production sometimes and at other
times boost production? For starters, a price of US$ 37 a barrel will do as much longterm harm to Opec as a price of US$ 10 a barrel since the higher price will impact
negatively on world growth and slacken world demand for oil. But a cheaper
price for oil will doubtless boost world demand, create over-capacity
production, and so heighten global inflationary risks while Opec states
lose much hard currency revenue.
OPEC ALREADY PRODUCING AT CAPACITY
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
Typically, a decision by OPEC to increase quotas cools prices. This time may be
different. A soaring world economy has sucked global inventories dry. Nearly every
OPEC producer, save Saudi Arabia, is already producing about as much oil as it can.
That means that any new OPEC promise of oil will have to come chiefly from the Saudis
themselves—and that is not good news.
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INDIVIDUAL NATIONS UNDERCUT OPEC PRICING STABILITY
MAUGERI, 2003
(Leonardo -- Group Senior Vice President for Corporate Strategies and Planning for the Italian energy
company eni, Foreign Affairs, "not in oil's name," July/Aug, l/n)
Meanwhile, many OPEC members undercut the organization's discipline in
order to sell more oil, even breaking long-term contracts so as to take
advantage of rapidly rising prices for spot sales. The irrational speculation
fostered by many producers and the lack of immediate reliable figures about world
consumption shadowed an emerging oil glut that began to drive oil prices down
starting in 1982. The "oil bubble" finally exploded in 1986 when Saudi Arabia
ceased underwriting OPEC's lack of discipline and flooded the world with its
own oil to regain market share. Oil prices plummeted to below $10 per barrel,
driving home the lesson that using the oil weapon injured the oil producers as well as
Western countries. Since 1986, the oil market has functioned smoothly, and OPEC
has constantly tried to ensure oil-price stability, promptly intervening to supply more
oil in times of temporary disruption. In recent years, therefore, price hikes and
volatility have been caused more by market factors than by political issues.
OPEC DOESN'T COORDINATE POLICIES FOR THE WHOLE GROUP
GATELY, 2004
(Dermot, staff, The Energy Journal, "OPEC's incentives for faster output growth," Apr 1)
OPEC's ability to coordinate its pricing or output strategy is limited; coordinated
planning seems very unlikely. To focus upon the output-expansion incentives for smaller groups within OPEC, I
examined two sub-groups--the Core and the Non-Core--and I explored the implications of slower or faster
output growth for each group. The results indicate that, in effect, these two groups are engaged in a
constant-sum game. Total OPEC payoffs will be virtually unchanged whether both
groups expand output slower or faster, or whether one expands faster and the other
expands slower. Each group has some incentive to expand its own output faster if the other group would expand output
Of course,
slowly. But if each group expects the other to match its output growth--with neither benefiting from faster output growth--then faster
output growth from both is unlikely.
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OPEC CAN'T BOOST OUPUT SIGNIFICANTLY
GATELY, 2004
(Dermot, staff, The Energy Journal, "OPEC's incentives for faster output growth," Apr 1)
We should not expect the significant increases in OPEC output that are projected by DOE and IEA--and certainly not a doubling of
capacity from levels that haven't changed substantially in the three decades since the OPEC countries took control of their oil from the
international oil companies.
OPEC's production will increase substantially only if one or more
countries within OPEC believe that they can achieve a sustainable increase in their share
of OPEC production. The obstacles to aggressive expansion of capacity within OPEC are
substantial. More likely would be a cautious approach to capacity expansion, with only moderate growth, at most 2% annually-much less than the 3.5% to 3.7% annual growth assumed by DOE and IEA. Such decisions could be motivated by
various political and economic arguments: competing claims on government budgets that
compete with investments in capacity expansion; unwillingness to allow participation by
foreign oil companies; and conservation concerns about too-rapid exhaustion of oil
reserves. One could even imagine statements of concern about global warming, and the willingness of the oil producing countries
"to do their part"--especially if they believe there would be no profit penalty from slower output growth.
THE NATURE OF OPEC MAKES OIL PRICES UNSTABLE
TAYLOR, 2004
(Jerry, researcher at Cato Institute, National Review, "OPEC is the problem," March 30, l/n)
But to Washington politicos and policy mavens it's not. In fact, many today who are content to leave the cartel alone are even
OPEC apologists contend that the cartel
assists in stabilizing oil prices. The record, however, suggests otherwise. In the period
defending OPEC against those who want to tear it down. These
between World War II and the formation of OPEC, the inflation-adjusted price of oil fluctuated little. Oil prices indeed jumped during
the Middle East crises of 1956 and 1967, but they fell back quickly. The inflation-adjusted price of oil -- indexed by gross domestic
From 1970 to 1980, however, the real price of oil
rose by about 1,300 percent. Between 1980 and 1986, it dropped by about two-thirds. It was fairly steady between
1986 and 1997, fell farther between 1997 and 1998, and then nearly quadrupled after February 1999. This is stability? Cartel
prices fluctuate more because they are less certain than normal market prices,
inviting speculation. In short, market agents are forced not only to consider global
supply and demand but also to factor in OPEC's behavior and its members' fidelity
to their promises. Hence, the market is less predictable and prices are accordingly
more volatile.
product -- fell by about two-thirds from 1945 to 1970.
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HIGH OIL PRICES CREATE ECONOMIC STABILITY IN OPEC NATIONS
ENERGY, 2004
("OPEC still declining," January 1, l/n)
increased oil prices tend to result in improved OPEC countries'
economics situations, budgets and trade balances. Higher oil export revenues also
tend to lessen pressures for economic reforms, and make it easier for OPEC
countries to increase their spending. However, the impact of higher oil prices is tempered by memories of past
price collapses (i.e., 1998), as well as a general understanding that oil prices can be highly volatile. Still , there is little
doubt that pressures to make difficult political choices (like cutting popular state subsidies for food
and fuel) tend to be lower during relatively prosperous times than in more difficult
ones.
All else being equal,
OPEC'S CAPACITY TO FLOOD THE MARKET IS DWINDLING
BUCHAN et al., 2004
(David, staff, Financial Times, "Saudi Arabia is the only country that can lift oil output significantly," June 3, ln)
For the first time in its 44-year history, however, Opec is coming close to running out
of the spare capacity it maintains to meet market demands in times of crisis. Over
the past two decades, Opec capacity has dwindled because of events such as the
Iraq-Iran war, the Gulf war, the Iraq war and a strike by Venezuelan oil workers in
2002. At the same time, global oil demand has increased, with the emergence of
China as the world's second biggest consumer and a steady rise in US consumption.
This year global oil demand is set to increase by its fastest rate in 16 years.
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OPEC'S ABILITY TO FLOOD THE MARKET IS HIGHLY QUESTIONABLE
ECONOMIST.COM, 2004
("pumping all they can?" August 6, l/n)
But now it is OPEC's ability to open the taps further that is in doubt-and at a time
when the antics of Russian prosecutors are also raising questions about supply from
that country. OPEC's spare capacity is now thought to be 1-2% of global demand,
well under the 4% that is thought necessary in order to influence prices. That gap
cannot be closed quickly, since the oil-production business has long lead times and
any new oil will take a couple of years at least to come on stream. In his comments
on Tuesday, Mr Yusgiantoro hinted that that went for Saudi Arabia as well as the rest
of OPEC. Saudi production in July was 9.25m bpd, well above its 8.45m quota, but
below its 10.5m official capacity. Following Mr Yusgiantoro's comments, Saudi
officials insisted they could indeed raise output quickly. Saudi Arabia claims that it
has opened two new production plants, at Abu Safah and Qatif, three months ahead
of schedule. While these are meant to replace production from older facilities, not to
add new output, it is understood that the Saudis are now planning to delay the
retirement of older fields in order to help ease the oil price. In addition to OPEC's
attempts to increase supply, the International Energy Agency also expects nonmembers to boost output by a combined 1.2m bpd over the coming year, of which
around half will be from the former Soviet Union. But that figure is hostage to events
in Russia. At 1.7m bpd (more than is pumped from all of Libya's wells), Yukos's
output makes up 2% of global oil production and thus has a noticeable effect on the
price. With Russian officials now attempting to sell the company's prize subsidiary,
Yukanskneftegaz, oil traders are likely to remain jittery. Another factor adding to
nerves in the market is the alert about more attacks from al-Qaeda, issued by
America's homeland-security chief last week. This came as a stark reminder of the
dangers facing America (the world's largest oil consumer) and the instability in the
Middle East (home of much of the world's oil reserves). With this uncertainty likely to
continue, OPEC likely to keep brushing up against its capacity limits, and Yukos
certain to remain under fire, the world may just have to get used to oil of $40 or
more a barrel.
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1NC SHELL
( A ) RUSSIA'S ECONOMY IS GROWING STEADILY
World Markets Analysis 5-27-2k4
<According to Putin, the Russian GDP expanded by 8% in January-April 2004. If the pace of growth
keeps up with the rate seen in Q1 2004 (8%), per capita income can be doubled by as soon as 2010.
The Russian economy should grow faster than the rest of the world, as only fast growth guarantees
poverty reduction and provides a basis for long-term business development. In addition, he pointed out
that the number of low-income citizens has decreased by a third as the real income of consumers has increased 1.5-fold over the past
four years. Only keeping up with the fast growth will enable the solving of Russia's social
problems. President Putin stated that doubling the GDP within a decade is fully achievable. Indeed, if the current pace of
economic growth keeps up, this goal can be achieved even earlier. He also voiced other ambitious objectives:
inflation is to be pushed down to 3% in the next few years, and the rouble is to be made fully convertible in two years - one year ahead
of schedule. However, doubling GDP and lowering inflation may well prove to be contradictory goals, as may curbing rouble
strengthening and making the rouble fully convertible.>
( B ) OIL IS KEY TO RUSSIAN ECONOMIC GROWTH
World Markets Analysis 5-27-2k4
<Putin stated that he is confident that the government will be able to curb inflation to 3% 'in the next
few years' (Putin failed to provide a more detailed time frame). However, in a truly stabilised economy, it should not be the
government's duty to keep the inflation in check, this should be mainly left for a responsible central bank. An inflation rate of 3% in
the near future certainly seems too ambitious a target. Indeed, even the inflation goal of 10% for this year may prove to be
unachievable combined with the policy of curbing the appreciation of the rouble. Putin pledges to boost economic
growth, but at present the source of this growth is the oil exporting sector. The oil revenues
increase domestic money supply, as the central bank's policy is to buy dollars from the currency
markets to keep the dollar price of the domestic currency from rising. The roubles used for buying
the petrodollars increase domestic money supply, and the Russian banking sector cannot absorb this excess liquidity.>
AND, FOR EACH $1 DROP IN PRICES, RUSSIA LOSES A BILLION
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
It is neither wise nor effective to use strategic reserves to manage prices, but the likely result of these
actions would be much lower prices that will expose a rift between consuming nations and producers such
as Russia. Every $1 shift in world oil prices translates into about $1 billion for
the Russian state budget. Russia ran a surplus of $5 billion in 2002, and the 2003 state budget
(which forecast a price for Urals crude of $21.50 per barrel) calls for saving $17 billion of oil revenue for
the future by paying down the current external debt. Contingency plans predict red ink if
oil prices fall below about $18 per barrel. Low prices would be a disaster for
Russia. If they also trigger disarray in OPEC, then a sustained period of cheap oil could spread fiscal
pain across the oil-producing world. In the past, however, U.S. policy has not changed in response to
collapses in world oil prices; U.S. energy firms generally fare poorly in that environment, but consumers
gain when they can guzzle more at lower cost and the economy is freer to soar when prices are low.
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1NC SHELL
( C ) RUSSIAN ECONOMIC FAILURE RISKS NUCLEAR WAR
HAMILTON, 1995
(Lee – representative from Indiana & member of the House international relations committee, Christian Science Monitor, April 24, ln)
RUSSIA today struggles between the forces of reform and repression. It is
neither authoritarian nor democratic. It has neither a state-controlled nor a market economy. The
challenge for US foreign policy is to keep Russia heading toward political and economic reform. Mr.
Clinton's opportunity When President Clinton visits Moscow in May, he should express United States
support for reform and democracy but voice strong opposition to Russia's brutal assault on Chechnya, one
of its own territories, and to other policies with which we disagree. This visit will also be an opportunity for
the president to state US support for principles instead of personalities and to meet important Russian
reformers. The good news is that Russia has a Constitution and an elected president and parliament.
Dissenting voices are heard. The media is free. Russia is preparing for parliamentary elections this
December and presidential elections next June. Private enterprise makes up half of Russia's economy, and
its share is growing. Russia is committed to tough reforms approved by the International Monetary Fund.
There is also bad news, beginning with the assault on Chechnya. Inflation, unemployment, and wrenching
economic change have left a third of Russians poor. Corruption, organized crime, militant nationalists, and
narrow-minded presidential advisers threaten future reform. Government secrecy is returning. Authorities
disregard the law. There is no middle class. Churches and unions are discredited. Political parties are
struggling to emerge. Frictions with the US have resulted from Chechnya and from Russia's opposition to
NATO expansion, its drive to lift sanctions against Serbia and Iraq, and its plans to export arms and
nuclear power stations to Iran. If Russia loses, so does US. If Russia continues to
move toward a free society and economy, the US will benefit. There will be
less risk of nuclear war, lower US defense budgets, new markets for US
exports, and more cooperation on regional and global problems. If Russia
fails, we lose. Russia and the US are still the world's leading nuclear
powers. If Russia returns to tyranny, or disintegrates, the future for USRussian relations could be grim. There could be a return to the cold war and
an expensive arms race. An unstable Russia may lose control of its
thousands of nuclear weapons. Some could fall into the hands of outlaw
states. Our new friends in Central Europe could come under threat.
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Uniqueness: Oil Exports Increasing
RUSSIA IS INCREASING ITS OIL EXPORTS
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
Like its production, Russia's crude oil exports have risen steadily since 1997.
Forecasts for 2002 have placed total exports at approximately 5 mb/d,(FN66)
approximately 1.3 mb/d of that to the rest of the FSU.(FN67) Of the remainder, about 3
mb/d finds its way into the Western European market, especially to Germany, France, the
UK, and Switzerland.(FN68) In the summer of 2002, Russia also made its first oil
deliveries to the United States, though this was mostly a ceremonial gesture ahead of
energy talks held in October.(FN69) The steady rise in Russian oil exports makes it
the second-largest exporter behind Saudi Arabia.
RUSSIAN SUPPLY OF GLOBAL OIL MARKET INCREASING
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
What does the above analysis of Russia's upstream oil production, policy environment, and transportation system suggest about the
broader role of Russian oil in the global market? As noted earlier,
interest in Russian crude oil production
has increased since the September 11 terrorist attacks, with many arguing that
Russia could rival Saudi Arabia in overall production and exports. This optimistic assessment
of Russia's future role seems at best generous, at worst na"ive. Russia's importance in the global oil market
will no doubt increase over the next decade. But neither the realities of Russia's transportation system nor,
more importantly, the projected structure of global oil demand in the coming years, support the conclusion that Russia will be able to
assert any form of dominance.
RUSSIA WILL CONTINUE TO BE ONE OF THE WORLD'S KEY OIL SUPPLIERS
NAIM, 2004
(Moises – ed of Foreign Policy, "Russia's Oily Future," Foreign Policy, Jan/Feb, l/n)
Russia's future will be defined as much by the geology of its subsoil as by the ideology of its leaders. Unfortunately, whereas
policymakers can choose their ideology, they don't have much leeway when it comes to geology. Russia has a lot of oil, and this
inescapable geological fact will determine many of the policy choices available to its leaders. Oil and gas now account for roughly 20
Russia is the
world's second largest oil exporter after Saudi Arabia, and its subsoil contains 33
percent of the world's gas reserves. It already supplies 30 percent of Europe's gas
needs. In the future, Russia's oil and gas industry will become even more important,
as no other sector can be as internationally competitive, grow as rapidly, or be as
profitable. Thus, Russia risks becoming, and in many respects may already be, a "petro-state." The arrest of oil magnate
percent of Russia's economy, 55 percent of its export earnings, and 40 percent of its total tax revenues.
Mikhail Khodorkovsky sparked a debate over what kind of country Russia will be. In this discussion, Russia's characteristics as a
petro-state deserve as much attention as its factional struggles.
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Russia is poised to capture the Lion’s share of the global oil economy
Morse and Richard, Executive Adviser at Hess Energy Trading Company and was
Deputy Assistant Secretary of State for International Energy Policy and portfolio manager
at Firebird Management, an investment fund active in eastern Europe, Russia, and Central Asia.3/4 2k2
(Edward and James, “The Battle for Energy Dominance,” Foreign Affairs p.ln)
<THANKS to the potential growth of Asian and U.S. demand, there could be room
in the future for both Saudi and Russian producers to gain market share if they
cooperate. But it is more likely that the policies pursued by Moscow and by
Washington will restructure the battlefield.
Although Russian oil is not nearly as large in its reserve base or as cheap
to produce as Saudi crude, it remains vast and far greater than is generally
recognized. Market forces have unleashed a dynamic transition in its oil sector
that will allow Russia to challenge OPEC and Saudi Arabia. In an economy
governed by market forces, Russian companies are poised to capture the lion's
share of growth in demand in China, India, and even the United States, through
joint ventures.>
ASIAN DEMAND FOR RUSSIAN OIL WILL INCREASE
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
Over a longer time horizon, and assuming Russia completes some of the proposed Asian pipelines, as well as the Murmansk facility,
Forecasts agree that Asia will be the largest source of
demand growth over the next decade. Additionally, Chinese fears over energy
source security are already prompting it to seek a diversified supply, giving Russia
an excellent opportunity to expand its presence in the Asian market.
prospects for Russia's oil exports improve.
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THE RUBLE IS GAINING IN STRENGTH
MAINVILLE, 2004
(Michael, staff, Toronto Star, "ruble making a comeback," Feb. 8, l/n)
"Everyone is saying that it's better to have rubles now, that keeping money in dollars
doesn't make sense anymore," says 18-year-old student Vika Nikolayeva as she emerges from one of
Moscow's ubiquitous exchange kiosks with a handful of rubles. Al Breach, chief economist at the Moscow
offices of investment bank Brunswick UBS Warburg, says there has been a major psychological shift
among Russians in favour of the ruble. "It's a real milestone that people are starting to
think about keeping their savings in rubles," says Breach. "Before, it was a straight nobrainer: You always saved in dollars ... This is a serious move toward a more normal economy." The
ruble strengthened against the dollar by 20 per cent last year, with the current
exchange rate hovering at about 28.50 rubles to the dollar.
RUSSIA'S ECONOMY IS GROWING
ROTHNIE, 2004
(David, staff, eFinancialNews.com, "Alfa capital raises first Russian fund," Aug 15, ln)
Despite the uncertainty surrounding Yukos, the Russian oil group that is being pursued by the national
government for unpaid tax totalling $ 3.4bn, foreign investors are seeking direct
exposure to Russia's economy, which is growing at around 7% a year.
RUSSIAN ECONOMY IS IMPROVING – DUE TO HIGH OIL PRICES
BROWN, 2004
(Frank, staff, Newsweek, "Return of the Jews," August 9, l/n)
In Russia oil prices are setting new highs. Economic growth is set to surpass
7 percent in 2004, as it has in most recent years.
RUSSIAN ECONOMY IS IMPROVING
RYARD, 2004
(Thomas, staff, World Market Analysis, "production of foreign cars in Russia set to double in 2004,"
August 9, l/n)
Production of foreign cars in Russia continues to increase steadily on the
back of continually improving economic conditions and strong demand for
foreign brands in the country. In 2003, about 55,000 foreign cars were assembled in Russia,
but this figure could rise to over 100,000 units in 2004. Currently there are four plants manufacturing
foreign cars in Russia.
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THE RUSSIAN ECONOMY IS EXPECTED TO GROW – PROVIDED HIGH EXPORTS
CONTINUE
SLAVINA, 2004
(Natalya, staff, TASS, "Gref predicts 6 pct economic growth rate," Aug 5, l/n)
The current social and economic development situation creates good prerequisites for economic growth next year, he said. The economy may well
grow by six percent, provided the prices of Russia's main export items will
keep rising at the current pace. However, to achieve this the government must implement a
full package of measures, first and foremost, those raising the competitiveness of a number of industries.
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RUSSIA IS HIGHLY SENSITIVE TO PLUMMETING OIL PRICES
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
This new groove in Russian-American relations, however, will not run deep. Buoyant oil prices in 2002
allowed a convenient but untested partnership to flourish. Both governments do have a durable common
interest in boosting Russia's oil exports: this benefits the United States through a more diverse world
supply and helps Russia by creating revenue and jobs. Intergovernmental relations, however, are not
capable of exerting much influence over the business conditions that actually determine private
investment in Russia's oil sector. Moreover, when oil prices drop, Washington and
Moscow will discover that they have very different interests. The United States
does have some capacity to tame wild extremes in prices through its manipulation of the SPR and
coordination with other oil-importing governments that also manage strategic reserves. In practice,
though, the government has -- rightly -- used the SPR only to deter severely high prices and has allowed
markets to operate unfettered when prices are lower. In Russia, on the other hand, state
finances and the nation's economic health are extremely sensitive to
shifting prices, making illusions about the ability to stabilize prices
particularly dangerous.
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I/L: Econ Relies on Oil
RUSSIAN ECONOMY DEPENDS ON OIL REVENUE – MAKES THEM
SUSCEPTIBLE TO OIL SHOCKS
FAK, 2004
(Alex, staff, Moscow Times, "Even Putin can't make the world love the Ruble," June 8, ln)
"You cannot first announce convertibility, then recall it [through the restrictions] and then announce it
again depending on how things are going at the oil rigs," said Yulia Tsepliayeva, an economist at ING
bank. Oil prices greatly affect capital flows into Russia. Because the
country's economic growth -- and the ruble's strength -- depend largely on
oil exports, many economists say convertibility is a pipe dream for now.
RUSSIAN ECONOMY DEPENDS ON OIL REVENUE
SIPIL, 2004
(Venla, staff, World Markets Analysis, "budget 2005" Aug. 23, l/n)
Moreover, the 2005 budget is based on a relatively conservative estimation of the oil
price. However, the Russian fiscal balance is very strongly dependent on the price
of oil and even though a comfortable surplus is likely in 2005, Russia should be
responsible in its fiscal policy.
OIL IS KEY TO THE RUSSIAN ECONOMY
BAHGAT, 2003
(Gawdat – dir of the center of Middle Eastern Studies at Indiana Univ of Pennsylvania, Orbis, "The New Geopolitics of Oil," Summer,
wilsonselect)
Russia is a major player on the global oil market because it is now the world's
second largest oil producer and exporter. The oil industry represents a major
proportion of Russia's gross national product (GDP) and generates substantial
public and private revenues. However, since the early 1990s the country's crude production has experienced dramatic
upheavals and a significant decline from peak production, as Figure 1 shows.
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OIL IS KEY TO RUSSIAN EXPORTS
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
On the surface, energy cooperation seems a wise choice. Russians are rich in
hydrocarbons and Americans want them. Oil and gas account for two-fifths of
Russian exports. In 2002 Russia reclaimed its status, last held in the late
1980s, as the world's top oil producer. Its oil output in 2003 will top 8
million barrels per day and is on track to rise further. Russian oil firms also
made their first shipments to U.S. markets in 2002 -- some of it symbolically
purchased as part of the U.S. government's effort to augment its Strategic Petroleum
Reserve (SPR). In addition, four Russian oil companies are preparing a large new
port in Murmansk as part of a plan to supply more than 10 percent of total U.S. oil
imports within a decade.
OIL IS KEY TO THE RUSSIAN ECONOMY
INVESTMENT ADVISER, 2004
("JMPF calls European equities rise," May 24, l/n)
Mr Macklow-Smith played down equity investors' concerns about sky-high oil prices.
He said: "Part of the strength in oil and gold has been because of dollar weakness
and by the end of the year oil will be less of a worry than it is now." At the same
forum, Mark Robinson, joint fund manager of the A £109.3m JPMorgan Fleming
Russian Securities trust, argued oil would play a key role for the Russian
market. Russia is the second largest oil producer, covering a sixth of the
Earth's surface and with many unexplored oil reserves.
OIL PRICE FLUCTUATIONS ARE DEVASTATING TO RUSSIA – OIL IS KEY TO
ITS ECONOMY
THUBURN, 2004
(Dario, staff, World Markets Analysis, "World Bank issues warning on Russian growth slowdown," Feb. 19, l/n)
Russia is even more dependent on oil and gas than the official statistics show,
according to a World Bank economic report published yesterday. The report says oil and gas
accounted for one-quarter of Russia's GDP, as opposed to the 9% reported
in official data, meaning that price fluctuations have a bigger impact than
previously believed. Christof Ruehl, the World Bank's chief economist for Russia, who has
repeatedly warned of the dangers of economic dependence on oil exports, said, 'The Russian
economy is more exposed to world movements in energy prices than official
GDP figures imply,' the Financial Times reports. According to some estimates, a US$1 change in
the price of oil can mean a change of as much as US$1bn in the state budget.
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Oil key to Russian economic growth
World Markets Analysis 5-27-2k4
<Putin stated that he is confident that the government will be able to curb
inflation to 3% 'in the next few years' (Putin failed to provide a more detailed
time frame). However, in a truly stabilised economy, it should not be the
government's duty to keep the inflation in check, this should be mainly left for
a responsible central bank. An inflation rate of 3% in the near future certainly
seems too ambitious a target. Indeed, even the inflation goal of 10% for this
year may prove to be unachievable combined with the policy of curbing the
appreciation of the rouble. Putin pledges to boost economic growth, but at
present the source of this growth is the oil exporting sector. The oil revenues
increase domestic money supply, as the central bank's policy is to buy dollars
from the currency markets to keep the dollar price of the domestic currency from
rising. The roubles used for buying the petrodollars increase domestic money
supply, and the Russian banking sector cannot absorb this excess liquidity.>
Oil propels Russian economic growth
The Times (London) 3-17-2k4
<"Economic growth," the bank argues, "is still largely a function of
hydrocarbon prices." Official figures show that the Russian economy grew by 7.3
per cent last year, but allowing for the rise in oil prices, the bank reckons,
the Russian economy grew by only 4 to 5 per cent, much as it has done in the
past. "Historical experience shows that when oil prices are not growing, growth
pace in Russia practically never exceeds 5 per cent," it says.
For the whole of Putin's first term, oil prices have been rising; they are
now about 50 per cent above levels before speculation about the Iraq war began.
So, on the back of this apparent economic boom, in such contrast to the
struggles of the Yeltsin years, Putin has promised rising living standards
with some confidence.>
Oil drives Russian economic growth
Quest Economics Database 3-16-2k4
(Russia Review, p.ln)
<The rapid progress of Russia's oil industry continued in 2002, providing
the main driving force for economic growth - and giving rise to concerns of
unbalanced reliance on hydrocarbons exports that could undermine manufacturing
industries. Total Russian oil production reached 7.7 million barrels per day in
2002. High world prices meant that oil and gas export revenues in 2002 reached
about US $ 42 billion, while tax receipts from the fuel and energy sector were
US $ 21 billion, or 38 per cent of total tax collection. The hydrocarbons boom
has not only made the Russian budget seemingly impregnable - with foreign
exchange reserves rising to a record US $ 53 billion by February 2003 - but also
provided a buffer against lower prices. Observers estimate that projected
continuing increases in oil production mean that by 2004, the government's
budget programme could be met even if oil prices fell to US $ 16 per barrel.>
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Oil critical to Russian economic growth and stability
Quest Economics Database 3-16-2k4
(Russia Review, p.ln)
<The oil boom has impacted on all aspects of Russia's economy and business
life. In 2002, about US $ 2 billion of Russian equity was listed on foreign
stock markets, four times the 2001 amount, of which 97.5 per cent was oil or
oil-linked paper. Russia's corporate eurobonds outstanding also swelled several
times over to US $ 4.5 billion, of which two-thirds was from oil and gas
companies. The biggest privatisation sale yet, in December 2002, of the
government stake in the Russo- Belarussian oil producer Slavneft to a holding
company owned by Sibneft and the Tyumen Oil Company (TNK), netted US $ 1.7
billion. In February 2003, hydrocarbons brought Russia two more ground-breaking
business deals - the US $ 6.5 billion agreement between BP and TNK to create a
50- 50 joint venture that will be Russia's third largest oil producer and its
single largest slice of foreign direct investment (FDI) by far, and a US $ 1.7
billion 10-year eurobond issue by the gas monopoly Gazprom, the biggest ever
such deal by an emerging market corporate. In April 2003, Sibneft and Yukos
merged to create Russia's largest oil company, with combined assets worth US $
35 billion.>
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LOWER OIL PRICES DEVASTATE RUSSIAN OIL PRODUCTION
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
The cost structure of Russian oil production is a critical issue, particularly if long-term output increases are to be sustained. Production
increases in Russia are coming from pushing existing infrastructure to its limits, while supplementing it with additional wells in
existing fields. The average yield from Russian wells continues to decline and dependence on old reservoirs has required costly
investments to net further oil, raising production costs to dangerously uneconomic levels .
Russian oil typically costs
$5 - $7 per barrel to produce, compared to $1 - $2 per barrel in Saudi Arabia.(FN23)
Costs will be even higher in many of Russia's undeveloped oil regions, perhaps upwards of $15 per barrel.(FN24) Just as high
oil prices triggered the Russian oil recovery in 1998, sustained growth in output will
also require sustained high prices. Technological advancements and modernization
have reduced the production costs of some of Russia's major oil producers,(FN25) but
Russia's production increases might not survive a major downturn in oil prices.
LOWER OIL PRICES EMPIRICALLY DEVASTATE RUSSIAN ECONOMY
POTTER, 2004
(Jane, staff, Legal Week, "the sleeping giant," May 27, l/n)
In 1998, the Asian financial crisis, coupled with a collapse in oil prices, triggered a
corresponding crash in the Russian market. Russia defaulted on debt, wiping out
the country's access to international financial markets for three years, and the
resulting lack of confidence triggered a significant flight of capital from the country.
LOW OIL PRICES DEVASTATE RUSSIAN ECONOMIC RECOVERY
MAUGERI, 2003
(Leonardo -- Group Senior Vice President for Corporate Strategies and Planning for the Italian energy
company eni, Foreign Affairs, "not in oil's name," July/Aug, l/n)
Ironically, new investments in non-OPEC areas, where oil costs are higher, are made possible by OPEC's
production ceilings, which sustain oil prices. If oil prices were below $18 per barrel, the output of the
United States, Canada, the United Kingdom, Norway, and Russia would be partially displaced. In
Russia's case, a recovery in the price of oil and natural gas has boosted oil
output and revenues. This in turn has led some observers to envisage
Russia as a future main supplier of Western oil needs, displacing Saudi Arabia.
However, considering that the Russian Federation has only one-fifth the oil reserves of the Saudis and that
old Soviet techniques have damaged many oil fields, it is reasonable to assume that current Russian oil
production is inflated by specific circumstances that cannot last forever. Russia's own consumption, for
instance, will recover and will absorb a growing part of domestic production. Overall, a return to low
oil prices would dampen any major leap forward by the Russian oil sector
and thwart needed investments in its export infrastructure. Thus, although Russia
remains an excellent long-term opportunity for oil and gas companies, particularly once the current
inflated outlook vanishes and legislation improves, it is misleading to compare its potential role in the
world oil market with that of the Saudis.
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LOW OIL PRICES WILL DEVASTATE THE RUSSIAN ECONOMY
SIPILA, 2004
(Venla, staff, World Markets Analysis, "Putin's fiscal policy outline," March 24, ln)
Russia would be badly hit by any sharp decrease in the oil price. The taxes
on the oil sector are estimated to raise an additional US$4bn a year - a
figure that is dependent on the oil price (please see graphs, which show that public
revenues have risen as the current account has improved). Meanwhile, there are still no clear signs of
banking reform or the fragmentation of the monopolies. Furthermore, the current high growth is partly
attributable to recovery from the 1998 financial crisis, as the sharp devaluation of the rouble in August
1998 provided Russia with a unique competitive advantage.
REDUCED OIL PRICES WILL DEVASTATE THE RUSSIAN ECONOMY
Channel NewsAsia, 2004
("high oil prices good for Russia unless economic reform is ignored," Aug 8, ln)
Russian economic development minister German Gref estimated Thursday that the
country's gross domestic product (GDP) could grow by 7.1 percent this year if oil
prices remain at levels seen since January. His ministry has already raised its official
annual growth forecast to 6.7 percent. Though problems affecting Yukos -- which has threatened to halt
exports if Russian justice officials continue to freeze its bank accounts -- have raised tension on global oil
markets, their impact within Russia has been mixed. "It is clear that a high oil price is
good for Russia," since one quarter of its GDP comes from the petroleum
and gas sectors, noted Alex Kantarovich, a strategist at the investment group Aton. On Friday, oil
prices eased slightly from records set early in the day, to 43.95 dollars a barrel for benchmark US crude in
New York and 40.70 dollars a barrel for Brent North Sea crude in London. "Russian dependence
on oil poses a risk, but one that should not materialize unless prices
collapse," Kantarovich continued, whereas the situation at present "leads us to
believe prices will remain at high levels".
A DROP IN OIL PRICES WILL CRUSH RUSSIA'S ECONOMY
ECONOMIC NEWS, 2004
("Russias role in global trade turnover grows at unprecedented rate," Aug 5, ln)
According to second-quarter results, we will outpace even Japan, says Center for Macroeconomic Research
director Elena Matrosova. This comparison carries great significance. Japan, much like other Asian
countries, is primarily dependent on growing external demand from other nations. As a result, a
drop in demand in foreign markets causes a crisis in the Japanese economy.
Matrosova believes that exports account for over 50% of Russias economic
growth. Should oil, natural gas, and metals prices drop tomorrow, Russia
could suffer the fate of the Asian tigers. Therefore, growing exports result in
growing economic and political risks domestically.
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RUSSIA DEPENDS ON HIGH OIL PRICES
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
In evaluating the significance of potential increases in Russia's production and export capacity, it is important to keep in mind the
forecasts for global oil demand to 2010. Deutsche Bank analysts have suggested that by 2005 global oil consumption will reach 81
mb/d, a 3.5 mb/d jump over 2002 levels.(FN72) During the same period, Russia's export capacity will probably rise less than 1.0
mb/d, potentially capturing one-quarter of new demand growth. But, because of infrastructure bottlenecks, exports far beyond Europe
will continue to be uneconomic to 2005. Thus Russia will need to rely on its traditional European markets to absorb its exports.
Demand growth in Europe through 2005, however, is expected to be weak, especially given the economic slowdown currently
plaguing the region. Furthermore,
increasing global supply and slow demand growth could exert
downward pressure on global oil prices, affecting the ability of the Russian
government and Russia's oil companies to finance additional expansion of
production or transportation. The recent decline in profitability of Russia's majors
makes the need for foreign investment even greater. Much of Russia's success depends on higher
global oil prices, but the Saudis may push oil prices down in order to defend OPEC's market share.(FN73)
OIL KEY TO RUSSIAN ECONOMIC RECOVERY
BAHGAT, 2003
(Gawdat – dir of the center of Middle Eastern Studies at Indiana Univ of Pennsylvania, Orbis, "The New Geopolitics of Oil," Summer,
wilsonselect)
The drastic decline in the country's oil production from a peak of 11.5 million barrels per day (b/d) in 1987 to 6.1 million b/d in 1996
stagnant economic conditions in Russia during most of
the 1990s meant decreased domestic industrial demand and a decline in drilling and
capital investment. The Russian economy overall, and oil production in particular,
turned upward in 2000, when Putin made economic recovery his main priority, with
special attention to the energy industry. Indeed, given Saudi Arabia's compliance with its Organization of
can be explained by several factors. First,
Petroleum Exporting Countries (OPEC) quota and the unrestricted Russia's expansion, Russia's oil production exceeded Saudi
Arabia's briefly in 2002.
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RUSSIA DEPENDS ON OIL REVENUE FOR ECONOMIC ADJUSTMENTS
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
Low oil prices did not inflict pain just in Central Asia and the Middle East. In 1998,
they coincided with unprecedented political strains in key oil-producing countries like
Russia, Indonesia, and even such Latin American nations as Venezuela, Mexico,
Ecuador, and Colombia. Russia has historically relied heavily on oil and gas for
its hard-currency earnings and still does today; its oil exports generated $
16.1 billion in 1996, some 20 percent of Russia's total export revenue.
Russia's recent financial crisis was hastened and worsened by disheartening
oil earnings. Low oil prices will complicate the country's troubled
transformation and leave it prisoner to its cashless "virtual economy."
Elsewhere, Venezuela's flagging economy in 1998 helped elect a military populist,
usher in a period of political turmoil, and stymie the implementation of major
constitutional reforms. Plunging oil revenues in 1998 also destabilized Mexico, whose
traditional political system is groaning with strain.
HIGH OIL PRICES ARE VITAL FOR RUSSIAN ECONOMIC RECOVERY
ENERGY, 2004
("OPEC still declining," January 1, l/n)
Rapidly fluctuating oil export revenues over the past few years also have affected
non-OPEC countries, such as Russia and Mexico, significantly. The economic situation
in Russia, for instance, improved significantly (with positive economic growth since 1999,
following a sharp downturn in 1998), in part as a result of a rebound in the country's oil and gas
export revenues since 1998. Russia earned an estimated $ 58.2 billion in net oil export revenues during 2003, with the
country's revenues expected to increase another 15 percent in 2004, to $ 66.8 billion. Russian real (constant 2000 dollars) oil export
revenues in 2004 are projected to be the highest since 1990, and more than triple the revenues earned in 1998.
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HIGH OIL PRICES ARE KEY TO THE RUSSIAN ECONOMY
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
At a Kremlin summit in May 2002, Presidents George W.
