@@ Asian power blocs begin to form @@

Asia Times
August 30, 2005


Energy: The catalyst for conflict


By Chietigj Bajpaee
c.bajpaee-alumni [AT] lse.ac.uk


Numerous recent and seemingly unconnected events have highlighted the emerging
fulcrums of potential alliances in Asia, as well as the possible focal points of
conflict.

First, Chinese energy company CNOOC (China National Offshore Oil Corporation) has
failed in its bid to acquire U.S. energy company Unocal, even though it made a higher
bid and offered better terms than its rival Chevron.

At the same time, Indian Prime Minister Manmohan Singh during a visit to the United
States was given a grand welcome and promised assistance on its civilian nuclear
power program, even though India is not a signatory to the nuclear Non-Proliferation
Treaty (NPT) and was frowned on for its nuclear tests in 1998.

In other words, while the U.S. stifles China's attempts to meet its energy security
needs it has promised to assist India in meeting its needs. It should be noted that
had the CNOOC-Unocal deal succeeded, a Chinese energy company would now have its
hands on energy assets in close proximity to India. For example, Unocal has
significant operations in Myanmar and Bangladesh, and in the 1990s it was involved in
negotiating the Trans-Afghan Pipeline (TAP) from the gas fields of Turkmenistan
through Afghanistan to Pakistan. India has a significant interest in these
operations.

Second, at the 60th anniversary of the end of World War II, while the European powers
held joint memorials, the East Asian powers held separate memorials with each country
choosing selectively remembered events. While Japan focused on the devastation of the
atomic bombs on Hiroshima and Nagasaki, China focused on its humiliation by Japanese
troops during such events as the Nanjing Massacre.

Historical animosities have been further enflamed by recent events. These include
South Korea and China's opposition to Japan's bid for a permanent seat on the UN
Security Council due to visits by Japanese Prime Minister Junichiro Kozumi to the
Yasakuni Shrine and Japan's republishing of a history textbook that whitewashes
Japanese wartime atrocities. Tensions have also been fueled by a territorial dispute
between South Korea and Japan over the Takeshima/ Tokdo islets, and between China and
Japan over the demarcation of the East China Sea.

Third, Russia and China held unprecedented joint military exercises this month.
Entitled "Peace Mission 2005" and comprising of 7000 mainland troops and 1800 Russian
forces, the exercises have come under the framework of the Shanghai Cooperation
Organization (SCO) with the intention to prepare for intervention in a state overcome
by ethnic conflict. While claiming that the war games were not targeted at any third
party, they were held in the Shandong peninsula and the Yellow Sea, in close
proximity to Japan, Taiwan and the Korean peninsula.

The exercises included a naval landing, which is unusual given that they come under
the SCO framework, which would imply involvement in landlocked Central Asia.
Furthermore, the U.S. was not invited to observe the exercises although the four
other SCO members (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan) along with SCO
observer states, India, Iran, Mongolia and Pakistan, were.

Growing Sino-Russian military cooperation comes in the context of China and Russia's
confrontational relations with Japan and the U.S.

While Russia has approved the construction of a Japanese-backed oil pipeline from
Taishet to the pacific port of Nakhodka, it has hinted that it will build a branch
from the pipeline to Daqing in China's northeast Heilongjiang province before
completion of the Japanese-backed route.

This change of plan has been fueled by Russia's growing frustration with Japan's
unwillingness to compromise on a decades-old territorial dispute over the Southern
Kurils/ Northern Territories and Kozumi's aggressive posturing, as seen with him
sailing around the disputed islands last September.

Meanwhile, China and Russia under the aegis of the SCO have also demanded that the
U.S. set a deadline for withdrawing its bases from Central Asia as the situation in
Afghanistan stabilizes.

This comes in the context of growing concern over the U.S.-backed "colored"
revolutions in Georgia, Ukraine and Kyrgyzstan. Soon after the SCO statement, Uzbek
President Islam Karimov gave the U.S. 180 days to withdraw its forces from the
Karshi-Khanabad (K2) airbase.

