China: Its geostrategy and energy needs

Testimony presented to:
The US-China Economic and Security Review Commission

By
Dr. Constantine C. Menges
Senior Fellow
Hudson Institute

October 30, 2003

Table of Contents:

Introduction- perspectives on China’s geostrategy.. 2

China since 1990: increased aggressiveness despite export-led economic growth   3

Reasons for China’s Pursuit of dominance in Asia and the World.. 3

Table 1: Oil Production Versus Demand.. 5

I. South China Sea/ “First Island Chain of Defense”. 6

Map 1: Vital Sea Lanes. 8

Table 2: China Offshore Oil Reserves. 9

II. Central Asia.. 9

Map 2: Purposed Central Asian Pipelines. 10

III. The China Russia Alliance. 10

China-Russia: their two-level strategy toward the US. 11

IV. The Middle East.. 13

Table 3: Chinese Oil Sources in the Middle East.. 13

Iran and Saddam’s Iraq.. 13

V Latin America.. 15

A New Castro Strategy.. 16

Table 4: South America: Countries at Risk from the New Pro-Castro Axis  16

Chinese Activity in Latin America.. 18

VI Policy Suggestions –Realistic Engagement.. 18

Appendix A: Oil Production and Demand History and Projections. 20

Appendix B: Members of the Forum of São Paulo.. 21

 October 30, 2003

China: its geostrategy and energy needs*

Introduction- perspectives on China’s geostrategy

Beginning in 1950, the communist government of China said that its goal in international politics is to promote peaceful relations with other states.  Therefore, its international conduct would always be governed by the “five principles of peaceful coexistence” which China defined to include: mutual nonaggression and mutual noninterference. [1] .

Yet, during the 1950s China committed many acts of aggression including: sending nearly a million troops to battle the United Nations forces in support of North Korea; threatening invasion and attacking island territories controlled by Taiwan; and, supporting armed communist insurgent movements seeking to overthrow regional governments.  Nevertheless, as the   historian Hsu put it, “Peking succeeded to a large extent in preventing [most Asian] states from aligning with the West” [2] , even India despite China’s surprise attack in 1962 and continuing occupation of part of its territory.  

In the post-Mao years, with China’s economic opening to the industrial democracies and other countries, there have been major changes in the methods of Chinese action in the world.  While China continues to say that it seeks to promote peace and the principles of peaceful coexistence, it has now added the major purpose of promoting its own economic development. Also during the 1990s China increasingly repeated, as officially stated in its October 2000 Report on National Defense, that it seeks “a new international political, economic, and security order, responsive to the needs of our times” [3] .  

While the content and structure of this “new international order” has not been made clear, obstacles to its realization that China often mentions are the alleged intention of the United States to dominate the world by what China calls “unipolarism” or “hegemonism”.  Also, impeding the Chinese “new world order” are the alliances maintained by the United States in Asia, Europe and the world, all of which China condemns as contrary to peace and relics of “the cold war mentality”.  China also opposes the plans of the United States for national missile defense and for Asian missile defense involving Japan, South Korea, and potentially other countries. 

 

Since 1990: increased aggressiveness despite export-led economic growth

Since 1980, China has had open access for its exports to the U.S. and other major democracies (while keeping restrictions on access to its market).  Economic benefits for China from 1990 to 2002 have included a cumulative trade surplus with the US, Japan, and the EU greater than $1.1 trillion (of which $612 billion is with the U.S.), foreign direct investment exceeding $320 billion, and western economic assistance of more then $60 billion, all contributing to significant economic growth. These Chinese trade surpluses have led to its accumulation of more then $330 billion in hard currency reserves. [4]

Instead of these benefits from the democracies leading to a more peaceful and less politically repressive China, the opposite has occurred. During the 1990s there was a deepening of political and religious repression within China and an acceleration of military modernization in nuclear weapons, missiles, and other advanced weapons. [5]  

China has spoken about building peaceful relations but in fact has often been coercive since 1990. It has territorial disputes with eleven of twenty five bordering and neighboring states [6] ; continues to transfer technology for weapons of mass destruction to potentially aggressive dictatorships which are also state sponsors of terrorism; has conducted large scale military espionage and covert influence operations against the United States and other countries; and, has failed to keep many of the arms limitation agreements it has signed.  It is the pattern of actions by communist China and China’s own official pronouncements that indicate its purpose is to seek dominance, first in Asia and then more widely in the world. 

