Friday, May 26, 2006

Axis of Oil -- Preview

From the forthcoming summer issue of the magazine, by Flynt Leverett and Pierre Noel.


While Washington is preoccupied with curbing the proliferation of weapons of mass destruction, avoiding policy failure in Iraq and cheering the “forward march of freedom”, the political consequences of recent structural shifts in global energy markets are posing the most profound challenge to American hegemony since the end of the Cold War. The increasing control that state-owned companies exercise over the world’s reserves of crude oil and natural gas is, under current market conditions, enabling some energy exporters to act with increasing boldness against U.S. interests and policies. Perhaps the most immediate example is Venezuela’s efforts to undermine U.S. influence in Latin America. The most strategically significant manifestation, though, is Russia’s willingness to use its newfound external leverage to counteract what Moscow considers an unacceptable level of U.S. infringement on its interests. At the same time, rising Asian states, especially China, are seeking to address their energy perceived vulnerability through state-orchestrated strategies to “secure” access to hydrocarbon resources around the world. In the Chinese case, a statist approach to managing external energy relationships is increasingly pitting China against the United States in a competition for influence in the Middle East, Central Asia and oil-producing parts of Africa.

We describe these political consequences of recent structural shifts in global energy markets by the shorthand “petropolitics.” While each of these developments is challenging to U.S. interests, the various threads of petropolitics are now coming together in an emerging “axis of oil” that is acting as a counterweight to American hegemony on a widening range of issues. At the center of this undeclared but increasingly assertive axis is a growing geopolitical partnership between Russia (a major energy producer) and China (the paradigmatic rising consumer) against what both perceive as excessive U.S. unilateralism. The impact of this axis on U.S. interests has already been felt in the largely successful Sino-Russian effort to rollback U.S. influence in Central Asia. But the real significance is being seen in the ongoing frustration of U.S. objectives on the Iranian nuclear issue. This will likely be a milestone in redefining the post-Cold War international order—not merely because Iran is likely to end up with at least a nuclear weapons option, but because of what that will imply about the efficacy of America’s global leadership.

Two questions:

1) Will these shifts matter to us if the price of oil makes it practical for the United States to depend exclusively on North American sources for energy?

2) Is our presence in the Middle East a greater threat to Russia and China than the proliferation of nuclear weapons in the region?
US currently has enormous potential control on oil production and transport of Saudi Arabia, Kuwait, UAE, and Iraq. Further extension of that control to Iran is an enormous threat to Russia, Cina, and India. It will not allowed to happen. The resistance of the aforementioned powers is a major reason reason for the Iran-US War to last a decade or more. A nuclear Iran is not a threat to Russia, China, and India. A US that controls the life blood of industrial world is.
Anonymous - Russia, China, and India have expressed concern over the prospect of a nuclear Iran. Perhaps it is true that the three states do not see the prospect in as urgent a way as the United States and the Europeans. But I don't think anyone regards the prospect with equanimity. Of course, what anyone is prepared to do about it is another matter.

It is not clear to me how Russia would be threatened by US control over Middle Eastern oil supplies. Russia doesn't import oil and I don't see how the US could dictate the world price. I don't believe closer US control of the Middle East is really possible in any case, given the likelihood that closer control would be resisted by local states and peoples. America is not going to plunge into new insurgencies over there so soon after extricating itself from the present one.

For strategic reasons it is difficult for me to see the US denying India access to Middle Eastern oil. I agree that China's access could be at risk from US dominance of the Persian Gulf. But if Beijing is willing to make the capital investment, China could pipe oil and gas overland from the Caspian and from Siberia, beyond the reach of US power.

Shifts in the energy market would seem to me of concern primarily to importing countries in the eastern hemisphere. If America can supply its own needs from North America, and if it cannot or chooses not to stand in the way of nuclear proliferation, it is hard to see what incentive there is for the US to maintain its present level of military engagement in the Persian Gulf. The question Russia, China, and India must consider is whether it is to their advantage for the United States to withdraw from the Indian Ocean.
All of this discussion presupposes that there is still a single commonality of interest among the powers rather than competing interests where compromise is the goal.
Mr. Billington:

The public pronouncements of Russia, China, and India are just that: public comments for public consumption. Yes, they may have a distant interest in non-proliferation but its is not germane to their interests in the Near East and specially in Iran.

There are scenarios for oil price war between Saudi Arabia and Russia under which Russian oil industry can go bankrupt. And this is just one aspect of Russia's interests: Iran is one of the main recipients of Russian peaceful nuclear technology and arms sales. Also, Iran is seen as a geopolitical counterbalance to the expanding influence of Turkey, the United States, and Islamic Wahhabism in the South and North Caucasus and Central Asia. Finally, Iranian oil and gas resources (4th and 2nd largest in the world respectively) are a lucrative target for future Russian investment.

For India, there is a need for safe, secure, and reliable energy that is independent of US/Russian/Chinese power. Iran fits the bill. They have no interest in having US exercise political control over all of Persian Gulf oil production. Then there is the need to circumvent Pakistan, access to Central Asia, etc. India has no interest in seeing Iran loosing its political independence.

