2006 April 18 Tuesday
Energy Seen As Warping Diplomacy Of Big Powers

Wondered when the national security types might start noticing what a serious pickle the United States is in due to oil and natural gas? Testifying before the US Senate Foreign Relations Comittee on April 5, 2006 US Secretary of State Condoleezza Rice says that growing appetites for energy are warping diplomacy around the world.

"We do have to do something about the energy problem. I can tell you that nothing has really taken me aback more, as secretary of state, than the way that the politics of energy. I will use the word 'warping' diplomacy around the world. It has given extraordinary power to some states that are using that power in not very good ways for the international system, states that would otherwise have very little power," Rice said.

"It is sending some states that are growing very rapidly in an all-out search for energy states like China, states like India that is really sending them into parts of the world where they've not been seen before, and challenging, I think, for our diplomacy."

She said "We are looking to technological solutions for the energy appetite of growing countries. And, of course, being able to cooperate with India on civil nuclear cooperation would help us to pursue that goal. And finally, I'll just note that we also are looking very hard for good partners in the nonproliferation work," she added.

"On the question of the India nuclear weapons programme, first of all, the Indian programme, we believe, just in terms of what India's incentives or disincentives are to grow its nuclear programme, its strategic programme, are more related to the political-military conditions in the region, than to any quantity of available nuclear material," Rice said.

This is all terribly predictable. Of course China is going to spend big money to compete with the United States for influence among the oil producing countries. The bigger the Chinese economy gets the greater the effort the Chinese government will make with foreign aid, military advisors, military equipment sales, diplomatic support in the United Nations, and in still other ways to curry favor with the oil producers. US influence will decline accordingly.

China does not object to bad human rights records when it courts countries.

China's oil industry has wooed countries that the United States has tried to isolate for political reasons -- such as Sudan, Iran and Burma -- potentially undermining the isolation efforts. Three of China's major oil companies have been aggressively pursuing long-term supply arrangements in such places as Venezuela, Nigeria, Gabon and Angola.

Since US influence will decline in oil producing countries the US ought to reduce its dependence on oil.

See my March 2004 post "Luft And Korin On China's Rising Demand For Oil And Saudi Arabia". I make a different argument in my post "Increased Chinese Demand For Oil Is A Net Loss For The USA". In a nutshell: rising demand from China and other countries forces the United States to pay more for oil. This makes us worse off. We have to make and export more stuff to pay for the oil we use.

American and Western dependence on oil creates environmental, economic, and national security problems. I think the most adaptive response to the heightening competition for dwindling oil reserves is to focus on developing replacements for oil rather than get caught up in a geopolitical Machiavellian "great game" for control of the oil that remains. But as energy prices continue on their upward path and growth in world oil production appears to falter the neocons compound our economic problems by draining America's treasury in Iraq while they prepare to extend their war into Iran.

The US trade deficit, worsened by the high price of oil, is eventually going to cause a decline in the value of the dollar. Since oil is priced in dollars that decline in the dollar will lower the cost of oil in other currencies. That, in turn, will increase demand for oil in other countries which will drive up the price of oil in dollars even higher.

Jane Bryant Quinn's recent essay "The Price of Our Oil Addiction" captures my attitude toward our situation:

Unfortunately, we're investing in war, not in crash projects to develop new energy sources. Maybe there's time to spare. But some events, like true civil war and collapse in Iraq, could change everything in a day. We're running a faith-based energy policy—still addicted to oil. If something goes wrong, it will go wrong big.

The Bush Administration is keen to change everything in a day by launching a strike against Iran. That'd take about 3 million barrels of oil a day off the market. Hello deep recession.

I have very low expectations from Washington DC on energy policy as I do on immigration policy, Middle Eastern policy, and fiscal policy. Hopefully entrepreneurs, venture capitalists, and others in the private sector will come up with solutions.

Share |      By Randall Parker at 2006 April 18 08:46 PM  Politics Grand Strategy

Tom Trousers said at April 18, 2006 11:56 PM:

China does not object to bad human rights records when it courts countries.

I don't care about human rights either.

Jorge D.C. said at April 19, 2006 2:44 AM:

While we are busy with the "War On Turr" China makes inroads in Central and South America and most other places. The Chinese are giving every nation to the south (every government that hates the yanquis) an alternative marketplace - an option that they never had before. This is a diplomatic nightmare and we are just seeing the tip of the iceberg.

It seems China is a basketcase that will crash eventually. On the other hand what does a recession or depression matter to a dictatorship? And they are proving to be great business people. If reports are correct that they've brought 400 million out of poverty in the past reform years, then they still have another 400 million dirt cheap laborers to exploit and fuel more 9% annual growth. They could burn another 10 years - and they can pay for the oil with US dollars.

Rise of China signals the true expiration of the WWII result. America's six decades of domestic tranquility were the spoils of that victory.

