Selection of pipeline routes from Central Asia to the West seems like a long-term process. Cost is only one consideration; political stability is essential. Feasibility is another yardstick. Studies have shown that it would cost more that $16 billion to construct a line under the Caspian Sea, across Azerbaijan, Armenia and Nakhichevan to Turkey. Because of the Libya-Iran Sanctions Act of 1996, major American oil companies must of necessity avoid Iran. Turkmenistan already supplies gas to the republics of Central Asia via the Soviet-developed and Russian-controlled system. A line through Afghanistan is not out of the question; it depends on the political nerve of the participants. The Unocal Corporation has already discovered pitfalls there. American women are certain to object because of the way the Taleban fundamentalists treat women in Afghanistan, a reminder that medieval customs still exist and get enforced by the Taleban. However, Afghanistan has another use. If this country threatens to negotiate with Afghanistan, negotiations may well convince Russia that Turkmenistan will pursue alternative routes if Moscow goes on damaging its vital economic interests by providing unsatisfactory and unreliable transit facilities for existing gas exports. As of mid1997, the most realistic prospect is for an improvement in transit conditions through Russia as Western companies secure improved conditions for oil transit through Russia. All parties involved in this aspect of the Great Game agree that there will have to be a new export pipeline.
The relationship between politics and pipeline development remains quite close. Russia, for example, cannot have forgotten the humiliating defeat in its war with Afghanistan. Furthermore, any rap Grozny is the capital city of Chechnya now an independent nation. [graphic]
prochement between Azerbaijan and Russia might involve Russian support for a negotiated settlement to the dispute in Karabakh. The recent settlement of Russia's dispute with Chechnya offers some tantalizing possibilities. Russia might even soften its position on the Caspian Sea's legal regime. Much will depend on whether Moscow's various factions or power centers will accept what is perhaps, the basic premise of Western activities has been that the economics of oil and gas in Central Asia make winners out of all of them. This premise runs counter to the nationalist belief in Moscow that the attainment of economic independence by Azerbaijan, Kazakhstan, and Turkmenistan is a zero-sum game in which, if the Central Asian republics gain, then Russia surely must lose.
On October 23, 1997 Ambassador Stuart Eizenstat, Under Secretary for Economic and Business Affairs, appeared before the Subcommittee on International Economic Policy, Export and Trade Promotion. It was a subcommittee of the Senate Foreign Relations Committee. Ambassador Eizenstat offered comments on the Clinton Administration's policy with respect to pipeline routes out of the Caspian Sea Basin. The Clinton Administration, he said, has "five main foreign policy interests in the Caspian region. They are: The independence and sovereignty of the New Independent States (NIS), and their democratic and market development; Promotion of regional conflict resolution; the increase and diversification of world energy supplies; continued support for U.S. companies; and continued pressure on the Iranian regime to change its unacceptable practices..."
"Resolution of regional conflicts in Nagorno-Karabakh, Abkhazia, and Chechnya is critical for successful and comprehensive energy development in the [Caspian] region. The conflict in Nagorno-Karabakh, for example, has contributed to instability in Azerbaijan and hinders serious consideration of a pipeline from Azerbaijan through Armenia to the west.....In the longer term, the scale of Caspian Basin energy resources not only justifies -- but will demand -- multiple transportation options for moving production out into world markets. ....The United States supports a [pipeline route from Baku, Azerbaijan, to Ceyhan, Turkey as one of multiple routes." Routing a pipeline through part of Turkey avoids any further environmental degradation of the Black Sea. However, such a route may have to be run through territory in which the Turkish army has an ugly civil war with the Kurds. Both sides recognize there is no military solution to this intractable problem.
