Reports & Papers
from
Caspian Studies Program
Sea of Instability: Caspian Politics and Pipelines
Thomas Goltz
April 10, 2001
Davis Center for Russian Studies
Event Co-sponsored by the Caspian Studies Program and the Davis Center
Summary by Patrick McCrann, CSP Student Associate
Journalist Thomas Goltz gave a seminar on April 10 entitled, "Sea of Instability: Caspian Politics and Pipelines," and jointly sponsored by the Caspian Studies Program and the Davis Center for Russian Studies. Goltz provided his own unique perspective on the Caspian Region and its complex geo-political situation. He did this by means of a twenty-minute video presentation entitled "Oil Odyssey 2000" (of the epic delivery of the first barrel of oil, via the planned route of the Baku-Tbilisi-Ceyhan pipeline, on three-wheeled motorcycle) and a subsequent talk on the events that took place following the trip.
Video summary: The documentary (needs to be seen to be believed) candidly charts the events surrounding the attempt to transport the first barrel of "Caspian crude" from Baku to Ceyhan. The video follows 26 intrepid travelers as they wind their way (Azerbaijan, Georgia, Turkey) through the Caucasus on wheels. While the group has its fair share of misfortune (breakdowns, border crossing issues and even an unfortunate accident), the film clearly shows how the people along the way are very excited by the prospects of the pipeline— almost every stop looked like a party! A public relations coup de grace for everyone involved, Oil Odyssey manages to cover the Caucasus— from the larger-than-life leaders to the everyman to the ex-patriots (and shows how they are all willing to jump through hoops in the name of crude!)-- in its imagined mystery and hardened reality.
Seminar presentation: In a brief follow-up to the video, Goltz added that partially as a result of delivering the first symbolic barrel of Caspian crude:
- the Turkish oil establishment became more serious about the Baku-Ceyhan pipeline;
a Sponsors' Group put down approximately $25 million to fund the basic engineering studies for the pipeline (engineers are currently mapping and examining the route), which will conclude in May/June.
Support for the Baku-Tbilisi-Ceyhan pipeline has been building among the oil companies. One year ago, Goltz reminded, the Clinton administration was repeatedly sending delegations to England to lure John Brown (of BP Amoco) into sponsoring Baku-Ceyhan project. This year, the roles have been reversed, with John Brown sending delegations to Washington to convince the new U.S. administration not to change official policy on the pipeline or the Iran-Libya Sanctions Act (which might open up a new route for Caspian oil).
Goltz noted other factors that have increased the lure of Baku-Ceyhan, including significant finds of natural gas at the Shah Deniz oil fields, raising the possibility of the construction of a parallel pipeline (without extra engineering cost) and the discovery of "historic levels" of hydrocarbon levels in the Kazakh section of the Caspian sea (Kashagan). This, followed by the unexpected announcement by Nursultan Nazarbayev (President of Kazakhstan) to commit a significant portion of the oil from this field to the Baku-Ceyhan pipeline, has also raised interest. Rumor also has it that there is a split between the Russian Federation and the Russian oil oligarchs operating in the Caspian, who might want BTC as an option for exporting their product.
Goltz identified both regional and local security as important concerns both in policy towards the pipeline and in the region on the whole. On a regional level, there are the continuing Caucasus conflicts (in Ossetia and Abkhazia, for example). On the local level, there are the drastically reduced social conditions outside of the capital cities. Goltz notes that the rural/urban dichotomy in the Caucasus is perhaps more pronounced now than ever before, citing Yerevan as the most extreme example. Goltz noted that the current debate on Armenia is focused on when it will go from a dying state to a dead one-in other words, when there is no one left, because of massive emigration.
Goltz also pointed to the Russian Federation's decision to impose the visa regime upon Georgia as a potential catalyst for regional change. He theorizes that the estimated 500,000+ Georgians will now de facto become loyal towards the Russian state as it is providing them with the means to live. The same process of out-migration is occurring in Azerbaijan, where an entire generation of youth has left the provincial cities for Russia to try and make a living.
According to Goltz, the oil companies are picking up the "social slack" in an attempt to compensate for this phenomenon. They are providing services (schools, wells, drinking water, etc.) in what Goltz terms "enlightened self-interest"— as they do not want to see a revolution on their hands.
