Tilting the balance of power: Oil flows to the East

By David Kashi and Kevin Wang | No Comments

Asia’s growing appetite for oil

Asia’s fast-track economic growth, driven primarily by the region’s leading emerging economies like China and India, is creating a massive surge in demand for the energy needed to fuel the expansion, especially oil. A recent report released by the National Bureau of Asian Research called Asia the “ground zero” for growth in global energy and commodity markets, indicating that the region will account for more than 85 percent of the increase in demand for oil over the next 20 years.

China, India, Japan, South Korea and other Asian countries are still heavily dependent on oil imports from the Persian Gulf and will remain so for decades. At the same time, the United States is becoming less dependent on oil from the Middle East as a result of the increasing its domestic drilling capacity. Many energy and security experts warn this “eastward shift’” will alter the global balance of power as China and other Asian nations compete with the U.S. for influence and access to oil. China’s surging demand, in particular, has brought it into conflict with other countries as it seeks short- and long-term supplies of oil, often in unstable and developing nations.

A landmark report released on Dec. 9, 2012 by the U.S. Office of the Director of National Intelligence warns that China’s quest for oil and other sources of energy will be one of the key “new sources of friction in a resource constrained world’’ in the coming decades.

“China is building up its naval power and developing land-bound energy transportation routes to diversify its access to energy,’’ increasing the potential for disputes, according to the report, titled “Global Trends 2030: Alternative Worlds.’’

Oil, gas and conflicts of interests in the South China Sea

The Philippines and its neighboring countries rely on the U.S. military to ensure maritime peace and stability in the South China Sea. Above: USNS Charles Drew, a U.S. Navy ammunition ship, parked at Subic Bay, Philippines on Nov. 26, 2012.

The South China Sea, stretching from the Strait of Malacca to the Strait of Taiwan, has become a flashpoint in this conflict because of the vast supplies of oil and natural gas it contains. Since the 1970s, countries in the area such as China, Vietnam, Malaysia, Taiwan and the Philippines claim part or all of the water and the islands and resources they contain, prompting disputes over borders and access to the oil. In recent years, the area has become even more of a geopolitical flash point, as Vietnam and the Philippines accuse China of unfairly expanding into the area by imposing unilateral fishing bans, arresting Vietnamese and Filipino fishermen and increasing coastal patrols in the region.

Meanwhile, China’s People’s Liberation Army Navy is also developing anti-ship missiles and modernizing its South Sea Fleet. On July 24, 2012, the Beijing government established a military garrison in Hainan Province to oversee the intensely disputed oil-and-gas-rich Paracel and Spratly Islands. Last November, China issued its new passport, which showed almost the entire South China Sea as being within its territorial boundaries. The passport also indicated that Taiwan, another claimant in the South China Sea, is part of China’s territory. Tension also exists in the East China Sea where the dispute over the ownership of Diaoyu/Senkaku Islands between China and Japan has been escalating since August, resulting in the rise of nationalism in both countries even as they elected new top leaders in recent months. China, after repeatedly sending surveillance aircraft into the disputed airspace and drawing quick responses from the Japanese air force, finally flew its own J-10 jet fighters into the airspace over the East China Sea on Jan. 10. Neither side fired a shot, but the friction renewed speculation over China’s tougher stance on foreign policy.

The U.S. Energy Information Administration agency estimates that as Asia’s demand for oil continues to rise rapidly, conflicts caused by ownership disputes in the South China Sea will escalate as all countries in the region try to gain an upper hand in securing energy to fuel their future growth. That, in turn, has drawn the attention of the United States, which is building up its military force in the region to ensure the freedom of navigation and to prevent an escalation of ongoing conflicts. However, according to the “Global Trends 2030” report, tensions—particularly within China—will likely grow over the US role in the region. “Chinese strategists worry that China’s dependence on the US for sea lane security will be a strategic vulnerability for China in a future conflict, such as over Taiwan, where the US might impose an oil embargo,” the report said.

The U.S. “Rebalances’’ Its Military: The New Shift To The East

The United States has increasingly been drawn into the escalating conflict over the South China Sea, even as it is trying to stay out of it.

In fall 2011, the Obama administration announced a major strategic effort known as the “pivot” or “rebalancing” to Asia.

“For the United States, this reflects a broader shift. After a decade in which we fought two wars that cost us dearly, in blood and treasure, the United States is turning our attention to the vast potential of the Asia Pacific region,” said President Barack Obama in an address to the Australian Parliament in November 2011.

The administration will prioritize the Asia Pacific region in its foreign and economic policies, and intensify its military role there. For the Pentagon, the rebalance can be measured by the increased deployment of Navy ships to the Pacific Command’s area of responsibility from elsewhere in the world, including six aircraft carriers and an increased number of cruisers, destroyers and submarines. The rebalance also means the development of new capabilities to contain China’s anti-ship missiles, strengthened regional partnerships and alliances, an increase in the number and size of joint military exercises in the Pacific, and more U.S. Navy visits to the regional ports.

