No. 232, September 2008 Strategic Forum 1

South Asia’s Rise

Despite possessing nearly a quarter of the 

world’s population, South Asia has long been 

a backwater in terms of global economic clout, 

accounting for less than 3 percent of worldwide 

gross domestic product (GDP). In the last two 

decades, however, the economic stagnation that 

has historically characterized the region has 

been overcome, thanks to significant policy 

shifts, so that the subcontinent is now the locus 

of some of the fastest growth in the world. India 

has led the way, averaging over 8 percent real 

growth over the last 5 years, but Pakistan, 

Bangladesh, and Sri Lanka have also been 

sustaining rates of 6 percent or more since 2005. 

The rise of South Asia in general and India in 

particular as a force on the economic scene 

is now almost universally recognized.

On the other hand, apart from the caution 

expressed by development economists about 

energy availability as a potential constraint on 

the continuation of these trends, there has been 

relatively little attention to the impact that the 

South Asian boom is likely to have on international energy markets. The dominant focus in 

global energy assessments has traditionally been 

on the major hydrocarbon suppliers—especially 

those in the Persian Gulf—and the developed 

countries that historically have accounted for 

the vast majority of energy consumption. More 

recently, China’s role has been widely noted,1

 but 

South Asia has received considerably less attention. 

Yet South Asia will be an increasingly important 

player in this market. The International Energy 

Agency (IEA) projects that energy demand in the 

S

outh Asia is projected to play a major 

role in global energy markets over the 

next several decades, with India alone 

expected to become the world’s third largest 

importer of petroleum by 2030. Satisfying the 

region’s growing demands will require a heightened degree of energy interdependence among 

historically antagonistic states. Consequently, 

like it or not, regional leaders will face a 

tradeoff between traditional desires for energy 

self-sufficiency and the ambitious development targets that they have set for themselves. 

Achieving such growth, therefore, requires that 

India, Pakistan, and the other countries of South 

Asia first address the persistent international 

disputes that hamper cross-border energy 

trade, establish effective control over presently 

ungoverned areas, reorient the missions of 

military forces to some extent, and develop a 

better understanding of the effects that energy 

interdependence will have on broader relations 

with neighbors.

From the U.S. point of view, understanding 

the multifaceted causal connections that exist 

among economic development, energy supplies, and security and stability, and how these 

dynamics are likely to affect South Asian states’ 

decisionmaking, may provide points of leverage 

with which policymakers can shape behavior 

on a wide range of issues affecting U.S. objectives in the region.

 Strategic Forum No. 232

September 2008

Institute for National Strategic Studies

National Defense University

http://www.ndu.edu/inss

Key Points

Energy Security in South Asia: 

Can Interdependence Breed 

Stability?

by Joseph McMillan

subcontinent will grow at more than double the 

worldwide rate over the next several decades. 

India will probably be the world’s third largest 

petroleum importer by 2030.2

As they come to account for a greater 

share of energy demand, the South Asian states 

will also likely play a greater role in the politics 

of global energy security. Conversely, energy 

security considerations will also begin to exert 

greater and more complex influence on politicalmilitary dynamics within the region. The impact 

of South Asia’s energy future upon the region’s 

politics, military relationships, and stability 

could be far-reaching and pose some basic 

choices for national leaderships.

Strategic Prisms

The issue we now call energy security has 

been a matter of concern to national security 

strategists for nearly 150 years. Over time, the 

prisms through which the subject is seen have 

become increasingly sophisticated as the role 

of energy in daily life has grown. It is possible 

to identify four such strategic prisms, differing 

from each other based on how energy resources 

are used: to support military forces, to support 

military industry, to support national civil 

economies, or to sustain the broader transnational economic system.

The narrowest way of thinking about energy 

security from a political-military perspective is in 

terms of energy requirements for military forces 

themselves. This was how energy first became 

a matter of interest to strategists, starting with 

the increasing predominance of steam-powered 
No. 232, September 2008 Strategic Forum 2

warships in technologically advanced navies 

in the mid-19th century. In the beginning, 

the introduction of steam power led the major 

naval powers to acquire colonial outposts 

to serve as coaling stations, but by the early 

20th century, the need to ensure reliable energy 

supplies to military forces had led both the 

United Kingdom and France to establish direct 

government involvement in the ownership 

and management of major oil companies.3

By the late 1930s, a second, broader way 

of thinking about energy security had become 

apparent. While military forces themselves were 

even more dependent on oil than they had been 

in the 1910s, the primary attention of energy 

strategists had turned from the need to fuel 

ships, airplanes, and tanks themselves to the 

need to fuel the military industrial complex

that produced those ships, airplanes, and tanks.

