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Your wish is our command, Part I
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From Claire—Over the weekend, the Cosmopolitan Globalists invited our readers to ask us anything. We confess that we were a bit nervous: What if we threw a party and noone came? Or worse: What if someone asked a question to which we didn’t know the answer?
But our readers pulled through for us with great questions. Forthwith, our answers. (For reasons of space, today’s newsletter will arrive in two parts.)
By Gabriel Mitchell
Question: How serious are the Greece-Turkey tensions? Will they affect the Greek economy, particularly the tourist sector?
Answer: The dispute between Greece and Turkey is serious, but it is unlikely to directly impact the Greek economy and future tourism to the country. Turkey and Greece are interconnected. Despite their historical grievances, they share around US$ 2.8 billion in annual trade, share gas grids, and are both NATO members. Don't forget, the Greek and Turkish tourism economies are also interconnected. A blow to Greek tourism is likely to have a similar effect on Turkey. There is no question that events over the past few years—in particular, Turkey’s decision to challenge Greek maritime boundaries—has tested the resilience of their common interests, yet their membership in the transatlantic alliance provides the blueprint for resolving their issues and resetting relations. The logical mediator is the US or NATO, convincing the parties to resume negotiations and find an equitable solution to their maritime disputes.
So while Turkey and Greece are unlikely to come to direct blows, that doesn’t mean their positions in the Eastern Mediterranean are not in conflict with one another. The two parties disagree over the interpretation of international law and the delineation of maritime boundaries. There are some Greek islands, such as Kastellorizo, which are located only a few kilometers from Turkey, yet theoretically command the same maritime space as the Greek mainland. Turkey’s claim—that it has been blocked out by its Eastern Mediterranean neighbors and doesn’t control maritime space worthy of its size—isn’t completely baseless, but the legitimacy of its position has been undermined by its pursuit of an aggressive game of brinksmanship that threatens regional stability.
Why don’t the two sides hash things out with a few lawyers? Because this is as much about ego and national pride as it is about anything else. In Athens and Ankara, maintaining low-level tensions helps create an environment of being under threat and allows a steady drumbeat of tension that serves everyone’s interests. An escalation would disrupt that equilibrium. But so could negotiations. Perhaps the parties will eventually reach an accord, but that will take some time, and neither side is interested in allowing a third-party adjudicate on their behalf.
Gabriel Mitchell is the Director of External Relations at the Mitvim Institute and a doctoral candidate at Virginia Tech University. His work focuses primarily on the energy geopolitics of the Eastern Mediterranean. Follow him @GabiAMitchell and read his weekly newsletter.
By Claire Berlinski
Question: Any guess when US citizens will be able to travel to the EU? Is fall possible, or maybe not until 2022?
Answer: This is going to depend on the political fight over vaccination passports. Greece and Spain are pushing for the adoption of an EU-wide certificate that would allow people who’ve been vaccinated to travel. Germany and France—both of which are full of anti-vax lunatics—are wobbling about this for fear it would create a de facto mandate to be vaccinated and discriminate against those who refuse. This is entirely desirable, in my view, but politically unpopular. (We’ll see how popular another year of recession proves to be.) If sanity prevails and the EU establishes some kind of program that permits vaccinated people to travel, it seems plausible, even probable, that this could extend to vaccinated Americans by the fall. Germany and France are more powerful than Greece and Spain, but at some point, surely, it will dawn on France that without tourists, the economy will collapse completely.
Or maybe it won’t. The extremely high level of anti-vax sentiment in France doesn’t encourage me to think the French public has an especial gift for rational calculation—or self-preservation, for that matter.
By Jon Nighswander
Question: How should the US deal with Germany? The Germans did a great deal of economic damage to the US (and even more to the EU) in the 2010s; they seem to lack knowledge of basic economics (e.g., countries with trade surpluses should not run large fiscal surpluses; if you punish bankrupt countries they will go even more bankrupt, etc.) How do we prevent this from happening again? What kind of pressure would best work against the German government?
