|
Books on Turkmenistan
|
Update No: 321 - (03/10/07)
How things have changed
The Turkmen situation has undergone a profound transformation. In December the
crazed dictator of the country died, Saparmurat Niyazov, needless to say the
former Communist boss of the former Soviet republic.
It can now at last open out to the wider world. Niyazov was a parochial
megalomaniac. The only people prepared to put up with him were the Russians. He
was totally unable to establish relations with anyone else. He even kept
Turkmenistan out of the Shanghai Cooperation Organisation (SCO), too afraid to
leave his country.
Opening up to the world
His successor is changing all that. He attended the Bishkek SCO meeting in
August as an observer. It is doubtless only a matter of time before Turkmenistan
joins.
Invitations to foreign leaders are legion. In Niyazov's day only the Russians
were sure of a welcome. Turkmenistan's new president has declared the gas-rich,
but so far isolated, Central Asian state "open to the world ", as it
steps up its efforts to deepen relations with the West since the death of its
autocratic leader last December.
Gurbanguly Berdymukhammedov told the UN General Assembly in September that
Turkmenistan was "open for broad-scale partnership in all areas of
activity." It was a novelty for a Turkmen leader to address the assembly or
be in New York at all.
He proceeded to an extended tour of the US, flanked by his top oil and gas
officials. It is becoming apparent that the US and the EU are back in the game.
Come in Kazakhstan
Before going to the US, he had an important meeting at home. Kazakhstan is a
vital partner for Turkmenistan, with huge gas and oil reserves itself. It would
help to coordinate their approach to the world market. Economic issues were at
the centre of Kazakh-Turkmen talks in Ashgabat on September 12th. President
Berdymukhammedov said economic cooperation with Kazakhstan is a "priority
aspect."
Kazakh President Nursultan Nazarbayev and Berdymukhammedov also discussed the
construction of a gas pipeline that would deliver Turkmen gas to Russia via
Kazakh territory. Kazakh energy companies have expressed interest in investing
in the development of Turkmenistan's oil fields, too.
The two sides also discussed a railroad project going through
Uzen-Gyzylgaya-Bereket-Etrek-Gorgan -- stretching from Kazakhstan to Iran via
Turkmen territory.
But it is not only officials in Astana who aim to develop economic ties
neighbours. Kazakh companies -- state-owned as well as private ones -- have
shown the interest and financial capacity to invest in neighbouring countries'
energy sectors, construction businesses, and general services. The political
will of the authorities has coincided with the companies' pragmatic interests at
present.
Russia, China Also Look To Move In
Kazakhstan is not the only country expanding its economic presence in Central
Asia. Russia has had a strong economic position in its former "soft
underbelly." The Russian state gas monopoly Gazprom has been the major
foreign partner of Turkmenistan and Uzbekistan.
In recent years, China has also greatly strengthened its economic position in
the region. Many Central Asians have even expressed fears of China's
"creeping expansion."
Turkmenistan has reached an agreement with Beijing on the construction of a gas
pipeline that is expected to start transporting Turkmen gas to China by 2009,
while Russia's Gazprom also of course has a long-standing agreement to export
Turkmen gas.
Astana versus Moscow and Beijing?
Will these developments produce a clash between the economic interests of Astana
and those of Moscow and Beijing in Central Asia?
Undoubtedly, there are contradictory interests. But Astana, Moscow, and Beijing
are bound by dozens and even hundreds of bilateral contracts, agreements, and
treaties as well as big institutional projects, like the SCO. The SCO summit in
Bishkek in August proved that -- at least in the energy sector -- China, Russia,
and Kazakhstan are interested in settling those contradictions on Turkmen gas.
As the gap deepens between the rich and poor in all Central Asian countries,
there are also growing discrepancies between Kazakhstan, on the one hand, and
poor countries like Kyrgyzstan, Tajikistan, and Turkmenistan on the other. This
makes regional stability more vulnerable. Kazakhstan should help its neighbours
by investing not only in the gas sector, but also by building hospitals,
schools, and roads.
The new Great Game
To understand the full import of what is going on, one needs to go back a bit in
time - not so far back as the Great Game between Great Britain and Russia over
Central Asia in the nineteenth century, however, which never really amounted to
much. It was a pure British paranoia about India that fuelled it - given that
the Russians were expanding eastwards to the Pacific, not southwards across the
highest and most inhospitable mountains in the world to take on Britain, the
world's premier power at the time. Curzon and the rest of them were living in a
dream-world.
But there is a real Great Game across Central Asia these days for very tangible
rewards, its carbon resources. The players are Russia and Britain's successor as
premier power, the US, plus the EU and China.
The Kremlin strikes back
The Kremlin was immediately alarmed in December at Niyazov's death. Their man
was out for the count. That any successor would venture to diversify gas exports
away from Russia was obvious.
