I think here we have got to really push in getting first the consumers together, and I am not talking about a consumer bloc for a confrontation between producer and consumer but simply to insure that the consuming nations of the world have a common understanding on what our major problems are and how we go about resolving those problems. That is our first step. Failing that, there is very little we can do. With this common understanding behind us, then the consumers move toward an accommodation with the producer. That in essence, is the way the stage is set, I believe, for the next months.

Mr. Nix. Coming back to the United States for a moment and our energy crisis, is it your view that we actually have a shortage of energy, gas and oil?

Mr. EBEL. Had conditions been normal, had Middle East production not been cut back, we would have expected the Middle East-that is, the Arab nations-to produce about 22 million barrels per day in January. With the production cut back they have produced, I believe, on the average of about 17.5 million barrels per day. That means that the world, those of us who depend upon the Middle East, was short by 4.5 million barrels per day.

Now the oil companies take what oil they have and they allocate their supplies on the most equitable basis they can. At the same time we have to recognize that there is an embargo on the shipments of Arab oil to the United States and the Netherlands; which means that we get no Arab oil at all. We had anticipated that we would be importing roughly say 2.5 million barrels per day of oil from the Arab world last month. That is an import in two ways-where a tanker loads in the Middle East and then it brings oil directly to our east coast. It also includes the oil that is picked up by tanker in the Middle East, moved to an intermediate refinery, refined into the various products and we import the products. We thus have both a direct and an indirect dependence on the Arab world.

According to the best statistics that we have, our imports are now at a level which tells us that we have been fully denied the amount of oil that we would have expected to import from the Arab world, roughly 2.5 million barrels per day. That is against an anticipated demand of say 20 million barrels per day under normal conditions. So we are feeling the effects of what I feel is a true shortage, not a manufactured or artificial shortage-withholding of supply simply to get the prices up.

I would have to accept the estimates that are available to us, I see no reason not to. We are always searching for better estimates. We always like to improve our data gathering system to make us independent so that we don't have to look for an intermediate source of statistics. We want to be able to gather our statistics directly and that takes time.

So, Mr. Chairman, again to answer your question I believe that it is a true shortage, that we have been denied Arab oil-the direct and indirect imports from the Arab world-and that this denial lies somewhere between 2 and 2.5 million barrels per day.

Mr. Nix. In the event that we exploited all of our reserves or sources of oil, would our shortage be relieved? At least how long would it take to relieve the shortage?

Mr. EBEL. Well, maybe I can answer your question, Mr. Chairman, in two parts. You recall that the oil on the North Slope was discovered in 1968. Under normal circumstances we might have expected construction of a pipeline to begin the following year. That pipeline

might have been completed in 1972 with oil flowing through it in large amounts in 1973 in sufficient quantity to almost eliminate our dependence on Arab oil.

Now, looking ahead, our dependence on Arab oil under normal circumstances is growing from year to year. As our need to import grew, our need to import from the Middle East grew. We have been obtaining a maximum amount from Canada and from Venezuela, from Indonesia and from Iran. This means that every additional barrel of oil we were going to be importing in the years ahead was going to be coming from the Middle East unless we were able to rejuvenate our domestic oil industry through access to the North Slope or through access to our offshore area.

Mr. NIX. However I view it, it is a rather bleak picture and we just hope that Mr. Kissinger remains in good health..

Mr. EBEL. Mr. Chairman, it is bleak for a few years ahead. This Nation in apposition to all of the other major oil consuming nations has an option available to it and that option is those resources we have yet to exploit in this country. We have tremendous coal reserves, tremendous shale reserves, undiscovered oil offshore, undiscovered deep-seated oil. We have options here which other nations would dearly love to have. If we can have the understanding of our citizens that we are trying to accommodate our needs for energy with their concern for prices and their concern for keeping the air clean and their concern for preserving the environment, I think we are going to make out all right but it is going to take time and there are going to be some difficult moments in the years ahead. But we can get the job done.

