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Turkmenistan: A U.S.-Iran Thaw Could Mean Major Benefits

Boston, 23 December 1997 (RFE/RL) -- As Iran takes the first tentative steps toward a dialogue with the United States, Turkmenistan can hope to reap rewards for its neutral policies for the first time.

Until now, Central Asia's attempts to deal with both Washington and Tehran have led only to tensions and contests over which interest would prevail. Russia, with its traditional influence over the Near Abroad, has been able to play one side against the other to get its own way.

But the overtures by Iranian President Mohammed Khatami this month may have suddenly changed the rules of the game. The U.S. now appears to be delaying the imposition of sanctions against Iran in hopes that a dialogue will develop between the two longtime foes.

Despite pressure from the U.S. Congress, American officials have already proved reluctant to invoke the sanctions law against Iran's $2 billion gas deal with France, Russia and Malaysia for fear of retaliation and a possible trade war.

Now, a stronger case can be made that sanctions should be put off to give dialogue a chance, opening the door to diplomacy for the first time since the Islamic Revolution of 1979.

If concrete progress can be made, then President Bill Clinton may be encouraged to waive sanctions in U.S. national interest. The law, which would impose sanctions against countries providing major business investments in Iran, also allows for a waiver of those provisions by Presidential determination.

Prospects for full relations between the U.S. and Iran still seem to be far off, but even so, the chances seem better now than at any time in the past 18 years. Under the best circumstances, resumption of normal American-Iranian trade is likely to take some time. But as a median step, the U.S. might be convinced to tone down its opposition to pipelines from Central Asia crossing Iran.

Such a change would be of enormous benefit to Turkmenistan. The republic is set to inaugurate its first pipeline from the Korpedzhe gas field to Iran later this month. While this line is expected only to supply Iranian cities like Mashad, there are hopes that a 2,000-kilometer pipeline will also be built through Iran to supply Turkey with gas.

In addition, Turkmenistan hopes to join Kazakhstan and China in building a trans-Iran oil pipeline to the Persian Gulf. All such projects now face U.S. opposition because of frozen relations with Tehran.

But if U.S. policy changes, Turkmenistan may at last be able to enjoy the competitive advantages of a major petroleum supplier instead of being caught in the middle between the great powers.

At present, Turkmenistan is torn by choices rather than being able to choose the best deal. The Clinton administration has been pressing the republic to commit its gas to a trans-Caspian pipeline which many analysts consider to be too costly and aimed only at avoiding Iran.

True competition among all available routes and markets seems to be the only way for the Central Asian energy suppliers to break through the standoff. Russia already seems to be sensing the change.

Last week, a spokesman for Russia's Gazprom expressed hope that the company's decision to build a Black Sea pipeline to Turkey would not affect its relations with Royal/Dutch Shell. Although Shell and Gazprom recently announced a strategic partnership, they now also seem to be in competition because Shell has decided to help build the Turkmenistan pipeline to Turkey through Iran.

As U.S. relations with Iran advance, it is likely to become increasingly clear to the Clinton administration that Russia has been the major beneficiary of its containment policy until now. Once pipeline routes to Iran open up, Russia will lose its monopoly status and become far more accommodating in order to stay in the game.

There have already been some hints that Gazprom will soon ease its stand toward Turkmenistan and perhaps allow pipelineaccess to Turkey over Russian territory, so that it can argue that no lines through Iran are needed after all.

But the benefits of competition will require that progress between the U.S. and Iran come quickly in the coming year. Azerbaijan has said that it plans to start negotiations in January with all concerned parties for the choice of a main export route for oil, to be decided in October 1998.

If Iran is disqualified from consideration, it could keep the conflict going for years. But the chances are that Western oil companies will try to deal with Iran in any case because shipments of early oil from the Caspian through Chechnya are not assured.

In its turmoil over domestic issues, Russia has apparently neglected to negotiate transit fees with Chechnya for Caspian oil shipments past the end of this year. Companies like British Petroleum say they believe that the Clinton administration will allow oil swaps with Iran, permitted under the sanctions law, to begin if Azerbaijan's export route through Chechnya fails.

That move would bring Iran closer into commercial relationships with republics of the Caspian region and could demonstrate to the U.S. that Iran can be a trustworthy transit partner. Such a development may be the next necessary step in U.S.-Iranian relations, even before a political dialogue occurs.

Michael Leylveld is national correspondent for the Journal of Commerce, an American newspaper. This analysis was written exclusively for RFE/RL.