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China is the world’s oldest continuous civilization with more than 3,500 years of written history. Its power has risen and declined, most notably in the mid-1800s, when the ruling Qing Dynasty crumbled, inviting rebellion and foreign intervention. At the end of World War II, the Nationalist government, weakened by a decade of war against Japan and wracked by corruption and incompe- tence, fought a civil war against the Chinese Communist Party and was defeated. 
By 1950, communist leaders like Mao Zedong believed their authoritarianism would return China to glory, a belief that expired after 30 million people starved to death in state-induced famines in the early 1960s and another 10 million perished in fanatical ideological campaigns. In December 1978, after several “great leaps” backward, Communist Party leader Deng Xiaoping introduced economic reforms that have steadily transformed the PRC into a remarkable hybrid—a “socialist market economy”—in essence, a communist state that uses market-based pricing principles. 
Feeding the Dragon. Twenty-five years into this experiment, China has the world’s sixth-largest economy, the third-largest defense budget according to some estimates, and the largest national population (1.3 billion people). According to the World Bank, its gross domestic product of $1.6 trillion is growing about 9 percent per year. China needs resources to feed its rapidly expanding economy, but it does not have sufficient oil, natural gas, aluminum, copper, or iron to satisfy its energy and manufacturing needs. Furthermore, it needs trade partners to buy its electronics, apparel, toys, and footwear. While communist China is embracing market concepts, it still has a non-market economy in which a disciplined totalitarian party retains full authority (through the central government) over non-state investment, import, export, and financial decisions. China’s neighbors are competing for many of the same world markets, as are Europe and the United States. Latin America is a particularly promising prospect. It is relatively unindustrialized and has an abundance of raw materials. Moreover, authoritarian leaders and/or corrupt oligarchies control a number of governments. Signing purchase agreements with them is much easier than dealing with the panoply of private corporations found in more democratic countries. Challenging the United States. China’s main rival for global preeminence is the United States. China sees the United States as preventing Taiwan’s reunification with the mainland and thwarting Beijing’s rise as a power. Previously, China was isolated, but now plays key roles in Asian geopolitics and aspires to do so elsewhere. Besides status as a nuclear nation, it is a member of the U.N. Security Council, the World Trade Organization, the Group of 77 developing nations, and the Asia Pacific Economic Cooperation group. It also holds observer status in the Organization of American States. While China has become the second-largest U.S. trade partner after Canada, it challenges U.S. influence wherever it can. In fact, it will soon have more attack submarines than the United States, with the addition of four Russian Kilo-class subs and new diesel–electric vessels equipped with technology that will allow them to run quieter than nuclear submarines. According to former U.S. Ambassador to Beijing James Lilly, “[T]he facts are that [the Chinese] run massive intelligence operations against us, they make open statements against us, their high-level documents show that they are not friendly to us.” Chinese military white papers promote power projection and describe U.S. policies as “hegemonism and power politics.” In the Western Hemisphere, the Chinese are taking advantage of failures of half-hearted market reforms and Washington’s unwillingness to pursue neighborhood relations with much enthusiasm. National Defense University professor Cynthia A. Watson notes, “[T]he 1990s turned into a period of severe disappointment as free markets led to rampant corruption and unfulfilled expectations in Latin America while Washington became the world’s superpower rather than a partner for the region.”

Johnson 5 (Stephen Johnson. “Balancing China’s Growing Influence in Latin America.” Backgrounder published by the Heritage Foundation. 24 October 2005. Web. 6 July 2013. http://www.heritage.org/research/reports/2005/10/balancing-chinas-growing-influence-in-latin-america)

China has the world’s sixth-largest economy, China needs resources to feed its rapidly expanding economy, but it does not have sufficient oil, natural gas, aluminum, copper, or iron to satisfy its energy and manufacturing needs. China’s neighbors are competing for many of the same world markets, as are Europe and the United States. Latin America is a particularly promising prospect. It is relatively unindustrialized and has an abundance of raw materials. China’s main rival for global preeminence is the United States. Previously, China was isolated, but now plays key roles in Asian geopolitics and aspires to do so elsewhere While China has become the second-largest U.S. trade partner after Canada, it challenges U.S. influence wherever it can In the Western Hemisphere, the Chinese are taking advantage of failures of half-hearted market reforms and Washington’s unwillingness to pursue neighborhood relations with much enthusiasm

China is interested in using Latin America to expand its economy

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

By now, everyone knows that China is the world’s No. 2 economy and growing.  Its GDP is around $7.5 trillion compared to the real No. 1, the U.S., at over $15 trillion. But that is changing. Just as each passing year seems to go faster than the next, China’s position on the world’s stage moves at break-neck speeds. Just how big is China?  It is way bigger than you think. Within three years, the Organisation of Economic Cooperation and Development believes that China’s economy will surpass that of the United States.  That means that by the time President Barack Obama is no longer in the White House, the new president will be the first since World War II to not govern the most powerful economy on Earth. Most estimates had China’s economy toppling that of the United States by 2020. Last year, China beat Germany and the U.S. to become the world’s biggest tourist source market.  More middle-class Chinese are hightailing it out of their country. They are going luxury goods shopping in Europe and shaking hands with Goofy in Disney World.  They spent over $102 billion last year, up from $73 billion in 2011, according to the United Nations World Tourism Organization. And they did this at a time when their economic growth is slowing due to a slowdown in Europe and a shift in domestic economic policy. Surprisingly, or not, China doesn’t need to grow at 10% to be in the big time.  A slower 7.5% is just fine. China has tons of problems. It’s got the worst smog in the world. It’s currently battling another round of bird flu, a new strain that’s already claimed the lives of four people in a week.  Over 16,000 diseased pigs were dumped in Shanghai rivers in March, possibly causing the outbreak of bird flu in the first place.  In China, the phrase “Don’t drink the water!” needs to be heeded carefully. Decades of waste poured from factories and cities into China’s rivers have turned many of them into open sewers, according to the World Wildlife Fund. About 40% of the water in the country’s river systems is unfit for human consumption. China produces a new coal-fired power station every week, and will be the world’s biggest emitter of carbon-dioxide by 2030.  Air, water and rising income inequality are now serious social problems for Beijing. This is what you get for growing so big, so fast. China’s economy has been on steroids for over 10 years. According to the latest research from the United Nations, China has further outpaced its competitors in world manufacturing, generating $2.9 trillion in output annually versus $2.43 trillion from the U.S., the world’s second-largest manufacturing economy. Over the last two years, China’s manufacturing sector has made strong gains, while the U.S. has been on Fed life support.“In 2011, China’s manufacturing output surged by 23% while manufacturing output in the U.S. only increased by 2.8%,” the American Enterprise Institute‘s Mark Perry said in his Carpe Diem blog on Friday. “That brought China’s manufacturing output last year to more than $2.9 trillion, which was almost half a trillion dollars (and 20%) more manufacturing output than the $2.43 trillion of manufacturing output that was produced in the U.S. last year.” In 2012, U.S. manufacturing slipped to 1.7% growth, according to the Federal Reserve.  Sure, U.S. manufacturing is getting bigger. But China’s manufacturing is getting humongous. China drives Asia, and Made in China drives the cheap, consumer culture in America.  Buy sneakers or a shirt, a piece of furniture or a Barbie Doll, and it probably has Made in China stamped on it.  Even as U.S. manufacturing is on the upswing, it is no match for big China. The U.S. imports from Asia rose 22% in February. Most of it comes from China, of course. In fact, the U.S. imported $32.7 billion worth of goods from China in February, according to the U.S. Census Bureau’s Foreign Trade division, making it once again the leading country in which the U.S. conducts its foreign trade.  Canada came in second with $25.7 billion, but that is mostly due to oil.  Even as China moves its way up to the No. 3 trading partner with the U.S., trailing NAFTA partners Canada and Mexico, the trade deficit between the U.S. and China keeps getting bigger. In 2012, the U.S. registered its biggest trade deficit ever with China at $315 billion, up from a record $295 billion in 2011 and another record of $273 billion in 2010.  Yes, China keeps breaking records

Rapoza 13 (Kenneth Rapoza. “Just How Big Is China? Bigger Than You Think.” 5 April 2013. Web. 6 July 2013. http://www.forbes.com/sites/kenrapoza/2013/04/05/just-how-big-is-china-bigger-than-you-think/)

China is the world’s No. 2 economy and growing.  Its GDP is around $7.5 trillion compared to the real No. 1, the U.S., at over $15 trillion. But that is changing. Just as each passing year seems to go faster than the next, China’s position on the world’s stage moves at break-neck speeds. Within three years, the Organisation of Economic Cooperation and Development believes that China’s economy will surpass that of the United States. Surprisingly, or not, China doesn’t need to grow at 10% to be in the big time.  A slower 7.5% is just fine China has further outpaced its competitors in world manufacturing, generating $2.9 trillion in output annually versus $2.43 trillion from the U.S., the world’s second-largest manufacturing economy. China’s manufacturing sector has made strong gains, while the U.S. has been on Fed life support the U.S. imported $32.7 billion worth of goods from China in February, according to the U.S. Census Bureau’s Foreign Trade division, making it once again the leading country in which the U.S. conducts its foreign trade

China’s economy and trade relations are growing faster than US

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

Chinese enterprises have developed a broad range of industrial initiatives in Cuba. Agricultural cooperation has focused on the production of rice, soy, sorghum, and maize, and Cuba exports 400,000 tonnes of raw sugar annually to China. Scientific exchange has developed in earthquake detection, solar energy research, cancer treatment, and vaccine production. In 2004, Hu Jintao pledged to invest $500 million in Cuba’s nickel sector, and although Venezuela emerged as the leading financier of the Las Camariocas ferro-nickel plant, China has since consumed 20,000 tons of the resource (Cheng 2009:1). The Chinese oil company Sinopec has teamed up with Cuba’s CUPET to develop onshore operations in Pinar del Rio (CRS 2008:24), while the China National Petroleum Corporation (CNPC) is negotiating exploration of Cuban deposits in the Gulf of Mexico. In 2007, 10,000 Chinese tourists visited Cuba, and as discussed below, electronics manufacturing and transport infrastructure have emerged as key areas of expansion. China often pays for developing country natural resources with trade credits, construction equipment, infrastructure upgrading, and technical training rather than hard currency (Robles 2005). The significance of such exchanges does not lie in their capacity to generate short-term commerce, but rather in the more encompassing goal of building stable alliances, political trust, and economic growth over the long term. This is facilitated by direct collaboration between the Cuban and Chinese governments, whose state-owned enterprises do not duplicate, undercut, or compete with each other. Even China’s more strictly commercial goals in Cuba, such as filling Cuban homes and stores with Chinese electronic appliances, have been accomplished in close collaboration with the Cuban state.

Hearn 9, Adrian H. "Cuba and China: Lessons and Opportunities for the United States." The Cuban Research Institute Florida International University, June 2009. Web. 6 July 2013. <http://cri.fiu.edu/research/commissioned-reports/cuba-china-hearn.pdf>.

Cuba exports 400,000 tonnes of raw sugar annually to China. Scientific exchange has developed in earthquake detection, solar energy research, cancer treatment, and vaccine production . In 2007, 10,000 Chinese tourists visited Cuba, and as discussed below, electronics manufacturing and transport infrastructure have emerged as key areas of expansion. China often pays for developing country natural resources with trade credits, construction equipment, infrastructure upgrading, and technical training rather than hard currency The significance of such exchanges does not lie in their capacity to generate short-term commerce, but rather in the more encompassing goal of building stable alliances, political trust, and economic growth over the long term. This is facilitated by direct collaboration between the Cuban and Chinese governments, whose state-owned enterprises do not duplicate, undercut, or compete with each other. Even China’s more strictly commercial goals in Cuba, such as filling Cuban homes and stores with Chinese electronic appliances, have been accomplished in close collaboration with the Cuban state.

China and Cuba have a strong agricultural relationship involving technology transfer

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

The authorities believe that Azcuba will serve as a perfect test case for more effective functioning of the production chain, since it encompasses every stage of the chain, from the production of raw material to export. “The revitalisation of this sector is good news for our country, because sugar continues to serve as a guarantee for international credits and foreign sales are a secure source of income,” a specialised economist told IPS. Of its total annual production, Cuba should export 400,000 tonnes of sugar to China, while supplying between 550,000 and 700,000 tonnes for domestic consumption. * This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

Patil 13, Vishal. "Cuban Sugar Sector Aims for Recovery in 2013 | SUGAR INDUSTRY."Cuban Sugar Sector Aims for Recovery in 2013 | SUGAR INDUSTRY. N.p., 12 Jan. 2013. Web. 06 July 2013. <http://www.sugarinds.com/2013/01/cuban-sugar-sector-aims-for-recovery-in.html>.

The revitalisation of this sector is good news for our country, because sugar continues to serve as a guarantee for international credits and foreign sales are a secure source of income,” a specialised economist told IPS , Cuba should export 400,000 tonnes of sugar to China, while supplying between 550,000 and 700,000 tonnes for domestic consumption. *

Cuba should export to china while reserving some for domestic use

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

According to the Financial Times, “a mysterious white substance is being smuggled over the border from Vietnam to China in growing quantities.” Of course this substance is a staple of modern Western society and something increasingly in demand in China and other emerging markets. The FT states that: “China is the world’s top importer of raw sugar and third-largest consumer overall. Toby Cohen, a director at London sugar merchant Czarnikow, points out that China’s overall sugar consumption is still low in per capita terms, and expects it to keep growing. China could consume “double the volume of sugar it is consuming today, and still be consuming less on a per capita basis than the western economies,” he said.” The urbanization of China is credited for this rising demand but urbanization is not anomalous to China. Other emerging markets are experiencing increased demand for sugar and other agricultural food stuffs. For emerging markets investors interested in profiting from this demand there are several options to choose from. One way to invest in the anticipated price increase of sugar is by owning the iPath DJ-UBS Sugar Subindex Total Return Index ETN (SGG). SGG does not invest in companies that produce sugar but in sugar futures contracts. This is more of a pure play on the price of sugar which will be affected worldwide as increased demand from emerging markets should drive prices higher.

Orlowski 13, Steven. "Demand For Sugar On The Rise." - Seeking Alpha. N.p., 17 Dec. 2012. Web. 06 July 2013. <http://seekingalpha.com/article/1069531-demand-for-sugar-on-the-rise>.

“China is the world’s top importer of raw sugar and third-largest consumer overall. Cohen , points out that China’s overall sugar consumption is still low in per capita terms, and expects it to keep growing. China could consume “double the volume of sugar it is consuming today, The urbanization of China is credited for this rising demand

China’s sugar demand is projected to skyrocket

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

Rising Chinese consumption of farm commodities, which has revolutionised markets for crops such as soybeans, looks set to shake-up sugar too, as consumers quit their low-sweetener diet. China, set to rise up the ranks to fourth among world sugar importers in 2011-12, is set to hit top rank by 2020, with purchases of some 4m-5m tonnes, Commonwealth Bank of Australia said. And even this will not mark the end of demand growth, with consumption likely to rise by a further 60%, on a per capita basis, by 2030. The surge in Chinese demand will have a large impact on world sugar markets, meaning "that any Chinese production scares will have a more pronounced impact on international trade flows and therefore on global sugar price volatility", CBA analyst Luke Mathews said. Sweeter tooth The thesis is based on the idea that relatively low annual sugar consumption rates among Chinese, of 7.6 kilogrammes per person, will close the gap with Western ones as diet changes. Besides increased wealth, urbanisation tends to enhance sugar consumption by boosting the spread of refrigeration and, with it, carbonated – and sweetened - drinks. Official statisticians in China said earlier this week that the country's urban dwellers now accounted for 51% of the population, exceeding rural inhabitants for the first time. CBA's central forecast is for annual sugar consumption, per person, to rise to 12.6 kilogrammes by 2020 and 20 kilogrammes a decade later – still well short of rates seen in the West. Australians eat 47 kilogrammes of sugar a year, and US consumers nearly 68 kilogrammes.

Goldman 12, Joe. "Agrimoney.com | Chinese Sugar - Chinese Taste for Sugar to Send Demand Soaring." Agrimoney.com | Chinese Sugar - Chinese Taste for Sugar to Send Demand Soaring. Agrimoney.com, 18 Jan. 2012. Web. 06 July 2013. <http://www.agrimoney.com/news/chinas-taste-for-sugar-to-send-demand-soaring--4061.html>.

China, set to rise up the ranks to fourth among world sugar importers in 2011-12, is set to hit top rank by 2020, with purchases of some 4m-5m tonnes, And even this will not mark the end of demand growth, with consumption likely to rise by a further 60%, on a per capita basis, by 2030. The surge in Chinese demand will have a large impact on world sugar markets, meaning "that any Chinese production scares will have a more pronounced impact on international trade flows and therefore on global sugar price volatility

China will be number one sugar importer in 2020

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

Cuba has authorized the first joint venture in the sugar industry in a bid to boost efficiency, modern technology to revitalize the sector. The state-run Sugar Group Azcuba was approved a month ago to create the first joint venture with foreign capital, to build a bioelectrical power station in the Ciro Redondo sugar factory, 45,000 km east of Havana. "The main goal is to achieve a diversified sugar industry to obtain the economic goals we have along with a high integration of the technicians," Wilson Morell, vice-president of Azcuba, told Xinhua in a recent interview during the Congress of Sugar Industry technicians which ended last Friday at the Havana Convention Palace. New facilities in the sugar factory will allow a greater contribution of electricity to the national network, Morell said, adding it will be the first step for the creation of similar units for better use of the energetic potential of the sugar cane, Another project with foreign capital at the sugar mill in the central province of Cienfuegos was also approved last Friday, he added. However, the official did not specify which foreign company would participate in the project. In January, the Brazilian group Odebrecht announced the signing of a contract with Azcuba for the productive management of a sugar factory in Cienfuegos. For over a century, Cuba was among the world's top sugar exporters, exceeding 8 million tons annually. But the industry shrank after the fall of the Soviet Union, Cuba's main economic ally. The island country's sugar production hit a historical low in 2009 with only 1.1 million tons. President Raul Castro has been trying to restore the sector with new technologies and systems to achieve a more efficient management and generate exports capable of financing its own expenses. The 2011-2012 is the first production season after Castro implemented reforms to modernize the industry, including dissolving the Sugar Ministry and replacing it with the more free market-style Azcuba, a company with representations in every province. Azcuba is comprised by 13 sugar companies, 56 sugar factories and derivatives, two research institutes and a qualification center.

Lina 12 (Yang Lina. “Cuba Opens Sugar Industry to Foreign Investment.” Web. 6 July 2013. http://news.xinhuanet.com/english/world/2012-09/10/c_131840344.htm)

Cuba has authorized the first joint venture in the sugar industry in a bid to boost efficiency, modern technology to revitalize the sector The main goal is to achieve a diversified sugar industry to obtain the economic goals we have along with a high integration of the technicians, For over a century, Cuba was among the world's top sugar exporters, exceeding 8 million tons annually. But the industry shrank after the fall of the Soviet Union, Cuba's main economic ally President Raul Castro has been trying to restore the sector with new technologies and systems to achieve a more efficient management and generate exports capable of financing its own expenses. The 2011-2012 is the first production season after Castro implemented reforms to modernize the industry,

Current Cuban sugar industry ventures do not consider the United States

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

By contrast, there is a fresh buzz of activity in Mejico. In the nearby fields, workers have been rushing to cut the cane before the weather turns. A shiny new Brazilian harvester charges forward, swallowing up the cane as it goes. Cuba has invested in some new equipment to kick-start its revamped sugar business. It is one of four machines Cuba invested in for the mill re-opening, far more efficient than the aging, Soviet alternative. There have been teething troubles with the re-opening. New machine parts arrived late, the workforce is young and inexperienced, and production is below target. Senior staff have slept little, under pressure to perform. But the whole community is willing this to succeed. Some pensioners are helping out at the mill for free, passing their expertise to a new, young generation. And many sugar workers who took up farming when the mill closed have hung up their spades and returned. “They like the mill. It’s a tradition here, more than anything. And it’s more secure work, right next to their homes,” explains mill director Jesus Perez Collazo. “There are a lot of challenges. The harvest is not as good as we wanted but the country needs to produce sugar, and we can help,” he says. China buys 400,000 tonnes of sugar from Cuba a year; now production is increasing, Azcuba says international brokers are also knocking at the door.

Ritter 13, Arch. "Tag Archives: Sugar Sector." The Cuban Economy La Economa Cubana. United Nations Economic Commission for Latin America, 22 May 2013. Web. 06 July 2013. <http://thecubaneconomy.com/articles/tag/sugar-sector/>.

They like the mill. It’s a tradition here, more than anything. And it’s more secure work, right next to their homes,” explains mill director Jesus Perez Collazo. “There are a lot of challenges. The harvest is not as good as we wanted but the country needs to produce sugar, and we can help China buys 400,000 tonnes of sugar from Cuba a year; now production is increasing, Azcuba says international brokers are also knocking at the door.

China works with Cuba now, they just need to increase investment

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

In line with half a century of firm ties between Cuba and the People's Republic of China, and strengthened relations recently, Cuban Council of State Vice President Marino Murillo Jorge journeyed to Beijing in late February for a "working visit."¶ Cuba became the first West Hemisphere nation to recognize the government of revolutionary China in 1960 when Cuban leader Fidel Castro interrupted a speech to ask whether or not diplomatic relations should be opened with the People's Republic. A million hands went up. In a reciprocal token of well-timed outreach, former Chinese President Jiang Zemin, alone among foreign leaders, visited beleaguered Cuba in 1993 following the Soviet Bloc collapse.¶ Murillo's weeklong discussions this time involved Chinese Vice-Prime Minister Hui Liangyu. They included a report on the Cuban Communist Party's recent party conference and proposals for new collaborative agricultural, scientific, commercial, and economic projects. Murillo, member of the Cuban party's Political Bureau and coordinator of Cuba's current economic reforms, met with top economic planners representing China's National Commission of Reform and Development.¶ The present era of cooperation began in Nov. 2004, when Chinese President Hu Jintao brought 200 businesspersons and investors to Cuba. He ended up signing a 16-point bi-national agreement covering bio-technical, higher education, telecommunications, nickel extraction initiatives, and more, with China providing favorable credit terms.¶ Follow-up took place in Havana in 2009, as national assembly presidents of the two nations agreed on new financial and commercial arrangements, and prepared for Cuban port, radio and television, and bulk transport modernization. In Dec. 2011, Cuban Council of State Vice-Minister Ricardo Cabrisas, meeting in China with the inter-governmental Cuba-China Commission, signed updates and reported on the 6th Cuban Communist Party Congress of that year.¶ Bilateral trade rose from $590 million in 2004 to $1.8 billion in 2010. China became Cuba's second largest trading partner, exceeded only by Venezuela. Chinese trade with Latin America overall has increased 42 percent over five years.¶ China has supplied Cuba with domestic electrical appliances, medical and electronic equipment, buses (8000 so far), locomotives, and bicycle-making machines. Cuba provides sugar, rum, cigars, high technology medications and vaccines, and 14 percent of the nickel China needs for steel production. China's Sinopec oil corporation has assumed a lead role in exploring underwater oil deposits off Cuba's northern coast. Sinopec's massive Scarabeo 9 drilling platform arrived recently from China.¶ Chinese specialists have upgraded Cuba's meteorological and earthquake-detection capabilities. Cuba's Molecular Immunology Center (MIC) recently announced that the anti-lung cancer vaccine CimaVax-EGF, made by the Cuban-Chinese Biotech Pharmaceutical Ltd (BPL) Company, would undergo trials in China. MIC head Augustin Lage visited China in February to assess use of Nimotuzumab monoclonal antibody, a BPL product directed at several human several cancers.¶ Offering Spanish language courses to Chinese students, the University of Havana recently awarded 49 diplomas in China, where students were taught by Cuban professors, while 71 others graduated in Havana. Altogether since 2004, 3,497 Chinese students have qualified at Cuban universities in medicine, nursing, humanities, tourism, and Spanish language and culture.¶ Cuba and China maintained ties over decades despite Cuban reliance economically and politically upon the Soviet Union, China's ideological rival. Asked by interviewer Ignacio Ramonet about socialism's future, Fidel Castro held up China as an example, as "a great power that did not destroy its history, a great power that held to certain fundamental principles, that sought unity, that didn't fragment its forces."("Fidel Castro, My Life," Scribner, 2006, p.623.)

Whitney 2012 (W.T. Whitney Jr. He practiced and taught pediatrics for 35 years and long ago joined the Cuba solidarity movement, working with Let Cuba Live of Maine, Pastors for Peace, and the Venceremos Brigade. He writes on Latin America and health issues for the People's World. “Cuba reaffirms ties with China”. People’s World. March 5, 2012. Accessed July 6, 2013. http://www.peoplesworld.org/cuba-reaffirms-ties-with-china/)

In line with half a century of firm ties between Cuba and the People's Republic of China, and strengthened relations recently The present era of cooperation began in Nov. 2004, when Chinese President Hu Jintao brought 200 businesspersons and investors to Cuba. He ended up signing a 16-point bi-national agreement covering bio-technical, higher education, telecommunications, nickel extraction initiatives, and more, with China providing favorable credit terms.¶ Follow-up took place in Havana in 2009, as national assembly presidents of the two nations agreed on new financial and commercial arrangements, and prepared for Cuban port, radio and television, and bulk transport modernization. In Dec. 2011, Cuban Council of State Vice-Minister Ricardo Cabrisas, meeting in China with the inter-governmental Cuba-China Commission, signed updates and reported on the 6th Cuban Communist Party Congress of that year.¶ Bilateral trade rose from $590 million in 2004 to $1.8 billion in 2010. China became Cuba's second largest trading partner, exceeded only by Venezuela. Chinese trade with Latin America overall has increased 42 percent over five years.¶ China has supplied Cuba with domestic electrical appliances, medical and electronic equipment, buses (8000 so far), locomotives, and bicycle-making machines. Cuba provides sugar, rum, cigars, high technology medications and vaccines, and 14 percent of the nickel China needs for steel production. Chinese specialists have upgraded Cuba's meteorological and earthquake-detection capabilities. Cuba's Molecular Immunology Center (MIC) recently announced that the anti-lung cancer vaccine CimaVax-EGF, made by the Cuban-Chinese Biotech Pharmaceutical Ltd (BPL) Company, would undergo trials in China. MIC head Augustin Lage visited China in February to assess use of Nimotuzumab monoclonal antibody, a BPL product directed at several human several cancers.¶ Offering Spanish language courses to Chinese students, the University of Havana recently awarded 49 diplomas in China, where students were taught by Cuban professors, while 71 others graduated in Havana. .¶ Cuba and China maintained ties over decades despite Cuban reliance economically and politically upon the Soviet Union, China's ideological rival

Sino-Cuban economic relations are resilient. US involvement is by no means necessary.

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

A major concern of developing sugarcane ethanol in China is the threat to sugar security. Rapid expansion of bioethanol production could potentially reduce the availability of sugar production, causing a reduction in its supply and increase of sugar price. In recent years, the sugar productions are stably at about 12 million tons, the max exceeded 14.84 million tons in 2008. While the total demand for sugar is about 12 million tons in China. With the combination of the further expansion of about 2 million acres sugarcane areas, and applying the advanced technology, for example: genetically modified sugarcane and improved cultivation techniques, yields can be increased from 5 tons to about 6-7 tons . So the sugar productions in China are expected to over 16 million tons. Based on these estimates, without affecting the supply of sugar, the current potential of sugarcane ethanol production reached over 2 million tons.

Liang 12 (Lei. "Simultaneous Production of Sugar and Ethanol from Sugarcane in China, the Development, Research and Prospect Aspects." Guangdong Academy of Industrial Technology, 4 Aug. 2012. Web. 6 July 2013. <http://cdn.intechopen.com/pdfs/27351/InTech-Simultaneous_production_of_sugar_and_ethanol_from_sugarcane_in_china_the_development_research_and_prospect_aspects.pdf>.)

A major concern of developing sugarcane ethanol in China is the threat to sugar security. Rapid expansion of bioethanol production could potentially reduce the availability of sugar production, causing a reduction in its supply and increase of sugar price the sugar productions in China are expected to over 16 million tons. Based on these estimates, without affecting the supply of sugar, the current potential of sugarcane ethanol production reached over 2 million tons

China won’t create sugar ethanol- trades off with edible sugar

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

China's sugar surplus will not be used to produce ethanol as it is not commercially viable, according to an expert. Thanks to a bumper sugarcane harvest, China is expected to witness a sugar supply surplus of between 0.5 million to 1 million tonnes in the 2007/2008 season, industry players have forecast. "It is impossible for China to develop sugar-ethanol projects as they are economically unsound," a sugar specialist from the Yunnan Sugar Association (YSA), who wished to remain anonymous, toldInterfax. "Producing 1 tonne of ethanol consumes around 2 tonnes of sugar. But 1 tonne of ethanol costs around RMB 4,800 ($685.71) here in Kunming and 2 tonnes of sugar cost around RMB 7,000 ($1,000)," the expert said. "Sugar-to-ethanol technology is not a problem in China, but such projects would never be promoted until sugar production costs drop to low enough levels." Without additional consumption sources like bioenergy projects, excessive sugar output this season has eaten at sugar prices and both sugarcane farmers and sugarcane crushing mills are suffering, the expert pointed out. "The profitability of crushing mills in southern China has shrunk heavily this season. Farmers are also very disappointed. As far as I know, some of them plan to shift their land to grains, fruits or tobacco next season for better economic returns," the expert said.

Harman 8, David. "Surplus Sugar in China Will Not Be Used to Make Ethanol." Resource Investor. Interfax China Commodities Daily Reports, 24 Apr. 2008. Web. 06 July 2013. <http://www.resourceinvestor.com/2008/04/24/surplus-sugar-in-china-will-not-be-used-to-make-et>.

China's sugar surplus will not be used to produce ethanol as it is not commercially viable, according to an expert "It is impossible for China to develop sugar-ethanol projects as they are economically unsound," a sugar specialist from the Yunnan Sugar Association said. "Sugar-to-ethanol technology is not a problem in China, but such projects would never be promoted until sugar production costs drop to low enough levels. Farmers are also very disappointed. As far as I know, some of them plan to shift their land to grains, fruits or tobacco next season for better economic returns," the expert said.

China can’t make ethanol economically competitive

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

MOSCOW, June 10 (RIA Novosti) – Resolving differences between Russia and the United States over missile defense is key to developing bilateral relations, a senior Russian lawmaker said Monday. “Missile defense has become a key issue: If we find a common language here, we could speak of a beginning of new positive dynamics in US-Russian relations,” Alexei Pushkov, head of the Russian lower house of parliament’s international affairs committee, said at a RIA Novosti press conference. Pushkov said Russian President Vladimir Putin and his US counterpart, Barack Obama, were expected to discuss missile defense, which remains a sticking point in bilateral ties, at the upcoming G8 summit in Northern Ireland’s Lough Erne on June 17-18.

Samad, Jewel. 10 June 2013"Missile Defense Key to Developing US-Russian Ties – MP." RIA Novosti. AFP,. Web. 06 July 2013. <http://en.rian.ru/russia/20130610/181598536.html>

Resolving differences between Russia and the United States over missile defense is key to developing bilateral relations, a senior Russian lawmaker said Monday. “Missile defense has become a key issue: If we find a common language here, we could speak of a beginning of new positive dynamics in US-Russian relations

Missile defense key to relations

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

It will certainly not be easy for Washington and Brasilia to build a more cooperative and trusting relationship. In the past few years, the two governments have openly clashed over many issues as Brazil vigorously pursued an increasingly ambitious international role. Despite a large reservoir of genuine good will, the situation could worsen in the coming period — regardless of how adroitly and carefully Dilma and her advisers manage Brazil’s foreign policy, or the care with which the Obama administration conducts U.S. diplomacy.¶ For the foreseeable future, it is almost inevitable that Brazil and the U.S. will continue to bump up against one another, both in the hemisphere and worldwide. Both nations are deeply engaged in global affairs, but pursue policies and agendas that reflect divergent interests, priorities and approaches. They will not always be able to find common ground or keep their disagreements in check. So in most respects, the U.S.-Brazil relationship will involve both conflict and cooperation — just like U.S. ties with other powerful nations.¶ Brazil’s progressively more assertive role in Latin America has led to a variety of squabbles. It surprised and irritated Washington with its intense opposition to a new U.S.-Colombia security pact. By subsequently concluding its own, albeit far more modest, military accord with Washington Brazil demonstrated a welcome flexibility. But it left no doubt that it expected the United States to consult and get its agreement before embarking on any new security initiatives in South America — a position endorsed by every other nation on the continent.¶ The country also crossed swords with Washington in Honduras, where a military coup some two years ago produced a still-unresolved political crisis. Unlike the U.S. and many Latin American governments, Brasilia has refused to accept the results of the November 2009 Honduran presidential elections. That disagreement has caused a divisive standoff in hemispheric relations.¶ The U.S. and Brazil are on opposite sides of the Cuba issue, as well. Washington stands alone in its diplomatic and economic isolation of Havana, while every Latin American capital has normal relations with the island. Brazil and the U.S. also clashed in 2009 over the conditions under which the Cuban government could be readmitted to the Organization of American States.

Hakim, Peter. "Brazil and the U.S.: Remaking a Relationship." Inter-American Dialogue. N.p., 9 June 2011. Web. 7 July 2013. <http://www.thedialogue.org/page.cfm?pageID=32&pubID=2679>.

