The Dispensable Nation: American Foreign Policy in Retreat

What sort of strategy are we following when we aggressively push for democracy in Egypt while we double down on support for the region’s stubbornly antidemocratic yet none-too-stable royal regimes? If we think that the protesters in Tahrir Square were on the right side of history, then why cozy up to monarchies that will be washed away by it? If we don’t think the region is in the throes of historic change, why embrace the Arab Spring at all? Our zigzagging policy is confusing and unconvincing.

The administration was happy when the Egyptian military accepted the results of the first parliamentary elections (held in stages from November 2011 to January 2012) and allowed the Muslim Brotherhood to take power.¹⁹ The White House thought that letting the Brotherhood experiment with governance—even if there was a danger that it might impose Islamic rule on a quarter of the people in the Arab world—would be less damaging to American interests than suppressing the election result. Short-circuiting the voters’ verdict, the administration feared, might lead to an even worse Egyptian reprise of the bloody, decade-long civil war that broke out in Algeria in 1991 after the generals there shut down an electoral process that the local Islamists were winning.²⁰

The administration was also hoping that Egypt’s Muslim Brothers would take a page from Turkey’s experience and worry less about Islamist ideology than about improving governance and fixing the economy. American envoys met with Brotherhood members, and the White House even hosted a delegation from the group in April 2012 to discuss economic and political issues and future U.S.-Egyptian ties. “They all had PhDs from American universities, and said all the right things,” according to one person who attended the meetings. “It was easy to feel optimistic, but who knows.” Placing a bet that pragmatism would outweigh ideology was a gamble, but it was the right one at the time, and letting democracy take its course regardless of which political or religious force came out on top sounded like prudent policy. It put America on the right side of history and in tune with the public mood in Egypt and the Arab world. But it would not be long before doubt set in, first when Egypt’s new Muslim Brother president, Mohammad Morsi, went to Tehran on a state visit in September 2012, and then, shortly after, when he dragged his feet condemning an anti-American mob attacking the American embassy.

But there was nothing approximating a strategy here. The laissez-faire method was not a reflection of any carefully thought-out approach to improving democratic prospects in the region. Instead, it was an expression of the attitude of detachment from the Middle East that pervaded the White House. It was the right policy for a president who did not want to get any more involved than he absolutely had to with the problems of Egypt and the Middle East. Any other approach would have meant coming up with a strategy and a plan for implementing it. The detachment would be clear when it came to grappling with economic reform, without which democracy would remain stillborn, and the political stasis that would follow, combined with economic stagnation, could hand over the future to anti-American religious extremists.

The collapse of Mubarak’s regime was nothing short of an earthquake in Middle Eastern politics, a significant historical development with far-ranging regional implications—or so was the consensus high and low in Washington. Egypt was going the way of Poland, the Philippines, Brazil, or South Africa—a key regional power turning toward democracy and pulling the rest of the neighborhood along with it. The democratic wave had at last made landfall on Middle Eastern shores.

If the Arab Spring were to bear fruit, America would have to get involved diplomatically and, more importantly, economically. American engagement had been vital to the success of previous democracy waves in Asia, Eastern Europe, and Latin America.²¹ In those places, America had led international efforts to anchor burgeoning democracies in the closest alliances with the West that could be managed (the promise of NATO and then EU membership had served as a useful magnet for Eastern Europe). We influenced political discussions and helped with the work of writing constitutions, forming parties, holding elections, and stabilizing young democratic governments.²² It is arguable that the Arabs would not welcome so much close engagement, but in any case we had no intention of offering it.

Of most crucial importance in the previous waves had been U.S. efforts to work in concert with Europe, international financial institutions, and private enterprise to pour vast economic resources into the new democracies. The idea had been to give promising political developments a sound basis in economic restructuring and greater engagement with the global economy. Over a ten-year period between 1989 and 1999, the West directed more than $100 billion to Eastern Europe alone.

During that time period the relevance of economic reform to successful democratization was captured in the so-called Washington consensus, an agreement among international financial institutions and world powers, led by the United States, to push for a regimen of reforms that would change the structure of economies, societies, and, hence, politics. That consensus has come under much criticism for its excesses, and the pain that many countries had to endure as a result. But it offered the benefit of clear direction to the international community and countries facing change—a sense of where they all wanted to go and how they would get there.

Democracy and stability in the Middle East need the same kind of direction, and a similar level of investment. Without economic change, democratic stirrings would not stand a chance. None of the democracy waves comparable to the Arab Spring succeeded without economic reform. Recall that it was stagnant economic growth, chronic mass unemployment, and the resulting despair that fueled protest against sclerotic Arab dictatorships in the first place.²³ And America had blamed 9/11 on the same lack of opportunity and economic stagnation.²⁴ Yet now that economic frustration was creating an opening for democracy rather than recruiting foot soldiers for Islamic extremism, Western support was nowhere to be found.

Nowhere was this Western insouciance more evident than in Egypt. None disputed that Arab democracy would be won or lost in Egypt. This is the most populous and, intellectually and politically, the most influential Arab country. The outcome in Egypt would decide whether the original message of the Arab Spring would take hold or be swallowed up in power games waged between military establishments and Islamist movements.

Egypt had started a tentative economic reform process during the last decade of Mubarak’s rule.²⁵ Those reforms were in large measure responsible for the emergence of protests—some 4,000 labor strikes and protests between 1998 and 2011.²⁶ The reforms removed the safety net for workers but expanded the private sector and the middle class, who, like middle classes everywhere, clamored for greater freedoms. Middle-class Egyptians were the first in the country to embrace the Tunisian example, organizing anti-Mubarak demonstrations that drew huge numbers of the frustrated poor who blamed the elderly longtime president for the jobs and social services lost to economic reform.

Mubarak’s reforms had not gone far enough by the time protesters occupied Tahrir Square in January 2011, and whatever gains they had made were washed away by the economic impact of the protests, Mubarak’s fall, and the instability that followed. Political upheaval plunged Egypt’s economy into crisis. In the first year after Mubarak stepped down, the country’s economy contracted by 0.8 percent,²⁷ its GDP falling by 4 percent and manufacturing by 12 percent. The economy lost a million jobs; unemployment rose to 15 percent (25 percent for young people).²⁸ Investment fell by 26 percent, with foreign investment dropping off the table ($6.4 billion in 2010, but only $500 million in 2011).²⁹ The drastic drop in domestic and foreign investment presented the government with a gaping hole of $11 billion in its financing in the second half of 2011.³⁰ International arrivals have nearly halved—a grave problem when, like Egypt, 11 percent of your GDP comes from tourism. Not surprisingly, the government’s budget shortfall ballooned, to $11 billion (10 percent of GDP, the largest in the Arab world). Combined with capital flight, which continues unabated thanks to persistent political instability, this has caused a sharp fall in foreign reserves from a high of $43 billion to $15 billion.³¹ Given that two out of every five Egyptians live on less than $2 a day, the impact of such jolts has been profound.

It gets worse: Half of Egypt’s 83 million people are under the age of 24. Among the country’s unemployed, as many as 90 percent are young and two-thirds have never worked. The government is hopelessly bloated and corrupt—for every one government employee per capita in Turkey there are eleven in Egypt, where do-nothing state jobs have long served as a thinly veiled form of welfare. The woeful educational system turns out a workforce of graduates who are not competitive in today’s global economy.

Egypt faces a vortex of poverty and instability unless it fixes its economy and finds jobs for its rapidly growing population. To keep up with the youth bulge, the economy must grow faster (in the range of 10 to 11 percent a year) and for much longer than perhaps has been seen anywhere in the world. (Actual growth in 2012 is expected to be 1.5 percent.)³² Failing that, Egypt could face social misery, and worse, radicalism. If the past is any guide, falling wages, downward mobility, and growing inequality are drivers of Islamic activism.³³ The deadly attacks on American diplomats in Egypt, Libya, Tunisia, and Yemen by anti-American mobs in September 2012 are just a preview of the kind of radicalism that could take hold of the region if economic stagnation and social misery are to be the lot of its people. Between 1974 and 1984, Islamic fundamentalism exploded in Egypt, especially among urban youth. During that same decade, public-sector white-collar workers (those working in state-owned enterprises) saw their real wages shrink by 8 percent, and, for those in government administration, by 23 percent.³⁴

The level of growth needed would require radical change. Egypt would have to open its economy, shrink its bloated and corrupt public sector (public debt stood at 80 percent of GDP in 2011), reform its laws and financial regulations, invest more in education and infrastructure, and promote privatization, trade, and direct foreign investment.

Unfortunately, the country has been reluctant to do any of this. Egyptians are not ready for economic change, at least not at the pace that was seen in Latin America or Eastern Europe when they went through reform. They want jobs and better services, but their political discussions do not include a serious debate over what to do with the economy.

On the street and in factories the perception was that with Mubarak gone there would be money flowing from the top down. But labor unrest and street agitation squeeze businesses. One ceramics manufacturer told me that he gave his factory workers a 40 percent raise only to have them strike for another 20 percent. He appealed to the government for help. The answer came back: “You are rich, they are poor; give them what they want.” He could not, and started winding down his business. The impasse is driving Egyptian politics into a binary choice between populism, under which the public sector will grow again to feed the frustrated poor, and a return to the law and order of Mubarak days—either way, democracy will be the victim.

Egyptians are suspicious of the West and jealously guard their national rights and sovereignty. They do not want the IMF telling them what to do, and their first impulse was to refuse its loan offers. They thought they could get away with this because Qatar and Saudi Arabia had promised Cairo $11 billion in economic assistance, but none of it ever materialized. One senior administration official told me that the interim government said to Washington and the IMF in private, “We don’t want your help, and if we agree to your help we don’t want you to tell anyone about it.”

This is a shame because such changes have a record of working. Reform was not easy. Eastern Europe had to endure 20 percent inflation along with drops of 20 to 40 percent in GDP. There were many setbacks, social hardships, and acts of political resistance. But in the end, economies were transformed, and Eastern Europe is better off for it. The same is true of Latin America.

Democracy (and also political and religious moderation) depends on economic growth, and economic growth depends on reform. It is that simple. Reforming Egypt’s economy will not be easy. The country lacks leaders resolved to push painful change, however badly needed, and there is no unified vision of the future. Egyptians want prosperity but are not ready to sign up for real economic reform and the belt tightening and economic hardships that go with it. Many think Mubarak already tried and failed at those kinds of reforms. President Muhammad Morsi, a sixty-one-year-old engineering professor with a PhD from the University of Southern California, talks about development and the economy all the time. He says that he favors the private sector and a business-friendly environment, and wants to work with international financial institutions to reform Egypt’s economy. His presidential campaign banners touted him as “Egypt’s Erdogan.” But he represents a Muslim Brotherhood that has a strong populist wing and has promised an economic safety net for the poor.³⁵

The single biggest obstacle to economic reform and democracy alike is the Egyptian military. Something of a state within the state, it controls vast holdings in every economic sector from manufacturing to construction, agriculture, and tourism.³⁶ It runs four-fifths of all industrial concerns and accounts for upward of 30 percent of the economy.

The generals have a different view of Egypt’s future and are jealously guarding their economic assets, which means resisting reform. They think that Egypt’s strategic importance would bring in enough aid for it to function—they have a hard time seeing why things could not go back to the way they had been under Mubarak. A senior American diplomat told me, “The military and its new government are not keen on reform, they think we should pay up for the country’s upkeep, and are resentful that we are not [doing so].”

The military does not want to give up its control of the economy, and that is a large reason it does not want to give up political power. It used its influence over the interim government in 2011 to say no to the IMF. And when it looked likely that an independent Muslim Brotherhood government would take over, the military tried to wrest control of the parliament and the constitution-writing process and tightened its grip over the judiciary, in part to have veto power over economic reform.

Egypt eventually entered talks with the IMF for a $4.8 billion assistance package (which would demand some reforms). The Muslim Brotherhood delegation that visited the White House in April 2012 was surprised to learn that the IMF had offered a package twice as large, but the Egyptian government (at the military’s prodding) had said no.

Many Egyptians, the Muslim Brothers foremost among them, say that they want democracy and prosperity. But unless the military’s grip on the economy is loosened, democracy will not stand a chance, and poverty will remain Egypt’s lot. Breaking the hold of the military over the economy will not happen absent fundamental reform with strong international backing. So far, Washington has neither endorsed economic reform forcefully nor used its considerable leverage (in the form of massive military aid) to nudge the military to consent to change.

Many hope that Egypt will embrace the “Turkish model,” mixing democracy and capitalism with a somewhat toned-down brand of Islamism to produce an open and prospering society. But the Turkish model was built on the back of a series of IMF-prescribed reforms and the EU’s deep economic and political engagement with Turkey. Absent similar fundamental economic reforms, Egypt looks to be going the way of Pakistan, its economy reliant on U.S. aid, constantly on the brink of disaster, and avoiding it only thanks to timely infusions of Arab aid and rescue packages put together by international financial institutions. Meanwhile, the country gets poorer, its problems grow, and its escape from the cycle of crisis and poverty becomes more daunting and less likely. Anti-American extremist forces would then reap the fruits of political frustration and social misery. On the political front, the military’s “deep state” controls key sectors of the economy and wields considerable influence over the bureaucracy, the judiciary, and the still-potent security services. Prospects for civilian rule, let alone true democracy, are dim. The Obama administration may have bet on democracy turning Egypt into Turkey, but Turkey got where it is thanks to sustained European engagement. There we have fallen short.

It is true that the global financial downturn and the Greek crisis had left little for Cairo, but that is no excuse. Egypt is a hinge upon which the fate of the whole Middle East may turn. America spent trillions addressing security problems in the region after 9/11, problems that Washington believed were caused by the failings of dictatorship. Did America not go to war in Iraq to bring democracy to the broader Middle East and end the grip of Islamic extremism on Muslim hearts and minds? Now that democracy was on the horizon, we did not want to invest in it. “In short,” writes David Sanger of the New York Times, “America would talk about democracy promotion. But it would no longer be democracy’s venture capitalist.”³⁷ Venture capitalism or something like it, however, is just what the Middle East needs. The region boasts plenty of entrepreneurial energy, but it can find no outlet as long as the twitching hand of the sclerotic state chokes off economic liberty.³⁸

The United States does not need to get it right everywhere, but it cannot afford to get it wrong in Egypt. It definitely cannot afford to stand back and simply watch events unfold without trying to influence them. A year and a half after Mubarak’s exit, the Obama administration still had no clear strategy for Egypt. Economic reform’s potential as a key driver of other changes has been largely overlooked. Change the economy in a freedom-friendly direction, and the generals and Islamists will have to adjust. In the words of the international relations scholar Michael Mandelbaum, “The knowledge and skills needed to practice democracy … come from the experience of operating a particular kind of economic system.… The school for democracy [is] the free-market economy.”³⁹

Egypt’s best chance for real change came early, right after Mubarak left. That is when America and its allies should have put a big financial package on the table in exchange for big changes. We should have stressed the need for economic reform emphatically, bending all efforts to convince Egyptians that their problems will never be solved until they scale back their overgrown central state, improve its efficiency, and allow more scope for free enterprise. We should have put economic reform at the top of our talking points with Egyptians across the political spectrum, the generals included. The administration is gradually warming up to the idea, but it still does not see the economy as the fulcrum for change in Egypt and is not making the necessary big push for it to happen.

That we have settled for doing so much less than we did after 1989 in Asia, Eastern Europe, and Latin America speaks volumes about our disengagement from the region. If the potential for democracy held by the Arab Spring was not enough to compel our engagement, it is not clear what would be.

The Arab Spring was a classic “black swan,” an unlooked-for but massive strategic shift that made the first big cracks in the hard crust of brutal dictatorship that had long encased the Middle East’s basket-case economies and scary social trends. It did what the Iraq war had been meant to do but had fallen short of. It was America’s opening to try in this region some of what it had tried two decades ago as the Iron Curtain fell and dictatorships crumbled one after the other. Back then, America jumped at the chance to leverage the West’s victory in the Cold War in ways that would change the world for the better. We led an international alliance to build market economies and consolidate democracy across many parts of the world. The chance to do the same in the broader Middle East, to build prosperous economies and nurture democracy—to try to move the region into a new historical phase and onto a safer trajectory for all concerned—has not evoked a comparable response. Reformist hopes are never a sure thing, but surely this is an opportunity tragically lost.

Obama never offered a vision or a grand strategy to guide America’s response to the cascade of events unfolding in the Middle East. He responded to the Arab Spring without a consistent strategy or much enthusiasm or engagement, as if the protests and the political changes they produced were merely an unwelcome distraction instead of a historic opening. France and Britain (and Hillary Clinton) goaded Obama into intervention in Libya,⁴⁰ but there, as in Egypt, American interest evaporated once the dictator was removed. America proved even more reluctant to get involved when it got to Syria. Rebels there have received moral and material support (largely nonmilitary and humanitarian aid) from America but no promise of intervention. In Bahrain, the administration protested the crackdown on protesters but did nothing more; and in Yemen, Washington backed a plan to stabilize the ruling regime with a formula that amounted to “No more President Ali Abdallah Saleh, but no democracy either.” Evidence of repression in Saudi Arabia was simply ignored.

To be sure, Obama’s initial instinct was to support protesters demanding an end to dictatorship. He saw the Arab Spring as a turning point in history, and he wanted America to help Arabs realize democracy. His strident rhetoric in support of protesters and his personal stance in pushing Mubarak off his throne were as revolutionary as what was happening on the Arab street. But his administration backed away from that bold stance. It started talking about balancing interests against values, and in practice increasingly put interests before values. The administration would not support democracy for all Arabs (Bahrainis, Saudis, Yemenis were out of luck), but only for those Arabs whose cause fit American interests. By the summer of 2012, that was a club of one: Syria. To the rulers and people of the Middle East alike, “Obama’s wavering policies could be interpreted not as encouragement of epochal change so much as an effort to continue as long as possible the policies of the past.”⁴¹

Obama has been understandably reluctant to sign up for more wars in the Middle East. But his handling of the Arab Spring and Middle East policy has been defined by decisions that had nothing to do with armed intervention but were all about whether to support the possibility of building democracy in the wake of revolution.

In their book Bending History, Martin Indyk, Kenneth G. Lieberthal, and Michael E. O’Hanlon explain Obama’s failure to rise to the challenge of the Arab Spring by arguing that the candidate who ran on the power of ideas became, once in office, a reluctant realist. His focus shifted away from the grand visions and hopes that marked his campaign and settled on the immediate tasks required for keeping America safe in a highly dangerous world. Realist or not, Obama’s legacy in the broader Middle East will not be a Reaganesque one of having overseen one of the great historical transformations of our time. Instead, it will be far narrower and closer to the legacy of George W. Bush, whose war on terror provided the basis upon which Obama shaped his own approach to America’s role in the world.

If there is a discernible American strategy for the Middle East, it is counterterrorism—continuing the war on al-Qaeda and its franchises and offshoots using Special Forces and drones. This is to be expected—after all, there is still the threat of terrorism coming from the region. But counterterrorism will not transform the Middle East. To fully appreciate the impact of American foreign policy on the region one has to consider the responses to democracy and terrorism side by side, as the Janus faces of American engagement. It is not just that we did not have a proper response at the right time to the Arab Spring, we have doubled down on counterterrorism. And when the two have come into conflict, as in Yemen, the latter has trumped the former. For, as surprising as it may seem to those who expected Obama to be a kind of “anti-Bush,” it is Bush’s preoccupation with homeland security as the be-all and end-all of grand strategy that serves as the best guide to how Obama sees American engagement in the Middle East.

