CHAPTER or natural, that has primarily determined the

CHAPTER 1
ENERGY AND GEO-POLITICS

Introduction 

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Since the industrial revolution the geopolitics of energy, including who supplies it and securing access to those supplies, have been a driving factor in global security and prosperity. Over the coming decades, energy politics will continue to become more complex. Energy and geopolitics have always been closely linked. The twentieth century saw access to energy resources become a major factor in determining the winners of wars, oil producers banding together to create new global alliances, and price swings that spurred or deterred the adventurism of superpowers. The vast and fast-paced changes in the energy sector in the twenty- rst century are rewriting the relations between the two elds. As new resources are made available and create new geopolitical tools and opportunities and as climate issues move to the fore of the global agenda, too little work has been done to create a clear map that enables policy makers, industry, and the public to navigate the new issues arising at the nexus of energy and geopolitics. 

 Energy is what keeps the world going. Throughout history – in all countries and through all ages – energy has been the driver of economic growth, the source of military power and the main determinant of people’s welfare. It is the access to energy, whether human, animal, or natural, that has primarily determined the scale and success of a civilisation or state. That is why the major civilisations have flourished in places where there was abundant sunshine and water that translated into availability of energy. Large families meant more hands and, therefore, more energy for agriculture and hunting. War booties typically included prisoners who constituted cannon fodder for battles and wars, and an energy source for economic activity in the victorious land. Slaves were a source of energy. Colonial powers used indentured labour to cultivate plantations of tea, sugar, rubber and tin that would bring economic gains to the mother country. During the Industrial Revolution, a country’s economic and military strength was critically dependent on availability of coal. In times past, these were the contours of the geopolitics of energy. 
The geopolitics of energy in today’s world principally revolve around oil and, to a lesser degree, gas, both of which are not merely trading but geopolitical commodities. Global energy geopolitics will be principally shaped by the ‘arc of energy’, stretching from the Gulf region to the Caspian Sea, through Siberia and the Arctic region to the Russian Far East, Alaska and Canada. It is in this region that nearly 80 percent of the world’s oil and gas, including potential reserves, are located. Asian countries, having the world’s most dynamic economies, and comprising half the world’s population, will remain dependent on energy from this arc. They will also be the principal consumers of energy from this region in the coming decades. The already complex traditional geopolitics of this region, marked by myriad inter-state disputes and instability, have been immensely further complicated by energy geopolitics and created enormous tensions and potential deadly conflicts. 
Given the size of its reserves, the Persian Gulf region will remain critical to ensuring that there is sufficient production to meet the increasing global demand for oil, particularly for Asian countries. Asian countries cannot count much on Russia, the other large global oil producer, since the latter’s priority market will be Europe, since it brings Russia both economic and geopolitical benefits. The geopolitics of gas are much more complicated than those of oil since multi-billion dollar gas pipelines or Liquefied Natural Gas trains tend to hardwire producers and consumers inflexibly, and the huge investments require many years to become profitable. As a high degree of mutual confidence among various parties is essential for the long-term success of a gas contract, gas deals inevitably have a strong strategic, geopolitical element. Although difficulties remain, South Asia could get access to Russian and Central Asian gas. 
India is already the world’s fifth largest consumer of energy and as its economy grows so will its energy needs. Hydroelectricity, nuclear energy and non-conventional sources of energy will have a marginal impact on India’s energy security, which will remain dependent on coal, oil and gas for the next quarter century. As India’s own resources and production are insufficient, India will have to import large quantities of oil and gas, even coal to some extent. 
At present, two-thirds of India’s imported oil comes from the Gulf region and another 15 percent from Nigeria. In the foreseeable future, India will have to continue to rely largely on Gulf oil. Equity investments in oilfields abroad will have only a marginal impact on India’s energy dependency on the Gulf. The presence of a large and prosperous Indian population in the Gulf region is an additional factor that makes this region important. India, thus, needs to give much greater attention to the Gulf countries in its foreign policy priorities. India has to be alert to ensure that the oil reserves of the Gulf countries do not come under the control of outside powers that may be in a position to deny them to India. India needs to establish its independent military presence in the Gulf in consultation with the concerned countries. India should also take the lead in providing an alternative paradigm for Gulf security along the lines of the ASEAN (Association of Southeast Asian Nations) Regional Forum. 
To meet its demand for gas, India is negotiating import of gas from Iran via an overland pipeline transiting Pakistan. Apart from providing energy security to both India and Pakistan and a steady long-term customer to Iran for its gas, an Iran-Pakistan-India (IPI) pipeline would have great geopolitical significance for the region. It would be a huge confidence- building measure between India and Pakistan that could create a momentum for a 

