A new theme is finding its way to the Indian discourses on energy security, as is bound to happen, drifting in from the West. Simply put, the United States is ending its dependence on oil imports from the Middle East and the geopolitics of the Middle East could never be the same again. The facts that could go into buttressing the thesis are rather meager and yet a fairly good case can be made out of them.
New sources of fossil energy have appeared such as shale gas and new gas fields are being discovered. Besides, the US, the world’s number one consumer, is attaining self-sufficiency in LNG that may last for at least one century ahead. This comes as a game changer. The old assumptions regarding the West’s dependence on the steady flow of cheap oil from the Middle East and the politics that devolved upon it is becoming redundant. Also, the Middle East’s share of the global recoverable reserves is itself declining and is already below 16% while the locus is shifting to the US, Canada, Brazil, Russia, Central Asia and other countries.
From the Indian perspective, how does it all add up? This was the question addressed by India’s National Security Advisor Shiv Shankar Menon recently in a keynote speech at the Council on Energy, Environment and Water in New Delhi. In the pantheon of Delhi-based think tanks, CEEW is a backbencher, having been around for only two years and still cutting teeth but it has chosen an unusual trajectory of inter-disciplinary research into governance that is bound to attract attention in the international community at some point, if not already.
Menon made some very significant remarks on the inter-relationship between energy and resources and national security in the contemporary world situation. If the thesis of the West’s declining interest in the Middle East’s oil is valid, it indeed gives an altogether new twist to the tale of the Arab Spring. Menon had this to say: “The Western developed economies can now afford the chaos that the so-called Arab Spring is bringing to the Middle East. They can actively encourage regime change in the area. The main victims of uncertainty in supply will be emerging economies like China and India who are still to diversify their sources of supply into long-term flexible contracts with other outside the region.”
This train of thought is a real brain teaser. It just stops short of saying that the West is promoting “chaos” in the Middle East. Again, it makes the point that the West is promoting regime change in the Middle East, although it overlooks that this promotion drive is highly selective and the West’s selectivity itself (eg., Libya, Syria) is borne out of geopolitical considerations. Interestingly, it almost equates regime change with “chaos”. Most important, it all but insinuates that the Arab Spring looks deceptively simple as a genuine wind of change. If one were to extend the thought process further, what, then, is the raison d’etre of the Arab Spring? The Indian policymakers appear to be brooding and still unready to be judgmental.
A collateral victim
Yet, it is difficult to think of the Arab Spring as a phenomenon that has nothing to do with oil. That is the unvarnished truth coming out of the Libyan war – and to a great extent from the ongoing grim struggle for the control of eastern Mediterranean (awash with oil all the way from Cyprus down to Israel) and northern Iraq. This is the first point.
Second, is the West victimizing China and India? The point is, China and India aren’t quite on the same footing as victims. True, India is increasingly figuring as a major consumer of the Middle East’s oil. But China has surged ahead of India in the geopolitics of oil from the region. China is vastly more than a consumer. It is emerging as a tough competitor for the West in regard of the Middle East’s oil resources and the downstream business, because it is also a big investor and is already an increasingly aggressive player in the Middle East market building railroads and metros and massive petrochemical complexes and even presenting itself as an investment destination.
To be sure, the West apprehends that like in Africa, it is a matter of time before China challenges its economic hegemony in the Middle East. India, in comparison, is sill only a junior-league player; it does not pose any such challenge to the West’s entrenched economic interests in the Middle East.
That is to say, while the West could be targeting China by creating “anarchy” in its Middle Eastern markets, India is if at all a mere collateral “victim”. This probably explains India’s lackadaisical stance apropos of the Libyan war or the Syrian crisis (or the Arab Spring in general), whereas China has been compelled into digging in to safeguard its cascading interests.
Indeed, it becomes difficult to generalize the current upheaval in the Middle East known as the Arab Spring. In Egypt at least, the US is barely remaining on top of the regime change. No one will say the US had a hand in instigating the revolution on Tahrir Square. It stands to reason that the US does not like many of the new policy orientations of the successor regime – such as Egypt’s move to normalize relations with Iran or the cooling down of ties with Israel – but is compelled to overlook these irritants.
Again, the US cannot but abhor the “chaos” that may follow any regime change in Bahrain or Saudi Arabia. On the other hand, it seems to have no problem instigating chaos in Syria. In Yemen, it positively finessed the spectre of chaos to its own (and Saudi Arabia’s) unilateral advantage – for the time being, at least.
