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    Central Asia
     Sep 29, 2007
Page 1 of 3
A massive wrench thrown in Putin's works
By M K Bhadrakumar

It almost seemed since the month of May that in the battles of the Caspian energy war, Russian President Vladimir Putin was destined to glide serenely from victory to victory until next March when he leaves office in the Kremlin.

But a backlash was bound to happen. Putin's standing as the ace player in the Great Game of our times had surely become an eyesore for Western capitals.

You could tell it from the stillness in the air, as the autumn began

stealthily approaching the Central Asian steppes, that something was afoot. Are we heading for a season of unraveling, with the West bracing, no matter what it takes, for a marathon jawing that would somehow punctuate the claustrophobic intensity of the Kremlin's string of success stories in May-June - and create an alternative?

In focus is Turkmenistan, the energy-rich gas powerhouse of Central Asia. These have been manic weeks in Ashgabat. The melodrama is acute. But then the inscrutable space between victory and the chimera of victory has always been very narrow in Central Asia.

September 1 was the cutoff date that the Kremlin penciled in for the signing of agreements relating to the Russian-Kazakh-Turkmen gas deal that Putin had wrapped up during his sensational Central Asia summit on May 12. But September is drawing to a close, and not only have the agreements not been signed, the main protagonist, Turkmen President Gurbanguly Berdimukhamedov, is unavailable in Ashgabat. He has proceeded on an extended visit to the United States, accompanied by bigwigs in the Turkmen oil and gas industry. It suddenly dawns that in one big throw of the dice, the US and the European Union are desperately playing themselves back into the game, which Moscow thought it had all but secured.

The empire strikes back
On May 12, at the tripartite Central Asia summit in the city of Turkmenbashi, Turkmenistan, Putin, Berdimukhamedov and Kazakh President Nurusultan Nazarbayev announced their intent to upgrade and expand gas-transportation pipelines from Turkmenistan and Kazakhstan along the eastern shore of the Caspian Sea, directly to Russia. Simultaneously, it was announced that the Turkmenistan-Uzbekistan-Kazakhstan-Russia pipeline of the Soviet era would also be modernized.

The intention was to overhaul the Soviet-era pipeline system known as Central Asia-Center, ensuring it would have a capacity of 90 billion to 100 billion cubic meters (bcm) at the Russian border by 2010 so that it could handle the production of the vast Turkmen and Uzbek gas fields. Moscow wanted the relevant inter-government agreements to be signed by September 1 so that the corporate agreements could be concluded by the end of the year, and consortiums could be formed by early 2008. Moscow expected actual construction to commence by the middle of next year.

The entire project is predicated on the belief that Russia will have almost exclusive access to Turkmenistan's vast gas reserves and will hold a near-monopoly on Turkmen gas exports.

Watchers of the Great Game concluded that Putin had dealt a death blow to all Western plans to bring Turkmen gas to the European market bypassing Russian territory, which has been the leitmotif of the United States' Central Asia policy over the past 15 years.

On the one hand, the Russian stratagem to get exclusive hold over Turkmen gas meant that the proposed trans-Caspian pipeline project and Nabucco pipeline project, and the existing Baku-Tbilisi-Ceyhan pipeline and Odessa-Brody-Poland pipeline - westward energy routes to Europe supported by the US - were all doomed. On the other hand, Moscow was poised to tighten its control of the transit and use of Central Asian oil and gas, apart from drawing the region's bulk of future outputs to transit routes under Russian control.

Without doubt, in their totality, the May 12 agreements meant that Moscow inflicted a strategic defeat on the United States' Central Asia policy. To reinforce the success, Putin visited Austria on May 23-24 and signed various agreements under which the Russian gas company Gazprom would enlarge its market share in Austria and gain direct access to the retail trade, and Russia would use Austria as a transit corridor for European markets in Italy, France, Hungary, Germany, Slovenia and Croatia. With this, the Nabucco pipeline project's future, in particular, looked extremely gloomy.

Everything seemed to work in Moscow's favor when on June 23 a memorandum was signed in Rome between Gazprom and Italy's ENI on a 900-kilometer pipeline project across the Black Sea from Russia to Bulgaria with an annual capacity of about 30bcm. The undersea pipeline, on reaching Bulgaria, would have two options for the Bulgaria-Italy route. A southwestern option would be through Greece and the Adriatic seabed in the Otranto Strait to southern Italy, while a northwestern route would run from Bulgaria via Romania, Hungary and Slovenia (and possibly Austria) to northern Italy. Bulgaria and Greece promptly announced their intention to join the project, known as the South Stream project. The Wall Street Journal aptly described it as a "pipeline into the heart of Europe".

