[Congressional Record (Bound Edition), Volume 152 (2006), Part 18]
[Senate]
[Pages 22992-22994]
[From the U.S. Government Publishing Office, www.gpo.gov]




             REMARKS TO THE GERMAN MARSHALL FUND CONFERENCE

  Mr. LUGAR. Mr. President, I ask unanimous consent that my remarks, 
delivered in a keynote address at the German Marshall Fund conference 
on Monday, November 27, in Riga, Latvia, in advance of the NATO Summit, 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Thank you, Madam President [Dr. Vaira Vike-Freiberga, 
     President of the Republic of Latvia]. I appreciate your 
     thoughtful introduction and your generous hospitality. It is 
     a pleasure to be back in Riga and to deliver the keynote 
     address here at this important German Marshall Fund 
     conference. This conference and the participants it has drawn 
     are evidence of the deep respect the Fund merits throughout 
     Europe and North America.
       In 1991 NATO stood at a crossroads. With the collapse of 
     the Soviet Union and the Warsaw Pact, the Alliance could have 
     declared victory and disbanded. Instead, NATO chose to adapt 
     to the new security environment and build on its legacy of 
     being the most successful security and defense organization 
     in history.
       Since that time, we have welcomed ten new members into the 
     Alliance and have begun a dramatic transformation of our 
     military capabilities. We have also undertaken missions in 
     the Balkans and Afghanistan that have extended the purpose of 
     the Alliance beyond the territorial defense of its 
     membership. However, while NATO is busier than ever, these 
     activities do not guarantee that the Alliance will remain 
     strong and relevant.
       For nearly half a century, NATO was oriented toward 
     defending against an attack from the East by Warsaw Pact 
     forces. Today, NATO's posture is influenced by emerging 
     threats such as the proliferation of weapons of mass 
     destruction, rogue states, terrorism, and genocide. The 
     security threats of the 21st century require NATO members to 
     deploy forces rapidly over long distances, sustain operations 
     for extended periods of time, and operate jointly as trans-
     Atlantic partners with the United States in high intensity 
     conflicts. To be fully relevant to the security and well 
     being of the people of its member nations, NATO must think 
     and act globally.

