Category Archives: Energy

Geomagnetic Storms and National Security Policy

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By Mr. James Burchill and Ms. Meghann Murphy

On June 7, 2012, the Center for Technology and National Security Policy (CTNSP) hosted an event on the Hill for the United States House Subcommittee for the Department of Homeland Security (DHS) on Cyber-security, Infrastructure Protection, and Security Technologies on severe solar storms and national critical infrastructure.

The event was organized by Dr. Alenka Brown, Mr. James Burchill, and Ms. Meghann Murphy, from the National Defense University, Institute for National Strategic Studies, Center for Technology and National Security Policy.
Panel participants included: Mr. Scott Pugh of Department of Homeland Security (DHS), Mr. Bill Murtagh of National Oceanic and Atmospheric Administration (NOAA), Colonel Daniel Edwards of the United States Air Force (USAF), and Dr. Alenka Brown of NDU.

Congressman Dan Lungren,  Chairman of the Subcommittee, wanted his subcommittee members to become educated in two areas:  1) solar storms and the impact of these storms on US critical infrastructures, and 2) the difference between a severe geomagnetic storm and an electrical magnetic pulse. The request to CTNSP was based on two October exercises that CTNSP/NWC conducted between Oct. 3 and 5, 2012.   These exercises were conducted to address the possibility of a severe solar storm, similar to the Carrington Event of 1859 (one of the largest solar storms to be recorded in US history), and the possible effects to the US national grid prompted by such a solar storm.

We know that geomagnetic storms are caused by fluctuations in the Sun’s magnetic field, and these often occur in growing frequency within an eleven year cycle known as the solar maximum. We are currently approaching its zenith. This is of concern as sufficiently large geomagnetic storms can cause numerous issues to critical infrastructure. Satellite operations and communications can be disrupted throughout the storm which can last many hours. Potentially longer term effects can be seen in the disruption of the electrical grid, e.g.,  high-voltage transformers which are critical to operation of our long distance transmission lines and large power plants.

The panelists were to educate the subcommittee members and senior professional staffers on the basics of geomagnetic storms and the effects on US critical infrastructures. The audience consisted of Congresswoman Richardson, and senior professional and junior staffers.  Chairman Lungren apologized for his absence and those of his other colleagues due to an unexpected classified briefing.

The panelists began by discussing the underlying science concerning solar storms given by Mr. William Murtagh, NOAA.  Mr. Scott Pugh, DHS, followed with an explanation of the difference between a severe solar storm and electric magnetic pulse.  He walked the audience through a severe geomagnetic storm exercise describing possibly consequences to our critical infrastructure based on a severe outage of the national electrical grid.  Dr. Alenka Brown, NDU, spoke on cascading effects should a solar storm occur, with emphasis on the population, the financial sector, and cyber.  Colonel Daniel Edwards, United States Air Force, Space Weather Group, gave a brief on how the military might engage during a solar storm event.

The outcome was a follow up future event that would provide a more in-depth analysis of severe geomagnetic storms in relationship to the US critical infrastructures to the subcommittee members. It was proposed that the National Defense University in collaboration with the Department of Homeland Defense would host the event.  In addition, a one-pager has been written and will be sent to the key panelist and Congressman Dan Lungren’s office.

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Energy Politics and Future Prospects in Iraq – An Event Report

By Denise Natali, July 26, 2011

Executive Summary:  On June 17, 2011, The INSS Center for Strategic Research conducted a seminar on Iraq’s re-emergent energy sector and its impact on national and regional politics. The purpose was to move beyond identity politics by examining resource-based interests and new tensions and opportunities for negotiation between groups in and across Iraq’s borders. Discussions focused on Iraq’s national energy strategy as influenced by regional trends and the impact of petroleum sector development on relations between Baghdad, the Kurdistan Regional Government (KRG) and provincial administrations. To what extent have these developments affected governance in Iraq? What implications do they have for U.S. policy, particularly as the U.S. military withdraws combat troops from the country?

Experts on Iraq and the energy sector addressed these issues in two panel discussions. They stressed the importance that oil will play in Iraq but were pessimistic about Iraq’s projections of future oil production. The speakers concluded that “Iraq will not be the next Saudi Arabia anytime soon.” Alongside infrastructure constraints, unresolved political issues between groups will continue to shape prospects for the energy sector. The withdrawal of U.S. combat forces scheduled for the end of this year also is expected to negatively affect Iraqi oil production due to reduced security.

The global and regional energy context. Trends in the global energy sector underline the significance and vulnerabilities of Iraq as an oil-producing state. Over the next 25 years global energy demand is expected to rise considerably; by 2030 the world will need about 103 million barrels of oil a day. This increase is anticipated to come mainly from non-OECD countries in East Asia and the Middle East.

Growing demand will provide incentives for producers to increase supply, either by using their excess reserves or increasing production. Specifically, it may require that Saudi Arabia produce 5 million additional barrels per day (bpd) and that Iraq increase its production as well. Based on these projected trends, OPEC’s market share can increase from 41 percent today to 52 percent by 2035.

