The Vital Triangle - China, US, Middle East

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October 15, 2008

SUSRIS EXCLUSIVE

The Vital Triangle: China, the United States,
and the Middle East
Chapter One - Introduction
Jon B. Alterman & John W. Garver

Editor's Note:

This is the first of two excerpts from a new book by Jon Alterman and John Garver addressing the multi-dimensional relationships among China, the United States and the Middle East. Later this week we will distribute "Saudi Arabia: The Pivotal State" from Chapter 3 of the book. We suggest you check the exclusive SUSRIS interview with Jon Alterman published on October 13, 2008 as well, to read about the conception of "Vital Triangle" and Dr. Alterman's reflections on his research for the book.

Ordering Info - "The Vital Triangle: China, the United States, and the Middle East"

The Vital Triangle: China, the United States, and the Middle East
Chapter One - Introduction
Jon B. Alterman & John W. Garver

Chinese premier Hu Jintao's visit to Washington in the spring of 2006 seemed star-crossed. A Falun Gong protester heckled him for several minutes on the White House lawn and had to be removed, and a White House announcer mixed up China's formal sovereign name with the name preferred by the nationalist government on Taiwan. At one point, confusion about staging caused President Bush to usher premier Hu off the podium, only to yank him back when the mistake was discovered. Throughout the four-day visit, neither the American hosts nor Chinese guests seemed wholly comfortable. Instead each seemed pre-occupied as it sought to maneuver between the sensibilities of politics at home along with the sensitivities of the other great power.

From Washington, Hu went on to Riyadh, Saudi Arabia, where the mood was much different. A carefully scripted tour went off without a hitch, and the two countries signed agreements strengthening cooperation in several areas, including energy exploration and security. Hu also became one of the first foreign leaders ever to address Saudi Arabia's Consultative Council, the country's appointed parliamentary body. There were no protestors, no uncomfortable conversations, and no damage control. Two nations made narrow agreements in their mutual interest, uncomplicated by either country's sense of its global role or its global responsibility. Saudi Arabia has gas and oil; China needs gas and oil. On that basis, agreements were made.

Hu's Arabian sojourn piqued interest in the United States, in part because the U.S. agenda with each country is so complicated. The U.S.-Saudi relationship has been close for more than a half-century, but what began as a relationship in the 1930s principally about oil and energy security has evolved into one that also concentrates heavily on counterterrorism, radicalization, the Arab-Israeli conflict, Iraq, Iran, and human rights. Traditionally, each country's ambassador to the other deals directly with the executive of the other state rather than working through Foreign Ministry counterparts. The intimacy of that relationship during the Cold War was clear not only through Saudi support for the mujahideen fighting the Soviet Union in Afghanistan, but through a whole series of other shared efforts, both overt and covert, to serve mutual strategic interests.

The events of September 11, 2001, shook the Saudi-U.S. relationship, but they did not recast it. Government-to-government cooperation across a wide number of fields today is deep and broadening, even as the Saudi and U.S. publics continue to eye each other warily. The bilateral governmental relationship has become so laden with importance that one White House official privately remarked in 2006, "Everything that matters to us in the Middle East goes through Riyadh."

The Sino-American relationship is, in many ways, an older one, dating back to the nineteenth century missionaries and traders. Yet, the Communist revolution set China and the United States as adversaries for decades, and it has only been for the last 35 years, since 1971, that common interests regarding the Soviet Union began to foster cooperative relations between the United States and the People's Republic of China (PRC). The relationship broadened greatly in 1978 when Deng Xiaopeng began to lead China towards economic engagement with the world. Still, many in both countries see the other not as partners or global actors with shared interests, but as competitors in both economic and military spheres. Americans fear that China seeks to displace U.S. primacy, while Chinese fear that the United States seeks to contain China in the Pacific. Further, some in the United States see China as an abuser of human rights that coddles oppressive regimes such as Iran and Sudan and enables them to escape the strictures of U.S.-led sanctions. They see China not so much as a fellow great power, but a rising superpower that aims to undermine U.S. hegemony. Finally, a growing number of Americans are beginning to fear the impact of Chinese trade with and investments in the United States. They fear Chinese holdings of U.S. debt, the potential sale of United States assets to China’s new sovereign wealth fund, and the sell of companies in sensitive technology industries to a potential military competitor. In China there are similar deep apprehensions about U.S. policies.

