With Russia, China, Saudi and OPEC+ manoeuvring to take advantage of the global energy and cost-of-living crises, the world’s democracies can no longer ignore their chronic vulnerability to the weaponization of critical resources. Fortunately, to mitigate the threat, they do not need to reinvent the wheel.
History doesn’t repeat itself but it often rhymes,” as Mark Twain is often reputed to have said is an appropriate description of the evolving relationship between the West and its adversaries. During the Cold War, the Soviet Union was a global superpower, owing to its military dexterity. Today, Russia’s armed forces appear to be in a miserable state, but the country has become an energy superpower that is using its vast natural-gas reserves as a potent weapon. Similarly, today’s standoff between the West and Russia over Ukraine echoes the Cold War confrontation to a great extent.
Europe to freeze without Energy this winter
With winter threatening, the Kremlin’s shutdown of gas flows to the European Union could have severe consequences, triggering the biggest energy crisis in 50 years. Though increasing deliveries of gas from the United States, the United Kingdom, and Norway will help mitigate the EU’s dependence on Russian supplies in the short run, it may not act as a long-term solution.
Alternate Energy Security Partnership is the need of the hour
The weaponization of energy resources underscores the need for a new kind of partnership among the world’s democracies. At the Baltic Sea Energy Security Summit in Copenhagen in August 2022, Germany, Poland, Lithuania, Latvia, Estonia, Finland, Sweden, and the European Commission signed a joint declaration to strengthen energy security in the Baltic Sea region by increasing their combined renewable-wind energy capacity by almost 7-fold over the next eight years. By 2030, offshore wind farms in the Baltic Sea region alone should be capable of producing 19.6 gigawatts per year, enough to meet the electricity demands of 28.5 million European homes (roughly equivalent to the combined number of households in all the Baltic Sea countries except Germany and Russia).
Geopolitics of Energy is on the cusp of a major shift
The world has to consider that the ‘Geopolitics of Energy” is on the cusp of a major shift. Over the last decade, the costs of wind and solar energy have fallen below that of fossil fuels in most countries. The immense growth of renewable energy will have two significant consequences. First, fuel-exporting countries’ ability to wield energy resources as a weapon will not be so potent. Second, as the geopolitical importance of fuel resources diminishes, the importance of critical raw materials such as rare-earth elements, minerals, and metals will increase.
China’s adverse track record of weaponizing its resources is a serious matter of concern
Over the last two decades, China has secured global dominance over the extraction and refining of minerals and metals. Today, China mines 58% and processes 85% of global rare-earth elements, giving it control over key parts of the supply chains needed to build wind turbines, solar panels, and electric vehicles. To put this position in perspective, Saudi Arabia’s share of global oil production stands at a mere 11%.
China’s dominance is a concern in itself; as it has an adverse track record of weaponizing its resources. In 2010, after a Chinese trawler collided with a Japanese coastguard vessel in the waters around the disputed Senkaku Islands, China halted its exports of rare-earth elements to Japan. In response, Japan took steps to reduce its dependence on China, including by working with mining companies to find new sources of the same materials, and by building its domestic refining capacity.
Europe should learn lessons from the 2010 Senkaku Island incident
Europe, the US, and other democracies should heed the lessons of the 2010 Senkaku Islands incident and begin forging a new alliance to secure the supply of energy and critical raw materials. We already know that the International Energy Agency – created by OECD members following the 1973 oil shock – has offered a potent defence against OPEC’s weaponization of oil.
AAAP (Alternate Energy Alliance Partners) will be the future world order
A new energy and raw materials alliance could start by including Japan, Australia, New Zealand, South Korea, and those Latin American democracies that support an ethical-based global order. Following the IEA model, it may develop a joint analytical capacity to produce regular forecasts of critical raw-material supplies and demand for them. And just as IEA members hold emergency oil reserves equivalent to at least 90 days of net oil imports, members of the new alliance would keep stockpiles of strategically important raw materials.
Finally, alliance partners would insist on a market-based international trading system for critical raw materials through the G7, the G20, and the World Trade Organization. They may coordinate and promote research aimed at diversifying demand for minerals while creating new public-private partnerships to build a pipeline of forthcoming extraction and refining projects.
In addition to empowering the green transition, critical raw materials and energy resources could become a source of peace, cooperation, and stability also. By building on the lessons from the 1973 oil shock, we can ensure that history doesn’t repeat itself. So, in the present geo-political scenario the world’s democracies should come together to act prudently and prevent further weaponization of essential economic goods.
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