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China: Analysis from Washington -- A New Player Enters Pipeline Politics

Prague, 30 January 1998 (RFE/RL) -- China has emerged as an important new player in the politics of pipeline projects intended to export oil and gas from the strategically important Caspian basin.

Driven by the increasing demands from its growing economy for petroleum products, by difficulties in developing its own domestic oil and gas resources, and by a desire to project Chinese influence along the Pacific rim, Beijing has encouraged talk of pipelines to bring oil and gas from Central Asia to China.

Because of the obstacles they have faced in moving Caspian oil out in other directions and because of the enormous potential market in China specifically and East Asia more generally, both the countries of this region and several major Western oil companies have responded with plans for just such pipeline routes.

Two projects are currently in the planning stages. One, a Turkmen-Kazakhstan-China-Japan route, has attracted investments from Exxon as well as other major firms. And another, a Kazakhstan-Chinese route, is being backed by Chevron.

Even the most optimistic scenarios suggest it might be several years before either of these or any other pipelines between the Caspian and China could be built.

But just as in the case with as yet incomplete pipeline projects heading westward, the possibility that Caspian oil and gas could flow eastward has already called attention to the enormous consequences that such a pipeline would have on the Caspian states, on China, and on the broader world.

For the Caspian basin state, such a pipeline might mean that they would finally be able to enjoy the benefits from the sale of their natural resources.

Such increase in wealth would almost certainly reduce their dependence on Russia, but it might also exacerbate tensions within the newly rich states while increasing friction between them and their still poor neighbors.

Moreover, such a pipeline would almost certainly lead the countries of the region to look to the Pacific rim rather than to the Middle East for economic and even political leadership.

Since they achieved independence in 1991, these countries have paid a great deal of attention to the countries of the capital-rich Pacific rim. And the construction of a Chinese pipeline route would only increase that tendency.

Such a development would confound the expectations of many governments and analysts in the West that the Central Asian states would focus almost exclusively on the countries of their Muslim co-religionists in the Middle East.

For China, the construction of such pipelines would bring a number of obvious benefits: It would provide the Chinese with a supply of oil and gas that would be very difficult for any other country to cut off and thus enhancing China's ability to project power in the Pacific.

It would reduce or even eliminate China's need to develop its own petroleum reserves in Xinjiang province. Efforts to develop oil and gas there in the past have sparked violent confrontations between the indigenous Uighur populations and the immigrant Han Chinese.

And such a pipeline route would give China greater freedom of action in international affairs. On the one hand, it might reduce Chinese interest in cooperating with the West to stabilize the Middle East. But on the other, it might also reduce Chinese interest in using its rising military power to influence its neighbors by giving Beijing a more cost-effective economic weapon to use against them.

Lastly, the construction of such a pipeline would have a major impact on the Pacific rim states, on the United States and Western Europe, and on the Russian Federation.

The Pacific rim states would simultaneously gain access to more oil and gas but only at the price of accepting additional Chinese influence.

The impact on the United States and Western Europe would be serious but not all in one direction.

Several firms would undoubtedly profit from the development of such a pipeline, but the strategic interest of these countries to reduce their dependence on oil from the Middle East might suffer. Moreover, both the U.S. and Western Europe would likely have to contend with an even more powerful and independent minded China.

Last but perhaps most serious is the impact this development would have on Russia. Not only would China be strengthened both relatively and absolutely, but Russian influence in Central Asia would be reduced still further.

Like the construction of a Chinese pipeline, such consequences remain very much in the future.

But because Chinese demand for oil will only grow, because other routes out for Caspian oil appear likely to remain largely blocked, and because a Chinese route appears to face fewer political obstacles than do other proposed pipeline routes, the possibility that such a pipeline will be built appears likely to attract ever more notice.

And that in itself will almost certainly mean that Chinese influence in the region and beyond will grow, even if no Caspian oil and gas flow eastward for many years.