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The other war for oil: China and Japan

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"China and Japan are locked in a fierce diplomatic and economic struggle to win access to Russian oil." And to China's chagrin, it appears that the Japanese are winning after Beijing believed it had secured a pipeline deal. Japan (which has virtually no oil and so imports all) and China (whose current 1/3 import level will rise to nearly 2/3 in a generation) bring that oil through an increasingly risky Malacca Straits for which China's brown water (inshore) navy is unable to mount a defense. Both want Russian oil and are willing to spend a packet to get it. While the Chinese line to city of Daqing is half the cost of the Japanese line to the port of Nakhodka, the Russians benefit by avoiding a single market dependency (China) and in gaining both foreign (Japanese and global) and Russian domestic clients.

While the PRC has, I believe, eclipsed India as Russia's major arms purchaser, the Russian decision shows the limits of Moscow's willingness to cooperate with its 'strategic partner' in Asia. Left unsaid is Russian fear over rising Chinese hegemony into some traditionally Russian lands north of the Amur (which Beijing felt that Imperial Russia stole from China and which it still softly disputes).

China has already demonstrated its strategic will to guarantee its energy security (witness the Lunnan to Shanghai natural-gas pipeline) and so has again looked to the "Stans" by resuscitating a oil pipeline to Kazakhstan, an area strategic to Russia which only recently lost Kazakhstan in the breakup of the USSR.  Yes, it remains within the CIS, but that is a far cry from Russian economic and military control.

I suspect that the Japanese will insert much needed technology into eastern Russia, which I think that the Russians would want to proliferate westward (in lieu of US players). Add to that Japan's decision to embark on a ballistic missile shield in 2003 (ostensibly against the DPRK but the same defensive footprint will cover current Chinese launch trajectories) and I see an increasingly interesting diplomatic contest in northeast Asia.

The oil wars: In the pipeline
Apr 29th 2004 | BEIJING AND MOSCOW
From The Economist print edition

Malaysia offers naval escorts through Malacca Straits
April 19, 2004
Pacific Business News

China's Demand For Oil May Make Thailand Canal A Reality
By Franz Schurmann
From WBAI Pacifica Radio
Jul 22, 2003, 20:35

Gordon Housworth



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