Press Release of Senator Lugar Lugar Lays Out Foreign Policy Agenda for Next President Wednesday, October 15, 2008 At the National Defense University today, U.S. Sen. Dick Lugar laid out a new foreign policy approach for the next president focusing on energy security, trade, climate change, and pro-active American leadership.   I am especially grateful for the opportunity to speak to you at such a momentous time for our nation and our government. Although almost every Presidential election is billed as the "most important ever," it is hard to imagine a more consequential set of issues that will face the next President.    Like most of you, I have followed the foreign policy debate between the Presidential candidates closely. Aside from strategy related to the ongoing wars in Iraq and Afghanistan, the foreign policy question that has received most attention during the Presidential campaign is when and how to engage hostile or uncooperative regimes. In the first presidential debate and frequently on the campaign trail, Senator McCain has criticized Senator Obama for allegedly being willing to negotiate directly with the leaders of such rogue regimes as Iran, Venezuela, and Cuba.   Senator Obama has countered that this is an oversimplification of his position, saying that he favors more consistent and nuanced diplomatic approaches to such regimes and an avoidance of establishing preconditions for talks that are unlikely to be met.   Typical of hard fought Presidential campaign issues, this debate has been characterized by hyperbolic rhetoric that seeks to influence the gut-level impulses of voters. Even so, the exchange is a reflection of one of the most frequently discussed issues in U.S. foreign policy circles. Specifically, what relative weight should be assigned to diplomacy versus other instruments of power - including military force - as we seek to address challenges posed by hostile nations?   Clearly, there is truth in the positions of both Senator McCain and Senator Obama. As Senator McCain suggests, there are times when diplomatic approaches to rogue regimes have little efficacy. No President should undertake discussions for the sake of appearances, and the President should be mindful of the legitimacy such talks might confer on particular leaders. But as Senator Obama has argued, isolating regimes, though sometimes necessary, rarely leads to a resolution of contentious issues. He correctly cautions against the implication that hostile nations must be dealt with almost exclusively through isolation or military force. In some cases, refusing to talk can even be dangerous. Negotiations on some level are particularly necessary in circumstances where the nations in question are prone to miscalculation or misinterpretation of U.S. intentions. For example, I have advocated much more regular contact between the United States and the governments surrounding Iraq, including Iran and Syria, primarily because greater transparency is inherently useful in dealing with regional issues stemming from the Iraq war, including refugee flows, border security, and humanitarian efforts. North Korea offers another example where talks have had inherent value. This is because North Korean assumptions and analysis about the United States and much of the outside world are so frequently distorted and their tendency toward dangerous miscalculation is so pronounced, that efforts to provide the government with a less insular picture of our intentions are essential.   The debate on when to pursue diplomacy - and by implication, when to pursue military force - is a logical one to have arisen in this campaign season, given the war in Iraq. But I would suggest today that despite its prominence, it does not reach the essence of the strategic problems confronting the United States in the coming decades. In fact, it underscores the degree to which U.S. foreign policy has become reactive. It defines foreign policy as a defensive exercise in which we struggle with nearly intractable problems - usually associated with a specific country, be it Iran, North Korea, Iraq, Russia, Cuba, Venezuela, etc.   Sometimes protecting national security does come down to a crisis response. But if most U.S. foreign policy attention is devoted to crises fomented by hostile regimes, we are ceding the initiative to our enemies and reducing our capacity to lead the world in ways that are more likely to affect our future.  I am not suggesting that the United States can ignore states like North Korea and Iran. I am suggesting that we cannot afford to allow our concern with such regimes to shorten our strategic horizon, militarize our foreign policy, unjustifiably concentrate our resources, or rob us of our strategic initiative.   If the United States is to remain secure and prosperous it must seek to shape the diplomatic and economic conditions in the world. We should be asking how do we change the rules of the game in ways that benefit a stable global order based on commerce, open borders, secure sea and air routes, adequate food and energy supplies, and the free flow of information? How do we organize the world and raise costs for those pursuing a course inimical to our interests? How do we avoid repeatedly being confronted with nothing but bad options - one of which usually is military force?     