Tapping into a pipe dream
It is in America's interest to help rid Kazakhstan of corruption and lack of transparency

S. Rob SOBHANI

One of former President Clinton's legacies is America's ill-conceived policy toward the oil-rich Caspian Sea region. It is a policy that is aimless at best, fostering subservience to Moscow's lingering expansionist tendencies. One can easily see the blind eye Mr. Clinton turned toward Russia and the deference with which he treated former President Boris Yeltsin when one looks at our non-policy vis-a-vis the Caspian region. The Bush administration has an opportunity to redirect a major component of our post-Cold War policy by preventing the re-absorption of this vital region into the Russian orbit.

We cannot overlook this historic battleground of the 19th century "Great Game," nor should we turn our back on Azerbaijan, the one country that has been Washington's steadfast ally since the breakup of the Soviet Union. Similar in size to South Carolina, oil-rich Azerbaijan is at the epicenter of the Caspian Sea region drama. According to the Energy Information Administration, by the year 2020, the United States will import 64 percent of its crude oil needs compared to 51 percent today, or 25.8 million barrels per day in 2020 versus 19.5 million barrels per day in 1999. Given America's worsening energy security, it is crucial for our decision-makers to secure dependable sources of oil. Although the Caspian Sea region is not as prolific as the Persian Gulf, it contains at least 10 percent of the world's oil reserves (an amount equal to five times U.S. oil reserves). Daily Caspian Sea production is projected to reach 5 million barrels by 2005. With a possible 100 billion barrels of reserves, the Caspian Sea region could be a dependable source of oil for the West for the next 4 decades. Oil projects signed thus far in Azerbaijan alone are expected to produce more than 2 million barrels per day - roughly equivalent to what the U.S. imports from OPEC's Arab members.

Russia, however, views the U.S.-Caspian Sea partnership, forged through oil, as a dual threat - the Caspian Sea region's break from Russian domination and U.S. ascendancy in Russia's traditional zone of influence. Russia's continuing strong-arm tactics in the Caspian Sea region and eight years of drift require some specific responses from Washington. First, the Bush administration should give top priority to the goal of uninterrupted development and transportation of Caspian Sea oil and gas to international markets.

Pipelines through Russia should not be the sole option for exporters because Moscow uses transport interruptions to strong-arm its pipeline customers. Washington should give its full support to the completion of the Baku-Tbilisi-Ceyhan oil pipeline and Trans-Caspian Gas Pipeline from Turkmenistan to Turkey. Support for these pipelines will anchor American interests in the region. Incoming Energy Secretary Spencer Abraham has referred to the Baku-Tbilisi-Ceyhan pipeline as a "pipe dream." But this is one dream that must become a reality in order to ensure Western energy security.

Second, President Bush must sign a waiver lifting the congressional ban on direct aid to Azerbaijan otherwise known as Section 907 of the Freedom Support Act. Mr. Clinton promised Azeri President Aliev that he would remove this discriminatory piece of legislation but he failed to keep yet another promise. By correcting the omission of his predecessor, Mr. Bush would help alleviate the suffering of the 1 million Azerbaijani refugees who have been uprooted from their homes as a result of the war with Armenia over Nagorno-Karabagh. Perhaps the most compelling reason to lift Section 907 is that the act deliberately harms a country that has never extended anything to the United States except friendship and economic partnership.

Third, Mr. Bush should launch a high-level diplomatic initiative to settle the Armenia-Azerbaijan conflict, which, if left unsolved, could prove to be the Achilles heel of the Baku-Tbilisi-Ceyhan pipeline. Unfortunately for Armenia and Azerbaijan, Mr. Clinton was never serious about resolving this dispute lest he upset the "friendship" he had crafted between Mr. Yeltsin and himself. While Russian policy since the outbreak of this land dispute has been frozen in stability, Washington must make its insistence on an immediate settlement clear to Moscow. Furthermore, Washington must show resolve and tie current Armenian aid to Yerevan's return of occupied Azeri territory outside Nagorno-Karabagh. In the end, the United States must strike a balance between the territorial integrity of Azerbaijan and the right of Armenians in Nagorno-Karabagh to self-determination within the boundaries of Azerbaijan.

Fourth, the new administration should support Georgia and President Shevardnadze because a Georgia destabilized by external or internal forces would be a severe blow to the viability of the Baku-Tbilisi-Ceyhan pipeline.

Finally, it is in America's interest for the Bush administration to work with the governments of Azerbaijan, Turkmenistan and Kazakhstan in order to rid them of two of the most entrenched legacies of Soviet communism: corruption and a lack of institutional transparency. Instead of lecturing countries like Azerbaijan, the United States should work with their governments to provide the institutional transparency required to enable these countries to reach their economic potential. The enormous hydrocarbon reserves of these sparsely populated countries are worth a potential $2 trillion, certainly a reliable market for American goods and services well into the 21st century.

The oil-rich Caspian Sea region is poised to become a major source of energy for the West. The key question is: Will the United States at last begin to act in a more far-sighted and proactive manner, so as to position itself as a major player in what promises to be one of the primary energy plays of the 21st century?