 

Reasons for China’s pursuit of dominance in Asia and the world

            The history of the twentieth century demonstrates that it is the inclination of political democracies to seek international security through conflict resolution, conflict prevention, and defensive alliances.  In contrast, ideological or expansionist dictatorships such as the regime in China seek international security through the domination and the neutralization of potentially threatening governments.  As the 21^st century began, the government of China defined the world situation as follows:

 … in today’s world, factors that may cause instability and uncertainty have markedly increased.  The world is far from peaceful.  There is a serious disequilibrium in the relative strength of certain countries.   No fundamental change has been made in the old, familiar and irrational international political and economic order.  Hegemonism and power politics [the actions of the United States] still exist and are pursuing and developing further in the international political, economic, and security spheres.  Certain big powers [the United States] are pursuing neointerventionism, neogunboat policy, and neo-economic colonialism, which are seriously damaging the sovereignty, independence, and developmental interests of many countries and threatening world peace and security. [7]

This negative assessment echoed accusations also made publicly by the then-President Jiang Zemin of China.  These are the public declarations of the private conclusions reached by the Chinese communist rulers in 1990, following their repression in Tiananmen Square. To protect itself from the actio ns of the United States defined as hostile “neointerventionism”, “neogunboat diplomacy” and “neo-economic colonialism”, China seeks to become dominant for a number of reasons.

1. Preserve the power of the Chinese Communist Party

            The first reason China seeks international dominance is to preserve the power of the communist party and its unquestioned rule.  The Party leadership has been concerned since the 1950s about what it perceives to be an American plot of promoting “peaceful evolution” from Communist dictatorship to democracy.  It believes that the United States and the democracies caused the end of communist rule in Eastern Europe and the unraveling of the Soviet Union.  Speaking publicly in June 2000, President Jiang Zemin reflected these concerns when he said: “our struggle to fight against western hostile forces infiltrating and seeking to overthrow [the Party] is a long and a complicated struggle that at times will be very intense” [8] .  A few months later, the Chinese leadership witnessed the people of Serbia removing the long established communist dictatorship of that country (1945-2000) through an essentially peaceful popular uprising that some believed was secretly encouraged and aided by the United States and other democracies. 

2 Counter the military power of the United States and its allies

            China’s second concern is the military power of the United States which is perceived as limiting its ability to take control of Taiwan and attain its other territorial aims in Asia. It is this military power which permits the U.S. virtually alone in the world to announce the sale of a large number of defensive weapons to Taiwan on April 23,2001 followed the next day by the statement of President George W. Bush that if China attacked Taiwan, the U.S. would do “whatever it took to help Taiwan defend itself.” [9] This military power was demonstrated in the 1991 Gulf war, in the 2001 removal of the Taliban and in the 2003 removed of the Saddam Hussein regime in Iraq.  It is inherent in the U.S. arsenal of 6,000 strategic nuclear weapons, and in its system of alliances. 

3. Ensure access to economic resources

            A third reason for China to seek dominance is to ensure its continued economic modernization and growth.  Chinese strategists have defined “comprehensive national power” to include the political will and leadership of a country, its economic, scientific, and technological resources and development as well as its military capabilities [10] . China’s involvement with the world economy since 1978, its rapid economic growth and enormous success in developing contemporary and advanced civilian and military technology all have made clear to the communist leadership that access to the economic, technological, energy and mineral resources of the world are essential to its future success. 

Table 1: China: Oil Production Versus Demand [11]

Oil imports are an example of China’s inevitably growing dependence on resources from abroad.  In the year 2000, China used about 4 million barrels of oil a day and produced about 3 million barrels a day [12] .  A comprehensive analysis by Robert A Manning concluded that China’s energy production may increase slightly in the next years but that its oil and other energy import requirements will rise steadily as China’s economy continues to expand and becomes more developed and as more motor vehicles are used.  The economy of China has been growing by more than 7% annually for many years.  Assuming that in the next years China’s economy grew at a rate of about 5.5%, China is estimated to need to import about 4 million barrels of oil a day by 2010 and 6 million barrels of oil a day by 2020. [13]  

Despite the leveling off in domestic Chinese oil production and its growing economy requiring more oil, the US department of Energy estimates that the total global demand for oil will increase to approximately 119 million of barrels per day by2025. [14]   However, global production for that same year is expected to be at 124 million barrels per day which is double the number of barrels in the current reserve capacity. [15] China therefore has no objective need to be concerned about access to available oil resources through the international oil market. However, it is also very possible that in spite of the market realities that China’s leadership is likely to continue seeking guaranteed access and exclusive control over foreign oil resources.   

China has witnessed economic sanctions imposed under US leadership on Serbia, Iraq, Iran, North Korea, and Cuba. China also experienced the negative effects of the temporary reduction in economic assistance and benefits imposed by the United States, Japan, and other countries after the Tiananmen massacre.   For the Chinese regime, the best way to avoid the potential of future economic denial may be an extensive program combining geopolitical influence building and geoeconomic positioning. It has been seeking positions of dominance and political influence such that no major power would consider denying China the resources that it considers vital for the functioning of its economy and society. Examples of this include China’s systematic efforts to have positions of potential control on a number of key international shipping routes such as its South China Sea claims, its naval bases in Myanmar/Burma, its control of ports at both ends of the Panama Canal, and its control of major port facilities in the Bahamas, Rotterdam and the Suez Canal. (See map 1 following) 

With these perspectives in mind, we now turn to a discussion of China’s geostrategy and energy needs in five regions of the world.  