Bush and Vladimir Putin pledged to
work together to reduce volatility in global energy markets and promote
investment in Russia's oil industry. Soon after, at the first-ever summit of U.S. and Russian
oil executives in Houston, Russia's energy minister, Igor Yusufov, reiterated this goal. The two
governments have created a special working group on energy cooperation, and Russia will host the next
commercial energy summit in 2003. In Moscow, especially, the potential of new oil ties has attracted
extensive media coverage and political speculation. For instance, Grigory Yavlinsky, head of Yabloko, one
of Russia's leading opposition parties, has suggested that the United States and Russia could sideline the
Organization of Petroleum Exporting Countries (OPEC) as the arbiter of world oil prices. This enthusiasm
is misplaced, however. A collapse of oil prices in the aftermath of an invasion of Iraq may soon lay bare
Washington's and Moscow's divergent interests. Russia needs high oil prices to keep its
economy afloat, whereas U.S. policy would be largely unaffected by falling energy costs. Moreover,
cheerleaders of a new Russian-American oil partnership fail to understand that there is not much that the
two governments can do to influence the global energy market or even investment in Russia's oil sector.
HIGH OIL PRICES ARE CRUCIAL FOR RUSSIAN ECONOMIC GROWTH
STELZER, 2004
(Irwin – sr fellow & dir of economic policy studies for the Hudson Institute, American Outlook Today,
"America's Oil Problem," Feb. 17,
http://www.hudson.org/index.cfm?fuseaction=publication_details&id=3231)
Those looking to Russia, which now produces almost as much oil as does Saudi Arabia, to step up exports sufficiently to return prices
to the $25 range are likely to be disappointed. Russian oil is relatively expensive to produce, and costly additions
to infrastructure (ports, pipelines) are needed if exports are to be increased significantly. Also, the
government’s fiscal health depends heavily on continued high oil prices, giving Russia little incentive
to ease price pressures on Western consumers.
THE RUSSIAN ECONOMY RELIES ON HIGH OIL PRICES
LAVRENTIEVA, 2002
(Victoria, staff, Moscow Times, "stocks surge on waves of positives," March 5, l/n)
"The market is not really expecting Russia to expand the export cuts [it
promised OPEC] in the next month or so, as the medium-term outlook for oil prices is comfortable
enough," O'Sullivan said. Energy Minister Igor Yusufov told Reuters on Monday that, despite heavy
pressure from visiting senior OPEC officials to extend oil export curbs, a decision was unlikely soon. "It's
too premature to give any forecast. We have our commitments until April 1 and we have a whole month
ahead of us," Yusufov said. "Russia still remains very dependent on oil prices and
the situation in the United States," Galperin said. "And this is not going to
change in the near future."
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HIGH OIL PRICES ARE KEY TO RUSSIAN ECONOMIC RECOVERY
MAASS, 2004
(Peter, staff, International Herald Tribune, "a Russian oil chief uses Putin's rules to win," Aug. 7, l/n)
The industry's
recovery has been a key goal of Putin's government; just as the Soviet
Union needed oil to finance its empire, Putin needs oil for his more modest
task, to get Russia back on its feet. Since 1999, production has risen by 50 percent, thanks
to an influx of investment and the incentive of rising oil prices. Russia is now the secondlargest exporter of oil after Saudi Arabia.
Russian production dropped by nearly half following the Soviet collapse in 1991.
OIL REVENUE IS KEY FOR RUSSIAN ECONOMIC RECOVERY
AHREND, 2004
(Rudiger -- Russia economist in the OECD's economics department, Moscow Times,
"pumping gdp growth," July 16, l/n)
Yet this estimate includes only the hydrocarbon sector's direct contribution to growth. The oil industry's
ability to sustain rapid growth has been an important contributor to growth in other sectors, particularly
those that produce investment goods for the oil industry. Moreover, Russia has been experiencing a
consumption boom in recent years, which has significantly contributed to GDP growth. Rising real incomes
have fueled very rapid consumption growth, much of which has been satisfied by imports. With import
volumes increasing by an average of 21 percent per year between 2000 and 2003, rapid export
growth has been the most important factor allowing Russia to enjoy this
rapid consumption growth without -- so far -- hitting the current account
constraint. And here again, we find the contribution of the oil sector to be
critical. The oil industry has been the major driver behind export growth
since 2000. Overall, export volumes increased by roughly 30 percent during
2000-03. This increase was overwhelmingly driven by the oil sector, which
increased export volumes by more than 60 percent. The other major export sectors -ferrous and non-ferrous metals, as well as machine building -- contributed little to overall export growth,
as their export volumes increased by only about 10-15 percent over the period, and the export volumes of
the gas sector actually fell significantly (though higher-priced exports to Western Europe increased
somewhat at the expense of exports to CIS countries).
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OIL REVENUE IS KEY FOR RUSSIAN ECONOMIC RECOVERY
AHREND, 2004
(Rudiger -- Russia economist in the OECD's economics department, Moscow Times,
"pumping gdp growth," July 16, l/n)
Altogether,
it is clear that since 2000, the importance of private oil companies'
performance for the economy as a whole has been enormous. As noted above,
industry accounted for almost half of GDP growth in 2000-03 and the oil sector for somewhat less than
half of industrial growth. Since state-owned oil companies barely grew, this implies that Russia's private
oil companies directly accounted for somewhere between one-fifth and one-quarter of GDP growth. Given
the knock-on effects from oil sector procurement and wages on domestic demand, the actual
contribution of private oil companies to economic growth was probably
greater still. Moreover, the private oil companies have played a crucial role
in keeping Russia's external balance in surplus, and thus in allowing the
current consumption boom to unfold. It is unlikely that Russia would have
been able to grow at anything like the rates it has experienced in recent
years had the private oil companies not raised investment, output and
exports very rapidly. Moreover, the performance of state-controlled oil companies and other
important state-controlled companies would appear to suggest that Russia's leading private oil companies
would not have achieved the growth performance of the last few years if they had remained under state
control.
THE RUSSIAN ECONOMY DEPENDS ON HIGH OIL PRICES
FOSSEDAL, 2004
(Gregory, staff, United Press International, "what's right in Russia?" April 2, l/n)
The price of oil, for example, is critical to Russia's economy. Last year, Russian
output surged by 8 percent, and the budget moved into a 1 percent surplus.
But about 75 percent of the gain in revenues, and more than half the GDP
gains, were due to high-flying world energy prices. "Russia," as a colleague puts
it, "is an oil stock."
HIGHER OIL PRICES MEAN MORE TAXES FOR RUSSIAN GOVERNMENT REVENUE
SIPILA, 2004
(Venla, staff, World Markets Analysis, "Putin's fiscal policy outline," March 24, ln)
Finance Minister Alexei Kudrin outlined the extent of the planned additional tax
burden on Russia's oil companies. In the event of the world oil price reaching
between US$20 and US$25/barrel, the export duty on oil will be in the range of
35%-45% of export revenue. However, if the price rises further, the duty will rise to
46%-65%. Kudrin stated that the new system of taxes and export duties would
contribute as much as US$3bn per year to the federal budget, assuming an average
oil price of US$27 per barrel.
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RUSSIAN ECONOMY DEPENDS ON HIGH OIL PRICES
SIPILA, 2004
(Venla, staff, World Markets Analysis, "Putin's fiscal policy outline," March 24, ln)
It is worrying that the target poverty figures are forcing the government to increase expenditure, just
when the revenue side of the budget is so vulnerable. There is still no guarantee that the
economy would be capable of surviving a sharp drop in oil prices. As a
precaution, the extra oil revenues are being channelled into a stabilisation
fund. However, in an economy that continues to subsidise domestic energy
prices heavily, and in which the banking and gas sectors remain strongly
concentrated, there is no guarantee that the use of these funds would be
anywhere near efficient enough.
RUSSIA'S ECONOMY RELIES ON HIGH OIL PRICES
APS REVIEW DOWNSTREAM TRENDS, 2004
("The Russian energy base," August 16, l/n)
In 2003, Russia's real GDP grew by 7.3%, surpassing average growth rates
in all other G8 countries, and marking the country's fifth consecutive year of
economic expansion. The economic growth over the past five years has
been fuelled primarily by energy exports, particularly given the boom in Russian oil
production and high world oil prices. But this type of growth has made the Russian economy dangerously
dependent on oil and gas exports, and especially vulnerable to fluctuations in world oil prices. Although
estimates vary widely, the World Bank has suggested that the oil and gas sector
may have accounted for up to 25% of GDP in 2003 - while employing less than 1% of
the population.
OIL EXPORT KEY TO RUSSIAN ECONOMIC GROWTH
ENERGY 1-1-2K4
(“OPEC Still Declining: Export revenues still lag far behind peak years,” Energy Journal vol. 29 no. 1)
<Rapidly fluctuating oil export revenues over the past few years also have
affected non-OPEC countries, such as Russia and Mexico, significantly. The
economic situation in Russia, for instance, improved significantly (with
positive economic growth since 1999, following a sharp downturn in 1998), in
part as a result of a rebound in the country's oil and gas export revenues since
1998. Russia earned an estimated $ 58.2 billion in net oil export revenues
during 2003, with the country's revenues expected to increase another 15 percent
in 2004, to $ 66.8 billion. Russian real (constant 2000 dollars) oil export
revenues in 2004 are projected to be the highest since 1990, and more than
triple the revenues earned in 1998.>
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Oil revenues are critical to Russian economic strength
Feld, senior analyst department of Energy, 6-2k4
(Lowell, “Major Non-OPEC Countries Oil Revenues,” p. http://www.eia.doe.gov/emeu/cabs/opecnon.html)
<Russia depends upon energy (mainly oil and natural gas) exports for critical shares of its total export
earnings (around 50% in 2003) and government revenues. Oil export revenues also are used to help pay off
Russia's large (around $123 billion as of early 2003) foreign debt. Thus, oil price fluctuations are of
definite concern to Russia. The sharp rebound in oil prices over the past few years has been good news for
Russia -- and especially its oil sector -- after an extremely difficult 1998 and early 1999. During 2000-2003,
for instance, Russia's top oil producers (Lukoil, Yukos, etc.) made windfall profits, resulting in billions of
dollars worth of additional tax revenues to the Russian government. Many Russian oil companies also have
begun to upgrade decaying oil infrastructure and to undertake new exploratory drilling. EIA is forecasting
Russian oil export revenues at $75 billion for 2004, up 23% from the $61 billion earned in 2003 (and the
highest in "real" terms since 1990), on higher oil prices and net oil exports. >
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I/L: Russia Key Supplier to US
RUSSIA IS A KEY OIL SUPPLIER TO THE U.S. – THE U.S. WANTS MORE OIL
FROM RUSSIA
KORCHAGINA, 2004
(Valeria, staff, Moscow Times, "Pipeline hinges on July report," May 28, l/n)
The United States -- along with other potential consumers of Russian oil such as
Japan and China -- has expressed keen interest in Russia expanding its oil
production and export capacity. While domestic oil majors have been steadily
ramping up output, Russian export capacity is now almost at its maximum.
RUSSIA IS A KEY OIL SUPPLIER TO THE U.S.
WEAFER, 2004
(Chris, chief strategist at Alfa Bank, Prime-Tass Business Newswire, "Putin: the investor
friendly president," May 27, l/n)
Finally, the timing of this call on the government to speed up the review of proposed
new export routes is not coincidental. The US Energy Secretary is due in Moscow for
talks tomorrow. The U.S. clearly wants Russia to make a strong commitment
to export expansion and also to facilitate U.S. oil majors getting some
significant involvement. Putin's comments today will smooth these talks and help
secure U.S. support for Russia's WTO entry bid.
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I/L: Russia Key Supplier to World
RUSSIA IS A KEY SUPPLIER OF GLOBAL OIL
FAULCONBRIDGE, 2004
(Guy, staff, Moscow Times, "Dresdner will set a price for Yugansk," Aug 13, l/n)
Russia is the biggest oil exporter in the world after Saudi Arabia, and the former
Soviet Union has been the engine of non-OPEC supply growth. With China driving oil demand
and U.S. consumption rising, Russia is a vital player in the oil game, especially
in a U.S. presidential election year.
Russian displacement of OPEC oil supply critical to stabilize global oil prices and
support Russian economic growth
Morse and Richard, Executive Adviser at Hess Energy Trading Company and was
Deputy Assistant Secretary of State for International Energy Policy and portfolio manager
at Firebird Management, an investment fund active in eastern Europe, Russia, and Central Asia.3/4 2k2
(Edward and James, “The Battle for Energy Dominance,” Foreign Affairs p.ln)
<Russia's oil revival has coincided with a downturn in the global economy
and the first major reduction in the global demand for oil since the early
1980s. The nearly 1 mbd increase in its production over the last two years came
at a time when OPEC cut output, thus losing market share, to put a floor under
prices. Not surprisingly, Moscow's motivations are being questioned and are
often seen as an attempt to grab power in the global arena. But Russia's
petroleum revival has also coincided with the terrorist attacks of September 11,
which have provided Moscow a chance to displace OPEC as the key energy supplier
to the West. Moscow's political leaders, as well as its corporate leaders in
oil and gas, are portraying Russia's oil firms as stable sources of supply,
willing to add output to the market to keep prices reasonable and thus revive
the global economy. In the eyes of these leaders, the new geopolitics of energy
can help Moscow gain both economically and politically. In economic terms,
energy production lets Russia integrate itself into the industrialized West. In
political terms, energy resources can be used to buttress Moscow's goal of
becoming a key partner of the United States.>
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OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence.
Oil instability promotes political instability, which may cause more oil instability.
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RUSSIA NEEDS OIL REVENUE TO PREVENT A CIVIL WAR
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
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.
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Impact Extensions: Nuclear War
COLLAPSED ECONOMY TRIGGERS A CIVIL WAR WHICH WILL GO
NUCLEAR
A) Russian economic collapse is most likely scenario for internal civil war
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<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.>
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B) Russian civil war ensures proxy wars, and nuclear exchange
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<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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Impact Extensions: Nuclear War
Russian civil war ensures proxy wars, and nuclear exchange
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<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.>
Russian civil war will trigger nuclear war
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<Only three countries, in fact, meet both criteria: Mexico, Saudi Arabia,
and Russia. Civil conflict in Mexico would produce waves of disorder that
would spill into the United States, endangering the lives of hundreds of
thousands of Americans, destroying a valuable export market, and sending a
torrent of refugees northward. A rebellion in Saudi Arabia could destroy its
ability to export oil, the oil on which the industrialized world depends. And
internal war in Russia could devastate Europe and trigger the use of nuclear
weapons.>
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Impact Extensions: Genocide
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
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AT: Dependency Turns
RUSSIA IS AN ALTERNATIVE TO U.S. DEPENDENCE ON MID-EAST OIL
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
Since the terrorist attacks of September 11, 2001, interest in the Russian oil sector has increased, particularly within the Bush
administration. Russia
is viewed as a potential buffer, if not substitute, for America's
dependence on Middle Eastern oil. This paper presents an overview of the Russian oil sector and suggests that
this optimistic vision is unlikely to be born out in reality. Incomplete attempts at legal and political reform continue to deter foreign
investors, and the profits that drove Russian oil companies production gains in the late 1990s have all but evaporated. Russia also
suffers from export infrastructure problems that could hamper its ability to play a meaningful role in the global market. This does not
mean Russia cannot play any role in the evolving global oil market. Rather, Russia should consider its development strategy carefully,
and U.S. policymakers should accept that the Middle East will continue to dominate the global energy supply.
US investment in Russian oil is key to curb Middle East/Saudi Dependence, cement
Putin-US relations, promote internal Russian economic stability, and ensure US energy
security
Woolsey, former CIA director, 8-2k2
(James, “Defeating the Oil Weapon,” Commentary Vol. 114, iss. 2 p. ebscohost)
<IN THE meantime-and here is the second component of the strategy-we should be helping Russia
substantially improve its share of the world's oil market. The level of oil production in Russia is already
high, but, thanks to the country's vast untapped reserves, it could be substantially higher; Jeffrey E. Garten
of the Yale School of Management has estimated that the current output of 6.9 million barrels per day could
expand by at least 50 percent. The main obstacle here is the deplorable state of the country's pipelines, most
of which (unlike the Russian oil companies themselves) are still governmentowned. In many places,
pipelines are lacking altogether. We should therefore help Russia obtain Western investment to modernize
and expand its pipeline network while urging Europe to import more Russian oil and, by means of
incentives, encouraging American oil companies to cooperate with Russian companies in the Middle East
and elsewhere. There are, admittedly, constraints on Russia's ability to provide a Saudi-style reserve
capacity that could be "surged" as needed. (One such constraint is the Russian winter.) But as a supplier,
Russia is likely to prove much more reliable than any regime in today's chaotic Middle East, and a steady
shift of much of the world's oil purchases toward that country would thus have an overall stabilizing effect.
It would also provide a tangible quid pro quo for the recent statesmanship of President Putin, who in more
than one way has seemed definitively to cast Russia's lot with the West. And it would offer a nicely bracing
reminder to the Saudis and other members of OPEC that their cartel's days may be numbered. Another
reason to take this step is more broadly strategic: to give Russia time to diversify its economy. We have a
real interest in encouraging Russian prosperity, since this is the best way to foster the growth of a middle
class and the kind of stability that can give solid roots to political liberalization and the development of the
rule of law. Russia has serious problems: corruption, criminality, proliferation of nuclear and missile
technology, brutality in Chechnya. But at this point it looks far more likely to develop democratically than
does Saudi Arabia, and it would be decidedly to our benefit that it do so. >
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RUSSIA DISAD
AT: Diversified Econ
Lack of Russian economic diversification ensures poverty and economic stagnation
The Times (London) 3-17-2k4
<So the question about the threat to Russia becomes one of distortion and
lost opportunities: of the damage that this uncurbed dependence on oil and gas
will do to hopes of creating a more vigorous, diverse and lawful commercial
life, and of lifting more Russians out of poverty, as Putin has promised.
It is easy to use Russia as an example of the "curse" of natural resources,
that now-fashionable argument. The concentration of its oil and gas industries
in the hands of a few, the reluctance to let these assets pass into foreign
hands and the corruption that has permeated the companies has warped Russian
economic life. This environment has made it harder for other businesses to start
up and prosper.
The negatives evidence is a lie, Russia’s reliance on oil is unquestionable
The Times (London) 3-17-2k4
<As the World Bank points out, official figures give a misleading impression
of the influence of the sector. According to some official data, the oil and gas
sector comprises less than 9 per cent of gross domestic product. At that level,
the bank asks rhetorically, why would anyone think its influence harmful or the
vulnerability too great? Yet according to the bank's analysts, much of the sector's revenues are
attributed by official figures to the service sector, through a financial
sleight of hand known as "transfer pricing". Allowing for that, the influence is
far greater.>
Lack of economic diversification ensures inevitable stagnation of Russia econ
Quest Economics Database 3-16-2k4
(Russia Review, p.ln)
<The oil boom has, however, increased the danger of one-sidedness in the
economy. In the three months to February 2003, industrial production in sectors
outside oil and metals fell each month, and this was preoccupying economic
decision makers in early 2003. In presenting to the government a programme for
2003-07 in February 2003, the economic development minister, German Gref, said
that the 'principal negative tendency' in the economy was the lack of structural
reorientation and the 'stagnation' of the processing industry. Gref proposed to
increase taxation in the oil sector and reduce it for manufacturers, but
observers believe that this would face strong resistance from oil companies.>
OIL DISADS
Consortium 2004
187
RUSSIA DISAD
AT: Yuko's
RUSSIAN OIL SUPPLY CONTINUES STRONGLY
THE KIPLINGER LETTER, 2004
("fuel costs outlook," Aug 6, l/n)
Russian oil will continue to flow throughout world markets even as Yukos,
Russia's giant oil conglomerate, is broken into pieces. Yukos' assets, which
pump about 2% of the world's oil, will be taken over by other Russian oil firms,
including Lukoil, which has U.S. outlets.
OIL DISADS
Consortium 2004
188
RUSSIA DISAD
AT: No Reserves
RUSSIA HAS PLENTY OF ACCESSIBLE OIL RESERVES
APS REVIEW DOWNSTREAM TRENDS, 2004
("The Russian energy base," August 16, l/n)
The energy sector in Russia, now in fairly good shape in contrast with the situation in 1998, is
developing under a strategic plan to 2020 which will raise domestic fuel
prices to a level that should stimulate efficiency and a switch to alternative
fuels. Energy-saving technologies will be applied along with a scaling back
of natural gas use in power generation. Launched in late 2000 and developed under the
supervision of the powerful Minister of Economic Development and Trade, German Gref, the plan calls for
a 250% rise in gas prices. The share of nuclear power should rise from 14% to 21% and coal consumption
will rise at the expense of gas. The Russian energy base should by 2020 produce a surplus for export from
the crude oil equivalent of 506m t/y (about 10m b/d) in 2000 to 600m t/y in 2020. Russia, the
largest country on earth crossing 11 time zones and having a population of 145m, possesses
vast reserves of oil, gas and coal. It has enough to meet its domestic
requirements and, with proper management, to be the biggest energy
exporter in the world.
OIL DISADS
Consortium 2004
189
RUSSIA DISAD – AFF
GENERAL
N/U – RUSSIAN ECONOMIC COLLAPSE SHOULD HAVE OCCURRED OVER
THE YUKOS SCANDAL
CORPORATE FINANCE, 2003
("Is Russia coming in from the economic cold?" Nov., wilsonselect)
Four years of hard work to build stability back into the Russian economy is being
threatened with ruin following the arrest of Mikhail Khodorkovsky, the head of Yukos on
October 27. The overall market has suffered losses of more than 10 % since his arrest,
driven down by the plunging shares of oil giant Yukos. Russia's largest oil company, and
responsible for 30% of the Russian stock market turnover, Yukos shares lost one-fifth of
their value on the news of Khodorkovsky arrest and rival bids from ExxonMobil and
ChevronTexaco for a strategic stake in the company were put on hold. As investors
sought the safety of the dollar, the Russian central bank sold at least $500 million to
support the currency immediately after news of the arrest was made public. The market
too did its utmost to quell fears that the markets were near collapse. As stability begins to
return to the market - the RTS (Russian Trading System) closed up 4.9% just 24 hours
after the news of Khodorkovsky's arrest-what do these turn of events mean for
corporates? Have recent reforms buried the gremlin of Russia's corporate past for good or
simply veneered over it?
OIL NOT THE ONLY VARIABLE IN ECONOMIC RECOVERY
CORPORATE FINANCE, 2003
("Is Russia coming in from the economic cold?" Nov., wilsonselect)
Kirill Stein, deputy head of corporate finance at Alfabank in Moscow, agrees natural
resources have been vital to Russia's recovery, but they are no longer the sole
facilitator for foreign investment: "You cannot underestimate oil [production and
prices]. But currency reserves, a healthy surplus current account and the prudent
financial measures undertaken by Putin's government have greatly helped to
alleviate this dependence on oil."
OIL DISADS
Consortium 2004
190
RUSSIA DISAD – AFF
GENERAL
RUSSIAN OIL RESERVES ARE IN QUESTION
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
The future of Russia's reserves is also a source of much disagreement. The heads of two
of Russia's major oil companies, Lukoil and Yukos, eager to encourage foreign
investment, offer an optimistic picture of potential discoveries, particularly in northern
Russia, Eastern Siberia, and the Caspian.(FN19) Others, however, have suggested that
Russia's reserves could be depleted before 2020, assuming continuing increases in
production.(FN20) No major new finds have been made since the announcement in 2000
that Russia's sector of the Caspian contains approximately three billion barrels of new
reserves. At current production levels, that only adds about one year of productive life to
Russia's oil sector. Exploratory drilling in new fields remains extremely weak in Russia,
particularly in previously unexplored regions. Of the 135 exploratory wells Lukoil drilled
in 2001, only thirteen were outside of Russia's traditional or mature production
areas.(FN21) Overall, exploratory drilling has remained quite low since the collapse of
the Soviet Union. In addition, approximately 60 percent of Russia's current reserves
qualify as "difficult to recover."(FN22) Major producers in Russia have focused on
consolidating easily accessible reserves while higher cost fields have gone unattended.
OIL REVENUE DOESN'T NECESSARILY GENERATE RUSSIAN ECONOMIC REFORMS
Channel NewsAsia, 2004
("high oil prices good for Russia unless economic reform is ignored," Aug 8, ln)
Stephen O'Sullivan of the investment group UFG said: "Record oil prices are good
for the state's coffers but they do not encourage reforms" that are key to
the development of Russia's economy. The international ratings agency
Standard and Poor's stressed in mid July that there was a growing risk of
Russian reforms slowing down as they ran into resistance from political and
industrial interests as well as from public opinion.
OIL DISADS
Consortium 2004
191
RUSSIA DISAD – AFF
GENERAL
RUSSIA LACKS THE INFRASTRUCTURE NECESSARY TO BE A SUCCESSFUL
OIL EXPORTING NATION
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
Assuming Russia can overcome obstacles to enhanced production capacity, the road
to becoming a major global oil supplier requires transportation infrastructure to
support surging exports. Most of Russia's existing oil pipeline and export network
dates from the Soviet era, a system designed to bring oil to communist satellites of Eastern Europe.(FN57) This
network is gradually being converted to service other European and Western markets, but needs major renovation. Moreover, with
existing infrastructure already operating at peak capacity in order to meet growing production, Russia can only accommodate growing
As with production
expansion, Russia's ability to move more oil to market requires serious investment,
which so far has been limited. The collapse of the Soviet Union had serious
consequences for the Russian pipeline system. Russia found itself with a significant portion of its pipeline
production by expanding the capacity of existing routes or adding entirely new pipelines.
system suddenly in foreign countries, including the Baltic ports of Ventspils and Butinge, and the Druzbha pipeline connecting central
Russia to Central Europe. This means that Russian oil companies now face additional transportation tariffs charged by the former
Soviet republics. For example, oil shipped to the Czech Republic or Germany via the southern branch of the Druzbha pipeline faces
three or four sets of tariff charges for shipment, significantly raising its price. Russian exporters currently have limited alternatives to
the pipeline system through Eastern Europe, the most significant transport facility options being the Black Sea ports of Tuapse,
Novorossiysk, and Ozervka.(FN58) In 2000, over half of Russia's oil exports traveled through the Bosporus,(FN59) and its Black Sea
facilities are currently operating above their output capacity, with additional oil from the Caspian Pipeline Consortium further
straining the system.
Russia has seen little new pipeline construction over the last five years.
The most significant project to date has been the Baltic Pipeline System (BPS), connecting Yaroslval to the Baltic port of Primorsk.
Currently, the BPS pumps 240,000 barrels per day (b/d), with an expansion to 360,000 b/d expected by the end of 2003.(FN60)
Transneft recently notified the government of its intention to proceed with the second phase of the BPS upgrade.(FN61) The BPS has
allowed Russia to avoid paying transit fees through Baltic States on the way to the Ventspils facility. However, while reducing
Russia's dependence on the old Eastern European routes, the BPS diverts, rather than expands, Russia's export capacity. Other
relatively minor pipeline projects have aimed to further reduce Russia's dependence on foreign transit providers. The Ukraine bypass
pipeline, for example, has reduced the tariffs faced by Russian oil flows through Ukraine on the way to the Black Sea ports.(FN62)
RUSSIA WILL NEVER MATCH SAUDI ARABIA
QUAYAT, 2003
(David -- Johns Hopkins University School of Advanced International Studies, SAIS Review, "the Russian oil sector and the global oil
economy," Summer/Fall, wilsonselect)
The Russian oil sector and its potential future role in the global oil economy presents an
interesting set of interactions between government and private actors, as well as strategic
considerations. There should be no illusions about Russian potential: Saudi Arabia
will continue to be the dominant player in the global oil market. Russia lacks both
the surge capacity and the export infrastructure to battle Saudi Arabia successfully.
Additionally, Saudi oil will continue to enjoy a comfortable cost and quality
advantage over Russian crude. Yet, this should not prevent Russia from becoming a
more significant player in global oil markets. A number of countries continue to have
concerns about oil source security. Russia presents an excellent opportunity to diversify
that supply. Whether Russia will be able to play that role is a question largely in its own
hands; a little good luck from the markets in terms of higher prices certainly could not
hurt.
OIL DISADS
Consortium 2004
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RUSSIA DISAD – AFF
GENERAL
FOREIGN INVESTMENT IN RUSSIAN OIL IS LOW
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
Investors face obstacles everywhere in the Russian oil business -- not only
in developing new oil fields and pipelines (known as "greenfield" investment), but also
for "brownfield" buyers of existing operations. In the early 1990s, British Petroleum,
one of the first major foreign players in Russia, invested about half a billion dollars in Sidanco and nearly
lost the whole sum when the Russian firm plunged into a Byzantine bankruptcy. Under Putin the tide
seems to be turning. Confidence in Russian institutions is rising, and official statistics (though notoriously
unreliable on the subject) suggest that the outflow of money from Russia has slowed. However, suspicions
of insider dealing and other deterrents to investors remain. For instance, when the Russian government
auctioned its stake in Slavneft in December 2002, every potential foreign bidder was discouraged from
participating in the process. The auction itself lasted only four minutes; one team submitted three of the
four bids, and the winning bid was barely above the reserve price. The low values that open markets
assign to Russian oil companies measure the enormous difficulties that lie ahead in building appropriate
corporate institutions and assuring investors of the safety of their stakes. According to a recent study by
PricewaterhouseCoopers, Western oil assets changed hands in the late 1990s for about $5 per barrel;
Russian assets, on the other hand, traded at less than 20 cents per barrel.
IT COSTS MORE FOR RUSSIA TO PRODUCE OIL THAN OPEC
VICTOR AND VICTOR, 2003
(David – dir of the program on energy and sustainable development at Stanford and sr fellow at the
Council on Foreign Relations, and Nadejda – research associate in the dept of economics at Yale, Foreign
Affairs, "axis of oil?" March/April, l/n)
What holds OPEC together is not merely an ideology of market manipulation
but also the facts that production in OPEC fields is generally inexpensive -few capital assets are idled when a swing supplier cuts back -- and that OPEC
member governments are generally able to exert strong control over
production decisions. In contrast, the structure of the Russian industry
favors exporting at full capacity rather than the on-again, off-again behavior
of a swing supplier. New wells in Russia generally require significant
investment drawn from demanding capital markets, and the tightest
bottleneck for Russian exports is not drilling but the infrastructure of
pipelines and ports needed to get oil to markets. Unlike the seaside Saudis,
the center of today's Russian oil industry is inland in Siberia -- more than two
thousand miles by pipeline to markets in western Europe. Slightly shorter pipes also
carry western Siberian oil to the Black Sea, but then the journey to market continues
at high cost through the narrow and crowded Bosporus. New and expanded routes
to the Adriatic Sea and the Baltic Sea -- as well as new fields and export
pipelines from eastern Siberia to China and ports on the Pacific Ocean -- all require
massive infusions of capital. Once spent, this investment is immobile and
thus creates a strong incentive for firms to pump at full capacity.
OIL DISADS
Consortium 2004
193
RUSSIA DISAD – AFF
GENERAL
Putin encouraging economic diversification
World Markets Analysis 5-27-2k4
<In his earlier speeches, Putin has called for diversification of the economy,
which is badly needed to decrease Russia's vulnerability to external economic
conditions (i.e. oil prices) and to sustain Russia's growth potential in the
long term. In this address, there was no emphasis on this. Banking reform
deserved more attention, as it is closely connected to achieving the important
goals of sustaining economic growth and diversifying the economy. Currently, the
most pressing problem in the domestic sector is not finding worthy investment
projects, but rather finding funding for them. The banking sector reforms need
to be furthered in order to make banks work as intermediaries for channelling
liquidity to credits. >
OIL DISADS
Consortium 2004
194
RUSSIA DISAD – AFF
Saudi/OPEC turn
Increase in Russian oil production is disadvantageous to Saudi and other Mid-East
producers
Morse and Richard, Executive Adviser at Hess Energy Trading Company and was
Deputy Assistant Secretary of State for International Energy Policy and portfolio manager
at Firebird Management, an investment fund active in eastern Europe, Russia, and Central Asia.3/4 2k2
(Edward and James, “The Battle for Energy Dominance,” Foreign Affairs p.ln)
<Russia and the Soviet successor states can easily continue to increase oil
output at this rate for years to come. The victims of that increase, in all
likelihood, will be Saudi Arabia, Kuwait, and other oil producers with state
monopoly companies that disallow foreign investment. The only oil not
threatened by Russia's rise is the petroleum developed by international
companies outside of the key OPEC countries of the Middle East.
The Russian increases have come as a surprise, especially for OPEC. As
recently as 1996, oil output from the post-Soviet states amounted to barely 7
mbd. Many people forgot that Moscow's state-owned enterprises once produced
more than 12.5 mbd before the Soviet collapse -- the largest amount of oil ever
produced by a single country, representing one-fifth of global production. That
sum is one-third more than Saudi Arabia's peak share at the end of 2000.>
OIL DISADS
Consortium 2004
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RUSSIA DISAD – AFF
Link turn
OIL REVENUES UNDERMINE RUSSIA’S ECONOMY
Rumer & Wallander, Senior Fellow, Institute for National Strategic Studies,
& Director of the Russia and Eurasia Program, CSIS, Winter 2003
(Eugene & Celeste, Washington Quarterly, Vol. 27, No. 1, p. 57)
Despite Russia's recent, strong economic growth following a decade of
unprecedented economic contraction in the 1990s, the economy remains weak by all
accounts and precariously dependent on exports of oil, gas, and other raw
materials. Accounting for half of Russian exports, energy resources are not a
reliable source of long-term stability and prosperity for Russian national
income and growth. Oil revenues, although providing a financial lifeline
in the
near term, have reduced incentives for modernizing Russian industry and for
introducing much-needed and long-delayed structural reforms. Far from serving
as the facilitator and financier of economic reform and modernization in Russia,
the energy and other mineral wealth sectors have subsidized the old economic
system and enabled it to coast along. n13
Furthermore, the extent to which Russia can sustain and increase its energy
production is questionable. The wealth is undoubtedly there, but the
uncertainty is whether Russia can sustain levels of production or increase them.
n14 For the most part, Russia has not revised Soviet oil-production methods,
which have resulted in low reserves-to-production ratios, overproduction, and
water encroachment in oil fields. Much of Russia's untapped reserves are found
in regions where the expense and technological requirements of production will
be high. The key to sustaining and potentially increasing production is good
corporate governance and effective public policy that will support the rule of
law and transparency and thus significant foreign investment.
Maintaining and increasing oil production also depends on global energy
prices. New investment in the Russian oil and gas sector, as well as the
infrastructure necessary to bring Russian hydrocarbons to market, is contingent
on the price of oil remaining high. The influx of Western capital and know-how
in the Russian oil sector, as well as further internal improvements in the oil
sector itself, will not cease should the price of oil dip below some benchmark
-- $ 17 or $ 20 per barrel, or some other magical number -- but Russian
assumptions about the country's economic situation as well as aspirations for
future growth, expressed most ambitiously by Putin's May 2003 call for
doubling Russian gross domestic product by 2010, will be jeopardized. n15 An
August 2003 World Bank report on the Russian economy warns that the Russian
government's expectations of growth rates at or above those already achieved in
the past five years "require unrealistically high prices for oil and gas." n16
Similarly, Russia's current ability to escape the effects of "Dutch
disease,"
whereby dependence on high prices of one's commodity exports drives up the value
of the national currency, undermining export competitiveness and thus growth,
stems from the appreciation of the euro against the dollar, which is unlikely to
be a permanent condition. n17 Dependence on commodity exports remains a
structural vulnerability of the Russian economy.
OIL DISADS
Consortium 2004
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SAUDI ARABIA DISAD
1NC SHELL
A. U.S. REDUCTION OF OIL TIPS THE SCALE OF SAUDI OIL PRODUCTION
MORSE AND RICHARD, 2002
(Edward Morse – exec advisor to Hess Energy Trading Company & former depty asst secretary of state for int'l energy policy, &
James Richard – manager at Firebird Management, an investment fund in Eastern Europe, Foreign Affairs, "The Battle for Energy
Dominance," March/April, ln)
It would be more accurate, in sum, to see the common interests of Washington and Riyadh as the
intersection of two large and unwieldy sets of goals. In both countries, the size and value of that
connection have been undergoing serious review since September 11. To the degree that
Washington decides to take action to reduce the U.S. economy's
dependence on oil, it can greatly affect the scale of increased oil production
over the next few decades. It is because of that opportunity that the
Russian challenge to Saudi Arabia has become tremendously important.
B. Cutting off Saudi oil ties results in internal civil wars and economic collapse
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<In a Saudi civil war, the oil fields will be a likely battle site, as
belligerents seek the revenue and international recognition that come with
control of petroleum. For either side to cripple oil production would not be
difficult. The real risk lies not with the onshore oil wells themselves, which
are spread over a 100-by-300 mile area, but in the country's dependence on only
a few critical processing sites. Destruction of these facilities would paralyze
production and take at least six months to repair. If unconventional weapons
such as biological agents were used in the oil fields, production could be
delayed for several more months until workers were convinced it was safe to
return. Stanching the flow of Saudi oil would devastate the United States and much
of the world community. Global demand for oil (especially in Asia) will
increase in the coming decades, while non-Persian Gulf supplies are expected to
diminish. A crisis in the planet's largest oil producer, with reserves
estimated at 25 percent of the world's total, would have a massive and
protracted impact on the price and availability of oil worldwide. As the
disruptions of 1973 and 1979 showed, the mere threat of diminished oil supply
can cause panic buying, national hysteria, gas lines, and infighting. Prices
for oil shot up 400 percent in 1973, 150 percent in 1979, and 50 percent (in
just 15 days) in 1990. The oil shocks of the 1970s threw the United States into
recession, causing spiraling inflation and a decline in savings rates that
plagues the U.S. economy even now. Trillions of dollars were lost worldwide.
