a comprehensive analysis on the China-US relations in the Middle East from the comparative perspective of China’s energy-led and US’ security-led Middle East policy and explores the measures that would help the two countries to manage their differences to enable peaceful coexistence and, thus, regional stability. To this end, this research aims to investigate the nature of China-US interaction in the Middle East and whether the existing policy discord is sustainable.
Map 1: Detailed Map of the Greater Middle East
In this research certain concepts are used to explain China-US relations in the ME. Of the concepts used, national power is the most frequently visited3 while it is at the same time one of the less agreed upon among the scholarship (Young, 2006: 5-7). Nevertheless, this research defines national power as the sum of a country’s hard power capabilities based on economic
3 Although international relations experts hold major differences of opinion regarding the fundamental components of national power, they seem to have reached consensus on dividing those components into ‘soft’
and ‘hard’ power. Later on, smart power (a combination of hard and soft power) has been added to the classification.
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and technological development. Doubtlessly, one can add to or extract from this definition certain components based on one’s level and purpose of analysis. Drawing from various studies by Organski, Kugler and others, this study identifies four components that together compose of a country’s hard power: GDP, population, technology and military capacity (Organski, 1958 and Organski and Kugler, 1980). Here, the indicators of soft power are excluded because, energy security as it is today is a factor of hard power in which ideational components that relate to soft power(such as culture, citizen diplomacy, education, media, and NGO activity) play little role. Hence, growing national power and capacity, in the case of China, on the one hand, enables, and on the other, obliges Beijing to seek energy security in the Middle East.
Energy security has appeared on Beijing’s foreign policy agenda for the second time when the nation lost its status as energy independent in the early 1990s (1993, to be exact) after a three-decade of self-sufficiency. China’s booming heavy industry sector,4 its large commercial export sector, and the rapidly expanding middle class that purchase two times more cars monthly than that of the US have led to an exponential increase in the demand for oil with no sign of easing in the foreseeable future. As domestic production failed to match civilian and industrial consumption, the Chinese government has come to see energy dependency as a national security issue to be tackled with a wide array of national and
international policy instruments (Cornelius and Story, 2007). For example, domestically, Beijing bolstered exploration activities, set up more stringent energy efficiency standards for industrial and civilian use and, starting from 2007, began to build a strategic petroleum reserve (SPR) to eventually have a 90-day supply capacity by 2020 and invested in alternative energy resources such as wind, hydro and solar. Internationally, Beijing devised a go-abroad policy in the early 2000s to enable its national oil companies (NOCs) to gain long-term control over natural resources in foreign countries through government-to-government agreements and equity oil concessions.5 However, as it engages the international energy market, China’s energy policy has
4 Indeed, “the share of heavy industry in China’s economy has steadily increased since the early 2000s. China now produces more than half of the world’s steel and cement output, and the growth of heavy industry is one of the major factors responsible for China’s rising energy consumption.” See, Yang, 2012.
5As of 2010, Chinese NOCs had equity stakes in production in 20 countries and the NOCs’ overseas equity shares reached 1.36 mb/d, nearly one-third of China’s net imports in 2009. See, Julie Jiang and Jonathan Sinton, Overseas
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elicited criticism in Washington which sees it as being run by the state and securitized – a clear distinction from the Western market-led approach.
Nevertheless, judging by historical precedence, Beijing’s state-driven energy security strategy has striking similarities with that which was embraced by the Western governments at the time of their industrialization throughout the 19th century. To be sure, going abroad
strategy was first adopted by the US government from the mid-1930s until the late 1970s.
Under the scheme, large private oil firms received help from the state to secure long-term concessions from foreign governments under lucrative terms. To be able to compete with the Europeans that had an advantage over the US oil companies because of their early arrival into the global energy scene, particularly the ME, the US government provided active support through economic instruments such as tax credits and subsidies for overseas investment.
