China, Napoleon once remarked, is a sleeping giant, and “when it awakens the world will tremble.”
China is now thoroughly awake. The economy of the world’s most populous country has been growing at a blistering rate of between 8 and 11 percent a year. Last year, the People’s Republic of China (PRC) superseded Mexico as the United States’ main trading partner. It also took Japan’s place as, after us, the second largest consumer of petroleum on the globe.
If the world has not yet quite begun to tremble in the face of these facts, the economic and geopolitical implications of the new Chinese prosperity are nevertheless immense—and not least where energy markets are concerned. Growing wealth is prompting millions of Chinese to abandon bicycles and overcrowded mass transit in favor of private cars. Last year, China’s domestic automobile sales increased by a staggering 69 percent. By 2010, the country is expected to have 90 times more cars on the road than it did in 1990; by 2030, it may have more than the U.S.
Such a gigantic fleet requires fuel. But China’s domestic oil production is declining. Already by 1993, after decades of self-reliance, domestic crude output was failing to meet the growing demand, and the country became a net importer; since then, dependence on foreign oil has increased steadily. According to a conservative estimate by the U.S. Department of Energy, China’s oil imports over the next two decades will grow by 960 percent. The International Energy Agency predicts that, by 2030, those imports, now at 1.9 million barrels a day, will rise to at least 10 million barrels a day, the current import level of the United States.
Some Chinese oil imports come from Kazakhstan, Venezuela, the Sudan, Russia, and Indonesia. These will no doubt continue, and increase. Nevertheless, a decade hence, the lion’s share of China’s energy imports will almost certainly come from one source: the major oil exporters of the Middle East.
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China is a relative newcomer to the Middle East; unlike the other great powers, it has never played a major role in the region. During the cold war, the geographically distant Chinese preferred to stay away from the intricacies of an area so beset by instability. Until Mao Zedong’s death in 1976, China had not even bothered to establish diplomatic relations with most of the local capitals.
Only in the late 70’s did Beijing emerge from its seclusion, forging ties with Jordan and Syria and almost all of the oil-rich states. These relationships have typically revolved around trade in armaments and dual-use technology. In recent years, China has supplied ballistic missiles to Syria, provided sensitive missile and nuclear technology to Iraq, and plied Libya with missile technology.
Iran, now the second largest supplier of China’s oil, has become a particularly important trading partner. As relations between the two countries have expanded, the PRC has sold ballistic-missile components to Iran as well as air-, land-, and sea-based cruise missiles, giving Tehran the capability to attack U.S. naval forces in the strategically vital waters of the Persian Gulf. Even more significantly, China has provided Iran with key ingredients for the development of nuclear weapons, including reactors and significant quantities of uranium. If Iran is today well on its way toward an indigenous nuclear-weapons capacity, that is thanks in no small part to Beijing.
But the biggest prize in the region is Saudi Arabia, the country that holds a quarter of global oil reserves, that is the world’s largest exporter, and that is today China’s number-one foreign supplier of crude oil.
As far back as the mid-1980’s, China began to engage in military commerce with Riyadh, selling it 36 intermediate-range ballistic missiles, building two missile bases south of the Saudi capital, and deploying Chinese security personnel to maintain them. Though the missiles were highly inaccurate, they endowed Saudi Arabia with a military potential its neighbors could not ignore. With a range of 1,800 miles, and capable of carrying a nuclear warhead, they could be used to strike any location between New Delhi and Tel Aviv.
In the years since that early sale, Sino-Saudi relations have grown only closer, especially after the two countries established full diplomatic ties in 1990. As military cooperation has deepened, China has offered to sell the Saudis, among other things, modern, solid-fueled intercontinental ballistic missiles with a range of up to 3,500 miles. A regular series of high-level visits by Chinese leaders culminated in President Jiang Zemin’s pronouncement of a “strategic oil partnership” between the two countries in 1999.
Could China supplant the U.S. as a major Saudi ally? At the moment it hardly seems likely. China is still a modest force in the Middle East, while the U.S. maintains large numbers of troops and formidable amounts of equipment in bases throughout the region. But given the logic of its domestic needs, Beijing is almost certain to step up its diplomatic and military efforts. Making its path easier is the fact that this also happens to be a moment of deep tension in U.S.-Saudi relations.
