The Great Game and Future wars over oil: Will China and the U.S. collide?

[Below are excerpts from 18 articles about wars over oil (and other resources) written between 2003 and 2015.  If even a small nuclear war breaks out, we risk a 5+ year nuclear winter. It is long past time to implement Colin Campbell’s Rimini (oil depletion) protocol, which Richard Heinberg explains quite well in his 2006 book: “The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism, and Economic Collapse.” Though there’s a good chance China will take America out silently with a cyberwar rather than bombs or their Blue Navy.

Alice Friedemann ]

Krauss, C., et al. July 24, 2015. China’s Global Ambitions, With Loans and Strings Attached. New York Times.

China has invested billions in Ecuador and elsewhere, using its economic clout to win diplomatic allies and secure natural resources around the world.  China has nearly $4 trillion in foreign currency reserves, which it is determined to invest overseas to earn a profit and exert its influence.

China’s growing economic power coincides with an increasingly assertive foreign policy. It is building aircraft carriers, nuclear submarines and stealth jets. In a contested sea, China is turning reefs and atolls near the southern Philippines into artificial islands, with at least one airstrip able to handle the largest military planes. The United States has challenged the move, conducting surveillance flights in the area and discussing plans to send warships.

Many developing countries, in exchange for loans, pay steep interest rates and give up the rights to their natural resources for years. China has a lock on close to 90 percent of Ecuador’s oil exports, which mostly goes to paying off its loans.

“The problem is we are trying to replace American imperialism with Chinese imperialism,” said Alberto Acosta, who served as President Correa’s energy minister during his first term. “The Chinese are shopping across the world, transforming their financial resources into mineral resources and investments. They come with financing, technology and technicians, but also high interest rates.”

China’s pull is strong. It is the world’s largest buyer of oil, which gives China substantial sway over petropolitics. It is also increasingly the trading partner of choice for many countries, taking the mantle from Western nations. China’s foreign direct investment — the money it spends overseas annually on land, factories and other business operations — is second only to the United States’, having passed Japan last year.

Chinese companies are at the center of a worldwide construction boom, mostly financed by Chinese banks. They are building power plants in Serbia, glass and cement factories in Ethiopia, low-income housing in Venezuela and natural gas pipelines in Uzbekistan.  China produces two million cars a month, far more than any other country. It mirrors the broader transformation of the economy from an insular agrarian society to the world’s largest manufacturer.

While the change has showered wealth on China, it has also brought new demands, like a voracious thirst for energy to power its economy. The confluence of trends has compelled China to look beyond its borders to invest those riches and to satisfy its needs.

Oil has been on the leading edge of this investment push. Energy projects and stakes have accounted for two-fifths of China’s $630 billion of overseas investments in the last decade, according to Derek Scissors, an analyst at the American Enterprise Institute.

China is playing both defense and offense. With an increased dependence on foreign oil, China’s leadership has followed the United States and other large economies by seeking to own more overseas oil fields — or at least the crude they produce — to ensure a stable supply. In recent years, state-controlled Chinese oil companies have acquired big stakes in oil operations in Cameroon, Canada, Kazakhstan, Kyrgyzstan, Iraq, Nigeria, São Tomé and Príncipe, Sudan, Uganda, the United States and Venezuela.

“When utilizing foreign resources and markets, we need to consider it from the height of national strategy,” Prime Minister Li said in 2009, when he was a vice premier. “If the resources mainly come from one country or from one place with frequent turmoil, national economic safety will be under shadow when an emergency happens.”

PetroChina and Sinopec, another state-controlled Chinese company, together pump about 25 percent of the 560,000 barrels a day produced in Ecuador. Along with taking the bulk of oil exports, the Chinese companies also collect $25 to $50 in fees from Ecuador for each barrel they pump.

China’s terms are putting countries in precarious positions.  In Ecuador, oil represents roughly 40 percent of the government’s revenue, according to the United States Energy Department. And those earnings are suddenly plunging along with the price of oil. With crude at around $50 a barrel, Ecuador doesn’t have much left to repay its loans.

To do so, Chinese authorities want to extend the length of the loans instead of writing off part of the principal. That means countries will have to hand over their natural resources for additional years, limiting their governments’ abilities to borrow money and pursue other development opportunities.

China has significant leverage to make sure borrowers pay. As the dominant manufacturer for a long list of goods, Beijing can credibly threaten to cut off shipments to countries that do not repay their loans, the senior Chinese banker said.


Gal Luft. February 3, 2004 U.S., China Are on Collision Course Over Oil. Los Angeles Times.

Gal Luft is executive director of the Institute for the Analysis of Global Security and publisher of the online publication Energy Security.

Sixty-seven years ago, oil-starved Japan embarked on an aggressive expansionary policy designed to secure its growing energy needs, which eventually led the nation into a world war. Today, another Asian power thirsts for oil: China.

While the U.S. is absorbed in fighting the war on terror, the seeds of what could be the next world war are quietly germinating. With 1.3 billion people and an economy growing at a phenomenal 8% to 10% a year, China, already a net oil importer, is growing increasingly dependent on imported oil. Last year, its auto sales grew 70% and its oil imports were up 30% from the previous year, making it the world’s No. 2 petroleum user after the U.S. By 2030, China is expected to have more cars than the U.S. and import as much oil as the U.S. does today.

Dependence on oil means dependence on the Middle East, home to 70% of the world’s proven reserves. With 60% of its oil imports coming from the Middle East, China can no longer afford to sit on the sidelines of the tumultuous region. Its way of forming a footprint in the Middle East has been through providing technology and components for weapons of mass destruction and their delivery systems to unsavory regimes in places such as Iran, Iraq and Syria. A report by the U.S.-China Economic and Security Review Commission, a group created by Congress to monitor U.S.-China relations, warned in 2002 that “this arms trafficking to these regimes presents an increasing threat to U.S. security interests in the Middle East.” The report concludes: “A key driver in China’s relations with terrorist-sponsoring governments is its dependence on foreign oil to fuel its economic development. This dependency is expected to increase over the coming decade.”

Optimists claim that the world oil market will be able to accommodate China and that, instead of conflict, China’s thirst could create mutual desire for stability in the Middle East and thus actually bring Beijing closer to the U.S.

History shows the opposite: Superpowers find it difficult to coexist while competing over scarce resources. The main bone of contention probably will revolve around China’s relations with Saudi Arabia, home to a quarter of the world’s oil. The Chinese have already supplied the Saudis with intermediate-range ballistic missiles, and they played a major role 20 years ago in a Saudi-financed Pakistani nuclear effort that may one day leave a nuclear weapon in the hands of a Taliban-type regime in Riyadh or Islamabad.

Since 9/11, a deep tension in U.S.-Saudi relations has provided the Chinese with an opportunity to win the heart of the House of Saud. The Saudis hear the voices in the U.S. denouncing Saudi Arabia as a “kernel of evil” and proposing that the U.S. seize and occupy the kingdom’s oil fields. The Saudis especially fear that if their citizens again perpetrate a terror attack in the U.S., there would be no alternative for the U.S. but to terminate its long-standing commitment to the monarchy — and perhaps even use military force against it.

The Saudis realize that to forestall such a scenario they can no longer rely solely on the U.S. to defend the regime and must diversify their security portfolio. In their search for a new patron, they might find China the most fitting and willing candidate.

The risk of Beijing’s emerging as a competitor for influence in the Middle East and a Saudi shift of allegiance are things Washington should consider as it defines its objectives and priorities in the 21st century. Without a comprehensive strategy designed to prevent China from becoming an oil consumer on a par with the U.S., a superpower collision is in the cards.

This explosive, complex region cannot accommodate two major powers competing not only over a barrel but also over the hearts, minds and allegiance of its people.


January 9, 2008. House Representative Roscoe Bartlett at conference on energy alternatives for U.S. Military.

China is buying into oil companies around the world. “When I asked the State Department why the Chinese are buying up oil around the world, they said the Chinese don’t understand the market system,” Bartlett said. “The Chinese don’t understand the market system,” he repeated as the room filled with grim chuckles.

China also is building a blue-water Navy, Bartlett said. At the rate warships are being built in China and the United States today, it won’t be too many years before China has the larger Navy, said Bartlett, who is the senior Republican on the House seapower and expeditionary forces subcommittee.

Chinese submarines are of particular concern, he said. They could give China control of the Taiwan Strait.

The Army estimates it will need $85 billion to refurbish or replace equipment being worn out or destroyed in Iraq. Don’t do it, Bartlett pleads. “A refurbished Humvee is still a Humvee” — that is, a fossil-fuel-guzzling battlefield vehicle, he said. “We should be more aggressive and innovative and actively pursue current and near-term technologies” that will reduce oil consumption. Consider these Bartlett statistics:

  1. Daily fuel consumption per deployed troop in combat has increased from 1.7 gallons during World War II to 27.3 gallons during the second Persian Gulf war.
  2. Fuel accounts for 70% of war-fighting logistics supplies by weight. 3) Convoys of tanker trucks are needed to keep combat vehicles, support vehicles and operating base generators running.
  3. Protection for fuel convoys diverts troops from combat operations. 5) Convoys create operational vulnerabilities, and reliance on convoys constrains force movement.

Ultimately, in a world with shrinking oil supplies, the United States will probably have to reconsider how it uses its military, Bartlett said.

Keeping U.S. troops in 100 countries around the world requires an extraordinary amount of energy. And it is clear to Bartlett, a medical school professor, inventor, scientist and business owner before entering Congress in 1992, that oil is running out.

“Most of the world’s authorities believe we have discovered 95 percent of the oil that will be discovered,” he said. And recent big discoveries, such as those in Latin America and the Gulf of Mexico, lie beneath miles of ocean and rock and would be enormously difficult and costly to tap.

At best, substitutes for oil, such as ethanol made from corn and other crops or liquefied coal and natural gas, can replace about one-third of today’s oil, Bartlett said.

But they have major drawbacks. The push to make ethanol from corn has already doubled the price of corn on the world market, prompting the United Nations to declare the practice of converting food crops into energy “a crime against humanity,” Bartlett said.

And converting coal to liquid fuel, as the U.S. Air Force is considering, releases twice as much global-warming carbon as burning petroleum-based fuel, he said.

Efforts to produce energy from fusion are about as likely to succeed as playing the lottery.

Making oil from tar sands and oil shale consumes more energy than it produces.

“Conservation is absolutely essential to buy us time” to develop new energy solutions, Bartlett said.



James Howard Kunstler. February 3, 2005. Kunstler on China. The Clusterfuck Nation Chronicle.

The elite clueless of the economics world had their annual jamboree in Davos, Switzerland, last week. Among other things, they heard that China’s economic output will grow to $4 trillion in 2020, from $1.6 trillion today. There was no discussion of the global oil production peak problem. Had it factored into things, there might have been some eyebrows raised about China’s prospects.

Davos jamboreener supremo Bill Gates, in his doofus-nerd “wisdom,” termed China “a change agent for the next twenty years.” What did he have in mind, one wonders? That all of China would eventually become a super-giant Redmond, Washington? A dynamic hypermega-burb full of happy motorists sipping Starbuck’s frappocinos on their way to the video game office?

Here’s the real deal: China is the last industrialized nation of the cheap energy age. Its factory production is keyed to the continuation of regular supplies of cheap oil. It has little oil of its own. In order to continue to pretend it can keep “growing” it will have to do two things. 1) embark on a military adventure to establish hegemony over oil producing regions, and 2) replace the prime customer for the avalanche of cheap “consumer” goods that its factories churn out.

We’ll take these questions in reverse order. China may have to find someone else to sell to because its American customers, the WalMart and Target shoppers, are sliding into bankruptcy after a decade-long credit card orgy. Will the Europeans throw away their own manufacturing capacity to make way for a Chinese tsunami of cheap hair dryers and blue jeans? Don’t bet on it. Will South America and Africa replace the American market? Forget it. Will China simply shift marketing to its own citizens? That brings us back to the oil question.

An industrial economy is not a perpetual motion machine. It has to run on something — in this case, oil, natural gas, and coal. If China expects to expand to meet the expectations of Davos, it will have to go adventuring for oil, in effect establish hegemonic relations with the countries that have the stuff. China is already scurrying around the globe signing contracts with nations such as Venezuela and Canada for future oil delivery — which, by the way, will come at the expense of the oil-hungry United States. China is currying favor with the nations of Middle East by doing civil engineering projects there. China’s army could walk into the oil producing nations of Central Asia. China can reach down to Indonesia with its expanding navy. In all these ventures, China will bump up against an increasingly desperate US, determined to preserve a way of life that, in the words of Veep Dick Cheney, is “non-negotiable.”

Meanwhile, China’s coal supply is mostly low-grade “soft” coal, exactly the stuff that will shove the world’s climate into phase change if it has to be used to replace missing oil. China hopes to get natural gas from its neighbor, Russia. Good luck on that. The Russians just planned a major natural gas line that will bypass China to north and go to Japan. The Russians need to be dominated by China like they need a hole in the head.

Conclusion: in the next twenty years, China is certain to contest militarily for the world’s remaining oil with what has been the prime customer for its manufacturing output. That would be America.

While the US is fraught with multiple economic difficulties — energy dependence, loss of productive activity, debt meltdown, an ongoing expensive war — China has problems that are even more fundamentally ominous — a population much more advanced in ecological overshoot, severe environmental destruction, and a water crisis that is manifesting, among other ways, in steeply falling grain harvests (on top of energy and resource dependence, unregulated banking, and the prospect of huge industrial overcapacity in the face of bankrupt customers).