Answer: Let’s start by challenging the initial assertion. How exactly did Germany hurt the US economically? Overall, the US economy grew by 23 percent from 2010 to 2019. US exports to Germany grew slowly during the Obama years and grew rapidly under Trump. The bilateral trade deficit is not surprising, given the US is four times as large as Germany and much wealthier on a per capita basis. No doubt Germany carries out some industrial and economic espionage against the United States, but not at the level of China or Russia, nor even Israel and the UK, if intelligence information that’s been made public is to be believed.
Our interlocutor is on firmer ground in discussing the economic damage Germany has done to the EU. Merkel quietly pursued a Germany First strategy for the first half of the decade, allowing German banks to make risky loans in Southern Europe to feed demand for German imports. She then became imperious and condescending when Southern Europeans couldn’t pay them back.
Germany has to take some responsibility for mismanaging Brexit, too. Most Germans viewed the departure of the UK with barely disguised Schadenfreude when they should have been worried about the EU’s loss of a major player in the world’s culture and economy. Before the referendum, Germany was quite passive; after the vote, Germans affected insult that the British would make such a stupid choice.
On the other hand, not everyone in the EU can complain. For the past decade, the German motor has driven rapid (and underreported) economic growth in Central Europe. Poland, Czechia, Slovakia, and Hungary alike have benefited tremendously by supplying the German automobile and manufacturing industries. Of course, this dependency on Germany creates a stable bloc in the EU in support of German policy towards Southern Europe. Maybe one can put this on the negative side of the ledger.
From the German point of view, their economic strategy makes sense tactically, if not strategically—a consistent and unfortunate thread in German policy since Bismarck’s retirement. German politicians don’t lack basic economic knowledge; they’re simply pursuing convenient policies that provide quick returns to greying German voters. This shores up support for the ruling coalition. Germany’s export-oriented policy devolves, too, from its aging population: domestic demand will always lag. The idea of punishing bankrupt countries plays very well with the German public, and it’s easier to sell the story that the Greeks and Italians were feckless and lazy than it is to tell voters they must tighten their belts because German banks were irresponsible.
Berlin’s commitment to export manufacturing has a particularly unfortunate consequence: Germany has been distracted from developing the digital industries that will dominate the rest of the century. If anything, Germans may soon view the 2010s as the Lost Decade. While the US nurtured a thriving start-up scene and an innovative economy that produced new global, digital brands such as Uber, Netflix, Facebook, Instagram, Twitter, and Tesla, Germany largely remained reliant on the same old mid-20th-century corporations. In 2019, Germany’s top five Fortune 500 companies were still Volkswagen, Daimler AG, Allianz insurance, BMW, and Siemens. There is no German equivalent of Apple or Berkshire Hathaway. One of Germany’s few digital success stories—Wirecard—turned out to be an embarrassing fraud.
The last decade was really rather humiliating for Germany. The lack of infrastructure spending has taken a toll on two once-proud symbols of Bundesrepublik efficiency, the Autobahn and the German Railway. Any long trip within Germany is a choice between fighting traffic jams or risking train delays. The inability to finish public works projects such as the Stuttgart railway station or the Berlin airport stands in stark contrast to the dynamism in Asia, or even Austria: In the past decade, we finished a new central railway station in Vienna, and we’re busy building a new subway line. To cap it off, Volkswagen managed to disgrace the German auto industry and the stubborn commitment to the diesel motor.
Absent reform—given Germany’s inability to deliver vaccines, the lack of real economic stimulus so far to Southern Europe, and the uninspiring politicians jockeying to replace Merkel—the 2010s may look good in hindsight, compared to the 2020s.
