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Hearing of the Middle East and North Africa Subcommittee of the House Foreign Affairs Committee - Assessing Energy Priorities in the Middle East and North Africa

Hearing

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Date:
Location: Washington, DC

"The Middle East and North Africa region produces over 35 percent of the world's oil supply, and over 20 percent of the global natural gas production. We know that energy resources are vital for the region, and as such they play an important role in the shaping of the geopolitical landscape that impacts our foreign policy. We also know that the Middle East and North Africa is one of the world's most volatile regions - prone to unrest, instability, political upheaval and conflict.

In Libya we saw armed groups occupying many of the strategically important oil fields and export terminals for nearly a year until a partial agreement was reached in April. And in Iraq we have only recently begun to see that country tap the potential of its proven oil reserves -- which is the source of 90% of its budget -- but now that Iraq's second largest city, Mosul, fell this week to al-Qaeda affiliated Islamic State of Iraq and the Levant (ISIL), and the increased deterioration of the security situation in that country, there is no telling what the future has in store for its energy sector.

But that just highlights the problem: Most of these countries rely heavily on the sale of oil or gas as their main driver for their economies, and anything that upsets the delicate balance can be extremely detrimental to their economic outlook and has the potential to upend the global energy market.

Then of course we have the recent discoveries of large natural gas fields off the coast of Israel. This has huge implications for our friend and democratic ally, the Jewish State of Israel, because seemingly overnight, Israel has gone from energy dependent on -- quite frankly -- some unreliable partners, to now commanding a large sum of natural gas that can transform its relations with its neighbors.

The instability in Egypt over the past few years, coupled with the large energy subsidies provided to Egyptians, has seen overconsumption in Egypt and has harmed their energy outlook. Both Israel and Jordan had been reliant on gas from Egypt, but now that Israel has the potential to export large sums of gas that Jordan needs, this could be an opportunity for those nations to strengthen their ties.

Israel's potential could also transform its relationship with Egypt and other Middle Eastern countries as they look for regional solutions to their energy needs. Yet Israel's natural gas boon hasn't just affected its relationship in the Middle East and North Africa region, it has also seen a promising and expanding relationship with Greece and Cyprus.

The recent discoveries of large hydrocarbons in the Eastern Mediterranean has helped forge an emerging and strategic relationship between these three countries, and this relationship has the potential to completely alter the political, economic and security situation in that region. Their cooperation has the potential to increase the global supply of energy from friendly, more stable nations and reduce the world's dependence on some of these rogue regimes. And by rogue regimes we mean always Iran.

Under this weak nuclear deal, the Administration eased the sanctions on the regime and effectively allowed it to breathe life back into its faltering economy. The Iranian economy is dependent on its oil sales, and Congress had implemented a strong sanctions program -- including several bills that I authored that imposed the strictest sanctions on Iran -- in an effort to get Iran to curb its illicit nuclear program.

According to the JPOA, Iran must not exceed 1 million barrels a day on average for the 6 month term. News reports have suggested that Iran is surpassing this threshold and if this pace continues, Iran will be in violation of the terms of the agreement.

Even if that happens, because we eased the sanctions it will be not be easy. It will be impossible to reinstitute them - once the genie is out of the bottle on Iran sanctions, that's it.

The Foreign Affairs Committee held a hearing yesterday on Iran, and one of the major takeaways was that the interim deal and any subsequent deal rely heavily on monitoring and verification; well we do have the tools to monitor and verify how much Iran is exporting, yet we don't seem to be doing anything to respond to the violation of the terms.

I hope we can get an explanation on this today, as well as hearing how U.S. policy is adjusting to the changing landscape of the Middle East and North Africa's energy sector, especially now that developments in the U.S. have seen us move from energy dependence to potentially becoming a net energy exporter; the implications are far reaching and quickly shifting, but are our foreign policy objectives adjusting appropriately? We'll find out today."


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