Caspian Oil and Quicksand

Editor’s Note: The following article appeared in the Monday addition of the New York Times–following Gaidar Aliyev and Bill Clinton meeting at the White House.

The Caspian region nowadays is best defined as a large body of undersea oil surrounded by nations anxious to tap it. The industry reckons that the Caspian reserves contain up to 200 billion barrels of oil worth as much as $4 trillion at current prices–plus comparable reserves of natural gas. Little wonder two potentates from the Caspian and Caucasus area–Presidents Heydar Aliyev of Azerbaijan–and Eduard Shevardnadze of Georgia–journeyed to Washington this summer seeking to improve diplomatic and commercial relations. The danger is that American political concerns will be overwhelmed by the petroleum juggernaut.

On one level–the challenge for Americans is practical. Only a relative trickle of Caspian oil can reach markets through a soon-to-be reopened pipeline that passes through unstable Chechnya to the Black Sea. But building new pipelines that extend west and south involves intricate political considerations in the region’s eight countries and in neighboring Russia–China–Turkey and Iran. Many of the region’s leaders are autocrats and hope to remain so with the help of oil wealth.

The challenges to Washington were outlined recently in a speech by Strobe Talbott–Deputy Secretary of State. He rightly stressed the enormous promise of a new Silk Road–a corridor of commerce linking east and west–but cautioned against letting oil trigger an imperial scramble among great powers to the disadvantage of the region’s inhabitants. "In pondering and practicing the geopolitics of oil," he said–"let’s make sure we are thinking in terms appropriate to the 21st century and not the 19th."

Yet in one respect–Mr. Talbott seemed to ignore his own advice by calling for immediate repeal of a 1992 Congressional ban on American aid to Azerbaijan. The statute–Section 907 of the Freedom Support Act–was meant to punish Azerbaijan for its trade embargo against Armenia’stemming from a deadlocked conflict over Nagorno-Karabakh. The ban is of particular interest to oil companies since they seek American Government-backed loans for drilling and pipeline ventures–assistance now forbidden in projects in Azerbaijan. Their cause is supported by a veritable battle-fleet of emeritus diplomats–including former Secretary of State James Baker and former national security advisers Brent Scowcroft and Zbigniew Brzezinski–all of whom have some business interest in development of Caspian oil.

Nagorno-Karabakh is emblematic of the area’s political and ethnic volatility. It is a predominantly Armenian enclave within Azerbaijan created by Stalin when he carved up Soviet territories in an effort to suppress various ethnic and religious groups. In 1988–Nagorno-Karabakh erupted in violence as Armenian Christians clamored for real self-rule within Azerbaijan–whose people are mostly Turkic-speaking Muslims.

An ugly war resulted that ended in stalemate when newly independent Armenia’sent its army across the frontier. Both sides have slaughtered civilians–and the conflict has displaced 800,000 Azerbaijanis. A cease-fire has somehow held for four years.

There may be a case for ending or modifying Section 907 now that the United States has joined Russia and France as co-chairs of Nagorno-Karabakh peace talks.

But Washington ought to proceed with great caution as it adjusts policies there and in the wider Caspian area. The former Soviet Communist leaders who remain powers in the region are not alike. Mr. Shevardnadze has proved himself a reformer and a democrat. Mr. Aliyev has not. Armenia’s President–Levon Ter-Petrosian–was re-elected in a 1996 vote of dubious fairness.

Corruption–political repression and human rights abuses remain endemic in the region. The United States has a nasty habit of subordinating its democratic principles when access to foreign oil reserves seizes the attention of politicians and their corporate benefactors. It happened in Iraq. It should not happen again in the Caspian basin.


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