[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
EMERGING THREAT OF RESOURCE WARS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
JULY 25, 2013
__________
Serial No. 113-63
__________
Printed for the use of the Committee on Foreign Affairs
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COMMITTEE ON FOREIGN AFFAIRS
EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida ENI F.H. FALEOMAVAEGA, American
DANA ROHRABACHER, California Samoa
STEVE CHABOT, Ohio BRAD SHERMAN, California
JOE WILSON, South Carolina GREGORY W. MEEKS, New York
MICHAEL T. McCAUL, Texas ALBIO SIRES, New Jersey
TED POE, Texas GERALD E. CONNOLLY, Virginia
MATT SALMON, Arizona THEODORE E. DEUTCH, Florida
TOM MARINO, Pennsylvania BRIAN HIGGINS, New York
JEFF DUNCAN, South Carolina KAREN BASS, California
ADAM KINZINGER, Illinois WILLIAM KEATING, Massachusetts
MO BROOKS, Alabama DAVID CICILLINE, Rhode Island
TOM COTTON, Arkansas ALAN GRAYSON, Florida
PAUL COOK, California JUAN VARGAS, California
GEORGE HOLDING, North Carolina BRADLEY S. SCHNEIDER, Illinois
RANDY K. WEBER SR., Texas JOSEPH P. KENNEDY III,
SCOTT PERRY, Pennsylvania Massachusetts
STEVE STOCKMAN, Texas AMI BERA, California
RON DeSANTIS, Florida ALAN S. LOWENTHAL, California
TREY RADEL, Florida GRACE MENG, New York
DOUG COLLINS, Georgia LOIS FRANKEL, Florida
MARK MEADOWS, North Carolina TULSI GABBARD, Hawaii
TED S. YOHO, Florida JOAQUIN CASTRO, Texas
LUKE MESSER, Indiana
Amy Porter, Chief of Staff Thomas Sheehy, Staff Director
Jason Steinbaum, Democratic Staff Director
------
Subcommittee on Europe, Eurasia, and Emerging Threats
DANA ROHRABACHER, California, Chairman
TED POE, Texas WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania GREGORY W. MEEKS, New York
JEFF DUNCAN, South Carolina ALBIO SIRES, New Jersey
PAUL COOK, California BRIAN HIGGINS, New York
GEORGE HOLDING, North Carolina ALAN S. LOWENTHAL, California
STEVE STOCKMAN, Texas
C O N T E N T S
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Page
WITNESSES
Mr. Edward C. Chow, senior fellow, Energy and National Security
Program, Center for Strategic and International Studies........ 5
Jeffrey Mankoff, Ph.D., deputy director and fellow, Russia &
Eurasian Program, Center for Strategic and International
Studies........................................................ 13
Brigadier General John Adams, USA, retired, president, Guardian
Six Consulting, LLC............................................ 21
Mr. Neil Brown, non-resident fellow, German Marshall Fund of the
United States.................................................. 64
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Mr. Edward C. Chow: Prepared statement........................... 8
Jeffrey Mankoff, Ph.D.: Prepared statement....................... 16
Brigadier General John Adams, USA, retired: Prepared statement... 23
Mr. Neil Brown: Prepared statement............................... 66
APPENDIX
Hearing notice................................................... 82
Hearing minutes.................................................. 83
Mr. Neil Brown: Material submitted for the record................ 84
EMERGING THREAT OF RESOURCE WARS
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THURSDAY, JULY 25, 2013
House of Representatives,
Subcommittee on Europe, Eurasia, and Emerging Threats,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 o'clock
a.m., in room 2172 Rayburn House Office Building, Hon. Dana
Rohrabacher (chairman of the subcommittee) presiding.
Mr. Rohrabacher. I call to order this hearing of the
Foreign Affairs Subcommittee on Europe, Eurasia, and Emerging
Threats. Today's topic is the emerging threat of resources
wars.
After the ranking members and I each take 5 minutes to make
opening remarks, each member present will have 1 minute to make
their opening remarks, alternating between majority and
minority members. And without objection, all members may have 5
days to submit statements, questions, and extraneous materials
for the record and hearing no objection, so ordered.
And now for my opening statement, an increasing global
demand for supplies of energy and strategic minerals is
sparking intense economic competition that could lead to a
counter productive conflict. Who owns the resources, who has
the right to develop them, where will they be sent and put to
use, and who controls the transport routes from the fields to
the final consumers are issues that must be addressed.
Whether the outcomes result from competition or coercion;
from market forces or state command, we will be determining how
to achieve and if we will achieve a world of peace and an
acceptable level of prosperity or we won't achieve that noble
goal. A ``zero sum world'' where no one can obtain the means to
progress without taking them from someone else is inherently a
world of conflict. When new sources of supply are opened up, as
in the case of Central Asia, there is still fear that there is
not enough to go around and thus conflict emerges.
Additional problems arise when supplies are located in
areas where production could be disrupted by political
upheaval, terrorism or war.
The wealth that results from resource development and the
expansion of industrial production increases power just as it
uplifts economies and uplifts the standards of peoples. This
can feed international rivalry on issues that go well beyond
economics.
We too often think of economics as being merely about
``business'' but the distribution of industry, resources and
technology across the globe is the foundation for the
international balance of power and we need to pay more
attention to the economic issues in our foreign policy and what
will be the logical result of how we deal with those economic
and those natural resource issues.
The control of access to resources can be used as political
leverage, as we have seen with Russia and China. They both have
demonstrated that. Indeed, China is engaged in an aggressive
campaign to control global energy supply chains and to protect
its monopoly in rare earth elements. This obviously indicates
that Beijing is abandoning its ``peaceful rise'' policy. This
is not an unexpected turn of events given the brutal nature of
the Communist Chinese regime.
This hearing will look into this and will look at the
economic and geopolitical tensions underlining the competition
that we see for natural resources and we need to discuss that
competition and we need to understand what is in the national
interest of the United States and what must be protected to
ensure that our people can enjoy a level of peace and
prosperity in the future.
I now yield 5 minutes to the ranking member, Mr. Keating.
Mr. Keating. Thank you, Mr. Chairman, and thank you for
holding this timely hearing. Today's hearing topic provides us
with an opportunity to look beyond Europe and Eurasia and
examine the global impact of depleting resources, climate
change and expanding world population and accompanying social
rest.
In March, for the first time, the Director of National
Intelligence, James R. Clapper, listed ``competition and
scarcity involving natural resources'' as a national security
threat on a path and on a par with global terrorism, cyber war,
and nuclear proliferation. He also noted that ``terrorists,
militants, and international crime groups are certain to use
declining local food security to gain legitimacy and undermine
government authority'' in the future.
I would add that the prospect of scarcities of vital
resources including energy, water, land, food, and rare earth
elements in itself would guarantee geopolitical friction. Now
add lone wolves and extremists who exploit these scenarios into
the mix and the domestic relevance of today's conversation and
you can see the importance of this is clear.
Further, it is no secret that threats are more
interconnected today than they were, let us say, 15 years ago.
