For national security conservatives, last week's State of the Union address was something of a wasteland. On the most pressing challenges facing the nation -- Iranian and North Korean nukes, Syria's meltdown, the war in Afghanistan, Al Qaeda's metastasization, the looming disaster of defense sequestration -- we were treated to a heaping portion of presidential mush, platitudes, and happy talk largely detached from the urgency of the historical moment. The overall effect will surely reinforce a dangerous perception that has increasingly taken root among friend and foe alike: America is waning. The world may be unraveling, but as far as President Obama is concerned, it's really not our problem. U.S. leadership is closed for the season. We're busy nation building at home.
Dismal as it was, there was a section of the president's address that may hold unexpected promise. Though wrapped in a bright green bow of climate change, Obama's discussion of energy could have important national security consequences. Of particular note was his embrace of an energy security trust fund. The proposal is the brainchild of an organization called Securing America's Future Energy (SAFE) and its Energy Security Leadership Council (ESLC) -- the "nonpartisan coalition of CEOs and retired generals and admirals" that the president highlighted in his speech.
In a report issued last December, SAFE and the ESLC called for the establishment of an energy security trust that would be funded by royalties derived from expanded drilling for oil and gas on federal lands. The trust would have one purpose only: supporting R&D on technologies designed to break oil's stranglehold over America's transportation sector, which accounts for about 70 percent of overall U.S. consumption.
Importantly, the underlying motive behind the SAFE/ESLC proposal had nothing to do with climate change and everything to do with national security and the country's economic health. Its authors properly see America's dependence on oil as a major strategic vulnerability. Even taking into account today's revolution in North American energy production, the United States for the foreseeable future will remain mired in a global petroleum market characterized by high and volatile prices, domination by an oftentimes hostile cartel, and the constant threat of disruption by geopolitical events in the world's most unstable regions. While convinced that America's current oil and gas boom must be fully exploited for the huge economic benefits it promises, SAFE and the ESLC also believe it must be leveraged for the long-term objective of breaking our dependence on oil once and for all -- thereby achieving true energy security and a measure of strategic flexibility that U.S. foreign policy has not known for decades.
National security conservatives should be sympathetic to the effort. As I've recounted elsewhere, while the idea of targeting Iranian oil sales as a means of pressuring its nuclear program has been around since at least 2007, the trigger on such sanctions wasn't pulled until 2012. For almost five years, both the Bush and Obama administrations were deterred from taking aggressive action due to fears that removing large quantities of Iranian crude from the market might produce a devastating price shock that would inflict major harm on the global economy.
That's five crucial years that were largely frittered away while Iran was allowed to earn hundreds of billions of dollars in revenue, dramatically enhance its enrichment capacity, and accumulate a stockpile of enriched uranium that with further processing could be used to build a handful of nuclear bombs. Five crucial years during which the pursuit of America's most pressing national security priority -- stopping Iran from acquiring nuclear weapons -- was dangerously constrained by our vulnerability to global oil markets. If that's not an intolerable situation for the world's leading nation to be in, I'm not sure what is. If there's a realistic strategy for doing something to mitigate it, we damn well should get started.
Equally worth noting, however, is the fact that when oil sanctions were finally imposed on Iran last year -- cutting Iranian exports by up to a million barrels per day -- a major disruption to global markets was successfully avoided in no small measure because of corresponding increases in oil production from the United States. As the race to stop Iran's nuclear program intensifies in coming months and further steps to curtail Iranian exports are contemplated -- perhaps removing as much as another 1.5 million barrels per day from the world market -- continued growth in U.S. production will only become more vital.
Now that President Obama has sought to co-opt the ESLC's CEOs, generals, and admirals for his purposes, it's vital to keep in mind the details of what exactly their energy security trust entails. Perhaps most importantly, the ESLC proposed that money for the Trust should come from new drilling in currently inaccessible federal lands and waters -- specifically to include the Pacific, Atlantic and eastern Gulf of Mexico areas of the Outer Continental Shelf (OCS), as well as the Arctic National Wildlife Refuge (ANWR). Moreover, the funds should be drawn from royalties that oil companies already pay as a matter of standard operating procedure when granted drilling rights in areas owned by the federal government. More pointedly, the trust as envisioned by SAFE and ESLC, explicitly ruled out the leveling of any new fees or taxes -- carbon or otherwise -- on oil and gas production. Finally, it's important to note that the money that would be diverted to the trust represents but a small fraction -- much less than 10 percent -- of the total new royalties that would fill federal coffers by opening the designated areas to drilling.
Perhaps not surprisingly, this isn't quite the Obama administration's vision for the Trust -- at least not yet. Most importantly, the administration is proposing that the money should be raised from royalties on existing production rather than from new production in the OCS and ANWR.
While Republicans should see the trust as an idea worth exploring and engage with Obama accordingly, they should hold fast to the ESLC's actual recommendation that explicitly links the trust to the opening of federal areas that were previously off limits. If the president wants to cloak himself in a proposal that "a nonpartisan coalition of CEOs and retired generals and admirals can get behind," Republicans should insist that he at least remain faithful to that proposal's core content.
The weight of the argument certainly favors Republicans. Economically, expanding oil production will serve as a huge boon to a still faltering U.S. economy. Strategically, it can play a vital role in stabilizing nervous global markets, especially in light of the looming showdown over Iran's nuclear weapons program. And politically, the reality is that no deal on an energy security trust is likely to get done unless Republicans get something significant on expanded drilling. Addressing that central pillar in the GOP's energy platform is probably an essential trade-off if Republicans are expected to overcome their deep-seated skepticism and go along with yet more funding for the Democrats' favorite hobby horse of green energy research.