I. South China Sea/ “First Island Chain of Defense”

Since 1992, China has again explicitly declared the South China Sea to be its sovereign territory, although these are international waters with vital sea-lanes. To enforce its offshore territorial claims, China has occupied disputed islands by force which has involved threats against the Philippines, Japan, Vietnam, and Indonesia.

There are two main island groups in the South China Sea: the Paracel Islands are in the northern part, about 200 miles from the coast of Vietnam and they are claimed by Vietnam as well as by China.  The Spratly islands are spread through the southern part of the South China Sea and include about 100 small islets, sand bars, reefs, and rocks, comprising a total area of no more than 1.8 square miles in a vast ocean. [16]   While China claims all the Spratly islands, they are also claimed by Vietnam, which currently occupies 27 of the 100; the Philippines, which occupies 8, Malaysia which occupies 3; Taiwan which occupies 1, while China currently occupies 7 [17] .  To date, there has been no definitive international arbitration of these competing claims. 

In February 1995, the Philippines revealed that one of the Spratly Islands, named Mischief Reef, which was 150 miles from its island of Pelawan, and nearly 1000 miles from mainland of China, had been occupied by China. In May 1995 the Clinton Administration privately told the Philippines not to invoke the mutual defense treaty. Instead the US urged diplomacy and officially stated that it has:

...an abiding interest in the maintenance of peace and stability in the South China Sea.  The United States calls upon claimants to intensify efforts to address issues related to competing claims, taking into account the interest of all parties and which contribute to peace and prosperity in the region.  The United States is willing to assist in any way the claimants deem helpful.  The United States reaffirms its welcome of the 1992 ASEAN declaration on the South China sea”. [18]  

That formal pronouncement by the Department of State was ignored by China. In turn, the United States mostly ignored China’s further aggressive actions.  

Yet, the May 1995 U.S. statement provides a preview of possible conflict with China in addition to that which might occur about Taiwan.  The United States totally rejected the Chinese claim of sovereignty over the South China Sea and said further:

Maintaining freedom of navigation is a fundamental interest of the United States.  Unhindered navigation by all ships and aircraft in the South China Sea is essential for the peace and prosperity of the entire Asia-Pacific region, including the United States … The United States would … view with serious concern any maritime claim or restriction on activity in the South China sea that was not consistent with international law…. [19]  

Testifying to the U.S. Congress in March 2000, the then Commander in Chief of US Forces in the Pacific, Admiral Dennis C. Blair, said that in addition to their Taiwan claims, “Chinese authorities have also claimed sovereignty over the South China Sea.  The resulting uncertainty over Chinese intentions in using force to resolve territorial claims creates concerns throughout the Asia Pacific region”. [20]

The effect of continuing acquiescence in these Chinese claims and actions could be to cede China de facto control over the islands in the South China Sea.  China could then use the sovereign rights under international law over waters extending to twelve miles from land boundaries and the economic exclusion zone of 200 miles from the land border recognized under the 1982 United Nations Law of the Sea in order to essentially establish large domains of sovereign control from the many Spratly islands and Paracel islands that might in effect give it operational or economic control over much of the South China Sea.

Map 1: Vital Sea Lanes [21]

China has acted and spoken in a tone of belligerent entitlement in pressing its claims in the South China Sea and to the Paracel and Spratly islands.  China has used force and has made clear that it is willing to use more force in the future if the other claimant countries fail to acquiesce in China’s purposes. Control of the South China Sea would facilitate China’s dominance of Asia, since US ships and aircraft as well as those of Japan, South Korea and other countries would have to have Chinese permission to transit the South China Sea, a major supply and transit route.  It is estimated that 50% of world commerce and more than 41,000 ships annually transit the South China Sea (in comparison with about 4,000 ships transiting through the Panama Canal each year). [22] If China controlled the South China sea it could decide which country’s ships could transit and which could not, and thereby it would have a means to exert political pressure on Japan, South Korea, and other countries in the region that depend on supplies moving through the South China Sea for their energy and commercial deliveries. Energy and other supplies could be transported around the South China Sea but this would increase costs. [23]

Such a coercive use of control over the South China Sea would be consistent with the new Chinese geopolitical doctrine of the “first island chain of defense”. This was advanced as a strategic concept in the 1990’s by General Liu Huaqing, a close associate of Deng Xiaoping, Vice-Chairman of the Central Military Commission and member of the Politburo elite until his retirement in 1997.  The first island chain of defense doctrine holds that to be secure China needs to control the entire region off its shores in a line from Japan to Taiwan and the Philippines [24] . 

