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EMERGING THREAT OF RESOURCE WARS

HEARING

BEFORE THE

SUBCOMMITTEE ON EUROPE, EURASIA, AND 

EMERGING THREATS

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS

FIRST SESSION

JULY 25, 2013

Serial No. 113–63

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ADAM KINZINGER, Illinois 

MO BROOKS, Alabama 

TOM COTTON, Arkansas 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

STEVE STOCKMAN, Texas 

RON DESANTIS, Florida 

TREY RADEL, Florida 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

LUKE MESSER, Indiana 

ELIOT L. ENGEL, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

JUAN VARGAS, California 

BRADLEY S. SCHNEIDER, Illinois 

JOSEPH P. KENNEDY III, Massachusetts 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS

DANA ROHRABACHER, California, Chairman 

TED POE, Texas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

PAUL COOK, California 

GEORGE HOLDING, North Carolina 

STEVE STOCKMAN, Texas 

WILLIAM KEATING, Massachusetts 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

BRIAN HIGGINS, New York 

ALAN S. LOWENTHAL, California 

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C O N T E N T S 

Page

WITNESSES 

Mr. Edward C. Chow, senior fellow, Energy and National Security Program, 

Center for Strategic and International Studies ................................................. 5

Jeffrey Mankoff, Ph.D., deputy director and fellow, Russia & Eurasian Program, Center for Strategic and International Studies ...................................... 13

Brigadier General John Adams, USA, retired, president, Guardian Six Consulting, LLC .......................................................................................................... 21

Mr. Neil Brown, non-resident fellow, German Marshall Fund of the United 

States .................................................................................................................... 64

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Mr. Edward C. Chow: Prepared statement ........................................................... 8

Jeffrey Mankoff, Ph.D.: Prepared statement ......................................................... 16

Brigadier General John Adams, USA, retired: Prepared statement ................... 23

Mr. Neil Brown: Prepared statement ..................................................................... 66

APPENDIX 

Hearing notice .......................................................................................................... 82

Hearing minutes ...................................................................................................... 83

Mr. Neil Brown: Material submitted for the record ............................................. 84

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EMERGING THREAT OF RESOURCE WARS 

THURSDAY, JULY 25, 2013

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON EUROPE, EURASIA, AND EMERGING THREATS,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Dana Rohrabacher 

(chairman of the subcommittee) presiding. 

Mr. ROHRABACHER. I call to order this hearing of the Foreign Affairs Subcommittee on Europe, Eurasia, and Emerging Threats. Today’s topic is the emerging threat of resources wars. 

After the ranking members and I each take 5 minutes to make 

opening remarks, each member present will have 1 minute to make 

their opening remarks, alternating between majority and minority 

members. And without objection, all members may have 5 days to 

submit statements, questions, and extraneous materials for the 

record and hearing no objection, so ordered. 

And now for my opening statement, an increasing global demand 

for supplies of energy and strategic minerals is sparking intense 

economic competition that could lead to a counter productive conflict. Who owns the resources, who has the right to develop them, 

where will they be sent and put to use, and who controls the transport routes from the fields to the final consumers are issues that 

must be addressed. 

Whether the outcomes result from competition or coercion; from 

market forces or state command, we will be determining how to 

achieve and if we will achieve a world of peace and an acceptable 

level of prosperity or we won’t achieve that noble goal. A ‘‘zero sum 

world’’ where no one can obtain the means to progress without taking them from someone else is inherently a world of conflict. When 

new sources of supply are opened up, as in the case of Central 

Asia, there is still fear that there is not enough to go around and 

thus conflict emerges. 

Additional problems arise when supplies are located in areas 

where production could be disrupted by political upheaval, terrorism or war. 

The wealth that results from resource development and the expansion of industrial production increases power just as it uplifts 

economies and uplifts the standards of peoples. This can feed international rivalry on issues that go well beyond economics. 

We too often think of economics as being merely about ‘‘business’’ 

but the distribution of industry, resources and technology across 

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the globe is the foundation for the international balance of power 

and we need to pay more attention to the economic issues in our 

foreign policy and what will be the logical result of how we deal 

with those economic and those natural resource issues. 

The control of access to resources can be used as political leverage, as we have seen with Russia and China. They both have demonstrated that. Indeed, China is engaged in an aggressive campaign to control global energy supply chains and to protect its monopoly in rare earth elements. This obviously indicates that Beijing 

is abandoning its ‘‘peaceful rise’’ policy. This is not an unexpected 

turn of events given the brutal nature of the Communist Chinese 

regime. 

This hearing will look into this and will look at the economic and 

geopolitical tensions underlining the competition that we see for 

natural resources and we need to discuss that competition and we 

need to understand what is in the national interest of the United 

States and what must be protected to ensure that our people can 

enjoy a level of peace and prosperity in the future. 

I now yield 5 minutes to the ranking member, Mr. Keating. 

Mr. KEATING. Thank you, Mr. Chairman, and thank you for holding this timely hearing. Today’s hearing topic provides us with an 

opportunity to look beyond Europe and Eurasia and examine the 

global impact of depleting resources, climate change and expanding 

world population and accompanying social rest. 

In March, for the first time, the Director of National Intelligence, 

James R. Clapper, listed ‘‘competition and scarcity involving natural resources’’ as a national security threat on a path and on a 

par with global terrorism, cyber war, and nuclear proliferation. He 

also noted that ‘‘terrorists, militants, and international crime 

groups are certain to use declining local food security to gain legitimacy and undermine government authority’’ in the future. 

I would add that the prospect of scarcities of vital resources including energy, water, land, food, and rare earth elements in itself 

would guarantee geopolitical friction. Now add lone wolves and extremists who exploit these scenarios into the mix and the domestic 

relevance of today’s conversation and you can see the importance 

of this is clear. 

Further, it is no secret that threats are more interconnected 

today than they were, let us say, 15 years ago. Events which at 

first seem local and irrelevant have the potential to set off 

transnational disruptions and affect U.S. national interests. We 

saw this dynamic play out off the coast of Somalia where fishermen 

were growing frustrated from lack of government enforcement 

against vessels harming their stock and where they took up arms 

and transitioned into dangerous gangs of pirates. Now violent 

criminals threaten Americans in multinational vessels traveling 

through the Horn of Africa. Unfortunately, I don’t see a near term 

end to the coordinated international response that this situation requires. 

I agree with Mr. Clapper that the depletion of resources stemming from many factors which above all include climate change has 

potential to raise a host of issues for U.S. businesses worldwide, for 

U.S. officials, and for individuals traveling abroad themselves. For 

this reason, Mr. Chairman, I have long advocated for alternate enVerDate 0ct 09 2002 13:37 Oct 18, 2013 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\_EEET\072513\82147 HFA PsN: SHIRL
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ergy resources. It is representative of what will hopefully one day 

be our nation’s first offshore wind farm. 

