April 26, 2005

Showdown In The Caspian: Part I

A few days ago, during Condoleeza Rice's visit to Moscow, the news reports all gave the impression that the relationship between the U.S. and Russia was more or less sound, except for a few relatively minor concerns (securing loose nuclear material, Putin's creeping authoritarianism). In other words, here are two natural allies with a few, shall we say, differences of opinion.

Fair enough, though not much attention seems to be paid to the thumb wrestling going on over oil and natural gas down in the Caucasus areas. Could this region turn into the source of greater disputes between Russia and the United States, especially as oil continues to grow scarcer and the great powers are forced to jockey for waning resources? Maybe. I don't know. But it sure seems like an important region to understand, so after a bit of googling and reading up, I'm going to try to put together a little primer on the Great Game being played out in the Caucasus region between our two favorite Cold War adversaries. Feel free to point out any mistakes, and I'll patch it up.

First, a map will come in handy here:

Yeah, that's the ticket. Now as we would expect, Russia under Vladimir Putin is surely trying to ascend to great power status once again. And the road back involves oil. Lots of it. Oil and gas account for about two-thirds of Russia's export revenue and a quarter of its GDP. And most importantly, Russia's trying to dominate the oil-transport game, fighting to make sure that any oil or gas that comes out of the resource-rich Caspian area goes through Russia first. And when I say "resource-rich", I mean resource-fucking-rich: the Soviet republics surrounding the Caspian are all told sitting on up to 200 billion barrels of oil—nearly as much as Saudi Arabia's 250 billion. So the Russian pipelines will do two things in the coming years: a) provide Moscow with a nice chunk of revenue, and b) maintain Russia's influence over the oil producing republics down south.

Naturally, the U.S. feels a bit uneasy about Russia having a monopoly on oil transport—ideally we'd like to construct pipelines that go from the Caucus oil and gas producers directly to the Black Sea and Turkey. As you can see in the map above, that means going through Azerbaijan and Georgia. Hence, the multi-billion dollar BTC pipeline, which runs from Baku, Azerbaijan, to Tblisi, Georgia, to Ceyhan, Turkey, as follows:

Not surprisingly, the U.S. has lavished aid on Georgia for the past ten years—about $800 million—and has been involved in training the Georgian military forces. Russia, meanwhile, has tried to maintain its influence over the region by keeping its forces in the northern autonomous regions of Georgia, including Adzharia, and has shelled out a good deal of aid to two of Georgia's more rebellious provinces, South Ossetia and Abkhazia. (When Georgia tried to invade Abkhazia in 1993, for instance, Russia helped repulse the Georgian force.) The U.S., understandably, is worried that the rebel provinces will stage attacks on the BTC pipeline, or sabotage it, and has prepared the Georgian army for this possibility.

I haven't said anything about the much-lauded "rose revolution" that toppled Eduard Shevardnadze in December of 2003. It's no secret that the rise of Mikhail Saakashvili was perfect for the United States—here was a leader who would keep Georgia stable, oppose Russian influence in the region, and call for Russia to withdraw its troops from Abkhazia. A leader who would keep the BTC pipeline safe. Of course the U.S. backed him; they'd be stupid not to. But in the grand scheme of things, I don't think Saakashvili will change the larger dynamic much.

Then there's Azerbaijan. If you don't want to pipe Caspian oil and gas through Russia or Iran, it has to flow through Azerbaijan. The BTC pipeline starts in Baku. So the U.S. doesn't try to rock the boat here; the ruling Aliyev dynasty is brutal, having stolen election after election, including most recently the younger Aliyev's sham ascendancy to power in 2003, where security forces beat protestors, and over 300 were hospitalized. But that doesn't matter: what truly matters is that the elder Aliyev signed a $7.4 billion contract with 10 oil companies back in 1994, including BP, Unocal, and Pennzoil. Needless to say, after the 2003 election, Richard Armitage in the State Department quickly made the call to congratulate Aliyev. Warmly. Okay, map-time again!

Again, Russia is none too pleased with U.S. influence in Azerbaijan, and has sought to aid and arm the country's longstanding neighbor and enemy, Armenia, as well as the disputed province of Nagorno-Karabakh (that little inset region), which was the source of a five-year war between the two countries. (The U.S., for its part, has been warming towards Armenia in recent years, offering greater economic and military aid.) Is it possible that Russia is hoping to stir up trouble in the region, of the sort that will make the BTC pipeline too unstable to use, forcing the oil to flow back through Russia? Maybe. Maybe not.

Recently, it seems that Russia has resigned itself to the BTC pipeline's existence, and may even start investing in it. (More of a concern to oil investors is Iran, which could very well use its terrorist network to sabotage the pipeline. Who knows? Rumors spread like avian flu. Certainly Russia and Iran wouldn't shed too many tears if the BTC were sabotaged and an alternative pipeline, going through Kazakhstan, Turkmenistan and then down through Iran to the Persian Gulf became the main outlet for Caspian oil and gas.) But it's awfully remarkable how one need only follow the pipelines to figure out how and why the great powers are acting in the way they are.

Anyway, this is only a rough overview of what's going on west of the Caspian. There's also a whole horde of interesting stuff about pipelines east of the Caspian, involving Kazakhstan, Turkmenistan, Iran, Afghanistan, Russia, the U.S., and—dum, dum—China. But I'll save all that for another post.
-- Brad Plumer 3:01 AM || ||