EXCLUSIVE: INDONESIA: RUSSIA OPENS THE PACIFIC FRONT
Author: David J. Jonsson
Family Security Matters, NJ
September 19, 2007
Military Alliances
Military cooperation is an instrument for containing the U.S. hegemony
in the region.
Russia This year, Russian President Vladimir Putin signed a $200
billion, seven-year rearmament plan for Russia’s military. The package
includes money for the Pacific Fleet, a major Pacific submarine base,
and new land- and sea-based intercontinental missiles. Last month,
Russia resumed global patrols by its long-range strategic bombers,
sending two of them far across Pacific Ocean waters to the vicinity
of Guam Island, site of a major U.S. base.
These actions are consistent with Russian strategy for opening the
Pacific Front and military alliance with Indonesia. It should be
noted that this also places Russia and China into potential conflict
in the Pacific Basin.
On September 6, 2007, Britain and Norway scrambled jets to trail
Russian bombers conducting the new patrols. The Russian Defense
Ministry described the flights by eight strategic bombers as a "routine
exercise" and said that although the aircraft had encountered planes
from NATO countries, there were "no incidents."
Last month, Russia conducted a joint military exercise with China,
one of its major arms customers. And it has made, or is negotiating,
other arms deals across Asia, including with India, Malaysia, Burma
and Vietnam.
Collective Security Treaty of Organization (CSTO) and Shanghai
Cooperation Organization (SCO) Some observers remain skeptical that
Russia will become a major competitor of the United States and,
increasingly, China for influence in the region.
Far from being an isolated phenomenon of bilateral cooperation,
the Moscow-Teheran axis in the defense sector results as being part
of a wider Euro-Asiatic security network that aims to involve other
minor regional states such as Kazakhstan, Kyrgyzstan, Tajikistan,
Azerbaijan, Uzbekistan, Armenia, and Byelorussia. These states are
united in the Collective Security Treaty of Organization (CSTO),
ratified in 1992, and in the Shanghai Cooperation Organization (SCO),
composed of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Russia
and China. Iran is not a member of the CSTO but participates as an
observer. Relations between Teheran and the CSTO are, however, helped
by Beijing’s mediation, former member of the SCO and strategic partners
of the CSTO. As can be seen from the complex structure of alliances,
Moscow aims to build a security and defense network in the Asian region
involving Iran as potential "containing" factor against U.S. influence.
CSTO is a military-political alliance and the SCO is
economy-powered. Together, the CSTO and the SCO account for about
half the global population and are increasingly keeping up with the
U.S. and NATO in terms of leverage in the U.N. and elsewhere, to
the shock and ire of many politicians there. Signatories to the CSTO
wouldn’t be able to join other military alliances or other groups of
states, while an aggression against one signatory would be perceived
as an aggression against all.
If on the one hand the Islamic Republic represents a means for the
Asiatic states to exert pressure over the Western ones, on the other
hand the intense military cooperation is a sign that an eventual
attack against the Islamic Republic could easily bring about a wider
military conflict.
Venezuela One of the most eye-popping elements of "Chavismo" is
Venezuela’s arms purchases. Flush with oil profits, Chavez, a former
army lieutenant colonel, has been buying as much shiny military
hardware as possible.
Since 2005, he’s spent more than $4 billion on foreign weapons, making
tiny Venezuela one of the world’s most aggressive arms purchasers. In
2006 alone, arms spending was up 13%, according to some estimates.
Some analysts project that if oil prices remain high, say, at more
than $50 a barrel, Venezuela could spend as much as $30 billion on
arms by 2012, the end of Chavez’s third term in office. Caracas is
already the largest arms buyer in the region – and is expected to be
so for the foreseeable future.
Russia is Chavez’s favorite arms outlet. Having spent more than $3
billion, Caracas is already under contract to buy 24 Su-30 fighters,
50 helicopters/gunships and 100,000 AK103 (AK47 follow-on) assault
rifles from Moscow. It has also inked a deal to build the Kalashnikov
rifle under Russian license in Venezuela.
Caracas is also interested in Russian air defense systems and diesel
submarines, which Moscow would likely be more than happy to provide. In
addition to Russia, Venezuela has had preliminary discussions with
Belarus and Iran about surface-to-air missile systems.
