Asia & the Pacific

In the year since Russia and China signed a landmark $400bn natural gas pact in May 2014, rapid developments in the energy sector and the geopolitical situation offer a chance to re-examine the deal. Indeed, the aftermath of the pact saw a return to a world of cheaper oil—a situation driven by a number of factors outside of Russia’s control. The buffeting winds of broadbrush western sanctions have deepened the uncertain fiscal outlook for Russia’s hydrocarbon-driven economy, calling its financial resilience into question.

The dramatic fall of oil prices is set to jeopardize both the U.S. ambition to become a big gas exporter by the end of this decade and the long-awaited development of a global gas market.

"In the dark days at the turn of the year, all but a few bits of U.S.-Russian cooperation to strengthen nuclear security in Russia came to a halt.  No longer, for now at least, will U.S. experts work with counterparts at major Russian nuclear facilities to implement better means to prevent insiders from stealing fissile material, or to improve accounting, so a theft would be quickly detected..."

After a decade of delays, on May 21 Russia and China clinched a $400 billion 30-year deal on the delivery of 38 billion cubic meters of gas per year starting in 2018. In Shanghai, President Vladimir Putin called the deal an "epic event."

French Minister of War Andre Maginot became infamous among military strategists for his fixation on a single route of attack that led to a fatal neglect of alternatives. Seeking to block a German invasion along the primary East-West axis, Maginot constructed an impregnable line of fortifications in the 1930s. He succeeded in preventing the attack he most feared, but when German panzers outflanked that line and rolled through Belgium in 1940, their attack from the rear led to France’s surrender in just six weeks.

Speaking at West Point last month, President Obama warned that “if nuclear materials are not secure, that poses a danger to American citizens.” Contrarily, recently proposed budget cuts could hamper work being done to ensure nuclear material never falls into the wrong hands. In his National Interest op-ed, Matthew Bunn makes the case that preventing nuclear danger should remain a top priority for Congress.

Russian President Vladimir Putin and Chinese President Xi Jinping are likely to find they have more in common than ever as they meet this week, starting today in Shanghai for a Sino-Russian summit and later in St. Petersburg for an economic forum. Both men are coming under sharp criticism from the West: Putin for his annexation of Crimea and Xi for his forays into the contested waters of the South China Sea. For all the fascinating and potentially consequential strategic conversations that may take place between these two men, the one to look out for will be whether they conclude a much-delayed energy deal to pipe huge amounts of Russian natural gas to China starting in 2018.

The most significant achievement to emerge from the 2014 Nuclear Security Summit was a pledge by 35 countries to observe the terms of a joint agreement, known as Strengthening Nuclear Security Implementation. Promoted strongly by the chairs of all three nuclear summits—the United States, South Korea, and the Netherlands— the 2014 initiative is an important step towards creating a robust global security system designed to prevent nuclear materials from falling into the hands of terrorists. Yet China, along with Russia, India, and Pakistan, did not join the pledge. Beijing has not offered any explanations. China not only can join the new initiative, it should join it—because joining is in China’s own national interest.

The big international oil companies are going through a crisis little noticed by analysts and the markets. It is a crisis of results and of vision.

Simply put, the majors — companies like Exxon Mobil, Royal Dutch Shell and BP — aren’t growing. They have discovered relatively little oil in recent years despite increasing investment. They also have lost their exclusive lock on the skills that made them indispensable to oil-producing countries.

“We are finally poised to control our own energy future,” said President Barack Obama in his State of the Union message, noting the drastic increase in American energy production from unconventional oil and gas resources.

Controlling our energy future means more than just producing a greater amount of our own energy. It also means harnessing this energy renaissance to meet our global geopolitical needs. We’ve begun to reap the many economic benefits this boom brings—such as easing the trade deficit and lowering carbon emissions. But we have only started to appreciate how this energy renaissance affects our larger strategic environment. And, not surprisingly, many readers of the tea leaves have confused reality with desire, by hoping more energy at home will mean keeping out of the volatile politics and economics of the Middle East.