At the end of the 19th century, Azerbaijan was the number one world source for oil. Until the middle of the 20th century, it remained the single largest supplier of oil to Europe. Capturing Baku, Azerbaijan's capitol city, was Adolph Hitler's principal strategic objective when the Nazi armies invaded the Soviet Union in 1941. History records that the Nazis almost captured their objective, but they ran out of fuel before they could reach Baku. Stalingrad was a mere 300 miles away; and the Nazis were stopped at the gates of this city. After World War II (193945), oil companies in the Soviet Union began looking for more oil in the Urals and then Siberia. Russian geologists overlooked Central Asia. Here was a huge area four times the size of France, beginning at the Caspian Sea and extending to China. It 55 million inhabitants are poor, and none of the five countries likes the other. Only Uzbekistan seems politically stable. Geographically, it is the center of Central Asia. Tashkent, its capital is considered the region's chief commercial city, and despite its Communist background, Uzbekistan has been trying to move towards a market economy. Notwithstanding, it was from Central Asia that the Soviet Union launched its invasion of Afghanistan in 1979, returning defeated ten years later.
Uzbekistan and Kazakhstan share the Aral Sea. Because of the Soviet Union's criminal indifference to the environment, the Aral Sea is now something like 25 percent of its former area, poisoned by pesticides and poor agricultural practices. It is literally drying up from overuse of water from two rivers that once had enough to irrigate cotton acreage. Most of the water diverted evaporated because the canals were neither covered nor lined. The water slowly became contaminated by pesticides and other chemicals sprayed on cotton and rice fields. Having settled on the seabed, these chemicals are now windblown for hundreds of miles. None of the neighboring states of Central Asia see any possibility of saving what's left of this once rich sea. Some inhabitants even suggest the location of oil refineries nearby, selling the refined products for hard currencies.
The discovery of new oil in Azerbaijan has set off a furious search for pipelines to carry oil and gas to Europe and the West. The Caspian Sea Basin may hold oil and gas reserves second only to those of the Middle East. Conservatively, the Caspian Sea Basin -- it includes Azerbaijan, Turkmenistan, Tajikistan, Kazakhstan, Kyrgistan, and Uzbekistan -- has oil reserves of more than 75 billion barrels and some 25 trillion cubic meters of natural gas. The Clinton Administration has announced it would oppose any pipeline that went through Iran. Furthermore, it does not want any pipeline going through a former Soviet oblast (county or province).
The image of a few pages ago is a highly stylized view of a critical area of oil geography. It features Grozny, the capital city of Chechnya. The pipelines shown passing through Grozny were badly damaged during the Russian attempt three years ago to subdue Chechen rebels who fought for their independence from the former Soviet Union. In 1996, President Boris Yeltsin sent General Alexandr Lebed to negotiate a cease fire and an agreement that would concede Chechen freedom. It was duly signed by the president of Chechnya after elections in that country.
On October 25, 1997 oil began to flow through Chechnya using the war-damaged pipeline. It ran from Baku to Novorossisk hundreds of miles to this Russian port on the Black Sea. A 95mile segment of the new pipeline transits Chechnya and Grozny, its capital. This oil is described as early oil, and some 176,000 barrels will flow through this pipeline by late 1997. Sixty-five years ago, a pipeline ran from Baku to Batumi, a Georgian port on the Black Sea, but it was shut down in 1935. Some of the early oil was bought by Lukoil, a giant oil company in Russia. On the same day the flow from Baku began, the formation of Central Asia Gas Pipeline Ltd. was announced in Turkmenistan. Currently, this company may deliver gas to an as yet un-designated port via pipeline in Afghanistan and Pakistan Unocal has the largest share of this consortium; the other companies have not been identified.
The location of pipelines from the Caspian Sea Basin to the West was critical. Depending where the pipelines are placed, power over this OPEC-free energy supply may fall to Chechen rebels, irredentist Armernians, Russian or Turkish gangsters, Iranian mullahs Kurdish guerillas or mercurial chieftains of ethnic groups that nurse ancient grievances of which the outside world knows nothing. Rosemarie Forthye, an American diplomat specializing in international energy issues put it succinctly in 1996: "All options are complicated, and none is trouble-free, because they all either pass through politically unstable areas, involve high costs because of distance or terrain, or are politically risky because they offend the sensibilities of one or more of the regional powers." This language appeared in The Politics of Oil in the Caucasus and Central Asia: Problems, Prospects, and Policy, International Institute for Strategic Studies, London, 1996.
