09.01.2011 0

Iceland Purchase Renews Concerns Over Chinese Geopolitical Intentions

By Robert Romano —  A provisional deal struck by a Chinese tycoon to purchase 115 square miles of territory in northeast Iceland has renewed concerns of the long-term geopolitical and economic designs of China.

Is the Red Dragon attempting to gain a strategic foothold in the North Atlantic?

Ostensibly, the $8.8 million purchase is to build an eco-tourism resort and a golf course. But considering Iceland’s strategic location — equidistant from Europe and North America — many are questioning why such a large swath of land is needed for a hotel.

Or, better yet, whether building a golf course on the Arctic Circle with perhaps only 4-5 months of proper weather conditions is the real reason behind the purchase.

“This question has to be looked at carefully from many different aspects,” Icelandic Interior Minister Ogmundur Jonasson told Reuters. He is concerned about selling such a large portion of land to a foreigner, as well as ownership of the natural resources on and in the land.

Put in a larger context, this move is just one among several by the Chinese to purchase up strategically important locales. For example, China has invested billions of euros in Greek infrastructure, such as its primary port city in Piraeus, an industrial zone to the west of Athens. China is investing heavily to modernize Piraeus.

They also have a proposal to spend billions of dollars for a Canadian pipeline from the Alberta oil sands to British Columbia. Not to mention boosting their gold stockpiles, and leveraging their near-monopoly on rare earth metals — useful several military applications including smart bombs.

Center for a New American Security senior fellow Robert Kaplan raised the alarm bells about China’s rising naval power in a much-read oped for the Washington Post last year, calling it the “greatest geopolitical development” in the past decade. While it may take years or decades for China to be able to compete with the U.S Navy, the development is certainly cause for concern.

Chinese military spending itself has skyrocketed in the past two years. Last year, its military budget was $77.95 billion, rising to $91.7 billion this year. Just this year it has unveiled its new stealth bomber and its first aircraft carrier.

The worst part, American taxpayers may be helping to finance it. With Chinese holdings of U.S. treasuries ranging from $1.165 to $1.465 trillion, at an effective interest rate of about 3 percent, the U.S. is forking over anywhere from $35 to $44 billion in interest payments annually. That’s almost half of China’s military budget.

Perhaps some of these developments recently led the U.S. Department of Defense to release a paper entitled, “Military and Security Developments Involving the People’s Republic of China 2011”. The paper outlines China’s attempts to modernize its military and its likely strategic posture over the next decade.

“Following this period of ambitious acquisition, the decade from 2011 through 2020 will prove critical to the PLA as it attempts to integrate many new and complex platforms, and to adopt modern operational concepts, including joint operations and network-centric warfare,” the report documents.

While discussions on China currently talk about their share of the U.S. national debt or economic globalization, the security side of the equation has been neglected — pretty much discounting thousands of years of human history that suggests international anarchy is the norm.

The combination of nuclear weapons and economic globalization is supposed to have tamed those historical tendencies. We’ll most likely find out in the next twenty years if realists like Robert Kaplan were right that it is not “in our interest to be distracted while a Chinese economic empire takes shape across Eurasia.”

Robert Romano is the Senior Editor of Americans for Limited Government.

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