Think Again

Think Again: The American
Energy Boom

Yes, oil and gas made in the USA is surging. But does that really liberate us from the Middle East?

Click here for FP's survey on how energy is remaking the world.

"The United States Is the Next Saudi Arabia of Energy."

Yes and no. American oil production, once thought to be in terminal decline, is up strongly for the first time in a quarter-century. Natural gas output, largely flat since the mid-1990s, has grown rapidly for the last five years. These trends look poised to continue, and observers are predicting major geopolitical consequences to follow. Ed Morse, an influential Citigroup analyst and former U.S. official, asserts, "North America is becoming the new Middle East." Robin West, another perceptive industry observer, predicts that by 2020, the United States will become the world's largest producer of oil and gas -- "the energy equivalent of the Berlin Wall coming down."

These sorts of views are quickly becoming conventional wisdom. But it takes more than sheer volume of oil and gas production to dominate world energy markets.

No doubt, the renaissance in U.S. oil and gas is really happening, fueled by new technology and high oil prices. About a decade ago, innovators aggressively began to marry horizontal drilling, which allows producers to access large swaths of an underground resource from a single well, with hydraulic fracturing -- better known as fracking -- which uses high-pressure fluids to crack dense rock and allow oil and gas to flow. The combination has unlocked vast quantities of oil and gas buried in shale rock deep underground. Technology has also allowed producers to tap resources far beneath the sea in a way that wasn't possible before; just two years after the Deepwater Horizon oil spill in the Gulf of Mexico, offshore production has recovered, helping spur U.S. oil production upward.

It's no coincidence that these technologies have flourished amid record-high oil prices. Extreme offshore production makes little sense unless oil prices are above $50 or $60 a barrel. The economics of extracting oil from shale are murkier, but most think that $70 or $80 a barrel is necessary. Ten years ago, most analysts were projecting $20 crude for as far as the eye could see. In that world, the current boom would have been impossible. Oil prices have shifted decidedly higher, however, making new production possible along with them.

As a mere matter of scale, projections that the United States will reclaim the title of world's largest oil producer are entirely plausible, though hardly guaranteed. Saudi Arabia produces around 10 million barrels of crude oil each day, versus about 6 million for the United States. Surging production of natural gas liquids (NGLs) -- crude-like hydrocarbons produced alongside natural gas -- effectively takes that figure up to about 8 million barrels a day. Morse claims that total U.S. production could exceed 10 million daily barrels by 2015, and even the cautious U.S. Energy Information Administration (EIA) sees combined crude and NGLs production coming close to 10 million barrels a day by 2020.

But what makes Saudi Arabia such a dominant global player isn't merely the scale of its energy production. It's that it actively attempts to influence the price of oil and often does so for explicitly political reasons, whether currying favor with Washington or trying to hurt Tehran. By restraining long-term investment in oil production capacity -- manufacturing scarcity -- the desert kingdom is able to prop up the average price of crude. What's more, by keeping some of its production capacity in reserve, to be swung on and off the market at will, Saudi Arabia is able to moderate short-term price swings. It's not because they love the Saudi royal family that world leaders are so solicitous when they visit Riyadh.

Nothing about the U.S. oil and gas boom suggests that Washington can or will step into this role. No U.S. government would -- or could -- attempt to prop up world prices by restraining U.S. supplies. Besides, America's oil boom is being driven by supplies that cost huge sums of money to develop. Once new wells are drilled (at a cost of about $100 million each for offshore development), owners will produce flat out to recoup their investments; there's no way they'll leave untapped production capacity just waiting for a political crisis or global market swing.

Joe Raedle/Getty Images

"The United States Could Be Energy Independent."

No. This massive new U.S. oil and gas output has brought talk of American energy independence back into vogue. Energy economist Adam Sieminski, the new EIA administrator, captured the shift in a February interview: "For 40 years, only politicians and the occasional author in Popular Mechanics magazine talked about achieving energy independence," he observed. "Now it doesn't seem such an outlandish idea." The numbers would appear to back up this sentiment.

Just five years ago, the experts were bracing for the United States to become dependent on imported liquefied natural gas, with uncertain geopolitical consequences, such as dependence on vulnerable Middle Eastern suppliers and entanglement in a global gas market in which Moscow plays a troubling role. That now seems like ancient history, as record gas production has spared the United States the need for large-scale imports. According to one only somewhat hyperbolic headline, "We've Fracked So Much Gas We've Got No Place to Put It."

