Archive for the ‘Economics’ Category

Iran facing a growing water crisis

January 12, 2010 Leave a comment

Karaj Dam in Iran

“Unsustainable development has increased the country’s water demand to a maximum level, causing the water level of underground resources sink to its lowest level – from 50 meters to 300 meters,” according to the general director of Iran’s Meteorological Organization, Parviz Rezazadeh.  According to an Iranian report from 2008, “per capita water quota will be below 1,000 cubic meters by 2050.” Iran has a wide range of climates by region, and an unevenly distributed population, creating additional problems around the issue of water distribution.  About half of the population lives in regions that contain over 70% of the water resources, in the north and west. The stress on adequate renewable sources of water is made worse by Iran’s growing population.  Continued stress on underground sources of water threaten to eliminate their very availability, and a little over half of the country’s water needs were estimated to be met through the use of these aquifers (same source as above).

The above tables and image are from a 2005 report written by Kaveh Madani Larijani.


Yemen and the Indian Ocean: The US strategy to maintain global power and contain China

January 8, 2010 Leave a comment

As the US becomes more overtly involved in the fighting taking place within and throughout Yemen, it is important to regard the wider strategic context that has made the Middle Eastern country such a focus of action and attention.

MK Bhadrakumar writes in the Asia Times that,

A cursory look at the map of region will show that Yemen is one of the most strategic lands adjoining waters of the Persian Gulf and the Arabian Peninsula. It flanks Saudi Arabia and Oman, which are vital American protectorates. In effect, Uncle Sam is “marking territory” – like a dog on a lamppost. Russia has been toying with the idea of reopening its Soviet-era base in Aden. Well, the US has pipped Moscow in the race.

The US has signaled that the odyssey doesn’t end with Yemen. It is also moving into Somalia and Kenya. With that, the US establishes its military presence in an entire unbroken stretch of real estate all along the Indian Ocean’s western rim. Chinese officials have of late spoken of their need to establish a naval base in the region. The US has now foreclosed China’s options. The only country with a coastline that is available for China to set up a naval base in the region will be Iran. All other countries have a Western military presence.

About half of the world’s oil production travels by sea, as does some 90% of the volume of all global trade.  Of this seaborne trade, some 70% of petroleum products pass through the Indian Ocean.

Maritime trade routes are “strategic by its control and commercial by its usage,” says Dr. Jean-Paul Rodrigue, Associate Professor, Dept. of Global Studies and Geography, Hofstra University.

Meanwhile, maritime trade has nearly doubled between 1990 and 2006 (UNCTAD, ‘Review of Maritime Trade.’ 2007). The nearby Straight of Hormuz, leading in and out of the oil and gas rich Persian Gulf, is, according to the US Energy Information Administration, “the world’s most important oil chokepoint due to its daily oil flow of 16.5-17 million barrels (first half 2008E), which is roughly 40 percent of all seaborne traded oil (or 20 percent of oil traded worldwide).”

In September 2009, US Admiral Timothy J. Keating gave a lecture stating that the Asia-Pacific region will become of increasing importance to the USA and the word over time. Keating mentioned that, “of the 20 largest ports in the world, 15 of them are in the Asia-Pacific region. Nine of them are right there in China.” Shanghai is the busiest port by volume in the world. He also mentioned that some 80% of the oil to China, Japan, South Korea, and Taiwan goes through the Straight of Malacca. To get there, it has to go across the Indian Ocean. (You can view a video of Keating’s lecture here).

Bhadrakumar’s earlier mentioned article asserts that:

Most important, however, for US global strategies will be the massive gain of control of the port of Aden in Yemen. Britain can vouchsafe that Aden is the gateway to Asia. Control of Aden and the Malacca Strait will put the US in an unassailable position in the “great game” of the Indian Ocean. The sea lanes of the Indian Ocean are literally the jugular veins of China’s economy. By controlling them, Washington sends a strong message to Beijing that any notions by the latter that the US is a declining power in Asia would be nothing more than an extravagant indulgence in fantasy.

