The U.S. – China Energy Security Concept Wojtek Wolfe
Rutgers University wojwolfe@rutgers.edu
Introduction
Energy security appears to be an intuitive concept to many observers, yet it is difficult to provide a clear definition of the concept along with a coherent policy proposal that balances between market fundamentals and geopolitics. An effective energy security strategy relies mostly on the global oil markets, but increasingly it must also account for geopolitical variables affecting the security and reliability of oil acquisitions.1 More importantly, it is necessary to acknowledge that certain developing states seek to bypass global energy markets to varying degrees for geopolitical reasons. Global energy markets and oil geopolitics counteract each other, sometimes to the detriment of states not
prepared to deal with both factors.
Since the end of World War II, superpower states’ need for secure oil supplies from conflicted regions of the world has created an ‘oil trap’ as first and second tier states’ oil needs increased while supplies decreased.2 Global geopolitics affects energy acquisition efforts and states’ energy security strategies, which in turn affect foreign policy and military decisions. The geopolitics of energy competition continues to affect
1 Most leading energy policy authors and analysts including Erica Downs, Michael Klare, Paul Sanders,
and Daniel Yergin agree that geopolitics plays a role in affecting energy security. Debates arise over the degree of impact. For a scholarly overview see: Julian Lee, "The Impact of Geopolitics on World Oil Production - 2008 Update," (London: Centre for Global Energy Studies, 2008). For mainstream media’s coverage of scholarly and industry experts’ opinions see: Clifford Krauss, "Economy and Geopolitics Decide Where Oil Goes Next," The New York Times, January 4, 2008. Industry reports also cite geopolitics, specifically Iran, as a causal factor, see: Peter Davies, "Oil Markets into 2006," (London: British Institute of Energy Economics/BP, 2006).
2 According to the Energy Information Administration, oil production includes crude oil and liquid natural
state foreign policy because countries cannot ascend to and maintain superpower status without secure access to reliable energy resources, which the global oil market has traditionally provided. As developing states are becoming increasingly dependent on energy imports, some are partially bypassing the energy market and seeking access through direct investment, which can drag them into complex political situations and military conflicts.
If the energy market cannot provide a state with adequate amounts of oil, enough to meet state economic and security requirements, then that state will expand its
acquisition efforts beyond the energy market, regardless of whether the lack of oil is the result of increased market fundamentals or the state’s perceived distrust of the market. While Western analysts continue to hold onto their faith in the global energy market, intensified energy competition has allowed second tier states to plan and execute their energy strategies according to their individual geopolitical preferences. Threats to states’ energy security status quo can affect their foreign policy and military decisions, both in their goals, as well as in their ability to promote interests abroad. Thusly, the geopolitics of energy competition continues to affect all states as most are not able to ascend to or maintain superpower status without secure access to reliable energy resources.
The global oil market has traditionally provided states with reliable energy access but some of the second tier states that are becoming increasingly dependent on energy imports are attempting to partially bypass the energy market and gain non-market dependent direct oil access, resulting in complex foreign policy challenges for the U.S.
Upon entering the world stage China became the world’s second largest oil consumer; it now faces difficult choices in meeting the challenges of mounting energy
needs and engaging the U.S. Complicating the issue further, some of the world’s other major oil producers – Saudi Arabia, Russia, and Iran – also hold strategically different political agendas from U.S. interests and have the potential to influence energy market prices through output restrictions and relative geopolitical factors.3 Global energy markets are tightening not only because of increased demand but also because of geopolitical variables such as production facility security, safe passage through transportation routes, political stability and leadership in oil producing states, and sanctions against oil producing states.4 While current market oil prices are significantly low due to the recent economic crisis, it would not be appropriate to assume that such low prices will remain permanent.
This paper begins to answer a number of energy related questions; what does energy security mean for first tier states and how does the meaning differ for second tier states? How does energy security differ from energy independence? Do global energy markets always trump geopolitical concerns when states develop their energy security strategies? What geopolitically oriented solutions does China seek to bypass market shortcomings? Are they working and what are the political ramifications the U.S. should expect from of China’s ‘going out’ strategy in Africa, the Middle East, Central Asia and Russia? In addressing these questions, the discussion is divided into the following sections: defining energy security, how energy security differs from energy
independence, the geopolitical aspects of energy security, and energy’s relationship with the military and national security establishment. It is important to point out that this paper
3 "2006 Report to Congress of the U.S.-China Economic and Security Review Commission," (Washington,
D.C.: U.S.-China Economic and Security Review Commission, 2006).
