The military operations in the Balkans affect the calculations concerning export routes for Caspian oil. The near-term regional effect of the hostilities in Kosovo is to make the Baku-Ceyhan line slightly more likely.
This is not to deny the continuing difficulties of a global and long-term nature that have made prospects for this project doubtful over the last year. One major question is whether the Azerbaijan International Operating Company (AIOC) will be able to produce enough oil to fill a Baku-Ceyhan line. Awaiting the results of Kazakhstan's overall review of export options for Tengiz oil, expected in late summer or early autumn, the AIOC put its Baku-Ceyhan planning committee on a quarterly rather than annual funding basis. In the near term, the Baku-Supsa link will not have the capacity required for this, and it is not anticipated soon.
The first and most obvious direct effect of the fighting in Kosovo is to put into doubt plans for transporting Caspian oil across the Balkans. This prospect has been central to several variants proposed by Romania, which wants to put the port of Constanta online as a transshipment point for exporters seeking to avoid the Turkish straits. Proposed transport routes going through Serbia on the way from Constanta to Trieste are now less likely for obvious reasons. However, another proposed route--less well known and not part of the Romanian proposals--from Bulgaria through Macedonia to the southern Albanian port of Vlore is also looking more doubtful.
Two other recent developments potentially affecting Balkan pipeline routes deserve note, although the events themselves are not strictly speaking in the Balkan area. The first is the effect that the fighting in the Balkans is having on domestic politics in Ukraine. It has strengthened the hand of the Russophiles, who have pushed a resolution through the Supreme Rada that supports reconsideration of the country's ties with NATO, even as the government continues to participate in the Partnership for Peace. The eventual result may be to force a national debate over the question of the nature of relations with Russia and participation in the structures of the CIS, including its security component. If this occurs, then domestic political constellations may later bring into question Ukraine’s role in the establishment of non-Russian oil export routes from the Caspian region.
The second is the birth of an evolving entente between Georgia, Azerbaijan, Turkey and Israel over energy and security. Readers probably remember the recent flap over Azerbaijan's offer of military facilities to NATO, made by an advisor to President Heidar Aliyev while Aliyev himself was undergoing medical treatment in Turkey. As that proposal was a nonstarter, Azerbaijan has now made an equivalent offer to Turkey alone. This seemed to be one of the axes of the "GUAM" entente (Georgia-Ukraine-Azerbaijan-Moldova), which arose a year and a half ago as these countries sought to solidify their autonomy from Moscow by agreeing to cooperate on non-Russian routes for export of Caspian oil. Now that is not so clear.
Almost unnoticed in the recent turmoil, Israeli leaders have visited Georgia and declared their interest in purchasing oil from the Ceyhan end of the prospective Baku-Ceyhan line. This hardly guarantees it will be built, but it highlights the complexity of international relations in the region.
The Azerbaijani offer to Turkey is not the only manifestation of this. Turkey and Israel have been enhancing their military cooperation now for many months. Azerbaijan has now even volunteered to send peacekeepers to the Balkans if requested to do so. All these countries have a common interest in the Baku-Ceyhan line, and the broader international security situation will probably promote their mutual rapprochement whether Baku-Ceyhan is built or not.
This new security formation also has a stronger general security component than the GUAM group. Its potential significance will increase as Turkey has let it be known that it will use its voice in NATO to prevent greater security tasks from being conferred on the West European Union. That in turn follows from the continuing hesitation-waltz between Turkey and the EU, which last year acquired acrimonious public expression and has left Turkey with only the United States as a major security partner.
The U.S. government is nevertheless impeded in its dealings with Ankara by the Greek and Armenian lobbies in Washington. These have not (yet) stopped the U.S. Congress from working up a bill that would drop the restrictions on aid to Azerbaijan as a part of a reassessment of national strategy in the "Silk Road" region. For the reasons of international strategy just mentioned, there has been a split in Washington between the Israeli and the Armenian lobbies, whose common interest in genocide issues usually leads them to work closely together.
Copyright © Robert M. Cutler unless otherwise noted.
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First published in FSU Oil & Gas Monitor, No. 25 (30 March 1999): 7 8.