The Oil and the Glory
Pax-Sinica: Why the U.S. should hand over Afghanistan and Central Asia to China
In northern Afghanistan, a potentially rich, U.S.-backed oil and gas tender is under way this week. Central to hopes for a face-saving force withdrawal in two years, the competition is part of a U.S. strategy of initiating a vibrant, self-sustaining industrial base in Afghanistan that can bring jobs and stability over the long term. What ...
In northern Afghanistan, a potentially rich, U.S.-backed oil and gas tender is under way this week. Central to hopes for a face-saving force withdrawal in two years, the competition is part of a U.S. strategy of initiating a vibrant, self-sustaining industrial base in Afghanistan that can bring jobs and stability over the long term. What the tender’s Pentagon advisers hope will not happen: another Chinese triumph in Afghanistan’s nascent oil and mining sector. Why? As a Pentagon official told me, the United States fears that China will end up "dominating Afghanistan."
From two decades of watching and covering the country, I feel confident saying that China will not end up "dominating Afghanistan," because the Afghans are too astute to let that happen. They do not require foreigners to inform them of the downside risks of falling under the sway of an outside power. Yet how astute are we?
By appearances, not very. We seem to have determined that because China is a great rival in many sectors, it is by definition a danger everywhere. But the logic does not hold in Central and South Asia, where a robust Chinese economic role — a Pax Sinica, if you will — may be what stands between the success and failure of primary U.S. and Western strategic objectives. "Without China’s assistance, almost nothing of sustainable consequence will happen in South or Central Asia — in Pakistan, in Afghanistan, or elsewhere," Larry Wilkerson, former chief of staff to Gen. Colin Powell, told me.
For two decades, the United States has sought to fashion Central Asia — and, since 9/11, Afghanistan — into a bastion of free-market democracy that respects human and civil rights. In the 1990s, the policy centered on reducing Russian influence in Central Asia through the construction of independent oil and gas pipelines. After 9/11, the policy shifted to creating a support base for the war in Afghanistan, eventually becoming what is known as the Northern Distribution Network. Now, NATO troops have plans to withdraw in 2014, and the United States is attempting to erect the foundation of a sustainable economic base on its way out. But the hour is late, and the plan runs the risk of Potemkinism — a nice try aesthetically, but lacking substance. The Chinese themselves are highly unlikely to explicitly come to America’s aid. But the United States could achieve some of its aims — a more stable Afghanistan, and a more economically independent Central Asia — with China’s implicit help by embracing some of its objectives.
The Afghan tender is for six exploratory blocks of land ranging in size from 1,200 to 2,200 square miles in and around the north-central Afghan city of Mazar-i-Sharif. According to a report last year by the U.S. Geological Service, the blocks contain an estimated 1 billion barrels of oil. If the estimate proves out, it is sufficient to attract attention from relatively large multinational oil companies. We won’t know who the bidders are until Saturday, when they must file an "expression of interest" with Afghanistan’s Ministry of Mines. (Complete offers are due in October, and the winner is to be announced by the end of the year.) But a Chinese company such as the China National Petroleum Corporation (CNPC) is expected to bid. If that Chinese company goes on to win, it will be the country’s second big hydrocarbon triumph in Afghanistan in as many years. It will also escalate an already loud fracas in the West.
In a series of policy journal articles, most recently in the current issue of Foreign Affairs, former U.S. Ambassador Zalmay Khalilzad and his son, Alexander Benard, have protested last year’s first-round oil tender victory by CNPC. Khalilzad, who served as ambassador to Afghanistan and Iraq during the George W. Bush presidency, now runs Gryphon Partners along with his son. The firm helps companies seeking business in the two nations and elsewhere by, among other things, introducing them to senior officials there. In Afghanistan, Gryphon has represented Britain-based Tethys Petroleum, which CNPC beat out in the first oil tender. The father-and-son pair has targeted the tender’s Pentagon advisers for criticism, arguing that CNPC’s triumph was a mockery of fair competition, and that the Pentagon should have carried out a policy of favoring U.S. companies. The argument becomes a bit overheated — Benard’s Foreign Affairs essay suggests that the good old days were when U.S. Marines were dispatched to straighten out countries that flouted the entreaties of American businessmen. But we do come to understand that the father and son unhappily believe that they and other American businessmen need better advantages abroad to win.
But that’s not how business actually gets done in this era of globalization. In Russia, for example, President Vladimir Putin has recently let three contracts for the prized Arctic go to ExxonMobil, Italy’s ENI, and Norway’s Statoil. In Africa, the hottest new play is the eastern coastline states of Kenya, Mozambique, and Tanzania, but the boom is led by American, British, and Italian companies. In other words, you do not have to be Chinese to win big. And there do not have to be gunboats.