What are the prospects for Iraq’s oil sector? Iraq can play an important role in increasing world energy supplies, although the extent to which it can attain predicted output levels is highly questionable. Despite world demand and the potential of Iraqi oil production, the effects of the bid rounds and foreign investment are unlikely to be realized until the end of the decade. Iraqi oil production is likely to remain at current levels (2.25 million bpd) through at least until 2012. Although official projections call for major increases in production, according to one energy expert, if Iraq produces four million bpd of oil by 2020 it would be a “tremendous success.”

Challenges and constraints to Iraqi oil production include:

  • Political, administrative and technical bottlenecks.Conflicting incentives and expectations between international oil companies (IOCs) and the Iraqi government are likely to complicate oil production. While IOCs seek immediate production and profit, the central government aims to assure control of oil sector activities, which has resulted in lower profit margins. Iraq’s technical service contracts (TSCs), for instance, have low production minimums and per barrel prices. The Iraqi petroleum sector also remains nationalized and is highly inefficient.Additionally, oil company deployment, security, visas, and Iraqi budget approvals are painstakingly slow and require massive levels of oversight and bureaucracy. Accountability, internal auditing, inventory control, and management of revenues are other major concerns. Conflicts on spending exist between the Iraqi oil and finance ministries, as well as between the central government and local populations. Iraq’s massive limitations on water, power, and export infrastructure pose further difficulties for companies investing in Iraqi oil.
  • Unclear legal environment. Absence of a national hydrocarbons law and inconsistencies in existing laws, a zero-sum and risk-averse business mentality, and inexperience with western contracts create additional obstacles for IOCs. Contractors now want to be paid in kind, which may lead to shrinkage in the oil sector. Moreover, since the Arab Spring, Iraqi citizens are demanding more from Baghdad in terms of equitable and effective provision of goods and services. It will be more difficult for the central government in Baghdad to invest in energy projects that do not yield immediate improvements in the welfare of the citizenry.The central government and KRG will continue to sign contracts with IOCs in the hopes of pressing forward and increasing oil production and revenues. According to one panelist, “Iraq is on its way to becoming a Nigeria on steroids.” Yet there is a growing realization in Baghdad that production levels are unlikely to be met and that service agreements may have to be renegotiated. Such changes will lead to additional costs and frustrations for future investment in the oil sector.
  • Are alternative export options available?Given Iraq’s ambitious oil production plans, the large percentage that petroleum comprises of state income (90 percent) and undeveloped pipeline infrastructure, Baghdad is seeking ways to increase export capacity through its southern and northern routes. Over the past year, the central government has signed contracts with international companies to repair and upgrade its current export infrastructure, renewed pipeline agreements with Turkey, and pursued additional routes.Still, the possibility of Iraq turning to or establishing alternative export routes at this time is unlikely. Developing pipelines through Syria, despite recently signed Memorandum of Understandings (MOUs) between Baghdad and Damascus in September 2010, is unrealistic given Syria’s unstable political conditions. Jordan remains an export point as demand and production increases. An export route through Saudi Arabia would require an unprecedented rapprochement with Riyadh, which does not seem likely in the near future. Additionally, the Saudi pipeline has been changed to a gas line and would need to be restructured for oil if it were to be used to export Iraqi petroleum.

An alternative route from the Kurdistan Region northward could be the most pragmatic option as it would provide more reliable access of Iraqi oil to European markets. Yet the Kirkuk-Ceyhan line is still under-utilized and Baghdad has commitments to developing its southern ports. The KRG could not unilaterally pursue such a project since it does not have the legal right to build a transnational pipeline to Turkey without Baghdad’s approval. Despite increased investment in the Kurdistan region and recognition of the KRG in a federal Iraq, the central government and regional states remain concerned about an overly autonomous Kurdish north and cross-border Kurdish nationalist influences.

Iran has little interest in a strong Iraqi oil economy that would enhance Iraqi independence and challenge its own petroleum sector. Iran may have a different set of goals, which include gaining a greater influence in the Iraqi energy market and constructing trans-Iraqi pipelines. Most participants agreed, however, that while Iran is uneasy with the idea that Iraq may be on par with Saudi Arabia in regard to OPEC quotas, Iraqis are uncomfortable with Iran’s blatant attempts to gain control of its petroleum, such as seizing an Iraqi oil well briefly last year. Iran could respond by creating trouble for Iraq through a whole host of measures, including targeting IOCs in the south.

Nor is Kuwait likely to play a constructive role in Iraq’s oil development. On the contrary, progress on rebuilding relations has been limited since the fall of Saddam Husayn’s regime. Baghdad certainly needs Kuwaiti support to remove sanctions still in force since 1990. It also wants debt forgiveness from Kuwait and greater access to the Gulf. Yet Baghdad rejects the land and maritime borders imposed by the U.N. Basra has already indicated that the demarcation is being changed on the Kuwait border. Iraq also is displeased that Kuwait funded a Syrian irrigation project that diverted water from the Tigris River. Tensions have also reemerged over Kuwait’s building of the Mubarak port, which will rival Iraq’s efforts to enlarge its meager facilities and increase export capacity.