Events which at first seem local and irrelevant have the
potential to set off transnational disruptions and affect U.S.
national interests. We saw this dynamic play out off the coast
of Somalia where fishermen were growing frustrated from lack of
government enforcement against vessels harming their stock and
where they took up arms and transitioned into dangerous gangs
of pirates. Now violent criminals threaten Americans in
multinational vessels traveling through the Horn of Africa.
Unfortunately, I don't see a near term end to the coordinated
international response that this situation requires.
I agree with Mr. Clapper that the depletion of resources
stemming from many factors which above all include climate
change has potential to raise a host of issues for U.S.
businesses worldwide, for U.S. officials, and for individuals
traveling abroad themselves. For this reason, Mr. Chairman, I
have long advocated for alternate energy resources. It is
representative of what will hopefully one day be our nation's
first offshore wind farm.
I deal daily with obstructive businesses and individuals
trying to get in the way of this and other projects in exchange
for increasing their companies' net profits. I would like to
add that given our distinguished panel of witnesses today and
our subcommittee's jurisdiction, I am sure we will be hearing
about the tremendous energy reserves in Central Asia and the
need for diversifying energy markets. In this regard, I would
like to take note that I have and will continue to advocate for
the importance of increasing democratic governance and rule of
law in that region. Energy production can get you only so far.
I would like to hear from our witnesses on how the United
States can engage with Central Asian governments to improve
governance and transparency in the energy sector, both
bilaterally and through international organizations such as the
Extracted Industries Transparency Initiative.
However, as we discuss these important issues, I hope that
we can continue to keep our own country's movement toward an
energy-independent future and the obstacles in its path in mind
itself.
With that, Mr. Chairman, I will yield back my time.
Mr. Rohrabacher. Thank you very much and we also have with
us Colonel Cook today who is a new member of the Congress and
making himself a very fine reputation. Colonel Cook, do you
have an opening statement?
Mr. Cook. Yeah, I will be very brief. I want to thank you,
Mr. Chairman. You know, I want to thank you for having this
hearing. I think it is an issue that doesn't get much
attention. And in my former life besides being in the military
for 26 years, I was a college professor and I have to admit I
taught history and I always have got to give the old saw that
people who do not understand history are bound to repeat it.
If you look at the history of conflicts and wars and
everything else and whether you go back to that famous book,
The Haves and Have-Nots, it is always about resources and who
has it and who doesn't have them and who wants them. And maybe
you could make an analogy on that. But I think we as a country,
at least have not picked up on those lessons of history and we
are very, very naive about the motivations of certain countries
and why they do certain things. And obviously, there are things
going on throughout the world right now in Eurasia which
underscores some of the things that we are going to talk about
today.
So I applaud having a hearing on this. I think the title
says it all, resource wars, and if we don't have the war yet,
we have had it in the past and we are going to have it in the
future. So thank you.
Mr. Rohrabacher. Thank you. And let me just note that
Colonel Cook is a former Marine officer and my father was a
Marine officer. I grew up on Marine bases.
Mr. Cook. Is that why I am on the committee?
Mr. Rohrabacher. But how that fits right in in the course
of what you were saying, Carl, is that my father joined the
Marines to fight World War II and it is very clear that natural
resources had a great deal to do with the Japanese strategies
that led to the Second World War and so we have some of our
witnesses may be talking to us and will be talking to us on
issues that are of that significance.
We have with us today Brigadier General John Adams, U.S.
Army retired, is president of Guardian Six Consulting, LLC, and
the author of the report, ``Remaking American Security Supply
Chain Vulnerabilities and National Security Risks Across the
Defense Industrial Base,'' published by Alliance for American
Manufacturing this May. General Adams served his final military
assignment as Deputy U.S. Military Representative to the NATO
Military Committee in Brussels, Belgium and on September 11,
2001, General Adams was stationed at the Pentagon as Deputy
Director of European Policy in the Office of the Secretary of
Defense. And we know what happened on that day. During his 30
years in the Army, General Adams' assignments have ranged from
aviation to military intelligence. He is a veteran of Desert
Storm. He also has three masters' degrees in international
relations, strategic studies, and English. Excellent, General,
that we have a General that has a degree in English. And is
currently a Ph.D. candidate in political science at the
University of Arizona.
We also have with us Edward C. Chow. He is a senior fellow
of the Energy and National Security Program at the Center for
Strategic and International Studies. He spent 20 years with the
Chevron Corporation in the United States and overseas including
as the country manager for China from 1989 to 1991 and he was
then based in Beijing. He holds a bachelor's degree in
economics, a master's degree in international affairs from Ohio
University. He has just returned last week from a trip to
Central Asia.
We also have with us Dr. Jeffrey Mankoff. He is deputy
director and fellow in the Russian and Euro-Asian Program at
the Center for Strategic and International Studies. He was a
2010-2011 Council on Foreign Relations International Affairs
fellow based in the Bureau of European and Euro-Asian Affairs
at the United States Department of State. From 2008 to 2010, he
was associate director of International Security Studies at
Yale University and received a Ph.D. in diplomatic history and
an M.A. in political science from Yale with his B.A. in
international studies and Russian studies from the University
of Oklahoma. Good to have him with us.
And Neil Brown currently serves as non-resident fellow at
the German Marshall Fund's Energy Transition Forum and Lugar
Diplomacy Institute, senior advisor at the Goldwyn Global
Strategies and is the founding director on the Board of the
Lugar Center. He previously served as senior professional staff
member for the Energy Security at the United States Senate
Foreign Relations Committee and as a senior advisor to
Republican Richard Lugar who we all remember very well and are
grateful for his service and grateful for your service to him.
He is also, I might add, a Rhodes Scholar.
So we have a very distinguished panel. I would ask each of
you to limit your spoken remarks to 5 minutes, put the rest in
the record, and then we will have a dialogue about the issues
you have brought to us today. We will start with Mr. Chow and
you may go straight ahead, sir.
STATEMENT OF MR. EDWARD C. CHOW, SENIOR FELLOW, ENERGY AND
NATIONAL SECURITY PROGRAM, CENTER FOR STRATEGIC AND
INTERNATIONAL STUDIES
Mr. Chow. Thank you, Mr. Chairman, members of the
committee. It is my distinct honor and privilege to testify
before you today. I understand that you wish me to address the
issues related to resource competition in Central Asia
including on pipeline transportation to markets outside the
region. I will stay within my competence on issues related to
international oil and gas, although I understand the committee
is interested in other natural resource competition which will
be addressed by other witnesses.
When the Soviet Union collapsed in 1991, Central Asia
offered a unique opportunity for western oil companies to enter
a known oil- and gas-producing province which was previously
closed to them. The Soviets had made a number of world-class
discoveries, which they did not have the technical capability
to exploit, most notably onshore Kazakhstan and offshore
Azerbaijan. At the same time, these newly independent countries
needed investments to enhance their economic autonomy and
thereby protect their future political sovereignty. Oil and gas
resources represented obvious immediate opportunities for
Western investments.
The United States was also interested in helping these
countries preserve their political independence by increasing
their economic options away from over reliance on Russia.
