A Conversation With Senator Bill Cassidy

Wednesday, May 4, 2022
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U.S. Senator from Louisiana (R); Member, Senate Committee on Energy and Natural Resources; Member, Senate Committee on Finance


National Security Correspondent, Wall Street Journal; CFR Member

Senator Bill Cassidy discusses issues in the United States and how the US and its allies should work closely together to counter Russian power and Chinese influence, such as energy independence, international environmental standards, anti-money laundering, and anti-corruption initiatives.


SALAMA: Good morning, everyone. So nice to see everyone in person for a change. Hopefully, this is the way it goes from now on.

My name is Vivian Salama. I am a national security correspondent for the Wall Street Journal. And it is my pleasure to be joined today here by Senator Bill Cassidy of Louisiana. Senator Cassidy, of course, needs no introduction as far as his very impressive service as a doctor and, you know, in the state legislature, and then the House and Senate.

So we have a range of issues that we want to cover today, but I wanted to mention that the audience consists of Council members joining us here in Washington and online. The discussion is going to be on the record. And we encourage you all to ask questions. So if you will, just think about them. We’re going to talk for about thirty minutes, and then we will turn it over to you all for your questions.

So, Senator, it’s great to be with you. Of course, Ukraine is dominating the news. I, myself, am heading there tomorrow. And so it’s on the minds of a lot of Americans here. The White House says that supplement resources that Congress provided on a bipartisan basis in March have been critical in bolstering security in Eastern Europe, countering Russia’s malign activities in the region, and delivering critical humanitarian and economic assistance. But it’s now calling on Congress to provide additional resources to help ensure Ukraine’s democracy prevails over Russian aggression.

And so what more, in your opinion, can be done in support of Ukraine right now, particularly as we enter this new phase in the conflict where—which the administration says could result in the annexation of the Donbas as soon as mid-May, and really drag on for months, and possibly years to come?

CASSIDY: The obvious—thank you, by the way. Good to be here, and great admiration for CFR, so I’m honored to be here. The obvious is to continue to provide arms. The next level is now do we support the other Europeans as they seek to have a united front, supporting Ukraine and opposing Russia? Now, clearly, you need to get energy support to the rest of Europe. When you speak to folks in Germany, they say that Germans may spend 5(,000)-6,000 euros more per family next year on energy. And folks say, well, just expand renewables. But they heat their homes with gas. Electrons cannot replace natural gas, which is actually heating a home. The Ruhr Valley is based upon feedstock that is either oil or natural gas.

And so if all the sudden they’re paying so much for fossil fuel, then they are going to have to either close the Ruhr Valley or people will go cold. Now, I can tell you that political support will be undermined—political support for opposition to Russia and support of Ukraine—will be undermined if people are energy impoverished. So aside from giving the weapons that we need to give the Ukrainians, the financial aid, the other support, we also need to support the rest of Europe. And principally, in terms of—at least one way is in terms of energy supplies. Now, you don’t turn that on. So we have to be creative. But the degree that we do that will help the Europeans have a united from opposing Russia and supporting Ukraine.

SALAMA: I do want to talk a little bit more about the energy dilemma in a moment, but you talked about weapons. One of the issues that Congress will have to grapple with in the weeks ahead is how to transfer newer models of equipment with more sophisticated technology to replace some of the old weaponry, especially those Soviet-era weapons that the Ukrainians have been relying on. So, first, at what point do those technologies start to deplete U.S. stockpiles, and when is that a concern for you? And also, what about concerns that those weapons could fall into the wrong hands? How does the U.S. address that?

CASSIDY: Well, of course, the approach we’ve taken so far, which is an attempt to transfer Soviet era. And keep in mind, Turkey is an ally, and they have SAM-400s. They have the latest, greatest from the Russians. And so wouldn’t it be great if the Turks would then transfer and then we could replace them with Patriots? It would solve several problems at once, correct? And clearly, control of the air is one of the key issues. But at some point, we will attempt to—we must, probably, have to replace further.

I can’t answer the question to the degree to which we’ve depleted our own stockpiles, but I do find that U.S. companies and remarkably agile in terms of increasing production. But just to say that. But as regards training them, it appears to already be occurring. Boris Johnson, perhaps speaking out of hand, spoke of how the Brits are already doing that. So at some point, particularly the longer it goes, it will occur. And it may fall in the wrong hands, but I think that’s one of the risks you take, so.

SALAMA: Senator, level with us here, because, you know, we have been pouring billions into Ukraine over the past few months alone. And it is getting bipartisan support. Obviously, no one wants to see Russia win its war of aggression. However, there are so many problems at home. You have inflation, soaring gas, food prices, another COVID variant, and it’s a midterm election year. And so I wonder how long can we sustain this level of aid before voters, before Americans, start to question and say: Hey, what about us? We have so many problems at home. How do you reconcile these two needs, both the domestic needs and the national security needs, that we’re facing now?

CASSIDY: Well, a couple things that we can do that would actually help simultaneously. The degree that the United States increases energy production does multiple things. First, it creates American jobs. Secondly, it actually helps decrease global emissions. Our natural gas is a heck of a lot more cleaner than whatever coal the Germans are going to be forced to burn if they don’t have adequate sums of gas. So creating jobs and addressing environmental issues—you look at it. Different people, like, prioritize both, but they’re all important. So I think there’s a—and by the way, the more energy we produce, the more that we can at least plausibly tell the American people that we’re working in the long term to decrease your energy costs directly and indirectly. So I think there’s a way to kind of thread a needle in which the American people can be convinced that we’re attempting to address everything simultaneously.