As few as nine diesel submarines, which could also be provided
by Germany or France, would make Venezuela the proud owner of
the region’s largest submarine fleet, withstanding the U.S., of
course. Venezuela has also sought arms from Spain, Sweden and Brazil,
which have declined for the moment as a result of U.S. pressure over
tech transfer issues. As China develops its advanced weapons industry,
it will likely become a source for Venezuela’s military.
Energy: the Oil Weapon Indonesia A series of contractual
production-sharing and long-term-supply spats pitting the Indonesian
government against multinational energy companies and big natural-gas
importers in Japan has recently tarnished Indonesia’s reputation as
a reliable business partner. It has also undermined the gas sector’s
overall earning potential – crucially at a time when global prices
have surged to near-record highs.
Indonesia has some of the largest known pools of natural gas in the
world, with total estimated reserves of 187 trillion standard cubic
feet (scf), according to the Energy Ministry. Local gas production in
2006 amounted to 8.1 billion scf per day, of which 46% was dedicated
to domestic demand for power generation, fertilizer production and
other industries, while the rest was exported mainly as liquefied
natural gas (LNG).
Significantly, Indonesia’s deep pools remain largely unexploited
and rising global energy prices have substantially upped the market
incentive to drop new wells. That’s apparently what French oil giant
Total SA, currently one of Indonesia’s largest gas exporters, assumed
when it announced last week plans to invest US$6 billion over the next
five years in its existing operations at the Mahakam Delta oil-and-gas
block in remote East Kalimantan province.
Yet no sooner had Total announced its investment plans when Mines and
Energy Minister Purnomo Yusgiantoro said the government would likely
seek to amend the company’s existing production-sharing contract,
including the agreed 70%-30% government-contractor split over revenues,
which is to expire in 2017. The minister said the amendments to the
contract would seek "what’s best for Indonesia".
For more than 25 years Indonesia, through Pertamina, dominated
the region and led the global LNG market as the world’s largest
exporter. But a number of nationalistic policy signals have recently
alienated new foreign investors and inhibited the country’s ability
to tap new supplies efficiently. Last year, Qatar bypassed Indonesia
as the world’s largest LNG exporter.
This year the government has said it will slash LNG exports to
traditional major buyers in Japan and South Korea (currently the
world’s two largest LNG importers) and also to Taiwan from the
contracted 26.4 million tons down to 21.4 million tons. Jakarta has
also said it cannot guarantee a contractual extension to supply 12
million tons annually to Japan’s Kansai Electric Power, Chubu Electric,
Kyushu Electric, Osaka Gas, Toho Gas and Nippon Steel Corp when
the deal runs out in 2011. Tokyo Electric Power Co, Japan’s biggest
electric utility, has recently said it will not renew its long-term
agreement to purchase LNG from Indonesia when it expires in 2009.
With Indonesia slashing exports to Japan, South Korea and Taiwan
according to this article….South Korea is one of the biggest
importer of Natural Gas in the world, they have serious implication
if the LNG supply is disrupted in any way.
Japan LNG Supply
LUKoil and the Indonesian state-owned oil company PERTAMINA have
signed an agreement to explore some potential fields on the republic’s
territory, the Russian oil giant’s press office reported. The document
was signed in Jakarta during Russian President Vladimir Putin’s visit
to the Republic of Indonesia.
The agreement specifies the companies’ joint operations for the next
two years and involves formation of a steering committee and a joint
technical group. The document promotes collaboration between LUKoil
and PERTAMINA, which shows great promise and paves the way for a
strategic alliance for developing joint projects in oil and gas
exploration and production, LUKoil President Vagit Alekperov said.
Be prepared. With the LNG supply for Japan mostly from Islamic
countries, including Indonesia, Japan needs to be concerned about
its energy security. China and South Korea also face similar security
issues.
Venezuela Venezuela is the world’s eighth-largest oil exporter.
In addition, it may have the world’s fifth-largest known oil reserves,
meaning it has more petroleum potential than any country in the
Western Hemisphere.
Not a dubious honor, by any means, these days.
Some experts believe the Orinoco Belt, an energy-rich region southeast
of Caracas, has as much – or more – energy potential than Saudi Arabia,
a country known to possess 25% of the world’s known oil reserves.
Unfortunately, the U.S. likes its Venezuelan heavy crude oil. Venezuela
is the United States’ fifth-largest foreign oil supplier, providing
10-15% of our oil imports at roughly 1.5 million barrels a day.
