Monday, November 2, 2009

Look Out Kid, It's Something You Did

Let's try something different today. A big part of some folks' frustration with getting involved in Central Asian happenings is that they have a difficult time jumping in to the deep-end of the subject matter that gets covered here. To remedy that, I'm going to try to explain some trends in energy policies within Central Asia...using lyrics of Bob Dylan's Subterranean Homesick Blues.

The Man in the Coon Skin Cap / In the big pen / wants eleven dollar bills / you only got ten
Any of the large energy projects that are going to, by definition, require a whole lot of investment. None of the stans would be able to drum up enough capital by their own governments alone. They are all just branded as more-or-less inept, blundering, kelptocracies by people who are ignorant of the area. And this won't change without the opportunities that real investment will afford. But the IMF-esque sources of money tend to come with the sorts of conditions that can cripple a developing country. Check that link...note how the astute writer notes that Central Asia is between South Asia and East Asia. Unfortunately, the IMF has really put the screws to the folks they want to help. In their 2009 projection, they note that "In contrast [to the rest of the countries], Azerbaijan, Turkmenistan, and Uzbekistan are projected to register robust growth in 2009..." So the three countries with the least IMF support are the ones weathering the global depression the most. Hmm. Fortunately, China, India, and Iran would be more than ready to fund projects that the IMF won't.
Maggie comes fleet foot / Face full of black soot / Talkin' that the heat put / Plants in the bed but
China's pollution is pretty much the stuff of legends at this point. Any project they get a part of in Central Asia will likely be gargantuan, but it'll also lead to who-knows-what sort of consequences. I'm actually returning from an energy conference where one of the keynote speakers praised that "China is a country run by engineers while America is a country run by lawyers." That statement can be parsed in many ways, but it does sort of explain some of the more awkward parts of China's Central Asian policies. Who knows what would happen if policies like that started happening in the Fergana Valley. But as glaciers melt and the Fergana becomes that much more fertile, especially relative to the rest of Central Asia), it could become the Next Big Economic Region.

You don't need a weather man / To know which way the wind blows
OK, this is sort of a stretch, lyrics-wise, but Central Asia is home to some of the flattest stretches of the flattest land on Earth. As such, it makes a pretty good sandbox for emerging wind-power technology. Mongolia has gotten a pretty decent start, but its a country with low energy usage...it can support those sort of possibilities. It will be really interesting to see what happens with Uzbekistan's experimentation with wind power. It's another country that is a pretty big energy importer (as well as water importer) for the region that badly needs to diversify. Wind power is too expensive to be practical now, but I'm open to anyone who could prognosticate the future of wind power in Uzbekistan better than I. Again, depending on the practicality of wind power, it could become just as important as hydropower is for Kyrgyzstan and Tajikistan. Any frame of energy independence for the steppe states would seem to change future relations between the water importers and exporters as related to dam-building.

Lookin' for a new fool / Don't follow leaders / Watch the parkin' meters
Carbon Sequestration is the new big thing in the energy world. Or at least was at the energy conference, which was led by Big Coal...sequestration allows them to keep doing what they are doing without any changes, just burying stuff and hoping it will go away (just plants are not enough to sequester the sort of CO2 being thrown up there). But even experts are skeptical about it, mostly because nobody has any clue whatsoever at what the long-term effects are of shoving noxious gasses far underneath the surface. Central Asia is a long way from US Voters, though, and projects like this get serious consideration...because what's the Tien Shan from New York? If the opportunity comes to get a sweetheart deal from some corporation in exchange for the opportunity to do carbon sequestration in the Kazakh or Turkmen gas fields, I would be skeptical, to say the least. Unless this turns out wonderfully or something.

The pump don't work / 'Cause the vandals took the handles
It's not related to Central Asia per se, but it's worth quoting John Robb's fuzzy math at length:
ROI (return on investment) for Nigeria's MEND. Four years of attacks that disrupted one million barrels a day of production (on average) = ~ 1.4 billion barrels disrupted. Direct costs at an average price of ~$70 a barrel and a $20 extraction cost to Nigerian kleptocrats and their corporate allies = $70 billion. Impact of the loss of 1 m barrels a day on the world, assuming a ~$10 premium due to the loss and ~80m barrels a day of global output = $800 m a day or $1.17 trillion. Loss of global economic output due to the premium = ~.5% of $50 trillion global GDP = $0.75 trillion. Total cost = ~$2 trillion. Cost of attacks = ~$1 m. ROI = 200 million %.
ROI = Rate of Investment. MEND essentially costs the global economy $200,000,000 for every $1 they spend.


So hopefully that's some stuff to chew on, and it should be enough fuel for many blog posts down the road. But one of my favorite quotes about historiography is Philip Roth's "The terror of the unforeseen is what the science of history hides, turning a disaster into an epic."

The study of Central Asia is just so fascinating because there are so many open-ended questions that could be answered in a hundred different ways. The young people (myself included) of all educational, ethnic, national, or whatever backgrouns who are getting in on the bottom floor now have the opportunity to do incredible things in the region.

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