Iraq war would cost Beijing millions
A US-led war on Iraq will cost China millions of dollars in higher oil prices and lost contracts and is likely to result in American domination of global supplies, an official newspaper said yesterday.
The Global Times said war would put up the world oil price by US$5 (HK$38.90) a barrel, so that China would have to pay US$10 million more per day for the two million barrels a day that it imports. In addition, Chinese labour contracts in the region would have to be suspended and the workers repatriated. China plans to purchase strategic oil reserves of 50 million barrels, enough for 25 days, but with oil prices so high, now is not a good time for large purchases.
Su Jingxiang, a specialist at the China Institute for Modern International Affairs, said while the world depended little on supplies of oil from Iraq, the overthrow of its President, Saddam Hussein, by the United States would affect the entire Middle East.
The newspaper looked at two possible outcomes of war for China - a swift victory for the US-led forces would lead to a client government in Iraq, stability and a more plentiful oil supply that would lead to lower prices and help stimulate the US economy.
But in the long term, it could have a negative effect on China as Washington would turn more of its attention to the country and increase the pressure on it.
The other scenario is that the US gets bogged down in a long and costly war, that could spread to other countries in the Middle East, forcing it to concentrate its manpower and resources. The upside to this is that it would give China a more relaxed international environment for several years.