The math is shakier when it comes to oil. The most bullish projections foresee around 15 million barrels a day of U.S. liquid fuels production by 2020, while the consultancy Wood MacKenzie claims that U.S. production could rise to about 10 million barrels a day by the close of this decade and 15 million before the end of the next. In any case, U.S. consumption is vastly greater. As of 2009, Americans burned through nearly 19 million barrels of oil-based liquid fuels each day to power their cars, trucks, and factories, and although that figure has edged down over the past couple of years, domestic supply is still a long way from matching U.S. demand.

That said, U.S. demand for oil appears to have peaked. While part of the recent fall can be chalked up to slow economic growth, sustained high oil prices and improving automobile technology are also at work. New fuel- economy standards, if they stick, could drive U.S. consumption down much further. Ultimately, though, it's a massive stretch to think the United States will eliminate the gap between oil supply and demand anytime soon.

In any case, energy independence requires more than impressive arithmetic. As long as the United States is fully integrated into the world oil market, U.S. fuel prices will rise and fall along with events on the other side of the globe -- say, a war with Iran. Greater domestic production will blunt the economic shock of rapidly rising prices -- better to suddenly be sending massive sums to North Dakota than to Saudi Arabia -- but because oil producers everywhere are relatively slow to spend their windfalls, skyrocketing prices could still knock the economy on its back.

"We Can Drill Our Way Out of High Prices."

Don't bet on it. Some people claim that unleashing U.S. oil and gas resources would slash the price of crude. Who can forget the cries of "Drill, Baby, Drill!" that saturated airwaves during the 2008 presidential campaign? Others insist that, because oil is priced on a global market, increased U.S. output wouldn't move the needle. Even Douglas Holtz-Eakin, the top economist for John McCain's 2008 presidential campaign, has written, "Domestic action to increase production will not lower gas prices set on a global market."

The precise truth lies somewhere in between. If U.S. producers were able to massively ramp up output, the ultimate impact would mostly boil down to one big question: How would other big oil producers (mainly the Saudis and the rest of OPEC) respond to a surge in U.S. supplies?

To stop prices from falling, they could cut back their output in response to new U.S. production, much as they've tried to in the past. That's essentially what happens in the much-cited projections by the Energy Information Administration. In one recent exercise, for example, it looked at what would happen to gasoline prices if U.S. oil production grew by about a million barrels a day. The net impact was a mere 4 cents a gallon fall. Why? All but a sliver of the increase in U.S. output was matched by cutbacks in the Middle East, leaving oil prices barely changed.

Predicting OPEC's behavior, though, is notoriously difficult. No one country wants to bear the burden of selling less oil. In good times -- when demand is high and supplies from outside OPEC are weak -- the market is big enough for everyone to have a piece. That's what happened in the early 1970s: Rising demand for crude combined with declining supply in the United States to give OPEC unusual power. The result was a decade of historically high prices.

In leaner times, though, when demand is less robust and supplies from outside OPEC are strong, restraint can be difficult. Left with a smaller market to divide among themselves, OPEC producers can end up battling for market share, ultimately pumping far more crude than expected. This is in part what happened in the 1980s: High prices spurred new supplies and restrained demand, making coordinated OPEC action to prop up prices almost impossible.

Which pattern will we see in the face of rising U.S. supplies, combined with new production from Brazil, Canada, Iraq, and beyond? Given the growing demand for oil in China, India, and elsewhere, the safest bet is on continued high prices, though slightly lower ones than would prevail without the new supplies. As a senior OPEC official told me this year, "There is plenty of room for everyone." Yet new crude -- particularly if it collides with strong restraints on demand -- could change the equation. It would be foolish to rule out a crash.


"The U.S. Energy Boom Will Create
Millions of New Jobs."

Overstated. The U.S. oil and gas boom has come at an auspicious time. With record numbers of Americans out of work, hydrocarbon production is helping create much-needed jobs in communities from Pennsylvania to North Dakota. Shale gas production alone accounted for an estimated 600,000 U.S. jobs as of 2010, according to the consultancy IHS CERA.

