Caucasus Report: January 19, 2001

WILL THE NEW U.S. ADMINISTRATION CONTINUE TO SUPPORT BAKU-CEYHAN? The nomination of former US Senator Spencer Abraham as US Energy Secretary in the new administration has engendered concern in Turkey and Azerbaijan as possibly heralding changes in U.S. policy towards the region that might adversely affect their interests. As a senator from Michigan, Abraham was a fervent supporter of Armenian issues in the U.S. Senate. He also led the campaign to stop the Clinton administration's attempts to annul Section 907 of the "Freedom Support Act." Abraham was also active in Armenian Genocide recognition campaign, and Armenian-American lobbying groups in Washington routinely identify him as a friend of Armenian-Americans.

In addition, newspapers in Turkey and in Azerbaijan reported last week that President-elect George W. Bush has been advised by two prestigious Washington think tanks, the Cato Institute and the Carnegie Endowment, to abandon the Baku-Ceyhan pipeline project on the grounds that shipping oil from Baku to the Turkish Mediterranean port Ceyhan is not commercially viable.

In testimony before the U.S. Senate Foreign Relations Committee last April, Martha Brill Olcott, a senior associate of the Carnegie Endowment, questioned the strategic significance of the Caspian region for the U.S., arguing that "at best this has been an area of secondary security interest for the U.S." She said then that in time the Caspian region could turn into more of a strategic burden to the US than the strategic asset it is currently perceived as.

In a foreign policy briefing last October, Cato Institute research fellow Stanley Koeber cited Chevron's Eurasia business unit's assessment that the Caspian oil will have high shipping costs (between $3 and $4 a barrel ) and low oil prices in the international markets that together will make the profit margin very thin.

"The pipeline, far from promoting US interests in the region, undermines them," because it has exacerbated U.S.-Russian tensions and bypasses Iran, thereby creating an obstacle to reaching out to those Iranians who want change, Koeber concluded.

Other U.S. research institutions also have expressed reservations about the Clinton administration's energy policy in the South Caucasus. The Baker Institute of Rice University in Texas has concluded that American interests in the countries of the Caspian Basin are modest. In a study published in April 1998, Baker Institute research fellow Joe Barnes concluded that "despite talk of a new 'Silk Road,' their physical remove from important markets and major sea-lanes renders them unlikely candidates to become, as some optimistically suggest, the new 'Tigers' of Asia."

Speculation in the Turkish press on a possible change of U.S. Caspian policy continue nonetheless, despite assurances by officials of the outgoing Clinton administration that there will be no change in U.S. policy on Baku-Ceyhan pipeline.

Steven Sestanovich, the State Department's ambassador at large for the Newly Independent States, said last week in Washington that there is no disagreement in Washington on the Caspian. Sestanovich added that he expects no change in U.S. policy in the region. But he acknowleged that the Bush administration has to take its own look at policies in the region.

Despite this advice, it is very unlikely that the new administration would in fact declare that the Caspian Basin is an area of secondary importance for U.S. interests. But it is very likely that the new administration's oil strategists will try to lift sanctions against the countries in the region.

In a speech at the Cato Institute in 1998, current Vice President-elect Dick Cheney harshly criticized U.S. sanctions against both Iran and Azerbaijan. As a result of those sanctions, Cheney said, "American firms are prohibited from dealing with Iran and find themselves cut out of the action, both in terms of opportunities that develop with respect to Iran itself, and also with respect to our ability to gain access to Caspian resources."

Lifting sanctions against Iran would certainly translate into major shifts in the U.S. energy policy in the Caspian. As U.S. oil firms have suggested, in addition to the existing Russian and planned Turkish export pipleines, one through Iran, which is regarded as economically the most viable route, would also become a feasible option. Another possibility would be annulling Section 907 of the Freedom Support Act, which imposes sanctions on Azerbaijan, and putting its rival Armenia on the major pipeline map. Possibly anticipating such a proposal, Ilham Aliev, the vice president of Azerbaijan's state oil company SOCAR, said last week, however, that Baku would never condone routing the Baku-Ceyhan pipeline via Armenia. (Harry Tamrazian)

ARMENIAN OPPOSITION PARTY DENIES ITS LEADER IN LINE TO BECOME INTERIOR MINISTER. Gegham Manukian, a spokesman for the Armenian Revolutionary Federation--Dashnaktsutiun (HHD), told Noyan Tapan on 17 January that there is no substance to speculation in the Armenian press that prominent HHD member Vahan Hovhannissian will be named Interior Minister. Hovhannissian, who is chairman of the Armenian parliament's Standing Commission for Defense, National Security and Internal Affairs, is one of several dozen HHD members arrested in early 1995 and subsequently brought to trial on charges of abetting terrorism and/or calling for the overthrow of the country's leadership. Proclaiming their release was one of Robert Kocharian's first acts on becoming acting Armenian president in February 1998 (see "RFE/RL Newsline," 11 February 1998); since that time the HHD has been considered as Kocharian's potential support base.

On 18 January, the daily "Haykakan Zhamanak," which is regarded as sympathetic to, and may receive some financial backing from, the Armenian Pan-National Movement of former President Levon Ter-Petrossian, suggested that it would be logical for President Kocharian to appoint Hovhannissian interior minister as a counterpart to increasingly powerful Defense Minister Serzh Sarkisian. The paper adds, however, that the present interior minister, Hayk Harutiunian, objects to the propect of relinquishing that position and is trying to thwart Kocharian's intentions by forging an "anti-Dashnak coalition inside the government." The paper suggests that Harutiunian's visit to Stepanakert earlier this week may have been a bid to enlist the support of the Karabakh leadership, which has little sympathy for the HHD but plenty for Sarkisian, who is a native of the unrecognized enclave. (Liz Fuller)

QUOTATIONS OF THE WEEK. "The main thing today is not to stop the war but to end it in such a way that it does not start again in two or three years." -- Interim Chechen administration ehad Akhmed-hadji Kadyrov, meeting on 16 January with a delegation from the Parliamentary Assembly of the Council of Europe (quoted by Interfax).

"An oil pipeline of peace can equally well become an oil pipeline of war." -- Armenian Deputy Foreign Minister Ruben Shugarian, interviewed by Noyan Tapan on 15 January.

"It is very difficut to follow a policy of balance, as Armenia is doing, and not to slip." Shugharian, ibid.