1AC
1AC – Inherency
Contention _ is Inherency
House version of the bill will fail due to the Dodd-Frank Act – a change in the
bill is necessary to solve.
Alic 7/2 (Jen, geopolitical analyst, co-founder of ISA Intel, 7/2/13, “Transparency Squabble Stalls US-Mexico Oil & Gas Deal,”
http://oilprice.com/Geopolitics/North-America/Transparency-Squabble-Stalls-US-Mexico-Oil-Gas-Deal.html)//DR. H
The US House has ratified an agreement governing oil and gas development along
the US-Mexico border, possibly breaking the moratorium on production here and adding in a
controversial clause that exempts companies from divulging payments made to
foreign governments. ¶ The US-Mexico Hydrocarbon Transboundary Agreement
(TBA) sets up a framework for joint development of oil and gas assets on the
shared border in the Gulf of Mexico by US companies and Mexico’s state-run Petroleos
Mexicanos (Pemex). ¶ About 1.5 million acres and an estimated 172 million barrels of oil and
304 billion cubic feet of natural gas are covered by the agreement.¶ This area could
ostensibly be freed up for leasing, as the legislation effectively ends a treatise moratorium on production here. ¶ There is one
glitch, however: While the Republican-led House bill passed by a vote of 256 to
171 (with only 28 Democrats voting in favor), there is an alternative bill in the Senate, which does
not include the disclosure exemption, and which the Obama administration
favors. Before anything is implemented, these two versions will have to come
together somehow.¶ The controversy has to do with the Dodd-Frank Act. The
Dodd Frank Act Section 1504 requires US companies to disclose payments to
foreign governments, subnational governments and the federal government.¶ Opponents of the act, which is pretty
much everyone making money on government contracts, say it harms the competitiveness of US companies in the face of foreign
Pemex is
100% state-owned and the Mexican government may prohibit the very disclosure
required by the Dodd-Frank Act, thus rendering US companies less competitive.
Companies who are not required to disclosure payments may have the advantage
in winning contracts.¶ Democrats are worried that it will reverse any progress made towards
greater transparency and preventing government corruption, which was the intention
of the Dodd-Frank Act in the first place. ¶ From the White House’s perspective, the House
version of the bill “negatively impacts US efforts to increase transparency and
accountability,” and while Obama has not said he would veto the bill, the administration is hoping to
amend it before it’s implemented.¶ What they are really concerned about is what this might mean beyond
Mexico. It could set a precedent for repealing Section 1504 of the Dodd-Frank Act
for other countries, which could harm national interests, as well as shareholder
interests. ¶ Democrats believe the Senate will not pass the House bill without
amending this exemption.¶ The US-Mexico TAP was brokered by the two countries in February 2012, and it’s gotten
pretty far, pretty fast. If we can get past this last hurdle, it could be a boon for Pemex . The
companies who are not made to stand up to the same scrutiny.¶ The other argument in favor of the exemption is that
state-run company is eyeing the deep-water Perdido fold belt, which could have the potential to expand Mexico’s stagnating
domestic production.¶ Last summer, Pemex announced a major discovery of crude oil in the Perdido fold belt, with preliminary
estimates that the company’s Trion-1 well contained 350 million barrels of oil equivalent (proved). The well is about 39 kilometers
Pemex noted that the discovery “increased certainty towards
the recovery of prospective resources in the Perdido area project which have been
estimated at up to 10 billion bbl of oil equivalent, and could potentially allow
Mexico to increase its oil production platform in the medium and long-term.”
south of US waters.¶ At the time,
Mexico Drilling along US-Mexico border inevitable ----- only a question of
cooperation or unilat
Urdaneta ’10 – associate at Grau Garcia Hernandez and Monaco (Law Firm) (Karla, “TRANSBOUNDARY PETROLEUM
RESERVOIRS: A RECOMMENDED APPROACH FOR THE UNITED STATES AND MEXICO IN THE DEEPWATERS OF THE
GULF OF MEXICO”, Houston Journal of International Law, Volume 32, Number 2, Spring 2010)
Mexico is primarily concerned with reservoirs located outside the
Western Gap, and more specifically, those located in the Perdido fold belt. Nonetheless, it is
only a matter of time until the Western Gap is made available for exploitation and
production by both countries, which will create the same issues for the Western Gap
faced by other areas of the GOM. The principal challenges that Pemex faces with regard
to deep-water production include: (i) human resources; (ii) exploration; (iii) exploitation; (iv)
technology; and (v) financing.85 These challenges will have to be assumed in the
short term because Mexico’s oil production is decreasing, and Pemex has
estimated that fifty-five percent of the country’s 54 billion barrels of equivalent
oil from prospective resources86 is located in deep-waters.87 Currently, Mexico cannot
compete with the United States with regard to the development of the resources in the GOM, for it has
not yet progressed beyond the stage of exploration. In order to strengthen
Pemex’s financial and technical capacities and provide it with more flexibility for the
performance of its functions, Mexico began reforming its energy legislation .88 This process
ended in November 2008. However, the last legislative reform does not endow
Pemex with the capital and technology necessary to undertake the activities of
exploration and production of deep-waters in the GOM.89 The issue of
transboundary reservoirs has attracted the attention of Mexican lawmakers,
politicians, and economists, among others.90 Most of them advise taking prompt
action to protect Mexico’s rights to its resources.91 Moreover, the exploitation of the
resources located in the GOM will be a way for Mexico to increase its levels of
petroleum production. To summarize, in the GOM (i) there are formations, like the
Perdido fold belt, that cross the maritime boundary of Mexico and the United
States, and that will enable production as early as 2010, (ii) substantial exploration
activity has already been conducted by the United States, (iii) large areas have
been leased by the United States for exploitation, while others are currently being
exploited, (iv) Mexico has not achieved the levels of resource development that the
United States has achieved, and (v) both countries need to take advantage of the
production of their hydrocarbons in the short term.92 In light of these
circumstances, with the aim of protecting the rights of both countries and
optimizing the use of resources, it would be appropriate for Mexico and the
In view of this,
United States to cooperate in the development of their transboundary reservoirs.
This cooperation will maximize economic benefits, avoid physical waste, increase
energy security, and avoid international disputes likely to arise if the United
States initiates production of the transboundary reservoirs. Cooperation has led
to beneficial results among other countries that have faced similar dilemmas.
Pemex needs US investment and expertise - oil production is decreasing now
Nick Miroff and William Booth 5/7/13 - (Correspondent for The Washington Post covering Mexico aster's
degree from the UC Berkeley School of Journalism, http://articles.washingtonpost.com/2013-0507/world/39073749_1_energy-industry-foreign-oil-petroleos-de-mexico)//AP
it once was a source of national pride, the state-run monopoly he created —
Pemex — has become a dinosaur, sapped by debt, sagging output and dated
technology. The Mexican government siphons off the company’s revenue to cover
about one-third of the federal budget, leaving insufficient funds for what has
become a critical task: finding more oil.¶ Mexico remains the third-¶ largest source
of foreign oil for the United States after Canada and Saudi Arabia. But the
country’s easy-pump crude is quickly running dry, and the company lacks the
technology and know-how to drill for the vast stores of tougher-to-reach deposits
that are thought to exist beneath Mexico’s deserts and seas. Fixing the company,
formally known as Petroleos de Mexico, has become a top priority for Mexico’s new president,
Enrique Peña -Nieto. With an overhaul plan expected by late summer, U.S. and other
global energy companies are waiting to see whether Mexico will once more give
outsiders a crack at the country’s hydrocarbon treasures, including the massive, virtually
untapped beds of shale gas south of the Texas border. At issue is whether Mexico will embrace the
prosperous state-managed model adopted by countries such as Norway and
Brazil — where national oil companies can partner with foreign firms and sell
shares to investors.¶ The U.S. Energy Information Administrationcalculates that
Mexico’s gas deposits are the fourth largest in the world, with the potential to
ensure decades of low-cost energy and give manufacturers an additional
incentive to invest in Mexico over places such as China.¶ For now, though,
Mexico’s oil exports to the United States are falling, dropping below the millionbarrel-per-day mark for the first time since 1994.¶ For those pushing for change,
the challenge is as much political as it is technical. The Mexican constitution
essentially blocks the country from forming joint- venture partnerships with
outsiders, and analysts say such restrictions will need to be scrapped if the
country wants to attract foreign drillers.
But while
known as
1AC – Heg
Contention _ is hegemony
Even anti-hegemonic authors agree that in the new political climate the
pursuit of hegemony is inevitable
Posen 13 – Ford International Professor of Political Science and Director of the Security Studies Program at the Massachusetts
Institute of Technology (Barry R. Posen, January/February 2013, “Pull Back: The Case for a Less Activist Foreign Policy,” Foreign
Affairs, http://www.foreignaffairs.com/articles/138466/barry-r-posen/pull-back) // CB
Despite a decade of costly and indecisive warfare and mounting fiscal pressures, the
long-standing consensus among American policymakers about
U.S. grand strategy has remained remarkably intact. As the presidential campaign made clear, Republicans and Democrats may
quibble over foreign policy at the margins, but they agree on the big picture: that the United States should dominate the world
militarily, economically, and politically, as it has since the final years of the Cold War, a strategy of liberal hegemony. The country,
they hold, needs to preserve its massive lead in the global balance of power, consolidate its economic preeminence, enlarge the
community of market democracies, and maintain its outsized influence in the international institutions it helped create.
The pursuit of hegemony is inevitable, sustainable, and prevents great power
war – star this card, it answers all turns
Ikenberry, Brooks, and Wohlforth 13 – *Stephen G. Brooks is Associate Professor of Government at Dartmouth College,
**John Ikenberry is Albert G. Milbank Professor of Politics and International Affairs at Princeton University and Global Eminence
Scholar at Kyung Hee University in Seoul, **William C. Wohlforth is Daniel Webster Professor of Government at Dartmouth College
(“Lean Forward: In Defense of American Engagement”, January/February 2013, Foreign Affairs,
http://www.foreignaffairs.com/articles/138468/stephen-g-brooks-g-john-ikenberry-and-william-c-wohlforth/lean-forward)
Since the end of World War II, the United States has pursued a single grand strategy: deep engagement. In an effort to protect its
security and prosperity, the country has promoted a liberal economic order and established close defense ties with partners in
Europe, East Asia, and the Middle East. Its military bases cover the map, its ships patrol transit routes across the globe, and tens of
thousands of its troops stand guard in allied countries such as Germany, Japan, and South Korea.¶ The details of U.S. foreign policy have differed
from administration to administration, including the emphasis placed on democracy promotion and humanitarian goals, but for
over 60 years, every president has agreed on the fundamental decision to remain deeply engaged in the world, even as the
rationale for that strategy has shifted. During the Cold War, the United States' security commitments to Europe, East Asia, and the Middle East
served primarily to prevent Soviet encroachment into the world's wealthiest and most resource-rich regions. Since the fall of the Soviet Union, the
aim has become to make these same regions more secure, and thus less threatening to the United States, and to use these security
partnerships to foster the cooperation necessary for a stable and open international order.¶ Now, more than ever, Washington might be
tempted to abandon this grand strategy and pull back from the world. The rise of China is chipping away at the United States' preponderance of power,
a budget crisis has put defense spending on the chopping block, and two long wars have left the U.S. military and public exhausted. Indeed, even as
most politicians continue to assert their commitment to global leadership, a very different view has taken hold among scholars of international
relations over the past decade: that the United States should minimize its overseas military presence, shed its security ties, and give up its efforts to lead
the liberal international order.¶ Proponents of retrenchment argue that a globally engaged grand strategy wastes money by subsidizing the
defense of well-off allies and generates resentment among foreign populations and governments. A more modest posture, they contend,
would put an end to allies' free-riding and defuse anti-American sentiment. Even if allies did not take over every mission the United States
now performs, most of these roles have nothing to do with U.S. security and only risk entrapping the United States in unnecessary wars. In short, those
in this camp maintain that pulling back would not only save blood and treasure but also make the United States more secure. ¶ They are wrong. In
making their case, advocates of retrenchment overstate the costs of the current grand strategy and understate its benefits. In fact, the
budgetary savings of lowering the United States' international profile are debatable, and there is little evidence to suggest that an
internationally engaged America provokes other countries to balance against it, becomes overextended, or gets dragged into
unnecessary wars.¶ The benefits of deep engagement, on the other hand, are legion. U.S. security commitments reduce
competition in key regions and act as a check against potential rivals. They help maintain an open world economy and
give Washington leverage in economic negotiations. And they make it easier for the United States to secure cooperation for combating
a wide range of global threats. Were the United States to cede its global leadership role, it would forgo these proven upsides while
exposing itself to the unprecedented downsides of a world in which the country was less secure, prosperous, and influential.¶ AN
AFFORDABLE STRATEGY¶ Many advocates of retrenchment consider the United States' assertive global posture simply too expensive. The
international relations scholar Christopher Layne, for example, has warned of the country's "ballooning budget deficits" and argued that "its strategic
commitments exceed the resources available to support them." Calculating the savings of switching grand strategies, however, is not so
simple, because it depends on the expenditures the current strategy demands and the amount required for its replacement –
numbers that are hard to pin down.¶ If the United States revoked all its security guarantees, brought home all its troops, shrank every branch of
the military, and slashed its nuclear arsenal, it would save around $900 billion over ten years, according to Benjamin Friedman and Justin Logan of the
Cato Institute. But few advocates of retrenchment endorse such a radical reduction; instead, most call for "restraint," an "offshore balancing" strategy,
or an "over the horizon" military posture. The savings these approaches would yield are less clear, since they depend on which security commitments
Washington would abandon outright and how much it would cost to keep the remaining ones. If retrenchment simply meant shipping foreign-
based U.S. forces back to the United States, then the savings would be modest at best, since the countries hosting U.S. forces usually
cover a large portion of the basing costs. And if it meant maintaining a major expeditionary capacity, then any savings would again be
small, since the Pentagon would still have to pay for the expensive weaponry and equipment required for projecting power abroad.¶
The other side of the cost equation, the price of continued engagement, is also in flux. Although the fat defense budgets of the past decade make an easy
target for advocates of retrenchment, such high levels of spending aren't needed to maintain an engaged global posture. Spending
skyrocketed after 9/11, but it has already begun to fall back to earth as the United States winds down its two costly wars and trims its base level of
nonwar spending. As of the fall of 2012, the Defense Department was planning for cuts of just under $500 billion over the next five years, which it
maintains will not compromise national security. These reductions would lower military spending to a little less than three percent of GDP by 2017,
from its current level of 4.5 percent. The Pentagon could save even more with no ill effects by reforming its procurement practices and compensation
policies.¶ Even without major budget cuts, however, the country can afford the costs of its ambitious grand strategy. The significant
increases in military spending proposed by Mitt Romney, the Republican candidate, during the 2012 presidential campaign would still have kept
military spending below its current share of GDP, since spending on the wars in Afghanistan and Iraq would still have gone down and Romney's
proposed nonwar spending levels would not have kept pace with economic growth. Small wonder, then, that the case for pulling back rests more on the
nonmonetary costs that the current strategy supposedly incurs. ¶ UNBALANCED¶ One such alleged cost of the current grand strategy is that, in
the words of the political scientist Barry Posen, it "prompts states to balance against U.S. power however they can." Yet there is no
evidence that countries have banded together in anti-American alliances or tried to match the United States' military capacity on
their own – or that they will do so in the future.¶ Indeed, it's hard to see how the current grand strategy could generate true
counterbalancing. Unlike past hegemons, the United States is geographically isolated, which means that it is far less threatening
to other major states and that it faces no contiguous great-power rivals that could step up to the task of balancing against it. Moreover,
any competitor would have a hard time matching the U.S. military. Not only is the United States so far ahead militarily in both
quantitative and qualitative terms, but its security guarantees also give it the leverage to prevent allies from giving military
technology to potential U.S. rivals. Because the United States dominates the high-end defense industry, it can trade access to its
defense market for allies' agreement not to transfer key military technologies to its competitors. The embargo that the United States has
convinced the EU to maintain on military sales to China since 1989 is a case in point. ¶ If U.S. global leadership were prompting balancing, then
one would expect actual examples of pushback – especially during the administration of George W. Bush, who pursued a foreign
policy that seemed particularly unilateral. Yet since the Soviet Union collapsed, no major powers have tried to balance against the
United States by seeking to match its military might or by assembling a formidable alliance; the prospect is simply too daunting. Instead, they
have resorted to what scholars call "soft balancing," using international institutions and norms to constrain Washington. Setting aside the fact that soft
balancing is a slippery concept and difficult to distinguish from everyday diplomatic competition, it is wrong to say that the practice only harms
the United States. Arguably, as the global leader, the United States benefits from employing soft-balancing-style leverage more than any
other country. After all, today's rules and institutions came about under its auspices and largely reflect its interests, and so they are in fact tailor-made
for soft balancing by the United States itself. In 2011, for example, Washington coordinated action with several Southeast Asian states to oppose
Beijing's claims in the South China Sea by pointing to established international law and norms. ¶ Another argument for retrenchment holds that
the United States will fall prey to the same fate as past hegemons and accelerate its own decline. In order to keep its ambitious strategy in
place, the logic goes, the country will have to divert resources away from more productive purposes – infrastructure, education,
scientific research, and so on – that are necessary to keep its economy competitive. Allies, meanwhile, can get away with lower military
expenditures and grow faster than they otherwise would. ¶ The historical evidence for this phenomenon is thin; for the most part, past
superpowers lost their leadership not because they pursued hegemony but because other major powers balanced against them – a
prospect that is not in the cards today. (If anything, leading states can use their position to stave off their decline.) A bigger problem with
the warnings against "imperial overstretch" is that there is no reason to believe that the pursuit of global leadership saps economic
growth. Instead, most studies by economists find no clear relationship between military expenditures and economic decline.¶ To
be sure, if the United States were a dramatic outlier and spent around a quarter of its GDP on defense, as the Soviet Union did in its last decades, its growth and competitiveness
would suffer. But in 2012, even as it fought a war in Afghanistan and conducted counterterrorism operations around the globe, Washington spent just 4.5 percent of GDP on
defense – a relatively small fraction, historically speaking. (From 1950 to 1990, that figure averaged 7.6 percent.) Recent economic difficulties might prompt Washington to
reevaluate its defense budgets and international commitments, but that does not mean that those policies caused the downturn. And any money freed up from dropping global
commitments would not necessarily be spent in ways that would help the U.S. economy.¶ Likewise, U.S. allies' economic growth rates have nothing to do with any security
subsidies they receive from Washington. The contention that lower military expenditures facilitated the rise of Japan, West Germany, and other countries dependent on U.S.
defense guarantees may have seemed plausible during the last bout of declinist anxiety, in the 1980s. But these states eventually stopped climbing up the global economic ranks
as their per capita wealth approached U.S. levels -- just as standard models of economic growth would predict. Over the past 20 years, the United States has maintained its lead
in per capita GDP over its European allies and Japan, even as those countries' defense efforts have fallen further behind. Their failure to modernize their militaries has only
served to entrench the United States' dominance.¶ LED NOT INTO TEMPTATION¶ The costs of U.S. foreign policy that matter most, of course, are human
lives, and critics of an expansive grand strategy worry that the United States might get dragged into unnecessary wars. Securing smaller
allies, they argue, emboldens those states to take risks they would not otherwise accept, pulling the superpower sponsor into costly conflicts -- a classic
moral hazard problem. Concerned about the reputational costs of failing to honor the country's alliance commitments, U.S. leaders might go to war
even when no national interests are at stake.¶ History shows, however, that great powers anticipate the danger of entrapment and
structure their agreements to protect themselves from it. It is nearly impossible to find a clear case of a smaller power luring
a reluctant great power into war. For decades, World War I served as the canonical example of entangling alliances supposedly
drawing great powers into a fight, but an outpouring of new historical research has overturned the conventional wisdom, revealing
that the war was more the result of a conscious decision on Germany's part to try to dominate Europe than a case of alliance
entrapment.¶ If anything, alliances reduce the risk of getting pulled into a conflict . In East Asia, the regional security agreements
that Washington struck after World War II were designed, in the words of the political scientist Victor Cha, to "constrain anticommunist allies in the
region that might engage in aggressive behavior against adversaries that could entrap the United States in an unwanted larger war." The same logic is
now at play in the U.S.-Taiwanese relationship. After cross-strait tensions flared in the 1990s and the first decade of this century, U.S. officials grew
concerned that their ambiguous support for Taiwan might expose them to the risk of entrapment. So the Bush administration adjusted its policy,
clarifying that its goal was to not only deter China from an unprovoked attack but also deter Taiwan from unilateral moves toward independence.¶ For
many advocates of retrenchment, the problem is that the mere possession of globe-girdling military capabilities supposedly inflates policymakers'
conception of the national interest, so much so that every foreign problem begins to look like America's to solve. Critics also argue that the
country's military superiority causes it to seek total solutions to security problems, as in Afghanistan and Iraq, that could be dealt with in
less costly ways. Only a country that possessed such awesome military power and faced no serious geopolitical rival would fail to be satisfied with
partial fixes, such as containment, and instead embark on wild schemes of democracy building, the argument goes. ¶ Furthermore, they contend, the
United States' outsized military creates a sense of obligation to do something with it even when no U.S. interests are at stake. As Madeleine
Albright, then the U.S. ambassador to the un, famously asked Colin Powell, then chairman of the Joint Chiefs of Staff, when debating intervention in
Bosnia in 1993, "What's the point of having this superb military you're always talking about if we can't use it? "¶ If the U.S. military scrapped its forces
and shuttered its bases, then the country would no doubt eliminate the risk of entering needless wars, having tied itself to the mast like Ulysses. But if it
instead merely moved its forces over the horizon, as is more commonly proposed by advocates of retrenchment, whatever temptations there were to
intervene would not disappear. The bigger problem with the idea that a forward posture distorts conceptions of the national interest, however, is that it
rests on just one case: Iraq. That war is an outlier in terms of both its high costs (it accounts for some two-thirds of the casualties and budget costs of all
U.S. wars since 1990) and the degree to which the United States shouldered them alone. In the Persian Gulf War and the interventions in Bosnia,
Kosovo, Afghanistan, and Libya, U.S. allies bore more of the burden, controlling for the size of their economies and populations.¶ Besides, the Iraq
war was not an inevitable consequence of pursuing the United States' existing grand strategy; many scholars and policymakers who prefer
an engaged America strongly opposed the war. Likewise, continuing the current grand strategy in no way condemns the United States to
more wars like it. Consider how the country, after it lost in Vietnam, waged the rest of the Cold War with proxies and highly limited interventions.
Iraq has generated a similar reluctance to undertake large expeditionary operations -- what the political scientist John Mueller has dubbed "the Iraq
syndrome." Those contending that the United States' grand strategy ineluctably leads the country into temptation need to present
much more evidence before their case can be convincing.¶ KEEPING THE PEACE¶ Of course, even if it is true that the costs of deep
engagement fall far below what advocates of retrenchment claim, they would not be worth bearing unless they yielded greater benefits. In fact, they do.
The most obvious benefit of the current strategy is that it reduces the risk of a dangerous conflict. The United States' security
commitments deter states with aspirations to regional hegemony from contemplating expansion and dissuade U.S. partners from
trying to solve security problems on their own in ways that would end up threatening other states.¶ Skeptics discount this benefit by
arguing that U.S. security guarantees aren't necessary to prevent dangerous rivalries from erupting. They maintain that the high costs of territorial
conquest and the many tools countries can use to signal their benign intentions are enough to prevent conflict. In other words, major powers could
peacefully manage regional multipolarity without the American pacifier.¶ But that outlook is too sanguine. If Washington got out of East
Asia, Japan and South Korea would likely expand their military capabilities and go nuclear, which could provoke a destabilizing
reaction from China. It's worth noting that during the Cold War, both South Korea and Taiwan tried to obtain nuclear weapons; the
only thing that stopped them was the United States, which used its security commitments to restrain their nuclear temptations.
Similarly, were the United States to leave the Middle East, the countries currently backed by Washington – notably, Israel, Egypt,
and Saudi Arabia – might act in ways that would intensify the region's security dilemmas.¶ There would even be reason to worry about
Europe. Although it's hard to imagine the return of great-power military competition in a post-American Europe, it's not difficult to foresee
governments there refusing to pay the budgetary costs of higher military outlays and the political costs of increasing EU defense cooperation. The result
might be a continent incapable of securing itself from threats on its periphery, unable to join foreign interventions on which U.S. leaders might want
European help, and vulnerable to the influence of outside rising powers. ¶ Given how easily a U.S. withdrawal from key regions could lead to
dangerous competition , advocates of retrenchment tend to put forth another argument: that such rivalries wouldn't actually hurt the United
States. To be sure, few doubt that the United States could survive the return of conflict among powers in Asia or the Middle East – but at what cost?
Were states in one or both of these regions to start competing against one another, they would likely boost their military budgets,
arm client states, and perhaps even start regional proxy wars, all of which should concern the United States, in part because its lead in military
capabilities would narrow.¶ Greater regional insecurity could also produce cascades of nuclear proliferation as powers such as
Egypt, Saudi Arabia, Japan, South Korea, and Taiwan built nuclear forces of their own. Those countries' regional competitors might
then also seek nuclear arsenals. Although nuclear deterrence can promote stability between two states with the kinds of nuclear forces that the
Soviet Union and the United States possessed, things get shakier when there are multiple nuclear rivals with less robust arsenals. As the number of
nuclear powers increases, the probability of illicit transfers, irrational decisions, accidents, and unforeseen crises goes up.¶ The case
for abandoning the United States' global role misses the underlying security logic of the current approach. By reassuring allies and actively
managing regional relations, Washington dampens competition in the world's key areas, thereby preventing the emergence of a
hothouse in which countries would grow new military capabilities. For proof that this strategy is working, one need look no further
than the defense budgets of the current great powers: on average, since 1991 they have kept their military expenditures as a percentage of GDP
to historic lows, and they have not attempted to match the United States' top-end military capabilities. Moreover, all of the world's most modern
militaries are U.S. allies, and the United States' military lead over its potential rivals is by many measures growing.¶ On top of all this, the current
grand strategy acts as a hedge against the emergence regional hegemons. Some supporters of retrenchment argue that the U.S. military
should keep its forces over the horizon and pass the buck to local powers to do the dangerous work of counterbalancing rising regional powers.
Washington, they contend, should deploy forces abroad only when a truly credible contender for regional hegemony arises, as in the cases of Germany
and Japan during World War II and the Soviet Union during the Cold War. Yet there is already a potential contender for regional hegemony -- China -and to balance it, the United States will need to maintain its key alliances in Asia and the military capacity to intervene there. The implication is that the
United States should get out of Afghanistan and Iraq, reduce its military presence in Europe, and pivot to Asia. Yet that is exactly what the Obama
administration is doing.¶ MILITARY DOMINANCE, ECONOMIC PREEMINENCE¶ Preoccupied with security issues, critics of the current grand
strategy miss one of its most important benefits: sustaining an open global economy and a favorable place for the United States within it. To be sure,
the sheer size of its output would guarantee the United States a major role in the global economy whatever grand strategy it adopted. Yet the country's
military dominance undergirds its economic leadership. In addition to protecting the world economy from instability, its military
commitments and naval superiority help secure the sea-lanes and other shipping corridors that allow trade to flow freely and
cheaply. Were the United States to pull back from the world, the task of securing the global commons would get much harder.
Washington would have less leverage with which it could convince countries to cooperate on economic matters and less access to the
military bases throughout the world needed to keep the seas open.¶ A global role also lets the United States structure the world
economy in ways that serve its particular economic interests. During the Cold War, Washington used its overseas security commitments to get
allies to embrace the economic policies it preferred -- convincing West Germany in the 1960s, for example, to take costly steps to support the U.S. dollar
as a reserve currency. U.S. defense agreements work the same way today. For example, when negotiating the 2011 free-trade agreement with South
Korea, U.S. officials took advantage of Seoul's desire to use the agreement as a means of tightening its security relations with Washington. As one
diplomat explained to us privately, "We asked for changes in labor and environment clauses, in auto clauses, and the Koreans took it all." Why? Because
they feared a failed agreement would be "a setback to the political and security relationship."¶ More broadly, the United States wields its security
leverage to shape the overall structure of the global economy. Much of what the United States wants from the economic order is more of the same: for
instance, it likes the current structure of the World Trade Organization and the International Monetary Fund and prefers that free trade continue.
Washington wins when U.S. allies favor this status quo, and one reason they are inclined to support the existing system is because they value their
military alliances. Japan, to name one example, has shown interest in the Trans-Pacific Partnership, the Obama administration's most important freetrade initiative in the region, less because its economic interests compel it to do so than because Prime Minister Yoshihiko Noda believes that his
support will strengthen Japan's security ties with the United States. ¶ The United States' geopolitical dominance also helps keep the U.S. dollar
in place as the world's reserve currency, which confers enormous benefits on the country, such as a greater ability to borrow money.
This is perhaps clearest with Europe: the EU's dependence on the United States for its security precludes the EU from having the kind of political
leverage to support the euro that the United States has with the dollar. As with other aspects of the global economy, the United States does not provide
its leadership for free: it extracts disproportionate gains. Shirking that responsibility would place those benefits at risk .¶ CREATING COOPERATION¶
What goes for the global economy goes for other forms of international cooperation. Here, too, American leadership benefits many countries but
disproportionately helps the United States. In order to counter transnational threats, such as terrorism, piracy, organized crime,
climate change, and pandemics, states have to work together and take collective action. But cooperation does not come about
effortlessly, especially when national interests diverge. The United States' military efforts to promote stability and its broader
leadership make it easier for Washington to launch joint initiatives and shape them in ways that reflect U.S. interests . After all,
cooperation is hard to come by in regions where chaos reigns, and it flourishes where leaders can anticipate lasting stability.¶ U.S.
alliances are about security first, but they also provide the political framework and channels of communication for cooperation on
nonmilitary issues. NATO, for example, has spawned new institutions, such as the Atlantic Council, a think tank, that make it easier for Americans
and Europeans to talk to one another and do business. Likewise, consultations with allies in East Asia spill over into other policy issues; for example,
when American diplomats travel to Seoul to manage the military alliance, they also end up discussing the Trans-Pacific Partnership. Thanks to
conduits such as this, the United States can use bargaining chips in one issue area to make progress in others.¶ The benefits of these
communication channels are especially pronounced when it comes to fighting the kinds of threats that require new forms of
cooperation, such as terrorism and pandemics. With its alliance system in place, the United States is in a stronger position than
it would otherwise be to advance cooperation and share burdens. For example, the intelligence-sharing network within NATO, which
was originally designed to gather information on the Soviet Union, has been adapted to deal with terrorism . Similarly, after a tsunami in
the Indian Ocean devastated surrounding countries in 2004, Washington had a much easier time orchestrating a fast humanitarian response with
Australia, India, and Japan, since their militaries were already comfortable working with one another. The operation did wonders for the United States'
image in the region.¶ The United States' global role also has the more direct effect of facilitating the bargains among governments that
get cooperation going in the first place. As the scholar Joseph Nye has written, "The American military role in deterring threats to allies, or of
assuring access to a crucial resource such as oil in the Persian Gulf, means that the provision of protective force can be used in bargaining situations.
Sometimes the linkage may be direct; more often it is a factor not mentioned openly but present in the back of statesmen's minds."¶ THE DEVIL WE
KNOW¶ Should America come home? For many prominent scholars of international relations, the answer is yes -- a view that seems even wiser in the
wake of the disaster in Iraq and the Great Recession. Yet their arguments simply don't hold up. There is little evidence that the United States
would save much money switching to a smaller global posture. Nor is the current strategy self-defeating: it has not provoked the
formation of counterbalancing coalitions or caused the country to spend itself into economic decline. Nor will it condemn the U nited
States to foolhardy wars in the future. What the strategy does do is help prevent the outbreak of conflict in the world's most important
regions, keep the global economy humming, and make international cooperation easier. Charting a different course would threaten all
these benefits.¶ This is not to say that the United States' current foreign policy can't be adapted to new circumstances and challenges. Washington does
not need to retain every commitment at all costs, and there is nothing wrong with rejiggering its strategy in response to new opportunities or setbacks.
That is what the Nixon administration did by winding down the Vietnam War and increasing the United States' reliance on regional partners to contain
Soviet power, and it is what the Obama administration has been doing after the Iraq war by pivoting to Asia. These episodes of rebalancing belie the
argument that a powerful and internationally engaged America cannot tailor its policies to a changing world. ¶ A grand strategy of actively
managing global security and promoting the liberal economic order has served the United States exceptionally well for the past six
decades, and there is no reason to give it up now. The country's globe-spanning posture is the devil we know, and a world with a disengaged
America is the devil we don't know. Were American leaders to choose retrenchment, they would in essence be running a massive
experiment to test how the world would work without an engaged and liberal leading power. The results could well be disastrous.
Decline causes lashout and collapses global trade—makes transnational
problems inevitable
Beckley ‘12
Michael, Assistant professor of political science at Tufts, research fellow in the International Security Program at Harvard Kennedy
School's. Belfer Center for Science and International Affairs, “The Unipolar Era: Why American Power Persists and China’s Rise Is
Limited,” PhD dissertation, AM
declinism could prompt trade conflicts and immigration restrictions. The
results of this study suggest that the United States benefits immensely from the free flow of
goods, services, and people around the globe; this is what allows American
corporations to specialize in high--‐value activities, exploit innovations created elsewhere, and lure
the brightest minds to the United States, all while reducing the price of goods for U.S. consumers.
Characterizing China’s export expansion as a loss for the United States is not just bad
economics; it blazes a trail for jingoistic and protectionist policies. It would be tragically ironic if
One danger is that
Americans reacted to false prophecies of decline by cutting themselves off from a potentially vital source of American power.
declinism may impair foreign policy decision--‐making. If top
government officials come to believe that China is overtaking the United States,
they are likely to react in one of two ways, both of which are potentially disastrous.
The first is that policymakers may imagine the United States faces a closing “window of
opportunity” and should take action “while it still enjoys preponderance and not wait
until the diffusion of power has already made international politics more competitive and unpredictable.”315 This belief may
spur positive action, but it also invites parochial thinking, reckless behavior, and preventive war.316
Another danger is that
As Robert Gilpin and others have shown, “hegemonic struggles have most frequently been triggered by fears of ultimate decline and
the perceived erosion of power.”317
By fanning such fears, declinists may inadvertently
promote the type of violent overreaction that they seek to prevent. The other
potential reaction is retrenchment – the divestment of all foreign policy obligations save those linked to vital
interests, defined in a narrow and national manner. Advocates of retrenchment
assume, or hope, that the world will sort itself out on its own; that whatever replaces
American hegemony, whether it be a return to balance--‐of--‐power politics or a transition to a post--‐power paradise,
will naturally maintain international order and prosperity. But order and prosperity are
unnatural. They can never be presumed. When achieved, they are the result of determined
action by powerful actors and, in particular, by the most powerful actor, which is, and will be for some time,
the United States. Arms buildups, insecure sea--‐lanes, and closed markets are only the
most obvious risks of U.S. retrenchment. Less obvious are transnational
problems, such as global warming, water scarcity, and disease, which may fester without a leader
to rally collective action.
Oil dependence scenario
Scenario _ is Military Oil dependence
Oil Dependence from the Persian gulf is high - Assumes fracking boom
Krauss 12 - (Clifford, correspondent for The New York Times currently is a national business correspondent based in Houston,
covering energy, "U.S. Reliance on Oil From Saudi Arabia Is Growing Again"
http://www.nytimes.com/2012/08/17/business/energy-environment/us-reliance-on-saudi-oil-is-growingagain.html?pagewanted=all&_r=0)//AP
The United States is increasing its dependence on oil from Saudi Arabia, raising its imports from the kingdom by more than 20
percent this year, even as fears of military conflict in the tinderbox Persian Gulf region grow. The increase in Saudi oil exports to the
United States began slowly last summer and has picked up pace this year. Until then, the United States had decreased its
dependence on foreign oil, particularly from the Gulf. This reversal is driven in part by the battle over Iran's nuclear program. The
United States tightened sanctions that hampered Iran's ability to sell crude, the lifeline of its troubled economy, and Saudi Arabia
agreed to increase production to help guarantee that the price did not skyrocket. While prices have remained stable, and Iran's
treasury has been squeezed, the United States is left increasingly vulnerable to a region in turmoil. The jump in Saudi oil production
has been welcomed by Washington and European governments, but Saudi society faces its own challenges, with the recent deaths of
senior members of the royal family and sectarian strife in the eastern part of the country, making the stability of Saudi energy and
political policies uncertain. The United States has had a decades-long political alliance with the Saudi leadership, one that has
become even more pivotal during the turmoil of the Arab spring and rising hostilities with Iran over that nation's nuclear program.
(Saudi Arabia and Iran are bitter regional rivals.) The development underscores the U.S. difficulty in lowering its dependence on
foreign oil — especially the heavy grades of crude that Saudi Arabia exports — even as domestic oil production is soaring.