In other words, to make diplomacy effective, we have to work constantly to ensure that we can apply a broad range of geopolitical leverage when we need to do so.   This is the work of foreign policy that does not make headlines and is all too often neglected by policymakers and historians alike. We have a tendency to glamorize the dramatic milestones of foreign policy: military operations, summits, diplomatic crises, or groundbreaking speeches. Historic landmarks like the Cuban Missile Crisis make for compelling treatment in books and movies. Such events capture our imagination, because we relive the struggles of leaders during times of great risk as they weigh the potential consequences of their actions.   But the effectiveness of our policy usually depends on the preparation that has occurred over decades.   It depends on how diligently we have attended to the fundamental building blocks of U.S. foreign policy, especially alliances, trade relationships, well-functioning embassies, reliable intelligence, humanitarian contacts, effective treaty regimes, and a positive reputation abroad. If this preparation has been neglected, no amount of charisma, bravado, or diplomatic skill by the commander in chief and the national security team will make up the deficit. Attending to the building blocks of national leverage not only increases our opportunities for foreign policy success, it decreases the chances that we may be cornered in a position where military force becomes necessary.   To amplify this dynamic, I would cite two current cases: one in which our government has succeeded in implementing a game-changing policy that opens up new economic and strategic opportunities that may benefit our diplomacy for decades; and one in which the United States strategic position could be severely weakened unless our government and those of our allies respond with greater cohesion and commitment.   India Nuclear Agreement   I will begin with the success story. By far the most forward looking foreign policy achievement of the current Administration was the recent nuclear agreement with India, which could free the U.S.-Indian relationship from decades of contentiousness. The agreement allows the United States to engage in peaceful nuclear cooperation with India. It will allow India to receive nuclear fuel, technology, and reactors from the United States -benefits that were previously denied to India because of its status outside the Nuclear Non-proliferation Treaty. For its part, India has created a new national export control system; promised to maintain its unilateral nuclear testing moratorium; pledged to work with us to stop the spread of enrichment and reprocessing technologies; proposed to separate its civilian and military facilities, and committed to place its civilian facilities under IAEA safeguards.      The benefits of this pact are designed to be a lasting incentive for India to abstain from further nuclear weapons tests and to cooperate closely with the United States in stopping proliferation.   But the strategic benefits of the relationship extend far beyond the nuclear agenda.   In response to India’s nuclear program and tests of nuclear weapons, the U.S. had systematically denied broad categories of sensitive technology to India. These included supercomputers, missile and space technology, satellites, advance fighters, microelectronics, and fiber optics.   From the Indian perspective, U.S. denial of these technologies limited their economic advancement and signaled to other nations that they could not be trusted.    One of the most important measures of trust between nations is the degree to which they are willing sell sensitive technology to one another. By this measure, the United States, for decades, had placed India into a lower tier of nations who were neither friends nor enemies. India responded by helping to lead the Non-aligned movement in frequent opposition to U.S. global initiatives at the United Nations and elsewhere.    The nuclear agreement just signed is the culmination of a process designed to open up broad categories of technological cooperation with India. The agreement moves India into a far more advantageous position - perhaps not equal to close allies like the United Kingdom, Japan, Israel, and Australia - but near enough to accommodate a blossoming of economic and strategic cooperation.   We have already received some benefits from this engagement. India is taking a more positive outlook toward the U.S. military presence in Afghanistan than it did originally. It supported our efforts to constrain Iran’s nuclear program through its votes in the IAEA Board of Governors in 2005 and 2006. India has also taken a more supportive attitude toward the Proliferation Security Initiative, though it has thus far declined to join.   The bottom line is that American efforts to shape the world are unlikely to succeed fully without the cooperation of India. Its sheer size ensures that it will have an enormous impact on the global economy. The agreement gives us a better chance to cooperate with the Indians on limiting carbon emissions.    We have a strong interest in expanding energy cooperation with India to develop new technologies, cut green house gas emissions, and prepare for declining global fossil fuel reserves. The United States’ own energy problems will be exacerbated if we do not forge energy partnerships with India, China, and other nations experiencing rapid economic growth.   