New Orleans: A Geopolitical Prize

By George Friedman

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.

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

New Orleans is going to be rebuilt....it has to be.

Eric The(SimpleEnough)Hun

Quoted: Quoted: I've told anyone who will listen that NOLA will become the Pearl of North America.  The historic part is intact.  The shitty part will be buldozed.  The levees will be rebuilt correctly.  Yuppies will buy there.  The poor/indigent/criminal elements will stay wherever they have refugee'd to. If I had the money, I'd buy as much of that below-sea-level real estate as I could get my hands on. Yup.

Yep.

I would love to have a home in the Garden District.

My cousins still occupy the house my Great, Great Granddaddy Hun built there in the 1870s.

It rocks!

Eric The(N'awlinsKindOfFellow)Hun

Quoted: Fine. Rebuild it. 20 feet higher.

Why?

The parts that really matter never got an inch of water!

The 7th, 8th, and 9th Wards simply need to become common areas...again!

No one built there until the 20th Century.

Strengthen the levees, widen and deepen the canals, and refurbish the pumping stations.

And then stand back!

Eric The(Entrepeneurial)Hun

Quoted: Wow.  Sounds like some people here have an overinflated idea of how important NO is.

No.

Some folks just understand how important New Orleans is to America.

Back in the day when river traffic was so important, it WAS important.

Well, settle down Mark Twain, the River today is as important as it ever was!

80% of all American grain floats down the Mississippi on barges.

It was estimated that during the first 4 days of the closing of the Port of New Orleans, Midwestern Farmers lost approximately 2 Billion dollars in lost sales.

Pretty damn important to the Midwestern Farmers.

Pretty damn important to anyone who eats their products, as well.

Of course, if you'd rather stick to your diet of tofu, be my guest!

Nowadays its just another run down harbor that can be contracted out to any other harbors.

Sorry, but that is pure idiocy!

There are no other ports that could compete with New Orleans.

You know why?

Hell, it could get washed away by a huge storm surge and all the commercial traffic that used to go there would be readily accepted by other ports without much problem.....oh wait..that already happened.

Uh, no, it most certainly did not!

What ports began accepting barges of grain and other products from the Mississippi River Valley?

Did you even listen to the President's speech last evening?

The part about it being rebuilt due to political reasons is absolutly true.

Willkommen zu Amerika!

Bienvenido a los Estados Unidos.

Accueillir aux Etats-Unis.

Dare il benvenuto agli Stati Uniti.

Say, where did you come from originally, anyway?

Having a robust economy IS good politics.

No New Orleans, No robust economy!

Just look for the next up and comming presidential hopefulls to start trying to get their names on the map as big supporters of NO and the re-build.

Louisiana and New Orleans just got a whole lot 'Redder'!

President Bush carried Louisiana by 57% to 43% over Kerry.

In 2008, the Republican Presidential Candidate will likely break 60%!

How about in your State?

Eric The(Geopolitical)Hun

Quoted: When Jesusland is founded, it will be our chief port. BTW Eric, tofu is made from soybeans, where do you think those come from?

Now why in the world would I know anything about tofu?

You think I'm from a 'Blue' State or something?

No Birkenstocks here, Buddy!

Eric The(Normal)Hun

Quoted: The Missisippi as a river port is important, but you don't really need New Orleans for that.

Please tell us why.

The shipping ports run along a few hundred miles from the Mississippi river mouth and New Orleans doesn't have much to do with keeping them going.

OK, just how far north of New Orleans can large ocean-going vessels navigate safely?

Hmmmm?

Let's hear your best guess.

Modern ports don't employ that many people and don't need big warehouses (except for bulk cargo).

Where did you come up with that?

The Port of New Orleans is the second largest employer in Louisiana.

Only the Department of Education has more employees.

Most of New Orleans is employed by the entertainmet and tourist industry.

Huh?

Could you manage to drop your 'Mardi Gras' ideas about New Orleans?

It's pathetically myopic.

You could easily put up a few well-protected docks with some rail lines running to them, and keep the whole thing going with a few thousand people.

Well, if that isn't the most asinine thing that I have heard in my life!

Thankfully, you are not in charge of running this nation's shipping.

I spent a year working for the Board of Commissioners of the Port of New Orleans, and I was amazed by the magnitude of the efforts that it took to run that Port.

To say that it could be run by a 'few thousand people' is absurd, in the extreme.