In the Indian Ocean region, China is increasingly coming under pressure. India is a natural ally of the US in the Indian Ocean region. Both disfavor any significant Chinese naval presence.

…China is keen to whittle down its dependence on the Malacca Strait for its commerce with Europe and West Asia. The US, on the contrary, is determined that China remains vulnerable to the choke point between Indonesia and Malaysia.

Meanwhile, according to Robert D. Kaplan’s article ‘Power Plays in the Indian Ocean,’ India is soon to become “the world’s fourth-largest energy consumer, after the United States, China, and Japan — is dependent on oil for roughly 33 percent of its energy needs, 65 percent of which it imports.”

Kaplan also writes that “India is enlarging its navy in the same spirit. With its 155 warships, the Indian navy is already one of the world’s largest, and it expects to add three nuclear-powered submarines and three aircraft carriers to its arsenal by 2015.”

“…How America ‘manages’ Eurasia is critical. Eurasia is the globe’s largest continent and is geopolitically axial. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania geopolitically peripheral to the world’s central continent. About 75 percent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about 60 percent of the world’s GNP and about three-fourths of the world’s known energy resources,” writes the highly influential US policy adviser, Zbigiew Brzezinks, in his book, ‘Grand Chessboard – American Primacy and its Geostrategic Imperatives.’

Redrawing Eurasia’s energy map: Russia, China, and Iran

January 7, 2010 Leave a comment

The Asia Times carries an article by the regularly excellent analyst and former Indian career diplomat, MK Bhadrakumar, who investigates the energy routes running throughout Asia and into Europe. He provides background on the strategic decision and their implications. It’s a good read. Excerpt below:

We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world’s largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.

…The United States’ pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.

…To be sure, 2009 proved to be a momentous year for the “energy war”. The Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil terminal near the port city of Nakhodka in Russia’s far east inaugurated by Prime Minister Vladimir Putin on December 27 (which will be served by the mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by Ahmadinejad on January 6 – the energy map of Eurasia and the Caspian has been virtually redrawn.

Turkmenistan a pivot in Eurasia’s high stakes energy contest

January 6, 2010 1 comment

On Wednesday, January 6, Iran and Turkmenistan opened a new natural gas line. Currently, Turkmenistan delivers some 8 billion cubic meters of gas annually through the 200 km KorpejeKordkuy pipeline into Iran. The older deal, inaugurated in 1997, is in place for 25 years. The latest agreement greatly increases natural gas supply to Iran by adding a second pipeline, 30 km (19 miles) in length. Turkmenistan is recognized as one of the world’s premier sources of natural gas, and has been the focal point of much political wrangling between regional and global powers for a share of the its energy.

Previously, Turkmenistan’s energy exports had been under the sway of Russia, using Gazprom as dominant the distributor of choice. Turkmenistan was previously a Soviet state, giving Russia an edge in all subsequent deals due to existing infrastructure between the two countries along with that countries residual influence, as well as its proximity, to the Central Asian nation.

From January 2010 on, Russia will import 30 billion cubic meters (bcm) of gas annually from Turkmenistan, a long fall from its 50 bcm of imports prior a major April 2009 explosion at pipeline leading to Russia.

Futhermore, China has opened a long pipeline from Turkmenistan, carrying some 40 bcm of gas, eroding Russia’s regional energy dominance even more.

The true scale of Turkmenistan’s gas reserves are shrouded in controversy and mystery, with experts claiming that it lacks or has enough to meet its current needs in addition to new exports to Europe. Not surprisingly, Turkmenistan’s government claims that is has massive reserves.

What makes Turkmenistan so important in the dynamics over the race for energy in Central Asia is twofold. First, it does have significant natural gas resources. This makes it very important to energy hungry China, to energy exporting Russia, and to neighbouring Iran which also requires natural gas for its domestic needs specifically in the northeast of the country which is closer to bordering Turkmenistan than to its own southwestern gas reserves.  Europe is also a major gas importer and has had to be reliant on Russian domestic and regional distribution for its needs. Europe, supported by the US, would like to have a more direct tap into Turkmenistan, bypassing its dependence on Russian sources and distribution.

