The East Moves West
Mini Teaser: India and China's Great Game in the Gulf.
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.
China's size and economic potential mean that direct Chinese influence and interests will expand westward, as John Garver argues in a comprehensive article in the China Quarterly. The impact of this expansion will be enhanced because of the parallel efforts of the European Union to expand eastward into the Caucuses and Central Asia with its "Transport Corridor Europe-Caucasus-Asia." This has resulted in financing for road and rail projects in Kazakhstan and Kyrgyzstan that connect to China's Xinjiang province. Though these new projects will take many years to be completed, the geo-economic and geopolitical impact is likely to be far reaching.
Although China has also embarked on a major expansion of its maritime capabilities, most analysts believe that the primary mission of China's navy (PLAN) will continue to be focused on regional defense rather than evolving into a truly global blue-water navy. China's primary security concerns will continue to be Taiwan and preparing for a possible conflict over the island that could involve military operations against the United States. Aside from Taiwan, the South China Sea will remain the focus of Chinese concerns because of disputes over offshore islands, such as the Spratly Islands, which contain important energy resources. China's maritime vulnerabilities are another reason it has launched a massive infrastructure program to open its west to Central, South and Southeast Asia.
U.S.-Indian-Chinese Relations
Although India and China's growing Middle East roles reflect different historical circumstances and different conceptions of national priorities, there is presently an important convergence between their interests and those of the U.S. when it comes to energy security. Historically, the Western powers argued that dependency on Middle Eastern sources required a regional military presence to secure energy supplies, especially in times of war. This was the motivation, in part, behind the Franco-British attack on Egypt in 1956 (to secure continued access for oil through the Suez Canal) as well as creation of the U.S.-led coalition to evict Saddam Hussein from Kuwait in 1991.
Will India and China follow in the footsteps of the Western powers and seek military means to shore up their energy needs? Or will they continue to rely on America's undisputed control of the world's oceans and the presence of the U.S. Fifth, Sixth and Seventh Fleets in the Persian Gulf, the Indian Ocean, the Mediterranean and the eastern Pacific to guarantee the uninterrupted flow of oil and natural gas to world markets?
Any disruption of the Gulf's energy would lead to an immediate and painful impact upon all their economies. So India and China, even though they disapproved of the U.S. decision to invade Iraq, both stand to lose if the United States fails in Iraq and insurgency and violence spread to Saudi Arabia, Iran and the smaller Gulf states. But it is not clear whether the current mechanisms for assuring energy security, namely American military hegemony, will forever be acceptable to India and China. There are Chinese strategists who are worried about the U.S. ability to stop the flow of oil to China in an event of a crisis and there are Indian strategists who worry that China, at some point, will be able to project power into the Indian Ocean and the Arabian Sea, especially if China's military ties with Pakistan grow. And some Americans are asking whether the huge price the United States pays to be the world's policeman is worth it, especially if its Asian economic competitors are getting a "free ride."
It has been argued that the mutual interest between China, India and the United States in containing the spread of radical Islam or preventing the spread of weapons of mass destruction to unstable regimes has created a strong overlap of strategic interests that should work in favor of developing a trilateral cooperative security agenda in the Middle East, the region where so many of the threats come from.
Yet there are geopolitical realities that do not fit so easily into a pattern of mutual cooperation. For starters, India and China, though now on friendly terms, are inevitable competitors within Asia. They have unresolved territorial disputes along the Indo-Chinese border (over which they fought a war in 1962). India has expressed concern about China's activities in Southeast Asia, particularly Myanmar. China's continuing strategic ties to Pakistan--which go back to the Cold War, including China's cooperation with Pakistan's nuclear and military programs--also figure into India's strategic calculus. More recently, China's assistance to Pakistan in constructing the new port at Gwadar raises a number of questions, including the long-term possibility that China could operate a fleet out of the port. Gwadar is located in Baluchistan in western Pakistan, less than a hundred miles from the Iranian border and similarly close to the Strait of Hormuz.
Some Chinese strategists, on the other hand, see U.S.-Indian ties and strategic cooperation as a potential challenge to Chinese interests in Asia. These concerns could lead to enhanced competition between India and China in both nuclear and maritime forces. India and China could once more emerge as adversaries given their overlapping interests in Southeast Asia, Central Asia, the Indian Ocean and the subcontinent itself. This could be especially troubling if their respective relations with Pakistan and Iran are competitive or even confrontational. The emerging strategic equation will become more complicated as the other great Asian power, Japan, shows signs of adopting a more assertive foreign policy and a willingness to challenge China on key security issues, including the question of Taiwan. In 2005 the Japanese government, in a break with the past, issued a joint statement with the United States declaring that Taiwan is a joint security concern.
