China is quenching its thirst for energy resources and forging regional relationships with Iran and Saudi Arabia. What does it mean for China’s fragile relations with the Bush administration?
By Sanam Vakil
The Middle East has a new player. Beijing has emerged on the Middle Eastern landscape, where it is cultivating relations with oil-rich countries such as Iran and Saudi Arabia. Many American strategists find China’s encroachment to be a threat to U.S. national interests. In light of waning U.S. credibility in the region due to its “war on terror” and the campaign in Iraq, the merits of Beijing’s drive into a once American preponderant domain are to be questioned. For China, however, this shift westward is a natural extension, foreshadowing its growing power and domestic imperatives. Interestingly, its entrance into the Middle East has not excluded Beijing from engaging in the age-old policies of realpolitik. In the region, China’s policies, while economically motivated, have strategic undertones that benefit and balance domestic and foreign policy.
This is China’s third push to the Middle East. The first took place during the Tang Dynasty (618–907), where the infamous Silk Road linked the commerce of East and West. A second occurred during the Ming Dynasty (1368–1644), where Zheng He, a eunuch admiral, directed an armada that brought him as far as Persia and Egypt. After the establishment of the People’s Republic of China in 1949, the Mao Zedong government as a second world power tried to lure many of the developing world countries of the region out of the warm embrace of the United States, albeit unsuccessfully.
China was eagerly received in the Middle East only in the aftermath of the Iranian revolution, as Beijing strategically ingratiated itself by supplying weapons to both warring parties, Iran and Iraq, who were engaged in their eight-year war. Additionally, Beijing maintained further neutrality by selling medium-range strategic missiles to Saudi Arabia. China took advantage of this opening to distribute military hardware to nations denied by the West. Repeatedly deals were made throughout the 1990s, such that China became Iran’s leading supplier of weaponry after Russia. Purchases included Chinese Silkworm anti-ship missiles and C-802 anti-ship missiles, which could threaten the growing American presence in the Persian Gulf. Under pressure from the Clinton administration, Beijing promised to halt sales of cruise missiles as well as refrain from upgrading dated Iranian missile technology. Needless to say, U.S. attempts at restraining China’s proliferation penchants have been challenging. Repeatedly and most recently, the U.S. Treasury Department has targeted a number of Chinese companies with sanctions for violating their national export laws with these ongoing exports to Tehran. At the same time, China exploited the Cold War tensions between Washington and Moscow, using America’s Israeli ally to gain access to Western technology. Simultaneously pandering to regional revolutionary and nationalist movements, Israel provided a unique solution to Beijing’s thirst for new arms. Official diplomatic relations between the two nations were not established until 1992, though. Conveniently, this relationship continued to blossom following the Tiananmen Square reprisals on Beijing. Indeed, Washington has continuously come into conflict with Tel Aviv for transferring American technology to China as interests collide over the unsettled issue of Taiwan. Israel has been pressured by Washington to relinquish some commitments to Beijing, further fueling the fire between East and West. Targeting Resource-Rich Nations
As China’s appetite for energy increased in the early 1990s, so did its quest to build relations with resource-rich nations. China became a net importer of oil in 1993, hungrily searching for markets. Iran was one of those markets, with the fourth-largest reserves of oil and second-largest reserves of natural gas. Moreover, its strategic proximity and increasing economic and political impact on the cusp of the Caspian Sea and Persian Gulf only enhanced its viability. China’s relationship with Iran requires a delicate balancing act between its ever-growing energy demands and foreign policy calculations. This relationship, among others, has brought China into conflict with the United States, which seeks to restrict all investment in the Islamic Republic. For Chinese leaders, walking the tightrope between their growing domestic energy imperatives and their fragile relations with the Bush administration is ever-important. Iran underscores the convergence and divergence of Sino-American interests.
Highlighting this Sino-Iranian- dynamic which takes the form of commercial energy ties is a liquefied natural gas (LNG) contract worth $100 billion signed with the Chinese company Sinopec, allowing it to develop the Yadavaran oil field in exchange for the purchase of 10 million tons of LNG a year for the next quarter-century. Once Yadavaran becomes operational, Tehran has committed to sell its Chinese comrades 150,000 barrels per day of crude oil at market prices. For both China and Iran, this deal is a commercial and political coup, providing each with its energy and security requisites. Throughout 2005, Iran was China’s third-largest supplier of oil. However, by January 2006, Tehran had trumped Riyadh as Beijing’s No. 1 energy provider. A second phase of the Iran-China strategic energy cooperation agreement will involve expanding Iran’s oil and gas pipeline facilities that have been obstructed through U.S. opposition. Attempting to facilitate greater access to Middle Eastern and Central Asian energy resources, Beijing has plans to construct a pipeline in Iran to take oil about 620 miles to the Caspian Sea and connect it with the planned pipeline from Kazakhstan to China.