Q & A Session: In response to a question about where the final pipeline will actually end up (i.e. is there a chance it will go through Armenia because of the Bush administration's design), Goltz recalled the initial stages of the Baku-Ceyhan project in 1992, when Armenia was prepared to drop the issue of "genocide" under the Ottoman Empire to have the pipeline go through its territory. Even though that didn't happen, Goltz pointed out that Turkish and Armenian officials do have some sort of a dialogue, and that the U.S is indeed promoting the dialogue heavily. Even though he views this exchange as positive, Goltz expressed no real hope for an impending resolution.
Goltz expressed doubt that the pipeline might be moved, as logistically so much has already been done to get the project to its current engineering phase that drastic changes would ultimately reshape the entire endeavor.
Goltz explained BP's turnaround on Baku-Ceyhan as being simply a matter of the number crunchers in London deciding that the Caspian region will play a serious role in BP's future (as it views itself over the next two decades).
When asked if the Armenian route is purely geographically better, Goltz answered that of course the easiest route would be across Karabagh and Armenia— every inch you shorten the pipeline, the more money you save (cutting out swaths of pipeline). However, we can't simply eliminate all of the politics surrounding the situation that prevent this scenario from taking place.
Goltz noted that there is a general need to separate U.S. policy from that of the mega-nationals (oil companies). He hinted that there is more enthusiasm on the part of oil companies right now, and not the U.S. government. And if the Russian Federation had been able to get their act together in the late 80s / early 90s and hadn't broken contracts and deals made on Siberia, the oil companies wouldn't have traveled down to Baku in the first place. Of course now corruption in Azerbaijan is forcing some companies to reconsider their position. While Iran would be geographically easier (to transport oil) than even Armenia, there remains the issue of which Iran are you dealing with (there are many levels). It is far easier to work in Azerbaijan, where once you have Aliyev's support, anything will get done.
When the topic of presidential succession arose, Goltz mentioned that Ilham (President Aliyev's son) has not mentioned anything about running for presidential office in 2003. In fact, Goltz offered that the most likely scenario would involve someone else assuming office first, so that this person could make all the mistakes and then Ilham could come to the 'rescue'.
Goltz also discounted the "certain chaos" that will supposedly occur after Aliyev is gone. Instead he feels there will be a credible succession, most likely led by someone who is studying abroad and interacting with the West.
In response to a question regarding apparent discrepancies in statements make by President Aliyev and his son on issues as Armenia and Russia, Goltz offered the point that Azerbaijan is essentially a friendless state. It has to keep as many balls up in the air as possible -- leading the Mr. Aliyevs to say whatever is necessary to keep other nations involved and interested in Azerbaijan. Things such as Section 907 and the embargo of Armenia, both of which prevent the U.S. and the E.U., respectively, from becoming true friends of Azerbaijan, bolster this position.
Goltz dismissed the idea that underground movements in Azerbaijan will rise up to lead the large refugee population to recapture Armenian-occupied territory. In his opinion, while the refugee population wants its land back, it also simply wants peace. Goltz feels that Aliyev successfully neutered much of the pro-war opposition by having the three current peace proposals translated into Azeri, published in the newspapers and forcing his opponents in parliament to debate the possibilities.
Unfortunately, the Azeri government has ignored the refugees, both financially and socially. The refugees are an uprooted and socially displaced group that lacks ties to formal Azerbaijan— this is one of the reasons why there are so many young men leaving for Russia to find work. At the same time, however, the only people talking about war are power-thirsty politicians from Baku who have never been to the regions and are not in touch with current refugee sentiments. Refugees are more concerned with living day-to-day than they are with mounting an armed attack on occupied territory.
When asked about the refugee population's thoughts on the possibility of resettlement, Goltz agreed that the people are, by necessity, settling down. As each year passes, they take more steps towards solidifying their current living situation simply as a means of survival. Of course, in all refugee situations, governments are reluctant to endorse permanent settlement as it means forsaking their occupied territory.
There is a strong resentment towards the U.S.-- as it has been involved in many of the processes (democratization, etc.) that have changed Azerbaijan significantly from its former communist self, yet there have been no obvious improvements in the average person's living situation. The people are becoming frustrated with the "let's wait a little while longer" approach, as there has been no sign of trickle-down from oil investments and foreign aid.