At first things seemed to goi their way. On May 12th, at the tripartite Central
Asia summit in the city of Turkmenbashi, Turkmenistan, Putin, Berdimukhamedov
and Kazakh President Nurusultan Nazarbayev announced their intent to upgrade and
expand gas-transportation pipelines from Turkmenistan and Kazakhstan along the
eastern shore of the Caspian Sea, directly to Russia. Simultaneously, it was
announced that the Turkmenistan-Uzbekistan-Kazakhstan-Russia pipeline of the
Soviet era would also be modernised.
The intention was to overhaul the Soviet-era pipeline system known as Central
Asia-Centre, ensuring it would have a capacity of 90 billion to 100 billion
cubic meters (bcm) at the Russian border by 2010 so that it could handle the
production of the vast Turkmen and Uzbek gas fields. Moscow wanted the relevant
inter-government agreements to be signed by September 1 so that the corporate
agreements could be concluded by the end of the year, and consortia could be
formed by early 2008. Moscow expected actual construction to commence by the
middle of next year.
The entire project is predicated on the belief that Russia will have almost
exclusive access to Turkmenistan's vast gas reserves and will hold a
near-monopoly on Turkmen gas exports. This it did of course in Soviet days, but
also under Niyazov.
Watchers of the Great Game concluded that Putin had dealt a death blow to all
Western plans to bring Turkmen gas to the European market bypassing Russian
territory, which has been the leitmotif of the United States' Central Asia
policy over the past 15 years.
On the one hand, the Russian stratagem to get exclusive hold over Turkmen gas
meant that the proposed trans-Caspian pipeline project and Nabucco pipeline
project, and the existing Baku-Tbilisi-Ceyhan pipeline and Odessa-Brody-Poland
pipeline - westward energy routes to Europe supported by the US - were all
doomed. On the other hand, Moscow was poised to tighten its control of the
transit and use of Central Asian oil and gas, apart from drawing the region's
bulk of future outputs to transit routes under Russian control.
Without doubt, in their totality, the May 12th agreements meant that Moscow
inflicted a strategic defeat on the US's Central Asia policy. To reinforce the
success, Putin visited Austria on May 23-24 and signed various agreements under
which the Russian gas company Gazprom would enlarge its market share in Austria
and gain direct access to the retail trade, and Russia would use Austria as a
transit corridor for European markets in Italy, France, Hungary, Germany,
Slovenia and Croatia. With this, the Nabucco pipeline project's future, in
particular, looked extremely gloomy.
Everything seemed to work in Moscow's favour when on June 23rd a memorandum was
signed in Rome between Gazprom and Italy's ENI on a 900-kilometre pipeline
project across the Black Sea from Russia to Bulgaria with an annual capacity of
about 30bcm. The undersea pipeline, on reaching Bulgaria, would have two options
for the Bulgaria-Italy route. A south-western option would be through Greece and
the Adriatic seabed in the Otranto Strait to southern Italy, while a
north-western route would run from Bulgaria via Romania, Hungary and Slovenia
(and possibly Austria) to northern Italy. Bulgaria and Greece promptly announced
their intention to join the project, known as the South Stream project. The Wall
Street Journal aptly described it as a "pipeline into the heart of
Europe".
The upstream source for the South Stream project would be largely Central Asian
and Siberian gas. Russia's game plan was obvious: maximize its control of the
export routes for Central Asian gas. Russia signalled that it was outstripping
the US both in regard of the upstream race for Central Asian gas as well as in
the race for control of transit and downstream activity.
But Turkmenistan failed to meet the September 1st deadline to confirm the May
12th agreements, or even an extension to October 1st. Indeed, its president was
in the US.
The US Administration goes into action
What had happened was as follows.
Alarm bells began ringing in Washington after the Kremlin's apparent May 12th
triumph. On May 30th, Vice President Dick Cheney's deputy assistant for national
security affairs, Joseph Wood, rushed to Baku, Azerbaijan. He had a single
message: Washington intended to meet the Russian challenge head-on and would
persist with the policy of opening direct access to Central Asian oil and gas
through Azerbaijan and Georgia, bypassing Russian territory and Russian
pipelines. He stressed the US would push ahead with the Nabucco and
Turkey-Greece-Italy gas transport projects. He told the Azerbaijani leadership
that it should take the initiative to sort out Azerbaijan's bilateral disputes
with Turkmenistan so that the latter could be drawn into the proposed gas
projects.
Simultaneously, on June 1st, Steven Mann, US principal deputy assistant
secretary of state, held talks with Berdimukhamedov in Ashgabat. Mann strongly
pitched for the trans-Caspian gas pipeline project (Turkmenistan to Azerbaijan
to Georgia to Turkey to Europe). He conveyed Washington's keen interest that
Turkmenistan should sell its gas to the European market directly, without the
Russian intermediary.
