China’s emerging twin pillar policy in the Gulf

In the media tumult following the charges that elements of the Iranian regime sought to assassinate the Saudi ambassador to the United States, the prospect of a faltering regional status quo has become a frightening reality. However, while the historic and regional rivalry between Saudi Arabia and Iran has unquestionably intensified, especially following the Saudi-led invasion of Bahrain this past spring to suppress majority Shi’a protests, recent events obscure the fact that Iran and Saudi Arabia increasingly share a growing economic market and great power ally in China. China’s gradual realignment from squarely backing Iran to courting Saudi Arabia in recent years heralds a geostrategic shift in Chinese foreign policy and marks the stirrings of a Chinese "twin-pillar" policy in the Gulf. Yet the U.S. should not necessarily view this shift as a threat to its strategic national interests in the Gulf. Rather, Chinese engagement with these two regional poles of influence could actually prove beneficial for the U.S. as it begins to rethink its regional strategy and seek ways to maintain stability without a large military presence.

While the rise of a Chinese twin-pillar policy evokes historical parallels with the U.S.’s own 1971 Gulf twin-pillar policy that sought to uphold U.S. strategic national interest in the Gulf by building up the region’s two rival powers (then with Iran under the Shah’s regime), it is a policy most importantly predicated on ensuring that China secures energy resources for its expanding economy. Due to the extraordinary growth of its industrial, petrochemical, and manufacturing sectors, as well as the rapid expansion of personal automobile use, China is currently the world’s second largest consumer of oil – and several economists predict it will be the primary consumer of oil by 2025. Despite aggressive pursuit of supply diversity, as much as 70 to 80 percent of China’s future oil imports will have to come from the Middle East and North Africa. To meet this growing demand, over the past ten years China actively courted Iran through a variety of economic and political inducements as a key part in ensuring a stable flow of energy. This partnership underlined the informal alliance structure in the Gulf which placed China as Iran’s ally and the U.S.-backed Saudi Arabia in separate corners. China’s emerging twin pillar policy remakes the mold and has the potential to not only reshape regional alignments but provide energy dominance and regional stability in the decades to come.

The impact of the wars in Afghanistan and Iraq and the events of the recent Arab uprisings have placed the traditional great power regional alliance structures in significant flux. Saudi Arabia’s intensified diplomatic outreach to both Russia and China in the wake of U.S. support of President Mubarak’s ouster in Egypt and the protests in Bahrain sent a clear message that it was willing to recalibrate its orientation towards the East if the U.S. missteps. China has welcomed this shift and seized upon the events of the past year to enhance its ties to and support for Saudi Arabia. Moreover, China has become an increasingly attractive partner for the Kingdom as it offers improved economic relations without insisting on political reforms. Indeed, China’s model of rapid economic development within an autocratic framework is increasingly cited by many in the Al-Saud family as a template for Saudi Arabia’s transformation to a modern knowledge economy as a monarchy.

In 2009, Saudi Arabia became the leading supplier of crude oil to China, once a position held by the U.S. More broadly, Sino-Saudi trade is expected to reach $60 billion by 2015, up from $40 billion in 2008. This compares to U.S.-Saudi bilateral trade at $43 billion in 2010. In February 2009, China’s President Hu Jintao and King Abdullah of Saudi Arabia also concluded a $1.8 billion contract to build a railway line between the Holy Cities of Mecca and Medina, to be completed in 2013 (since many firms are unable to contract in Mecca due to the restriction on the entrance of non-Muslims, one recent Economist article described how Chinese firms are even converting hundreds of its workers to Islam to secure the contractual work).

The strengthening of economic ties between the two countries has increasingly corresponded with political cooperation. During a bilateral summit this past June between Chinese Premier Wen Jiabao and Saudi Arabia’s Speaker of the Majlis Ash-Shura Council, Abdullah Bin Mohammed Bin Ibrahim Al-Sheikh, Premier Wen said that "China and Saudi Arabia hold wide consensus and identical interest on such major issues as coping with the international financial crisis, maintaining regional peace and stability, and respecting civilization diversification." In a follow-on statement, the Chinese Ministry of Affairs noted, "Saudi Arabia expects to join hands with China to lift the bilateral relations to a higher level." Months before this meeting, it is also interesting to note that China’s sixth naval escort flotilla arrived in Jeddah, Saudi Arabia for the first time on a goodwill visit in November 2010. The symbolism of this naval visit is significant considering the United States was evicted from its Saudi bases in 2003.

Signaling a potential high stakes reorientation of its relationship with the U.S., this past April Saudi Arabia announced that it would sign an agreement with China to build a nuclear power program, widely seen as a move to counter Iran’s regional ambitions. Previously, one CIA-analyst alleged that "the People’s Republic of China delivered a turn-key nuclear ballistic missile system to the Kingdom of Saudi Arabia over the course of several years beginning no later than December 2003." Whether true or not, it remains apparent that Saudi Arabia is serious about building a nuclear power program and announced this past September that it would spend $100 billion over the next 20 years to construct 16 nuclear reactors. The first two would be constructed over the next decade.

