New Orleans: A Geopolitical Prize

New Orleans: A Geopolitical Prize

 

By George Friedman

http://www.stratfor.com/news/archive/050903-geopolitics_katrina.php

September 01, 2005 22 30 GMT -- The American political system was

founded in Philadelphia, but the American nation was built on the

vast farmlands that stretch from the Alleghenies to the Rockies.

That farmland produced the wealth that funded American

industrialization: It permitted the formation of a class of small

landholders who, amazingly, could produce more than they could

consume. They could sell their excess crops in the east and in

Europe and save that money, which eventually became the founding

capital of American industry.

 

But it was not the extraordinary land nor the farmers and ranchers

who alone set the process in motion. Rather, it was geography -- the

extraordinary system of rivers that flowed through the Midwest and

allowed them to ship their surplus to the rest of the world. All of

the rivers flowed into one -- the Mississippi -- and the Mississippi

flowed to the ports in and around one city: New Orleans. It was in

New Orleans that the barges from upstream were unloaded and their

cargos stored, sold and reloaded on ocean-going vessels. Until last

Sunday, New Orleans was, in many ways, the pivot of the American

economy.

 

For that reason, the Battle of New Orleans in January 1815 was a key

moment in American history. Even though the battle occurred after

the War of 1812 was over, had the British taken New Orleans, we

suspect they wouldn't have given it back. Without New Orleans, the

entire Louisiana Purchase would have been valueless to the United

States. Or, to state it more precisely, the British would control

the region because, at the end of the day, the value of the Purchase

was the land and the rivers - which all converged on the Mississippi

and the ultimate port of New Orleans. The hero of the battle was

Andrew Jackson, and when he became president, his obsession with

Texas had much to do with keeping the Mexicans away from New

Orleans.

 

During the Cold War, a macabre topic of discussion among bored

graduate students who studied such things was this: If the Soviets

could destroy one city with a large nuclear device, which would it

be? The usual answers were Washington or New York. For me, the

answer was simple: New Orleans. If the Mississippi River was shut to

traffic, then the foundations of the economy would be shattered. The

industrial minerals needed in the factories wouldn't come in, and

the agricultural wealth wouldn't flow out. Alternative routes really

weren't available. The Germans knew it too: A U-boat campaign

occurred near the mouth of the Mississippi during World War II. Both

the Germans and Stratfor have stood with Andy Jackson: New Orleans

was the prize.

 

Last Sunday, nature took out New Orleans almost as surely as a

nuclear strike. Hurricane Katrina's geopolitical effect was not, in

many ways, distinguishable from a mushroom cloud. The key exit from

North America was closed. The petrochemical industry, which has

become an added value to the region since Jackson's days, was at

risk. The navigability of the Mississippi south of New Orleans was a

question mark. New Orleans as a city and as a port complex had

ceased to exist, and it was not clear that it could recover.

 

The ports of South Louisiana and New Orleans, which run north and

south of the city, are as important today as at any point during the

history of the republic. On its own merit, the Port of South

Louisiana is the largest port in the United States by tonnage and

the fifth-largest in the world. It exports more than 52 million tons

a year, of which more than half are agricultural products -- corn,

soybeans and so on. A larger proportion of U.S. agriculture flows

out of the port. Almost as much cargo, nearly 57 million tons, comes

in through the port -- including not only crude oil, but chemicals

and fertilizers, coal, concrete and so on.

 

A simple way to think about the New Orleans port complex is that it

is where the bulk commodities of agriculture go out to the world and

the bulk commodities of industrialism come in. The commodity chain

of the global food industry starts here, as does that of American

industrialism. If these facilities are gone, more than the price of

goods shifts: The very physical structure of the global economy

would have to be reshaped. Consider the impact to the U.S. auto

industry if steel doesn't come up the river, or the effect on global

food supplies if U.S. corn and soybeans don't get to the markets.

 

The problem is that there are no good shipping alternatives. River

transport is cheap, and most of the commodities we are discussing

have low value-to-weight ratios. The U.S. transport system was built

on the assumption that these commodities would travel to and from

New Orleans by barge, where they would be loaded on ships or

offloaded. Apart from port capacity elsewhere in the United States,

there aren't enough trucks or rail cars to handle the long-distance

hauling of these enormous quantities -- assuming for the moment that

the economics could be managed, which they can't be.

 

The focus in the media has been on the oil industry in Louisiana and

Mississippi. This is not a trivial question, but in a certain sense,

it is dwarfed by the shipping issue. First, Louisiana is the source

of about 15 percent of U.S.-produced petroleum, much of it from the

Gulf. The local refineries are critical to American infrastructure.

Were all of these facilities to be lost, the effect on the price of

oil worldwide would be extraordinarily painful. If the river itself

became unnavigable or if the ports are no longer functioning,

however, the impact to the wider economy would be significantly more

severe. In a sense, there is more flexibility in oil than in the

physical transport of these other commodities.

