Resource crisis threatens Asia’s rise

BRAHMA CHELLANEY

Asian economies facing a domestic resource crunch are being forced increasingly to rely on imported mineral ores, timber and fossil fuels, bringing international supplies under pressure and triggering price volatility. Yet Asia, paradoxically, is the world’s economic locomotive. Its resource constraints raise the question of whether the region can continue to spearhead global economic growth.

Essentially, Asia’s rise has fueled an insatiable appetite for resources it does not have. Unlike North America and Europe, which are well endowed with natural capital, Asia is the world’s most resource-poor continent in per-capita terms.

Resource-poor

This is best exemplified by the world’s two most populous countries, China and India. India has 17.8% of the world’s population but just 0.8% of its known oil and gas reserves. In water resources, India must make do with only 4.3% of the world’s water.

China, for its part, supports 19% of the world’s population on its territory with a 6.6% share of global water resources. It has fairly rich hydrocarbon reserves in Xinjiang, a territory it forcibly absorbed, along with Tibet, a treasure-trove of natural resources. Yet China is a leading importer of oil and gas — a fact that has shaped its aggressive international and domestic strategies to lock up long-term resource supplies.

Even as resource-wealthy countries such as Australia, Brazil, Canada and Russia enjoy commodities export booms, Asia’s resource struggle has brought it to a treacherous point of growing external dependency, geopolitical tensions and environmental degradation.

On the security front, sharpening Asian competition over natural resources has served to aggravate disputes over resource-rich territories, including in the East and South China Seas and in southern and central Asia. For instance, the Japanese-controlled Senkaku Islands that China now assertively covets occupy just 7 sq. km but are surrounded by rich hydrocarbon reserves. Similarly, the disputed Spratly Islands sprawl over more than 425,000 sq. km of the South China Sea but contain less than 4 sq. km of land area.

The common factor in territorial issues over Kashmir, the Golan Heights, the West Bank, Tibet and Central Asia’s divided Ferghana Valley is that they are more about resources than about land. These territories are desirable as wellsprings of natural resources.

Asia’s overexploitation of its own natural resources, meanwhile, has spurred an environmental crisis which, in turn, is contributing to regional climate change. Asia confronts three interlinked crises — focused on resources, environment and climate change — that threaten its economic, social, and ecological future. From Asian cities that dominate the list of the world’s most polluted cities to many urban areas suffering acute water shortages, the region faces intensifying resource-related stresses.

Whereas Asian economies can import fossil fuels, mineral ores and timber, they cannot import the most vital resource — water, shortages of which are accentuating food-security challenges. Increases in crop yields and overall food production in Asia are now lagging demand growth. Rising incomes have driven a shift in diets, especially towards meat, which requires a notoriously water-intensive production process.

The resource competition has also intensified interstate tensions over the direction of oil and gas pipelines. China has managed to secure new hydrocarbon supplies through pipelines from Russia, Kazakhstan and Myanmar. But other major Asian economies, such as Japan, India and South Korea lack direct access to such pipeline supply routes and will remain largely dependent on energy imports by sea from the increasingly unstable Persian Gulf region.

Strained relations

Historically, access to resources has been a critical factor in both war and peace. For example, Japan — a U.S. ally in World War I — became America’s principal foe in World War II after launching a sneak attack on Pearl Harbor in desperation over U.S. oil, steel and scrap-metal embargoes. America’s invasion of oil-rich Iraq a decade ago had a resource motive. Today, natural resources are at the hub of various Asian conflicts.

Asia’s resource-related “Great Game” can be prevented from injecting greater instability only by establishing rules-based cooperation and competition. Lamentably, there has been little headway in this direction. For example, 53 of Asia’s 57 transnational river basins have no water-sharing arrangement or other cooperative mechanisms. This reality needs to be seen in the context of strained political relations in most Asian subregions.

Those who believe that Asia’s continued rise is unstoppable and the West’s decline inevitable should consider whether Asian economies can keep making impressive economic strides without mitigating their resource challenges through greater efficiency of use, recycling and other innovative means. Ultimately, Asia must find ways to build a more sustainable and peaceful future for itself.

Brahma Chellaney, a geostrategist, is professor of strategic studies at the New Delhi-based Center for Policy Research and is an author, most recently, of “Water, Peace, and War” (Rowman & Littlefield, 2013).

 (c) Nikkie Asian Review, 2013.

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