Foreign Policy Blogs

America’s Strategic Rebound: An Update

A few quick updates are in order for a regular theme in this blog: Amid a torrent of extravagant prophesying about how China is poised to conquer the world, technological innovations and private entrepreneurs are actually rejuvenating America’s strategic prospects.

As previous posts (here and here) have outlined, the marked surge in U.S. oil and natural gas production that has transformed the country’s energy outlook over the past five years promises to have far-reaching economic and geopolitical ramifications.  The unexpected energy boom is due to key strides in extraction technology – namely, hydraulic fracturing (“fracking”) and horizontal drilling – as well as advances in seismic imagining that have unlocked gas and oil deposits previously thought inaccessible within tightly-packed shale rock formations.

The huge impact of the shale energy revolution was highlighted in a report released yesterday by the International Energy Agency.  Calling the development “nothing short of spectacular,” the IEA’s World Energy Outlook forecasts that the United States will overtake Russia as the world’s largest producer of natural gas by 2015 and will come to rival Saudi Arabia in oil output by the end of the decade.  It also concludes that this country will largely achieve energy self-sufficiency by 2035.  A report last week by the Organization of Petroleum Exporting Countries contains a similar analysis, finding that rising U.S. oil production will significantly decrease American dependency upon the cartel.

Another of my posts argued that among the foreign policy implications of the U.S. energy boom would be the denouement of Russia’s great power aspirations and the restoration of U.S. soft power.  Two articles in the current issue of Foreign Affairs underscore these themes:

  • Thane Gustafson, an expert on the Russian energy sector, writes that the oil revenues that have helped prop up the Putin regime are likely to decline in the coming years as oil production in western Siberia becomes more difficult and expensive.  In theory, Russia could reap the benefits of the shale revolution but Gustafson doubts that Moscow will be able to implement the legal and regulatory reforms that would foster the necessary innovations and entrepreneurship.
  • Ruchir Sharma, an expert on the global economy, argues that adulation about China’s state-centric brand of economic management that underpins confident predictions about its inexorable ascendancy is misplaced.  He notes that the country’s “population is simply too big and aging too rapidly for its economy to continue growing as rapidly as it has” and the resulting slowdown will effectively rebut the “notion that China’s success demonstrates the superiority of authoritarian, state-run capitalism.”   He concludes that “the new global economic order will probably look more like the old one than most observers predict.”

This commentary was originally posted on Monsters Abroad. I invite you to connect with me via Facebook and Twitter.

 

Author

David J. Karl
David J. Karl

David J. Karl is president of the Asia Strategy Initiative, an analysis and advisory firm that has a particular focus on South Asia. He serves on the board of counselors of Young Professionals in Foreign Policy and previously on the Executive Committee of the Southern California chapter of TiE (formerly The Indus Entrepreneurs), the world's largest not-for-profit organization dedicated to promoting entrepreneurship.

David previously served as director of studies at the Pacific Council on International Policy, in charge of the Council’s think tank focused on foreign policy issues of special resonance to the U.S West Coast, and was project director of the Bi-national Task Force on Enhancing India-U.S. Cooperation in the Global Innovation Economy that was jointly organized by the Pacific Council and the Federation of Indian Chambers & Industry. He received his doctorate in international relations at the University of Southern California, writing his dissertation on the India-Pakistan strategic rivalry, and took his masters degree in international relations from the Johns Hopkins University School of Advanced International Studies.

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