Why China is the Real Winner in Ukraine and Iraq
Policy + Politics

Why China is the Real Winner in Ukraine and Iraq

As crises spread throughout Europe and the Middle East, China has been largely absent from the scene. That’s because both the sanctions leveled against Russia because of their invasion in Ukraine and the burgeoning American plan to confront the Islamic State of Syria and Iraq (ISIS) are a blessing for Beijing.

The standoff in Ukraine landed China a sweetheart gas deal from Russia. Moscow had refused to sign a deal with China for ten years because they wanted Beijing to pay higher gas prices. However, with the Ukraine crisis threatening European payments, Russia caved and agreed to a lower price in May.

Related: Did China Just Checkmate Russia in Ukraine?

“Because Putin was forced to kowtow to the Chinese as insurance against a future slowdown in European gas purchases, China is now able to buy gas from Russia at 42 percent less then the Russian contract to the Baltics,” said Edward Goldberg, a professor at Baruch College and the New York University Center for Global Affairs.

At the same time, China gets 51 percent of its oil for from the Middle East. According to Gordon G. Chang, author of The Coming Collapse of China and a blogger at Forbes, China imports 1.5 million barrels of Iraqi oil per day, nearly half of Iraq’s daily output.

“China National Petroleum Corp., a state enterprise, swooped up Iraqi oil after last decade’s war—Beijing, by the way, sold arms that ended up in the hands of insurgents fighting Americans—by accepting Baghdad’s razor-thin margins and onerous conditions,” Chang wrote in Forbes in June. “Many said it was China that won the Iraq War because it signed the major oil deals afterwards.  As a result, Beijing now has a lot riding on the outcome in Iraq as ISIS takes on the Shiite-dominated ruling group in Baghdad.”

Chang also noted that the United States would actually be in a stronger economic position with Iraqi oil off the market.

Related: A Radical Way for Ukraine to Fight and Defeat Russia

“The U.S. overtook Russia as the world’s biggest natural gas producer in 2012 and is, after Saudi Arabia and Russia, the third biggest pumper of oil,” Chang wrote. U.S. energy imports have fallen in the last five years, natural gas by 32 percent and oil by 15 percent. So a crisis would put America in an even stronger position in the oil and gas markets.”

Goldberg said that in forming the coalition, the United States is doing China’s dirty work.

China “is not involved in the game what so ever,” he said, adding that Beijing was piggybacking off of “America's defense of their oil supply lines instead challenging America's positions as policeman.”

“Why should China spend the money if the U.S. is doing this for them … gratis?” Goldberg asked.  

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