                        The Test of Afghanistan

       This is evident in the NATO mission in Afghanistan. That 
     country presents a difficult environment, but NATO must be 
     resourceful, resilient, and ultimately successful. The 
     September 11 attacks were planned in Afghanistan, al-Qaeda 
     still operates there, and the fate of the country remains 
     inexorably tied to the Alliance. NATO's International 
     Security and Assistance Force (ISAF) is responsible for 
     security operations throughout all of Afghanistan.
       In recent months, Taliban attacks have occurred with 
     greater frequency, coordination, and ferocity. They have 
     extended well beyond the South and East, where most of the 
     fighting has been located. Although the hunt for al-Qaeda 
     terrorists continues, the primary threat to the stability of 
     Afghanistan is Taliban insurgents who are challenging ISAF in 
     greater numbers, sowing dissent among Afghanis, cooperating 
     with the bourgeoning narcotics trade, and complicating 
     security efforts in ways that inhibit the rule of law and 
     reconstruction.
       If the most prominent alliance in modern history were to 
     fail in its first operation outside of Europe due to a lack 
     of will by its members, the efficacy of NATO and the ability 
     to take joint action against a terrorist threat would be 
     called into question. Moreover, Afghanistan has a 
     legitimately elected government and a long-suffering people, 
     both of which deserve a chance to succeed without the threat 
     of violent upheaval.
       It is imperative that NATO fulfills its commitments to 
     Afghanistan. The Alliance has found it difficult to generate 
     the political will to meet NATO objectives. The reluctance in 
     capitals to grant NATO requests for troops and resources have 
     complicated this process. Despite months of intensive 
     discussions, Supreme Allied Commander/Europe, General Jim 
     Jones, disclosed in September that NATO was 2,500 troops 
     short of the minimal commitment requested for ISAF. These 
     troops did not materialize until General Jones and other NATO 
     leaders publicly put Alliance nations on the spot for these 
     shortfalls.
       Afghanistan has become a test case for whether we can 
     overcome the growing discrepancy between NATO's expanding 
     missions and its lagging capabilities. NATO commanders must 
     have the resources to provide security, and they must have 
     the flexibility to use troops to meet Afghanistan's most 
     critical security needs. Unfortunately, NATO capitals are 
     making the military mission even more difficult by placing 
     national caveats on the use of their forces. These 
     restrictions, coupled with troop shortages, are making ISAF a 
     less cohesive and capable force.
       Similar problems are plaguing the NATO Response Force 
     (NRF), which is slated to be NATO's expeditionary fighting 
     unit. As is often the case, the lack of transport 
     capabilities is a glaring deficiency. I am hopeful that the 
     plan to establish a fleet of C-17s under the command and 
     control of NATO succeeds. To overcome these challenges and 
     similar ones, we must reverse the downward spiral of defense 
     budgets. Only a handful of members spend more than 2 percent 
     of their gross domestic product on defense. Good intentions 
     can only carry a military force so far--the NRF and other 
     NATO assets must have the equipment, training, and resources 
     to fulfill their mission.
       I believe strongly that NATO is capable of meeting the 
     challenge in Afghanistan. NATO commanders have demonstrated 
     that they understand the complexity of the mission. They know 
     that success in Afghanistan depends on the attitudes of the 
     people, the progress of reconstruction, the development of 
     the economy and the building of civil institutions that can 
     deal with the narcotics trade, as much as it depends on 
     battlefield victories.
       Most Afghanis have welcomed the advances in personal 
     freedom, political participation, and educational 
     opportunities that have come during the last five years. The 
     recent increase in violence in Afghanistan clearly is not 
     evidence of a popular uprising. But to the degree that there 
     is discontent, disillusionment, or fear among the Afghan 
     people due to their security situation, trust in the Afghan 
     government and NATO will dissipate. Insecurity stemming from 
     insurgent activity by Taliban forces has also caused Afghanis 
     in some regions to seek the protection of tribal leaders and 
     warlords, which in turn undercuts the authority of the Afghan 
     government and increases the risk of civil conflict between 
     tribal factions. Given these dynamics, we must dispel any 
     doubts about the commitment of NATO and the West to 
     Afghanistan's emergence as a stable and free society.

                        The Centrality of Energy

       NATO's challenges continue to come in new formations. We 
     have to understand not only the military configuration of 
     threats before us, but also the likely basis for future 
     conflict. The NATO alliance has been successful, not because 
     it fought wars, but because it prevented them. If the NATO 
     alliance is to be fully relevant to the security of its 
     members, it must expand beyond the mission of military 
     defense and begin to think about how to prevent the 
     conditions that will lead to war.
       In the coming decades, the most likely source of armed 
     conflict in the European theater and the surrounding regions 
     will be energy scarcity and manipulation. It would be 
     irresponsible for NATO to decline involvement in energy 
     security, when it is abundantly apparent that the jobs, 
     health, and security of our modern economies and societies 
     depend on the sufficiency and timely availability of diverse 
     energy resources.
       We all hope that the economics of supply and pricing 
     surrounding energy transactions will be rational and 
     transparent. We hope that nations with abundant oil and 
     natural gas will reliably supply these resources in normal 
     market transactions to those who need them. We hope that 
     pipelines, sea lanes, and other means of transmission will be 
     safe. We hope that energy cartels will not be formed to limit 
     available supplies and manipulate markets. We hope that 
     energy rich nations will not exclude or confiscate productive 
     foreign energy investments in the name of nationalism. And we 
     hope that vast energy wealth will not be a source of 
     corruption within nations that desperately ask their 
     governments to develop and deliver the benefits of this 
     wealth broadly to society.
       Unfortunately, our experiences provide little reason to be 
     confident that market rationality will be the governing force 
     behind energy policy and transactions. The majority of oil 
     and natural gas supplies and reserves in the world are not 
     controlled by efficient, privately owned companies. Geology 
     and politics have created oil and natural gas superpowers 
     that nearly monopolize the world's oil supply. According to 
     PFC Energy, foreign governments control up to 79 percent of 
     the world's oil reserves through their national oil 
     companies. These governments set prices through their 
     investment and production decisions, and they have wide 
     latitude to shut off the taps for political reasons.
       The vast majority of these oil assets are afflicted by at 
     least one of three problems: lack of investment, political 
     manipulation, or the threat of instability and terrorism. As 
     recently as four years ago, spare production capacity 
     exceeded world oil consumption by about ten percent. As world 
     demand for oil has rapidly increased in the last few years, 
     spare capacity has declined to two percent or less. Thus, 
     even minor disruptions of oil supply can drive up prices. 
     Earlier this year, a routine inspection found corrosion in a 
     section of BP's Prudhoe Bay oil pipeline that shut down 8 
     percent of U.S. oil output, causing a $2 spike in oil prices. 
     That the oil market is this vulnerable to something as 
     mundane as corrosion in a pipeline is evidence of the 
     precarious conditions in which we live.
       Within the last year and a half, the international flow of 
     oil has been disrupted by hurricanes, unrest in Nigeria, and 
     continued sabotage in Iraq. Al-Qaeda and other terrorist 
     organizations have openly declared their intent to attack oil 
     facilities to inflict pain on Western economies. We should 
     also recognize that NATO members are transferring hundreds of 
     billions of dollars each year

