Power Hungry

In a recent article on India, I made reference to its co-operation with China and Iran on energy issues. I also called energy security and supply ‘the issue of our time,’ and wondered openly how the West would respond to India’s growing energy thirst a question I mean to explore in a future article.

For now, however, the largest consumer of energy in Asia remains China, a nation with huge growth figures and its own concept of what the US used to call ‘Manifest Destiny.‘ The largest energy consumer in the world, of course, is still the supposed hyperpower: the United States.

Unstoppable force, meet immovable object.

The US has long been insecure about its energy supplies particularly oil. For this reason, it has propped up notorious human rights abusers like the Saudi regime, as well as supporting ‘regime change’ in Iran, Iraq and Afghanistan (to name only three).

More recently, it has worked to build relationships with resource rich and geographically well-positioned nations such as Azerbaijan, Georgia, Ukraine  and the Central Asian States. So far, the results have been mixed.

While the US’s chess moves and their effects on human rights and global stability have largely been ignored or distorted by the mainstream media, there is no lack of negative talk about China’s growing energy appetite all this despite the fact that the US consumes roughly three times as much oil as China.

Even if oil production has not yet peaked, the world’s finite reserves put China and the US on a collision course. While full-scale war between the two countries is unlikely, we are already seeing media conflict, positional jockeying and it could be argued the beginnings of proxy wars around the world.   We can expect this kind of conflict to increase as oil grows scarcer and the stakes grow higher.

Let’s briefly survey those parts of the world that supply the US with oil at the moment. Even during the Cold War, the USSR ceded the Middle East (as a sphere of influence) to the US. Client regimes   in Egypt, Jordan, Saudi Arabia, Iraq until 1990, Iran from 1953-1979 and the Gulf States have kept the US in the dominant geostrategic position in the world’s most crucial energy region. The US dollar’s standing as the world’s reserve currency (and the one preferred for oil transactions) has perpetuated this status by propping up massive US oil and military spending. As I will argue, this is changing rapidly.

Traditionally in the sphere of the USSR and to a lesser degree China, Central Asia has more recently become a crucial battleground for both resources and ‘resource transits.’ Afghanistan’s Unocal pipeline project (in ‘co-operation’ with the Taliban) is just one well-known example.

Only last month, the US House of Representatives backed the admission of both Georgia and Ukraine into NATO,  even though both countries have significant anti-Western sentiment among their populations.

Azerbaijan and Kyrgyzstan now both host US bases, but neither country could be called a ‘staunch’ ally. And as, Russia and other powers assert themselves in the region, there is little cause to believe that the US will have success elsewhere in the region.

China , however, has a major presence in Central Asia through the Shanghai Cooperation Organisation. It is also extending its reach in South Asia to Pakistan. Pipelines to China’s western Xinjiang region are a relatively simple and logical extension of China’s existing relations with its neighbours, and China has surplus funds that it has already decided not to channel into more foreign currency buying.

The US’s ‘humanitarian’ interventions in Somalia in the 1990s and this year have been lauded as ‘anti-terror’ and ‘pro-democracy.’ In fact, they are nothing of the sort. They are a miniature ‘Great Game’ for regional supremacy, transplanted to the Horn of Africa.

The Islamic Courts Union (ICU) in Somalia was supported by secularists and a majority of the population as the most stable and secure government that the country has had since warlord rule. The ICU was allowed to rule for around a year until the end of 2006, before the US supported the old warlord regime and Somalia’s bitter (Christian) foe Ethiopia in attempting to overthrow it. Thousands have died so far and the fighting continues.

The Sudanese Government is the other demonised entity in the Horn region. We witnessed Bill Clinton ordering airstrikes in 1998 on a ‘chemical weapons’ factory that the US knew was nothing of the sort ) and have since seen unprecedented support from Right-wing Christian evangelicals for intervention there. Last year saw the creation of AFRICOM,   the newest US military command that will deal with most of Africa and, one might presume, drive foreign policy in the region in a military direction.

