Islam, poppies and pipelines: background to the coming war – Part 2

With a sharper eye for the location of coming global crises than most military planners, the producers of the most recent James Bond film The World Is Not Enough set Bond’s adventures in the oil-rush regions of ex-Soviet Central Asia. In a wonderful Bond set-piece, our hero, with a decorative American oil engineer attached, faces death when the villains entomb him in an oil pipeline they are building across somewhere like Azerbaijan or Turkmenistan. Bond and the beautiful engineer face being minced to death by a wonderful robot that makes automatic weld repairs while moving along the inside of the pipeline at great speed. I don’t need to tell you the outcome – “Bond beats robot, gets girl, saves western civilization”.

The need to rid the world of the menace of terrorism is obvious – and has indeed been so long before the attacks on the Pentagon and the World Trade Centre. However, in addition to capturing or killing Osama bin Laden (with the remote possibility of achieving something more than his martyrdom) the coming American war against Afghanistan is aimed at providing the foundations for a stable government in Afghanistan. After more than 20 years of Soviet invasion and civil war, this is a good idea in itself, and much to be prayed for. Whether the US intervention can achieve that goal, and what the cost will be in Afghan lives through war and starvation as a political tool in that war, are another matter.

But in addition to the desirable goal of flushing out bin Laden and like terrorist networks, US policy in stabilizing the politics of the region has a slightly less disinterested purpose. The key to Central Asian politics is economic development in Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan and Kyrgyzstan, all of which are amongst the poorest parts of the former Soviet Union. Most are authoritarian dictatorships of the most dismal kind. For the past ten years the US has been wooing the governments of these countries, and opening the doors for profitable investment by US companies.

Turkmenistan, Uzbekistan, Tajikistan and Kazakhstan make up the eastern side of the Caspian Sea Basin, beneath which lie oil reserves to rival those of Saudi Arabia and the world’s richest reserves of natural gas. If you read the trade newspapers and websites of the world oil industry, words like”fabulous”, “huge”, “enormous” flow across the pages describing the Caspian Sea basin gas and oil fields. But more importantly, these words go together with “undeveloped”, “isolated” and “politically unstable”. There are billions of dollars to be made there, but the possibility of realizing these fabulous profits hinges on one crucial issue: how is the gas and oil to get to its potential markets? While the countries of Central Asia may be floating on a sea of hydrocarbon, they are far from both actual seas and centres of industry. – and deep in the heart of Islam

In the past the Caspian republics exported most of its oil and gas to a pipeline grid integrated into the rest of the Soviet Union/Russia. But with the collapse of the Soviet Union, the terms of trade became very sharp. In the 1990s the ex-Soviet buyers of Caspian hydrocarbons could no longer afford to pay world prices. And Gazprom, the state oil old Soviet oil company that owned the pipelines, was selling its own oil in competition with that of the Caspian republics. Either way, the terms of trade became very sharp for the Caspian states. In 1997, Gazprom denied Turkmenistan access to its pipelines over a payment dispute, resulting in a devastating 25% drop in the Turkmenistan GDP. The ex-Soviet Russian pipeline network itself is past its use-by date, having been sloppily built with out-of-date technology, and itself needs billions of dollars simply to renovate it.

A small number of new pipelines have been built, but many more are, as they say, in the pipeline. But all have costs in the billions, and each of the possible routes from the Caspian Sea basin – west, south, southeast and east – has very serious political difficulties. If Afghanistan political turmoil could be ended, there are literally billions of dollars to be made by US and Japanese companies, by the Turkmenistan and Afghanistan and Pakistani governments, and one key element of US planning for regional hegemony finally tied down.

The Northern Route: from the Caspian through Russia

An existing Russian pipeline to the huge oil terminal on the Black Sea port of Novorossiisk could be linked to the new fields in Azerbaijan and later Kazakhstan. A plan for this “Northern Route” involving the Caspian Sea Pipeline Consortium of Russian and foreign corporations is pressing ahead, but faces several severe obstacles. The first is the war in Chechenya, through which the first phase of this pipeline passes. The second is that the US is opposed to it for precisely the reasons that Russia likes it: it would be good for Russia. The third is that Turkey is uneasy about increasing Russian oil and gas tanker traffic exiting the Black sea through the already over-crowded 17 mile-long Bosphorus/Turkish Straits which connect the Black Sea to the Mediterranean, which now carries 1.7 million barrels/day of oil alone.

