Power Failure: American Policy in the Caspian

Power Failure: American Policy in the Caspian

Mini Teaser: Whereas in Central Europe Washington barely acknowledges Russian sensibilities, in Central Asia and the Caucasus it indulges them to excess.

by Author(s): S. Frederick Starr

A cardinal principle of U.S. policy since the collapse of the Soviet
Union has been to foster the independence of the new states
established on former Soviet territory. In Central Europe, U.S.
policy goes further: In order to protect the sovereignty of Poland,
Hungary, and the Czech Republic, the United States has championed the
eastward expansion of NATO, in effect transforming what had been a
Russian glacis against the West into a European glacis against
Russia. Despite strong Russian objections, the U.S. government is
pressing ahead with this.

Many debate whether such a course is either necessary or wise. Nearly
lost amid these controversies, however, are the growing problems of
sovereignty in Central Asia and the Caucasus. Consistent with its
principles, the United States has made clear its support for the
independence of the five Central Asian states (Kazakhstan,
Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan) and the three
Caucasus republics (Armenia, Azerbaijan, and Georgia). But whereas in
Central Europe Washington barely acknowledges Russian sensibilities,
in Central Asia and the Caucasus it indulges them to excess. As a
result, U.S. deeds fall short of its rhetorical support for the new
countries of the region. Particularly in the crucial energy sector,
U.S. actions are having the effect of undermining these countries'
sovereignty.

Under both the Bush and Clinton administrations, policy toward this
region has been largely derivative of other U.S. objectives, above
all the desire to support the political and economic development of
the new Russia and the concern to isolate the Islamic Republic of
Iran. This is understandable, given the centrality of these two
countries to American interests as a whole. But the resulting
policies have the effect of assigning excess influence on the area to
Russia and, hence, of preventing the emergence of a natural balance
of influence in the area among these countries' larger neighbors. The
result is to weaken the independence of the new states on either side
of the Caspian and to destabilize the region as a whole.

It is clearly time for a second look at U.S. policies, not least
because much has changed since they were first put in place. Above
all, the advanced industrial countries have come to appreciate the
fact that Central Asia and Azerbaijan have oil--lots of oil--and huge
amounts of natural gas. Suddenly, U.S. officials at every level,
right up to and including the White House, are studying oil deals and
pipeline routes and generally rushing to incorporate energy concerns
into their action programs for the region.

So far this has taken place with scant regard for the larger
geopolitical issues at stake. Lacking this larger perspective, the
United States is left not with a real policy toward the region but a
mélange of corollaries of policies whose real focus is elsewhere. If
the United States wants to live up to its professed concern for the
sovereignties of these eight new states, it is time to rethink what
it is doing there, as well as its policy toward Iran. For the status
quo is bad for Central Asia and the Caucasus, bad for the development
of democracy in Russia, and, arguably, bad for U.S. efforts to deal
effectively with the regime in Tehran. There is still time to set
things right. But not very much time, for once energy deals are
sealed and pipeline routes settled, it will be much harder to adjust
course.

Moscow's Relentless Pressure

The volume of gas and oil involved in Central Asia and the
Caucasus--referred to generically as the Caspian Basin--is
potentially so vast that its importance extends far beyond the new
governments' concerns for their own economic and political survival.
Clearly, the region is fated to play a major role in all future
planning on world energy supplies. More specifically, its resources
are part of the key to relieving the overdependence of the United
States, Western Europe, and Japan on just one source of supply, the
tempestuous Persian Gulf, and all the troubles that go with it.

Estimates vary widely but they are all high. Together, Central Asia
and Azerbaijan possess 7.5 trillion cubic meters of known reserves of
natural gas and probable undiscovered reserves of 20 trillion cubic
meters more. The known gas reserves of Turkmenistan alone are twice
those of the North Sea and four times those of the Gulf of Mexico.
The lowest estimate of the region's known reserves of oil is twenty
billion barrels. But Kazakhstan, whose Tengiz field is one of the
largest anywhere, claims twenty-two billion barrels of known reserves
with a potential to rise to more than fifty billion barrels, while
estimates of Turkmenistan's undiscovered reserves range up to
thirty-seven billion barrels.

While developed economies everywhere have an interest in securing a
diversified supply of oil and gas, for Azerbaijan and the countries
of Central Asia unencumbered access to markets is the key to their
very survival as independent states. And on this point Russia has
pursued a far more aggressive and threatening strategy than anyone
has accused it of doing in Central Europe.

