The Crux of the Matter
Alfred Mendes looks at the common thread running through more than a decade of American military - and political - interventions.
There is an unmistakable thread running through America’s move eastward since the collapse of the Soviet Union in 1991. Using their vast economic clout - in the form of loans, grants and sanctions - and backed by threatening military supremacy (to say nothing of the devious use of ‘unattributable’ mercenary groups such as the MPRI), the Americans accomplished two objectives:
(a) dismembered federal Yugoslavia, thus delivering a death-blow to the last country in Europe still -in their eyes - tainted with ‘communism’; and (b) the instability in the region which this inevitably created, supplied them with a reason/excuse for maintaining a strong military presence there, in the form of Camp Bondsteel in Kosovo (built by Brown & Root, of whose parent company, Halliburton, the present Vice President of the US Dick Cheney was CEO). It is worthy of note that Camp Bondsteel was situated within easy striking distance of the $826 million Trans-Balkan oil pipeline, known as Corridor 8, the construction of which had been awarded by the US Trade & Development Agency (of whom more later) to the Armenian-Macedonian-Bulgarian Corp (AMBO), following a feasibility study by the same Brown & Root.
This pipeline would carry Caspian oil westwards, thereby circumventing the crowded Bosphorous, and, as such, would be a crucial - though dependent - component of the ‘unmistakeable thread’ mentioned in the opening sentence of this article. This implied ‘dependency’ merely reflects the more crucial importance of the vast oil reserves of the Caspian/Near-East region which would feed Corridor 8 (among others). Indeed, it is particularly important to view America’s role in this Near-East region in some detail if we are to gain an understanding of its objectives in the present impasse in which it has enmeshed itself. And there can hardly be a more effective means of doing this - than by examining relevant reports/papers of some of its administrations’ departments: words that come ‘straight from the horse’s mouth’ as it were. Of necessity, these reports must cover the period following the collapse of the USSR in 1991, inasmuch as it was only then that the USA could gain access to the critical Near-East and Balkan regions, thereby consolidating their already well-established dominance over the Mid-East/Gulf region. And what better organisation to start with than the Trade & Development Agency (TDA), set up in 1981 - and which, in 1991, had been authorised to operate in the New Independent States of the ex-USSR. It clearly sets out its aims in its May 2001 report: “The Trade & Development Agency (TDA), an independent US government agency, provides funding for US companies to conduct feasibility studies on major projects in developing and middle income countries ...TDA promotes economic development, while helping the US private sector get involved in projects that offer significant export opportunities”... Then adds that...“Exports of goods and services related specifically to those projects already total over $1,2 billion”. Their 2000 report dealing with the TransBalkan Corridor 8 pipeline adds: “The longest lasting impact we can have is to bring US technology & investment to the Balkans through our private sector...While at the same time ensuring that American businesses have a fair shot at winning associated contracts”.
Disregarding the fact that there can not possibly be an ‘independent’ government agency - privatisation would now be ‘the order of the day’.As of September 2001, The TDA has provided $12,357,683 funding for US companies to conduct feasibility studies in the following Near-East states: Armenia, Azerbaijan, Georgia, Kazakhstan, Krygystan, Tajikistan, Turkey & Uzbekistan. This region is of pivotal pertinence to this article as it is the source of large reserves of that money-making industry - oil and gas. And it need hardly be added that it is the one industry which has attracted the most attention from the Americans (in particular) - and understandably so. In the report of the year 2000 of the Energy Information Agency (of the US Department of Energy):
“The Caspian Sea region’s oil & gas potential has attracted much attention since the break-up of the Soviet Union. The nations in the Caspian Sea region - Azerbaijan, Iran, Kazakstan, Russia, Turkmenstan & Uzbekistan - are already major energy producers...The Caspian Sea is 7 hundred miles long & contains 6 separate hydrocarbon basins”. Further, “the lure of these resources has drawn in foreign direct investment, which increased from $15 million in 1993..to $1.6 billion in 1998, equivalent to about 40% of Azerbaijan’s GDP.”... “And to encourage additional investment, President Aliyev (of Azerbaijan) has signed numerous treaties protecting the rights of foreign investors.” Azerbaijan, “the oldest known oil-producing region in the world experienced an oil boom at the beginning of the 20th century and later served as a major refining center in the former Soviet Union.” “Nagorno-Karabakh had been an autonomous region under Soviet rule. Soon after Azerbaijan’s independence Armenian separatists declared control of Nagorno-Karabakh”...and ..“displaced almost a million Azeris from about 20% of Azerbaijan.” This led to a bloody war, as a result of which “The United States passed Section 907 of its Freedom Support Act (FSA) in October 1992, restricting US government assistance to Azerbaijan.” A ceasefire was declared in 1994 and “in October 1998 US legislation... permitted exemptions to Section 907 of the FSA for democracy assistance, humanitarian assistance, prevention of the spread of weapons of mass destruction, as well as programs of the US Foreign Commercial Service, the US Export-Import Bank, the Overseas Private Investment Corporation, OPIC.” (OPIC’s funds were controlled by the Soros Private Fund Management). “In what was described as ‘the deal of the century’, The Azerbaijan International Operating Company (AIOC) signed an $8 billion, 30 year contract in September 1994 to develop 3 Caspian Sea fields...with total reserves estimated at 3.5 billion barrels.”.. Holdings of the AIOC were as follows: BP 34.1%; TPAO 6.7%; Itochu 3.9%; Statoil 8.6%; Lukoil 10%; SOCAR (Azerb.) 10%; Delta-Hess 2.7%; Pennzoil 5.6%; Exxon 8%; Unocal 10.3%. (It is pertinent to add that James Baker [ex-Chief of Staff under Reagan, & ex-Secretary of State under Bush snr.] acted as legal representative for the AIOC).