Indeed, “In a material sense, oil was at the center of the redistributive system of American hegemony. In Saudi Arabia, and to a lesser extent in other areas of the Persian Gulf, major US oil companies benefited from special relationships between the United States and the
producing countries and from the protection and support of the American government”
(Keohane 1984: 139). Also, when deemed necessary, US governments mobilized the State Department and US military to protect its national energy interests (Lei and Yen, 2007).
Thus, China’s modern day state-led going-abroad strategy has some similarities with that of the US from the 1930s onwards with the exception that currently the Chinese military (PLA) does not play an active role (although its role as a provider of sea lane security has been growing) in national energy policy unlike that of the symbiotic relationship between the US military and the energy industry in the early and mid-20th century. In its current form, China’s energy strategy remains much less military-oriented as it currently lacks a strong PLA backing although it may not be the case in the medium to long-run as the Chinese Navy achieves greater force projection capabilities.
However, as opposed to Western companies (First British and other major European firms in the beginning of the 20th century and then US firms from the mid-1930s), which
investments by Chinese National Oil Companies: Assessing the Drivers and Impacts, Information Paper Prepared for the Standing Group for Global Energy Dialogue of the International Energy Agency, Paris, February 2011.
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managed to forge political and economic relationships with key producing countries in the Middle East and elsewhere as far as nearly a century ago, today Chinese companies are facing a less promising international energy environment. The PRC government realizes that the US and European companies have an almost five-decade advantage over China’s new comers.
Therefore China’s NOCs will hardly enjoy equal opportunity in the markets long appropriated by Western multinationals. Hence, Beijing finds itself in a less than optimum energy security
environment constrained by its lack of historical and geopolitical depth in the Middle East (Beng and Li, 2005). Accordingly, China’s contemporary energy policy is composed of three
interrelated strategies.
The first strategy involves seeking oil agreements in neighboring countries such as Russia, Turkmenistan and Kazakhstan and building overland routes (highway, railway tracks and pipelines) for the delivery of hydrocarbon resources. The second strategy requires China to go further and engage the particular countries in the Extended Middle East and Latin America where the energy interests of Western companies are not as strongly entrenched as in other places. The final strategy includes deals with countries such as Iran, Sudan and Syria that have been marginalized and reduced to pariah states through sanctions and other means by the West and; therefore, are not available for US and Europe investment. It is seen from the three strategies that as one goes down the list of strategies, the security implications of doing business in energy increase considerably (Calabrase, 1998; Lee, 2013; Yao, 2007).
In addition to economics, politically and militarily, too, Western states, particularly the US, have a strong footing in the energy-rich regions, especially the Middle East. The US has a long-developed comprehensive relationship with oil-producing countries and, in addition to a host of military bases across the region, operates a naval base in Bahrain, home to the US Naval Forces Central Command and the Fifth Fleet, which is responsible for an area stretching across the Persian Gulf, Red Sea and the Arabian Sea as far south as Kenya in East Africa. Also, when necessary, the US has the capacity to effectively intervene in the countries in the region, using the available political, economic and military instruments to achieve its objectives (Harris, 2010).
Indeed, especially militarily, the United States can seriously disrupt China’s existing oil interests in the region.
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Iran and Sudan are two cases in which the United States and its allies have negatively affected Beijing’s energy prospects for the past two decades. Iran has constantly been threatened with military action and also heavily sanctioned due to its contentious nuclear energy program although currently there is a chance for a lengthy (and never guaranteed) normalization process. US pressure not only slowed down the investment by the Chinese NOCs in the country’s under-invested energy sector, it also forced Beijing to refrain from signing new equity agreements to develop Iran’s vast untapped fields (Downs and Maloney, 2011;
Zahirinejad and Vrushal, 2010). Similarly, international pressure on the Sudanese government led to the partition in 2011. After the split, Khartoum, a close energy partner for Beijing, lost control over vast energy fields in the South, which accounted for more than three quarters of oil produced in the pre-partition era Sudan. Also, China suffered from the pre and post-partition environment especially in 2011 and 2012 because of the South’s perception of China as a long-time ally of the North. Recent developments in the break-away South Sudan have further endangered China’s energy prospects.