The U.S. imports more than 60% of its oil, making our economy
vulnerable to shocks in the international energy market. Chavez knows
this. He once said: "We have invaded the United States, but it’s with
our oil."
Chavez has vowed to use oil as a weapon, promising to play his
"strong oil card" to "finish off the U.S. Empire." On May 1st, he
got started on his plan by announcing his intention to nationalize
Venezuela’s oil industry.
Venezuela is now in the process of transitioning from dependence
on the long-dominant Western energy firms, including some American,
to ownership by the state-owned oil company, Petroleos de Venezuela
(PDVSA).
Although this move is not promising for American energy security, it
is fortunate that Venezuelan oil is of the heavy crude variety. It’s
highly acidic and difficult to refine. That’s good news for the U.S.
Why? At the moment, most of the oil refineries capable of processing
Venezuelan heavy crude oil happen to be in the U.S., because Caracas
has failed to invest sufficiently in petroleum processing capabilities.
This may change with China’s commitment to invest in the refinery
sector.
Venezuela sends the majority of its petroleum exports, about 60%, to
the U.S. So, in the short-term, cutting off oil shipments to America
would be, at best, a pyrrhic victory for Chavez because he needs
access to American refineries – and so does his Bolivarian revolution.
In the longer term, that situation may change drastically. Caracas may,
over time, develop domestic refining capability for its heavy crude
oil – and look elsewhere for eager buyers of its thick, black gold.
Indeed, it already is.
Enter China, another of Venezuela’s new extra-hemispheric
friends. China is now the world’s second-largest consumer of energy –
and imported oil, too. And Beijing is eager to find new energy sources.
With no Pacific seaports to transport oil from, it costs about $15
more per barrel to transport oil to China from Venezuela. Despite
this, China is now the fastest-growing destination for Venezuelan
oil. Eager to buy oil that might otherwise be bound for the U.S.,
China is working on significant investments in the Venezuelan energy
sector, including developing heavy crude refineries there.
Chavez doesn’t just use oil as a foil against enemies like the U.S. He
also uses the windfall profits to help friends, including other
regional leftist politicians running for election, especially high
office. For example, he unabashedly bankrolled successful presidential
candidates in Bolivia (Evo Morales), Nicaragua (Daniel Ortega) and
Ecuador (Rafael Correa). To Chavez’s disappointment, his candidates
fell short in Peru and Mexico.
Chavez is using the expropriation of Venezuelan energy assets as
a means of consolidating not only his political power at home, but
projecting power abroad as well through arms purchases, political
campaigns and manipulating oil markets.
But the real question is whether PDVSA, an increasing source
of Chavez’s revenue – and thereby his influence – can actually
handle the departure of Western oil firms and their highly skilled
technocrats. Early indicators aren’t good. It’s risky. At the moment,
oil typically generates 80% of the country’s export income, provides
more than half of the central government’s revenue, and is responsible
for about one-third of the country’s gross domestic product.
In the end, Hugo Chavez defines himself in opposition to the U.S. His
agenda – a troubling military buildup, connections with countries of
concern, political meddling abroad and oil machinations – is bad news
for everybody.
The director of national intelligence testified to Congress in
February: "Chavez is among the most stridently anti-American leaders
anywhere in the world, and will continue to try to undercut U.S.
influence in Venezuela, in the rest of Latin America and elsewhere
internationally."
Chavez clearly plans to challenge the status quo, wielding a
multifaceted, asymmetric campaign akin to a political, economic,
security and social insurgency in Latin America and the Caribbean at
the expense of the United States’ influence and interests.
It’s tempting to write off Chavez simply as Latin America’s latest
tin-pot strongman, but he shouldn’t be taken lightly. Venezuela’s
"Chavismo" has the potential to cause real trouble for the U.S. and
Latin American democracies.
# #
FamilySecurityMatters.org Contributing Editor David J. Jonsson is
the author of Clash of Ideologies -The Making of the Christian and
Islamic Worlds, Xulon Press 2005. His new book: Islamic Economics
and the Final Jihad: The Muslim Brotherhood to the Leftist/Marxist
– Islamist Alliance (Salem Communications (May 30, 2006 and can be
reached at: djonsson2000@yahoo.co.uk read full author bio here
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Note — The opinions expressed in this column are those of the author
and do not necessarily reflect the opinions, views, and/or philosophy
of The Family Security Foundation, Inc.
From: Emil Lazarian | Ararat NewsPress