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Caspian Basin Pipeline Politics

By Nik Novak and Eric Halvorson
A class project by students in International Environmental Problems & Policy
(Geography 378, Fall 2002, University of Wisconsin-Eau Claire, USA)
Assistant Professor of Geography Zoltan Grossman grossmzc@uwec.edu
(715) 836-4471
P.O. Box 4004,
Eau Claire, WI 54702 USA

There are four main proposed pipeline routes from the Caspian Basin region--each with their unique geographical and political problems. This page focuses on the political aspects of this multifaceted problem. For most of human history, this region has been a highly contested area. This was true in ancient times and it is true in present times. With the industrialized world's increasing dependence on oil and the discovery of vast reserves in the Caspian Sea, political tension has only intensified.

Read more about Caspian Sea pipelines

Since the fall of the Soviet Union in 1991, (historical background) a wide array of governments and international oil consortiums have descended upon the Caspian Sea Basin to plunder its land-locked crude oil. Conservative estimates place Caspian mineral wealth at 100 billion barrels--roughly $2 trillion worth--while other estimates suggest figures twice as high. Participants in extraction include, chiefly, the United States, Europe, Russia, Iran, and China. All parties wish to extract as much of the wealth for themselves as possible and to control transport of said fuel. In a world dependent on oil, the construction of pipelines means investment, jobs, long-term access to natural reserves, transit fees, and political and economic leverage. Periphery arguments for extraction include the creation of free markets and expanded democracy for the Caspian region.

The U.S., which imports nearly half the world's crude oil, will likely become the region's most influential force. Ian Bremmer writes: "American firms hold substantial percentages of nearly every major Caspian consortium agreement, and have rights over almost every major field presently under exploration or development. Their goals have been straightforward: get the oil out by any (and preferably all) means possible--quickly, safely, and cheaply." But getting the oil to market will prove no small task. The geopolitical climate offers no clear solutions. The cheapest and most efficient pipeline route cuts south through Iran. However, Iran has earned a spot on President George W. Bush's "Axis of Evil" hit-list and is subject to the Iran-Libya Sanctions Act (ILSA), passed by Congress in 1996. The U.S. will likely stifle any attempt to pump Caspian oil through Iran.

Russia, meanwhile, still controls old Soviet infrastructure which runs through the Caucasus and the republics of Central Asia. Russia is Europe's chief oil exporter and wishes to regain hegemony over its lands and resources. The U.S. regards Russia with a muddled eye: It sees her as both a competitor and a strategic ally in stabilizing the Caspian Basin. Existing oil pipelines from the region run to European Russia. One runs through the Muslim region of Chechnya, an ethnic minority republic that tried to secede from Russia, until Russian forces invaded and crushed Chechen rebels in 2000.

China also wishes to gain a hold on Caspian oil. With its burgeoning population and rapid introduction into the world economy, China requires greater resources than can be attained by rail. The proposed pipeline across Kazakstan would travel 5300 miles and cost $9.5 billion. The U.S., Europe, Russia, and Iran would just assume it not go that far east.

The U.S. seeks to transport oil through Turkey. Though a NATO ally, Turkey promises an expensive pipeline route (the Main Export Pipeline, or MEP) which winds westwardly from Azerbaijan's capital of Baku, through war-torn mountain regions, to the Mediterranean port of Ceyhan. Kurdish troubles in southeastern Turkey, contingent on Turkey's acceptance into the European Union and a looming war with Iraq, pose other difficulties for the MEP.

However, the U.S. has suggested an alternative, easterly route which would transport Kazak oil through Afghanistan to the port of Karachi, Pakistan. The route is currently stalled due to war and general instability.

Read more about Caspian Sea pipelines

The U.S. State Department under President William J. Clinton called the Baku-Ceyhan oil pipeline (also known as Baku-Tbilisi-Ceyhan, or BTC) a "cornerstone" of its foreign policy for the Caspian region. The current Bush administration remains equally supportive of the proposed pipeline.

"The political allure of the BTC project for the United States is self-evident," writes Mark Berniker. "The BTC pipeline could deny Iran a significant role as a Caspian energy exporter; reduce the dependence of the Caucasus and the Central Asian states on Russian pipelines; and bolster fledgling regional economies, especially those of Azerbaijan, Georgia, and Turkey."

