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China, Russia, and the Middle East: The Shifting Geopolitics of Great Power Competition
Senior Fellow for National Security at the Foreign Policy Research Institute, and former Diplomacy Consultant to the State Department (2006-2023) John Sitilides shares insights on U.S. foreign policy and national security strategies to address, confront, and resolve the rapidly shifting dynamics of geopolitics, international security, and risk management in an “increasingly fragile world order.“
Strategic Deterrence to Protect National Security and Uphold Global Trading System
In conjunction with the U.S. intelligence community’s 2024 Annual Threat Assessment, Director of National Intelligence Avril Haines testified before the Senate and House Intelligence Committees in April 2024 that the international security landscape is marked by an “increasingly fragile world order” that is testing and challenging U.S. primacy on multiple fronts, “including great power competition with an ambitious, but anxious China in Asia and a confrontational Russia in Europe,” as well as regional conflicts afflicting the Middle East since the Oct. 7 Hamas multi-pronged invasion of southern Israel. The multiplying, intensifying disruptions occurring in several of the most critical regions of the world is roiling the strategic planning of corporate executives and investment managers, especially in national and global energy markets. During the first half of 2024, U.S. arch-rivals and lesser adversaries increasingly perceived American deterrence capabilities as weakened and therefore less credible.
Iran’s Multi-Pronged Threats Across the Middle East
Hamas could not have perpetrated the sadistic atrocities against thousands of Israeli civilians without years of active training, organizing, and financing of its terror operations by Iran. Since the radical Shia theocracy took power in Tehran in the 1979 revolution, the Iranian regime has been actively encircling, threatening, and attacking Israel, its Gulf regional neighbors, and U.S. personnel, bases, and regional assets through a series of proxy terror groups and organizations. Together, Hamas in Gaza, Hezbollah in Lebanon, Houthis in Yemen, and Shia militias in Syria and Iraq comprise the Iranian-led “Axis of Resistance” across the Middle East, from Iran to the eastern border with Afghanistan and Pakistan, as far west as the Mediterranean coast of Syria, Lebanon, and Israel, and south to the Horn of Africa and the Arabian Sea.
The Axis is overseen by the Quds Force, the overseas arm of Iran’s military elite known as the Islamic Revolutionary Guards Corps. Tehran’s Shia theocracy has actively trained thousands of Hamas terrorists, with financial support estimated by the State Department of up to $100 million annually since it seized power from the Palestinian Authority in Gaza in 2007. Much of the financing for these operations now comes from the spike in Iranian oil sales to China, especially as Washington has since 2021 relaxed U.S. sanctions against Iranian oil buyers, in an effort to coax Tehran to the negotiating table to restore the multi-national nuclear agreement. Tehran is believed to have earned $100 billion from renewed oil exports, about 90% of those to China.
The most important strategic asset of the Iranian-led axis is Hezbollah, deployed north of Israel inside Lebanon. Iran has armed and trained about 40,000 Shia Hezbollah fighters, having invested between $700 million and $1 billion annually for years, dating back to the early 1980s.
The State Department describes Hezbollah as “the most technically capable terrorist group in the world.” Possessing 150,000 missiles and rockets aimed at Israel, increasingly loaded with precision-guided technology, Hezbollah acts as the primary deterrent hedge against a major Israeli attack on Iran’s nuclear energy and weapons facilities.
Global Shipping Under Assault in Vital Red Sea Chokepoint
About fifteen years ago, Iran began arming Houthi rebels in Yemen, in the southwestern corner of the Arabian peninsula astride the Bab al-Mandab strait, one of the world’s most important waterways and shipping chokepoints through which about 12% of global shipping in volume passes annually. The Houthis declared solidarity with Hamas and attack global shipping in the Red Sea, choking off regional shipping lanes between the Indian Ocean and the Mediterranean Sea, disrupting European supply chains and rerouting commercial and energy shipping. Previously, about sixty ships daily crossed the Red Sea north towards Egypt’s Suez Canal or south into the Arabian Sea to turn east either to energy rich Gulf ports or the maritime superhighway across the Indian Ocean enroute to East Asia markets. Red Sea shipping has since collapsed by 80%, and container ships are being re-routed around Africa, causing two to three week delays, overburdening African ports with surging shipping traffic, and adding costs to international commerce between Europe, the Middle East, and Asia.