I deal daily with obstructive businesses and individuals trying to 

get in the way of this and other projects in exchange for increasing 

their companies’ net profits. I would like to add that given our distinguished panel of witnesses today and our subcommittee’s jurisdiction, I am sure we will be hearing about the tremendous energy 

reserves in Central Asia and the need for diversifying energy markets. In this regard, I would like to take note that I have and will 

continue to advocate for the importance of increasing democratic 

governance and rule of law in that region. Energy production can 

get you only so far. I would like to hear from our witnesses on how 

the United States can engage with Central Asian governments to 

improve governance and transparency in the energy sector, both bilaterally and through international organizations such as the Extracted Industries Transparency Initiative. 

However, as we discuss these important issues, I hope that we 

can continue to keep our own country’s movement toward an energy-independent future and the obstacles in its path in mind 

itself. 

With that, Mr. Chairman, I will yield back my time. 

Mr. ROHRABACHER. Thank you very much and we also have with 

us Colonel Cook today who is a new member of the Congress and 

making himself a very fine reputation. Colonel Cook, do you have 

an opening statement? 

Mr. COOK. Yeah, I will be very brief. I want to thank you, Mr. 

Chairman. You know, I want to thank you for having this hearing. 

I think it is an issue that doesn’t get much attention. And in my 

former life besides being in the military for 26 years, I was a college professor and I have to admit I taught history and I always 

have got to give the old saw that people who do not understand history are bound to repeat it. 

If you look at the history of conflicts and wars and everything 

else and whether you go back to that famous book, The Haves and 

Have-Nots, it is always about resources and who has it and who 

doesn’t have them and who wants them. And maybe you could 

make an analogy on that. But I think we as a country, at least 

have not picked up on those lessons of history and we are very, 

very naive about the motivations of certain countries and why they 

do certain things. And obviously, there are things going on 

throughout the world right now in Eurasia which underscores some 

of the things that we are going to talk about today. 

So I applaud having a hearing on this. I think the title says it 

all, resource wars, and if we don’t have the war yet, we have had 

it in the past and we are going to have it in the future. So thank 

you. 

Mr. ROHRABACHER. Thank you. And let me just note that Colonel 

Cook is a former Marine officer and my father was a Marine officer. I grew up on Marine bases. 

Mr. COOK. Is that why I am on the committee? 

Mr. ROHRABACHER. But how that fits right in in the course of 

what you were saying, Carl, is that my father joined the Marines 

to fight World War II and it is very clear that natural resources 

had a great deal to do with the Japanese strategies that led to the 

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Second World War and so we have some of our witnesses may be 

talking to us and will be talking to us on issues that are of that 

significance. 

We have with us today Brigadier General John Adams, U.S. 

Army retired, is president of Guardian Six Consulting, LLC, and 

the author of the report, ‘‘Remaking American Security Supply 

Chain Vulnerabilities and National Security Risks Across the Defense Industrial Base,’’ published by Alliance for American Manufacturing this May. General Adams served his final military assignment as Deputy U.S. Military Representative to the NATO Military 

Committee in Brussels, Belgium and on September 11, 2001, General Adams was stationed at the Pentagon as Deputy Director of 

European Policy in the Office of the Secretary of Defense. And we 

know what happened on that day. During his 30 years in the 

Army, General Adams’ assignments have ranged from aviation to 

military intelligence. He is a veteran of Desert Storm. He also has 

three masters’ degrees in international relations, strategic studies, 

and English. Excellent, General, that we have a General that has 

a degree in English. And is currently a Ph.D. candidate in political 

science at the University of Arizona. 

We also have with us Edward C. Chow. He is a senior fellow of 

the Energy and National Security Program at the Center for Strategic and International Studies. He spent 20 years with the Chevron Corporation in the United States and overseas including as the 

country manager for China from 1989 to 1991 and he was then 

based in Beijing. He holds a bachelor’s degree in economics, a master’s degree in international affairs from Ohio University. He has 

just returned last week from a trip to Central Asia. 

We also have with us Dr. Jeffrey Mankoff. He is deputy director 

and fellow in the Russian and Euro-Asian Program at the Center 

for Strategic and International Studies. He was a 2010–2011 Council on Foreign Relations International Affairs fellow based in the 

Bureau of European and Euro-Asian Affairs at the United States 

Department of State. From 2008 to 2010, he was associate director 

of International Security Studies at Yale University and received 

a Ph.D. in diplomatic history and an M.A. in political science from 

Yale with his B.A. in international studies and Russian studies 

from the University of Oklahoma. Good to have him with us. 

And Neil Brown currently serves as non-resident fellow at the 

German Marshall Fund’s Energy Transition Forum and Lugar Diplomacy Institute, senior advisor at the Goldwyn Global Strategies 

and is the founding director on the Board of the Lugar Center. He 

previously served as senior professional staff member for the Energy Security at the United States Senate Foreign Relations Committee and as a senior advisor to Republican Richard Lugar who 

we all remember very well and are grateful for his service and 

grateful for your service to him. He is also, I might add, a Rhodes 

Scholar. 

So we have a very distinguished panel. I would ask each of you 

to limit your spoken remarks to 5 minutes, put the rest in the 

record, and then we will have a dialogue about the issues you have 

brought to us today. We will start with Mr. Chow and you may go 

straight ahead, sir. 

5

STATEMENT OF MR. EDWARD C. CHOW, SENIOR FELLOW, ENERGY AND NATIONAL SECURITY PROGRAM, CENTER FOR 

STRATEGIC AND INTERNATIONAL STUDIES 

Mr. CHOW. Thank you, Mr. Chairman, members of the committee. It is my distinct honor and privilege to testify before you 

today. I understand that you wish me to address the issues related 

to resource competition in Central Asia including on pipeline transportation to markets outside the region. I will stay within my competence on issues related to international oil and gas, although I 

understand the committee is interested in other natural resource 

competition which will be addressed by other witnesses. 

When the Soviet Union collapsed in 1991, Central Asia offered 

a unique opportunity for western oil companies to enter a known 

oil- and gas-producing province which was previously closed to 

them. The Soviets had made a number of world-class discoveries, 

which they did not have the technical capability to exploit, most 

notably onshore Kazakhstan and offshore Azerbaijan. At the same 

time, these newly independent countries needed investments to enhance their economic autonomy and thereby protect their future 

political sovereignty. Oil and gas resources represented obvious immediate opportunities for Western investments. 

The United States was also interested in helping these countries 

preserve their political independence by increasing their economic 

options away from over reliance on Russia. Additionally, as the 

largest oil importer in the world, we had an interest in seeing incremental oil and gas supplies outside of the Middle East and 

OPEC flow into global markets, whether we ourselves import those 

volumes or not. 

With the help of Western investments, Central Asia and the 

Caucasus today produce around 3.5 percent of global oil supply and 

hold around 2.5 percent of the world’s known proven reserves in 

oil. For comparison, this is equivalent to four times that of Norway 

and the United Kingdom combined. Another way of looking at this 

is to say the region produces around 8.5 percent of non-OPEC oil 

and holds around 9.5 percent of non-OPEC oil reserves. In other 

words, oil production in Central Asia has added significantly to 

global supply and will continue to do so in the future. 

In many ways, the energy future of the region lies as much or 

more in natural gas than in oil. Central Asia is estimated to hold 

more than 11 percent of the world’s proven gas reserves, mostly 

concentrated in Turkmenistan which has lagged behind 

Kazakhstan and Azerbaijan in attracting outside investments. The 

region currently produces less than 5 percent of global gas supply, 

so there is tremendous potential for growth. 

