“The first thing we have to do is to recognize the magnitude of the geopolitical shock to global energy markets that has occurred” – Ed Chow, CSIS said at the Tbilisi international conference by The McCain Institute at Arizona State University (ASU), the George W. Bush Institute and the Economic Policy Research Center (EPRC). The two-day conference is titled ‘Slava Ukraini’ in support of Ukraine.
According to Chow, the world is facing the greatest geopolitical shock sine the World War II. “Even for those of us who remember the twin oil shocks in 1970s I think we will look back and say that this has a bigger impact – Ed Chow stated on the conference panel ‘The Western Response to Russia’s Invasion of Ukraine’, adding that for those who won’t remember the 1970’s, the Arab oil embargo lasted for 5 months while this war has gone for six months with no end in sight.
“This is very serious and we should recognize the magnitude. As the Belgian government, both Prime Minister and Energy Minister said recently, this is not a problem of one year but 5 to 10 and maybe longer” – Ed Chow emphasized.
According to the international energy expert with 40 years of industry experience, economic sanctions take a long time to work, if at all. “Our sanctions are notoriously leaky – Ed Chow stated.
Making parallels with Saddam Hussein’s Iraq and Mohammed Gaddafi’s Libya, the panelist maintained that it was ultimately the US military intervention that took care of the situation – in both cases – not sanctions. “And in this case, Ukraine is not asking west to fight for it.
It’s asking the west would arm Ukraine for the fight for themselves but also for the Western security and Western values, at the same time” – Ed Chow stated.
According to the senior associate in the Energy Security and Climate Change Program at CSIS, there’s no silver bullet in an oil ban of or a price cap if the objective is to end this war as quickly as possible.
“Economic sanctions are necessary to degrade Putin’s ability to wage this war in the medium to long term – Ed Chow said - But let’s face it: he [Putin] is waging this war with the energy revenue from the last 20 years, not with the energy revenue of this year. And this is very important to remember”.
According to Chow, as the winter is approaching, the cohesion of allies will be tested: “We have the very unfortunate incident couple of weeks ago with the American Energy Secretary – he told the attendees of the conference - writing to refining companies in the US saying, please, don’t’ export as much petroleum products as you’re currently doing – maybe, you should be building domestic stock. And if you don’t do something about this, maybe the government will have to consider measures to force you to do so. This is very dangerous talk because western solidarity in energy security is extremely important”.
Ed Chow believes the US will have the same issue with the liquefied natural gas. “The US natural gas prices are now three times what they were a year ago this time. European Natural Gas prices are 10 times higher than the US natural gas prices. So we should be supporting Europe by continuing our commitment to free trade in energy. But if we send signals of not doing that, then alliance unity would frail” – he said, adding that the Europe is going to have a similar political issue when it comes to sharing gas storage this winter. “That’s going to be a tough nut to crack” – Ed Chow said.
According to the international energy expert with 40 years of industry experience, the West needs to explain to its own populations the magnitude of the situation that the West’s own interest are at stake.
“At least speaking for the United States – Ed Chow continued - I don’t think that’s been well explained. We’re telling Americans that we are here to help Ukraine but not for our own interests as well. In order to do this politically, we need to explain to our people what’s at stake. The US have a role to play and we should step up more and think long term and not just think about gasoline prices for the summer or for this fall” – Ed Chow concluded his speech as the panelist of Tbilisi International Conference by The McCain Institute at Arizona State University (ASU), the George W. Bush Institute and the Economic Policy Research Center (EPRC).
This is the sixth convening of the Tbilisi Conference since 2014.
