Opinion

The Great Debate

Why work with India’s new leader? It’s the economy, stupid

India's Prime Minister Modi gestures while speaking at Madison Square Garden in New York

Great powers sneak up on you.  While Washington has been preoccupied with a burning Middle East, Russia behaving badly and, to a lesser extent, the rise of China, U.S. relations with India have slipped down the diplomatic priority list. In coming decades, however, enormous, unwieldy India will likely be the United States’ most important continental partner in Asia.

On Sunday, 19,000 spectators were enthralled at a rock-star-like rally for India’s new prime minister, Narendra Modi, in Madison Square Garden in New York.  Additional screens were set up in Times Square.  The Rolling Stones and U2 do not command a similar reception. Responding to chants of “Modi, Modi, Modi,” the prime minister promised to “form the India of [his fans’] dreams.”

Modi, a Hindu nationalist who successfully brought economic growth to his home state of Gujarat, was elected by a landslide in May. His first state visit to the United States this week signified to Indians around the world that their country is back, front and center, on the world stage. After a frustrating few years of economic slowdown and gridlock in Delhi, they can be proud to be Indian again. Their hopes are now pinned on their new prime minister and his team.

Let’s hope that India is back on the U.S. priority list as well.

India's Prime Minster Modi appears on screen as he speaks on stage during the Global Citizen Festival concert in Central Park in New YorkWhy does India matter? First, it is enormous and growing. Just 16 years from now, many experts believe, India will likely have inched past China to become the world’s most populous country, with 1.5 billion people. By 2030, China will likely be the world’s largest economy by purchasing-power parity, with the United States second and India third.

Yet the size of India’s middle class is expected to surpass that of both the United States and China, due to its fast-growing population. In 2030, India alone will account for 23 percent of middle-class spending globally (nearly $13 trillion a year!). U.S. companies will be courting Indian customers. If our two governments can remove trade and investment barriers, we will be selling that new, huge middle class everything from computers to cars to legal services and much more.

Want energy independence? Keep the nuclear option and limit exports

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Whether or not you follow the energy markets, it’s very likely you’ve heard the phrase “U.S. energy independence” at one time or another in recent years. Yet the very notion that the United States can be completely self-sufficient when it comes to supplying our domestic need for energy consumption is seriously flawed for a number of reasons ranging from population growth, pure economics, a lack of public policy and a dated permitting process vital to commercialize new energy projects. Collectively, this should have Americans questioning whether U.S. power production can be enough to completely eliminate the need for foreign energy sources.

[poll id="2"]The biggest use for energy is electricity. Using 2013 data from the Energy Information Administration (EIA), in order to produce electricity in the United States, we used a total of 4,058,209 thousand megawatt-hours last year of which 39 percent was supplied from coal, 27 percent from natural gas, 19 percent came from nuclear, 7 percent from hydropower, 6 percent from other renewables, 1 percent from petroleum and less than 1 percent from other gases. So, despite the Obama administration’s efforts to help fight carbon emissions, coal still dominates in the United States. In fact, according to a recent EIA Short-Term Energy Outlook (STEO), the allure of cheaper coal has actually fostered its greater use to offset an increase in natural gas prices.

Coal, of course, releases an enormous amount of carbon dioxide when it’s burned.

from Breakingviews:

Iraq troubles are unlikely to bring new oil crisis

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The continued violence in Iraq looks like a harbinger of a sharp cutback from the world’s seventh-largest oil producer. But the bulk of Iraq’s production is still secure. Even though the Middle East has clearly become less stable, it will still take a cascade of problems to create a big oil price shock.

The oilfields which account for around 90 percent of Iraq’s production are in the still peaceful south of the country, far from the conflict zones. Oilfield security is tight and has recently been increased. The evacuation of non-essential staff by BP and other foreign operators is not an immediate threat to output, since these large fields are predominantly staffed by locals. Oil exports were near record rates in June, according to industry sources cited by Reuters.

from Breakingviews:

Russia puts gas-hungry China in a bear hug

By Ethan Bilby
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Russia has signed a long-awaited gas pipeline deal with China, and it leaves the People’s Republic in a bear hug. Russia gets a new market outside the increasingly frosty European Union. Oil major PetroChina gets to balance out some losses from low regulated prices at home. But the optics of the deal shred Beijing’s pretensions to political neutrality.

Russia could use a friend. EU countries have been planning to diversify supply away from dependence on Russia, which provides a third of their energy needs – especially after a dispute in 2009 saw gas cut off. Annexing Ukraine’s southern Crimea region has raised the temperature further. New pipelines from places like Azerbaijan are designed to limit Moscow’s leverage.

