Some Interesting Reading.
Subject:
Caucasus
Date:
Mon, 14 Jun 1999 20:42:10 -0500 (CDT)
From:
"alert@stratfor.com" <alert@stratfor.com>
To:
redalert@stratfor.com
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STRATFOR's
Global Intelligence Update
June 15, 1999
Conflict Threatens Caucasus Pipelines
Summary:
Competition between Russia and NATO for influence on Russia's
periphery will undoubtedly accelerate following their
confrontation in Kosovo. Besides the Baltics and Ukraine,
competition between Russia and NATO is already fierce in the
Caucasus. Increasing tension in this already unstable region may
drive oil companies operating in Central Asia to look elsewhere
for pipeline routes to move their oil. In particular, they are
likely to look south, to Iran.
Analysis:
Besides Kosovo, the Baltics, and Ukraine, another area of heated
contention between Russia and the West is in the Caucasus.
There, Russia is increasingly cooperating militarily with Armenia
and is believed to be cooperating politically with Abkhaz
separatists, to counterbalance NATO influence in Azerbaijan and
Georgia. Complicating matters, the wild card Chechnya is forging
its own path with the aid of Middle Eastern interests. Caught in
the middle are international oil companies, who are attempting to
cash in on Central Asia's oil wealth.
The main pipelines for Central Asian oil -- the Baku-Novorossiysk
pipeline and the Baku-Supsa pipeline -- pass through the Caucasus
and are vulnerable to regional unrest. The older and larger
Baku-Novorossiysk line was ruptured by an explosion early on June
14, apparently during an attempt by Chechen rebels to steal oil
from the route. The pipeline has been illegally tapped in the
past. Flow through the pipeline has also been halted repeatedly
by the Chechen government, on the grounds that Russia has failed
to pay fees for use of the portion of the pipeline that passes
through Chechen territory.
The recently opened Baku-Supsa route, while touted as a safer
route for avoiding the Chechen instability, also quite poignantly
avoids Russia altogether -- undermining Russian influence on the
region's oil and Russian revenue from that oil. The Baku-Supsa
route was opened following military maneuvers training to defend
the line by Ukrainian, Georgian, and Azeri troops, acting as part
of the regional alliance then known as GUAM, and under the
framework of NATO's Partnership for Peace. GUAM, which also
included Moldova, expanded to include Uzbekistan during meetings
in Washington DC, held concurrently with the NATO anniversary
summit in April, and established a charter encompassing military
cooperation within the group and with NATO. GUUAM members,
though part of the Commonwealth of Independent States (CIS), have
opted out of the CIS Collective Security Treaty.
Intensifying this increasing competition between Russia and NATO
in the Caucasus, Azerbaijan claims that Russia brokered the sale
of several Chinese surface to surface missile complexes to
Armenia, which remains in a fragile truce with Azerbaijan over
the contested Nagorno-Karabakh enclave. Russia has also provided
Armenia with advanced jet fighters and surface to air missile
systems. Reports have now surfaced, denied by Yerevan, that
three of the Chinese missile systems are targeted at Georgia's
Supsa oil terminal. On June 14, in the largest incident of its
kind since the two countries signed a cease-fire five years ago,
300 Armenian troops reportedly attacked Azeri positions in the
Terter region. Baku claims three Armenian assaults were repulsed
with heavy losses.
As tension escalates in the Caucasus, NATO must again decide --
now that it has put a toe in the pool, whether it intends to dive
in. Oil companies may not be willing or able for the situation
to be resolved. While the Baku-Supsa route was a Russia-skirting
stopgap until the expensive and controversial U.S.-backed Baku-
Ceyhan pipeline to Turkey could be built, neither route looks
particularly secure now or in the future. As long as foreign
access to the oil fields is not threatened, oil companies may now
revive their interest in previously considered alternative
pipeline routes. One of these, through western Afghanistan, has
its own security concerns to contend with. But the other, and
perhaps most rational route -- south through Iran -- is primarily
blocked by U.S. political opposition. However, U.S.-Iranian
relations have been gradually improving, and we expect to see
U.S. oil companies with interests in Central Asia take another
shot at accelerating U.S.-Iranian detente.
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