Other senior US officials began fanning out to the Caspian region carrying
similar messages that it would be far more advantageous for the Central Asian
gas- and oil-producing countries to deal with European buyers directly. Thus US
assistant secretary of state Richard Boucher visited Kazakhstan and Deputy
Assistant Secretary of State Matthew Bryza visited Azerbaijan in the first week
of June. Washington also began pressuring the EU to display a sense of urgency
in forestalling the looming Russian monopoly over Central Asia's gas exports.
Washington's primary intent was to sow seeds of doubt in the Turkmen mind
regarding the wisdom of putting all its eggs in the Russian basket. On June
21st, Washington upped the ante when Admiral William Fallon, commander of the US
Central Command, arrived in Ashgabat and was received by Berdimukhamedov. Fallon
carried a brief on energy cooperation.
The consultation was evidently productive. On June 27th, when Evan Feigenbaum,
US deputy assistant secretary of state for South and Central Asian affairs,
arrived in Ashgabat with a delegation of American oil majors, he heard good
news. "The president [Berdimukhamedov] stated publicly, very clearly, that
Turkmenistan remains interested in the trans-Caspian pipeline," Feigenbaum
later told the media.
He said his message to the Turkmen leader was, "American policy on energy
has been very clear for a very long time. Monopoly tends to work to the
disadvantage of producers ... The point is, what is good for the United States
is good for the global energy supply and global energy security. That has been
the basis of our conversation with Turkmenistan and other producers in this part
of the world."
Ten days after Feigenbaum's discussions, Matthew Bryza, deputy assistant
secretary of state, arrived in Ashgabat. On the eve of the visit, Bryza said in
Washington on July 10th, "There is a large - huge - supply of natural gas
in the far-western reaches of Turkmenistan, which, if the market decides, will
make its way to Europe via Azerbaijan ... And I'll leave for Turkmenistan
tomorrow to see if we can help Azerbaijan and Turkmenistan build on the momentum
they've already created in their relations."
A wrench in the wheel
Moscow certainly took note of these strange goings on - a stream of senior US
diplomats attired in pinstripe suits with top executives of oil majors with
suspiciously heavy-looking attache cases in tow, trooping out of Ashgabat hotel
rooms almost every week. If there was any doubt about what they were up to, that
became clear in late July when US-based energy company Chevron announced its
intention to open an office in Ashgabat and participate in the development of
Caspian energy resources.
On July 3rd, at a public ceremony in Ashgabat marking his 50th birthday,
Berdimukhamedov said Turkmenistan maintained its "neutral status" and
had "equal relationships" with all. He added, "Without joining
any kind of political alliances, we will carry on with our efforts to build new
gas pipelines to carry our gas to China, and to Pakistan and India via
Afghanistan, and to Europe via the Caspian Sea. This means that we will have
equal and mutually beneficial relations with Russia and the United States, with
European countries, and with our neighbours as well."
Even if Moscow kept up an air of confidence about Berdimukhamedov, a degree of
uneasiness was inevitably creeping in. This became apparent when in an interview
with the Russian media on July 6th, Russian First Deputy Foreign Minister Andrei
Denisov hit out that the string of Russian successes in the Caspian energy war
was "getting on Washington's nerves". He continued, "The US has
been lobbying the idea of an East-West energy corridor for a long time. Its aim
is to arrange the transportation of hydrocarbons from the Caspian region
bypassing the territories of Russia and Iran."
He warned the "notorious trans-Caspian gas pipeline" would run into
obstacles, since the status of the Caspian Sea was yet to be determined, and
second, Turkmenistan and Azerbaijan were involved in disputes over the ownership
of a number of fields. "In addition, the special nature of the Caspian
should be taken into consideration. Here the risks are very high due to the
closed nature of the water system, the geology of the sea bed and the presence
of strong underwater currents," Denisov pointed out.
Indeed, Denisov has a point. Moscow is betting on how Washington will be able to
cross such formidable hurdles. Russia and Iran are literally in a position to
throw a wrench in the wheel if they sense that Washington is getting close to
the realization of the trans-Caspian project. Both Moscow and Tehran will be
keenly watching Berdimukhamedov's discussions in the US during his current
visit. It couldn't have escaped their attention that highly influential US oil
majors from Texas, which carry much clout within the George W Bush
administration at the highest levels, are sponsoring the visit of the Turkmen
delegation to the US. US Secretary of State Condoleezza Rice, who once served on
the board of directors of Chevron, is scheduled to meet with Berdimukhamedov.
The wild Iranian card
Iran fully shares Russia's antipathy toward US "poaching" in the
Caspian region. This was in full display when Berdimukhamedov visited Tehran on
June 15th-16th. Iranian President Mahmud Ahmadinejad cautioned his Turkmen
counterpart, "Certain powers are in their own interests turning the issue
of the Caspian Sea into a challenge among regional countries ... certain
bullying powers are after the oil and energy resources of the Caspian Sea, but
the environment and security of the sea has a major impact on the life of the
littoral states."
