US Outflanked in Eurasia Energy Politics

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US Outflanked in Eurasia Energy Politics

Postby Byrne » Wed Jun 14, 2006 10:12 am

From <!--EZCODE LINK START--><a href="http://www.engdahl.oilgeopolitics.net/Geopolitics/Ouflanked/ouflanked.html" target="top">www.engdahl.oilgeopolitics.net/Geopolitics/Ouflanked/ouflanked.html</a><!--EZCODE LINK END--><br><br><!--EZCODE BOLD START--><strong>US Outflanked in Eurasia Energy Politics</strong><!--EZCODE BOLD END--><br><br>F. William Engdahl, June 3, 2006<br> <br><br>The United States' global energy-control strategy, it's now clear to most, was the actual reason for the highly costly regime change in Iraq, euphemistically dubbed "democracy" by Washington. But while it is preoccupied with implanting democracy in the Middle East, the United States is quietly being outflanked in the rush to secure and control major energy sources of the Persian Gulf, the Central Asian Caspian Basin, Africa and beyond. <br><br>The quest for energy control has informed Washington's support for high-risk "color revolutions" in Georgia, Ukraine, Uzbekistan, Belarus and Kyrgyzstan in recent months. It lies behind US activity in West Africa, as well as in Sudan, source of 7% of China's oil imports. It lies behind US policy vis-a-vis President Hugo Chavez' Venezuela and President Evo Morales' Bolivia. <br><br>In recent months, however, this strategy of global energy dominance has shown signs of producing just the opposite: a kind of "coalition of the unwilling", states that increasingly see no other prospect, despite traditional animosities, but to cooperate to oppose what they see as a US push to control the future security of their energy. <br><br>If the trend of recent events continues, it won't be US-style democracy that is spreading, but rather Russian and Chinese influence over major oil and gas supplies. <br><br>Some in Washington are beginning to realize that important figures might have been too clumsy in recent public statements about both China and Russia, two nations whose cooperation in some form is essential to the success of the global US energy project. <br><br><br>Ripping into China and Russia<br>Contrary to advice from older China hands, including former secretary of state Henry Kissinger, architect of president Richard Nixon's 1972 opening to China, the White House denied visiting Chinese President Hu Jintao the honor of a full state dinner when he visited in April, serving instead a short "state lunch". Hu was publicly humiliated by a well-known Falungong heckler at the White House press conference. <br><br>A few weeks later, Vice President Dick Cheney slapped Russian President Vladimir Putin with the most open attack on Russia's internal human-rights policy as well as its energy policy in a speech in the Baltic state of Lithuania. There, Cheney declared of Russia, "The government has unfairly and improperly restricted the rights of her people." He accused Russia of energy "intimidation and blackmail". Some days later, Secretary of State Condoleezza Rice reiterated that Russia should be "pressed" on democratic reforms. Rice also slapped China in the face in March during a trip to Southeast Asia, calling China a "negative force" in Asia. <br><br>Curiously, Washington has repeatedly accused China of "not playing by the rules", in terms of its oil politics, declaring that China is guilty of "seeking to control energy at the source", as though that had not been US energy policy for the past century. <br><br>The significance of taking aim simultaneously at both Russia and China, the two Eurasian giants, the one the largest investor in US Treasury bonds, the other the world's second-most-developed military nuclear power, reflects the realization in Washington that all may not be as seamless in the quest for global domination as originally promised by various strategists in and around the administration of President George W Bush. <br><br>Next Thursday, member nations of the Shanghai Cooperation Organization (SCO), led by China and Russia, will reportedly invite Iran, currently an observer, into full membership. Even if full membership is postponed, as has been mooted, the fact remains that Russia and China both want to seal closer cooperation with Iran in Eurasian energy cooperation. <br><br>The SCO was founded in June 2001 by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Its stated goal was to facilitate "cooperation in political affairs, economy and trade, scientific-technical, cultural, and educational spheres as well as in energy, transportation, tourism, and environment protection fields". Recently, however, the SCO is beginning to look like an energy-financial bloc in Central Asia consciously being developed to serve as a counter-pole to US hegemony. <br><br>Russia's energy geopolitics<br>In recent months SCO members have taken several potentially strategic steps to distance themselves from energy and monetary dependence on the US. In his recent State of the Union