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cfm/m:5:18556:172076 Ne w Orleans: A Geopolitical Prize By George Friedman The American politica l 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, amazin gly, could produce more than they could consume. They could sell their e xcess crops in the east and in Europe and save that money, which eventua lly became the founding capital of American industry. But it was not the extraordinary land nor the farmers and ranchers who alone set the proce ss in motion. Rather, it was geography -- the extraordinary system of ri vers that flowed through the Midwest and allowed them to ship their surp lus to the rest of the world. All of the rivers flowed into one -- the M ississippi -- and the Mississippi flowed to the ports in and around one city: New Orleans. It was in New Orleans that the barges from upstream w ere unloaded and their cargos stored, sold and reloaded on ocean-going v essels. Until last Sunday, New Orleans was, in many ways, the pivot of t he American economy. For that reason, the Battle of New Orleans in Janua ry 1815 was a key moment in American history. Even though the battle occ urred 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 e ntire Louisiana Purchase would have been valueless to the United States. Or, to state it more precisely, the British would control the region be cause, 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 po rt of New Orleans. The hero of the battle was Andrew Jackson, and when h e became president, his obsession with Texas had much to do with keeping the Mexicans away from New Orleans. During the Cold War, a macabre topi c of discussion among bored graduate students who studied such things wa s this: If the Soviets could destroy one city with a large nuclear devic e, which would it be? If the Mississippi River was sh ut to traffic, then the foundations of the economy would be shattered. T he industrial minerals needed in the factories wouldn't come in, and the agricultural wealth wouldn't flow out. The Germans knew it too: A U-boat campaign occurred near th e mouth of the Mississippi during World War II. Both the Germans and Str atfor have stood with Andy Jackson: New Orleans was the prize. Last Sund ay, nature took out New Orleans almost as surely as a nuclear strike. Hu rricane Katrina's geopolitical effect was not, in many ways, distinguish able from a mushroom cloud. The petrochemical industry, which has become an added value to the regio n 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 r ecover. The Ports of South Louisiana and New Orleans, which run north an d south of the city, are as important today as at any point during the h istory of the republic. On its own merit, POSL is the largest port in th e United States by tonnage and the fifth-largest in the world. It export s more than 52 million tons a year, of which more than half are agricult ural products -- corn, soybeans and so on. A large proportion of US ag riculture flows out of the port. Almost as much cargo, nearly 17 million tons, comes in through the port -- including not only crude oil, but ch emicals 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 commodi ties of agriculture go out to the world and the bulk commodities of indu strialism come in. The commodity chain of the global food industry start s here, as does that of American industrialism. If these facilities are gone, more than the price of goods shifts: The very physical structure o f the global economy would have to be reshaped. Consider the impact to t he US auto industry if steel doesn't come up the river, or the effect on global food supplies if US corn and soybeans don't get to the marke ts. The problem is that there are no good shipping alternatives. River t ransport is cheap, and most of the commodities we are discussing have lo w value-to-weight ratios. The US transport system was built on the ass umption that these commodities would travel to and from New Orleans by b arge, where they would be loaded on ships or offloaded. Apart from port capacity elsewhere in the United States, there aren't enough trucks or r ail cars to handle the long-distance hauling of these enormous quantitie s -- 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 Lo uisiana and Mississippi. This is not a trivial question, but in a certai n sense, it is dwarfed by the shipping issue. First, Louisiana is the so urce of about 15 percent of US-produced petroleum, much of it from the Gulf. The local refineries are critical to American infrastructure. Wer e all of these facilities to be lost, the effect on the price of oil wor ldwide would be extraordinarily painful. If the river itself became unna vigable or if the ports are no longer functioning, however, the impact t o the wider economy would be significantly more severe. In a sense, ther e is more flexibility in oil than in the physical transport of these oth er commodities. By a ll accounts, the Louisiana Offshore Oil Port, which services supertanker s in the Gulf, is intact. Port Fourchon, which is the center of extracti on 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 unde rwater systems look like, but on the surface, the damage - though not tr ivial -- is manageable. The news on the river is also far better than wo uld have been expected on Sunday. The Mississippi apparen tly has not silted up to such an extent that massive dredging would be r equired to render it navigable. Even the port facilities, although appar ently damaged in many places and destroyed in few, are still there. What has been lost is t he city of New Orleans and many of the residential suburban areas around it. The population has fled, leaving behind a relatively small number o f people in desperate straits. Some are dead, others are dying, and the magnitude of the situation dwarfs the resources required to ameliorate t heir condition. But it is not the population that is trapped in New Orle ans that is of geopolitical significance: It is the population that has left and has nowhere to return to. The oil fields, pipelines and ports r equired a skilled workforce in order to operate. In other words, in order to opera te the facilities critical to the United States, you need a workforce to do it -- and that workforce is gone. Unlike in other disasters, that wo rkforce cannot return to the region because they have no place to live. New Orleans is gone, and the metropolitan area surrounding New Orleans i s 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 ti me. 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 peo ple will not be returning to New Orleans any time soon, they will be enr olling their children in new schools, finding new jobs, finding new acco mmodations. If they have any insurance money coming, they will collect i t If they have none, then -- whatever emotional connections they may ha ve to their home -- their economic connection to it has been severed. In a very short time, these people will be making decisions that will star t to reshape population and workforce patterns in the region. A city is a complex and ongoing process - ...
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