Oil Shocks DA
1NC Shell
1NC – DA
Oil prices are steady now at $73/barrel BUT new uncertainties will be magnified via OPEC.
Lawler 6/13 Lawler, Alex. Reporter @ Reuters. (2023, June 13). “OPEC holds oil demand view
steady despite economic growth warning”. Reuters.
https://www.reuters.com/business/energy/opec-holds-2023-oil-demand-view-steady-warnseconomic-outlook-2023-06-13/. ut-ac
LONDON, June 13 (Reuters) - OPEC
left its forecast for 2023 global oil demand growth steady for a
fourth month on Tuesday, though the producer group warned that the world economy faced rising uncertainty and slower growth
in the second half of the year. Global oil demand this year will rise by 2.35 million barrels per day (bpd),
or 2.4%, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report.
This was virtually unchanged
from the 2.33 million bpd forecast last month . "There are rising uncertainties regarding
economic growth in the second half of 2023 amid ongoing high inflation , already elevated
key interest rates and tight labour markets ," OPEC said in its report. "Moreover, it is still unclear as to how
and when the geopolitical conflict in Eastern Europe might be resolved ," it added, referring to Ukraine.
OPEC+, which comprises OPEC, Russia and other allies, has been taking more steps to support the oil market in 2023. On June 4 the group
announced its second package of output cuts since April and Saudi Arabia pledged a
voluntary cut for July. Crude prices, however, have remained under pressure from concern
over slowing economic growth and demand . The Brent crude benchmark added to an earlier gain after the report was
released, rising 2.5% gain to trade above $73 a barrel. Chinese oil demand is now expected to rise by 840,000 bpd, OPEC said, up from the
800,000 bpd forecast last month, adding to a recovery after strict COVID-19 containment measures were scrapped.
OPEC left its 2023
global economic growth forecast at 2.6% and said momentum was slowing . A graphic in the report
showed that growth could slow to 0.1% quarter on quarter in the final three months of the year. Potential upside factors, other
than a drop in inflation, include an even stronger than previously expected economic
rebound in China and the United States being able to maintain its first-half momentum, OPEC said.
Military cooperation has been crucial to guaranteeing smooth oil flows to the US for 70 years –
disruption in the relationship causes price shocks.
Marlow, 23
[Iain, Diplomatic Correspondent @ Bloomberg Business: “How US-Saudi Relations Are Strained
by Oil and Distrust,” published by Washington Post on 4-3-2023.
https://www.washingtonpost.com/business/energy/2023/04/03/what-opec-oil-cuts-mean-forus-saudi-arabia-relations/b8095820-d24f-11ed-ac8b-cd7da05168e9_story.html]//AD
More than seven decades ago , the US and Saudi Arabia, despite differences on human rights and the Arab-Israeli
conflict, established
a close alliance . It was based on an exchange: The US gave security
guarantees to Saudi rulers, and they promised access to the kingdom’s vast oil
reserves. The arrangement has withstood periodic conflicts over the years. Of late ,
however, the relationship’s moorings have weakened , with the US no longer as dependent on Saudi oil and the
Saudis less trusting of US protection. As
a result, disputes that once might have been papered
over can now seem like potential ruptures .
1. Where does the
It
relationship stand?
is strained , most recently over the price of oil. By constraining production, Saudi Arabia, the world’s
biggest exporter of crude oil, has kept prices high , contributing to inflation around the
world . At the start of April, the Saudi-led Organization of Petroleum Exporting Countries announced a surprise production cut of more than
1 million barrels a day. When OPEC in October announced the biggest cutback in output since 2020, US President Joe Biden treated the move as
a betrayal by the Saudis and threatened unspecified consequences.
2. Why a betrayal?
Hoping, in part, to secure an easing of oil prices, Biden had reversed his policy of shunning the kingdom’s de facto leader, Crown Prince
Mohammed bin Salman, over the 2018 murder by Saudi agents of Washington Post columnist Jamal Khashoggi. US intelligence agencies
concluded that the prince approved the operation to kill Khashoggi, a critic of the kingdom’s government, in Istanbul. (The crown prince denied
any involvement while accepting symbolic responsibility as the country’s unofficial ruler.) While a candidate for the presidency in 2019, Biden
had pledged to treat Saudi Arabia as a “pariah” for the murder, and while he didn’t go that far once in office, initially he did refuse all contact
with Prince Mohammed. But with oil prices spiking as a result of Russia’s war in Ukraine, in July 2022 Biden swallowed his pride, flew to Saudi
Arabia and publicly bumped fists with the prince.
3. How dependent is the US on Saudi oil?
The shale boom has made the US the world’s largest producer of oil and thus less reliant on foreign supplies. For the crude it does import,
Canada rather than the Middle East is now the primary source. But as
Biden’s hat-in-hand trip showed, Saudi Arabia
has considerable influence over the price of oil as the biggest producer within OPEC , which
pumps about 60% of internationally traded crude .
4. Why
has Saudi faith in the US eroded?
Saudi officials complain that the US has become an unreliable protector. They cite the US exit from
Afghanistan in 2021 that precipitated its government’s fall and, a decade earlier, the withdrawal of support from US ally Hosni Mubarak during
widespread protests that led to the Egyptian president’s downfall. They
lament what they call US “disengagement”
from the Middle East , arguing that Washington has done too little to contain the expanding
influence of Iran, Saudi Arabia’s rival for regional dominance. In March, the Saudis and Iranians agreed to restore diplomatic relations,
which were severed in 2016, in a deal brokered by China, to which the kingdom has grown closer.
Unpredictable oil prices triggers multiple existential risks.
Song et al 22 Song, Y., Chen, B., Wang, X. Y., & Wang, P. P. (2022). Defending global oil price
security: Based on the perspective of uncertainty risk. Energy Strategy Reviews, 41, 100858. utac
7. Conclusion and policy implications This study examined the impact of uncertainty risk on oil prices from January 1997 to February 2021. We
sought to reveal time-varying attributes at different horizons and time points by applying the TVP-SVVAR model. This study draws the following
First, the increase of economic policy uncertainty leads to higher oil prices , mainly
because economic policy uncertainty is a major systemic risk factor. It also increases the
demand for hedging and spawns a large number of speculators, increasing the demand for oil
futures, which drives up oil prices. Second, geopolitical risks also have a positive impact on oil
conclusions.
prices . The geopolitical risks of oil-producing and oil-consuming countries reduce oil supply and
increase oil demand (including normal and preventive oil demand), respectively, resulting in the rise of oil prices.
Third, the impact intensity of economic policy uncertainty on the oil market is significantly
greater than that of geopolitical risks. This is largely because the motivation of superpowers to intervene in geopolitical tensions to
maintain oil price stability may weaken the link between geopolitical risks and oil prices. Thus, economic policy uncertainty is
extremely important in the international oil market. Finally, through oil futures hedging tools and
the improvement of the oil market mechanism, the relationship between oil supply and
demand is relatively stable and the impact of supply and demand factors on oil prices is
gradually weakening. We also investigated the influence of severe political (9/11 terrorist
attacks and the Iraqi and Libyan wars) and economic (European debt crisis, global financial
crisis, and Sino-U.S. trade war) uncertainty event shocks on oil prices. We drew the following
conclusions. First, the differences in oil prices under different economic or political events are
mainly reflected through oil demand channels. Among them, the destructive impact of the global
financial crisis and the 9/11 terrorist attacks on oil demand and prices is higher than that of
the other events . Second, during political events, the influence of various factors on oil prices is stronger than that for economic
events. Therefore,
we should pay more attention to the impact of uncertainty risk and the changes
in oil demand caused by political events on oil price fluctuations . Our research also has some limitations. For
example, the
uncertainty risk in the oil market consists not only of geopolitical risk and economic
policy uncertainty but also includes trade policy uncertainty , natural disaster risk, infectious
disease risk, etc. Future research should consider more risk sources and study the impact of uncertainty risk on different types of
assets or asset portfolios. At the same time, it would be valuable to use higher frequency data.