It will certainly not be easy for Washington and Brasilia to build a more cooperative and trusting relationship Despite a large reservoir of genuine good will, the situation could worsen it is almost inevitable that Brazil and the U.S. will continue to bump up against one another in most respects, the U.S.-Brazil relationship will involve both conflict and cooperation — just like U.S. ties with other powerful nations.¶ Brazil’s progressively more assertive role in Latin America has led to a variety of squabbles. Brazil left no doubt that it expected the United States to consult and get its agreement before embarking on any initiatives in South America The U.S. and Brazil are on opposite sides of the Cuba issue Washington stands alone in its diplomatic and economic isolation of Havana,

Text: The United States federal government should enter into prior binding consultation with the Federative Republic of Brazil [over the plan]

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

The most serious clashes between the U.S. and Brazil are likely to arise over global, not regional, issues. What has most exasperated Washington and unsettled bilateral relations in recent years is Brasilia’s close, supportive relationship with Iran, including strong and growing economic ties. U.S. officials were encouraged that President Rouseff swiftly changed Brazilian policy in one crucial area: Her government will no longer ignore or downplay Tehran’s repression, and she has instructed her United Nations ambassador to endorse an investigation of human rights abuses in Iran. However, it remains uncertain how Brasilia will deal with other U.S. concerns, such as Iran’s support of terrorist groups and its unrelenting threats toward Israel.

Hakim, Peter. "Brazil and the U.S.: Remaking a Relationship." Inter-American Dialogue. N.p., 9 June 2011. Web. 7 July 2013. <http://www.thedialogue.org/page.cfm?pageID=32&pubID=2679>.

The most serious clashes between the U.S. and Brazil are likely to arise over global issues. What has most exasperated Washington and unsettled bilateral relations in recent years is Brasilia’s close, supportive relationship with Iran, including strong and growing economic ties. U.S. officials were encouraged that President Rouseff swiftly changed Brazilian policy in one crucial area: Her government will no longer ignore or downplay Tehran’s repression, and she has instructed her United Nations ambassador to endorse an investigation of human rights abuses in Iran. However, it remains uncertain how Brasilia will deal with other U.S. concerns, such as Iran’s support of terrorist groups

Relations are key to stop Iranian prolif

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

Israel would also respond differently to a nuclear-armed Iran than to a nuclear-capable one. Israel has long maintained that it will “not be the first to introduce” nuclear weapons into the Mid- dle East. Given that Israel is widely believed to already have a significant nuclear arsenal, this has been interpreted to mean that if another Middle Eastern state declared itself a nuclear power, Israel would do the same too. If Iran became openly nuclear armed, then, Israel could be expected not only to declare itself a nuclear power, but also to pursue qualitative (and possibly quantitative) im- provements to its arsenal. Such a move would further erode whatever (presumably small) legitima- cy the nuclear Nonproliferation Treaty enjoys in the region; it would also put the United States in the awkward position of needing to decide whether to assist Israel in any way. Beyond the Middle East, an Iranian move from being nuclear capable to being nuclear armed would also have big consequences for global nonproliferation efforts. The problem is simple: failing to prevent another state from acquiring nuclear weapons would severely damage the credibility of the nonproliferation regime. That would make it harder to gather support for preventing other states from acquiring nuclear weapons too. U.S. policymakers have been extremely frustrated with many countries’ insistence that Iran has a right to continue developing its enrichment capacity, so long as it adheres to IAEA rules. But one redeeming side effect of this has been that these countries can accept what Iran is doing without weakening their attachment to nonproliferation. Iranian acquisition of nuclear weapons would shatter that peace.

Levi, Michael. "Limiting Iranian Nuclear Activities." Council on Foreign Relations. N.p., n.d. Web. 6 July 2013. <www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1

Israel would respond differently to a nuclear-armed Iran than to a nuclear-capable one If Iran became openly nuclear armed, then, Israel could be expected not only to declare itself a nuclear power, but also to pursue qualitative (and quantitative) im- provements to its arsenal an Iranian move from being nuclear capable to being nuclear armed would also have big consequences for global nonproliferation efforts failing to prevent another state from acquiring nuclear weapons would severely damage the credibility of the nonproliferation regime. That would make it harder to gather support for preventing other states from acquiring nuclear weapons too countries can accept what Iran is doing without weakening their attachment to nonproliferation. Iranian acquisition of nuclear weapons would shatter that peace

Iranian proliferation spills over and leads to Middle Eastern proliferation

Cuba Sugar Ethanol Negative - JDI 2013.html5

Kansas (JDI)

Case Negatives

2013

As U.S. Henry Hub prices have continued to decrease, demand for natural gas in Mexico has skyrocketed, particularly among industrial users. And today in Mexico there is a severe shortage of natural gas. A recent article from Bloomberg (click here) reports that large industrial customers in Mexico are seeing ~50% curtailments. Mexico would like to import more from the United States, but north-south pipelines are extremely limited and already running near 100% capacity. This is a classic textbook example of a price control. When you impose a price control lower than the market clearing price, demand exceeds supply so there is deadweight loss. Mexican buyers with high willingness-to-pay aren’t able to buy natural gas, and the Mexican producer, PEMEX, doesn’t have much incentive to increase production. In addition to deadweight loss, price controls leads to misallocation. Prices serve to coordinate actions of buyers and sellers, but they also serve to allocate goods to the buyers who value them the most. Without a market mechanism to clear the market, PEMEX is deciding who gets gas on a “case-by-case” basis. This doesn’t guarantee an efficient allocation, and leads to wasted resources as industry executives fly back and forth from Mexico City trying to increase their allotments.

Davis, 2012 (Lucas, Associate Professor of Economic Analysis and Policy at the Haas School of Business at the University of California, Berkeley, “Natural Gas Shortages in Mexico”, Energy Institute at Haas, http://energyathaas.wordpress.com/2012/09/24/natural-gas-shortages-in-mexico/)

As U.S. Henry Hub prices have continued to decrease, demand for natural gas in Mexico has skyrocketed, particularly among industrial users Mexico would like to import more from the United States When you impose a price control lower than the market clearing price, demand exceeds supply so there is deadweight loss Mexican buyers with high willingness-to-pay aren’t able to buy natural gas, and the Mexican producer, PEMEX, doesn’t have much incentive to increase production price controls leads to misallocation they also serve to allocate goods to the buyers who value them the most , PEMEX is deciding who gets gas on a “case-by-case” basis This leads to wasted resources as industry executives fly back and forth from Mexico City trying to increase their allotments.

The reason PEMEX isn’t inclined to drill for more gas is that the government has tied prices to the US. The plan does not change this. Low prices and high demand mean importing from the US is inevitable and PEMEX will inevitably collapse.

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The Mexican government has the tools to succeed, but it must redirect its efforts. To date, its campaign against drug traffickers has relied on the massive deployment of federal security forces, both police and military. But their "presence and patrol" strategy presents only a minor inconvenience to criminal groups, which work around it by shifting their trafficking routes. To strengthen law enforcement and restore public confidence, there is an urgent need to modernize and professionalize Mexico's police and courts. The 2008 passage of constitutional reforms in this area was a good start. As they are implemented, the changes will transform the country's judiciary from one that relies on closed courtrooms and mostly written evidence into a system where evidence is presented in open court. The federal government has also made strides in developing a professional national police force. It is devoting resources to the improvement of state and local forces and boosting investigative capabilities, including creating a national police database that allows authorities to track crimes in different parts of the country.

Selee, 2010 (Andrew, the director of the Mexico Institute at the Woodrow Wilson International Center for Scholars; David Shirk, fellow at the center and an associate professor at the University of San Diego; and Eric Olson, senior adviser at the center, 3/28/10, “Five myths about Mexico's drug war,” http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR2010032602226_pf.html)

The Mexican government has the tools to succeed To strengthen law enforcement and restore public confidence, there is an urgent need to modernize and professionalize Mexico's police and courts. The 2008 passage of constitutional reforms in this area was a good start the changes will transform the country's judiciary into a system where evidence is presented in open court. The federal government has also made strides in developing a professional national police force. It is devoting resources to the improvement of state and local forces and boosting investigative capabilities that allows authorities to track crimes in different parts of the country.

Their only internal link is that taxing PEMEX gives the government resources to fight the drug war---squo solves that

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

From 2006 to 2012, Calderón sent more than 50,000 soldiers onto Mexico's streets, invested billions of dollars on equipment and training, attempted to vastly reform the police and judicial systems, and strengthened Mexico's partnership with the United States (PDF). But a legacy of "political manipulation of law enforcement and judicial branches, which limited professionalization and enabled widespread corruption" has left the government with "only weak tools to counter increasingly aggressive crime networks," writes CFR's Shannon O'Neil in America's Quarterly. The police are easily bought, in part because in many cities, they earn less than teachers or even burrito vendors. On the website InSight Crime, Patrick Corcoran notes that "an underpaid officer could double or triple his salary by simply agreeing to look the other way." The CFR report notes police agencies "suffer from dangerous and deplorable working conditions, low professional standards, and severely limited resources." The Calderón administration attempted to counter police corruption by dramatically increasing the role of the military in the fight against drug cartels. Not only have tens of thousands of military personnel been deployed to supplement, and in many cases replace, local police forces, they have also been heavily recruited to lead civilian law enforcement agencies (PDF). Mexico's judicial system—with its autocratic judges and lack of transparency—is also highly susceptible to corruption. The Congressional Research Service report noted that even when public officials are arrested for working with a cartel, they are rarely convicted. Calderón's militarization strategy also resulted in accusations of serious human rights abuses. A November 2011 report by Human Rights Watch found that "rather than strengthening public security in Mexico, Calderón's 'war' has exacerbated a climate of violence, lawlessness, and fear in many parts of the country." The report, which looked at five states, documented more than one hundred and seventy cases of torture, thirty-nine disappearances, and twenty-four extrajudicial killings.

CFR, 2013 (Aimee Rawlins, Council on Foreign Relations, “Mexico's Drug War”, 1/11/2013, http://www.cfr.org/mexico/mexicos-drug-war/p13689#p3)

Calderón sent more than 50,000 soldiers onto Mexico's streets, invested billions of dollars on equipment and training, attempted to vastly reform the police and judicial systems, and strengthened Mexico's partnership with the United States ). But a legacy of "political manipulation of law enforcement and judicial branches, which limited professionalization and enabled widespread corruption" has left the government with "only weak tools to counter increasingly aggressive crime networks The police are easily bought they earn less than teachers or even burrito vendors an underpaid officer could double or triple his salary by simply agreeing to look the other way Mexico's judicial system—with its autocratic judges and lack of transparency—is also highly susceptible to corruption. The Congressional Research Service report noted that even when public officials are arrested for working with a cartel, they are rarely convicted rather than strengthening public security in Mexico, Calderón's 'war' has exacerbated a climate of violence, lawlessness, and fear in many parts of the country

Widespread corruption means attempts to solve drug violence inevitably fail

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The White House does not spend much time looking south. During six hours of televised campaign debates this year, neither Mr Obama nor his vice-president mentioned Mexico directly. That is extraordinary. One in ten Mexican citizens lives in the United States. Include their American-born descendants and you have about 33m people (or around a tenth of America’s population). And Mexico itself is more than the bloody appendix of American imaginations. In terms of GDP it ranks just ahead of South Korea. In 2011 the Mexican economy grew faster than Brazil’s—and will do so again in 2012. Yet Americans are gloomy about Mexico, and so is their government: three years ago Pentagon analysts warned that Mexico risked becoming a “failed state”. As our special report in this issue explains, that is wildly wrong. In fact, Mexico’s economy and society are doing pretty well. Even the violence, concentrated in a few areas, looks as if it is starting to abate. Mañana in Mexico The first place where Americans will notice these changes is in their shopping malls. China (with more than 60 mentions in the presidential debates) is by far the biggest source of America’s imports. But wages in Chinese factories have quintupled in the past ten years and the oil price has trebled, inducing manufacturers focused on the American market to set up closer to home. Mexico is already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more. On present trends, by 2018 America will import more from Mexico than from any other country. “Made in China” is giving way to “Hecho en México”. The doorway for those imports is a 2,000-mile border, the world’s busiest. Yet some American politicians are doing their best to block it, out of fear of being swamped by immigrants. They could hardly be more wrong. Fewer Mexicans now move to the United States than come back south. America’s fragile economy (with an unemployment rate nearly twice as high as Mexico’s) has dampened arrivals and hastened departures. Meanwhile, the make-up of Mexican migration is changing. North of the border, legal Mexican residents probably now outnumber undocumented ones. The human tide may turn along with the American economy, but the supply of potential border-hoppers has plunged: whereas in the 1960s the average Mexican woman had seven children, she now has two. Within a decade Mexico’s fertility rate will fall below America’s. Undervaluing trade and overestimating immigration has led to bad policies. Since September 11th 2001, crossing the border has taken hours where it once took minutes, raising costs for Mexican manufacturers (and thus for American consumers). Daytrips have fallen by almost half. More crossing-points and fewer onerous checks would speed things up on the American side; pre-clearance of containers and passengers could be improved if Mexico were less touchy about having American officers on its soil (something which Canada does not mind). After an election in which 70% of Latinos voted for Mr Obama, even America’s “wetback”-bashing Republicans should now see the need for immigration-law reform. No time for a siesta The least certain part of Mexico’s brighter mañana concerns security. This year has seen a small drop in murders. Some hotspots, such as Ciudad Juárez, have improved dramatically. A third of Mexico has a lower murder rate than Louisiana, America’s most murderous state. Nevertheless, the “cartels” will remain strong while two conditions hold. The first is that America imports drugs—on which its citizens spend billions—which it insists must remain illegal, while continuing to allow the traffickers to buy assault weapons freely. American politicians should heed the words of Felipe Calderón, Mexico’s outgoing president, who after six years and 60,000 deaths says it is “impossible” to stop the drug trade.

Economist, 2012 (The Economist, “The Rise of Mexico,” 11/24/12, http://www.economist.com/news/leaders/21567081-america-needs-look-again-its-increasingly-important-neighbour-rise-mexico)

Mexico is more than the bloody appendix of American imaginations In GDP it ranks ahead of South Korea In 2011 the Mexican economy grew faster than Brazil’s—and will do so again in 2012. Yet Americans are gloomy about Mexico Pentagon analysts warned that Mexico risked becoming a “failed state”. that is wildly wrong Mexico’s economy are doing well violence, concentrated in a few areas is starting to abate wages in Chinese factories have quintupled in the past ten years Mexico is already the world’s biggest exporter of flat-screen televisions, BlackBerrys and fridge-freezers, and is climbing up the rankings in cars, aerospace and more by 2018 America will import more from Mexico than from any other country. “Made in China” is giving way to “Hecho en México The least certain part of Mexico’s brighter mañana concerns security This year has seen a small drop in murders Nevertheless, the “cartels” will remain strong while two conditions hold The first is that America imports drugs which it insists must remain illegal while continuing to allow the traffickers to buy assault weapons freely it is impossible” to stop the drug trade

No Mexican economic collapse or failed state, cartel violence is getting better but it’s inevitable because of U.S. drug demand

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

President Obama acknowledged that ‘the battle President Calderón is fighting … is not just his battle, it´s also ours’.59 However, Hilary Clinton said in 2009: ‘clearly what we’ve been doing has not worked’, adding that US policies on curbing drug use, narcotics shipments and the flow of guns had been ‘ineffective’.60 ‘Our insatiable demand for illegal drugs fuels the drug trade. ….Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police, of soldiers and civilians ’61 ‘We have been pursuing these strategies for 30 years…. Neither interdiction [of drugs] nor reducing demand have been successful’.62 Many argue that for as long as the US continues to treat the problem solely as a crime and security issue rather than a health issue to be managed and a commercial business to be regulated, there will be a constant stream of recruits to fill the gaps created in the ranks of the traffickers no matter how successful security operations become. Despite calls from former and current presidents of Colombia, Guatemala and Mexico to broaden the debate to look at alternative approaches, such as decriminalisation or legalisation, the US has been unwilling or politically unable to do so.63 Obama refused to address it at the Summit of the Americas 2012, saying that he personally and his administration did not view legalisation as the answer.64

Couch, 2012 (Neil, Brigadier, British Army, July 2012, “Mexico in Danger of Rapid Collapse’: Reality or Exaggeration?,” http://www.da.mod.uk/colleges/rcds/publications/seaford-house-papers/2012-seaford-house-papers/SHP-2012-Couch.pdf)

President Obama acknowledged that ‘the battle President Calderón is fighting … is not just his battle, it´s also ours’ what we’ve been doing has not worked’, adding that US policies on curbing drug use, narcotics shipments and the flow of guns had been ‘ineffective Our insatiable demand for illegal drugs fuels the drug trade. ….Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police Many argue that for as long as the US continues to treat the problem solely as a crime and security issue rather than a health issue there will be a constant stream of recruits to fill the gaps created in the ranks of the traffickers no matter how successful security operations become. Despite calls from former and current presidents of Colombia, Guatemala and Mexico the US has been unwilling or politically unable to do so.

Drug demand and weapons trafficking means security approaches are incapable of success

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The advantage to Mexico also creates a strategic problem for Mexico. Given the money at stake and that the legal system is unable to suppress or regulate the trade, the borderland has again become -- perhaps now more than ever -- a region of ongoing warfare between groups competing to control the movement of narcotics into the United States. To a great extent, the Mexicans have lost control of this borderland. From the Mexican point of view, this is a manageable situation. The borderland is distinct from the Mexican heartland. So long as the violence does not overwhelm the heartland, it is tolerable. The inflow of money does not offend the Mexican government. More precisely, the Mexican government has limited resources to suppress the trade and violence, and there are financial benefits to its existence. The Mexican strategy is to try to block the spread of lawlessness into Mexico proper but to accept the lawlessness in a region that historically has been lawless. The American position is to demand that the Mexicans deploy forces to suppress the trade. But neither side has sufficient force to control the border, and the demand is more one of gestures than significant actions or threats. The Mexicans have already weakened their military by trying to come to grips with the problem, but they are not going to break their military by trying to control a region that broke them in the past. The United States is not going to provide a force sufficient to control the border, since the cost would be staggering. Each will thus live with the violence. The Mexicans argue the problem is that the United States can't suppress demand and is unwilling to destroy incentives by lowering prices through legalization. The Americans say the Mexicans must root out the corruption among Mexican officials and law enforcement. Both have interesting arguments, but neither argument has anything to do with reality. Controlling that terrain is impossible with reasonable effort, and no one is prepared to make an unreasonable effort.

Friedman, 2012 (George, Founder and CEO of STRATFOR, 8/21/12, “Mexico's Strategy,” http://www.stratfor.com/weekly/mexicos-strategy)

Given the money at stake and that the legal system is unable to suppress or regulate the trade, the borderland has become a region of ongoing warfare between groups competing to control the movement of narcotics into the United States So long as the violence does not overwhelm the heartland, it is tolerable. The inflow of money does not offend the Mexican government The American position is to demand that the Mexicans deploy forces to suppress the trade. But neither side has sufficient force to control the border, and the demand is more one of gestures than significant actions or threats The United States is not going to provide a force sufficient to control the border, since the cost would be staggering. Each will thus live with the violence. the problem is that the United States can't suppress demand and is unwilling to destroy incentives by lowering prices through legalization Mexicans must root out the corruption among Mexican officials and law enforcement. Both have interesting arguments, but neither argument has anything to do with reality. Controlling that terrain is impossible with reasonable effort, and no one is prepared to make an unreasonable effort.

Total stalemate on controlling the drug trade makes it inevitable

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Petróleos Mexicanos, known as Pemex, has long been the third rail of Mexican politics. The state-owned company, originally based on oil fields seized from foreign owners over 70 years ago, has produced sizable government revenue and union jobs for hundreds of thousands of Mexicans. Foreign investment has been largely restricted. But now Pemex’s main asset, the giant Cantarell offshore field, is shrinking fast. The company says it needs to boost annual investment by 46 percent, to $37 billion, to tap undeveloped shale-gas deposits and deep-water reserves. Without some private capital and expertise from abroad, Mexico risks becoming an importer in the next decade. Many of Mexico’s politicians and policymakers have known this for years. Yet Mexican nationalism, resistance from the unions, and the sheer size of the task of transforming Pemex have stood in the way. The planets may be aligning for a solution: Mexican President Enrique Peña Nieto says he’s negotiating to get the political support he needs to break the state monopoly in oil and gas exploration and production this year in a bid to accelerate Mexico’s economic growth. In the model envisioned by Peña Nieto, Pemex would develop certain fields, while foreign and private companies would tap others. The oil and gas reserves in the ground would still be the property of Mexico. Peña Nieto declines to discuss many details of the proposal or whether it would include a change in the constitution, which limits how private companies can profit from the nation’s energy resources. He has, however, been sending signals to international oil companies that he needs their help to arrest eight years of decline in Mexico’s crude output. “It’s obvious that Pemex doesn’t have the financial capacity to be in every single front of energy generation,” the 46-year-old president said in an interview in London on June 17, before he traveled to Northern Ireland for meetings with Group of Eight leaders. “Shale is one of the areas where there’s room for private companies, but not the only one.”

Martin and Rodriguez, 6/20/13 (Eric and Carlos, reporters for Bloomberg News in Mexico City, “Mexico's President Pushes Reforms for State Oil Company Pemex”, Bloomberg Businessweek, http://www.businessweek.com/articles/2013-06-20/mexicos-president-pushes-reforms-for-state-oil-company-pemex)

Pemex, has long been the third rail of Mexican politics. The state-owned company, originally based on oil fields seized from foreign owners over 70 years ago, has produced sizable government revenue Pemex’s main asset, the giant Cantarell offshore field, is shrinking fast. The company says it needs to boost annual investment by 46 percent Without some private capital and expertise from abroad, Mexico risks becoming an importer in the next decade The planets may be aligning for a solution: Mexican President Enrique Peña Nieto says he’s negotiating to get the political support he needs to break the state monopoly in oil and gas exploration and production this year in a bid to accelerate Mexico’s economic growth Pemex would develop certain fields, while foreign and private companies would tap others. The oil and gas reserves in the ground would still be the property of Mexico Nieto has been sending signals to international oil companies that he needs their help Shale is one of the areas where there’s room for private companies, but not the only one.”

Text: The federal government of Mexico should pass President Nieto’s PEMEX reform proposal

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The most highly anticipated of Peña Nieto’s announced reforms are the energy and fiscal reforms, which he is likely to try to push through before the 2015 mid-term elections. The energy reform seeks to realize the vast and largely untapped potential of Mexico’s oil and gas reserves. Pemex, the state-owned oil and gas monopoly, hands over most of its profits in taxes to the state. This prevents the company from investing in new technology or optimizing production, which has led to a gradual decline in oil production since 2004 and forced Mexico to begin importing petrol and natural gas from the United States. While Mr. Peña Nieto has ruled out privatizing Pemex, many hope that the energy and fiscal reforms will, on the one hand, allow private investors to enter into risk-sharing contracts with Pemex for deep water exploration (half of Mexico’s oil is in unexplored deep waters), shale gas, and refining; and, on the other hand, allow Pemex to reinvest more of its profits as the government weans itself off oil revenue and relies on a greater tax intake. This is why the administration argues that any changes in the energy sector must go hand in hand with fiscal changes. The most likely approach would be to introduce a value-added tax on food and medicine (which are now exempt) and undertake a new social-security reform to ensure more Mexicans emerge from the informal economy and contribute to the public safety net through social security taxes. Mr. Peña Nieto’s reforms have the potential to open up attractive new business opportunities and spur greater foreign investment in Mexico. If the new administration can build on its early reforms and open up the energy sector to private investment while restructuring its public finances, Mexico is sure to attract more attention from international investors and become a top investment destination.

Corpart, 2013 (Guillaume, Managing Director of Americas Market Intelligence and a veteran of Latin American competitive intelligence and strategy consulting, “President Peña Nieto's Reforms and What They Mean for Business in Mexico” , AMI, http://americasmi.com/en_US/expertise/articles-trends/page/president-pena-nietos-reforms-and-what-they-mean-for-bussiness-in-mexico)

The most highly anticipated of Peña Nieto’s announced reforms are the energy and fiscal reforms energy reform seeks to realize the vast and largely untapped potential of Mexico’s oil and gas reserves Pemex hands over most of its profits in taxes to the state. This prevents the company from investing in new technology or optimizing production, which has led to a gradual decline energy and fiscal reforms will, on the one hand, allow private investors to enter into risk-sharing contracts with Pemex for deep water exploration and allow Pemex to reinvest more of its profits Mr. Peña Nieto’s reforms have the potential to open up attractive new business opportunities and spur greater foreign investment in Mexico If the new administration can build on its early reforms and open up the energy sector Mexico is sure to attract more attention from international investors and become a top investment destination

Nieto’s current reform package solves the entire advantage-allows foreign investment

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The country needs “very deep” reforms to lure investment to its natural gas and crude fields after eight years of declining oil output, and proposed changes could be ready by the end of summer, Hector Moreira, who also is a former official in the country’s Energy Ministry, said today at the Bloomberg Mexico Conference in New York. A congressional bill to open the oil monopoly would prompt as much as $50 billion in annual investments if approved, he said. Much-needed changes will open the way for faster growth and a stronger currency in the region’s second-largest economy, Gray Newman, Morgan Stanley’s chief Latin American economist, said at the event. Officials from JPMorgan Chase & Co. and Grupo Financiero Banorte said they’re optimistic President Enrique Pena Nieto will lead a successful effort at reforms this year. “This administration doesn’t only have the willingness, but the political power and political capital” to enact the changes, Gabriel Casillas, Banorte’s chief Mexico economist, said. Casillas said he was “very bullish” on the peso, the best-performing major currency against the dollar this year, and that investors hadn’t yet priced in the reforms. Economic Slowdown A slowdown in economic expansion is putting pressure on Pena Nieto to gain approval to open the energy industry and change laws to boost tax collection, reforms he says may lift growth to 6 percent. “We need far more investment, we need capacity in production and we need technology,” Moreira said. “We need to transform the energy sector in a very deep way. I think now is the time.” The ruling Institutional Revolutionary Party has the ability to pass the key bills, which will attract investment and bolster Mexican markets, according to Eduardo Cepeda, the senior country officer for JPMorgan in Mexico. Mexico’s stock market may slump 10 percent if none of the promised reforms are carrier out this year, Cepeda said. Still, that could present a buying opportunity because the structural changes will eventually get done, he said.

Cattan and Espinosa, 7/10/13 (Nacha and Veroníca Navarro, Bloomberg Businessweek, “Mexico Oil Monopoly Ending to Pemex as JPMorgan Sees Reform (3)”, http://www.businessweek.com/news/2013-07-10/mexico-poised-to-end-state-energy-monopoly-pemex-official-says)

The country needs “very deep” reforms to lure investment to its natural gas and crude fields after eight years of declining oil output A congressional bill to open the oil monopoly would prompt as much as $50 billion in annual investments if approved Much-needed changes will open the way for faster growth and a stronger currency in the region’s second-largest economy This administration doesn’t only have the willingness, but the political power and political capital” to enact the changes Casillas said he was “very bullish” on the peso, the best-performing major currency against the dollar this year A slowdown in economic expansion is putting pressure on Pena Nieto to gain approval to open the energy industry and change laws reforms he says may lift growth to 6 percent We need far more investment, we need capacity in production and we need technology, We need to transform the energy sector in a very deep way. I think now is the time The ruling Institutional Revolutionary Party has the ability to pass the key bills, which will attract investment and bolster Mexican markets

Nieto’s PEMEX reforms generate massive growth in the Mexican economy

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Northwestern (NHSI)

Case Negatives

2013

Nonetheless, the ability of the United States to encourage reform is severely limited. Mexican leaders are extremely sensitive to perceived "bullying" by the United States. Too public a U.S. position—particularly on opening up Mexican oil fields to foreign development—might actually undermine reform efforts. In any instance, the United States should be modest in its calls for reform in Mexico. After all, Mexico is not the only North American country with constitutional and cultural constraints on good public policy. As noted, the United States appears incapable of stopping the flow of weapons to Mexico. Recently queried on this. President Obama was reduced to spluttering about the Second Amendment to the U.S. Constitution.37 Both Mexico and the United States should avoid fetishizing the oil sector. Petroleum production is a means, not an end—a reality often forgotten by resource nationalists and industry experts alike. In Mexico, petroleum production is only one sector of an economy that has failed to deliver broad-based, sustained growth. The importance of oil is, to a large degree, a manifestation of Mexico's inability to develop an adequate taxation regime. We would not be discussing a potential crisis associated with declining production if the Mexican government were not so dependent on it for revenue. Ultimately, Mexicans must determine the future of the Mexican oil sector. They have by far the greatest economic stake in the development of their countries energy industry. It is they who must bear whatever costs—in terms of higher sectoral unemployment or steeper personal taxation— that restructuring the Mexican energy sector might entail. It is they who must endorse and, perhaps more importantly, sustain the political compromises necessary to attain reform.

Barnes, 2011 (Joe, the Bonner Means Baker Fellow, James A. Baker III Institute for Public Policy, Rice University, 4/29/11, “Oil and U.S.-Mexico Bilateral Relations,” http://www.bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf)

the ability of the United States to encourage reform is severely limited. Mexican leaders are extremely sensitive to perceived "bullying" by the United States Too public a U.S. position—particularly on opening up Mexican oil fields to foreign development—might actually undermine reform efforts the United States should be modest in its calls for reform in Mexico. Both Mexico and the United States should avoid fetishizing the oil sector. Petroleum production is a means, not an end—a reality often forgotten by resource nationalists and industry experts alike. In Mexico, petroleum production is only one sector of an economy that has failed to deliver broad-based, sustained growth We would not be discussing a potential crisis associated with declining production if the Mexican government were not so dependent on it for revenue Mexicans must determine the future of the Mexican oil sector They have by far the greatest economic stake in the development of their countries energy industry It is they who must endorse and, perhaps more importantly, sustain the political compromises necessary to attain reform

Overt U.S. push for joint ventures derails PEMEX reform-turns the aff

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

When it was first drafted by the Mexican revolutionary government in 1917, Article 27 of the Constitution did not foresee transboundary reservoirs in Mexico’s hydrocarbon picture, much less the possibility of drilling for such resources in ultra deep waters in the Gulf of Mexico.94 The current text of Article 27 corresponds to a rather regional, isolated map of Mexico.95 The resources that are referred to by such article are either clearly located within Mexican territory or within territories that are under Mexican jurisdiction.96 The complex reality of resources trespassing maritime or territorial boundaries is not even contemplated by the Mexican Constitution and, therefore, there is no constitutional foundation for the treatment of such reservoirs.97¶ On the other hand, the Mexican Constitution does set forth a generic prohibition concerning the execution of contracts that may entail the exploitation of such resources by any other company other than the state oil company, which, pursuant to the Regulatory Law, is Pemex.98 This prohibition clearly bans the contracts that would permit joint development or unitization agreements with a third party, be it private or public.99¶ To this effect, noted oil and gas expert Bernard Taverne has pointed out that a unitization agreement is really a joint operating agreement with a number of added features that make it more complex.100 Hence, it would seem obvious that if Article 27 of the Constitution can be interpreted in the sense that it forbids cooperative schemes, such as joint operating agreements, this prohibition can all the more be extended to a unitization and/or other similar agreements.101¶ Therefore, a constitutional amendment in Mexico is necessary as the legal foundation for such negotiations and cooperative instruments.102 Otherwise, the already difficult process of negotiating and performing joint development agreements would be made more difficult by legal uncertainty.103 Political convenience should not be the criteria for creating the legal framework for transboundary development. A framework filled with gaps and loopholes may condemn such projects to joint litigation instead of cooperation, and all would parties suffer greatly as a result.

Grunstein, 2011 (Miriam, professor and researcher at the Centro de Investigación y Docencia Económicas, attorney, served as an advisor to a commissioner at the Federal Energy Regulatory Commission in Mexico as well as to the Mexican Senate, 2011, “UNITIZED WE STAND, DIVIDED WE FALL: A MEXICAN RESPONSE TO KARLA URDANETA’S ANALYSIS OF TRANSBOUNDARY PETROLEUM RESERVOIRS IN THE DEEP WATERS OF THE GULF OF MEXICO,” Houston Journal of International Law, http://www.hjil.org/wp-content/uploads/2010/10/Grunstein-Final.pdf)

the Mexican Constitution did not foresee transboundary reservoirs in Mexico’s hydrocarbon picture, much less the possibility of drilling for such resources in ultra deep waters in the Gulf of Mexico The complex reality of resources trespassing maritime or territorial boundaries is not even contemplated by the Mexican Constitution the Mexican Constitution does set forth a generic prohibition concerning the execution of contracts by any other company other than the state oil company Pemex noted oil and gas expert Bernard Taverne has pointed out that a unitization agreement is really a joint operating agreement a constitutional amendment in Mexico is necessary as the legal foundation for such negotiations and cooperative instruments Otherwise, the already difficult process of negotiating and performing joint development agreements would be made more difficult by legal uncertainty Political convenience should not be the criteria for creating the legal framework for transboundary development. A framework filled with gaps and loopholes may condemn such projects to joint litigation instead of cooperation, and all would parties suffer greatly as a result

Pressing joint ventures before a Mexican constitutional amendment causes mass litigation, conflict, and uncertainty---turns every advantage

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Petrofac's Engineering and Consulting Services business has won a contract by Petroleos Mexicanos (PEMEX) for a deepwater drilling project offshore Mexico. The project was awarded in conjunction with Doris Engineering of Houston. Under the contract, Petrofac will complete specialized technical assistance and supervision for a deepwater subsea well for the Lakach project, located in the Gulf of Mexico. The contract also includes construction, installation, commissioning, testing and startup of the well and infrastructure, as well as tie-ins to existing onshore facilities. The project is scheduled for completion near the end of 2015, according to Petrofac. "I am delighted that Petrofac's Engineering & Consulting Services business has been selected to support such a significant project for PEMEX with this its first major deepwater development," said Craig Muir, managing director of Petrofac. "PEMEX will benefit from the full breadth of Petrofac's specialist subsea pipeline consulting and engineering services in addition to our well management capabilities. We look forward to working closely with PEMEX on this significant project and further building Petrofac's presence in Mexico."