SALAMA: Well, I want to go back to the energy issue. Obviously, this war has dealt a supply shock to the global oil market. Today we heard that the European Union is going to aim to—in its sixth round of sanctions—aim to block—to sanction Russian energy. But the European Union also needs to the United States’ help in reducing its dependence on Russia. And the Biden administration really faces limits as far as what it can do because of the fact that our liquified natural gas needs have surged, and because of the fact that we are at capacity to a large extent, according to a lot of officials within the administration. And so what is—what is the discussion in Congress about trying to get Europe away from its dependence on Russian energy? And how can the U.S. also bolster its own energy resources, or its own energy supply, by helping our allies get through this?

CASSIDY: So we’ve called for what we call an Operation Warp Speed on energy. And it was said to have taken two to ten years for a vaccine to be produced for COVID, and within ten months we were vaccinating folks. What if we have an Operation Warp Speed when it comes to permitting new energy infrastructure? So I’ve spoken to two different people as an example of how this could apply. I’ve spoken to someone who is setting up an LNG export terminal. And it’s offshore, so he’s—it’s a little bit of a different model. He’s already having built the trains—how you would liquify and ship. He’s already building—they’re called trains. He's already building these.

He's waiting for his permitting. He said that if he had his permits that he thinks he could be exporting gas within a year. But it’ll take him two to three years because he’s waiting on his permits. Now, that is a bureaucratic process in which, if you could bring everyone into a room metaphorically and say, my gosh, you have a problem with this, can you solve it? And people are not allowed to sit on it for six months and then get back to you, and someone leaves in the interim, so the next person has to be trained—no. Everybody would be there, and it would hasten.

Secondly, speaking to a person in charge of drilling off the outer continental shelf off of Louisiana—which would create American jobs—high-paying American jobs for people who don’t necessarily go to college, but with overtime they can make upwards of $100,000 a year. Good jobs. And this person tells me they have five permits pending right now before the federal government to drill off an existing platform. And they’ve been told they’ll get one of out of the five, and it’ll take them at least a year to process. And, by the way, the reasons for the delay, as it turns out, are not really valid. But it seems as if it is just a means by which the administration is slowing down drilling.

So if we want to say that we have a mature basin, the Gulf of Mexico, with a platform that is already there, and we can go in five different directions to get more gas and oil—and, by the way, the person told me if they had the permits they would have oil and gas be in—and the refineries are in the LNG export terminals in Louisiana or off the coast of Louisiana, within twelve months. This is a recurring thing. If it weren’t for permitting delays, we would be able to be either producing and/or shipping within twelve months. And instead, the recurring theme is it will take us two, three, five years. You know, to quote Pogo, we have met the enemy and he is us. The administration needs to stop being the enemy of domestic energy production both for our sake, and for the sake of our allies.

SALAMA: I do want to dig into that just a little more, because obviously there are limitations for what the administration can do as far as dictating rules for private oil and gas companies. And so how can they incentivize, and how can Congress incentivize, to get American companies to address global supply needs, you know, expand their own production, but also, as you were talking about, jobs and others things. You know, how can they get them on board to address the need right now, instead of just kind of going after wherever—whatever countries pay the most, or something like that?

CASSIDY: Well, a couple things about that. Now, one, you got to start being innovative and—one, you have to stop being hostile to fossil fuel. Which is not to say that you write off the environment. By the way, this permitting process is for renewables as well. It is for carbon capture sequestration. There is a problem with this administration. One example, just real-life example. Louisiana wants to begin carbon capture sequestration projects. You’ve got to permit the well to make sure that it’s—or, the aquifer to make sure that you’re going to keep it trapped. This is CCUS. We’ve got thirty-three geologists in our Department of Environmental Quality. We still have to obey the rules that EPA puts forth, even if we have primacy. We have an application that was supposed to be ruled on last October out of EPA region six in Dallas. And as far as I know, they’ve still not processed it to send it to D.C.

Now, this is for CCUS. This is to lower emissions. And the administration can’t get off the dime as regards approving that. So if you want to do something, OK, we need to increase fossil but we need to simultaneously do things that will decrease carbon emissions, they’re stopping both. So I’m not going to give them a pass. I’m going to say that they are actually the obstruction that is preventing both projects that would lower emissions, or lower CO2 in the atmosphere, and those that would increase more—that would increase domestic production, and that which would expedite the export of this gas overseas.

Now, as long as we’re going to be sclerotic—I’m a gastroenterologist, forgive me the metaphor—constipated as regards how we do this regulatory environment, we’re going to end up kind of in a knot. And it’s going to hurt our allies. It’s going to hurt our effort to fight the Russians. And it’s going to hurt domestic job production. And it’s going to now allow us to lower fuel costs on the basis of increasing supply.