In addition to production from Soviet-era discoveries, new discoveries of major oil and gas fields have been made in the region. Deserving special mention are Kazakhstan’s Kashagan field offshore 

Caspian Sea, which is the largest oil discovery in the world for over 

30 years; Turkmenistan’s Galkynysh gas field, which is the largest 

onshore gas field in the world; and, Azerbaijan’s Shah Deniz gas/

condensate field. 

Given its landlocked geography, Central Asia has to rely on longhaul pipelines to take its oil and gas to market. Previously Soviet 

pipelines in the region almost all head to European Russia either 

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to feed the domestic Soviet market or for trans-shipment to European markets. Control of these pipelines continued to give Russia 

leverage over transit of oil and gas from the region to market after 

the end of the Soviet Union. 

However, Western investments in oil and gas production also led 

directly to investments in new pipelines, which are not controlled 

by Russia’s Transneft for oil and Gazprom for gas. These include 

a number of projects I have put into the record which I will in the 

interest of time not discuss right now. 

These new pipelines have diminished Russian control of oil and 

gas exit out of Central Asia and the Caucasus and helped achieve 

the objectives from the 1990s of giving the region more economic 

options and allowing its oil and gas production to flow freely to 

world markets. 

When the Soviet Union collapsed in 1991, China was just about 

to convert from a net oil exporter to net oil importer. It was slow 

off the mark in the race for Central Asian oil and gas. By the time 

it focused on this region, most of the large production opportunities 

have already been acquired by Western companies. From a Chinese 

point of view, they have been playing catch up ever since. 

Today China is the second largest oil importer in the world and 

an increasingly important importer of gas. With stagnant Chinese 

domestic production and rapidly growing energy demand, China is 

destined to replace us as the world’s largest oil importer in a decade or so. Its companies have been investing in oil and gas around 

the world, including in neighboring Central Asia. Chinese companies now produce around 30 percent of Kazakhstan’s oil, although 

from smaller fields than those operated by Western companies, and 

hold the only onshore concession in Turkmenistan. 

In part because of disappointments in dealing with Russia on oil 

and gas, China has focused on pipeline development from Central 

Asia including an oil pipeline from Western Kazakhstan and gas 

pipeline from Turkmenistan through Uzbekistan and Kazakhstan 

to China. China has replaced Russia as the largest importer of 

Turkmen gas and this volume is slated to double or triple in the 

coming years. 

The next growing source of competition for Central Asia oil and 

gas is likely to come from India, which follows closely China in 

growth in oil and gas demand and consequently oil and gas imports. Indeed, as Chinese demographic growth slows and population ages, India’s energy demand is commonly forecasted to grow 

faster than China’s in a decade or so. 

With all due respect to the committee, the concept of resource 

wars is often exaggerated. The investments I referred to in Central 

Asia oil and gas production and pipeline development require tens 

of billion dollars and many years to mature. Conflict generally 

freezes such investments and resources are then stranded for many 

years. It is true that there is resource competition in Central Asia, 

as is true around the world. 

Our policy concern should be for such competition to be conducted in a rule-based manner, without political coercion, as the 

chairman mentioned, or non-transparent business practices, to the 

disadvantage of the citizens of the host countries and global consumers. As long as the rules of competition are fair, our oil, servVerDate 0ct 09 2002 13:37 Oct 18, 2013 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\WORK\_EEET\072513\82147 HFA PsN: SHIRL
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ices and equipment companies can compete in Central Asia, where 

they are doing rather well, and market competition will drive economic efficiency to the benefit of all. Observing the nature of resource competition and assessing its political consequences will remain an important task for your committee. In Central Asia itself, 

my humble opinion is control of water resources are more likely to 

lead to direct conflict than with oil and gas. 

Thank you for your attention. 

[The prepared statement of Mr. Chow follows:]

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Mr. ROHRABACHER. Thank you for your testimony and I might 

add that we have had already one hearing on water in Central Asia 

and we do plan several more hearings focused on water there and 

elsewhere in the world, but especially focused on Euro-Asian needs 

because it is the Eurasia Subcommittee. 

And now Dr. Mankoff. 

STATEMENT OF JEFFREY MANKOFF, PH.D., DEPUTY DIRECTOR AND FELLOW, RUSSIA & EURASIAN PROGRAM, CENTER 

FOR STRATEGIC AND INTERNATIONAL STUDIES 

Mr. MANKOFF. Chairman Rohrabacher, Ranking Member 

Keating, members of the committee: Thank you for the opportunity 

to testify before the subcommittee on Europe, Eurasia, and Emerging Threats. 

The discovery of new offshore oil and gas deposits in the Eastern 

Mediterranean Sea is one of the most promising global energy developments of the last several years. Handled wisely, these deposits 

off Israel and Cyprus, as well as potentially Lebanon, Gaza, and 

Syria, can contribute to the development and security for countries 

in the Eastern Mediterranean, and across a wider swathe of Europe. Handled poorly, these resources could become the source of 

new conflicts in what is an already volatile region. 

According to the United States Geological Survey, the Levant 

Basin in the Eastern Mediterranean holds around 122 trillion cubic 

feet of natural gas, along with 1.7 billion barrels of crude oil. While 

these currently recognized volumes are comparatively small relative to those found in the Persian Gulf, Russia, or the Caspian sea 

basin, they are large enough to have a significant impact on the energy security of states in the Eastern Mediterranean and to make 

some, albeit more limited contribution to energy security in Europe. 

The oil and gas resources of the Eastern Mediterranean sit, however, at the heart of one of the most geopolitically complex regions 

of the world. The Israeli-Palestinian conflict, tensions between 

Israel and Lebanon, the frozen conflict on Cyprus, and difficult relations among Turkey, the Republic of Cyprus, and Greece all complicate efforts to develop and sell energy from the Eastern Mediterranean. The Syrian civil war has injected a new source of economic and geopolitical uncertainty, and standing in the background 

is Russia, which is seeking to enter the Eastern Mediterranean energy bonanza, and to maintain its position as the major supplier 

of oil and gas for European markets. 

Amidst all this uncertainty, however, the recently discovered gas 

fields in the Eastern Mediterranean are starting to come into production. A second exploration well was recently drilled off of the 

coast of Cyprus, while Israel’s Tamar field started production in 

June. With mounting uncertainty in Egypt, and indeed, across 

much of the Arab world, the ability to meet its energy needs from 

domestic sources is a critical contribution to Israel’s energy security. 

Yet, Israel’s transformation into a significant energy producer is 

not without its challenges. Most immediate perhaps is the question 

of how Israel will sell its surplus gas on international markets. The 

most economical option, at least in the short term, would be the 

14

construction of an undersea pipeline allowing Israeli gas to reach 

European markets through Turkey. Such a pipeline from Israel to 

Turkey pipeline would be less expensive to build than new 

Liquified Natural Gas facilities, would reinforce the recently 

strained political ties between Turkey and Israel, and would contribute to the diversification of Europe’s energy supplies by bringing a new source of non-Russian gas to Europe. 

Such a pipeline, however, would likely either run off the coasts 

of Lebanon and Syria, or have to go to Turkey through Cyprus. 

