The US risks losing the globalization long game to China

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International tensions continue to mount in the wake of The Hague ruling on July 12 that China’s claims to the South China Sea have no legal basis.

Considering what’s at stake, it shouldn’t come as a surprise to anyone. U.S. trade accounts for $1.2 trillion of the $5.3 trillion of trade that passes through the South China Sea each year. As the Council on Foreign Relations recently noted, a crisis in the South China Sea would seriously impact both regional economies, as well as our own, increasing insurance rates and necessitating longer transits from port to port.

That the South China Sea may, by Chinese estimates, yield 130 billion barrels of oil (more than any area of the globe except Saudi Arabia), only compounds the importance of a peaceful resolution. However, as U.S. focus intensifies in one area of the globe, it wanes in another.

It means that, even if we get our way in the South China Sea, we risk losing big in the game of globalization. While the U.S. is busy leading complicated diplomatic processes in Asia, China continues expanding its influence elsewhere, specifically, in the very regions that have moved down the list of U.S. foreign policy priorities.

Nowhere is this phenomenon more prevalent than in Djibouti, a country situated on the northeast coast of Africa described by U.S. Ambassador Tom Kelly as “at the forefront of [U.S.] national security policy” but one that few Americans understand in terms of strategic value. Though small in size, Djibouti plays a vital role in U.S. national security. It houses our only permanent military base on the African continent and positions us within striking distance of al-Qaeda in the Arabian Peninsula (AQIP) and al-Shabaab, in Somalia.

Similar to the South China Sea, Djibouti is also a critical trade route. Positioned at the choke point between the Red Sea and the Gulf of Aden, the Port of Djibouti is the nucleus of one of the busiest shipping routes in the world, connecting Europe, the Far East, the Horn of Africa and the Persian Gulf.

Yet despite its importance, the country has been overshadowed by other American foreign policy priorities, like the geopolitical chess match in the South China Sea. Earlier this year, the U.S. sent the USS John C. Stennis carrier strike group (CSG) to the disputed waters as a show of force.

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To put that in terms of financial commitment, the acquisition cost of a CSG is roughly $13 billion, and it costs $6.5 million a day to simply operate a CSG. We gave under $5.5 mn dollars in aid to Djibouti in all of 2015, less than the cost of operating our carrier strike group in the South China Sea for just one day.

When Djibouti – a country led by an increasingly authoritarian leader – held elections last year, the U.S. gave $7,914 for “Elections and Political Processes” and $4,486 for “Political Parties” via USAID. No American election monitors were present. Not surprisingly, incumbent President Omar Guelleh emerged victorious, earning 87% of a vote which activists claim was preceded by political repression, police brutality, and biased national media.

While the U.S. turns away from Djibouti, China is leaning in, investing billions in infrastructure projects that only extend its influence there. And it’s working. Nearly one year ago today, China and Djibouti came to terms on what is China’s first overseas military base. It will soon give China the largest military presence in the country and a major stake on one of the most strategic waterways in the world.

The South China Sea is just one investment in China’s increasingly diversified portfolio. For China, the most likely worst-case scenario is they are allowed to save face after The Hague ruling, paving the way for a successful G-20 meeting in Hangzhou and the IMF’s expected acceptance of the Chinese yuan to its globally recognized basked of reserve currencies. Not a bad worst-case scenario.

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The best case could include the above, along with China maintaining some sort of military presence in the South China Sea. If so, the country is, as one senior western diplomat warned, one step closer to developing a “web of bases” that give them “control over strategic waterways all the way into the Med[iterranean Sea].”

It’s clear China is playing the long game, actively investing in strategic influence around the globe. As the United States works towards a peaceful conclusion in the South China Sea, we must also remain focused on nurturing critical diplomatic relationships elsewhere. Making our influence felt in the South China Sea is important, but far less so if it dissolves our position in countries like Djibouti.

James D. Durso is the Managing Director of Corsair LLC, a supply chain consultancy. He was a professional staff member at the 2005 Defense Base Closure and Realignment Commission and the Commission on Wartime Contracting in Iraq and Afghanistan.  Mr. Durso served as a U.S. Navy officer for 20 years. His overseas postings were as a Foreign Military Sales advisor in Kuwait and Saudi Arabia, and in Iraq as a civilian transport advisor with the Coalition Provisional Authority.

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