Random Thoughts

Liquid Crunches

One of the most ignored realities likely to lead to a crisis and even wars is the disparity between supply and demand of crucial liquids. These are oil and water. There is a finite and limited supply of oil and gas and the rising demands and expectations of China and India with their burgeoning economies and the unfulfilled expectations of their nouveau riche is likely to lead to a supply crunch in the near future. France and to a lesser extent Belgium are two countries that have effected a concerted policy of deriving a large proportion of their energy needs from nuclear power. Many other European countries have chosen a visceral regression by voting for referendums eliminating or reducing nuclear power plants. Others geographically advantaged have opted for wind or wave power.

India in its characteristic fashion has chosen to ignore problems by sweeping them under the rug or hesitating like Trishanku. It is critical for India to exploit its hydroelectric potential to the maximum and to link up its rivers to provide inland waterways to facilitate its commerce and utilize its hydroelectric potential. Unfortunately India does not yet have sufficient production of hydrocarbons for potential self-sufficiency. Fortunately this has prevented it from being a victim of manipulation by energy hungry great powers. Thus it has fortunately escaped the manipulation and exploitation that is the misfortune of many Gulf States, Trans-Caspian and Central Asian victims. This happenstance does not insulate it from the vagaries of fluctuating oil and gas prices. It is therefore critical for India to place its bets on nuclear power and further plan on using its almost inexhaustible resources of Thorium to achieve self-sufficiency in power.

Another advantage that it should exploit is that of linking its nuclear power generation to desalinization of seawater. This will remedy the chronic shortage of water in much of India and forestall the potential war likely to occur with Pakistan over the waters of the Indus and that with Bangladesh over the waters of the Brahmaputra and Ganges. It would also protect India from adverse policies of China where some of the Indian water supply originates in Tibet. Furthermore the nuclear power plants which should be placed in South and South-central India would decrease the Indian dependency on foreign oil and gas, which come from less than friendly and politically unstable states around the Persian Gulf. Thus they would permit India to pursue an independent foreign policy without being held hostage to Islamic states with unstable internal problems and overt or covert Islamic leanings favoring the unstable, radical and likely failed state of Pakistan.

There is not a shadow of doubt that India's two major deficits are energy, as manifested in oil and gas and potable water. These are two crucial essentials that governments of different spectra and philosophy have failed to provide to the detriment of the common citizen and one of the prime reasons for the justifiable anti-incumbent backlash. Fortunately a desalination program linked to a nuclear power plant, though not ideal or completely cost effective is likely to provide potable and safe drinking water at a lesser cost than an independent desalination plant. The higher investment is likely to be repaid and compensated by diminished expenditure of foreign exchange and a learning curve for a new and important technology. The riparian problems sooner or later are likely to lead to a war with Pakistan and Bangladesh and thus it behooves India to counter the problem to nip it in its bud or postpone it to the distant future. A failure to do so is likely to lead to a devastating war with a nuclear holocaust.

Beyond the liquid crisis of oil and water there is a potential for a liquidity crisis. America in the past has borrowed needed capital from other surplus capital rich nations of Europe to fund its own expansion and then reneged on its debts as in the history of the railroads. Its profligate tendencies ensure some form of default or wipe out of its huge and unsustainable debt. Right now developing Asian countries by choice or necessity are willing recipients of these questionable IOUs, but the appetite for them is on the verge of satiation for those countries not guaranteed protection by the American nuclear umbrella. This Ponzi scheme rests on the thin edge of a wedge and the loss of faith in the American dollar and its government debt are teetering on the edge. Any other country except the military bully would have had its currency and debt devalued as Argentina and Brazil prove. Economic mills grind exceedingly slowly at times but delay is not to be misunderstood as destiny forestalled.  


More by :  Gaurang Bhatt, MD

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