 

There is clearly good news as information comes in. By all accounts,

the Louisiana Offshore Oil Port, which services supertankers in the

Gulf, is intact. Port Fourchon, which is the center of extraction

operations in the Gulf, has sustained damage but is recoverable. The

status of the oil platforms is unclear and it is not known what the

underwater systems look like, but on the surface, the damage -

though not trivial -- is manageable.

 

The news on the river is also far better than would have been

expected on Sunday. The river has not changed its course. No major

levees containing the river have burst. The Mississippi apparently

has not silted up to such an extent that massive dredging would be

required to render it navigable. Even the port facilities, although

apparently damaged in many places and destroyed in few, are still

there. The river, as transport corridor, has not been lost.

 

What has been lost is the city of New Orleans and many of the

residential suburban areas around it. The population has fled,

leaving behind a relatively small number of people in desperate

straits. Some are dead, others are dying, and the magnitude of the

situation dwarfs the resources required to ameliorate their

condition. But it is not the population that is trapped in New

Orleans that is of geopolitical significance: It is the population

that has left and has nowhere to return to.

 

The oil fields, pipelines and ports required a skilled workforce in

order to operate. That workforce requires homes. They require stores

to buy food and other supplies. Hospitals and doctors. Schools for

their children. In other words, in order to operate the facilities

critical to the United States, you need a workforce to do it -- and

that workforce is gone. Unlike in other disasters, that workforce

cannot return to the region because they have no place to live. New

Orleans is gone, and the metropolitan area surrounding New Orleans

is either gone or so badly damaged that it will not be inhabitable

for a long time.

 

It is possible to jury-rig around this problem for a short time. But

the fact is that those who have left the area have gone to live with

relatives and friends. Those who had the ability to leave also had

networks of relationships and resources to manage their exile. But

those resources are not infinite -- and as it becomes apparent that

these people will not be returning to New Orleans any time soon,

they will be enrolling their children in new schools, finding new

jobs, finding new accommodations. If they have any insurance money

coming, they will collect it. If they have none, then -- whatever

emotional connections they may have to their home -- their economic

connection to it has been severed. In a very short time, these

people will be making decisions that will start to reshape

population and workforce patterns in the region.

 

A city is a complex and ongoing process - one that requires physical

infrastructure to support the people who live in it and people to

operate that physical infrastructure. We don't simply mean power

plants or sewage treatment facilities, although they are critical.

Someone has to be able to sell a bottle of milk or a new shirt.

Someone has to be able to repair a car or do surgery. And the people

who do those things, along with the infrastructure that supports

them, are gone -- and they are not coming back anytime soon.

 

It is in this sense, then, that it seems almost as if a nuclear

weapon went off in New Orleans. The people mostly have fled rather

than died, but they are gone. Not all of the facilities are

destroyed, but most are. It appears to us that New Orleans and its

environs have passed the point of recoverability. The area can

recover, to be sure, but only with the commitment of massive

resources from outside -- and those resources would always be at

risk to another Katrina.

 

The displacement of population is the crisis that New Orleans faces.

It is also a national crisis, because the largest port in the United

States cannot function without a city around it. The physical and

business processes of a port cannot occur in a ghost town, and right

now, that is what New Orleans is. It is not about the facilities,

and it is not about the oil. It is about the loss of a city's

population and the paralysis of the largest port in the United

States.

 

Let's go back to the beginning. The United States historically has

depended on the Mississippi and its tributaries for transport.

Barges navigate the river. Ships go on the ocean. The barges must

offload to the ships and vice versa. There must be a facility to

empower this exchange. It is also the facility where goods are

stored in transit. Without this port, the river can't be used.

Protecting that port has been, from the time of the Louisiana

Purchase, a fundamental national security issue for the United

States.

 

Katrina has taken out the port -- not by destroying the facilities,

but by rendering the area uninhabited and potentially uninhabitable.

That means that even if the Mississippi remains navigable, the

absence of a port near the mouth of the river makes the Mississippi

enormously less useful than it was. For these reasons, the United

States has lost not only its biggest port complex, but also the

utility of its river transport system -- the foundation of the

entire American transport system. There are some substitutes, but

none with sufficient capacity to solve the problem.

 

It follows from this that the port will have to be revived and, one

would assume, the city as well. The ports around New Orleans are

located as far north as they can be and still be accessed by ocean-

going vessels. The need for ships to be able to pass each other in

the waterways, which narrow to the north, adds to the problem.

Besides, the Highway 190 bridge in Baton Rouge blocks the river

going north. New Orleans is where it is for a reason: The United

States needs a city right there.

 

New Orleans is not optional for the United States' commercial

infrastructure. It is a terrible place for a city to be located, but

exactly the place where a city must exist. With that as a given, a

city will return there because the alternatives are too devastating.

The harvest is coming, and that means that the port will have to be

opened soon. As in Iraq, premiums will be paid to people prepared to

endure the hardships of working in New Orleans. But in the end, the

city will return because it has to.

 

Geopolitics is the stuff of permanent geographical realities and the

way they interact with political life. Geopolitics created New

Orleans. Geopolitics caused American presidents to obsess over its

safety. And geopolitics will force the city's resurrection, even if

it is in the worst imaginable place.

 

 

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