An excellent op-ed by Ruppert Murdoch:
Unfortunately, far from reflecting our unity, NATO’s entry into Afghanistan has exposed its divisions. Instead of standing together as full and equal partners, a handful of alliance members are bearing the brunt of the fighting. Defense Secretary Robert Gates has said that the lack of equal burden sharing threatens the future of the alliance. He is right.
We must face up to a painful truth: Europe no longer has either the political will or social culture to support military engagements in defense of itself and its allies. However strong NATO may be on paper, this fact makes NATO weak in practice. It also means that reform will not come from within.
…Right now the U.S. has a test in its own backyard. Colombia is a nation that is fighting poverty, battling the drug lords, and taking on terrorists backed by foreign governments. Its citizens have suffered terribly from violence, and want peace and opportunity. So its brave and innovative president, Álvaro Uribe, is trying to bring the rule of law to people who have not known it.
All President Uribe asks of us is that we ratify the trade agreement we have negotiated with his nation. By ratifying this agreement, we would open an important market for American goods. We would demonstrate to millions in our hemisphere that the path to prosperity lies in freedom and democracy. And we would give strong moral support to a leader struggling to bring hope and opportunity to his people in an important part of the world.
Everyone knows this, Democrats as well as Republicans. Yet House Speaker Nancy Pelosi has effectively put off the bill by not scheduling a vote. We need to make clear to the leadership in Congress what killing this trade deal would mean.
Throughout Colombia, a defeat for the trade deal would be confirmation that the U.S. is not an ally you can count on. Throughout Latin America, a defeat for the trade deal would be exploited by thugs like Venezuela’s Hugo Chávez, who would tell the people, “See, the Americans will never accept you as equals and partners.” And throughout the world, a defeat for the trade deal would be taken as another sign that the U.S. will not stand by its friends when the going gets tough.
Arturo Sarukhan, Mexico’s ambassador to the U.S., puts it this way: “The most important geopolitical mistake the United States could do today . . . is not ratifying that treaty.”
As CONTENTIONS readers know, the American intelligence community, in an NIE released last December, stated that it had “high confidence” that Iran shelved its nuclear weapons program in fall 2003. As Director of National Intelligence Michael McConnell testified at the Senate Intelligence Committee this month, weapons design is “the least significant” portion of a nuclear weapons program. The most important is obtaining fissile material. In Iran’s case that would be enriched uranium.
The NIE talked about that issue too. It said that Tehran would probably be able to produce enough uranium for a single bomb sometime “during the 2010-2015 time frame.” Yet not everyone agrees with this view. “New simulations carried out by European Union experts come to an alarming conclusion: Iran could have enough highly enriched uranium to build an atomic bomb by the end of this year,” reports Spiegel Online.
[more]
Michael McConnell raises the point that has been obvious to all observers paying the least bit of attention to Iran’s nuke program. Isn’t it astonishing that media outlets endlessly parrot the words of the unclassified summary of the NIE — without ever thinking about what it means? One has to conclude that the reporters are rather dim bulbs, or that they have a party line to defend.
From the Summary and Discussion:
Biofuels have been championed as an energy source that can increase security of supply, reduce vehicle emissions and provide a new income stream for farmers. These claims are contested, however. Critics assert that biofuels will increase energy-price volatility, food prices and even life-cycle emissions of greenhouse gases. This paper presents salient facts and figures to shed light on these controversial issues and asks whether biofuels offer a cure that is worse than the disease they seek to heal.
The information gathered in this paper gives rise to two fundamental questions:
1. Do the technical means exist to produce biofuels in ways that enable the world to meet demand for transportation energy in more secure and less harmful ways, on a meaningful scale and without compromising the ability to feed a growing population?
2. Do current national and international policies that promote the production of biofuels represent the most cost-effective means of using biomass and the best way forward for the transport sector?
The rush to energy crops threatens to cause food shortages and damage to biodiversity with limited benefits
The OECD Round Table on Sustainable Development has just released a thorough 57-page study on the costs, efficiency and environmental impact of biofuels. The full text of the report is here: Biofuels: is the cure worse than the disease? [PDF].
I’m very pleased with the quality of the work, and the conclusions — which I’ll paraphrase as “stop the subsidies, carbon tax each fuel for its externalities, then get government out of the way and let the markets work”.
If you agree that the damaging U.S. ethanol tariffs and subsidies should be stopped, please write your representatives. Stopping the handouts will be extremely difficult due to the concentrated benefits/diffuse costs which motivates politicians to reward their corn state contributors.