It's much harder, though, to extrapolate into the future. In a deeply depressed economy, new development can put people to work without reducing employment elsewhere. That's why boom states have benefited massively in recent years. The same is not true, though, in a more normal economy. Unemployment rates are typically determined by fundamental factors such as the ease of hiring and firing and the match between skills that employers need and that workers have. The oil and gas boom won't change these much.

That's why we should be skeptical about rosy projections of millions of new jobs. Wood MacKenzie, for example, claims that the energy boom could deliver as many as 1.1 million jobs by 2020, while Citigroup forecasts a whopping 3.6 million. Unless the U.S. economy remains deep in the doldrums for another decade, these will mostly come at the expense of jobs elsewhere.

That hardly means all the new oil and gas coming online is worthless. In the near term, it can support hundreds of thousands of workers who would otherwise be unemployed. In the long term, it should deliver a boost to the overall U.S. economy, raising GDP by as much as three percentage points, according to my colleague, Citigroup's Daniel Ahn. But we can't drill our way out of America's job crisis. The numbers just don't add up.


"Strong Regulations Would Kill the Boom."

Dead wrong. The technology at the heart of the U.S. oil and gas boom has become central to the battle between the environmental community and the oil and gas industry. Drillers and their allies have often resisted new regulation, insisting that the industry is already heavily regulated at the state level and that fears of fracking are overblown. Barry Smitherman, chairman of the Texas Railroad Commission, captures the sentiment well, warning that more regulation could "kill the technology that's taking us to energy independence." Green groups have hit back with demands for stricter oversight of fracking, highlighting threats to air and water and disruptions to local communities. The Sierra Club has gone so far as to launch a "Beyond Natural Gas" campaign to accompany its efforts to move "Beyond Coal" and "Beyond Oil."

Some warnings, like an alarm in early 2011 that Pittsburgh's tap water was radioactive, have been over the top. Executed properly, development of shale gas and oil can be done in ways that safeguard the environment and protect communities. But there are always bad apples and sloppy operators. They require not only solid regulation, which often exists at the state level, but also strong enforcement and penalties to deter and punish violators, which too often do not exist.

This is not only about preventing bad behavior -- it's a matter of building public trust. Operators that refuse, for example, to support mandatory disclosure of the chemicals they use in fracking inevitably raise suspicions. That's true regardless of whether those chemicals actually endanger public health. Industry is at its best when it helps craft regulations that protect people and the environment while allowing robust development to proceed apace. But those who instinctively oppose stricter rules are sowing the seeds of their own misfortune: Robust regulation might add a few percentage points to the cost of producing natural gas, but weak regulation will sap confidence, and if communities shut down drilling, the price of natural gas will rise a lot more.

"The Energy Boom Is Bad for Climate Change."

It doesn't have to be. If there's one thing that critics of oil and gas development on the left have right, it's that we've done far too little to combat climate change. Serious action to mitigate the problem will require moving close to zero carbon emissions over the long run. That's right, zero. That will eventually mean little or no coal, oil, or gas consumption, unless the emissions produced by burning those fuels are captured and buried deep underground. Nor can we wait to start taking action: Because investments today can last decades, a meaningful strategy to curb U.S. emissions must begin, well, yesterday.

So is more oil and gas production fundamentally at odds with confronting climate change? It's not that simple. New natural gas production is actually great news for climate change. Gas is largely displacing coal, and it produces only half as much carbon dioxide when burned. Furthermore, while new coal-fired power plants are expensive and thus tough to displace later, gas-fired facilities are much cheaper. That makes it easier to replace them as lower-carbon options, such as nuclear energy, solar power, or coal or gas plants that capture their carbon dioxide emissions, become more attractive. All of this means gas is better for the climate.

Oil presents a tougher problem. New U.S. production doesn't displace dirtier fuels; indeed, insofar as it lowers gasoline and diesel prices, it feeds higher demand for crude. Yet unless massive U.S. production fundamentally overturns world oil market dynamics, the impact of new supplies on world prices (and hence emissions) will be modest. Instead, new U.S. output will largely displace production overseas, particularly from OPEC members. Not only will the scale of additional emissions be limited, but the gains to the U.S. economy will be larger than the accompanying climate damage.

