THE AXIS OF OIL

I have read this article and I have found it quite remarkable. It could explain why the "hawks" are flying over Iran, and how the Chinese diplomacy works: exchange military technology for oil in order to undermine America.

Anyway, the article points out some truly worrying questions, the most t important of all: geopolitical stability will be in great peril unless we take drastic measures. The US must hedge China's rise to great-power status. China must not be encouraged to think it can challenge America's superpower status… as it is currently doing.

Given past government interference, whether it was the Texas government trying to keep prices high by restricting output in the early days, or the OPEC cartel doing the same in recent times, it can't be said that the free play of supply and demand ever set prices in the oil market. But we are now seeing an even more profound uncoupling of the oil industry from anything resembling the model characteristic of market economies. Governments rather than traditional commercial enterprises are increasingly taking control. And those governments often have interests quite hostile to ours.

The Chinese are desperate to secure supplies of oil to sustain an economic growth rate that is crowding double digits and that converted them into a net importer of oil in 1993. That means, first of all, forging closer economic and political ties in the Middle East. The Iran-China Chamber of Commerce, established in 2000, reports that trade between the two countries totalled $7 billion last year, a 25 percent increase over the previous year. But this is not the ordinary buying and selling of profit-driven companies. Instead, it is the result of state-owned companies in China buying oil from state-owned companies in Iran, in transactions aimed as much at mutual political advantage as at commerce. China buys oil and funds a U.S. adversary; Iran sells oil, and in return gets help with the nuclear weapons program that worries America. Score: Adversaries, 2; U.S., nil.The China Petroleum & Chemical Company (Sinopec) also signed a 30-year natural gas purchase deal to help the mullahs get their gas industry moving and agreed to invest in the development of the Yadavaran oil field in return for Iran's agreement to sell it 150,000 barrels per day of crude oil. So much for U.S. trade sanctions.
The advantages to Iran of closer ties with China are obviously not restricted to payments received for oil. As Gal Luft and Anne Korin pointed out last year in Commentary, China "has sold ballistic-missile components to Iran as well as air-, land-, and sea-based cruise missiles. . . . Even more significantly, China has provided Iran with key ingredients for the development of nuclear weapons," and China's Fiber-Home Communications Technology is building a broadband network in Iran.

When Sinopec agreed to spend $300 million to develop natural gas resources in Saudi Arabia, "the deal raised eyebrows for its high risk and potentially low returns," reported the New York Times. The Sinopec deal was aimed mainly at establishing a larger Chinese presence in the Middle East. And a market for products that are on America's list of embargoed items. The Sino-Saudi oil-for-arms trade has included the sale by China of ballistic missiles with a range of 1,800 miles and capable of carrying a nuclear warhead, according to Luft and Korin.

China clearly aims to position itself as an alternative to America as an ally and armorer of countries that oppose U.S. foreign policy. Amy Myers Jaffe, a fellow at the James A. Baker III Institute for Public Policy at Rice University, told the New York Times that the Chinese "tend toward countries where the U.S. has sanctions like Sudan, Iran and Iraq." She might have added that China also tends towards countries that are key suppliers of the oil that keeps the wheels of American commerce turning

The entire article is available at weeklystandard.com

What is OUR GOVERNMENT currently doing? Should we include China in the Axis of Evil? Are geopolitical conflicts likely to arise in a few years ? Future does not look clear, after all. Bush, Cheney, Rumsfeld... WAKE UP