America’s fascination with drones is easy to understand. They are efficient and cheap and a far easier way to wage the war on terror than a counterinsurgency campaign involving tens of thousands of troops and nation-building to go with it. So it was not a surprise that drones quickly became the central pillar of America’s successful counterterrorism strategy in Afghanistan and Pakistan, and then Yemen.⁴²

Other counterterrorism advances also came online right around the time Obama became president, most notably an enhanced cyberwar capability.⁴³ The combination of drones, Special Forces, and cyberwarfare presented the new president with a viable high-tech clandestine alternative to traditional military means to combat terrorism—Counterterrorism Plus. All told, as in the counterterrorism expert Peter Bergen’s estimation, Obama is actually one of America’s militarily most aggressive presidents—comfortable with making tough decisions such as killing bin Laden or expanding drone programs.⁴⁴

When it came to drones there were four formidable unanimous voices in the Situation Room: the CIA, the Office of the Director of National Intelligence, the Pentagon, and the White House’s counterterrorism adviser, John Brennan. Defense Secretary Robert Gates may have said no to military involvement in Libya, but he was fully supportive of more drone attacks. Together, Brennan, Gates, and the others convinced Obama of both the urgency of counterterrorism and the imperative of viewing America’s engagement with the Middle East and South Asia through that prism. Their bloc by and large discouraged debate over the full implications of this strategy in national security meetings.

Quietly, and without any fanfare or debate, counterterrorism became the cornerstone and principal objective of American policy in the Middle East and South Asia.⁴⁵ However, the policy of disengagement paired with drone strikes is not likely to prove viable in the long run. We have learned from our experience in Pakistan that drones are a difficult sell, though local populations may put up with drone campaigns longer if there is deep engagement with the United States and economic assistance to add other dimensions to the relationship.

Drones rely heavily on cooperative regimes that can tie America’s hands in terms of supporting change. Yemen is a good example. Washington was rightly concerned that al-Qaeda would take advantage of the pro-democracy protests that engulfed Yemen throughout 2011 and eventually forced President Saleh out of office. But Washington had to balance its support for political change with its desire to keep in place the security apparatus that supported drone attacks on al-Qaeda targets. Washington left the political negotiations around Saleh stepping down to Saudi Arabia and the Gulf Cooperation Council and focused its attention on al-Qaeda. The outcome kept the Saleh regime in place but without Saleh himself, a sop to the protesters. In the bargain, America protected and expanded its drone program. (It was in the midst of protests that a drone strike killed the Yemeni-American al-Qaeda leader Anwar al-Awlaki, who had been identified as, among other things, a player in the failed Times Square attack.) The message was that even after Arabs themselves did what America had been asking of them for so long—break with Arab nationalism and its dictatorships—America is still sticking with the same game plan, fighting al-Qaeda. Drones, not democracy, drive American policy.

There is no doubt that drone attacks have worked locally (in Afghanistan, Pakistan’s FATA region, and Yemen) to quickly decimate al-Qaeda’s ranks. Yet it is open to question whether the drones’ success in one location masks the creation of bigger problems elsewhere. The record in Pakistan and Yemen shows that drone attacks disperse al-Qaeda farther afield; the metastasis of terrorism in turn requires more drone attacks in more places. That is no success at all.

Drones are also not as innocuous as they sound. Drone strikes are aerial attacks that happen in collusion with a local government or in violation of a country’s sovereignty and in either case run the risk of inflaming public opinion. They provoke anti-Americanism and the extremism that goes with it, and once those sentiments are inflamed it will be difficult to sustain the program—Pakistan and Yemen both provide ample evidence of that. Compared with other methods of striking from a distance, drones can indeed be surgical. But drones are like an economist’s fiscal tool, clean and efficient until they encounter real-world politics.

When we were planning for Hillary Clinton’s October 2009 trip to Pakistan, her first as secretary of state, Holbrooke was adamant that we organize a town hall with women. He said that whenever Hillary got together with women the atmosphere was electric—“Just look at what happened in South Korea,” he would say. She could connect with women around issues that mattered to them, and that could produce a critical breakthrough in Pakistani public opinion.

It made sense, and the embassy invited a large group of affluent, English-speaking women—the type who cared about women’s rights, democracy, and cultural freedoms. Four young women journalists would interview Clinton, and then the crowd would get to ask questions. The atmosphere was indeed “electric,” but not because Clinton was bonding with the crowd. These modern Pakistani women were brimming with anger. From the get-go every other question was about drones, the civilians they killed, and the humiliation they visited on Pakistan by violating its sovereignty. Sitting through that inquisition, I could not see a future for a foreign policy built on drones.

In April 2012, Pakistan’s parliament recommended that the government end the drone program. The next step could be street protests—which have been on the rise since September 2012, when a YouTube video clip insulting the Prophet Muhammad went viral. That would not only make the program untenable but also radicalize politics. Drones could be promoting the very problem that they are intended to solve.

At a time when the Arab world is grappling with economic and political change, American foreign policy is marching to a different drummer. The White House favors containment rather than engagement, and drones are the main tool. And the policy is spreading fast, from Afghanistan and Pakistan to the Middle East. Yemen is the Middle Eastern target for the drone strategy, but if al-Qaeda proliferates in Syria, or in an Iraq now stripped of U.S. troops, or elsewhere—Somalia or Libya—the program could extend to those places as well.⁴⁶ Al-Qaeda thrives in failed states. The right strategy for America is to shore up states battered by the winds of change.⁴⁷

Some have argued that the Arab Spring has not given America much to work with. It has not produced liberal forces marching toward democratic capitalism. Libya is hardly a state, Syria is falling into civil war, and Egypt is descending into the unknown, caught for now between Islamic fundamentalists and their only real rival for power, a clique of authoritarian generals. Nor do democrats seem to predominate in Yemen or Bahrain. Others argue that locals themselves have waved away U.S. involvement. Egypt has been cool to the IMF and has been growing more anti-American. In fact, some say, it is a good thing that America has stayed away, making sure that it is not an obstacle to change.

But not being an obstacle to change is not enough. America should be making sure that change moves in the right direction, is not reversed, and does not go off the rails. Our policy, in the end, will be judged by whether the Arab Spring produces better Arab states that do right by their people and live up to their responsibility to the international order and its institutions. Only then will we have brought our values and interests into alignment. On that score, Obama’s disengaged attitude toward the Middle East has served neither America’s values nor its long-term interests.

At a private meeting in London in January 2012, a senior Saudi prince with influence over the oil kingdom’s foreign policy told an audience of prominent Americans that he did not like the term “Arab Spring” because it did not feel like a spring. “What about Arab Awakening?” asked one of his listeners. He did not like that either; the Arabs had not been asleep. “What would you call it then, Your Highness?” The prince thought for a moment. Then he said, “Arab headaches—that is what they are.”

We are now fairly certain that in the new Middle East, the fruit of the Arab Spring will not be a rising liberal Arab order, but an ascendant Islamist one that, if it is able to assert itself, will be a rival to Iran and Turkey and an enemy to the United States and Israel. The shape of this reality will be decided by intensifying regional rivalries playing out amid rising sectarian tensions and the still-bleak economic picture. America will have to contend with these dynamics, which will affect American interests and set the context for American policy.¹

As we look down that difficult road, we can sum up our interests in the Middle East under three headings: oil, Israel, and terrorism. Americans have come to believe that their country is engaged in the Middle East because we want a cheap and stable supply of oil. That is true, but in reality even if the Middle East had no oil, it would still hold our attention. America cares deeply about Israel, and Israel is in the Middle East. Wishing to change Arab attitudes toward Israel was one big reason why the George W. Bush administration pushed for the war against Saddam Hussein. Those on the right who favored the war saw extremism, anti-Americanism, and antagonism toward Israel as different faces of the same problem, which they blamed on decaying states built on Arab nationalism. As we have seen, that bellicose ideology, which captured the Arab imagination after the Suez Crisis of 1956, launched much of the region into decades of economic stagnation under brutal dictators such as Saddam. Ironically, Arab nationalism made a wasteland of Arab intellectual life, and even after the ideology lost its grip on the popular imagination, the states that it built suffocated whole societies and pushed numerous young people into the arms of Islamic extremists. Destroy those states, free Arab society, and bring democracy to the Middle East, the logic went, and extremism will begin to evaporate while the Arab-Israeli conflict grows more tractable. How unsound this reasoning was became apparent very quickly in 2011.

What is true, what must be openly discussed, is that it was largely in response to our dependence on the Middle East for oil and our concern for Israel’s security that we became so focused on the rise of Islamic fundamentalism, the specter of al-Qaeda, and the rise of a nuclear Iran as a threat. The 9/11 attacks lent new urgency to our worries in these areas, but the roots of concern run deeper, and the lingering fear continues to preoccupy us even after the killing of bin Laden, the visible weakening of al-Qaeda, and the Arab world’s tentative turn to democracy.

The Obama administration may talk of pivoting to Asia—and, by implication, washing our hands of the Middle East—but that goal will likely run up against the reality of challenges that oil, Israel, and terrorism and the host of issues tied to them will put before us. Moving on from the Middle East was an aspiration divorced from hard facts facing American foreign policy. Continued worry over terrorism is still a consuming concern that belies our proclaimed desire to deploy our resources elsewhere in the world.

Let us consider oil, our most obvious reason for being in the Middle East. By the end of the First World War, Great Britain had one overriding interest in the Middle East, and that was oil. The Royal Navy’s switch from coal to oil made the precious liquid a strategic commodity of the first rank. Moreover, the British government stood to benefit from the taxes that British oil companies would pay into London’s exchequer.²

Americans inherited this concern for oil along with management of the region when the British moment in the Middle East ended with the Suez Crisis in 1956. During the Cold War, America jealously guarded the Persian Gulf against Soviet designs. But in time, America also came to worry about Arab threats to cut off oil. One such disruption in 1973, led by Saudi Arabia to punish America for its support of Israel, wreaked havoc on the American economy. Before long, the price of oil had quadrupled as oil-producing countries banded together as OPEC to get a better deal for their precious export.³

The “oil shock” of the 1970s jolted America into action. Since then, we have coddled dictators, built military bases, gone to war, and generally kept deepening our engagement in the Middle East—all to secure oil. The costs of this strategy have been anti-Americanism, war, and terrorism. The columnist and author Thomas Friedman, a longtime observer of the region, thinks that our problems in the Middle East would go away if we ended our dependence on oil—if we kicked the habit and “went green.” For some time now, he has rallied the American Left to embrace alternative energies as the remedy to our Middle East headaches—“go green and end the green menace,” one might call this. Every time someone asks Saudi oil minister Ali Al-Naimi about green energy making oil obsolete, he simply laughs and says, “It’s not going to happen.” Getting off oil is a far-fetched, long-run answer to an immediate strategic problem.

The Right’s solution is to find more oil at home, a sentiment most clearly captured by the battle cry “Drill, baby, drill!” And this might well work. According to a 2011 report from the Congressional Research Service, the sum of all fossil-fuel reserves plus technically recoverable but undiscovered oil and natural gas in the United States and Canada nearly equals the sum of such resources found in Saudi Arabia, Iran, Iraq, Kuwait, Libya, and Qatar put together.⁴ If you add Mexico, then North America’s total exceeds that of these Middle Eastern oil and gas producers. The past decade has seen the rapid expansion of oil and natural gas production via methods such as slant drilling and hydraulic fracturing (fracking) in U.S. shale deposits, including the Bakken Formation beneath North Dakota and Montana and the Marcellus Formation that extends from a corner of Tennessee in the south as far north as western New York State and as far east as New Jersey. Buoyed by such finds (some say the most significant since the discovery of the vast East Texas Oil Field in 1930), America could be on the road to becoming energy self-sufficient. By as soon as 2020, the United States could be the world’s leading producer of oil and natural gas. There is also a great deal more oil and gas stored in Canada’s Alberta tar sands and the outer continental shelf than anyone had realized—the problem is that the environmental costs of getting to it are as yet not fully known.

Still, besting Saudi Arabia or Qatar in oil and gas production will not change America’s strategic conundrum. Energy self-sufficiency is a solution to an imaginary problem. Today we depend on the Middle East for only about 30 percent of our imported oil. The rest of our imported oil—and note that we are depending somewhat less on these sources as places such as North Dakota are now shipping the prized light, sweet crude⁵—comes from Canada, Mexico, Venezuela, and Africa. We take only a tenth of the Middle East’s petroleum exports; most go to Asia. Abu Dhabi’s oil, for instance, is locked down by long-term contracts with Japan and South Korea. And yet despite this, we cannot escape the strategic headaches caused by Middle Eastern oil.

The reason is that the oil market is fungible—a shortage or a high price in one corner means higher prices everywhere else. If the Asian states lose their Middle East supply, their demand for oil will not go away—it will simply push prices higher. But that is not a problem that will be solved solely by drilling or fracking our way to greater oil and gas independence. Nor can we think that oil-supply problems suffered by our allies and major trading partners will somehow leave our own economy unaffected. As such, we may cut our imports of Middle East oil further, but we must still keep viewing stability in the Middle East as a vital American interest. Protecting that interest will become more difficult as complicated changes continue to cascade across the region.

How complicated? Consider the fact that the administration’s decision to escalate pressure on Iran to compel its compliance on the nuclear issue in early 2012 had an immediate blowback in the form of higher oil prices—at the inconvenient moment when the U.S. economy was starting to show signs of growth after years of sluggishness and depressed labor and housing markets.

The oil-producing countries ranged around the Persian Gulf have also become more dependent on their petrodollars, just as they have become weaker and vulnerable to political tumult. They need our greenbacks probably worse than we need their oil. Opulence is not power; to the contrary, it has cut these regimes from their traditional moorings. Behind the gilded veneer of wealth and power are hollow political structures and teetering institutions that increasingly lean far too heavily on American military might.

In late 1973, as the Arab oil embargo following the Yom Kippur War was causing great pain in the West, America warned King Faisal of Saudi Arabia that if he did not lift the embargo, America would invade his country to resume the flow of oil. The king replied, “If you do that, we will set the oil fields on fire. We came from the desert and will return to the desert.” That may have been a slightly credible threat then; it is a wholly incredible threat now.

Gone are the days when Saudi royals could handle the nomadic life of mounted desert tribesmen. The Saudi rulers need stable oil markets even more than we do. Their lavish urban lifestyles depend on oil, as does whatever shaky degree of control they have over their restless people. Forty-five percent of the kingdom’s GDP goes to supporting the royal family with its battalions of princes (60,000 by last count). In 2004 Saudi Arabia needed oil to sell at $20 a barrel to support its entitlement programs and defense spending. To keep the Arab Spring out (and also pay for massive defense spending), the Saudi monarchy promised its population $60 billion in subsidies—it now needs oil to sell for at least $80 a barrel to meet its obligations. That number is expected to go up to $325 a barrel by 2030.

On par with oil, and perhaps even more important to America’s involvement in the Middle East, is Israel’s security. Israel is not entirely a foreign policy concern for the United States. If that were true, we would have hardly sided with a small state with no natural resources or market to speak of, and would have long ago thrown in our lot with the far larger and resource-rich Arab world.

In reality, Israel is an American domestic political issue. Many Americans care deeply about Israel for religious and cultural reasons—Israel receives broad support from evangelical Christians, a community that is far larger than the American Jewish one. We do not have vital strategic interests in the Jordan Valley, but the need to behave as if we do has put us in an unenviable position in the midst of the Arab-Israeli dispute.

The United States will continue to support Israel, and that will weigh on Arab public opinion, fueling anti-Americanism and making it difficult for America to realize many of its goals in the region. It is therefore in America’s interest that the Arab-Israeli dispute be resolved. Then America’s support for Israel would not be at odds with the desire for stronger ties between the United States and the Arab and Muslim worlds. But how to do it? Whereas the Bush administration tried to solve the problem by changing the Arab world, it is more realistic to actually push for a real peace deal.

But we have failed to do so. The Arabs too have failed—either to defeat Israel or persuade it to make peace. With turmoil swirling all around the Middle East, there is now even more reason to sue for peace. America once had the luxury of standing between its Arab and Israeli allies because the region was locked in a predictable status quo. In today’s fluid environment America cannot count on being able to continue as before or rest assured that trying to do so would not in fact fuel instability and imperil its allies. Resolving the Arab-Israeli dispute is perhaps the single most important thing America can do to contribute to regional stability and thereby help the Arab world find its way to peace and security. That would douse the flames of anti-Americanism. But this is unlikely. The Arab-Israeli Gordian knot will not be easily untangled; the corrosive impact of this reality will keep America in the Middle East for far longer than it hopes.

Oil, Israel, and terrorism will remain the mantra of our Middle East policy regardless of what other cause we embrace there or how much we say we are done with the region. The hard fact about the Middle East is that this trifecta is interconnected. We cannot pick and choose which part we want to deal with. If neither us nor our vital allies bought oil from the Middle East, so we could claim to have no more direct or nearly direct dependence on oil, the Middle East could move into someone else’s orbit, probably China’s or Russia’s, which would erode our standing in the world and disturb the global balance. Or the Middle East could collapse into economic misery. Social scientists like to talk about “the oil curse”—when countries have lots of oil to sell and hence lots of money sluicing around to fund misgovernment and corruption—and yet not being able to sell their oil would be even worse. That outcome would not produce a peaceful and stable Middle East we can forget about. On the contrary, we would then face a far unrulier region dominated by conflict and extremism. That would make life harder for Israel as well as Europe, which not only sits next to the Middle East but has many people of Middle Eastern origin within its borders. If our allies suffered from Middle Eastern problems, we would hurt too. The sham of a “hands off the Middle East” policy would swiftly become apparent, and we’d be back in the region in no time.

The way to think about the Middle East is not to discount our dependence on it, but to take proper stock of why we have been so deeply engaged with it. There is more: now is the time to plan, to be prepared for addressing our vital interests in a drastically more complex and fragile environment. America’s challenge is to achieve sustained, smart engagement. Exit is not an option, and whatever President Obama may believe, “leading from behind” our allies won’t do.

The Middle East is going through a difficult phase—and that is saying something, considering that, in recent memory, the region has not had it easy. The Arab Spring has set loose long-simmering frustrations over political repression, economic stagnation, and cultural and religious expression. For the first time in a long time, there is real politics in the Arab world, and the street truly matters. There is also real conflict, and the potential for much more of it. The peoples of the Middle East have given themselves a fresh chance to tackle many problems, and that is a good thing. In the long run, it could help the region a great deal. But there is a danger that, given the current combustible mix of poor economies, Islamism, ethnosectarian score settling, and intensifying national rivalries, the region could end up much worse off, and that mix does not augur well for American interests or Israel’s security. Never before has America encountered so much change and uncertainty in so many countries all at once in the Middle East.

The fundamental circumstances affecting the broader Middle East are worrisome, but not necessarily fatal. The region has too many people and too few resources.⁶ The Middle East is running out of water, low on food and electricity, and increasingly unable to address citizens’ demands for basic public services and infrastructure. The population, moreover, skews very young, so all these problems will only get worse as large generational cohorts come of age and seek better life prospects. Jobs are already scarce, which is one reason why there is growing poverty and political agitation across the region. But down the road, across the region, there will not be enough water, food, or electricity either.