It is not, then, that the United States is hostile toward either the Middle Eastern states or China; it has deep and complicated relations with each. Those relations are robust and strategic, and they cover a wide range of activities. But just as those relations encompass a wide range of shared interests, they also encompass serious concerns with strong constituencies in the United States. Protest accompanies most leaders of both China and Middle Eastern states when they visit the United States, and critical words pour out on the floors of Congress.

Similarly, anti-Americanism has spread its roots in both the Middle East and in China. In the Middle East, there is widespread resentment towards the United States over a variety of issues. Some are narrower and policy related, such as the U.S. approach to the Arab-Israeli conflict and U.S. actions in Iraq. Others are more general, from seeing the United States as the principal guarantor of security to authoritarian regimes, to fearing the United States as a rapacious, homogenizing cultural juggernaut that threatens to obliterate local norms and customs. In the eyes of many Arabs, the United States is a superpower that needs a comeuppance, and one that could use a competitor to balance its reckless ways.

In China, the accepted foreign policy orthodoxy is that the United States is a hegemonic power that aggressively pursues its own interests at others' expense. Many analysts see recent U.S. efforts to reform the Middle East and replace unpalatable rulers as undermining stability rather than supporting it. In this way, they see the United States acting against the interests not only of China, but of the international community more broadly.

By contrast, Chinese-Middle Eastern relations are far simpler and, some would say, shallow. Gone are the days when China sought to be a reliable friend of liberation movements around the world and thus the foe of most established governments. Now, a thirst for energy guides much of China's policy in the Middle East, with other commercial, military, and diplomatic interests playing a subsidiary role. Because Middle Eastern governments control much of what China seeks in the Middle East, China has sought to broaden its relationships with these governments.

These governments, in turn, have been tremendously impressed with the way in which China's economy has grown under a durable authoritarian system. They have also been gratified that the Chinese have made no appeals to upend their domestic practices and that China puts its millions into promoting trade rather than working to strengthen civil society groups that seek the strength to push for internal reforms. China is no longer the foe of regimes in the Middle East, but their friend; the country has gone from being a revolutionary power to being a status quo power. The United States in some regards has undergone a transformation in the opposite direction as regards the Middle East.

On the popular level, China carries little of the baggage that the United States does in the Middle East. Local publics (and their governments) conveniently elide China's rigorous atheism and its ongoing battle with Muslim Uighur separatists in the Western provinces, and they see a country that manufactures affordable goods and communicates respect. The Chinese public seems to see the Middle East as a place wracked by conflict, one that is strategically important, but that poses no challenge to China. Chinese officials seek to develop a kind of "positive multipolarity" that enables China to be the friend of all and the enemy of none. The task is made easier by the fact that China's relationship with the Middle East is one of calculation rather than emotion; for Western powers, there is often quite a bit of both.

This volume explores the complex interrelationships between China, the Middle East, and the United States -- what we call the "Vital Triangle." There is surely much to be gained from continuing what we would see as two-dimensional work -- China and the United States, The United States and the Middle East, and China and the Middle East. Such scholarship has a long history, and it no doubt has a long future. But it is the three-dimensional equation -- which seeks to understand the effects of the Chinese-Middle Eastern relationships on the U.S., the U.S. Middle Eastern relationship on China, and the Sino-American relationship on the Middle East -- that draws our attention. It is this approach that captures the true dynamics of change in world affairs and the spiraling up and spiraling down of national interests. Central to our understanding is a belief that if any one of the three sides of this triangular relationship is unhappy, it has the power to make the other two unhappy as well. The stakes and the intimacy of the interrelationship highlight not only the importance of reaching accommodation, but also the potential payoff of agreement on common purpose.

The binding cord in the triangular relationships between China, the Middle East, and the United States is energy. Energy led the United States to the Middle East in the 1930s, it leads China to the region today, and over the last 75 years, it has led the Gulf from abject poverty to prosperity. The United States consumes approximately 25 percent of the world's oil production; China in 2005 consumed about 7 percent of global oil production, though that was projected to double to 14 percent by 2015. China's booming economy accounted for approximately 50 percent of the annual growth in world oil consumption in 2006 and 43 percent of that growth in 2007. Although conservation efforts are afoot in both countries, each will remain highly reliant on petroleum products to support their economies long into the future.