Status quo military oil dependence from the persian gulf decimates power
projection
Fitzpatrick ‘11
(Senior Policy Advisor for Clean Energy at Third Way, Josh Freed, Vice President for Clean Energy at Third Way, and Mieke Eoyan,
Director for National Security at Third Way, June ,Fighting for Innovation: How DoD Can Advance CleanEnergy Technology... And
Why It Has To, content.thirdway.org/publications/414/Third_Way_Idea_Brief_-_Fighting_for_Innovation.pdf)
military’s reliance on oil from unstable and often unfriendly parts of the world
creates a significant security threat. Like most consumers, the Pentagon purchases petroleum on the global
market. Some of the largest suppliers in this market are Middle Eastern and North African nations, many
of which are prone to internal political instability and/or tenuous relationships with
the American government. The ten countries with the largest oil reserves, for example, include the likes of Libya,
Iran, Nigeria, Venezuela, and Iraq. This leaves the U.S. vulnerable to petroleum price
fluctuations influenced by the Organization of Petroleum Exporting Countries (OPEC), which currently is
chaired by Iran.6 Supply concerns are particularly acute in forward-deployed military
locations, like Afghanistan and Iraq, which rely on the safe transportation of fuel through
volatile regions to power vehicles and generators. Military operations account for 75% of all DoD
energy consumption, requiring immense amounts of fuel to be brought to theater.7 U.S. and allied fuel convoys
have been targeted by militants in Iraq, Afghanistan, and Pakistan, resulting in military and
civilian casualties, as well as disruptions in energy supply to critical operations . In
The
April of 2011, the Taliban warned of a “spring offensive” that would include attacks on “logistical convoys of the foreign invaders”
within Afghanistan.8 And in May, militants damaged or destroyed over a dozen fuel tankers taking 15 lives in the process.9 It is
estimated that over 3,000 American troops and contractors have been killed while protecting supply convoys in Iraq and
Afghanistan.10 As Navy Secretary Ray Mabus has said, “Fossil fuel is the No. 1 thing we import to Afghanistan, and guarding that
fuel is keeping the troops from doing what they were sent there to do, to fight or engage local people.”11
Reliance on oil can
the military less responsive and flexible in its operations
also make
. For instance, the Defense
Science Board notes that if the Abrams tanks used in operation Desert Shield had been 50% more fuel efficient, there would have
been a greatly reduced need for fuel and related infrastructure which, in turn, would have cut the military’s build-up time by 20%.12
Between 2000 and 2008, DoD’s
oil expenditures increased by almost 500%, peaking at nearly $18
And estimates show that every $10 increase in the cost of a barrel of oil
adds another $1.3 billion to the Pentagon’s fuel budget, swelling the national
deficit and diverting resources from critical defense priorities .14 The rise in spending on fuel
billion.13
by DoD is not solely due to skyrocketing oil prices. The wars in Afghanistan and Iraq, combined with ever-more energy hungry
weapons systems, vehicles and communications devices have increased demand to historic levels. Transporting fuel to military
operations sites, often via heavily-protected convoys, also contributes significantly to the cost. Unless DoD makes significant strides
to reduce its demand and promote innovative methods of generating and distributing energy, it is on course to spend over $150
billion over the next decade on fuel and electricity. That’s up from the roughly $107 billion the Pentagon spent on energy between
2000 and 2009, at the height of two overseas conflicts.15
Mexican oil sources trade off with dependency on saudi arabia and is good large supply
Estrada 07- President at Analítica Energética S.C., (Javier, “TRANS-BOUNDARY OIL AND GAS FIELDS BETWEEN
¶
¶
MEXICO AND THE USA”, January 21st, 2007, 27th USAEE/IAEE North American Conference,
http://www.usaee.org/usaee2007/submissions/OnlineProceedings/Javier%20Estrada.pdf, //CJD)
USA requires increasing energy sources to meet its energy demand
requirements, ¶ specifically oil and natural gas, and preferably should get them
from domestic sources. US ¶ politicians have expressed a policy of reducing the
country’s dependency on oil from the ¶ Middle East, despite the fact that the
region remains an available and competitive ¶ petroleum source. Thus, the US is
now focusing efforts to increase exploration and ¶ production within US borders.¶
One possible area available to domestic producers is the deep-water areas of the
GoM, ¶ which is believed to hold one of the largest oil reserves in the world. The
GoM basin is a ¶ nearly circular structural basin, approximately 1,500 km in
diameter, filled with sediments ¶ from the late Triassic to the Holocene. The GoM
is approximately 4 million square miles ¶ and accounts for roughly ninety percent
of US offshore oil and gas production.4¶ About ¶ 20% of the Gulf lay in more than
3,000 meters of water depth, with the deepest part, the ¶ Sigsbee Deep, at more
than 4,000 meters water depth.¶ Although oil companies in both countries have long
explored the shallower depths of the ¶ GoM, it had not been technologically or
economically feasible to pursue oil and gas in the ¶ mineral-rich deep waters of the
GoM until recently. ¶ Small scale oil production in the US GoM started in 1938 and
since then exploration and ¶ production has grown considerably. By the 1970s,
more than 50% of the discoveries made ¶ in the Gulf Coast basins were offshore.
By the 1980s exploratory drilling had reached ¶ water depths beyond 6,000 feet in
the western part of the GoM and new research focused ¶ in sub-salt reservoirs. ¶
Activities lowered down during the late 1980s and early 1990s. The GoM was
believed to ¶ be a mature province. However, advances in platforms, drilling
technology and 3D seismic ¶ made it possible to identify commercial fields in
deeper waters. By the late 1990s the US ¶ GoM oil activities experienced a new
boom, with additional interest in ultra-deep water ¶ areas. The Deep Water
Royalty Relief Act5¶ provided incentives to develop fields in water ¶ depths greater
than 600 feet, leading to expansion in all the segments of the petroleum ¶ value
chain. During the following decade, oil production from deep waters grew by
840% ¶ and gas production by 1,600%. By 2004 exploration reached the 3,000
The
meters water depth ¶ record.¶ Production in the deep waters has centered on the
Mississippi delta in fields containing up ¶ to 500 million barrels of oil equivalent.
Now the activities are moving towards the eastern ¶ part of the GoM where major
discoveries like Neptune and Mad Dog are starting to ¶ produce. Other fields are
in deeper waters (2,300 meters), as for example Spiderman and ¶ San Jacinto. ¶ Only in
the coast of Florida the offshore activities did not developed as in the rest of the ¶
US GoM. This is explained by an environmentally motivated moratorium passed
in 1981, ¶ expiring in 2012. The area offshore Florida could contain 5 trillion cubic
feet (TCF) of gas, ¶ though it is unknown whether the moratorium will be lifted. ¶
Many continue to consider the US GoM as a mature hydrocarbon basin with production ¶
coming from 1,112 fields and accumulated production of more than 14.6 billion
barrels ¶ (MMMB) of oil and 164 TCF of gas since 1938. On the other hand, the
2002 figures from ¶ the MMS show that proven reserves in the US GoM are 18.75
MMMB and 176.8 TCF of ¶ gas. Today offshore operations in the GoM represent
about 12.5% of the total US oil ¶ production and some 25% of the gas produced. ¶
Now that the main producing plays and hydrocarbon systems are well known, the
GoM is ¶ regarded by oil companies as a region with interesting commercial
hydrocarbon potentials, ¶ even though the projects to obtain them will require
state of the art drilling technology and ¶ new approaches to exploration.
Geologists consider that the area continues to present ¶ significant prospective
resources in the deep and ultra-deep waters. New plays have been ¶ proved,
including sub-salt reservoirs, while producing areas continue to be important.
This ¶ could be explained by the fact that the average size of fields discovered in
the deep waters ¶ of the GoM during the last decade are 67 million barrels of oil
equivalent (MMboe) ¶ compared to 5 MMboe in shallow waters. Their
productivity is also considerably higher, ¶ though the lifting costs are significant
due to expensive exploration and production ¶ equipments. But this is not
stopping the developments. Many of the new discoveries are at ¶ 7,000 feet water
depths, adding 1.8 billion barrels of oil equivalents in new reserves. The ¶ deep
and ultra-deep exploratory efforts have made possible to identify deep shelf gas ¶
plays and sub-salt reservoirs¶
Instability in Persian gulf increasing now - makes oil production unstable
Summers 6/23/13 - (Dave, Curators' Professor Emeritus of Mining Engineering at Missouri University of Science and Technology,
"Instability in the Middle East Makes Accurate Oil Market Predictions Impossible" http://oilprice.com/Geopolitics/MiddleEast/Instability-in-the-Middle-East-Makes-Accurate-Oil-Market-Predictions-Impossible.html)//AP
The continuing conflict in Syria, and the slow spread of violence in the region around it, continue to make it difficult to make
accurate predictions about the future of oil exports from the region. Within Syria itself production had fallen into decline about ten
years ago, before the current struggle began. The precipitate drop over the last two years has, however, been much more dramatic.
As Energy Export Data browser noted from the BP statistic review, production fell by 49% last year. As with most oil-producing
nations oil consumption had, on the other hand, been steadily rising with net exports (some is exported as crude and re-imported as
refined product) falling to around 100 kbd. The conflict has, however, also reduced internal consumption at similar rates earlier in
the conflict. At the same time that Syrian exports have sensibly disappeared, so the exports from Iran have continued to fall. Data
through the end of last year shows that sanctions continued to bite, with exports falling 31% last year. Much of the oil from Iran goes
to China, India and Turkey. In May 2013 the total exports fell to 700 kbd although individual monthly numbers fluctuate given the
complexity of now getting oil into the hands of customers. India is hoping that the change in the Iranian Presidency will lead to an
easing of sanctions. In the interim, the exemptions that China, India and Turkey are receiving to some of the sanctions have just
been extended another six months. Part of this comes from the cuts those countries have already made. India, for example is now
down to around 117 kbd less than half that of a year ago. Oil imports into China are reported to have increased, perhaps because the
Chinese have just agreed to buy a number of Chinese drilling rigs. Total exports are projected to fall to 1.3 mbd over the current
Iranian fiscal year (which started in March). If Iran is having to store more of its oil in off-shore tankers, this may explain the fall in
regional tanker availability over the past month. In a recent post I discussed my concern over the likelihood of Iraq being able to
achieve the increased volumes of production within the time frame that their Central Government has suggested. However, as
Leanan caught recently, Kurdish Iraq is moving more and more toward independent action in regards to their oil. From the Turkish
side a pipeline will be allowed, that can go to the border, but not cross it. Mysteriously it will likely then fill, over time, with a flow of
1 mbd. Turkey is working with BP to develop the resources of Kurdish Iraq. In the interim Turkish demand has stabilized to a greater
degree than it has in its southern neighbors. The hope is that a pipeline can be built from Iraq, through Jordan, but that requires that
a mutually acceptable line of credit be established, and that appears to be a problem. Egypt has the same soft-credit deal with Libya
for a supply of a million barrels a month. The price, however, will be at that of the world market. Unfortunately as the level of
violence continues to grow one starts to get into an almost inevitable snowball effect, and there is a consequent negative impact on
much industry, likely including that of oil production. The most likely consequence will be a further fall in the regional export of oil,
which has a follow-on consequence in that the customers who have lost this supply (Japan has given up all Iranian oil for example)
must then go onto the world market to find an alternate source of supply. As those sources become even scarcer than they are
already, marginal amounts of oil become more critical to maintaining a global balance. But such supplies don’t become available at
the drop of a hat. It seems to be a drum that I beat perhaps a bit often, but it is a message that bears repeating. Without significant
and ongoing investment in the more difficult regions of the world, funds to identify the necessary availability of resource, and then to
drill, in a timely manner, to prove the resource and start the process of turning it into a reserve, the oil balance cannot be sustained
at a viable and acceptable price. It does not matter how glowing a set of reports are put out about how we can all relax because the
world has plenty of oil in shale.
PEMEX economy scenario
PEMEX decline will trigger instability throughout Mexico – timeframe is 10
years
Kohl 11-27-12 (Keith, “Crisis of Consumption,” http://www.energyandcapital.com/articles/mexican-oil-crisis/2833)
we all know the story behind the Cantarell field's downfall. Once production
started to decline, Pemex began injecting nitrogen to boost output. But this
strategy was short-lived, and production at the field has been dropping sharply
since — roughly 14% each year for the last six years.¶ Cantarell's decline marked the
beginning of the end for Mexican oil production.¶ The country's new finds have also
proven underwhelming. The recent discovery by Pemex in Southern Mexico is a
perfect example. According to Pemex, the new field holds up to 500 million barrels of
crude oil, a trifle compared to the billions of barrels Cantarell once held.¶ But these
days, Mexico will take whatever it can get... and pray it can hold off the decline.¶
Crisis of Consumption¶ Mexico's declining oil production means there's less oil available
for export.¶ Those 2.5 million barrels flowing from Pemex's wells daily are crucial
to the country's stability.¶ When almost 40% of your government budget is paid from
oil revenue, exporting less oil is not an option — but that's exactly what's
happening (click charts to enlarge): During the first eight months of 2012,
Mexican oil exports to the United States were slightly above one million barrels
per day. Last May oil exports fell below one million barrels per day for the first
time in 27 years.¶ Barring some miracle taking place in Mexico's oil industry, I
believe the country will be a net oil importer within ten years.
Of course,
Gulf Drilling will allow PEMEX to restore itself- Latin oil profits and resources
Negrete and Méndez 6/5- staff writers at Thomas net, (Andrea and Adriana, “GE Signs $84 Million
Agreement with PEMEX for Deepwater Exploration Projects in the Gulf of Mexico”, 6/5/13, Thomasnet news,
http://news.thomasnet.com/companystory/GE-Signs-84-Million-Agreement-with-PEMEX-for-DeepwaterExploration-Projects-in-the-Gulf-of-Mexico-20009682, //CJD)
GE Oil & Gas (NYSE: GE) has signed an $84 million
agreement with PEMEX Exploration and Production to supply and to install
subsea wellheads for PEMEX's deepwater and ultra-deepwater drilling projects
in the Gulf of Mexico. This marks GE's largest agreement with PEMEX for the
supply of subsea high capacity wellheads.¶ The Gulf of Mexico is a strategic zone for
the hydrocarbon industry, since it is estimated to hold more than 50 percent of
Mexico's potential or prospective resources. However, such reserves are located
in deepwater and ultra-deepwater sites, and advanced technology is needed to
extract those resources for the benefit of the country.¶ GE Oil & Gas has become a
strategic partner both for PEMEX and for Mexico in the search of new
hydrocarbon reserves. By designing high-technology subsea wellheads that provide a
larger load, pressure capacity and a full-bore design, unique in the market, GE is
helping drillers reach greater depths. For the latest PEMEX project, GE will supply
SMS800 and DWHC 700 high capacity wellheads; similar GE technology has
CIUDAD DEL CARMEN, CAMPECHE —
previously been installed at several other Mexican oil fields including Perdido,
Lakach and Kunah.¶ Carlos Arnoldo Morales Gil, Head of PEMEX Exploration and
Production, talks about the importance of such partnership: "PEMEX uses the
most advanced technology in the world; our main goal is to optimize the
hydrocarbon reserves and the resources we have. This is one of the reasons we've
been using technology and expertise provided by GE Oil & Gas for several years
now."¶ "Our focus is to seek partnerships where GE can offer its expertise to
support the economic development of Mexico," said João Geraldo Ferreira, president and CEO for GE
Oil & Gas Latin America. "Mexico has an increasingly strategic position in our company's
global business plans, and PEMEX is one of the most important partners we
have."¶ Octavio A. Mejía, regional sales manager for GE Oil & Gas Subsea Systems in
Latin America, pointed out that this agreement confirms the trust and the
excellent collaboration between PEMEX and GE Oil & Gas. "During the last six years
GE has provided top of the line technology and training to PEMEX. So far, we
have provided subsea wellheads and service to more than 24 wells and we expect
to provide many more."
Mexican instability hurts US power
Kaplan ’12 (Robert D., chief geopolitical analyst at Stratfor With the Focus on Syria, Mexico Burns, Stratfor, 3-28-2012,
http://www.stratfor.com/weekly/focus-syria-mexico-burns)
While the foreign policy elite in Washington focuses on the 8,000 deaths in a conflict in Syria -- half a world away from the United
States -- more than 47,000 people have died in drug-related violence since 2006 in Mexico. A deeply troubled state as well as a
demographic and economic giant on the United States' southern border, Mexico will affect America's destiny in coming decades
more than any state or combination of states in the Middle East. Indeed, Mexico may constitute the world's seventh-largest economy
in the near future. Certainly, while the Mexican violence is largely criminal, Syria is a more clear-cut moral issue, enhanced by its
own strategic consequences. A calcified authoritarian regime in Damascus is stamping out dissent with guns and artillery barrages.
Moreover, regime change in Syria, which the rebels demand, could deliver a pivotal blow to Iranian influence in the Middle East, an
event that would be the best news to U.S. interests in the region in years or even decades. Nevertheless, the Syrian rebels are divided
and hold no territory, and the toppling of pro-Iranian dictator Bashar al Assad might conceivably bring to power an austere Sunni
regime equally averse to U.S. interests -- if not lead to sectarian chaos. In other words, all military intervention scenarios in Syria are
fraught with extreme risk. Precisely for that reason, that the U.S. foreign policy elite has continued for months to feverishly debate
Syria, and in many cases advocate armed intervention, while utterly ignoring the vaster panorama of violence next door in Mexico,
speaks volumes about Washington's own obsessions and interests, which are not always aligned with the country's geopolitical
interests. Syria matters and matters momentously to U.S. interests, but Mexico ultimately matters more, so one would think that
there would be at least some degree of parity in the amount written on these subjects. I am not demanding a switch in news coverage
from one country to the other, just a bit more balance. Of course, it is easy for pundits to have a fervently interventionist view on
Syria precisely because it is so far away, whereas miscalculation in Mexico on America's part would carry far greater consequences.
For example, what if the Mexican drug cartels took revenge on San Diego? Thus, one might even argue that the very noise in the
media about Syria, coupled with the relative silence about Mexico, is proof that it is the latter issue that actually is too sensitive for
loose talk. It may also be that cartel-wracked Mexico -- at some rude subconscious level -- connotes for East Coast elites a south of
the border, 7-Eleven store culture, reminiscent of the crime movie "Traffic," that holds no allure to people focused on ancient
civilizations across the ocean. The concerns of Europe and the Middle East certainly seem closer to New York and Washington than
does the southwestern United States. Indeed, Latin American bureaus and studies departments simply lack the cachet of Middle
East and Asian ones in government and universities. Yet, the fate of Mexico is the hinge on which the United States' cultural and
demographic future rests. U.S. foreign policy emanates from the domestic condition of its society, and nothing will affect its society
more than the dramatic movement of Latin history northward. By 2050, as much as a third of the American population could be
Hispanic. Mexico and Central America constitute a growing demographic and economic powerhouse with which the United States
has an inextricable relationship. In recent years Mexico's economic growth has outpaced that of its northern neighbor. Mexico's
population of 111 million plus Central America's of more than 40 million equates to half the population of the United States. Because
of the North American Free Trade Agreement, 85 percent of Mexico's exports go to the United States, even as half of Central
America's trade is with the United States. While the median age of Americans is nearly 37, demonstrating the aging tendency of the
U.S. population, the median age in Mexico is 25, and in Central America it is much lower (20 in Guatemala and Honduras, for
example). In part because of young workers moving northward, the destiny of the United States could be north-south, rather than
the east-west, sea-to-shining-sea of continental and patriotic myth. (This will be amplified by the scheduled 2014 widening of the
Panama Canal, which will open the Greater Caribbean Basin to megaships from East Asia, leading to the further development of Gulf
of Mexico port cities in the United States, from Texas to Florida.) Since 1940, Mexico's population has increased more than five-fold.
Between 1970 and 1995 it nearly doubled. Between 1985 and 2000 it rose by more than a third. Mexico's population is now more
than a third that of the United States and growing at a faster rate. And it is northern Mexico that is crucial. That most of the drugrelated homicides in this current wave of violence that so much dwarfs Syria's have occurred in only six of Mexico's 32 states, mostly
in the north, is a key indicator of how northern Mexico is being distinguished from the rest of the country (though the violence in the
city of Veracruz and the regions of Michoacan and Guerrero is also notable). If the military-led offensive to crush the drug cartels
launched by conservative President Felipe Calderon falters, as it seems to be doing, and Mexico City goes back to cutting deals with
the cartels, then the capital may in a functional sense lose even further control of the north, with concrete implications for the
southwestern United States. One might argue that with massive border controls, a functional and vibrantly nationalist United States
can coexist with a dysfunctional and somewhat chaotic northern Mexico. But that is mainly true in the short run. Looking deeper
into the 21st century, as Arnold Toynbee notes in A Study of History (1946), a border between a highly developed society and a less
highly developed one will not attain an equilibrium but will advance in the more backward society's favor. Thus, helping to stabilize
Mexico -- as limited as the United States' options may be, given the complexity and sensitivity of the relationship -- is a more urgent
national interest than stabilizing societies in the Greater Middle East. If Mexico ever does reach coherent First World status, then it
will become less of a threat, and the healthy melding of the two societies will quicken to the benefit of both. Today, helping to thwart
drug cartels in rugged and remote terrain in the vicinity of the Mexican frontier and reaching southward from Ciudad Juarez (across
the border from El Paso, Texas) means a limited role for the U.S. military and other agencies -- working, of course, in full
cooperation with the Mexican authorities. (Predator and Global Hawk drones fly deep over Mexico searching for drug production
facilities.) But the legal framework for cooperation with Mexico remains problematic in some cases because of strict interpretation of
19th century posse comitatus laws on the U.S. side. While the United States has spent hundreds of billions of dollars to affect
historical outcomes in Eurasia, its leaders and foreign policy mandarins are somewhat passive about what is happening to a country
with which the United States shares a long land border, that verges on partial chaos in some of its northern sections, and whose
population is close to double that of Iraq and Afghanistan combined. Mexico, in addition to the obvious challenge of China as a
rising great power, will help write the American story in the 21st century. Mexico will partly determine what kind of society America
will become, and what exactly will be its demographic and geographic character, especially in the Southwest. The U.S. relationship
with China will matter more than any other individual bilateral relationship in terms of determining the United States' place in the
world, especially in the economically crucial Pacific. If policymakers in Washington calculate U.S. interests properly regarding those
two critical countries, then the United States will have power to spare so that its elites can continue to focus on serious moral
questions in places that matter less.
1AC – trade deficit
Contention _____ is trade deficits
Trade deficit expanding
Mitchell and Morath 6/4/13 – (Josh and Eric, “U.S. Trade Deficit Widens as Global Demand Falters ”, WSJ,
http://online.wsj.com/article/SB10001424127887324563004578524983651869220.html)//Javi
Americans' appetite for foreign goods, including cars and cellphones, pushed imports higher and widened the U.S. trade deficit in
April, while slower growth abroad restrained overseas demand for U.S. products. Imports rose 2.4% from March, to $227.7 billion,
the nation's trade
gap expanded by 8.5% from March to $40.3 billion. The report bolstered evidence that U.S. consumers are
powering the nation's economic growth despite higher payroll taxes that took effect in
January. The rise in April imports reflected higher consumer demand for foreign cars, clothing, drugs
and other consumer goods, showing that Americans appear to be in a spending mood. But the figures also signaled
caution for key parts of the economy. While overall U.S. exports rose for the second time in three months,
new signs of trouble emerged in recession-plagued Europe and slower-growing Asian
economies. "It certainly supports the idea that there isn't a huge amount of demand really
anywhere," said Dan Greenhaus, chief global strategist at New York-based BTIG LLC. "The data is just broadly in line with a
and exports increased just 1.2%, to $187.4 billion, the Commerce Department said Tuesday. As a result,
moderately growing economy."
Offshore drilling solves trade deficit – reduces necessity for oil imports
Priest, 13 – (Tyler, “Should the U.S. Expand Offshore Oil Drilling?”
http://online.wsj.com/article/SB10001424127887324020504578398610851042612.html)
The U.S. will be the world's largest per-capita consumer of crude oil for the
foreseeable future. To help meet this demand and limit reliance on imports, the country will need to
increase exploration for offshore oil. As the 2010 Deepwater Horizon disaster demonstrated, there are risks.
Critics, however, too often exaggerate the risks, including the impacts of routine drilling operations on ecosystems,
and understate the benefits. Expanding offshore drilling with appropriate site selection, oversight
and attention to the lessons from Deepwater Horizon—already embodied in new rules on equipment, drilling and safety—should
be a central objective of U.S. energy policy. Regardless of the progress we make in limiting our carbon
addiction, kicking the habit won't happen easily or soon. The raw energy produced by a single offshore
oil platform in 2010—BP BP.LN +1.02% PLC's Thunder Horse facility in the Gulf of Mexico—was equivalent to
the electricity generated in 2012 by all the wind and solar installations in the U.S.
combined. Offshore oil also does more than help satisfy our energy
appetite. Annual federal proceeds from offshore leases have ranged as high as
$18 billion in recent years, second only to income taxes as a revenue source. And every barrel of
consumption that isn't imported helps ease the U.S. trade deficit.
Data proves resolving the deficit solves protectionism
Hufbauer et. al. 10 (Gary, Former Senior Chair at the Council on Foreign Relations,
Author of multiple books on international trade, Peterson Institute for International
Economics, “US Protectionist Impulses in the Wake of the Great
Recession”, http://www.iie.com/publications/papers/hufbauer201003.pdf)
The U.S. unemployment rate more than doubled between the onset of the Great Recession in¶ December 2007 and December 2009,
and is now hovering just below 10 percent (figure 1).¶ 1¶ Considering that this discouraging figure likely understates broader
deterioration in the U.S.¶ labor market,¶ 2¶ the absence of sustained Congressional pressure for large‐scale protectionist¶ measures,
beyond “Buy American” provisions and several smaller companions (all examined in¶ this report), is in some ways surprising.¶ 3¶ At
least part of the explanation for the restrained political response is the simultaneous large¶ improvement in the U.S. trade balance
during 2008 and early 2009. Figure 1 illustrates how the¶ total U.S. deficit in goods and services trade was nearly cut in half during
this period, creating a¶ political obstacle to kneejerk protectionism. As we will elaborate in section IV, during recessions¶ an
improving external balance (from imports falling faster than exports) often acts an¶ “automatic international economic stabilizer,”
which temporarily fulfills an equivalent¶ economic function to a Keynesian government stimulus package. The “external sector” of
the¶ U.S. economy during the early quarters of the Great Recession provided an “automatic offset”¶ to sliding U.S. economic activity.
This probably caused policymakers to think twice about¶ succumbing to short‐term protectionist instincts.¶ However, figure 1 also
shows how the improvement in the U.S. trade balance has been only¶ temporary and indeed began to reverse as the U.S. economy
exited the Great Recession during¶ the second half of 2009. Crucial for the political threat of protectionism, economic forecasts¶
indicate that the U.S. unemployment rate will probably remain at very high levels over the¶ medium term, despite President
Obama’s emphasis on “jobs, jobs, jobs” in his State of the¶ Union Address delivered on January 27¶ th¶ , 2010.¶ 4¶ A time lag of at
least 12 to 18 months probably separates the point at which the U.S. trade¶ balance showed maximum improvement (spring 2009)
and the expected drop in measured¶ unemployment well below 10 percent (fall 2010). Absent the “feel good” factor of an improving¶
trade balance, but facing continuing high unemployment levels, protectionist sentiment in the¶ U.S. Congress may increase in the
coming months, especially as the November 2010 midterm¶ election draws near.¶ This is particularly so, as current economic
forecasts suggest a more robust U.S. economic¶ recovery in the coming years, relative to other industrial trading partners (table 1). A
large and¶ growing deficit in the U.S. external balances will likely persist for some time, while the external¶ balances of other major
trading partners could hold steady or even improve. If the United¶ States thus returns to its “pre‐crisis role as the world’s
importer/consumer of last resort,”¶ protectionist impulses in the U.S. Congress are destined to escalate.¶ 5¶ Fresh U.S. protectionist
initiatives, at a time when the U.S. economy is growing at a decent pace,¶ will likely invite in‐kind retaliation by America’s trading
partners, despite the relatively muted¶ reaction to the original “Buy American” provisions in early 2009 and other protectionist
measures implemented since then. No longer facing a newly‐elected U.S. president, who¶ entered office with considerable global
appeal in the midst of an unprecedented economic¶ crisis, foreign leaders are unlikely to give the U.S. an easy pass on future new
instances of U.S.¶ protectionism.
Extinction
Panzer 8 (Michael J., Faculty – New York Institute of Finance, Financial Armageddon: Protect Your Future from Economic
Collapse, p. 137-138)
The rise in isolationism and protectionism will bring about ever more heated arguments and
dangerous confrontations over shared sources of oil, gas, and other key commodities as well as factors of production
that must, out of necessity, be acquired from less-than-friendly nations. Whether involving raw materials used in strategic industries
or basic necessities such as food, water, and energy, efforts to secure adequate supplies will take increasing precedence in a world
Disputes over the misuse, overuse, and pollution of the environment
and natural resources will become more commonplace. Around the world, such tensions will
give rise to full-scale military encounters, often with minimal provocation. In some
instances, economic conditions will serve as a convenient pretext for conflicts that stem from
cultural and religious differences. Alternatively, nations may look to divert attention away
from domestic problems by channeling frustration and populist sentiment toward other
countries and cultures. Enabled by cheap technology and the waning threat of American retribution, terrorist groups
will likely boost the frequency and scale of their horrifying attacks, bringing the threat of random violence
to a whole new level. Turbulent conditions will encourage aggressive saber rattling and
interdictions by rogue nations running amok. Age-old clashes will also take on a new, more heated sense of urgency.
China will likely assume an increasingly belligerent posture toward Taiwan, while
Iran may embark on overt colonization of its neighbors in the Mideast. Israel, for its part, may look to
where demand seems constantly out of kilter with supply.
draw a dwindling list of allies from around the world into a growing number of conflicts. Some observers, like John Mearsheimer, a
political scientists at the University of Chicago, have even speculated that an “intense confrontation” between the United States and
China is “inevitable” at some point. More than a few disputes will turn out to be almost wholly ideological. Growing cultural and
religious differences will be transformed from wars of words to battles soaked in blood. Long-simmering resentments could also
Terrorists employing
biological or nuclear weapons will vie with conventional forces using jets,
cruise missiles, and bunker-busting bombs to cause widespread destruction.
Many will interpret stepped-up conflicts between Muslims and Western societies as the beginnings of
a new world war.
degenerate quickly, spurring the basest of human instincts and triggering genocidal acts.
Trade deficit destroys economy
Sherter 5/10/13 – (Alain, “How the U.S. trade gaps hurts the economy”, CBS, http://www.cbsnews.com/8301505123_162-57431723/how-the-u.s-trade-gaps-hurts-the-economy/)
U.S. trade deficit rose in March at its fastest clip in 10 months, as sales of consumer goods
coming from overseas outstripped gains in U.S. exports, according to new Commerce Department data.
The global
Despite Europe's financial woes, imports from the region jumped nearly 23 percent in March and hit a new high of roughly $35
the U.S.
trade deficit
doubled
billion. Since
economy officially started recovering in 2009, the
has
, notes economist
Peter Morici. It's worth noting that many of those clothes, electronic gadgets, and other low-priced products coming into the U.S.
from China and elsewhere are, in fact, goods made overseas by American companies. In theory, that should drive job-creation here
in the states. The lower the price of, say, a Chinese-made flat-screen TV, the more units American consumers will buy. Rising
demand for nice TVs is supposed to boost hiring, as U.S. companies gear up to fill orders. If only theory jibed better with reality.
With the U.S. economy still showing symptoms of depression, demand has yet to fully rebound. Hiring remains slow.
As the
trade deficit has grown, meanwhile, U.S. businesses have moved a lot more jobs abroad in recent
years than they've created at home. Between 1999 and 2008 U.S. multinationals slashed their
domestic workforce by 1.9 million, while increasing overseas employment by 2.4 million, economist Martin
Sullivan has shown. And it's not only about wages. The U.S. has lost more manufacturing jobs since 2000 than several countries that
The number
of financial services, IT, HR, and other white-collar jobs lost to offshoring has
risen since the financial crisis. How does offshoring relate to America's growing trade deficit? Both stifle job-creation, which in
pay their workers more, including Australia, France, Germany, and Sweden. Nor is it only about manufacturing.
turn is affected by U.S. trade policy. Since 2001, for example, the U.S. trade gap with China has resulted in a loss of 2.8 million jobs,
a widening deficit can act as
a drag on the economy by muting the job-creating effects of consumer spending.
Why? Because when people hit their local mall or big-box retailer, what they buy is mostly made abroad. That
creates more jobs overseas than it does here. It also weakens the impact of
government stimulus by reducing the "multiplier" effect you get when formerly unemployed
workers in the U.S. suddenly have a job and money in their pockets. (Again, the idea there is that higher consumer
spending drives hiring, which continues the virtuous circle by pushing up
spending.)
according to the Economic Policy Institute, a Washington think-tank. More broadly,
US is key to the global economy
Caploe 09 David, CEO of the Singapore-incorporated American Centre for Applied Liberal Arts and Humanities in Asia., “Focus
still on America to lead global recovery”, April 7, The Strait Times, lexis
IN THE aftermath of the G-20 summit, most observers seem to have missed perhaps the most crucial statement of the entire event, made by
United States President Barack Obama at his pre-conference meeting with British Prime Minister Gordon Brown: 'The world has become
accustomed to the US being a voracious consumer market, the engine that drives a lot of economic growth worldwide,' he said. 'If there is going to
be renewed growth, it just can't be the US as the engine.' While superficially sensible, this view is deeply problematic. To begin with, it ignores the
fact that the global economy has in fact been 'America-centred' for more than 60 years. Countries - China, Japan, Canada, Brazil,
Korea, Mexico and so on - either sell to the US or they sell to countries that sell to the US. This system has generally been advantageous
for all concerned. America gained certain historically unprecedented benefits, but the system also enabled participating countries - first in Western
Europe and Japan, and later, many in the Third World - to achieve undreamt-of prosperity. At the same time, this deep inter-connection
between the US and the rest of the world also explains how the collapse of a relatively small sector of the US economy - 'subprime' housing, logarithmically exponentialised by Wall Street's ingenious chicanery - has cascaded into the worst global economic crisis
since the Great Depression. To put it simply, Mr Obama doesn't seem to understand that there is no other engine for the
world economy - and hasn't been for the last six decades. If the US does not drive global economic growth, growth is not going
to happen. Thus, US policies to deal with the current crisis are critical not just domestically, but also to the entire world.
Consequently, it is a matter of global concern that the Obama administration seems to be following Japan's 'model' from the 1990s: allowing major
banks to avoid declaring massive losses openly and transparently, and so perpetuating 'zombie' banks - technically alive but in reality dead. As
analysts like Nobel laureates Joseph Stiglitz and Paul Krugman have pointed out, the administration's unwillingness to confront US banks is the
main reason why they are continuing their increasingly inexplicable credit freeze, thus ravaging the American and global economies. Team Obama
seems reluctant to acknowledge the extent to which its policies at home are failing not just there but around the world as well. Which raises the
question: If the US can't or won't or doesn't want to be the global economic engine, which country will? The obvious answer is
China. But that is unrealistic for three reasons. First, China's economic health is more tied to America's than practically any
other country in the world. Indeed, the reason China has so many dollars to invest everywhere - whether in US Treasury bonds or in Africa - is
precisely that it has structured its own economy to complement America's. The only way China can serve as the engine of the global
economy is if the US starts pulling it first. Second, the US-centred system began at a time when its domestic demand far
outstripped that of the rest of the world. The fundamental source of its economic power is its ability to act as the global
consumer of last resort. China, however, is a poor country, with low per capita income, even though it will soon pass Japan as the
world's second largest economy. There are real possibilities for growth in China's domestic demand. But given its structure as an export-oriented
economy, it is doubtful if even a successful Chinese stimulus plan can pull the rest of the world along unless and until China can start selling again
to the US on a massive scale. Finally, the key 'system' issue for China - or for the European Union - in thinking about becoming the engine of
the world economy - is monetary: What are the implications of having your domestic currency become the global reserve currency? This is an
extremely complex issue that the US has struggled with, not always successfully, from 1959 to the present. Without going into detail, it can safely
be said that though having the US dollar as the world's medium of exchange has given the US some tremendous advantages, it has also created
huge problems, both for America and the global economic system. The Chinese leadership is certainly familiar with this history. It will try to
avoid the yuan becoming an international medium of exchange until it feels much more confident in its ability to handle the
manifold currency problems that the US has grappled with for decades. Given all this, the US will remain the engine of global
economic recovery for the foreseeable future, even though other countries must certainly help. This crisis began in the US - and
it is going to have to be solved there too.
Global economic decline causes nuclear war
Auslin ‘9
(Michael, Resident Scholar – American Enterprise Institute, and Desmond Lachman – Resident Fellow – American Enterprise
Institute, “The Global Economy Unravels”, Forbes, 3-6, http://www.aei.org/article/100187)
What do these trends mean in the short and medium term? The Great Depression showed how social and global chaos followed hard
on economic collapse. The mere fact that parliaments across the globe, from America to Japan, are unable to make responsible,
economically sound recovery plans suggests that they do not know what to do and are simply hoping for the least disruption. Equally
worrisome is the adoption of more statist economic programs around the globe, and the concurrent decline of trust in free-market
systems. The threat of instability is a pressing concern. China, until last year the world's fastest growing economy, just reported that
20 million migrant laborers lost their jobs. Even in the flush times of recent years, China faced upward of 70,000 labor uprisings a
year. A sustained downturn poses grave and possibly immediate threats to Chinese internal stability. The regime in Beijing may be
faced with a choice of repressing its own people or diverting their energies outward, leading to conflict with China's neighbors.
Russia, an oil state completely dependent on energy sales, has had to put down riots in its Far East as well as in downtown Moscow.
Vladimir Putin's rule has been predicated on squeezing civil liberties while providing economic largesse. If that devil's bargain falls
apart, then wide-scale repression inside Russia, along with a continuing threatening posture toward Russia's neighbors, is likely.
Even apparently stable societies face increasing risk and the threat of internal or possibly external conflict. As Japan's exports have
plummeted by nearly 50%, one-third of the country's prefectures have passed emergency economic stabilization plans. Hundreds of
thousands of temporary employees hired during the first part of this decade are being laid off. Spain's unemployment rate is
expected to climb to nearly 20% by the end of 2010; Spanish unions are already protesting the lack of jobs, and the specter of
violence, as occurred in the 1980s, is haunting the country. Meanwhile, in Greece, workers have already taken to the streets. Europe
as a whole will face dangerously increasing tensions between native citizens and immigrants, largely from poorer Muslim nations,
who have increased the labor pool in the past several decades. Spain has absorbed five million immigrants since 1999, while nearly
9% of Germany's residents have foreign citizenship, including almost 2 million Turks. The xenophobic labor strikes in the U.K. do
not bode well for the rest of Europe. A prolonged global downturn, let alone a collapse, would dramatically raise tensions
inside these countries. Couple that with possible protectionist legislation in the United States, unresolved ethnic and territorial
disputes in all regions of the globe and a loss of confidence that world leaders actually know what they are doing. The result may be a
series of small explosions that coalesce into a big bang.
1AC – Plan
Plan: The United States Federal Government should pass the Outer
Continental Shelf Transboundary Hydrocarbon Agreement Authorization Act
outlined in the House of Representatives bill 1613.
