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The U.S. and Central Asian oil
By Qamar Agha
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The American "war against terrorism" has also become a battle to control the energy resources of the Central Asian region.
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THE UNITED States-led "war on terrorism" has succeeded in achieving many of its objectives that include the dislodging of the Taliban regime and the installation of a pro-western Government in Afghanistan. It has also succeeded in dismantling Osama bin Laden's Al-Qaeda network. Like Saddam Hussein in the Persian Gulf region, the Taliban in Afghanistan has provided the U.S. an opportunity to deploy its forces in Central and South Asia. Washington was trying since the disintegration of the Soviet Union to gain access to the strategic Central Asian region which has more than 6 per cent of the world's proven oil resources and almost 40 per cent of its gas reserves.
The U.S. is now involved in the unfinished task of restoring peace in war-ravaged Afghanistan and trying to gain influence in the newly-independent oil-rich Central Asian Republics of Turkmenistan, Kazakhstan, Tajikistan, Uzbekistan and Kyrgystan where a vacuum has been created with the disintegration of the Soviet Union. These countries are rich in resources but they neither have the technology nor the financial resources to pump out and distribute their energy resources from the isolated and land-locked region to the principal energy markets in Western Europe and South Asia. The only existing pipelines were those of the old Soviet distribution network through Russia, which after the collapse of the Soviet Union needs massive investments to upgrade.
The economic crisis in Russia, the Taliban-backed Islamic militancy in Central Asia and the inefficiency of the Central Asian regimes have further complicated the situation. Earlier, the U.S. policy in the region was to undermine "Russia's economic monopoly while at the same time ensuring that other rivals like Iran and China were kept out of the region". The American administration throughout the 1980s spent billions of dollars funding the jehad against the Moscow-backed regime in Kabul to undermine the Soviet Union. Once the Soviets left Afghanistan, the Americans turned a blind eye to the Islamic militancy and regressive social policies of the Taliban that was backed and funded by two of its closest allies, Pakistan and Saudi Arabia. The U.S. initially tolerated the Taliban regime because it helped in the containment of Iran, and Russia's influences in the region.
But the Bush administration is now exploring the possibility of entering in a big way the new oil bazaar of Central Asia. Its plan is to bring oil and gas through pipelines via countries over which it could exert substantial political influence and bypass Russia and Iran. Both these countries have large proven reserves of oil and gas but are opposing the U.S. moves in the region. However, the oil cartels are insisting that Iran, which has the second largest gas reserves in the world and has over 93 billion barrels of proven oil reserves, be included in the future setup. Otherwise they will have to spend billions of dollars to bring oil by an alternative route under the Caspian Sea through the Caucasus via Azerbaijan and Georgia and then across Turkey, known as the Baku-Ceyhan corridor, which links this region to Europe.
The strategic location of Iran and its vast energy reserves are important in the future oil market. Iran has borders with Turkey, Turkmenistan and Azerbaijan as well as with Pakistan. Iran maintains friendly ties with Turkey and is also connected with it through an extensive pipeline network. Without spending much time and money, oil and gas from Central Asia can be transported to Europe through the Iranian route. This route is the safest and will need only $300,000 to connect Iran with Azerbaijan. Besides, Iran will have to raise additional funds to bring oil and gas through pipelines to neighbouring Pakistan and from there to India, which is the major energy consumer in South Asia. Iran also has facilities where Central Asian oil can be refined and exported. Two U.S. oil companies, Chevron and Mobil, which already have oil concessions in Kazakhstan and Turkmenistan are seeking American permission to carry out swaps with Iran.
The American "war against terrorism" has also brought about a virtual encirclement of Iran. U.S. troops are now deployed in Central Asia, Afghanistan and Pakistan. Large numbers of western troops are also present in the Persian Gulf region to protect pro-west regimes against the threat posed by internal as well as external forces. Turkey, a member of NATO, also has the presence of U.S. troops. Besides, the Americans keep accusing Iran of harbouring terrorism. Iran is also facing serious economic difficulties because of its war with Iraq and the sanctions imposed by the U.S. in the wake of the takeover of its embassy in Teheran by Islamic zealots. However, the Iranian leadership has so far resisted U.S. pressure. It has improved ties with the European Union and invited E.U. oil companies to invest in its energy sector, which needs massive foreign investments and technology upgradation. It is also demanding that Central Asian oil be routed through Iran. It is trying to settle its problems with the western nations through diplomatic means. Even during the current crisis, it has taken a "principled" stand by declaring the terrorist attack on America as a "barbaric act against the tenets of Islam" but refused to be part of the U.S.-led war on terrorism. Instead, it proposed a "dialogue with civilisation" to avert any future confrontation.
The "pragmatic" leadership in Iran has always left room for diplomatic manoeuvring. Teheran maintains friendly ties with all its neighbours including the interim regime in Afghanistan. Neither India nor Turkey has any objection to buying oil and gas from Iran. Inspite of its political differences with the West, Iran had developed economic ties with the European nations and Japan. Similarly, it wants to establish a "limited relationship" with the U.S. Clearly, the signal is for reconciliation. But the economic differences between the two are still wide. The U.S. wants uninterrupted oil supplies to western nations at an agreed price, whereas Iran is working on a strategy which gives the oil-producing nations the right to determine prices. Washington is demanding that "market forces rather than politically inspired production agreements should govern the oil market". It believes that higher oil prices cause inflation, and the world economy will slip into recession that will also hurt oil-producing countries. But, the countries of the region believe the oil market is controlled by the western nations and their interest lies in keeping the oil prices low. And as a result, most of the countries of the region are facing serious financial difficulties.
But under the changed situation with American military presence across the region, these countries will find it extremely difficult to dictate oil prices. The newly-independent Central Asian republics are desperate for cash. For over a century, these countries were ruled by the Tsars and the Soviets and remained underdeveloped. Taliban-backed Islamic militancy has further worsened the situation in the region where it is now feared that Russian domination will be replaced by American hegemony. Iran was of the view that the vacuum created by the Russian withdrawal should be filled by the countries of the region and wanted major powers including India to prevent superpower domination in this strategic region.
However, this has not happened and now the western troops have arrived in the region but the U.S. is also facing a slowdown in its economy. Now its priority is to prevent recession rather than spend billions of dollars for investments in the oil bazaar of Central Asia just to bypass Iran — a project which is not viable commercially and opposed by western oil companies. There are already moves which point to incorporating Iran in the future oil strategy of the region. Now the Americans are spread all over Central and South Asia and the American "war against terror" has also become a battle to control the energy resources of the Central Asian region.
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