SALAMA: Obviously a very hot topic. I’m sure we’ll get some questions on it. But I wanted to shift to China. Two years ago President Donald Trump signed what he called a historical trade deal with China, which committed—in which China committed to 100 billion (dollars) of additional U.S. exports before the December 31, 2021. Chad Bown, my pal at the Peterson Institute for International Economics, just wrote last month, quote, “Today the only undisputed historic aspect of that agreement is its failure. One lesson is not to make deals that cannot be fulfilled with unforeseen events inevitably occur, and in this case a pandemic and a recession. Another is to not forget the complementary policies needed to give an agreement a chance to succeed.” So how would you characterize these efforts? And what more can be done to hold China accountable for any unfair trade practices that are lingering?

CASSIDY: Let’s rethink it.


CASSIDY: If you—if you’re going to say, OK, we’re going to rely upon the Chinese keeping their end of the bargain, you know, it’s a triumph of hope over experience, as Samuel Johnson said of second marriages. So we’ve learned a lesson. We are not—you can’t trust them to do something which they’re going to perceive is not in their economic interest. So what we’ve proposed is a carbon border adjustment, in which we would say—and let me just back up a little bit. Let me just give a little bit of an overview. In 1988, I believe it was, Paul Kennedy wrote his book, The Rise and Fall of Great Powers. And in that book, he correlated the energy use with the growth of gross domestic product, just use the phrase, as well as the ability to finance increased military strength. And you can look through history and see this kind of all three being correlated.

I think if he wrote this book today he would throw in emissions. But emissions are just a little bit more complicated. And to give a flavor to this, in 2005 the EU and the U.S. committed to lowering emissions. Since then, we have, despite higher GDP and higher population growth, et cetera. The Chinese did not commit to doing so. And there’s a reason for it. The reason they didn’t is that it’s cheaper to manufacture if you don’t have environmental standards. And I can give specific examples of folks in industry have told me how this is applied. So you don’t have to obey environmental standards. They’re using coal as a cheap form of energy. And so it attracts foreign direct investment.

Now, where am I going with this? You’re shaking your head, yeah, where are you going? (Laughter.) The point being that with China we have a lot of standards out there, will you please do it? Again, triumph of hope over experience. Rather, let’s go to a carbon border adjustment. Well, listen, China, if you wish to import to the United States, and if we can work with our allies to the EU as well, Canada and U.K. If you wish to import to some of the largest consuming nations in the world then you are going to have to match our regulations, our standards for lowering carbon intensity. If you don’t, you’re going to pay a fee.

Now we’ve moved from something where we just sure hope that you’d comply into something which can be an objective standard. And in which, frankly, we’re already positioned to do very well, because we’ve lowered our carbon intensity. I think the better way to approach our trade with China is to say: OK, if you’re kind of manipulating, arbitraging, whatever you want to say, ignoring the international commitments that you theoretically have made to lower carbon intensity, in order to attract foreign direct investment, and then import the same good back to our economy, we’re going to attach a fee to your carbon intensity. Now, that would begin to level the playing field, frankly re-shore or near-shore a lot of industry, and protect American jobs.

SALAMA: Well, let me ask you—first of all, I was nodding my head in eager anticipation for where you were going with that. (Laughter.)

CASSIDY: Yeah, right.

SALAMA: But, no, please tell me—like, explain to me if we’ve learned any lessons from the last two years of negotiations with China? In terms of—you know, President Trump was very adamant about dealing bilaterally on trade relations. But there are a number of issues with regard to China that are multilateral, that our allies are also facing. Regulation restrictions, Chinese export restrictions on fertilizer is a global issue. So would it have been better if we had engaged allies, even in the text of the agreement, in the daily negotiations, and kind of looped them in, done it together, versus bilaterally with China alone?

CASSIDY: It’s always easy to—you know, again, in medicine we call it the retrospective scope. It’s always easy to look backwards and imagine how something could have been better. But I think probably we’ve been the most aggressive nation worldwide as regards dealing with China. It’s only been of late that the Europeans seem to have moved to our position in terms of dealing with them aggressively. So I think that if there’s a credit to Bob Lighthizer and to the previous administration, it’s that they elevated the issue that now others have seen it and they’ve gravitated to our position—if you will, setting the stage for the cooperation which now I do think will be better to have.

SALAMA: I’m going to move on to energy and the environment. All of these topics, by the way, obviously ripe for questions, and we look forward to the questions from our members. But turning to energy and the environment, in a Fox News op-ed earlier this year, you wrote that the administration’s solitary focus on lowering domestic emissions has sacrificed U.S. interests. Reducing emissions, specifically global emissions, is crucial, however good energy and climate policy must meet at the nexus of the environment, national security, economy, and affordable energy. We have a lot of challenges at home, as we’ve been saying. And so how do you think that the U.S. can kind of corral its assets, its resources, and be able to address all of these issues at once without neglecting, say, national security over the environment? Or the environment over the economy? How do you do it all?

CASSIDY: Let me reframe that—rephrase it. Repeat it, rephrase it, if you will, reframe it. There’s a nexus between—there’s a nexus between national security, the economy of the family—the economy of a family and of a country, between energy and climate. If you ignore any one of those, you lose all four. Now, Europe gives us a great example. They ignored energy security, and so now they’ve sacrificed national security. They’re having to burn coal instead of natural gas. So they’ve increased their emissions. And the economy, as I spoke earlier, is going to suffer because of the absence of feedstock and the absence of the ability to get affordable energy.