4 OPEC president cites geopolitical variables between the U.S. and Iran as significant in determining oil
market prices. See: Opec President Warns No End to Oil Price Rises, (CNBC, 2008 [cited July 5 2008]); available from http://www.cnbc.com/id/25551498/for/cnbc.
does not intend to frame China as the ‘rising threat’ to U.S. national security. Quite the opposite, the focus on China intends to highlight China’s energy problems and eventually prescribe policies to effectively deal with those issues while engaging China in its
development.
Defining Energy Security
Daniel Yergin points out that the simplest definition of energy security is “the availability of sufficient supplies at affordable prices.”5 Yergin was correct to point out that energy security is not a standalone concept but one that is embedded directly into state behavior. However, this definition becomes problematic on two levels; first, the meaning of sufficient supplies changes depending on the relative international position of the state. First tier states can focus on this simple definition of energy because they have grown economically interdependent and enjoy an already established and reliable energy security strategy. Their energy security strategy is seen as stable because they assume the international markets will remain stable when following proper fiscal policies.
For energy exporters, the definition of energy security is focused on maintaining stable international demand for their product.6 This includes a mixture of free market practices and cartelization. For example, more recently, oil exporters in Africa, Central Asia/Russia, and the Middle East have exhibited increased openness to direct investment and access by consumer states.
The second problematic aspect of Yergin’s energy security definition is that it promotes the idea that diversification of supply sources is a key component of energy
5 Daniel Yergin, "Ensuring Energy Security," Foreign Affairs 85, no. 2 (2006). 6 Ibid.
security.7 Diversification allows states to spread their energy acquisition risks across different sources. Although Yergin likely did not mean for states to pursue non-market energy access, that is exactly what has been occurring since the end of the Cold War, and it is a logical explanation of how developing states hedge against more powerful states by avoiding total global energy market integration and opt to rely on self-help energy
seeking behavior that bypasses energy markets through direct access to energy sources. In experiencing economic and political changes, second tier states must adjust to their shifting placement within the international system. By definition, change from the status quo is a risk with unknown consequences.8 Accordingly, as their economic and military powers increase, second tier states recognize but do not fully embrace increasing dependence on global energy markets. They may join or create international trade
institutions to help deal with the challenges of integrating into a globalized economy, which includes a new set of standards in economic behavior such as meeting international regulations dictating monetary behavior and domestic fiscal responsibility.
Second tier states must also come to terms with the reality that their increased economic output continuously moves them beyond the safety of energy independence and toward global energy market dependence. However, with their economies and political systems in flux, many second tier states do not yet trust the global economy or cannot politically afford to endure energy market volatility with the same degree of comfort as their first tier neighbors. Rising energy prices may cost an incumbent leader the upcoming election in a fully developed state, but volatile prices may spark
significantly more drastic changes in a developing state.
7 Ibid.
8 Amos Tversky and Craig Fox, R., "Weighing Risk and Uncertainty," in Choices, Values, and Frames., ed.
Because real-world energy security strategy is geopolitically and market efficiency dependent, the definition put forth here builds on Yergin’s original concept and adds that energy security is the secure availability and access to sufficient, reliable, and diverse supplies at affordable prices as prescribed by a combination of current global energy markets and relevant geopolitical factors. For the purposes of a broader
understanding of state energy seeking behavior, this definition includes states’ relative geopolitical factors that may impact their individual energy needs, their relative
propensities towards relying entirely on energy markets, and the political factors linked to energy issues. For the purposes of reflecting real-world policy problems, this definition takes into account non-free market approaches to energy security, as well as the
recognition that seemingly peripheral political issues may be directly related to energy needs and carry significant consequences in international relations.
