CHINA AND THE MIDDLE EAST, AUSTRALIA AND LATIN AMERICA: OIL, GAS, RESOURCES AND DICTATORS AND REVOLTS

MIDDLE EAST AND CHINA

20080310-W020040920674446884165 meets leader of Kuwait.jpg
Hu Jintao and the leader of Kuwait
China gets 46 percent of its oil from the Middle East (2007). Petroleum imports from the region are expected to increase fourfold between 2005 and 2030. One analyst told the Financial Times: “China is interested in more strategic relations with Gulf oil producers, to a privileged place for itself and become a high-priority customer---while pursuing a strategy to get oil from other sources and reduce its dependence on Middle East oil. “But even the most optimistic assessment of diversification is that it will continue to get at least half of its oil from the Middle East.”

China’s growing influence puts in direct competition for energy resources with the United States and the West. One analyst told the Financial Times: “China’s strategy in the Middle East puts us in competition for influence. But the answer is not a confrontational approach over energy interests---it is to develop a more cooperative relationship with the Chinese on energy security.”

China has steeped ups it charm offensive in the Middle East in recent years. In December 2010, Chinese Premier Wen Jiabao spent five days in Syria signing deals and doing things like planting olive trees in the Golan Heights. In Syria, China has moved in and tried to take up a position long occupied by the Soviet Union. In Turkey and even Iraq China seems to be moving in and filling a void as the United States pulls back. In Turkey, which is a NATO member, Chinese warplanes were included in a military exercise.

China quickly mended fences with Turkey after Turkey criticized the Chinese for their treatment of Uighurs. In October 2010, Chinese Premier Wen Jiabao became the first Chinese leader to visit Turkey in eight years. The Chinese premier signed another batch of contracts including an agreement for the joint construction of 4,500 kilometers of Turkish railway. Turkey’s Prime Minister Recep Tayyip Erdogan styled the project “a new Silk Road.”

In June 2011, China welcomed Sudanese leader Omar al-Bashir on a state visit and gave him red-carpet treatment that included a meeting with Chinese President Hu Jintao in the Great Hall of the People and the signing of several oil and gas deals. At the time Bashir was wanted by the International Criminal Court on genocide charges for orchestrating atrocities in the Darfur region.

Arabs, See Yiwu, Places

China appears to be positioning itself to enjoy the windfall of repairing and rebuilding Iraq and Afghanistan when the hostilities abate there and the United States and European countries leave. In November 2009, CNPC (China National Petroleum Corporation) and BP promised to invest $50 billion in developing the Rumalia oil field in Iraq, a plan that could triple the oil field’s output. It was the first big oil deal announced in Iraq since the 2003 invasion. In 2007, the state-run Metallurgical Corporation of China (MCC) won the right to develop the Aynak copper field south of Kabul. Part of the $3 billion deal was a promise to build a coal power plant and Afghanistan’s first freight railway. In both cases it appears that China was able to win the deals and get a jump on its rivals because of willingness to put up with security risks. MCC is also bidding on a iron deposit west of Kabul.

China has given scholarships to students from Middle East nations, let Middle East charities open up mosques in Muslim areas of China and trained hundreds of Arab professionals in fields such as agriculture and biochemistry.

The United States was not pleased with the arms deals that China made with Saddam Hussein’s Iraq, Sudan and Iran---country that have ben blacklisted for the alleged support of terrorism.

China has good relations with Israel and its enemies. Israel is China’s second largest supplier of weapons after Russian China has invited Hamas members to Beijing.

See Energy

Iraq and China

China is seeking oil and natural gas deals in Iran and Iraq and spending billion of dollars there. China earned some goodwill from Iraq when it forgave $8 million in Iraqi debt that dated back to the Saddam Hussein era.

In April 2004, seven Chinese nationals were taken hostage in Iraq by insurgents. The seven were taken from the vehicle they were traveling in around Fallujah on the same day they entered Iraq from Jordan. The men did not work for the government or a Chinese company and were released unharmed with the help of a group called the Iraq Muslim Presbytery. At that time there were 10 Chinese companies with 40 employees working in Iraq.

Eight Chinese were abducted and held hostages by Iraqi insurgents in January 2005. The militants threatened to kill the hostages and said they would be treated “mercifully” if Beijing “clarified its role” in Iraq banned all Chinese nationals from entering Iraq. The hostages were freed.

A $1.2 billion deal with Iraq calls for the development of Ahdab oil field once the U.N. sanctions against Baghdad are lifted. China picked on a $1 billion oil and pipeline deal in Sudan after the U.S. company Occidental oil was prohibited from doing business there.