Iran’s unprecedented barrage of ballistic missiles, cruise missiles, and drones against Israel is the first such direct military attack launched from Iranian soil, after decades of hiding behind its many regional terror, militia, and proxy forces. Israel’s complex Iron Dome defenses successfully destroyed the barrage with intelligence input from Saudi Arabia, Jordan, and the United Arab Emirates. Whether Iran’s failed attack was the outcome of strategic incompetence, hardware failures, or a deliberate decision to avoid escalation and re-establish deterrence remains speculative. Israel retaliated with a modest-scale yet sharply-focused attack near Iran’s major nuclear facility, demonstrating its ability to evade Iranian missile defenses and destroy nearby air bases – as well as Iran’s valued nuclear related facilities. Israel remains the Middle East’s only nuclear power, with as many as 80-300 land-based nuclear-tipped missiles in hardened silos, on sophisticated fifth-generation aircraft, and on submarines on near-constant patrol in the eastern Mediterranean Sea near its Haifa port, against which Tehran currently possesses zero capability to prevent from reaching targets in westernmost Iran.
FBI Warms of Potential International Terror Resurgence
FBI Director Christopher Wray has testified before Congress that the Islamic State terror group is now an elevated threat within the United States and in western European countries, following the devastating terror strikes in Iran in January 2024 and in Moscow in March 2024, the deadliest in Europe in twenty years. The FBI has about 4,000 open investigations into possible lone-wolf extremists, small groups inspired by Hamas, or larger coordinated attacks as in Moscow, with a significant increase since Oct. 7. According to the White House, “there is no current evidence of a credible plot. We are extremely vigilant about the potential risk given the evolving threat landscape.”
No Viable Exit Strategy for Ukraine War
Moscow’s broader attention remains concentrated on the ongoing invasion of Ukraine, now well into its third year and with no diplomatic settlement in sight. The war of attrition may be reaching an inflection point whose further direction is under intense political debate in Washington, and a nascent one in Europe. Vladimir Putin has ordered the Russian industrial base into full-time war production mode, is rapidly expanding Russia’s munitions advantage over Ukraine, mobilizing and deploying significant additional manpower in captured Ukrainian territory, and pre-positioning armor for new offensives across central Ukraine towards Kyiv. The most recent U.S. aid package is expected to sustain Ukrainian forces through the end of 2025. Ukraine’s economy and especially its civilian energy infrastructure is being targeted with Russian missiles, rockets, and drones bombardment with increasing lethality.
More NATO Flashpoints Outside Alliance Borders
At the same time, the NATO alliance must remain vigilant regarding escalating tensions outside its theater boundaries, beyond just the war in Ukraine. These include in Moldova, sandwiched between Ukraine and NATO member Romania; in Georgia, which Russia invaded in 2008 to carve out two breakaway pro-Moscow republics; in the ongoing conflict between energy-rich Azerbaijan and increasingly impoverished Armenia; and again in the Balkans, where ethnic Serbs threaten to secede from Bosnia thirty years after regional conflicts resulted in the killings of a quarter million Europeans. None of these potential actions or hostilities violate any NATO sovereignty or territory, which leads to the question of whether and how the alliance would respond to a series of additional out-of-area mini-crises or wars as in Ukraine. Whether President Biden is re-elected or former President Trump is elected to a second term, the White House in 2025 can be expected to call on delinquent alliance members to spend at least 2%, and as much as 3% of GDP on defense procurement to free up scarce U.S. forces and assets for re-deployment in the increasingly precarious Indo-Pacific region.