If one accepts that a lot of the “damage” Germany caused in the previous decade was in fact the result of German weakness and internal structural problems, the answer to the question—how to deal with Germany—would be to encourage it to deal more effectively with its own internal stagnation. An obvious step would be to stop the self-defeating Trump-era policy of trying to pressure Germany and isolate it. That policy only makes sense if your long-term goal is a solid Russo-Sino-German alliance.
The US should see Germany as a valued partner. Both the US and Germany are now struggling with authoritarian pseudo-populism and Covid19. Both could use the other’s help. The US is still positioned such that it can encourage Germans to see themselves as the carriers of the liberal democratic torch. A concrete step in that direction would be supporting initiatives for deeper EU integration and working toward a more democratic EU, one where Germans align their interests with Europe’s general well-being. Germany and the United States alike would benefit from revisiting the idea of enlightened self-interest.
Jon Nighswander is a partner at Schottentor Capital and a distressed debt investor who works with lenders and debt-holders seeking to recover value from special situations. He lives in Vienna.
By Geoff Marcy
Question: The Norway wealth fund, having amassed US$1.3 trillion from North Sea oil, is taking the high road now and refusing in invest in fossil fuels, with particular opprobrium directed at Canada’s oil sands. The World Bank is being encouraged to cease any investments in fossil fuels. Car makers are committing to build EVs, which will allow wealthier drivers to buy Teslas, subsidized by other taxpayers. Biden forbids a pipeline supplying Canadian oil to Gulf Coast refineries that were built to process that Canadian oil, resulting in it being shipped by rail. Meanwhile, China and India built more coal-fired plants to build on the progress made so far in bringing their masses out of abject poverty, and China offers to build same for neighbours in Asia and Africa. The West, struggling with the debts from dealing with Covid, takes on the Green Mantle and its cost, while advising developing countries to spurn cheap energy and build windmills instead. Unleash your brain trust and tell us how all this could go wrong.
Answer: The question about using revenue from North Sea Oil raises local and global issues. Every country must assemble a local portfolio of electricity generation to meet its energy, environmental, and economic preferences. Each country must divine relative weights for those three preferences, rendered mere guesswork because carbon emission spreads globally, dependent on every other country’s divining. The gaming of greenhouse gases allows some countries to choose cheaper energy sources at the expense of pollution that is globally diluted, motivated rationally by myriad trade-offs in a world of diverse wealth. Humanity needs all energy options on the table.
Humanity faces two severe challenges, with conflicting solutions that bear on geopolitical stability. We need electrical energy for all 7.8 billion of us. We must also reduce the production of greenhouse gases (GHG) emitted by energy generation. These two goals are like asking a long distance runner to run farther and faster, but to stop exhaling. Engines exhale.
Currently, half of the world’s population survives on less than 20% of the electrical energy, per capita, used by the US and Europe. For example, the 1.3 billion people in India use an average of only 7 percent the electrical energy, per capita, used by people in the US and Sweden. The developing world needs more energy production to raise their standard of living.
GHG production, notably carbon dioxide and methane, spew into the Earth’s atmosphere when we burn gas and coal to produce electrical energy. We need to bring our worldwide GHG production of 50 billion tons per year down to nearly zero, in 30 years, just to stop increasing the existing atmospheric pollution.
For any remaining doubters of climate change (are there any?) the world is measurably warming, and glaciers are retreating—no matter your theory of the cause. Burning natural gas or coal simply adds yet more GHG to the atmosphere that will trap even more infrared heat within our planet, warming it more.
Mitigation of climate change deserves more attention, such as building storm walls and moving folks away from the shoreline. But many cultures dependent on their farms will suffer from inadequate rain or flooding, unable to migrate across borders. Kansas farmers should be worried.
To study solutions to this energy-climate quandary, we need a laboratory—a closed box with a mock planet to do experiments. Fortuitously, we have a mock Earth: Texas, the self-described energy capital of the world. The Texas legislature established a grid system, the Electric Reliability Council of Texas, that’s self-contained—disconnected from energy sources from other states. Hence the fortuitous closed-box lab experiment.
