East Asia, North America

The League of the Overshadowed

It is easy to be small and ignored. But to be large and ignored, it helps to hide within the shadow of an even larger entity. In the realms of economics and geopolitics, there are three very large countries which, though not actually ignored, do not always receive the respect their size demands, as they inhabit the shadows thrown by the world’s colossi, the USA and China. These countries are Canada, Mexico, and Japan.

Japan has by far the third largest economy in the world, by far the second largest developed economy in the world, by far the second largest population among developed economies, and the tenth largest population globally.

Canada is the second largest country in the world, the fourth largest possessor of renewable freshwater, the fourth largest producer of renewable energy, the fourth largest exporter of oil, and the tenth largest economy.

And Mexico has the world’s eleventh largest population, thirteenth largest territory, and fifteenth largest economy. (Only five other nations are top-15 in all three categories: the US and the BRICs). Mexico has 2.5 times the population of the next largest Spanish nation (Colombia), plus a diaspora of 35-45 million in the US. It is also the twelfth largest oil producer in the world. The Greater Mexico Region (including Mexico, Texas, California, Venezuela, and US waters in the Gulf) produces more oil than Saudi Arabia or Russia. This region also has an economy larger than any country in the world, apart from the US or China.

The League of the Overshadowed

At the moment, however, trade between Canada, Mexico, and Japan is quite small. Neither Canada nor Mexico are even among Japan’s top fifteen trade partners. And while Mexico and Canada do trade with one another more often — Mexico recently overtook Britain to become Canada’s third biggest trade partner — trade with Mexico still counts for less than three percent of Canada’s total. Their trade with one another is overshadowed by that of the US. Indeed, California alone trades far more with Canada, Mexico, and Japan than those countries do with one another. There is no League of the Overshadowed… yet.

It may be worth noting, though, that US politics have to a certain extent put trade with Canada, Mexico, and Japan into question. President Trump’s first executive order was to withdraw from the Trans-Pacific Trade Partnership, in which Japan would have accounted for over 60 percent of the twelve member-states’ GDP apart from the US. Trump has also signalled his intention to renegotiate NAFTA, tighten the US-Mexico border, raise tariffs on Canadian farm and forestry products, and keep American fossil fuels cheap.

If these policies are followed through on, they could have the effect of driving US trade partners somewhat closer together. Obviously, Canada and Mexico have an interest in showing that they can trade with one another regardless of what Washington intends to say or do about NAFTA. Both also have an interest in exporting more fossil fuels to Asia, where prices remain more expensive than in the shale-rich US. On June 1, in fact, Canadian senator Paul Massicotte wrote an op-ed calling for Canada and Japan to sign a free trade agreement with one another as quickly as possible, given the failure of TPP and risks for NAFTA. Especially as both Canada and Japan have large majority governments right now, such a deal may happen.

An economic relationship between Canada, Mexico, and Japan could turn out to be far more significant, however, than being just a knee-jerk response to Trump’s America-First politics. As we will see, Canada, Mexico, and Japan are in fact complimentary nations, both economically and geographically. Already they have a propensity to trade with one another that is larger than their absolute trade levels suggest (see graph below). So long as Japan’s economic growth remains stagnant, Mexico remains poor, and Canada remains underpopulated, this propensity does not matter much. But if these conditions do not remain, we should expect trade between these three significant, overshadowed countries to grow by a very large amount.

canada propensity to trade

Complimentary Nations

Economists often talk about land, labour, and capital, considering them fundamental inputs of productivity. In the case of Canada, Mexico, and Japan, these inputs are epitomized: Canada has land but not labour, Mexico labour but not capital, and Japan capital but not land. Together, then, they could make a formidable team.

In Canadian politics and business, it has become common in recent years to say that by exporting natural resources to China, Canada can finally reduce the near-monopoly that the US has on buying Canadian exports. This view, however, is based on a false extrapolation of a trend that is now nearing its end: industrial growth in coastal Chinese cities. As China now seeks to rebalance its economy, by investing instead in its service sectors (which are less resource-intensive) and interior cities (which have a lower propensity to engage in trans-Pacific trade), its demand for Canadian resources is unlikely to continue to surge. Most of the resources it does buy will probably continue to come from within its own borders — China only imports 15 percent of the energy it consumes — or from its “One Belt, One Road” partners in Asia.

In Japan, on the other hand, the reverse is true. Japan has few resources of its own, and no Silk Roads to tap. Japan imports 90-plus percent of the energy it consumes, mainly from the Middle East. Its access to the Middle East, however, is imperilled, both from competition with other Asian countries (notably, China and India) as well as from Middle Eastern conflicts. Consider, for example, that Japan accounts for 30-40 percent of LNG imports globally, yet its primary supplier, Qatar, is now in an open feud with Saudi Arabia. Between competition and conflict, Japan could have to rely more on trans-Pacific trade to get resources. It would not be the first time: in the 1930s, eighty percent of the oil Japan consumed was imported from the US.

China-Japan comparisons.png

Even more important may be the impact of labour-saving machinery — robotics — upon Japanese trade. Because Japan has the oldest population in the world by far, it is planning to become a leader in robotics. Even, for example, as soon as the Tokyo Olympics in 2020, Japan is planning to showcase its robotic prowess. Yet robots are highly energy-intensive, and industrial robots resource-intensive. If Japan really does become the leader in robotics, it is likely to start importing lots of energy and other commodities from resource-rich countries like Canada. It may also be likely to start exporting its robotic technologies to countries like Canada, given Canada’s abundance of resources but lack of a large, cheap, human labour force.

Upstairs, Downstairs 

Today, if you exclude the US or Europe, Canada and Mexico have the largest combined economies of any pair of countries which are part of the same trade bloc (see graph 1 below). Yet if you include Europe, Canada and Mexico still rank quite a bit lower than a number of pairings of Europe’s largest economies (graph 2).

trade bloc pairing comparisons

In other ways, however, Canada and Mexico rank ahead of these European pairings. In population they do so (graph 3). In land they do so too (indeed, Mexico alone is larger than any four countries in the EU combined). And in terms of their indirect, second-degree trade (their combined trade with a third country), Canada and Mexico as a pair lead the world (graph 4), a result of their both trading hugely with the US.

canada-mexico indirect trade


While Canada’s propensity to trade with Mexico is greater than with any significant country apart from the US, it is still only around half as high as its propensity to trade with the US. The reason for this is simple: Canada and Mexico do not share a border with one another. They are not even very close in proximity to one another. More than 3000 kilometres separate Mexico City from any of the largest cities in Canada.

This separation is also reflected in Canada’s lack of a significant Spanish-speaking diaspora, particularly relative to that of the US. In spite of the fact that 21 percent of Canada’s population is foreign-born, compared to just 14 percent in the US, only 0.3 percent of Canada’s population is Mexican, compared to an estimated 11 percent of the population in the US. Even the state with the smallest share of its population being Mexican or Mexican-American—Maine—has a higher share, 0.4 percent, than Canada does.

