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United States News Title: Senator Biden: We Need to Confront Russia’s Oil Dominance with Aggressive, High Level Diplomacy By admin - Posted on June 13th, 2008 Tagged: Congress • Consumer issues • Crude oil price • Diplomacy • Economy • Energy • Fossil fuels • Gas prices • Joseph Biden • Oil • Pipelines • Russia • Senate • Trade Biden: “We need diplomacy to forge a common strategy among energy consuming countries in Europe, a shared effort that can confront Russian dominance.” June 12, 2008 -- Washington, DC – Chairman of the Senate Foreign Relations Committee Joseph R. Biden, Jr. (D-DE) held a hearing this afternoon entitled, “Oil, Oligarchs, and Opportunity: Energy from Central Asia to Europe” to examine Russia's use of its enormous oil and gas reserves, and regional pipeline system, to expand its global political influence and economic leverage. Russian oil pump: Photo by Amanda Graham (CC) The Committee discussed diplomatic options, including the promotion of alternative pipelines, for European consumers and Central Asian suppliers to reduce Russia's current near-monopoly on oil and natural gas supplies. The Committee heard testimony from Former National Security Advisor Zbigniew Brzezinski, followed by a second panel comprised of former Gore National Security Advisor Leon Fuerth, AZEast Group Partner Roman Kupchinsky and Zeyno Baran of the Hudson Institute. The full text of Sen. Biden’s opening statement is below. “The biggest worry for American families today is the state of our economy. “And the biggest worry for our economy is the explosive rise in the price of oil. It is hitting family budgets every time they fill their tanks - it threatens a new wave of inflation as the price of everything from food to textiles to chemicals is pulled up by skyrocketing oil prices. As we have heard in previous hearings before this Committee, our dependence on oil has weakened our economy, driven up our defense expenditures, and put our foreign policy in a straitjacket. “That is why, following the leadership of Senator Lugar, this Committee has made the issue of energy security and its role in our foreign policy the focus of many hearings in recent years. We will continue that focus with additional hearings. “Today we will hear from a panel of distinguished witnesses, beginning with the Dr. Zbigniew Brzezinski, on the Great Game being played out in the Caspian Sea region. The stakes are high. They involve hundreds of billions of dollars in oil and infrastructure, the resurgence of Russia, and the energy security of Europe. “It is played out in a region rife with its own historical instabilities, shifting alliances, and shaky regimes. And this region is one of immense importance to our security and the security of our allies. It is mostly Muslim nations that are uncertain whether to look West or East. Its hydrocarbons fuel Europe and could offer additional supply for a global market that is maxed out. “But there are also opportunities there for us to pursue, opportunities for diplomatic and security success that could contribute to a more stable region and a more stable global energy future. These opportunities are there, but only if we seize them, only if we give this region and these challenges the attention, resources, and diplomatic skill they need – at the highest level. “As complicated as the flows of oil and gas into, through, and out of this region look on a map, the basic elements we will examine today are clear. “Russia controls the old, Soviet-era infrastructure for moving oil and gas in the region. That infrastructure reinforces Russian influence, because on top of its own oil and gas, Russia is the major buyer of its neighbors’ hydrocarbon resources and a major seller of those same resources, through its pipelines to Europe. That arrangement suits Russia just fine. “As we discussed in our hearing yesterday on Sovereign Wealth Funds, Russia has amassed a ‘Stabilization Fund’ of over $127 billion. They have used some of that wealth to buy into the parent company of Airbus, and have threatened to expand those holdings substantially. That company is a major European defense supplier. “No wonder the President and Prime Minister of Russia spend more time running Gazprom than they do running the country. It is not just the sheer volume of oil and money that is enhancing Russia’s power. They have shown that they are willing to use their dominance of both ends of most existing pipelines to extract not just economic deals, but, increasingly, political influence. “Russians love chess. Our strategic response on the chess board of Central Asia must be to establish a presence on parts of the board they do not yet control. That means laying down new pipelines that add alternatives - that introduce real competition - to the monopoly Russia has enjoyed. Giving more choices to both suppliers and customers should help wring waste and inefficiency out of the system – bringing a situation where supply and demand, not threats and bribes, set prices. “Those pipelines need not just billions of dollars of investment, but also the rule of law, property rights, and predictability that investors demand. Those pipelines require building alliances among the nations they traverse, the suppliers needed to fill the pipelines, and the consumers at the other end. “And we need diplomacy to forge a common strategy among energy consuming countries in Europe, a shared effort that can confront Russian dominance. That puts diplomacy at the center of our approach to this region. A key question for this hearing must be: are we deploying the diplomatic resources, the attention, this issue demands? “Senator Lugar and I are particularly interested to know if our government has the right people, in the right positions, to achieve our goals. Do we have the right pieces in play to confront the Russian position? “One way to form a common response to the power of energy exporters is a global deal to reduce the threat of climate change by cutting emissions from fossil fuels. That will mean global-scale commitment to alternatives and to rules that give investors a predictable future, a smart deal that protects economic growth. The longer we delay that deal, the longer we delay our own domestic energy and climate plan, the weaker our hand in dealing with Russia, or with OPEC. Our addiction empowers them. “I have worked with Senator Lugar on a Resolution calling for renewed U.S. leadership in international climate negotiations. Progress on those talks will be part of a move away from our dependence on oil, the root of so many of our foreign policy issues. “Senator Lugar is a genuine expert on this region. He has been there more than half a dozen times, most recently in January of this year. He’s the most senior U.S. official to visit Turkmenistan since their new President took office. “I can’t think of anything that is more important to our energy policy than the issues we will discuss at this hearing. Of particular interest to me, is why we seem to have an inability to form a powerful common response and how we can form that common response. “I want to welcome Dr. Brzeznski back to this Committee, and I look forward to hearing from our panel of distinguished experts on this topic.” Source: Senator Joe Biden
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