2004 April 26 Monday
China Making Energy Deals The World Over

China has surpassed Japan as the second largest importer of oil and it will most likely surpass the United States within 10 or 20 years. An article in Newsweek reports many examples of Chinese efforts to build better diplomatic relations and to do oil development deals in many countries around the work.

Now Chinese diplomats are spending more time in Riyadh, Saudi oil officials are learning Mandarin Chinese and the bonds between the two countries are stronger than ever. Little wonder that Chinese officials afforded VIP treatment to Saudi Oil Minister Ali al-Naimi when he visited in early April. And it may have paid off: the minister boosted hopes for a long-delayed $3 billion contract to enlarge an existing refinery and build an ethylene project in the Chinese province of Fujian. If it goes forward, the deal would raise Saudi energy exports by as much as 50 percent. Sinopecóthe Chinese refining conglomerate with the largest stake in the project's developmentówas already awarded a gas-exploration license for nearly 40,000 square kilometers in Saudi Arabia's Rub al-Khali basin earlier this year.


Hu Jintao and his entourage of globe-trotting oil officials have been loitering in Libya and glad-handing in Gabon. In January Hu embarked on a tour of energy-exporting African states, inking a 30-year deal to buy Gabonese crude and laying the groundwork for future deals in Chad and Niger.

In the face of all this the Bush Administration intends to cut rather than increase energy research spending. Energy policy is national security policy. The Bush Administration is lacking in a serious strategy for a major national security issue. The Bushies are taking a very short-run view of US energy needs and are not considering the longer term problems that result from the money that flows to the Middle East to buy oil. The Bushies seem to be oblivious to the fact that America's only serious rival for global power is in the process of gaining more important and influence in the eyes of Middle Eastern oil producers and that this rival will likely eventually displace the US as largest customer of the Middle Eastern oil producers.

See my previous posts China Energy Consumption Growth Complicates Anti-Terrorist Efforts and Luft And Korin On China's Rising Demand For Oil And Saudi Arabia for more on the problem that the world's oil dependency posese for US national security and what we ought to do about it.

Share |      By Randall Parker at 2004 April 26 01:55 AM  Politics Grand Strategy

Fly said at April 27, 2004 5:06 PM:

Energy research is good. (Interesting new developments in Cold Fusion, the energy source that wouldnít die. Hehe.) I agree the Bush adminstration could do more.

However why worry about China making deals with Suadi Arabia to develop new energy sources? As Chinaís economy grows they are going use more energy. Isnít it good that the Chinese are working to expand the worldís energy supply? Oil is fungible. Saudi Arabia selling more to China just means China will buy less from someone else. Given the potential for a Saudi civil war isnít it better that China make these deals than a western country?

A prior post showed concern about China purchasing nuclear plants from the west. I understand and share your concern that China has been a major source of nuclear proliferation. However, encouraging countries around the world to use the most up-to-date nuclear power plants (which use less enriched uranium and are better designed for safety) seems necessary in order to reduce CO2 emissions and reduce oil usage while increasing the world energy supply.

China and India are going to use more energy. Hopefully this energy will come without major environmental, economic, or political problems.

Randall Parker said at April 27, 2004 5:28 PM:


Suppose Saudi Arabia has a civil war. Suppose lots of the oil production equipment is damaged to destroyed. Regardless of which countries are buying oil from Saudi Arabia at the time that the civil war starts all oil importing countries will pay much more for oil.

But this is besides the point. My point here is that as China buys more oil from the Middle East US influence is going to decline, Chinese influence is going to increase, and the Saudis and other governments there are going to play the US and China off against each other.

Of course oil comes with major economic and political problems. We wouldn't have fought Gulf War I if Kuwait didn't have oil. We wouldn't have had military forces stationed in Saudi Arabia during the 1990s and beyond if Saudi Arabia, Kuwait, and Iraq didn't have oil.

My underlying argument is that the on-going fairly bipartisan attempt to ignore the ways our foreign policy and events in other countries are being influenced by oil causes us to respond maladaptively to the political and national security problems posed by the world's dependence on oil from the Middle East.

Fly said at April 27, 2004 10:09 PM:

If there were a Saudi civil war any joint projects with the Saudiís would be at risk. If the Chinese are viewed as neutrals they are less at risk. Other than in Iraq, I wouldnít have the west invest any more capital in the ME.