[[Page 22993]]

     to some of the least accountable, autocratic regimes in the 
     world. The revenues flowing to authoritarian regimes often 
     increase corruption in those countries and allow them to 
     insulate themselves from international pressure and the 
     democratic aspirations of their own peoples. As large 
     industrializing nations such as China and India seek new 
     energy supplies, oil and natural gas may not be abundant and 
     accessible enough to support continued economic growth in 
     both the industrialized West and in large rapidly growing 
     economies. In these conditions, energy supplies will become 
     an even stronger magnet for conflict.
       Under the worst case scenarios, oil and natural gas will be 
     the currency through which energy-rich countries leverage 
     their interests against import dependent nations. The use of 
     energy as an overt weapon is not a theoretical threat of the 
     future; it is happening now. Iran has repeatedly threatened 
     to cut off oil exports to selected nations if economic 
     sanctions are imposed against it for its nuclear enrichment 
     program. Russia's shut off of energy deliveries to Ukraine 
     demonstrated how tempting it is to use energy to achieve 
     political aims and underscored the vulnerability of consumer 
     nations to their energy suppliers. Russia retreated from the 
     standoff after a strong Western reaction, but how would NATO 
     have responded if Russia had maintained the embargo? The 
     Ukrainian economy and military could have been crippled 
     without a shot being fired, and the dangers and losses to 
     several NATO member nations would have mounted significantly.
       We are used to thinking in terms of conventional warfare 
     between nations, but energy could become the weapon of choice 
     for those who possess it. It may seem to be a less lethal 
     weapon than military force, but a natural gas shutdown to a 
     European country in the middle of winter could cause death 
     and economic loss on the scale of a military attack. 
     Moreover, in such circumstances, nations would become 
     desperate, increasing the chances of armed conflict and 
     terrorism. The potential use of energy as a weapon requires 
     NATO to review what Alliance obligations would be in such 
     cases.