Econ decline cascades through interlinked networks – extinction.
Maavak 21 (Matthew, PhD in Risk Foresight from the Universiti Teknologi Malaysia, External
Researcher at the Kazimieras Simonavicius University, Expert and Regular Commentator on
Risk-Related Geostrategic Issues at the Russian International Affairs Council, “Horizon 2030:
Will Emerging Risks Unravel Our Global Systems?” Salus Journal, 2021, vol. 9)
Various scholars and institutions regard global social instability as the greatest threat facing this
decade. The catalyst has been postulated to be a Second Great Depression which, in turn, will have
profound implications for global security and national integrity. This paper, written from a broad systems
perspective, illustrates how emerging risks are getting more complex and intertwined; blurring boundaries
between the economic, environmental, geopolitical, societal and technological taxonomy used by the World Economic Forum for its annual
global risk forecasts. Tight
couplings in our global systems have also enabled risks accrued in one area to
snowball into a full-blown crisis elsewhere. The COVID-19 pandemic and its socioeconomic fallouts exemplify this
systemic chain-reaction. Onceinexorable forces of globalization are rupturing as the current global system can no longer be sustained due to
poor governance and runaway wealth fractionation. The coronavirus pandemic is also enabling Big Tech to expropriate the levers of
governments and mass communications worldwide. This paper concludes by highlighting how this development poses a dilemma for security
professionals. Key Words: Global Systems, Emergence, VUCA, COVID-9, Social Instability, Big Tech, Great Reset Introduction The new decade is
witnessing rising volatility across global systems. Pick any random “system” today and chart out its trajectory: Are our education systems
becoming more robust and affordable? What about food security? Are our healthcare systems improving? Are our pension systems sound?
Wherever one looks, there are dark clouds gathering on a global horizon marked by volatility, uncertainty, complexity and ambiguity (VUCA).
But what exactly is a global system? Our planet itself is an autonomous and selfsustaining mega-system, marked by periodic cycles and
elemental vagaries. Human activities within however are not system isolates as our banking,
utility, farming, healthcare and
retail sectors etc. are increasingly entwined. Risks accrued in one system may cascade into an
unforeseen crisis within and/or without (Choo, Smith & McCusker, 2007). Scholars call this phenomenon “emergence”; one where
the behaviour of intersecting systems is determined by complex and largely invisible
interactions at the substratum (Goldstein, 1999; Holland, 1998). The ongoing COVID-19 pandemic is a case in point. While experts remain divided
over the source and morphology of the virus, the contagion has ramified into a global health crisis and supply chain nightmare. It is also tilting the geopolitical balance. China is the largest
exporter of intermediate products, and had generated nearly 20% of global imports in 2015 alone (Cousin, 2020). The pharmaceutical sector is particularly vulnerable. Nearly “85% of
medicines in the U.S. strategic national stockpile” sources components from China (Owens, 2020). An initial run on respiratory masks has now been eclipsed by rowdy queues at supermarkets
and the bankruptcy of small businesses. The entire global population – save for major pockets such as Sweden, Belarus, Taiwan and Japan – have been subjected to cyclical lockdowns and
quarantines. Never before in history have humans faced such a systemic, borderless calamity. COVID-19 represents a classic emergent crisis that necessitates real-time response and adaptivity
in a real-time world, particularly since the global Just-in-Time (JIT) production and delivery system serves as both an enabler and vector for transboundary risks. From a systems thinking
perspective, emerging risk management should therefore address a whole spectrum of activity across the economic, environmental, geopolitical, societal and technological (EEGST) taxonomy.
Every emerging threat can be slotted into this taxonomy – a reason why it is used by the World Economic Forum (WEF) for its annual global risk exercises (Maavak, 2019a). As traditional forces
of globalization unravel, security professionals should take cognizance of emerging threats through a systems thinking approach. Methodology An EEGST sectional breakdown was adopted to
illustrate a sampling of extreme risks facing the world for the 2020-2030 decade. The transcendental quality of emerging risks, as outlined on Figure 1, below, was primarily informed by the
following pillars of systems thinking (Rickards, 2020): Diminishing diversity (or increasing homogeneity) of actors in the global system (Boli & Thomas, 1997; Meyer, 2000; Young et al, 2006);
Interconnections in the global system (Homer-Dixon et al, 2015; Lee & Preston, 2012); Interactions of actors, events and components in the global system (Buldyrev et al, 2010; Bashan et al,
2013; Homer-Dixon et al, 2015); and Adaptive qualities in particular systems (Bodin & Norberg, 2005; Scheffer et al, 2012) Since scholastic material on this topic remains somewhat inchoate,
this paper buttresses many of its contentions through secondary (i.e. news/institutional) sources. Economy According
to Professor Stanislaw Drozdz (2018) of the Polish
Academy of Sciences, “a
global financial crash of a previously unprecedented scale is highly probable” by the mid- 2020s. This will
lead to a trickle-down meltdown, impacting all areas of human activity. The economist John Mauldin
(2018) similarly warns that the “2020s might be the worst decade in US history” and may lead to a Second Great
Depression. Other forecasts are equally alarming. According to the International Institute of Finance, global debt may have surpassed
$255 trillion by 2020 (IIF, 2019). Yet another study revealed that global debts and liabilities amounted to a staggering $2.5 quadrillion (Ausman,
2018). The reader should note that these figures were tabulated before the COVID-19 outbreak. The IMF singles out widening income
inequality as the trigger for the next Great Depression (Georgieva, 2020). The wealthiest 1% now own more than twice as much wealth as 6.9
billion people (Coffey et al, 2020) and this chasm is widening with each passing month. COVID-19 had, in fact, boosted global billionaire wealth
to an unprecedented $10.2 trillion by July 2020 (UBS-PWC, 2020). Global GDP, worth $88 trillion in 2019, may have contracted by 5.2% in 2020
(World Bank, 2020). As the Greek historian Plutarch warned in the 1st century AD: “An imbalance between rich and poor is the oldest and most
fatal ailment of all republics” (Mauldin, 2014). The stability of a society, as Aristotle argued even earlier, depends on a robust middle element or
middle class. At the rate the global middle class is facing catastrophic debt and unemployment levels, widespread social disaffection may morph
into outright anarchy (Maavak, 2012; DCDC, 2007). Economic
stressors, in transcendent VUCA fashion, may also induce radical
geopolitical realignments. Bullions now carry more weight than NATO’s security guarantees in
Eastern Europe. After Poland repatriated 100 tons of gold from the Bank of England in 2019, Slovakia, Serbia and Hungary quickly
followed suit. According to former Slovak Premier Robert Fico, this erosion in regional trust was based on historical
precedents – in particular the 1938 Munich Agreement which ceded Czechoslovakia’s Sudetenland to Nazi Germany. As Fico reiterated
(Dudik & Tomek, 2019): “You can hardly trust even the closest allies after the Munich Agreement… I guarantee that if something happens, we
won’t see a single gram of this (offshore-held) gold. Let’s do it (repatriation) as quickly as possible.” (Parenthesis added by author). President
Aleksandar Vucic of Serbia (a non-NATO nation) justified his central bank’s gold-repatriation program by hinting at economic headwinds ahead:
“We see in which direction the crisis in the world is moving” (Dudik & Tomek, 2019). Indeed, with
two global Titanics – the
United States and China – set on a collision course with a quadrillions-denominated iceberg in the middle, and a viral outbreak
on its tip, the seismic ripples will be felt far, wide and for a considerable period. A reality check is
nonetheless needed here: Can additional bullions realistically circumvallate the economies of 80 million plus peoples in these Eastern European
nations, worth a collective $1.8 trillion by purchasing power parity? Gold however is a potent psychological symbol as it represents national
sovereignty and economic reassurance in a potentially hyperinflationary world. The portents are clear: The current global economic system will
be weakened by rising nationalism and autarkic demands. Much uncertainty remains ahead. Mauldin (2018) proposes the introduction of Old
Testament-style debt jubilees to facilitate gradual national recoveries. The World Economic Forum, on the other hand, has long proposed a
“Great Reset” by 2030; a socialist utopia where “you’ll own nothing and you’ll be happy” (WEF, 2016). In the final analysis, COVID-19 is not the
root cause of the current global economic turmoil; it is merely an accelerant to a burning house of cards that was left smouldering since the
2008 Great Recession (Maavak, 2020a). We also see how the four main pillars of systems thinking (diversity, interconnectivity, interactivity and
“adaptivity”) form the mise en scene in a VUCA decade. Environmental What
happens to the environment when our
economies implode? Think of a debt-laden workforce at sensitive nuclear and chemical plants,
along with a concomitant surge in industrial accidents? Economic stressors, workforce demoralization
and rampant profiteering – rather than manmade climate change – arguably pose the biggest threats to the
environment. In a WEF report, Buehler et al (2017) made the following pre-COVID-19 observation: The ILO estimates that the annual cost
to the global economy from accidents and work-related diseases alone is a staggering $3 trillion. Moreover, a recent report suggests the world’s
3.2 billion workers are increasingly unwell, with the vast majority facing significant economic insecurity: 77% work in part-time, temporary,
“vulnerable” or unpaid jobs. Shouldn’t this phenomenon be better categorized as a societal or economic risk rather than an environmental
one? In line with the systems thinking approach, however, global
risks can no longer be boxed into a taxonomical
silo. Frazzled workforces may precipitate another Bhopal (1984), Chernobyl (1986), Deepwater Horizon (2010) or Flint water crisis (2014).