Mr. Nix. You know, Mr. Ebel, one of the deep regrets that I have is that the facts as expressed by you there a few moments ago have not been made known to the American public. The American public, I suppose 40 percent of the people take the position that there is no shortage-somebody is lying to them, that the oil companies are exploiting everyone by withholding. No one comes out with a factual statement supported by reason. The American people will listen to reason but it has not been done in a manner that is convincing to the people. It is regrettable that it has to be done, and it has to be done by someone; otherwise, we will have more difficulties such as we are having in a number of States, on the highways in many States. That is regrettable. I think it is unnecessary. That is the situation.

I want to thank you very much for your testimony. I think it is a real valuable contribution to the inquiry that we have set afoot here. Thank you very much.

Mr. EBEL. Thank you very much, Mr. Chairman.

Mr. Nix. The subcommittee will stand adjourned.

[Whereupon, at 3:43 p.m. the subcommittee adjourned.]

OIL AND ASIA

WEDNESDAY, FEBRUARY 20, 1974

HOUSE OF REPRESENTATIVES,
COMMITTEE ON FOREIGN AFFAIRS,

SUBCOMMITTEE ON ASIAN AND PACIFIC AFFAIRS,

Washington, D.C. The subcommittee met at 2 p.m., in room H-236, the Capitol, Hon. Robert N. C. Nix [chairman of the subcommittee] presiding.

Mr. Nix. The subcommittee will come to order.

Today we will hear testimony on the effect of new resource politics in Asia. We will hear something on mainland China's self-sufficiency in minerals due to its early industrialization and the future impact of mineral rich Siberia and oil rich Indonesia on Asia.

We will also hear from a witness, Lord Michael Lindsay, who was a witness to the first cultural revolution in China. Today the press is filled with discussions of the Maoist succession crisis. Whether it is a crisis or not, we shall go into that question. We shall go into the question of a new cultural revolution which may be aimed at some elements of the legal segments in that country. Professor Lindsay hopefully will be able to throw some light on these issues.

We will also submit for the record material previously submitted to the subcommittee for canceled hearings back in November on the very questions mentioned above.

Our first witness today will be Dr. Lee who at present is a fellow at Harvard University in East Asian legal studies and a former fellow of Woodrow Wilson International Center for Scholars.

Mr. Lee.

STATEMENT OF HONGKOO LEE, ROCKEFELLER FOUNDATION FELLOW IN EAST ASIAN LEGAL STUDIES, HARVARD UNIVERSITY; PROFESSOR OF POLITICAL SCIENCE, SEOUL NATIONAL UNIVERSITY; AND FORMER FELLOW, WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS

Mr. LEE. Thank you very much, Mr. Chairman.

As a sometime student of American politics I have watched with a sense of fascination the process of filibuster in the American Congress. Todav instead of reading the rather lengthy statement I have prepared, I will merely present a condensed version of that stateinent which I will give now orally.

Mr. Nix. You may proceed, sir.

Mr. LEE. I shall begin with a brief explication on the nature of the emerging politics of resource control.

Politics is a process whose style and direction are determined in part by conscious human choices and decisions. What makes the politics of resource control a distinctly new blend of politics is the emergence of new and articulated consciousness in all nations toward values of natural resources like oil as a power resource of highest importance. By "power resource" we mean those which could either generate or convert into political power. Emergence of political mechanisms like OPEC to convert power resource like oil to actual political power has enhanced a universal appreciation for the potential value of natural resources.

Such appreciation for the value of natural resources as political resource is further heightened by the recognition of the fact that the energy resources are distributed unevenly among the nations, the rate of energy consumption among the nations is extremely uneven, and the traditional mode of acquiring external resources through military conquest has become obsolete.

Given this new and intense consciousness for the value of natural resources in general and oil in particular, political decisionmakers everywhere are forced to make a sweeping reconsideration of their basic policy assumptions. For example, as the value of natural resources sharply increases, the relative value of military capability as political power resource in international politics seems to decrease gradually.