Ultimately, U.S. efforts to combat climate change should focus mostly on the demand side of the equation. Curbs on fossil fuel usage, through steps like fuel-economy standards, carbon pricing, power plant regulation, and targeted incentives for clean energy, are far less likely to lead to additional emissions elsewhere than restraints on fossil fuel production. If U.S. policy aimed at oil demand ends up crashing crude prices, and that in turn reduces domestic production, the net result will still be good for the United States. But if the United States goes after the drillers without cutting back on demand, it'll just be shifting production to other countries.

"Barack Obama Is Bad for the Oil and Gas Industry."

False. The oil and gas industry does not exactly love President Obama. Many of the industry's most prominent members rail against his "job-killing tax hikes," bankroll his opponents, and assert that his claims about oil production "couldn't be farther from the truth." Some of this frustration stems from real policy disagreements. Many oil and gas producers scoff at efforts to promote clean energy. They chafe at the drilling restrictions put in place in the aftermath of the Deepwater Horizon oil spill and are apoplectic about the president's denial of a permit for the Keystone XL pipeline.

Yet Obama has presided over an extraordinary boom in oil and gas production. That fact alone suggests he isn't out to wreck the industry. So why the hostility? Bennett Johnston, then a Democratic senator from Louisiana, put the dynamic well, though he was talking about another president and another energy boom 30 years ago: "When I go down in my state, I see virtually none of the independent oil producers for Carter.… We've gotten higher drilling rig counts, more dollars being spent, more activity, more profits being made by oil people than ever before. But do they like Carter? Oh no, they hate him because of his rhetoric."

So let's get real: Obama may criticize the energy industry, but he has been pretty damn good for business. Washington under his watch may not be turning into Riyadh on the Potomac, but these are happy days for oil and gas producers. Even the president's efforts to remove industry tax breaks would amount to an additional burden of around $4 billion a year for an industry that posted more than $100 billion in profits (and far more in revenues) last year. And far from shutting down business with draconian new rules, his administration has worked to craft regulations that keep production going while also protecting the public. After pausing to improve safety provisions in the wake of the Deepwater Horizon oil spill, Obama has allowed new offshore oil drilling and production to resume. No president has a perfect record on energy. Yet if America's energy industry and its supporters set aside rhetoric, they'll find quite a lot to gush about.

Think Again

Think Again: Al Qaeda

A year after Osama bin Laden's death, the obituaries for his terrorist group are still way too premature.

"Al Qaeda Is on the Brink of Defeat."

Keep dreaming. Osama bin Laden was fond of recounting the following parable from the Quran to rally his followers in times of despair: A much-better-armed Christian army employed war elephants in a fearsome assault against Mecca, aspiring to destroy the Kaaba shrine, one of Islam's most sacred sites. But birds showered the Christian army with pellets of hard-baked clay, and the Arabs eventually defeated the invaders. To bin Laden and other al Qaeda leaders, this demonstrated that God was on their side -- even in the face of certain defeat.

Over the past decade, U.S. policymakers and pundits have repeatedly written al Qaeda's obituary. The latest surge of triumphalism came after bin Laden's killing a year ago. U.S. Defense Secretary Leon Panetta asserted that the United States was "within reach of strategically defeating al Qaeda," while President Barack Obama proclaimed, "We have put al Qaeda on a path to defeat," and academic experts churned out a new wave of books with such bullish titles as The Rise and Fall of al-Qaeda.

These declarations of victory, however, underestimate al Qaeda's continuing capacity for destruction. Far from being dead and buried, the terrorist organization is now riding a resurgent tide as its affiliates engage in an increasingly violent campaign of attacks across the Middle East and North Africa. And for all the admiration inspired by brave protesters in the streets from Damascus to Sanaa, the growing instability triggered by the Arab Spring has provided al Qaeda with fertile ground to expand its influence across the region.

Al Qaeda's bloody fingerprints are increasingly evident in the Middle East. In Iraq, where the United States has withdrawn its military forces, al Qaeda operatives staged a brazen wave of bombings in January, killing at least 132 Shiite pilgrims and wounding hundreds more. The following week in Yemen, fighters from al Qaeda in the Arabian Peninsula seized the town of Radda, while expanding al Qaeda's control in several southern provinces. "Al Qaeda has raised its flag over the citadel," a resident told Reuters.

