Tuesday, July 02, 2013

Int Relations: Recalibrating American Grand Strategy - Softening US Policies Toward Iran In Order to Contain China

President Barack Obama talks with Gen. Ray Odierno, Gen. Martin Dempsey, and Admiral James "Sandy" Winnefeld, May 29, 2011.

Source: ISN

Recalibrating American Grand Strategy: Softening US Policies Toward Iran In Order to Contain China

This article was originally published by the Strategic Studies Institute of the US Army War College

How might the US cope with China in an era of government austerity? Think grand strategically, says Samir Tata. Instead of fretting about how to cope with anti-access/area denial strategies in the Indian Ocean, Washington must first do something more substantial – i.e., boost its ties with India, Indonesia and Iran.

By Samir Tata for Strategic Studies Institute of the US Army War College (SSI)
Over the next decade, the United States will have to rethink its grand strategy as it addresses the challenge of maintaining its primacy as a global power in an increasingly multipolar world whose center of gravity has shifted to Asia. The task will be all the more daunting because significant fiscal and economic constraints imposed by a federal government debt that has mushroomed to nearly $16 trillion or about 100 percent of GDP, and a continuing economic slowdown that has been the deepest and longest since the Great Depression will force difficult tradeoffs as the United States seeks to realign and streamline vital national interests with limited resources.[1] The overarching national security objective of the United States must be crystal clear: to counterbalance and contain a rising China determined to be the dominant economic, political, and military power in Asia.

While China’s rise will not be a straight line, its trajectory to great power status is obvious.[2] A twenty-first century version of a Greater East Asia Co-Prosperity Sphere with China at the epicenter is emerging.[3] China is the biggest economy in Asia, having surpassed Japan in 2010.[4] China is the largest trading partner of Japan, South Korea, Taiwan, Australia, India, and the ten countries of the Association of Southeast Asian Nations (ASEAN). Unquestionably, China is the economic engine of Asia, displacing both Japan and the United States. According to US government projections, China is expected to be the world’s largest economy by 2019 in terms of purchasing power parity (which adjusts for cost of living) with a forecasted gross domestic product (GDP) of $17.2 trillion compared to an expected US GDP of $17 trillion.[5]
From a strategic perspective, the “Achilles heel” of China is its over-whelming dependence on Persian Gulf energy imports to fuel its rapidly growing economy. The sea lines of communication (SLOCs) over which these vital oil and gas imports are transported by tanker—from the Strait of Hormuz in the Persian Gulf to the Arabian Sea and Indian Ocean, continuing on to the Bay of Bengal and through the Malacca Straits into the South China Sea—is China’s jugular vein. Virtually all Persian Gulf energy exports destined for China (as well as for Japan, South Korea, and Taiwan) flow through this route. Two important alternatives to the Malacca Straits are the Sunda and Lambok Straits in Indonesia linking

the eastern Indian Ocean to the Java Sea which continues to the South China Sea. Another key energy route flows from Saudi ports on the Red Sea (principally the port of Yanbu) to the Bab el Mandab in the Gulf of Aden proceeding on to the Arabian Sea and the Indian Ocean and continuing to the Malacca Straits, or the Sunda and Lambok Straits. The five critical choke points—Hormuz, Bab el Mandab, Malacca, Sunda and Lambok—and the SLOCs linking them are controlled by the US Navy.

China’s economic and military security is inextricably intertwined with its energy security. Since 2000, China has been a net importer of oil and gas, primarily from the Persian Gulf. China became the world’s largest energy consumer in 2009, with 96.9 quadrillion British thermal units (BTU) of annual energy consumption compared to 94.8 quadrillion BTU for the United States.[6] By 2011, China surpassed the United States as the largest importer of Persian Gulf oil, importing 2.5 million barrels per day (bbls/d) from the region (representing about 26 percent of total Chinese oil consumption of 9.8 million bbls/d), overtaking the United States which imported 1.8 million bbls/d from the Persian Gulf (representing about 10 percent of total US oil consumption of 18.8 m i l l ion bbl s/d ).[7]

In fact, over half of US oil imports come from three countries in the Americas: Canada, Venezuela, and Mexico, with Canada being the single most important foreign supplier.[8]

The US Energy Information Administration (EIA) projects that by 2030 oil imports, mainly from the Persian Gulf, will represent 75 percent of total Chinese oil consumption. By contrast, US oil imports are expected to decline sharply and account for only 35 percent of total US oil consumption by 2030.[9]

Clearly, Persian Gulf oil imports will be far more crucial to China than to the United States. Accordingly, for China, ensuring access to Persian Gulf oil and gas will loom large as a vital national interest. By contrast, for the United States, a key strategic priority will be denial of access to Persian Gulf energy resources to its adversaries.

