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    China Business
     Jun 15, 2012


SPEAKING FREELY
The long oil road to Tianjin
By Emanuele Scimia

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

While dark clouds continue to gather over the economies of the United States and Europe, African leaders are assessing the damage done to their own countries and looking for potential (Asian) antidotes. Nigeria, Africa's biggest oil producer and a sort of geopolitical pivot of the continent's western rim, provides a case study of the problems that the region's nations are meeting to find alternatives to American and European markets.

The United States, following the increase of its domestic production and a series of refinery closures, has drastically cut

 

back oil imports from Nigeria. In February, the US imported 352,000 barrels per day against over 1 million a year earlier (at this time Washington was the biggest buyer of Nigerian crude), according to the US Energy Department's Energy Information Administration.

In a report published on May 28, the African Development Bank drew a grim picture of growth perspectives in Africa due to the fallouts of the European sovereign debt crisis. Faced with a dramatic slowdown of their own economies, countries in the Old Continent have slashed import of goods coming from Africa, as well as investments and economic aids towards underdeveloped African nations.

Notably, such a reduction touches upon the export of oil and other raw materials, which accounted for 59% of the Euro-African trade in 2010. This cutback might be partly mitigated after the European Union's embargo on Iranian oil becomes fully operational from July 1.

The Nigerian government in Abuja aims at compensating for the drop in crude imports by the United States and Europe with a surge of Chinese demand. In this regard, the Central Bank of Nigeria aims at diversifying its currency reserves, raising holdings into yuan, so as to facilitate trade between the two countries. On the other hand, to minimize the exposure towards the indebted European Union (EU) members, the Nigerian Central Bank could trim the share of its foreign stocks in euros.

The first hurdle that hinders Nigeria's plans to divert crude exports from the Euro-Atlantic region to China is that of distance. The voyage from the Nigerian oil terminal of Bonny to the Chinese harbor of Tianjin is 17,000 kilometers, while it is just over 8,000 km to New York and 7,000 km to Rotterdam, in Europe. Since Chinese buyers should recover the cost of the long crude shipping, the reality is that they could call on price cuts.

It is worth noting that Nigeria and China have recently failed to strike a deal to harmonize their commercial relations, with Abuja claiming that Beijing is flooding Nigeria with substandard products - an allegation of a sort that appears to be increasingly frequent among China's partners in Africa and Latin America.

However, the worst danger for Nigeria's oil supply to Asia is going to arise from the protracted condition of instability sweeping through the country and its neighbors, a situation that has always haunted European and US trade in this region.

Internally, Nigeria's central institutions are threatened by two rebel groups: Boko Haram and the Movement for the Emancipation of the Niger Delta (MEND). Boko Haram is a bloody Islamist outfit acting in the north of the country, where the majority of the population professes the Muslim faith. This jihadist organization is notorious for launching al-Qaeda or Taliban-style suicide attacks against police stations, churches and other civilian targets.

In the south, the explicit purpose of MEND's armed rebellion is that of forcing both the central government and foreign oil companies to share with local communities in the Niger Delta a greater portion of the revenues from oil production in this region.

The major threat at present seems to be coming from Boko Haram, which is gaining a transnational dimension within the growing Islamist nebula raging across the Sahel region (of which the northern Nigeria is part). The group's tentacles stretch from the north of Mali to Chad, another breeding point linked to the insurgence in the Sudanese region of Darfur.

Although Nigeria is not adjacent to Mali, the civil war that broke out there earlier this year, with the constitution of a de-facto independent state in its northern region of Azawad, represents a further element of volatility for Nigerian authorities. Since January, the National Movement for the Liberation of Azawad (MNLA), a secularist formation fighting for Tuareg independence, has claimed the control of this large swathe of Mali.

MNLA is ruling the Azawad region along with jihadist formations such as Ansar Dine, al-Qaeda in the Islamic Maghreb (AQIM) and the Movement for Unity and Jihad in West Africa (MUJAO). Reportedly, militants of Boko Haram - or perhaps groups tied to it - operate in the Malian city of Gao.

Such a connection between secularist and Islamist Tuareg groupings - which many observers see as quite unnatural - has prompted more than 400,000 Malian refugees to flee to neighboring Burkina Faso, Niger, Senegal or Mauritania. Because of a potential domino effect, it may also provide Boko Haram - and supposed political manipulators behind it - with a successful model to raise the stakes, claiming an independent state in the north of Nigeria.

Until now, Boko Haram has called for the extension of Sharia law throughout Nigeria (and not only in the northern part of the nation, where it is already in force at present) more than for an overt independence of its regional stronghold.

In order to protect their economic and geostrategic interests in Western Africa, countries like the US, Britain, France and Australia have arranged military special operations in the area. On March 13, Australian daily The Age wrote about the country's special operation squadrons that had been deployed in Nigeria (as well as in several other African countries), ready to intervene if Australian citizens (usually national companies' workers, journalists or humanitarian activists) were kidnapped or endangered by armed groups or common criminals.

As far as regional security, military and intelligence issues are concerned, it seems as though Western countries are trying to revive in Africa "indirect rule", the system of colonial government set up by the British Empire in some of its African and Asian dependencies, whose mastermind was Frederick Lugard, the High Commissioner of the UK Protectorate of Northern Nigeria from 1899 to 1906. Under this system, native rulers could manage local affairs, while British officials kept control over taxation, defense and foreign affairs.

It is uncertain whether China - though the question could be extended to India as well - is willing to intrude heavily into this African quagmire, taking into consideration Beijing's resistance to meddle in the domestic affairs of its economic partners and the first cracks in its economy.

At any rate, China's challenge for the eroding parts of Euro-American vested interests in the oil-rich Gulf of Guinea are much more complex than the parallel Red Dragon's penetration in the Horn of Africa.

Emanuele Scimia is a journalist and geopolitical analyst based in Rome.

(Copyright 2012 Emanuele Scimia)

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.





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5. China's Afghan oil deal on the skids

6. Towards a new Arab cultural revolution

7. OPEC in the driving seat

8. The Muslim revolution 'hiding in plain sight'

9. PCCW joins China's rush to Africa

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(24 hours to 11:59pm ET, Jun 13, 2012)

 
 



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