Bush-Cheney Energy Plan Bears Watching

By Abid Aslam
July 2001
(updated February 11, 2002)

0107energy.pdf

When President Bush unveiled the findings of the National Energy Policy Development Group last May, consumer and environmental organizations said the report's policy recommendations favored energy corporations over the public and the environment. In the wake of Enron's collapse, new questions are being raised about the ways that Enron and other energy firms may have shaped the report's recommendations. The refusal of Vice President Cheney, who headed the energy task force and was himself the former director of the oil services giant Halliburton, to release a list of individuals consulted by the committee has sparked a confrontation between the administration and the General Accounting Office.

The shock of Enron's disintegration has given new impetus to campaign finance reform, and the Senate Democrats are using the Enron scandal to promote their own energy bill. Debate over U.S. energy policy has almost exclusively focused on domestic energy issues--such as vehicle fuel-efficiency standards, conservation efforts, new oil and coal exploration and production. However, in the new plan advanced by Bush and Cheney, energy is seen not only as a domestic imperative, but also as a means to project U.S. influence internationally. As such, the administration's energy strategy, presented by President Bush in May, could have serious political and environmental consequences around the world. This will be especially true in areas embroiled in conflicts between states or between governments and armed secessionists, ethnic groups, peasants, or labor unions. Bush's aggressive energy strategy is likely, for example, to stir up more conflict in the following countries and regions:

• West Africa, site of the controversial Chad-Cameroon oil and gas pipeline project as well as U.S. and multinational oil operations in Nigeria's troubled Niger delta region.
• The Caspian region, where the strife-torn province of Nagorno-Karabakh straddles key production and pipeline sites.
• Aceh, where the Indonesian government has fought a pro-independence movement for decades.
• Burma (also known as Myanmar), where the central government is at war with regional insurgencies, even as it seeks to maintain its grip on the political opposition in Rangoon (the capital, also known as Yangon) and in exile.

Bush's energy plan could also engender new self-determination conflicts. First, and rather obviously, its emphasis on supply will provide impetus for exploration and production everywhere there's a hint of energy waiting to be tapped--including, for example, on indigenous lands in Brazil and Venezuela. Second, and less directly, it will involve promoting policies known to create or reinforce the inequalities of wealth and treatment that have led to conflict. Thus, minorities not yet affected by U.S. and multinational energy investment could begin to feel its effects.

Energy and Free Markets

The plan, entitled Reliable, Affordable and Environmentally Sound Energy for America's Future, argues: "A significant disruption in world oil supplies could adversely affect our economy and our ability to promote key foreign and economic policy objectives, regardless of the level of U.S. dependence on oil imports." One of these objectives is to open markets to U.S. investors. Accordingly, the Cheney task force calls for new or reinvigorated efforts to promote free market, procompetitive agendas under the North American Free Trade Agreement (NAFTA), at the World Trade Organization (WTO), and through bilateral investment treaties. It also highlights a number of projects and places where U.S. oil and gas companies are jockeying for position. Such recommendations further dovetail with World Bank Group, International Monetary Fund (IMF), and U.S. Export-Import Bank efforts to create opportunities for investors.

The plan, written by a task force led by Vice President Dick Cheney, envisions "deep water offshore exploration and production in the Atlantic Basin, stretching from offshore Canada to the Caribbean, Brazil and West Africa." The key to such ambitions, of course, is money, and Washington has long sought to make the world more hospitable to, and rewarding for, U.S. investors.

Accordingly, the plan calls for the United States to further press WTO "members to open markets eligible for private participation in the entire range of energy services, from exploration to the final customer …[and] attempt to ensure nondiscriminatory access to foreign providers of energy services." It also urges Washington to stiffen its insistence that members of the WTO, an eventual Free Trade Area of the Americas, and the Asia-Pacific Economic Cooperation forum ensure a "pro-competitive regulatory environment for energy services."

In other words, the governments of countries targeted by U.S. and other foreign investors would be pressured to remove all legal and regulatory impediments to the corporations' abilities to own or operate everything from drilling platforms, pipelines, and refineries to neighborhood gas stations. What's more, foreign governments would need to ensure that local business, environmental, health, and labor regulations don't interfere with profit maximization.

