Something Americans will like
Deputy Secretary of State Bill Burns gave a fine speech yesterday at CSIS on “A Renewed Agenda for U.S.-Gulf Partnership” heavy on security, resolving regional conflicts and supporting “positive” transitions (you wouldn’t want to use the D word in the Gulf). Too bad the agenda bore so little semblance to the changing reality.
The Gulf will of course remain important to the US and to the rest of the world. Its oil resources are the life’s blood of much of the global economy. An interruption in supply, as Bill rightly pointed out, would cause an increase in oil prices worldwide, with possibly catastrophic impacts on growth and investment.
But the political economy of Gulf oil is changing. The United States is importing less of it, down now to about 20% coming from the Persian Gulf. And that represents a shrinking percentage of total US oil requirements, as our own oil production is increasing rapidly. Asia is importing more Gulf oil. China takes the lion’s share of Hormuz-transported oil, India another big chunk. The International Energy Agency forecasts that 90% of Persian Gulf oil will go to Asia within a generation. Why would such a dramatic shift in oil trade not affect geopolitics?
It doesn’t make sense for the United States to continue to carry the whole burden of guaranteeing the flow of Hormuz oil, as we have since even before President Carter announced his doctrine in 1980. And the military responses it often uses are counterproductive. Dispatching the US Navy to the strait of Hormuz raises world oil prices, causing the economic damage we would like to avoid.
Others should pick up more of the burden, which need not be exclusively military. This should start with the Gulf producers themselves. The United Arab Emirates have built a pipeline around Hormuz, and the Saudis have them as well. But more can and should be done to circumvent Hormuz. The Saudis could use friction reducing agents to increase the capacity of their pipeline to Yanbu, on the Red Sea. Iraq, which today exports more than 90% of its oil through the Gulf, is talking with Jordan and Turkey about pipelines in their directions.
Other oil consumers should also be relieving the United States of some of the burden. Our over 700 million barrel Strategic Petroleum Reserve is a powerful, if costly, instrument to wield against a supply disruption, especially when used in coordination with other International Energy Agency members like Germany and Japan. But India and China have not built oil stocks to the levels required of IEA members, and they don’t have any obligation to coordinate stock draw. Our diplomats need to get busy convincing them to do so.
Another important diplomatic gap is lack of attention to the Sunni/Shia fault line, which happens to go through the strait of Hormuz and is ultimately the greatest threat to it. The US should be far more attentive than it is to reducing sectarian frictions in the Muslim world. Indifference to the plight of Sunnis in Syria and to the plight of Shia in Bahrain lands us in bad odor with both groups and heightens the risk that sectarian strife will one day be a proximate cause of closing the strait.
Naval action will remain the last resort to keep Hormuz open. But the military burden should not fall entirely on the US. China and India already patrol for pirates nearby. They should be invited to join a multinational task force for Hormuz, one the US might lead but that others would contribute to. It is highly unlikely that Iran would take military action against countries that are importing the bulk of its oil. And it would be useful to keep the Chinese navy tied up doing something helpful outside the East and South China seas.
The Gulf is changing. US policy should too. Pipelines, oil stocks, reduced sectarian frictions and a multinational naval force could significantly reduce US burdens without endangering the Gulf. It is time for us to shift burdens to others, and reduce the role of the US navy. Americans will like that.