Unsurprisingly, Uzbekistan's ultimatum followed its suppression of the Andjian
uprising in May, which the U.S. and other Western powers condemned and China and
Russia commended, as seen by Karimov's visit to Beijing two weeks after the uprising.

Sino-U.S. tensions have also flared over a series of provocative statements by
officials on both sides. On the Chinese side, Major-General Zhu Chenghu in a speech
at the Hong Kong Foreign Correspondents Club in mid-July stated that China would
initiate a nuclear first-strike on the U.S. if it were to intervene in a conflict
over Taiwan.

Whether this statement was made in a personal capacity as the Chinese government
claims or as an attempt by the central government to test international reaction will
only be verified in the coming months when it is established if Zhu has been censured
or promoted for his statement.

On the U.S. side, Secretary of Defense Donald Rumsfeld has made numerous remarks
warning of China's growing military capability. Recently, he stated that China's
growing military expenditure was out of step with its claims of "peaceful emergence".
This statement was made in the context of a U.S. Defense Department report last
month, which cited China's growing military modernization as tilting the military
balance in the Taiwan Strait and undermining long-term stability in the region. The
U.S. and Japan also issued a joint statement in February, which identified the
Sino-Taiwan dispute as a mutual security concern.

Finally, South Korea is growing increasingly estranged from Japan and the U.S. due to
its softer approach in dealing with North Korea's nuclear ambitions. This was seen
recently with Unification Minister Chang Dong-young stating that Pyongyang had the
right to a peaceful nuclear energy program, while the top U.S. negotiator at the
six-party talks, Christopher Hill, has stated that light water reactors are
unnecessary to meet the North's energy needs. Seoul's increasingly conciliatory
stance with Pyongyang has been fueled by a shift in power from the vehemently
anti-communist Grand National Party (GNP) to President Roh Moo-hyun's ruling left-of
center Uri Party.

Coupled with South Korea's attempts to access energy resources in Russia and Central
Asia and the territorial dispute with Japan over the Takeshima/ Tokdo islets, there
are hints of a shift in South Korea's international relations from the U.S.-Japanese
camp towards the Sino-Russian camp.


Players hedging their bets

At present there are no clear alliances in Asia. Instead, there are numerous
permutations and combinations of alliances that may be formed. All sides are hedging
their bets and preparing for every possibility.

China and the U.S. have recently initiated a strategic dialogue and both states along
with India, Australia, Japan and South Korea have established an energy partnership
known as the Asia-Pacific Partnership on Clean Development. China has also played a
vital role in brokering the six-party talks on North Korea's nuclear program,
although its neutrality in the dispute is questionable.

While Russia and China have a strategic partnership in the military sphere, both
states still have stronger trade and investment relations with the U.S. than with
each other. Russia is also weary of the demographic imbalances created by the
encroachment of China's population into its sparsely populated far eastern territory.
There are also limits on the level of Sino-Russian military cooperation - while both
states may engage in joint intervention in Central Asia, Russia is unlikely to
intervene in a conflict over Taiwan, just as China is unlikely to get involved in
Chechnya.

While U.S.-India relations have shown considerable improvement under the Bush
administration, India opposes U.S. unilateralism, including its policy on Iraq and
support for Pakistan's military dictatorship.

Meanwhile, the U.S. opposes India's plans to strengthen energy cooperation with Iran
with a gas pipeline from Iran to India traversing through Pakistani territory.

Sino-Indian energy cooperation has also increased, with both states holding a stake
in the development of the Yahavaran oil field in Iran and the Greater Nile Oil
Project in Sudan, as well as China Gas Holdings establishing an alliance with India's
largest energy conglomerate, GAIL (Gas Authority of India Limited).

Growing bilateral trade, cooperation in the G33 bloc at the World Trade Organization
and China's recognition of Sikkim as a part of India as quid pro quo for India's
recognition of Tibet as a part of China are further evidence of a rapprochement in
Sino-Indian relations. Finally, India's observer status at the SCO coupled with China
and India's dependence on Russian military hardware and energy resources revive the
idea of a strategic triangle between India, China and Russia.