An important aspect of defining energy security is in the realm of perception. Perceptions and psychological bias have been shown to generate various degrees of effect on decision making. In a similar vein, market psychology also generates varied levels of impact on decision makers, their views of traditional energy markets’ reliability, market speculation, and the need to protect against future loss.9 If prices are rising or showing high levels of volatility and oil futures speculation goes beyond what market
fundamentals predict for futures pricing, then market psychology and individual loss
9 Werner F. M. De Bondt and Richard Thaler, "Does the Stock Market Overreact?," The Journal of Finance
40, no. 3 (1985), Mark Grinblatt and Bing Han, "Prospect Theory, Mental Accounting, and Momentum,"
Journal of Financial Economics 78, no. 2 (2005), Daniel Kahneman and Richard Thaler, "Economic
Analysis and the Psychology of Utility: Applications to Compensation Policy," The American Economic
Review 81, no. 2 (1991), Daniel Kahneman and Amos Tversky, "Prospect Theory: An Analysis of Decision
aversion can push prices even higher.10 Decision makers may perceive a market inefficiency or imperfection and lose confidence in either or both, supply security and price stability.11
With noted exceptions, first tier states focus more on price stability while second tier states focus on price stability as well as supply security. The U.S. intervened during the first Gulf War when it appeared that Saddam Hussein may have control over
Kuwait’s output capability; generally, first tier states act only when a significant threat has the potential to disrupt energy markets. On the other hand, second tier states that may not have the capabilities for direct military intervention opt for more continuous direct investment in order to hedge against what they perceive to be market errors, a lack of trust in the market, or other energy insecurities. Regardless, the main concern for states is to be able to predict or guesstimate the future of the global oil supply, demand, and price as closely as possible. As with all attempts to predict future trends, inherent issues in forecasting can translate to energy insecurity.
Energy Independence
Energy security is a vital part of national security, although national security is sometimes pursued unilaterally while energy security needs to be pursued multilaterally. In contemporary times, energy security means states have enough energy supplies or expect adequate access to those supplies. Depending on the state, this involves relying on the market unless the state is self-sufficient. However, the underlying assumption of
10 "Oil Market Tug of War: Fundamentals Versus Psychology," (Washington D.C.: Cambridge Energy
Research Associates, 2007).
11 Stuart Harris and Barry Naughten, "Economic Dimensions of Energy Security in the Asia-Pacific," in
Energy Security in Asia, ed. Michael Wesley, Routledge Security in Asia-Pacific Series (London:
national security is that a sovereign state can act alone in pursuing its best interests with as little outside interference as possible. Thusly, when we look at energy security in the context of national security, we are looking at two congruent issues. However, when dealing with public opinion we see that a large segment of the American public opposes America’s dependence on foreign oil and advocates for energy independence.
Energy security and energy independence are salient political issues because nearly all states rely on secure access to energy on a daily basis. However, like many high profile public policy issues the concept of energy security is susceptible to perception bias and framing manipulation for the sake of mobilizing political support. Energy security is a broadly recognized but frequently misunderstood concept, especially when political pundits attempt to draw parallels with or frame energy security as synonymous with energy independence. Energy security includes reliable access to energy, but it does not include the idea of independence from global energy markets or avoiding energy supplies exported by unsavory energy producing states.
In import-reliant states, politicians and lobby groups seize opportunities to promote voter favorable rhetoric supporting energy independence and freedom from the political consequences of foreign oil dependence.12 These types of groups are against the U.S. importing oil from the Persian Gulf states of Saudi Arabia, Iraq and Kuwait, which accounted for 18 percent of net oil imports and 11 percent of oil demand for 2006.13 Although it is technologically unfeasible for the U.S. to switch to alternative fuels on a country-wide scale, the growing popularity of energy independence as a political policy
12 For an example see: Terror-Free Oil Initiative: First Step to Energy Independence, (2008 [cited July 26,
2008]); available from http://www.terrorfreeoil.org/.
in the U.S. can be partly explained by the inherent effectiveness of loss framing over gain framing.