Pakistan is generally considered a South Asian country but can be seen as part of the broader Middle East as well. In its travails we can glimpse the shape of things to come. Electricity shortages are already a staple of Pakistani daily life. A combination of corruption, mismanagement, and the sheer number of users places crushing demands on the country’s outdated power grid. Power outages lasting more than twenty hours a day in sweltering summer heat are common.⁷ Global climate change is melting the Himalayan glaciers, which in the short run means flooding in the Indus Valley that destroys homes, displaces people, and wrecks farmland.⁸ After the deluge looms a time of severe droughts and food shortages. All this in a country of 180 million—the world’s fourth most populous, and expected to be home to 325 million by 2050.⁹ And Pakistan is not alone.

Yemen, too, is running out of water. Iraq is short of electricity, and Egypt is short of both electricity and food: its 83 million people rely on imports to eke out their diets, and high food prices were among the reasons crowds poured into Tahrir Square to pull down the Mubarak regime. Protests in Syria came on the heels of the worst drought in generations.¹⁰ By 2030, there will in all likelihood be many more Yemenis, Iraqis, and Egyptians than there are today, just as there will be more Pakistanis. If food shortages helped spark the Arab Spring, we can only dare to imagine what water and electricity shortages added on top of them will do.

On the brighter side, a more youthful population could also be an engine for growth. Look at China or Vietnam, whose economic booms owe much to each country’s large supply of young workers. The cheap and ample labor they supplied gave China a competitive edge that fueled double-digit economic growth, plenty of jobs at the bottom of society, and even more wealth at the top. The economic analyst Ruchir Sharma writes that cheap labor willing to move to industrial centers is necessary for rapid growth.¹¹ Since 1978, that has been China’s elixir of growth, which in peak years soared to stratospheric rates of 13 percent and higher.¹² Now it can also be the Arab world’s.

Today, China’s labor advantage is not what it once was; manufacturers are looking for other parts of the world where young labor is abundant. The Arab world could be a good candidate. If jobs were to flow west from China, unemployment in the Arab world could decline, and with steady growth at least some Arab countries could find their way to the club of middle-income countries. Tunisia, Jordan, and Morocco are all good candidates.

Although development may not depend that much on what political scientists call “regime type” (dictatorship versus democracy), it does depend on stability. We know that economies will not prosper amid the kinds of conflicts that now haunt the Arab world. We can expect a series of Arab states to fail, generating crises that could tax our resources and demand our attention for years to come. And we are in danger of adding Iran to the tally. We can already see the potential for a belt of failed states containing hundreds of millions of people and stretching from Pakistan and Afghanistan through Iran and on to Iraq, Syria, and even Egypt. We may be able to deal with one at a time, but a confluence of crises could put to the test our ability to manage our interests in the region.

This may be the worst imaginable outcome, but even if only part of it comes to pass it could burden us with untold costs. Imagine the myriad problems that such a result would have in store for us: there will be wars and humanitarian crises to attend to as well as terrorism, piracy, drug trafficking, and other illicit activities to fight. We would be doing this fighting in high mountains and low deserts, cities, towns, and villages from Libya to Pakistan, from the air, on the ground, and on the seas. Our European allies would be supportive, China and Russia may lend us a hand, but what would be missing is real allies in the region. None of the main players in the region will be up to task; in fact they will be the source of much of the trouble.

Egypt may still be in search of stability, and even if it has found it we may no longer see it as a reliable ally—we may find little in common with what is likely to be an Islamist-dominated and prickly, nationalistic state. Egypt, indeed, may become a source of many problems, both deliberate (Cairo could stir up anti-Americanism) and inadvertent (famine could stalk the banks of the Nile as Egypt collapses into a fragile state).

Then there is Saudi Arabia. So much in the Middle East rides on the country’s stability, including prospects for a steady oil supply and reasonable energy prices. You don’t have to look too closely to realize that betting on Saudi Arabia’s continued stability is a risky proposition. What are the odds that a thoroughly undemocratic and fabulously wealthy state built on unquestioning loyalty to a ruling family, backed by lavish entitlement programs and puritanical faith, will chug along unscathed as whirlwinds of change swirl around it? Maybe the Saudis will buck history and bend its rules at every turn—but is that likely? The more the region around Saudi Arabia falls into chaos, the less the kingdom will be willing or able to act as the pillar of American policy. It was not until 1965, when King Faisal brought a semblance of fiscal responsibility to state finances, that America actually thought Saudi Arabia could survive as a country. The past fifty years have lulled us into a false sense of comfort about Saudi Arabia’s exceptional stability. But we should know better than to bet that the country’s luck will continue indefinitely. We should definitely know better than to bet our regional policy on it, especially now in this period of profound change across the region.

As different as it is from the Kingdom of Saudi Arabia, the Islamic Republic of Iran is also something of a dubious historical relic—an ideological state languishing under a bloated public sector, standing outside the global economic and political order and increasingly at odds with its own people. We know from experience that such states, whether communist or Islamist, don’t have an indefinite lease on life. They are brittle entities, all too prone to become victims of their own economic floundering and political brutality.

Unlike Egypt or Saudi Arabia, of course, Iran is not a country that America is counting on to support U.S. interests in the broader Middle East—although as the veteran political analyst Leslie Gelb puts it, Washington and Iran do have a surprising number of significant common interests and could in principle (however unlikely it may seem right now) be fast friends. Much of U.S. policy in the region since 1979 has been aimed at containing Iran and combating its nefarious influence outside its borders. America’s tight relationship with the Persian Gulf’s Arab states and the chain of American bases across the Persian Gulf from Oman to Kuwait all came about in an effort to deal with a troublesome Iran. But let us recall that before 1979, Iran was in fact an important U.S. ally. Is it so strange to think that, even after the massive shift wrought by the rise of the Islamic Republic has been taken into account, a substrate of common national and geostrategic interests remains, at least in potential form, and can be accessed if circumstances change?

Consider that even since 1979 America has at least been able to take Iran’s stability as a given, and has drawn benefit from this. The Iranian state has been a menace to be sure, but not so Iranian society. Iran is arguably the one country in the region outside Israel where the general public is pro-American (or at least not reflexively anti-American). Iran has so far not produced warlords and drug kingpins. Nor is it a free space in which terrorists and pirates may nest at will, or whose main export is massive humanitarian crises. In short, Iran is not a weak or failing state, and while it produces threats, they are of a sort easier to see and even, I would argue, to deal with than the kind of inchoate, unpredictable threats and problems that typically emanate from failed states.

If the current mix of confrontation and economic pressure continues, however, as we’ve seen, state failure is exactly where Iran is heading. The outcome of our policy will be not a stable, friendly Iran, but an unstable, unfriendly Iran. The gradual implosion of the Iranian state and society under international pressure will only add to regional instability.

There is now also another gladiator in the arena to consider: Turkey. Buoyed by a dynamic economy and a decade of political stability under Erdogan’s Justice and Development Party (AKP), Ankara is building its influence in Lebanon, Syria, and Iraq, and increasingly also in Egypt and Libya. The Turks like to do business in the Middle East, but economics is merely the foundation for a more ambitious role as undisputed regional leader and bridge builder between East and West. The Turks have one foot in Europe and one in Asia, they belong to NATO and have special ties with the EU, and now they are also the richer, stabler, and more solidly democratic elder brother who wishes to guide the Arab world toward greater stability and prosperity.

Ankara’s decision to become engaged in the broader Middle East is the most welcome development of the past decade. We should thank Europe for that. By closing the door to Turkey’s hopes for full EU membership, Europe unwittingly made Ankara look east and south. Ruled by a party of moderate Islamists and able to boast years of economic success, Turkey now feels comfortable about returning to the Middle East after close to a century of absence. At the end of World War I, the new Turkish Republic turned west, imagining a European future. Turkey disowned its Islamic and Ottoman legacy just as its rebellious Arab subjects made it clear that they wanted nothing more to do with Turkish rule. Then, Turks were not fellow Muslim Middle Easterners but all-too-recent imperial overlords who had blocked the path to Arab empowerment.

But now the Turks are returning and being welcomed like long-lost relatives who come back from a distant land bearing all the signs and trappings of success. In the time that Turkey was gone, the Middle East changed. It has forgotten about the inequities of Ottoman rule that gave birth to Arab nationalism and the horrors of World War I, or the heroics of the wartime Arab Revolt against Turkish rule led by the maverick British officer T. E. Lawrence. There are no more grudges against Turkey. Instead, Arabs are mesmerized by Turkey’s success, wanting to hear all about how it happened and whether there is anything in it for the region.

Over the past decade, Turkey has increased its economic and diplomatic activity across the Arab world and the broader Middle East, but it still does not have enough Arabic speakers or deep knowledge of the Arab world. Turkish troops and assistance have gone to Afghanistan. Turkey has cultivated trade ties with Iraqi Kurdistan; tried but failed to broker deals between rival factions in Lebanon and Iraq; and participated in international efforts to deal with contentious issues involving Libya, Syria, and Iran.

The West alternately worries about and dismisses “neo-Ottomanism”—the desire to rebuild the cultural and political web of influence that once joined the Arab periphery to the metropole of the Turkish sultans.¹³ Turkey’s tendency to evoke Ottoman times may strike listeners as ominous, but it is unclear that Turks mean their rhetoric as anything more than historical color—somewhat like the occasional evocations of Charlemagne, the Holy Roman Empire, or the Hanseatic League that were heard among Europeans when they were discussing the European Coal and Steel Community and the Common Market. American diplomats tend to look askance at Turkey’s ambitions and have been known to mock foreign minister Ahmet Davutoglu as a neo-Ottoman “Energizer bunny” who can turn every diplomatic contact into a forum for his vision of Turkey’s old-yet-new regional role. But over time Washington has warmed up to Davutoglu and found Turkey to be the perfect instrument for its policy of “leading from behind” our allies in the Middle East—which, whatever its flaws, would be utterly unworkable without Turkey.

Obama seems to recognize this. He phones Erdogan often and has probably conferred with him more than he has with any other world leader. The Turkish prime minister has worked closely with the White House on Syria and Iran, even carrying a personal message from Obama to Khamenei in March 2012 on the eve of the crucial talks with Iran. For America, Turkish influence in the Middle East is an important stabilizing force. Turkey is prosperous and democratic. It is a longtime NATO member and has deep economic ties with Europe. Despite Erdogan’s worrisome authoritarian tendencies—muzzling the press and putting journalists in jail—and periodic overtures to his Islamist base, Turkey retains a competitive political system with values that are closer to those of the West than those of the Arab world. Unlike Arab states or Iran, moreover, Turkey is not running against history, but with it. We can safely imagine Turkey becoming even more stable, democratic, and capitalist.

Some in Washington think the new axis of power in the region pits Ankara-Riyadh-Doha (add Cairo and Damascus to that once Egypt gets on its feet and Syria’s Sunni majority topples Assad) against Tehran-Baghdad-Beirut (until Hezbollah is declawed). They argue that America ought to work with and through the Sunni axis against the Iranian one. The logic seems self-evident, but the picture is not likely to be that clear.

There is still reason to doubt that Turkey could or would serve as anchor for American policy. Turkish enthusiasm for the Middle East was at its peak when the region looked to be opening up economically and inching its way to democracy. Ankara could then imagine a region built in Turkey’s image; Istanbul would be the region’s economic hub and Ankara its political center. Foreign Minister Davotuglu, Turkey’s most articulate strategic thinker, did not envision neo-Ottomanism to be about troubleshooting, peacekeeping, and scurrying from crisis to crisis to tackle the region’s problems.¹⁴ Turkey will have to do some of this, especially when trouble is at its door as in Syria, but Ankara’s appetite for diving headfirst into the region’s problems is dwindling. Davotuglu’s slogan for Turkey’s turn to the Middle East was “zero problems with neighbors.” Now with states across the region imploding into protest and conflict, it looks as if Turkey may find itself with neighbors that offer zero aside from problems.

Turkey may also lack the capacity to do more troubleshooting. In the near future it will have to contend with succession in its ruling party, and the Turkish economy is beginning to show signs of slowing down, along with many other once high-flying emerging markets.¹⁵ This does not mean that Turkey will become unstable, only that it may not be willing or able to act as regional ombudsman or America’s go- to ally.

In short, America will be compelled to do more in this region, and it will have to do it increasingly on its own. If it needs help, it will have to rally allies. Leading others from behind will not work largely because there are no obvious allies able to put out ahead. Add to this the fact that in the end, it is we alone who must defend our position and protect our interests against encroachment by our global rivals, especially China.

If there is any American strategy at play in the Middle East these days it can be summed up as follows: Keep Egypt from getting worse, contain Iran, rely on Turkey, and build up the diplomatic and military capabilities of the Persian Gulf monarchies. In other words, play defense with regard to the Arab Spring, play offense when it comes to Iran, and maintain continuity in waging the war on terror. But the United States must do all this in a changing geostrategic environment.

Over the past decade, the center of gravity of the Middle East has been steadily shifting east and south, first from the Levant and eastern Mediterranean (the region running from Turkey in the north to Egypt in the south and stretching east to the borders of Jordan and Syria with Iraq), which was for decades the eye of the storm in the Middle East, to the Persian Gulf, and then from the Arab world north and east to Iran and Turkey. Since the Iraq invasion of 2003, conflict in and around the Persian Gulf has consumed most of America’s attention and resources. It is in the Persian Gulf that the United States has deployed to fight in Iraq, contain Iran, and keep oil flowing to world markets. The newly salient fault line between Shias and Sunnis runs through the Persian Gulf, and it is also here that oil money gives new kids on the block such as Oman, Qatar, and the UAE their outsize influence on Arab politics.

Since 2003, a Persian-versus-Arab competition for power in the Persian Gulf (with clear sectarian overtones) has become an important regional dynamic, influencing the turn of events in Syria, Lebanon, and the Palestinian territories, where distant Iran, Saudi Arabia, and Qatar are more influential players than neighboring Egypt or Jordan. The fate of Syria and future of Lebanon, in large measure, hang in the balance of Iranian-Saudi relations; it was Qatar that brokered a peace in Lebanon in 2008; and it is Iran and Saudi Arabia that are deepening the sectarian divide in Syria and vying to decide the region’s stance on the Palestinian issue.

Shia-Sunni sectarian rivalry will not always lead to bloody conflict and is by no means the only dynamic at play in the Middle East, but its influence over events large and small, and more broadly over the balance of power in the region, is unmistakable. And the Arab Spring has accelerated this dynamic. Sectarianism will not explain every development and every alliance in the region, but until the imbalance in distribution of wealth and power between Shias and Sunnis is set right, sectarianism will remain an important determinant of regional politics. The Shia-Sunni rivalry and the Arab Spring have brought into sharp relief how much tension centers on the Persian Gulf. It is here that the Shias are concentrated in numbers, and that Iran faces Sunni champion Saudi Arabia. The Persian Gulf is a Shia lake, surrounded by Shia-majority Iran, Iraq, and Bahrain, with significant Shia populations also living in Kuwait, Saudi Arabia’s eastern oil region, and the UAE. The more besieged the Shias feel—and the sight of a U.S.-backed Sunni regime such as Bahrain’s shooting Shia protestors cannot help in this regard—the more likely they will be to seek shelter under Iran’s wing.¹⁶ Iran may pull back from Sunni lands (Syria or Yemen), where its tenuous influence depends on denunciations of Israel, but Iranian influence will only expand among the Shia. Iran’s zone of influence will grow in and around the Persian Gulf exactly when we see it to be on the decline in Syria. This reality not only makes the Persian Gulf the geostrategic epicenter of the broader Middle East, but also should give pause to any American strategists who think they can count on stable Persian Gulf monarchies as pillars of U.S. policy.

Washington has found itself unwittingly on the Sunni side of the street. That might have been inevitable given that Iraq now matters less to America while the threat that Iran and Hezbollah pose to Western interests puts them in America’s crosshairs. The combustible mix of the Arab Spring and sectarianism has undermined another American foe in Syria, whereas in Bahrain an American friend quickly stamped out protests. America looks to be doing the Sunnis’ work for them—caging Iran and pulling down Assad. America of course does not think that it is lining up as a player in the region’s sectarian scrum, but it might as well be doing just that, for the result is the same.

That may not be the best outcome, and Washington should take great care lest it sleepwalk into a sectarian blind alley. It will not serve America’s interests to become involved on one side of the most deep-seated and long-running division in the region without a clear sense of its dynamics, how it may end, and what its implications may be for the United States.

To start with, the energy calculus in the Persian Gulf may change to reflect sectarian rivalries. Shia-majority Iraq could challenge Saudi Arabia for primacy as an oil exporter, thereby loosening the Saudi grip on the West’s strategic imagination. Once the mammoth Iraqi oil fields begin pumping to their potential (and also develop excess capacity on par with Saudi Arabia’s), world markets could soften and Saudi Arabia’s economic stability and global political influence wane. Saudi Arabia has 262 billion barrels of oil reserves. It also has pumping capacity (10.8 million barrels a day) that dwarfs Iraq’s (2.4 million barrels a day) and Iran’s (4.2 million barrels a day). But as suggested above, this imbalance in pumping capacity could change. Iraq has an estimated reserve of 144 billion barrels, but some put its true reserve as high as 300 billion. Add Iran’s 136 billion, and the geostrategic stakes in the Sunni-Shia rivalry along the Persian Gulf shoreline begin to come into focus. That these three countries together account for a third of the world’s proven oil reserve bears heavily on worries about steady supplies and stable prices.

There are also rivalries and disagreements between the flag bearers of the Sunni rise, Turkey and the Persian Gulf monarchies, especially over how to handle Iran. They all view Iran and its Shia allies with suspicion, but Turkey, unlike the Persian Gulf monarchies, does not see Iran as a strategic threat and does robust business with Tehran. Furthermore, Turkey and the Persian Gulf monarchies are now rival claimants to leadership of the region’s Sunnis.

The Arab Spring has animated this jockeying for power and influence by aggravating sectarian tensions. This is not just a matter of governments, but of popular attitudes. Sunnis all over the region are cheering for the Sunni rebels who are fighting to topple Assad’s minority Alawite (read Shia) regime in Syria. Similarly, Shias in Iraq, Iran, and elsewhere are identifying with coreligionists in Bahrain who are being held down by a Sunni monarchy and the minority that it represents.

The toppling of Saddam enfranchised Iraq’s Shias. Iran likewise felt emboldened after Saddam’s removal, and when Hezbollah made a strong showing in its 2006 conflict with Israel in southern Lebanon, the Shias seemed decisively on the rise. Fast-forward to 2012, however, and the picture changes. American pressure regarding the nuclear issue is squeezing Iran, and its main ally is on the ropes in Damascus.

Syria is being torn from the clutches of the Assad regime to become a Sunni-led country. Elsewhere, the Arab Spring’s biggest upshot so far has been the unleashing of Sunni Islamism—the Sunni expression of Islam and its unabashed claim to sectarian supremacy and political power—in Egypt, Tunisia, Morocco, and potentially many other Arab countries. In public discourse and official statements, a certain Sunni triumphalism is now palpable.