It is true, of course, as even the most hardened Russophobes concede,
that Moscow lacks the ability to project real power beyond its
borders through its military, nor is it soon likely to do so with the
benign tools of industrial export, communications, or aid. Much
"integrationist" sentiment in Moscow is mere bluster, the normal
emanations of people adjusting to the realities of their
post-imperial status. It is less threatening than what was heard from
de Gaulle's Paris forty years ago or, for that matter, from London or
Madrid in the late eighteenth and early nineteenth centuries. The
U.S. government has been wise to ignore it. But in the field of
energy Russia is able to exert such powerful leverage over its
southern neighbors as to jeopardize their ability to develop as
sovereign entities. In this domain irredentist schemes have not only
been trumpeted by disgruntled chauvinists but actually implemented
over the past several years. In energy Russia has reverted to the
same hardball tactics employed by the Soviet government in the l980s.

Moscow's policy is simplicity itself: First, it dictates that its
southern neighbors must export all their oil and gas through Russian
pipelines or, failing that, minimize the capacity of alternative
lines and assure that Russian firms own a stake in them; second, it
intrudes Russian firms into multinational energy consortia put
together by Azerbaijan or the Central Asian states; third, it forces
the Central Asians to allocate energy to CIS countries that do not
pay their bills, thus assuring that a producer country like
Turkmenistan remains poor; fourth, it claims or creates Central Asian
debts to Russia and then forces payment in the form of shares in the
region's refining and processing facilities as they are privatized;
and, fifth, wherever possible it uses Western credits and investments
in Russian firms to pay for these projects.

It is not possible in a short space to recount all the concrete steps
that have been taken to implement this policy. Suffice it to say that
Russia has done everything possible, short of actual invasion, to
prevent Azerbaijan from exporting its Caspian oil through a pipeline
to the Black Sea coast of Georgia. Additionally, Moscow has tried to
foil alternative routes for transporting the oil, such as sending it
out through an unused Iranian-Turkish pipeline, or even through a
proposed Turkish pipeline ending in the Mediterranean port of Ceyhan.
The latter project remains alive as of this writing, but its
construction, which is by no means certain, lies in the future.
Turkmenistan had also sought alternatives to Russian-owned pipelines
for its gas exports to Europe. To disabuse leaders of that country of
such notions, Moscow cut back Turkmenistan's promised deliveries to
Europe by 20 percent and then for two years blocked deliveries to
other parts of Europe. The Turkmens got the message.

No less striking is the manner in which Moscow has attempted to bring
Kazakhstan to heel. Russia's general approach to all development in
the region has been to insist that the Caspian is a lake and not a
sea, a formulation that would give Moscow veto power over all
plans--notably those of Azerbaijan and Kazakhstan--to exploit the
Caspian's resources. Last December Moscow gained its objective that
beyond a forty mile limit all resources would be exploited jointly by
all littoral countries, effectively denying Azerbaijan control of
some of its richest properties. While this debate grinds along in
international meetings, Russia has used stronger methods against
Almati (as Alma Ata became known after independence), especially in
its efforts to assure that oil from Kazakhstan's massive field at
Tengiz be exported solely through Russia's Black Sea port of
Novorossiisk. When Kazakhstan balked in 1994, Moscow simply closed
the spigot on all Kazakh exports until that country, on the verge of
civil breakdown, saw the error of its ways.

Meanwhile, Chevron, Kazakhstan's partner in the Tengiz project,
seemed unwilling to play ball, so Moscow declared its Tengiz oil to
be so filthy that it endangered the Russian pipeline and posed an
environmental hazard--this, despite the fact that during Soviet times
the Russians themselves had been shipping the same oil through the
same line! Chevron obliged by building a new processing plant. When
at this point Turkey protested (on environmental grounds) against a
parade of Russian supertankers winding their way through the
traffic-choked Bosporus at Istanbul, the Russians responded by
undertaking to build either a terminal at St. Petersburg, 1100 miles
to the north, or a new pipeline across the Balkans. Such tactics
eventually brought all parties to agreement on the Novorossiisk line.
Celebrating Moscow's victory, Russia's deputy prime minister made the
revealing declaration that the pipeline represented "an enormous step
promoting the integration of Russia and Kazakhstan." It also meant
billions of dollars in tariffs for Russia's cash-strapped government.

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