Challenged Hegemony: The United States, China, and Russia in the Persian Gulf

Stanford University Press

Stanford, California

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Library of Congress Cataloging-in-Publication Data

Names: Yetiv, Steven A., author. | Oskarsson, Katerina, 1983- author.

Title: Challenged hegemony : the United States, China, and Russia in the Persian Gulf / Steve A. Yetiv.

Description: Stanford, California : Stanford University Press, 2018. | Includes bibliographical references and index.

Identifiers: LCCN 2017015746 (print) | LCCN 2017017047 (ebook) | ISBN 9781503604261 (ebook) | ISBN 9781503602878 (cloth : alk. paper) | ISBN 9781503604179 (pbk. : alk. paper)

Subjects: LCSH: Persian Gulf Region—Foreign relations—United States. | United States—Foreign relations—Persian Gulf Region. | Persian Gulf Region—Foreign relations—China. | China—Foreign relations—Persian Gulf Region. | Persian Gulf Region—Foreign relations—Russia (Federation) | Russia (Federation)—Foreign relations—Persian Gulf Region. | Hegemony—United States. | Petroleum industry and trade—Persian Gulf Region.

Classification: LCC DS326 (ebook) | LCC DS326 .Y485 2018 (print) | DDC 327.536—dc23

LC record available at https://lccn.loc.gov/2017015746

Typeset by Bruce Lundquist in 10/14 Minion

CHALLENGED HEGEMONY

The United States, China, and Russia in the Persian Gulf

Steve A. Yetiv

Katerina Oskarsson

Stanford University Press

Stanford, California

Contents

Figures and Tables

Acknowledgments

Abbreviations

1. Introduction

Part I: The United States in the Persian Gulf

2. The United States and the Global Oil Era

3. A New Security Framework

4. The United States, Economics, and Energy

Part II: The Role of China and Russia

5. China’s Steep Ascent in the Persian Gulf

6. Global Oil and China’s Economic Penetration

7. Russia: From Cold War to the Modern Era

8. Russia’s Trade and Energy Shift

Part III: The United States, Changing Dynamics, and Oil Security

9. How America, China, and Russia Have Changed

10. The Rise and Not Fall of Oil Security

11. The Travails of Hegemony: A Classic Problem

12. Conclusion

Notes

Index

List of Figures and Tables

Figure 2.1. Persian Gulf Oil Imports, United States versus China, 1994–2015

Figure 3.1. U.S. Arms Sales to the GCC States, 1980–2012

Figure 4.1. Total Trade between the United States and the Persian Gulf States, 1985–2015

Figure 4.2. U.S. Crude Oil Imports from the Persian Gulf, 1973–2015

Figure 4.3. U.S. Oil Imports from the Persian Gulf as a Percentage of Total U.S. Oil Imports, 1973–2015

Figure 6.1. Total Trade between China and the Persian Gulf States, 1992–2015

Figure 6.2. Saudi Arabia’s Oil Exports to China and the United States, 2000–2014

Figure 8.1. Total Trade between Russia and the Persian Gulf States, 1981–2015

Figure 9.1. China and Russia: Arms Trade with the Gulf States, 1988–2011

Figure 9.2. External Arms Sales to the Persian Gulf States, 1988–2011

Figure 9.3. Total Chinese, American, and Russian Trade with the GCC States, 1992–2015

Figure 9.4. Total Chinese, American, and Russian Trade with Iraq, 1992–2015

Figure 9.5. Total Chinese, American, and Russian Trade with Iran, 1992–2015

Figure 9.6. Total Trade between Russia and the Persian Gulf States, 1981–2015

Table 3.1. U.S. Foreign Military Sales Agreements to the Persian Gulf States

Table 9.1. Relative Economic Capability of Iran, Iraq and Saudi Arabia

Table 9.2. The Regional Military Balance

Acknowledgments

We thank the dozens of people who provided input for this book over the past decade. If there are any errors in the book, we would like to blame them for it. Kidding aside, their contributions were invaluable, as were those of the external reviewers. We also thank Stanford University Press and its staff for managing this project deftly.

Abbreviations

1

Introduction

NO ISSUE IN WORLD AFFAIRS garners greater attention than the global role and position of the United States, and few regions dominate global headlines more than the Middle East. We address both subjects, America and the Middle East, within the context of a broader exploration into what it means to be a great power in world affairs.