Both options are fraught with peril. Though Lebanon and Israel 

have not demarcated their maritime border, Beirut argues that 

Israel’s gas fields cross into Lebanese waters, and Hezbollah has 

threatened to attack Israeli drilling operations. Syria, of course, is 

in a state of near anarchy. In this perilous environment, finding investors willing to build a pipeline will be challenging, and even if 

built, such a pipeline would be difficult to secure. Going through 

Cyprus is also difficult, largely because of the difficult relationship 

between the Republic of Cyprus and Turkey. However, Cyprus’s 

own gas fields represent another potential source of conflict. Turkey has not recognized the Republic of Cyprus’s exclusive economic 

zone and in fact has pressured companies seeking to do business 

there, and recently also began its own exploratory drilling off of the 

de facto Turkish Republic of Northern Cyprus without permission 

from the government in Nicosia. The revenues from Cypriot energy 

could benefit communities on both sides of the island, but only if 

a political agreement can be worked out in advance. 

The major alternative to a pipeline from Israel to Turkey would 

be to build an LNG, a Liquified Natural Gas facility to liquefy gas 

for sale to markets in Asia and the Middle East. Russia, in particular, backs this idea. 

The push to build new LNG facilities though is only one way in 

which Moscow and its energy companies are seeking a larger role 

in the Eastern Mediterranean. In addition a February 2013 marketing agreement signed with the Israelis at Tamar, Russian companies are also interested in Israel’s much larger Leviathan field, 

as well as in the offshore oil and gas off of Lebanon. Of course, 

given Russia’s interest in preventing competition for its gas in Europe, there are legitimate questions about whether Gazprom would 

actually follow through on developing any of these concessions that 

it might win in the Eastern Mediterranean. 

One reason the United States has cared about Eastern Mediterranean gas is because of its potential to bolster the energy security of U.S. allies in Europe. Today, this concern is less pressing 

than in the past. The recent announcement of the Trans-Adriatic 

Pipeline, connecting to the 

Trans-Anatolian Pipeline heralds the beginning of the longawaited Southern Gas Corridor, which will bring news supplies 

from the Caspian to Europe. While small, these projects can be 

scaled up in the future. The United States itself is also poised to 

become a significant gas exporter. Finally, the ongoing implementation of the European Union’s Third Energy Package is creating a 

more competitive, liberalized and deeper market in Europe itself. 

While all these developments promote European energy security, 

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main the principal supplier of Europe’s gas for many years. The potential volumes from the Eastern Mediterranean could bolster European energy security around the margins, but they are not sufficient not to change this fundamental reality. For that reason, 

Washington’s main objective in the Eastern Mediterranean should 

be less about Europe and more about ensuring that energy does not 

become a source of new resource conflicts, whether between Israel 

and its neighbors or over Cyprus. The United States’ push for 

Israeli-Turkish reconciliation, which the promise of energy cooperation has helped facilitate, is a good example of the positive role 

that the United States could play. U.S. diplomacy in Cyprus should 

proceed in similar fashion. 

Likewise, sharing the benefits of energy should also be one element in an settlement of the conflict between 

Israelis and Palestinians. 

The United States has no reason to oppose the role of Russian 

companies in the Eastern Mediterranean in principle, however, it 

should work with partner governments in the region to ensure 

transparency and that the promised production does, in fact, occur. 

Eastern Mediterranean energy can advance a range of U.S. interests in the wider region. Absent sustained diplomatic engagement, 

however, it can also be the source of new conflicts in what is already a very dangerous area. Avoiding that outcome should be the 

primary focus of U.S. engagement on the future of Eastern Mediterranean energy. 

Thank you. 

[The prepared statement of Mr. Mankoff follows:]

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Mr. ROHRABACHER. Thank you very much. Now we have about 

10 minutes before a vote is called. And so it is intention of the 

chair to finish the testimony. We will then retreat to the floor 

where we will be casting our ballots on very important issues and 

then we come back immediately thereafter, for the question and 

dialogue session of this hearing. 

Gentlemen, you may proceed. We are about to have some votes, 

so if you can keep it to 5 minutes that would be great. 

STATEMENT OF BRIGADIER GENERAL JOHN ADAMS, USA, 

RETIRED, PRESIDENT, GUARDIAN SIX CONSULTING, LLC 

General ADAMS. Chairman Rohrabacher, Ranking Member 

Keating, and members of the subcommittee, I want to thank you 

for taking the time to examine emerging foreign threats to the national security and interests of the United States related to the irresponsible and predatory actions of other nations in their pursuit 

for national resources. 

I am a 30-year veteran of the United States Army and my firm 

Guardian Six Consulting recently partnered with the Alliance for 

American Manufacturing, a labor-management partnership between some of America’s leading manufacturing companies and the 

United Steelworkers to take a look at vulnerabilities to the American defense industrial base. 

Our report, ‘‘Remaking American Security,’’ examined a range of 

vulnerabilities and in particular instances in which reliance on offshore companies deepen the supply chain, puts U.S. national security at risk. The defense industrial base really needs to be managed 

as a part of our force structure. Our report took the approach of 

linking strategy to forces that we need to win to the capability 

those forces possess to the programs that enable those capabilities. 

Then we drill deeper. Which supply chains do we need in place and 

secure so that those programs can be successful? 

Remaking American security examines 14 defense industrial 

base nodes vital to U.S. national security. We investigated lowertier commodities and raw materials and subcomponents needed to 

build and operate the final systems. Based on our research, the 

current level of risk to our defense supply chains and to our advanced technological capacity is very concerning. The bottom line 

is this, foreign control over defense supply chains restricts U.S. access to critical resources and places American defense capabilities 

at risk in times of crisis. 

In the report, we devote a chapter to the importance of access to 

specialty metals and rare earth elements. Increasingly, these resources are central to modern life and central to modern defense 

preparedness. And each year, the U.S. Department of Defense acquires nearly 750,000 tons of minerals for an array of defense and 

military functions. In spite of this clear demand, over time, the 

United States has become dependent on imports of key materials 

from countries with unstable political systems, corrupt leadership, 

or opaque business environments. The United States used to have 

relatively easy access to many mineral ores, but this situation has 

changed dramatically as the United States has neglected to preserve its mining base and global demand for minor and unusual 

chemical elements has surged. 

22

Compounding the tensions over access to specialty metals, many 

countries rich in natural resources take a stance of resource nationalism. Within the past decade, countries have attempted to leverage and manipulate extractive mining by threatening to impose 

extra taxes, reduce imports, reduce exports, nationalize mining operations and restrict licensing. Moreover, the countries themselves, 

notably China, have taken a more aggressive posture toward mineral resources and now compete aggressively with Western mining 

operators for extraction control. 

Meanwhile, advanced industrialized countries, including the 

United States, have abandoned mining and mining exploration 

even though global demand for economically and militarily significant ores and chemical elements has risen and will continue to 

rise. These factors, taken together, present a dangerous and 

unsustainable situation for our economic and national security. 

Specialty metals are used in high-strength alloys, semiconductors, consumer electronics, batteries, armor plate, and many more 

defense-specific and commercial applications. We possess significant reserves of many specialty metals with an estimated value of 

$6.2 trillion. However, we currently import over $5 billion of minerals annually and are almost completely dependent on foreign 

sources for 19 key specialty metals. 