Additionally, as the largest oil importer in the world, we had
an interest in seeing incremental oil and gas supplies outside
of the Middle East and OPEC flow into global markets, whether
we ourselves import those volumes or not.
With the help of Western investments, Central Asia and the
Caucasus today produce around 3.5 percent of global oil supply
and hold around 2.5 percent of the world's known proven
reserves in oil. For comparison, this is equivalent to four
times that of Norway and the United Kingdom combined. Another
way of looking at this is to say the region produces around 8.5
percent of non-OPEC oil and holds around 9.5 percent of non-
OPEC oil reserves. In other words, oil production in Central
Asia has added significantly to global supply and will continue
to do so in the future.
In many ways, the energy future of the region lies as much
or more in natural gas than in oil. Central Asia is estimated
to hold more than 11 percent of the world's proven gas
reserves, mostly concentrated in Turkmenistan which has lagged
behind Kazakhstan and Azerbaijan in attracting outside
investments. The region currently produces less than 5 percent
of global gas supply, so there is tremendous potential for
growth.
In addition to production from Soviet-era discoveries, new
discoveries of major oil and gas fields have been made in the
region. Deserving special mention are Kazakhstan's Kashagan
field offshore Caspian Sea, which is the largest oil discovery
in the world for over 30 years; Turkmenistan's Galkynysh gas
field, which is the largest onshore gas field in the world;
and, Azerbaijan's Shah Deniz gas/condensate field.
Given its landlocked geography, Central Asia has to rely on
long-haul pipelines to take its oil and gas to market.
Previously Soviet pipelines in the region almost all head to
European Russia either to feed the domestic Soviet market or
for trans-shipment to European markets. Control of these
pipelines continued to give Russia leverage over transit of oil
and gas from the region to market after the end of the Soviet
Union.
However, Western investments in oil and gas production also
led directly to investments in new pipelines, which are not
controlled by Russia's Transneft for oil and Gazprom for gas.
These include a number of projects I have put into the record
which I will in the interest of time not discuss right now.
These new pipelines have diminished Russian control of oil
and gas exit out of Central Asia and the Caucasus and helped
achieve the objectives from the 1990s of giving the region more
economic options and allowing its oil and gas production to
flow freely to world markets.
When the Soviet Union collapsed in 1991, China was just
about to convert from a net oil exporter to net oil importer.
It was slow off the mark in the race for Central Asian oil and
gas. By the time it focused on this region, most of the large
production opportunities have already been acquired by Western
companies. From a Chinese point of view, they have been playing
catch up ever since.
Today China is the second largest oil importer in the world
and an increasingly important importer of gas. With stagnant
Chinese domestic production and rapidly growing energy demand,
China is destined to replace us as the world's largest oil
importer in a decade or so. Its companies have been investing
in oil and gas around the world, including in neighboring
Central Asia. Chinese companies now produce around 30 percent
of Kazakhstan's oil, although from smaller fields than those
operated by Western companies, and hold the only onshore
concession in Turkmenistan.
In part because of disappointments in dealing with Russia
on oil and gas, China has focused on pipeline development from
Central Asia including an oil pipeline from Western Kazakhstan
and gas pipeline from Turkmenistan through Uzbekistan and
Kazakhstan to China. China has replaced Russia as the largest
importer of Turkmen gas and this volume is slated to double or
triple in the coming years.
The next growing source of competition for Central Asia oil
and gas is likely to come from India, which follows closely
China in growth in oil and gas demand and consequently oil and
gas imports. Indeed, as Chinese demographic growth slows and
population ages, India's energy demand is commonly forecasted
to grow faster than China's in a decade or so.
With all due respect to the committee, the concept of
resource wars is often exaggerated. The investments I referred
to in Central Asia oil and gas production and pipeline
development require tens of billion dollars and many years to
mature. Conflict generally freezes such investments and
resources are then stranded for many years. It is true that
there is resource competition in Central Asia, as is true
around the world.
Our policy concern should be for such competition to be
conducted in a rule-based manner, without political coercion,
as the chairman mentioned, or non-transparent business
practices, to the disadvantage of the citizens of the host
countries and global consumers. As long as the rules of
competition are fair, our oil, services and equipment companies
can compete in Central Asia, where they are doing rather well,
and market competition will drive economic efficiency to the
benefit of all. Observing the nature of resource competition
and assessing its political consequences will remain an
important task for your committee. In Central Asia itself, my
humble opinion is control of water resources are more likely to
lead to direct conflict than with oil and gas.
Thank you for your attention.
[The prepared statement of Mr. Chow follows:]
----------
Mr. Rohrabacher. Thank you for your testimony and I might
add that we have had already one hearing on water in Central
Asia and we do plan several more hearings focused on water
there and elsewhere in the world, but especially focused on
Euro-Asian needs because it is the Eurasia Subcommittee.
And now Dr. Mankoff.
STATEMENT OF JEFFREY MANKOFF, PH.D., DEPUTY DIRECTOR AND
FELLOW, RUSSIA & EURASIAN PROGRAM, CENTER FOR STRATEGIC AND
INTERNATIONAL STUDIES
Mr. Mankoff. Chairman Rohrabacher, Ranking Member Keating,
members of the committee: Thank you for the opportunity to
testify before the subcommittee on Europe, Eurasia, and
Emerging Threats.
The discovery of new offshore oil and gas deposits in the
Eastern Mediterranean Sea is one of the most promising global
energy developments of the last several years. Handled wisely,
these deposits off Israel and Cyprus, as well as potentially
Lebanon, Gaza, and Syria, can contribute to the development and
security for countries in the Eastern Mediterranean, and across
a wider swathe of Europe. Handled poorly, these resources could
become the source of new conflicts in what is an already
volatile region.
According to the United States Geological Survey, the
Levant Basin in the Eastern Mediterranean holds around 122
trillion cubic feet of natural gas, along with 1.7 billion
barrels of crude oil. While these currently recognized volumes
are comparatively small relative to those found in the Persian
Gulf, Russia, or the Caspian sea basin, they are large enough
to have a significant impact on the energy security of states
in the Eastern Mediterranean and to make some, albeit more
limited contribution to energy security in Europe.
The oil and gas resources of the Eastern Mediterranean sit,
however, at the heart of one of the most geopolitically complex
regions of the world. The Israeli-Palestinian conflict,
tensions between Israel and Lebanon, the frozen conflict on
Cyprus, and difficult relations among Turkey, the Republic of
Cyprus, and Greece all complicate efforts to develop and sell
energy from the Eastern Mediterranean. The Syrian civil war has
injected a new source of economic and geopolitical uncertainty,
and standing in the background is Russia, which is seeking to
enter the Eastern Mediterranean energy bonanza, and to maintain
its position as the major supplier of oil and gas for European
markets.
Amidst all this uncertainty, however, the recently
discovered gas fields in the Eastern Mediterranean are starting
to come into production. A second exploration well was recently
drilled off of the coast of Cyprus, while Israel's Tamar field
started production in June. With mounting uncertainty in Egypt,
and indeed, across much of the Arab world, the ability to meet
its energy needs from domestic sources is a critical
contribution to Israel's energy security.
