Shale Gas Race: Political Risk in China, Argentina and Mexico

Posted on January 19, 2014 by admin

Journal of Political Risk, Vol. 2, No. 1, January 2014.

A global map showing shale gas basins, top reserve holders.

Global shale gas basins, top reserve holders. Source: Reuters, Catherine Trevethan.

Igor Faynzilbert, CFA
Financial Analyst

As the world continues to embrace cleaner and more efficient sources of energy over the next 25 years, natural gas stands to gain a large market share at the expense of less efficient and more pollutant coal and wood. The United States is currently the biggest winner from hydraulic fracturing and horizontal drilling that allow significantly increased production of shale gas. However, China, Argentina and Mexico are also potential gainers from these new technologies if they manage to overcome political and infrastructure challenges that have considerably slowed development of new gas fields. Continue reading →

South Korean public opinion shifts towards independent nuclear capability

Posted on March 12, 2013 by admin

Gallup opinion polls conducted following North Korea’s third nuclear weapons test found that approximately 64% to 66.5% of South Koreans believe South Korea should develop an independent nuclear weapons capability. They want the capability to defend against North Korea if the United States unexpectedly withdraws its security commitment to South Korea (New York Times).

The United States is fully committed to the defense of South Korea, and North Korea is well aware of this fact. For this reason, South Koreans should not be overly concerned with the latest North Korean antics. The United States stands firmly with its ally South Korea.

Nevertheless, South Koreans are understandably uncomfortable having an unpredictable and highly belligerent nuclear-armed neighbor to the North. South Korean nuclearization would be a major blow to nonproliferation of weapons of mass destruction (WMD). The nonproliferation regime works because member countries show self-restraint by not developing independent nuclear weapons. Rather, they entrust their defense to a close security partnership with the United States, NATO, and other friendly alliances.

If the strength of the alliance is not apparent to the voting population of a non-nuclear country — in this case South Korea — then it is incumbent upon the stronger member of the alliance to take greater measures to display that commitment. These measures should include improved specification of treaty obligations, greater numbers and quality of forces deployed to South Korea, higher levels of South Korean inclusion and diplomatic collaboration in U.S. foreign policy decision-making, and improved diplomatic relations overall through improved trade relations. Deepening all facets of the relationship between South Korea and the United States will enhance the trust required for South Koreans to place the security of their nation in the hands of the United States.

Not taking proactive measures to improve the trust of South Koreans in the United States risks nuclearization of South Korea, which by example, will exponentially increase the risk of further global WMD proliferation. South Korea is a highly respected member of the international community. South Korean nuclearization will erode the taboo against proliferation, making it seem a respectable option for many small and medium-sized nations. We cannot afford the increased risk of nuclear war that this entails.

Unfounded Worries of a Sino-Japanese War

Posted on March 8, 2013 by admin

Saber-rattling by China over the Senkaku Islands, most recently in the form of locking weapons on a Japanese ship and helicopter, have led some analysts to warn of war between the two East Asian countries. These analysts go further to question whether the US treaty commitment to Japan’s territorial integrity would hold in this case (Wall Street Journal).

Such warnings are overblown. Militarized jostling of this sort is normal for low-intensity territorial disputes. All parties — including China — recognize that war would be counterproductive. China regularly activates media coverage with its mildly belligerent actions in order to bolster and maintain its long-term claim to the islands should the case go to an international court in future. Japan is a key US ally and trading partner. There is no question that were war to occur between China and Japan, the United States would defend its ally.

Effects of terrorist veterans returning to the West from foreign wars

Posted on February 28, 2013 by admin

Thomas Hegghammer of the Norwegian Defence Research Establishment recently found that most terrorists originating in the West (Europe, Australia, or the US) conduct their terrorism in conflict zones such as Iraq or Afghanistan. These terrorists are defined as “foreign fighters”. When these foreign fighter veterans return to the West, they are more likely to complete attacks, which are more likely to be lethal (American Political Science Review, volume 107, no. 1, Feb 2013, “Should I stay or should I go? Explaining variation in Western Jihadists’ choice between domestic and foreign fighting.”)

As the wars in Iraq and Afghanistan wind down, we can expect countervailing effects on terrorism in the West. On the one hand, there presumably will be less reason to conduct terrorism, as terrorists use these wars as justification for their actions. On the other hand, foreign fighter veterans will be returning to the West, increasing the quantity, militancy, and experience of the pool of potential domestic terrorists. New justifications for terrorism — for example Western intervention in Mali and Syria — can always be found by those so inclined.