But this may be likely to change, for two reasons. First, there is a political faction in the US which is wary of further Hispanic immigration, seeing it as a threat to the singular position held by the English language in America. Second, whereas the population of the US is relatively young, the population of Canada is Boomer-dominated, inching towards old age. This is especially true of the population of Canada’s French-speaking provinces, Quebec and (partially) New Brunswick. These provinces also, because of the far smaller language gap between French and Spanish than between Spanish and English, have a much higher propensity to attract Latin Americans than do other parts of Canada (see graph). Between demographics of this kind and US immigration politics, the next major wave of Latin American emigrants could be to Canada.

canada-quebec comparisons.png

The aging population of Canada’s Baby Boomers, and especially of Quebec’s Baby Boomers, also indicates another area in which Canada-Mexico economic ties—both direct and indirect—are likely to grow: tourism.  Already today, Mexico is the largest destination for Canadian travellers apart from the US, while the areas of the US that Canadians spend the most time in — Florida, the Southwest, and New York — are ones in which Mexican-Americans (or in Florida’s case, Hispanic-Americans in general) inhabit in large numbers. As Canadian Baby Boomers reach old age or retire, they are likely to spend more time in places like Mexico, in order to avoid much of the discomfort (even danger) of dark, icy Canadian winters. This will be most true of Quebec, given its older population, colder winters, and greater ability to learn Spanish.

Travel by Canadians .png

As the chart above implies, the US reconciliation with Cuba may also lead Canadians to spend more time in Mexico. During the past generation, the US rivalry with Cuba has given Canadians a near lock on the Cuban market. Canadians account for an estimated forty percent of all visitors to Cuba, and Cuba accounts for a disproportionately large destination (given Cuba’s relatively small size) for Canadian tourists. As the US allows its own population to go to Cuba, however, Canadian snowbirds will lose the advantage of having such a cheap, warm country all to itself. Many will re-route to other Latin American beaches.

An even more important pull factor for Canadian snowbirds will be “e-commuting”. The ability for young Canadians to spend time in a cheap, warm country in the winter is likely to increase dramatically as a result of the modern Internet. This is also likely to impact the Baby Boomers. If, for example, it becomes easier for a Boomer’s children and grandchildren to come visit them in Florida or Mexico for, say, a whole month over Christmas, rather than for just a week, then Boomers will be likelier to go in the first place.

And the relationship may not even remain one-way only: Mexicans may begin to visit Canada more often too. Today Mexicans do not go to Canada much, because they lack the disposable income to do so. If and as Mexicans become wealthier, however, they may look to Canada as a place to go in the summer; a place where the summer weather is not too hot, the major metropolises are not too crowded, and a cottage by a northern lake may be rented at an affordable rate. Climate change could, sadly, also play a role in this equation. Mexico — and the Southwestern US, in which tens of millions of Mexican-Americans live — is dangerously arid, whereas Canada is in possession of an abundance of renewable, surface-level freshwater.

Conclusion—The New Drivers of Trade 

Today, the main driver of trade is proximity. Countries which share borders with one another tend to trade a lot — though, of course, there are many exceptions to this — whereas far-away countries tend not to. However as (or, admittedly, if) globalization continues, proximity may no longer matter as much. Complimentarity may matter a lot more. We have seen here various ways in which Canada, Mexico, and Japan may be complimentary to one another. Canada has land but not labour, Mexico labour but not capital, Japan capital but not land. Canada has cold, dark winters but warm, water-rich summers, Mexico warm bright winters but hot, arid summers. All three countries have coasts on the North Pacific Ocean; none are part of the Asian (or Eurasian, or Afro-Eurasian) continent. And all three countries are very large, yet are overshadowed by neighbours that are far larger than they are. They may end up, if only informally, a formidable League.

Africa, Europe, North America, South America

The Return of the Atlantic

This article was written for an essay contest, so the style is a little bit different from others on this site. It was first written three years ago, when most people had not yet become bearish on the Chinese economy and politicians in the US were still talking a lot about America’s “pivot to Asia”. The essay discusses the possibility that the Atlantic regions – North America, South America, Europe, and much of Africa – will remain at the heart of the international system in the years and decades to come, for better or for worse.

Hope you like it!


The Return of the Atlantic 

For nearly 500 years, the Atlantic Ocean was the unrivalled centre of the international system, connecting Europe to its expansive economic and imperial networks in Africa, Asia and the Americas. Transatlantic trade continued to exceed transpacific trade as recently as the late 1980s, while at the same time the transatlantic alliance against the Soviet Union remained the world’s most important geopolitical partnership. Indeed it seems incredible to recall now, but China, India, Indonesia, Korea, and Australia combined had a smaller economic output than West Germany in 1990.

Today, in contrast, the European Union and United States both import more goods from China alone than they do from one another, and the Cold War has been over for a quarter of a century. The Pacific has in many ways become the new centre of the world: it is home to the three largest economies of America, China, and Japan, is the highway for East Asian imports of commodities and exports of manufactured goods, and acts as a base for nearly 75 percent of US soldiers stationed outside of North America or Afghanistan. Not surprisingly, a majority of economists, politicians, and journalists believe that the continued economic growth of populous Asian countries like China, India, and Indonesia means that the centrality of the Pacific has only just begun.

In this essay we will argue that, even as it remains popular to herald the arrival of a “Pacific Century” (to quote a famous Hillary Clinton op-ed in Foreign Policy magazine), it will actually be the Atlantic that will become once again the centre of the international system, serving as the corridor of an expanding economic network that will incorporate Europe, the Americas, much of Africa, and to a lesser extent even parts of southern Asia. Transatlantic commerce is likely to once again exceed the value of transpacific commerce and, partly by doing so, it will help to serve as an organizing force in global geopolitics. We hope it will serve as a force for good in the world as well.

To be sure, while we view this Atlantic phenomenon as likely to be brought about by economic, cultural, and linguistic circumstances that are already actively or latently in place, we will also argue that, from a policy perspective, the political effectiveness and ethical utility of such a reinvigorated transatlantic relationship will depend on the extent to which efforts are made to reduce carbon emissions in developed economies, as well as on the extent to which efforts are made to provide honest and constructive assistance to struggling countries within the developing world.

The Pacific Moment

The rise of transpacific trade during the latter half of the 20th century occurred as a result of a unique set of circumstances. These were, specifically, the reconstruction of the Japanese economy following its destruction in the Second World War, the emergence of South Korea and Taiwan following their adoption by the United States as strategically-located allies in 1950, and the rapid growth of coastal Chinese states following their devastation during the Sino-Japanese War, Chinese Civil War, and isolationist era under Mao, which occurred in an overlapping succession from 1927 until 1979. These four countries have caused transpacific commerce to soar in recent decades, with help from Southeast Asian success stories like Singapore, Thailand, and Malaysia.