Those of us Boomers, who were reading newspapers in the 1960s can recall China’s capacity for political psychosis. It’s been forty years since the “cultural revolution.” The Davos Sages seem to assume that China is a stable country. The Clusterfuck view sees it differently. As the American consumer / sprawl economy sputters, China will find itself in desperate circumstances: starved for energy, stuck with zillions of unsold coffee-makers and barn jackets, racked with unemployment, and hard-put to feed its own people.

China is going to be a “change agent,” all right, but not in the way that Bill gates expects.



Klare, M. T. May 1, 2008. The New Geopolitics of Energy. The Nation

While the day-to-day focus of US military planning remains Iraq and Afghanistan, American strategists are increasingly looking beyond these two conflicts to envision the global combat environment of the emerging period–and the world they see is one where the struggle over vital resources, rather than ideology or balance-of-power politics, dominates the martial landscape. Believing that the United States must reconfigure its doctrines and forces in order to prevail in such an environment, senior officials have taken steps to enhance strategic planning and combat capabilities.

Since 2006 the Defense Department, in its annual report Military Power of the People’s Republic of China, has equated competition over resources with conflict over Taiwan as a potential spark for a US war with China.  “Analysis of China’s military acquisitions and strategic thinking suggests Beijing is also developing capabilities for use in other contingencies, such as conflict over resources.” The report went on to suggest that the Chinese are planning to enhance their capacity for “power projection” in areas that provide them with critical raw materials, especially fossil fuels, and that such efforts would pose a significant threat to America’s security interests.

The Pentagon is also requesting funds this year for the establishment of the Africa Command (Africom), the first overseas joint command to be formed since 1983, when President Reagan created the Central Command (Centcom) to guard Persian Gulf oil. Supposedly, the new organization will focus its efforts on humanitarian aid and the “war on terror.” But in a presentation delivered at the National Defense University in February, Africom’s deputy commander, Vice Adm. Robert Moeller, said, “Africa holds growing geostrategic importance” to the United States–with oil a key factor in this equation–and that among the key challenges to US strategic interests in the region is China’s “Growing Influence in Africa.”

Russia, too, is being viewed through the lens of global resource competition. Although Russia, unlike the United States and China, does not need to import oil and natural gas to satisfy its domestic requirements, it seeks to dominate the transportation of energy, especially to Europe. This has alarmed senior White House officials, who resent restoration of Russia’s great-power status and fear that its growing control over the distribution of oil and gas in Eurasia will undercut America’s influence in the region.

In response to the Russian energy drive, the Bush Administration is undertaking countermoves. “I do intend to appoint…a special energy coordinator who could especially spend time on the Central Asian and Caspian region,” Secretary of State Condoleezza Rice informed the Senate Foreign Relations Committee in February. “It is a really important part of diplomacy.” A key job of the coordinator, she suggested, would be to encourage the establishment of oil and gas pipelines that bypass Russia, thereby diminishing its control over the regional flow of energy.

Taken together, these and like moves suggest that a momentous shift has occurred. At a time when world supplies of oil, natural gas, uranium and key industrial minerals like copper and cobalt are beginning to shrink and the demand for them is exploding, the major industrial powers are becoming more desperate in their drive to gain control over what remains of the planet’s untapped reserves  These efforts typically entail intense bidding wars for supplies on international markets–hence the record high prices for all these commodities. But they also take military form, as arms transfers and the deployment of overseas missions and bases. It is to bolster America’s advantage–and to counter similar moves by China and other resource competitors–that the Pentagon has placed resource competition at the center of its strategic planning.

Alfred Thayer Mahan Revisited

This is not the first time that American strategists have placed a high priority on the global struggle over vital resources. At the end of the nineteenth century a bold and outspoken group of military thinkers, led by naval historian and Naval War College president Alfred Thayer Mahan and his protégé, then-Assistant Secretary of the Navy Theodore Roosevelt, campaigned for a strong American Navy and the acquisition of colonies to ensure access to overseas markets and raw materials. Eventually, their views helped generate public support for the Spanish-American War and, upon its conclusion, the establishment of a Caribbean and Pacific empire by the United States.

During the cold war, ideology reigned supreme as containment of the USSR and the defeat of Communism were the overriding objectives of American strategy. But even then, resource considerations were not entirely neglected. The Eisenhower Doctrine of 1957 and the Carter Doctrine of 1980, though couched in the standard anti-Soviet rhetoric of the day, were principally intended to ensure continued US access to the Persian Gulf’s prolific oil reserves. And when President Carter established the nucleus of Centcom in 1980, its primary responsibility was protection of the Persian Gulf oil flow–not containment of the Soviet Union.

After the cold war, the first President Bush tried, and failed, to establish a global coalition of like-minded states–a “new world order”–that would maintain global stability and allow Western corporate interests (American firms foremost among them) to extend their reach across the planet. This approach, in watered-down form, was subsequently embraced by President Clinton. But 9/11 and the current Administration’s relentless campaign against “rogue states,” notably Iraq under Saddam Hussein and Iran, has reinjected an ideological element into US strategic planning. As George W. Bush tells it, the “war on terror” and rogue states are the contemporary equivalents of earlier ideological struggles against Fascism and Communism. Examine the issues closely, however, and it is impossible to disentangle the problem of Middle Eastern terrorism or the challenge posed by Iraq and Iran from the history of Western oil extraction in those regions.

Islamic extremism of the sort propagated by Osama bin Laden and Al Qaeda has many roots, but one of its major claims is that the Western assault on and occupation of Islamic lands–and the resulting defilement of Muslim peoples and cultures–has been driven by the West’s craving for Middle Eastern oil.

“Remember too that the biggest reason for our enemies’ control over our lands is to steal our oil,” bin Laden told his sympathizers in a December 2004 audiotaped address. “So give everything you can to stop the greatest theft of oil in history.”

Likewise, the US conflict with Iraq and Iran has largely been shaped by the fundamental tenet of the Carter Doctrine: that the United States will not permit the emergence of a hostile power that might gain control over the flow of Persian Gulf oil and thus–in Vice President Cheney’s words–“be able to dictate the future of worldwide energy policy.”

Concern over the safety of vital resource supplies has, therefore, been a central feature of strategic planning for a long time. But the attention now devoted to this issue represents a qualitative shift in US thinking, matched only by the imperial impulses that led to the Spanish-American War a century ago. This time, however, the shift is driven not by an optimistic faith in America’s capacity to dominate the world economy but by a largely pessimistic outlook regarding the future availability of vital resources and the intense competition over them waged by China and other rising economic dynamos. Faced with these dual challenges, Pentagon strategists believe that ensuring US primacy in the global resource struggle must be the top priority of American military policy.

Back to the Future

In line with this new outlook, fresh emphasis is being placed on the global role of the Navy. Using language that would sound surprisingly familiar to Alfred Mahan and the first President Roosevelt, the Navy, Marines and Coast Guard unveiled A Cooperative Strategy for 21st Century Seapower in October; it emphasizes America’s need to dominate the oceans and guard the vital sea lanes that connect this country to its overseas markets and resource supplies:

Over the past four decades, total sea borne trade has more than quadrupled: 90% of world trade and two-thirds of its petroleum are transported by sea. The sea-lanes and supporting shore infrastructure are the lifelines of the modern global economy. Heightened popular expectations and increased competition for resources, coupled with scarcity, may encourage nations to exert wider claims of sovereignty over greater expanses of ocean, waterways, and natural resources–potentially resulting in conflict.

To address this danger, the Defense Department has undertaken a massive modernization of the combat fleet, entailing the design and procurement of new aircraft carriers, destroyers, cruisers, submarines and a new type of “littoral combat” (coastal warfare) ship–an endeavor that could take decades to complete and consume hundreds of billions of dollars. Elements of this plan were unveiled by President Bush and Defense Secretary Gates in the budget proposal for Fiscal Year 2009, submitted in February. Among the big-ticket items highlighted in the shipbuilding budget are:

  • $4.2 billion for the lead ship of a new generation of nuclear-powered aircraft carriers;
  • $3.2 billion for a third Zumwalt class missile destroyer; these warships with advanced stealth capabilities will also serve as a “testbed” for a new class of missile cruisers, the CG(X);
  • $1.3 billion for the first two littoral combat ships;
  • $3.6 billion for another Virginia class submarine, the world’s most advanced undersea combat vessel in production.

Proposed shipbuilding programs will cost $16.9 billion in FY 2009, on top of $24.6 billion voted in FY 2007 and FY 2008.

The Navy’s new strategic outlook is reflected not only in the procurement of new vessels but also in the disposition of existing ones. Until recently most naval assets were concentrated in the North Atlantic, the Mediterranean and the Northwest Pacific in support of American forces assigned to NATO and the defense pacts with South Korea and Japan. These ties still figure prominently in strategic calculations, but ever-increasing weight is placed on the protection of vital trade links in the Persian Gulf, the Southwest Pacific and the Gulf of Guinea (close to Africa’s major oil producers). In 2003, for example, the head of the US European Command declared that the aircraft carrier battle groups under his command would be spending fewer months in the Mediterranean and “half their time going down the west coast of Africa.”

A similar outlook is guiding the realignment of overseas bases, which has been under way for the past several years. When the Bush Administration came into office, most major bases were in Western Europe, Japan or South Korea. Under the prodding of then-Defense Secretary Rumsfeld, however, the Pentagon began to relocate forces from the outer fringes of Eurasia to its central and southern regions–especially East-Central Europe, Central Asia and Southwest Asia–as well as to North and Central Africa. True, these areas are home to Al Qaeda and the Middle Eastern “rogue states”–but they also contain 80 percent or more of the world’s oil and natural gas, as well as reserves of uranium, copper, cobalt and other critical industrial materials. And, as noted, it is impossible to separate the one from the other in US strategic calculations.

A case in point is the US plan to maintain a basing infrastructure to support combat operations in the Caspian Sea basin and Central Asia. American ties with states in this area were established several years before 9/11, to protect the flow of Caspian Sea oil to the West. Believing that the Caspian basin could prove a valuable new source of oil and natural gas, President Clinton worked assiduously to open the doors to US involvement in the area’s energy production; aware also of the endemic ethnic antagonisms in the region, he sought to bolster the military capabilities of friendly local powers and to prepare for possible intervention by American forces. President Bush later built on these efforts, increasing the flow of US military aid and establishing bases in the Central Asian republics.

A corresponding mix of priorities governs the Pentagon’s plans to retain a constellation of “enduring” bases in Iraq. Many of these installations will no doubt be used to support continuing operations against insurgent forces, for intelligence activities or for the training of Iraqi army and police units. Even if all US combat troops are withdrawn in accordance with plans announced by senators Clinton and Obama, some of these bases will probably be retained for the training activities they say will continue. At least some bases, moreover, are specifically earmarked for the protection of Iraqi oil exports. In 2007, for example, the Navy revealed that it had established a command-and-control facility atop an offshore Iraqi oil terminal in the Persian Gulf to oversee the protection of vital terminals.

A Global Struggle

No other major power is capable of matching the United States when it comes to the global deployment of military power in the pursuit or protection of vital raw materials. Nevertheless, other powers are beginning to challenge this country in various ways. In particular, China and Russia are providing arms to oil and gas producers in the developing world and beginning to enhance their military capacity in key energy-producing areas.

China’s drive to gain access to foreign supplies is most evident in Africa, where Beijing has established ties with the oil-producing governments of Algeria, Angola, Chad, Equatorial Guinea, Nigeria and Sudan. China has also sought access to Africa’s abundant mineral supplies, pursuing copper in Zambia and Congo, chromium in Zimbabwe and a range of minerals in South Africa. In each case the Chinese have wooed suppliers through vigorous diplomacy, offers of development assistance and low-interest loans, high-visibility cultural projects–and, in many cases, arms. China is now a major supplier of basic combat gear to many of these countries and is especially known for its weapons sales to Sudan–arms that reportedly have been used by government forces in attacks on civilian communities in Darfur. Moreover, like the United States, China has supplemented its arms transfers with military-support agreements, leading to a steady buildup of Chinese instructors, advisers and technicians, who now compete with their US counterparts for the loyalty of African military officers.

Much the same process is under way in Central Asia, where China and Russia cooperate under the auspices of the Shanghai Cooperation Organization (SCO) to provide arms and technical assistance to the military forces of the Central Asian “stans”–again competing with the United States to win the loyalty of local military elites. In the 1990s Russia was too preoccupied with Chechnya to pay much attention to this area, and China was likewise consumed with other priorities, so Washington enjoyed a temporary advantage; in the past five years, however, Moscow and Beijing have made concerted efforts to gain influence in the region. The result has been a far more competitive geopolitical environment, with Russia and China, linked through the SCO, gaining ground in their drive to diminish US influence.

A clear expression of this drive was the military exercise the SCO conducted last summer, the first of its kind to feature participation by all member states. The maneuvers involved some 6,500 personnel from China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan and took place in Russia and China. Aside from its symbolic significance, the exercise was indicative of China’s and Russia’s efforts to enhance their capabilities, placing a heavy emphasis on long-range assault forces. For the first time, a contingent of Chinese airborne troops were deployed outside Chinese territory, a clear sign of Beijing’s growing assertiveness.

To ensure that the intended message of these exercises did not go unnoticed, the presidents of China and Russia used the occasion of an accompanying SCO summit in Kyrgyzstan to warn the United States (though not by name) against meddling in Central Asian affairs. In calling for a “multipolar” world, for example, Vladimir Putin declared that “any attempts to solve global and regional problems unilaterally are hopeless.” For his part, Hu Jintao noted, “The SCO nations have a clear understanding of the threats faced by the region and thus must ensure their security themselves.”

