Iraq crisis exposes China’s reliance on foreign oilBy Michele Penna Jun 26, 2014 11:01AM UTC
Not long ago, Iraq was hailed as a big win for China: without firing a single bullet, Chinese companies had gained tremendous access to the country’s oil. A story run by The New York Times last year shed light on the benefits that China had secured in the aftermath of the American-led intervention in the region. According to the New York-based media outlet, Chinese companies were scooping up nearly half of Iraqi oil production, or some 1.5 million barrels a day, with a view to increasing their investments even further. Michael Makovsky, a former Defense Department official in the Bush administration, reportedly said that the US had ‘lost out’: “the Chinese had nothing to do with the war, but from an economic standpoint, they are benefiting from it, and our Fifth Fleet and air forces are helping to assure their supply.”
Things look thoroughly different one year later. As the Islamic State of Iraq and Syria (ISIS) extends its control over a large part of the country and a new crisis unfolds, thorns are appearing in Beijing’s Middle Eastern bed of roses: oil prices are rising, the infrastructure on the ground could be at risk and personnel potentially in danger.
“It’s quite bad for China,” Scott W. Harold, an associate political scientist with the RAND Corporation, told Asian Correspondent. “Oil prices have gone up to US$114 a barrel and that’s terrible for a large importer like China, as they are very dependent on Middle Eastern oil.” An article on the People’s Daily reported a few days ago that China depends on the world market for almost 60 percent of its oil consumption and that the crisis is going to affect prices at home.
Besides, argued Dr. Harold, Beijing feels uneasy at the thought of a radical Islamist movement seizing power in Iraq because of the situation in Xinjiang, China’s westernmost province. There, clashes between separatist forces – some claiming to be conducting a ‘Holy War’ against the authorities – and the police have increased, and so have terrorist attacks against civilians.
The most immediate security issue for the government in Beijing, in any case, is likely to be how to ensure the safety of the over 10,000 Chinese employees currently working in Iraq. On June 12, one of them was kidnapped and released only after a few days.
Chinese Foreign Ministry spokesperson Hua Chunying told reporters last week that “the safety of Chinese employees working in Iraq is a great concern for the Chinese government” and that the Embassy in Iraq has asked Baghdad to protect “the safety and legitimate rights and interests of Chinese employees.”
Beijing is also taking more concrete steps ahead of a possible intensification of the crisis, so as to be ready in case the situation becomes critical. “At present, Chinese employees in Iraq [..] are in relatively safe areas,” said Mrs. Hua. “For those who are in places where the security situation is less optimistic, we will do our best to assist them in evacuating to safer areas.” PetroChina had announced the day before that the company is cutting staff in Iraq, without disclosing the exact number.
Beijing may be drawing a parallel with its experience in Libya in 2011, when some 29,000 Chinese citizens living in the country had to be rescued. At the time, Xinhua News Agency quoted the Foreign Ministry as saying that “about 2,500 had returned to China, and some 23,000 and 3,400 were respectively taking shelter at and heading for other countries.”
According to Dr. Harold, however, there may be something to be gained for China. “Part of the strategic community will think there is a silver lining because Iraq will distract the US from the Asia pivot and will discredit the notion that the US is effective in intervening abroad,” he said.
Many, it should be noted, hold the view that China benefited from former President Bush’s misguided policy in the Middle East: while Washington was absorbed in its experiments with war and democracy, Chinese power grew unchallenged in the East. In a similar vein, scholar and foreign policy expert Ian Bremmer recently observed that the main winner in the struggle for Ukraine is going to be neither Europe nor Russia, but China, whose leaders are quietly witnessing the divide between Moscow and the West grow to levels unseen since the end of the Cold War.
Against such background, whether China will be willing to flex its muscles and provide real support to the government in Baghdad remains an open question. For now, the Foreign Ministry has – at least publicly – only heightened its rhetoric. “The security and stability of Iraq has a bearing on the security, stability and development of the entire region. China has been supportive of the Iraqi governments’ efforts to safeguard security and stability, and has provided Iraq with help of various forms to the best of its capabilities. China will continue to do so,” Mrs. Hua recently pointed out at a press conference.
China has never been fond of using foreign intervention to solve political problems, and one of the pillars of the country’s political narrative is the principle of ‘non-interference’, which pretty much means that China does business with everyone and talks politics with nobody (excluding a few sensitive issues such as Taiwan and Tibet).
“I think it’s unlikely that China will do anything militarily,” said Dr. Harold. “In the US there is a debate whether to use air power to strike militants, but I don’t think China is having any such debate: that’s simply not the Chinese approach and they don’t have the capability to project power so far away.”