Leadership of the Sunni world is a plum eagerly sought by many. It is clear that Turkey, in keeping with neo-Ottomanism, sees itself as the protector of Sunni prerogatives in the region.¹⁷ A sense of Sunni identity is embedded in the ruling AKP’s conception of Islam and its place in politics inside Turkey as well as across the region. Back in 1997, before the AKP as we know it had come into being, I sat down with a group of Islamist political activists (several of them are now leaders in the AKP and the Turkish government). One of them tried to explain the dilemma they faced in Turkey by drawing a parallel with Syria. He said, “We do not want Turkey to become Syria, a Sunni-majority country ruled by an Alevi military. In Syria, an Alawite military dominates; here an Alevi military is trying the same thing.” (Turkish generals with origins in the Alevi community, a religious minority with Shia affinities, were then seen as Kemalism’s staunchest defenders and Turkish Islamism’s worst enemies.) The sense of Sunni defensiveness and embattlement that he expressed brought me up short.

The large majority of Turks—especially those on the Islamic side of the aisle—are not just Muslim, but distinctly Sunni in their identity. Just as Turkey’s Sunnis identify with Syria’s Sunnis, Turkey’s Alevis feel solidarity with Syria’s Alawites—although their faiths are not the same and their rituals differ. Alevis, for instance, congregate in cemevis to pray, and the community has so far refused the Turkish government’s entreaties that it too worship in mosques—that is, blend in with Sunnis.¹⁸

By some estimates, Alevis make up as much as a quarter of Turkey’s population (Alevis themselves claim the share is much higher), and they include Turkish citizens of both Kurdish and Turkish ethnicity.¹⁹ To get a fuller picture of the ethnosectarian identities that exist in today’s Turkey, one should also take into account the additional 3 to 5 percent of the population who are Shias of Azeri lineage, the ethnic cousins of Iranian Azeris and much of the population of independent Azerbaijan. None of this is to suggest that Turkey suffers from acute sectarianism—it does not—but sectarian shadings and undercurrents are present. If the rest of the region blows up into sectarian violence, these could become more prominent and more problematic features of Turkish life. Already Turkey’s role in the Syrian crisis has brought to the fore uncomfortable debates about where Alevis pray. Alevi intellectuals have taken the lead in criticizing the AKP government’s support for the uprising in Syria, and debate over Turkey’s role in the conflict now has a clear sectarian undertone. Deniz Baykal, former leader of the opposition Republican People’s Party, or CHP, has called for constitutional changes that would protect Turkey from “Syrian contamination” by fully recognizing the religious rights of the Alevi sect and reorganizing the State Directorate of Religious Affairs to accommodate Alevis.²⁰ The ruling AKP has rejected such suggestions. Prime Minister Erdogan has shot back, saying, “If we are Muslims then our temple ought to be one and the same” (i.e., no constitutional recognition of Alevi rights).²¹ At the same time, the government is conscious of the brewing sectarian tension in light of developments in Syria. At a public rally Erdogan brushed aside criticism by his main rival, Kemal Kiliçdaroglu (current leader of CHP), of Turkey’s posture toward Syria, saying that of course as an Alevi, Kiliçdaroglu would have a soft spot for Assad.²²

Much has been written about the personal relationship between Erdogan and Assad—they had been known to vacation together—and how that had improved the once-tense relations between Turkey and Syria before the Arab Spring. Such coverage is overblown. The truth of the matter is that neither Erdogan nor anyone in his party has ever thought of Alawites as true Muslims or considered their control of Syria legitimate.

The AKP party’s Sunni base may support greater Turkish involvement in Syria—and that may sit well with Erdogan’s ambition to lead the Sunni world from the Balkans to Central Asia and deep into the Middle East. But fear that deeper involvement in Syria’s troubles could inflame Turkey’s own sectarian tensions has stayed his hand. And so will Turkey’s business interests.

The coming apart of Syria has reactivated Turkey’s Kurdish separatist PKK (Kurdistan Workers Party), which has strong ties with Syria’s Kurds. As Damascus loses control of its Kurdish region and refugees flow into Turkey, the PKK—with the Syrian government’s encouragement—has found more room to operate. The resulting terrorist attacks in Turkey have put the country on edge, raising the specter of a risky Turkish intervention in Syria. What’s more, Iraq’s Kurds are sympathetic to the separatist movement, and their leader Masoud Barzani has provided it support, to Turkey’s annoyance. Relations between Turkey and the Kurdish region of northern Iraq have been warm—this year, after oil giants Chevron, Gazprom, and Total signed oil deals with Barzani, Turkey announced it would build two new pipelines to export the new oil through Turkey. But the PKK is now coming between Erdogan and Barzani.

Similarly, China, which has been doing growing trade with Turkey, is irked at Turkey’s stance on Syria in support of the United States. That has not impacted business between the two countries so far, but it is a dark cloud over the horizon. Syria is putting at risk Turkey’s domestic stability and economic interests, and that is likely to serve as a brake on Erdogan and Davutoglu’s embrace of the Sunni surge in Syria and Iraq.

Turkey’s main rival for leadership of the Sunni world is Saudi Arabia. The rivalry is not new. During the first decade of the twentieth century, the Ottoman-appointed governor of the Hejaz (the mountainous Red Sea coastal province of today’s Saudi Arabia where Mecca and Medina are located, and which at the time was the seat of power on the Arabian Peninsula), Sharif Hussein of Mecca (the great-grandfather of King Abdullah II of Jordan), challenged the Ottoman sultan in Istanbul, claiming autonomy for Hejaz and religious authority for himself despite the sultan’s nominal status as caliph of all Muslims. Hussein’s case rested on his claim of blood kinship to the Prophet Muhammad himself (something to which the Ottoman sultans had no pretensions) and his status as “guardian of the two holy places,” meaning Mecca and Medina.

The rivalry reached its symbolic climax in a dispute over who had the authority to declare a jihad either for or against the Allies or the Central Powers during the First World War. In the end, Sharif Hussein threw in his lot with the British, who thought in turn that his fatwa would carry the most weight not only with Arabs but also among the many Muslims of British India and Britain’s African colonies. Given this thumbnail history (readers may be familiar with some of it from well-known sources such as T. E. Lawrence’s Seven Pillars of Wisdom or David Lean and Robert Bolt’s 1962 cinematic masterpiece Lawrence of Arabia), it is not hard to see how neo-Ottoman Turkey’s recent rise has grated on Saudi sensibilities and breathed new life into the old competition between Mecca and Istanbul.

Turkey and Saudi Arabia may cooperate on Syria, but they are vying against each other for influence over Egypt and Iraq. Turkish foreign minister Davutoglu’s idea of an “axis of democracy” running between Ankara and Cairo runs athwart Saudi hopes of embracing Egypt as a means of containing the Arab Spring and the democratic aspirations it released.²³ Saudi Arabia looks to Egypt with worried eyes. A chaotic Egypt will present the Saudis with myriad problems, and a democratic Egypt may be no less a thorn in the kingdom’s side. It is hard to imagine that the oil princes relish the prospect of a large Arab country filled with Sunnis just across the Red Sea playing host to Saudi dissidents, holding competitive elections, allowing mass demonstrations, and the rest. Unlike Iran, Egypt cannot be dismissed as a bearer of Persian and Shia deviationism. Saudi Arabia has already had to close its Cairo embassy for a time.²⁴ Saudi rulers can feel at ease only with an authoritarian Egypt.

Turkey is less sectarian in its outlook than Saudi Arabia and has many more areas of common interest with Iran than do the Saudis, and what we may see is not a hard-and-fast Sunni alliance arrayed against Iran, but a degree of cooperation between Ankara and Tehran that would allow Turkey to set itself apart from Saudi Arabia.

An Iranian businessman who plies his trade in Iraqi Kurdistan told me, “All those Turkish businesses that you see doing business in northern Iraq are not really Turkish; many are Iranian or part Iranian.” He said:

The Revolutionary Guards could not do business in Iraq after 2003 because the Americans would not let them. So [the Guards] formed shell companies in Turkey. Those companies are either Revolutionary Guards–owned or they are partnerships between the Guards and Turkish businesses. Together they do business in Iraq. You go to meetings in Istanbul with these Turkish companies to talk about business in Iraq and there are Iranians in the room. The Turks know it, they are all making money; it contributes to the Guards’ budget.

America should favor a prosperous and democratic Turkey rather than a conservative and authoritarian Saudi Arabia assuming the mantle of Sunni leadership. Saudi Arabia and other Gulf monarchies will be caught between containing the Shia power centers (Iran, Iraq, Lebanon) and coping with the surging Sunni Islamism of the Muslim Brotherhood and Salafis, which have a populist and antimonarchical bent. In order to have any hope of surviving, these monarchies will have to gravitate toward Islamism and feed Sunni extremism across the region. Here again, Pakistan tells a disturbing premonitory tale. There, the Saudis pumped money in to empower Sunni extremists (and fund a nuclear program) as a way of flanking Shia Iran. If the troubles that Saudi-backed Sunni extremism have brought to Pakistan, its neighbors, and the world at large are any indication, we should hope that Ankara rather than Riyadh emerges as the Muslim world’s Sunni big brother. Turkey too will find itself having to tack in the direction of the Islamism that is sweeping the Arab world. That will not suit Ankara’s global ambitions, and we will have to do what we can to see that Turkey does not veer too far off course in order to align itself with the Arab mood. Neo-Ottomanism can be a positive force only if it avoids marching under the banner of Islamism.

The Persian Gulf monarchies’ efforts to surf the new wave are already in full swing. Qatar and Saudi Arabia have been aiding Salafi forces in Libya, Syria, and Lebanon. Yet Washington relies heavily on gas-rich Qatar, a tiny emirate that has big regional ambitions and deep pockets to go with them. Occupying a small peninsula that juts off the Arabian coast into the Persian Gulf, Qatar has long-running rivalries with the UAE and especially Saudi Arabia (there have been armed border skirmishes). The ruling al-Thani family provides bases for the U.S. Central Command (CENTCOM) and also owns al-Jazeera, the Arab world’s most popular and influential satellite TV channel. This unusual combination of U.S. military muscle and influence over Arab public opinion via the power of television gives Qatar an outsized presence in Arab politics. Al-Jazeera tends to follow the interests of the Sunni regime, showing blood-curdling news footage from Syria to rally Arab public opinion against Assad but remaining largely silent about Shia protests against a Sunni monarch in nearby Bahrain.

Qatar took a leading role in brokering a truce between Lebanon’s bickering factions in 2008, averting open conflict there. More recently, Qatar played a key role in Arab League deliberations over whether to push for intervention in Libya and Syria. That sort of regional engagement is attractive to Washington. Doha, America thinks, has the cash and the desire to move policy. But that is a risky proposition. Should America trust a small country that may have the will to make its voice heard diplomatically but lacks the diplomatic and military capacity to see its favored policies through to completion?

Nor are Qatar’s power plays always in line with U.S. objectives. A small fish that wishes to swim beside a whale may know a few tricks, but does it have the stamina to swim against the tide? In a region awash with anti-Americanism, Qatar has decided to balance its close ties with Washington with hedging on the other side. It was not until al-Jazeera broadcast images of the Arab Spring to the world that Washington found something to like about the network. Over the years, al-Jazeera has consistently criticized American policy—and on many occasions deservedly so. In return, Washington has blocked its broadcast on American cable channels, and it was perhaps a convenient coincidence that in both Iraq and Afghanistan American firepower zeroed in on the al-Jazeera bureaus. The network’s anti-American slant was fine with the al-Thanis and their lieutenants, who pointed to it in order to reject charges that they were U.S. stooges.

Qatari hedging does not end with al-Jazeera, however. The emirate has also lent support to Islamist forces (both the Muslim Brotherhood and, more worryingly, Salafis) in Libya, Egypt, and Syria.²⁵ Qatar Airways announced a deal with Iran to take over a fifth of that country’s domestic airline industry at a time when a lack of spare parts and rising air accidents rooted in American sanctions were causing ordinary Iranians much angst.²⁶

The Persian Gulf monarchies have not made it past the dangers that the Arab Spring represents, and indeed are particularly vulnerable to them. The UAE’s decision to close the offices of the National Democratic Institute (a pro-democracy organization backed by the U.S. government) in March 2012 betrayed an awareness of this. The Persian Gulf’s ruling elites are eager for American military protection, but not for American values.

Saudi Arabia in particular is vulnerable to Arab Spring aftershocks. The House of Saud was quick both to jack up domestic entitlement spending and to urge the region’s other monarchies not to give in to protesters.²⁷ The kingdom’s rulers have pumped billions into the economies of Bahrain, Egypt, Jordan, Morocco, and Yemen. The dole has bought Saudi Arabia some relief—bolstering ruling regimes in Bahrain and Jordan, and strengthening the military’s hand in Egypt while giving Yemen a soft landing after Saleh’s exit.

That has worked for now, but the fundamentals are not in favor of long-run authoritarian stability. As we have seen, the region’s monarchies are now more dependent on oil than at any other time in their history, and soon they may be more dependent on the flow of oil from the Persian Gulf into world markets than their thirsty customers.

Saudi financial support to its fellow monarchs is not a one-time intervention. Absent real reform, Arab economies are going to remain bottomless money pits, and Saudi Arabia cannot afford to keep them all serviced amply enough to maintain its influence on the shape of Arab political life. The Middle East is not Europe, and Saudi Arabia (or even the whole collection of Arab petromonarchies) is not Germany. Certainly Abdullah bin Abdulaziz cuts no Angela Merkel–like figure. The notion that America can expect the Middle East to manage its own financial crises the way Europe does is misplaced and dangerous.

We cannot think with glee of getting off Middle Eastern oil and seeing energy prices drop, but then continue to rely on the Persian Gulf’s oil monarchies to realize our security and diplomatic goals in the region. If oil prices fall sharply, Saudi Arabia runs into big trouble. We might not shed many tears for the Saudi princes and their religious policemen, but can we think that cataclysmic change in the Persian Gulf will somehow not affect us?

Oil experts estimate that risk accounts for at least a fifth of the current price of oil—jittery buyers paying a premium to hedge against future supply cutoffs. Our policy in the region, threatening war with Iran, contributes to that premium. If we were to free ourselves of Middle East worries or somehow find our way to peace with Iran, the biggest losers would be Saudi Arabia and Russia, each of which has an economy that is dangerously dependent on high oil prices.

If the Chinese and Indian economies slow down over the coming decade, the Persian Gulf will face a precipitous drop in the price of oil. If fracking and other new fossil-fuel extraction technologies do around the world what they are doing in America, the resulting fall in energy prices could produce a Persian Gulf that is in deeper economic and social trouble and with fewer prospects for recovery than its larger Arab neighbors in the Levant and North Africa. Saudi Arabia could then be in worse shape than Egypt—it will have a harder political landing, and worse yet, the Saudi economy and labor force would not be in the position to pick up the pieces by attracting foreign investment to manufacture goods for export and integrate happily into the world economy. The Persian Gulf will not be able to do as Southeast Asia did after the financial crisis of 1998.

There is a lot of talk around the Persian Gulf region of “life after oil.” Dubai and Bahrain have experimented with building financial sectors and every emirate is investing in tourism. As yet, however, there is no sustainable model—the non-oil economy still needs oil revenue to survive. The smaller emirates have built sovereign wealth funds that will provide income long into the future. That is a cushion to protect against dropping oil revenues, but only if the population feeding off that income does not grow inordinately. Despite rising oil wealth, Saudi Arabia’s per capita income ($20,000) has not changed since the 1980s.²⁸ If its population keeps growing at the current rate of 2 percent annually—which means that Saudi Arabia’s population will double in fewer decades than it should—then GDP per capita may start to decline.

A larger question is whether a youthful populace living off a sovereign wealth fund will remain satisfied with idleness and lack of productivity and not turn to political activism. Can the appeal of Xbox always be counted on to exceed the appeal of Tahrir Square? Despite expensive investments the Saudi educational system is not producing skilled labor. Much of the productive work is still done by foreign guest workers while locals hold do-nothing government jobs or occupy themselves with religious activities. Saudi Arabia is awash with holders of doctorates in religious subjects.

There has been a buzz about the new King Abdullah University for Science and Technology (KAUST), a Saudi version of MIT intended to turn out world-class scientists and engineers who will build the kingdom a highway into the future. Billions have gone into the new venture, luring leading American universities to partner with KAUST. But the project remains a white elephant, disconnected from the rest of the Saudi educational system, the prospects for realizing its goals uncertain as of yet. Like many other megaprojects in the Persian Gulf, the emphasis is on audacity rather than substance. What the region needs is change that is built from the ground up.

Already there are too many frustrated unemployed and underemployed youth in Saudi Arabia, spending too much time watching al-Jazeera and networking on Facebook or Twitter to remain immune to the lure of change on display in Tunisia, Egypt, or Syria. Forty percent of young Saudi men are unemployed—and their ranks will swell in the coming years—and a staggering 40 percent of all Saudis are under the age of fifteen.²⁹ Protests could easily return to the kingdom, and if Bahrain erupts again, then protests could take on a sectarian cast, triggering agitation among Saudi Arabia’s own Shias.

Jacked-up entitlement spending has poured oil on the troubled waters for now, but it cannot correct worrisome long-term trends. If oil prices do not keep pace with the country’s current standards of living, the only alternative would be to whittle down entitlement programs and wean the economy off oil. The Saudi state could not accommodate that change easily if at all.³⁰ It could crack, and if it survives it would be only after becoming more representative.

To avoid a crisis point the Saudi economy and society will have to undergo fundamental structural change. The rulers are not ready for anything so drastic, but are experimenting with new ways of doing things. One approach is to educate women and give them more freedom in hopes that they will become more gradual change agents. There are now more women in universities—at some schools they outnumber men—and they are winning new rights: to drive, to vote (albeit in what are still fairly meaningless elections, since they account for only a minority of council seats), and to hold previously forbidden executive positions. But the social impact of this change is as yet unclear. The Saudi economy cannot create enough jobs for men; it will be hard-pressed to furnish enough for legions of new female applicants. Having more men pushed into unemployment, moreover, will not bode well for social and political stability.

Over the past decade, Islamic finance—whose compatibility with sharia law both in terms of banning interest and keeping the sexes apart in bank branches accounts for much of its attraction—has employed a growing number of women. Islamic financial institutions have developed banking and financial services for women, becoming a source of what in the West would be called “pink-collar” jobs. Some Saudi women are now crossing over to regular banking and elbowing men out of white-collar jobs. One senior male Saudi banker told me, “Women are more diligent, work harder, and stay at the office until the work is done. In short, they are better employees. I would much rather hire women than men, and I expect I will be hiring more [women] in the future.” Educated Saudi women will continue to create new workplace pressures that the current Saudi system is ill equipped to address.

Since 9/11, America has encouraged reform in Saudi Arabia. First we thought reform would stem the rising tide of extremism; now we think it may ensure the kingdom’s stability. But there is no soft landing for Saudi Arabia. Its political system is too rigid, too dependent on the hard-line cabal of influential Wahhabi clerics, and too dominated by the large class of princes of the House of Saud to be able to change. If it tries to change, it will break. Saudi Arabia’s rulers know this; they know their youth want economic prosperity and political empowerment, and that is why they have positioned their country squarely against the Arab Spring.

