Food-Water-Energy

The report, Enhancing Security in Afghanistan and Central Asia through Regional Cooperation on Water: Amu Darya Consultation Report, is the product of an international consultation held on December 7, 2010, at the European Parliament, organized by EWI, the Parliamentarians Network for Conflict Prevention, Wageningen University and the Amu Darya Basin Network.

The report’s recommendations call for the five countries that depend on the Amu Darya – Tajikistan, Kyrgyzstan, Turkmenistan, Uzbekistan, and Afghanistan – to pursue an Integrated Water Resource Management (IWRM) approach to the river at the local and basin level.

“An IWRM approach would help basin countries balance competing demands for water use between agricultural, industrial and hydropower sectors, and between upstream and downstream users,” the report points out.

The report also calls for development efforts to begin on a local level, such as training experts from different countries in joint forums to build trust and encouraging European countries to share best practices.

The report cautions that pursuing multilateral legal and economic agreements should not be the focus of regional policies, as existing mechanisms are generally “too broadly defined” to be effective. Another challenge is that Afghanistan, one of the Amu Darya’s major upstream countries, is not party to any international or regional treaties on water.

“With Afghanistan’s economic development, there will be more of a strain on existing water resources in the basin” says Rizk. “Forging international cooperation is therefore all the more crucial.”

The report’s recommendations will be pursued through the Amu Darya Basin Network, created by EWI in partnership with the Development Policy Review Network. EWI now coordinates the Network with the support of the Gerda Henkel Stiftung Foundation. To learn more about the Amu Darya Basin Network, please visit www.amudaryabasin.net

Executive Summary

Between June 2009 and January 2010, the EastWest Institute (EWI) began exploring how the United States, China, and the international community could build strategic trust through cooperation on climate change and climate security. EWI examined this issue through policy discussions in several forums: Track 2 processes such as the U.S.-China High Level Security Dialogue and the U.S.-China-Europe Trialogue21 initiative; a roundtable session in New York; and the U.S.-China Working Group on Climate Change—a group of Chinese and American experts convened with the support of the Connect U.S. Fund who met before and after Copenhagen to assess progress and to determine ways to move forward.

The timing has been fortuitous. The United States is re-engaged, domestically and internationally, on climate change issues; the Obama administration has moved climate and clean-energy cooperation to the top of the bilateral agenda with China; and the disappointing Copenhagen climate change negotiations have left the United States, China, and the global community with much to do to find a new international framework on climate change before the Kyoto Protocol expires in 2012.
This paper captures key observations from those discussions, focusing on two areas that pose the biggest obstacles to progress in bilateral and multilateral efforts to address climate change concerns. These areas are:

• The trade-off between emission caps and development goals;
• Technology transfer and intellectual property (IP) rights.

An important caveat: while the paper draws heavily on the discussions of the EWI-convened U.S.-China Working Group on Climate Change, the views in this paper should not be ascribed, individually or collectively, to members of the group. The group’s debates and discussions helped inform this paper’s analysis and recommendations, but the paper does not reflect a consensus in the group, because indeed consensus was lacking.

• The main challenges and recommendations relating to the main points of contention are summarized in Table 1. Among the biggest concerns—reinforced in large part at the Copenhagen meeting—are:
• The establishment of a system for the measurement, reporting, and verification (MRV) of emissions commitments that is acceptable to both developed and developing countries;
• Fostering confidence between the United States and China in each other’s carbon reduction commitments;
• Overcoming market, regulatory, and political barriers to technology transfer, including concerns over signs of “energy protectionism;”
• Reconciling different notions and expectations between developed and developing countries about each other’s role in technology transfer and financing;
• Building confidence in China’s IP protection regime and the broader international debate about the role of IP in clean energy technology transfer under the United Nations Framework for Climate Change Cooperation (UNFCCC).

Evident in the discussions was a stark contrast in the underlying American and Chinese assumptions that frame the debate. The two countries differ in their views of their obligations to reduce carbon emissions, their relative willingness to compromise national sovereignty for verification regimes, their contrasting notions of technological transfer from developed to developing countries, and their assessment of the role of IP (including China’s IP system) in the facilitation of such transfers.
Politics also play a role. Prospects of climate change legislation in the United States are dim: the divisive battle over health care reform and upcoming mid-term congressional elections have hardened divides within the U.S. And the politics of U.S.-China relations, which have affected mutual perceptions and cooperation in areas such as security and trade, have spilled over to the realm of climate change and clean energy as well.

The recommendations in this paper primarily address U.S.-China cooperation. The two countries are the world’s largest carbon emitters and have a critical role to play in moving the international process ahead. While the United States and China do not speak for all developed and developing countries respectively, we hope that these recommendations will help shape a framework that both developed and developing countries can accept.

