Why China stands to gain the most from the Middle East talks.
- By Daniel AltmanDaniel Altman teaches economics at New York University's Stern School of Business and is chief economist of Big Think.
Remember when the Israeli-Palestinian conflict made front pages every day and the United States fought wars to secure oil and gas in the Middle East? Back then, the region’s political problems were of primary economic importance to Americans. But now, as the prospect of energy independence dawns, to whom does the Middle East really matter?
On the surface, it sure seems like American interests are at stake. Thirteen years almost to the day after the Camp David summit failed, negotiations have started anew in Washington. A lot has changed since 2000, however.
Monthly imports of crude oil and other petroleum products from the Persian Gulf peaked at 96.7 million barrels in April 2001. This year, they’ve been hovering around 50 million to 60 million barrels. Natural gas imports from the Middle East are also much smaller today than they were in 2000, but they’ve always been dwarfed by pipeline imports from Canada. Even American imports of liquefied natural gas — a major export for Qatar and Yemen — come primarily from Trinidad and Tobago. And overall, imports of natural gas have been falling since 2007.
Petroleum imports from the Middle East aren’t as important as they used to be for the European Union, either. In 2001, about 25 percent of the EU’s imports came from the Middle East. Last year, the share was just 15 percent; Russia and the rest of the former Soviet Union supply far more of Europe’s oil.
So where is all the Middle East’s oil going? Countries in East Asia depend on it. China, for example, got about half its crude from the Middle East in 2011. But that figure paled next to that of Japan, which imports 87 percent of its oil from the Middle East.
Of course, oil and gas aren’t the only economic reasons to worry about the Middle East. Egypt’s Suez Canal is still a critical passageway for commerce, and its throughput more than doubled between 2001 and 2012. Not much of that traffic was traveling to or from the United States, though. The biggest users were shippers in Southeast Asia, the Red Sea region, and Northern Europe.
As a whole, the European Union received about 4.4 percent of its merchandise imports from Gulf countries in 2012. Adding Egypt, Israel, Jordan, Lebanon, Syria, and Turkey brought the total to 8.3 percent. Both of these shares have been increasing in recent years. Meanwhile, China’s total trade with the Middle East has been growing steadily, too; imports from the region tripled between 2007 and 2011.
Trade between the United States and the Middle East is much smaller, though it has increased since the collapse at Camp David. Thanks in part to new trade agreements, the share of American imports of goods and services coming from the region has risen by about two-thirds, from 3 percent in 2000 to 4.9 percent in 2012. The twist is that the new trade agreements — and trade with the Middle East in general — have often been pursued for political reasons.
Bahrain, Jordan, and Oman were never going to be the most crucial trading partners for the United States. Nor are they necessarily the most economically efficient sources of imports; other countries might have offered Americans lower-priced goods under the same favorable trading rules. But strengthening economic ties in the Middle East has long been seen as a useful underpinning for strategic goals: protecting Israel, isolating Iran, and maintaining a local military presence. As a result, the importance of the American economic relationship with the Middle East has been artificially maintained.
Yet America’s economic interest in the Middle East is still far smaller than Europe’s or Asia’s. This does not stop the United States from doing most of the political legwork in the region, at least publicly. Once again, the world can bear witness to the ritual of the American president and secretary of state organizing an Israeli-Palestinian peace conference as if it were another station of the cross on the way to Golgotha. At the United Nations, American officials wail weekly about the continuing onslaught of death in Syria. Americans lead the effort to stop Iran’s nuclear program, and Americans are trying to rein in the excesses of Egypt’s military.
So where are the Europeans, Chinese, and Japanese? They may be active behind the scenes, but in public they look like classic free riders. Perhaps they see little to gain by involving themselves in conflicts whose economic consequences have been largely contained. They may also, as a general rule, have less of an interventionist attitude than the United States. Still, in economic terms their people arguably have more at stake in the Middle East than Americans do, and the gap between those interests is likely to increase.
If Washington’s latest effort to bring the Israelis and Palestinians together fails, it may be a long time before an American president takes the initiative in the Middle East again. War and frustration have taken their toll, and the economic imperative is far from clear. To fill the vacuum, China, Japan, and the European Union could form a new coalition of partners for peace. It may seem like a stretch to imagine these three heavyweights working together on Egypt, Syria, or Jerusalem. But can they afford not to?