And all this occurred at a time when the United States was less dependent on
foreign petroleum than it is now. Cutting the Saudi pipeline today would
cause a severe worldwide recession or depression. Short of physical attack, it
is the gravest threat imaginable to American interests.>
OIL DISADS
Consortium 2004
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SAUDI ARABIA DISAD
1NC SHELL
C. COLLPASE OF THE GLOBAL ECONOMY RISKS MULTIPLE SCENARIOS FOR GLOBAL NUCLEAR WAR
Bearden 2000 (Tom; Lt. Col. U.S. Army – Retired, “The Unnecessary Energy Crisis: How to Solve It Quickly” 6/24
http://www.freerepublic.com/forum/a3aaf97f22e23.htm accessed 8/6/04 wdc/wbw)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the stress on nations will
have increased the intensity and number of their conflicts, to the point where the arsenals of weapons of mass destruction
(WMD) now possessed by some 25 nations, are almost certain to be released. As an example, suppose a starving North Korea
launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or
suppose a desperate China-whose long-range nuclear missiles (some) can reach the United States-attacks Taiwan. In addition to
immediate responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict, escalating
it significantly. Strategic nuclear studies have shown for decades that, under such extreme stress conditions, once a few nukes
are launched, adversaries and potential adversaries are then compelled to launch on perception of preparations by one's
adversary. The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without effective
defense, the only chance a nation has to survive at all is to launch immediate full-bore pre-emptive strikes and try to take out its
perceived foes as rapidly and massively as possible. As the studies showed, rapid escalation to full WMD exchange occurs.
Today, a great percent of the WMD arsenals that will be unleashed, are already on site within the United States itself. The resulting
great Armageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for many decades.
OIL DISADS
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SAUDI ARABIA DISAD
Uniqueness: Oil Demand Up
GLOBAL OIL DEMAND IS UP – JAPAN, BRAZIL AND MIDDLE EAST COUNTRIES PROVE
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<An economic recovery is underway in Japan, where economists estimate GDP grew
by 2.3% in 2003 and expect it to grow at that rate again in 2004. This reversal
comes after two years of stagnation. Furthermore, the nuclear crisis there that
boosted oil demand in 2003 has not yet been completely resolved. GDP revivals
are likely boosting oil demand in Argentina and Brazil, enhancing the prospects
for the entire Latin American region outside of Venezuela. With rising cash
flows from oil sales, oil consumption in the Middle East seems to also be
growing robustly. In our view, the potential for demand upgrades in the non-OECD
countries looks good. Downgrades to these forecasts could come from lower GDP,
higher average oil prices, or the potential for atypical events (like a warm
winter) to lower demand rather than increase it.>
US/CHINESE OIL DEMAND INCREASING
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<We look for demand to grow 1.5mmb/d in 2004 and 1.6mmb/d in
2005, driven mainly by higher global GDP growth. The consensus estimate for
global GDP growth in 2004 is 4.2% (and 4.5% for Deutsche Bank), following a 3.3%
rise in 2003. The current consensus for 2005 is 3.8% (DB ). The average rate of
global GDP growth calculated using IMF data over 1998-2003 was about 3.2% per
year. In view of the above-average growth, and the potential for some of the
"unusual" factors of 2003 to persist into 2004, we see upside risk to our 2004
oil demand projection, especially given that China and the US are both expanding
at the same time. The US accounts for about one quarter of the world's oil use,
and despite the occasional impacts from fuel switching and weather, growth in
oil is still largely determined by GDP.>
AMERICAN OIL DEMAND WILL RISE THROUGH 2K5
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<A year ago, the consensus forecast for 2004 GDP growth in the US was 3.6% and
now stands at 4.6%, and 5.2% from DB. If achieved, this GDP would exceed the
robust 4.3% rate achieved in 1997-1999 when oil demand growths averaged 400kb/d
annually. In 2004, we expect US oil demand to climb to 20.4mmb/d, or a similar
370kb/d (EIA 440kb/d), and we expect at least 360kb/d growth in 2005, or less
than the EIA's 480kb/d on rising transportation and industrial use. >
OIL DISADS
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SAUDI ARABIA DISAD
I/L: High Oil Prices Key to Econ
HIGH OIL PRICES ARE KEY TO THE SAUDI ECONOMY
QUINN, 2004
(Eamon, staff, Sunday Business Post, "more oil price blues ahead," July 18, l/n)
Continued strong demand and slowing Russian production means the Organisation of
Petroleum Exporting Countries (Opec), and in particular Saudi, will yet again have to take up
the slack.'' The brokers said that the new capacity constraints spelled good news for investors in oil stocks. There was a
very low'' probability of oil falling to $ 25 a barrel, because Saudi Arabia now
needed a high oil price to service its burgeoning budget deficit, according to the analysts.
SAUDI ARABIAN ECONOMY IS DEPENDENT ON OIL PRICES
McCARTHY, 2004
(John, staff, Florida Today, "Saudis must get tough on terror," June 18, l/n)
If the Saudi government didn't have incentive to do that before, they do now. The stated goal of the
terrorists is to drive all Westerners out of the region. And the State Department has recommended all
25,000 Americans there leave Saudi Arabia. But the Saudi economy is almost totally
dependent on the export of oil. And the Saudi oil industry is dependent on
foreign workers. If foreigners were to pull out, it is unlikely the nation
would be able to continue to export oil in any sizeable amounts, experts say.
SAUDI ARABIAN ECONOMY IS DEPENDENT ON OIL PRICES
Middle East Review World of Information, Sept. 28, 2000 (l/n)
Saudi Arabia's rapid economic development since the 1950s is entirely due
to its vast hydrocarbon resources - it has one-quarter of the world's proven oil
reserves. Oil accounts for around 90 per cent of the country's exports and threequarters of the government's revenues. Oil revenues have funded major
infrastructure developments and the modernisation of the country's cities,
but this dependency means that the economy is vulnerable to falls in the
price of oil.
THE SAUDI's BENEFIT FROM HIGH OIL PRICES – THEY CHECK THE OUTPUT
FROM OTHER OIL-PRODUCING NATIONS
ENERGY, 2004
("OPEC still declining," January 1, l/n)
Saudi oil export revenues are projected to decline by 14 percent during 2004, to $ 70 billion, compared to $ 81 billion earned in 2003.
Saudi Arabia benefited both from higher world oil
prices as well as from its ability to increase production and exports sharply and
rapidly, due to the country's large spare production capacity. As a result, Saudi
Arabia was able to make up for lost production from Venezuela, Iraq, and Nigeria
as well as to reap higher revenues. During 2004, Saudi Arabia will likely cut back its production as the year
During the Iraq war starting in March 2003,
progresses in order to help keep oil prices at desired levels.
OIL DISADS
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SAUDI ARABIA DISAD
I/L: Low Oil Prices Cause Instability
PLUMMETING OIL PRICES RISKS MASSIVE POLITICAL INSTABILITY IN
SAUDI ARABIA
GAUSE, 2000
(Gregory – prof of political science at Univ of Vermont, Foreign Affairs, "Saudi Arabia: Over a Barrel," May/June, l/n)
More ominously, a recurrence of serious fiscal problems could spur a
political crisis in Saudi Arabia. Fiscal crises impose on governments the sort
of hard choices that can split a ruling elite. With the issue of succession to King Fahd
settled in favor of Abdallah, the Saudi elite remained united during the difficult year of 1998. If the
next oil price decline coincides with the more difficult succession question
of the future -- how to move from the generation of the sons of the kingdom's founder, Abd al-Aziz,
to the generation of his grandsons -- oil and economic policy could become enmeshed
with struggles for power within the al-Saud family. That generational shift might not
come for a decade or more, but a fiscal crisis would certainly exacerbate the
underlying tensions in the ruling family. Family factions would then look to
mobilize those already discontented due to hard economic times. Serious
political instability in the world's biggest oil exporter would be at hand. That
prospect is reason enough for the United States to urge its friends in Riyadh to get their house in order.
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LOW OIL PRICES PUT SAUDI POLITICAL STABILITY AT RISK
BRONSON, 2001
(Rachel – fellow for national security studies at the council on foreign relations, Orbis, "beyond containment in the Persian Gulf,"
march 22, ln)
Difficulties are compounded by the instability of the oil markets. When oil
prices were low in 1998, GCC economies grew by just 1.2 percent. While the
International Monetary Fund (IMF) predicts the global growth rate in 2000 to be 4.8 percent, Saudi Arabia
is expected to grow by 3.5 percent, and other studies predict that growth in almost all Gulf states will fall
below the world average. [7] Perhaps most tellingly, Saudi Arabia's per capita gross domestic product
dropped from $ 15,500 in 1980 ($ 2,500 more than the U.S. figure that year) to $ 6,600 in 1998 ($
25,000 less than in the United States). [8] Attracting foreign direct investment (FDI) is a
priority for all of the GCC states, which need capital to fund crucial
infrastructure projects. [9] Over the past twenty-five years, Saudi Arabia has drawn only $ 5
billion in foreign capital, although $ 139 billion was available worldwide in 1999 alone. [10] A more
transparent economic and legal system would help both to encourage FDI and to end the drain on money
kept outside the Gulf. According to the World Bank, GCC nationals hold between $ 150 billion and $ 200
billion abroad, while other analysts put this number closer to $ 500 billion. [11] In addition, the large
foreign labor pool remits approximately $ 20 billion per year. [12] Although Gulf states are now reviewing
and redrawing domestic laws governing investment, accounting, and adjudication, experts believe the
changes are not happening fast enough. For example, Saudi Arabia is opening its multibillion-dollar energy
sector, but is unlikely to hit its year-end target for signing memoranda of understanding with big oil firms.
[13] Kuwait's privatization efforts remain mired in parliament. Beyond the problems of weak growth and
a shortage of capital, the training Gulf college graduates currently receive is not keeping up with the
needs of business. As a result, although unemployment is increasing, firms in the region are hiring
thousands of skilled foreign nationals. Each state is now trying to strike a balance between religious
training and professional skills, and between traditional rote methods and creative thinking. The GCC
recently began encouraging the development of a labor exchange that links training and educational
programs throughout the region, and each state has offered incentives to hire local nationals. [14] Saudi
Arabia, for instance, has set up a fund to assist, share costs, and give loans to private firms that train and
employ Saudis. [15] But training costs are high, and companies are reluctant to invest time and money in
employees who are often poached by rival firms. The difficulties are compounded by cultural expectations
that make it difficult for a firm to fire a natio nal. Oman provides a good example of the region's
problems: although the total expatriate labor force declined in 1998 by 2.3 percent, the number of Omani
citizens employed by the public sector increased by 2.6 percent. [16] To be sure, Gulf states have taken
steps to address some problems. Governments are using the windfalls created by high oil prices to pay
down external debt and correct structural weaknesses rather than provide free social services and support
inefficient industries, as in the past. [17] But as sluggish economic forecasts and weak
job growth indicate, the greatest structural flaw of all has yet to be tackled.
The local economies (with the notable exception of the UAE) remain
undiversified and excessively vulnerable to fluctuations in the price of oil.
Their attractive short-term prospects rely on a tenuous and by most
estimates unsustainable revenue stream.
New Opposition
It is difficult to predict exactly how the frustration generated by structural inefficiencies will manifest itself,
but Gulf leaders are justifiably worried. Senior Saudi planners and members of the
royal family have even identified economic problems as a chief national
security problem.
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LOW OIL REVENUES COULD WRECK THE SAUDI ECONOMY, RISKING A
CIVIL WAR
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "saving America from the coming civil wars," Jan/Feb., l/n)
if the kingdom
succumbs to civil war, the outcome will be catastrophic not just for the
United States but for the world. A country built on contradictions, Saudi Arabia is
extremely vulnerable to internal war. The same factors that have kept its
regime in power -- the oil economy, the military, Islam, the royal family -- could now
fuel an insurrection. Meanwhile, global dependence on Saudi oil will only increase in coming years,
AS LIKELY as is conflict in Mexico, there is even less hope for Saudi Arabia -- and
making an interruption in its flow even more dangerous. Fabulous oil wealth has been a mixed blessing
for Saudi Arabia. Oil has spared the Saudi government from the need to tax its citizens; as a result, the
regime has never learned to convince its subjects to sacrifice for the good of the state (nor have the
citizens learned to weather privation). The timid Saudi government must constantly buy the people's
loyalty with material comforts. That might not have become a problem had oil prices not begun to drop in
the 1980s. Saudi Arabia's per capita GDP plunged from $ 17,000 early in that decade to around $ 7,000
today. Unemployment among high school and university graduates rose to an alarming 25 percent.
Struggling to cope with these problems, the government has incurred large deficits since 1983.
Meanwhile, the estimated $ 65 billion it spent on the Gulf War only exacerbated matters. But as long as
the royal family continues to benefit from government spending by receiving lavish kickbacks from foreign
contractors, there seems little hope of major cuts in expenditures. Rather than reduce its reliance on oil,
in the face of increased expenses the Saudi economy has become more and more dependent on it, even
as oil revenues plummet (oil export earnings are expected to shrink from $ 43 billion in 1997 to just over
$ 29 billion in 1998). The government thinks that the damage done to the economy by failing to raise
taxes or make major spending cuts is less dangerous than the alternative, which might alienate large
portions of the population. But if the economy continues to deteriorate, the
government will have to make hard choices that could rock the Saudi state.
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OIL IS KEY TO THE SAUDI ECONOMY
MIHAILESCU, 2004
(Andrea, staff, United Press International, "Saudi Arabia minimizes dependence on oil," Aug 19, ln)
The Saudi oil sector represents 80 percent of the country's budget revenue,
generating massive profits, according to Russia's Finansovyye Izvestiya. For instance, the
prime cost of extracting oil from the Shaybah field costs approximately $1 per barrel and it costs around
$4 per barrel to ship oil from Saudi Arabia to the United States. The field extracts some 600,000 barrels of
oil per day; Saudi annual income can be roughly computed to approximately $4 billion. Meanwhile, a
skilled worker at the field earns around $15,000 per month, according to Russia's Finansovyye Izvestiya.
LOW OIL PRICES TRASH THE SAUDI ECONOMY, RIPENING IT FOR CIVIL UNREST
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
Sustained low oil prices also mean tremors in the Persian Gulf -- the site of a fundamental U.S. military
commitment. The longer oil prices droop, the more daunting the political, social,
and economic challenges that the Gulf countries will face. Social unrest
already bubbles under the surface in most Gulf countries, and succession
crises may erupt as a generation of aging leaders passes. Populations in the region
are swelling at a rate of 4 percent or more per year -- a pattern that foreshadows the worsening
demographic bulges caused by large populations under the age of 25 throughout the Gulf. Already, half of
the Gulf's inhabitants are under 15 years old, portending daunting problems in education and employment
as well as increased strains on local infrastructure and resources such as food, water, health, and electric
power. Per capita incomes have plummeted; in Saudi Arabia, for example, real per capita GDP fell from $
11,450 in 1984 to $ 6,725 a decade later. And oil is no panacea. Since 1982, Saudi Arabia has gone from
$ 140 billion in surplus revenues to run up a national debt of almost $ 130 billion. As the Gulf's
economies shrink, jobs are becoming an increasingly critical problem. In the
ten largest Saudi cities, for example, unemployment is socking the middle
classes, and about 20 -- 30 percent of Saudis lack jobs. Broad cultural and
demographic shifts do not help, either. Many countries, especially Saudi Arabia, now
have a large, idle class of students, some favoring religious study. If
employment opportunities in the kingdom remain bleak, Riyadh could lose
its ability to co-opt this expanding younger generation, which could become
a major constituency for Islamist opposition movements.
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SAUDI ARABIA WATCHES OIL PRICES CLOSELY
CAREY et al., 2004
(Glen, staff, Platt's Oilgram News, "Naimi says new Saudi fear is flooded market," June 3, l/n)
The Saudi minister said last month Riyadh was prepared to raise output to its full capacity of 10.5-mil b/d if its customers needed
more oil. Naimi did not repeat that pledge in the same manner June 2, saying instead he feared saturating the market. "The kingdom
currently has spare capacity of around 2-mil b/d and we have absolutely no objection and we are absolutely ready to raise the
kingdom's production. But our main fear is flooding the market. We have to be wary of [this] because this is what happened in 199899," Naimi said. "The kingdom of Saudi Arabia, together with producers inside and outside OPEC, is working together to guarantee
there are sufficient supplies of oil on the market. But at the same time, we want to avoid oversupply which could lead to the market
collapsing." "We need to reduce this perception of a potential shortage in the market...Eventually people will see that fundamentals
Saudi Arabia and other cartel members
were all watching oil prices carefully, he said. "I can assure you the kingdom, and all
OPEC members, are concerned by the oil price issue.
are in balance and that prices will hopefully stabilize," Naimi said.
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OIL FLUCTUATIONS DRASTICALLY AFFECT SAUDI ECONOMY
BAER, 2003
(Robert – former agent in the CIA, Atlantic Monthly, "The fall of the House of Saud," May, wilsonselect)
The functioning of the world's most advanced welfare state is influenced
overwhelmingly by fluctuations in the price of oil. In 1981, when the entire kingdom was in effect being
put on the dole, oil was selling at nearly $40 a barrel, and the annual per capita income was $28,600. A decade later, just before Iraq
invaded Kuwait, refiners were able to buy oil for about $15 a barrel. The Gulf War sent prices back up to about $36 a barrel before
they quickly fell. Today a barrel of oil once again fetches around $40, but twenty years' worth of inflation, combined with a population
Because roughly 85 percent of Saudi
Arabia's total revenues are oil-based, every dollar increase in the price of a barrel of
oil means a gain of about $3 billion to the Saudi treasury. In the early 1980s the kingdom boasted
explosion, has brought per capita income down to below $7,000.
cash reserves on the order of $120 billion; today the figure is estimated to be $21 billion.
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SAUDIA ARABIA IS A KEY OIL SUPPLIER TO THE U.S.
LeBLOND, 2004
(Doris, staff, Oil & Gas Journal, "international oil summit addresses high oil prices," May 24, ln)
One political view was expressed by Petrostrategies Director Pierre Terzian, who
pointed to the tensions between the US and its major supplier, Saudi Arabia
-- which already has started diversifying its oil partnership base away from the US -- and to the fact that
"Washington's opinion no longer has much impact within OPEC" because of the Bush administration's
"unreserved support" for Israel's Ariel Sharon.
SAUDI ARABIA IS A KEY OIL SUPPLIER TO THE U.S.
ECONOMIC NEWS, 2004
("share of import in US oil processing increased to 62.9%," Jan. 5, l/n)
Saudi Arabia was the key oil supplier to the US in 2003. This country
supplied to America on average 1,76 million barrels per day. Then follows Mexico
(1,57 million barrels per day), Canada (1,53 million barrels) and Venezuela (1,16 million barrels). K2Kapital Company reported on it.
U.S. DEMAND IS THE LINCHPIN OF THE SAUDI OIL ECONOMY
MORSE AND RICHARD, 2002
(Edward Morse – exec advisor to Hess Energy Trading Company & former depty asst secretary of state for int'l energy policy, &
James Richard – manager at Firebird Management, an investment fund in Eastern Europe, Foreign Affairs, "The Battle for Energy
Dominance," March/April, ln)
One of the hidden aspects of the relationship is the Saudi dependence on the United States for
providing an expanding market. Although Asian demand for oil is expected to grow
dramatically in coming decades, no other economy rivals that of the United States for the
growth of its oil imports. Over the past decade, the increase in the U.S. share of the oil
market, in terms of trade, was higher than the total oil consumption in any other country,
save Japan and China. The U.S. increase in imports accounts for more than a third of the total
increase in oil trade and more than half of the total increase in OPEC's production during the
1990s. This fact, together with the fall in U.S. oil production, means that the United States will
remain the single most important force in the oil market. The hope of Saudi Arabia and OPEC
for an increased market and for greater market share is uniquely dependent on growth in U.S.
demand. Hence it is not for security alone that Riyadh depends on the United States but for
the very economic basis of the Saudi regime, which relies almost entirely on oil for revenue.
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SAUDI ARABIA IS KEY TO GLOBAL OIL MARKETS
MORSE AND RICHARD, 2002
(Edward Morse – exec advisor to Hess Energy Trading Company & former depty asst secretary of state for int'l energy policy, &
James Richard – manager at Firebird Management, an investment fund in Eastern Europe, Foreign Affairs, "The Battle for Energy
Dominance," March/April, ln)
RIYADH'S RELATIONS with Washington are much more complex than they appear on the surface, because
they involve unspoken understandings and a number of useful fictions. September 11 has complicated
these understandings, because the publics in both countries are suspicious of the cooperation between the
two governments. Washington recognizes Saudi Arabia's critical role in the global
oil sector, especially Riyadh's price moderation. Saudi Arabia, in turn, plays
its Washington cards diligently. The kingdom has protected its position as
the top U.S. supplier. Today, Saudi Arabia supplies around 1.7 mbd of the
roughly 10 mbd imported into the United States -- a market share higher
than that of any competitor. The kingdom maintains this share to show how important Saudi
supplies are to the United States. The Saudi leadership can thus ensure that Washington will help defend
Saudi Arabia, which means not only the defense of the kingdom's oil fields and territorial integrity but the
defense of the House of Saud.
SAUDI ARABIA IS VITAL FOR THE GLOBAL FLOW OF OIL – THEY HAVE MORE
RESOURCES AND ARE ABLE TO INFLUENCE THE OIL PRICE
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
Surely all this investment and discovery prove that the Saudis are ever less important to the oil market
these days? Nonsense. Ignore the headlines and look instead at geological and market realities, and it
quickly becomes clear that Saudi Arabia remains the indispensable nation of oil. The
Saudis not only export more oil than anyone else, but they also have more
reserves than anyone else—by a long shot. Fully one-quarter of the world's
proven reserves lie in Saudi Arabia. Four neighbours—Iran, Iraq, the United Arab Emirates
and Kuwait—each have about one-tenth. Russia, Nigeria and Alaska put together do not match Saudi
reserves. Even more important is Saudi Arabia's role as swing producer. Unlike other countries, the
Saudis keep several million barrels per day (bpd) of idle capacity on hand
for emergencies. Today Saudi Arabia is the only country with much spare
capacity available (see chart 1), though the precise amount is a matter of intense debate. Nansen
Saleri, an official at Saudi Aramco, the country's state-owned oil company, will say only that Saudi output
will rise in June to about 9m bpd, and that the country can raise its output above 10m bpd "rapidly".
This spare capacity allows the Saudis to moderate oil-price spikes. They
have done precisely this at various times: during the Iran-Iraq war, when output from
both countries was disrupted; during and after the first Gulf war, when output from Iraq and Kuwait was
lost; and last year, when civil strife in Venezuela and Nigeria curbed output from both countries on the eve
of last year's invasion of Iraq (which itself disrupted Iraqi output).
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SAUDI ARABIA IS A KEY OIL SUPPLIER WITH PROVEN RESERVES
BAHGAT, 2003
(Gawdat – director of the Center for Middle Eastern Studies, Department of Political Science, at Indiana University of
Pennsylvania, World Affairs, "Oil and Militant Islam," January 1, EbscoHost)
With approximately 261 billion barrels of proven oil reserves (more than one-fourth
of the world total) and up to 1 trillion barrels of ultimately recoverable oil, Saudi
Arabia is the world's leading producer and exporter.(n5) In addition to this enormous
oil reserve, Riyadh's cost of production is one of the lowest in the world--less than
$1.50 per barrel, whereas the global average cost is about $5, and much higher in
some places. Also, Saudi Arabia has a great advantage when it comes to adding new reserves or increasing production
capacity. According to the Saudi oil minister, Ali al-Naimi, it costs the kingdom less than ten cents a
barrel to discover new reserves; the cost in some other areas of the world can be as
high as $4 per barrel.(n6)
SAUDI ARABIA IS KEY TO THE GLOBAL OIL MARKET
BAER, 2003
(Robert – former agent in the CIA, Atlantic Monthly, "The fall of the House of Saud," May, wilsonselect)
Promoters of Alaskan, Mexican Gulf, Caspian, and Siberian oil all like to point out that the United States has been weaning itself from
Saudi Arabian oil, for protection against the effects of just such an attack on the Saudi oil system. Saudi Arabia may sit on 25 percent
of the world's known oil reserves, they argue, but it provides somewhere around 18 percent of the crude oil consumed by the United
Saudi Arabia has the
world's only important surplus production capacity--two million barrels a day. This
keeps the world market liquid. Not only that, but because the Saudis more or less
determine the price of oil globally by deciding how much oil to produce, even
countries that don't buy Saudi oil would be vulnerable if the flow of that oil were
disrupted.
States--and that is down from 28 percent in only a decade. What these people fail to mention is that
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SAUDI ARABIA IS KEY TO THE GLOBAL OIL MARKET
BAHGAT, 2003
(Gawdat – dir of the Center of Middle Eastern Studies at Indiana Univ in Pennsylvania, Orbis, "The new geopolitics of oil," summer,
EbscoHost)
Saudi Arabia, like other large Persian Gulf oil producers, is a very small oil
consumer. Non-Persian Gulf producers such as the United States and Russia consume either all or a large portion of their
production. This gives the kingdom extra weight in global oil trade. Third, unlike Russia, which is moving toward privatization, the
kingdom has a nationalized oil industry, with the government exercising full control
and ownership of all the country's oil fields. Fourth, Saudi Arabia has free access to the
sea. Its export pipeline infrastructure is extremely well developed, linking crude fields with
marine export terminals and loading platforms on the Persian Gulf and the Red Sea. Fifth, most of the world's spare
productive capacity is located in Saudi Arabia. This is an important strategic asset
for the kingdom: whenever a sudden interruption of supplies occurs, the kingdom
can fill the gap in a very short time. This serves as an insurance policy against temporary shortages in world oil
supplies. All these characteristics of the Saudi oil industry taken together make the
kingdom one of the most important players, if not the most important, in the global
oil market. The United States therefore has a strong and continuing interest in securing
Saudi cooperation on the non-interruption of its oil supplies and stability of oil
prices.
Second,
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SAUDI ECONOMY RELIES ON OIL REVENUE WHICH IS KEY TO PREVENT
POLITICAL INSTABILITY
NEIL, 2002
(Andrew, staff, Scotland on Sunday, "Hostages to Fortune," April 7, ln)
But the Achilles heel of any potential Opec conspiracy to hike oil prices to levels that might threaten world
economic stability is that paradox, Saudi Arabia, sitting astride 25 per cent of the world's known oil
reserves, with probably more at its command should it ever stir itself to fresh exploration efforts . The
Saudis may foment anti-Americanism in the region and bankroll terrorism while publicly posturing as
America's ally; but its freedom to strong arm the US by using the oil threat is
undermined by a greater realpolitic: the survival of its corrupt, despotic
regime. Saudi attempts since the 1970s to build a diversified economy from
the fat profits of higher oil process have failed miserably. If anything, its
royal family is even more heavily in hock to an uninterrupted stream of oil
revenues to keep revolution, always a risk, at bay now than it was then. Put
simply, the Saudis need the oil revenues more than America needs the oil.
With 30 years of accumulated oil revenues invested in global markets, the
last thing Saudi princes want to see is global recession and a collapse in the
value of their share portfolios. Oil revenues account for 70 per cent of Saudi
income, spent mostly on the 21st-century's equivalent of Julius Caesar's
beer and circuses: free housing, water, worthless, prejudiced, anti-Western
education, subsidised desert crops and pointless construction projects. Any
glitch in this would spell doom for the ruling family.
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FAILED ECONOMIC REFORMS IN SAUDI ARABIA RISK INSURRECTION
POLLACK, 2003
(Kenneth -- Director of Research at the Saban Center for Middle East Policy at the
Brookings Institution, Foreign Affairs, "Securing the Gulf," July/Aug, l/n)
Terrorism and internal instability in the Persian Gulf are ultimately fueled by
the political, economic, and social stagnation of the local Arab states. It is true
that American policies anger many Arabs and that the Palestinian issue is a matter of great popular
concern. But these are not really what creates fertile ground for domestic insurrection or the recruitment
efforts of radical Islamist groups such as al Qaeda. What is more important is that too many Arabs
are unemployed or underemployed because of the utter failure of their
economic systems. Too many feel powerless and humiliated by despotic governments that do less
and less for them while preventing them from having any say in their own governance. And too many feel
both threatened and stifled within a society that cannot come to grips with modernity. Most Middle East
experts think that a revolution or civil war in any of the GCC states within the next few years is unlikely,
but few say so now as confidently as they once did. In fact, even the Persian Gulf regimes
themselves are increasingly fearful of their mounting internal turmoil,
something that has prompted all of them to announce democratic and
economic reform packages at some point during the last ten years. From Crown
Prince Abdullah of Saudi Arabia to the emir of Qatar to the new king of Bahrain, the
Persian Gulf rulers recognize the pressure building among their populations
and the need to let off some of the steam. If the reforms do not succeed and
revolution or civil war ensues, the United States might face some very
difficult security challenges. Widespread unrest in Saudi Arabia, for
example, would threaten Saudi oil exports just as surely as an Iranian invasion.
OIL INSTABILITY TRIGGERS POLITICAL INSTABILITY
SAMUELSON, 2004
(Robert, staff, Newsweek, "The cartel we love to hate," Feb. 23, l/n)
It's this roller coaster that OPEC wants to avoid. Low prices deprive producer
governments of their biggest source of money and, thereby, threaten their existence.
Oil instability promotes political instability, which may cause more oil instability.
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OIL EARNINGS ARE KEY TO QUIESCE RADICAL MOVEMENTS
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
Distributing economic spoils has been a major vehicle for the Gulf regimes to sustain
their power base and legitimacy. In some Gulf countries, as many as 90 percent of
the labor force work in government jobs. Political critics and potential opposition
leaders are frequently bought off through subsidies, high offices, or other tokens of
wealth and status. The regimes also build religious centers, medical facilities, and
other services to placate the disgruntled. But economic stagnation has already
strengthened local resentment over official corruption and greed and has widened
disparities between rich and poor. Without healthy oil revenues to buy off
restive populations, the Gulf leaders will be left with only repression to
silence foes and quell public discontent, which could fuel even more violent
opposition. Radicalized local populations could also threaten the Middle East peace
process; disgruntled Gulf states might be tempted to placate Islamist movements by
funding the terrorists of Hamas, for instance.
DETIORATING ECONOMY CAN TRIGGER MULTIPLE CAUSES OF SAUDI
CIVIL WAR
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "saving America from the coming civil wars," Jan/Feb., l/n)
As the above suggests,
Saudi Arabia suffers from the fact that the various threats to
domestic peace all reinforce one another. The bad economy intensifies religious
extremism, which in turn exacerbates divisions in the armed forces. The catalyst for
civil war can therefore come from one of several different sources. A power struggle
in the royal family over succession to the throne, squabbles over shares of an evershrinking economic pie, or disenchantment in the military with the royal family's
selfish behavior could all set off a major conflagration.
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SAUDI INSTABILITY CAN IGNITE A GLOBAL RECESSION
MORITSUGU, 2004
(Ken, staff, Courier Mail, "fine line to tread at OPEC," June 4, l/n)
As the only country with significant spare production capacity, Saudi Arabia
alone can offset any cutoff in supply elsewhere. If Saudi production were
lost, no country could fill the gap. "The market is fearing its worst fears,"
said Joseph Stanislaw, the president of Cambridge Energy Research Associates in the US. "If
something happens in Saudi Arabia, there's nothing to make up for it." That
fear has added $US6 to $US8 to the price of a barrel of oil, many analysts think. Others put the premium
in the $US3 to $US5 range. A successful attack on Saudi facilities would push up
prices even further, threatening the US and global economic recovery. That is
bad news from OPEC's point of view, too, because recessions reduce the demand for oil.
COLLAPSE OF SAUDI OIL PRODUCTION WILL TRIGGER A GLOBAL DEPRESSION
POLLACK, 2003
(Kenneth -- Director of Research at the Saban Center for Middle East Policy at the
Brookings Institution, Foreign Affairs, "Securing the Gulf," July/Aug, l/n)
America's primary interest in the Persian Gulf lies in ensuring the free and stable flow of oil from the
region to the world at large. This fact has nothing to do with the conspiracy theories leveled against the
Bush administration during the run-up to the recent war. U.S. interests do not center on whether gas is $2
or $3 at the pump, or whether Exxon gets contracts instead of Lukoil or Total. Nor do they depend on the
amount of oil that the United States itself imports from the Persian Gulf or anywhere else. The reason
the United States has a legitimate and critical interest in seeing that Persian
Gulf oil continues to flow copiously and relatively cheaply is simply that the
global economy built over the last 50 years rests on a foundation of
inexpensive, plentiful oil, and if that foundation were removed, the global
economy would collapse. Today, roughly 25 percent of the world's oil
production comes from the Persian Gulf, with Saudi Arabia alone
responsible for roughly 15 percent -- a figure expected to increase rather than
decrease in the future. The Persian Gulf region has as much as two-thirds of the
world's proven oil reserves, and its oil is absurdly economical to produce,
with a barrel from Saudi Arabia costing anywhere from a fifth to a tenth of
the price of a barrel from Russia. Saudi Arabia is not only the world's largest
oil producer and the holder of the world's largest oil reserves, but it also has a
majority of the world's excess production capacity, which the Saudis use to stabilize and control the price
of oil by increasing or decreasing production as needed. Because of the importance of both
Saudi production and Saudi slack capacity, the sudden loss of the Saudi oil
network would paralyze the global economy, probably causing a global
downturn at least as devastating as the Great Depression of the 1930s, if
not worse. So the fact that the United States does not import most of its oil from the Persian Gulf is
irrelevant: if Saudi oil production were to vanish, the price of oil in general would shoot through the
ceiling, destroying the American economy along with everybody else's.
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SAUDI ARABIA DISAD
Impact Extensions: Instability Causes Depression
SAUDI ARABIA NEEDS OIL REVENUE TO PREVENT A CIVIL WAR
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
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 shortterm disruptions. The 1991 Gulf War demonstrated the West's capacity to defend important oil
Neither, frankly, is Washington.
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.
A REVOLUTION IN SAUDI ARABIA WILL CRUSH THE GLOBAL ECONOMY
BAER, 2003
(Robert – former agent in the CIA, Atlantic Monthly, "The fall of the House of Saud," May, wilsonselect)
Not all the wishing in the world will change the basic reality of the situation.
* Saudi Arabia controls the largest share of the world's oil and serves as the market
regulator for the global petroleum industry.
* No country consumes more oil, and is more dependent on Saudi oil, than the United States.
* The United States and the rest of the industrialized world are therefore absolutely dependent on Saudi Arabia's oil reserves, and will
be for decades to come.
* If the Saudi oil spigot is shut off, by terrorism or by political revolution, the effect on the
global economy, and particularly on the economy of the United States, will be
devastating.
SAUDI POLITICAL INSTABILITY WILL DEVASTATE THE GLOBAL ECONOMY
COHEN, 2003
(Ariel – Heritage Foundation, Washington Times, "energy security at risk," May 23, l/n)
Al Qaeda's recent attacks in Riyadh, Saudi Arabia, and the closure of the U.S. Embassy
there, have exposed the weaknesses of the kingdom's security apparatus.
These developments also further one of Osama bin Laden's goals to drive the "infidels" from the "Land of
the Two Mosques" and topple the monarchy. Clearly, the global economy and the United
States are at risk. If the Saudi regime falters, if the kingdom's vast oil
infrastructure is damaged, or if a prolonged civil war erupts, oil prices are
likely to skyrocket. A deep economic recession would be triggered by the
high cost of energy, with devastating consequences, particularly in an election
season. The United States must draw the obvious conclusions and take precautions, and it has to act now.
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Impact Extensions: Instability Causes Depression
SAUDI POLITICAL INSTABILITY WILL TRIGGER MASSIVE OIL SHOCKS
COGGAN, 2004
(Philip, staff, Financial Times, "the short view," July 2, ln)
Although oil prices are well below their 1970s levels in real terms, it is not
difficult to imagine them returning to such peaks, at least in the short term,
should the Saudi Arabian regime collapse. That would be a real "oil shock"
for the global economy.
SAUDI CIVIL WAR WILL CAUSE A GLOBAL RECESSION
ROBERTS, 2004
(Paul – author of The End of Oil, Fresh Air, May 6, l/n)
Well, it depends how quickly that happens. I mean, there are essentially two scenarios to move into a
post-oil order. The first is the real nasty one. That's where a country like Saudi Arabia or
falls into civil war, and all of a sudden you have, in the case of Saudi
Arabia, you know, eight million barrels of oil of daily production taken off the
market. And it's chaos, it's oil price spikes, it's recession, and we're forced to cut
Venezuela
back our oil use and to rapidly develop alternatives, you know, which means you'd get the quickest energy
source you could, which in this country would be coal. And that would be disastrous for our efforts to keep
climate from changing. So that's the bad scenario.
SAUDI CIVIL WAR WILL CAUSE A GLOBAL DEPRESSION
SAMPSON, 2004
(Anthony, staff, Daily Mail, "forge Iraq, this is the real threat," June 1, ln)
The Saudis, with much American help, have responded by massively increasing the
military defences of their oilfields, with between 20,000 and 30,000 troops and security
guards. But the loyalty of these guards has become much less certain in
recent months, to the extent that the prospect of a civil war in Saudi Arabia
is no longer altogether fanciful; nor would the result of such a war be
predictable. A fundamentalist victory in Saudi Arabia would provide a
greater challenge to Western security than either Iraq or Afghanistan, for it
could create an energy crisis which would damage the world economy. The
Western consuming countries are normally not worried about radical governments taking power in oilproducing countries, because even rogue states have to sell their oil to pay for their ambitious plans. But
if the fundamentalists were eventually to take control of Saudi Arabia, they would not feel the same
necessity. They have always said that the oil wealth has corrupted their
country and the austere Islamic faith on which the kingdom was founded.