Framing can best be explained as the way in which “individuals and groups make sense of their external environment”.14 Political players use framing to organize,
prioritize, and simplify complex political issues. Framing the future as a loss is more effective than framing the future as a gain in promoting change from the status quo.15 Put more simply, people will spend more money to avoid potential losses than they will spend in seeking potential gains.16 This loss aversion effect is evident in individual decision making models and in group consensus models when dealing with simply framed security issues intended to influence public opinion.17
Another tactic to secure public opinion is to promote the Strategic Petroleum Reserve (SPR) as the main solution for energy independence, which would provide only a temporary respite from oil supply disruptions and is effective in only short term energy security management. As of July 26, 2008, the U.S. SPR inventory contained
approximately 706 million barrels of sweet and sour crude. At the current rate of consumption, the reserve can provide import protection for 58 days. However, its drawdown capability is limited to 4.4 million barrels per day (bpd), which would not
14 William A. Boettcher, "The Prospects for Prospect Theory: An Empirical Evaluation of International
Relations Applications of Framing and Loss Aversion," Political Psychology 25, no. 3 (2004), A. Tversky and D. Kahneman, "The Framing of Decisions and the Psychology of Choice," Science 211 (1981).
15 Rose McDermott, Risk-Taking in International Politics: Prospect Theory in American Foreign Policy.
(Ann Arbor, MI: University of Michigan Press, 1998).
16 Amos Tversky and Daniel Kahneman, "Loss Aversion in Riskless Choice: A Reference-Dependent
Model," The Quarterly Journal of Economics 106, no. 4 (1991).
17 Wojtek M. Wolfe, Winning the War of Words: Selling the War on Terror from Afghanistan to Iraq
cover its energy needs if imports were halted abruptly.18 Although China’s leadership initially thought of strategic oil reserves as a powerful panacea to its mounting energy problems it has in recent times shown signs of stepping away from relying solely on such an approach.19
As a result of the necessity of rallying public opinion, it is more effective to promote energy independence through loss avoidance framing, as is the case with lobbying groups such as the terror free oil movement, than it is to promote energy security through cost increasing technologies, diversification of energy sources, and reducing demand of a perceived public commodity. Part of the difficulty in politically advertising effective energy security strategies is that in being effective, the strategy is not likely to decrease costs for the consumer. Furthermore, from the U.S. perspective, an effective energy strategy includes increased cooperation with Middle Eastern energy suppliers instead of increased independence from the region.
The U.S. is the world’s largest importer of oil; it is increasing its liquefied natural gas (LNG) imports to increasingly higher levels.20 However well-intentioned or attractive
to the consumer, attempts to provide ‘terror-free’ oil are unfeasible at present time
because they would require the U.S to withdraw appreciably from global energy markets, resulting in market upset for economically interdependent states, increased oil
nationalism among supplying states, and further politicization of an already vulnerable
18 Strategic Petroleum Reserve - Quick Facts and Frequently Asked Questions, (U.S. Department of
Energy, 2008 [cited July 26, 2008]); available from
http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html.
19 Erica Downs, "The Brookings Foreign Policy Studies Energy Security Series: China," (Washington
D.C.: The Brookings Institution, 2006).
20 U.S. House of Representatives Committee on Foreign Affairs, Foreign Policy and National Security
issue.21 With current technology lacking the capability to implement state-wide
alternative fuel use, shortsighted energy independence rhetoric and policy proposals only further exacerbate the problem in the public realm and ignore more feasible options for dealing with America’s energy needs.
Accordingly, most discussions promoting energy independence policies will shift policymakers’ focus away from pressing geopolitical variables, the promoting of price stability through market stability, and creating incentives for further interstate
cooperation in lieu of risky self-help methods. Therefore, U.S. policymakers need to focus on engaging China and other relevant second tier states towards energy security cooperation..22
Geopolitics and Oil
Geopolitics is best described as strategic interaction between politics, geography, and history.23 The geopolitics of oil has played a varying but important role in state foreign policy and will likely continue to do so well into the new century. Since the 2003 U.S. led invasion of Iraq, certain oil supplying countries have increasingly used their resources to counter U.S. policies giving further credence to the likelihood of their willingness to use their resources to pursue strategic foreign policy goals. China’s closer relationship with Russia is substantiated by their increased direct energy trade, military trade and military cooperation in the form of military war games off the coast of China.
21 A F Alhaji, "What Is Energy Security? (1/5)," Middle East Economic Survey L, no. 39 (2007). 22 Foreign Policy and National Security Implications of Oil Dependence.
