Review: China and the Persian Gulf

China and the Persian GulfChina’s rise, according to many analysts, has been the world’s most significant geopolitical and economic development of the 21st century. Central to China’s rise has been the energy it needs to fuel economic growth. Importing over 42 percent of its crude oil from the Persian Gulf, Beijing views the region as vital for this economic development. China’s growing influence in the world’s most oil-rich region is the subject of Bryce Wakefield and Susan L. Levenstein’s China and the Persian Gulf: Implications for the United States.

The contributors pay particular attention to China’s relations with Saudi Arabia, Iran, and Iraq. Since 2002, Saudi Arabia has been China’s top supplier of crude oil, presently supplying over one-fifth of its crude oil and replacing the United States as Saudi Arabia’s top export partner. The Sino-Saudi bilateral relationship is valued economically and politically in both capitals. According to Erica Downs in her essay in the volume, U.S. demand for oil is expected to decrease over the next 15 years, while China’s demand is expected to reach 16.3 million barrels per day by 2030, constituting over two-fifths of the global increase in demand for petroleum. Therefore, Saudi Arabia is convinced that China is the most reliable partner for “security of demand.” Moreover, in the aftermath of the 9-11 terrorist attacks, complications in U.S.-Saudi relations, in particular the West’s criticism of Saudi Arabia’s human rights record, have made closer ties with China more appealing.

Sino-Iranian ties are delicate, largely due to Beijing’s perception of Iran as “a tempting but tough place to do business,” writes Downs. Iran is China’s third largest supplier of crude oil, and the Islamic Republic’s oil and natural gas fields, which are open to foreign investment, do attract Chinese oil firms. However, Downs concludes that Western-imposed sanctions on Iran have pressured China to act cautiously when assessing the value of its ties to Iran compared to Saudi Arabia. From Tehran’s perspective, there is much incentive to lure China’s oil companies into Iran to demonstrate the Western-imposed sanctions’ ineffectiveness. China, like the West, does not want to see Iran develop a nuclear weapon. Nonetheless, Beijing is suspicious of the real U.S. and European interests in Iran and has therefore not cooperated with Western efforts to isolate Tehran.

China sees Iraq and its 115 billion barrels of proven oil reserves as a “land of opportunity,” according to Downs. Iraq is planning a major expansion of its oil production, and its oil ministry offered three of 11 major contracts to Chinese companies. Afshin Molavi labels China an “unlikely winner” of Washington’s 2003 invasion of Iraq. A joint partnership between China National Petroleum Corporation and British Petroleum over the enormous Rumaila oil field has the potential to make Iraq China’s new top supplier of crude oil within eight years, surpassing Saudi Arabia and Iran.

Jon Alterman believes that interdependency defines the triangular relationship between the United States, China, and the Persian Gulf. The United States Pacific Command (PACOM) is the largest U.S. command, and it focuses on China. However, U.S.-Sino trade is the second largest in the world, and China possesses leverage over the U.S. economy, holding almost one trillion dollars in U.S. debt. U.S.-Gulf relations are largely security-oriented as Washington sells billions of dollars of arms to the region’s governments each year and has established military bases in all Gulf Cooperation Council (GCC) countries, save Saudi Arabia. Lastly, Sino-Gulf relationships are defined primarily by Middle Eastern demand for Chinese construction and manufactured goods and China’s unquenchable thirst for the Gulf’s non-renewable natural resources.

China and Gulf states can’t force the United States out of the Persian Gulf, nor can the United States and Gulf states remove China. At the same time, Washington and Beijing are not positioned to squeeze the Middle Eastern oil producers, as the global economy is far too reliant on Persian Gulf oil. Alterman concludes that the three actors share a mutual interest in maintaining stability in the Gulf and continuing the free flow of energy. Washington’s “goal should not be to deny the triangle,” he writes, “but instead to embrace it.”

The contributors to China and the Persian Gulf concur that China is increasingly important to the Gulf states and vice versa. Moreover, Beijing has replaced the ideological foreign policy pursuits of the Mao era with self-calculating, shrewd, and cautious strategies. Although it does not seek to rival the United States as the region’s dominant military power, China may take advantage of U.S. dilemmas in the region to pursue its own agenda by evading U.S.-imposed sanctions and directly dealing with energy rich states that the United States seeks to isolate, such as Iran, to acquire valuable assets and play spoiler. In this inescapable triangle, China, the United States, and the Persian Gulf are all in tension, but in the end they all need each other too.

Giorgio Cafiero is a contributor to Foreign Policy In Focus.