Caspian Oil And Pipeline Diplomacy

There are moments in history when the rivalries and the self-interest of great powers and the deeper logic of high finance suddenly come together to define the shape the world will take in the future.


One of those moments will come on Oct. 4, in London, when Western oil and energy giants, backed by their governments, gather to decide the fate of the oil of the Caspian Sea.


The choice is simple. The oil can come out through the existing Russian pipelines that run north from Baku up through Chechnya and then north-west to the Russian Black Sea Port at Novorossiisk. Or it can avoid Russia, and come out through a new pipeline, via Georgia.


At stake is not just the $7 billion investment of an international consortium of British, French, Italian and U.S. oil giants. If they all agree on the Georgian route, that signals the twilight of Russia's power to assert economic dominance over the former Soviet republics through pipeline diplomacy.


Georgia's Eduard Shevardnadze thinks his own life could be at stake too. He has made no secret of his suspicion that the recent assassination attempt upon him was aimed at foreclosing the Georgian pipeline route.


This is the post-Cold War era, where the old world of geopolitics collides with the new world of geo-economics, and the battles are over oil. The Gulf War against Iraq was about oil. The Chechen war was about oil in part. One of the problems of the Bosnian wars is the competing Croat and Serb demands for the oilfields of eastern Slovonia.


The U.S. government has been involved in the pipeline affair since last August, when the National Security Council saw the first oil survey results and concluded that in the 21st century, the Caspian energy basin would match the Persian Gulf in importance.


U.S. Deputy Secretary of State Strobe Talbott will be pushing for the London meeting to follow his advice and come up with the solution of Solomon: Two pipelines, one through Russia and the other through Georgia.


There is no shortage of oil to pump through them: The lowest proven figure for the Caspian fields is 4 billion tons. Estimates range far higher, though well short of the 15-20 billion tons reckoned to be in the single Tengiz oilfield of Kazakhstan.


As well as the Caspian Sea deal, another oil rush is under way in Kazakhstan, where Chevron has a $20 billion contract to develop the vast Tengiz oilfield. British Gas and Italy's Agip have signed a similar deal to develop the Karachaganak natural gas field of Kazakhstan.


If the West can break the Russian stranglehold over the Caspian pipeline routes in London, it will seek to do so again for the Kazakh fields. The London decision, which must be ratified by the Azerbaijani government in Baku on Oct. 9, will set the course for up to $50 billion in investment and a new geopolitical order for Central Asia that seeks to exclude Iran and curtail Russian ambitions.


And do not forget the role of U.S. politics. President Clinton's main rival, Republican Senator Robert Dole, has already sniffed an election issue in his big foreign policy statement this year.


"The security of the world's oil and gas supplies remain a vital interest of the United States and its major allies. But its borders now move north, to include the Caucasus, Siberia and Kazakhstan," Senator Dole noted. "Our forward military presence and diplomacy need adjusting."