Why is Obama doing what he is doing in Syria? Some think this is all about Israel. I want to suggest an alternative explanation. It is a bit complicated, but I think it hangs together. It starts with Saudi Arabia. While Saudi Arabia is a majority Sunni population, it has a substantial, growing, but minority Shia population. The Shia inhabit the oil rich Eastern provinces of Saudi Arabia.
When the United States removed Saddam Hussein as the ruler of Iraq and replaced him with Shia leaders in 2005, this essentially laid the foundation for giving Iran, an overwhelming Shia nation, effective control of Iraq and its oil. This set off alarm bells in Saudi Arabia. With Lebanon under effective control of the Shia led Hezbollah, the Saudis as of 2010 were facing a new power balance in the Middle East–Iran, not Israel, was spreading its influence, largely thanks to the policy of the United States.
Within the last four years, there has been a dramatic shift in the oil relationship that had been the cornerstone of the relationship between the Saudis and the United States. The Atlantic Monthly laid this out last year:
In other words, the U.S. shale gas boom is one, though not only, major factor in reducing the country’s use of oil and gradually weaning the country from relying on the Persian Gulf. Another chart from EIA corroborates the recent downward trend in U.S. oil imports, now primarily originating within the Americas, with Canada leading the way.
China, on the other hand, is heading in the opposite direction. Its oil import dependence now stands at about 55 percent, or importing about 5.3 million barrels per day (BPD) out of total demand of 9.9 million BPD, according to PetroChina estimates. This is roughly equivalent to the peak of U.S. import dependence, and much of China’s oil comes from the same places that had been such a big part of the American supply. As of 2010, nearly half of China’s imported oil arrived from the Gulf, including Libya and Iraq. In short, China risks becoming the “new U.S.” in the Middle East, a direct result of its energy-intensive growth model and the rapid expansion of the transport sector.
Moreover, some in China fear that increasing U.S. energy independence, particularly its enormous shale output, will make the Middle East is strategically dispensable for the U.S., providing Washington with more flexibility to “disrupt” the region in a way that would indirectly damage Chinese interests. In other words, if Middle Eastern oil no longer matters quite so much to the U.S., then it would have more freedom to do things that would risk disrupting Middle Eastern oil output, such as forcing “regime change” in unfriendly countries.
As simplistic as this may sound, such a view seems to be gaining some traction. One Chinese commentator, pointing out that U.S. oil imports from the Gulf have plummeted to 15 percent and that domestic gas production rose from 20.2 to 22.4 trillion cubic feet in just three years, argued that these developments give Washington more leverage to push around China through, for instance, Iran sanctions.
We, the United States, are no longer dependent on the Middle East oil. China is. But the Saudis are no longer the ruling the roost as they did in the 1970s. Iran, with its new partner, Iraq, is in a position to provide an alternative to the Saudis. It is not there yet, but the dynamics in the region are moving in that direction.
China, unlike the United States, is dependent on foreign imports and that dependency is going to increase, not diminish in the coming years. But China is not the only country with a billion plus, and growing, population. There also is India.
Give’s us a nice leg up on the Chinese, right? One little problem. The Chinese hold more that one trillion dollars of our debt. The Chinese hold roughly 7% of our national debt. They do not control us, but their willingness to finance our Federal expenditures is a fact we cannot ignore.
Another country that holds a significant part of our debt is Saudi Arabia:
The Saudi Arabian Monetary Agency (SAMA) currently holds about $500 billion worth of overseas assets, of which some $360 billion are held in foreign securities. The majority of the latter are US treasury bills. Banks in Saudi Arabia also have considerable holdings of US treasuries, and private Saudi business families hold large portfolio investments in the US. With the decline of the dollar relative to other major currencies since 2002, these assets have lost international purchasing power. But most of that decline happened before the international economic crisis of 2008-2009—the US recession and the recent downgrade have hardly affected the value of the dollar.
Instead, US government debt has remained the default “safe haven” for international investors, and demand for long-term treasury notes has increased after the downgrade as investors fled more speculative asset classes. The downgrade was interpreted as a sign of general economic uncertainty rather than an indicator that the risk of a US debt default has increased.
So what does all of this have to do with Syria?
I have not thought this through completely, but it appears that the United States’ policy vis-a-vis Syria is intended to reassure the Saudis that we are not going to abandon them to the Iranians. In fact, by imposing sanctions on Iran and its ability to sell oil overseas we are helping the Saudis maintain its position as the major supplier of oil to China.
The Saudis, as we already know, have played the principal role in helping arm the “rebels” in Syria. Of course this means they are arming radical Sunni jihadists. You know, the folks we like to label as Al Qaeda. Despite Obama’s claim that US policy is to help free the Syria people from a tyrannical reign, that is not what is really going on. Instead, we are helping shore up the Saudis and trying to prevent Iran from becoming an alternative source to growing Asian demand for Middle East oil.
Are you willing to send your son or daughter to die in Syria in order to protect Saudi Oil interests? I am not.