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America's Push on the Caspian Pipeline is Not Good Sense for the Oil Companies



Dec 2, 1999

LONDON- Rarely, if at all in the post Cold War world, has there been such a stark case of high politics and doubtful economics. The oil company's director of international affairs has been openly blunt about it: "The only way this is going to work is to make the pipeline as affordable as possible for shippers to put their oil down it. We are asking the U.S. government to attract as much oil as possible and to attract as much financing as possible".

Thus BP Amoco, the world's third largest oil company, opens its begging bowl for a taxpayers' handout with the fulsome backing of the U.S. government. All in the cause of giving Russia, now supposedly no longer our enemy, a black eye. Left to itself and the dictates of the competitive market, BP Amoco would not build a new pipeline to carry Caspian Sea oil across Turkey, avoiding the old routes through Russia. But if the U.S. government makes it worth its while, well that is another story.

Not for nothing have the oil companies signed up high paid consultants the likes of former U.S. Secretaries of State Al Haig and James Baker and former National Security Advisor Zbigniew Brzezinski. Insecure when it comes to political decisions whose stakes are this high the oil companies have bought the best advice money can buy. The truth is they've bought re-cycled Cold War warriors whose primary loyalty is not to their current paymasters but to their long-held convictions that the U.S. should first win the Cold War and then make sure that Russia can never again mount a credible challenge to the West. To integrate Russia with the West would be a mistake, they believe. Rather Russia should be reduced in power and then isolated. This is the Treaty of Versailles by another name and another method. Not reparations. Instead, no opportunities. And political encirclement - an expanded Nato on its western flank and a line of pro-western oil-rich client states- Azerbaijan, Georgia, Turkmenistan and Kazahstan - on its southern Asian flank. And, of course, if possible, a Western orientated China on its east.

At the moment oil from the Caspian Sea goes from Azerbaijan across Georgia to Russia or up through Chechnya. The Russians, naturally, would want to see these routes, which are both the cheapest and the most direct, used to capacity. And, if they become overused, build an additional pipeline for oil and gas underwater to Turkey's Black Sea Coast.

The oil companies themselves have pushed for a new pipeline south via Iran with an outlet on the Persian Gulf. But the U.S., despite some tentative moves towards rapprochement with Iran, is not yet in the mood to consider ending its long standing embargo. It remains convinced that Iran is still intent on manufacturing nuclear weapons and targeting them on Israel.

The deal long in the making for the new Caspian pipeline across Georgia and then Turkey was announced two weeks ago by President Bill Clinton in Istanbul and immediately denounced in Moscow as one more piece of evidence that, although Washington talks a lot of peace, its clear long term purpose is hard real politik, a fundamental change in the whole strategic relationship between Russia and the West.

For now the Yeltsin Administration has its own reasons for keeping the Russian reaction in check. Yeltsin himself started the ball rolling by working to dismember the Soviet Union as part of his own bid to displace from power Mikhail Gorbachev - he needed to make his own position as the elected Russian premier the one that counted. But once Yeltsin ends his term of office next year a new man in the Kremlin - likely on the present line up to be more of a nationalist - will draw on the widespread anti-American antipathy that exists not just among those that follow such matters, but among a general populace that was startled by the expansion of Nato and is distinctly uneasy about America's wish to re-write the Anti-Ballistic Missile Treaty. The oil pipeline confirms the worst suspicions of the Russian man and woman in the street who feel more by the day that America is trying to do their country down.

Clinton Administration apologists have their arguments. Mr Clinton himself has described the pipeline as "an insurance policy for the entire world because it would route energy supplies through multiple routes and not a single choke point".

The language of choke points dates back to Cold War days and the greatly overdrawn fears that the Soviet armies would march across Afghanistan and Pakistan and head down to the Persian Gulf and close it off for exiting oil tankers by seizing control of the Strait of Hormuz. Wildly exaggerated as a scenario then, it received its coup de grace when, as a consequence of the Gulf War, Iraq was stopped from shipping its oil out and the West, somewhat to its surprise, found it could live without it. Besides, the last thing Russia wants to do is to hoard its hard-currency-earning oil.

Another senior administration official told the New York Times last week that the Russians "clearly see this as threatening. They see this as the next phase of U.S.-Russian competition. They don't seem to understand that they would be better off with a stable southern flank".

"Stable southern flank?" Is that how Washington would look at it if the Russians were engaged in a similar endeavour in Mexico and Guatemala? There can be no stable southern flank if there is East/West competition. We already have had a poisonous taste of that with the helping hand from Washington that put the Taliban power in Afghanistan in an effort to keep pro Russian elements at bay. A few years later the Taliban are succouring extreme Islamic militants far and wide including the notorious Osama bin Laden. And, earlier this year, the chief foreign affairs advisor to the president of Azerbaijan was reported as saying that Azerbaijan wants a U.S. military base there, a viewpoint that Washington has not sought to firmly rebuff. How "stable" can such provocation be?

BP Amoco has said that it won't make a final decision on going ahead with the new pipeline until next October when it will be clear just how much financing the U.S. has been able to raise. The oil companies should use the time to start thinking for themselves. The British, American and Norwegian companies involved already have contracts to prospect for and extract the oil and gas. The free market has already made them winners whichever route is decided for. Isn't that enough? Do they really need government aid to prosper? Do they really want to end up as the lackeys of new-born Cold War warriors in Washington? If they pause to ponder these questions they might be pleasantly surprised what answers they get.


Copyright © 1999 By JONATHAN POWER


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