I recommend section 8 “An alternative policy agenda” for a summary of the report’s reasoning and conclusions:
136. There is little doubt that current patterns of fossil fuel-based energy use are unsustainable and that a change in direction is needed. There is, however, no obvious technological fix available that will supply the world with a source of automotive fuel that is cheap, clean, flexible and easily scalable. Hydrogen has been discussed, but many problems are yet to be overcome. In such a situation, when technological change is unpredictable, a prudent policy would be to keep as many options open as possible while at the same time letting prices adequately reflect environmental and natural-resource scarcities.
137. The current push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without generating significant environmental benefits. The upward pressure first-generation biofuels create on food prices, and the increasing burden their subsidisation places on taxpayers, are likely to make policies that support them indiscriminately less and less acceptable to the public.
138. Current biofuel support policies are placing a significant bet on a single technology notwithstanding the existence of a wide variety of different fuels and power trains that have been posited as options for the future. Those policies – that support high blends of ethanol, in particular – necessitate major investments in vehicles and fuel-distribution infrastructure — investments that, once made, put pressure on policy-makers to protect them.
139. Governments should cease creating new mandates for biofuels and investigate ways to phase them out. Mandating blending ratios, market shares or volumes creates certainty for investors in biofuel production capacity, but in so doing simply transfers risk to other sectors and economic agents. Mandates do not save motorists money: biofuels still account for only a tiny fraction, perhaps 1%, of the total world market for petroleum-derived transport fuels — not enough to substantially affect prices. In any case, if prices of petroleum products were to rise above the cost of producing biofuels, the mandates would not be needed. If petroleum prices were to fall, mandating biofuels means that transport fuels containing them would cost more.
140. Mandates are blunt instruments for reducing net petroleum use and greenhouse gas emissions. Despite large differences in the contributions that particular feedstock/technology combinations can make in achieving these objectives, almost all of the mandates currently used by OECD countries make no distinction among biofuels except between ethanol and biodiesel. Some countries have started to investigate ways to differentiate biofuels according to their life-cycle GHG emissions, but it is still unclear how they can do this in a way that is compatible with WTO rules. Setting mandatory targets is risky when the potential supply of biofuel feedstocks that can be sustainably produced is unknown and the commercialisation of second-generation technologies remains uncertain.
141. To the extent that subsidisation of biofuels reduces the retail prices of transport fuels in some countries, biofuel-support policies are also insulating drivers from the true costs to society of their fuel consumption, be it reduced national security or increased emissions of CO2. A far more neutral and efficient policy tool would be to tax fuels according to the externalities they generate.
142. Attempts to quantify support provided to biofuels also point to a more disturbing problem: that governments are providing billions of dollars or euros to support an industry about which they have only scant information. Yet without good statistics, it is difficult to imagine that policy makers are obtaining the feedback they need to respond to new developments in a timely fashion. In many countries, the only statistics available on production of biofuels are those collected by producers’ associations. Statistics on consumption are even harder to obtain. And the fact that support is provided by multiple levels of government, in diverse forms, suggests that new policies are being introduced in the absence of comprehensive information on how they are affecting the marginal rate of assistance.
143. A number of other policies that governments could pursue would be less risky than those typically used by OECD countries. One would be to remove tariffs on imported biofuels. Tariffs are especially high on ethanol, and the longer they remain in place, encouraging inefficient investments in expensive productive capacity, the harder will be the adjustment needed once they are removed. Moreover, the countries most affected by import tariffs are generally developing countries with a comparative advantage in biofuel production.
144. The second would be to co-ordinate internationally on developing agreed standards for sustainable biofuels. Certification of biofuels to sustainability standards would not solve all the negative environmental consequences of expanded biofuel use, but it might help reduce some of the worst direct effects. At the least, international co-ordination would avoid an even worse situation where countries each require conformity to different standards.
145. If technology is the main barrier to the commercialisation of second-generation biofuels, supporting R&D is likely to be more cost-effective than supporting production from first-generation facilities. Koplow (2006) points to the United States Energy Policy Act of 2005 as a good policy example. The Act calls for reverse auctions for cellulosic ethanol production, where the bidder requiring the lowest amount of public money per gallon produced will get the subsidy. Such an approach keeps development risks within the private sector and it reduces the chance of overcompensation.
146. The demand side of the transport fuel problem should receive proportionally more attention than the supply side. A litre of gasoline or diesel conserved because a person walks, rides a bicycle, carpools or tunes up his or her vehicle’s engine more often is a full litre of gasoline or diesel saved at a much lower cost to the economy than subsidising inefficient new sources of supply. The IEA (2006a) points out that significant benefit can be achieved by improving vehicle efficiency. If all technical means of engine, transmission and vehicle technologies are implemented, a 40% improvement in the fuel economy of gasoline vehicles could be achieved at low costs by 2050.