1AC – Solvency
Contention _ is Solvency
The US is key- their land, congress needed, same with Kerry
CR 6/27- Congressional Record of the United States Congress, (“OUTER CONTINENTAL SHELF TRANSBOUNDARY
HYDROCARBON AGREEMENTS AUTHORIZATION ACT”, 6/27/13, Congressional Record,
http://beta.congress.gov/congressional-record/2013/06/27/house-section/article/H4096-6, //CJD)
H.R. 1613¶ Be it enacted by the Senate and House of Representatives of ¶ the United States
of America in Congress assembled,¶ SECTION 1. SHORT TITLE.¶ This Act may be cited as the
``Outer Continental Shelf ¶ Transboundary Hydrocarbon Agreements
Authorization Act''.¶ TITLE I--AMENDMENT TO THE OUTER CONTINENTAL
SHELF LANDS ACT¶ SEC. 101. AMENDMENT TO THE OUTER CONTINENTAL
SHELF LANDS ACT.¶ The Outer Continental Shelf Lands Act (43 U.S.C. 1331 et ¶
seq.) is amended by adding at the end the following:¶ ``SEC. 32.
TRANSBOUNDARY HYDROCARBON AGREEMENTS.¶ ``(a) Authorization.-After the date of enactment of the ¶ Outer Continental Shelf Transboundary
Hydrocarbon Agreements ¶ Authorization Act, the Secretary may implement the
terms of ¶ any transboundary hydrocarbon agreement for the management of ¶
transboundary hydrocarbon reservoirs entered into by the ¶ President and
approved by Congress. In implementing such an ¶ agreement, the Secretary shall
protect the interests of the ¶ United States to promote domestic job creation and
ensure the ¶ expeditious and orderly development and conservation of ¶ domestic
mineral resources in accordance with all applicable ¶ United States laws governing
the exploration, development, ¶ and production of hydrocarbon resources on the
outer ¶ Continental Shelf.¶ ``(b) Submission to Congress.--¶ ``(1) In general.--No later
than 180 days after all parties ¶ to a transboundary hydrocarbon agreement have
agreed to its ¶ terms, a transboundary hydrocarbon agreement that does not ¶
constitute a treaty in the judgment of the President shall be ¶ submitted by the
Secretary to--¶ ``(A) the Speaker of the House of Representatives;¶ ``(B) the
Majority Leader of the Senate;¶ ``(C) the Chair of the Committee on Natural
Resources of ¶ the House of Representatives; and¶ ``(D) the Chair of the
Committee on Energy and Natural ¶ Resources of the Senate.¶ ``(2) Contents of
submission.--The submission shall ¶ include--¶ ``(A) any amendments to this Act
or other Federal law ¶ necessary to implement the agreement;¶ ``(B) an analysis of
the economic impacts such an agreement ¶ and any amendments necessitated by
the agreement will have on ¶ domestic exploration, development, and production
of ¶ hydrocarbon resources on the outer Continental Shelf; and¶ ``(C) a detailed
description of any regulations expected to ¶ be issued by the Secretary to
implement the agreement.¶ ``(c) Implementation of Specific Transboundary
Agreement ¶ With Mexico.--The Secretary may take actions as necessary to ¶
implement the terms of the Agreement between the United ¶ States of America
and the United Mexican States Concerning ¶ Transboundary Hydrocarbon
Reservoirs in the Gulf of Mexico, ¶ signed at Los Cabos, February 20, 2012,
including--¶ ``(1) approving unitization agreements and related ¶ arrangements
for the exploration, development, or production ¶ of oil and natural gas from
transboundary reservoirs or ¶ geological structures;¶ ``(2) making available, in the
limited manner necessary ¶ under the agreement and subject to the protections of
¶ confidentiality provided by the agreement, information ¶ relating to the
exploration, development, and production of ¶ oil and natural gas from a
transboundary reservoir or ¶ geological structure that may be considered
confidential, ¶ privileged, or proprietary information under law;¶ ``(3) taking
actions consistent with an expert ¶ determination under the agreement; and¶ ``(4)
ensuring only appropriate inspection staff at the ¶ Bureau of Safety and
Environmental Enforcement or other ¶ Federal agency personnel designated by
the Bureau, the ¶ operator, or the lessee have authority to stop work on any ¶
installation or other device or vessel permanently or ¶ temporarily attached to the
seabed of the United States, ¶ which may be erected thereon for the purpose of
resource ¶ exploration, development or production activities as approved ¶ by the
Secretary.¶ ``(d) Exemption From Resources Extraction Reporting ¶
Requirement.--Actions taken by a public company in accordance ¶ with any
transboundary hydrocarbon agreement shall not ¶ constitute the commercial
development of oil, natural gas, or minerals for purposes of section 13(q) of the ¶
Securities Exchange Act of 1934 (157 U.S.C. 78m(q)).
2AC backlines
Pemex
Pemex failing now
PEMEX failing- Production and exports
Garcia 6/06- staff writer at Reuters, (Victor, “PEMEX CEO: oil production is making a comeback, analysts doubt it”,
6/06/13, Petroleum world, http://www.petroleumworld.com/storyt13060601.htm, //CJD)
Zaap oil field is the jewel in the crown of Mexico's oil industry,
pumping one in every three barrels of crude the country produces, at some of the
lowest costs in the world.¶ But behind the luster, state oil monopoly Pemex quietly expects a
gloomier future for the aging field, leaving a big gap in supply and casting serious doubt
on its public proclamations of a new era of oil growth.¶ In the main control center on
the KU-S platform, a 12,500-tonne tangle of tanks and pipes at the heart of Ku Maloob Zaap,
monitors flash real-time data showing how much crude is being sucked up from
deposits two-thirds of a mile below the ocean floor in the 58-square-mile (150-sq-km) field.¶ Workers beam when
talking about the platform, the hub for a network of 173 shallow water wells that
produces crude for the equivalent of only about $6 a barrel.¶ They tout a five-year
streak without an accident; a hotel for visitors; even a gym for the 116 workers who live
here above the glittering waters of the Bay of Campeche.¶ What they don't discuss - and what
Pemex would rather avoid talking about - is that in a few years, production here is
expected to begin a precipitous decline.¶ In February, Pemex said it expected Ku Maloob Zaap's
output to hold steady at 850,000 barrels per day (bpd) through 2017. Since then, Pemex
CEO Emilio Lozoya has repeatedly declared that Mexico, the world's seventh-largest
oil producer, is making a comeback.¶ "Production is not declining. It is actually
beginning to rally," he said recently, referring to total national output. "This is big
news for our country, and something that is not necessarily known to the public."¶
But many analysts question that scenario. A closer look at Ku Maloob Zaap helps explain why.¶ In a
presentation at Rice University in Houston, Texas, early last year, Lozoya's predecessor, Juan Jose Suarez Coppel,
estimated production at the giant offshore oilfield, whose Maya name means
"good nest of coals," will fall 60 percent by 2023.¶ Pemex officials initially
declined to comment on the estimate until Reuters showed them the Rice
presentation. At that point they confirmed that the forecast still stands.¶ Even a cursory
examination of Pemex's own figures underlines why oil analysts do not share Lozoya's
confidence.¶ Mexico's average annual crude production has been edging down for
years. At the outset of 2013, average first-quarter oil output sank to 2.54 million bpd, its lowest level
since 1990.¶ The data and the forecasts highlight a disconnect between Pemex's
optimism and the reality at fields like Ku Maloob Zaap.¶ Two-thirds of fields are
already in decline, and Lozoya's latest forecast for a 20 percent rise in output to 3
million bpd over the next five years is premised on production from some that
have yet to be developed, analysts say.¶ For many, it sounds all too familiar. Just a few years ago
the giant Cantarell field was thought to be a stalwart; output has now plunged to
one-tenth of 2004 levels, a shockingly abrupt decline that caught world oil
markets off guard.¶ "Production is going to fall and there's nothing obvious that
will replace it," said Dave Pursell, an oil analyst with Houston-based energy
development bank Tudor Pickering Holt, who worked on reservoir studies in
The vast Ku Maloob
Mexico in the 1990s.¶ "If a public company in the U.S. told me that, the stock would
be a short," he added. "You'd sell it."¶ The Mexican government hopes a landmark
energy reform aimed at luring private oil major investment will help boost
output.¶ Next month, Pemex will auction six blocks in Mexico's Chicontepec basin,
home to the country's largest hydrocarbon reserve, in a more immediate push for
additional capital.¶ EXPORTS, PRODUCTION DOWN¶ Renewed optimism has
emerged with the election of President Enrique Peña Nieto, who has pledged to
revitalize Pemex.¶ Yet developing the country's newest discoveries to replace
behemoths like Ku Maloob Zaap will take years, even if Peña Nieto's energy reform
attracts new investment. Since pumping its first barrel of oil in 1980, Ku Maloob
Zaap output has risen to a record 847,000 bpd last year.¶ Miles of underwater
pipelines connect the shallow water field's platforms, located on the southern rim
of the Gulf of Mexico. The pipelines converge underneath Pemex's $1 billion Floating
Production, Storage and Offloading (FPSO) vessel, a 360,000-tonne ship nearly four
football fields long.¶ The FPSO mixes heavy and light crude on its deck and, like a
massive gas station, fills up visiting oil tankers for direct export via a hose that
gently bobs up and down on the water.¶ Ten hours after docking, most tankers disconnect
and begin their short voyage north to U.S. Gulf coast refineries.¶ But the tankers are
making fewer trips: oil exports are down by over a third since 2004. And over the
same period, oil output has fallen by a quarter since peaking at 3.4 million bpd.
PEMEX is failing now- YPF reports
Webber 6/27- staff writer at financial times, (Jude, “Confused about what’s going on between YPF and Repsol? So are
we.”, 6/27/13, Financial times, http://blogs.ft.com/beyond-brics/2013/06/27/confused-about-whats-going-on-between-ypf-andrepsol-so-are-we/?#axzz2Xo1gNyzs, //CJD)
Pemex playing at?¶ Why would the Mexican oil company’s CEO go to the trouble of
flying to Barcelona two weeks ago to explore the possibility of brokering a peace deal
between Spain’s Repsol (in which it has a 9.37 per cent stake) and YPF, Repsol’s renationalised
former unit, if Pemex was then going to vote against the deal at a board meeting? ¶
That is just one of the head-scratching conclusions of Wednesday’s Repsol board
meeting at which a plan, that YPF is now trying to deny ever really even existed
formally, was rejected out of hand.¶ To recap: Repsol is suing Argentina for $10.5bn
for the expropriation, without compensation, of 51 per cent of YPF last year, and is also
taking legal action against companies teaming up with YPF.¶ But YPF needs those
companies badly – it has vast shale reserves, that are geologically some of the
most valuable on the planet, but needs investors to put up the billions required to
ramp up development. With the expropriation still raw, Argentina’s regulated energy market,
foreign exchange and import controls, government strictures on repatriating
profits, stubbornly high inflation and unpredictable policy-making – plus the
ongoing Repsol litigation – investors are not rushing to open their wallets.¶ As Raoul
LeBlanc, managing director at IHS Energy, told beyondbrics:¶ From a sicentific point of view, the subsurface of Vaca
Muerta is really, really good – probably better than [US] plays … The big problem
in Argentina is all the above-ground stuff.¶ So with YPF needing to resolve the
What is
expropriation saga to open up shale investment prospects, the other question is,
why did Argentina low-ball its offer to Repsol so badly.¶ On the table at Wednesday’s board
meeting was a plan to create a new company to control 6.4 per cent of the prized Vaca Muerta shale formation, in which YPF
would have 51 per cent, Repsol 47 per cent and Pemex 2 per cent. But the board
unanimously rejected it – which means that Pemex did too.¶ In Argentina’s
presidential pink palace, such an offer no doubt sounds quite generous enough –
after all, the government has accused Repsol of “hollowing out” YPF and it has
made clear that it doesn’t really believe it needs to pay a penny. And playing
hardball is, too, the Argentine government’s preferred modus operandi.¶ YPF took
awkward steps to try to distance itself from the failed plan, denying in a bizarre
statement that it had ever existed as a formal offer from the Argentine government at all (meanwhile
sources in Mexico said Pemex was just the messenger, not the originator of the plan).¶ But YPF
praised what it called Repsol’s openness to dialogue – even though Repsol told it bluntly any such
offer should be “negotiated through the appropriate corporate channels”, be balanced
and big enough to get it to drop its lawsuits.¶ YPF, which has succeeded in persuading
Cristina Fernández, the president, of the need to settle and has been trying to find
a way to do a deal for months, had made clear it had not been expecting the issue
to be wrapped up at Wednesday’s board meeting. But it had entertained the hope
that its improved offer – coming after this one ended up in a siding – was at least
on the right track.¶ As could have been predicted, however, it seems financial stakes proved an
insurmountable stumbling block.
Mexican heavy crude oil exports to the US are falling
EIA 5/14/13 - (US Energy Information Administration, "Mexico Week: Lower Mexican oil production contributes to lower crude
oil exports to U.S." http://www.eia.gov/todayinenergy/detail.cfm?id=11251)//AP
Crude oil exports anchor the energy trade between Mexico and the United States. In
2012 Mexico was the world's ninth largest oil producer. The value of crude oil exports
from Mexico to the United States reached $35.7 billion in 2012, having more than doubled since
2004. However, Mexico's crude oil production and exports to the United States have
both fallen, with exports down to 0.97 million barrels per day (bbl/d) in 2012 from 1.48
million bbl/d in 2004. Last year was the first time since 1994 that annual exports
of Mexican crude oil to the United States fell below 1 million bbl/d. Typically, Mexico
exports its heavier crude oils and keeps its lighter crude, mostly from southern
regions, for its own refineries. More than 90% of Mexico's heavy crude oil
production occurs in the Northeastern Marine production region (see map), and this is
where 75% of Mexico's oil production declines have occurred. The heavy crudes
are predominantly composed of the Maya variety, which state oil company
Petroleos Mexicanos (Pemex) mainly produces from the Cantarell and KuMaloob-Zaap offshore oil fields, located along the coast of the Yucatan
Peninsula.¶ Crude oil production trends in Mexico vary by grade and location.
Mexico's production of heavy crude oil fell 46%, or 1.1 million bbl/d, from 2004
to 2012. However, Mexico's production of light and extra light crude oil rose 0.2
million bbl/d between 2004 and 2012, partially offsetting the heavy crude
declines.¶ In 1938, Mexico nationalized its hydrocarbons, and its constitution
continues to prohibit foreign companies from owning any portion of production.
Throughout much of the world, and certainly in the United States, equity shares of
hydrocarbon production are a significant incentive for companies to share the
risk of production and, at the same time, provide technical expertise.¶ In 2008,
Mexico's Congress enacted energy reform legislation to help address concerns
related to Mexico's slow application of advanced exploration and production
technologies and its declining oil production since 2004. The reforms retained
Pemex ownership of all crude oil produced, but they allowed foreign companies
to participate in the oil sector through service contracts. As a result, Pemex
entered into a handful of partnerships, mostly concentrated in lower-risk
production areas where there is a relatively greater likelihood of recovery. So far,
partnerships have not included major international oil companies.
PEMEX key to Mexican econ
PEMEX key to Mexico’s economy- 70% of state taxes
Melgar 07-Undersecretary at Ministry of Energy Electricity, (Lucy, “Mexico’s economy steady but Pemex
“critical””, Emerging Markets”, 03/19/2007, http://www.emergingmarkets.org/Article/1257244/Mexicos-economysteady-but-Pemex-critical.html, //CJD)
Mexico became a champion of climate concerns during the administration of President Felipe
Calderón (2006–present). In April 2012, Congress approved the Ley General de Cambio Climático (Climate
Change Law), the second of its kind worldwide, establishing the framework to
achieve voluntary nationwide greenhouse gas (GHG) mitigation targets: 30 percent by 2020 and 50
percent by 2050. Congress also set a goal of generating 35 percent of electricity with
clean technologies by 2024. Reaching these objectives will require a major
transformation of an energy mix that relies heavily —93 percent—on hydrocarbons,
including 60 percent in the power industry. Wind, solar and geothermal energy,
all of which Mexico has in abundance, have yet to be tapped to their fullest
potential.¶ Traditionally, the Mexican government has used the state-owned
monopolies of the energy sector as instruments of public policy, either to promote
fiscal policy or for industrial development. The deployment of renewable energies
and clean technologies—for both internal consumption and export—opens an
opportunity for developing new industries, generating employment and moving
toward a green-growth economy.¶ Still, there is no sense of urgency when it comes
to restructuring the power industry, despite a shortage of natural gas for
combined-cycle generation and challenges in meeting GHG mitigation targets.
Instead, even with growing opportunity for private investment, discussions are only
beginning around the organizational arrangement required to meet renewable
targets. Achieving these goals, while increasing national competitiveness, means that reform will
eventually be necessary.¶ The oil and gas industry is a different story. Since 2004, oil
production has been in sharp decline, going from a peak of 3.4 million barrels per
day (mbd) to 2.5 mbd in the first quarter of 2012. At current rates of production,
reserves are expected to last 9.5 years. At the same time, domestic demand has been
rising and is expected to reach 2.3 mbd by 2015. In addition, Mexico imports
close to 50 percent of its gasoline and over 40 percent of its natural gas.¶ The
decline in production is particularly worrisome, since oil revenues are critical to the
financial solvency of the government, accounting for 35 percent of government
income. The sustained high level in oil prices has masked the net decline in crude
exports, but a significant shift in the international oil market could result in a
severe financial crisis. That fear, and the perceived need to increase oil income,
drove the 2008 Energy Reform.¶ The government currently relies on extracting
revenue from petroleum production and sales rather than taxation to finance the
public budget. As a result, PEMEX's financial condition is determined not only by the
market but by the policies of the Secretariat of Finance and Public Credit—where,
even under the latest fiscal regime, 70 percent of PEMEX net income goes to
paying taxes and duties. Thus, despite being one of the top petroleum companies in
the world, pemex is technically bankrupt, sharply curtailing the possibilities for
growth and investment for innovation.¶ Restoring the financial health of PEMEX
is critical to the oil company’s future, and that means freeing it from its status as
the state cash cow. Most experts and politicians converge on the view that PEMEX
needs to be structured more as a private company. As such, it should follow
international best practices, be removed from the federal budget, become
autonomous, have its own capital and assets, and adopt better corporate
governance. Still, it’s also generally agreed that the state should continue to be
the sole owner of Mexican hydrocarbon reserves.
Key to the Mexican economy- exports
Martin and Longmire 11- staff writers at Journal of energy security, (Jeremy and Sylvia, “The
Perilous Intersection of Mexico’s Drug War & Pemex”, March 15th, 2011, Journal of Energy Security,
http://www.ensec.org/index.php?option=com_content&view=article&id=283:the-perilous-intersection-of-mexicosdrug-war-aamp-pemex&catid=114:content0211&Itemid=374, //CJD)
interconnection of oil and nationalism in Mexico is historic and constitutional.
the Mexican Constitution sets forth the basic facts that President Lázaro
Cárdenas emphasized during the nationalization period of the 1930’s: “The
nation is the only owner of the all the hydrocarbons reserves and production”; that
“licensing and concessions are prohibited”; and that “Pemex is the nation’s
operator and controls the first-hand sales and must not share revenues,
production or reserves.” This fundamental political reality continues to affect
development of the nation’s huge oil resource potential by restricting private—
particularly foreign—investment.¶ It has been said that in Mexico, oil is not
merely a chemical compound but rather a fundamental element of sovereignty—a
part of the national DNA. The story is well known but worth repeating: Oil is an essential
part of the national treasury. Though diminished in relative terms for Mexico’s
economy, oil still generates over 15 percent of current export earnings. Moreover,
Pemex, due to its onerous fiscal and tax regime, accounts for about 40 percent of
the government’s budget. ¶ Oil long ago emerged as a significant form of hard
currency and provided what amounted to an economic lifeline for a series of Institutional
Revolutionary Party, or PRI, governments. In some cases, oil earnings provided a last gasp to stave off
financial crisis in the country, such as the 1994 peso crisis. ¶ In late 1994, as Mexico
neared default, the United States orchestrated an international bailout of roughly
$50 billion. Mexican oil sales were used—quite successfully—as collateral for the
roughly $20 billion in US loans to Mexico. ¶ Leaders for years have depended
upon and pointed to the windfall of the nation’s oil patch for its economic wellbeing and, during the good times, growth. Without broad tax and fiscal reform in
the nation, Pemex will remain a financial linchpin, albeit an increasingly tenuous
one.
The
Indeed,
Key to Mexican economy- energy stats prove
Moreno-Bird and Ros 09- *Editorial Board Member at Economí, Aunam¶ Deputy Director at ECLAC-Mexico,
Decider Committee Member at Economic Culture Fund, worked at the David Rockefeller Center for Latin American Studies at
Harvard University, **Professor Emeritus of Economics¶ (Diploma in Economics, University of Cambridge, 1978), “Development
and Growth in the Mexican Economy : A Historical Perspective”, April 23, 2009,
http://books.google.com/books?id=tibg4RKrFIIC&pg=PA244&lpg=PA244&dq=PEMEX+key+to+mexico's+economy&source=bl&o
ts=SIVLgwEdZk&sig=DgWcAozY2u3EWySQPsp44Y-TlyA&hl=en&sa=X&ei=cY7MUcOpLS30gHomoGYAw&ved=0CEcQ6AEwAzgK#v=onepage&q=PEMEX%20key%20to%20mexico's%20economy&f=false, pg.
244//CJD)
respect to reform of the energy sector, recent initiatives have focused on the
oil industry. At the time of writing there is a heated debate on the future of PEMEX
and the Calderon administration's proposals to partially privatize segments of the
oil industry. It is clear that the country's medium-term growth prospects depend
on the urgent reform of PEMEX for unless considerable investment in exploration
occurs soon, Mexico’s oil reserves, extraction, and exports will decline sharply in
the next 10 years.¶ In our view, reform should focus on the following aspects. The first
is the appropriation and use of oil rents. How are they used? How much of these rents is
PEMEX allowed to use for investment purposes? As is well known, the enormous
gap between the costs of oil extraction and its sale price generates massive profits
for oil companies. PEMEX is no exception. In 2007 its average cost of extracting a
barrel of oil was about US$4 to US$5 in the face of a sales price greater than
US$80. These oil rents have been systematically by the state and, to a smaller, but
not insignificant extent, by the ruling party and PEMEX's trade union. In the past 10
years PEMEX has contributed 40% of total revenues (8% GDP). In 2007 it recorded
US$584 million in before-tax profits but paid US$583 million in taxes (Ibarra, 2008).
These practices have transformed PEMEX into a tax collecting agency, dramatically
reducing PEMEX's ability to invest in expanding or maintaining its productive
capacity, its exploration activities, and its proven reserves, as well as
undermining its capacity to become a key dynamic player in the internal
petroleum and petrochemical products market. Moreover its capacities for
technological innovation have been drastically eroded, by decreasing the fiscal,
financial, and human resources allocated to the instituto Mexicano del petróleo (PEMEX’s
technological research institute).
With
PEMEX key to Mexico’s economy- GDP and income levels
Coballasi and Tangle 08- *Director at Standard & Poor's, formerly worked at Senior Analyst
at BBVA Probursa, analyst at Corporacion Geo, and analyst at The Carson Group, (Jose and Enrique,
“Petroleos Mexicanos (PEMEX)”, May 13th, 2008, Standard and Poor’s,
http://www.pemex.com/files/content/PEMEX_SA_0508_ING.pdf, //CJD)
Standard & Poor's Ratings Services' ratings on Petroleos Mexicanos (PEMEX) reflect the United
Mexican States' significant support, Mexico's¶ large oil and gas reserve base,
PEMEX's monopoly status in the large Mexican oil and gas market, and its
central¶ role in Mexico's energy sector.¶ Nevertheless, the local-currency rating on
PEMEX is two notches below that on Mexico. This reflects PEMEX's¶ highly
leveraged financial profile and its unfavorable reserve replacement compared
with that of other¶ investment-grade oil companies. The company's after-tax
financial measures are very weak for the rating category¶ because of large
unfunded pension obligations and a high government take. This has resulted in
PEMEX financing¶ most of its capital expenditures with debt during the past
several years.¶ The ratings on PEMEX and Mexico are linked because the Mexican
government owns the company, PEMEX has an¶ important role in Mexico's
economy, the government depends heavily on oil revenues, and the government
exercises¶ considerable oversight of PEMEX, particularly with respect to all fiscal
aspects of its management.¶ PEMEX accounts for about 40% of Mexico's publicsector revenue through taxes and dividends, and petroleum¶ and derivatives
account for about 15% of the country's total exports (net of "maquila" imports). We believe¶ PEMEX's
importance as a source of tax revenues and export receipts and as a funding
vehicle is a strong economic¶ incentive for Mexico to support the issuer during
periods of financial distress.¶ PEMEX enjoys a satisfactory business position.
Mexico's extensive base of proved developed and undeveloped¶ hydrocarbon
reserves supports this. As of Dec. 31, 2007, reserves were about 14.7 billion barrels of oil
equivalent¶ (as determined in accordance with Rule 40[a] of Regulation S-X of the Securities Act of 1933, the reporting¶
standard of the U.S. SEC). Also supporting PEMEX's business position is its constitutionally
protected monopoly¶ status in most segments of the large Mexican oil and gas
market, including exploration and production (E&P),¶ refining, marketing, and
certain petrochemicals. However, commodity price volatility and government¶
interference--including the high transfers to the government that keep the
company from appropriate capital¶ spending--are primary risks to its business.¶
Although the company has made important investments in the past six years,
government ownership has created a¶ heavy tax burden that has kept it from
increasing investment. This has led to a weak reserve-replacement ratio,¶ other
operating inefficiencies, and after-tax financial measures that compare
unfavorably with those of other¶ investment-grade oil and gas issuers. We believe
the increase in PEMEX's financial obligations has exposed it more¶ to commodity
price volatility, which could further weaken its after-tax key financial measures
and reduce its¶ liquidity if crude oil prices fall.¶ PEMEX's strong EBITDA
generation (about $60.5 million in 2007) reflects its extensive proved reserves, competitive
lifting costs, and proximity to the U.S. market. Consequently, the company's
upstream operations are¶ profitable in most pricing scenarios, although a high
percentage of heavy crude oil in the production mix can¶ exacerbate margin
compression when pricing is depressed. In 2007, the company posted ratios for funds from¶
operations (FFO) to total debt, EBITDA interest coverage, and total debt to EBITDA of
11.7%, 11.9x, and 1.7x,¶ respectively. (These ratios consider as debt-like obligations the company's unfunded
pension liabilities of about $48¶ billion.)¶ During the past two years, PEMEX has posted more reasonable
after-tax cash flow figures as a result of the use of a¶ cash-flow proxy to determine
the taxes levied on its E&P operations, coupled with its ability to credit against
other¶ duties the negative indirect taxes arising when gasoline reference prices
exceed the price at the pump in Mexico.¶ Nevertheless, we expect that taxes will remain
an important burden on the company's finances. Therefore, we¶ expect after-tax
financial performance to remain weak for the rating, as evidenced by the FFO-tototal debt ratio¶ mentioned above. Without the changes needed to moderate the issuer's
growth in unfunded pension liabilities, it is¶ unlikely that PEMEX will improve its
key financial ratios significantly.¶ The outcome of the energy reform proposed by
the government in early April 2008 and its effects on PEMEX are¶ still uncertain.
Five bills were presented to the Mexican congress. The reforms include important
changes to the legal¶ framework under which PEMEX operates, intended to
increase the company's accountability, transparency, and¶ managerial autonomy.
The package also includes proposals for contracts with the private sector for
refinery¶ construction and operation, storage facilities, and pipelines. However,
the government has not yet sent a sixth bill¶ with its proposed reform to PEMEX's
fiscal regime. Furthermore, opposition in congress has been intense, and the¶
discussion period has been extended to allow for a "national debate" on the
energy reform. We expect the¶ discussion to continue until the next legislative period of
September-December 2008, when congress reconvenes.
PEMEX decline causes Mexican instability
Clement 08 (Jude, San Diego State University, “Peak oil and Mexico: The socioeconomic impacts of Cantarell’s decline,” Energy
Bulletin, August 27, 2008, http://www2.energybulletin.net/node/46360)
Reduced oil exports from Mexico will have far reaching implications. At the global level,
an increasingly inelastic production chain will be drawn that much tighter. For the United States, a stable
source of supply will be eroded to the detriment of both reliability and energy
security. As important as these consequences are, however, they pale in significance compared to the
impact reduced oil production will have on the people of Mexico – a nation which
has literally changed its socioeconomic profile with billions in revenues from oil
exports. Record revenues pay for schools, roads, hospitals, and other important
societal infrastructure. Oil revenues constitute nearly 40% of the Federal
government’s budget. After a decade of steady progress in poverty reduction, a
severe production decrease will put public spending in jeopardy. In 2006, despite nearly
identical sales of $100 billion, Pemex paid $54 billion in taxes compared to only about $36 billion by PDVSA, Venezuela’s statecontrolled oil company. In short,
revenue from oil exports is the foundation of Mexico’s leap
forward. But, the specter of Mexico’s emerging public spending crisis looms on the horizon. Reality is quickly setting in. Second
quarter profits dropped 56% this year over the same period in 2007. This decline in revenues has forced
Mexican President Felipe Calderón to call for “an urgent reduction in public
spending to reduce the enormous dependence on oil revenue.” It is no
exaggeration to state that the government’s ability or inability to adapt to lower
oil revenues will affect virtually every aspect of life in Mexico. In order to shed light on this
issue, the present analysis focuses on how declining oil revenues will impact five core facets of Mexican society: 1) Social
Progress 2) Economic Growth 3) Inequality 4) Political Stability 5) Migration. Social
Progress Oportunidades has been the principal anti-poverty program of the Federal government since former President Vicente Fox
started the effort in 2002. The aim is to assist poor families to invest in human capital by improving the education, health, and
nutrition of their children. Cash transfers are awarded for such habits as consistent school attendance and regular health clinic
visits. Figure 2 illustrates the International Monetary Fund’s (IMF) data on the impact Fox’s six-year term had on poverty. As these
data indicate, the percentage of households not possessing an adequate level of the given essential has steadily declined since 2000.
Index Mundi, a database of country profiles, also details the significant improvements in living standards that have occurred in
Mexico since 2000. The percentage of the population below the poverty line has decreased from 27% to 13%. The infant mortality
rate has fallen from 26 to 19 deaths per 1000 live births. Mexico’s literacy rate has increased from 87% to 90% for citizens over age
is continuing its
recent dedication to social and human welfare programs. An anti-poverty
campaign has been implemented throughout the country. Monthly government checks are
15 and the country’s life expectancy has jumped from 71 to 76. Under current President Calderón, Mexico
distributed to the elderly, handicapped, and single mothers. Dental clinics provide low-cost services in poor neighborhoods and
many citizens receive free medical care. The Mexican government is building orphanages for homeless children and affordable
housing for families in need. More strict emission standards have been implemented and public transportation systems are
improving. Mexico has embarked on a nationwide recycling program and low interest loans are increasingly available to citizens
essence, social programs have become a high priority for
seeking to start a small business. In
Calderón and other Mexican leaders, regardless of political party. Economic Growth Grant Thornton International has identified
Mexico as the fourth largest emerging market in the world, behind only China, India, and Russia in terms of opportunities for
Escalating oil prices have helped Mexico’s economy sustain a
healthy rate of growth. Gross Domestic Product (GDP) per capita growth has increased 47% in only eight years and
investment and development.
now stands at about $12,500 – the highest in Latin America. Just a decade ago, Mexico was reeling from an economic meltdown and
a continuance of armed uprisings. Many banks had collapsed due to unpaid loans. The 1994 North American Free Trade Agreement
(NAFTA) opened huge markets for Mexican-made goods and expedited the success of the maquila industry now booming along its
northern border. These factories and assembly plants have thrived under preferential tariff programs established by the U.S. and
Mexican governments to encourage the development of industry in Mexico. Materials and equipment are imported duty-free. In
recognition of this prosperity, the U.S Department of Treasury recently reported that Mexico is now less reliant on the economic
progress of the United States. There are now “diverse factors that mitigate the effects” of economic downturns in the U.S. In
particular, the report cites Mexico’s strong economic policies and the increased spending on housing, public education and other
infrastructure sectors as stabilizing influences on the domestic economy. A government-backed fund, Infonavit, has doubled its
lending in the past seven years and homes purchased through mortgages have tripled. Gray Newman, Head Economist for Latin
America at Morgan Stanley has noted: “The stability of the past decade-plus has allowed the financial markets and banks to grow up.
Mortgages exist now. People can get loans. There has been a birth of a middle class in Mexico.” Mexico is averaging an annual
economic growth rate of about 3% and people in the lower economic strata have benefitted relatively the most. This situation is
There is no question that
income has become more evenly distributed among Mexicans. The Gini coefficient is a
somewhat surprising given Mexico’s historical pattern of economic inequities. Inequality
statistical measure of national income inequality developed in 1912 by Italian statistician Corrado Gini and widely used in
international economic analyses. The index is a ratio expressed as a percentage. A higher percentage rate indicates more of an
unequal distribution. In other words, “100” would indicate one person has all the income and “0” signifies everyone has exactly the
same income. Figure 3 demonstrates increased levels of economic equality taking root in Mexico, according to the United Nations
(UN). Many credit Mexico’s expanding income equality to its shift to a multiparty democracy. In 2000, conservative Vicente Fox
became Mexico’s first president outside the Institutional Revolutionary Party (PRI) in over 70 years. Fox helped subdue the
persistent inflation and runaway public spending that plagued the country. Mexico had been caught in boom-and-bust cycles for
generations. One manifestation of equality appears in vehicle ownership. In their study, Vehicle Ownership and Income Growth,
Worldwide: 1960-2030, Dargay, Gately, and Sommer put Mexico’s average annual vehicle growth rate over the next two decades at
5%. The research group projects that Mexico will have 66 million vehicles on its roads by 2030 – an astounding increase of over
300% in less than a generation. By 2030, the total amount of vehicles on Mexican roads will have easily surpassed those in Canada,
Germany, Spain, France, Great Britain, and Italy. Political Stability Until Fox from the National Action Party (PAN) was elected
president in 2000, the Institutional Revolutionary Party (PRI) had a virtual monopoly on the country’s politics and has been widely
accused of using payoffs, intimidation, and election fraud to continue dominance stretching back to the 1930s. The 2006
the legacy of the 2006
revolution may be the seed of upcoming political turmoil regarding oil. Political
presidential election was the closest, and most controversial, in Mexico’s history. In fact,
infighting continues to hamper any effort by the Calderón administration to give outside companies more of an opportunity to
partner with Pemex to slow the production decline.
Simply put, the oil reform issue has completely
divided the country. The former mayor of Mexico City, Andrés Obrador, has headed rallies of hundreds of thousands
protesting his 2006 presidential election defeat due to “fraud.” Obrador steadfastly opposes any effort calling for greater outside
involvement in the oil sector. Under his leadership, in April, the Party of the Democratic Revolution (PRD) seized the floor of the
Chamber of Deputies and forced the PRI and Calderón’s PAN to subject the proposed oil reform to several months of expert
testimony in the Senate. The PRD has also implemented a series of non-binding citizen initiatives voting on Calderón’s proposal. The
public has overwhelming opposed the bill. PAN officials claim this effort is simply an attempt to divide Mexicans and weaken the
government. Political posturing has sent all parties scrambling to gain a favorable position for the mid-term elections next year.
Lawmakers remain decisively split on whether to internally reform Pemex or bring in outside help for deepwater exploration and
production. Resource nationalism has been a strong persuasion in Mexico since Pemex’s inception in 1938. Among many Mexicans,
changing the way the company does business is viewed as a threat to national security and an affront to national pride. Further
,
political stability is already on shaky ground due to free trade debates and
corruption accusations. This political stability could be at further risk if
government expenditures were greatly reduced due to declining oil revenues. Such
revenues currently support a social safety net that includes food subsidies. The rising expectations many citizens now retain will
Overall,
threats to Mexico’s stability abound and will be exacerbated by declining oil
revenues and a concomitant decline in government entitlement programs. It is well
known that drug cartel activity continues to spiral out of control in Mexico,
especially in the border cities of Tijuana and Juárez. The ability to confront the
cartels depends on the financial foundation of oil revenues. Further, the country has recently
exacerbate the situation. In the past eight years, millions of Mexicans have been given their first taste of success.
experienced large oil reform protests, deadly worker strikes, violent demonstrations against corn price increases, and numerous
pipeline attacks.
Mexico’s full democracy, after only eight years, may face a bumpy road
indeed. Migration It has been estimated that over 250,000 undocumented Mexicans enter the U.S. every year and another
200,000 enter through legal channels. Despite the undeniable improvements in living standards, millions of Mexicans still live in
life. As oil production declines, the Federal government will lack
the resources to fully fund social programs. Thus, the potential of significantly expanded out- migration
poverty and seek a better
to the United States looms large. The last time Mexico experienced turmoil of this magnitude was during the revolution era from
1910 to 1940 – when a quarter of the population left the country, most arriving in the United States. A similar mass migration today
would obviously have significantly greater ramifications because Mexico’s population has increased five-fold in the last half century.
In their groundbreaking book, Migration, Unemployment and Development, Harris and Todaro claim economics is the main force
behind migration patterns. Their research supports the Neo-Classical microeconomic theory of migration, which asserts increasing
the happiness of a prospective migrant is the most effective way to encourage that individual to remain in his or her native country
Mexican migration expert, Wayne Cornelius, from the University of California at San Diego, agrees. He believes the emerging middle
class in Mexico is the reason the number of undocumented migrants detained by U.S. border agents declined by 20% in the past
But, if enough Mexicans feel the extensive socioeconomic crunch declining oil
revenues will bring, this slowdown in out-migration would rapidly be reversed. The
year.
United States could be faced with an unprecedented humanitarian crisis along its southern border. Conclusion The recent peak and
inevitable decline of Mexico’s Cantarell signals continuing decreases in both total oil production and exports. Reduced exports will
lead to lower oil revenues and, in turn, will force a reduction in funding for the socioeconomic programs that have improved the
Federal government will be hard pressed to maintain social
programs, economic development, and infrastructure expansion. The “Principle of Rising
quality of life in Mexico. The
Expectations,” eloquently defined by de Tocqueville in the 1850s, is about to meet the reality of peak oil in Mexico. And the impact
may well take a heavy toll on the hopes, dreams, and aspirations of millions of Mexican families.