The strategic significance of reliable energy 

supplies for national economies as a whole, 

rather than simply for defense needs, hit home 

in the wake of World War II, particularly in 

1946–1947, when inadequate supplies of coal, 

oil, and electricity for the manufacturing and 

transportation industries paralyzed Western 

European economies and raised fears not only 

of another depression like that of the 1930s but 

also of the collapse of democratic states and their 

replacement by communist ones. This energy 

crisis led directly to a radical innovation in 

American foreign policy—the Marshall Plan—

and to the first steps toward the European 

integration process that over a period of several 

decades led to the modern European Union.4

Although the postwar European energy 

crisis was addressed on a transnational basis, 

energy security was still seen primarily in a 

single state context. That is, strategists worried 

primarily about what an energy shortage in 

Belgium, for example, would do to the economy 

of Belgium and thus to the politics of Belgium. 

It was only over time, as global demand started 

bumping against the limits of global supply 

and national economies became increasingly 

interdependent, that analysts began to understand how a severe energy shortage in one part 

of the world could have drastic repercussions 

for the international economic system as 

a whole, even in places where energy supplies 

were locally abundant. The economic crisis 

following the 1973–1974 Arab oil embargo 

painfully brought home to most analysts the 

severe global ramifications of major energy 

shortages.5

 This systemic perspective on energy 

security is now virtually axiomatic within the 

U.S. strategy community.

These four ever-broader perspectives on the 

political-military implications of energy security 

are cumulative, not sequential. In other words, 

the World War II emphasis on energy security 

as it related to war production did not negate 

the need to consider the energy needs of military forces. Likewise, awareness of the systemic 

effects of energy prices and availability on the 

global economy does not negate the need for 

strategists to take into account the other three 

perspectives. In 1980, planners in the U.S. 

Department of Defense as well as members of 

the congressional Armed Services committees 

spent nearly as much time worrying about the 

effect of tumultuous energy markets on military war reserve fuel stockpiles as they did 

about the possible use of military forces to 

protect global oil flows from disruption.6

South Asian 

Energy Context

Which of these perspectives should dominate thinking about energy security in South 

Asia? The precise answer depends on what we 

think the energy picture in the subcontinent 

is going to look like in the coming years, but 

three assumptions about South Asia’s energy 

future seem reasonable. Some would probably 

argue that they are indisputable.

Increasing Demand. First, we 

can assume that energy demand in South Asia 

is going to increase steadily and substantially 

for the foreseeable future. It will probably more 

than double over the next 30 years—Indian 

requirements alone are projected to increase 

more than 140 percent—compared with an 

increase of only 55 percent for the world as a 

whole.7

 This rapid rise in energy needs is, of 

course, a necessary corollary of continued economic growth. It is well known that although 

countries may differ in their ratios of energy 

consumption to economic output, or energy 

intensity, there is a clear and unavoidable 

correlation between the two.

Moreover, this energy intensity tends to 

increase in any given economy as the focus of 

production shifts from the agricultural to the 

manufacturing and service sectors8

—exactly 

what economists say has to happen in countries 

such as Pakistan and India if recent growth 

rates are to be sustained.9

 Even without such 

a shift, two other factors suggest that energy 

intensity in South Asia will have to increase 

nevertheless. One is that, according to the World 

Bank, unreliable supplies of energy, particularly 

electricity, are already the most important 

factor in the high cost of doing business in 

South Asia compared to other regions. Reducing 

such costs is one of the essentials of sustained 

growth.10 The other is that whether or not 

economic activity shifts away from the agricultural sector, the pressing need to improve 

standards of living in the countryside will 

require a range of specific measures such as 

rural electrification, improving transportation 

of crops to markets, better medical care, clean 

drinking water, and access to cleaner cooking 

and heating fuels, all of which will further 

drive up energy requirements.