“At the end of September 1998, Azerbaijan began the privatization of its first major energy enterprise, the Baku gas liquification plant. In addition, President Aliyev issued a decree privatizing the International Bank of Azerbaijan in November 1998.”
“Azerigaz has signed agreements with both Statoil and Royal Dutch/Shell to help Azerbaijan to develop and export its gas.” While on the subject of Azerbaijan, it is pertinent to note that, as
reported in the Azeri newspaper ‘Azadlyg’ of 6th of January 2000: (1) John Sununu (ex-Chief of Staff under Bush snr. and shareholder in the US RV Investment Group exploiting gold mines in Azerbaijan) had been an adviser to the Azeri government, while doing his best to persuade US Congressmen to lift the Section 907 ban on Azerbaijan (noted above); and (2) George Shultz
(ex-President of Bechtel Group & ex-Secretary of State under Reagan), while on tour trying to persuade Azerbaijan to adopt a gas pipeline project, went so far as to refer to President Heydar Aliyev as Azerbaijan’s ‘George Washington’!
Georgia: Since its independence from the USSR in 1991, it has suffered from civil conflicts as a result of separatist struggles in Abkhazia, and South Ossetia - to say nothing of the more recent conflict along its border with Chechnya. “Although Georgia is a member of the Commonwealth of Independent States (CIS)...President Eduard Shevardnadse announced in February 1999 that his country would withdraw from the CIS’s Collective Security Treaty. Integration with the west is moving forward, and President Eduard Shevardnadse’s victory in the October 1999 parliamentary election was widely seen as a referendum on the president’s pro-western policies.” “On March 8th 1996, the presidents of Georgia and Azerbaijan signed a 30-year agreement to pump some of AIOC’s ‘early oil’ along a western route to the Georgian Black Sea port of Supsa. The Georgian International Oil Co., a subsidiary of the AIOC, upgraded the existing pipeline along this route and built the Supsa terminal on the Black Sea at a cost of $565 million. The pipeline became operational in April ‘99.”
On June 26th 1997, Houston-based Frontera Resources Corp. signed a contract with the Georgian State Oil Co., Saknavtobi, to develop the Kura Basin and build a petroleum refinery near Tbilisi (the holdings were: Saknavtobi 50%; Frontera 30%; & Amerada Hess Corp. & Delta Oil Central Asia Ltd. 20%) - and the funding for same would be assisted by a $60 million loan from The European Bank for Reconstruction & Development. It is pertinent to note some
of the more well-known names of Fronteras’ Board members: Chairman William H. White (ex Deputy Sec. of Treasury under Clinton); President/CEO Steve Nicandros (ex-Pres. Conoco Int’l Operations); and Advisers John Deutch (ex-CIA Dir.) & Lloyd Bentsen (ex-Treasury Sec.). “A coup attempt in 1998 led the chairman of the National Independence Party to call for NATO or the United States to station a military contingent in Georgia to protect Caspian oil transport. In December 1998, representatives from the GUAM Group (Georgia, Ukraine, Azerbaijan, Moldova) held talks about setting up a special peacekeeping force to protect the oil export pipelines, with NATO to set up this force within the framework of the ‘Partnership for Peace Program’, which was established by NATO to strengthen ties with former Eastern Bloc and former Soviet states.” The courtship between the ‘communist’ Shevardnadse and the capitalist James Baker from the days when the former was Foreign Minister and the latter Secretary of State would now end in wedlock! “Kazakhstan is important to world energy markets because it contains significant oil & gas reserves”...and... “is the second largest oil producer among the former Soviet republics- after Russia. Kazakhstan has opened its resources to development by foreign companies... ‘production sharing agreements’ (PSA’s) & exploration/field concessions. By far the largest of these is the TengizChevroil joint venture.”
