China And India Change The Game

This is EXCELLENT analysis. I'm only posting a section. But I've linked it.

Faced with a market in which politicsbe it the U.S. Congress or OPEC or Hugo Chavez have an equal if not greater influence on price as economics, the two have agreed to coordinate their efforts to secure energy resources. The plan is modeled on their recent joint deal in Syria. India and China will essentially work together to secure their energy resources without unnecessarily bidding up the price of those resources. In other words, the Indians and Chinese have agreed to a consumer's cartel representing 2.3 billion potential consumers.

The significance of the alliance is hard to understate. India and China represent the two leading sources of increased oil demand globally. Each have enormous populations that are entering the modern economy at breakneck speed. As these populations increase their per capita income, they demand products and services that require higher and higher amounts of energy particularly oil for the new cars their citizens want to drive.

Both the Indians and the Chinese are feeling the pressure of diminishing oil discoveries and flatlined oil production at a time when expansion of their domestic economies is rapidly increasing demand for energy. One unit of Chinese gross domestic product, for example, uses three times as much energy as a unit of American GDP. And 10 times as much as a unit of Japanese GDP.

It is clear is that this pact escalates the global competition for oil. Yet it does so in a fairly sophisticated way. The two nations have agreed to distort the market rather than continue to compete and lose to global market imbalances (India 's concern) or nationalistic politics (China 's). Together, their combined markets and purchasing power offer an extremely attractive partner to producing states especially states like Syria, Iran and Sudan, who might otherwise feel pressure from Western concerns over human rights and democracy.

At the same time, the deal demonstrates that neither China nor India can, or have an interest in attempting to, secure access to oil through military means, as the British did through World War II and as the United States has done since. This pact is not a military alliance. However, strategic resources have a long and bloody history of attracting military protection, and none less than energy. If this pact does not produce results and if the balance between oil production and demand continues to weaken, we may in the future see an Asian equivalent of the Carter Doctrine.

Here in Washington, however, this news offers leading strategic advisers and their political clients a perfect moment in which to change the strategic narrative a false narrative which has been imposed on America since the attacks of 9/11.

In Washington, the conventional storyline is still that nuclear terrorism is the single greatest threat to the United States and should therefore be the center of our national security strategy. Indeed, John Kerry and George Bush agreed on this assessment in their debates during the 2004 election. As Col. Larry Wilkerson pointed out earlier this week, that assessment is wrong. And it has been since September 12.

This new alliance offers message-makers the out that they have been missing. Ever since the White House starting hyping its war on terror to a scared and underinformed American public as an existential conflict comparable to the World War II or the Cold War, politicians have refused to say otherwise. Now, with the failure in Iraq palpable, the arrogation of power so obvious, and now the rise of a real strategic challenge evident, it is time to change the story.

And yet, dangers lurk. The administration has released slides from its forthcoming Quadrennial Defense Review that place an enormous priority on preparing to deter the rise of a future "near peer" superpower. In other words, Secretary of Defense Donald Rumsfeld is salivating at the prospect of a rising China (and the massive weapons budgets such a foe would require).