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Analysis From Washington - Profits Financial and Political

  • Paul Goble



Washington, April 30 (RFE/RL) - A new pipeline deal allowing oil from Kazkhstan's Tengiz field to flow to the West will bring Moscow both financial rewards and important political benefits.

On his way back from China last week, Russian President Boris Yeltsin signed an accord with Kazakhstan, Oman and a number of international oil companies that calls for the construction of a new pipeline between Kazakhstan and the Black Sea.

Under the agreement, the Russian government and Russian companies will own 44 percent of the total flow and thus receive 44 percent of the profits. Western firms - including Chevron, Mobil, and British Gas - will put up most of the 1,200 million needed to construct the pipeline to a new port near Novorossiisk.

Yeltsin suggested that this agreement was possible because Russia now had gained a larger ownership share in the consortium than earlier agreements had anticipated. His public suggestion - that this deal was primarily about profits - was echoed in a number of Western papers.

But in fact, as Yeltsin has made clear in the past, far more was and is at stake.

Kazakhstan's President Nursultan Nazarbayev has viewed the construction of a pipeline to the West as both a source of needed hard currency for his country and a basis for his country's political independence from Moscow. Until recently, he and Chevron, the original foreign investor in this project, had explored a number of pipeline routes for the oil over which Almaty would have greater control.

Among the proposals were routes through Iran, the Transcaucasus, the North Caucasus and even China. But none of these was chosen. Some were rejected because of conditions on the ground, others because of Western views on Iran, but all were opposed by Moscow which wanted the oil to flow through Russian territory.

After four years of discussion, the Russian position has won out, and Moscow can expect to reap enormous profits - but the biggest ones will be political rather than monetary.

While Kazakhstan will be enriched by the sale of oil - and its economic situation dictated its agreement to the latest terms - Russia will gain even more of the profits and with a minimal investment.

But most important from Moscow's point of view, Russia will now have a chokehold on the flow of Kazakhstan's oil to the West and thus will be able to use this power to secure greater Kazakhstani acquiescence in Moscow's current plans to accelerate the reintegration of the CIS countries.

Moreover, Moscow will have assured itself of control over yet another source of oil that could be put in play as a bargaining chip if there is another oil crisis in the Middle East. Just as Russian strategic thinkers have pointed out that Moscow could under certain conditions use its gas pipeline to divide Western Europe from the United States, so too there will be those in Moscow who might urge the similar use of Kazakhstan oil.

As in the past, these political consequences of the chosen route have been largely ignored in the Western press. Not only does that make them more likely to occur but it virtually guarantees that an agreement intended to help Kazakhstan in one way may end by weakening it in another.
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