These and other efforts by Russia and China, combined with stepped-up US military aid to states in the region, are part of a larger, though often hidden, struggle to control the flow of oil and natural gas from the Caspian Sea basin to markets in Europe and Asia. And this struggle, in turn, is but part of a global struggle over energy.

The great risk is that this struggle will someday breach the boundaries of economic and diplomatic competition and enter the military realm. This will not be because any of the states involved make a deliberate decision to provoke a conflict with a competitor–the leaders of all these countries know that the price of violence is far too high to pay for any conceivable return. The problem, instead, is that all are engaging in behaviors that make the outbreak of inadvertent escalation ever more likely. These include, for example, the deployment of growing numbers of American, Russian and Chinese military instructors and advisers in areas of instability where there is every risk that these outsiders will someday be caught up in local conflicts on opposite sides.

This risk is made all the greater because intensified production of oil, natural gas, uranium and minerals is itself a source of instability, acting as a magnet for arms deliveries and outside intervention. The nations involved are largely poor, so whoever controls the resources controls the one sure source of abundant wealth. This is an invitation for the monopolization of power by greedy elites who use control over military and police to suppress rivals. The result, more often than not, is a wealthy strata of crony capitalists kept in power by brutal security forces and surrounded by disaffected and impoverished masses, often belonging to a different ethnic group–a recipe for unrest and insurgency. This is the situation today in the Niger Delta region of Nigeria, in Darfur and southern Sudan, in the uranium-producing areas of Niger, in Zimbabwe, in the Cabinda province of Angola (where most of that country’s oil lies) and in numerous other areas suffering from what’s been called the “resource curse.”

The danger, of course, is that the great powers will be sucked into these internal conflicts. This is not a far-fetched scenario; the United States, Russia and China are already providing arms and military-support services to factions in many of these disputes. The United States is arming government forces in Nigeria and Angola, China is aiding government forces in Sudan and Zimbabwe, and so on. An even more dangerous situation prevails in Georgia, where the United States is backing the pro-Western government of President Mikhail Saakashvili with arms and military support while Russia is backing the breakaway regions of Abkhazia and South Ossetia. Georgia plays an important strategic role for both countries because it harbors the Baku-Tbilisi-Ceyhan (BTC) pipeline, a US-backed conduit carrying Caspian Sea oil to markets in the West. There are US and Russian military advisers/instructors in both areas, in some cases within visual range of each other. It is not difficult, therefore, to conjure up scenarios in which a future blow-up between Georgian and separatist forces could lead, willy-nilly, to a clash between American and Russian soldiers, sparking a much greater crisis.

I estimate that it costs approximately $100 billion to $150 billion per year to enforce the Carter Doctrine, not including the war in Iraq. Extending that doctrine to the Caspian Sea basin and Africa will add billions. A new cold war with China, with an accompanying naval arms race, will require trillions in additional military expenditures over the next few decades. This is sheer lunacy: it will not guarantee access to more sources of energy, lower the cost of gasoline at home or discourage China from seeking new energy resources.

If, as is widely predicted, global oil reserves have begun to shrink by then, both of our countries could be locked in a dangerous struggle for dwindling supplies in chronically unstable areas of the world. The costs, in terms of rising military outlays and the inability to invest in more worthwhile social, economic and environmental endeavors, would be staggering.



Gordon, G. April 3, 2005. Recession, famine and war seen if demand outstrips supply. Experts fear day when oil runs low. Sacramento Bee.

Within a couple of hours last week, crude oil prices hit a record $56 a barrel, President Bush fretted publicly over world oil shortages and the Senate voted to open an Alaskan wildlife refuge to drilling.

The converging events drew attention to what administration officials call a temporary global energy crunch. But bigger worries also are bubbling to the surface – fears of a day of reckoning over world oil reserves.

Even as China and India are joining the grab for oil, most experts agree that world production will peak sometime in the next several decades – more likely in the next couple of years, a gaggle of outspoken academics say.

If rising petroleum demand meets falling supply before new energy sources are ready, government officials say, a world that runs on oil could face cataclysmic consequences ranging from recessions to famine and even war.

Peaking oil production “will result in dramatically higher oil prices, which will cause protracted economic hardship in the United States and the world,” a team of Energy Department consultants warned in a report last month. “The challenge of oil peaking deserves immediate, serious attention if risks are to be fully understood and mitigation begun on a timely basis.”

The most obvious step is to transform into a fuel-efficient fleet the 200 million cars, sport-utility vehicles and trucks that guzzle two-thirds of America’s 21 million-barrel-a-day oil consumption, consultant Robert Hirsch and colleagues wrote.

After the peak, said senior Energy Information Administration petroleum geologist David Morehouse, the rate of production drop-off from declining oil fields would likely be “pretty quick.”

“We don’t want the world oil peak to sneak up on us,” said John Wood, who heads a Dallas-based unit that projects oil supply and demand for the EIA.

Kenneth Deffeyes, a Princeton University geology professor, says it might be too late to plan. Deffeyes worked previously in Shell Oil’s research laboratory alongside M. King Hubbert, who gained fame when he accurately predicted in 1956 that oil production in the continental United States would peak between 1965 and 1970. Using a similar formula, Deffeyes predicts that the global peak will occur by next Thanksgiving.

If Deffeyes is right, Morehouse said, “our goose is cooked. If things get bad enough, and somebody gets desperate enough,” he said, an oil peak scenario could lead to war.

Amos Nur, a Stanford University geophysicist, all but predicts a war with China over oil. He notes that Americans consume a per-capita average of 25 barrels of oil each year, while the Chinese average 1.3 barrels and the people of India less than a barrel. If Chinese and Indian consumption reached one-quarter or a third of U.S. consumption, he writes, it would require 50 percent more oil worldwide and tensions could “slide into a military conflict.”

Bush told a news conference that new oil demand “from countries like China” is “outracing supply” and driving up prices.

Matthew Simmons, chairman of a Houston-based oil industry investment bank, contends in a forthcoming book that the Saudis damaged their oil fields by overproducing in the early 1970s and again after Iraq invaded Kuwait in 1990. That changed the subsurface pressure, creating huge water problems that will make it harder to recover oil, he said.



Yardley, J., et al. April 8, 2005. Chinese Navy Buildup Gives Pentagon New Worries. New York Times

At a time when the American military is consumed with operations in Iraq and Afghanistan, global terrorism and the threat of nuclear proliferation in North Korea and Iran, China is presenting a new and strategically different security concern to America, as well as to Japan and Taiwan, in the western Pacific, Pentagon and military officials say.

China, these officials say, has smartly analyzed the strengths and weaknesses of the American military and has focused its growing defense spending on weapons systems that could exploit the perceived American weaknesses in case the United States ever needs to respond to fighting in Taiwan.

A decade ago, American military planners dismissed the threat of a Chinese attack against Taiwan as a 100-mile infantry swim. The Pentagon now believes that China has purchased or built enough amphibious assault ships, submarines, fighter jets and short-range missiles to pose an immediate threat to Taiwan and to any American force that might come to Taiwan’s aid.

In the worst case in a Taiwan crisis, Pentagon officials say that any delay in American aircraft carriers reaching the island would mean that the United States would initially depend on fighter jets and bombers based on Guam and Okinawa, while Chinese forces could use their amphibious ships to go back and forth across the narrow Taiwan Strait.  Some American military analysts believe China could now defeat Taiwan before American forces could arrive at the scene, leaving a political decision about whether to attack, even though Taiwan would already be lost.

“They are building their force to deter and delay our ability to intervene in a Taiwan crisis,” said Eric McVadon, a former military attaché at the United States Embassy in Beijing. “What they have done is cleverly develop some capabilities that have the prospect of attacking our niche vulnerabilities.”

China’s rapid military modernization is the major reason President Bush has warned the European Union not to lift its arms embargo against Beijing. At the same time, some officials in Washington, particularly on Capitol Hill, would like Taiwan to buy more American arms to beef up its own defenses.

Japan, America’s closest ally in East Asia and China’s rival for regional dominance, is also watching China’s buildup and reorganizing its own military. The Japanese prime minister, Junichiro Koizumi, has echoed President Bush by calling on Europe to leave the arms embargo against China in place. A research center affiliated with Japan’s Defense Ministry has also criticized China’s increased military spending and cautioned that Beijing was rushing to prepare for possible conflict with Taiwan, an assertion China sharply denied. The growing friction between Japan and China, fueled by rising nationalism in both countries, is just one of the political developments adding to tensions in East Asia. In March, China passed a controversial new “antisecession” law authorizing a military attack if top leaders in Beijing believe Taiwan moves too far toward independence – a move that brought hundreds of thousands of people in Taiwan out to protest. China’s most recent military white paper also alarmed American policy makers because it mentioned the United States by name for the first time since 1998. It stated that the American presence in the region “complicated security factors.” China, meanwhile, accused the United States and Japan of meddling in a domestic Chinese matter when Washington and Tokyo recently issued a joint security statement that listed peace in Taiwan as a “common strategic objective.”

“The potential for a miscalculation or an incident here has actually increased, just based on the rhetoric over the past six months to a year,” one American intelligence analyst in Washington said. At a welcoming ceremony on March 28 for the command ship Blue Ridge of the American Seventh Fleet, here at the home base of China’s South Sea Fleet, the American commanding officer, Capt. J. Stephen Maynard and his Chinese counterpart, Senior Capt. Wen Rulang, sidestepped questions about the antisecession law and military tensions. Asked about China’s military buildup and how America should view it, Captain Wen praised the United States Navy as the most modern in the world. “As for China,” Captain Wen said, “our desire is to upgrade China’s self-defense capabilities.”

In China’s view, however, self-defense involves Taiwan, which it regards as a breakaway province and which the United States, by treaty, has suggested it would help defend. In 1996, when China fired warning-shot missiles across the Taiwan Strait before the Taiwanese elections, President Clinton responded by sending a carrier battle group to a position near Taiwan. Then, China could do nothing about it, Now, analysts say, it can.

In fact, American carriers responding to a crisis would now initially have to operate at least 500 miles from Taiwan, which would reduce the number of fighter sorties they could launch. This is because China now has a modern fleet of submarines, including new Russian-made nuclear subs that can fire missiles from a submerged position. America would first need to subdue these submarines.

China launched 13 attack submarines between 2002 and 2004, a period when it also built 23 ships that can ferry tanks, armored vehicles and troops across the 100-mile strait. Tomohide Murai, an expert on the Chinese military at the National Defense Academy in Tokyo, said that China’s buildup is intended to focus on an American response, but he is skeptical that China already has the naval and air superiority over Taiwan to dominate the strait.

But Mr. Murai said China’s military would continue to expand and modernize for years to come because of the country’s booming economy, while Japan is restricted by budget constraints and its World War II era Constitution. Chinese subs and Japanese vessels already have played politically explosive cat-and-mouse games around a string of islands claimed by both countries.

China, meanwhile, often expresses concern about rising militarism in Japan and notes that Japan spends more on its military budget – a debatable point since Western experts say China vastly understates its own military spending. China also worries that the United States Navy could be used to try to cut off oil supplies if a conflict ever arises over Taiwan.

Robert Karniol, an Asia specialist at Jane’s Defense Weekly, noted that Japan is also modernizing its military in a significant way, largely as its competes with China for regional dominance in Asia. He said Japan is restructuring the independent branches of its military under a unified command modeled after the American Joint Chiefs of Staff.

And just as Japan is looking at China, he said, so is China looking past Taiwan at Japan. China’s naval upgrades will not only strengthen its hand against Taiwan but also expand its influence around Asia. “If the Taiwan issue was resolved next month, China’s military modernization would not end,” Mr. Karniol said. “The Chinese understand that if their ambition is to become the dominant power in Asia – well, who can disrupt that? The United States and Japan.”



Wiggin, A. October 14, 2013. The Coming War Between the U.S. and (Insert Country Here).

War between the US and China — an unpleasant thought, for sure…unless you happen to be a defense contractor. The threat of war could be sufficient to power the defense industry’s profit growth for many years.

We would not be tackling this grim topic — nor engaging in the financial market version of grave-dancing — if the suits and uniforms in Washington understood that China is merely implementing its own version of the Monroe Doctrine.

China’s Monroe Doctrine aims to keep the United States from getting closer than it is already. If you don’t remember the Monroe Doctrine from history class, it goes like this: President James Monroe in 1823 put the European powers on notice that if they meddled anywhere in Latin America, the United States would step in to put a stop to it. It was a big “keep out of our backyard” sign.

OK, it was more subtle than that; an aging Thomas Jefferson congratulated Monroe on achieving a “cordial friendship with England.” The doctrine was, indeed, a tacit agreement between the United States and Great Britain. The US took a free ride on the Royal Navy. Its ships patrolled the waters surrounding Latin America, keeping the continental powers far from America’s doorstep.

The original Monroe Doctrine aimed to keep Europeans away. China’s Monroe Doctrine aims to keep the United States from getting closer than it is already.

“The Pacific basin has long been home to the United States’ largest trading partners, and Washington deploys more than 320,000 military personnel in the region, including 60% of its navy,” writes Conn Hallinan of the think tank Foreign Policy in Focus. “The American flag flies over bases in Japan, the Philippines, South Korea, Malaysia, Thailand, the Marshall Islands, Guam and Wake.” The US Seventh Fleet routinely sails near the Chinese coast, to the edge of the “12-mile limit” where international waters end.