In addition to this geopolitical purpose, dominance over the South China Sea and other adjacent waters could help China meet its future energy needs. Current estimates are that there could be 8 billion barrels of oil beneath the waters of the South China Sea within the internationally recognized exclusive economic zone of China. This could mean large additional energy resources in the entire South China Sea. The following table summarizes the estimated 29 billion barrels of oil within the recognized Chinese Economic Exclusion Zones within the four adjacent seas. In all these situations it is probable that large additional reserves also exist under waters claimed by Japan and other regional states within their economic exclusion zones.

Table 2: China Offshore Oil Resources [25]

Domestic holding	Proven/Reported Reserves
South China Sea (including the Taiwan Strait)	8 Billion Barrels
Yellow Sea	4.5 Billion Barrels
Bohai Gulf	4.5 Billion Barrels
East China Sea	12 Billion Barrels

 

II. Central Asia

The unraveling of the Soviet Union in 1991 opened new opportunities for China to establish relations with the newly independent-post Soviet States of Central Asia. Year by year, but gradually and carefully, China expanded its political economic relations with the Central Asian states directly on its border and continued the talks it had been conducting with the USSR on the demarcation of those borders. By 1995 China had begun a regular series of summit meetings with the leaders of Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, and Tajikistan.

In 1996, Russia was invited to join in these gatherings usually held in Shanghai and then in June 2001, the presidents of China, Russia and four Central Asian states established a political-security alliance which they named the Shanghai Cooperation Organization and which President Jiang Zemin called the “Shanghai Pact”.  This alliance treaty includes: political, economic, and security htmects.

China’s purposes in establishing this alliance included:

1/ an effort to assure normal and friendly relations with states on its borders for security reasons;

2/using these relations to bring Russia closer to its geopolitical purposes while also reassuring Russia;

3/and, increasing access to and the security of its energy supplies from Central Asia as well as from the Middle East.

The proposed energy pipeline from Kazakhstan will transit directly into China. In addition, the proposed overland pipeline from Iran to China would first traverse Central Asia. (see the following map)

Map 2: Proposed Central Asian Pipelines [26]

III. The China Russia Alliance

The relationship between Russia and China went from alliance in the 1950s to deep hostility from 1960 to 1985 followed by gradual normalization during the Gorbachev years. After 1991, Yeltsin continued talks on defining the 2,000-mile border but kept a political distance because China remained communist, had publicly endorsed the 1991 coup attempt by Soviet communist hardliners and also opposed Yeltsin’s democratic htmirations.

However, in April 1996, Yeltsin changed this policy and at China’s urging agreed to a “strategic partnership” with China.  This meant foreign policy cooperation and increased Russian weapons sales. Through a series of regular summit meetings, China moved the “partnership” with Russia toward strategic alignment marked by an ever larger component of shared anti-US political objectives (e.g. support for dictatorships in Serbia, Iraq, Iran, and opposition to US missile defenses) along with increased Russian military sales and military cooperation.

In July 2001, Presidents Putin and Jiang signed a treaty of alliance, which formalizes and expands Chinese-Russian strategic coordination. While the treaty states that it "is not aimed at any third country," it explicitly seeks to promote a "new international order." This is the phrase China and now Russia use to describe international politics when the United States no longer has or seeks what they have jointly called "unilateral military and security advantages."

China-Russia: their two-level strategy toward the US

After the terrorist attack on the US of September 11, 2001, Russia provided extensive and welcome cooperation as the US moved in Afghanistan against international terrorists who were also arming groups attacking Russia and to a lesser extent China.  China also provided some modest cooperation, though it was and remains extremely concerned about US force deployments in Central Asia. 

Nevertheless, China and Russia have continued to pursue a two-level strategy toward the United States.  First, the two countries maintain a sense of normal relations with the United States and other democracies so that they will continue providing China and Russia with vitally needed economic benefits.  For example, since 1992 Russia has received more than $150 billion in US, western and international economic aid; from 1990 to 2002 China obtained more then $1.4 trillion in economic benefits from the US, EU, and Japan.

At the second level, Russia and China are using mostly political and covert means to oppose the United States selectively on security issues including by providing support and weapons of mass destruction/ballistic missiles components and expertise to hostile regimes which the US judges to be state sponsors of terrorism such as Iran, Libya, and North Korea. [27]   

Other negative htmects include: Russia’s continued sales of advanced weapons to China, which aims these at U.S. forces in the Pacific – since 1998 about $18 billion have already been sold with an estimated $20 billion more scheduled through 2004. And the political and military-to-military relationship with communist China is strengthening authoritarian trends within Russia.

