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    Central Asia
     Oct 11, 2008
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US standing in Caspian drips away
By M K Bhadrakumar

On Sunday, en route to Astana, Kazakhstan, after a "very nice trip to India", US Secretary of State Condoleezza Rice told reporters accompanying her, "I just wish I could have stayed longer in India". New Delhi must be one of a handful of capitals where officials from the George W Bush administration receive an expectant welcome, and the doomsday warnings emitted from New York and Washington do not seem to matter.

But there was another reason for Rice's trepidation as her jet descended to Astana - US influence and prestige in Central Asia and the Caspian region has again plummeted. Rice realizes there is hardly any time left to retrieve lost ground, and the Bill Clinton administration's legacy in the Caspian and Central Asia has largely dissipated. Central to this has been the failure of the Bush


administration to handle relations with Russia. The stocktaking has already begun.

Writing in The Washington Post on Wednesday, former secretaries of state Henry Kissinger and George Shultz rebuked the Bush administration for its "drift towards confrontation with Russia" and pointed out that "isolating Russia is not a sustainable long-range policy". They said much of Europe is "uneasy". Their target was Rice, a self-styled "Sovietologist", and her inexcusably vitriolic attack on the Kremlin in a speech at the Marshall Fund of Germany in Washington on September 18.

Confrontational diplomacy
Kissinger and Shutlz particularly cautioned the Bush administration against encouraging confrontational diplomacy towards Russia by its neighbors, which would be counter-productive. Most certainly, there is already a backlash in the region. Azerbaijan, which the Bush administration once regarded as close regional ally, snubbed Vice President Dick Cheney during his visit to the capital, Baku, last month. Washington pretended not to notice, and deputed to Baku last week yet another top official - Deputy Secretary of State John Negroponte - whom the State Department's website describes as Rice's "alter ego".

On arrival on October 2, Negroponte forthwith said he was carrying a "simple message" - that the US has "deep and abiding interests" in Azerbaijan and these are "important interests" which hold implications for regional and international security. He implied Washington that was not going to roll over and give way to Moscow in the southern Caucasus.

Against the backdrop of the conflict in the Caucasus in August, the Caspian Sea basin has become a focal point. This was inevitable. At the core lies Washington's determination to avoid Russian participation in the European energy-supply chain. To quote Ariel Cohen of US conservative think-tank the Heritage Foundation, "Since August, US diplomats have been busy trying to shore up Washington's geopolitical position all around the Caspian, including Baku, [Turkmenistan capital] Ashgabat and Astana."

Russia is gaining the upper hand in the region. Despite robust US diplomacy in Ashgabat - over 15 American delegations arrived there in the past year - Turkmenistan, which already exports around 50 billion cubic meters of its gas through Russia, has responded well to Moscow's overtures. It has decided to stick to the terms of an April 2003 deal whereby virtually all its exports are handled by Russia "up through 2025", and Turkmen gas exports to Russia are expected to rise to 60-70 billion cubic-meters by 2009, leaving hardly any surplus for Western companies. Ashgabat has also committed to the construction of a pipeline to Russia via Kazakhstan along the eastern coast of the Caspian Sea.

The clincher was Russia's offer to buy Turkmen gas at "European prices" - the same approach that Moscow adopted for securing control of Kazakh and Uzbek gas exports. Russia has since made a similar offer to Azerbaijan, which Baku is considering. Azerbaijan was the true success story of US oil diplomacy in the post-Soviet era. Clinton literally snatched it from Russia's orbit in the 1990s by pushing through the Baku-Tbilisi-Ceyhan [BTC] oil pipeline against seemingly impossible odds. Azerbaijan is now edging back toward Moscow.

It is negotiating with Russia an increase in the annual capacity of the Baku-Novorossiisk pipeline. Azerbaijan reducing its commitment to the US-supported Baku-Supsa and BTC pipelines, which have a massive capacity of 60 million tonnes annually and could easily handle Azeri oil exports, is a breakthrough for Russia.

Russia's resolute stance in the Caucasus has caught Baku's attention. Baku understands Russia's resurgence in the southern Caucasus, and President of Azerbaijan Ilham Aliyev dislikes the mercurial personality of Georgian President Mikheil Saakashvili. Azerbaijan might have lost $500 million in revenues due to the suspension of oil transportation via the Baku-Supsa and Baku-Tbilisi-Ceyhan pipelines in August due to the conflict, and Baku's new interest in the Russian pipeline stems from a desire to protect its relationship with Moscow.

The implications are quite serious for Washington. Any reduction in the Azeri exports via BTC could impact the viability of the pipeline, which has been a cornerstone of US oil diplomacy in the Caspian, pumping early 1 million barrels of oil per day from Azerbaijan to Turkey's Mediterranean coast, where most of the supply is then shipped to Europe. The BTC pipeline looks secure for now, but has come under the increased watch of Russia.

Again, question marks have appeared regarding the future of the Nabucco gas pipeline, which, if constructed, would bypass Russian territory and bring Caspian gas from Azerbaijan via Georgia and Turkey to the European market. What if Azerbaijan accepts the Russian offer to buy gas at "European prices"? Has the Caucasus conflict fatally hurt Nabucco's prospects?

Russia comes out on top
There is indeed a new ambivalence in the geopolitics of the region. All across Western Europe, Eurasia and China countries are assimilating what happened in the Caucasus in August and are assessing their stakes vis-a-vis a resurgent Russia. They seek accommodation with Russia. Moscow has come out very much on top.

The war in Georgia has somewhat clouded the relations between Russia and the European Union. The final declaration of the EU summit on September 1 underscored the need to reduce energy dependence on Russia. But the EU's options, too, are limited. Europe has pinned its hopes on Nabucco, but it can only be implemented with Russian participation. Claude Mandil, former head of the International Energy Agency, said recently in an interview with the Russian daily Kommersant, "There is much oil and gas in Central Asia, but still less than in Russia or Iran."

Mandil, who advises French President Nicolas Sarkozy on energy issues, was critical of the US pressure on Europe to isolate Russia, calling it "counter-productive". He said, "The EU alone should decide the issue of energy security. The US itself is highly dependent on oil imports from Venezuela, but no EU members tell Washington that it's time to attend to that problem".

China also recognizes the Russian consolidation in the Caspian-Central Asian region. A commentary in the People's Daily in early September took note that Russia's Central Asia diplomacy has been "crowned with great success". It noted that visits by Russian leaders to Central Asian capitals in August helped "consolidate and strengthen" Moscow's ties with the region and achieved "substantial outcomes" in energy cooperation.

The Chinese commentary concluded: "Against a global backdrop of Russia's growing contradictions with the West � the high-level shuttle diplomacy of Russian leaders will further enhance Russia's strategic position in Central Asia, beef up the control of oil and gas resources and help coordinate the positions of Russia and these Central Asia nations on the Transcaucasia issue". Beijing has obviously made a realistic assessment of its own options in Central Asia.

In fact, during Russian Prime Minister Vladimir Putin's visit to

Continued 1 2  

Oil in troubled mountains, (Aug 12, '08)

Relax and float south stream, (Mar 14, '08)

1. Bernanke running out of ammo

2. Wall Street: A new Iraq War

3. Oil, war, lies and 'bulls**t'

4. The Russians get on message

5. China lost in SE Asian space

6. Milk scandal sours China's 'soft power'

7. Beijing restrains buying urge

(24 hours to 11:59pm ET, Oct 9, 2008)


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