Transcript Discussion papers 10

NS4054
Fall Term 2015
Papers for Discussion
October 21/26
Overview
• Issie Lapowsky, How Climate Change Became a National
Security Problem, Wired, October 20, 2015
• Traditionally in the U.S. climate change has been framed
as
• An economic issue,
• An environmental issue, and
• A public health issue
• Only recently has climate change been taken seriously as
a national security by politicians
• However for some time now military minds have been
sounding the alarm on climate change
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Climate and National Security I
• Syria to Arab Spring
• In 2003 DoD report noted that climate change could lead
to food shortages and drought
• Create instability on vulnerable countries
• Many dismisses report as reflecting a far off threat
• Since then defense and intelligence agencies have
concluded climate change a more immediate threat
• Council on Foreign Relations paper 2007
• Offered recommendations on how to mitigate risk
• CIA Report in 2008
• Attempted to predict climate change’s impact on national
security by 2030
3
Climate and National Security II
• By 2014 DoD had
• Adopted term “threat multiplier” to describe climate change
• Put out a Climate Change Adaptation Roadmap which Surveyed
the vulnerability of country’s military bases
• Research began to reveal how climate change
contributed to the Arab Spring and the conflict in Syria
• Framing climate change as a national security threat has
advantages
• Increases sense of urgency, but also creates a path for
environmental solutions
• Military could play an important role in building advanced green
technology
• Helping secure the country’s grid and give the U.S. a
strategic advantage over other countries in the future – in
attacking problems in a broad systematic way
4
Climate and National Security III
• While security implications of climate change are real –
critical not to raise too many alarms
• Best to acknowledge that climate change not the biggest
national security risk today
• Framing it that way only makes it easier for critics to
write off the issue entirely
• Best to argue that climate change not the biggest
security issue, but one that will make security harder
• If framed as a security issue the military will want to
respond
• Way they respond will have little to do with stopping the spread
of climate change
• Will have to do with protecting military interests
• May make international cooperation over climate change more
difficult.
5
China’s Currency I
• Mark Miotrowski, China’s Currency on Track to Challenge
the U.S. Dollar in Oil Markets, The Fuse October 15, 2015
• Overview
• China’s forthcoming launch of a crude futures contract to
be traded with the yuan is another step towards
challenging the role of the dollar and the currency’s
dominance in oil markets
• Since 1400s six dominant currencies have been the
world’s reserve currency
• Global power usually associated with a dominant
currency – one that has the role of a reserve currency
6
Reserve Currencies
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China’s Currency II
• There has already been movement in deplcing the dollar
in oil deals
• China overtook the U.S. in 2015 as the top importer of
crude oil
• As major producers competed for market share from
Chinese buyers they have been willing to do deals in
yuan:
• Russia,
• Iran
• Angola
• Venezuela, and
• Sudan
• Others likely to follow
8
China’s Currency III
• Growing use of the yuan in oil trading represents the
decline of the petrodollar – dollars earned by producers
through the sale of petroleum
• Shifts will have major implications for the geopolitical
backdrop
• Provides a boost to the new crude futures exchange.
• IMF meanwhile looking at whether to include the yean in
the Special Drawing Rights (SDR) the IMF’s basket of
reserve currencies
• If included a symbolic victory for China
• Yuan would take a major step in its role as an international
currency along side the euro, yen and Swiss franc
9
China’s Currency IV
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China’s Currency V
• This would enable China to attract more investors
• With a more liquid market of yuan assets China can
accelerate transforming Shanghai into a major
international financial center by next decade
• With 64% of currency reserves in global banks held in
dollars China has a long way to go to achieve its goal.
• Furthermore 60% of the world’s economic output is either
in the dollar or “dollar zone” – currencies pegged to the
dollar.
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China’s Currency VI
• What does the dollar’s supremacy mean for the average
American?
• Relative stability of the dollar is what drives the global
demand for dollar denominated assets
• Dollar’s significance enables
• inexpensive lending for Americans
• allows the government and U.S. companies to borrow easily
12
China’s Currency VII
• Financial Crisis a Turning Point
• One reason China is so determined is because of its desire for
superpower status
• Another factor is its frustration during the 2008
international financial crisis
• Crisis demonstrated how vulnerable the rest of the world is to the
U.S. economy and its currency
• Although the recession began in the U.S. it negatively impacted
China
• In aftermath of the financial meltdown, Chinese officials
believed the U.S. manipulated the global financial system
and passed its economic paid on to the rest of the world
•
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China’s Currency VIII
• U.S. actions included
• Depreciation of the dollar
• Three rounds of quantitative easing, and
• Allowing debt to balloon
• Also showed the danger of holding reserves of the dollar
• The recession of 2008 also hurt China’s export economy
with demand for its goods and products taking a big hit
in Europe and the U.S.
• The export-led economy that sustained growth fo so long
in China is not viable in the longer term.
• By moving toward a consumer based economy the yuan
has a better chance of becoming a major reserve
currency
• China would not have to worry about the yuan appreciating
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World’s Largest Economies
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