China, of course, which has domestic oil reserves of about 20 billion barrels and domestic gas reserves of 107 trillion cubic feet (Tcf ), is seeking oil and gas resources which it can effectively control in its own backyard.[10] In the East China Sea, low-end estimated oil reserves are 60 billion barrels, and in the South China Sea, low-end estimated oil reserves are 11 billion barrels.[11] Not surprisingly, the potential energy resources of these areas have generated intense rival claims involving China, Japan, South Korea, Vietnam, and the Philippines. However, the East and South China Seas have yet to be explored systematically, and their oil and gas resources are a long way from being developed and produced. By comparison, the proved oil reserves of Saudi Arabia alone amount to 263 billion barrels, and the combined proved oil reserves of Iran and Iraq are about 252 billion barrels.[12] Thus, from the Chinese viewpoint, the strategic importance of access to Persian Gulf oil and gas resources is not significantly changed even with Chinese control over access to oil and gas resources in the East and South China Seas.

If the United States is to counterbalance China successfully, it must be able to threaten China’s energy security. Ideally, the United States should be in a position in which it can persuade the Persian Gulf oil producers, if necessary, to turn off the tap and decline to supply China with oil and gas. Furthermore, the United States must be able to put in place anti-access, area denial strategies (a) in the eastern Indian Ocean and Bay of Bengal to blockade the Malacca, Sunda and Lambok Straits; and (b) in the western Indian Ocean and the Arabian Sea to blockade the arc between the Bab el Mandab to the Strait of Hormuz. Indonesia, India, and Iran will be critical to the success of a recalibrated American grand strategy to contain China.

 (To access the remainder of this article, please follow this link to the PDF at the Strategic Studies Institute.)

For additional reading on this topic please see:
By Invitation, Mostly: The International Politics of the US Security Presence, China, and the South China Sea
The US Rebalancing to Asia: Indonesia’s Maritime Dilemma
China Naval Modernization: Implications for US Navy Capabilities

[1] For total public debt outstanding, see US Department of the Treasury, Daily Treasury Statement, August 31, 2012, Table III-C, https://fms.treas.gov/fmsweb/viewDTSFiles?dir=a&fname=12083100.pdf For total GDP see Bureau of Economic Analysis (BEA), National Income and Product Accounts, August 29, 2012, http://www.bea.gov.

[2]China is likely to face a pension and social security bomb by 2050. The combined impact of a low fertility rate (1.56) and skewed male to female ratio at birth (1.18 to 1) means that “Unlike the rest of the developed world, China will grow old before it gets rich.” See “Demography: China’s Achilles heel,” The Economist, April 21, 2012, http://www.economist.com and “China’s population: The most surprising demographic crisis,” The Economist, May 5, 2011, http://www.economist.com.

[3] Japan’s original version of the Greater East-Asian Co-Prosperity Sphere was enunciated in August 1940 to serve as the rationale for the Japanese Empire being carved out by Japanese militarists. See Warren I. Cohen, East Asia at the Center: Four Thousand Years of Engagement with the World (New York: Columbia University Press, 2000), 352.

[4]BBC News, “China overtakes Japan as world’s second biggest economy,” 14 February 2011, http://www.bbc.co.uk.

[5]US Energy Information Administration (EIA), “World gross domestic product (GDP) by region expressed in purchasing power parity, Reference case,” International Energy Outlook 2011, http://www.eia.gov.

[6]US Energy Information Administration, Table A1 “World total primary energy consumption by region, Reference case,” in International Energy Outlook 2011, http://www.eia.gov.

[7]For total Chinese oil consumption and imports, see US Energy Information Administration (EIA), China: Country Analysis Brief, September 4, 2012, http://www.eia.gov; for total US oil consumption and imports see EIA, “Energy in Brief: How dependent are we on foreign oil?” July 13, 2012, http://www.eia.gov; and EIA, “Petroleum and Other Liquids: US Net Imports by Country,” August 30, 2012, http://www.eia.gov.

[8] Ibid. In particular see “Energy in Brief: How dependent are we on foreign oil?”

[9]Ibid. For further details regarding the forecasted dramatic drop in US oil imports, see figure 114 “US net imports of petroleum and other liquids fall in the Reference case” in EIA, Annual Energy Outlook 2012,” June 25, 2012, http://www.eia.gov.

[10]US Energy Information Administration, China: Country Analysis Brief, September 4, 2012, http://www.eia.gov.

[11] EIA, East China Sea: Analysis Brief, September 12, 2012, http://www.eia.gov; South China Sea: Analysis Brief, February 7, 2013, http://www.eia.gov.

[12] “2011 World Proved Reserves,” http://www.eia.gov.

Samir Tata is a foreign policy analyst. He served as an analyst with the National Geospatial-Intelligence Agency, Senator Feinstein, researcher with Middle East Institute, Atlantic Council, & National Defense University. He has a B.A. in Foreign Affairs & History from the University of Virginia, and an M.A. in International Affairs from George Washington University.