SPEAKING FREELY US outflanked in Eurasia energy politics By F William Engdahl
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The United States' global energy-control strategy, it's now clear to most, was
the actual reason for the highly costly regime change in Iraq, euphemistically
dubbed "democracy" by Washington. But while it is preoccupied with implanting
democracy in the Middle East, the United States is quietly being outflanked in
the rush to secure and control major energy sources of the Persian Gulf, the
Central Asian Caspian Basin, Africa and beyond.
The quest for energy control has informed Washington's support for high-risk
"color revolutions" in Georgia, Ukraine, Uzbekistan, Belarus and Kyrgyzstan in
recent months. It lies behind US activity in West Africa, as well as in Sudan,
source of 7% of
China's oil imports. It lies behind US policy vis-a-vis President Hugo Chavez'
Venezuela and President Evo Morales' Bolivia.
In recent months, however, this strategy of global energy dominance has shown
signs of producing just the opposite: a kind of "coalition of the unwilling",
states that increasingly see no other prospect, despite traditional
animosities, but to cooperate to oppose what they see as a US push to control
the future security of their energy.
If the trend of recent events continues, it won't be US-style democracy that is
spreading, but rather Russian and Chinese influence over major oil and gas
Some in Washington are beginning to realize that important figures might have
been too clumsy in recent public statements about both China and Russia, two
nations whose cooperation in some form is essential to the success of the
global US energy project.
Ripping into China and Russia
Contrary to advice from older China hands, including former secretary of state
Henry Kissinger, architect of president Richard Nixon's 1972 opening to China,
the White House denied visiting Chinese President Hu Jintao the honor of a full
state dinner when he visited in April, serving instead a short "state lunch".
Hu was publicly humiliated by a well-known Falungong heckler at the White House
A few weeks later, Vice President Dick Cheney slapped Russian President
Vladimir Putin with the most open attack on Russia's internal human-rights
policy as well as its energy policy in a speech in the Baltic state of
Lithuania. There, Cheney declared of Russia, "The government has unfairly and
improperly restricted the rights of her people." He accused Russia of energy
"intimidation and blackmail". Some days later, Secretary of State Condoleezza
Rice reiterated that Russia should be "pressed" on democratic reforms. Rice
also slapped China in the face in March during a trip to Southeast Asia,
calling China a "negative force" in Asia.
Curiously, Washington has repeatedly accused China of "not playing by the
rules", in terms of its oil politics, declaring that China is guilty of
"seeking to control energy at the source", as though that had not been US
energy policy for the past century.
The significance of taking aim simultaneously at both Russia and China, the two
Eurasian giants, the one the largest investor in US Treasury bonds, the other
the world's second-most-developed military nuclear power, reflects the
realization in Washington that all may not be as seamless in the quest for
global domination as originally promised by various strategists in and around
the administration of President George W Bush.
Next Thursday, member nations of the Shanghai Cooperation Organization (SCO),
led by China and Russia, will reportedly invite Iran, currently an observer,
into full membership. Even if full membership is postponed, as has been mooted,
the fact remains that Russia and China both want to seal closer cooperation
with Iran in Eurasian energy cooperation.
The SCO was founded in June 2001 by China, Russia, Kazakhstan, Kyrgyzstan,
Tajikistan and Uzbekistan. Its stated goal was to facilitate "cooperation in
political affairs, economy and trade, scientific-technical, cultural, and
educational spheres as well as in energy, transportation, tourism, and
environment protection fields". Recently, however, the SCO is beginning to look
like an energy-financial bloc in Central Asia consciously being developed to
serve as a counter-pole to US hegemony.
Russia's energy geopolitics
In recent months SCO members have taken several potentially strategic steps to
distance themselves from energy and monetary dependence on the US. In his
recent State of the Union speech, President Putin announced that Russia is
planning to make the ruble convertible into other major currencies and to use
it in its oil and gas transactions.
A convertible ruble is to be introduced, according to latest Russian
statements, on July 1, six months earlier than originally planned. Russia also
has stated it plans to shift a share of its now considerable dollar reserves
away from the US currency and that it will use 40 billion US dollars to
purchase gold reserves.
Russia's state-owned natural-gas transport company, Transneft, has consolidated
its pipeline control to become the sole exporter of Russian natural gas. Russia
has by far the world's largest natural-gas reserves and Iran the
second-largest. With Iran inside, the SCO would control the vast majority of
the world's natural-gas reserves, as well as a significant portion of its oil
reserves, not to mention the Strait of Hormuz, the narrow corridor for a
majority of Persian Gulf oil-tanker shipment to Japan and the West.