And it is not just the youth who are restless. I have often thought about a conversation I once had regarding Saudi Arabia’s future. It was 2007, and I was in the country to give some talks. Iraq was then in the grip of sectarian violence, and everyone I met in Saudi Arabia seemed worried about the Shia-Sunni conflict and the rising tide of Iranian influence. Saudi Arabia has a significant Shia minority, concentrated in the country’s vast oil-rich Eastern Province.³¹ Since the Iranian revolution of 1979 first raised the specter of sectarianism in the region, unrest among Shias has been a sensitive topic in the kingdom.³²

One afternoon, I went to a date plantation outside the city of Dammam in the heart of the Eastern Province to meet community leaders. The plantation belonged to a local Shia leader, and he gathered several of his friends and colleagues to talk about the impact of Iraq and the challenges facing Saudi Shias. I asked them what they wanted of their government. A well-educated middle-aged engineer who had worked for decades at the Saudi oil giant ARAMCO replied, “It is not true that we want to break away from Saudi Arabia, we just want the right to practice our faith.” I asked him, “If that is all you want, then why are you such a threat to the kingdom?” He leaned forward in his chair and said:

We are not the only minority in this country; Wahhabis are a minority too. Most Saudi Sunnis are not Wahhabi. If Shias get their way, those other Sunnis will want to practice Islam their own way. Here in Dammam they come to us, they say they want to celebrate

milad al-nabi

[the Prophet’s birthday] but they cannot, here it is forbidden. If Shias get permission to observe Ashura, then other Sunnis also want permission to observe

milad al-nabi

. Before Saudis captured Mecca [in 1925] every noon there were five

adhans

[calls to prayer] in Mecca, one for Shias and four for each of the four schools of Sunni law. Now there is only one, the Wahhabi one. We want five calls to prayer every day in Mecca.

The fanatical Wahhabi warriors, the so-called brothers or ikhwan who won the Arabian Peninsula for the Saudi clan at the end of World War I, were particularly hard on the Shia. Many were put to the sword, but the pogrom failed to subdue the Shia. They have remained the one Muslim community to successfully resist Wahhabi hegemony—and their continued presence means the standing possibility that they will push for a modicum of pluralism.

In addition to religion, there is the factor of regionalism. The Hejaz was once a separate kingdom with its own far-flung ancient trade routes, a long Red Sea coastline, a Turkish- and German-built railroad to Damascus, and the great religious centers of Mecca and Medina to lend it towering spiritual prestige. In fact, the Hejaz is the cradle of Islam, and it was where the trade wealth, the high culture, and the political power of the Arabian Peninsula were focused. The Hejaz’s dominant position changed only when the House of Saud (a clan from the high-desert province of Najd to the east) and its Wahhabi armies conquered the region and bested its Hashemite rulers (the ancestors of today’s king of Jordan) after World War I. Hejazis have a proud cultural heritage and resent the cultural domination of Najd enshrined in the Saudi state.

And Hejaz is not alone. Asir (on the border with Yemen) and Ha’il (in the heart of the kingdom) also claim a proud heritage in defiance of Najdi cultural hegemony. Could a Shia campaign for autonomy in matters of religious observance encourage the long-murmuring, never-stilled voice of Hejazi nationalism to make itself heard more loudly? The House of Saud created a single country, but its roots may be shallower than we think. Shias cannot break away from Saudi Arabia, but they might be able to break it up.

This is why Saudi Arabia fears Iran and its nuclear ambitions. It is not that a nuclear Iran would invade Saudi Arabia as Saddam overran Kuwait in 1990. Nor is it a question of Iran twisting Saudi Arabia’s arm on oil prices or the Palestinian issue. Saudi Arabia is afraid, rather, that a bullish Iran armed with nuclear weapons will ask for the broadcasting of Shia prayer calls in Mecca, and then for a Shia mosque there. Next, Iran might seek to build a massive shrine and pilgrimage destination dedicated to certain Shia saints who are buried in Medina. The first Saudi king razed the cemetery where they lie into rubble decades ago, but if it were to be rebuilt, Shia pilgrims would doubtless return there in huge numbers, much as they did when the fall of Saddam restored access to the holy cities of Iraq. The Saudi rulers and their clerical allies find such a prospect deeply frightening and disconcerting: it would threaten the end of Wahhabism. Saudis fear not so much Iran, but the pluralism that Iran has promised to force on their country if ever the chance arises—a pluralism that would speak loudly to the multitude of Saudi citizens whose ethnic and sectarian aspirations do not line up with the Saudi-Wahhabi ideology of state.

In Saudi Arabia, the pillars of American policy in the region rest on quicksand. When Saudi Arabian troops arrived in Bahrain to help the monarchy there suppress its pro-democracy opposition—claiming that it was putting down an Iranian-backed Shia power grab—Iranian parliamentary speaker Ali Larijani observed that “Saudi Arabia has now moved all its pawns, and its queen is exposed.”³³ Saudi Arabia has embarked on an audacious foreign policy offensive to contain and defeat the Arab Spring across the Arab world and snuff out Iranian influence in the region. Saudis are deeply involved in the politics of Arab countries from Morocco to Yemen, spending billions to decide political outcomes. They are involved in the internal struggles of Sunni regimes with their Shia populations in Yemen (against the Shia tribal Hooti rebellion), Bahrain, Syria, and Lebanon, and against Iran at the international level. This offensive is stretching Saudi Arabia’s military, diplomatic, and economic capacity, an overreach that could indeed expose the kingdom’s “queen.”

The specter of cataclysmic change demands continued engagement from America. Gone are the days when the United States could easily safeguard its interests by relying on a handful of pliant dictators. America is inclined to hold on to that old and tired strategy even as it claims to be welcoming the winds of change sweeping across the region. But the ground is shifting in the Middle East. Power is moving from rulers to the masses, from the secular elite to Islamist challengers, and from the Arab heartland to the Persian Gulf (Iran’s lair) and Turkey. These transitions will be fraught with conflict that will cause instability and put American interests at risk. The least good option is to double down on the monarchies of the Persian Gulf and in so doing take sides in the sectarian power struggle driving the region’s conflicts. It is better that American policy rely on a broader set of countries, and then not just on their rulers but also their people. That nimbleness is all the more important as the complexities of the Middle East will also become fodder for the approaching American rivalry with China.

In the spring of 2012, I asked a senior member of President Obama’s cabinet, who had just returned from high-level talks in China, where he thought the Chinese leadership was on the host of issues that worried America: Afghanistan, Pakistan, Iran, the Arab Spring. “We don’t know,” he said. “What most worries us is that we don’t know what they want, and what they are afraid of.”

Others wonder the same about us. They don’t know what we are thinking and where we are heading. We have abandoned Iraq and Afghanistan to instability, pushed Pakistan away, destabilized but not “denuclearized” Iran, let down countries of the Arab Spring, and still managed to also alienate authoritarian allies in the Persian Gulf. We have done all that and then declared our intention to shrink our presence in the Middle East, because we don’t see an upside to investing in the region’s future. We think the future lies in the east, and that the great game of global power politics will be against China in the Asia-Pacific.

President Obama’s “pivot to Asia” policy is at its core a policy of containing China—it is a “forward-deployed diplomacy to face China in its backyard.”¹ Hillary Clinton used the term “pivot” first, in an article in Foreign Policy magazine, to argue the administration’s case that America ought to pay less attention to the Middle East and more attention to Asia.² She wrote that China (and not the Middle East) is the real strategic challenge facing America. What is needed, she went on, is a “reset” of global strategy in which Washington deemphasizes the Middle East and camps at China’s doorstep to make sure that Beijing’s influence remains limited. “The future of the United States is intimately intertwined with the future of the Asia-Pacific,” she declared.³ Global politics “will be decided in Asia,” went the subhead, “not Afghanistan or Iraq, and the United States will be right at the center of the action.”⁴

But it would be folly for America to build its new strategy thinking that the Middle East has nothing to do with China. Folly to think that we can abandon one to contend with the other, or that what happens in the wake of our departure from the Middle East will stay in the Middle East. The Middle East remains the single most important region of the world—not because it is rich in energy, or fraught with instability and pregnant with security threats, but because it is where the great power rivalry with China will play out and where its outcome will be decided. The various strands of our Middle East policy—in Afghanistan and Pakistan, with regard to Iran and the Arab Spring—already intersect with our broader interests with regard to China. In China’s eyes, the region is growing in importance—and in the coming decades it will matter more to Beijing than Africa or Latin America. If we could tell what the Chinese were thinking, or what they were afraid of, we would see the Middle East right at the heart of it. A retreat from the Middle East will not free us to deal with China; it will constrain us in managing that competition.

We not only have to remain fully engaged with the Middle East, we have to increase our economic and diplomatic footprint there to match our show of military force.

I am hardly the first to see rising China as a global challenge—the most significant strategic challenge facing the United States today.⁵ Economically, China accounts for growing shares of global output and consumption and has a voracious appetite for commodities that it feeds via trade and investment links reaching deep into every continent. China has risen by participating in the global economy, but that interdependence does not necessarily mean that China’s rise will be peaceful or that its coexistence with the United States at the helm of the global order will be harmonious.⁶

China is building up its military; its navy has extended its reach as far as the Gulf of Aden (to suppress Somali pirates) and the shores of Libya (to evacuate Chinese citizens endangered by the fighting there). Chinese warships now routinely make port calls in the Middle East. Building bases on a series of islands along its own periphery and extending deep into the Indian Ocean will give China the necessary foundation for building a dominant naval position in some of the world’s most strategic waters. China is expanding its second-strike nuclear capability, improving the effectiveness of its anti-ship missiles, and building its capabilities in new domains such as cyberspace and outer space.⁷ The goal is to replace America as Asia’s preeminent power and to fold all of East Asia into a Chinese sphere of influence. Some may dismiss such fears as exaggerated, but there is no doubting that China’s ambitions are increasingly running up against American interests. Hillary Clinton confirmed this trend when she told an audience in Senegal that the continent’s infatuation with China was misplaced. Africa should not look to China, but to “a model of sustainable partnership that adds value, rather than extracts it.” Unlike China, she continued, “America will stand up for democracy and universal human rights even when it might be easier to look the other way and keep the resources flowing.”⁸ China was stung by that volley and joined the rhetorical battle, highlighting the growing competition for influence and access between two powers across the globe.

The rise of China as an economic and military powerhouse is changing the global balance of power and challenging the United States with a return to a bipolar world.⁹ The boundary lines will not be as stark as during the Cold War; there are fewer ideological differences, no clear sense of “us and them” jealously guarded by threat of war and nuclear annihilation. But we are inching our way to something similar—a global rivalry that although not ideological is real and is still about global power.

America’s interest lies in an open international economic system—built on the principle of free trade and open exchange of goods, services, and money. Our great fear is that China sees its interests in exactly the opposite way: carving out various regions of the world into spheres of influence from which America would be excluded.¹⁰ We would like to avoid this outcome by encouraging China to fully embrace the rules and institutions that govern global economics and international politics—in short, the normative global order that we helped create and have enforced for more than sixty years, and which China had no part in creating. We hope China will enter into more multilateral treaties, participate in more multilateral organizations, embrace shared global values, and live by them at home and abroad. We would like China to act as a partner with the United States in addressing global issues. But this may all be too much to ask, at least in the short run. And if China’s growth is going to challenge international norms then it is bound to run up against the global order, which means conflict with the United States. Conflict is not in our interest, but we are preparing for it. The Middle East will have much to do with whether that will come to pass.

We have been joined at the hip with China when it comes to economic concerns; trade, investment, and the financing of U.S. debts with Chinese surpluses have interwoven the U.S. and Chinese economies in intricate ways.¹¹ We have sought its support in tackling thorny issues from Libya to Iran to Pakistan. But when it comes to global affairs we see a clear line separating our interests from those of China. The Chinese see us as a challenge too—they are the rising power and we the established one; they are elbowing their way to the top and we do not want to make room.

From Beijing’s perspective, American reassurances to the contrary notwithstanding,¹² “pivoting to Asia” sounds a lot like “containing China.”¹³ It looks to them like Obama has settled the long-running debate in America over whether to “engage” or “contain” China in favor of the latter. America has sharpened its rhetoric on China and declared its intention to confront its ambitions in Asia and Africa. America’s vision is “that we continue to be what we have been now for seven decades: the pivotal military power in the Asia-Pacific region, which has provided peace and stability.” The emphasis on “military” is what worries China.¹⁴ We are forging new military ties with India, Vietnam, and the Philippines; wooing Myanmar and Mongolia; and pursuing a free-trade pact (the so-called Trans-Pacific Partnership, or TPP for short) with several Asian countries to link them closely with America. Beijing sees all these efforts as components of a strategy to put China in a cage. “China’s greatest strategic fear,” writes Henry Kissinger, “is that an outside power or powers will establish military deployments around China’s periphery capable of encroaching on China’s territory and meddling in its domestic institutions. When China deemed that it faced such a threat in the past, it went to war.… in Korea in 1950, against India in 1962, along the northern border with the Soviet Union in 1969, and against Vietnam in 1979.”¹⁵ China is not thinking of war with America, but its instinct is to build its capability to resist American pressure and push back against American encirclement, and that could be a slippery slope to confrontation.

Signs of China’s greater influence are all around for American leaders to see. As one high administration official noted, “We go to country after country through airports built by China, and meet [those countries’] leaders in new buildings paid for by China.” In Pakistan, Holbrooke was told time and again, “We can point to the bridge that China built here; we cannot point to a bridge that you have built.” Yet America’s attention has turned to China’s regional backyard. Recent sage advice on how to handle China from Kissinger as well as Zbigniew Brzezinski has focused on maintaining the balance of power in the Asia-Pacific—popularly viewed as the arc from the Sea of Japan to the Straits of Malacca.¹⁶

China, however, already sees East and West Asia (the term it uses for the Middle East) as linked. For instance, in July 2012, after months of coaxing, the Chinese finally agreed to talk to U.S. emissaries about Afghanistan and Pakistan. But the U.S. diplomats arrived in Beijing not long after tensions over the South China Sea had surged, with Chinese and Philippine warships engaging in a standoff over Scarborough Shoal, a tiny collection of reefs and rocks plus a lagoon sitting only 120 miles west of Luzon (the largest island of the Philippines, on the eastern edge of the South China Sea). The Chinese blamed the United States for the crisis and refused to engage on the question of Pakistan, telling their American interlocutor: “There are now new issues like the South China Sea coming over the horizon that demand our attention.” The Chinese don’t divide the world into a set of separate policy domains; to them, the Middle East and Asia (and Africa and Latin America) are interconnected.

The Obama administration took the Scarborough Shoal contretemps as a sign that China’s rise would no longer be as peaceful or harmonious as before, and likely come at the cost of American interests and those of its regional allies. American interests rest with strong Southeast Asian states prospering on the back of open commerce. China’s aggressive posturing over the South China Sea (and the rich oil and natural gas deposits lying beneath it) challenges that vision. It has rattled Beijing’s Asian neighbors, and some among them, like the Philippines and Vietnam, have looked to Washington for help.¹⁷ But what Obama and his advisers got wrong is their assumption that Chinese assertiveness is limited to Asia, and that Asia, in China’s view, is the Asia-Pacific.

There are two conceptions of Asia in Chinese thinking. The first is indeed the Asia-Pacific: the area from Myanmar eastward, or, in other words, the regions we call Southeast Asia (Myanmar, Thailand, Vietnam, Indonesia, Philippines, Singapore, etc.) plus Northeast Asia (Japan, North Korea, South Korea). Then there is the larger conception of Asia as the entire vast landmass—the world’s largest both in area and population—that stretches from the Pacific Ocean to the Mediterranean Sea. China has come to accept America’s dominance in the Asia-Pacific for now, but not so in the countries of South and Central Asia and the greater Middle East. Our strategy should be to challenge the Chinese conception of where America can and should be present. We achieve that by maintaining a strong presence in the western parts of Asia and not just in the form of military bases, but by becoming embedded in the region’s economy and political life.

America is an integral part of the Asia-Pacific thanks to its many trade deals and military bases, and also its bilateral alliances and the multilateral institutions it has helped create and now participates in. Our goal is to keep the region stable, open, and free of conflict. We see benefit in the region’s prosperity and openness to American business and trade. The wealthier the Asia-Pacific has become the more important it is for us to make sure that it will remain free of hegemonic control by any one power. The same logic should apply to the Middle East. Yet today the Middle East accounts for 5 percent of U.S. trade and only 1 percent of its direct foreign investment ($54 billion out of $3.4 trillion), a paltry amount compared with the Asia-Pacific, which accounted for 16 percent of American investment abroad.¹⁸ We are now doing less trade with the region than China is. The big story of the past decade that we missed amid our preoccupation with wars in the Middle East is the explosion of Chinese trade with the region. China’s trade with Iran has grown from $1.3 billion in 1999 to $45 billion in 2011; with Saudi Arabia from $4 billion in 2001 to $50 billion in 2011; and with Egypt from less than a billion in 2001 to $9 billion in 2011. Since 2006 China has been exporting more to the Middle East than the United States does, and the same is true for imports since 2009.¹⁹ In 2010 Chinese exports to the region were close to double that of the United States (China is now the largest exporter to the region), and Chinese direct foreign investment took off, leaving America far behind: 30 percent of China’s global contracts in that year were with Arab enterprises.²⁰ We have essentially ceded the Middle East to China and others to profit from just as we geared up to prevent the same happening in the Asia-Pacific and Africa.

In the past, America has resisted being pushed out of Asia by a hegemonic force. From 1941 to 1945, America fought a world war with Germany and Japan, then we faced down the Soviet Union for decades to prevent such an outcome.²¹ America now fears that China may wish to exclude the United States from Asia exactly when the sagging U.S. economy badly needs all the ties that can be mustered.²² That fear is behind the expansion of free-trade arrangements (with Japan and South Korea) and new business ties in Asia (with India and countries of Southeast Asia)²³ and, more broadly, behind the “rebalancing” exercise and the effort to convince the countries of the Asia-Pacific that China is not going to grow till it blocks the sun; we will be there to check its ambition. We also want China to know that we will stand athwart its path to hegemony. But to be convincing, we have to do that not just in East Asia but everywhere else, too, starting with West Asia.

The global oil company BP forecasts that between now and 2030, 95 percent of the increase in world demand for oil will come from China and India (which by 2030 could surpass China as the world’s most populous country). Even if they grow at a slower pace, the two Asian giants will still account for a significant share of global energy consumption. North America, by contrast, will become energy independent. In 2030, natural gas will account for a far bigger share (and likely majority) of global energy consumption, but less so in China or India. For starters China will still lack the necessary pipeline infrastructure to distribute natural gas nationally (building a national grid connecting supply sources to hundreds of thousands of cities, towns, and villages will take considerable time and investment), and that will limit its ability to harness its own shale gas reserves as well.

By 2030, the oil- and gas-producing countries of Central Asia and the Middle East will be totally dependent on Asian buyers—the oil-induced strategic nexus between America and the Persian Gulf will be coming apart. That trend is already evident. Japan is buying natural gas from Qatar at $15 to $17 per million BTUs (about a thousand cubic feet), whereas the cost in America for the same amount of gas is just $3 (one reason to be hopeful that U.S. manufacturing will become more competitive). Qatar and other Middle Eastern gas producers can expect a shrinking demand from the West—Asia is now their market. They are looking east just as China is looking west. Persian Gulf monarchies are investing in refineries, banks, and manufacturing in China, deepening economic ties between East and West Asia.