Yet, Israel's transformation into a significant energy
producer is not without its challenges. Most immediate perhaps
is the question of how Israel will sell its surplus gas on
international markets. The most economical option, at least in
the short term, would be the construction of an undersea
pipeline allowing Israeli gas to reach European markets through
Turkey. Such a pipeline from Israel to Turkey pipeline would be
less expensive to build than new Liquified Natural Gas
facilities, would reinforce the recently strained political
ties between Turkey and Israel, and would contribute to the
diversification of Europe's energy supplies by bringing a new
source of non-Russian gas to Europe.
Such a pipeline, however, would likely either run off the
coasts of Lebanon and Syria, or have to go to Turkey through
Cyprus. Both options are fraught with peril. Though Lebanon and
Israel have not demarcated their maritime border, Beirut argues
that Israel's gas fields cross into Lebanese waters, and
Hezbollah has threatened to attack Israeli drilling operations.
Syria, of course, is in a state of near anarchy. In this
perilous environment, finding investors willing to build a
pipeline will be challenging, and even if built, such a
pipeline would be difficult to secure. Going through Cyprus is
also difficult, largely because of the difficult relationship
between the Republic of Cyprus and Turkey. However, Cyprus's
own gas fields represent another potential source of conflict.
Turkey has not recognized the Republic of Cyprus's exclusive
economic zone and in fact has pressured companies seeking to do
business there, and recently also began its own exploratory
drilling off of the de facto Turkish Republic of Northern
Cyprus without permission from the government in Nicosia. The
revenues from Cypriot energy could benefit communities on both
sides of the island, but only if a political agreement can be
worked out in advance.
The major alternative to a pipeline from Israel to Turkey
would be to build an LNG, a Liquified Natural Gas facility to
liquefy gas for sale to markets in Asia and the Middle East.
Russia, in particular, backs this idea.
The push to build new LNG facilities though is only one way
in which Moscow and its energy companies are seeking a larger
role in the Eastern Mediterranean. In addition a February 2013
marketing agreement signed with the Israelis at Tamar, Russian
companies are also interested in Israel's much larger Leviathan
field, as well as in the offshore oil and gas off of Lebanon.
Of course, given Russia's interest in preventing competition
for its gas in Europe, there are legitimate questions about
whether Gazprom would actually follow through on developing any
of these concessions that it might win in the Eastern
Mediterranean.
One reason the United States has cared about Eastern
Mediterranean gas is because of its potential to bolster the
energy security of U.S. allies in Europe. Today, this concern
is less pressing than in the past. The recent announcement of
the Trans-Adriatic Pipeline, connecting to the
Trans-Anatolian Pipeline heralds the beginning of the long-
awaited Southern Gas Corridor, which will bring news supplies
from the Caspian to Europe. While small, these projects can be
scaled up in the future. The United States itself is also
poised to become a significant gas exporter. Finally, the
ongoing implementation of the European Union's Third Energy
Package is creating a more competitive, liberalized and deeper
market in Europe itself.
While all these developments promote European energy
security, as the Congressional Research Service has noted,
Russia will remain the principal supplier of Europe's gas for
many years. The potential volumes from the Eastern
Mediterranean could bolster European energy security around the
margins, but they are not sufficient not to change this
fundamental reality. For that reason, Washington's main
objective in the Eastern Mediterranean should be less about
Europe and more about ensuring that energy does not become a
source of new resource conflicts, whether between Israel and
its neighbors or over Cyprus. The United States' push for
Israeli-Turkish reconciliation, which the promise of energy
cooperation has helped facilitate, is a good example of the
positive role that the United States could play. U.S. diplomacy
in Cyprus should proceed in similar fashion.
Likewise, sharing the benefits of energy should also be one
element in an settlement of the conflict between
Israelis and Palestinians.
The United States has no reason to oppose the role of
Russian companies in the Eastern Mediterranean in principle,
however, it should work with partner governments in the region
to ensure transparency and that the promised production does,
in fact, occur. Eastern Mediterranean energy can advance a
range of U.S. interests in the wider region. Absent sustained
diplomatic engagement, however, it can also be the source of
new conflicts in what is already a very dangerous area.
Avoiding that outcome should be the primary focus of U.S.
engagement on the future of Eastern Mediterranean energy.
Thank you.
[The prepared statement of Mr. Mankoff follows:]
----------
Mr. Rohrabacher. Thank you very much. Now we have about 10
minutes before a vote is called. And so it is intention of the
chair to finish the testimony. We will then retreat to the
floor where we will be casting our ballots on very important
issues and then we come back immediately thereafter, for the
question and dialogue session of this hearing.
Gentlemen, you may proceed. We are about to have some
votes, so if you can keep it to 5 minutes that would be great.
STATEMENT OF BRIGADIER GENERAL JOHN ADAMS, USA, RETIRED,
PRESIDENT, GUARDIAN SIX CONSULTING, LLC
General Adams. Chairman Rohrabacher, Ranking Member
Keating, and members of the subcommittee, I want to thank you
for taking the time to examine emerging foreign threats to the
national security and interests of the United States related to
the irresponsible and predatory actions of other nations in
their pursuit for national resources.
I am a 30-year veteran of the United States Army and my
firm Guardian Six Consulting recently partnered with the
Alliance for American Manufacturing, a labor-management
partnership between some of America's leading manufacturing
companies and the United Steelworkers to take a look at
vulnerabilities to the American defense industrial base.
Our report, ``Remaking American Security,'' examined a
range of vulnerabilities and in particular instances in which
reliance on offshore companies deepen the supply chain, puts
U.S. national security at risk. The defense industrial base
really needs to be managed as a part of our force structure.
Our report took the approach of linking strategy to forces that
we need to win to the capability those forces possess to the
programs that enable those capabilities. Then we drill deeper.
Which supply chains do we need in place and secure so that
those programs can be successful?
Remaking American security examines 14 defense industrial
base nodes vital to U.S. national security. We investigated
lower-tier commodities and raw materials and subcomponents
needed to build and operate the final systems. Based on our
research, the current level of risk to our defense supply
chains and to our advanced technological capacity is very
concerning. The bottom line is this, foreign control over
defense supply chains restricts U.S. access to critical
resources and places American defense capabilities at risk in
times of crisis.
In the report, we devote a chapter to the importance of
access to specialty metals and rare earth elements.
Increasingly, these resources are central to modern life and
central to modern defense preparedness. And each year, the U.S.
Department of Defense acquires nearly 750,000 tons of minerals
for an array of defense and military functions. In spite of
this clear demand, over time, the United States has become
dependent on imports of key materials from countries with
unstable political systems, corrupt leadership, or opaque
business environments. The United States used to have
relatively easy access to many mineral ores, but this situation
has changed dramatically as the United States has neglected to
preserve its mining base and global demand for minor and
unusual chemical elements has surged.
Compounding the tensions over access to specialty metals,
many countries rich in natural resources take a stance of
resource nationalism. Within the past decade, countries have
attempted to leverage and manipulate extractive mining by
threatening to impose extra taxes, reduce imports, reduce
exports, nationalize mining operations and restrict licensing.
