China Raises Mideast Energy Stakes


2006.01.18
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WASHINGTON—China’s search for foreign oil is posing a challenge for U.S. interests in the Middle East, but greater cooperation, not confrontation, is the solution, according to analysts at the Brookings Institution.

In the latest issue of The Washington Quarterly , China and Middle East analysts Flynt Leverett and Jeffrey Bader say China’s quest for oil “is making it a new competitor to the United States for influence in the Middle East.”

“The smarter and potentially more successful U.S. policy would be to try to work with China to give it both a sense of energy security and a shared interest in a stable Middle East,” they conclude.

Bader, director of the Brookings Institution’s China Initiative program, told Radio Free Asia that China will continue to depend heavily on oil imports from the Middle East, despite having secured new sources in Kazakhstan and Russia.

Little choice

“I don’t see that they have any choice but to look toward the states surrounding the Persian Gulf,” Bader said. “The states of Central Asia and Russia can provide a certain amount, but not in quantities anything like what the Middle East can provide.”

Saudi Arabia remains China’s leading source for imported oil, with supplies rising to nearly 440,000 barrels per day in the first 11 months of last year. Imports from Iran rose last year to 304,000 barrels per day, according to Chinese customs data and the Reuters news agency.

Leverett and Bader’s article points to China’s deepening involvement in Saudi Arabia following the 1999 visit to that country by then-Chinese president Jiang Zemin. China has since attracted Saudi investment for Chinese refinery expansion, while Saudi Arabia has launched highly profitable petrochemical sales to Chinese textile factories.

China has also increased its investment in oil exploration and production in Iran. Chinese investments in Iran’s energy sector could exceed $100 billion over the next 25 years, the article said, citing a report in the Asia Times .

Bader told Radio Free Asia that the United States doesn’t expect China to stop buying Iranian oil, despite international concerns that Iran may be developing nuclear weapons.

“But the manner in which China develops its relationship with Iran beyond purchases of petroleum can make the European negotiations with Iran on their nuclear program either more difficult or less difficult,” Bader said.

Joint ventures

In a separate interview, John Calabrese, assistant professor of foreign policy at the American University in Washington, said it is unlikely that a confrontation between China and the United States over oil would escalate into a military clash.

In the oil market, Calabrese said, all importing countries are competing for resources. What might happen in “the worst case” is that competition could drive China to loosen its export controls on sensitive technology to make a deal for oil, he said.

“What we have to worry about is if the Iranians insist on something like an arms transfer,” he said.

Meanwhile, Bader said, the United States should encourage joint ventures between U.S. and Chinese oil companies. It should also try to engage China in a regional security framework for the Middle East. There are no alternatives to cooperation, Bader said.

The United States must engage with China, said Bader, so that China doesn’t create strategic partnerships with “countries where the U.S. may have significant foreign policy problems.”

Original reporting by Michael Lelyveld for RFA. Edited for the Web by Richard Finney.

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