speech, President Putin announced that Russia is planning to make the ruble convertible into other major currencies and to use it in its oil and gas transactions. <br><br>A convertible ruble is to be introduced, according to latest Russian statements, on July 1, six months earlier than originally planned. Russia also has stated it plans to shift a share of its now considerable dollar reserves away from the US currency and that it will use 40 billion US dollars to purchase gold reserves. <br><br>Russia's state-owned natural-gas transport company, Transneft, has consolidated its pipeline control to become the sole exporter of Russian natural gas. Russia has by far the world's largest natural-gas reserves and Iran the second-largest. With Iran inside, the SCO would control the vast majority of the world's natural -gas reserves, as well as a significant portion of its oil reserves, not to mention the Strait of Hormuz, the narrow corridor for a majority of Persian Gulf oil-tanker shipment to Japan and the West. <br><br>Late last month Russia and Algeria, the two largest gas suppliers to Europe, agreed to increase energy cooperation. Algeria has given Russian companies exclusive access to Algerian oil and gas fields, and Gazprom and Sonatrach will cooperate in delivery to France. Putin has canceled Algeria's US$4.7 billion debt to Russia and, for its part, Algeria will buy $7.5 billion worth of Russian advanced jet fighters, air defense systems and other weapons. <br><br>On May 26 Russian Defense Minister Sergei Ivanov also announced that his country would definitely supply Iran with sophisticated Tor-M1 anti-aircraft missiles, reportedly as a prelude to supplying even more sophisticated weapons. <br><br>Then, in one of the more fascinating examples of geopolitical chutzpah, the Kremlin-controlled Gazprom gas monopoly entered quiet negotiations with Israeli Prime Minister Ehud Olmert through his billionaire friend, Benny Steinmetz, to secure Russian natural -gas supplies to Israel via an undersea pipeline from Turkey to Israel. <br><br>According to the Israeli paper Yediot Ahronot, Olmert's office has said it will support the Gazprom proposal. In several years Israel faces a shortage of gas from Tethys Sea drilling and soon from Egypt. Tethys Sea gas is projected to run dry in a few years. British Gas is in talks to supply gas from Gaza but Israel disputes BG's right to drill. <br><br>But even with Egypt and Gaza, gas shortages are expected by 2010 unless Israel is able to find new sources. Enter Gazprom and Putin. The gas would be diverted from the under-used Russia -Turkey Bluestream Pipeline, which Russia built to increase its influence over Turkey two years ago. Putin clearly seeks to gain a lever inside Israel over the one-sided US influence on Israeli policy. <br><br>China energy geopolitics also in high gear<br>For its part, Beijing is also moving to "secure energy at the sources". China's booming economy, with 10% growth, requires massive natural resources. China became a net importer of oil in 1993. By 2045, China will depend on imported oil for 45% of its energy needs. <br><br>On May 26, crude oil began to flow into China through a newly completed pipeline from Atasu, Kazakhstan, to the Alataw Pass in China's far-western region of Xinjiang, a 1,000-kilometer route announced only last year. It marked the first time oil is being pumped directly into China. Kazakhstan is also a member of the SCO, but had been regarded by Washington since the collapse of the Soviet Union as in its sphere of influence, with ChevronTexaco, Rice's former oil company, the major oil developer. <br><br>By 2011 the pipeline with extend some 3,000km to Dushanzi, where the Chinese are building their largest oil refinery, due to completed by 2008. China financed the entire $700 million pipeline and will buy the oil. Last year the China National Petroleum Corp bought PetroKazakhstan for $4.2 billion and will use it to develop oilfields in Kazakhstan. <br><br>China is also in negotiations with Russia for a pipeline to deliver Siberian oil to northeastern China, a project that could be completed by 2008, and a natural-gas pipeline from Russia to Heilongjiang province in China's northeast. China just passed Japan to rank as world's second-largest oil importer behind the United States. <br><br>Beijing and Moscow are also integrating their electricity grids. Late last month the China State Grid Corp announced plans to increase imports of Russian electricity fivefold by 2010. <br><br>In its relentless quest to secure future oil supplies "at the source", China has also moved into traditional US, British and French oil domains in Africa. In addition to being the major developer of Sudan's oil pipeline, which ships some 7% of total China oil imports , Beijing has been more than active in West Africa, the source of vast fields of highly prized low-sulfur oil. <br><br>Since the creation of the China-Africa Forum in 2000, China has scrapped tariffs on 190 imported goods from 28 of the least developed African