The Western Route (2) : via Georgia to Turkey.

In late September of this year, Azerbaijan and Georgia agreed on terms for passage rights across Georgia of a gas pipeline from Azerbaijan to Turkey to start exports in 2004. In total, the Trans-Caspian Gas Pipeline will cost about $1 billion, but would open the way to Azerbaijani gas reaching either Turkish domestic markets or onward to Europe. This would fit with EU planning to create a gas grid stretching from the Caspian to the Atlantic. Georgia is still politically unstable, but more importantly, this route is not especially suitable for the states to the east of the Caspian Sea -Uzbekistan, Tajikistan, Turkmenistan and Kazakhstan. Anything involving the Caspian Sea itself is regarded as extremely sensitive by oil companies because in the mess left by the break-up of the Soviet Union, there is no accepted legal framework for governing the Caspian Sea itself. The US has been pressing hard for the project to come on line quickly, both because it would begin the flow of serious investment funds, and because it would strengthen its current favourite for regional strongman, Turkey, against its former favourite, Iran.

The Eastern Route: China

Another possibility of considerable importance for East Asia and Japan would be a pipeline from Turkmenistan to Xinjiang in China, and then into the Chinese gas grid to the industrialized east coast – and possibly on to Japan. The problem however is the huge distance involved – more than 7,000 km. – and very rugged terrain in places. According to a study by Mitsubishi, Exxon and China National Petroleum, such a pipeline would cost more than $10 billion. There is also a small problem of providing a tempting and vulnerable target to separatist movements in China’s western provinces. China National Petroleum recently abandoned an agreement with Kazakhstan to construct an oil pipeline east because of disagreements about cost. However China is seriously interested in Caspian Sea hydrocarbon resources, and has even reported an interest in a pipeline to the Arabian sea, with a view to importing gas and oil by supertanker.

The Southern Route: Iran

Turkmenistan shares a long border with Iran, and there is already a gas pipeline linking it to the northern region of Iran, where most of Iran’s industry is located. Iran of course, itself has very large gas and oil reserves, but these are located in the south of the country, close to the Persian Gulf. An expansion of the Turkmenistan-Iran relationship could be beneficial to both states. More importantly, it would provide another route to Turkey, and hence Europe, or to the Indian Ocean. However, the prosperity of Iran is not something viewed with great favour in Washington. Nonsense about rogue states apart, Washington’s core concern about Iran is its role as the natural dominant power in the Persian Gulf. When the Shah was in power, this was to be lauded; come the Iranian revolution, to be abhorred. As French, Japanese , Italian, Chinese, Malaysian and Russian companies have moved back into a politically changing Iran, American oil and construction companies have long been nudging Washington to soften its stance toward Iran, and in particular to abandon the Iran and Libya Sanctions Act of 1996. But until Washington is sure it can control ensure the safety of its own oil interests in Saudi Arabia and other conservative Gulf states, there is little likelihood of Washington supporting a major Iranian pipeline for Caspian Basin gas.

The Southeastern Route: Afghanistan to Pakistan

For gas exporters, cost rises with length of pipeline. The shortest and cheapest export route for Uzbekistan oil and for its vast gas reserves is through Afghanistan, and serious planning for both oil and gas pipeline construction by US companies has long been in place. Turkmenistan, Uzbekistan, Afghanistan and Pakistan agreed in 1997 to build a large Central Asian Gas pipeline through the less mountainous southern parts of Afghanistan to Pakistan, and then possibly on to the growing market of India. The Central Asian Gas Pipeline Consortium was made up of Unocal (US, 47% share), Delta Oil (Saudi Arabia, 15%), Government of Turkmenistan (7%), Itochu Oil Exploration (Japan, 6.5%), Indonesia Petroleum [INPEX] (Japan, 6.5%), Hyundai Engineering and Construction (5%), and the Crescent Group(Pakistan, 3.5%). Unocal was the lead developer, much encouraged by the US government. In December 1997, senior officials of the US Department of Energy meeting in Washington with Taliban ministers put their blessing on the enterprise.

