The devastation wrought by Hurricane Katrina on the energy infrastructure of the United States—however temporary—is a tangible reminder of the importance of energy security to US economic health and the well-being of US citizens. Few issues have as significant a strategic national component. At the same time, Latin America and the Caribbean have been blessed with abundant energy resources, which, if developed efficiently and effectively, can be a leading engine of regional development. If geography is destiny, the Americas are ripe for market-based energy collaboration. In turn, energy collaboration can be an important catalyst for the hemispheric economic integration envisioned by leaders at the Miami, Santiago, Quebec City, and Monterrey Summits of the Americas.
Indeed, as hemispheric leaders convene in November for the next Summit, in Mar del Plata, Argentina, the idea of a united hemisphere is largely a vision that remains unfulfilled, and the Free Trade Area of the Americas announced 10 years ago in Miami will not occur in 2005 as originally agreed. As disappointing as this may be—and it is disappointing—hemispheric economic integration remains a goal worthy of active pursuit, particularly as other regions of the world move ahead in the global economy.
Without a greater sense across the region of what is at stake and a strategy to position the Americas for success in the global economy, however, Western Hemisphere economic integration will lag and the region will fall increasingly behind. There must be a new way of thinking, accompanied by creative leadership, that literally begins to transform the region into a globally competitive commercial space. This is a long-term project, to be sure, that depends on a multitude of factors including education, democratic consolidation, and the rule of law. But long term or not, efforts must begin now.
In a global economy, competitiveness is the key to success. Even as oil reaches historic highs, the cost of energy and reliability of supply are critical indicators of competitiveness and economic health in all consuming nations. For the United States, the Americas are vital. We already import more energy from Canada than anywhere else, and oil sands make proven Canadian reserves truly bountiful. Mexico is third after Saudi Arabia in terms of US energy imports but could export more if foreign investment were allowed. Additionally, fourteen percent of US oil imports come from Venezuela, while Trinidad and Tobago, Ecuador, and other hemispheric nations also supply significant energy to the United States, and Brazil is a world leader in ethanol production. There is more to be done to secure our own interests. By working with hemispheric nations where appropriate to provide financing, regulatory advice and coordination, public-private partnerships, and political support, we will improve hemispheric development prospects, broaden supply options, encourage the efficient use of energy, and help address our own long-term energy needs.
At the same time, energy exploration and production can—and should—form a backbone of Latin and Caribbean economic development. With oil and natural gas at historic highs, coupled with a dearth of alternative economic options in nations such as Bolivia and Ecuador, regional political leaders should be intensively focused on ways to encourage the development of energy resources on market terms. Nonetheless, with depressing regularity, political maneuvering, grandstanding, disregard of contractual obligations, and the subversion of efficient energy production and usage to overtly political ends has limited the prospects for hemispheric energy development and integration while unnecessarily raising energy costs along the entire spectrum of the production chain. Regional competitiveness and prospects have suffered accordingly.
Greater attention to energy issues in the hemisphere among both producing and consuming nations and a long-term regional strategy is required. When it comes to US energy security, and thus national security, in an unstable world, the Western Hemisphere continues to play a significant if underappreciated role. In the region itself, there is a huge opportunity to use abundant energy resources as an engine for long-term, sustainable economic growth to address the profound development needs of its citizens. Such opportunities don’t often come along. When they do, the time for action is at hand.
Eric Farnsworth is Vice President of the Council of the Americas.