Nonetheless, Beijing has few options other than seek its energy fortune in the Extended Middle East. Now world’s largest energy consumer since 2010 and the largest importer of crude oil since November 2013, China is highly reliant on the Middle East to meet its energy needs.
The region accounts for over 50% of the nation’s total crude oil imports. In 2012, out of the seven biggest providers of oil, five were located in the Middle East. It is estimated that by 2015, the share of Middle Eastern oil in China’s total import will climb to 70% (Ma, et al., 2012; IEA, 2011a). Hence, although certain security issues in the oil producing countries (such as socio political instability or foreign intervention) may seriously disrupt or even fully stop China’s exploration and production activities, Beijing needs to maintain its presence in these geographies and seek further strategic depth.
Threats to China’s energy security are not limited to those that it may face in exploring and extracting foreign oil but also in transporting it. Now maritime security occupies even a larger space in Beijing’s strategic calculations as country’s trade, including trade in energy, is overwhelmingly carried out by sea routes. At the moment, US retains full naval control over strategic chokepoints in the Persian Gulf and the Malacca Strait along which China’s oil imports
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from the ME flow (Newmyer, 2009: 218). The Strait of Hormuz in the Persian Gulf serves as the exit gate for the shipping of goods and commodities from the region. Most of the crude oil exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq goes through this four-mile wide channel between Oman and Iran. Needless to say that more than two third of this oil is shipped to East Asia, primarily, to China, Japan, India and South Korea.
Similarly, the Strait of Malacca links the Indian and Pacific Oceans and, with an estimated 15.2 million b/d flow in 2011, it connects Middle Eastern oil to the Asian markets (EIA, 2013a&c). Hence, in the face of hard realities such as the strong military presence of the US in the Middle East and East Asia, its ability to intervene and disrupt international oil flow, the standoff with Iran over its nuclear energy policy, the ongoing Syrian crisis, the popular Arab dissent across the Middle East as well as other non-traditional security threats such as piracy and terrorism, China’s energy policy occupies a central place in the nation’s strategic
calculations and is inadvertently securitized.
Therefore, although it is not as comprehensive as that of the US and much less militarized, Chinese involvement in the Middle East has become decidedly multidimensional, consisting of diplomatic, economic and military dynamics. Placing each level of energy security (access, exploration, extraction, transportation, and processing) at the center of its Middle East policy, as this research has found out, Beijing has taken economic, political and military steps involving various combinations of these dynamics. As China engages the energy rich region in more comprehensive way, its policies eventually come into collision with those of the US on economic, political and military fronts.
It appears that two developments are becoming manifest in the China-US relations in the Middle East. First, the US has been reducing its energy dependency on the Middle East due to growing domestic production that is made possible with new extraction techniques, higher efficiency, growth in services-based industries and stagnant consumption (Clapper, 2012; Eland, 2011). This offers Washington a greater space in the region because of less constraint on its
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foreign policy making that energy dependency normally brings about.6 United States’ warm embrace of the Arab Spring is one of the consequences of such strategic breadth. Second, at the time when the US is adopting a more or less anti-status quo posture in the Middle East as is exemplified by its nation-building efforts in Iraq and Afghanistan, China, in line with its growing power and national capability, is becoming more assertive and pursue its energy interests with less consideration to the US geopolitical concerns while pushing for incremental and internally-driven change in the Middle East. Such conflict of interest would be even more pronounced if a major war in the Middle East pushed the sides deeper into their political and ideological
quarters. Unless proper policies are not taken, China’s growing energy dependency and the existing policy discord between the US and China may lead to a deeper competition and confrontation even in the absence of a major regional crisis in the region (Chen, 2008).