THA key to solve PEMEX
Plan solves PEMEX’s problems through tech transfers, cooperation, oil rig
inspection
Rogers 12 (Will, the Bacevich Fellow at the Center for a New American Security (CNAS). Prior to joining CNAS, recipient of
the 2007 Political Studies Senior Prize Scholarship. A B.A. in Political Science-International Relations from the University of
California, San Diego, with an emphasis in U.S. national security and foreign policy, “U.S.-Mexico Offshore Oil Agreement May Help
Mexico Rejuvenate Oil Production” February 23, 2012, Center for a New American Strategy,
http://www.cnas.org/blogs/naturalsecurity/2012/02/us-mexico-offshore-oil-agreement-may-help-mexico-rejuvenate-oil-produc
//EH)
The United States and Mexico have come to an agreement that would allow both countries to drill for oil and natural gas along their
the Transboundary
Agreement “removes uncertainties regarding development of transboundary
resources in the resource-rich Gulf of Mexico” and opens up approximately 1.5
million acres of the U.S. outer continental shelf to exploit the estimated 172
million barrels of oil and 304 billion cubic feet of natural gas. “This agreement makes available
promising areas in the resource-rich Gulf of Mexico and establishes a clear process by which both
governments can provide the necessary oversight to ensure exploration and
development activities are conducted safely,” Secretary of the Interior Ken Salazar said. The U.S.-Mexico
agreement was penned a week after Mexican oil regulators cautioned that Petroleos Mexicanos – or
PEMEX, the national oil company – is ill prepared to manage a serious offshore oil spill.
maritime border in the Gulf of Mexico. According to a U.S. Department of Interior press release,
According to a February 15, 2012 report from The Wall Street Journal: The regulator's chief, Juan Carlos Zepeda, said
Petróleos Mexicanos has relatively little experience with deep-water drilling,
much less with the ultra-deep wells—those at depths exceeding 6,000 feet—that
it could tackle as soon as next month. Pemex plans to drill as many as six deep-water wells this year,
including the two ultra-deep wells, more than at any time in its history. The U.S.-Mexico agreement provides a
framework for both countries to conduct joint inspection of the others’ oil rigs in
the Gulf of Mexico, in part intended to ensure safety standards are met. The
agreement also allows U.S. companies and PEMEX to jointly develop oil and
natural gas reserves in the transboundary region, which could provide an
opportunity for U.S. companies with a long history of offshore oil drilling to
cooperate and share lessons learned with PEMEX. “Coordination and sharing
communications, training, personnel, equipment and technology are essential for
safe and productive drilling,” said Jorge Piñon, a former president of Amoco Oil Latin America and a current
research fellow at the University of Texas, in an interview with The New York Times on Monday. In recent years, Mexico’s oil
industry has been plagued by a range of technical deficiencies and declining
production in its largest and most important oil field, the Cantarell. Oil production there
has dipped from about 2 million barrels a day in 2004, to close to 700,000 barrels a day in 2009. Meanwhile, PEMEX
officials have cautioned that production is likely to decline by about 15 percent a
year through 2015. The decline in production is in part a symptom of the lack of
technical development in Mexico’s oil sector. Mexico’s oil industry has been plagued in recent decades by
a constitutional prohibition that restricts foreign oil companies from working with the domestic oil industry, which also
prohibits new technology sharing that may otherwise help PEMEX rejuvenate oil
production. In a 2009 blog post, Joseph S. Nye, Jr. Researcher Seth Myers aptly described the consequences that seem to be
playing out today. According to Myers: One of the unintended consequences of Pemex’s monopoly and the preeminence of Cantarell
in the national oil industry has been that Pemex’s technical capabilities have seriously lagged behind the times. Cantarell is an
extremely small field for its production capabilities, located in extremely shallow water with very high initial pressure and very low
water saturation – by and large, it has been an extremely easy field to develop and produce oil from. As a result, Pemex grew
its deep water capabilities beyond
1,000 meters are largely nonexistent and it was forced to close wells in Cantarell
when water content reached even minimal levels (96% less than what U.S. wells
are capable of handling). The U.S.-Mexico agreement still has to run domestic traps before it is finalized, but it looks
somewhat complacent in terms of developing new drilling capacity –
like both countries are on their way to cooperatively developing offshore oil in their respective maritime boundaries of the Gulf of
the
agreement may help PEMEX develop safe technology for offshore drilling in a
way that avoids violating that restriction. It will be interesting to see how much production Mexico is able
Mexico. Although it is not very clear how the agreement will square with the existing constitutional restriction,
to safely develop, and what effects this could have across the rest of Mexico, considering that oil revenues account for roughly 40
rejuvenating
Mexico’s oil production may help bring about more stability – but only if those
revenues translate into government programs that help bring about that stability.
percent of the government’s budget. Despite one’s feelings about the merits of offshore oil drilling,
New reserves found – solves diminishing production claims
Latino Daily News 12 (“PEMEX Finds 500 Million Barrels of Crude Oil,
Largest
Discovery
in
a
Decade,”
November
26,
2012,
http://www.hispanicallyspeakingnews.com/latino-daily-news/details/pemex-finds-500-million-barrels-of-crude-oil-largestdiscovery-in-a-decade/20064/
)
found reserves of up to 500 million barrels
of crude in southern Mexico, a discovery that President Felipe Calderon hailed as the “biggest find” of
petroleum on land in the past decade. The Navegante 1 field is about 20 kilometers (12 miles) from
Villahermosa, the capital of the southern state of Tabasco, and yielded light crude at a depth of 6,800 meters (22,295
feet), Pemex officials told Efe. Initial estimates are that the field contains 500 million proven, possible
and probable (3P) barrels of petroleum, but new test wells are planned and could
boost reserve estimates to up to 1 billion barrels, Pemex said. Calderon, who is less than a week away
State-owned oil giant Petroleos Mexicanos, or Pemex, said it
from handing over power to President-elect Enrique Peña Nieto, announced the discovery during the inauguration of a cryogenic
plant in Poza Rica, Veracruz, on Sunday. The oil reserves are in the Cuencas del Sureste geological formation, Pemex said. Mexico’s
oil output totaled almost 3.4 million bpd in 2004, but it has since fallen due to a sharp decline in production at shallow offshore
Cantarell, formerly Mexico’s most productive field, and many years of insufficient investment. The government, however, said last
Pemex had succeeded in halting a steady annual decline in its reserves
dating back to 1979. A recent oil sector overhaul in Mexico gave the oil monopoly – created when the country’s oil
year that
industry was nationalized in 1938 – more freedom to undertake projects with private firms, which are to be hired under incentivebased service contracts. Pemex announced the discovery last month of the Supremus 1 field in the Gulf of Mexico, a find that officials
said would boost Mexico’s production curve to 50 years. The Supremus 1 well, located some 250 kilometers (155 miles) east of the
city of Matamoros, Tamaulipas state, and roughly 40 kilometers (25 miles) south of Mexico’s maritime border with the United
Pemex, the world’s No. 4 oil
producer with output of 2.5 million barrels per day (bpd), is the biggest
contributor to Mexico’s federal budget and is one of the few oil firms worldwide
that handles all aspects of the productive chain, from exploration to distribution
and the marketing of end products.
States, holds oil amounting to about one-third of Mexico’s total reserves, officials said.
THA increases PEMEX economy- eases restrictions on Mexican companies
Wood 12- Professor at the Institute of Autonomous Technology of Mexico, Senior Adviser, Mexico Institute,
Renewable Energy Initiative, (Duncan, “US-Mexico Cross Border Energy Cooperation: ¶ a new era in the Gulf of
Mexico”, March 2012, Woodrow Wilson International Center for Scholars for the Mexico Institute,
http://www.wilsoncenter.org/sites/default/files/March_2012_Transboundary_Oil_Agreement_0.pdf, //CJD)
Treaty establishes that information must be exchanged on oil-related ¶
activities within 90 days of the entrance into law of the treaty; both governments ¶
must report on activities occurring on their side of the dividing line in the Gulf. ¶
The
However, if activity occurs within a 3 mile area, notification must be automatic. As ¶ soon as an oil field is identified,
roduction of the resource is prohibited until the ¶ two countries have come to an
agreement to unify the oil reserve. At this point ¶ the two sides will exchange
information about the field, and determine whether it ¶ is a cross-border resource
or not. If the two sides cannot agree, an independent arbitrator will be called in to decide on
the issue. The process of unitization of the ¶ field will then begin in order to
determine the division of oil from the field. ¶ The next stage in the procedure
involves determining a development plan for the ¶ field and choosing an operator.
In Mexico, this stage has been seen as highly ¶ controversial given that a foreign and
private oil company may begin to exploit ¶ "Mexican" oil, even though it is drilling
on the U.S. side of the donut hole, due to ¶ the flow of oil within the field. While it is
true that private companies have been ¶ extracting oil in Mexico through contracts
for the past year, the new arrangement ¶ is sensitive because of the long-term
perception in Mexico that the U.S. could ¶ siphon off Mexican oil in border areas.
The oil produced, however, will be divided ¶ up according to the established
percentages, and those barrels will be given to ¶ their respective "owners". This means
that oil that has technically come from the ¶ Mexican side of the border will be
returned to Pemex, who will then process and ¶ commercialize it. Even more controversially,
the Treaty allows for the tantalizing ¶ prospect of operators other than Pemex to
drill for oil on the Mexican side of the ¶ Gulf. If and when this happens, it would mark an
extraordinary step forward in ¶ breaking the taboos over foreign companies and
Mexican oil. A key point that ¶ has been emphasized by the Mexican government,
however, is that the goal is to ¶ maximize the recovery rate from each resource, so
as to maximize the economic ¶ returns from oil production. It is for this reason
that a company other than Pemex ¶ may be chosen, depending on the nature of
the field and the capacities of the ¶ company concerned. And of course, once again
the oil would be the property of ¶ the Mexican state. ¶ If the U.S. and Mexican
governments cannot agree on a development plan or ¶ operator, the default
position determined by the Treaty is for each side to ¶ produce independently, up
to the maximum percentage of the resource allocated ¶ by the unitization
agreement. This would likely be a suboptimal outcome, as two ¶ operators would
be less able to maximize the recovery rate. ¶ In the design of the Treaty, the two sides studied
existing cross-border oil ¶ agreements around the world, and the negotiators claim
to have incorporated the ¶ lessons from those deals into this one. In fact, the bilateral
agreement goes ¶ beyond. Within the agreement there is a mechanism by which, if
later studies ¶ discover that the original unitization agreement is shown to have
been incorrectly ¶ calculated (by later seismic studies), the allocations can be
reworked by giving ¶ the side that lost out a higher percentage of future
production. This is an issue ¶ that has always been incredibly difficult to negotiate
p
in other agreements, but the ¶ Mexican and U.S. governments have blazed a trail
by institutionalizing this ¶ mechanism in the deal. ¶ One of the lingering questions
that have been raised by some oil insiders in ¶ Mexico is why the private sector in
the U.S. has supported this deal. On the U.S. ¶ side of the border, 305 blocks have
already been identified, with permits issued ¶ for 32. Two of these blocks in the
Great White field are already in operation (although production has not begun). Of the remaining blocks,
it is highly unlikely ¶ that any will be in production before the Treaty comes into
force. The Treaty will ¶ apply retroactively unless it damages any of those interests,
perhaps helping to ¶ explain why the private sector is on board with the deal. More
importantly, ¶ however, the companies were consulted heavily in the period
leading up to the ¶ negotiations. Furthermore, as Mexican officials have been keen to
point out, the ¶ International Oil Companies (IOCs) are enthusiastic that the
Treaty gives them ¶ legal certainty in the E&P activities in the border regions. Rather
than risk ¶ protracted legal battles in international courts should Mexico challenge
any future ¶ discoveries, the IOCs can now work within an established framework
in which ¶ risks are more easily quantified. ¶ The Transboundary Agreement is a
major step forward for energy relations ¶ between the two countries, providing a
major boost to Pemex as it tries to ¶ improve its reserve position and its
production outlook. The prospect of ¶ significant oil discoveries in the border
region, and the possibility of working ¶ alongside the private sector, is intriguing
and controversial, to say the least. What ¶ is certain is that the Treaty sets a new
framework for cooperation between the ¶ two countries that will produce new
ways of thinking about oil production in ¶ Mexico, an issue that will surely be of
importance in the looming debate over ¶ energy reform.
Gulf Drilling will allow PEMEX to restore itself- resources
Negrete and Méndez 6/5- staff writers at Thomas net, (Andrea and Adriana, “GE Signs $84 Million
Agreement with PEMEX for Deepwater Exploration Projects in the Gulf of Mexico”, 6/5/13, Thomasnet news,
http://news.thomasnet.com/companystory/GE-Signs-84-Million-Agreement-with-PEMEX-for-DeepwaterExploration-Projects-in-the-Gulf-of-Mexico-20009682, //CJD)
GE Oil & Gas (NYSE: GE) has signed an $84 million
agreement with PEMEX Exploration and Production to supply and to install
subsea wellheads for PEMEX's deepwater and ultra-deepwater drilling projects
in the Gulf of Mexico. This marks GE's largest agreement with PEMEX for the
supply of subsea high capacity wellheads.¶ The Gulf of Mexico is a strategic zone for
the hydrocarbon industry, since it is estimated to hold more than 50 percent of
Mexico's potential or prospective resources. However, such reserves are located
in deepwater and ultra-deepwater sites, and advanced technology is needed to
extract those resources for the benefit of the country.¶ GE Oil & Gas has become a
strategic partner both for PEMEX and for Mexico in the search of new
hydrocarbon reserves. By designing high-technology subsea wellheads that provide a
larger load, pressure capacity and a full-bore design, unique in the market, GE is
helping drillers reach greater depths. For the latest PEMEX project, GE will supply
SMS800 and DWHC 700 high capacity wellheads; similar GE technology has
previously been installed at several other Mexican oil fields including Perdido,
CIUDAD DEL CARMEN, CAMPECHE —
Lakach and Kunah.¶ Carlos Arnoldo Morales Gil, Head of PEMEX Exploration and
Production, talks about the importance of such partnership: "PEMEX uses the
most advanced technology in the world; our main goal is to optimize the
hydrocarbon reserves and the resources we have. This is one of the reasons we've
been using technology and expertise provided by GE Oil & Gas for several years
now."¶ "Our focus is to seek partnerships where GE can offer its expertise to
support the economic development of Mexico," said João Geraldo Ferreira, president and CEO for GE
Oil & Gas Latin America. "Mexico has an increasingly strategic position in our company's
global business plans, and PEMEX is one of the most important partners we
have."¶ Octavio A. Mejía, regional sales manager for GE Oil & Gas Subsea Systems in
Latin America, pointed out that this agreement confirms the trust and the
excellent collaboration between PEMEX and GE Oil & Gas. "During the last six years
GE has provided top of the line technology and training to PEMEX. So far, we
have provided subsea wellheads and service to more than 24 wells and we expect
to provide many more."
A2: US SQ offshore drilling solves
No offshore drilling in SQ- SEC regs
Sousa 12- Director at Golar LNG Limited in Bermudan Oil and energy, (Georgina, “ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE¶ SECURITIES EXCHANGE ACT OF 1934”, 4/27/12, Sea Drill,
http://www.seadrill.com/stream_file.asp?iEntityId=1377, //CJD)
Our business in the offshore drilling industry is affected by laws and regulations
relating to the energy industry and the environment in the geographic areas
where we operate. The offshore drilling ¶ industry is dependent on demand for
services from the oil and gas exploration and production industry, and, accordingly, we
are directly affected by the adoption of laws and regulations that, for ¶ economic,
environmental or other policy reasons, curtail exploration and development
drilling for oil and gas. We may be required to make significant capital
expenditures to comply with governmental ¶ laws and regulations. It is also possible
that these laws and regulations may, in the future, add significantly to our
operating costs or significantly limit drilling activity. Our ability to compete in ¶
international contract drilling markets may be limited by foreign governmental
regulations that favor or require the awarding of contracts to local contractors or
by regulations requiring foreign contractors ¶ to employ citizens of, or purchase supplies
from, a particular jurisdiction. Governments in some countries are increasingly
active in regulating and controlling the ownership of concessions, the exploration
¶ for oil and gas, and other aspects of the oil and gas industries. Offshore drilling
in certain areas has been curtailed and, in certain cases, prohibited because of
concerns over protection of the ¶ environment. Operations in less developed
countries can be subject to legal systems that are not as mature or predictable as
those in more developed countries, which can lead to greater uncertainty in ¶ legal
matters and proceedings.¶ To the extent new laws are enacted or other
governmental actions are taken that prohibit or restrict offshore drilling or
impose additional environmental protection requirements that result in
increased ¶ costs to the oil and gas industry, in general, or the offshore drilling
industry, in particular, our business or prospects could be materially adversely
affected. The operation of our drilling units will require ¶ certain governmental
approvals, the number and prerequisites of which cannot be determined until we
identify the jurisdictions in which we will operate on securing contracts for the
drilling units. ¶ Depending on the jurisdiction, these governmental approvals may
involve public hearings and costly undertakings on our part. We may not obtain
such approvals or such approvals may not be obtained ¶ in a timely manner. If we
fail to timely secure the necessary approvals or permits, our customers may have
the right to terminate or seek to renegotiate their drilling contracts to our
detriment. The ¶ amendment or modification of existing laws and regulations or
the adoption of new laws and regulations curtailing or further regulating
exploratory or development drilling and production of oil and gas ¶ could have a
material adverse effect on our business, operating results or financial condition.
Future earnings may be negatively affected by compliance with any such new
legislation or regulations.
A2: 2008 reforms solved
Didn’t solve- no profits and politics
Wood 10- Director, International Relations,Instituto Tecnológico Autónomo de México, (Duncan, “The
Outlook for Energy Reform ¶ in Latin America”, March 2010, Woodwrow Wilson Center,
http://www.wilsoncenter.org/sites/default/files/LAP_Energy.pdf, //CJD)
The energy reforms of 2008 did little to improve the ¶ prospects for oil production
in Mexico. Changes to the ¶ administrative structure of PEMEX, a new regulatory ¶
framework, citizen bonds, and the possibility of new ¶ contracts for service
providers are unlikely to have a profound impact on either production numbers
or reserves ¶ in the short term. What’s more, the government has been ¶ very slow in
implementing the reforms, leading the PRI ¶ to call for political action against
Calderón if he fails to ¶ execute the reforms in full before the fall of 2009.¶
However, although the reforms of 2008 are largely ¶ viewed as inadequate and
“asfixiadas” (suffocated), there ¶ is little enthusiasm for taking up the issue again in the
¶ short term. First, the political agenda in Mexico at present is dominated by two
main issues: security and the ¶ economy. The war on drugs in Mexico has
occupied the ¶ executive branch and is consistently identified in public opinion
polls as by far the most important issue facing the country. The economic crisis in
the country has ¶ reached a level where the impact is deeper than that of ¶ the
1994/5 peso crisis. This combined with the hangover ¶ from the H1N1 flu
epidemic, means that the question ¶ of energy is hardly viewed as a priority in
most political ¶ circles at the moment. Public opinion polls reflect this ¶ too. In
June 2009, a Simo poll highlighted this: whereas ¶ 44 percent of people surveyed
believe that the recent ¶ reforms did not resolve the problems facing PEMEX, ¶
only 36 percent believe another round of reforms is necessary in the near future. ¶
As noted above, the prospects for further energy reform ¶ in Mexico were
dramatically altered by the mid-term elections in the summer of 2009. The PRI
victory in the ¶ Congress in July meant that the PAN government now ¶ has to find
an even closer mode of cooperation with the ¶ PRI leader in the Cámara de
Diputados, Beatriz Paredes, ¶ than was necessary before. This will be made particularly
difficult by the tense and problematical relations between ¶ Paredes and the PAN
leader in the Cámara, Germán ¶ Martínez, which will necessitate President Felipe
Calderón ¶ directly engaging with Paredes on most major issues. ¶ Whether or not
the PRI is willing to meaningfully consider a new round of energy reform will
largely ¶ depend on how they view their prospects in the 2012 ¶ Presidential
contest. If the party continues to do well in ¶ the polls and has a candidate who can
realistically win the ¶ election, there is the possibility that the PRI will agree to ¶
meaningful reforms of PEMEX. Additionally, constitutional restrictions on
private and foreign investment in ¶ the oil sector could pave the way for a PRI
president to ¶ govern without having to worry too much about a crisis ¶ in oil
revenues.
Heg
Oil dependence from Persian Gulf high
Oil Dependence from persian gulf increasing now
IER 8/28/12 - (group of experts who conduct intensive research and analysis on the functions, operations, and government
regulation of global energy markets, "Obama Policies Making US More Dependent on Persian Gulf Oil"
http://www.instituteforenergyresearch.org/2012/08/28/u-s-oil-imports-from-the-persian-gulf-and-saudi-arabia-grow-in-2012and-administration-policies-may-be-to-blame/)//AP
bad news is that while we have reduced our dependence on imports, we are
getting more dependent on oil imports from the Persian Gulf, particularly Saudi
Arabia. During the first five months of this year, oil imports from the Persian Gulf
increased by 33 percent compared to the first five months of 2011. This was mainly
due to an increase of oil imports from Saudi Arabia of 29 percent. At the same
time, our total oil imports fell by 6 percent. Thus, the Persian Gulf’s share of U.S. oil
imports is up 6 percentage points—from 15 percent for the first 5 months of last
year to 21 percent for the first 5 months of this year—and the share of our oil
imports from Saudi Arabia is up 4 percentage points, from 10 percent to 14
percent.[ii]
According to data from the Energy Information Administration (EIA), the United States imported a daily
average of almost 1.5 million barrels of Saudi Arabian crude over the first five
months of this year, compared to a daily average of about 1.1 million barrels over
the same period last year. The corresponding numbers for oil imports from the Persian Gulf oil are an average of 2.2
million barrels per day for the first 5 months of this year compared to 1.7 million barrels per day for the
first 5 months of last year.
The increase in oil exports from Saudi Arabia to the United States began slowly last
summer and has increased this year. Even though domestic oil production is
increasing, the Obama administration is finding it difficult to lower its
dependence on Persian Gulf oil, especially the heavy grades of crude oil that Saudi
Arabia exports and that our refineries in the Gulf of Mexico use. Some oil analysts
indicate that this increasing dependency may only last a few years—until more
Canadian and Gulf of Mexico production comes on line. These are issues that
have been caused by the Obama administration. First, their moratorium and
“permitorium” on offshore drilling after the Macondo accident resulted in 17
percent less oil production in offshore federal waters in fiscal year 2011 than the
year before. Then, their failure to permit the Keystone XL pipeline that would
bring heavy crude oil from Canada postponed new supplies from our Northern
Ally.
The
Keystone pipeline solves oil dependence from persian gulf
IER 8/28/12 - (group of experts who conduct intensive research and analysis on the functions, operations, and government
regulation of global energy markets, "Obama Policies Making US More Dependent on Persian Gulf Oil"
http://www.instituteforenergyresearch.org/2012/08/28/u-s-oil-imports-from-the-persian-gulf-and-saudi-arabia-grow-in-2012and-administration-policies-may-be-to-blame/)//AP
Oil imports from the Persian Gulf have increased significantly this year due to decreased oil production from the federal waters off
the Gulf of Mexico, declining production of crude oil in Mexico and Venezuela, lack of pipelines to import more Canadian oil, and
the configuration of Gulf Coast refineries to process heavy crude oils. The Obama Administration seems to be untroubled by this
direction since it feels it can use the Strategic Petroleum Reserve in the event of a crisis. However, the Obama Administration can
take positive steps now by approving the Keystone Pipeline, opening more federal lands to oil production, and creating an
environment that promotes oil and gas drilling. Taking those steps, the United States could be almost independent of overseas oil
within 15 years.
Regional war in gulf coming now
Regional War in the persian gulf coming now
Duman 6/29/13 - (İsmail, writer for world bulletin, "Syria-Iran-Turkey: New war scenarios in the Middle East"
http://www.worldbulletin.net/?aType=haber&ArticleID=82111)//AP
Iran-Syria Relations and the possibility of regional war... "And what do Iran's 'Revolutionary Guards' think of Syria? They believe
that Assad's government constitutes an exception." says Wahied Wahdat-Hagh. "They claim that whilst almost all Arab governments
have been touched by the change afoot in the Arab world, with most of these falling due to their 'pro-Western' policies, Syria is 'an
exception.' Syria is counted amongst the 'ranks of resistance,' they say." On the other hand, when Amir Taheri focuses on the details
of Iran-Syria relations, he gives place to these sentences in his article: "Iran, however, stands dead set against the scheme. Over the
last decade, Syria has become more of a client state than an ally. Iran has kept Syria's moribund economy alive with frequent cash
injection and investments thought to be worth $20 billion, and also gives Syria 'gifts,' including weapons worth $150 million a year.
Tehran sources even claim that key members of Assad's entourage are on the Iranian payroll. During Bashar's presidency, the
Iranian presence has grown massively. Iran has opened 14 cultural offices across Syria, largely to propagate its brand of Shiite Islam.
Iran's Revolutionary Guard also runs a 'coordination office' in Damascus staffed by 400 military experts, and Syria is the only
Mediterranean nation to offer the Iranian navy mooring rights. The two countries have signed a pact committing them to 'mutual
defense.' Syria and North Korea are the only two countries with which Iran holds annual conferences of chiefs of staff." Moreover,
"Under a mutual defense pact signed between Syria and Iran in 2005, Syria agreed to allow the deployment of Iranian weapons on
its territory. On June 15, 2006, Syria's defense minister, Hassan Turkmani, signed an agreement with his Iranian counterpart for
military cooperation against what they called the 'common threats' presented by Israel and the United States. 'Our cooperation is
based on a strategic pact and unity against common threats,' said Turkmani. 'We can have a common front against Israel's threats.'"
says Mitchell Bard. He also looks at the strategic importance of Syria for Iran in his article: "Syria harbors in Damascus
representatives of ten Palestinian terrorist organizations including Hamas, Islamic Jihad, the Democratic Front for the Liberation of
Palestine(DFLP), and the Popular Front for the Liberation of Palestine all of which are opposed to advances in the peace process
between Israel and the Palestinian Authority. These groups have launched terrible attacks against innocent Israeli citizens, which
have resulted in hundreds of deaths. Syria also supports the Iranian-funded Hezbollah. For more than 30 years, Lebanon was
essentially controlled by Syria. With Syrian acquiescence, Lebanon became the home to a number of the most radical and violent
Islamic organizations. Hezbollah (Party of God), in particular, has been used by the Syrians as a proxy to fight Israel." Today, we
began to talk about the elimination of these two allies. Although some observers only focuses on the Syria, many of them indicate
"regional war". In this regional war, Iran will be main target. According to Austin Bay, the civil war has now expanded into a twilight
regional war between Iran and NATO, with Turkey as NATO's frontline actor. As a parallel comment, "The involvement of Iran,
Turkey, Saudia Arabia, and other gulf states has turned the Syrian uprising from an internal event - resulting from mass poverty,
oppression, and a lack of economic and political future - into a potential regional war." says Zvi Bar'el. "Syria, whose regional
strategic importance is based less on oil and natural resources, and more on its strong relationship with Iran and ability to intervene
in Iraqi affairs, has been able to prevent the establishment of a military front against it. As opposed to the immediate international
consensus that allowed for a military offensive in Libya, there has been no initiative to promote a similar UN Security Council in
regards to Syria." On the other hand, "All the ingredients for a conformation led by the U.S. against Iran exist." says Mahdi Darius
Nazemroaya. "Iranophobia is being spread by the U.S., the E.U., Israel, and the Khaliji monarchies. Hamas has been entangled into
the mechanisms of a unity government by the unelected Mahmoud Abbas, which would mean that Hamas would have to be
acquiescent to Israeli and U.S. demands on the Palestinian Authority. Syria has its hands full with domestic instability. Lebanon
lacks a functioning government and Hezbollah is increasingly being encircled." Today, we are hearing some allegations in order to
aim Iran at the target. Necessarily, we are thinking that while Syria is second target, the main target is Iran in the Middle East?
Wayne Madsen's comments approve our argument: "Israel's strategy is to make certain that its plans to attack Iran's nuclear
facilities and, perhaps other targets, meet no opposition from diplomatic circles in the United States... Israel has placed its own
interests well beyond and in contravention of those of the United States." He also mentions a polarization between regional powers
as a component part of this puzzle: "Countries in Asia are scrambling to join the Shanghai Cooperation Organization (SCO) as full
members. Confronted by a belligerent United States, NATO, and Israel intent on toppling the governments of Syria and Iran, the
economic, cultural, and de facto collective security pact that comprises Russia, China, Kazakhstan, Kyrgyzstan, Uzbekistan, and
Tajikistan announced after its prime ministers' summit in St. Petersburg that SCO would soon be opening its doors for full
membership for Pakistan, Iran, and India. The Asian nations want to freeze the United States out of interference in Asia." Moreover,
"The structure of military alliances respectively on the US-NATO and Syria-Iran-SCO sides, not to mention the military involvement
of Israel, the complex relationship between Syria and Lebanon, the pressures exerted by Turkey on Syria's northern border, point
indelibly to a dangerous process of escalation." says Michel Chossudovsky. "Any form of US-NATO sponsored military intervention
directed against Syria would destabilize the entire region, potentially leading to escalation over a vast geographical area, extending
from the Eastern Mediterranean to the Afghanistan-Pakistan border with Tajikistan and China." If we attach the excuses against
Iran to this polarization process, it can be more easily to read this picture... According to Wayne Madsen, "Israel, using its agents of
influence in the UN delegations of the United States, Britain, Germany, Canada, Sweden, and the Netherlands, has ensured that
International Atomic Energy Agency (IAEA) Director General Yukiya Amano has tainted his agency's report on Iranian nuclear
developments in a manner that would have never been tolerated by his predecessor, Mohammed ElBaradei. Amano certainly took no
interest in the fact that his own nation, Japan, was secretly producing nuclear weapons at the Fukushima nuclear complex in
contravention of IAEA rules. The aftermath of the destructive earthquake in Japan laid open the secret work going on at Fukushima.
Amano is perfectly willing to act as a cipher for Israel and the Israel Lobby in 'discovering' IAEA violations by Iran." On the other
hand, giving an ear to Pepe Escobar about the producing fabrication causes in order to aim Iran at the target can be very helpful:
"It's Christmas in October - as the United States government has just handed it the perfect gift; in the excited words of US Attorney
General Eric Holder, 'A deadly plot directed by factions of the Iranian government to assassinate a foreign ambassador on US soil
with explosives.'
Oil dependence from Persian Gulf bad
Dependence in Persian Gulf is a tripwire for the US
Energy Future Coalition 7 - (The Energy Future Coalition is a broad-based, nonpartisan alliance that seeks to bridge the
differences among business, labor, and environmental groups and identify energy policy options with broad political support, "The
benefits of biofuels: Oil Dependence and National Security"
http://www.energyfuturecoalition.org/biofuels/benefits_oil_dep_nat_security.htm)//AP
Transportation accounts for about two-thirds of all U.S. petroleum use, and oil supplies 96% of the energy consumed by
transportation. Thus, the U.S. transportation sector could not operate without oil.
This dependence translates into military and foreign policy risks because of the importance of protecting access to needed oil
reserves in unstable areas. President Jimmy Carter put it clearly in the 1980 State of the Union address when he said: “An attempt
by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States
of America, and such an assault will be repelled by any means necessary, including military force.”
China views Persian gulf as key to security
China views access to the persian gulf as critical to military security
Tata 13 - (Samir, foreign policy analyst. He served as an analyst with the National Geospatial-Intelligence Agency, Senator
Feinstein, researcher with Middle East Institute, Atlantic Council, & National Defense University. He has a B.A. in Foreign Affairs &
History from the University of Virginia, and an M.A. in International Affairs from George Washington University, "Recalibrating
American Grand Strategy: Softening US Policies Toward Iran In Order to Contain China"
http://www.strategicstudiesinstitute.army.mil/pubs/parameters/Issues/WinterSpring_2013 /7_Article_Tata.pdf)//AP
China’s economic and military security is inextricably intertwined with its energy security. Since 2000, China has been a net
importer of oil and gas, primarily from the Persian Gulf. China became the world’s largest energy consumer in 2009, with 96.9
quadrillion British thermal units (BTU) of annual energy consumption compared to 94.8 quadrillion BTU for the United States.6 By
2011, China surpassed the United States as the largest importer of Persian Gulf oil, importing 2.5 million barrels per day (bbls/d)
from the region (representing about 26 percent of total Chinese oil consumption of 9.8 million bbls/d), overtaking the United States
which imported 1.8 million bbls/d from the Persian Gulf (representing about 10 percent of total US oil consumption of 18.8 million
bbls/d).7 In fact, over half of US oil imports come from three countries in the Americas: Canada, Venezuela, and Mexico, with
Canada being the single most important foreign supplier.8 The US Energy Information Administration (EIA) projects that by 2030
oil imports, mainly from the Persian Gulf, will represent 75 percent of total Chinese oil consumption. By contrast, US oil imports are
expected to decline sharply and account for only 35 percent of total US oil consumption by 2030.9 Clearly, Persian Gulf oil imports
will be far more crucial to China than to the United States. Accordingly, for China, ensuring access to Persian Gulf oil and
gas will loom large as a vital national interest. By contrast, for the United States, a key strategic priority will be denial of
access to Persian Gulf energy resources to its adversaries. China, of course, which has domestic oil reserves of about 20 billion
barrels and domestic gas reserves of 107 trillion cubic feet (Tcf), is seeking oil and gas resources which it can effectively control in its
own backyard.10 In the East
China oil concerns are solely in the middle east - they will sell WMD to ensure
bi-lateral ties
Lewis 2 - (Steven W., senior researcher in asian politics and economics james a. baker iii institute for public policy rice university,
"china’s oil diplomacy and relations with the middle east"
http://www.bakerinstitute.org/publications/PEC911Update_ChinasOilDiplomacyRelationsMiddleEast.pdf)//AP
China’s initial inclinations seem to be pointing towards the pursuit of bilateral approaches with key oil producing states in the
Middle East and Africa, and to a lesser degree in Latin America.1 Bilateral approaches, in periods where oil markets are tight
such as the past two years, can lead to strings attached in exchange for stable supply, especially increased pressure from oil suppliers
for political concessions. At its worst, this might portend increased demands on China for
deliveries of weapons
of mass destruction to these politically sensitive markets. The U.S., Japan and Europe have faced similar
problems, especially in the 1970s, and have taken certain unified policy steps to lessen exposures. China, however, has yet to
consider seriously a multilateral alliance with other oil consuming countries and has instead reached out in greater measure to
individual oil exporting countries.
Econ Impact
That collapses the economy- energy markets directly linked
Mark Bettinger et al 10 - (Director of Sierra Club’s Federal and Interna"onal Climate Campaign. Dr. Bernard Finel is
Director of Research and Senior Fellow at the American Security Project. Ann Mesnikoff is the Director of Sierra
Club’s Green Transporta"on Campaign. Jesse Pren"ce-Dunn is a Washington Representa"ve with Sierra Club’s
Green Transporta"on Campaign. Lindsey Ross is a research associate for climate security at ASP. Bernard I. Finel, Ann Mesnikoff,
Jesse Prentice-Dunn, and Lindsey Ross, "Ending Our dependence on Oil" http://www.sierraclub.org/pressroom/downloads/201005-ending-oil-dependence.pdf)//AP
Economic disruptions have a variety of sources. In 1973 and 1979, energy prices spiked
as a result of events in the Middle East and Persian Gulf. American economic growth
during this time suffered by trillions of dollars.29 Increasing demand worldwide
will also result in price increases – and other, more serious issues. Our economic
vulnerabilities as they concern the Persian Gulf have been especially exploited
during the last couple of decades. War in 1991 in the Persian Gulf was waged to
prevent Saddam Hussein from controlling Kuwait’s oil reserves, which would have
brought what today constitutes approximately 30 percent of the world’s proven
oil reserves under his control.30 Nearly two decades and another war in the region
later, we are still fighting to bring stability to Iraq and spending billions to do so.
Today, over 21 percent of our imports arrive from this region.31 Sky-rocketing oil
prices in 2007 and 2008 provide another example of our vulnerability to shocks
in the oil market. Increasing global demand, particularly in developing nations, will
affect global oil prices and the American consumer significantly. Current projections
suggest that prices will likely continue to rise, easily surpassing the 2008 highs in
coming years, though these projections vary based on assumptions about the
value of the dollar annual interest, inflation and unemployment rates.32 The U.S.
military has also expressed concern over our oil dependence. Global energy demand, the military
projects, will increase by 50 percent by the 2030s. Fossil fuels, at 80 percent, will
constitute a majority of the energy supply – barring, of course, significant
investment in alternative sources before this time. Sixty percent of fossil fuel
usage, the Joint Operating Environment 2010 Report predicts, will be in the form
of gas and oil.