Increasing Prices. A second 

assumption is that we are never going to see 

the days of cheap energy again. Energy economists have traditionally assumed that despite 

a certain amount of volatility, real prices would 

ultimately tend to gravitate back to the established long-term average. But that paradigm 

may have shifted. As Daniel Moran and James 

Russell point out:

Before 2003 oil traders regarded $20 per 

barrel as the trend around which shortterm volatility would revolve. Lately the 

consensus has shifted closer to $40 or $50, 

Joseph McMillan is a Senior Research Fellow in the Institute for National Strategic Studies at the National 

Defense University. Comments or questions may be sent to the author at mcmillanj@ndu.edu.

although the postwar 

European energy crisis 

was addressed on a 

transnational basis, 

energy security was 

still seen primarily in 

a single state context
No. 232, September 2008 Strategic Forum 3

an increase of 100 per cent or more in the 

perceived trend in three years. Should this 

wave-like process of periodic doubling continue at anything like a comparable pace 

in the future, it seems certain that questions 

about the market’s ability to revert to historical norms will grow more urgent among 

the major consumer states.11

Since those words were written, expectations 

about the long-term price norm have, if anything, moved even higher.

Strategists in the developed countries have 

generally accepted such an upward trend as a 

given. What matters from these countries’ perspectives is not that prices remain low, but that 

they be predictable over the long run. Indeed, 

the prospect of global petroleum production 

peaking at some undefined point in the future 

argues that an upward trend in prices would be 

economically useful because it would gradually 

suppress demand and encourage the development of alternative energy sources as petroleum 

resources are used up.12 One may doubt whether 

less affluent countries whose future development depends in large part on increased energy 

consumption can take such a sanguine view of 

this prospect. Whether we welcome rising prices 

or not, however, we must assume that they will 

be a reality for the foreseeable future.

Increasing Foreign 

Dependency. The third assumption is 

that no South Asian country is going to be able 

to meet its energy needs entirely from within 

its own domestic resources. Most of the countries in the region have energy endowments 

of one kind or another: India has significant 

coal deposits, Bangladesh has natural gas, and 

the countries across which the Himalayas and 

Hindu Kush lie have substantial undeveloped 

hydroelectric potential. But development of the 

transportation sector in these countries is going 

to depend on oil, which no South Asian country has yet discovered in any substantial quantities. In short, none of the South Asian countries 

possesses the entire range of energy resources 

needed to meet its development objectives.

The obvious conclusion is that energy trade 

must be part of the solution to South Asia’s 

continued development. A large share of that 

trade must clearly come from outside the region. 

After all, the South Asian countries collectively 

are now able to meet less than 30 percent of 

their combined oil needs from within the 

region;13 if increasing demand is to be met at 

all, most of the new supplies will have to come 

from the Persian Gulf or beyond. However, in 

addition to external sources of supply, international energy experts increasingly believe that 

greater cooperation within South Asia and with 

adjoining regions would be one of the most 

effective ways—perhaps an indispensable 

way—to deal with the regional energy deficit. 

This emphasis on regional cooperation has 

caught the attention not only of academic 

economists but of the official development 

community as well. Cross-border energy trade 

is one of the cornerstones of the U.S. Agency 

for International Development’s (USAID’s) 

South Asian Regional Initiative for Energy 

(SARI/E), as well as a number of other plans 

for regional development.

The rationale for looking to regional cooperation as the key to meeting South Asia’s burgeoning energy needs is laid out in a recent 

World Bank study that describes such an 

approach as providing a “logical and rational 

public policy choice . . . a win-win situation to 

all the participants.”14 The study points out that 

the fundamental economic conditions for trade 

exist: some countries in and near South Asia 

(specifically Bhutan, Burma, Iran, Kyrgyzstan, 

Nepal, Tajikistan, and Turkmenistan) have 

more fossil or hydropower resources than 

they can use, while others (Afghanistan, 

Bangladesh, India, Pakistan, and Sri Lanka) 

face a widening gap between demand and supply. The potential supplying countries would 

obviously generate income for national economic development by selling energy, while 

importing countries such as India and Pakistan 

would benefit by reducing the constraints on 

growth currently imposed by inadequate energy 

supplies. Moreover, the potential importers 

must take into account that alternative solutions to greater energy trade, such as investment in additional hydroelectric, fossil-fueled, 

or nuclear electric generating capacity, would 

all compete for capital with other equally pressing development needs, such as education and 

infrastructure.15

Strategic Implications

How, then, among the four prisms through 

which national security strategists might view 

the issue of energy security, should we see the 

evolving energy context in South Asia? While 

military forces themselves and their supporting industrial base will continue to require 

energy supplies (the first and second prisms), 

those concerns pale in comparison to each 

South Asian country’s need for energy in support of national economic development. To 

the extent that South Asian economies become 

increasingly integrated with each other and 

with the wider international economy, South 

Asian national security strategists also must be 

increasingly aware of the impact of energy on 

the global system. Moreover, as India becomes 

a more important factor in world energy markets, New Delhi will inevitably play a much 

greater role than in the past on matters of 

global energy security, even if only politically 

and not militarily.