Moreover, the countries themselves, notably China, have taken a
more aggressive posture toward mineral resources and now
compete aggressively with Western mining operators for
extraction control.
Meanwhile, advanced industrialized countries, including the
United States, have abandoned mining and mining exploration
even though global demand for economically and militarily
significant ores and chemical elements has risen and will
continue to rise. These factors, taken together, present a
dangerous and unsustainable situation for our economic and
national security.
Specialty metals are used in high-strength alloys,
semiconductors, consumer electronics, batteries, armor plate,
and many more defense-specific and commercial applications. We
possess significant reserves of many specialty metals with an
estimated value of $6.2 trillion. However, we currently import
over $5 billion of minerals annually and are almost completely
dependent on foreign sources for 19 key specialty metals.
The United States must maintain strategic reserves of those
defense-critical elements, strategic elements, that face likely
shortages while seeking alternative sources. Congress is
beginning to give appropriate attention to this issue and
shifting more toward a bottom-up approach to securing the
supply chains of key materials but more must be done. The
Federal Government has not formulated a comprehensive policy
approach to address the national security risks of inadequate
access to many of these key minerals.
In the middle of a complex defense drawdown, as well as
sequestration which cuts budgets and deprives our defense
planners flexibility, the defense industrial base can seem like
a distant and abstract concern, but it is not. Preserving a
robust and innovative defense industrial base is a national
imperative and that starts at the most basic level.
Thank you. I look forward to your questions.
[The prepared statement of General Adams follows:]
----------
Mr. Rohrabacher. General, you were right on 5 minutes.
Now Mr. Brown, can you do the same?
STATEMENT OF MR. NEIL BROWN, NON-RESIDENT FELLOW, GERMAN
MARSHALL FUND OF THE UNITED STATES
Mr. Brown. Being fourth in the batting order and knowing my
problems at baseball, I know that I won't be able to follow the
General quite so well as that precision.
It is a real pleasure to come to this side of the Capitol
and join this distinguished committee. When I joined the Senate
committee staff in 2005, we held a lot of hearings on these
sorts of issues and at that time it was a lot of doom and
gloom. For decades, really, we had become conditioned as
Americans to be on the receiving end of oil and gas,
particularly oil decisions with governments that did not have
our best interests at heart.
So I am particularly grateful for this committee, for you,
Chairman and Ranking Member, for holding this hearing at a time
where Americans are doing what we do best which is changing the
rules of the game through innovation in oil and gas and
unconventional sources, efficiency, alternative energy, we are
giving ourselves not only economic opportunities, but much more
significant foreign policy flexibility and opportunities around
the world, including in Central Asia which is important both
for the issues that Ed mentioned in terms of the volume of oil
and gas and other minerals the region has, but also for the
strategic benefits and importance given that it sets above
Iran, Pakistan, and Afghanistan.
There are, I think, two major energy forces happening in
Central Asia. One is China which is using its financial clout
to access resources and the other is Russia. Russia is after
power of a different sort which is political power, by
maintaining as much control as possible over transit, in
particular, it wants to further its own interests in keeping
its friends in power.
I thought that some context might be useful. Congressman
Keating mentioned that local events around the world can really
impact the prices Americans pay at the pump, our economy, our
national security. And really what has happened in the global
oil market in particular is that the rising demand of emerging
economies, particularly China, India, and in the Middle East,
ironically, has over time really narrowed the margins in the
global oil market which meant particularly in the mid-2000s
that even small disruptions, attacks in the Niger Delta on
Shell's facilities could have an impact right here at home. Now
the recession, I guess one good side of the recession is that
demand slowed down so that we got a bit more of a window and
also more recently the U.S. has boosted supply, again giving
more flexibility. But that structural shift in markets has not
changed. So we can expect more of the same, unfortunately, when
the economy picks up.
Now I want to skip to--seeing my time--skip to what is
happening with Russia. And really what you have is on the
Central Asia side, pipelines running north and that is Russia's
lever of control, one of its most important levers of control
over those governments and on the eastern side of Europe, the
supply routes. So we have major concerns in Central Europe,
Eastern Europe, the Balkans, the Baltics, and dependence on
Russia for gas, in particular. Now if Russia were simply to
allow markets to work, that dependence would still bring
economic detriment, but it would not be, I suppose, a strategic
concern. But unfortunately, that is not the way Russia
operates. We have seen time and again their willingness to use
energy as a weapon or for coercion.
So the U.S. strategy has really focused on diversification.
It was mentioned previously the Southern Corridor which
recently has had a boost in picking of a pipeline route to
deliver Caspian gas on into Europe, but there is still much
more work to be done.
I would like to have entered into the record a report that
the Foreign Relations Committee on the Senate side put out in
December that goes into this in great detail so that if my
testimony, when you read that, doesn't cure your insomnia, then
the report will definitely take care of it.
Mr. Rohrabacher. Without objection the report will be
submitted for the record at this point in the record.
Mr. Brown. Thank you. Three key recommendations from that
report and the analysis is for the first time, the United
States has the ability to directly aid our allies on gas
supplies. We have an abundance of natural gas and those allies
want that gas whether that is Turkey which would like to reduce
its dependence on Iranian gas or Central Europe that would like
to reduce its dependence on Russian gas. The Congress is
currently considering a bill that Congressman Turner put out
that would automatically grant export licenses, so I recommend
that to you.
The second recommendation is that even as we think about
our own LNG exports, we also have to focus on pipelines. And to
that extent we need much more high-level engagement on a
concerted basis because decisions in these regions on energy
are made at the highest levels of government, so you need to
have that kind of constant attention and the loss of the
Nabucco project which would have delivered gas directly into
Central Europe means that we need to think of new ways to make
sure that we have pipeline interconnections to help our allies
there.
And finally, we need to reemphasize the prospect of a
Trans-Caspian pipeline to link infrastructure that originates
now in Baku to Turkmenistan. It has been talked about a long
time and it is extremely challenging, but without U.S.
leadership the opportunity will be lost and I know this
committee is also considering a resolution on that issue, so
that is well on your radar. Thank you.
[The prepared statement of Mr. Brown follows:]
----------
Mr. Rohrabacher. I want to thank all of you for giving us
some food for thought and we will go and vote and it is the
chair's intention to call this hearing back to order 5 minutes,
Mr. Keating, 5 minutes after the last vote, is that all right
with you, Mr. Keating? Okay, so 5 minutes after the last vote
which we expect to have ready at around 11:30. We should be
back around 11:30. So this hearing is now not adjourned, but in
recess.
[Recess.]
Mr. Rohrabacher. The hearing will come to order. I want to
thank you for holding off. The ranking member, Mr. Keating,
will be joining us momentarily. He gave us permission to
proceed in the meantime without him.
I found all of the witnesses to be offering some very
compelling testimony today and I think the record of this
hearing will be of great value to all of us and to a great
number of people will be looking through this record.