So it shows you that by ignoring one of the four, that you’ve ended up sacrificing all four. I would argue, to rephrase you question, you cannot address any one of the four unless you address all four. How can you do so? The United States emissions right now are roughly the same as they were in 1992. Think about that. How much larger is our economy? How many more people do we have? How much more energy are we producing, because since then it was thought that we were playing out our shale—excuse me—our gas and oil production. And now we’re producing record amounts. But our emissions are lower. How did we do it?

Because gas has replaced coal. Yes, there’s a marginal effect of renewables. But the biggest story is that natural gas, which has about 50 percent of the carbon footprint per unit of energy, has significantly replaced coal as an energy source, and gas has replaced oil as feedstock for chemical industry. Now, that shows you, we took care of our energy production by expanding the development of cheap natural gas. And we’ve remarkably lowered the price. And because of that, our economy has improved. Because of that, our national security has improved. We’re much less dependent upon the Middle East than we formerly were because we’ve increased our domestic supply. And as I’ve already pointed out, the climate has benefitted because we’ve decreased our emissions, despite larger economy and larger population. So that’s how, if you address all four simultaneously, you do well.

Let’s give an example of this administration. They’ve done their best to kill fossil fuel by a death of a thousand cuts. Whatever they can do in the regulatory regime to stop the development of future supplies, they have done so. OK. That’s great. And now our allies are burning coal instead of gas. And global worldwide greenhouse gas emissions are going to increase because we can’t backfill for what the Russians were producing. So they are so focused on leaving it in the ground they forgot that emissions are going to increase worldwide because of that set of ill-informed decisions. I would argue the only way that you can address climate is by addressing the other three as well.

SALAMA: This is expensive, it sounds. And just to get Congress on board—

CASSIDY: No! Au contraire!

SALAMA: Just to get Congress on board when there’s—when on environment, national security, economy, and affordable energy, when so many members are on different pages with regard to these four issues that you list. So how do you make this happen?

CASSIDY: You do it by educating people as to the validity of what you’re saying. Is it cheaper to keep an aircraft carrier group in the Mediterranean or to be energy self-sufficient? Is it cheaper to use cheap natural gas or to pay for other, more expensive, forms of energy? Ask the Germans, and they will tell you that it’s cheap natural gas.

SALAMA: But you have to spend money to make money.

CASSIDY: Well, I can tell you, there’s private capital that would be unleashed to develop natural gas plays if there wasn’t this kind of constant pressure from the administration not to spend capital on it. I would argue the cheapest option for the West—not just the United States, but the West—is to develop those energy resources which allow us to push back on Russia by not having to support their economy by purchase of energy resources. And to lower the climate—the global emissions by, again, using cheap natural gas instead of coal, wherever you’d be burning coal. What I just outlined is the cheapest way to go. And it creates more American jobs. And it does the best for the environment. And it does best for our national security. And once folks become aware of that then they kind of, OK, I get it.

SALAMA: I want to ask you one more question unrelated to this before we turn to the members. You have led a group of seven bipartisan colleagues in introducing a resolution urging Congress to combat international criminal organizations, illicit trade, and the use of trade-based money laundering, which pose a significant threat to U.S. national security. What motivated you to pursue this action? And what are the priorities for you?

CASSIDY: Yeah. So there’s a great GAO report on trade-based money laundering and our government’s response to it that came out last December, which I recommend to anyone who would be interested in this topic. But trade-based money laundering is the means by which terrorist organizations and transnational criminal organizations move money around the world. Oftentimes, these dollars come from illicit activities in the United States—for example, selling fentanyl. So we have a hundred thousand Americans dying from overdoses.

The money that is earned from selling these drugs is moved out of the United States increasingly by trade-based money laundering, to either further criminal activity or, in the case of Hezbollah, which may—which may move about $400 billion a year—I think 400 billion or million? Million. Four hundred million dollars a year through South America, through the west coast of Africa, up unto the Middle East, to fund their activities. Now, we are—Americans are dying. But the criminal proceeds are financing more American deaths and/or more criminal activity, more terrorist activity around the world.

The question is, how do we manage that? Well, as it turns out, the way we are—the way we are currently doing it, if there is international trade, here is a bill of lading and here is an invoice. Most times those two never meet. So there can be somebody who is doing a phantom shipment. Here’s the invoice. We’re going to send a couple million dollars back and forth. But there’s actually no goods transpired. Or it can be an under invoice or a double or triple invoice. It can be a duplicate invoice. All these things are allowable because of the way that we manage this.

And hundreds of millions of dollars are moved across borders by this mechanism. This has incredible implications. I spoke to a prime minister of Mali. And—I think it was Mali. And I just kind of tossed out, is there any way that illicit trade is affecting your country? He launches into how—into this specific topic, and how Boko Haram is being financed by dollars being laundered out of the United States up there.

I’m reading about—this morning in the New York Times—about how plantations of avocados are being destroyed in Mexico as criminal activity is going into these farms and taking the land from these farmers. Intuitively, you know that may be why Mexicans are now the number-one people group coming across our border, with Mexico coming here in irregular migration, because they’re being displaced by gangs. It’s being financed by this mechanism. It is a criminal activity which has now become a national security activity and is killing a hundred thousand Americans a year from drug overdose.