These disasters were notably not the result of manmade climate change. Neither was the Fukushima nuclear disaster (2011) nor the Indian
Ocean tsunami (2004). Indeed, the combustion of a long-overlooked cargo of 2,750 tonnes of ammonium nitrate had nearly levelled the city of
Beirut, Lebanon, on Aug 4 2020. The explosion left 204 dead; 7,500 injured; US$15 billion in property damages; and an estimated 300,000
people homeless (Urbina, 2020). The environmental costs have yet to be adequately tabulated. Environmental disasters are more attributable
to Black Swan events, systems breakdowns and corporate greed rather than to mundane human activity. Our
JIT world aggravates
the cascading potential of risks (Korowicz, 2012). Production and delivery delays, caused by the COVID-19
outbreak, will eventually require industrial overcompensation. This will further stress senior executives, workers,
machines and a variety of computerized systems. The trickle-down effects will likely include substandard products, contaminated food and a
general lowering in health and safety standards (Maavak, 2019a). Unpaid or demoralized sanitation workers may also resort to indiscriminate
waste dumping. Many cities across the United States (and elsewhere in the world) are no longer recycling wastes due to prohibitive costs in the
global corona-economy (Liacko, 2021). Even in good times, strict protocols on waste disposals were routinely ignored. While Sweden championed the global climate change
narrative, its clothing flagship H&M was busy covering up toxic effluences disgorged by vendors along the Citarum River in Java, Indonesia. As a result, countless children among 14 million
Indonesians straddling the “world’s most polluted river” began to suffer from dermatitis, intestinal problems, developmental disorders, renal failure, chronic bronchitis and cancer (DW, 2020).
It is also in cauldrons like the Citarum River where pathogens may mutate with emergent ramifications. On an equally alarming note, depressed economic conditions have traditionally
provided a waste disposal boon for organized crime elements. Throughout 1980s, the Calabriabased ‘Ndrangheta mafia – in collusion with governments in Europe and North America – began
to dump radioactive wastes along the coast of Somalia. Reeling from pollution and revenue loss, Somali fisherman eventually resorted to mass piracy (Knaup, 2008). The coast of Somalia is
now a maritime hotspot, and exemplifies an entwined form of economic-environmental-geopolitical-societal emergence. In a VUCA world, indiscriminate waste dumping can unexpectedly
morph into a Black Hawk Down incident. The laws of unintended consequences are governed by actors, interconnections, interactions and adaptations in a system under study – as outlined in
the methodology section. Environmentally-devastating
industrial sabotages – whether by disgruntled workers, industrial competitors, ideological
maniacs or terrorist groups – cannot be discounted in a VUCA world. Immiserated societies, in stark defiance of climate change diktats, may
resort to dirty coal plants and wood stoves for survival. Interlinked
ecosystems, particularly water resources, may be
hijacked by nationalist sentiments. The environmental fallouts of critical infrastructure (CI) breakdowns loom like a
Sword of Damocles over this decade. Geopolitical The primary catalyst behind WWII was the Great
Depression. Since history often repeats itself, expect familiar bogeymen to reappear in societies
roiling with impoverishment and ideological clefts. Anti-Semitism – a societal risk on its own – may reach alarming proportions in the
West (Reuters, 2019), possibly forcing Israel to undertake reprisal operations inside allied nations. If that
happens, how will affected nations react? Will security resources be reallocated to protect certain minorities (or the Top 1%) while larger
segments of society are exposed to restive forces? Balloon
effects like these present a classic VUCA problematic.
Contemporary geopolitical risks include a possible Iran-Israel war; US-China military
confrontation over Taiwan or the South China Sea; North Korean proliferation of nuclear and
missile technologies; an India-Pakistan nuclear war; an Iranian closure of the Straits of
Hormuz; fundamentalist-driven implosion in the Islamic world; or a nuclear confrontation
between NATO and Russia. Fears that the Jan 3 2020 assassination of Iranian Maj. Gen. Qasem Soleimani might lead to WWIII
were grossly overblown. From a systems perspective, the killing of Soleimani did not fundamentally change the actor-interconnectioninteractionadaptivity equation in the Middle East. Soleimani was simply a cog who got replaced.
2NR XT Cards
2NR XT: UQ
Saudi Arabia oil prices are low now
Reed 05/9 [Stanley Reed, "Falling Oil Prices Cause Saudi Aramco’s Profit to Slip 19 Percent,"
New York Times, 5-9-2023, https://www.nytimes.com/2023/05/09/business/saudi-aramco-q1earnings.html, leah]
Saudi Aramco on Tuesday reported $31.9 billion in net income for the first quarter, a drop of
about 19 percent compared with the same period a year ago, mainly because of lower oil
prices.
But with oil prices still relatively robust, Saudi Aramco remains enormously profitable — its earnings were roughly comparable to the quarterly
profits reported by Exxon Mobil, Chevron, Shell and BP combined — mainly because it produces enormous volumes of petroleum from giant
fields in Saudi Arabia at relatively low cost.
Prices for Brent crude, the international benchmark, were about $81 a barrel on average for
the first three months of 2023, compared with about $100 a barrel in the same period a year
earlier.
Aramco’s main owner, the
Saudi government, recently orchestrated a cutback in production by the
group of countries known as OPEC Plus, apparently aiming to halt falling prices. Prices
jumped on that announcement, but then resumed sliding, dipping as low as about $72 a
barrel earlier this month before recovering to about $77 by Tuesday.
On a call with financial analysts, Amin Nasser, Aramco’s
chief executive, said that demand for oil seemed
likely to remain healthy this year as the economies of China and India, two major importers, grow
strongly. He attributed the recent drop in oil prices to concerns that economic growth would be sapped by central banks raising interest rates,
and by the regional banking crisis in the United States. “In our view, the markets overreacted,” he said.
