STANFORD -- With oil prices heading toward $50 a barrel, what would happen if the markets really blew?

Ever since the late 1970s, Washington's answer to such an event has relied on oil stockpiled mainly by the federal government, to be released if market instability warranted it. Today, the U.S. Strategic Petroleum Reserve contains 666 million barrels -- nearly 65 days of imports -- worth nearly $30 billion at current prices. Our industrialized allies have similar stocks, India has started one and China, whose oil imports are rising rapidly, is expected to create a reserve soon. Through the International Energy Agency in Paris, the major oil importers have agreed, in principle, to coordinate their stockpiles.

Unfortunately, reserves in the United States and most democracies are nearly feckless as a policy instrument. The legislation that created the U.S. reserve gave the power to buy and sell stocks to a federal agency, now the Department of Energy, that, in effect, passes the decision on to the president. White House control automatically converts every key decision into a highly political act.

In July 2000, President Clinton's order to transfer some strategic reserves to fill a newly created Northeast Home Heating Oil Reserve had obvious political implications for Al Gore's presidential bid. In 1996, Congress required the sale of more than $220 million of stockpiled oil to help pay down the budget deficit, another political move, though one that, in hindsight, looked wise when oil prices tanked two years later.

The uncertainty of reliable production in Russia and Iraq, coupled with the general threat of new terrorist attacks, makes for many worrisome scenarios. But a cloud of political suspicion would hang over any management decision. If President Bush released stockpiled oil to stabilize prices in an election year, no matter how justified his action, he surely would be accused of political pandering. And if he rightly refused to release oil because speculative trading doesn't meet the standard of "severe energy supply interruption," as called for in the 1975 legislation setting up the Strategic Petroleum Reserve, would he face charges that he was rewarding his oil buddies with record profits?

One way to take the politics out of governing the Strategic Petroleum Reserve would be to mechanize decision-making, such as by setting a price trigger for sales and fills. President Reagan's Council of Economic Advisors, among others, considered this option and wisely demurred. In the 1980s, the international spot market for oil was not fully developed; prices were mainly driven by opaque long-term contracts, not market dynamics. Price triggers act similarly to price controls, increasing the risk of creating true scarcities in oil supply. Such automatic triggers would have smoothed small gyrations in the oil market but failed when most needed to dampen large price swings.

There's a better way: independent management of the strategic reserve. In contrast to an automatic mechanism, an independent authority would be able to detect subtle economic and political shifts that determine our true vulnerability to oil shocks. More important, such an authority would depoliticize Strategic Petroleum Reserve decision-making, which would enable us to use the stockpile for its originally intended purpose of providing a credible bulwark against the most severe chaos in oil markets.

The president could create an independent board to manage the reserve within existing legislation, but that would not completely remove a political taint. New legislation would better accomplish the job. Congress and the president should look to the Federal Reserve as a model. The Strategic Petroleum Reserve needs its own resources, with politicians supplying broad guidelines for action and periodic review rather than direct control. Such a change would not only affect the United States but would also require remaking the International Energy Agency into something closer to a central bankers' forum.

New management for America's oil reserve would spark new thinking about the optimal size and operation of strategic stocks. Until now, most public debate has focused on the reserve's size. The International Energy Agency suggests that its member countries keep a petroleum stockpile roughly equivalent to 90 days of domestic consumption. In truth, the optimal size of strategic reserves is not a single quantity but depends on political and economic conditions. A competent independent authority would make it possible to carry a smaller stockpile -- at lower cost. Because today's oil prices are formed in highly liquid markets, the standard of "severe supply interruption" is largely meaningless. The better standard is our willingness to absorb price shocks. For that there is no simple answer, yet independent economic authorities can make the wisest choices.

More than 30 years after our first oil shock, the Strategic Petroleum Reserve still wears polyester and bell-bottoms. A dose of market reform and political independence can bring its fashion up to date and create a truly useful tool for protecting the U.S. economy.

After an intensive selection process, the Korean Studies Program (KSP) at the Asia-Pacific Research Center (APARC), Stanford Institute for International Studies at Stanford University has selected the first class of its Pantech Fellowships for Mid-Career Professionals. Philip W. Yun and John Feffer will be in residence during the 2004-2005 academic year and collaborate with the faculty and fellows at KSP and APARC. The fellowship was made possible by generous gift from Pantech Group.