From foreign capitals to local coffeehouses, opinions abound about the current and future state of the United States, especially compared to now-and-then rivals such as China¹ or Russia.² It has been hard to escape the pessimism about America’s trajectory in world affairs. Summing up the views of a large number of scholars, Amitav Acharya, former president of the International Studies Association, asserted that the age of global dominance by any single power as the world has previously experienced under Britain, then America, is over.³ While some scholars challenge the notion that America is in eclipse,⁴ even some optimists wonder about the durability of its position.⁵

Yet while many observers think U.S. capability is in decline at the global level, that is not what our data and analysis reveal regarding the Persian Gulf. We find that American capability, which should not be conflated with influence, has increased significantly in the past few decades at the military, economic, and political levels, with some important qualifications. Despite many challenges, America is a hegemon inasmuch as it has predominant capabilities toward and in the Gulf that are unavailable to other states in their entirety.

However, we move beyond the question of U.S. capability in the oil-rich Persian Gulf in this book. We also seek to understand what American hegemony really means. What does being the strongest actor yield in the complex and unpredictable circumstances of world affairs? We do not make broad claims here but focus instead on the question of what American hegemony means for global oil security.

To be sure, the Middle East often appears to be highly unstable, and in many cases it is, such as in Syria and Libya, but we argue that the rise of American hegemony in the Persian Gulf in particular over the past several decades has, contrary to conventional views, increased oil security. The story is far more complex, as we will show, but the rise of American capabilities in the region, including its strategic cooperation with regional countries, has helped protect oil security.

Oil security can be defined in various ways.⁶ We define it in terms of provisioning oil to the global economy so as to ensure reasonable oil prices, which are shaped by numerous economic, political, and security factors.⁷ We can all debate what the term "reasonable oil prices" really means, but large spikes in oil prices or oil shocks that cause major economic dislocation are problematic and in fact have been linked to most of America’s economic recessions since the 1973 Arab oil embargo.

Washington’s capabilities have helped check real and perceived threats to oil security ranging from economic coercion to military actions, even though a number of thorny and costly issues have emerged that are endogenous to the American role. We explore them in detail here, especially in Chapter 11.

While the United States is central to our thesis, we chose to focus secondarily on China and also on Russia because they are America’s primary historic and contemporary challengers at the global level. In fact, some scholars argue that China, Russia, and Iran have exploited the decline of the United States and assumed a much bolder foreign policy.⁸ We also explore China and Russia because their position in the Persian Gulf, unlike that of other global powers outside the United States, has changed dramatically and altered oil security, a key issue area for us. Exploring their standing and role over time tells us something about change in global and regional politics and puts America’s evolution in the region and in the arena of oil security into clearer perspective through comparison.

China’s rise in the Persian Gulf has been meteoric over the past several decades. Although China remains far behind the United States in all areas of involvement, Beijing has expanded—in some cases dramatically—its diplomatic, trade, and energy ties to regional states. We cannot understand modern China and its foreign policy, much less the international relations of the Persian Gulf, without understanding these developments. China’s rise in the Gulf has challenged America economically and, in some measure, politically, but it has largely benefited oil security. This is because Beijing depends on economic growth to maintain its global position and boost its burgeoning middle class. Thus, it needs oil at reasonable prices. Since much of that oil is protected under a U.S.-led security system, Beijing also has had a vested interest in not undermining that system, even if it also rivals Washington. China has also become increasingly interdependent with the Arab states and therefore prefers greater regional security even if that also benefits Washington.

For its part, Russia entertains a grossly exaggerated view of its own standing and power in the world, as many would argue,⁹ but it still remains an important global actor. To a far lesser degree than China, Russia has also expanded in the political and economic arenas in the Gulf. But Russia is less important strategically in and around the Gulf region than it was during the Cold War, and that has further benefited oil security.

While the rise in American capability and changes in the international relations of the region have boosted global oil security, U.S. hegemony has faced serious challenges. Indeed, it would be misleading to paint a picture of the rise of hegemony as translating easily into positive outcomes. The picture is much more complex. We stress that the real story is about both U.S. hegemony and the challenges Washington faces, which we capture in the concept of challenged hegemony. But that raises two questions: What are the challenges, and how have they manifested themselves? We are not referring to all of the problems of the Middle East that challenge Washington, such as potential domestic instabilities in the Persian Gulf¹⁰ or possible spillover effects of conflicts outside the Persian Gulf. We address problems that are tied to hegemony and help us weigh what it really means, especially for global oil security.