2NR XT: Link
US policy shift in Saudi causes them to leverage oil prices in retaliation – huge implications for
the international economy
Chandran 18 (Chandran, Nyshka. “Iran May Benefit as US-Saudi Ties Are Tested.” CNBC, CNBC, 18 Oct. 2018,
www.cnbc.com/2018/10/18/us-saudi-arabia-ties-iran-may-benefit-from-jamal-khashoggi-case.html - BIB)
"The fallout from Jamal Khashoggi's disappearance is the latest political misstep from Saudi Arabia that will geopolitically benefit Iran," Sanam
Vakil, a senior consulting research fellow at U.K. think tank Chatham House, wrote in a note this week. "Saudi
Arabia has already
threatened to retaliate against [U.S.] sanctions by using its leverage here, and oil prices have accordingly
risen, thereby benefiting Iran in its last few weeks of oil sales before sanctions take effect." Khashoggi, a Washington Post columnist and
Saudi national, was a critic of the kingdom's Crown Prince Mohammed bin Salman. He was last seen entering the Saudi consulate in Istanbul on
Oct. 2. Turkish officials allege that he was murdered by a team of Saudi operatives, but Riyadh has denied those accusations. There have been
growing calls for the U.S. to punish Riyadh if the allegations were found to be true. "What I would do, I know what I'm going to do, I'm going to
sanction the hell out of Saudi Arabia," Republican Senator Lindsey Graham from South Carolina said on Tuesday. Trump, whose close links to
the kingdom has been scrutinized, may now be forced to act amid international and domestic pressure. Earlier this year, Saudi
Arabia,
the world's largest oil producer, promised Trump that it would hike oil supplies to help offset
supply losses from Tehran and stabilize prices. But if the U.S. punishes Riyadh, that could push the
kingdom to withhold oil supplies and allow prices to spike — a move that may boost Iranian coffers. Iranian
crude is selling at more than $80 per barrel, Iranian Vice President Eshaq Jahagiri told local media this week. That means even with crude
exports halved, the country will still have the same income as before, he added. In a statement on Sunday, Saudi
Ministry said that "if
Arabia's Foreign
it receives any action, it will respond with greater action." It also warned that "the
Kingdom's economy has an influential and vital role in the global economy" — a phrase that some observers interpreted as a veiled threat. The
next day, the Saudi embassy in Washington, D.C. urged the international community to avoid jumping to any conclusions. The statement
avoided any direct reference to using
oil as a weapon but "it's clear that was the subtext," Mohammed Ayoob, a senior fellow at the
Center for Global Policy and professor at Michigan State University, wrote in a Tuesday note published on the Australian Strategic Policy
Institute. The
kingdom has previously used energy as a political tool, most famously during the
1973-1974 oil embargo. "A Saudi decision to cut oil production even by as little as 10% could
send international energy markets into turmoil with oil prices rising well above US$100
immediately," Ayoob warned. Such a development, he said, would likely make Iran "the primary beneficiary of the Khashoggi affair."
The plan destroys future relations with Saudi Arabia – seals in MBS’ oil power policy – the
threshold past $100/barrel triggers unstable oil shocks.
Ignatius 4/4 Ignatius, David. David Ignatius is a prize-winning columnist for the Washington
Post and has been covering the Middle East and the CIA for nearly four decades. They have a
degree in Economics from the University of Cambridge and studied at Harvard University.
(2023, Apr. 4). “Opinion | With oil production cut, the Saudis send a message to the U.S.”
Washington Post. https://www.washingtonpost.com/opinions/2023/04/04/saudi-arabia-opecoil-production-cut/. ut-ac
It is tempting
to see the oil-production move by MBS, as the Saudi crown prince is known, as a pre-
arraignment endorsement of former president Donald Trump. Certainly, he prefers Republicans, but he has been hedging his bets in the GOP,
too. In February, MBS hosted Senate Minority Leader Mitch McConnell (Ky.) and a group
of top GOP senators that
included James E. Risch of Idaho and Tom Cotton of Arkansas. This week, the Saudis staged a lavish event in
Miami hosted by Republican Mayor Francis X. Suarez, an ally of Gov. Ron DeSantis, a Trump rival. MBS is still loyal, in his way,
to the former president who boasted to Bob Woodward, “I saved his ass” after the 2018 murder of Post contributing columnist
Jamal Khashoggi. MBS’s sovereign wealth fund has financed the LIV Golf tour that has showcased
Trump’s resorts and has put more than $2 billion in an investment firm run by Jared Kushner, Trump’s son-in-law and former senior
adviser. But I’m guessing that, for MBS, Chinese President Xi Jinping is the new Trump — the big guy
who indulges the Saudi leader’s ambitions as a regional powerhouse . When Xi visited Saudi Arabia in
December, MBS organized a Gulf summit at which other countries joined in pledging cooperation
on economic, energy and security issues. MBS has told Saudi confidants that the United States remains
the kingdom’s partner, but not its only partner. I am told that the crown prince explained to these insiders that while
his predecessors would immediately grant U.S. requests, “I
broke that because I want things in return.” MBS is still
buying Boeing airplanes, for example, but he just received a reaffirmation of U.S. protection
in Burns’s visit and a joint military exercise. The Biden administration has taken the latest Saudi rebuff calmly, in
contrast to its anger after the kingdom sharply cut production in October . Officials note that
crude oil prices were at 15-month lows, below $80 a barrel for much of March, and that analysts were
forecasting a further slide below $70. Facing that kind of price decline, the Saudis often cut production .
Biden administration officials are betting that prices will settle in the mid-80s, and that the overall
economic effect will be limited. But if the market tightens and prices rise above $100 a barrel ,
it’s not clear what the administration could do about it . Biden is not a president for whom
this Saudi leader is likely to do any favors.
Oil analysts argue that there is an upside. Prices had fallen to levels that
discouraged spending for new production capacity. Modestly higher prices might encourage investment that “will be highly necessary when
demand takes off” as the global economy revives, argues Andrew Gould, a former chief executive of Schlumberger and former board member
of Saudi Aramco. As
MBS explores partnership with his new best friend, Xi, he’s becoming more
assertive with such neighbors as the United Arab Emirates and Egypt. MBS told Saudi
confidants last year that he had demanded concessions from both countries by the end of
2023. Egyptian President Abdel Fatah El-Sisi traveled this week to Riyadh, in a visit that “affirmed mutual concern for
promoting common cooperation,” a spokesman for the Egyptian president said. Tensions are said to remain
with the UAE, but the Emiratis followed MBS’s lead on the oil-production cut . For Israel, a
headstrong MBS carries special risks . Israel has been seeking to normalize relations with the Saudis. But MBS just
made a deal with Iran, Israel’s mortal enemy, in a diplomatic bargain brokered by China , the
United States’ strongest rival. MBS wants it both ways : maintaining U.S. (and covert Israeli)
protection while he ignores their interests . That won’t work. The United States coddled a
vulnerable Saudi Arabia for more than half a century because we needed its oil . Now, increasingly, we
don’t. What we want is a Saudi Arabia that behaves like a responsible partner, even as it inevitably puts Saudi interests first.
1NC/2NR Link: Bond Selling
Independently, any threat to relations could lead to Saudi Arabia divesting its bonds of US
debt—sending shock waves through the world economy.
Lin Noueihed et al 18 [She has reported on the Middle East for 12 years, initially for Lebanon’s
Daily Star and Middle East International, and later as a Reuters correspondent], Zainab Fattah,
Anthony Dipaola, Mark Niquette, 10-15-2018, "Oil, Debt and Iran: Weapons in Any U.S.-Saudi
Fight Over Khashoggi," Bloomberg, https://www.bloomberg.com/news/articles/2018-10-15/oildebt-and-iran-weapons-in-any-u-s-saudi-row-over-khashoggi {OS}
In 2016, the
U.S. released details of Saudi holdings of American debt for the first time. The numbers had
been secret for four decades, part of a deal where by the U.S. would buy Saudi oil and provide it
with military aid and the kingdom would plow petrodollars into Treasuries to finance U.S.
spending. The grand total of Saudi holdings in 2016? $117 billion , ranking Saudi Arabia among the
top 12 foreign holders
of U.S. bonds. Some analysts have speculated that it might hold even more indirectly.
Saudi Arabia could divest its Treasury holdings , and threatened to do just that when it faced
pressure over the involvement of its citizens in the Sept. 11, 2001 attacks. But it is far from the biggest direct investor, limiting the impact.