Ahmadinejad made it clear that Iran will strongly oppose the US presence in the
Caspian region. The Iranian position is that the establishment of sustainable
security within the Caspian region must be the prerogative of the littoral
states (Russia, Kazakhstan, Turkmenistan, Azerbaijan and Iran) and no US
involvement will be allowed. Russia sees eye-to-eye with the Iranian position.
However, Tehran also has its own agenda in the energy sphere, separate from
Russia's, in opposing the US-sponsored trans-Caspian gas pipeline project.
Tehran has consistently canvassed for increased exports of Turkmen gas, oil and
petrochemical products through Iran. Given Turkmen-Azeri tensions, Ashgabat also
traditionally feels more comfortable about exporting its gas via Iran rather
than routing it through Azerbaijan.
The mutual interest of Tehran and Ashgabat to route gas via Iran to the Western
market found its expression when the energy ministers of Turkey and Iran signed
a memorandum in Ankara on July 13th on gas deliveries from Turkmenistan and Iran
via Turkey to Europe. The idea didn't quite come out of the blue, but it was
nonetheless startling in its freshness. To be sure, the proposal was a direct
snub to Russia. It in essence aimed at helping to revive the Nabucco gas
pipeline project.
It would open up Iran's gas reserves for Western markets, thereby reducing
Europe's dependence on Russian supplies. The proposal involved 20bcm of gas
reaching Turkey annually from Iran and 10bcm from Turkmenistan via Iran. The
entire volume (30bcm) would be added to the Azerbaijani gas already reaching the
Nabucco pipeline heading to Europe, which would assure the project's viability.
The Iranians threw in a big carrot for Turkey, offering to the Turkish Petroleum
Corp the right to develop the South Pars blocks 22, 23 and 24 without any
tendering and on a buy-back arrangement.
At one stroke, the Turkish-Iranian proposal strove to undercut Putin's gains
through May-June in establishing monopoly on Turkmen gas. It underscored how
Europe could exploit Iran's ambitions as an energy exporter if only the Iran
nuclear issue didn't get in the way. In fact, but for the stand-off with Iran,
the Turkish initiative fitted admirably well with Washington's own energy
strategy toward the Caspian.
Not surprisingly, Washington put its foot down on the Turkish initiative. But
the jury is still out. Most certainly, Washington will have been quietly pleased
that Turkey's memorandum of understanding with Iran is at the very least likely
to reinforce misgivings in the Turkmen mind about committing itself to the
Russian-Kazakh-Turkmen inter-governmental agreement handing over to Moscow
virtual monopoly in the export of Turkmen gas.
The sequence of dramatic developments has shown that rivalries over the Caspian
energy reserves are getting a great deal more rough and ruthless. All means are
fair if the end is in sight - as in love or war. It will be interesting to watch
how Washington reacts to the Turkish-Iranian tango, as time unfolds. Will it
remain adamant that Europe should have no truck with Iranian gas? Or will it
coyly step aside and let Iran compete with Russia in the European gas market?
Ashgabat's China option
Meanwhile, Ashgabat began some manoeuvring of its own. It did its homework and
concluded it could bargain better with Moscow if it had a European option (with
US backing, of course) and, furthermore, that it could do better still
bargaining with Moscow and the Europeans by developing a "China
option". At any rate, Berdimukhamedov arrived in Beijing on a two-day visit
on July 17th at President Hu Jintao's invitation.
Before leaving for Beijing, he said his visit marked "not only a new page
in the chronicles of Turkmen-Chinese cooperation, but also a milestone in the
implementation of Turkmenistan's foreign-policy strategy". He intended to
build on an agreement his predecessor Saparmurat Niayzov had signed during his
visit to Beijing in April 2006 envisaging the construction of a
Turkmenistan-China gas pipeline project capable of delivering 30bcm of Turkmen
gas annually for a 30-year period commencing in 2009.
The joint communique issued after Berdimukhamedov's visit to Beijing said
Beijing regarded China-Turkmen relations as an "important component"
of China's foreign policy, while Ashgabat viewed relations with China as
"one of the priority directions" of its foreign policy.
But Turkmenistan's dealings with China haven't gone down well in Western
capitals. They fear that the West collectively will be the loser if Ashgabat
chooses to send its surplus gas to China instead of to Europe via the Nabucco
pipeline. Indeed, China's breakthrough in Turkmenistan has been impressive.
During Berdimukhamedov's visit to Beijing in July, China National Petroleum Corp
(CNPC) signed a production-sharing agreement for exploring and developing gas
fields on the right bank of Amu Darya River in eastern Turkmenistan with known
reserves of 1.7 trillion cubic meters of gas. This was in addition to the CNPC's
previously existing US$1.5 billion contract for gas-field exploration in
southeastern Turkmenistan during the 2007-10 period.