While this rising transpacific trade has certainly deserved the widespread public attention it has received, it has nevertheless served to overshadow a number of other key characteristics of the global economy, which instead highlight the enduring significance of the Atlantic Ocean. These include the fact that roughly 65 percent of both the world’s nominal economic output and private consumer spending are located in the Atlantic basin rather than in the Pacific basin; that more than 70 percent of the populations of North America, South America, and Sub-Saharan Africa live within the Atlantic basin rather than the Pacific basin; that the Pacific generally takes 2-4 times longer to cross widthwise by ship than the Atlantic does; that the quantity of transatlantic investment is estimated to be 5-10 times greater than transpacific investment; and that Indian and Pakistani trade and labour crosses the Atlantic, Mediterranean, or Arabian Sea far more often they do the Pacific.

The reemergence of transatlantic interactivity as a defining feature of the international system will simply reflect these enduring realities. In addition, it will be driven by a set of economic evolutions that are beginning to revive transatlantic trade relative to transpacific trade, as well as by the continued spread of modern communications and the emergence of African and Latin American economies, which are helping to increase the political and economic significance of the cultural, social, and linguistic affiliations that bind together the four continents of the Atlantic world.


Transatlantic Connections

Atlantic regions share a number of important connections with one another. The first is cultural: unlike in Asia, the overwhelming majority of people in the Americas are of European or African heritage. Most have ancestors that arrived within just the past century or two. This could have increasingly powerful political and economic consequences in the future, particularly as the economies of Africa develop and as African populations in the Americas become wealthier and more empowered (most notably the 40 million US African-Americans, 28 million Afro- Caribbeans, 15 million Afro-Brazilians, and 80 million Brazilians who identify as being of mixed ancestry), such that it will no longer just be white Americans and Europeans engaged in the most significant transatlantic partnerships.

The second transatlantic connection is a social one, the result of technology increasingly allowing first-, second-, and even third-generation immigrants in the developed world to maintain relationships with family members, friends, and acquaintances back in their countries of origin. Crucially, immigrants in North America and Europe come overwhelmingly from Latin America, Sub-Saharan Africa, or the Mediterranean basin. More than half of the foreign-born population in the United States arrived from Latin America alone, and there are about four times as many first-generation immigrants in the European Union from Africa or the Americas as there are from East Asia.

There are, in fact, already 2-3 million Latino-Americans living in Spain, and more than 50 million living in the United States. Africa’s emigration rate to both Europe and North America, meanwhile, has risen at a faster pace than that of any other region since 1980, and is likely to continue to do so as a result of the fact that the average birth rate in Sub-Saharan Africa is nearly twice as high, and the per capita income nearly twice as low, as that of any other part of the world.

Finally, and in our opinion most importantly, there are the transatlantic linguistic connections. Over 80 percent of the world’s nearly 1.5 billion native speakers of Spanish, English, French, Portuguese, or Arabic live within the Atlantic or Mediterranean basins; each of these languages is fairly prominent within at least three separate continents. English, moreover, is far more widespread in mainland Europe than it is in any other continent apart from North America (or Australia). Switzerland, Germany, Austria, Scandinavia, the Netherlands, and Belgium are particularly proficient; according to some estimates, 60-90 percent of their populations are able to speak English In France, Italy, and Poland, meanwhile, the share of English speakers is estimated at 30-40 percent, which is still far ahead of countries like China, Japan, Indonesia, and even India.

In Africa, European languages are also spoken more widely than in most other areas of the world. This is partially the result of to the continent’s colonial histories, many of which ended as recently as the 1960’s or 1970’s. It is, however, also the result of Sub-Saharan countries tending to be linguistically diverse, such that their use of European languages as lingua franca remains common practice. Indeed, despite having the world’s lowest density of accessible schools, televisions, computers, and satellite dishes, English is already spoken by a greater number of people in Africa than in more populous India, both as a native language and as a secondary one.

French, meanwhile, is used by an estimated 90 million Africans, Portuguese by an estimated 20 million Africans, and Arabic as far south as the Sahel.24 In South Africa approximately 20 million people understand Afrikaans, a language that is for the most part mutually intelligible with Dutch. Over 85 percent of Africa’s English-speaking population and nearly all of Africa’s French-, Portuguese-, Arabic-, and Afrikaans-speaking populations live within the Atlantic or Mediterranean basins.

Also important is that over 40 percent of Africa’s population is under the age of fifteen. This makes it the world’s youngest region by a considerable margin: by comparison, only 15 percent of China’s population and 29 percent of India’s population are younger than fifteen. Children possess the ability to learn languages many times more easily than adults can, particularly if they have access to schooling, books, media, and modern communications.

Africa’s current generation of children might become the first to grow up with widespread access to such tools, which might therefore help African economies to develop and integrate with the other continents of the Atlantic world. This is also one reason why it would be wise from a policy standpoint for Europe and North America to immediately support economic development in Africa, since doing so would help African populations gain access to more education and information now while they are still young.

Shifting Trade Patterns

In 2013, Chinese coastal cities had an average nominal per capita income of roughly $20,000, nearly as high as those of South Korea and Taiwan. The median age in China is 37, about the same as in the US; in South Korea and Taiwan the median age is 40. These are no longer really “emerging markets”, in other words. Rather than experience another lengthy period of rapid economic growth that would continue to drive up transpacific trade, they will instead be undergoing various structural evolutions, as all maturing economies tend to do over time.

In the coastal areas of China, this evolution is likely to be from an economy oriented around exports of lower-end manufactured goods to an economy that exports value-added goods and services and is more reliant on the private consumption of its own population. Such shifts are natural for a middle-income economy like China to experience, but they may also reduce the quantity of China’s transpacific imports of industrial commodities and transpacific exports of manufactured goods.

Economic growth in the poorer interior provinces of China, meanwhile, or in the even poorer Indian subcontinent, is not certain to bring about the continued rise of transpacific commerce either. The emerging provinces of the populous Chinese interior are likely to trade mainly with coastal Chinese provinces and other countries in Asia, rather than with economies overseas. Today, for instance, in Sichuan and Henan, the two largest inland Chinese provinces, exports account for around just 4 percent of provincial economic output, almost nothing compared to the 47 percent of economic output that exports account for in coastal China’s two largest provinces, Guangdong and Jiangsu.

In addition, given the crowdedness of China’s coastal cities and ports, the interior provinces of China may also increasingly avoid using the Pacific in favour of the more direct “Silk Road” routes to Europe, or in favour of using Myanmar’s commercially navigable Irrawaddy River to directly access the Indian Ocean.The economic emergence of the Indian subcontinent, meanwhile, could perhaps lead transatlantic commerce to rise faster than transpacific trade, as India and its neighbours may partially succeed China in supplying cheap goods or services to consumers in the Atlantic world.