Eizenstat also reiterated America's support for multiple pipelines. "In keeping with our support for the Baku-Ceyhan oil pipeline, we have urged the Turks to create a commercially attractive arrangement. On the gas side we are working with Turkey to identify energy alternatives to meet their energy shortages, including gas from the Caspian through the Caucasus. We continue to press Turkey to open its border with Armenia as part of its ongoing, positive role in resolving the Nagorno-Karabaskh conflict." In May, 1997, Turkey signed a Memorandum of Understanding with Turkmenistan and Iran. It allows Iran to buy gas from Turkmenistan, while Iran will permit this gas to transit its territory. Eizenstat stated flatly that this Memorandum did not authorize a pipeline across Iran in violation of the Iran-Libyan Sanctions Act of 1996. "We will monitor future developments under the Memorandum of Understanding and... should we find evidence of investment activity which could enhance Iran's ability to develop its own petroleum resources, we will take appropriate action under this act of Congress."
In his comments to the International Economic Policy, Export and Trade Promotion Committee, a subcommittee of the Senate Foreign Relations Committee. Eizenstat showed a real awareness of the environmental hazards of shipping oil through the Black Sea via the Straits of Bosporus, the Dardenelles and the Sea of Marmara into the Aegean Sea for destinations in Western Europe. The extreme hazards of operating in the Black Sea argue against its use at all as a route carrying oil. Construction of a dual system of pipelines, two for oil and another two for gas built in parallel via Azerbaijan, possibly Georgia and then through Turkey to Ceyhan seem the most feasible at the end of 1997.
Attached to this book is a legal opinion written by S. Andrew Scharfenberg. It appeared in the Spring 1996 Issue of the Emory University International Law Review. Its title was Regulating Traffic Flow in the Turkish Straits: A Test for Modern International Law. Its author concluded on page 29:
The Montreux Convention has successfully governed navigation in the Turkish Straits for 60 years. Despite its successes, the Montreux regime is not ideal. Much has changed since the signing of the treaty [in 1936]: the size and number of ships on the water, the type of cargo on board, and the needs of interested parties. To compensate for these differences, Turkey has instituted the Regulations with the goal of protecting shipping , the environment, and human life. The Regulations are not perfect and they have aroused a great deal of opposition from other states. Even so, they are Turkey's best hope for mitigating dangers in the Straits [of Bosporus]. The only superior alternative, at least in the eyes of the international community , would be to convene a conference for the development of a new international strait regime for governance of the Bosporus and Dardenelles. But given that none of the parties to the Montreux Convention has called for a new conference or even an amendment to the existing treaty, Turkey is justified in taking unilateral action. The Regulations are consistent with international law and the Montreux Convention. Free passage through the Straits does not mean unregulated passage. The right of free passage is valuable only to the extent that passage is effectuated. Turkey's rules provide practical guidelines necessary for the safe management of heavy traffic in the narrow Bosporus waterway. The Montreux agreement implicitly gives Turkey the power to adopt such a regulatory scheme; reason demands it. Footnotes appear at http://www.law.emory.edu./EILR/volumes/spring96/scharfen_fn.html
Additionally, Mr.. Scharfenberg noted that the Montreux Convention might be abrogated by Turkey . Articles 2629 provide for termination of the treaty. If Turkey chose this route, the author suggests that another existing treaty replace the Montreux Convention. If preceded by a denunciation of the Montreux Convention, the Convention on the Protection of the Black Sea Against Pollution might serve as a replacement of the Montreux regime. Alternatively, the United Nations Convention on the Law of the Sea (UNCLOS) might work, but Turkey has not yet ratified this treaty. In any case, Turkey would support denunciation of the Montreux Convention by asserting the doctrine of rebus sic stantibus. It holds that a significant change in material circumstances warrants a state's decision to ignore the mandates of a treaty.
One may safely argue that all the fuss over interpretation of a 60year old treaty occurred because oil was discovered in the Caspian Sea Basin. Turkey may say that the increase in the number of super tankers passing through the Bosporus after loading at Russia's port city of Novoissisk will irreparably damage the marine environment. Russia may continue raising objections that it should be allowed to continue its pollution of the Black Sea as a way of vindicating the free passage through the Bosporus as guaranteed by the Montreux Convention of 1936.
All contents © 1998 William M. Brinton