U.S. Losing Saudi Arabia as an ally

James J. Coyle: U.S. losing Saudi Arabia as an ally

 By JAMES J. COYLE / For the Register

Published: Nov. 18, 2013 Updated: Dec. 2, 2013 9:28 a.m.

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CONCERN

"Saudi Arabia cannot afford to be encircled by Iran, from Iraq and Syria. That is out of the question," said Khalid al-Dakhil, a political sociology professor at King Saud University, who has called for Saudi Arabia to become less dependent on the United States, told the New York Times in October.

In 1988, I asked a member of the Reagan administration what was being done to regain America's position in Iran. “Nothing,” was the reply. “We don't need them as long as we have Saudi Arabia.” How things have changed.

As world powers prepared to move closer to Iran, the head of Saudi intelligence (and former ambassador to the United States), Prince Bandar bin Sultan, told European diplomats that he planned to scale back Saudi cooperation with the United States in Syria. He said this move was in protest over America's policies in the Middle East. The prince promised a “major shift” in relations with the U.S., taking official Washington by surprise. It shouldn't have.

The Saudis were shocked when the United States advised its longtime ally, Egypt's President Hosni Mubarak, to step down during the Arab uprisings. And when the military pushed aside the Muslim Brotherhood-supported President Mohamed Morsi, the American suspension of military aid was met in Riyadh with profound disbelief. The Kingdom immediately promised to make up any aid to Egypt that the Americans cut.

Saudi Arabia answered the call of Bahraini King Hamad bin Isa al Khalifa in 2011 to put down Shia protesters. Military action was in direct defiance of American advice. In Iraq, America's troop withdrawal in December 2011 left a Shia-dominated government in Baghdad, and Saudi Arabia's Sunni allies out in the cold. Meetings with Iran in Geneva involving the U.S., Russia, China, the United Kingdom, France and Germany have sent a shiver of fear through the kingdom – a fear of abandonment as America seeks rapprochement with its Persian nemesis.

The final step was President Barack Obama abandoning his own red-line in Syria. Former head of Saudi intelligence (and former ambassador to the United States and Great Britain) Prince Turki bin Faisal, called the American policy “lamentable.” According to Reuters, the Prince believed the deal between the United States and Russia to be a ruse. “The current charade of international control over Bashar's chemical arsenal would be funny if it were not so blatantly perfidious. And designed not only to give Mr. Obama an opportunity to back down (from military strikes), but also to help Assad to butcher his own people.”

The king was furious at America's actions. The Saudi foreign minister canceled his address to the United Nations General Assembly, and then refused to take a coveted seat on the UN Security Council. “This was a message for the U.S., not the UN,” said Prince Bandar.

The Obama administration is downplaying the crisis. Secretary of State Kerry emerged from a meeting with his Saudi counterpart to say the foreign minister had not raised Prince Bandar's concerns. A senior American defense official said the U.S. remains “fully committed to security cooperation” with the kingdom. A senior administration official said the U.S. and Saudi Arabia have a longstanding partnership. White House spokesman Jay Carney said any disagreements would be worked out in a “candid and forthright way as we maintain the basic foundation of a very important relationship.”

Indications are, however, that the breach is a serious one. Apparently, Saudi Arabia did not warn its American ally before it took the drastic step of rejecting the Security Council seat. Prince Bandar said the Saudis would begin to work in Syria with allies such as Jordan and France, rather than the United States. Military and commercial ties are in danger. According to a Reuters' source close to Saudi policy, “The shift away from the U.S. is a major one. Saudi doesn't want to find itself any longer in a situation where it is dependent.” The source promised an impact; echoing a phrase one usually associates with American decision makers, he said “All options are on the table now.”

James J. Coyle is the director of Global Education at Chapman University and the chair of the Eurasian committee of the Pacific Council for International Policy.

China's Growing Energy Appetite and Strategy

Analysts who follow the energy "Great Game" being played between Russia and the Rest are turning their attention away from the European front, toward the growth of China. Asia Times' correspondent Pepe Escobar explains the dynamics of Chinese energy growth in the magazine The Nation. China is the world's fifth largest oil producer, at 3.7 million barrels per day, just below Iran and slightly above Mexico. China consumes 10% of the world's production, second only to the United States' 27% share and triple its consumption of 30 years ago. The International Energy Agency estimates that Chinese oil consumption will reach 11.3 million barrels a day by 2015.

