EFTA01801416.pdf

From: Office of Terje Rod-Larsen Sent: Thursday, October 17, 2011111/ Subject: October 17 update 17 October, 2013 Article 1. =he Washington Post Turkey blows Israel's cover for Iranian spy ring David Ignatius <http://www.washingtonpost.com/david-ignat=us/2011/02/17/A8XXcal_page.html> =a href="gb">Article 2. =he National Interest The Psychology of Barack Obama Robert W. Merry <http://nationalinterest.org/profile/roberr-w-merry-0> Article 3. =IME As Iran and the West Make Progress in Geneva, Israel Grumbles From th= Sidelines Karl Vick <http://world.time.com/author/karlvick/> =a href="gd">Article 4. =oreign Policy New technologies are dramatically reshaping the geopolitics of the Mi=dle East =my Myers Jaffe, Ed Morse Article 5. =all Street Journal <http://www.newamerica.net/taxonomy/term/1=20> Why OPEC No Longer Calls the Shots =aniel Yergin Article 6. The Gua=dian <http://www.guardian.co.uk/theguardian> =/p> EFTA_R1_00142328 EFTA01801416 Americans need to discover how the world sees them Timothy Garton Ash <http://www.theguardian.com/profile/timoth=gartonash> &n=sp; Arti=le 1. The Washington Post=/span> Turkey blows =srael's cover for Iranian spy ring David Ignatius <http://www.washingtonpost.com/david-ignat=us/2011/02/17/ABKXcal_page.html> =/p> October 16, 2013 --=The Turkish-Israeli relationship4=pan> <http://www.haaretz.com/news/diplomacy- defense/1.549086> became so poisonous <http://www.washingtonpost.com/opinions/turkish-president-=bdullah-gul- assad-must-go/2013/09/23/ffc45d7a-246e-11e3-b75d-5b7f66349852_=tory.html> early last year that the Turkish government of Prime Minister Recep Tayyip=Erdogan is said to have disclosed to Iranian intelligence the identities o= up to 10 Iranians who had been meeting inside Turkey with their Mossad ca=e officers. Knowledgeable sourc=s describe the Turkish action as a "significant" loss of intelligence =nd "an effort to slap the Israelis." The incident, disclosed here for =he first time, illustrates the bitter, multi-dimensional spy wars that lie behind the current negotiations between Iran and Western=nations over a deal to limit the Iranian nuclear program. A Turkish Embass= spokesman had no comment. Israeli anger at th= deliberate compromise of its agents may help explain why Prime Minister B=njamin Netanyahu became so entrenched in his refusal to apologize to Erdog=n about the May 2010 Gaza flotilla incident chttp://www.washingtonpost.com/wp-dyn/content/article/2010.05/31/AR2010053102860.html> . In that confrontation at sea, Israeli commandos boarded a Turkish-organized convoy of ships carrying humanitaria= aid to Gaza. Nine Turks were killed. Netanyahu finally apologi=ed to Erdogan <http://www.washingtonpost.com/blogs/world=iews/wp/2013/03/22/yes- netanyahus-apology-to-turkey-is-a-very-big-dealh by phone in March after President Obama negotiated a compromise chttp://www.washingtonpost.com/wo=ld/middle_east/obama-ends-israel-visit-by-honoring-historic- figures/2013/0=/22/7a489fc4-92e9-11e2-ba5b-550c7abf6384_story.html> =ormula. But for more than a year before that, the Israeli leader had resis=ed entreaties from Obama and Secretary of State Hillary Clinton to heal th= feud. Top Israeli officia=s believe that, despite the apology, the severe strain with Erdogan contin=es. The Turkish intelligence chief, =akan Fidan <http://online.wsj.com/news/articles/SB1000142405270230364=304579107373585228330> , is also suspect in=lsrael because of what are seen as friendly links with Tehran <http://www.haaretz.com/print- edition/news/israel-worried-=y-new-turkey-intelligence-chief-s-defense-of-iran-1.294568> <=pan style="font- size:18.0pt">; several years ago, Israeli intelligence officers are said to have described him fa=etiously to CIA officials as "the MOIS station chief in Ankara," a ref=rence to Iran's Ministry of Intelligence and Security. The United States=continued to deal with Fidan on sensitive matters, however. Though U.S. officia=s regarded exposure of the Israeli network as an unfortunate intelligence =oss, they didn't protest directly to Turkish officials. Instead, Turkish=American relations continued warming last year to the point that Erdogan 2 EFTA_R1_00142329 EFTA01801417 was=among Obama's key confidants <http://www.whitehouse.gov/th=-press-office/2013/08/07/readout-president- obama-s-call-prime-minister-erd=gan-turkey> = This practice of separating intelligence issues from broader policymaking =s said to be a long-standing U.S. approach. U.S. officials were=never sure whether the Turkish disclosure was done in retaliation for the =lotilla incident or was part of a broader deterioration in Turkish-Israeli=relations. Israeli intelligenc= had apparently run part of its Iranian spy network through Turkey, which =as relatively easy movement back and forth across its border with Iran. Th= Turkish intelligence service, known as the Milli Istihbarat Teskilati</=>, or MIT, conducts aggressive surveillan=e inside its borders, so it had the resources to monitor Israeli- Iranian covert meetings. <http://www.mit.gov.tr/eng/index.html> U.S. officials asse=sed the incident as a problem of misplaced trust, rather than bad tradecra=t. They reasoned that the Mossad, after more than 50 years of cooperation =ith Turkey, never imagined the Turks would "shop" Israeli agents to a hostile power, in the words of one so=rce. But Erdogan presented a unique challenge, as he moved in 2009 to champion the Palestinian cause <http://www.aa.com.tr/en/news/182098--palestinians-appreci=te-erdogans-unity-efforts> and, in various ways, steered Ankara away from what had been, in effect, a secret partnership with Jerusalem. <=span> The Israeli-Turkish=intelligence alliance was launched in a secret meeting in August 1958 in A=kara between David Ben- =urion <http://www.jewishvirtuallibrary.orgnsource/biography/ben=gurion.html> , then Israel's prime m=nister, and Adna= Menderes <http://www.turkishweekly.net/article/60/the-menderes-peri=d-1950-1960-.html> , then Turkey's pri=e minister. "The concrete result was a formal but top-secret agreement for comprehensive cooperation" between the Moss=d and Turkish intelligence, wrote Dan Raviv and Yossi Melman in their 2012=book, "Spies Against Armageddon chttp://www.amazon.com/gp/product/0985437839/ref=3Das li_qfspasinil tl?ie=UTF8&camp=1789&creative=9325 &=creativeASIN=0985437839&linkCode=as2&tag=washpost-opinions-2=> ." =/p> The groundwork had =een laid secretly by Reuven Shiloah <http://www.amazon.com/gp/product/0714643610/ref=as_li_q=_sp_asin_il_tl?ie=UTF8&camp=1789&creative=9325&c reativeA=IN=07146436108ilinkCode=as2&tag=washpost-opinions-20> , the founding director of the Mossad, as part of what he called a "periph=ral alliance strategy." Through that partnership, Israelis provided trai=ing in espionage to the Turks and, ironically, also to Iranians under the =hah's government, which was toppled in 1979. Fidan, the Turkish =py chief, is a key Erdogan adviser. He became head of the MIT in 2010 afte= serving as a noncommissioned officer in the Turkish army and gaining a ba=helor's degree from the University of Maryland and a doctorate in Ankara. After Fidan took over the Turkish s=rvice, "he rattled Turkey's allies by allegedly passing to Iran sensit=ve intelligence collected by the U.S. and Israel," according to a =ecent profile <http://online.wsj.com/news/articles/SB1000142405270230364=304579107373585228330> in the Wall Stre=t Journal. The Journal also noted U.S. fears that Fidan was arming jihadist rebels in Syria4=pan> <http://www.al- monitor.com/pu=se/originals/2013/10/turkey-must-control-jihadists-entering-syria.html> . The Netanyahu-Erdog=n quarrel, with its overlay of intelligence thrust and parry, is an exampl= of the kaleidoscopic changes that may be ahead in the Middle East. The Un=ted States, Israel, Iran, Saudi Arabia and Egypt are all exploring new alliances and struggling to find a new equ=librium — overtly and covertly. =/span> Arti=le 2. The National Intere=t 3 EFTA_R1_00142330 EFTA01801418 The Psycholog= of Barack Obama Robert W. M=rry <http://nationalinterest.org/profile/rober=-w-merry-0> October 16, 2013-- =n 1972, Duke University professor James David Barber brought out a book th=t immediately was heralded as a seminal study of presidential character. T=tled The Presidential Character: Predicting Performance in the White House, the book looked at qualities of temperamen= and personality in assessing how the country's chief executives approac=ed the presidency—and how that in turn contributed to their success or f=ilure in the office. Although there were=flaws in Barber's approach, particularly in his efforts to typecast the =ersonalities of various presidents, it does indeed lay before us an intere=ting and worthy matrix for assessing how various presidents approach the job and the ultimate quality of their =eadership. So let's apply the Barber matrix to the presidential incumben=, Barack Obama. Barber, who died in=2004, assessed presidents based on two indices: first, whether they were &=uot;positive" or "negative"; and, second, whether they were="active" or "passive." The first index —the positive/=egative one—assesses how presidents regarded themselves in relation to the chall=nges of the office; so, for example, did they embrace the job with a joyfu= optimism or regard it as a necessary martyrdom they must sustain in order=to prove their own self- worth? The second index—active vs. passive—measures their degree of wanting to ac=omplish big things or retreat into a reactive governing mode. These two indices p=oduce four categories of presidents, to wit: Active-Positive: Th=se are presidents with big national ambitions who are self-confident, flex=ble, optimistic, joyful in the exercise of power, possessing a certain phi=osophical detachment toward what they regard as a great game. Active-Negative: Th=se are compulsive people with low self-esteem, seekers of power as a means=of self-actualization, given to rigidity and pessimism, driven, sometimes =verly aggressive. But they harbor big dreams for bringing about accomplishments of large historical dimension.</=pan> Passive-Positive: T=ese are compliant presidents who react to events rather than initiating th=m. They want to be loved and are thus ingratiating—and easily manipulate=. They are "superficially optimistic" and harbor generally modest ambitions for their presidential years. But th=y are healthy in both ego and self-esteem. Passive-Negative: T=ese are withdrawn people with low self-esteem and little zest for the give=and-take of politics and the glad-handing requirements of the game. They a=oid conflict and take no joy in the uses of power. They tend to get themselves boxed up through a preoccupatio= with principles, rules and procedures. When Barber first p=t forth this matrix, it was correctly viewed as distinctively probing and =riginal. And there is little doubt that such traits, if correctly identifi=d and analyzed, can inform our assessments of how presidents do their job. But there is plenty of room for debate whe= it comes to attaching particular traits to particular presidents.<=p> For example, do we =eally want to place George Washington in the Passive-Negative category, as=Barber does? Did he have low self-esteem? Did he avoid power and shrink fr=m conflict? Did he concentrate on small matters—procedures, etc.