                  Energy as an Article Five Commitment

       We must move now to address our energy vulnerability. 
     Sufficient investment and planning cannot happen overnight, 
     and it will take years to change behavior, construct 
     successful strategies, and build supporting infrastructure.
       NATO must determine what steps it is willing to take if 
     Poland, Germany, Hungary, Latvia or another member state is 
     threatened as Ukraine was. Because an attack using energy as 
     a weapon can devastate a nation's economy and yield hundreds 
     or even thousands of casualties, the Alliance must avow that 
     defending against such attacks is an Article Five commitment. 
     This does not mean that attempts to manipulate energy for 
     international political gain would require a NATO military 
     response. Rather, it means that the Alliance must commit 
     itself to preparing for and responding to attempts to use the 
     energy weapon against its fellow members. NATO must become a 
     reliable refuge for members against threats stemming from 
     their energy insecurity. If this does not happen, the 
     Alliance is likely to become badly divided as vulnerable 
     members seek to placate their energy suppliers. In fact, no 
     issue in the history of NATO is so likely to divide the 
     alliance in the absence of concerted action.
       Article Five of the NATO Charter identifies an attack on 
     one member as an attack on all. Originally envisioned to 
     respond to an armed invasion, this commitment was the bedrock 
     of our Cold War alliance and a powerful symbol of unity that 
     deterred Warsaw Pact aggression for nearly fifty years. It 
     was also designed to prevent coercion of a NATO member by a 
     non-member state. We should recognize that there is little 
     ultimate difference between a member being forced to submit 
     to foreign coercion because of an energy cutoff and a member 
     facing a military blockade or other military demonstration on 
     its borders.
       In preparing for such a commitment, NATO leaders should 
     develop a strategy that includes the re-supply of a victim of 
     an aggressive energy suspension. How would the Alliance shift 
     energy supplies and services to a member under such an 
     attack? What steps can NATO take now to ensure that we have 
     the infrastructure in place to respond to such an attack? 
     What steps are needed to diversify our energy sources and 
     supply routes to deter the use of energy as a weapon? 
     Alternatives to existing pipeline routes must be identified 
     and financial and political support for the development of 
     alternative energy sources is crucial. A coordinated and 
     well-publicized Alliance response would be a deterrent that 
     would reduce the chances of miscalculation or military 
     conflict. It would also provide a powerful incentive for 
     Member states to remain in the Alliance and for prospective 
     members to accelerate reforms necessary to qualify for 
     membership.
       The energy threat is more difficult to prepare for than a 
     ground war in Central Europe. Troops, equipment, and supplies 
     can move along highways and over difficult terrain. Energy 
     supplies do not enjoy the same freedom of movement. 
     Developing a logistical response to an energy cutoff will 
     prove a complex challenge.
       My friend, Mark Grossman, the former U.S. Under Secretary 
     of State for Policy, has proposed reviving the REFORGER 
     exercises of the Cold War. These exercises were carried out 
     to prepare for the massive troop and equipment re-supply 
     mission that would be required to thwart a Soviet attack. A 
     new REFORGER should focus on how the Alliance would supply a 
     beleaguered member with the energy resources needed to 
     withstand geo-strategic blackmail. This will not be easy or 
     comfortable for the Alliance. Members will be required to 
     tighten their belts and make hard choices. But, if we fail to 
     prepare, we will intensify our predicament.
       Beyond constructing strong alliance commitments related to 
     energy, NATO must engage Russia and other energy rich 
     nations. I advocate establishing regular high-level 
     consultations between Russia and NATO on energy security. The 
     economic and political situation in Russia is intensely 
     influenced by the price of energy. Moscow is banking on big 
     returns from its energy sector indefinitely into the future. 
     But the fickleness of energy markets affects not only 
     consumers, but producers.
       I believe that Russia has a long-term interest in achieving 
     a more prosperous stability that comes with greater 
     investment in its energy sector and the development of a 
     reputation as a trusted supplier. But its recent actions to 
     temporarily reduce gas supplies to the West, confiscate some 
     foreign energy investments, and create further barriers to 
     new investment are undermining confidence in Moscow's 
     reliability. This trend is likely to have unintended 
     repercussions for Russia. Even now, Russians are feeling the 
     effects of inadequate investment in their energy sector. 
     Russia boasts the world's largest reserves of natural gas, 
     but this winter it could face gas shortages of its own. 
     Russia has not contended with investment problems in its 
     natural gas industry, and its artificially low domestic gas 
     prices have undermined the development of efficiency measures 
     that are commonplace in the West. Russia now requires gas 
     imports from Central Asia, which it sells at a premium to 
     Europe. Yet if growing domestic demand in Russia outstrips 
     stagnating production and Central Asian imports, as some 
     commentators predict, the Kremlin will face the difficult 
     choice between letting some of its people go cold or not 
     meeting its commitments to Europe.
       We do not wish these difficulties on anyone. But we should 
     speak clearly with Russia about our concerns and our 
     determination to protect our economies and our peoples. We 
     should outline the differences between a future in which 
     Russia tries to leverage for political advantage the energy 
     vulnerabilities of its neighbors and a future in which Russia 
     solidifies consumer-producer trust with the West and respects 
     energy investments that help expand and maintain Russia's 
     production capacity. Energy is a two-way relationship and 
     will remain so even as Europe and the United States diversify 
     their energy resource base. Both NATO and Russia need a 
     sustained discussion on the rule of law, the status of 
     foreign investment, bi-national and multinational agreements, 
     and steps to implement the principles agreed to at the G-8 
     Summit in July.

