Windfall

by Meghan L. O'Sullivan

  Chinese imports from Africa: Valentina Romei, “China and Africa: Trade Relationship Evolves,” Financial Times, December 3, 2015, https://next.ft.com/content/c53e7f68-9844-11e5-9228-87e603d47bdc#axzz3tS8PqNxN.

  But what is most remarkable: See Yun Sun, “Xi and the 6th Forum on China-Africa Cooperation: Major Commitments, but with Questions,” Brookings Institution, December 7, 2015, www.brookings.edu/blogs/africa-in-focus/posts/2015/12/07-china-africa-focac-investment-economy-sun.

  Because, rather than acquiring equity oil: Daniel Yergin, The Quest: Energy, Security, and the Remaking of the Modern World (London: Penguin Books, 2012), 193.

  “Industrial capacity cooperation”: Ibid.

  After decades of insisting: See “Chasing the Chinese Dream,” Economist, May 4, 2013, https://www.economist.com/news/briefing/21577063-chinas-new-leader-has-been-quick-consolidate-his-power-what-does-he-now-want-his.

  Graham Allison, a renowned professor: See Graham Allison, Destined for War: Can America and China Escape Thucydides’s Trap (Boston: Houghton Miller Harcourt Publishing, 2017). During his September 2015 visit to the United States, President Xi Jinping dismissed the idea of a “Thucydides trap”; during a speech in Seattle, he said, “There is no such thing as the so-called Thucydides trap in the world. But should major countries time and again make the mistakes of strategic miscalculation, they might create such traps for themselves.” “Full Text of Xi Jinping’s Speech on China-U.S. Relations in Seattle,” Xinhuanet, September 24, 2015, http://news.xinhuanet.com/english/2015-09/24/c_134653326.htm.

  Energy will not be the only factor: For other reflections on China and global energy governance, see Bo Kong, “Governing China’s Energy in the Context of Global Governance,” Global Policy 2, special issue (September 2011): 51–65.

  In April 2005, Mikkal Herberg: See David Zweig and Bi Jianhai, “China’s Global Hunt for Energy,” Foreign Affairs (September/October 2005), https://www.foreignaffairs.com/articles/asia/2005-09-01/chinas-global-hunt-energy.

  In 2006, the Pentagon’s annual report: The report states, “In the near term, China’s military build-up appears focused on preparing for Taiwan Strait contingencies, including the possibility of U.S. intervention. However, analysis of China’s military acquisitions suggests it is also generating capabilities that could apply to other regional contingencies, such as conflicts over resources or territory.” Office of the Secretary of Defense, Annual Report to Congress: Military Power of the People’s Republic of China (Washington, D.C.: Department of Defense, 2006), 1, http://web.archive.org/web/20150929063154/http://fas.org/nuke/guide/china/dod-2006.pdf.

  Two years later, a new version of: Office of the Secretary of Defense, Annual Report to Congress: Military Power of the People’s Republic of China (Washington, D.C.: Department of Defense, 2008), 13, http://www.mcsstw.org/www/download/China_Military_Power_Report_2008.pdf. Similarly, a 2008 presentation explaining the rationale for the establishment of AFRICOM—an overseas joint command similar to the Pentagon’s CENTCOM, but for Africa, not the Middle East—highlighted the importance of Africa’s oil and gas to the United States and China’s growing influence over countries with such resources. Lauren Ploch, “Africa Command: U.S. Strategic Interests and the Role of the U.S. Military in Africa,” Congressional Research Service, July 22, 2011, https://fas.org/sgp/crs/natsec/RL34003.pdf.

  During a Senate Committee hearing: The LNG Permitting Certainty and Transparency Act: Full Committee Hearing on S. Hrg. 114–9, Before the Senate Energy and Natural Resources Committee, 114th Congress (January 29, 2015), C-SPAN video, 01:56:53 https://www.c-span.org/video/?324072-1/hearing-liquified-natural-gas-permitting%20.

  Michael Smith, the CEO of Freeport: “U.S. Government Discouraged Chinese Investment in LNG Exports,” Reuters, May 14, 2015, www.reuters.com/article/us-lng-china-idUSKBN0NZ2F720150514.

  As of early 2017, China had received: “LNG Monthly 2017,” U.S. Department of Energy, 2, https://energy.gov/fe/downloads/lng-monthly-2017.