Some have even hinted at a Sino-Japanese-Indian alliance - a sort of grand Asian
alliance. While unlikely given the high level of mistrust between China and Japan, it
is not impossible given the unprecedented trade and investment interdependence
between the three states - China is India and Japan's second largest trading partner
after the U.S.

Nevertheless, certain combinations are more likely than others. In all likelihood,
China and Russia will grow closer as will Japan and the U.S. Apart from disputes over
Taiwan, China's exchange rate, quotas on Chinese-made textiles, intellectual property
rights infringements and China's human rights record, the U.S. is growing
increasingly frustrated with China's relations with dictatorial regimes, including
Robert Mugabe in Zimbabwe, King Gyandera in Nepal and Islam Karimov in Uzbekistan, as
well as support for "rogue" or anti-U.S. regimes such as Myanmar, Iran, Sudan and
Venezuela. Russia and China have also opposed U.S. unilateralism on the world stage.

India and South Korea are sitting on the fence and could go either way depending on
how events play themselves out.

For example, Chinese support for Pakistani aggression could put India on the side of
the U.S. against China, while aggressive and unilateral military action by the U.S.
could solidify an Asian alliance.

The current Sino-Indian rapprochement could also be unraveled by a flare-up over
their territorial disputes in Aksai China and Arunachel Pradesh, energy competition
on the world stage and China's encroachment into India's "sphere of influence" as
seen by its improving relations with Bangladesh, Nepal and Sri Lanka, attempts to
join the South Asian Association for Regional Cooperation (SAARC) and growing naval
presence in the Indian Ocean.

Meanwhile, an increasingly active Japanese military could push South Korea towards
China, while Chinese military aggression could push South Korea closer to the
Japan-U.S. alliance. Internal South Korean politics and events in North Korea in
terms of the humanitarian situation, political stability and military posturing would
also be relevant in determining the future direction of South Korea in the
Asia-Pacific region.


Energy competition reveals the stages of confrontation

While Asian alliances remain in a state of flux, the stages of competition and
confrontation are growing increasingly clear. All the major Asian powers are
significant energy consumers and importers with the U.S., China, Japan, South Korea
and India being the first, second, third, fourth and sixth-largest energy consumers
respectively. Thus, energy competition will determine the stages of future
confrontation and conflict in Asia.

One potential stage of conflict is the sea lanes of Asia, which include the East and
South China Sea, the Malacca Strait and Strait of Hormuz and the Indian and Pacific
Oceans. These are not only vital as transit points for energy shipments (eg. half of
the world's oil transits through the Malacca Strait) but also as potential sources of
energy resources (eg. territorial disputes in the potentially energy-rich East and
South China Seas).

Apart from facing the threat of a blockade in the case of an inter-state conflict,
the sea lanes are also vulnerable as targets for piracy and maritime terrorism. The
Malacca Strait for example, experiences 40% of the world's piracy. India, Japan,
China and the U.S. have all expressed interest in increasing their role in ensuring
the security of the strait, although Indonesia and Malaysia have been reluctant to
allow external involvement in the region.

Each state is attempting to address these threats in their own way. For example,
China is trying to strengthen its blue-water naval capability as rumors of it
building or buying an aircraft carrier have attested. It is also financing ports in
Pakistan (Gwader) and Myanmar (Sittwe) to bypass chokepoints in the case of
conflicts.

China has also leased Myanmar's Coco islands, which are in close proximity to India's
Andaman-Nicobar islands and the Malacca Strait and the Bay of Bengal. It has also
engaged in open military posturing over its territorial dispute with Japan over the
East China Sea, as seen last November when a Chinese nuclear-powered submarine
encroached into Japanese waters off the Okinawa islands.

Another potential stage of conflict is Central Asia where the "New Great Game" is in
full swing as states and non-state actors compete for energy resources and strategic
influence. Recently, China National Petroleum Corporation (CNPC) and India's ONGC
Mittal Energy (OME), a consortium comprising of the Oil and Natural Gas Corporation
(ONGC) and Mittal Group competing for Canadian oil company, PetroKazakahstan.