Trade deficit
Trade deficit leads to economic collapse
Trade deficit hurts the economy – job cuts and tax increase
Morici 5/10/11 – Senior Contributor to TheStreet (“Rising Oil Prices and China Imports Driving Trade Deficit Up”, The
Street, http://finance.yahoo.com/news/Rising-Oil-Prices-and-China-tsmf-2695764368.html)
the deficit on international trade in goods and services
was $44 billion in February, up from $27 billion in mid-2009, when the economic recovery began. This trade
deficit subtracts from demand for U.S.-made goods and services, just as a large federal budget
deficit adds to it. Consequently, a rising deficit slows economic recovery and jobs creation and
limits how much Congress and the President may cut the deficit without sinking the
economic recovery. Rising oil prices and imports from China are driving the trade
deficit up, and these are major barriers to creating enough jobs to pull unemployment to acceptable levels over the next several
years. Were the Obama administration and Republican leadership in Congress to
address the trade deficit, economic growth, jobs creation and tax revenues would
increase dramatically, and the federal deficit could be cut to manageable levels without fear
Tuesday, analysts expect the Commerce Department to report
of killing jobs creation. Jobs Creation The economy added 216,000 jobs March; however, 360,000 jobs must be added per month to
bring unemployment down to 6% over the next 36 months. With federal and state governments trimming civil servants, private
sector jobs growth must exceed 360,000 per month to accomplish this goal. Americans have returned to the malls and new car
too many dollars go abroad to purchase Middle East oil and Chinese
consumer goods that do not return to buy U.S. exports. This leaves too many
Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes.
showrooms, but
Addons
Dodd- Frank
The plan waivers dodd-frank- Mexico law and worker protection
GPO 6-27- Government Printing Office, (“OUTER CONTINENTAL SHELF TRANSBOUNDARY HYDROCARBON
AGREEMENTS AUTHORIZATION ACT”, 6-27-13, http://www.gpo.gov/fdsys/pkg/CREC-2013-06-27/html/CREC-2013-06-27-pt1PgH4096-6.htm, //CJD)
H.R. 1613 also includes language to protect American workers by ¶ removing
uncertainty surrounding the application of Dodd-Frank Wall ¶ Street Reform and
Consumer Protection Act disclosure requirements.¶ The agreement signed by the
Obama administration and Mexico ¶ specifically provides what royalty payments Mexico
would receive from ¶ energy developers. However, under current U.S. law, companies that ¶
commercially develop oil, natural gas, or minerals are required to ¶ disclose
payments made to a foreign government. This could create a ¶ potential conflict
because Mexico has yet to decide how they will ¶ collect royalties and could
potentially set regulatory measures that ¶ prohibit disclosure of payments.¶ {time}
1300¶ This would then block American workers from being able to develop ¶ these
resources.¶ Waiving the Dodd-Frank requirement is necessary in order to help ¶
protect American jobs and American-made energy in this instance. ¶ Without it,
foreign-controlled energy companies could develop this ¶ American energy
resource. The royalty payments to Mexico would still be ¶ undisclosed and kept
private, but the net result would be that ¶ Americans would lose out on this energy
potential.
Wavering once repeals the whole bill- SEC is key to the whole thing
Bennett 10- domestic and foreign investments attorney at Stroock Law firm, (Hillel, “Congress
Repeals Dodd-Frank FOIA ¶ Exemption for SEC “, October 13, 2010, stroock & stroock & lavan llp,
http://www.stroock.com/SiteFiles/Pub996.PDF, //CJD)
Obama signed ¶ Senate Bill 3717 (“Bill”) into law, effectively ¶
repealing a broad exemption of the Securities and ¶ Exchange Commission (“SEC”) from the Freedom ¶ of
Information Act (“FOIA”) and other disclosure ¶ established by Section 929I (“Section
929I”) of the ¶ Dodd-Frank Wall Street Reform and Consumer ¶ Protection Act
(“Dodd-Frank”). ¶ Section 929I of Dodd-Frank ¶ Section 929I exempted the SEC from being ¶
compelled through FOIA and non-FOIA litigation ¶ to disclose information
obtained by the SEC in ¶ connection with its surveillance, risk assessments, ¶
regulatory or oversight activities or obtained in ¶ connection with reporting
obligations of financial ¶ institutions under the Securities Exchange Act of ¶ 1934,
the Investment Company Act of 1940 and the ¶ Investment Advisers Act of 1940
(as amended by ¶ Dodd-Frank, collectively, the “Acts”). ¶ The SEC had requested the
exemption in order to ¶ facilitate its enforcement activities.1¶ According to the ¶ SEC,
financial institutions resisted providing the agency with non-public information
on the grounds ¶ that the SEC might not be able to keep it ¶ confidential,
particularly from competitors or other ¶ third parties seeking access to such
information ¶ through discovery in connection with commercial ¶ litigation or
otherwise.2 ¶ However, after the SEC used Section 929I to ¶ avoid disclosing details of its
On October 5, 2010, President
failure to detect the ¶ Bernie Madoff ponzi scheme, Congress decided to ¶ review
whether Section 929I was overbroad.3 ¶ FOIA Exemption 8 ¶ On September 23, 2010, the House
passed the ¶ Bill, previously approved by the Senate, which ¶ deletes the exemption
provisions of Section 929I, but ¶ adds language clarifying that Exemption 8 of
FOIA ¶ (“Exemption 8”) applies to the SEC.4¶ Exemption 8 ¶ provides that matters
“contained in or related to ¶ examination, operating, or condition reports
prepared ¶ by, on behalf of, or for the use of an agency ¶ responsible for the
regulation or supervision of ¶ financial institutions,” are exempt from FOIA.5¶ Therefore,
although Congress removed the exemption created by Section 929I, Congress ¶
confirmed that the pre-existing FOIA exemption ¶ applicable to certain
information concerning financial ¶ institutions is applicable to information
obtained by ¶ the SEC.6¶ Although Exemption 8 applies to information ¶ obtained by
the SEC relating to financial institutions, ¶ Exemption 8 provides less
confidentiality protection ¶ than Section 929I for two main reasons. First, ¶
Exemption 8 only exempts from FOIA requests ¶ information “contained in or
related to examination, ¶ operating or condition reports” prepared by or for ¶ the
SEC, whereas Section 929I applied to all ¶ information obtained by the SEC under
the Acts, ¶ including information obtained through reporting ¶ obligations of
financial institutions and for the ¶ purposes of any surveillance, risk assessments, ¶
regulatory or oversight activities.7 ¶ Second, Exemption 8 is only an exemption from ¶
FOIA, not from other attempts to compel the SEC ¶ to disclose information
relating to its activities or to ¶ the financial institutions it regulates. For example, ¶
the SEC is not exempt from having to provide ¶ information in response to
subpoenas issued in a ¶ litigation context among third parties.8¶ Section 929I ¶
provided a broad prohibition against compelling the ¶ SEC to disclose information
relating to its ¶ investigations or to financial institutions in non-FOIA ¶ contexts.¶
Conclusion ¶ The SEC and financial institutions regulated by the ¶ SEC lost a significant
confidentiality protection with ¶ the effective repeal of Section 929I. However, the
¶ repeal is a return to the pre-Dodd-Frank status quo ¶ under which Exemption 8
of FOIA applies to ¶ information contained in or related to reports ¶ prepared by or
for the SEC. ¶ In the future, a revised version of Section 929I ¶ may be proposed.
House sponsors of the Bill have ¶ already indicated interest in seeking an
exemption ¶ more tailored to the confidentiality concerns of ¶ financial institutions
and less open to public criticism, ¶ to facilitate SEC enforcement activities.9
Absent repeal, US economy will crumple – regulations hamstring small
business
Graves 11 [Rep. Sam Graves of Missouri is chairman of the House Small Business Committee, “Small
Businesses Not Celebrating Dodd-Frank's Birthday”, July 21st, 2011,
http://www.foxnews.com/opinion/2011/07/21/small-businesses-not-celebrating-dodd-franksbirthday/,]
The few effective provisions of Dodd-Frank are masked by its many flaws; flaws that have been and will
American economy
and our financial future if not reversed.
continue to be detrimental to the
As Chairman of the House Committee on Small Business, I am particularly
concerned about the impact these flaws will have on small firms across America. Small
companies are the cornerstone of the American
economy and are our most effective job creators. On average, seven of every ten new jobs are created by small businesses. The impact of DoddFrank on small businesses is two-fold: First, Dodd-Frank is having a tremendous impact on small business lending. In the last few years, lending to small firms has
plummeted to record lows. The stricter regulatory environment created by Dodd-Frank, and the new Consumer Financial Protection
Bureau (CFPB), combined with the uncertainty brought by many of the laws’ vague provisions ,
is slowing small business lending. Access to
capital is critical for small business success and crucial to our economic recovery. Without access to capital, many small companies
are not able to maintain operations, let alone expand and create new jobs. With unemployment hovering at over 9 percent we should be doing more to make credit
available to our job creators, not stifling lending with new regulations. Second, small financial institutions are disproportionately affected by
Dodd-Frank. Many small businesses rely on small financial institutions, like credit unions and community banks, to meet their capital requirements. Without
them, these small businesses would have to close their doors. Small lending institutions lack the capability of their larger counterparts
to hire the additional manpower necessary to deal with the hundreds of additional regulations created by Dodd-Frank. The increase in costs associated with these new
regulations will lead to a decrease in revenue and will reduce small banks’ ability to meet the credit requirements of their communities. In a recent House Small Business
Committee hearing, Thomas Boyle, Vice-Chairman of a small bank in LaGrange, Illinois conveyed this sentiment by saying: “I am deeply concerned that this [DoddFrank] model will collapse under the massive weight of new rules and regulations… these pressures are slowly but surely strangling traditional community banks,
handicapping our ability to meet the credit needs of our communities. The consequences are real. Costs are rising, access to capital is limited, and revenue sources have
been severely cut. It means that fewer loans get made. It means a weaker economy. It means slower job growth.” To help address the
consequences of Dodd-Frank and the CFPB, House Republicans will seek to pass a bill today that would bring much needed oversight to the Bureau. The Consumer
Financial Protection Safety and Soundness Improvement Act of 2011 (H.R. 1315) would replace the Bureau’s director, who is an unelected, unaccountable bureaucrat who
has sweeping powers, with a 5-member bipartisan commission. The legislation would establish a meaningful review process of CFPB rules that may endanger the safety
and soundness of small financial institutions. A bipartisan commission would promote certainty and continuity by preventing a new director from unilaterally reversing
earlier decisions, and would carry out regulatory initiatives in a manner that is consistent with the safety and soundness of the country’s financial system. Over the past
year, Dodd-Frank has done the opposite of what President Obama, Rep. Frank and Sen. Dodd promised. Lending remains restricted, unemployment is stagnant and small
business owners are more uncertain than ever about the state of the economy. Further, Dodd-Frank’s impact on small businesses has
impeded the nation’s economic recovery, killing job growth and stifling innovation.
Next Thursday, we will continue our
oversight of this burdensome law when our Subcommittee on Investigations, Oversight and Regulations examines the impact of the CFPB on small businesses in a
hearing. House Republicans are committed to reverse the harmful provisions in Dodd-Frank so that small businesses and lenders can
thrive responsibly and spark
growth in our economy.
Extinction
O Hanlon et al, 12
O’Hanlon 12 Kenneth G. Lieberthal, Director of the John L. Thornton China Center and Senior Fellow in Foreign Policy and Global
Economy and Development at the Brookings Institution, former Professor at the University of Michigan [“The Real National
Security Threat: America's Debt,” Los Angeles Times, July 10th, http://www.brookings.edu/research/opinions/2012/07/10economy-foreign-policy-lieberthal-ohanlon]
Alas, globalization and automation trends of the last generation have increasingly called the American dream into question for the
working classes. Another decade of underinvestment in what is required to remedy this situation will make an isolationist or
populist president far more likely because much of the country will question whether an internationalist role makes sense for
America — especially if it costs us well over half a trillion dollars in defense spending annually yet seems correlated with more job
undercuts U.S. leadership abroad. Other countries
sense our weakness and wonder about our purport 7ed decline. If this perception becomes more widespread, and
the case that we are in decline becomes more persuasive, countries will begin to take actions that reflect
their skepticism about America's future. Allies and friendswill doubt our
commitment and may pursue nuclear weapons for their own security, for example; adversaries will
sense opportunity and be less restrained in throwing around their weight
in their own neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely become less stable. Major
war will become more likely. When running for president last time, Obama eloquently articulated big foreign
policy visions: healing America's breach with the Muslim world, controlling global climate change, dramatically
curbing global poverty through development aid, moving toward a world free of nuclear weapons.
These were, and remain, worthy if elusive goals. However, for Obama or his successor, there is now amuch more
urgent big-picture issue: restoring U.S. economic strength. Nothing
else is really possible if that fundamentalprerequisite to effective
foreign policy is not reestablished.
losses. Lastly, American economic weakness
1ar Dodd Frank extensions
Plan= Waiver
The plan would be an exemption from Dodd- Frank
NRH 6-27- Natural Resources committee for the house of representatives, (“Outer Continental Shelf Transboundary Hydrocarbon
Agreements Authorization Act (H.R. 1613)”, 6/27/13, http://naturalresources.house.gov/news/documentsingle.aspx?DocumentID=340002, //CJD)
bill would protect U.S. jobs and provide greater regulatory certainty to U.S.
companies.¶ The agreement signed by the Obama Administration and Mexico specifically
provides what royalty payments Mexico would receive from energy developers .
However, under current U.S. law (section 1504 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act) companies that commercially develop oil, natural gas or minerals are
required to disclose payments made to a foreign government. This could create a
potential conflict because Mexico has yet to decide how they will collect royalties
and could potentially set regulatory measures that prohibit disclosure of
payments.¶ The bill includes a provision that would waive the Dodd-Frank
requirement in order to help protect American jobs and American-made energy.
Without it, foreign-controlled energy companies could develop this American
energy resource and the royalty payments to Mexico would still be undisclosed
and kept private.¶ The bill would also put into place an important and transparent
framework for future implementation of similar transboundary hydrocarbon
agreements with other nations.
The
Has to be waivered- sessions prove
Duncan 6-27- United States Representative from South Carolina, (Jeff, “H.R.1613 Outer Continental Shelf Transboundary Hydrocarbon
Agreements Authorization Act”, 6-27-13, The week in congress, http://theweekincongress.com/2013/06/27/h-r-1613-outer-continental-shelftransboundary-hydrocarbon-agreements-authorization-act/, //CJD)
bill would supplant the existing SEC waiver authority resulting in, opponents
hold, secret transactions between Mexico and private business without the SEC
intervention.¶ “Allowing such secret payments is not only unwise,” dissenters hold, “it is also
unwarranted. The SEC already has the authority to provide waivers from the
Dodd-Frank disclosure requirement should it be warranted. The SEC has general
exemption authority under Sections 12(h) and 36 of the Securities Exchange Act
of 1934. The SEC can `exempt any person, security, or transaction, or any class or
classes of persons, securities, or transactions’ using this authority `to the extent
that such exemption is necessary or appropriate in the public interest, and is
consistent with the protection of investors.’ If a situation arises where such a
waiver is needed, the SEC already has the authority it needs to exempt companies
from the disclosure requirement. We should not provide a blanket exemption as
is included in the underlying bill.Ӧ The Mexican Government view of the matter
includes several considerations relevant to the matter; According to Javier H.
Estrada of Analitica Energética S.C. writing for Offshore-mag.com the Mexican
oil company, Pemex, “is the only oil company allowed as investor and operator
under the Mexican system. The constitution prohibits foreign control of oil and
gas production.” Estrada points out that the Mexican legislature views the
necessity of establishing an agreement with the US as a defensive position
The
protecting Mexican interests from being exploited by the more technologically
efficient US petroleum industry. So, an agreement on the sharing of resources
extracted is seen as urgently necessary.
Waiver= death of Dodd Frank
Amendments like the plan are key to full out repeal
Mulvey 11- JD/MA at Boston University School of Law (Ryan, “III. Dodd-Frank Proposed Legislative Amendments”, Sep
20, 2011, Developments in banking law,
http://www.bu.edu/law/central/jd/organizations/journals/banking/archives/documents/volume31/Dodd-FrankAmendments.pdf,
//CJD)
Dodd-Frank Proposed Legislative Amendments ¶ A. The Future of Dodd-Frank
and the Problem of ¶ Regulatory Reform ¶ One of the great ironies of contemporary
politics is that ¶ efforts to provide for simplified regulation frequently lead to ¶
increasingly complex regulatory schemes.1¶ The Dodd-Frank Wall ¶ Street Reform and Consumer
Protection Act (“Dodd-Frank” or ¶ “Act”) 2 has significantly contributed to such complexity.3¶
Indeed, ¶ partly because of its intricacy, Dodd-Frank has proven to be one of ¶ the
more controversial laws to come out of Congress during the ¶ Obama
presidency.4¶ From the moment of its conception to its infancy ¶ as codified law,
Dodd-Frank has caused division among politicians, ¶ academics, industry experts,
and the public.5¶ Nevertheless, the implementation of Dodd-Frank, or ¶ something along
its lines, was perhaps inevitable in the wake of the 2008 financial crisis.6¶ The
public, the financial industry and the state ¶ of the market called out for
attention.7¶ Thus, Dodd-Frank ¶ represented, for some, a necessary effort to curb the wiles
of Wall ¶ Street and to restore regulatory sanity to what had become an ¶
increasingly free—if not entirely uninhibited—sector of the market.8¶ To opponents of the
Act, however, it has become yet another ¶ example of intrusive government and prolix
legislation.9¶ Of course, ¶ for the near future, at least, Dodd-Frank is here to stay and will ¶
continue to play an instrumental role in shaping the contemporary ¶ financial
regulatory regime.10¶ The purpose of this article is to summarize current efforts to ¶
either curb the effects of Dodd-Frank, or to modify its regulatory ¶ reach. As will be
demonstrated, a great deal of such legislation has ¶ flooded Congress since the opening
of the 112th Session, which ¶ witnessed the installation of Speaker John Boehner
and the present ¶ Republican majority.11 Such efforts—ranging from all-out repeal, to ¶ more
modest attempts at crafting existing provisions, especially in ¶ Title VII—reflect
the general attitude that Dodd-Frank was drafted ¶ hastily and without careful
consideration of the impact of entirely new regulatory regime.12 Many fear that
the Act has stifled Wall ¶ Street and retarded economic recovery; others suggest
that it merely ¶ grows an already bloated federal bureaucracy and has moved ¶
regulatory power from accountable institutions to new organs that ¶ operate
outside of Congressional purview.13 The wide latitude given ¶ to the Consumer Financial
Protection Bureau (“CFPB”) in drafting ¶ rules and “filling in” regulatory gaps left in the
text of Dodd-Frank ¶ opens the door to complex regulations that could become as ¶
problematic as the complex securities that contributed to the last ¶ financial
crisis.14¶ On the other hand, with the Act still in its infancy and not yet ¶ fully
implemented, the fruit of Dodd-Frank have yet to ripen.15 While ¶ it may be too
soon to offer arguments for industry reliance on its ¶ provisions, the passage of
III.
significant amendments, let alone ¶ wholesale repeal, has the potential to only
cause further confusion ¶ and complexity.
Dodd Frank kills econ
Dodd Frank kills the economy- stats prove
IBD 12- Investor Business Daily, (“Dodd-Frankenstein Strangling Economy On Second Anniversary”,
07/23/2012, Investors Business Confidence, http://news.investors.com/ibd-editorials/072312-619198-recoverystalled-after-dodd-frank-act-became-law.htm?p=full, //CJD)
Two years ago, Democrats engineered the biggest regulatory hijacking of
the financial sector since the New Deal. Also two years ago, the recovery stalled.¶ In
fact, economic growth shrank soon after President Obama signed into law the
monstrous Dodd-Frank Wall Street Reform and Consumer Protection Act, notes
a new study by the American Enterprise Institute in Washington.¶ The economy
began to show signs of life in 2009 and the first half of 2010. But after Dodd-Frank became
law in July 2010, real GDP growth, home prices and manufacturing output all
headed south. AEI says the 2,319-page law strangled the modest recovery by
creating hundreds of business uncertainties that froze the financial sector and the
flow of credit to industries.¶ "The Dodd-Frank Act was such a comprehensive piece of
legislation — and required so many new regulations before its effect could be fully
evaluated — that many financial institutions and firms simply decided to wait for
regulatory developments before expanding, hiring new workers or rehiring
workers previously laid off," said the report by Peter Wallison, former Treasury official and Financial Crisis Inquiry
Commissioner.¶ And they're still waiting.¶ The sweeping law requires more than 400 separate
rulemakings that may not be fully implemented for several years. In contrast, the
Sarbanes-Oxley Act of 2002 took just 16 rulemakings over 2-1/2 years.¶ A study by the
Heritage Foundation found that "most of the law's provisions have little or no
connection to the financial crisis that provided the excuse for their creation." And
not a single provision in the law touches Fannie Mae and Freddie Mac, the chief
culprits in the crisis still protected by Democrats.¶ What has been implemented is
harming, not helping, consumers and the economy. For instance:¶ Subscribe to the IBD Editorials
Podcast¶ • By curbing the fees banks can charge retailers for processing debit-card
purchases, banks have had to increase fees paid by customers. The share of large
banks offering free checking plunged to 35% last year from 96% in 2009.¶ • The
Volcker Rule effectively barring banks from investing their own funds is also
driving up fees.¶ • Capital-reserve requirements are forcing Wall Street firms to
raise capital by cutting payrolls.¶ • A little-known provision requiring
manufacturers prove that the metals they use in electronics aren't mined by
Congo rebels could cost producers as much as $16 billion a year and make
products sold by discount retailers more expensive.¶ • Community bankers are
restraining growth to stay below the $10 billion asset threshold at which more
stringent Dodd-Frank rules kick in.¶ The American Bankers Association predicts the law
will help drive more than 1,000 banks out of business by the end of the decade
and could destroy 2.9 million jobs over the next three years alone.¶ The law also
created perhaps the most powerful regulatory agency ever established — the
Consumer Financial Protection Bureau. It has the power to regulate, free of
Red Tape:
congressional oversight even over its budget, every consumer financial
transaction and then some.¶ In many ways, CFPB is a civil-rights agency
masquerading as a consumer watchdog. It will:¶ • Collect through its Office of Fair
Lending new bank data by race to "target areas of greatest risk for
discrimination" including mortgage and small business lending.¶ • Police for the
first time bill collectors and credit reporting bureaus to enforce "fairness."¶ •
Create through its Office of Minority Inclusion racial hiring quotas at 20 bank
regulatory agencies, including the Fed.¶ The regulatory onslaught is a boon only
for compliance lawyers and government regulators, whose ranks will swell by
2,849 new positions, the GAO says.¶ The financial overhaul, one of the president's signature
achievements, was supposed to prevent another crisis. But now on its second
anniversary, it's clear Dodd-Frank only made a bad situation worse. Its next
observance should be its funeral.
Kills econ- too many regs
Barone 1/7-senior political analyst for the Washington Examiner, ( Michael, “Dodd-Frank’s Problems — and Potential
Solutions”, 1/7/2013, national review, http://www.nationalreview.com/articles/336977/dodd-frank-s-problems-and-potentialsolutions-michael-barone, //CJD)
we will probably see much controversy over the implementation of
Obamacare. Health insurance is something that almost every adult has some
acquaintance with, and there seem to be glitches aplenty in the legislation, much
delay in issuing regulations, and some possible changes resulting from litigation.¶
We’re likely to see or hear less about the operations of the Dodd-Frank financial-regulation
legislation, passed four months after Obamacare. Most of us don’t work at banks
or financial institutions, which will have to grapple with its myriad provisions
and the regulations to be issued thereunder, and we tend to toss out those
disclosure forms our bank sends.¶ But Dodd-Frank may produce more problems
than it solves. That is the thesis of David Skeel, professor at the University of Pennsylvania Law School, in his new
book, The New Financial Deal: Understanding the Dodd-Frank Act and Its
(Unintended) Consequences.¶ Skeel does not find fault in Dodd-Frank’s effort to
regulate derivatives — contracts in which one party agrees to pay another in case
of changes in interest rates, currency-exchange rates, oil prices, or just about
anything else — with provisions encouraging them to be conducted through
clearinghouses.¶ Derivatives were an obvious target for regulation, since it was
derivatives based on the value of mortgage-backed securities that did much to
trigger the collapse of Lehman Brothers and AIG in 2008. Skeel calls these Dodd-Frank
derivative provisions “an unequivocal advance.”¶ But he sees serious problems in what he describes as
the two themes that emerge from the law’s 2,319 pages: “(1) government
partnership with the largest financial institutions and (2) ad hoc interventions by
regulators rather than a more predictable, rule-based response to crises.Ӧ The
prime mover behind these policies, he argues, was Treasury secretary Timothy
Geithner, who as a junior Treasury official played a role in the bailout packages
for the Mexican peso in 1994–95 and the hedge fund Long Term Capital
Over the next year,
Management in 1998. They’re his models for future regulation.¶ As president of the New York
Federal Reserve, he played a key role in fashioning responses to the financial crises of
2008. Dodd-Frank, Skeel argues, was written to give regulators powers they felt
they lacked when they allowed Lehman Brothers to go into bankruptcy in
September 2008.¶ Lehman’s collapse, followed by the Bush administration’s demand
for the $700 billion TARP legislation — and especially the House’s initial
rejection of TARP (reversed four days later) — led to staggering losses first in the
stock market and then in the economy at large.¶ Skeel is one of many who argue,
persuasively in my view, that the real mistake here was not the failure to bail out
Lehman but the apparently successful bailout of a smaller investment bank, Bear
Stearns, in March 2008.¶ The Bear bailout created expectations that the Federal
Reserve and the Treasury would bail out every big financial institution —
expectations strengthened when the government took over Fannie Mae and
Freddie Mac in August 2008 and AIG in early September.¶ Lehman could and
almost certainly would have sold itself out of trouble, Skeel argues, if its
executives had not had such expectations.¶ Dodd-Frank’s provisions requiring
special treatment of the very largest financial institutions create similar
expectations, Skeel says. And it enables those “too big to fail” institutions to
borrow money at lower rates than smaller banks. Similarly, Fannie and Freddie
— with their implicit government guarantee — were able to borrow cheaply and
engage in the practices that brought them down, costing taxpayers $140 billion.¶
Skeel is a specialist in bankruptcy law, and he argues that the relatively fixed rules of
bankruptcy could better handle the breakdown of big financial institutions than
the discretion Dodd-Frank gives to regulators.¶ One reason Dodd-Frank is tilted
against bankruptcy, he says, is congressional-committee jurisdiction lines: DoddFrank was the product of banking committees, and bankruptcy is handled by the
judiciary committees.
Destroys the economy- Volcker Rule
Berlau 11- Senior Fellow for Finance and Access to Capital in the Center for Economic Freedom at the
Competitive Enterprise Institute, (John, “Repeal Senseless and Job-Destroying Volcker Rule from Dodd-Frank”,
January 18th, 2011, Open Market, http://www.openmarket.org/2011/01/18/repeal-senseless-and-job-destroyingvolcker-rule-from-dodd-frank/, //CJD)
the Financial Stability Oversight Council may issue its recommendations
for implementing the Volcker Rule, the provision of the Dodd-Frank financial
legislation that bans so-called proprietary trading by banks.¶ Initial reports
indicate that the council may try to assuage some concerns about the rule’s
economic effects by attempting to draw a line between long-term investing from
short-term trading. Congress, however, should still repeal this senseless rule that is
already showing signs of doing lasting damage to the economy and which will
most likely add, not lessen, systemic risk.¶ The Volcker rule is based on the faulty
premise that a financial institution making a loan — any loan — is somehow
inherently more dangerous than investing or trading. It was that premise that led
to the enactment of Glass-Steagall in the Depression that separated “commercial”
On Tuesday,
from investment banking.¶ After evidence of the damage that Glass-Steagall was
doing to U.S. competitiveness plus empirical studies that showed it did not
protect the financial system from systemic risk, the Clinton administration and a
large bipartisan majority in Congress largely repealed it in 1999.¶ Yet bad ideas
have a way of coming back to life, and Glass-Steagall’s repeal was falsely blamed
for the financial crisis — a crisis primarily causes by lax lending standards on
traditional mortgage loans — loans bought by the quasi-government entities
Fannie Mae and Freddie Mac and encouraged by laws such as the Community
Reinvestment Act.¶ As Peter Wallison, fellow at the American Enterprise Institute and a
commissioner on the congressionally-created Financial Crisis Inquiry
Commission, has written, the commercial banks that imploded all went bust “by
investing in bad mortgages or mortgage-backed securities, not because of the
securities activities of an affiliated securities firm.” (Wallison and some of his fellow commissioners
are expected to detail the amount of bad loans influenced by government rules in their final FCIC report, which may be written as a
Volcker rule restricts banks, and in some cases insurance holding
companies, from ”proprietary trading” — which it defines as trading for the
institution itself rather than for its customers. But this is based on a similarly
false premise.¶ There is nothing inherently more risky about trading — short-term or
long-term — than making loans. Supporters of the Volcker rule say banks
shouldn’t be “gambling” with taxpayer money, and indeed deposit insurance
should be reformed and gradually phased out so that all institutions as well as
savers and investors are more risk-conscious.¶ But policymakers must recognize
that every time a financial institution engages in an economic transaction — whether a
loan or a trade — it is making a “gamble” that it will never get its money back. Limiting a
bank’s ability to take equity in a firm by saying it can lend but not invest to that
particular firm will result in less, not more, protection from risk.¶ And already, the
Volcker rule may be hindering economic recovery. John Maggs reports in Politico
that banks are losing top traders to hedge funds, because of uncertainty about the
rule. Banks ability ”make markets” for investors by buying a particular security
may be sharply restricted, which in turn could slow down the formation of new
businesses that create new jobs.¶ And even though this supposedly was taken care of
by giving regulators more flexibility, there is still concern that the rule will affect
many insurance companies investments in blue-chip stocks. These are
investments that are encouraged and even required by state insurance
commissioners as a way for companies to diversify their investments for
solvency.¶ Hopefully, the recommendations of the council will blunt some of the rules
worst economic effects. But due to unnecessary restriction and uncertainty that
will still linger, Congress should repeal the misguided Volcker rule and move on
to the Dodd-Frank “financial reforms” glaring omission — the behemoths Fannie
Mae and Freddie Mac, which were at the center of the crisis.
dissent.)¶ The
Destroys economy- small businesses
Gessing 12- full-time President of the Rio Grande Foundation, (Paul, “DODD-FRANK WILL REDUCE SMALL
BUSINESSES’ ACCESS TO CREDIT”, 3/15/13, American Action Forum, http://americanactionforum.org/topic/dodd-frank-willreduce-small-businesses%E2%80%99-access-credit, //CJD)
devil is always in the details. Nowhere is this statement truer than in the area
of federal legislation. Nowhere are those details more devilish than in the Dodd-Frank
legislation that was passed in the wake of the 2008 banking and financial crisis.
This law holds a ticking time bomb that, if not addressed, will destroy a large
swath of the U.S. economy while further concentrating the banking business in
the hands of those few behemoth banks that did so much to cause the economic
crisis from which our nation is still emerging.¶ Small banks did not cause the
economic crisis. They were not engaged in the risky behaviors that caused the
economy to tank and they were not bailed out by trillions of taxpayer dollars. But
when it came time to “reform” the banking system, it was the big banks, not the
small ones, that had the lobbying power to get what they wanted on Capitol Hill.¶
Specifically, I’m referring to Section 1071 of the Dodd-Frank Act. Section 1071 amends
the Equal Credit Opportunity Act to require that financial institutions collect and
report information concerning credit applications made by women- or minorityowned businesses and by small businesses.¶ The stated goal of this section of DoddFrank — “to facilitate the enforcement of fair lending laws” — is laudable. Unfair
lending practices are abhorrent and are something that reputable banks should
not engage in. Still, Section 1071 is problematic. In order to ensure that lenders
aren’t discriminating against minority groups on price, it will take away lenders’
ability to flex with borrowers, to custom-make loans. This will make it impossible
for lenders to make the loans their customers need.¶ Flexibility is the small banks’
main selling point. Big banks already loan in ways that ensure that each loan is
similar to another. They are big, ponderous and don’t “need” to tailor loans to
small businesses.¶ One banker at a locally owned bank that I interviewed for this article
says that no two small business loans are exactly alike and that Section 1071 will
destroy small bankers’ competitive edge in small business lending relative to the
big banks.¶ Small businesses rely on flexible lending from small banks to grow. This
growth spurs economic growth and new business development, but will suffer
incalculable harm if Section 1071 of Dodd-Frank becomes effective. Small banks
(banks with under $1 billion in total assets) make up only about 10% of the
banking deposit market, but they make approximately 40% of loans to small
businesses, which employ 80 million Americans.¶ The intent of Section 1071 is to
make more credit available to small businesses, but its effect will, in fact, be just
the opposite. And since economic recoveries are led by entrepreneurial small
businesses, Section 1071 will endanger our nation’s economic recovery.¶ Lastly, by
hurting small banks, Section 1071 will increase the big banks’ market share,
exacerbating the “too big to fail” problem that caused this mess in the first place.¶
Because it has not been implemented yet, Section 1071 is, as they say, “below the
radar.” But, once it does go into effect, it won’t be long before lenders and small
business owners are affected by it. It is up to Congress and the Obama
administration to recognize the problem and get rid of Section 1071 entirely,
before it strangles our economic recovery.
The
Dodd Frank kills growth- banking industry
Payne 12- staff writer at the foundry, (Amy, “Morning Bell: Dodd-Frank Financial Regulations Strangling
Economy”, July 20, 2012, the foundry, http://blog.heritage.org/2012/07/20/morning-bell-dodd-frank-financialregulations-strangling-economy/, //CJD)
bank raised its fees or stopped offering free checking accounts in the last
couple of years? If so, you can thank the regulatory boondoggle that is the DoddFrank financial law.¶ Since its passage two years ago tomorrow, the number of
large banks that offer free checking has declined sharply. In 2009, 96 percent of
them offered free checking, but just 34.6 percent did in 2011.¶ Senator Chris Dodd (D-CT) and
Has your
Representative Barney Frank (D-MA) argued that their namesake would save America from another financial crisis—but most of the
Dodd–Frank does not end
bailouts and taxpayer support for big banks. Under the act, the Federal Deposit
Insurance Corporation (FDIC) is permitted to purchase the assets of a failing
firm, guarantee the obligations of a failing firm, take a security interest in the
assets of a failing firm, and borrow on the failed firm’s total consolidated assets .
(For Bank of America, that would be $2 trillion in bailout authority to be paid by taxpayers.)¶ Congress has proven, in
fact, that it grossly misdiagnosed the factors responsible for the financial crisis,
while ignoring primary culprits such as Fannie Mae and Freddie Mac. But in its haste to
appear relevant and on top of things, Congress has unleashed a staggering
amount of new regulations that are actually harming—not helping—the
economy.¶ There’s a reason the financial regulation law has been called “DoddFrankenstein.” This monstrous creation will swell the ranks of regulators by
2,849 new positions, according to the Government Accountability Office. It created
yet another new bureaucracy called the Consumer Financial Protection Bureau
(CFPB) that has truly unparalleled powers.¶ This new bureau is supposed to
regulate credit and debit cards, mortgages, student loans, savings and checking
accounts, and most every other consumer financial product and service. And it’s
not even subject to congressional oversight.¶ Frighteningly, the CFPB’s regulatory
authority is just as vague as it is vast. More than half of the regulatory provisions
in Dodd–Frank state that agencies “may” issue rules or shall issue rules as they
“determine are necessary and appropriate.” This means, as The Economist put it, “Like
the Hydra of Greek myth, Dodd-Frank can grow new heads as needed.Ӧ Congress
avoided making real law here and passed the responsibility for “fixing” the
financial sector to these newly minted bureaucrats. And that hasn’t been going too well.¶ As
Heritage’s Diane Katz explains in a two-year checkup of the law:¶ As of July 2, 63 percent of the deadlines have
been missed, which has intensified the cloud of uncertainty enveloping the
finance sector—and the economy—since passage of the act. Thousands of
businesses do not know what the government demands they do differently or
when they must do it.¶ The results of this haphazard regulation are dire, Katz says,
because “consumers will experience tight credit, higher fees, and fewer service
innovations. Job creation will suffer.” She adds that “financial firms of all sizes
are shelling out hundreds of millions of dollars for regulatory compliance officers
and attorneys rather than making loans for new homes and businesses.Ӧ So the
law that was supposed to fix the financial sector—and created something called
law’s provisions have little or no connection to the most recent crisis.¶ For example,
the Consumer Financial Protection Bureau—is hurting consumers rather than
“protecting” them. Congress should repeal Dodd-Frank before it can do any more
damage.
Mexico relations
Solves US- Mexico Relations- energy security
Brown and Meacham 6/05- *non-resident fellow at the German Marshall Fund of the United States, **
director of the Americas Program at the Center for Strategic and International Studies. They previously served as senior advisers on
the Republican staff of the Senate Foreign Relations Committee and authored the report Oil, Mexico, and the Transboundary
Agreement, (Neil and Carl, “Time for US-Mexico Transboundary Agreement”, 06/05/13, The Hill, http://thehill.com/opinion/oped/303739-time-for-us-mexico-transboundary-agreement, //CJD)
Such was the concern of many in Mexico that led to an oil exploration
moratorium along our maritime border. Congress should now approve a more
neighborly solution.¶ The United States-Mexico Transboundary Agreement (TBA) would enable cooperation
between our two federal governments and our companies to unlock the potential
for oil and natural gas reserves that extend across our Gulf of Mexico maritime
boundary.¶ Congressional approval of the TBA would enrich U.S.-Mexico relations
in the near term while laying the foundation for improved energy security and
enhanced environmental protection for the Gulf Coast.¶ Bilateral relations with
Mexico have improved dramatically in recent years, yet energy cooperation has
lagged. Oil holds a privileged position of national pride and constitutional
protection in Mexico, historically putting it off limits for domestic reform and bilateral
cooperation with the U.S. The TBA is, therefore, more than just an energy agreement.
Its approval by the Mexican government is a political statement opening a
window to richer relations.¶ While the area under future jurisdiction of the TBA
could provide incremental domestic oil production, a far greater prize for the U.S.
oil portfolio is the prospect of more reliable oil trade with our ally Mexico. The
TBA would, for the first time, allow oil majors to work in joint production arrangements
with PEMEX and support the confidence building necessary to enable those
arrangements more widely in Mexico. That is not only good for oil major
shareholders, it is good for our nation’s energy security.¶ Even as U.S. domestic oil
production increases, the sources of our imports remain critical for economic
stability and national security flexibility. Recently, Mexico was supplanted by Saudi
Arabia as our second largest foreign oil source after Canada.¶ Mexican oil
production has dropped by more than a quarter over the last decade, and U.S.
refiners geared for heavy oil had to look elsewhere to make up the difference.