China and Iran

China has invested billions of dollars in Iran’s oil and gas fields, hopes Iran will keep it supplied oil and gas for decades to come and sells advanced weapons such as cruise missiles and missile comtrol systemsto Iran. China got 14 percent of its imported oil from Iran in 2006 and will probably get a larger percentage n the future

China has taken measures to get Iran to negotiate on the nuclear issue but also held up the United Nations from reprimanding and imposing sanctions on Iran and generally prevented the world community from isolating Iran over the nuclear weapons issue. China has supplied intelligence to the international Atomic Energy Agency with intelligence linking Iran To making nuclear weapons.

China is involved in so-called P5 plus 1 groups that is negotiating with Iran to resolve the nuclear crisis. Hu Jintao has urged the world community to be flexible with Iran. In January 2010, China scuttled plans to impose a forth round of sanctions on Iran, arguing for more “time and patience,” and sent low level officials on important meeting attended by the United States, France, Britain, Russia and Germany on the matter. China HAS sent fuel to Iran seemingly in defiance of sanctions against Iran

The Obama administration has concluded, the Washington Post reported in October 2010, that Chinese firms are helping Iran to improve its missile technology and develop nuclear weapons, and has asked China to stop such activity, a senior U.S. official said. John Pomfret wrote Washington Post, “The U.S. official speaking anonymously said U.S. intelligence thinks that Chinese companies and banks have been involved in providing restricted technology and materials to Iran's military programs. He said that these deals occurred both before and after the enhanced U.N. sanctions were approved. [Source: John Pomfret, Washington Post, October 18, 2010]

“The U.S. official said that most of the deals concerned Iran's missile program. However, a senior official from a Western intelligence agency said Chinese firms were also discovered selling high-quality carbon fiber to Iran to help it build better centrifuges, which are used in enriching uranium. The official said he had no information to corroborate that reporting. [Ibid]

“Other officials and analysts said the number of firms involved in not following sanctions was less important than the quality of the technology Iran was obtaining. In 2008, for example, Iran obtained 108 pressure gauges, which are critical to the functioning of a centrifuge, from one Chinese company. A year earlier, a small company in the Chinese port city of Dalian provided Iran with a range of sensitive materials, including graphite, tungsten copper, tungsten powder, high- strength aluminum alloys and high-strength maraging steel, again for its nuclear program. That firm allegedly received payment from Iran via U.S. banks. [Ibid]

After The Japanese energy giant INPEX announced in October 2010 it was pulling out of Iran China has becomes the last major economy with significant investments in Iran's energy industry. Russia does not have major investments there and recently canceled the sale of an advanced antiaircraft missile to Iran, refunding the $900 million sticker price. "China now is the only country with a major oil and gas industry that's prepared to deal with Iran," the U.S. official told the Washington Post. "Everyone else has pulled out. They stand alone." [Ibid]

According to a document revealed by Wikileaks: A March 2009 meeting in Beijing suggested that China was pressuring Iran behind the scenes a bit more than we might imagine. A Chinese think tanker reported that Chinese officials were “frustrated with the lack of progress on the nuclear issue.” According to an American political officer in Beijing, the “Chinese had warned [Iran] not to take China’s economic interests in Iran for granted.” It also showed China playing some good ol’leverage by pointing out that “China’s dependence on Iranian energy is decreasing given recent improvements in Sino-Saudi relations.” There other cables that indicated Beijing’s suspicion of Tehran. In August 2009, when a U.S. official asked a Chinese expert whether Iran viewed China as a fair broker, the Chinese side responded, “Iran trusts nobody.” [Source: Evan Osnos, The New Yorker, November 29, 2010]

In April 2010, China sent an envoy to Iran as part of the international effort to put pressure on Iran to scale down its nuclear program. This came after China had shown reluctance in the past to put pressure on Iran. A month earlier China joined a conference call with five other major powers including the United States to discuss new sanctions on Tehran. By May 2010, the United States won China’s support for sanctions against Iran.

