Eurasia Daily Monitor — The Jamestown Foundation
Monday, May 8, 2006 — Volume 3, Issue 89
IN THIS ISSUE:
*Trans-Caspian gas pipeline project receives boost from Western
officials
*Cheney speech in Vilnius shocks Kremlin
*Nazarbayev welcomes Cheney, Beijing reacts
CHENEY VISIT SPOTLIGHTS KAZAKHSTAN’S PIVOTAL ROLE
U.S. Vice President Richard Cheney’s May 5-6 visit to Astana — and an
overlapping visit by European Union Energy Commissioner Andris Piebalgs
there — achieved a long-overdue rebalancing of Western policy
priorities regarding Kazakhstan and, by implication, the region as a
whole. At the joint news conference with Kazakh President Nursultan
Nazarbayev, Cheney described Kazakhstan as a "key strategic partner of
the United States" in terms of energy supply projects and anti-terrorism
efforts.
Cheney’s visit increased the impetus toward the creation of a
trans-Caspian oil transport system that would enable Kazakhstan to
export its oil through the Baku-Tbilisi-Ceyhan pipeline. Discussions on
that project had marked time for several years, largely because of
Russia’s monopolization of oil transit from Kazakhstan. U.S. Energy
Secretary Samuel Bodman urged Nazarbayev in Astana in March to expedite
the signing of the relevant agreements on the trans-Caspian project (see
EDM, March 16). On the second day of Cheney’s Astana visit, Kazakh Prime
Minister Daniyal Akhmetov promptly announced in Baku that Kazakhstan is
ready to sign those agreements next month.
Moreover, Cheney’s visit jump-started discussions over a trans-Caspian
gas pipeline from Kazakhstan via Azerbaijan, Georgia, and Turkey to
Europe. That pipeline would follow the Baku-Tbilisi-Erzurum (Turkey),
where two options are available: either to Greece and Italy, or to
Bulgaria, Romania, Hungary, and Austria. The Kazakh energy and mineral
resources minister, Baktykozha Izmukhambetov, announced at the
conclusion of Cheney’s visit that Kazakhstan intends to request the
European Commission (the EU’s executive arm) to undertake a technical
and feasibility study for the construction of a trans-Caspian gas
pipeline. Kazakhstan will discuss joining the gas project to Erzurum at
an expanded meeting with the participation of European customers. If,
however, Astana insists on Iran’s participation in that meeting, the
project might bog down in political complications.
Piebalgs also discussed the gas project on May 3-4 with Nazarbayev,
conveying the interest of certain large European companies in gas
supplies from Kazakhstan. The Baku-Tbilisi-Erzurum pipeline, with a
projected capacity of up to 30 billion cubic meters, can combine gas
volumes from Azerbaijan’s Shah-Deniz offshore field (to which that
pipeline is dedicated) with volumes from Kazakhstan. In addition,
Piebalgs proposed that Kazakhstan speed up the signing of an agreement
with the EU’s Atomic Energy Community (Euratom) on deliveries of uranium
from Kazakhstan.
Any trans-Caspian project would, however, be commercially limited
without inputs from Turkmenistan. Politically, moreover, Kazakhstan
would be better placed to withstand Russia’s opposition to the project,
if the other eastern Caspian country participates as well. As the Hudson
Institute’s Zeyno Baran remarked on this occasion: If the United States
continues to balk at dealing with leaders of energy-producing countries
because of democracy concerns, then "Soon there won’t be any more
democracies in the region to participate with. You can say all you want
about how we will not take part in these great games, but Russia and
China are taking part in them, and the United States risks losing out"
(Western news agencies cited by Moscow Times, May 5).