I donít see China as being a power in the ME. Isnít China militarily far behind the US with little to no ability to project force outside the China region. I havenít heard that Chinese military hardware compares with the US. What could China offer ME countries? Nuclear weapons? Chinese troops? (In twenty years the military situation may change.)

I donít think the Chinese or the EU can oppose the US in the ME or keep the Saudiís in power. The main factor saving the Saudi royals is that the alternative is a theocracy.

I agree that the US should never have let the West become so dependent on ME oil and should be actively working to reduce that dependence. So let the Chinese develop the fields and weíll look for energy elsewhere.

Randall Parker said at April 27, 2004 10:58 PM:

Fly, China sold a nuclear weapons design to Pakistan and provided other assistance to Pakistan's nuclear program.

China doesn't have to send troops in order to gain influence. However, as China grows richer it can afford a much more powerful military including a deep water navy.

Fly said at April 28, 2004 11:23 AM:

China has been, is, and may remain an enemy. China passed nuclear plans. China would happily watch the US stumble. However China does seem to operate as a rational nation. Trouble that China makes for the US can be repaid in spades in areas important to China. (Chinaís neighbors donít exactly trust China.)

China is developing rapidly. As Chinese technology improves and the Chinese economy grows, China may become a strong military force. However that takes time. Likely twenty years. The ME situation should be resolved long before then.

In the mean time China is growing and needs more energy. China is going to be a player in the oil, gas, and nuclear power fields. Rather than trying to stop China everywhere Iíd encourage China where possible and confront China where strategically necessary.

My prediction is that China wonít continue to grow and succeed without signficant reform. Restricting their citizenís access to information will fail. Stifling democracy in Hong Kong will fail. (Hong Kong may give China indigestion.) Central command of the economy will fail. Hopefully the transition to a more open, democratic, and capitalistic society wonít get too messy.

I doubt China will ever be a friend to the US. At best China will become the France of Asia.

Randall Parker said at April 28, 2004 5:27 PM:

Fly, Yes, China the rational actor sold Pakistan nuclear designs. What else might China the rational actor do to gain oil supplies? Sell nuclear technology to various oil producers?

No, the Middle East situation will not be resolved in 20 years. It has been going on for many decades and will continue to do so.

Trying to stop China? What makes you think I'm advocating that? How would we do that exactly? I'm advocating acceleration of technological developments designed to obsolete both American and Chinese demand for Middle Eastern oil. This will decrease China's motive to manuever in the Middle East in ways contrary to US interest and will reduce US interest in the Middle East. Works for both the USA and China.

China can grow much more because most of it is still so primitive. Their legal system may places limits on how far they can go. But many regions haven't started to develop at all.

Fly said at April 28, 2004 8:06 PM:

Randall, I donít know the history of Chinaís weapon proliferation. My naÔve guess is that it went something like this: At a time when the US was mainly concerned with confronting the Soviet Union, China helped Pakistan in order to counter what China saw as a growing Indian threat. I.e., help the enemy of my enemy. Without nuclear weapons India would defeat Pakistan, which was not in Chinaís interest. Pakistan then exchanged technology with North Korea and later spread nuclear technology to other Muslim countries. I doubt China was happy with that outcome as China has its own problem with a Muslim minority. Nor do I believe that China is happy that North Korea has gone nuclear.

China needs for its economic development to continue. Anything that upsets the Chinese economy could destablize the country. Trouble with the US wonít help. China is in a tough position. If they donít curb North Korea there could be war on the Korean penisula or Taiwan, Japan, and South Korea could all go nuclear. Lots of bad WII memories in that area. Curbing North Korea could lead to collapse of the North Korean government and a flood of refugees.

With internal problems and neighbor problems I donít see the Chinese being a threat in the ME for many years. Nor do I see China being a major threat for selling nuclear technology in the ME. I think that role more likely falls to Pakistan, North Korea, and to a lesser degree Russia and Europe.

ďNo, the Middle East situation will not be resolved in 20 years. It has been going on for many decades and will continue to do so.Ē

I expect there to be lingering turmoil for many years. However, I expect the major changes in the ME to occur within the next five years. Either the Bush policy will be successful and the swamp will start draining or the Bush policy will fail and the ME will be destabilized by civil wars. If a major terror attack kills hundreds of thousands of Americans, the war will take a very ugly turn.