How has energy development influenced and been influenced by national and regional politics? Given the centrality of oil to politics in Iraq, energy development has played a key role in shaping the political landscape. Yet there also are limitations to oil’s role in resolving the country’s problems. Underlying the future of energy development are issues of national reconciliation and state structure, or where power resides in Iraq.

Specifically, while the Kurdish parties heavily favor a confederal structure where they have larger revenue distribution and control of local resources, other Arab parties are mixed regarding the issue of state structure. Prime Minister Nuri al-Maliki’s Dawa party and the Sadrists favor a centralized state and Baghdad’s direct control over the oil sector. Some Arab Sunni groups, however now support confederalism as a means of increasing their influence in a federal Iraqi state.

Most Iraqis, regardless of ethnic or religious identity, want some benefit from oil or gas production in their province or region. If the KRG gets greater local control over its oil sector, southern Iraqi provinces are likely to make similar claims. For instance, Anbar is pressing to develop the liquefied petroleum gas (LPG) fields in its province and gain greater control over the local security situation.

  • Energy intensifies existing debates over Kurdish autonomy. For the KRG, control of oil would facilitate demands for economic independence and allow it to ignore Baghdad. The KRG not only wants to control its own oil, but also seeks to delineate borders and resolve issues of disputed territories, particularly Kirkuk. The KRG thinks that a confederal structure would check the power of the central government and give it sufficient leverage to negotiate political issues. The KRG also views confederalism as the best guarantee for its own security, at least in checking Baghdad’s potential control over regional affairs.
  • Energy creates new resource-based tensions. The unclear and competing visions of the nature of the Iraqi state – whether power should be centralized or decentralized – and the drive to increase oil revenues have influenced Baghdad’s relations with provincial administrations and the KRG. One of the tensions is over management and control of the oil sector and its revenues, enhanced by deliberately written ambiguities of the 2005 Constitution. Article 112 discusses the intent of the central government to work with regional and provincial governments. Yet it also has been used by local administrations to assert their authority over oil fields in their provinces. The Wasit provincial council, for example, attempted to shut down an oil field operation in its territory in September 2010, claiming that article 112 gave it the right to do so.Iraqi populations also are claiming a greater share of oil revenues, which has led to new resentments over perceived inequalities among provinces. Although Article 140 of the Iraqi constitution created mechanisms to give oil-producing provinces one dollar for every barrel produced, this revenue has not been distributed equally across Iraq. Basra has benefited because it has the most petroleum production, as well the fact that it is closely intertwined with Baghdad and the regime. Oil-poor provinces such as Anbar, however, have been ignored in the new Iraqi state and in its distribution of petroleum rents.In some cases in southern and central Iraq, these tensions have escalated to attacks on local leaders. As a result, governorate-level security forces are assuming greater control of well site security, which is intensifying the conflict. Al-Maliki has responded by assigning the Iraqi army to guard the oil pipelines, although this effort is unlikely to be accepted by provincial leaders who rely on their own local security forces and are pressing for regional-based security. Additionally, many of the IOCs do not trust Iraqi security forces and may take increasing responsibility for their own security by building airstrips to internalize personnel movements and using private security forces.

    While most provinces want some benefit of energy sector revenues, the KRG has been the most aggressive in demanding complete control over oil and gas production in the Kurdistan Region. Arbil has taken advantage of Baghdad’s intransience and resisted integration into an overall national structure. Since 2002 the KRG has signed 37 production sharing contracts (PSCs) and has earned over one billion dollars in signing bonuses alone. Additionally, the KRG has placed oil companies beyond the Kurdish-Arab border in the disputed territory of Kirkuk. This strategy has created new “facts on the ground” to entrench its political and economic interests.

  • Energy encourages deal-making. Weakness in the federalist structure alongside energy sector demands have encouraged deal-making between the various factions in the Iraq government. Given the budgetary problems faced by Baghdad and Arbil (Baghdad has a deficit and the KRG has not paid the IOCs), a compromise over oil payments may be possible in the near future. For instance, the Kurds and the opposition Iraqiyya Party of Ayad Allawi appear to be combining efforts on oil and gas issues by claiming the bid rounds are unconstitutional. The Kurdistan Alliance also gave the oil and gas committee chairmanship to Adnan Janabi, an Iraqiya member, who has introduced a law separating oil operating companies from the Ministry of Oil. Other pressures for a compromise could be linked to Turkish policy shifts, the KRG’s need to pay IOCs in its region, and increasing demands from some provinces in southern and central Iraq about greater decentralization.Still, Baghdad-KRG negotiations are slow and uncertain. The central government has partially paid the costs of only two oil companies in the Kurdistan Region thus far, but not their profits. The payment was not part of an officially approved or audited scheme, but rather, a secret agreement and political bargain between al-Maliki and KRG Prime Minister Barham Salih. Compromise can be further deterred by revenue growth, frustration from Baghdad with Kurdish maximalist policy, territorial disputes, and U.S. policy appearing to favor the KRG.