On the anti-terrorism front, Cheney’s visit highlighted Kazakhstan’s
contribution to American-led efforts in Afghanistan and Iraq. In the
latter country, Kazakh military engineers and sappers form one of the
exceedingly few units from predominantly Muslim countries (the other
such contributing country is Azerbaijan). From October 2001 through
April 2006, more that 3,000 flights of the United States and its NATO
allies passed through Kazakhstan’s air space on missions in Central Asia
and Afghanistan, and 360 planes made emergency or refueling stops at two
airfields made available by Kazakhstan for those purposes. In September
this year, Kazakhstan will host the Steppe Eagle 2006 international
military exercise with the participation of the United States, Britain,
and Turkey under NATO’s Partnership for Peace program.
In Astana, Cheney stated that the United States favors a diplomatic
solution to the Iran nuclear problem. He held up Kazakhstan as an
outstanding example for Iran to follow in this regard: Following the
Soviet Union’s breakup, Kazakhstan renounced the inventory of nuclear
weapons and infrastructure situated on its territory and fully
cooperated with international organizations, Russia, and the United
States in ridding the country of nuclear weapons components and
materials.
(Khabar news agency and Television, Interfax, May 5, 6)
–Vladimir Socor
AFTER VILNIUS, PUTIN HAS TO RECONSIDER HIS PROSPECTS
U.S. Vice President Dick Cheney used his speech at last week’s
conference in Vilnius to address Russia in a blunt new tone. Prior to
the conference, Russian President Vladimir Putin’s advisers had assumed
that the maximum extent of U.S. criticism had been set by the report,
"Russia’s Wrong Direction," presented by the Council on Foreign
Relations (see EDM, March 13). Warning signals from experts and NGO
activists who had gathered in Vilnius before the top-level conference
were dismissed as "boring preaching from the EU" (Moskovskie novosti,
May 5). But the broadside delivered by Cheney, regarded in the Kremlin
as a no-nonsense political heavyweight, was compared to Churchill’s
landmark "iron curtain" speech 60 years earlier (Kommersant, Ezhednevny
zhurnal, May 5).
The cautious response from the Russian Foreign Ministry, which
emphasized that the substance of relations had not changed, was
obviously an attempt to downplay the effect, also by questioning the
competence of VP’s aides (Newsru.com, May 6). There was, however, a rush
of defensive comments and rebuffs from outspoken Duma deputies and
experts with ties to the presidential administration. Vyacheslav Nikonov
and Andrei Kokoshin emphasized that Washington was irritated by Russia’s
growing power and decisiveness in asserting its "sovereignty," while
Gleb Pavlovsky called Cheney’s address a "considered nasty provocation"
(Strana.ru, May 4, 5). Only Putin, however, can deliver the real answer,
and he cannot postpone this answer any further than his annual address
to parliament, scheduled for Wednesday, May 10 (Gazeta.ru, May 5).
According to the carefully controlled leaks, Putin was not satisfied
with the drafts presented to him in early April and so postponed the
annual event in order to sharpen the focus of the speech, which
essentially would be his last address before election season begins in
2007 (Moskovskie novosti, April 21). Foreign policy was supposed to be
one of the key topics, but now the "balance sheet" in this department
has to be redrawn (Vedomosti, May 3). What had been an impressive record
of achievements — from strengthening the alliance with China to making
a crucial difference in the Middle East — has unexpectedly become
recast as a series of opportunistic improvisations that has put Russia
into a tight corner. The claim for restored "Great Power" status is
undermined by the simple fact that Russia does not command due respect
among its neighbors, and the expected triumph of the G-8 summit
in St. Petersburg is seriously downgraded even if Cheney confirmed U.S.
President George W. Bush’s intention to take part.
