US foreign policy juggles energy needs

By Mike McCarthy Jun 26, 2006, 3:37 GMT

Washington - When the US and India struck a nuclear energy deal earlier this year, it was aimed at addressing India's growing role in the world and its emergence as a regional power in Southeast Asia.

At the same time, it was a recognition that India's growth will be coupled with a higher demand for more energy that will further cramp the global oil market as industrial nations scramble to ensure their future needs are met.

The quest for natural resources has always been a cornerstone of international politics, but soaring energy prices and the rise of the Chinese and Indian economies have brought the global oil market to the front of foreign policy.

Only third behind the US and Japan, China is rapidly rising as an oil thirsty nation, prompting concerns of diplomatic clashes over oil resources. China has begun cutting oil deals in the US backyards of Canada and Latin America.

China's desire for oil, critics like Amnesty International have charged, was a key reason why the nation of 1.3 billion people was reluctant to endorse the tough measures Washington wanted against Iran over its nuclear ambitions or against Sudan over the conflict in Darfur. Both countries are important suppliers to the Chinese market.

Danel Yergin, chairman of the Cambridge Energy Research Associates in Washington, told a congressional panel in May that oil would provide a source for disagreement on how to address other foreign policy issues.

'If there were serious controversy between the United States and China involving oil or gas, it would likely arise not because of a competition in a well-functioning global market for the resources themselves, but rather because they had become enmeshed in larger foreign policy controversies,' Yergin said.

Yergin said that it was important for the United States and other large oil consumers to engage China and India about their need for oil and to protect the energy supply chain.

Record high petrol prices in the United States have also brought considerable political pressure on US President George W Bush, who during his January State of the Union address warned that America was 'addicted to oil.' He said his administration would support research into alternative fuels and expand nuclear energy.

But that has had little impact on short-term fuel prices, and Bush has sought to tighten relations with countries whose human rights practices do not fit into his vision for promoting democracy around the world.

Bush's meeting with Azerbaijani President Ilham Aliyev, whose country holds vast oil and natural gas reserves, became the focus of his critics on the human rights front. The US State Department's annual report on human rights criticized Azerbaijan.

Many countries that have poor human rights records are oil exporters, including Saudi Arabia, Iran, and Venezuela, whose president, Hugo Chavez, has been criticized by the US for eroding democratic institutions.

In fact, Venezuela and Saudi Arabia are key exporters to the United States, and Bush, as with Azerbaijan, has to walk a delicate balance between his vision for democratic freedoms and the need to ensure the US economy keeps moving.

During Aliyev's visit, Bush talked about the importance of implanting democracy in the region, but also identified energy security as something the entire world desires.

'I appreciate the vision of the government and the vision of the president in helping this world achieve what we all want, which is energy security,' Bush said. 'And Azerbaijan has got a very important role to play.'

Further complicating foreign policy issues is the role high oil prices play in emboldening leaders like Chavez and Iranian President Mahmoud Ahmadinejad, who is facing down international demands to divest its uranium enrichment programme. Iran is the world's fourth largest producer of oil, after Saudi Arabia, Russia and the US.

Thomas Friedman, a New York Times columnist writing in the latest edition of Foreign Policy magazine, said Ahmadinejad might not have characterized the Holocaust as a 'myth' and Chavez might not have said British Prime Minister Tony Blair could 'go right to hell' if oil were 20 dollars a barrel instead of 60 dollars.