They would be glad to reduce their oil exports to punish the West, and to
revert to a simpler way of life.
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Impact Extensions: Instability Causes Depression
A SAUDI CIVIL WAR WILL TRIGGER A GLOBAL DEPRESSION
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "Saving America from the Coming Civil Wars," Jan/Feb, ln)
Saudi Arabia suffers from the fact that the various threats
to domestic peace all reinforce one another. The bad economy intensifies
religious extremism, which in turn exacerbates divisions in the armed
forces. The catalyst for civil war can therefore come from one of several
different sources. A power struggle in the royal family over succession to
the throne, squabbles over shares of an ever-shrinking economic pie, or
disenchantment in the military with the royal family's selfish behavior could
all set off a major conflagration. In a Saudi civil war, the oil fields will be a
likely battle site, as belligerents seek the revenue and international
recognition that come with control of petroleum. For either side to cripple
oil production would not be difficult. The real risk lies not with the onshore
oil wells themselves, which are spread over a 100-by-300 mile area, but in
the country's dependence on only a few critical processing sites.
Destruction of these facilities would paralyze production and take at least
six months to repair. If unconventional weapons such as biological agents
were used in the oil fields, production could be delayed for several more
months until workers were convinced it was safe to return. Stanching the
flow of Saudi oil would devastate the United States and much of the world
community. Global demand for oil (especially in Asia) will increase in the coming
decades, while non-Persian Gulf supplies are expected to diminish. A crisis
in the planet's largest oil producer, with reserves estimated at 25 percent of
the world's total, would have a massive and protracted impact on the price
and availability of oil worldwide. As the disruptions of 1973 and 1979 showed, the mere
As the above suggests,
threat of diminished oil supply can cause panic buying, national hysteria, gas lines, and infighting. Prices
for oil shot up 400 percent in 1973, 150 percent in 1979, and 50 percent (in just 15 days) in 1990 . The
oil shocks of the 1970s threw the United States into recession, causing
spiraling inflation and a decline in savings rates that plagues the U.S.
economy even now. Trillions of dollars were lost worldwide. And all this
occurred at a time when the United States was less dependent on foreign
petroleum than it is now. Cutting the Saudi pipeline today would cause a
severe worldwide recession or depression. Short of physical attack, it is the
gravest threat imaginable to American interests.
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Impact Extensions: US Power Projection
Saudi stability key to US power projection
Pollack 2003 (Kenneth; Director of Research at the Saban Center for Middle East Policy at the Brookings Institution, Foreign Affairs
July/August l/n wdc/wbw)
But the United States is not simply concerned with keeping oil flowing out of the Persian Gulf; it also has an interest in
preventing any potentially hostile state from gaining control over the region and is resources and using such control to amass
vast power or blackmail the world. And it has an interest in maintaining military access to the Persian Gulf because of the
region's geostrategically critical location, near the Middle East, Central Asia, eastern Africa, and South Asia. If the United
States were denied access to the Persian Gulf, its ability to influence events in many other key regions of the world would be
greatly diminished. (Much of the air war against Afghanistan, for example, was mounted from bases in the Persian Gulf.) The
tragedy of September 11, 2001, finally, has demonstrated that the United States also has an interest in stamping out the terrorist groups
that flourish in the region.
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Impact Extensions: Genocides
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
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Impact Extensions: Climate Control
SAUDI CIVIL WAR WILL UNDERMINE GLOBAL CLIMATE CONTROL
ROBERTS, 2004
(Paul – author of The End of Oil, Fresh Air, May 6, l/n)
Well, it depends how quickly that happens. I mean, there are essentially two scenarios to move into a
post-oil order. The first is the real nasty one. That's where a country like Saudi Arabia or
falls into civil war, and all of a sudden you have, in the case of Saudi
Arabia, you know, eight million barrels of oil of daily production taken off the
market. And it's chaos, it's oil price spikes, it's recession, and we're forced
to cut back our oil use and to rapidly develop alternatives, you know, which
means you'd get the quickest energy source you could, which in this country
would be coal. And that would be disastrous for our efforts to keep climate
from changing. So that's the bad scenario.
Venezuela
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Impact Extensions: Prolif
CIVIL WAR RISKS SAUDI PROLIFERATION OF WMD
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "saving America from the coming civil wars," Jan/Feb., l/n)
There is something to this view. Most civil wars do not directly threaten the United States or its allies.
While recent internal conflicts have raised humanitarian concerns, none has seriously affected American
security or economic interests. This, however, was largely a matter of luck. The United States
should recognize a vital and sobering truth: that Russia, Mexico, and Saudi Arabia
all now stand on the brink of civil war, conflicts that would have devastating
consequences for the United States. These consequences are not the traditional dangers of
state-to-state aggression, such as outside attack or invasion. Though largely ignored by scholars and
policymakers, who remain fixated on the idea of international conflict, internal war has emerged as a
principal threat to security in the post-Cold War world.
THE END OF THE WORLD (AS WE KNOW IT)
CONFLICTS FOUGHT within the borders of a single state send shock waves far beyond their frontiers. To
begin with, internal wars risk destroying assets the United States needs. Were the Persian Gulf
oil fields destroyed in a Saudi civil war, the American economy (and those of the
rest of the developed world) would suffer severely. Internal wars can also unleash
threats that stable governments formerly held in check. As central
governments weaken and fall, weapons of mass destruction may fall into
the hands of rogue leaders or anti-American factions. More directly, internal wars
endanger American citizens living and traveling abroad. Liberia will not be the last place America sends
helicopters to rescue its stranded citizens. Finally, internal wars, when they erupt on U.S. borders,
threaten to destabilize America itself. U.S. intervention in Haiti was spurred, in large part, by fear of the
flood of refugees poised to enter the United States.
Saudi fears of Iran, Israeli nuclear programs and fear of America/Saudi rift risks
Saudi going nuclear
Russell, adjunct assistant professor in the Security Studies Program at Georgetown University, 1-4-2k4
(Richard, “Saudi Nukes,” p. http://www.washingtontimes.com/op-ed/20040104-102921-9166r.htm)
<American and international attention is focused on the nuclear weapons programs of the recent past in
Iraq and Libya and of the present in North Korea and Iran. American officials would be wise not to restrict
their fields of vision to these targets, lest they miss other potential nuclear weapons aspirants. One such
candidate is Saudi Arabia, which is seldom mentioned as a problem country regarding nuclear weapons.
Much like the movie Casablanca, the "usual suspects" are more readily trotted because they are at odds
with American national interests nearly across the board, while Saudi Arabia shares many interests with the
United States. 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. >
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Impact Extensions: Prolif
Saudi fears Iran, Israeli nuclear program, growing instability in the Mid-East, and rift in
US-Saudi relations as a cause to join the ‘nuclear club’
Dvali, research assistant Center for Non-Proliferation Studies, 3-2k4
(Akaki, “Will Saudi Arabia Acquire Nuclear Wepons,” p. http://www.nti.org/e_research/e3_40a.html)
<In the course of the last decade, concerns that Saudi Arabia would seek to acquire nuclear weapons have
arisen periodically. These concerns have largely been driven by Saudi Arabia's geopolitical situation, which
some analysts suggest gives the country a number of strong incentives to develop its own nuclear arsenal.
However, no solid evidence has yet appeared in open source material demonstrating that Saudi Arabia is
seeking nuclear weapons. Nevertheless, these concerns merit reexamination in the wake of the recent
revelations about the proliferation activities of Dr. Abdul Qadeer Khan, the former head of the Pakistani
nuclear weapons program. Khan sold or offered nuclear weapons technology to several Middle Eastern
states, including Iran, Iraq, Libya, and Syria. No direct evidence has emerged confirming that Khan made
similar offers to Saudi Arabia, but longstanding suspicions of nuclear cooperation between Pakistan and
Saudi Arabia are cause for continued concern. 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.>
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Impact Extensions: Prolif
Reports prove that Saudi is pursing membership in the ‘Nuclear Club’
Dvali, research assistant Center for Non-Proliferation Studies, 3-2k4
(Akaki, “Will Saudi Arabia Acquire Nuclear Wepons,” p. http://www.nti.org/e_research/e3_40a.html)
<The allegations that The Guardian put forward in September 2003 are not really new. Rumors about
Riyadh's possible nuclear ambitions have circulated on several other occasions over the past decade.
However, they were not given much attention, possibly because of the absence of evidence of Saudi
Arabia's pursuit of nuclear weapons. According to Saudi defector Mohammed Khilevi, who was first
secretary of the Saudi mission to the United Nations until July 1994, Riyadh has sought a bomb since
1975.[7] Khilevi produced documents in support of his charges that between 1985-1990, the Saudi
government paid up to five billion dollars to Saddam Hussein to build a nuclear weapon. According to
Khilevi, these payments were made on the condition that some of the bombs be transferred to a Saudi
arsenal if the Iraqi project were successful.[8] Khilevi also claimed that Saudi Arabia had provided
financial contributions to the Pakistani nuclear program, and had signed a secret agreement that obligated
the Pakistani government to provide positive security assurances to Saudi Arabia.[8] Citing UN officials,
The Guardian also mentions past rumors (dating back 20 years) that the Saudis wanted to pay Pakistan to
do research and development on nuclear weapons.[1]
The recent revelations about the black market nuclear technology network led by Dr. A.Q. Khan, the father
of Pakistan's atomic bomb, increase the probability that suspicions about Saudi nuclear arrangements are
credible. In early February 2004, Khan publicly confessed that he had transferred nuclear technologies and
know-how to several countries, including Iran, Libya, and North Korea.[9,10] Unconfirmed reports also
mention that Khan developed some ties with Syria and Iraq; reportedly those countries rejected Khan's
offer as they mistrusted his intentions.[11] Although Khan stated that his motivation for nuclear
proliferation was ideological, it is widely believed that Khan's activities were motivated by profit.[9,12,13]
Given these facts, it is reasonable to suspect that Khan developed ties with Riyadh, which would have been
capable of paying for all kinds of nuclear-related services. However, to date, reports have only suggested
but not confirmed that Saudi Arabia was among the countries that received Khan's nuclear assistance.
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I/L: Oil Key to US-Saudi Relations
US-Saudi relations determined by oil and military relations
Chanin & Gause III, president of The Legacy Project & Professor of Mid-East Studies U of Vermont,
12-22-2k3
(Roger and Bob, “U.S.-Saudi relations: bump in the road or end of the road?” Middle East Policy Vol. 10
no. 4 p.ln)
<For most of the history of Saudi-American relations, the agenda has been
dominated by issues of high politics, security and energy. Oil, military
cooperation, a common anticommunism and Arab-Israeli issues were the core of the
relationship. Consequently, the relationship, particularly in the United States,
was the focus of a select few with direct interests in these specialized areas.
Now, however, both sides are intensely interested in domestic political and
social issues in the other country, which are now seen as directly related to
international security concerns. But as these domestic issues take on new
salience in the relationship, the likelihood of tension and misunderstanding
grows. No one likes to be told by outsiders how to arrange his or her own
affairs. But that is what is happening now, on both sides of the relationship,
and there is no reason to think that this trend is temporary. How these
sensitive issues are handled by Washington and Riyadh will determine, to a great
extent, the tone and tenor of the relationship for the foreseeable future.>
Oil is the backbone of US-Saudi relations
Kaiser & Ottaway, Washington Post Staff Writers, 2-11-2k2
(Robert and David, “Oil for Security Fueled Close Ties,” The Washington Post p. ln)
<The oil embargo, accompanied by production cuts, was short-lived, but it
changed the world. Faisal was pleased to find a way, in March 1974, to lift it,
but by then the price of oil had risen from less than $ 3 a barrel to more than
$ 11. It was a change destined to transfer hundreds of billions of dollars from
oil-consuming nations to oil producers, making Saudi Arabia enormously rich. On
the foundation of that wealth and the oil that produced it, the modern Saudi
-American relationship was constructed.
It was constructed urgently by the United States, which was chastened and
scared by the embargo. William E. Simon, one of its architects as the secretary
of Treasury at the time, neatly summarized the United States' suddenly intense
interest in Saudi Arabia on the eve of a visit to the kingdom in August 1974.
"My visit to Saudi Arabia," Simon wrote in a memorandum, "is an important
next step in the continuing process of establishing the closest possible
partnership with the Saudis. For the U.S. the primary interest is our continued
access to Saudi Arabian oil in adequate quantities . . . at an acceptable
political as well as economic price. We wish to assure that the Saudis continue
to exercise their growing power in oil and monetary matters with moderation and
in ways consistent with our own objectives." >
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I/L: Oil Key to US-Saudi Relations
Oil is the lynchpin for US-Saudi relations
Morse and Richard, Executive Adviser at Hess Energy Trading Company and was
Deputy Assistant Secretary of State for International Energy Policy and portfolio manager
at Firebird Management, an investment fund active in eastern Europe, Russia, and Central Asia.3/4 2k2
(Edward and James, “The Battle for Energy Dominance,” Foreign Affairs p.ln)
<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.>
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I/L: Saudi Economy key to US-Saudi Relations
Political/Economic collapse in Saudi will jeopardize US-Saudi relations
Dobbs, Washington Post Staff Writer, 4-29-2k3
(Michael, “US-Saudi Ties Prove Crucial in War,” p. http://www.saudi-americanforum.org/Newsletters/SAF_Item_Of_Interest_2003_04_29.pdf)
<The relationship could come crashing down if, as some commentators predict, Saudi Arabia is swept by
political and economic turmoil. For the time being, however, official Washington is continuing to bet on
the autocratic House of Saud as the best means of ensuring continued U.S. access to a quarter of the world's
proven oil reserves. With such exceptions as the governments of Britain and possibly Israel, few foreign
governments enjoy the degree of diplomatic and personal access to the heart of the Bush administration as
Saudi Arabia's. During the run-up to the war, contacts between the two sides deepened, officials said. >
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Impact: US-Saudi Relations key to Check Saudi Prolif
American disengagement from Saudi causes Saudi to go nuclear – this risks destabilizing
arms races risking accidental launch
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<However, the domestic focus of anti-American feelings in the kingdom will be gone, relieving the Saudi
government of what has come to be a political burden. American forces, stuck in the middle of the desert
with little access to off-base entertainment, and under increasingly stringent Saudi limitations in terms of
use of the base (reacting to their own public opinion), will likewise not be sorry to leave. The only
downside to redeploying our forces out of Saudi Arabia comes in the context of Iran's now more public
quest to acquire nuclear weapons. Without the explicit security guarantee represented by an American
military presence in the country, the Saudi leadership might feel that it has to acquire an "off the shelf"
nuclear deterrent capacity to match Iran. In 1987, without the knowledge of the U. S., Saudi Arabia
obtained surface to surface missile from China as the Iran-Iraq War spread to the waters of the Gulf. A
similar move on the nuclear front is not inconceivable. It is, however, highly dangerous. It would escalate
the regional arms race, and there are no assurances that the Saudis could handle issues of security,
command and control, accidental launch avoidance, etc. As a result, any American redeployment out of
Saudi Arabia needs to be accompanied by a public renewal of the American security commitment to
stability in the Gulf and security for its strategic partners from foreign attack. It also needs to be
accompanied by the strongest private representations to the Saudis that a policy of WMD proliferation
would forfeit that American commitment. >
SPLIT IN US-SAUDI TIES RISKS SAUDI PROLIF
LEVI, 2003
(Michael – science & technology fellow at Brookings Institute, "Would the Saudis go nuclear?" The New Republic, June 2,
http://www.geocities.com/munichseptember1972/would_the_saudis_go_nuclear.htm)
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
Realists counter that the United States needs Saudi oil and Saudi military bases. But
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. July 1994 brought more news of Saudi interest in nuclear
weapons when defector Mohammed Al Khilewi, a former diplomat in the Saudi U.N. mission, told London's Sunday Times that,
between 1985 and 1990, Saudi Arabia had actively aided Iraq's nuclear weapons program, both financially and technologically, in
return for a share of the program's product. Though Khilewi produced letters supporting his claim, no one has publicly corroborated
his accusations. Still, the episode was unsettling. Then, in July 1999, The New York Times reported that Saudi Defense Minister
Prince Sultan bin Abdulaziz Al Saud had recently visited sensitive Pakistani nuclear weapons sites. Prince Sultan toured the Kahuta
facility where Pakistan produced enriched uranium for nuclear bombs—and which, at the same time, was allegedly supplying materiel
If Saudi Arabia
chose the nuclear path, it would most likely exploit this Pakistani connection.
Alternatively, it could go to North Korea or even to China, which has sold the Saudis missiles in
and expertise to the North Korean nuclear program. The Saudis refused to explain the prince's visit.
the past.
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Impact Extensions: US-Saudi Relations Key to Check Prolif
TIES WITH THE US KEEP THE SAUDIS FROM PROLIFERATING
LEVI, 2003
(Michael – science & technology fellow at Brookings Institute, "Would the Saudis go nuclear?" The New Republic, June 2,
http://www.geocities.com/munichseptember1972/would_the_saudis_go_nuclear.htm)
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.
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Impact Extensions: US-Saudi Relations key to Mid-East Peace Coop
US-Saudi relations are critical to security cooperation in the Mid-East
Chanin & Gause III, president of The Legacy Project & Professor of Mid-East Studies U of Vermont,
12-22-2k3
(Roger and Bob, “U.S.-Saudi relations: bump in the road or end of the road?” Middle East Policy Vol. 10
no. 4 p.ln)
<All the attendees, Saudi and American, recognized that important interests
continue to tie the two countries together, particularly in oil and security
matters. For many years, the United States and Saudi Arabia have coordinated
closely on regional security concerns, with a particular emphasis on stability
in the oil-producing countries of the Gulf and, during the Cold War, on
opposition to communist regimes, particularly in the Muslim world. Most notable
in the history of the relationship was the closely concerted support for the
mujahideen in Afghanistan during the Soviet occupation. Additionally, the
Iran-contra affair illustrates Saudis' willingness to provide covert support to
an American initiative that, however misguided it may now seem, was nevertheless
a priority at the time. Much of the bilateral cooperation between the two
countries was based on the presumed benefits of Saudi leadership in the Muslim
world and the Saudis' use of their wealth to support causes of common interest. >
Conflict in the Middle East will Escalate to Global Nuclear War
Steinbach 2002 (John; Center for Research on Globalization, “Israeli Weapons of Mass Destruction: a Threat to Peace” March
http://www.wagingpeace.org/articles/2002/03/00_steinbach_israeli-wmd.htm accessed 8/6/04 wdc/wbw)
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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Impact Extensions: US-Saudi Relations key to Mid-East Peace Coop
US-Saudi cooperation critical to Mid-East Peace Process
Cordesman, Arleigh Burke Chair in Strategy at the Center for Strategic and International Studies and is
Co-Director of the Center's Middle East Program, 5-16-2k3
(Anthony, p. http://www.saudi-american-forum.org/Newsletters/SAF_Item_Of_Interest_2003_05_16.htm
5)
<Cooperation is needed to support the Arab-Israeli peace process. If there is ever to be an Arab-Israeli
peace settlement, or if the current Israeli-Palestinian War is to be contained, both the US and Saudi Arabia
need to work together as much as possible to push the peace process forward and reduce support for violent
extremism on both sides. The US and Saudi Arabia will never share common objectives or perceptions
until there is a just, secure, and lasting peace, but it is clear that the present level of Saudi support and
cooperation is far better than indifference or hostility, or what would occur if political evolution was
replaced with revolution. >
US-Saudi cooperation critical to US training of Saudi National Guard and regional
security
Cordesman, Arleigh Burke Chair in Strategy at the Center for Strategic and International Studies and is
Co-Director of the Center's Middle East Program, 5-16-2k3
(Anthony, p. http://www.saudi-american-forum.org/Newsletters/SAF_Item_Of_Interest_2003_05_16.htm 5)
<There is a continuing need for US and Saudi security cooperation. Removing Saddam Hussein has helped
reduce the security risks in the Gulf, but it has scarcely eliminated them. Iraq is not going to be stable for
years—if not decades— The US has not left Saudi Arabia in security terms. Saudi Arabia operates more
than 750 US main battle tanks, 4,800 other armored vehicles, and some 200 advanced combat aircraft. US
training and support is critical to all of Saudi Arabia’s military services and its National Guard. Moreover,
Saudi Arabia signed some $7.7 billion worth of new arms agreements with the US between 1995 and 2002,
and the Saudi need for US training and technical support will continue for at least another decade. A
military relationship now needs to be built around US military assistance to Saudi Arabia, coupled to aid in
internal security, and efforts to strengthen cooperation in the South Gulf and GCC. >
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Impact Extensions: US-Saudi Relations Key to Global Oil Flow
Saudi-US relations are critical to maintain stable flow of oil
Chanin & Gause III, president of The Legacy Project & Professor of Mid-East Studies U of Vermont,
12-22-2k3
(Roger and Bob, “U.S.-Saudi relations: bump in the road or end of the road?” Middle East Policy Vol. 10
no. 4 p.ln)
<All the attendees, Saudi and American, recognized that important interests
continue to tie the two countries together, particularly in oil and security
matters. For many years, the United States and Saudi Arabia have coordinated
closely on regional security concerns, with a particular emphasis on stability
in the oil-producing countries of the Gulf and, during the Cold War, on
opposition to communist regimes, particularly in the Muslim world. Most notable
in the history of the relationship was the closely concerted support for the
mujahideen in Afghanistan during the Soviet occupation. Additionally, the
Iran-contra affair illustrates Saudis' willingness to provide covert support to
an American initiative that, however misguided it may now seem, was nevertheless
a priority at the time. Much of the bilateral cooperation between the two
countries was based on the presumed benefits of Saudi leadership in the Muslim
world and the Saudis' use of their wealth to support causes of common interest.
Saudi Arabia is the largest producer and exporter of oil in the world, and
it has the largest proven oil reserves in the world (25 percent of the world
total). Its centrality in the world oil market today cannot be exaggerated. The
fact that Saudi Arabia has been reluctant to allow foreign capital back into its
energy sector--unlike other major oil producers--could reduce its central role
in the future. However, for now there is no denying the dominant role Saudi
Arabia plays in the world oil market, or America's interest in assuring
stability in the world oil market.
For the most part, Saudi Arabia has exercised its oil power in ways
consistent with American interests in stable supply and stable pricing. The
Saudis hold an excess production capacity of roughly 2 million barrels per day
(mbd) (producing on average only 8 million of a potential 10 mbd). They have
consistently adjusted their production to prevent prices from spiking above $ 28
per barrel for an extended period. Immediately after the attacks of 9/11, Saudi
Arabia increased oil shipments to the United States to prevent panic buying in
the American market. In the run-up to the Iraq war of 2003, the Saudis increased
oil production to more than 9 mbd, smoothing out a market made jittery not only
by the impending war but also by political problems in Venezuela and Nigeria.>
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Impact Extensions: US-Saudi Relations Key to Basing Rights
US-Saudi relations cement American basing rights in Saudi Arabia which is critical to
US air operations in the greater Mid-East
Gause, Professor of Political Science at U of Vermont, 5-22-2k2
(Gregory, “The Future of US-Saudi Relations,” FDCH p.ln)
<I think it has more to do with harm to American feelings than to American
interests. We expected our friends to stand with us after September 11, without
question and without hesitation. Since the Gulf War, we have counted Saudi
Arabia in the camp of our friends. At a minimum, the Saudis were supposed to be
grateful to us for saving them in 1990-91 from Saddam Hussein. But they are not
friends in the way that the Canadians or the British, who share our domestic
values and our overall worldview, are. Moreover, "gratitude" is not a
convertible currency in international relations. Rather, the Saudis are
strategic partners who share a number of common interests with us. We can work
with them when those interests coincide, as they frequently do. The Saudis'
first reaction to any policy choice is not, How can we help the Americans on
this? but, How can we help, or at least not hurt, ourselves? In this, Saudi
Arabia is like almost every other country in the world. Those who thought
otherwise, who put the Saudis in the "friends" category, have swung to the other
extreme and now come close to labeling them as "enemies." That is equally
mistaken. While Saudi public statements on the recent crisis have frequently
been infuriating to Americans (like the frequent denials by Prince Naif,
the
interior minister, that Saudis were involved in the September 11 attacks), we
need to remember that the successful American air campaign over Afghanistan was
directed from the command center at the Prince Sultan Airbase, south of Riyadh.
Saudi political and religious leaders have unanimously and frequently
condemned the attacks, and have quietly used their leadership role in the Arab
and Muslim worlds to have organizations like the Arab League and the Islamic
Conference forthrightly condemn them as well. For example, the Islamic
Jurisprudence Group of the Muslim World League, meeting in Mecca in January of
this year, adopted a directive on jihad and terrorism that could have been
written by the Bush administration. >
US-Saudi relations secure American air-basing rights
Gause, Professor of Political Science at U of Vermont, 5-22-2k2
(Gregory, “The Future of US-Saudi Relations,” FDCH p.ln)
<T he most tangible symbol of the post-1990s Saudi- American
relationship is the deployment of approximately 4,000 to 5,000 U.S. military
personnel in the kingdom, an air force air wing that patrols the skies over
southern Iraq. It is those forces that bin Laden has railed against as defiling
the holy places of Islam for nearly a decade. Though denied officially by both
Washington and Riyadh, the Washington Post reported in January that the Saudi
government is on the verge of asking for the redeployment of those forces out of
the kingdom. >
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Impact Extensions: US-Saudi Relations Key to Basing Rights
Saudi airbases are critical to air-force power projection in the Mid-East/Afghanistan
Kaiser & Ottaway, Washington Post Staff Writers, 2-11-2k2
(Robert and David, “Oil for Security Fueled Close Ties,” The Washington Post p. ln)
<Many other members of the Ulema accepted this conclusion only reluctantly,
or not at all, according to Saudi sources. But first the Bush and then the
Clinton administrations decided that as long as Hussein remained in power and
posed a threat to his neighbors, the United States would need the facilities
provided by Saudi Arabia, particularly the Prince Sultan Air Base. There, the
Pentagon has built a state-of-the-art command center that it used to coordinate
the air war against Afghanistan. >
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Impact Extension: US-Saudi Relations Prevent Coup
US-Saudi relations are critical to Mid-East stability and anchoring preventing Saudi
Royal family coup
Gawdat, Winter 2k3
(Bahgat, “Oil and Militant Islam: Strains on US-Saudi Relations,” World Affairs Vol. 165, issue. 3
P.Academic Search Premier)
<When Saudi Arabia's Prince Bandar bin Sultan visits President Bush's Texas ranch today, he will join a
small list of world statesmen to receive the coveted invitation reserved for good friends -- or, as now,
sensitive diplomacy. Yet Bush will need more than charm and an intimate setting to reverse a downward
spiral in U.S.-Saudi relations, which are key to U.S. interests in the Middle East and broader U.S. security.
Bush's dilemma is that deep differences between the USA and Saudi Arabia have opened up since Sept. 11.
While the rifts can be papered over for now, they require a major rethinking of a 60-year-old friendship of convenience between the
world's leading power and the top oil exporter. Many Americans, angry to learn that 15 of the 19 hijackers were Saudi citizens,
question why the U.S. government still considers a fundamentalist Islamic nation ruled by a repressive monarchy to be a "friend."
Earlier this month, leaked reports of a private briefing to a Pentagon advisory panel gave voice to that feeling. A Rand Corp. analyst
argued that the U.S. government should view Saudi Arabia as an enemy that supports terrorism, and consider seizing its oil fields. The
Pentagon disavowed the report, which provoked Saudi protests. But tensions have only piled on the mutual anger. Earlier this month,
U.S. relatives of World Trade Center victims filed a $3 trillion lawsuit against Saudi royal family members on charges that their
money helped finance the terrorist attacks. Now, the Saudis are hinting they won't let U.S. authorities question Saud A.S. al-Rasheed,
a Saudi citizen who turned himself in to Saudi authorities last week after the FBI put out a worldwide alert for him. The reason: His
photo turned up on a disk with pictures of the Sept. 11 hijackers. The Saudis' stance only deepened U.S. frustrations over the royal
family's patchy cooperation in the war on terrorism. Still, the Bush administration and Saudi rulers are bound by
mutual needs: The USA needs Saudi oil, and the Saudi royal family needs U.S. troops to prevent its
ouster.>
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Impact Extensions: US-Saudi Relations key to War on Terrorism
US-Saudi cooperation critical to successful war on terror and NRG security
Cordesman, Arleigh Burke Chair in Strategy at the Center for Strategic and International Studies and is
Co-Director of the Center's Middle East Program, 5-16-2k3
(Anthony, p. http://www.saudi-american-forum.org/Newsletters/SAF_Item_Of_Interest_2003_05_16.htm 5)
<There has been enough talk about “Fourth World Wars,” “Zionist conspiracies” in the US, and fatal flaws in Western and Arab
cultures. It is time for both the US and Saudi Arabia to restructure their relationship in a far more positive way. The events of
9/11 cannot be forgotten, and there is no way to go back to the past. At the same time, there are ten good
reasons that should lead the two countries to work together: 1. Both the US and Saudi Arabia now face a
common threat from terrorism, both in terms of internal and regional threats. Saudi Arabia may have been
slow to recognize how serious this threat is, but since the terrorist attacks in Saudi Arabia in May 2003, it
has become clear that it is as real for Saudis as it is for Americans. It is also clear that dealing with
terrorism requires close cooperation between the two countries, that Saudi Arabia needs US assistance in
modernizing many aspects of its internal security operations, and that the US needs Saudi cooperation in
reducing the flow of money to terrorists and their ability to manipulate Islamic causes. Furthermore, it is clear
that political, social, and economic forces are at work where this cooperation will have to go on for years –
if not decades – after Bin Laden and Al Qaida have ceased to be a threat. 2. The US and the world need
Saudi and Gulf oil, and Saudi Arabia and its neighbors need to export it. The US Department of Energy
estimates that the global economy requires Gulf oil production capacity to increase from 22.4 million
barrels per day (mbd) in 2001 to 24.5 mbd in 2005, 28.7 mbd in 2010, 33.0 mbd in 2015, 38.96 mbd in 2020, and 45.2 mbd in
2025. Saudi production alone must increase from Saudi Arabia, from 10.2 mbd in 2001 to 23.8 mbd in 2025 –an increase of 133
percent. The DOE estimates that Gulf OPEC states exported an average of 16.9 mbd, or 30 percent of a world total of 56.3 mbd in
2002. It projects that Gulf OPEC exports will reach 35.8 mbd by 2025; and then reach 37 percent of the world total of 94.6 mbd.
Approximately 70-80% of Saudi government revenues come from petroleum exports, and they make up some 90-95% of all Saudi
exports. These exports require both security and a level of investment that Saudi Arabia and the Gulf states
can no longer sustain without massive foreign direct investment in both Saudi Arabia’s petroleum sector
and the rest of its economy. 3. The US and Saudi Arabia have a common interest in the long-term internal
stability of Saudi Arabia. This, however, requires more than counterterrorism. Saudi Arabia’s population
explosion is having a major impact on its economy.>
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ATTACK ON SAUDI OIL FIELDS WILL COLLAPSE THE GLOBAL ECONOMY
BAER, 2003
(Robert – former agent in the CIA, Atlantic Monthly, "The fall of the House of Saud," May, wilsonselect)
In the decades after World War II the United States and the rest of the industrialized world developed a deep and irrevocable
dependence on oil from Saudi Arabia, the world's largest and most important producer. But by the mid-1980s--with the Iran-Iraq war
raging, and the OPEC oil embargo a recent and traumatic memory--the
supply, which had until that embargo
been taken for granted, suddenly seemed at risk. Disaster planners in and out of government began to ask
uncomfortable questions. What points of the Saudi oil infrastructure were most vulnerable to
terrorist attack? And by what means? What sorts of disruption to the flow of oil, short-term and long-term, could be
expected? These were critical concerns. Underlying them all was the fear that a major attack on
the Saudi system could cause the global economy to collapse. The Saudi system
seemed--and still seems--frighteningly vulnerable to attack. Although Saudi Arabia has
more than eighty active oil and natural-gas fields, and more than a thousand working wells, half its
proven oil reserves are contained in only eight fields--including Ghawar, the world's largest onshore oil
field, and Safaniya, the world's largest offshore oil field. Various confidential scenarios have suggested
that if terrorists were simultaneously to hit only a few sensitive points
"downstream" in the oil system from these eight fields--points that control more than 10,000 miles of
pipe, both onshore and offshore, in which oil moves from wells to refineries and from refineries to ports, within the kingdom and
without--they
could effectively put the Saudis out of the oil business for about two
years. And it just would not be that hard to do.
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Brink: US-Saudi Relations
US-SAUDI RELATIONS ARE ON THE BRINK OF COLLAPSE
LEVI, 2003
(Michael – science & technology fellow at Brookings Institute, "Would the Saudis go nuclear?" The New Republic, June 2,
http://www.geocities.com/munichseptember1972/would_the_saudis_go_nuclear.htm)
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.
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AT: Diversification of Econ
OIL IS STILL A MAJOR CONTRIBUTION TO SAUDI ECONOMY
DIBOOGLU AND ALESIA, 2004
(Sel Dibooglu – prof of economics at SIU, and Eisa Alesia – economics advisor at Saudi Arabian Monetary
Agency, Contemporary Economic Policy, Jan, EbscoHost)
Despite attempts at diversifying economic activity in Saudi Arabia, oil revenues still
account for nearly 37% of Saudi Arabian GDP and over 70% of government revenue (Table 1). The table
also shows that except for the late 1980s, Saudi Arabia's share of world crude oil production has
been stable in the past two decades, providing about one-eighth of the world's crude
oil. Growth has been moderate in the past two decades,(FN3) except for the early 1990s, when the economy recorded a respectable
growth due to the increase in oil production relative to previous years. Table 1 indicates that during the past two decades, inflation has
been modest. Though the merchandise trade balance has been recording surpluses, the current account balance has been mostly in
deficit due to transfers, which largely reflect remittances by foreign workers working in the kingdom .
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AT: Saudis can't prolif
Saudi has the necessary infrastructure to weaponize nuclear munitions
Russell, adjunct assistant professor in the Security Studies Program at Georgetown University, 1-4-2k4
(Richard, “Saudi Nukes,” p. http://www.washingtontimes.com/op-ed/20040104-102921-9166r.htm)
< The Saudis already have in place a foundation for building a nuclear weapons deterrent. In the mid1980s, 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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GENERAL
IRAQI EXPORTS WILL INEVITABLY CURTAIL SAUDI OIL REVENUES
ENERGY, 2004
("OPEC still declining," January 1, l/n)
Saudi Arabia maintains the highest share of OPEC oil export revenues (at 34 percent of
the OPEC total in 2003). By 2005, Saudi Arabia's share of OPEC oil export revenues is
expected to fall to 29 percent, as Iraq's share grows from 4 percent to 10 percent.
REDUCING DEPENDENCE ON SAUDI OIL LOWERS THE RISK OF CONFLICT
DAVID, 1999
(Steven – prof of political science at Johns Hopkins, Foreign Affairs, "Saving America from the Coming Civil Wars," Jan/Feb, ln)
To guard against a conflict in Saudi Arabia, the United States should lead the effort
to reduce Western dependence on Saudi oil. This will require a mixed strategy,
including the expansion of U.S. strategic oil reserves (which could be done now,
while Saudi oil is cheap and available), locating new suppliers (such as the Central
Asian republics), and reviving moribund efforts to find oil alternatives. None of this
will be easy, especially in an era of dollar-a-gallon gasoline, but it makes more sense
than continuing to rely on an energy source so vulnerable to the ravages of civil war.
SAUDI ECONOMY IS VULNERABLE TO PRICE SHOCKS
DIBOOGLU AND ALESIA, 2004
(Sel Dibooglu – prof of economics at SIU, and Eisa Alesia – economics advisor at Saudi Arabian Monetary
Agency, Contemporary Economic Policy, Jan, EbscoHost)
Given the relative importance of oil price shocks to the world economy, it is
important to investigate the impact of real oil price shocks to oil producing
countries as well. In that regard, Saudi Arabia, as the largest oil producer in the
world, warrants particular attention. This article investigates the sources of macroeconomic fluctuations in
Saudi Arabia for the 1980-2000 period using structural VAR methods with an emphasis on oil prices and the resulting terms of trade
Saudi Arabia has a sizable impact on the real oil price,
particularly in the short run. Moreover, the results show that Saudi Arabian output is somewhat vulnerable to termsof-trade shocks. Except for modest trade balance shocks and aggregate demand shocks in the short run, supply shocks
explain a sizable proportion of Saudi Arabian output fluctuations. The rest of output is
changes. The results show that
explained by the real oil price. Similarly the real exchange rate seems to be driven by real oil prices and domestic aggregate demand
shocks. Monetary
shocks in the short run and real oil prices in the long run explain the
bulk of price level movements. These results call for diversification of the production base in Saudi GDP. Moreover,
oil-producing countries should aim for a stable nominal oil price because such a
policy will reduce terms-of-trade variability in the short run.
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GENERAL
SAUDI ARABIA IS DIVERSIFYING ITS ECONOMY
MIHAILESCU, 2004
(Andrea, staff, United Press International, "Saudi Arabia minimizes dependence on oil," Aug 19, ln)
Seeking to diversify the kingdom's dependence on oil revenue, Saudi Arabia
has signed lucrative gas deals with some of the world's major energy
players to develop the country's gas fields. Amid rapidly increasing profits from rising oil
prices, Saudi Arabia seeks to diversify its economy.
