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
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