No wonder Chinese leaders sense — rightly or wrongly — that they’re being encircled.

“China has made it clear that it will not tolerate the threat to its security represented by a foreign military presence at its gates when these foreign forces are engaged in activities designed to probe Chinese defenses and choreograph a way to penetrate them,” writes our acquaintance Chas Freeman, the veteran US diplomat who was President Nixon’s interpreter on his groundbreaking visit to “Red” China in 1972.

“There’s no reason to assume that China is any less serious about this than we would be if faced with similarly provocative naval and air operations along our frontiers.

Thus are the Chinese asserting their dominion over the disputed Senkakus Islands. “China sees the islands as part of its defensive parameter,” Hallinan explains, “an understandable point of view considering the country’s history. China has been the victim of invasion and exploitation by colonial powers, including Japan, dating back to the first Opium War in 1839.

China also insists it rightly controls a host of islands in the South China Sea — rich fishing grounds and a potential source of oil and gas. These islands, such as the Spratlys and Paracels, are also claimed by… oh, let’s run down the list: Vietnam, Malaysia, Taiwan, Brunei and the Philippines. Maybe the Kardashians too, for all we know.

In addition, China has

  • commissioned its first aircraft carrier
  • Developed a whiz-bang stealth fighter jet called the J-20
  • Goosed its defense spending by double-digit percentages every year for the past decade (although Beijing’s defense budget it still one-fifth the size of Washington’s).

A sensible US response would go something like this: “Hey, China’s implementing its own Monroe Doctrine. They want to be in charge in their own backyard. Meanwhile, we’re $16.4 trillion in debt. Heck, we owe $1.1 trillion of that to China. Why are we going deeper in debt to keep 60% of the Navy stationed in the Pacific basin? Maybe we should reconsider this whole ‘American lake’ thing.

“…America’s strategic move east is aimed in practical terms at pinning down and containing China and counterbalancing China’s development.”

Instead, the US government is doubling down.

“As the war in Iraq winds down and America begins to withdraw its forces from Afghanistan, the United States stands at a pivot point,” then Secretary of State Hillary Clinton wrote in Foreign Policy’s November 2011 issue. “One of the most important tasks of American statecraft over the next decade will therefore be to lock in a substantially increased investment — diplomatic, economic, strategic and otherwise — in the Asia-Pacific region.

In DC wonk circles, this statement of intentions has come to be known as “the pivot”.

The same month Clinton published that article — with the presumptuous title “America’s Pacific Century” — the Obama administration stationed 2,500 US troops on Australia’s northern coast for the first time. More encirclement.

“The U.S. sees a growing threat to its hegemony from China,” said a commentary from the official Xinhua News Agency. “Therefore, America’s strategic move east is aimed in practical terms at pinning down and containing China and counterbalancing China’s development.

In Empire of Debt, we postulated the empire has a logic all its own. That logic will bring about events beyond your control. It is far better to understand those events and plan your life and your portfolio accordingly… than to allow them to blindside you and your family.


May 2013. ASPO-USA.

[My comment: This piece from the Association for the Study of Peak Oil, makes me wonder if China will be unable to wage war because they’ve “attacked themselves” with so much pollution and toxins that they will internally collapse]

China’s major energy issue right now is what to do about the toxic smog which comes from burning in excess of 4 billion tons of coal and 10 million barrels of oil, with minimal pollution controls, each year. Last winter air quality in Beijing rose to nearly 1,000 ppm as compared to 50 ppm or below which is considered good. Even in April the pollution index was flirting with 200 ppm which is flat out unhealthy. China’s economic miracle over the past 35 years has been based on rapidly increasing consumption of large quantities of coal and oil. To maintain economic growth without an annual increase of 10 percent more coal and 5 percent more oil consumption each will be difficult. Last week it was revealed that China’s top power producer recently started construction on 16 large energy projects without approval from Beijing. China’s leaders, including the new President, know they have a major problem. If they continue to increase their pollution their citizens will become ill and die at ever increasing rates and anyone with an option will choose to live somewhere where they don’t have to breathe China’s air. In short the China’s economic miracle seems to be on course to strangle itself. Even though Beijing has numerous plans to deal with air pollution while continuing to grow economically, the simple fact is that Chinese Communist Party’s no-elections legitimacy is based largely on the argument that it can deliver 7-10 percent economic growth each year. At all levels China’s leaders know that they will be judged on how well they deliver economic growth to the exclusion of all other concerns. A good guess would be that air, water, and soil pollution in China is going to get a lot worse before actions that will seriously slow economic growth are taken.



Glain, S. Dececember 20, 2004. Yet Another Great Game. Beijing’s aggressive petrodiplomacy in Africa has put it on a collision course with Washington. Newsweek International.

If a report circulating among senior members of America’s defense establishment is any guide, the Sino-American war for future petroleum supplies has already begun.

According to the 80-page study, Beijing has identified the United States as “a paramount threat to its energy security and economic stability” and is busily establishing a “string of pearls” — forward deployments of surveillance stations, naval facilities and airstrips–to safeguard the petroleum-transport route from the Persian Gulf to the South China Sea. Once it controls Asia’s vital sea lanes, the report goes on, China may then move on some of the world’s key oil reserves–perhaps by replacing the United States as Saudi Arabia’s patron and protector, or by seizing a strategic oil pipeline in the Russian Far East. The Chinese, the report says, “equate energy security with physical possession or control of energy supplies” and “have a tendency to see securing their energy security as a zero-sum game.

Nowhere is that more clear than in sub-Saharan Africa, where Chinese oil and natural-gas companies have over the past several years inked deals with regimes such as Sudan’s. o  “It’s very effective and farsighted diplomacy,” says John Tkacik, a China expert at the Heritage Foundation in Washington. “They look to where their opponent is not and discreetly place their pieces in unclaimed areas of the map, which in this case is Africa.”

In staking out Africa, however, Beijing is setting itself up for a seismic rivalry with the United States, which has identified the region as key to its efforts to diversify its oil sources away from the unstable Middle East. In the aftermath of 9/11, a U.S.-Israeli study group recommended that Washington prevent “rivals such as China” from horning in on Africa’s natural resources, while the Pentagon study says, “Chinese companies are investing in East, West, and North Africa and [the Chinese Army] has sent troops to protect its energy investments in Sudan” an assertion long rumored by human-rights groups and other Africa experts but never confirmed. In turn, American oil companies have raised their profile in Africa amid rumors that the United States is planning to build a military base in the oil-rich Gulf of Guinea.

“In Africa,” says Jamal Qureshi, an oil-markets expert at PFC Energy in Washington, “you’ve got new players, with China as a possible counterweight to the U.S. There could be elements of confrontation.”

Before 9/11, U.S. oil companies generally kept their distance from such countries as Sudan, the Democratic Republic of the Congo and Libya, due to political risk, concerns over human-rights violations, sanctions or all three. True, U.S. firms have done business with autocracies like Nigeria, despite the Bush administration’s public snubbing of President Olusegun Obasanjo. But until now, such deals have been cut on a piecemeal basis–unlike those recently struck by state-owned China National Petroleum Co. (CNPC) as part of an official policy of nurturing diplomatic ties in exchange for oil concessions.

During the cold war, China reached out to Africa in political solidarity with its nonaligned nations, and to block them from having relations with Taiwan. Indeed, Africa accounts for a dwindling share of the 27 or so countries that still recognize the island state over China. Now China is supporting developing countries as part of a transparent bid for economic gain, and its petrodiplomacy extends worldwide.

In October Beijing agreed to buy up to $100 billion in Iranian petroleum and gas and to help develop a major Iranian oilfield near the Iraqi border–evidence of an evolving Sino-Iranian alliance that is featured in the Pentagon report. Earlier this year Beijing signed a 25-year deal to develop natural-gas reserves in Iran–despite U.S.-led sanctions–and it is increasingly active in the Gulf states. Iranian Oil Minister Bijan Zanganeh recently said that the strengthening Tehran-Beijing link was “neutralizing” U.S.-imposed sanctions. “Japan is our No. 1 energy importer for historical reasons… but we would like to give preference to exports to China,” said Zanganeh.

Africa, though, remains the new oil frontier for both China and the United States. Since Chinese President Hu Jintao’s February goodwill mission to oil-producing states, Beijing has signed agreements with Algeria, Gabon and Nigeria, and is discussing similar deals with Niger, Chad, the Central African Republic, Congo and Angola. In return for access to raw materials in Africa, China is financing and building roads, dams, airports and energy grids, signing free-trade agreements and even promoting Africa at home as a tourist destination. Within the next half decade, according to energy analysts, Africa is expected to account for nearly a third of the oil China purchases overseas, up from 25 percent today.

Once oil-independent, China has over the last decade become increasingly reliant on imports, which now account for 60 percent of its oil consumption, up from 6.4 percent in 1993. Within the next five years, according to Beijing, China will be importing 50 million tons of oil and 50 billion cubic meters of gas annually. Even for a country more concerned with human rights, those kinds of numbers would remove many inhibitions.

In 2001 Beijing identified Sudan as the springboard for its campaign to triple its overseas oil production within four years, despite U.N. sanctions against the Sudanese regime. CNPC now dominates a consortium of Asian companies drilling Sudan’s fields under license by Khartoum. Through a subsidiary, CNPC took a lead role in building a 1,500-kilometer-long pipeline from the main oilfields to the Red Sea and built a refinery near Khartoum with a 2.5 million-ton processing capacity. Safely distanced from the chaos in southern Darfur, these facilities have helped swell Sudan’s oil output to 345,000 barrels per day, up from 270,000 in 2003, and provide an estimated 8 percent of China’s total oil consumption.

The sales have also helped finance Khartoum’s arms purchases from Beijing; the government is thought to be nurturing a Sudanese arms industry with Chinese technology. “Khartoum is emboldened and encouraged by China’s assistance,” says Jemera Rone, a Sudan specialist for Human Rights Watch. “It is using petrodollars to manufacture arms, many of them knockoff versions of Chinese weapons.”

The Sino-Sudanese ties are complicating U.N. efforts to isolate Khartoum for its alleged complicity in massacres and rapes in southern Darfur. Beijing has blocked or diluted several U.S.-sponsored draft resolutions condemning Khartoum, and has signaled it will veto further sanctions. Washington, which needs Chinese support in Security Council matters regarding Iraq, is unlikely to push Beijing on Sudan.

While the United States appears to have conceded Sudan to China, it is active elsewhere in Africa. U.S. President George W. Bush has made a point of meeting with leaders of such countries as Chad and Congo, which in the past barely registered on Washington’s foreign-policy map. The African Oil Policy Initiative Group, a confederation of oil executives, members of Congress, White House officials and consultants, has recommended that the United States work openly with Nigeria to secure Africa’s oil-rich areas and enhance the prospects for foreign investment. It has also urged the Pentagon to build a naval base at the oil-rich islands of So Tome and Principe, and to permanently deploy a large force of U.S. troops there. Some analysts even suspect that the deliberate way in which the United States lifted sanctions on Libya earlier this year was a move to check China’s growing influence in Africa. If China sees energy security as a zero-sum game, so, it appears, does its American rival.



Scully, M.G. September 29, 2004. The Natural World. he End of Easy Oil. The Chronicle of Higher Education.

You don’t have to be a conspiracy theorist or a Michael Moore enthusiast to think that Donald Rumsfeld and his colleagues in the Bush administration are being disingenuous when they declare that the war in Iraq is not about oil.

In fact, according to the authors of two new books, most foreign- policy and many domestic decisions made by the current administration — and by its predecessors going back to that of Franklin D. Roosevelt — have been shaped, overtly or covertly, by a desire to assure a secure supply of cheap petroleum for America’s economic and military needs. And, the authors of the books conclude, maintaining that “energy security” will become more difficult, more dangerous, and more likely to produce violence in the years ahead.

Our petroleum habit will have growing influence on both geopolitical and economic issues, according to Paul Roberts in The End of Oil: On the Edge of a Perilous New World, published by Houghton Mifflin, and Michael T. Klare, in Blood and Oil: The Dangers and Consequences of America’s Growing Petroleum Dependency, published by Metropolitan Books.

As Roberts, a writer who focuses on economic and environmental issues, says: “Although we will not run out of oil tomorrow, we are nearing the end of what might be called easy oil. Even in the best of circumstances, the oil that remains will be more costly to find and produce and less dependable than the oil we are using today.”

Klare, a professor of peace and world-security studies at Hampshire College and defense correspondent for The Nation, suggests that the United States has never resolved the inherent tension between our need for assured supplies of petroleum to keep the economy cooking and our growing reliance on overseas sources of that oil, especially from areas, like the Persian Gulf, that have a long and continuing history of instability.

Rather than develop a sustained strategy for reducing our reliance on such sources, he says, American leaders “have chosen to securitize oil — that is, to cast its continued availability as a matter of ‘national security,’ and thus something that can be safeguarded through the use of military force.”

Klare argues that our demands for energy and those of other major powers will require the petroleum-rich Gulf states to “boost their combined oil output by 85 percent between now and 2020. … Left to themselves, the Gulf countries are unlikely to succeed; it will take continued American intervention and the sacrifice of more and more American blood to come even close. The Bush administration has chosen to preserve America’s existing energy posture by tying its fortunes to Persian Gulf oil.”

Even more worrisome, Klare says, is the intense and growing competition among countries such as the United States, China, India, and those in the European Community over petroleum supplies. “This competition is already aggravating tensions in several areas, including the Persian Gulf and Caspian Sea basins,” he writes. “And although the great powers will no doubt seek to avoid clashing directly, their deepening entanglement in local disputes is bound to fan the flames of regional conflicts and increase the potential for major conflagrations.”