China has pursued the new relationship with Russia in an effort to bring Moscow to its side on as many issues as possible while moving Russia away from the United States. It has also seen the new alliance with Russia as a means to have access to Central Asian and Russian energy supplies. For example in July 2001 President Putin and Jiang signed an agreement on the establishment of a 600,000 barrels a day oil pipeline between Russia and China.(which has yet been realized) [28] Russia with 49 billion barrels in oil reserves (2002) could be an important energy supplier for China. 

Beginning in October 2002, Japan began buying Russian oil for the first time since 1978, and offered to finance the building of a pipeline to the Russian port of Nakhodka for exports of Russian oil and gas to Japan. Discussions continued in 2003, concerning a Russian pipeline for energy exports to both Japan and China. Then, on June 20 2003, Russian President Vladimir Putin said he “would prefer Russia built an oil pipeline to the Pacific coast near Japan over a proposed link to China… [Putin] added he considered the project more flexible than a pipeline ending in Daqing, China.” [29]

Liu Hongbin, a director general of the Chinese company's publicly traded unit, PetroChina, said “The Daqing route has definitely been delayed. Now, we have to see how Russia wants to proceed with this project”. [30] This after a July 2003 visit by Japan's Agency of Natural Resources and Energy with promises of not only financing a potential pipeline but also assisting in the development of Siberian Oil fields. [31]

On September 24th 2003, the Russian Prime Minister announced that Russia will “honor the agreement on establishing a pipeline to Daqing for China”. [32] This announcement came on the eve of the China- Russia bi-lateral summit followed by the meeting of the Shanghai Cooperation Organization. Nevertheless, at the October 2003 APEC summit meeting Japan “offered a financial package worth US$7 billion dollars in assistance for Russia in return for the oil pipeline being used to provide oil for Japan. [33] This competition between China and Japan for access to Russian energy supplies has not yet been resolved and undoubtedly increases China’s interest in securing guaranteed access to oil in other regions. 

IV. The Middle East

In 1998, China imported 61% percent of its oil, from the Middle East, a proportion that is expected to rise to as high as 80% by 2010. [34] The following table indicates the amounts supplied to China by various Middle Eastern Countries in 2002.

Table 3: Chinese: Oil Sources in the Middle East [35]

Countries	Volumes 1,000 b/per day	Reserves in Billions of Barrels
Saudi Arabia	245	261.7
Kuwait	23	96.5
Iran	229	89.7
Oman	173	-
Iraq	12	112.5
Qatar	10	-
Yemen	49	-
Total:	741	560.4

            Clearly China has the economic means to purchase oil from responsible Middle Eastern countries. However, for geostrategic reasons as well as to have preferential access to energy supplies China has established very close relations with terrorist sponsoring countries such as Iran, Libya, and formerly, Saddam’s Iraq

Iran and Saddam’s Iraq

China’s current imports from Iran are about 229,000 barrels per-day but it intends to increase this significantly once the over land pipeline through Central Asia has been completed. After opposing Iran’s development of nuclear weapons, Japan lost the exclusive right to develop the new Azadegan field in Iran which is now being opened up to European and Asian firms including Chinese firms. [36]

In 1980, Iraq invaded Iran and began an eight year long conflict which caused two million dead and wounded on both sides.  In that war, both sides attacked with short-range ballistic missiles and sought to develop nuclear, chemical, and biological weapons for use against the other. 

China sold weapons to both Iran and Iraq during and after the war. These military sales by China provided hard currency earnings for the Chinese military industrial complex and a means of developing close relations with two oil-rich dictatorships, which could help to meet China’s oil, needs in the present and future.  Both Iran and Iraq wanted to develop increasingly destructive weapons for mutual deterrence or battlefield use if another war should occur.  They were also both hostile to the United States and its allies in the region. 

In 1990 Iraq invaded Kuwait. The United States led a broad coalition in 1990-91 to enforce UN Security Council resolutions requiring Iraq to withdraw from Kuwait.  This meant that the United States and several of its NATO allies had to face the possibility of dealing with an opponent that might use chemical, or biological weapons as well as ballistic missiles. 

In 1997 the Office of Naval Intelligence stated: “discoveries after the Gulf war clearly indicate that Iraq maintained an aggressive WMD [weapons of mass destruction] procurement program.  A similar program exists today in Iran, with a steady flow of materials and technologies from China to Iran.  This exchange is one of the most active WMD programs in the third world …” [37] .  In succeeding years, the public congressional testimony of the Director of Central Intelligence, and the Director of the Defense Intelligence Agency indicated that China and Russia continued the active proliferation of weapons of mass destruction technology, expertise and components to a number of hostile and potentially dangerous countries including Iran, Iraq, and North Korea [38] .