Eric The(WellRounded)Hun

Quoted: Quoted: Some folks just understand how important New Orleans is to America. Eric, I respect you and your opinions normally carry allot of weight, but in this case you are wrong. Well, settle down Mark Twain, the River today is as important as it ever was! Only because its cheaper. 80% of all American grain floats down the Mississippi on barges. Only because its cheaper.  It dosn't have to, it is just the most viable alternative at this time. It was estimated that during the first 4 days of the closing of the Port of New Orleans, Midwestern Farmers lost approximately 2 Billion dollars in lost sales. Don't confuse the temporary shutdown of ALL commerce with the permanent loss of NO.  After the hurricane went through, EVERYTHING stopped, regardless if it was still working or not because of all of the other damage and the loss of employees, power, etc. Get all this business up and working again, past the short term temp shutdown, and the economy will survive, adapt, and overcome past the loss of the NO port. The short term effects of anything of this nature are always the harshest, regardless of how much actual damage is done and thats simply because things tend to shut down for a period of time until people are sure that things can be picked up again, re-directed, or worked in a different manner as prescribed by the given circumstances. NO can go and we would adapt quite well to its loss in short order. Pretty damn important to the Midwestern Farmers. Pretty damn important to anyone who eats their products, as well. Of course, if you'd rather stick to your diet of tofu, be my guest! As I said, this effect is from the short term shut down of services caused by the hurricane, not by the loss of NO.  Don't forget that we have planes, trains, and automobiles as well.  If NO goes tits up, the grain will still be moved, just to different places and shipped out from there. Sorry, but that is pure idiocy! There are no other ports that could compete with New Orleans. You know why? I gotta call bullshit on this.  I know that there are many ports that can handle anything that the port of NO can along with their current traffic and without a hiccup to boot.  Port of NO is not unique by any stretch of the imagination.  It just has geology going for it at the current time, but there is nothing that happens at the port of NO that can't be done anywhere else. Uh, no, it most certainly did not! What ports began accepting barges of grain and other products from the Mississippi River Valley? Which ports need to be accepting barges?  I would bet you money that the lagging trucking industry has already stepped up to pick up the excess as well as the rail system.  The barge system isn't irreplaceable. Did you even listen to the President's speech last evening? You mean did I watch the prez hand the keys to the hardworking taxpayers govt. wallet to the "poor and disadvantaged" who are more than willing to plunder the public largess without paying a cent of taxes towards the same ends their entire lives simply so the prez can pander to the extreme left race-baiters and uber-liberals under the guise of "Compassionate conservatism"? Having a robust economy IS good politics. No New Orleans, No robust economy! BS.  NO isn't that important that its loss will mean the entire US economy will suffer in the long term.  This is where you blur the lines between fantasy and reality. Fantasy: NO is important and its loss means that the entire US economy will suffer. Reality: We have proven time and time again that where there is a will, there is a way and even if NO is flooded again and left that way until every waterlogged building turns to mud, we WILL find an alternate method of conducting business and getting the product out, the jobs started, the economy upright and working hot straight and normal in less than a year or two because thats the way we are.  Yes we have history, but we also have an overriding desire to make things work and be successfull that manifests itself in the very real aspect of capitalism. NO, like anything else is expendable.  We will get over it, get past it, rebuild somewhere else if necessary, divert goods, people, or services to other areas more than capable of handling the extra work, and we will drive on and be just fine.   NO can go the way of the do-do and eventually all that will be remembered of it will be that curious custome that we heard of in the before-times called 'Mardi Gras'. Louisiana and New Orleans just got a whole lot 'Redder'! President Bush carried Louisiana by 57% to 43% over Kerry. In 2008, the Republican Presidential Candidate will likely break 60%! How about in your State? Eric The(Geopolitical)Hun   So what you're telling me is that a state that voted in a democrate for gov, and its largest city has a retard..er...democrat for mayor, that just got buttfucked on national television by a hurricane and who allot of its residents feel screwed over by the percieved slight of the fed govt in responding to the disaster area, is somehow going to vote republican?   Based on what?  Old stats and polls?  Frankly, with the finger pointing already starting, this is gonna get allot uglier before it gets better and you can bet that no single republican associated with the current administration is going to come out of this without a few shitstains on their ties that will be fully used against them come election time.  Honestly, things ain't looking good for the repubs right now. Chris

Wait'll I get back from the gun show today!



Eric The(Gleeful)Hun

Quoted: The port of LA moves more goods than any NOLA port. www.portoflosangeles.org/

What you actually meant to say was that the Port of Los Angeles handles more imports from Asia than any other port in the United States.

That is the only area in which is beats the Port of New Orleans, which, together with the 'Ports of South Louisiana' which are the various ports below New Orleans, constitutes the busiest port in the Western Hemisphere.

This port, my dear Californy friend, allows the US to sell our goods to other nations, rather than just serve as an adjunct to the Red Chinese Navy.

Now, what about the possibility of earthquakes?



Run, run for your lives!

(How do you holler that in Spanish, por favore ?)

Eric The(OrInMadarinChinese?)Hun