Oil Wars: The Balkans
by George Draffan
Wars are often blamed on political, ethnic, and religious animosities, but war is more often the inflamation of these conflicts -- and war is usually about resources: land, transport routes, and above all, resources. What's the most valuable resource in the modern world? Oil.
The 1995 Dayton Accords led to a major NATO military operation to "pacificy" Bosnia-Herzegovina. For the multinational corporations working alongside NATO, one of the most important rewards will be the construction of a trans-Balkan pipeline to bring oil from the Caspian Sea region to Europe. William Ramsay, U.S. Deputy Assistant Secretary of State for Energy, Sanctions And Commodities, claiming that that Caspian oil is "crucial to the world energy balance over the next 25 years," has revealed that "there already exists a kind of outline of a new Silk Road running through the Caucasus and beyond the Caspian. We think oil and gas pipelines, roads, railways and fiber optics can make this 21st century Silk Road a superhighway linking Europe and Central Asia."
The European Union, the U.S. government, and a gang of multinational corporations (including BP, Amoco, Exxon, Unocal, Caterpillar, Halliburton/Brown & Root, and Mitsubishi) are using all the military, political, and economic tools at their disposal to destroy and recreate the infrastructure and economy of southeastern Europe in their own image. The conflicts of interest between government officials and corporate executives are blatant and revealing.
Recent NATO military action in Yugoslavia is part of a long strategic (economic) battle to control the Balkans. The current focus is to secure oil and gas pipeline routes from the oilfields of the Caspian Sea to the consumers of Europe. Multinational oil corporations from the U.S., Britain and other European countries, and Russia are signing multibillion-dollar contracts with Kazakhstan,
"The oil from this region played a major strategic role during this century's two world wars. Protecting the oilfields of the Caucasus was an Allied priority. During the second world war, oil from the Caucasus was an essential target of Hitler's expansionist policies. Following the 1939 German-Soviet pact, Soviet oil from the Caucasus accounted for a third of Germany's imports. In 1942, Germany repeatedly conducted military campaigns to gain control over the region's natural resources. Towards the end of the 19th century, cut-throat competition had already built up between the oil companies. Russia, fearing loss of control over its petroleum markets, sabotaged an agreement in 1895 between American Standard Oil, the Rothschilds and Nobels. Competition in the region was increasingly fuelled by ethnic conflict, administrative corruption and underdeveloped legal and trade practices. Natural resources have [again] become a major issue in the Caucasus and central Asia in recent years. Specialists reckon that the area might contain the world's third largest oil and natural gas reserves after the Gulf region and Siberia. Oil resources are estimated at 200 billion barrels. The most extensive fields have been located in Kazakhstan and Azerbaijan. Other lesser reserves and oil exploitation sites are to be found in Georgia, Uzbekistan, Turkmenistan and Armenia... The fall of the Soviet empire and its concomitant loss of influence in the region has turned the latter into a grey area where regional powers are pitted against one another, each seeking to ensure that their interests prevail within the new successor republics to the former USSR. These countries are seeking a balance between the interests of the regional power brokers and their own national interests and are hoping that their natural resources will offer them the means of developing their economies, thus generating the stability that is needed within the region. One of the major problems of these landlocked states is oil transport, for which they are dependent on cooperation with their neighbours. This is leading to the formation at regional and international levels of a series of alliances and counter alliances, the aim of which is to allow the countries involved to gain access to or influence over some of the world's most important natural reserves."
"Two questions loom over the region's future: Who owns the bonanza? Who will transport it to market? The answers will help shape the global economy in the next century and the international order that governs it. The terms are now being set in some of the most intense corporate negotiations the world has ever seen -- and on a ring of battlefields that encircles the Caspian basin."
In 1998, civil war in the Georgian province of Abkhazia was fueled by Russian weapons to both sides, perhaps to destabilize Georgia shortly before a decision was to be made whether to route the U.S.-backed Main Export Pipeline through Rusia rather than through Georgia. "Moscow wants Georgia to be unstable. It's in their interest," charges Vakhtang Kolbaia, deputy chairman of the Georgian parliament. "Western countries understandably require security for their investments."
As reported by Project Underground in its journal Drillbits and Tailings, "Less than a decade after the final diplomatic skirmishes of the Cold War, the men who led the battle on both sides have joined forces to exploit the oil reserves of the Caspian Sea. The Caspian, which is the world's largest inland sea, is estimated to contain as much as 200 billion barrels of oil alone plus another 100 billion barrels' worth of gas under the neighboring Kara Kum Desert and other sites. At average price levels for the 1990s, that adds up to a treasure chest of roughly US$5 trillion. Today Amoco, British Petroleum, Chevron, Exxon, Mobil and Unocal are leading a multi-billion dollar frenzy to extract these reserves from Azerbaijan, Kazakhstan and Turkmenistan, the three countries that surround the Caspian together with Russia and Iran."