The $1.9 billion Centgas pipeline is to be 48 inches in diameter (how many centimeters?), and to run 1271 kilometers from the Afghanistan-Turkmenistan border, due south and then east, generally following the Herat – Kandahar road, then cross the Pakistan border at Quetta, terminating at Mulat. The Turkmenistan government has agreed to build a short pipeline to the huge Dauletabad gas field. 20 billion cubic meters of natural gas per year will flow down the pipeline, and the Turkmenistan government has guaranteed to deliver with 708 billion cubic meters of gas to the consortium – equivalent to the entire reserves of the Dauletabad field.

Just how much the consortium stands to make depends on many factors, especially fluctuations in the price and demand for natural gas in the markets of East and Southeast Asia. But there are clearly huge profits to be made. And for all three countries, the project would be immensely beneficial. For Afghanistan it would be the first major foreign investment since the Soviet invasion in 1979. For Pakistan it could be a key to the next stage of industrialization. Just how much the Centgas consortium agreed to pay the Taliban for transit rights is unknown. But Unocal’s competitor in the race to build an oil pipeline form Turkmenistan through western Afghanistan to the Arabian Sea coast of Pakistan was reported to have offered the Taliban $1 billion in transit fees, plus a considerable amount of railroad track, road construction, and a police post building every 20 km. Along the pipeline to by garrisoned by Taliban troops.

The US government pressured Turkmenistan heavily to give preference to the Unocal-led Centgas consortium over their Argentinian competitor, Bridas. In 1997 Centgas got the gas pipeline contract, but by the time it was ready to commence work, the political situation in Afghanistan that had looked promising to US eyes in the mid-1990s had deteriorated. Civil war continued, the Taliban’s cultural extremism and hostility to women had exploded in the world media, and Afghanistan had become a major terrorist base. In August 1998, the US attacked bin Laden’s Afghanistan base, and four months later, Unocal pulled out of Centgas. The combination of instability, pressure form the US government, and attacks from shareholders and women’s groups in the US was too much.

With Afghanistan at war with itself and the United States, the alluring Centgas project was on hold, despite repeated efforts to re-start the consortium by all three governments. With the profits to be made so enormous, Unocal was reported to be trying to edge back into the project last year. But in addition to its obvious problems in Afghanistan, Unocal is being sued in a US court for use of Burmese forced labour over its Thailand-Burma project. (If this case succeeds, it will be the first occasion on which a US court has held a US corporation legally responsible for foreign human rights violations related to its profit-making activities. If the case is won, Unocal could face many millions in damage awards.) And the United States government imposed economic sanctions on Myanmar, banning new investment, largely because of the domestic reaction to Unocal’s exploitation of Burmese forced labour organized by the Myanmar dictatorship.

Meanwhile Unocal remains the lead developer on the consortium to build a 42-inch (centimeters = ?) 1700 kilometer oil pipeline from northern Turkmenistan through Afghanistan to a Pakistani port on the Arabian Sea. A Unocal spokesman boasted to Congress that it would compare with the giant(and environmentally risky) Trans-Alaska Pipeline. Unocal – and Japanese -executives regard this $2.5 billion plan as by far the cheapest and least difficult way of bringing Turkmenistan’s oil to the sea, where it can be loaded onto supertankers bound for Japan and Korea, and possibly China..

Oil and gas are not the direct causes of the war in Afghanistan, but understanding the motives of long-term US policy towards that country is important. The pursuit of hydrocarbon interests has been a constant of US policy in the region for more than half a century. Having created the mujahadin resistance to fight the Soviets during the Cold War, the US then lost interest in the country, and allowed its former clients to destroy it. In order to gain the stability necessary for oil and gas operations, it flirted with the Taliban, until finally the whirlwind its earlier support for the mujahadin had created came blowing back home as a terrorist horror.

Link for Author

Richard Tanter Website (Japanese Information)