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The Geopolitics of Shale from Stratfor

The Geopolitics of  Shale is republished with permission of Stratfor.”

By Robert D. Kaplan Chief  Geopolitical Analyst

According to the elite newspapers and journals of opinion, the future of  foreign affairs mainly rests on ideas: the moral impetus for humanitarian  intervention, the various theories governing exchange rates and debt rebalancing  necessary to fix Europe, the rise of cosmopolitanism alongside the stubborn  vibrancy of nationalism in  East Asia and so on. In other words, the world of the future can be  engineered and defined based on doctoral theses. And to a certain extent this  may be true. As the 20th century showed us, ideologies — whether communism,  fascism or humanism — matter and matter greatly.

But there is another truth: The reality of large, impersonal forces like  geography and the environment that also help to determine the future of human  events. Africa has historically been poor largely because of few  good natural harbors and few navigable rivers from the interior to the  coast. Russia is paranoid because its  land mass is exposed to invasion with few natural barriers. The Persian Gulf  sheikhdoms are fabulously wealthy not because of ideas but because of large  energy deposits underground. You get the point. Intellectuals concentrate on  what they can change, but we are helpless to change much of what happens.

Enter shale, a sedimentary rock within which natural gas can be trapped.  Shale gas constitutes a new source of extractable energy for the post-industrial  world. Countries that have considerable shale deposits will be better placed in  the 21st century competition between states, and those without such deposits  will be worse off. Ideas will matter little in this regard.

Stratfor, as it happens, has studied the issue in depth. Herein is my own  analysis, influenced in part by Stratfor’s research.

So let’s look at who has shale and how that may change geopolitics. For the  future will be heavily influenced by what lies underground.

The United States, it turns out, has vast deposits of shale gas: in Texas,  Louisiana, North Dakota, Pennsylvania, Ohio, New York and elsewhere. America,  regardless of many of the political choices it makes, is poised to be an energy  giant of the 21st century. In particular, the Gulf Coast, centered on Texas and  Louisiana, has embarked upon a shale gas and tight oil boom. That development  will make the Caribbean an economic focal point of the Western Hemisphere,  encouraged further by the 2014 widening of the Panama Canal. At the same time,  cooperation between Texas and adjacent Mexico will intensify, as Mexico  increasingly becomes a market for shale gas, with its own exploited shale basins  near its northern border.

This is, in part, troubling news for Russia. Russia  is currently the energy giant of Europe, exporting natural gas westward in  great quantities, providing Moscow with political leverage all over Central and  particularly Eastern Europe. However, Russia’s reserves are often in parts of  Siberia that are hard and expensive to exploit — though Russia’s extraction  technology, once old, has been considerably modernized. And Russia for the  moment may face relatively little competition in Europe. But what if in the  future the United States were able to export shale gas to Europe at a  competitive price?

The United States still has few capabilities to export shale gas to Europe.  It would have to build new liquefaction facilities to do that; in other words,  it would have to erect plants on the Gulf of Mexico that convert the gas into  liquid so that it could be transported by ship across the Atlantic, where  regasification facilities there would reconvert it back into gas. This is doable  with capital investment, expertise and favorable legislation. Countries that  build such facilities will have more energy options, to export or import,  whatever the case may be. So imagine a future in which the United States exports  liquefied shale gas to Europe, reducing the dependence that European countries  have on Russian energy. The geopolitics of Europe could shift somewhat. Natural  gas might become less of a political tool for Russia and more of a purely  economic one (though even such a not-so-subtle shift would require significant  exports of shale gas from North America to Europe).

Less dependence on Russia would allow the vision of a truly independent,  culturally vibrant Central and Eastern Europe to fully prosper — an ideal of  the region’s intellectuals for centuries, even as ideas in this case would have  little to do with it.

