“The Power of Natural Resources”
200 years after the industrial revolution
took hold and 30 years after the great oil crisis, natural resources have once again attracted attention
as a determining factor in global development. With all the existential and economic
differences between the wide range of natural resources from fossil fuels through precious metals to
water, in almost all cases a marked shift is evident in the dynamics of supply and demand, plus a deeper
awareness of the obvious shortage of deposits. The huge rise in resource prices is a reflection of enormous
insecurity in a world that, in many regions, is still struggling to find answers to the impact of global
competition, demographic realities and the collapse of several social and political illusions, and is
also a powerful incentive to take a frank look at unpleasant truths on the economic, political and social
levels.
Resources
provision as a geostrategic flashpoint
The underlying problem of the geographical
incongruence between natural resource deposits and the centres of economic power has always been one
of the world’s key historical themes. During the 20th century, it tended to be overshadowed by ideological
differences and the fear of mutually assured nuclear destruction. Today, the economic rise of a relatively
resource-poor Asia and the impending exhaustion of existing deposits in North America and Europe give
the situation a relevance that a few years ago was still unexpected. Widespread talk about the focus
of China’s foreign policy on resources, plus a new-found confidence in Russia, Iran or Venezuela, can
be seen as a sign of imminent upheaval in the geostrategic balance of power. How accurate is the prediction
that the battle over resources is increasingly likely to become the dominating geopolitical factor?
Has the world’s public been adequately prepared for such a development – especially in the industrialised
West? Has there been sufficient analysis of the extremely varying intentions of the key players and
the logic behind their conduct and decisions? Is enough being done to keep the global race for resources
in check?
The new mutual interdependency between supremely different
regions of the world may, on the one hand, lead to increasing global instability. At the same time,
the long-range impact of dysfunctional governmental structures in resource-rich regions of Africa or
Southeast Asia, as well as of the fragile balance of power in Central Asia and the Middle East – to
say nothing of the descent into chaos currently being experienced in Iraq – assumes a new significance.
That being said, confrontations over natural resources are threatening to develop with unprecedented
volatility into the daily political weapons of historically, culturally and religiously motivated strategic
aims. On the other hand, it is those very same increasing economic interdependencies that could prove
to be the key to stabilising common interests. It is unlikely that the successful development of hitherto
neglected regions of the world has ever been of such obvious value for the entire world community as
it is today. What steps, institutions and processes are suited to helping such an opportunity for positive
social development achieve a breakthrough on a wide footing?
Resource supply as
a strategic challenge to companies and regulatory policy
Only a few years after the apparently infinite importance
of information technology came close to letting the physical reality deteriorate into a sideshow, securing
the long-term supply of natural resources and energy has become a key strategic challenge for companies
throughout the world. Accordingly, it has become necessary to find a suitable way to integrate an extraordinarily
complex environmental dimension into the processes of formulating and implementing strategies. To what
extent will increasing insecurities over the input factors and the limits to conventional hedging instruments
call internationally linked business models into question? Will future-proofed logistics systems be
ready in time to achieve a quick and flexible response to changing resource requirements? At the same
time, entrepreneurial players from resource-rich regions of the world are acquiring increasingly important
roles in the world economy. When it comes to business relationships with these emerging resource giants,
what has to be considered? How can they be integrated into the global economic order as productive and
dependable partners over the long term?
As a question of economic regulatory structure, the supply
of natural resources and energy to companies and households is in need of urgent review. Regulation
of the energy market on the national and international levels continues to be a largely unsolved problem
– with regard to its long-term economic viability as well as its social acceptability. In the prevailing
regulatory framework, who makes the rules and which interests are actually considered? Politically,
how can an efficient market structure be helped towards reality? What are the prospects, for example
in Europe, for a coordinated energy policy? Is a new and constructive dialogue between business and
politics required, in order to secure the future of the core infrastructure of every modern economy?
Natural resources,
the dynamics of the global economy, and the drive to innovate
Especially when considering the interaction with global
economic dynamics, the question about the future significance of natural resources is a very important
one. The growing demand for commodities – in particular for energy carriers – is a reflection of the
current exceptional state of the global economy and the buoyant rise of Asia, upon which the massive
resource price hikes have so far had amazingly little effect. Nevertheless, the question still remains
about how well the world’s trading and finance system has in fact taken up the new price structures,
and how well future resource related shocks would be absorbed. The complex interactions between resource
and finance markets are the subject of fundamental discussions, with the latter often being suspected
of contributing to further pricing uncertainties. In trade policy, the prospect of further and increasing
interdependencies is generally threatening to trigger nationalistic-protectionist reflexes and thus
reduce the flexibility of possible adjustment measures – as witnessed by the continuing absence of a
conclusion to the Doha process. On the other hand, every historical comparison illustrates that the
prices of natural resources tend to follow a pronounced cyclical pattern. Could, therefore, in spite
of all the indications for a long-term change in the dynamics of supply and demand, the current resources
boom prove to be a bubble that is set to burst, an event for which the players on the finance markets
in particular should be prepared?
The power of natural resources expresses itself not least
in a marked pressure to innovate. Future economic development will largely depend on the ability to
extract, process and recycle resources with greater efficiency. How can the productivity be further
improved with available resources? Are incentives necessary that go beyond further expected price rises?
In times of high energy and commodity prices, economic growth will be all the more dependent on the
release of complementary potential. Which sectors of the world economy show promise in this respect,
regardless of the state of the natural resource markets? Throughout the world, are current private and
state-sponsored investments in innovation and technology enough for cultural assets, knowledge and,
not least, human resources to produce entrepreneurial solutions that are sufficiently creative? What
role will existing intellectual property protection regimes play in safeguarding advances in innovation
in the context of global competition?
Current developments also offer opportunities, however,
and these should be exploited. There is no doubt that the massive shift of finance and investment flows
involves a great deal of risk as far as political stability and good governance are concerned. But equally,
regions rich in natural resources and with new financial strength – parts of South America, Asia and
also the Arab world – unlock new possibilities for a future of economic and political prosperity.
A global change to
sustainability?
Increasing shortages and rising prices are an unmistakable
reminder of the unpleasant fact that our economic and social order is largely based on the consumption
of exhaustible resources. At the same time, there is increasing evidence that, worldwide, the cost of
environmental pollution and climate change to the ecology, to the world’s economies and to health, possibly
represents a problem that is even more urgent than the irretrievable consumption of resources deposits.
While in Western industrialised nations huge investment over recent decades has enabled processes to
become less of a burden, environmental destruction in the emerging countries has in the meantime grown
into an obvious hindrance to further economic development. Then there is the potentially dramatic impact
of climate change, which concerns the world community as a whole.
In spite of all the signals that prompt a decisive global
change to sustainability, considerable uncertainty remains about the data and theoretical models that
provide the evidence for human impact on climate change. In the light of the possibly prohibitive cost
of further delays, can we still afford the luxury of such doubt? Conversely, in the name of albeit well-meant
environmental alarmism, do we run the risk of denying billions of people a chance for a future in prosperity
and freedom? How would plausible scenarios for sustainable global development look like? Are further
rises in the price of resources and emission certificates sufficient cause for a comprehensive change
of mentality? How could an insight into the ecological and moral necessity for such a U-turn be initiated
and established amongst the world’s population, after repeated crisis scenarios over the last 30 years
have come and gone with only limited effect?