Penn Energy, 2013 (“Petrofac wins PEMEX deepwater drilling contract offshore Mexico,” 3/12/13, http://www.pennenergy.com/articles/pennenergy/2013/03/petrofac-wins-pemex-deepwater-drilling-contract-offshore-mexico.html)

Petrofac has won a contract by Petroleos Mexicanos (PEMEX) for a deepwater drilling project offshore Mexico. The project was awarded in conjunction with Doris Engineering of Houston Petrofac will complete specialized technical assistance in the Gulf of Mexico. The contract also includes construction, installation, commissioning, testing and startup of the well and infrastructure, as well as tie-ins to existing onshore facilities PEMEX will benefit from the full breadth of Petrofac's specialist subsea pipeline consulting and engineering services in addition to our well management capabilities. We look forward to working closely with PEMEX on this significant project and further building Petrofac's presence in Mexico

PEMEX is doing deep water drilling joint ventures now

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

But we should not exaggerate the commercial advantages to U.S. firms were Mexico to open up its petroleum sector to more foreign involvement. U.S. firms would face competition from elsewhere—notably Brazil's state-controlled Petrobras, which already has extensive experience in the Gulf of Mexico. Moreover, the most important economic stake in reviving Mexican production—volume and diversity of world supply—does not require the extensive participation of U.S. companies. Indeed, from a long-term perspective, it might be best for the United States were Mexico to open up first to non-U.S. firms. Such an approach could diminish political obstacles; assuage the fears of the Mexican public; demonstrate that foreign participation can work to Mexico's advantage; and set a precedent for later, major U.S. participation. Needless to say, no U.S. administration would ever publicly support such an idea. But Washington would be wise, indeed, to restrain its response to any Mexican moves in the direction of increasing its cooperation with firms such as Petrobras.

Barnes, 2011 (Joe, the Bonner Means Baker Fellow, James A. Baker III Institute for Public Policy, Rice University, 4/29/11, “Oil and U.S.-Mexico Bilateral Relations,” http://www.bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf)

we should not exaggerate the commercial advantages to U.S. firms were Mexico to open up its petroleum sector to more foreign involvement. U.S. firms would face competition from elsewhere notably Brazil's Petrobras which already has extensive experience in the Gulf of Mexico the most important economic stake in reviving Mexican production—volume and diversity of world supply—does not require the extensive participation of U.S. companies Indeed it might be best for the United States were Mexico to open up first to non-U.S. firms Washington would be wise, indeed, to restrain its response to any Mexican moves in the direction of increasing its cooperation with firms such as Petrobras

U.S. involvement isn’t key- other countries are already filling in

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The finds will bolster the legacy of President Calderón, who had overseen declines in crude output by Pemex every year since he took office in late 2006. But ultimately the discovery could derail an overhaul of the company promised by President-elect Enrique Peña Nieto, who assumes office on Dec. 1. Because Pemex’s petroleum production has dropped 25 percent from its peak of 3.4 million barrels a day in 2004, Peña Nieto called energy reform his “signature issue.” He promised to change rules that allow private and foreign oil companies to provide services to Pemex but ban them from owning stakes in Mexico’s oil and gas fields. Mexico depends on royalties from Pemex for about a third of its budget. Pemex lacks experience beyond shallow waters, and Mexico’s deepwater Gulf territory is too vast for a single company to explore and exploit, says Juan Carlos Zepeda, head of the nation’s Hydrocarbons Commission. Capital Economics, a London-based research firm, says allowing international companies to invest and produce in Mexico’s fields could boost the nation’s growth by as much as 0.8 percent a year. Now, with a possible 10 billion barrels in new reserves from the recent finds, politicians may find it easier to stick with the status quo. “Reforms are easier done in an urgency moment,” says Lisa Schineller, chief of Latin American ratings at Standard & Poor’s (MHP), which downgraded Mexico in 2009 in part because of its overreliance on oil. “When you’re losing oil revenue, there’s greater pressure.”

Businessweek, 2012 (“A Big Oil Find May Derail Reforms in Mexico,” 10/4/12, http://www.businessweek.com/articles/2012-10-04/a-big-oil-find-may-derail-reforms-in-mexico)

The finds will bolster the legacy of President Calderón, who had overseen declines in crude output by Pemex the discovery could derail an overhaul of the company promised by President-elect Enrique Peña Nieto Peña Nieto called energy reform his “signature issue.” He promised to change rules that allow private and foreign oil companies to provide services to Pemex Mexico’s deepwater Gulf territory is too vast for a single company to explore and exploit Now, with a possible 10 billion barrels in new reserves from the recent finds, politicians may find it easier to stick with the status quo. “Reforms are easier done in an urgency moment When you’re losing oil revenue, there’s greater pressure.”

Recent discovery of 10 billion barrels of oil means Mexican politicians won’t reform

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico's state oil monopoly Petroleos Mexicanos plans to invest a record $25.3 billion this year, of which the lion's share will go into upstream activities as the company works to maintain or raise oil and gas output, officials said Thursday. Chief Financial Officer Mario Beauregard said in a conference call with analysts that 79% of the total is earmarked for exploration and production, 17% for refining, and the rest for gas processing and petrochemicals. Pemex had record sales of $126.6 billion in 2012, up from $111.4 billion in 2011, as double-digit growth in domestic sales offset practically flat export sales. Pemex also paid a record $69.4 billion to the federal government in taxes and duties, leaving it with a net profit of just under $400 million. Oil and related taxes and royalties make up about a third of Mexico's federal budgets, and Pemex occasionally reports quarterly net losses. The administration of President Enrique Pena Nieto is planning to overhaul the country's restrictive energy laws to allow for greater private investment in the state-run oil industry, and is expected to present proposals to Congress in the second half of the year. Mr. Beauregard said reform discussions are under way but declined to comment further. Carlos Morales, who heads Pemex's production and exploration division, said that $3 billion of the planned investment this year will be for exploration. With the decline of some of the company's most productive fields in the shallow waters of the southern Gulf of Mexico, Pemex is seeking oil from more complex reserves, such as the onshore Chicontepec basin and in deep waters of the Gulf.

WSJ, 2/28/13 (Wall Street Journal, “Mexico's Pemex Plans Record $25.3 Billion Investment in 2013,” 2/28/13, http://online.wsj.com/article/SB10001424127887323978104578332400579225008.html)

Mexico's state oil monopoly Petroleos Mexicanos plans to invest a record $25.3 billion this year, of which the lion's share will go into upstream activities as the company works to maintain or raise oil and gas output, officials said Pemex had record sales of $126.6 billion in 2012, up from $111.4 billion in 2011, as double-digit growth in domestic sales The administration of President Enrique Pena Nieto is planning to overhaul the country's restrictive energy laws to allow for greater private investment in the state-run oil industry, and is expected to present proposals to Congress Morales, who heads Pemex's production and exploration division, said that $3 billion of the planned investment this year will be for exploration Pemex is seeking oil from more complex reserves, such as the onshore Chicontepec basin and in deep waters of the Gulf

No PEMEX production declines-new production and deep-water exploration prove

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico's level of crude-oil production will move higher as new wells come online at existing fields, giving state-run oil monopoly Petroleos Mexicanos, or Pemex, time to develop shale oil and gas resources in the medium term, followed by deep-water fields in subsequent years, the company's production chief said Friday. "We now see conditions for a return to higher output," Carlos Morales, Pemex's head of exploration and production, said in an interview. "Today we are producing 2.565 million barrels a day," he said. "We hope to be reaching the end of the administration [2018] with production around three million barrels a day." Pemex's predictions for output have failed in the past, with production falling in each of the past eight years from a peak of 3.4 million barrels a day in 2004. Since 2009, the yearly declines have been minimal, and production has increased in recent months. Mr. Morales carefully outlined how Pemex would raise production at existing fields. Big offshore assets such as Ku-Maloob-Zaap and Cantarell will hold at current levels through careful management, and two new offshore fields in shallow waters will add 280,000 barrels a day in the next few years. Output at the sprawling onshore Chicontepec fields will rise to 200,000 barrels a day from the current 75,000, and mature fields being revisited with new technology will be good for an additional 190,000 barrels a day, Mr. Morales said. The Pemex production chief says he expects the company's mix of oil sources to keep the production cost of crude around the current $6.80 per barrel. But while production over the next eight years or so will be dominated by existing projects, Pemex will be moving aggressively on exploiting shale oil and gas deposits, particularly those that are part of the Eagle Ford formation in Texas that crosses the border into Mexico. "We have drilled wells in shale that produce crude," Mr. Morales said. "The cost is around $30 per barrel," which is more expensive than the relatively easy oil in the shallow waters of the Gulf of Mexico but still highly profitable at current oil prices, he added. Pemex thinks Mexico could have as much as 60 billion barrels of crude oil equivalent in shale deposits, about evenly divided between oil and gas, Mr. Morales said. In the next few years, shale resources could undergo huge development because the technology to do so is already being widely used in the U.S.

WSJ, 3/2/13 (Wall Street Journal, 3/2/13, “Pemex Executive Says Oil Output Set to Rise,” http://online.wsj.com/article/SB10001424127887323978104578336673832410166.html?mod=googlenews_wsj)

Mexico's level of crude-oil production will move higher as new wells come online at existing fields, giving state-run oil monopoly Pemex, time to develop shale oil and gas resources in the medium term, followed by deep-water fields in subsequent years We now see conditions for a return to higher output We hope to be reaching the end of the administration with production around three million barrels a day yearly declines have been minimal, and production has increased in recent months Big offshore assets such as Ku-Maloob-Zaap and Cantarell will hold at current levels through careful management, and two new offshore fields in shallow waters will add 280,000 barrels a day in the next few years Output at the sprawling onshore Chicontepec fields will rise and mature fields being revisited with new technology will be good for an additional 190,000 barrels Pemex will be moving aggressively on exploiting shale oil and gas deposits, particularly those that are part of the Eagle Ford formation In the next few years, shale resources could undergo huge development because the technology to do so is already being widely used in the U.S.

New shallow off-shore production and increased on-shore production solves PEMEX production

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Large increases in direct and third-party investment in recent years has enabled PEMEX to halt net decreases in production, at least temporarily. Importantly, PEMEX also now reports achieving a 100% replacement rate for reserves, improving prospects for continued production. Increased investment also has led to discoveries of large new deep water resources at Trion, Supremos, and Maximino, achievements of which PEMEX officials are justifiably proud. Several interlocutors credited energy reforms passed in 2008 for enabling those finds by giving PEMEX more flexibility to partner with international companies on a service contract basis, building on the shift to reliance on contracting services to enable investments stretching from the late 1990s. PEMEX leaders plan to raise production to 2.7 mbd in 2013 and 3 mbd by 2017, requiring up to $38 billion annually in investment. Near term growth is expected to come primarily from Chicontopec, a highly complex unconventional onshore project that is subject of great hope and scorn. Despite years of development and reportedly $5 billion in investment, the project is well behind expectations and currently only 70,000 barrels per day are produced, which puts claims of near-term growth in serious doubt. Over the longer-term PEMEX has set a goal to increase production to 3.3 mbd by 2024. Achieving that goal will require significantly more new production than the difference between the 3.3 mbd goal and today’s 2.6 mbd given expected large declines in KMZ.

Brown & Meacham, 2012 (Neil Brown and Carl Meacham, Senate Foreign Relations Committee Senior Staff Members, 12/21/12, “Oil, Mexico, and the Transboundary Agreement,” http://www.foreign.senate.gov/publications/download/oil-mexico-and-the-transboundary-agreement)

Large increases in direct and third-party investment in recent years has enabled PEMEX to halt net decreases in production PEMEX also now reports achieving a 100% replacement rate for reserves, improving prospects for continued production. Increased investment also has led to discoveries of large new deep water resources Several interlocutors credited energy reforms passed in 2008 for enabling those finds by giving PEMEX more flexibility PEMEX leaders plan to raise production requiring up to $38 billion annually in investment. Near term growth is expected to come primarily from Chicontopec, a highly complex unconventional onshore project Over the longer-term PEMEX has set a goal to increase production to 3.3 mbd by 2024. Achieving that goal will require significantly more new production

PEMEX production increasing now-Chicontopec and increased investment prove

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico’s ruling party has taken a first step to back President Enrique Pena Nieto’s plan to end a 75-year-old state monopoly on the oil industry.¶ The president’s Institutional Revolutionary Party, known as PRI, voted Sunday at its national assembly to end its opposition to constitutional changes that would ease state-owned Petroleos Mexicanos’s grip on the oil industry, Bloomberg reported. ¶ Pena Nieto has not yet presented a bill proposing the changes and would still have to win the votes in Congress, where his coalition controls 241 of 500 seats in the lower house. ¶ Oil output in the world’s ninth-largest producer of crude has fallen for eight years as Pemex finances a third of the government’s public budget. Opening the industry to foreign investors would boost production while lifting economic growth by as much as 2 percentage points each year, according to the Energy Ministry. ¶ “Our party is transforming itself in order to represent and better serve all Mexicans,” Pena Nieto said at his party’s assembly according to the news wire. ¶ “The PRI, without falling into complacency, has opted to examine itself and redefine its position to adapt to the nation’s new circumstances.” ¶ The PRI also ended a ban that prohibited its members from voting for taxes on food and medicine. The changes were approved today at the party’s national assembly. ¶ Pena Nieto, 46, has pledged to open the oil industry to more competition, to reduce the tax burden on Pemex and to increase government revenue in a bid to boost economic growth. His administration hasn’t yet disclosed details on the proposals it said will be sent to Congress this year.

Upstream, 3/4/13 (Upstream is an international oil & gas newspaper, 3/4/13, “Mexico ruling party steps toward Pemex reform,” http://www.upstreamonline.com/live/article1319001.ece)

Mexico’s ruling party has taken a first step to back President Enrique Pena Nieto’s plan to end a 75-year-old state monopoly on the oil industry The PRI voted Sunday at its national assembly to end its opposition to constitutional changes that would ease state-owned Petroleos Mexicanos’s grip on the oil industry Opening the industry to foreign investors would boost production while lifting economic growth by as much as 2 percentage points each year Our party is transforming itself in order to represent and better serve all Mexicans,” Nieto said The PRI, without falling into complacency, has opted to examine itself and redefine its position to adapt to the nation’s new circumstances Nieto has pledged to open the oil industry to more competition

Reforms will pass in the squo-Nieto and PRI promises prove

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The time is ripe for a historic transformation of Mexico’s energy sector. The 2008 Reforma Energética (Energy Reform)—a congressionally-approved presidential initiative that established or modified seven laws—highlighted the significant challenges facing the Mexican oil industry and the economic implications of a decline in oil production. The problem: it didn’t resolve them. ¶ With the exception of Andrés Manuel López Obrador of the Partido de la Revolución Democrática (Party of the Democratic Revolution—PRD), for the first time in Mexican politics the presidential candidates this year set out a series of bold institutional reforms. These included what was unthinkable years ago: turning the state-owned enterprise, Petróleos Mexicanos (PEMEX), into an autonomous firm that could issue stock shares—a model similar to the one adopted by Brazil’s Petrobras in the 1990s. ¶ But is this wishful thinking? As with past proposals to open up Mexico’s power or oil industries, are expectations rising against all odds? ¶ The answers will begin to emerge once the newly elected congress convenes in September and President-elect Enrique Peña Nieto takes office in December 2012. But Mexico’s incoming leadership will have to address a growing consensus about the need to modernize the energy sector. ¶ Conventional wisdom holds that Mexico’s energy sector will not change until the country faces a severe crisis. But, at least conceptually, change is already under way. The future of Mexico will be determined by the ability of the incoming administration to turn visions of a grand redesign of the energy sector into implementable policies. To be sure, there will need to be some hard negotiation and bargaining to reach the compromises and build the agreements necessary to make this happen.

Melgar, 2012 (Lourdes, director of the Center for Sustainability and Business at EGADE Business School of the Tecnológico de Monterrey, Summer 2012, “The Future of PEMEX,” http://www.americasquarterly.org/node/3781)

The time is ripe for a historic transformation of Mexico’s energy sector The 2008 Reforma didn’t resolve them for the first time in Mexican politics the presidential candidates this year set out a series of bold institutional reforms. These included what was unthinkable years ago: turning the state-owned enterprise, Petróleos Mexicanos (PEMEX), into an autonomous firm that could issue stock shares Mexico’s incoming leadership will have to address a growing consensus about the need to modernize the energy sector The future of Mexico will be determined by the ability of the incoming administration to turn visions of a grand redesign of the energy sector into implementable policies.

Nieto’s current reforms solve the advantage

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico’s ruling party changed its platform on Sunday to allow for private investment in the state-owned oil monopoly, paving the way for a possible overhaul of a company that is seen as a pillar of the Mexican state. Nearly 5,000 members of the Institutional Revolutionary Party, also known as the PRI, voted unanimously at their national convention to remove language in the party’s platform that for years had opposed injecting private money in Petroleos Mexicanos, or Pemex. The party also erased its opposition to sales taxes on food and medicines. President Enrique Pena Nieto, who led last year’s electoral comeback for the party that governed from 1929 to 2000, said the energy and fiscal reforms are needed for Mexico to become more competitive. He urged party members to support him when he sends the bills to Congress, likely in the second half of this year. “The PRI is seeking renovation to bring the changes Mexico needs,” Pena Nieto told a crowd of thousands. “The PRI is not pleased and it is choosing to reexamine and redefine where it stands on the challenges facing the country.” Pena Nieto’s intention of opening the oil behemoth to more private and foreign investment has set off warnings among leftists about the privatization of an enterprise whose nationalization is seen by the left as a source of national pride. Pena Nieto has previously denied any plans to privatize Pemex. On Sunday, party president Cesar Camacho repeated that the Pemex would stay in state hands, saying “We share the need of an energy reform for better growth, keeping the state’s control, but modernizing the industry to reach its full potential and making sure the exploitation of our resources benefits everyone.” A meeting of opposition mayors called for protests in mid-March to oppose the ruling PRI’s new platform. After Sunday’s decision, analysts said they expect the PRI to put forward a unified front when the bills are voted upon. The PRI doesn’t hold a majority in Congress, but it’s the strongest legislative block with 241 of 500 representatives. Pena Nieto has also built consensus in other issues with the opposition parties. “The party is leaving behind its old taboos to be able to discuss the reality of the country,” said Alejandro Schtulmann, head of research of the firm Emerging Markets Political Risk Analysis. During the PRI’s 12-year hiatus from presidency, its members firmly opposed such measures proposed by then-ruling National Action Party, arguing the country would lose sovereignty by allowing foreign investment in Pemex. They also alleged that taxing for food and medicines’ purchases would severely affect the poor. “The PRI wanted to wait until it had the presidency,” said Schtulmann. Though oil is a sensitive topic for many Mexicans who learn state ownership is one of the three main principles of the constitution, its production has fallen year after year. But most of the country’s reserves remain untapped because Pemex lacks the technology for exploration.

AP, 3/3/13 (Associated Press, 3/3/13, “Mexico’s ruling party backs energy reform,” http://fuelfix.com/blog/2013/03/03/mexico%E2%80%99s-ruling-party-backs-energy-reform/)

Mexico’s ruling party changed its platform on Sunday to allow for private investment in the state-owned oil monopoly, paving the way for a possible overhaul of a company that is seen as a pillar of the Mexican state. Nearly 5,000 members of the Institutional Revolutionary Party, also known as the PRI, voted unanimously Nieto said the energy and fiscal reforms are needed for Mexico to become more competitive. He urged party members to support him when he sends the bills to Congress, likely in the second half of this year The PRI is seeking renovation to bring the changes Mexico needs The PRI is not pleased and it is choosing to reexamine and redefine where it stands on the challenges facing the country We share the need of an energy reform for better growth, keeping the state’s control, but modernizing the industry to reach its full potential and making sure the exploitation of our resources benefits everyone analysts said they expect the PRI to put forward a unified front when the bills are voted upon. The PRI doesn’t hold a majority in Congress, but it’s the strongest legislative block with 241 of 500 representatives The party is leaving behind its old taboos to be able to discuss the reality of the country The PRI wanted to wait until it had the presidency

PRI will get PEMEX reforms passed soon-they’re the key party for passage

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

In an important test of President Enrique Peña Nieto’s sway over resistant factions of his party, the ruling Institutional Revolutionary Party has changed its bylaws to clear the way for major reform of the gigantic national oil company. Meeting in its annual convention, the PRI, as the party is known, on Sunday passed several changes that Peña Nieto needed to make possible a series of reforms he has promised as the hallmark of his administration. Chief and most difficult among them is a plan to open the behemoth state oil company, Petroleos de Mexico, or Pemex, to private and foreign investment, long a taboo in this country. Pemex, a symbol of nationalistic pride, is the top income earner for the Mexican state, but its production of oil has been declining dramatically and the company is in dire need of outside expertise for deep-sea exploration and other projects. Peña Nieto has stated that reform of Pemex is a top priority, but his party’s bylaws forbid its members who serve in Congress from voting on any change in the way the company is managed. On Sunday, after hearing from the president, several thousand members of the party voted unanimously to change the rules and allow support for Pemex reform. The membership also voted to allow its representatives to support changes in the value-added tax scheme. PRI statutes had prohibited taxes on food and medicines, but Sunday’s vote removed that ban. Sunday’s vote was a significant gauge of whether Peña Nieto would be able to win the support of the more recalcitrant members of the party who remain wedded to old-style PRI nationalistic paternalism and who are not inclined to change the way Pemex is run nor the way taxes are levied.

LA Times, 3/4/13 (Los Angeles Times, “Mexico president wins key party vote on reform of national oil company,” 3/4/13, http://www.latimes.com/news/world/worldnow/la-fg-wn-mexico-pri-oil-pemex-20130304,0,7559619.story)

In an important test of President Enrique Peña Nieto’s sway over resistant factions of his party, the ruling Institutional Revolutionary Party has changed its bylaws to clear the way for major reform of the gigantic national oil company the PRI ssed several changes that Peña Nieto needed to make possible a series of reforms Chief and most difficult among them is a plan to open the behemoth state oil company Pemex private and foreign investment Peña Nieto has stated that reform of Pemex is a top priority, but his party’s bylaws forbid its members who serve in Congress from voting on any change in the way the company is managed several thousand members of the party voted unanimously to change the rules and allow support for Pemex reform Sunday’s vote was a significant gauge of whether Peña Nieto would be able to win the support of the more recalcitrant members of the party

The PRI unanimously voted for PEMEX reform-that’s the key litmus test

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

However, Mr Peña has reason to be optimistic. The opposition PAN shares much of Mr Peña’s agenda, and together the two parties have a two-thirds majority in both houses of Congress. A new power to fast-track two bills per congressional session will help. A lot will depend on who ends up leading the PAN, which is restive and rudderless after finishing third in the presidential election. The handover period between July’s election and December’s inauguration has been a model of presidential co-operation. Mr Calderón’s crackdown on Mexico’s vindictive criminals has given him a personal reason to stay on good terms with the new government, to make sure of the protection he and his family will need when he leaves office. Fighting on two fronts Mr Peña’s main problem in Congress may well be his own party. As this special report went to press Congress was about to pass a labour-law reform, which among other things would make hiring and firing easier. But linked measures to make Mexico’s over-mighty unions more transparent and democratic were voted down by congressmen from Mr Peña’s own PRI, which has strong ties to unions. If the unions cannot be tamed, Mr Peña’s other reforms—to open up the monopolised energy sector and overhaul the tax system—may be similarly diluted.

Economist, 2012 (The Economist, “From darkness, dawn,” 11/24/12, http://www.economist.com/news/special-report/21566773-after-years-underachievement-and-rising-violence-mexico-last-beginning)

Mr Peña has reason to be optimistic. The opposition PAN shares much of Mr Peña’s agenda, and together the two parties have a two-thirds majority in both houses of Congress. A new power to fast-track two bills per congressional session will help The handover period between July’s election and December’s inauguration has been a model of presidential co-operation Calderón’s crackdown on Mexico’s vindictive criminals has given him a personal reason to stay on good terms with the new government Fighting on two fronts Mr Peña’s main problem in Congress may well be his own party

Even if the PRI isn’t enough- the PAN still supports Nieto’s reforms

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico’s need for oil and natural gas reform is widely acknowledged amongst leaders in Mexico. The primary question remains whether domestic political conditions will allow reform to advance. Oil has a privileged status in Mexican identity and politics akin to the third rail of Social Security in the United States: it basically works for now, is widely acknowledged to not work in the future, and any attempts to reform it may jeopardize a politician’s future. Newly sworn-in President Enrique Pen˜a Nieto campaigned on reforming the Mexican energy sector and his new administration appears committed to follow-through on that promise. The political will to reform is evident; it is less clear whether President Pen˜ a Nieto will garner sufficient support within his Institutional Revolutionary Party (PRI), including overcoming possible union opposition, to pass meaningful reform. Having achieved incremental energy reforms in 2008, the now opposition National Action Party (PAN) leadership appears poised to support broader oil and natural gas reform if offered by the PRI. Previously, some observers had raised concern that the PAN may hinder reform, as the PRI had done under the Caldero´n administration, to frustrate the new Presidential administration. In addition, some interlocutors indicated that the leftist Revolutionary Democratic Party (PRD) could attempt to undermine oil sector reform, including by staging public demonstrations against any initiative. While the general contours of political distinctions can be surmised even now, the exact lines of debate will be determined only when the government offers the actual scope of their proposed reform initiative.

Brown & Meacham, 2012 (Neil Brown and Carl Meacham, Senate Foreign Relations Committee Senior Staff Members, 12/21/12, “Oil, Mexico, and the Transboundary Agreement,” http://www.foreign.senate.gov/publications/download/oil-mexico-and-the-transboundary-agreement)

Mexico’s need for oil and natural gas reform is widely acknowledged amongst leaders in Mexico Oil has a privileged status in Mexican identity Newly sworn-in President Enrique Pen˜a Nieto campaigned on reforming the Mexican energy sector and his new administration appears committed to follow-through on that promise. The political will to reform is evident Having achieved incremental energy reforms in 2008, the now opposition National Action Party (PAN) leadership appears poised to support broader oil and natural gas reform if offered by the PRI Previously, some observers had raised concern that the PAN may hinder reform, as the PRI had done under the Caldero´n administration

Status quo solves Mexican reform---PRI support was the biggest hurdle---PAN support is locked in

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The challenge for PEMEX is to increase reserves and oil and gas production in areas that are not part of its traditional zone of expertise. PEMEX has been outstanding at E&P in shallow waters. But its experience is mostly limited to 3,300 feet (1,000 meters) deep—far above the 8,200 to 11,500 feet (2,500 to 3,500 meters) needed in the most interesting area of the Gulf of Mexico. Going to deep and ultra-deep waters or to complex, fractured onshore fields such as Chicontepec requires new skills. Mexico is in the process of developing regulatory and safety measures to do so. But it is not a matter of buying technology in the market, as some politicians have asserted. Particularly in the case of deepwater production, international best practices show that because of the associated complexity and high risk, no company can operate alone. The Deepwater Horizon oil spill in April 2010, when a BP-operated drilling rig exploded on the U.S. side of the Gulf of Mexico and caused a 4.9 million barrel leak, reinforces the concerns over risks. Ideally, PEMEX would enter in a joint venture with companies at the cutting edge of deepwater production, such as Chevron, Shell, Petrobras, or BP. Yet this is prohibited by the Mexican Constitution, and the new contracts are unlikely to attract those companies.

Melgar, 2012 (Lourdes, director of the Center for Sustainability and Business at EGADE Business School of the Tecnológico de Monterrey, Summer 2012, “The Future of PEMEX,” http://www.americasquarterly.org/node/3781)

The challenge for PEMEX is to increase reserves and oil and gas production in areas that are not part of its traditional zone of expertise. PEMEX has been outstanding at E&P in shallow waters its experience is mostly limited in the most interesting area of the Gulf of Mexico Mexico is in the process of developing regulatory and safety measures to do so. But it is not a matter of buying technology in the market, as some politicians have asserted international best practices show that because of the associated complexity and high risk, no company can operate alone Ideally, PEMEX would enter in a joint venture with companies at the cutting edge of deepwater production, such as Chevron, Shell, Petrobras, or BP. Yet this is prohibited by the Mexican Constitution

Mexican President Nieto is pushing Constitutional reforms that would open up the state’s monopoly on oil production to private and foreign investment---the Mexican Congress has to approve it, and it’ll pass now because of support within Nieto’s party, the PRI---that’s Upstream.

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

In the midst of this debate, PEMEX has opted to speed up the process and commit significant investment in order to try to lock in a favorable decision by the CNH. pemex has also invested heavily in acquiring the equipment to respond in case of an accident. But questions arise about whether PEMEX should instead focus on Mexico’s less risky and financially more rewarding options: enhanced oil recovery, secondary recovery and shallow water production. Choosing any of those alternatives would allow PEMEX to profit from its expertise, save financial resources and buy time so that a sustainable deepwater exploitation process can be put in place.

Melgar, 2012 (Lourdes, director of the Center for Sustainability and Business at EGADE Business School of the Tecnológico de Monterrey, Summer 2012, “The Future of PEMEX,” http://www.americasquarterly.org/node/3781)

PEMEX has opted to speed up the process and commit significant investment in order to try to lock in a favorable decision pemex has also invested heavily in acquiring the equipment to respond in case of an accident. But questions arise about whether PEMEX should instead focus on Mexico’s less risky and financially more rewarding options secondary recovery and shallow water production Choosing any of those alternatives would allow PEMEX to profit from its expertise save financial resources and buy time so that a sustainable deepwater exploitation process can be put in place

Shallow water drilling is sufficient for PEMEX growth

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Even in a worst-case scenario where the reforms do not happen, Mr Lozoya says Pemex will manage to increase production to 3m bpd by the end of the administration in 2018. But he and the president have set their sights far higher than that.¶ He pulls out a map that shows one of two new gas pipelines that will bring cheap natural gas south from the US to feed Mexican industry and petrochemical development – especially of fertilisers.¶ “It is going to boost agriculture and heavy manufacturing, significantly,” he says. Then he adds, arching his eyebrows: “but most important of all, it is a two-way pipeline which will also allow us to send gas the other way.”

FT, 2/27/13 (Financial Times, “Pemex chief hails Mexico as ‘new Mideast’,” 2/27/13, http://www.ft.com/intl/cms/s/0/5dbc2e8e-80d8-11e2-9c5b-00144feabdc0.html#axzz2NSCSJswg)

Even in a worst-case scenario where the reforms do not happen, Mr Lozoya says Pemex will manage to increase production he and the president have set their sights far higher than that.¶ He pulls out a map that shows one of two new gas pipelines that will bring cheap natural gas south from the US to feed Mexican industry and development is going to boost agriculture and heavy manufacturing, significantly but most important of all, it is a two-way pipeline which will also allow us to send gas the other way.”

Lack of reforms won’t collapse PEMEX-gas fills in

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

While the Mexican stock market has hit record highs recently and the economy is forecast to grow more than 3.5 per cent in 2013, faster than Brazil for the third year in a row, output at Pemex has slumped. From a peak of 3.4m barrels of oil a day in 2004, production has fallen to about 2.6m bpd. Experts say that without greater foreign investment and technology Mexico could cease to be a major energy exporter within six years, even though it sits on promising deepwater reserves in the Gulf of Mexico. “So what will the Pemex explosion mean for the national debate on energy reform? It puts Pemex firmly in the spotlight for a start,” tweeted Duncan Wood, director of the Mexico Institute at the Woodrow Wilson centre in Washington. “Pemex needs to be modernised from top to bottom, from exploration and production to basic practices ... Will legislators [now] recognise that Pemex has fallen behind the times?” The contrast between Pemex and the rest of Mexico’s export sector is stark. While foreign car and electronic goods manufacturers have poured investment into the country, boosting national exports to a record, under the Mexican constitution Pemex is only allowed to offer limited service contracts with private companies.

FT, 2013 (Financial Times, 2/1/13, “Pemex blast puts onus on energy reforms,” http://www.ft.com/intl/cms/s/0/eb947824-6c88-11e2-953f-00144feab49a.html#axzz2NSCSJswg)

While the Mexican stock market has hit record highs recently and the economy is forecast to grow more than 3.5 per cent in 2013 faster than Brazil for the third year in a row output at Pemex has slumped , production has fallen Experts say that without greater foreign investment and technology Mexico could cease to be a major energy exporter within six years The contrast between Pemex and the rest of Mexico’s export sector is stark. While foreign car and electronic goods manufacturers have poured investment into the country, boosting national exports to a record, under the Mexican constitution Pemex is only allowed to offer limited service contracts with private companies

PEMEX not key to the Mexican economy-overall increases despite PEMEX failures

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

On the economic side, while Mexico remains heavily dependent on the remittances of the millions of immigrants now working, legally or illegally, in the United States, the country also has a rising middle class. It is common to associate the Mexican economy with Pemex, the state oil company, which the government has tended to loot—in the process, depleting oil revenue that should have been put to work on modernization of drilling infrastructure, particularly offshore, which, if Mexico is to continue as a major petroleum exporter, is where it must hunt for new resources. (The contrast with the much better-run, state-controlled Brazilian oil giant, Petrobras, or Malaysia’s Petronas, is painful.) But, increasingly, there is also the Mexico of Homex, a company started in Sinaloa in 1989. Homex is now one of the leading global firms involved in the building of low- and middleincome housing, with large operations in Brazil and India as well as in 20 Mexican states. And yet, the only thing most non-Mexicans who are drawn to the failed-state hypothesis seem to know about Sinaloa is that it gave its name to a powerful drug cartel. If one takes the long view, the clash between the Mexico of Pemex and the Mexico of Homex may be as important as the war between the cartels and the government. And, unless the Mexican economy implodes, which is highly unlikely, there is an excellent chance that the Mexico of Homex will prevail. In any case, it is a contest in which the narco-traffickers—even narco-traffickers operating right alongside the Homexes of Mexico—do not now have, and will never have, a say.

Rieff, 2011 (David, Senior Fellow at the World Policy Institute at the New School for Social Research, a Fellow at the New York Institute for the Humanities at New York University, and a member of the Council on Foreign Relations, 3/17/11, “The Struggle for Mexico,” http://www.newrepublic.com/article/world/magazine/85337/mexico-calderon-clinton-obama-drug-cartels#)

while Mexico remains heavily dependent on the remittances of the millions of immigrants the country also has a rising middle class. It is common to associate the Mexican economy with Pemex which the government has tended to loot , there is also the Mexico of Homex, a company started in Sinaloa in 1989. Homex is now one of the leading global firms involved in the building of low- and middleincome housing with large operations in Brazil and India as well as in 20 Mexican states. the clash between the Mexico of Pemex and the Mexico of Homex may be as important as the war between the cartels and the government unless the Mexican economy implodes, which is highly unlikely, there is an excellent chance that the Mexico of Homex will prevail it is a contest in which the narco-traffickers do not now have, and will never have, a say.

