In the coming years, India and China again will become increasingly important players in the Middle East. The United States will have to accept that its "unipolar moment" in the Middle East is transitory. Today the United States has satisfactory relations with China, and there is much discussion of a new U.S.-Indian strategic relationship. Does this mean, however, that India will eventually cooperate on Gulf security? Or that China will be a continuing partner in the effort to bring stability to the world's most important source for oil and natural gas? Both countries have their own agenda for the region that may, over time, diverge from U.S. objectives.

India's Middle East Presence

Indians are no strangers to the region. For hundreds of years Indians enjoyed close economic and cultural ties with the peoples of the Gulf. During the period of the Raj, officials in Bombay managed British interests in the Gulf. Indian soldiers and laborers provided the bulk of the workforce that sustained Britain's Gulf presence in peace and war. Indian volunteers played a crucial role as members of Britain's Indian Army that fought in the Middle East during World War I and World War II.

Today India's most visible presence in the Gulf is demographic. Approximately 3.5 million Indians work in the Gulf Cooperation Council countries and send home about $4 billion annually in remittances. Without its South Asian workforce, the Arab Gulf countries would not be able to exploit their riches and would not be able to build the new, flamboyant city-states that are emerging--Bahrain, Doha and Dubai being prime examples. Eighty percent of the population of the United Arab Emirates consists of expatriates, of which the majority comes from South Asia, including 1.2 million Indians.

The 1990-91 Gulf crisis was a wake-up call for India. Not only did energy prices spike, but hundreds of thousands of Indians were repatriated from Kuwait and Iraq, leading to economic hardship for many regions of India dependent on Gulf remittances. India's inability to evacuate its citizens from the Gulf with its navy pointed to a lack of maritime capability (it eventually had to charter foreign aircraft for the evacuation). Thus, energy security and the expansion of its maritime power are driving India's emerging presence in the Middle East.

Currently, oil accounts for about 30 percent of India's total energy consumption, and future oil demand in India is expected to grow rapidly. Meanwhile, Indian consumption of natural gas has risen faster than any other fuel in recent years. The Indian government is investing heavily to secure supplies of fossil fuels from the Gulf. In March 2005 the Oil & Natural Gas Corporation, India's largest state-run oil explorer, won the right to develop Qatar's offshore Najwat Najem oil field with an initial investment of $20 million.

India's biggest success overseas has been in Iran, where the state-run Indian Oil Corporation reached an agreement in January 2005 with the Iranian firm Petropars to develop a gas block in the gigantic South Pars gas field. India is also helping Iran develop its Chahbahar port, as well as several infrastructure projects. In January 2005, the Gas Authority of India Ltd. signed a thirty-year deal with the National Iranian Gas Export Corporation for the transfer of as much as 7.5 million tons of liquid natural gas to India per year. The deal, worth an estimated $50 billion, will also entail Indian involvement in the development of Iranian gas fields. Even more noteworthy, Indian and Pakistani officials are discussing the construction of a $3 billion natural gas pipeline from Iran to India via Pakistan, an extraordinary step for two long-term adversaries. If completed, the pipeline would provide both countries with a substantial supply of gas.

India is also set to expand its navy (it is estimated that by 2009 it will be the world's third largest). It has embarked on an expansive modernization program, which includes the construction of ten frigates and nine corvettes, the procurement of a Russian aircraft carrier (the Admiral Gorshkov) capable of deploying MiG-29 aircraft and the development of an indigenous nuclear-powered submarine production capability. In recent years it has been increasing its naval deployments to the Gulf and has developed close bilateral defense ties with the Arab states, while expanding its tactical cooperation with the U.S. Navy (both navies now cooperate very effectively in maritime rescue operations, most recently in 2005 after the Asian tsunami)--far different than during the first Gulf War, when India was seen as a pitiful giant, unable to project power even in its own backyard.