China and Japan hold over $1 trillion each of U.S. Treasuries, which are classed among the safest investments on Earth.
“ The
most powerful weapon Saudi has is oil and its investments ,” said Fawaz Gerges, a professor of international
relations at the London School of Economics. “I doubt Saudi will decrease the production of oil to the world economy because it will hurt itself,
and I doubt that Saudi will withdraw its investments.”
2NR XT: I/L
Oil price spikes would crush the global economy
Mullaney, 18 – (Tim Mullaney, reporter covering economics, health care and technology for
CNBC. "Risks are rising that oil prices will cause next recession", CNBC,
https://www.cnbc.com/2018/07/13/risks-rising-that-oil-prices-will-cause-next-recession.html)
NL
Oil gained more than 20 percent in the first half of 2018, and
odds have been rising that higher crude oil prices will
spark the next economic downturn . This should not come as a surprise for any investor who
is a student of market history: The last five U.S. recessions were also preceded by a rise in oil
prices.
In July 2008, even when the Federal Reserve was still betting that it had a handle on the economy, Warren Buffett warned that “exploding” inflation —
“Quickly rising oil prices have been a
contributing factor to every recession since World War II,” said Moody’s chief economist
Mark Zandi. Odds of a 2020 U.S. recession have risen to 34 percent, from 28 percent before
this year’s spike in crude oil, Moody’s stated in a report. President Donald Trump’s tax cut, a deal on Capitol Hill to boost government spending,
whether in the price of oil or steel — was the biggest risk to the U.S. economy.
and a flattening of the difference between short- and long-term interest rates also are contributing to the elevated recession risk. “My recession odds for 2020 have
significantly increased since late last year,” Zandi said. Oil seesawed in trading on Monday after President Trump’s tweet about Iran added to a geopolitical catalysts
for oil. It started trading strong but trailed off by the end of the day.
Recent swings in the price of oil — especially early last week, when
Treasury Secretary Steve Mnuchin said some buyers of Iranian oil may be given extra time before sanctions hit, and Trump and Russian President Vladimir Putin
show that the oil trade remains vulnerable to a downturn.
Sanctions against Iran , reimposed as Trump repudiated his predecessor’s deal to halt Iran’s development of nuclear weapons, is playing a
discussed working together to regulate oil prices —
major role in crude oil prices. In late June the Trump administration signaled that oil buyers must stop buying Iranian crude by November,
and shortly after, Trump said he had a deal with the Saudis to increase production, though doubts remain about the Saudis’ ability to increase production by as
much as 2 million barrels. In June figures reported last week, Saudi production was up by 500,000 barrels as it tries to tame the recent growth in crude oil prices. But
the Saudis also have also said they cannot raise oil production above that level this month. Earlier this month, Sanford C. Bernstein made a call that crude could
reach $150 a barrel over the next several years. On Monday, as the U.S. and Iranian leaders ratched up their war of words, some analysts contended that oil could
The case for a short-term surge in crude prices is that the
Trump sanctions would remove much, even all, of Iran’s 2.2 million barrels per day from a global
market of just less than 100 million daily barrels, at the same time the global economic
expansion has demand growing 1.7 percent annually, according to Bjørnar Tonhaugen, head of oil markets at Oslo-based
consulting firm Rystad Energy. The market is already struggling with the loss of as many as 700,000 barrels
a day of Libyan crude, and more from Venezuela, as those nations struggle with outdated or malfunctioning production systems
and internal political turmoil. The math on how much higher oil prices hurt the economy “ If we do get oil prices of $100 , $125 or $150, you
reach a severe pain threshold , and not just for the U.S.” said Bernard Baumohl, chief economist of the Economic Outlook Group in Princeton,
reach $200 a barrel if Iran shuts down the Strait of Hormuz or takes military action.
New Jersey. “There’s nothing vague or ambiguous about it. You reach a pain threshold in the triple digits,
and there is a much higher
probability of a global downturn. … It would be cataclysmic .’’ Baumohl isn’t a believe in the recession theory,
though. “You can have a statement made that drives [oil prices] up one day and down the next,
the key is to focus on fundamentals,” he said. Assuming no major geopolitical crisis, and that is a big
assumption, we expect to see a downward slope even with Iran sanctions.” The reason: U.S. shale output will
continue to rise from what is already a record level. “By next year, the U.S. will be the largest producer of oil in the world,” Baumohl said. U.S. West
Texas Intermediate crude oil prices were around $68 on Monday, while Brent crude oil was
near-$73. The issue of more expensive crude and its economic ripple effects boils down to two questions: What would happen if crude
really went up above $100, and how likely is that scenario, really? The first question can be answered, at least
partly, using some established rules of thumb about how much spending on gasoline cuts into other consumer spending. Baumohl cites an estimate that every
penny added to the price of gasoline reduces consumer spending by $1 billion a year. Zandi
estimates that every $10 added to crude prices would reduce U.S. growth by 10 to 15 basis points, or 0.1 to
0.15 percentage points, in the year after the increase. Going from $50 to $75, which has already happened, will reduce
growth by a quarter of a point to nearly half of 1 percent, Zandi said. If oil hit $150, an economy recently growing near a 3
percent rate would see growth fall by half, and that’s before higher prices sparked inflation
and forced interest rates higher , Baumohl said. “I think $150 oil in a short period would suck the wind
out of the expansion,” Zandi said. “ Recession risks would be very high.”
2NR !/UQ: Recession
We are on the brink of an economic recession—inflation, downturns, and geopolitical tensions
increase current risks.
Graeme Wearden 23, "Global economic forecast for 2023? A stormy start followed by a ray of
hope," Guardian, 1-2-2023, https://www.theguardian.com/business/2023/jan/02/globaleconomic-forecast-for-2023-a-stormy-start-followed-by-a-ray-of-hope
Investors should brace for another turbulent year in the financial markets, economists have
warned as central banks fight inflation, China reopens its economy after Covid-19 restrictions
and the Ukraine war pushes the global economy towards recession. The first half of the new year is likely to
be choppy, according to Wall Street predictions, after global markets suffered their biggest fall since the 2008 financial crisis last year. But the
US S&P 500 is still expected to end 2023 a little higher than it began the year. The average target of 22 strategists polled by Bloomberg has the
S&P 500 ending 2023 at 4,078 points – about 6% higher than it ended 2022. Economists
predict the US Federal Reserve
will slow its interest rate hikes this year, as the outlook for America’s economy sours. US inflation has
dropped back from its peak last summer, while the series of Fed rate hikes in 2022 has also cooled the housing market. “We believe
that a period of sub-trend growth is inevitable, and recession risks are high as the lagged effects
of tighter monetary policy work their way through the economy,” said Brian Rose, senior US economist at UBS
Global Wealth Management. Michael Antonelli, managing director and market strategist at investment bank Baird, predicted the Fed would
end its hiking cycle in February, and “hit the pause button” after one more rate rise. He also expects the US stock market to make gains during
2023, pointing out that two consecutive falls are “very rare”. “The stock markets all about ‘Are things getting better or are things getting
worse?’ I think they will get slightly better next year,” Antonelli told Yahoo Finance Live. “I don’t think we’re getting any big gains, but I think
next year will be somewhat positive,” Antonelli added. Deutsche
Bank predicts economic downturns this year,
which will hit financial markets. “We see major stock markets plunging 25% from levels somewhat above today’s when the US
recession hits, but then recovering fully by year-end 2023, assuming the recession lasts only several quarters,” Deutsche Bank analysts said in
their 2023 World Outlook late last year. Strategists
at Russell Investments believe a recession seems likely in
2023 and equity markets may struggle but remain hopeful a global economic recovery should
be on the horizon by year-end. The head of the International Monetary Fund has warned that
this year is going to be “tougher than the year we leave behind”, with a third of the world’s
economy in recession. Kristalina Georgieva said it would be “because the three big economies –
the US, EU and China – are all slowing down simultaneously”. A global downturn could prompt central banks to
reverse some of the hefty interest rate rises implemented in the last year. Nikolaj Schmidt, chief international economist at investment
management firm T. Rowe Price, predicts that central banks will ease monetary policy early in the second half of 2023. “We see the world
plunging into a global recession in 2023. The
recession is going to be the result of the immense monetary
tightening the central banks have administered over the past 12 months. As a silver lining, it will sow the
seeds for a substantial retracement of inflation,” Schmidt said. Analysts at investment bank Jefferies predict a global recession this year, but
expect Asia could avoid an outright downturn. The region could benefit from a resurgence of tourism, as Chinese tourists begin to slowly return
to travel. “Global
economic conditions continue to deteriorate as inflation remains high and market
conditions tighten; however, Asia could be the best of a bad lot and avoid an outright recession.