As they emerge, the Indian subcontinent and the Chinese interior will also be importing rapidly growing quantities of oil and gas from the the Persian Gulf, Central Asia, and Russia. Indeed, India and Pakistan already receive roughly 75 percent of their oil and gas imports and an astonishing 30 percent of their imports of goods in general from the Persian Gulf. China’s interior provinces, meanwhile, get around 75 percent of their gas imports from Turkmenistan and Uzbekistan and 30 percent of their oil imports from Russia and Kazakhstan. These imports are likely to increase, not only because of India’s and China’s continued growth, but also because of their shared desire to consume less coal, on which they rely for an average of about 65 percent of their energy consumption.

This need to import large quantities of energy could lead to competition, rather than cooperation, between regional powers like China, India, and Japan, potentially undermining Asia’s ability to cooperate as a more coherent political unit. (In contrast, the Atlantic world consists mainly of synergistic relationships where energy is concerned: Europe is a net energy importer, South America and Africa are net energy exporters, and North America is not too far from reaching the “energy independence” it has long dreamed about). Moreover, because the European Union itself currently receives around 60 percent of its oil and gas imports from Russia, the Persian Gulf, or Central Asia, the increasing energy consumption of Asia may force Europe to begin importing much more energy from the Americas or western Africa instead, further boosting transatlantic trade.

Conclusion: Policy Framework

While the renewed significance of the Atlantic is likely to occur mainly as a result of the commercial, cultural, social, and linguistic factors discussed above, we believe that specific policy goals are nevertheless required to ensure that such a renewal occurs in a manner that is both ethical and politically effective on a global level. Two policies in particular may be advisable in this regard:

One is the implementation of per capita carbon emissions taxes. Such taxes would likely facilitate transatlantic commerce through the export of European energy-saving and clean energy production technologies to the emissions-intensive markets of North America, whilst simultaneously providing both Europe and America with a more responsible and defensible platform in climate treaty negotiations with industrialized Asian economies that have much lower per capita and historical emissions levels.

The other is increasing political outreach and economic assistance to struggling countries, particularly those within Africa. Africa contains many of the world’s greatest challenges if it is not constructively engaged with, and it also has a youthful and diverse population of more than a billion people, vast reserves of natural resources, and linguistic and social connections with Europe and the Americas. All of these qualities make it a necessary component of any revitalized transatlantic project.

Of course, each of these policies deserves much more focus than we have left to spare in this essay. Yet still we feel confident in saying that, if these two policies are diligently and honestly pursued, then the unexpected return of the Atlantic as the central corridor of the international system would not only become more likely to occur, but will also be much more welcome when it does.

Images, North America

US Legal Immigration — Image of the Day



With all the disgusting Trump talk on the issue of illegal immigration that has been going on, the other main source of American newcomers – legal immigrants – is sometimes overlooked. The maps above were made by Giorgio Cavaggion, using data from the Department of Homeland Security of immigrants who “became legal permanent residents during the fiscal year of 2012.” That year over one million people in the US became Legal Permanent Residents. Here are 10 thoughts on the maps above:

1. Mexico Still Dominates

Even in spite of the big drop-off in immigration from Mexico to the United States (see graphs below), Mexico still ranks first in half of the states in the country. Only in the northeastern and north-central regions of the US, from Montana to Maine, is Mexico not #1.


2. India a Strong Second 

India finished first in six states (Ohio, Pennsylvania, New Jersey, Connecticut, Delaware, and Virginia) and second to Mexico in twelve states (Washington state, Arizona, Texas, Wisconsin, Illinois, Missouri, Arkansas, Mississippi, Alabama, Georgia, South Carolina, and North Carolina). This is a big increase from previous generations (see graph below).

Still, nearly a third of all Indian immigrants in the US live either in California or New Jersey. More than 25% live in San Jose, Chicago, or Greater New York City. Also notable is that India’s many regions are not represented proportionally in America. Rather, Indian states like Gujarat and Punjab are highly over-represented. Gujaratis, for example, account for more than 20% of Indians in the US, though they are only 6% or so of the population within India itself.


Population pyramid of Indian Immigrants in the US


Foreign-born Americans By Country of Origin. India still ranks far behind Mexico, and just barely ahead of various Pacific and Caribbean countries

3. Burmese in Fly-Over Country 

Burma (aka Myanmar) was first in Indiana and second to Mexico in Kansas, Oklahoma, Nebraska, and Iowa. This could be significant going forward, given that Myanmar may have finally begun to liberalize its political system and renew ties with the United States in recent years. Indeed, Myanmar has often been seen as one of Hillary Clinton’s primary achievements during her time as Secretary of State, so if she becomes president it could perhaps further impact the US-Burmese relationship. Since the mid-2000’s, though, most Burmese immigrants in the US have been from non-Burmese ethnic minority groups, like the Karen people.

4. Bhutan Surprises

I would never have guessed that Bhutan, a far-away Himalayan country of just 750,000 people, would finish first on this list in three separate states (Vermont, New Hampshire, and North Dakota). No other country, apart from Mexico, India, and the Philippines, was first in three or more states. And even the Philippines was first in just one of the Lower 48 states.

5. The French Connection 

Vietnam finished first in just one state, Louisiana, and the fact that it did reflects two different ways in which history continues to inform the present-day United States. First is the French connection: Louisiana and Vietnam were both part of the globe-spanning French Empire, a fact that seems to resonate today even though neither Louisiana nor Vietnam even speak much French anymore. Or maybe Vietnamese just enjoy New Orleans jazz.

Second is the American military: wherever it goes, people from that country tend to end up in the United States. The Vietnamese have now become one of the biggest non-Hispanic groups in the US apart from Chinese and Indians, as have immigrants from Korea and the Philippines where the US also fought significant wars during the 20th century.  Iraq too has seen its share of immigrants to the US grow over the past decade: on the maps above, Iraqis finished first in Michigan and second to Mexico in Tennessee and Idaho.

6. Cubans in Kentucky, Dominicans in Massachusetts 

One might have expected Cuba to finish first in Florida, but in fact Mexico took that honour, leaving Cuba in second. But while Florida was the only state where Cuba finished second to Mexico, Kentucky, surprisingly, was the only state where Cuba finished first overall. Massachusetts and Rhode Island, meanwhile, were taken by the Dominican Republic, which did not finish second to Mexico in any states.

Though Cuba and the Dominican were the only two Spanish-speaking countries apart from Mexico on either of the maps above, the United States of course also has a very large population from other Latin American countries. These did not finish first – or second to Mexico – in any states, however, because many live in Washington D.C. (Salvadorans in particular) or in major immigrant-rich states like California, New York, and Florida, or come from Puerto Rico which is not considered to be a foreign country, or have not yet become Legal Permanent Residents.