Table 1:  Summary of Main Challenges and Recommendations

Executive Summary

There is an urgent need for political action in the Middle East and other regions – including much of Africa and Asia – to address the potential for conflict over water and to foster a process of cooperation among co-riparian states. Policymakers often acknowledge in principle the importance of water for regional security. However, the recent EastWest Institute policy series has shown that there is still insufficient coordination in the management of shared water resources.

To address these concerns, the EastWest Institute’s Parliamentarians Network for Conflict Prevention and Human Security issued the Amman Declaration on Improving Regional Cooperation on Water (page 11). The declaration outlines a set of principles for parliamentarians that are necessary to overcome major challenges to cooperation on water across national borders. It was developed by members of parliament, government officials, academics, and civil society representatives from Africa, Asia, Europe and North America. The Parliamentarians Network issued the declaration at their third international session in Amman, held under the patronage of Jordan’s Prince Hassan El bin Talal and in cooperation with the Royal Scientific Society.

The following report outlines in detail key points of discussion at the meeting. In brief, its recommendations include:

1. Address co-riparian equity, a critical step to ensure the peaceful cooperation of all states and broad acceptance of agreements by upstream and downstream populations;
2. Emphasize efficient and sustainable use of water resources to better manage water supplies threatened by climate change, overuse and pollution, particularly in densely populated areas already at risk of conflict;
3. Build capacity and invest in water-management technology to ensure local ownership and management of shared water supplies;
4. Manage agricultural development with limited water resources to meet rising food and nutritional demands of growing populations;
5. Share data in a transparent manner to provide entry points for policymakers and experts to build trust and make informed legislative decisions;
6. Build political will among policy makers and in their constituencies to foster dialogue and shape legislation towards efficient, sustainable and equitable water management.

Executive Summary

The almost total absence of bilateral or regional cooperation on water between Afghanistan and its neighbors is a serious threat to sustainable development and security in the region. The ever-increasing demand for water, the unpredictable availability of water, and the inefficient management of water resources combine to form a complex but solvable challenge to regional security and development. Currently there are hardly any spaces in which to cooperatively address trans-boundary water issues. There are hardly any forums for dialogue or bilateral or multilateral agreements, and possibilities for data sharing or joint action are limited.

The EWI’s consultations made abundantly clear that the regional nature and importance of water cooperation is fully recognized by all stakeholders. However, stark differences in capacity, combined with contextual issues such as historic mistrust and competing regional security priorities (in particular from the international community), have kept stakeholders from engaging in a process of dialogue on water cooperation.

This paper outlines current challenges to effective and sustainable cross-border cooperation on water and makes the following recommendations to overcome them.

• Cross-border data-sharing schemes should be examined to improve the hydro-meteorological knowledge base in Afghanistan and the region. Afghanistan’s water sector has suffered immensely from decades of conflict and needs significant improvement. Exchange of hydrological data between Afghanistan and its neighbors would speed up that process and may be done through a shared, transparent repository of scientific hydrological data on each of Afghanistan’s trans-boundary river basins. Data sharing would need to be a joint effort of Afghanistan and its neighbors, with assistance from the international community.
• Building on eventual successes of data-sharing schemes, regional stakeholders should regularly exchange their water policies, thus building trust across borders.
• Assistance from the international community to Afghanistan’s water sector should adopt a regionally sensitive approach rather than one focused on individual states. Donors have not yet made the regional dimension a priority in their assistance policies.
• Assistance from the international community to Afghanistan’s water sector needs to be coordinated. Afghanistan’s water sector should be strengthened to bring it in line with the capabilities of its neighbors by coordinating resources and targeting them on building the human, financial, and technical capacity necessary to help Afghanistan take a full part in regional initiatives.
• As a first step toward shared hydrological data and a needs assessment for the sharing of national water policy plans, senior water experts from the region should meet regularly. In light of the geographic and political specifics of each of the river basins, these meetings should be river-basin based.

In order to deal with resurgent nationalism in the global scramble for energy resources.

Among the major issues addressed in the book and the presentation were:

• Energy security is a core part of national sovereignty for many states.
• There is a need to depoliticize and to de-securitize energy.
• All actors concerned—whether energy-exporting or energy-importing—are interested in a stable and predictable energy markets and physical continuity of energy flows.
• All parties concerned should work on resolving the overall general sense of insecurity and correct the misperceptions about the real intentions of the major global energy actors.
• Transit and importing countries consider energy as an issue of strategic importance. For example, not only Turkey wants to be a major West Asia’s energy hub, Ankara also sees itself as a rising global energy player. Similar to Turkey, India does not hide its ambitions to become South Asia’s top energy actor.
• Closer cooperation between different international and regional energy regimes is essential. The United Nations can play a more significant role in fostering trust and cooperation in this matter.
• In Europe, the trend towards a common energy policy lies in intense consultations between member states. National governments and not EU institutions should have a decisive influence on the development of EU’s common energy vision.