In the past shocks of the dotcom bust, and the GFC [Great Financial Crisis], Asia bounced back quickly, and we expect that it can do the same in
2023,” analysts at Jefferies said. China’s
decision to relax Covid-19 restrictions last month could ease
global supply chain tensions, but may also lead to higher demand for commodities and energy,
adding to inflation pressures.
2NR XT: !
Failure to sustain growth causes war---data proves.
Tania Lațici & Elena Lazarou 21. Tania Lațici is a Non-resident Fellow with the Transatlantic
Leadership Program at the Center for European Policy Analysis. Elena Lazarou is the Head of the
External Policies Unit of the European Parliamentary Research Service. “Peace and Security in
2021”.
https://www.europarl.europa.eu/RegData/etudes/STUD/2021/690669/EPRS_STU(2021)69066
9_EN.pdf
The link between financial crises and a deterioration in democracy, peace and security has been
highlighted by several studies . As noted by Matthias Goldmann, 'in recent years, more and more data has
become available which reveals a correlation between sovereign debt crises and the outbreak of civil
wars . 225 Thomas Piketty and Branko Milanović have stressed the link between financial crisis,
inequality and social collapse . 226 In addition to economic recession and falling trade volumes, global economies are strongly
affected by chronic deflation. Historically, there is a correlation between inflation-deflation cycles and the debt cycles: deflationary pressure
increases during peace years, and inflationary, during war years. 227 Writing for The Economist, Qian Liu
has warned that the
next economic crisis could cause a 'global conflict' .228 This is concerning, particularly in the
context of the current debate on a new 'cold war' brewing between the US and China, in the paradigm of a
'Thucydides's trap'.229
The combination of global
social risks, increased international tensions due to rising protectionism and the Covid-19
pandemic, has raised some concerns regarding the risk of a repetition of the 1930s scenario , which
eventually led to World War II. 230 The US 'America first' protectionist trade policy developed under former president Donald Trump
could reignite under Joe Biden's stimulus package. Under the Biden administration, protectionism may be more targeted and subtle, but it is
not going to disappear. Furthermore, high
rates of unemployment, and unconventional monetary policy measures, including
possible 'modernisation' of the main central banks' legal mandates and their impact on debt cycles and inequality, have all been cited
as causes for concern. 231 The dangerous link between the state of the global economy and
peace has, once more, come to the fore – this time as a result of the 21st century's gravest health crisis. Massive stimuli by
central banks and governments, such as US$120billion in monthly bond purchases by the US Federal Reserve, or the $1.9 trillion stimulus bill
adopted by US Congress (American Rescue Plan Act of 2021) awoke, in January 2021, not only hope of economic growth but also fears of rising
inflation. The US Treasury yield curve has steepened to four-year high and, as noted by Standard & Poor's Global Market Intelligence Unit, 'A
steep yield curve – when there is a large spread in interest rates between shorter-term Treasury bonds to longer-term bonds – often precedes a
period of economic expansion, as investors bet that a central bank will be forced to raise rates in the future to tamp down higher inflation'.
Even slow growth causes extinction.
Eric Edelman & Hal Brands 17, Hal Brands is senior fellow at the Center for Strategic and
Budgetary Assessments (CSBA) and Henry A. Kissinger Distinguished Professor of Global Affairs
at the Johns Hopkins School of Advanced International Studies (SAIS). Eric Edelman is counselor
at CSBA and the Hertog Distinguished Practitioner in Residence at SAIS., 6-21-2017, "America
and the Geopolitics of Upheaval," Foreign Policy,
http://www.foreignpolicyi.org/content/america-and-geopolitics-upheaval
"The essence of a
revolution is that it appears to contemporaries as a series of more or less unrelated
upheavals,” Henry Kissinger wrote in 1969. “But the crises which form the headlines of the day are
symptoms of deep-seated structural problems.” Kissinger wrote this passage as the postwar international system was
coming under unprecedented strain, with profound shifts in the global distribution of power driving incessant disruptions in U.S. foreign policy.
His admonition applies just as well today, at the onset of a new era of upheaval. During Donald Trump’s presidency and after, U.S.
foreign
policy is likely to be wracked by crises. The instability and violence along a resurgent Russia’s
periphery, the growing frictions with an increasingly assertive China, the provocations of a
rapidly nuclearizing North Korea and the profound chaos at work throughout the Middle East:
these and other challenges have recently tested U.S. officials and are likely to do so for the
foreseeable future. The world now seems less stable and more dangerous than at any time
since the Cold War; the number and severity of global crises are increasing. Yet crises do not occur
in a vacuum; they are symptomatic of deeper changes in the international order . Accordingly, America’s
responses will be ill-informed and astrategic unless Washington first forms a deeper conception of the current moment. The
geopolitical changes underway are often framed in terms of “polarity”—the debate on whether America’s
“unipolar moment” is over and a multipolar world has emerged. But this debate is misleading. On the one hand, discussions of
polarity frequently exaggerate American decline, obscuring the fact that even though Washington’s
international superiority has diminished, its global lead over any single challenger remains quite
impressive. On the other hand, the polarity debate actually obscures both the degree and breadth of the ongoing changes in the
international system, and of the challenges facing American officials. The fundamental fact of international politics today is that the post–Cold
War era has ended. The defining features of that period were uncontested U.S. and Western primacy, marked declines in ideological struggle
and great-power conflict, and remarkable global cooperation in addressing key international-security challenges. Now, however, the
world
has returned to a more normal—which is to say, more dangerous and unsettled—state. The
core characteristics of the emerging era are the gradual erosion of U.S. and Western primacy,
revived great-power competition across all three key regions of Eurasia, renewed global
ideological struggle, and empowerment of the agents of international strife and disorder . What
makes the present period so tumultuous is that these forces often compound one another’s
destabilizing effects; moreover, their collective impact is magnified by a growing uncertainty about whether America and other
traditional defenders of the international system will continue playing that role in the future. American primacy is not dead, in
other words, and true multipolarity is still a long ways off. But U.S. primacy is far more contested than at any time in a quarter-century,
and the friendly contours of the post–Cold War system have given way to a darker and more challenging environment. The best way to
understand the present era is to compare it to the previous one. The post–Cold War era was defined by four phenomena that made it
historically favorable to American interests. The first was uncontested U.S.