So our resolution is attempting to highlight this, and to hopefully call upon the administration to break down the silos that currently exist in how this information is shared, and move from truly a paper-based way to follow trade—paper-based—into something which would probably be blockchain oriented, in which we could use analytics and AI in order to look at these patterns. Now, I’m sorry I threw a lot in there, but I’ve been thinking so much about this. And it’s something that we can do that can crimp these gangs and terrorist organizations that threaten our national security. Sorry. (Laughs.)

SALAMA: Very interesting, and a lot of meat there. So I encourage you all to read that.

Would love to turn it over to our members. We’ll take our first question here, sir. Don’t forget to introduce yourself, tell us who you are.

Q: Hi. Steve Charnovitz from George Washington University.

Doctor and Senator, thank you for your excellent presentation. You were very convincing on your criticism of the Biden administration’s energy policy. I think what you said was quite visionary. But on the area of international trade, I didn’t think you were as visionary. You talked about illicit trade. What is your vision for legal trade? All I heard you say was tariffs on China.

(Comes on mic.) I won’t repeat it all. But you talked about your vision for energy policy, but you haven’t talked about really anything for your vision for international trade, other than the border adjustments against China. What’s your view on that? Should the administration be doing trade agreements with trade promotion authority from the Congress? Should we be having a positive, constructive policy for the World Trade Organization? I haven’t heard as much from the Senate Republicans on international trade as I used to, so I would be interested in your vision for positive international trade to create exports and jobs for the U.S. economy.

CASSIDY: So, Steve, I’m glad you asked. (Laughter.) First, if you speak to Republicans, they would like—and when Katherine Tai came and spoke before Finance Committee, there was a strong push for the administration to begin entering into trade talks with other organizations. We still remain the party of trade. And if you will, the assumption is the administration is choosing not to because, frankly, it would tick off the trade unions. So, first. But let’s go into what you’d mention, the visionary—excuse me. What you speak of as the visionary. My staffers—I’ve got several staffers here. One of them is helping us put together something called the Americas Act.

Now, I think the United States has ignored the Western Hemisphere, to our great detriment. And so—and part of the reason I began exploring this is what could we do that would halt irregular migration from Central and Latin America by creating a stickiness? If you have a job, you’re less likely to migrate. And so we’ve come up with the Americas Act. Now, the beginning of this Americas Act is how do we facilitate trade between the U.S. and, within the Western Hemisphere, not just the U.S., in a way which kind of squeezes out the illicit and accentuates the legal?

So we’ve talked about—and in our legislation, we firmly promote—and in the GAO report they speak of using a distributed ledger or a blockchain by which you would now conduct trade. We’ve mentioned this to Inter-American Bank. And then, coincidentally or not, about six months later they gave a $500,000 grant to several Latin American countries. So now there’s more than seven countries in Latin America doing something called la cadena, the chain, in which they would use distributed ledger blockchain to facilitate trade between their countries. Now, think about this. It makes trade, I won’t say frictionless, but it makes it a lot less fractioned if you can now use a distributed ledger to move back and forth. Secondly, you squeeze out some of the corruption. Instead of having to give a personal consideration to someone—to a border guard, here’s 100 pesos, can you please allow my goods through, and he approves the paperwork—now you have the paperwork which can be reviewed and, theoretically, would make that less susceptible to personal considerations being required.

Thirdly, if you can squeeze out the trade-based money laundering, imagine the scenario. There are goods going from the United States to Guatemala, but the invoice goes through Panama. In Panama, the invoice is marked down by 50 percent, depriving Guatemala of 50 percent of the tariff that they would receive on an imported good. Therefore, decreasing the amount of money they have to do infrastructure development, that would therefore attract foreign direct investment. Now, if you say, oh, well, you’ve got a distributed ledger, and the U.S., Guatemala and Panama are simultaneously evaluating, and, boom, this markdown is not appropriate therefore it will not occur. Guatemala would increase the amount of receipts they would get in order to invest in their infrastructure, et cetera.

So we do think that our Americas Act, which we’re introducing soon, and that portion of it which would emphasize the distributed ledger blockchain, is something which would be incredibly beneficial for the Western Hemisphere. And then we’d like to expand that worldwide. The GAO report speaks about how CBP is already attempting some of these pilot projects. And, it’s my understanding, that they’re collaborating with la cadena.

SALAMA: And you think that’s going to get bipartisan support?

CASSIDY: I think it will. I head a breakfast this morning with Ken Salazar, the U.S. ambassador to Mexico, just coincidentally, the ambassador from Mexico, and then several other senators. And there is strong interest in improving trade relations with countries like Mexico. This is a way plausibly to do so. And to think that we’re still doing our trade transparency units with paper? I mean, to say that, and you think to yourself, what with paper? What, with paper? Like, Maersk and IBM are collaborating to do shipments by distributed ledger blockchain. Why isn’t the federal government? Why aren’t we collaborating with Maersk? That’s something that we can do. And in fact, you have to ask yourself, we’re not? You know, that’s just kind of, like, whoa, can’t believe that. Whoa. So anyway, you see where I’m going with that.

SALAMA: I think we’re going to take a question from one of our virtual members.

OPERATOR: We’ll take the next question from Krishen Sud.

SALAMA: Don’t forget to introduce yourself.

Q: Yeah. Hi. Thank you for taking my question. It’s Krishen Sud. I’m a member of CFR.

