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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 [1] 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) [2], 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 [3], 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.

Steve Sherman graduated from the University of Iowa and lives and works in Hawkeye country. Steve is an author, popular radio commentator, and former Iowa House candidate.

10 Comments (Open | Close)

10 Comments To "Countering China’s Coal Advantage in the Middle East"

#1 Comment By Francis E Blangeard On October 8, 2017 @ 11:27 pm

The United States needs to reduce its ‘global footprint’ and begin to position itself for a realistic role in the world for a nation that is just 4% of the world population. The only thing that allows the US to have such a large ‘footprint’ is ever expanding debt which is unsustainable and is heading the US down the road to a really big fall.

#2 Comment By AJ On October 9, 2017 @ 10:49 am

Get real. The US created an opening for China in the Middle East by raining death and destruction on some countries, threatening others. Blame the neoliberals for the loss of influence.

While One Road One Belt is in the process of uniting the Eurasian heartland, the overextended Empire is beginning to bleed out.

Your wishful thought of expanding the Empire’s footprint is a very old one. From the Pleistocene.

#3 Comment By john On October 9, 2017 @ 11:02 am

What is this proposal? We want a big government handout to big coal, to subsidize energy to the Middle East? This under the guise of “geopolitics”. China is providing the ME with “capital” according to the article. How are we going to do that? Why we will borrow from China of course! How is this making sense?

#4 Comment By collin On October 9, 2017 @ 11:11 am

Isn’t the biggest problem here is the cost of asset protection for US firms is a lot higher than China firms? So China has a massive competitive advantage with less protection cost and the more government directed investments. (Of course some of these nations like Iran don’t have good relations with the US either.)

Also, I have wonder how long it will take the Pakastani people to turn against China?

#5 Comment By David Walkabout On October 9, 2017 @ 1:20 pm

More Neocon trash on TAC — what a shame

#6 Comment By Ethan On October 9, 2017 @ 3:26 pm

It’s really disappointing that an article like this got published in a site that I generally respect. Because it is wrong on so many different levels. First, on the environmental level, we have accelerating global warming and sea level rise that 99% of the scientific community is in agreement on the evidence. The barrier reef is doomed, and islands in the Pacific are going under. Miami is routinely getting flooded by King tides these days. But let’s ignore little peccadillos like these. Lets talk about the economics of coal.
Coal is finished. Even, despite all credible scientific evidence to the contrary, you don’t believe in global warming, heres something you can’t ignore-it’s no longer economical. Natural gas and renewables are now the lowest cost option. Also the combination is complementary-when the sun doesn’t shine or that the wind doesn’t blow a natural gas turbine can be brought on line in minutes, not days like coal. “Clean coal” is a bad joke or lie at the least. CCS technology rarely works and when it does it makes coal fired power even more expensive and hence totally uneconomic. As a result, new coal power plants are unbankable-they can’t get financing. In Australia, the worlds largest coal mine project, the Carmichael mine, can’t get of the ground not because of all the protests, but because no bank in the world will loan them money!! In the two largest coal burning nations China and India, they are running not walking away from coal. Solar power in India is already the lowest price option. And unlike coal you don’t need massive infrastructure projects to bring it on line at a village level. It’s true that China has been backing coal powered plants in the Middle East and Pakistan, but that’s in the nature of a last gasp. China has already shuttered most new coal power plant projects within its own boundaries so it is trying to offload some of its surplus knowhow and equipment on the Middle East. It’s in the good old USA that coal is making a last and ugly stand. Obama may not be here any longer but the coal power plants just keep closing one by one despite Trump’s lies. It’s not just the environmentalists but the Wall Street bankers that say No to coal. And finally, I have news for Mr Sherman. In his home state of Iowa, just look around. The last coal mine closed in 1994. But the windmills are sprouting like the corn. Iowa seems to have spoken.

#7 Comment By GregR On October 9, 2017 @ 3:40 pm

So how much money is the Author receiving from the US coal lobby? I mean seriously there is no way this even passes the smell test for sanity.

The US is getting out of the coal business because the coal business is dying. No force on earth is going to reverse that. First Natural gas is cheaper, and better for the environment so there is little justification to try and ‘save’ the industry.

Second the Middle East has some of the best lands for solar power anywhere in the world, which is why they are expanding so rapidly in solar production, at a scale that makes it price competitive with natural gas.

But the primary failure of this article is in understanding why the Middle East is building coal plants. It isn’t for economic reasons, there are cheaper options, it is to diversify their fuel suppliers. They are reasonably concerned about being dependent on just oil (locally sourced), or just gas (primarily US sourced), and want to expand to coal because it is available from elsewhere (china). The reality is that there is nothing the US can do to slow this down because the justification has nothing to do with the cost of power, but with the source of the raw fuel.

#8 Comment By balconesfault On October 10, 2017 @ 4:41 am

In 2016 China decided to stop building 103 domestic coal-powered power plants that were in the construction or planning phase.

#9 Comment By elkern On October 10, 2017 @ 10:37 am

Can’t take someone seriously if they use the phrase “clean coal” without the Quotes. Is Sherman a paid shill, or merely ignorant?

#10 Comment By Ray Woodcock On October 10, 2017 @ 2:04 pm

Maybe someday we’ll be a second-string nation, having to prioritize the question of what China is doing. We’re not there yet. It seems to make more sense to ask, first, what we want to do, and then ask whether China helps or hinders that.

It is certainly novel to propose that what we want to do, in the Middle East, is primarily about coal.

The logic seems to be that we shouldn’t prioritize what China is doing, and we shouldn’t prioritize coal, but somehow the two of them do combine to form a priority. I’d think, rather, that the two of them combine to form a niche.