Countering China’s Coal Advantage in the Middle East


If we know anything about the Middle East, it is this one truth: When America leaves a void, another power quickly fills it.

Most think of the Middle East as a sea of sand and a virtually unlimited source of oil. But the region’s natural resource with the fastest growing demand is actually coal. America is the most coal-rich country in the world. There’s ample opportunity for a strategic alliance between the U.S. and the Middle East that revolves around our coal and their oil, but that hasn’t happened. Instead, the U.S. has allowed an opening to form, and China has gladly stepped in to capitalize.

While the governor of West Virginia petitions Donald Trump for a $4.5 billion sales subsidy for his state’s coal industry, the Middle East apparently can’t get enough of it. For all their oil and natural gas reserves, some of the most strategically important countries in the region have been building coal plants—and turning to China for help. Policymakers in Washington should take notice: The Chinese are now erecting coal plants across Iran, Egypt, and Dubai, increasing their strategic footprint throughout the Middle East with old-school energy diplomacy. This newfound relationship threatens to undermine America’s standing in the region, just as Trump attempts to right the ship after eight years of mismanagement.

Beijing’s regional momentum is largely the result of a 2013 World Bank decision to prohibit the funding of foreign coal projects. Without money from the West, American allies in an unstable region have turned to China for their energy needs. If this trend continues, critical American partners in the Middle East may start gravitating towards Beijing.

China has extensive interests in the Middle East, both economic and geostrategic. Last year, Chinese President Xi Jinping embarked on a charm offensive in the region to boost the profile of his ambitious Belt and Road Initiative (BRI), in which the Middle East and North Africa (MENA) countries play a major role. Between 2004 and 2014, trade flows between China and MENA surged by 600 percent. Beijing remains heavily dependent on oil and gas imports from the MENA region along its Gulf “String of Pearls.”

In addition to cozying up to U.S. allies, Beijing has also strengthened its relationship with Iran, which it sees as a partner in countering American influence in the Middle East. It’s quite telling that Tehran will take center stage in Xi’s BRI vision: Iran has long prospered as a trading hub between the East and West, and China is interested in securing Ayatollah Khamenei’s support for its ever-expanding geopolitical gambit. With billions of dollars at stake, China is also stepping in as a mediator in the numerous conflicts riddling the Middle East, using the BRI as a tension-reduction mechanism between warring factions. This explains projects such as the Iran-Pakistan gas pipeline, Pakistan’s new port at Gwadar, and the Silk Road highway between Xinjiang and Tehran.

Since the Middle East largely lacks its own coal reserves, the technology and fuel must be imported. The World Bank’s ban on funding coal projects has effectively hamstrung the West in that regard. Meanwhile, China was able to radically improve its coal technology, making steady advances in developing clean coal power plants that extract more energy with lower emissions and less coal usage. With those factors in mind, Beijing was quick to realize that the newfound hunger for coal was a serendipitous opportunity to cement its relationships by providing substantial, and much needed, capital.

Washington could still beat the Chinese at their own game by leveraging the energy card. Trump has already announced the withdrawal of the U.S. from the Paris climate accord in lieu of pursuing a better deal to protect American interests, and has made it clear that future funding of the UN’s Green Climate Fund won’t be taking place on his watch. Following a $1 billion contribution under Barack Obama, the United States will keep its seat on the managing board of the Fund for at least the next 12 months, leaving the door open to U.S. influence over future approval of energy projects.

Washington needs to follow through and target strategic areas where demand for coal power is being addressed by China (like the Middle East or Southeast Asia) as a matter of priority. Since the U.S. is the World Bank’s main financial backer, the Department of the Treasury holds immense sway over its policy direction.

In a region where energy and geopolitics align so perfectly, re-establishing America’s role in the Middle Eastern coal industry may be the best way to ensure our global footprint doesn’t disappear in the ever-changing sands.

By Steve Sherman
The American Conservative


Please enter your comment!
Please enter your name here