It is unlikely that any South Asian country, 

other than perhaps India, can have a major 

effect by itself on the health of the international 

energy system as a whole. However, even if we 

limit ourselves to viewing South Asian energy 

security through the third prism described 

above (that of purely national economic health), 

there are a number of imperatives for the region’s 

foreign and defense establishments. Indeed, 

the measures necessary to address the region’s 

energy requirements will in many cases impose 

new and more challenging demands on the 

region’s diplomats and soldiers.

Resolving Regional Conflicts.

The most obvious of these demands is overcoming 

the regional tensions that have stymied trade 

among the South Asian states in the past. Perhaps 

self-evident but nevertheless worth emphasizing 

is that “trade flourishes under peaceful conditions.”16 The lack of such conditions has affected 

regional energy trade in two ways. The most 

obvious is that investors are unwilling to put 

greater cooperation 

within South Asia and 

with adjoining regions 

would be one of the 

most effective ways to 

deal with the regional 

energy deficit
No. 232, September 2008 Strategic Forum 4

large amounts of capital into areas where they 

perceive a high risk that war might destroy their 

investments. The other is that animosities and 

distrust can reinforce the view among political 

leaders that only self-sufficiency in energy can 

adequately protect national security. It should 

be clear that this attitude is no longer tenable. 

South Asian countries face a stark choice 

between rapid development and energy self-sufficiency; they cannot have both. It is therefore 

incumbent on the region’s leaders and diplomats to begin setting the conditions for energy 

cooperation. Ideally, that means resolving 

border and resource disputes—including the 

long-running issue of Kashmir. At a minimum, 

it means that all sides must cease tolerating, let 

alone supporting, organizations whose purpose 

is to exacerbate the disputes.

Bringing Order to 

Ungoverned Spaces. A corollary to 

reduction of tensions is the need to stabilize 

historically disorderly parts of the region. In 

some cases, this means whole countries. One 

of the principal elements in the World Bank’s 

vision of a region-wide energy market is the 

construction across Afghanistan of long-distance 

power transmission lines from Tajikistan 

and Kyrgyzstan and a gas pipeline from 

Turkmenistan. It should be self-evident that 

this vision cannot be realized as long as vast 

areas of Afghanistan remain subject to disorder. 

As David Hamon and Arnold Dupuy have 

observed, “Oil and gas pipelines, by their very 

nature as static assets, are inviting targets” for 

terrorists and insurgents.17 The same could be 

said for long-distance power lines. Between 

1990 and 2005, terrorists mounted more than 

330 attacks against oil and gas facilities worldwide, and it is well known that the Iraqi electrical 

grid has been a major target of insurgent 

activity since the 2003 invasion.18

At the most obvious level, the existence 

of such threats suggests that the security forces 

of the countries through which energy flows 

will find themselves taking on responsibility for 

securing the energy lines of communication with 

a much higher priority than has been the case 

in the past. The implications reach beyond the 

purely military, however. The kind of regional 

cooperation necessary to meeting each country’s national energy needs will require that 

Islamabad, New Delhi, and Kabul recognize 

their mutual interest in a stable Afghanistan 

in which governmental authorities are capable 

of exercising credible control over the national 

territory, including the most remote areas. 

To reach the full potential of regional energy 

cooperation, Kabul would also need to develop 

the institutional capability to negotiate, monitor, 

and enforce complex multinational energy contracts, a capability inextricably tied to governance capacity in general.

India’s and Pakistan’s shared interest 

in a stable, effectively governed Afghanistan 

is arguably so strong that it should already be 

overriding the two countries’ historic habit of 

treating Afghanistan as an arena for bilateral 

political jousting. If it has not yet reached that 

level of importance, it will do so in the next few 

years. Whether New Delhi and Islamabad will 

recognize the imperative and act on it remains 

to be seen, but the risks to each of not doing so 

are clearly growing.