147. Biofuels may well play a part in expanding the range of energy sources available in the future. The extent of their penetration will be limited by the opportunity cost of biofuel feedstocks being applied to competing end uses, and the extent to which second-generation technologies can significantly lower the costs of production. But in view of the fact that even the most optimistic studies posit no more than 13% of liquid fuel needs in 2050 being supplied by biofuels, it must be asked whether the diversion of such large amounts of public funds in support of this single technological option can be justified. Given that a much larger supply of clean transportation energy will be needed than biofuels can supply, governments need to apply their regulatory interventions and fiscal resources in ways that enable the widest array of technology options to compete.
Technorati Tags: Biofuel, Ethanol
“America is, psychologically, an open-frontier society. Europe’s frontier closed a millennium ago.”
Commenting on the G-8 conference Brian Carney notes how different are the perspectives of old Europe and America. He really has a point, and not obvious… The technological optimism is reflected in the outlook of Prof. Jeffrey Sachs, a greens greenie heading the Earth Institute. We won’t know for probably 20 years whether Sachs’ optimism was appropriate. But I do think he reflects the “silicon valley” can-do perspective — in contrast to the EU instinct towards more big government, more big regulation — i.e., the command and control instinct.
…At a recent conference here hosted by the Council for the United States and Italy, an American venture capitalist and a German parliamentarian revealed just how different the outlooks are on the opposing shores of the Atlantic. The debate was not between a global warming skeptic and an alarmist, but between an American businessman and a German politician who both accept the need to address climate change and come to very different conclusions about how to do so.
The German took the floor first. His was a bold thesis: The economic transformation required to address global warming will bring huge energy efficiencies—and hence huge economic benefits—even if there is no global warming problem. But vested interests in the energy sector stand in the way of that transformation. “We cannot,” therefore, “wait for the industries that in many cases will be the losers . . . to make the necessary changes,” he told the audience of American and European industrialists.
To this American ear, this smacks of the tales about the man who invented a car that runs on water, but was bought out by Detroit to protect their market. But from a European perspective, it makes more sense.
…In other words, the characteristic American response to, say, climate change, is to believe that technologies— and even companies—that do not now exist will crop up to solve the problem, assuming there is a problem. The characteristic European response, as exemplified by the German conspiracy theorist in Venice, is to focus on how to get the businesses to behave “better.”
The open frontier view was captured by a Silicon Valley representative in the room. He stood up to announce that “clean tech” would be to this decade what high-tech was to the 1990s. The companies that would revolutionize our energy usage, he claimed, were now being funded by venture capitalists, and the Ciscos, Microsofts and Googles of the next decade would be the companies that solved the energy puzzle. We hadn’t heard of any of them now, he insisted, but they would be huge. Is he right? Maybe. Who cares? It’s his money, and the money of his colleagues in the Valley. The point is, if there’s a conspiracy to keep revolutionary clean technology down, he didn’t get the memo. The notion that this is simply a trans-Atlantic divide can easily be overstated. There are statist Americans and entrepreneurial Europeans. But the divide between the open-frontier camp and the closed-frontier camp is very real, and of the utmost importance to the global warming debate.
If you believe that the means for addressing human influence on the climate have not yet been invented, but moreover that the best chance of developing them lies with entrepreneurs whose ideas have not yet been tested in the market, then global warming is just another opportunity— and, if the doomsayers are right, a potentially huge one.
The dividing line can be seen, again, in the divergent approaches of the U.S. and Western Europe to the challenges posed by economic change. Most European employment law is focused on preserving the jobs that already exist. Policies designed to create new jobs are viewed as threatening to the status quo—and they are threatening. The question is whether the status quo is presumed to be better than an unknown future. If you believe that the economic frontier is closed, then you are wont to suspect that the future is at least as likely to be worse than the present as it is to be better. And so you fight to preserve what you have.
Claire Berlinski, author of Menace in Europe: Why the Continent’s Crisis is America’s, Too:
A consensus has begun to emerge. The problems I described—Europe’s collapse of confidence, the unsustainable character of its welfare economies, its population decline, the rise of militant Islam, and the flourishing in Europe of a host of bizarre anti-Enlightenment ideologies—are now widely appreciated.