So, Senator, I was just wondering what your thoughts were on shale technology and perhaps shale technology being the marginal provider of energy historically. When prices have gone up there’s been a big increase in shale production, but it doesn’t seem to have happened much this time. And just a second quick question, do you have a view on nuclear energy as a resource? I know we’ve got all kinds of issues since Fukushima, but I’m just curious whether the technology has improved to an extent that that could be part of the longer-term solution?

CASSIDY: Yeah, great. Great. First, about shale as the swing producer, if you talk to the shale guys, gals, they will tell you—the shale guys and gals—they will tell you that they’ve been hurt by the absence of private capital, and that, again, this death of a thousand cuts of the administration encouraging or discouraging private investment in fossil fuel has really hurt them. Now, it’s not just now, but the other issue they have is the absence of oil field service companies having sufficient supplies and sufficient number of workers in order to build out. Why? This is just a virtuous—no—it is the opposite of a virtuous cycle. You discourage investment, and so therefore people who are oil field service downsize. The workers find other jobs. And so now that you’re attempting to ramp up, you’re attempting to ramp up when you got to rebuild. And it takes time to rebuild.

So first, I agree with you that shale plays should be the marginal producers. They’re the ones that most rapidly can ramp up production. But it’s not something that you flip on like a light switch. It is something which is—has a ramp. And we have to recognize that. The administration, if they could provide regulatory certainty, not just for the development of oil and gas but for the pipelines that are required to offload, et cetera—could facilitate this. And they would give reassurance to those investors.

Secondly, regarding nuclear, I saw that now Japan, just in the last day or so, is saying once more that they have to increase their nuclear supply. And they have to reassure folks that they can do it safely. So I do think the traditional nuclear will, you know, maybe be more explored. The Germans I think are still planning to phase out their nuclear plants. They tell me it’s only about 5 percent of their electricity, but it’s still 5 percent of the electricity. So maybe the Europeans could continue to get some more life out of the ones that they have.

But I’ll also point out that in the previous Congress, under Republicans, we authorized small modular nuclear reactors. And in the bipartisan infrastructure bill, which I was privileged to be a part of the negotiations, we funded small, modular nuclear reactors. So also—and I’m told by Lisa Murkowski that the first small, modular nuclear reactor will go online in Alaska to power a military base. So we are making real investments in those sorts of newer-generation, more rapidly built, safer to operate nuclear plants, that can have a focal use. And I think will contribute a lot of carbon-free energy.

SALAMA: Interesting. Members in person? Yes, sir. Don’t forget to introduce yourself.

Q: Thank you. Jonathan Chanis.

Thank you, Senator, for your presentation and for your plan. There’s an expression in Washington that policy is personnel. Do you—

CASSIDY: Is what?

SALAMA: Personnel.

Q: Personnel.


Q: Do you think that it’s possible to make progress on your plan without some serious changes to the people that the administration has put in place to design and implement energy policy?

CASSIDY: So are you asking me would I rather have a Republican president? (Laughs.)

Q: I was thinking more like schedule Cs and people at the lower levels of the bureaucracy.

CASSIDY: Well, I see what your point is. And by the way, I’d like to think, as I said earlier, that this is something that could be accomplished on a bipartisan basis, joking aside. Because I do think you can plausibly look to how increasing U.S. natural gas production decreases worldwide global greenhouse gas emissions. Now, to your point, are there folks in the bottom levels who are kind of street level enforcers of law who might be retarding the ability to get something done? I suppose that might be. But I will say, I’m a former medical school professor. And I’ve just found that young people oftentimes have firmly held beliefs, but they are typically more susceptible to persuasion than are others. And there’s no substitute for education. Everything I’m talking about is logical. Everything I’m talking about, I can show you that if we ship more gas to China, and they use our gas instead of their coal, global greenhouse gas emissions decrease.

So I’ll say for society in general, there has to be kind of an education process. The bankers, my gosh, the bankers. You assume they’re all well-educated. They are—they are not investing in natural gas, thinking that global greenhouse gas emissions are going to improve. I mean, that is just so bass-ackwards. And so I think it just needs to be a discussion, in which hopefully—it’s always the professor in me that thinks maybe truth will win out.

SALAMA: Bass-ackwards. I’m going to have to write that one down. (Laughter.) I like that.

CASSIDY: Again, I’m a gastroenterologist, so some things come to mind. (Laughter.)

SALAMA: We’re going to go virtual for another question.

OPERATOR: We’ll take the next question from Louise Shelley.

Q: Thank you for your interesting comments. I’m director of the Terrorism, Transnational Crime, and Corruption Center at George Mason University, and a Council member.

In your legislation on the Americas, are you also thinking about the issue of free trade zones and how they may impede the ability to trace illicit trade; and also the large role of the Chinese in this, who are moving counterfeits and other commodities that are being used to—(inaudible)?

CASSIDY: Louise, what a great question. And so, just for context for the listeners, free trade zones are where you can bring goods into a community, and they are not subject to tariff. You can do value-add, and then you can ship them back out. And these are used legitimately for economic development. New Orleans has a significant free trade zone. New Orleans, I guess, second or third largest port in the nation by tonnage. And so it can be an economic development tool. But it can also be something used by criminals in which you can circumvent tariffs and otherwise insert counterfeit goods into the supply chain.