“In April 1993, Chevron completed a historic $20 billion, 50/50 joint venture deal with Kazakhstan to create the TengizChevroil to develop the Tengiz oil field, estimated to contain 6 - 9 billion barrels of oil.”..“In April 1996, Mobil announced that it had purchased from the Kazakhstan government a 25% share in the consortium developing Tengiz.”
“Conoco is moving forward with a plan to ship 1.5 million metric tons of liquid natural gas (LNG)/ year from Kazakhstan and Turkmenestan across the Caspian to Baku, where it would then be shipped by rail to Georgian ports.”....“Conoco has set up a joint venture with Georgia’s Ajargazi railway and a Turkish partner, and has also spent $600,000 to install facilities at the Georgian port of Batumi.” In November 1998, Russia approved the construction of the Caspian Pipeline Consortium (CPC) 900 mile, $2.3 billion pipeline from the Tengiz oil field to the Black Sea port of Novorossisk. “CPC members include Russia (24%), Kazakhstan (19%), Chevron (15%), LukArco (12.5% [Russia/US]), Mobil (7.5%), Rosneft-Shell (7.5% [Russia-UK/Netherlands]), Oman (7%), BG (2% [UK]), Agip (2% [Italy]), Kazakhstan Pipeline Ventures (1.75%), and Oryx (1.75% [US]).” (Note: the ubiquitous National Security Adviser to Bush jnr., Condoleezza Rice, sat on Chevron’s board from 1991 to 2001).
From testimony of Robert W. Gee, Assistant Secretary for policy of the US Department of Energy to the House Committee on International Relations: “Total foreign direct investment in Kazakhstan’s oil & gas sector from 1991 through 1996 was approximately $2 billion. Total commitments for new, future direct investment in Kazakhstan’s oil & gas development now stands at over $35 billion...TengizChevroil... reported profits of $80 million - up from only
$1 million in 1995.”
“Mobil, Shell and Chevron are conducting a feasibility study on building a pipeline from Aktau, in western Kazakhstan, to Baku.”“Kazakhoil, Katransoil, British Gas, Lukoil, AGIP and Texaco have signed an agreement to construct a new 285 mile pipeline to transport the condensate from Bolshoy Chagan to Atyrau, where it will connect with the CPC pipeline.”
“Turkey’s strategic location makes it a natural ‘energy bridge’ between major oil producing areas in the Middle-East and Caspian Sea regions on the one hand, and consumer markets in Europe on the other. Turkey’s port of Ceyhan is an important outlet both for current Iraqi oil export as well as for potential future Caspian oil exports.”
“In late June 1998, the Turkish government signed an unconvential 18-month agreement with the IMF in which Turkey pledged to cut its inflation rate to 50% by year-end 1998, and to 20% by year-end 1999. Under the deal, the IMF is to monitor and endorse Turkey’s economic policies...In particular, the IMF is pushing for reforms in banking, agriculture, social security, and privatisation. In July 1999, the Turkish government agreed to a controversial privatisation agreement to article 47 of their constitution, which regulates nationalisation permitting private entities to be taken over by the government...This could help pave the way for multi-billion dollar energy investments in Turkey.”(It would seem that the Turks are facing a similar situation today, in March 2003!!!). “Turkey has been attempting to show that the Baku-Ceyhan line is cost-competitive compared to alternate routes. In late May 1998, former US
Secretary of Energy, Federico Pena, during a trip to Turkey, reiterated US support for this plan.”
“Turkey’s sole private refinery is ATAS, near Marsin on the Mediterranean coast, a joint venture of Mobil (51%), Shell (27%), British Petroleum (17%) and local Marmara Petrol ve Rafineri Islem AS (5%).” A Turkish consortium won a bid “to construct the 46 inch, 160 mile pipeline from Dogubayazit, on the Iranian border, to Erzurum” - to carry Iranian gas.
This “brought criticism from the US for political reasons. The deal also initially appeared to violate the Iran-Libya Sanctions act (ILSA)...However, because Iran will only receive transit fees for moving the gas to Turkey, the United States determined that Turkey was not in violation of the ILSA”
“Turkmenistan is important to world energy markets because it contains over 100 trillion cubic feet of proven natural gas reserves, the third largest in the world.”..and...“After declining during the early 1990’s, Turkmenistan’s oil production has been steadily increasing since 1995.”
“In March 1998, the UK’s Monument Oil (which has since been taken over by Lasmo Oil) reached an agreement with Iran’s National Iranian Oil Co. (NIOC) to provide oil from the offshore Burun field in western Turkmenestan to the northern border of Iran and swap it for oil to be exported from the Persian Gulf.”.. Stakes in the Burun field: Lasmo (35%), Mobil (40%), & Burren Energy (25%). “The oil swaps began in late July 1998”, although, because “Mobil is barred by US law from trading with Iran...in April1999, the request was formally denied.”
