Petro-Power and the Nuclear Renaissance

Two Faces of an Emerging Energo-fascism (Part 2) - (Part 1 Here)

By Michael T. Klare

01/18/07 "TomDispatch" -- -Not "Islamo-fascism" but "Energo-fascism" -- the heavily militarized global struggle over diminishing supplies of energy -- will dominate world affairs (and darken the lives of ordinary citizens) in the decades to come. This is so because top government officials globally are increasingly unwilling to rely on market forces to satisfy national energy needs and are instead assuming direct responsibility for the procurement, delivery, and allocation of energy supplies. The leaders of the major powers are ever more prepared to use force when deemed necessary to overcome any resistance to their energy priorities. In the case of the United States, this has required the conversion of our armed forces into a global oil-protection service; two other significant expressions of emerging Energo-fascism are: the arrival of Russia as an "energy superpower" and the repressive implications of plans to rely on nuclear power.

Energy Haves and Have-nots

With global demand for energy constantly rising and supplies contracting (or at least failing to keep pace), the world is being ever more sharply divided into two classes of nations: the energy haves and have-nots. The haves are the nations with sufficient domestic reserves (some combination of oil, gas, coal, hydro-power, uranium, and alternative sources of energy) to satisfy their own requirements and be able to export to other countries; the have-nots lack such reserves and must make up the deficit with expensive imports or suffer the consequences.

From 1950 to 2000, when energy was plentiful and cheap, the distinction did not seem so obvious as long as the have-nots possessed other forms of power: immense wealth (like Japan); nuclear weapons (like Britain and France); or powerful friends (like the NATO and Warsaw Pact countries). Needless to say, for poor countries possessing none of these assets, being a have-not state was a burden even then, contributing mightily to the debt crisis that still afflicts many of them. Today, these other measures of power have come to seem less important and the distinction between energy haves and have-nots correspondingly more significant -- even for wealthy and powerful countries like the United States and Japan.

Surprisingly, there are very few energy haves in the world today. Most notable among these privileged few are Australia, Canada, Iran, Kazakhstan, Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, Venezuela, Iran, Iraq (if it were ever free of conflict), and a few others. These countries are in an envious position because they do not have to pay stratospheric prices for imported oil and natural gas and their ruling elites can demand all sorts of benefits -- political, economic, diplomatic, and military -- from the foreign leaders who come calling to procure copious quantities of their energy products. Indeed, they can engage in the delicious game of playing one foreign leader against another, as Kazakhstan's President, Nursultan Nazarbayev -- a regular guest in Washington and Beijing -- has become so adept at doing.

Pushed even further, this pursuit of favors can lead to a quest for political domination -- with the sale of vital oil and natural gas supplies made contingent on the recipient's acquiescing to certain political demands set forth by the seller. No country has embraced this strategy with greater vigor or enthusiasm than Vladimir Putin's Russia.

The Rising Energy Superpower

At the end of the Cold War, it appeared as if Russia was a forlorn, wasted ex-superpower, impoverished in spirit, treasure, and influence. For years, it was treated with disdain by American officials. Its leaders were forced to swallow humiliating agreements like the expansion of NATO to Moscow's former satellites in Eastern Europe and the abrogation of the Anti-Ballistic Missile Treaty. To many in Washington, it must have seemed as if Russia was little more than a relic of history, a has-been never again slated to play a significant role in world affairs.

Today, Moscow, not Washington, seems to be enjoying the last laugh. With control over Eurasia's largest reserves of natural gas and coal as well as enormous supplies of petroleum and uranium, Russia is the new top dog -- an energy superpower rather than a military one, but a superpower nonetheless.

First, a look at the big picture. Russia is the absolute king of natural gas producers. According to BP (the former British Petroleum), it alone possesses 1.7 quadrillion cubic feet of proven gas reserves, or 27% of the total world supply. This is even more significant than it might appear because Europe and the former USSR rely on natural gas for a larger share of their total energy -- 34% -- than any other region of the world. (In North America, where oil is the dominant fuel, natural gas accounts for only 25% of the total.) Because Russia is by far the leading supplier of Eurasia's gas, it enjoys a position of supply dominance unmatched by any energy provider -- except Saudi Arabia in the petroleum field. Even in that realm, Russia is the planet's second leading producer, falling just 1.4 million barrels short of Saudi Arabia's 11.0 million barrels per day at the start of 2006. Russia also possesses the world's second largest reserves of coal (after the United States) and is a major consumer of nuclear energy, with 31 operational reactors.

Soon after assuming power as president in 1999, Vladimir Putin set out to convert this superabundance of energy -- the economic equivalent of a nuclear arsenal -- into the sort of political clout that would restore Russia's great-power status. By controlling the flow of energy to other parts of Eurasia from Russia and former Soviet republics like Kazakhstan and Turkmenistan (whose energy is exported through Russian pipelines), he reasoned, he could exercise the sort of political influence enjoyed by Soviet officials during the heyday of the Cold War. To accomplish this, however, he would have to reverse the wide-ranging privatization of the oil and gas industry that occurred in the early 1990s after the breakup of the USSR and bring vital elements of Russia's privately-owned energy industry back under state control. Since there was no legitimate way to do this under Russia's post-Communist legal system, Putin and his associates turned to illegitimate and authoritarian methods to de-privatize these valuable assets. Here, we see another emerging face of Energo-fascism.