So I’m looking at my staff to make sure, but most of the criminal activities are abroad. So it would be difficult for us to address that in domestic legislation, except insofar as we if we could capture some of the value-add, if we could get a distributed ledger monitoring trade worldwide. But we do have—but, to the second part of your question, what about counterfeit goods? We do have a customs border protection reform bill that we’re not entering—that we’re now introducing. And we’ve vetted this with both CBP as well as with shipping and manufacturing stakeholders.

And our—and I think—I’m looking at my staff—we introduced—we’re going to introduce that pretty soon, right? Like, a month or so? This year. So we’re going to introduce that this year. And we’ve been in the process of vetting that. And it is something that we think begins to go after counterfeit goods. And then, third aspect to it, I have a bill with Dick Durbin called the INFORM Act, in which we also would have online sales—think eBay or Amazon—that would have to give more access to those—more consideration to those American companies, for example, that feels that the goods being sold online is either stolen from them or is a counterfeit good. So the Inform Act—I spoke to Durbin about that this morning—we are optimistic can get passed this Congress.

It seemed like there was one other thing you wanted to say. Also, as regards the trade-based money laundering, there is a process now which Louise is aware of. People in China want to get their capital out of China. And so—and they are selling fentanyl or fentanyl precursors to Mexican cartels, who then sell the fentanyl into the United States. So they are using a process of effectively money laundering where in order to transfer capital out of the U.S., the payment by the cartels would be to a Western Hemisphere bank. So we’re also attempting to address that through our Americas Act, to kind of address this kind of unholy alliance between Chinese chemical producers and Mexican cartels.

SALAMA: What about Russian money laundering? Because right now obviously it’s a hot topic, and kind of goes to what you were just saying about, you know, domestic policies versus things that are happening abroad. It’s something we’re talking about with allies right now, how much is going to address Russian efforts to basically protect itself, insulate itself in recent years from any targets of sanctions and otherwise?

CASSIDY: Yeah, so the Russians, of course, have bought a lot of—allegedly have bought a lot of real estate in cities like London and New York. Money that has allegedly been stolen and then is used to buy a big penthouse. And again, putatively increasing the property values of that—of those real estate markets. And the idea being if they ever had to liquidate, at least they’d have $100 million in a penthouse that they could sell and then put into their pocket. And I think we’re seeing that the Brits, for example, are no longer tolerating that. They always knew it was there, but there was a little bit of a blind eye turned. So I think that this question would be something interesting to revisit in six months, because in response to Putin’s war and going after oligarchs, countries are now using the tools that they’ve always had but have chosen not to use.

SALAMA: I see. Do we have any more questions here from any members? We have—we have a virtual question, actually. Let me turn to the virtual audience.

OPERATOR: We’ll take the next question from Daniel Arbess.

CASSIDY: Ah, Daniel.

Q: Hi, Senator. I have to tell you, and you know that I don’t use these words lightly, your virtuosity and your positive energy this morning are just spectacular. I mean, it’s—with everything going on, and the—you know, the mediocrity that we sometimes hear out of Washington, you’re in a—you’re in a class by yourself.

I can’t resist the temptation to engage your brilliant mind in the bigger question and the bigger picture around the end game of Putin’s war. At some point in time, Putin is going to stop. And he’s going to want to solidify whatever it is that he’s been able to bite off, ideally in his mind land locking Ukraine all the way through Odessa. I hope that we will prevent him and even eject his forces from Ukraine. But as you said at the outset here, things are going to have to move a lot more quickly and aggressively to achieve that outcome.

So as plan B, how is it that we can reach any kind of peace outcome with a war criminal who is engaged in a clear violation of Article 2-4 of the United Nations charter, war crimes under the Geneva Conventions, and even genocide, as defined in section—in Article 2 of the Genocide Convention, which we all have an affirmative obligation not to acquiesce it. So how do we do business with Putin if there’s ever an opportunity to do that? And if we can’t do business with Putin and underwrite, effectively, his bad behavior, how do we get Putin out of the picture?

CASSIDY: Hey, Dan. Great to hear from you. Thank you—thank you for the kind words.

Of course, if I was a seer I’d be at the track right now. But this is how I can imagine it would work. Recall when—first, let me bring two things together. I mentioned earlier Paul Kennedy’s 1988 book The Rise and Fall of the Great Powers. And when he speaks about how energy use—and we can say for a country like Russia, energy income—GDP, and the ability to militarize are all strongly positively correlated. And as he talks about imperial overreach, in which a company—a country extends itself too far, and then begins to decline because they can no longer afford their military interventions, adventurism.

Now, give us a true life example, period, new paragraph. Under the Reagan administration, the Saudi Arabians, whether with the encouragement of Reagan or not, dramatically lowered the cost of oil to the point that the Russians could not support their economy. The Russians—the USSR went bankrupt because the price of oil was so low so long. And lowering the price of oil became a geopolitical tool in which there were pictures of rusting Russian tanks. And as the USSR broke down, they pulled back. It is a classic Paul Kennedy scenario.