The United States must maintain strategic reserves of those defense-critical elements, strategic elements, that face likely shortages while seeking alternative sources. Congress is beginning to 

give appropriate attention to this issue and shifting more toward 

a bottom-up approach to securing the supply chains of key materials but more must be done. The Federal Government has not formulated a comprehensive policy approach to address the national 

security risks of inadequate access to many of these key minerals. 

In the middle of a complex defense drawdown, as well as sequestration which cuts budgets and deprives our defense planners flexibility, the defense industrial base can seem like a distant and abstract concern, but it is not. Preserving a robust and innovative defense industrial base is a national imperative and that starts at the 

most basic level. 

Thank you. I look forward to your questions. 

[The prepared statement of General Adams follows:]

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Mr. ROHRABACHER. General, you were right on 5 minutes. 

Now Mr. Brown, can you do the same? 

STATEMENT OF MR. NEIL BROWN, NON-RESIDENT FELLOW, 

GERMAN MARSHALL FUND OF THE UNITED STATES 

Mr. BROWN. Being fourth in the batting order and knowing my 

problems at baseball, I know that I won’t be able to follow the General quite so well as that precision. 

It is a real pleasure to come to this side of the Capitol and join 

this distinguished committee. When I joined the Senate committee 

staff in 2005, we held a lot of hearings on these sorts of issues and 

at that time it was a lot of doom and gloom. For decades, really, 

we had become conditioned as Americans to be on the receiving end 

of oil and gas, particularly oil decisions with governments that did 

not have our best interests at heart. 

So I am particularly grateful for this committee, for you, Chairman and Ranking Member, for holding this hearing at a time 

where Americans are doing what we do best which is changing the 

rules of the game through innovation in oil and gas and unconventional sources, efficiency, alternative energy, we are giving ourselves not only economic opportunities, but much more significant 

foreign policy flexibility and opportunities around the world, including in Central Asia which is important both for the issues that Ed 

mentioned in terms of the volume of oil and gas and other minerals 

the region has, but also for the strategic benefits and importance 

given that it sets above Iran, Pakistan, and Afghanistan. 

There are, I think, two major energy forces happening in Central 

Asia. One is China which is using its financial clout to access resources and the other is Russia. Russia is after power of a different 

sort which is political power, by maintaining as much control as 

possible over transit, in particular, it wants to further its own interests in keeping its friends in power. 

I thought that some context might be useful. Congressman 

Keating mentioned that local events around the world can really 

impact the prices Americans pay at the pump, our economy, our 

national security. And really what has happened in the global oil 

market in particular is that the rising demand of emerging economies, particularly China, India, and in the Middle East, ironically, 

has over time really narrowed the margins in the global oil market 

which meant particularly in the mid-2000s that even small disruptions, attacks in the Niger Delta on Shell’s facilities could have an 

impact right here at home. Now the recession, I guess one good 

side of the recession is that demand slowed down so that we got 

a bit more of a window and also more recently the U.S. has boosted 

supply, again giving more flexibility. But that structural shift in 

markets has not changed. So we can expect more of the same, unfortunately, when the economy picks up. 

Now I want to skip to—seeing my time—skip to what is happening with Russia. And really what you have is on the Central 

Asia side, pipelines running north and that is Russia’s lever of control, one of its most important levers of control over those governments and on the eastern side of Europe, the supply routes. So we 

have major concerns in Central Europe, Eastern Europe, the Balkans, the Baltics, and dependence on Russia for gas, in particular. 

65

Now if Russia were simply to allow markets to work, that dependence would still bring economic detriment, but it would not be, I 

suppose, a strategic concern. But unfortunately, that is not the way 

Russia operates. We have seen time and again their willingness to 

use energy as a weapon or for coercion. 

So the U.S. strategy has really focused on diversification. 

It was mentioned previously the Southern Corridor which recently has had a boost in picking of a pipeline route to deliver Caspian gas on into Europe, but there is still much more work to be 

done. 

I would like to have entered into the record a report that the 

Foreign Relations Committee on the Senate side put out in December that goes into this in great detail so that if my testimony, when 

you read that, doesn’t cure your insomnia, then the report will definitely take care of it. 

Mr. ROHRABACHER. Without objection the report will be submitted for the record at this point in the record. 

Mr. BROWN. Thank you. Three key recommendations from that 

report and the analysis is for the first time, the United States has 

the ability to directly aid our allies on gas supplies. We have an 

abundance of natural gas and those allies want that gas whether 

that is Turkey which would like to reduce its dependence on Iranian gas or Central Europe that would like to reduce its dependence on Russian gas. The Congress is currently considering a bill 

that Congressman Turner put out that would automatically grant 

export licenses, so I recommend that to you. 

The second recommendation is that even as we think about our 

own LNG exports, we also have to focus on pipelines. And to that 

extent we need much more high-level engagement on a concerted 

basis because decisions in these regions on energy are made at the 

highest levels of government, so you need to have that kind of constant attention and the loss of the Nabucco project which would 

have delivered gas directly into Central Europe means that we 

need to think of new ways to make sure that we have pipeline 

interconnections to help our allies there. 

And finally, we need to reemphasize the prospect of a Trans-Caspian pipeline to link infrastructure that originates now in Baku to 

Turkmenistan. It has been talked about a long time and it is extremely challenging, but without U.S. leadership the opportunity 

will be lost and I know this committee is also considering a resolution on that issue, so that is well on your radar. Thank you. 

[The prepared statement of Mr. Brown follows:]

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Mr. ROHRABACHER. I want to thank all of you for giving us some 

food for thought and we will go and vote and it is the chair’s intention to call this hearing back to order 5 minutes, Mr. Keating, 5 

minutes after the last vote, is that all right with you, Mr. Keating? 

Okay, so 5 minutes after the last vote which we expect to have 

ready at around 11:30. We should be back around 11:30. So this 

hearing is now not adjourned, but in recess. 

[Recess.] 

Mr. ROHRABACHER. The hearing will come to order. I want to 

thank you for holding off. The ranking member, Mr. Keating, will 

be joining us momentarily. He gave us permission to proceed in the 

meantime without him. 

I found all of the witnesses to be offering some very compelling 

testimony today and I think the record of this hearing will be of 

great value to all of us and to a great number of people will be 

looking through this record. 

One major truism of our era is we are now living in a time that 

is different than it was 50 years ago in that we have huge chunks 

of the world population that seem to be perched and ready to uplift 

their standard of living, especially in India and China. And we are 

talking about together they represent maybe half of the world’s 

population I believe. And half of the world’s population which in 

the past seemed to be relegated to living the rest of eternity in poverty and deprivation. 

This will obviously, if indeed, their well being and their economic 

well being is to be uplifted, that will, will it not, create a huge 

drain on natural resources. It takes energy to have prosperity for 

normal people. It takes clean water as well, I might add. And it 

takes industrialization or at least the production of wealth using 

technology to uplift large populations. So thus, we face a world now 

that is going to have if, indeed, India and China are to increase 

their standard of living, this will create a major—it will exacerbate 

everything we have been talking about today. 

