Tuesday, June 10, 2003

Hmmm. China is making a diplomatic push in the oil-rich Central Asian Capsian Basin. The thrusts and counter-thrusts sound like the early moves of another 'Great Game'. China needs the imported oil (even though much of China remains unexplored and there are no reliable estimates of oil reserves there) and it is in our best interest to make sure that Central Asia does not become a mega-'client state' of China. Throw in Russia and things get interesting.

"For the Chinese, a lack of domestic energy supply and a volatile external source is a threat to domestic development," said Matthew Oresman, a research assistant for the Freeman Chair in China Studies at the Washington, DC-based Center for Strategic and International Studies. "They have no strategic oil reserves. There’s a certain point where a Kazakhstan pipeline almost becomes a national security need."

"The Chinese need a secure route for oil, and Central Asia is a great option," Oresman added. "The Chinese are taking big risks by gambling on places that are far away."

For Caspian Basin states, China’s rising role in the region is a welcome development. Following the US-British ouster of Saddam Hussein’s dictatorship in Iraq, the outlook for Caspian Basin energy exports, especially for the Baku-Tbilisi-Ceyhan (BTC) pipeline, has become increasingly murky.

US experts and officials have suggested that expanded Iraqi oil exports could hurt Western demand for BTC resources. [For background see the Eurasia Insight archives]. Washington’s envoy for Caspian energy issues, Steven Mann, recently indicated that the increased competition could put pressure on Caspian states – especially Azerbaijan, Kazakhstan and Turkmenistan – to reform their legal frameworks to make their respective countries more appealing for foreign investors.

Mann’s comments stand in sharp contrast to the regional trend over the past few years. Regional leaders, such as Nazarbayev, have exhibited increasing authoritarian tendencies. In recent months, officials in Central Asia have been annoyed by US criticism, mainly concerning political issues and human rights. Some appeared to have become more wary of a dominant US economic and strategic presence in the Caspian Basin, and have sought to dilute Washington’s regional influence. [For additional information see the Eurasia Insight archives].

By engaging China, Central Asian leaders can gain additional leverage in their dealings with Washington, said Richard Bush, the director of the Center for Northeast Asian Policy Studies at the Brookings Institution. In addition to China and the United States, most regional leaders have maintained strong ties with Central Asia’s traditional protector – Russia. In pursing a "multi-vectored policy," Central Asian leaders hope to utilize the intense competition among regional powers to maximize their strategic and economic benefits.

"The Chinese counter or balance the US role in the region," Bush said. "China is [already] the biggest trading partner for many of these Central Asian countries. They want to balance their economic interests."

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