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Russia: Caspian Nations Face Difficult Choices On Pipeline Around Chechnya

Boston, 8 October 1999 (RFE/RL) -- Nations in the Caspian Sea region may be facing difficult choices as the result of Russia's invitation for them to join in building an oil pipeline to bypass Chechnya.

The proposal was disclosed Tuesday by an official of the Russian pipeline company Transneft. Sergei Ter-Sarkisyants, a Transneft vice president, said Russia is asking Azerbaijan, Kazakhstan and Turkmenistan to take part in the pipeline plan to detour around Chechnya. Transneft estimates that the line through Dagestan will take six months and $100 million to build.

The figures fall far short of those given recently by other Russian officials, who have publicly discussed options for raising $200 million to $250 million for the Chechnya bypass. When the pipeline alternative between Baku and Novorossiysk was first proposed in 1997 by former Deputy Prime Minister Boris Nemtsov, officials said it would take nine months and cost $220 million.

The huge cut in the cost estimate may reflect the pressure on Transneft to accomplish a political task. Last month, a new chairman of the company was forcibly installed by the government of Prime Minister Vladimir Putin, who ordered the pipeline to be built. Transneft has little money available for such a large unplanned expense. It might be unwise for officials to admit that they cannot do the job. One possible solution is to claim a lower price.

Another way out of the problem would be to share the burden with other Caspian countries, after trying to convince them that they would benefit as well. Two years ago, Russia planned to sell Eurobonds to finance the bypass on its own. Foreign financing seems impossible now with a war going on.

Russia's Caspian neighbors may be tempted to join in a project that would help them to gain export capacity. The line through Chechnya has been closed or subject to illegal tapping for most of this year. Azerbaijan, Kazakhstan and Turkmenistan all depend on Russia in some way for access to export markets. Helping Russia with the bypass might open the door for cooperation on other export routes.

The alternatives to cooperation could also prove hazardous. Russia's relations with Turkmenistan appear to have turned frostier since last month when Ashgabat claimed sovereignty over a sector of the Caspian where it is conducting exploration. The country was warned by the Russian Foreign Ministry, which rejected the claim.

Tensions have been aggravated this week by Russian press reports charging that Turkmenistan is providing passage for Afghan terrorists on their way to Chechnya. Ashgabat has condemned the allegations, calling them "nonsense" and "dirty insinuations." Russia has leveled similar accusations of support for the rebels against Azerbaijan and Georgia, which both support pipeline routes from the Caspian that would avoid Russia. Moscow's message seems to be not only that it would appreciate help in a time of trouble but that it can also use pressure on its neighbors to make them choose sides.

But analysts say that aiding the bypass project would be ill-advised. The detour through Dagestan would help to create a virtual embargo of Chechnya, depriving it of future income, exports or strategic value. Those who join in construction or share in its benefits are likely to become Chechnya's enemies and potential targets for retaliation. It is hard to imagine that a Caspian partnership for the pipeline would be regarded as an ordinary business deal. So far, the Chechens appear to have steered clear of interfering with any pipelines in the region, except the one that runs across Chechnya. Far-flung Chechen business interests have generally supported Azerbaijan President Heydar Aliyev, arguing that he will bring greater prosperity and trade to the Caucasus, even though he has promoted a main export pipeline route that does not run through Chechnya.

But a cooperative bypass project that is designed to cut off all future transit through Chechnya could change the equation in the region, creating the appearance of an alliance against the rebels. There would be an advantage for Russia, but it is hard to see one for the other Caspian nations.

Meanwhile, U.S. officials have renewed their own invitation to Russia to participate in building the Baku-Ceyhan oil line. Speaking in Moscow this week, Jan Kalicki of the U.S. Commerce Department said that greater pipeline capacity for the Caspian will be needed even if a Chechnya bypass succeeds. Russia would be welcome to participate in the U.S.-backed project, an offer that was first made over two years ago.

But peaceful cooperation seems even less likely now, while pipeline projects have become an extension of war.