China And India Change The Game  

Posted by Big Gav

omPaine has an interesting column on the new China-India energy pact.

What better to shake Washington out of its strategic tunnel vision than a new alliance over oil between the world's two most populous countries? An article that appeared last night in the Financial Times states that, "China and India, the world’s two fastest-growing energy consumers, on Thursday set aside long-standing rivalries and agreed to co-operate in securing crude oil resources overseas."

That's a strategic bombshell. It's also a major opportunity.

First the story. China and India have been busy over the past few years attempting to secure oil fields and other energy assets for their domestic or state-owned oil companies. China, for instance, has secured a major deal to develop Alberta 's tar sands oil deposit, a deposit which places Canada above Iraq in terms of recoverable reserves. It has sealed deals in Africa, notoriously with fellow human rights violator Sudan. India has sealed major energy deals with Iran but, as reported in the FT, "lost out to Chinese rivals in the race to acquire fields in Angola, Nigeria, Kazakhstan and Ecuador." China, of course, was recently rebuffed by the U.S. Congress in its attempt to buy Unocal.

Faced with a market in which politics—be it the U.S. Congress or OPEC or Hugo Chavez—have an equal if not greater influence on price as economics, the two have agreed to coordinate their efforts to secure energy resources. The plan is modeled on their recent joint deal in Syria. India and China will essentially work together to secure their energy resources without unnecessarily bidding up the price of those resources. In other words, the Indians and Chinese have agreed to a consumer's cartel representing 2.3 billion potential consumers.

The significance of the alliance is hard to understate. India and China represent the two leading sources of increased oil demand globally. Each have enormous populations that are entering the modern economy at breakneck speed. As these populations increase their per capita income, they demand products and services that require higher and higher amounts of energy—particularly oil for the new cars their citizens want to drive.

Both the Indians and the Chinese are feeling the pressure of diminishing oil discoveries and flatlined oil production at a time when expansion of their domestic economies is rapidly increasing demand for energy.

It is clear is that this pact escalates the global competition for oil. Yet it does so in a fairly sophisticated way. The two nations have agreed to distort the market rather than continue to compete and lose to global market imbalances (India 's concern) or nationalistic politics (China 's).

At the same time, the deal demonstrates that neither China nor India can, or have an interest in attempting to, secure access to oil through military means, as the British did through World War II and as the United States has done since. This pact is not a military alliance. However, strategic resources have a long and bloody history of attracting military protection, and none less than energy. If this pact does not produce results and if the balance between oil production and demand continues to weaken, we may in the future see an Asian equivalent of the Carter Doctrine.

Here in Washington, however, this news offers leading strategic advisers and their political clients a perfect moment in which to change the strategic narrative—a false narrative—which has been imposed on America since the attacks of 9/11.

In Washington, the conventional storyline is still that nuclear terrorism is the single greatest threat to the United States and should therefore be the center of our national security strategy. As Col. Larry Wilkerson pointed out earlier this week, that assessment is wrong. And it has been since September 12.

This new alliance offers message-makers the out that they have been missing. Ever since the White House starting hyping its war on terror to a scared and underinformed American public as an existential conflict comparable to the World War II or the Cold War, politicians have refused to say otherwise. Now, with the failure in Iraq palpable, the arrogation of power so obvious, and now the rise of a real strategic challenge evident, it is time to change the story.

And yet, dangers lurk. The administration has released slides from its forthcoming Quadrennial Defense Review that place an enormous priority on preparing to deter the rise of a future "near peer" superpower. In other words, Secretary of Defense Donald Rumsfeld is salivating at the prospect of a rising China (and the massive weapons budgets such a foe would require).

To rush into the breech claiming China and India are the new grand strategic threat is to play into Rumsfeld's hands. It would also hasten the economic disaster that lies just over the horizon. Rather, it is time for really big-picture thinking to figure out just how we can prevent the increasing competition over oil to turn into a strategic threat that destroys the American economy, doing to America what we did to the Soviets. That will require a new grand strategy that bridges our economy and our foreign policy.

The time to start is now.

TomPaine also has a look at the internal political games being played in Iran.
Why is Iran 's new president going out of his way to provoke the United States, Israel and Europe with his brinkmanship over Iran's nuclear program and repeated denial of the Holocaust?

Many commentators have put the international posturing of Mahmoud Ahmadinejad down to inexperience and incompetence. But it would be foolish to underrate a man who has survived the hurly-burly of Iran's Islamic revolution and one of the bloodiest conflicts of the past quarter century (the Iran-Iraq war, where Ahmadinejad served as a Revolutionary Guard commander) to emerge in his 40s as post-revolutionary Iran's first non-clerical president.

The signs are that Ahmadinejad's rhetoric, both on Iran's civil nuclear program (which the West fears is a cover for plans to produce nuclear weapons) and on Israel, is deliberate and calculated. Like much of his political maneuvering since he unexpectedly won last year's presidential elections, Ahmadinejad's international gestures are probably designed with one principle aim in mind: to ensure political survival in the power struggle that is now underway at the heart of Iran's fragmented power structure.

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