primacy. America emerged from the Cold War with
clear economic dominance, possessing nearly 25 percent of global GDP in 1994. It controlled nearly 40 percent of world defense
outlays, along with utterly unrivaled advantages in global power-projection capabilities. Crucially, these
capabilities not only gave Washington an enormous lead over any geopolitical competitor; they also
provided the ability—as Saddam Hussein discovered in 1991—to marshal decisive military might in virtually
all the key strategic regions around the world. In the nineteenth century, the British ship of the line symbolized
London’s global primacy; in the late twentieth century, the American carrier strike group symbolized an even more imposing preeminence. Nor
was American dominance purely unilateral, because it was powerfully accentuated by the strengths of the broader Western coalition. In 1994,
America’s treaty allies in Europe and the Asia-Pacific accounted for 47 percent of global GDP and 35 percent of global military spending, giving
Washington and its closest friends upward of 70 percent of global economic power and military spending. Throughout the post–Cold War era,
allied involvement thus lent added force to U.S. diplomacy on key issues of international order; from the Gulf War to the war in Afghanistan,
allied contributions reinforced America’s ability to project military power overseas. This was no balance of power; it was one of the most
pronounced imbalances the world had ever seen. U.S. dominance was also evident in a second phenomenon—the decline of international
ideological competition. Francis Fukuyama’s “end of history” thesis has been much derided, but it captured three indisputable facts about the
post–Cold War era: that democracy and markets were spreading more widely than ever before; that there was no credible global competitor to
the liberal-capitalist model; and that even former U.S. enemies, such as Russia, and authoritarian states, such as China, were making
unprecedented efforts to integrate into the liberal order either economically, politically or both. To be clear, Western concepts of human rights
and political democracy were far from fully accepted in these countries, and Russian and Chinese leaders—among others—sooner or later
came to see liberal proselytism as a grave threat. But the intense ideological struggles of the twentieth century were clearly over, and the
liberal model seemed incontestably ascendant. These first two phenomena related to a third—the remarkable great-power comity of the post–
Cold War era. The end of the Cold War did not, as was widely expected, see a fragmenting of America’s alliances, or a resurgence of Japanese
and German revisionism. Rather, the major Western powers remained tied to America, largely because Washington continued to provide
crucial global public goods such as security and leadership of an open global economy. Moreover, the
sheer geopolitical
dominance of the Western coalition meant that it was dangerous if not impossible for
countries like Russia and China to mount serious great-power challenges of their own. Admittedly,
there remained sometimes-serious disagreements between the United States and these countries, over issues from NATO enlargement to
Taiwan, and those disagreements would grow more pronounced with time. But the
danger of great-power war was
nonetheless historically low during the 1990s, and great-power rivalries were more muted than
at any time since the Concert of Europe. All of these characteristics fed into a final post–Cold War phenomenon: remarkable
multilateral cooperation in addressing the relatively mild international disorder of the day. With great-power conflict
dormant, U.S. foreign policy and the international community focused largely on combating
lesser geopolitical “spoilers,” from ethnic cleansing to mass-casualty terrorism to the actions
of aggressive regional powers such as Iraq or North Korea. These efforts, in turn, were greatly
aided by the relatively tranquil state of international politics. The absence of great-power
conflict made it far easier to organize broad coalitions to confront malevolent actors, whether Saddam Hussein in
1990–91 or Al Qaeda after 9/11. In the same vein, great-power peace allowed America and its allies to devote increasing attention to other
forms of post–Cold War disorder. The fact that NATO could focus on “out of area” interventions for roughly two decades after the Soviet
collapse, for instance, was directly related to the paucity of more traditional geopolitical threats. It would be a mistake, of course, to exaggerate
how benign or pliable the post–Cold War environment really was. The “global disorder” of the period hardly seemed mild for the victims of
catastrophic terrorism or ethnic cleansing; U.S. primacy was not omnipotence, as Washington’s travails in places from Mogadishu to Srebrenica
to Helmand amply demonstrated. But by any meaningful historical comparison, the structure of international politics was uniquely conducive to
the promotion of U.S. interests and ideals—a fact that is now the source of some nostalgia as the global system changes in five significant ways.
The first key structural shift underway is the erosion of U.S. and Western primacy. It is incorrect to see this change as a transition from
unipolarity to multipolarity, for true multipolarity will not arrive anytime soon. The
United States still possesses
substantial economic advantages over its closest competitor, China, namely an $18 trillion GDP that (as of 2015) was more
than $7 trillion larger than China’s, and a per-capita GDP roughly four times that of China. U.S. defense spending also remains around three
times that of China, and Washington maintains enormous advantages in the power-projection capabilities—aircraft carriers, advanced tactical
aircraft, nuclear-powered submarines and others—that allow it to command the global commons and exert disproportionate influence around
the world. What
has happened over the past fifteen years, however, is that the extent of U.S. and
Western primacy has diminished. The U.S. shares of global wealth and military spending have declined
from 25 percent and 42 percent, respectively, in 2004, to around 22 and 34 percent in 2015. The drop-off among America’s allies has been
more severe. U.S. allies in Europe and the Asia-Pacific commanded 47 percent of global GDP and 35 percent of global military spending in 1994;
those shares had fallen to 39 and 25 percent, respectively, by 2015. Moreover, many of America’s most powerful allies—particularly in
Europe—have undergone severe military decline. The British Royal Navy once ruled the waves, but now struggles to rule even the waters
around the home islands; the German army faces equipment shortfalls so severe that its troops have had to exercise with broomsticks in place
of machine guns. Western
overmatch remains impressive by historical standards, but the global
playing field is slanted much less dramatically than before. Meanwhile, the relative positions of
America’s principal competitors have improved significantly. Russian economic power remains
unimpressive, but an aggressive military modernization program has roughly doubled defense
spending over a decade while also developing the capabilities needed to compete with the
West—airborne assault units, special-operations forces, ballistic and other missile systems, and anti-access/area-denial capabilities, among
others. China, meanwhile, has expanded its share of global wealth more than threefold, from 3.3
to 11.8 percent, between 1994 and 2015, and its share of world military spending more than fivefold, from 2.2 to 12.2 percent. As in
Russia’s case, China’s military buildup has featured the tools—ballistic and cruise missiles,
diesel-electric and nuclear submarines, advanced air defenses, and fourth-generation fighters—
needed to offset longstanding U.S. advantages in the Asia-Pacific, as well as capabilities, such as aircraft carriers,
needed to project Chinese power even further afield. The uncontested U.S. primacy of the 1990s has become the
highly contested primacy of today. This is no academic distinction; the pernicious effects of
this shift are already being seen. The decline of allied military power has made it harder for those allies
to defend themselves against growing security threats, and to make more than token military
contributions to addressing global challenges such as the rise of the Islamic State. Secretary of Defense
Robert Gates famously warned in 2011 that NATO faced a “dim if not dismal future” if European capabilities continued to erode; American
frustration has only become more pronounced since then. More fundamentally still, the
changing power balance means
that U.S. rivals and adversaries now have greater ability to shift the international order to suit
their own preferences, a factor driving a second key shift in global politics today . If greatpower comity was the post–Cold War norm, great-power competition is the standard today.
Authoritarian rivals that were never fully reconciled to the post–Cold War order, and accepted it only to the degree compelled by U.S.
and Western primacy, are now using their greater relative power to push back against that order in
key geopolitical regions from East Asia to the Middle East to eastern Europe. Because
Washington’s principal adversaries can concentrate their resources regionally, rather than
having to distribute them globally, the power shifts that have occurred in recent years are
having outsized effects at the regional level. And because the regional orders now being
challenged have been the foundation of the broader post–Cold War system, these countries are
effectively subverting the system “from the bottom up.” Consider Chinese behavior in East Asia. Chinese leaders
always saw America’s post–Cold War dominance as a transitory condition to be suffered for a time, not something to be welcomed forever.
And so as China’s geopolitical potential has soared, Beijing has taken bolder steps to erect a Sino-centric regional order. It has asserted
expansive maritime claims and used techniques such as island building to shift facts on the
ground without risking a premature military clash with America. It has challenged longstanding
norms such as freedom of navigation in the South China Sea, and steadily increased efforts to coerce its neighbors. It has probed
and worked to weaken U.S. alliances and partnerships, by simultaneously wooing and
intimidating America’s regional friends. Finally, Beijing has conducted a major military buildup focused precisely on
capabilities that will give it dominance over its neighbors and prevent the United States from intervening in their defense. These efforts
are now having an accumulating effect. Chinese coercion has dramatically altered perceptions of momentum and power in
the region, while the Chinese buildup has made the outcome of a Sino-American war over Taiwan or other regional hotspots far more doubtful.
