Sec. Clinton: Energy increasingly important in foreign policy

A massive global market upheaval brought about by new oil and gas exploration and production technologies is making energy an even more important part of US foreign policy, US Sec. of State Hillary R. Clinton said.

“Energy is at the core of geopolitics because it’s an issue of wealth and power, making it both a source of conflict or cooperation,” she told an audience at Georgetown University. “It’s essential to how we power our economy and manage our environment, making it in our interest to promote technologies that reduce pollution and provide economic growth abroad as well as at home. Finally, it’s a key to economic development and stability, making it essential for us to help the 1.3 billion people worldwide who don’t have immediate access to it.”

Less US reliance on imported crude oil has strengthened the nation’s global standing, Clinton said. “Our country can’t be an island in an international energy market,” she maintained. “Oil markets are global, and natural gas markets are moving in that direction. Protecting our energy security calls for us to make progress at home and abroad. That requires producing more American energy.”

US energy diplomacy continues to emphasize encouraging countries to resolve their disputes, such as in the South China Sea, or begin working on emerging issues in frontier areas, such as through the Arctic Council, the secretary said.

The US Department of State also works to promote competition and discourage supplier monopolies, she added. While DOS has conducted energy diplomacy in the past—usually when crises arose—its new Bureau of Energy Affairs gives it a team of energy experts to work with other federal departments on issues before they turn into problems, Clinton said.

Iran sanctions

“Security is also at the heart of the most important energy diplomacy we’ve conducted during the Obama administration: working with other countries to impose sanctions to keep Iran from developing nuclear weapons,” she said. “This has involved painstaking efforts, starting with convincing consumers of Iranian oil to reduce their purchases by reaching out to other major producers to increase production. It also helped that the US increased its own oil production by nearly 700,000 b/d which encouraged other countries to diversify their supply sources. It has let us put unprecedented economic pressure on Iran while reducing vulnerability in the rest of the world.”

US foreign policy also encourages Iraq’s government to rebuild its crude production capacity, which has grown from 2.3 million b/d in 2010 to 3.2 million b/d 2 years later, according to Clinton.

“The Iraqis have come a long way in trying to modernize their infrastructure and create a hydrocarbon law that will work for them,” she said. “There are still bones of contention, and there’s much that’s unsettled. Iraq has a lot of work to do, but its oil resources suggest it will be able to address its domestic needs.”

She said the US strongly supports efforts across the Middle East to work out challenges of producing and exporting energy. “Israel has made significant strides with natural gas off its coastline, and there is potential for new sources off Cyprus and Lebanon,” Clinton said. We’ve been urging everyone to work out their boundaries because overlapping claims will stand in the way of development unless they’re resolved.”

Every government in the region is in the same frame of mind, she maintained: “They need more reliable energy sources, some of which they can do domestically, but some of which will require agreements with its neighbors. As difficult as the problems now appear, we can make some diplomatic headway by getting more countries to act in their own interest to resolve boundary questions and develop stronger commercial energy relationships with their neighbors.”

Undo 'resource curse’

Clinton said US diplomatic efforts also try to address poor governance that often accompanies sudden resource wealth. “We need to work to undo the ‘resource curse,’ especially since new technologies suggest more countries will become oil exporters,” she maintained. “They need support to assure that their energy resources don’t cause more trouble. The problem isn’t with resources. It’s with greed.”

The US supports building blocks to create effective regulations in countries such as Uganda which are on the verge of significant energy development, she said. “We also support the Extractive Industries Transparency Initiative, which the US joined a year ago, becoming only the second developed country to do so,” she said.

The challenges aren’t new because countries have been fighting over natural resources for centuries, Clinton said. “But this is a moment of profound change,” she continued. “Right now, developing countries are consuming more energy than developed countries. There’s been a surge in global natural gas supplies, lessening the world’s dependence on oil, and technology has grown to a point that we can drill for oil in places where we couldn’t before.”

Clinton said the message the US is trying to convey with all these efforts to resolve energy disputes and promote cooperation is that the US recognizes that energy will continue to be a major global issue in the 21st century.

“The answers to these questions are being written right now, and we intend to play a major role in writing them,” she declared. “There is no choice. We have to be involved. The future of the world hangs in the balance.”

Contact Nick Snow at nicks@pennwell.com.

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