—at the expense of the big matters? Hardly. An= my favorite mismatch was Barber's insertion of Ronald Reagan into the P=ssive-Positive category, meaning his famous optimism was merely superficia=, that he reacted to events rather than initiating them, that he was easily manipulated. No, Reagan clearly =as an Active-Positive who transformed the economic debate in America, inje=ted profoundly new thinking into the body politic, and set about not just =o counter the Soviet threat but to upend the Soviet Union itself. 4 EFTA_R1_00142331 EFTA01801419 And he did this with hardly any evidence th=t he absorbed in any unhealthy way the barrage of harsh criticism thrown a= him. Besides, who is to say his optimism, so eloquently projected, was ar=ificial? On the other hand, =yndon Johnson and Richard Nixon clearly were Active-Negative, in Barber'= terms. So were Herbert Hoover and Woodrow Wilson, as Barber suggests. And=it isn't difficult to accept some of Barber's list of Active- Positives—Thomas Jefferson, Franklin Roosevelt=and Harry Truman. All of which sugges=s that Barber's categorizations could be viewed as a kind of parlor game= There is plenty of room for discussion and debate on just where various p=esidents should be placed. No doubt partisan impulses will creep into the parlor game as well. So let's all go i=to the parlor and talk about Obama. He took office withrbig ambitions and a manifest resolve to change American society in very si=nificant ways. This was manifest particularly in his Affordable Care Act, =esigned to transform the way we dispense health care in America and increase federal intrusion into a sixth of the =urrent economy (projected to be 20 percent of the U.S. economy by 2020). A=d he was willing to do this without a single opposition vote, which reflec=ed an almost breathtaking political audacity. His energy bill represents another reflection of his ambitions, =nd multiple actions in the regulatory realm (some of questionable constitu=ional validity) reflect also Obama's preference for America as a Europea=-style social democracy. Since the country has generally shunned such a course since the early years of the N=w Deal and a brief spurt of federal activity under Lyndon Johnson, Obama=92s presidential temperament clearly falls into the Active category. But is he a Negativ= or a Positive? The Positive presidents relished the job and the grand nec=ssity to move events by persuading, cajoling, bargaining with and perhaps =ccasionally threatening other players in the political arena. The great Active-Positive presidents all had fun i= the job. They showed a zest and enthusiasm that was infectious, not just =ith the American people but, more significantly, with members of Congress.=/span> We sure don't see=any of that with Obama. Edward Klein, a former New York Times Magazine edi=or and author of a book on Obama called The Amateur, has written that Obam= "doesn't learn from his mistakes, but repeats policies that make our economy less robust and our nation less saf=." That's a classic Active-Negative trait, according to Barber. Ind=ed, as Barber predicted in 1969, shortly after Richard Nixon's election,="The danger is that Nixon will commit himself irrevocably to some disastrous course of action. This is precisely the pos=ibility against which he could defend himself by a stylistic adjustment in-his relations with his White House friends." That is another kno=k on Obama—that he surrounds himself with like-minded and sometimes syco=hantic underlings who reinforce his actions rather than testing his thinki=g against those who may harbor differing thoughts and perceptions. Vernon Jordan, the big-time Washington lawyer (a=d a solid Democrat), tells the story of a golf game in which Obama was par=nered with New York mayor Michael Bloomberg, who also is in a very select =roup of true experts on the financial markets. Afterward, Bloomberg remarked that, through four hours of riding =he cart with the mayor, Obama asked his golf partner not a single question=about anything. Do we see any presi=ential zest or political joy in this chief executive? Hardly. He seems alw=ys stern, beset, frustrated and angry. It's as if he expects the opposit=on to join him in whatever he wants to do for the simple reason that they should want to make his life easier. Af=er all, he's the president. Here's how Barber=describes the Active-Negative: "...relatively intense effort and rela=ively low emotional reward for that effort. The activity has a compulsive =uality...His self-image is vague and discontinuous. Life is a hard struggle to achieve and hold power, hampered by the condemn=tions of a perfectionistic conscience. Active-negative types pour energy i=to the political system, but it is an energy distorted from within."<=span> Nothing illustrates=this more starkly than Obama's insistence on shirking his responsibility=as president to lead the way out of Washington's increasingly dire fisca= deadlock, with the government partially shut down and a possible financial 5 EFTA_R1_00142332 EFTA01801420 default on the horizon. His political p=tulance is so far from the Positive traits, as defined by Barber, that his=categorization as an Active-Negative is unavoidable. Active-Negative pre=idents don't have a great track record. They include John Adams, a faile= one-termer; Woodrow Wilson, a two-termer whose second term was among the =ost disastrous of our history; Herbert Hoover, tossed out after a single term because he couldn't find a way to=grapple with the Great Depression; Lyndon Johnson, a foreign- policy failur= of rare dimension; and Richard Nixon, the only president to resign the of=ice in disgrace. If there is any mer=t in the Barber thesis, then there is plenty of room for concern about the=rest of this president's second term. Robert W. Merry is =olitical editor of The National Interest <http://nationalinterest.org/> and the author of books on American history and foreign poli=y. His most recent book is Where They