Chinese economic diplomacy has drawn many countries in the region closer into Beijing’s economic orbit. “America has lost” the struggle for
regional supremacy, President Rodrigo Duterte of the Philippines announced in 2016—an exaggeration, surely, but a marker of how contested
the region has become. Great-power
competition is even more unvarnished in Europe, where a
militarily resurgent Russia is reasserting lost influence and undoing key aspects of the post–Cold
War settlement. Moscow has waged wars of conquest against Georgia and Ukraine; it has worked to
undermine NATO and the European Union through efforts ranging from paramilitary subversion, to military intimidation, to financial support
for anti-EU and anti-NATO politicians and other intervention in Western political processes. In
doing all of this, Russia has
fundamentally contested the notion of a post–Cold War Europe whole, free and at peace; it has
challenged—with some success—the institutions that have long maintained security and
prosperity in the region. And as with China, these actions have been underwritten by a military buildup that has restored Russian
overmatch along NATO’s exposed eastern flank and enhanced Moscow’s ability to project power as far afield as the Middle East. Russia has
become an ambitious great power again: it is asserting its prerogatives in ways that only seem anomalous in contrast to the remarkable
cooperation of the post–Cold War era. Finally, geopolitical revisionism is alive and well in the Middle East. Iran
is not in the same
power-political class as Russia or China, but it is a regional power seeking to assert regional
mastery. It is doing so via the use of proxies and its own forces in conflicts in Syria, Yemen and Iraq,
via the weaponization of sectarianism in countries across the region, and via investments in
asymmetric capabilities such as ballistic missiles and special-operations forces. This agenda has
led Tehran into conflict with U.S. security partners such as Egypt, Saudi Arabia and the United
Arab Emirates; it has contributed significantly to the instability that plagues the region. Each of
these geopolitical challenges is different, of course. But taken collectively, they represent a geopolitical sea change from the post–Cold War era.
The revival of great-power competition entails sharper international tensions than have been known for
decades, and the return of Cold War phenomena such as arms races and security dilemmas. It entails intensifying
conflicts over the global rules of the road, on issues from freedom of navigation in the South
China Sea to the illegitimacy of altering borders by force. It entails starker struggles over states
that reside at the intersection of rival great powers’ spheres of influence, such as the
Philippines, Ukraine and Iraq. Finally, it raises the prospect that great-power rivalry could lead to greatpower war—a phenomenon that seemed to have followed the Soviet Union onto the ash heap
of history with the end of the Cold War. The world has not yet returned to the titanic
geopolitical struggles of the twentieth century, but it is returning to the historical norm of
great-power strife—with all the dangers that entails.
Turmoil in interdependencies causes war
Tønnesson 15 — (Stein Tønnesson, Leader of programme on East Asian peace @ Uppsala
University, “Deterrence, interdependence and Sino–US peace,” International Area Studies
Review, 18:3, p.297-311, http://journals.sagepub.com/doi/full/10.1177/2233865915596660,
accessed 7-13-2017, SagePub, JSO)
recent works on China and Sino–US relations have made substantial contributions to the current
understanding of how and under what circumstances a combination of nuclear deterrence and
economic interdependence may reduce the risk of war between major powers . At least four conclusions
can be drawn from the review above: first, those who say that interdependence may both inhibit and drive conflict are right.
Interdependence raises the cost of conflict for all sides but asymmetrical or unbalanced
dependencies and negative trade expectations may generate tensions leading to trade wars
among inter-dependent states that in turn increase the risk of military conflict (Copeland, 2015: 1, 14, 437;
Several
Roach, 2014). The risk may increase if one of the interdependent countries is governed by an inward-looking socio-economic coalition (Solingen, 2015); second, the
risk of war between China and the US should not just be analysed bilaterally but include their allies and partners. Third party countries could drag China or the US
into confrontation; third, in this context it is of some comfort that the three main economic powers in Northeast Asia (China, Japan and South Korea) are all deeply
integrated economically through production networks within a global system of trade and finance (Ravenhill, 2014; Yoshimatsu, 2014: 576); and fourth,
decisions for war and peace are taken by very few people, who act on the basis of their future
expectations. International relations theory must be supplemented by foreign policy analysis in order to assess the value attributed by national decisionmakers to economic development and their assessments of risks and opportunities. If leaders on either side of the Atlantic begin to seriously
fear or anticipate their own nation’s decline then they may blame this on external dependence,
appeal to anti-foreign sentiments, contemplate the use of force to gain respect or credibility,
adopt protectionist policies, and ultimately refuse to be deterred by either nuclear arms or prospects
of socioeconomic calamities. Such a dangerous shift could happen abruptly , i.e. under the instigation of
actions by a third party – or against a third party. Yet as long as there is both nuclear deterrence and interdependence, the tensions in East Asia are unlikely
to escalate to war. As Chan (2013) says, all states in the region are aware that they cannot count on support from either China or the US if they make provocative
The greatest risk is not that a territorial dispute leads to war under present circumstances but that changes in the world
economy alter those circumstances in ways that render inter-state peace more precarious. If
moves.
China and the US fail to rebalance their financial and trading relations (Roach, 2014) then a trade war could result, interrupting transnational production networks,
This could have unforeseen consequences in the field of
security, with nuclear deterrence remaining the only factor to protect the world from
Armageddon, and unreliably so. Deterrence could lose its credibility: one of the two great powers
might gamble that the other yield in a cyber-war or conventional limited war, or third party countries might
provoking social distress, and exacerbating nationalist emotions.
engage in conflict with each other, with a view to obliging Washington or Beijing to intervene.
Economic decline triggers nuclear conflict
Mann 14 (Eric Mann is a special agent with a United States federal agency, with significant
domestic and international counterintelligence and counter-terrorism experience. Worked as a
special assistant for a U.S. Senator and served as a presidential appointee for the U.S. Congress.
He is currently responsible for an internal security and vulnerability assessment program.
Bachelors @ University of South Carolina, Graduate degree in Homeland Security @
Georgetown. “AUSTERITY, ECONOMIC DECLINE, AND FINANCIAL WEAPONS OF WAR: A NEW
PARADIGM FOR GLOBAL SECURITY,” May 2014,
https://jscholarship.library.jhu.edu/bitstream/handle/1774.2/37262/MANN-THESIS-2014.pdf)
The conclusions reached in this thesis demonstrate how economic
considerations within states can figure
prominently into the calculus for future conflicts . The findings also suggest that security issues with
economic or financial underpinnings will transcend classical determinants of war and conflict,
and change the manner by which rival states engage in hostile acts toward one another . The
research shows that security concerns emanating from economic uncertainty and the inherent
vulnerabilities within global financial markets will present new challenges for national
security, and provide developing states new asymmetric options for balancing against
stronger states.¶ The security areas, identified in the proceeding chapters, are likely to mature into global
security threats in the immediate future. As the case study on South Korea suggest, the overlapping security
issues associated with economic decline and reduced military spending by the United States
will affect allied confidence in America’s security guarantees . The study shows that this outcome
could cause regional instability or realignments of strategic partnerships in the Asia-pacific
region with ramifications for U.S. national security. Rival states and non-state groups may also
become emboldened to challenge America’s status in the unipolar international system.¶ The potential
risks associated with stolen or loose WMD , resulting from poor security, can also pose a
threat to U.S. national security. The case study on Pakistan, Syria and North Korea show how financial constraints
affect weapons security making weapons vulnerable to theft, and how financial factors can
influence WMD proliferation by contributing to the motivating factors behind a trusted insider’s decision to sell weapons
technology. The inherent vulnerabilities within the global financial markets will provide terrorists’
organizations and other non-state groups, who object to the current international system or distribution of power,
with opportunities to disrupt global finance and perhaps weaken America’s status . A more ominous
threat originates from states intent on increasing diversification of foreign currency holdings, establishing alternatives to the dollar for
international trade, or engaging financial warfare against the United States.