The above argument applies equally well to China but even more strongly. It is in the national interest of China to have as many politically independent oil producers/suppliers as possible. Consider a hypothetical situation in which China decides to forcibly re-incorporate Taiwan into PRC. If US controls (politically) all these oil producers, it can engineer an embargo against China (same as what US did just prior to the war with Japan in 1941).

I agree with your comments as far as the current situation of global forces is concerned. But as an strategist, one has to consider all situations including potential confrontations and wars.

The Oil & Gas of Caspian that you have mentioned is a pipe-dream. The volume of hydrocarbons there is just not comparable to that of the Persian Gulf. Moreover, the cost of production, let alone delivery, from the Persian Gulf is much lower than the Caspian sea basin. In addition, in regards to China, their main industrial and development hubs are by the South China Sea and not in Sinkiang. Chinese are trying to diversify their Oil & Gas suppliers; they cannot-strategically speaking-rely on the Caspian or Russia alone.

I respectfully disagree with your statement “Shifts in the energy market would seem to me of concern primarily to importing countries in the eastern hemisphere.” I disagree because that statement completely discounts the oil content in the huge amount of imports from East Asia that US consumes.

As I have said before in this forum; US currently does not have a non-proliferation policy. It has a policy of choosing nuclear good guys and bad guys. US is making the world more unsafe for smaller states. These states have to try to form alliances with more powerful states, build indigenous deterrent power, or totally surrender (and get nothing in return : Libya, Serbia) And, pray tell me, what is the US military doctrine in case a tactical nuclear weapon is used against the beach-head that an invading American army has established?

In your last paragraph you posed the right question but for the wrong geographical locations. You should have asked: “Why should US stay in Northeast Asia and in Europe?” In the Persian Gulf, the US power is needed to re-assure its allies (Japan, Australia, Singapore, South Korea, Thailand and other) that there can be a guaranteed supply of oil & gas. There is also the need to maintain a deterrence power against moves by Russia, China, India, Iran and assorted others to gain political control of the hydrocarbon production from current US vassal states of the Persian Gulf (Saudi Arabia, Iraq, UAE, Kuwait, and others).

And your last question I cannot answer: They may want to have US in the Indian Ocean so that their rival could not move in yet. For now, US presence might be acceptable; 20 years from now it may not be so (once India and China have their blue ocean navies).

Anonymous 1 responding.
Anonymous No. 1,

My point about China is that for Beijing to depend on maritime lines of supply is a critical strategic vulnerability. It will make no difference to China whether its oil suppliers are U.S. clients or independent producers if a U.S. blockade prevents oil from either from reaching Chinese ports. For this reason, I would expect Beijing to pay the capital costs to develop Siberian energy resources for its own use, even if Siberia cannot more than partially replace the energy that China can currently import less expensively from the Middle East.

The danger of a price war between Russia and Saudi Arabia would seem to me to give Russia a reason to turn to China. The Russian state is happy to cash in on exports to the wider world, but if world prices fall the Russian economy would suffer, as you point out. I would think that if China offers Russia an acceptable price with a long-term contract and can absorb all of Siberia's energy output, then both states would have a degree of economic security that each may find attractive for different reasons.

I hadn't thought of the petrochemical content of U.S. imports from East Asia; the role of petroleum does indeed go beyond energy to include substances vital to manufacturing. But petrochemicals take a small fraction of crude oil, and the oil used in East Asian manufacturing (ie. not burned for fuel) could I think be supplied from Alaska, which already exports its oil to Asia. Any disruption in the Persian Gulf would impact the United States by tightening oil supplies worldwide. But most of the impact would be on the oil available for transportation and electric power, and (for a time) America could I think meet its need for energy to burn from North American sources if the price of energy can be sustained at a high enough level.

Regarding proliferation, I agree that we do not have a consistent policy. Nuclear weapons could be useful to small states to deter their neighbors and to deter the United States. However, US policy right now is an aberration, and I don't see the United States launching new wars without a much higher threshhold of necessity. If we have to go to war with a nuclear state, which is only conceivable if the state does not have a large enough arsenal to go MAD on us, the war would be an air war. But any war would likely be ad hoc and the results temporary. The longer trend will continue of relative U.S. decline and stronger multipolarity.