Beyond these anecdotes, several indicators suggest that al Qaeda is growing stronger. First, the size of al Qaeda's global network has dramatically expanded since the 9/11 attacks. Al Qaeda in Iraq, al Qaeda in the Arabian Peninsula, al Qaeda in the Islamic Maghreb, and Somalia's al-Shabab have formally joined al Qaeda, and their leaders have all sworn bayat -- an oath of loyalty -- to bin Laden's successor, Ayman al-Zawahiri.

These al Qaeda affiliates are increasingly capable of holding territory. In Yemen, for example, al Qaeda in the Arabian Peninsula has exploited a government leadership crisis and multiple insurgencies to cement control in several provinces along the Gulf of Aden. Al Qaeda's affiliates in Somalia and Iraq also appear to be maintaining a foothold where there are weak governments, with al-Shabab in Kismayo and southern parts of Somalia, and al Qaeda in Iraq in Baghdad, Diyala, and Salah ad Din provinces, among others.

The number of attacks by al Qaeda and its affiliates is also on the rise, even since bin Laden's death. Al Qaeda in Iraq, for instance, has conducted more than 200 attacks and killed more than a thousand Iraqis since the bin Laden raid, a jump from the previous year. And despite the group's violent legacy, popular support for al Qaeda remains fairly high in countries such as Nigeria and Egypt, though it has steadily declined in others. If this is what the brink of defeat looks like, I'd hate to see success.

"Al Qaeda's Mergers Are a Sign of Weakness."

Wishful thinking. In recent years, al Qaeda leaders have consciously developed a strategy to expand their presence in North Africa, the Middle East, and South Asia. Rather than weakening the organization, this mergers-and-acquisitions strategy has been fairly successful in allowing al Qaeda to expand its global presence.

Today, al Qaeda has evolved from a fairly hierarchical organization at its 1988 founding to a more decentralized one composed of four main tiers. First, there's al Qaeda's core leadership in Pakistan. Zawahiri took over as emir after bin Laden's death, and Abu Yahya al-Libi, the head of al Qaeda's religious committee, became his deputy. They are flanked by a new cast of younger operatives, such as Hassan Gul, Hamza al-Ghamdi, Abd al-Rahman al-Maghrebi, and Abu Zayd al-Kuwaiti al-Husaynan -- figures charged with plotting al Qaeda operations, managing its media image, and developing its religious dogma.

Security concerns, however, have prohibited this core group -- al Qaeda Central -- from playing a major strategic and operational role. Its leaders can't meet together anymore, are unable to provide timely information or guidance to operatives, and spend an inordinate amount of time simply trying to survive. This reality makes the proliferation of al Qaeda franchises critical to the network's survival. Still, as documents seized from bin Laden's home in Abbottabad show, al Qaeda Central is not entirely isolated. It has remained in contact with its affiliates overseas and provided strategic advice on issues from leadership appointments to fundraising, as well as mandates for attacks. Before his death, bin Laden himself instructed deputies to focus "every effort that could be spent" on targeting the United States and even to plot the assassinations of Obama and Gen. David Petraeus.

The next tier of al Qaeda includes a growing list of affiliated groups in Iraq, Yemen, North Africa, and Somalia. Al Qaeda's most recent merger was this February, when it publicly announced a formal relationship with Somalia's al-Shabab. These affiliates benefit from al Qaeda Central's ideological inspiration and guidance. Take al-Shabab. In announcing his group's official merger with al Qaeda, al-Shabab's emir, Mukhtar Abu al-Zubair, gloated that his group's prestige had now been lifted in the jihadi world and beckoned Zawahiri to "lead us to the path of jihad and martyrdom that was drawn by our imam, the martyr Osama."

The third tier incorporates more than a dozen allied groups that remain formally independent but work with al Qaeda on operations when their interests converge. One example is Pakistan's Tehrik-i-Taliban, which, though focused on South Asia, has been involved in terrorist plots overseas, notably the failed 2010 attack in Times Square. Al Qaeda has assisted in several Tehrik-i-Taliban-led attacks, including the May 2011 siege of the Pakistan Navy's Mehran naval base in Karachi. In Nigeria, the Salafi group Boko Haram has emerged as an increasingly deadly threat -- most spectacularly killing more than 200 people in January -- and has also developed relations with al Qaeda. Since 2009, according to U.S. government officials in the region, Boko Haram operatives have traveled to Mali to train with members of al Qaeda in the Islamic Maghreb in explosives manufacturing and suicide attacks.