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Ever since September 11, 2001, when it emerged that fifteen of the nineteen men who carried out the terrorist attacks on New York and Washington were Saudi citizens, the American media have been full of tales of Saudi laxity in fighting terror, not to mention complicity in funding and inciting it. Relatives of the victims of 9/11 have filed a multi-trillion-dollar lawsuit against Saudi Islamic organizations and three top members of the royal family. A widely publicized book, Sleeping with the Devil, by the former CIA official Robert Baer, trumpets the idea of simply seizing the Saudi oil fields (an idea whose strategic rationale was first adumbrated in a January 1975 COMMENTARY article by Robert W. Tucker).
Public anger at the Saudis has also begun to be reflected in the workings of the U.S. government. Under new immigration guidelines, the expedited entry procedures of the pre-9/11 era have been eliminated, and Saudi males seeking to enter this country are subject to special scrutiny. In 2002, the Pentagon’s Defense Policy Board heard a RAND Corporation expert describe Saudi Arabia as the “kernel of evil” and, like Baer, advance the notion of seizing and occupying oil fields in the country’s eastern province. Anti-Saudi sentiment in Congress is also running high, and there has been a steady drumbeat of opposition to the presence of American forces on the Saudi peninsula. In 2003, following the defeat of Saddam Hussein, the Bush administration responded to this pressure by withdrawing the bulk of those forces, relocating them in nearby Qatar.
Though it was done quietly, the American military departure may turn out to be a major strategic turning point. It certainly has created new opportunities for both the Saudis and the Chinese.
In Saudi Arabia itself, growing U.S. animosity has fed doubts about America’s dependability as an ally, if not outright fears of Washington’s long-term intentions. Many worry, with reason, that the liberation of Iraqi Shiites from Saddam Hussein’s oppressive rule may ignite discontent among the kingdom’s own Shiites, who happen to be situated geographically atop the largest oil fields. Equally disturbing for many Saudis is the American effort to revive Iraq’s shattered oil industry. The infusion of an additional 6 million barrels per day into world oil markets will inevitably mean fewer petrodollars for the economically stretched kingdom.
No wonder, then, that Saudi newspapers and officials alike have taken to deriding harshly what they call the American “pressure campaign” against their country. For the first time since 1973, according to the New York Times, some have even spoken openly about cutting off oil supplies unless Washington alters direction. At the very least, the Saudi government appears to recognize that it can no longer depend on the U.S. as the guarantor of its security, and that it is time to diversify the kingdom’s portfolio.
The internal politics of the Saudi royal family are notoriously difficult to decipher. The kingdom’s de-facto ruler, Crown Prince Abdullah, heads what constitutes the pro-American faction, which has always stressed the high quality of U.S. military equipment and the reliability of U.S. logistical support. But there is increasing opposition to this view. In particular, the minister of defense, Prince Sultan (who is the father of the current Saudi ambassador to the U.S., Prince Bandar), has been enthusiastically promoting expanded Sino-Saudi relations as a hedge against American fickleness. As the Saudis watch opinion shift against them in Washington, and as fears develop that Congress may block transfers of sophisticated weaponry, the pro-Chinese element is gathering strength.
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There are some particularly alarming scenarios to consider here. If the Saudis were to begin worrying seriously about a future American seizure of their oil fields, they might well seek ways to deter it. Given the weakness of their own military, one option would be to acquire nuclear weapons. Although talk of a nuclear-armed Saudi Arabia may, at this juncture, seem farfetched, it is not beyond the realm of possibility. Saudi Arabia could break its military dependence on the U.S. either by entering into an alliance with some other existing nuclear power or by acquiring its own nuclear capability. In either case, China would play a crucial role.
If the Saudis opted to acquire their own bomb, they would likely become the first nuclear power to have bought one off the shelf. Were this to happen, it would represent the culmination of a Sino-Saudi-Pakistani nuclear project that began in May 1974 when, following India’s ascension to the nuclear club, China sent scientists to assist Pakistan in developing that country’s own nuclear program. By the early 1980’s, China had supplied the Pakistanis with enough enriched uranium to build a few weapons. In 2001, the CIA reported that China was continuing to lend “extensive support” to Pakistan’s program. Today, Pakistan is estimated to have an arsenal of between 35 and 60 nuclear weapons.