Canadian heavy crude production is increasing in the country’s oil sands region,
but pipeline infrastructure is insufficient. Therefore, in effect, the U.S. has had to
increase imports of Middle East crudes in order to make up for shortfalls in
Mexico. The TBA alone will not structurally reverse Mexico’s oil decline, but it is
likely a necessary first step along that path.¶ Regardless of TBA approval, Mexico’s PEMEX
will continue its deepwater exploration near the U.S. border. With memories of
Deepwater Horizon still fresh, it is worrisome that Mexico’s oil safety regulator,
known as CNH, has almost no capacity to provide independent on-site
inspections. All facilities operating under the TBA would be subject to U.S.
inspectors with the ability to stop operations. Moreover, U.S. and Mexican regulators
would work hand in hand, offering support for more systematic improvement.¶
Given the foreign policy, energy security, and environmental benefits of the TBA
signed in February 2012, it is disappointing that the Obama administration has
delayed taking steps necessary for Congress to approve the agreement. That delay
does not make it any less important for Congress to approve the agreement soon.¶
Congress has a critical role in clarifying certain provisions of this international
agreement. Dispute resolution mechanisms warrant particular attention. Already,
it has been mistakenly argued that the TBA requires greater secrecy in payments
of oil deals, encouraging an effort to exempt the agreement from the CardinLugar transparency law. No such secrecy is required by the TBA, which
subordinates its confidentiality rules to domestic law.¶ The longer the TBA sits on
the shelf, the more likely it will be hamstrung as a proxy for more rancorous
energy disputes.¶ Prompt Congressional activity could be a useful vote of
confidence in the upcoming domestic energy sector reform in Mexico. Mexico
needs new oil production from more complex fields to counterbalance its
declining fields, let alone increased production. Leaders in Mexico’s two largest
political parties know that under current capital and management constraints,
PEMEX alone is extremely unlikely to turn Mexico’s oil and natural gas
abundance into prosperity for the Mexican people. International oil majors are
needed, but that will take political courage.¶ Congressional approval of the TBA
would tangibly demonstrate that the U.S. government and our companies are
willing partners. That is good for Mexico and for the U.S.
Bioterrorism
That’s key to solve bioterror- method cooperation
Rosales et al 11- MD has worked in the health arena for more than 20 years and in public health over 15 years, after
serving five years as Director, Office of Border Health for the Arizona Department of Health Services. Dr. Rosales has expertise in
program development and implementation, public health administration, policy and health disparities research in the Southwest,
(Cecilia, “U.S.Mexico cross-border workforce training needs:survey implementation”, January 2011, Journal of Injury and Violence
Research at Kermanshah University of Medical Sciences, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3134923/, //CJD)
Abinational border-wide, online assessment on preparedness/emergency
response and workforce training needs of personnel dedicated to the U.S.-Mexico
border region was ommissioned by the ten U.S.-Mexico border state health
offices through the U.S.-Mexico Border Governor’s Conference. The overarching
goal of the study was to provide the Border States with information that could serve to
orient, train, and evaluate the workforce charged with public health emergency
preparedness and response as well as future preparedness personnel. The primary
objective of the study was to assess and prioritize bioterrorism, infectious disease,
and border training needs critical for responding to intentional and unintentional
emergencies along the border region. The study was to describe the characteristics,
learning preferences, proficiency and educational needs of the emergency
preparedness and response workforce operating in the counties located in the U.S. border
area. This area was defined by the La Paz Agreement and Public Law 103-400 (U.S. – Mexico
Border Health Commission) as 100 kilometers north and south of the international
boundary. The relative lack of literature addressing U.S.-Mexico cross-border issues
related to emergency preparedness and bioterrorism highlights the importance of
this assessment. This study describes and provides results of the assessment
conducted with the four U.S. Border States and two Mexico Border States. While the
study was mandated for all ten states funding was only provided for border cities
within six states. Funding of transborder studies has been challenging for
researchers focused on border health issues. The state of Sonora, sister state to Arizona, and the state of
Chihuahua, sister state to Texas, were both successful in securing the resources to survey the preparedness and response workforce.
Unchecked bioterror causes extinction – Outweighs regional nukes
Ochs 2 (Richard Ochs, ANALYST FOR THE CHEMICAL WEAPONS WORKING GROUP,
July 9 2002 -- “BIOLOGICAL WEAPONS MUST BE ABOLISHED IMMEDIATELY” -http://www.freefromterror.net/other_articles/abolish.html)
Of all the weapons of mass destruction, the genetically engineered, biological
weapons, many without a known cure or vaccine are an extreme danger to the
continued survival of life on earth. Any perceived military value or deterrence pales
in comparison to the great risk these weapons pose just sitting in vials in
laboratories.¶ While a "nuclear winter," resulting from a massive exchange of nuclear
weapons, could also kill off most of life on earth and severely compromise the
health of future generations, they are easier to control. Biological weapons, on the other
hand, can get out of control very easily, as the recent anthrax attacks has
demonstrated. There is no way to guarantee the security of these doomsday
weapons because very tiny amounts can be stolen or accidentally released and
then grow or be grown to horrendous proportions. The Black Death of the Middle
Ages would be small in comparison to the potential damage bioweapons could
cause.¶ Abolition of chemical weapons is less of a priority because, while they can also kill millions of people outright, their
persistence in the environment would be less than nuclear or biological agents or more localized. Hence, chemical weapons would
once a
localized chemical extermination is over, it is over. With nuclear and biological
weapons, the killing will probably never end. Radioactive elements last tens of
thousands of years and will keep causing cancers virtually forever.¶ Potentially worse
than that, bio-engineered agents by the hundreds with no known cure could
wreck even greater calamity on the human race than could persistent radiation.
AIDS and ebola viruses are just a small example of recently emerging plagues
with no known cure or vaccine. Can we imagine hundreds of such plagues?
HUMAN EXTINCTION IS NOW POSSIBLE.
have a lesser effect on future generations of innocent people and the natural environment. Like the Holocaust,
Air power
US- Mexican relations key to solve air power- Katrina proves
FERNANDEZ 09- LIEUTENANT COLONEL at the United States Air Force, (Greg, “MEXICO
AND TRILATERAL¶ AIR DEFENSE, IS NORAD¶ THE ANSWER?”, Feb. 20th, 2009, U.S. Army War
College, http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA498049&Location=U2&doc=GetTRDoc.pdf,
//CJD)
Americans tend to have a short historical memory. For U.S.¶ citizens,
the US expedition is ancient history. Yet, to the average Mexican, the
MexicanAmerican war and Niños Heroes remains very vivid: It is recent history.¶
U.S. investments in Mexico during the last decades of the 19th century
contribute¶ to the stereotype of the “rich gringos”; resentment of Yankee economic
exploitation of¶ southern underdogs remain alive and well in Mexico. In fact,
perpetuating this¶ stereotype is advantageous to the Mexican government: It helps
them maintain¶ domestic order by positing a false, yet believable, relationship
between Mexico’s¶ internal problems and U.S. power and greed. Mexican politicians
continue to exploit this¶ myth because the general Mexican population is not
ready to forget the past 200 years¶ or let their guard down. They fear that any
cooperation with the U.S. will once again¶ expose them to U.S. exploitation.¶ The
armed forces of Mexico consist of two distinct components: The Secretariat¶ of National
Defense which oversees both SEDENA and the FAM, and the Secretariat of¶ the
Navy (SEMAR). The command and control of the FAM is similar to that of the U.S.¶
Army Air Corps in 1941 when it was subordinate to the Army before becoming a¶
separate service in 1947. The FAM is subordinate to and part of the Mexican Army.¶
Because they are trapped in the SEDENA apparatus, prospects for promotion of any of¶ the
FAM leaders to the minister level of leadership are nil.17 In fact, service jealousy and¶
inter-service rivalry is so great that SEDENA will not allow any FAM initiative to
proceed¶ without Army approval.18 Because of this superior-subordinate relationship,
when¶ SEDENA does not benefit from a U.S. / FAM initiative, the initiative will
surely stop at¶ the SEDENA S-2, so it never proceeds to the ministerial level of
command.¶ In 1941 the U.S. had a command arrangement between the Department
of War¶ and the Department of the Army, which is analogous to the current
command and¶ control arrangement in Mexico between the Army and Navy. An
active duty officer—a four-star general in the case of the SEDENA and an Admiral
in the case of the Navy—is¶ appointed head of each ministry.19 The Army and Navy
cabinet ministers report to the¶ President; at the same time, they serve as
operational commanders of their respective¶ forces.20 The Mexican Army and Navy
Ministries do not report to a single unified¶ commander at any level below the
President because there is no position equivalent to¶ Secretary or Minister of
Defense.21¶ The roles and responsibilities of the services are stipulated in the
Mexican¶ Constitution. Chapter One, Article One of the “Ley Orgánica del Ejército y Fuerza Aérea¶ Mexicanos” or the
Constitutional Law of the Mexican Army and Air Force assigns five¶ missions to SEDENA/FAM:¶ 1. Defense of the
Integrity, Independence, and Sovereignty of the Nation;¶ 2. Internal Security;¶ 3.
On the other hand,
Civic action and Social Projects that Assist in the Development of the Nation;¶ 4.
Conducting civic actions and social causes that tend to the country's progress;¶ 5.
In the event of a disaster to help maintain order, help the people and their¶
property and reconstruction of the affected areas.22¶ Article Three of the
Constitutional Law of the Mexican Army and Air Force further¶ refines and
constrains the Mexican Army/Air Force’s roles and missions: “The Mexican¶ Army
and Air Force should be organized, trained and equipped under the
requirements¶ to accomplish their missions.”23 Simply put, the Constitution mandates
their inward¶ focus, so activities not conforming to this requirement are deemed
unconstitutional.¶ Articles One and Three explain why Air Force engagement is an
uphill battle and why¶ they pose obstacles for FAM – USAF cooperative activities.
Traditional air engagement¶ strategies that are executed in exercises are usually
offensive in nature and conducted¶ outside Mexico. This creates a twofold problem
for the USAF: First, participation in¶ exercises where offensive strikes are
involved is difficult to justify to services whose¶ constitutional mandate is
internally focused and to a country that does not recognize¶ any external threats.
Second, according to Article 76 Section Three of the Political¶ Constitution of the
Mexican United States:¶ The Senate shall have power: To authorize the president’s
orders under¶ which troops are sent beyond the national borders, foreign troops
are¶ allowed to travel across the country… ¶ Therefore, the Mexican Senate must approve
travel of the military beyond the nation’s¶ borders. Though rare, this can and has taken
place: As recently as 2005, SEDENA¶ deployed north of Mexican border during
Hurricane Katrina relief efforts. This was the¶ first time since 1846 that Mexican
troops had operated on American soil. These¶ constitutional limitations are
extremely important for planning exercises with the FAM. In fairness to SEDENA, the
Constitution actually enforces subordination of the¶ FAM to SEDENA. SEDENA’s
mission focuses on domestic order and support to civil¶ authorities. In order to
meet the mission requirements in a country with limited ground¶ lines of
communication, SEDENA wants air support to be available at the ground¶
commander’s beck and call. FAM independence would require negotiation for air¶
support; more importantly, as with the USAF, money would move from
SEDENA’s¶ budget to buy costly modern aircraft. This subordination will continue
because it is¶ unrealistic to believe SEDENA would support an independent FAM,
given these two¶ major issues.¶ Unlike SEDENA and the FAM, many view SEMAR’s
relationship with the U.S.¶ Navy as Mexico’s closest military-to-military
relationship with U.S. services. SEMAR¶ frequently conducts training and
exercises with U.S. Naval forces, leaving their Army¶ and Air Force counterparts
wondering where their engagement strategies are falling¶ short. The answer lies in
the Mexican Constitution. SEMAR is not constrained to¶ internally focused
missions like SEDENA and FAM. The “Ley Orgánica de la Armada de¶ México” or
the constitutional law of the Mexican Navy, specifies the Navy’s mission ¶ Chapter
One - Article One: The Mexican Navy is a national military¶ institution of a
permanent nature, whose mission is to employ the power¶ Shipbuilding of the
Federation for external defense and assist in the¶ internal security of the
country.24¶ Chapter One – Article Three: The Mexican Navy will implement its¶
responsibilities by themselves or jointly with the Army and Air Force or¶ with
units of the Federal Executive, when he ordered the Supreme¶ Command or when
circumstances require.¶ 25¶ Therefore, constitutionally, SEMAR has two main
missions—the use of naval¶ power to ensure external defense and to assist in
internal security.26 Whereas SEDENA ¶ has constitutionally directed internally
focused duties, SEMAR can and does use the¶ Constitution to their advantage for
conducting external engagements. SEDENA or the¶ FAM will not enjoy this luxury
without amendments to the Constitution.
Air power is key to check multiple scenarios of extinction
Wyne, 8 – Michael W. Wynne, Secretary of the Air Force [“Sovereign Options:
Securing Global Stability and Prosperity A Strategy for the US Air Force”, Air
University, Strategic Studies Quarterly, http://www.dtic.mil/cgibin/GetTRDoc?AD=ADA508798&Location=U2&doc=GetTRDoc.pdf]
In response to the current threat environment, the US Air Force has implemented
a strategy of sovereign options to guide it as it organizes, trains, ¶ and equips its
forces. Sovereign options refer to the spectrum of choices ¶ air, space, and
cyberspace capabilities offer US policy makers for solving ¶ problems. For Airmen,
sovereign options communicate layers of meanings. ¶ On one level sovereign
options represent the unique options that only air, ¶ space, and cyberspace power
can provide. In this sense, Air Force strategy ¶ reflects how Airmen contribute
directly to solving problems. In another ¶ sense, the term sovereign options means
that Airmen provide ways to enrich ¶ strategies and operations by contributing
capabilities that combine with ¶ those of other services or agencies, Finally,
sovereign options communicate ¶ that Airmen provide capabilities to secure US
goals and interests without involving the resources or territory of other states or
entities—only Airmen can ¶ deliver air, space, and cyberspace effects anywhere on
the planet from the sovereign territory of the United States with speed, precision,
and global reach. Our goal is to provide options that maximize America’s ability
to tailor ¶ its responses to meet current and future threats across the continuum of
¶ conflict.¶ At the lower end of the spectrum, the concept of Air Force sovereign ¶
options allows the United States to provide humanitarian aid and disaster ¶ relief
in order to save lives and sometimes defuse tensions before they ¶ erupt into
conflict. After the tsunami of 2004 swept across Southeast Asia ¶ and after the
earthquake of 2005 devastated Pakistan, Airmen offered the ¶ first contact many
in those countries had with the United States and pro-¶ vided a powerful
corrective to the extremist propaganda that dominates ¶ the media in those
regions. During the opening days of Operation Enduring ¶ Freedom, disaster relief
took on another aspect. As we fought Taliban forces ¶ in Afghanistan, the Air
Force dropped food and leaflets to villages as part of a ¶ successful effort to
communicate that our war was against the Taliban regime ¶ and their al-Qaeda
allies, not with the Afghan people who suffered under their ¶ lash. Only the Air
Force had the capability to deliver these effects directly to ¶ these inland regions. ¶
After Operation Desert Storm, the United States found yet another way ¶ to use its
air assets in the gray area between peace and war. throughout ¶ the 1990s,
Saddam Hussein responded to UN sanctions and weapons ¶ inspectors with cheat
and retreat tactics. These tactics were a variant on ¶ the so-called nightmare
scenario of the Gulf War, in which the coalition ¶ feared Hussein would comply
with the president’s demand that he leave ¶ Kuwait, only to invade again after US
ground forces left the theater. Since ¶ the cost of repeated ground deployments
would be prohibitive, Saddam ¶ could use these tactics to achieve his goals while
simultaneously wearing ¶ down the United States. The use of no-fly zones,
however, backed up by ¶ a single brigade-sized land element, contained Hussein
for over a decade. ¶ Similarly, rather than deploy US ground forces into a civil war
in the Bal-¶ kans, for over three years we used airpower, first to limit the
aggression of ¶ the Bosnian-Serbs and then as the basis for a coercive air
campaign that ¶ worked with indigenous ground forces to force a peace
agreement. These ¶ innovative options allowed US presidents to defeat our
opponents’ plans ¶ at an exceedingly low cost in US lives and treasure.¶ At a higher
point on the spectrum of conflict, for over 50 years, the visible ¶ movement and
basing of Air Force assets have often been the clearest method ¶ the United States
has, short of using force, to signal its commitment during ¶ crises. During the
Cuban Missile Crisis and the Yom Kippur War, the visible dispersal and
movement of aircraft provided US presidents with an instantly ¶ recognizable
means to convey their intent to the Soviets without actually using ¶ violence.
During the Berlin Blockade, airlift provided a means short of war to ¶ assert our
commitment to Berlin. More recently, the presence of Air Force as-¶ sets in the
Persian Gulf, Guam, and many other bases conveys to friends and ¶ potential
opponents alike the strength of our commitment to those regions. ¶ he small
manpower footprints of Air Force bases also are relatively unobtrusive and allow
us to convey commitment while limiting negative effects on ¶ local economies and
politics.¶ In recent wars, the Air Force has offered policy makers another option ¶
for fighting and winning without risking the lives of large numbers of US ¶
servicemen and women. In Operation Deliberate Force, Operation Allied ¶ Force,
and more recently, Operation Enduring Freedom, the US Air Force ¶ worked
directly with indigenous ground forces to defeat the genocidal armies of the
Bosnian-Serb, Serbian, and Taliban regimes. Better yet, when ¶ combat subsided,
the presence of friendly indigenous armies on the ground ¶ greatly eased the
transition to nation-building operations. Working with ¶ indigenous populations
increases the likelihood that there will be a friendly ¶ population to work with
after the fighting. ¶ Against the current counterinsurgency in Iraq and
Afghanistan, the ¶ Air Force has provided even more options. Unlike in previous
guerrilla ¶ wars, because of the sensors, range, and accuracy of our UAVs, space,
and ¶ manned aerial assets, our opponents have been unable to mass. When ¶ they
try to mass, we quickly find and destroy them from the air. By pre-¶ venting the
enemy from acting in large groups, Airmen save countless US ¶ lives, magnify the
capabilities of our own ground forces, and provide the ¶ Iraqi government time to
build its institutions and security forces.
1ar relations extentions
Relations Solvency
Solves relations- energy trade
Simmons 4/30- business education from Indiana Wesleyan University¶ Winthrop University- Institute of Management¶ Winthrop
University, (Daniel, “U.S.-Mexico Transboundary Hydrocarbons Agreement: A Rare Victory for Oil and Gas in the Obama Era”, 4/30/13, Master
Resource, http://www.masterresource.org/2013/04/u-s-mexico-transboundary-hydrocarbons-agreement/, //CJD)
Mexico is America’s third largest trading partner and has been one of the largest sources of oil
exports to the United States. Mexico is the largest recipient of U.S. gasoline
exports and the second largest recipient of our natural gas exports.¶ The energy
trade between the United States and Mexico is growing, especially for America’s
finished petroleum and natural gas exports. Mexico’s heavy oil production is
falling, but that means more spare refining capacity on the Gulf Coast if Canadian
oil sands can be transported to the Gulf Coast.¶ The Gulf of Mexico is one of the
most prolific hydrocarbon-producing areas for both the United States and
Mexico. Oil production, especially in deepwater on the U.S. side of the border, has
moved closer to the U.S.-Mexico maritime border in recent years. Until last year,
however, there was no agreement on how to divide resources between the United
States and Mexico for resources that straddle the border.¶ The Agreement¶ A Fact Sheet
released by the U.S. Department of State on February 20th announced and
described the Transboundary Hydrocarbon Agreement.¶ The United States and
Mexico today signed an agreement concerning the development of oil and gas
reservoirs that cross the international maritime boundary between the two
countries in the Gulf of Mexico. The Agreement is designed to enhance energy
security in North America and support our shared duty to exercise responsible
stewardship of the Gulf of Mexico. It is built on a commitment to the safe, efficient,
and equitable exploitation of transboundary reservoirs with the highest degree of
safety and environmental standards.¶ Elements of the Agreement· The United
States and Mexico jointly announced their intention to negotiate a transboundary
hydrocarbons agreement on June 23, 2010, following the Joint Statement
adopted by Presidents Obama and Calderon at the conclusion of President
Calderon’s State Visit to Washington on May 19, 2010.¶ Upon entry into force, the current
moratorium on oil exploration and production in the Western Gap portion of the
Gulf of Mexico will end.¶ The Agreement establishes a cooperative process for
managing the maritime boundary region that promotes joint utilization of
transboundary reservoirs.¶ The Agreement provides a legal framework for possible
commercial activities at the maritime boundary and sets clear guidelines for
transboundary developments. It establishes incentives for oil and gas companies
to voluntarily enter into arrangements to jointly develop any transboundary
reservoirs. In the event such an arrangement is not achieved, the Agreement
establishes a process by which U.S. companies and PEMEX can individually
develop the resources on each side of the border while protecting each nation’s
interests and resources.¶ The legal certainty created by the Agreement will enable
U.S. companies to explore new business opportunities and carry out collaborative
projects with PEMEX.¶ The Agreement also provides for joint inspections teams to
ensure compliance with applicable laws and regulations. Both governments will
review all plans for the development of any transboundary reservoirs.¶ Evaluation¶ The
Transboundary Hydrocarbon Agreement, enacted after decades of indecision between Mexico
and the United States, allows oil and natural gas production on 1.5 million acres
that was previously off-limits because of border issues. The extent of incremental
production, however, depends cooperative relations between the United States
and Mexico and American companies and PEMEX. The great promise is for
Mexico to reverse decades of declining production–and double its estimated 10.5
billion barrels of proven oil reserves.¶ The potential is certainly there with robust
estimates of in-place oil and gas reserves and (U.S.-side) newly developed
hydraulic fracturing technologies. For example, one of America’s most prolific
shale fields, the Eagle Ford, extends into Mexico, but all of the activity is on the
U.S. side of the border. This is similar to areas throughout the U.S. where
production is skyrocketing on private and state lands but remaining dormant on
federal government lands.
Solves relations- oil trade
Seelke 1/16- Specialist in Latin American Affairs at the Congressional Research Service, (Clare Ribando, “Mexico’s New
Administration: Priorities and Key Issues in U.S.-Mexican Relations”, January 16th, Congressional Research Service,
http://www.fas.org/sgp/crs/row/R42917.pdf, //CJD)
future of oil and gas production in Mexico is of great importance for Mexico’s
economic ¶ development and for U.S. energy security, a key congressional interest; Mexico is
consistently a ¶ top U.S. crude oil supplier. Mexico’s state oil company, PEMEX,
established in 1938 as the ¶ world’s first major national oil company, remains an
important source of government revenue, but ¶ is struggling to counter the
country’s declining oil production. Policy experts have long urged ¶ Mexico to
reduce the heavy fiscal burdens on PEMEX and to reform the constitution to
enable ¶ PEMEX to pursue joint ventures with foreign oil companies that have the
technological ¶ experience and capital required for deep offshore and
unconventional exploration and production. ¶ However, numerous stakeholders in
Mexico are concerned that increasing private involvement in ¶ PEMEX could
threaten Mexico’s constitutionally protected control over its natural resources. ¶
U.S. policymakers are likely to closely follow President Peña Nieto’s efforts to
reform PEMEX. ¶ While monitoring prospects for energy reform in Mexico is an
issue for long-term congressional ¶ oversight, the 113th Congress could be asked to
consider approving the U.S.-Mexico ¶ Transboundary Hydrocarbons Agreement
signed in February 2012. Estimates that a marine area¶ straddling the U.S.Mexico border held billions of barrels of crude oil prompted discussions ¶ between
the United States and Mexico starting in the 1970s on how to manage
exploration.38¶ These resource estimates have continued to drive negotiations
focused on jointly managing ocean ¶ areas in the Gulf of Mexico beyond the two
nation’s respective exclusive economic zones ¶ (EEZs).39 In 2001, the marine area was
delimited by both countries and they agreed that a ¶ moratorium on exploration
and drilling would be in effect for approximately 10 years in a “buffer ¶ zone”
The
marking the area at the border of each country’s marine boundary. The stated purpose
of ¶ the moratorium was to grant time for each country to learn more about the
geology and ¶ geophysical characteristics of the area and to determine how to best
address managing transboundary resources once the moratorium was lifted.
During the early years that the moratorium ¶ was in effect, both countries studied the
area and considered options for managing oil and gas ¶ reserves in the border
area. In May 2010, the United States and Mexico jointly announced their ¶
intention to work toward replacing the moratorium with a mutual plan for
developing transboundary resources. ¶ On February 20, 2012, the governments of the
United States and Mexico announced the Transboundary Hydrocarbons
Agreement.40 The agreement is a step toward clarifying relations ¶ between the
two countries with respect to managing resources in portions of the Gulf of
Mexico ¶ that straddle their international marine border.41 Secretary of State Hillary
Clinton has referred to ¶ the Trans-boundary agreement as an example of recent
U.S.-Mexican efforts to develop a ¶ sustainable energy trading relationship. ¶ Before
the agreement can take effect, both countries must review and accept it. The Mexican ¶ Senate
approved the agreement on April 12, 2012, and the Mexican Presidency
completed all ¶ other domestic requirements to implement the agreement on May
22, 2012.42 Steps toward U.S. ¶ review and acceptance are currently underway
with the Department of State taking lead ¶ responsibility for addressing questions
about the agreement during this process. A procedural ¶ question has emerged
with respect to what actions are needed for the agreement to be accepted in ¶ the
United States. At issue is whether the agreement should be entered in the form of a
treaty (in ¶ which case it would need to be submitted to the Senate and approved
by a two-thirds majority) or a Congressional-Executive Agreement (in which case
congressional authorization would take the ¶ form of a statute passed by a
majority of both Houses). ¶ The 113th Congress may soon be called upon to decide
what, if any, implications might stem from ¶ the United States accepting this
agreement.43 Accordingly, the following questions arise with ¶ respect to how the
agreement might affect U.S. interests: (1) Would the agreement lead to any ¶ new
legal or regulatory obligations for U.S. interests? (2) Would existing
environmental laws or ¶ existing lease terms and conditions in effect in the Gulf of
Mexico be affected by the agreement?, ¶ and (3) What, if any, fiscal implications
(gains or losses) might result from accepting the ¶ agreement and carrying out
collaborative projects in the boundary area?
Solves relations- energy industry growth
OIS 12- office of spokesperson in Washington DC at the US department of state, (“U.S.-Mexico Transboundary Hydrocarbons
Agreement”, 24 February 2012, Scoop World, http://www.scoop.co.nz/stories/WO1202/S00596/us-mexico-transboundaryhydrocarbons-agreement.htm, //CJD)
United States and Mexico today signed an agreement concerning the
development of oil and gas reservoirs that cross the international maritime
boundary between the two countries in the Gulf of Mexico. The Agreement is
designed to enhance energy security in North America and support our shared
The
duty to exercise responsible stewardship of the Gulf of Mexico. It is built on a
commitment to the safe, efficient, and equitable exploitation of transboundary
reservoirs with the highest degree of safety and environmental standards.¶
Elements of the Agreement¶ • The United States and Mexico jointly announced their
intention to negotiate a transboundary hydrocarbons agreement on June 23,
2010, following the Joint Statement adopted by Presidents Obama and Calderon
at the conclusion of President Calderon’s State Visit to Washington on May 19,
2010.¶ • Upon entry into force, the current moratorium on oil exploration and production
in the Western Gap portion of the Gulf of Mexico will end.¶ • The Agreement
establishes a cooperative process for managing the maritime boundary region
that promotes joint utilization of transboundary reservoirs.¶ • The Agreement
provides a legal framework for possible commercial activities at the maritime
boundary and sets clear guidelines for transboundary developments. It establishes
incentives for oil and gas companies to voluntarily enter into arrangements to
jointly develop any transboundary reservoirs. In the event such an arrangement is
not achieved, the Agreement establishes a process by which U.S. companies and
PEMEX can individually develop the resources on each side of the border while
protecting each nation’s interests and resources.¶ • The legal certainty created by the
Agreement will enable U.S. companies to explore new business opportunities and
carry out collaborative projects with PEMEX.¶ • The Agreement also provides for
joint inspections teams to ensure compliance with applicable laws and
regulations. Both governments will review all plans for the development of any
transboundary reservoirs.¶ Further Growth in the Bilateral Energy Relationship¶ • This Agreement has
been a catalyst for increased engagement between our respective safety
regulators for the oil and gas sector. That engagement is expected to deepen in
the years ahead as we work together to exercise responsible stewardship of the
Gulf of Mexico.¶ • Mexico is consistently one of the top three exporters of
petroleum to the United States. It ranked second behind Canada in 2010 with
exports to the United States of 1.3 million barrels per day.¶ • The United States and
Mexico launched the Bilateral Framework on Clean Energy and Climate Change
in April 2009 to explore ways to further develop the potential of this important
energy trading relationship. With its focus on renewable energy, energy
efficiency, adaptation, market mechanisms, forestry and land use, green jobs, low
carbon energy technology development and capacity building, the Bilateral
Framework has supported work on common emissions standards for heavy
vehicles, closer integration of electricity grids and development of solar and wind
energy generation plants in the border region.
Solves relations- energy economies
GPO 12- US government printing office for the use of the Committee on Foreign Relations, (“OIL, MEXICO, AND THE TRANSBOUNDARY AGREEMENT:A
¶
MINORITY STAFF REPORT¶ PREPARED FOR THE USE OF THE¶ COMMITTEE ON FOREIGN RELATIONS¶ UNITED STATES SENATE”, DECEMBER 21, 2012, U.S.
GOVERNMENT PRINTING OFFICE,
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.foreign.senate.gov%2Fpublications%2Fdownl
oad%2Foil-mexico-and-the-transboundaryagreement&ei=oKDRUbm4AeTG0AGWvIHQBg&usg=AFQjCNEZsmcfgXzQ0omtPqf8HklAkTjfxA&sig2=KMPAxoDCYoB4uf1Rkckvag&bvm=bv.48572450,d.dmQ, //CJD)
passage of the TBA would boost U.S.-Mexico relations on¶ energy issues, which
have traditionally lagged. Mexican officials¶ roundly expressed support for the
TBA and expectation for U.S.¶ ratification in conversation with the authors. The
political impact¶ of not approving and implementing the TBA would set back U.S.¶ Mexican relations on energy specifically and more broadly . Each of¶ our countries
has hot button domestic political issues that take¶ courage for political leaders to
address. In Mexico, oil is one such¶ issue, and members of both the PAN and PRI
put their political¶ weight behind ratification in Mexico. The U.S. not fulfilling its
side¶ of the agreement would, therefore, be seen as a violation of trust¶ and could
erode confidence. In the extreme, although unlikely, if¶ Mexico proceeds with domestic
energy reforms, U.S. companies¶ could be shut out of certain opportunities until
the TBA is ratified.¶ However, bilateral benefits of approving the agreement do not
require¶ immediate passage; U.S. commitment can be demonstrated¶ by the
Obama administration formally submitting the TBA for¶ Congressional approval
and commencement of Congressional hearings.¶ There is reason to believe that
the TBA can receive broad bipartisan¶ backing in Congress. It would benefit bilateral
relations, promote¶ domestic oil production, and improve environmental
protections¶ in the Gulf of Mexico. Following normal Congressional procedure¶ to
ensure the agreement is vetted and implementing legislation¶ is reasoned will
benefit each of those goals. External proponents¶ of the TBA will need to increase
communication and advocacy¶ to improve the likelihood of Congressional leaders
acting on¶ the agreement in the 113th U.S. Congress.¶ North American Energy
Security¶ The United States and Canada are radically transforming global¶ energy
markets. Unconventional oil and natural gas has led to a¶ renaissance in North American
energy production. Alongside continued¶ growth in renewable fuel and power
sources and energy efficiency,¶ the continent is poised to be functionally selfsufficient in¶ energy. Mexico should be invited to join in the U.S.-Canada driven¶
resurgence.¶ The impacts of the North American oil and gas powerhouse reach¶
beyond energy markets. Low-priced American natural gas is encouraging¶ job creation,
industrial growth, and new trade opportunities.¶ Increasing U.S. domestic oil
production and trade with Canada¶ will keep more American dollars at home.
Regimes that use¶ their oil and natural gas riches for intimidation and coercion,
such¶ as Venezuela and Russia, are seeing their petro-fueled power eroded.¶ Affordable
and reliable energy supplies are critical to job creation¶ and quality of life for
citizens of the United States and for our allies¶ Canada and Mexico. North
America has long been a global¶ leader in energy innovation, production, and
market promotion.¶ The geographical proximity of our industrial and population
centers¶ with our resource basins, integrated supply and transport¶ chains across
borders, and cultural closeness of our peoples has encouraged¶ steadily increasing
coordination and integration of North¶ American energy, transport, and related
infrastructure.¶ Maximizing the potential for oil and natural gas to promote economic¶
growth and security across the continent will require continual¶ improvement in
policy communication, infrastructure rationalization,¶ and regulatory
Finally,
harmonization between the U.S., Canada,¶ and Mexico. Canada and the U.S. have
largely integrated energy¶ systems, but fissures over the Keystone XL pipeline
approval process¶ is an example of the need for even greater regulatory
coordination.¶ Comparatively, U.S.-Mexico energy coordination and integration¶ is
well behind.¶ Power sector reforms prompted by NAFTA demonstrate that a¶
trilateral effort can have major results. Most importantly, key leaders¶ from both the PRI
and PAN in Mexico City are interested in¶ making progress. Recently, President
Pen˜ a Nieto wrote: ‘‘Together¶ with the United States and Canada, [energy shifts]
may well contribute¶ to guaranteeing North American energy independence—¶
something from which we would all greatly benefit.’’ 10
Energy is a crucial area for cooperation- Mexico needs it now more than
ever
Morales 11 - Professor¶ Monterrey Institute of Technology and Higher Education (ITESM)¶ Santa Fe Campus,
PhD from Institut d'Études Politiques, (ISIDRO, “THE ENERGY FACTOR IN¶ MEXICO–U.S. RELATIONS”, APRIL
29, 2011, JAMES A. BAKER III INSTITUTE FOR PUBLIC POLICY¶ RICE UNIVERSITY,
http://www.bakerinstitute.org/publications/EF-pub-MoralesFactor-04292011.pdf, //CJD)
Mexican oil and energy resources have¶ remained
strategic for U.S. interests. Mexico has functioned as a buffer zone—or pivot—
because¶ of the U.S. need for a reliable energy supply south of the border, mainly
in oil and petroleum¶ products, particularly during periods when world energy
resources are at stake, including the¶ First World War, WWII, the oil shocks of the
1970s, and the current transition phase of¶ “expensive oil.” However, oil and
energy resources alone do not account for Mexico’s strategic¶ value. As witnessed by the
military, commercial, and labor alliances built by the two countries¶ during
WWII, Mexico is much more than an oil well to the U.S. in times of distress.
Mexico has¶ functioned as a sort of “thick border” from which to filter threats and
risks and to access vital¶ resources, such as people and goods. Mexico’s buffering
properties have made the country’s¶ political regime—and its capacity to manage
its risks and resources—major priorities for American interests. This explains why
Washington has traditionally tolerated and accepted¶ Mexico’s nationalistic
rhetoric and dirigisme in the governance of oil and energy resources.¶ For more
than a century, Washington has indeed put pressure on Mexico’s political elite to
grant¶ concessions for energy resource exploitation to private investors, including,
of course, American¶ investors. However, when these pressures risk alienation of
Mexico’s political class, or threaten¶ the stability of the political regime—
regardless of how democratic that regime might be—¶ Washington compromises,
even if the final outcome is not entirely favorable to private American¶ firms. ¶ With
the inception of NAFTA in 1994, and the emergence of a new security alliance between the¶
two countries with the establishment of SPP (2005) and the Mérida Initiative
(2007), the bilateral¶ relationship between Mexico and the U.S. might evoke
memories of WWII. However, in this¶ new edition of global warfare, conventional
oil resources are not as crucial as 70 years ago.¶ Instead, technology, intelligence
From the turn of the 20th century to the present,
gathering, critical infrastructure, competitiveness, and a more¶ diversified mix of
energy resources, in which non-conventional and renewable fuels are critical,¶
have become much more important devices for coping with the security
challenges of the 21st¶ century. In this regard, Mexico’s assets in terms of
territory, people, natural resources, and¶ governance capabilities have moved the
country from being a simple buffer zone to a critical¶ pivot. If the pivot turns
unstable, unsafe, and unpredictable, this will directly impact the U.S.¶ This
explains why, at present time, the top priority in the agenda of the two countries
is the¶ escalation of violence in Mexico, and the political challenges unleashed by
the activities of¶ organized crime. Mexico’s public safety has become a part of U.S.
security, that is, it has¶ become an “intermestic” problem,27 and this explains why
security trumps other issues on the¶ agenda. As long as Mexico remains a major
exporter of crude oil to the U.S.—something that is¶ in Mexico’s economic and
political interests— U.S. energy interests will be fulfilled, despite¶ limited
opportunities for private participation in Mexico’s energy industry. If Mexican
exports¶ decline dramatically, this will negatively impact Mexico’s economic
opportunities and intensify¶ tensions in a bilateral relationship already under
stress. Furthermore, Mexico has the potential of¶ strengthening its energy
relationship with the U.S. as non-conventional and renewable fuels¶ become
higher profile. The production of energy from solar, wind, and biomass sources, as
well¶ as biofuels, escapes the nationalistic and sovereign-based governance of
conventional energy¶ resources in Mexico. That is why it is crucial that Mexicans
define the new cooperative¶ architecture under which Mexico and the U.S. will
pursue their mutual interests while equally¶ reaping the benefits.
