Tangled Web of an Oil Pipeline

Competition to control Central Asian fuel wealth heats up with violence

A dash of the surreal has been added to the stew of money, power, and murder simmering in Transcaucasia. Abkhaz separatists, demanding independence from Georgia, are threatening to blow up any pipeline moving oil from the rich new Caspian Sea oilfields to a terminal on Georgia's Black Sea coast. Tens of billions of dollars are at stake, which helps to explain the motivation. But who is doing what remains murky.

Abkhazia is a small triangle of land on the Black Sea in northwest Georgia, with a population of perhaps half a million, of whom less than 20 percent are ethnic Abkhazians. Some say the rebellion was started by Russia, to cut Georgia down to size. In any case, it was pursued with decisive Russian military support. A quarter of a million ethnic Georgians were driven out. Some of these who sought to return have been massacred.

Open war has ended after five years but violence continues. The separatists have proclaimed a republic. It has no international recognition, not even in Moscow. It recently advised US oil companies, among others, as well as foreign construction firms and bankers, that the billions they are investing are seriously at risk unless Georgia gives in. Speaking of a potential "war zone," one letter reads, "At the present time, Abkhazia has elements in place ready to implement plans to completely disrupt any efforts to install an oil pipeline through Georgian territory."

Sizing up the roaring mouse

It is hard to tell how real this threat may be. The roaring mouse has sharp little teeth and the pipeline runs within reach a dozen miles away. Moscow doesn't want that pipeline functioning under any conditions. It would like to see all Caspian oil flow through Russia, collecting transit fees that would increase exponentially as oil production goes into high gear after 2000. Russia's own petroleum industry is in a bad way. The world price at present just about equals the cost of production plus taxes and transit, meaning very little return from what has been one of Russia's most profitable exports.

On February 10, an attempt was made to assassinate President Eduard Shevardnadze in the heart of Georgia's capital, Tbilisi. It was a highly professional job. A strong commando force choreographed an ambush with rocket grenades and heavy machine guns. Mr. Shevardnadze escaped when the driver of his armored limousine managed to run it out of range.

No Russian connection has been established, but Shevardnadze spoke of a "third force" of "international terrorism" in Russia. This description might fit old communists, who consider Shevardnadze a traitor for his role in the collapse of the Soviet Union, or elements in the military or in the oil industry. Thirty months earlier, while negotiating with Turkey, a car bomb nearly killed Mr. Shevardnadze. Asked whether it was meant to block a pipeline deal, he replied, "You asked the right question."

The pipeline tangle is as bizarre as its Caucasus/Central Asia background. The region on both sides of the Caspian sea has a Thousand-and-One-Nights quality. Here lies the greatest oil find of this half-century, with twice the reserves of the North Sea and Alaska combined, (plus huge quantities of natural gas) coming on stream as the output of those older fields declines. Small wonder that giant oil companies of many nations are attracted, as bees to honey. The investment of some $8 billion is expected to bring a return of $40 billion from Azerbaijan alone. One insuperable obstacle has been removed - with the end of the Soviet Union, the oil fields lie in what are now independent countries. A remaining difficulty is Russia's claim to a share of all Caspian off-shore oil on the grounds that the world's largest enclosed body of salt water is a lake - which allows more territorial claim - and not a sea.

Still, there are signs that Moscow is softening this demand - at a price. It has even reached an agreement with Kazakhstan, removing the block on its energy exports. There has, however, been no visible change in Russia's stand on the Transcaucasus pipelines. Two Soviet-era lines exist for Baku oil, both at present unused. One runs north to the Russian port of Novorossiysk, but via Grozny in Chechnya. Moscow is glad to re-route it. The other leads to the Georgian port of Supsa. It is decrepit but under urgent repair. Both are adequate for the comparative trickle, the so called "early oil" that will flow for the next two years. When it gushes in the new century, a big pipeline will be needed and the odds favor the Georgian option. Especially attractive is one that would branch south from Georgia to the Turkish port of Ceyhan on the Mediterranean, expensive but obviating the need for tankers in the Black Sea.

Opening Central Asian valve

The US is backing this course as vigorously as relations with Russia permit. It favors any plan that gives the former Soviet republics economic as well as political independence from Moscow. But Washington has another aim too - cutting Iran out of the action. This is coupled with sanctions against Iraq and labeled dual containment. It is a hybrid that leaves Saddam Hussein in place in Iraq, nastier than ever, and sees Iran reaching out in all directions, in business as well as diplomacy.

When the US Congress and the administration stop shooting themselves in the foot, they will be able also to help open the Central Asian valve of the great new energy source for America's and everyone's benefit.

* Richard C. Hottelet, a longtime foreign correspondent for CBS, writes on world affairs.

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