By Liz Fuller
Prague, Dec 21 (RFE/RL)
Optimistic predictions that uncertainty and obstacles to the export of Caspian oil to
international markets would be
resolved in 1998 have proven premature.
In November 1997, the Azerbaijan International Operating Company (AIOC) �the first
international consortium to begin
operations in the country� began exporting oil through an existing pipeline that begins
in Baku, passes through
Chechnya�s capital Grozny and ends in Russia�s Black Sea port of Novorossiisk. At the
time, most observers anticipated
that within 12 months a decision would be made on the route for the so-called Main Export
Pipeline. That line is intended
to carry much larger quantities of oil not only from Azerbaijan�s offshore Caspian oil
fields, but also �thanks to a
planned trans-Caspian pipeline� from Kazakhstan and Turkmenistan.
As of early 1998, three options for the Main Export Pipeline were under discussion: north
through Russia, west to
Georgia�s Black Sea ports of Supsa and Poti, and southwest through Georgia to the
Turkish terminal at Ceyhan. (On
geo-political grounds, the U.S. has blocked the shortest and most economical route, south
through Iran.)
For the past three years, the U.S., Turkey, and Azerbaijan�s President Heydar Aliyev
have been lobbying energetically
for the Baku-Ceyhan route. Meeting in Istanbul in March, the foreign ministers of
Azerbaijan, Georgia, Turkey,
Kazakhstan and Turkmenistan endorsed that option. Eight months later, the presidents of
Azerbaijan, Georgia, Turkey,
Kazakhstan and Uzbekistan, together with U.S. Energy Secretary Bill Richardson, signed a
formal declaration of support
for that route.
But some of the oil companies in the AIOC have serious reservations about the Baku-Ceyhan
route, whose estimated
cost is $3.5 billion. Their reservations have been exacerbated by the steep fall in oil
prices on world markets.
Consequently, despite pressure from the Azerbaijani leadership to make a firm commitment
to Baku-Ceyhan, the AIOC
repeatedly postponed a final decision on the route for the Main Export Pipeline.
Nor was disagreement over the merits of the Baku-Ceyhan route the sole point of contention
between the AIOC and the
Azerbaijani leadership this year. In the early Summer, the Azerbaijani leadership
threatened legal proceedings against
the consortium when it became clear that the cost of repairs to the existing Baku-Supsa
pipeline would be almost double
the AIOC�s initial estimate. The first oil was pumped into that pipeline in early
December.
But a second major pipeline project, that from Kazakhstan�s vast Tengiz field west
across Russia to Novorossiisk, has
moved closer to becoming a reality. A feasibility study was approved by the Kazakh
government in early November, and
later that month the first contract on construction of a sector of the 1,500-kilometer,
$2.2 billion pipeline was signed in
Moscow.
A major obstacle to the exploitation of Kazakhstan�s offshore oil was removed in early
July, when President Nursultan
Nazarbayev and Russian President Boris Yeltsin signed a formal agreement dividing their
respective sectors of the
Caspian Sea. But despite a mid-December meeting in Moscow of deputy foreign ministers of
the five littoral states,
dissent persists among them over the best approach to dividing the entire sea and all its
resources.
Russia and Kazakhstan continue to advocate dividing the sea-bed into national sectors,
leaving the Caspian waters for
common use. Azerbaijan and Turkmenistan want to divide both the sea-bed and the waters
into national sectors. Iran
signaled at the December meeting that it might agree to that approach, which it had
previously rejected, but only on
condition that all national sectors of the sea are of equal size.
As a result of the lack of officially recognized divisions among the five states�
sectors of the sea, Azerbaijan and
Turkmenistan are currently engaged in a heated dispute over ownership of two oil fields.
Four rounds of talks this year
have failed to resolve the dispute. And in December, Baku formally protested an agreement
signed between Iran and two
Western oil companies on exploratory drilling in what Azerbaijan insists is part of its
national sector.
Russia�s insistence that the waters of the Caspian be jointly used could also prove a
major obstacle to the planned
Trans-Caspian pipeline that is to transport Kazakh and Turkmen oil to Baku for export.
Russian officials argue that
project is ecologically risky because the Caspian is in an earthquake zone.