This might especially be relevant to Poland. For Poland may have significant  deposits of shale gas. Were Polish shale deposits to prove the largest in Europe  (a very big “if”), Poland  could become more of an energy producer in its own right, turning this flat  country with no natural defenses to the east and west — annihilated by both  Germany and the Soviet Union in the 20th century — into a pivot state or  midlevel power in the 21st. The United States, in turn, somewhat liberated from  Middle East oil because of its own energy sources (including natural gas finds),  could focus on building up Poland as a friendly power, even as it loses  substantial interest in Saudi Arabia. To be sure, the immense deposits of oil  and natural gas in the Arabian Peninsula, Iraq and Iran will keep the Middle  East a major energy exporter for decades. But the shale gas revolution will  complicate the world’s hydrocarbon supply and allocation, so that the Middle  East may lose some of its primacy.

It turns out that Australia also has  large new natural gas deposits that, with liquefaction facilities, could  turn it into a principal energy exporter to East Asia, assuming Australia  significantly lowers its cost of production (which may prove very hard to do).  Because Australia is already starting to emerge as the most dependable military  ally of the United States in the Anglosphere, the alliance of these two  great energy producers of the future could further cement Western influence in  Asia. The United States and Australia would divide up the world: after a  fashion, of course. Indeed, if unconventional natural gas exploitation has  anything to do with it, the so-called post-American world would be anything  but.

The geopolitical emergence of Canada — again, the result of natural gas and  oil — could amplify this trend. Canada has immense natural gas deposits in  Alberta, which could possibly be transported by future pipelines to British  Columbia, where, with liquefaction facilities, it could then be exported to East  Asia. Meanwhile, eastern Canada could be the beneficiary of new shale gas  deposits that reach across the border into the northeastern United States. Thus,  new energy discoveries would bind the two North American countries closer, even  as North America and Australia become more powerful on the world scene.

China also has  significant deposits of shale gas in its interior provinces. Because Beijing  is burdened by relatively few regulations, the regime could acquire the land and  build the infrastructure necessary for its exploitation. This would ease  somewhat China’s energy crunch and aid Beijing’s strategy to compensate for the  decline of its coastal-oriented economic model by spurring development  inland.

The countries that might conceivably suffer on account of a shale gas  revolution would be landlocked, politically unstable oil producers such as Chad,  Sudan and South Sudan, whose hydrocarbons could become relatively less valuable  as these other energy sources come online. China, especially, might in the  future lose interest in the energy deposits in such low-end, high-risk countries  if shale gas became plentiful in its own interior.

In general, the coming of shale gas will magnify the importance of geography.  Which countries have shale underground and which don’t will help determine power  relationships. And because shale gas can be transported across oceans in liquid  form, states with coastlines will have the advantage. The world will be smaller because of unconventional gas  extraction technology, but that only increases the preciousness of  geography, rather than decreases it.

Editor’s Note: Stratfor offers a combination of  geopolitical insight, source-driven intelligence and objective analysis to  produce customized reliable information and forecasting for businesses,  organizations and government agencies. For more information about Stratfor’s  client solutions offerings, click here: http://info.stratfor.com/solutions/

Read more:  The Geopolitics of Shale | Stratfor

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Modern Spies – BBC2

Modern Spies is a two-part BBC TV series that looks at the real world of modern spies and  compares it with the fictional spy world. There were clips from Spooks, 24, James Bond and Tinker Tailor Soldier Spy, but the programme was mostly concerned with the real world. It was presented by Peter Taylor, a BBC journalist who specialised in Northern Ireland in the 1990s and has reported widely on al-Qaeda since 9/11.

For the first time interviews with serving British intelligence officers were broadcast on TV. They were identified by only their first names,  their faces were obscured and actors spoke their words, so we have to take their word and that of the BBC that they were who they claimed to be. Given Peter Taylor’s reputation, I would be surprised if they were not genuine.

They came from all three UK intelligence agencies; the Security Service, better known as MI5, which deals with threats to the UK’s national security; the Secret Intelligence Service, or MI6, which is responsible for intelligence operations abroad; and GCHQ, responsible for electronic security, codes and cyphers. This was the first time that cameras had been allowed inside GCHQ’s main site at Cheltenham. Science fiction fans (and perhaps conspiracy theorists) may be amused to learn that Britain’s military satellite communications network is called Skynet, the same name as the computer network that is humanity’s enemy in the Terminator films.