LOWER, STABLE OIL PRICES BENEFIT THE SAUDIS MORE
BOOTLE, 2004
(Roger, staff, The Sunday Telegraph, "impending disaster," June 6, ln)
That is why different Opec members have followed different strategies. Saudi
Arabia has traditionally favoured a relatively low oil price, not only because
this complied with the wishes of its close ally, the United States, but also
because it was in its own economic self-interest. Saudi has massive oil
reserves which can last many decades into the future. The last thing it
needs is to prompt the development of new technologies which render oil
obsolete, thereby making its oil in the ground practically worthless. By
contrast, oil-producing states with small reserves naturally favour a policy of making
hay while the sun shines.
OIL PRICES ARE TOO HIGH – THE SAUDIS CAN'T COMPENSATE FOR ANY
DISRUPTIONS
CHICAGO TRIBUNE, 2004
("disruption fears grease continuing price surge," Aug. 20, ln)
the Organization of Petroleum
Exporting Countries, and Saudi Arabia in particular, do not have the ability
to swiftly raise production high enough in the event of a major global supply
disruption. "The oil price is firmly in the danger zone," Stephen Roach, chief
Underpinning the market's nervousness is the belief that
economist at Morgan Stanley in New York, said in a note to clients. Should prices reach $50 and stay
there for several months, this would be "in the ballpark with full-blown oil shocks of the past" that have
caused recessions, he said.
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GENERAL
LOWER, STABLE OIL PRICES BENEFIT THE SAUDIS MORE
BAHGAT, 2003
(Gawdat – dir of the Center of Middle Eastern Studies at Indiana Univ in Pennsylvania, Orbis, "The new geopolitics of oil," summer,
EbscoHost)
Traditionally, the organization's market power has been viewed as a trade-off between maximizing price and maximizing market
share. Within OPEC, countries such as Algeria, Nigeria, and Indonesia contain relatively large populations and relatively small oil
reserves. These countries therefore have generally tended to favor a strategy of short-term revenue maximization and to have low
OPEC members with small
populations and large oil reserves such as Kuwait, the UAE, and Saudi Arabia have tended
to favor a strategy of long-term revenue maximization and have generally been in
stronger positions to weather price declines. Given its huge production, Saudi
Arabia has occupied the driver's seat in determining OPEC production and pricing
policies, as Figure 2 illustrates. Saudi production is huge both in absolute terms and as a percentage of total OPEC production,
political/social tolerance for the pain caused by low oil revenues. On the other hand,
ranging from a low point of 20.70 percent in 1985 to highs of 42.7 percent in 1981 and 34.89 percent in 1991. Note that Saudi Arabia's
share in total OPEC production reached its highest levels in 1981 and 1991. At the beginning of both the Iran-Iraq War and the 1991
Gulf War, Riyadh raised its production to make up for the shortage of supplies caused by regional conflicts. Since early 2003 Saudi
Arabia has been pumping more than 9 million barrels of oil per day to offset low output in Venezuela and slim U.S. inventories. The
This
deliberate policy of maintaining prices at moderate levels and preventing excessive
high prices serves the Saudi national interests particularly well in the medium and
long terms. High oil prices could lead to the development of alternative or
competing energy sources, which would undermine the importance of petroleum. If
petroleum loses its competitive edge, it would be difficult to recover it even if prices
kingdom further raised its production in March to cover any shortfall in supplies resulting from the war in Iraq.
subsequently declined. High prices would also encourage oil exploration and development in non-OPEC countries, which in turn
would increase supplies and exert downward pressure on prices. As Saudi oil minister Ali Al-Naimi emphasizes, "We live in one
world whose geographical and economic blocks are interrelated and affect each other.
Excessively high prices could
have a negative impact on the world economy, which in turn weakens demand in the
long run and causes producing countries to lose their credibility."(FN28)
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GENERAL
LOWER, STABLE OIL PRICES BENEFIT THE SAUDIS MORE
BAHGAT, 2003
(Gawdat – director of the Center for Middle Eastern Studies, Department of Political Science, at Indiana University of
Pennsylvania, World Affairs, "Oil and Militant Islam," January 1, EbscoHost)
for several decades Saudi Arabia used its influence to encourage moderate oil
prices. A close examination of the international oil market over the last three decades suggests two constant characteristics that
shaped and guided the dramatic changes the industry has experienced. First, since the early 1970s oil prices have been
highly volatile. In the last thirty years the price of a barrel of oil has fluctuated from a low of $9 to a high of $37 . That
volatility has contributed to political and economic instability in both consuming
and producing countries. Second, in addition to economic factors; oil markets have always been driven by political
Fourth,
forces. Put differently, the prices of oil do not merely reflect an equilibrium between supply and demand. Rather, they are equally
determined by political developments in both producing and consuming countries. Thus, the global oil market has been rightly
described as "guided laissez-faire."(n10) Taking those two characteristics into consideration,
the Saudi government
has realized that high prices have potential long-term disadvantages, including the
development of alternative or competing energy sources, which could undermine the
importance of petroleum and investment exploration in the kingdom. Furthermore,
high prices would encourage oil production in competing regions such as the
Caspian Basin and the North Sea. Finally, excessively high prices could have a negative
impact on the world economy, which in turn weakens demand for oil. Thus, Riyadh
has always advocated stable prices at a "reasonable level." This Saudi stand has
contributed to the stabilization of the global economy and substantial savings to U.S.
consumers.
THE WORLD CAN EASILY HANDLE A SUPPLY SHOCK
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
How would the world oil market react to such a blow? The world is clearly better
equipped to handle a supply shock than it was during the turbulent 1970s.
For a start, the rich world is much less energy intensive. Unlike three
decades ago, OECD countries now maintain large "strategic reserves" of
petroleum, and co-ordinate the release of these during emergencies through the
International Energy Agency (IEA). The rise of energy futures markets over the
past two decades also offers some scope for the world to deal better with
short-term price shocks.
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SAUDI ARABIA DISAD – AFF
AT: US Troop Presence Impact
No Impact to American military presence in Saudi – America will retain troop
commitments
Dobbs, Washington Post Staff Writer, 4-29-2k3
(Michael, “US-Saudi Ties Prove Crucial in War,” p. http://www.saudi-americanforum.org/Newsletters/SAF_Item_Of_Interest_2003_04_29.pdf)
<The presence of U.S. troops on Saudi soil has been one of the major grievances exploited by al Qaeda
leader Osama bin Laden in his diatribes against Washington. But even if the Air Force role is sharply
reduced, officials say that other U.S. troops will remain, including those responsible for training the Saudi
defense forces and coordinating command-and-control systems. The Saudi decision to cooperate with the
United States over Iraq reflected a political calculation that the administration was determined to go ahead
with the ouster of Hussein, no matter how much opposition it encountered. >
N/U – BUSH ALREADY DECREASING TROOPS IN SAUDI ARABIA
POLLACK, 2003
(Kenneth -- Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
Foreign Affairs, "Securing the Gulf," July/Aug, l/n)
The sweeping American and British military victory in Operation Iraqi Freedom has now cleared the way
for the United States to try to establish a more durable framework for Persian Gulf security. Indeed, the
Bush administration is already starting to do so by withdrawing the vast
majority of American troops from Saudi Arabia, although this move seems more about
closing an old chapter of American involvement than about opening a new one. With Saddam Hussein
gone, a broad rethinking of U.S. strategy toward the region is necessary, because in some ways the
security problems of the Persian Gulf are now likely to get more challenging instead of less.
TURN -- MILITARY WITHDRAWAL WILL REDUCE TERRORISM RISK
POLLACK, 2003
(Kenneth -- Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
Foreign Affairs, "Securing the Gulf," July/Aug, l/n)
The best way for the United States to address the rise of terrorism and the
threat of internal instability in Saudi Arabia and the other GCC states would
be to reduce its military presence in the region to the absolute minimum, or
even to withdraw entirely. The presence of American troops fuels the
terrorists' propaganda claims that the United States seeks to prop up the
hated local tyrants and control the Middle East. And it is a source of
humiliation and resentment for pretty much all locals -- a constant reminder
that the descendants of the great Islamic empires can no longer defend themselves
and must answer to infidel powers. So pulling back would diminish the internal
pressure on the Persian Gulf regimes and give them the political space they
need to enact the painful reforms that are vital to their long-term stability.
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SAUDI ARABIA DISAD – AFF
AT: US Troop Presence Impact
US basing rights in Saudi aren’t sustainable and risk Saudi backlash jeopardizing
US-Saudi relations – New strategic partnership with GCC states critical to force
projection and new relationship
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<Saudi Arabia has served as the linchpin of American military and political influence in the Gulf since
Desert Storm. It can no longer play that role. After the attacks of September 11, 2001, an American military
presence in the kingdom is no longer sustainable in the political system of either the United States or Saudi
Arabia. Washington therefore has to rely on the smaller Gulf monarchies to provide the infrastructure for
its military presence in the region. The build-up toward war with Iraq has accelerated that change, with the
Saudis unwilling to cooperate openly with Washington on this issue. No matter the outcome of war with
Iraq, the political and strategic logic of basing American military power in these smaller Gulf states is
compelling. In turn, Saudi-American relations need to be reconstituted on a basis that serves the shared
interests of both states, and can be sustained in both countries' political systems. That requires an end to the
basing of American forces in the kingdom. The fall of Saddam Hussein will facilitate this goal, allowing
the removal of the American air wing in Saudi Arabia that patrols southern Iraq. The public opinion
benefits for the Saudis of the departure of the American forces will permit a return to a more normal, if
somewhat more distant, cooperative relationship with the United States.>
Saudi basing rights aren’t stable – American commitment to GCC states secures
needed bases
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<The smaller Gulf states are better able to manage the political consequences of an American military
presence than is Saudi Arabia. The same logic that made them the centerpiece of British Gulf strategy for
150 years still remains today. However, with its increasing reliance upon them, the United States must
avoid the fallacy that it can simply recreate the British role in the Gulf of a past colonial age. With bettereducated and more politically aware populations, these smaller states cannot be viewed simply as
protectorates. The United States role needs to be minimally acceptable in local public opinion. This will
depend enormously on how overall American policy is viewed there on larger issues in the Arab and
Muslim worlds, particularly the Arab-Israeli conflict. In these new political circumstances, the United
States must also avoid the temptation to play an overtly imperial role of direct intervention in local politics,
such as in ruling family factional squabbles. Changes imposed from the outside, no matter how well
intentioned, are likely to misread local realities and to engender a local backlash. With this strategy in
place, the U.S. will be far better prepared to weather the upcoming turning point in U.S.-GCC relations.
That change might be affected at the margins by the outcome of the coming war with Iraq, but its direction
is set. The change began before the attacks of September 11, 2001, but its pace has accelerated since that
fateful day. For reasons of domestic politics in both Saudi Arabia and the United States, Washington can no
longer look to Riyadh as the military centerpiece of its Gulf strategy. Because of the growing distance in
the Saudi-American relationship, the smaller Gulf states will assume an even more central role in the
maintenance of American military power in the region, certainly during the war against Iraq, and most
probably thereafter. The United States now faces the third crucial turning point in its Gulf policy over the
past thirty years, since Great Britain gave up its role as protecting power over the smaller states of the
lower Gulf. The first turning point in U.S.-G. C. C. relations was the British withdrawal of 1971, and the
response was the Nixon Doctrine policy of the "twin pillars.">
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SAUDI ARABIA DISAD – AFF
AT: US Relations Impact
Even hard-right neo-conservatives oppose the current Saudi-American relationship
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<What has changed most dramatically since the attacks of 9/ 11, however, has been the attitude in the
American right wing toward Saudi Arabia. Both neo-conservatives and the religious right had previously
accepted the close American relationship with Riyadh on strategic grounds, even while opposing many
aspects of Saudi politics and society. They have now become vocal critics of the relationship. Given the
importance of both of these groups in the Republican Party, it is hard to see how the U. S.-Saudi
relationship could return to the generally unexamined state (from the American public's perspective) that
existed before 2001. There have been, and will continue to be, sufficient issues to keep the relationship in
the media spotlight. One example, from late 2002, was the Congressional and media furor over the
revelation that personal checks from the wife of the Saudi ambassador to Washington (herself a member of
the ruling family) to Saudis living in the United States were signed over to associates of two of the 19
September 11 hijackers.>
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SAUDI ARABIA DISAD – AFF
AT: Basing-Rights Impact
Saudi basing rights are hollow – Afghan conflict proves
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<The Saudi government very publicly denied American forces the right to use Saudi bases for the air
campaign in Afghanistan, even while quietly allowing the U. S. to use the command and control center at
Prince Sultan Airbase, south of Riyadh, to coordinate that campaign. In a public meeting with Saudis in
November 2001, the Crown Prince revealed that in August 2001 he had sent a letter to President Bush
complaining of the American stand on the Arab-Israeli issue. In that letter, he said that differences between
the two countries on that issue had grown so great that "from now on, you have your interests and the
Kingdom has its interests, and you have your road and we have our road.">
Prince Sultan Air-base is irrelevant to USAF power projection, Qatar base is more
then sufficient
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<Rethinking the Security Relationship and the Wider War on Terrorism The more important debate on the
U. S.-Saudi relationship revolves around the basis on which Washington will seek to reconstruct it. Clearly,
the relationship with Riyadh is not an alliance, at least the way that term has come to be understood in the
United States. The Saudis are not going to be "with us" on every Middle Eastern initiative, or on every
element of the war on terrorism, that we pursue. It is more accurate to think of them as strategic partners on
a number of vitally important issues, including oil, regional stability in the Gulf, Arab-Israeli peace, and the
global debate in the Muslim world about radicalism and terrorism. Our interests overlap, but are not
identical. Where they do overlap, we can work together. Where they do not, we will go our separate ways.
In fact, one of the most troubling issues in the relationship, the American military presence in the kingdom,
is on its way to solution. The great bulk of uniformed American military personnel in Saudi Arabia now are
in the air wing (approximately 5,000 troops) stationed at Prince Sultan Airbase. They maintain the air
patrols over southern Iraq (Operation Southern Watch) established shortly after the Gulf War. If an
American military attack on Iraq brings down Saddam Hussein, the need for those air patrols disappears. At
that point, the air wing can be withdrawn. The command and control facilities built at the Airbase are
already being duplicated in Qatar.
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SAUDI ARABIA DISAD – AFF
AT: Basing-Rights Impact
America doesn’t need Saudi bases – GCC states provide the necessary
infrastructure to secure access for America’s military
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<The U. S. and the Smaller Gulf Monarchies: Safe Ports in a Threatening Storm? The Expanding Network
As the American relationship with Saudi Arabia contracts, particularly on the military side, America's
reliance on its military relations with the smaller Gulf monarchies inevitably expands. Since 1991, the
United States has developed an extensive network of Gulf military bases (although Washington eschews
that term, in favor of "access agreements" and "facilities" and other such euphemisms, everyone in the
region calls these installations in their country "the American base"). These cover much of the G. C. C.
Kuwait has hosted American troops on a regular basis since 1991, at a permanent facility north of Kuwait
City (Camp Doha). The U. S. has also prepositioned equipment for an armored brigade. With the build-up
of U. S. and allied forces in Kuwait for an attack on Iraq, nearly one-third of the territory of the country has
been declared a closed military zone. • The headquarters of the vastly expanded American naval presence
in the Gulf, the Fifth Fleet, is in Manama, Bahrain's capital. There is normally at least one carrier battle
group in the Gulf area at all times. Approximately 4,000 U. S. military personnel are attached regularly to
the headquarters in Bahrain. • Qatar signed an agreement in December 2002 to upgrade American facilities
in the country, which include a major airfield at Al Udaid, a command and control center (duplicating
facilities in Saudi, in case the U. S. is denied access to them), and prepositioning depots for the equipment
for two armored brigades. • Oman provides access to American forces and prepositioned material at
airbases at Al Seeb and Thamarit and on Masirah Island in the Arabian Sea. • The port and airport facilities
in the UAE provide vital logistical support for American forces, and that country hosts more recreational
visits by American troops than any other foreign country.>
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SAUDI ARABIA DISAD – AFF
AT: Basing-Rights Impact
GCC bases are better for American naval mobility, and military basing; Saudi bases are
held hostage to regional politics
Gause III, Professor of Mid-East Politics and IR U of Vermont, 5-20-2k3
(Gregory, “The Approaching Turning Point: The Future of US-Relations with the Gulf States,” p.
http://www.Saudi-American-Forum.org)
<However, not once was there an attack on the Fifth Fleet headquarters, or on American military personnel
in the country. There are two reasons for the greater acceptance of a foreign military in these smaller states
than in Saudi Arabia. First, they are more accustomed to it. It was not so long ago that Great Britain had a
formal protectorate role in these states, within the living memory of their elites. In fact, in Kuwait, Qatar,
and the UAE, foreigners outnumber citizens. The kind of social disruptions that an American military
presence brings are not nearly as unusual in these countries as they are in Saudi Arabia. Second, they are
relatively small in terms of area (Oman is an exception here) and population. The rulers' patronage systems
can encompass most of the citizens directly. Personal connections can mitigate political opposition, and
improve intelligence gathering. Security services have fewer people to monitor. Violent opposition would
find it harder to hide. This is not to say that political tensions are absent in the smaller Gulf monarchies.
Each has its own problems. However, compared with Saudi Arabia, they are simply easier to manage
politically.>
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SAUDI ARABIA DISAD – AFF
AT: Coup/Succession Impact
SAUDI ARABIA NOT AT RISK TO SUCCESSION
BRONSON, 2001
(Rachel – fellow for national security studies at the council on foreign relations, Orbis, "beyond containment in the Persian Gulf,"
march 22, ln)
To be sure, by traditional measures the region is more stable than it has been for some time. Leadership
succession is no longer the pressing concern it was just a few years ago. The speed with which the Qatari
and Bahraini transitions occurred was promising, and Crown Prince Abdallah's assumption of power in
Saudi Arabia has occurred in all but name. Saudi Arabia is unlikely to face a succession
crisis for a decade or more, when the decision will need to be made on how
to pass the mantle of leadership from the sons of Abdel Azziz to his
grandsons. In the UAE, power is likely to pass seamlessly from Sheikh Zayed to his oldest son,
Khalifa, who will himself determine his successor. The transitions in Kuwait and Oman, however, remain
unclear. For its part, Iran is also no longer aggressively trying to export Islamic revolution and,
particularly under President Mohammed Khatami, has sought to engage its Arab neighbors rather than
threaten them. [19]
EVEN IF RADICALS OVERTHROW SAUDI ARABIA THE US OIL SUPPLIES WOULD NOT BE SHUT
DOWN. MIDDLE EAST ECONOMIES ARE TOO DEPENDENT ON OIL TO SHUT OFF THE SUPPLY
Paul Blustein, Washington Post Staff Writer, 1996 [Sept. 18, The Washington Post HEADLINE: An Unstable
Middle East Won't Put the U.S. Over a Barrel\\jan]
Even the West's worst nightmare -- a coup by radicals to overthrow the Saudi monarchy -- would probably lead
to only a short-term disruption in oil prices, according to experts, because the new rulers would need cash, too.
"Look at what's happening in Turkey," said Michael Lynch, an energy expert at the Massachusetts Institute of
Technology. "An Islamic fundamentalist becomes head of a coalition government, and the first thing he does is
increase spending. " A radical Saudi regime might be tempted to try increasing revenue by slashing production
to drive up prices. But such a strategy would be unlikely to pay off because, over time, demand for oil would
fall and new supplies would come on stream -- pushing prices back down. "They've seen this lesson work in the
'80s," said John Lichtblau, chairman of the Petroleum Industry Research Foundation. "It isn't just some
theoretical capitalist point. "
MIDDLE EAST COUNTRIES WILL NOT SHUT OFF OIL SUPPLIES REGARDLESS OF WHO IS
RULING
Paul Blustein, Washington Post Staff Writer, 1996 [Sept. 18, The Washington Post: HEADLINE: An Unstable
Middle East Won't Put the U.S. Over a Barrel\\jan]
But OPEC's ability to rig the market has withered away as its members' thirst for cash has risen. That's a stark
contrast with the 1970s, when Saudi Arabia and a couple of other Persian Gulf states were so flush with
petrodollars that they could easily afford to curb production.
"What we've learned since then is that nobody supplies oil on the world markets because they have friends,"
said Milton Russell, director of the Joint Institute for Energy and the Environment at the University of
Tennessee. "They supply oil on world markets to make money." Iran and Libya may be radical Muslim states,
but they pump as much oil as they can to raise funds for their rapidly growing populations. Saudi Arabia's
welfare state has become so costly that the desert kingdom's net foreign assets (its holdings of overseas assets,
minus its liabilities) have shrunk from well over $ 100 billion in the early 1980s to less than $ 10 billion today.
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SAUDI ARABIA DISAD – AFF
AT: Terrorist Attack Oil Fields Impact
LITTLE RISK OF SUCCESSFUL ATTACK ON SAUDI OIL FIELDS
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
Not everyone is worried. Nawaf Obaid, an adviser to the Saudi royal family, argues in
the latest issue of Jane's Intelligence Review that the risk of a successful attack on oil
facilities remains "very low". He explains: "At any one time, there are up to 30,000
guards protecting the Kingdom's oil infrastructure, while high-technology
surveillance and aircraft patrols are common at the most important facilities and
anti-aircraft installations defend key locations." Mr Obaid claims that the Saudi
government has added $750m over the past two years to its security budget (which
totalled $5.5 billion last year, according to him) specifically to fortify the oil sector.
Kevin Rosser of Control Risks Group, a business-risk consultancy, agrees. He observes
that there is plenty of redundancy built into the Saudi network—through multiple
ports, pipelines and excess capacity—that should ease the blow from any attack.
Besides, he insists, to do any real damage terrorists would have to hit bottlenecks, not just
blow up random bits of pipeline. Mr Rosser quips that, "the golden goose is not a sitting
duck."
LITTLE RISK OF TERRORIST ATTACK ON SAUDI OIL
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
Not everyone is worried. Nawaf Obaid, an adviser to the Saudi royal family, argues in the latest issue of
Jane's Intelligence Review that the risk of a successful attack on oil facilities remains "very low". He
explains: "At any one time, there are up to 30,000 guards protecting the Kingdom's
oil infrastructure, while high-technology surveillance and aircraft patrols
are common at the most important facilities and anti-aircraft installations
defend key locations." Mr Obaid claims that the Saudi government has added $750m over the
past two years to its security budget (which totalled $5.5 billion last year, according to him) specifically to
fortify the oil sector. Kevin Rosser of Control Risks Group, a business-risk consultancy, agrees. He
observes that there is plenty of redundancy built into the Saudi network—
through multiple ports, pipelines and excess capacity—that should ease the
blow from any attack. Besides, he insists, to do any real damage terrorists
would have to hit bottlenecks, not just blow up random bits of pipeline. Mr
Rosser quips that, "the golden goose is not a sitting duck."
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AT: DEPENDENCY TURNS
Dependency Causes Price Shocks/Spikes
TURN: CYCLICAL OIL SPIKES STIMULATE THE OIL MARKET
ENERGY 1-1-2K4
(“OPEC Still Declining: Export revenues still lag far behind peak years,” Energy Journal vol. 29 no. 1)
<World oil price spikes and crashes are, in many respects, cyclical, as they
affect oil supply and demand. For example, the oil price collapse of 1998 led to
a large number of well closures (as well as a reduction in oil exploration and
production) in non-OPEC countries, including the United States, where thousands
of so-called "stripper" wells were shut down in Oklahoma and Texas. The price
collapse also tended to stimulate world oil demand. Higher oil prices since
1999, on the other hand, have tended to encourage an upsurge in oil sector
drilling activity and a reduction in oil demand growth.>
TURN: HIGH OIL PRICES STIMULATE OPEC NATIONS ECONOMY
ENERGY 1-1-2K4
(“OPEC Still Declining: Export revenues still lag far behind peak years,” Energy Journal vol. 29 no. 1)
<All else being equal, increased oil prices tend to result in improved OPEC
countries' economics situations, budgets and trade balances. Higher oil export
revenues also tend to lessen pressures for economic reforms, and make it easier
for OPEC countries to increase their spending. However, the impact of higher oil
prices is tempered by memories of past price collapses (i.e., 1998), as well as
a general understanding that oil prices can be highly volatile. Still, there is
little doubt that pressures to make difficult political choices (like cutting
popular state subsidies for food and fuel) tend to be lower during relatively
prosperous times than in more difficult ones.>
PRICE SHOCKS ARE NATURAL AND SHORT-LIVED
TOMAN, 2002
(Michael -- senior fellow at Resources for the Future, Brookings Review, "International Oil Security," Spring, wilsonselect)
Neither the demand for oil nor its supply is highly price sensitive in the short term. When supplies go down, prices have to rise
considerably to adjust demand. No matter who produces the oil, a shock to global supplies (accidental or deliberate) will send oil
While price shocks are uncomfortable, they are not likely to be severe
or to last long. (There could be exceptions, such as losing Saudi Arabia's entire output for five years.) Moreover, fairly
large swings in petroleum prices seem to have become business as usual in an
inherently volatile market. How serious, then, are the macroeconomic threats posed by oil price volatility?
prices up abruptly.
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AT: DEPENDENCY TURNS
Dependency Causes Price Shocks/Spikes
OPEC IS POISED TO WARD OFF RECESSION FROM PRICE SPIKES
BIRMINGHAM POST, 2004
("oil prices edge up to war record," May 14, l/n)
OPEC is concerned that the soaring prices could slow global growth, but believes
current 13-year highs are largely out of its control. The group's president Purnomo
Yusgiantoro said: 'OPEC is very concerned with the current high oil prices, and we'll
try to avoid the same global recession which happened in 1973.' OPEC members
will meet in Amsterdam next week to discuss a proposal from Saudi Arabia, the
world's largest oil producer, to hike output by 1.5 million barrels per day from the
current ceiling of 23.5 million.
HISTORICALLY HIGH OIL PRICES LEAD TO ADJUSTMENTS
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
Doubtless, there's a worldwide panic creeping into nearly every national
economy about where oil prices are headed and their impact on domestic
growth - and politics. So great are oil shocks, historically, that mediumterm calculations of their impact are folly. Oil price hikes impose
immediate burdens on national and world economies so that macroeconomic
policies require adjustments in the shorter term. From these adjustments
flow social and political pains.
Oil independence doesn’t solve oil spikes that affect the overall global economy
Larson, Under Secretary for Economic, Business and Agricultural Affairs Dept. of State, 6-20-2k2
(Alan, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<MR. LARSON: I could give, congressman, a quick response to your points on
foreign policy. First of all I think that even if we didn't import a drop of oil
we would still be very concerned about oil issues because of the effect of oil
price spikes on our economy and the effect of oil disruptions on the economies
and perhaps the policies of our major allies in Europe and Japan.>
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AT: DEPENDENCY TURNS
Dependency Causes Price Shocks/Spikes
EMPIRICALLY THE US STOCK MARKET DOES NOT OVERREACT TO OIL PRICE SHOCKS
Jones, Charles M.; Kaul, Gautam, 1996 [Journal of Finance, June; HEADLINE: Oil and the stock markets;
includes appendices\\jan]
Our detailed investigation of the reaction of 'the U.S. stock market to oil shocks shows that stock prices
rationally reflect the impact of news on current and future real cash flows. We find no evidence of fads and/or
market overreaction. While the Canadian stock market also appears to react rationally to oil shocks, the
experiences of Japan and the United Kingdom are different. We are unable to completely explain these stock
markets reactions to oil price changes within the context of a rational asset pricing framework; oil shocks in
Japan and the United Kingdom lead to change s in stock prices that appear to be substantially greater than can
be justified by the effects of these shocks on subsequent real cash flows. Our attempts to a account for changing
expected returns also cannot help explain the effect of oil shocks on either stock market. Measurement errors in
inflation and/or oil price variables and, more importantly, in our proxies for expected real cash flows also do not
appear to affect our analysis. Therefore, we conclude that in the ease of Japan and the United Kingdom either:
(a) oil price shocks in impact expected stock returns in a way that is not captured by our proxies for expected
returns, or (b) these stock markets overreact to oil price shocks.
OIL PRICE FLUCTUATIONS ARE CYCLICAL AND NATIONS REBOUND
ENERGY, 2004
("OPEC still declining," January 1, l/n)
World oil price spikes and crashes are, in many respects, cyclical, as they affect oil
supply and demand. For example, the oil price collapse of 1998 led to a large number of
well closures (as well as a reduction in oil exploration and production) in non-OPEC
countries, including the United States, where thousands of so-called "stripper" wells were
shut down in Oklahoma and Texas. The price collapse also tended to stimulate world oil
demand. Higher oil prices since 1999, on the other hand, have tended to encourage an
upsurge in oil sector drilling activity and a reduction in oil demand growth.
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AT: DEPENDENCY TURNS
Dependency Crushes the Economy
SUSTAINED HIGH PRICES WON'T TRIGGER A RECESSION
OXFORD ECONOMIC FORECASTING US WEEKLY BRIEF, 2004
("high oil prices threaten the expansion," Aug. 23, l/n)
All of this would certainly reduce growth to below what it otherwise would have been,
but a recession remains unlikely, even if high prices are sustained. The US economy
is more energy efficient than it was during the energy shocks of the 1970s and
1980s, and in those shocks the increase in the oil price was, on a percentage basis,
much larger than we have seen to date. In addition, measures would be taken to
counter the impact. If the economy appeared to be faltering, the Federal Reserve
would postpone further tightening of monetary policy and reverse that which has
already occurred. Instead of continuing to fill the Strategic Petroleum Reserve, the
federal government could release some of that reserve to bolster supply. And the
high prices would encourage more exploration and drilling. Oil deposits that were too
expensive to develop when oil was at $ 30 may become profitable with oil at $ 50.
SUSTAINED HIGH PRICES WON'T TRIGGER A RECESSION
BUSINESS LINE, 2004
("the coming global recession in 2005," Aug. 16, l/n)
The energy efficiency of the Western economies is often cited as the proof of the
resilience of global economy to high oil price. It may be partially true. Previous oil
shocks might have pushed back the threshold oil price that hurts global activity.
Hence, the impact of a high price for energy would not be linear.
TURN – A DROP IN OIL PRICES WILL TRIGGER A GLOBAL RECESSION
SEARJEANT, 2000
(Graham, staff, The Times, "The oil spectre spirals round again," Aug. 17, l/n)
Once, global commerce was affected by discoveries of gold or wheat
harvests. Today, oil is probably the only commodity whose price variations
can affect the world economy. Twice before, in 1974 and 1979, oil prices
lagged behind an inflationary international boom, only to catch up and
overtake suddenly through the efforts of the Opec cartel. Each time, the rest
of the world was quickly thrust into recession. Having over-reached itself,
Opec is no longer so powerful. Many other sources of oil have been developed and
industrial economies have learnt a little from these disasters. Yet oil still matters.
Shipping rates, for instance, have jumped to their highest for 30 years.
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AT: DEPENDENCY TURNS
Supply Shocks
LITTLE RISK OF OIL SHORTAGES
MAUGERI, 2003
(Leonardo -- Group Senior Vice President for Corporate Strategies and Planning for the Italian energy
company eni, Foreign Affairs, "not in oil's name," July/Aug, l/n)
Dire predictions of scarcity go hand in hand with fears about oil security. The truth
is that oil supplies are neither running out nor becoming insecure. Today,
the average world recovery rate from existing oil reserves is 35 percent, as
compared to about 22 percent in 1980. Given current oil consumption levels,
every additional percentage of recovery means two more years of existing
reserves. This evolution also partly explains why the life index of existing reserves
is still growing even though the world is replacing only 25 percent of what it
consumes every year with new discoveries and major new oil discoveries have
decreased since the 1960s. Today's ratio of proven oil reserves to current production
indicates a remaining life of 43 years for existing reserves, compared to 35 years in
1972 and 20 years in 1948. Advances in technology explain the apparent
contradiction between fewer discoveries and more oil. Whereas an oil field
does not change, knowledge about it does, sometimes dramatically. Oil
abundance, rather than scarcity, has been recurring since John D.
Rockefeller's era. Barring unexpected disruptions, it should continue to be
the norm, given that the average growth rate of world oil demand is
expected to remain at less than two percent annually over the next 15
years. Major producing countries have taken steps to avoid repeating past excesscapacity cycles. Nonetheless, their expansion potential is huge. Saudi Oil Minister Ali
Naimi has noted that Saudi Arabia is producing oil from only 9 to 10 of the country's
80-plus oil fields, and 8 of these were discovered more than 40 or 50 years ago.
IMMENSE RESERVES ALLOW SAUDIA ARABIA TO OFFSET SUPPLY
DISRUPTIONS
BAHGAT, 2003
(Gawdat – director of the Center for Middle Eastern Studies, Department of Political Science, at Indiana University of
Pennsylvania, World Affairs, "Oil and Militant Islam," January 1, EbscoHost)
Most of the world's spare production capacity is located in Saudi Arabia, which means
that whenever a sudden interruption of supplies occurs, Saudi Arabia can fill the gap in a
very short time. That can be seen as an insurance policy against temporary shortages in
world oil supplies. For the last several decades Riyadh in most cases has proved to be a
reliable partner in overcoming oil crises.
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SAUDI ARABIA HAS SPARE OIL RESERVES THAT CAN MODERATE OIL
PRICES IN THE EVENT OF SHOCKS OR DISRUPTIONS
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
Even more important is Saudi Arabia's role as swing producer. Unlike other
countries, the Saudis keep several million barrels per day (bpd) of idle capacity on
hand for emergencies. Today Saudi Arabia is the only country with much spare capacity
available (see chart 1), though the precise amount is a matter of intense debate. Nansen
Saleri, an official at Saudi Aramco, the country's state-owned oil company, will say only
that Saudi output will rise in June to about 9m bpd, and that the country can raise its
output above 10m bpd "rapidly". This spare capacity allows the Saudis to moderate
oil-price spikes. They have done precisely this at various times: during the Iran-Iraq
war, when output from both countries was disrupted; during and after the first Gulf
war, when output from Iraq and Kuwait was lost; and last year, when civil strife in
Venezuela and Nigeria curbed output from both countries on the eve of last year's
invasion of Iraq (which itself disrupted Iraqi output).
THE WORLD CAN HANDLE AN OIL SUPPLY SHOCK
ECONOMIST, 2004
("What if? Saudi Arabia and oil," May 29, l/n)
How would the world oil market react to such a blow? The world is clearly better
equipped to handle a supply shock than it was during the turbulent 1970s. For a
start, the rich world is much less energy intensive. Unlike three decades ago, OECD
countries now maintain large "strategic reserves" of petroleum, and co-ordinate the
release of these during emergencies through the International Energy Agency (IEA).
The rise of energy futures markets over the past two decades also offers some scope
for the world to deal better with short-term price shocks.
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RESERVES ALLOW SAUDIA ARABIA TO OFFSET SUPPLY DISRUPTIONS
BAER, 2003
(Robert – former agent in the CIA, Atlantic Monthly, "The fall of the House of Saud," May, wilsonselect)
The Saudis have repeatedly used their surplus production capacity to stabilize the
international oil market. They used it to break the OPEC embargo (but not before they had
enriched themselves by tens of billions of dollars), in 1974. They used it again during the protracted
Iran-Iraq war, to keep oil flowing to the industrialized West. They used it during
the Gulf War, in 1990-1991; with help from a couple of other Gulf states, they produced an extra five million barrels a day,
making up for the loss of Iraqi and Kuwaiti oil. And they used it again on September 12, 2001. Less than
twenty-four hours after the attacks on the World Trade Center and the Pentagon, the Saudis decided to send nine million barrels of oil
to the United States over the next two weeks.
The result was that the United States experienced only
a slight inflation spike in the wake of the most devastating terrorist attack in
history. Had that same surplus capacity been taken out of play with twenty pounds of Semtex,
all bets would have been off. The U.S. Strategic Petroleum Reserve can support the domestic market for only about seventy days. And
if Saudi Arabia's contribution to the world's oil supply were cut off, crude petroleum could quite realistically rise from around $40 a
barrel today to as much as $150 a barrel.
It wouldn't take long for other economic and social
calamities to follow.
SPR reserves are capable of being transported around America – extensive pipeline
and scenario planning ensure
Felmy, Director of Policy Analysis and Statistics API, 1-15-2k3
(John, “API’s Year-End Statistical Report,” FNS p.ln)
<MR. FELMY: Well, you have the ability from the SPR to release in the first 90
days I believe, according to DOE, roughly 4.3 million barrels a day, followed by
the next 30 days it's about 3.2. It drops down to 2 for the next 30, and
ultimately a little over 1 for a period of 180 days. We have a pipeline system
in place that as I understand it is capable of handling 120 percent of the
releases from the SPR. So I would think that there's sufficient capacity to be
able to move that around in the U.S. wherever it was needed. And if you -- but I
am not familiar with the detailed pipeline structure to give you any precise
routes or so on on where it goes.>
SAUDI ARABIA CAN INCREASE OIL SUPPLY
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
Long term, Saudi Arabia contends that it could double its petroleum output for 50 years
or more, if necessary. If the figures are sound, the additional Saudi oil could help forestall
an oil shock that some predict will occur by the end of the next decade.
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Advancements in American technology and SPR provide America with a sizeable
reserve
Felmy, Director of Policy Analysis and Statistics API, 1-15-2k3
(John, “API’s Year-End Statistical Report,” FNS p.ln)
<It is also worth noting that although commercially available crude stocks
fell by 36 million barrels in 2002, the federally controlled Strategic Petroleum
Reserve, SPR, saw an infusion of some 50 million barrels of crude during 2002.
Congress designed the SPR as an important resource to be used in the event of
emergency disruptions. By the first week of 2003, the SPR contained nearly 600
million barrels total -- the equivalent of 300 days of crude oil imported from
the Middle East.
It is important to remember that over the past decade, America has
increased the number of worldwide sources for its crude oil supplies. It has
also used its technological advances to develop more sources, both domestic
and foreign, and we know that Americans recognize this capability of the
industry. And some of that is represented in these charts here. With that, that
concludes my statement. And Ron Planting and I are prepared for any questions.