The Return of the Chinese

Six centuries ago a visible manifestation of China's superpower status was its westward voyages of exploration (which reached as far as Tanzania) led by the eunuch Admiral Zheng He, a Muslim originally from Central Asia. At its peak he commanded a fleet of more than 300 vessels and 30,000 men. His fourth expedition brought him to the Middle East and modern-day Iran; in 1432 Zheng sent a special mission to the Arabian Peninsula and, more importantly, to Mecca. After Zheng's last voyage China abruptly halted its naval explorations due to a reordering of national priorities. For centuries following the abandonment of its maritime outreach, China had little to do with the Middle East. Compared with the comfortable, historic relationship between India and the Middle East, especially the Gulf, the Chinese are considered much more as outsiders.

Following the creation of the People's Republic in 1949, China tried to work with revolutionary groups in the Arab world. But this was never successful and was vigorously opposed by nationalists who controlled most Arab states. China then adopted a very pragmatic approach. During the Iran-Iraq War, China became a major arms supplier to both countries. Most dramatic was China's surprise sale of medium-range strategic missiles to Saudi Arabia in the mid-1980s (which was motivated, on the Saudi side, by the U.S. refusal, because of Israeli objections, to provide fuel tanks for Saudi F-15s). In parallel, China began to modernize its armed forces and, denied access to Western military technology, turned to Israel for military cooperation. Israel remains one of China's most important arms suppliers, especially of high-technology items. This has become a very controversial issue in the United States, especially in the Department of Defense, which is responsible for contingency plans for the defense of Taiwan.

China's Middle East outreach now manifests itself in three relevant areas: energy security, maritime activity and, perhaps most portentous, the numerous infrastructure projects linking its western regions with Central and Southwest Asia. In 1993, China became a net importer of oil, mostly from the Middle East. Because air pollution became an increasingly serious problem, particularly the burning of dirty fossil fuels, China turned to natural-gas electricity generation as a preferred clean-fuel method. This increased its interests in gaining access to long-term gas deals with Middle Eastern countries, including Iran. As a result of China's continued economic growth and its voracious needs for energy, the Gulf and Central Asia, along with other regions of the Middle East, have become more important priorities for Chinese foreign policy. In 2004, China became the world's second-largest consumer of petroleum products, with total demand of 6.5 million barrels per day. Roughly half of China's imported oil comes from the Middle East, with Saudi Arabia alone accounting for 17 percent in the first quarter of 2005. The Energy Information Agency predicts China's demand will reach 14.2 million barrels per day by 2025, with net imports of 10.9 million barrels per day.

The three main Chinese oil companies are the China National Petroleum Corporation, the China Petrochemical Corporation (Sinopec) and China National Offshore Oil Cooperation. The Sinopec Group has been looking for overseas oil reserves for its refineries. The company's crude-oil imports account for nearly 80 percent of the country's total, and more than half of these come from the Middle East. In recent years Sinopec has increased its investment in the Middle East.

In January 2004, Sinopec signed a contract with Saudi Arabia for the exploration and production of natural gas in a nearly 15,000-square-mile area in the vast Rub al-Khali, the desert known as the "Empty Quarter." Initial investment in the project is planned to reach $300 million. Sinopec also has begun purchasing overseas oil assets, with its most notable success being a contract for the development of Iran's Yadavaran oil field signed in November 2004. Yadavaran may eventually produce 300,000 barrels per day. Currently, Sinopec is bidding for rights to exploit 16 Iranian oil fields, over obstacles and objections from the United States.

The booming Chinese economy has dramatically increased its dependence on foreign trade for both exports and imports. This has reinforced China's concerns about westward land access to Central and South Asia, as well as maritime access to strategic straits and critical waterways such as the Indonesian archipelago.

In the 1960s, China was instrumental in constructing the Karakorum Highway linking western China with Pakistan. China is now deeply involved in expanding road and rail connections in Central Asia, Pakistan, Iran, Nepal, Bhutan and Myanmar. It is also developing an oil pipeline from Kazakhstan and a huge deep-sea port on the Pakistani coast at Gwadar. These projects reflect China's determination to develop its western provinces and to connect them to Eurasia as well as to facilitate much faster and cheaper communications for human traffic and goods and services.

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