What are the outstanding issues in negotiating a national hydrocarbons law? The debate over control of natural resources and revenue-sharing has had important implications for Baghdad-KRG relations. While the KRG wants petroleum to be managed and negotiated locally with limited revenues transferred to the central government, Baghdad seeks greater control of the energy sector and distribution of its finances. Similarly, the KRG has emphasized that it wants to limit the central government’s role in revenue-sharing. These differences have played out in the failure to ratify a national hydrocarbons law and revenue-sharing law.

  • Legitimacy and Nature of Production Sharing. One of the key issues between the KRG and Baghdad is the legitimacy of the PSCs signed by the KRG Ministry of Natural Resources. Recognition of the Kurdish contracts will partially depend upon which faction wins out in the central government. The “common sense” faction, led by Adnan Janabi, could allow for negotiation and recognition of the PSCs. Janabi believes that making a deal with the Kurds will help put him in a position of power and assist Ayad Allawi in becoming Prime Minister. Deputy Prime Minister for Energy Affairs, Hussein al-Shahristani and al-Maliki represent the “non-common sense” faction that is trying to preserve centralization. They pose the strongest challenge to the KRG and recognition of the PSCs in their current form.Even if the Janabi faction prevails, Kurdish contracts and payment mechanisms would be subject to a large host of processes, accounting procedures, and audits by different Iraqi ministries and agencies. Baghdad also could recognize the PSCs but structure them like the TSCs used in southern and central Iraq. Negotiation also depends upon the KRG, which has been unwilling to open its oil and financial records to Baghdad or use its own revenues to pay IOC profits.

Whether or not a national hydrocarbons law is essential to Iraqi petroleum production is questionable. While it would allow large companies to expand beyond their current boundaries by clarifying complex responsibility and timing issues, an oil law ultimately is not necessary to resolve the larger Baghdad-KRG dispute about the structure and nature of power in the Iraqi state.

What effect will U.S. military withdrawal in Iraq have on the country’s oil production? The U.S. withdrawal is expected to have a negative impact on Iraqi oil sector development by contributing to delays in production and exportation and removing an important source of logistics, intelligence, and security for the Iraqi government and IOCs.

The absence of the U.S. military also will increase the transaction costs of doing business in Iraq. Increased security risks could diminish interest in the next bidding round since fields are smaller and in riskier areas. It may also give greater access to Chinese and Korean national oil companies, which have invested in Iraq’s oil sector and are generally interested in new wells, alongside increased economic and technical cooperation. The Chinese National Petroleum Company (CNPC) currently is developing the Halfaya oil field and has partnered with British Petroleum (BP) to develop the super-giant Rumaila oil field. The Chinese National Offshore Corporation (CNOOC) is leading the development of the 2.5 billion barrel Missan oil field in southern Iraq.

Still, participants agreed that the U.S. could play an important indirect role in influencing Iraqi energy production in the following ways:

  • Building-up staff capabilities.According to one energy expert and former U.S. diplomat, the U.S. could build up staff capability in the Iraq oil ministry and national oil company. These efforts could include developing collaboration between actors, streamlining procurement in large bureaucracies and energy systems, and encouraging Iraqis, who tend to feel they were once good technocrats and do not need help to become successful, to update their skills and knowledge of the energy sector. Increasing diplomatic focus on keeping the country stable will also help move it forward.The most successful model for Iraq could be one in which the World Bank and the International Monetary Fund provide assistance to the ministries. This third party model would provide the unique expertise that is needed without direct American involvement.
  • Revisit U.S.-KRG relations. A U.S.-KRG alliance was vital to realize immediate political objectives after the 2003 war and is important to assuring regional stability. Yet now that these objectives have been realized, at least in part, some thought the United States may need to revisit its approach and policy toward the KRG. Washington should send a message to the KRG that it will continue to protect the Kurds, although not unconditionally in light of growing KRG authoritarianism and disinterest in opening financial records to Baghdad. The United States should also stop acting as a safety net for the Kurds, which is breeding resentment among Arab Iraqis and could impede future negotiations between Baghdad and Arbil.

Known unknowns. There are several unknowns in Iraq’s energy future that the U.S. needs to consider, including the Sunni Arab response to the U.S. departure and stability of the country. Shi’a areas have had fourth-round oil development contracts; however, all gas development remains in Sunni Arab and mixed areas. It is uncertain how this aspect of energy development will unfold.

The Sadr movement’s response to the withdrawal or ongoing presence of U.S. troops could also jeopardize oil production and force new political alliances that are less welcoming to IOCs and the privatization of the oil sector. The nature of these alliances is uncertain, and one that can reformulate the energy sector potential. A final uncertainty is the future of democracy in Iraq as its leaders pursue rapid oil development. Will the federal system in its current form be sustained and if not, what type of state and political system will emerge? How would political changes affect economic development and wealth distribution? Who will benefit?

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Dr. Denise Natali is the Minerva Chair at the Center for Strategic Research at National Defense University’s Institute for National Strategic Studies. She may be contacted at (202) 685-2249 or denise.natali@ndu.edu. The views expressed are her own and do not reflect the official policy or position of the National Defense University, the Department of Defense, or the U.S. government.