It has become impossible to deny that Moscow’s carefully prepared agenda
for the summit has been effectively cancelled and not only because Iran
demands top priority or the issues in Russia’s relations with Belarus,
Georgia, and Ukraine are creeping in. The main problem is the topic of
"energy security," which was supposed to be a trump card for Moscow but
has become — as Vilnius proved beyond doubt — a highly contentious
issue (Vedomosti, May 3; Kommersant, May 4). Putin’s courtiers were
absolutely certain that the stratospheric rise of oil prices
automatically granted their boss a position of strength and still cannot
comprehend the magnitude of their miscalculation. The plain fact of the
energy "supply-demand" matrix is that Russia is far more dependent upon
the export of its hydrocarbons to the European market than the West is
dependent upon importing them from Russia. Despite all
the talk about conquering the Asian markets and satisfying China’s
insatiable appetite, Moscow now and in the years to come is firmly
plugged into European distribution networks — and it desperately needs
the income from delivering the contracted volumes of natural gas. What
eliminates any possibility for building a position of strength is the
lack of spare production capacity in oil and gas. Gazprom’s "bad
behavior" is on balance a far smaller mistake than its underinvestment
in basic assets resulting in their degradation. In any emergency,
perhaps a cold spell next winter, Russia cannot be a "swing producer" —
and so, for all intents and purposes, is unable to provide any energy
security.
In mid-April, greeting German Chancellor Angela Merkel in Tomsk, Putin
showed a slight disappointment in the EU’s "unfriendly" attitude towards
Gazprom, but now he has to stop nursing grudges and draw some serious
conclusions. In his political plans, the G-8 summit has had a far
greater significance than just diplomatic history and a prize photo
opportunity. It should have sealed his fate as a statesman who
impeccably performed a hard mission and could safely retire, remaining
respected in the West, influential at home and decently rich as a member
of a few corporate boards (Ezhednevny zhurnal, May 5). Now, however, the
future looks far more troubled as the perfectly staged crowning moment
transforms into a highly unpleasant rendezvous where seven Western
counter-parts will enumerate their disappointment in his mismanagement
of the energy sector and disapproval of his methods of
leadership.
The internal logic of the "vertical" system of power created by Putin
rejects any transition of authority to a successor, however carefully
chosen. It is far easier for him to "organize" a third presidential term
than to implement an "exit strategy" that would forge a new compromise
among the greedy elites and guarantee a safe retirement (Polit.ru, May
3). Constitutional "technicalities" could be ironed out with massive
public support and the key allies — from China to Kazakhstan to Belarus
— would congratulate him with great relief. Western leaders would
criticize, but they already do, so there is little to worry about.
Cheney’s stern warning that Russia is not "fated to become an enemy" in
essence means that Putin’s Russia has to be dismantled; it may be a
choice too far for a lonely hostage of the Kremlin walls.
–Pavel K. Baev
CHENEY’S VISIT LEAVES ASTANA FACING NEW DILEMMA IN MULTI-VECTOR POLICY
U.S. Vice President Dick Cheney praised Kazakhstan as "a good friend and
important strategic partner," particularly in fighting international
terrorism, as he wrapped up his two-day visit to Kazakhstan on May 6.
The trip culminated with the signing of documents to amend the agreement
to eliminate facilities for developing and testing weapons of mass
destruction, cooperation in preventing the illegal movement of nuclear
material, and a memorandum on mutual understanding on economic
development.
Although Cheney’s visit was highlighted as a new phase in U.S.-Kazakh
economic relations, and he pledged assistance to Kazakhstan in its
endeavors to join the most economically competitive states of the world,
the trip carried a strong political subtext. Fielding questions from
journalists in Astana, Cheney essentially reiterated his statement, made
earlier in Vilnius, that Russia is using its control over energy
resources to exert pressure on the Baltic and Black Sea states. He said
his views on that point coincided with those of other participants at
the Vilnius summit. Kazakh President Nursultan Nazarbayev adopted
Cheney’s conciliatory tone and said that there was no confrontation
between Russia and the United States. "Rather, it was a friendly
exchange of opinions. We all should be accustomed to thinking that every
independent state solves its problems and pursues a certain policy.
We all should learn to respect this policy" (Kazakhstanskaya pravda, May
6).