And for example, Mr. Chow, you mentioned in your testimony 

the growing competition in Central Asia for Central Asian oil and 

that India is part of this for this oil and gas competition for that. 

There are different ideas. We have heard testimony today about 

pipelines that could then maybe connect India and China to this 

oil and gas in Central Asia. But any pipeline that would go through 

or get to India from Central Asia it seems like it would have to 

come through and what is being looked at now as an Afghan—

Turkmenistan-Afghan-Pakistan-Indian pipeline, TAPI, I think they 

call it. 

And is that realistic, Mr. Chow, that they could—is that pipeline 

really a pipe dream, considering the fact of what is going on in Afghanistan and the turmoil that pipeline would have to go through? 

Mr. CHOW. Thank you, Mr. Chairman, for that question. I think 

in my written testimony I made clear to you that I am helping the 

Department of State in figuring out how to advance this pipeline 

project and challenges for that project is indeed daunting for quite 

obvious reasons that we don’t need to go into detail here. 

I think the fundamental reason why this might work, and I say 

might, is that you have a country in Turkmenistan that has the 

fourth largest gas resources in the world that seeks diversification 

72

of its export routes so that it doesn’t become over reliant on China 

as it once was over reliant on Russia for its natural gas exports. 

And at the same time, as you have already mentioned, we have got 

this booming energy market in India. If it is possible to connect the 

two, and geography dictates that therefore you have to go through 

Afghanistan and Pakistan, then there are fundamental ingredients 

that would make that project work economically if you can manage 

the political and security risks involved. 

So I think the economics are there. The interest of the government to seek alternative export routes is there. By the way, it converges rather well with U.S. national interests in the sense that 

our interests and the stability of the region in integrating Afghanistan into both South and Central Asian economies and also to promote better relationships for Pakistan with its neighbors, most 

prominently India and Pakistan. So it is a very challenging project. 

I have worked in this industry quite a long time. The fundamental economics are there. Whether politically and in terms of security it is achievable we will have to find out. 

Mr. ROHRABACHER. So let us note that you are saying it is a challenging project, but it is not challenging engineering-wise, is it? 

The challenge has to do with political decisions and political stability and within Afghanistan and that region. India would certainly have an important, let us say be an important customer for 

that oil, but at the same time wouldn’t that be something the Chinese would not want to have developed? 

Mr. CHOW. I think that that is fair to assume. 

Mr. ROHRABACHER. So what we have, Dr. Chow, is the great powers of that region, India and China, have conflicting interests over 

what to do with that natural resource and again, that is what this 

hearing is all about and we should take note of that and learn from 

it and maybe try to project what that means in the future. 

Do any of the other panelists have a comment on that? 

Mr. CHOW. I would just add, Mr. Chairman, if you will permit 

me, that we should not underestimate the interests of the national 

leaders of the countries involved in Central Asia to balance the interests so that they are not overly dependent on any one of the regional powers. So they have a fundamental interest in diversity of 

export groups. 

Mr. ROHRABACHER. Yes. Mr. Brown? 

Mr. BROWN. Maybe to add just a couple thoughts to that because 

you have hit on something that is both a positive and a negative 

in this world which is, even on just a humanitarian basis, we want 

poor people to rise up out of poverty. And who can blame them for 

wanting air conditioning and cars and all the sorts of things that 

they want? 

Mr. ROHRABACHER. Refrigerators or clean water. 

Mr. BROWN. Exactly. And in an ironic sort of way, when we see 

China, India, and other emerging economies go out searching for 

these resources, it is an indicator of economic activity which on the 

other side benefits the United States in terms of being a strong 

trading partner where we can sell our goods and services. So it 

really is a double-edged sword. 

In my prepared testimony, I mentioned one manifestation of energy and conflict that we do see happening and that is around the 

73

issue that you have raised which is electrification and access to 

power. We see in countries like Pakistan, we just saw it in Egypt 

where the inability of governments to provide such a basic resource 

as power can lead to instability that can then overthrow those governments and directly impact U.S. activities. That is why the work 

that Ed is doing on TAPI, there is also discussions that the World 

Bank is working on in electrification to bring from Central Asia, 

that is essential. 

There is also a huge multi-billion person market out there that 

U.S. companies can access to provide power, whether that is from 

big stationary plants that might use coal or natural gas or renewables. It is much like the telecommunications and kind of personal 

goods, soaps and what not, industries found in emerging markets 

where these may be poor people, but they do have purchase power. 

And so unlike countries that just want to take natural resources, 

the U.S., we have a position to really invest and also make money 

in the trading relationships. 

Mr. ROHRABACHER. Let us hope that there will be some stability 

enough so that those natural resources and that is what this is all 

about, will be able to be utilized to help human beings. 

If I was, however, if I was in India and I was trying to calculate 

what I should be doing strategically considering that what seems 

to be an adversarial relationship with China and Pakistan, but 

China, it seems to me that I would want to help those elements in 

Turkmenistan and Afghanistan that might be willing to align 

themselves with India’s interests. And again, we are talking about 

fundamental reasons for conflict. 

Mr. Mankoff, you mentioned the gas off of the Israeli coast, 

would that gas, and we heard mention of Egypt a moment ago, 

would that gas be something that could be used for bringing peace 

between Egypt and Israel and especially now that maybe you have 

a different potential direction for Egypt rather than the Muslim 

Brotherhood and anti-Israeli government? Could perhaps Israel 

step forward and try to say that that gas could be used for Egypt 

as well in a peaceful endeavor? 

Mr. MANKOFF. Yes. Thank you for your question. The fundamental challenges that face that part of the world are ultimately 

rooted in politics. And energy, I think, can play a role in addressing 

the conflicts between Israel and her neighbors, but in and of itself 

is not sufficient to do that. I think you have to have political agreements, political solutions to some of the problems between those 

countries and energy can be a carrot or an inducement for reaching 

those agreements. 

There has been discussion in Israel about exporting some of this 

gas to Jordan, for example, although apparently that has now been 

caught up in internal Israel politics. 

Mr. ROHRABACHER. Right now, Israel is in negotiations on water 

with Jordan. 

Mr. MANKOFF. Yes. 

Mr. ROHRABACHER. And especially about—this has been going on 

for a few years now, between the Red Sea to Dead Sea project 

which there has been step-by-step, but they have been negotiating 

at a time when there are other factors that were driving Israel and 

Jordan apart. They had this mutual interest in negotiating for 

74

water. Perhaps would Egypt and now in the situation that it is and 

the Government of Egypt is now in a precarious situation, perhaps 

this would be a good time to try to demand some positive ties based 

on economic dual interest. 

General, did you have a comment on those things? 

General ADAMS. No sir. 

Mr. ROHRABACHER. Any comment on the Chinese part with Central Asia and the pipeline? 

General ADAMS. No, sir. That is not something we covered in our 

report. 

Mr. ROHRABACHER. All right, thank you very much. I will now 

turn to my ranking member, Mr. Keating. 

Mr. KEATING. Thank you, Mr. Chairman, and as you can see, the 

chairman knows the shortcuts better than I do coming back from 

votes. 