  Finally, members of Congress: The Obama Administration did seek to make this clear through statements issued after strategic and economic dialogues held between the United States and China. However, more recently, developments such as the Apple patent dispute with China and Uber’s sale of its China business to a local competitor have heightened sensitivity around the need for reciprocal investment opportunities in China. A 2017 survey conducted by the American Chamber of Commerce in China found that close to three-quarters of Americans surveyed felt foreign businesses were less welcome in China than they did two years ago. See “Joint U.S.-China Press Statements at the Conclusion of the Strategic & Economic Dialogue,” U.S. Department of State, July 10, 2014, https://20092017.state.gov/secretary/remarks/2014/07/228999.htm; “Remarks by Vice President Biden and Chinese Vice President Xi at a U.S.-China Business Roundtable,” The White House, Office of the Vice President, The White House President Barack Obama, August 19, 2011, https://obamawhitehouse.archives.gov/the-press-office/2011/08/19/remarks-vice-president-biden-and-chinese-vice-president-xi-us-china-busi; “China Business Climate Survey Report,” AmChamChina, 2017, https://www.amchamchina.org/policy-advocacy/business-climate-survey/.

  While Chinese investment has quietly flowed: A 2015 report by the Rhodium Group revealed that there has been significant Chinese investment in U.S. energy from 2000 to 2015. The study points to 113 energy deals valued cumulatively at $13.4 billion as of early 2017. “Chinese Investment Monitor,” Rhodium Group, http://rhg.com/interactive/china-investment-monitor. However, in 2012, the U.S. government—through a White House order—forced the reversal of a wind farm investment in Oregon by a private Chinese firm. The wind farm was close to a military base. This investment was the first to be blocked on such grounds in twenty-two years. “US Blocks Chinese Firm’s Investment in Wind Farms,” BBC News, September 28, 2012, www.bbc.com/news/world-us-canada-19766965.

  Recognizing Beijing and building a relationship: Henry Kissinger, On China (London: Penguin Books, 2012), 213–15.

  For China, the opening brought: See Denny Roy, China’s Foreign Relations (Lanham, MD: Rowman & Littlefield, 1998), 29–30.

  On November 11, 2014: See Cary Huang, “Xi Jinping and Barack Obama Walk Down the Path of History,” South China Morning Post, November 15, 2014, www.scmp.com/news/china/article/1640193/xi-jinping-and-barackobama-walk-down-path-history; Carol E. Lee, “U.S., China Reach New Climate, Military Deals,” Wall Street Journal, November 12, 2014, www.wsj.com/articles/u-s-china-ready-deals-to-avert-military-confrontations-1415721451.

  According to the Chinese press: “Xi, Obama meeting: a lively history lesson,” China Daily, November 15, 2015, http://www.chinadaily.com.cn/china/2014-11/15/content_18920403.htm.

  As discussed in Chapter Seven: These goals are slightly less ambitious than the ones made by President Obama in 2009, when he announced the target of reducing emissions by 83 percent by 2050 compared to 2005 levels. Doing so would entail a 17 percent reduction in 2020, a 30 percent reduction in 2025, and a 42 percent reduction in 2030. “President to Attend Copenhagen Climate Talks,” The White House, November 25, 2009, https://obamawhitehouse.archives.gov/the-press-office/president-attend-copenhagen-climate-talks.

  China, for its part, announced: John Podesta and John Holdren, “The U.S. and China Just Announced Important New Actions to Reduce Carbon Pollution,” The White House, President Barack Obama, November 12, 2014, https://obamawhitehouse.archives.gov/blog/2014/11/12/us-and-china-just-announced-importantnew-actions-reduce-carbon-pollution.

  But doing so will create challenges: For more on the politics behind better environmental regulations, see Jost Wübbeke, “The Three-year Battle for China,” China Dialogue, April 25, 2014, https://www.chinadialogue.net/article/show/single/en/6938-The-three-year-battle-for-China-s-new-environmental-law.

  China’s trade with the Middle East: “The Great Well of China,” Economist, June 18, 2015, http://www.economist.com/news/middle-east-and-africa/21654655-oil-bringing-china-and-arabworld-closer-econ
omically-politics-will.

  In 2040, the U.S. EIA anticipates: International Energy Agency, World Energy Outlook 2014 (Paris: OECD Publishing, 2014), 81, http://www.worldenergyoutlook.org/weo2014.

  The 2017 decision of Saudi Aramco: “Saudi Arabia’s Aramco to Invest $7 bn in Malaysia Oil Refinery,” Yahoo! News, February 27, 2017, https://www.yahoo.com/news/saudi-arabias-aramcoinvest-7-bn-malaysia-oil-100804170.html.

  China’s vision for closer economic and political: See “Xi Jinping Attends Opening Ceremony of Sixth Ministerial Conference of China–Arab States,” Ministry of Foreign Affairs of the People’s Republic of China, June 5, 2014, http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1163554.shtml.

  Harking back to historical cooperation: “Conference Proceedings: China in the Middle East,” Georgetown Security Studies Review, June 2015, http://georgetownsecuritystudiesreview.org/wp-content/uploads/2015/07/GSSR-Asia-Conference.pdf.

  such trade had stood at less: Piero Formica, Stories of Innovation for the Millennial Generation: The Lynceus Long View (London: Palgrave Macmillan, 2013), 131.