An oil pipeline from Atasu in north-western Kazakhstan to Alashankou in China's
Xinjinag province is due to be completed in December, and in May China concluded a
US$600-million joint venture deal to develop Uzbekistan's oil fields. China's Tarim
Basin to Shanghai (west-to-east) gas pipeline, which came online last year could also
potentially be extended to Kazakhstan and Turkmenistan and even further to Iran and
the Caspian Sea.

Meanwhile, Iran and India have agreed to jointly develop the Iranian port at
Chahbahar as well as the road linking the port to Afghanistan and Central Asia, with
India having exclusive rights to the port. With the removal of the Taliban regime
from Afghanistan, the U.S.-backed Turkmenistan-Afghanistan-Pakistan (TAP) or
Trans-Afghan pipeline is also back on the table and with an improvement in
India-Pakistan relations, the pipeline could potentially be extended to India.

Finally, the U.S. is attempting to undermine the Russian monopoly on oil and gas
pipelines from Central Asia to the west with the inauguration of the
Baku-Tiblisi-Ceyhan pipeline in May.

In the military sphere all the major players in the "New Great Game" have some form
of military presence in the region. As Karimov ordered the U.S. to withdraw its
military presence from Uzbekistan, U.S. Secretary of Defense Donald Rumsfeld visited
Central Asia to ensure that the U.S. presence at Manas airbase in Kyrgyzstan and over
flight rights in Tajikistan remained. Russia has also reasserted its presence in
Central Asia under President Vladimir Putin, with a permanent military presence in
Tajikistan since its 1992-7 civil war as well as at Kant airbase in Kyrgyzstan.

In an attempt to contain the "three evils" of extremism, terrorism and fundamentalism
China, operating under the aegis of the SCO, has established an anti-terror center in
Tashkent, Uzbekistan and engaged in counter-terrorism exercises in Kyrgyzstan in 2002
and Kazakhstan in 2003. India has allegedly established a military and medical
facility in Tajikistan. Apart from military influence, the players are also
attempting to exercise "soft" power influence in the region, including historical
links (as in the case of India and Russia), religious links (as in the case of Saudi
Arabia and Pakistan), cultural links (in the case of Turkey and Iran) and economic
links (in the case of the U.S., South Korea and Japan).


Return of power politics

The international system is in a state of flux. Contrary to many strategists, we are
not at the end of history. Rather, we have come full circle. The players,
technologies and motives may have changed but the disputes are now fueled by
primordial loyalties and basic needs, such as energy resources. Right now oil is the
primary catalyst for conflict but other resources such as natural gas or water may
soon play just as prominent a role.

In these new conflicts states still play a decisive role. The view that states are
becoming increasingly irrelevant is incorrect. While non-governmental organizations,
multinational companies and civil society are becoming increasingly important
players, they are not supplanting states. States still hold a clear monopoly on the
use of force. While terrorist organizations challenge this monopoly, most groups have
nowhere near the capabilities of states and often rely on the backing of states in
the form of funding, arms, training and sanctuaries. Thus, the conflict scenarios
with the most destructive potential involve states either engaged in conflict with
each other or non-state actors.

Asia faces the volatile combination of a number of states with historical rivalries
growing increasingly bold on the world stage as a result of their increasing economic
prosperity and defense budgets, a rediscovery of their identities, and increasing
dependence on imported energy resources. Power blocs are gradually coalescing around
shared interests. At present the fulcrums of these power blocs could swing in a
number of directions. The real threat will emerge when there is a solidification of
these alliances.


* Chietigj Bajpaee is an Asia analyst. He has been a researcher for civic exchange, a
Hong Kong-based public policy think-tank and for the London-based International
Institute for Strategic Studies and a risk analyst for a New York-based risk
management company. He has a graduate degree in international relations from the
London School of Economics and an undergraduate degree in economics and government
from Wesleyan and Oxford universities. His areas of interest include energy security
and political, economic and security developments in the Asia-Pacific region.
http://www.atimes.com/atimes/China/GH30Ad03.html


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