Pondering this picture, the Obama administration and some observers have assumed that America can leave the Middle East and wash its hands of Middle Eastern problems. If we don’t need their oil, then surely we don’t have to deal with their headaches? That would be wise if Chinese interest in Middle Eastern energy sources did not threaten to put at a disadvantage the very allies—India, Japan, South Korea, and even much of Europe—that America needs to balance China.²⁴ If these countries became dependent on China for their energy supplies they would have to align their foreign and economic policies with China, which would mean moving away from the United States. That would put a big dent into our plans for containing China in the Asia-Pacific and ensuring the region’s continued prosperity and openness. The best way for China to break American containment in its backyard is to squeeze the energy lifeline of America’s Asian allies, and that would have to happen in the Middle East. It is these same countries, which have been asking us to pay more attention to the Asia-Pacific, that will soon be asking us to refocus on the Middle East.

In April 2012, Turkey’s prime minister, Recep Tayyip Erdogan, visited Urumqi, the capital of China’s far western province of Xinjiang, home to the Turkic-speaking and historically Muslim Uyghur ethnic group. With four ministers and thirty Turkish business executives in tow, Erdogan visited factories, mosques, and bazaars. To set the proper tone for the first visit of a Turkish premier to China in twenty-seven years, Erdogan had decided to first make a stop in predominantly Turkic and Muslim Urumqi. But unlike Charles de Gaulle in Quebec, Erdogan had not gone to Urumqi—site of Uyghur versus Han Chinese communal unrest not long ago—to support local nationalist aspirations. On the contrary, he told an audience there that Turkey believed in “one China.” There would be no Turkish support for Islamic activism and Uyghur separatism. This was a major shift for Turkey. Only three years before, Erdogan had angered Beijing by referring to China’s crackdown on Uyghur separatists as “genocide.” Beijing had asked Erdogan to retract his comments; he declined then, but was now in effect doing just that.

Turkey was not interested in local politics, but stood ready to invest in the local economy—to help develop a free economic zone in Urumqi. Turkey’s economic reach into Central Asia would now extend to Xinjiang, and that could in time help China further extend its own reach into Central Asia.

Erdogan’s trip to China was a follow-up to the February 2012 visit to Turkey by the incoming Chinese president Xi Jinping. On his way back from Washington, Xi made two stops. One was Ireland, where China hopes to capitalize on shrinking American and European investments—especially in the pharmaceutical industry—in order to seize a commercial beachhead on Europe’s western flank. The other was Turkey, where China sees an opportunity to enter Europe from the east, and also to find a foothold in the Middle East and the Caucasus. It is rare for an incoming Chinese president to make such an exploratory visit—it signaled the centrality of Turkey to the new president’s plans for China. China is pivoting west, angling to poach on the lucrative economic relations between the United States and the EU, and to push into western Asia. Turkey is the critical launching pad for both ambitions.

Erdogan’s performance in Urumqi sat well with China’s leaders: “It is what we would have wanted to see, confirming the new economic and strategic opportunity,” was how one senior Chinese official put it. Erdogan had set the stage for the real reason he was going to China: to conclude a sweeping and historic agreement between China and Turkey. After Urumqi, Erdogan went to Beijing. There, he and Chinese premier Wen Jiabao signed on to deals on a wide range of economic projects, an ambitious twenty-five, to be precise. The two countries agreed to build cars and consumer goods together, but also to invest massively in new infrastructure for Turkey—some of which would serve China’s larger geostrategic interests. China agreed to sell energy-hungry Turkey two nuclear power plants, build oil refineries, develop new port facilities, dig a canal in Istanbul to reduce congestion on the Bosporus, and lay down a railway from Istanbul through eastern Turkey with plans to connect (likely through Iran, where China is also building railroads)²⁵ to lines in China proper that reach all the way to the coastal cities that are the hubs of Chinese industry and commerce.²⁶ There was even talk of China building a third bridge over the Bosporus to connect Istanbul’s European and Asian halves. Between 2000 and 2012, Turkish trade with China grew more than twentyfold to $25 billion, and it was poised to multiply again.²⁷

At the Beijing offices of the Turkish Industrialists and Businessmen’s Association (TUSIAD) there is unbridled enthusiasm for the burgeoning business ties: “Our trade is $25 billion. China exports $23 billion to Turkey, but we export only $2 billion to China. We want to export more to China, but China is also happy to make up for that imbalance with FDI [foreign direct investment].” That means more Chinese companies opening shop in Istanbul and across Anatolia. TUSIAD has been wooing Chinese companies, beating the pavement in Beijing and Shanghai, looking for Chinese customers for Turkish goods and Chinese investors for Turkish ventures. Erdogan’s trip was a shot in the arm. “Now that there is government to government agreement there is official support for the business relationship. This is now a whole new game.” TUSIAD’s vanguard in Beijing acknowledges that there are hurdles to clear—for instance, Turkey has been slow to give Chinese nationals work visas—but it hopes bureaucratic snags will not stand in the way of a boom in trade. Indeed, China is now so important to Turkey’s aspirations that the promise of a rich relationship will move mountains in Ankara—and even change Turkish foreign policy. Rebuffed by Europe and hungry for investments and markets, Turkey is fast moving into China’s orbit. And Turkey is not alone. Egypt’s new president Mohammad Morsi, too, has written off the West as a source of investment and financial assistance. He is looking to China for help. In August 2012 he flew to Beijing (ahead of a stop in Tehran) to cultivate economic ties with China. The Arab world’s most important country, with the largest population, sitting at the crossroads of Asia, Africa, and Europe, thinks it has a thing or two to offer to China.

For Turkey, the Chinese connection brings new markets and much-needed foreign investment to sustain its economic boom at a time when Europe (Turkey’s major trading partner) is going through a downturn, and when the Arab world (where Turkey had hoped to grow its exports) is being buffeted by political instability. Turkey has set itself the goal of becoming, by the time of the Turkish Republic’s centennial in 2023, the world’s tenth-largest economy (it is now the sixteenth largest). Everything in Turkey is now geared to achieving this—both the government and the private sector have made it their mantra. Massive investments, mountains of commodities, and lucrative new markets will all be needed. In Turkish eyes, East Asia and especially China hold the key. One senior Erdogan adviser put it this way: “To realize our goal we need China’s investments to build new bridges, roads, telecommunications and new technologies, but also business and trade. China is building up Africa, why not Turkey? China is the only country in the world that is willing to make that kind of investment.” And what of Turkey’s future in Europe? I asked. “Europe will not make that kind of investment. Turkey’s future needs China.”

The turn to China is part of a bigger push east for Turkey. Ankara has also signed an ambitious free-trade deal with South Korea and is encouraging investments from Singapore (which has even opened an office for its economic development board in Turkey) and Japan, which is looking for the same investment opportunities that China is keen on. The expanded trade deals with East Asian economic powerhouses will complement trade deals Turkey is planning with Southeast European, Caucasian, and Central Asian states. Through their investments in Turkish manufacturing, East Asian countries can reach deep into Europe and the broader region around Turkey.

Turkey’s “neo-Ottoman” vision is in one sense rather literal. Because borders in this region are so artificial—drawn by colonial powers at the end of the First World War—there is a natural wish to transcend those boundaries somewhat and for Turkey to return to the regional family it left when the Great War ended and the Ottoman Empire collapsed. No single measure has done more to move Turkey and the region toward that vision than Turkey’s decision to abolish visa requirements for citizens of the broad region around it. That has spurred unprecedented travel and trade all centered on Turkey—a vast market of singular importance to China and its East Asian neighbors.

Turkey’s ambitious development plans rely heavily on Iraqi oil and East Asian markets and investments. As energy and investment enable Turkish growth, they will also bring together the two wings of Asia with Turkey as the critical linchpin. Proven oil and gas reserves in Iraq’s Kurdish region, where Turkish influence is ubiquitous, equal those of Libya, and the low cost of exploration matches that of Saudi Arabia. The Kurdish region expects to pump 1 million barrels a day by 2015 and double that by 2020.²⁸ China is eyeing that production. So many Chinese companies have showed up in Irbil in the last year that local firms are looking for Mandarin speakers to serve the burgeoning Chinese business.

China sees rising Turkey as an economic partner, a new market for Chinese goods and technology (China is particularly proud of selling its old nuclear technology to Turkey), and a good place in which to invest. Turkey has a growing middle class and consumer market, and soon it will be Europe’s fifth-largest economy. Its transport corridor and commercial ties make it a convenient gateway to large European and Middle Eastern markets as well as smaller ones in the Balkans, the Caucasus, and Central Asia. Turkey also offers China potential access to energy sources in Iraq and the Caucasus. China is also keenly interested in Central Asia, and there Turkish influence runs deep. A Chinese-Turkish partnership could rival the influence that Russia and Iran exert in Central Asia and the Caucasus. China has a sizable footprint in all these markets, but Turkey can provide China with an even greater presence. Turkey’s special economic relations with Europe, its open border and relaxed visa policy with its neighbors, and its port, road, rail, and pipeline infrastructure all add up to this: if China is in Turkey, then it will automatically be in many other places, too.

It looks, in other words, like Asia is getting smaller as Turkey moves east and China moves west. The two booming emerging markets now bracket the continent, and as economic integration takes root the vast expanse between the Mediterranean and the Yellow Sea will shrink into one geostrategic space. That should be how America thinks of Asia, as the geographic region, economic zone, and strategic space between Turkey and China.

Over the past decade western Asia has emerged as the energy hub for the rapidly growing economies of the Asia-Pacific and South Asia, China chief among them.²⁹ These economies need the vast oil and gas reserves of Russia, Central Asia, and the Persian Gulf and the transport corridor of Iran, Afghanistan, and Pakistan to fuel their growth.

Coal still accounts for 70 percent of China’s energy consumption and 80 percent of its electricity supply,³⁰ but oil is catching up fast and is already the main topic of concern when China considers its global outlook and interaction with international markets.

James Fallows of the Atlantic explains China’s growing hunger for oil as a peculiar facet of its growth. “As fast as [China’s] economy grows, its energy consumption grows faster still. Each percentage point increase in economic output leads to a more than proportional increase in demand for energy.”³¹ Two decades ago, China produced all the oil that it needed and even exported some.³² China started importing oil in 1993. By 2005, its demand for crude had doubled, and it had become the world’s second-largest oil importer, behind only the United States. China’s demand for oil will double again in the coming fifteen years or so. Well before then, in 2020, China is projected to be importing 7.3 million barrels of crude a day—half of Saudi Arabia’s planned output.³³ By this time, China will be the world’s number one oil consumer, and the manic rate of urbanization is likely to keep China deeply dependent on oil. In the next decade alone, the rise of new Chinese cities, according to a McKinsey report, “will account for around 20 percent of global energy consumption and up to one-quarter of growth in [global] oil demand.”³⁴

To sate its burgeoning hunger for energy, China has gone on the prowl for coal, oil, and gas around the world.³⁵ Around 1999, China adopted the “Go Out” policy of encouraging diplomats and state-owned companies to secure long-term oil contracts.³⁶ Chinese interests looked first to low-hanging fruit (places where there is little competition or Western presence) in Thailand and Peru, and then sought larger deals in Sudan and South Sudan. China has invested $44 billion in oil projects beyond its borders, half of it in Africa. Between 2002 and 2003, trade between China and Africa doubled to $18.5 billion, most of it oil imports.³⁷ But none of this is enough. China needs the larger supplies of Russia and the Middle East. It craves the stability of long-term supply contracts but also seeks to invest in “upstream” oil and gas exploration, which it has done in Iran. Iran’s rich oil and gas reserves remain a significant opportunity for the Go Out strategy.³⁸

East Asia is emerging as the ultimate energy importer, whose needs are perfectly matched with the supply potential of western Asia (comprising the Middle East and Central Asia). The Middle East exports around 30 million barrels of oil per day, and East Asia imports the same amount.³⁹

Securing fossil fuels at the source is not China’s only concern. It is also worried about the security of its supply routes.⁴⁰ The first step in America’s pivot to Asia has been to build up military ties with Australia, the Philippines, Vietnam, and India. In a military competition, America has the clear advantage of using its superior sea power to squeeze China’s oil supplies. China, meanwhile, is worried about the U.S. Navy’s control of the Persian Gulf. Also a worry is the narrow, five-hundred-mile-long passage between Sumatra and the Malay Peninsula known as the Straits of Malacca. This shallow, heavily traveled, easily blocked stretch of water—in the Phillips Channel just south of Singapore it is less than two miles wide—is the eastern doorway to the Indian Ocean and one of the world’s critical maritime chokepoints. More than 85 percent of the oil and oil products bound for China pass through the Straits from west to east. For Chinese strategists, resolving what they call “the Malacca dilemma” is a major preoccupation.

The Chinese are concerned about American strategic relations from Japan to India, for they see in U.S. dealings the outlines of a noose that could choke China’s access to energy.⁴¹ In the run-up to World War II, America, Britain, and the Netherlands did deny energy- and resource-poor Japan access to oil, rubber, and iron shipments from Southeast Asia and the Dutch East Indies. This is a lesson that is not lost on China’s strategic decision makers. During the Cold War, the Soviet Union cast hungry eyes on the Persian Gulf with the idea of doing something similar to the West. Access to energy, and therefore the Middle East, will be at the heart of the next global rivalry.

In response to its concern, China is building a blue-water navy and has invested in the “string of pearls” strategy of building bases in the Indian Ocean (in places such as Sri Lanka) to protect its sea routes to Africa and the Middle East. There is already a brisk competition between China and India over which country will dominate the Indian Ocean. The two Asian powers eye each other with suspicion even as they cooperate to address the menace of piracy.⁴² But China in particular is also worried about U.S. control of the high seas, which, added to America’s dominant position in the Persian Gulf, puts China’s energy supplies at risk. The Scarborough Shoal row, in which China’s assertion of primacy over the South China Sea met with resistance from some Southeast Asian nations with U.S. backing, brought the problem into sharp relief. At that point, America had already announced that it would deploy 2,500 U.S. Marines to Australia and help the Philippines to upgrade its navy.

In order to escape the Malacca dilemma, China has turned to a series of overland pipelines linking the eastern industrial centers of Shanghai and Guangzhou with western China and Turkmenistan, respectively.⁴³ China has also looked to Myanmar as an alternate route that avoids the Straits. There, Beijing has had to compete for influence with Delhi. India, too, is growing rapidly, and is looking to the same Middle Eastern and Central Asian sources to sustain its economy. India, however, already has a sizable navy and is America’s strategic partner; the Bush administration sought to bolster India as a counterweight to China by forging closer ties with Delhi through measures such as a deal regarding nuclear power for civilian uses.

China and India have a contentious history. They fought a short, sharp border war high up in the Himalayas in late 1962, and India remains China’s strategic nemesis. They do plenty of trading now, but their rivalry will come to the fore as they vie against each other to gain access to western Asia’s energy resources on the best terms. In its extensive efforts to secure its access to Middle Eastern and Central Asian oil and gas, China is acting upon its fear of India as well as its fear of the United States.

Myanmar also poses a challenge to China’s plans. In early 2011, Myanmar’s military regime began a surprising series of reforms that have led to a thaw in relations with Washington. This cannot be pleasing to China, which had been treating Myanmar as effectively a client state. In fact, fear of excessive dependence on Beijing seems to be one of the motives driving the reform advocates within Myanmar’s ruling regime. In mid-2012, Myanmar suspended work on the massive Myitsone Dam that China had been building across the Irrawaddy River—another signal that Naypyidaw is trying to put some modest distance between itself and Beijing.

Farther to the west, China has earmarked $12 billion to develop the port of Gwadar on Pakistan’s Arabian Sea coast. The idea is to create a place where petrochemicals piped down from Central Asia (Kazakhstan and Turkmenistan) and minerals shipped from Afghanistan can be loaded onto tankers and cargo ships bound for China. The Gwadar project has been hampered by instability and security challenges—the product of clashes between local Baluch separatists and the central government—of the kind that U.S. multinationals such as ExxonMobil have long had to cope with in Indonesia or Nigeria. But China continues to invest in Gwadar and work to bring the port facility under its control.⁴⁴

Little wonder, then, that China has been interested in still other pipelines. These include one going from Iran into Pakistan and then perhaps eventually through the Hindu Kush mountains into Xinjiang. Another would start in the Central Asian gas fields of Turkmenistan and then snake its way through Afghanistan and Pakistan to Gwadar or into Xinjiang. Here again, however, there is U.S. competition. Washington is talking about a pipeline from Turkmenistan to India (not China) as part of America’s “New Silk Road” initiative to bring commerce and economic development to Afghanistan and other countries along the historic overland trade routes between China and Europe. The New Silk Road is a lofty idea that would work if there were true American commitment to Afghanistan’s stability and substantial financial commitment to build infrastructure, develop industry, and facilitate trade, not to mention commitment to improved relations with Pakistan and engagement with Iran. Without this commitment, at best the idea will become the basis for a Chinese regional economic system.

Two decades ago, China’s large industrial and population centers lay almost exclusively along its east coast. That region remains a dynamo, but people and production—and the hunger and thirst for energy inputs—are moving west.⁴⁵ China now needs more and more energy for its middle and western regions, and that is another reason why pipelines into China’s southwestern provinces of Yunnan (from Myanmar) and Xinjiang (from Pakistan) are increasingly attractive.⁴⁶

Political scientist Kent Calder writes that energy interdependence is tying eastern and western Asia together in new ways. The Chinese-Turkish deal further shows that East Asia’s need for closer ties with West Asia is matched by West Asia’s need to trade with the East. In 1980, East Asia accounted for 20 percent of the Middle East’s imports; that number has now doubled to 40 percent and is likely to grow further.⁴⁷ China now carries on a robust trade with the Persian Gulf monarchies and is rapidly filling the gap left by the withdrawal of Western interests from Iran and Pakistan. China’s economic reach in Asia is vast and rapidly growing. Its political touch and military sting are sure to be felt soon.

China’s rise has so far not been as disruptive as that of Japan or Germany (or Russia) in the last century. The economic rise of those countries had, to put it mildly, a distinctly militaristic edge. The hunger for resources and markets drove those powers to start expansionist wars. The Chinese mantra since Deng Xiaoping launched economic reforms in 1978, in contrast, has been “a peaceful rise in a harmonious world.” There is a detectable air of caution and patience in China’s strategic thinking, but that barely masks the country’s determination in protecting its interests and realizing its goals. Beijing has ambitions but doesn’t want trouble.⁴⁸ Given China’s manifold domestic challenges and all that it still must do to consolidate its economic gains, Beijing knows that it “is not in a position to be arrogant or boastful” (the words are those of Deputy Foreign Minister Dai Bingguo). And yet, China still sees its interests as separate from those of the rest of the world, and its hunger for resources and markets could end up in military conflict.⁴⁹

The “we don’t want trouble” approach sounds nice, in other words, but it may prove increasingly hard to sustain, exhibit one being the current saber rattling in the South China Sea. But the current spat over the South China Sea is not all that puts the United States and China on a collision course or makes China’s rise a source of global tension, for that matter. China is, after all, increasingly an imperialist power. Imperialism emerged in the nineteenth century as growing European economies looked around the world for commodities and markets to fuel their gathering industrialization.⁵⁰ European powers then—much like China today—invested heavily in securing trade routes and building infrastructure for resource extraction.