China has been active in Africa for some decades, and is criticised by the West for working with odious regimes (one must assume that this righteousness stems from our own unspotted commitment to ‘democracy’ and ‘freedom’). China brings large sums of capital asking in return resources and aid opportunities, but at a very low political cost to the energy supplier. This must be attractive to countries tired of decades of political interference during the colonial and post-colonial eras.

What does the f
uture hold?

In the short term, this race between China and the US will see the continuing demonisation of pro-Chinese regimes, including their human rights and ‘democratic’ records, and (dis)information about China’s energy hunger. And the US will continue to express concern over any pipeline deals they are not involved in (we certainly have not heard the last of Russia’s first ever deal with Saudi Arabia).

At the same time, there will be a solidifying of bilateral agreements between energy suppliers/transit points and China including those places wavering now between China and the US.

And, of course, the US will conduct covert operations to destabilise ‘unfriendly’ energy suppliers always with the option of full-scale military intervention.

As oil continues to grow in value over the medium term, proxy wars could grow in both quantity and intensity. This would probably be a less-preferred option for both China and the US due to the damage to infrastructure. But as political destabilisation becomes widespread, the stakes become very high for us all. In a worst case scenario, the world would be damaged not only by fossil fuel use but by rising insurgencies against entrenched capital the suffering and instability long visited on the developing world spreading to developed nations, bringing civil, ethnic and religious conflicts with it. In fact, the Pentagon appears to be planning for just this.

Whatever the military dimensions of the energy race, it’s difficult to envision the US winning in the long term. At the moment, no country is capable of matching the USA in its projection of military force around the globe but, as the Vietnamese replied to the US officer who couldn’t resist pointing out that the US had consistently won on the battlefield, ‘That may be so, but it is also irrelevant.’

This is because US military adventures need financing, and, ironically, its biggest lender is China   although not for much longer, as China stops buying US Treasury bonds and currency, and diversifies its existing reserves.

The decline in the US dollar is a long way from finished. But worse for the US, its basic manufacturing continues to be outsourced overseas, and in the high-tech area (which had been its pride and joy) the US has slipped to seventh in the world. Even its own monetary organisation, the IMF, downgraded US growth forecasts for this year while saying that the overall world economy would still grow at the same rate it had previously predicted. Perhaps the world no longer catches a cold when the US sneezes?

This last point is key. Unlike other major powers, the US’s isolation left it relatively strengthened by both World Wars last century, allowing it to become the world’s leading money-lender and holder of gold. Its currency was pre-eminent and it knew that it could print as much of it as it wanted, without worrying about inflation because central banks around the world would absorb the extra dollars as reserves. This is no longer happening to nearly the same degree China is just one of several countries that are losing interest in US dollars.

This will have a large effect on the affluence of Western societies. As energy suppliers improve their bargaining power, we will see consumer price rises commensurate with those of oil. Food miles will be increasingly crucial, as will the effect of oil- and gas-derived pesticides and fertilisers.

There are probably not enough fossil fuel resources globally and certainly not enough cheaply available ones to propel giant countries like China and India to Western levels of affluence. But the two levels could meet halfway, causing unrest in the oil-driven Western economic system and its populations.

In the US, what we are seeing might be called a ‘market correction.’ The US is geographically further from energy reserves than China is, and the military that kept its grip on these resources is losing both its deterrent power (as US citizens are losing their appetite for war) and its financing. The neo-conservatives are losing even elite support and other factions are not as hawkish whether circumstances will force them into becoming so will be a major factor in the next few decades.

There is another option.

The US was the world leader in alternative energy in the 1980s but didn’t continue its development as oil was so cheap. China, according to commentator John Ralston Saul at a recent event here in Hong Kong, is ‘at least having the conversation’ on the environmental impact of its rapid development there is even a ‘Green’ architectural initiative emanating from Beijing.

We must hope, then, for two things: first, that the US resurrects its alternative energy technology; and second, that China continues to have its Green conversation and acts on it.

The alternative is a world of increasing environmental degradation, civil unrest and a superpower intent on going down swinging.