Although we argue that hegemony boosts oil security, we also underscore the downside of hegemony. Several problems endogenous to hegemony cannot be ignored. Hegemony contributes to anti-Americanism and to terrorism in part because maintaining hegemony requires positive relations with autocratic regimes, places America into contested political space, and conjures up images among many of a powerful Western state seeking to dominate and exploit regional actors. Such hegemony is also very costly financially for the United States. America, in essence, protects global oil security and reasonable oil prices for the entire global economy, bearing highly disproportionate costs.

Moreover, hegemony hardly translates into direct influence. That, in fact, may be a classic conundrum in world history for any great power that has sought to translate predominant capability into desirable outcomes. Understanding these challenges yields a more balanced picture of America’s standing and role in the region and how that connects to its global standing as well.

Hegemony also generates some level of soft balancing. Soft balancing has the same goal as hard balancing—to check the strongest actor—but relies on international institutions and economic and diplomatic approaches to balance rather than the hard balancing approaches of alliances and military spending. The United States has faced both types of balancing chiefly from Russia, China, and Iran.¹¹ That raises the interesting point that the same factors that can benefit oil security can also chip away at American hegemony. Thus, China’s need for oil benefits oil security in the Gulf, but its dependence on oil also pushes it to compete with the United States economically in the Gulf and sometimes to try to check it strategically, even if Beijing does not want to undermine Washington’s security role that helps protect that oil.

Furthermore, our argument does not ignore real threats to oil security. They certainly do exist, even though they are often exaggerated or misunderstood.¹² The real question is what these threats mean for our two key arguments: the rise of American hegemony and, in turn, its positive effect on global oil security. That is the scope that we have set here.

For example, some scholars have predicted the demise of the House of Saud since the 1960s. The regime has escaped that fate, but U.S.-Saudi relations are complicated and sometimes opaque, and instability in the kingdom is a real issue. What does that mean for our two key arguments?

At the broadest level, it is important to question the entire paradigm of global oil security and the U.S. role in the Persian Gulf. Indeed, protecting the free flow of oil, while vital to the global economy, is not the best path to security in the long run. The best path is to get off our reliance on oil in the first place. However, the world has not done nearly enough to move toward a new paradigm. In fact, global oil consumption has increased significantly over the years to nearly 90 million barrels a day (mbd) in 2016, and that trend is not likely to change any time soon. The U.S. Department of Energy estimates that the global use of oil will increase from 87 mbd in 2010 to 97 mbd in 2020 and 115 mbd in 2040. Until our dependence on oil decreases substantially, the Persian Gulf will remain crucial.

Why This Topic Matters

We offer a window on the vital issue of global oil security that affects politics and economics all the way down to the local gas pump; no country can escape that issue. Much excellent work exists on oil security and covers subjects ranging from the fundamentals of oil supply, to pipeline politics, to Russia’s strategic use of energy for political power.¹³ However, far less attention is given to how the international relations of the Gulf affect oil security. This is in part because most scholars of the Middle East are not focused on oil security,¹⁴ and most oil security analysts do not focus on the international relations of the Middle East. We address this gap and bridge these areas by examining oil security with special attention to the role of great powers.

That few other goals are more important for the global economy than ensuring oil security is clear. Failure to do so could stunt global economic growth and cause much human suffering. As we earlier noted, past American and global recessions have been preceded or accelerated by an increase in oil prices, often the result of Persian Gulf instability, including the 1973 oil embargo, the 1979 Iranian Revolution, and the 1980 outbreak of the Iran-Iraq War. In light of most estimates, oil will only become more central in the race to find approaches for meeting increasing energy demand at reasonable prices,¹⁵ and the Persian Gulf, as we discuss in Chapter 2, will be increasingly critical for meeting this demand.

Oil is by far the most important energy source¹⁶ and is fundamentally tied to international politics and security. Oil is far more likely to contribute to military conflicts and to other security and political issues than other energy sources,¹⁷ and it is central in driving climate change.¹⁸

Global oil trade accounts for a major part of global consumption.¹⁹ Oil has a virtual monopoly on the transportation sector, which drives the world economy, and it is used in numerous products, including fertilizing, cultivating, processing, and, especially, transporting food. What happens in the Persian Gulf trickles down across all areas of human endeavor, making this region a fulcrum of global dynamics.