Roberts notes, for instance, that the development of renewable alternatives to petroleum, such as biofuels, solar power, clean coal, and hydrogen, has not been as rapid or as simple as their promoters had hoped. And even if those alternatives had been developed more fully, he adds, “many of the new fuels and technologies lack high power density and simply will not be able to deliver the same energy punch as the hydrocarbons they replace.”

What that means, he says, is that the new technologies must be accompanied by sharp increases in energy efficiency. He is not sanguine about achieving such gains. “In spite of high energy prices and rising concerns about energy security, consumers and policymakers alike have all but stopped talking about the ways we use energy, how much we waste, and what might be changed.”

Klare writes that President Bush’s choice of Vice President Dick Cheney to conduct a major review of energy policy preordained an anti-efficiency outcome. When the National Energy Policy Development Group began its work, in February 2001, he writes, the United States “stood at a crossroads.” It could “continue consuming more and more petroleum and sinking deeper and deeper into its dependence on imports,” or “it could choose an alternative route, enforcing strict energy conservation, encouraging the use of fuel-efficient vehicles, and promoting the development of renewable energy sources.”

While the group’s report — National Energy Policy — gave lip service to the concepts of conservation and energy self-sufficiency, he says, a close reading “reveals something radically different.” The policy “never envisions any reduction in our use of petroleum,” Klare writes. “Instead it proposes steps that would increase consumption while making token efforts to slow, but not halt, our dependence on foreign providers.”

Given the Bush administration’s close ties to the oil-and-gas industry, such an outcome may have been inevitable, Klare says. But even an administration without such links would find it politically risky to move to a radically different energy policy. Like his predecessors, he notes, President Bush “understood that shifting to other sources of energy would entail a change in lifestyle that the American public might not easily accept. … And so he chose the path of least resistance.”

Roberts, who focuses on the question of total energy supply more than on the geopolitical consequences of relying on foreign oil, finds little cause for optimism in our current strategy. The longer we put off the transition to a postpetroleum era, the harder that transition will be, he says, and the more unrest and violence we will encounter.

As oil supplies dwindle, “energy security, always a critical mission for any nation, will steadily acquire greater urgency and priority,” he writes. “As it does, international tensions and the risk of conflict will rise, and these growing threats will make it increasingly difficult for governments to focus on longer-term challenges, such as climate or alternative fuels — challenges that are in themselves critical to energy security, yet which, paradoxically, will be seen as distractions from the campaign to keep energy flowing. … The more obvious it becomes that an oil-dominated energy economy is inherently insecure, the harder it becomes to move on to something else.”

In the meantime, Klare argues, the Bush administration’s war on terrorism, the impulse of its neoconservative supporters to spread “democracy” to the Middle East, and our desperate need for stable supplies of oil have merged into a single strategy — one that will commit us to maintaining military forces in many parts of the world and to using those forces to protect oil fields and supply routes.

“It is getting hard,” he writes, “to distinguish U.S. military operations designed to fight terrorism from those designed to protect energy assets.”

Many of the authors’ arguments and conclusions have been advanced before, and both men fall into the category of “energy pessimists,” who do not believe that we will be able to maintain our current levels of oil consumption for as long as agencies like the U.S. Geological Survey and Europe’s International Energy Agency predict. Such agencies, Roberts says, “are under intense political pressure to err on the side of wild optimism.”

But regardless of whether Klare and Roberts err on the side of pessimism, their message is unsettling: We are headed into uncharted territory, led by a government that seems prepared to use force, when necessary, to preserve the current system. We face growing competition from other countries for a finite resource at a time of growing animosity toward the United States.

It is a message that is moving beyond academic and environmental circles. In a recent “midyear outlook” report, Wachovia Securities, a large investment company, examines the impact of “the end of cheap oil” for investors. “We neither expect, nor wish to dwell on, worst- case scenarios — but the market knows it is foolhardy to ignore the possibilities,” the report says. It warns that with record-high oil prices and many domestic refineries operating at or near capacity, “a disruption somewhere in the production chain could have a greater than normal effect on energy markets.”



Roberts, P. June 28, 2004. The Undeclared Oil War. Washington Post.

While some debate whether the war in Iraq was or was not “about oil,” another war, this one involving little but oil, has broken out between two of the world’s most powerful nations.

For months China and Japan have been locked in a diplomatic battle over access to the big oil fields in Siberia. Japan, which depends entirely on imported oil, is desperately lobbying Moscow for a 2,300-mile pipeline from Siberia to coastal Japan. But fast-growing China, now the world’s second-largest oil user, after the United States, sees Russian oil as vital for its own “energy security” and is pushing for a 1,400-mile pipeline south to Daqing.

The petro-rivalry has become so intense that Japan has offered to finance the $5 billion pipeline, invest $7 billion in development of Siberian oil fields and throw in an additional $2 billion for Russian “social projects” — this despite the certainty that if Japan does win Russia’s oil, relations between Tokyo and Beijing may sink to their lowest, potentially most dangerous, levels since World War II.

Asia’s undeclared oil war is but the latest reminder that in a global economy dependent largely on a single fuel — oil — “energy security” means far more than hardening refineries and pipelines against terrorist attack. At its most basic level, energy security is the ability to keep the global machine humming — that is, to produce enough fuels and electricity at affordable prices that every nation can keep its economy running, its people fed and its borders defended. A failure of energy security means that the momentum of industrialization and modernity grinds to a halt.

In the “emerging” economies, such as Brazil, India and especially China, energy demand is rising so fast it may double by 2020. And this only hints at the energy crisis facing the developing world, where nearly 2 billion people — a third of the world’s population — have almost no access to electricity or liquid fuels and are thus condemned to a medieval existence that breeds despair, resentment and, ultimately, conflict.

In other words, we are on the cusp of a new kind of war — between those who have enough energy and those who do not but are increasingly willing to go out and get it. While nations have always competed for oil, it seems more and more likely that the race for a piece of the last big reserves of oil and natural gas will be the dominant geopolitical theme of the 21st century.

Already we can see the outlines. China and Japan are scrapping over Siberia. In the Caspian Sea region, European, Russian, Chinese and American governments and oil companies are battling for a stake in the big oil fields of Kazakhstan and Azerbaijan. In Africa, the United States is building a network of military bases and diplomatic missions whose main goal is to protect American access to oilfields in volatile places such as Nigeria, Cameroon, Chad and tiny Sao Tome — and, as important, to deny that access to China and other thirsty superpowers.

The diplomatic tussles only hint at what we’ll see in the Middle East, where most of the world’s remaining oil lies. For all the talk of big new oil discoveries in Russia and Africa — and of how this gush of crude will “free” America and other big importers from the machinations of OPEC — the geological facts speak otherwise. Even with the new Russian and African oil, worldwide oil production outside the Middle East is barely keeping pace with demand.

In the run-up to the Iraq war, Russia and France clashed noisily with the United States over whose companies would have access to the oil in post-Saddam Hussein Iraq. Less well known is the way China has sought to build up its own oil alliances in the Middle East — often over Washington’s objections. In 2000 Chinese oil officials visited Iran, a country U.S. companies are forbidden to deal with; China also has a major interest in Iraqi oil.

But China’s most controversial oil overture has been made to a country America once regarded as its most trusted oil ally: Saudi Arabia. In recent years, Beijing has been lobbying Riyadh for access to Saudi reserves, the largest in the world. In return, the Chinese have offered the Saudis a foothold in what will be the world’s biggest energy market — and, as a bonus, have thrown in offers of sophisticated Chinese weaponry, including ballistic missiles and other hardware, that the United States and Europe have refused to sell to the Saudis.

Granted, the United States, with its vast economic and military power, would probably win any direct “hot” war for oil. The far more worrisome scenario is that an escalating rivalry among other big consumers will spark new conflicts — conflicts that might require U.S. intervention and could easily destabilize the world economy upon which American power ultimately rests.

As demand for oil becomes sharper, as global oil production continues to lag (and as producers such as Saudi Arabia and Nigeria grow more unstable) the struggle to maintain access to adequate energy supplies, always a critical mission for any nation, will become even more challenging and uncertain and take up even more resources and political attention.

This escalation will not only drive up the risk of conflict but will make it harder for governments to focus on long-term energy challenges, such as avoiding climate change, developing alternative fuels and alleviating Third World energy poverty — challenges that are themselves critical to long-term energy security but which, ironically, will be seen as distracting from the current campaign to keep the oil flowing.

Paul Roberts is the author of “The End of Oil: On the Edge of a Perilous New World.”

Hale, D. April 5, 2004. Will China need a blue water navy to protect commodity imports?

China’s immense need for raw materials will have many economic and political consequences.

First, China will have to develop a foreign policy and military strategy to protect its access to raw materials. As its trade ties expand with commodity exporting countries in Latin America, Africa, and southeast Asia, China will want to insure that they are reliable suppliers of critical raw materials. The sheer growth of trade should help to promote good political relations. The interesting question is whether China will perceive the need to have a larger Navy to protect shipments of oil from the Middle East, iron ore from Latin America, and liquefied natural gas from Australia.

In the late 19th century and early 20th century, commodities played an important role shaping British foreign policy. Britain nearly took the side of the confederacy during the American Civil War because of its large cotton imports from the south. Britain went to war with the Boers in South Africa in order to control the country’s large gold deposits. After oil replaced coal as the fuel of the Royal Navy, Britain significantly expanded her political role in the Middle East. She acquired protectorates such as Iraq and Kuwait from the Ottoman Empire. She helped to overthrow regimes in Iran which threatened her control of oil reserves. She also defended Malaya from a communist insurgency during the 1950s because of concern about the colony’s production of tin and rubber as well as the fact that Malaya was a major owner of pounds in the offshore Sterling area.

Commodities also have influenced American foreign policy. The U.S. maintained good relations with South Africa during the apartheid era in part because of the country’s large natural resource endowment. The U.S. went to war over Kuwait because of concern about Iraq controlling too large a share of the world’s oil reserves. The U.S. invaded Iraq during 2003 in part because of doubts about the reliability of Saudi Arabia as an ally and oil supplier. The U.S. is now moving to strengthen its relations with west Africa because it could be importing 25% of its oil from that region by 2005. Both the American Air Force and Navy have greatly increased their activity in the region.

Commodities have influenced Japanese foreign policy as well. During the 1970s, Japan adopted a pro-Arab foreign policy because of concern about oil supplies. In recent years, Japan has attempted to maintain a good relationship with Iran in order to obtain access to new oil deposits. Japan has also had a close relationship with Australia because of that country’s role as a primary supplier of iron ore and other raw materials to Japanese industry.

It has been over 500 years since China has deployed naval vessels far from the country’s territorial waters. But if China becomes dependent upon raw materials from regions as diverse as the Middle East, central Africa, and Latin America, she will naturally want to project power and influence in those regions.

China has already deployed 4,000 troops in the Sudan to protect its investment in an oil pipeline which it developed there with Petronas of Malaysia. The Sudan has been in a civil war for many years because of conflicts between the Moslem North and the black Christian South. China is concerned that the conflict could disrupt the pipeline so it has taken direct action to insure the project’s security. There has been little international attention focused on China’s role in the Sudan but is could set an important precedent for the future. As China’s dependence upon foreign commodities expands, it could decide to offer military support to governments in other countries suffering from civil wars or military rebellions. African countries also like doing business with Beijing because the Chinese government does not criticize their human rights policies. China’s relationship with Liberia demonstrated the flexibility of its political relationships with Africa. During recent years it has been a large buyer of Liberian timber despite the fact that Liberia had a civil war and authoritarian political regime which recognized Taiwan.

China may attempt to enhance her political relationship with the commodity producing countries by promoting bilateral free trade agreements. China, for example, is now holding talks with Australia about a potential FTA. The Chinese government recently appointed a very senior diplomat, Madam Fuying, as the new ambassador to Canberra in order to promote a more strategic relationship with the country. China is attracted to Australia because of the country’s large reserves of natural gas, coal, iron ore, and other raw materials. At a recent Africa-China summit conference in Addis Abba, China pledged to boost its two way trade with Africa to $30 billion by 2005 from $12.4 billion during 2002. It also has begun talks with South Africa on the creation of a new free trade agreement with that country. China intends to broaden its imports from oil to a variety of other commodities as well as to promote more investment.

As a result of China’s need for oil the government recently announced it was starting negotiations with the six nation Gulf Cooperation Council about a possible free trade agreement. The GCC – Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – has become China’s eighth largest trading partner. The agreement would be designed to promote both trade and investment between China and the Gulf countries. It would also be the second regional trade agreement after the one already under discussion with Asean.

China’s most important new investment in the middle east is a commitment by Sinopec to develop Iran’s Yadavaran oil field in exchange for agreeing to buy 10 million tonnes of Iranian liquefied natural gas annually for 25 years. This deal follows a contract signed by Zhuhai Zhenrong, one of China’s four state owned oil traders, to purchase 110 million tonnes of liquefied natural gas over 25 years starting in 2008. The most recent deal is worth a potential $70 billion and will cause Iran to be one of China’s major energy suppliers. Such large energy contracts will probably cause China to take Iran’s side in many diplomatic disputes with the U.S. and could even encourage China to supply arms to Iran if she is unable to obtain them from Europe.