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US Military’s First Comprehensive Operational Energy Strategy Released

By Richard Andres, PhD; Christine Zaino, Research Assistant;
Kevin Ostlie, Research Assistant

Energy and Environmental Security Policy Program

 

For the first time, the Department of Defense (DoD) has published a comprehensive strategy for operational energy. Energy for the Warfighter: Operational Energy Strategy, published by the newly established Office of the Assistant Secretary of Defense for Operational Energy Plans and Programs (ASD(OEPP)), was released last month. Initial reactions to the document were mixed: some welcomed the inaugural strategy, while others felt it lacked specific goals and performance measures. The criticisms, however, are misplaced. The strategy is an important and appropriate first step to improving and unifying DoD energy policy. The new strategy sets the stage for OEPP, mandated by Congress in 2009, to harmonize operational energy policy under an ASD-level office and allows greater opportunities for the military to act as a leader and first mover in the advancement of energy efficiency endeavors and technologies.

The Operational Energy Strategy (OES) focuses on operational energy use – “energy used by military forces in execution of their day-to-day missions.” This focus on operations rather than domestic installations is important because the Services—with the notable exception of the Marine Corps—have often placed greater emphasis on installations than operations.  The OES, on the other hand, attempts to “guide the Department of Defense in how to better use energy resources to support the Department’s operational needs and the Nation’s strategic energy security goals.” As the strategy points out, it is important that DoD align its energy policy with its core mission to ensure American security. Suboptimal energy use in the field contributes to vulnerabilities – more than 3000 military personnel were casualties of attacks on supply lines in Iraq and Afghanistan between 2003 and 2007. The volatility of energy prices and global competition for scarce energy resources like petroleum also underscores the need to reduce energy consumption. Operational energy took up 75% of all U.S. military energy used in 2009, making it a crucially important focus in energy planning.

Beyond increasing the Department’s focus on operations, the new strategy also plays an important role in helping to coordinate action across the Services. As the leader and underwriter of global security across “the five domains” – air, land, sea, space and cyberspace – the U.S. military relies on energy to achieve its core mission. Before the creation of OEPP, each branch of the military had established energy visions that were compatible, but rarely synchronized. The OES builds on existing approaches by the Army, Navy, Air Force, and Marine Corps but is unique in that it provides direction across the Department.

In terms of its content, the new Strategy lists “3 Principle Ways” to improve DoD energy policy. These include: “More Fight, Less Fuel,” which addresses reducing energy demand; “More Options, Less Risk,” which focuses on diversifying energy sources; and “More Capability, Less Cost,” which emphasizes that future planning on “force structure, posture and strategy” should be done with energy in mind. These are all compatible with the key points of the military’s energy vision. The Army, Navy, Air Force, and Marine Corps all focus on using energy more effectively in order to serve their national security mission by increasing efficiency and curtailing use when possible to reduce demand, securing access to energy supplies including the development of alternative sources, and looking to the future – “serv[ing] as a model to the nation,” being “resilient to any potential energy future,” inspiring “cultural change,” and “instilling a warrior ethos” that values energy as a weapon of war, respectively.

While the OES has been criticized as too vague, the document should be understood as the first piece in the overall energy plan. As the OEPP’s inaugural strategy issuance, it lays the groundwork necessary for future undertakings of the office. For the past few years, the Services have frequently replicated each other’s work and failed to field promising new technologies—often simply due to a lack of coordination between Services and between domestic institutions and warfighters.  Among other things, the OES will help to optimize energy initiatives across the Services by lowering the chances of duplication of efforts and by highlighting and filling in the gaps that have resulted from stovepiped programs. In addition to providing an overarching direction for DoD energy projects, merging these efforts under the responsibility of OEPP will provide a level of transparency in energy policy that has not been prevalent in DoD culture. The new strategy is a step toward treating energy with the same respect that is given to other tools of war. New energy initiatives across the Services and in the civilian world can be better leveraged under a coordinated energy strategy. Successes like the Marine Corps’ SPACES technology (backpack-portable solar power units that can recharge batteries, lightening a soldier’s load by 10 pounds or more, and reducing the need to resupply) and promising advances like the Navy’s 50/50 bio-fuel/JP-8 blend jet fuels are more likely to be shared and diffused throughout the Department under a unified strategy.

It will be important to see how OEPP builds upon the foundational Operational Energy Strategy with its forthcoming implementation plan. Intended to be released 90 days following the OES, the implementation plan is slated to contain a set of goals with performance measurements and timetables. The OES indicates that the two documents should move forward together to create both short-term and long-term visions for operational energy, while establishing a viable roadmap containing the concrete goals and processes necessary to drive operational energy to the more efficient, diversified, and less costly institution conceptualized by the OES. Hopefully the implementation plan will address the criticisms voiced about the vagueness of the strategy.

The emphasis on long-term goals in the OES is a signal from OEPP that new ways of thinking about energy won’t be institutionalized overnight. The framework presented in the strategy is designed to be incorporated into training and curricula at the senior-level service schools so energy considerations become one of the routine factors of everyday decisions, evidenced under the third theme, which aims to include energy considerations in all future planning and training. General David Petraeus emphasized this approach when he issued a memorandum to the U.S. forces in Afghanistan that encouraged commanders to be mindful of routine energy consumption and ordered them to make “energy-informed” decisions in order to prevent energy consumption from limiting combat capabilities. The OES encourages this kind of attitude from high-level commanders across all Services and operations.