The agreement also improves our access to the burgeoning information technology industry in India and strengthens our position related to strategic issues pertaining to China, on which India is naturally predisposed to be with us.   A closer relationship with India, gives us more diplomatic leverage in preventing flare-ups of the conflict between India and Pakistan. Further down the road, it is reasonable to expect greater conventional military cooperation with the Indians as they buy more of our weapons. This could be critical to areas of joint interest, such as counterterrorism and the suppression of piracy.   With a well-educated middle class that is larger than the entire U.S. population, India can be an anchor of stability in Asia and a center of economic growth. By concluding this pact, the U.S. has embraced a long-term outlook that will give us new diplomatic options. It is an opportunity to build a strategic partnership with a nation that shares our democratic values and will exert increasing influence on the world stage.                            Russian Energy Monopoly   In contrast to this forward looking initiative, history may record Russia’s unchecked movement toward an energy supply monopoly over our European allies, as one of the most damaging foreign policy developments of the post-Cold War era. American and European efforts to mitigate this advance have been tentative and lacking in high-level focus. This failure is all the more disheartening given that the process of NATO expansion, achieved over the last decade and a half, has been a model example of a game-changing foreign policy initiative that has yielded enormous long-term security and economic benefits.   Earlier this year at a summit in Bucharest, Romania, NATO failed to provide Ukraine and Georgia with Membership Action Plans that would put them on a path to join the alliance. This was a critical error that has had broad implications for European security and catastrophic consequences for Georgia. Numerous reasons were cited for withholding the Membership Action Plans, including a lack of public support for NATO membership in Ukraine and frozen conflicts with Russian-backed separatists in Georgia. But these justifications were not the real reasons. The decision arose out of European fears of Russia’s use of energy supplies as leverage against alliance members. Unfortunately, the United States failed to provide the leadership needed to overcome these impulses. The conflict in Georgia has been the most notable manifestation of this wider failure. It has amplified the importance of energy as a strategic priority in capitals across the region, but it is far from certain that it will be enough to overcome European disunity on the issue.    Access to adequate energy supplies is critical to European prosperity and security and this has resulted in government decisions based upon fear rather than a strategic vision. The current environment is further complicated by a continent increasingly divided between energy "haves" and "have-nots." The "haves" enjoy long-term energy contracts with Russia and Gazprom, and personalized pipeline systems. The "have-nots" are former Soviet and Warsaw Pact states located in what the Kremlin calls its "sphere of influence" that have repeatedly weathered Russian demands for foreign policy concessions backed up by threats of energy cutoffs. These have-nots are being bypassed by new Russian energy pipelines, increasing their vulnerability to energy blackmail.   The Kremlin and Gazprom have shut off energy supplies to six different countries during the last several years. Russian claims that these shutoffs occurred simply to compel countries to pay full market prices have been echoed by some European governments. Unfortunately, the facts don’t support this assertion.    Two years ago at the NATO summit in Riga, Latvia, I encouraged the Alliance to make energy security an Article V commitment in which a member experiencing a deliberate energy disruption would receive assistance from other alliance members. I argued that there was little difference between an armed invasion and an energy cutoff. A natural gas shutdown to a European country in the middle of winter could cause death and economic loss on the scale of a military attack. Such circumstances are made more dangerous by the prospects that nations would become desperate, increasing the chances of armed conflict and terrorism.    Many Europeans felt I raised a valid point but that this was not a subject they were inclined to discuss in public. Others argued that energy issues should be handled by the European Union, not NATO. I am less interested in which organization leads the effort, than in ensuring that someone leads. Neither NATO, nor the EU has developed an adequate strategy to address Europe’s energy vulnerability.   Meanwhile Russia continues to enhance its near monopoly over European natural gas supplies. In addition to bilateral deals with Germany to construct the Nord Stream pipeline and with Italy’s ENI to construct the South Stream pipeline, Russia has inked supply agreements with Greece, Bulgaria, and Hungary. These nations had little confidence that their western neighbors would support them in case of an energy emergency, and they reacted by seeking their own separate deal with Russia. Such deals are being made from positions of weakness. European governments are being forced to surrender majority shares of national refineries and energy transportation systems.   