I find this whole issue very important for two reasons because 

the effects of it can go either way. These can be areas of conflict 

that make the situation worse, but they could also be areas as your 

testimony indicated where if things fall the right way, that these 

countries could be—have greater control over their own economy, 

their own energy sources, for instance, and make them more stable 

and profitable and being able to do more ancillary business from 

this. So how this breaks is not just unilateral. It can go both ways. 

Along those lines, General Adams, coming from Massachusetts 

we are very proud to have John Adams in front of us testifying. 

But you mentioned the issue of corruption. One of the things in 

this region that could inhibit business investment are these corruption issues. If you would like to address what we could do to help 

in that regard and then any of the panel members if you would like 

to comment on that. Because I see that as one of the real issues 

that could hinder private investment in that area. 

General ADAMS. Thank you, Congressman Keating, and the opportunity to answer that question. Allow me to answer the question 

in the context of what we investigated in our report, specifically the 

lack of access that the United States has to key minerals and materials that we need for our defense supply chains. And there is, in 

fact, concerns and we are concerned based on our research that corrupt business practices and manipulation of markets is one of the 

reasons that we have a lack of access to key raw materials, specifically rare earth elements. 

As you know, China decided two decades ago that they would 

shore up their extraction industry, their mining industry for rare 

earths and they were successful in doing that. And they were also 

able to basically drive other mining countries out of business of 

doing rare earth minerals. The last U.S. mine, the Molycorp mine 

in California, went out of business in 2002. There were other reasons than the fact that the Chinese were driving the prices so that 

the mine was not economically competitive, but that was certainly 

a huge factor. And then having attained a near monopoly in the 

mining of key rare earth elements and minerals, China continued 

to not only involve themselves in the extraction industry, extraction of oxides, but the entire supply chain for rare earth elements 

and production of such things as advanced magnets which is a 

key—we have advanced magnets in all modern defense electronics. 

75

Smart bombs, for example, have to have advanced magnets. China 

pulled that supply chain into China. Now is that corrupt? Certainly, there is manipulation. Is that something that we allowed to 

happen because we had our eye off the ball? I would argue that 

that is the case. And I will come back to that in just a moment. 

There is a another example I would like to give where the platinum group of metals, platinum is used in a wide variety of applications, but the commercial application we are all familiar with is 

the catalytic converter. But almost every modern engine has to 

have platinum group of metals in it, small parts of it, but there has 

to be platinum group of metals, minerals in every modern engine. 

Most of it is mined in South Africa. And I don’t want to go into 

a long, political discussion of the instability in South Africa, it is 

what it is. And we have to remember the role of the Chinese in 

that as well. The Chinese have established over the last 20, 30 

years, excellent ties with countries in sub-Saharan Africa. Is that 

something that again we should note at this point, especially in 

this august committee. I would argue, yes, we should. 

So the platinum group of metals comes largely from South Africa. 

We need that for our defense materials, our defense equipment and 

again, is the market being manipulated or is it corruption? I would 

argue certainly it is manipulation. 

What we need to do and I won’t belabor the point, but what we 

need to do is to go to strategy and base our need for our strategic 

materials in the need for defense strategic that fits the threats of 

the next 20, 30 years. We are pretty good at doing strategy. We 

have got a lot of people over across the river who do that pretty 

well and they get a lot of help from this building as well. But we 

are good at that. And we are good at designing programs that let 

us execute the strategy. But what we need to do is decide what are 

those key strategic materials? And if we find that market manipulation is part of the reason we don’t have access, then we need to 

enforce fair trade laws and we need to make sure that we have protection of existing laws and regulations and provide for domestic 

sourcing for key industries. We have to have a coherent strategic 

at the U.S. Government level to determine what those critical raw 

materials are. And then we need to act upon that to make sure 

that we have got secure access to them for our war fighters. Thank 

you. 

Mr. KEATING. I am reminded, General, with your comments what 

some of the top military people in our country said when they said 

what is our greatest threat and many of them have come down to 

the fact it is our economy. And I think that is part of what you are 

saying. 

Mr. Brown? 

Mr. BROWN. Congressman, I appreciate you bringing up corruption. It is one piece of a very ugly side of natural resources, particularly in oil and gas, but also in some minerals where they can be 

a magnet for some of the worst governance practices in the world. 

They can embolden authoritarian leaders that may choose to be authoritarian against their own people’s interests or against our interests. And we see that around the world. 

In the extreme, it can even lead to conflict. It undermines political stability and you see internal conflict around the use of those 

76

resources and the revenues. So the best example of that, of course, 

is the Niger Delta. And as you mentioned, that is a good example 

of a major company then having its infrastructure, its oil be shut 

in because of that violence. 

Central Asia, fortunately, does not face that level of violence, but 

we all know that the revenues from these resources are supporting 

some rather poor governance practices and of course you see the 

same thing in Russia. I think the unfortunate side is that we have 

limited leverage on governance of resources, precisely because the 

governments are rich because of them so we have very little aid 

money going in. At the same time, we have competing priorities, 

we have strategic needs in Central Asia, so we can only do so 

much. 

But there is a good news story which is that Congress a couple 

of years ago took the step to institutionalize norms that are focused 

on the fact that information is the necessary first step to improve 

governance in these countries, to empower civil society, to empower 

the press and to empower investors. So laws are now in place that 

will bring to light the revenues that are paid to these governments 

so that then that information can be used effectively. 

In your opening comments, you also mentioned the voluntary Extractive Industry Transparency Initiative. Well, probably not that 

many people know, but the U.S. now has decided to lead by example. And so the government led by the Department of the Interior, 

companies, and civil society are, just yesterday actually, there was 

the most recent meeting. They are coming up with common practices so that we can show the American people what the Federal 

Government is bringing to bear. And that is going to have tremendous impacts in our diplomacy because one of the things when you 

go talk to these governments and say well, you should be more 

transparent, etcetera. They say, ‘‘What you doing?’’ I am happy to 

say that the U.S. Government is now going to be at the lead of that 

and I encourage Congress to become involved in those discussions 

because you are the people who are going to have to explain it to 

Americans when they ask. 

Mr. KEATING. Yes, Doctor. 

Mr. MANKOFF. I would just like to add a word about Central 

Asia. For the last decade plus, the United States’ engagement in 

this part of the world has been driven very heavily by the conflict 

next door in Afghanistan and that has created a kind of dependence if you will on these relatively untransparent, corrupt, and 

often brutal governments in Central Asia. But because of the dependence that we have had on them for security cooperation, it has 

been difficult for the United States to place issues of transparency 

in governance at the top of the bilateral and regional agenda in 

dealing with these countries. 

As we begin the transition to the withdrawal of international 

forces from Afghanistan over the next year and a half, one of the 

benefits of this change is that we will be in a position where we 

are less dependent upon these countries for achieving our core security objectives. And that means that the United States will have 

increased leverage to push on some of these issues that you raised 

in your comments. 

77

Now certainly as Mr. Chow said, the governments in Central 

Asia are very interested in diversifying their engagement so that 

they do not become overly reliant, either economically or politically 

on either the Russians or the Chinese which means that they all 

have and have all expressed a very strong interest in continued 

and deepening engagement with the United States. In a post-Afghan Conflict environment that means that the United States has 

the opportunity to push harder to be more insistent and to make 

its engagement more conditional on these governments meeting 

their obligations on issues of governance and transparency including their management of natural resources. 

