China bets on Saudi oil and gas
by Andrew Latham, January 18, 2023
It was only a few years ago that the signing of the China-Iran Comprehensive Strategic Partnership (CSP) seemed to augur the crystallization of a new axis of evil in the Middle East. That agreement involves unprecedented bilateral economic, military and cybersecurity cooperation. The fear was that the signing of this agreement signaled that China would now be backing Iran in its struggle for regional supremacy against both the Gulf Arab states and their American backer.
This was always somewhat overblown. Beijing has, formally at least, long pursued a policy of equivalency in its diplomatic engagements and military cooperation, signing comprehensive strategic partnership agreements with both Saudi Arabia and Iran in 2016, for example, and in both 2017 and 2019 participating in separate military drills with both Iran and Saudi Arabia.
But, fundamentally, those who argued that China had decided to back Iran in its cold war with the Gulf Cooperation Council (GCC) states were not wrong. Beijing had clearly decided that its policy of strategic even-handedness was unsustainable and that the best way to achieve its core interests – to undermine U.S. hegemony in the Gulf and to secure access to the region’s oil and gas resources – was to enter into a strategic partnership with Tehran. And so, in 2021 it signed the China-Iran CSP.
Since then, however, two developments have so transformed the geopolitical landscape that China now appears to be reversing itself, not in the sense of returning to strategic even-handedness, but in the sense of decisively favoring the Gulf Arab states over Iran.
First, the growing desire on the part of the GCC states for greater strategic autonomy (greater independence from Washington) has created an opening for Beijing. Since the Obama administration first began negotiating with Tehran over the latter’s nuclear program, and especially since the Joint Comprehensive Plan of Action (JCPOA) was signed in 2015, the sense that the United States was softening its stance on Iran and could therefore no longer be considered a reliable security partner has been growing among the Gulf Arab states.
In turn, this has provided a powerful incentive for those states to adopt a hedging strategy — that is, to cultivate closer relations with China to minimize their dependence on a United States whose interests are increasingly divergent from theirs. This has created opportunities for Beijing that simply did not exist before.
Second, China’s growing reliance on GCC oil and natural gas has naturally inclined it to take steps to ensure that that supply remains uninterrupted and secure. Not long ago, China’s leaders wagered that Iran would become the preferred supplier of oil and gas to China, providing one of the incentives to tighten their strategic relations with Tehran. The failure to revive the JCPOA, however, and the resulting continuation of sanctions (which have inflicted serious damage on the Iranian oil and gas sector and made doing business with Iranian firms incredibly onerous) have revealed this to be a very bad bet indeed. Conversely, in the new era of strategic hedging on the part of the GCC, betting on Saudi oil and gas now appears to be the far more rational wager. This has created an incentive structure for Beijing that simply didn’t exist before.
Gradually at first, then suddenly, these changes in both opportunities and incentives appear to have induced a change of heart in Beijing. Whereas as recently as 2021, Beijing seemed to have thrown its lot in with Tehran, China’s leaders now seem convinced that the best way to advance and defend their interests in the Gulf is to court the GCC states.
And so, in December China and the GCC agreed to adopt a five-year joint action plan for strategic dialogue, to develop their partnership in various security and economic issues and to address the Iran nuclear program and regional issues. And Beijing agreed to this in the full expectation that doing so would profoundly displease their Iranian partners.
Again, some caveats are in order. Beijing has not cut Tehran adrift altogether. Indeed, following the joint China-GCC announcement, it took some diplomatic steps to reassure the Iranian leadership that their country was not being thrown under the bus.
But the change in China’s regional strategy is real. And it will result in the geopolitical map of the Persian Gulf being redrawn, amplifying some existing trends and introducing some new ones. The regional cold war will continue, perhaps with some elements of detente as all sides see the possibility – and potential payoffs – for a relaxation of tensions. And Washington will continue to play an important role in the region, even if its attention will increasingly be on Europe and the Western Pacific. Largely thanks to China, however, the hedging GCC states will enjoy increasing strategic autonomy and Washington will exercise decreasing influence over its erstwhile regional partners.
Simultaneously, the Gulf States will continue to be drawn ever more tightly into China’s economic orbit. And, finally, Iran will become increasingly isolated, perhaps even marginalized.
What will all this mean for peace and stability in the region? At the moment, that’s not clear. It might embolden the Gulf states to ramp up their competition with Iran, knowing that China will be disinclined either to rein them in or support Tehran. Or it might result in a weakened and marginalized Iran adopting a more restrained strategy, in turn prompting the GCC states to restrain themselves and perhaps leading to some form of regional detente — or at least a stable balance of power. Or, finally, it might incentivize a marginalized and cornered Iran to weaponize its nuclear potential, with predictably catastrophic results for the region and the world.
One thing, however, is clear: As the early-20th century philosopher Antonio Gramsci put it in a very different context, the “old world is dying, and the new world struggles to be born.” Let’s hope it is not, as he put it then, also a “time of monsters.”
Andrew Latham is
a professor of international relations at Macalester College in Saint
Paul, Minn., a non-resident fellow at Defense Priorities in Washington,
D.C., and a Senior Fellow with the Institute for Peace and Diplomacy in
Ottawa, Canada. Follow him on Twitter @aalatham.