The U.S.-based oil multinational Chevron is leading a Caspian Pipeline Consortium which is developing Caspian-Kazakhstan oil deposits. "Kazakhstan has begun exporting its oil to Europe without using the old Russian network. In late 1996, Tengizchevroil (a joint venture between Kazakhstan and the American company Chevron) exported oil to Europe by road, rail and ship. Existing pipelines today all run through Russia and Kazakhstan is thus dependent on Russia's goodwill. However, Kazakhstan signed an agreement with China on 28 September 1997 providing, inter alia, for joint construction of two oil pipelines, to be operational by the year 2002. Under the Tengizchevroil joint venture, Kazakhstan's Tengiz oilfield began operations in April 1993. Chevron's investment in this contract is probably one of the largest made by an American company on the territory of the former Soviet Union."
In 1992 and 1995, Kazakhstan signed agreements with British Gas and Agip to restore its Karachaganak field.
Atlantic Richfield (ARCO) has a contract with Turkey to develop oil and gas from the Black Sea.
In 1991, Azerbaijan began negotiating with Amoco, BP, McDermott, Pennzoil, Ramco, Unocal, TPAO, Statoil and other corporations on a deal to develop the Azeri, Chirag and Gunashli fields in the Azeri sector of the Caspian Sea. Azerbaijan's State Oil Company (SOCAR) is to have a 20 percent share in the project and the Russian company Lukoil will take a 10 percent holding. The deal was signed in September 1994, and in December the consortium had formed as the Azerbaijan International Operating Company (AIOC), with Terry D. Adams as chairman. American corporations (Amoco, Pennzoil, Unocal, Exxon) have a 40 percent interest in the $8 billion AIOC. British corporations (BP, Ramco Khazar) have a 19 percent interest. SOCAR (Azerbaijan), Lukoil (Russia), Den Norske Stats Olieselscap (Norway), Turkie Petrollari (Turkey), Itochu (Japan), and Delta Nimir Khazar (Saudi Arabia) are also involved.
The AIOC consortium's plan to build a pipeline from Baku to Ceylon, Turkey, has gotten lobbying assistance from former British Energy Minister Tim Eggar (now CEO of the British corporation Monument Oil), former British Foreign Minister Malcolm Rifkind (now a director of the British oil corporation Ramco), two former U.S. National Security Advisors, Zbigniew Brzezinski and Brent Scowcroft (now a director of AIOC), as well as former U.S. Secretary of State James Baker (oil corporation attorney), former U.S. Secretary of the Treasury Lloyd Bentsen, former U.S. Defense Secretary Dick Cheney (then CEO of oil services corporation Halliburton, now candidate for U.S. Vice President), and former Whie House chief of staff John Sununu. Iran-Contra figure and former U.S. Air Force major general Richard Secord has been helping to train the Azerbaijani army.
In November 1995, the Azeri government signed a contract with the CIPCO (Caspian International Petroleum Company) made up of Lukoil (Russia), Agip (Italy), and Pennzoil (U.S.) to develop the the Karabakh oil and gas field (no connection with the Nagorno-Karabakh region) 120 kilometers off the coast of Baku, with reserves estimated at between 450 million and 1.26 billion barrels of crude oil and natural gas.
By 1997, Exxon, Pennzoil, Amoco and Unocal had invested $5 billion in Azerbaijan.
In October 1997, Turkmenistan signed a $2 billion contract with an international consortium led by Unocal company to build a pipeline from Turkmenistan to Pakistan via a route that crosses 750 kilometers of Afghanistan. Turkmenistan President Niyazov confirmed that he had the promise of support for the pipeline from the both the ruling Taliban and from anti-Taliban factions.