Late last month Russia and Algeria, the two largest gas suppliers to Europe,
agreed to increase energy cooperation. Algeria has given Russian companies
exclusive access to Algerian oil and gas fields, and Gazprom and Sonatrach will
cooperate in delivery to France. Putin has canceled Algeria's US$4.7 billion
debt to Russia and, for its part, Algeria will buy $7.5 billion worth of
Russian advanced jet fighters, air defense systems and other weapons.
On May 26 Russian Defense Minister Sergei Ivanov also announced that his
country would definitely supply Iran with sophisticated Tor-M1 anti-aircraft
missiles, reportedly as a prelude to supplying even more sophisticated weapons.
Then, in one of the more fascinating examples of geopolitical chutzpah, the
Kremlin-controlled Gazprom gas monopoly entered quiet negotiations with Israeli
Prime Minister Ehud Olmert through his billionaire friend, Benny Steinmetz, to
secure Russian natural-gas supplies to Israel via an undersea pipeline from
Turkey to Israel.
According to the Israeli paper Yediot Ahronot, Olmert's office has said it will
support the Gazprom proposal. In several years Israel faces a shortage of gas
from Tethys Sea drilling and soon from Egypt. Tethys Sea gas is projected to
run dry in a few years. British Gas is in talks to supply gas from Gaza but
Israel disputes BG's right to drill.
But even with Egypt and Gaza, gas shortages are expected by 2010 unless Israel
is able to find new sources. Enter Gazprom and Putin. The gas would be diverted
from the under-used Russia-Turkey Bluestream Pipeline, which Russia built to
increase its influence over Turkey two years ago. Putin clearly seeks to gain a
lever inside Israel over the one-sided US influence on Israeli policy.
China energy geopolitics also in high gear
For its part, Beijing is also moving to "secure energy at the sources". China's
booming economy, with 10% growth, requires massive natural resources. China
became a net importer of oil in 1993. By 2045, China will depend on imported
oil for 45% of its energy needs.
On May 26, crude oil began to flow into China through a newly completed
pipeline from Atasu, Kazakhstan, to the Alataw Pass in China's far-western
region of Xinjiang, a 1,000-kilometer route announced only last year. It marked
the first time oil is being pumped directly into China. Kazakhstan is also a
member of the SCO, but had been regarded by Washington since the collapse of
the Soviet Union as in its sphere of influence, with ChevronTexaco, Rice's
former oil company, the major oil developer.
By 2011 the pipeline with extend some 3,000km to Dushanzi, where the Chinese
are building their largest oil refinery, due to completed by 2008. China
financed the entire $700 million pipeline and will buy the oil. Last year the
China National Petroleum Corp bought PetroKazakhstan for $4.2 billion and will
use it to develop oilfields in Kazakhstan.
China is also in negotiations with Russia for a pipeline to deliver Siberian
oil to northeastern China, a project that could be completed by 2008, and a
natural-gas pipeline from Russia to Heilongjiang province in China's northeast.
China just passed Japan to rank as world's second-largest oil importer behind
the United States.
Beijing and Moscow are also integrating their electricity grids. Late last
month the China State Grid Corp announced plans to increase imports of Russian
electricity fivefold by 2010.
In its relentless quest to secure future oil supplies "at the source", China
has also moved into traditional US, British and French oil domains in Africa.
In addition to being the major developer of Sudan's oil pipeline, which ships
some 7% of total China oil imports, Beijing has been more than active in West
Africa, the source of vast fields of highly prized low-sulfur oil.
Since the creation of the China-Africa Forum in 2000, China has scrapped
tariffs on 190 imported goods from 28 of the least developed African countries,
and canceled $1.2 billion in debt.
Indicative of the way China is doing an end-run around the Western-controlled
International Monetary Fund among African states, China's Export-Import Bank
recently gave a $2 billion soft loan to Angola. In return, the Luanda
government gave China a stake in oil exploration in shallow waters off the
coast. The loan is to be used for infrastructure projects. In contrast, US
interest in war-torn Angola has rarely gone beyond the well-fortified oil
enclave of Cabinda, which ExxonMobil along with Shell Oil have dominated until
recently. That is apparently about to change with the growing Chinese interest.