PEMEX isn’t key to the economy and no collapse-Homex checks

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Once shuttered off by tariffs and trade controls, Mexico has opened up to become a place where the world does business. The North American Free-Trade Agreement (NAFTA), which in 1994 eliminated most tariffs between Mexico, the United States and Canada, was only the beginning: Mexico now boasts free-trade deals with 44 countries, more than any other nation. In northern and central Mexico German companies turn out electrical components for Europe, Canadian firms assemble aircraft parts and factory after factory makes televisions, fridge-freezers and much else. Each year Mexico exports manufactured goods to about the same value as the rest of Latin America put together. Trade makes up a bigger chunk of its GDP than of any other large country’s. Normally that would be a good thing, but after the 2007-08 financial crisis it meant that Mexico got a terrible walloping. Thanks to its wide-open economy and high exposure to the United States it suffered the steepest recession on the American mainland: in 2009 its economy shrank by 6%. The country had already had a rocky decade. When China joined the World Trade Organisation in 2001, it started undercutting Mexico’s export industry. In the ten years to 2010 Mexico’s economy grew by an average of just 1.6% a year, less than half the rate of Brazil, which flourished in part by exporting commodities to China. But now changes are under way, in Mexico’s factories, its financial sector and even its oil and gas fields, that augur well for a very different decade. Latin America’s perennial underachiever grew faster than Brazil last year and will repeat the trick this year, with a rate of about 4% against less than 2% in Brazil. Mr Peña is aiming to get annual growth up to 6% before his six-year presidency is over. By the end of this decade Mexico will probably be among the world’s ten biggest economies; a few bullish forecasters think it might even become the largest in Latin America. How did Mexico achieve such a turnround?

Economist, 2012 (The Economist, “Señores, start your engines,” 11/24/12, http://www.economist.com/news/special-report/21566782-cheaper-china-and-credit-and-oil-about-start-flowing-mexico-becoming?zid=298&ah=0bc99f9da8f185b2964b6cef412227be)

Mexico has opened up to become a place where the world does business NAFTA eliminated most tariffs between Mexico, the United States and Canada Mexico now boasts free-trade deals with 44 countries, more than any other nation. In northern and central Mexico German companies turn out electrical components for Europe Each year Mexico exports manufactured goods to about the same value as the rest of Latin America put together. Trade makes up a bigger chunk of its GDP than of any other large country’s now changes are under way, in Mexico’s factories, its financial sector and even its oil and gas fields, that augur well for a very different decade. Latin America’s perennial underachiever grew faster than Brazil last year and will repeat the trick this year, with a rate of about 4% Mexico will probably be among the world’s ten biggest economies

Increasing openness in the rest of the economy means it’s decoupled from oil

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

THE APOCALYPSE WAS on its way, and it would begin in Mexico. Where else? When archaeologists dug up Mayan calendars that ominously seemed to run out in the final days of 2012, some doomsayers predicted the end of the world. To many Mexicans it seemed like just another example of their country’s unending run of bad luck. The steepest recession on the American mainland, a plague of H1N1 swine flu and a deepening war against organised crime had made the preceding few years fairly grim. In 2009 the Pentagon had given warning that Mexico could become a “failed state”. Armageddon would be the icing on the cake. But it turns out that the Mayan glyphs were misunderstood. The men with magnifying glasses now say that the world is not about to end—in fact, it seems that the Mayans were predicting something more like a renewal or a fresh start. Could the same be true of Mexico? This special report will argue that there is a good chance of it. Some awful years are giving way to what, if managed properly, could be a prosperous period for Latin America’s second-largest economy. Big, irreversible trends, from a falling birth rate at home to rising wages in China, are starting to move in Mexico’s favour. At the same time the country’s leaders are at last starting to tackle some of the home-grown problems that have held it back. Many of the things that the world thinks it knows about Mexico are no longer true. A serially underachieving economy, repeatedly trumped by dynamic Brazil? Mexico outpaced Brazil last year and will grow twice as fast this year. Out-of-control population growth and an endless exodus to the north? Net emigration is down to zero, if not negative, and the fertility rate will soon be lower than that of the United States. Grinding poverty? Yes, but alleviated by services such as universal free health care. A raging drug war? The failure of rich countries’ anti-drugs policies means that organised crime will not go away. But Mexico’s murder rate is now falling, albeit slowly, for the first time in five years. A vast country with deeply ingrained problems and unreformed corners, Mexico could yet squander the opportunities that are coming its way. But there are signs that it is beginning to realise its potential. With luck, the dire predictions made by the Pentagon and others may turn out to be as reliable as a misread Mayan calendar.

Economist, 2012 (The Economist, “From darkness, dawn,” 11/24/12, http://www.economist.com/news/special-report/21566773-after-years-underachievement-and-rising-violence-mexico-last-beginning)

To many Mexicans it seemed like just another example of their country’s unending run of bad luck. . In 2009 the Pentagon had given warning that Mexico could become a “failed state”. Armageddon would be the icing on the cake. But it turns out that the Mayan glyphs were misunderstood that the Mayans were predicting something more like a renewal or a fresh start. Could the same be true of Mexico? there is a good chance of it. Some awful years are giving way to what, if managed properly, could be a prosperous period for Latin America’s second-largest economy. Big, irreversible trends, from a falling birth rate at home to rising wages in China, are starting to move in Mexico’s favour the country’s leaders are at last starting to tackle some of the home-grown problems that have held it back Mexico outpaced Brazil last year and will grow twice as fast this year. poverty alleviated by services such as universal free health care Mexico’s murder rate is now falling With luck, the dire predictions made by the Pentagon and others may turn out to be as reliable as a misread Mayan calendar

Irreversible trends guarantee continued Mexican economic growth

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

China’s cut-price export machine sucked billions of dollars of business out of Mexico. But now Asian wages and transport costs are rising and companies are going west. “The China factor is changing big-time,” says Jim O’Neill, the Goldman Sachs economist who in 2001 coined the “BRICs” acronym—Brazil, Russia, India and China—much to Mexico’s irritation. China is no longer as cheap as it used to be. According to HSBC, a bank, in 2000 it cost just $0.32 an hour to employ a Chinese manufacturing worker, against $1.51 for a Mexican one. By last year Chinese wages had quintupled to $1.63, whereas Mexican ones had risen only to $2.10 (see chart 1). The minimum wage in Shanghai and Qingdao is now higher than in Mexico City and Monterrey, not least because of the rocketing renminbi. Right next door Hauling goods from Asia to America is costlier too. The price of oil has trebled since the start of the century, making it more attractive to manufacture close to markets. A container can take three months to travel from China to the United States, whereas products trucked in from Mexico can take just a couple of days. AlixPartners, a consultancy, said last year that the joint effect of pay, logistics and currency fluctuations had made Mexico the world’s cheapest place to manufacture goods destined for the United States, undercutting China as well as countries such as India and Vietnam. Companies have noticed. “When you wipe away the PR and look at the real numbers, Mexico is startlingly good,” says Louise Goeser, the regional head of Siemens, a German multinational. Siemens employs 6,000 people at 13 factories and three research centres around Mexico. From its recently enlarged facility in Querétaro, in central Mexico, surge-arrestors and transformers trundle up to warehouses in the central United States in two days. Ms Goeser says that Mexican workers are well qualified as well as cheap: more engineers graduate in Mexico each year than in Germany, she points out. In Aguascalientes, not far away, Nissan is building a $2 billion factory. Together with an existing facility it will turn out a car nearly every 30 seconds. About 80% of the parts in each car are made in Mexico. By using local suppliers, the company is “armoured” against currency fluctuations, says José Luis Valls, head of Nissan Mexico. “If you are localised, you can navigate through floods and storms. If you depend on imports of components, you are very fragile.” In nearby Guanajuato Mazda and Honda are building factories; Audi is constructing a $1.3 billion plant in Puebla. This year Mexico will turn out roughly 3m vehicles, making it the world’s fourth-biggest auto exporter. When the new factories are up and running, capacity will be 4m. According to projections by HSBC, in six years’ time the United States will be more dependent on imports from Mexico than from any other country (see chart 2). Soon “Hecho en México” will become more familiar to Americans than “Made in China”.

Economist, 2012 (The Economist, “Señores, start your engines,” 11/24/12, http://www.economist.com/news/special-report/21566782-cheaper-china-and-credit-and-oil-about-start-flowing-mexico-becoming?zid=298&ah=0bc99f9da8f185b2964b6cef412227be)

now Asian wages and transport costs are rising and companies are going west The China factor is changing big-time China is no longer as cheap as it used to be The minimum wage in Shanghai and Qingdao is now higher than in Mexico City and Monterrey, not least because of the rocketing renminbi The price of oil has trebled since the start of the century, making it more attractive to manufacture close to markets the joint effect of pay, logistics and currency fluctuations had made Mexico the world’s cheapest place to manufacture goods destined for the United States When you wipe away the PR and look at the real numbers, Mexico is startlingly good Mexican workers are well qualified as well as cheap: more engineers graduate in Mexico each year than in Germany If you are localised, you can navigate through floods and storms This year Mexico will turn out roughly 3m vehicles, making it the world’s fourth-biggest auto exporter in six years’ time the United States will be more dependent on imports from Mexico than from any other country Soon “Hecho en México” will become more familiar to Americans than “Made in China”.

Manufacturing shift to Mexico locks in growth

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Mexico’s economy on a sustainable growth path Mexico’s economy was particularly hard hit during the recent recession, with a 7% drop in GDP in 2009. GDP rebounded 5.5% in 2010, and has increased by 4.3% in the first quarter of 2012. Mexico is expected to eclipse Brazil for the second year in a row. The Economist Intelligence Unit forecasts 3.7% average annual growth in the 2013-16 period. The Mexican economy is far more diversified than that of other Latin American countries, which are generally more dependent on commodities. The industrial sector accounts for about 90% of export earnings, including 20% in the high-tech sector. The automobile industry is by far the most important sector, directly employing more than 500,000 people and generating $30 billion in revenue. Virtually all major car manufacturers have operations in Mexico, surpassing Canada as dominant North American manufacturer just last year. Earlier this year, for example, Nissan announced a $2 billion car plant investment in Aguascalientes. Consumer durables, including electronics, also account for a significant portion of exports. While a number of companies have chosen to forego or delay investments in Mexico because of cartel violence, FDI remains high and growing. In the last couple of years, the key manufacturing hub of Monterrey has been hit hard by the open conflict between Los Zetas and the Gulf Cartel. Nonetheless, in 2010 alone, 95,000 jobs were created and FDI amounted to a record $2.4 billion. Tourism is also a key industry, accounting for 9% of GDP and 7.5 million direct and indirect jobs. Despite the U.S. media focus on drug violence, Mexico remains the number one destination for Americans travelling abroad, and very few tourists have been caught in the violence. Over a million Americans are permanent residents, and a record 20 million visited the country last year, up 10% from 2010.

Fournier, 2012 (Pierre, geopolitical analyst, National Bank Financial (a subsidiary of National Bank of Canada), 7/30/12, “POST-ELECTION MEXICO REMAINS A BUY,” http://c3352932.r32.cf0.rackcdn.com/pdf4100207b74a22c3c754fffc3d98edf42.pdf)

Mexico’s economy on a sustainable growth path GDP rebounded 5.5% in 2010, and has increased by 4.3% in the first quarter of 2012. Mexico is expected to eclipse Brazil for the second year in a row The Mexican economy is far more diversified than that of other Latin American countries The industrial sector accounts for about 90% of export earnings, including 20% in the high-tech sector The automobile industry is by far the most important sector Consumer durables, including electronics, also account for a significant portion of exports While a number of companies have chosen to forego or delay investments in Mexico because of cartel violence, FDI remains high and growing. in 2010 alone, 95,000 jobs were created and FDI amounted to a record $2.4 billion Despite the U.S. media focus on drug violence, Mexico remains the number one destination for Americans travelling abroad

Mexican economy’s sustainable-diversification and drug cartels can’t undermine

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

There are other ways in which it is important to distinguish Mexico from Pakistan. The government in Islamabad has done virtually nothing, and seems to care not a whit, about the country’s poor, whether in terms of their health and general nutrition, their educational opportunities, or their chances of finding work. Moreover, unlike Pakistan, Mexico is not a religiously divided country (the contest for adherents between the Catholic Church and its increasingly successful evangelical rivals is impassioned, but it is neither violent nor a challenge to the state’s authority). Nor is it a country facing a population crisis: The average age in Mexico was 17 in 1980; it is 28 today, and Mexican birthrates are in free fall. Pakistan’s birthrates, by contrast, continue to rise, which makes the chances of even a decent government providing reasonable levels of employment a long shot at best. Finally, Pakistan’s only powerful neighbor with whom it could plausibly link its economy happens to be its chief rival, India. The Mexican economy, by contrast, is now thoroughly interconnected with America’s. Which means that, barring a complete collapse of the capitalist system, Mexico’s economy will always have a floor from which to build.

Rieff, 2011 (David, Senior Fellow at the World Policy Institute at the New School for Social Research, a Fellow at the New York Institute for the Humanities at New York University, and a member of the Council on Foreign Relations, 3/17/11, “The Struggle for Mexico,” http://www.newrepublic.com/article/world/magazine/85337/mexico-calderon-clinton-obama-drug-cartels#)

it is important to distinguish Mexico from Pakistan Mexico is not a religiously divided country Nor is it a country facing a population crisis which makes the chances of even a decent government providing reasonable levels of employment The Mexican economy is now thoroughly interconnected with America’s. Which means that, barring a complete collapse of the capitalist system, Mexico’s economy will always have a floor from which to build.

Interdependence with the U.S. means it’s impossible for Mexico’s economy to collapse

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Driven by Mexico, Citigroup’s Latin-American consumer banking revenue grew 7% year-over-year in the third quarter to $2.4 billion, while the bank’s revenue in Asia was down. “We think that Mexico is extremely well-poised for growth,” Pandit said on Citigroup’s earnings conference call. “I was just there not too long ago and with the leadership change there in addition to prospects for reforms and what you are seeing on the ground—that is a high spot definitely.” Citigroup’s stock was up 4% on Monday. Not too long ago, the idea that big-shot American CEOs would be touting Mexico would have seemed unlikely. When the financial crisis hit the U.S. in 2008, FORBES predicted a “Mexican Meltdown.” The explosion of the drug war between the Mexican drug cartels and the government, coupled with the sure-to-come drop in exports to the contracting U.S. economy, seemed like it would derail Mexico again and ensure that other emerging markets like Brazil would keep passing it by. The U.S. Joint Forces Command lumped Mexico in the same category as Pakistan and worried it was becoming a failed state. Mexico’s economy was hit very hard by the financial crisis and its recession was severe, but its recovery miraculously has been even stronger. Even with the weak U.S. recovery and the ongoing drug violence, Mexico has boomed. Top officials in the Mexican government predict the country’s economic growth could reach 5% in 2012, after gross domestic product increased by 3.9% and 5.5% in the last two years. At the same time, Brazil’s economy has slowed and Mexico is starting to catch up to its regional rival. The Mexican stock market has performed well, with the benchmark IPC index up nearly 13% in 2012 and more than 20% in the last year. Pemex, the state-owned oil company that dominates the Mexican economy, recently announced deep-water oil discoveries in the Gulf of Mexico, suggesting the company might be able to slow the decline of its production.

Vardi, 2012 (Nathan, Forbes Staff, 10/15/12, “The Mexican Miracle: Despite Drug War, Economy Is Booming,” http://www.forbes.com/sites/nathanvardi/2012/10/15/the-mexican-mircale/print/)

Driven by Mexico, Citigroup’s Latin-American consumer banking revenue grew 7% year-over-year in the third quarter We think that Mexico is extremely well-poised for growth was just there not too long ago and with the leadership change there in addition to prospects for reforms and what you are seeing on the ground—that is a high spot definitely When the financial crisis hit the U.S. in 2008, FORBES predicted a “Mexican Meltdown The explosion of the drug war coupled with the sure-to-come drop in exports to the contracting U.S. economy, seemed like it would derail Mexico Mexico’s economy was hit very hard by the financial crisis and its recession was severe, but its recovery miraculously has been even stronger Even with the weak U.S. recovery and the ongoing drug violence, Mexico has boomed Mexican gross domestic product increased by 3.9% and 5.5% in the last two years The Mexican stock market has performed well, with the benchmark IPC index up nearly 13% Pemex recently announced deep-water oil discoveries in the Gulf of Mexico

Mexican economy’s super-resilient---even massive instability can’t hurt it

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

A ‘collapsed’ state, however, as postulated in the Pentagon JOE paper, suggests ‘a total vacuum of authority’, the state having become a ‘mere geographical expression’.16 Such an extreme hypothesis of Mexico disappearing like those earlier European states seems implausible for a country that currently has the world’s 14th largest economy and higher predicted growth than either the UK, Germany or the USA; that has no external threat from aggressive neighbours, which was the ‘one constant’ in the European experience according to Tilly; and does not suffer the ‘disharmony between communities’ that Rotberg says is a feature common amongst failed states.17,18 A review of the literature does not reveal why the JOE paper might have suggested criminal gangs and drug cartels as direct causes leading to state collapse. Crime and corruption tend to be described not as causes but as symptoms demonstrating failure. For example, a study for Defense Research and Development Canada attempting to build a predictive model for proximates of state failure barely mentions either.19 One of the principal scholars on the subject, Rotberg, says that in failed states, ‘corruption flourishes’ and ‘gangs and criminal syndicates assume control of the streets’, but again as effect rather than trigger.20 The Fund for Peace Failed States Index, does not use either of them as a ‘headline’ indicator, though both are used as contributory factors. This absence may reflect an assessment that numerous states suffer high levels of organised crime and corruption and nevertheless do not fail. Mandel describes the corruption and extreme violence of the Chinese Triads, Italian Mafia, Japanese Yakuza and the Russian Mob that, in some cases, has continued for centuries.21 Yet none of these countries were singled out as potential collapsed or failed states in the Pentagon’s paper. Indeed, thousands of Americans were killed in gang warfare during Prohibition and many people ‘knew or at least suspected that politicians, judges, lawyers, bankers and business concerns collected many millions of dollars from frauds, bribes and various forms of extortion’.22 Organised crime and corruption were the norm in the political, business, and judicial systems and police forces ran their own ‘rackets’ rather than enforcing the law.23 Neither the violence nor the corruption led to state failure.

Couch, 2012 (Neil, Brigadier, British Army, July 2012, “Mexico in Danger of Rapid Collapse’: Reality or Exaggeration?,” http://www.da.mod.uk/colleges/rcds/publications/seaford-house-papers/2012-seaford-house-papers/SHP-2012-Couch.pdf)

A ‘collapsed’ state suggests ‘a total vacuum of authority’, the state having become a ‘mere geographical expression’ Such an extreme hypothesis of Mexico disappearing like those earlier European states seems implausible for a country that currently has the world’s 14th largest economy and higher predicted growth than either the UK, Germany or the USA; that has no external threat from aggressive neighbours, and does not suffer the ‘disharmony between communities Crime and corruption tend to be described not as causes but as symptoms demonstrating failure a study to build a predictive model for proximates of state failure barely mentions either One of the principal scholars Rotberg, says that in failed states, ‘corruption flourishes’ and ‘gangs and criminal syndicates assume control of the streets’, but again as effect rather than trigger This absence may reflect an assessment that numerous states suffer high levels of organised crime and corruption and nevertheless do not fail Neither the violence nor the corruption led to state failure

Zero risk of Mexican collapse---best predictive models of state failure agree

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Bottom line: Despite concerns about the newly elected government, continued drug cartel violence, and the wave of resource nationalism sweeping much of Latin America, we reiterate our view that investors in Mexico and the Mexican markets will outperform. What “failed state”? In 2009-10, negative perceptions about Mexico hit an all-time high. A number of forecasters and think-tanks, including the U.S. Army’s Southern Command, predicted that Mexico was on the verge of becoming a “failed state”. In our initial country report on Mexico in March 2010 (Mexico: Too Strategic to Fail with Strong Long-Term Fundamentals”, NBF Geopolitical Research), we argued that “Mexico’s social, political and economic fundamentals are far stronger than what proponents of the ‘failed state’ thesis pretend”. Since then, the Mexican economy has outperformed most Latin American economies, and the Mexican Bolsa (up 30.5%) has outperformed most other global stock markets. In this update, we reiterate our bullish view on Mexico. We believe that: (i) The rebound in economic growth after the 2009 recession is sustainable (ii) Drug violence does not represent an existential threat to the state and that it is likely to decrease (iii) The new government will follow through on its promises to reduce PEMEX’s stronghold on the oil sector (iv) Mining companies will continue to benefit from a favourable investment climate (v) The political system will become gradually more democratic and transparent going forward. The politics of Mexico: Endemic corruption or the consolidation of democracy? The election on July 1st of Enrique Pena Nieto of the Institutional Revolutionary Party (PRI) – along with the strong showing of the PRI in congress (240 of 500 seats) – has been viewed with much scepticism. The PRI had ruled Mexico for 71 consecutive years, a period widely associated with corruption, cronyism and autocratic rule. In the short term, media headlines have been focused on the legal challenge which defeated Presidential candidate Manuel Lopez Obrador has filed with the Federal Electoral Institute (IFE). While Lopez Obrador – from the left-wing Democratic Revolution Party (PRD) – lost by more than three million votes (38.21% to 31.59%), he has formally accused the PRI of purchasing and manipulating millions of votes, and of overspending. Tens of thousands of Mexican youth have been demonstrating regularly in Mexico City to denounce the election and what they view as media bias in favour of the PRI candidate. In 2006, Lopez Obrador lost the Presidential election by 0.5%, and accusations of fraud and irregularities caused significant havoc in central Mexico. This time, however, the Federal Electoral Court’s impending ruling in September, which will likely validate Pena Nieto’s victory, is unlikely to create much disruption. The President-elect will be officially sworn in on Dec. 1st. More importantly, while a number of PRI officials will inevitably yearn for “the good old days”, Mexico’s democratic progression is unlikely to lose steam. The combined opposition – the PRD and the centre-right National Action Party (PAN), which took third place with 25.4% of the vote – holds a majority in congress. The PRI itself, which campaigned on a reformist platform, is also far less monolithic than in the past. Arguably, the Institutional Revolutionary Party (PRI) is far more institutional than revolutionary, and the expectations should be for continuity and stability. Beyond the controversy surrounding the last two Presidential elections, Mexico has achieved a successful transition from one-party rule to a credible multi-party system. Nonetheless, the new government faces a number of significant challenges. The federal government is far too dependent on oil revenues from Petróleos Mexicanos (PEMEX), and must broaden its meagre tax base, especially as the growth of the informal economy is responsible for 75% of the jobs created in the last decade. Local and state authorities are largely unaccountable for the money they spend, and along with the police and judiciary, are the source of pervasive corruption. Drug Violence: An existential threat? No challenge is greater than the violence and uncertainty resulting from the drug wars. With 55,000 dead since President Felipe Calderon (PAN) decided to declare war on the cartels in 2006 with the active support of the army, drug violence has monopolized global media coverage on Mexico. It has also cost the Mexican economy an estimated 1% of its GDP annually. While the cartels will remain a serious issue for the foreseeable future, they are unlikely to become an existential threat to the Mexican state and economy. The violence remains focused on northern border towns, and Michoacán and Guerrero states. The Central American nations of Belize, Guatemala and Honduras have double the murder rates of Mexico, and those of Brazil and Colombia are also higher. Drug-related homicides have dropped 19% in the 12 months ending June 2012. The President-elect has pledged to continue the war on the cartels, but has given no clear indications on his strategy. While negotiating an official truce is out of the question, it appears that a modus vivendi (an understanding) involving a less aggressive military posture in exchange for less cartel violence involving civilians could be sought and achieved. With the Sinaloa and Los Zetas cartels gradually eliminating their rivals, a reduction in violence between cartels and perhaps even a truce between the two top criminal gangs is also possible. Overall, the balance of risks favours a reduction of cartel violence rather than an increase.

Fournier, 12 (Pierre, geopolitical analyst, National Bank Financial (a subsidiary of National Bank of Canada), 7/30/12, “POST-ELECTION MEXICO REMAINS A BUY,” http://c3352932.r32.cf0.rackcdn.com/pdf4100207b74a22c3c754fffc3d98edf42.pdf)

Despite continued drug cartel violence investors in Mexico and the Mexican markets will outperform What “failed state”? In 10, negative perceptions about Mexico hit an all-time high U.S. Army predicted Mexico was on the verge of becoming a “failed state Mexico’s social, political and economic fundamentals are far stronger than what proponents of the ‘failed state’ thesis pretend the Mexican economy has outperformed Latin American economies The rebound in economic growth is sustainable Drug violence does not represent an existential threat to the state and it is likely to decrease The new government will follow through on its promises to reduce PEMEX’s stronghold on the oil sector Mexico’s democratic progression is unlikely to lose steam expectations should be for continuity and stability Mexico has achieved a successful transition the cartels are unlikely to become an existential threat to the Mexican state and economy violence remains focused on northern border towns an understanding) involving a less aggressive military posture in exchange for less cartel violence involving civilians could be sought and achieved a reduction in violence between cartels and even a truce between the two top criminal gangs is also possible the balance of risks favours a reduction of cartel violence rather than an increase

No failed state risk or chance of the cartels controlling the state---reject their ev from circa 2010---violence will trend down in the future, and PEMEX reforms solve now

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The evidence indicates that the Pentagon’s apocalyptic horizon-gazing was exaggeration. The conjecture may have arisen from a failure to understand the nature of the ‘war’, to paraphrase Clausewitz. The US’s inclination to classify it as an insurgency, George Bush’s judgement on the threat from failed states and assessments of Mexico’s poor progress all add up to make the Pentagon’s prognosis understandable, but nonetheless flawed. However, if Mexico is not failing, it certainly is not winning in its drug war. The flow of arms, drugs and money in and out of the country continues undiminished and the number of deaths each year continues to rise. What is surprising, therefore, is the extent to which the country confounds the predictions of theories that indicate looming weakness. The inability to provide security throughout the country and to control her borders should be expected to undermine the rule of law and thus state legitimacy, as should the corruption that causes lack of confidence in key institutions such as the police and judiciary. The scholarly work that this paper has referenced indicates that organised crime and corruption pose challenges to Mexico’s legitimacy, rule of law and institutions similar to those described in the theory of state failure. Crime and corruption threaten her economy. The media are not unfettered. The police forces may not be ‘paralysed’, but are distrusted and ineffective. The military is one of few, if not the only, institutions that retains its integrity, despite being unable to ‘secure the population from violence and fear’ across the ‘whole of its domain’. Her borders are not fully controlled. Drug barons, though not warlords, act as alternative suppliers of services, such as protection and community projects. The legal system and judicial framework are not structured to deliver justice equitably. The economy is underperforming, as is the delivery of public goods and services. However, Clausewitz, Garzón and Rotberg explain why these are not existential threats. The aim of the gangs is to make money and they use violence and corruption only to shape the environment in order to do so. They have no political agenda. Their violence is not ‘politics by other means’ nor is it directed at the regime in order to gain greater autonomy, political power or concessions. The majority of the violence is internecine, between gang members; security forces are engaged only when they interfere with the narco-traffickers’ business. In fact, it is possible the gangs would not want the state to fail. They rely on protection from compromised elements of the state and on the infrastructure and services that enable them to continue their business and which allow them to enjoy their profits. The error, therefore, lies in confusing the motives of drug gangs with those of terrorists and insurgents.

Couch, 2012 (Neil, Brigadier, British Army, July 2012, “Mexico in Danger of Rapid Collapse’: Reality or Exaggeration?,” http://www.da.mod.uk/colleges/rcds/publications/seaford-house-papers/2012-seaford-house-papers/SHP-2012-Couch.pdf)

evidence indicates the Pentagon’s apocalyptic horizon-gazing was exaggeration The US’s judgement on the threat from failed states and assessments of Mexico’s poor progress add up to make the Pentagon’s prognosis understandable, but flawed However, if Mexico is not failing it certainly is not winning in its drug war the country confounds predictions of theories that indicate looming weakness scholarly work indicates organised crime and corruption pose challenges to Mexico’s legitimacy, rule of law and institutions However these are not existential threats The aim of the gangs is to make money They have no political agenda Their violence is not ‘politics by other means’ The majority of the violence is internecine between gang members gangs would not want the state to fail They rely on protection from compromised elements of the state and on the infrastructure and services that enable them to continue their business The error lies in confusing the motives of drug gangs with those of terrorists and insurgents

No failed states impact, and it’s impossible to solve drug cartels

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

A recent Pentagon study concluded that Mexico, like Pakistan, could suffer a “wholesale collapse of civil government,” which would cause a major national security problem for the United States. The report understandably has attracted attention here and has caused alarm in Mexico, where any U.S. concerns about border security summon bitter memories. In 1848, half of what was then Mexico was lost to the United States as the result of a war, which both sides eagerly sought. And during the Mexican Revolution, the last time the United States deployed large numbers of troops on the border, General Pershing invaded Mexico in pursuit of Pancho Villa, bringing the two countries to the brink of war. Nothing on the political horizon even vaguely indicates that Mexico is on the brink of collapse. Mexico is a vigorous if tumultuous democracy. Unlike Pakistan, there are no significant insurgent challenges, and no history of coups since the Mexican Revolution nearly a century ago. Until the current global financial crisis, Mexico’s economic situation has much improved. Instead, the threat comes from the proliferation of criminal gangs profiting from the traffic in illegal drugs headed for the United States. Law enforcement efforts are hampered by corruption that extends high into Mexico’s political apparatus. Local police in the border towns simply have been out-gunned. President Calderon has ordered the army to restore order, and it has had a measure of success in killing or capturing some of the most notorious gang leaders. But Mexico’s gangs have not been reluctant to fight back, taking on the state through assassination of high-ranking officials and local terror campaigns. The violence could escalate. Mexico’s gangs could turn to large-scale terrorist bombings, as the narco traffickers did in Colombia, as a warning to authorities to back off. They could also create and finance local terrorist groups to distract authorities. And they can finance public protests and, as we have seen in Colombia, back political candidates to oppose the government’s crackdown and protect their interests. While collapse is highly unlikely, the near- and long-term trends are worrisome. With 85 percent of its exports going to the United States, Mexico is being hit hard by the sharp decline in the U.S. economy. Remittances from Mexican workers in the United States—Mexico’ second largest source of foreign exchange—are also down. Mexico wisely hedged its 2009 oil revenues, but unless oil prices again rapidly ascend, the country’s oil revenues will fall in 2010. The deteriorating security situation also directly impacts the economy. Growing violence discourages foreign investment and tourism, thereby increasing unemployment. Meanwhile, domestic drug consumption continues to increase. The Mexican Army may retake the border towns, but that will not alter the fundamental equation. The continuing demand in the United States for illegal drugs enriches and empowers the criminal cartels that provide them. The United States has also become the principal source of weapons for Mexico’s gangs. As a consequences of drugs going north, and billions of dollars and thousands of guns going south, the growing wealth and firepower of Mexico’s crime lords raises a long-term threat to the security of both countries. The deterioration of northern Mexico from crime-ridden to crime-ruled is likely to be gradual and insidious. Nominal state authority would still exist. Police would continue to deal with petty crime. Commerce would continue. Superficially, northern Mexico might appear normal—a failed state does not necessarily have to look like Somalia. But no-go areas and untouchable crime bosses protected by heavily armed private armies would point to the real locus of power. Although this situation would hardly be good news, the United States could live with it. Concerns would increase if the violence were to spread across the border into the United States.

Jenkins, 2009 (Brian Michael, Senior Advisor to the President of the RAND Corporation, 3/23/9, “Mexico: Failing State?,” http://security.nationaljournal.com/2009/03/mexico-failing-state.php)

A Pentagon study concluded Mexico could suffer a collapse of civil government which would cause a major national security problem for the U S Nothing on the political horizon even vaguely indicates Mexico is on the brink of collapse there are no significant insurgent challenges, and no history of coups the threat comes from the proliferation of criminal gangs The violence could escalate Mexico’s gangs could turn to large-scale terrorist bombings The deterioration of northern Mexico from crime-ridden to crime-ruled is likely to be gradual state authority would still exist Commerce would continue the U S could live with it

Even massive Mexican instability doesn’t get close to state collapse or spilling over to affect the U.S.

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

This notion appears to be increasingly widespread. The Joint Forces Command recently issued a study saying that Mexico — along with Pakistan — could be in danger of a rapid and sudden collapse. President Obama is considering sending National Guard troops to the Mexican border to stop the flow of drugs and violence into the United States. The opinion that Mexico is breaking down seems to be shared by much of the American news media, not to mention the Americans I meet by chance and who, at the first opportunity, ask me whether Mexico will “fall apart.” It most assuredly will not. First, let’s take a quick inventory of the problems that we don’t have. Mexico is a tolerant and secular state, without the religious tensions of Pakistan or Iraq. It is an inclusive society, without the racial hatreds of the Balkans. It has no serious prospects of regional secession or disputed territories, unlike the Middle East. Guerrilla movements have never been a real threat to the state, in stark contrast to Colombia. Most important, Mexico is a young democracy that eliminated an essentially one-party political system, controlled by the Institutional Revolutionary Party, that lasted more than 70 years. And with all its defects, the domination of the party, known as the P.R.I., never even approached the same level of virtually absolute dictatorship as that of Robert Mugabe in Zimbabwe, or even of Venezuela’s Hugo Chávez. Mexico has demonstrated an institutional continuity unique in Latin America. To be sure, it can be argued that the P.R.I. created a collective monarchy with the electoral forms of a republic. But since 2000, when the opposition National Action Party won the presidency, power has been decentralized. There is much greater independence in the executive, legislative and judicial branches of government. An autonomous Federal Electoral Institute oversees elections and a transparency law has been passed to combat corruption. We have freedom of expression, and electoral struggles between parties of the right, center and left. Our national institutions function. The army is (and long has been) subject to the civilian control of the president; the church continues to be a cohesive force; a powerful business class shows no desire to move to Miami. We have strong labor unions, good universities, important public enterprises and social programs that provide reasonable results. Thanks to all this, Mexico has demonstrated an impressive capacity to overcome crises, of which we’ve had our fair share. They include the government’s repression of the student movement of 1968; a currency devaluation in 1976; an economic crisis in 1982; the threefold disaster of 1994 with the Zapatista rebel uprising, the murder of the P.R.I. candidate for president and a devastating collapse of the peso; and the serious post-election conflicts of 2006.