  Beijing kept quiet when: Yitzhak Shichor, “Iran Keeps China in a Chokehold,” Asia Times Online, accessed September 26, 2008, www.atimes.com/atimes/China/JI26Ad01.html.

  Prime Minister Wen Jiabao: Michael Wines, “China Leader Warns Iran Not to Make Nuclear Arms,” New York Times, January 20, 2012, www.nytimes.com/2012/01/21/world/asia/chinese-leader-wen-criticizes-iran-on-nuclear-program.html?_r=0.

  In speaking with journalist Tom Friedman: Barack Obama, “The Obama Interviews: China as a Free Rider,” New York Times Video, August 9, 2014, video recording, www.nytimes.com/video/opinion/100000003047788/china-as-a-free-rider.html.

  When asked about Chinese views: Alexa Olesen, “China Sees Islamic State Inching Closer to Home,” Foreign Policy, August 11, 2014, http://foreignpolicy.com/2014/08/11/china-sees-islamic-state-inching-closer-to-home/.

  Both powers, in short, are in need: For some ideas of ways in which the United States and China can begin to increase their cooperation, see Christopher Yung and Wang Dong, “U.S.-China Relations in the Maritime Security Domain,” in U.S.-China Relations in Strategic Domains, ed. Travis Tanner and Wang Dong (Seattle: The National Bureau of Asian Research, April 2016), http://www.nbr.org/publications/element.aspx?id=889.

  Eleven: The Middle East—Trying to Make the Most of a Tough Situation

  Sir Mark Sykes slid his finger: For a vivid account of this history, and the Anglo-French rivalry that underpinned it, see James Barr, A Line in the Sand: The Anglo-French Struggle for the Middle East, 1914–1948 (New York: W. W. Norton, 2013). Quote in text can be found on page 7.

  Enraged, House wrote: Ibid., 30.

  Walid Jumblatt, the leader of the Druze: Jim Muir, “Sykes-Picot: The Map That Spawned a Century of Resentment,” BBC News, May 16, 2016, www.bbc.com/news/world-middle-east-36300224.

  Barham Salih, a Kurdish leader: Robin Wright, “How the Curse of Sykes-Picot Still Haunts the Middle East,” New Yorker, April 30, 2016, www.newyorker.com/news/news-desk/how-the-curse-of-sykes-picot-still-haunts-the-middle-east.

  Even ISIS leader Abu Bakr al-Baghdadi: Ibid.

  Turkey saw its GDP per capita: “GDP per capita, PPP (current international $), Turkey,” The World Bank, http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=TR.

  Oil and gas are the economic lifeblood: As mentioned later in the chapter, from 2011 to 2014, Saudi Arabia alone reportedly provided nearly $23 billion in aid to Bahrain, Egypt, Jordan, Oman, Yemen, Palestine, Morocco, Sudan, and Djibouti. “KSA [Kingdom of Saudi Arabia] Has Allocated SR252bn in Foreign Aid Since 1990,” Arab News, September 29, 2014, www.arabnews.com/economy/news/637176.

  With dozens of American sailors: “Ibn Saud Greets President Franklin D. Roosevelt on USS Quincy in the Suez Canal,” YouTube, 3:49, posted by “CriticalPast,” March 15, 2014, www.youtube.com/watch?v=FH1cUz7O7mg.

  He slept outside on the deck: Thomas W. Lippman, “The Day FDR Met Saudi Arabia’s Ibn Saud,” The Link 38, no. 2 (April/May 2005): 5, www.ameu.org/getattachment/51ee4866-95c1-4603-b0dd-e16d2d49fcbc/The-Day-FDR-Met-Saudi-Arabia-Ibn-Saud.aspx.

  Sitting close together, the leaders: Ibid., 7.

  Over the course of the twentieth century: See Bruce R. Kuniholm, “The Carter Doctrine, the Reagan Corollary, and Prospects for United States Policy in Southwest Asia,” International Journal 41, no. 2 (1986).

  A few years earlier, the CIA: See “Intelligence Memorandum: The Impending Soviet Oil Crisis,” U.S. Central Intelligence Agency, ER 77-10147, CIA Historical Review Program, March 1977, www.cia.gov/library/readingroom/docs/DOC_0000498607.pdf.

  In his last State of the Union: Jimmy Carter, “The State of the Union Address Delivered Before a Joint Session of the Congress,” House of Representatives, Washington, DC, January 23, 1980, The American Presidency Project, www.presidency.ucsb.edu/ws/?pid=33079.

  His words were interrupted: See “1980 State of the Union Address,” C-SPAN, https://www.c-span.org/video/?124054-1/1980-state-union-address.