What is true of Afghanistan internationally is equally true of Pakistan domestically. 

The realization of robust energy trade between 

Central and South Asia is vitally dependent on 

the establishment of sustainable, dependable 

order in the areas through which pipelines 

and electrical lines must pass. International 

investors considering whether to put money into 

such projects will take into account not only 

market prices and costs of production and 

transmission, but also the risk that their investments will occasionally be blown to pieces. 

Whether the risk comes from Pashtun nationalists, religious extremists, or feuding tribes will 

make little difference to venture capitalists. 

Moreover, the same concern is likely to apply 

to proposed projects with Iran. Whatever the 

official U.S. position on the Iran-Pakistan-India 

pipeline or the project to supply Iranian electricity to the Gwadar port, either could be 

derailed if the infrastructure should be threatened by Baloch separatists. In sum, the impact 

that disorder along Pakistan’s frontiers will 

have on the country’s energy security must now 

be added to the many other reasons for addressing the chronic instability there.

Proliferation Concerns. No discussion of South Asian energy futures would be 

complete without some reference to the option 

of nuclear power. This issue, of course, has 

achieved greater saliency in the 3 years since 

the announcement that India’s nuclear weapons program notwithstanding, the United States 

would supply it with civilian nuclear technology. 

That event, however, did not begin and will not 

end South Asian interest in nuclear energy as 

a relatively clean alternative to additional fossil 

fuel–burning powerplants.

The problem, at least with respect to 

Pakistan, is that significant development of 

additional nuclear electricity generating capacity 

will be an extremely capital-intensive proposition. To some extent, the same is true of other 

sources of energy. The difference is that provided institutional constraints on investment 

can be alleviated, profitable nonnuclear energy 

projects have the potential for attracting outside capital. However, the international community demands a higher standard when it comes 

to investments involving nuclear technology. 

Unfortunately, in the view of most Western 

countries, Pakistan’s track record on nuclear 

proliferation does not inspire the confidence 

that would be necessary for potential investors and suppliers to make the kind of accommodation that the United States has made with 

India. A fuller and more transparent accounting 

of the activities of the A.Q. Khan network would 

probably help in this regard, but it is hard to 

say if that alone would resolve the matter sufficiently for nuclear energy to be a plausible 

alternative to regional energy trade as a solution to Pakistan’s future requirements.

Energy Interdependence and 

National Security. Finally, addressing 

South Asia’s energy needs, particularly if the 

solution is along the lines currently envisioned 

by the development community, will require 

a reorientation in the way South Asian defense 

and foreign affairs strategists have historically 

thought about their respective countries’ 

national security.

Willingly accepting dependence on foreign 

suppliers for such a vital resource as energy is 

something that goes against the instincts of 

virtually every national security strategist. 

The link between energy security and national 

security has become so strong that even countries 

South Asian countries 

face a stark choice 

between rapid 

development and 

energy self-sufficiency; 

they cannot have both
No. 232, September 2008 Strategic Forum 5

rejecting the idea of war over other issues seem 

prepared to contemplate the use of military force 

to ensure energy supplies in extremis.19

As long ago as the 1950s, major oil consumers 

considered military responses to the trend 

toward nationalization of major oil-producing 

companies in the 1950s and 1960s, not because 

of principled opposition to socialized ownership 

of major industries but because of concern that 

the production policies of state-owned companies might be dictated by political rather than 

economic motives—as turned out to be the 

case in 1973.

Such reluctance is understandably heightened if there is a history of tension between 

supplier and consumer, or if the supplier is 

seen as unstable or undependable. Thus, the 

construction of a natural gas pipeline system 

between the Soviet Union and Western Europe 

in the 1980s raised fears that were expressed 

in a 1982 U.S. National Intelligence Estimate:

[The Kremlin] calculates that the increased 

future dependence of the West Europeans 

on Soviet gas deliveries will make them 

more vulnerable to Soviet coercion and will 

become a permanent factor in their decision 

making on East-West issues.20

If energy interdependence did nothing 

more than place consuming countries at the 

mercy of their suppliers, the strategist’s life 

would be comparatively simple. For example, 

one might think at first glance that Pakistan 

would put itself in a strongly advantageous 

position if a large share of Indian energy supplies flowed across Pakistan’s territory. But 

experience shows that the strategic dynamic 

created by interdependent energy markets can 

be complex and hard to predict. Fears that the 

Soviet Union would use natural gas shipments 

for political leverage turned out to be exaggerated because the Kremlin’s need for cash for the 

ailing Soviet economy outweighed any possible 

value the pipeline may have had as a coercive 

instrument. On the other hand, seen from Kyiv 

and Minsk 25 years later, Russia’s opportunity 

to manipulate natural gas supplies for political 

purposes may be a much more serious issue.