Resource Conflicts

In the process of pursuing its new energy strategy, the U.S. government risks sparking new conflicts over the allocation of resources and the distribution of wealth. Regardless of their roots, such conflicts often come to be expressed as ethnonationalism or secession. Witness the role of economic liberalization in the breakup of Yugoslavia, which began as a series of disputes over the federal budget and the republics' respective debt burdens. Or consider India's Uttar Pradesh, where well-to-do farmers who benefited from the Green Revolution are now pushing to establish their own state, free from the poverty that characterizes much of the state. (Ironically, the farmers intensified their thus-far-nonviolent campaign after the central government agreed to carve out a new state for marginalized but politicized indigenous groups known as "scheduled tribes.")

The Bush-Cheney plan zeroes in on specific areas that are high on U.S. energy companies' lists of priorities and that appear on the radar screens of self-determination conflict watchers. These include:

• Algeria and the United Arab Emirates, which, along with Saudi Arabia and Qatar, are targeted for efforts to "open up … energy sectors to foreign investment" and expand trade in energy-related goods and services. Algerian President Abdelaziz Bouteflika met Bush in Washington on July 12; the two discussed increasing military cooperation and U.S. investment in Algeria's oil sector. Algerian paramilitary operations in and around the Kabylia region were stepped up in April and continue to target the restive Berber (or Amazigh) population.
• Brazil and Venezuela, where the plan seeks "to improve the energy investment climate," but where reserves lie within territory settled or claimed by indigenous groups. That Brazil is confronting its own energy crisis could bode well for U.S. investors pitching themselves as saviors for domestic power providers desperate to increase production. In Brasilia, as in Sacramento, politicians may blame rolling blackouts on deregulation--botched or otherwise--but there's little chance of re-regulation, least of all for governments that must court the World Bank and IMF.
• Nigeria, where the plan makes no mention of Niger delta peoples' struggles against the federal and state governments and against foreign corporations that rely on--and sometimes fund--state security forces for control over indigenous lands. These companies include Shell and Chevron. Last month, local communities assailed the World Bank's International Finance Corporation (IFC) for approving loans to local commercial banks that would then lend the money to Shell subcontractors in the region. Shell is being sued in U.S. courts for its alleged complicity in the 1995 detention and hanging of nine activists from the Ogoni community. The IFC distanced itself from Shell's Nigerian operations in the mid-1990s but now seems to have found an indirect way to restore the relationship.
• Benin, Togo, and Ghana, which, along with Nigeria, are partners in the West Africa Gas Pipeline Company, set up to construct and operate a regional pipeline connecting the Niger delta to Nigeria's neighbors. Chevron is the project's managing sponsor.
• Chad and Cameroon, partners with ExxonMobil, Chevron, and Malaysia's Petronas in building and operating an oil and gas pipeline from the troubled Doba basin and other parts of Chad to Cameroon's Atlantic Coast. Project supporters--including the World Bank--have admitted that armed ethnic and political strife have prevented full environmental assessments in Chad, and ExxonMobil has acknowledged that security concerns in Cameroon prompted it to opt for an offshore storage and distribution facility. Ex-Im Bank also is providing financial and insurance cover. Human rights groups have expressed concern about the arrests of opposition leaders in Chad and the government's recent and planned acquisitions of arms.
• The Caspian region, where proven oil reserves--principally in Azerbaijan and Kazakhstan--are about 20 billion barrels, a little more than in the North Sea and slightly less than in the United States. Ongoing exploration is likely to reveal significantly larger reserves, the Bush-Cheney plan says. Mobil, BP Amoco, and Phillips Petroleum are partners in the Offshore Kazakhstan International Oil Company, which faces resentment from local competitors, chiefly Central Asian Industrial Holdings.

