The Guardian February 23, 2000

War in the Caucasus:
The Politics of Oil

by Kenny Coyle

In the early years of the 20th century, oil from the Russian Caucusus 
accounted for nearly half of all oil produced in the world. The oil 
district of Grozny was, next to Baku, the most important Russian oil area 
before the revolution and by 1915 accounted for about 18 per cent of 
Russian oil production.

More than half the investment in [pre-Revolutionary] Russian oil came from 
abroad. Before World War I, total investment in the Russian oil industry 
was US$214 million, US$130 million of which represented foreign capital. 
Great Britain was particularly active in Russia, providing more than 60 per 
cent of the foreign capital.

In the Soviet Union, Grozny oil was at one time quite important, accounting 
for one-third of national production in 1932. In the post-Soviet era the 
importance of Grozny oil for the Russian economy has diminished greatly but 
its importance as a regional producer has increased.

Over the years, Grozny became a key oil pipeline crossroads, an oil 
refining centre and also a juncture for natural gas from fields in Russia 
and Central Asia.

The vast oil fields of Central Asia, Kazakhstan, Azerbaijan and in the 
North Caucasus of Russia have always been a target for invasion. It was to 
secure unimpeded access to these riches, as much as for the symbolic 
associations with the city's name, that Hitler threw division after 
division at Stalingrad in World War II.

The break-up of the Soviet Union has released these enormous resources that 
had been denied to Western transnational corporations for decades. This is 
an enormous boon for Western imperialism.

Prising open the oil fields grouped beneath and around the Caspian Sea has 
been a key strategic target of the US in the past decade.

BP Amoco, Texaco, Mobil, Chevron and other US and foreign companies have 
already spent over a billion dollars on developing the Caspian oil 

They are drawing on a whole spectrum of Cold War foreign policy figures 
from the US and Britain to cash in on the region.

Zbigniew Brzezinski, former National Security Adviser under President 
Carter and a key figure in securing initial US support for the Afghan 
mujahidin, is a consultant to Amoco.

James Baker, a former US Secretary of State, runs a law practice in Houston 
doing business for the oil companies, where he is able to use his 
friendship with his former Soviet counterpart Edward Shevardnadze, now 
President of Georgia.

Former US National Security Adviser, Brent Scowcroft, advises Pennzoil and 
the multinational Azerbaijan consortium.

Dick Cheney, President Bush's Secretary of Defence, is now chief executive 
of Halliburton of Houston, the world's largest oilfield services company.

Azerbaijan is also a favourite destination for the British oil companies 
such as Monument and Ramco. Timothy Eggar, who as British Energy Minister 
led a delegation to Baku in 1994, is now chief executive of Monument Oil, 
while former Foreign Minister Malcolm Rifkind sits on the board of Ramco.

In October 1997, Le Monde Diplomatique wrote: "The negotiation of 
oil contracts enabled Washington to show a direct interest in the region. 
The US Government sees it as an extra source of energy, should Persian Gulf 
oil be threatened.

"It also wants to detach the former Soviet republics from Russia both 
economically and politically, so as to make the formation of a Moscow-led 
union impossible.

"In an article published in the spring, former [US] Defence Secretary 
Caspar Weinberger wrote that if Moscow succeeded in dominating the Caspian, 
it would achieve a greater victory than the expansion of NATO would be for 
the West."

US policy therefore has both a tactical economic aspect and a longer-term 
strategy to further weaken Russia.

The most crucial question for oil supply though is the route chosen for 
delivery. Unlike the Persian Gulf, none of the oil producing states of the 
Caucasus offer the possibility of shipment to the West by tanker, since the 
Caspian Sea is essentially a huge inland lake.

The alternative is the construction of a super pipeline from Central Asia 
to either the Mediterranean or the Persian Gulf.

The Russians put together a Caspian Pipeline Consortium to run a pipeline 
from the Tengiz fields of Kazakhstan across Russia to the port of 
Novorossisk on the Black Sea and to link this with a pipeline extending 
northwest from Baku.

However, to do this the pipeline from Baku would have to run through either 
Chechnya, or neighbouring Dagestan, itself the target of several Chechen 
mujahidin incursions in August 1999.

The US Government, however, insisted from the outset that the pipeline, 
expected to carry one million barrels per day, run from the Azerbaijani 
capital, Baku, to Turkey's Mediterranean port of Ceyhan.

Washington's aim is to ensure that oil supplies are free from Russian and 
Iranian influence.

The Istanbul Protocol [an agreement to build the Baku-Ceyhan pipeline], 
signed late last year during the OSCE conference in the Turkish city, is a 
significant victory for the plans of the US and Turkey.

The New York Times of November 19, 1999, bluntly described it as 
"one of President Clinton's cherished foreign policy projects, a pipeline 
that would assure Western control over the potentially vast oil and natural 
gas reserves".

US Secretary of Energy, Bill Richardson, enthused: "This is a major foreign 
policy victory. It is a strategic agreement that advances America's 
national interest."

Inevitably, many Russians believe that destabilisation in the Caucasus 
represents a Western plot to monopolise energy resources in the region. 
While this has a certain simplistic aspect to it, ignoring as it does the 
other complex factors, it nonetheless expresses a certain truth.

The expansion of Western imperialist influence eastward demands the further 
break-up of Russia and the wresting of her rich energy resources from her 
grasp, piece by piece.

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Morning Star

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