Tue Aug 20th, 2019 at 03:44:18 AM EST
Who lost the Mid-East?
China's Ultimate Play For Global Oil Market Control H/T Naked Capitalism
While we have been distracted by Trump and Brexit new trade and security arrangements are afoot in the Gulf. Dismayed by what they see as US wavering with respect to Iran, The Emirates and, with equivocation, Saudi Arabia have assented to a new role in the Gulf for China and Russia. This could stabilize the region and defuse conflict between Saudi Arabia and Iran. There has been a storm of diplomatic activity in the region on several fronts. This could presage a withdrawal of US forces and influence in the area - or WW III.
(The author) Yossef Bodansky, Director of Research at the International Strategic Studies Association (ISSA) and Senior Editor of Defense & Foreign Affairs publications (including the Global Information System: GIS), was, for more than a decade, the Director of the US House of Representatives Task Force on Terrorism and Unconventional Warfare.
See either link to the original article for a wealth of detail on the storm of diplomatic moves and new treaties, defense arrangements and mutual guarantees already made in the area between Russia, Iran, China the Emirates and other regional powers including Turkey and Pakistan.
Front-paged - Frank Schnittger - An important discussion, which you may have missed if you follow only Anglo-American media
All attention is focused on the twists-and-turns of the very noisy US-Iran dispute in the Persian Gulf, but all the while the People's Republic of China (PRC) is rapidly and quietly consolidating a dominant presence in the area with the active support of Russia.
Beijing, as a result, is fast acquiring immense influence over related key dynamics such as the price of oil in the world market and the relevance of the petrodollar. The PRC and the Russians are capitalizing on both the growing fears of Iran and the growing mistrust of the US. Hence, the US is already the main loser of the PRC's gambit.
The dramatic PRC success can be attributed to the confluence of two major trends:
(1) The quality and relevance of what Beijing can offer to both Iran and the Saudi-Gulf States camp; and
(2) The decision of key Arab leaders -- most notably Saudi Crown Prince Mohammed bin Salman bin `Abd al-'Aziz al Sa'ud (aka MBS) and his close ally, the Crown Prince of Abu Dhabi, Sheikh Mohammed bin Zayed Al Nahyan (aka MBZ) -- to downgrade their traditional close ties with the US, and reach out to Beijing to provide a substitute strategic umbrella.
The lack of attention to these developments in the US media may be, in no small part, because the whole subject is inconvenient both to Republicans and Democrats. The Republicans don't want the Trump Administration to be branded as the ones who lost the Middle East while the Democrats might be happy just to wait until it is fully a fait acomplis. Admittedly this is more likely for progressive Democrats, who would be happy to have a reason to wind down US involvement in the Middle East and to shift attention and resources to US domestic issues. But where are US Neo-Cons?
Hence, the PRC offer to oversee and guarantee the establishment of a regional collective security regime -- itself based on the Russian proposals and ideas first raised in late July 2019 -- is now getting considerable positive attention from both shores of the Persian Gulf. Iran, Saudi Arabia, the United Arab Emirates (UAE), Qatar, and Oman appear to be becoming convinced that the PRC could be the key to the long-term stability and prosperity in the Persian Gulf and the Arabian Peninsula.
Iran is also considering the expansion of security cooperation with Russia as an added umbrella against potential US retaliation.
Overall, according to sources in these areas, the US was increasingly perceived as an unpredictable, disruptive element.
The profound change in the attitude of the Saudi and Emirati ruling families, who for decades have considered themselves pliant protégés of the US, took long to evolve. However, once formulated and adopted, the new policies have been implemented swiftly.
Iran, The Emirates and Saudi Arabia are all concerned about having a security umbrella in the case of US withdrawal from the Middle East.
Both MBS and MBZ concluded that they need a far stronger strategic umbrella than the US and Israel could offer in order to survive in the era of Iran's ascent.
As a result, MBZ reached out to Beijing in early July 2019. After comprehensive preparatory negotiations, MBZ arrived in Beijing on July 20, 2019, for a milestone visit in which he met PRC Pres. Xi Jinping for lengthy discussions. According to PRC senior officials, Mohammed bin Zayed and Xi Jinping "elevated the two countries' relationship to that of a strategic partnership". The key outcome was the UAE's acceptance of the dominance of the PRC and Russia in the Persian Gulf.
"The UAE and China are moving towards a promising future," MBZ said in his concluding meeting with Xi Jinping. His visit aimed at "developing co-operation and a comprehensive strategic partnership, as well as opening new horizons for joint action in various sectors," MBZ explained. Xi Jinping responded by stressing "the profound significance of China-Arab relations". The PRC and the UAE would now work closely together to transform the Persian Gulf into "a security oasis" rather than a new "source of turmoil".