Chinese infrastructure projects under way in Angola include railways, roads, a
fiber-optic network, schools, hospitals, offices and 5,000 units of housing
developments. A new airport with direct flights from Luanda to Beijing is also
Indirectly, through its support of the Sudanese government, China is also a
contender in a high-stakes game of potential regime change in neighboring,
oil-rich Chad. This year, World Bank president Paul Wolfowitz was forced to
back down from plans to cut off World Bank aid because of the threat of an
oil-export cutoff by Chad. ExxonMobil is currently the major oil company active
in Chad. But Sudan backs Chadian rebels, who were only prevented from toppling
the notoriously corrupt and unpopular regime of President Idriss Deby by the
1,500 French soldiers propping up the regime. Washington has joined with Paris
in backing Deby.
Sudan has involved Chinese, rather than Western, corporations in exploiting its
oilfields, largely as a result of misconceived US sanctions imposed in 1997,
which blocked US oil companies from doing business in Sudan. A new Sudan-backed
regime in Chad would jeopardize the Chad-Cameroon pipeline and Western oil
firms. One can imagine China just might be willing to step into such a vacuum
and help Chad develop its oil, especially if the lion's share went to China.
Immediately after his humiliating diplomatic visit to Washington in April,
President Hu went on to Nigeria, Africa's largest oil producer and long
regarded by Washington as in its "oil sphere of interest". In Nigeria, Hu
signed a deal whereby the African country will give China four oil-drilling
licenses in exchange for a commitment to invest $4 billion in infrastructure.
China will buy a controlling stake in Nigeria's 110,000-barrel-per-day Kaduna
oil refinery and build railway and power stations, as well as take a 45% stake
in developing Nigeria's OML-130 offshore oil and gas field, referred to by the
chairman of China National Overseas Oil Corp as "an oil and gas field of huge
interest ... located in one of the world's largest oil and gas basins".
Almost all of Nigeria's current oil production is controlled by Western
multinationals. But the situation there will also soon change in China's favor.
Similar soft infrastructure loans or energy investment offers are being made to
Gabon, Ivory Coast, Liberia and Equatorial Guinea. The curious charge against
China of "not playing by the rules" and "trying to secure energy at the source"
begins to assume real dimension when these and Russia's recent energy moves are
taken as a totality.
It's little wonder that some Washington hawks are getting alarmed. Suddenly,
the world of potential "enemies" is no longer restricted to the Islam-centered
"war on terror". Leading neo-conservative ideologue Robert Kagan wrote a
prominent opinion article recently in the Washington Post. Kagan is privy to
pretty high-level thinking in Washington, presumably. His wife, Victoria
Nuland, worked as Vice President Richard Cheney's deputy national security
adviser until being named US ambassador to the North Atlantic Treaty
Kagan declared, in reference to Russia and China, "Until now the liberal West's
strategy has been to try to integrate these two powers into the international
liberal order, to tame them and make them safe for liberalism. If, instead,
China and Russia are going to be sturdy pillars of autocracy over the coming
decades, enduring and perhaps even prospering, then they cannot be expected to
embrace the West's vision of humanity's inexorable evolution toward democracy
and the end of autocratic rule."
Kagan charged that China and Russia have emerged as the protectors of "an
informal league of dictators" that, according to Kagan, currently includes the
leaders of Belarus, Uzbekistan, Myanmar, Zimbabwe, Sudan, Venezuela, Iran and
Angola, among others around the world, who, like the leaders of Russia and
China themselves, resist any efforts by the West to interfere in their domestic
affairs, either through sanctions or other means. "The question is what the
United States and Europe decide to do in response," wrote Kagan.
The mainstream US foreign-policy organization, the New York-based Council on
Foreign Relations, has also recently weighed in on the question of Chinese
energy pursuits. In a recent report, the CFR accuses the Bush administration of
lacking any comprehensive long-term strategy for Africa. It criticizes US focus
on humanitarian issues such as in Darfur southern Sudan, demanding instead that
the US "act on its rising national interests on the continent". Those
interests? The CFR lists oil and gas as No 1; growing competition with China
(closely related to No 1) as No 2.
F William Engdahl is author of the book A Century of War:
Anglo-American Oil Politics and the New World Order (Pluto Press Ltd). He has a
soon-to-be published book on genetically modified organisms titled Seeds
of Destruction: The Hidden Political Agenda Behind GMO. He may be contacted
through his website, www.engdahl.oilgeopolitics.net.
(Copyright 2006 F William Engdahl.)
Speaking Freely is an Asia Times Online feature that allows guest writers to have
Please click hereif you are interested in