Two issues on the U.S.-Indian agenda have implications for the Middle East, especially in relation to Iran. The Bush Administration's decision to revoke decades of restricted policies on U.S.-Indian nuclear technology cooperation have been justified in the broader context of U.S. interests in Asia. Critics argue the nuclear deal is further proof of the administration's radical new approach to proliferation, which is not to see proliferation per se as the problem but rather proliferation to certain hostile countries, such as Iran and North Korea. This philosophy is very different from the original principles underlined in the Nuclear Non-Proliferation Treaty, which required that the United States, the Soviet Union, Britain, France and China to take steps to draw down and eventually eliminate their own nuclear forces. There is no evidence this is happening, and countries such as Iran argue the U.S. stance on proliferation is hypocritical and that the deal with India demonstrates the "double standard."
A second issue concerns India's strategic interests in Iran. India has good reasons to nurture a close relationship with the Islamic Republic. A friendly Iran provides a westward buffer in the event that the political situation in Pakistan deteriorates and, in the extreme case, if Pakistan succumbs to control by radical Sunni theocrats. Alternatively, good relations with Iran can help India and Pakistan overcome their antagonisms, especially in the area of energy cooperation. Both India and Pakistan need more natural gas, of which Iran has the world's second-largest reserves. The proposed natural gas pipeline from Iran to India via Pakistan has been in the advanced planning stages for a number of years, but an array of technical, economic and political problems have delayed consummation of the agreement. Not the least of these problems has been the strong opposition of successive U.S. governments to projects that enhance Iran's energy development. Although the United States has no direct veto power over such pipeline deals, its opposition is a major barrier and has a deterrent effect on the various financial institutions that would have to commit great sums of money up front to initiate the project. U.S. opposition to the pipeline runs directly counter to Indian interests; absent a rapprochement of U.S.-Iranian relations, it is likely to remain a source of friction between India and the United States.
Managing the Trilateral Relationship
How does increasing strategic cooperation between India and the United States effect U.S. policy in the Gulf and relations with China? In the immediate future there is little India can do, or would probably wish to do, to help in Iraq. However, Indian policy towards Iran will have immediate resonance in Washington, which could be negative if India parts company with the United States on tough measures to contain Iran's nuclear program. For the future, as India emerges as a great power in its own right, it will have a greater influence over those regions, such as the Gulf, where it has vital interests. A decade from now it is not likely that any Indian government will sit idly by if thousands of its citizens are threatened in the Gulf, as happened in 1990. Given the growing bilateral military-to-military ties between India and the Gulf states, it is not unrealistic to envisage a time when India's role in the Gulf takes an overtone of a "presence", or possibly even that of "policeman." There is nothing predetermined about such an Indian role, but it would be wise for American decision-makers to include such possibilities into their own calculations about future American strategies. India will not act in the Gulf at America's behest, but all logic suggests India and America have many mutual interests in the region.
It will be a long time before China can directly establish a physical presence in the Arabian Sea and the Gulf, but, as indicated earlier, its westward reach by land is increasing, and eventually its maritime capabilities will permit expansion into the Indian Ocean. If this takes place against a background of U.S.-Sino-Indian cooperation, then China's growing Middle East role will pose no vital threat to American or Indian interests. But if events take a different turn and the new century sees increasing competition and antagonism between the Asian giants, then a more classical model of the Asian balance of power could evolve.
In anticipation of such developments, some advocates of the U.S.-Indian strategic relationship see it as an essential element in an inevitable struggle with China. But Indians will not play this role unless their own relations with China seriously worsen. For this reason the United States should not overplay the benefit of the new relationship with India. Rather, the United States should accept that both India and China are going to be more assertive powers in the years ahead and the United States will have to adjust to the reality that it cannot, and should not, be the perpetual policeman of a region of the world that has caused it great anguish and for which it has received little gratitude. One effect of the U.S. domestic debate about the current crises in the Middle East has been to burst the bubble of imperial exuberance that followed the initial successes in Afghanistan and Iraq. It remains to be seen whether a more sober America will emerge--still committed to Middle East stability and reform but less inclined to flaunt its exceptionalism and more prepared to work with the emerging Asian giants who both have growing stakes in the region.
Geoffrey Kemp is director of Regional Strategic Programs at the Nixon Center. He served as special assistant to President Reagan and was senior director for Near East and South Asian affairs on the National Security Council staff.