Although it was released months after its initial due date, the timing of the OES’s release may in fact be advantageous. One of the pressing issues facing new Secretary of Defense Leon Panetta is how to reduce the budget without reducing the capability and effectiveness of the U.S. military. Both Congress and President Obama have requested that DoD reduce expenditure both immediately and in the long-term, putting Panetta in a challenging situation. Finding more efficient, long-term energy solutions could become a significant factor in the budget equation. Given his energy conscious stances, Panetta is likely to make energy savings a high priority.

The release of the U.S. military’s first comprehensive Operational Energy Strategy will prove a valuable first step to increasing mission effectiveness in both the short and long terms. The forthcoming implementation plan is likely to do more. At the end of the day, what is most critical is that the new OEPP office acts as a coordinating force with and between the services that focuses on minimizing duplication, facilitating diffusion of new technology and techniques to the joint warfighting community and institutionalizing the Services’ successes.  All of this requires a light touch and an emphasis on the long game and the new strategy takes precisely this approach.

Dr. Richard B. Andres is Professor of National Security Strategy at the National War College and Chair of the Energy & Environmental Security Policy Program at National Defense University.

Christine Zaino is a Research Assistant with the Energy & Environmental Security Policy Program at National Defense University. She is currently pursuing her MA in International Affairs at the Elliott School of International Affairs at The George Washington University.

Kevin Ostlie is a Research Assistant with the Energy & Environmental Security Policy Program at National Defense University. He is currently pursuing his MA in Public Policy, concentrating in International Security and Economic Policy, at the University of Maryland School of Public Policy.

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What happens when Yemen runs out of oil?

By Ted Pikulsky, MA – Research Assistant, Washington College, MD  ’10

 

Yemen is a nation on the brink. Although ongoing for the past two years, more attention has been drawn to the civil war in Yemen due to the political turmoil being experienced across the MENA region since January 2011. In fact, the country is split along three completely separate fault lines, leading to further chaos than a simple two-faction conflict. First, the resource poor north is at war with the (relatively) resource rich south. Second, tribes loyal to President Saleh are at war with non-aligned tribes. Third, the Islamists are at war with the secularists. These various groups are by no means homogenous themselves and have varying motives ranging from the establishment of a new and unified government to secession and the breakup of the Yemeni state.

The recent events are symptoms of a larger issue and serve to highlight the real threat to Yemen’s future: The growing scarcity of essential resources. Oil production and export accounts for roughly 70-75 percent of government revenue and by some estimates, Yemen could run completely dry by 2017

Such speculation is not based in paranoia. As of January 2010 Yemen’s proved oil reserves were placed at 3.16 billion bbl (oil barrels). Despite some upsets to production in March 2011 and thanks to an emergency oil transfusion  from Saudi Arabia, oil production has leveled off to around 150,000 bbl/day (barely enough to cover consumption based on 2009 rates). Even at such a low rate of production, it is clear that not much time is left. An unstable state to begin with, when the petrodollars are finally cut off the results could be disastrous.

The central government has already received a taste of what could be in store when the oil finally stops flowing. Following the March 2011 bombing of the critical 140 mile pipeline that ran from the Maarib oil fields to the primary refinery in Aden, oil production effectively fell to zero throughout the spring. The suspected losses from this brief period of stopped output hover at the billion dollar mark. To an economy whose GDP is only $60 billion to begin with, and an annual deficit of approximately $2.5 billion, such a loss is catastrophic. The money that flowed from the central government to its tribal guarantors sustaining Yemen’s system of patronage effectively ceased. Since Saleh came into power thirty years ago the government has maintained a carefully designed network of money transfers and political appointments. As long as the central government has kept the roughly 4-5,000 tribal leaders paid-off they have been able to maintain their loyalty and control over regions that Saleh’s government would otherwise have difficulty maintaining. The money, like the oil, has slowed to a trickle.

Since the January protests calling for President Saleh’s ouster, a spotlight has been cast on the dangers brewing in Yemen. Intelligence officials have long been aware of the threat of extremism for which Yemen seems to be a breeding ground. It has become increasingly clear that AQAP (Al-Qaeda on the Arabian Peninsula) and other sympathetic groups have a strong presence in the country. Some speculations are that there are as many as 500 Al-Qaeda and sympathetic militants in Yemen already. What will happen to the Yemeni state as it exists today if the government totally collapses?

The United States has long had a close relationship with Saleh’s government. No small part of this is the strategic waterway that Yemen occupies. The Gulf of Aden is one of the most crucial waterways to international maritime economy and certainly for oil transport. It is no secret that the United States has taken a vested interest in protecting it since the British left in 1967.

Piracy is a major threat in the Gulf of Aden. While most attacks originate from Somalia, widely accepted to be a failed state, a stable Yemen is essential in staving off this threat. If Yemen were to collapse and Western navies were to lose the strategic foothold of Aden in the region, it is easy to foresee the increased danger to maritime activity.