Although the Saddam Hussein regime in Iraq did fire a number of ballistic missiles in 1991, it was deterred by threats of massive retaliation from using chemical or biological warheads.  But the fact that 400,000 US and allied troops had faced this threat for many months added impetus to the expressed policy of the first Bush administration that preventing the spread of these weapons of mass destruction and the means to deliver them was one of the highest priority concerns of US foreign policy. 

As China shifted in 1990 to the view that the United States was its “main enemy”, it viewed the sale of components for weapons of mass destruction and the sale of technical assistance in building these to Iran, Iraq, North Korea, Syria, Libya and other states hostile to the United States, as not only financially profitable but also a way to strengthen the enemies of its “main enemy”.  During the 1990s a great deal of government information became public in the United States about first Chinese and then later Chinese and Russian activities in transferring weapons of mass destruction to the main state sponsors of terrorism [39] . 

During the 1990s and since, China has provided Iran with ballistic missile components as well as air, land and ship-based cruise missiles.  By 2001, the Director of DIA, testified that “ these along with Iran’s submarines, mines, and missile patrol boats can attack ships including US naval forces in the Middle East “and stem the flow of oil from the [Persian Gulf] for brief periods” [40] .  China also sent Iran key ingredients for the development of nuclear weapons, poison gas production ingredients; rocket propellants, and a “research” nuclear reactor.  The CIA noted that in 1999 Iran “continued to seek production technology, training, expertise, and chemicals that could be used as precursor agents in its chemical warfare program from entities in Russia and China” [41] .

In 2001, the newly inaugurated Bush Administration publicly accused Chinese organizations of breaking UN Security Council prohibitions by providing advanced fiber optics support for the military command and control systems of Iraq [42] .  During the 1990s, China reportedly provided ingredients that Iraq used for nerve gases, missiles and nuclear weapons, and China also sold Iraq chemicals that are used to produce missile fuel [43] .  There had been no United Nations inspection of Iraq since the autumn of 1998 when Saddam Hussein refused to cooperate any longer with the inspection system that had been set up under the terms of the UN Security Council Resolutions.  As permanent members of the Security Council, China and Russia colluded to undo the inspection regime and to delay its resumption until November 2002. 

The US lead liberation of Iraq in 2003 ended most risks posed by that régime. However, Iran continues as the leading state sponsor of terrorism and is moving rapidly toward acquiring nuclear weapons.  China continues to provide political and military support to that clerical dictatorship for both strategic and energy related reasons. 

V Latin America

There is an emerging pro-Castro axis in Latin America which has largely escaped public and official notice. China is not the cause of this trend, but it is a close political and military ally of the Castro régime in Cuba which is working with its allies in the region to bring this about. The following chart summarizes my perspective that the pro-Castro axis now includes four countries with a combined population of 223 million which also produce 5 million barrels of oil daily and have an estimated 84 billion (2000) barrels in reserve. The table also shows other countries risk. 

 

 

 

 

 

 

Table 4: South America: The New Pro-Castro Axis and Countries at Risk

During the 1990’s, China established ever closer political and military relations with the Cuban régime including a military accord in 1999 and obtained facilities for espionage against the United States and other targets on Cuban territory. For China the primary benefit of this emerging pro-Castro axis is to weaken and distract the United States as it faces partially hostile governments on its southern border. In addition however, as régimes friendly to Cuba and China take control of countries with significant energy resources-such as the Chavez regime in Venezuela, China can expect to have preferential or guaranteed access to those energy resources.     

A New Castro Strategy

Since 1959, the Castro regime in Cuba has been using political means as well as covert action, terrorism and insurgency to bring anti-US, radical regimes to power in the Western Hemisphere and other regions. 

In 2002, a high level defector from Cuban intelligence wrote, “Cuba’s espionage apparatus (the DGI), one of the largest and most efficient on the planet, with more than 10,000 spies, has been active on a global scale.  The DGI rapidly [learned] … undercover operations …, cryptography, falsification of documents, training of operatives, theft of secret information, [establishing] illegal centers, the penetration of governments and armed forces, disinformation, assassination of political figures …” [44] .

Furthermore, Cuba trained more than 30,000 terrorists from various continents of which 10,000 were from Latin America, with the rest being operatives from the Middle East and Europe [45] .  Castro’s terrorist/insurgent methods mostly failed in Latin America, except in Colombia where the threat from the communist insurgency continues and has increased.   However, the 10,000 DGI personnel and many of the 30,000 Cuban-trained terrorists provide the cadre for Castro’s new strategy.  

