The coming Atlantic century

HE US is rising; Europe is stabilising and both are moving closer together. That was the principal message earlier this month at the annual Munich Security Conference (MSC), a high-powered gathering of defence ministers, foreign ministers, senior military officials, parliamentarians, journalists and national-security experts of every variety. The participants came primarily from Europe and the US. Indeed, when the conference began in 1963, it was focused entirely on Nato members. This year, however, senior government officials from Brazil, China, India, Nigeria, Singapore, Qatar and Saudi Arabia also joined - an important sign of the times.

John McCain, the US senator and 2008 presidential candidate, always leads a large congressional delegation to Munich. The US administration also typically sends the secretary of defence or the secretary of state to deliver a ritual speech, reassuring the Europeans of the strength of the transatlantic alliance. This year, US Vice-President, Joe Biden, did the honours, bumping the US representation up a notch.

The conference also featured a panel on an unusual subject - 'The American Oil and Gas Bonanza: The Changing Geopolitics of Energy'. US Special Envoy and Coordinator for International Energy Affairs, Carlos Pascual, described "the US internal energy revolution" as: A 25 per cent increase in naturalgas production, which should push down US gas prices and enough oil output to reduce oil imports from 60 per cent to 40 per cent of consumption, with an additional 10 per cent increase projected.

Pascual projected that the US will be able to import all of its energy needs from within the Americas by 2030. A recent confidential study by the German Intelligence Agency raises the possibility that the US could actually become an oil and gas exporter by 2020, in contrast to its present position as the world's largest energy importer. That honour will likely fall to China then, which will become increasingly dependent on the Middle East. As an extra bonus, the higher US proportion of gas use has reduced US carbon emissions to 1992 levels.

The sense of US "good fortune", a phrase that is not often heard around the world these days, increased with the panelists' description of how lower energy prices for US manufacturing has a broad positive impact on the American economy's competitiveness. As a result, the country's energy reserves have also become an investment magnet. German Minister of Economics and Technology, Philipp Rosler, said that many German firms were already relocating to the US because of lower energy prices.

Equally important, the panelists reported on the rising importance of liquid natural gas relative to pipeline gas, which has enormous geopolitical implications. In a nutshell, if gas is exported in liquid form, it is fungible. In other words, if Russia restricts the flow of gas to Ukraine for political reasons, but the rest of Europe has gas from other sources, they can simply resell their gas to Ukraine and export it via the Baltic Sea.

Jorma Ollila, Chairman of Royal Dutch Shell, described the global map of major shale oil and gas deposits. Ukraine itself has the third-largest reserves in Europe; other countries with large deposits include Poland, France, China, Indonesia, Australia, South Africa, Argentina and Mexico. And the US has already taken over from Russia as the world's largest gas producer. All of this data got Brazilian Foreign Minister Antonio de Aguiar Patriota's attention. On a panel titled 'The Rising Powers and Global Governance', Patriota referred to the energy discussion and noted that the rising powers should remember that "the established powers are not sinking powers". In short, the pervasive narrative of western decline suddenly reversed itself.

The horizon seemed brighter on the European side as well. In the opening panel on ' The Euro Crisis and the Future of the EU', cautious optimism prevailed. No one thought that the European Union's (EU) troubles were resolved, but no one thought that the Eurozone was coming apart, either. On the contrary, German Finance Minister, Wolfgang Schauble, made clear that German resolve to see the Eurozone through its troubles was firm. And a prominent economist in the audience, who has often predicted the Eurozone's demise, was backtracking rapidly. Aside from reports of a rising US (fiscal woes notwithstanding) and a stabilising Europe (despite the common currency's troubles), the conference featured a speech by Biden that went far beyond the reassuring rhetoric that US policymakers typically offer in European capitals.

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