Finally, al Qaeda draws on support from inspired networks -- groups and individuals that have no direct contact with al Qaeda Central but are motivated by the movement's cause and outraged by the perceived oppression of Muslims. Lacking direct support, these networks tend to be amateurish, if occasionally lethal. The quintessential example is Nidal Malik Hasan, a U.S. Army major who in November 2009 gunned down 13 people and wounded 43 others at Fort Hood, Texas. There are more recent cases as well. In February 2011, Khalid Aldawsari was arrested in Lubbock, Texas, on charges of planning terrorist attacks after purchasing sulfuric acid, nitric acid, wires, and other bomb-making material. Last September, Rezwan Ferdaus was arrested for allegedly plotting to attack the Pentagon and the U.S. Capitol.

Sure, al Qaeda's mergers could eventually create fissures among increasingly autonomous groups. For now, though, these mergers have allowed al Qaeda to survive -- and expand.

"Al Qaeda Is Unpopular."

Not as much as you might think. In May 2011, shortly after bin Laden's death, the Pew Global Attitudes Project released an opinion survey with the pithy headline: "Osama bin Laden Largely Discredited Among Muslim Publics in Recent Years." Its findings have been widely trumpeted by those seeking to highlight the organization's decreasing popularity in Muslim countries. And indeed, the poll found that support for al Qaeda, and for bin Laden himself, has been steadily declining among Muslims in Jordan, Lebanon, Pakistan, Turkey, and a handful of other countries.

Yet a closer look at the data reveals that al Qaeda's support has not fallen as far as the headlines would have you believe. According to the same Pew poll, roughly one-quarter of the Muslim population in the Palestinian territories, Indonesia, and Egypt still supports al Qaeda -- some 73 million people. Even if that estimate is high, this seems a significant foothold for the organization, because al Qaeda doesn't appear to require significant levels of public support to accomplish its bloody work. Indicators of al Qaeda's support elsewhere are even more disturbing. Its popularity among Nigerian Muslims was just under 50 percent -- a striking finding for a country that has witnessed the growth of Boko Haram.

Before we write al Qaeda's epitaph, it would be wise to understand what the available facts tell us -- and what they don't. After all, al Qaeda's popularity is frequently less important than that of insurgent groups to which it is attached. That is exactly al Qaeda's objective: to establish a symbiotic relationship with local groups that have more support and legitimacy. In Afghanistan, for example, a Taliban overthrow of President Hamid Karzai's government would be an enormous victory for al Qaeda, which would almost certainly re-establish a sanctuary in the country.

"The Arab Spring Was Bad for al Qaeda."

If only. The Arab Spring triggered an initial -- perhaps naive -- wave of optimism that al Qaeda had lost the war of ideas. Take Egypt, where a group of plugged-in liberal youths in Cairo appeared to be guiding the revolution. "The young men and women who had filled Liberation Square," wrote scholar and author Fouad Ajami, "wanted nothing of that deadly standoff between the ruler's tyranny and the jihadists' reign of piety and terror."

Not so fast. A growing body of research conducted by such scholars as Stanford University's David Laitin and James Fearon has found that weak, ineffective governments are critical to the rise of insurgencies -- and, ultimately, are fertile ground for terrorist groups. Weak states do not possess sufficient bureaucratic and institutional structures to ensure the proper functioning of government, and their security forces are unable to establish basic law and order.

In other words, the Arab Spring revolutionaries may not be sympathetic to violent jihad, but the instability they sow may be al Qaeda's gain. The unfortunate reality, at least for the moment, is that the uprisings over the past year have weakened governments across the Arab world from Syria to Yemen. The World Bank ranks many among the world's worst-performing governments.