Krauze, 2009 (Enrique, editor of the magazine Letras Libres and the author of “Mexico: Biography of Power,” 3/24/9, “The Mexican Evolution,” NYT, http://www.nytimes.com/2009/03/24/opinion/24krauze.html?_r=0&pagewanted=print)

ask me whether Mexico will “fall apart It most assuredly will not Mexico is tolerant and secular without religious tensions of Pakistan or Iraq It is inclusive without racial hatreds of the Balkans. It has no serious prospects of secession or disputed territories Guerrilla movements have never been a real threat to the state Mexico is a young democracy Mexico has demonstrated an institutional continuity unique in Latin America Our national institutions function The army is subject to the civilian control a powerful business class shows no desire to move to Miami Mexico has demonstrated an impressive capacity to overcome crises

Absolute zero risk of Mexican collapse---everything’s super-resilient

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The country has certainly seen a big rise in drug violence, with cartels fighting for control of major narcotics shipment routes -- especially at the U.S. border and near major seaports and highways -- and branching into kidnapping, extortion and other illicit activities. Ciudad Juarez, in particular, has been the scene of major battles between two crime organizations and accounted for nearly a third of drug-linked deaths last year. But the violence is not as widespread or as random as it may appear. Though civilians with no evident ties to the drug trade have been killed in the crossfire and occasionally targeted, drug-related deaths are concentrated among the traffickers. (Deaths among military and police personnel are an estimated 7 percent of the total.) A major reshuffling of leaders and alliances is occurring among the top organized crime groups, and, partly because of government efforts to disrupt their activities, violence has jumped as former allies battle each other. The bloodshed is also geographically concentrated in key trafficking corridors, notably in the states of Sinaloa, Chihuahua and Tamaulipas. While the violence underscores weaknesses in the government's ability to maintain security in parts of the country, organized crime is not threatening to take over the federal government. Mexico is not turning into a failed state.

Selee, 2010 (Andrew, the director of the Mexico Institute at the Woodrow Wilson International Center for Scholars; David Shirk, fellow at the center and an associate professor at the University of San Diego; and Eric Olson, senior adviser at the center, 3/28/10, “Five myths about Mexico's drug war,” http://www.washingtonpost.com/wp-dyn/content/article/2010/03/26/AR2010032602226_pf.html)

The country has seen a big rise in drug violence But the violence is not as widespread as it may appear drug-related deaths are concentrated among the traffickers because of government efforts to disrupt their activities, violence has jumped as former allies battle each other The bloodshed is geographically concentrated in key trafficking corridors organized crime is not threatening to take over the federal government Mexico is not turning into a failed state

Mexico won’t turn into a failed state

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

All of this would seem to suggest that the pessimism of the U.S. military back in 2008 was justified—that Mexico is in fact a failed, or at least a failing, state. And yet, as grave and as horrifying as all this is, it’s worth pausing to ask whether the label “failed state” is really the most accurate, or useful, way to think about our neighbor to the south. When people talk about Mexico as a failed state, what they seem to be discussing is not the Mexico of today but the Colombia of 20 years ago. (Generals, apparently, are not the only people always well-prepared to fight the last war.) From the 1980s to the early ’90s, the Medellín and, to a lesser extent, the Cali cartel posed a genuine threat to the Colombian state. To be fair, some of the similarities between Colombia and Mexico are startling, most notably that Medellín then was what Juárez is today—the city with the highest murder rate in the world. But it is also important to consider the differences. The Colombian narco-traffickers had complicated but extremely important links with both the left-wing FARC guerrillas and the right-wing paramilitaries. The result of these connections was that the leaders of the cartels, most famously, Pablo Escobar Gaviria of the Medellín cartel—in 1989, Forbes magazine described him as the seventh-richest man in the world—became important actors on the political and military fronts of a two- and sometimes three-sided, low-intensity insurgency that verged on civil war. Escobar really was like a character out of a Gabriel García Márquez novel, fascinated by power and with political ambitions from the start. In 1982, he had been elected on the Colombian Liberal Party list as an alternate representative from Medellín to Congress. He never gave up his ambition to play a political role, advertising it to the media even in the last year of his life, as government forces were hunting him down. In contrast, while Mexicans are profoundly divided about how to respond to the cartels, no one I have spoken with has ever suggested there is credible evidence that any of the cartel leaders have Escobar-like ambitions—or any national political agenda. This emphatically does not mean that what the drug lords want is not terrible enough. How else can one describe their demand that the Mexican state give them a free hand to run their domestic production and cross-border smuggling operations, as well as to go after their real and supposed enemies, and, indeed, anyone who gets in their way or who is just in the wrong place at the wrong time, with complete impunity? To do this, the cartels have not just bribed enormous numbers of policemen and local officials, but, in at least one case, helped elect someone to the Mexican Congress. Still, to say that the cartels represent a fundamental challenge to the Mexican government as a whole—a rebellion on the scale of what took place in Colombia or what is taking place now in Pakistan—would be hyperbole. Indeed, the Mexican state is in important ways both stronger and more successful than many Americans seem to realize. In the area of public health, and, more broadly, in poverty reduction, Mexico has far more to teach than to learn. The country is generally thought to have handled the H1N1 panic better than many rich countries. And the Mexican government’s social-assistance program, now known as Oportunidades—which skillfully and creatively uses a range of assistance, from conditional cash transfers to health and nutritional support—has been enormously effective in changing the status of Mexican women (who are the program’s recipients), improving the health of children, and lifting large numbers of people out of poverty. Oportunidades’s global reputation is such that Michael Bloomberg gave the okay for an Oportunidades pilot program in New York City. The Ministry of Social Development (SEDESOL in its Spanish acronym) is a model of what such an agency should be, and development experts around the world speak of it with a respect sometimes bordering on awe. Significantly, the corruption that bedevils Mexican law enforcement has no equivalent whatsoever in the social sphere, and, despite the drug crisis, SEDESOL goes from strength to strength.

Rieff, 2011 (David, Senior Fellow at the World Policy Institute at the New School for Social Research, a Fellow at the New York Institute for the Humanities at New York University, and a member of the Council on Foreign Relations, 3/17/11, “The Struggle for Mexico,” http://www.newrepublic.com/article/world/magazine/85337/mexico-calderon-clinton-obama-drug-cartels#)

it’s worth pausing to ask whether the label “failed state” is accurate, or useful to think about our neighbor to the south When people talk about Mexico as a failed state they seem to be discussing not the Mexico of today but the Colombia of 20 years ago consider the differences Colombian traffickers became important actors on the political and military fronts no one has ever suggested there is credible evidence that any of the cartel leaders have ambitions—or any national political agenda to say the cartels represent a fundamental challenge to the Mexican government as a whole would be hyperbole the Mexican state is stronger and more successful than Americans realize the Mexican government’s social-assistance program has been enormously effective in lifting large numbers of people out of poverty corruption that bedevils Mexican law enforcement has no equivalent whatsoever in the social sphere

No Mexico state failure ever

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

This chapter will illuminate how these six variables have defined the nature of the bilateral relationship and its consequent impact on Mexican domestic policy and politics. These drivers explain Mexico’s impressive degree of political autonomy during much of the twentieth century despite sharing a 2,000-mile border with a superpower; the narrowing of this autonomy in the last quarter century; and the still significant freedom of action the bilateral relationship affords Mexico. They explain why Mexico almost always bends to U.S. demands related to national security and follows the U.S. lead on economic policy, why Mexican vulnerability to U.S. pressure varies depending on the issue at hand and thus why Mexico’s democratic transition has thus been a largely Mexican affair while its narcotics control policies have been subject to significant U.S. influence. The chapter concludes with an analysis of how these variables are apt to mold the future of the bilateral relationship and its likely impact on Mexican domestic affairs. The Drivers Power and geography One of the most important sources of Mexico’s historic vulnerability to U.S. power is its geographic position on the southern (and previously western) border of the United States. In the years after Mexico’s 1821 independence, an insecure and expansionist United States facing the intrigues of European powers on its borders was an active player in Mexican domestic affairs to counter British influence in a country characterized by persistent political instability. Twenty-five years later, the United States initiated a war that deprived Mexico of half of its territory and transformed the United States into a continental power. For most of the remainder of the nineteenth century, U.S. intervention in Mexican affairs declined markedly owing to internal U.S. challenges (the Civil War and Reconstruction) and the rise of a stable, relatively pro-U.S. government in Mexico. During the early twentieth century, however, Mexican political instability again invited U.S. intervention in a failed attempt to steer the Mexican Revolution in a direction amenable to U.S. interests. Failing that, the United States repeatedly exploited its military and economic power to force Mexico to adopt policies more “acceptable” to the United States. The oft-quoted aphorism attributed to former Mexican President Porfirio Diaz, “Poor Mexico, so far from God and close to the United States,” conveys these real historic limits to Mexico’s sovereign autonomy created by a border shared with a great power. Yet geography has also constrained the freedom of U.S. policy action. Mexico’s position on the U.S. southern border means that the overriding U.S. interest in Mexico is ultimately to have a stable ally on its frontier. The importance of this fact was evident during the early nineteenth century and was forcefully underlined during World War I when Mexican political instability and flirtation with U.S. adversaries created the threat of a possible attack on the United States through Mexican territory. In the aftermath of that war, concerns about foreign adversaries attacking the United States through Mexico declined, but the approach of a second world war rekindled U.S. strategic concerns about Mexico. In this circumstance the United States acquiesced to the 1938 nationalization of the Mexican petroleum industry, a clear violation of the sanctity of private property rights for which the United States had intervened in the past. Put simply, having an ally in such a strategically important country trumped the rights of U.S. property owners. During the Cold War when the United States feared that developing nations might fall like dominos to communist influence, Mexico was the “last domino” in Latin America. This strategic reality motivated a U.S. willingness to accept Mexico’s authoritarian politics and closed economy for forty years, practices that had previously motivated U.S. involvement in Mexican affairs, in exchange for a stable, anti-communist ally to the south. Mexico repeatedly exploited this consequence of geography to carve out an autonomous policy-making space. Throughout the Cold War, this enabled an independent foreign policy that was regularly at odds with U.S. preferences. For a revolutionary regime following increasingly conservative economic and social policies at home, a foreign policy motivated by the revolutionary principles of anti-imperialism, social welfare, and non-intervention was an effective tool for legitimating the regime. This inspired a series of international positions in direct opposition to United States policy. Most notably, Mexico sustained diplomatic ties with the Soviet Union when that was frowned upon in Washington; it recognized the Castro regime in Cuba and persistently opposed its political and economic isolation; it vocally opposed U.S.-sponsored coups and other forms of intervention in Latin America; and it actively supported the 1970s socialist government in Chile. The United States tolerated this opposition with an eye to strengthening a stable, essentially pro-U.S. regime on the U.S. frontier, but only as long as Mexican action did not pose a real obstacle to the U.S. capacity to protect its strategic interests. The lone exception to this Cold War rule occurred during the 1980s in Central America when the United States concluded that Mexican involvement directly impeded the promotion of U.S. strategic aims in the region. This circumstance provoked two years of very tense bilateral relations, but the United States ultimately concluded that a strategy designed to outmaneuver Mexico was more likely to produce a positive outcome than further pressure on Mexico to abandon its independent and domestically popular policy stance. Yet when the United States perceives a threat to its national security emanating from Mexico or when Mexican stability appears to be at risk, Mexico’s autonomy narrows once again. Following the September 11, 2001 terrorist attacks on the World Trade Center and the Pentagon, Mexican policy autonomy evaporated leading to a series of actions that responded perfectly to U.S. national interests. Mexico’s current difficulties with drug trafficking organizations and the threat they represent to stability in Mexico have also hampered its policy freedom. The strategic factor in the bilateral relationship thus trumps other policy concerns. When this involves the possibility of an attack on the U.S. homeland or political instability in Mexico, it sharply increases U.S. influence in Mexican affairs, but when it involves protecting an established, stable ally in Mexico, U.S. influence declines sharply.

Starr, 2010 (Pamela K., Director, U.S.-Mexico Network, Associate Professor (NTT), University Fellow, Center on Public Diplomacy, University of Southern California, October 2010, http://college.usc.edu/usmexnet/wp-content/uploads/2010/10/Camp-Oxford-paper-final.doc)

these six variables have defined the nature of the bilateral relationship and its impact on Mexican domestic policy They explain why Mexico almost always bends to U.S. demands related to national security its narcotics control policies have been subject to significant U.S. influence One of the most important sources of Mexico’s historic vulnerability to U.S. power is its geographic position the overriding U.S. interest in Mexico is ultimately to have a stable ally on its frontier Mexico was the “last domino” in Latin America The U S tolerated opposition only as long as Mexican action did not pose a real obstacle to the U.S. capacity to protect its strategic interests Yet when the U S perceives a threat to its national security emanating from Mexico or when Mexican stability appears to be at risk Mexico’s autonomy narrows Following September 11 Mexican policy autonomy evaporated leading to a series of actions that responded perfectly to U.S. national interests Mexico’s difficulties with drug trafficking have hampered its policy freedom. The strategic factor in the bilateral relationship trumps other policy concerns When this involves the possibility of an attack on the U.S. homeland or political instability in Mexico it sharply increases U.S. influence in Mexican affairs

The U.S. will never let Mexican instability threaten strategic interests---they always comply with pressure on security issues

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Northwestern (NHSI)

Case Negatives

2013

The intermestic quality of the bilateral relationship has made nationalism a much less effective barrier against U.S. meddling in Mexican internal affairs. From drugs to jobs, health care, environmental protection, and even the ethnic makeup of U.S. society, many U.S. domestic policy challenges are now influenced by developments in Mexico. This situation unsurprisingly creates an incentive for U.S. politicians to demand that Mexico adjust its domestic policy in a manner that might help resolve these U.S. policy problems. This incentive is particularly pronounced in those divisions of the executive branch responsible for domestic problems with clear international drivers, such as the Drug Enforcement Administration, and in the U.S. Congress where political survival depends on resolving local concerns that have international drivers. The domestic ¬policy focus of these actors, meanwhile, limits their sensitivity to the self-restraining influence that Mexican nationalism has elsewhere in the U.S. government. It is the U.S. Congress, however, that has the greatest capacity to influence Mexican policy and politics because of its role in making and overseeing U.S. foreign policy. For example, it was the U.S. Congress that established the drug policy certification process that from 1987 to 2001 threatened foreign governments with economic sanctions for insufficient cooperation with U.S. counter-narcotics policies. The Congress elicited a number of policy concessions from Mexico in exchange for its 1993 authorization of NAFTA, and it attempted to condition the 1995 U.S. financial rescue package for Mexico on changes to its immigration, drug, and economic reform policies. And the very limited U.S. government demands for increased democracy in Mexico during the 1980s and 1990s emanated almost exclusively from the U.S. Congress. Congress has thus attempted to force Mexico to modify its domestic behavior to a much greater degree than other members of the U.S. government in large measure because its incentive to self-restrain is less pronounced. And congressional pressure has proven to be most effective when it has control over something Mexico wants, such as the approval of NAFTA under Salinas, immigration reform under Fox, and authorization of counter-narcotics funding under Calderón. Case Studies The interplay among these six drivers has determined the relative degree of U.S. influence in Mexican policy and politics for decades and continues to do so. Three basic axioms about their interplay and resulting impact on Mexico’s domestic policy-making autonomy apply: 1) Mexican autonomy is most narrow when the United States perceives that developments in Mexico directly threaten its national security and when Mexico has tied its own policy-making hands; 2) Mexican domestic policy autonomy will never again be as wide as it was in the mid-twentieth century, but it remains significant when U.S. national security is not at risk, Mexican nationalism is potent, and the U.S. Congress is marginalized; and 3) Mexican autonomy is often constrained when the U.S. Congress plays a central bilateral policy role, especially when Mexico needs congressional cooperation to achieve a policy objective. These basic rules for the reach of U.S. influence in Mexican affairs are best illuminated by five cases that exemplify each axiom in turn.

Starr, 2010 (Pamela K., Director, U.S.-Mexico Network, Associate Professor (NTT), University Fellow, Center on Public Diplomacy, University of Southern California, October 2010, http://college.usc.edu/usmexnet/wp-content/uploads/2010/10/Camp-Oxford-paper-final.doc)

From drugs to jobs, health care, environmental protection, and even the ethnic makeup of U.S. society, U.S. domestic policy challenges are now influenced by developments in Mexico This creates an incentive for U.S. politicians to demand that Mexico adjust its domestic policy in a manner that might help resolve these U.S. policy problems Congress has the greatest capacity to influence Mexican policy and politics because of its role in making and overseeing U.S. foreign policy Congress has attempted to force Mexico to modify its domestic behavior to a much greater degree congressional pressure has proven to be most effective when it has control over something Mexico wants Mexican autonomy is most narrow when the U S perceives that developments in Mexico directly threaten its national security

The U.S. will always just force Mexico to do whatever we need to maintain heg-this cites the factors from their evidence

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Northwestern (NHSI)

Case Negatives

2013

Mexico’s room for policy maneuver is most narrow in two very distinct sets of circumstances – when a threat to U.S. national security emerges in Mexico, erases U.S. self-restraint, and lays bare the power asymmetry in the relationship, and when Mexico willingly ties its own policy-making hands. Under these circumstances, there is no significant bilateral tension despite considerable U.S. influence in Mexican affairs because Mexico fully understands and accepts the absolute necessity for cooperation. The aftermath of the terrorist attacks on the World Trade Center and the Pentagon on September 11, 2001, demonstrates the first case and post-NAFTA economic policy making illuminates the second. Following the 9/11 attacks, the United States immediately circled the wagons to prevent a possible follow-up attack from across its northern or southern border. As noted above, dramatically increased security at the border significantly constrained cross-border trade for weeks, making clear the depth of U.S. alarm. In this context, Mexico quickly took steps that demonstrated its willingness to cooperate fully with U.S. security concerns. It deployed 18,000 troops to protect its air and sea ports despite concerns that this might make Mexico vulnerable to anti-U.S. terrorist attacks; it provided intelligence on “special interest aliens” of particular concern to the United States; and it agreed to a “Smart Border Agreement” designed to protect the United States from possible terrorist attacks emanating from Mexican territory without excessively restricting the cross-border flow of goods. Despite a historic taboo against overt security cooperation with the United States and despite Mexican reservations about the U.S. perception of risk or the need for such a significant Mexican investment in counterterrorism operations, the country cooperated without question. Mexican officials understood that they were “obliged to respond to U.S. security demands” of this sort.

Starr, 2010 (Pamela K., Director, U.S.-Mexico Network, Associate Professor (NTT), University Fellow, Center on Public Diplomacy, University of Southern California, October 2010, http://college.usc.edu/usmexnet/wp-content/uploads/2010/10/Camp-Oxford-paper-final.doc)

Mexico’s room for policy maneuver is most narrow when a threat to U.S. national security emerges in Mexico erases U.S. self-restraint, and lays bare the power asymmetry in the relationship Under these circumstances there is no significant bilateral tension despite considerable U.S. influence in Mexican affairs because Mexico fully understands and accepts the absolute necessity for cooperation Following 9/11 the U S immediately circled the wagons dramatically increased security at the border significantly constrained cross-border trade Mexico quickly took steps that demonstrated its willingness to cooperate fully with U.S. security concerns Despite a historic taboo against overt security cooperation with the U S the country cooperated without question Mexican officials understood that they were obliged to respond to U.S. security demands

If any actual threat to U.S. security emerges, we’ll force Mexico to comply, and they won’t backlash

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Northwestern (NHSI)

Case Negatives

2013

A newly released White House report on the U.S. border with Mexico highlights the Obama administration's strategic shift toward forgoing a closer working relationship with its southern neighbor. This, despite recent restrictions by Enrique Peña Nieto's government on who American intelligence services can contact in Mexico. The White House's 2013 National Southwest Border Counternarcotics Strategy illustrated nine points that focus on interdiction, tackling drug cartels along the border, halting money laundering, building up stronger communities and strengthening ties between the two nations in terms of counternarcotics. “The U.S.-Mexican bilateral relationship continues to grow based on strong, multi-layered institutional ties,” the report stated. “Based on principles of shared responsibility, mutual trust, and respect for sovereign independence, the two countries’ efforts have built confidence that continues to transform and strengthen the bilateral relationship in 2013 and beyond.” While the U.S. report touts a need for greater cooperation, new Mexican security policies could hamper that. A recent decision by the Mexican government has ordered a halt in direct communications between American intelligence agencies and their counterparts south of the border. Now instead of directly consulting local law enforcement, agencies like the DEA and FBI will have to contact Mexico's Interior Ministry before being passed along through the proper channels. Intelligence sharing, however, was a major talking point when President Barack Obama met with his Mexican counterpart back in May. Despite scarce details about the meeting, the two leaders discussed border security and the use of drones along the 1,954-mile shared border. Peña Nieto downplayed the notion that the new, more centralized arrangement would damage its security partnership with the United States. He said Obama agreed during their private meeting earlier in the day to "cooperate on the basis of mutual respect" to promote an efficient and effective strategy. "I think the U.S. government wants to make sure that Peña Nieto is on the same page as Obama, that he wants to pursue the cartels as consistently and aggressively as [former Mexican President] Calderón did during his presidency," Alex Sanchez, a security analyst at the Council on Hemispheric Affairs, told ABC News. Even as the Obama administration hopes that Peña Nieto will continue to go on the offensive against the drug cartels in Mexico, the report suggests a more humanitarian approach to the drug war. Besides counternarcotics efforts, a solid portion of the report concerns community building measures along the border, ways to deal with substance abuse and violence, as well as health and education programs. “The crime and breakdown in public health and safety that affect many border communities has a close nexus with substance use —including abuse of alcohol and other drugs— can have a far-reaching effect on the resilience of communities,” the report stated. “Heavily Hispanic communities along the border have been particularly hard hit.” The report’s focus on community building seems to go along with Peña Nieto’s strategy in combating the drug war. Instead of the “kingpin” approach that his predecessor Felipe Calderón took, which focused on apprehending or killing high-ranking cartel members, Peña Nieto has moved to a plan to reduce the levels of violence in the country and bolster trust of law enforcement among the populace. The report has some analysts hopeful that there will be better working relations between the U.S. and Mexico, especially in light of the new rules concerning U.S. intelligence agencies. “The election of Peña Nieto sparked vocal concerns among U.S. political leaders over his stated desire to move priorities away from arrests and drug seizures, and towards violence reduction, and there have also been reports of tensions between the incoming government and U.S. officials over the level of U.S. involvement in Mexican security policies,” the Latin American intelligence website Insight Crime stated. “However, the U.S. strategy displays no sign of this friction, only expressing a desire to increase cooperation, which despite the public murmuring is likely to be the case.”

FNL 7/5 [July 5, 2013. Fox News Latino. “U.S. Wants More Intelligence Cooperation With Mexico, White House Report States” http://latino.foxnews.com/latino/news/2013/07/05/us-wants-more-intelligence-cooperation-with-mexico-white-house-report-states/#ixzz2aos85oqW]

A newly released White House report on the U.S. border with Mexico highlights the Obama administration's strategic shift toward forgoing a closer working relationship in Mexico The White House illustrated nine points that focus on tackling drug cartels halting money laundering building up stronger communities and strengthening ties between the two nations in terms of counternarcotics. The U.S.-Mexican bilateral relationship continues to grow based on strong, multi-layered institutional ties, Based on principles of shared responsibility, mutual trust, and respect for sovereign independence, the two countries’ efforts have built confidence that continues to transform and strengthen the bilateral relationship Intelligence sharing was a major talking point when Obama met the two leaders discussed border security Nieto downplayed the notion that the new arrangement would damage its security partnership with the United States. Obama agreed to "cooperate on the basis of mutual respect" Besides counternarcotics efforts, the report concerns community building measures along the border ways to deal with substance abuse and violence, as well as health and education programs. The focus on community building seems to go along Nieto’s strategy Instead of the “kingpin” approach Nieto has moved to a plan to reduce the levels of violence and bolster trust there will be better working relations between the U.S. and Mexico, especially in light of the new rules concerning U.S. intelligence agencies the U.S. strategy displays no sign of friction, only expressing a desire to increase cooperation, which despite the public murmuring is likely to be the case.”

Drug cooperation is high now and will continue to grow – Nieto and Obama’s meetings

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Northwestern (NHSI)

Case Negatives

2013

Security cooperation with Mexico is as good as it has ever been with the new administration of President Enrique Pena Nieto, U.S. Homeland Security Secretary Janet Napolitano said Tuesday. Napolitano, who is leaving her post to head the University of California, met with Mexican Interior Secretary Miguel Angel Osorio Chong in this border city and announced plans for a bi-national security communications network and coordinated patrols between U.S. Border Patrol and Mexico’s Federal Police. No details of the programs were released. “What we have been working on is improved intelligence sharing between our countries on a real-time basis and making sure as, Secretary Osorio Chong said, that the gaps are filled and they are filled in a timely way,” Napolitano said. “But the emphasis on intel sharing, information sharing, making risk assessments that address the risk both countries face ... those things I think are continuing and are even stronger than they have been.” Napolitano’s visit comes one week after the capture of alleged Zeta leader Miguel Angel Trevino Morales, which appeared to be the result of U.S.-Mexico intelligence sharing. Mexico would not say what role the U.S. played in the capture, but the arrest and killing of many top capos has come with intelligence from U.S. law enforcement. Trevino Morales, considered among the most violent of Mexico’s drug lords, was caught July 15 by Mexican marines along with two others on a dirt road outside Nuevo Laredo, across the border from Laredo, Texas. It was a significant arrest for Pena Nieto, whose administration has been at pains to show it is not softening the pursuit of organized crime since he took office Dec. 1. His predecessor, Felipe Calderon, was repeatedly lauded by the U.S. for unprecedented cooperation between the two countries as he led an aggressive offensive against Mexico’s drug cartels. The Pena Nieto administration in April announced that contact for U.S. law enforcement would go through a “single door,” Osorio Chong’s office, signaling an end to direct sharing of resources and intelligence among law enforcement of both nations. U.S. Rep. Henry Cuellar, a Democrat from Laredo, said Tuesday that he had congratulated Osorio Chong following Trevino Morales’ arrest and called it the latest sign of cooperation. “The U.S. has helped provide for a while intelligence to make sure that they’re successful in reaching targets,” Cuellar said. The meetings took place just inside Mexico at the end of an international bridge linking Matamoros and Brownsville, Texas. Security was heavy at both ends of the bridge, with dog teams inspecting outbound cars on the Brownsville side and soldiers and state and federal police canvassing the bridge on the Mexican side. Napolitano was scheduled to fly on to Mexico City for meetings with Pena Nieto’s Cabinet. It will likely be her last visit to Mexico as homeland security secretary since she announced earlier this month that she will be leaving the post.

AP 7/23 [July 23, 2013. Associated Press. “DHS secretary discusses cooperation with Mexican domestic security chief at border meeting” http://articles.washingtonpost.com/2013-07-23/world/40859585_1_mexico-city-u-s-border-patrol-u-s-rep]

Security cooperation with Mexico is as good as it has ever been with the new administration of Nieto .S. Homeland Security Secretary Napolitano met with Mexican Interior Secretary Chong and announced plans for a bi-national security communications network and coordinated patrols we have been working on is improved intelligence sharing on a real-time basis and making Chong said that the gaps are filled the emphasis on , information sharing, making risk assessments that address the risk both countries face those things are continuing and are even stronger than they have been The Nieto administration announced that contact for U.S. law enforcement would go through a “single door,” Rep Cuellar congratulated Chong following Morales’ arrest and called it the latest sign of cooperation.

Security cooperation is as good as it’s ever been – new communication methods

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Northwestern (NHSI)

Case Negatives

2013

The White House's newly released 2013 National Southwest Border Counternarcotics Strategy continues the Obama administration's shift towards training, institution building, and civil society investment, and calls for deepening cooperation between the two countries, despite recent tensions. The report [pdf] describes nine strategic objectives, which focus on improving interdiction of drugs, arms and cash, and efforts to tackle money laundering, dismantling drug trafficking organizations operating in the border region, developing "strong and resilient" communities, and enhancing bilateral counternarcotics cooperation. The plan reiterates the US's refocusing of its Merida initiative priorities away from providing security equipment and towards building stronger judicial institutions, training and technical assistance for law enforcement, and increased support for civil society organizations working in the rule of law and human rights. It also sees the broadening of the initiative to include assistance to local state level authorities instead of just working on the Federal level. In fitting with the Obama government's aim of moving to a more humanistic counternarcotics policy, there are also plans to strengthen communities in the border region, with resources to be dedicated to tackling substance abuse and violence through health and education programs. The report also contains a particular focus on increased intelligence sharing between the United States and Mexico, with the El Paso Intelligence Center (EPIC) slated to become a "key node" for intelligence. The White House strategy report contains few surprises, and is clearly based on Obama's drift away from policies focused almost entirely on security to include broader social issues that fuel organized crime and the drug trade. One striking aspect is the continued commitment to close cooperation with Mexico. This section of the report displays no hint of the rhetorical bluster that has surrounded bilateral debate over new Mexican President Enrique Peña Nieto's security policies. The election of Peña Nieto sparked vocal concerns among US political leaders over his stated desire to move priorities away from arrests and drug seizures, and towards violence reduction, and there have also been reports of tensions between the incoming government and US officials over the level of US involvement in Mexican security policies. However, the US strategy displays no sign of this friction, only expressing a desire to increase cooperation, which despite the public murmurings is likely to be the case.

Barget 7/3 [July 3, 2013. James Bargent is a freelance journalist based in Colombia. “2013 US Southwest Border Strategy Calls for More Cooperation with Mexico” http://www.insightcrime.org/news-briefs/2013-us-southwest-border-strategy-calls-for-more-cooperation-with-mexico]

The White House's Counternarcotics Strategy continues the Obama administration's shift towards training, institution building, and civil society investment, and calls for deepening cooperation between the two countries, The report describes nine strategic objectives which focus on improving interdiction of drugs, arms and cash, and efforts to tackle money laundering, dismantling drug trafficking organizations operating in the border region, developing "strong and resilient" communities, and enhancing bilateral counternarcotics cooperation The plan reiterates the US's refocusing of its Merida initiative wards building stronger judicial institutions, training and technical assistance for law enforcement, n fitting with the Obama government's aim of moving to a more humanistic counternarcotics policy, there are also plans to strengthen communities in the border region with resources to be dedicated to tackling substance abuse and violence through health and education programs. The report also contains a particular focus on increased intelligence sharing between the United States and Mexico, with EPIC) slated to become a "key node" for intelligence. The White House strategy contains continued commitment to close cooperation with Mexico. the US strategy displays no sign of friction, only expressing a desire to increase cooperation, which despite the public murmurings is likely to be the case.

New strategic objectives heighten US-Mexico drug cooperation now

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Case Negatives

2013

While many in the press speculate about who will emerge as Trevino's successor, we need to recognize that taking out cartel leaders is a little like playing whack-a-mole. Trevino moved into power in October 2012 when Heriberto "The Executioner" Lazcano was killed by Mexican authorities. Eliminating the personnel is unlikely to solve the problem; eliminating the processes they use to make and launder their money is more promising. That perspective doesn't get enough attention. Not from media, much less the Mexican and the U.S. governments. In Congress, it's a bipartisan effort of denial. "We seem to be completely blind to the danger of economic injury caused by the transnational criminal organizations," said Cameron Holmes, director of the Southwest Border Anti-Money Laundering Alliance. "We're just not even paying attention to it." Voices like Holmes stress that Trevino was one player, a principal in a transnational criminal organization. And like any enterprise, the motivation is money. Holmes knows something about that, too. He authored the money-laundering statutes and led the prosecution in Arizona that allowed the state to eventually settle for $94 million with Western Union. The charge was that the company was being used by drug lords for complicated money transfers to shuffle money across the border. But that was several cartel business models ago. Holmes stresses the nimble nature of drug traffickers, who are savvy to emerging technology and adept at using new mechanisms like front-loaded bankcards. Taking out leaders while leaving these operations in place accomplishes little. Still, Holmes would like to see more more Mexican narcotraffickers extradited to the U.S., where better money-laundering laws are in place and the courts and law enforcement are much less corrupt. Left to be seen is how closely Mexico's new president is willing to work with the U.S. government on such measures. Trevino had a $5 million reward on his head from the northern side of the border too, where he had been indicted for money-laundering and drug trafficking. But it's safe to say that, in effect, both nations have been bilaterally complicit in their unwillingness to devote the necessary forces against drug enterprises like Los Zetas, or any of their rivals. Taking drug lords out is all well and good. (And it would be nice to see Joaquin "El Chapo" Guzman, leader of the Sinaloa Cartel, be the next one bagged.) But we will not have won until they are put out of business.

Sanchez 7/19 [July 19, 2013. Mary Sanchez is an opinion-page columnist for The Kansas City Star. “Taking out drug lords is nice, but we need more than perp walks” http://www.chicagotribune.com/news/opinion/sns-201307191200--tms--msanchezctnms-a20130719-20130719,0,5645812.column]

taking out cartel leaders is a little like playing whack-a-mole eliminating the processes they use to make and launder their money is promising hat perspective doesn't get enough attention from the U.S. governments. In Congress, it's a bipartisan effort of denial. We seem to be completely blind We're just not even paying attention to it Taking out leaders while leaving these operations in place accomplishes little Left to be seen is how closely Mexico's new president is willing to work with the U.S. government on such measure both nations have been bilaterally complicit in their unwillingness to devote the necessary forces against drug enterprises like Los Zetas, or any of their rivals.

