Rattling the resource chain

ISN Security Watch | 22 Dec 2009

Forecast reports on scarcity predict global actors will move in on dwindling resources. Governments are taking notice, and so should the public, Vivian Fritschi writes for ISN Security Watch.

By Vivian Brailey Fritschi for ISN Security Watch

As each year comes to a close, we tend to reflect on the past and the coming year, when it is perhaps the near future that demands more urgent attention. Indeed, a troubling commonality emerges upon a review of the major security and defense white papers and various forecast reports.

Governments, corporations and research institutes paint a very similar picture of the future – one that portrays the transition from a surplus to a post-surplus world. While the latter does not necessarily mean absolute scarcity, it does suggest rising scarcity in many key resources.

This is more than just a trend; it is the underlying current that will shape the foreseeable future.

A significant part of our planetary wealth has gone into what we’ve built, used and thrown away, as visible in our national infrastructures, our cities, towns and homes, and in our mountains of trash around the world.

The implication of this global structural change should not be underestimated; as many modern systems (especially economic and industrial) were built on the fundamental assumption that resources were infinite. Still, it may be decades before the process of rethinking (and in some cases recreating) dominant and sacred theoretical paradigms trickles down to public discourse and policymaking.

Decades ahead: The prevailing outlook

As demand for natural resources increases, in turn raising their value, market players will logically shift their emphasis toward more efficient extraction, use and secure management of these resources. In the long term, an intensification of competition and/or conflict over these resources (whether ‘hot’ or ‘cold,’ inter-state or intra-state) is more likely, with corporations being the most responsive actors.

For instance, the Saudi-based Binladen Group’s effort to invest over $4 billion in rice fields in Papua is motivated by a need to secure food production, according to a Thomson Reuters report. While the report also said that the group was having difficulties acquiring land from local people, it is unclear how much pressure Papuans are under from the government and the corporation to cede land.

One of the most violent disputes over resources is playing out in the oil conflict in the Niger Delta region with Shell Oil and the Nigerian government on one side, and the Ogoni people on the other.

The anticipated rise in competition and conflicts for natural resources is balanced by the expectation that international collaboration between grassroots movements will expand to mitigate some of the most urgent or acute problems.

Conflict and security

Predictions of accelerating conflict signal a concurrent increase in weapons and arms proliferation, and criminality (including terrorism).

Traditional security issues will continue to be among the highest priorities, especially given the increasingly lethal use of weapons (due to technological advancements and innovation). However, there are already early indications, especially in defense white papers, that strengthening the tools of civil society (cooperation, mediation, facilitation, collaboration, etc.) will play an important role in future security measures.

A greater emphasis on the prevention of conflict at an early stage is expected, and both the US and UK defense strategy papers highlight the importance of collaboration.

Likewise, the Chinese defense white paper says that Beijing will continue to pursue a new security concept featuring “mutual trust, mutual benefit, equality and coordination […] [and] encourage the advancement of security dialogues and cooperation with other countries […]”

Other national defense white papers, including those of the UK, France, Japan, Australia, New Zealand and Switzerland, either highlight areas of cooperation or identify prevention as an important component of security.

The reports suggest governments will place greater emphasis on the prevention of conflict and security in the areas of the most basic resources themselves (energy, water and food), as the overall vulnerability of these resources to risk (especially to grave risks from disasters, man-made or natural) can directly impact supply, access and production stability, and ultimately the global economy.

In its 2009 report, the US-based Energy Information Administration projects that world demand for energy will increase by over 40 percent in the next few decades.

According to the Food and Agricultural Organization, the greater the degree to which developing countries are integrated into the world market, the greater their vulnerability to economic crises. In addition, a 2009 FAO report notes that the situation has prompted “some analysts to ask whether new linkages between food and energy markets have broken the long-run downward trend in real agricultural commodity prices.”

Long-standing assumptions that the prices of commodities will fall over time are now being questioned. There is no way to know how this will affect existing economic models or the stability of fragile economies. Most developing countries are net food importers, and as such, the implication of a sustained upward rise in food prices will clearly put greater pressure on these governments to provide food security.

Prices, competition and demographics

Rising prices and competition for goods may be a sign that the historical long periods of economic stability and increasing prosperity may become a thing of the past. Many long-term forecast reports - including the National intelligence Council’s Global Trends 2025: A Transformed World - anticipate continued economic volatility.  This will be provoked in part by rising energy demand, the interdependence of national economies, and increasing protectionism.

Most countries are not easily able to isolate themselves from the economic ills of some other nation or market sector. How this will be managed is unclear, given that the cost of most (if not all) goods is tied to energy prices and may correspondingly follow energy on its upward.

Barring some major scientific innovations that would result in a significant drop in the cost of energy, a constant upward pressure in prices will have its greatest impact on developing and less-developed countries. But people who need to increase a meager income will logically be drawn to areas where employment opportunities are greater.

Demographic pressures are already on an upward trend; not just birth rates, but also the numbers of elderly and the rate of youth unemployment. Populations across the globe will continue to shift from countryside to city; as well as from poor to wealthier countries.