1ar- relations solve bioterror
The boarder is a weakness- technology cooperation is key to resolve the issue
Bravata et al. 2- Project director at University of California San Francisco B. Stanford Evidence-based
Practice Center, M.D., M.S in medical analysis at Stanford university, (Dena, “Bioterrorism Preparedness and
Response: Use of ¶ Information Technologies and Decision Support Systems”, June 2002, Evidence
Report/Technology Assessment¶ Number 59, http://archive.ahrq.gov/downloads/pub/evidence/pdf/bioit/bioit.pdf,
//CJD)
The earliest signs and symptoms caused by most biothreat agents are flulike ¶ illness, acute respiratory distress, gastrointestinal symptoms, febrile
hemorrhagic syndromes, and ¶ febrile illnesses with either dermatologic or
neurologic findings. Therefore, patients with these ¶ syndromes are the targets of
bioterrorism-related syndromal surveillance programs. There is no ¶ widely accepted
definition for any of these syndromes. As a result, syndromal surveillance ¶ systems are
widely heterogeneous with respect to the syndromes under surveillance and the ¶
definitions of each syndrome. ¶ Findings. We found 7 syndromal surveillance systems,
none of which has been described in ¶ a peer-reviewed evaluation report (Tables 3, 14
and 15; Figures 3 to 10; Appendix H). We have ¶ no specific information about the usefulness of
these systems in terms of detecting known ¶ infectious disease outbreaks (e.g., no
information about whether the syndromal surveillance ¶ system detected last
season’s influenza outbreak). Additionally, we have no specific information ¶ on any of
these systems’ flexibility, acceptability, representativeness, or the direct costs of ¶
implementation. ¶ The purposes of the systems vary: some systems are designed for
ongoing surveillance for ¶ infectious disease outbreaks; whereas, others are for short-term
surveillance for bioterrorism- related illness before, during, and after major
political, economic, or entertainment events. For ¶ example, the Border Infectious
Disease Surveillance Project (BIDS) collects syndromal ¶ surveillance information
along the U.S.-Mexican border. BIDS performs ongoing surveillance by ¶ routinely
collecting and analyzing data at regular intervals (Table 14). In contrast, systems such ¶ as
the Lightweight Epidemiology Advanced Detection and Emergency Response
System ¶ (LEADERS), have typically been used to perform event-based surveillance—that
is, they begin ¶ collecting data for a brief period before an event thought to be a
target for bioterrorists (e.g., a ¶ major sporting or political event) and continue collection through
a specified time after the event ¶ has finished (Tables 14 and 15; Figures 4 and 5). LEADERS has
been used for event-based ¶ surveillance for the 1999 World Trade Summit, the
2000 Democratic and Republican National ¶ Conventions, and the 2001 Presidential
Inauguration. (LEADERS can also be used for ongoing ¶ surveillance.) ¶ The systems also differ with respect
to the type of syndromal data they collect. For example, ¶ public health officials
are evaluating several methods for collecting syndromal surveillance data ¶ from
clinical personnel. The Syndromal Surveillance Tally Sheet is a paper-based ongoing ¶
syndromal surveillance tool used in Santa Clara County, California for the
surveillance of 6 ¶ syndromes (Tables 14 and 15; Figure 6).243 Triage nurses in urgent care
centers and emergency ¶ departments enter data on each patient whom they
evaluate and fax the sheet to the local health ¶ department at the end of each shift
Background.
device that can ¶ be used to display syndromal
surveillance questions to users in a variety of clinical areas (Tables ¶ 14 and 15; Figure 7).244
It was recently piloted in the Stanford University Medical Center ¶ Emergency
Department. It is likely that similar tools have been developed and implemented
by ¶ county health departments throughout the U.S.; however, a comprehensive survey
of the ¶ syndromal surveillance methods currently in use was outside the scope of
our project. ¶ The Early Warning Outbreak Recognition System (EWORS),245, 246
developed collaboratively ¶ by the Naval Medical Research Unit-2, Department of
Defense Global Emerging Infections ¶ System (DOD-GEIS), and the Indonesian Ministry
of Health, is a global syndromal surveillance ¶ system (Tables 14 and 15). EWORS
uses a simple computer program designed to enable ¶ untrained personnel to
collect basic demographic and symptom data that are downloaded daily ¶ from
remote sites to the Indonesian Ministry of Health.
(typically 3 times a day). Health Buddy®¶ is a
Drug Cartels
PEMEX solvency and reform are critical to battling drug cartels in Mexico
O’Sullivan ’12 – professor of international affairs at Harvard's Kennedy School of Government
(Meghan, served on the National Security Council from 2004 to 2007, and was deputy national security advisor for Iraq and
Afghanistan, “Mexican Oil Reforms Are Vital on Both Sides of the Border”, reprinted from CFR at Bloomberg, 7-30-2012,
http://www.bloomberg.com/news/2012-07-30/mexican-oil-reforms-are-vital-on-both-sides-of-the-border.html)//Javi
a coalition of Mexican advocacy groups has been protesting in front of Televisa,
the country’s largest TV network, to contest the legitimacy of President-elect Enrique Pena Nieto’s July 1
victory. These protests are the second in a string of such demonstrations scheduled
before Pena Nieto takes office in December. They bode ill for Mexico’s near-term political future,
pointing to a rocky transition at a time when the challenges facing the country are
anything but modest. Americans might assume that tackling the drug trade that has resulted in more
than 47,000 deaths since 2006 would top the agenda. But a strong case can be made that energy reforms
are at least as urgent, for if Mexico can’t stem its sharply deteriorating energy
situation, its ability to tackle other systemic problems will be severely
compromised. Despite some recent progress in diversifying its economy, Mexico
still relies on oil for 30 percent of its fiscal revenue. Yet oil production has
plummeted from 3.4 million barrels a day in 2004 to 2.5 million in 2011, with most experts predicting a continuing decline
In recent days
over the next decade. Absent changes, Mexico could be a net importer of oil by 2020, ceasing exports to the U.S. altogether.
Drug cartels instability will spill over throughout Latin America
Bonner ’10 – senior principal of the Sentinel HS Group
(Robert C., former administrator of the U.S. Drug Enforcement Administration, “The New Cocaine Cowboys”, Foreign Affairs,
July/August 2010, http://www.foreignaffairs.com/articles/66472/robert-c-bonner/the-new-cocaine-cowboys)
The recent headlines
from Mexico are disturbing: U.S. consular official gunned down in
broad daylight; Rancher murdered by Mexican drug smuggler; Bomb tossed at U.S.
consulate in Nuevo Laredo. This wave of violence is eerily reminiscent of the carnage
that plagued Colombia 20 years ago, and it is getting Washington's attention.¶ Mexico is in
the throes of a battle against powerful drug cartels, the outcome of which will determine
who controls the country's law enforcement, judicial, and political institutions. It will
decide whether the state will destroy the cartels and put an end to the culture of
impunity they have created. Mexico could become a first-world country one day, but it
will never achieve that status until it breaks the grip these criminal organizations have
over all levels of government and strengthens its law enforcement and judicial
institutions. It cannot do one without doing the other.¶ Destroying the drug cartels is
not an impossible task. Two decades ago, Colombia was faced with a similar -- and in
many ways more daunting -- struggle. In the early 1990s, many Colombians, including
police officers, judges, presidential candidates, and journalists, were assassinated by the
most powerful and fearsome drug-trafficking organizations the world has ever seen: the
Cali and Medellín cartels. Yet within a decade, the Colombian government defeated
them, with Washington's help. The United States played a vital role in supporting the Colombian
government, and it should do the same for Mexico.¶ The stakes in Mexico are high. If the
cartels win, these criminal enterprises will continue to operate outside the state and the
rule of law, undermining Mexico's democracy. The outcome matters for the United
States as well -- if the drug cartels succeed, the United States will share a 2,000-mile
border with a narcostate controlled by powerful transnational drug cartels that threaten
the stability of Central and South America.
That causes nuclear war and extinction
Manwaring 05 – adjunct professor of international politics at Dickinson
(Max G., Retired U.S. Army colonel, Venezuela’s Hugo Chávez, Bolivarian Socialism, and Asymmetric Warfare, October 2005,
http://www.strategicstudiesinstitute.army.mil/pdffiles/pub628.pdf)
Chávez also understands that the process leading to ¶ state failure is the
most dangerous long-term security challenge ¶ facing the global community
today. The argument in general is that ¶ failing and failed state status is the breeding
ground for instability, ¶ criminality, insurgency, regional conflict, and terrorism.
These ¶ conditions breed massive humanitarian disasters and major refugee ¶ flows.
They can host “evil” networks of all kinds, whether they ¶ involve criminal business
enterprise, narco-trafficking, or some form ¶ of ideological crusade such as
Bolivarianismo. More specifically, these ¶ conditions spawn all kinds of things
people in general do not like such ¶ as murder, kidnapping, corruption,
intimidation, and destruction of ¶ infrastructure. These means of coercion and
persuasion can spawn ¶ further human rights violations, torture, poverty,
starvation, disease, ¶ the recruitment and use of child soldiers, trafficking in
women and ¶ body parts, trafficking and proliferation of conventional weapons ¶
systems and WMD, genocide, ethnic cleansing, warlordism, and ¶ criminal
anarchy. At the same time, these actions are usually ¶ unconfined and spill over into
regional syndromes of poverty, ¶ destabilization, and conflict.62¶ Peru’s Sendero
Luminoso calls violent and destructive activities ¶ that facilitate the processes of
state failure “armed propaganda.” ¶ Drug cartels operating throughout the
Andean Ridge of South ¶ America and elsewhere call these activities “business
incentives.” ¶ Chávez considers these actions to be steps that must be taken to
bring 23¶ about the political conditions necessary to establish Latin American ¶
socialism for the 21st century.63 Thus, in addition to helping to provide ¶ wider
latitude to further their tactical and operational objectives, ¶ state and nonstate
actors’ strategic efforts are aimed at progressively ¶ lessening a targeted regime’s
credibility and capability in terms of its ¶ ability and willingness to govern and
develop its national territory ¶ and society. Chávez’s intent is to focus his primary
attack politically ¶ and psychologically on selected Latin American governments’
¶ ability and right to govern. In that context, he understands that ¶ popular
perceptions of corruption, disenfranchisement, poverty, ¶ and lack of upward
mobility limit the right and the ability of a given ¶ regime to conduct the business
of the state. Until a given populace ¶ generally perceives that its government is
dealing with these and ¶ other basic issues of political, economic, and social
injustice fairly ¶ and effectively, instability and the threat of subverting or
destroying ¶ such a government are real.64¶ But failing and failed states simply
do not go away. Virtually ¶ anyone can take advantage of such an unstable
situation. The ¶ tendency is that the best motivated and best armed organization
¶ on the scene will control that instability. As a consequence, failing ¶ and failed
President
states become dysfunctional states, rogue states, criminal ¶ states, narco-states,
or new people’s democracies. In connection with ¶ the creation of new people’s
democracies, one can rest assured that ¶ Chávez and his Bolivarian populist allies
will be available to provide ¶ money, arms, and leadership at any given
opportunity. And, of ¶ course, the longer dysfunctional, rogue, criminal, and narcostates ¶ and people’s democracies persist, the more they and their associated ¶
problems endanger global security, peace, and prosperity.65
***Off Case Answers***
2AC US Politics
US increasing economic engagement with Mexico now- thumps disads
Stras ’13 (Marcy Stras, JD Supra Law News Reporter, “The U.S. Mission in Mexico Increases Corporate Eligibility to
Participate in its Business Facilitation Program”, http://www.jdsupra.com/legalnews/the-us-mission-in-mexico-increases-cor13097/, January 15, 2013)
The United States Embassy in Mexico city announced the expansion of its
Business Facilitation Program (BFP) that allows access to expedited visa
processing for employees of qualifying firms traveling to the U.S. on company
business. The BFP provides time-saving benefits for businesses whose employees need to travel to the U.S., and
highlights the United States’ commitment to deepening trade and economic
engagement with Mexico. The BFP is open throughout Mexico and is available at all U.S. Consulates and the
Embassy. However, the BFP requires interested firms to register with the U.S. Embassy’s or Consulates’ Consular Section.
According to the announcement:
In the house – all but one republican voted for the THA bill and since
immigration is predicated on getting more republicans on board, that aff is
popular.
GOP love the plan- house advancement proves
Kasperowicz 6/26- staff writer at the hill, (Pete, “House advances offshore energy bills”, 6/26/13, the hill,
http://thehill.com/blogs/floor-action/senate/307959-house-advances-offshore-energy-bills, //CJD)
The House voted Wednesday in favor of a rule that will allow it to vote on two
energy bills this week that are aimed at expanding the development of offshore
energy resources.¶ Members voted 235-187 in favor of the rule, which covers two bills: H.R. 2231,
the Offshore Energy and Jobs Act, and H.R. 1613, the Outer Continental Shelf Transboundary
Hydrocarbon Agreements Authorization Act.¶ Republicans supported the first bill
as one that would help expand domestic energy development, and said it's
needed to counter the Obama administration's restrictions on offshore lease
sales.¶ "So in essence you have a bill that makes us more energy independent,
drives down the cost of fuel for U.S. families, helps reduce the cost to the federal
government, and produces an estimated 1.2 million new jobs. I think by most
standards that would be considered a fairly good bill," said Rep. Rob Bishop (RUtah).¶ Republicans added that President Obama's announcement this week shows Obama is
looking to run in the other direction, by seeking to restrict emissions from coalfired electricity plants. ¶ "The President's latest efforts to impose new energy taxes
and government red tape follow four and a half years of erecting American energy
roadblocks," House Natural Resources Committee Chairman Doc Hastings (RWash.) said.
2AC Mexican Politics
Bill already passed in Mexico – this is no longer a DA
Rampton 4/29 (Roberta, writes for reuters, “UPDATE 1-U.S.-Mexico deal on expanded Gulf oil drilling still in limbo,” Reuters,
http://uk.reuters.com/article/2013/04/29/usa-mexico-oil-idUKL2N0DG1MR20130429)
- More than a year after the United States and Mexico
signed a much-lauded deal that would remove obstacles to expanding deepwater
drilling for oil in the Gulf of Mexico, the agreement has still not been finalized by the United States.
WASHINGTON, April 29 (Reuters)
The delay, for which people close to the administration blame Congress while Republicans in Congress blame the administration, is
certain to be discussed when President Barack Obama visits Mexican President Enrique Pena Nieto in Mexico City on Thursday.
Mexico immediately ratified the pact in April 2012, but the United States has so far been unable to
pass a simply worded, one-page law to put the agreement into force.
Nieto PC not key
The Economist 7/13 (“Why are opposition parties going along with a pact that benefits their arch-enemy?,” July 13, 2013,
http://www.economist.com/news/americas/21581743-why-are-opposition-parties-going-along-pact-benefits-their-arch-enemypolitical)
FEW political parties are as cunning at forging alliances of convenience as Mexico’s Institutional Revolutionary Party (PRI). During
economic crises in the 1980s and 90s it persuaded businesses and unions to join “solidarity” pacts that forced them to freeze prices
and wages. In the late 1980s it struck a deal of sorts with the conservative National Action Party (PAN), surrendering a few
governorships in exchange for approval of sweeping economic reforms. But when thrown into opposition from 2000-12, the PRI
Its obstinacy helped to frustrate the presidency of Felipe
Calderón, whose nominated successor was crushed by Enrique Peña Nieto, the PRI’s
candidate, in a presidential election last year. Why, then, have Mexico’s opposition parties
obediently tagged along with the PRI in a new alliance, known as the “Pact for
Mexico”, which is allowing Mr Peña to race through his legislative agenda? The
pact, launched the day after Mr Peña took office on December 1st, secures crossparty backing for a package of long-overdue reforms. It has already made
possible an overhaul of education and a law to tackle monopolies in telephony
and broadcasting. But the alliance is under strain. In the run-up to local elections held in almost half the states on July
resolutely blocked calls for co-operation.
7th, the PAN and the leftist Party of the Democratic Revolution (PRD) threatened to pull out of the pact, demanding that the
government stop local PRI bosses from using electoral dirty tricks honed during its seven decades in power in the 20th century. In
the end (and despite a surge of violence ahead of the polls) the results offered something for everyone. Though the PRI won almost
half the 931 city halls up for grabs, the PAN toppled it in some big cities. In alliance with the PRD, it claimed victory in a governor’s
race in Baja California, which it has held for 24 years. But Juan Molinar, the PAN’s spokesman, still says the PRI’s behaviour during
the election undermined faith in the pact. “Every time we have offered proof of [electoral] irregularities, there has been no response.
Absolutely none,” he says. Nonetheless, neither opposition party appears ready to renege on the pact just yet. The PAN says that its
careful dealing with the PRI in the 1990s helped to earn it the public support necessary to win the presidency in 2000; it hopes to
achieve something similar through the current pact. The PRD says some of the pact’s achievements, such as the monopoly-busting
telecoms law, have been high on its agenda for years. Like the PAN, it hopes to use the alliance to negotiate political reforms that
would weaken the PRI in some of its regional strongholds. Members of both parties note that the alliance has not necessarily
But
the opposition parties are also bound to the pact by their weakness. The PAN was
thrown from the presidency into third place in last year’s election, and has been
bitterly divided since. Its leader, Gustavo Madero, has been fighting for his political life all year; his direct line to the
president, courtesy of the pact, gives him more clout than he would otherwise enjoy. The PRD, meanwhile, has
suffered the departure of its former rabble-rousing presidential candidate, Andrés
benefited Mr Peña’s popularity greatly: his approval rating, 57% at the last count, has not improved much since he took office.
Manuel López Obrador. The pact helps the party to portray itself as a moderate, centre-left alternative to Mr López Obrador’s fiery
populism. That will be tested later this year when members of the pact begin discussion of one of the left’s biggest bugbears, the
opening up of the hidebound state oil industry. Mr López Obrador waits in the wings to pick up the votes of the disaffected poor. The
peculiar context of Mexican politics makes the pact especially compelling. According to Enrique Krauze, a historian, when the PRI
lost its long grip on power in 2000 the new PAN leadership should have forged a “government of national unity” with the left to
dismantle the monopolies and bureaucracies of the PRI era. It didn’t, and years of political paralysis followed. It may be that today’s
The drug-related violence that has racked
Mexico in recent years provides a new reason for politicians to pull together.
“This pact is truly something of great merit,” says Mr Krauze. “For the first time in our history the parties
alliance represents a belated realisation of that idea, 13 years on.
are learning to work together in a democratic context.” Yet there is also something familiar about the deal: its principal beneficiary,
as so often before, is the wily PRI.
Link inev – Nieto will push energy reform in near future
Barrera 7/11 (Adriana, staff writer for Reuters, “UPDATE 3-Failed Pemex oil field auction ups pressure on Mexico to reform,” July
11th, 2013, Reuters, http://www.reuters.com/article/2013/07/11/mexico-oil-idUSL1N0FH1OQ20130711)
Mexican state oil monopoly Pemex got a dismal response to an auction of contracts at one of its main oil fields on Thursday,
turning up pressure on the government to open up the industry to more private
capital with an imminent reform. Most bidders in the Chicontepec basin auction signaled they wanted a higher
fee per barrel than Pemex would pay for the private contracting scheme to turn around part of the massive field, which has
consistently fallen short of expectations. Pemex only successfully contracted half of the six blocks put out to tender, part of Mexico's
efforts to find more investment to boost flagging crude output. The two biggest blocks, Pitepec and Amatitlan, did not even attract
The lack of interest led to immediate calls for President Enrique
Pena Nieto to push for a reform that will make Mexico's oil industry more
attractive for private investors when the government presents its planned
overhaul by early September. "The process in this round has been a failure," said Luis Miguel Labardini, a partner
with Mexico City-based energy consultancy Marcos and Associates. "This shows the new administration that what
is really required in Mexico is a deeper reform." Pemex, meanwhile, hailed the tender as an success.
bidders, the company said.
"We see the result very positively as we were able to assign three blocks at very, very attractive prices," said Carlos Morales, head of
Pemex's exploration and production arm. The three successful tenders obligate Pemex to pay each of the winning companies less
than $1 per barrel produced plus full reimbursement of production costs. Mexico's crude oil exports currently fetch as much as $109
per barrel. Pemex failed to attract any bids from multinational oil producers. While oil majors BP and Royal Dutch Shell both
purchased project specifications, neither ultimately sought to qualify for the auction. "That shows you that the big oil companies are
looking for commercial opportunities on the scale to which they're accustomed, but they didn't find any," said George Baker, the
publisher of Mexico Energy Intelligence, an industry newsletter. Among the auction's winners, U.S. oil services giant Halliburton
won the contract to operate the Humapa block, which contains 341 million barrels of oil equivalent (boe) in proven, probable and
possible (3P) reserves spread across 49 square miles (128 sq km). And Mexico's Grupo Diavaz got the nod for the Miquetla block,
which contains 248 million boe in proven, probable and possible reserves spread across 43 square miles. Pemex said it will launch a
new auction for the three blocks that failed, Amatitlan, Pitepec and Miahuapan, the company said. It did not provide further details.
REFORM PRESSURE The Chicontepec auction marks the third round of the country's fee-per-barrel private contracting scheme,
fruit of a 2008 reform aimed at revitalizing aging oil fields and attracting long-term private investment. The six blocks constitute
about 15 percent of the basin's total reserves, or about 3.2 billion barrels of crude equivalent, and cover 368 square miles. Sixteen
companies, nearly all oilfield service companies, pre-qualified for the auction. Pemex's Morales added that a fourth round of
contracts, including up to five blocks, will be auctioned by October in southern Mexico, but he did not offer further details. The
Chicontepec basin, discovered more than 80 years ago, is located in the east-central states of Veracruz and Puebla and is home to
about 40 percent of Mexico's certified hydrocarbon reserves, or about 17 billion boe. Last year, Chicontepec produced an average of
74,800 barrels per day (bpd). Despite heavy investment, Pemex has failed to meet production targets at the geologically complicated
basin, where millions of barrels of oil are scattered across many small deposits, a feature that makes production costly and slow.
Boosting output is one of the chief aims of the government's energy reform, which
will be a major political challenge. The Mexican constitution mandates that only the state can own and commercialize the country's
Pena Nieto has promised a major overhaul of the industry to
attract new investment from private oil companies. His Institutional Revolutionary Party (PRI) must
oil and gas resources, but
break with years of tradition to go down that path, and will need support from other parties in Congress, where it lacks a majority.
Pemex has been a symbol of Mexican self-sufficiency since the oil industry was nationalized by the PRI in 1938. While details of the
reform have yet to be revealed, a formal proposal is expected by Sept. 8. Mexican crude oil production has fallen to just over 2.5
million bpd from a peak of 3.4 million bpd in 2004.
Link non-unique – Nieto already spent PC on energy reform
Martin et al 6/20 (Staff writers for Bloomberg Businessweek, “Mexico's President Pushes Reforms for State Oil Company Pemex,”
Bloomberg News, http://www.businessweek.com/articles/2013-06-20/mexicos-president-pushes-reforms-for-state-oil-companypemex)
Mexican President Enrique Peña Nieto says he’s
negotiating to get the political support he needs to break the state monopoly in oil
and gas exploration and production this year in a bid to accelerate Mexico’s
economic growth. In the model envisioned by Peña Nieto, Pemex would develop certain fields, while foreign and private
The planets may be aligning for a solution:
companies would tap others. The oil and gas reserves in the ground would still be the property of Mexico. Peña Nieto declines to
discuss many details of the proposal or whether it would include a change in the constitution, which limits how private companies
He has, however, been sending signals to
international oil companies that he needs their help to arrest eight years of
decline in Mexico’s crude output. “It’s obvious that Pemex doesn’t have the financial capacity to be in every
can profit from the nation’s energy resources.
single front of energy generation,” the 46-year-old president said in an interview in London on June 17, before he traveled to
Northern Ireland for meetings with Group of Eight leaders. “Shale is one of the areas where there’s room for private companies, but
Peña Nieto says his administration will send the energy bill to
Congress by September, when regular sessions resume. He’s relying on the Pact
for Mexico, an alliance of the country’s top three political parties, which have
vowed to work together to achieve major reforms. Peña Nieto’s own party, the Institutional
not the only one.”
Revolutionary Party (PRI), doesn’t have enough votes on its own for a constitutional amendment. “We’re approaching key
Nieto says. “I’m optimistic that this political climate of understanding
and agreement will be maintained.” Yet investors have pushed down the price of Pemex bonds in the last
deadlines,” Peña
month. They’re losing confidence in the president’s ability to achieve the needed changes amid signs that the Pact for Mexico is
fraying. Corruption allegations against the PRI have already almost derailed the alliance. In April, the National Action Party, a
member of the pact, released video and audio tapes allegedly showing officials from Peña Nieto’s party arranging to use government
social programs to win support before local elections. The accord may end if Peña Nieto doesn’t prevent electoral irregularities in
states where local contests will take place on July 7, said Jesús Zambrano, head of the Party of the Democratic Revolution, another
member of the pact in May.
PEMEX reform thumps the link
Martin and Cattan 7/18- staff writers at Bloomberg, (Eric and Nacha, “Mexico’s PAN to Push Own Bill
Opening Pemex Ahead of Pena Nieto”, 7/18/13, Bloomberg, http://www.bloomberg.com/news/2013-07-18/mexicos-pan-to-push-own-bill-opening-pemex-ahead-of-pena-nieto.html, //CJD)
Mexico’s opposition National Action Party plans to present an energy bill seeking
constitutional changes to open state-owned oil producer Petroleos Mexicanos to more
competition and reverse eight years of falling output.¶ The plan to be presented July
31 will offer exploration concessions for private companies, said Gustavo Madero, the party’s
president, who pledged to do “everything necessary” to win passage. The proposal
would attract up to $30 billion in private investment, boost Mexican gross domestic product growth
by as much as two percentage points annually and reserve majority control of projects for Mexican investors, other officials
from the PAN, as the party is known, said today at a news conference.¶ The PAN’s
announcement preempts a proposal by the ruling Institutional Revolutionary Party, or PRI, of
President Enrique Pena Nieto, who said last month his plan would be presented in September to
break the monopoly of Pemex in oil fields through an alliance between the
nation’s three biggest parties. Congress must pass an electoral reform before the
PAN will approve any energy initiative, lower house lawmaker Ricardo Anaya,
said at the press conference.¶ “The model of the Mexican oil industry is exhausted,”
Madero said at the news conference in Mexico City. “It’s an unworkable and unsustainable model that
needs to be reformed at its base so that it can return to being productive.Ӧ The bill
would create 100,000 new jobs, Anaya told reporters today.¶ Luis Alberto Villarreal, the PAN’s
coordinator in the lower house of Congress, said the party’s proposed overhaul
would be the broadest energy proposal presented in decades.¶ Mexico City’s former mayor,
Marcelo Ebrard, has said his opposition Democratic Revolution Party, the third
member in the Pact for party should “strongly” oppose Pena Nieto’s oil plan.
PC low now- close election wrecked Nieto’s first term momentum
Wilkinson and Ellingwood 7/02- staff writers at LA times, (Tracy and Ken, “Mexico Presidentelect Peña Nieto's win is weaker than expected”, LA times, 7/02/13,
http://articles.latimes.com/2012/jul/02/world/la-fg-mexico-election-analysis-20120703, //CJD)
— Mexico's Institutional Revolutionary Party is marching back into the
presidential palace bolstered by its control of a raft of state governorships and a
good standing in Congress.¶ But its mandate is much shakier than the party had
predicted before Sunday's election, reflecting the nagging suspicions with which
many Mexicans regard the PRI and complicating President-elect Enrique Peña Nieto's ability
to execute an ambitious reform program.¶ He will have to negotiate with rival
parties, including a newly empowered left, and will not have the free hand he might have
expected as he pursues initiatives such as opening up the massive state oil company, Pemex,
to foreign investment. Resistance from the opposition, as well as the old guard of
his party and the unions that backed him, could block reforms and condemn Mexico
to status quo and economic malaise.¶ "His mandate is clearly weaker than
expected," said Carlos Ramirez, a Mexico analyst for the New York-based Eurasia Group.¶ "He will be in a tough
spot. The view inside the party was that they were going to win by a landslide....
Peña will have to choose his battles because he's likely to encounter resistance
from within his coalition."¶ Peña Nieto will be handcuffed to some degree by the
MEXICO CITY
wariness with which voters viewed handing power back to his party, whose 70-year
rule was characterized by rampant corruption and authoritarian practices. Despite his
victory, 3 in 5 voters cast ballots for other parties.¶ "It would be in the PRI's interest
to read this victory with humility, that they won despite their limitations," said Jesus
Silva-Herzog Marquez, a columnist with the newspaper Reforma. "The PRI is obliged now to show it can
govern democratically. It must admit that the sources of this deep, stubborn lack of
confidence are, in the end, healthy and necessary."
2AC Enviro DA
Non-unique- BP oil spill is still killing Gulf organisms today
Bertrand 12- staff writer at international business times, (Pierre, “BP Gulf Oil Spill Destabilizing Marine
Ecosystem, Researcher Says”, 4/19/12, International Business Times, http://www.ibtimes.com/bp-gulf-oil-spilldestabilizing-marine-ecosystem-researcher-says-439610, //CJD)
Two years after the Deepwater Horizon disaster, a deep-sea biodiversity study
suggests residual oil from the BP blowout threatens the stability of the entire Gulf
of Mexico ecosystem.¶ Paul Montagna, Harte Research Institute chair and professor at Texas A&M Corpus Christi, is
leading a environmental impact study looking at how oil has affected marine life far below the Gulf's surface in sea mud. ¶ The
study is being conducted as part of the federal government's case against BP as
Judge Carl Barbier in New Orleans determines how liable BP is for its role in the
gushing of 5 million barrels of oil in 2010.¶ Samples of sea mud were taken within six
miles of the original BP Macondo well and again 100 miles away, nearer the coast, between the fall of 2010 and the spring
of 2011. What Montagna found suggests oil that has trickled down to the ocean floor is killing off
species of invertebrate crustaceans that live within the mud.¶ Montagna could not
quantify the amount of biodiversity lost, because his findings will be presented in
court to assess BP's impact on the environment, but he said what is happening will
eventually destabilize the Gulf of Mexico's ecosystem if it continues.¶ Here's why:
Organisms that live in the mud on the ocean floor are the base of the marine food
chain. Those that live in the mud are eaten by the bottom dwellers that live on the
surface of the ocean floor. Those bottom dwellers in turn feed the fish that prey
off the ocean floor, and they in turn are eaten by bigger fish higher up the food
chain.¶ They are good sentinels, Montagna said of the mud organisms. They are like the canaries of the
ocean.¶ If the bottom dwellers are healthy, it is a good indication the rest of the
food chain is as well, but having oil sifting through the ocean mud is threatening
to destabilize the entire food web for a long time, because the bottom of the ocean
is cold and dark, Montagna said.
Alt causes –
1. Embargo and overfishing.
Brenner 08 (Jorge, postdoctoral research associate at the Harte Research Institute for Gulf of Mexico Studies, Texas A&M
University-Corpus Christi, “Guarding the Gulf of Mexico's valuable resources,”
http://www.scidev.net/global/pollution/opinion/guarding-the-gulf-of-mexico-s-valuable-resources.html)//DR. H
The economic embargo is widely considered as the main barrier to
international marine research and conservation programmes in the Gulf. But, given
that the Gulf is enclosed by three countries, an integrated view of governance of common resources
should prevail over the political strategies of the individual countries.
We have abused the region's ecological resources in
treating them as a source of wealth while failing to share responsibility for their
conservation. In my opinion, this misunderstanding of the concept of the commons —
This common responsibility is often overlooked.
owned by everyone and no one — has probably caused more damage than the
economic embargo imposed on almost self-sufficient Cuba.
Rich in biodiversity and habitats
The Gulf of Mexico is rich in biodiversity and unique habitats, and hosts the only known nesting beach of Kemp's Ridley, the world's
most endangered sea turtle.
The Gulf's circulation pattern gives it biological and socioeconomic importance: water from the Caribbean enters from the south
through the Yucatan Channel between Cuba and Mexico and, after warming in the basin, leaves through the northern Florida Strait
between the United States and Cuba to form the Gulf Stream in the North Atlantic that helps to regulate the climate of western
Europe.
About one-third of the Gulf is a broad continental shelf, which provides a wealth
of fisheries. Intensive fishing is the biggest factor interfering with the Gulf's
environment, and is an area where the three governments should cooperate in
managing this international resource.
2. GMO’s.
Bello 9 (Walden, “A Critique of Orthodox Perspectives,” All Africa, Opinions, http://allafrica.com/stories/200906260740.html,
AD: 6/30/09)
Proponents of GMOs have not been able to alleviate worries that transgenic foods have the potential for creating
unexpected reactions in humans unless these foods, which have never been seen before and thus not selected for human
consumption by eons of evolution, are tested rigorously in accordance with the universally recognised precautionary principle.
Neither have they been able to allay worries that non-target populations might be negatively affected by genetic
modification aimed at specific pests, as in the case of Bt corn's impact on the monarch butterfly. Nor have they dispelled
the very real threat of loss of biodiversity posed by GMOs. The risks are hardly trifling, as noted by one account: The
effects of transgenic crops on biodiversity far extend the concerns already raised by monocropping under the
Green Revolution. Not only is diversity decreased through the physical loss of species, but because of its 'live' aspect, it
has the potential to contaminate, and potentially to dominate, other strains of the same species. While this may be a limited concern
with respect to the contamination of another commercial crop, it is significantly more worrisome when it could contaminate
and eradicate generations of evolution of diverse and subtly differentiated strains of a single crop, such as the recently discovered
transgenic contamination of landraces of indigenous corn in Mexico.[3]
3. Warming
Shah 12 (Anup, 3/4/12, “Climate Change Affects Biodiversity,” http://www.globalissues.org/article/172/climate-change-affectsbiodiversity)//DR. H
The link between climate change and biodiversity has long been
established. Although throughout Earth’s history the climate has always
changed with ecosystems and species coming and going, rapid climate change
affects ecosystems and species ability to adapt and so biodiversity loss increases.
From a human perspective, the rapid climate change and accelerating biodiversity loss risks
human security (e.g. a major change in the food chain upon which we depend,
water sources may change, recede or disappear, medicines and other resources
we rely on may be harder to obtain as the plants and forna they are derived from
may reduce or disappear, etc.).
The UN’s Global Biodiversity Outlook 3, in May 2010, summarized some concerns that climate change will have on ecosystems:
Climate change is already having an impact on biodiversity, and is
projected to become a progressively more significant threat in the coming
decades. Loss of Arctic sea ice threatens biodiversity across an entire biome and
beyond. The related pressure of ocean acidification, resulting from higher
concentrations of carbon dioxide in the atmosphere, is also already being
observed.
Ecosystems are already showing negative impacts under current levels of climate
change … which is modest compared to future projected changes…. In addition to warming temperatures, more
frequent extreme weather events and changing patterns of rainfall and drought
can be expected to have significant impacts on biodiversity.
— Secretariat of the Convention on Biological Diversity (2010), Global Biodiversity Outlook 34, May, 2010, p.56
the
rapid nature of the change suggests that most species will not find it as beneficial
as most will not be able to adapt.
Some species may benefit from climate change (including, from a human perspective, an increases in diseases and pests5) but
Link inevitable – PEMEX will inevitably drill in the Gulf of Mexico, it’s just a
question of whether or not the US gets involved and their safety would
prevent more and more environmental destruction
Cuban oil drilling is inevitable – the embargo only locks-out US safety experts
*drilling is inevitable for two reasons: 1) energy demand – Cuba is energy poor and has an economic incentive to drill on the coast of
Florida to tap oil reserves to meet demand; 2) eases the power transition – tapping oil reserves creates a source of a self-sustaining
economy for Cuba so they don’t have to depend on Venezuela, that increases stability
LaGesse 12 – David LaGesse reporter, with recent articles that have appeared in National Geographic, Money, and most frequently
in U.S. News & World Report – National Geographic News – November 19, 2012 – internally quoting Jorge Piñon, a former
president of Amoco Oil Latin America (now part of BP) and an expert on Cuba's energy sector who is now a research fellow at the
University of Texas at Austin.– http://news.nationalgeographic.com/news/energy/2012/11/121119-cuba-oil-quest/
But an energy-poor Cuba also has its risks. One of the chief concerns has been over the danger of an accident as Cuba pursues its
search for oil, so close to Florida's coastline, at times in the brisk currents of the straits, and without U.S. industry expertise on safety. The
worries led to a remarkable series of meetings among environmentalists, Cuban officials, and even U.S government officials over several
years. Conferences organized by groups like the nonprofit Environmental Defense Fund (EDF) and its counterparts in Cuba have taken place in the
Bahamas, Mexico City, and elsewhere. The meetings included other countries in the region to diminish political backlash, though observers say the
primary goal was to bring together U.S. and Cuban officials. EDF led a delegation last year to Cuba, where it has worked for more than a decade with
Cuban scientists on shared environmental concerns. The visitors included former U.S. Environmental Protection Agency administrator William Reilly,
who co-chaired the national commission that investigated BP's 2010 Deepwater Horizon disaster and spill of nearly 5 million barrels of crude into the
Gulf of Mexico. (Related Quiz: "How Much Do You Know About the Gulf Oil Spill?") They discussed Cuba's exploration plans and shared information
on the risks. "We've found world-class science in all our interactions with the Cubans," said Douglas Rader, EDF's chief oceans scientist. He said,
however, that the embargo has left Cubans with insufficient resources and inexperience with high-tech gear. Although the United States
and Cuba have no formal diplomatic relations, sources say government officials have made low-profile efforts to prepare for a potential problem. But
the two nations still lack an agreement on how to manage response to a drilling disaster, said Robert Muse, a Washington attorney and expert on
licensing under the embargo. That lessens the chance of a coordinated response of the sort that was crucial to containing damage
from the Deepwater Horizon spill, he said. "There's a need to get over yesterday's politics," said Rader. "It's time to make sure
we're all in a position to respond to the next event, wherever it is." In addition to the environmental risks of Cuba going it alone ,
there are the political risks. Piñon, at the University of Texas, said success in deepwater could have helped Cuba spring free of Venezuela's influence
as the time nears for the Castro brothers to give up power. Raúl Castro, who took over in 2008 for ailing brother Fidel, now 86, is himself 81 years old.
At a potentially crucial time of transition, the influence of Venezuela's outspoken leftist president Hugo Chávez could thwart moves by Cuba away from
its state-dominated economy or toward warmer relations with the United States, said Piñon. Chávez's reelection to a six-year term last month keeps the
Venezuelan oil flowing to Cuba for the foreseeable future. But it was clear in Havana that the nation's energy lifeline hung for a time on the outcome of
this year's Venezuelan election. (Chávez's opponent, Henrique Capriles Radonski, complained the deal with Cuba was sapping Venezuela's economy,
sending oil worth more than $4 billion a year to the island, while Venezuela was receiving only $800 million per year in medical and social services in
return.) So Cuba is determined to continue exploring . Its latest partner, Russia's Zarubezhneft, is expected to begin drilling this month in
perhaps 1,000 feet of water, about 200 miles east of Havana. Piñon said the shallow water holds less promise for a major find. But that
doesn't mean Cuba will give up trying.