In particular, the U.S. supports Turkey, a NATO ally and a staging point against Iraq. The U.S. has pushed hard for Turkey's admittance into the European Union, hoping the move would garner much-needed consensus for a pre-emptive strike. Says Deputy Defense Secretary Paul Wolfowitz: "Turkey offers a valuable model for Muslim-majority countries striving to realize the goals of freedom, secularism, and democracy."

But support for the BTC would deny oil to Russia and almost certainly pit the U.S. against Russia, whom it depends on for regional stability. Not insignificantly, Turkey proclaims neutrality on the Chechen issue, while at the same time it trains and supports Muslim rebels against the Russian government.

The rest of the BTC pipeline proves no less complicated. It skirts the Kurdish region of southeastern Turkey where Kurds occasionally rise up and assert their right to independence. Turkey has put down such efforts militarily, and has consequently been subject to allegations of human rights abuse. (The same abuses have stifled Turkey's admittance into the EU.)

Turkey also fears an influx of Iraqi Kurds should the U.S. lead a war to annihilate Saddam Hussein. (More than a million refugees entered Turkey and Iran following the Persian Gulf War attacks in 1991.) Turkey does not care to house a hostile Kurdish population, especially considering the poor state of its economy.

The BTC thus runs north and east into neighboring Georgia (near the war-torn Abkhazia region) and near the disputed territory of Karabakh, home to an enclave of Armenians within mountainous Azerbaijan. The locals of said territory have been killing each other since at least 1923, though they negotiated a ceasefire nine years ago. The conflicts have left more than a million refugees in Azerbaijan.

During the mid-1990s, the U.S. State Department estimated Azerbaijan's crude reserves at 50-200 billion barrels. The numbers were eagerly inflated in an effort to entice investors and secure control over Caspian oil. The government at Baku, meanwhile, run by President Heydar Aliyev (a former KGB general and Communist party boss) and his "royal family," milked western consortiums for all it could get. Later, when oil drilling explorations discovered reserves of approximately 5-15 billion barrels, many of the multinational firms withdrew their support. Aliyev made off like a bandit, much to the chagrin of Azeri people who saw little, if any, economic benefit.

Despite the demise of Azeri mineral wealth, the U.S. continues its search across the Caspian in hopes of transporting Kazak oil. Notes Laurent Ruseckas: "Given the project's importance as the symbol of U.S. commitment to the region, and as part of the mortar holding together the emerging 'Baku-Ceyhan' axis, a retreat at this stage would be very difficult, potentially destabilizing, and destructive to American credibility."

Should Kazakstan's reserves prove more abundant, the BTC may again achieve prominence. However, many conglomerates remain leery of proposed expenses, including the cost required to lay oil pipelines on the Caspian Sea floor between Kazakstan and Baku.

Soon after winning the election Russia's president Vladimir Putin's "Near Abroad" political program began to focus on the Caspian Sea oil reserves. According to Carol R. Saivetz, "On April 21, 2000 the Caspian was one of only two topics discussed by the Russian Security Council." Also during this meeting Putin create a special position focusing on Caspian affairs. It is safe to conclude the Caspian Sea was very important to Putin's political goals.

If Russia wants to exert significant political power in the Caspian region there are a few obstacles they need to get around first. To start with, once the Soviet Union dissolved in 1991 Moscow lost a large portion of territory surrounding the Caspian Sea. Also during this time other countries were actively seeking to reap the economic benefits of the region. Russia objected to their moves and claimed the Caspian Sea to be an inland lake. This clever ploy changes to legality for obtaining the resources by which all littoral states must now agree upon any projects before they could go forward.

The United States is another obstacle for Russia. The United States would like any potential pipeline to avoid both Russia and Iran. Putin is determined to raise Russia back to its former position of power in the world and, if he can avoid the pitfalls, Caspian resources might help him do so.

When the Soviet Union collapsed in 1991, so too did Kazakstan's economy. Kazak President Nursultan Nazarbayev, not wishing to be overthrown, decided to stir his addled economy by tapping oil reserves located beneath the Caspian steppes. He received immediate assistance. Russia offered to construct a pipeline connecting Kazakstan to the Black Sea. China proposed a 5,300-mile line to transport crude east. Iran suggested a shorter alternative route south. But Kazakstan, closely allied with the U.S. government, seemed most interested in a Unocal-led deal that would move oil southeast and out through the Pakistani port of Karachi.

