Energy Dependence and Political Power: Some Paradoxes

Abstract

A normal view of international power politics and related issues of economics is that an energy supplier will hold tremendous power and influence over an energy user. This strikes most people as merely common sense.But the opposite can also be true, as the user acquires power and influence over the supplier. The complexities of an increasingly interdependent world may thus present surprises on all sides, with the location of political power being more difficult to sort and predict, and with the joint gains of exploiting economic exchanges, perhaps coming out ahead of considerations of relative power.1There are a number of examples. The initial impression of the relationship between OPEC and oil recipients was that the OPEC states would be free to do as they chose, dictating policy changes to the advanced industrialized democracies.2 But the realization soon set in in Iran and Saudi Arabia and the various Emirates that they needed oil-dependent economies and the advanced products and technologies that could only come from such economies. Rather than holding back oil output to achieve maximum revenue and maximum reserves for the future, these oil exporters thus kept output at higher levels. If the West did not get the oil it wanted, Riyadh might not have all the air conditioners it would need in the future. (A more classic constraint on monopolies also applied because the Saudis had to fear that if oil supplies were cut too much their normal customers would find regular sources of higher-priced oil elsewhere or develop other sources of energy.)A similar kind of debate pertained in the early 1980s to the question of whether Western European countries should invest in a pipeline connecting them to Soviet sources of natural gas.3 The Reagan administration counseled against this, arguing that Moscow would be able to dictate all kinds of policy changes to the North Atlantic Treaty Organization (NATO) countries by threatening to hold back natural gas whenever its foreign policy requests were ignored. It was forecast to be another form of "Finlandization," where the Western Europeans would be forced to agree, more than they wanted to, with the Soviet view of the world. It would not be because of the threat of a Soviet conventional invasion or a nuclear attack, but because of the threat of an economic punishment.The West European countries took some elementary precautions to prepare for the threat of such a cutoff-for example, by requiring new industrial plants to be of a multifuel variety so that the heating for the elderly in German cities would not have to be turned off even if Soviet natural gas were cut off. The Western Europeans went ahead with the pipeline. The ensuing years did not see a noticeable Finlandization of the NATO countries. Instead there was a Western victory in the Cold War. The Berlin Wall came down, Germany was unified, the Warsaw Pact collapsed, and the Soviet Union broke into pieces.One can find yet another example in the economic relationship between imperial Japan and the United States in 1941, as Japan, deeply engaged in its invasion of China, was dependent on the United States and the Netherlands East Indies for petroleum and scrap metal.4 If anyone would have concluded that this gave the United States and its partners the leverage to dictate an abatement of Japanese militarism and a Japanese withdrawal from China, they would be corrected by the Japanese attack on Pearl Harbor. The attack was indeed a response to the embargo on oil that the United States arranged with its partners, an embargo that may not have had the final approval of President Franklin Roosevelt because it was announced by one of his subordinates in the State Department who may have misinterpreted the president's wishes.Later, various U.S. administrations used American grain and beef sales to the Soviet Union as a means of rewarding liberalization and punishing transgressions. When President Jimmy Carter chose to punish Moscow for its invasion of Afghanistan by withdrawing the American team from the 1980 Moscow Olympics and by canceling grain sales, the latter move cost him the support of several midwestern states in the 1980 election; he subsequently lost his office to Ronald Reagan. …