Fascinatingly, this increase in Sino-Saudi relations has not led to a significant cooling of China’s alliance with Saudi Arabia’s regional rival Iran. To start, China continues to rely on Iranian for crude oil — and will for the foreseeable future. The China Customs Organization announced this past August that Iran’s total crude exports to China increased 47 percent from January to July 2011, compared to an identical period the previous year. Iran is China’s third largest oil supplier after Saudi Arabia and Angola. In 2004 China and Iran signed a $70 billion deal that would allow China’s Sinopec to purchase 250 million tons of liquefied natural gas (LNG) and develop Iran’s Yadavaran field, guaranteeing that China received 150,000 barrels of Iranian crude oil per day for the next 25 years.

Far from cooling relations, China and Iran continue to bolster their historic economic and political relationship despite China’s continued and growing outreach to Saudi Arabia. This past summer China and Iran signed several agreements on infrastructure and trade cooperation while also celebrating their 40-year anniversary in diplomatic relations. In 2009 the two countries signed 18 economic agreements totaling $17 billion. Currently, over 100 Chinese state companies operate in Iran. In 2010 bilateral trade reached a record $29.3 billion, an increase of 38.5 percent compared to 2009. And, most crucially, in August China’s Ambassador to Iran, Yu Hongyang, underlined China’s continued support of Iranian nuclear ambitions stating, "Iran, as a signatory to the nuclear Non-Proliferation Treaty, has a right to nuclear energy meant for peaceful purposes."

China’s engagement with both Iran and Saudi Arabia aligns with its ratcheting up of economic and political ties throughout the region. With the U.S.’s prolonged involvement in Iraq, Afghanistan, and other neighboring countries, China is slowly but surely beginning to outpace the U.S.’s political and economic influence across the region, a trend likely to persist as China continues to align itself with majority Arab opinion (often opposite the U.S.) on other salient regional issues like the Palestine question (evidenced by its recent vote in favor of Palestine joining UNESCO).

China has also begun to enhance its military and naval presence in the broader Gulf region, especially with basing access and control of Gwadar, Pakistan, to assist in securing its energy shipments in and out of the region. China’s success in developing Gwadar as a maritime commercial hub now places China just 250 miles from the Gulf’s strategic maritime chokehold, or Strait of Hormuz. An intensifying interest in energy security by China, however, does not necessarily translate into an inevitable dynamic of military competition. As the U.S. remains preoccupied with Afghanistan, Pakistan, Yemen, and other destabilizing events of the region, China may prove to be an important strategic partner in helping maintain security and stability between Iran, Saudi Arabia, and other regional actors. In January 2009, for example, the Pentagon welcomed the deployment of the Chinese navy for anti-piracy operations in the Gulf of Aden, where both the United States and China depend on the same shipping lanes. Most recently, China joined the United States, Pakistan, Saudi Arabia, and eight other international navies for Exercise AMAN-2011 (Together for Peace). The exercise was based in Karachi and symbolizes a possibility for greater multilateral operations on the high seas, in addition to other burgeoning regional security partnerships like those affiliated with the Shanghai Cooperation Organization.

The most important test of China’s new regional role will be whether it can successfully balance an Iran and Saudi Arabia that are increasingly locked in a seeming zero sum game for control of the region through regional proxies. As China tries to balance its economic engagement with both Iran and Saudi Arabia, there will inevitably come a moment when it is unable to stand apart as a disinterested actor in the regional rivalry. With influence comes interest. Possible positive spillover from this entanglement could include assuming, willingly or not, the responsibility of becoming the go-to regional powerbroker – a role the U.S. is quickly shedding.

Currently no security forum exists in the broader Middle East where Iran and Saudi Arabia sit at the same table. Without any institutional ties or informal consultative bodies, the two dominant regional players have few intermediaries. While a common forum for Saudi Arabia and Iran to interact may not lead to an immediate decrease in hostile positioning, China could build informal channels of consultation that could be expanded when the need arises. China’s transforming relationship with Saudi Arabia has the potential to force China into assuming a greater role in defraying regional tensions and placing pressure on Iran to dismantle its nuclear program.  This might also assist in keeping nuclear rhetoric at a minimum, especially as the Gulf Cooperation Council, under the leadership of Saudi Arabia, declares its interest in pursuing nuclear programs for member states if Iran continues its nuclear activities. 

A Chinese twin-pillar policy has begun to take hold in the Gulf and the spread of a greater Chinese influence is already underway. With a chaotic and unpredictable future on the horizon for the greater Gulf region, the U.S. should harness China’s new influence to promote regional stability. Put plainly, the United States faces a choice between acknowledging China’s growing interest and influence in the broader Gulf region, or risks excluding it at the expense of stability.   The U.S. must strive to adapt and adopt a new foreign and regional security policy that encompasses an increased Chinese Gulf presence.

Dr. Geoffrey F. Gresh is an Assistant Professor at the College of International Security Affairs at National Defense University. The views expressed here are his own.