US 'Energy Independence': Geopolitical Consequences

BMI View: The US shale gas ' revolution ' has led to speculation that Washington could gradually abandon the Middle East. Although we believe that such suggestions are misplaced, we nevertheless examine the consequences of a US shift in military priorities.

Over the past year or two, there has been considerable speculation that the US can achieve 'energy independence' over the coming years as a result of the development of unconventional oil and gas resources (the shale gas revolution) in North America. Some proponents of US energy independence argue that Washington would no longer need to involve itself in the affairs of the Middle East, and could reduce or completely withdraw its military presence in Kuwait, Bahrain, and Qatar. However, we believe that this is a false argument. There is indeed a case for US energy independence, but this would not necessarily lead to a reduction of the American military presence in the Middle East.

American military involvement in the region stretches back decades, and during the Cold War this was aimed at preventing a Soviet takeover of the region. The Carter Doctrine of 1980 explicitly stated that 'an attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.' During the 1980s, the US ensured the safe passage of shipping in the Persian Gulf at the height of the Iran-Iraq war. The US presence really increased from the 1990s, after it went to war against Iraq following that country's invasion of Kuwait. Thereafter, Washington maintained a policy of dual containment against Iran and Iraq, before invading Iraq in 2003.

Three Reasons For Continued US Involvement In The Middle East

Global oil supplies: Firstly, the US is not in the Middle East solely because America needs its oil. The US in fact imports less than 10% of its oil from the region. Rather, the US is expected to guarantee the security of oil shipments (especially through the Strait of Hormuz) to friendly states, namely Europe, Japan, South Korea, and several other Asian countries. This role augments the United States' importance in global affairs. If Washington relinquished these perceived responsibilities, then other countries dependent on Middle Eastern oil imports, such as China and India, could be expected to expand their naval capabilities and more actively project their influence in the Middle East. Given that China is already a geopolitical competitor of both India and Japan in Asia, their rivalry could be carried into the Middle East. Of course, it is highly likely that Beijing and New Delhi (and possibly even Tokyo and Seoul) will seek greater involvement in the Middle East regardless of what the US does, but Washington will probably not take any conscious action to hasten this eventuality.

Furthermore, even if the US substantially reduced its imports of Middle Eastern oil, oil prices would still be determined by international markets, and thus respond to global events, including instability in the Middle East. Therefore, the US would feel compelled to retain a military presence in the Gulf region for the purpose of mitigating shock events that could cause the oil price to surge.

Protection of Israel: The second major reason that the US is heavily involved in Middle Eastern affairs is the protection of Israel from external threats. In the past, these have come from Egypt and Syria (until the 1970s), and Iraq (until 2003). At present, the threat mainly stems from Iran and its proxies. If the US were seen to be reducing its commitment to Israel's security, this could embolden the Jewish state's enemies into provocations against it. Israel would become increasingly alarmed, potentially prompting it to strengthen its already powerful military capabilities or even carry out military action against real or imagined threats more frequently. This would be negative for regional stability. In our view, the strong pro-Israel lobby in the US means that Washington will not abandon Israel.

Regional balance of power: The third major reason for US involvement in the Middle East is to maintain a balance of power between the region's most powerful states, namely Iran, Saudi Arabia, Turkey, and Iraq (pre-2003). During the 1980s, the US carefully acted to ensure that neither Iran nor Iraq emerged overwhelmingly victorious in their eight-year war (1980-1988). The US went to war in the Gulf in 1991 because Iraq, which at the time had the fourth-largest military in the world, invaded a small sovereign state, Kuwait, thus threatening to control a huge proportion of Arab oil resources and overturn the regional order. The US went to war against Iraq again in 2003 on the basis that the latter's alleged weapons of mass destruction made it a regional threat. Now, there is speculation that the US and/or Israel may eventually attack Iran, because if the latter acquires nuclear weapons, it would become the hegemonic power in the region. Overall, it is difficult to see the US withdrawing from the Gulf region while Iran remains hostile to key American allies.