In addition, adoption of the Bush energy plan would: back the Baku-Tblisi-Ceyhan (BTC) oil pipeline; "establish the commercial conditions that will allow oil companies operating in Kazakhstan the option of exporting their oil via the BTC pipeline"; support private investors to "develop the Shah Deniz gas pipeline as a way to help Turkey and Georgia diversify their natural gas supplies and help Azerbaijan export its gas"; and encourage Greece and Turkey to link their gas pipeline systems, thus allowing through-flow from the Caspian region to Europe.

BP Amoco struck gas at Azerbaijan's Shah Deniz field and is promoting the pipeline to Turkey, which in March agreed to buy the gas beginning in 2004. Chevron, ExxonMobil, TotalFinaElf, and Japan's Mitsui also are invested in Azerbaijan's oil and gas sector. While the plan touts the business prospects, it makes no mention of the strategic importance of Nagorno-Karabakh, where fighting following the 1991 collapse of the Soviet Union and an occupation by Armenian troops resulted in more than 30,000 deaths, before Russia brokered a cease-fire in 1994. Reportedly, some 100 people a year are still killed by snipers and landmines.

Bush met the Armenian and Azerbaijani leaders separately in Washington in April, and in July, U.S. officials joined Russian and French counterparts in trying to help negotiate a political settlement. Secretary of State Colin Powell is directly involved, a clear indication of Washington's willingness to wade into foreign policy quagmires where energy interests are at stake.

Pressure to secure the necessary conditions for successful ventures will be intense, particularly since Iran announced, last year, that a Chinese-Swiss consortium had obtained funding from French banks for an oil pipeline from the Caspian Sea port of Neka to a suburb of Tehran. The project would involve not only oil extraction and transport but also refining--a core element of Iran's economy. The announcement was seen by U.S. analysts as undermining U.S. sanctions and as a further challenge to Washington's waning influence in the Caspian region.

Finally, Bush's energy plan highlights the need to build Asian reserves but focuses primarily on regional giant India, which has asked for help to maximize its domestic oil and gas production. Although U.S. companies, including Enron and Samson International, are players in India, other firms remain heavily invested in strife-torn Asian regions glossed over by the Bush-Cheney document. These include Aceh and Burma, where ExxonMobil and Unocal, respectively, have been implicated in clampdowns by government forces.

Last month, the International Labor Rights Fund filed suit against ExxonMobil on behalf of 11 people from Aceh under the Alien Tort Claims Act. The suit alleges that Mobil, as it was then called, provided logistical and material support to Indonesian troops operating in the restive territory between 1989 and 1998, when former President Suharto declared it a "military operational area" and sustained an intense effort against the armed separatist group GAM. The company denies any wrongdoing. It suspended its Aceh operations in March amid growing security concerns, prompting the government in Jakarta to deploy reinforcements to the region. It reportedly has been weighing a return under pressure from Indonesia's state oil company, Pertamina, which is anxious to resume royalty receipts. The suit appears destined to join similar actions that have languished for years in the federal courts, including one against Unocal, sued by Burmese nationals alleging human rights abuses stemming from a project in their country.

A Dark Future?

As Congress and the administration advance the plan, official statements and media coverage will focus mostly on domestic issues. This mirrors Bush's argument that the strategy is designed to avert "a darker future" presaged by California's rolling blackouts. Partisan and independent analysts alike say the Bush-Cheney plan, which bears the marks of heavy lobbying by energy industry executives, faces intense debate. How many of its 105 recommendations will become official policy remains the subject of speculation.

Assuming the Cheney task force gets its wishes, it is anyone's guess how much of the resulting energy will warm American homes or fuel SUV expeditions to the mall. But that's hardly the main point. Rather, the Bush plan is largely an effort to help U.S. companies establish strategic positions from which to command profit and to influence world energy markets, presumably in the national interest.

This strategy will surely benefit the energy industry--businesses that often operate to the detriment of human rights, the environment, and the general welfare in countries from which oil and gas are extracted. Whether it will erode the underlying American faith that U.S. corporations serve U.S. citizens remains an open question, not least in California.

(Abid Aslam <aaslam@igc.org> is a contributing editor at Foreign Policy In Focus and the North America and Caribbean editor of Inter Press Service, an international news agency.)