“In July 1998, Monument Oil signed two ‘production sharing agreements’ (PSA’s) with Mobil and Turkmeneft... Mobil is the operator, holding a 52.4% interest, Monument with 27.6%, and Turkmeneft with 20%. By 2001, Mobil & Monument are expected to invest $100 million conducting seismic surveys and drilling appraisal wells.”
A dispute arose between Turkmenistan and Azerbaijan over the the offshore Serdar oil & gas field, and “in June 1998, Mobil won the right..to develop the field”..but “announced that it would not sign an agreement with Turkmenistan or begin work on the field until the two countries settle the dispute. US special envoy for Caspian energy issues Richard Morningstar made a visit to the two capitals in May 1999, and presented US ideas on resolution of the dispute.”
“As part of its strategy to increase natural gas exports, Turkenmenistan is developing alternatives to Russia’s pipeline network. The most important proposed project is the Trans-Caspian Gas Pipeline (TCGP), which would run from Turkmenistan under the Caspian Sea to Azerbaijan, through Georgia, and deliver its gas supply to Turkey.”....“Shell endorsed the TCGP plan in August 1999...and agreed to take a 50% stake in the pipeline, with the rest being held by the pipeline developer PSG (a joint venture between Bechtel & GE Capital)”... “Turkish and American officials have strongly supported the TCGP, including a visit by US Secretary of Energy, Bill Richardson, (ex-US UN representative under Clinton) to Turkmenistan in August 1999 to promote the project....and the US Export-Import Bank and Overseas Private Investment
Corp. OPIC (see above) have pledged to assist with guarantees.”
“In July 1997, officials from Turkmenistan and Pakistan and representatives from Unocal & Saudi Arabia’s Delta Oil signed an agreement to build the Turkmenistan-Afghanistan-Pakistan line” (900 mile long; cost of between $2 billion & $2.7 billion). “In October 1997, Unocal (of California) set up the Central Asian Gas Pipeline (CentGas) consortium.” (Holdings: Unocal 46.5%; Delta Oil 15%; Turkmenistan Gov’t 7%; Indonesia Petroleum/INPEX [Japan] 6.5%; ITOCH/CIECO [Japan] 6.5%; Hyundai Engineering [S.Korea] 5%; The Crescent Group [Pakistan] 3.5%)....(Unocal gave a grant of $900,000 to the University of Nebraska to train Afghans to build this pipeline). “On August 22 1998, Unocal suspended construction plans due to the continuing civil war in Afghanistan” ....(though it is recently reported that Unocal renewed dialogue with partners in 2000)
“Uzbekistan contains significant oil & gas reserves, and currently as the world’s eighth largest natural gas producer.”...Uzbekistan did not conform to the reform plan instigated by the IMF and EBRD in 1994, as a result of which 17 US companies - including Enron and Unocal - ceased operating there. As the DOE put it: “Privatization in Uzbekistan has also been lagging.”
However, “Uzbekistan has substantially increased its oil production since independence, with total oil production (including natural gas liquids) increasing from 66,000 barrels per day in 1992 to an estimated 213.000 bbl/d in 1999.”... “Uzbekistan has approved a joint project between Baker Hughes and Uzbekneftegaz to increase oil production at North Urtabulak, and Baker Hughes will invest $8 million in the project. Baker Hughes also has the option to develop the Adamtash, South Kemachi. and Umid fields, with total investments of $120 million.”
“Texaco and Uneftepererabotka Formed the UZ-Texaco joint venture at the Fergana refinery in 1996 to produce and market Texaco-branded engine, transmission and hydraulic lubricants fro local crude oil. UZ-Texaco is one of the few companies with a license to convert earnings in Sums (local currency) into dollars. Following a 1998 tender, Mitsui commenced a $200
million upgrade to expand desulphurisation capacity at the Fergana refinery.”
“Uzbekistan has been developing domestic uses for its plentiful gas, such as converting its cars & trucks to run on compressed natural gas (CNG) instead of gasoline, and developing a network of CNG filling stations. A joint venture with American Engineering Inc. is already under development for this purpose.”
The forgoing is by no means a comprehensive account of Corporate Americas’ incursions into the Near-East, but is detailed enough - witness enough - to reflect the crucial role that the oil & gas industry has been playing - and is playing - in contemporary events in the Mid & Near-East regions. But it must never be forgotten that it is not the product itself that is the crux of the matter - rather, it is the socioeconomic system within which the product is exploited and dispensed that determines its effect on world events: that is the crux of the matter!