US Involvement In The Middle East Comes At A Price

Overall, the United States' involvement in the Middle East has come at a price. Washington's long-term support for Israel and authoritarian Arab regimes in the region (prior to the Arab Spring of 2011), its deployment of troops in Saudi Arabia in the 1990s and early 2000s, its repeated military actions against and subsequent occupation of Iraq, and drone strikes in Yemen have all fuelled anti-Americanism. This helped fuel the rise of al-Qaeda and led to the 9/11 terror attacks that claimed almost 3,000 lives in the US. America also suffered the loss of 4,500 troops in Iraq during its eight-year occupation of that country.

Arguably, a powerful new external player in the Middle East such as China could begin with a clean slate and attempt to portray itself as an 'honest broker', in contrast to the US, which is seen as biased in favour of Israel and against Iran. Beijing would also be less likely than Washington to interfere in the internal affairs of regional states. However, if China were to pick sides in the region or pursue hegemonic policies, then it too could generate resentment and 'anti-Chinese-ism' over the long run.

What If The US Abandoned The Middle East?

Nonetheless, let us suppose that the US decided to substantially reduce its commitments to the region. We see several consequences:

  • Iran would almost certainly emerge as the major power, even if it did not possess nuclear weapons, for it has a large military and very active external intelligence service. Tehran may be tempted to increase its support for oppressed Shi'a Muslims in eastern Saudi Arabia and Bahrain, as well as anti-Israeli groups in the Levant - all of which would prove destabilising.

  • Turkey and Saudi Arabia, both Sunni Muslim countries, would emerge as the main competitors to Iran, and we would expect to see a three-way arms race between them. This might also entail a nuclear build-up. That said, if the US energy revolution led to substantially lower oil prices, then Iran and other Gulf states would suffer economically, thus reducing their ability to spend heavily on armaments.

  • Israel would find itself more isolated in the region, and could become more aggressive as a result. The Jewish state could also be expected to search for a new 'big brother', but it is unclear which country can fulfil this role. No major emerging power (e.g. China) is likely to share America's knee-jerk commitment to Israel.

  • China would almost certainly seek to expand its involvement in the Middle East, and could even establish a military presence in the region. India could eventually be expected to follow suit. Beijing's choice of security partners could radically transform the region's geopolitics.

  • World oil prices would probably be subject to greater volatility, reflecting the geopolitical power vacuum left by the US.

Most of the above trends are already in motion, but these processes would accelerate if the US departed the Middle Eastern scene.

Implications Beyond The Middle East

If the US did indeed reduce its military presence in the Middle East, then it would be able to devote more attention and resources to the Asia-Pacific region, in line with its stated 'pivot' towards the area. Although Washington does not publicly admit it, the 'pivot' is mainly to counterbalance China's rising power, which is of concern to Japan, Vietnam, the Philippines, and India. The downside risk is that greater US involvement in Asia could strain its relations with China.

The geopolitics of Europe could also see notable changes. The US retains tens of thousands of troops in Germany, Italy, and the UK, in part because they are NATO allies but also because they serve as military logistical hubs for US actions in the Middle East and North Africa. The importance of these facilities could thus decline. So too could Russia's geopolitical power, if global energy prices fell substantially. A weaker Russian economy as a result of reduced external demand for its energy could force the Kremlin to focus more on domestic matters, especially if public discontent increased as a result of weaker economic growth.

More broadly, if US energy independence led to lower global oil prices, then the geopolitical influence of other petro-states such as Venezuela and the Gulf monarchies could also decline. Reduced oil revenues could undermine political stability, as governments would have less means to 'buy' social stability. Furthermore, countries hoping for a massive energy bonanza as a result of relatively new oil discoveries, such as Brazil and Ghana, could see some of their expectations dashed.

No Dramatic Changes Soon

Overall, it will probably be several years before the US energy bonanza has a substantial impact on global energy prices. In the meantime, although the US is undoubtedly tired of fighting long wars in Afghanistan and Iraq, it will retain its current security commitments in the Middle East for the foreseeable future. Meanwhile, although China in 2012 began testing its first aircraft carrier, it lacks a 'blue water' (i.e. ocean-going) navy and foreign naval bases. Furthermore, any increased Chinese naval activity would initially be focused on the East China Sea and South China Sea, and thence Indian Ocean rather than the Persian Gulf. Therefore, it will be many years - probably at least a generation - before China is capable of displacing the US as the main external power in the Gulf.

This article is tagged to:
Sector: Country Risk, Shipping, Oil & Gas
Geography: Middle East

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