SPEAKING FREELY Strategic squeeze over
Caspian resources By W Joseph
Stroupe
Speaking Freely is an Asia Times
Online feature that allows guest writers to have their
say. Please click hereif you
are interested in contributing.
There is
every indication the geopolitical rivalry between
America and Russia, inspired by a fervent desire on the
part of both parties to control Caspian energy
resources, is now coming to a head. The American-backed
Baku-Tbilisi-Ceyhan (BTC) pipeline, which is designed
and intended to carry precious crude oil (and later,
gas) from the Caspian Sea port of Baku in Azerbaijan,
west to Tbilisi in Georgia, and southwest to the
Mediterranean port of Ceyhan in North Atlantic Treaty
Organization member Turkey, circumvents both Russia and
Iran, and also bypasses the already congested bottleneck
of the Turkish Straits, which connects the Aegean Sea
and the Black Sea.
This route for the pipeline,
with a major portion stretching across Georgia, was
specifically promoted by the United States as a way to
cut deep into Russia's monopoly over Caspian energy
resources. It is projected that crude oil will begin
flowing through the pipeline next year. In the near
future, a number of smaller but strategically important
connecting pipelines are envisioned, which would greatly
enhance the value to the West of the BTC pipeline. From
the US point of view, its own energy security and that
of the West is at stake. From the Russian point of view,
its continued monopoly and all the economic and
geopolitical power and influence that go with it is very
much at stake. Not surprisingly, Russia has opposed from
the start the US-inspired, US-financed BTC pipeline,
which will lie right in Russia's "back yard".
In
the deeply troubled region of the Caucasus, where ethnic
rivalries and secessionist civil wars abound, the US is
very concerned about security for the new pipeline. This
is particularly so in Georgia, where a new pro-US
president has taken power since January of this year and
where two de facto autonomous regions have previously
been created as a result of bloody civil war in the
early 1990s, after the breakup of the Soviet Union.
Georgia proper has a very weak and sickly economy, while
the autonomous region of Adjaria, which includes the
Black Sea port city of Batumi, and which refuses to pay
taxes to the Georgian capital Tbilisi, is doing quite
well economically.
For obvious reasons, the new
president of Georgia, Mikhail Saakashvili, wants to rein
in the de facto autonomous regions and make them fully
obedient to Tbilisi. Since becoming president, he has
sought to accomplish this task, not so much through
constructive diplomacy, but rather by means of threats
and ultimatums. His tactics sparked a crisis with the
autonomous region of Adjaria in March, and again at the
end of April, when Georgia held massive military
exercises on the immediate border between Georgia and
Adjaria, resulting in Adjaria blowing up several bridges
linking it to Georgia proper, in an effort to forestall
any kind of military invasion of Adjaria by Tbilisi.
Saakashvili has a well-known reputation as a "hot head",
and in his dealings with Adjaria he is certainly living
up to his reputation.
Diplomatically speaking,
by using heavy-handed tactics such as the issuing of
public proclamations of his determination to remove
Aslan Abashidze from power in Adjaria, the issuing of
ultimatums to the Adjarian leader and the staging of
massive military exercises on the border between Georgia
and Adjaria at the height of tensions, Saakashvili has
created a situation for himself in which it will be
virtually impossible for him to back down without
sabotaging his own hold on power. Therefore, in forcing
the situation into a crisis, he has made a very risky
bid for complete control over Adjaria.
On May 5,
with the help of Russia, Abashidze was deposed as
president and thus Tbilisi consolidated its control over
Adjaria. And while Saakashvili's risky bid has indeed
paid off, it could not have succeeded without Moscow's
intervention and help. He certainly has his own reasons
and interests in consolidating Tbilisi's control over
all the regions of Georgia; there is, of course, a much
bigger picture involving the surrounding region and the
US and Russia as well. That bigger picture involves the
geopolitical rivalry over strategic control of Caspian
energy resources.
As stated previously, on the
one hand Washington is seeking stability and security in
Georgia and the region in order to ensure the viability
of the BTC pipeline, and on the other hand Moscow would
not lose any sleep if the BTC pipeline project somehow
came to naught. But in the peaceful resolution to the
crisis in Georgia, Washington has mostly gotten what it
wants, thanks to Moscow's direct intervention to prevent
bloodshed - greater security by virtue of a
consolidation of Tbilisi's power over Adjaria. On the
surface, Moscow appears to be significantly facilitating
the interests of its rival, Washington, thereby risking
the loss of its own precious interests in the oil-rich
region. But there is much more to this very complicated
situation than meets the eye.
Clearly, it was
not in Moscow's interests to see Georgia, and possibly
even the surrounding region, go up in the flames of
violent strife and civil war. Moscow's own interests
would likely have been very negatively affected. It
would be difficult for Moscow to export energy resources
if the region had descended into instability and chaos.
Once those conditions would take hold, neither
Washington nor Moscow could hope to control events. Very
wisely, Moscow stepped in (as invited by the Georgian
president himself) to ensure that a reasonable measure
of stability in the region was not lost, as it certainly
could have been due to Washington's and Tbilisi's risky
bid to consolidate control. Hence, in this action,
Moscow was really pursuing its own larger interests, not
those of Washington.
In the process, Russian
President Vladimir Putin has even come off looking like
a diplomatic statesman, one who averts bloody crises and
facilitates increased regional stability. This is no
small bonus in the sphere of diplomatic prestige, power
and influence. It portrays Russia in some very important
and positive light, in the view of the rest of Europe.
