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Sunday, 4 December 2011

Whose Century?

In announcing her decision to propose that India should become an approved customer for Australian uranium, the Prime Minister said that it was appropriate for Australia to become more accommodating towards India in this "Asian Century". China is already a huge customer for Australian minerals, and India buys significant quantities of those that are not subject to export constraints. It is very much in Australia's interests for everyone in the emerging regional economies to be allowed to bid competitively for supplies. Uranium is a special case among industrial materials, because it is exceptionally important in the replacement of fossil fuels as well as by reason of the risk that the mineral may be processed for weapons.

The involvement of Australian forces in Afghanistan must be taken into account in a decision to supply the aboriginal enemy of Pakistan with uranium. India and Pakistan have been at loggerheads since the calamitous decision was taken by Earl Mountbatten [as the final Viceroy, endowed with absolute dictatorial power] to allow the creation of an Islamic state within the dissolving imperial India. Tens of millions of Muslims remained in India where they have not notably been oppressed: while millions of Hindus died in partition and afterwards, and they have virtually been eliminated from Pakistani territory. Pakistan has nuclear weapons, and has exported the technology to make them to North Korea and to other rogue states; and elements in the Pakistani military are reported increasingly to be supporting Australia's opponents in Afghanistan. The only power with the means and the will to contain Pakistan is India: while India is hesitant to be placed in that position, not least because this could cause China to strengthen its ties with Pakistan and create two power-blocks in Asia. The geopolitical background is inescapable in this consideration of the implications of the opening of trade in uranium from Australia to India.

In speaking of an Asian Century Julia Gillard was not referring primary to actual or potential patterns of military alliance and engagement. She was expressing the conventional contemporary view that the growth of major Asian economies will mean that by 2099 China and India and Japan and probably Indonesia will be economic powers at least equal to the European Union and to the North American free trade area. Brazil and other economies off the Eurasian landmass will also be major powers; but the largest shift in global economic focus is already well advanced from the North Atlantic to the Indian Ocean and the west Pacific. Australia is near the hot spots, and is well resourced with minerals. But water is short in many parts of Australia much of the time; as it is becoming extremely hard to obtain water in large parts of China and in swathes of India. Pakistan's problems of governability have been enhanced in recent years by random assaults of drought and flood which have also affected neighbouring provinces of India.

Industrialisation and a high consumer living standard depend crucially on there being a high availability of potable water, washing water, plant-watering water and water of the quality appropriate for a huge range of industrial purposes. Cities, even more than rural communities, depend for their survival absolutely on the efficient disposal of human, animal and industrial waste; much of which is in the present phase of technology most effectively transported in water through sewerage systems to the appropriate treatment plant. This will only be an Asian Century - or an Australian Century - if the issues or water supply and sewage disposal are mastered proportionately to the level of population and to the operative mix of economic and social activities. This requires huge ongoing investment. A superabundance of people, ideas, techniques, minerals and sustainable energy sources will founder if the supply of water fails, or if sewerage is swamped.

So what of tired old Europe, and of the no-longer-so-super USA today? Will the gods of water treat them kindly? Not so far! Texas and neighbouring states have had record-breaking drought and heat last summer, and now air currents [most notably the Jet Stream] that normally track well to the north have in recent days brought exceptional snow and cold to the south-central USA and then proceeded south of their usual route to Europe, resulting in a record drought in most of the western continent. The Alps are almost without snow [such that my Club is contemplating cancelling their annual expedition], while the eastern Rockies in North America have an early abundance of the stuff. The Danube and the Rhine are at unprecedentedly low levels for the time of year, with ships grounded at several points along the Danube; while half the City Of Koblenz on the Rhine was evacuated today [December 4] for the disposal of a huge world war two bomb that had been exposed by a remarkably low flow on the river. In legendarily wet little Britain there are floods in the west, early snow in the north and intensifying drought in the south and east.

Nature usually corrects - and frequently over-corrects - for exceptional events such as storm, drought, forest fire or deep freeze: but there are no guarantees. Large areas of Africa have passed under desert in the past half-century: conservation was not helped by local agricultural practices but desertification was certainly not caused primarily by human agency. The historically massive Lake Chad has virtually disappeared. The climate-change lobby report each and every datum that contributes to a mass of evidence that the earth is warming; and spin it with the assertion that human agency is the primary source of the warming. The geological record shows constant change: hot and cold periods have alternated over millions of years, without previously having had the assistance of mankind.

In the absence of sufficiently satisfying scientific predictions as to the impact of the predicted climate change on humans, science-fiction writers have supplied scenarios; and those that have had the greater credence tend to be the most pessimistic. Against this background speculation about an Asian Century becomes more complex and broadly less optimistic. Water, alongside energy, has to be factored into all economic planning options. But there has always been a problem about prices:Adam Smith [1776] wrote of the 'paradox of value': diamonds - which then were ornamental only, they had no industrial uses as they do now - were highly priced, while water -which was absolutely essential to support life - was a free good for the farm-based population. Water is now rapidly becoming expensive, worldwide. It has been delivered to cities at huge cost since ancient times, and in this century as cities demand more water for direct human consumption [and for thousands of other purposes] the cost of supplying and removing it are increasing: and more and more often the cost is no longer picked up by the government: the charges are imposed on the users by creating a 'market' in water supply. The cost of installing abstraction, transport and storage facilities for 'wholesale' water, added to the cost of piping the water to millions of 'retail' users in homes and businesses, means that deliverers of water supplies are natural monopolies..The creation of a wholly fictitious 'market' in these circumstances, with shares issued to real investors and a regulator [in the UK this is OFWAT] makes pricing water a fabulous piece of fantasy: yet every human's need for water every day makes water supply a fundamental reality.

The Economics and the Politics of water [and of sewerage] present an increasingly important set of considerations that should influence all economic planning and projections. "The rain falleth upon the just and the unjust" and "the wind bloweth where it listeth", according to the oldest surviving religious texts. The availability of water will determine whether economic plans succeed, or are made nonsense. Schemes to ensure the future availability of water are phenomenally expensive in both monetary cost and in the toll on human, animal and vegetable ecosystems: and on the human psyche. The global economy would be hard pressed to address a hemispheric drought: yet in most economic planning an abundance of water is taken for granted. That is foolish.No modelling that I have ever seen, for example a projection of the future trend of the euro against the US dollar, has ever made allowance for a catastrophic long-term failure of the water supply. Recognition of this basic fact calls into question the whole apparatus of economic forecasting: so who can now show that this is definitively the Asian Century?

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