While the U.S. argued for free markets, it set about securing economic and political control over much of Central Asia. Turkmenistan, irritated by Russian measures to divert its oil without adequate compensation, gladly agreed to connect its existing oil rigs with those of Kazakstan. The rest of the Unocal-proposed pipeline, however, suffered from a myriad roadblocks. Afghanistan in particular was fraught with corruption and age-old warlord squabbling. The U.S. sought assistance from Afghanistan's most stable regime, the Islamic fundamentalist Taliban, which seized power in 1996. The U.S. provided help to the Taliban in hopes it would establish some sort of control in the war-torn region. But the Taliban also gave assistance to extremist groups such as Osama bin Laden's al-Qaida. When al-Qaida agents destroyed two U.S. embassies in Africa in 1998, Washington lost its patience with the Taliban. In his 1998 testimony to Congress, the Unocal vice president expressed disappointment.

In October 2001, after al-Qaida attacked the Twin Towers and the Pentagon, U.S. forces invaded Afghanistan and, with the help of the ethnic-Tajik Northern Alliance, set out to destroy the Taliban. Inserted as interim Afghan president was Pashtun leader Hamid Karzai, a former top advisor to Unocal who had negotiated with the Taliban in an effort to construct a Central Asian pipeline. Karzai's would be a tough road to hoe, as the U.S. continued to fund (and still does fund) local warlords to snuff out al-Qaida cells.

Should Afghanistan ever stabilize long enough to secure western development, the U.S. faces another challenge in Pakistan. Writes Ted Rall: "The State Department inexplicably cozied up to this snake pit of anti-American extremists, choosing a nation led by a dictator who seized power in an illegal coup as our principal South Asian ally." Pakistan is of course the nearest sizable port east of Ceyhan, Turkey that does not run through Iran.

On May 30, 2002, Pakistan's president General Pervez Musharraf signed a deal with Karzai and Turkmen President Saparmurat Niyazov to lay plans for a 900-mile gas pipeline. Likewise, President Nazarbayev has been working to secure oil and gas agreements between Kazakstan and India.

Pipeline construction through Afghanistan, meanwhile, remains stalled. Unocal has exited the region entirely, closing offices in Kazakstan, Pakistan, Turkmenistan, and Uzbekistan, retaining operations only in Azerbaijan. Though the U.S. wants badly to tap into Caspian oil reserves, U.S. firms clearly are skeptical of investing in an Afghan pipeline while the region is so unstable.


Ian Bremmer, "Oil Politics," World Policy Journal 15 (Spring 1998): 27-35.

Vincent P. Bonner, "TED Case Studies: Kazakhstan and Oil"; available from: http://www.american.edu/ted/kazakh.htm

Mark Berniker, "As Baku-Ceyhan Construction Date Nears, Debate Continues Over Project's Viability," Business and Economics (4 December 2002); available from: http://www.eurasianet.org/

Dexter Filkins, "Turks, Fearing Flow of Refugees, Plan Move Into Iraq," New York Times (23 November 2002).

Thomas Goltz, "The Caspian Oil Sweepstakes," Nation 265 (17 November 1997): 18-21.

Michael R. Gordon, "U.S. Presses Turkey's Case on Europe and Cyprus Issues," New York Times (3 December 2002).

Mark Jacobson, "Big Oil Comes to Baku," Natural History 108 (March 1999): 54-68.

Laurent Ruseckas, "U.S. Policy and Caspian Pipeline Politics: The Two Faces of Baku-Ceyhan," in Succession and Long-Term Stability in the Caspian Region (Cambridge, MA: BCSIA, 2000).

Michael Lelyveld, "Kazakhstan: Talk of Oil Pipeline Through Afghanistan Seen as Premature," EurasiaNet Business and Economics (17 February 2002); available from: http://kazhegeldin.addr.com/english/engl_18_02_02.html

Ted Rall, "Bush Fuels Oil Conspiracy Theory," (10 January 2002); available from: http://www.alternet.org/story.html?StoryID=12205

Ted Rall, "The New Great Game: Oil Politics in Central Asia," (11 October 2001); available from: http://www.globalissues.org/