7. East Asia in the West 

This is an obvious one: immigrants from East Asian countries often continue to cling to the Pacific Ocean even once they reach the United States. Though Mexico still finished first throughout the entire US West Coast, the Philippines finished first in Hawaii and Alaska and second to Mexico in California, Nevada, New Mexico, and Wyoming. Oregon and Utah, meanwhile, were the only two states in which China was second to Mexico. India, though not a Pacific country, was second to Mexico in Arizona and in Washington state.

8. East Africa in the North

Of the ten states in the Lower 48 which directly border Canada, Mexico finished first in just two (Washington state and Idaho), Canada finished first in just one (Montana), Bhutan finished first in three, Somalia in two (Maine and Minnesota), and Iraq in one (Michigan). Another East African state, Ethiopia, finished first in nearby South Dakota. Ethiopia also finished second to Mexico in Colorado.

9. Filipinos in Coal Country

Outside of the offshore states of Hawaii and Alaska, the only state the Philippines finished first in was West Virginia. Outside of California, Nevada, and New Mexico, the only state the Philippines finished second to Mexico in was Wyoming. Today Wyoming accounts for approximately 40% of US coal production and West Virginia accounts for about 10% of US coal production. Both states produce considerably more coal than any other state; only Kentucky even comes close to  their level of coal production. Wyoming, West Virginia, and Alaska also have the highest per capita energy production of any states in the country.

10. China “Seemingly” Underrepresented

China, in spite of its huge population, only finished first in one state, and only finished second to Mexico in two states. This could be a bit misleading, though, since the state that China finished first in was New York. New York was the only one of the “Big 4” states (California, Texas, Florida, and New York) not to be finished by first in by Mexico, and, with the exception of Michigan, it was the only one of the fourteen most populous states in America not to be finished first in by either Mexico or India.



East Asia, Europe, India, North America, South Asia

The Geopolitics of Cheap Energy

Oil prices have fallen again: they are now at $29 a barrel for West Texas Intermediate crude and a similar price for Brent, their lowest since 2003. Natural gas, coal, and other commodity prices have also been dropping of late, in most cases. So: what will be the geopolitical consequences of cheap energy in general and of cheap oil in particular, all other things being theoretically held equal?

One consequence of cheap energy is the weakening, possibly, of four potential great powers: Russia, Brazil, China, and Mexico. While the media has understood the Russian and Brazilian half of this list – their economies are both estimated to have shrunk by 1-3 percent druring 2015, after all, which is difficult to miss – it has largely failed to register the Chinese and Mexican half. This is because it views China as being a leading oil, energy, and natural resource importer rather than as a resource exporter like Russia or Brazil, and because it views Mexico as merely a source of drugs, migrants, resorts, and cheap goods rather than as a potential great power.


China may be the world’s largest energy importer, but it is has also become its second largest energy producer, and as such only relies on energy imports for an estimated 15% of its total energy consumption, in contrast to 94% in Japan, 83% in South Korea, 33% in India, 40% in Thailand, and 43% in the Philippines. In 2014 imports of oil were equal in value to just around 2.4 % of China’s GDP, according to the Wall Street Journal, compared to 3.6% in Japan, 6.9% in Korea, 5.3% in India, 5.4% in Thailand, 4% in the Philippines, and 3.3% in Indonesia.

South Korea and Japan also imported more than two and four times more liquified natural gas, respectively – the prices of which tend to track oil prices more closely than conventional natural gas prices do – than China did. China’s LNG imports barely even surpassed India’s or Taiwan’s. China’s imports of natural gas in general, meanwhile, were less than half as large as Japan’s and only around 20% percent greater than South Korea’s.

China, furthermore, tends to import energy from the most commercially uncompetitive, politically fragile, or American-hated oil-exporting states, such as Venezuela, Iran, Russia, Iraq, Angola, and other African states like Congo and South Sudan. In contrast, Japan and South Korea get their crude from places that will, perhaps, be better at weathering today’s low prices, namely from Kuwait, Qatar, the UAE, and Saudi Arabia. Similarly, China gets much of its natural gas from Turkmenistan, Uzbekistan, and Myanmar, whereas Japan imports gas from Australia and Qatar and South Korea imports gas from Qatar and Indonesia.

China’s top source for imports of high-grade anthracite coal, and its third largest source for imports of coal in general, is North Korea. China has, in addition, invested capital all over the world in areas hurt by falling energy and other commodity prices, including in South America, Africa, Central Asia, Canada, and the South Pacific.

Another mistake the media makes is looking at China as if it were a country, rather than what it really is: both a country and a continent. Continents have internal, deeply-rooted regional divisions, and China is no exception. Its main divide is between areas south of the Yangtze River, which tend to be mountainous, sub-tropical, and dependent upon importing fossil fuels, and areas north of the Yangtze, which tend to be flat, more temperate, and rich in fossil fuels.

Northern China, stretching over 1000 km from Beijing southward to Shanghai on the Yangtze, is the country’s political heartland. It is densely populated and home to most of China’s natively Mandarin-speaking, ethnically-Han citizens. When compared to southern China, the north has historically been somewhat insulated from foreigners like the Europeans, Americans, and even Japanese. Beijing’s nearest port is roughly 5000 km away from Singapore and the Strait of Malacca; Hong Kong, in contrast, is only around 2500 km from Singapore and Malacca. Beijing is rougly 2600 km from Tokyo by ship, whereas Shanghai is just 1900 km from Tokyo and Taipei is just 2100 km from Tokyo.

Japan’s Ryukyu island chain and the Kuroshio ocean currents historically allowed for easy transport from Japan to Taiwan and the rest of China’s southeastern coast; the Japanese controlled Taiwan for more than three and a half decades before they first ventured into other areas of China in a serious way during the 1930s. Even today, Japan accounts for a larger share of Taiwan’s imports of goods than do either China or the United States.

Southern China has often depended on foreign trade, since much of its population lives in areas that are sandwiched narrowly between Pacific harbours on one side and coastal subtropical mountain ranges on the other. In northern and central China, in contrast, most people live in interior areas rather than directly the along the Pacific coast. These people in the interior generally did not engage in as much foreign trade, as in the past moving goods between the interior and coast was often limited by the fact that northern China’s chief river, the Huang-he, was generally unnavigable and prone to flooding northern China’s flat river plains, destroying or damaging roads and bridges in the process.

In southern and central China, by comparison, even people living far inland could engage with the coast by way of the commercially navigable Yangtze and Pearl Rivers, which meet the Pacific at the points where Shanghai and Hong Kong are located.

Northern China, however, was most directly exposed to the land-based Mongol and Manchu invaders who ruled over the Chinese for most of the past half-millenium or so prior to the overthrow of the Manchu Qing Emperor in 1912. Today the north continues to retain the political capital, Beijing, and a disproportionally large majority of Chinese leaders were born in north China — including Beijing-born Xi Jinping and Shandong-born Wang Qishan (a former mayor of Beijing) — in spite of the fact that most Chinese political revolutionaries, including Mao Zedong, Deng Xiaoping, Chang Kai-Shek, Sun Yat Sen, Zhu De, Ye Jianying, Hong Xiuquan, and famed writer Lu Xun, hailed from southern or south-central China.