Philip Yun received his law degree from Columbia University and was a Fulbright Scholar at the Yonsei University Graduate School of International Studies. Yun has had a remarkable career working both in the private and the public sector. While holding high-level positions at the U.S. Department of State, Yun worked closely with the Secretary of Defense, Dr. William Perry, to develop broad expertise on international negotiations, strategic planning and problem solving. He has practiced law both in Korea and in the U.S., worked in private equity investment, and provided comments and opinions for the media on North Korean issues. While in residence, he will work on developing an outline of a comprehensive roadmap that will lead to a secure and prosperous Northeast Asia that would include North Korea.

John Feffer is an accomplished writer and editor who has written on numerous topics such as the politics of food, Asia, Eastern Europe, Russia, foreign policy, economics, and nationalism. As a frequent traveler to North Korea (and to South Korea), he has a rare knowledge of and balanced perspective toward North Korea. His most recent publication is "North Korea/South Korea: U.S. Policy at a Time of Crisis". He is a former associate editor of World Policy Journal and has worked for the American Friends Service Committee, most recently as an international affairs representative in East Asia. He serves on the advisory committees of the think tank Foreign Policy in Focus and the Alliance of Scholars Concerned about Korea. While in residence, he will concentrate on examining food policy on the Korean peninsula.

KSP and APARC look forward to their joining us in the fall.

The article by Daniel Kleppner, Frederick Lamb, and David Mosher (Physics Today, January 2004, page 30) summarizes the results of the excellent American Physical Society study released in July 2003 on boost-phase options for national missile defense.1 The study represents one of the most authoritative analyses to date on the subject and will enhance the quality of the public debate on missile defense for years to come. However, although I agree with many of the study's conclusions, the overall assessment is somewhat pessimistic, especially with respect to the feasibility of intercepting solid-propellant intercontinental ballistic missiles.

My analysis of airborne intercept options suggests that first-generation airborne boost-phase interceptors (ABIs) carrying 90-kg kinetic-kill vehicles should be effective against liquid-propellant ICBMs. It also suggests that second-generation ABIs with 50-kg KKVs could be effective against solid-propellant ICBMs, provided the ABIs can get within approximately 500-600 km of the ICBM launch site, which is possible for relatively small states such as North Korea.2

ABIs have the advantage that they can contribute to an effective theater missile defense--an important mission given the widespread proliferation of short- and medium-range ballistic missiles. In fact, ABIs are the only form of terrestrial boost-phase intercept that can be effective against very short burn-time ICBMs or short-range ballistic missiles because, if necessary, ABI launch platforms can fly over an opponent's territory. Neither ground-based nor naval-based interceptors have that option.

One should also note that ABI systems pose very little threat to the strategic nuclear forces of the five major nuclear powers; hence, they are not nearly as destabilizing as other forms of missile defense. To the extent that one takes seriously the rhetoric of sharing US ballistic missile defense technology, ABI systems can be transferred because they do not threaten US or allied strategic forces.

The difference between my conclusions and those of the APS study arises from different technical assumptions that result, in my case, in greater intercept ranges. In particular, I assumed that an airborne X-band radar can be built within the next decade, which, for favorable geographies like North Korea, can reduce target-detection and tracking delays by as much as 10 to 15 seconds compared to those in the APS study. I also made the assumption, based on the burn times for existing US and Russian solid-propellant ICBMs, that solid-propellant ICBMs have a nominal burn time of 180 s; the APS study assumed a 170-s burn time based on US solid-propellant submarine-launched ballistic missile technology. Also, airborne missiles can accelerate faster; hence, they can have higher average flight speeds compared to surface-based interceptors (on which the APS study focused) because the drag force is lower at high altitudes.

Nevertheless, solid-propellant ICBMs are very difficult targets. Successful intercept will require sensor architectures that push the limits of target detection and tracking, and large (1500 kg), high-speed (6.0 km/s ideal velocity) two-stage airborne interceptors carrying lightweight KKVs. While 50-kg KKVs stretch the limits of what currently is possible, solid-propellant ICBMs stretch current offensive threat possibilities. Neither may be far-fetched 10 years from now.

ABIs do have drawbacks. However, none of them are so severe as to eliminate ABIs from consideration as a viable component of a future US missile defense architecture. In fact, airborne intercept is probably the most attractive boost-phase missile defense option.

Preferences regarding boost-phase ballistic missile defense often have more to do with different threat assessments, operational and political issues, and cost than with technical disagreements. I see no serious technical barrier to an effective ABI system. Nevertheless, the decision to proceed with any form of ballistic missile defense, ABIs included, should be based on an assessment of the system's priority relative to such other important US security concerns as countering terrorism and modernizing conventional forces. From this perspective, the US currently is spending too much on ballistic missile defense.

References

1. D. K. Barton et al., Report of the APS Study Group on Boost-Phase Intercept Systems for National Missile Defense: Scientific and Technical Issues, July 2003; available at http://www.aps.org/public_affairs/popa/reports/nmd03.cfm.