Speaking in Washington earlier this month (Dec. 9) at one of at least a dozen major
conferences on Caspian oil held in
1998, U.S. Department of Commerce advisor Jan Kalicki described 1998 as �the year in
which the euphoric rush to the
Caspian was tempered by rational expectations.� Kalicki mentioned the failure of three
trial wells drilled in 1998 to yield
oil in commercially viable quantities �a failure that has seriously disquieted the
international oil community. If more trial
Caspian wells prove dry, or if the AIOC indefinitely delays a firm commitment to the
Baku-Ceyhan pipeline, expectations
may be revised further downwards in the new year.
By Paul Goble
Washington, Dec 21 (RFE/RL)
Just as has been the case every year since the collapse of the USSR, the post-Soviet
states in 1999 are likely to
continue to become ever more different one from another. But beneath this increasing
diversity, all 15 � the 12 former
Soviet republics and the three Baltic states � now face three common challenges, each of
which appears likely to
intensify and generate crises in many of these countries over the next 12 months.
First of all, these countries will be forced to respond to the consequences of this
diversity itself, even as many inside and
outside the region deny it or even try to reverse this trend. Second, they will have to
deal with the increasing split
between popular expectations and political and economic realities. And third, they will
have to do so with fewer resources
because they appear likely to receive ever less outside assistance and attention.
Dealing with any one of these sets of problems would challenge the capacity of virtually
any state. Coping with them all
at once is likely to be beyond the capacity of many of these countries. And even the
effort to do so may plunge some of
them into turmoil. The diversification of these countries following the demise of the
Soviet system should not have
surprised anyone. After all, these 15 countries have very different national traditions,
and these are reasserting
themselves with ever greater force.
But if the diversification was both understood and expected by most of the participants,
its consequences have been far
greater for them, for their neighbors and for the world at large than many had
acknowledged. For each of the countries,
this diversification has opened many questions about just what kind of a society it should
have and where it should
position itself on the map of the world.
For their neighbors, such questions have opened an even larger number of questions about
what kind of relationships
should be maintained between and among countries bound together in the past.
And for the larger world, these same questions have challenged assumptions about how this
region should be conceived
or even whether the former Soviet space remains in any sense a proper region for analysis
and political action. As 1999
dawns, all these questions remain open and thus likely to generate conflict.
The second challenge of post-Soviet development, however, may have even more immediate and
severe
consequences. In all too many of these countries, popular expectations about democracy and
free markets have run into
some harsh realities.
In some post-Soviet countries, this revolution of rising expectations has led ever more
people to think about challenging
the ruling elites, many if not most of whom are holdovers from the former system even if
they have proclaimed their
allegiance to a new one. In others, this clash between hope and reality has led to
demobilization of public opinion, a
situation in which governments find it hard if not impossible to generate support and thus
open themselves to a different
kind of instability.
And in a few, this contrast has allowed some political figures to generate support by
identifying one or another group as
a scapegoat or by seeking to return to a past that was never as good as they present it or
as those now suffering appear
to believe.
But in almost every case, the differences between hope and reality are generating
conflicts that governments currently
lack the resources they would need to overcome these problems quickly. And that situation
in turn is likely to get worse
during the next twelve month. Given the financial crisis in Russia, fewer Western
governments and fewer outside firms
are likely to supply the kind of assistance that many in this region would need to stave
off a crisis. Moreover � and in a
reflection of the difficulties many have in making distinctions across this area � these
same governments and firms are
likely to reach judgments about all the countries of this region on the basis of what has
happened in the Russian
Federation.
Even if some outside sources do in the end provide more help, it will likely come with
more strings attached, something
certain to offend many if not all of the political elite and populations � even those
who acknowledge that such strings
may be necessary.
And that response too will put additional strain on the political and economic systems of
these states, driving some into
crisis while forcing others to face up to their difficulties in one or another way. The
difficulties that many of these
countries are likely to have in 1999 undoubtedly may lead some to argue that these
countries would be better off back
together.
But the enormous differences in the ways in which they are likely to respond during the
next year as in the past in fact
will be yet another indication of why that outcome, among all the possible ones, is
perhaps the least likely of all.