In the global hunt for oil, the United States had a huge head start. The U.S. government has been intimately involved in developing the oil industry in the Middle East since the 1930s, as U.S. companies (and their British counterparts) carried out the initial prospecting in the barren lands of the Arabian Peninsula. Beginning in 1933, a consortium of U.S. oil companies (starting with Standard Oil of California, which became Chevron, and coming to include the precursors to Exxon, Texaco, and others) established the Arabian-American Oil Company, or Aramco. The company was a joint Saudi-American venture until the Saudi side acquired a 100 percent stake in the company in the 1980s. In it’s almost half century of binational ownership, Aramco created a park-like campus in Dhahran that not only made Americans feel at home, but also made Saudi managers feel like they were in the United States. As Saudis came to play increasingly large roles in management, they did so largely on American terms. National oil companies arose throughout the Middle East in the 1950s and 1960s, and local states took over their operations, yet these companies in many ways remained American operations, even when they ceased to be U.S.-owned. The structure was American, the working language was English, and, most important, the ethos of the institution resonated with U.S. values.

For many decades, the Western orientation made immense sense, because the major consuming countries were Western as well. Even growth in Japanese and Korean consumption proceeded smoothly under a Western model, so great were the impacts of the U.S. postwar occupations on each country. When China became a net importer of oil in 1993, when its Middle Eastern imports quickly skyrocketed, the existing business model seemed less adequate. China had its own needs, its own interests, and its own ways of doing things, and they did not always fit with the commercial model that had emerged under Western tutelage.

As China's oil imports grew in the 1990s, Chinese national companies have sought equity shares in oil projects, hoping that such stakes will be less subject to interruption than oil purchased on the open market. China has a unique approach to the international energy marketplace, in that the government "simultaneously strives to retain control of the industry while encouraging its state oil companies to be aggressively entrepreneurial." China has three major oil and gas companies -- The Chinese National Petrochemical Corporation (Sinopec), the China National Offshore Oil Company (CNOOC), and the China National Petroleum Corporation (CNPC). In 2000, CNPC established a subsidiary, PetroChina, which is partly financed by private equity with a clear profit orientation. Sinopec alone is engaged in some 120 oil and gas projects in the Middle East, and currently approximately 10 percent of China's oil imports globally come from fields in which China's state-owned oil companies have an equity stake. But as China looks around the world for oil equity holdings, it finds that most of the proven reserves of oil are already spoken for, much of it by the national oil companies of producer nations that control 85 percent of the world's traded oil.

About half of China's imported oil, and about 20 percent of China's total oil supply, now comes from the Middle East. In 2005, about 40 percent of China's oil supply was imported. Over the past decade China has tried to diversify its oil imports to include less volatile sources, and these efforts have paid off in increased imports, including from states of the former Soviet Union and Latin America. Sub-Saharan Africa is China's most promising new supplier, having increased its share of total imports from 1.8 percent in 1992 to about 28 percent in 2005. Yet as Figure 1.1 shows, China's demand for imported oil is growing so rapidly, and Middle Eastern petroleum resources are simply so much richer than those of other regions, that the percentage of China's imported oil coming from the Middle East hardly changed from 1990 (47.8 percent) to 2005 (49.7 percent).

In the United States, by contrast, 27.4 percent of imported oil came from the Middle East in 2007, with Canada and Mexico combining to outweigh the Middle East share. The ratio of proven reserves to production in various oil-producing regions suggests that the Middle East will continue to be the dominant source of Chinese oil imports. According to one report, 70 percent of China's imported oil will be coming from the Middle East by the end of 2015.

In recent years, other issues in the Middle East have fueled tension between the United States and China. In 2004, U.S. Secretary of State Colin Powell referred to events in Darfur as "genocide" and called for concerted international action to force change on the government in Khartoum, to the apparent frustration of China's permanent representative to the United Nations. China has been a reluctant partner on U.S. efforts to tighten international sanctions on Iran as a consequence of its nuclear program, and a new raft of U.S.-imposed secondary sanctions on countries and businesses investing in Iran could have direct implications for Chinese investment there. Further, any hint of Chinese assistance to the Iranian armed forces -- even dual-use materials -- could be highly inflammatory to a U.S. public that is watching American soldiers fighting forces in Iraq that are at least partly backed by Iran and view with concern the prospect of an Iranian-U.S. military confrontation in the Gulf.

China's rising concentration on the Middle East as an energy resource, and the enduring U.S. concentration on the region as a key strategic battleground, creates the possibility of competition or even military conflict that could spill over to other regions of the world. In addition, and perhaps even more troubling to Chinese security professionals, Sino-American intentions elsewhere in the world could lead to Sino-American conflict in the Middle East. Such an eventuality could cut China off from access to energy, since the United States controls the sea-lanes on which oil to China travels. Although China and the United States have thus far not clashed in the Middle East, the consequences of such conflict are serious enough that they bear prolonged examination.