Journalist Steve Coll has described what he calls China’s “mercantilist approach to energy” and the premium that it places on physically owning oil supplies. This flies in the face of the fungibility of the global oil market. Whereas America thinks of global oil markets as an integrated whole, governed by rules of free exchange, China seeks a direct supply-and-demand relationship between itself and wherever the oil comes from. That harkens back to nineteenth-century colonialism. The upshot will be greater Chinese control of the supply–demand relationship and deepening political involvement with, and dependency on, energy-producing regions and countries. The scent of nineteenth-century colonialism is not lost on Coll, who calls China’s approach “neo-colonial.”⁵¹

“Peaceful rise” will not go hand in hand with mercantilism. And if a peaceful rise does not work, then, as Henry Kissinger has warned, America’s relationship with China could start to look like a version of the Anglo-German rivalry that haunted Europe on the eve of World War I.⁵² Germany was the rising, insurgent power then, hungry for energy and other commodities that would aid its expansion, eagerly seeking markets for the products of its burgeoning factories. Germany’s mercantilist approach collided with Britain’s dominance over the global economy—a dominance that was secured not only by the reach of a British Empire “upon which the sun never set,” but also by a Royal Navy that protected the commercial interests of many other nations before German expansionism.⁵³ Germany turned to militarism, forming its High Seas Fleet, which supported the growth of its influence beyond continental Europe and set in motion a race to war in the first decade of the twentieth century.

Similarly, America’s response to China’s mercantilist push against open trade and commerce puts us on a collision course with China. The Middle East will be at the center of that clash when it happens.

The example of European imperialism holds other lessons too. The initial outflow of capital from Europe to the New World (British capital played a large role in building the iconic cattle-ranching and railroad businesses of America’s Old West) was soon followed by the flow of capital back to Europe as cheap commodity prices and industrial exports sold to the New World yielded European countries huge profits. Things did not run smoothly everywhere, however. Some local populations balked at the unfair terms of trade with Europe, and European powers reacted in some cases with the use of force and even outright territorial-political conquest. Imperialism evolved into colonialism, which made sense because European powers were struggling not only to deal with restive locals but also to protect their holdings from rival powers.

Yesterday’s imperialism has gradually shifted east as a latecomer to the party, China, has begun investing heavily in Africa, Latin America, and western Asia.⁵⁴ It is building railways and ports in sub-Saharan Africa and Afghanistan, much as Britain and France once did in India or Africa.⁵⁵ Chinese managers and workers are moving to Africa, living and working in colonies that are reminiscent of British cantonments in colonial India. These Chinese are there to stay for the long haul.

China is also doling out cash to rulers, such as Venezuela’s Hugo Chávez, as Britain, France, and the Netherlands once did. In the “game of nabobs” that Britain played with its European rivals in India, the object was to win the allegiance of local rulers in order to control trade routes. In a contemporary version of the ploy, Beijing’s deep investment in Cambodia has separated that country from its Southeast Asian neighbors on issues that matter to China, creating discord in the ranks of ASEAN just when the United States is trying to rally the regional grouping to resist Chinese domination of the South China Sea. The game of nabobs goes on.

Across Africa and Asia today, country after country is happy to have Chinese money building railways and ports for moving commodities to China. As for what floods of cheap Chinese imports are doing to local manufacturing, that is another, less happy story. In Nigeria and Pakistan, Chinese textiles are driving local producers out of business. One Pakistani textile manufacturer told me: “Everyone worries that if we open trade with India its textiles will put us out of business, but the Chinese are already doing that.” Soap manufacturers and even producers of crockery are saying the same. According to some estimates, China now accounts for a staggering 90 percent of that market in Pakistan.

We know from history that the imperialist formula of monopoly control over commodity exports plus plentiful manufactured goods imports will lead to political trouble. The initial enthusiasm for Chinese investment will give way to anger at the net outflow of wealth to China as it extracts commodities and dumps cheap manufactured goods in country after country. To sustain the economic arrangement, China will have to get involved politically. It will have to delve into the domestic politics of countries, taking sides in messy internal fights, but also take a position on regional disputes. And when its interests warrant making important decisions for desired outcomes, persuasion will be the method of choice, and force the method of last resort.

China will also encounter other global players looking for the same commodities and resources. America, Europe, India, Japan, and South Korea, as well as other emerging nations, will all be looking for the same iron, copper, manganese, bauxite, rare earth metals, and oil. The gold rush boom in Mongolia—which has attracted $15 billion in foreign investment and is pitting the United States against China in the vast but sparsely populated country of 3 million people—along with the South China Sea disputes provide a window into this. After all, China has already seized the Spratly Islands, a collection of rocks near undersea oil deposits. Elsewhere, China has the first mover’s advantage in Africa and is trying to elbow its way to domination in Southeast Asia. But to protect its investment and prevent supplying countries from playing it against its rivals, China will have to exercise more political control. As China faces the same kind of challenges protecting its assets that once led Europe to embrace colonialism, a “peaceful rise” may grow considerably less peaceful.

The Chinese, however, are not looking that far ahead. For now, the U.S. security presence in the Persian Gulf and other regions is providing the stability upon which Beijing can free-ride as it develops its interests abroad. China gets to have it all. It enjoys the luxury of engaging a region’s troublemakers and unstable states—Iran or Pakistan, for instance—while at the same time benefiting from advantageous trade conditions.

As we have seen, America has been lobbying the Saudis to sell China more oil in order to gain Chinese help in reining in Iran and Pakistan. But why should that be? Why shouldn’t Beijing be offering us concessions in order to get America to maintain its costly investment in regional security? Many observers muse that in the not-too-distant future, when any U.S. need for Middle Eastern oil is a fading memory and the only customers for Persian Gulf oil are in East Asia, China will be in the unenviable position of relying entirely on U.S. security to protect the Gulf’s crucial wellheads. And yet, it is not that simple. China is happy with free-riding now because its relations with America have been, generally speaking, quiet. Since 9/11 we have been focused on the Middle East, ignoring China’s rise for the most part. But as China finds itself in America’s crosshairs, the benefits of freeing its Middle East interests from the clutches of American influence will outweigh the security dividend it gains from American presence in the region. China will soon welcome the American exit from the region even at the cost of shouldering the security cost itself. American retreat from the Middle East will be welcomed in China as a strategic boon; and this is exactly why it should not happen. This is already evident in the Chinese attitude toward Central Asia. This region is not only a source of valuable energy for China, but owing to its cultural and ethnic ties to the Turkic Muslim minority living in China’s westernmost provinces, it is also of security and geostrategic interest to China. Beijing has sought to tightly integrate Central Asia into its economic orbit. This has also meant allying with Iran and Russia—the other key players in the region—to limit American presence in the region. The Chinese-founded and -backed Shanghai Cooperation Organization (SCO)—a rival to American power wrapped as a counterweight to NATO and the Gulf Cooperation Council (GCC)—reflects this approach. It should be America using its presence in the Middle East to deny China hegemony over commerce. That would be for the greater good of the global economy.

America may not have announced that it is closing any bases in the Persian Gulf—for now it is our diplomatic and economic footprint that is visibly shrinking—but President Obama has declared that with mounting economic pressures at home America is considering a different sort of military footprint in the Middle East, one that will be designed not to wage new land wars, but primarily to carry out precision counterterrorism missions. The example of America’s precipitous withdrawals from Iraq and then Afghanistan looms large and could well extend to the Persian Gulf in years to come unless we have a global agenda associated with our military presence in the Middle East—as was the case in Europe and East Asia during the Cold War. The military presence should be tied to a growing diplomatic and economic engagement, the goals of which are treaties, alliances, and multilateral organizations. All this would promote regional stability and the inclusion of the Middle East in the international economic order.

This is not America’s current trajectory. China without America in the Middle East will have a free hand to impose its own economic system on the region, and when conflicts arise, to referee them from the exalted perch of the Middle Kingdom—as it is now doing between warring Sudan and South Sudan.

In this endeavor China would need allies and local enforcers. Those in America who argue that we should reduce our footprint in the Persian Gulf because we will no longer need its oil and gas should consider what could fill the vacuum: a greater role for Iran and Pakistan, backed by China. That should give us pause, given the illiberal nature of both countries and the state of our relations with them.

For a period in the 1970s, the Shah’s Iran did in fact serve as the gendarme of the Persian Gulf. Britain had pulled back from the “east of Suez,” and America, preoccupied with and then exhausted by its war in Vietnam, was none too keen to step into the breach. The Shah offered to take responsibility for Persian Gulf security.

The deal was that Western powers would recognize Iran’s regional role if Tehran would recognize the sovereignty of Bahrain and other Persian Gulf emirates and use some of its newfound oil wealth to build up Iranian naval strength so it could contribute to the defense of American interests. Soon, Iranian ships were patrolling the Gulf, and when a communist-backed rebellion in the Dhofar region of Oman threatened the pro-Western monarch there, it was Iran that sent troops to wage a counterinsurgency campaign (which is the main reason why Oman remains to this day the most Iran-friendly of the Persian Gulf emirates). The Persian Gulf security arrangement worked until the Shah fell in 1979. But it had not all been smooth sailing. In 1974, Iran had occupied three strategic islands at the mouth of the Straits of Hormuz, claiming them as Iranian territory. Even today, the dispute continues to mar relations between Iran and the United Arab Emirates.

Pakistan too has played a security role in the Persian Gulf region. After extremists occupied the Grand Mosque in Mecca in 1979—posing the most serious threat to the Saudi monarchy since its creation—the kingdom turned to Pakistan for help. Pakistan sent divisions of troops to Saudi Arabia to serve as the monarchy’s praetorian guard. The Muslim and highly experienced Pakistani forces gave Saudi rulers peace of mind throughout the 1980s, and a good reason to deepen security ties with Pakistan—setting the stage for what many believe was Saudi investment in Pakistan’s nuclear program.

The Pakistan option is still Saudi Arabia’s trump card when its interests diverge from those of the United States. In March 2011, when the Arab Spring was in full swing and just after protests rocked Saudi Arabia and Oman and nearly toppled the pro-Saudi monarchy in Bahrain, Prince Bandar bin Sultan flew to Islamabad to ask for help. He wanted assurances from Pakistan that it would deploy troops in Bahrain and Saudi Arabia if and when protests grew out of hand (he knew the United States certainly would not). He was asking, in other words, for a return to the Saudi-Pakistani security arrangement of the 1980s.

The help ultimately arrived in Bahrain, the Gulf state where the regime had come closest to falling. With the Pakistan army’s blessing, thousands of Pakistani veterans and experienced tribal fighters were recruited through newspaper ads to join the Bahraini security forces, which were desperate to beef up their capabilities ahead of surging unrest.

However, it is worth noting that managing Persian Gulf security with Iran and Pakistan for allies could prove a difficult undertaking for Beijing. Back in the 1960s and 1970s, Iran and Pakistan were the best of friends. At the time, the main strategic fault line in the region was between Iran and Pakistan on one side, and Afghanistan and India on the other. By the 1990s, however, Iran and Pakistan had grown apart. Pakistan saw Iran’s revolution as a menace—it was stoking sectarian tensions between Shias and Sunnis. Sectarian violence plunged Pakistan into sporadic chaos throughout the 1990s, as radical groups on both sides, backed by patrons in Iran and Saudi Arabia respectively, carried out bombings and assassinations in campaigns of violence that continue to this day.⁵⁶ Iran and Saudi Arabia first crossed swords over regional power in Pakistan in the 1980s and 1990s. Saudi Arabia mobilized Pakistan’s radical Sunni groups to stand in the way of Iran-backed Shia politicians and militias seeking to influence politics next door.⁵⁷ Saudi Arabia won that battle.

Iran and Pakistan were also at odds over Afghanistan. During the 1980s, Pakistan worked closely with Saudi Arabia and America to drive the Soviets out, and then Pakistan forged a partnership with the Saudis over its Taliban project in Afghanistan in the 1990s. Iran moved closer to India, and the two backed the Northern Alliance as it resisted the Taliban and therefore the Pakistani-Saudi plan for dominating Afghanistan.

Today, American efforts to peel India away from Iran are happening at the same time that Washington has been breaking with Islamabad over counterterrorism issues. That has created an opening for Iran and Pakistan—both of which resent the American presence in the region—to ponder working together in Afghanistan and over regional issues. But Pakistan still has close ties to Iran’s archrival, Saudi Arabia. There is as yet no clear strategic realignment with Iran, but there is a lot of jockeying for position. China could face difficulty managing the complex web of alliances and rivalries in this region—especially Saudi anxieties over Iran. For now, the souring of U.S. relations with Pakistan has created grounds for improved relations and increased strategic coordination between Tehran and Islamabad, both of China’s allies.

Those alliances are powerful. In November 2009, when the Obama administration was busy pressuring Pakistan into cooperation on Afghanistan, Chinese and Pakistani officials gathered in Islamabad to celebrate the launch of a new high-level Chinese-Pakistani project: manufacturing up to 250 JT-17 fighter jets in Pakistan. It was a $5 billion deal, and only the first part of a broader joint initiative to develop military hardware.⁵⁸ The project is significant, not only as a token of Chinese support for Pakistan in its military and strategic rivalry with India, but also in what it says about the depth of ties between China and Pakistan.⁵⁹

Pakistani prime minister Yusuf Raza Gilani likes to repeat the Chinese ambassador’s cloying description of Sino-Pakistani friendship as “higher than the Himalayas and sweeter than honey.”⁶⁰ Pakistanis also say that China is an “all-weather” friend as a way of suggesting that America is at best only a “fair-weather” friend.⁶¹

In the atmosphere of bitterness and recrimination that followed the discovery of bin Laden living in the very lap of its military establishment, Pakistan has fallen back on the old idea that China stands by Pakistan through thick and thin. Pakistanis will tell you readily of China’s critical assistance during the 1965 war with India (although Iran played just as supportive a role), or that China helped Pakistan during the 1971 war, the Kargil War of 1990, and even today: China is the only country to support Pakistan after the Abbottabad fiasco.⁶²

China may be an “all-weather” friend, but China still does not like blizzards or tornados. China does not like it when Pakistan pushes too hard with India, or provokes American anger. China wants Pakistan as a strategic base, not a source of fresh headaches. Waves of extremists trained in Pakistan may stoke fires of separatism in Xinjiang, and, as happened before, countless Chinese engineers can be abducted by Pakistani tribesmen for ransom; yet China’s true anger at Pakistan is directed at its threat of a regional power play. China wants to use Pakistan to serve Chinese interests, and it will not be made a pawn in Islamabad’s regional games. So it was that even as China was stepping up its investment in Pakistan’s military capability, it was winding down its support for Pakistan on the Kashmir issue.⁶³

China has been a source of moral support too, the country that Pakistan turns to when faced with Indian threats or U.S. pressure. Over the past decade, China has encouraged this feeling by deepening its strategic investment in Pakistan. Along with fighter jets, pipelines, a port, and bridges, China is building roads and power plants and has promised civilian nuclear reactors like the one going to Turkey. There are free-trade agreements that promise to expand commerce between the two countries to $15 billion by 2015. China already accounts for 11 percent of Pakistan’s imports.⁶⁴

Chinese businessmen are ubiquitous in hotels in Lahore and Karachi, exploring investment prospects even in software companies. China Mobile has bought a controlling share of PakTel; Chinese arms manufacturers sell $7 billion per year in military hardware to Pakistan. In fact Pakistan accounts for the bulk of China’s weapons sales worldwide, and China is Pakistan’s largest defense supplier. Beijing sells it aircraft (including those that can deliver a nuclear payload), ships, and advanced warning systems. There are plans for the sale of submarines. China is helping Pakistan build an indigenous military-industrial complex through joint projects that cover not only fighter planes but also tanks, guided-missile frigates, ballistic missiles, and even satellites for communication and remote sensing.⁶⁵ China clearly wants a strong Pakistani military—and in particular a strong Pakistani navy—as a strategic asset in West Asia.

The cooperation also extends to Pakistan’s controversial nuclear weapons program. The infamous A. Q. Khan, father of the Pakistani A-bomb, openly acknowledged Chinese assistance in the form of weapons-grade uranium, technical drawings of nuclear weapons, and tons of uranium hexafluoride that Pakistani centrifuges could spin into yet more weapons-grade uranium.⁶⁶

Pakistan grew closer to, and warmer toward, China while General Pervez Musharraf was president, but now the ties between the two countries have a distinct business component. President Zardari travels to China twice a year. He says it is “to learn,” but the wealthy Zardari is also known to have personal investments in China. He is showing the way, as it were, to tighter business ties that complement the growing military and development ties between the two countries.

China also values Pakistan as a thorn in the side of India. Pakistani mischief preoccupies India, taxes its military resources, and could potentially deny India the security it needs to achieve its desired economic growth. China does not encourage war between India and Pakistan, but a credible Pakistani threat, backed by nuclear weapons, is an asset to China. India hopes to win China with promises of access to the vast Indian consumer market, but China sees India more as a rival in selling cheap exports and buying commodities than as a market for Chinese wares. And of course India is now America’s close strategic ally in the great game of containing China.

The strategic location of Pakistan—and a possible Chinese naval base at Gwadar—not too far east of the Strait of Hormuz is a fact of enormous importance to Beijing as it contemplates its strategy for West Asia and the Gulf region, and ponders how to counter U.S. and Indian strength in the area. As Robert Kaplan writes:

The Indian Ocean accounts for fully half the world’s container traffic. Moreover, 70 percent of the total traffic of petroleum products passes through the Indian Ocean, on its way from the Middle East to the Pacific. As these goods travel that route, they pass through the world’s principal oil shipping lanes, including the Gulfs of Aden and Oman—as well as some of world commerce’s main chokepoints: Bab el Mandeb and the Straits of Hormuz and Malacca. Forty percent of world trade passes through the Strait of Malacca; 40 percent of all traded crude oil passes through the Strait of Hormuz.

⁶⁷

As trade in energy supplies and goods between East and West Asia as well as between Africa and Asia continues to grow, the figures cited by Kaplan will only increase as well.

India too, of course, sees the Indian Ocean basin as a strategically critical area. Set to become the world’s fourth-largest energy consumer (only the United States, China, and Japan are bigger), India will soon be importing 90 percent of its oil from the Persian Gulf, on a route that goes directly past Pakistan’s Makran coast. India also imports coal from Africa and Southeast Asia, and that too has to cross the Indian Ocean. Even if India were to switch to natural gas, given its limited pipeline capacity, it would have to rely on tankers coming from the Persian Gulf or Indonesia.⁶⁸

Gwadar is therefore a centerpiece in the “string of pearls” strategy, which would give China strategic control over Indian Ocean trade, as well as a staging ground for protecting its supply routes against pirates or more global rivals. Gwadar is for now a desolate place—more like an abandoned construction project than a bustling port—but then, the Chinese are in Pakistan for the long haul. Gwadar’s value will come into play down the road.

Iran is a long-term friend of China as well. It was among the first Middle Eastern countries to follow America’s lead and open up to China in the 1970s.⁶⁹ But relations between the two ancient nations go much further back. As Iranian diplomats learned to their delight back in the mid-1970s, China to this day preserves priceless manuscript collections of classical Persian literature—some of it no longer extant in Iran itself—that go all the way back to the time of the Great Silk Road, when caravans hauled goods back and forth across Asia on the same route that took Marco Polo from Persia to China and brought the Mongols into the Middle East.

