yet another chunk..

The China connection
Saudi Arabia, Iraq and Iran stand one-two-three in global estimated oil and natural gas reserves. The Iraq invasion, which unsettled world energy politics in unpredictable ways, set in motion portentous activities in China, an undisputed future US economic competitor. China's leaders, in search of energy sources for their burgeoning economy long before the American invasion of Iraq, had already in 1997 negotiated a US$1.3 billion contract with Saddam to develop the al-Ahdab oil field in central Iraq.

By 2001, they were negotiating for rights to develop the much larger Halfayah field. Between them, the two fields might have accounted for almost 400,000 barrels per day, or 13% of China's oil consumption in 2003. However, like Iraq's other oil customers (including Russia, Germany and France), China was prevented from activating these deals by the UN sanctions then in place, which prohibited all Iraqi oil exports except for emergency sales authorized under the UN's oil-for-food program. Ironically, therefore, China and other potential oil customers had a great stake in the renewed UN inspections that were interrupted by the American invasion. A finding of no weapons of mass destruction might have allowed for sanctions to be lifted and the lucrative oil deals activated.

When "regime change" in Iraq left the Bush administration in charge in Baghdad, its newly implanted Coalition Provisional Authority declared all pre-existing contracts and promises null and void, wiping out the Chinese stake in that country's oil fields. As Peter S Goodman reported in the Washington Post, this prompted "Beijing to intensify its search for new sources" of oil and natural gas elsewhere. That burst of activity led, in the next two years, to new import agreements with 15 countries. One of the most important of these was a $70-billion contract to import Iranian oil, negotiated only after it became clear that a US military threat was no longer imminent.

This agreement (Iran's largest since 1996) severely undermined, according to Goodman, "efforts by the United States and Europe to isolate Tehran and force it to give up plans for nuclear weapons". On this point, an adviser to the Chinese government told Goodman, "Whether Iran would have nuclear weapons or not is not our business. America cares, but Iran is not our neighbor. Anyone who helps China with energy is a friend." This suggested that China might be willing to use its UN veto to protect its new ally from any attempt by the US or the Europeans to impose UN sanctions designed to frustrate its nuclear designs, an impression reinforced in November of 2004, when Chinese Foreign Minister Li Zhaoxing told then-Iranian president Mohammed Khatami that "Beijing would indeed consider vetoing any American effort to sanction Iran at the Security Council."

The long-term oil relationship between China and Iran, sparked in part by the American occupation of neighboring Iraq, would soon be complemented by a host of other economic ties, including an $836-million contract for China to build the first stage of the Tehran subway system, an expanding Chinese auto manufacturing presence in Iran and negotiations around a host of other transportation and energy projects. In 2004, China sought to deepen political ties between the two countries by linking Iran to the Shanghai Cooperative Organization (SCO), a political alliance composed of China, Russia, Uzbekistan, Tajikistan, Kazakhstan and Kyrgyzstan. China and Russia soon began shipping Iran advanced missile systems, a decision that generated angry protests from the Bush administration. According to Asia Times Online correspondent Jephraim P Gundzik (The US and that 'other' axis, Jun 9), these protests made good sense, since the systems shipped were a direct threat to US military operations in the Middle East:
Iran can target US troop positions throughout the Middle East and strike US Navy ships. Iran can also use its weapons to blockade the Straits of Hormuz through which one-third of the world's traded oil is shipped. With the help of Beijing and Moscow, Tehran is becoming an increasingly unappealing military target for the US.
At the June meeting of the SCO, after guest Iran was invited into full membership, the group called for the withdrawal of US troops from member states, and particularly from the large base in Uzbekistan that was a key staging area for American troops in the Afghanistan war. The SCO thus became the first international body of any sort to call for a rollback of US bases anywhere in the world. A month later, Uzbekistan made the demand on its own behalf. The Associated Press noted, "The alliance's move appeared to be an attempt to push the United States out of a region that Moscow regards as historically part of its sphere of influence and in which China seeks a dominant role because of its extensive energy resources."

