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    Central Asia
     Nov 13, 2009
Page 1 of 2
The rise of Rimland?
By Robert M Cutler

MONTREAL - Recent energy and other developments in Southwest Asia, particularly involving Turkey, Iran and Iraq, sketch the outline of an imminent reorganization of international relations in the region. This will have knock-on effects for Eurasia as a whole and the shape of the international system in coming decades.

At the same time, it suggests new and unexpected relevance of the mid-20th century geopolitical theorist Nicolas Spykman.

A key point is the little-noticed movement towards gas imports from the Kurdish region of northern Iraq into Turkey. Industry figures from the scene now estimate that 8 billion cubic meters per year (bcm/y) will flow from the Kurdish region into the Nabucco pipeline by the time it enters service, at present forecast


to be in 2016. Added to the similar amount already committed from Azerbaijan, this makes up just over half of the projected 31 bcm/y volume of the pipeline.

The agreement on gas supplies from northern Iraq follows from the visit by Turkish Foreign Minister Ahmet Davutoglu in late October to Irbil, the capital city of Iraqi Kurdistan, to open a Turkish consulate there. His delegation comprised no fewer than 70 officials and businessmen. The visit was itself a knock-on from one by a large and high-level Turkish delegation headed by Prime Minister Recep Tayyip Erdogan to Baghdad in the middle of October, when literally dozens of cooperation agreements were signed in a wide spectrum of policy areas.

These events suggest a tentative resolution of certain instabilities in Southwest Asia that have persisted since the breakup of the Ottoman Empire nearly 100 years ago. They represent the emergent re-integration of two economies rent asunder by the division of the empire in the early 20th century, together with an incipient consolidation of the post-Cold War "Southern Corridor" for energy from the Caspian Sea region to Europe. The significance of such a development of the evolution of post-Cold War international relations in the region is clear.

Recently announced oil industry contracts have garnered the most attention in this regard, and some background helps to put these in their proper perspective.

The Turkish Petroleum Company (TPC) was established in 1912 in opposition to US companies' interests. Two years later, the Anglo-Persian Oil Company (APOC) achieved 50% control of TPC. APOC later became the Anglo-Iranian Oil Company, then British Petroleum, then with the purchase of an American company BP-Amoco, today known as BP. The Iraqi government recently agreed with BP and the China National Petroleum Corporation (CNPC) on a deal for the development of the Rumaila oil field in the south of Iraq, which CNPC estimates to hold 17 billion barrels of reserves.

By 1927, when oil was discovered at Kirkuk, in what is present-day Iraqi Kurdistan, the TPC was divided into equal shares among APOC, Royal Dutch Shell, and the Compagnie Francaise des Petroles (CFP), and a US consortium called the Near East Development Corp, with a non-voting 5% share to Armenian Calouste Gulbenkian, born in Turkey and the original "Mr Five Percent", whose impressive collection of ancient art is now exhibited in his eponymous museum in Lisbon.

By 1929, when the TPC became the Iraqi Petroleum Co (IPC) and Iraq was under British mandate from the League of Nations, a difference of interests had emerged within the companies comprising it. While Shell and the CFP (which became the French company Total in 1991) sought to develop the Kirkuk deposits as quickly as possible, the APOC (today's BP) and the American company Standard Oil of New Jersey (which became Esso, then Exxon, and is today ExxonMobil) sought to delay it because they had other holdings and didn't mind keeping the oil in the ground there.

This soup of companies gives a hint as to continuities in the story. Skipping the next three hardly uneventful decades, the IPC by 1960 was still developing only one-twentieth of all the resources in Iraq to which it had rights. That year, a meeting of oil producers in Baghdad led to the foundation of the Organization of Petroleum Exporting Countries (OPEC), and the next year the Iraqi "Law No 80" expropriated all IPC concessions not already in production.

Following these events, OPEC members began negotiating with Western consuming countries independently of one another, leading to increased production and undercutting of Iraq, which suffered a significant decline in market share. Throughout the 1960s, the Iraqi National Oil Company (INOC) contracted first with the French and then with the Soviet Union, asking for help to development the North Rumaila fields: the ones just signed over to BP and CNPC.

By 1975, and following its strong advocacy of the 1973-74 oil embargo on the West, Iraq nationalized all foreign energy interests still remaining in the country, then throughout the rest of the decade autonomously developed the domestic energy extraction industry. This went relatively well until the disastrous Iran-Iraq war began, lasting for a decade. Then came the first Gulf War, followed by United Nations sanctions.

By the end of the 1980s, the USSR had agreed to assist in the development of the West Qurna field; LUKoil inherited this agreement after the end of the Soviet Union, but it is now out of luck. After the fall of Saddam Hussein, the government of Iraq declared all contracts signed during the Saddam era were invalid and were to be reviewed and subjected to new Iraqi law. LUKoil accordingly put in a new bid for West Qurna earlier this year, but has lost out to Western rivals.

The Iraqi government has just reached agreement with America's ExxonMobil (Standard Oil of New Jersey when it was a member of TPC in the 1920s) and Anglo-Dutch company Shell (also a TPC member) to develop the West Qurna field, of which the reserves are estimated at 8.7 billion barrels.

The signature of these agreements with Western firms (and there are surely more to come) represents the historic reversal of the nationalization policy introduced in 1960, seven years after the coup in neighboring Iran against Iranian prime minister Mohammad Mossadeq, who had pursued an analogous policy.

The agreements also coincidentally signify the irretrievable downfall of the ideology and practice of the transnational Arab socialist Ba'ath party, of which remnants are present and active throughout a number of state structures in the Arab world, although an Iraq-Syria split dating from the mid-1960s had already destroyed its pretensions to any sort of universalism.

The Ba'ath party had taken power in Iraq in 1963 and Saddam was its last significant representative in power, although it survives through the Assad clan in Syria. This era of the 1960s also marked the Soviet foreign-policy initiative to curry favor with such regimes, categorized in Soviet doctrine of the time as "revolutionary democracies", adding Third World intelligentsia and other miscellaneous social strata into the already eclectic mix of the "popular front" line of Seventh Comintern Congress (1935).

That Soviet doctrinal shift had been made authoritative in the 1960s through writings and speeches by Boris I Ponomarev, chief of the Third (Communist) International before its dissolution in 1943, thereafter head of the Soviet Communist Party Central Committee's International Department and eternal candidate member of its politburo.

So the new energy agreements allow one to see in still clearer retrospective focus the final extinction of a whole so-called (in Soviet doctrine) "national anti-imperialist" social stratum that came into state executive power throughout a number of former European colonies, at the head of the anti-imperialist independence movement about half a century ago. 

Continued 1 2  

The 'other' Kurdistan seethes with rage (Oct 16, '09)

Nabucco ink starts to flow (Jul 16, '09)

Behind the Afghan propaganda
(May 2, '09)

Backstage at the theater of 'terror'
(Feb 27, '09)



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