One major truism of our era is we are now living in a time
that is different than it was 50 years ago in that we have huge
chunks of the world population that seem to be perched and
ready to uplift their standard of living, especially in India
and China. And we are talking about together they represent
maybe half of the world's population I believe. And half of the
world's population which in the past seemed to be relegated to
living the rest of eternity in poverty and deprivation.
This will obviously, if indeed, their well being and their
economic well being is to be uplifted, that will, will it not,
create a huge drain on natural resources. It takes energy to
have prosperity for normal people. It takes clean water as
well, I might add. And it takes industrialization or at least
the production of wealth using technology to uplift large
populations. So thus, we face a world now that is going to have
if, indeed, India and China are to increase their standard of
living, this will create a major--it will exacerbate everything
we have been talking about today.
And for example, Mr. Chow, you mentioned in your testimony
the growing competition in Central Asia for Central Asian oil
and that India is part of this for this oil and gas competition
for that. There are different ideas. We have heard testimony
today about pipelines that could then maybe connect India and
China to this oil and gas in Central Asia. But any pipeline
that would go through or get to India from Central Asia it
seems like it would have to come through and what is being
looked at now as an Afghan--Turkmenistan-Afghan-Pakistan-Indian
pipeline, TAPI, I think they call it.
And is that realistic, Mr. Chow, that they could--is that
pipeline really a pipe dream, considering the fact of what is
going on in Afghanistan and the turmoil that pipeline would
have to go through?
Mr. Chow. Thank you, Mr. Chairman, for that question. I
think in my written testimony I made clear to you that I am
helping the Department of State in figuring out how to advance
this pipeline project and challenges for that project is indeed
daunting for quite obvious reasons that we don't need to go
into detail here.
I think the fundamental reason why this might work, and I
say might, is that you have a country in Turkmenistan that has
the fourth largest gas resources in the world that seeks
diversification of its export routes so that it doesn't become
over reliant on China as it once was over reliant on Russia for
its natural gas exports. And at the same time, as you have
already mentioned, we have got this booming energy market in
India. If it is possible to connect the two, and geography
dictates that therefore you have to go through Afghanistan and
Pakistan, then there are fundamental ingredients that would
make that project work economically if you can manage the
political and security risks involved.
So I think the economics are there. The interest of the
government to seek alternative export routes is there. By the
way, it converges rather well with U.S. national interests in
the sense that our interests and the stability of the region in
integrating Afghanistan into both South and Central Asian
economies and also to promote better relationships for Pakistan
with its neighbors, most prominently India and Pakistan. So it
is a very challenging project.
I have worked in this industry quite a long time. The
fundamental economics are there. Whether politically and in
terms of security it is achievable we will have to find out.
Mr. Rohrabacher. So let us note that you are saying it is a
challenging project, but it is not challenging engineering-
wise, is it? The challenge has to do with political decisions
and political stability and within Afghanistan and that region.
India would certainly have an important, let us say be an
important customer for that oil, but at the same time wouldn't
that be something the Chinese would not want to have developed?
Mr. Chow. I think that that is fair to assume.
Mr. Rohrabacher. So what we have, Dr. Chow, is the great
powers of that region, India and China, have conflicting
interests over what to do with that natural resource and again,
that is what this hearing is all about and we should take note
of that and learn from it and maybe try to project what that
means in the future.
Do any of the other panelists have a comment on that?
Mr. Chow. I would just add, Mr. Chairman, if you will
permit me, that we should not underestimate the interests of
the national leaders of the countries involved in Central Asia
to balance the interests so that they are not overly dependent
on any one of the regional powers. So they have a fundamental
interest in diversity of export groups.
Mr. Rohrabacher. Yes. Mr. Brown?
Mr. Brown. Maybe to add just a couple thoughts to that
because you have hit on something that is both a positive and a
negative in this world which is, even on just a humanitarian
basis, we want poor people to rise up out of poverty. And who
can blame them for wanting air conditioning and cars and all
the sorts of things that they want?
Mr. Rohrabacher. Refrigerators or clean water.
Mr. Brown. Exactly. And in an ironic sort of way, when we
see China, India, and other emerging economies go out searching
for these resources, it is an indicator of economic activity
which on the other side benefits the United States in terms of
being a strong trading partner where we can sell our goods and
services. So it really is a double-edged sword.
In my prepared testimony, I mentioned one manifestation of
energy and conflict that we do see happening and that is around
the issue that you have raised which is electrification and
access to power. We see in countries like Pakistan, we just saw
it in Egypt where the inability of governments to provide such
a basic resource as power can lead to instability that can then
overthrow those governments and directly impact U.S.
activities. That is why the work that Ed is doing on TAPI,
there is also discussions that the World Bank is working on in
electrification to bring from Central Asia, that is essential.
There is also a huge multi-billion person market out there
that U.S. companies can access to provide power, whether that
is from big stationary plants that might use coal or natural
gas or renewables. It is much like the telecommunications and
kind of personal goods, soaps and what not, industries found in
emerging markets where these may be poor people, but they do
have purchase power. And so unlike countries that just want to
take natural resources, the U.S., we have a position to really
invest and also make money in the trading relationships.
Mr. Rohrabacher. Let us hope that there will be some
stability enough so that those natural resources and that is
what this is all about, will be able to be utilized to help
human beings.
If I was, however, if I was in India and I was trying to
calculate what I should be doing strategically considering that
what seems to be an adversarial relationship with China and
Pakistan, but China, it seems to me that I would want to help
those elements in Turkmenistan and Afghanistan that might be
willing to align themselves with India's interests. And again,
we are talking about fundamental reasons for conflict.
Mr. Mankoff, you mentioned the gas off of the Israeli
coast, would that gas, and we heard mention of Egypt a moment
ago, would that gas be something that could be used for
bringing peace between Egypt and Israel and especially now that
maybe you have a different potential direction for Egypt rather
than the Muslim Brotherhood and anti-Israeli government? Could
perhaps Israel step forward and try to say that that gas could
be used for Egypt as well in a peaceful endeavor?
Mr. Mankoff. Yes. Thank you for your question. The
fundamental challenges that face that part of the world are
ultimately rooted in politics. And energy, I think, can play a
role in addressing the conflicts between Israel and her
neighbors, but in and of itself is not sufficient to do that. I
think you have to have political agreements, political
solutions to some of the problems between those countries and
energy can be a carrot or an inducement for reaching those
agreements.
There has been discussion in Israel about exporting some of
this gas to Jordan, for example, although apparently that has
now been caught up in internal Israel politics.
Mr. Rohrabacher. Right now, Israel is in negotiations on
water with Jordan.
Mr. Mankoff. Yes.
Mr. Rohrabacher. And especially about--this has been going
on for a few years now, between the Red Sea to Dead Sea project
which there has been step-by-step, but they have been
negotiating at a time when there are other factors that were
driving Israel and Jordan apart. They had this mutual interest
in negotiating for water. Perhaps would Egypt and now in the
situation that it is and the Government of Egypt is now in a
precarious situation, perhaps this would be a good time to try
to demand some positive ties based on economic dual interest.
General, did you have a comment on those things?
General Adams. No sir.