  Just one year later, newly elected President: Ronald Reagan, “The President’s News Conference,” East Room, White House, Washington, DC, October 1, 1981, The American Presidency Project, www.presidency.ucsb.edu/ws/?pid=44327.

  In 1990, Iraqi forces overran: Oil was, of course, not the only decisive factor in the U.S. response to Iraq’s invasion of Kuwait in 1990.

  “The economic lifeline of the industrial world”: Thomas L. Friedman, “U.S. Jobs at Stake in Gulf, Baker Says,” New York Times, November 14, 1990, www.nytimes.com/1990/11/14/world/mideast-tensions-us-jobs-at-stake-in-gulf-baker-says.html. Also see a PBS interview with Baker, in which he responds to the question of what was the impetus for war by saying, “The fundamental reason was that this was very much in the vital national interest of the United States. It had been seen to be in the vital national interests of the United States through both Republican and Democratic administrations going all the way back to Roosevelt. That is secure access to the energy resources of the Persian Gulf. That, plus the fact that we had here an outrageous case of unprovoked aggression by a large country against its small neighbor. We had the potential of a dictator who was in the process of developing nuclear weapons or trying to develop nuclear weapons, sitting astride the economic lifeline of the West. We had a situation where if he had been successful it would have adversely impacted the economies of all of the West. It would have impacted jobs in the United States. All of those reasons were valid reasons for fighting this war. My suggestion that it boiled down to jobs got a lot of attention and flak but the fact of the matter is it would have boiled down to jobs if Saddam Hussein had been able to control the flow of oil from the Persian Gulf or to, by controlling his own oil and Kuwait’s oil act in a way to influence prices.” “Oral History: James Baker,” PBS, accessed October 17, 2016, www.pbs.org/wgbh/pages/frontline/gulf/oral/baker/1.html.

  As late as 1989, the United States: Tim Kane, “Global U.S. Troop Deployment, 1950–2003,” Heritage Foundation, October 27, 2004, http://www.heritage.org/defense/Report/Global-US-Troop-Deployment-1950-2003.

  Yet, even a decade after Iraq: Joshua Rovner and Caitlin Talmadge, “Less Is More: The Future of the U.S. Military in the Persian Gulf,” The Washington Quarterly 37, no. 3 (Fall 2014), https://twq.elliott.gwu.edu/less-more-future-us-military-persian-gulf.

  According to economist Anders Aslund: “A Symposium of Views: The Geopolitics of U.S. Energy Independence,” The International Economy (Summer 2012): 23–24, www.international-economy.com/TIE_Su12_GeopoliticsEnergySymp.pdf.

  Middle East policy expert: Ibid.

  In 2012, President Obama voiced: Benjamin Alter and Edward Fishman, “The Dark Side of Energy Independence,” New York Times, April 27, 2013, www.nytimes.com/2013/04/28/opinion/sunday/the-dark-side-of-energy-independence.html.

  Obama’s Republican opponent in the 2012: Ibid.

  In 2016, Donald Trump’s campaign: Markham Hislop, “So Long, OPEC—You’re at th
e Top of Donald Trump’s Hit List,” Financial Post, November 14, 2016, http://business.financialpost.com/fp-comment/so-long-opec-youre-at-the-top-of-donald-trumps-hit-list.

  Then, beginning with the economic slowdown: “U.S. Imports by Country of Origin,” U.S. Energy Information Administration, https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm.

  U.S.-Saudi crude trade reflected: The peak of 2.2 mnb/d in May 2003 turned into a trough of 0.8 mnb/d by December 2014. Ibid.

  The IEA and some oil and gas experts: For instance, see Leonardo Maugeri, “Global Oil Production is Surging: Implications for Prices, Geopolitics, and the Environment,” Geopolitics of Energy Project, Belfer Center for Science and International Affairs, Kennedy School of Government, Harvard University, June 2012, 2, http://www.belfercenter.org/sites/default/files/legacy/files/maugeri_policybrief.pdf; International Energy Agency, World Energy Outlook 2016, 142.

  If history is any indication: See Blake Clayton and Michael Levi, “The Surprising Sources of Oil’s Influence,” Survival 54, no. 6 (2012).

  They were approximately 1.4 mnb/d: “U.S. Crude Oil Imports,” U.S. Energy Information Administration, http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_m.htm; Quote can be found in David Ottaway, The King’s Messenger: Prince Bandar bin Sultan and America’s Tangled Relationship with Saudi Arabia (New York: Walker, 2008), 86.

  And they were more or less: Ottaway, The King’s Messenger, 167.

  They estimate the costs: Mark A. Delucchi and James J. Murphy, “US Military Expenditures to Protect the Use of Persian Gulf Oil for Motor Vehicles,” Energy Policy 36 (2008): 2259, https://escholarship.org/uc/item/0j9561zd#page-12.