In addition, we tie into the broader debate about U.S. capability. While the questions of the United States and its challengers are ubiquitous, they focus on the global rather than the regional level. Thus, we commonly see questions of the following kind in the popular press and academic outlets: Is the United States still a global hegemon?²⁰ Will China or other actors overtake it as the strongest state in the world?²¹ Has the world become post-American or multipolar?²² These are great and important questions, but they are focused on capability at the global level. What is starkly missing is an understanding of how the relative capabilities of great powers have changed in regions of the world.

The question of the rise or fall of America in the world is not about one global-level story but rather many stories, each of which may tell a different tale. Thus, hypothetically, the United States could weaken in one or more regions but gain strength in others, or it may weaken or strengthen across the board. Paying attention to both the global and regional levels, and the links between them, offers additional explanatory leverage and fidelity. For example, as international relations scholars Robert Keohane and Joseph Nye have demonstrated, the relative capabilities of major powers in an issue area—in this case, regions—may well differ from the distribution of such capabilities at the global level and depending on the issue area in question.²³ Great Britain, for instance, remained the preeminent power in the ocean issue area well after its power began to flag at the global level. Global analysis may mask such differences across different issue areas and regions.

Much good qualitative analysis exists on the region, but we seek to offer the most comprehensive, data-driven portrait to date of the changing capabilities and role of America and, to a lesser extent, China and Russia, in the Persian Gulf. We compare their political, economic, and military capabilities in the region within the context of a broader narrative on hegemony, great power involvement, and oil security.

We focus on the 1970s through 2015, with an emphasis on the post–Cold War period. In covering such a relatively long period, we hope to offer insight into broader trends that are likely to remain germane for some time, even if some of the particulars that we identify change significantly.

No study of which we are aware has explored the evolution of China and Russia in the region systematically, much less in comparison to the United States.²⁴ In fact, there is a remarkable dearth of work on the international relations of the Persian Gulf in general. There are some excellent exceptions,²⁵ but the goal of these works usually is to focus on one great power in the region,²⁶ and they differ markedly from our work in their goals, scope, and approaches.

We also offer systematic attention to change, which is in relatively short supply in the study of international relations yet important. As international relations scholars Yale Ferguson and Richard Mansbach put it, to know if and how change has taken place, it is necessary to have a baseline—the past—against which to compare and contrast the present.²⁷ Joseph Nye has cautioned that One should be wary of extrapolating long-run trends from short-term cycles.²⁸ Other thinkers as well have observed that many studies are too static because they present only one-period snapshots of American and Chinese capabilities, which can be deceptive.²⁹

Beyond our aim of illuminating Washington’s role and position, we seek to do the same with Russia and China. Energy-thirsty China has become increasingly interested and engaged in the Persian Gulf region over the past several decades. The region is now critical to China—perhaps even more so than Europe. For its part, Russia has been a major player in the Persian Gulf over the past several decades. Thus, it is important to understand in what ways it has declined there and in what manner it continues to be involved in the Persian Gulf and in issues that affect regional security.

The International Relations of the Persian Gulf

We explore a few key questions: How have the capability and role of the United States changed in the Gulf in the past several decades? What does that mean for oil security? How have the capability and role of America’s main rivals in the world, China and Russia, changed in the region, and what does that mean for America’s regional role and for oil security?

To answer these questions, we had to develop an appropriate approach and method. Part of the challenge was to study capability over time. In international relations, power is traditionally defined as the ability to get others to do something they otherwise would not do or, relatedly, to achieve a desired outcome. This definition subsumes concepts such as soft power which is the ability to attract others.³⁰ The second way to define power is in terms of capabilities. This is chiefly done by examining key indicators such as military and economic capabilities.

Here, we define power in terms of capabilities, which is one prominent way by which hegemony is usually conceived. We do not adopt a definition of hegemony in which the hegemon is necessarily viewed as being able to bring about the outcomes it desires.³¹ We define hegemony as a preponderance of material resources,³² which includes military capabilities, as many realists would emphasize,³³ and broader economic capabilities, as liberals and political economists would stress.³⁴ In fact, we also pay attention to political relations and security arrangements that might be missed in data analysis but are germane to exploring the capabilities, role, and interactions of great powers in regions.

