Energy Security in South Asia: Can Interdependence Breed Stability? (Strategic Forum. Number 232, September 2008)

Abstract

Despite possessing nearly a quarter of the world's population, South Asia has long been a backwater in terms of global economic clout, accounting for less than 3 percent of worldwide gross domestic product (GDP). In the last two decades, however, the economic stagnation that has historically characterized the region has been overcome, thanks to significant policy shifts, so that the subcontinent is now the locus of some of the fastest growth in the world. India has led the way, averaging over 8 percent real growth over the last 5 years, but Pakistan, Bangladesh, and Sri Lanka have also been sustaining rates of 6 percent or more since 2005. The rise of South Asia in general and India in particular as a force on the economic scene is now almost universally recognized.On the other hand, apart from the caution expressed by development economists about energy availability as a potential constraint on the continuation of these trends, there has been relatively little attention to the impact that the South Asian boom is likely to have on international energy markets. The dominant focus in global energy assessments has traditionally been on the major hydrocarbon suppliers-especially those in the Persian Gulf-and the developed countries that historically have accounted for the vast majority of energy consumption. More recently, China's role has been widely noted, 1 but South Asia has received considerably less attention. Yet South Asia will be an increasingly important player in this market. The International Energy Agency (IEA) projects that energy demand in the S outh Asia is projected to play a major role in global energy markets over the next several decades, with India alone expected to become the world's third largest importer of petroleum by 2030. Satisfying the region's growing demands will require a heightened degree of energy interdependence among historically antagonistic states. Consequently, like it or not, regional leaders will face a tradeoff between traditional desires for energy self-sufficiency and the ambitious development targets that they have set for themselves. Achieving such growth, therefore, requires that India, Pakistan, and the other countries of South Asia first address the persistent international disputes that hamper cross-border energy trade, establish effective control over presently ungoverned areas, reorient the missions of military forces to some extent, and develop a better understanding of the effects that energy interdependence will have on broader relations with neighbors.From the U.S. point of view, understanding the multifaceted causal connections that exist among economic development, energy supplies, and security and stability, and how these dynamics are likely to affect South Asian states' decisionmaking, may provide points of leverage with which policymakers can shape behavior on a wide range of issues affecting U.S. objectives in the region.

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“…Joseph McMillan's article in Strategic Forum entitled "Energy security in South Asia: can interdependence breed stability?" discussed these conditions in detail (McMillan, 2008). The report argued that energy intensity, soaring prices, and increased dependence on the global market make energy interdependence indispensable and inevitable.…”

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“…The rich energy resources of the region are unevenly distributed and largely untapped. None of the HKH countries will be able to meet their energy needs entirely from their own domestic resources; they face a stark choice between rapid development and energy self-sufficiency as they cannot achieve both without energy interdependence and a collaborative approach (McMillan 2008;Mahmud 2012). For example, Nepal and Bhutan have great untapped hydropower potential while India, Pakistan, and Bangladesh have large reserves of gas and coal.…”

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“…Research literature broadly captures the four dimensions while dealing in energy security, i.e. (1) disruptions in supply, (2) uninterrupted availability, (3) price shocks, and (4) affordability. There are several factors influencing supply situation, like reserves, ability of an economy to acquire supply, level of resource diversification, accessibility to resources, and geopolitical concerns surrounding resource acquisition.…”

“…Those countries with the most control of energy resources have the biggest power advantage in international system [1] Interruptions to energy supplies cause financial, economic, social losses and also cause adversity of military strengths. From a politico-military dimension energy security is to fulfil the energy needs of military forces but in the light of contemporary politicaleconomic international system, energy security is much broader and larger [2]. Oil shocks have had macroeconomic consequences in both exporting and importing countries.…”