The combination of political and economic instability and demographic trends will increase the urgency of human security issues, especially in terms of public health and migration. The problems associated with high urbanization will continue to be exacerbated, and megacities that are already fragile will become more so: hotbeds of poverty, crime, disease and despair that could destablize the surrounding regions and rattle world markets.

Enlarging the ‘global power circle’

The other side of this dire picture is that while some must endure the worst effects, other nations and regions will benefit.

While the oil boom of the last decade has impoverished many, it has brought substantial wealth (and consequently power and influence) to countries with the capacity to export their oil resources. As a result, there are early signs of regional power blocks emerging and consolidating, in particular among the Arab Gulf states and the Central Eurasian states (including Russia).

Oil aside, other regions that have enjoyed substantial economic growth are also enjoying greater global power and influence, in particular the nations of East and South Asia. By nearly all accounts, Asia-Pacific will play an even greater role in international relations in the coming decades.

The recent expansion of the G-8 to the G-20 was hailed by many as the decisive widening of the ‘global power circle.’ But the shift in global power has implications not only for power centers in the West that must now share influence, but also signals a shift in global leadership, and a rather subtle fragmentation of the political unity long maintained by previous power structures.

According to many specialists, the rise of new regional power hubs means nations that had neither power nor influence and were isolated from the dominant forums of the UN and from the West can now find leadership and access to power from nations whose chose to not meddle in the affairs of other states, regardless of the governments’ activities.

ASEAN has in many ways set a precedent for the independence of regional hubs, being one of the first regional groups to codify the principle of non-interference. The ‘Asian way’ of managing conflicts is considered by some to be as much of a rejection of the western style of political leadership as it is a reflection of the regional tendency to emphasize alternative (that is, locally ‘appropriate’) approaches and solutions to conflict that also yield results.

Regional hubs will become more important, but global coordination for global problems will also increase.

Four trends collide

It has been argued that a confluence of four trends (the weakening of UN enforcement of its own rules; a decrease in US economic strength and influence; the shift of global wealth to resource-rich regions; and the rise of new regional hubs) signals an erosion of global leadership and governance.

A stand-out aspect of the new regional hubs is that they are not solely comprised of democratic states (in the western sense). In fact, many of their members are not democratic at all, and as such, the hubs are able to provide political and economic support to and serve as havens for isolated 'like-minded' regimes.

Consequently, the reports suggest that a fragmentation of global leadership will negatively affect the western democracy project, which will likely lose some momentum as the wealth gap between the democratic and undemocratic regional hubs begins to shrink, as these new hubs continue to gain wealth and international influence, and as non-democratic countries become better able to pursue political systems in their own best interests.

Many experts expect there to be some weakening in theglobal dominance of the normative western concept of democracy as well as the functional roll-back of democratic practices and processes in some areas.

In the Freedom House’s annual Nations in Transit report for 2009, Vladimir Shkolnikov reports that among the new democracies in Eastern Europe, there is a disturbing trend in “[t]he decline in the strength and vibrancy of civil society…” and that “the momentum of the current backsliding is to be checked and reversed. […] ”…[M]odest backsliding could turn into a more costly and systemic crisis if existing problems are not addressed.”

He also discusses “the trends of democratic decline in authoritarian petro-states […]”

The report highlights the likelihood that governments (particularly Russia and the Central Asian states) will continue to limit civil society activities through the use of legal frameworks, burdensome administrative and tax requirements, harassment and control of the media and other public service organizations, not to mention creating more barriers to control access to technology that would limit civil society participation.

While technology has enabled many democratic revolutions, it may also facilitate their dismantlement.

Accepting reality

While environmentalists and other researchers have been sounding the alarm for decades, the global public has only slowly begun to accept that there are serious problems with the environment.

Governments have been incorporating this information into their strategic long-term and planning documents and funding for some time, and larger corporations have been the earliest to react, moving to secure access to and gain a competitive advantage over dwindling resources in parts of Asia, Latin America and Africa.

The cause of the lag in public understanding of this issue is exceptionally complex, shaped by access to education, information and communications technology, not to mention deliberate misinformation and propaganda from all sides.

But this is changing as people begin to understand how resource scarcity is shaping everyday life: How a decade-long drought in Australia put bread and other grain-based products in the Middle East and Asia at risk; how a shift to seemingly more environmentally friendly products like biofuels can wipe out the availability of an essential dietary staple imported in Central and Latin America; how the price of rice in Thailand (and the export controls that have since been put in place there) is actually more important than the price of rice in China; that bigger and better financial deals in the US national financial chain can result in a financial meltdown across the globe; how massive agricultural expansion projects have dried up nearly the entire Aral sea; and how the felling of trees on a mountain in Kenya can threaten water supplies for the 10 million living downstream.

What the global shift in resources highlights the most are the connections in the global chain. We are all linked now, more than ever. In the future, we will learn to care more (as individuals) about what happens to our neighbors, and we will agitate (our governments) to respond better and faster.

Vivian Brailey Fritschi is business development manager for the ISN.
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