So and we opened up this conversation, what can we do? And my response was, if we can support the Europeans by taking market share and lowering the price of fuel, then the Russians have less income, and they cannot afford their adventurism. And, to your point, they would not be able to maintain that forward position. Now, what did we see, by the way, when all that happened? There became internal discord within the Soviet Union that led to Gorbachev trying to manage that, but ultimately he was swept aside. But the point being, the economic disruption, even in a totalitarian state, could not be ignored by the government.

So going back to the point once more that I started with, the degree that the U.S. is able to use our energy production as a geopolitical tool, decreasing the income of the Russian government, hurting their economy, means they cannot support their adventurism, they have to pull back, and it sows the seeds for internal disruption. Now, you may say that’s a one, two, three, and four that has to happen. But we have recent history within that country in which it did. And that’s why I think the geopolitical tools—as a geopolitical tool, energy production is a heck of a lot cheaper and it’s a heck of a lot better than war. And it’s something that we can do to benefit us.

SALAMA: I want to double down on something I’d asked earlier on this subject, because when I talk to European officials they say: The Americans want to help us, but they say they are at their capacity as far as LNG right now. You do not think so?

CASSIDY: And I would go back to Operation Warp Speed—

SALAMA: Right.

CASSIDY: And speaking to people who are both drilling and people who are building LNG export facilities, that within a year, which wouldn’t quite be the winter—the beginning of winter. Now, you know, we’ve already lost a couple months, for example. But nonetheless, it would begin to make an impact. Instead of waiting five years to replace that, we would have a sooner supply. And the longer we wait to institute Operation Warp Speed for energy, the more it becomes a solution that cannot occur.

SALAMA: And you don’t think that warp speed would ultimately hurt us domestically, our own needs domestically?

CASSIDY: Oh, no. You can see that the market for natural gas—our natural gas sells much less expensively here. In fact, if you really want to be visionary—hey, Steven—you really want to be visionary—and, by the way, you’re wearing—you’re wearing LSU colors, purple and gold. I appreciate that. If you really want to be visionary, and this would totally turn on the head. One of the things happening right now is that the energy companies, the independents who provide about 80 percent of the oil and gas coming out of west Texas can’t get financing. But let’s assume that they can get financing, and they send their gas to an LNG export facility off the coast of Louisiana.

And that amount of LNG has been prebought by a South Korean government, an Indian government, a European government—prebought. And they’re paying for it Henry Hub prices, which is probably about $5 or $6 per mcf. What if the U.S. took a stake—the U.S. government took a stake? And we say, no, we’re going to actually control this. If we sell domestically, we’ll sell it for $6, but if we sell it internationally, we’re going to sell it for the international price, which might be double or triple? The taxpayer would win. It would send a signal to financial institutions that you could invest there and not lose your investment. And it avoids the scenario in which China prebuys some gas, providing the financing for the development of the LNG export facility, and they buy at $4 or $6 per mcf and they sell it for $12 an mcf. Think of that.

Foreign countries could buy our gas at a lower price and sell it at European cost, and they would make the delta, as opposed to our government sending a signal that we’re going to reassure you regarding financing and, by the way, we will—if we do, we’re going to take the gain on the resale to a foreign market. Now, that is so totally turned on the head. But you ask yourself, why not? And that’s what this administration could do, should they choose. Now, I will say that they have encouraged the Ex-Im Bank to begin to make investment in domestic energy. But as I recall they’re still, shall we say, reluctant to invest in fossil.

SALAMA: Very interesting. Anyone else? Oh, yes, please. We have about two minutes for question and answer, just to warn you both. (Laughter.)

Q: Hi. Maggie Dougherty, with the U.S. Senate Foreign Relations Committee.

I’ll ask you an easy one then, if you only have two minutes. Obviously, Russia has taken up a lot of the space, but we’ve talked briefly about China. How has the U.S. Senate, the administration been able to—you know, while Putin’s war in Ukraine is going on—still focus on the threat of China? Your assessment, please.

CASSIDY: Yeah. I think that this has sharpened the Chinese mind that the U.S. can be—and our allies, can actually work in concert. Now, partly what I’m going to say, you can tell me I get it right or get it wrong, but we were clearly concerned about Taiwan, right? And I think this has reassured the Taiwanese that if they put up resistance that they could have allies. I think that the Australians being concerned about the Solomon Islands being militarized by the Chinese and their vigorous reaction also sends a signal. I think our selling subs to the Chinese with—to the Australians, I’m sorry—with the capability that those subs would have. So I do think that we’ve had a set of actions that would send the signal.

And keep in mind, China’s very vulnerable. To get energy or shipping through those straits between those islands off their coast funnels all their shipping to a point. And that makes them very vulnerable in terms of military action. I don’t want a war with China. But if China’s saber rattling, they got to understand their weaknesses. And, by the way, I also think that a carbon border adjustment is a way to diffuse the tension between our two countries, a cheaper, better alternative to war in which we would level the playing field, easing some of the trade tensions, but also doing something positive for the climate and good for American jobs. And in that, again, diffusing, let the pressure out, that would make war less likely.

SALAMA: I’m glad we got one more in on China. I have about five follow ups, but unfortunately, we’re out of time. Thank you all for joining this hybrid meeting. And thank you to Senator Cassidy for your time.

Just so you all know, there’s going to be a video and a transcript of today’s meeting available on the CFR website. Thank you, everyone. Stay safe and healthy and have a great day. (Applause.)


This is an uncorrected transcript.


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