To Japan of today, for example, a military threat from the Soviet Union is far less serious than a threat of oil cutoff from the Middle East. It is indeed a baffling experience for Japan to maintain on one hand a mutual security pact with the United States which presupposes the Soviet Union as a potential enemy and, on the other hand, to go all out to make a joint venture with the Soviet Union to explore the Siberian resources. In such a baffling and confusing context the value of the American nuclear umbrella may not seem as high as it used to. It is quite obvious that the new politics of resource control will generate a number of new power configurations in international policies.

One more characteristic of the politics of resource control may deserve a brief mention here; that is, an evident rise of nationalism or nationalistic trend everywhere and equally apparent decline of internationalism all over the world. Whether or not such a trend constitutes merely an initial reaction to the crisis atmosphere created by the inauguration of the politics of resource control and soon will be overcome by a new and more vigorous internationalism remains to be seen. Emergence of the politics of resource control has necessitated a reconsideration of our perspectives toward Chinese society in general and its resource politics in particular. The recent oil crisis has underscored the importance of estimating the national strength of any state partly in terms of the degree of crisis-proof quality residing in the system; and judged in terms of crisis-proof quality, the Chinese system seems to deserve an exceptionally high mark. The high degree of crisis-proof quality in the Chinese system may be based on both structural and psychological strength. The capacity to control the needs, to adjust the needs to supplies on the structural level and to maintain a frame of mind geared toward self-sufficiency on the psychological level seems to have jointly contributed to the strength of the Chinese system to weather any global economic crisis.

As for the estimate of actual Chinese oil reserve and production, I can merely note that, in the absence of any accurate assessment of Chinese strength, it would be much more sensible to run the risk of an overestimation than an underestimation.

In China today, unlike most other countries in the world, ideology is still a highly potent and relevant force. What, then, is the ideological foundation upon which the Chinese position in the politics of resource control stands?

It is the new theory of the intermediate zones which seems to provide an ideological guideline for the new era. Putting the theory in a nutshell, it divides the world into three parts: The two superpowers; the second intermediate zone which is comprised of the advanced industrial nations like Japan and Western Europe; and the first intermediate zone which is essentially the Third World of Afro-Asian and Latin American nations.

The historical reality of our time is, according to the theory, that the two superpowers are engaged in both contention and collusion to expand their political and economic dominance over the intermediate zones; therefore, the nations of the world are faced with an urgent task of protecting their independence and interest from the threat of superpower imperialism. An obvious tactical guideline derived from the above propositions on the intermediate zones is a promotion of a broad united front between the nations of the first and the second intermediate zones.

We can quickly delineate several features of the theory of the intermediate zones.

First, the theory of the intermediate zones seems to mark a definite departure from the past in the sense that it signals the voluntary transfer of China from the Socialist camp to the ranks of the Third World.

Second, the vigorous emphasis on Chinese identification with the Third World is noteworthy for it is based on a conscious glorification of the historical and cultural heritage of the Third World and a fresh appreciation for the immense value of natural resources in the Third World. It seems that the Chinese leaders are acutely aware of the tremendous opportunity as well as the imminent danger facing the Third World, the opportunity to revive the past glory through development of vast resources and the danger of losing both political and economic independence through superpower dominance and exploitation of natural resources.

Parenthetically I could note here the Chinese antagonism toward the multinational corporations in this respect.

Third, one of the immediate objectives of the theory is undoubtedly to check the Soviet expansion and threat.

The Chinese contention is that the Soviet economic practice in Eastern Europe and elsewhere tends to justify labeling them as Socialist. imperialism. As for the Soviet charge that the theory of the intermediate zones is in fact an imperialistic scheme to cover up the hegemonic design of China, I shall speculate later.

As I attempt here a panoramic review and fanciful projections of the relative positions of the four powers-China, the Soviet Union, the United States and Japan-involved in the politics of resource control in East Asia, we may initially note a couple of simple categorizations. According to the Chinese scheme, the United States and the

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