Castro’s intentions have not changed since 1959, or since the end of the Cold War.  In 2001, during a visit to Iran, Castro said “The people and the governments of Cuba and Iran can bring the United States to its knees” [46] .  In 1990, Castro initiated the Forum of Sao Paulo with Lula da Silva as its chairman.  This organization is a successor to Castro’s Tricontinental Congress which, beginning in 1966, increased collusion among terrorist organizations from Latin America, the Middle East and Europe.  The Forum of Sao Paulo also convenes all the communist parties and terrorist organizations of Latin America, along with terrorist organizations from the Middle East and Europe, as well as representatives from Iraq, Libya, North Korea, China, Laos, and Vietnam.  (See list at Appendix B)

The main theme of the First (1990) and Fourth (1993) annual meetings of the Forum of Sao Paulo was that “our losses in Eastern Europe will be offset by our victories in Latin America” [47] .  This was an explicit indication of its solidarity with communist regimes and of Castro’s future intentions, which in fact are being realized. 

Participants at the 2001 Forum meeting in Cuba and the December 2002 meeting in Guatemala included communist and radical parties from nearly every state in Latin America - including the Worker’s Party of Brazil and Chavez’s MVR of Venezuela; Latin American terrorist groups like the FARC, ELN, MIR, M19, Tupac Amaru and global terrorist groups like the IRA, ETA, and Popular Front for the Liberation of Palestine – General Command.  In December 2002, as in most past years, there were representatives from supportive regimes such as Saddam Hussein’s Iraq, Libya (both of which have had connections to Cuba and its allies during and after the Cold War) and the communist regimes of North Korea, Laos, Vietnam, and China. [48]

During the 1990s, Castro decided on a new strategy: helping radical political leaders friendly to him take control of their countries by winning national elections in which they present themselves as “populists”, opposed to corruption, while concealing their ultimate purposes.  This new Castro method has four components:

1.      Providing propaganda and political support openly and covertly to radical, pro-Castro leaders, not officially members of any communist party, who would run for the presidency of their countries.  They would avoid Marxist-Leninist rhetoric and instead favor “populism” and oppose “neoliberalism”, expressing the Castro ideological agenda in more neutral terms, 

2.      These pro-Castro, democratically elected presidents would then use the Chinese communist approach of pursuing a two-level international strategy.  One level would involve normal relations with all countries and with foreign and especially US economic interests. They would favor international trade and business relations and encourage foreign investment, all of which would both provide useful income for the regime and assure a friendly voice about it from the foreign business and international financial community;

3.      At the second level, while professing to seek “good relations with all countries”, these radical pro-Castro presidents would seek to help other pro-Castro groups take power by working with radical or communist political and armed groups in Latin America such as the FARC, ELN, and others in the Forum of Sao Paolo; with state sponsors of terror such as Cuba and Iran as well as with communist regimes like China and North Korea.

4.      Step by step, these pro-Castro presidents would use pseudo-constitutional means to consolidate their rule internally and make it irreversible.

Chinese Activity in Latin America

Communist China and Cuba formalized their growing relationship with a military agreement in 1999. In the same year, Lula da Silva’s Brazilian Worker’s Party formalized party-to-party relations with the Communist Party of China. 

In Late 2000, China and Venezuela established a close military relationship that has expanded since.  In the last two years, reports of Chinese military personnel in Venezuela have become more frequent. 

Soon after Lula da Silva took office in July 2003 as president of Brazil, the Chinese-Brazilian strategic and military relationship grew, with a permanent Chinese military staff arriving in Brazil shortly after inauguration.

Other forms of cooperation have increased simultaneously.  Lula declared a “strategic partnership” with China in May 2003.  Since then, Brazil has undertaken to forge relations with China through Mercosur, the G-22 and in partnerships involving satellites and aerospace technology transfers to China.

The President of Ecuador, Col. Lucio Gutierrez, is a part of the Pro Castro Axis and made a state visit to China in September 2003. Ecuador and Venezuela have completed oil deals with Chinese Oil Company SINOPEC and the Chinese government.

VI Policy Suggestions –Realistic Engagement

For nearly a quarter century US policy towards China has been one that can be termed “unconditional engagement” The hope, repeated by presidents of both major political parties was that free trade would bring political freedom to China and lead to its becoming evermore cooperative internationally.

This has not occurred and since 1990 China has both again defined the US as its “Main Enemy” and has used the increased wealth from its one sided unfair trade with the US and other democracies to support an ever expanding military and a strategy which can be called one of domination through stealth.

This requires realism and prudence on the part of the US. The US should pursue a strategy of "realistic engagement" with China which would include the following:

1.      strengthening defensive alliance relationships with friendly countries in Asia,

2.      deploying Asian regional missile defenses and a U.S. national missile defense;

3.      opposeing the use of force and coercion by China in all of its territorial disputes including that with Taiwan;

4.      a policy of strict reciprocity in trade, which permits China, with its restricted market access, to sell only as much in the U.S. market as the U.S. may sell in China unless China ceases its strategic nuclear buildup, its proliferation of weapons of mass destruction, and implements the human rights commitments to which it has obligated itself, 

5.      the US should consider multilateral agreements which would provide China reassurance for its future access to energy supplies under normal market conditions provided that the conditions stated in item 4 are met.