Building on the relationship described above, the main argument of this research is that the China-US policy discord has led to a strategic competition in the Middle East. Unless proper policy measures are taken, this competition may lead to a destructive power struggle in the Middle East, threatening regional and global peace. It is hypothesized that the underlying reason for this policy discord is the radically different nature of the two countries’ Middle East policies: Whereas China’s conduct in the region is dominantly economics (energy)-driven and status-quo oriented, US approach is largely security-driven and a dynamic combination of status quo and revisionism.
Essentially, this study offers critical policy analysis in a comparative setting. It attempts to empirically evaluate the Chinese and US foreign policy strategies in the Greater Middle East and investigate how they relate to each other. From this analysis, it hopes to reach conclusions that will shed light on the China-US relationship in the Middle East. Then, drawing on the conclusions reached, it offers policy recommendations on how to prevent a great power confrontation in the Middle East in order to better manage the regional peace, considering Beijing’s energy and Washington’s geopolitical interests.
6 It must also be noted that importing countries may have a certain level of leverage on the exporting nations especially if the oil producing country is export dependent. However, policy constraints outweigh policy leverages.
A proper example would be the U.S-Saudi relations in which US dependency has constrained Washington in pushing for reform and democratization in the Kingdom, a clear contradiction with the US policy toward Iran.
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It is acknowledged in this research that strategic decision-making requires considering the worst-case scenario and strategizing accordingly, drawing on verifiable empirical facts.
Future is filled with uncertainties for states, as for individuals, and strategy-making leaves no room for optimist projections. Rather, the objective of strategizing is to remain prepared to and be able to address successfully the likely threats to national security no matter how far-fetched they seem at the moment. Therefore, in the case of China-US relations in the Middle East, the policy analysis this dissertation undertakes assumes that future holds a more contentious and competitive relationship due to an empirically-verifiable policy discord and offers
recommendations accordingly.
To further refine the policy analysis and draw on a larger theoretical basis, this research utilizes certain theoretical concepts such as national power, parity and overtaking as offered in power shift theories, primarily power transition and hegemonic decline models. National power includes GDP, population, military capacity and technology. It is observed that along with its growing national power, China has become more attentive and assertive in protecting its global strategic interests, including energy interests. It is also observed that (as will be shown in the case studies in the proceeding chapters) the US-China strategic competition in the Middle East primarily arises from a discord in each side’s conflicting policies: Whereas the US involvement in the region is more security-driven (explained by the US’ declining energy dependency and its historically strong political and military entrenchment), Chinese involvement is more energy-driven (explained by China’s growing energy dependency and its minuscule military
presence).This relationship is schematized in Figure 1 below:
Figure 1: China-US Strategic Competition
It must be underlined that the policy discord mentioned in this article does not arise from a competition between the US and China over scarce energy resources in the Middle East.
As a matter of fact, US’ growing independency from the Middle Eastern energy resources is one of the fundamental causes for discord. Obviously not every two country experiences strategic competition only because they experience discord. Policy discord is possible when/if two states achieve near parity in national power. Because, when there is disparity, the powerful side can mobilize its hard or soft power mechanisms (or a combination of the two) to coerce/persuade the other side into its will. When there is parity (or near parity), however, existing
disagreements could lead to protracted crises if the interests, priorities and policies of the two sides are incongruent.
China’s energy-driven strategy in the Middle East is becoming less compatible with those of the U.S Among others, this could be ascribed to the simultaneous growth in Beijing’s national power and energy dependency. Consequently, as China moves from the traditional confines of its Middle East policy, a China-US strategic competition becomes intensified. The rivalry will likely continue as the US achieves greater energy independency as inversely proportional to China, which is projected to be more reliant on the Middle East in the coming
China’s energy-driven strategy in the Middle East is becoming less compatible with those of the U.S Among others, this could be ascribed to the simultaneous growth in Beijing’s national power and energy dependency. Consequently, as China moves from the traditional confines of its Middle East policy, a China-US strategic competition becomes intensified. The rivalry will likely continue as the US achieves greater energy independency as inversely proportional to China, which is projected to be more reliant on the Middle East in the coming