[ROCKMAN]

Keith - Interesting...thanks. The marines are part of a "Marine Air Ground Task Force". An MAGTF is a more or less self-contained unit that can be deployed as a projection force. Essentially they can be used as a quick strike force or, more worrisome, as a "trip wire" with enough teeth to make a potential adversary think twice.

Probably shouldn't read too much into that choice of a unit. Maybe.

[agramante]

Their capabilities are consistent with potential missions to the South China Sea. If the US is going to station anyone there as a warning at all, that's only sensible. I did know that the US was to some extent taking up Japan's cause in the Senkaku Islands, but not until now did I realize how involved we are in the South China Sea too. So far it seems like the various players are only setting up their chess pieces, so to speak, and not making any moves to capture.

The Mideast will be a hornet's nest for as long as there's any oil and as long as there is more than one ethnic group there. And Israel is the only nuclear power (right now), and there are no local superpowers. But China is very different. I agree: the scariest potential for real world conflict lies in the South China Sea. In this light the TPP becomes an even more urgent arm of American policy.

[ROCKMAN]

a - I'm not sure if the treaty is still in place but at one time the US was obligated to provide military defense of Japan's interest in return for Japan agreeing to not build up their military forces except for homeland security forces. Thus the US may still have the obligation to represent Japan with military intervention in any dispute with China in the SCS. Again, I doubt it would turn into a shooting match. OTOH Viet Nam just started as a minor "police action".

[Tanada]

$this->bbcode_second_pass_quote('', 'C')hina's bid for Arctic oil
Earlier this month, CNOOC, the state-owned oil giant, teamed up with Eykon Energy, a small Icelandic energy company, to bid for an exploration license off the northeast coast of Iceland. CNOOC's move comes shortly after the two countries strengthened their ties in April, when Iceland became the first European nation to sign a free-trade agreement with China.

A handful of important business deals between the two nations have also recently been inked, including a confidential cooperation agreement between Arion Bank, one of Iceland's largest lenders, and China Development Bank, a large state-owned financial institution. And further bolstering its increasing interest in the region, China was recently inducted as a permanent observer at the Arctic Council, the chief decision-making entity in the region.

[agramante]

Rock--we do indeed have treaty obligations to Japan, but obviously those obligations are subject to some interpretation. Namely, if Japan begins aggressively inciting China by stationing troops on the Senkaku Islands (in the East, not South, China Sea), believing that its big brother USA will back t up, Japan might find itself...on an island. (Sorry.)

The US is bound to the Philippines by a security treaty, and possibly to other states there but I haven't checked exhaustively. So there is potential for us to be dragged by treaty into conflict there with China as well. But, as with the East China Sea, I think we'd show serious military force only if China were the clear aggressor. Our economic relations with them and their growing military power earn them that much respect. I think our strategic interests lie more in the realms, not of upholding treaties, but of preserving our shipping routes near the Chinese mainland, and of preventing the Chinese from securing all of the subsea oil in that area of the Pacific. Over the medium to long term I don't see what realistic prospect we have of success, but this might be where the TPP could be instrumental. Even a somewhat slapdash economic union, with the US as hegemon and the EU as a partner (both important markets for China), could cause the Chinese to hesitate in their territorial claims. And if the union were attractive enough for China to join, they would perforce lower many of their protectionist policies. My surmise is that the TPP is a tacit acknowledgment of our medium- to long-term military limitations in that area of the world.

Compare this to China's efforts (as Tanada has cited above) to build relationships with the arctic nations. The strategies might not be that much different.

[ralfy]

There is no "we" in this issue as governments and military forces essentially work for financiers and industries. If any, the public is saddled with war costs or are at the receiving end of conflict, and those who benefit from such conflict are the same financiers with their political and military partners.

Hence,

"Expert says Philippines can’t rely on US vs China"

http://globalnation.inquirer.net/77335/ ... s-vs-china

Two years earlier,

"US not coming to PH aid vs China"

http://newsinfo.inquirer.net/14118/us-n ... d-vs-china

[agramante]

It's a semantic "we", I suppose, Ralfy, since I'm a US citizen. I don't pretend to any realistic amount of influence on the situation.

[dorlomin]

$this->bbcode_second_pass_quote('ROCKMAN', 'N')icaragua is plowing ahead with a plan to dig a Chinese-funded rival to the Panama Canal across the midriff of the country, fast-tracking a proposal through the ruling party-controlled congress despite a lack of details about the $40 billion project.

A China-based consortium says it will finance the project and turn over control of the infrastructure to Nicaragua in exchange for a majority of the earnings, which it would share with the Nicaraguan government….

[dorlomin]

$this->bbcode_second_pass_quote('ralfy', '
')
"Expert says Philippines can’t rely on US vs China"

http://globalnation.inquirer.net/77335/ ... s-vs-china

Two years earlier,

"US not coming to PH aid vs China"

http://newsinfo.inquirer.net/14118/us-n ... d-vs-china

[ROCKMAN]

d - The N. Canal: Might not happen. Might happen. Might be a bad in vestment. Might be a good investment. The Chinese may not actually be planning on making the investment but just using the press releases as a negotiating ploys in their other trades. I tend to just focus on what the Chinese are doing or say they are planning to do. Since my crystal ball is perpetually cloudy I try to avoid making predictions as to what will or won't happen or if such projects will turn out good or bad.