China's top three oil suppliers are Saudi Arabia, Iran and Angola. China has invested $120 billion in Iran's energy sector over the past five years (so much for UN sanctions!), and purchases 14% of its imported oil from the Islamic Republic. The Chinese energy company Sinopec has agreed to invest an additional $6.5 billion to build oil refineries there. China is also the principle supplier of machinery and parts used in Iran's oil production.

Escobar reports that Saudi Arabia has tried to wean China away from its reliance on Iran, offering to supply the Chinese with the same amount of oil it buys from Iran--but at a discount. China's interest in a strategic relationship with Iran has trumped profit, however, and Beijing rejected the Saudi offer. Christina Lin, who follows Chinese military developments, reports that China views Iran as a means of counterbalancing U.S.-supported Arab monarchical states. This does not mean the Saudis are frozen out of the market, however; over half of Saudi oil exports are now to Asia, as opposed to 14% to the United States. Saudi Aramco owns refineries in both Qingdao and Fujian provinces, and is China's principal trading partner in the Middle East.

Most of this oil comes to China through two naval choke points: the Strait of Hormuz and the Strait of Malaccca. 20% of China's oil imports transits Hormuz, and a full 80% of its imports has to go through Malacca. To overcome this maritime vulnerability, the Chinese are trying to develop overland supply routes from Central Asia. As an example, the Kazakh oil fields lie close to the Chinese border and the Chinese company financed a pipeline to deliver its oil to the Middle Kingdom. The Chinese have become so close to the Kazakhs that there have been four heads-of-state summits in the past four years. President Hu Jintao has declared that the relations between the two countries are a "strategic partnership of long-term stability, good-neighborly friendship and win-win cooperation," according to Robert Cutler in the Asia Times.

Another source of petroleum was the strife-torn country of Libya. According to a report published in asahi.com, China has invested large sums of money in Libya. There had been 36,000 Chinese in the country before hostilities began, working on 75 joint venture projects with an additional 50 projects in the pipeline. Each year, China was importing 7.4 million tons of petroleum from Libya.

China has also begun receiving Russian oil via the Eastern Siberia-Pacific Ocean (ESPO) pipeline. China lent the Russian-state run company Rosneft $25 billion to build the line, and the plans are that it will bring 15 million tons of petroleum annually for the next 20 years. This is equivalent to 6% of China's 2010 petroleum consumption, according to asahi.com.

China's growing energy appetite, however, cannot be satiated by Russian and/or Central Asian pipelines. As much as they might fear the vulnerability, they will continue to be reliant on a maritime delivery route. To protect themselves, they are developing a "string of pearls," a series of Chinese naval bases stretching from the straits of Hormuz to the energy-hungry cities of China's east coast. According to Christina Lin, these pearls include upgraded military facilities on Hainan Island, an upgraded airstrip and oil drilling platforms in the contested islets of the South China Sea, a canal in Thailand, and intelligence-gathering facilities near the Strait of Malacca; ports in Burma, Bangladesh, and Sri Lanka; a naval base in Gwadar, Pakistan; and facilites in Port Sudan. The string of pearls gives the Chinese military an overseas presence for the first time in modern Chinese history.

Other Central Asian countries are jumping into the game: following the Kazakh example of getting the Chinese to finance oil projects, Turkmenistan has turned to China to finance natural gas projects. the Turkmen have the world's fourth largest gas reserves, and they sell their gas to China, Russia and Iran. Bloomberg Businessweek reports that Turkmenistan is doubling the amount of natural gas it had originally planned to sell China, and will be shipping 60 billion cubic meters per year by 2015. China is a welcome new market for Turkmenistan, who lost its previous main customer (Russia) after a pipeline explosion disrupted deliveries to that state.

Overall, China's natural gas consumption is expected to grow by 22.6% in 2011, according to a report released by the research arm of China National Petroleum Corporation (CNPC), as reported by the China Daily. Consumption will grow from 106 bcm in 2010, to 130 bcm in 2011,and to 230 bcm in 2015. Domestic output of the fuel will rise 58% in the same time period, reaching 150 bcm in 2015. The CNPC report verified that China imported 4.4 bcm from Central Asia in 2010, and has opened negotiations with Russia for an additional 70 bcm per year by 2015.

With such astronomical projections of increases in petroleum and natural gas consumption, China will be first in line for any production increases from anywhere throughout the world. The current relaxation in oil and gas prices will not be able to be sustained in the mid to long term in the face of Chinese energy demands.