Why did the president of the most powerful country in the world spend 40 minutes on the telephone to an obscure Caucasian politician? Paul Sampson describes the oil-driven interest in the new independent states of central Asiaby Paul Sampson / March 20, 1997 / Leave a comment
The world’s industrial countries are facing the possibility of a new oil crisis in the next century, as the Asian economies expand and instability in the middle east persists. For this reason attention has shifted to the giant oil and gas reserves in central Asia and the Transcaucasus.
The three fledgling states of Azerbaijan, Kazakhstan and Turkmenistan have some of the world’s largest oil and gas reserves, dotted in and around the Caspian Sea. But they all share a problem: the existing pipelines which deliver their oil and gas to international markets pass through Russia, which can thus threaten the economic independence of the southern flank of its lost empire.
The US and Turkey have tried to nudge the southern republics away from Russia by promoting new pipelines which take the oil westwards. The US’s arch enemy, Iran, has also embarked on its own pipeline strategy, making use of its growing commercial links with Islamic central Asia. But, so far, Moscow has managed to hold its ground.
The battle for the Caspian pipelines echoes the “great game” of the late 19th century, when Britain and Russia duelled for control of trade routes to central Asia and Afghanistan. In the modern version, the glamour comes not from youthful spies disguised as spice merchants, but from flamboyant oil tycoons and bizarre politicians.
The battle for Azerbaijan
The oil war is complicated by the fact that Azerbaijan, Kazakhstan and Turkmenistan are unstable new nations run by dictators.
Baku, the capital of Azerbaijan, was the oil centre of the world at the end of the 19th century. European pioneers flocked to this remote city on the Caspian to make their fortunes. It was Baku’s oil which helped Shell break the Rockefellers’ monopoly at Standard Oil, and which lured Hitler to his ill-fated foray into the Caucasus.
Baku’s global importance evaporated under communism, but it got its second chance after the collapse of the Soviet empire in 1991. A cluster of European and American oil companies, later known as the Azerbaijan International Operating Co (AIOC), negotiated an $8 billion contract to develop three giant oil fields.
In its early days of independence, Azerbaijan was a mess. The country was at war with Armenia over the disputed enclave of Nagorno-Karabakh and its first post-Soviet president, Ayaz Mutalibov, was toppled in June 1992. He was replaced by Abulfaz Elchibey, a nationalist dissident who wanted to renew…