April 1996

Diplomatic Doings

Georgian Official, Caucasus Expert Discusses Volatile Pipeline Issue

An official from the Republic of Georgia said that unlocking the rich oil fields of Azerbaijan is one of the great problems of the late 20th century. The problem demonstrates the complex political power struggles in the Caucasus region and it represents a potential conflict that could draw in Russia, Iran and all of Eastern Europe. Paul Goble, a senior fellow at the Potomac Foundation and a Caucasus expert, said a possible war in this region "would make Bosnia look like a pre-school class."

Goble joined Georgian Minister and Deputy Chief of Mission George Makharadze at a Feb. 26 Middle East Institute discussion on the prospects for building an oil pipeline through the Caucasus. Although it is clear that all countries involved in a pipeline agreement would benefit economically, Goble pointed out that the issues are far more complex than just economic benefits. "It isn't about oil, it is about political power and how Russia, Iran, the U.S. and others want to exercise that power," Goble said.

Azerbaijan and the oil companies involved have examined a number of options for piping oil from their land-locked reserves to a sea port for distribution. All the possibilities have been met with strong criticism by one side or another. Azerbaijan proposed exporting oil through Iran, and met with opposition from the United States. It proposed a pipeline through Russia, but there Azerbaijan risked losing control to Russian interests. A pipeline route through Armenia would work only if the Nagorno-Karabagh war were resolved, and a route through Georgia depends on security and financing, both of which are questionable in the new republic.

Makharadze said Georgia is ready to use its existing pipeline structure to ship Azeri oil. "This project is of the utmost importance for Georgia," he said. "It will bring related infrastructure, money and jobs, and stabilize our government and the economy. With this, Georgia will be able to attract other companies to invest." Makharadze also stressed the West's interest in Georgian stability, saying his country is a "bulwark" against Islamic fundamentalism. "Our success is certainly critical to U.S. national security interests," he said.

While Georgia pushes for an agreement, however, Goble said there are some parties that don't want a pipeline in place. As long as there is opposition, he said, the prospect for exporting oil out of Azerbaijan remains poor. "Russia wants to remain the dominant power in the region and it knows that to do this it must stay in control of energy production and distribution," Goble said. "Russia would be perfectly willing to keep a state of frozen instability in the Caucuses until it is ready to step in and take control again."

He also warned that minority and non-governmental interests in Georgia and Armenia could also hinder oil distribution, even if both governments agree to a pipeline. "It is real easy to blow up a pipeline," Goble added. "You must create a situation where everyone will benefit from the oil moving and no one benefits from blowing it up."

In a critique of U.S. policies in the region, Goble said America's hard-line stance against Iran has only complicated the issue and hasn't served any strategic purpose. Shutting out Iran also allows Russia to be the only major power. "Isolating Iran as a radical Islamic state is a sure way to keep it radical and destabilized," he said. Although he criticized many of Iran's domestic and foreign policies, he said the United States has been "too pro-Russian and too anti-Iranian" in its foreign policy. Russia's handling of the Chechnya issue proves why this could be a dangerous strategy, he said.

A solution to Azeri oil distribution, Goble concluded, is the establishment of an international consortium to agree on a pipeline plan that benefits all the countries in the area. The United States, he said, should play a major role in this consortium. "We have to make sure that all countries benefit from keeping the oil flowing and that no country benefits from stopping it."

—Geoff Lumetta