countries, and canceled $1.2 billion in debt. <br><br>Indicative of the way China is doing an end-run around the Western-controlled International Monetary Fund among African states, China's Export-Import Bank recently gave a $2 billion soft loan to Angola. In return, the Luanda government gave China a stake in oil exploration in shallow waters off the coast. The loan is to be used for infrastructure projects. In contrast, US interest in war-torn Angola has rarely gone beyond the well-fortified oil enclave of Cabinda, which ExxonMobil along with Shell Oil have dominated until recently. That is apparently about to change with the growing Chinese interest. <br><br>Chinese infrastructure projects under way in Angola include railways, roads, a fiber-optic network, schools, hospitals, offices and 5,000 units of housing developments. A new airport with direct flights from Luanda to Beijing is also planned. <br><br>Indirectly, through its support of the Sudanese government, China is also a contender in a high-stakes game of potential regime change in neighboring, oil-rich Chad. This year, World Bank president Paul Wolfowitz was forced to back down from plans to cut off World Bank aid because of the threat of an oil-export cutoff by Chad. ExxonMobil is currently the major oil company active in Chad. But Sudan backs Chadian rebels, who were only prevented from toppling the notoriously corrupt and unpopular regime of President Idriss Deby by the 1,500 French soldiers propping up the regime. Washington has joined with Paris in backing Deby. <br><br>Sudan has involved Chinese, rather than Western, corporations in exploiting its oilfields, largely as a result of misconceived US sanctions imposed in 1997, which blocked US oil companies from doing business in Sudan. A new Sudan-backed regime in Chad would jeopardize the Chad-Cameroon pipeline and Western oil firms. One can imagine China just might be willing to step into such a vacuum and help Chad develop its oil, especially if the lion's share went to China. <br><br>Immediately after his humiliating diplomatic visit to Washington in April, President Hu went on to Nigeria, Africa's largest oil producer and long regarded by Washington as in its "oil sphere of interest". In Nigeria, Hu signed a deal whereby the African country will give China four oil-drilling licenses in exchange for a commitment to invest $4 billion in infrastructure. <br><br>China will buy a controlling stake in Nigeria's 110,000-barrel-per -day Kaduna oil refinery and build railway and power stations, as well as take a 45% stake in developing Nigeria's OML-130 offshore oil and gas field, referred to by the chairman of China National Overseas Oil Corp as "an oil and gas field of huge interest ... located in one of the world's largest oil and gas basins". <br><br>Almost all of Nigeria's current oil production is controlled by Western multinationals. But the situation there will also soon change in China's favor. Similar soft infrastructure loans or energy investment offers are being made to Gabon, Ivory Coast, Liberia and Equatorial Guinea. The curious charge against China of "not playing by the rules" and "trying to secure energy at the source" begins to assume real dimension when these and Russia's recent energy moves are taken as a totality. <br><br>Whither Washington?<br>It's little wonder that some Washington hawks are getting alarmed. Suddenly, the world of potential "enemies" is no longer restricted to the Islam-centered "war on terror". Leading neo-conservative ideologue Robert Kagan wrote a prominent opinion article recently in the Washington Post. Kagan is privy to pretty high-level thinking in Washington, presumably. His wife, Victoria Nuland, worked as Vice President Richard Cheney's deputy national security adviser until being named US ambassador to the North Atlantic Treaty Organization. <br><br>Kagan declared, in reference to Russia and China, "Until now the liberal West's strategy has been to try to integrate these two powers into the international liberal order, to tame them and make them safe for liberalism. If, instead, China and Russia are going to be sturdy pillars of autocracy over the coming decades, enduring and perhaps even prospering, then they cannot be expected to embrace the West's vision of humanity's inexorable evolution toward democracy and the end of autocratic rule." <br><br>Kagan charged that China and Russia have emerged as the protectors of "an informal league of dictators" that, according to Kagan, currently includes the leaders of Belarus, Uzbekistan, Myanmar, Zimbabwe, Sudan, Venezuela, Iran and Angola, among others around the world, who, like the leaders of Russia and China themselves, resist any efforts by the West to interfere in their domestic affairs, either through sanctions or other means. "The question is what the United States and Europe decide to do in response," wrote Kagan. <br><br>The mainstream US foreign-policy organization, the New York-based Council on Foreign Relations, has also recently weighed in on the question of Chinese energy pursuits. In a recent report, the CFR accuses the Bush administration of lacking any comprehensive long-term strategy for Africa. It criticizes US focus on humanitarian issues such as in Darfur southern Sudan, demanding instead that the US "act on its rising national interests on the continent". Those interests? The CFR lists oil and gas as No 1; growing competition with China (closely related to No 1) as No 2.<br><br> <p></p><i></i>