The perceived success of these energy policies in Moscow has given hope to Russian ambitions that some parts of the Soviet-era sphere of influence could be firmly re-established. These ambitions, coupled with the West’s disunity, have caused some NATO allies on the periphery of the alliance to worry about the reliability of NATO’s Article V commitment to come to the aid of a member state that is attacked. Thus, one of the cornerstones of U.S. foreign policy– the maintenance of a secure, prosperous, and largely united Europe able to function as an engine of economic growth and a reliable ally – has been put at serious risk.    Moreover, our failure to counter Russia’s energy strategy has increased incentives for Moscow to depend even more heavily on the leverage it can exert through its oil and natural gas. Faced with the recent sharp decline of the Russian stock market and the withdrawal of investment after its invasion of Georgia, Moscow may see declining benefit in economic diversification and cooperation with the West. If this leads to greater coordination with Iran, Venezuela, and other energy producers to control energy production, our interests will be even more sharply at odds with Russia’s course. Russia has already advocated for a global natural gas cartel and proposed a trans-Saharan pipeline linking West Africa to export terminals in North Africa in an effort to gain leverage over African gas supplies to Europe.   While several NATO and EU members have pursued a unified European energy strategy, others have frustrated the formulation of a European policy. Some of NATO’s largest governments worked to ensure that no reference was made to energy security in the Bucharest summit communiqué. Some European leaders have argued that energy is an economic issue that depends on markets and should not involve governments. Unfortunately, energy suppliers are not playing by these rules. It is difficult to distinguish where the Russian Government ends and where Gazprom begins. Clearly Gazprom has sacrificed profits and needed domestic infrastructure investments to achieve Russian foreign policy goals.   Many in Eastern European governments will privately concede that the Nord Stream and South Stream pipeline projects are threats to their security. The effect of Nord Stream and South Stream will be to increase overall European dependence on Gazprom and make it easier to divide Europe on critical foreign policy issues. European unity will be far more difficult to maintain when half of Europe can be subjected to energy cutoffs while deliveries can continue to the others.    Russia will be Europe’s preeminent energy supplier for decades, but this does not mean that the trans-Atlantic community is powerless.   Establishing a Trans-Atlantic Energy Policy   It is past time for the trans-Atlantic community to establish a credible energy security strategy that diversifies energy sources for all Europe and that refuses to tolerate the use of energy as an instrument of coercion. By establishing such a strategy and combining their purchasing power, Europe can ensure that states receive equal and non-discriminatory treatment.   I believe NATO should play a leading role in formulating and advancing such a strategy because energy and security are synonymous. As the world’s preeminent security alliance, it is NATO’s duty to respond to crises threatening member states as well as act to prevent such crisis. Failure to address energy will undermine the alliance’s ability to act in a unified way on these core functions.    While the current situation appears bleak, progress in unifying Europe behind a cohesive energy policy can be made in the near term. A first priority should be completing the so-called East-West energy corridor to bring oil and gas across the Caspian from Central Asia to distribution from Central Europe. Success requires leadership in promoting Caspian sources of energy with independent transportation routes; supporting pro-Western governments in Azerbaijan, Georgia and Turkey that host significant energy transportation routes; and developing strong multilateral support and funding for the Nabucco pipeline.   Kazakhstan and Turkmenistan hold large energy reserves. While not as large as Russia’s, they can play a pivotal role in European diversification efforts. Leaders in both governments told me they wanted more dialogue with the West when I visited them earlier this year. Nevertheless, Kazakhstan and Turkmenistan recently concluded large-scale agreements with Moscow to sell gas and oil to Russia for delivery to European markets. In part, these deals were reactions to the failure of the West to provide alternatives and to engage leadership in the region. Both countries understand that while maintaining trade with Russia, it is in their interests to diversify their export opportunities.    