But Beijing has reason to be nervous. In the ultimate analysis, will Ashgabat
deliver what it promises, or use the China option as a bargaining chip vis-a-vis
the Europeans? The Turkmen deal matters a lot to Beijing. The proposed
Turkmenistan-China gas pipeline is expected to run to China's Xinjiang Uighur
autonomous region and link up with the 6,500km pipeline under construction (to
be completed by 2010) connecting Xinjiang to Guangzhou. Even though
Berdimukhamedov assured his Chinese hosts in Beijing that the "Turkmen side
will do everything it can to implement the agreements ... [and] Turkmenistan has
enough surplus gas for export in various directions", doubts persist in the
Chinese mind.
Chinese Premier Wen Jiabao gave vent to Beijing's anxieties when he told the
visiting Turkmen president of the need to "implement bilateral agreements,
[and] work closely on the gas project". The joint communique also made a
pointed reference to "the need to strictly abide by, and conscientiously
implement" Chinese-Turkmen energy cooperation agreements.
Shades of a new cold war
If the Turkmen-Chinese energy deals go through, the West stands to lose heavily.
There simply might not be sufficient surplus gas left for export to Europe. In
comparison, Russia is better placed to absorb the entry of the Chinese
competitor on the Turkmen gas scene. As for Tehran, its overriding priority is
that the "Great Satan" (US) is kept away from Turkmen energy reserves
at any cost. Iran welcomes China's presence in Central Asia. Besides, a
Turkmenistan-China gas pipeline system could easily be connected to Iran at a
future date, giving Tehran direct access to the Chinese energy market.
These cross-currents have found expression in recent weeks. In the middle of
August, on the eve of the annual summit meeting of the Shanghai Corporation
Organization (SCO) in Bishkek, Kyrgyzstan, the US Trade and Development Agency
offered a financial grant to Azerbaijan and Turkmenistan for conducting
feasibility studies to build trans-Caspian undersea pipelines. The timing was
perfect. Washington wanted to restrain Turkmenistan from drawing too close to
the SCO, as that would be a great leap forward in the realization of an Asian
energy grid.
Also, Washington finally succeeded in getting the EU to get its act together for
a coordinated energy policy toward Central Asia and Russia. On September
14th-15th, a conference was held in Budapest where the EU resoundingly affirmed
its intention to press ahead with the Nabucco project. Andris Piebalgs, the EU's
energy commissioner, described Nabucco as an "embodiment of the existence
of a common European energy policy". The EU appointed the former foreign
minister of the Netherlands, Jozias van Aartsen, coordinator for the Nabucco
project.
The conference clarified the contours of the 3,300-kilometer Nabucco, which will
now originate in eastern Turkey and run through Bulgaria, Romania and Hungary to
Austria, with a capacity of 30-35bcm annually. European banks, especially the
European Investment Bank and the European Bank of Reconstruction and
Development, will fund the project, estimated to cost 5 billion euros (US$7.1
billion).
Parallel to US diplomatic efforts in Ashgabat, the EU has also begun working on
the Turkmen leadership. There is a new sense of urgency in Brussels as the EU
seems to have concluded that any effort to break dependence on Russian supplies
will have to begin with Ashgabat.
Immediately after the Budapest conference, Austrian Economics Minister Martin
Bartenstein visited Ashgabat. (Austria has a pivotal role in the Nabucco
project.) Berdimukhamedov told Bartenstein that Turkmenistan has "multiple
vectors in its energy policy and in creating alternative energy export routes,
including in the southern direction through the Caspian Sea, it is prepared to
deliver natural gas to European countries". In other words, he put on
record Ashgabat's keenness to export its gas directly to the European market
without the Russian intermediary.
At the same time, British Energy Minister Malcolm Wicks also visited Ashgabat.
(Wicks is the first cabinet minister from Britain to visit Turkmenistan in the
past nine years.) His visit followed a high-powered BP delegation, which held
discussions in the Turkmen capital. Wicks took up the trans-Caspian pipeline
project (Azerbaijan-Georgia-Turkey route) with Berdimukhamedov. He said this
feeder pipeline for Nabucco would be of "special importance" to the EU,
which would fund the project.
Wicks told the media later that Moscow is butting into Ashgabat's energy policy.
He said, "The right to decide on this matter is Turkmenistan's and
Azerbaijan's, and nobody else's. Oil and gas issues are not just energy issues;
they are national-security issues for many countries. The EU's cooperation with
the countries in the [Caspian] region should be seen through the prism of energy
security and national security of all the states involved in these
projects."
Most important, Wicks offered to Berdimukhamedov that if Turkmenistan sold its
gas directly to the European market, it would be paid at the rate of the
prevailing market price rather than the discounted price at which Russia buys
Turkmen gas for re-export to Europe.