During Presidents’ Day week in the US, a rare winter storm brought sub-zero temperatures along with snow and ice to most of Texas for four days. On February 16, Dallas hit -2oF. The arctic conditions forced several natural gas and coal-fired power plants offline. Some wind turbines iced over, impossible to repair in the bad weather, and clouds blocked the sunlight from the solar panels. Thus energy production from both fossil fuels and renewables was compromised. The Texas grid rationed electricity, with millions of citizens getting only an hour or two per day, even though 60 percent of Texans depending on electricity to heat their home.
Texas gets most of its electricity from natural gas, followed by wind and coal. Nuclear power supplies only 15 percent. What infrastructural and grid-management changes does Texas need to be less vulnerable to such a disaster?
The media descended into a frenzy of partisan misinformation. The left-leaning media blamed Texans for being cheapskates—for funding a minimal power grid vulnerable to fluctuating demand (yes, that was dumb, but more on this later). They mocked the use of natural gas, typical of oil-loving Texans, doing double-duty for electricity and heating. They pointed out that the gas plants and supply lines failed.
Meanwhile, the right-leaning media whined about the Texas folly of going green and using renewable sources such as wind turbines. Indeed, when ice freezes on blades, aerodynamic performance declines. Sweden has developed mitigating technology; cold-weather packages heat turbine components such as the gearbox and motors.
More important, when heating needs rise, the energy production from wind turbines can’t ramp up: There is only so much wind. Texas was able to burn more gas to meet demand, but even that wasn’t enough. During this storm, wind turbines provided only 8 percent of the heightened electricity demand. The right-leaning media conveniently downplayed the compromised gas plants that suffered from low fuel supply reapportioned to heating and the compromised pipelines that malfunctioned in the cold. Gas helped the shortfall of wind and solar, but not enough.
Media circus aside, this storm is not that unusual for Texas. It has experienced sub-zero temperatures ten times in the past hundred years. The Texas closed-box experiment informs Texas, as well as the developing world: We need reliable delivery of electrical energy, day or night, sunny or cloudy, wind or no—and it must not produces greenhouse gases.
The Texas experiment points to a solution for the world, too: One that has already been highlighted by environmentalists and think tanks. Many studies show that the electricity needs in each region of the world can’t be met by wind turbines and solar panels alone. It’s not windy and sunny around the clock. Batteries are expensive.
Wind and solar come with environmental hazards, too. Wind turbines kill hundreds of thousands of birds every year, including the most majestic of them, eagles and hawks, which are sliced up by the huge rotating blades. Solar panel farms are placed in the desert and cover thousands of acres. The construction process involves bulldozing and leveling it all—killing the tortoises and reptiles in the way. Attempts to relocate all of these creatures have so far been only partially successful.
Hydroelectric power remains a piece of the energy puzzle. But dams already dot most of the world’s rivers. They do horrific damage to fish spawning cycles, river valley ecosystems, and the indigenous people who are displaced, such as the millions evacuated upstream from the Three Gorges Dam.
Conservation and energy efficiency are also helpful. The US and Europe have slightly reduced their greenhouse gas emissions in the past few years. Bravo!
The dual crises of global energy requirements and greenhouse gas emissions have no perfect solution, in large part because the world population will grow to 10 billion in a few decades. Yet we need to reduce emissions, meet air quality standards, and achieve carbon-free electricity grids around the world.
We may draw from one additional energy source, and one emerging technology.
Many dismissed nuclear power long ago, concerned about meltdowns, nuclear waste storage, and nuclear weapons. Now, faced with this energy and climate crisis, people across the political spectrum are reconsidering nuclear power, encouraged by improvements to reactor safety and product waste management, better regulations, and our need for carbon-free energy.
Nuclear power plants provide electricity on demand, day and night, wind or no. They produce no greenhouse gases during operation. Anyone seriously concerned about the electrical needs of billions of people in developing countries and climate change should be willing to evaluate nuclear power anew.
