From the April 24, 2006 edition

BIG DEMAND: Taxis in Beijing waited to get their gas tanks filled before a national price increase took effect last month. JASON LEE/REUTERS/FILE

Bold idea for energy woes: global cooperation

Some analysts envision an alliance of consumer countries to boost energy security and stabilize supplies.

WASHINGTON “Increasingly, world diplomacy is linked to energy."

Whether it's the proposed US nuclear agreement with India, tension over a natural-gas pipeline from Russia to Europe, or talks between President Bush and Chinese President Hu Jintao about China's growing ties to oil-rich Iran, world leaders are factoring crucial energy needs into their strategic calculations.

Global energy strains have been particularly evident over oil, which topped a record $75 a barrel last Friday.

So is it time for an OPIC - an organization of petroleum-importing countries - as a way to build up cooperation among the world's booming and increasingly competitive energy consumers?

Such an idea may sound far-fetched. Indeed, any discussion among officials about greater energy cooperation is just in the beginning stages: NATO has held a conference on energy security, and Sen. Richard Lugar (R) of Indiana has recently proposed legislation calling for enhanced international partnerships. But among analysts, consensus is growing on the need to find new ways to boost international energy security and cooperation.

"Energy considerations underlie international politics today more than any other issue and are at the root of every country's international behavior," says Gal Luft, codirector of the Institute for Analysis of Global Security in Washington. "As more countries like China and India enter the club of energy-intensive societies, we should be developing forums for steering the competitive tendencies into more cooperative channels."

China's entry into the club of major energy consumers - last year it overtook Japan as the world's second-largest consumer of petroleum after the United States - demonstrates both the challenges of growing competition and the opportunities held out by greater cooperation

SOURCE: ENERGY INFORMATION ADMINISTRATION; AP

China is engaged in a search for oil that has it setting deals with Iran, Sudan, Burma, and other energy sources the US considers unsavory - and, in some cases like Iran, as threats to international security. US officials worry that the priority of securing oil supplies from Iran is leading the Chinese to balk at US efforts to penalize Iran for moving ahead with what the US suspects is a nuclear-weapons program.

But China is also interested in building a stable and cooperative economic relationship with the US, its largest commercial partner. And it is that desire the US could tap into, some experts say, by working with China and other countries like it on enhancing energy cooperation and security.

China's interest in greater international economic cooperation and in a larger role in international economic and security frameworks was on display during Mr. Hu's visit last week, White House officials say. Perhaps the greatest long-term accomplishment of the Bush-Hu summit was the indication that Chinese leaders see their country as "a stakeholder in the international economic system," said Dennis Wilder, the National Security Council's acting senior director for East Asian affairs.

For some observers, such broad characterizations simply mean the White House was unable to extract any specific commitments from the Chinese: on accelerating appreciation of the yuan, for example, or going along with sanctions against Iran.

But other officials say the degree to which energy issues suffused the Bush-Hu discussions suggests a desire for potentially significant cooperation.

The two leaders approached energy as "a common challenge of the two countries," said Faryar Shirzad, deputy national security adviser for international economic affairs. Mr. Bush, he said, emphasized to Hu "the importance of diversifying away from oil," in particular to develop nuclear energy.

US companies are keen on entering the Chinese market to develop nuclear power plants, energy experts note.

After his US visit, Hu headed to Saudi Arabia. His itinerary also includes Nigeria and other African countries.

One hurdle in the road to developing cooperation among energy-consuming countries is the Bush administration's distaste for the kind of international bureaucracy that might be charged with overseeing such a project, some experts say. But others add that the bones of what might be a starting point already exist in the International Energy Agency (IEA), a branch of the Organization for Economic Cooperation and Development that serves developed countries.

James Bartis, an expert in energy security at the RAND Corp. in Arlington, Va., says the IEA or something like it could serve as an "umbrella of oil consumers" that could begin to address fears about stable supplies and develop joint energy-investment strategies - and therefore become a force for stability in a world of tightening energy supplies.

"Right now most energy deals are bilateral, but energy is a global issue and bilateral agreements are not the solution to global problems," says Mr. Bartis.

By becoming members of the IEA, countries agree on building strategic petroleum reserves, and commit to coming to the rescue of any fellow member country that has its energy supply cut, by natural disaster or otherwise.

The problem with the IEA as currently structured is that it serves developed countries - and thus excludes fast-growing energy consumers like China and India. "The producer countries have their OPEC," says Bartis. "If you want to enhance energy security, then creating a structure that takes in all the big consuming countries would be a natural place to start."

He notes, for example, that vast amounts of energy are thought to be locked in regions that either overlap the boundaries of consumer nations or are in disputed territory, as in parts of the South China Sea. Building a forum for discussing and addressing such issues could both enhance international stability and lead to new energy development, he says.

Others point out that the contemplation of enhanced energy-security cooperation goes beyond a few experts. James Pinkerton, a fellow with the New America Foundation in Washington, notes the legislation outlined by Senator Lugar, chairman of the Senate Foreign Relations Committee. In addition to calling for international energy partnerships, his proposed Energy Diplomacy and Security Act also calls for a hemispheric energy cooperation forum.

Still, others remain realistic about the prospects for greater cooperation in a domain that has long been more typified by aggressive competition.

"As crucial as I think [greater international cooperation on energy] is, we also have to remember that this attention comes at a time when energy markets are extremely tight," says Mr. Luft of Global Security.

China hears the US emphasizing alternative energy sources and counseling an arm's-length approach to Iran and is a little suspicious, he adds. "China looks at the US - the consumer of 25 percent of the world's energy - and says, 'You don't have a right to lecture to us, where we have one-third the use and five times the population.' "

Luft adds that if there is to be greater international energy cooperation, it will indeed require US leadership - but that will mean "leading by example," he says. "And that means curbing our consumption and taking a deep look at our policies of consumption."