In 2004, trade between China and Iran hit a record $7 billion, a 42 percent increase from bilateral trade in 2003 of $4 billion. Non-oil trade was at a record high of $1 billion for 2004 and double that for 2005. By 2008, trade is expected to be a record $8 billion. Of course, the Iran-China trade flow is paltry compared with the $202 billion in U.S.-China bilateral trade in 2005. More than 250 Chinese investments now are percolating in Iran. This remarkable economic synergy is serving Iran in the wake of international uproar over its nuclear program. As talk of sanctions or military options looms large, conservative ideologue and editor of the government newspaper Kayhan, Hossein -Shariatmadiari, recently described the Sino-Iranian partnership as serving Tehran’s interests: “Sanctions are not useful nowadays, because we have many secondary options in markets like China.” Protecting Strategic Interests
These commercial interests recently have morphed into strategic ones as well as China regularly has come to Tehran’s defense in the ongoing battle over the Islamic regime’s nuclear ambitions. In the rounds of circular diplomacy, Beijing and Moscow have resisted pressure from Washington to sanction their Iranian brethren. Ultimately, amidst their economic interests, both Russia and China want to avoid any U.N. Security Council opening reminiscent of the Iraq War that would lead to a military encounter with Iran. As the Iranian nuclear game plays out, China must be cautious in its strategy. Thus far, it has tactically toed the line against sanctions following its Russian counterpart. China is expected to maintain a similar approach as Russia in this nuclear standoff in what is emulating an East versus West divide. Both countries are members of Shanghai Cooperation Organization (SCO), an intergovernmental body founded by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The SCO was initially set up as an open and nonaligned organization, and it was not initially targeted at a third party. Iran, Pakistan and India have joined as observer nations, hoping eventually to convert their status to full member nations. Some have said that the SCO eventually could threaten the West as “an OPEC with bombs.” The significance of the SCO is indeed a merger of security and energy interests that could pose a challenge to U.S. interests in the Caspian and South Asian region. Despite the warming of Russo-Chinese relations and the invitation of Iranian President Ahmadinejad to the June SCO summit in Beijing, Iran’s status has yet to be elevated. While Beijing continues to guard its interests in Tehran—both strategically and commercially—it also must consider the value of Sino-American ones. Beijing’s Middle Eastern incursion is not limited to Iran. Tehran’s Persian Gulf neighbor Saudi Arabia has also benefited from Chinese patronage in the form of missile sales, launchers and energy contracts. Saudi Arabia is China’s primary trading partner in the Middle East and is poised to maintain that role. China hopes to increase bilateral trade with Saudi Arabia from about $15 billion in 2005 to $20 billion in 2010. In 1999 the Saudi Kingdom and the Chinese Middle Kingdom signed a mutually beneficial Strategic Oil Cooperation Agreement. In return for opening their domestic market to Chinese investment and allowing China to pursue upstream oilfield activities in the kingdom, Saudi companies have begun participating in China’s downstream refining business. Most significant, King Abdullah was the first Saudi monarch to visit China since the two countries established diplomatic links in 1990, suggesting the importance of Sino-Saudi relations. At the same time, Beijing adroitly exploits the use of its cultivated Middle Eastern relations to placate its restive Muslim population. Residing primarily in Xingjiang Province, the 7.2 million Uighurs have been targeted by Beijing for their grievances against the central government and their separatist aims of establishing an Islamic Republic of East Turkestan. Ironically, in this situation, Beijing has cooperated with Washington’s “war on terror,” linking its own Muslim problem with the global conflict. This has enabled the government to crack down domestically against the ethnic minority.
Beijing also has used its relations with Iran and Saudi Arabia as soothing mechanisms. Former Iran President Mohammad Khatami toured Xingjiang Province, suggesting the region could bridge the divide between China and the Middle East. Further, Chinese hajj pilgrims have traveled to Saudi Arabia every year since 1955; their number regularly exceeded 6,000 in the 1990s and by 2003 had ballooned to more than 10,000. Clearly, Beijing’s Middle Eastern strategy is guided by a pragmatic policy designed to further its domestic needs and growing international ambitions. Tactically pursuing relations with energy-rich states such as Iran and Saudi Arabia while also securing its commercial interests, China has strategically pushed into the Middle East.
Often at odds with Washington in its dealings, Beijing has calculated never to overstep the bounds of Sino-American relations. While China’s emergence in this region portends its growing global strength, ultimately the Dragon’s movements reveal its delicate balancing act between East and West. Sanam Vakil is an assistant professor of Middle East Studies. She received her M.A. and Ph.D. from SAIS. |
