Bush’s oil connections herald new interest in Caspian oil game

Developing Just Leadership

Zafar Bangash

Dhu al-Qa'dah 07, 1421 2001-02-01


by Zafar Bangash (World, Crescent International Vol. 29, No. 23, Dhu al-Qa'dah, 1421)

Hopes of a less strident foreign policy from the new American president, George W. Bush, even in such areas as oil, especially vis-a-vis Iran, may be misplaced. While Bush and Dick Cheney, his vice-president, are beholden to oil interests, American officialdom has the tendency to act in incredibly stupid ways. As Bush prepared for his inauguration of January 20, Jesse Helms, the influential Republican senator and chairman of the senate foreign relations committee, threatened to intensify efforts to enforce the Iran-Libya Sanctions Act of August 1996, even as the Bush team was expressing doubts about its efficacy. For four years, Clinton winked at sanctions-busters, especially the Europeans, who opposed it on grounds of extra-territoriality. They argued that Washington had no right to dictate to companies of other countries how and with whom to do business.

A political hot potato was thrown into Bush’s lap by the American “Dinosaurs club” when it raised objections to China’s Petroleum and Chemical Corp (SNP) signing a deal to expand Iranian trade in Caspian Sea oil. Last month Sinopec agreed to invest $150 million to increase the capacity of oil-refineries in Tehran and Tabriz as well as enlarge the Iranian port facilities at Neka on the Caspian Sea. This would enable Iran to take crude oil from the Caspian littoral states — Kazakhstan, Azerbaijan etc — and load an equivalent amount from its terminals in the Persian Gulf for export. Iranian oil policy in the Caspian Sea has given the US dinosaurs something to get worked up about. While European firms — Total, Fina, Elf and OAO Gazprom, and Malaysia’s Petronas — were given waivers when they invested in Iranian oil projects in defiance of US sanctions, the Chinese deal appears to have roused the anti-Iran lobby. Interestingly, Sinopec is not entirely Chinese-owned. Last year, it sold equity shares to Exxon Mobil Corp (XOM), Royal Dutch/Shell Group (RD) and BP Amoco plc (BPA). Policy analysts say that the role of these companies in the Iranian deal could complicate matters for Bush, who favours US oil-companies. They have lobbied not to renew the sanctions act because it has hurt their interests and kept them out of the lucrative Iranian market.

The reasons advanced by the US for imposing sanctions on Iran (and Libya) are totally spurious: alleged support of terrorism, opposition to the so-called ‘peace process’ in the Middle East, and development of weapons of mass-destruction. The first and third allegations are completely false; Washington has not been able to provide any evidence whatsoever. Opposition to the ‘peace process’, meanwhile, is a point of principle, as the peace process was and remains a farce aimed at denying the Palestinians their rights. They have rejected it totally.

The real reasons for sanctions against Tehran are not difficult to discern: the zionists want to maintain a ring of fire around Iran, but want Washington to do their dirty work for them. Second, the US itself is supporting plans to export Caspian crude through Azerbaijan and Georgia to Turkey’s Mediterranean port of Ceyhan. Washington is the chief sponsor of the Ceyhan line and has prevented US companies from taking Caspian crude to Iran. The US company Unocal had hoped to construct a gas pipeline from Turkmenistan to Pakistan but continuing conflict in Afghanistan has prevented this from happening. Russia, too, is heavily involved in the competing Caspian Pipeline Consortium line from Kazakhstan’s huge Tengiz field to Russia’s Black Sea port of Novorossiisk, which is due to open this summer.

These policies are enmeshed in a larger strategic struggle for influence in and around the Caspian Sea region, the new oil frontier. The hand on the oil-tap will also control the world, hence the great rush to dominate. Russia has been trying to reassert its influence in the Caucasus and the Central Asian republics since the Soviet Union disintegrated in 1991. The US has also been active wooing various countries, especially Azerbaijan and Georgia, to advance its own political agenda. There is a curious dichotomy in Washington’s policy towards Moscow: it wants to befriend its former nemesis as well as contain it. In Chechnya, America not only supports Moscow’s genocidal policy but also provides military help to crush the Chechens’ aspirations. With respect to Caspian Sea oil and Russia’s attempts to cash in on it, Washington is trying to undermine these manoeuvres.

