Chindia and the challenges of energy security and strategic stability

Author: Andrew Phillips, ANU

A revolution in energy consumption is sweeping Asia. Rapid economic growth in China and India has yielded a corresponding spike in their energy consumption.

Despite the welcome surge of prosperity from this growth, the Asian energy revolution has the potential to seriously exacerbate states’ energy security concerns, imperilling strategic stability, and, ultimately, regional prosperity

Energy security concerns have long been central to Asia’s strategic evolution. The conjunction of the post-1972 Sino-US-Japanese rapprochement with the 1970s oil shocks produced a benign but highly contingent regional security dynamic. In the wake of the oil shocks, Tokyo drew closer to America and its regional allies, while the contrast between Japan’s resource paucity and China’s (albeit temporary) fossil fuel abundance provided an early commercial focus for bilateral reconciliation. India’s poverty and dependence on subsidised Soviet oil, meanwhile, muted its impact on global energy markets, removing an additional potential lateral pressure on Japan’s energy security. America’s status as the hegemonic protector of both the major OECD energy-consuming states and the major Persian Gulf energy suppliers provided an additional layer of reassurance, benefiting consumers and suppliers alike. First world energy super-consumers were all beneficiaries of a US-centred network of alliances, and were able to cooperate to ride out the decade’s energy shocks.

In 2011, China and India have risen as two energy super-consumers increasingly dependent on energy imports to fuel industrialisation, but they are prevented by pride and self-interest from following Japan’s example in consenting to forever remain energy protectorates of the US. Simultaneously, having been chastened by its experiences in Iraq and Afghanistan, and now confronting its own straitened fiscal circumstances, America’s credibility as the hegemonic guarantor of access to Persian Gulf energy supplies is increasingly open to question. In such volatile conditions, the danger is that the Asia-Pacific’s established and emerging great powers will begin to conceive of energy security in zero-sum terms precisely at the moment when they are already contending with the formidable challenges of managing the transition from an America-centred to a more multi-polar international order.

There are worrying signs that energy security concerns are already aggravating regional tensions. In Northeast Asia, development of infrastructure for conveying Russia’s Siberian oil and gas reserves to Asian markets was delayed for much of the 2000s by a Sino-Japanese tussle over pipeline routes. The Sino-Japanese relationship has been further strained over the past decade as a result of disputes over the development of contested oil and gas reserves in the East China Sea. While these disputes by themselves are unlikely to catalyse an armed confrontation, they reflect a tendency for Japan and China to regard one another as competitors for the scarce energy resources both need to sustain their economic development. In light of China’s increasingly assertive diplomacy and Japan’s fears of being eclipsed by a rising China, the emergence of energy security as a further point of friction between the two countries threatens to further destabilise an already febrile regional security environment.

The prospect of escalating energy competition between Northeast Asia’s giants is deeply troubling. However, an even more potent source of concern lies in the emerging nexus between energy security anxieties and nascent strategic rivalries throughout the Indian Ocean littoral. Since becoming a net oil importer in 1993, China has become increasingly anxious to hedge against the possibility of US maritime interdiction of its energy lifeline to the Middle East. Central to China’s efforts to mitigate its ‘Malacca dilemma’ have been sustained initiatives to strengthen its economic, diplomatic and strategic ties with states along the Indian Ocean littoral, together with a more long-term effort to enhance the People’s Liberation Army Navy’s capacity to undertake missions in support of ‘far sea defence.’ While motivated primarily by defensive motivations related to its energy interests, Chinese activism in the Indian Ocean has inevitably stirred Indian fears of Chinese ‘encirclement.’ These fears have in turn spurred India to cultivate closer ties with the United States and its allies, with the US-Indian 123 civil nuclear agreement providing a convenient platform for India to simultaneously pursue its energy security interests while hedging against China’s rise.

The emerging nexus between expanding Asian energy needs and accelerating regional rivalries is particularly distressing because it is so avoidable. China, India, America and Japan share a common interest in securing affordable and reliable access to energy supplies, thus energy security could potentially form a fruitful focus for regional cooperation. The existence of a patchwork of bilateral and multilateral energy agreements in the region moreover attests to the cooperative possibilities of energy security concerns. But the ad hoc and often symbolic character of these deals also testifies to a failure to apprehend the potential for unconstrained energy rivalries to pose a systemic threat to Asia’s continuing peace and prosperity.

What Asia desperately needs is a concerted effort to re-frame energy security as a common security interest that is intimately tied to the preservation of a stable regional order. Such an endeavour might begin with the institutionalisation of regular energy dialogues between generally competitive dyads such as China and Japan and China and India. These dialogues could provide the diffuse strategic reassurance necessary to make existing multilateral energy frameworks more effective. Ultimately, however, the energy challenges now facing Asia are playing out in a global context, thus greater efforts must also be made to draw China and India into global energy governance institutions such as the International Energy Agency (IEA). A host of obstacles presently preclude both countries’ inclusion as formal members of the IEA. Nevertheless, outreach activities such as the Enhanced Engagement programmes the IEA undertakes with China, India and other large developing countries must continue to be pursued with vigour if these states’ energy policies are to be steered in a more cooperative direction.

As energy markets are transformed by over two and a half billion Chinese and Indian consumers aspiring to First World living standards, concerted action will be necessary to ensure that energy security is conceived as a focus for cooperation rather than conflict. The Asian energy consumption revolution should be celebrated as a symptom of economic success. But its strategic consequences must be scrupulously managed, lest this revolution unleash competitive dynamics that could yet jeopardise the extraordinary promise of the Asian century.

Andrew Phillips is a Fellow in the Department of International Relations at the Australian National University.

This essay draws from a broader research project that will be presented in Beijing on 16-19 May 2011 as part of the MacArthur Foundation’s Asian Security Initiative Project Workshop ‘Policy Alternatives for Integrating Bilateral and Multilateral Regional Security Approaches in the Asia-Pacific.’