China and India in the Gulf Cooperation or Conflict

Dr. Naser al-Tamimi
Dr. Naser al-Tamimi
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GCC countries survival depends on oil exports to sustain their economies, thus they will not encourage any party against the other in order to ensure stable markets for their energy supplies.

Naser al-Tamimi
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Today about two thirds of the Gulf region energy exports go to Asia. The International Energy Agency (IEA) expects energy trade between the Middle East and Asia to grow rapidly in years to come as the U.S. moves towards energy self-sufficiency. Asia could account for up to 90 per cent of oil exports from the Middle East in the future. Furthermore, in light of the developments “The Arab Spring” that have swept the Middle East and North Africa and continues to evolve so far, the spotlight on Gulf-Asia relations is of great significance, as the confidence in U.S. power is eroding. This is in addition to the volume of trade between the two Asian giants, China and India, and the Gulf States are growing rapidly. For example the bilateral trade between GCC and China exceeded $ 133 billion and with India hit over $ 141 billion in 2011 according to latest UN’s Comtrade data. Not to mention the millions of Indian workers in the region, and the interests of the Indian and Chinese companies which are growing strongly in the region.

Indeed, both China and India have become more economically interdependent with the Gulf and the two countries will not be able to exclude each other from the region. As big importers of natural resources, India and China, will benefit from and may actively seek to promote stability in the Middle East. Additionally, China and India have a high level of dependence on energy imports, particularly oil; they are exposed to the same risks of the international oil markets. Therefore it is in the interests of both countries to cooperate together towards price stability and keeping reliable oil supplies.

Meanwhile, the Middle East oil producers export more oil to Asia than to Europe and North America combined. In fact, about two-thirds of GCC oil exports are channeled to the Asia. The Asian Pacific countries, individually and collectively, are heavily dependent on oil from the Gulf. According to the U.S. Energy Information Administration (EIA) Japan sources roughly 80 percent, South Korea 75% and India imports almost two thirds of its oil from the GCC states. The International Energy Agency (IEA) forecasts that China will import 70% of its oil from the GCC by 2015. India is projected to replace Japan and emerge as the third-largest consumer of energy (after the United States and China) by that time. The bulk of Indian supplies come from the Gulf and in particular Saudi Arabia; this dependency is expected to change only marginally in the next decade.

Unlikely Conflict

In this geopolitical environment; China and India are acting in the economic interdependence model, and there is no evidence to suggest otherwise. Firstly, the two countries will depend on the import of large quantities of oil from the Middle East and the GCC; therefore, the stability of the region is in their interest. Secondly, the GCC states and most of the Middle East countries do not allow investments in the upstream oil sector (exploration and production), thus there is no room for competition between Chinese and Indian firms in that sector. Thirdly, both China and India do not yet (and maybe decades to come) have the capabilities to deploy significant naval forces in the Middle East and Indian Ocean and will remain dependent for the time being on the U.S. presence. Fourthly, The GCC countries survival depends on oil exports to sustain their economies, thus they will not encourage any party against the other in order to ensure stable markets for their energy supplies. Fifthly, the fight against terrorism and prevent the spread of nuclear weapons are also a common interest for all Asian countries. Last but not least, it is arguable that it is in the interests of both countries to enhance their collective leverage over energy suppliers.

Above all, the position of the two countries regarding the Arab issues are closer to each other (and the Arab countries) more than to Washington. This is clearly reflected in their political attitude of the two countries towards Palestine, Bahrain, Syria, Libya, Iran’s nuclear program, climate changes and many other issues. In this context, common interests suggest that intense security competition between the two countries over Middle East’s oil in the next two decades is unlikely. Indrani Bagchi a leading foreign policy journalist and the diplomatic editor at The Times of India once eloquently summarized the evolving Indo-China relationship as “competition on some levels and co-operation on others (…) but conflict is most unlikely.”

(Dr. Naser AL-Tamimi is a UK-based Middle East analyst and Al Arabiya’s regular contributor with particular research interest in energy politics and the political economy of Saudi Arabia, the Gulf and Middle East- Asia relations. The writer can be reached at: [email protected])

Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.
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