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Prepared by the
Institute for the Analysis of Global Security

June 9, 2004
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Energy Security Current Issue

Terror's Next Target
Attacks on the West's oil and gas infrastructure -- from production facilities to pipelines and tankers -- are likely to be the next "mega" target of terrorists, and could wreak havoc with the world's economy, according to an in-depth IAGS analysis of the susceptibility of the energy industry featured in the latest Journal of International Security Affairs (Winter 2004).

China and US should set up a strategic dialogue on energy issues
Interview with Dr. Gal Luft of the Institute for the Analysis of Global Security, originally published by 21st Century Business Herald in Chinese.

A crude threat
The terrorist campaign against Iraq's pipelines demonstrates that pipeline attacks are no longer a tactic but part of a sustained, orchestrated effort that can deliver a significant strategic gain. They can also cause significant damage to the global oil market.
Next in line to emulate the insurgents in Iraq could well be Islamist terrorist groups operating in Central Asia, among them Chechen separatists and the Islamic Party of Liberation, a group that seeks to carry out a holy war against the West and is a suspect in the recent wave of deadly attacks in Uzbekistan.

Chilly response to U.S. plan to deploy forces in the Strait of Malacca
Whether something is profoundly wrong in the dialogue between the U.S. and the two Asian powers is an important question in itself, but the real issue is what is the best mechanism to secure the world's most important shipping corridor, through which one quarter of world trade and half of the world's oil and two thirds of liquefied natural gas move each day.

Highlights from the Department of Energy’s International Energy Outlook 2004-2025

North Sea oil is declining
Since the 1970s North Sea oil has not only been a major source of wealth for both the British and Norwegian economies but also a way for Europe to cut its dependence on Middle East oil. Now many of the major fields in the North Sea are in decline and the North Sea is about to lose its prominent role as one of the world's leading oil domains.

Terror's Big Prize
Since September 11, pipelines, tankers, refineries and oil terminals have been attacked frequently. Except for a sharp increase in maritime insurance premiums in these regions these attacks had marginal strategic consequences. But in at least two cases oil terrorism could have rattled the world.

Libya: changing its spots?
Libyan crude oil is particularly attractive due to its very low sulphur content, which requires much less refining than higher sulphur oil. It is extremely high quality crude, whose characteristics are not easily found elsewhere. Despite its unique treasure, Libya's production capacity is relatively small, standing on 1.5 mbd of crude, or 2% of world supplies.
Since the 1988 Lockerbie bombing Libya had been under U.S. and UN sanctions which hindered its ability to generate enough investment to develop its oil sector. Libya's decision to embark on a rapprochement with the U.S came at unsurprisingly perfect timing, just as concessions for major U.S. oil companies were about to expire.

On the technology front

Fuel Cell power plant installed at NJ College
The fuel cell will provide 250 kilowatts of electric power as well as heat, to several buildings on the campus.

Biomass-to-Ethanol Progress
The enzyme costs of converting cellulosic biomass into sugars for fuel ethanol production have been reduced approximately twenty-fold with technology developed by the National Renewable Energy Laboratory (NREL) and Denmark based Novozymes, biotech-based leader in enzymes and microorganisms.

EU study: Methanol from biomass - competitive with gasoline
A study of a new patented Swedish technology concluded that the alchohol fuel methanol can be produced from biomass via black liquor gasification at a cost competitive with that of gasoline and diesel.

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Back Issues

Reagan's way of war

President Reagan's death brought to the fore his outstanding accomplishment of ending the Cold War. Like American presidents before him he led the U.S. in the charge against communism by forging alliances and sending troops to remote theaters at high cost in blood and treasury. What made Reagan's vision for victory particularly remarkable is that it stemmed from the belief in the power of technology as both a force multiplier and a game changer.

For the three and a half decades that preceded Reagan's presidency, Americans lived in the ominous shadow of a thermonuclear war which threatened to bring destruction to the planet. Two years into his first term, Reagan invited some of America's leading scientists to "give us the means of rendering these nuclear weapons impotent and obsolete." The result was a radical decision to develop a new system, which became known as "Star Wars," to reduce the threat of nuclear missiles by destroying them from space. The decision was met with a mixture skepticism and ridicule. Critics pointed to the technological barriers and the huge costs involved. But Reagan did not falter and insisted on pursuing the project. His gambit worked. The Soviets, already burdened by poor economy, proposed to eliminate all nuclear weapons over 15 years, contingent on the U.S backing off the project. Reagan declined and within a year the two superpowers began negotiations toward nuclear disarmament and permanent peace.

Thus ended the Cold War.

In mobilizing technology to win a world war President Reagan emulated the success of President Franklin Delano Roosevelt who had decided during World War II to develop the nuclear bomb as the ultimate weapon against which no conventional weapons could compete. Both presidents led the free world in a war against a ruthless enemy determined to change the existing world order and bring an end to the west's way of life. Both presidents used America's ingenuity and the power of technology to bring about the final defeat of the challenger.

Today we are again at war, a war of ideas against militant Islamists who want to destroy America's society, its allies and its core values. It is a war against a creed of violence, intolerance and zeal. But unlike previous global conflicts in this war the U.S. is dependent upon the part of the world where its enemies reside. Consuming a quarter of the world's oil while holding only three percent of global reserves, the U.S. is more dependent than ever on oil imported from the Middle East. Corrupt dictators whose power is derived from oil control more than 70 percent of the world's reserves and with it the power to manipulate global economy and sponsor an education system that teaches hatred and intolerance.

With oil reserves outside the Middle East depleting faster than those in the region our dependence on Middle East oil will only increase and with it the power wielded by our enemies.

The war on terror can be fought for many more years but defeat of the radicals cannot be achieved as long as we continue to transfer money to those who wish us harm. The legacy of Reagan and Roosevelt is that technology can win global wars and ensure peace, prosperity and stability. If President Bush wants to achieve similar success, he should follow in their footsteps and initiate a national effort on the scale of the Manhattan Project and Star Wars aimed at ending U.S. dependence on foreign oil. Only by removing the yoke of our energy dependence can we deny countries that "don't particularly like us," to use President Bush's words, the wealth which enables them to fuel terror and spread hatred toward our nation.

Gal Luft is executive director of the Institute for the Analysis of Global Security (IAGS)