2. See D. A. Wilkening, Science and Global Security, (in press).

Those advocating nuclear arms control and nonproliferation have few reasons for optimism and many reasons for concern, with obstacles including a lack of public interest in the issue; inadequate security controls at facilities storing nuclear-weapons materials; the threat posed by rogue nations such as Iran and North Korea; and the Bush administration's opposition to the Comprehensive Test Ban Treaty banning nuclear weapons testing.

These and other challenges were explored at a special CISAC workshop on "Arms Control and Nonproliferation: Past Triumphs, Future Prospects," held June 1 at SIIS. The event honored George Bunn -- a nuclear nonproliferation pioneer and consulting professor at CISAC -- on the occasion of his 79th birthday. The workshop, which drew more than 120 attendees, was moderated by CISAC co-director Christopher F. Chyba and featured presentations by four expert panelists who have worked closely with Bunn. They included his son Matthew, a senior research associate for Harvard University's Project on Managing the Atom.

As the first presenter, Matthew Bunn discussed the problem of inadequate security systems to prevent the theft of weapons-grade nuclear materials. Because there are no worldwide standards for protecting such materials, many nations devote inadequate resources to the task. Bunn showed slides of nuclear materials storage facilities with primitive locks, flimsy seals and broken-down fences. He cited Russia as the largest threat, because it has the world's biggest stock of unguarded nuclear-weapons materials. He urged international standards for safeguarding nuclear materials; renewed discussion with Russia on the issue; and the removal of nuclear material from sites where adequate security is not feasible.

In the second presentation, Thomas Graham -- a senior U.S. diplomat who has negotiated numerous major arms-control agreements -- said the nuclear Non-proliferation Treaty was not meant to forever discriminate between nuclear "haves" and "have-nots." Instead, it was designed so that those without nuclear weapons would benefit by receiving peaceful nuclear technology from weapons-producing nations, and guarantees that they would not be attacked. But when the United States shirks its nonproliferation obligations -- as it has done by rejecting the Comprehensive Test Ban Treaty and taking steps to develop new nuclear weapons -- the entire regime is threatened, Graham said. He cited Pakistan and North Korea as the biggest nuclear threats, and said the United States must engage in direct negotiations with the latter.

The next presentation, by Daryl Kimball -- executive director of the Arms Control Association -- addressed prospects for the Comprehensive Test Ban Treaty. Though the treaty has been signed by 171 nations including the United States, it has been ratified by only 113 of those nations -- not including the United States -- and must be ratified by 12 more of the 44 designated "nuclear-capable" nations before the treaty can take effect. Kimball discussed the Bush administration's opposition to the treaty, noting that Bush has sought to remove it from the Senate's agenda. Still, Kimball said he's optimistic that the treaty will ultimately be ratified by the United States and will take effect. He cited increasing international pressure on CTBT "holdout states," and a recent U.S. poll showing that public support for the treaty is at its highest level ever, 87 percent.

John Rhinelander, an attorney who helped negotiate the ABM Treaty and SALT I agreements, discussed the prospects for nuclear weapons in space. The weaponization of space is supported by the Bush administration, he noted, and is a real possibility if the United States follows through on its missile defense program. He predicted that President Bush, if re-elected, would continue to pursue weapons development in space, but said Kerry seemed unlikely to do so if elected.

During a question-and-answer session following the presentations, the panelists offered perspectives on why it is so difficult to get the public's and lawmakers' attention on nuclear non-proliferation issues. The panelists agreed that since the breakup of the Soviet Union, most Americans -- including lawmakers -- no longer perceive nuclear weapons as a serious threat, and they have little knowledge about the existing quantity of nuclear weapons. Matthew Bunn said the problem is, "there is no one whose reelection depends on reducing or securing nuclear weapons." He said nuclear non-proliferation could best be promoted by tying it to the issues of terrorism and homeland security. Rhinelander and Grahm advocated holding Congressional hearings on the issue for the first time in 20 years.

Regarding Israel, India and Pakistan, Graham said those nations -- which produce nuclear weapons but have refused to join the NPT regime -- cannot continue to remain outside the regime. He proposed that the three nations be allowed to join in limited form, in exchange for accepting basic limitations such as no first use and no nuclear testing.

Throughout the event, Bunn was praised by the panelists and moderator; Chyba described him as "the personification of the best that CISAC strives to be." Bunn was the first general counsel for the U.S. Arms Control and Disarmament Agency, helped negotiate the nuclear Non-Proliferation Treaty, and later served as U.S. ambassador to the Geneva Disarmament Conference.