[dorlomin]

$this->bbcode_second_pass_quote('ROCKMAN', 'd') - The N. Canal: Might not happen. Might happen. Might be a bad in vestment. Might be a good investment. The Chinese may not actually be planning on making the investment but just using the press releases as a negotiating ploys in their other trades. I tend to just focus on what the Chinese are doing or say they are planning to do. Since my crystal ball is perpetually cloudy I try to avoid making predictions as to what will or won't happen or if such projects will turn out good or bad.

[ROCKMAN]

d - I agree. That bit I threw out about China doing a head fake with the N. Canal issue wasn't on the spur of the moment. Been thinking about China playing in this very big game with many different govts. As I'm sure you know leverage isn't always a matter of what one is doing but what someone else thinks they might do.

It was, after all, a Chinese that wrote "The Art of War". LOL.

[Keith_McClary]

$this->bbcode_second_pass_quote('dorlomin', 'T')he 1930s hangs over strategic planners in the west like the sword of Damocles. They fear that small concessions to aggression will lead to a world war.

[ROCKMAN]

About the recent Chinese govt’s push to raise domestic interest rates: listened to an analyst’s theory this weekends that ties the move to Chinese global JV’s and oil acquisition. Don’t know if the analyst has it right but makes sense to me. First, as many have speculated in the past, the domestic boom in construction et al was been getting out of hand and had the potential to be as big a bubble burst as happened in the US back in ’08. Apparently a huge “shadow lending” system had developed in China that pumps a good bit of capex into very risky ventures. The govt wasn’t able to tame it down from a regulatory standpoint so they finally decided to make it too expensive to continue by raising the interbank loan rate overnight to very high levels…something like 3X what it had been.

But, according to his “sources”, there was a second reason: the govt wants more liquidity to support its effort to tie up natural resources all around the planet. Apparently (he says) there was a power shift with the new leader coming into office: the powerbrokers who were becoming $millionaires had a friend in the old leader. But the new man felt the long game of tying up resources was more important than maintaining China’s high growth rate. In essence their consumption was rising too fast to be offset by their efforts to tie up energy resources.

Who knows if he does have an inside source or if he’s making it up. But many folks have said China was growing at an unsustainable rate and when the bubble did pop it would be as bad or worse than when it happened in the US. Basically he called the govt’s efforts a controlled crash landing: painful to a degree but survivable. He felt many other analysts were missing the longer term value of the govt’s move and that whatever short term growth damage that may be done it will be more than made up in the long game.

[ROCKMAN]

I’m sure everyone is up to speed on recent events in Egypt. At the drill rig yesterday we were joking that China might want to delay plans to build the biggest Egyptian oil refinery in history until matters settle down a bit.

But then this morning there was a report that there may be a US law that would prevent us from sending our normal $1.5 billion in aid to Egypt: we can’t send aid to a govt taken over by military coup. And from what I understand much of the aid supports their military. Also chatter that the IMF might pull some support from the new govt. Made me think of the potential opening this might allow China. Would China find the takeover morally unacceptable and not want to do business there? Heck…the military could execute 100,000 members of the Brotherhood and the Chinese wouldn’t even blink IMHO. As long it doesn’t interfere with their business plans the Chinese would be good to go.

Cut off financial support to Egypt? Gotta watch for those unintended consequences. Think of the Suez Canal (In 2011, 17,799 ships transited the Suez Canal from both directions, of which 20 percent were petroleum tankers and 6 percent were LNG tankers) and the less well known SUMED Pipeline.The 200-mile long SUMED Pipeline provides an alternative to the Suez Canal for those cargos too large to transit through the Canal. The crude oil flows through two parallel pipelines that are 42-inches in diameter, with a total pipeline capacity of around 2.4 million bbl/d. Oil flows north through Egypt and is carried to a terminal on the Mediterranean.

Egypt might not export a significant amount of oil but they do have the hands around the throats of many other oil importing countries via that transit oil. We certainly don’t have to worry about Egypt attacking any other country. But I doubt anyone could occupy Egypt by force and keep that oil moving. Sounds like being a friends is a better approach then being adversaries. And I have no doubt the Chinese have already pledged their support to the new govt. Nothing personal against the Brotherhood...just good business.

[Keith_McClary]

$this->bbcode_second_pass_quote('ROCKMAN', 'B')ut then this morning there was a report that there may be a US law that would prevent us from sending our normal $1.5 billion in aid to Egypt: we can’t send aid to a govt taken over by military coup.

[ROCKMAN]

Keith - So the question: is the move by the Egyptian military a coup? I suppose that depends what the definition of “is” is. Sound familiar? LOL

[Keith_McClary]

$this->bbcode_second_pass_quote('ROCKMAN', 'K')eith - So the question: is the move by the Egyptian military a coup? I suppose that depends what the definition of “is” is. Sound familiar? LOL

[Keith_McClary]

hiccup, hiccup.
ElBaradei’s appointment as Egypt’s PM overturned

[agramante]

hic-COUP! hic-COUP!

Plainly Egypt's military thought decisive action would be better than a draw-out siege. Time will tell how right they were, and what their intentions really are--whether to assert more control over the central government, or to step back.

Egypt's control of the Suez is critical enough to the world economy that whoever is in charge--provided that they're in charge--will find willing enough partners at the table. It's likely this consideration which prompted their military to do as they did--to make as quick and efficient a change of leadership, even outside the constitution, as they could, and avoid a Syria-type meltdown into factions, though a unified military would ultimately be the arbiter. Better to act now, as the crisis was beginning to unfold, than wait until they had to start attacking their own citizens in the effort to pacify things, and so lose their own approval rating.