The visit came against the backdrop of the growing threat of United States-led oil-export sanctions against Iran and China’s need to secure alternative sources of oil and gas. But its unstated purpose was to bolster China’s rising profile in the Persian Gulf and the Muslim world.
Having faced a pushback in East and Southeast Asia after the US enunciated a new strategic framework for the “Indo-Pacific” region, and given the growing profile of energy in the geopolitics of the South China Sea, the Chinese are moving to secure their western flank. Indeed, in the six years since Saudi King Abdullah’s visit to China in January 2006, China has emerged as the most important Asian power in the Gulf, establishing extensive business and strategic links.
At a conference on “Gulf and Asia,” organized by the Geo-Economics and Strategy Program of the International Institute of Strategic Studies in Bahrain last October, Yang Guang of the Chinese Academy of Social Sciences pointed out that China had overtaken the US as the biggest importer of oil from the Gulf Cooperation Council (GCC) countries.
While China is investing in pipelines in Central Asia and Russia, and in oil equities in Africa and elsewhere, according to Yang, for China, “the Gulf region’s abundance of resources, its geographic position, and good transport links make it the primary option on the list of international oil suppliers.” Even as the US and Europe reduce their dependence on Gulf oil, China will remain strategically dependent on the Gulf for their energy.
So will India. Indeed, Indian National Security Adviser Shiv Shankar Menon also toured the Gulf recently, visiting Saudi Arabia, Qatar, and Kuwait. Though his foray into the region attracted much less attention than Wen’s, the focus of his visits was, likewise, energy security (as well as securing Arab investment in India).
Both China and India buy oil from Iran (with China accounting for 22% of Iran’s oil exports), and thus would be adversely impacted by US-led sanctions. But both countries have interests in the region that go far beyond oil.
For China, the GCC countries have emerged as a major market for Chinese manufactured goods and food exports. For India, the region is home to six million expatriates who remit annually close to $20-30 billion – almost half of the $60 billion in total yearly remittances by Indian workers abroad.
Concerns about the fallout of Gulf instability for India’s energy security have risen alongside deepening ties with Israel. Indeed, when Indian Foreign Minister S. M. Krishna visited Tel Aviv this month to explore possibilities for diplomacy in alleviating regional tensions, he was received with the honors accorded only to Israel’s closest allies.
Such diplomatic activism by China and India clearly reflects their shared concern about energy supplies. Both countries have so far gone along with United Nations-authorized sanctions against Iran, and have publicly demanded that Iran adhere to its commitments as a signatory to the Nuclear Non-Proliferation Treaty (NPT). But the bottom line for both countries is energy security.
Both China and India will seek to impress upon the US that any action against Iran aimed at preventing it from developing nuclear weapons should not be at the expense of economic growth and energy security in Asia. Given the stake that both the US and Europe have in stabilizing and sustaining global growth, their policies should be aimed at ensuring that China, India, and other newly industrializing Asian economies can take up the slack created by the slowdown in OECD economies.
So, even as Wen travels west, the West must travel east. A trilateral initiative by the US, China, and India in the Gulf, aimed at facilitating a resolution of historic problems in the region, would benefit global growth and stability. As the region’s biggest and most influential country, Saudi Arabia could play a positive role by inviting the US and Asia’s two giants to work jointly towards a peaceful resolution of the Iran problem.
While Russia has its interests in the region, it has little or no stake in arresting the rise in oil prices that instability in the Gulf would trigger. China and India, on the other hand, would be badly affected by another surge in oil prices.
India can ill afford a further economic slowdown, with GDP growth this year forecast to fall to 7.5%, compared to the five-year average of 9% in 2003-08, while inflation remains high, partly owing to rising energy prices. Deepening malaise there and in China would disrupt global growth at a time when Europe remains mired in crisis.
The US, too, cannot afford military conflict in the Gulf, given its need to shore up the domestic foundations of its economic power. As a result, the time is ripe for fresh ideas and innovative initiatives aimed at addressing Asia’s energy-security concerns in the Middle East. Increasingly, those ideas and initiatives will come from Asia itself.
Sanjaya Baru is Director for Geo-Economics and Strategy at
the International Institute of Strategic Studies.