23 This paper takes the structural geopolitical approach to the topic but will venture into cultural geopolitics
A recent example of militarizing energy security is found in Russia’s unilateral invasion of Georgia.24 During the summer of 2008, Russian military forces assaulted and gained control over the Baku-Tbilisi-Ceyhan (BTC) pipeline in Georgia. The surprise invasion left an unknown number of civilians dead, wounded, or displaced,25 and displayed the potential for oil to be effectively used as an coercive tool of foreign policy.26 Geopolitically, the invasion gave Russia control over a pipeline feeding into Western Europe and disrupted U.S. access to Georgia’s other major oil pipeline. Georgia itself does not have noteworthy energy resources but the British Petrol (BP) sponsored pipeline allows oil to flow from the Caspian Sea to the coast of Turkey, bypassing Russia and Iran. Recently, Russia announced plans to build a natural gas pipeline in Uzbekistan, giving it greater control over gas exports to Western Europe and reasserting more control over its former Soviet territory.27
Previously, Russia shut down an oil pipeline feeding into Central and Western Europe,28 choosing to use energy as leverage after its continued objections to the North Atlantic Treaty Organization’s (NATO) expansion into Central and Eastern Europe went unheard.29 In 2007, Russia’s tactic proved effective in gaining the West’s attention and securing concessions that would deny Georgia NATO membership. However, the concessions were not far-reaching enough to prevent the eventual recognition of
Kosovo’s independence, which Russia saw as an encroachment on its region. Regionally,
24 Guy Faulconbridge, Russia Confirms Troop Advance into Georgia Proper (Reuters, 2008 [cited August
11, 2008]); available from http://www.reuters.com/article/asiaCrisis/idUSLB86717.
25 Steven Pearlstein, "Russia's Strike Shows the Power of the Pipeline," The Washington Post, August 13,
2008.
26 Human Rights Watch, (2008 [cited September 29, 2008]); available from http://www.hrw.org. 27 Catrina Stewart, "Reports: Russia, Uzbekistan to Build Gas Pipeline," Forbes, September 9, 2008. 28 Michael Schwirtz, "Russia Considers Alternatives to Oil Pipeline through Belarus," The New York Times,
January 10, 2007.
29 Russia Objects to Nato Expansion, (BBC News, 2006 [cited August 11 2008]); available from
Georgia’s strategic location makes it a desirable ally for both Russia and the U.S.
However, since Georgia’s political inclination was to align with the West, Russia sought to take action to either protect its access to Georgia’s valuable oil pipelines or to simply keep the West from competing against Russian pipelines. In either case, energy security strategy is shifting towards more proactive and self-help tactics that include political ramifications.
Major energy suppliers that are politically opposed to U.S. policies will likely continue to strategically hedge against the U.S., as evidenced by China’s expanded direct energy trading and oil diplomacy with Iran, Russia, and Sudan. Increased diplomatic and military cooperation between Russia and China, as well as Russia’s recent use of energy supplies to exact diplomatic concessions from the West are reinvigorating perceptions of an axis of oil that may include China and points towards future security competition with the U.S.30
Energy security strategy in Asia is also changing because of the area’s economic growth, the increased regionalization of the energy markets, and the geopolitics affecting production and transportation logistics in many states such as Iraq, Iran, Nigeria, Russia, and Venezuela. 31 On the one hand, global energy markets have become more anti-geopolitical in order to insulate producers and consumers against oil shocks, thereby reducing an individual state’s ability to influence market pricing. However, at the same time, the main energy consumers and producers in Asia, for example, have created
30 Flynt Leverett, "The Geopolitics of Oil and America's International Standing," (Washington, D.C.:
Committee on Energy and Natural Resources United States Senate, 2007), Flynt Leverett, "The New Axis of Oil," The National Interest, July 2006.