Finally, Saudi Arabia has a vested interest in what happens in Yemen and to say the Royal Family is concerned is an understatement. Proof of this is the selling, turned “charitable contribution”, of 3 million bbl conceivably intended to prop up the flat-lining Yemeni government while it retakes and repairs the broken pipeline connecting Aden with Yemeni oil fields. Of course this amounts to sticking a finger in the dike, as it is yet to be seen what lengths Al Sa`ud will be willing to go to keep Yemen limping along.

The question remains: What will happen to Yemen when it finally runs out of oil? It is around the corner, yet no infrastructure or social organization exists to absorb the shock that will take place to the economy. Even if the money and/or resources existed, it is difficult to imagine that the appropriate safeguards could be put in place in time. There is no infrastructure or institutional mechanism to absorb or resolve any crisis—political or economic.

The Saudis have already begun to prepare for their eventual future of running dry (one that is considerably further off). They have instituted programs promoting both alternativeenergy and public education that will (theoretically) carry the country into a post-petrol economy. Of course this has been funded by massive amounts of oil money that Yemen could not have matched in its most productive years.

Is Yemen destined to become the Arabian Peninsula’s Somalia? Worse still for Yemen is that running out of oil is not the biggest catastrophe it will face in the near future. The desert nation is already beginning to exhaust its natural aquifers and has neither the money nor geography to take on desalination projects. If Yemen cannot survive an oil crisis, what government will be left to deal with a water crisis?

 

 

Ted Pikulsky is the Assistant to the Director of Communications at the Institute for National Strategic Studies, at the National Defense University. He is currently conducting research on media, communications and political processes. He holds a MA in History from Washington College and a BA in International Relations and Economics from Boston University.

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The Light at the End of the Tunnel. Literally.

By Olivia Jaras and Jacqueline Strzemp, Center for Strategic Research

Chilean President embracing rescued minerDefying all odds, this past Wednesday was the culmination of a 70 day effort to extricate 33 Chilean miners who were trapped over half a mile under the earth. For the first seventeen days, they were sustained by spoonfuls of tuna, milk, crackers and small portions of peach toppings every other day. Their water supply was also very limited. For those first two weeks, their loved ones doubted the miners would survive, yet, on the seventeenth day, news arrived that all were alive, trapped in an emergency shelter within the mine.

In the following weeks, numerous ideas were posited on how to rescue these miners in an effective and expedient way; in the meantime, oxygen was being pumped into the mine to help the miners avoid asphyxiation until they could be rescued. There were three separate efforts to drill an escape tunnel for the miners, and, in the meantime, rescue holes were drilled to provide amenities such as bibles, empanadas, toothbrushes, and other miscellaneous requests to make the miners more comfortable in their predicament. The original projection was that they would not be rescued until Christmas, though Chilean President Sebastian Piñera was pulling out all the stops for the rescue to come to fruition.

The international community avidly supported the rescue effort to help the miners survive — even NASA donated gels, food, and equipment that are generally used in space expeditions. Technology and equipment were provided by Australia, the United States, Canada, and other countries, representing the high levels of coordination and cooperation that occurred in the international community.

On Wednesday night, October 13, the last of the miners was rescued via a specifically designed rescue capsule. It took approximately one hour to bring each person to the surface. Upon their return above ground, the miners were met by a team of health experts, their family and friends, President Piñera, and even Bolivian President Evo Morales. After emotional moments shared among the miners and their families, they were sent to the hospital for observation, since it is possible that they could have a variety of health problems (including muscle atrophy, pneumonia, and dental issues) after being trapped underground for so long.

The world was captivated by the rescue effort, which was broadcast live on various television networks, pushing these miners to a new level of international fame. While all of this was occurring, President Piñera, who was on site for the culmination of the rescue effort, constantly received calls of support from the Latin American and international community, demonstrating the full impact of the global community’s strong solidarity and what this solidarity and collaborative effort can achieve in a time of crisis.

What does the Chiliean miners rescue event mean for other global disasters, and how can this goodwill be replicated?

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A Weapon of Biblical Proportions?

By Micah J. Loudermilk, Center for Strategic Research

abstract small blue technology imageThe past several weeks have witnessed an explosion of reports on the recently-discovered Stuxnet malware, referred to as the world’s first cyber super-weapon. Suspicions that the worm was custom-designed to target a nuclear facility in Iran – perhaps Bushehr or Natanz – have grown with the passage of time since Stuxnet infections appear heavily concentrated in Iran, perhaps reaching a breaking point since a text string was found deep inside Stuxnet’s code containing an allusion to the Biblical figure Esther, credited with saving the Jews from destruction by the Persians. As cyber experts worldwide race to decode and understand Stuxnet – numerous questions are arising regarding the incredible sophistication of the attacks, who is responsible for it, and what the end result will be when the worm finds its target. However, equally important and not yet analyzed are two important questions about the longer-term consequences of Stuxnet in the cyber sphere.