The US doesnít have twenty years to resolve the ME. Either the Bush plan works or there will be world wide escalating global terrorism leading to nuclear genocide. (Or there will be some totally different outcome that I just donít see.)

I agree with your basic point that the US dependence on ME oil has greatly harmed US security and we should be undertaking a massive research and development program to remove that dependence.

Randall Parker said at April 28, 2004 8:58 PM:

Fly, The US can not resolve the Middle Eastern problem in 5 years because their culture can not be changed that quickly. You are bringing what sounds like an American sensibility to the Middle East. Well, they do not think like we do.

The Bush Administration can not even transform Iraq. I've explained at length why this is so. See the bottom of my post Bring Back Iraqi Army Officers Or Pursue Democratic Imperialism? for a list of reasons why this is so.

Fly said at April 28, 2004 11:01 PM:

Randall, youíve given excellent reasons why changing the Iraqi culture will be difficult. However just as I canít know that we will succeed, you canít know that we will fail. The future hasnít been written. The US has immense resources and the stakes are very high.

Either Middle East culture changes or it is destroyed. Reading about world events, Arab culture, and the Islamic faith make me question whether we will succeed. Iíve worked with educated Muslims and read Iraqi and Iranian blogs so I do believe there is hope.

What do you see as an alternative? I read your post on splitting up Iraq? How does this lead to a ME that no longer nurtures terrorism? (Splitting up Iraq is good for the Kurds but doesnít help the region.) Without a democratic and successful Iraq as an example, how are we to change Saudi Arabia, Syria, and Eqypt?

If we donít change ME culture, how long before an American city is destroyed? How many American cities will be destroyed before innocent Muslims are hunted down by mobs in America and cities filled with innocent Muslims nuked? (No, I donít think America will let itself be destroyed.)

Given the alternatives I see, weíd better make Iraq a success.

Randall Parker said at April 28, 2004 11:21 PM:

Fly, Have you watched public approval levels for the war in Iraq? They are falling faster than the approval levels fell for the Vietnam War in the 1960s. Well, I remember as a child watching week after week the 100 or so deaths per week that Walter Cronkite reported year after year. Our Iraq casualties are nothing compared to that.

Do you think that keeping Iraq together will somehow be a step against terrorism? If democracy is so important as part of plan to make the Middle East less of a breeding ground for terrorism then then that is a reason to split up Iraq. The Kurds are more likely to trust a democracy that is made up overwhelmingly of Kurds. Ditto for the Sunnis.

As for a democratic Iraq being an example: Why would it? Why isn't Turkey an example already? Why aren't European countries an example?

My problem with the US intervention in Iraq is that the US is not even beginning to do what it would take to transform the place. The US would have to outlaw polygamy and cousin marriage (leaving existing marriages intact). It would have to create secular liberal educational institutions. It would have to have an occupation force 4 or 5 times as big in order to maintain order. An effort to transform Iraq into a liberal democracy would need to change the factors in Iraq that work against liberal democracy. I don't see any of that. I don't see the democracy advocates discussing the necessity of doing deeper changes to Iraq.

I made a number of suggestions on how to change Iraq back in January 2003. I would also encourage you to go read Stanley Kurtz's two articles on the scale of the job of trying to change a place like Iraq if you haven't already. He compares it to post-WWII Japan and Germany and also the British Raj India. Great stuff.

Fly said at April 29, 2004 1:41 PM:

The main issue is whether one believes the US is in a war for survival. If we areít, if the WoT is just a police action then our efforts in Iraq arenít justified. Sadam is gone so letís clean up a little, give the Kurds a state, put someone in power and get out. Donít try imposing our cultural values on Iraqiís and on the greater ME. Make the Europeans happy and save our soldiers lives. Reduce our dependence on ME oil and thumb our noses at Ďem.

But what if we are in a war for survival? What if there is a worldwide death cult financed by ME oil and Muslim sympathizers in Western countries? If so we are in a race. As technology spreads and advances, the weapons will become ever more devastating and terrorist attacks more difficult to detect and prevent. How many years do we have?

Am I wrong? Maybe. But I believe many Americans see it the same way.