China’s Strategic Rivalry Versus the Free World
China continues to escalate its harassment of Taiwan since the January 2024 election of its current president. Dozens of Chinese aircraft regularly probe Taiwan’s defenses and U.S. diplomatic and military responses, to advance Beijing’s strategy of testing and exhausting Taiwan’s political leadership in order to eventually unify with China what it considers to be merely a renegade province with zero sovereignty over its future. This policy in turn reinforces Taiwan’s majority opposition to unification, especially after Beijing’s brutal crackdown on Hong Kong as a former “special administrative region” largely extinguished any remaining interest in a “one country, two systems” outcome.
Beijing’s strategic calculus seems to entail gradually expanding its aggressive maritime patrols and frequent military airspace violations and transgressions around and over Taiwan, and where feasible, the South China Sea and the East China Sea, where it shares maritime boundaries with — and contests the sovereignty over the continental shelves and islands of — Japan and South Korea.
Those countries are also alarmed at Beijing’s hostile actions against the Philippines, largely obscured by the focus on Taiwan, as well as against many ASEAN countries that border the South China Sea. In response, the White House and Congress have deployed U.S. Army Special Forces on Taiwanese islands, training troops in the event of an amphibious assault by China. This daring policy may undermine Washington’s long-standing adherence to maintaining the status quo, supporting a free-market democratic Taiwan that chooses its own domestic, political, and economic directions, but does not declare formal independence from Beijing. For the time being, this approach may be the most effective means of preventing a calamitous war in Asia that Bloomberg Economics projects could result in losses of $10 trillion, or 10% of global GDP[1].
China’s Global NetZero Supply Chain Dominance
In recent decades, Germany, the U.K., and other European countries became willfully dependent on a hostile authoritarian Russian supplier of energy, and the gradual deindustrialization of the continent’s major powers exposes their lack of strategic foresight regarding Moscow’s energy weaponization options. However, a repeat of absent strategic foresight is playing out in the industrial West as political leaders continue to forego “all of the above” energy supplies that provide a more robust domestic security, instead becoming dependent on a hostile authoritarian Chinese supplier of energy to power their economies in the decades ahead. Beijing’s “Made in China 2025” program to dominate the leading breakthrough technologies of the 21st century includes battery electric vehicles, solar panels, and wind turbines. Chinese Communist leaders saw the opportunity in the early 2000s to exploit the growing impulse in Western capitals to abandon reliable, affordable, and readily available coal, oil, and natural gas and to instead pursue intermittent, weather-dependent alternative energy production as a replacement for hydrocarbons. China now dominates the global production of these alternative energy sectors of growing importance in the U.S. and EU, due mostly to massive distortional government subsidies of their mandated installation and consumption.
Energy Realism for a Robust National Security
China also dominates the global electric vehicle supply chain and seems positioned to do so for the foreseeable future. The Communist Party is targeting Germany’s global automotive industrial lead just as it successfully collapsed Germany’s and Europe’s solar panel manufacturing advantages in the late 2000s and early 2010s. Those industries are now flattened in Europe, and China controls most of the refining and processing of rare earth elements required to build solar panels, wind turbines, and all-electric vehicles as well as their batteries. These alternative energy sectors cannot be built without the energy-intensive production of steel and cement that require coal, oil, and natural gas. As Beijing tightens its grip on the manufacturing of these alternative energy components, it is the world leader in coal plant expansion and is planning as many as 300 new coal projects at an equivalent rate of two coal power plants being permitted every week, each one designed to last 40 years and offsetting the carbon emissions reductions undertaken in the U.S. and Europe.
Whether President Biden is re-elected or former President Trump is elected to a second term, the U.S. will continue to be the world’s leading oil and natural gas producer and export superpower. Washington will need to urge energy importing countries such as Germany and Taiwan to regard their national security more seriously, to reallocate federal budgets to prioritize military preparedness and bolster regional deterrence, and to diversify their energy supplies more realistically amid the most significant international security upheavals of this still young century.
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