The rise of pro-Iranian politics in Iraq
The combination of a thoroughly incompetent American occupation and a growing guerrilla war also set in motion a seemingly inexorable drift of Iraq's Shi'ite leadership - many of whom had lived in exile in Iran or already had close ties to Iran's Shi'ite clerics - toward an ever more multi-faceted relationship with the neighboring power.

The first (unintended) American nurturing of these ties occurred just after the fall of the Saddam regime, when US military forces demobilized the Iraqi army and police, and focused their military attention on tracking down "regime remnants". The resulting absence of a police presence produced a wave of looting and street crime that engulfed many cities. The Coalition Provisional Authority found a remedy to the situation by tacitly supporting the formation of local militias to deal with the problem.

Three pre-existing groups with strong ties to Iran quickly established their primacy in the major Shi'ite areas of Iraq. The Sadrists, centered largely in Baghdad's enormous Shi'ite slum, now known as Sadr City, had historically been the most visible leadership of internal Shi'ite resistance to Saddam and were accused by the Saddam government of accepting all manner of clandestine support from the Iranian government. The Supreme Council of Islamic Revolution in Iraq (SCIRI), and Da'wa, on the other hand, had organized military and terrorist attacks inside Iraq, working from bases in Iran. Both had long been openly associated with the Iranians and were committed to an Iraqi version of Iranian-style Islamist governance. Once Saddam fell, all three groups immediately sought leadership within Iraqi Shi'ite communities and dramatically increased their standing by recruiting large numbers of unemployed young men into their militias and assigning them to maintain order in their local communities.

The Sadrists, with their Mehdi army militia, also became the backbone of Shi'ite resistance to the occupation, leading two major revolts in Najaf in April and August of 2004, and highly visible non-violent protests at other places and times. SCIRI and Da'wa took a more moderate stance, following the lead of Grand Ayatollah Ali al-Sistani, and working, however cautiously, with the occupation authorities. At the same time, all three groups provided much of the actual local governance in southern Iraq, including establishing offices where citizens could ask for individual and collective help, and adjudicate local disputes.

As the occupation's military forces either withdrew to their bases in many cities in the south or became completely occupied in countering an increasingly resourceful and widespread armed revolt (mostly in the Sunni areas of central Iraq), the militias became increasingly important parts of local life, only adding to the ascendancy of the organizations they represented in Iraqi civil society. Given their historical connections to Iran, this ascendancy cemented a sort of fraternal relationship between the emerging Shi'ite leadership and Tehran's clerical government.

As the economic situation in Iraq deteriorated under the weight of corrupt reconstruction politics and the pressure of the resistance, Iran became an ever more promising source of economic sustenance. Saddam had forbidden Iranian pilgrimages to Iraqi Shi'ite holy sites in the twin cities of Karbala and Najaf, so the toppling of the Ba'athist regime opened the way for a huge influx of pilgrims and cash. Iranian entrepreneurs began to negotiate building projects for hotels and other tourist-oriented facilities in the holy cities. Iranian financiers offered to support the construction of a modern airport in Najaf to facilitate tourism.

From this foundation, other economic ties developed, though the hostility of the American-run Coalition Provisional Authority and its appointed Iraqi-run successor limited formal relationships. Nonetheless, a bustling cross-border trade involved hundreds of trucks a day carrying a variety of goods in both directions. These relatively unimpeded highways became even more crowded as the escalating insurgency began to threaten, or actually close, routes to Saudi Arabia, Syria and Lebanon. When a combination of security and infrastructural problems shut down the Iraqi port of Umm Qasr in 2004, Iraqi merchants began using the nearby Iranian port of Bandar Khomeini to receive shipments of Australian wheat. In one ironic twist, according to persistent rumors, regular shipments of Johnny Walker Red and other imported American liquor brands were being smuggled across the border into prohibitionist Iran to feed an illegal market at bargain basement prices (as low as $10 per liter).