Moscow is not idling either. Viktor Kalyuzhny, the Kremlin’s special envoy for the Caspian, has said that Russia has never been closer to a final solution on how to share the Caspian Sea’s vast oil and gas deposits among the five countries that border it. Kalyuzhny made the remarks after his two-day visit to Tehran, but his claim that Iranian president Mohammad Khatami will be visiting Moscow on March 19 for talks with his Russian counterpart, Vladimir Putin, has not been confirmed by Tehran. Iran is demanding that the five Caspian states — Azerbaijan, Kazakhstan, Turkmenistan, Russia and Iran — divide the area evenly, with each country taking 20 percent. Russia says the area should be apportioned along median lines, which would give Iran just 14 percent. Iran has countered this by saying that Moscow/Tehran policies in the Caspian are guided by agreements signed in 1921 and 1940, but has agreed to attend a meeting of a special working group in late February or early March. Kalyuzhny took this as progress and added that the summit should kick-start more intensive negotiations that may result in a settlement. Russia, however, is going ahead with bilateral agreements with the other states.

Putin was able to secure Azeri acquiescence to the Russian proposal after he met president Haydar Aliyev in Baku. On January 9 the Caspian fleet of the Russian navy was put on alert. Russian naval chief, admiral Vladimir Kuroedov then ordered warships “to sail to the central and northern parts of the Caspian Sea” for naval exercises. A senior source in the Russian navy was quoted by Vremya Novostei magazine on January 10 as saying: “If Russia fails to come to terms with its neighbours before large-scale development of Caspian oil deposits begins, then the fleet’s strength will take on acute significance in the region.”

The Kremlin is determined to realise its ambitions in the Caspian, by dialogue or by gunboat diplomacy. Russian naval exercises were condemned by Tehran, which pointed out that “there is no military threat in the Caspian so Russian naval exercises are completely unjustified.” After the collapse of the Soviet Union, Moscow was too busy picking up the pieces to care much about the Caspian Sea, so others asserted their rights to its riches. In talks with Kazakh president Nursultan Nazarbayev, former Russian president Boris Yeltsin had even mentioned the possibility of “totally demilitarising the Caspian Sea.” However, when the Kremlin realised that Russia’s neighbours might well start developing the Caspian shelf without it, demilitarisation plan was abandoned.

Other developments also shed light on Moscow’s intentions. Unlike other Russian fleets, whose forces have been cut in the past decade, the strength of the Caspian Fleet is being increased every year. Last December the fleet completed the 77th Separate Marine Brigade and added several new Serna-class landing-craft to its armory. Earlier, four additional missile- and artillery-capable vessels had been dispatched to the Caspian from the Baltic Fleet. The flotilla of naval border-guard units of the Federal Border Guard Service deployed in the Caspian Sea is also being strengthened.

Russian naval officers are coy about their objectives in the Caspian Sea: “maintaining a favourable navigation environment, protection of navigation, guarding fishing grounds and sea shelf development sites, etc.” However, the scripts for naval exercises during the past two years show how serious the Russian navy’s “battle application plans” are. Periodic sea-based missile launches from the fleet’s RK-25 series vessels against surface targets could hardly be meant only for “protection of fishing grounds.”

The fleet may also obtain warships fitted with the latest Moskit (Mosquito) missiles. Despite the fact that until now the Kremlin has been avoiding direct use of gunboat diplomacy in the Caspian, the Russian foreign ministry has already warned recalcitrant neighbours attempting to divide the sea in Russia’s absence that “Russia reserves the right to take appropriate measures to ensure and enforce inalienable principles of navigation and fishing freedom in the Caspian Sea.”

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