The Circle of Crude

NYT Editorial

The public derision of Republicans' idea for a $100 gasoline rebate has focused on the desperate political pandering embodied in the proposal. But there's another view that makes it seem even worse. Consider the China angle.

With the nation already deeply in debt — and with Congress angling this week to cut taxes for affluent investors by more than $20 billion — lawmakers would need to borrow $10 billion to make the rebates happen. Since more than 80 percent of the immense borrowing of the Bush years has been from foreigners, it's safe to assume that most of the rebates would be courtesy of foreign lenders, of which China has been one of the most willing.

It’s the circle of crude: China's competition for the world's oil is pushing up prices. Congress piles on more debt to calm angry consumers with a rebate. The increased debt is a prescription for a weaker dollar, which in turn would make imports, including oil, even more expensive.

The United States' huge — and growing — foreign indebtedness and its refusal to curb its appetite for oil risk eroding its position in the world, at precisely the moment when it needs to use its leverage as the world's dominant power to manage the extraordinary repercussions that will come with China's growth. Energy prices and the effect on global warming are only the beginning. China's demand for other natural resources poses new dangers as well, as The Times's report last week on China's planned leveling of the Indonesian tropical forests attests.

The United States can't, and shouldn't, try to curb China's economic progress, or the appetite of Chinese consumers for the good things in life. But dealing with the effects will require strong and savvy diplomacy. President Bush blew the chance to make that point — to Americans and the Chinese — during the recent visit of China's president, Hu Jintao. Then last week, as Bill Frist, the Senate majority leader, was dreaming up his $100 rebate plan, President Hu moved on to Africa. He exchanged warm hugs with Nigeria's president, Olusegun Obasanjo, and signed a deal to buy a big share of a major oil field in Nigeria. A few days later, in Kenya, he banged happily on a traditional drum at the welcoming ceremony, and then proceeded to sign a deal that will allow China to explore for oil off the coast of Kenya.

The United States' outsized needs for the same resources that China covets, plus its need to borrow from China and other countries, diminish its influence with countries whose importance goes beyond that of their oil wells. Nigeria, the United States’ fifth-largest oil supplier, is also important to American counterterrorism efforts, especially in the strategically important Gulf of Guinea. Kenya is also important in the fight against terror because its location on the Horn of Africa has made it both a training ground and a way station for terrorists.

Both countries are rife with corruption that the United States has been trying to help mitigate, in hopes of more stable economic relations and of a safer, more humane world. But America's laudable goals are, at best, wishful thinking — at worst, propaganda — unless the United States develops energy and fiscal policies that will allow it the maneuverability it needs to balance China's deepening ties not only with places like Nigeria and Kenya, but also with Saudi Arabia, Sudan, Indonesia, Myanmar and so on, as global competition continues unabated. Unfortunately, as of now, the level of America's response to this new challenge has been embodied in that pathetic recipe: borrow money from the Chinese central bank, and use it to give every voter $100 to buy more gas.