In January 2012, David Ignatius wrote in the Washington Post: “The squeeze is already beginning on Iran’s oil exports---and guess which nation quietly reduced its purchases from Tehran. Why, that would be China, Iran’s supposed protector. The Chinese cut their imports from Iran roughly in half for January, trimming 285,000 barrels per day from their average last year of about 550,000 barrels per day, according to Nat Kern, the publisher of Foreign Reports, a respected industry newsletter. [Source: David Ignatius, Washington Post , January 17 2012]

China and Afghanistan

China is one of the leading investors in Afghanistan. In 2007 it made the largest investment in Afghan history: $3 billion by China Metallurgical to develop the world’s largest untapped copper reserves at Aynak. China is also interested in Afghanistan’s oil, gas, iron and uranium. Many in the United States and Europe want to see China do more in Afghanistan on the military side: perhaps training soldiers or police as a minimum.

In Afghanistan, the Chinese pressured archeologists to stop excavating a 2,600-year-old Buddhist monastery south Kabul because the excavations interfere with China’s development of the world’s second biggest unexploited copper mine.

The Aynak copper mine is 50 kilometers outside of Kabul. As of late 2009, several hundred Chinese engineers were already there---behind a bomb-proof fence with American soldiers nearby---renovating the mine. The Afghan Mining Minister Mohammed Ibrahim Adel was accused of taking a $30 million bribe to award Aynak to MCC. Adel denied taking the bribe. Insiders say bribes were offered by several bidders.

the United States and China share a common interest in Afghanistan: ridding it of militants and drugs.

China and Libya

In Libya, the Chinese abstained from voting on a UN resolution that effectively authorized international military intervention in Libya on humanitarian grounds. Chinese diplomats then went a step further. They supported a Security Council resolution that imposed an arms embargo and other sanctions on the regime of Libyan leader Muammar Qaddafi, and endorsed referral of the regime’s crackdown to the International Criminal Court in the Hague. [Source: James M. Dorsey, Bloomberg, February 6, 2012]

Thirty-two thousand Chinese---most of them working on construction projects or providing oil filed services---were stuck in Libya when unrest broke out there in early 2011. Beijing sent charter flights and ferries along with military transport planes to pull out Chinese nationals. China even moved a missile frigate to waters off Libya to protect citizens being evacuated. The in rest brought to a halt a half-finished $2.7 billion housing project and oil field work undertaken by the Chinese.

China dispatched the frigate Xuzhou from off the coast of Somalia to the Libyan coast to help evacuate Chinese citizens in Libya. The move has attracted widespread attention because it was a dramatic demonstration of how the Chinese government intends to use its expanding naval power around the world.

Beijing Greets Libyan Rebel Leader While Gaddafi Is Still in Power

China cultivated relations with both Qaddafi’s embattled regime and the Benghazi-based rebels. Yet that evenhanded approach didn’t prevent the rebels from threatening a commercial boycott, particularly after they found documents purporting to show that Chinese defense companies had discussed the supply of arms with Qaddafi operatives. A Chinese Ministry of Commerce delegation visited Libya this week in a bid to recover at least some of the losses that China, Libya’s biggest foreign contractor, suffered with the evacuation last year of 35,000 workers who were servicing $18.8 billion worth of contracts. [Source: James M. Dorsey, Bloomberg, February 6, 2012]

In June 2011, Mahmoud Jibril, the leader of Libya’s rebel opposition arrived in Beijing for talks as a Chinese Foreign Ministry spokesman for the first time described the opposition as “an important political power in Libya.” The meeting with Jibril came after China’s foreign minister met with Col. Muammar el-Qaddafi’s foreign minister. “We are in contact with both parties in Libya, urging the parties to ease conflict in order to facilitate the national and people’s fundamental interests as soon as possible,” the ministry’s spokesman, Hong Lei, said. Jibril is the chairman of the executive board of the Libyan opposition’s National Transitional Council. [Source: Keith Bradsher, New York Times June 21, 2011]

Keith Bradsher wrote in the New York Times, “China’s departure from its usual reticence toward political opposition groups has prompted significant discussion among experts on China’s foreign policy, with the main focus on the country’s shift from being an oil exporter as recently as the early 1990s to importing half its oil now. “It’s unusual for them to negotiate with anyone other than the incumbent government, but clearly China has oil interests,” said Ben Simpfendorfer, the managing director of Silk Road Associates, an economic and political consultancy in Hong Kong that focuses on China’s relations with the Middle East. Libya was a large oil exporter until the recent civil conflict halted shipments.

China has consistently preached nonintervention in recent years and has opposed international efforts to put pressure on even repressive governments like those in Zimbabwe, Sudan, Myanmar and North Korea. When the United Nations Security Council voted in March to authorize airstrikes against Colonel Qaddafi’s forces to prevent them from killing civilians in opposition areas, China was one of five countries that abstained.