Russia’s economic health is greatly affected by European energy purchases. Russia’s growth in the recent past has been in great part due to energy exports. According to the World Bank and IMF, it’s estimated that Russia’s oil and gas sector made up about 64% of export revenues in 2007, and were tied to 30% of all foreign direct investment (FDI). Also, according to Alfa Bank, the energy sector accounts for some 20.5% of the country’s GDP.

Europe, on the other hand, imported 42% of its oil and 43% of its natural gas from Russia in 2004. In some European countries, their energy imports from Russia can top 80 or 90 per cent.

Nabucco gas pipeline, completed and proposed routes

Secondly, Turkmenistan’s geographic location is key to its importance. Europe is seeking greater energy independence from Russia, and the US has hatched a plan, that has so far seen little success, to accomplish this. It wishes to draw a long, multi-continental pipeline from Asia to Europe, running through Turkey in order to bypass Russia’s routes.  This 3,300 km pipeline, called Nabucco, is to run from the western coast of the Caspian sea, through Turkey, and into Europe. Interested parties have had great difficulty in making this line a reality due numerous and various political, security, and economic issues. Even if such a line was established, it would need a steady supply of energy. Central Asia is an obvious choice for this. Turkmenistan lies on the eastern shores of the Caspian sea and can act both as a source of energy and a route for pipelines across the sea. Of course, this route is made difficult by regional players such as Russia and Iran which border Caspian sea itself.

In April 2009, US president Barack Obama appointed Richard Morningstar to head up Eurasian energy policy. MK Bhadrakumar writes in Asia Times that Morningstar, under president Clinton, successfully championed the Baku-Tbilisi-Ceyhan oil pipeline.

In 1998, Morningstar was quoted as saying that, “the fundamental objective of the US policy in the Caspian is not simply to build oil and gas pipelines. Rather it is to use those pipelines, which must be commercially viable, as tools for establishing a political and economic framework that will strengthen regional cooperation and stability and encourage reform for the next several decades.”

Bhadrakumar states that Morningstar has been very busy and pragmatic in his first week in office under president Obama. He has been trying to win a supply deal from gas rich Turkmenistan in order to transit that energy across the Caspian sea and through to Europe. He has also stated that the US would consider striking a deal with Iran for natural gas. It has even been suggested that some Western technology may be made available to Iran’s energy sector if a natural gas deal was concluded.

Talk of purchasing natural gas from Iran can well be a carrot in negotiations between the US and Iran on the latter country’s nuclear program. Also, the US has been seeking some degree of increased cooperation from Iran in order to stabalize Afghanistan.

Having Iran join the proposed Nabucco pipeline would have that energy rich country enter into what would become an increasingly competitive market for European consumers, eroding Russia’s dominance.

The likelihood of Iran joining the Nabucco project is slim in the short-term. Tensions are high between the US and Iran, and this proposal is likely to serve both as an incentive to Iran and as a display of how serious the US is about making the proposed pipeline a reality, thus bolstering the confidence of currently lackluster potential investors.

Turkey’s interest in all of this or a Russian southern pipeline project lies in its potential to come out as a hub for energy pipelines leading from Asia to Europe. Meanwhile, Iran, though facing extreme difficulty in the affair, has interests in reviving plans for the IPI (Iran-Pakistan-India) pipeline to supply India’s growing energy needs.  This route would also have the potential to tap into Turkmenistan’s supply in addition to Iran’s southwestern resources.

Maps of Iran

December 30, 2009 Leave a comment

I’ve gathered a collection of maps on Iran here. You can find more at the University of Texas Perry-Castaneda Library Map Collection. Click on each map for a closer view.

Map - Iran political map 2001

Iran Population Density 2004

Iran demographics 2004

Iran demographics 2004

Iran shaded relief 2001

Iran Key Pretroleum Facilities 2004

Iran Southern Caspian Energy Prospects 2004

Iran Strait of Hormuz 2004

Iran Industry and Mining 1978 CIA Source

Iran Light Industry and Agriculture 1973 CIA Source

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