Energy and Security in the Industrializing World

University of Kentucky UKnowledge Energy Policy Public Affairs and Public Administration 1990 Energy and Security in the Industrializing World Raju G. C. Thomas Marquette University Bennett Ramberg Click here to let us know how access to this document benefits ou.y Thanks to the University of Kentucky Libraries and the University Press of Kentucky, this book is freely available to current faculty, students, and staff at the University of Kentucky. Find other University of Kentucky Books at uknowledge.uky.edu/upk. For more information, please contact UKnowledge at [email protected]. Recommended Citation Thomas, Raju G. C. and Ramberg, Bennett, "Energy and Security in the Industrializing World" (1990). Energy Policy. 1. https://uknowledge.uky.edu/upk_energy_policy/1 Energy & Security in the Industrializing World This page intentionally left blank This page intentionally left blank Energy & Security in the Industrializing World Edited by RAJU G.C. THOMAS and BENNETT RAMBERG THE UNIVERSITY PRESS OF KENTUCKY Written under the auspices of the Center for International and Strategic Affairs, University of California, Los Angeles. (A list of other Center publications appears at the back of this book.) Copyright ©1990 by The University Press of Kentucky Scholarly publisher for the Commonwealth, serving Bellarmine College, Berea College, Centre College of Kentucky, Eastern Kentucky University, The Filson Club, Georgetown College, Kentucky Historical Society, Kentucky State University, Morehead State University, Murray State University, Northern Kentucky University, Transylvania University, University of Kentucky, University of Louisville, and Western Kentucky University. Editorial and Sales Offices: Lexington, Kentucky 40508-4008 Library of Congress Cataloging-in-Publication Data Energy & security in the industrializing world I edited by Raju G.C. Thomas and Bennett Ramberg. p. em. Includes bibliographical references. Includes index. ISBN 978-0-8131-5520-3 1. Energy policy-Developing countries-Case studies. 2. Energy industries-Political aspects-Developing countries-Case studies. 3. Developing countries-National security-Case studies. 4. Developing countries-Foreign relations-Case studies. 5. Nuclear weapons-Developing countries-Case studies. 6. Developing countries-Military-Case studies. I. Thomas, Raju G. C. II. Ramberg, Bennett. Ill. Title: Energy and security in the industrializing world. HD9502.D442E49 1990 333.79'091724-dc20 90-12513 This book is printed on acid-free paper meeting the requirements of the American National Standard for Permanence of Paper for Printed Library Materials. § Contents Lists of Tables and Figures vii 1 The Relationships among Energy, Security, and the Economy RAJU G.C. THOMAS 1 2 India RAJU G.C. THOMAS 13 3 South Korea ToNG WHAN PARK 35 4 Pakistan CHARLES K. EBINGER 54 5 Taiwan DENIS FRED SIMON 77 6 Argentina CYNTHIA A. WATSON 101 7 Brazil ETEL SoLINGEN 123 8 Cuba JoRGE F. PEREZ-L6PEZ 153 9 South Africa MARGARET F. CouRTRIGHT 182 10 Energy and Security in Industrializing Nations: Prospects for the Future BENNETT RAMBERG 192 Contributors 200 Index 203 This page intentionally left blank This page intentionally left blank Figures and Tables FIGURES 1.1 Energy impacts on security and the economy 6 l. 2 Basic relationships among energy, security, and the economy 8 3.1 Electric power generating capacity in South Korea, 1961-1977 38 3. 2 South Korean consumption of primary energy 39 TABLES 2.1 Growth of power generating capacity in India 29 3.1 Petroleum refining capacity in South Korea 40 3.2 South Korea's bill for crude oil imports 41 3.3 Sources of South Korea's crude oil imports 42 3.4 Long-term energy demand forecast for South Korea 43 3.5 Nuclear power plants in South Korea (February 1989) 45 5.1 Power generation and consumption in Taiwan 79 5.2 Sources of energy supply in Taiwan 81 5.3 Energy security indicators 82 5.4 Sources ofTaiwan's petroleum imports 83 5.5 Taiwan's nuclear power stations 86 6.1 Argentina's imports of petroleum and its byproducts, 1955-1982 108 6.2 Energy production in Argentina, 1977-1987 114 7.1 Energy and the economy in Brazil (1970-1982) 126 7.2 Cost of Brazil's oil imports 1971-1987 (selected years) 127 7.3 Nuclebnis and subsidiaries 141 8.1 Cuba's production of commercial energy, 1959-1987 157 8.2 Cuba's domestic energy supply, 1959-1987 160 viii 8.3 Cuban energy imports, 1959 and 1962-1986 161 8.4 Cuba's supply of oil and oil products, 1959-1986 163 8.5 Cuban energy supply, 1959-1986 164 10.1 Per capita energy consumption (Kilograms of oil equivalent) 196 10.2 Imports as a percentage of total energy utilization 197 10.3 Nuclear power plants at end of 1988 198 10.4 Energy profiles 199 1 The Relationships among Energy, Security, and the Economy RAJU G.C. THOMAS With the oversupply of oil on world markets and the fall in international oil prices from $32-41 per barrel in 1980 to mid-1989 levels of $15-20 per barrel, the international energy crisis that followed the 1973 Arab-Israeli war appears to have passed.I The