Brazil is very excited about the potential for developing a “strategic partnership” with China. Brazil views a close relationship with Chinas as a pillar of its foreign policy because it wants to promote a network of alliances with other developing countries to challenge American hegemony. The Brazilians want to promote a multi-polar global power structure and believe China can play a major role in such a system. China actually regards itself as an emerging super-power, not just a developing country, but it will accommodate Brazil’s ambitions because it plans to massively expand its trade with Brazil. Chinese firms are planning a $2 billion investment in Brazil’s aluminum industry and a $1.5 billion investment in the steel sector.

China has already moved from being Brazil’s 15th trading partner in 1999 to being number two last year because of large increases in imports of soybeans and iron ore. Brazil hopes to boost its China exports to $10 billion by 2005 because of demand for many commodities, including dairy products, cotton, tropical fruit, fish and coffee. Brazil also has the potential to greatly increase its output of soybeans. In 2003, China accounted for one third of global trade in soy products and 20% of soy oil. As a result of China, Latin America now sends a rapidly growing share of its exports to east Asia, including 13% of pulp sales, 13% of steel, 43% of iron ore, and 26% of copper. Chile therefore plans to launch talks with China on a free trade agreement as well.

In a visit to Latin America during November, President Hu Jintao announced several major initiatives to strengthen economic relations with Brazil and Argentina. He announced that China would invest $8.5 billion in Brazilian infrastructure (railways, ports, highways) and $19 billion in Argentine infrastructure and energy development. He also agreed to import more meat and fruit from both countries. He declared both countries to be official destinations for Chinese tourists as well. China now sends out twenty million tourists every year, so this status is potentially valuable in competing for Chinese business. Hu Jintao also visited Cuba and the state owned company, Mini Metals, announced plans to invest in a Cuban ferro nickel project. China has plans to make other investments in Latin America’s energy sector as well. It has made a $100 million investment in Ecuador and plans to announce other major projects in the future. China is studying proposals to invest in the Venezuelan oil industry and will probably complete them when President Chavez visits Beijing in early 2005.

China’s need for petroleum could also transform its relationship with Russia. Trade between Russian and China is booming. It is likely to reach $22 billion this year or a level four times higher than five years ago. The countries are also planning infrastructure investments which could further enhance trade. In February, China announced that it would embark upon a 15 year project to build a railroad that would run 870 miles from eastern Russia to Dalian, a seaport in Manchuria. China is anxious to develop corporate relationships with Russian energy companies to obtain petroleum. The Chinese also attempted to purchase a medium sized Russian oil company, Slavneft, during 2002 but the deal was blocked by the Russian government. The delegation from the Chinese National Petroleum Company was arrested when they arrived in Russia. One western oil company conducted an opinion survey of Russian attitudes towards foreign investment and found far more acceptance of Japanese than Chinese investment.

China’s ambitions in Russia are complicated by the fact that Russia is highly insecure about its eastern frontier. The Russians fear that China could someday threaten their far eastern territory because much of it was Chinese before the conquests of the 19th century. There is also a huge imbalance of population. The Russian provinces in the Far East have lost 2 million people during the past decade while it is estimated that 3 million Chinese have crossed the border into Russia. There are also 127 million people in the three adjoining Chinese provinces. At present, 66% or Russia’s oil production and 91% of its gas production comes from fields in western Siberia. But oil analysts estimate that eastern Siberia and the Russian Far East could have 110 billion barrels of oil.

During 2003, China and Japan competed for the right to develop an oil pipeline in Russia for their respective markets. The Chinese formed an alliance with Yukos while the Japanese focused on the government pipeline monopoly, Transneft. The Yukos Company agreed to sell China 300,000 barrels per day starting in 2006, or an amount triple the level of China’s oil imports from Russia in 2003 and six times higher than in 2002. When the Chinese chose Yukos as a partner, it was regarded as Russia’s most successful and transparent oil company. But it was a mistake because Mr. Putin had the CEO of Yukos arrested last October because of his decision to meddle in politics and develop a pro oil industry coalition in the Duma. The Russian government has subsequently announced that it will support the construction of an oil pipeline following the proposed Japanese route. The new pipeline will stretch over 4000 kilometers, coming close to the border of the autonomous region of inner Mongolia. China hopes to add an auxiliary line to its leading oil center in Daqing but it is not yet clear if Russia will approve the project. Russia will be able to satisfy the new demand for oil only by developing oil deposits in eastern Siberia closer to the Chinese border than its current large fields. Although China perceives that Russia stole land from it during the 19th century, it has not been actively demanding the return of lost territory. The great risk to Russia’s territorial security could ultimately prove to be American and European trade policy. China currently plans to pay for its commodity imports by exporting a growing volume of manufactured goods. If the U.S. and Europe attempt to curb China’s exports, she will have no way to pay for her rapidly growing imports of oil and other raw materials. In such a scenario, China could decide that the most attractive way of securing adequate energy supplies would be to reclaim lost territory in the Russian far east with large oil reserves. Russia could then be the long term casualty of protectionist trade policies in North America and Europe.

While Russia has been ambiguous about its relationship with China, Kazakhstan has given China a great welcome. The Chinese National Petroleum Company has invested $700 million in oil development. China is about to spend $3 billion on a new pipeline from Atasu to China’s Xinjoang Uygue autonomous region. The three section trunklune of over 3000 kilometers will ultimately be able to deliver 20 million tonnes of Caspian Sea crude to western China. As Kazakhstan currently exports 70% of its oil via pipelines passing through Russia, it is anxious to develop new markets.

China is also planning large natural resource projects in Mongolia. China has signed a letter of intent to develop a copper mine and committed $50 million open a new zinc mine. The Mongolian President has also invited Chinese companies to drill for oil in the country. Three are 1,000 Chinese companies with operations in Mongolia. China is showing its support by providing crews to pave Mongolia’s roads and offering a $300 million loan for other forms of development. During the Cold War, Mongolia was a Soviet satellite but China’s need for raw materials will now lead to a close alliance between Beijing and Ulan Bator.

The other regions which could be vulnerable to Chinese territorial claims are the Senkakus Islands (the Chinese call them Daiyous) and Spratly Islands in the South China Sea. It is widely perceived that both sets of island could provide access to large oil reserves. In the 1970s, Deng Xiaoping had discouraged China from pursuing territorial claims in its neighborhood. He said that conflicts over the islands should be “left for the next generation”. In November 2002, Asean and China concluded a treaty that called on all claimants to avoid actions that might heighten tensions in the flashpoint region. This was further reinforced last winter by a nonaggression pact with Asean. But in recent months, China has once again begun to speak out about its claims. It has criticized Vietnam for attempting to give oil drilling rights to foreign companies and promoting tourism on the Spratly Islands. It recently allowed a group of Chinese nationalists to land on the Senkaku Islands and plant a flag. The Chinese were promptly arrested by the Japanese police and then sent home to a hero’s welcome. In early July, the Chinese foreign ministry publicly warned Japan not to explore for natural gas near the disputed islands. The official said, “Japan should consider the bigger picture of maintaining relations between the two countries and should consider stability in the East China Sea. Japan should proceed with caution.” The new regime of Hu Jintao has been constantly stressing to other Asian countries that China’s emergence as a great power will not threaten them, but China’s concern about securing adequate oil supplies could encourage Beijing to become more assertive again over territorial claims in regions which adjoin large oil supplies. As with Russia, the ultimate determinant of how far China goes in pursuing its claims may depend upon western trade policy. If the U.S. and Europe make it difficult for China to pay for oil imports with exports of manufactured goods, China could decide to pursue a more aggressive foreign policy to obtain oil from disputed territories.

China has launched several major initiatives to obtain oil reserves in Africa. China entered the Sudan during the late 1990s and now has large investments there. In 2003, the China National Petroleum Corporation completed development of a major new oil field with productive capacity of 10 million tonnes per year, a refinery processing 2.5 million tonnes per year, and a 1,506 km pipeline. CNPC has recently expanded into Algeria, Niger, and Chad while its rival Sinopec has moved into Gabon, Egypt, and Nigeria. Sinopec is also negotiating for a stake in Grynberg’s large concession in the Central African Republic. China International and United Petroleum Corporation recently signed a service contract with the Nigerian Petroleum Development to develop two new oil concessions in the shallow waters of the River State and to import 50,000 bpd. Sinopec has turned Angloa into China’s third largest source of oil after Saudi Arabia. China tried to strengthen the relationship by also offering Anglo a $2 billion concessional loan during early 2004. CNPC hopes to invest in a new $3.2 billion refinery project at Lobito and to develop joint ventures with Chevron Texaco in developing some of Angola’s deep water offshore blocks. Petro China has also recently formed a venture with Diamondworks to market petroleum in several west African countries. In January – February 2004, President Hu Jintao visited Egypt, Gabon and Algeria to discuss new energy ventures. In Egypt, China agreed to provide new technical expertise and develop new ventures in exploration, production, refining, and marketing.

In Gabon, Hu Jintao signed a contract for 1 million tonnes of oil imports per year. After the president left, Sinopec signed an agreement to participate in exploration of new oil bocks both offshore and onshore. China began investing in Algeria two years ago and the Hu Jintao visit further strengthened the relationship. In 2002, Sinopec signed a $525 million contract to develop the Zarzaitine oil field in the Sahara Desert and to build a refinery nearby. In 2003, CNPC signed a deal worth $325 million to buy several refineries and import oil from Algeria. After the Hu Jintao visit, CNPC signed a new agreement to establish a permanent joint committee to promote more energy cooperation with Algeria, to give CNPC new exploration rights, and to develop new pipelines as well as expand existing refineries. In the period January-July 2003, Africa provided 13,137 million tonnes of China’s total imports of 50,639 million tonnes. Anglo supplied 6,237 million tonnes, Sudan provided 3,429 million tonnes, and Equatorial Guinea supplied 1,193 million tonnes. The tremendous Chinese focus on Africa today guarantees that the continent will become a progressively more important supplier of raw materials to China.

As a result of China’s huge energy needs, the government is also giving serious consideration to developing more nuclear power. China now has nine generators operating in Zhenjiang and Guangdong. Two are under construction in Zhenjiang. Proposals to build another four should be approved within two months. The London based World Nuclear Association says that China will probably build another 26 generators in eight different provinces. Some government officials have suggested that China could become the world’s largest consumer of nuclear power by 2050. The government is anxious to promote more nuclear power because during 2004 24 of China’s 31 provinces have been suffering from electricity shortages. China is importing a large quantity of new generating equipment from Europe and the U.S. to eliminate the shortages but its current growth curve for electricity demand is so high that nuclear power is clearly a strategic alternative to its long-term needs.

Secondly, China is likely to emerge as a more important player in financing the development of natural resources. The Chinese regard ownership as an important element of control. In the U.S., for example, they purchased cutting rights over large tracts of timber land nearly twenty five years ago. China’s National Petroleum Corporation has spent over $40 billion on foreign investments. The big Chinese oil companies are now investing in oil development projects in Indonesia, Latin America, Africa, and Australia.

In the past, the largest players in the development of global commodity production have been companies from the U.S. and the British Commonwealth, especially Canada, Australia, and South Africa. These companies are currently holding negotiations with China about both investing in new Chinese projects as well as forming joint ventures with Chinese firms to develop mines in other countries. Rio Tinto has several joint ventures with China in Australia.

Chinese firms could also emerge as competitors with American and European firms. Saudi Arabia, for example, recently allowed Chinese firms to invest in its new natural gas industry while excluding American firms from the project. The Saudis were attracted to China because it could be a huge market and there were no tensions over issues such as Israel and terrorism. China also supplied intermediate range ballistic missiles to Saudi Arabia several years ago and collaborated in a Saudi financed project to develop nuclear power in Pakistan. If the U.S. relationship with the Saudis continues to deteriorate, China could emerge as a more important player in providing them with security.

China recently announced a $5 billion (U.S.) takeover bid for Canada’s largest mining company, Noranda. Noranda has large copper mines as well as a 60% shareholding in Falconbridge, one of the world’s leading nickel producers. The takeover bid drew immediate criticism from conservatives in Canada alarmed at the prospect of China controlling large nickel reserves. They point out the large mines in Sudbury, Ontario were originally developed to supply nickel to the U.S. Navy because the U.S. has no nickel deposits and that it is dangerous to allow China to purchase them through Falconbridge. Falconbridge mines nickel, in Ontario, Quebec, and New Caledonia, as well as having a large smelter in Norway. The Canadian government is reluctant to challenge the bid because of its desire for good economic relations with China but the controversy does indicate that China’s new role in the commodity market is promoting debate about military and security concerns, not just economic issues. Many Canadians are suspicious of China because of its policies in the area of human rights, Tibet, and Taiwan. The Noranda bid has revived those concerns as well as provoking discussion about the military importance of Canada’s large nickel reserves. What remains to be seen is whether the deal will actually close. Since the deal was announced, there has been a significant appreciation of the Canadian dollar which could raise the price for Mini Metals to levels which will be commercially unacceptable.

Thirdly, China’s huge demand for raw materials could produce a sustained improvement in the terms of trade of the developing countries. During the era since World War Two, the developing countries have often suffered from declining commodity prices, especially during periods of recession in the U.S. economy. There were major developing country debt crises during the early 1980s because of a severely restrictive U.S. monetary policy which depressed commodity prices. Russia also defaulted on her debt during 1998 because of a large drop in the oil price which crippled tax revenues. In the future, it is possible that Chinese monetary policy will play a more critical role than American monetary policy in determining commodity prices. What remains to be seen is whether China will be more sensitive to her global monetary role than the Americans were in the past.