MR. FELMY: You're right crude oil stocks dropped according to our survey by
about three million barrels last week. The EIA has the 270 number as being the
minimum operational level that they have referenced. It's a number that has been
developed -- Oh, I guess it was initially developed in the late '80s. Since that
point, the American petroleum industry has changed dramatically. We have gotten
a lot more efficient in terms of our operations. We are much more computerized.
So it's unclear to me really what that level means. At this point we see that
the market appears to be working. We had robust production last week. For
example, we had record levels of gasoline production, record levels of have
distillate production, we had refinery utilization that was very high. It
appears the system is functioning quite well, even at relatively low levels of
stocks.
In terms of the SPR, I guess my point at this point was I think we need to
keep our powder dry on using the SPR. We have had no indications of shortages,
refinery problems. As I said, the system seems to be working. So at this point
we are not in an emergency in my opinion, and I think we should press forward
with seeing how things are going and monitor the situation carefully.>
NO SHORTAGE OF OIL
BOOTLE, 2004
(Roger, staff, The Sunday Telegraph, "impending disaster," June 6, ln)
There is no practical prospect of oil running out and thereby bringing on a
collapse of the world economy. Indeed, the world is awash with the stuff. It
is all a matter of precisely where the oil is and the cost of getting hold of it.
Furthermore, there is an ample alternative source of oil, namely shale oil. It
is estimated that the world has something like 240 times more shale oil
than it has reserves of petroleum.
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Saudi Arabia strategic reserves off-set supply shock disruption
Larson, Under Secretary for Economic, Business and Agricultural Affairs Dept. of State, 6-20-2k2
(Alan, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<Spare production capacity, especially in Saudi Arabia, is another factor that
mitigates the risks associated with supply disruptions. And I think it's
important to point out that in the last two years Iraq has either interrupted
its supplies, or threatened to, on three occasions. And in each case, a
combination of the readiness of the United States and our partners to be able to
respond through stocks, and assurances from Saudi Arabia that it would use its
oil, spare oil production capacity, to offset such disruptions, has moderated,
very significantly, the response of markets to these threats.>
Energy diversification solves supply shocks – Venezuela crisis proves
McManus, Acting Director Office of International Energy and Commodity, 10-21-2k3
(Matthew,” US NRG Security: West Africa and Latin America,” FNS p.ln)
<Oftentimes people talk about a disruption from the Middle East. I think
Venezuela has shown that you can have a disruption from any one region in the
world and in this case it was Middle East suppliers led by Saudi Arabia that
largely compensated for a Western Hemisphere supplier, so we need to maintain
engage with all of our major suppliers and I understand that Secretary Brodman
is off the plane from Saudi Arabia hours ago.>
Global oil reserves will peak around 2k8
Richter, 12-7-2k3
(John, “Is the End of Cheap Oil the End of Civilization?” The Rant p.
http://www.therant.info/archive/000003.html)
<In 1956, Shell Geophysicist M. King Hubbert used statistical analysis to predict that US oil extraction
would reach its highest level in the early 1970s. Hubbert projected oil the oil extraction rate over time as a
bell-shaped curve. The now famous “Hubbert Curve” of oil extraction is symmetrical around its maximum.
This predicts that the extraction rate doesn't fall off a cliff, but declines over a period of time. According to
the US Department of Energy’s Energy Information Administration (EIA), the US oil extraction rate in
2000 was still 60% of the 1970 peak[vii]. C.J. Campbell (one of the leading petroleum geologists drawing
attention to the oil peak problem) estimates that world oil extraction will decline 3 percent per year after
reaching its peak around 2008.[viii] Barring an embargo or war, we don't have to learn to do without oil,
but we must find a way to make do with less of it.>
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ENERGY SUPPLIES HAVE NEVER BEEN AS SECURE AS THEY ARE NOW
Financial Times, February 1, 1997; Pg. 03, TITLE: Supplies of energy safe for 50 years // VT98-ACS
Mr Baker, speaking at a seminar sponsored by Price Waterhouse, said concerns about the security of energy
supplies, which had been common in the 1970s and 1980s, were a thing of the past.
The world had never felt more relaxed about the security of energy supplies and this was having a big impact on
the structure of the power industry.
THE OIL SUPPLY WILL BE STABLE FOR THE NEXT FIFTEEN YEARS
Snow, Nick 1996 [Oil & Gas Investor, May: It's still the Middle East\\jan]
"Complacency is a value term," observes John H. Lichtblau, chairman of Petroleum Industry Research
Foundation Inc. in New York. "The assumption that there's enough oil around for the foreseeable future may be
fundamentally correct. In the 1980s people were saying that there was not enough oil to supply all our needs.
That kind of forecast, in addition to political problems in oil supplying countries, made some people say that
we'd have supply problems by the end of the century. Obviously, they were wrong. "More oil is being produced
now. No one is looking at constrained production for the next 15 years. A great deal of new technology makes it
possible to develop resources that couldn't be developed before. More oil also is being produced from
traditional areas. There still are political and economic, but not geologic, reasons why there might again be
supply problems."
THE GULF WAR PROVES THAT A MIDDLE EAST CONFLICT WILL NOT HAVE LONG TERM
IMPACTS ON OIL PRICES OR THE ECONOMY
Jim Landers, 1996 [THE DALLAS MORNING NEWS, July 16; Saudi blast exposes flaws in energy
policy\\jan]
We are relying more and more on the military for our energy security. Two lessons were learned painfully from
the 1970s oil shocks: Let market forces defeat cartels and handle energy supply and demand. When war
intervenes, use strategic stocks of oil and strategic forces to restore peace. The Persian Gulf War saw these
lessons in full application . Oil prices went up for a short while, but nobody cried out for price controls. Oil
stocks were available and eased buyer fears. The U.S. military took care of the rest. In the years since the gulf
war, we have drifted along with these tenets intact. We import most of our oil. We pay gasoline prices that are
lower in real terms than they were in the 1970s.
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THE INTERNATIONAL ENERGY AGENCY WILL PREVENT ANY MAJOR IMPACTS FROM THE
NEXT OIL SHOCK
Jim Landers, 1996 THE DALLAS MORNING NEWS, July 16; Saudi blast exposes flaws in energy policy\\jan]
In the 1970s, when oil disruptions delivered tremendous blows to the economy, the United States and other free
market economies formed the International Energy Agency. Its response plan for oil shocks is very much in
sync with the U.S. approach. Market forces have the lead, with strategic oil reserves acting as insurance. There's
no military component in the agency's plan, but everyone knows whose military would get the call in an energy
war. "The system is perfectly satisfactory," said Robert Priddle, the agency's executive director, "as long as it's
maintained. And none of our member-' governments have lost interest in maintaining their obligations."
THE RAISE IN OIL PRICES BECAUSE OF THE GULF WAR WAS COMPARABLE TO THE PRICE HIKE
OF THE 1970'S. THIS PROVES THAT ANOTHER OIL SHOCK WILL NOT WREAK HAVOC ON THE
ECONOMY
Jones, Charles M.; Kaul, Gautam, 1996 [Journal of Finance, June; HEADLINE: Oil and the stock markets;
includes appendices\\jan]
The dependence of the world economy on oil was again reflected in the international reaction to Iraq's
occupation of Kuwait. The maneuvers by Iraq to raise the world price of oil late in July 1990 and its invasion of
Kuwait less than a week later led to a near doubling of oil prices (from $ 16.10 to $ 30.00 per barrel) in the
second half of 1990. In fact, the 1990 oil price rise is comparable to even the notorious OPEC price hikes of
1973-1974 and 1979 1980.
AN OIL SHOCK OCCURRED IN 1986 - THE ECONOMY WASN'T DISASTROUSLY AFFECTED
Snow, Nick 1996 [Oil & Gas Investor, May: It's still the he Middle East\\jan]
The other great oil price shock came in l986. Tired of being the "swing" producer within OPEC that adjusted its
production to F preserve prices, Saudi Arabia opened its taps and cut prices to whatever it too k to sell all of its
oil. The shock was so profound, Lichtblau recalls, because "many had expected the price to stay in the low-tomid '20s at least. Many forecasts at that time had talked about increases at least in line with inflation. When
prices fell from the high '20s to the low teens, it was as big a shock as the 1973-74 and 1978-79 increases. "In
retrospect," he says, "it was stupid that the other OPEC nations assumed that Saudi Arabia would absorb all the
demand reduction .. Had it not taken its action with the high prices and slow demand, Saudi Arabia would have
been out of the market. It was self defense for Saudi Arabia, but also a rescue mission for OPEC. It finally got
back together when it agreed that the Saudis no longer would take the marginal producer's role."
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OPEC NO LONGER CAN HAVE THE EFFECT THAT IT HAD IN THE 1970'S
Snow, Nick 1996 [Oil & Gas Investor, May: It's still ' the Middle East\\jan]
It's not your imagination. A lot has changed worldwide in the oil and gas industry in 15 years. Petroleumconsuming nations no longer quake when the Organization of Petroleum Exporting Countries holds its twiceyearly ministerial meetings to set prices and production levels. Privatization, advanced technology and joint
ventures have replaced nationalization and high tax and royalty schedules as key strategies for countries trying
to exploit petroleum assets.
THE OIL MARKET IS SIGNIFICANTLY DIFFERENT THAN IT WAS IN THE 1970'S. THE MIDDLE
EAST CAN NO LONGER AFFECT THE MARKET IN THE SAME WAY
Paul Blustein, Washington Post Staff Writer, 1996 [Sept. 18, The Washington Post: HEADLINE: An Unstable
Middle East Won't Put the U.S. Over a Barrel\\jan]
Once again, the Middle East is crackling with instability. The latest military confrontation with Iraq -and the
ensuing surge in global oil prices -- came just 10 weeks after the deadly bombing of a U. S. military barracks in
Saudi Arabia. And once again, pundits are bemoaning the fact that 23 years after the first "energy crisis," the
United States remains dependent on this volatile region for oil. What the hand-wringing analysts haven't noticed
is that fundamental changes have taken place in the global energy market -- changes that have dramatically
weakened the power of Middle Eastern oil exporters. As the chart at right shows, oil now behaves much more
like an ordinary commodity, with prices rising and falling in response to supply and demand fluctuations, than it
used to in the period before the early '80s -- when prices essentially were fixed by government officials at home
and abroad. Today, oil prices are set in spot markets and futures markets around the world. Two decades ago,
when such markets barely existed, the price of oil seemed headed inexorably upward, in stair step fashion,
responding to the dictates of the Organization of Petroleum Exporting Countries. And in the decades before the
emergence of OPEC, oil prices were allowed to rise gradually in accord with the decisions of industry
regulators such as the Texas Railroad Commission. "It's a whole different world There really weren't true oil
markets back in the 1970s as there are today," said Douglas Bohi, a senior fellow at Resources for the Future, a
Washington-based think tank.
PRODUCTION OUTSIDE OF THE MIDDLE EAST IS RAPIDLY INCREASING
Energy Economist, 1996 [AUGUST, HEADLINE: energy Market Report: Crude oil & products\\JAN]
The prospects for non OPEC production, almost irrespective of whether crude oil prices are closer to $ 15 rather
than $ 20 per barrel, continue to look good, even if there are inevitably some temporary disappointments. For
some time, when planning new developments, oil companies have assumed that oil prices might be low,
possibly around $ 15, forever. This means that any significant changes in oil prices is good news. John Browne,
BP Chief Executive, speaking at a London press conference, was bullish on group production potential: BP total
oil and gas production could be 1.8 mbdoe by 2000 and might even reach 2.0 mbdoe. Average lifting costs
could be less than $ 2 a barrel and finding and developing costs could be lower than $ 5 per barrel. Once the
new fields had reached plateau production levels, they would be yielding 800,000 doe at lifting costs some 30
per cent below current levels.
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NON OPEC OIL PRODUCTION WILL CONTINUE TO RISE
Energy Economist, 1996 [AUGUST, HEADLINE: Energy Market Report: Crude oil & products\\JAN]
OPEC will not welcome the news that non OPEC production, anticipated to rise by 1.5 mbd this year could go
up by an additional 1.6 mbd in 1997. Next year, the pace of increase in OECD oil demand could slow to 1.4 per
cent, despite an acceleration in economic growth, "due to an assumed return to normal weather". In contrast,
non OECD oil demand growth is forecast to accelerate to 4.1 percent, mainly due to a projected slowdown in
the decline in FSU demand.
NO SCARCITY PROBLEM – GLOBAL SUPPLY AND RESERVES
ASTRONOMICALLY OUTPACE DEMAND
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at Rice Univ, and Robert
Manning – sr fellow and dir of asian studies at the Council on Foreign Relations, Foreign Affairs, "the shocks of a world of cheap oil,"
Jan/Feb, l/n)
Both the popular and the elite media -- from Parade asking "Could It Happen Again?" to
Scientific American, no less, proclaiming "The End of Cheap Oil" -- are peppered with
forecasts of gloom and doom about energy security. But the "sky-is-falling" school of oil
forecasting has been systematically wrong for more than a generation. In its dramatic
1972 "Limits to Growth" report, the group of prominent experts known as the Club of
Rome wrote that only 550 billion barrels of oil remained and that they would run out by
1990. In fact, the world consumed 600 billion barrels of oil between 1970 and 1990,
and there are today more than a trillion barrels of proven reserves (recoverable at
current prices under current conditions). This figure is likely to continue rising even as
global consumption exceeds the current 73 million barrels a day. Indeed, the
International Energy Agency says that there are 2.3 trillion barrels in ultimate
recoverable reserves, and if unconventional sources such as tar sands and shale are
included, the number may well be greater than 4 trillion barrels.
NEW TECHNOLOGIES MAKE EXTRACTING OIL CHEAPER
TAYLOR, 2004
(Jerry, researcher at Cato Institute, National Review, "OPEC is the problem," March 30, l/n)
Someday, of course, oil stocks will indeed begin to dwindle. When that might be,
however, is unknowable because new technologies continue to emerge that make finding
and producing oil cheaper than ever before.
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Asian Economy
ASIAN ECONOMIES EMPIRICALLY GROW DESPITE HIGH OIL PRICES
XINHUA, 2004
("East Asia enjoys robust growth despite oil price hike," July 30, ln)
The East Asian countries enjoyed robust economic growth with increasing
exports and domestic demands in the first half this year, despite the hiking
of world oil price and uncertainty over U.S. interest rates, said the Asian Development Bank (ADB)
in a semi-annual report published Thursday. The report, entitled "Asia Economic Monitor" which comes
out every six months, said that the "synchronized" economic growth which began in
the latter half of 2003 continued throughout the first half of 2004, with an 8
percent increase of GDP in the countries of the region in the first quarter this
year, higher than the 7.6 percent growth in the last quarter of 2003.
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"Oil as a Weapon"
USE OF OIL AS A WEAPON CAN BACKFIRE – DETERS USE
MACWHIRTER, 2004
(Iain, staff, The Herald, "Iraq is becoming a disaster movie," June 2, l/n)
The problem with the oil weapon is that it tends to damage the people who use it. Opec
found that the collapse of western economic growth precipitated by their price hike in the
1970s reduced demand and caused the price of oil to collapse. Producing less oil actually
made it cheaper. Consequently, Arab countries are now very cautious about increasing
the price of oil. They don't want the price to rise too fast, which is why Saudi Arabia
agreed last week to increase production, and why it will do so again at the Opec summit
in Beirut tomorrow.
OPEC DOESN'T CONTROL OIL PRICES – SPECULATORS AND THE STOCK
MARKET DO
BUCHAN et al., 2004
(David, staff, Financial Times, "Saudi Arabia is the only country that can lift oil output significantly," June 3, l/n)
Many Opec delegates also blame the price rise on speculative investors in crude
futures markets in London and New York. Speculative interest in crude futures is at
some of its highest levels of the past 10 years, with most investors betting that prices will
rise further. Today as much as 20 per cent of the oil price has nothing to do with the
fundamentals of supply and demand, analysts believe, in part because of the
prominence of speculators. "The fear factor is what is driving prices higher and that
is something that is out of the hands of Opec members," said Abdullah bin Hamad alAttiyaa, Qatar's energy minister.
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General
DEPENDENCY ARGUMENTS ARE OVERSTATED – THE U.S. IS BECOMING
MORE EFFICIENT USERS OF ENERGY
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at
Rice Univ, and Robert Manning – sr fellow and dir of asian studies at the Council on Foreign Relations,
Foreign Affairs, "the shocks of a world of cheap oil," Jan/Feb, l/n)
Contributing to this trend toward ample supply are the technological improvements
that have made more efficient use of energy. Energy use has also been held in check
by technological advances in residential and industrial use as well as in power
generation. For example, from 1980 to 1995, the amount of energy used in the
United States per constant dollar of GNP declined from $ 16.47 to $ 13.44. Europe
and Japan made even bigger gains in efficiency.
TURN – CHEAP OIL INCREASES DEPENDENCY
MAUGERI, 2003
(Leonardo -- Group Senior Vice President for Corporate Strategies and Planning for the Italian energy
company eni, Foreign Affairs, "not in oil's name," July/Aug, l/n)
Cheap oil has always been and remains a curse for industrialized countries
and is the most elusive enemy of oil security. It constricts the development
of expensive energy alternatives and new oil regions. It discourages
conservation and perpetuates lax Western consumption habits. Finally, it
increases dependence on the Persian Gulf countries with the lowest
production costs. Cheap oil is harmful to the producing countries as well. Today
less than 25 percent of global production but 65 percent of the world's proven oil
reserves are concentrated in five countries: Saudi Arabia, Iraq, the United Arab
Emirates, Kuwait, and Iran. All of these countries, as well as other OPEC members,
need decent oil prices; since 1999, they have finally managed a certain degree of
internal discipline in order to limit output and regulate prices. This policy leaves few
alternatives for the Persian Gulf producers because their economies remain heavily
based on oil while their demography has changed dramatically.
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DEPENDENCY GOOD: ASIA/US ECONOMY
Mid-East oil is cheap and ample – its key to American and Asian economic stability
Larson, Under Secretary for Economic, Business, and Agricultural Affairs Dept. of State, 4-8-2k3
(Alan, “Energy Concerns Cannot Constrain US Policy,” State Department p.ln)
<The Middle East holds two-thirds of proven world oil reserves and has the
lowest production costs in the world. Saudi Arabia, the world's largest oil
producer, has pursued a policy of investing in spare oil production capacity and
storage, and diversifying its export routes to both the Persian Gulf and the Red
Sea. These enormous investments allow Saudi Arabia to credibly assure markets
that it has the spare production capacity, and the export outlets, to mitigate
supply disruptions in the Gulf or elsewhere. Saudi Arabia and other major Gulf
producers, such as the UAE, Kuwait, and Qatar, repeatedly emphasize their
commitment to be reliable suppliers of oil and natural gas to world markets. And
they have demonstrated their leadership by offsetting the recent fluctuations in
Despite frequently expressed concerns about "dependence" on the Middle East,
the world and U.S. economies clearly benefit from access to these low-cost
supplies. In fact, this region is a core supplier not to the U.S., but to our
key economic partners, primarily in Asia. Without abundant, low-cost Gulf
supplies, we would expend scarce economic resources to secure the energy we need
at higher cost to the world economy, and our citizens.
Gulf producers will continue to have an indispensable role in the world
market. >
Collapse of China’s economy would cripple the US economy and create an unstable
power vacuum in Northeast Asia
Hwee, 1998 (Yeo Heng, Captain in the Singapore Armed Forces, “The US-Japan-China
Triangle: Maintaining Peace And Security In A Troubled East Asia,”
http://www.mindef.gov.sg/safti/pointer/back/journals/1998/Vol24_2/6.htm)
In 1994, US trade with North-East Asia amounted to US$300 billion. While security paves the way
for viable economics, economics in turn determines in a relative sense, the inclinations of foreign
policy. Instability in North-East Asia will upset the US economy as much as the Asian ones. The US
had provided assurance that it would continue to remain engaged in North-East Asia. The bilateral
relationships that the US has developed with various nations in the Asia-Pacific have been the
principal basis for US presence in the region since the 1950s. They have been the pillars on which
the US relied upon in the containment of Soviet influence in the Cold War and can still be mutually
exploited to influence regional events. To eliminate or undermine them would be to inject an
essence of instability in the region whereby great power rivalries may occur.
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DEPENDENCE GOOD: MID-EAST ENGAGEMENT
AMERICAN ENGAGEMENT IN THE PERSIAN GULF IS CRITICAL TO MAINTAIN THE
FREE-FLOW OF OIL – AMERICAN DISENGAGEMENT RISKS COLLAPSE OF THE GLOBAL
ECONOMY
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<America's primary interest in the Persian Gulf lies in ensuring the free and stable flow of oil from the
region to the world at large. This fact has nothing to do with the conspiracy theories leveled against the
Bush administration during the run-up to the recent war. U.S. interests do not center on whether gas is $2 or
$3 at the pump, or whether Exxon gets contracts instead of Lukoil or Total. Nor do they depend on the
amount of oil that the United States itself imports from the Persian Gulf or anywhere else. The reason the
United States has a legitimate and critical interest in seeing that Persian Gulf oil continues to flow
copiously and relatively cheaply is simply that the global economy built over the last 50 years rests on a
foundation of inexpensive, plentiful oil, and if that foundation were removed, the global economy would
collapse.>
THAT TRIGGERS NUCLEAR WAR
Mead, 1992
(Walter -- sr counselor at the World Policy Institute, New Perspectives Quarterly, summer, “outer limits to America’s turn inward, p.
30)
If so, this new failure -- the failure to develop an international system to hedge against the possibility of worldwide depression -- will
Hundreds of millions -- billions -- of people around the world have
pinned their hopes on the international market economy. They and their leaders have embraced
open their eyes to their folly.
market principles -- and drawn closer to the West -- because they believe that our system can work for them. But what if they can’t?
What if the global economy stagnates -- or even shrinks? In that case, we will face a new
period of international conflict: South against North, rich against poor, Russia,
China, India -- these countries with their billions of people and their nuclear
weapons will pose a much greater danger to world order than Germany and Japan
did in the ‘30s.
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DEPENDENCY GOOD: SAUDI ARABIA/AMERICA ECONOMY
AMERICAN DEPENDENCY ON SAUDI OIL CRITICAL TO SAUDI ARABIA, AMERICA AND
THE GLOBAL ECONOMY
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<Today, roughly 25 percent of the world's oil production comes from the Persian Gulf, with Saudi Arabia
alone responsible for roughly 15 percent -- a figure expected to increase rather than decrease in the future.
The Persian Gulf region has as much as two-thirds of the world's proven oil reserves, and its oil is absurdly
economical to produce, with a barrel from Saudi Arabia costing anywhere from a fifth to a tenth of the
price of a barrel from Russia. Saudi Arabia is not only the world's largest oil producer and the holder of the
world's largest oil reserves, but it also has a majority of the world's excess production capacity, which the
Saudis use to stabilize and control the price of oil by increasing or decreasing production as needed.
Because of the importance of both Saudi production and Saudi slack capacity, the sudden loss of the Saudi
oil network would paralyze the global economy, probably causing a global downturn at least as devastating
as the Great Depression of the 1930s, if not worse. So the fact that the United States does not import most
of its oil from the Persian Gulf is irrelevant: if Saudi oil production were to vanish, the price of oil in
general would shoot through the ceiling, destroying the American economy along with everybody else's.
THAT CAUSES NUCLEAR WAR
Mead, 1992
(Walter -- sr counselor at the World Policy Institute, New Perspectives Quarterly, summer, “outer limits to America’s turn inward, p.
30)
If so, this new failure -- the failure to develop an international system to hedge against the possibility of worldwide depression -- will
Hundreds of millions -- billions -- of people around the world have
pinned their hopes on the international market economy. They and their leaders have embraced
open their eyes to their folly.
market principles -- and drawn closer to the West -- because they believe that our system can work for them. But what if they can’t?
What if the global economy stagnates -- or even shrinks? In that case, we will face a new
period of international conflict: South against North, rich against poor, Russia,
China, India -- these countries with their billions of people and their nuclear
weapons will pose a much greater danger to world order than Germany and Japan
did in the ‘30s.
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DEPENDENCY GOOD: AMERICAN LEADERSHIP
AMERICAN OIL DEPENDENCY ON MIDDLE EASTERN OIL CRITCAL TO GEOSTRATEGIC
POSITIONING AND MAINTAINING MILITARY PRESENCE -- THIS IS CRITICAL TO
AMERICA’S ABILITY TO FORWARD DEPLOY AND DETER THE RISE OF HOSTILE
RIVALS
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<But the United States is not simply concerned with keeping oil flowing out of the Persian Gulf; it also has
an interest in preventing any potentially hostile state from gaining control over the region and is resources
and using such control to amass vast power or blackmail the world. And it has an interest in maintaining
military access to the Persian Gulf because of the region's geostrategically critical location, near the Middle
East, Central Asia, eastern Africa, and South Asia. If the United States were denid access to the Persian
Gulf, its ability to influence events in many other key regions of the world would be greatly diminished.
(Much of the air war against Afghanistan, for example, was mounted from bases in the Persian Gulf.) The
tragedy of September 11, 2001, finally, has demonstrated that the United States also has an interest in
stamping out the terrorist groups that flourish in the region.>
U.S. LEADERSHIP PREVENTS GLOBAL NUCLEAR WAR
KHALILZAD, 1995
(Zalmay -- rand corp., “losing the moment,” Washington Quarterly, spring, l/n)
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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DEPENDENCE GOOD: SOLVES IRAN AGGRESSION/SAUDI
CIVIL WAR
AMERICAN PULLOUT FROM GCC STATES RISKS IRANIAN AGRESSION AND CURTAILS
AMERICAN EFFORTS TO CONTAIN INTERNAL SAUDI CIVIL WAR
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<The best way for the United States to address the rise of terrorism and the threat of internal instability in
Saudi Arabia and the other GCC states would be to reduce its military presence in the region to the absolute
minimum, or even to withdraw entirely. The presence of American troops fuels the terrorists' propaganda
claims that the United States seeks to prop up the hated local tyrants and control the Middle East. And it is
a source of humiliation and resentment for pretty much all locals -- a constant reminder that the
descendants of the great Islamic empires can no longer defend themselves and must answer to infidel
powers. So pulling back would diminish the internal pressure on the Persian Gulf regimes and give them
the political space they need to enact the painful reforms that are vital to their long-term stability. But such
a withdrawal, in turn, would be the worst move from the perspective of deterring and containing Iran -- or
of being in a good position to respond swiftly to, say, a civil war in Saudi Arabia should one ever emerge.>
MINIMAL US PRESENCE IN GULF STATES CRITICAL TO MENDING ARAB-US
RELATIONS, AQUIECISING IRANIAN NUCLEAR-AGRESSION, AND REGIONAL BURDEN
SHARING
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<This smaller military footprint would go a long way toward alleviating the internal problems caused by
the presence of U.S. combat forces in the Persian Gulf region -- so not surprisingly, this is the strategy that
the Gulf Arabs themselves favor. With Saddam gone, their overriding goal now is to minimize domestic
discontent, and they believe that the United States can keep peace in the region with a minimal presence.
This approach would also be popular in certain quarters of the American military, which would be glad to
shed the burdens of policing an inhospitable and less than luxurious region far from home. On the other
hand, the mere fact that the Persian Gulf states are so enamored of this strategy ought to give American
planners pause. With the exception of Kuwait after the Iraqi invasion, most of these countries have shown a
distressing determination over the years to ignore their problems -- both external and internal -- rather than
confront them. Although returning to a mostly over-the-horizon presence could provide the Persian Gulf
states with the leeway they need to push through reforms, it is equally likely that they will see the
withdrawal of U.S. forces as a panacea for all their problems and decide that internal reforms are therefore
unnecessary. A reduced U.S. military and political presence, in turn, would weaken Washington's ability to
press its local allies to make the tough choices they need to for their own long-term well-being. A return to
an over-the-horizon posture would also risk re-creating some of the same problems that made the strategy
untenable the first time around. If Iran were to acquire nuclear weapons, a minimal American presence in
the region might tempt it to new aggression. The GCC countries have often shown a willingness to
accommodate powerful, aggressive neighbors, and a reduced American presence could increase their
willingness to do so again -- giving Iran, say, an unhealthy degree of control over oil flows. Finally, a
limited American presence might tempt other outside powers -- such as China -- to fish in the Gulf's
troubled waters at some point down the road.>
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DEPENDENCY GOOD: IRAN/GCC STABILITY
AMERICAN COMMITMENT TO THE MIDDL EAST IS CRITICAL TO CURTAILING
IRANIAN AGRESSION
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<The idea would be for the United States to establish a formal defense alliance with the GCC states and a
new government of Iraq. To paraphrase Lord Ismay's famous quip about NATO, the goal would be to keep
the Americans in, the Iranians out, and the Iraqis down. A formal defense pledge would be the best way to
lock in an unflinching American commitment to the security of the region; would serve as the best deterrent
to outright Iranian aggression; and, by extending a security guarantee to Iraq, would effectively solve
Baghdad's security dilemma as well, providing a benign framework for Iraq's conventional rearmament
while obviating the need for it to acquire WMD to deter Iran. As a bonus, if Persian Gulf publics could be
convinced that American forces were there as part of a community of equals, such an arrangement might
also help legitimize the U.S. presence in the region. Such an alliance should be more viable than its
predecessors, meanwhile, because the GCC states and Iraq share the same primary external security threat:
Iran.>
AGGRESSIVE IRAN JEOPARDIZES U.S. HEGEMONY IN THE MIDDLE EAST
FOLLMAN, 2003
(Mark, staff, Salon.com, "is Iran next?" July 10, l/n)
Beyond containing a potential nuclear threat, hawks see considerable benefit to the
U.S. in "going to Tehran." Iran, with its strategic location, represents the last major
military obstacle to U.S. hegemony in the Gulf, and hawks fear it could seriously
undermine U.S. plans to stabilize Iraq and Afghanistan. As one of the two remaining
"axis of evil" states, and alongside Syria the last significant rejectionist, terrorsupporting state in the Mideast after the collapse of Saddam's regime, Iran is a
natural target for U.S. hawks.
U.S. LEADERSHIP PREVENTS GLOBAL NUCLEAR WAR
KHALILZAD, 1995
(Zalmay -- rand corp., “losing the moment,” Washington Quarterly, spring, l/n)
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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AT: DEPENDENCY TURNS
China
HIGH OIL PRICES HAVEN'T AFFECTED CHINESE ECONOMIC GROWTH
XINHUA, 2004
("East Asia enjoys robust growth despite oil price hike," July 30, ln)
The East Asian countries enjoyed robust economic growth with increasing
exports and domestic demands in the first half this year, despite the hiking
of world oil price and uncertainty over U.S. interest rates, said the Asian Development Bank (ADB)
in a semi-annual report published Thursday. The report, entitled "Asia Economic Monitor" which comes
out every six months, said that the "synchronized" economic growth which began in
the latter half of 2003 continued throughout the first half of 2004, with an 8
percent increase of GDP in the countries of the region in the first quarter this year,
higher than the 7.6 percent growth in the last quarter of 2003. Due to their similar levels of
economic development, ADB includes China, South Korea and the 10 member countries
of the Southeast Asian Association in the east Asian region. Japan and the Democratic People's Republic of
Korea are not included. ADB said that China leads the region by striking a 9.8 percent
growth in the first quarter this year, while Singapore, the Philippines and Malaysia also saw
unexpected quick growth. Because of drought, avian flu and troubles in southern provinces, Thailand 's
GDP growth slowed down to stand at 6.5 percent in the first quarter.
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BACKSTOPPING ANSWERS
High oil prices key to make alternatives cost-competitive; this is critical to renewable
integration
Richter, 12-7-2k3
(John, “Is the End of Cheap Oil the End of Civilization?” The Rant p.
http://www.therant.info/archive/000003.html)
<Higher prices will affect the transportation sector in a similar way; some uses will bear higher prices
better than others. Electric cars have been built since before Henry Ford and the Model-T, but cannot
compete with the gasoline engine for performance, range, and ease of refueling. Most households have
more than one car. As gasoline becomes expensive, electric cars will be commonly used for short
commutes and shopping trips. At least one of the family cars will be electric. Long trips will become less
common. While this isn't hard to predict, it’s much harder to imagine military vehicles and airliners running
on anything but concentrated, liquid fuel. These will be among the final uses of oil products.>
High oil prices key to successful transition to renewable society
Richter, 12-7-2k3
(John, “Is the End of Cheap Oil the End of Civilization?” The Rant p.
http://www.therant.info/archive/000003.html)
<The peaking of world oil extraction will not mean the end of civilization. But world extraction will
decline gradually over several decades, giving us time to make the necessary changes. As oil gets scarce,
increasing prices will stimulate investment in non-conventional oil resources. Rising prices will also reduce
consumption and drive new efficiency enhancements. There are substitutes for nearly every use of oil
today, but they aren't cheap or plentiful. There will be painful economic dislocations. The transportation
sector will have to be downsized and retooled. Since governments haven't recognized the problem, these
adjustments will result largely from higher prices. The 1970s were a time of “stagflation” – a stagnant
economy with high levels of monetary inflation. They were not good times. The end of cheap oil may be
worse. But they weren't anything like the dark ages. Civilization will make it.>
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AT: ISRAEL DEPENDENCY TURN
ISRAEL IS DECREASING ITS DEPENDENCE ON OIL
HUNTER, 2004
(Catherine, staff, World Markets Analysis, Aug. 11, l/n)
Israel's use of crude oil for power generation fell by 47% in Q2, following the
commissioning of the country's first gas-fired power units at the start of the year, reported Globes. The
use of low-sulphur and low-asphalt crude oil for power generation fell from 372,000 tonnes in the second
quarter of 2003 to 196,000 tonnes in the second quarter of 2004. However, fuel consumption for
transportation continued to rise to 1.05m tonnes of petrol (gasoline) and 1.31m tonnes of diesel in H1
2004, from 1.02m tonnes and 1.21m tonnes in H1 2003 respectively, it added.
Significance: Given Israel's almost entire dependence on imports of crude oil, for energy and
transportation, the increased use of gas for domestic power generation is
already beginning to have a positive impact on import quantities and costs.
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DEPENDENCY TURNS
Uniqueness: Mid-East Dependency Increasing
THEIR CLAIMS ARE ALL HYPE – GLOBAL OIL CONSUMPTION WILL INCREASINGLY
BECOME MORE RELIANT ON MIDDLE EASTERN OIL
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<Today, roughly 25 percent of the world's oil production comes from the Persian Gulf, with Saudi Arabia
alone responsible for roughly 15 percent -- a figure expected to increase rather than decrease in the future.
The Persian Gulf region has as much as two-thirds of the world's proven oil reserves, and its oil is absurdly
economical to produce, with a barrel from Saudi Arabia costing anywhere from a fifth to a tenth of the
price of a barrel from Russia. Saudi Arabia is not only the world's largest oil producer and the holder of the
world's largest oil reserves, but it also has a majority of the world's excess production capacity, which the
Saudis use to stabilize and control the price of oil by increasing or decreasing production as needed.>
DEVASTATING SUPPLY SHOCKS ARE LIKELY
OSTROFF, 2004
(Jim, staff, Kiplinger Business Forecasts, "no respite from high energy prices," Aug 13, l/n)
Saudi Arabia can no longer be counted on to lift exports to tamp down prices, as
it has done several times since the 1980s. "However dire the supply situation seemed in the past, everyone knew that the
Also,
Saudis had up to 1.5 million barrels of oil a day they could add to production quickly. But that's no longer the case," says Richard
Baxter, a senior energy analyst with Ardour Capital Investments, an investment bank. In fact, the Saudis have already boosted oil
production more than 20%, or by around 1.5 million barrels daily over the last year, and Saudi vows this week to add another 1
million barrels were greeted by a rise in oil prices to near their record of just over $45 a barrel. "The timeframe for this extra oil
the Saudis aren't opening the spigots on
existing wells, but drilling new ones that won't necessarily pan out," Baxter says. Moreover,
potential shocks are plentiful. In addition to the risk of a terrorist attack on
pipelines or shipping terminals in Iraq, Saudi Arabia or Kuwait, there are
numerous other worrisome trouble spots: Civil unrest in Venezuela or Nigeria could
again shut down their oil exports. Together, these two countries provide roughly 5 million barrels a day. In
production is about one year. And even that is uncertain because
Russia, Kremlin moves against oil giant Yukos raise the fear of losing that company's output about 1.7 million barrels a day, or 12%
of world output.
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DEPENDENCY TURNS
Internal Links
LOW US DOLLAR VALUES RESULTS IN OPEC JACKING UP OIL PRICES
Saunders, Vice President and Energy Analyst Deutsche Bank, 3-24-2k4
(Jay, “NRG Information Administration 2004 NRG Outlook Report,” FDCH p.ln)
<OPEC and prices. Currency impacts suggest higher OPEC-driven dollar denominated prices as
US dollar weakness presents good justification for OPEC holding oil prices at
the upper edge of its price band. OPEC ministers have been complaining loudly
about the impact of the weak US dollar on purchasing power. In January 2000 the
US dollar and the Euro were trading at about parity. It now takes about US $1.25
to buy one Euro.>
PRICE VOLATILITY IS INEVITABLE
WORLD MARKETS ANALYSIS, 2003
("OPEC fear Q2 oil glut," Feb. 3, l/n)
With oil prices still over US$30/b and US commercial stocks at historic lows the
markets are still bullish, but the situation will alter substantially once a war in Iraq
begins and demand drops off in Q2 and Q3. OPEC will need to be careful in its
assessment of the market this year and volatility is likely to be with us for some time
yet given the uncertain outlook.