At the same time, the EU has also shifted gear in curbing Gazprom's expansion
into European markets. On September 19th, the European Commission (EC) adopted a
plan that virtually aims at preventing Gazprom from buying pipeline networks in
the EU. While the plan has to travel a long way to become fully fledged
legislation, and there are question marks about the efficacy of its
implementation, it is clear that the EU is deliberately erecting a new barrier
between it and Russia.
This goes beyond a mere energy issue. The Wall Street Journal wrote, "How
to handle Russia ... has been one of the bloc's most divisive foreign policy
issues in recent years ... [The proposal] reflects an evolution in attitudes
that has seen EU countries that once firmly supported Moscow change their
tone."
The daily added, "This is partly the result of changes in EU leadership,
which has seen close friends of Russia such as former German chancellor Gerhard
Schroeder, Italy's Silvio Berlusconi and France's Jacques Chirac replaced.
Russia's actions are also responsible for the change ... [Moscow's] willingness
to use energy supply as a weapon of foreign policy spooked and angered European
leaders."
Clearly, a sort of "trans-Atlantic solidarity" is forming in Brussels
on energy dialogue with Russia. This has obvious political and strategic
overtones. More and more European countries are accepting Washington's demarche
that the West must speak with one voice in relations with Russia.
Brussels is in effect demanding that Moscow choose between controlling
transmission networks in Europe and remaining a supplier of energy. But the idea
goes beyond that. EC President Jose Manuel Barroso told the media, "We need
to place tough conditions on ownerships of assets by non-European companies to
make sure we all play by the same rules." In actual terms, Barroso demanded
that the Kremlin should give European oil companies the chance to buy assets in
Russia if Gazprom wanted to buy in the EU.
But Moscow sees reciprocity in a different way. The Kremlin asserts that state
control over Russia's energy reserves is not something unique to Putin's Russia.
It says the situation is the same in France or Norway, for example. The
influential chairman of the Russian Duma's (parliament's) international affairs
committee, Konstantin Kosachev, warned that Russia would retaliate. "We
shall have to restrict our foreign partners' access to the corresponding
strategic industries of the Russian economy to the same extent we are denied
access to certain branches of the west European free-market economies," he
said in Moscow on September 19th.
He stressed, "Nobody should expect Russia will display endless philanthropy
and unremittingly sacrifice its national interests for the sake of preserving an
illusion of partnership. This will never happen."
The blasts of the new cold war have begun blowing across the oil and gas fields
of the Caspian region. History is repeating itself. It was over control of the
fabulous Baku oilfields that a concerted Western military intervention took
place at the time of the Bolshevik Revolution of 1917. The "Baku
Commissars" of the Red Army, who resisted, became the stuff of Soviet
folklore. And in World War II Adolf Hitler committed his Panzer divisions in a
desperate drive to seize control of the Baku fields.
The blasts beginning to blow across the Caspian region threaten to be every bit
as unpredictable as the turbulence triggered by the US missile-defense
controversy and the North Atlantic Treaty Organization's continued expansion
into the territories of the former Soviet Union.
Caspian summit in Tehran
Thus as Caspian leaders assemble in Tehran for their summit in about two weeks'
time, a huge East-West divide has appeared, which seemed improbable even six
months ago. Putin arrives in Tehran on October 16th on his first visit to Iran.
At stake are several tense issues.
Putin will want to hear from Berdimukhamedov what is going on in the complicated
Turkmen mind. He will look forward to hearing from Berdimukhamedov, fresh from
his visit to the US, that Ashgabat is still committed to the May agreements on
quadripartite energy cooperation involving Russia, Kazakhstan, Uzbekistan and
Turkmenistan.
Certainly, Putin won't be pleased with a legacy that in the closing months of
his presidency, middle-level US diplomats and oil executives might have stumped
him in Russia's Central Asian backyard. Moscow will pull out all the stops to
prevent this. Admittedly, Moscow has much leverage and Ashgabat will be aware of
the perils of brazen independence from Russian influence.
Meanwhile, China too will be closely watching for signs if Berdimukhamedov
intends to fulfill the commitments he made in Beijing during his July visit. If
Berdimukhamedov decides to opt for the latest Western packages on the
trans-Caspian pipeline, Turkmenistan's cooperation with China may suffer. That
would raise doubts about the prospects of China receiving 30bcm of Turkmen gas
annually for the next 30 years.
As regards Tehran, it will try to persuade Berdimukhamedov that consorting with
the US might not prove to be for his own good in the medium and long terms.
Azerbaijani President Ilham Aliyev, on the contrary, will encourage
Berdimukhamedov to continue undeterred and instead move along the track of the
trans-Caspian pipeline project.
One thing is certain. Settlement of the Caspian Sea's status will remain
postponed, as the present differences among the littoral states preclude the
possibility of major trans-Caspian projects of the sort that the EU and the US
espouse - and that suits Russia and Iran.