First, can cyber attacks be defended against? Troublingly, the short answer to that question appears to be “no” – at least not with any degree of consistency and reliability. Stuxnet opened the door on a whole new field of cyber warfare, previously considered impossible, and with it a slew of new possibilities for attacks. Operating without human guidance and capable of taking over industrial control systems, Stuxnet is a perfect example of how rapidly the cyber field is evolving, consistently leaving those seeking to defend against attacks playing catch-up.

On the surface, the superiority of offensive capabilities compared to their defensive counterparts is relatively simple: an offensive system is successful if it strikes once, but a defensive system has zero margin for error. This equation is magnified on the cyber front where new loopholes and critical vulnerabilities are found and exploited by attackers faster than they can be closed and protected. When coupled with the near-instantaneous speed at which networks operate, defense against attacks becomes infinitely more difficult.

Second, is the realm of cyber warfare officially open for business? Sure, for years the Chinese and other entities have been hacking DoD networks, the U.S. electrical grid, and other critical infrastructure, but the Stuxnet malware is potentially the first real-world case using a worm to destroy a physical target. While no mechanism exists by which to define at what point a cyber attack or infiltration becomes an act of war, it seems clear that there must be a line, but where should one draw it? Should Iran’s Bushehr or Natanz plant be destroyed by this cyber attack, is it necessarily any different from utilizing jet fighters or missiles to achieve the objective? These are all vital questions which must be addressed, not simply in the case of Stuxnet, but broadly speaking.

Notwithstanding of this episode’s outcome, the door into this terrifying world – where targets can be hit and critical infrastructure compromised without a nation or group taking any tangible action – is potentially open. The possibilities are immense, and the problems even greater – in large part due to the attribution problem. Regardless of whether or not the destruction of another nation’s nuclear plant crosses any arbitrary lines, absent knowledge of what country is responsible for unleashing it (without even addressing the possibility of rogue group actions), a concerted response is difficult. The danger here, and one already obvious from the cyber attacks directed daily at the U.S., is that countries can take actions against other states from the relative safety of anonymity, potentially giving rise to an increased use of cyber tactics as a means to asymmetrically attack one’s opponents.

Ultimately, it may never be known who perpetrated the Stuxnet worm or what, if any, the effects were on Iran’s nuclear program (assuming that is indeed the target). One can draw conclusions from delays to the launch of the Bushehr facility, but these delays have been persistent and Iran continues to deny that any of its nuclear facilities have been adversely affected (despite being infected). However, it is crucial to understand that cyber attacks of this type are now fully within the realm of possibility and, as ideas previously only imagined in science-fiction movies move ever closer to reality, the strategic calculus of U.S. policymakers must learn to adjust quickly and accordingly.

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Can a Cyber Warfare Strategy be Defined?

By Eric Crownover, Center for Technology and National Security Policy

Binary Code

Cyber Warfare

Throughout history, those who have studied war have sought to understand the nature of warfare. Strategists have frequently written on the development of military strategy whether it focuses on the principles of warfare or on the influence technological advances (i.e. sea power, air power, and nuclear power) have had on the development of military strategy. The nature of warfare is constantly being revisited and cyber warfare is of great importance in the discussion of future warfare.

Military strategists must develop an understanding of how cyber capabilities can be used in military strategy. The United States Cyber Command (USCYBERCOM) will need to attempt to address this problem. After achieving Initial Operating Capability in May of 2010, USCYBERCOM is expected to achieve full operational capability this October.

USCYBERCOM’s focus is to centralize cyberspace operations, strengthen Department of Defense cyber capabilities, and bolster DOD’s cyber expertise utilizing components from all branches of the military. Securing cyberspace is a main objective of the United States. In order to achieve this objective, USCYBERCOM along with other components must be proactive and develop a comprehensive understanding of cyber warfare.

According to the United States National Strategy to Secure Cyberspace, the United States is “now fully dependent on cyberspace.” Thus, the unimpeded successful functioning of cyberspace is crucial for everyday activities.  The threat has been identified but what now? Can the lessons of history help inform the development of a cyber strategy?

Military strategists have suggested that deterrence can be utilized in cyber warfare. Deterrence seeks to prevent a specific action from happening. For deterrence to work, the policymaker must understand what action will deter a specific actor. Even though a specific action has not occurred does it imply that deterrence worked? In order to apply deterrence to cyber warfare, who are the actors facilitating these incursions? What drives these actors? What actions will deter these actors? Deterrence has had historical value, but how or can the theory adapt to the cyber domain?

What is the difference between cyber warfare and cyber attacks? Clausewitz stated that war is an expression of politics by other means. Thus, war is an action between states. However, inherent to the attribution problem, is a cyber attack an attack perpetrated by an individual or is it cyber war perpetrated by a state? Cyber attacks occur over cyber networks; cyber attacks are not geographically bound; the networks are geographically bound but cyber attacks are a global capability. Thus, in order to create a strategy one must reliably discern the difference between a cyber attack and cyber war.

If cyber attacks and cyber war are discernible, can lessons learned from Thucydides and Sun-Tzu to present day nuclear strategists be applicable to cyber warfare? Or does a 21st century threat require unique 21st century thought?

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