Asked at the news conference on Tuesday if inviting an opposition leader to negotiations reflected China’s desire to be prepared no matter which side wins in the Libyan conflict, a Hong replied in part: “We believe that Libya’s future should be decided by the Libyan people. China respects the Libyan people’s freedom of choice...China believes that the Libyan opposition National Transitional Council has become an important political force in Libya,” Mr. Hong said on Tuesday. “We would like to remain in contact with the N.T.C. and work towards a political solution.”

Strong criticism of Colonel Qaddafi by other Arab countries, like Qatar, as well as efforts by African leaders to negotiate a settlement in Libya may have made China more willing to depart from its usual practice of avoiding contact with opposition groups, Mr. Simpfendorfer said. China buys half of its oil and gas from the Middle East, and now buys more oil and oil products from Saudi Arabia, for example, than the United States does. China also buys sizable quantities of oil from Libya, although less than it buys from Saudi Arabia. China purchased $4.45 billion worth of Libyan crude oil last year, according to data from Global Trade Information Services Inc., a data service based in Columbia, S.C.

China and Syria

In February 2012, China joined Russia in vetoing a condemnation of Syria’s regime at the United Nations Security Council. The New York Times reported: United Nations Security Council effort to end the violence in Syria collapsed in acrimony with a double veto by Russia and China on Saturday, hours after the Syrian military attacked the city of Homs in what opposition leaders described as the deadliest government assault in the nearly 11-month uprising. [Source: Neil Macfarquhar and Anthony Shadid, New York Times, February 4, 2012]

The veto and the mounting violence underlined the dynamics shaping what is proving to be the Arab world’s bloodiest revolt: diplomatic stalemate and failure as Syria plunges deeper into what many are already calling a civil war. Diplomats have lamented their lack of options in pressuring the Syrian government, and even some Syrian dissidents worry about what the growing confrontation will mean for a country reeling from bloodshed and hardship.

The veto is almost sure to embolden the government of President Bashar al-Assad, which brazenly carried out the assault on Homs on the day that the Security Council had planned to vote. It came, too, around the anniversary of its crackdown in 1982 on another Syrian city, Hama, by Mr. Assad’s father, Hafez, in which at least 10,000 people were killed in one of the bloodiest episodes in modern Arab history. “It’s quite clear---this is a license to do more of the same and worse,” said Peter Harling, an expert on Syria at the International Crisis Group. “The regime will take it for granted that it can escalate further. We’re entering a new phase that will be far more violent still than what we’ve seen now.”

The Security Council voted 13 to 2 in favor of a resolution backing an Arab League peace plan for Syria, but passage was blocked by Russia and China, which opposed what they saw as a potential violation of Syria’s sovereignty. The support of those countries has proved crucial in bolstering the Syrian government’s confidence, despite an isolation more pronounced than any time since the Assad family seized power more than four decades ago.

After the vote, and the failure before that of the Arab League peace plan to stem the violence, predictions were grim about what is ahead in a conflict that the United Nations says has claimed more than 5,000 lives. To many, two inexorable forces were at work: a government bent on crushing the uprising by force and an opposition that, if not increasing in numbers, appeared to be growing even more determined.

Both Russia and China said they vetoed the measure because it unfairly blamed only the Syrian government for the violence. Ambassador Vitaly Churkin of Russia called it an “unbalanced message,” while the Chinese envoy, Li Baodong, said the resolution, in trying to predetermine the outcome of dialogue between the government and the opposition, “might further complicate the situation.”

James M. Dorsey of Nanyang Technological University in Singapore, wrote in Bloomberg: “Rather than portray China as a global power that seeks good relations with all and -- unlike the U.S. -- doesn’t meddle in other countries’affairs, the veto of a relatively toothless condemnation of the regime in Damascus has painted China into a corner. The nation now appears to support an international pariah that brutally suppresses its people, a stance that risks roiling ties with some of China’s most important energy suppliers in the Arab League, which sponsored the defeated UN resolution. [Source: James M. Dorsey, Bloomberg, February 6, 2012]

In March 2011, China warned both sides in Syria to shun violence but also told the international community “not to interfere.” The official Chinese government newspaper, the People’s Daily, called U.S. Secretary of State Hillary Clinton “super arrogant.” for criticizing China’s position on Syria.