Some of the interviewees were from the CIA and FBI; they were named, but were either senior enough to already be publicly known or else retired.  A lot of it was devoted to recruitment; British and American intelligence agencies now have recruitment films on their websites. In the past, MI5 and MI6 recruited via informal approaches at universities, mainly Cambridge and Oxford.

Post 9/11 there has been a need for Asian agents who can infiltrate al-Qaeda. A ‘sting’ operation was re-enacted. British Asian MI5 agents persuaded a British member of al-Qaeda that they could supply him with weapons. The al-Qaeda man was arrested.

One of the FBI  officials interviewed said that 9/11 led to a downgrading of counter-intelligence (operations against foreign intelligence services) as counter-terrorism was expanded. This created problems because, despite the end of the Cold War, Russia continues to spy on the West. It was claimed that there are now as many Russian spies in the USA as there were Soviet ones during the Cold War.

In a well publicised case 10 Russian spies were arrested in the USA in June 2010. Most of them were ‘dead doubles'; Russians who had taken the identity of Americans who were born around the same time as themselves but died young. The exception was Anna Chapman, who has become the best known of the 10 because of her looks. She was able to operate under her own name because her ex-husband, Alex Chapman, is British.

The FBI investigation into the Russian spy ring was also re-enacted. Chapman did not meet her contact, but used a laptop with an encrypted wi-fi connection to send information to somebody a short distance away. The FBI broke the encryption and arranged a meeting between her and one of its own agents, who took the laptop for repair.

The Russian agents were arrested when the FBI realised that they were getting close to a Cabinet official. It was suggested that she might have been a ‘honey trap’ agent; one whose job is to obtain sensitive information by seducing somebody who possesses it. The FBI has subsequently issued a statement saying that Chapman had not attempted to seduce the Cabinet official. In fact, another Russian spy, Cynthia Murphy, who worked on Wall St, had several meetings with a financier who was a friend of the Cabinet official.

The 10 Russians were eventually swapped for four Russians accused of spying for the West. One potentially tragic impact of the case is on the two daughters of Cynthia Murphy and  her husband Richard, also a member of the spy ring. The BBC programme  suggested that their marriage was arranged as part of their cover by the Russian intelligence services. The daughters, having been born and brought up in the USA, now find themselves living in Russia with parents whose marriage may be a sham.

The programme talked about honey traps as if they were always used to entrap men by having them approached by younger and extremely attractive women, who would use pillow talk to obtain secrets. However, I recall reading during the Cold War of handsome and charming male agents who would seduce lonely government secretaries in order to obtain secrets.

Intelligence depends on the sources of information. An enormous risk is of acting on intelligence provided by a rogue source. Rafid Ahmed Alwan al-Janabi, an Iraqi defector code-named ‘Curveball’, told German intelligence, the BND, about Saddam Hussein’s weapons of mass destruction. His information was used by the USA to justify the 2003 invasion of Iraq. He admitted on-screen that he made up his stories of secret factories and special trucks carrying bio-weapons. According to The Guardian, he did so in order to bring down Saddam’s regime and had an agreement with the BND that they would not pass his information onto other countries. He claims to be ‘comfortable’ with what he did.

A major intelligence threat to the West is coming from China. The Chinese intelligence services like to operate via what are known as ‘cut-outs.’ These, rather than a Chinese intelligence officer, deal with the sources. The sources may not know who they are supplying information to, and the risk that the intelligence officers may be arrested is considerably reduced.

It was claimed that China has obtained full details of all US nuclear weapons and it was pointed out that China’s newest combat aircraft, the J-20, is very similar to the Lockheed Martin F-35. It was alleged that the Chinese had obtained details of the F-35 by hacking into the computers of BAE Systems, Lockheed Martin’s British partner.

A very interesting programme. albeit on a subject where you can never be sure that you are being told the whole truth. Like the spies, you are reliant on your sources. However, Peter Taylor has a good reputation so I think that we learnt as much of the truth as we are likely to on this subject.

More to follow on the second programme, which deals with the questions of how far the British intelligence services will go to protect the country from terrorist threats and whether or not they have a licence to kill.

For UK viewers, the programme is available on the I-Player until midnight on 16 April. There were no co-producers, so I do not know if it will be shown in other countries.

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