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Tuesday, November 09, 2004

Central Asia, Part One

I decided to go ahead and post the first part of this piece, the second part will be done very soon (in the next 24 hours!) and will be posted then.

Lutz Kleveman The New Great Game: Blood And Oil In Central Asia

Despite containing some of the largest reserves of petroleum and natural gas in the world the nations of the Caspian Sea region are almost certainly the most obscure in the world for the average Westerner. Among the captains of the energy industry and among political elites from Washington to Moscow, Central Asia is neither a joke nor a head-scratcher, nor are its constituent states relegated to the role of answers to pub trivia questions. In writing this book the author, Lutz Kleveman, set out to "examine how the geopolitical struggle over the Caspian oil and pipeline routes caused the Afghan war and other armed conflicts in the region." In the course of his travels he visits major producing nations such as Azerbaijan, Kazakhstan, and Turkmenistan, as well as pipeline sites (existing and planned) like Georgia (famously the homeland of a certain Joseph Dzugashvili), Uzbekistan, Kyrgyzstan, and Afghanistan, as well as the adjoining areas of the main regional players such as Russia, Iran, Pakistan, and the Xinjiang region of China. With the collapse of the Soviet Union in 1989 the fourteen 'autonomous republics' that, along with Russia, had comprised the Soviet Union became independent. Suddenly, for the first time since the Bolshevik Revolution, the major Western energy corporations had access to the major petroleum and natural gas fields in the Caucasus and Central Asia. During the Tsarist era this region had seen huge investment from American and European firms, especially in the region around Baku, and their corporate descendents giddily rushed back in as the Soviet Union shriveled and died. The long years of separation had created a great longing in the West, indeed one of the central reasons for Hitler's invasion of the Soviet Union was to seize the oil fields of the Caucasus, a plan that failed when the Wehrmacht found itself bogged down, then trapped, then finally annihilated during the attempted seizure of Stalingrad. Now, with increasing instability in many of the Opec energy-producing nations, such as Saudi Arabia, Nigeria, and Venezuela, and Saddam Hussein's Iraq still under international sanctions, the Caucasus and Central Asia were seized on as a long-term solution to over-reliance on the nations of Opec.

With these new opportunities came new problems. The central problem for the energy industry operating in far-flung locales has always been moving from producing regions to consumer regions. This problem is particularly acute in the Caspian area, because it had always been the least developed and poorest part of the Soviet Union, and so consequently a very large amount of pipeline infrastructure would have to be created from scratch. Compounding these logistical/developmental problems are serious political issues. Because the Caspian Sea does not connect to any other major body of water all pipelines from the production centers have to travel across national borders, sometimes three or more. Existing pipelines from the Azeri capital and energy production hub Baku run north through the Chechen capital Grozny into Russia, but Western energy firms (and their supporters in government) wanted to buy directly from the source nations, without having to go through Moscow. Running south from Azerbaijan is Iran, where a major pipeline route would be obviously politically out of the question to Washington. So, the decision was made that a pipeline running west from Baku was called for.

"Azerbaijan's vulnerability has wider regional implications because the country's location makes it a geopolitical pivot. It can be described as the vitally important 'cork' controlling access to the 'bottle' that contains the riches of the Caspian Sea basin and Central Asia. An independent, Turkic-speaking Azerbaijan, with pipelines running from it to the ethnically related and politically supportive Turkey, would prevent Russia from exercising a monopoly on access to the region and would thus also deprive Russia of decisive political leverage over the policies of the new Central Asian states." - Zbigniew Brzezinski (p. 25)

Going west, the logical route runs from Baku through Armenia into Turkey. Unfortunately, political reality intervenes. Armenia and Azerbaijan had fought a brutal war in the early 1990's over the ethnic Armenian enclave of Nagorno-Karabakh, a conflict that had ended in humiliating defeat for the Azeris (Armenian forces control 15% of Azerbaijan's land to this day). So, that was out. Then, the next idea was to route the pipeline in a crooked way from Baku through Tbilisi to the Turkish port of Ceyhan. Post-Soviet Georgia was, and is, a deeply disfunctional place, to put it in ludicrously mild terms. Three civil wars, in Abkhazia, South Ossetia, and Ajaria, economic collapse, mass emigration, soaring crime, and absolutely rampant corruption presided over by a gleefully kleptocratic government headed by Eduard Shevardnadze. Yes, the same one. After Shevy played his role as foreign minister in the dying days of the Soviet Union he returned home to take power after the disastrous reign of romantic nationalist Zviad Gamsakhurdia. By the time Kleveman arrived in Georgia it was a country foundering under the force of its unleashed demons, casting about forlornly for its place in the world.

""We need the big oil pipeline so that we will continue to have the United States on our side against Russia. You see, Georgia has nothing else to offer to the world, we have to sell our geographical position...We are beggars, but we would rather be beggars than live under Moscow's yoke again!...The oil per se does not matter. Sure, it will generate customs and transit fees but that money will once again end up in the pockets of the wrong people anyway."" (p.31)

Since the book was finished quite a bit has happened in Georgia. Shevardnadze was overthrown in the 'Rose Revolution' last November by an assortment of dissidents led by the American-educated lawyer Mikheil Saakashvili. The breakaway republic of Ajaria was quickly brought back into the fold, yet tensions are still thick between the new government in Tbilisi and the leaders of the breakaway republics of Abkazia and South Ossetia. In Azerbaijan, as well, there has been a change of leadership, but this time simply a dynastic succession from the deathbed of ex-KGB chieftain turned nationalist boss Heydar Aliyev to his son Ilham. After their humiliating defeat in the Karabakh war, the Aliyev clan turned to exploiting their greatest natural resource, inviting in British Petroleum, and turning their minds to stuffing their pockets to the brim, with little consideration for the nearly one million Azeris displaced from their homes in the conflict.

One of the biggest problems with oil, why it is known as 'the devil's tears', is that is one of the world's greatest boons to corruption. Almost no poor country has experienced a major oil windfall without all sorts of chaos. Nigeria, Saudi Arabia, Venezuela, Angola, Iran, etc; almost everywhere that has seen sudden booms in oil production has experienced enormous problems with corruption and social stratification. This problem was particularly acute at the height of Opec's ransoming of the globe in the 1970's. When the money is literally gushing from the ground, and your rule is somewhat arbitrary anyways, why not steal what you can, or at the very least make sure your ethnic group/tribe/sect/social class are looked after? Part of the problem for poor countries, is that oil, although perennially a high-demand product, is not a high employment industry, especially with the technological capabilities of the modern corporate behemoths. The sort of money that oil can produce tends to send weak legal and political systems (often based as much on personal relationships as what's on the books) haywire. Oil revenues can also distort economies and encourage bad habits, especially in times of high prices, with governments spending the money on projects that return to haunt them.

Even in the Western nations, with their long traditions of rule of law and independent oversight of corporate activities, the nature of the energy industry often tempts people off the straight and narrow, as with the carnivalesque fraud of Enron. Countries that were wealthy before big oil discoveries (like Britain and Norway) have tended to fare quite well in the aftermath. Other places, like Saudi Arabia (which is a pretty odd state anyways) have experienced wrenching change as a result of an influx of oil wealth. The changes in the Caucasus and Central Asia to date have been less all-encompassing, but as the new pipelines are agreed upon and start to come online, with good governance a mostly unknown concept regionally, many of the countries discussed in the book will start to experience even greater problems piggybacking on their new opportunities.

to be continued here...

|| RPH || 10:08 AM || |