The nuclear option for emerging markets

Last year, greenhouse gas emissions reached a record high of 39 billion tons. Emissions actually dropped in the United States and Europe, but substantial increases in China and India more than erased this bit of good news.

That is all the more reason to focus on innovative solutions that slow the growth in emissions from emerging markets.

The U.S.-India civilian nuclear deal is one such solution.

The key principles of this agreement were signed by President George W. Bush and Prime Minster Manmohan Singh eight years ago this week. The deal brought India’s civilian nuclear program under the International Atomic Energy Agency’s inspection regime. In return, Washington removed sanctions and permitted India to build nuclear power plants with foreign help. Most of the discussion leading up to the deal has focused on its potential effect on non-proliferation treaties and on the partnership between the U.S. and India.

The shale factor in U.S. national security

The boom in domestic shale oil and gas production has increased U.S. prosperity and economic competitiveness. But the potential for this to enhance our national security remains largely unrealized.

The shale surge has boosted production by 50 percent for oil and 20 percent for gas over the last five years. Yet our political leaders are only just beginning to explore how it can help further national strategic interests.

We led a major study at the Center for a New American Security in the last year, bringing together a nonpartisan panel to examine national security implications of the unconventional energy boom. We decided that outdated idealization of “energy independence” is preventing the administration and Congress from focusing on current energy vulnerabilities and figuring out how Washington should secure our economic and security interests.

Is nuclear power the answer on climate change?

James Hansen’s latest press conference was positively scary.

NASA’s former chief climate scientist (he recently left government to pursue a more activist role) met with environmental journalists last month at Columbia University to release a new study with the ominous title, “Assessing Dangerous Climate Change: Required Reduction of Carbon Emissions to Protect Young People, Future Generations and Nature.”

Hansen and his co-authors contend that the agreed-to goal of limiting global warming to 2 degrees Celsius (3.6 degrees Farenheit) above pre-Industrial levels prescribed in the recent Intergovernmental Panel on Climate Change report is still too high to prevent “long-lasting, irreversible damage” to our planet — including raising sea levels, submerging coastal cities and turning vast tracts of the earth into virtual furnaces.

Hansen departs from environmental orthodoxy, however, in arguing that there is no way to cut greenhouse gas emissions sufficiently by relying solely on green alternatives like solar and wind power.

The Case Against Natural Gas Exports

President Barack Obama has made middle-class jobs and natural gas two of his top second-term policy objectives. Both could be undermined if his Department of Energy (DOE) continues to approve gas industry applications for exporting American gas.

There is already a move in Congress to remove DOE’s authority, so approvals can move even faster, and the oil and gas industry has thrown all its lobbying muscle behind this effort to steamroll through the permission process.

Natural gas, the cleanest of the hydrocarbon-based fuels, has long been a primary choice for heating and power generation, as well as an essential raw material, or “feedstock,” for a vast range of chemistry-based products, including every kind of plastic, synthetic cloth and high-tech composite materials. When gas supplies came under pressure in the late 1990s, the chemical industry — and most other energy-dependent U.S. heavy manufacturers — were hard hit.

The architecture of abundance: Building energy infrastructure

For the past 40 years, energy policymakers in Washington worried about a seemingly intractable menace: managing the risks of scarce fossil fuels.

Energy supply issues have been nettlesome at least since the Nixon administration, often producing long gasoline lines, sluggish economic growth, dependence on unstable foreign regimes and even backlash at the ballot box. Most policy solutions — including government subsidies, exotic fuel mandates, even restructuring the Department of Energy — were all oriented around this scarcity paradigm.

That was then. Today, technological innovations like horizontal drilling, better seismic imaging and hydraulic fracturing have done what new laws and regulations never could. We now produce massive amounts of North American energy that will lower prices for consumers, create a domestic manufacturing renaissance and even influence geopolitical alignments.

The looming U.S.-China rivalry over Latin America

President Barack Obama meets with Chinese President Xi Jinping (L) in California, June 7, 2013. REUTERS/Kevin Lamarque

Though the U.S. and Chinese presidents heralded a “new model” of cooperation at their weekend summit, a growing competition looks more likely. The whirlwind of activity before President Barack Obama met with President Xi Jinping in the California desert revealed that Beijing and Washington’s sights are set on a similar prize — and face differing challenges to attain it.

Their focus is Latin America and the prize is increased trade and investment opportunities in a region where economic reforms have pulled millions out of poverty and into the middle class. Latin America is rich in the commodities and energy that both China and the United States need, largely stable politically and eager to do deals.

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