New Orleans: A Geopolitical Prize

By George Friedman

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, POSL 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 large proportion of U.S. agriculture flows out of the
port. Almost as much cargo, nearly 17 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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