Mr. KEATING. I would just have one other last comment, if I 

could, Mr. Chairman, and that would be many of these resources, 

these rare minerals are there, but there aren’t transportation networks. There aren’t infrastructure support to get them. It would be 

too expensive. So one of the things that came to my mind is if we 

are engaged somehow in assistance that is private or the governmental side in these, maybe there can be linkages between some 

of those infrastructures being built and making sure this transparency with the mining and the development of many of these 

rare materials. 

General, that is my last question. 

General ADAMS. Sir, if I may respond to that? You may know 

that we have looked closely at Afghanistan for possible extraction 

of raw materials, specifically rare earth elements in Kandahar and 

how difficult that would be. And what I want to mention is that 

the search for alternate sources is a good thing and we should continue to do that and we should do that first here domestically. We 

have got great alternate sources for rare earths in Alaska and in 

northern Great Plains as well as California. 

And I said the last mine in California closed in 2002. Of course, 

it opened again, the Molycorp mine opened in 2012, so the search 

for alternate sources for specifically rare earths should continue. 

That is a very good thing for us to do. But it begs the question here 

that we ought to consider as we are looking at sequestration and 

limited budgets, the U.S. Geological Survey is key to that and it 

was key to evaluating the potential for rare earth extraction in Afghanistan as well and they get a lot of help from the Department 

of Defense especially when we are talking about security. 

I have met with our Department of Defense executive for working with economic aspects of our Afghanistan involvement. It looks 

like it is going to be prohibitive for us to get rare earths from 

southern Afghanistan for security reasons. But the search is the 

important thing and I would like to just put a plug in for the 

USGS, the U.S. Geological Survey. Absolutely essential. It is like 

the canary in the mine. They are so essential to our being able to 

detect and identify and to program how we identify these key raw 

materials for our use. If we are going to use strategy to determine 

which ones we need to protect, USGS is key. 

Mr. KEATING. Thank you, General. I yield back. 

Mr. ROHRABACHER. And now we have Mr. Duncan. 

Mr. DUNCAN. Thank you, Mr. Chairman. Thanks for this hearing. Most of my questions were answered during the dialogue so I 

don’t have a lot of questions, but I am on the Energy and Minerals 

78

Subcommittee of the Natural Resources Committee here in the 

House and so the rare earth issue has been something that we 

have been following for at least the last 3 years that I have been 

here. I do concur with the General that we have missed some opportunities over the last 30 years, but if the administration and 

Congress will look forward to developing those relationships with 

the countries that China currently has the relationships with, that 

have the rare earths, but I will also say that and you just touched 

on it, we have got a lot of rare earths in this country that are currently the mining areas and the resources are currently off the 

table for mining activity and production just due to a lot of policies, 

current, and in the past. And so I believe we need to open up more 

of those resources here in America. It is not only an energy-independence policy, but a security policy with regard to rare earths. 

I also want to mention, Mr. Chairman, I am co-chair of the 

Transatlantic Working Group with members of European Parliament. And we had members of European Parliament in Washington last week and one of the topics of conversation was their reliance, European countries’ reliance on the natural gas coming from 

Russia and how concerned they are about stability of that going 

forward. And we talked about opportunities that United States’ oil 

and natural gas companies have to export LNG to Europe to supply 

the needs of natural gas to our European traditional allies. And 

how Europe is definitely looking to the U.S. as a source for that. 

So there is opportunity if we can expedite LNG terminal applications in this country. We have an abundance of natural gas and everyone is aware of that. We have got opportunity to export that to 

countries that are more friendly and it is not only the European 

Union countries that I talked to, but my understanding is that 

some of the V4 countries, Hungary, Czechoslovakia, Poland, Slovakia, are very interested in those LNG exports as well which kind 

of raises my awareness that it is a real issue because they are sitting so close to those pipelines that come through those countries 

from the resources to the East. And so I think there is an opportunity for American companies in the energy sector, but also think 

America can take advantage of the resources we have got here, but 

also echo the General’s comments. 

And let me pause to thank you for your service to our nation, sir. 

I appreciate it. 

To echo your comments, we have got to go forward and think 

about the relationships we have with the countries, South Africa, 

sub-Sahara countries, but also all across the globe that have the 

rare earths that we are so reliant on in the automotive sector and 

the technology sector. 

You had mentioned cell phones, cell phones that operate with numerous rare earth minerals that make them work. Without those 

rare earth minerals, they don’t work. They don’t hold that data or 

they don’t transmit that data. 

So Mr. Chairman, I am not going to ask any questions, but I 

want to thank you because these gentleman have done a fabulous 

jobs of answering my questions. You guys have done a good job of 

asking questions that were along the lines, so I thank you so much 

for this important topic. And with that, I yield back. 

Mr. ROHRABACHER. All right, well, thank you very much. 

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General, if my notes are correct, you testified that there were—

Mr. Duncan, oh, he is off. 

I was going to say underscoring Mr. Duncan’s point, your testimony was that we important 750,000 tons of vital minerals and 

material every year. Is that annually? 

General ADAMS. 750,000 tons. 

Mr. ROHRABACHER. Whew. All right. I want to thank the witnesses as well. I think that this should be viewed, and the subject 

should be viewed in terms of national security, but also in terms 

of in humanitarian terms as well because as I emphasized earlier 

on, unless we succeed in this arena, ordinary people who now live 

in total deprivation around the world have no chance at all of improving their standard of living. 

And while we may, for example, it might be a good thing and it 

is a good thing that if we can bring some competition to the Russian pipeline that now supplies the natural gas to Europe, it would 

be a good thing that Azerbaijan and others have a competition with 

that. Competition is good for people’s standard of living, and as we 

have found out in the United States. 

And so those of us who support the idea of pipelines and helping 

develop transportation systems for these things, it is not anti-Russian to do that, but it is pro-human being to try to develop more 

availability of resources, of natural gas to people everywhere and 

especially those that are currently under the domination of one 

source for a vital material like natural gas and such. 

That is, by the way, one of the reasons why President Reagan 

opposed that natural gas pipeline from Russia during his administration because he did not want to provide a country that didn’t 

have free elections which was the Soviet Union to have such a 

dominant role over Western Europe. Whether or not it is a country 

that has free elections or not, it is a good idea to have several 

sources for gas and several sources for the vital minerals and materials that we have been talking about today. 

So with that said, I want to thank all of you for your testimony. 

This has been one of the many hearings we will have on the need 

for us to focus on water resources and other resources that are necessary to preserve the peace and to make sure that people have a 

right to improve their standards of living throughout the world. So 

with that said, this hearing is adjourned. 

[Whereupon, at 12:22 p.m., the subcommittee was adjourned.] 

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A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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MATERIAL SUBMITTED FOR THE RECORD BY MR. NEIL BROWN, NON-RESIDENT FELLOW, 

GERMAN MARSHALL FUND OF THE UNITED STATES

[NOTE: The entire report is not reprinted here but is available in committee records 

and on the Internet at http://www.gpo.gov/fdsys/.]

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