fundamental transformation of India-Pakistan relations. As a regional energy project, the IPI could form the nucleus of a regional cooperation arrangement, in the first instance between South Asia and Iran and later perhaps within the framework of the Shanghai Cooperation Organization (SCO). Despite so many uncertainties surrounding the Turkmenistan- Afghanistan-Pakistan (TAPI) gas pipeline project, India is participating in discussions on the TAPI for geopolitical considerations. India would not like a gas pipeline to come up from Turkmenistan to Pakistan via Afghanistan without India being involved in it. It is not in India’s interest that Pakistan emerges as the key country with which Central Asia, including Afghanistan, is anchored economically, politically and strategically through oil and gas pipelines, roads and railways. 
At the same time, it would be prudent for India to spread its risks and not to rely exclusively on gas pipeline transit routes via Pakistan. The only possible alternative is gas from Russia and Central Asia via China. India must get involved in Eurasian oil and gas projects, not only for its energy security but for political and strategic considerations since Eurasia is likely to remain an important centre of global geopolitics. As a long-time trusted friend and strategic partner of Russia, India could expect Russia to be positively inclined towards its quest for access to Eurasian energy. However, a hard-nosed Russia is unlikely to accommodate India except as part of a larger strategic relationship and understanding. If India remains committed to an overarching India-United States strategic relationship there is not much hope for a meaningful India-Russia energy relationship. 
India must have a strategic understanding on energy with China too since both are major energy consumers seeking energy from the same sources and also because China also holds the key to finding a viable alternative energy transportation route from Eurasia to India that bypasses Afghanistan/Pakistan. Although such a project faces considerable technical and political challenges, it does hold out the exciting possibility of developing a major energy corridor between Eurasia and the Indian Ocean carrying gas from Eurasia to India via China, and oil from the Gulf to China via India. If there are insurmountable technical problems in constructing pipelines, it may be still possible to transmit electricity generated from gas or hydropower projects by transmission cables across the Karakoram and Himalayan mountain ranges. Perhaps such a Eurasian energy project could be implemented within the framework of the India-China-Russia trilateral dialogue, or the SCO. Apart from energy benefits, various long-term political, strategic, economic and environmental benefits would flow to both India and China. 
In the new geo-political realities of the 21st century, bold and innovative, even visionary, approaches are needed in inter-state relations, including in the area of energy security. The fructification of such a Eurasian energy blueprint offers the exciting prospect of transforming the Central Asian region into a strategic space uniting major Asian energy producers, consumers and transit countries in a web of interdependence. Instead of being the battlefield of a new ‘Great Game’, Central Asia could become the crossroads of a 21st century version of the traditional Silk Route, with gas and oil pipelines replacing caravan convoys. The Himalayas-Karakoram region could truly become a frontier zone of peace, friendship and development, rather than one of confrontation and conflict. A mega-project like this would also act as a huge stimulus for the global economy. Such a conceptual breakthrough would have far-reaching long-term consequences. It would not only bring all-round economic advantage, prosperity, social and political stability, but also create a solid and enduring foundation for greater trust, confidence and understanding, extensive people-to-people ties 

and communication links that will hopefully lead to new, lasting and stable political and strategic relationships. 
South Asia is a key region that will play an important part in the geopolitics of energy. Given its location and size, its economic and military strength and potential, and its position as a growing consumer of energy, India will be very much a part of global energy geopolitics in the coming years. If it is regarded as a responsible stakeholder and a reliable transit country, Pakistan can also become a critical player in global energy geopolitics and get many economic and political benefits. 
While currently self-sufficient in oil and gas, Southeast Asia may in future have to turn to the Gulf for its energy security. It also has to ensure that satisfactory security arrangements remain in place for transit of energy shipments through the waters of this region, especially the Malacca Straits, so that the major consumers of energy do not feel tempted to resort to unilateral measures or work out alternative transportation routes that bypass or divide the region.