Examining the capabilities of external actors in a region is a different matter from examining them at the global level. Conventionally, scholars compare the capabilities of states at the global level based largely on military and economic issues such as gross domestic product (GDP), national deficit, defense spending, population demographics, education levels, and number of allies, to mention just a few. However, these indicators are not suitable for regional-level analysis. Thus, even changes in defense spending may affect capabilities differently across regions, while fluctuations in GDP may or may not have meaning for regional dynamics. Studying change at the international level can provide insight into regions but does not substitute for a regional-level analysis.

The capabilities of outside actors in regions are shaped most importantly by the state of their diplomatic relations with area states, military presence in or near the region, arms sales and security relations, and economic ties such as mutual trade and investment. Such indicators provide a useful portrait of the capability and role of those who must act at long distances, but examining data can also yield a dotted sketch of reality. Thus, we ensconce such analysis in a broader story while acknowledging the challenges of trying to transform history with all its messiness into a coherent narrative.

To systematically examine the capabilities of the outside states in the region, their evolving roles, and critical features of regional security, we study the period of the 1970s to 2015 primarily, with a focus on the post–Cold War period from 1991 to 2015. Using original data, we explore and compare the following qualitative and quantitative indicators within a broader story that puts these indicators in perspective.

• The state of diplomatic relations between the United States, China, and Russia and regional states. In this domain, we explore diplomatic treaties and accords, high-level visits, and official and unofficial statements to capture the broader picture of ongoing relations.

• Military presence, security agreements, and arms sales of the United States, China, and Russia. In this security area, we examine changes in the level and composition of arms trade, broader defense relations, and the external powers’ military presence in or near the region.

• Great power economic and energy ties. Here, we analyze changes in the level of hydrocarbon and nonhydrocarbon trade, mutual foreign direct investment, and energy agreements, cooperation, and relations.

Using multiple indicators yields a fuller picture. For example, we might assume that if diplomatic relations are poor, then strategic and economic interaction will also suffer seriously. That is a fair assumption, but sometimes it does not hold. For instance, America’s relations with Saudi Arabia were very tense in the years after September 11, but their economic and strategic interaction, which fed into America’s overall standing, did not suffer in the same time period.

To be sure, indicators of global capabilities are easier to collect and compare. For example, it’s quick work to compare GDP, even if the data may not be fully accurate. By contrast, our indicators pose a greater challenge in this regard, but what we lose in ease and comparability, we hope to gain in explanatory potential.

The Organization of the Book

Chapter 2 sketches key signposts in the American journey into the Persian Gulf and the rise of oil as the most critical source of energy in the world. Chapters 3 to 8 deal with the United States, China, and Russia and explore the key aspects of great power capability and standing laid out in this chapter.

Chapter 9 then brings together, develops, and compares all of the empirical evidence we have presented regarding the United States, China, and Russia. Using quantitative and qualitative analysis, we provide a detailed as well as panoramic overview of change to sum up and put our more detailed analyses in context.

Part III examines the larger issues we have raised. Chapter 10 shows how the rise of American hegemony has actually boosted global oil security, as has China’s growing need for oil. Chapter 11 examines the difficulties of hegemony and the challenges that America faces, which need to be considered carefully. Some of these challenges are related to the rise of China in the region and the continuing role of Russia. But the challenges run much deeper and include the high costs of maintaining hegemony, terrorism and the resentments that it generates in the region, and the fact that hegemony does not equal influence in world politics—perhaps a classic phenomenon as we look back at the fate of hegemons in history.

The conclusion in Chapter 12 expands on our key arguments. It explains what our findings mean more broadly for security studies, hegemony, international political economy, and Middle East politics.

I

THE UNITED STATES IN THE PERSIAN GULF

2

The United States and the Global Oil Era

THE MIDDLE EAST has been an arena for great power rivalry for millennia, from the time of the vast empires that followed the first civilizations, through the great game of Euro-Russian rivalry in the nineteenth century, and into the Cold War of the twentieth century and the post–Cold War period. The most ancient rivalries began at least as early as 2500 B.C. in Mesopotamia, the purported cradle of civilization between the Tigris and Euphrates Rivers in modern-day Iraq. Thereafter, a broad array of empires rivaled each other for influence, including the Babylonians, Assyrians, the Hittites of Anatolia, and the Persians, whose vast empire under Cyrus the Great stretched across the Near East from Greece