The experts are frequently wrong but there is more and more talk of "global American decline". I read about "managed American decline" today like that of the British Empire. There is a tone of aquiescence out there. This guy Friedman and his Earth is Flat book is the closest you'll find to national optimism - except it's not national optimism at all! It's all about becoming an internationalist global entity as the only strategy for future survival.

Between our historically stable national demography being cracked by the multicultural can opener and events in the middle east plus the rise of China - well if you're out there feeling pessimistic there is good reason.

Kenelm Digby said at April 19, 2006 6:36 AM:

No offence Jorge,but China is definitely NOT a "basket-case", and there is no reason to think that its spectacular growth will falter.
If you want to see a real "basket-case" in action, (As judged purely by objective means on trade balances, foreign exchange reserves, foreign liabilities, individual indebtness, , immigration by "numpties", the poverty of idustial investment, bad schools etc etc), I suggest you look to the United Kingdom, or even, dare I say it closer to home.

Jorge D.C. said at April 19, 2006 2:34 PM:

I was talking about the underlying foundation of China's economy but still you're right basket case was a poor choice of words. China's system is something other than that. Something never seen before frankly.

They are not a real market economy, have little transparency etc. Yet they avoid paying the price. The lesson is that a dirt cheap labor pool of hundreds of millions allows suspension of traditional economic realities - temporarily.

Yes the USA has its own serious issues. But the economic foundations of the two countries are like night and day.

Jorge D.C. said at April 19, 2006 2:43 PM:

So China's leader Hu gets feted by Bill Gates and friends. I had to laugh when I read that the elementary school children that attended were from John Stanford International School. Gee, I wonder if they recite the pledge of allegiance in the classrooms there?

Meanwhile China obstructs US foreign policy at every turn and arms our enemies. The difference between the USSR and China is that the fifth column that supported Uncle Joe Stalin and the Soviet system was limited to the Left and the red diaper babies. The new fifth column is made up of the traditional American-hating Left AND the corporate Right.

Watch Lou Dobbs on CNN. He's about the only mainstream media outlet expressing rational jaw-dropping dismay at current events regarding China.

Randall Parker said at April 19, 2006 4:08 PM:


During the rise of America in the 20th century we had a humdinger of a depression. I expect China will too. That does not mean that China will stay in that depression. It'll come out of it and resume the previous growth trend.

China's got corruption problems. But it does not need to equal the US in per capita GDP in order to become more powerful. It has, what, 4 and a half times as many people?

Jorge D.C. said at April 19, 2006 5:48 PM:

That does not mean that China will stay in that depression.

Agreed - but doesn't the example of Japan demonstrate that the length and severity (of a depression) correlate strongly with transparency?

...it does not need to equal the US in per capita GDP in order to become more powerful.

Yes and the same goes for the military equation. They don't need actual parity in order to successfully retake Taiwan. Having the numbers and the will to sacrifice them is real power.

Kenelm Digby said at April 20, 2006 3:59 AM:

Back to my favorite hobby-horse, I'm pretty sure that China will avoid any major recession. due to purely racial reasons.

Ned said at April 20, 2006 6:29 AM:

Oil has been warping the diplomacy of great powers for the last century. This arguably started in the early days of the 20th century, when the British decided to convert their navy from coal to oil propulsion. Coal was abundant in the UK, oil was not. The British knew that, without fuel, their battleships would be useless, so they began looking to the Middle East, especially around the Persian Gulf, where most of the oil is found. It was the quest for oil in southern Asia that drove Japanese expansionism which led to the Pacific War. In 1942, Hitler diverted his offensive forces in Russia from the Moscow-Leningrad axis to the south, toward the Caucauses, mostly trying to get the oil. This led to the battle of Stalingrad and the ultimate German disaster in Russia. Great power involvement in the Middle East has been all about oil - what else is there in the MIddle East? It's amazing (and disturbing) that Condi Rice is surprised at this. (For a great discussion of this topic, see Daniel Yergin's Pulitzer Prize winning book, "The Prize: The Epic Quest for Oil, Money and Power").

John S Bolton said at April 20, 2006 12:43 PM:

So far as all this is driven by the increase in oil demand from China, it would be easy and beneficial to sabotage their economic growth. This can be done by not allowing them, or foreign central banks which sponsor their growth, to increase their dollar support, to the extent needed to maintain growth from increase of export manufactures from there.

Stephen said at April 20, 2006 6:06 PM:

John, with a policy of overt economic sabotage, you're essentially declaring war on China. Assuming you're President, how do you anticipate China would react to such an action, and how would you limit the escalation of this conflict?

Stephen said at April 20, 2006 9:30 PM:

China Hand has a current posting about a US diplomat trying to complaint to a Chinese diplomat about China's mercantilism, but something got lost in the transalation... China Hand goes on to make the point that the US is struggling to find a nasty epithet to describe China, and observes that "Mercantilist" doesn't really rank up there with "Axis of evil" or "Rogue state".

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