Today, out of China’s seven Standing Comittee top leaders, only seventh-ranked Zhang Gaoli was born in southern China, whereas five of the seven were born in northern China and one, Premier Li Keqiang, was born in central China. Zhang Gaoli may in fact be the first person born outside of northern or central China in thirty years to have made it to the Standing Committee. He is also the only person currently in the 25-member Politburo born outside of northern or central China. Among the 11-man Central Military Commission, meanwhile, seven were born in northern China, while two were born in north-central China and two in south-central China. Out of the 205 active members of the Party Central Committee, fewer than 15 were born south of central China.

Indeed, the southern half of China, stetching from islands in Taiwan, Hainan, Hong Kong,  Xiamen, and Macau in the east to the plateaus of Yunnan, Sichuan, and Tibet in the west, is politically peripheral. It is home to a majority of China’s 120 million or so non-Han citizens (most of whom are not Tibetan or Uyghur, though those two groups recieve almost all of the West’s attention), China’s 200-400 million speakers of languages other than Mandarin, China’s tens of millions of speakers of dialects of Mandarin that are relatively dissimilar to the Beijing-based standardized version of Mandarin, most of China’s 50-100 million recent adopters of Christianity, and most of China’s millions of family members of the enormous worldwide Chinese diaspora.

Southern China is physically closer to Southeast Asia (a region with a huge Chinese minority population) and most of the populous areas of Japan, and further away from sparsely populated Mongolia or Siberia, than northern China is. The south’s Fujian province, in particular, is linguistically and economically close to Taiwan, while the south’s Guangdong province is close to Hong Kong. A large share of China’s GDP comes from the coastal areas of China from around Shanghai south to Guangdong, particularly if you include Taiwan as part of the country. Guangdong alone accounts for an estimated 10% of mainland China’s GDP and over 25% of its exports. This creates a somewhat unbalanced dynamic: China’s political periphery is also its economic centre.

As it happens, northern China produces almost all of China’s fossil fuels (particulary in and around Shanxi province, 300 km or so inland from Beijing, where a large share of China’s coal is mined and which has seen the biggest political shakeup of any province from Xi Jinping’s anti-corruption campaign thus far), whereas southern and central China, especially if you include the neighbouring economy of Taiwan as being part of China, account for most of China’s imports of energy. Taiwan, in fact, may be more dependent on oil imports than any other significant economy in the world. Falling energy prices may weaken the Chinese political heartland relative to its periphery, in that case. Whether or not this will generate any political instability going forward remains to be seen.

If (a big if) energy prices remain low for a sustained period, then the question of China’s future dependence on imported energy also becomes relevant, as does the question of the future dependence on imported energy of China’s most important neighbours. In that case, how dependent on energy imports will countries like China, Japan, and India be in a decade or two from now?

While it is impossible to know what the future will be like, it is not difficult to imagine that China will remain less dependent on energy imports than India and/or Japan during the years or decades ahead, as a result of India’s still-emerging economy and Japan’s still-roboticizing economy.

China is not likely to be a major adopter of energy-intensive robots, in per capita terms, because China has a far larger cheap labour force than any country in the world apart from India. Japan, in contrast, will likely help lead the robot revolution, as its labour force is expensive and aging rapidly. This could make Japan even more dependent on importing energy, as machines that are both highly mobile and capable of sophisticated computation require an enormous amount of energy to run — and indeed, one of their main advantages over human labour is that they can and frequently will be tasked to run 24-7,  without even taking any time off for holidays or sick days.

China is not certain to increase its energy imports nearly as much as less-developed economies like India, meanwhile, as the Chinese inudstrial sector is facing challenges as a result of its past generation of energy-intensive growth. China faces rising labour costs in its cities, a pollution problem, crowded transportation infrastructure, a US that is concerned with Chinese industrial power, and countries throughout the world afraid of China’s world-leading carbon emissions. In addition, China is located much further away from the Persian Gulf and Caspian Sea oil and gas fields than the Indians and other South Asians are, and so might have difficulty accessing them in a pinch.

China may also have to face industrial competition from resource-rich or capital-rich economies such as Australia, Norway, Canada, Qatar, Texas, and maybe even Hong Kong, which will perhaps be able to use energy-intensive robots of various kinds to build up their manufacturing sectors in spite of their small labour forces. This could make China’s industrial growth rate slip, which in turn might reduce China’s resource imports and thus prevent China from becoming the leading beneficiary of low energy and commodity prices.

Such a shift will be especially likely if the United States or European economies decide to enact tariffs on goods coming from places that generate power by using coal in inefficient ways, a prospect that has become increasingly likely as a result of America’s triple-alliance between environmentalists opposed to coal consumption, shale gas producers competing with coal, and energy companies trying to pioneer more expensive but cleaner ways of consuming coal. China may then have to focus on growing its service sectors instead of its energy-intensive industrial sectors.

Japan, lastly, might benefit from Russia’s energy-related woes more than China will. This is not only because the Chinese have to a certain extent often looked to Russia as an ally against the West, but also because the areas of Russia that China is close to are mostly irrelevant to China: they are landlocked, Siberian, and for the most part located far from China’s population centres. Pacific Russia, in contrast, located next to the Sea of Japan on the East Asian side of Russia’s Pacific mountain ranges, has a far more liveable climate than the continental Siberian interior, is home to a number of useful medium-sized port cities, and accounts for much of the oil and nearly all of the Russian natural gas exports to Asia — led by energy-rich Sakhalin Island, which is just 40 km away from Japan and was partly owned and inhabited by the Japanese prior to the Second World War.

Russia may, in fact, be somewhat better prepared to fight another border war with China like it did in 1969, which might not be too different than the many other wars Russia has fought around its own borders both prior to and since then, than it would be to face off against Japan again within its far-eastern, mountainous, archipelagic and peninsular Pacific region, as it did in 1905 and then during World War Two. Of course this does not mean Japan will attack Russia — though it has certainly toyed with the idea of making more forceful moves in the Southern Kuril Islands, which both countries claim as their own. Even the unspoken possibility of conflict, however, may help grant the Japanese leverage over Russia in negotiations relating to commercial or political issues.


Mexico is much more than just America’s messy basement. It has the world’s 11th largest population,14th largest GDP, and, because it is in the New World, its population is in many ways much more internally unified than those of most other large countries are. It also has important ties to the rest of the Spanish-speaking world, to the Latin-based world in general, and to the 35 million or so Mexicans in the United States in particular, most of whom live in states adjacent to the Mexican border. Mexico is the clear potential leader in the Spanish-speaking world: its population is bigger than those of Colombia, Argentina, and Venezuela combined, and its economy is about to surpass Spain’s. If you include illegal transactions, Mexico already has the largest economy in the Spanish world by far. Along with (or perhaps instead of) Portuguese-speaking Brazil, Mexico could potentially help Latin America to become one of the most prominent regions in the world during the decades ahead.

