US carefully extends influence in Russia's backyard

Sep 23, 1997 02:00 AM

The Clinton administration and American oil companies are intensifying a campaign to end Russia's century-old dominance over the vast oil and gas riches of the Caspian Sea region, an area potentially crucial to the strategic U.S. goal of securing major new energy sources outside the Middle East.
In recent months the administration has lavishly feted the leaders of Azerbaijan and Georgia and it is preparing a similarly grand reception in December for the president of gas-rich Turkmenistan. Deputy Secretary of State Strobe Talbott is personally involved in mediation of a dispute between Armenia and Azerbaijan that jeopardises a planned pipeline to the West beyond Russian control. Vice President Gore will discuss Caspian energy issues in Moscow this weekend and first lady Hillary Rodham Clinton plans to visit Central Asia in November.
As for the oil companies, U.S. energy executives shuttle by the hundreds to Baku, capital of Azerbaijan. Mobil Corp. has opened an office in the tiny Turkmeni oil town of Nebitdag, accessible over a road travelled by camels and goat herds. Last month, four major U.S. companies signed an agreement at the White House to invest $ 8 billion in Azeri oil, while Chevron Corp. plans a $ 20 billion investment in Kazakhstan's Tengiz oil field, one of the world's 10 biggest.
Senior administration officials stress that they want to secure access for U.S. oil companies to this multitrillion-dollar treasure without rekindling the Cold War rivalry between Washington and Moscow in a region long regarded by Russia as its preserve. Yet recent Senate hearings into the connection between political donations and access to the White House have offered unexpected glimpses of the administration's real intentions in Central Asia, stripped of diplomatic niceties.
Called to testify recently about her contacts with international oil financier Roger Tamraz and his plans for a Caspian oil pipeline, former National Security Council aide Sheila Heslin gave Senate investigators an unusually candid summary of U.S. policy. The administration, she said, sought "to promote the independence of these oil-rich (former Soviet republics), to in essence break Russia's monopoly control over the transportation of oil from that region." Heslin described how President Clinton had called the ruler of oil- rich Azerbaijan in October 1995, to "buck him up" when he was wavering under Russian pressure about approving a pipeline route that would not be under direct Russian control.
Senate investigators also released a document prepared in 1995 for Donald L. Fowler, who was then the chairman of the Democratic National Committee, relating to Tamraz, who gave $ 300,000 to Democratic causes in order to gain access to the White House to promote his pipeline project.
"The Caspian (pipeline) deal is drawing Washington in," the document stated. "Washington is feeling the mounting pressures from oil companies such as Amoco, Mobil, Exxon, McDermott, Brown & Root, Bechtel and Chevron. The Clinton administration is being pushed to alter its pro-Russia policy and start backing the republics in an attempt to push the deal forward." Under that pressure, the administration's support for independent nations in Central Asia -- and Western access to the region's oil -- has steadily intensified. The State Department encapsulated U.S. ambitions in a report last April, which said the U.S. goal is "to tie the region securely to the West" through multiple pipelines and transportation corridors outside Russia.
U.S. officials have sought to play down any tensions a more activist U.S. policy has caused with Russia. A senior US diplomat insisted that Washington and Moscow are not engaged in a "bipolar Herculean conflict" but are moving more toward "invest and share (rather than) squeeze and predominate." Yet the increasingly competitive scramble over oil and gas concessions and pipeline routes has, as one analyst put it, begun to resemble "a combination of chess and poker."
Russian President Boris Yeltsin publicly said last month that the United States "is declaring that (the Caucasus) is in their zone of interest. Our interest is weakening, but the Americans are beginning to penetrate this zone."
The State Department quickly responded that the United States "does not believe in spheres of influence for the United States or any other country."
Evidence of U.S. success in penetrating what was once exclusive Russian turf is abundant. Turkmen oil officials, for example, in November will fly to Houston -- capital of the American oil industry -- to auction 11 oil and gas concessions in the Caspian Sea. And U.S. companies hold a 40 % stake in the Azerbaijan International Operating Company (AIOC), which is to start pumping oil to the West next year.
Further evidence of Russia's eroding dominance can be seen in the recent acquisition by China and Indonesia of major Kazakh oil concessions. Turkey, Pakistan and China are eyeing the vast untapped gas reserves of Turkmenistan, south of Kazakhstan, to fuel power plants.
For Russia, the penetration of foreign influences in the Caspian marks a dramatic historical watershed.
The energy-rich nations of Central Asia and the Caucasus made up a large part of the Russian empire that emerged under the czars. Much of modern Baku was built by Russians in the days of "the great game," the 19th century struggle between Russia and Britain for control of the area between India and the Black Sea.
Baku became the first centre of the world's oil industry. But with the advent of Soviet rule in 1917, Moscow eventually put Caspian development on the back burner in favour of exploiting its own oil reserves and signing big deals to supply western Europe with Siberian gas in return for hard currency. Meanwhile, Moscow exercised absolute political control over the isolated republics around the Caspian, and all roads, rail lines and pipelines led north to Russia.
To some Russian nationalists, who still view Caspian oil and gas as their rightful preserve, recent events are a bit like "seeing the Indians take back the prairie at the end of the film," said S. Frederick Starr, chairman of the Central Asia Institute in Washington. "There's growing anxiety about the waning of the Russian presence in a part of the world they considered their back yard for 150 years."
For the Clinton administration, maintaining friendly relations with Moscow while working to loosen Russia's control over Caspian resources has proved a sensitive undertaking. As U.S. officials and oil companies stepped up their efforts to secure Western access to the region in 1994, Russian officials made clear that America should keep out. "They were saying this is our area, not yours, and we ought to be determining how to develop it," an administration official said.
Over the past three years, U.S. officials have attempted to convince their Russian counterparts that profits and growth, fuelled by rapid development of energy resources, will be more important in the future global economy than control of the resources in the ground.
"The extent to which (Russia and its neighbours) are integrated into the international economic system will be far more relevant than old-fashioned notions of control," said Jan H. Kalicki, a Commerce Department official who co-ordinates energy and trade policy with Russia and its former republics.
The best example of Moscow's more accommodating position, U.S. officials say, is its acceptance of the 1995 decision by the government of Azerbaijan and a Western-dominated international consortium to build a pipeline south of Russia through Georgia to the Black Sea.
The Russian oil company LUKoil was given a 10 % interest in the consortium, and about half the Azeri oil will still go north through another pipeline to Russia's Black Sea port of Novorossiisk -- providing Moscow succeeds in difficult negotiations over transit fees to be paid to Chechnya.
Yet oil company officials and policy analysts agree that the game is just beginning. The struggle over a bigger pipeline from Baku, which willbe built at the end of the decade, is far from resolved, as is the battle over future oil and gas pipelines from Turkmenistan and Kazakhstan.
As this unfolds, Russia still has plenty of political, commercial and military tools at its disposal. There is still strong resentment of foreign penetration, especially in the foreign ministry, according to U.S. officials.
In late August, Moscow signed a treaty of "friendship, co-operation and mutual assistance" with Armenia, which went to war with Azerbaijan in 1992 and currently controls territory within striking distance of the planned oil export pipeline from Baku to Supsa on the Black Sea. Moscow has reportedly shipped $ 1 billion in arms to the landlocked nation.
Gazprom has flexed its economic muscle in the region. Chief executive Rem Vyakhirev recently said he would not allow Kazakh gas being developed by Texaco to be exported to the West through Gazprom pipelines.
Gazprom in August announced plans to ship Russian gas to Turkey via a pipeline under the Black Sea, for which it signed a $ 3 billion preliminary agreement with Turkey.

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