Opinion
Updated ,first published
Updated ,first published
Behind the turbulence that characterises US President Donald Trump’s actions in Iran lies a shrewd geopolitical strategy. In the short term, he wants to demonstrate leverage over China when he meets President Xi Jinping at a pivotal summit next month. In the long term, he wants a politically submissive Middle East.
China, the world’s largest refiner of oil, purchases about 14 per cent of its seaborne crude from Iran. The true figure is probably higher, disguised as shipments from Oman, the UAE and Malaysia to get around US sanctions. Independent low-margin Chinese refiners in Shandong province, known as teapots, also import high-sulfur fuel oil from Iran. Taken as a whole, China’s enormous plastics sector relies on Iran for almost a quarter of its liquefied petroleum gas. Control over what Iran can export and to whom allows the US to retaliate if China restricts rare earth mineral supplies to the United States.
Trump’s abduction of Venezuela’s Nicolás Maduro in January was driven in part by a similar logic; Venezuela has the largest proven oil reserves in the world, and its Merey grade is also high in sulfur, well-suited for China’s teapot refineries. Trump wants indirect but politically critical leverage over China through control over Iran and Venezuela.
The keyword here is “control”. Control of oil rather than access to oil is the foundation of the United States’ Middle East policy. “Access to oil” implies that the United States simply wishes to buy oil like any other country; that it wants oil at a reasonable price. But the US already has access to oil. Its East Coast oil refiners (PBF Energy, Phillips 66 and Monroe Energy) have no trouble buying oil from West African suppliers. Thanks to its domestic shale revolution, the US is already self-sufficient. It is a major contributor to the global oil supply network.
Control is a very different beast. Control of oil means, among other things, controlling the terms on which its industrial rivals in Europe and Asia can access their oil. After World War II, the reconstruction of Japan required abundant supplies of energy. The United States obtained what it called “veto power” over Japan by controlling its access to these supplies. A price increase can harm the dollar reserves of heavily oil-dependent economies, ensuring they act in accordance with US objectives. Sometimes, a US-induced price rise can help its diplomacy. In 1986, the US requested Saudi Arabia to cut production to drive crude oil prices higher – to improve US relations with none other than Iran, which needed higher prices.
Control also means ensuring that oil-rich Gulf states pour some of their revenues into US Treasury securities, banks and corporations. Saudi Arabia, for instance, has bought $US150 billion ($211 billion) in US Treasury holdings. Kuwait, another family dictatorship, has bought $US66 billion.
These oil-rich states buy US Treasury bonds, make deposits in US banks and otherwise ensure that some of the dollars they earn from oil sales will flow back to US corporations. They also buy advanced US weapons systems. Saudi Arabia and the United Arab Emirates (UAE) are among the largest buyers of advanced US weapons systems.
Qatar, a monarchy with the third-largest proven reserves of natural gas in the world, hosts the forward headquarters of US Central Command at Al-Udeid Air Base, which it built at a cost of over $US1 billion. It will spend many more billions to expand it from an expeditionary to a permanent base for more than 15,000 personnel and their aircraft. Its sovereign wealth fund has committed over $US45 billion in investments in US corporations. Qatar Airways is a major buyer of US commercial aircraft.
An Iran with a government more amenable to US influence can be expected to do something similar. This is why Trump says that the war against Iran could take weeks. He isn’t merely interested in ending its uranium enrichment. After all, Iran obtained its original nuclear reactor as well the highly enriched uranium fuel to run it from the US, under former president Dwight D. Eisenhower’s “Atoms for Peace” program in 1957, when the two countries were friendly.
In the long term, a politically submissive Middle East would likely see a network of states with authoritarian regimes that comply with US objectives. These include rolling back Iran’s membership of the Shanghai Co-operation Organisation, undermining China’s Belt and Road Initiative, and weakening the China-Pakistan Economic Corridor. If the US can’t change the Islamic Republic itself, then keeping it weak, divided and preoccupied with its internal affairs is good enough.
Control, not access, is what Trump is after. It is the same strategy Britain had 100 years ago, when Walter Hume Long, the first lord of the admiralty, said that “if we secure the supplies of oil now available in the world, we can do what we like”.
Professor Clinton Fernandes is in the Future Operations Research Group at UNSW. His latest book is Turbulence: Australian Foreign Policy in the Trump Era.
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Professor Clinton Fernandes is part of University of NSW’s Future Operations Research Group which the threats, risks and opportunities that military forces will face in the future. He is a former intelligence officer in the Australian Army.