"Chevron, as a partner in the Caspian Pipeline Consortium with Kazakhstan, supports a $2 billion Russian route from Kazakhstan to Novorossiysk that is already under construction -- a step that puts the San Francisco firm at odds with Washington. The United States government and a majority of American oil firms have thrown their weight behind the longest and most expensive proposed pipeline, a 1,030-mile, $3 billion conduit across Azerbaijan, Georgia and Turkey, from Baku on the Caspian Sea to the Turkish port of Ceyhan on the Mediterranean. Azerbaijan is also publicly committed to the Ceyhan MEP system, which would tentatively be joined to a proposed $2 billion pipeline under the Caspian carrying oil from Turkmenistan and Kazakhstan. The Ceyhan MEP is expected to cost 50 percent more than the proposed new Russian system. But advocates point out that it would avoid the narrow and crowded shipping lanes on the Bosporus strait between the Black Sea and the Mediterranean, where oil spills would bring disaster to the most heavily populated area of Turkey. In May , Washington formally launched its "Caspian Sea Initiative," authorizing the U.S. Export-Import Bank and two other federal agencies to support 65 energy projects in the region. All are tied to the Baku-Ceyhan route. [In 1999], the new Western Pipeline from Baku to the Georgian Black Sea port of Supsa goes into operation. Like the proposed Ceyhan route, it bypasses Russia entirely, for reasons that that have as much to do with international gamesmanship as they do with money or technical feasibility.... The only existing pipeline courses through Russia, a country whose dependence on volatile energy revenues is as dangerously high as that of its tiny, resource-rich former satellites. A quarter of all Russian tax receipts now comes from oil industry levies and fees. Both the country's young prime minister, Sergei Kiriyenko, and his predecessor, Viktor Chernomyrdin, are former gas or oil company presidents. The Kiriyenko government hopes to revive a deeply ailing economy by drawing the bulk of Caspian basin oil to a much larger new pipeline to Novorossiysk. Rival pipelines through their own countries are also being pushed by Ukraine, Romania, Greece, Iran, Pakistan, Afghanistan, Turkmenistan, China and Armenia. But the primary contenders are the routes to Novorossiysk and Ceyhan -- each of which plunges into a battle zone. Support for a Ceyhan pipeline will drag the American government and U.S. corporations ever deeper into the Turkish campaign against Kurdish insurgents, which is already being fought with American F-16s serviced by U.S. Air Force maintenance crews.
In April 1999, the government of Azerbaijan signed contracts with Exxon and Mobil to develop offshore oilfields in the Caspian Sea. The signing ceremony took place at the U.S. White House, and was presided over by U.S. Secretary of Commerce William M. Daley.
"If we're going to have a strong relationship that includes our ability to sell around the world, Europe has got to be a key....That's what this Kosovo thing is all about." -- U.S. President Clinton
Meanwhile, the Azerbaijan government is selling off ports, railroads, the national airline, airports and other state-run enterprises to foreign investors.
The U.S. Exim Bank, U.S. OPIC, and the World Bank are interested in financing and insuring a Balkans pipeline. In 1998, U.S. President Clinton created an Office of the Special Advisor to the President and the Secretary of State for Caspian Basin Energy Diplomacy.
In April 1998, U.S. President Clinton and Vice President Gore gave a $750,000 grant to Turkmenistan President Saparmurat Niyazov to pay for a study of a gas pipeline that would circumvent Iran by going through Turkey. It was also an enticement for doing further business with Western oil corporations; while Turkmenistan had signed deals with Mobil and Monument Oil, the country refused to privatize its economy. Unocal has been planning a pipeline to send Turkmen gas to Pakistan via Afghanistan, but fighting between the ruling Taliban government and opposition in the north had delayed that project. In May 1998, U.S. Export-Import Bank president James Harmon was sent to Turkmenistan to help finance the export of American goods.
"With Russia to the north, Iran to the south, and the multiethnic Caucasus Mountains strewn across its middle, Azerbaijan is in one of the world's most war-prone neighborhoods... Besides Russia and Iran, there are the rebellious Chechens, who control the main pipeline route from Azerbaijan to the west, and the Georgians and Turks, who are lobbying furiously to have the oil rerouted through their territories instead. And to the west is Armenia, which has occupied 20 percent of Azerbaijan's territory since it seized the enclave of Nagorno-Karabakh in the early 1990s, and has vowed to block any oil pipeline in its vicinity. Yet, U.S. officials in Baku say they hope that Azerbaijan's oil will salve the region's ethnic animosities, rather than aggravate them. Because pipelines will have to be built across several countries, the thinking goes, everyone stands to benefit. President Clinton has personally telephoned the Azeri leader, Aliyev, to recommend that oil be pumped out through two pipelines, one traversing southern Russia and one through Georgia, and then perhaps continuing on to Turkey as the oil flows increase... President Aliyev, a canny former Politburo boss who rules Azerbaijan with only token political opposition, is well aware of his country's importance to the United States and the West, and he is trying to make the most of it. When he handed out exploration contracts, he made sure that oil giants from every major Western country were in on the deal, including Exxon, Pennzoil, Amoco, Unocal, British Petroleum, and even Russia's Lukoil. By crafting such an elaborate network of friendships, Aliyev hopes to balance all the forces who greedily eye his country's wealth. Azerbaijan is the only former Soviet republic outside the Baltic states that has not been forced to accept Russian military bases. It is unabashedly pro-American, and has even petitioned to join NATO."