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DEPENDENCY TURNS
Economy
PRICE SHOCKS RIPPLE THROUGHOUT THE ECONOMY
TOMAN, 2002
(Michael – senior fellow at Resources for the Future, Brookings Review, "International Oil Security," Spring, wilsonselect)
The second component is macroeconomic disruptions arising from oil price
instability. These disruptions became a concern during the 1970s, when oil price
shocks were followed by economic downturns and inflation in the industrialized
countries. Among the causes of oil price shocks are unexpected supply reductions by individual oil suppliers or suppliers as a
group, unexpected surges in demand (caused, for example, by a cold winter), or destabilizing inventory adjustments (such as a build-
Oil price shocks appear to have consequences for the
economy beyond the direct effects of an increase in energy costs. Researchers have
offered varied explanations for this multiplier effect. Energy price shocks could
increase unemployment because worker productivity drops when energy use is curtailed in the face of rising prices and
real wages do not fall along with productivity. A sharp and sustained increased in energy prices
could idle fixed capital or make it prematurely obsolescent. The economy as a whole
could experience adjustment costs as producers and consumers try to respond to the energy price hikes by altering
up of stocks when the market already is tight).
the bundles of goods and services they make and buy. The direct and indirect burdens of higher energy prices are likely to be heaviest
The key issue in global oil security is not "running out"–the world
has hundreds of years of existing and potential reserves. Nor is it targeted embargoes or how much
oil the United States buys from particular countries–both are meaningless in an integrated world oil market. The key issue is
energy prices.
for lower-income groups.
HIGH OIL PRICES WILL TRIGGER A RECESSION
BAHGAT, 2003
(Gawdat – dir of the Center of Middle Eastern Studies at Indiana Univ in Pennsylvania, Orbis, "The new geopolitics of oil," summer,
EbscoHost)
To sum up, the Saudi policy of keeping oil prices at moderate levels coincides with
U.S. and global economic interests. Providing world economies with oil supplies at
reasonable prices gives Riyadh steady revenues and ensures continuity and stability for
its economic and political development, while a moderate oil price benefits the American
economy. It acts much like a tax cut by increasing consumer disposable income and
allowing for looser monetary policy, lower interest rates, lower inflation, and stronger
economic growth. High oil prices were a major cause for recessions in the United States
and other Western economies for the last several decades, including the one in the early
2000s and may be pushing the current U.S. recession. Should they persist, if history is a
reliable guide, Saudi Arabia will act decisively to bring prices back into line.
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DEPENDENCY TURNS
Economy
HIGH OIL PRICES RISK GLOBAL RECESSION
FINANCIAL TIMES INVESTOR, 2003
("business gloom deepens amid fears of conflict," Jan. 26, l/n)
Fears about the effect on the oil price of an attack on Iraq are seen as the biggest
danger to the world economy. Steep rises in the oil price have typically been
followed by global recessions. The Organisation of Petroleum Exporting
Countries is expected to increase production if the price of oil surges following an
invasion of Iraq. But there is still uncertainty over how high and how protracted the
spike in prices would be. Alan Blinder, a former vice-chairman of the US Federal
Reserve, said: "As the plateau of oil prices gets higher and longer, we start looking
not at a small recession as in the early 1990s but at a more serious one – and in the
worst case a very serious one as in the 1970s' oil shock."
EMPIRICALLY HIGH OIL PRICES TRIGGER A GLOBAL RECESSION
BIRMINGHAM POST, 2004
("what is story behind cartel that calls shots in market?" June 3, l/n)
Q: Haven't we been here before?A: Massive oil prices rises were sparked by
Opec in 1973 when it blocked exports in protest at Western support for
Israel in its war against Arab states. The rises sparked a global recession
and while Western economies are now less reliant on oil, optimistic
predictions of economic recovery may have to be revised.
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DEPENDENCY TURNS
Economy
Dependence hurts the U.S. economy
Gray, Podesta, and Wirth 2003 (C. Boyden, Partner – Wilmer, Cutler & Pickering and Former Counsel – 1st Bush Administration;
John D, Visiting Law Professor – Georgetown and Former Chief of Staff – Clinton Administration; Timothy E., President – United
Nations Foundation and Former Senator – Colorado, Foreign Affairs July/August l/n wdc/wbw)
U.S. dependence on oil leaves the country's economic, security, and environmental destiny to forces beyond America's control.
Reducing this exposure -- especially in the transportation sector, which is 95 percent dependent on petroleum -- must be a primary
goal of national energy policy.
Since October 1973, when Arab nations imposed a six-month embargo on oil exports to the United States, America has vowed to
reduce its dependence on foreign oil. Each of the last seven U.S. presidents has pledged to steer the nation toward greater energy
security, but the problem has only grown worse. Imports have passed 50 percent of total oil consumption and are projected to reach
more than 60 percent by 2010. Of the one trillion barrels of world reserves, only four percent are to be found in the United States, and
fully two-thirds are in the Persian Gulf. A quarter of U.S. imports are from that volatile region, and other key trading partners are
substantially more dependent on the Persian Gulf: Japan, for example, buys 75 percent of its oil from that region. China's economic
growth is also rapidly increasing its dependence on Persian Gulf oil.
The intensity of oil use in the transportation sector makes the American economy vulnerable to the actions of other states. A study by
Oak Ridge National Laboratory estimates a $7 trillion cost to the U.S. economy from the oil market upheavals of the last 30 years.
Indeed, every economic recession in the past 40 years has been preceded by a significant increase in oil prices.
U.S. Key to the global Economy
Mead 2004 (Walter Russel; Your Daddy and the world greatest economist Foreign Policy 3/1 l/n wdc/wbw)
Similarly, in the last 60 years, as foreigners have acquired a greater value in the United States--government and private bonds, direct
and portfolio private investments--more and more of them have acquired an interest in maintaining the strength of the U.S.-led system.
A collapse of the U.S. economy and the ruin of the dollar would do more than dent the prosperity of the United States. Without
their best customer, countries including China and Japan would fall into depressions. The financial strength of every country
would be severely shaken should the United States collapse. Under those circumstances, debt becomes a strength, not a weakness,
and other countries fear to break with the United States because they need its market and own its securities. Of course, pressed too far,
a large national debt can turn from a source of strength to a crippling liability, and the United States must continue to justify other
countries' faith by maintaining its long-term record of meeting its financial obligations. But, like Samson in the temple of the
Philistines, a collapsing U.S. economy would inflict enormous, unacceptable damage on the rest of the world. That is sticky
power with a vengeance.
A Collapse of the Global Economy Risks Multiple Scenarios for Global
Nuclear War and Extinction
Bearden 2000 (Tom; Lt. Col. U.S. Army – Retired, “The Unnecessary Energy Crisis: How to Solve It Quickly” 6/24
http://www.freerepublic.com/forum/a3aaf97f22e23.htm accessed 8/6/04 wdc/wbw)
History bears out that desperate nations take desperate actions. Prior to the final economic collapse, the stress on nations will
have increased the intensity and number of their conflicts, to the point where the arsenals of weapons of mass destruction
(WMD) now possessed by some 25 nations, are almost certain to be released. As an example, suppose a starving North Korea
launches nuclear weapons upon Japan and South Korea, including U.S. forces there, in a spasmodic suicidal response. Or
suppose a desperate China-whose long-range nuclear missiles (some) can reach the United States-attacks Taiwan. In addition to
immediate responses, the mutual treaties involved in such scenarios will quickly draw other nations into the conflict, escalating
it significantly. Strategic nuclear studies have shown for decades that, under such extreme stress conditions, once a few nukes
are launched, adversaries and potential adversaries are then compelled to launch on perception of preparations by one's
adversary. The real legacy of the MAD concept is this side of the MAD coin that is almost never discussed. Without effective
defense, the only chance a nation has to survive at all is to launch immediate full-bore pre-emptive strikes and try to take out its
perceived foes as rapidly and massively as possible. As the studies showed, rapid escalation to full WMD exchange occurs.
Today, a great percent of the WMD arsenals that will be unleashed, are already on site within the United States itself. The resulting
great Armageddon will destroy civilization as we know it, and perhaps most of the biosphere, at least for many decades.
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DEPENDENCY TURNS
Asian Economy
HIGH OIL PRICES HURT ASIAN ECONOMIES:
KAMMERER, 2004
(Peter, foreign editor, South China Morning Post, "oil price rise poses huge risk to Asia," August 14, l/n)
Asian countries risk losing the economic gains made since the 1997
financial crisis if crude oil prices remain high, analysts said this week. With
inflation already rising in some countries as prices hover at near-record
levels, governments are looking for ways to cushion the impact . Subsidies on oil
products, most evident in Malaysia and Thailand, are under increasing strain, prompting emergency
meetings of energy officials. Oil has also become political for candidates in next month's presidential
election in Indonesia, and the Philippines' recently elected president Gloria Macapagal-Arroyo, who is
controversially considering a petrol tax to raise much-needed revenue. Prices could also be a significant
factor in next year's general elections in Thailand if they remain high. A recent study by the intergovernmental International Energy Agency concluded that if high oil prices were sustained for a year,
Thailand would lose 1.8 per cent of gross domestic product, the Philippines 1.6 per cent and India 1 per
cent. Oil exporting nations China and Malaysia would be less exposed, although would still experience
respective cuts in GDP of 0.8 per cent and less than 0.4 per cent. The director of the agency's oil markets
and emergency preparedness office, Kenji Kobayashi, said on Thursday the impact for Asia
would be considerable given the region's high dependence on oil imports.
Although Asia produces only 10 per cent of the world's oil, it uses more than a quarter of global supplies.
Industrialisation has created expanding demand, most notably in China and India. Oil imports are
estimated to have cost India US$ 15 billion – about 3 per cent of GDP – last year. "Sustained oil
prices of US$ 45 a barrel and above will cause inflation in coming months
followed by a hampering of economic growth," Mr Kobayashi warned from his Paris
office. "They have to make efforts in their macro-economic and energy policies to reduce the effects."
Although Asian countries have been turning to natural gas and improving energy conservation, oil remains
the primary power source. The Singapore-based head of the Centennial Group consultancy's economic
research practice, Manu Bhaskaran, concluded that China, India, South Korea and Thailand would be
worst hit by rising prices. Indonesia, Malaysia and Singapore were better placed to weather any economic
turmoil. Global growth would slow as oil prices rose, reducing the demand for
exports from the region, he said. The more open a country's economy, the
greater the impact. Malaysia was better placed than most other countries because of the
revenues it would earn from higher oil prices. Indonesia was also in this situation, although would benefit
to a lesser extent, Mr Bhaskaran said. Singapore, which had become oil-rich because of its role as a
major oil refining centre, would also gain through increased refinery margins. Higher global prices also
meant more oil and gas exploration in the region. Nonetheless, Malaysia on Thursday said it would have
to review subsidies because losses to the government were becoming a burden. Indonesia, Thailand and
India would also have to rethink their subsidies, Mr Bhaskaran said. "Higher oil prices have
created policy dilemmas for governments," he said. "Raising oil prices means
inflation goes up and that affects the economy. They're caught in a bind, but
they have no choice but to bite the bullet." Asian Development Bank economist Park
Cyn-young determined in a study of the impact of a US$ 10 a barrel oil price rise on 10 Asian countries
that the Philippines, Thailand and Singapore would fare worst. Trade balances would be impacted the
most. If oil prices were to remain above US$ 40 a barrel until the end of next
year, inflation in Asia, not including Japan, would rise by more than 1 per cent
and real income would fall by 0.8 per cent, or US$ 28.8 billion, her report said.
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DEPENDENCY TURNS
Asian Economy
ASIAN ECONOMIES ARE KEY TO THE GLOBAL ECONOMY
JUSTER, 2003
(Kenneth – under secretary of commerce for industry and security, State Department, "commerce official calls free economy
incompatible with terrorism," April 29, l/n)
That is also why, today, APEC – the Asia-Pacific Economic Cooperation forum – focuses not just on
economic issues, but also on security issues. The Asia-Pacific economic region accounts for over 50
percent of the world's trade, 21 of the world's 30 top container seaports, and 23 of the world's 30 busiest
airports. In the year 2000, U.S. exports to APEC totaled $500 billion, making
the APEC economies – as a whole – the largest export customer of the United
States. And U.S. imports from APEC in 2000 totaled nearly $700 billion. In
addition, Asia is the home of a number of significant financial and banking
centers, including Hong Kong. Indeed, the overall health of the Asian economy is
one of the keys to ensuring a strong global economy.
THIS CAUSES NUCLEAR WAR
Mead, 1992
(Walter – sr counselor at the World Policy Institute, New Perspectives Quarterly, summer, “outer limits to America’s turn inward, p.
30)
If so, this new failure – the failure to develop an international system to hedge against the possibility of worldwide depression – will
Hundreds of millions – billions – of people around the world have
pinned their hopes on the international market economy. They and their leaders have embraced
open their eyes to their folly.
market principles – and drawn closer to the West – because they believe that our system can work for them. But what if they can’t?
What if the global economy stagnates – or even shrinks? In that case, we will face a new
period of international conflict: South against North, rich against poor, Russia,
China, India – these countries with their billions of people and their nuclear
weapons will pose a much greater danger to world order than Germany and Japan
did in the ‘30s.
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DEPENDENCY TURNS
Mid-East Arms Race/Terrorism/US-Sino relations
MIDDLE EAST DEPENDENCY RISKS ARMS RACES, TERRORISM, WAR, THWARTS
ECONOMIC GROWTH AND JACKS US-CHINESE RELATIONS
INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY, IRONICALLY NO AUTHOR
LISTED, 2-22-2K2 (P. http://www.iags.org/futureofoil.html accessed 5-25-2k4)
<Projecting 2001 production levels, by 2020 83% of global oil reserves will be controlled by Middle
Eastern regimes. The energy security and national security concerns that stem from reliance on a single
energy resource that is unevenly distributed throughout the world will be intensified as demand for oil
grows. The result will probably be:







A handful of Middle East suppliers will regain the influence they had in the 1970s and once again
be able to dictate the terms on world oil markets and manipulate oil prices and world politics.
Middle Eastern producers will continue to use their oil revenues to increase their military
expenditures, fuel an arms race and undermine regional stability.
Corrupt, oppressive regimes will continue to use oil revenues as a means to maintain their power.
Wealth generated by oil rich Middle Eastern countries will continue to flow into terrorist
organizations and organizations promoting radical Islam.
The U.S. will need to keep increasing American military presence in the region to ensure our
access to the remaining oil. This will mean further U.S. embroilment in Middle East conflicts,
more anti-American sentiment, and a deepening rift between the West and the Islamic world.
Tension between the U.S. and China due to growing Chinese intervention in the Middle East to
ensure its own access to oil and Chinese arming of Middle Eastern countries hostile to the U.S.
and its allies.
Further drain on economic resources caused by imports of expensive oil. >
COLLAPSE OF US-SINO RELATIONS RISKS MULTIPLE SCENARIOS FOR
NUCLEAR WAR
Barbar Conable, Former Congressmen, and David Lampton,
Director of Chinese Studies at The Nixon Center,
Foreign Affairs, Winter 1993
The most serious threats to American security andeconomic interests in Asia include armed conflict
withnuclear potential between the two Koreas and betweenBeijing and Taipei that could lead to economic
ormilitary conflict; a re-ignition of the Cambodianconflict; and a botched transition to Beijing'ssovereignty
in Hong Kong in 1997. None of theseproblems can be handled effectively withoutsubstantial SinoAmerican cooperation. Constructiverelations with Beijing will not assure P.R.C.cooperation in all cases;
needlessly bad relationswill nearly ensure conflict.>
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DEPENDENCY TURNS
"Oil as a Weapon"
America must diversify its energy sources or risk being held hostage to the whims of
OPEC profit-rackets
Hyde, representative R-IL, 6-20-2k2
(Henry, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<The enticing prospect of freedom from the whims of foreign rulers has been
held by every president since 1973 and its infamous Arab oil boycott. Our energy
security is also directly linked with the voracity of OPEC's demands. OPEC, the
Organization of Petroleum Exporting Countries, conspires to fix prices and
restrict the supply of crude oil to the world market in order to maximize
profits. We must devise alternate sources of energy and supplies to confront
this threat. Yet, barring radical changes in our lifestyles, the economy and
technology, our domestic resources alone will continue to fall short of this
goal. As Americans, we count on energy to protect our security, to fuel our cars,
to provide heat, air-conditioning and light for our homes, to manufacture goods
and to transport supplies. In all these needs we as consumers pay the price for
fluctuations in the global energy market. Gas prices are largely determined by
the price of crude oil, which has fluctuated greatly in recent months. Recently,
prices at the pump were as high as a $1.73 per gallon for regular unleaded
gasoline in Hawaii. Currently in Chicago the same type of gas sells on average
for $1.58 per gallon. The U.S. Department of Energy reports that this summer's
gas prices are expected to reach the third highest on record.>
American dependence on OPEC oil makes America susceptible to the cartels cutthroat way
Abraham, Secretary of NRG, 6-20-2k2
(Spencer, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<Crude oil prices are determined by worldwide supply and demand and are
obviously influenced by the Organization of Petroleum Exporting Countries
policies of production and quotas. In recent years, as I think is well known,
that organization, as tried to keep world oil prices in a target price
band of $22 to $28 a barrel. OPEC's ability to influence oil prices worldwide
arises because its members possess preponderance over 90 percent of the world's
spare oil production capacity. There's currently around seven million barrels
per day of excess crude oil production capacity in the global oil market and
almost all of it is in the Middle East OPEC countries. OPEC has attempted to
keep the price of oil within its target by a series of production cuts. In
total, those production quotas have been reduced by five million barrels per
day, although leakage has resulted in an effective cut of about four million
barrels per day during the timeframe in which these reductions have occurred.
Our national energy policy recognizes that our significant dependence on
imported oil has serious economic and security implications.>
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DEPENDENCY TURNS
War on Terrorism -- Shell
American dependency on Mid-East oil handicaps War on Terror and fuels
international terrorism
Lantos, representative D-CA, 6-20-2k2
(Tom, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<Mr. Chairman, our dependence on Middle East oil severely undermines our
ability to combat international terrorism. Fearing another Arab oil embargo,
some of our diplomats cow tow to Middle East autocrats and permit their
anti-democratic, anti-American practices to go unanswered. It is distressing
that U.S. foreign policy in the Middle East is often held hostage to oil
interests. The question we must ask ourselves is how can we break free of this
crippling dependence? The title of today's hearing is the Facts and Myths Behind
Foreign Oil Dependency. The fact is that we will remain beholden to these Middle
Eastern suppliers until we scale back America's addiction to oil. The myth
is that we can drill our way out of dependency.>
TERRORISM RISKS EXTINCTION
JOHNSON, 2002
(Reed, staff writer, Los Angeles Times, June 18, l/n)
the phantom menace of nuclear catastrophe has come back
with a vengeance--stalking our imaginations, confounding our leaders, confronting us with a host of atomic
terrors hitherto barely imagined: hijacked airliners rammed down the throats of nuclear power
plants; "dirty bombs" spraying lethal radiation and rendering huge swaths of cities
uninhabitable for years to come. Looming over these lesser catastrophes is the
threat of an actual nuclear weapons attack. After the lull of the '90s, we're learning to start worrying and
fear The Bomb all over again. Only now America must face the possibility of dealing with more
than just one or two mega-adversaries capable of sending our entire country up in a
mushroom cloud. Now we're conjuring up visions of a suitcase bomb detonated at Times Square, a 10-kiloton dose of
But in the bleak months since Sept. 11,
megadeath delivered in a truck to downtown Los Angeles or Chicago. Or a regional conflict, like the present one pitting India against
nuclear rival Pakistan over the disputed Kashmir territory, escalating into global Armageddon. On the one hand ,
we're being
confronted anew with the sublime terror of extinction; on the other, with the
banality and ridiculousness of a threat to our lives and our civilization from
something that may be lurking in a briefcase, a pair of Hush Puppies or, as in the new Hollywood
blockbuster "The Sum of All Fears," a cigarette-vending machine.
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DEPENDENCY TURNS
War on Terrorism
Lack of American timetable or energy efficient technology ensures Mid-East Oil
dependency – this feeds the coffers of terrorists
Lantos, representative D-CA, 6-20-2k2
(Tom, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<The 217 million cars, buses and trucks on our roads consume 67
percent of the oil we use. The administration's plan, in my
judgment, lacks a program with firm timetables to utilize currently available
technologies to make our gas-guzzling vehicles less dependent on oil. It also
lack a national renewable portfolio standard to speed the replacement of fossil
fuel with renewable energy sources, and the plan lacks effective incentives to
conserve power use in both homes and businesses.
These shortcomings in the administration's plan will guarantee increased
dependence on the regimes that bankroll terrorism. Mr. Chairman, the
administration's energy plan was written before the events of September 11. It
is imperative, in my judgment, that we adapt our approach to support our war
effort, not to undercut it. And although the administration has yet to revisit
its energy plan, I continue to hope that sooner or later common sense and logic
will prevail. It is in this spirit of hope that I look forward to hearing our
witnesses today. Thank you, Mr. Chairman.>
Mid-East oil dependence undermines America’s ability to resolve the War on
Terror
Ben-Meir, Mid-East Project Director at the World Policy Institute and a professor of International
Relations at New York University, 6-22-2k4
(Alon, “Defeating Terror: Energy Independence,” UPI p.ln)
< As we watch another American being beheaded in the Middle East, we must ask
ourselves: how much longer can we continue to delude ourselves and pursue the
same failed policy of merely trying to kill or capture terrorists (albeit
necessary) rather than dealing with the root causes of terrorism itself? An
energy-independence strategy is not a luxury; it is of a paramount importance
and a critical part of a comprehensive strategy we must urgently pursue to
defeat international terrorism. Here is why:
First, dependence on oil-producing countries compels us to protect their
governments in order to maintain political stability, no matter how corrupt,
rigid, and undemocratic they may be. As long as we continue to be perceived as
the protector of undemocratic regimes and as long as the prospects for real
reform remain elusive, we will continue to suffer the disdain and hatred of the
region's masses. If these perceptions remain unchanged, we will be the target of choice for
al-Qaida, whose public support in Saudi Arabia, for example, is currently higher
than 50 percent and whose main agenda there is to destabilize the country. As
long as we remain beholden to the oil-producing states, we compromise our
strategic interests and limit our policy choices in the region, thereby severely
impeding our chances of ever winning the war on terrorism.
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DEPENDENCY TURNS
War on Terrorism
Mid-East oil dependency hampers America’s ability to combat global terror
Gaffney, President and CEO Center for Security Policy, 6-20-2k2
(Frank, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<MR. FRANK J. GAFFNEY, JR: Mr. Chairman, thank you. I'm going to try to speak
as quickly as I can in light of the time limits we're operating under. I'd like
to make four points about the concerns that have bearing on national security
with an energy perspective. And then five suggested areas that this committee,
and American policy makers more generally, might focus on to try to take
corrective action.
The first is the obvious concern that's been mentioned several times this
morning. And that is the distinct problem of our overdependence upon foreign
sources, particularly of oil, and particularly from the Persian Gulf. I think
it's clear our ability to wage, effectively, a global war on terror may be
impinged upon, perhaps significantly so, if our enemies were able to disrupt, or
otherwise interfere, with such energy flows.>
American oil dependence on Mid-East oil fuels terrorism
Gaffney, President and CEO Center for Security Policy, 6-20-2k2
(Frank, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<Fourth, and finally, in this respect, it's been mentioned, and I think it's
of great concern. We are waging a war against those whose terrorist activities
are made possible, at least in part, by the proceeds of American and Western oil
purchases from the Persian Gulf. Specifically, such purchases are clearly
enabling Saudi support for our Islamist enemies.
I would note this is not a problem not only elsewhere in the world, such as
we've seen with Wahhabist madrassas in places like Pakistan, Indonesia and
Malaysia, it's true here in the United States as well, where I understand that
perhaps as many as 80 percent of the mosques in this country have their
financing, or their mortgages, underwritten by Saudi institutions, and members
of the royal family and so on.
I think we can no longer adopt, as we have, with respect to the Saudi
behavior this sort of senile, evil attitude whereby we have tolerated the effort
of the kingdom to channel internal opposition elsewhere by encouraging virulent
hostility towards America and her allies, most specially, Israel.>
OPEC revenues feed terrorist groups – making it a risky relationship
Gaffney, President and CEO Center for Security Policy, 6-20-2k2
(Frank, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<MR. GAFFNEY: Well, again, I think some of the things that I was just alluding
to would have a very destructive effect and that's why you would doubtless see
the Saudis and others in the Gulf, presumably, and maybe some of the oil
companies who have a comfortable relationship with them opposing this kind of
use of the SPR for this kind of purpose. But I think what we have to be clear
about is that it really is in our strategic interest to diminish the power of
that cartel, especially given that both you and I alluded to in terms of where
some of the proceeds of the money going into OPEC countries is winding up. And
that's clearly in the hands of the terrorists we're waging war against.>
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DEPENDENCY TURNS
War on Terrorism
Foreign Oil Dependence Undermines US Efforts to Combat Terrorism
Burns, US Senator, '03 [Conrad, Heritage Lecture #780, March 28]
Many have not realized the incredibly big impact that our oil
dependency has on the security of our country. The attack on 9/11 by
Islamic extremists should have been a wake-up call to the nation that
our vital security interests are threatened by our increasing
dependence on Middle East oil imports. I am sorry to say that our
nation still slumbers.
We should see the danger that lies in buying up to a quarter of our
imported oil from Saudi Arabia and Iraq.
We should see the dangers of paying billions of dollars to a man
committed to amassing weapons of mass destruction.
We should see and understand that every time America buys a barrel of
rogue oil we are in part funding unseen radicals.
And we should see that our national security is at risk, our foreign
policy is shackled, and our diplomatic credibility in the Middle East
undermined, so long as we buy from regimes that deny democracy and
freedom.
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DEPENDENCY TURNS
War on Terrorism
American dependency on Mid-East oil handicaps War on Terror and fills the
coffers of terrorist groups
Lantos, representative D-CA, 6-20-2k2
(Tom, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<REP. TOM LANTOS (D-CA): Thank you very much, Mr. Chairman. I shall be very
brief. Let me first express my appreciation for your holding this very important
hearing. Since the horrific events of last September we have held a number of
important hearings to assess how we can most effectively defeat global
terrorism. Until today we have not examined how our reliance on Middle Eastern
oil handicaps our ability to combat international terrorism.
Mr. Chairman, today America's dwindling oil reserves provide less than half
of the oil our economy uses. This leaves us heavily dependent on the Middle
Eastern regimes that control the vast majority of the world's known oil
reserves. Many of these regimes are either actively hostile to the United
States, as is the case with Iran, Iraq and Libya, or unsteady autocratic regimes
beholden to Islamic fundamentalists, like Saudi Arabia. Not surprisingly, many
of these same regimes funnel oil revenues into support for global terrorist
organizations.
Saudi royal family uses oil revenues to fund radical-terrorist groups
Lantos, representative D-CA, 6-20-2k2
(Tom, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
< The Saudi royal family, for instance, pumps millions of dollars
into radical religious schools and mosques across the Middle East that spread
the puritanical teachings of the Wahhabi sect of Islam. These schools preach
hate toward America. Many of these schools train the very Al-Qaeda terrorists
who struck America on September 11.>
Dependence fosters terrorism and draws the U.S. into wars
Gray, Podesta, and Wirth 2003 (C. Boyden, Partner – Wilmer, Cutler & Pickering and Former Counsel – 1st Bush Administration;
John D, Visiting Law Professor – Georgetown and Former Chief of Staff – Clinton Administration; Timothy E., President – United
Nations Foundation and Former Senator – Colorado, Foreign Affairs July/August l/n wdc/wbw)
Nor are supply disruptions and price shocks the only risks that oil dependence creates for U.S. national security. The flow of funds to
certain oil-producing states has financed widespread corruption, perpetuated repressive regimes, funded radical anti-American
fundamentalism, and fed hatreds that derive from rigid rule and stark contrasts between rich and poor. Terrorism and aggression are
byproducts of these realities. Iraq tried to use its oil wealth to buy the ingredients for weapons of mass destruction. In the future, some
oil-producing states may seek to swap assured access to oil for the weapons themselves. It is also increasingly clear that the riches
from oil trickle down to those who would do harm to America and its friends. If this situation remains unchanged, the United States
will find itself sending soldiers into battle again and again, adding the lives of American men and women in uniform to the already
high cost of oil.
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DEPENDENCY TURNS
GCC Relations – Mid East Instability
AMERICAN-GCC ALLIANCE RISKS JEOPARDIZING INTERNAL MIDDLE EASTERN
NATION-STATE STABILITY
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<Still, this approach also has its drawbacks. In particular, the GCC states do not actually want a formal
alliance relationship with the United States, at least not at the moment. GCC leaders fear that far from
legitimizing an American presence, such an alliance would be seen as the ultimate act of colonialism and
cronyism and would thus help to delegitimize their own regimes. Even a very pro-American Iraqi
government might be uneasy with a formal treaty relationship, for similar reasons. It is also unclear how
such an alliance system could address the threat of domestic instability in the GCC. Because of the
weakness of its armed forces, if Tehran does ever decide to pursue a more aggressive policy, it is more
likely to try to undermine its neighbors from within than attack them directly from without. And despite its
fearsome punching power, a Persian Gulf alliance would still be vulnerable to an enemy that hits below the
belt.>
AMERICAN PULLOUT FROM GCC STATES/SAUDI ARABIA IS CRITICAL TO QUELLING
TERRORIST THREATS – CRITICAL TO PEACE AND STABILITY OF THE REGION
POLLACK, Director of Research at the Saban Center for Middle East Policy at the Brookings Institution,
JULY/AUGUST 2K3
(KENNETH, “SECURING THE GULF,” FOREIGN AFFAIRS VOL. 82, ISSUE 4 P. ACADEMIC
SEARCH PREMIER)
<The best way for the United States to address the rise of terrorism and the threat of internal instability in
Saudi Arabia and the other GCC states would be to reduce its military presence in the region to the absolute
minimum, or even to withdraw entirely. The presence of American troops fuels the terrorists' propaganda
claims that the United States seeks to prop up the hated local tyrants and control the Middle East. And it is
a source of humiliation and resentment for pretty much all locals -- a constant reminder that the
descendants of the great Islamic empires can no longer defend themselves and must answer to infidel
powers. So pulling back would diminish the internal pressure on the Persian Gulf regimes and give them
the political space they need to enact the painful reforms that are vital to their long-term stability. But such
a withdrawal, in turn, would be the worst move from the perspective of deterring and containing Iran -- or
of being in a good position to respond swiftly to, say, a civil war in Saudi Arabia should one ever emerge.>
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DEPENDENCY TURNS
Middle East Economy
Mid-East economy promises to steer the global economy into depression
Rifkin, president of The Foundation on Economic Trends in Washington DC, 3-242k4
(Jeremy, “The Perfect Storm That’s About to Hit
Rising Oil Prices and a Weak Dollar Could Shatter the Global Economy,” Guardian p.ln)
<So we have all the conditions coming together to create the perfect economic storm: record oil prices
triggering a restriction in US economic growth and an increase in the federal budget deficit, accompanied
by further erosion in the value of the dollar - with increased budget deficits and the diminished value of the
dollar leading in turn to higher interest rates to convince foreign investors to lend the US additional money,
followed by a further retraction of the US economy as rising interest rates lead to a drop in domestic
investment and consumption. The cascade of events touches off a tsunami that engulfs the rest of the global
economy, submerging the world in deep recession.
As long as the US and global economy are increasingly dependent on an ever-dwindling supply of oil from
the Middle East, the conditions for a perfect economic storm will continue to haunt us. The solution, in the
long run, is to wean the world off its dependency on oil. That would require much tougher fuel efficiency
standards, greater energy conservation measures, support of hybrid vehicles and a switch to renewable
sources of energy. Short of that, expect the storm clouds to gather in intensity. >
THIS CAUSES NUCLEAR WAR
Mead, 1992
(Walter -- sr counselor at the World Policy Institute, New Perspectives Quarterly, summer, “outer limits to America’s turn inward, p.
30)
If so, this new failure -- the failure to develop an international system to hedge against the possibility of worldwide depression -- will
Hundreds of millions -- billions -- of people around the world have
pinned their hopes on the international market economy. They and their leaders have embraced
open their eyes to their folly.
market principles -- and drawn closer to the West -- because they believe that our system can work for them. But what if they can’t?
What if the global economy stagnates -- or even shrinks? In that case, we will face a new
period of international conflict: South against North, rich against poor, Russia,
China, India -- these countries with their billions of people and their nuclear
weapons will pose a much greater danger to world order than Germany and Japan
did in the ‘30s.
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292
DEPENDENCY TURNS
Middle East Economy
American dependence on Mid-East oil holds our economy hostage – risking collapse
Eizenstat, Partner Convington and Burlin, 6-20-2k2
(Stuart, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<In addition to the national security concerns, there are also economic
impacts for our dependence. Oil is the greatest -- the biggest natural resource
import and one of the largest contributors to our trade deficit. Last year we
imported $110 billions in petroleum products out of a total trade deficit of
$350 billion, a third of our total trade deficit.
The volatility of world oil markets leaves our economy vulnerable to price
fluctuations and there are environmental impacts as well, and that is as one who
negotiated the Kyoto Protocol and is concerned about global warming. With three
percent of the world's population but we're responsible for 25 percent of the
greenhouse gas emissions and a reduction in oil consumption it's essential to
deal with that issue as well.>
Mid-East oil dependency gives Al-Qaida the upper hand to destroy oil facilities and
undermine the US economy
Ben-Meir, Mid-East Project Director at the World Policy Institute and a professor of International
Relations at New York University, 6-22-2k4
(Alon, “Defeating Terror: Energy Independence,” UPI p.ln)
<Second, as long we remain dependent on Arab oil, we can count on al-Qaida to
even more systematically target anything related to oil -- for example, in Saudi
Arabia, its oil facilities, both to undermine the U.S. economy and weaken the
Saudi government's economic power base, which is oil. Perhaps even more
important, frequent attacks will have a devastating psychologically effect
throughout the region and on oil-consuming countries impacting not only other
industries but also their stock markets. To be sure, the future economic
stability of the Western hemisphere and Japan will be put in jeopardy.>
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US-Arab Relations – Terrorism
Mid-East oil dependency jeopardizes US-Arab relations; this makes terrorism and
economic collapse inevitable
Ben-Meir, Mid-East Project Director at the World Policy Institute and a professor of International
Relations at New York University, 6-22-2k4
(Alon, “Defeating Terror: Energy Independence,” UPI p.ln)
<Finally, our dependence on oil makes it impossible to change the perception
of the Arab and Muslim masses about America and its goals in the region. The
U.S. efforts in Iraq and elsewhere in the Middle East to promote democracy and
freedom are seen as nothing more than smokescreens to hide our real agenda, the
exploitation of Arab oil and wealth for our sole benefit. There is not much that
the United States can say or do to change these perceptions as long as we depend
on Arab oil and continue to be perceived as less than even-handed in dealing
with the Israeli-Palestinian conflict. Our actions and policies in the Middle
East, especially the war in Iraq and its aftermath, enforce rather than dilute
such beliefs. To be sure, if we continue to support current Arab despotic regimes, the
hatred and scorn toward America felt by the Arab masses will not only continue
unabated but grow. Terrorism, as the most forceful way of expressing that
resentment toward us, will continue to escalate. The sooner we become less
reliant on Middle-Eastern oil by adopting a specific and comprehensive energy
plan, the sooner we can develop a more independent policy to deal with terrorism
and other regional issues. The development of such a policy does not mean that
we need to abandon oil as a tradable commodity like any other industrial or
natural resource that we can buy and sell; it means that we no longer depend on
it for our survival. Only when oil loses its potency as a resource on which our
entire economic national security depends will we take from al-Qaida the ability
to threaten our national interests by using oil as a weapon against us.>
ECONOMIC COLLAPSE RISKS NUCLEAR WAR
Mead, 1992
(Walter -- sr counselor at the World Policy Institute, New Perspectives Quarterly, summer, “outer limits to America’s turn inward, p.
30)
If so, this new failure -- the failure to develop an international system to hedge against the possibility of worldwide depression -- will
Hundreds of millions -- billions -- of people around the world have
pinned their hopes on the international market economy. They and their leaders have embraced
open their eyes to their folly.
market principles -- and drawn closer to the West -- because they believe that our system can work for them. But what if they can’t?
What if the global economy stagnates -- or even shrinks? In that case, we will face a new
period of international conflict: South against North, rich against poor, Russia,
China, India -- these countries with their billions of people and their nuclear
weapons will pose a much greater danger to world order than Germany and Japan
did in the ‘30s.
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US-Arab Relations – Terrorism
TERRORISM RISKS EXTINCTION
JOHNSON, 2002
(Reed, staff writer, Los Angeles Times, June 18, l/n)
the phantom menace of nuclear catastrophe has come back
with a vengeance--stalking our imaginations, confounding our leaders, confronting us with a host of atomic
terrors hitherto barely imagined: hijacked airliners rammed down the throats of nuclear power
plants; "dirty bombs" spraying lethal radiation and rendering huge swaths of cities
uninhabitable for years to come. Looming over these lesser catastrophes is the
threat of an actual nuclear weapons attack. After the lull of the '90s, we're learning to start worrying and
fear The Bomb all over again. Only now America must face the possibility of dealing with more
than just one or two mega-adversaries capable of sending our entire country up in a
mushroom cloud. Now we're conjuring up visions of a suitcase bomb detonated at Times Square, a 10-kiloton dose of
But in the bleak months since Sept. 11,
megadeath delivered in a truck to downtown Los Angeles or Chicago. Or a regional conflict, like the present one pitting India against
nuclear rival Pakistan over the disputed Kashmir territory, escalating into global Armageddon. On the one hand ,
we're being
confronted anew with the sublime terror of extinction; on the other, with the
banality and ridiculousness of a threat to our lives and our civilization from
something that may be lurking in a briefcase, a pair of Hush Puppies or, as in the new Hollywood
blockbuster "The Sum of All Fears," a cigarette-vending machine.