Remarkably, Putin himself had long before spelled out the rationale for concentrating control over Russia's energy resources in the state's hands. In a 1999 summary of his Ph.D. dissertation on "Mineral Raw Materials in the Strategy for Development of the Russian Economy," he asserted that the Russian state must oversee the utilization of the country's mineral raw materials -- including oil fields in private hands -- for the good of the Russian people. "The state has the right to regulate the process of the acquisition and the use of natural resources, and particularly mineral resources, independent of on whose property they are located," he wrote. "In this regard, the state acts in the interests of society as a whole." No better justification for Energo-fascism can be imagined.

The most famous expression of this outlook has been the so-called Khodorkovsky Affair. In 2003, Mikhail Khodorkovsky, the CEO of Yukos, then Russia's top oil producer, was arrested on fraud and tax-evasion charges. He had run afoul of Putin by pursuing all sorts of energy deals independent of the state, including possible joint ventures with Exxon Mobil, and by supporting anti-Putin political forces inside Russia -- either of which would have alone been sufficient to earn him the Kremlin's wrath.

However, it is now apparent that Putin's ultimate goal in engineering the arrest was to seize control of Yuganskneftegaz, Yukos' prime asset, accounting for about 11% of Russia's oil output. With Khodorkovsky and his top associates in prison awaiting trial, the government auctioned Yuganskneftegaz to a secretive shell company, which then resold it to state-owned Rosneft at a below-market price. In one fell swoop, Putin had managed to dismember Yukos and turn Rosneft into the country's leading oil producer.

The Russian president has also sought to extend state control over the distribution and export of oil and gas by blocking any effort by private firms to build pipelines that would compete with those owned and operated by Gazprom, the state-owned natural gas monopoly, and Transneft, the state oil-pipeline monopoly. The United States and other consuming nations have long pushed for the construction of privatized oil and gas pipelines in Russia to increase the outflow of energy to Europe and other foreign markets as well as to dilute the power of Gazprom and Transneft. The Kremlin has, however, systematically foreclosed all such efforts.

If the concentration of ownership of energy assets in the state's hands through legally dubious means is one dimension of emerging Energo-fascism in Russia, a second is the utilization of this power to intimidate have-not states on Russia's periphery. The most notable expression of this to date was the cutoff of natural gas supplies to Ukraine on January 1, 2006. Ostensibly, Gazprom stopped the flow in a dispute over the pricing of Russian gas, but most observers believe that the action was also intended as a rebuke to Ukraine's Western-leaning president, Victor A. Yushchenko. Remember, this was in the dead of winter, and natural gas is the main source of heat in Ukraine, as in much of Eastern Europe and the former USSR. Gazprom resumed the flow after a last-minute pricing compromise and following vociferous complaints from Western European customers who were suffering their own losses (as the Ukrainians diverted Europe-bound gas for their own use). This was the moment when it became clear to all that Moscow was fully prepared to open and close the energy spigot as a tool of foreign policy.

Since then, Moscow has employed this tactic on several occasions to intimidate other neighboring states in what it terms its "near abroad" (as the U.S. used to speak of Latin America as its "backyard"). On July 29, 2006, claiming a leak, Transneft halted oil shipments to the Mazeikiu refinery in Lithuania after its owners announced its sale to a Polish firm, not a Russian one. Observers of the move speculate that Russians officials intended to force a Russian takeover of the refinery.

In November, Gazprom threatened to more than double the price of natural gas to its former Georgian SSR from $110 to $230 per 1,000 cubic meters. The alternative offered was a cessation of deliveries. Again, political pressure was believed to be at least part of the motive as Georgia's pro-Western government has defied Moscow on a wide range of issues. In December, Gazprom pulled the same sort of trick on Belarus, demanding a major readjustment of prices from a close (and impoverished) ally that had recently been showing mild signs of independence.

This, then, is another face of Energo-fascism in Russia: the use of its energy as an instrument of political influence and coercion over weak have-not states on its borders. "It is not that energy is the new atomic weapon," Cliff Kupchan of the Eurasia Group consultancy told the Financial Times, "but Russia knows that petro-power, aggressively and cleverly applied, can yield diplomatic influence."

Big Brother and the Nuclear Renaissance

The last face of Energo-fascism to be discussed here is the inevitable rise in state surveillance and repression attendant on an expected increase in nuclear power. As oil and natural gas become scarcer, government and industry leaders will undoubtedly push for a greater reliance on nuclear power to provide additional energy. This is a program likely to gain greater momentum from rising concerns over global warming -- largely a result of carbon-dioxide emissions created during the combustion of oil, gas, and coal. President Bush has repeatedly spoken of his desire to foster greater reliance on nuclear power and the administration-backed Energy Policy Act of 2005 already provides a variety of incentives for electrical utilities to build new reactors in the United States. Other countries including France, China, Japan, Russia, and India also plan to up their reliance on nuclear power, greatly adding to the global spread of nuclear reactors.