This historic bond is reinforced by a common view that not only as modern nation-states but as ancient civilizations, China and Iran deserve their respective places in the sun. Iranians swoon when Chinese leaders wax poetic about the rights of old nations, the travesty of the abuses that China and Iran suffered at the hands of Western powers, and the putative malign role of those same powers in continuing to block China’s and Iran’s rise to the top.

Iran’s leaders like the idea of a strong China as a balance against America. A bipolar world is a safer place for Iran. Iranian rulers fantasize about a world in which China would confront America, as did the Soviet Union at one point, shielding Iran from American pressure.

Chinese trade has kept the Iranian economy afloat despite severe Western economic sanctions, and Chinese arms sales and technology transfers have been critical to modernizing Iran’s antiquated military.⁷⁰ But China has a long way to go to rival American power, and unlike the Soviet Union, China is not gunning for confrontation with America. Beijing’s counsel to Tehran is to be supple and not to provoke Washington.

In Iran, China has both strategic and economic interests.⁷¹ Iran is a heavy hitter in the Middle East, a local power with a long history in a region full of “tribes with recently acquired flags,” and the influence to go with that status. The Soviet Union’s fall helped restore Iranian influence across a vast region, from the Caucasus through Central Asia. When the United States and NATO took down the Taliban after 9/11, Afghanistan too fell under renewed Iranian influence. Iran’s soft power on the Arab street waxed with anti-Israel bluster and extended westward into Iraq, Syria, and Lebanon. Iran’s economic zone now stretches from Herat in western Afghanistan west to Suleimaniya and Basra in Iraq.

That Iran has defied American wishes is not unwelcome to China. Beijing gets that its rivalry with America is global, and does not like seeing uncontested U.S. hegemony in any region. And the more China covets Middle Eastern oil, the more it feels keen to check American influence.

But China does not want to see Iran become like Iraq—so defiant and risk prone that it invites U.S. military action followed by U.S. control of the spoils. So the Chinese caution Iran, nudging it to talk to the West and to accommodate at least some Western concerns.⁷² Beijing has supported sanctions against Iran—and benefited from the effect of sanctions in driving away Western economic interests, leaving the field to China. In an ironic twist, it appears that China has supported sanctions in order to do more business with Iran and to tighten its own economic hold over the country. But as with North Korea, when it comes to the Iranian nuclear program (or support for Hamas and Hezbollah), Beijing does not share American interests.

Iran, as the Chinese are keenly aware, is also rich in oil and gas. It holds 10.3 percent of the world’s proven oil reserves and 15.8 percent of its gas reserves (second in size only to Russia’s). In 2010, China was Iran’s largest energy customer (accounting for 16.2 percent of Iran’s energy exports), and Iran was China’s largest energy supplier (accounting for 17.4 percent of China’s energy imports). These numbers have grown since sanctions have cut Iranian energy exports to Europe and the rest of Asia. The Chinese too cut some of their formal oil imports from Iran, but that drop is more than made up for by off-the-books exports of Iranian oil to China via Iraq and some of it through Dubai.

More important, Iran has the only major oil and gas reserves in the region that are outside Western multinational control. It presents Chinese state-controlled oil companies with a unique opportunity to build “upstream” capabilities. China has signed on to develop the North Azadegan oil field and to explore for natural gas offshore in the North Pars field under the Persian Gulf.

Then there are the deepening economic ties that have unfolded apace with tightening Western sanctions. As Western businesses left, Iran turned to China to fill the void. Chinese goods flowed into Iran to replace European, Japanese, and Korean imports. Chinese oil conglomerates stepped in to take over energy and infrastructure contracts abandoned by French and Japanese companies. Iranians did not like the China option, but they had no other recourse. Iran’s bureaucrats doubt that Chinese companies can get the job done—the North Azadegan field is five years behind production schedule, and China’s record exploring oil and gas in the South China Sea has not inspired confidence either. Many Iranians, moreover, find the Chinese hard to work with—the cultural gap is wider than the one that separates Persians from Europeans. Despite their legendary toughness and wiliness as negotiators, Iranian businessmen find that their Chinese partners give less and squeeze more and drive exceptionally hard bargains. But China is willing to do business with Iran when no one else will, and the Iranians have nowhere else to turn.

Since 2009, China has emerged as Iran’s largest trading partner. Bilateral trade between the two countries is estimated at $40 billion in 2012, and a good portion of China’s surging trade with the UAE actually consists of goods that are promptly reexported to Iran—worth an estimated $7 billion this year alone. China pays Iran in yuan for its oil, depositing the money in Chinese banks. Iran’s Central Bank keeps those yuans in China and sells them to Iranian businessmen, who then convert their Chinese currency into dollars and euros in order to do business in the international market.

Many Iranian manufacturers have now shifted all their production to China. A maker of kitchen utensils for the Iranian home market explained to me that he had had to shutter his factory in Iran because he could not obtain letters of credit in Western currencies and could not afford the high cost of energy and imports. He moved his production to China. He now ships his Chinese-made products back to Iran through Dubai and as a “Chinese” manufacturer is able to sell to a far broader market in the Middle East and Africa. He himself is prospering, but the Iranians who used to work for him back home are jobless. The sanctions have not stopped the nuclear program, but they have made Iran economically dependent on China. Could strategic dependence follow?

Washington sees its Iran policy as something separate from the pressure applied to Pakistan, but the fact is that U.S. policy is pushing the two isolated countries closer to each other just as it is confirming Chinese domination over their economies. Iran and Pakistan are to China’s Asia strategy what Vietnam and India are to America’s. The two countries, both with significant influence in Afghanistan and Central Asia, could serve as pillars of China’s “Silk Road strategy.” By establishing control over post-American Afghanistan, they could help see to it that Central Asian riches could get to Persian Gulf and Arabian Sea ports or go through overland pipelines into China. Add Turkey to the Iran-Pakistan duo, and China will have secured economic hegemony over a vast region that stretches from the northwest borders of India to the southeast corner of Europe.

We view Iran and Pakistan today antagonistically. Through the narrow lens of our current regional priorities they look menacing, and so we have isolated Iran and alienated Pakistan—and still failed to change them. But our priority will soon be China, and that means it will not be in our interest to leave these countries out in the cold to serve as pillars of China’s power play in the Middle East. Addressing China’s challenge requires us to build bridges, not push away Iran and Pakistan.

The region will not be better off under China’s thumb. Indeed, it is not as a favor to our regional allies that we should keep our presence there. It is because by staying there in a meaningful way (not just with jet fighters and aircraft carriers but through economic and civilian engagement) we would be denying China dominance. We would also be sitting in a chokehold position next to China’s energy lifeline—something that the Chinese have been trying to avoid. Chinese leaders may believe in their country’s peaceful rise and discount the conflict-rousing implications of their mercantilism, but they also believe that America’s intentions are not peaceful. That could mean military confrontation down the road, and short of that, it could mean serious friction with implications for both the American and Chinese economies—a new kind of cold war.

In the short run, China is content with the U.S. security dividend. American military power, diplomacy, and development aid keep the Persian Gulf and the broader Middle East in some semblance of order. To keep Washington happy—and dissuade America from creating instability—Beijing is willing to provide the United States with measured support on Iran and Pakistan. Beijing would not like to see Iranian obduracy or Pakistani adventurism invite greater American military involvement in the region. Resistance to America on the part of Saddam Hussein’s Iraq and Taliban-run Afghanistan led not to less but to more American presence in the region. The fruit of an American war with Iran or Pakistan would be regional instability and (eventually) governments in Tehran and Islamabad that would be closer to Washington than Beijing (Maliki and Karzai’s governments in Iraq and Afghanistan are undeniable evidence here). That would not serve Chinese interests. It is better for Beijing if for now Iran and Pakistan give in far enough to international pressure to keep America at bay.

Stability in the Middle East is good for China because it should help hold down the price of oil. America was once a source of that stability, but its policies, and more so its talk of a desire to unburden itself of the Middle East, are now fueling jitteriness in oil markets. For Beijing, U.S. policy represents a potential source of what economists call “externalities.” In other words, if the United States shifts its policy toward confrontation and away from stability in the Persian Gulf region, China will have to pay the resulting higher-risk premium on oil. This will erase some of China’s comparative trade advantage. Beijing does not want to see this happen. In the short run, therefore, it advises Iran and Pakistan to keep things cool and avoid raising tensions with America. In the longer run, it may mean that China would welcome a smaller U.S. role in the region.

China’s tactical support of U.S. aims sometimes looks to Washington like a convergence of interests. For example, concerned with possible American military strikes against Iran’s nuclear program, China signed on to UN sanctions and leaned on Tehran to take its talks with the P5+1 seriously. Similarly, as U.S. relations with Pakistan frayed in 2011 and 2012, putting Pakistan’s stability at risk and raising serious prospects of a clash between Washington and Islamabad, China turned away Pakistani requests for aid, lobbied Islamabad to make up with Washington, and dropped its usual cagey stance in order to agree to informal talks with America on Pakistan.

America looks to China for help in managing Iran and Pakistan, whereas China sees Iran and Pakistan as part of its policy of managing America. If America were not in the Middle East, China would not feel the compulsion to placate Washington; it would more brazenly protect its narrow economic interests—and the costs to America (and its allies) could really add up.

China could start by cutting India’s access to energy and markets in Central Asia and the Middle East, doing to India what China fears America could do to it. Japan and South Korea could suffer too. All the talk these days in American foreign policy circles is about how to leverage U.S. relations with Japan and South Korea to pressure China. But those two Asian countries depend on the same Middle Eastern energy sources as China, and the more China’s influence grows in the Middle East the more they will have to fall in line with China to protect their energy supply. If America wants Japan and South Korea to stay independent of China and be able to stand up to Beijing, then it must protect Tokyo and Seoul’s position in the Middle East—not from the Arab suppliers, but from China.

Over time, a region dominated by China will begin to look like China. Its push into the broader Middle East in search of energy and markets will shape that region in China’s image: illiberal and mercantilist. For its part, America has laid its chips on the Gulf’s Arab monarchies (no liberal bastions themselves). China looks to them, too, to sell it oil and gas, but the pillars of China’s Middle Eastern strategy are Turkey, Iran, and Pakistan—the Northern Tier countries that America befriended during the Cold War. In those years, Washington took up London’s old position in what Rudyard Kipling famously called “the great game,” which was to keep Moscow away from the warm waters of the Mediterranean Sea and the Indian Ocean, and don’t let the Russian bear get his paws on the oil fields of the Middle East. Now China is rebuilding old Northern Tier multilateral organizations for its own strategic ends.

The SCO seeks to achieve this end. Both Iran and Pakistan belong to the SCO. The organization’s June 2012 meeting was dedicated to discussing regional security in the Afghanistan-Pakistan corridor and to expanding Chinese-Russian cooperation on economic issues in Central Asia in anticipation of the U.S. withdrawal from Afghanistan.

In one way after another, America is pushing the Middle East further into China’s bosom. More broadly, it seems, America has done all the fighting while China has done all the business. For more than a decade now, America has poured blood and treasure into Afghanistan to defeat the Taliban and pacify the country. But once mineral riches were discovered in an Afghanistan now made safer for geological exploration by U.S. and NATO involvement, who got the first mining contract? China, which also promised to build highway and rail routes for shipping copper ore—to China. It is the same story in Iran and Pakistan. America wrestles with thorny security problems, while the Chinese ink deals.

What would be the upshot if America remained fully engaged in the Middle East? What would that mean for China’s role in the region, and for our relations with China? We could protect the region from China’s heavy hand and from illiberal institutions that it would promote and support. We could ensure our Asian allies’ access to steady energy supplies, and in the process limit China’s ability to realize its broader strategic interests in Asia and globally.

American presence in the Middle East at a time when China too is expanding there would force China to abide by international rules and institutions of the kind they have had to submit to in the Asia-Pacific. That would enforce America’s larger goal of persuading the rising giant to live within the bounds of a rules-based system—the one based on Western liberal values and reflecting the fundamental tenets of the international system. To that end we should be building multilateral institutions in the Middle East of the kind we have built and supported in Asia, such as ASEAN, Asia-Pacific Economic Cooperation, and the East Asia Summit—which China is doing in the form of SCO—rather than leave the region to its own fate. Those institutions would promote stability and also entrench rules and norms necessary to the orderly conduct of regional politics. Once we have built those institutions we should encourage China to join and to participate in regional security, diplomatic and economic discussions, and collective management. Just as China links what is happening in the South China Sea to developments in Pakistan or Iran, we should link Chinese actions in the Middle East to American relations in Asia and vice versa.

James Fallows writes of China’s rise, “Either the growing power of the Chinese economy will change the rest of the international system, effectively making it more Chinese, or the growing prosperity of the Chinese people will change their own country’s system, making it more international.”⁷³ That is how our deeper engagement in the Middle East can have an impact: encouraging China to become international rather than allowing the Middle East to become Chinese.

We have the requisite military muscle and economic and political influence today to see to the orderly expansion of China’s role in the region; we should put this capability to good use.

America does not need to pivot to Asia geographically; it needs to do so conceptually. That means it must recognize the Middle East as an integral part of Asia. In 2010, Hillary Clinton took the bold step of challenging China’s claim to the South China Sea. In a speech at the ASEAN meeting in Vietnam, she defended all nations’ right of access to that body of water. She added that it was a right that America was prepared to defend and finished by saying that all disputes should be settled through multilateral talks. That doughty stance on behalf of the liberal world order—“freedom of the seas” is among the great principles of classical liberalism—caused several nations in the region to take heart, show greater independence vis-à-vis China, and move closer to America.⁷⁴ The same bold thinking that governs America’s China policy in East Asia should govern its approach to West Asia. China, more than counterterrorism and nuclear fear, should be the bedrock of America’s Middle East strategy in the twenty-first century.

CONCLUSION: AMERICA, THE PIVOTAL NATION

There is a great debate these days about whether America is declining.¹ Those who warn that our best days are behind us blame this reversal of fortune—the loss of our superpower status, economic dominance, and unrivaled leadership in the world—on economic troubles at home,² imperial overreach abroad, or simply the fact that we are no longer alone in the pole position—there is China and its fellow BRIC (Brazil-Russia-India-China, a popular shorthand for rapidly growing economies) pack aspirants to great power nibbling at our heels.³

We have economic problems at home, to be sure, but we are still the world’s largest economy and have the strongest military, and the idea of emerging markets supplanting America on the world scene is for now more fantasy than reality. We still have all the ingredients for global leadership,⁴ and we certainly talk of how much our place in the world matters to us. The problem is that none of that is reflected in how we do business.

I don’t believe America is declining. Far from it. Rather than why we are declining, the question everyone should be asking is why, despite our overwhelming power and potential, our influence is diminishing.⁵ The answer lies in how we exercise our power and how we see our role in the world.

If we see global leadership slipping from our grasp, it is not because our economy was in recession for much of the past four years but because we have been uncertain about our role in the world. Over the past decade, first our exclusively military approach to foreign policy making did great damage to our reputation, and now the inconsistency evident in how we pursue our interests has cast doubt on our leadership. Our aim for the past four years has been to engage less, do less, and have a smaller footprint. But then we should be prepared to also matter less and influence less—to become irrelevant to outcomes, be they large or small. It has been a losing proposition for us, and that should matter to us. So it is that in the past decade we have gone from leading everywhere to leading nowhere. That is the surprising epilogue to our decade-long foray into the Middle East.

America should not settle for this result. American leadership is still critical to the stability of the world order and the health of the global economy—to expansion of trade and the continued development and prosperity of nations. There is no other power today that could play America’s role on the world stage or is willing to step into America’s shoes. Nor would the world be better off were that to happen, or even if any and all of the rising BRIC nations and those following in their footsteps tried their hands at it. The world America has built still needs America to lead it. America remains the world’s pivotal nation.

But the world has changed and is changing still, and so should American leadership. The frustration Americans feel when they tally the cost of their foreign adventures only to see them fail is understandable. Too often in the recent past we have led with our military. That has been costly and fruitless. In the Middle East, in particular, where American leadership was put to the test in the past decade, that approach has been disastrous.

Rather than shun leadership in the world, it is time to think differently of how we approach influencing its affairs. It is time we returned diplomacy and economic engagement to their rightful place. Those facets of American power were central to its leadership in the past—defining both our vision and audacity—and they should be so again in the future.

Our world has been shaped by bold acts of American statesmanship. Harry Truman won the future for the free world with a massive commitment of American power and resources to build a transatlantic alliance that successfully contained and defeated the Soviet Union. George H. W. Bush similarly pushed hard for German unification, a risky proposition that at first even Germans were wary of. Successfully contending with the challenges that the greater Middle East poses to American security demands similar bold American leadership, the willingness to embrace a clear strategy and commit the full measure of American power to realizing it.

Historically, American leadership in the world has been a force for good. Without it, writes Robert Kagan, the world could be led “by some other kind of order, reflecting the desires and the qualities of other world powers,” which may be illiberal and destructive; or, he writes, “perhaps [the world order could] simply collapse.”⁶ That is why we think of America as the indispensable nation.

It was only after what America did in Bosnia—compelling a confused and recalcitrant Europe to follow America’s lead to end genocide in the Balkans—that it earned that sobriquet. The people of the Middle East heard President Obama say in his much-anticipated speech on the Arab Spring, “Our support for these principles [human rights and democratic, peaceful demands for political freedom and economic opportunity, and legitimate aspirations of people] is a top priority and central to the pursuit of other interests in the region. The U.S. will marshal all our diplomatic, economic, and strategic tools to support these principles.”⁷ What they understood was that the nation that had transformed other parts of the world for the better was now poised to help change theirs.

The Arab Spring was a ray of hope in a troubled region. But a brave call for freedom cannot alone change the reality of economic stagnation, social misery, and political frustration. Not without outside support. We don’t have to look too closely to realize that the Middle East is going through a historical transformation. Islamism is rising, sectarianism exploding, and regional balances of power collapsing, and flash points in Lebanon, Iraq, Syria, and Bahrain are threatening conflagration on a regional scale. The last time change of this magnitude happened was in 1979, when the Iranian revolution inspired Islamic radicalism and upended regional stability. What is happening in the Middle East today is both more complex and potentially bigger, and demands greater American engagement.⁸

Solving the problems of the Middle East and the threat they pose to the world requires a fundamental change in the region’s economic profile.⁹ The international community would have to make a sizable investment—a Marshall Plan in scale—to bring about change of that magnitude. And that requires American leadership. Even if we cannot afford that right now, we still need a clear economic strategy for the region—a plan for using development aid, trade, and investment to help the region and also serve our interests.

That is familiar territory for the United States; it has secured stability, promoted prosperity, and built democracy in region after region of the world since the end of World War II. But when it comes to the Middle East, America has forgotten this legacy. It has relied more on war (and nowadays on drones) than on trade. The Bush administration contemplated a free-trade deal with Egypt but then shelved the idea when President Mubarak jailed dissidents. We have signed preliminary free-trade agreements with Jordan and Morocco, but they remain limited in scope and there have been no plans for deepening them. Pakistan has been clamoring for more trade instead of aid, but our response has been yes to aid but no to trade. American leadership of the kind that would transform the Middle East has to be anchored in economic interdependence that would promote growth in the region and make it a part of the burgeoning global economy. Change in the Middle East needs BRIC-like development, and that requires American investment.