Of overarching importance will be the impact of all this on Russia-Iran
relations. The two countries share common concerns over Ashgabat's energy policy
in the coming months as well as on Caspian Sea issues. Russian-Iranian
convergence of interests on regional issues has once again surged to the
forefront. A question remains: How will this geopolitical reality influence
Moscow's policy at a time Washington is hoping to isolate Iran?
Of course, if Washington succeeds in effecting Turkmenistan's
"defection", that will constitute a severe setback for Russia's
regional interests. The Central Asian states, especially Kazakhstan, will draw
their own conclusions, which in turn could impact on Commonwealth of Independent
States integration.
stealthily approaching the Central Asian steppes, that something was afoot. Are
we heading for a sason of unraveling, with the West bracing, no matter what it
takes, for a marathon jawing that would somehow punctuate the claustrophobic
intensity of the Kremlin's string of success stories in May-June - and create an
alternative? In focus is Turkmenistan, the energy-rich gas powerhouse of Central
Asia. These have been manic weeks in Ashgabat. The melodrama is acute. But then
the inscrutable space between victory and the chimera of victory has always been
very narrow in Central Asia. September 1 was the cutoff date that the Kremlin
penciled in for the signing of agreements relating to the Russian-Kazakh-Turkmen
gas deal that Putin had wrapped up during his sensational Central Asia summit on
May 12. But September is drawing to a close, and not only have the agreements
not been signed, the main protagonist, Turkmen President Gurbanguly
Berdimukhamedov, is unavailable in Ashgabat. He has proceeded on an extended
visit to the United States, accompanied by bigwigs in the Turkmen oil and gas
industry. It suddenly dawns that in one big throw of the dice, the US and the
European Union are desperately playing themselves back into the game, which
Moscow thought it had all but secured. The empire strikes back On May 12, at the
tripartite Central Asia summit in the city of Turkmenbashi, Turkmenistan, Putin,
Berdimukhamedov and Kazakh President Nurusultan Nazarbayev announced their
intent to upgrade and expand gas-transportation pipelines from Turkmenistan and
Kazakhstan along the eastern shore of the Caspian Sea, directly to Russia.
Simultaneously, it was announced that the
Turkmenistan-Uzbekistan-Kazakhstan-Russia pipeline of the Soviet era would also
be modernized. The intention was to overhaul the Soviet-era pipeline system
known as Central Asia-Center, ensuring it would have a capacity of 90 billion to
100 billion cubic meters (bcm) at the Russian border by 2010 so that it could
handle the production of the vast Turkmen and Uzbek gas fields. Moscow wanted
the relevant inter-government agreements to be signed by September 1 so that the
corporate agreements could be concluded by the end of the year, and consortiums
could be formed by early 2008. Moscow expected actual construction to commence
by the middle of next year. The entire project is predicated on the belief that
Russia will have almost exclusive access to Turkmenistan's vast gas reserves and
will hold a near-monopoly on Turkmen gas exports. Watchers of the Great Game
concluded that Putin had dealt a death blow to all Western plans to bring
Turkmen gas to the European market bypassing Russian territory, which has been
the leitmotif of the United States' Central Asia policy over the past 15 years.
On the one hand, the Russian stratagem to get exclusive hold over Turkmen gas
meant that the proposed trans-Caspian pipeline project and Nabucco pipeline
project, and the existing Baku-Tbilisi-Ceyhan pipeline and Odessa-Brody-Poland
pipeline - westward energy routes to Europe supported by the US - were all
doomed. On the other hand, Moscow was poised to tighten its control of the
transit and use of Central Asian oil and gas, apart from drawing the region's
bulk of future outputs to transit routes under Russian control. Without doubt,
in their totality, the May 12 agreements meant that Moscow inflicted a strategic
defeat on the United States' Central Asia policy. To reinforce the success,
Putin visited Austria on May 23-24 and signed various agreements under which the
Russian gas company Gazprom would enlarge its market share in Austria and gain
direct access to the retail trade, and Russia would use Austria as a transit
corridor for European markets in Italy, France, Hungary, Germany, Slovenia and
Croatia. With this, the Nabucco pipeline project's future, in particular, looked
extremely gloomy. Everything seemed to work in Moscow's favor when on June 23 a
memorandum was signed in Rome between Gazprom and Italy's ENI on a 900-kilometer
pipeline project across the Black Sea from Russia to Bulgaria with an annual
capacity of about 30bcm. The undersea pipeline, on reaching Bulgaria, would have
two options for the Bulgaria-Italy route. A southwestern option would be through
Greece and the Adriatic seabed in the Otranto Strait to southern Italy, while a
northwestern route would run from Bulgaria via Romania, Hungary and Slovenia
(and possibly Austria) to northern Italy. Bulgaria and Greece promptly announced
their intention to join the project, known as the South Stream project. The Wall
Street Journal aptly described it as a "pipeline into the heart of