Obama emphasized that the United States will play a larger, long-term role in shaping the region in the future. “As the world’s fastest-growing region — and home to more than half the global economy — the Asia Pacific is critical to achieving my highest priority, and that’s creating jobs and opportunity for the American people.” Obama said. In a speech delivered at the Shangri-La Security Dialogue last June, Defense Secretary Leon Panetta said America’s fate is “inexorably linked” with the Asia Pacific region, leading to “more than six decades of U.S. military presence and partnership.”

“We take on this role not as a distant power, but as part of the Pacific family of nations,” said Panetta, “Our goal is to work closely with all of the nations of this region to confront common challenges and to promote peace, prosperity, and security for all nations in the Asia-Pacific region.”

The strategic shift comes as the Pentagon draws down the troops in Iraq and Afghanistan, and plans to incrementally deploy 60 percent of the naval ships to the Pacific by 2020, a shift of from the current 50 percent. The Pentagon also has announced new Marine rotational deployments to Australia, new littoral combat ship deployments to Singapore and the possibility of new military-to-military cooperation with the Philippines. With possible reductions in overall U.S. defense spending looming, Obama has publicly assured allies in the region that the U.S. military presence in Asia will only be strengthened. Panetta and other senior U.S. officials, however, have been careful to say that the U.S. will not take sides in the South China Sea disputes.

“We do not take a position on competing territorial claims over land features and have no territorial ambitions in the South China Sea; however, we believe the nations of the region should work collaboratively and diplomatically to resolve disputes without coercion, without intimidation, without threats, and without the use of force,’’ said State Department spokesman Patrick Ventrell said in a release on Aug. 3, 2012.

Panetta and senior military officials say the shift in military deployments is not meant to confront or contain China’s growth but rather to protect the free flow of commerce and shipping. They have not threatened the possible use of U.S. force to prevent the escalation of ongoing conflicts. Instead, Washington is encouraging regional countries to develop a universal code of conduct and respect international laws.

What The Shift Means For the U.S. – And The World

Some high-level U.S. officials, including State Secretary Hillary Clinton, have described the strategic shift as a “pivot’’ to Asia, while Panetta and others stress that it is rather a “rebalance,” a carefully worded distinction meant to assure Middle East allies that Washington will not abandon its commitments to the Persian Gulf. According to a Congressional Research Report titled, “Pivot to the Pacific? The Obama Administration’s “Rebalancing” Toward Asia,” the fundamental goal underpinning the shift is to “devote more effort to influencing the development of the Asia-Pacific’s norms and rules, particularly as China emerges as an ever-more influential regional power.” The report by the independent research arm of Congress said that instead of a sudden turn of focus, the shift is “a continuation and expansion of policies already undertaken by previous administrations, as well as earlier in President Obama’s term.”

According to the CRS report, the most dramatic shifts are in the military. The rebalance aims to expand the U.S. presence in the southwestern Pacific and make it “more flexible, more distributed and politically sustainable.” The Obama administration has announced new deployments or rotations of troops and equipment to Australia and Singapore, as well as the increased number of Navy ships deployed forwardly to rest of Western Pacific.

The Navy’s Pacific Fleet Commander, Adm. Samuel J. Locklear III, described the shift as more than just an increase of ship deployment to the region.

“The rebalance has been and it continues to be about strengthening relationships, adjusting our military posture and presence, employing new concepts, capabilities and capacities to ensure that we continue to effectively and efficiently contribute to the stability and security of the Asia Pacific as we protect U.S. national interest.” Locklear said in remarks last December at the Pentagon.

Details about the shift are contained in a Pentagon-commissioned report by the Center for Strategic and Independent Studies (CSIS), titled “US Force Posture Strategy in the Asia Pacific Region: An Independent Assessment.’’

Among the key points: “Consolidating US bases, troops and military assets in Japan and South Korea; building up US forces on Guam and Northern Mariana Islands, strategically located in the Western Pacific; stationing in Singapore littoral combat ships—relatively small, fast, flexible warships capable of intelligence gathering, special operations and landing troops with armored vehicles; and making greater use of Australian naval and air bases and positioning 2,500 Marines in the northern city of Darwin.”

The Pentagon’s latest Defense Strategic Guidance report, in January 2012, said the U.S. is also trying to strengthen its military to military relationships in the region. It is considering establishing a joint military center in Thailand to increase cooperation and respond to regional natural disasters, and re-opening old naval and air bases in Vietnam and the Philippines for greater access for ship and aircraft repair and resupply. U.S. officials say the increased U.S. military presence will boost security capacity of key “partner states” through more flexible security assistance mechanisms and through cooperative counter-terrorism, counter-drug, and counter-insurgency operations.

Despite talks over the potential conflicts with China in the Pacific, Locklear and other Navy officials said the U.S. and Chinese militaries have a responsibility to maintain a good dialogue and a good relationship, stressing the rebalance is “based on a strategy of collaboration and cooperation, not containment, and that the United States is a Pacific power that will remain a Pacific power.” Xi Jinping, China’s newly appointed president, said during his visit to the U.S. in February 2012 that “the Pacific is large enough to host the two powers.”