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Re: US Outflanked in Eurasia Energy Politics

Postby Byrne » Fri Jun 16, 2006 7:58 am

The SCO been mentioned by Webster Tarpley as a threat to US (energy) interests. The rise of the SCO certainly seems to be getting the back up of the US & the <!--EZCODE LINK START--><a href="http://www.cfr.org/publication/10883/rise_of_the_shanghai_cooperation_organization.html" target="top">CFR</a><!--EZCODE LINK END--> , with recent US State Dept <!--EZCODE LINK START--><a href="http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=43693&NewsKind=Current%20Affairs" target="top">pronouncements</a><!--EZCODE LINK END--> that the SCO was 'contradictory' on 'terror' (presumably because Iran attended the SCO conference as an Observer & is possibly looking to become a full member). <br><br>The SCO was set up, several months before the September 11 terrorist attacks on the World Trade Center in New York. <br><!--EZCODE HR START--><hr /><!--EZCODE HR END--><br>From <!--EZCODE LINK START--><a href="http://www.eurasianet.org/departments/insight/articles/eav061506.shtml" target="top">www.eurasianet.org/departments/insight/articles/eav061506.shtml</a><!--EZCODE LINK END--><br><br><!--EZCODE BOLD START--><strong>WASHINGTON PONDERS WAYS TO COUNTER THE RISE OF THE SHANGHAI COOPERATION ORGANIZATION</strong><!--EZCODE BOLD END--> <br>Ariel Cohen 6/15/06 <br>A EurasiaNet Commentary <br><br>Members of the Shanghai Cooperation Organization during a June 15 summit forcefully asserted their right to regulate affairs in Central Asia. A declaration signed by the heads of state of all six member states, including Russia and China, is widely viewed as placing the group in direct opposition to the United States in the regional geopolitical contest.<br><br>SCO leaders gathered in Shanghai, site of the group’s founding five years ago. In the June 15 declaration, the SCO professed to be operating according to "principles of openness, non-alliance and not targeting at any third party." However, the text’s language left little doubt that the group rejects the US democratization agenda, and hinted that member states would consider acting in concert in an effort to reduce the United States’ geopolitical presence in Central Asia.<br><br>"The SCO will make a constructive contribution to the establishment of a new global security architecture of mutual trust, mutual benefit, equality and mutual respect," the declaration asserted. "Threats and challenges can be effectively met only when there is broad cooperation among all countries and international organizations concerned. What specific means and mechanisms should be adopted to safeguard security of the region is the right and responsibility of countries in the region."<br><br>The statement went on to indicate that Central Asian states would follow their own development paths. "Diversity of civilization and the model of development must be respected and upheld. Differences in cultural traditions, political and social systems, values and model of development formed in the course of history should not be taken as pretexts to interfere in other countries’ internal affairs."<br><br>Also at the summit, Russian President Vladimir Putin expressed support for Iran’s right to engage in peaceful nuclear research. Following a side meeting with Iranian President Mahmoud Ahmadinejad, who attended the summit as an observer, Putin stated that "all countries in the world, including Iran, have the right to fulfill their plans in the use of high technologies for the benefit of their development," the Moscow News web site reported. The Russian leader, however, added a caveat that nuclear research should be conducted "in a way to fully eliminate" international concerns that Iran was striving to build a nuclear weapon. Putin also announced that Iran was ready to negotiate on an international package designed to prompt Iran to suspend its nuclear enrichment activities in return for economic benefits. [For background see the Eurasia Insight archive]. He indicated that Iran would soon makes its views clear on a possible timeline for talks, the official RIA Novosti news agency reported.<br><br>In a speech at the summit, Ahmadinejad called on regional states to tighten cooperation. "We need a strong powerful organization [SCO] to protect us from unreasonable outside interference," the Iranian leader said, plainly referring to the United States.