The question is whether a more strongly multipolar world will be in the interest of the larger powers and whether the unchecked spread of nuclear weapons to small states will be in the interest of the world as a whole. If we define interest as freedom from U.S. dominance, then multipolarity and nuclear proliferation are to everyone's advantage, except America's. But I don't think that is a realistic definition of the interest of other nations in the long-term. The question we cannot answer is whether other nations will agree to consider the long-term. But I believe we have the right and duty to ask them to do so, if (and it is a crucial if) we are willing to propose something other than U.S. hegemony as the alternative to multipolar rivalry.
Mr. Billington:

About your first point: a US Naval blockade of China will be an act of War and then all bets are off. It will be more prudent to achieve the same result through the plausible-deniability of vassal states. In other words, I stand by my argument and respectfully continue to disagree with you.
In regards to the petrochemical content of products; I has also in mind the inputs to produce them-including the gas needed to bus the workers to the plants, etc.
Your third paragraph, in fact, is an argument for US withdrawal from Persian Gulf. I am not sure I can agree with you; you are suggesting an experiment that may blow up in every one’s face.
Who is to define the interests of the world; US? EU? Russia? China? Or a combination of them? Was it in the interest of the world that NATO attacked Serbia? Was it in the interest of the world that China, EU, US and others supported the Khmere Rouge for years against Vietnam? Is it in the interest of the world for Israel to have thermonuclear weapons? Why does France need nuclear weapons? Or England? Unless these questions are answered in a satisfactory manner, there is absolutely no chance of success in non-proliferation.
US world hegemony is a pipe-dream. US is the hegemon of the Western Hemisphere. There is absolutely no chance of any state, including US, becoming a world hegemon; the geography of the planet mitigates against it. There are many states that define their interest as freedom from US dominance; for such states (India, Brazil, China, Russia, Iran, South Africa, North Korea, Burma) multi-polarity and nuclear proliferation are not so un-desirable.

Anonymous No. 1
Anonymous No. 1,

I was mistaken to frame my point about China in terms of a situation as extreme as a blockade. It would be enough to say that if we deny China access to the Persian Gulf in the manner you describe, the Chinese would have an incentive to rely on energy sources in the interior of Asia, and Russia's interests would be served if China decided to do so.

However, I'm not sure we can tell the Persian Gulf states to whom they can and cannot sell oil, and if nuclear weapons spread throughout the region it is inconceivable that we could exercise any control there. I am not proposing that we withdraw; I am only stating that if the region goes nuclear our departure will simply be a fact.

I distinguished intentionally between (1) the interest of other countries in reducing US global dominance and (2) the longer-term interest of these countries after US dominance has ended.

As long as the US is globally dominant (to the extent that it is, at sea and in the air, and in places on land that do not have nuclear weapons to deter us), other countries will perceive their interest in terms of what is disadvantageous about this dominance to them.

But what kind of security will these countries have in a multipolar world bristling with nuclear weapons after we have gone? I don't believe such a world is inevitable but it could arrive if no one asks ahead of time whether there is an alternative to it. Consequently I think that we, the United States, have the right and duty to ask other countries what their long-term interest is when US global power is history.
Mr. Billington:

I am not un-sympathetic to your comments in general; it is about their concrete realization that I am skeptical.

US or any other state has a right to ask other countries "ask other countries what their long-term interest is when US global power is history". But beyond asking, what concrete steps is the United States willing or capable of taking? What is your recommendations?

I know Vietnam wants US to stay engaged in Southeast Asia (against China). I know Australia is concerned about both China and India. North Korea wants US to leave. What are your thoughts on these specific situations?

And please keep in mind that for a stable peaceful world, some state actors will have to be loosers.

Anonymous No. 1
We have to step back from all of this and the US and other countries need to decide--do they want the US to be the guarantor of the international order, including keeping sea lanes open for energy transit.
Conservative Realist - "other countries need to decide--do they want the US to be the guarantor of the international order, including keeping sea lanes open for energy transit."

This is the immediate question and I think it is a very fair one to put to other countries right now. The longer-term question, what other countries will do after the US no longer has the power to guarantee the world order, may not be possible to answer at this time. But I think we should encourage the question to be debated because it compels other countries to think more deeply about their own responsibilities.

Anonymous No. 1 - Regarding the specific countries you mention, regional associations (the African Union, ASEAN) could be more effective a few decades from now. North Korea is a special case but it is fundamentally a proxy for China.

I think there will need to be a vision of security for the world that includes the larger powers as well as regions of smaller ones. I have tried to outline a plan on the second of two pages that begin here:

Given its speculative nature, the prospects for what I would like to see may not be realistic. But I think there is value in looking ahead in this way because the arguments against what I propose would in themselves sharpen the sense of what options do exist.
Mr. Billington & Conservative Realist:

Whose "international order"? Were the Kosovo War, Iraq War III, Panama War, Somalia examples of upholding international and global order? And what about supporting Saddam Hussein and Pol Pot? Please explain.

My view is this: There is no international order-just disorder that is manifest or hidden. US, just like any other state, has to chart a corse in choppy waters. The long term survival of the state is the only goal.

ASEAN has no chance of supplanting US. Japan is the only country that could but the ASEAN states will resist it.

Conservative Realist: In such cases as "keeping sea lanes open for energy (and trade) transit", hosting the Internet, etc. US could be supported even by unfriendly states since there is tangible benefit for all. Moreover, an alternative to US might be even less desirable to many other states. Beyond that, I just do not believe that all state actors are interested in global stability-certainly not under US.

Anonymous No. 1
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