Mr. Rohrabacher. Any comment on the Chinese part with
Central Asia and the pipeline?
General Adams. No, sir. That is not something we covered in
our report.
Mr. Rohrabacher. All right, thank you very much. I will now
turn to my ranking member, Mr. Keating.
Mr. Keating. Thank you, Mr. Chairman, and as you can see,
the chairman knows the shortcuts better than I do coming back
from votes.
I find this whole issue very important for two reasons
because the effects of it can go either way. These can be areas
of conflict that make the situation worse, but they could also
be areas as your testimony indicated where if things fall the
right way, that these countries could be--have greater control
over their own economy, their own energy sources, for instance,
and make them more stable and profitable and being able to do
more ancillary business from this. So how this breaks is not
just unilateral. It can go both ways.
Along those lines, General Adams, coming from Massachusetts
we are very proud to have John Adams in front of us testifying.
But you mentioned the issue of corruption. One of the things in
this region that could inhibit business investment are these
corruption issues. If you would like to address what we could
do to help in that regard and then any of the panel members if
you would like to comment on that. Because I see that as one of
the real issues that could hinder private investment in that
area.
General Adams. Thank you, Congressman Keating, and the
opportunity to answer that question. Allow me to answer the
question in the context of what we investigated in our report,
specifically the lack of access that the United States has to
key minerals and materials that we need for our defense supply
chains. And there is, in fact, concerns and we are concerned
based on our research that corrupt business practices and
manipulation of markets is one of the reasons that we have a
lack of access to key raw materials, specifically rare earth
elements.
As you know, China decided two decades ago that they would
shore up their extraction industry, their mining industry for
rare earths and they were successful in doing that. And they
were also able to basically drive other mining countries out of
business of doing rare earth minerals. The last U.S. mine, the
Molycorp mine in California, went out of business in 2002.
There were other reasons than the fact that the Chinese were
driving the prices so that the mine was not economically
competitive, but that was certainly a huge factor. And then
having attained a near monopoly in the mining of key rare earth
elements and minerals, China continued to not only involve
themselves in the extraction industry, extraction of oxides,
but the entire supply chain for rare earth elements and
production of such things as advanced magnets which is a key--
we have advanced magnets in all modern defense electronics.
Smart bombs, for example, have to have advanced magnets. China
pulled that supply chain into China. Now is that corrupt?
Certainly, there is manipulation. Is that something that we
allowed to happen because we had our eye off the ball? I would
argue that that is the case. And I will come back to that in
just a moment.
There is a another example I would like to give where the
platinum group of metals, platinum is used in a wide variety of
applications, but the commercial application we are all
familiar with is the catalytic converter. But almost every
modern engine has to have platinum group of metals in it, small
parts of it, but there has to be platinum group of metals,
minerals in every modern engine. Most of it is mined in South
Africa. And I don't want to go into a long, political
discussion of the instability in South Africa, it is what it
is. And we have to remember the role of the Chinese in that as
well. The Chinese have established over the last 20, 30 years,
excellent ties with countries in sub-Saharan Africa. Is that
something that again we should note at this point, especially
in this august committee. I would argue, yes, we should.
So the platinum group of metals comes largely from South
Africa. We need that for our defense materials, our defense
equipment and again, is the market being manipulated or is it
corruption? I would argue certainly it is manipulation.
What we need to do and I won't belabor the point, but what
we need to do is to go to strategy and base our need for our
strategic materials in the need for defense strategic that fits
the threats of the next 20, 30 years. We are pretty good at
doing strategy. We have got a lot of people over across the
river who do that pretty well and they get a lot of help from
this building as well. But we are good at that. And we are good
at designing programs that let us execute the strategy. But
what we need to do is decide what are those key strategic
materials? And if we find that market manipulation is part of
the reason we don't have access, then we need to enforce fair
trade laws and we need to make sure that we have protection of
existing laws and regulations and provide for domestic sourcing
for key industries. We have to have a coherent strategic at the
U.S. Government level to determine what those critical raw
materials are. And then we need to act upon that to make sure
that we have got secure access to them for our war fighters.
Thank you.
Mr. Keating. I am reminded, General, with your comments
what some of the top military people in our country said when
they said what is our greatest threat and many of them have
come down to the fact it is our economy. And I think that is
part of what you are saying.
Mr. Brown?
Mr. Brown. Congressman, I appreciate you bringing up
corruption. It is one piece of a very ugly side of natural
resources, particularly in oil and gas, but also in some
minerals where they can be a magnet for some of the worst
governance practices in the world. They can embolden
authoritarian leaders that may choose to be authoritarian
against their own people's interests or against our interests.
And we see that around the world.
In the extreme, it can even lead to conflict. It undermines
political stability and you see internal conflict around the
use of those resources and the revenues. So the best example of
that, of course, is the Niger Delta. And as you mentioned, that
is a good example of a major company then having its
infrastructure, its oil be shut in because of that violence.
Central Asia, fortunately, does not face that level of
violence, but we all know that the revenues from these
resources are supporting some rather poor governance practices
and of course you see the same thing in Russia. I think the
unfortunate side is that we have limited leverage on governance
of resources, precisely because the governments are rich
because of them so we have very little aid money going in. At
the same time, we have competing priorities, we have strategic
needs in Central Asia, so we can only do so much.
But there is a good news story which is that Congress a
couple of years ago took the step to institutionalize norms
that are focused on the fact that information is the necessary
first step to improve governance in these countries, to empower
civil society, to empower the press and to empower investors.
So laws are now in place that will bring to light the revenues
that are paid to these governments so that then that
information can be used effectively.
In your opening comments, you also mentioned the voluntary
Extractive Industry Transparency Initiative. Well, probably not
that many people know, but the U.S. now has decided to lead by
example. And so the government led by the Department of the
Interior, companies, and civil society are, just yesterday
actually, there was the most recent meeting. They are coming up
with common practices so that we can show the American people
what the Federal Government is bringing to bear. And that is
going to have tremendous impacts in our diplomacy because one
of the things when you go talk to these governments and say
well, you should be more transparent, etcetera. They say,
``What you doing?'' I am happy to say that the U.S. Government
is now going to be at the lead of that and I encourage Congress
to become involved in those discussions because you are the
people who are going to have to explain it to Americans when
they ask.
Mr. Keating. Yes, Doctor.
Mr. Mankoff. I would just like to add a word about Central
Asia. For the last decade plus, the United States' engagement
in this part of the world has been driven very heavily by the
conflict next door in Afghanistan and that has created a kind
of dependence if you will on these relatively untransparent,
corrupt, and often brutal governments in Central Asia. But
because of the dependence that we have had on them for security
cooperation, it has been difficult for the United States to
place issues of transparency in governance at the top of the
bilateral and regional agenda in dealing with these countries.
As we begin the transition to the withdrawal of
international forces from Afghanistan over the next year and a
half, one of the benefits of this change is that we will be in
a position where we are less dependent upon these countries for
achieving our core security objectives. And that means that the
United States will have increased leverage to push on some of
these issues that you raised in your comments.