Spill spreads and kills ecosystems – that’s key to regional biodiversity
*Cuba lacks access to containment systems – only the US has the type of response equipment which is able to effectively respond to
an oil spill
*the impact is magnified – Cuban waters contain the highest concentration of biodiversity in the region and is home to important
aquatic life – spills cause spillover damage
Almeida ’12 – Rob Almeida is Partner/CMO at gCaptain. He graduated from the US Naval Academy in 1999 with a B.S in Naval
Architecture and spent 6.5 years on active duty as a Surface Warfare Officer. He worked for a year as a Roughneck/Rig Manager
trainee on board the drillship Discoverer Americas. May 18th – http://gcaptain.com/drilling-cuba-embargo-badly/
In short however, Cuba’s access to containment systems, offshore technology, and spill response equipment is severely restricted by
the US embargo , yet if a disaster occurs offshore, not only will Cuban ecosystems be severely impacted, but those of the Florida
Keys, and US East Coast. If disaster strikes offshore Cuba, US citizens will have nobody else to blame except the US Government
because outdated policies are impacting the ability to prepare sufficiently for real-life environmental threats. Considering Cuba
waters are home to the highest concentration of biodiversity in the region and is a spawning ground for fish populations
that migrate north into US waters, a Cuban oil spill could inflict unprecedented environmental devastation if not planned for
in advance.
2AC China SOI DA
Case outweighs – US heg is best and solves all of the impacts to the DA – Prevents great powers wars, solves for a
risk of a transition war, and retains global trade ties
Insert specific impact D from China SOI Core
US influence high now – Obama trip.
Sabatini 5-13. [Christopher, editor-in-chief of Americas Quarterly and senior director for policy of the Americas
Society/Council of the Americas, "Guest post: At last, US recognition of its national interest in Latin America" Financial Times -blogs.ft.com/beyond-brics/2013/05/13/guest-post-at-last-us-recognition-of-its-national-interest-in-latinamerica/#axzz2TaN36YjO]
It’s become a common refrain: US influence in the western hemisphere is on the
wane. Whether measured by the US’s commercial weight in the region or its ability to dictate the terms of debate on everything
from Cuba to narcotics, there is little doubt that the “Colossus to the North” is confronting a more diverse and at times contentious
Obama’s trip to Mexico and Costa Rica in May and Vice President Joe
Biden’s plans to travel to Brazil, Colombia and Trinidad and Tobago reflect – at long
last – the US’s recognition of its national interest in the rising economic and
diplomatic powers of its hemisphere and its capacity to influence its current and
potential allies.¶ Policy in the first four years of the Obama administration was marked by nice-sounding rhetoric of
hemisphere.¶ President
partnership and failed efforts to reach out to wayward countries – Bolivia and Ecuador. The Obama administration believed it could
win back the region simply by not being the Bush administration and by dedicating high-level diplomatic resources to woo Ecuador
– having Secretary of State Hillary Clinton give a major policy speech in Quito – and by negotiating the re-entry of the US Agency for
International Development in Bolivia. The first effort was rewarded when Ecuador granted asylum at its embassy in London to
Julian Assange, founder of WikiLeaks, and when it led a regional assault to undermine the Inter-American Commission on Human
Rights this year. The second effort failed on May 1, when Bolivian President Evo Morales said he was kicking USAID out of his
country, again.¶ The region has changed, and with it the ability of the US to influence individual countries simply by leveraging its
development dollars or its regional prestige.¶ That’s not to say, however, that the US is irrelevant or lacks resources. Despite the
rhetoric of populist leaders in Ecuador and Venezuela (and the assumptions of many US commentators),
popular opinion
in Latin America toward the US remains positive. In central America between 70 and 80 per cent of
citizens have favourable opinions of the US; even in Venezuela and Ecuador over 60 per cent of citizens are predisposed to liking the
yanquis.¶ In the economic realm, across the hemisphere, the US has declined in absolute and in some cases in relative terms as an
exporter to Latin American and as a market for its exports – but not by as much as many media accounts would have you believe.
For example, in Brazil in 1995, the US provided 21 per cent of imports and bought 21 per cent of exports; by 2011 that had declined
to 15 per cent and 10 per cent, respectively. It was the same in Chile, where imports from the US dropped from 25 per cent in 1995 to
Yes,
Latin America has joined global markets. But the US remains central, especially for
countries with the fastest rates of growth and the greatest long-term potential. That’s no coincidence. Unlike China, the
US is a market for Latin America’s higher-end manufactured goods. Mexico has been been
20 per cent by 2011, and the US market for Chilean exports contracted from 14 per cent to 11 per cent in the same period.¶
particularly good in seizing the advantage of the US market provided by NAFTA to move up the value chain and is now exporting
The US is now seeking to play this economic card
– the power of its market. The countries that President Obama and Vice President Biden
have selected to visit and the message they have delivered underscore both the
importance of those countries to the US and a new-found effort to buttress
diplomacy with economic promise.¶ Key to this will be negotiation of the Trans-Pacific Partnership. It will
automobiles and aeronautic equipment globally.¶
unite 11 countries – Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam –
representing a combined GDP of almost $21tn (about 30 per cent of world GDP) and $4.4tn in exports of goods and services. The
effort has attracted the attention of Japan and South Korea – which, if they join, would bring the the agreement to a total of 40 per
cent of global GDP – and Colombia. It’s also provoking envy in Brazil.¶ So it should. Although Brazil secured the election of Roberto
Azevêdo as head of the World Trade Organization, Brazil has only a slim stake in the global free trade economy. One of five members
of Mercosur, the southern cone customs union (which last year, curiously, admitted Venezuela), Brazil’s free trade agenda has been
tied to that of its sometimes less liberally-inclined neighbours, particularly Argentina. Mercosur, which, as a customs union, requires
that member countries negotiate free trade agreements as a bloc, has FTAs with countries or blocs that represent a mere $692bn of
GDP. Compare that with the FTAs that Chile has with countries and blocs with a combined GDP of $53tn or Peru, whose FTAs link it
to economies with a combined GDP of $50tn.¶ This week, it was announced that both President Sebastian Piñera of Chile and
the US has seen free
trade and its domestic market as a card to play with emerging economic powers
in the region, while sending a subtle message to the others that they are free to join in if they like, or wallow in the past.
President Ollanta Humala of Peru will visit Washington to meet President Obama in June. Clearly,
Chinease and US economic influence in Latin America is not zero sum
Xiaoxia 5/6/13 - (Wang, staffwriter for the economic observer one of the top three economic-focused newspapers in China and is well regarded for
its in-depth special features and commentary, "in america's backyard: china's rising influence in latin america" http://www.worldcrunch.com/china2.0/in-america-039-s-backyard-china-039-s-rising-influence-in-latin-america/foreign-policy-trade-economy-investments-energy/c9s11647/)//AP
China's involvement in the Latin American continent doesn’t constitute a threat to the United States, but brings benefits. It is
precisely because China has reached "loans-for-oil" swap agreements with Venezuela, Brazil, Ecuador and other countries that it
brings much-needed funds to these oil-producing countries in South America. Not only have these funds been used in the field of oil
production, but they have also safeguarded the energy supply of the United States, as well as stabilized these countries' livelihood -and to a certain extent reduced the impact of illegal immigration and the drug trade on the U.S.
For South America, China and the United States, this is not a zero-sum game, but a multiple choice of mutual benefits and synergies.
Even if China has become the Latin American economy’s new upstart, it is still not in a position to challenge the strong and diverse
influence that the United States has accumulated over two centuries in the region.
US investment inevitable
Dumbaugh et al 5. [Kerry, specialist in Asian Affairs, Mark Sullivan, Specialist in Latin American affairs, "China's
growing interest in Latin America" CRS Report for Congress -- April 20 -- www.au.af.mil/AU/AWC/AWCGATE/crs/rs22119.pdf]
Chinese activity in Latin America is one of relatively¶ benign
expansion, confined to seeking out trade and investment opportunities.17 They say¶ that the inroads China has
made into the region are marginal compared with longstanding U.S. economic
linkages, and they see evidence that Chinese officials have been restrained¶ in their Latin American contacts.18 They point out
that U.S. trade and investment in Latin¶ America dwarfs that of China’s
involvement in the region. (U.S. imports from Latin¶ America amounted to $255 billion in 2004, while U.S.
cumulative direct investment in¶ Latin America in 2003 amounted to some $304 billion.19) Morever, observers contend¶ that the
future growth potential of Chinese investment and trade will always be¶
constrained by the economic advantages conferred by U.S. geographic proximity
to Latin¶ America. Furthermore, they indicate that migration patterns to the United States from¶
Central and South American countries have given the United States greater cultural ties¶ and
longer-term economic importance to the region than China could ever have.¶
Other observers contend that
Adherents of this view maintain that the United States should avoid overreacting to¶ China’s economic initiatives in Latin America.
They assert that China’s emerging¶ presence in the region is not a threat to the United Sates, but is consistent with the longstanding
U.S. policy of integrating China into the world system.20
Plan doesn’t crowd out china- SEC requirements allocate spaces for all the
foreign companies
LNR 6-27- Legislation News and Report, (“H.R.1613 Outer Continental Shelf Transboundary Hydrocarbon Agreements
Authorization Act”, 6/27/13, The week in Congress, http://theweekincongress.com/2013/06/27/h-r-1613-outer-continental-shelftransboundary-hydrocarbon-agreements-authorization-act/, //CJD)
The bill amends the Outer Continental Shelf Lands Act (OCSLA) authorizing the Secretary of
Interior to implement terms of an agreement for management of the
transboundary hydrocarbon reserves that
was agreed to (in 1997) by Congress and the President.¶ The need for the bill is described in the bill;
“… (H.R. 1613) will provide the Secretary of the Interior the legislative authority to implement a February 2012 Agreement signed by then-U.S. Secretary of State Hillary Clinton and Mexican Foreign Secretary
Patricia Espinosa on how to explore, develop and share revenue from hydrocarbon reservoirs that overlie our maritime boundary with Mexico in the Gulf of Mexico. The bill also establishes a clear and transparent
process on how to implement future transboundary hydrocarbon agreements, ensures U.S. sovereignty on our Outer Continental Shelf (OCS), and includes a discreet waiver of Securities and Exchange
Commission reporting requirements that may be in conflict with language in the Agreement and Mexican law to provide certainty to future exploration and development in these areas.Ӧ The bill explains further,
“In 1978, the United States established maritime boundaries with Mexico extending out to the 200-nautical-mile limit of our nation’s exclusive economic zone. However, this mapping left two enclosed areas,
known as the Western Gap and Eastern Gap, both of which extended beyond the 200-nautical-mile jurisdiction of each country. As a result, on June 9, 2000, the United States and Mexico signed the U.S.-Mexico
Maritime Boundary Treaty which established a continental shelf boundary between the U.S. and Mexico in the Western Gap area. This treaty was ratified by the Senate on October 18, 2000, and established a 1.4nautical-mile moratorium from hydrocarbon development on each side of the boundary in the Western Gap area in recognizing the possibility of transboundary hydrocarbon oil and gas reservoirs. While the
have arrived at the aforementioned
Agreement, which sets up a legal framework to guide commercial energy
development in these areas.Ӧ The bill includes a discreet waiver of Securities and
Exchange Commission reporting requirements that may be in conflict with
language in the Agreement and Mexican law to provide certainty to future
exploration and development in these areas. The SEC requires US companies to
reveal to shareholders any mineral royalty payments (for the purpose of
advancing commercial development) to foreign governments. The bill would
waive that requirement raising concerns with those who support the bill. ¶ The bill
report holds that, “American workers could be blocked from producing American energy
in American waters if Mexico blocks disclosure of royalty payments due to it
under the terms of an earlier agreement. As a result of this conflict between the
Agreement language and Securities and Exchange Commission (SEC)
requirements, American companies could be barred from developing a discovered
transboundary energy resource, thereby leaving it to foreign-controlled energy
companies such as China or Russia, who fall outside the jurisdiction of these SEC
reporting requirements, to develop this American resource.Ӧ The above view is the
point of contention between supporters and opponents of the bill as described in
the bill data, “The Dodd-Frank requirement, otherwise known as the SEC Natural
Resource Extraction disclosure rule, is intended to protect investors by allowing
them to know if a company is making mineral royalty payments to a government
that could expose the company to civil liability or even criminal sanctions. It also
aims to increase transparency regarding
moratorium was due to expire in 2010, it has been extended, during which time the U.S. and Mexico
resource extraction projects in the developing world, thereby eliminating the so-called `resource curse’
that has plagued many developing countries for decades by creating a cycle of corruption in their governments.Ӧ The bill would supplant the existing SEC waiver authority resulting in, opponents hold, secret
transactions between Mexico and private business without the SEC intervention.¶ “Allowing such secret payments is not only unwise,” dissenters hold, “it is also unwarranted. The SEC already has the
authority to provide waivers from the Dodd-Frank disclosure requirement should it be warranted. The SEC has general exemption authority under Sections 12(h) and 36 of the Securities Exchange Act of 1934.
The SEC can `exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions’ using this authority `to the extent that such exemption is necessary or appropriate in the
public interest, and is consistent with the protection of investors.’ If a situation arises where such a waiver is needed, the SEC already has the authority it needs to exempt companies from the disclosure
requirement. We should not provide a blanket exemption as is included in the underlying bill.Ӧ The Mexican Government view of the matter includes several considerations relevant to the matter; According to
Javier H. Estrada of Analitica Energética S.C. writing for Offshore-mag.com the Mexican oil company, Pemex, “is the only oil company allowed as investor and operator under the Mexican system. The constitution
prohibits foreign control of oil and gas production.” Estrada points out that the Mexican legislature views the necessity of establishing an agreement with the US as a defensive position protecting Mexican interests
from being exploited by the more technologically efficient US petroleum industry. So, an agreement on the sharing of resources extracted is seen as urgently necessary.¶ The bill ”…will provide the Secretary of the
Interior the legislative authority to implement a February 2012…on how to explore, develop and share revenue from hydrocarbon reservoirs that overlie our maritime boundary with Mexico in the Gulf of
Mexico.”¶ The Secretary’s actions must protect US interests and promote domestic job creation and ensure expeditious and orderly development and conservation of domestic mineral resources in accordance with
US laws governing exploration, development, and production for hydrocarbon resources on the Outer Continental Shelf.¶ Within 180 days after parties to a transboundary hydrocarbon agreement have
agreed to terms, and if those terms constitute a treaty in the judgment of the President, the agreement shall be submitted to the Speaker of the House, the Senate Majority Leader, the Chair of the Hose Committee
on Natural Resources, and the same in the Senate.
China is committed to working peacefully with the US – most recent trip
proves
Zhang and Shi ‘13
[Yuhan Zhang is an energy professional in a multinational energy company based in the United States and a former researcher at the
Carnegie Endowment for International Peace. Lin Shi is an energy professional in a multinational energy company based in the
United States and a former consultant at the World Bank. “Conflict between China and the US is not inevitable,” East Asia Forum,
4/13/2013, http://www.eastasiaforum.org/2013/04/13/conflict-between-china-and-the-us-is-not-inevitable/]
President Xi Jinping’s official visit to the United States in February 2012 — as China’s then vice president — suggests that conflict between the two
states is not inevitable. This goes against the ideas of American offensive realists, who have publicly argued that conflict is an unavoidable consequence
But Xi’s visit saw
China and the United States reach consensus on a number of important issues.
They agreed to prioritise shared interests and mutual respect as a means of
ushering in an era of win–win cooperation between China and the United States.¶
of the will to survive, which requires large states to maximise power and pursue hegemony in their own regions.
Xi’s visit had three main goals: first, to strengthen trust between the two powers through an official visit; second, to familiarise American leaders with
The
timing of Xi’s visit coincided with the 40th anniversary of President Nixon’s visit
to China and the publication of the Sino–US joint communiqués, which played a critical role in
the basic political, economic, ideological and diplomatic style of China’s next leader; and, third, to consolidate Sino–US trade relations.¶
normalising relations between the two states. Upon his arrival, Xi met with a number of former secretaries, including former secretaries of state Henry
Kissinger and Madeleine Albright and former secretary of the Treasury Henry Paulson. Xi also met with many policy makers from the current
His visit laid a good foundation for the positive
development of China-US political and economic relations for at least the next
decade. There are two key reasons for this. The first is that the visit successfully delivered the message that China is willing to engage in political
administration, including President Barack Obama.¶
communication and economic cooperation with the United States. During meetings with current and former politicians, business people and the media,
This message is
necessary to reduce the possibility of future strategic
misunderstandings, especially because the United States, as a representative
Western capitalist power, has been seen as ideologically prejudiced against China
since the Cold War.¶ It is also timely because China’s rapid economic growth in the past decades has arguably aroused envy and fear in
Xi repeatedly stressed the importance of cooperation and friendship between China and the United States. ¶
the United States and some European countries, which have been suffering from the consequences of the global financial crisis and the European debt
crisis. These anxieties have hardly been assuaged by statements from a growing pool of commentators who predict that China will soon equal the
United States in economic power, and will eventually supplant its hegemony. ¶ But this prediction fails to account for the philosophical grounding of
Chinese leaders, which indicates that China has neither the intention nor the capacity to challenge America’s hegemony. As Mao Zedong pointed out in
the early 1960s, ‘We [China] are a socialist country. We do not invade other countries, not in 100 years or 1000 years’. Mao’s successors have
consistently reiterated this principle and repeated many times that China will never seek hegemony. Xi’s visit served as another reminder that China’s
and America’s interests are in many ways aligned, and that there is considerable scope for the largest advanced economy and the largest emerging
Secondly, Xi’s visit helped to further China-US
trade and economic relations. In recent years, as part of China’s ‘going out’
strategy, more and more state-owned enterprises and private companies in China
have engaged in mergers and acquisitions activities in North America and Europe, with the
intention of absorbing Western advanced technologies and management techniques. ¶ After Xi’s visit to the US, hundreds
of accompanied Chinese entrepreneurs have now moved closer to possessing an
accurate understanding of local policies and the investment environment in America. This deepening
of China-US relations will encourage more Chinese enterprises to invest in the
United States. High-tech, clean energy and manufacturing industries are bound to become new hotbeds of bilateral cooperation in the next
economy in the world to establish a new type of partnership.¶
few years. The trade orders signed in Iowa and California by Xi’s team also included preferential agricultural policies for American farmers, which have
been welcomed and endorsed by the federal government, state governments and the American public. ¶ Admittedly, the 2012 US presidential election
campaign saw candidates from both the Democratic and the Republican parties score political points by criticising many of China’s policies, including
, Xi’s visit indicated that the future of China-US
relations under his presidency will be shaped by cooperation, despite the
intrusion of domestic politics.
its exchange rate and trade policies. But, overall
Chinese Resource War claims are false
Victor ‘7
(David G,- Adjunct Senior Fellow for Science and Technology, Council on Foreign Relations; Director, Program on Energy and
Sustainable Development @ Stanford “What Resource Wars?” 11/12 http://www.nationalinterest.org/Article.aspx?id=16020)
concerns about
RISING ENERGY prices and mounting
environmental depletion have animated fears that the
world may be headed for a spate of “resource wars”—hot conflicts triggered by a struggle to grab valuable resources. Such
the threat industry has sounded the alarm bells especially
loudly in three areas. First is the rise of China, which is poorly endowed with many of the
resources it needs—such as oil, gas, timber and most minerals—and has already “gone out” to the world with the goal of
fears come in many stripes, but
securing what it wants. Violent conflicts may follow as the country shunts others aside. A second potential path down the road to
resource wars starts with all the money now flowing into poorly governed but resource-rich countries. Money can fund civil
wars and other hostilities, even leaking into the hands of terrorists. And third is global climate change, which could multiply
Most of
this is bunk, and nearly all of it has focused on the wrong lessons for policy. Classic resource wars are good
material for Hollywood screenwriters. They rarely occur in the real world. To be sure,
stresses on natural resources and trigger water wars, catalyze the spread of disease or bring about mass migrations.
resource money can magnify and prolong some conflicts, but the root causes of those hostilities usually lie elsewhere.
Fixing them requires focusing on the underlying institutions that govern how resources are used and largely determine whether
stress explodes into violence. When conflicts do arise, the weak link isn’t a dearth in resources but a dearth in governance.
Latin American energy resources not key to China.
Dominguez 6. [Jorge, Professor @ Harvard’s Weatherhead Center for International Affairs, "China's Relations With
Latin America: Shared Gains, Asymmetric Hopes" Inter-American Dialogue Working Paper -- June -www.thedialogue.org/PublicationFiles/china.pdf]
Another dimension of variation is specific ¶ to key products. China has seemingly
limitless demand for energy. Rolling blackouts ¶ are a fact of life for many Chinese. China ¶ has not
turned to Latin America to address ¶ its energy needs, however. China imports little ¶
petroleum from Mexico. China’s largest energy ¶ trading partner in Latin America is
Venezuela, ¶ but Venezuela’s share of China’s oil imports ¶ was only 1.1 percent in
2003. For Venezuela, ¶ as Tables 3 and 4 show, this makes China ¶ a significant trading partner but the comparison underscores the
Latin America has a trivial
role in ¶ addressing China’s energy needs.
asymmetry in hopes ¶ and leverage in Sino-Venezuelan relations. ¶ In short,
2AC SEC CP
Notes – Against this CP, all it does is allow other countries to invest in Mexico, so it does not solve for the Heg adv
or trade deficits Adv. Mexico relations add-ons are also offense against this CP
Signing TBA key to allow for more PEMEX reforms – means CP fails
Brown and Meacham 6/05- *non-resident fellow at the German Marshall Fund of the United States, **
director of the Americas Program at the Center for Strategic and International Studies. They previously served as senior advisers on
the Republican staff of the Senate Foreign Relations Committee and authored the report Oil, Mexico, and the Transboundary
Agreement, (Neil and Carl, “Time for US-Mexico Transboundary Agreement”, 06/05/13, The Hill, http://thehill.com/opinion/oped/303739-time-for-us-mexico-transboundary-agreement, //CJD)
Such was the concern of many in Mexico that led to an oil exploration
moratorium along our maritime border. Congress should now approve a more
neighborly solution.¶ The United States-Mexico Transboundary Agreement (TBA) would enable cooperation
between our two federal governments and our companies to unlock the potential
for oil and natural gas reserves that extend across our Gulf of Mexico maritime
boundary.¶ Congressional approval of the TBA would enrich U.S.-Mexico relations
in the near term while laying the foundation for improved energy security and
enhanced environmental protection for the Gulf Coast.¶ Bilateral relations with
Mexico have improved dramatically in recent years, yet energy cooperation has
lagged. Oil holds a privileged position of national pride and constitutional
protection in Mexico, historically putting it off limits for domestic reform and bilateral
cooperation with the U.S. The TBA is, therefore, more than just an energy agreement.
Its approval by the Mexican government is a political statement opening a
window to richer relations
.¶ While the area under future jurisdiction of the TBA could provide incremental
domestic oil production, a far greater prize for the U.S. oil portfolio is the
prospect of more reliable oil trade with our ally Mexico. The TBA would, for the first time,
allow oil majors to work in joint production arrangements with PEMEX and
support the confidence building necessary to enable those arrangements more
widely in Mexico. That is not only good for oil major shareholders, it is good for our
nation’s energy security.¶ Even as U.S. domestic oil production increases, the sources
of our imports remain critical for economic stability and national security
flexibility. Recently, Mexico was supplanted by Saudi Arabia as our second largest
foreign oil source after Canada.¶ Mexican oil production has dropped by more
than a quarter over the last decade, and U.S. refiners geared for heavy oil had to
look elsewhere to make up the difference. Canadian heavy crude production is
increasing in the country’s oil sands region, but pipeline infrastructure is
insufficient. Therefore, in effect, the U.S. has had to increase imports of Middle East
crudes in order to make up for shortfalls in Mexico. The TBA alone will not
structurally reverse Mexico’s oil decline, but it is likely a necessary first step along
that path.¶ Regardless of TBA approval, Mexico’s PEMEX will continue its deepwater
exploration near the U.S. border. With memories of Deepwater Horizon still
fresh, it is worrisome that Mexico’s oil safety regulator, known as CNH, has
almost no capacity to provide independent on-site inspections. All facilities
operating under the TBA would be subject to U.S. inspectors with the ability to
stop operations. Moreover, U.S. and Mexican regulators would work hand in hand,
offering support for more systematic improvement.¶ Given the foreign policy,
energy security, and environmental benefits of the TBA signed in February 2012,
it is disappointing that the Obama administration has delayed taking steps
necessary for Congress to approve the agreement. That delay does not make it
any less important for Congress to approve the agreement soon.¶ Congress has a
critical role in clarifying certain provisions of this international agreement.
Dispute resolution mechanisms warrant particular attention. Already, it has been
mistakenly argued that the TBA requires greater secrecy in payments of oil deals,
encouraging an effort to exempt the agreement from the Cardin-Lugar
transparency law. No such secrecy is required by the TBA, which subordinates its
confidentiality rules to domestic law.¶ The longer the TBA sits on the shelf, the
more likely it will be hamstrung as a proxy for more rancorous energy disputes.¶
Prompt Congressional activity could be a useful vote of confidence in the
upcoming domestic energy sector reform in Mexico. Mexico needs new oil
production from more complex fields to counterbalance its declining fields, let
alone increased production. Leaders in Mexico’s two largest political parties
know that under current capital and management constraints, PEMEX alone is
extremely unlikely to turn Mexico’s oil and natural gas abundance into prosperity
for the Mexican people. International oil majors are needed, but that will take
political courage.¶ Congressional approval of the TBA would tangibly demonstrate
that the U.S. government and our companies are willing partners. That is good
for Mexico and for the U.S.
links to politics- GOP backlash against SEC action
Economist 02- World political and economic news source, (“Corporate malfeasance is on the verge of
becoming a big political issue—even though the public hardly cares about it yet”, 7/4/02, The economist,
http://www.economist.com/node/1217728, //CJD)
DOMESTIC matters have failed to exert much of a hold on American politics since the
destruction of the World Trade Centre. The vanishing budget surplus, campaign-finance
reform and the rest have come and gone, leaving not a wrack behind. Yet disintegrating
confidence in corporate America will surely be different. This week, it reached even the
door of George Bush himself.¶ Following the revelation that worthless WorldCom had padded its accounts to the tune of $3.9
billion—which itself followed a series of other scandals dating back to the collapse of Enron—Mr Bush put himself at the head
of a parade of outrage demanding a measure of responsibility from corporate
executives. He interrupted the G8 summit in Canada to complain about balance-sheet
shenanigans. He gave a radio address demanding that executives should be criminally
liable if they give intentionally misleading information. Next week he will give a big
speech on Wall Street to explain more policies.¶ His rhetoric already marks a change. After the
Enron affair, Mr Bush talked about a few “bad apples”. Now he is talking about threats to “our
entire free enterprise system”. His change was necessary not just because of the mess
(to suffer one business scandal may be regarded as a misfortune; to suffer eight looks
worse than careless), but also because the scandals have dangerously reinforced the
idea that Republicans are soft on business.¶ Although the WorldCom affair has nothing to do
with political corruption (the company did not seek government help, as Enron did), it certainly smacks of
corporate corruption. That is the stick Democrats are beating Republicans with. They sneer that
the president's rhetoric about tackling white-collar fraud is belied by his earlier
reluctance to give the Securities and Exchange Commission (SEC) more money. The leader of the Senate, Tom
Daschle, has incredulously contrasted the Republicans' current outrage with their earlier
deregulatory fervour. Most alarmingly, eyes are turning to the president's own business
record. The SEC investigated some of his share dealings in 1990-91, when Mr Bush, then
on the board of Harken Energy Corporation, took 34 weeks to give “timely” notice of an
$848,560 stock trade, made a week before bad news was disclosed.¶ The outrage has
already revived a bill on accountancy reform that had appeared dead in the Senate only
two months ago. The bill, sponsored by Paul Sarbanes, a Democrat from Maryland, would create an
independent regulatory board to set book-keeping standards, limit accountants'
consultancy work, discipline dodgy auditors and prevent a senior auditor from working
with a public company for more than five years. Mr Daschle says the Senate will vote on the bill next week and
forecasts it will pass by a landslide.
2AC Thorium CP
Note - This CP would only potentially solve the heg adv, not the trade deficits advantage or the Mexican Relations
add-on. Also, major problem for this CP is that Thorium cannot be put into tanks. It can only solve for like city
power needs, not military dependence on oil which is the IL into the advantage. Also, it will take a really long time
to develop thorium into a feasible alternative to fossil fuel, so a TF DA to the CP on the heg impact is also a good
idea.
Thorium doesn’t solve in the short term and only replaces nuclear power
Ibrahim 7/15 (Dr. Ahmad, Fellow at the Academy of Science Malaysia and Science Analyst for Strait Times, “More interest in nuke
fuel thorium,” http://www.nst.com.my/opinion/columnist/more-interest-in-nuke-fuel-thorium-1.319433)
DESPITE the safety issues related to nuclear power, many feel it is not wise to ignore it as an energy source. We should instead look
for ways to mitigate the safety challenges. One of the most powerful arguments in support of nuclear energy is its low greenhouse gas
emissions. As climate change continues to pose threats to global wellbeing, going nuclear is a viable energy option. Scientists are
looking at how to improve the safety features of nuclear energy. They do this in a number of ways. One is to develop new reactor
designs that make the operation of nuclear plants safer. Another, which is more long term, is to look at alternative nuclear fuels.
Thorium is one such fuel that appears to show promise. Thorium is a naturally occurring radioactive material. It was discovered in
1828 by a Norwegian mineralogist and named after Thor, the Norse god of thunder. Thorium is estimated to be three to four times
more abundant than uranium in the Earth's crust. Thorium was once commonly used as the light source in gas mantles. Many
countries have experimented using thorium as a nuclear fuel. These include Canada, China, Germany, India, the Netherlands, the
United Kingdom and the United States. When compared with uranium, there is growing interest in developing thorium as a new
Extracting its latent energy value in a cost-effective manner
remains a challenge and will require considerable research and development
(R&D) investment. Research into the use of thorium as a nuclear fuel has been
taking place for more than 40 years, though with much less intensity than that for uranium. Basic
primary energy source.
development work has been conducted in Germany, India, Canada, Japan, China, Netherlands, Belgium, Norway, Russia, Brazil, the
United Kingdom and the United States. Tests have been conducted on a number of different thorium-based fuel forms. The China
Academy of Sciences in January 2011 launched a big R&D programme on reactor technology for thorium. The Research Centre
apparently has a 5MW prototype under construction at Shanghai Institute of Applied Physics. This should come into operation in
2015. India has huge resources of easily accessible thorium, but relatively little uranium. This explains why India has made use of
thorium for large-scale energy production a major goal in its nuclear power programme. Using thorium as fuel offers attractive
features, including lower levels of waste generation, less radioactive elements in that waste, and providing a diversification option
for nuclear fuel supply. Also, the use of thorium in most reactor types leads to significant extra safety margins. Thorium fuel is now
being tested in the Halden research reactor in Norway. It was loaded in the last week of April. Led by Norwegian company Thor
Energy, the test will provide information necessary for qualifying this new fuel material for commercial use in current reactors. Such
fuel, in pellet form, promises higher operating safety margins due to higher thermal conductivity and melting point, and produces no
new plutonium as it operates. Thor Energy said thorium-plutonium fuels provided a new option for reducing civil and military
It is clear many countries are investing in developing thorium as a
viable nuclear fuel. A recent report has suggested that China has recently approved more than 1,000 PhD students on
plutonium stocks.
thorium studies. Malaysia does have decent deposits of thorium. Apart from the tailings from tin mining, studies show there are
other deposits. Another potential source is the residue coming from the Lynas rare earths processing plant in Kuantan. This is the
reason why many feel it is unwise to allow such residue to be exported out. In France, a similar rare earths processing company,
Rhodia, has kept all its thorium-rich residue for future use as fuel. In Malaysia, unfortunately, we have squandered on the
opportunity to capitalise on the thorium contained in the residues of the Asian Rare Earths Company, which operated a while back
in Perak. They have all been cementised for disposal. The recently established National Committee on Thorium may provide a plan
on how to use the country's thorium deposits.
Mechanism- Thorium implementation fails
Kawa, 12/19/12 – writer for BusinessInsider (Lucas, “There's One Big Obstacle To US Development Of Thorium.”
http://www.businessinsider.com/how-natural-gas-is-crowding-out-thorium-2012-12)
Last week Norway joined India, China, and others in testing thorium, regarded by some as the energy source of the future.¶ Gary Krellenstein is
one of those people. This former JP Morgan Energy and Environment Director penned a report calling thorium “The Best, Most Overlooked
Solution to Global Warming and Long-Term Energy Supply.”¶ He’s quick to trumpet the benefits of thorium, especially compared to uranium
(most of which we’ve discussed before) but also provides a perspective on some of thorium’s disadvantages, which include:¶ High capital costs
($4000-$10,000/kW)¶ Little existing infrastructure, no commercially operating plants¶ Long lead times (estimated at over 10 years) and
licensing issues¶ The bad reputation of nuclear energy, due to meltdowns at Chernobyl and Fukushima¶ But these aren’t the definitive factors
that have prevented thorium’s proliferation – Krellenstein has a very direct answer for what’s keeping thorium on the sidelines:¶ The natural
gas revolution.¶ Krellenstein claims that advances in fracking technology gives the U.S. another 100 years of domestic natural gas reserves,
under current demand. Moreover, the price is expected to stay under $5/million cubic feet through 2022.¶ His conclusion:¶ Thorium power
technology cannot economically compete with electricity generated by gas so long as NG prices remain in the $3-$6 per mmbtu price range.¶
Simply, investors (who don't care about societal benefits of thorium) have to go for the best possible return on their principal. Krellenstein
develops the argument that this means choosing natural gas – for now:¶ Gas plants can be build more quickly and are cheaper than nuclear
plants¶ Natural gas has less harmful emissions than other fossil fuels¶ Alternative energy sources are too expensive and unreliable¶ He doesn’t
see contamination caused by fracking as a threat to natural gas production, stating that it “appears to be a problem only where the shale is
near the water aquifer, and there is no shortage of deep shale deposits.Ӧ But, in his opinion, there's only so long before we transition to
thorium. Here's a list the preconditions Krellenstein thinks are necessary for thorium to thrive:¶ Stricter regulations regarding greenhouse
gases¶ Tests which demonstrate its viability¶ Investment grade credit ratings in order to finance the project¶ Price guarantees from contractors¶
Public knowledge of the benefits of thorium¶ A stronger global economy
Links to politics- not perceived as cost effective
Niiler 12 Eric is a health and science writer at the Washington Post. “Nuclear power entrepreneurs push thorium as a fuel,” Feb 20,
http://www.washingtonpost.com/national/health-science/nuclear-power-entrepreneurs-push-thorium-as-afuel/2011/12/15/gIQALTinPR_story.html?wprss=rss_national
Although the idea of thorium power has been around for decades
it has not caught on
in the United States
¶ There are small boatloads of fanatics on thorium that don’t see the
downsides
it would be too
expensive to replace or convert the nuclear power plants already running in this
country:
it’s not compelling for infrastructure and investments.”¶
thorium would still have radioactive byproducts
¶
the benefits don’t outweigh the huge costs of
switching technologies. “I’m looking for something compelling enough to trash billions
of dollars of infrastructure that we have already and I don’t see that.”¶ Thorium
advocates
¶
recognize
Part of the problem is that nuclear only means one
thing in the public and [U.S.] government’s mind.”¶
— and some countries are planning to build thorium-
powered plants —
with the companies that design and build nuclear plants
or with the national research labs charged with
investigating future energy sources. “
,” said Dan Ingersoll, senior project manager for nuclear technology at the Oak Ridge National Laboratory in Tennessee. For one thing, he said,
“A thorium-based fuel cycle has some advantages, but
pointed out that
He also
some
— just not as much as uranium and not as long-lived — and that there is no ready
stockpile of thorium in the United States. It would have to be mined. Overall, he says
such as Kirk Sorensen, a former NASA engineer who is now chief executive of Huntsville, Ala.-based Flibe Energy, are not deterred. “We
this is a new and different technology,
and developing it is significantly different from the existing nuclear industry,” Sorensen said. “
Thorium exists in the ground as thorium oxide and is three to four times as abundant worldwide
as uranium, according to a 2005 report from the International Atomic Energy Agency. Thorium is less radioactive than uranium, and it emits alpha particles, which are less biologically harmful than uranium’s gamma particles. That
makes thorium easier to store safely.¶ With an extremely high melting point (over 6,000 degrees), thorium has been used in portable gas lanterns, high-temperature ceramic products and aerospace applications. But because of its
radioactivity and the development of alternative materials, most uses of the element were phased out. ¶ Once a working experiment¶ Half a century ago, however, the United States was taking a serious look at thorium as a
nuclear fuel. It was used at a molten-salt reactor that government scientists built and ran from 1965 to 1969 at Oak Ridge. ¶ But after India detonated a nuclear bomb in 1974 with plutonium extracted from a reactor designed for
non-weapons use, fears of proliferation convinced successive U.S. administrations to cut back on experimental nuclear programs. The thorium-fuel project was mostly forgotten. Instead, all subsequent nuclear plants were
designed to use uranium, the fuel that powers all 104 reactors operating in the United States today. ¶ Almost all the U.S. plants are at least 25 years old; some are approaching 50. With the federal government unable to come up
with a permanent waste disposal site, spent fuel rods — which remain radioactive for thousands of years — are piling up at each reactor site.¶ Nevertheless, utilities have been preparing to build 20 to 30 similar reactors to replace
the older ones. (Earlier this month, the Nuclear Regulatory Commission approved Atlanta-based Southern Co.’s proposal to build two such reactors in Georgia. ) ¶ For the past few years, Sorensen has been trying to convince them
to build LFTRs instead. He posts technical documents from the Oak Ridge thorium reactor on his blog, Energy from Thorium. Last year, he left his day job at Teledyne Brown Engineering to start Flibe, the name of which is derived
from the mixture of fluoride, lithium and beryllium salts used in a LFTR.¶ “We can look back to Oak Ridge,” he says, to “rebuild the capability that existed in 1974.” ¶ Sorensen says a LFTR using a mixture of thorium as a fuel plus
either uranium or plutonium to kick-start the reaction could produce higher core temperatures at lower pressures than steam reactors, meaning it would not need as many safety and cooling systems. ¶ Even better, he says, LFTRs
could be configured to consume the spent fuel that is sitting around the country at nuclear sites. ¶ Other entrepreneurs are taking a different tack. McLean-based Lightbridge wants to mix thorium and uranium to slightly boost the
most U.S. nuclear
energy industry executives are wary of both approaches to thorium, saying that neither
utilities nor investors are eager to gamble on an unfamiliar technology.
output of existing nuclear plants. Lightbridge is helping the Russian government build such a program, said Seth Grae, the company’s president and chief executive.¶ But