Mexico may not be a major beneficiary of low energy prices, for three general reasons. First, it is a net oil-exporting economy: oil exports accounted for an estimated 2.7% of Mexico’s GDP in 2014, and Mexico had been hoping to increase its oil and gas production since its president enacted widely-touted reforms in the country’s energy sector that year. Mexico is also often a relatively high-cost oil producer, and so may be forced to cede market share to more price-competitive producers in other countries.

Second, Mexico has ties – both existing ties and potential future ties – to other countries in Latin America, a region that is highly economically dependent on exports of energy and other natural resources. Most of the South American economy is already in or flirting closely with recession as a result of the commodity crash, which on the whole is probably not a good thing for Mexico.

Third, Mexico has ties to the southwestern United States, in the areas of America that were part of Mexico prior to the 1830s-1850s, most notably California and Texas where around 25 million Hispanic-Americans live today. Like Mexico itself, this part of the US is dependent on energy exports, led by Texas (a major producer of oil, gas, coal, wind power, solar power, and refined petroleum products: Texas produces approximately one-fifth of US energy and one-third of US crude oil) but also including the surrounding energy-producing states of Oklahoma, Colorado, New Mexico, Utah, Louisiana, Arkansas and the federally-administered oil-and-gas producing waters in the Gulf of Mexico.

Nearly all of the states with a high share of Mexican-Americans are either energy-exporting states or else, in the case of California, New York, Florida, and Arizona, have the lowest per capita energy consumption of any states apart from tiny  Rhode Island, Hawaii, and Connecticut.

Even California’s energy imports do not balance out Texas’s energy exports, because California is itself the US’s third largest oil-producing state, tenth largest energy-producing state, and has the fourth lowest per capita energy consumption; its energy imports are not as large as one might expect given the enormous size of the Californian economy. They might even shrink in the future, if the Monterrey basin shale resources are developed. California is also the largest agricultural producer in the United States (Texas is fourth), a big sector that can be hit by falling commodity prices as well.

Mexico has admittedly been benefiting from cheap gas prices brought on by Texas’s shale boom.  Mexican imports of US gas have nearly tripled since 2009, which has benefited the industrial sector in northern and north-central Mexico. This gas import growth might slow going forward, however, as America’s LNG export facilities may soon be coming online, LNG import facilities in both Europe and China are expected to be opened soon, and the Panama Canal expansion which will be finised this year may allow LNG ships to traverse the canal from Texas to Asia for the first time. As LNG allows US gas to be sold worldwide, Mexico’s import growth of US gas might slow down. In any event, Mexico is the 19th largest natural gas producer in the world, so even with increasing imports from the US it will not soon become a significant net importer of natural gas.

In the future, meanwhile, somewhat similar to China, Mexico’s industrial growth may not be as strong as most people expect, which could cause it to become less dependent on energy and other commodity imports relative to other countries. Mexico is currently a major industrial economy, the result of its large and cheap labour force and proximity to US consumers. As labour and other prices in northern and to a lesser extent central Mexico are becoming more expensive due to economic growth in these areas, however, Mexico’s industrial growth rate may slow. This is because central and especially southern Mexico are separated from the US by vast areas of mountainous deserts or jungles, making the north-south roads and pipelines through Mexico expensive to build, use, and maintain, as well as potentially vulnerable to groups like the drug cartels, indigenous peoples, or local governments. Southern Mexico resembles Central America more than it resembles northern Mexico.

Mexico may increasingly also have to face industrial competition from Cuba, which is the only other sizeable Hispanic country close to the United States; from Venezuela, if it too can finally mend fences with America and leverage its energy resources to industrialize; or from Canada and the US, if they try to use robots and other technologies to re-industrialize. If, finally, domestic politics lead the US to try to make the Mexican border more of a barrier, Mexico might have to industrialize less and stick more to the many other sectors of the diverse Mexican economy, which are less resource-intensive.


There is a fourfold division in Europe, where energy and commodity imports are concerned. First is between mainland Europe, which is a major importer of energy and oil, and the regions surrounding mainland Europe (namely Scandinavia, the North Sea, the former Soviet Union, the Middle East, North Africa, western Africa, and the Americas), which are energy and commodity producers. Even the United States has now become such a big energy producer that its energy imports account for only around 15% of its overall energy consumption, a very low share in comparison to an estimated 62% in Germany, 71% in Spain, 77% in Italy, 46% in France, and 43% in Britain.

Second is between countries which use the Euro as their currency – Germany, Spain, France, Italy, Greece, Slovakia, etc. – which tend to be significant importers of oil or other commodites, and countries that do not use the Euro – Norway, Sweden, Switzerland, Britain, Denmark, Poland, Romania, Czech Republic, Ukraine, Belarus, Russia, etc. – which tend to produce a decent amount of oil, energy, or other commodities — or else, like Switzerland, have economies that are not energy-intensive and so may not benefit as much from cheap energy. (Switzerland, the 20th largest economy in the world, also relies on imports for just 52% of its energy, according to the World Bank, which is a lower share than in all but four of the 19 countries within the Eurozone). Admitedly there are a few exceptions to this rule: most notably Turkey, which imports a lot of energy but does not use the Euro, and Estonia and to a lesser extent the Netherlands, which produce a decent amount of energy domestically yet do use the Euro. Still, even the Netherlands is a major net importer of crude oil.

The third division is between countries that are in the European Union and European countries that are not in the European Union. This division is similar to the Eurozone one, except that states like Britain, Denmark, Poland, Romania, and Sweden — all of which are mid-sized energy or commodity producers – are in the European Union but do not use the Euro, which leave the continent’s major commodity and enegy producers of Norway, Russia, and Ukraine as more prominent outsiders. Turkey, meanwhile, is, unlike Russia, Switzerland, Norway, or Ukraine, a member of the quite important European Customs Union, though like them it is not part of the EU.

Finally, and in some ways most pertinently, there is a division between northern Europe and southern Europe. The further north you go, the less dependent the Europeans are on energy imports. Scandinavia and Russia are the furthest north: they are major energy and commodity producers. (Even the three Baltic states, which are generally assumed to be among the smaller countries in Europe, actually own far more land per capita – and especially forested land, which is crucial for feeding Europe’s sizeable wood-fuel industry – than any European countries to the south of them do).

These are followed by countries like Britain, the Netherlands, Romania, Ireland, the German economies, Poland, the Czech Republic, Slovakia, Hungary, Belgium, and northern France, which have economies that are also not too dependent on energy imports. (Like Switzerland, both Ireland and northern France have economies that are not at all energy-intensive, when compared to others).

