Sunday, August 18, 2019

China’s Ultimate Play For Global Oil Market Control

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.

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.

The main driving issue is the realization by both MBS and MBZ that, irrespective of the reassuring rhetoric of US Pres. Donald Trump and Jared Kushner, their bitter nemesis — Qatar — is far more important to the US than the rest of the conservative Arab monarchies and sheikhdoms of the GCC. The last straw came in early July 2019 in the aftermath of the visit of the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, to Washington, DC. Sheikh Tamim received an extravagant reception from both Pres. Trump in person and official Washington. Trump lavished praises on Qatar and the Emir, and emphasized the US renewed commitment “to further advancing the high-level strategic cooperation between our two countries”.

There are good reasons for the US preference of Qatar.

The Al-Udeid Air Base in Qatar is by far the most important US base in the entire greater Middle East. Qatar is mediating between the US and several nemeses, including Afghanistan, Iran, and Turkey. Qatar is providing “humanitarian cash” to HAMAS in the Gaza Strip, thus buying quiet time for Israel. Qatar has given generous “political shelter” to numerous leaders, seniors, and commanders of questionable entities the US would like to protect but would never acknowledge this (including anti-Russia Chechens and other Caucasians, and anti-China Uighurs).

Qatari Intelligence is funding and otherwise supporting the various jihadist entities which serve as proxies of the CIA and M?T (Milli ?stihbarat Te?kilat?: the Turkish National Intelligence Organization) in the greater Middle East (mainly Syria, Iraq, Libya, Jordan, Yemen) and Central Asia (mainly Afghanistan-Pakistan, China’s Xinjiang and Russia’s Caucasus and the Turkic peoples of eastern Siberia).

On top of this, Qatar is purchasing billions of dollars’ worth of US-made weapons; and paying cash on-time (unlike the habitually late Saudis who now cannot afford to pay what they’ve already promised).

Moreover, the Middle East is awash with rumors that Qatari businessmen saved the financial empire of the Kushner family by investing at least half-a-billion dollars in the 666 5th Avenue project in New York. The rumors are very specific in that the investment was made for political reasons on instruction of the Emir. In the conspiracies-driven Arab Middle East, such rumors are believed and serve as a viable motive for the policies of the Trump White House: an ulterior motive the Saudis and Gulfies cannot challenge.

The handling by the Trump White House of the Iranian shootdown of the US RQ-4A/BAMS-D Global Hawk drone on June 20, 2019, only exacerbated further the anguish of both MBS and MBZ. Both of them, along with other Arab leaders, urged the Trump White House to strike hard at Iran in retaliation. Both MBS and MBZ communicated in person with the most senior individuals at the White House. They were stunned to learn that Trump communicated directly with Tehran on the possibility of a largely symbolic retaliatory strike, and the prospects of bilateral negotiations.

Both MBS and MBZ consider the last-minute cancellation of the US retaliatory strike a personal affront and humiliation because Trump did not accept and follow their positions and demands for action. Both MBS and MBZ are now convinced that not only the US demonstrated weakness and lack of resolve, but that Pres. Trump was personally not committed to fighting Iran on behalf of Saudi Arabia and the Gulf sheikhdoms. (...)

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.

by Yossef Bodansky, OilPrice.com | Read more:
Image: uncredited