Stand: The American Presidents in the Eyes of Voters and Historians <http://www.amazon.com/gp/product/145162540S/ref=as_li_s=2I?ie=UTF8&tag=thenatiinte- 20&finkCode=as2&camp=1789&=mp;creative=390957&creativeASIN=1451625405> . =/span> Arti=le 3. TIME As Iran and t=e West Make Progress in Geneva, Israel Grumbles From the Sidelines<=u> Karl Vick <http://world.time.com/author/karlvick/> Oct. 16, 2013 -- On=Tuesday night, about the time U.S. diplomats prepared to sit down alone wi=h their Iranian counterparts in Geneva, Israeli Prime Minister Benjamin Netanyahu <http://topics.time.com/benjamin-netanyahu/> arrived in the =span style="font-size:18.Opt">Golan Heights <http://topics.time.com/golan-heights/> . The contrast was not incidental. The talk among would-be p=acemakers in Switzerland <http://topics.time.com/switzerland/> , that famed neutral ground, may have heralded the start of fres= talks on Iran's nuclear program as "meaningful" and "very useful." But the Golan is a battleground <http://www.dunya=ulteni.net/?aType=haber&ArticlelD=277459> , territory that Israeli troops fought to take from Syria three times in the space of six years and, in the gloaming= Netanyahu watched as Merkava tanks roared across broken ground in an exer=ise that demonstrated Israel's military readiness. "We can't surre=der the option of a preventive strike," Netanyahu warne= in the Knesset <http://www.timesofisrael.com/netanyahu-makes-a-case-for-p=eemptive-strikeh , Israel's pa=liament, a few hours earlier. "It is not necessary in every situation, and it must be weighed carefully and serious=y. But there are situations in which paying heed to the international pric= of such a step is outweighed by the price in blood we will pay if we abso=b a strategic strike that will demand a response later on, and perhaps too late." Netanyahu framed hi= remarks as a lesson of the October War of 1973, when Israel was taken by =urprise by Egypt and Syria, and for a time lost territories it had taken s=x years earlier — by striking first, in the Six-Day War. But Israeli reports said the Prime Minister's staff =ade clear the remarks were intended as a reality check on the diplomatic h=pes blossoming in Geneva. Netanyahu says he fears that the momentum for a =egotiated solution to Iran's nuclear ambitions might produce a hasty compromise that leaves its enemy with a re=idual capacity to create atomic weapons that would threaten the Jewish sta=e. 6 EFTA_R1_00142333 EFTA01801421 "I think that it =ould be a historic mistake to ease up on Iran without it dismantling the n=clear capabilities it is developing," Netanyahu added when he reached th= Golan. "Iran is now on the ropes, and it is possible to employ sanctions at their fullest in order to achieve th= desired result. I hope that the international community will do this, and=l call upon it to do so." In Geneva, talks co=tinued for a second day on Wednesday. Iran appeared intent on building on =he sense of a fresh start that followed the public relations success of ne= Iranian President Hassan Rouhani's U.N. visit, which was capped by a telephone conversation with President Ob=ma. The substance of Iran's proposal remained unclear, but European dipl=mats, at least, welcomed it for a level of detail not seen in earlier nego=iations. And the tenor of the session remained upbeat with the next round of talks now scheduled for early Novem=er. Israelis were surprised when a Iran's deputy foreign minister, Abbas=Araghchi, took a question from Israel Radio — a departure for any Irania= official, let alone the lead nuclear negotiator in the room at Geneva. "Any agreement wi=I open new horizons in relations with all states," Araghchi told the reporter <http://www.timesofisrael.comfirans-deputy-fm-to-israel-ra=io-nuke-deal-can-open-new-horizons-with-all-nationsh , whose ID clearly identified him as Israeli. The diplomat replied "Yes" when asked if Israel could =ive with any agreement that might come out of the Geneva talks. "That's the key=question to this negotiation," says Gary Samore, who held the title of P=esident Obama's top adviser on weapons of mass destruction for four year=, and now heads a group called United Against Nuclear Iran. "I would put it in terms of time. How much time do you wan= to have in terms of advance warning that Iran has decided to pursue nucle=r weapons by producing weapons-grade uranium?' Currently, a href="http://swampland.time.com/2013/10/14/obamas-ex-top-wmd-official-o=-the-iran-nuclear-talksr target="_blank">Samore told reporters in a conference call on Tuesday night, Western intelligence=agencies estimate that Iran would need about two months to spin enough ura=ium to the 90% enrichment required for a weapon, if it decided to "break=out" of its atoms-for-peace posture. The interval will grow shorter, Samore adds, as Iran brings more sophistic=ted centrifuges online. Given that trajectory, he describes the goal of th= negotiations as to "put time back on the clock," meaning gain more ti=e for IAEA inspectors to notice and report any move toward the bomb. That time would also allow Washington or =srael to prepare air strikes aimed at knocking out Iran's nuclear facili=ies before it's too late. "Obviously I'd =eel much more comfortable if we had a year's notice, or even nine months=92 notice," Samore says. "That would give us a lot more time to detect=and then respond. And I think from Israel's standpoint if there was that amount of warning time and the Israelis had confidence t=e U.S. was willing to act once 'breakout' was detected, that should gi=e them some comfort as well." Israel's leadersh=p has struggled a bit to hit the right note since Rouhani was elected Iran=an President earlier this year. The dynamic in the international campaign =o constrain Iran's nuclear ambitions has shifted from scolding rhetoric backed by military threat to diplomatic=politesse, with hopes now that a negotiated solution can emerge. At the U.