![ChinaSA](/sites/default/files/styles/hart_news_article_image_640/public/image/2020/10/chinacarteroil2.jpg?itok=XL-ezI2y)
Chinese President Xi Jinping, foreground, and Saudi Crown Prince Mohammed bin Salman. (Source: HartEnergy.com; Gil Corzo, Matias Lynch, Rapid Fire/Shutterstock.com)
The Middle East continues to be a mess in every way, former Defense Secretary Ash Carter said during a KPMG webinar on Sept. 30. But in the energy sphere, with a few exceptions, China is the pivotal player and the Middle East is yesterday’s news, said Carter and other experts on a separate recent CERAWeek by IHS Markit webinar.
“In the great scheme of things, the future belongs to North America, Europe, Asia and Latin America, and the Middle East doesn’t count,” Carter told Regina Mayor, KPMG’s global and U.S. head of energy and natural resources.
Which is not to diminish the importance of U.S. engagement in that part of the world, particularly in respect to containing terrorism, Carter said. But in global energy geopolitics, the U.S. and Middle Eastern nations have turned their attention toward China, experts on a CERAWeek by IHS Markit webinar said.
“There’s been a realization for decades now among all the major energy producers in the Middle East that markets are moving eastward and the orientation of their own economies needs to follow that,” said Suzanne Maloney, vice president and director of the foreign policy program at the Brookings Institution. That has come with the growing recognition that the role played by the U.S. in the region has receded, she said. Economic relationships with China are now underpinned by diplomatic and strategic relationships.
![Former Defense Secretary Ash Carter](/sites/default/files/inline-images/ashcarter.jpg)
Former Defense Secretary Ash Carter (Source: stock_photo_world/Shutterstock.com)
The U.S. relationship with China has changed over time, as well.
“I’ve never seen Russia and China as emboldened as they seem to be today,” Carter said. He added that, in a sense, Russia and China are already at war with the U.S. He referred to Russia’s continued efforts to interfere in elections, but the U.S. hasn’t fully realized the extent.
On the global energy stage, China’s role as a major importer of oil served as a needed counterbalance to the Saudi-Russia price war of March.
“The world of oil was depending on China as an importer this spring and China came in and saved the market by buying a lot of oil and creating a floor, in a way, at a time when the U.S., acting as a producer, tried to coordinate a supply cut with Russia and Saudi Arabia,” said Roger Diwan, vice president for financial services at IHS Markit. “The U.S. is securitizing the oil relationship and the U.S. is such a player in oil and gas. That makes the security issue for China even more preeminent.”
Flirting with Danger
The most prominent political player in the Middle East, Saudi Crown Prince Mohammed bin Salman, has shown an appetite for trying to play global powers against each other. Carter sees him as an opportunist who became very sophisticated, very quickly as King Salman ceded more power to him.
“He’s a friend of ours when he needs us to be a friend but he’ll also flirt with others at the same time,” he said. “It’s not like the kind of relationship we used to have with Saudi Arabia where things were much more predictable. He’s a much more tactical kind of guy. He’ll go over and flirt with [Russian President Vladimir] Putin; he’ll flirt with Xi [Jinping, China’s president]. He’ll suggest that he could do without us. That’s much more challenging than it was in previous times.”
The Saudi dalliance with Russia is a volatile one, as shown by the oil price war that broke out in March and jolted the energy industry. Carter views the possibility of the kingdom shifting its alliance from the U.S. to Russia as a hollow threat.
“I would call it flirtation more than a serious development of an enduring relationship,” he said. “And I would call them on that. I wouldn’t allow him to think it was anything else.”
Political Climate
The modern political relationship between the U.S. and China began during the Vietnam War and has always been marked by conflict, said Evan Feigenbaum, vice president for studies at the Carnegie Endowment for International Peace. With the Trump administration’s tariff war, the relationship is even more strained.
If former Vice President Joe Biden wins the presidency, the relationship could be altered, Feigenbaum said. He would expect a Biden administration to include China in its energy and climate change agenda.
“It’s very difficult to imagine an American reset on the climate issue that doesn’t involve a reach-out to Beijing,” Feigenbaum said. “That’s an opportunity for the two governments to define a different kind of tone to the relationship, but also to put a floor on some of the freefall.”
A Biden presidency would be a profound change for the U.S. oil and gas industry.
If former Vice President Joe Biden wins the presidency, the relationship could be altered, Feigenbaum said. He would expect a Biden administration to include China in its energy and climate change agenda.
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