It is that prospect that drove this study, the culmination of a two-year effort to examine not only the sources of potential conflict between China, the United States, and the Middle East, but also steps that might be taken to prevent such a conflict from breaking out. The study took the coauthors to both China and the Middle East for in-depth discussions with policymakers and scholars. A week of sustained interviews in Beijing in the spring of 2007 and a conference bringing together U.S., Chinese, and Arab experts in Abu Dhabi in the autumn of 2007 punctuated the exchange of ideas.

This study begins with an exploration of the Chinese perspectives on the China-Middle East-U.S. triangle, followed by the Middle East, and then those of the United States. A final concluding section points forward and offers a set of policy recommendations.

To a degree, it is the finding of this study that China is not and does not seek to be a rival of the United States in the Middle East. Indeed, China's diplomacy is very clearly oriented toward not confronting the United States in the Middle East (or elsewhere, in most cases). In addition, China has benefited tremendously from the security protection that the United States extends for Chinese interests.

At the same time, however, many Chinese believe the U.S. actions in the region have undermined stability and thus hurt Chinese interests. There is an ongoing temptation for China to deal directly with states that the United States is seeking to isolate, thereby picking up valuable assets at fire sale prices. In other words, although there is no immediate conflict, the conditions under which conflict might arise are not hard to imagine.

Overwhelmingly, however, the United States, China, and the governments of the Middle East share a deep interest in regional stability and the free flow of energy, and we believe that those common interests create a platform for cooperation that can enhance not only security in the Middle East, but also Sino-American relations more generally. The Middle Eastern piece of this puzzle is a small but significant one, and we are grateful for the opportunity to help sketch out its dimensions.

Reprinted with permission.
Copyright 2008 by Center for Strategic and International Studies

[Link to Figure 1.1 ]

About Jon B. Alterman

Jon B. Alterman, Director Middle East Program, CSIS Jon Alterman is director and senior fellow of the CSIS Middle East Program. Prior to joining CSIS, he served as a member of the Policy Planning Staff at the U.S. Department of State and as a special assistant to the assistant secretary of state for Near Eastern affairs. He served as an expert adviser to the Iraq Study Group (also known as the Baker-Hamilton Commission) and is a professorial lecturer at the Johns Hopkins School of Advanced International Studies.

Before entering government, he was a scholar at the U.S. Institute of Peace and at the Washington Institute for Near East Policy. From 1993 to 1997, Alterman was an award-winning teacher at Harvard University, where he received his Ph.D. in history. He also worked as a legislative aide to Senator Daniel P. Moynihan (D-NY), responsible for foreign policy and defense. Alterman has lectured in more than 20 countries on subjects related to the Middle East and U.S. policy toward the region.

He is the author or coauthor of three books on the Middle East and the editor of a fourth. In addition to his academic work, he is a frequent commentator in print, on radio, and on television. His opinion pieces have appeared in the Washington Post, Los Angeles Times, Wall Street Journal, Financial Times, Asharq al-Awsat, and other major publications. He is a member of the editorial boards of the Middle East Journal and Transnational Broadcasting Studies and is a former International Affairs Fellow at the Council on Foreign Relations.

CSIS Profile - Jon B. Alterman

About John W. Garver

John W. Garver is a professor in the Sam Nunn School of International Affairs at Georgia Tech. He is a member of the editorial boards of the journals China Quarterly, Journal of Contemporary China, Issues and Studies, and Asian Security, and a member of the National Committee on U.S.-China Relations.

Garver is coauthor of seven books and more than 60 articles dealing with China relations. His books include China and Iran: Ancient Partners in a Post-Imperial World (2006); Protracted Contest: Sino-Indian Rivalry in the Twentieth Century (2001); Face Off: China, the United States and Taiwan's Democratization (1997); the Sino-American Alliance: Nationalist China and American Cold War Strategy in Asia (1997); The Foreign Relations of the People's Republic of China (1993); Chinese-Soviet Relations, 1937-1945; The Diplomacy of Chinese Nationalism (1988); and China's Decision for Rapprochment with the United States (1982).

Dr. Garver has received grants from the Fulbright Foundation, the Smith Richard Foundation, the U.S. National Academy of Science, the U.S. Department of Education, the Chiang Ching-kuo Foundation, and the U.S. Institute of Pakistan Studies. He has lived in various part of China for more than six years, has traveled widely throughout Asia, has conducted formal research in a number of Asian countries, and is fluent in Chinese. He served in the U.S. Army from 1969 to 1971.

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