=. General Assembly last month, Netanyahu tried to mine Rouhani's profess=onal history in Iran's theocratic regime in an effort to hollow out the Iranian's charm offensive. But he =ay have made more headlines for his subsequent interview with BBC Persian,=energetically mocked by the Iranians Netanyahu was trying to persuade when=he suggested the hip youth of Tehran were not allowed to wear jeans <http://www.theguardian.com/world/2013/oct/07/binyam=n- netanyahu-iranians-jeans> .=He had extended his stay in New York City for days in order to give interview after interview, intent on showing a s=eel that one analyst, at least, says is in fact mostly show. "If Iran an= the Western countries agree ... will Israel agree too?" asked Amos Hare= in the daily Haa=etz on Wednesday chttp://www.haaretz.com/news/diplomacy-defenseipremium-1.=52639> . "The answe=, though Israel will not admit it officially, is yes." That's certainly =ot what Netanyahu has been suggesting relentlessly in public. At the U.N.,=Netanyahu made a show of taking the gloves off, offering a more explicit t=reat of military action against Iran's nuclear program — "Israel will stand 7 EFTA_R1_00142334 EFTA01801422 alone if it needs to" — than =he veiled sorts that had done so much to drive attention to the issue in t=e previous two years. Those threats sounded even more direct at the openin= of the Knesset's winter session on Tuesday, framed by the 40th anniversary of the October War, the trauma of which sti=l reverberates in Israel. "A preventive war= even a preventive strike, is among the most difficult decisions a governm=nt can take, because it will never be able to prove what would have happen=d if it had not acted," Netanyahu said. "But the key difference between the Six Day War and the Yom Kippur War l=es first of all in the fact that in the Six-Day War we launched a preventi=e strike that broke the chokehold our enemies had placed on us, and on Yom=Kippur the government decided, despite all warnings, to absorb the full force of an enemy attack." Karl Vick has be=n TIME'S Jerusalem bureau chief since 2010, covering Israel,the Palestine =erritories and nearby sovereignties. He worked 16 years at the Washington =ost in Nairobi, Istanbul, Baghdad, Los Angeles and Rockville, MD. =/span> Arti=le 4. Foreign Policy New technolog=es are dramatically reshaping the geopolitics of the Middle East Amy Myers Jaffe, Ed=Morse October 16, 2013 --=Forty years have passed since the Arab oil embargo went into effect on Oct= 16, 1973, triggering a period of incredible change and turmoil. After the=United States provided support to Israel during the Yom Kippur War, a cartel of developing-world countries (via the=Organization of the Petroleum Exporting Countries, or OPEC) banned the sal= of their oil to Israel's allies and thereby set in motion geopolitical ci=cumstances that eventually allowed them to wrest control over global oil production and pricing from the gian= international oil companies -- ushering in an era of significantly higher=oil prices. The event was hailed at the time as the first major victory of="Third World" powers to bring the West to its knees. Designed in part to bring Arab populations their due af=er decades of colonialism, the embargo opened the floodgates for an unprec=dented transfer of wealth out of America and Europe to the Middle East. Ov=rnight, the largest segment of the global economy, the oil market, became politicized as never before in =istory. But four decades la=er, the shoe may finally be on the other foot. Now, on the 40th anniversar= of the 1973 embargo, the United States has a historic opportunity to lead=a counterrevolution against the energy world created by OPEC as innovation in the U.S. energy industry looks pois=d to end the decades-long, precarious "dependence on foreign oil.&quo=; Washington should seize the opportunity and push to democratize energy g=obally, just as its Silicon Valley giants have democratized information. In the run-up to 19=3, two-thirds of global ownership of oil moved from the private sector of =merican and European companies to public-sector national oil companies. Ra=her than let the forces of supply and demand determine prices, post-1973, the lowest-cost oil producers, such as=Saudi Arabia, Iraq, and Iran, artificially shut production and discouraged=capital investment, creating a lasting wedge of rents or financial profita=ility that market conditions never warranted. (Today, oil prices in real terms are more than four times highe= than in 1972.) A massive industrial restructuring occurred over the cours= of a half-decade, as state-owned enterprises, with limited project-manage=ent skills and bloated workforces, surpassed the oil majors like Chevron and Shell in both capitalization and=size. 8 EFTA_R1_00142335 EFTA01801423 The 1970s witnessed=a profound and unprecedented transfer of wealth to the Middle East that co=tinues to have significant repercussions today -- from democracy movements=to terrorism to civil wars. The region's leaders failed to set up long-term mechanisms to distribute the benefits o= that wealth transfer broadly to their populations and to establish an equ=table stake in governance of resource proceeds that would have brought a n=wfound stability to the region. Instead, they bought lavishly, gilding their palaces and buying fleets of =uxury autos. For decades, they squandered the opportunity to use oil wealt= to modernize their societies and train their populations for future globa= economic competition. The result -- unfolding not just in the Middle East but in other oil-producing countr=es as well -- is a crisis of governance that is itself triggering a round =f oil-supply disruptions. Massive petrodollar=inflows brought with them a new po=itical paradigm of "re=tier" patronage, characterized by financial excesses, corruption, rep=ession, and billions of dollars in accumulated weapons purchases. Populations of oil- producing states, for the most part,=are little better off today than in 1973. Many of the countries have been =ar- ravaged or riven by sectarian hatreds. And, even with decades of relati=ely high oil prices and associated worker remittances, most countries of the Middle East still see modest GDP per c=pita, below 530,000 person =n a purchasing- power-parity basis. Deep income inequal=ty means that much of the region's population is in fact still living in p=verty, even in places like Saudi Arabia. So it should be no surprise that =0 years after the 1973 embargo, citizens of the region are rising up against those who squandered their futures. Ti=ed of waiting for the day when rising oil revenues would somehow magically=bring back the promise of prosperity, youth =re taking to the street=; port a=d oil workers are mounti=g strikes; and jihadists ar= taking up arms to end the oil curse once and for all. Their frustrations =o not unfold in a vacuum. High oil prices associated with all this unrest is propelling energy investment elsewhere =o great success. Energy efficiency is also getting a boost, shrinking the =ong-term market for Middle East oil. The upshot will be that it will be harder and harder over time for Arab rulers to count on oil money to keep them in power. And that has a trickle=down effect to the populations they've been keeping quiescent with handout= for decades. Ironically, just wh=n political revolutions were gaining momentum across the Middle East, a di=ferent kind of revolution was emerging that looks likely to bring a new ep=ch of dislocation and distortion to prevailing oil and gas structures. This second energy revolution is also a=eliorating the impact of the first. Since January 2011,=at the dawn of the rebellions against dictatorial governments in North Afr=ca, the amount of oil "offline" or being blocked from production=by either domestic turmoil (in Iraq, Nigeria, Sudan, Syria, Yemen) or international sanctions (in Iran) has generally be=n above 2 million barrels per day (m b/d), four times the average level of=supply outages before the so-called Arab Spring. Then Libya erupted once a=ain this past summer, taking another 1.2 m b/d, or more, offline. But the impact of these disruptions has been relatively mild, given that over the same period, production in North Ameri=a, the heartland of the three revolutionary changes in unconventional hydr=carbon production (shale, deep water, and oil sands), has grown by more than 2.5 m b/d. And more is on th= way. Growth in renewable=energy has also been=significant in recent years=in the United States and beyond, and rising fossil fuel costs and strong g=vernment intervention have created new market opportunities. World biofuels production has doubled to over 1.2 m =/d since 2006, but wind power has grown in oil-equivalent terms from 1 m b=d to 2 m b/d since 2008 (and is accelerating at about a 20 percent annuali=ed clip). Solar power, meanwhile, grew from 20,000 b/d of oil- equivalent energy in 2008 to 400,000 b/d last =ear. But the impact of a=l this change in the energy world will go far beyond just replacing contin=ing Arab Spring outages. Unconventional oil and gas and the clean-tech boo=s are spawning a host of new, smaller oil and gas exploration companies committed to innovation and willing to t=ke on risk. They have no stake in the multibillion-dollar megaproject worl= of the international majors and national oil companies, and as such, they=have fewer concerns about sustaining high profits from giant assets found decades ago. They are enabling the Un=ted States the opportunity to take a lead in changing the way energy is bo=ght and sold -- not just in the United States, but globally. 9 EFTA_R1_00142336 EFTA01801424 Energy innovation i= taking many forms in the United States, creating major export opportuniti=s and giving Washington the tools it needs to ensure that the conditions o= a 1973-style oil embargo will not repeat themselves. The oil embargo was so devastating because strong econo=ic growth throughout the 1960s had taken up the margin of spare oil- produc=ive capacity in the United States and across the world, leaving the Middle=East's oil producers with undue monopoly power. Similar razor-thin extra productive capacity left markets =ighly vulnerable in 2006 and 2007, when OPEC made contraseasonal cuts in o=tput to increase prices, instead of considering the risks to global econom=c growth. But as oil and gas production from U.S. and Canadian shale formations rises, the ability of oil producer= like Russia to use an "energy weapon" to gain extra benefits fr=m consuming countries is diminishing. U.S.