The willingness of these governments to discuss trans-Caspian alternatives will not turn into investments on the ground without concerted, high-level engagement. Prime Minister Putin visits the region several times a year, and his personal diplomacy has been critical to Russia’s success. NATO and EU leaders have not devoted the time, energy, and political capital required to solidify Western relationships in the region.   I strongly urged the Administration to appoint a Special Energy Envoy to the Caspian region. The White House responded by naming C. Boyden Gray to the position. Notwithstanding the contributions a Special Envoy can make, it is time for a U.S. President to visit Central Asia and make these critical geostrategic arguments in person. I would applaud a visit by President Bush in his last months in office, but his successor must certainly make a visit to Central Asia a high priority early in his presidency.   Energy resources from the Caspian are dependent upon Azerbaijan, Georgia, and Turkey. These three countries host the Baku-Tbilisi-Ceyhan and South Caucasus pipeline, which carries gas and oil from Azerbaijani fields in the Caspian toward Western markets. To ensure true resource diversification, the trans-Atlantic community must continue to support the independence and democratic transformations in the Caucasus. European intransigence on future Turkish membership in the EU also has consequences for energy security. Unfounded fears of mass migration and other cryptic concerns must be rejected. The situation in Iraq has strained the U.S-Turkey bilateral ties. It is time for the United States to redouble our efforts to improve the relationship and support Turkey’s EU ambitions. Turkish membership is important to regional security, outreach to the Muslim world, and energy independence.    The Nabucco natural gas pipeline is intended to connect energy infrastructure nodes in Turkey and Austria passing through Bulgaria, Romania, and Hungary. It is intended to be the final link connecting Caspian energy resources with European consumers, but it is being challenged by Russian-backed pipeline proposals to cross the Black Sea.    Numerous NATO and EU member states have attempted to make the Nabucco pipeline a reality. Unfortunately their efforts have been stymied. Intransigent European governments must be convinced that long-term security interests are not served by developing a two-tier European energy society. European history has proven that insecurity in one country is enough to provoke reactions across the entire continent.    Although diversifying energy transit routes from Central Asia to Europe should be a first priority, this does not diminish the importance of rapid progress in building energy trade with North African countries, increasing use of biofuels, improving efficiency in power and transportation, deploying of clean coal and carbon sequestration technologies, or increasing usage of nuclear power. Likewise, proactive engagement with Russia to push for market-oriented energy policies is necessary. Without decisive action by the trans-Atlantic community to turn back Russia’s current efforts to further monopolize gas supplies, Western unity on a wide range of security issues will be put in jeopardy. In such an environment, it may become increasingly difficult to find common ground with a more strident Russia. The trans-Atlantic community must come to grips with the fact that our future is threatened by the continued abdication of leadership on energy.   Conclusion   The United States faces dynamic world conditions that bear little resemblance to the Cold War era in which most current policy-makers came of age. The global financial crisis has demonstrated both the connectedness and the fragility of the world economy. Meanwhile, we are struggling to come to grips with the rapid economic advancement of China, India, Brazil, and others. Even as new economies try to find energy to fuel their ambitions, the specter of climate change looms with unpredictable implications for economic activity and conflict. We are witnessing troubling trends in global food production, communicable diseases, and water resources that will continue to impact economic and political stability. The massive transfer of wealth to energy-rich states has turned some corrupt and hostile regimes into regional powers. The spread of information technology has opened up wonderful possibilities for global cooperation, but it has also helped to empower terrorist cells.   To successfully deal with these and dozens of other conditions, the next Administration must think every day, not just how to solve problems that are already manifest, but how to increase U.S. leverage in the future. No amount of skillful decision-making can make up for a diminishment of the core strength of U.S. foreign policy. Maintaining this core strength is painstaking work. It can be measured in alliances, trading partners, diplomatic capabilities, exchange programs, international agreements, global respect, and numerous other factors.   With this in mind, each of you should think of how you can contribute to the retooling of U.S. foreign policy. And you should think about how we can undertake broad diplomatic offensives based on that core strength, which will achieve transformational outcomes. With patient investments in the building blocks of national security and attention to long term strategic opportunities, the United States will thrive in this century as we did in the last.   ###