OIL DISADS
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DEPENDENCY TURNS
Saudi Civil War
Energy diversification is critical to prevent America from being drawn into Saudi
civil war
David, professor of Political Science at Johns Hopkins University, Jan/Feb 1999
(Steven, “Saving America from the Coming Civil Wars,” Foreign Affairs p.ln)
<To guard against a conflict in Saudi Arabia, the United States should lead
the effort to reduce Western dependence on Saudi oil. This will require a
mixed strategy, including the expansion of U.S. strategic oil reserves (which
could be done now, while Saudi oil is cheap and available), locating new
suppliers (such as the Central Asian republics), and reviving moribund efforts
to find oil alternatives. None of this will be easy, especially in an era of
dollar-a-gallon gasoline, but it makes more sense than continuing to rely on an
energy source so vulnerable to the ravages of civil war.>
CIVIL WARS RISK TURNING INTO GENOCIDES
DIAMOND, 2003
(Jared – prof of geography and envtl health sciences at UCLA, Harper's Magazine, "the last Americans," June 1, l/n)
The connection between the two lists is transparent. Today, just as in the past, countries that are
environmentally stressed, overpopulated, or both are at risk of becoming politically stressed, and of seeing
their governments collapse. When people are desperate and undernourished, they
blame their government, which they see as responsible for failing to solve their problems. They try to
emigrate at any cost. They start civil wars. They kill one another. They figure that
they have nothing to lose, so they become terrorists, or they support or
tolerate terrorism. The results are genocides such as the ones that already
have exploded in Burundi, Indonesia, and Rwanda; civil wars, as in Afghanistan,
Indonesia, Nepal, the Philippines, and the Solomon Islands; calls for the dispatch of First World troops, as
to Afghanistan, Indonesia, Iraq, the Philippines, Rwanda, the Solomon Islands, and Somalia; the collapse
of central government, as has already happened in Somalia; and overwhelming poverty, as in all of the
countries on these lists.
OIL DISADS
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DEPENDENCY TURNS
Unilateralism Bad
Mid-East oil dependency forces America to act unilaterally to protect foreign
interest – this risks pre-emption and alienating critical allies in the war on terror
Ben-Meir, Mid-East Project Director at the World Policy Institute and a professor of International
Relations at New York University, 6-22-2k4
(Alon, “Defeating Terror: Energy Independence,” UPI p.ln)
<Third, to protect the supplies of Middle-Eastern oil, the United States may
sooner rather than later find itself once again acting unilaterally, further
alienating the global community, especially in the Arab and Muslim worlds. Our
experience in Iraq has demonstrated the high price to be paid for acting
unilaterally; we have undermined our relations with much of the international
community and precipitated a serious schism within the international system that
is unhealed to this day. It is not an unbelievable scenario that a future major
disruption in oil supplies could tempt the U.S. to act preemptively or take
other extraordinary measures to protect its national interests. But the Iraq
debacle has shown the folly of such responses, and a repetition must be avoided.
Another confrontation with our Western allies will only deepen the current rift,
further impeding our war on terrorism outside the Middle East. What we must take
from our experience in Iraq is that protecting oil supplies in the future may
increasingly become politically and militarily untenable.>
OIL DISADS
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297
DEPENDENCY TURNS
Backstopping
Mid-East energy dependence hold’s American ‘hostage’ at the pump – preventing
necessary alternative energy transition
Ben-Meir, Mid-East Project Director at the World Policy Institute and a professor of International
Relations at New York University, 6-22-2k4
(Alon, “Defeating Terror: Energy Independence,” UPI p.ln)
<Fifth, our dependence on Arab oil often forces us to operate according to the
whim of the oil-producing nations; under the best of circumstances, this makes
us vulnerable to the needs and greed of their governments. In addition, our
dependency, and the often the cozy relationships we cultivated with the leaders
of countries like Saudi Arabia continue to prevent us from committing to a real
energy-independence strategy. That is, as long as these governments keep the
price of a barrel of oil relatively low, we will do very little to develop
alternate energy sources. Leave it to fragile regimes like those of the Saudis
and other OPEC nations to manipulate oil prices, hold families "hostage" at
the gas pump, and keep the levers controlling oil flow in their hands, all to
inhibit us from acting independently in our own national interest.>
HIGH OIL PRICES WON'T NECESSARILY FORCE ALTERNATIVE OPTIONS TO
OIL
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
There's still more stunning analysis. Edward Luttwak of the US-based
Center for Strategic and International Studies recently offered an even
longer view to the current world oil price problem. He says the best
solution is for oil prices to rise even higher because this will break
the Western world's addiction to oil'. That's not as silly as it sounds,
as it'll then force governments and private corporations to pump more
research and development dollars into developing real energy alternatives.
There is one problem with this analysis: almost the whole world is oil
dependent. So is the world economy, and the world's strongest and weakest
militaries too. And Opec is pretty much dependent on oil exports. Break
Opec's back and run the risk of political and military mayhem that will
easily spread through the world economy. Even if this doesn't eventuate,
and alternative energy sources are found, what will the latter cost, and
who'll be able to afford the alternatives? Certainly not the developing
economies.
OIL DISADS
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298
DEPENDENCY TURNS
Iranian Prolif
American dependence on Iranian oil enables nuclear weapons production, and
terrorist training
Gaffney, President and CEO Center for Security Policy, 6-20-2k2
(Frank, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<MR. GAFFNEY: I think one other thing you need to keep your eye on,
congressman, because I think it is another front in this war -- and a colleague
of mine at the Center for Security Policy, Roger Robinson, has been doing some
very important work in the field, and that is monitoring what the Iranians -among others by the way, but the Iranians in the present context are doing to
come to our capital markets, or the European capital markets to raise funds,
some of which -- just as their oil proceeds will inevitably wind up going into
nuclear weapons build ups, other weapons of mass destruction and offensive
weaponry and of course support for terrorists. So this is another thing that I
think the will of the Congress or the intention of the Congress to try to
contain the danger posed by the radical Islamist theocrats in Iran as being
circumvented if not, you know, out and out defied.>
IRANIAN PROLIF RISKS REGIONAL NUCLEAR WAR
Conflict in the Middle East will Escalate to Global Nuclear War
Steinbach 2002 (John; Center for Research on Globalization, “Israeli Weapons of Mass Destruction: a Threat to Peace” March
http://www.wagingpeace.org/articles/2002/03/00_steinbach_israeli-wmd.htm accessed 8/6/04 wdc/wbw)
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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DEPENDENCY TURNS
Hegemony
Foreign Oil Dependence Constrains U.S. Hegemony
Bergsten 2004 (C. Fred; Director – Institute for International Economics, Foreign Affairs March/April l/n wdc/wbw)
At a time when U.S. foreign policy is dominated by war, terrorism, and weapons of mass destruction, economic concerns are often
relegated to the back burner. But in reality, economic policy must be an integral component of any successful foreign policy. Some of
its elements, such as the suppression of terrorist financing and support for reconstruction efforts in Iraq and Afghanistan, bear directly
on the most central national security concerns. The linkage, however, is much broader, because most countries, rich or poor, large or
small, depend heavily on the global economy for their prosperity and their stability. Hence, economics ranks at the top of their list of
concerns. To continue to be relevant to the rest of the world, the United States must engage effectively on these issues.
As the sole military superpower, the United States may often be able to undertake unilateral initiatives for the sake of national
security. But in economic policy, unilateralism is simply not an option. No government, Washington included, can ignore market
forces. The European Union's economy is now as large as that of the United States, and the euro has begun to challenge the dollar for
global financial leadership. The United States relies on foreign investors -- including the monetary authorities of competitor Asian
economies -- to finance massive external deficits, and it depends on oil imported at prices set by producers in other countries.
Cooperation is therefore a necessity in the realm of international economics. Indeed, because of the close connection between
economics and other international issues, economic policy often restrains the unilateralist tendencies in U.S. foreign policy as a whole.
U.S. Hegemony is Critical to Preventing Global Nuclear War
Khalilzad 1995 (Zalmay; RAND Institute, “Losing the Moment? The United States and the World After the Cold War” Washington
Quarterly Spring l/n wdc/wbw)
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.
OIL DISADS
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DEPENDENCY TURNS
Oil Shocks
OIL MARKET CAN'T SUSTAIN SUPPLY SHOCKS
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
Global spare operating capacity in oil markets is roughly the same as in 1973 -- 1.5
million barrels -- but that excess is less than 2 percent of today's world production, given rapid
growth in demand. In 1973, 1.5 million barrels represented about 3 percent of production (Greenwire, Aug. 10). "Spare
capacity -- the shock absorber for the world economy -- is running very thin," explained
James Burkhard, an oil analyst with Cambridge Energy Research Associates. Growth in world demand in 2004 is nearly double the
World oil demand is
expected to rise from 81.7 million barrels per day (bbl/day) in 2004 to 83.9 million bbl/day in 2005, a 2.7 percent
increase, according to the U.S. Energy Information Administration. Likewise, the International Energy Agency expects demand
average growth for the preceding six years, he added. TIGHT OIL, LOOSE MARKET
to increase by 2.3 million bbl/day, or about 3 percent. In either case, the upward demand will be driven in large part by India,
Indonesia and other developing countries, as well as the United States and China -- the world's No. 1 and No. 2 petroleum consumers.
At the same time, supply is expected to increase from 82.7 million bbl/day in 2004 to 83.8 million bbl/day
in 2005, a 1.3 percent change, according to EIA. About half of the 1.1 million bbl/day increase will come from Saudi
Arabia and OPEC countries, said EIA analyst Tanc Lidderdale. EIA's long-term petroleum forecast shows
world consumption outpacing production by about 300,000 bbl/day by 2025. Global production and
consumption would grow about 1.8 percent annually, with production reaching 117.5 million bbl/day and consumption hitting 117.8
million bbl/day in 2025. Meantime, OPEC's production would grow about 2.5 percent annually, and its market share would grow
"Supply will generally continue to meet demand," said John Felmy, chief
"The question is what price you'll pay."
The supply/demand imbalance, coupled with the lack of spare capacity, is at the
heart of the recent series of oil price spikes, analysts say. Crude oil prices peaked several times over the past
about 0.7 percent annually.
economist at the American Petroleum Institute.
week on the New York Mercantile Exchange, surpassing $45 per barrel, as new acts of sabotage in Iraq and political turmoil in
Nigeria, Russia and Venezuela spurred questions about top producers' ability to meet surging demand. Yesterday's close for New York
crude at $44.80 per barrel for September futures contracts was up 19 percent, or $7 a barrel, since June 30. London's Brent crude
futures contracts, meanwhile, climbed 5 cents to hit $41.30 a barrel. Factoring for inflation, the recent peak prices are still well below
the highs in the years after 1979's Islamic Revolution in Iran, when prices averaged more than $35 per barrel (about $73 in today's
U.S. crude prices could surpass $50 if one
or more supply disruptions removes 500,000 to 750,000 barrels a day from the
world market for several weeks. The ingredients for $50 oil prices include political and civil unrest in Iraq,
Nigeria and Venezuela, suggests Pulitzer Prize-winning author Daniel Yergin, also a Cambridge Energy Research Associates analyst.
"The world has one of the smallest cushions ever for absorbing a loss of supply,
while demand growth is the strongest in a generation," Yergin said.
dollars). Still, some analysts predict that by the end of September,
OPEC CAN'T MEET GLOBAL DEMAND
BUCHAN et al., 2004
(David, staff, Financial Times, "Saudi Arabia is the only country that can lift oil output significantly," June 3, l/n)
For the first time in its 44-year history, however, Opec is coming close to running out of the spare capacity it maintains
to meet market demands in times of crisis. Over the past two decades, Opec capacity has dwindled because of events
such as the Iraq-Iran war, the Gulf war, the Iraq war and a strike by Venezuelan oil workers in 2002. At the same time,
global oil demand has increased, with the emergence of China as the world's second biggest consumer and a steady rise
in US consumption. This year global oil demand is set to increase by its fastest rate in 16 years.
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DEPENDENCY TURNS
Oil Shocks
65% OF ENERGY INCREAES WILL COME FROM PERSIAN GULF OIL, SETTING US
UP FOR A DAMAGING OIL SHOCK IN THE FUTURE WHEN PRICES ARE
INCREASED
Stefan Halper, is host of NET Television's "World Wise" and a former White House and
State Department official, The Christian Science Monitor, October 18, 1996, Pg. 18
Second, the Persian Gulf, with 65 percent of the world's oil reserves, is expected to supply up
to 80 percent of the oil for the increased demand. This leaves us at risk to sudden oil price
increases which have, since 1970, always been followed by recession.
GENERATING MORE OIL SUPPLY WILL TAKE A LONG TIME
BUCHAN et al., 2004
(David, staff, Financial Times, "Saudi Arabia is the only country that can lift oil output significantly," June 3, l/n)
Of course high oil prices should eventually stimulate more supply. But this could
take time. Many of Opec's members with the biggest oil deposits have refused to let
international oil companies tap their oil and have been slow to invest in increasing
capacity by themselves. Outside Opec, mature fields in the US and North Sea are
producing less and less oil while new discoveries have proved elusive, with 2001-2003
yielding an average of 6.8bn barrels a year of new oil found, compared with 11.4bn a
year between 1995 and 2000.
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DEPENDENCY TURNS
Oil Shocks
PERSIAN GULF SUPPLIERS HAVE HUGE RESERVES AND LOW PRODUCTION
COSTS -- THEY WILL BE IN CONTROL OF THE WORLD IF IT IS DEPENDENT ON
OIL
Energy Report, September 16, 1996, TITLE: World to become much more dependent on
Persian Gulf oil, report warns
"Persian Gulf exporters, with enormous reserves and low production costs, promise to be the
key swing producers in meeting the world's increased oil demand," the report states.
[Trilateral Commission]
DEVASTATING SUPPLY SHOCKS ARE LIKELY
OSTROFF, 2004
(Jim, staff, Kiplinger Business Forecasts, "no respite from high energy prices," Aug 13, l/n)
Saudi Arabia can no longer be counted on to lift exports to tamp down prices, as it
has done several times since the 1980s. "However dire the supply situation seemed in the past, everyone knew that the Saudis
Also,
had up to 1.5 million barrels of oil a day they could add to production quickly. But that's no longer the case," says Richard Baxter, a senior
energy analyst with Ardour Capital Investments, an investment bank. In fact, the Saudis have already boosted oil production more than
20%, or by around 1.5 million barrels daily over the last year, and Saudi vows this week to add another 1 million barrels were greeted by a
rise in oil prices to near their record of just over $45 a barrel. "The timeframe for this extra oil production is about one year. And even that
the Saudis aren't opening the spigots on existing wells, but drilling new
ones that won't necessarily pan out," Baxter says. Moreover, potential shocks are plentiful. In
addition to the risk of a terrorist attack on pipelines or shipping terminals in Iraq,
Saudi Arabia or Kuwait, there are numerous other worrisome trouble spots: Civil
unrest in Venezuela or Nigeria could again shut down their oil exports. Together, these two
is uncertain because
countries provide roughly 5 million barrels a day. In Russia, Kremlin moves against oil giant Yukos raise the fear of losing that company's
output about 1.7 million barrels a day, or 12% of world output.
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DEPENDENCY TURNS
Oil Shocks
USA STRATEGIC OIL RESERVE WILL ONLY LAST 37 DAYS
JOHN BERGER, National Research Council, 1997; CHARGING AHEAD: THE BUSINESS OF
RENEWABLE ENERGY AND WHAT IT MEANS FOR AMERICA p. XIII
The nation's Strategic Oil Reserve contains only a 37-day oil supply. We cannot afford to be
passive or complacent about energy.
RENEWABLE ENERGY CAN REPLACE DEPENDENCE ON MIDDLE EAST OIL
Gabe G. Heller, The Palm Beach Post, October 1, 1996, Pg. 9A, TITLE: OIL CAUSES
MORE TROUBLE THAN IT'S WORTH
We must find sources of renewable energy, such as solar power, wind power, biofuels and
environment-controlled coal.
Persian Gulf oil can be replaced with readily available alternatives.
RENEWABLE ENERGY IS AN INSURANCE POLICY AGAINST FUTURE OIL
DISRUPTIONS
CongressDaily/P.M., September 23, 1996, TITLE: Despite Hostility, Renewable Energy
Boosters Win A Few
[Congressperson] Schaefer contends that renewable energy is insurance against energy
supply disruptions due to political instability. Research now avoids the need for a crash
program in the future to meet an energy shortage, Schaefer said, while noting solar and
renewables took the largest cut of any energy research program in FY96. He said other
countries are making advances in solar and renewables, putting American competitiveness in
jeopardy, and that the American public supports the program.
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DEPENDENCY TURNS
Domestic Sources Solve
Increase in domestic oil production critical to solve foreign dependency
Hyde, representative R-IL, 6-20-2k2
(Henry, “Oil Diplomacy: Facts and Myths Behind Foreign Oil Dependency,” FNS p.ln)
<The United States imports 52 percent of the oil it uses and as an oil
importing nation, our energy security is inextricably linked with the political
and economic security of our suppliers. Currently the riskiest factors include
the instability in the Middle East and Venezuela, Iran's recent call to all Arab
and Muslim nations to use oil as a weapon against the United States and Iraq's
suspension of oil exports to the U.S., currently amounting to one million
barrels of oil per day. U.S. energy security is not only affected by our
imports, but our domestic supplies are an important part of the equation as
well. We must examine why domestic production has been falling over the past
two decades. Are regulations so overbearing that they place the energy security
of the United States in jeopardy? By increasing our domestic production of
energy in both fuel types and deficiency, we ensure our survival in the event of
a catastrophic disruption of world oil supplies.
I believe this may be accomplished through new technology, which is much more
environmentally sound than in years past. I am pleased that the president's
national energy plan calls for an increase in the strategic petroleum reserve as
a means to address an imminent disruption in supplies, and as a national defense
reserve. Is energy dependence possible or even advisable? Is diversification of
suppliers and types of fuel the answer to the U.S. national energy security?
Even if energy independence is not feasible in the short term, greater energy
security certainly is. I believe that the means of achieving that lies close at
hand in our own hemisphere.>
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DEPENDENCY TURNS
AT: Saudi Arabia will offset
SAUDI ARABIA WILL BE LESS EFFECTIVE AT CURBING SHOCKS AND
SPIKES
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
Despite new assurances from Saudi Arabia -- the world's lone swing producer -- that
it can pump more oil to drive down prices and meet growing demand, analysts are
beginning to question the kingdom's long-term oil viability. It is well known that
Saudi Arabia's most productive fields are reaching maturity and inevitable decline
(Greenwire, March 2).
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DEPENDENCY TURNS
Timeframe
CHANGES IN OIL PRICES AFFECT CONSUMERS VIRTUALLY INSTANTLY
OSTROFF, 2004
(Jim, staff, Kiplinger Business Forecasts, "no respite from high energy prices," Aug 13, l/n)
What's more, the growth of worldwide computerized trading means virtually no lag time
before consumers feel the pinch. Any upward move in crude oil prices or those of
competing fuels is passed on within weeks. So, businesses should expect their energy
bills to jump during the spring and fall over the next couple of years as crude oil prices
climb by up to $15 a barrel during these high-demand seasons.
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GENERAL AFF ANSWERS
AT: Decrease Demand
DEMAND REDUCTION WON'T AFFECT PRICE
OSTROFF, 2004
(Jim, staff, Kiplinger Business Forecasts, "no respite from high energy prices," Aug 13, l/n)
Demand growth will slow to about 2.5% in 2005, but that won't be enough to deflate
oil prices much. Says Burkhard: "Typically over the last decade, the cushion, or spare oil
production, has been up to 5 million barrels a day. But it's1.5 million barrels now and
likely will be just one-third of that [by year's end]."
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GENERAL AFF ANSWERS
AT: Instability Stops Oil Flow
OIL PRODUCTION EMPIRICALLY CONTINUES EVEN DURING PERIODS OF
POLITICAL INSTABILITY
ENERGY DAY, 2001
(October 1, l/n)
Throughout past decades oil has continued to be pumped from countries casual observer
might consider on the brink of collapse. Hydrocarbons have never stopped flowing from
countries as war torn and battered as Algeria and Angola, while political and
environmental upheavals in countries such as Kuwait and Nigeria have failed to pull the
plug on exports. Whichever army or militia controls the oil fields, refineries or pipelines,
oil is always exported in exchange for much-needed hard currency.
RELIGIOUS EXTREMISTS WON'T TARGET OIL SUPPLIES
FANDY, 2002
(Mamoun – prof of politics at National Defense Univ, Middle East Policy, "The United States and Saudi Arabia," March 1, l/n)
If the war on terrorism does not extend beyond Afghanistan, the consequences will be
regime stability, cooperation and oil-price stability. On the issue of oil, I've concluded
that jihad and oil don't mix. Throughout my observations of Islamic movements
from Algeria to Saudi Arabia, none of them have attacked an oil installation. I don't
know if there is an ethical component to it, but this requires a little research.
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GENERAL AFF ANSWERS
AT: Price Fluctuations
OIL PRICE FLUCTUATIONS ARE INEVITABLE
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
The end of oil is not near, analysts say, but the era of cheap oil may end sooner than
expected, given recent market trends. Concerned by recent record-high oil prices -early morning trading saw oil prices hit $45.00 per barrel, up from yesterday's close of $44.80 -- experts predict that
between now and the peak of world oil production, global supply and demand will
wrestle for equilibrium, with fluctuations driven by economic growth, volatile
markets and supply uncertainties. The picture is complicated by emerging economies in China and south Asia
where oil demand growth is outpacing that of North America and Europe. Meanwhile, the world's resource-rich
regions continue to struggle against war, pipeline sabotage, political instability and
fears of terrorism. "We'll have higher highs and higher lows, and the price of oil will
continue to be volatile," said Charles Maxwell, a veteran industry analyst with Weeden & Co. in Connecticut.
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HIGH OIL PRICES BAD
Crushes the Econ
HIGH OIL PRICES WILL GUARANTEE A RECESSION – ITS EMPIRICALLY
PROVEN AND EXPERTS AGREE
STAR TRIBUNE 1-24-04
Economic forecasters historically have discounted price swings in energy as
"random noise" without long-term consequences. But Federal Reserve Chairman Alan
Greenspan said he doubts whether an outlook for rising energy prices is without
consequence.
"In what may or may not be a coincidence, the last three recession periods in the United States those of 1990-91, 1980-82 and 1974-75 – were preceded by spikes in the price of oil,"
Greenspan said in a speech in June 2001 before the Economic Club of Chicago.
HIGH OIL PRICES WILL COLLAPSE CURRENT ECONOMY RECOVERY
USA TODAY 2-11-04
OPEC, the cartel that pumps one-third of the world's oil, shocked the globe Tuesday by saying production
quotas would be strictly enforced immediately and production would be cut again April
1, slicing output 10%. The United States warned that higher prices caused by tighter oil supplies
could stymie a struggling recovery.
HIGH ENERGY PRICES CAUSE DEEPENING RECESSION IN US
MANUFACTURING SECTOR
THE WASHINGTON TIMES 2-7-04
Manufacturers, which have shed 3.3 million jobs since 2000 in by far the biggest job
losses of the recession, have been particularly sensitive to medical costs as well as
other high operating costs such as near-record energy prices.
HIGH OIL PRICES CAUSE A RECESSION
BROWN, 2003
(Fred, staff, Knoxville News-Sentinel, "politics of oil play role in Iraqi conflict," March 20, l/n)
Increases in oil prices usually mean the economy is likely to enter a recession. "In fact," says David Greene, a
Corporate Fellow of Oak Ridge National Laboratory who has spent 25 years researching transportation and energy policies, "all the
recessions since 1970 have been preceded by a major price shock in oil, and every price shock is
followed by recession. "Prices act more like a trigger. When prices go up, dollars leave the
United States and are not used here to stimulate the economy."
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OIL DISADS
UNIQ: Prices Will Remain High
LACK OF NEW WELLS WILL KEEP OIL PRICES HIGH
FINANCIAL TIMES ONLINE, 2004
(Aug. 25, http://news.ft.com/cms/s/d4fc60cc-f6bc-11d8-a879-00000e2511c8.html)
Some of the world's biggest oil producing countries have reduced their investment in new
capacity despite record oil prices. The Organisation of Petroleum Exporting Countries
[OPEC] this week revealed that its members drilled 6.5 per cent fewer wells in 2003,
suggesting that the global supply crunch and high oil prices could last longer than
expected, analysts said. The numbers appear to contradict statements by Opec members that they are actively building
extra capacity. "Oil demand has been booming since quarter one 2003, offering Opec along with rising oil prices a clear enough
signal of tightening market conditions, which the organisation seems to disregard," the Centre for Global Energy Studies, a London-
"Opec has tried to get prices to stay high and now with
nearly two years of very strong demand for oil we are really capacity constrained,"
based consulting firm, said recently.
said Leo Drollas, CEGS deputy executive director and chief economist.
OIL PRICES WILL REMAIN HIGH
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
other industry analysts debate whether the price of oil will again reach the levels
seen in the 1990s, when crude averaged $17.87 a barrel. A global economic
downturn, spurred by a recession in China or terrorist attack on the United States,
could deflate oil prices to about $30 a barrel, predicts Bob Ebel, chairman of the Center for Strategic &
International Studies' energy program. But without such a major economic catalyst, Ebel said he sees
"nothing out there that would force prices down."
Still,
OIL PRICES WILL NEVER GO TOO LOW
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
Three years ago, Saudi Arabia, Kuwait, Iran, Mexico and Venezuela - some
of Opec's leading members - claimed that they were going broke when world
oil price collapsed to US$ 10 a barrel. In late 1998, they reacted by
agreeing to cut production, not by much but enough to drive oil prices up
that did not disturb the world's political sensitivities. The six-month
lag time from production cut began to bite and by mid-1999, oil prices had
soared to US$ 20 a barrel - about the long-term average after inflation.
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OIL DISADS
UNIQ: Prices Will Remain High
OIL PRICES WILL REMAIN HIGH
OSTROFF, 2004
(Jim, staff, Kiplinger Business Forecasts, "no respite from high energy prices," Aug 13, l/n)
There's little chance that crude oil and fuel prices will moderate much, if at all, until
2006 or so, even though world oil production will be a record 82 million barrels a day
this year. One reason: A very stiff risk premium of $10 to $15 a barrel. That's because
there's little or no extra capacity to cushion the market from any sudden supply
shocks. World demand for oil will jump 3% this year to 81.3 million barrels a day, says
James Burkhard, director of world oil analysis with Cambridge Energy Research
Associates, an energy consulting firm. "That's the biggest one-year increase in 25
years...and more than double the average growth in any year since 1998 [when oil
demand by Asian nations soared]," he says.
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OIL DISADS – NEG
AT: Oil Prices are Dropping
RECENT DROP IN OIL PRICES WON'T AFFECT OVERALL GAINS IN OIL REVENUES
GOLDSTEIN, 2004
(Steve, staff, August 25, CBS MARKETWATCH,
http://cbs.marketwatch.com/news/newsfinder/pulseone.asp?guid=%7BFE492B4B-5463-4D15-A3659761FBD5BEEA%7D&siteid=google&dist=google)
European Central Bank President Jean-Claude Trichet on Wednesday said the bank remains
"confident yet vigilant" concerning prospects for a gradual economic recovery and
said it won't alter its forecasts in the face of rising oil prices, according to a radio interview with
RTL, AFX News said. Trichet told the radio station that the high oil price situation cannot be described as a crisis.
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OIL DISADS
Prices Will Stabilize
PRICE OF OIL WILL STABILIZE
BURNHAM, 2004
(Michael, staff, Greenwire, "crude will last, but it will not come cheap," Aug. 12, ln)
"There's absolutely no indication that we're near the peak of oil," the American Petroleum
Institute's Felmy insisted. Instead, Felmy said the market jitters over supply disruptions are linked to
limited investments that the oil industry made in pipelines, wells and other
infrastructure during the late 1990s, when the price of a barrel of oil reached a nadir of $8.But as oil
prices shot upward during the past four years, so have investments in new oil
projects. Thus, new wells coming on stream within the next few years could drive
down the cost of oil moderately, Felmy continued.
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OIL DISADS – NEG
General Internal Link
LOW OIL PRICES WILL DEVASTATE OIL-PRODUCING NATIONS
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at Rice Univ, and Robert
Manning – sr fellow and dir of asian studies at the Council on Foreign Relations, Foreign Affairs, "the shocks of a world of cheap oil,"
Jan/Feb, l/n)
OIL PRICES have been flirting recently with $ 25 -- $ 30 per barrel, levels almost
reminiscent of the oil shocks of the 1970s. Rising energy prices have been accompanied
by the usual hysteria about dwindling supplies and potentially dangerous transfers of
wealth, tempting policymakers to consider ways of dealing with a coming oil crisis. But
contrary to much received wisdom, the energy problem looming in the early 21st century
is neither skyrocketing prices nor shortages that herald the beginning of the end of the oil
age. Instead, the danger is precisely the opposite; long-term trends point to a
prolonged oil surplus and low oil prices over the next two decades. Paradoxically,
this scenario of plenty could destabilize oil-producing states, especially those in the
ellipse stretching from the Persian Gulf to Russia. And although the economies of the
United States and oil-importing developing nations would by and large benefit, the
backfire of low oil prices could undermine U.S. policy assumptions and imperil U.S.
interests.
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OIL DISADS – NEG
Impact – Turns Your Case
HIGH OIL PRICES WILL FORCE ALTERNATIVE OPTIONS TO OIL
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
There's still more stunning analysis. Edward Luttwak of the US-based
Center for Strategic and International Studies recently offered an even
longer view to the current world oil price problem. He says the best
solution is for oil prices to rise even higher because this will break
the Western world's addiction to oil'. That's not as silly as it sounds,
as it'll then force governments and private corporations to pump more
research and development dollars into developing real energy alternatives.
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AT: SAUDI ARABIA CAN UNDERSELL
IT IS EASIER FOR NON-OPEC OIL NATIONS TO COMPETE
JAFFE AND MANNING, 2000
(Amy Myers Jaffe – dir of the Energy Research Program at the James Baker Institute for public policy at Rice Univ, and Robert
Manning – sr fellow and dir of asian studies at the Council on Foreign Relations, Foreign Affairs, "the shocks of a world of cheap oil,"
Jan/Feb, l/n)
Many analysts expected that non-OPEC oil production would be short-lived. But
they missed the technological advances -- including computer-assisted, threedimensional imaging that lets geologists "see" underground oil pockets -- that
slashed the costs of developing hard-to-tap reserves and improved the chances for
new discoveries. Moreover, better platform designs and drilling methods have also
let companies recover more of the oil they find. These technological gains have
dramatically lowered the cost of finding and producing oil and natural gas and
given energy consumers ample, inexpensive supplies just at the time that earlier
forecasts had predicted a shortage. They have extended the life of existing wells and
allowed the oil industry to double the amount of oil recovered -- in many cases from
about 20 to 30 percent to between 50 and 60 percent. The average U.S. costs for finding
oil fell from about $ 15 per barrel in the 1980s to just $ 5 per barrel in 1998. Drillers
are four times as successful at finding natural gas and six times as successful at finding
oil as they were before the 1973 oil crisis.
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GENERAL -- TIMEFRAME
THE TIMEFRAME IS 8 WEEKS FOR OIL TO AFFECT THE MARKET
BEDI, 2000
(Bishen, staff, Malaysian Business, "boiling over," Nov. 16, l/n)
That's not all. It takes roughly eight weeks for oil output increases to
flow through world markets. That's about the time when oilfield output
decisions are made and implemented and oil tankers, on average, reach
their ports. Enter the oil market speculators who, like hedge fund
managers, have long been considered villains in the world economy.
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OIL PRICE STABILITY KEY
PRICE INSTABILITY IS DETRIMENTAL TO THE ECONOMY
SHOWALTER, 2004
(Monica, staff, Investor's Business Daily, "Energy in the age of angst," Aug 2, l/n)
Swings in oil prices -- in either direction -- present a hazard. If oil prices go too low,
there is less incentive for explorers to find new sources and refiners to invest in
production upgrades. If the price is high, the investment climate is good, but consumer
demand could fall. Refiners and marketers in particular must pay attention to the impact
of the economy because they market and sell to consumers.
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OIL DISADS – AFFIRMATIVE
N/U – Oil Prices Decreasing
OIL PRICES DECREASING
ASSOCIATED PRESS, August 25, 2004
(http://www.forbes.com/home/feeds/ap/2004/08/25/ap1518865.html)
Stocks rallied in quiet trading Wednesday as lower oil prices brought out buyers, countering a
pair of government reports that gave a mixed picture of the economy. In the final hour of trading, the Dow Jones
industrial average added 83.62, or 0.8 percent, to 10,182.25. The broader gauges were also higher. The Nasdaq
composite index rose 21.79, or 1.2 percent, at 1,858.68. The Standard & Poor's 500 index was up 8.35, or 0.8 percent, at
1,104.54. The moderate surge in buying was welcome on Wall Street as investors have been in no hurry to commit new
money to stocks lately. A long list of worries has kept many on the sidelines, including volatile oil prices and persistent
terror fears. Contributing to the light volume, a number of traders are preparing to take off ahead of the Republican
convention in New York next week. "I think the market is looking for a catalyst and right now there is just not a lot going
on," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. "People are waiting. They don't want to do
anything based on one set of assumptions only to see things turn out the other way." Soaring fuel prices have
pressured the market for weeks, with oil recently topping $46 per barrel, a record level. Prices have
softened somewhat over the last few sessions, however, as anxiety about global supply
eased.
OIL PRICES ARE DROPPING
DESAI, August 25, 2004
(Pratima, staff, Reuters, "lower oil prices support stocks, dollar,"
http://www.reuters.com/financeNewsArticle.jhtml?type=bondsNews&storyID=6064330)
Retreating oil prices supported European equities and the dollar on Wednesday as
investor concerns about economic and earnings growth eased, while euro debt yields slipped.
OIL PRICES PLUMMETING
THE AUSTRALIAN, August 25, 2004
(http://www.theaustralian.news.com.au/common/story_page/0,5744,10572410%5E1702,00.html)
OIL prices plummeted below $US44 a barrel today, sinking for the fourth
consecutive day, as supply fears receded and profit-taking took over. "This is overdue, this is
so overdue," said Fadel Gheit, an oil industry analyst at Oppenheimer & Co in New York. "Oil prices have been extremely inflated."
Light crude for October delivery settled at $US43.47, down $US1.74. The price of Nymex-traded oil futures has fallen by 11 per cent
When adjusted for
inflation, oil is more than $US13 cheaper than it was leading up to the first Gulf
War.
since last Thursday, when they settled at $US48.70 - the highest Nymex settlement on record.
OIL PRICES LOWERING
AFX.COM, 2004
("ENI CEO says April, May went well," June 11, l/n)
"However, Saudi Arabia has given precise signals of its availability to increase
supplies," he said. Oil prices are slowly falling and should come down to a level similar
to those of last year, he said.
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AFFIRMATIVE ANSWERS
AT: High Oil Prices Key to Stability
HIGHER OIL PRICES DON’T GUARANTEE POLITICAL STABILITY
BIRDSALL AND SUBRAMANIAN, 2004
(Nancy Birdsall -- President of the Center for Global Development, and Arvind Subramanian – division chief at the IMF, Foreign
Affairs, "Saving Iraq from its oil," July/Aug, l/n)
Nowhere have all the pathologies associated with oil manifested themselves
more clearly than in Nigeria. In the late 1960s, the Biafran war of secession
-- then Africa's biggest civil war, which killed a million people -- was, in part, an
attempt by the country's eastern, predominantly Igbo, region to gain
exclusive control over oil reserves. Nigeria has also suffered the assassination of
two of its leaders, six successful coups and four failed ones, and 30 years of military
rule. Its "pirates in power," as one Africa historian called its leaders, have plundered
Nigeria's oil wealth to the tune of perhaps $100 billion. The explosion in windfallfinanced government expenditures has also provided increased
opportunities for kickbacks. All of these forces have contributed to poor
economic growth and other staggeringly malign results. Between 1970 and
2000, the number of people living below the poverty line in Nigeria increased from
19 million to nearly 90 million, and inequality widened: the top 2 percent of the
population, which earned as much as the bottom 17 percent in 1970, now earns as
much as the bottom 55 percent. Nor are such statistics unique to Nigeria. In
different forms and at different times, natural-resource wealth has wreaked
similar havoc in Angola, Equatorial Guinea, Gabon, and Venezuela, and now
threatens to affect tiny Sao Tome and Principe. In Angola, an estimated $4.2
billion has gone missing from government coffers over the last few years. In
Venezuela, poverty has nearly doubled since the late 1970s and the share of national
income going to business owners has increased from 50 percent to nearly 80
percent; as a result, ordinary workers now get a mere 20 percent of the economic
pie.
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OIL DISADS – AFFIRMATIVE
Uniq for dependency turns
MORE PRICE SPIKES ARE INEVITABLE
QUINN, 2004
(Eamon, staff, Sunday Business Post, "more oil price blues ahead," July 18, l/n)
Further spikes in world oil prices will be unavoidable as capacity in Russia will
eventually fail to meet booming world demand, leading oil analysts have warned.
The warning comes as the price of crude oil again lifted above $ 40 a barrel after the
International Energy Agency (IEA) increased its forecasts for world oil demand for the
rest of this year and into 2005. Neil McMahon and Ben Dell of Sanford C Bernstein in
London said that the IEA predictions pointed to growing pressure on world oil
producers when the crippling winter sets in around the key Russian oil wells in
Siberia.