Middle East Economic Survey
VOL. XLIX
No 51
18-Dec
REGIONAL/CASPIAN
Energy Security Ties Between East Asia And Central Asia: Power Games Or Partnership
By Tatsuo Masuda
The following is the text of a speech delivered by Professor Tatsuo Masuda to a colloquium at Columbia University on 30 November/1 December. Professor Masuda is: Director, Member of the Board, SOC Corporation; Professor, Tokyo Institute of Technology (SIMOT); and Visiting Professor, University of Paris-Dauphine (CGEMP). He is also a former Vice President of Japan National Oil Corporation.
In the autumn of 1996, I visited China as a member of the International Energy Agency (IEA) delegation, then, as the Director responsible for oil markets and security. I still recall my conversation with a young Chinese gentleman. We met in a reception and discussed Chinese energy security. He surprised me by saying that he was studying the feasibility of an oil pipeline from Kazakhstan to China. He added that it was his dream. At the time, I called this “a silk road pipeline”, which sounded very romantic but not realistic.
Today, this pipeline has become a reality. China and Kazakhstan first held talks on this pipeline project in 1997, but it did not move forwards until a Russo-China pipeline plan fell off the table around 2003 due, perhaps, to the intervention by Japan. The Kazakh-China oil pipeline construction started in September 2004. The first phase was completed in December 2005 (960km), and the total pipeline will be completed by 2011, stretching over 3,000km. Currently, nearly 70% of Kazakh oil is exported through Russia, therefore, this pipeline will contribute to diversifying the outlets of her oil. Very interestingly, Rosneft and Lukoil reportedly expressed their interest in sending oil to China through this pipeline. If things go well, this could be a symbol of powerful energy cooperation among Russia, Kazakhstan and China, which may have certain geopolitical implications.
In parallel with this, a gas pipeline project is ongoing. In August 2005, KazMunaiGaz and China National Petroleum Corporation (CNPC) signed an agreement to construct a gas pipeline from Kazakhstan to China, the route of which is yet to be determined.
Russia-China Cooperation
Russo-China cooperation has had some ups and downs. In 1998, Yukos and CNPC planned to build a 2,260km-long oil pipeline from Angarusk to Daqing. However, Japan intervened in this pipeline game in 2002. After the summit meeting between Prime Minister Koizumi and President Putin in January 2003, the Russian government decided on a 4,200km-long pipeline from Angarsk to Nakhodka with a spur to Daqing. The order of pipeline construction was reversed from “China first” to “Pacific Coast (Japan) first”. However, two years later, in April 2005, the Russian government announced the two-staged construction of the pipeline, Tyshet to Skovorodino (near Daqing), then Skovorodino to Prevoznaya (next to Nakhodka). The second stage is conditional on the development and production of enough oil to justify pipeline economy. This represents another reversal of the order from “Japan first” to “China first”. Those reversals may well reflect the consideration of Russia to strike a balance between “economic interest with Japan” and “strategic interest with China”.
Interestingly enough, Japan hosted “The Central Asia Plus Japan Dialogue” in June 2006 in Tokyo by inviting Foreign Ministers from Central Asia including Turkmenistan. Afghanistan also participated as an observer. The Yomiuri newspaper suggested in its editorial of 7 June 2006 that Japan should play a strategic role in the Great Game of the 21st Century. Such efforts were followed by Prime Minister Koizumi’s visit to Kazakhstan in late August.
I want to shed light on those developments from one particular aspect, and pose the question: should we regard these developments as a “New Great Game” or not? Indeed, in the Great Game of the 19th and the early 20th Century, the British Empire and the Russian Empire played power games over supremacy in Central Asia. Today, the participation of China has given it a completely a new dimension. Even Japan, which used to be rather hesitant or too careful to play power games as such, has jumped in.
But, if we are obsessed with the perception of a “Great Game”, an old fashioned notion of the past, it will lead us to ugly rivalries among big powers (such as Russia, China, US and Japan). We have had more than enough of those in the preceding centuries.
New Concept Of Partnership
What is needed today is a new concept, which should be shared with not only players (big companies and governments) but also with the media, which influences shaping of various perceptions. Let me draw your attention to the remarks made by a very interesting person from Kazakhstan. Quite recently, I had an opportunity to talk with HE Erlan Idrissov, Ambassador of Kazakhstan to the UK and the former Foreign Minister. I asked him if the New Great Game could produce a win-win situation or whether Central Asia would become the playground for big powers. He said something very thoughtful: “We have to go beyond an old concept of game. Any game, whatsoever, produces the winners and the losers. There is nothing like a win-win situation coming out of games. What is needed is the concept of partnership rather than game.”
I share the worries with Ambassador Idrissov and fully support his call for “partnership”. If players continue to compete against each other as they did in the past, there will be more risks than opportunities. A good example would be the East Siberian Oil Pipeline. As mentioned earlier, Japan participated in the game, and the Russian decisions on the construction of the pipeline changed to “Japan first”, then to “China first”. While the Russian government was talking in favor of Japan, there were important strategic and military developments between Russia and China. In December 2003, the two governments signed a defense cooperation protocol involving $2bn worth of arms and technologies purchased by Beijing from Moscow. In October 2004, they solved the remaining border conflicts completely. And in August 2005, the two countries had the joint military exercises involving army, navy and air force in Shantung Peninsula, China. In my reading, this is a typical tripartite power game, which will not necessarily lead to a win-win situation.
I watched these developments carefully and thought to myself: “What if China and Japan had cooperated from the beginning?” The cooperation would have diminished the room for Russia to play the game with the two countries. Such rivalry helped aggravate their bilateral relations, which had already deteriorated due to the Yasukuni Shrine issue and the East China Sea Gas dispute, generating uneasy tension in East Asia. We could learn lessons from this living example.
If the spirit of “partnership” prevails, Eurasian pipelines will enhance the “energy supply security” of East Asia, and enhance “energy demand security” of Central Asia. If not? I will leave the conclusion to you.