Cheney’s Vilnius speech also did not go unnoticed in China. Beijing
media speculated, "Cheney’s harsh criticism [of Russia] infected fresh
tension that is likely to be still felt when Russian President Vladimir
Putin hosts U.S. President George Bush at the summit of the G-8 club of
rich nations in St. Petersburg in July." The official Chinese view is
that Cheney’s criticism was provoked by "Russia’s new self-confidence"
(China Daily, May 6).
On the eve of Cheney’s arrival in Astana, some analysts noted that the
White House, no longer content with Kazakhstan’s role as an important
economic partner in Central Asia, was scheming to draw Astana into its
geopolitical orbit. Kyrgyzstan’s plans to revise the U.S. lease on the
Manas air base and deteriorating relations with Uzbekistan make a
long-term political alliance between Washington and Astana more
realistic.
Cheney’s visit coincided with Kazakh Prime Minister Daniyal Akhmetov’s
trip to Baku, where he conducted talks with Azeri leader Ilham Aliyev
and Iran’s President Mahmoud Ahmadinejad. Akhmetov stressed Azerbaijan’s
need to ensure the security of the Caspian region and reaffirmed
Kazakhstan’s readiness to deliver oil to the Azeri Sangachal sea
terminal to be sent onward to Europe, bypassing Russia. Experts believe
Azeri oil and gas supplies alone are not enough to meet Europe’s
enormous demands for energy resources, and future deliveries from
Kazakhstan through the Baku-Tbilisi-Ceyhan pipeline could make up the
shortfall. But at the same time, analysts warn that Kazakhstan will have
to stick to its multi-vector foreign policy and keep the right balance
among China, the United States, Russia, and other players in the Caspian
region (Delovaya nedelya, April 28).
Like Aliyev, Nazarbayev is worried over the intensifying standoff
between Teheran and Washington, which poses a direct threat to the
Caspian region. Apparently, if Astana will not actively support the U.S.
campaign against Tehran, the White House wants Kazakhstan to at least
maintain a "friendly neutrality." Washington does not want Kazakhstan,
which possesses one-fourth of the world’s uranium reserves, to get too
close to Iran. Talking to journalists, Cheney said the United States
favors a diplomatic solution to the Iranian nuclear problem. He said
Iran would be well advised to follow the example of Kazakhstan, which
surrendered its nuclear arsenal in the early 1990s (Liter, May 6). He
also lauded Kazakhstan for its peacekeeping efforts in Afghanistan and
Iraq.
Yet Astana expects much more than just praise and friendly words from
Washington. American investment in the Kazakh economy has reached
<html>.5 billion. Now Kazakhstan wants U.S. assistance for its nuclear
energy program. Over the last two months the government has been
actively discussing projects to construct nuclear power stations.
Nazarbayev told journalists that his talks with Cheney were conducted in
an open and trustful atmosphere. But Kazakhstan cannot easily discard
Russian and Chinese interests in the Caspian region. Just before
Cheney’s visit Astana hosted the president of Russia’s Lukoil company,
Vagit Alekperov, who took part in the ceremony opening Lukoil’s new
branch office in Astana and announced plans to expand the company’s
activities in Kazakhstan’s Khvalynskoye and Tsentralnoye oil fields
(Kazakhstanskaya pravda, April 27).
Even taking into account Russian and Chinese strategic priorities in
Kazakhstan, Astana markets itself as Washington’s most reliable partner
in Central Asia. Thus, it is no wonder that the Bush administration
toned down its criticism of political developments in Kazakhstan, mildly
rebuking Astana for last year’s presidential elections that were "not
fully conforming to international norms." Cheney had only perfunctory
talks with leaders of local political parties, conspicuously avoiding
painful topics. He said Kazakhstan was on the right track with political
reforms, but Astana still must prove that it deserves that assessment.
–Marat Yermukanov
The Eurasia Daily Monitor, a publication of the Jamestown Foundation, is
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