In June 1999 the U.S. Trade and Development Agency awarded a $588,000 grant to Bulgaria to explore building a pipeline across Bulgaria, Macedonia and Albania to pump Caspian Sea oil European consumers-just before NATO and Russia reached agreement on action in Kosovo.
"The U.S. government has given Bulgaria a half-million dollar grant to explore building a pipeline across the Balkans to pump Caspian Sea oil to the West, sending shock waves through Turkey, a key U.S. ally that wants the potentially lucrative pipeline for itself .... The decision has raised speculation among regional experts that it may be part of a larger economic development plan envisioned by the Clinton administration to stabilize the southern Balkans after the massive dislocations and infrastructure damage caused by the Serbian repression in Kosovo and the US -led NATO bombing of Serbia." -- UPI
"How absurd it is to refer to the oil in the Caspian Sea region as having anything to do with the NATO operation. The Caspian Sea is over a thousand miles from Yugoslavia." - commentator in The Guardian newspaper
"Stated U.S. policy goals regarding energy resources in this region include fostering the independence of the new states and their ties to the West, breaking Russia's monopoly over oil and gas transport routes, encouraging the construction of East/West pipelines that do not transit Iran and denying Iran dangerous leverage over the central Asian economies." -- chairman of U.S. House Committee on International Relations
"The key tactical objective of the [NATO] air war seems to be the deindustrialization of Serbia and Vojvodina, by the destruction of key national refinery, communication and transportation assets in day and night bombardment. John Broder has recently quoted Clinton as saying that "Europeans would...pay most of the cost of rebuilding Yugoslavia" after the war. It is more likely that this help will come in the form of IMF arranged privatization of these economic sectors of Serbia by transnational corporations at fire sale prices. The control of oil fields in Vojvodina, approximately five billion in mineral deposits and the second largest European deposit of lignite coal (17 billion tons) in Kosmet, are just secondary prizes."
Reconstructing Yugoslavia after the war will cost $30 to $100 billion. In July 1999, a Balkan Assistance and Reconstruction Conference in Washington DC was organized Equity International to provide a venue for government officials to meet with corporate executives from Caterpillar, Halliburton/Brown & Root ((see profile of NATO), International Paper, Mitsubishi, and other corporations to plan the financial and political needs for the occupation and operation of the Balkans.
While Dick Cheney was U.S. Secretary of Defense, U.S. construction giant Brown & Root was awarded hundreds of millions of dollars worth of construction contracts in war zones from Bosnia to Somalia to Haiti. Soon after, Cheney quit the Pentagon and was hired as the CEO of Halliburton, the corporate parent of Brown & Root.
NATO provides the military strength, and under a June 1999 "Stability Pact" drawn up by the U.S., UK, Germany, France, Italy, Canada, Japan and Russia, Balkan reconstruction will be coordinated by the European Union in conjunction with the World Bank and the United Nations. "A determined push is being made by Europe to dominate the Balkans in the aftermath of the war. Yesterday the Blair government organised a second meeting to encourage and organise bids by British construction firms and consultants for the rebuilding of Kosovo, worth an estimated £3 billion. Contracts for the entire Balkan region are estimated to be worth £30 billion. The pattern is being repeated throughout Europe. To the same end in Germany, the Schröder government is setting up a task force involving ministries and private firms." As a condition for membership in the EU, there will be a permanent armed presence and the EU would have overall control of "customs services and policing powers to control all port and frontier crossings, as a condition of New Associate Membership." Bosnian economic policy will be controlled by a Western central bank governor from New Zealand, designated by the IMF.
One of the gems of Yugoslavian privatization is the state-owned Trepca mining complex which has reserves of lead, zinc, cadmium, gold, silver, and billions of tons of coal, being processed by smelting plants, metal treatment sites, freight yards, railroad lines, and a power plant.
"Major NATO efforts will also be required in Turkey to control a part of Kurdistan's 65 Gbo of oil reserves and the oil pipeline from the northern Iraqi city of Kirkuk to Turkey's Mediterranean port of Ceyhan. The planned major oil and gas pipelines between Azerbaijan to the port of Ceyhan will require additional security. There are also plans to extend this gas pipeline to Israel, which may explain recent joint Turkey and Israel military exercises. The need to protect this new pipeline will eventually be used to justify an aggressive new NATO pacification action against the Kurdish people. The new 30 billion-five year agreement to modernization of Turkey's military by US arms merchants seems to bear out this possibility. Turkey has already killed thousands of Kurds, destroyed some 3,000 villages, and created about two million refugees in the last 14 years! What will happen when Turkey really gets serious about pipeline security!"
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