The Biden-Harris clean energy plan specifically includes “advanced nuclear reactors that are smaller, safer, and more efficient at half the construction cost of today’s reactors.” Biden learned in the Senate that over the past two decades, engineering improvements in nuclear power have continued steadily, overseen by the Department of Energy.
The plan includes nuclear power to provide “an equitable clean energy future.” It calls for moving “ambitiously to generate clean, American-made electricity to achieve a carbon pollution-free power sector by 2035. This will enable us to meet the existential threat of climate change while creating millions of jobs with a choice to join a union.”
President Obama also strongly supported nuclear power. For example, his FY 2016 Budget contained US$ 900 million for nuclear power research, engineering, and tests.
Nuclear is the largest source of clean power in the US, contributing 800 billion kWh annually, all free of greenhouse gas emission. And it is highly reliable: day or night, wind or no, 24/7, 365 days a year. In 2019, nuclear plants operated at full power 93 percent of the time.
As the Biden Administration notes, nuclear plants provide good union jobs. And nuclear technology can be sold to other countries, building valuable partnerships and helping to solve their energy needs while addressing global climate change.
The danger of nuclear power is, of course, accidents Fukushima and Chernobyl are prominent in the public’s minds. But Fukushima was placed at an ill-advised location, near a fault line and a shore where a tsunami could do damage. Mark Ramsayer asked why Japan allowed this “high damage, high probability event.” He concluded Japan’s poor tort system imposed inadequate disincentives. Obviously, placing reactors near fault lines or where tsunamis may hit should be forbidden for all future reactors.
Chernobyl represents old-style, Soviet engineering that is not remotely representative of modern engineering and safety standards.
The storage and disposal of radioactive waste from the plants also prompts concern. Spent fuel is now stored at 76 reactor or storage sites in 34 states, where the Department of Energy oversees storage until a more permanent solution can be found. We do, absolutely, need a long-term storage and transport solution. But our planet has enormous surface area, including remote locations that allow deep underground storage, albeit ones that must provide structural integrity for thousands of years.
Many of us were opposed to nuclear power for decades. But thoughtful people absorb new information and reevaluate. Nuclear engineering has progressed enormously. Climate change is accelerating, chiefly because billions of people’s living standards are rising. Thirty years ago, the trade-off between safety and environment favored, perhaps, caution. Many leading environmentalists have changed their minds.
France understands the tradeoff. It derives 72 percent of its electricity from nuclear energy. There have been no accidents. Macron and France plan to mix in wind turbines and solar power so that by 2035, nuclear power will contribute 50 percent of France’s power. With the Paris Accord in mind, France is constructing a rational suite of energy sources.
The Department of Energy is pursuing multiple paths toward new nuclear power plants. A new reactor at Plant Vogtle in Waynesboro, Georgia, will begin operation in 2021 and 2022. The Department is also developing smaller reactor designs, including small modular reactors, the size of a small building, that produce 10-100 megawatts of power. Their advantages will include low capital costs and incremental expansion, along with improved liquid cooling.
These reactors are small enough to be placed underground, adding security against sabotage, and they will operate with low-enriched uranium, 5 percent U-235, similar to current nuclear plants. These reactors will have security built in as the highest priority. The department is also studying “microreactors”. These offer even lower construction costs, shorter lead times, and greater flexibility in siting.
Smaller still are Multi-Mission Radioisotope Thermoelectric Generators that provide 110 Watts of electrical power. Indeed, the US Mars lander, Perseverance, that just landed on Mars derives its electrical power from such a generator onboard.
In the background, the department makes use of, and oversees, American engineering contractors for the development of these reactors. The department announced in October 2020 that it selected two teams to receive $160M in initial funding under the new Advanced Reactor Demonstration Program, which is meant to help domestic private industry demonstrate advanced nuclear reactors in the United States. The Department of Energy is awarding TerraPower LLC (Bellevue, WA) and X-energy (Rockville, MD) US$80 million each in initial funding to build two advanced nuclear reactors that can be operational within seven years.