world has shifted from devising strategies of crisis management to strategies-albeit rapidly fading-for avoiding similar crises in the future. Such were the lessons learned from the sustained energy crisis of the 1970s, which severely affected both the industrialized and developing countries for almost a decade. For the Western industrialized nations, economic dependency and vulnerability in the hands of a small number of developing countries, mainly in the Islamic Middle East, came as a rude shock. In the crisis, only a radical reevaluation of Western diplomatic and strategic policy in the Middle East could keep the oil flowing to the West.2 Attitudes toward the Arab-Israeli dispute, particularly the Palestinian issue, had to be adjusted in the West-especially in the United States-so as not to alienate the conservative Arab oil-producing states. Whereas few Americans had pre viously known the difference between Persians and Arabs, or between Shiite and Sunni Muslims, these distinctions were quickly learned. Mon archies such as Iran and Saudi Arabia assumed considerable importance, both as major suppliers of petroleum and as markets for massive sales of military hardware, intended to reverse the flow of petrodollars. The competition among the industrialized weapons suppliers, especial ly between Eastern and Western bloc countries, and the sudden ac cumulation of advanced weapons among oil-exporting countries of the Middle East threatened to upset the military balances that had prevailed among Israel, the conservative and radical Arab states, and Iran. At the same time, the prolonged oil crisis established the economic and strategic interdependence of the Western industrialized countries and the Islamic 2 RAJU G.C. THOMAS Middle East. It became clear that conflicts and domestic political up heavals in the Middle East could not be ignored, since every major disturbance implied the threat of a disruption in the oil flow to the West. The economic consequences for the developing countries were no less severe, although the Western nations had substantially more prosperity at stake. For example, oil demand in the United States in 1973 was 28.61 barrels of oil equivalent per capita, compared with only 1.38 barrels per capita for the Less Developed Countries.3 Nevertheless, in many indus trializing countries, such as India, Pakistan, and Brazil, economic shocks from the oil crisis led to severe foreign exchange shortages and the curtail ment of various development programs. Unlike wealthy countries, low and middle-income states were unable or unwilling at the time to trade arms for oil to correct their trade imbalances. (The notable exception is Brazil, which more recently has managed to step up its overseas sales of small arms and ammunition.) Instead, some of these states resorted to other economic tactics. For example, by encouraging unskilled and semi skilled labor to work in the Middle East oil-producing countries, India, Pakistan, South Korea, and Taiwan were partly able to offset the high cost of oil imports through petrodollar remittances from their "export" labor forces. Despite the economic near-catastrophes suffered as a result of the much higher oil prices demanded by the oil-exporting countries of the Middle East, the diplomatic strategy of the developing countries took on an unexpectedly supportive role for the Organization of Petroleum Export ing Countries (OPEC), in the hope of obtaining special economic con cessions and trade and investment benefits. An offshoot of the 1970s energy crisis was the belief by some of the developing countries that a long-term solution could be found by embark ing on or accelerating nuclear energy programs. The dramatic drop in oil prices that began in the mid-1980s has not necessarily reversed the com mitment to nuclear energy development in many industrializing states. The choice of this energy alternative, especially by countries with prevail ing or perennial security fears-among them India, Pakistan, South Af rica, South Korea, and Taiwan-has renewed the concern that resources and capabilities acquired in the nuclear energy sector could make more difficult the control of nuclear weapons proliferation. While the world in 1989 is no longer in the midst of an energy crisis, it should be clear that there are underlying relationships among (a) a nation's energy needs and external dependency; (b) its economic and political stability; and (c) its broader security concerns. The intensity of these relationships will, of course, vary from country to country in the developed and developing worlds, and within each country over time. Perhaps in the current framework of an international oil oversupply and low prices, the Energy, Security, and the Economy 3 basic relationships may appear obscure, and "crisis prevention" inap propriate. Much of the new mood of optimism arises from oil discoveries, increases in energy efficiency, especially through advances in com puterized automation, and the prospect of tapping alternative energy sources.

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