Many problems stand in the way of this so-called renaissance, not least the mammoth costs involved and the fact that no safe system has yet been devised for the long-term storage of nuclear wastes. Furthermore, despite many improvements in the safety of nuclear power plants, worries persist about the risk of nuclear accidents such as those that occurred at Three Mile Island in 1979 and Chernobyl in 1986. But this is not the place to weigh these issues. Let me instead focus on two especially worrisome aspects of the future growth of the nuclear power industry: the possible federalization of nuclear reactor placement in the U.S. and the repressive implications globally of the greater availability of nuclear materials open to diversion to terrorists, criminals, and "rogue" states.

Currently, America's municipalities, counties, and states still exercise considerable control over the issuance of permits for the construction of new nuclear power plants, giving citizens in these jurisdictions considerable opportunity to resist the placement of a reactor "in their backyard." For decades, this has been one of the leading obstacles to the construction of new reactors in the U.S., along with the costly and time-consuming legal process involved in winning over state legislatures, county boards, and environmental agencies. If this practice prevails, we are never likely to see a true "renaissance" of nuclear power here, even if a few new reactors are built in poor rural areas where citizen resistance is minimal. The only way to increase reliance on nuclear power, therefore, is to federalize the permit process by shunting local agencies aside and giving federal bureaucrats the unfettered power to issue permits for the construction of new reactors.

Unlikely, you say? Well consider this: The Energy Policy Act of 2005 established a significant precedent for the federalization of such authority by depriving state and local officials of their power to approve the placement of natural gas "regasification" plants. These are mammoth facilities used to reconvert liquified natural gas, transported by ship from foreign suppliers, into a gas that can then be delivered by pipeline to customers in the United States. Several localities on the East and West coasts had fought the construction of such plants in their harbors for fear that they might explode (not an entirely far-fetched concern) or become targets for terrorists, but they have now lost their legal power to do so. So much for local democracy.

Here's my worry: That some future administration will push through an amendment to the Energy Policy Act giving the federal government the same sort of placement authority for nuclear reactors that it now has for regasification plants. The feds then announce plans to build dozens or even hundreds of new reactors in or near places like Boston, New York, Chicago, San Francisco, Los Angeles, Denver, and so on, claiming an urgent need for additional energy. People protest en masse. Local officials, sympathetic to the protestors, refuse to arrest them in droves. But now we're speaking of defiance of federal, not state or municipal, ordinances. Ergo, the National Guard or the regular Army is called up to quell the protests and protect the reactor sites -- Energo-fascism in action.

Finally, there's another danger in the spread of nuclear power: that it will require a systematic increase in state surveillance of everyone even remotely connected with commercial nuclear energy. After all, every uranium enrichment facility, nuclear reactor, and waste storage site -- and any of the linkages between them -- is a potential source of fissionable materials for terrorists, black-market traffickers, or rogue states like Iran and North Korea. This means, of course, that all of the personnel employed in these facilities, and all their contractors and sub-contractors (and all their families and contacts) will have to be constantly vetted for possible illicit ties and kept under strict, full-time surveillance. The more reactors there are, the more facilities and contractors who will have to be subjected to this sort of oversight -- and the more the security staff itself will have to be subjected to ever higher levels of surveillance by state security agencies. It's a formula for Big Brother on a very large scale.

And then there's the special problem of "breeder reactors." These plants produce ("breed") more fissionable material than they consume, often in the form of plutonium, which can, in turn, be burned in power reactors to generate electricity but can also be used as the fuel for atomic weapons. Although such reactors are currently banned in the United States, other countries, including Japan, are building them so as to diminish their reliance on fossil fuels and natural uranium, itself a finite resource. As the demand for nuclear energy grows, more countries (even, possibly, the USA) are bound to build breeder reactors. But this will vastly increase the global supply of bomb-grade plutonium, requiring an even greater increase in state supervision of the nuclear power industry in all its aspects.

The State's Iron Grip

All the phenomena discussed in this two-part series -- the transformation of the U.S. military into a global oil-protection service, the growth of the energy equivalent of a major-power arms race, the emergence of Russia as an energy superpower, and the need for increased surveillance over the nuclear power industry -- are expressions of a single, overarching trend: the tendency of states to extend their control over every aspect of energy production, procurement, transportation, and allocation. This, in turn, is a response to the depletion of world energy supplies and a shift in the locus of energy production from the global north to the global south -- developments that have been under way for some time, but are bound to gain greater momentum in the years ahead.

Many concerned citizens and organizations -- the Apollo Alliance, the Rocky Mountain Institute, and the Worldwatch Institute, to name but a few -- are trying to develop sane, democratic responses to the problems brought about by energy depletion, instability in energy-producing areas, and global warming. Most government leaders, however, appear intent on addressing these problems through increased state controls and a greater reliance on the use of military force. Unless this tendency is resisted, Energo-fascism could be our future