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I ran across
this late today, wish that I’d seen it earlier this week to reference comments and
discussion here and elsewhere. kwc There is a
brief history lesson and some perspective on the question of should New Orleans
be rebuilt. Dr. Friedman makes a
few statements with which I take issue, regarding damage to oil rigs and
refineries, but this was written early and his vagueness is understandable. Hopefully, a regional reconstruction
mobilization will be launched soon that would make FDR and the Japanese and
Germans proud. Likewise, I hope we will draw on the lessons of the Marshall
Plan as well as Asian and European experience as we devise this massive
redevelopment project. And it’s been
on my mind since Lawry mentioned the moral sins of our misadventure in Iraq: the
huge and complex economic, environmental and sociocultural impacts of the loss
of this major US city, by natural disaster, should make Americans appreciate how
much the ‘shock and awe’ of the bombing of Baghdad and the invasions of Falluja
and Tal Afar have had on the Iraqi psyche and country. With armed soldiers
patrolling streets and commerce stopped, utilities and infrastructure damaged, looting
and fire decimating historical markers, businesses and homes, doctors working
under great restriction, families separated and dispersed, the press being censored
for body counts, innocents lost and lives changed forever, we are ‘walking a
mile’ in the shoes of Iraqis who faced a very different storm. That reminds of another discovery from
earlier this week: When armies are mobilized and issues joined,
the man who is sorry over the fact, will win. -- Lao-Tzu (c.604-c.531 B.C.) New Orleans: A Geopolitical
Prize
The American political
system was founded in Philadelphia, but the American nation was built on the
vast farmlands that stretch from the Alleghenies to the Rockies. That farmland
produced the wealth that funded American industrialization: It permitted the
formation of a class of small landholders who, amazingly, could produce more
than they could consume. They could sell their excess crops in the east and in
Europe and save that money, which eventually became the founding capital of
American industry. But it was not the
extraordinary land nor the farmers and ranchers who alone set the process in
motion. Rather, it was geography - the extraordinary system of rivers that
flowed through the Midwest and allowed them to ship their surplus to the rest
of the world. All of the rivers flowed into one - the Mississippi - and the
Mississippi flowed to the ports in and around one city: New Orleans. It was in
New Orleans that the barges from upstream were unloaded and their cargos
stored, sold and reloaded on ocean-going vessels. Until last Sunday, New
Orleans was, in many ways, the pivot of the American economy. For that reason, the
Battle of New Orleans in January 1815 was a key moment in American history. Even
though the battle occurred after the War of 1812 was over, had the British
taken New Orleans, we suspect they wouldn't have given it back. Without New
Orleans, the entire Louisiana Purchase would have been valueless to the United
States. Or, to state it more precisely, the British would control the region
because, at the end of the day, the value of the Purchase was the land and the
rivers - which all converged on the Mississippi and the ultimate port of New
Orleans. The hero of the battle was Andrew Jackson, and when he became
president, his obsession with Texas had much to do with keeping the Mexicans
away from New Orleans. During the Cold War, a
macabre topic of discussion among bored graduate students who studied such
things was this: If the Soviets could destroy one city with a large nuclear
device, which would it be? The usual answers were Washington or New York. For
me, the answer was simple: New Orleans. If the Mississippi River was shut to
traffic, then the foundations of the economy would be shattered. The industrial
minerals needed in the factories wouldn't come in, and the agricultural wealth
wouldn't flow out. Alternative routes really weren't available. The Germans
knew it too: A U-boat campaign occurred near the mouth of the Mississippi
during World War II. Both the Germans and Stratfor have stood with Andy
Jackson: New Orleans was the prize. Last Sunday, nature
took out New Orleans almost as surely as a nuclear strike. Hurricane Katrina's
geopolitical effect was not, in many ways, distinguishable from a mushroom
cloud. The key exit from North America was closed. The petrochemical industry,
which has become an added value to the region since Jackson's days, was at
risk. The navigability of the Mississippi south of New Orleans was a question
mark. New Orleans as a city and as a port complex had ceased to exist, and it
was not clear that it could recover. The ports of South
Louisiana and New Orleans, which run north and south of the city, are as
important today as at any point during the history of the republic. On its own
merit, the Port of South Louisiana is the largest port in the United States by
tonnage and the fifth-largest in the world. It exports more than 52 million
tons a year, of which more than half are agricultural products - corn, soybeans
and so on. A larger proportion of US agriculture flows out of the port. Almost
as much cargo, nearly 57 million tons, comes in through the port - including
not only crude oil, but chemicals and fertilizers, coal, concrete and so on. A simple way to think
about the New Orleans port complex is that it is where the bulk commodities of
agriculture go out to the world and the bulk commodities of industrialism come
in. The commodity chain of the global food industry starts here, as does that
of American industrialism. If these facilities are gone, more than the price of
goods shifts: The very physical structure of the global economy would have to
be reshaped. Consider the impact to the US auto industry if steel doesn't come
up the river, or the effect on global food supplies if US corn and soybeans
don't get to the markets. The problem is that
there are no good shipping alternatives. River transport is cheap, and most of
the commodities we are discussing have low value-to-weight ratios. The US
transport system was built on the assumption that these commodities would
travel to and from New Orleans by barge, where they would be loaded on ships or
offloaded. Apart from port capacity elsewhere in the United States, there aren't
enough trucks or rail cars to handle the long-distance hauling of these
enormous quantities - assuming for the moment that the economics could be
managed, which they can't be. The focus in the media
has been on the oil industry in Louisiana and Mississippi. This is not a
trivial question, but in a certain sense, it is dwarfed by the shipping issue.