Europe". The upstream source for the South Stream project would be largely
Central Asian and Siberian gas. Russia's game plan was obvious: maximize its
control of the export routes for Central Asian gas. Russia signaled that it was
outstripping the US both in regard of the upstream race for Central Asian gas as
well as in the race for control of transit and downstream activity. Alarm bells
began ringing in Washington. On May 30, Vice President Dick Cheney's deputy
assistant for national security affairs, Joseph Wood, rushed to Baku,
Azerbaijan. He had a single message: Washington intended to meet the Russian
challenge head-on and would persist with the policy of opening direct access to
Central Asian oil and gas through Azerbaijan and Georgia, bypassing Russian
territory and Russian pipelines. He stressed the US would push ahead with the
Nabucco and Turkey-Greece-Italy gas transport projects. He told the Azerbaijani
leadership that it should take the initiative to sort out Azerbaijan's bilateral
disputes with Turkmenistan so that the latter could be drawn into the proposed
gas projects. Simultaneously, on June 1, Steven Mann, US principal deputy
assistant secretary of state, held talks with Berdimukhamedov in Ashgabat. Mann
strongly pitched for the trans-Caspian gas pipeline project (Turkmenistan to
Azerbaijan to Georgia to Turkey to Europe). He conveyed Washington's keen
interest that Turkmenistan should sell its gas to the European market directly,
without the Russian intermediary. Other senior US officials began fanning out to
the Caspian region carrying similar messages that it would be far more
advantageous for the Central Asian gas- and oil-producing countries to deal with
European buyers directly. Thus US assistant secretary of state Richard Boucher
visited Kazakhstan and Deputy Assistant Secretary of State Matthew Bryza visited
Azerbaijan in the first week of June. Washington also began pressuring the
European Union to display a sense of urgency in forestalling the looming Russian
monopoly over Central Asia's gas exports. Washington's primary intent was to sow
seeds of doubt in the Turkmen mind regarding the wisdom of putting all its eggs
in the Russian basket. On June 21, Washington upped the ante when Admiral
William Fallon, commander of the US Central Command, arrived in Ashgabat and was
received by Berdimukhamedov. Fallon carried a brief on energy cooperation. The
consultation was evidently productive. On June 27, when Evan Feigenbaum, US
deputy assistant secretary of state for South and Central Asian affairs, arrived
in Ashgabat with a delegation of American oil majors, he heard good news.
"The president [Berdimukhamedov] stated publicly, very clearly, that
Turkmenistan remains interested in the trans-Caspian pipeline," Feigenbaum
later told the media. He said his message to the Turkmen leader was,
"American policy on energy has been very clear for a very long time.
Monopoly tends to work to the disadvantage of producers ... The point is, what
is good for the United States is good for the global energy supply and global
energy security. That has been the basis of our conversation with Turkmenistan
and other producers in this part of the world." Ten days after Feigenbaum's
discussions, Matthew Bryza, deputy assistant secretary of state, arrived in
Ashgabat. On the eve of the visit, Bryza said in Washington on July 10,
"There is a large - huge - supply of natural gas in the far-western reaches
of Turkmenistan, which, if the market decides, will make its way to Europe via
Azerbaijan ... And I'll leave for Turkmenistan tomorrow to see if we can help
Azerbaijan and Turkmenistan build on the momentum they've already created in
their relations." A wrench in the wheel Moscow certainly took note of these
strange goings on - a stream of senior US diplomats attired in pinstripe suits
with top executives of oil majors with suspiciously heavy-looking attache cases
in tow, trooping out of Ashgabat hotel rooms almost every week. If there was any
doubt about what they were up to, that became clear in late July when US-based
energy company Chevron announced its intention to open an office in Ashgabat and
participate in the development of Caspian energy resources. On July 3, at a
public ceremony in Ashgabat marking his 50th birthday, Berdimukhamedov said
Turkmenistan maintained its "neutral status" and had "equal
relationships" with all. He added, "Without joining any kind of
political alliances, we will carry on with our efforts to build new gas
pipelines to carry our gas to China, and to Pakistan and India via Afghanistan,
and to Europe via the Caspian Sea. This means that we will have equal and
mutually beneficial relations with Russia and the United States, with European
countries, and with our neighbors as well." (Emphasis added.) Even if
Moscow kept up an air of confidence about Berdimukhamedov, a degree of
uneasiness was inevitably
A massive wrench thrown in Putin's worksBy M K Bhadrakumar It almost seemed
since the month of May that in the battles of the Caspian energy war, Russian
President Vladimir Putin was destined to glide serenely from victory to victory
until next March when he leaves office in the Kremlin. But a backlash was bound
to happen. Putin's standing as the ace player in the Great Game of our times had
surely become an eyesore for Western capitals. You could tell it from the
stillness in the air, as the autumn began.
« Top
|