Even on the off chance that democracy takes root in the Arab world, a dose of reality is still appropriate. Research conducted by the University of Vermont's Gregory Gause and other scholars has found that democratization does not reduce the likelihood of terrorism. Democratic states are just as likely to face terrorism and insurgency as undemocratic ones. Nor is there any evidence that democracy in the Arab world would "drain the swamp," as U.S. Defense Secretary Donald Rumsfeld put it in 2001, eliminating support for terrorist organizations among the Arab public. Just ask Turkey, which has suffered through several decades of terrorism by Kurdish groups, despite remaining one of the Muslim world's longest-lasting democracies. Terrorism, in short, is not caused by regime type.

If Zawahiri gets his wish, the Arab Spring will be a boon for al Qaeda. In an eight-minute video released in February, titled "Onward, Lions of Syria," Zawahiri urged each Muslim to help "his brothers in Syria with all that he can, with his life, money, opinion, as well as information." Al Qaeda in Iraq responded to the call by standing up terrorist cells in Syria and participating in several attacks, as U.S. intelligence officials had warned publicly.

"Zawahiri Lacks bin Laden's Charisma."

Yes, but… Western assessments of Zawahiri have almost uniformly brushed him aside as too unpopular to consolidate and hold power. Tom Donilon, Obama's national security advisor, bluntly remarked that Zawahiri "is not anywhere near the leader that Osama bin Laden was."

Zawahiri, however, has now bested bin Laden in an important category: He has survived. Zawahiri has certainly been through the fire before. He was imprisoned and tortured by the Egyptians in the early 1980s for his involvement in the assassination of President Anwar Sadat. After his release, he fled to Pakistan and then survived repeated threats in Sudan, Afghanistan, and finally Pakistan again. Meanwhile, he has become one of the chief architects of al Qaeda's mergers-and-acquisitions strategy, supporting a formal relationship with al-Shabab and encouraging al Qaeda to exploit the Arab Spring.

Zawahiri has long been one of al Qaeda's most important writers and strategic thinkers, from his 1992 Black Book to his 2001 Knights Under the Prophet's Banner, which outline al Qaeda's vision of overthrowing Arab regimes -- the "near enemy" -- and replacing them with governments that implement an extreme interpretation of sharia law. Despite the bromides and incongruities, Zawahiri's writings have been pillars of al Qaeda's ideology.

Still, Zawahiri has weaknesses. Among jihadists, he does not enjoy the swashbuckling aura of bin Laden. He is a scholar and a medical doctor, not a vaunted warrior. Zawahiri has also been a deeply polarizing figure, publicly feuding with Islamist movements and rival leaders. "Zawahiri's policy and preaching bore dangerous fruit and had a negative impact on Islam and Islamic movements across the world," Issam al-Aryan, a top Egyptian Muslim Brotherhood figure, shot back in 2007 after the al Qaeda leader criticized the Brotherhood's refusal to advocate the violent overthrow of the Egyptian government.

It is tempting to dismiss Zawahiri as an irascible leader incapable of bin Laden's strategically daring feats. But he has survived on the run for almost three decades. If his persistence and organizational savvy tell us anything, it's that he can be an implacable, dangerous, and sometimes underappreciated enemy.

"Al Qaeda Will Never Work with Iran."

Never say never. Some scholars and former policymakers dismiss the possibility of al Qaeda-Iranian cooperation. "I think [there] is a war-fevered hysteria that is going on now," protests Hillary Mann Leverett, a National Security Council aide during the Clinton and Bush administrations. "A lot of this stuff is really flimsy." On the surface, she seems right. Not only is Iran a fundamentalist Shiite regime while al Qaeda is violently Sunni, but the two groups also have different long-term goals and have occasionally clashed.

Yet on the geopolitical chessboard, they share a common enemy: the United States. Iran has held several al Qaeda senior leaders since they were driven from Afghanistan in late 2001. Some have raised funds for the terrorist organization by leveraging wealthy Persian Gulf donors, while others have provided strategic and operational assistance to al Qaeda Central. Of particular importance are members of al Qaeda's former management council, which bin Laden established as a backup command-and-control node in Iran. They include Saif al-Adel, Sulaiman Abu Ghaith, Abu al-Khayr al-Masri, Abu Muhammad al-Masri, and Abu Hafs al-Mauritani -- all of whom apparently remain in Iran under various forms of house arrest, according to my interviews with government officials from Britain, Jordan, Saudi Arabia, and the United States.

