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Central Asia: Pipeline Superhighway Replaces The Silk Road

London, 19 November 1997 (RFE/RL) -- A senior U.S. official says a new Silk Road is being created through the Caucasus and the Caspian that will serve as a "superhighway" between Central Asia and Europe.

William Ramsay, deputy assistant secretary of state for energy, sanctions and commodities, said in London today that the creation of this east-west corridor will coincide with the development of the Caspian oil and gas fields -- the world's second largest reserves outside the Gulf.

He said: "There already exists a kind of outline of a new Silk Road running through the Caucasus and beyond the Caspian. We think oil and gas pipelines, roads, railways and fiber optics can make this 21st century Silk Road a superhighway linking Europe and Central Asia."

Ramsay spoke at a two-day conference, "Oil and Money", which is considering the extent of world oil energy reserves and the likely supply and demand challenges of the future. The conference is being attended by energy industry executives and financiers.

Ramsay said the Caspian reserves are crucial to the world energy balance over the next 25 years. He said U.S. companies estimate that the region has some 65 billion barrels of economic reserves -- roughly the equivalent of the North Sea when drilling began.

He said some experts estimate that the area can daily supply 4.5 to six million barrels of oil a day if production and transit problems are resolved. He said the Caspian can provide one-third of the expected increase in energy demand by 2010 -- and will play a decisive role in powering world development over the next three decades.

Ramsay said U.S. Energy Secretary Pena stressed on his visit to the region last week that the next 12 to 18 months are a crucial period in Caspian development. Pena went to Ankara, Yerevan, Baku, Ashgabat and Tbilisi. (US officials are also due to discuss Caspian issues with Kazakh President Nursultan Nazarbayev in Washington this week).

He said Pena carried a strong message in support of multiple pipelines from the oil and gas fields in Azerbaijan and other Caspian nations and the need to get on with selecting a main export route.

Pena also reiterated his support for a pipeline route from Baku through the Caucasus to the southern Turkish coastal city of Ceyhan.

Ramsay said Pena used each stop to reinforce U.S. opposition to investment by western energy companies in the Iranian oil and gas sectors, as well as to Iranian transit corridors for Caspian oil and gas. Teheran argues that its geographical location linking the world's two most important hydrocarbon reserves, the Caspian and Gulf, makes its the logical choice for the transhipment of Caspian oil to the Persian Gulf and Caspian gas through Iran from Turkmenistan to Turkey.

But another U.S. speaker at the conference, Robert Pelletreau, a former Assistant Secretary of State for Near Eastern Affairs, outlined the U.S case against Iran: its alleged support for international terrorism, its "aggressive" attitude towards its Gulf neighbors, its desire to develop weapons of mass destruction, particularly nuclear weapons, and its repression of human rights at home. Ramsay said the U.S. Congress's Iran-Libya Sanctions Act, ILSA, threatening sanctions against western energy companies investing in Iran (and Libya) "wasn't particularly popular" among regional leaders -- but "neither did we find any real enthusiasm for putting confidence in Iran to provide unimpeded transit of vital exports or imports."

Ramsay said the sanctions are in place not to frustrate U.S. friends in and around the Caspian basin, but because Iran has "not yet chosen to cease its unacceptable behavior." (Ramsay himself is the U.S. government official with responsibility for implementing ILSA.)

Ramsay said on his tour, Pena made clear that all regional countries can benefit from a Eurasian Transport Corridor, and he encouraged the "early resolution of territorial disputes that limit options for pipeline routes." The Caucasus has a number of ongoing disputes including Chechnya, Abkhazia, South Ossetia and Nagorno-Karabakh.

Ramsay said dozens of U.S. companies are involved in Caspian developments, mostly offshore, where U.S technology is unrivaled. U.S firms have spent several billion dollars in a region where total investment may rise to over $30,000 million in the next several years.

Ramsay also said that Russia -- "the essential player in the region" -- has much to gain from participating fully in the development of the Caspian Basin reserves. He said its companies can make money off both the production and transport of these resources and Russia can also benefit indirectly as these countries become more prosperous.

He said: "I want to make it crystal clear that we are not competing with Russia in the Caspian. As far as we are concerned, the Great Game (named after19th century Russian-British rivalry in the region) is a fiction invented by journalists and pundits who have transferred a 19th century framework to the last days of the 20th century."

He said Pena and Russian First Deputy Prime Minister Nemtsov had talks earlier this month to identify ways in which the U.S. and Russia can cooperate in the Caspian region.

Ramsay said the U.S. wants to see the Caspian countries use their resources as the engine to develop into independent, market-oriented economies. He said: "We can trace a direct line between economic development in the region and the resolution, or at least the dampening, of its turbulent political relations."