Significantly, Xi Jinping referred to "a hundred years of grand plan" when describing the PRC's relations with the UAE. MBZ also signed a large number of bilateral agreements, both economic and strategic.
While in Beijing, Mohammed bin Zayed asked Xi Jinping to mediate a deal with Tehran in order to negate the US-driven escalation and possible war. The PRC moved very fast, and within a few days dispatched to Tehran a high-ranking delegation led by the head of the International Liaison Department of the Communist Party of China (CPC), Song Tao. His mandate was to discuss the new security regime for the Persian Gulf, as well as the conditions for increasing PRC purchase of Iranian oil in disregard of the US sanctions. On the Iranian side, Song Tao's official host was the highly influential Secretary of the Expediency Council, Mohsen Rezaei. This meant that Khamene`i was directly involved. Song Tao stayed in Tehran for three days and met with a large number of senior officials, mostly members of Khamene`i's innermost circle of confidants and advisors.
The goal of these arrangements is to turn the Middle East into a zone of security to ensure the flow of oil to those who still need it, especially China. Since China is both a guarantor of security to the Emirates and Saudi Arabia and a major purchaser of oil from Iran, it is in a unique position to guarantee regional security and a major beneficiary. The USA is no longer dependent on Middle East oil.
The Head of Iran's Foreign Policy Strategic Council, Kamal Kharrazi, reminded Song Tao that "both Iran and China are opposed to US's unilateralism and hegemony".
Hence, both countries should work closely together in confronting the US. The Speaker of the Iranian Parliament, Ali Larijani, also stressed that close cooperation "can help counter the US animosity and neutralize its consequences". He suggested that Russia should be brought into the new security regime in the Persian Gulf. Larijani urged the PRC to expedite its anti-US intervention in the Persian Gulf because "success of this plan is contingent upon practical steps". Foreign Minister Mohammad Javad Zarif noted "the two countries' common strategic outlook toward international developments", and urged close cooperation in order to reverse "Washington's attempts to impose its own hegemony on the world".
All the Iranian officials had no problem with some form of rapprochement with the UAE and Saudi Arabia provided they did neither participate in a war against Iran, nor permit the US to use their territory and bases for strikes against Iran and Iranian proxies.
The PRC delegation was impressed by the Iranian eagerness to cooperate and to accept a PRC umbrella.
Song Tao told his interlocutors that "the mission of the delegation is to strengthen the strategic coordination and dialogue between the two countries and we are willing to confront challenges and problems together". He agreed with the imperative to jointly confront the US, and accepted the need to move fast jointly. Song Tao concurred that "there are complicated and rapid developments happening on the international stage that have created challenges for the countries of China and Iran, but our resolve and determination is to support Iran's legal and legitimate rights to development and progress". Song Tao promised to discuss in Beijing concrete ideas how to improve and expand the PRC's policy of "long-term strategic" ties with Iran in view of the current situation in the Persian Gulf.
But the new arrangements also presage a new, lower price of oil on the world market.
On August 6, 2019, the PRC Ambassador to Tehran, Chang Hua, delivered the decision of the Forbidden City to play the active and leading rôle in the establishment of a new regime of collective security in the Persian Gulf.
Beijing was convinced, he stated, that "any projects and initiatives that aim to strengthen security in the Persian Gulf must be proposed and carried out by the regional countries themselves". Chang Hua explained that "the Chinese side, as President Xi Jinping has said, is hopeful that the Persian Gulf will remain a region of peace and security". The PRC was ready to actively contribute to the sustenance of peace and security in this crucial area. "The Persian Gulf and the Strait of Hormuz are the most critical channel and gateway in the world for transferring energy; therefore, they are significant for the world's policy-making, security and economy," Chang Hua concluded.
The PRC also started to implement specific undertakings.
First came the decision to increase the importation of Iranian oil, not only to help an ally in distress, but also as an affront to the United States. According to PRC senior officials in Beijing: "China continues oil imports from Iran to show independence from US sanctions." The PRC also agreed to purchase oil with yuans, euros, and other currencies in order to reduce their vulnerability to US financial sanctions. The PRC would continue to import its Iranian crude via at least a dozen Iranian tankers also in order to demonstrate to all that "China [is] a country powerful enough to bust US sanctions".
Moreover, the anticipated large-scale PRC imports of Iranian crude would have a major impact on the price of oil. Experts in the US and Europe concluded that under such circumstances, the oil price could sink by as much as $30 a barrel. The experts worried that the PRC might decide to purchase large quantities of Iranian oil as a retaliation for the trade/tariff war with the US.
Saudi Arabia is caught in a bind. It can no longer be assured of security by the USA, yet it wants the price of oil to remain around $60/bbl. Hence its dithering. But the US fracking industry will become uneconomical with $30/bbl oil.