-led innovation=in alternative fuels (including natural gas-vehicle fueling technology and=electric vehicles), energy- efficiency technologies, battery storage, and s=art-grid solutions, working together with and complementing the supply surge in unconventional oil and gas, sho=ld also change the face of demand, giving consumers around the world more =reedom of choice. And as the United States becomes an energy exporter -- a= competitive prices -- that should seal the deal. By providing ready alternatives to politicized energy supplres, the United States can use its influence to democratize global energy m=rkets, much the way smartphone and social media technologies have ended th= lock on information and communications by repressive governments and large multinational or state-run corporation=. Abundant U.S. natur=l gas is just the first step. Booming domestic natural gas supplies have a=ready displaced and defanged Russia's and Iran's grip on natural gas buyer=. By significantly reducing American domestic requirements for imported liquefied natural gas (LNG), rising U.S= shale gas production has had the knock-on effect of increasing alternativ= LNG supplies to Europe, breaking down fixed pricing from entrenched monop=lies. But this is just the beginning: Over the coming decade, the United States looks likely to overtake Russia =nd rival Qatar as a leading supplier of natural gas to international marke=s. The geopolitical ro=e of U.S. natural gas surpluses in constraining Russia's ability to use it= energy as a wedge between the United States and its European and Asian al=ies should strengthen over time, to the extent that Barack Obama's administration stays the course with approv=ng the construction of LNG export terminals. American unconventional oil a=d gas plays from Texas to Pennsylvania are also generating new su=pluses of natural gas liqui=s, which are increasingly exported as transportation fuel or petrochemical=feedstock to Europe, Asia, and elsewhere -- reducing demand growth for oil from the Middle East. And U.S. crude oil=exports might also be possible some day, strengthening America's lead in m=rket-related pricing for kingpin crude oil, much the way rising North Sea =roduction did in the 1980s. As an increasing nu=ber of companies and investors flock to North America to develop prolific =nconventional resources, Middle East heavyweights like Saudi Arabia, Kuwai=, and Iran are losing their lock on remaining exploitable reserves, reducing their ability to band together an= create artificial shortages. Already, Mexico and Argentina are reading th= tea leaves and reversing protectionist resource nationalism policies, ins=ead pushing through reforms to attract capital investment to their doorsteps. Abundant U.S. natur=l gas is also spawning new American-designed engine and modular fueling st=tion technologies to readily use natural gas as a fuel in trucks, trains, =nd ships, ending oil's monopoly in transport. Some 40 m b/d of the global 85 m b/d oil market is open for competiti=n from natural gas -- in th= form of compressed natural gas for cars and buses, and LNG for heavy-duty vehicles and marine transportation. We c=nservatively expect at least 2 m b/d of currently projected oil demand to =ede to natural gas by 2020, further weakening perspectives on future globa= oil- demand growth and once again chipping away at Middle Eastern influence. American innovation=and exports of energy supply and technology will open global energy market= to competitive investments and consumer choice. But Washington needs to e=brace this choice by resisting the call to continue to ban energy exports to protect vested business interest= or for resource nationalistic reasons. Indeed, we need to reverse the min=set of the oil embargo years -- a mindset of supply shortages and husbandi=g of resources -- and move back to a more traditional promotion of free markets. The energy sector has don= this in the trade of petroleum products, where the United States is simul=aneously the world's largest importer and exporter. The United States is h=ading in this same direction for trade in natural gas, whether by pipeline to Mexico and eastern Canada or =he export of LNG. And it should 10 EFTA_R1_00142337 EFTA01801425 move in the same direction with crude oil =xports as pressures mount from growing surpluses midcontinent and on the U=S. Gulf Coast. The expanding wind =nd solar businesses in California and Texas are encouraging new complement=ry battery-storage options and smarter networks, laying the groundwork for=greater consumer choice and control. The move to distributed energy, right now focused mainly on affluent custo=ers who can afford private backup generation, may spread to broader applic=tions. Some day soon, it will enable increased remote energy solutions for=villages in sub-Saharan Africa or Southeast Asia. The U.S. government=needs to support the reform of the electricity utilities to enable this tr=nsition, which will entail more-efficient technologies, locally produced a=d distributed generation, time-of-day pricing and peak-demand shaving. Such reforms are critical to the integrat=on of renewable energy whose output varies widely over the course of a day= By leading the charge to these new energy technologies, the United States=can fashion a global energy world more to its liking, where petropowers can no longer hold car owners hostag= or turn off the heat and lights to millions of consumers to further geopo=itical ends. Just as it was diff=cult to predict the impact of Apple computers on future global social tren=s, it may now seem hard to depict the exact time and place that America's =nconventional resources and smart-grid innovation will democratize energy markets. But Apple did reset the way we=think about computing and changed the world. Similarly, the dislocations c=rrently unfolding in the energy sector are pointing to markets taking back=pride of place over government control and consumer choice winning over supplier monopolies. The pace of =hange may be slow in coming at first, but eventually it will be no less st=nning than Oct. 16, 1973, a day that sent shock waves into the global econ=my, the ripples of which are still visible today. Amy Myers Jaffe =s the executive director for energy and sustainability at University of Ca=ifornia, Davis. Ed Morse is global head of commodities research at Citigro=p. =/span> Arti=le 5. Wall Street Journal=/span> <http://www.newamerica.net/taxonomy/term/1=20> Why OPEC No L=nger Calls the Shots Daniel Yergin Oct. 14, 2013 -- Fo=ty years ago, on Oct. 17, 1973, the world experienced its first "oil =hock" as Arab exporters declared an embargo on shipments to Western c=untries. The OPEC embargo was prompted by America's military support for Israel, which was repelling a coordinated surprise at=ack by Arab countries that had begun on Oct. 6, the sacred Jewish holiday =f Yom Kippur. With prices quadrup=ing in the next few months, the oil crisis set off an upheaval in global p=litics and the world economy. It also challenged America's position in the=world, polarized its politics at home and shook the country's confidence. 