China Needs to Change Mideast Foreign Policy

In February 2012,James M. Dorsey of Nanyang Technological University in Singapore, wrote in Bloomberg, “The question is no longer whether officials in Beijing will abandon the principle of non-interference in other countries’affairs to protect their expanding interests around the globe. The question is when. China joined Russia in vetoing a UN resolution against Syria partly for fear that backing the UN’s rebuke of a government’s brutal suppression of its people may come back to haunt China itself, given its treatment of Tibetans and of Uighur Muslims in the Xinjiang autonomous region. [Source: James M. Dorsey, Bloomberg, February 6, 2012; Dorsey is a senior fellow at the S. Rajaratnam School of International Studies at Nanyang Technological University in Singapore]

Yet China’s economic growth and associated need to secure resources increasingly have been at odds with this long-standing policy of being aloof. That’s especially true in the resource- rich region that stretches from the Atlantic coast of Africa to Central Asia and the subcontinent, much of which is now in revolt. Over the past year, a series of incidents in the region have tested China’s non-interference policy, but without serious damage to the country’s image. With China’s veto of the UN resolution on Syria, Chinese determination to cling to a principle rooted in 19th-century diplomacy seems set to backfire.

The Arab revolt is certain to force not only a revision of China’s policy of non-interference but also of the employment practices of Chinese companies. With new and long-standing governments in the region desperate to reduce unemployment -- a key driver of the revolts -- authorities in Libya and elsewhere are likely to demand that Chinese construction companies employ local, rather than imported, labor.

The need for a revised approach to the Middle East and North Africa, as well as countries such as Pakistan and Afghanistan, will become increasingly clear as China boosts its investment in Central and South Asian nations before the scheduled 2014 withdrawal of U.S. forces from Afghanistan, where China has secured oil and copper rights.

Reports that China is considering establishing military bases in Pakistan’s insurgency-plagued northwestern tribal areas near the border with Afghanistan, and a naval base in the Balochistan port city of Gwadar, could create further pressure for change. China holds the Pakistan-based East Turkestan Islamic Movement responsible for attacks last year in Xinjiang’s city of Kashgar. Defeating the movement is key to Chinese plans to keep regional trade and energy flowing, and the bases in Pakistan may tempt China to take on a role as local policeman.

If it takes an event to drive a change of China’s foreign policy, Yemen may prove to be the spark. With $355 billion worth of trade with Europe and a quarter of China’s exports traveling through Bab el Mandeb -- the strait that separates Yemen from Somalia and Djibouti -- China cannot afford a collapse of law and order in Yemen. The crisis-ridden country is countering multiple threats, including an al-Qaeda insurgency after mass protests and intercommunal fighting that forced the resignation of President Ali Abdullah Saleh and paved the way for elections later this month.

China has breached its non-interference policy to respond to these pressures in the recent past. Its deployment of naval vessels off the coast of Somalia to counter piracy, for example, constituted the first Chinese venture of its kind. But China’s status as an emerging economic superpower demands that it become a more muscular global actor to pursue its interests. Ultimately that will mean taking positions on domestic disputes and conflicts around the world that have a bearing on China’s global national-security interests, the very opposite of the stance it adopted on Syria. Similarly, China will need to maintain military bases in key regions that serve to secure Chinese demand for natural resources, and to satisfy domestic calls to ensure the safety of its nationals abroad.

China and Latin America

China has showed a strong interest in Latin America, where is has signed deals to develop Venezuelan oil fields and Bolivian gas fields and invested in a Brazilian steel mill and copper mines in Chile and Peru. It is also buying up soy beans and sugar. Between 2001 and 2005, trade between Latin America and China grew at a 20 percent annual rate.

China and Brazil's bilateral trade surpassed $56 billion last year, up from $2.3 billion a decade earlier. In 2009, China replaced the U.S. as Brazil's biggest trading partner.

Venezuelan President Hugo Chavez visited China in September 2008 and offered to sell China more oil.

See Trade

China and Australia

Relations between China and Australia became strained in the late 2000s over efforts by Chinese to buy mines and commodities in Australia and the arrest of an Australian mining executive with Rio Tinto in China

China is Australia’s largest trading partner. In June 2011, Australian Prime Minister Julia Gillard ruled out meeting with Dalai Lama.

In diplomatic cable revealed by Wikileaks, Former Australian Prime Minister Keven Rudd described Chinese leaders as “paranoid” about Taiwan and Tibet and told the United States to use force against China “if everything goes wrong.” Rudd is a Mandarin-speaking former diplomat who was posted for a while in Beijing.

Australia, See Uranium, Energy

Image Sources: Landsberger Posters http://www.iisg.nl/~landsberger/, Chinese government, Wiki Commons

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2008 Jeffrey Hays

Last updated April 2012

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