America’s Missed Opportunity

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The Department of Energy and the Federal Energy Regulatory Commission maymove at a snails pace, but Russian President Vladimir Putin does not move so slow. Through the power of oil and natural gas, President Putin imperils American interests in the West and the East.

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Left to Right: China’s President Xi Jinping and Russia’s President Vladimir Putin at the Ceremony Finalizing the Two Nation’s Energy Deal (Source:www.telegraph.com)

A partnership and balance of power has been established between the world’s greatest supplier of natural gas, Russia, and one of the world’s largest potential consumer of natrual gas, China. A border thousands of miles long, a pipeline, an aliance, and now a deal worth $400 billion has forged a political and economic tie between Russia and China. The mutual attraction between Russia and China makes this alliance stable and self-sustaining.

Although China needs Russia in the medium and long-range for its vast energy needs, Russia needed to strike a deal with China with more immediate urgency due to its weak economy. Jane Perlez, of the New York Times, writes, “With Russia’s economy near recession and the International Monetary Fund projecting 0.2 percent growth this year, Mr. Putin was desperate to get the deal done…” While Russia’s economy may be close to a recession now, in, the long-run, Russia will have the advantage of proximity and supply in future natural gas negotiations with East and South Asian nations.

With one deal completed, Russia is now in a stronger position to bargain on possible deals with major natural gas importers such as Japan (the world’s largest importer of liquefied natural gas in terms of volume) and South Korea (a nation that imports 97% of its natural gas). If America wants to truly pivot towards Asia, then a more proactive stance on natural gas could help it both interms of trade and diplomacy with its treaty allies in East Asia, Japan and South Korea. Michael Klaire on Public Radio International’s program, The World, says

:…those countries like Russia which have such a surplus of energy that they’re in a powerful position. But then countries like China and India have such strong economies that they’ve become powerful bidders in the energy market. So the U.S. is at an extreme disadvantage right now.

Amazingly, America could compete with Russia in the natural gas market, but regulators continue to stand in the way of commerce and progress. While it will take years to build the pipelines that will transport Russian natural gas to markets in Asia, the versatility of shipping LNG from America via big tankers to Asia could give American suppliers a strategic advantage. Moreover, a natural gas deal with American allies such as India, Japan, and South Korea could go a long way to make President Obama’s pivot to Asia real.

Finally, the proposed Trans Pacific Parternship trade deal, which the Obama Administration strongly support, would lower trade barriers for LNG (making it even more profitable). The market exists for American LNG, but the regulatory willingness for this trade does not currently exist. Economically, politically, and strategically LNG trade between America and Asia would help America in its position with both Russia and China.

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