Russia is really proving herself to be a valuable asset
in a very dangerous world. But in taking such actions,
is not Moscow virtually handing Washington the victory
in the Great Game over control of Caspian energy
resources? No, not in the least. Moscow has, by its
actions, retained and even possibly enhanced her levers
to dominance over Caspian energy resources. How so?
When the economic viability studies for the BTC
pipeline were conducted, it was unanimously concluded
that due to the considerable US$3 billion cost of
constructing the pipeline and the notably increased
expense of pumping crude oil its entire 1,100-mile
length, securing agreements to transport Kazak oil in
large quantities would be a must, so as to reach the
projected daily flow of 1 million barrels. Failing this,
the BTC pipeline would be at significant risk of
becoming a $3 billion, 1,100 mile-long albatross. From
the very inception of the project, its economic
viability has been an issue. In order to calm such
concerns, the BTC consortium sought and obtained written
agreements with Kazakhstan to ensure that it would
commit to transporting a large amount of its oil by
means of the pipeline. However, the agreements signed
were not hard contracts or firm commitments, but rather
constituted only a notice of intent, according to recent
statements coming out of Astana, the capital. Thus,
Kazakhstan has served notice that it retains the right
to make its own decisions about how it wishes to bring
its vast crude oil reserves to market. What other
choices does it have?
Russia, in the atmosphere
of the developing BTC project, rushed to build a
pipeline of its own to serve Kazakhstan's (and of course
its own) interests. The new pipeline Russia built runs
from the Kazakhstan oil fields to the Russian Black Sea
port of Novorossiisk. This alternative pipeline, the
Caspian Pipeline Consortium (CPC), runs across Russian
territory. While the US continues to urge Kazakhstan to
fully join the BTC pipeline, Russia is pressing
Kazakhstan to sign long-term contracts for the transit
of its oil by means of the CPC pipeline.
The
most recent statements coming out of Astana indicate
Kazakhstan intends to use multiple routes for transit of
its oil, not wishing to place all its eggs in one
basket, so to speak. This could spell big trouble for
the BTC pipeline, which must have a large commitment of
Kazak oil to become economically viable. Kazakhstan is
also exploring the possibilities of exporting its oil
through Turkmenistan and Iran, which would further
damage the economic viability of the BTC pipeline.
Despite recent negotiations between Azerbaijan
and Kazakhstan over Kazakhstan's use of the BTC
pipeline, the Kazak president refused to give a firm
commitment to fully join BTC. Russia has recently
signaled that it can penalize Kazakhstan economically by
imposing tariffs on its goods crossing Russian territory
if it joins the BTC pipeline, and also that it is
willing to give Kazakhstan very good terms for the
export of its oil if Kazakhstan signs a long-term
contract with Russia. Indications are very strong that
Kazakhstan and Russia are indeed nearing a firm,
tangible agreement on crude oil exports by means of the
Russian system.
In January of this year, Putin
visited Kazakhstan, and the two partners signed a series
of agreements and voiced great enthusiasm over their
joint cooperation in the military, space, economic and
energy spheres. Kazakhstan makes no secret of its
definite tilt toward Russia. In the immediate aftermath
of September 11, Kazakhstan believed that a true
strategic partnership with the US was possible. However,
relations have subsequently soured with the US for a
number of reasons, notably over the issue of human
rights. Also an issue are disagreements over taxation
and other matters that arose between Western oil
companies and Astana. And there is an ongoing corruption
case in New York in which top Kazak officials are
implicated.
While a strategic partnership with
Washington is viewed in Astana as less and less
desirable, such a partnership with Russia is rapidly
developing on the ground, in a number of spheres.
Additionally, Kazakhstan is deepening its ties with
oil-hungry China, recently signing agreements for the
export of oil southeastward, away from the BTC pipeline.
All in all, Kazakhstan's "commitment" to BTC is soft,
and possibly getting softer. As stated above, without a
large commitment of Kazak oil, BTC will likely not
become viable economically.
Against this
backdrop, Russia's actions in Georgia become much
clearer. Moscow doesn't have to engage in the old-style
Cold War tactics of embarking on the dangerous course of
fostering or facilitating instability of any sort in the
Caucasus in an effort to damage the BTC project. It can
follow the course of fostering stability, which greatly
serves its own interests in such a strategically
important region. At the same time, Moscow has very
effectively hit the BTC project where it is the weakest,
where it hurts the most - seeking to rob the project of
its desperately-needed full commitment of Kazak oil.
Russia won't mind that some Kazak oil joins the
BTC. But it is ensuring that the amount will be far less
than required for the success of the project. By an
adroit use of diplomacy and economic power and
influence, Moscow has been turning Kazakhstan away from
Washington and toward itself. Moscow is pleased to let
the BTC consortium spend all the money it wants to
complete a pipeline which is unlikely to ever see the
light of day, economically speaking. Moscow is therefore
effectively implementing its new Great Game strategy,
the Putin Doctrine, as it has recently been dubbed.
While Washington fiddles with BTC, Moscow is very
effectively consolidating its own control over Caspian
energy resources.
W Joseph Stroupe is
editor in chief of GeoStrategyMap.com.
(Copyright 2004 W Joseph Stroupe)
Speaking Freely is an Asia Times Online
feature that allows guest writers to have their say.
Please click hereif you
are interested in contributing.
May 11, 2004
No
material from Asia Times Online may be republished in any form without written
permission.
Copyright
2003, Asia Times Online, 4305 Far East Finance Centre, 16 Harcourt Rd,
Central, Hong Kong