Congress isn’t concerned about drugs – no action on either side

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The bottom is line is that Los Zetas is a transnational criminal/terrorist organization that has spread terror up and down Mexico and Central America and continues to pose a serious, if often overlooked, threat to U.S. national security. Treviño’s arrest represents the first big success against a key Mexican crime figure for President Peña Nieto. And while Peña Nieto’s administration has sought to play down the costs and consequences of the drug war, the violence continues to be a major national crisis and a challenge for U.S.–Mexican relations. The force responsible for tracking and capturing Treviño was Mexico’s equivalent of the Marine Corps, a military strike force that has worked closely with U.S. military trainers. U.S. intelligence assets may also have played an important, if undisclosed, role in the arrest. Washington will likely request Treviño’s extradition to the U.S. Despite recent friction, high-level officials from Mexico and the U.S. continue to coordinate counter-drug activity in the spirit of the Merida Initiative. With the domestic focus on immigration reform and border security high on the congressional agenda, it is easy to overlook the importance of strong cross-border cooperation, intelligence sharing, and extraditions of Mexican criminals to the U.S. in order to bring to justice deadly desperados such as Treviño and respond to the threats posed by transnational criminal organizations such as Los Zetas.

Walser 7/18 [July 18, 2013. Ray Walser, a veteran Foreign Service officer, is a Senior Policy Analyst specializing in Latin America at The Heritage Foundation. “Arrest of Notorious Zetas Leader Built on U.S.–Mexican Cooperation” http://blog.heritage.org/2013/07/18/arrest-of-notorious-zetas-leader-built-on-u-s-mexican-cooperation/]

Los Zetas is a transnational criminal/terrorist organization that has spread terror up and down Mexico and Central America and continues to pose a serious, if often overlooked, threat to U.S. national security violence continues to be a major national crisis and a challenge for U.S.–Mexican relations. Mexico’s equivalent of the Marine Corps, has worked closely with U.S. military trainers U.S. intelligence assets may also have played an important role Despite recent friction, high-level officials from Mexico and the U.S. continue to coordinate counter-drug activity in the spirit of the Merida Initiative With the domestic focus on immigration reform and border security high it is easy to overlook the importance of strong cross-border cooperation and respond to the threats posed by transnational criminal organizations

Despite importance, counter-drug activity is overlooked by officials

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The new administration has shifted priorities away from the U.S.-backed strategy of arresting kingpins, which sparked an unprecedented level of violence among the cartels, and toward an emphasis on prevention and keeping Mexico’s streets safe and calm, Mexican authorities said. Some U.S. officials fear the coming of an unofficial truce with cartel leaders. The Mexicans see it otherwise. “The objective of fighting organized crime is not in conflict with achieving peace,” said Eduardo Medina-Mora, Mexico’s ambassador to the United States. Two weeks after Peña Nieto assumed office Dec. 1, the new president sent his top five security officials to an unusual meeting at the U.S. Embassy in Mexico City. The new attorney general and interior minister sat in silence next to the new leaders of the army, navy and Mexican intelligence agency. Also at the Dec. 15 meeting were representatives from the U.S. Drug Enforcement Administration (DEA), the CIA, the FBI, the Office of the Director of National Intelligence and other U.S. agencies charged with helping Mexico destroy the drug cartels that had besieged the country for the past decade. The Mexicans remained stone-faced as they learned how entwined the two countries had become during the battle against narco-traffickers, and how, in the process, the United States had been given near-complete access to Mexico’s territory and the secrets of its citizens, according to several U.S. officials familiar with the meeting. The administration of the previous president, Felipe Calderón, had granted U.S. spy planes access to Mexican airspace to gather intelligence. Unarmed Customs and Border Protection drones had flown from U.S. bases in support of Mexican military and federal police raids against drug targets and to track movements that would establish suspects’ “patterns of life.” The United States had also provided electronic signals technology, ground sensors, voice-recognition gear, cellphone-tracking devices, data-analysis tools, computer hacking kits and airborne cameras that could read license plates from three miles away. Under a classified program code-named SCENIC, the CIA was training Mexicans how to target and vet potential assets for recruitment and how to guard against infiltration by narco-traffickers. In deference to their visitors, the U.S. briefers left out that most of the 25 kingpin taken off the streets in the past five years had been removed because of U.S.-supplied information, according to people familiar with the meeting. Also unremarked upon was the mounting criticism that success against the cartels’ leadership had helped incite more violence than anyone had predicted, more than 60,000 deaths and 25,000 disappearances in the past seven years. Meanwhile, Mexico remains the U.S. market’s largest supplier of heroin, marijuana and methamphetamine and the transshipment point for 95 percent of its cocaine. When the Dec. 15 meeting concluded, Mexico’s new security officials remained poker-faced.

Priest 5/1 [May 1, 2013. Dana Priest is a national security reporter whose work focuses on intelligence and counterterrorism. “U.S. role to decrease as Mexico’s drug-war strategy shifts” http://seattletimes.com/html/nationworld/2020902455_mexicoobamaxml.html]

The new administration has shifted oward an emphasis on prevention and keeping Mexico’s streets safe and calm .S. officials fear the coming of an unofficial truce with cartel leaders. The Mexicans see it otherwise. The objective of fighting organized crime is not in conflict with achieving peace, said Mexico’s ambassador to the U S The new attorney general and interior minister sat in silence next to the new leaders The Mexicans remained stone-faced as they learned how entwined the two countries had become during the battle against narco-traffickers, and how, in the process, the United States had been given near-complete access to Mexico’s territory and the secrets of its citizens Calderón, had granted U.S. spy planes access to Mexican airspace to gather intelligence drones had flown from U.S. bases to track movements patterns of life.” success against the cartels’ leadership helped incite more violence than anyone had predicted, more than 60,000 deaths and 25,000 disappearances in the past seven years , Mexico’s new security officials remained poker-faced.

US efforts to combat Mexican drug trafficking are counter-productive – new Mexican administration doesn’t want to work with the US

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

In a visit to Washington two weeks ago, Mexico’s top security team shared the outlines of the new plan with U.S. agencies, according to U.S. and Mexican officials. It contains many changes. The president will not be nearly as directly involved in counterdrug efforts as was Calderón, the officials said. The interior minister will coordinate the relationships among Mexican and U.S. agencies and other Mexican units. Given the corruption of Mexican law enforcement and armed forces, U.S. officials said privately they would be unwilling to share sensitive information until they have vetted the people involved. The Mexican government also plans to create five regional intelligence fusion centers and to build a 10,000-member super police force. This force would be steeped in military discipline but would use police tactics, rather than military force, to keep violence to a minimum. Medina-Mora, the Mexican ambassador, said in an interview that his nation considers U.S. help in the drug war “a centerpiece” of Mexico’s counternarcotics strategy. But the Mexican delegation also told U.S. authorities that Americans will no longer be allowed to work inside any fusion center.

Priest 5/1 [May 1, 2013. Dana Priest is a national security reporter whose work focuses on intelligence and counterterrorism. “U.S. role to decrease as Mexico’s drug-war strategy shifts” http://seattletimes.com/html/nationworld/2020902455_mexicoobamaxml.html]

Mexico’s top security team shared the outlines of the new plan with U.S. agencies, The president will not be nearly as directly involved in counterdrug efforts . The interior minister will coordinate the relationships among Mexican and U.S. agencies The Mexican government also plans to create five regional intelligence fusion centers and to build a 10,000-member super police force. This force would be steeped in military discipline but would use police tactics, rather than military force, to keep violence to a minimum Americans will no longer be allowed to work inside any fusion center.

New policies mean the US can’t be more involved in drugs no matter what the aff does

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Despite all these concerns, the US government immediately congratulated the Pena Nieto government on the bust. It has supported the Mexican drug war with equipment, training and US agents on the ground and pressured the new Mexican president to continue the military/police model. This is the second reason to fear a rise in violence. The Trevino Morales arrest and US and Mexican government statements following it are a joint message that the drug war will continue with support from both administrations - despite its failures and growing citizen opposition. President Pena Nieto had attempted to put distance between his policies and the drug war of his predecessor, Felipe Calderon - and with good reason. The offensive on drug cartels with the deployment of the armed forces and police has led to more than 100,000 deaths in the country and widespread human rights violations. Drug trafficking has continued unabated and polls show most Mexicans see no progress in the campaign against drug traffickers.

Carlsen 7/18 [July 18, 2013. Laura Carlsen is a policy analyst and director of the Americas Program of the Center for International Policy. “Kingpin arrest will mean more violence in Mexico” http://www.aljazeera.com/indepth/opinion/2013/07/201371812446923277.html]

the US has supported the Mexican drug war and pressured the new Mexican president to continue the military/police model This is the reason to fear a rise in violence. the drug war will continue with support from both administrations despite its failures and growing citizen opposition. The offensive on drug cartels has led to more than 100,000 deaths and widespread human rights violations most Mexicans see no progress in the campaign against drug traffickers.

US-Mexican drug cooperation fails and has opposition from the citizens

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Pena Nieto promised to redirect efforts from the drug war to public safety as a cornerstone of the campaign that brought him to office in July 2012. This explains why this arrest was handled much differently from the past. If before criminals were brought out bloodied and cuffed with great fanfare, this time the administration sent out a discreet statement with mug shots of Trevino Morales, his two companions, and a map of where they were captured by Navy and police forces. Videos showed Trevino being led without handcuffs. Eduardo Sanchez, the spokesperson for the security cabinet, noted that the alleged criminals were charged with "organised delinquency, murder, crimes against health (drug trafficking), torture, money laundering, illegal possession of arms, among others". He added the assassination of 265 migrants in San Fernando, Tamaulipas in two incidents that shocked Mexican society and the world. The self-congratulatory tone and combative talk of defeating organised crime was conspicuously absent. Mexican security cabinet spokesman Eduardo Sanchez highlighted Mexican inter-agency cooperation. He dodged the question on US involvement in Trevino Morales' capture. The New York Times, citing anonymous sources, said the US government "played a key behind-the-scenes role" and helped confirm the identity of the drug lord through DNA. Obama on the other hand, welcomed the news as a confirmation of Pena Nieto's commitment to the joint drug war. President Obama said in an interview with the Spanish-language Univision, "I think what it [the arrest of Trevino Morales] shows is that the Pena Nieto administration is serious about continuing efforts to interrupt drug operations". The network interpreted the short interview as a major endorsement of Pena Nieto's continued commitment to US-backed counternarcotic efforts. Obama stated explicitly that there were questions about that commitment during the campaign. Indeed, US-Mexico cooperation in the drug war has hit rocky times. In addition to early fears that Pena Nieto would attempt to pact with the cartels, his decision to channel all security cooperation through the Ministry of the Interior - a move to rein in US agencies' open access to Mexican national security - caused concern in Washington. Insiders said security assistance was on hold until the picture cleared. This move marks continued access and cooperation for US government agents under the same drug war model, just when questions about the cooperation are again emerging in light of leaks that Mexico is among countries routinely spied on by the US National Security Agency. The US government is heavily invested in the Mexican drug war, not so much due to the more than $2bn dollars it has spent to bolster the disastrous strategy, but in the enormous expansion of its presence in Mexico. The US security aid package known as the Merida Initiative allowed many US government agencies to more than double their personnel under a broad umbrella that places US agents in intelligence-gathering, counternarcotic operations, border control and spying. It represents millions of dollars in contracts to private defense, security and computer firms. Assuming the crimes attributed to him are proven in a court of law, no one could fail to celebrate the incarceration of a cold-blooded criminal such as Miguel Angel Trevino Morales. But that the arrest signals the continued alliance of the US and Mexican governments in a security effort that uses the public as collateral damage is bad news for us all.

Carlsen 7/18 [July 18, 2013. Laura Carlsen is a policy analyst and director of the Americas Program of the Center for International Policy. “Kingpin arrest will mean more violence in Mexico” http://www.aljazeera.com/indepth/opinion/2013/07/201371812446923277.html]

Nieto promised to redirect efforts from the drug war to public safety this arrest was handled much differently from the past. Mexican security cabinet spokesman Eduardo Sanchez highlighted Mexican inter-agency cooperation. Obama welcomed the news as a confirmation of Pena Nieto's commitment to the joint drug war. Obama said the arrest shows that Nieto is serious about continuing efforts to interrupt drug operations Nieto decision to channel all security cooperation through the Ministry of the Interior marks continued access and cooperation for US government agents under the same drug war model, The US government is heavily invested in the Mexican drug war, The US security aid package known as the Merida Initiative allowed many US government agencies to more than double their personnel under a broad umbrella that places US agents in intelligence-gathering, counternarcotic operations, border control and spying. the arrest signals the continued alliance of the US and Mexican governments in a security effort that uses the public as collateral damage is bad news for us all.

The US and Mexico are cooperating now, but badly - makes the public collateral damage and fails to accomplish anything good

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

On February 20, 2012, Hillary Rodham Clinton, U.S. Secretary of State, and Patricia Espinoza, Mexican Secretary of Foreign Relations, formally signed the U.S.-Mexico Agreement on Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico. In the remarks made at the signing of this agreement, Secretary of State Clinton said: If a reservoir straddles the boundary, then there would be disputes over who should do the extraction and how much they should extract. The agreement we sign today helps prevent such disputes. It also helps promote the safe, efficient, and equitable exploration and production of cross-boundary reservoirs. Each country maintains its own right to develop its own resources... . This agreement creates new opportunities. And for the first time, American companies will be able to collaborate with PEMEX, their Mexican counterpart. n2 [*6] The signing of this truly unprecedented agreement is unique for the following reasons: (a) The agreement offers the prospects of opening up for commercial exploitation submarine oil and natural gas reservoirs deemed to be the fourth largest in the world; n3 (b) The agreement removes uncertainties regarding the development of transboundary resources of nearly 1.5 million acres of the U.S. Outer Continental Shelf; n4 (c) The agreement establishes a legal regime whereby companies of both countries will be able to jointly develop transboundary reservoirs; (d) The agreement allows U.S. oil companies to invest and to enter into contracts with PEMEX for the exploration and exploitation of these reservoirs, a most unprecedented legal change in the legislative history of Mexico; (e) And, finally, this agreement moves the United States and Mexico closer to completing all the needed maritime boundary delimitations between both countries in the Gulf of Mexico and the Pacific Ocean regarding marine waters, the continental shelf and the corresponding seabed and subsoil areas. Given the agreement's significant importance, on May 19, 2010, President Barack Obama announced his intention to negotiate the agreement following the Joint Statement adopted by Presidents Obama and Calderon at the conclusion of President Calderon's State Visit to Washington on May 19, 2010. n5 From the Mexican side, the Secretariat of Energy (SENER) reported that six bilateral technical meetings and three formal negotiating reunions by the corresponding teams of Mexico and the United States were [*7] necessary to agree on the numerous legal questions included in the final text of this long and technical agreement. n6 The negotiation of this bilateral instrument was a most difficult task for both SENER and the Secretariat of Foreign Affairs (SRE). Nine days after the agreement was signed, the Secretariat of the Interior (Secretaria de Gobernacion) transmitted the 2012 Agreement to the Mexican Senate n7 with the purpose of obtaining the "Senate's Approval" required by Article 76, Paragraph I, and Article 133 of Mexico's Political Constitution. n8 Scientifically, the Gulf of Mexico has virtually become a "marine province" of the United States, because of its peculiar configuration, its geographical contiguity to the U.S., and especially because of its valuable resources, in particular oil and natural gas. In a foremost scientific compilation by the Department of Geological Sciences of the University of Texas at Austin, published under the auspices of The Geological Society of America in 1991, these statements are made regarding the petroleum resources known to exist in that Gulf: [*8] The Gulf of Mexico basin is one of the foremost petroleum provinces of the world. As of the end of 1987, it has demonstrated ultimate known recovery of of 112.7 billion barrels of crude oil, 22.5 billion barrels of natural gas liquids (for a total of 136.6 billion barrels of petroleum liquids, and 523.8 cubic feet of natural gas), for a total of 222.5 billion barrels oil equivalent. ... . As a producing petroleum province, the Gulf of Mexico basin belongs in the same rank as the Arabian-Iranian province of the Middle East and the West Siberian province of the Soviet Union. The Gulf of Mexico basin contains approximately 9% of the world's known recovery of petroleum liquids (crude oil and natural gas liquids) and approximately 11% of the world's known recovery of natural gas. ... . The Gulf of Mexico basin is primarily an oil-producing petroleum province. Of the 222.5 billion barrels oil equivalent ultimate recovery as of the end of 1987, 50.7% were crude oil, 10.1 were natural gas liquids, and only 40.2% were natural gas. The relative importance of petroleum liquids and natural gas varies substantially across the basin. The southern half (in Mexico) is highly oil prone, with more than 81% of its oil equivalent known ultimate recovery consisting of crude oil and natural gas. By comparison, the northern half (in the United States) is more gas prone, gas providing more than 52% of its oil equivalent ultimate known recovery. n9 These authoritative scientific statements leave no doubt as to the importance the Gulf of Mexico plays regarding its oil and natural gas deposits not only for today but especially for the next seven or eight decades to come, when the scarcity of oil will increase on a global scale, a serious consideration that underlines the clear strategic value of this basin for the United States and Mexico. In a world that is already witnessing the alarming increase in the costs of oil and natural gas due to the rapid diminution of oil reserves, the 2012 Agreement acquires greater significance as every day that goes by. This agreement may be described as the very first business partnership between the United States and Mexico. A partnership that lays down fair rules and objective mechanisms to avoid disputes; establishes a modern legal regime to share a fluid transfrontier resource based on mutually agreed principles, allowing both countries to proceed with an equitable, safe and efficient utilization of that resource; and, at the same time, promotes and protects the preservation of the marine environment.

Vargas ‘12 [Jorge A. Vargas is a Professor of Law at the University of San Diego School of Law. Fall 2012, “ARTICLE: The 2012 U.S.-Mexico Agreement on Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico: A Blueprint for Progress or a Recipe for Conflict?,” San Diego International Law Journal, 14 San Diego Int'l L.J. 3, p. lexis]

the U.S.-Mexico Agreement promote the safe, efficient, and equitable exploration and production of cross-boundary reservoirs. This agreement creates new opportunities The agreement offers the prospects of opening up for commercial exploitation submarine oil reservoirs deemed to be the fourth largest in the world; The agreement removes uncertainties regarding transboundary resources of nearly 1.5 million acres of the U.S. Outer Continental Shelf; The agreement allows U.S. oil companies to invest and to enter into contracts with PEMEX for the exploration and exploitation of these reservoirs, a most unprecedented legal change in the legislative history of Mexico; the Gulf of Mexico has virtually become a "marine province" of the United States, because of its valuable resources, oil he Gulf of Mexico basin is one of the foremost petroleum provinces of the world. t has demonstrated ultimate known recovery of of 112.7 billion barrels of crude oil, These scientific statements leave no doubt as to the importance the Gulf of Mexico plays regarding its oil or the next seven or eight decades to come, when the scarcity of oil will increase on a global scale, In a world that is already witnessing the alarming increase in the costs of oil due to the rapid diminution of oil reserves the 2012 Agreement acquires greater significance

The plan opens up drilling in a massive oil field – prices are affected rapidly

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Finding and exploiting oil and gas resources in the ultra-deepwater areas of the Gulf of Mexico is occurring at an accelerated pace. Huge new discoveries have recently been made in a large geological structure known as the Lower Tertiary Wilcox Trend that is located in the U.S.-Mexico Maritime Boundary Region. These discoveries have been projected to boost current U.S. oil reserves by as much as fifty percent. Technological advancements and market conditions have finally reached a point where production of hydrocarbons in these ultra-deepwaters is commercially feasible. However, due to the transboundary characteristics of many of these hydrocarbons, some form of bi-national cooperation is necessary to effectively manage the shared resources, protect the oceanic environment and comply with evolving norms of international law before commercial production can begin. Well established international customary norms prohibit unilateral exploitation of transboundary oil and gas resources. Consequently, it is important for the two nations to address these issues today rather than putting them off until they become a critical political problem in their bilateral relations. The United States and Mexico have already agreed to temporarily cooperate in the exploration of potential oil and gas resources in one portion of the Gulf of Mexico known as the Western Gap. This is an area in the center of the Gulf of Mexico that falls outside of the 200 mile exclusive economic zones of the two nations. After scientific studies provided evidence that the Western Gap qualifies as part of each nation’s extended continental shelf, a Delimitation Treaty was negotiated and ratified in 2000. This Treaty gave Mexico access to about 62 percent of the Gap, while the U.S. retained about 38 percent. The Treaty also established a 2.8 nautical mile buffer zone along the new boundary to account for the possibility that straddling oil and gas reservoirs may be located there. The nations agreed to a ten year drilling moratorium and to share information on the geological and geophysical characteristics of any reservoirs in the buffer zone. In 2010, the moratorium expires and either side may exploit the resources in the zone.

McLaughlin ‘7 [Richard J. McLaughlin is the Endowed Chair at the Harte Research Institute for Gulf of Mexico Studies at Texas A&M University. 3/23/7, “PANEL ON THE WESTERN GAP AND TRANSBOUNDARY RESOURCES IN THE ULTRA-DEEPWATERS OF THE GULF OF MEXICO,” http://losi.tamucc.edu/Panels/Panelist%20Abstracts/Abstract%20-%20Richard%20McLaughlin.pdf]

Finding and exploiting oil in the ultra-deepwater areas of the Gulf of Mexico is occurring at an accelerated pace Huge new discoveries have recently been made in the U.S.-Mexico Maritime Boundary Region These discoveries have been projected to boost current U.S. oil reserves by as much as fifty percent due to the transboundary characteristics some form of bi-national cooperation is necessary to effectively manage the shared resources before commercial production can begin The United States and Mexico have already agreed to temporarily cooperate in the exploration of potential oil and gas resources in the Western Gap. a Delimitation Treaty was ratified established a 2.8 nautical mile buffer zone The nations agreed to a ten year drilling moratorium

Development in the Gulf increases US oil reserves by 50% - current moratoriums block drilling, the plan reverses that

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

The agreement announced today also would lift a moratorium on waters in a buffer area known as the Western Gap that both nations put off limits for 10 years in a 2000 treaty. That moratorium was extended through 2014 after the Deepwater Horizon oil spill. It stems from a May 2010 commitment between U.S. President Barack Obama and Mexican President Felipe Calderón. They said it would include safety insight from the 2010 spill, which started a month earlier. It wouldn’t take force until both nations’ legislatures, the Senate in the case of the U.S., sign off. “We ought to be able to gather necessary political forces to get the ratification that is needed,” Salazar said Mexico still faces the problem of how to get at the deepwater oil on its side of the Gulf border. Pemex lacks much of the technology needed for ultra-deep exploration and production. Also Mexico’s constitution prohibits foreign companies from actually owning any of the oil they produce in the nation’s waters and on its lands, making many less eager to get involved. “With this we all win, and we guarantee that our oil will be used to the benefit of Mexicans,” Calderón said Monday. Tommy Beaudreau, director of the Bureau of Ocean Energy Management, said the accord would “respect” Mexico’s constitution. If Pemex and U.S. countries can’t agree on how to jointly develop a boundary-straddling resource, another process would determine how each side could develop its share, Salazar said. Sean Shafer, analyst with Sugar Land-based Quest Offshore Resources, said companies will need a few years to get permits and more leases and start drilling. But he said the area holds vast promise and some infrastructure is already in the vicinity, as evidenced by Shell’s already-producing Perdido hub project nearby. The waters, concentrated in the western Gulf, are more oil-heavy than eastern Gulf waters, Shafer said. “Right now natural gas prices are very low, so operators are more interested in the oilier stuff,” Shafer said. The oil-and-gas industry hailed the announcement, in a rare moment of praise for the Obama administration, while using the occasion to urge the Interior Department to open new waters off the East Coast. Although Obama has touted that U.S. oil production is at an eight-year high, industry groups such as the American Petroleum Institute argue his policies have hurt development offshore and on federal lands, instead crediting new technologies and rising production on state and private lands. “The administration’s announcement with Mexico is a positive step that demonstrates the value of opening new areas to responsible and safe domestic offshore development,” Reid Porter, API spokesman, said in an email. “This shared announcement also shows the need for U.S. energy policy that emphasizes more domestic development — such as areas offshore Virginia, North Carolina and South Carolina — to maximize U.S. jobs and investment to energy development here at home.” The waters belonging to the U.S. make up an area “larger than the state of Delaware,” Salazar said, and contain up to 172 million barrels of oil and 304 billion cubic feet of natural gas. The actual amount is speculative until drilling actually starts, but could far outstrip the estimate, Shafer said. “I’d say that’s a pretty conservative estimate,” Shafer said.

Kollipara ’12 [Puneet Kollipara is a Houston Chronicle politics & energy reporter, 2/20/12, “U.S., Mexico, reach accord on drilling below maritime border,” http://fuelfix.com/blog/2012/02/20/449517/]

The agreement would lift a moratorium on waters in a buffer area known as the Western Gap That moratorium stems from a commitment between Obama and Calderón. the area holds vast promise and some infrastructure is already in the vicinity The waters are more oil-heavy natural gas prices are very low, so operators are more interested in the oilier stuff,” The oil-and-gas industry hailed the announcement, in a rare moment of praise for Obama Although Obama has touted that U.S. oil production is at an eight-year high industry groups argue his policies hurt development The waters belonging to the U.S. contain up to 172 million barrels of oil The actual amount could far outstrip the estimate,

The plan’s lifting of the embargo massively increases the amount of US oil exports – reversal of Obama’s previous policies

Mexico Energy Negative - Northwestern 2013 6WeekJuniors.html5

Northwestern (NHSI)

Case Negatives

2013

Basically, the 2000 Treaty n94 defines the limits within which each Party may exercise its sovereign rights over the seabed and the subsoil of the continental shelf in a submarine area located in the western Gulf of Mexico, beyond the limits of their respective exclusive economic zones extending out to 200 nautical miles (in an area known as the "Western Gap") for the purpose of exploring the continental shelf and exploiting its natural resources. n95 Under international law, and according to the 1982 U.N. Convention on the Law of the Sea, coastal states exercise over the continental shelf "sovereign rights for the purpose of exploring it and exploiting its natural resources." n96 When the U.S. Senate was receiving testimony regarding the 1978 Treaty as part of the ratification proceedings, Dr. Hedberg, former Executive of the Gulf Oil Corporation, said that "the northwestern part of the central Gulf (located in the Area) (some 25,000 square miles (equivalent to more than a million acres)) could be by far the most promising deep-water petroleum territory to which the United States rightfully has claim." n97 This statement generated tremendous interest among the powerful oil industry (including the American Association of Petroleum Geologists n98), who immediately started lobbing to stop the U.S. Senate from giving its advice and consent to the 1978 Treaty. n99 The pressure was so intense and successful that said Treaty was withdrawn from consideration on the [*32] Senate floor on September 16, 1980, and did not receive the advice and consent of the Senate until seventeen years later, on October of 1997. Accordingly, to reach agreement with Mexico on the precise maritime boundary of the submarine continental shelf in the central and deepest part in the middle of the "Western Gap," in a submarine area beyond 200 nautical miles known to have rich mineral deposits, was of paramount importance for both the United States and Mexico, especially when one considers that the maritime boundary of the submarine continental shelf to be drawn in that part of the Gulf was going to bisect a transboundary hydrocarbon reservoir to be shared by both countries.

Vargas ‘12 [Jorge A. Vargas is a Professor of Law at the University of San Diego School of Law. Fall 2012, “ARTICLE: The 2012 U.S.-Mexico Agreement on Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico: A Blueprint for Progress or a Recipe for Conflict?,” San Diego International Law Journal, 14 San Diego Int'l L.J. 3, p. lexis]

the 2000 Treaty defines the limits within which each Party over the seabed in the Western Gap the northwestern part of the central Gulf could be by far the most promising deep-water petroleum territory to which the United States rightfully has claim. This statement generated tremendous interest among the powerful oil industry to reach agreement with Mexico on the "Western Gap was of paramount importance for both the United States and Mexico the maritime boundary of the submarine continental shelf to be drawn in that part of the Gulf was going to bisect a transboundary hydrocarbon reservoir

Oil companies have massive interest in the plan – instantaneous development of the region

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Northwestern (NHSI)

Case Negatives

2013

Still, it is important to put the projected decline in Mexican oil production into perspective. Mexico may be an important producer, but its petroleum output represents less than 5% of the world total. In terms of the Western Hemisphere, any decline in its production over the next 25 years is likely to offset by increased productions elsewhere, notably Brazil and Canada. An eventual turnaround in Venezuelan production—almost certainly associated with Hugo Chavez’s exit from power—is also possible. Venezuela, unlike Mexico, possesses vast oil reserves; it could, under the right circumstances, significantly increase its output. Venezuela, not Mexico, today surely represents the great lost opportunity” of hemispheric petroleum production. Opening up additional U.S. coastal areas and nature preserves in Alaska could also help partially offset the decline in Mexico. By way of yet another comparison: The projected decline in Mexican production is significantly less than the decline in North Sea production between 1999 and 2007. This is not to downplay the importance for the United States of volume and diversity of supply to world oil markets. It does suggest, however, that the slow decline of Mexican production is unlikely to precipitate a crisis in international oil markets. This is particularly true as many observers are already predicting decreasing Mexican output. World markets are well aware of the troubled condition of Mexico’s oil sector. The only surprise would be if Mexico were to increase its petroleum output.

Barnes ’11 [Joe Barnes is the Bonner Means Baker Fellow at the James A. Baker III Institute for Public Policy at Rice University. 4/29/11, “Oil and U.S.-Mexico Bilateral Relations,” http://www.bakerinstitute.org/publications/EF-pub-BarnesBilateral-04292011.pdf]

it is important to put the projected decline in Mexican oil production into perspective its petroleum output represents less than 5% of the world total any decline in its production is likely to offset by increased productions elsewhere, An eventual turnaround in Venezuelan production is also possible Venezuela, could significantly increase its output the slow decline of Mexican production is unlikely to precipitate a crisis in international oil markets. many observers are predicting decreasing Mexican output markets are aware of the troubled condition of Mexico The only surprise would be if Mexico were to increase its petroleum output.

Plan surprises markets – increased oil production immediately shocks markets

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Northwestern (NHSI)

Case Negatives

2013

The GoM is one of the last remaining prolific petroleum provinces in the world. So far the resources have been identified and produced in the shallow waters of Mexico. In the US, exploration and production in the GoM has taken place since the 1940s and now is extending southwards near to the border with Mexico. At the same time, technology has evolved to produce at 3,000 m (9,842 ft) water depths, though at very high costs. Mexico, the US, and Cuba share the GoM which may hold trans-boundary reservoirs, including the Western and Eastern gaps. Mexico and the US executed a bilateral Treaty in the year 2000, to define the area in which the Western Gap reservoir lies, with a 10-year moratorium that soon will conclude. Thus, Mexico and the US must reach sharing and unitization schemes pursuant to international practice. Mexico also faces a major challenge in implementing international practice due to its constitutional and legal framework for hydrocarbons. Both countries have much to gain by solving this issue fairly, promptly, and functionally. The authorities in both countries are aware of the issue and seem ready to draw a treaty both countries can live with.

Estrada ‘9 [Javier Estrada is president of the consulting company Analitica Energética S.C. in Mexico City. He has 27 years of experience in oil and gas in Mexico, Norway, and the US. July 2009, “Reservoirs that cross country lines need special agreements,” http://www.offshore-mag.com/articles/print/volume-69/issue-7/latin-america/reservoirs-that-cross.html]

The GoM is one of the last remaining prolific petroleum provinces in the world. the resources have been identified and produced in the shallow waters of Mexico technology has evolved to produce at 3,000 m depth Mexico, the US, share the GoM n which the Western Gap reservoir lies, Mexico and the US must reach sharing and unitization schemes pursuant to international practice Both countries have to gain by solving this issue

The Gulf of Mexico is the last reserve that could massively impact global oil production – plan is key

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Northwestern (NHSI)

Case Negatives

2013

A major component to relieving upward pressure on gasoline prices in the US will come from increasing domestic oil production and not from raising taxes, American Petroleum Institute Pres. and Chief Executive Officer Jack Gerard told reporters Mar. 20 during a conference call from Washington, DC.¶ He said President Barack Obama's administration needs a "reality check" as well as a revision to the unclear signals it is sending the market. This is something that US voters understand as well, Gerard noted, citing statistics from a poll conducted earlier this month by Harris Interactive on behalf of API among 1,009 registered voters in the US.¶ "Voters understand that raising taxes is not a solution for high gasoline prices," Gerard said, adding, "No economist in the world will tell you gas prices can be reduced by increasing taxes, and the Congressional Research Service just released a study saying so," Gerard said.¶ "A true all-of-the-above energy strategy would include greater access to areas that are currently off limits, a regulatory and permitting process that supported reasonable timelines for development, and immediate approval of the Keystone XL pipeline to bring more Canadian oil to US refineries. This would send a positive signal to the market and could help put downward pressure on prices," he said.¶ A large majority of these polled voters, API said, "also believe that more US oil and natural gas development could reduce gasoline prices (81%), lead to more American jobs (90%), and enhance America's energy security (84%)."¶ Gerard said, "Most US resources have been placed off-limits. The US oil and natural gas industry is currently allowed to explore, develop, and produce on less than 15% of the federal offshore areas. More than 85% of those areas are off limits, denying all Americans the benefits of producing those resources—benefits like greater supplies of crude oil and natural gas, job creation, and significant returns on our treasury in taxes, rents, royalties, and bonus bids."¶ Market perception¶ The very notion that the Obama administration is proposing the release of oil supplies from the nation's Strategic Petroleum Reserve or asking other countries, such as Saudi Arabia, to boost oil production, is a "clear admissions that supply matters" in the case of relieving gasoline price pressure, Gerard said.¶ Markets are largely driven by perception, Gerard said, and when Obama in his early days in office sent out the message to the market that oil and gas production from the Gulf of Mexico, for example, would be higher today than it was then, that is part of the reason we're experiencing higher gasoline prices in the US.¶ To illustrate this point about clear market signals, Gerard recalled the example of when US gasoline prices were surpassing $4/gal during George W. Bush's presidency, his administration lifted the moratorium on offshore drilling and in a matter of days, oil prices fell by $15-16/bbl.