It should be understood and communicated to China that there are enough energy supplies for all countries and that reasonable projections to 2025 indicate total world energy capacity of 125 mbpd and total world wide demand of 119 even without considering the 280 billion barrels of sand based oil which will be come available in Canada as a result of new extraction technologies. A peaceful and cooperative China would be assured of adequate energy resources for the future.  

Appendix A: Oil Production and Demand History and Projections

Oil Production Capacity [49]

Region/Country	History (Estimates)		Projections
	1990	2001	2005	2010	2015	2020	2025
Total Persian Gulf	18.7	22.4	24.5	28.7	33.0	38.9	45.2
Total OPEC	27.2	32.6	35.1	40.7	46.3	53.9	61.8
Total Non-OPEC	42.2	46.6	49.1	53.2	57.0	59.6	62.7
China	2.8	3.3	3.5	3.6	3.5	3.5	3.4
Total World	69.4	79.2	84.2	93.9	103.3	113.5	124.5

Oil Demand [50]

Region/Country	History			Projections
	1990	2000	2001	2005	2010	2015	2020	2025
United States	17.0	19.7	19.6	20.5	23.0	25.2	27.1	29.2
Western Europe	12.5	13.8	14.0	14.1	14.4	14.6	14.8	15.3
Japan	5.1	5.5	5.4	5.5	5.8	6.1	6.3	6.5
Total Developed Nations	38.8	44.1	43.9	45.6	49.3	52.9	55.8	59.3
Eastern Europe Former Soviet Union	10.0	5.2	5.3	6.1	6.8	7.2	7.9	8.8
China	2.3	4.8	5.0	5.5	6.5	7.7	9.4	10.9
India	1.2	2.1	2.1	2.3	2.8	3.5	4.5	5.5
Total Developing Nations	17.3	27.6	27.9	29.4	33.5	38.7	44.5	50.7
Total World	66.1	76.9	77.1	81.1	89.7	98.8	108.2	118.8

Appendix B: Members of the Forum of São Paulo

Nation	Party
Argentina	Frente Democracia Avanzada
Argentina	Partido Comunista Argentino
Argentina	Partido Intransigente
Brasil	Partido dos Trabalhadores
Brasil	Partido Socialista Brasileiro
Brasil	Partido Comunista do Brasil
Brasil	Movimento Revolucionário 8 de Outubro
Brasil	Partido Popular Socialista
Colômbia	Alianza Democrática M19
Colômbia	ELN
Colômbia	FARC-EP
Colômbia	Partido Comunista Colombiano
Colômbia	Presentes por el Socialismo
Cuba	Partido Comunista
Chile	MIR
Chile	Partido Comunista de Chile
Equador	Movimiento Popular Democrático
Equador	Partido Socialista - Frente Amplio
El Salvador	FMLN
Guatemala	URNG
México	Partido de la Revolución Democrática
México	Partido del Trabajo
Nicarágua	FSLN
Porto Rico	Partido Independentista Puertorriqueño
Porto Rico	Nuevo Movimiento Independentista Puertorriqueño
Porto Rico	Frente Socialista
Panamá	Partido Revolucionário Democrático
Peru	Movimiento Revolucionario Tupac Amaru
Peru	Partido Comunista Peruano
República Dominicana	Alianza por la Democracia
República Dominicana	Fuerza de la Revolución
República Dominicana	Movimiento Izquierda Unida
República Dominicana	Partido de los Trabajadores Dominicanos
Uruguai	Frente Amplio
Uruguai	Partido Comunista
Uruguai	Partido Socialista de Uruguay
Uruguai	Movimiento de Participación Popular
Uruguai	Partido Obrero Revolucionario Trotskista-Posadista
Venezuela	Partido Comunista de Venezuela

[From Forum of São Paulo Website, Jan 2003, Bold are armed terrorist groups]

Members not listed on Website

Venezuela	MVR Fifth Republic Movement; joined in 1995
Bolivia	MAS (Movement to Socialism of coca grower Evo Morales)
Ecuador	Movements associated with Lucio Gutierrez

Observer Delegations

China	Chinese Communist Party [51]
North Korea	Korean Worker’s Party
Vietnam	Vietnamese Communist Party
Laos	Laoatian Communist Party (Pathet Lao)
Germany	Party of Democratic Socialism [former East German Communists]
Spain	ETA
Ireland	Provisional IRA
Palestine	PFLP-General Command
Palestine	Palestinian Liberation Organization
Libya	Unknown Government/Ruling Party officials
Iran	Unknown Government/Ruling Party officials
Iraq	Baath Party
Soviet Union	[Sent representatives in 1990] [52]

[Bold are communist regimes, state sponsors of terrorism or terrorist organizations]