Tuesday, June 11, 2013

The Far East Comes Near

China dips its toe in the Middle East's troubled waters

Commentary - Executive magazine

That China is a rising global power is a given, although whether the People’s Republic will eventually usurp the United States as world hegemon is hotly debated. But as a saying goes in the Far East that reflects the region’s burgeoning confidence: “Europe was yesterday’s power, today it is the US, and tomorrow it will be Asia.”

With China the world’s second largest economy and forecast to overtake the US by 2025 if not earlier, Beijing undoubtedly has the biggest say among the ascendant Asian states. Yet when it comes to a political role in the Middle East, the Far East has traditionally acted as a bystander — an exception being Japan’s involvement in the 1990 Gulf War, albeit a non-military one, by providing $12 billion to the US war chest — but this has started to change in recent years.

An inkling of what’s afoot was a surprise diplomatic move by Beijing when Israeli Prime Minister Benjamin Netanyahu and Palestinian Prime Minister Mahmoud Abbas made visits — separately, of course — to China in early May. Beijing announced a “four point peace plan” to Abbas, and the Chinese Foreign Affairs Ministry proposed hosting a future Israel-Palestine peace summit.

While both offers were politely rebuffed, the move was a notable development in China’s foreign policy, which has focused more directly on the Pacific Rim and its immediate sphere of influence than projecting political clout elsewhere on the planet. As analysts continuously, and rather obviously, emphasize, China’s foreign policy outside its backyard has been driven by securing commodities — as if China is unique in that respect and the US or other countries are not focused on energy in our “carbon era”.

In this regard, it is worth noting that around half of China’s oil imports are currently sourced from the Middle East and North Africa (MENA), and that is set to rise to 80 percent by 2020, according to the International Energy Agency (IEA). Trade — primarily energy from the MENA and goods from China — is slated to grow and diversify, with Beijing and the Arab states setting a target to bolster trade from a projected $222 billion this year to $300 billion in 2014.

To ensure a steady flow of energy from the MENA region, peace and stability are clear priorities for Beijing. That is likely one reason for its proposal to mediate in the Arab-Israeli conflict, and China could play a role as a largely independent actor without the historic baggage of the US or Europe.

Indeed, if China plays a canny game, it could push the Israelis — potentially via trade, as China is Israel’s top trading partner in Asia, with bilateral trade close to $10 billion in 2012 — to make serious concessions for a viable Palestinian state and in doing so garner support among the far more populous Arab and Muslim public that the US lacks due to its unflinching support for the Jewish state.

There is a long way to go though before China will become a heavyweight player in MENA politics. Indeed, it has been happy to “free load” along with the rest of the world on the back of the US’ military presence in the Gulf that keeps the Strait of Hormuz open for oil tankers. As pointed out in these pages last year, the US spent an estimated $6.8 trillion between 1976 and 2008 projecting military force in the Persian Gulf, so when taking into consideration the 6.2 billion barrels a year that pass through the Strait, the US is essentially footing a bill of $79 a barrel to keep itself and everyone else in Gulf oil.

China is in no position to incur such costs or replace the US as the “global policeman” — it only has one aircraft carrier — but Beijing is showing that it is willing to dip its toe in the Middle East’s troubled waters and in one of the world’s most intractable conflicts. It is indicative of increased Chinese involvement in the MENA’s geopolitics in the years to come.

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