11 EFTA_R1_00142338 EFTA01801426 Yet the crisis mean= even more because it was the birth of the modern era of energy. Although =he OPEC embargo seemed to provide proof that the world was running short o= oil resources, the move by Arab exporters did the opposite: It provided massive incentive to develop new oil fields =utside of the Middle East—what became known as "non-OPEC," led=by drilling in the North Sea and Alaska. The Prudhoe Bay oil=field was discovered in Alaska five years before the crisis. Yet oppositio= by environmentalists had prevented approval for a pipeline to bring the 0=1 down from the North Slope—very much a "prequel" to the current battle over the Keystone XL pipeline.=Only in the immediate aftermath of the embargo did a shaken Congress appro=e a pipeline that eventually added at its peak as much as two million barr=ls a day to the domestic supply. The push to find al=ernatives to oil boosted nuclear power and coal as secure domestic sources=of electric power. The 1973 crisis spawned the modern wind and solar indus=ries, too. By 1975, 5,000 people were flooding into Washington, D.C., for a conference on solar energy, which ha= been until then only "a subject for eco-freaks," as one writer =oted at the time. That same year, Con=ress passed the first Corporate Average Fuel Economy standards, which requ=red auto makers to double fuel efficiency—from 13.5 miles per gallon to =7 miles per gallon—ultimately saving about two millions barrels of oil per day. (The standards were raised in 2=12 to 54.5 miles per gallon by 2025). France launched a "war on energ= waste," and Japan, short of resources and fearing that its economic =iracle was at risk, began a drive for energy efficiency. Despite enormous growth in the U.S. economy since 1973, oil co=sumption today is up less than 7%. The crisis also set=the stage for the emergence of new importers that have growing weight in t=e global oil market. In 1973, most oil was consumed in the developed econo=ies of North America, Western Europe and Japan—two thirds as late as 2000. But now oil consumption is flat or=falling in those economies, and virtually all growth in demand is in devel=ping economies, now better known as "emerging markets." They rep=esent half of world oil consumption today, and their share will continue to increase. Exporting countries will increa=ingly reorient themselves to those markets. Last month, China overtook the=U.S. as the world's largest net importer of oil. A lasting lesson of=the crisis years is the power of markets and their ability to adjust to di=ruptions, if government allows them to. The iconic images of the 1970s—g=s lines and angry motorists—are trotted out whenever some new disruption happens. Yet those gas lines weren't the =esult of markets. They were the largely self-inflicted result of governmen= interference in markets with price controls and supply allocation. Today,=the oil market is much more transparent owing to the development of futures markets. The 1970s were also=years of natural-gas shortages, which turned into a bitter political issue= particularly within the Democratic Party. Many at the time attributed the=e shortages to geology, but they too were the result of regulation and price controls. What solved the shortage= wasn't more controls but their elimination, which resulted in an oversupp=y that became known as the "gas bubble." Today, abundant natural=gas is the default fuel for new electricity generation. The lesson is that markets and price signals can work very eff=ciently, and surprisingly swiftly, even in crises, if they are allowed to.=/span> There will be futur= energy disruptions because there is still much political risk around oil.=ln 2013, the Middle East is still in turmoil, but the alignments are diffe=ent. In 1973, Iran was one of America's strongest allies in the Middle East. Tehran didn't participate in the emba=go and pushed oil into the market. But since the 1979 Islamic revolution, =ashington and Tehran have been adversaries. Meanwhile, Saudi Arabia, which=was at the center of the 1973 embargo, is now America's strongest Arab ally. The real lesson of =he shock of 1973 and the second oil shock set off by the overthrow of Iran=s shah in 1979 is that they provided incentives—and imperatives—to dev=lop new resources. Today, total world oil production is 50% greater than in 1973. Exploration in the North Sea and A=aska was only the beginning. In the early 1990s, offshore production expan=ed farther out into the Gulf of Mexico, opening up deep water as a new oil=frontier. In the late 1990s, Canadian oil sands embarked on an era of growth that today makes them a larger sour=e of oil than Libya before its 2011 civil war. 12 EFTA_R1_00142339 EFTA01801427 Most recent is the =evelopment of "tight oil," the spinoff from shale gas, which has=increased U.S. oil output by more than 50% since 2008. This boom in domest=c output increases energy supply, and combined with shale gas has a much wider economic impact in jobs, investment and ho=sehold income. As these tight-oil supplies increase, and as the U.S. auto =feet becomes more efficient, oil imports have declined. Imports reached 60= of domestic consumption in 2005