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Central Asia/Russia: Analysis From Washington--Dueling Pipelines

Washington, 4 August 1997 (RFE/RL) - Two major decisions -- one by the United States and another by Russia -- highlight the complex interplay of politics and economics on all questions having to do with access to Central Asian gas and oil.

A week ago, U.S. officials said that Washington had no legal basis for objecting to Western involvement in an Iranian pipeline project to carry Turkmenistan natural gas across Iran to Turkey.

These officials said that the ongoing American sanctions regime against Tehran, for its sponsorship of international terrorism, did not apply in this case because the principle beneficiaries of this project would be Turkmenistan and Turkey rather than Iran.

Then on Friday, the Russian government told Turkmenistan President Saparmurat Niyazov that it had annulled an agreement between two Russian oil companies with Azerbaijan because of Ashgabat's objections.

That accord, signed by Lukoil and Rosneft with the State Oil Company of Azerbaijan on July 4, called for the exploitation of offshore gas deposits in Kyapaz, a section of the Caspian Sea claimed by Turkmenistan as well as Azerbaijan.

At one level, the American decision appears to reflect the triumph of economics over politics, while the Russian one appears to reflect the triumph of politics over economics.

But in fact the situation is far more complicated not only for these two countries but for Turkmenistan and the entire region.

Despite repeated denials, Washington's decision to allow the pipeline to go ahead not only opens the way for the outflow of Turkmen natural gas to the West and for the profits that will bring, but also has enormous political consequences -- intended or not.

Washington's decision in this case sets a precedent that it will be hard for the U.S. to back away from unless Iran decides, or is provoked into, some new outrage. And if there are more projects like this one, they will inevitably lessen Tehran's diplomatic isolation.

Moreover, the American decision to allow this project to go ahead may permit the countries of Central Asia and the Caucasus to build a more solid foundation for their independence.

And that in turn represents a fundamental geopolitical challenge to Moscow which has sought to maintain its influence over the territory of the former Soviet Union and which has exploited Western efforts to isolate Iran in order to isolate these countries as well.

For Russia, on the other hand, the decision to defer to Ashgabat on the question of Kyapas is clearly a political one -- a response to warming U.S. ties with Azerbaijan and a reassertion of Russia's claim to a voice over decisions about the Caspian basin.

But the Russian decision has both economic roots and economic consequences. One reason Moscow may have decided to annul the accord was that some in the Russian capital were unhappy with their share of the deal or its division among the two Russian companies.

Moreover, at least some in Russia may be calculating that they can get an even better deal from Ashgabat, and possibly even from Baku, by taking this line now.

Turkmenistan's sale of natural gas to Russia and other CIS countries fell dramatically last year because Ashgabat did not receive payment. But that fall-off has weakened the economy of Turkmenistan and thus limits its freedom of action on other issues.

Moreover, by backing Ashgabat on this issue, Russia may be trying to promote itself as a pipeline route at least for the immediate future especially since the Iranian pipeline route's capacity is too small to carry all the natural gas Turkmenistan would like to export.

And that in turn might lead others, including those involved in the development of Azerbaijani oil, to look to the Russian route as well.

These contrasting combinations of politics and economics seem likely to complicate the development of this region. Not only must each government consider the ways in which these two elements matter for itself but also the ways in which they matter for the other.

Any failure to do the latter will almost certainly mean that one side will misread the actions of the other in this most complicated of games. And that in turn could further delay the start of the flow of gas and oil from Central Asia and the Caucasus.