No energy source is without its safety concerns, and none currently provides adequate amounts of energy, especially during inclement weather. The proper approach is to mix nuclear power with wind, solar, and natural gas to provide electricity for the world that is nearly carbon-free and that functions during rare weather events.
Bringing reliable, carbon-free electricity to both developing and developed countries involves two other issues: cost per kWh and demand fluctuations. The cost of wind turbines and photovoltaics are dropping, keeping them competitive, per kWh, with gas and nuclear power. Wind and solar remain key components in any country’s energy portfolio. But both suffer from vicissitudes of weather.
For already-developed countries, Li-ion battery storage can augment the electrical grid to mediate the fluctuations of demand, rather than simply build more power plants for bad weather. The cost per kWh favors such batteries, and the renewable power plants already exist. For developed countries, a rational strategy is to maintain, and grow, the suite of power plants, phase out gas and coal, and install Li-ion battery storage. The ensemble must be optimized for cost per kWh. Wind, solar, and nuclear all should be promoted, as France is doing, with Li-ion batteries accommodating peak demand.
In contrast, developing countries enjoy the dubious advantage of assembling their electrical power grids from scratch, optimized for cost per kWh, without old power-plant baggage. For those countries, nuclear power achieves both goals of reliable, on-demand electrical power and zero carbon emission. They will not need to pay for enormous Li-ion battery plants.
Is nuclear power economically competitive with wind and solar? China has done the math, deciding to build 45 nuclear reactors since 2000—some for other countries. In addition, of the 54 reactors under construction in the world, 20 stem from China or Russia. By the way, China puts Chinese flags atop their reactors, as with their landers on the Moon and Mars.
Power plants in developing countries matter more to climate change. China is already emitting more greenhouse gases than the US and Europe combined. Southeast Asia and India will soon match China in emissions. Four billion people in developing countries require a dependable energy source that produces no greenhouse gases. Nuclear power should be a major component in their electrical portfolio.
In a larger sense, a fundamental disease in Western liberal democracies is our poor (vanished?) ability to hold town hall meetings to discuss the multidimensional components of changes we face and to arrive at mutually appreciated solutions. Discussions of climate change and nuclear power—or our lack thereof—are an example of this disease. Many Democrats believe climate change poses a threat to the survival of Homo sapiens. Nancy Pelosi called climate change “The existential threat of our time.” These same Democrats find nuclear power unacceptable. Bernie Sanders and Elizabeth Warren are opposed to nuclear power, and most of the moderate Democrats oppose any construction of nuclear power plants. Rational discussion would weigh the projected deaths of billions against the a few hundred deaths every 20 years.
The right, meanwhile, insists that Texas’s blackouts were caused by windmills—and the Green New Deal.
US democracy is so diseased that we cannot even discuss the no-brainer solutions to our problems, such as nuclear energy. We have no town hall meetings for calm, informed discussion of the risks of nuclear power and climate change, and the benefits and costs of policies to mitigate them. A town hall meeting would start with shared goals—a world with few deaths and reliable electricity for the lowest cost. Joint metrics and trade-offs could be discussed.
So many issues, especially those of existential importance (such as CRISPR gene editing), would benefit from calm discussions of actual goals, risk-reward, and shared appreciation of adopted policies. Instead, we have 50 percent of the population red-faced and angry about every issue. Voting should be the last resort of democracy, not the first.
The CCP system will win, and the West will disintegrate, if we can’t rediscover our ability to have sensible and adult town-hall discussions and shared goals.
Geoffrey W. Marcy, a Ph.D. astrophysicist, has co-authored 375 scientific papers in peer-reviewed journals. He was named California Scientist of the Year in 2000 and awarded the NASA Medal of Exceptional Scientific Achievement in 2003.
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