31 See P. R. Odell, "The Global Oil Industry: The Location of Production - Middle East Domination or
Regionalisation?," Regional Studies 31, no. 3 (1997). Cited in Michael Wesley, "The Geopolitics of Energy Security in Asia," in Energy Security in Asia, ed. Michael Wesley (London: Routledge, 2007).
policies to counter full integration into the global energy market by seeking more direct access to and control over energy sources and transportation routes.32 In addition, China and India have used their national oil companies to secure more direct oil access.33
This form of strategic thinking about energy goes against free market principles heavily espoused by Western policymakers; however, increased geopolitically based energy-seeking activities have forced new recognition of the trend among somewhat reluctant government and private sector observers.34 In the long term, the U.S. needs to counter emerging energy security strategies by strengthening historical and political alliances and promoting energy infrastructure investment that benefits energy market integration over defection among second tier states.35
If policymakers are correct in assuming that democracies are least likely to
challenge the global energy market status quo, then the U.S. and its allies will continue to face energy related foreign policy challenges caused by market defection since Norway and Mexico are the only established liberal democracies and among the top ten oil exporting countries.36 China’s equity oil contracts and arms for oil exchanges with
oppressive regimes have already resulted in harmful political and human security
outcomes. As those tactics continue to spread among America’s competitors, so does the likelihood of negative policy ‘blowback’ and the emergence of new regional threats to first tier states’ interests and their ability to pursue their foreign policy interests.
32 Bernard D. Cole, Sea Lanes and Pipelines: Energy Security in Asia (Westport: Praeger Security
International, 2008), Wesley, "The Geopolitics of Energy Security in Asia," p. 4.
33 Justin Blum, "National Oil Firms Take Bigger Role," Washington Post, August 3, 2005.
34 See "2006 Report to Congress of the U.S.-China Economic and Security Review Commission.", "China's
Overseas Investments in Oil and Gas Production," in Prepared for the US-China Economic and Security
Review Commission (New York: Eurasia Group, 2006).
35 Joe Barnes and Amy Myers Jaffe, "The Persian Gulf and the Geopolitics of Oil," Survival 48, no. 1
(2006).
36 See list at: Top World Oil Net Exporters, (Energy Information Administration, 2006 [cited August
Strategic Hedging, Energy and China’s Military Strategy
Strategic hedging is an desirable option for China because the limited opportunity and incentive to effectively engage in hard balancing behavior against the U.S.,
especially when it would involve military confrontation or an belligerent military alliance competing against the U.S.37 Pape argues that incentives exist for certain second tier powers to soft balance against the U.S. while avoiding a direct military conflict. Powers like China and Russia might seek out balancing opportunities in response to increases perceptions of threat that stem from U.S. unilateralism in its foreign policy, the potential relative gains from controlling Iraqi oil reserves and influencing greater control over the Persian Gulf’s oil reserves, and U.S. insistence on pursuing its Nuclear Missile Defense (NMD) program in Japan and Poland.38 Therefore, China is searching for investment opportunities leading to closer political and military ties with states opposed to U.S. hegemony.39 Internally, China pursues internal balancing by seeking increased military modernization of its forces, tying it directly to its energy exploration abroad.40
China’s Military and Energy Security
As the concept of energy security moves back into mainstream politics, policymakers themselves are increasingly interested in understanding the impact of China’s energy seeking behavior. The U.S. – China Economic and Security Review
37 Wojtek M. Wolfe and Brock F. Tessman, "The Geopolitics of China's Energy Trade: A Method of Soft
Balancing against the United States?" (paper presented at the Meeting of the International Studies Association, San Francisco, 2008).
38 Robert A. Pape, "Soft Balancing against the United States," International Security 30, no. 1 (2005). 39 Wolfe and Tessman, "The Geopolitics of China's Energy Trade: A Method of Soft Balancing against the
United States?".
Commission continually looks at this issue, offering an energy section heading to
examine “The effect of the large and growing economy of the People’s Republic of China on world energy supplies and the role the United States can play…in influencing the energy policy of the People’s Republic of China.”41 For U.S. planners, this concern covers China’s ability to affect the legitimate energy trade market, destabilize already volatile energy producing states, and increase militarization of the oil trade.
China continually seeks to increase its ability to provide adequate security to their energy transportation routes.42 The Straits of Malacca, which is host to approximately eighty percent of China’s crude oil imports, represent the most vital oil transportation route to China’s economy and the most vulnerable to foreign attack.43 However, since
China’s naval forces continue to lack the capabilities to perform this mission, cooperative strategies with the U.S. remain the best option for ensuring energy transportation route security.44 Yet, China’s leaders maintain their preference towards increasing their military naval capabilities and protecting their sea lanes without foreign help.