How did Pakistan, with its grinding poverty, pay for this expensive project? Some of the costs were undoubtedly carried by the Chinese in pursuit of their own interests, including their rivalry with India. But considerable evidence suggests that Saudi Arabia played a part as well. In May 1999, a year after Pakistan’s first nuclear test, Prince Sultan, escorted by then-prime minister Nawaz Sharif, toured the country’s uranium-enrichment and missile-production facilities at Kahuta—the only foreign dignitary allowed into a facility that was off-limits even to then-president Benazir Bhutto. There he was briefed by Abdul Qader Khan, the controversial father of Pakistan’s “Islamic bomb.” In 2002, Khan, in turn, led a delegation of Pakistanis to Saudi Arabia as personal guests of Prince Sultan. All told, according to Robert Baer, Saudi Arabia has poured over $1 billion into Pakistan’s nuclear program.
Even if Saudi Arabia does not pursue nuclear status, however, it has abundant reasons for looking east to China both for markets and for military assistance, just as China has abundant reasons for looking west to Saudi Arabia for continued access to Middle Eastern oil. And aside from these mutual interests, an alliance with China would hold other attraction for the Saudis. Unlike the U.S., the Chinese do not aspire to change the Arab way of life, or impose freedom and democracy on regimes that view such ideas with skepticism and fear. Indeed, Chinese attitudes toward the open societies of the West are markedly similar to those of the Arab despotisms themselves.
The Chinese also have at their disposal immense reserves of manpower, which they can deploy to protect the oil resources of any new allies they acquire. Thousands of Chinese soldiers disguised as oil workers, for example, are used today to guard petroleum facilities in Sudan. With 11 million men reaching military age annually, China could easily replicate this elsewhere. Finally, while the U.S. is continually castigated by the Arabs for its closeness to Israel, China’s ties with Jerusalem have never risen above the level of indifference.
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Of course, many other factors must be weighed in the balance. The Chinese may well find fishing in Middle Eastern waters to be a risky business, entailing high costs in relations with other powers, and in particular with the U.S.
Already there are signs of growing disquiet in Washington over China’s role in the Middle East. The U.S.-China Economic and Security Review Commission, a group created by Congress to monitor relations between the two countries, issued a warning in 2002 over China’s provision of “technology and components for weapons of mass destruction and their delivery systems” to such Middle Eastern states as Iran, Syria, Libya, and Sudan. This was characterized as “an increasing threat to U.S. security interests.” Significantly, the report took special notice of China’s growing dependence on imported oil, calling it a “key driver” impelling relations with “terrorist-sponsoring governments” in the region.
If such concerns continue to mount, China could find itself gaining in one region only to lose in another. The Chinese economy may be heavily dependent on Middle Eastern oil, but it is also heavily dependent on trade with the U.S. The shelves of Wal-Mart alone account for 10 percent of China’s exports to the U.S. and 1 percent of China’s GDP.
Whether and under what circumstances the U.S. would ever choose to exercise its leverage is another matter. Right now, any collision over Middle Eastern oil is more a potential than an actual threat. Besides, if predicting the future is risky at all times, the present moment makes the exercise almost foolhardy. That the Middle East is in an exceptionally volatile condition goes without saying. And as for China, its astonishing economic growth may yet turn out to be a bubble; if it pops, so will its high rates of energy consumption. Then, too, even if stellar economic growth continues, the Chinese may find attractive alternatives to oil: the country is extremely rich in coal and natural gas, and, since it has not yet invested heavily in an expensive petroleum infrastructure, it could develop ways to harness fuels produced from coal and biomass (both of which it has in abundance) and thus overcome its dependence on imported oil altogether.
Still, it is worth bearing in mind that the U.S., which has been trying for three decades to break its addiction to Middle Eastern oil, has only become more dependent with each passing year. Whether the Chinese can do better remains at best an open question. For the time being, the trend lines are what they are: oil reserves elsewhere are being depleted faster than in the Middle East, and before too long that region will contain the last remaining reservoir of cheaply extractable crude. If each barrel the U.S. needs is also sought after by China, a superpower conflict in the world’s most unstable region can once again become an omnipresent danger. At that point, as Napoleon foresaw, the world will surely tremble.
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