<br><br>Washington now confronts the likelihood the SCO states will try to put the squeeze on the US geopolitical position in Central Asia. American policymakers are currently working to develop a strategy to blunt the SCO’s ability to influence regional developments.<br><br>Kazakhstan, an SCO member, figures prominently in the US strategic calculus. Energy-rich Kazakhstan is Central Asia’s economic engine, and thus wields considerable influence in any regional grouping of which it is a member. Top Bush administration officials have courted the country’s president, Nursultan Nazarbayev. For example, during an early May visit to Kazakhstan, US Vice President Dick Cheney expressed admiration for the country’s economic and political development. [For additional information see the Eurasia Insight archive]. <br><br>The United States is also believed to be supportive of Kazakhstan’s efforts to join the World Trade Organization. The hope in Washington is that stronger US-Kazakhstani ties will encourage Astana to act as a force for moderation within the SCO vis a vis the United States.<br><br>The United States, however, will have to show patience toward Astana. Understandably, Nazarbayev is engaged in a balancing act between the Bear, the Dragon, and the far-away American Eagle. He recently sent a letter to Ahmadinejad calling attention to Kazakhstan’s decision to voluntarily give up its nuclear stockpile after the collapse of the Soviet Union, a gesture appreciated by the Bush Administration. At the same time, Kazakhstani officials have expressed a desire to forge closer economic relations with Iran.<br><br>So, what else can the United States do to counter the rise of the SCO? For one, Washington should recognize that the SCO’s leading powers – China and Russia – are extremely sensitive to the US presence in what has traditionally been their sphere of influence. Washington should develop a nuanced policy, using both words and actions, designed to reassure Moscow and Beijing that the geopolitical competition in Central Asia is not a zero-sum game.<br><br>American diplomats should also strive to convince Chinese officials that Russia is trying to drag Beijing into the anti-American bloc, an action that runs contrary to China’s long-term economic interests. In addition, US officials should remind Beijing that unless Tehran is restrained, Iran is likely to drive up world oil prices through pursuit of its aggressive policies, especially its nuclear research program. [For background see the Eurasia Insight archive]. China is experiencing a tremendous rise in energy consumption, driven by the country’s rapid economic development. As a UN Security Council member, China could play a key role in the possible imposition of sanctions against Iran, if Tehran continues to defy the international community on the nuclear issue.<br><br>The oil price issue represents a wedge that the United States can use to divide Russia and China. With its abundant yet hard-to-extract energy reserves, Russia is a high-cost oil producer, and is thus interested in the Middle East instability to keep oil prices high and its budget revenues higher. &#1040; senior Putin foreign policy advisor told me that Russia will quietly cheer more Middle East instability as oil prices may climb to $90 a barrel or higher. China, on the other hand, has an almost insatiable demand for energy so that it can maintain its present economic growth pace. Thus, Beijing is interested in keeping the price of Middle East oil as low as possible.<br><br>There are few levers available to Washington to influence Russian behavior. Perhaps the best Washington can do is to remind the Kremlin of the likely geopolitical repercussions of an aggressive, nuclear armed Iran. Russia’s present support for Tehran could easily boomerang in the coming years, and Moscow could come to see Tehran posing a geopolitical threat to the Russian Federation’s southern flank. Iranian influence is already making inroads into Azerbaijan, and Tehran is likely to intensify its competition with Moscow for influence throughout the Caucasus and Central Asia.<br><br>As US officials engage China and Russia, Washington should concurrently continue building relationships not only with Kazakhstan, but also with Kyrgyzstan, Tajikistan and Mongolia. Bush Administration strategists believe that wealth creation, robust education strategies, and ethnic and religious harmony will go a long way to stem the rise of radical Islam, and thus take much of the steam out of the SCO.<br><br>As America is pursuing its "long war" on jihadi terrorism and ideology, it can ill-afford a conflict with Russia and China in Eurasia. Thus, Washington must explore ways to establish a dialogue with SCO, or risk yet another humiliation in the hands of Moscow and Beijing. <br><br><br>Editor's Note: Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security at the Heritage Foundation, and the author of Eurasia in Balance (Ashgate, 2005) and Russia-Kazakhstan Energy Cooperation (GMB Publishing, 2006).<br><br>Posted June 15, 2006 © Eurasianet <br><br> <p></p><i></i>
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