Military Influence
The militarization of energy is increasing as illustrated by China’s arming of Sudanese troops;45 the alleged smuggling of Chinese missiles through Iran into Iraq to be
41 "2006 Report to Congress of the U.S.-China Economic and Security Review Commission."
42 Erica Strecker Downs, China's Quest for Energy Security (Santa Monica: Rand Corporation, 2000), p.
xii.
43 "Annual Report to Congress: Military Power of the People's Republic of China," (Washington, D.C.:
Department of Defense, 2007), p. 8.
44 Evan A. Feigenbaum, "China's Military Posture and the New Economic Geopolitics," (Houston: Center
for International Political Economcy and James A. Baker III Institute for Public Policy, 1999).
45 Chen Feng, "Chinese, Sudanese Senior Military Leaders Hold Talks," Xinhua News Agency, April, 4
used against U.S. troops;46 the invasion of Georgia and Russia’s gaining of control over specific portions of Georgia’s energy transportation routes, which resulted in increased tensions over a strategic port in the Ukraine;47 and Iran’s recent submarine production intended to protect its interests in the Strait of Hormuz48- these are all examples of further militarization related to energy security politics. These types of military activities fit the definition of a ‘catastrophic breakdown’ in the balance between free market energy trade and the underlying military assurance of that trade.49 Military assurance of energy supplies exists in equilibrium with the global market because it is necessary to keep the global energy market functioning, but significant changes from the status quo are perceived as risks to the market.
China itself has sought to find firmer footing as a major player in the international arena through militarization. As part of an encompassing modernization attempt, China has been pursuing long-range military modernization efforts including upgrades to its conventional and nuclear weapons capabilities. Beijing made the strategy shift in 1985 and in less than a decade both the People’s Liberation Army (PLA) and the People’s Liberation Army Navy (PLAN’s) military modernization began gaining the attention of mainstream observers.50 As a result, the China that was once viewed as a counterbalance to Soviet aggression faced accusations of regional hegemonic aspirations in East Asia.
46 The weapons smuggling would not directly relate to the topic, but for the Iran connection that is
increasing with increased direct China-Iran oil investment. "Us Says Chinese Missiles Smuggled through Iran into Iraq," Forbes, July 22, 2007.
47 David L. Stern, "Russian Actions Reignite Tensions over Strategic Port in Ukraine," International
Herald Tribune, August 25, 2008.
48 "Iran Says It Is Building Submarines to Protect Vital Oil Route," The National, August 25, 2008. 49 James Wirtz, "Role of Energy Security in Homeland Defense: Understanding the Threat," (Peterson
AFB: Homeland Security and Defense Education Consortium, 2008).
50 For earlier analyses see: China's Military Faces the Future, ed. James Lilley and David Shambaugh
(New York: M.E. Sharpe, 1999), Thomas Christensen, "Posing Problems without Catching Up,"
The Office of Naval Intelligence reported China’s military strategy shifting away from a strict coastal defense posture towards extended offshore defense capabilities as a result of the changing international environment.51 China’s military strategy shift was necessary for its ‘going out’ energy strategy to be effective in the long run. Both
endeavors are part of a larger String of Pearls Strategy (SPS) focusing on expanding the country’s geopolitical influence and its force projection capabilities.52 China’s naval strength provides the basis for future naval security and assurance of its energy sources and transportation routes.53 Within this reciprocating policy loop, China is accessing oil supplies to aid its military capabilities and expand PLAN capabilities to protect its expanding Sea Lines of Communication (SLOC). Up until this strategy shift, the PLA’s ground fighting capabilities trumped the military’s naval concerns.