In southern Europe, finally, there are the economies of Spain, Portugal, Greece, Italy, France-sans-Paris, Turkey, Cyprus, and Malta, which are highly dependent on imports of oil, natural gas, and energy in general. (While nearby Algeria remains a large energy-exporting state and Libya has energy-export potential, Morocco, Israel, Lebanon, and Jordan are highly dependent on energy imports and Egypt and Tunisia are both more or less energy neutral). Perhaps not incidentally, most of southern Europe has experienced an economic depression during the past eight years.

The biggest exception within southern Europe, meanwhile, is Italy, which produces more oil than France, Greece, Turkey, and Spain combined, slightly more oil than even Germany produces. This may in fact partly help to explain why Italy has been suffering a great deal of late, whereas the Spanish, Portuguese, and possibly even Greek economies might finally be on the mend. Even Italy is the world’s third largest gas importer, however, so as with Spain, Portugal, Turkey, and Greece, the Italians depend on imports from abroad to supply more than 70% of the energy they consume.


Turkey is in the most interesting position of all when it comes to energy and geopolitics. It, along with its nearest European neighbour Greece, is a significant net energy importer; Turkey has a relatively energy-intensive economy and energy imports account for three-quarters of its energy consumption, while in Greece energy imports account for 60% of energy consumption. Oil imports in Turkey and Greece were estimated to be equal in value to 3.2% and 4.5% percent of GDP in 2014, respectively, both figures quite a bit higher than in most other countries within Europe.

Surrounding Turkey and Greece, however, is a ring of leading energy-producing regions: the Middle East, Russia, Ukraine, the Caspian Sea-Central Asia region, and North Africa. Even Turkey’s closest Western neighbours of note, namely Italy, Romania, and Austria, are not necessarily going to benefit much from cheap oil or cheap energy. Italy produces nearly three times as much oil as Turkey does, Romania produces nearly twice as much oil as Turkey and depends on energy imports for just 22% of its energy consumption, and Austria has the lowest oil-imports-as-a-percent-of-GDP of any country in the Eurozone. Even Israel, Cyprus, and Egypt have made major new energy discoveries of late, of natural gas within the Eastern Mediterranean.

In past years, Turkey has already seen many of its neighbours fall to shambles to one extent or another — first the Soviet Union, Yugoslavia, Lebanon, Algeria, and the Caucuses in the 1990s, now Iraq, Syria, Ukraine, Greece, Georgia, and Libya, among others. Further troubles in the regions surrounding Turkey, then, perhaps brought on by the falling price of energy, could create a serious power vaccum for the Turks to consider filling.

Turkey’s close-to-home rivals the Kurds, meanwhile, are also potential losers in a cheap energy environment. They produce a lot of oil in Iraqi Kurdistan, abut a number of hydropower facilities located within Turkey’s mountainous Kurdish regions where the headwaters of the Tigris and Euphrates rivers form, and possess ties in some cases to energy-rich Iran (as a result of the Kurdish population in Iran as well as the fact that Persians tend to be ethno-linguistically closer to most Kurdish groups than most Kurds are to either Turks or Arabs) or to energy-rich Iraq (as a result of the sizeable Kurdish population that lives in Iraq).


India, like China, is both a major energy producer, the seventh largest in the world, and a major energy consumer, the third largest in the world. In India, however, oil imports were equal to 5.3% of GDP in 2014, compared to just 2.4% in China, while energy imports accounted for 33% of Indian energy consumption, compared to just 15% for China. And whereas in China the areas that benefit the most from cheap energy are located outside of the Chinese political heartland, in India the country’s political core territories — which are centred around India’s largest state by far, namely Uttar Pradesh (population 200 million), as well as parts of its neighbouring states like Bihar (India’s third largest state), Madhya Pradesh (5th largest), Rajasthan (7th largest), and Delhi (India’s capital city, population 17 million) — may benefit among the most in India from falling oil and energy prices.

Some of the other areas within India, on the other hand, such as parts of both Western India (which produces 75% of the oil from onshore fields in India, and which has close economic ties to the nearby energy-rich Persian Gulf) and Eastern India (which is where most of India’s coal and other commodities are produced or exported), might not benefit in the same way*.

[*when I say “benefit”, I mean it in the geopolitical sense of the term, not in the ethical sense. From an ethical point view, for example, the fall in energy and commodity prices is arguably great news for many of the people in Eastern India who were being exploited because of their coal and mineral wealth. Obviously, things like this are usually far more complicated in reality than can be captured in any single essay].

India’s geopolitical dream is of a prosperous, peaceful Indian Ocean basin in which it, by virtue of its size, diversity, and central location, would be far and away the most prominent and powerful country. In order to accomplish this India must have better relations with Pakistan, a country that has been backed by the United States as well as by fellow Muslim states like Saudi Arabia. With the Saudis and other Sunni Muslim countries hurt by cheap oil and energy prices, and with India’s traditional allies against Pakistan, namely the Russians and Iranians, hurt by cheap energy too, both India and Pakistan might perhaps be forced to rely more heavily on the Americans. If, then, the Americans decide to prioritize India-Pakistan peace-making as a way to maintain stability in South Asia and help to contain forces like China, Russia, and pan-Islamism, there may be some cause to be hopeful. Don’t be too sure though: there are plenty of reasons why India, Pakistan, and the United States might each find it difficult to pursue Indian-Pakistani or Hindu-Muslim reconciliation.

Within the wider Indian Ocean region, stretching 6000 km from Madagascar to Indonesia and 6000 km from Sri Lanka to Kerguelen, there is also some scope for careful optimism. In East Africa, from around Ethiopia south through the Great Lakes, most economies are not dependent on energy exports in the way that western African countries like Angola, Nigeria, Algeria, Congo, Gabon, and Equatorial Guinea are. Even South Africa, the world’s sixth largest coal exporter, is not nearly as dependent on energy exports as Nigeria, Angola, or Algeria are, and is a net importer of crude oil. Oman and Yemen, similarly, the two Arab countries with coastlines directly along the Indian Ocean, are not nearly as dependent on energy exports as other Arab countries like Saudi Arabia, the UAE, Qatar, and Kuwait are. They, especially Yemen, may also be leading importers of food.

In the eastern Indian Ocean, the Indonesian islands of Sumatra and especially Java (combined population: 195 million) tend to be energy-importing areas, in contrast to Indonesia’s Pacific islands like Kalimantan and, 3500 km to the east of the Indian Ocean, West Papua, which account for most of Indonesia’s energy production as Sumatra’s aging oil fields are declining. In Indonesia’s neighbour Malaysia, similarly, most oil production comes from around the Pacific island of Borneo, an island Malaysia shares with Indonesia and Brunei, rather than from the Malay Peninsula on the edge of the Indian Ocean where most of Malaysia’s population lives. Singapore, moreover, which is located roughly in between western Malaysia and western Indonesia, is the world’s 13th or 14th largest oil importer (it is roughly tied with Thailand, which is also located along the outer edge of the Indian Ocean); in spite of its small size Singapore now imports nearly twice as much crude oil as Indonesia and Malaysia combined export to the world.