In the final part of my series on how social changes are making good negotiating skills even more important, I focus on the effect of resource shortages. As I argue in my book on negotiating, “The Yes Book”, now out on Random House, these changes require us to up our game as modern creative negotiators rather than continuing with old fashioned styles of negotiation based purely on brinkmanship and the application of power. Shortages of water, and fossil fuels both illustrate this imperative.
(A) Water
One of the by-products of global warming from climate change is that water is becoming scarcer, with the increases in temperature coinciding with a peak in world population and the extra demand on food and water resources as a result. The gloss is taken off forecasts of greater economic progress for China and India by predictions of water shortage.
China has a strategic water shortfall. It has almost four times the population of the United States but only the equivalent of one-third of America’s water resources. China’s groundwater reserves are already over-exploited, and water tables are dropping. As the racing economy guzzles it faster and faster, the problem worsens. Fifty percent of cities have been left without drinking water that meets acceptable hygienic standards, according to the World Wildlife Fund.
India is worse off. It depends on the monsoons and flows from the Himalayan glaciers, which are retreating. India has to sustain 20 per cent of the world’s population with just 4 per cent of the world’s freshwater. The Ganges is polluted and water volume on the Indus – a river crucial to both India and Pakistan – is down 30 per cent. As India’s middle-class grows rapidly, its food and energy consumption leads to soaring water consumption. McKinsey predicts that India would need to double its water capacity by the year 2030 to meet the demands of its surging population.
How will countries deal with this problem – by being selfish or through co-operative negotiation?
A recent American intelligence report has made it clear which way it thinks this issue will pan-out, predicting that problems with water could destabilize countries in North Africa, the Middle East and South Asia over the next decade. The report concluded that countries could use water for political and economic leverage over neighbours and that major facilities like dams and desalination plants could become targets of terrorist attacks. Coupled with poverty and other social factors, problems with water could even contribute to the political failure of weaker nations.
The report warned that upstream countries will increasingly use dams and other projects “to obtain regional influence or preserve their water interests” over weaker countries downstream. This is already happening on the Tigris and Euphrates, where Turkey, Syria and Iran have harnessed the headwaters of the two rivers that flow through Iraq.
It doesn’t have to be like this – co-operative negotiation can help. The Mekong committee was formed to help regulate the flow of that mighty river between interested countries/claimants. It managed to survive the Vietnam War. The Indus Water Treaty has survived two wars between India and Pakistan and proved to be a successful mechanism for consultation, inspection and flow of data. This kind of collaboration offers the world a better prospect of dealing with water shortages.
(B) Fossil fuels
The world faces a similar dilemma over its addiction to fossil-based fuels. It is no secret that we have a finite supply of these – both oil and gas. The recent developments in fracking, enabling additional supplies of gas to be released from shale and sandstone deposits will slow the decline. They will also have a geo-political impact since many countries in which fracking is now taking place on an industrial scale (such as the US) have previously had a dependency on Middle Eastern oil. This means that other countries (for example those in Asia) will become much more dependent on, and much more important to, Middle Eastern oil suppliers. However, the technology that has enabled fracking will not change the essential problem that we consume fossil fuels at an unsustainable rate.
Once again countries have a choice as to how to deal with that…
One option is for those fortunate enough to have fossil fuel reserves to play hardball in negotiations with others. Russia’s handling of its gas disputes with Ukraine would seem to bear that out. In the spring of 2012 Russia raised the stakes over its efforts to take control of Ukraine’s gas-pipeline system, as it started diverting gas supplies to Europe away from the former Soviet republic. Ukraine reported that Russia had almost halved gas-transit volumes through its pipeline system to Europe. “This is only the beginning,” a spokesman for Russia’s Gazprom said. The two neighbours had been locked in talks over a new gas-supply contract; the Ukraine had been pushing for cheaper gas in order to balance its budget, but in exchange for lower-priced gas, Moscow had been aiming to gain control of Ukraine’s pipeline system. This was not the first time tensions have simmered over the issue. Russia has previously stopped all gas supplies to Ukraine, at the end of 2008, after the collapse of talks to end a row over unpaid bills and prices. A similar row between Gazprom and Ukraine at the beginning of 2006 led to gas shortages in several EU countries. The ongoing row has been marked by aggressive rhetoric on both sides.
Is this the answer to the potential scarcity of fossil based fuels, or does co-operative negotiation hold out a better hope?
Japan has recently announced its intention to enter the Trans-Pacific Partnership trade pact (TPP). With Japan’s entry, the trade pact will now include 12 nations along the Pacific Rim, including the United States. Why? One reason is that all members of the trade pact can gain automatic access to US natural gas. That’s good for Japan. From the US point of view, such negotiations hold out the prospect of opening up Japanese markets to US goods like cars.
Similarly, China has been making overtures to Arctic countries as part of its effort to secure “permanent observer” status on the Arctic Council, an eight-country political body that decides regional policy. Why? A US Geological Survey estimates that 30% of the world’s undiscovered natural gas reserves lie above the Arctic Circle, in addition to vast deposits of oil, coal, rare earths and uranium, and experts say that China wants to get in on the ground floor. As arctic ice melts the previously frozen North also opens up a potentially viable and much shorter shipping route between Shanghai and Northern Europe. This potential collaboration gives other countries a chance to influence China – hence Norway’s support for China’s membership of the Arctic Council, despite their disagreements over human rights since the award of the Nobel Peace Prize to dissident, Liu Xia.
The first objective should of course to be arrest the effects of global warming – including the melting of arctic ice, for which Chinese industrialisation is partially responsible – but at least this kind of initiative represents a negotiated attempt to deal with resource shortage rather than the use of strong-arm tactics.