The SPS includes activities supporting the PRC’s continued economic growth, military modernization for both the PLA and PLAN, and expansion of its diplomatic sphere of influence. The main obstacle to these objectives is the PRC’s access to energy sources outside of the global market and its ability to secure appropriate SLOCs to transport their energy supplies. The U.S. Navy currently has the capability and
willingness to maintain secure access to the South China Sea and the Straits of Malacca, critical access points for both economic and military interests in the region, contributing to China’s concerns about its military vulnerability. In order to hedge their bets against the possibility of failing international cooperation with the U.S. to maintain unfettered
Multipolar Asia," International Security 18, no. 3 (1993/1994), Denny Roy, "Hegemon on the Horizon? China's Threat to East Asian Security," International Security 19, no. 1 (1994).
51 "China's Navy 2007," (Washington, D.C.: Office of Naval Intelligence, 2007).
52 Christopher J. Pehrson, "String of Pearls: Meeting the Challenge of China’s Rising Power across the
Asian Littoral," (Carlisle: Strategic Studies Institute, 2006).
53 Bernard D. Cole, "Chinese Naval Modernization and Energy Security" (paper presented at the 2006
SLOCs through East Asia, the PRC began to seek untapped energy sources, increased its naval expenditures, and extended diplomatic relationships to countries directly at odds with not only U.S. policies but their neighbors and much of the West.54
China has also been directly investing in oil supplies throughout the African continent, and some argue that China’s actions could precipitate the locking in of those supplies as they could be preventing other states from investing.55 Additionally, many of the investments require military protection within the host states opening the opportunity for China’s military weapons sales56 and protection provided directly by Chinese military forces,57 all of which contribute to the militarization of the oil trade. The arms for oil exchanges ignore international pressures on these states to conform to human rights norms and continue to divert a small but growing amount of oil away from the global energy market.
In one case, China and its NOCs have been reported as providing aircraft and airstrips to Sudan’s troops engaged in attacking civilians in Sudan.58 Such activities combined with the direct placement of PLA assets inside host energy producing states lays the groundwork for greater military control over politically unstable energy producing states. If military occupation increases significantly, the host states’ lack of political stability becomes an advantage to the occupier if they can control the state after the collapse of the host government. If such a hypothetical scenario were to occur, then
54 Pehrson, "String of Pearls: Meeting the Challenge of China’s Rising Power across the Asian Littoral." 55 Wolfe and Tessman, "The Geopolitics of China's Energy Trade: A Method of Soft Balancing against the
United States?".
56 Peter S. Goodman, "China Invests Heavily in Sudan's Oil Industry: Beijing Supplies Arms Used on
Villagers," Washington Post, Thursday, December 23, 2004.
57 "China, Nigeria Promise to Build Strategic Partnership," People's Daily Online, April 15, 2005, Susan
Puska, "Military Backs China's African Adventure," Asia Times Online, June 8, 2007, Su Qiang and Le Tian, "Peacekeeping - a Rising Role for China's Pla," China Daily, July 24, 2007.
China would be left in a potential nation-building situation with limited options. Although reports allege significant Chinese military concentrations in Sudan, publicly China’s leaders have only indicated their request for additional security and protection over their country’s energy investments in unstable states. The potential for political fallout has not been adequately discussed but it can also provide an advantage in the context of militarization. If these states fail, they could leave an advantageous power vacuum for an occupying state; in such a case, China would hold a strategic advantage by gaining physical control over that state’s energy supplies.
Conclusion
A volatile energy market can impact oil dependent states that do not have adequate energy-flexibility to respond to impacting crises. Therefore, states that have limited or no energy production capabilities must be significantly more forward thinking in their policies when preparing to deal with energy shocks, either market or
geopolitically based.59 High oil prices show significant impact on OECD countries’
economies and the IEA continues to cite geopolitical uncertainties as a contributing factor affecting oil prices and economic outcomes.60 Tight energy markets increase the
importance of geopolitics when considering energy security tactics. Although much of global energy trade is now commoditized, geopolitics still impacts states’ abilities to acquire and transport oil. When such issues affect military strategy, it is important to examine them in proper context, in order to avoid an alarmed reaction and possible
59 Michael T. Klare, Resource Wars: The New Landscape of Global Conflict (New York: Metropolitan
Books, 2001).
60 "Analysis of the Impact of High Oil Prices on the Global Economy," (Paris: International Energy
military escalation. The U.S. and China must work together to overcome the recent difficulties between their respective military forces as this may prove counterproductive to assessing China’s military overtures in the region.
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