Fourthly, China is now going to emerge as an important factor in the conduct of monetary policy by the G-7 countries. During the past year, China’s boom has produced a 25% increase in America’s crude materials price index. In the past, such large increase in commodity prices might have provoked the Federal Reserve to raise interest rates. But the Fed has not tightened in part because China’s exports of manufactured goods are helping to restrain America’s consumer price index. Wal-Mart, for example, is now purchasing $14 billion of goods from Chinese companies and $26 billion from American, Japanese, and Korean companies using China as an export base. The import of low priced goods from China is limiting the ability of American firms to raise prices despite rising raw material costs. But at some point, rising commodity prices could set the stage for higher inflation and force central banks to raise interest rates. In the past, the G-7 central banks focused primarily on their own business cycles and the American economy. In the future, they will have to take account of how fluctuations in the Chinese economy are affecting global commodity prices.

During much of China’s history, it was difficult for western countries to pay for their imports of silk and porcelain because China did not want western products. The British resolved this problem by selling opium to China during the early 19th century. In the modern era, there are no such constraints on China’s trade. In contrast to the era before the industrial revolution, China has an immense appetite for both manufactured goods and commodities from the rest of the world. China plans to expand exports of manufactured goods in order to pay for imports of commodities. The great risk to this equilibrium is trade policy in the industrial countries. Some countries want to impose trade barriers on Chinese imports.

In fact, it would not be an exaggeration to suggest that the financial underpinning of the Bush administration’s economic and foreign policies is the fact that the east Asian central banks now have $2.0 trillion of foreign exchange reserves which are nearly 90% invested in U.S. government securities. It is the willingness of the east Asian central banks to fund the U.S. budget deficit which has permitted the Bush administration to pursue a highly expansionary fiscal policy without any adverse consequences for the domestic bond market. The Bush administration is so concerned about manufacturing job losses that it does not want to acknowledge its unusual financial dependence upon east Asia, but the reality is that their currency intervention has become a de facto form of burden sharing for the Bush foreign and defence policies. China is anxious to maintain a stable exchange rate because of concerns about the stability of its financial system and the fact that it has lost ten times as many manufacturing jobs as the U.S. during the past six years because of the restructuring of its state owned enterprises.

China’s economic takeoff and new role in the global commodity markets has occurred so quickly that the U.S. and other countries have not yet fully come to terms with it. The U.S. and other countries are extremely sensitive to the risk of job losses resulting from China’s export growth, but they have not devised a strategy for coping with the larger consequences of China’s new role. There are many questions which loom. If China accounts for 30-40% of global metal consumption in fifteen years, what will be the consequences for commodity prices and trade flows? Will China become the dominant trading partner of countries as diverse as Australia, South Africa, and Brazil? If China assumes such a role, will she attempt to develop a larger blue water Navy to protect the ships providing critical supplies of oil, iron ore, and other raw materials? Will China become a major investor in the developing countries in order to finance the development of new natural resource projects? Will China follow in the footsteps of the U.S. and Britain by intervening in the domestic political affairs of countries which become her primary commodity suppliers or recipients of investment? Will China offer arms supplies to developing countries in order to enhance its access to their commodity production? Is the intervention in the Sudan only the first step to a much larger Chinese military role all over the third world?

The U.S. has clashed with China in the past over its policy in the Middle East. During the late 1990s, China offered to sell military technology to Iran in order to develop a relationship for enhancing its access to energy supplies. The U.S. protested and China ultimately backed down. But as a result of China’s new circumstances, the temptation will be strong for China to pursue a variety of diplomatic strategies for enhancing its access to raw materials. The challenge for the U.S. will be to demonstrate that it can accommodate China’s need for raw materials and play a cooperative role in helping Beijing to assure adequate raw material supplies. The U.S. has always supported a policy of open sea lanes and protecting private property. The U.S. should now reassure China that it will use its own military forces to assure the safety and security of Chinese vessels and others carrying critical raw materials. The U.S. should also attempt to collaborate with China in developing a common policy for third world countries. As with the Sudan, it is not difficult to imagine countries as diverse as the Congo, Papua New Guinea, or even Saudi Arabia turning to China for help in suppressing rebellions or protecting political elites. In the past, the U.S. would have reacted adversely to the deployment of Chinese troops anywhere. But as a result of China’s new role in the global commodity markets, the U.S. will have to recognize that China has new security concerns which it should attempt to manage rather than simply reject.

China announced a major breakthrough in its third world relationships during mid-April when it said that it would join the Nuclear Suppliers Group. China’s application to join the 40 nation NSG is an important recognition that it should join other leading countries in regulating proliferation of nuclear weapons. China also wants to improve its own access to nuclear technology from the United States because of its plans to increase the role of nuclear power within China. As a result of this decision, China will no longer be able to offer Middle Eastern countries access to nuclear technology as a quid pro quo for oil supplies.

In the 1950s and 1960s, the Chinese relationship with the third world was heavily influenced by the 1954 Bandung summit conference in Indonesia. At that summit, the leaders of newly independent countries of Asia and Africa pledged to work together on behalf of a non-aligned third world. During the 1960s, China helped Zambia to cope with Rhodesian trade sanctions by constructing a railway from Dar Es Salam to Lusaka. In the future, China will have a totally different relationship with the developing countries. China will become their primary export market as well as being an investor in their natural resource industries. China’s negotiations with them over commodity contracts will have a major impact on their terms of trade and national income. If commodity prices fall sharply and they experience recessions, they could blame China whereas in the past they would have blamed American imperialism.

At present only a few things appear to be certain. The transformation apparent in the commodity markets during the past year is likely to persist for some time. China will become an increasingly more important influence on commodity prices than the old industrial economies of North America, Europe, and Japan. China could drive commodity higher prices as she develops larger reserves of oil, grain, and other critical raw materials. When China finally has an investment slowdown, commodity prices will decline. But as China is unlikely to experience a full scale recession anytime during the next decade, there will be a steady, if not always spectacular growth in her demand for raw materials. By 2015-2020, her share of global metal consumption could be 50% larger than America’s.

Such a large change in the composition of global commodity demand and trade flows will have political consequences. China is going to develop far more intimate relationships with many developing countries than have existed before. She is going to redefine her national security strategy to include protection of critical raw material supplies. It is too soon to speak of a new era of Chinese imperialism in the third world, but China will certainly play a more influential role in the affairs of many developing countries. The U.S. has been so obsessed with the issue of trade that it has not developed any long-term strategy for managing the consequences of China’s new role. The U.S. can regard China’s new role as an opportunity for cooperation on many geopolitical issues or as a further threat to its own economic interests. There is no way to predict exactly how policy makers will respond to China’s new status. At this point only one thing is certain. China’s new role as the world’s largest consumer of many industrial commodities will force everyone to rethink their assumptions about foreign policy, military policy, and even the conduct of monetary policy during the early decades of the 21st century.


December 4, 2003. China’s huge thirst for oil set to change world’s energy flows. Asian Wall Street Journal.

With its factories working overtime, and its consumers on course to buy almost 2 million cars this year, China is developing a world-class thirst for oil. And its hunt for steady supplies is reshaping the global energy scene.

China – which this year surpassed Japan as the No 2 petroleum user after the US – is increasing its oil purchases even faster than it is pumping up its brawny economy. Imports for the first 10 months of 2003 were up 30 per cent from year-earlier levels. The International Energy Agency expects imports to double to some 4 million barrels a day by 2010. By 2030, China is expected to be importing about 10 million barrels a day, roughly what the US imports now. Domestic oil output, meanwhile, is flat.

From Houston to London to Moscow, oil companies are looking to secure market share in China, as China roams the world looking for oilfields to develop. And strategists are struggling to predict what China’s rise as a super-buyer will mean for the oil market, the environment – and world politics.

Some fear that China, which doesn’t have large strategic reserves of fuel, might grow so desperate for oil that it would battle the US for influence in the Middle East or even trade weapons technology to alleged terrorist states.

“China is having an incredible influence on energy flows, not just in Asia but on a worldwide basis,” Peter Davies, chief economist at BP, told reporters on a recent trip to Russia, from where BP hopes to supply China with Siberian gas. “The whole centre of gravity of the world energy market is changing.”

This year and next, China is expected to account for about a third of the increase in global oil demand.

Chinese demand is also making geopolitical waves in the US. Last month, the US-China Economic and Security Review Commission, a committee of congressional appointees, debated how China’s thirst for oil would affect US access to energy supplies. Last year, the Pentagon reviewed a report on what it would mean for US national security if the Chinese and Saudis grew closer. Saudi Arabia, the world’s largest exporter, is negotiating to build a huge refinery in China with Exxon Mobil. The desert kingdom even has begun giving Chinese-language lessons to its oil officials.



Shanker, T., et al. March 1, 2005. N U.S. Lawmakers Warn Europe on Arms Sales to China. New York Times.

Senior members of Congress from both parties emerged from a meeting with President Bush on Tuesday warning Europe that if it lifts its ban on arms sales to China, the United States may retaliate with severe restrictions on technology sales to European companies.

The warning came after Mr. Bush, on his trip to Europe last week, twice cautioned the Europeans not to lift the restrictions, in place for 15 years. His insistence was based, at least in part, on a new American intelligence assessment that Beijing is rapidly becoming better equipped to carry out a sophisticated invasion of Taiwan and to counter any effort by the United States to react to such an attack, administration officials and intelligence analysts say.

After the White House meeting on Tuesday, Senator Richard G. Lugar, the Indiana Republican who is chairman of the Foreign Relations Committee, said that if the ban is lifted – as European leaders have said they plan to do in coming months – Congress could react with “a prohibition on a great number of technical skills and materials, or products, being available to Europeans.” The ranking Democrat on the committee, Senator Joseph R. Biden Jr. of Delaware, called a lifting of the ban “a nonstarter with Congress.”

Their statements reinforce warnings that Mr. Bush and Secretary of State Condoleezza Rice made in meetings with Europeans over the past several weeks that the weapons sales would amount to a transfer of even more sophisticated military technology to China. But European officials say that the concerns are overstated, and that they are considering a compromise proposal that would keep advanced technologies from being exported.

Although Mr. Bush and Ms. Rice have spoken publicly about the sale of heavy weapons, Pentagon officials say the biggest concern is the technology that goes with it, including radar and battlefield communication systems that could take China’s rapid military buildup to a new level. And to make their case, the officials have begun to discuss how such technology would give China an increased ability to intimidate Taiwan with the threat of invasion if it moves too aggressively toward independence.

The motivations for the officials to discuss this intelligence in interviews over the past two weeks are varied, and certainly include concerns about how the Chinese buildup could affect American security interests. But the discussion also comes as Congress takes up Mr. Bush’s new spending proposals, which devote a majority of supplemental funding to land forces and the war in Iraq, while missions related to perceived threats from China fall mainly to the Navy and the Air Force.

In addition, some administration hawks are concerned about China’s rapid growth as a military power in the Pacific at a time that American attention is focused on the Middle East.

The new intelligence reports indicate that since Mr. Bush came to office, China has raced ahead with one of the most ambitious military buildups in the world – including building 23 new amphibious assault ships that could ferry tanks, armored vehicles and troops across the 100 miles to Taiwan, and 13 new attack submarines.

“Their amphibious assault shipbuilding alone equals the entire U.S. Navy shipbuilding since 2002,” one intelligence official said.

The official said Chinese military purchases abroad and domestic production of ships and warplanes “definitely represents a significant increase in overall capacity.” At the same time, any advances in radar and communications ability would improve how rapidly and effectively those ships and planes could support an invasion or counter American moves in the region.

Military experts in European capitals and in Washington say they do not dispute the American intelligence reports on the growth in quality and quantity of Chinese arms. But European political leaders argue that the sanctions were placed to punish China because of its killing of pro-democracy demonstrators in Tiananmen Square 16 years ago, not because of its military power.

Now that a new generation of leaders has taken over in Beijing, they say, the specific cause of the sanctions is removed.

In contrast, Japan has sided with the United States in asserting a growing Chinese threat to Taiwan, publicly inserting those concerns for the first time into a joint security statement issued in recent days.

The latest intelligence reports give the fullest sense to date of what China has actually fielded in the past several years, and how, as the new director of central intelligence, Porter J. Goss, recently told Congress, the weaponry could “tilt the balance of power in the Taiwan Strait.”

The United States has deliberately left vague whether or how it would defend Taiwan in the event of invasion. The last time a crisis erupted in the region, President Clinton put a carrier near the Taiwan Strait – but not inside it – as a caution to Beijing.

That event prompted a rethinking of military strategy in Beijing, China experts say. One intelligence official noted that China’s military expansion has tried to fill gaps that have been identified in a range of Pentagon reports and public American intelligence estimates.

The intelligence official said: “What the Chinese have systematically done is look at what other people have said about them, and said, ‘Fine. I don’t have a credible amphibious capability. Well, I’m going to build one. I don’t have a credible surface force that can provide adequate air cover and surface-to- surface strike capability against incoming fleets. Fine, I’ll build that. Submarines worry you? Fine, I’ll buy them or I’ll build them.’ ”

“It’s a modernization across the force,” the official added.

China’s growing submarine fleet, which includes new nuclear- and conventional-powered vessels, helps China patch a major vulnerability: an inability until now to control the Taiwan Strait. This larger submarine fleet, even if less effective than its American counterpart, would vastly complicate any effort by Washington to intervene. Past calculations of how quickly the American aircraft carrier fleet could safely move into the area are even now being rewritten to include new estimates of the patrolling range of the new Chinese submarine fleet.