The details of al Qaeda's relationship with the Iranian government are hazy. Many of the operatives under house arrest have petitioned for release. In 2009 and 2010, Iran began to free some detainees and their family members, including members of bin Laden's family, while the management council remains in Iran under limited house arrest. Members are allowed to communicate with al Qaeda Central, fundraise, and help funnel foreign fighters through Iran, according to several senior U.S. government officials.

Iran is likely holding al Qaeda leaders on its territory first as an act of defense. So long as Tehran has several leaders under its control, the terrorist group is unlikely to attack Iran. The strategy, however, might also have an offensive component if the United States or Israel were to target Iran's nuclear facilities. Tehran has long used proxies to pursue its foreign-policy interests, especially Hezbollah in Lebanon. And several of al Qaeda's leaders in Iran, such as Adel, the group's onetime security chief, have extensive operational experience that would be valuable in such a situation.

Al Qaeda is likely making similar calculations about working with Iran. To be sure, some al Qaeda leaders revile the ayatollahs. In a 2004 letter, Abu Musab al-Zarqawi, the late al Qaeda chief in Iraq, called Shiites "the insurmountable obstacle, the lurking snake, the crafty and malicious scorpion." In a sign of Churchillesque pragmatism, though, Zawahiri publicly chastised Zarqawi, writing that the Shiites were not the primary enemy -- at least not for the moment. It was crucial, he explained, to understand that success hinged on support from the Muslim masses in Iraq. "In the absence of this popular support," argued Zawahiri, "the Islamic mujahid movement would be crushed in the shadows."

For al Qaeda, Iran is a refuge. The United States has targeted al Qaeda in Iraq, Pakistan, Yemen, and other countries, but it has limited operational reach inside the Islamic Republic. What's more, Iran borders the Persian Gulf, Iraq, Turkey, Afghanistan, and Pakistan, making it centrally located for most al Qaeda affiliates.

With the management council under limited house arrest, Iran and al Qaeda's relationship remains at arm's length. But that could change if Washington and Tehran finally come to blows. Should the United States or Israel decide to attack Iranian nuclear facilities or tensions otherwise escalate, Iran and al Qaeda could find that they share a common interest in bloodying America's nose.

"Al Qaeda Is Too Weak to Strike in the United States."

Dead wrong. It only takes one attack to be successful. Also, lest we forget, there have been some close calls in recent years: In June 2009, Abdulhakim Mujahid Muhammad attacked a military recruiting center in Little Rock, Arkansas, fatally gunning down one soldier and wounding another. He had listened to the sermons of Anwar al-Awlaki, the late Yemeni-American al Qaeda operative, and had spent time in Yemen. Najibullah Zazi, Nidal Malik Hasan, Umar Farouk Abdulmutallab, Faisal Shahzad, and the 2006 transatlantic plotters based in Britain also planned or carried out al Qaeda-inspired terrorist attacks on American soil or on U.S.-bound airplanes -- some with deadly results. What if more of these attempts had succeeded?

But that's not all. Dozens of people have been arrested and prosecuted in U.S. courts in recent years for their ties to al Qaeda and its affiliates. They include Zachary Adam Chesser, who was arrested by the FBI in July 2010 for his ties to al-Shabab, and Jamshid Muhtorov, an Uzbek refugee arrested in Chicago this January for allegedly providing material support to the Islamic Jihad Union, an al Qaeda ally. These examples -- and there are many more -- should dampen any exuberance about the group's supposed demise.

Since Sept. 11, 2001, the West has repeatedly declared al Qaeda all but dead and buried -- only to see it rise again. This time, the weakness of governments across the Arab world and South Asia, the durability of some of al Qaeda's main allies, and the decreasing U.S. presence in Iraq, Afghanistan, Pakistan, and other countries could contribute to al Qaeda's post-bin Laden survival. Drones and special operations forces may kill some al Qaeda leaders, but they will not resolve the fundamental problems that have turned the region into a breeding ground for terrorism and insurgency.

Predictions of al Qaeda's imminent demise are rooted more in wishful thinking and politicians' desire for applause lines than in rigorous analysis. Al Qaeda's broader network isn't even down -- don't think it's about to be knocked out.

Rehan Khan/EPA

Mohamed Abdiwahab/AFP/Getty Images

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Mohamed Abdiwahab/AFP/Getty Images