If we are at war there will be death and destruction. Better that it occurs in Iraq than in the US. Better that it be well trained and equiped US soldiers fighting fanatics with AK47ís than snipers and bombers in the US. Yes, I will grieve for every soldier that is crippled or killed, but I thank him for saving Americans by his sacrifice.

Does America have the stomache for it? Will we cut and run? Our soldiers wonít but I donít know about the public. How many of us think we are at war? How many believe that Iraq is a critical battlefield? How many people just wonít face unpleasant truths?

ďDo you think that keeping Iraq together will somehow be a step against terrorism? If democracy is so important as part of plan to make the Middle East less of a breeding ground for terrorism then then that is a reason to split up Iraq. The Kurds are more likely to trust a democracy that is made up overwhelmingly of Kurds. Ditto for the Sunnis.Ē

I think the Kurds would be better off as a separate nation with control of the northern oil fields. I also believe that they would welcome US bases to guarantee their security. I also believe that their connection to Syrian Kurds could help destabilize Syria. The same might be true for Iranian Kurds. Turkey wouldnít be happy and would likely cause trouble. The new Kurdish nation wouldnít serve as model for an Arab democracy because the Kurds arenít Arabs. (Same reason Turkey isnít the Arab model. Turkey is very valuable as an example Muslim democracy.) This solution would allow the US to project military power against Saudi Arabia, Iran, and Syria and thereby apply pressure for them to change. Unfortunately I think those countries will breed terrorists until the current regimes are drastically changed. We need the Arabs in Saudi Arabia, Syria, and Egypt to want to change.

Perhaps the Sunniís could form a democracy. With little oil wealth I donít see them being economically successful in the near term. (A federation provides a method for distribution of oil wealth. That is a problem with a complete split. The Kurds are already attempting to claim most of the north.)

A Shiite south might fall under the sway of Iran. Or it might be a successful democracy. InterestingÖthe Sistani school of Islam tends to separate spiritual and secular rule. Possible but Iím doubtful.

Iím guessing that splitting the country would be better than nothing. Still, I believe a federation with constitutional law and guaranteed minority rights would more likely be the model needed to reform the ME. Even with such a democracy the chances for success arenít great.

Randall, I followed your links. I feel weird commenting on an article you wrote so long ago. So much has happened. However, one source of disagreement is whether the US can succeed at changing ME culture so a few comments are in order.

ďAs is the case in other Arab countries where loyalty to the government and nation is weak the Iraqi people do not identify with or feel much loyalty toward Iraq as a nation-state in the way that Westerners feel loyalty toward governments and nations. Because the Iraqis and Arabs in other Middle Eastern states do not feel that loyalty they will not feel that they are the ones being conquered and defeated. To them it what is about to happen in Iraq will be a defeat of Saddam Hussein, his extended family and his top level servants. It will be seen as a change at the top where one elite takes out another elite. The bulk of Iraqis will feel more like spectators. The reason for this feeling is that they do not feel allegiance to the abstraction (which exists in the minds of Westerners far more than in the minds of Iraqis) that is supposedly being defeated.Ē

Arabs through out the ME saw the quick defeat of Iraq as a personal defeat. Even Iraqiís who hated Saddam showed shame at how quickly Iraq fell. The Iraqi blogger HealingIraq was depressed for a week after watching Saddamís dental exam. His comment was how could Iraq have let that decrepit old man ruin Iraq for so long.

I agree that Iraq is a tribal society. However it is also a nation and Iraqiís feel nationalism. That is evident in every Iraq blog I read. It is also evident when Iraqiís rally behind the thugs in Fallujah. And when the new Iraqi forces refuse to fight against fellow Iraqiís. (Kurds feel much less nationalism and more desire for a Kurdish state.)

Randall, I read through your suggestions for changing the Iraqi family structure. I think exposure to Western culture will break the cousin marriage system down. As with the Iranians, young men and women arenít going to put up with the old ways. Weíve contaminated Ďem. Religious conservatives and fanatics will resist, but the main populace is clamoring for Western goods and entertainment.

HmmmÖI think American Muslim immigrants tend to assimilate American culture, but that doesnít seem to have happened in France. Do French Muslims reject the West because France rejects them? Or is it that American Muslim immigrants are more intelligent and better educated? Is cousin marriage common among French Muslims? The world is very complicated.

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