Russia Offers to Kazakhstan to Transport Oil via the Baltic Pipeline System under Construction

Daniel FERRO

ASTANA, Jan 31


In the end of the last week the Russian Minister of Transport Sergey Frank in course of his meeting with the President of Kazakhstan Nursultan Nazarbaev announced an �opportunity to service an additional amount of Kazakhstani oil in the promising north-west direction.�

Upon briefing by reporters Frank said that on Thursday, January 27, the Government of Russia had discussed the progress in construction of the Baltic Pipeline System, the Russian oil terminal port Primorsk at St. Petersburg would be a part of that system.

On February 10, he said, the Russian Government will finally consider the aforementioned project in details.

Frank also said that in the course of his meeting with Nazarbaev the possibility of organization of a joint Russian-Kazakh ventures for shipment of various goods to the European markets had been discussed, including joint ventures that, he said, would be dealing with �the system of intermodal and mulitmodal shipments�.

Frank stated that joint working groups currently consider operations of Sea, River and Ground types (first of all, motorcar) transport.

Furthermore Frank said that currently three new intergovernmental agreements are being worked out, that are supposed to improve operation of the transport systems of both States.

Radio Liberty

Problems of January 25 are Problems of the Year

January is the beginning of the year. 2000 brought two to three new serious problems to the Kazakhstani authorities. On Tuesday the next CIS summit was held in Moscow. The acting President Vladimir Putin received experienced CIS leaders and talked to them from the new geopolitical bell tower. most probably President Nazarbaev did nit become a close friend of the new Russian leader. Meetings of the two leaders did not exceeded the bounds of the agenda. At the press conference in Moscow President Nazarbaev did not conceal his criticism towards problems inside the CIS. While President of Uzbekistan Islam Karimov considered it necessary to appreciate Putin. That time namely Uzbek troops invaded Kazakhstan and tried to capture a part of the Kazakhstani land in the Saryagash district.

Two problems of January 25 may become for Kazakhstan problems of the year. In the north there is democratic Russia that undergoes the new rise. In the south there is Uzbek dictatorship that fails to fit in its frames. Kazakhstan concluded treaties on eternal friendship with both countries. It is time to test brotherly love. At the Moscow summit Kazakhstan and Uzbekistan initiated the creation of the common anti-terrorist center. Kazakhstan along with Byelorussia also proposed a number of initiatives. On January 27 President Nazarbaev acquaint media with his evaluation of the summit:

- At the closed meeting I said that it was the time to establish the strategic partnership. All CIS countries have different domestic political situations, different approaches to the economic policy and reforms: some of them are in advance, some of them are behind, others are in the middle. The strategic partnership could save the internal independence of each state, but there would be no obstacles to strengthen ties between the countries. The economy is first of all, the problem of security is secondary, then comes the struggle against terrorism. First, we have discussed these problems a lot and concluded some well-known agreements. Second, the change of the Russian leader is a serious issue. Frankly speaking, the respected Russian President Yeltsin could not work actively due to the state of his health. His fulfillment of the responsibilities of the CIS chairman was the same. As the new energetic man came, we may hope that the CIS affairs will stir up. Let the Russian election be held normally. Once the election is held, we will meet again and our discussion will be different and decisions will be also different. We believe in that.

On the whole President Nazarbaev is satisfied with the results of the CIS leaders� meeting. Possibly, until Putin settles down in the presidential chair it is too early to speak of an abrupt strengthening of Russia�s influence. The famous scientist, politologist, Doctor of history Azimbai Gali expressed the following opinion in his interview to Radio Liberty:

- At first when Putin came Russia really tried to demonstrate the new arrangement of forces. But Russia�s economic and military resources as well as its political influence were different. A state�s geopolitical ambitions should be adequate to its economic power. There are an obvious revival, and completed recession in the Russian economy. But this does not prove that Russia is absolutely stable. Russia has some good economic indices. This may be caused by high prices of oil and gas.

Beyond doubt, after Yeltsin�s resignation, Russia will stir up its economic expansion in Kazakhstan. Sooner or later the Kazakhstani authorities will have to put an end to their multi-vector foreign policy. The Kazakh Service of Radio Liberty analyzed this in the previous weekly review of the most significant events of the week. The future possible routes of Kazakhstani oil are what matters. The USA, Russia, China should to quarrel with each other. They may just agree with each other! What a demarche did Uzbekistan dare to take? �Take from an Uzbek man what his wore; take from a Kazakh man on what he rode,� the folk saying states. Uzbekistan tightly closes its borders referring to uninvited guests. But its neighbors suffer from it. Today�s guest of Radio Liberty, the Professor Azimbai Gali forecasts:

- Uzbekistan had geopolitical ambitions long ago. �We are successors of Great Moguls, we are heirs of Timur the Great, in the Middle Ages we�� It is not a surprise that they demonstrate such ambitions against Kazakhstan. But today Uzbekistan is not in a position to show such a conceit anybody. Uzbekistan can be defeated and this may hasten the collapse of Karimov�s regime.

That was the previous week of January, i.e. the beginning of the year. The Kazakhstani authorities faced two problems: the necessity to agree with Russia in a new way and the difficult division of lands with Uzbekistan. The third problem of the week was usual. On Sunday a big opposition meeting was held in Almaty. The Forum of Kazakhstani Democratic Forces significantly widened the frames of pensioners� traditional protest. People seriously criticized the authorities� policy. At the meeting the activist of Pokolenye movement, the writer Saya Issa announced to Radio Liberty:

- Today not only pensioners gathered in the square. Today students also express their protest to the government. People came even with their children. Social condition of people is getting worse. The new century has just begun, but life is moving back.