First, Louisiana is the source of about 15 percent of US-produced petroleum,
much of it from the Gulf. The local refineries are critical to American infrastructure.
Were all of these facilities to be lost, the effect on the price of oil
worldwide would be extraordinarily painful. If the river itself became
unnavigable or if the ports are no longer functioning, however, the impact to
the wider economy would be significantly more severe. In a sense, there is more
flexibility in oil than in the physical transport of these other commodities. There is clearly good
news as information comes in. By all accounts, the Louisiana Offshore Oil Port
(LOOP), which services supertankers in the Gulf, is intact. Port Fourchon,
which is the center of extraction operations in the Gulf, has sustained damage
but is recoverable. The status of the oil platforms is unclear and it is not
known what the underwater systems look like, but on the surface, the damage -
though not trivial - is manageable. The news on the river
is also far better than would have been expected on Sunday. The river has not
changed its course. No major levees containing the river have burst. The
Mississippi apparently has not silted up to such an extent that massive
dredging would be required to render it navigable. Even the port facilities,
although apparently damaged in many places and destroyed in few, are still
there. The river, as transport corridor, has not been lost. What has been lost is
the city of New Orleans and many of the residential suburban areas around it.
The population has fled, leaving behind a relatively small number of people in
desperate straits. Some are dead, others are dying, and the magnitude of the
situation dwarfs the resources required to ameliorate their condition. But it
is not the population that is trapped in New Orleans that is of geopolitical
significance: It is the population that has left and has nowhere to return to. The oil fields,
pipelines and ports required a skilled workforce in order to operate. That
workforce requires homes. They require stores to buy food and other supplies.
Hospitals and doctors. Schools for their children. In other words, in order to
operate the facilities critical to the United States, you need a workforce to
do it - and that workforce is gone. Unlike in other disasters, that workforce
cannot return to the region because they have no place to live. New Orleans is
gone, and the metropolitan area surrounding New Orleans is either gone or so
badly damaged that it will not be inhabitable for a long time. It is possible to
jury-rig around this problem for a short time. But the fact is that those who
have left the area have gone to live with relatives and friends. Those who had
the ability to leave also had networks of relationships and resources to manage
their exile. But those resources are not infinite - and as it becomes apparent
that these people will not be returning to New Orleans any time soon, they will
be enrolling their children in new schools, finding new jobs, finding new
accommodations. If they have any insurance money coming, they will collect it.
If they have none, then - whatever emotional connections they may have to their
home - their economic connection to it has been severed. In a very short time,
these people will be making decisions that will start to reshape population and
workforce patterns in the region. A city is a complex
and ongoing process - one that requires physical infrastructure to support the
people who live in it and people to operate that physical infrastructure. We
don't simply mean power plants or sewage treatment facilities, although they
are critical. Someone has to be able to sell a bottle of milk or a new shirt.
Someone has to be able to repair a car or do surgery. And the people who do
those things, along with the infrastructure that supports them, are gone - and
they are not coming back anytime soon. It is in this sense,
then, that it seems almost as if a nuclear weapon went off in New Orleans. The
people mostly have fled rather than died, but they are gone. Not all of the
facilities are destroyed, but most are. It appears to us that New Orleans and
its environs have passed the point of recoverability. The area can recover, to
be sure, but only with the commitment of massive resources from outside - and
those resources would always be at risk to another Katrina. The displacement of
population is the crisis that New Orleans faces. It is also a national crisis,
because the largest port in the United States cannot function without a city
around it. The physical and business processes of a port cannot occur in a
ghost town, and right now, that is what New Orleans is. It is not about the
facilities, and it is not about the oil. It is about the loss of a city's
population and the paralysis of the largest port in the United States. Let's go back to the
beginning. The United States historically has depended on the Mississippi and
its tributaries for transport. Barges navigate the river. Ships go on the
ocean. The barges must offload to the ships and vice versa. There must be a
facility to empower this exchange. It is also the facility where goods are
stored in transit. Without this port, the river can't be used. Protecting that
port has been, from the time of the Louisiana Purchase, a fundamental national
security issue for the United States. Katrina has taken out
the port - not by destroying the facilities, but by rendering the area
uninhabited and potentially uninhabitable. That means that even if the
Mississippi remains navigable, the absence of a port near the mouth of the
river makes the Mississippi enormously less useful than it was. For these
reasons, the United States has lost not only its biggest port complex, but also
the utility of its river transport system - the foundation of the entire
American transport system. There are some substitutes, but none with sufficient
capacity to solve the problem. It follows from this
that the port will have to be revived and, one would assume, the city as well.
The ports around New Orleans are located as far north as they can be and still
be accessed by ocean-going vessels. The need for ships to be able to pass each
other in the waterways, which narrow to the north, adds to the problem. Besides,
the Highway 190 bridge in Baton Rouge blocks the river going north. New Orleans
is where it is for a reason: The United States needs a city right there. New Orleans is not
optional for the United States' commercial infrastructure. It is a terrible place
for a city to be located, but exactly the place where a city must exist. With
that as a given, a city will return there because the alternatives are too
devastating. The harvest is coming, and that means that the port will have to
be opened soon. As in Iraq, premiums will be paid to people prepared to endure
the hardships of working in New Orleans. But in the end, the city will return
because it has to. Geopolitics is the
stuff of permanent geographical realities and the way they interact with political
life. Geopolitics created New Orleans. Geopolitics caused American presidents
to obsess over its safety. And geopolitics will force the city's resurrection,
even if it is in the worst imaginable place. http://www.stratfor.com/news/archive/050903-geopolitics_katrina.php |
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