In the case of Afghanistan, the Chinese are highly unlikely to win the latest tender, primarily because the Afghans will want to mix things up. But if they do win, it will not be a disaster. On the contrary, "the more economically invested China is, the more it’s a status quo actor and willing to support the future stability of the country," Andrew Small, a scholar at the German Marshall Fund, told me.
We are not talking about a Chinese security role. In terms of foreign adventurism, Beijing has no record of exercising its military might abroad apart from in Tibet and the South China Sea. Perhaps its territorial notions will expand over time, but I found no one who suggested that China wishes to play a security role in Afghanistan or Central Asia.
China’s role as a serious economic player in the region goes back a decade and a half. Starting in the mid-1990s, it began to seek and obtain oil and gas fields in Kazakhstan and Turkmenistan. In 2006, CNPC became the only company to obtain prized rights to an onshore natural gas field in Turkmenistan, in large part by pledging to quickly monetize the field with a pipeline into China. The 1,100-mile pipeline was completed three years later.
In contrast, the West has failed to build any pipeline connecting Central Asia to the outside despite some 17 years of trying. The West’s sorry pipeline story goes back to the 1991 Soviet breakup, when increasing numbers of American oil companies began to seek deals in Central Asia. The Clinton administration got behind the construction of new oil and gas pipelines as a way both to export the companies’ hydrocarbons and to reduce Russian influence in the region. One idea was to build a gas pipeline across the Caspian Sea connecting Turkmenistan to Azerbaijan, and on to Turkey and then Europe. In recent years, the line took on the name Nabucco.
The policy continues today, but has morphed into a truncated line known as "Nabucco West" that leaves out Turkmenistan and starts in Azerbaijan, namely because the Turkmen have refused to commit to the idea. The Obama administration has also resurrected a line promoted in the 1990s by Unocal connecting Turkmenistan to the Indian subcontinent via Afghanistan. Today it is known by the acronym TAPI.
Both lines — Nabucco and TAPI — have confronted serious obstacles since neither is very practical from a commercial standpoint. Yet what about turning the axis of both proposed lines east? Rather than shipping Azeri gas to the west, what about exporting it east, into the existing Turkmenistan-China line? The result would be the same — the Caucasus in this case would have another economic outlet independent of Russia. And in the case of Afghan gas, a Chinese dogleg would also accomplish the same ultimate goal: monetizing Afghanistan’s natural wealth. A parallel oil line could be built as well.
Then there is the talk of a "new Silk Road," embraced by Secretary of State Hillary Clinton and the U.S. military’s Central Command. The idea is a massive Afghan economic development program, with new roads, railroads, electric lines, and energy pipelines connecting the borders of Europe with the ports of the Arabian Sea and India, with Afghanistan as a hub in the economic center. I am told that although the plan is still being discussed, it shows no signs of materializing. There are many reasons for that, including its grandiosity. But I would raise another reason — that it has been honchoed from Washington. According to interviews, China not only is excluded as a partner; its role appears not even to have been seriously contemplated. "There are lots of China bashers who don’t like the idea of China being involved at all," said a U.S. official with knowledge of the process. The omission makes this already far-fetched plan less realistic.
As it happens, the Chinese are themselves erecting a new Silk Road, though they eschew that moniker, from which both Afghanistan and the United States could find themselves outsiders. But if the United States shakes off the cobwebs and includes China in its thinking, perhaps the Washington-led plan would seem more feasible. A centrist rationale for getting together with China to achieve such U.S. aims is not new. In the Washington Quarterly last year, Evan Feigenbaum, a former deputy assistant secretary of state and now an advisor to Mitt Romney, described the Chinese-led outlines of an evolving new Asia. "The United States and China don’t need joint approaches to pursue strategic cooperation, just mutually beneficial ones," Feigenbaum wrote. "And in Central Asia, where Russia has had a near-hammerlock on the region’s oil and gas, China’s new assertiveness comes primarily at Russia’s expense."
The Pentagon itself is not monolithic on the subject. Small, of the German Marshall Fund, suggests that a sizable number of thinkers in the Pentagon favor a more fully engaged Chinese presence in Afghanistan. Indeed, he is among the few I spoke with who think that such geopolitical logic will carry the day in U.S. policy in Central Asia. "I do actually think it’s going to be one of the few areas of Chinese foreign policy where what they’re doing will be seen in relatively positive terms," he said.
Ultimately, the Chinese themselves, and not just the Afghans, are likely to be restrained. The Chinese will be cautious about overstepping when the United States shifts to a civilian presence in 2014, analysts told me. In addition, CNPC and other Chinese companies have their own, limited appetite for risk and will "be hesitant about being overexposed and overcommitted," Small said. It is only left to a more nimble United States to recognize the opportunity to succeed through Chinese means.