Whether or not they are appreciated, there is still no consensus at all about what do about them…
John Wixted interprets the significance of opinion polls showing strong anti-Americanism:
I know you’ve heard all about the fact that the world has turned against America because of George Bush’s imperialism, his opposition to the Kyoto Protocol, his tendency to torture terrorist detainees, his refusal to endorse “we-are-all-in-this-together” proposals like the International Criminal Court, and on and on. Because of him, Americans cannot walk around with their heads held high anymore. We know this because polls often show that people in other countries have an unfavorable image of America. And to many on the left, that’s a big problem. I always ask them why, and I have not yet heard one good answer. Not one. In fact, people are invariably surprised by my question because they’ve never really thought about it. It sounds bad at first (”everybody hates us!”), but the concern tends to vaporize once you think through it a bit. It’s just a popularity contest, after all, one that translates into nothing of importance. Nothing at all. Surprisingly, this point applies to our standing in Muslim nations as well. Popularity polls there, as elsewhere, just don’t matter.
By contrast, a different kind of poll — the kind that France just took — really is important. And that’s the kind of poll that shows America’s true standing in the world. If America’s standing really were so low, presidential candidates should be able ride anti-Americanism to victory. This should be especially true in France and Germany — the two most anti-American states in Western Europe (according to popularity polls, anyway).
With today’s election in France, the advanced industrialized democracies of the world (i.e., the G7) have all had a chance to weigh in since the 2003 invasion of Iraq. Who won those elections anyway, the anti-American hysteric, or the pro-American supporter of the war on terror? Here is the scorecard:
Pro-American supporters of the war on terror:
United States (George Bush, 2004)
Great Britain (Tony Blair, 2005)
Germany (Angela Merkel, 2005)
Japan (Junichiro Koizumi, 2005)
Canada (Stephen Harper, 2006)
France (Nicolas Sarkozy, 2007)
Anti-American opponents of the war on terror:
Italy — (Romano Brodi, 2006)
…Unlike popularity contests, which don’t matter at all, these polls reflect America’s actual standing in the major industrialized democracies of the world. Maybe Hugo Chavez of Venezuela is the one who is on the right track, while France, Germany, Great Britain, Japan and Canada have all veered off onto the wrong track, but I somehow think it might be the other way around.
John includes an interesting Angela Merkel quote from the pre-Iraq war period:
…here are some words of wisdom from Merkel before the invasion of Iraq:
Two things have been highlighted once again by the EU decision. First, the danger from Iraq is not fictitious but real. Second, working not against but jointly with the United States, Europe must take more responsibility for maintaining international pressure on Saddam Hussein. As is argued in the EU summit declaration, this means advocating military force as the last resort in implementing U.N. resolutions.
It is true that war must never become a normal way of resolving political disputes. But the history of Germany and Europe in the 20th century in particular certainly teaches us this: that while military force cannot be the normal continuation of politics by other means, it must never be ruled out, or even merely questioned — as has been done by the German federal government — as the ultimate means of dealing with dictators. Anyone who rejects military action as a last resort weakens the pressure that needs to be maintained on dictators and consequently makes a war not less but more likely.
The selective leakers are getting the full support of almost all the media. Fortunately the Wall Street Journal continues to provide critical missing perspective:
One of the most revealing subplots in the European coup attempt against World Bank President Paul Wolfowitz is who is coming to the American’s defense. The rich European donor countries want him to resign, while the Africans who are the bank’s major clients are encouraging him to stay.
You wouldn’t know this from the press coverage, which continues to report selective leaks from the bank staff and European sources who started this political putsch. The latest “news” is that the European Parliament has asked Mr. Wolfowitz to resign, thus sustaining that body’s reputation for irrelevant but politically correct gestures. If Mr. Wolfowitz leaves, no doubt some of the europols will angle for the job.
The more telling story is the support for the bank president from reform-minded Africans. At a press conference during this month’s World Bank-IMF meetings in Washington, four of the more progressive African finance ministers were asked about the Wolfowitz flap. Here’s how Antoinette Sayeh, Liberia’s finance minister, responded:
“I would say that Wolfowitz’s performance over the last several years and his leadership on African issues should certainly feature prominently in the discussions . . . . In the Liberian case and the case of many forgotten post-conflict fragile countries, he has been a visionary. He has been absolutely supportive, responsive, there for us . . . . We think that he has done a lot to bring Africa in general . . . into the limelight and has certainly championed our cause over the last two years of his leadership, and we look forward to it continuing.”
The deputy prime minister for Mauritius, Rama Krishna Sithanen, then piped in that “he has been supportive of reforms in our country . . . . We think that he has done a good job. More specifically, he has apologized for what has happened.”