Poruban 12 – Steven Poruban "API: Raising US oil supplies key to lowering gasoline prices" 3/26 www.ogj.com/articles/print/vol-110/issue-3c/general-interest/api-raising-us-oil.html

A major component to relieving pressure on prices will come from increasing domestic oil production Obama's administration needs a "reality check" as well as a revision to the unclear signals it is sending the market greater access to areas that are currently off limits, a regulatory process that supported development, and Keystone would send a positive signal to the market and could put downward pressure on prices Most US resources have been placed off-limits Market perception¶ The very notion that the Obama administration is proposing the release of oil supplies from the nation's Strategic Petroleum Reserve or asking other countries, such as Saudi Arabia, to boost oil production, is a "clear admissions that supply matters Markets are largely driven by perception and when Obama in his early days in office sent out the message to the market that oil and gas production from the Gulf of Mexico, for example, would be higher today than it was then, that is part of the reason we're experiencing higher gasoline prices in the US.¶ To illustrate this point about clear market signals, Gerard recalled when prices were surpassing $4/gal during Bush's presidency, his administration lifted the moratorium on offshore drilling and in a matter of days, oil prices fell by $15-16/bbl.

Increased US production collapses oil prices immediately

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Northwestern (NHSI)

Case Negatives

2013

Moreover, the U.S. energy boom could contribute to some longer term instability in the region’s traditional petroleum producing countries, and U.S. policymakers will need to remain watchful.¶ Although the IEA expects global oil prices to stay above $100 a barrel for the foreseeable future, it is not inconceivable for the opposite to come true. One can imagine a scenario where oil prices fall to $60 or $70 a barrel due to much greater tight oil production in America. At those prices, some of the petro monarchies – from Saudi Arabia to Kuwait – would be in a pinch to raise the revenue needed to pay for social programs, like fuel subsidies. If those governments are forced to curb social spending, it could exacerbate some of the socioeconomic and political tensions that have contributed to revolutionary change across the Arab world recently.

Rogers 12 – Will Rogers, the Bacevich Fellow at the Center for a New American Security, 11/26/12, “US energy: What's oil production got to do with national security?,” http://www.csmonitor.com/Environment/Energy-Voices/2012/1126/US-energy-What-s-oil-production-got-to-do-with-national-security

the U.S. energy boom could contribute to instability in the region’s traditional petroleum producing countries Although the IEA expects global prices to stay above $100 for the foreseeable future One can imagine a scenario where oil prices fall to $60 due to much greater tight oil production in America At those prices petro monarchies would be in a pinch to raise revenue needed to pay for social programs If those governments are forced to curb social spending it could exacerbate socioeconomic and political tensions that have contributed to revolutionary change across the Arab world

Increased oil production collapses prices to $60---that destroys producers

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Northwestern (NHSI)

Case Negatives

2013

Much of the analysis of the recent shale/fracking revolution has focused on its stunning alteration of the natural gas landscape. Yet many gas wells also produce prodigious amounts of crude oil as well, which explains our nation's steady surge in oil production. The U.S. produced 6.5 million barrels of crude every day in 2012, and the EIA expects that figure to rise to 7.3 million this year and 7.9 million in 2014. That's a 22% increase in just two years. Of course, rising domestic production means that oil importers will send less crude our way. Yet oil is a globally fungible commodity, and as more oil is redirected to other markets, the stage may be set for a glut that send global oil prices well lower. The long-term picture gets brighter. Now, let's look at these two factors over the longer haul. First, domestic oil production is expected to keep on rising, as the shale revolution grows yet deeper. That's why some economists think we may become energy-independent within five or six years. The United States is the world's largest oil importer, and removing the largest buyer from the market would have profound effects in pricing and demand.

Sterman ’13 [May 10, 2013. David Sterman is has worked as an investment analyst for nearly two decades. “Oil prices are primed to drop” http://money.msn.com/top-stocks/post.aspx?post=bc42a487-4bd3-4f3d-8821-47225ecffc2c]

prodigious amounts of crude oil explain our nation's steady surge in oil production . the EIA expects a 22% increase in domestic production oil importers will send less crude our way as more oil is redirected to other markets, the stage may be set for a glut that send global oil prices well lower removing the largest buyer from the market would have profound effects in pricing and demand.

Increased oil production creates a glut and drops prices globally

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Northwestern (NHSI)

Case Negatives

2013

Still, analysts see signs that the high prices might not last. While U.S. supplies of crude and gasoline have fallen recently, they are still higher than their five-year averages for this time of year. "We would not give too much weight to the larger-than-expected drawdown in US crude stocks in the recent data," wrote Julian Jessop, a commodities analyst at Capital Economics, in a report Wednesday. "Inventories are still unusually high." Jessop wrote that ample supplies and still-sluggish global economic activity "should drag oil prices lower again by the end of the year." Tom Kloza, chief oil analyst at GasBuddy.com, thinks the surge in gasoline demand over the past two weeks may be temporary, brought on by a July 4 holiday that followed terrible spring weather in much of the country. "It was such poor weather for four months that people had cabin fever," Kloza said. He expects demand to moderate in the coming weeks. He also notes that U.S. refiners are making more gasoline than they have since 1997, so supplies should remain high. Eric Lee, an oil analyst at Citigroup, had expected oil prices to rise this summer as refiners around the world drew down oil supplies so they could ramp up production, but he also expects the price of crude to weaken in the coming months. "We would expect it to stay here in the short term and then ease off in the next month or two," he said.

Fahey ’13 [July 10, 2013. John Fahey is an energy writer for AP. “Oil surpasses $106 a barrel on big drop in US crude supplies; pump prices expected to rise” http://www.startribune.com/business/214908891.html]

high prices might not last .S. supplies of crude are higher than their five-year averages for this time of year Inventories are still unusually high ample supplies and still-sluggish global economic activity "should drag oil prices lower again by the end of the year." .S. refiners are making more gasoline

High US oil supplies drag global prices down

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Northwestern (NHSI)

Case Negatives

2013

The U.S. oil boom is finally affecting global energy prices — but don’t expect cheap prices at the pump as a result. U.S. oil production peaked in the early 1970s and has been on a more or less steady decline ever since. Or at least, that was the case until five years ago, when the fracking boom in North Dakota and elsewhere led to a sudden surge in domestic crude production. The U.S. pumped 6.5 million barrels a day of oil last year, according to the Energy Information Administration, the most since the mid-1990s, and production has continued to surge; April’s figure of 7.4 million barrels per day marked the best month in more than two decades. (Other sources suggest an even bigger increase.) You might think all that extra oil would be good news for drivers, but so far that hasn’t happened. The price of a gallon of regular gasoline averaged $3.62 in 2012, the highest on record. Moreover, gas prices have kept on rising even as improved fuel efficiency, a weak economy and other factors have kept demand growth in check. What gives? Part of the explanation has to do with a key but often-ignored piece of the oil industry: infrastructure. Oil is a globally traded commodity, which in theory means that prices should be the same everywhere. If demand spikes in China, for example, then prices there will rise, and oil traders will sell them more oil until prices even out again. Similarly, if the industry discovered a huge new oilfield off the coast of Marseille, French prices would fall, leading to lower imports (or, if the field was big enough, more exports), once again equalizing prices.

Casselman ’13 [June 29, 2013. Ben Casselman is an economics reporter for the Wall Street Journal. “Number of the Week: U.S. Oil Boom Affecting Global Prices” http://blogs.wsj.com/economics/2013/06/29/number-of-the-week-u-s-oil-boom-affecting-global-prices/]

The U.S. oil boom is finally affecting global energy prices U.S. oil production has continued to surge Oil is a globally traded commodity, which in theory means that prices should be the same everywhere If demand spikes in China prices there will rise, and oil traders will sell them more oil until prices even out

Free flowing oil means US oil affects global prices

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Northwestern (NHSI)

Case Negatives

2013

Approving and implementing TBHA soon is very important, hearing witnesses told the subcommittee. “Approving the treaty will create new levels of legal certainty for US and Mexican firms operating in Gulf of Mexico border regions, encouraging them to engage in the risk-taking required to produce oil from deep water,” said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars. TBHA also has far-reaching implications in terms of regulatory cooperation between the two countries that is fundamentally necessary in the aftermath of the 2010 Macondo deepwater oil well accident and spill, and is crucial for boosting Mexican standards, he continued. US ratification before Mexico begins its energy reform debate in earnest will encourage that process, while waiting until it is actually under way may complicate the debate, Wood said. Facilitate joint ventures Ratifying TBHA also would encourage US independents and Mexico’s state-owned Petroleos Mexicanos (Pemex) to jointly develop resources in the gulf, noted Kyle Isakower, American Petroleum Institute’s vice-president for regulatory and economic policy. “This agreement will provide legal certainty to US [independents], which will encourage investment in new energy development, creating jobs and spurring economic growth,” he said. The president should resolve lingering uncertainty over whether he intends TBHA to be a treaty or an executive agreement, Isakower added. “Appropriate legislative action should then quickly be taken to ratify the treaty, if applicable, and pass implementing legislation,” he said. When Salmon asked him if API members see chances to work with Pemex if Mexico makes the necessary reforms, Isakower replied: “I believe they see many opportunities going forward. [TBHA] is only the first step. Working with Pemex on trans-boundary projects is very important because it may provide opportunities to work with Pemex long-term on other plays.” Full TBHA implementation matters most as a vehicle for cooperation between the two countries, suggested Daniel R. Simmons, regulatory and state affairs director for the Institute for Energy Research. “Mexico has an estimated 10.5 billion bbl of proven oil reserves, but that amount could double when unconventional and deepwater resources become proven reserves,” he said. “[TBHA] is important for the production of some of these deepwater resources.”

Snow ‘13 [Nick Snow is a Washington Editor, Oil & Gas Journal, 3/14/13, “House panel asks Obama to take energy steps with Mexico, Canada,” http://www.ogj.com/articles/2013/03/house-panel-asks-obama-to-take-energy-steps-with-mexico--canada.html]

Approving and implementing TBHA is very important, Approving the treaty will create legal certainty for US and Mexican firms encouraging them to engage in the risk-taking required to produce oil from deep water, US ratification would encourage US independents and Pemex) to jointly develop resources in the gulf This agreement will provide legal certainty which will encourage investment TBHA] is the first step Working with Pemex may provide opportunities to work with Pemex long-term Mexico has an estimated 10.5 billion bbl of proven oil reserves, but that amount could double when unconventional and deepwater resources become proven reserves TBHA] is important for the production of these deepwater resources.”

Status quo development doesn’t link because of uncertainty – TBHA ratification key to huge amounts of new oil

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Northwestern (NHSI)

Case Negatives

2013

To further answer the question of what happens in Mexico beyond Cantarell, the current predicament and context must be acknowledged. Indeed, estimates have pointed to oil production average decline rates of about 5 percent per year, beginning in 2010. In the last few years, talk has emerged that Mexico will likely cease to be an oil exporter by the end of the current decade. The Energy Information Administration, however, indicates that may be an optimistic premise: In its International Energy Outlook 2010, it estimated that Mexico could become a net importer by 2015, with imports surpassing 1 mbd by 2035. It is also worth noting that Mexico’s stated plan to deal with the foregoing scenarios and its hope to reverse these ominous trends lie in the deep waters on Mexico’s side of the Gulf. The touted “treasure at the bottom of the sea” bandied about during the 2008 energy reform debate remains the true “X factor” for any legitimate answers to what happens beyond Cantarell, and whether or not the EIA forecast for imports in 25 years holds true.

Martin ’11 [Jeremy Martin is the Director of the Energy Program at the Institute of the Americas; and Sylvia Longmire, a Mexico Security Expert & President, Longmire Consulting, 3/15/11, “The Perilous Intersection of Mexico’s Drug War & Pemex,” Journal of Energy Security, http://www.ensec.org/index.php?option=com_content&view=article&id=283:the-perilous-intersection-of-mexicos-drug-war-aamp-pemex&catid=114:content0211&Itemid=374]

To answer what happens in Mexico beyond Cantarell, the current predicament must be acknowledged estimates pointed to oil production decline rates of percent per year, Mexico will likely cease to be an oil exporter Mexico could become a net importer by 2015, that Mexico’s stated plan to reverse these ominous trends lie in the deep waters on Mexico’s side of the Gulf The treasure at the bottom of the sea remains the true “X factor

Mexican oil production is declining now - Gulf drilling reverses current trends-

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Case Negatives

2013

In other words, rising U.S. production is having a moderating effect on global prices. But don’t expect to see a big impact at your local filling station. The fracking boom has boosted U.S. production by roughly 2 million barrels per day over the past five years. That’s a big increase by domestic standards, but it represents just over 2% of worldwide oil consumption — hardly enough to cause a big drop in prices. Moreover, the U.S. may be seeing rising supplies and moderating demand, but the rest of the world is just the opposite. Global demand is rising, driven by economic growth in China and other emerging economies. And supplies outside of North America have been held in check by the decline of older oil fields and efforts by the OPEC cartel to maintain high prices through production limits. None of that is likely to change anytime soon.

Casselman 6/29/13 [June 29, 2013. Ben Casselman is an economics reporter for the Wall Street Journal. “Number of the Week: U.S. Oil Boom Affecting Global Prices” http://blogs.wsj.com/economics/2013/06/29/number-of-the-week-u-s-oil-boom-affecting-global-prices/]

, rising U.S. production is having a moderating effect on global prices. The fracking boom has boosted U.S. production by roughly 2 million barrels That’s a big increase by domestic standards, but just over 2% of worldwide oil consumption hardly enough to cause a big drop in prices

Status quo production isn’t enough to massively affect prices – aff is key

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Northwestern (NHSI)

Case Negatives

2013

In the view of Russians interviewed by the authors, this paucity of cooperation results from perceived impediments erected by the U.S. government. Similarly, Russian officials see the shale gas revolution as a conspiracy on the part of the United States to undermine Russia’s role in energy markets. Absent forward momentum, the Russia-U.S. energy relationship might even deteriorate. The United States could soon become a major energy exporter again, which would lead to direct energy sales competition between Russia and the United States for the first time in history. One major opportunity for enhanced partnership, as opposed to competition, is the deal reached last August between Exxon Mobil and Rosneft. The project has only recently begun the preliminary seismic surveys, technical assessments and environmental studies that would allow any substantial drilling to start. Bringing the project to fruition, and augmenting it with near-term cooperation on tight oil and other energy projects, is important for both sides. Concrete Russia-U.S. energy collaboration could help dispel mutual misconceptions and perhaps spur U.S. and Russian economic cooperation in other areas. That in turn could help to increase the number of stakeholders in both countries that share an interest in maintaining good relations. These kinds of private-sector ties, as much as political will in Washington and Moscow, will contribute to the health of bilateral ties moving forward.

Weitz ’13 [January 29, 2013. Richard Weitz is a senior fellow and director of the Center for Political-Military Affairs at Hudson Institute. “Global Insights: Oil Sector a Challenge for Russia, Opportunity for U.S.,” World Politics Review. http://www.worldpoliticsreview.com/articles/12672/global-insights-oil-sector-a-challenge-for-russia-opportunity-for-u-s]

Russian officials see the shale gas revolution as a conspiracy on the part of the United States to undermine Russia’s role in energy markets the Russia-U.S. energy relationship might deteriorate The United States could become a major energy exporter which would lead to direct sales competition between Russia and the United States One opportunity for enhanced partnership is the deal between Exxon Mobil and Rosneft Concrete Russia-U.S. energy collaboration could help dispel mutual misconceptions and spur U.S. and Russian economic cooperation in other areas That could help to increase stakeholders that share an interest in maintaining good relations private-sector ties, will contribute to the health of bilateral ties

US LNG exports are perceived as competition with Russia – destroys opportunities for energy cooperation and broader relations

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2013

That central point is that Russia matters a great deal to a U.S. government seeking to defend and advance its national interests. Prime Minister Vladimir Putin’s decision to return next year as president makes it all the more critical for Washington to manage its relationship with Russia through coherent, realistic policies. No one denies that Russia is a dangerous, difficult, often disappointing state to do business with. We should not overlook its many human rights and legal failures. Nonetheless, Russia is a player whose choices affect our vital interests in nuclear security and energy. It is key to supplying 100,000 U.S. troops fighting in Afghanistan and preventing Iran from acquiring nuclear weapons. Ten realities require U.S. policymakers to advance our nation’s interests by engaging and working with Moscow. First, Russia remains the only nation that can erase the United States from the map in 30 minutes. As every president since John F. Kennedy has recognized, Russia’s cooperation is critical to averting nuclear war. Second, Russia is our most consequential partner in preventing nuclear terrorism. Through a combination of more than $11 billion in U.S. aid, provided through the Nunn-Lugar Cooperative Threat Reduction program, and impressive Russian professionalism, two decades after the collapse of the “evil empire,” not one nuclear weapon has been found loose. Third, Russia plays an essential role in preventing the proliferation of nuclear weapons and missile-delivery systems. As Washington seeks to stop Iran’s drive toward nuclear weapons, Russian choices to sell or withhold sensitive technologies are the difference between failure and the possibility of success. Fourth, Russian support in sharing intelligence and cooperating in operations remains essential to the U.S. war to destroy Al Qaeda and combat other transnational terrorist groups. Fifth, Russia provides a vital supply line to 100,000 U.S. troops fighting in Afghanistan. As U.S. relations with Pakistan have deteriorated, the Russian lifeline has grown ever more important and now accounts for half all daily deliveries. Sixth, Russia is the world’s largest oil producer and second largest gas producer. Over the past decade, Russia has added more oil and gas exports to world energy markets than any other nation. Most major energy transport routes from Eurasia start in Russia or cross its nine time zones. As citizens of a country that imports two of every three of the 20 million barrels of oil that fuel U.S. cars daily, Americans feel Russia’s impact at our gas pumps. Seventh, Moscow is an important player in today’s international system. It is no accident that Russia is one of the five veto-wielding, permanent members of the U.N. Security Council, as well as a member of the G-8 and G-20. A Moscow more closely aligned with U.S. goals would be significant in the balance of power to shape an environment in which China can emerge as a global power without overturning the existing order. Eighth, Russia is the largest country on Earth by land area, abutting China on the East, Poland in the West and the United States across the Arctic. This territory provides transit corridors for supplies to global markets whose stability is vital to the U.S. economy. Ninth, Russia’s brainpower is reflected in the fact that it has won more Nobel Prizes for science than all of Asia, places first in most math competitions and dominates the world chess masters list. The only way U.S. astronauts can now travel to and from the International Space Station is to hitch a ride on Russian rockets. The co-founder of the most advanced digital company in the world, Google, is Russian-born Sergei Brin. Tenth, Russia’s potential as a spoiler is difficult to exaggerate. Consider what a Russian president intent on frustrating U.S. international objectives could do — from stopping the supply flow to Afghanistan to selling S-300 air defense missiles to Tehran to joining China in preventing U.N. Security Council resolutions.

Allison 11 [October 30, 2011. Graham Allison is Director of the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government. “10 reasons why Russia still matters,” http://dyn.politico.com/printstory.cfm?uuid=161EF282-72F9-4D48-8B9C-C5B3396CA0E6]

Russia matters a great deal Putin’s return as president makes it more critical for Washington to manage its relationship with Russia Russia is a player whose choices affect our vital interests in nuclear security and energy. It is key to preventing Iran from acquiring nuclear weapons. Russia remains the only nation that can erase the United States from the map in 30 minutes. Russia’s cooperation is critical to averting nuclear war. Russia is our most consequential partner in preventing nuclear terrorism Through Cooperative Threat Reduction not one nuclear weapon has been found loose Russia plays an essential role in preventing the proliferation of nuclear weapons and missile-delivery systems to stop Iran Russian choices to sell or withhold sensitive technologies are the difference between failure and the possibility of success. Russian support remains essential to combat terrorist groups Moscow is an important player in today’s international system Moscow more closely aligned with U.S. goals would be significant in the balance of power to shape an environment in which China can emerge as a global power without overturning the existing order. Russia provides transit corridors for supplies to global markets whose stability is vital to the U.S. economy Russia’s potential as a spoiler is difficult to exaggerate. Consider what a Russian president intent on frustrating U.S. international objectives could do — from selling S-300 air defense missiles to Tehran to joining China in preventing U.N. Security Council resolutions

Russian relations are key to preventing extinction

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Case Negatives

2013

Russia‘s economy is probably not, as Ksenia Yudaeva, Russia’s representative to the Group of 20 nations told Bloomberg the other day, “already in recession,” but it’s economy is clearly decelerating: growth for 2012 as a whole was 3.4%, but in the 4th quarter of 2012 it was only around 2.1% and provisional estimates of growth in the 1st quarter of 2013 are only around 1.1%. The economic slowdown is so significant that it has already been reflected in the Economy ministry’s 2013 growth forecast, which was recently slashed from 3.6% to 2.4%. Before proceeding further it seems worth noting that the initial forecast of 3.6% wasn’t bizarrely optimistic or unrealistic: the IMF’s 2013 projection for Russia was actually marginally higher at 3.7%, and other forecasts generally had Russia in the 3.5% range of unspectacular but reasonable growth. So what changed? Well one thing that a lot of different outlets seem to agree on is that “external demand” (i.e. “Europe”) is having a major impact. Here’s Reuters: “Russia’s GDP grew at around one percent in the first quarter, weighed down by lacklustre investment and a decline in exports of strategic commodities such as natural gas that were hit by a slump in the European market.” Here’s the same WSJ article I quoted earlier: “The Economy Ministry said weakness across a broad range of sectors lay behind the cut in the forecast. Exports are stagnating amid weaknesses in Russia’s main market, Europe, where Russian natural gas is facing newfound competition.” And here’s another Bloomberg article: “Russia’s $2 trillion economy is growing at the weakest pace since a 2009 contraction as Europe’s debt crisis curbed exports and prompted companies to trim investment”

Adomanis 4/7/13 [Mark Adomanis is a contributor to Forbes who specializes in Russian economics and demographics. “Russia's Economy Is Rapidly Slowing And The Kremlin's Options Are Limited” Forbes. http://www.forbes.com/sites/markadomanis/2013/04/17/russias-economy-is-rapidly-slowing-and-kremlins-options-are-limited/]

Russia‘s economy is clearly decelerating growth for the 4th quarter was 2.1% and growth in the 1st quarter are only around 1.1%. The economic slowdown has already been reflected in the Economy ministry’s 2013 growth forecast Russia’s GDP grew at around one percent weighed down by a decline in exports of natural gas Exports are stagnating amid weaknesses in Russia’s main market Russian natural gas is facing newfound competition

Russian economy is on the brink – natural gas key

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Northwestern (NHSI)

Case Negatives

2013

Maintaining market share and oil-indexed prices are major concerns for Russia. Russia holds the world’s largest natural gas reserves and was the largest producer until the U.S. overtook it in 2011 with the growth in U.S. shale gas production. Gas export is vital to the Russian economy, contributing about $64 billion in revenues in 2011.7 Russia has jealously guarded its European market share through control of its pipeline transit capacities. By restricting access to its transit pipelines, Russia is able to prevent supplies from other countries, such as Turkmenistan which holds an estimated 500 Tcf of proved reserves, from reaching lucrative European markets and competing with Russian supplies. The strategy was working well until several years ago when economic recession caused European gas demand to stagnate and at the same time more LNG supplies, particularly from Qatar, became available. Qatar had increased its LNG liquefaction capacity in anticipation of exports to the U.S., but its plans were stymied by U.S. shale gas production which eliminated the need for imports. As a consequence, European prices fell and Russians were pressured to offer more competitive prices than the contractual oil-indexed prices. During the past year, several European companies successfully renegotiated their contracts and extracted discounts from Russia. U.S. LNG exports will likely apply greater pressure on Russia and other gas exporters to transition to competitively set prices. Based on WGM projections using the two market scenarios, Russian revenues from exports to Europe are estimated to be significantly impacted by U.S. LNG exports, which will both displace some amount of Russian exports to Europe and reduce the price Russians receive in Europe. The table in Figure 3.5 shows the projected impact of U.S. LNG exports on Russian revenues (in 2012 U.S. dollars) from exports to Europe. Of course, the impact is higher when U.S. LNG exports are sent to Europe instead of Asia since there is direct competition with Russian supply and greater European price impact. Perhaps a bit surprisingly, the impact is higher under the Competitive Response case than in the BAU scenario. The reason is that under the BAU scenario, in which Russia and other major current gas exporters adhere to oil-price indexation, Russian exports to Europe are reduced down to the minimum take volumes as competitively priced supplies displace the oil-indexed flexible volumes. Hence, U.S. LNG exports have little impact on Russian volumes and most of the impact is through lower prices it receives in European markets for their exports. In the Competitive Response scenario, Russia is assumed to price more of its supplies on a competitive basis and therefore more Russian volumes are exported to Europe than under the BAU market scenario. With U.S. LNG exports, some of these non-minimum take volumes are displaced. Therefore, Russia is hit by both loss of volume and erosion of price under the Competitive Response scenario. These scenarios indicate that U.S. LNG exports may lead Russia to price its supplies on a competitive basis or be relegated to just selling its minimum take contracted volumes.

Choi and Robertson ’13 [2013. Tom Choi is a Natural Gas Market Leader at Deloitte MarketPoint LLC. Peter J. Robertson is an Independent Senior Advisor on Oil & Gas for Deloitte LLP. “Global impacts of LNG exports from the United States “ Deloitte. http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Energy_us_er/us_er_GlobalImpactUSLNGExports_AmericanRenaissance_Jan2013.pdf]

Maintaining market share and oil-indexed prices are major concerns for Russia ussia holds the world’s largest natural gas reserves Gas export is vital to the Russian economy contributing about $64 billion in revenues Russia has jealously guarded its European market share through control of its pipeline transit capacities. By restricting access to its transit pipelines, Russia is able to prevent supplies from other countries The strategy was working until supplies, became available Qatar increased its LNG liquefaction capacity plans were stymied by U.S. shale gas production which eliminated the need for imports European prices fell and Russians were pressured to offer more competitive prices U.S. LNG exports will likely apply greater pressure on Russia and other gas exporters to transition to competitively set prices. Russian revenues from exports to Europe are estimated to be significantly impacted by U.S. LNG exports, which will both displace some amount of Russian exports to Europe and reduce the price Russians receive in Europe Russian exports to Europe are reduced down to the minimum take volumes as competitively priced supplies displace the oil-indexed flexible volumes. U.S. LNG exports impact through lower prices Russia is hit by both loss of volume and erosion of price under U.S. LNG exports may lead Russia to price its supplies on a competitive basis or be relegated to just selling its minimum take contracted volumes.

US LNG exports will apply pressure on Russia and significantly impact their economy

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Northwestern (NHSI)

Case Negatives

2013

In Russia historically, economic health and political stability are intertwined to a degree that is rarely encountered in other major industrialized economies. It was the economic stagnation of the former Soviet Union that led to its political downfall. Similarly, Medvedev and Putin, both intimately acquainted with their nation’s history, are unquestionably alarmed at the prospect that Russia’s economic crisis will endanger the nation’s political stability, achieved at great cost after years of chaos following the demise of the Soviet Union. Already, strikes and protests are occurring among rank and file workers facing unemployment or non-payment of their salaries. Recent polling demonstrates that the once supreme popularity ratings of Putin and Medvedev are eroding rapidly. Beyond the political elites are the financial oligarchs, who have been forced to deleverage, even unloading their yachts and executive jets in a desperate attempt to raise cash. Should the Russian economy deteriorate to the point where economic collapse is not out of the question, the impact will go far beyond the obvious accelerant such an outcome would be for the Global Economic Crisis. There is a geopolitical dimension that is even more relevant then the economic context. Despite its economic vulnerabilities and perceived decline from superpower status, Russia remains one of only two nations on earth with a nuclear arsenal of sufficient scope and capability to destroy the world as we know it. For that reason, it is not only President Medvedev and Prime Minister Putin who will be lying awake at nights over the prospect that a national economic crisis can transform itself into a virulent and destabilizing social and political upheaval. It just may be possible that U.S. President Barack Obama’s national security team has already briefed him about the consequences of a major economic meltdown in Russia for the peace of the world. After all, the most recent national intelligence estimates put out by the U.S. intelligence community have already concluded that the Global Economic Crisis represents the greatest national security threat to the United States, due to its facilitating political instability in the world. During the years Boris Yeltsin ruled Russia, security forces responsible for guarding the nation’s nuclear arsenal went without pay for months at a time, leading to fears that desperate personnel would illicitly sell nuclear weapons to terrorist organizations. If the current economic crisis in Russia were to deteriorate much further, how secure would the Russian nuclear arsenal remain? It may be that the financial impact of the Global Economic Crisis is its least dangerous consequence.

Filger 9 – Sheldon, author and blogger for the Huffington Post, “Russian Economy Faces Disastrous Free Fall Contraction” http://www.globaleconomiccrisis.com/blog/archives/356

In Russia economic health and political stability are intertwined to a degree that is rarely encountered in other major economies Medvedev and Putin are unquestionably alarmed at the prospect that Russia’s economic crisis will endanger the nation’s political stability Should the Russian economy deteriorate the impact will go far beyond the obvious accelerant such an outcome would be for the Global Economic Crisis Russia remains one of only two nations on earth with a nuclear arsenal of sufficient scope and capability to destroy the world a national economic crisis can transform itself into a virulent and destabilizing social and political upheaval During the years Yeltsin ruled security forces guarding the nuclear arsenal went without pay leading to fears that personnel would sell nuclear weapons to terrorist organizations. If the current economic crisis in Russia were to deteriorate much further, how secure would the Russian nuclear arsenal remain? It may be that the financial impact of the Global Economic Crisis is its least dangerous consequence.

Russian economic crisis leads to nuclear war

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Northwestern (NHSI)

Case Negatives

2013

The emergence of global, rather than regional, gas markets will have a tremendous impact on Gazprom’s negotiating power in markets where it has exploited its position as a dominant supplier. When and if the United States and Canada become net LNG exporters,7 they will for the first time directly compete with Russian gas exports in Europe and Asia. Given the dependence of Russia’s economy on these gas exports, Russian leaders are understandably alarmed at the prospect of such competition. What role should the United States play in Russia’s relationship with its oil and gas customers? Russian energy strategy is built on special relationships with buyers in post-Soviet Eurasia and in Europe. Although the United States and the European Union have at times encouraged states in post-Soviet Eurasia to “move away” from Russia, the West, broadly conceived, has not been prepared to foot the bill for the subsidized Russian gas these countries depend upon for economic survival.

Abdelal and Mitrova ’13 [Rawi Abdelal is the Joseph C. Wilson Professor of Business Administration at Harvard Business School and the Chair of the MBA Required Curriculum. Tatiana Mitrova is the Head of Global Energy at the Moscow School of Management SKOLKOVO Energy Center and Head of the Center for International Energy Markets Studies at the Energy Research Institute of the Russian Academy of Sciences, January 2013, “U.S.-Russia Relations and the Hydrocarbon Markets of Eurasia,” http://daviscenter.fas.harvard.edu/publications/us-russiafuture/us-russiafuture_working_group_paper_2_EN.pdf]

The emergence of global, gas markets will have a tremendous impact on Gazprom if the United States become net LNG exporters they will compete with Russian gas exports in Europe and Asia Given the dependence of Russia’s economy on gas exports, Russian leaders are alarmed Russian energy strategy is built on special relationships the West, has not been prepared to foot the bill

US encroachment on Russian gas exports triggers volatile competition

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Northwestern (NHSI)

Case Negatives

2013

Second, Russia’s relationships with oil and gas customers do not, and will not, have a major impact on U.S. national interests. The United States is very quickly changing its position from strongly dependent on hydrocarbon imports to much more self-sufficient (primarily due to the unconventional gas and shale oil production boom). The United States is not— and is unlikely to become—an important market for Russian energy exports. However, a number of European allies and key partners, as well as Russia’s neighbors in post-Soviet Eurasia, depend on imported gas and oil from Russia. As European and Eurasian policy makers and business executives have sought to manage this energy relationship, some U.S. policy makers have attempted to insert themselves, taking firm positions on the organization of a relationship in which the United States has no direct role. Third, energy exports are a critical source of revenue for the Russian government, though they are not (Russian bluster and U.S. alarmism notwithstanding) a significant source of geopolitical power. Taking the bluster at face value, U.S. policy makers have generally failed to recognize that Russia’s growing dependence on hydrocarbon exports is a sign of vulnerability, not strength. Moreover, this vulnerability runs deep; the Russian budget depends on the ability of Russian firms to export oil and gas.

Abdelal and Mitrova ’13 [Rawi Abdelal is the Joseph C. Wilson Professor of Business Administration at Harvard Business School and the Chair of the MBA Required Curriculum. Tatiana Mitrova is the Head of Global Energy at the Moscow School of Management SKOLKOVO Energy Center and Head of the Center for International Energy Markets Studies at the Energy Research Institute of the Russian Academy of Sciences, January 2013, “U.S.-Russia Relations and the Hydrocarbon Markets of Eurasia,” http://daviscenter.fas.harvard.edu/publications/us-russiafuture/us-russiafuture_working_group_paper_2_EN.pdf]

, Russia’s relationships with gas customers do not, and will not, have a major impact on U.S. national interests The United States is changing its position to much more self-sufficient he United States is not an important market for Russian energy exports a number of European allies and key partners depend on imported gas and oil from Russia As European policy makers ave sought to manage this energy relationshi U.S. policy makers attempted to insert themselves taking firm positions on the organization of a relationship in which the United States has no direct role energy exports are a critical source of revenue for the Russian government though they are no a significant source of geopolitical power. .S. policy makers have generally failed to recognize that Russia’s growing dependence on hydrocarbon exports is a sign of vulnerability, this vulnerability runs deep the Russian budget depends on the ability of Russian firms to export oil and gas.