In a written statement on “Current and Projected National Security Threats to the United States” submitted to the Senate Select Committee on Intelligence earlier this month, Vice Adm. Lowell E. Jacoby, the director of the Defense Intelligence Agency, discussed an even broader nature of the Pentagon’s concern.

“In addition to key Taiwanese military and civilian facilities,” Admiral Jacoby said, “Chinese missiles will be capable of targeting U.S. and allied military installations in the region to either deter outside intervention in a Taiwan crisis or attack those installations if deterrent efforts fail.”

Admiral Jacoby, in unclassified testimony, predicted that by 2015, the number of Chinese nuclear warheads “capable of targeting the continental United States will increase severalfold.”

For now, though, China’s capabilities are not considered a threat to the United States mainland; China still lacks an oceangoing navy that could rival America’s presence in the Pacific, while America has no lack of nuclear missiles that can strike China from land or from submarines.

Experts also say it is clear that China will be able to proceed with its modernization plans with or without European weapons, though its progress may be slower. China has purchased destroyers, as well as many other weapons, from Russia, its main supplier. At the same time, it is modernizing its fleet of warships, built at a rapidly growing chain of domestic shipyards that is financing its own expansion by taking an increasing share of commercial shipbuilding contracts in Asia, according to United States government assessments.



Shanker, T. June 3, 2005. Rumsfeld Issues a Sharp Rebuke to China on Arms. New York Times.

Defense Secretary Donald H. Rumsfeld, in an unusually blunt public critique of China, said Saturday that Beijing’s military spending threatened the delicate security balance in Asia and called for an emphasis instead on political freedom and open markets.

In a keynote address at an Asian security conference here, Mr. Rumsfeld argued that China’s investment in missiles and up-to-date military technology posed a risk not only to Taiwan and to American interests, but also to nations across Asia that view themselves as China’s trading partners, not rivals.

He said no “candid discussion of China” could neglect to address these military concerns directly, and criticized China for not admitting the full extent of what he described as its worrisome military expansion.

“Since no nation threatens China, one wonders: why this growing investment?” Mr. Rumsfeld asked. “China’s defense expenditures are much higher than Chinese officials have publicly admitted. It is estimated that China’s is the third-largest military budget in the world, and now the largest in Asia.”

The United States has accused China of manipulating the value of its currency in order to increase exports, and of exerting heavy-handed pressure on Taiwan.

A joint warning from the American and Japanese defense and foreign ministers has rankled Chinese leaders, as has the Bush administration’s insistence that Europe must not ease curbs on arms sales to China.

Mr. Rumsfeld, for his part, has long taken a tough stance on China.

In recent weeks, American officials have compiled reports detailing how China has carefully analyzed the strengths and weaknesses of the United States military to focus its growing spending on weapons systems that could exploit perceived American weaknesses in case the United States ever responds to fighting in Taiwan.

These military and intelligence officials say China has purchased or built enough amphibious assault ships, submarines, fighter jets and short-range missiles that pose an immediate threat to Taiwan and to any American force that might come to Taiwan’s aid.

The Pentagon’s report to Congress on China is two months late, and one administration official said drafts of the document have been written, circulated and re-written as officials try to strike the right balance between warnings to Beijing and praise of its help on North Korea and its openness to investment.

“Pyongyang’s nuclear ambitions threaten the security and stability of the region, and indeed the world,” he said. “President Bush and the other four leaders have urged the regime to return to the six- party talks. The United States also urges the regime to embrace the openness and freedom that have helped so many of its neighbors thrive.”

Mr. Rumsfeld described the American military in the region as poised to battle terrorism and the proliferation of biological, chemical and nuclear weapons.


Sevastopulu, D., et al. May 24, 2007. US fears over China nuclear weapons. The Financial Times.

The US is increasingly concerned about China’s deployment of mobile land and sea-based ballistic nuclear missiles that have the range to hit the US, according to people familiar with an imminent Pentagon report on China’s military.

The 2007 Pentagon China military power report will highlight the surprising pace of development of a new Jin-class submarine equipped to carry a nuclear ballistic missile with a range of more than 5,000 miles. Washington is also concerned about the strategic implications of China’s preparations later this year to start deploying a new mobile, land-based DF-31A intercontinental ballistic missile that could target the whole US. Robert Gates, US defense secretary, on Thursday said the report would not exaggerate the threat posed by China. “It paints a picture of a country that is devoting substantial resources to the military and developing…some very sophisticated capabilities.

The report also outlines concerns about the build-up of missiles across the Taiwan Strait, China’s recent anti-satellite missile test and its development of technologies to deny access in space.

US experts on the Chinese military have been surprised by the pace of development of the nuclear forces, and particularly the Jin program. The Pentagon believes that China is developing five Jin submarines. One is already being tested at sea and could become operational next year. “The Chinese have maintained that they have a ‘no first use’ policy [for nuclear weapons] and that they have a minimal deterrent policy, which means they have only enough nuclear capability to retaliate,” said Michael Green, former White House senior Asia adviser to President George W. Bush. “But open source journals and discussions and their own modernization suggest that they are possibly developing capabilities for a more flexible use of nuclear weapons, and survivability and tactical uses that would call into question this declared policy.

In 2005, Chinese General Zhu Chenghu fueled US concerns that China might be changing its strategic stance when he told journalists that it might have to use nuclear weapons against the US if attacked during a confrontation over Taiwan. Chinese officials later restated the country’s “no first use” policy and have privately played down Gen Zhu’s influence. Some analysts have also suggested that the Chinese move could be partly in response to US plans to develop a ballistic missile defense system. Russia has recently raised concerns about plans by the US to place missile interceptors in Europe.


War between Japan and China?

Also see: Chalmers Johnson. March 2005.   No Longer the “Lone” Superpower: Coming to Terms with China. JPRI Working Paper No. 105.

Tisdall, S. January 18, 2005. Sino-Japanese ‘cold war’ stirs new tensions. The Guardian.

When Nobutaka Machimura, Japan’s foreign minister, asked Israel to halt weapons sales to Japan’s neighbours at the weekend, there was little doubt which particular neighbour he had in mind. And when Japan’s defence ministry recently drew up contingency plans to deploy 55,000 troops in the event of an invasion of disputed islands off southern Japan, there was no question who the most likely invader would be.

While the world watches China’s rapid rise towards superpower status with awe, Japan, China’s old enemy, watches with foreboding.

It is almost inconceivable that Japan and China would ever fight again. The two countries are increasingly economically interdependent. But relations are certainly deteriorating.

Political tensions, territorial rivalries, competition over energy resources, and China’s military build-up, dramatised by a recent, illegal incursion by a nuclear submarine, provide the ingredients for a 21st-century oriental remake of the cold war.

Japan’s brutal 1930s wars of conquest are far from forgotten or forgiven in China.

But anti-Japanese nationalist sentiment is now being exploited to boost the Communist leadership’s waning ideological authority.

Chinese anger focuses on the visits of the Japanese prime minister, Junichiro Koizumi, to Tokyo’s Yasukuni shrine, where war criminals are commemorated alongside Japan’s war dead. China says this proves Japan has not truly repented its militarist past.

Beijing refuses to hold bilateral summits until Mr Koizumi kowtows and for this, among other reasons, is opposing Japan’s bid for a UN security council seat. The antipathy is mutual.

A survey last year found that 58% of Japanese (like most Taiwanese) fear China’s long-term intentions.

Japan’s latest defence review for the first time named China, along with North Korea, as a potential threat.

Meanwhile, Mr Koizumi has suggested ending economic aid, which Beijing regards as its right in lieu of war reparations.

As Mr Machimura made clear, Japan wants all countries, not just Israel, to stop arming China. This includes Britain and the EU, which are considering lifting an arms embargo imposed after the 1989 Tiananmen Square massacre.

But Japan’s response to China’s rise has several other dimensions. Before visiting Israel, Mr Machimura went to Moscow.

Russia, another of China’s old enemies, shares Tokyo’s worries about Beijing’s regional ambitions. Bilateral trade is expanding, with Japanese investment flowing into Russia’s energy and automotive sectors. Military contacts are also growing.

Moscow announced this month that a new £6bn oil pipeline from eastern Siberia would run to the Pacific coast, allowing access to Japan, rather than to Daqing, in north-east China. Russia’s president, Vladimir Putin, is expected to visit Tokyo soon. And high-level talks have even recommenced over a 60-year-old territorial dispute.

The foreign minister, Sergei Lavrov, said Russia wanted to clear away old disagreements. “The main thing now is to seek full cooperation in all spheres,” he told Mr Machimura.

This is a big change. Exactly 100 years ago this month, Japan was destroying Russia’s Pacific fleet. Hostilities continued through much of the 20th century.

Japan’s unusual political and diplomatic assertiveness is being matched militarily despite its post-war pacifist constitution.

As a study by Christopher Hughes, published by the International Institute for Strategic Studies, makes clear, the old rules are being bent as Japan confronts not only China but also problems posed by terrorism, nuclear proliferation, and the weakening of an over-stretched America’s defensive shield.

This national self-assertion encompasses landmark decisions to acquire ballistic missile defences and hi-tech force capabilities; send troops abroad (as in Iraq); and pursue military collaboration with South Korea, Australia and some south-east Asian countries.

“All this activity has been set against the background of sharpened domestic debate that challenges many post-war security taboos,” Dr Hughes writes.

“Japan’s policy-makers are questioning the self-imposed ban on Japan’s exercise of the right of collective self-defence … The prohibitions and principles that constrain Japan’s exercise of military power [are under] ongoing investigation.”

In other words, as China stands up, so too again may Japan.

Kristof, N.D. December 20, 2003. The China Threat? New York Times.

Is China a threat to the rest of the world? Perhaps, for rising powers have always spelled trouble for their neighbors, even in the case of democracies like Athens (the Peloponnesian War) and the U.S. (we managed to invade Canada and Mexico in the 1800’s).

What troubles me is the growing nationalism that the government has cultivated among young people. Americans saw a hint of that when enraged mobs attacked our embassy in Beijing after the U.S. bombed the Chinese Embassy in Belgrade in 1999, and when Chinese students reacted to the horror of 9/11 by filling Internet chat rooms with delighted cheers of shuang — roughly equivalent to “Wow, so cool!”

But it’s in attitudes toward the Japanese that we see a leading indicator of the instability that blind nationalism can cause. This fall, three Japanese students in the central Chinese city of Xian performed a bawdy skit, wearing red bras over T-shirts and throwing the stuffing at their audience — and word spread that the Riben guizi, Japanese devils, were mocking China. So a mob of 1,000 people rampaged through town, looking for any Japanese to attack. In the same vein, fury had erupted around the country a few weeks earlier because of reports that Japanese businessmen had engaged in an orgy with Chinese prostitutes in the southern city of Zhuhai.

The Chinese rage was hypocritical in a country where hundreds of thousands of prostitutes blatantly ply their wares — in Zhengzhou last year, an army of prostitutes practically battered down my hotel room door as I cowered inside. Even the Chinese recounting of history has become hysterical.

Take the Rape of Nanjing in 1937, which was so brutal that there’s no need to exaggerate it. One appalled witness in the thick of the killing, John Rabe, put the death toll at 50,000 to 60,000. Another, Miner Searle Bates, estimated that 12,000 civilians and 28,000 soldiers had been killed. The Chinese delegate to the League of Nations at the time put the civilian toll at 20,000. A Communist Chinese newspaper of the period put it at 42,000. Yet China proclaims, based on accounts that stand little scrutiny, that 300,000 or more were killed. Such hyperbole abuses history as much as the denial by Japanese rightists that there was any Rape of Nanjing at all.

It nurtures nationalism by defining China as a victim state, the world’s punching bag, that must be more aggressive in defending its interests. What does this add up to? The rising nationalism warps Chinese decision-making and risks conflicts with Japan over, for example, the disputed Senkaku/Diaoyu islands.

It also forces the government to be tough in international disputes — particularly in the case of Taiwan, where a miscalculation could conceivably lead to a war with the U.S. “Some Chinese military leaders are saying that Japan is secretly behind Taiwan’s moves toward a referendum and independence,” warned a well-connected Chinese who knows that this is nonsense.”They say it is all a Japanese plot to steal Taiwan from China.”

The reasons for rising Chinese nationalism are complex and include a justified anger at Japan’s reluctance to apologize for war atrocities. But one factor is the way the Chinese government has been pushing nationalist buttons in an effort to create a new national glue to hold the country together as ideology dissolves. By constantly excoriating the Japanese nationalists of the 1930’s, they are emulating them. One of the lessons of 1930’s Japan and Germany is that ferocious nationalism is a real global security risk, and it’s a matter that the U.S. and other countries should respectfully raise with President Hu.

To their credit, some farsighted Chinese intellectuals are calling for changing China’s “victim mentality,” recognizing that it is one of the greatest obstacles to China’s maturing into the global leader that it should be. Meanwhile, we in the West are bashing China, unfairly and demagogically, over its exports. But we’re missing the risk in China’s rise. The menace isn’t in its trade policies, but in its nationalist psychology.

Additional reading

Liu, H.C.K. June 16, 2005. The coming trade war and global depression. Asia Times.

Spencer, R. November 19, 2004 Tension rises as China scours the globe for energy. Telegraph, UK.

Giry, S. November 11, 2004 CHINA’S AFRICA STRATEGY. Out of Beijing. The New Republic.

Perlez, J. August 28, 2004. Across Asia, Beijing’s Star Is in Ascendance. New York Times.

French, H.W. March 28, 2004. China Moves Toward Another West: Central Asia. New York Times.

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