The upstream source for the South Stream project would be largely Central Asian and Siberian gas. Russia's game plan was obvious: maximize its control of the export routes for Central Asian gas. Russia signaled that it was outstripping the US both in regard of the upstream race for Central Asian gas as well as in the race for control of transit and downstream activity.

Alarm bells began ringing in Washington. On May 30, Vice President Dick Cheney's deputy assistant for national security affairs, Joseph Wood, rushed to Baku, Azerbaijan. He had a single message: Washington intended to meet the Russian challenge head-on and would persist with the policy of opening direct access to Central Asian oil and gas through Azerbaijan and Georgia, bypassing Russian territory and Russian pipelines. He stressed the US would push ahead with the Nabucco and Turkey-Greece-Italy gas transport projects. He told the Azerbaijani leadership that it should take the initiative to sort out Azerbaijan's bilateral disputes with Turkmenistan so that the latter could be drawn into the proposed gas projects.

Simultaneously, on June 1, Steven Mann, US principal deputy assistant secretary of state, held talks with Berdimukhamedov in Ashgabat. Mann strongly pitched for the trans-Caspian gas pipeline project (Turkmenistan to Azerbaijan to Georgia to Turkey to Europe). He conveyed Washington's keen interest that Turkmenistan should sell its gas to the European market directly, without the Russian intermediary.

Other senior US officials began fanning out to the Caspian region carrying similar messages that it would be far more advantageous for the Central Asian gas- and oil-producing countries to deal with European buyers directly. Thus US assistant secretary of state Richard Boucher visited Kazakhstan and Deputy Assistant Secretary of State Matthew Bryza visited Azerbaijan in the first week of June. Washington also began pressuring the European Union to display a sense of urgency in forestalling the looming Russian monopoly over Central Asia's gas exports.

Washington's primary intent was to sow seeds of doubt in the Turkmen mind regarding the wisdom of putting all its eggs in the Russian basket. On June 21, Washington upped the ante when Admiral William Fallon, commander of the US Central Command, arrived in Ashgabat and was received by Berdimukhamedov. Fallon carried a brief on energy cooperation. The consultation was evidently productive. On June 27, when Evan Feigenbaum, US deputy assistant secretary of state for South and Central Asian affairs, arrived in Ashgabat with a delegation of American oil majors, he heard good news. "The president [Berdimukhamedov] stated publicly, very clearly, that Turkmenistan remains interested in the trans-Caspian pipeline," Feigenbaum later told the media.

He said his message to the Turkmen leader was, "American policy on energy has been very clear for a very long time. Monopoly tends to work to the disadvantage of producers ... The point is, what is good for the United States is good for the global energy supply and global energy security. That has been the basis of our conversation with Turkmenistan and other producers in this part of the world."

Ten days after Feigenbaum's discussions, Matthew Bryza, deputy assistant secretary of state, arrived in Ashgabat. On the eve of the visit, Bryza said in Washington on July 10, "There is a large - huge - supply of natural gas in the far-western reaches of Turkmenistan, which, if the market decides, will make its way to Europe via Azerbaijan ... And I'll leave for Turkmenistan tomorrow to see if we can help Azerbaijan and Turkmenistan build on the momentum they've already created in their relations."

A wrench in the wheel
Moscow certainly took note of these strange goings on - a stream of senior US diplomats attired in pinstripe suits with top executives of oil majors with suspiciously heavy-looking attache cases in tow, trooping out of Ashgabat hotel rooms almost every week. If there was any doubt about what they were up to, that became clear in late July when US-based energy company Chevron announced its intention to open an office in Ashgabat and participate in the development of Caspian energy resources.

On July 3, at a public ceremony in Ashgabat marking his 50th birthday, Berdimukhamedov said Turkmenistan maintained its "neutral status" and had "equal relationships" with all. He added, "Without joining any kind of political alliances, we will carry on with our efforts to build new gas pipelines to carry our gas to China, and to Pakistan and India via Afghanistan, and to Europe via the Caspian Sea. This means that we will have equal and mutually beneficial relations with Russia and the United States, with European countries, and with our neighbors as well." (Emphasis added.)

Even if Moscow kept up an air of confidence about Berdimukhamedov, a degree of uneasiness was inevitably 

Continued 1 2

Russia is far from oil's peak (Sep 27, '07)

Russia bolsters ties with Iran (Sep 22, '07)

Winning the next cold war (Sep 19, '07)

1. The man behind the madness

2. US frets over Iran's 'strategic dominance'

3. Russia is far from oil's peak

4. How the 'gang of four' lost Iraq

5.  Monks in the vanguard for regime change

6. The Iraq oil grab that went awry

7. Buddha vs the barrel of a gun

8.French warmongering aids Iran's cause

9. When central banks play with fire

10. Japan's premier faces India dilemma

11. Economics at the root of protests

(24 hours to 11:59 pm ET, Sep 27, 2007)


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