Now certainly as Mr. Chow said, the governments in Central
Asia are very interested in diversifying their engagement so
that they do not become overly reliant, either economically or
politically on either the Russians or the Chinese which means
that they all have and have all expressed a very strong
interest in continued and deepening engagement with the United
States. In a post-Afghan Conflict environment that means that
the United States has the opportunity to push harder to be more
insistent and to make its engagement more conditional on these
governments meeting their obligations on issues of governance
and transparency including their management of natural
resources.
Mr. Keating. I would just have one other last comment, if I
could, Mr. Chairman, and that would be many of these resources,
these rare minerals are there, but there aren't transportation
networks. There aren't infrastructure support to get them. It
would be too expensive. So one of the things that came to my
mind is if we are engaged somehow in assistance that is private
or the governmental side in these, maybe there can be linkages
between some of those infrastructures being built and making
sure this transparency with the mining and the development of
many of these rare materials.
General, that is my last question.
General Adams. Sir, if I may respond to that? You may know
that we have looked closely at Afghanistan for possible
extraction of raw materials, specifically rare earth elements
in Kandahar and how difficult that would be. And what I want to
mention is that the search for alternate sources is a good
thing and we should continue to do that and we should do that
first here domestically. We have got great alternate sources
for rare earths in Alaska and in northern Great Plains as well
as California.
And I said the last mine in California closed in 2002. Of
course, it opened again, the Molycorp mine opened in 2012, so
the search for alternate sources for specifically rare earths
should continue. That is a very good thing for us to do. But it
begs the question here that we ought to consider as we are
looking at sequestration and limited budgets, the U.S.
Geological Survey is key to that and it was key to evaluating
the potential for rare earth extraction in Afghanistan as well
and they get a lot of help from the Department of Defense
especially when we are talking about security.
I have met with our Department of Defense executive for
working with economic aspects of our Afghanistan involvement.
It looks like it is going to be prohibitive for us to get rare
earths from southern Afghanistan for security reasons. But the
search is the important thing and I would like to just put a
plug in for the USGS, the U.S. Geological Survey. Absolutely
essential. It is like the canary in the mine. They are so
essential to our being able to detect and identify and to
program how we identify these key raw materials for our use. If
we are going to use strategy to determine which ones we need to
protect, USGS is key.
Mr. Keating. Thank you, General. I yield back.
Mr. Rohrabacher. And now we have Mr. Duncan.
Mr. Duncan. Thank you, Mr. Chairman. Thanks for this
hearing. Most of my questions were answered during the dialogue
so I don't have a lot of questions, but I am on the Energy and
Minerals Subcommittee of the Natural Resources Committee here
in the House and so the rare earth issue has been something
that we have been following for at least the last 3 years that
I have been here. I do concur with the General that we have
missed some opportunities over the last 30 years, but if the
administration and Congress will look forward to developing
those relationships with the countries that China currently has
the relationships with, that have the rare earths, but I will
also say that and you just touched on it, we have got a lot of
rare earths in this country that are currently the mining areas
and the resources are currently off the table for mining
activity and production just due to a lot of policies, current,
and in the past. And so I believe we need to open up more of
those resources here in America. It is not only an energy-
independence policy, but a security policy with regard to rare
earths.
I also want to mention, Mr. Chairman, I am co-chair of the
Transatlantic Working Group with members of European
Parliament. And we had members of European Parliament in
Washington last week and one of the topics of conversation was
their reliance, European countries' reliance on the natural gas
coming from Russia and how concerned they are about stability
of that going forward. And we talked about opportunities that
United States' oil and natural gas companies have to export LNG
to Europe to supply the needs of natural gas to our European
traditional allies. And how Europe is definitely looking to the
U.S. as a source for that.
So there is opportunity if we can expedite LNG terminal
applications in this country. We have an abundance of natural
gas and everyone is aware of that. We have got opportunity to
export that to countries that are more friendly and it is not
only the European Union countries that I talked to, but my
understanding is that some of the V4 countries, Hungary,
Czechoslovakia, Poland, Slovakia, are very interested in those
LNG exports as well which kind of raises my awareness that it
is a real issue because they are sitting so close to those
pipelines that come through those countries from the resources
to the East. And so I think there is an opportunity for
American companies in the energy sector, but also think America
can take advantage of the resources we have got here, but also
echo the General's comments.
And let me pause to thank you for your service to our
nation, sir. I appreciate it.
To echo your comments, we have got to go forward and think
about the relationships we have with the countries, South
Africa, sub-Sahara countries, but also all across the globe
that have the rare earths that we are so reliant on in the
automotive sector and the technology sector.
You had mentioned cell phones, cell phones that operate
with numerous rare earth minerals that make them work. Without
those rare earth minerals, they don't work. They don't hold
that data or they don't transmit that data.
So Mr. Chairman, I am not going to ask any questions, but I
want to thank you because these gentleman have done a fabulous
jobs of answering my questions. You guys have done a good job
of asking questions that were along the lines, so I thank you
so much for this important topic. And with that, I yield back.
Mr. Rohrabacher. All right, well, thank you very much.
General, if my notes are correct, you testified that there
were--Mr. Duncan, oh, he is off.
I was going to say underscoring Mr. Duncan's point, your
testimony was that we important 750,000 tons of vital minerals
and material every year. Is that annually?
General Adams. 750,000 tons.
Mr. Rohrabacher. Whew. All right. I want to thank the
witnesses as well. I think that this should be viewed, and the
subject should be viewed in terms of national security, but
also in terms of in humanitarian terms as well because as I
emphasized earlier on, unless we succeed in this arena,
ordinary people who now live in total deprivation around the
world have no chance at all of improving their standard of
living.
And while we may, for example, it might be a good thing and
it is a good thing that if we can bring some competition to the
Russian pipeline that now supplies the natural gas to Europe,
it would be a good thing that Azerbaijan and others have a
competition with that. Competition is good for people's
standard of living, and as we have found out in the United
States.
And so those of us who support the idea of pipelines and
helping develop transportation systems for these things, it is
not anti-Russian to do that, but it is pro-human being to try
to develop more availability of resources, of natural gas to
people everywhere and especially those that are currently under
the domination of one source for a vital material like natural
gas and such.
That is, by the way, one of the reasons why President
Reagan opposed that natural gas pipeline from Russia during his
administration because he did not want to provide a country
that didn't have free elections which was the Soviet Union to
have such a dominant role over Western Europe. Whether or not
it is a country that has free elections or not, it is a good
idea to have several sources for gas and several sources for
the vital minerals and materials that we have been talking
about today.
So with that said, I want to thank all of you for your
testimony. This has been one of the many hearings we will have
on the need for us to focus on water resources and other
resources that are necessary to preserve the peace and to make
sure that people have a right to improve their standards of
living throughout the world. So with that said, this hearing is
adjourned.
[Whereupon, at 12:22 p.m., the subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing RecordNotice deg.
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Material submitted for the record by Mr. Neil Brown, non-resident
fellow, German Marshall Fund of the United States
[Note: The entire report is not reprinted here but is available in
committee records and on the Internet at http://www.gpo.gov/fdsys/.]