The Lindh Programme book was able to delve in more depth into some specific threats to the global energy security. Among the most pressing issues are:

• Internal unrest/instability in the energy-producing and the transit countries—especially Iraq and Iran;
• Intra-state tensions on the global scale and the energy-producing and transit regions;
• Terrorist attacks against energy installations, pipelines and maritime energy routes;
• Political and diplomatic mistrust between energy exporters, energy importers, and transit countries;
• Real and perceived scarcity of the hydrocarbon resources;
• Rarity of new large-scale discoveries;
• Territorial disputes;
• Use of energy as a political tool;
• Selection of the transport corridors and conflicts between importers, exporters and transit countries.

To address these very real threats to global energy security, governments, international organizations, the private sector, and civil society should work together to mitigate existing threats and prevent the emergence of new challenges. These actors should use multilateral frameworks, preferably under UN auspices, with a number of binding rules, and take into account the interests of all stakeholders involved. This universal framework should also integrate all positive results achieved by existing global and regional energy institutions such as the Energy Charter Treaty, the International Energy Agency, and the International Energy Forum.

Among the next steps that concerned energy stakeholders should undertake include:

• Diversifying energy systems on the global, national, and regional levels;
• Developing and implementing advanced energy saving and energy efficiency measures;
• Build up of emergency fuel stocks;
• Promotion of R&D activities to spread efficient and environment-friendly technological options;
• Development of traditional and new domestic energy sources;
• Strengthen multilateral energy cooperation;
• Promote an institute of ‘energy diplomats’ on the global and regional levels.

EWI will continue to undertake research and develop recommendations on the pressing issue of global energy security through its work in energy and conflict prevention, including planned work in 2008 on integrating Iran in binding regional frameworks through energy cooperation.

The United States and China are in dire need of secure energy solutions that can keep pace with their large appetites for energy. Both countries possess abundant coal reserves, but the approach to coal policy has favored cheap extraction over serious consideration of the societal costs of coal. This paper studies the use of coal in the two countries and recommends steps they can take to make coal productive, sustainable and environmentally responsible,

The financial crisis has highlighted the need for such an inclusive governance structure as pump-priming increases the possibility of political friction between energy producers and consumers. Energy markets, unlike financial markets and other goods and services, are more generally characterized by substantial government intervention. The energy sector is dominated by companies that either had or still do have substantial support from national governments. Beyond the formal state-owned sector, private energy companies have always been under scrutiny and or control by government given the importance of providing reliable supplies of ‘essential services’ and energy security to a country’s people and businesses. This aim of governments has meant that domestic energy policy impacts on foreign policy in a number of ways, including escalating fears regarding resource nationalism when oil prices are volatile.

This paper provides an overview of existing research on the outcomes of government ownership and intervention in the energy sector through the example of state-owned oil companies as they compare with their so-called private sector counterparts. The purpose of this analysis is to improve the competitiveness of the energy sector while settling exaggerated fears regarding the negative eff ects of energy nationalism on the security of supply to other countries. This paper builds on work of the EastWest Institute beginning in 2005 on promoting confi dence, trust and cooperation in global energy security.

Other essential characteristics of energy commerce include the regular occurrence of market failure, information asymmetries and potential market manipulation due to the oligopolistic market power of OPEC and in some cases multinational oil companies. High and rising oil prices in the fi rst eight months of 2008 were in part due to infrastructure bottlenecks and short selling by hedge funds. The collapse in oil prices through October 2008 and since may have brought a sharper realization to many of the most powerful oil companies that they would benefi t from a less volatile, more transparent and better regulated market.

State-owned energy companies will become even more important in coming years. According to the International Energy Agency, in the next four decades, developing countries – most with state-owned companies – will be the source of 90 per cent of all new supplies of oil. According to a Rice University study, state-owned companies already control almost 80 per cent of world oil reserves and will dominate the market in the future.

Recommendations

As a result of consistent market failure in the energy sector, there needs to be a global governance structure specifi cally aimed at regulating it to allow for more transparency and competition. This global corporate governance structure would primarily consist of multinational private energy companies and state owned energy companies. It would promote:

• greater transparency in reporting of government-owned enterprises in the energy sector, based perhaps on the adoption of the Extractive Industries Transparency Initiative
• introduction of domestic regulatory regimes in various countries to incorporate the idea of ‘competitive neutrality’ to provide greater competition between the oil majors and the new “seven sisters”
• energy market reform in the big sister state of origin countries to improve competition in domestic markets and allow for a more even ‘playing fi eld’ to underpin new energy diplomacy between oil consuming and oil producing countries
• introduction of global accounting standards for energy companies that have either a controlling stake or a minority stake held by government to decrease cross subsidies between the domestic, often-legislated monopoly and off -shore investment
• a new complaints mechanism (an International Energy Tribunal) to ensure that that all stakeholder interests can be accounted for. This could be constructed along the lines of the anti-dumping provisions in the WTO or anti-trust procedures in terms of anti-competitive detriment.