A Dangerous Oil Game in Dagestan

At the turn of the 20th century, J. D. Rockefeller made the Standard Oil
fortune in the waters at the southern end of the Caspian Sea, near the
Caucasian city of Baku. The fierce international competition for those riches
was described as the Great Game..
A century later, after the collapse of the Soviet Union, this term has been
revived to describe the renewed struggle among multinational corporations and
global political powers to control the oil and gas fields of the Caspian
region. The stakes are higher today than they were for Rockefeller because of
the discovery of oil fields in Kazakhstan at the northern end of the Caspian,
and natural gas to the east in Turkmenistan..
Russia and the Western powers are operating in the region on an increasingly
competitive basis, on the assumption that Caspian development is a zero-sum
game. They are building military alliances with local governments and
engaging in exercises with local troops..
In the United States, the competitive outlook is intensified by a
consideration of petroleum products as a national security issue. Around the
Caspian, however, this approach contributes to local political instability,
diminishes regional security, heightens the risk for investments in the
region and reduces opportunities for effective extraction of Caspian
The Great Game metaphor has become a misleading, possibly dangerous,
anachronism. It is dangerous because while it is appropriate to the keen
sense of geopolitical competition in the region, it invites participants to
forget that most parts of the region either are currently scenes of conflict
or are only a few steps away from ignition. Heightened international
competition will certainly produce sparks and further conflagrations would be
costly for everyone. It is no longer possible to treat the locals as pawns in
a game, so it is impossible to separate the extraction of energy resources
from local economic development and political stability..
The combination of energy extraction with development and stability appears
to be the strategy of the Russian government in the sleepy Caspian seaport of
Mahachkala, in the Russian republic of Dagestan. It appears that Moscow is
determined to transform Mahachkala into a major oil and gas terminal. It has
completed reconstruction of the petroleum pipeline from Baku to the Russian
Black Sea port of Novorossisk, bypassing Chechnya through Dagestani
territory. The pipeline now includes a 17-kilometer link to Mahachkala's
seaport, which has permitted officials in Russia's Transneft oil organization
to urge Western oil executives to transfer Turkmen and Kazakh crude through
Mahachkala's facilities..
There appear to be at least three related reasons for Moscow's interest in
Mahachkala's increasing hydrocarbon traffic. First, it is clear that Moscow
wants to support the Dagestani economy, and thereby contribute to the
Republic's political stability. Budgetary transfers from Moscow to Mahachkala
have increased sixfold in the last two years..
Second, Moscow has now recognized that Dagestan is the key to its presence in
the North Caucasus. Third, this presence is particularly important to Moscow
because Dagestan, on the Western shore of the Caspian, has historically been
the point of north-south connection in the region. If Moscow is to maintain
its presence in the southern Caspian-Caucasus region, it must maintain a
vital presence in Dagestan..
If these considerations are the basis of Moscow's strategy in the Caucasus
then that strategy makes sense in terms of the challenge posed by Caspian
hydrocarbon development. Among hydrocarbon basins the Caspian is uniquely
landlocked. From the Caspian Sea to Western industrial centers, all routes
for hydrocarbon transport run through the Caucasus..
It will be more difficult for the West to get anything into or out of the
Caspian basin if there are political problems in the Caucasus, and there will
be political problems in this impoverished region unless hydrocarbon
extraction results in local economic development..
An alternative to the Great Game would emphasize local stability, giving
greater attention to local cultures, problems and politics, with
international cooperation toward broad-based economic development. Only
through attention to regional stability will the players succeed in the
extraction of Caspian resources..
The writer, an assistant professor at Southern Illinois University,
contributed this comment to the International Herald Tribune.

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