Moreover, depending on the relative political and military power of the partners in an 

interdependent energy relationship, supplying 

countries may find themselves the object of 

greater solicitude about their foreign policy 

and domestic politics than they originally 

bargained for. In 1933, when King Abdul Aziz 

selected Standard Oil of California in preference 

to a British company to develop the oil reserves 

of Saudi Arabia’s Eastern Province, he did so in 

part because he saw the United States as having 

no imperial agenda in the region.21 He could 

not have foreseen that global dependence on 

Saudi oil would someday make the United 

States intensely interested not only in the external 

defense of the kingdom but also in the stability 

and durability of its domestic institutions. 

Similarly, just as the construction of power 

lines and pipelines across Afghanistan to 

Pakistan would heighten Islamabad’s stake in 

developments in Afghanistan, so the continuation of such lines into India would heighten 

New Delhi’s stake in developments in Pakistan.

U.S. Policy Implications

How the South Asian countries approach 

their energy security challenges has important 

consequences for U.S. interests in the stability 

and peaceful development of this critical 

region. If they approach energy security with 

the zero-sum mentality that has tended to 

characterize other aspects of regional relations 

in the past, or if they gravitate to the kind of 

neomercantilist efforts to secure complete 

control of their own energy needs throughout 

the supply chain that characterized European 

powers in the early 20th century, then the region 

is in for a renewed cycle of heightened tension 

and constrained development.

Conversely, decisions by South Asian 

governments to take a chance on creating the 

kind of interdependence envisioned by foreign 

energy experts could lead the region down a 

much more productive path from both the economic and security points of view. As outlined 

above, however, successful energy interdependence requires all of the region’s governments 

to undertake significant changes in politicalmilitary policy, both as prerequisites to the 

creation of an operating regional energy system 

as well as to ensure the system’s successful functioning once it is created.

Given its interest in this outcome, the 

United States should look for opportunities 

not only to encourage more open energy policies—as USAID is already doing through its 

SARI/E plan—but also to promote the political and security decisions that are necessary to 

these policies’ success. For example, the United 

States should encourage regional militaries 

and domestic security agencies to begin thinking about the implications of having to secure 

energy transit facilities such as pipelines and 

power transmission lines across remote and 

rugged parts of their countries, and urge them 

to start shaping their capabilities accordingly. 

Moreover, the United States should spotlight the 

energy implications of economic development 

in its strategic dialogues with India, Pakistan, 

and Afghanistan, emphasizing the linkages 

between enduring energy security and issues 

such as resolution of disputed borders and the 

extension of governance to ungoverned areas.

The establishment among the South Asian 

countries of reciprocal interests in each other’s 

political and economic welfare clearly holds 

the United States 

should spotlight the 

energy implications of 

economic development 

in its strategic dialogues 

with India, Pakistan, 

and Afghanistan

The Strategic Forum series presents original research by members 

of NDU as well as other scholars and specialists in national security 

affairs from this country and abroad. The opinions, conclusions, 

and recommendations expressed or implied within are those of 

the contributors and do not necessarily reflect the views of 

the Department of Defense or any other agency of the Federal 

Government. For information on NDU Press visit the Web site at 

http://www.ndu.edu/inss/nduhp. INSS also produces Joint Force 

Quarterly for the Chairman of the Joint Chiefs of Staff; the journal 

can be accessed at www.ndupress.edu.

The Institute for National Strategic Studies (INSS) is a policy 

research and strategic gaming organization within the National 

Defense University (NDU) serving the Department of Defense, 

its components, and interagency partners. The institute provides 

senior decisionmakers with timely, objective analysis and gaming 

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INSS seeks to promote understanding of emerging strategic 

challenges and policy options.