Sub-Saharan Africa is the world’s poorest region, and Mr. Wolfowitz has appropriately made it his top priority. On his first day on the job, he met with a large group of African ambassadors and advocates. His first trip as bank president was a swing through Burkina Faso, Nigeria, Rwanda and South Africa. He also recruited two African-born women vice presidents, a rarity at the bank.
If you’re surprised by that last fact, then you don’t appreciate that the World Bank has always been a sinecure for developed-world politicians. They get handsome salaries, tax free, and their performance is measured not by how much poverty they cure but by how much money they disperse.
Mr. Wolfowitz has upset this sweetheart status quo by focusing more on results, and especially on the corruption that undermines development and squanders foreign aid. Yet many of the poor countries themselves welcome such intervention. At the same April 14 press conference, Zambian Finance Minister N’Gandu Peter Magande endorsed the anticorruption agenda:
“We should keep positive that whatever happens to the president, if, for example, he was to leave, I think whoever comes, we insist that he continues where we have been left, in particular on this issue of anticorruption. That is a cancer that has seen quite a lot of our countries lose development and has seen the poverty continuing in our countries. And therefore . . . we want to live up to what [Wolfowitz] made us believe” that “it is important for ourselves to keep to those high standards.”
…
The noisy leaking and staff protests are aimed at getting Mr. Wolfowitz to make their life easy by resigning. But that would only validate their campaign to oust him for giving his girlfriend a raise that the bank’s own ethics committee advised him to deliver after he had tried to recuse himself. Since our editorial reported on all of these “ethics” details two weeks ago, no one has even tried to dispute our facts. The critics have shifted to a new line that, because his “credibility” has been damaged by these selective smears, Mr. Wolfowitz must now resign “for the good of the bank.”
Let’s hope the White House doesn’t fall for this rot, and, by the way, it’s about time Treasury Secretary Hank Paulson spent some of his political capital and defended Mr. Wolfowitz. He’d be in good company among Africa’s progressive leaders.
A useful summary on the 50th birthday of the positive aspects of the EU:
…The bloc’s economic record is mixed. This is still a Europe of wasteful farm subsidies, low growth and high unemployment, with rising protectionism and a regulatory zeal unmatched anywhere in the free world. Yet the bad ideas tend to come from bad leaders. When the Brussels bureaucracy and dreams of creating a super-state are checked by a vigilant media and national governments, the Europe construct itself can be market friendly. In the past two decades, the EU on balance has done more to open the door to greater competition than provide a back door, as Margaret Thatcher feared, for welfare policies.
Why? Most crucially, the 1957 Treaty of Rome was inspired by free-market principles. The EU is the world’s largest zone for the free movement of goods, capital and people. When individual countries have tried to blunt those freedoms, Brussels has often fought back with vigor. The euro, the world’s most successful currency union, has lowered interest rates, promoted internal trade by removing exchange-rate risks and–especially in the Latin countries–made it impossible for governments to inflate their way out of trouble.
Europe’s diversity and growing size are also strengths. For each dysfunctional Italy, there’s a booming Britain or Estonia or Denmark showing how market-friendly policies pay dividends. In a wider Europe, good ideas squeeze out the bad. The Eastern Europeans have popularized low and flat taxes. Boom-town London is home to hundreds of thousands of Poles and Frenchmen, whose departure is an electoral issue in their native countries, where politicians are realizing they must compete to keep their brightest at home.
On the edges of the Continent, a half-circle running from Spain to Ireland to Finland and down to Eastern Europe is a zone of strong economic growth. In the middle, the big powers of France, Italy and Germany cry out for deeper overhauls. As long as those economies are weak, voters will be anxious about global competition and, in turn, skeptical about opening Europe further. This explains the current unease about further EU enlargement, particularly to Turkey, and the backlash against freeing trade in services and cross-border takeovers.
The Financial Times reports a new poll showing that EU citizens are almost exactly the inverse of their Iraqi counterparts. As I posted yesterday:
by a majority of two to one, Iraqis prefer the current leadership to Saddam Hussein’s regime, regardless of the security crisis and a lack of public services.
Today the FT reports that by almost a majority of two to one, Europeans think life is worse now than before joining the EU:
The malaise gripping the European Union as it approaches its 50th birthday this week is highlighted in a new poll which shows that 44 per cent of citizens think life has got worse since their country joined the club.
The poll suggests the bloc’s 27 leaders have their work cut out to revive enthusiasm for Europe’s project of “ever closer union” when they meet for official anniversary celebrations in Berlin next Sunday.
The FT/Harris poll, conducted in the EU’s five biggest countries and the US, found that only 25 per cent of the Europeans questioned felt life in their country had improved since it joined the EU.
The poll details are here.
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