All the same, Menon’s summing up of the implications of the Arab Spring on India’s energy security is thought-provoking. He said, “Now the Middle East accounts for less than 16% of global recoverable reserves. New shale oil and new gas fields are coming into production in the next few years.” This reduces the West’s dependence on the Middle East’s oil supply. Obviously, in geopolitical terms, the West is comfortably placed to be on the “right side of history.”
India does face a problem, given its heavy dependence on the Persian Gulf countries and Iran for sourcing its oil and LNG. India needs to diversify in anticipation of the protracted nature of the upheaval in the Middle East. However, access to energy sources is not the problem today for India. “When we consider India’s energy security today, while supply is abundant, risk and vulnerability are much higher than ever before.”
Now, to return to the “chaos”, can the West afford the consequent dangers in the overall regional situation? The danger is there that the “chaos” can always work to the advantage of non-state actors. What ensues from the “chaos” is difficult to calibrate. Conceivably, therefore, there is a method in the madness of the West and it does not seem to be very different from what George Kennan wrote over half a century ago – that control of the Middle East’s oil is extremely vital for the West’s prosperity.
Indeed, one interpretation of the genesis of the Cold War could be that it was about keeping the former Soviet Union out of the oil-rich Middle East. What is at work in the current scenario is the creation of chaotic conditions of regime change in which the West’s historical hegemony of the Middle East can be perpetuated in the face of new forms of challenge from the emerging powers such as China or “post-Soviet” Russia. This is an entirely different set of challenges from what obtained in the highly ideological struggle of the Cold War. Menon makes an interesting point somewhere that we are all capitalists today.
However, the co-relation between the geopolitics of the Middle East and the region’s oil resources hasn’t fundamentally changed. Actually, it cannot change. Control of oil and the ability to manipulate oil prices is crucial for the Western financial system. That is to say, we need to constantly factor in a not-so-obvious factor, namely, that the Middle East’s oil is not only consumable, it is also a saleable commodity, and the price at which it is sold becomes terribly important for the Western economies, including the US economy.
Much of the surplus investible capital that oil exports generate in the Persian Gulf (which runs into trillions of dollars) goes into the western banking system. Even if dependence on the Middle East’s oil is diminishing for the West as energy consuming countries, petrodollar recycling will remain for the foreseeable future a matter of incessant interest. The bottom line is that the American dollar is the currency in which the oil trade is conducted and the US will ensure that it remain for as long as possible, no matter what it takes.
And petrodollar recycling is directly linked to the nature of the regimes that rule the oil-rich countries. Without such pliant regimes in power in, say, Qatar or Kuwait or Bahrain, the British banks will be great losers and the US cannot hope to retain its military presence in the Persian Gulf region. Imagine if the Muslim Brotherhood takes advantage of the “chaos” in Kuwait or Saudi Arabia or if Shi’ite empowerment in Bahrain and Kuwait are taken to their logical conclusion. Thanks to the rise of Egypt’s Brothers, for the first time, Iranian warships are crossing the Suez Canal.
That is to say, there is a matrix here somewhere that may not be obtrusive, but built around the oil resources of the region, which would have little to do with the Western economies’ needs to import oil or the advent of shale gas. Kennan, after all, said that it is not only crucial for the US to control the Middle East’s oil but also to ensure that no unfriendly power gains control over those resources – “our resources”.
Thus, even if the US is attaining absolute energy security and may need to import no more, it still has the need to launch wars (Iraq, Libya, Syria), instigate color revolutions (Georgia, Kyrgyzstan), take recourse to wasteful containment strategies (Iran) or pitilessly fragment established nation states (Iraq) because oil remains pivotal to the geopolitics of regions such as the “Greater Middle East” or the Caspian and Central Asia.
Obviously, history has not ended in the vast space of the Greater Middle East. Why else would the US want to deploy its cutting edge missile defence system in Qatar at this point when it has exportable surplus of LNG and has mastered the technology for extracting shale gas? Or, for that matter, why is the US leaving out the massive Soviet-era bases in Afghanistan – Shindand (bordering Iran) or Kandahar (facing Pakistan) or Bagram overlooking China and Central Asia) – from the purview of its celebrated drawdown of troops through 2013 and 2014? These are footfalls of our current history.
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