                       Expanding NATO's Partners

       One critical element in strengthening the alliance's energy 
     security is developing new relationships and admitting new 
     members who will contribute to NATO's efforts in this area. I 
     applaud Alliance efforts to develop special relationships 
     with states around the world. At the Riga Summit, NATO should 
     authorize the creation of partnerships with like-minded 
     countries such as Japan, Australia, South Korea, Finland, and 
     Sweden.
       An effective energy strategy should also include new 
     strategic relationships with energy exporters. I urge 
     Alliance leaders to look to the Caucasus and Central Asia for 
     new partnerships. These states are critically located and are 
     important sources of oil and natural gas. Substantial 
     improvement is needed in the region in areas such as 
     democracy, the rule of law, and civil society. A closer 
     relationship with NATO will promote these values and 
     contribute to our mutual security. I recommend that NATO 
     focus especially on its relationships with Azerbajian and 
     Kazakhstan. While both countries have considerable work to 
     do, eventual NATO membership must be on the table.
       I believe that some aspirant states are prepared to assume 
     membership responsibilities. Croatia, Albania, and Macedonia 
     should be invited to join NATO as soon as they meet Alliance 
     requirements. Each has expressed a strong desire to join the 
     Alliance, and each is capable of making important 
     contributions. While I am disappointed that invitations will 
     not be extended here at Riga, we must increase the tempo of 
     cooperation between the Alliance and those states.
       NATO should also invite Georgia to join the Alliance. 
     Tbilisi is a young democratic government, resisting pressure 
     from breakaway republics backed by Moscow and Russian troops 
     on Georgian soil. Georgia has been a superb role model for 
     the region, and it is host to critical segments of the Baku-
     Tbilisi-Ceyhan oil pipeline and the Southern Caucuses natural 
     gas pipeline. Two months

[[Page 22994]]

     ago, the NATO Secretary General announced that the Alliance 
     had launched an Intensified Dialogue with Georgia. While this 
     is an important step, NATO must grant a Membership Action 
     Plan as soon as possible.
       After recovering from recent political instability, Ukraine 
     has indicated that it wants to move more slowly toward NATO 
     membership. I am pleased that Kiev has acknowledged the 
     important work needed to accurately convey to its population 
     what NATO membership would mean. While I hope this process 
     might move more quickly, I urge the Alliance, when all 
     applicable criteria are satisfied, to support efforts for 
     Ukraine to join NATO.
       The Alliance must also continue to encourage Belgrade to 
     meet its international obligations, which include full 
     cooperation with the International Criminal Tribunal for the 
     former Yugoslavia. With additional progress on war criminals 
     and other important reforms, Serbia would be a valuable 
     member of the Alliance.

                               Conclusion

       By their nature, alliances require constant study and 
     revision if they are to be resilient and relevant. They must 
     examine the needs of their members and determine how the 
     alliance can safeguard the freedom, prosperity, and security 
     of each member. NATO has survived and prospered because it 
     has been able to do this repeatedly. We have met the threat 
     of Soviet aggression, expanded the zone of peace and security 
     across Europe, guarded against the risks posed by terrorism 
     and weapons of mass destruction, and improved our ability to 
     project power over long distances. We are meeting threats in 
     Afghanistan, the African continent, and other locations 
     outside Europe. But if we fail to reorient the Alliance to 
     address energy security, we will be ignoring the dynamic that 
     is most likely to spur conflict and threaten the well-being 
     of alliance members.
       I understand that adopting energy security as a mission is 
     a major advancement from NATO's origins. But it represents an 
     historic opportunity to change the circumstances of 
     geopolitics to the benefit of all members. At this summit, we 
     should engage in a broad, strategic debate on how we can 
     ensure progress in Afghanistan, strengthen NATO through new 
     members, and face the energy security threats of the 21st 
     century together. Although Riga may not produce definitive 
     answers to these questions, it must be the summit that starts 
     the crucial discussion that will lead to consensus.
       The stakes are such that if we wait even a few years, we 
     are likely to find that our alliance is in jeopardy. We will 
     look back at this point in time and see it as a critical 
     juncture that required bold vision and leadership. I look 
     forward to working together with each of you to provide this 
     leadership.
       Thank you.

                          ____________________