US CHINA & MIDDLE EAST
● Kessenger - Faisal Agreement
Introduction:
● The Middle East(ME) is a geo-economic partner and has an
increasing defence relation with the USA.
● China has now been increasing encroachments in ME
● Recent disappointing visit of Joe biden in Saudi Arabia(SA)
● On the other hand a comparatively much more successful
visit of Xi Jinping in SA
● This is all due to the geo-strategic rivalry China is taking
over the ME & influencing the decision making process of
Middle eastern countries.
Middle East:
● Many of the experts & scientist are saying ME means GCC
○ GCC - Gulf Cooperation Council
● Other Geo-political Scientists are saying GCC + Iran + Iraq
○ Or in other words countries that surround the
Persian Gulf Sea
What does Middle East Offer:
● Hydrocarbon & Trade Routes in the Region (Geo-Economic
Importance)
Note: our focus is on Hydrocarbon Politics
Hydrocarbon Politics:
1. Middle East the largest Hydrocarbon Producer & exporter
● Saudi Arabia - world's largest Producer & exporter of Oil
(historically & Currently)
● Iran - 2nd largest producer & exporter of Gas & 4th largest
of Oil
● Currently after Russia Largest Exporter of Gas is Qatar
(due to sanctions)
2. The world's economic Engine is overwhelmingly dependent
(Specially West) on the Middle East.
● US in particular
3. However since the beginning of 21st century - US has tremendously
increased its internal hydrocarbon capacity
● Shae oil & gas Capacity
● 75% of their indigenous need is being fulfilled indigenously
● Approximately 12-15 % of hydrocarbon is imported from
neighbours
● 12-15% imported from ME
● Hence the dependence had decreased.
4. China’s Major imports are from Caspian Region
● Russia, Central Asian Republic (Kazakhstan, Turkmenistan
etc)
5. 2015 onwards since JCPOA has been signed (a civil nuclear deal),
29% of China's hydrocarbon Imports are from Iran
● Note: Iran is a part of both Caspian region & ME
6. With the intensity China's Industry is growing - it needs more
hydrocarbon
7. Above that China is industrializing the whole Region (under BRI)
8. Middle Eastern Oil is best in Quality
● Caspian Region & Iran's Oil has more impurity
● On the other hand teh GCC oil is said to be “sweet oil” - with
less Carbon & Sulphur Quantity
● It also has an increased power factor for engines
● Hence China is more interest in GCC oil
● EX: 2020 & 2021 there were many visits of XI to Riyadh -
along with agreement
● Middle east needs to increase it market at US is becoming
less dependent hence they too are looking to the developing
world
9. China wants to influence ????
● China's Objective is to form the Petro dollar to Petro Yuan.
1972 - Open Secret Agreement of Petrodollar
● KSA announced in 1972 - that its oil trade would be
conducted in dollars
● After this GCC countries also adopted Dollar as the trading
currency for their Oil
● A resolution was also passed on the platform of OPEC -
organization of petroleum exporting countries
○ The international trade of Oil will be conducted in
dollars
○ Here it is evident that GCC has the hold (the final
say)
○ This lead to dollarization of international trade
● US becoming an economic power - Dollarization of
international trade was the biggest factor which started
with Petrodollar.
China therefore is giving dents to dollar:
● By signing Currency Swap Agreements (CSA)
● China had signed agreements with 36 countries
○ China - Russia Trade will be done in Yuan-Rubble
○ China - Iran Trade is shifting to Yuan-Tuman
(iranian Dinar/Riyadh)
● China's Strategy & Current Policy
○ China-KSA Trade should be in Yuan-Riyal
○ This would be a huge dent of Dollar
● China's Long-term plan:
○ Convincing SA for PetroYuan
○ Moving away from petrodollar
○ For the foreseeable future it doesn't seem to be
turning into reality
○ However in the long run it is a possibility, being the
largest economy and it influence of regional
Growth
Note: Petrodollar agreement is gone —> US economic Leadership is
Gone
OPEC & US - CHINA RIVALRY
OPEC:
●
● Decides the international energy decision
● They decide id hydrocarbon production is o be increased or
decreased
● They are the decision makers
● Producers act of the decision made by them
2022 - Resolution passed:
● Oil producers will decrease there production
● This was supported by Russia
● & outrightly opposed by Saudi Arabia
● USA has been influencing the Hydrocarbon decision made
by OPEC
● China is trying to influence the decision making process on
this platform
● USA in 2013 & 2022 was unable to influence
● As ME countries were not in favour back in 2013 and now
they want to increase which both go against there USA
desires
● A vacuum is being generated
● China is trying to fill that Vacuum
● The mpr the gap increases between US - Saudi relation —>
China will fill it
● And the more influence China has on Riyad the more they will
be able to …
Q: US China Rivalry is no longer in the South China Sea but is rising in
the middle east?
Watch these Videos:
● QUAD vs RCP
● AUKUS
● Encirclement of China
● Us strategic partnership with regional countries
● China's policies