China interests in Gaddafi

Huge oil and financial deals play major part in Beijing's support for Libya's despot and halt to foreign intervention.
By Pepe Escobar
What a sight. Chinese president Hu Jintao pulling a vintage John Lennon performance in Beijing and telling self-styled Arab liberator and French neo-Napoleonic president Nicolas Sarkozy to "give peace a chance" in Libya.

The top four BRICS countries (Brazil, Russia, India, China) all abstained at the voting of UN Security Council Resolution 1973. In his subtle address to Sarkozy, Hu also implied his displeasure that the African Union, which was overwhelmingly against a foreign intervention in Libya, had their proposals totally sidelined by the West.

Only three days before UN Resolution 1973 was voted on, Gaddafi met with the ambassadors of BRICS members China, Russia and India, and told them, according to the JANA news agency: "We are ready to bring Chinese and Indian companies to replace Western ones." That may go a long way to explain the BRICS abstentions.

It would be tempting to see the Beijing leadership merrily watching Washington walk into another open-ended quagmire in a Muslim nation – part of a Chinese grand strategy of letting the US be distracted in peripheral Muslim countries in the arc from northern Africa to Central Asia.

Well, it is slightly more complicated than that.

Shopping for suppliers

China has 50 large-scale projects in Libya, but still invests less than in Angola and Zambia. From a Libyan point of view, China is a major Gaddafi financial partner – the third-largest buyer of Libyan oil behind Italy and France, with the added bonus of following its world-famous "non-interventionism" policy.

Yet in energy terms, China's top African oil suppliers are Angola, Sudan and Nigeria – all ahead of Libya.

Around 80 per cent of Libya's oil reserves, of roughly 44 billion barrels, are in the Sirte basin – spread out between Tripolitania and Cyrenaica, a great deal of it under on and off rebel control.

Some 70 per cent of Libya's GDP is connected to oil. Beijing would hate to contemplate a balkanisation of Libya along Korea's lines – an impoverished, oil-less, Gaddafi-ruled west/North Korea opposed to an affluent, oil-rich, Western-aligned Cyrenaica/South Korea.

Beijing never really worried about a Western embargo on Libyan oil. Who would dare strike a tanker navigating under the Chinese flag?

What Beijing wanted was for the rebels to collapse, with Gaddafi back in charge of the whole country and no "regime change".

Now with a Libyan stalemate as the most possible scenario, Beijing is factoring its influence in the price of oil. Oil consumption in China is about 4 per cent of GDP. Each $10 increase in the price of a barrel dangerously increases that proportion by 0.4 per cent.

Then there's Washington's response to the AU via the Pentagon's Africom – created by the Bush administration in late 2007, but now already in its first African war. Africom innocuously brands itself as "advising and training" military forces.

Only five African countries are not associated with Africom in some way – among them Libya.

Africom holds the paltry record of coordinating a botched Ethiopian invasion of Somalia that ended up with a great deal of the country embracing the hardcore al-Shabab militia. Africom also war-gamed a full-scale conflict in the Gulf of Guinea. Angola, China's top oil supplier in Africa, happens to be in the Gulf of Guinea.

So no wonder the leitmotiv in the influential People's Daily is something like: "Libya has been attacked because of oil", with the corollary of this anti-China power play in Libya mirroring Western interference in Sudan.

Oil or jasmine?

Chinese reaction to the complex Sunni/Shia tumult in Bahrain has been silence. Why? That may be a good question for Saudi foreign minister Saud bin Faisal bin Abdul-Aziz, who repositioned the House of Saud post-Cold War to a preferential footing with China.

Saudi Arabia is China's top oil supplier (1.1 million barrels a day; the Middle East as a whole exports a total of 2.9 million); that limits Beijing's leverage to really influence the Arab world.

Africa is absolutely crucial for China's energy strategy. Let's take a look at China's top oil suppliers: Saudi Arabia, Iran, Angola, Russia, Oman and Sudan.

At the strait of Hormuz – through which transits Saudi, Iranian and Omani oil – China is hostage of the local policeman, the US 5th Fleet, which also patrols the Bab el-Mandeb, the gateway to the Red Sea and the naval highway for Sudan's oil to reach the Indian Ocean.

Then there's the strait of Malacca, between Sumatra and the Malay Peninsula, patrolled by the US 7th Fleet – the key chokepoint for oil navigating towards China.

China also has to worry about Iran, its number two supplier (of oil and also natural gas), under severe sanctions that have shrunk its energy production.

So it is no surprise Beijing has connected the dots between Libya being bombed and Bahrain and Yemen getting away with repression of pro-democracy protests. The 5th Fleet calls Bahrain home, and Aden, in Yemen, is the key to the Red Sea.

Whichever the latitude, Beijing finds the Pentagon's mighty machine interfering with most of its key sources of energy; half of China's oil imports in 2011 came from MENA (Middle East/ Northern Africa). The threat is graphic, as Beijing sees it.

Africa, in the periphery of Eurasia, is also a key battlefield of the New Great Game – as the global geo-economy is rearranged, and the competition between the US and China for energy resources is emphasised.

Beijing's position is crystal clear in the words of Lin Zhiyuan, a deputy office director of the People's Liberation Army Academy of Military Sciences.

Writing in People's Daily, Zhiyuan stresses how "the US global military redeployment centres mainly on an instable arc zone", and how "the African continent is taken as a strong point to prop up the US global strategy", with Africom facilitating the US "advancing on the African continent, taking control of the Eurasian Continent and proceeding to take the helm of the entire globe".

And then there is the social volcano inside the Middle Kingdom. Moving at lightning speed to curb the ultra-sensitive political reverberations of the great 2011 Arab Revolt – the "harmonious society" collides with the prospect of a "jasmine revolution" – the Beijing leadership condemned what it dubbed "street corner politics" which can only lead to "social chaos" and "stagnate" Chinese society.

In a nutshell; China is not the Middle East, and Middle East "turmoil" does not apply to China. Instead, "happiness" has been set as the new national goal – replacing GDP growth (and, hopefully, making everyone forget about inflation, social inequality and corruption).

Bob Dylan, who turns 70 next month, played his first concert ever in China this week, at a packed Workers' Gymnasium in Beijing.

In China, Dylan is considered a sheng ren – a sage. He did play "A Hard Rain's Gonna Fall". The Chinese translation may have sent shivers down the spine of many a Middle Kingdom strategist.

Pepe Escobar is the roving correspondent for Asia Times.