Oil manoeuvre by China, India challenge Washington on energy and security fronts

VIENNA, Austria (AP) - Iran, Sudan, Venezuela and Syria - nations shunned by the United States as nuclear threats, insurgent havens or human rights violators - are increasingly being wooed by China and India in a race for oil and influence that is challenging Washington on the energy and security fronts. The most recent U.S. concerns have focused on China's bid for Unocal Corp., America's ninth largest oil company. American congressmen, senators and former Central Intelligence Agency director James Woolsey have described it as a threat to U.S. national security.

But less high-profile manoeuvre by the two Asian powerhouses are also raising questions.

Besides their involvement in energy projects worth billions of dollars in countries America views with concern, India and China also have bought into Russia's oil and gas sector. And Beijing, with Moscow's apparent blessing, is reaching out to energy-rich former Soviet republics in central Asia where the Americans have military outposts.

President George W. Bush this week said America's relationship with China is "a good relationship, but it's a complex relationship."

He also feted Indian Prime Minister Manmohan Singh at the White House in clear recognition of that country's growing significance.

The all-out energy offensive by the two Asian powers was documented this year by the National Intelligence Council, the U.S. government think-thank that advises the CIA and senior U.S. policy-makers.

"The likely emergence of China and India as new major global players . . . will transform the geopolitical landscape," the report said.

"In the same way that commentators refer to the 1900s as the 'American Century,' the early 21st century may be seen as the time when some in the developing world, led by India and China, come into their own."

The report also said energy demand through 2020, especially by India and China, "will have substantial impacts on geopolitical relations."

In Asia's former Soviet republics, such moves threaten to hurt U.S. interests by skewing alliances in a key part of the world on the doorstep of the oil-rich Caspian basin and also close to Iraq and Afghanistan.

The need for a U.S. military toehold - established during the Afghanistan offensive - is already being questioned by the governments of Uzbekistan and Kyrgyzstan.

The Uzbek Foreign Ministry last month said that other than for overthrowing Afghanistan's Taliban regime, "any other prospects for a U.S. military presence . . . were not considered by the Uzbek side." And a week ago, Kyrgyzstan's president, Kurmanek Bakiyev, said it was time to "begin discussing the necessity of the U.S. military forces' presence."

The Shanghai Co-operation Organization, a regional alliance led by China and Russia, this month called on the U.S. to set a date for withdrawing forces from the two ex-Soviet republics. General Richard B. Myers, chairman of the U.S. Joint Chiefs of Staff, called it an attempt to "bully" the two U.S. allies - a charge Moscow sharply rejected.

Strategic manoeuvering has always been a part of world rivalries and most nations aren't that choosy - Saudi Arabia, the world's largest oil producer, remains crucial to Washington despite its human rights record. But the imperative of making friends with energy-rich nations has grown over the past two years as oil prices rise and consumption grows.

Much of the oil - a third of world output - still is pumped by the Vienna-based Organization of Petroleum Exporting Countries, whose powerhouse is Saudi Arabia.

But billions of barrels of the world's reserves are in countries hostile to the U.S. such as Iran, OPEC's second largest oil producer, where U.S. sanctions have locked out American oil companies. Billions more are in countries and regions with uncertain loyalties.

Chinese oil demand now is second only to America's and within 20 years is it is expected to increase to 21 million barrels a day. That's what America consumes now - and most of it will be imported.

India's oil consumption over the same period is expected to double to a daily 5.3 million barrels - also mostly imported.

Beijing is also casting a wider oil net because the U.S. presence in Iraq - thought to have the world's second-largest oil reserves - has derailed Chinese attempts to establish a toehold there.

Chinese and Indian investments in countries and regions of U.S. concern include:

-A 50-per cent Chinese stake in the sprawling Yadavaran oil fields of Iran, which the United States accuses of trying to make nuclear weapons. The Chinese last year also signed deals worth an estimated $70 billion US for 228.8 million tonnes of Iranian liquefied natural gas.

-Majority Chinese control in the consortium dominating the oil industry of Sudan, which once sheltered Osama bin Laden and whose government is accused of human rights abuses linked to massacres in the Darfur conflict.

-Chinese ownership of 60 per cent of a major Kazakhstan oil and gas enterprise and plans to build a pipeline for Kazakh crude into China.

-India's multi-billion dollar project to pipe in Iranian gas via Pakistan - a plan criticized this month by U.S. Secretary of State Condoleezza Rice.

-Billion-dollar investments by India's main oil and gas enterprise in far-flung projects that include Syria - accused by Washington of failing to prevent insurgents from crossing its border into Iraq and of suppressing democracy in Lebanon. India has also signed a pipeline deal with gas-rich Myanmar's hard-line military junta.

-Chinese and Indian interest in Venezuela, the fourth-largest U.S. oil supplier, whose president, Hugo Chavez, is a fierce critic of U.S. foreign policy. Chavez is trying to rewrite concessions to U.S. oil companies and has invited China and India to participate in oil exploration.

Both Beijing and New Delhi deny that their efforts constitute a threat to the United States.

Alluding to concerns about Iran, the Chinese Foreign Ministry told The Associated Press that "China's development of friendly relations with another country. . . won't harm any other country's interests."

A ministry statement said Beijing is "devoted to developing constructive and cooperative relations with the United States." And Sanjaya Baru, the Indian prime minister's media adviser, says the pipeline is nothing more than a "bilateral issue between. . . India and Iran."

Gary Sick, a member of the U.S. National Security Council under former president Jimmy Carter, says sanctions on Iran effectively means embargoing Iranian oil.

"The Chinese approving a resolution that imposes a sanction on (Iran's) oil - I don't see it happening," he said.

© The Canadian Press, 2005