War Alters Caspian Equation

Joseph Fitchett IHT Wednesday, October 31, 2001 U.S. Accepts Bigger Russian Role in Tapping Non-Gulf Oil PARIS Since the terror attacks on Sept. 11, the Caspian basin and Russia have suddenly taken on a dramatic new centrality in global oil politics.

"Now there's more at play than ever," said James Steinberg, research director at the Brookings Institution in Washington. During his years as deputy head of the National Security Council in the Clinton administration, Mr. Steinberg pushed U.S. efforts to promote pipelines aimed at marketing Caspian energy reserves while selecting routes that minimized crossing Russian-controlled territory and bypassed fundamentalist Muslim Iran.

Now events in Afghanistan could alter the map and increase the urgency for pipelines carrying Caspian oil, he said. The shifts will involve, to the north, moves for greater U.S.-Russian cooperation on Caspian energy exports and, to the south, if Afghanistan emerges from the war as a stable international partner, fresh prospects for a gas line leading across Afghanistan to Pakistan's coast on the Arabian Sea.

Russia already seems to be a big winner politically in light of Washington's interest in working with Moscow on expanding exports from the giant oil and gas reserves in Central Asia.

"It used to be seen as a zero-sum version of the great game for influence between Russia and the United States," said Mr. Steinberg. Last month, Condoleezza Rice, the U.S. national security adviser, publicly assured the Kremlin that the Bush administration "harbored no plans for squeezing Russia out" of Central Asia.

Last month, a Russian-backed pipeline - the only new conduit built in the last 10 years in the Caspian - opened its taps at its terminal in Kazakhstan to send oil, destined for the global tanker trade, to the Russian port of Novorossiysk on the Black Sea.

In contrast, the hopes of the Clinton administration for strategic pipelines, notably a line from the Caspian port of Baku to Ceyhan, a terminal on Turkey's Mediterranean coast, proved too expensive for corporate investors in the 1990s.

Among its new attractions, Caspian energy, coming from the former Soviet republics of Kazakhstan, Turkmenistan and Azerbaijan, is "non-OPEC oil," a Bush administration official said, meaning that supplies from these countries are less likely to be affected by the price and supply policies applied by the oil-exporting cartel. If much larger quantities are needed by Western markets, pipelines that lessened dependence on the Gulf might be more feasible financially.

Already, the conflict in Afghanistan, with the risk that it might spill over into the Gulf, has increased the attraction of Russia as a secure pathway for oil and gas pipelines from the Caspian region. Worries about supply security could offset the extra costs of Caspian oil, enabling the region to emerge as an important rival to the Gulf, a potentially volatile region that is the biggest source of Western oil imports.

Russia has already made gains in using energy to revive its influence in Turkmenistan and Kazakhstan.

The newly opened Novorossiysk pipeline from the Tengiz field in Kazakhstan can carry 60 million tons of oil a year. That flow is only a fraction of world supplies, but the pipeline marks a significant gain for Moscow in terms of transit fees and political leverage in Central Asia.

Now President Vladimir Putin of Russia has taken a bigger gamble on the prospects of closer energy cooperation with Washington as part of a global realignment in the war on terrorism.

While endorsing the arrival of U.S. armed forces in Uzbekistan and Tajikistan, a decision opposed by hard-liners in Moscow who fear a permanent U.S. military presence in the former Soviet republics, Mr. Putin reportedly hopes Washington will, in return, accept Moscow's role in ensuring the flow of swelling amounts of Caspian oil via the northern route guaranteed by Russia.

In a bargain of this kind, Mr. Putin is hoping to reap major political benefits, and multibillion-dollar annual profits for the impoverished Central Asian states and for Russia if Moscow can become the intermediary for Caspian oil via pipelines crossing southern Russia.

An equally spectacular change could occur if Afghanistan emerges as a stable country seeking a place in the world economy. That would revive international interest in a 1,400-kilometer (900-mile) pipeline across Afghanistan that would carry Caspian natural gas south to the Pakistan coast on the Arabian Sea.

Gas could be shipped from a terminal there, where U.S. aircraft carriers now operate, to fast-growing energy markets in neighboring India and Asia, thus bypassing the choke point in the Strait of Hormuz at the mouth of the Gulf.

The U.S. oil company, Unocal, lobbied hard in the 1990s to get Afghanistan's warring factions and ultimately the ruling Taliban to agree on security guarantees for such a pipeline.

Unocal's efforts were egregious enough to fuel claims that the United States secretly helped the Taliban, a charge made by Ahmed Rashid in his recent book, "Taliban: Militant Islam, Oil and Fundamentalism in Central Asia." The Taliban ultimately signed the pipeline contract, but Unocal abandoned the $2 billion project in 1998 because of political turmoil in Afghanistan and international outrage over the Taliban's human rights abuses.

U.S. strategic interest in the pipeline remains strong. According to an Energy Department report last summer, "Afghanistan's significance from an energy standpoint stems from its geographical position as a potential transit route for oil and natural gas exports from Central Asia to the Arabian Sea."

For Washington, the southern pipeline route seemed to promote regional stability because it could link Pakistan and India - nuclear-armed rivals - as joint beneficiaries of oil coming from the Caspian without having to pass through the Gulf.

Critically, now, "U.S. military engagement in the region may give us more leverage in working with Central Asian leaders on this whole cluster of issues, including ways of avoiding the costs of expensive pipelines running under the Caspian" to reach Baku and then go on to Turkey, Mr. Steinberg said.

JOSEPH FITCHETT is on the staff of the International Herald Tribune.

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-- Martin Thompson (mthom1927@aol.com), October 31, 2001