INSTITUTE FOR NATIONAL STRATEGIC STUDIES

Patrick M. Cronin

James A. Schear Director David H. Gurney

Director of Research Director, NDU Press
No. 232, September 2008 Strategic Forum 6

11 Daniel Moran and James A. Russell, “The 

Militarization of Energy Security,” Strategic Insights 7, no. 1 

(February 2008), available at <www.ccc.nps.navy.mil/si/2008/

Feb/moranFeb08.pdf>.

12 Ibid.

13 U.S. Department of Energy, Energy Information 

Administration, Country Energy Profiles, available at <tonto.

eia.doe.gov/country/index.cfm>.

14 Venkataraman Krishnaswamy, Potential and 

Prospects for Regional Energy Trade in the South Asia 

Region (Washington, DC: World Bank, 2007), 1.

15 Ibid., 1–2.

16 Ibid., 11.

17 David W. Hamon and Arnold C. Dupuy, “Security of 

Energy: The Conflict after Next?” Strategic Insights 7, no. 1 

(February 2008), available at <www.ccc.nps.navy.mil/si/2008/

Feb/hamonFeb08.pdf>.

18 Moran and Russell.

19 Ibid.

20 Quoted in Roman Kupchinsky, “Analysis: The 

Recurring Fear of Russian Gas Dependency,” Radio Free 

Europe/Radio Liberty, May 11, 2006, available at <www.

rferl.org/featuresarticle/2006/05/f368d0af-7d18-4e8a-baa1-

96e62b911813.html>.

21 Rachel Bronson, Thicker Than Oil: America’s Uneasy 

Partnership with Saudi Arabia (Oxford: Oxford University 

Press, 2006) 17.

22 Krishnaswamy, 14.

risks, but also has the potential for great benefit beyond simple energy security for all the 

countries in the region. The creation of the 

European Coal and Steel Community in 1951, 

which brought six recently warring countries 

together to address common energy challenges, 

proved to be the first step on the road to today’s 

European Union. Of course, there is no guarantee that energy cooperation by itself will have 

such remarkable consequences anywhere else. 

Certainly the idea that interdependence necessarily guarantees peace is readily dispelled by 

a retrospective examination of the rosy future 

envisioned for the Euroatlantic world as late as 

the summer of 1914. Nevertheless, as the World 

Bank puts it:

[T]he world experience appears to demonstrate that cross border investments and 

trade and associated business interests help 

to lower political tensions. Entrepreneurial 

investment initiatives with imaginative 

financing and risk mitigation strategies—

possibly with the involvement of multilateral 

financing institutions in some projects as 

neutral parties to help build the confidence 

and mitigate risks—could help to start and 

strengthen the virtuous circle of trade growth 

and regional peace.22

Notes

1

 See, for example, Bernard D. Cole, “Oil for the Lamps 

of China”—Beijing’s 21st-Century Search for Energy, McNair 

Paper 67 (Washington, DC: National Defense University Press, 

2003).

2

 International Energy Agency (IEA), World Energy 

Outlook 2007: China and India Insights (Paris: Organisation 

for Economic Co-operation and Development/IEA, 2007), 3, 

42, 73.

3

 Erik Dahl, “Naval Innovation: From Coal to Oil,” 

Joint Force Quarterly 27 (Winter 2000/2001), 52, available at 

<www.ndu.edu/inss/Press/jfq_pages/1327.pdf>; Daniel Yergin, 

The Prize: The Epic Quest for Oil, Money, and Power (New 

York: Free Press, 2003), 159–164.

4

 Yergin, 422–424.

5

 Ibid., 634–636. Yergin points out that “for the developed countries of the industrial West, the sudden hike in oil 

prices brought profound dislocations,” but also that “the group 

that suffered most from the price increases were those developing countries that were not fortunate in having been blessed 

with oil” (635).

6

 House Armed Services Committee Subcommittee 

on Investigations, Department of Defense Petroleum 

Requirements and Supplies (Washington: U.S. Government 

Printing Office, 1980).

7

 IEA, 3, 42, 73.

8

 David Newberry, “Power Sector Reform, Private 

Investment, and Regional Cooperation,” in South Asia: Growth 

and Regional Integration, ed. Sadiq Ahmed and Ejez Ghani 

(Washington, DC: International Bank for Reconstruction and 

Development/World Bank, 2007), 144.

9

 Sadiq Ahmed and Ejez Ghani, “South Asia’s Growth 

and Regional Integration: An Overview,” in South Asia: Growth 

and Regional Integration, 10.

10 Ibid., 5.

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