Of course, it was the prospect of a win-win compromise that represented the genius of the SAFE/ESLC proposal in the first place. Republicans get expanded drilling. Democrats get more money for green energy. And in a single package, the sometimes competing goals of economic growth, reducing oil dependence, and lowering carbon emissions could all be addressed in a reasonable way. Something for everyone. That's the basis for broad consensus on a bipartisan energy deal that might actually do the country considerable good. If President Obama turns out to be truly serious about it, Republicans should be prepared to meet him half way.
One final note: For any Washington think tank, having the president of the United States specifically reference your organization in a State of the Union address and endorse one of its policy recommendations is the equivalent of hitting the jackpot. Major kudos to SAFE, an organization that I work with in an advisory capacity. Its success is a great reminder of the extraordinarily important contribution that privately funded non-profit research institutions can make to U.S. policy and the advancement of American interests.
Tom Pennington/Getty Images
By Phil Levy
Amidst the dire warnings and the pledges and the general cacophony coming out of the global climate talks in Denmark, how can we separate real progress from -- forgive me -- hot air?
It can help to set up our own scorecard. Let's set aside qualms about the way scientists have handled questions of global warming and stipulate that the goal is to reduce worldwide emissions of greenhouse gasses. Because these gasses float across national boundaries, this is a global problem.
We can ask the question dear to the hearts of secular economists: WOOPS -- What would an Omnipotent and Omniscient Planner Support? In this case, a wise and benevolent social planner would balance the costs and the benefits of global emissions reductions, set global targets, then allocate the reductions across countries so as to minimize the total costs. If the resulting burdens fell more heavily on China than on the United States, the U.S. Treasury would just cut Beijing a check to ensure an equitable outcome.
This does not seem terribly far removed from what the Copenhagen conference is trying to achieve, nor Kyoto before that. The problems lie not in the grand concept but in some familiar and gnarly political and international relations hurdles. Here are four.
1. Two-level games. Robert Putnam introduced the idea that any agreement must win over both international negotiators and their domestic constituencies. Senator Jim Webb (D-VA) just helpfully reminded President Obama of this in the climate context, warning in a letter that emissions reductions were not to be set through presidential promise, that "only specific legislation agreed upon in the Congress, or a treaty ratified by the Senate, could actually create such a commitment on behalf of our country." Bon voyage, Mr. President. As it happens, the Senate has expressed little enthusiasm for pending cap-and-trade legislation. If it is any comfort, our Australian friends are having similar issues.
2. Observability and Verifiability. If the United States and Europe restrict their emissions, but China and India do not, then global emissions might not fall, and could even increase. In any scenario, every nation would have a strong incentive to free-ride on an agreement, forgoing the costs of abatement while enjoying a cooler global clime. Yet verification is a particularly difficult issue. First, these emissions can be widely dispersed and difficult to measure. Much of the discussion has focused on the more manageable task of verifying specific emission reduction projects, but these will do little good if the emissions reemerge elsewhere in the country. Second, there is strong reluctance among developing nations to accept even a limited verification program. According to a New York Times report today from Copenhagen:
[A] document was said to be framed by Brazil, South Africa, India and China. It made no mention of specific commitments on their part and rejected outside auditing of projects to reduce emissions financed by those countries on their own.
In other words, no checking up on overall emissions, no checking up on home-financed schemes, just oversight on foreign-funded projects.
3. Intertemporal Commitment. Much of the climate discussion involves long-range targets, such as the promise that U.S. emissions in 2050 will be 83 percent below 2005 levels. In 2050, Barack Obama will turn 89 years old and even Robert Byrd may no longer be in the U.S. Senate. It is notoriously difficult to make such commitments across time. The United States Congress annually undoes its past promises to cut Medicare spending and to apply the alternative minimum tax more broadly. One way to make painful emissions reduction promises credible would be to front-load the pain, but that seems highly unlikely in the midst of the current recession.
4. International Payments. In the study of international trade, it is taken as given that countries will not just hand over money to each other. They may tweak tariffs, quibble about quotas, or rejigger regulations, but they will not just hand over cash. We assume this because such payments are relatively rare. There is aid, U.N. dues, and the occasional instance of reparations, but overall very few instances where large credits and debits are settled between governments. More specifically on the minds of developing negotiators is the observation that "past commitments under earlier climate pacts have largely gone unpaid."
Our benevolent social planner would likely find cutting developing country emissions more globally efficient than cutting in the developed world. But that then brings demand for high-stakes compensation, which can be politically challenging. From the Wall Street Journal:
U.S. climate envoy Todd Stern has called a developing-country suggestion that industrialized countries contribute as much as 1% of their gross domestic products "untethered from reality."
The U.S. and the European Union have said they are willing to provide their "fair share" of a total global figure of $10 billion a year from 2010 to 2012.
That amount "would not buy developing countries' citizens enough coffins," said Lumumba Stanislaus Di-Aping, Sudan's U.N. ambassador, who represents the Group of 77, a body that includes China, India and Brazil.
The challenge for Copenhagen is to overcome not one but all of these major political obstacles. My favorite expression of skepticism was in the Financial Times:
When questioned, most Danes expressed enthusiasm for the conference even if some are cynical about the likely outcome. "They will do just enough to make it look like they're doing something," said Christian Jensen, a student.
AXEL SCHMIDT/AFP/Getty Images
Shadow Government is a blog about U.S. foreign policy under the Obama administration, written by experienced policy makers from the loyal opposition and curated by Peter D. Feaver and William Inboden.