The plan takes advantage of Russian vulnerability as it inserts US action where their presence isn’t needed

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Northwestern (NHSI)

Case Negatives

2013

After an initial hesitation, the United States and other Western nations have followed the advice to sideline Russia in the region. Yet the West’s attempts to secure and stabilize Eurasia after the end of the Cold War should be recognized as a failure. Eurasia has not become stable or peaceful and continues to disintegrate. The arrogant bureaucrats in Washington and Brussels have failed to understand that they lack the resources, the will, and the experience to stabilize the complex region. Today – after the Iraq war and the global financial crisis – the United States is beginning to recognize its over-extension in the world, but it is not at all clear if Washington and Brussels are prepared to act differently in Eurasia. Rather than being guided by the Russia irrelevance approach, Western diplomacy will do well to recognize that, even while unable to prevent a further meltdown of Eurasia on its own, Russia remains a critically important and potentially indispensable power. Russia’s importance in Eurasia can be described in four principal ways. First, Russia continues to possess dominant military and diplomatic resources which it has already used effectively to resolve several violent conflicts in the region, such as those in Tajikistan and Moldova in the 1990s and in Georgia in 2008. Second, Russia remains a nation with an incomparable historical experience and cultural capital for pacifying the volatile territories from the Balkans to Central Asia. The nations of Eurasia go back centuries and have developed similar cultural experiences. During the Soviet era, they shared external borders, fought the same enemies, and were subject to similar linguistic and cultural policies. Although the Baltics were independent during the interwar years and preserved a sense of national identity even while a part of the Soviet empire, other republics’ experience with statehood was too short and fragmented to develop a sufficiently strong sense of cultural distinctiveness. Russian was the common second language in non-Russian republics and the mother tongue of many professionals and politicians. Today it remains the common language uniting the former republics. People across the region watch the same Russian-language news broadcasts, movies, serials, and soap operas. They eat many of the same foods, especially on holidays, and support the Russian football team in international competitions. The bonds across republics are strongest among business and political elites, many of whom were educated in the same universities, worked in the same institutions, and served together in the Soviet army.42 Third, Russia is able to serve as a state-building example in the region. Although it is in no position to offer viable competition to the United States’ liberal democratic ideas, Russia has been perceived by many in the region as generally successful in accomplishing other state-building tasks, such as providing citizens with order, basic social services and protection against external threats. This explains why ordinary people and many politicians from Central Asia to Ukraine often rate Russia’s current leaders higher than their own.43 Even outside the region, the influence of Russia’s state-building experience is considerable and rising. For instance, the report by the European Council on Foreign Relations provides evidence of Russia and China’s ability to attract votes at the United Nations. The report notes that since the late 1990s, support for Russian positions has risen from around 50%–76% today, while support for the EU and US fell from over 70% and 75% to around 50% and a mere 30%, respectively.44 Finally, Russia possesses enormous energy reserves which it has been successfully exploiting to its advantage. Russia has approximately 13% of the world’s known oil reserves and 34% of its gas reserves.45 This power resource has gained in importance as global energy demand and prices have risen. As a result of competition with the Kremlin over resources in Russia and the Caspian region, American and European companies lost many opportunities. Meanwhile, Russia remained an important oil and gas producer, preserving its status as a major transit country through which to carry energy from the Caucasus and Central Asia to Europe. Part of Russia’s negotiating success stems from the fact that the republics used to be linked together in what Soviet planners called a “single economic complex” that was anchored by Russia. International trade and investment networks from the Soviet era continue to facilitate commerce by keeping transaction costs low. After the breakup, several republics, including Central Asia’s, Belarus and Armenia, initially opposed the idea of establishing their own currencies and severing commercial links with Russia. Russia has been slow to withdraw its energy subsidies for the former Soviet states, and all of them have taken advantage of this discount. Transit states, such as the Baltics, Ukraine, Moldova and Belarus, profited handsomely by reselling considerable portions of Russian supplies to European consumers at the world market price. Today, millions of labor migrants from the poorer republics - Moldova, Tajikistan, and Azerbaijan, for example - earn a living in Russia because there are not enough jobs at home. Of other large powers acting in this part of the world, only Russia remains irreplaceable because it possesses all the four listed attributes. By contrast, other leading powers, such as China, the United States and the European Union can only claim two out of four – military and diplomatic tools as well as various components of the state-building experience, but not the cultural capital and the energy reserves. 8. Preventing Eurasian collapse Given the significance of Eurasia, preventing a collapse of the region should be a number one priority. Although Russia alone is not the solution, recognizing its critical role in stabilizing Eurasia is essential. Once this is done in practice, and not rhetorically, many pieces of the region’s puzzle will start falling into their places. Energy supplies will become more reliable; governments in politically contested areas, like Georgia, Ukraine and Moldova, will obtain a greater legitimacy; and the so-called frozen conflicts will have a better opportunity to be resolved. Russia’s recent resurgence is a response to its lacking recognition as as a vital power and partner of the West. Continuously denying Russia a genuine engagement in the region–under false pretenses of its “neoimperialism” or “irrelevance” – is sure to bring additional counter-productive effects. If nothing changes on the West’s part and if Russia chooses to dedicate itself to obstructing Western policies in Eurasia, we will soon see the collapsing dynamics in the region. Ukraine and Moldova may disintegrate, as did Georgia. Belarus may be reintegrated with Russia. Central Asia and Azerbaijan are likely to be subjected to a much greater degree of instability with unpredictable consequences. Russia too will suffer greatly as its modernization processes will be derailed. In short, the region may change beyond recognition – mostly through use of force. Russia, of course, is only a part of the solution. Other major powers must become involved as participants in establishing a collective security arrangement in Eurasia. From a security perspective, it is important that the three most prominent actors in the region, NATO, SCO, and the Collective Security Treaty Organization (CSTO), develop a joint assessment of threat and coordinate their policies. Instead of expanding its reach further, NATO ought to learn its limitations and stop efforts to solve problems in Afghanistan or elsewhere unilaterally. Without a full- fledged involvement of SCO and CSTO, Afghanistan is likely to turn into another version of Iraq, with additional negative implications for the U.S. reputation in the world. What is referred to as “Obama’s war” by pundits46 has the potential of carrying lasting destructive consequences for the larger Eurasian region. Kyrgyzstan may serve as an example of how great powers mismanage crises in the region. When the country went through its first violent change of power in March 2005, the event – accompanied by an even worst violence in Uzbekistan’s Andijan in May 2005 – had the potential to spread a greater instability in the region. Yet the large powers were unable to agree on a unified response. The change of power was strongly supported by the United States and the European Union, while Russia and China viewed the event as directed against their power and security. When another, even more violent round of power struggle occurred in Kyrgyzstan in June 2010, it again elicited no serious response from key powers or international organizations in the region. In the meantime, the new interim government in Bishkek failed to gain control over the country, and the southern part – a stronghold of the ousted president Kurmanbek Bakiev – became a de facto independent.47 The new elections that followed legitimized the situation by empowering Bakiev’s party and delivering a blow to the ruling coalition.48 The absence of an agreement among key powers49 and a functional collective security system in the region are sure to continue to serve as catalists for Kyrgyzstan’s continued destabilization. Another key issue is energy security. Although theoretically Russia and the Western nations in the region could build an energy consortium and even cooperate on the basis of the International Energy Agency (IAE), in practice they are engaged in a highly competitive zero sum interaction. A new, shared understanding of energy challenges must be reached which would encourage a mutual respect for each side’s critical interests. Viewing Russia as a potentially reliable alternative to traditional Middle Eastern sources of energy may serve the West and members of the region better than the image of a “neo-imperialist” bully that only seeks to subvert its neighbors’ policies. Here, too, one might take advantage of existing yet poorly exploited arrangements. For instance, the Caspian Pipeline Consortium’s principles allow for a joint exploitation of existing reserves and transportation routes and may be extended to other projects. Trying to persuade European countries to invest additional billions into the Russia alternative Nabucco pipeline may well turn out to be a waste of money and time. As the West and Russia continue their scramble for Caspian resources, both Kazakhstan and Turkmenistan are building pipelines to China and may at some point consider cooperation with the Asian giant more advantageous to their interests. A more important and potentially unifying idea for all the parties would be to engage in the construction of acceptable rules and principles of energy security among Eurasia’s powers. Finally, for restoring the region’s capacity to function and perform basic services for its residents it is critical to curb the Russophobic nationalism. While rebuilding a Russia-centered empire would be very dangerous, there is hardly an alternative to the emergence of an economically and culturally transparent community of nations with strong ties to the former metropole. For Russia not to raise the issue of ethnic “reunification” of some 20 million Russians living outside their “homeland”, it is necessary to facilitate the establishment of conditions for cultural openness across the region. Russians and other ethnic minorities must be able freely to travel, practice their linguistic and religious needs, and celebrate their historically significant events. The overall objective of the outside world should be to strengthen Russia’s confidence as a regional great power, while discouraging it from engaging in revisionist behavior.

Tsygankov ’12 [Andrei P. Tsygankov is a Professor at the Departments of Political Science and International Relations, San Francisco State University, January 2012, “The Heartland No More: Russia’s Weakness and Eurasia’s Meltdown,” Journal of Eurasian Studies, Vol. 3, No. ]

Washington lack the resources to stabilize the complex region Russia remains a critically important and potentially indispensable power Russia continues to possess dominant military resources to resolve conflicts in volatile territories from the Balkans to Central Asia Russia is able to serve as a state-building example in the region Russia possesses enormous energy reserves which it has been successfully exploiting to its advantage. Russia has 34% of gas reserves As a result of competition with the Kremlin American companies lost many opportunities Russia remained a major transit country through which to carry energy Of other large powers only Russia remains irreplaceable because it possesses all four attributes. the U S can only claim two out of four Given the significance of Eurasia, preventing a collapse of the region should be a number one priority Russia is critical in stabilizing Eurasia Continuously denying Russia a genuine engagemen sure to bring additional counter-productive effects If nothing changes on the West’s part and if Russia chooses to dedicate itself to obstructing Western policies in Eurasia, we will soon see the collapsing dynamics in the region. Ukraine and Moldova may disintegrate, . Belarus may be reintegrated with Russia Central Asia and Azerbaijan are likely to be subjected to a much greater instability with unpredictable consequences the region may change beyond recognition through use of force . Kyrgyzstan may serve as an example of how great powers mismanage crises even worst violence had the potential to spread a greater instability in the region large powers were unable to agree on a unified response Another key issue is energy security Although theoretically Russia and the Western nations could build an energy consortium and even cooperate in practice they are engaged in a highly competitive zero sum interaction. Viewing Russia as a potentially reliable alternative to Middle Eastern sources of energy may serve the West better than the image of a “neo-imperialist” bully that only seeks to subvert its neighbors’ policies The overall objective should be to strengthen Russia’s confidence as a regional great power, while discouraging it from engaging in revisionist behavior.

US-Russia energy cooperation is vital for Eurasian stability – spills over to the broader region

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Northwestern (NHSI)

Case Negatives

2013

Thus many structural conditions for conventional war or protracted ethnic conflict where third parties intervene now exist in the Trans caucasus and Central Asia. The outbreak of violence by disaffected Islamic elements, the drug trade, the Chechen wars, and the unresolved ethnopolitical conflicts that dot the region, not to mention the undemocratic and unbalanced distribution of income across corrupt governments, provide plenty of tinder for future fires. Many Third World conflicts generated by local structural factors also have great potential for unintended escalation. Big powers often feel obliged to rescue their proxies and proteges. One or another big power may fail to grasp the stakes for the other side since interests here are not as clear as in Europe. Hence commitments involving the use of nuclear weapons or perhaps even conventional war to prevent defeat of a client are not well established or clear as in Europe. For instance, in 1993 Turkish noises about intervening on behalf of Azerbaijan induced Russian leaders to threaten a nuclear war in that case. Precisely because Turkey is a NATO ally but probably could not prevail in a long war against Russia, or if it could, would conceivably trigger a potential nuclear blow (not a small possibility given the erratic nature of Russia's declared nuclear strategies), the danger of major war is higher here than almost everywhere else in the CIS or the "arc of crisis" from the Balkans to China. As Richard Betts has observed, The greatest danger lies in areas where (1) the potential for serious instability is high; (2) both superpowers perceive vital interests; (3) neither recognizes that the other's perceived interest or commitment is as great as its own; (4) both have the capability to inject conventional forces; and (5) neither has willing proxies

Blank 2K [September 22, 2000. Stephen J. Blank is an Expert on the Soviet Bloc for the Strategic Studies Institute. “American Grand Strategy and the Transcaspian Region”, World Affairs.]

many structural conditions for conventional war where third parties intervene exist in Trans caucasus and Central Asia The outbreak of violence by undemocratic and unbalanced distribution of income provide plenty of tinder for future fires conflicts generated by local structural factors also have great potential for unintended escalation. Big powers feel obliged to rescue their proxies One power may fail to grasp the stakes Hence commitments involving the use of nuclear weapons noises about intervening induced Russian leaders to threaten a nuclear war Russia, would conceivably trigger a potential nuclear blow the danger of major war is higher here than almost everywhere The greatest danger lies in areas where potential for serious instability is high superpowers perceive vital interests both have the capability to inject conventional forces; and neither has willing proxies

Eurasian conflict escalates and goes nuclear – uniquely unstable region

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Northwestern (NHSI)

Case Negatives

2013

Energy sectors, including natural gas, play an important role in Russian economy. Energy exports were one of the driving forces of Russia’s economic recovery from the collapse of 1990s. The country enjoyed more than 5 percent annual real economic growth in 2000-2008. However, over-reliance on the revenues from energy exports was also one of the major factors for Russian economic downturn during a global recession of 2008-2009, when a reduction in demand for fossil fuels, and a collapse of oil and energy prices greatly contributed to an almost 8 percent GDP loss in 2009. Demand and prices recovered in 2010, leading to a 3.7 percent GDP growth. The IMF (2011) forecasts 4.5 percent annual GDP growth for Russia for 2011–2012, but the concerns about the viability of Russian growth based on fossil exports remain. Natural gas exports from Russia get special attention in comparison to other energy exports, because Russia has less diversified ways to export natural gas in comparison to oil and coal, which are in general easier to transport. On the demand side, it is also relatively easier to switch from one oil or coal supplier to another, hence the importers have fewer concerns about relying on a single supplier or a limited number of suppliers. As a result, Russian oil and coal exports have not had the disruptions seen in the gas transit routes through Ukraine and Belarus. Russia tries to find a way of reducing reliance on transit countries as disputes with them hurt stable gas supplies. Europe, as the largest importer of Russian gas, tries to find a way of reducing reliance on Russia by moving to liquefied natural gas (LNG) imports by tankers from Africa, the Middle East, and Latin America. The development of shale gas in USA has resulted in a substantial price differential between North American and European (and Asian) natural gas markets. This price differential creates a potential for LNG exports from USA. Future LNG development and emergence of shale gas pose questions about the ability of Russia to keep gas exports to Europe at the recent levels, when about 5.5 trillion cubic feet (Tcf)1 out of a production of 19–21 Tcf were destined to European markets.

Paltsev ’11 [July 2011. Sergey Paltsev is the Assistant Director and Principal Research Scientist for Economic Research at the MIT Joint Program on the Science and Policy of Global Change. “Supplementary Paper SP 3.1: Russia’s Natural Gas Export Potential up to 2050” http://mitei.mit.edu/system/files/NaturalGas_Sup_Paper3.1.pdf]

Energy sectors, including natural gas, play an important role in Russian economy Energy exports were one of the driving forces of Russia’s economic recovery from the collapse of 1990 Natural gas exports from Russia get special attention in comparison to other energy exports, because Russia has less diversified ways to export natural gas in comparison to oil and coal, it is easier to switch from one oil or coal supplier to another, hence the importers have fewer concerns about relying on a single supplier The development of shale gas in USA has resulted in a substantial price differential between North American and European (and Asian) natural gas markets. This price differential creates a potential for LNG exports from USA. Future LNG development and emergence of shale gas pose questions about the ability of Russia to keep gas exports to Europe at the recent levels,

US natural gas exports tradeoff with Russian exports to Europe – natural gas is key to Russia’s economy

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Northwestern (NHSI)

Case Negatives

2013

The reasons for Gazprom’s change of fortune are myriad and complex, but the simplest immediate answer is that new sources of natural gas are shortly coming online, broadening EU options. Azerbaijan’s massive Caspian offshore Shah Deniz field is coming online and new discoveries in Africa and eastern Mediterranean, ranging from Uganda to Israel are also promising for the EU, which currently buys most of its natural gas imports from the Russian Federation and Norway. Europe is also importing increasing amounts of liquefied natural gas from Qatar, and the final “wild card” in the mix is that the burgeoning U.S. shale boom could see the U.S. begin LNG exports in the next several years. Accordingly, if Russia is to retain its dominant EU market share, then it is going to have to start behaving more like a reasonable producer subject to the vagaries of the market place rather than continue to regard its European clientele as option-less consumers to be fleeced as thoroughly as possible at every opportunity.

Daly ’13 [July 25, 2013. Dr. John C.K. Daly is the chief analyst for Oilprice.com. “Russia’s Oil and Natural Gas Industry Facing Market Turmoil” EconoMonitor. http://www.economonitor.com/blog/2013/07/russias-oil-and-natural-gas-industry-facing-market-turmoil/]

The reasons for Gazprom’s change of fortune is that new sources of natural gas are shortly coming online the wild card” in the mix is that the burgeoning U.S. shale boom could see the U.S. begin LNG exports if Russia is to retain its dominant EU market share, then it is going to have to start behaving more like a reasonable producer subject to the vagaries of the market place rather than continue to regard its European clientele as option-less consumers to be fleeced as thoroughly as possible at every opportunity.

Increased US LNG exports pose a threat to Russia

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Northwestern (NHSI)

Case Negatives

2013

Gas exporting countries could suffer a decline in trade revenue due to price erosion and/or supply displacement. Entry of new supply clearly benefits consumers, but negatively impacts suppliers through price reductions and/or direct displacement of their export volumes. Even if gas supply in a region is not directly displaced by U.S. LNG exports, its producers might suffer decline in revenues due to lower prices affecting the region. Furthermore, gas exporting countries could face increased pressure to adopt market-based gas prices in lieu of oil-indexed prices. As the world’s largest gas exporter by both volume and revenue and a high cost gas provider into Europe, Russia appears to be particularly vulnerable, especially if U.S. LNG exports are sent to Europe

Choi and Robertson ’13 [2013. Tom Choi is a Natural Gas Market Leader at Deloitte MarketPoint LLC. Peter J. Robertson is an Independent Senior Advisor on Oil & Gas for Deloitte LLP. “Global impacts of LNG exports from the United States “ Deloitte. http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Energy_us_er/us_er_GlobalImpactUSLNGExports_AmericanRenaissance_Jan2013.pdf]

Gas exporting countries could suffer a decline in trade revenue Entry of new supply negatively impacts suppliers through price reductions and/or direct displacement of their export volumes Even if gas supply in a region is not directly displaced by U.S. LNG exports, its producers might suffer decline in revenues due to lower prices affecting the region. gas exporting countries could face increased pressure to adopt market-based gas prices in lieu of oil-indexed prices the world’s largest gas exporter by both volume and revenue and a high cost gas provider into Europe, Russia appears to be particularly vulnerable, especially if U.S. LNG exports are sent to Europe

Russia is particularly vulnerable to US LNG exports

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Case Negatives

2013

Notice also that even with U.S. LNG exports assumed to be shipped to Asia, projected supplies from the Former Soviet Union (FSU), including Russia and gas-rich Caspian republics such as Turkmenistan and Azerbaijan, and Middle East are displaced. The reductions in volumes are not a result of direct displacement by U.S. LNG exports but rather due to global rebalancing of gas supplies. Some of the supplies displaced out of Asia by U.S. LNG are diverted to European markets. For example, some of the Middle East LNG projected to be displaced in Asia are redirected to Europe and displace European sources, such as Russian gas imports. The interconnectivity and dynamics of global markets imply U.S. LNG exports will have global impacts. If U.S. LNG exports are sent to Europe, the impacts are quite different. The WGM projects there to be less displacement of LNG supplies and more displacement of domestic and pipeline imports. The reason is simple: Europe imports far less LNG to meet its demand than does Asia. If U.S. LNG exports are sent to Europe instead of Asia, there is less displacement of Australian LNG and more displacement of African LNG, which includes supplies from Algeria, Egypt, Nigeria, Equatorial Guinea, and new supplies from Mozambique and Tanzania. Other displaced supplies include European sources, primarily contracted flexible supplies from Norway and the Netherlands, and FSU sources, including Russia and Caspian republics. Notice that Asian supplies are still affected by U.S. exports to Europe because of global gas supply displacement and lower prices. Russia, the leading gas exporter to Europe, appears to be especially hard hit by U.S. LNG exports. Because of its huge volumes of gas exports, primarily to Europe, and their high cost to markets, Russia is vulnerable to supply competition. In Figure 3.4, Russian supplies are estimated to be the high-cost source into European markets and therefore Russian contract supplies above the minimum-take volumes would be the first to be displaced by incremental lower cost supply. With current slack European demand, there is already some displacement of Russian imports, as flexible volumes indexed to oil price have not been utilized by European buyers. U.S. LNG exports to Europe are projected to obviate the need for Russian and some other oil-indexed flexible supplies.

Choi and Robertson ’13 [2013. Tom Choi is a Natural Gas Market Leader at Deloitte MarketPoint LLC. Peter J. Robertson is an Independent Senior Advisor on Oil & Gas for Deloitte LLP. “Global impacts of LNG exports from the United States “ Deloitte. http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Energy_us_er/us_er_GlobalImpactUSLNGExports_AmericanRenaissance_Jan2013.pdf]

with U.S. LNG exports shipped to Asia supplies from Russia are displaced The reductions in volumes are a result of global rebalancing of gas supplies displaced supplies include Russia Asian supplies are still affected by U.S. exports to Europe because of global gas supply displacement and lower prices Russia, the leading gas exporter to Europe, appears to be especially hard hit by U.S. LNG exports Because of its huge volumes of gas exports, primarily to Europe, and their high cost to markets, Russia is vulnerable to supply competition Russian supplies are estimated to be the high-cost source into European markets and therefore Russian contract supplies above the minimum-take volumes would be the first to be displaced by incremental lower cost supply U.S. LNG exports to Europe are projected to obviate the need for Russian and some other oil-indexed flexible supplies.

US LNG exports would displace Russian exports

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Northwestern (NHSI)

Case Negatives

2013

In Europe, where Gazprom once had a reputation for hardball tactics and dictating prices, customers are tapping new sources. Booming shale-gas production in the U.S. has freed up vast quantities of other fuel from around the world, including American coal no longer needed at home. With that new leverage, Gazprom's European customers have squeezed billions of dollars in discounts from the company, and they are pressing for more. Europe is Gazprom's most lucrative market. The company supplies about one-quarter of the European Union's natural gas via a network of pipelines. Gazprom said Tuesday its net profit declined by $6.5 billion, or 15%, in 2012, as sales to the EU fell by about 9%. Gazprom has been the flagship of Russian leader Vladimir Putin's drive to make Russia an energy superpower. The company, which also controls Russia's fourth-largest oil producer, was created two decades ago out of the Soviet Ministry of Gas and is majority-owned by the state. By law, it is the only Russian company permitted to export gas. The company's current struggles are affecting Russia's economy because it accounts for over 10% of export revenues. Earlier this year, Mr. Putin criticized Gazprom for letting exports decline, hurting government tax revenues. In March, government officials warned that stagnant gas exports were a big reason why growth will fall short of Mr. Putin's target of 5% a year. In October, Mr. Putin called on Gazprom to adapt its strategy in response to what he called the "shale revolution."

Marson and Parkinson 5/1/13 [James Marson is an Energy Reporter at The Wall Street Journal. Joe Parkinson is a Bureau Chief at The Wall Street Journal. “In Reversal, Neighbors Squeeze Russia's Gazprom Over Natural-Gas Prices” The Wall Street Journal. http://online.wsj.com/article/SB10001424127887324240804578414912310902382.html]

In Europe, where Gazprom once had a reputation for dictating prices, customers are tapping new sources shale-gas production in the U.S. has freed up vast quantities of other fuel from around the world, Gazprom's European customers have squeezed billions of dollars in discounts its net profit declined by 15% Gazprom has been the flagship o Putin's drive to make Russia an energy superpower. it is the only Russian company permitted to export gas. The company's current struggles are affecting Russia's economy because it accounts for over 10% of export revenues stagnant gas exports were a big reason why growth will fall short of Mr. Putin's target of 5% a year

US production creates competition for Russia – affect Russian economy

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Northwestern (NHSI)

Case Negatives

2013

Europe is an unavoidable panner. The European market consumes 90% of Russia’s total gas exports and 60% of its crude oil, which make up only 25 and 15% of Europe’s total demand, respectively. Russia presently does not have any viable alternative markets remotely equal in size to Europe. Dependence is a two-way phenomenon. “40% of Russian public money” comes from the sale of oil and gas to Europe, and at least 75% of Russian export revenues are linked to the EU’s energy market in general. Without any extant alternative markets to exploit in the near-term, Moscow requires European gas revenues to preserve its own financial solubility. Energy overshadows other concerns. Paillard believes that while the energy trade has, in the past, been “part of a game of blackmail, lies and fear” between Europe and Russia, its new status as a “question of life or death for Russian revitalization” and its importance to Europe’s economic growth mean that neither side can afford to use gas supplies as leverage in other international concerns. In Paillard’s estimation, Brussels and Moscow both regard issues such as human rights or the Chechen conflict as not being worth risking the energy trade over. Therefore, Russian and the European Union are inextricably bound to one another by their mutual dependence on the energy trade. Russia cannot absorb the financial consequences of interrupting the EU revenue stream, while the European Union cannot do without Russian gas supplies. Europe has few alternative suppliers, and cannot develop alternative energy sources in the near term. Russia, meanwhile, is unlikely to be able to diversify its economy or target new markets any better than it has in the past.

Weitz ’11 [Richard Weitz is asenior fellow at the Hudson Institute and a World Politics Review senior editor, November 2011, “Can We Manage a Declining Russia?,” http://www.aei.org/files/2011/12/08/-can-we-manage-a-declining-russia_152701899417.pdf]

The European market consumes 90% of Russia’s total gas exports Russia does not have any viable alternative markets remotely equal in size to Europe 75% of Russian export revenues are linked to the EU’s energy market Moscow requires European gas revenues to preserve its own financial solubility Energy overshadows other concerns energy trade has been a “question of life or death for Russian revitalization neither side can afford to use gas supplies as leverage Russia cannot absorb the financial consequences of interrupting the EU revenue stream, while the European Union cannot do without Russian gas supplie Russia is unlikely to be able to diversify its economy

US exports threaten a national priority of Russia

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Northwestern (NHSI)

Case Negatives

2013

LNG supplies whose development was anchored to the belief that the United States would be a premium market will continue to be diverted. In the reference case, the US market remains the lowest priced major market region in the world throughout the model time horizon. Many US terminals once expected to be actively utilized will remain relatively empty. During the period from 2013 to 2015, US terminals see some growth as new volumes from Australian LNG development push African LNG cargoes to the US market—a trend exacerbated by growth in LNG supply from West Africa in the 2014-20 15 period. The reference case projects that consumers in Europe will receive a double benefit from the rise in global gas supply. Not only will Europe increasingly find alternatives to Russian pipeline supplies, but these alternative supplies will exert pressure on the status quo of indexing gas sales to a premium marker determined by the price of petroleum products. In fact, Russia has already had to accept lower prices for its natural gas and is now allowing a portion of its sales in Europe to be indexed to spot natural gas markets, or regional market hubs, rather than oil prices. This change in pricing terms signals a major paradigm shift. Yet as Europe moves to gas-on-gas pricing, global marker prices in the reference scenario fail to converge through 2040. Europe’s price premium will hover at more than SI above henry Hub prices, even as Europe develops its own shale resource and diversifies sources of supply.

Jaffe and O’Sullivan ’12 [July 2012. Amy Myers Jaffe is the Wallace S. Wilson Fellow in Energy Studies at the James A. Baker III Institute for Public Policy at Rice University in Houston, Texas. Meghan L. O'Sullivan (is a former deputy national security adviser on Iraq and Afghanistan, Jeane Kirkpatrick Professor of the Practice of International Affairs, and senior fellow at Harvard University's John F. Kennedy School of Government Belfer Center for Science and International Affairs. “The Geopolitics of Natural Gas: Report of the Scenarios Workshop of Harvard University’s Belfer Center and Rice University’s Baker Institute Energy Forum” Belfer Center for Science and International Affairs, Harvard Kennedy School. http://www.bakerinstitute.org/publications/EF-pub-HKSGeopoliticsOfNaturalGas-073012.pdf]

the US market remains the lowest priced major market region in the world Many US terminals once expected to be actively utilized will remain relatively empty. Europe increasingly find alternatives to Russian pipeline supplies these alternative supplies will exert pressure on the status quo of indexing gas sales to a premium marker determined by the price of petroleum products. Russia has already had to accept lower prices for its natural gas and is now allowing a portion of its sales in Europe to be indexed to spot natural gas markets, or regional market hubs, rather than oil prices. This change in pricing terms signals a major paradigm shift.

Russia will be forced to accept lower prices on natural gas

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Northwestern (NHSI)

Case Negatives

2013

Recent increases in natural gas reserve estimates and advances in shale gas technology make natural gas a fuel with good prospects to serve a bridge to a low-carbon world. Russia is an important energy supplier as it holds the world largest natural gas reserves and it is the world’s largest exporter of natural gas. Energy was one of the driving forces of Russia’s recent economic recovery from the economic collapse of 1990s. The country enjoyed more that 5 percent annual real economic growth for the period of 2000- 2008. The robust growth with ever increasing energy prices had contributed to a sense of a long-term economic stability in Russia. These prospects have changed drastically with a global recession, and the resulting reduction in demand for fossil fuels, and the collapse of oil and gas prices from their peaks of 2008. An additional factor is an ongoing surge in a liquefied natural gas (LNG) capacity and a development of Central Asia’s and the Middle East gas supplies that can compete with Russian gas in its traditional (European) and potential (Asian) markets. To study the long-term prospects for Russian natural gas, we employ the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the world economy. While we consider the updated reserve estimates for all world regions, in this paper we focus on the results for Russian natural gas trade. The role of natural gas is explored in the context of several policy assumptions: a reference case with no greenhouse gas mitigation policy and scenarios of emissions targets in developed countries where they restrict their greenhouse gas emissions to 50 percent relative to 2005 by 2050. Scenarios where Europe takes on an even more restrictive target of 80 percent reduction of greenhouse gas emissions relative to 2005 by 2050 and reduces its nuclear-based generation are also considered. Asian markets become increasingly important for natural gas exports and several scenarios about their potential development are considered. We found that over the next 20-40 years natural gas can still play a substantial role in Russian exports and there are substantial reserves to support a development of the gas-oriented energy system both in Russia and in its current and potential gas importers. In the Reference scenario, exports of natural gas grow from Russia’s current 7 Tcf to 10-12 Tcf in 2030 and 15-18 Tcf in 2050. Alternative scenarios provide a wider range of projections, with a share of Russian gas exports shipped to Asian markets rising to 30 percent by 2030 and more than 50 percent in 2050. Patterns of international gas trade show increased flows to the Asian region from Central Asia, the Middle East, Australia and Russia. Europe’s reliance on LNG imports increases, while it still maintains sizable imports from Russia.

Paltsev ’11 [July 2011. Sergey Paltsev is the Assistant Director and Principal Research Scientist for Economic Research at the MIT Joint Program on the Science and Policy of Global Change. “Supplementary Paper SP 3.1: Russia’s Natural Gas Export Potential up to 2050” http://mitei.mit.edu/system/files/NaturalGas_Sup_Paper3.1.pdf]

Russia is an important energy supplier it holds the world largest natural gas reserves and it is the world’s largest exporter of natural gas Energy was one of the driving forces of Russia’s recent economic recovery from the economic collapse of 1990s. The robust growth with ever increasing energy prices had contributed to a sense of a long-term economic stability in Russia over the next 20-40 years natural gas can play a substantial role in Russian exports there are substantial reserves to support a development of the gas-oriented energy system in Russia exports of natural gas grow Patterns of international gas trade show increased flows to the Asian region from Russia. Europe’s reliance on LNG imports increases, while it still maintains sizable imports from Russia.

Russia’s natural gas exports are key to economic stability – exports will continue to increase

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Northwestern (NHSI)

Case Negatives

2013

Stable natural gas exports are crucial for the Russian economy as oil and gas revenues are a key element of the federal budget. Gazprom, as the only Russian company exporting gas, permanently wrestles with the dilemma of whether to meet the increasing domestic demand for gas at affordable prices or to increase its gas exports abroad, mainly to Europe The new Nord Stream pipeline is expected to cut transportation costs and increase the share of Russian gas in Europe up to 30% by 2013. Natural gas exports depend on the volume of gas extraction and contract obligations. Gas exports reach their peak during winter months due to high demand: 23.6 billion cubic meters in January 2011 against 10.3 billion cubic meters in August 2011. The monthly share of exported gas is normally 25%-30% of all natural gas mining.

Shiyakov ’11 [November 17, 2011. E. Shiyakov is a CEIC Anaylst. “Russia to Increase Natural Gas Exports to Europe via Nord Stream Pipeline” CEIC Data. http://blog.securities.com/2011/11/russia-to-increase-natural-gas-exports-to-europe-via-nord-stream-pipeline/]

Stable natural gas exports are crucial for the Russian economy oil and gas revenues are a key element of the federal budget. Gazprom permanently wrestles with the dilemma of whether to meet the increasing domestic demand for gas at affordable prices or to increase its gas exports

Natural gas exports are key to the Russian economy

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Northwestern (NHSI)

Case Negatives

2013