THE ROVING EYE Russia and Iran lead the new energy game
By Pepe Escobar
Whatever the West may have thought about it, Russian President Vladimir Putin
has already spectacularly preempted this weekend's Group of Eight (G8) summit
in St Petersburg with his own bit of Pipelineistan news. Putin announced in
Shanghai on June 15 that "Gazprom is ready to support the construction of a gas
pipeline from Iran to Pakistan and India with financial resources and
He was referring to a fabled US$7 billion, 2,775-kilometer, 10-year old project
- an Iranian idea - which should now be finished by 2009, developed by
Gazexport, a Gazprom subsidiary. As a result, by 2015 both India and Pakistan
should be receiving at
least 70 million cubic meters of natural gas a year.
Thus the two top global gas producers - Russia and Iran - reached a strategic
partnership abiding not only by their own interests but the interests of India,
Pakistan, China and part of Central Asia, something that spells nothing less
than an auspicious economic future for a great deal of Asia - independent from
any American interference. Washington was not amused.
Not surprisingly, everyone else in the region begged to differ. For Iran this
represents the coveted Pipelineistan way to the east. India will save at least
$300 million a year. Pakistan will receive as much as $600 million a year in
transit fees. The pipeline will inevitably be extended to Yunnan province in
China. No wonder the announcement was made at the annual meeting of the
Chinese-inspired Shanghai Cooperation Organization (SCO).
The Russian masterstroke is to divert the bulk of upcoming Iranian gas exports
to Asia - while Russia is still negotiating a very complex and very lucrative
deal with Brussels to supply the European Union. Tehran and Moscow have reached
a remarkable agreement. Putin and Iranian President Mahmud Ahmadinejad will be
working in tandem. In Shanghai they all but decided to consult on all matters
regarding gas prices and the new routes of Pipelineistan. Control of prices
plus transportation routes obviously spell out a gas OPEC (Organization of
Petroleum Exporting Countries) just around the corner (Putin though was careful
to dub it just "a joint venture", not a cartel).
In practical terms Gazprom (See The
Gazprom nation Asia Times Online, May 26) Now, a decade and a half
after the end of the Cold War, the US and Russia's lines of friction are
startlingly similar: Eastern Europe, the Black Sea basin, Ukraine, Moldavia,
Georgia and Iran. Sixty years ago, the Soviet Union offered Iran an energy
partnership. Now Moscow is offering not only a nuclear partnership - building
the nuclear reactor in Bushehr - but still an energy partnership, in the manner
of selling its own gas wealth the most profitable way for both sides.
Putin is an accomplished chess player. Accusations of heavy-handedness - on
civil liberties and on energy policy - aside, the Kremlin does not need a
confrontation with the "colonialist" West (the qualification is Putin's). What
it needs is to find the best use for the massive financial flows that are
pouring over Russia. The Russian weekly Vlast identifies "a new Russophobia in
the West, hypocrite and erroneous". The Russian response is to challenge the
West to accommodate to its own terms. The Kremlin calls its own internal
experiment "sovereign democracy". As the Kommersant daily put it, "the West
must answer to a series of ultimatums posed by Russia, including its refusal of
European rules on the energy market, it particular position regarding Iran and
the assurance of non-intervention on Russian internal affairs".
Putin's message to the G8 is loud and clear: we're back. And this Gazprom
nation, also reveling on oil at $75 a barrel, and rising, is doing things its
own way - like exterminating, with perfect timing, public enemy number one,
Chechen rebel leader Shamil Basayev, or banishing homeless people, street
vendors, intellectuals and opposition voices from St Petersburg ahead of the G8
summit. There's virtually nothing the West can do about it. Russia is not
struggling to be part of "the West" anymore; it has evolved its own system, and
not unlike the Middle Kingdom, at the center of the system lies the Kremlin.
Preemption is the (Russian) name of the game. Russia's strategic partnership
with China has been solidified via the SCO. On the ultra-sensitive Iranian
nuclear dossier, Moscow's game is extremely flexible, and all about nuance, as
are Russia's relations with the Islamic world. It is charging market prices to
both Ukraine and Georgia for its gas. And sooner - rather than much later - the
gas OPEC with Iran and Central Asia may be a done deal.