THE GLOBE based on materials from the Kazakh Service of Radio Liberty

(Translated from Kazakh by THE GLOBE, full text)

The Geopolitics of Caspian Oil

Jan 26 (Stratfor)


The leaders of Azerbaijan, Georgia and Turkey met again in Ankara Jan. 21 to hash out the final details of the much-touted Baku-Ceyhan oil pipeline. Baku-Ceyhan is one of a dozen various proposals for exporting oil from the former Soviet Union. Despite having U.S. support, it is also one of the least likely to be built. Several pipeline options are on the table, all with strategic and political pros and cons. The existing network certainly cannot handle the projected supply of oil to come from the region. Thus, new pipelines must be put in place. Considering the instability of the region, the significant question becomes: Which pipelines are most likely to be built? [See map.]


The Existing Network and Plans for Expansion

The existing pipeline system for the Caspian Sea region has a limited capacity, consisting of a mere 500,000 barrels per day (bpd). The United States Department of Energy estimates that the region will be capable of producing 3,500,000 bpd by 2010 and 5,000,000 bpd by 2020, vastly more than the current pipelines can handle.

To alleviate this problem, Russia is building the Tengiz-Novorossiysk line from Kazakstan to access Central Asian oil fields. Furthermore, most of the Caspian�s pipelines can be expanded. Baku-Supsa and Baku-Novorossiysk, each operating at 100,000 bpd, can increase their production up to six-fold.

Simply expanding the existing pipelines, however, will be both costly and insufficient. Expansion of the Baku-Novorossiysk route will require large outlays for additional sections needed to bypass Chechnya. Due to the conflict in Chechnya, Russia has been forced to use costly rail-links to circumvent the Chechen section of the line. Also, none of these routes terminates near its primary market � Western Europe � instead ending on the Black Sea. A total capacity of more than two million bpd would create immense tanker traffic on the Black Sea and serve to clog the already congested Bosporus.

Other pipeline plans are in the works to counter this challenge. The U.S. preference is for a one million bpd Baku-Ceyhan pipeline that terminates directly on the Mediterranean. But the Clinton administration has yet to place any financial resources behind the pipeline. Another U.S.-backed proposal � this one with assistance from the Export-Import Bank of the United States, the European Bank for Reconstruction and Development and the World Bank � would pump tanker oil from a coastal port in Bulgaria through Macedonia to Albania. This Burgas-Vlore pipeline, with a capacity of 750,000 bpd, would do much to alleviate the Bosporus traffic and directly supply Western Europe.

Another option is one that avoids the Black Sea entirely by piping Caspian oil through Iran. Tehran has offered to pay for the construction of an underwater pipeline or to redirect Caspian Sea tankers to Neka, Iran, which has an oil terminal capable of handling 300,000 bpd without additional costs. Iran would then construct a second oil pipeline from the Neka terminal to the town of Rey, outside Tehran.

The World After Chechnya

How the War�s Impact Will Be Felt Beyond the Battlefield

27 Jan (Stratfor)


Far beyond the rubble of Grozny, the four-month war in Chechnya is a defining moment for both Russia and the West. Within Russia, the war will determine the unity of the federation and the leadership of the next government. On a global scale, the war will impact Moscow�s bid to return to superpower status. In order to win, Russia must choke off rebel supplies flowing through neighboring Georgia. This, in turn, sets up a confrontation with the West. Washington has spent a decade building ties with Georgia and must back its partners in Tbilisi � or risk losing influence throughout the former Soviet Union.


In the West, Russia�s campaign against rebels in the Chechen republic has provoked an outcry over civilian casualties. Russia�s own official casualty figures now stand at more than 1,100 dead troops. But the war�s significance transcends the conflict itself.

The war will have a powerful ripple effect that reaches not only to Moscow but ultimately to Washington. Since the fall of the Soviet Union in 1991, the Caucasus has been the effective borderland between the West and Russia, a place where the interests of both collide. To Russia, the region is a backyard that must be secured. To the United States, the Caucasus is a firebreak, where American influence can prevent a resurgent Russian threat to Europe.

The political shock waves now impact the pro-Western government of Georgia. Moscow has accused the government of President Eduard Shevardnadze of allowing vital supplies to flow northward through Georgian territory into the hands of the Chechen rebels, keeping Moscow�s 140,000 troops from defeating an estimated 8,000 rebels. Although the Georgian government denies aiding the rebels, it has until lately refused to allow combat operations by Russian troops based in Georgia.

It is difficult to underestimate the increasing implication of the Georgian government in the Chechen war. Washington has cultivated close ties with Shevardnadze and sought to draw the Georgian military even closer by including it in NATO�s Partnership for Peace program and planning some 30 exercises this year involving U.S. and Georgian troops. During the war, the United States has tried to reassure Shevardnadze�s government by announcing aid to help secure Georgia�s borders.

As the pressure builds on Georgia, Washington faces three choices. It can choose to overlook the problem, abandon Georgia in the hope that a Russian victory will quell its belligerency � or Washington can encourage Georgia to stand up to Russia.

The last choice will force the United States to make a much larger reckoning: Is a resurgent Russia a greater threat than a chaotic Russia? Is it financially and militarily possible to keep Russia in retreat? And, if possible, is it worthwhile? Is the likely loss of American influence in the Ukraine, Azerbaijan and the Baltic states worth avoiding a confrontation? After all, pushing Russia back now could result in Russian pressure elsewhere or leadership even more aggressive than acting President Vladimir Putin.

All Over the Globe is published by IPA House.
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