The following is an excerpt from a paper written by Craig Hulet titled:
The Hydra of Carnage
The Silk Road Strategy:
The bellum justum Between
Empire and Revolt
HEARING ON U. S. INTERESTS IN THE CENTRAL ASIAN REPUBLICS
February, 12 1998
I shall quote at length from the hearing and with as little commentary as possible; the words spoken by those I quote are far superior to whatever I might add as garnish. I shall begin at the best place, the beginning, and allow one Mr. Robert W. Gee, Assistant Secretary for Policy and International Affairs, Department of State, to ask his rhetorical question:
To begin, you may ask why is the United States active in the region? The United States has energy security, strategic, and commercial interests in promoting Caspian region energy development. We have an interest in strengthening global energy security through diversification, and the development of these new sources of supply. Caspian export routes would diversify rather than concentrate world energy supplies, while avoiding over-reliance on the Persian Gulf.
...We have strategic interests in supporting the independence, sovereignty, and prosperity of the Newly Independent States of the Caspian Basin. We want to assist the development of these States into democratic, sovereign members of the world community of nations, enjoying unfettered access to world markets without pressure or undue influence from regional powers.
...We also have an interest in maximizing commercial opportunities for U.S. firms and for U.S. and other foreign investment in the region's energy development. In short, our interests are rooted in achieving multiple objectives. Rapid development of the region's energy resources and trade linkages are critical to the independence, prosperity, democracy, and stability of all of the countries of that region.
This gives you some idea of reference what the hearing was meant to address. The testimony continues in this vein, outlining several areas of policy objectives:
While we recognize the influence regional politics will play on the development of export routes, we have always maintained that commercial considerations will principally determine the outcome. These massive infrastructure projects must be commercially competitive before the private sector and the international financial community can move forward. Our support of specific pipelines, such as the Baku-Ceyhan oil pipeline and trans-Caspian oil and gas lines, is not driven by any desire to intervene in private commercial decisions. Rather, it derives from our conclusion that it is not in the commercial interest of companies operating in the Caspian States, nor in the strategic interests of those host States, to rely on a major competitor for transit rights.
...cooperating with Russia. Our Caspian policy is not intended to bypass or to thwart Russia. In fact, two key projects closest to fruition go through Russia, those of the Azerbaijan International Operating Company northern early pipeline, and the Caspian Pipeline Consortium from Kazakhstan through Russia to the Black Sea port of Novorossiysk....U.S. companies are working in partnership with Russian firms in the Caspian, and there will be future opportunities to expand that commercial cooperation.
...isolating Iran. Our policy on Iran is unchanged. The U.S. Government opposes pipelines through Iran. Development of Iran's oil and gas industry and pipelines from the Caspian Basin south through Iran will seriously undercut the development of east-west infrastructure, and give Iran improper leverage over the economies of the Caucasus and Central Asian States. Moreover, from an energy security standpoint, it makes no sense to move yet more energy resources through the Persian Gulf, a potential major hot spot or chokepoint. From an economic standpoint, Iran competes with Turkmenistan for the lucrative Turkish gas market. Turkmenistan could provide the gas to build the pipeline, only to see itself displaced ultimately by Iran's own gas exports.
...The United States has stressed the importance of achieving agreement on concrete project proposals among the relevant countries as early as possible. Along these lines, we have encouraged the regional governments to accelerate multilateral discussions with their neighboring States and with the private sector shippers through the establishment of national working groups. These groups have a critical role in resolving regulatory, legal, tariff, and other issues that will make the Eurasian corridor most commercially attractive.
Thus we have the synopsis of the policy objectives of the United States government. Questioning Mr. Gee on his trip to Turkey, a key player in the region where the pipeline projects are being proposed, Congressman Bereuter asking what actions Turkey was prepared to take elicited this response.
They recognize that they need to take proper steps to reform some of their governmental infrastructure in order to make the environment much more commercially viable. Among other things, they are experiencing some difficulties in reforming some of their legal requirements relative to the privatization of the power generation market in order to allow private investment to come in, with the necessary guarantees of securing investment, to provide the gas market that would facilitate the transport of gas into Turkey.
...I did mention, without asking a question, the role of OPIC and of course the multilateral organization, MEGA. OPIC would facilitate American firms' participation. We would expect to see other countries do something similar in a worthy project. Is it essential to the Turkish Government that there be a multilateral investment guarantee agency or are they satisfied with simply the various developed countries that have such loan guarantee programs like OPIC, to provide them one by one under a competitive kind of environment?
When Mr. Gee was asked about Afghanistan he stated the following:
Perhaps the Unocal witness can give you more detail. I do understand that they do have an agreement with the government of Turkmenistan. They have also been in discussions with the various factions within Afghanistan through which that proposed pipeline would be routed.
...The U.S. Government's position is that we support multiple pipelines with the exception of the southern pipeline that would transit Iran. The Unocal pipeline is among those pipelines that would receive our support under that policy.
I would caution that while we do support the project, the U.S. Government has not at this point recognized any governing regime of the transit country, one of the transit countries, Afghanistan, through which that pipeline would be routed. But we do support the project.
Mr. Berman then asked him, "I am thinking of how Uzbekistan, Kazakhstan-is this a pipeline for their use or is this primarily for Caspian Sea oil? Mr. Gee responded "It would be a pipeline generally for production from Kazakhstan and Turkmenistan, which is where most of the potential reserves are thought to be located. Mr. Bereuter questioned again, "There is an oil field in Kazakhstan, Tengiz, or something like that. Mr. Gee added, "The Tengiz oil field, yes." Mr. Bereuter: "Reportedly the world's largest known untapped field. That may be subject to dispute. It began to be exploited apparently most recently about 1993, I am told. How much have U.S. firms invested? Have they received any substantial return on their investment at this point"?
Mr. Gee, responded with this important additional information:
...I believe that the transit route for that field is still under development. I don't know whether there have actually been sales of production from the Tengiz field.
I am informed by our staff that there have been sales from that field. I can provide that information to you. We don't have it available today as to any specific volumes or monetary returns from that sale.
...According to our calculations, total foreign direct investment in Kazakhstan's oil and gas sector from 1991 through 1996 was approximately U.S. $2 billion. Total commitments for new, future direct investment in Kazakhstan's oil and gas development now stands at over U.S. $35 billion. The Tengiz field has estimated reserves of 24 billion barrels of crude oil and over 1800 billion cubic meters of associated natural gas. Oil production has slowly risen to its current level of approximately 160,000 barrels per day. Production is currently being hampered by limited access to export pipelines. Once the Caspian Pipeline Consortium pipeline is constructed, oil production from Tengiz is expected to increase to 750,000 barrels per day by 2010. Even at production of 160,000 barrels per day, the venture has been profitable. Tengizchevroil, the consortium producing the Tengiz field, reported profits of U.S. $80 million in 1996, up from only U.S. $1 million in 1995.
Professor S. Frederick Starr of Johns Hopkins University was the next to testify, stating with regard to the legislation put forward to implement the policy,...
In this progress toward formulating an American policy toward this region, it seems to me that the so-called Silk Road Strategy Act, H.R. 2867, goes further than any previous official act of the U.S. Government toward translating our principles with regard to this region into concrete action.
The next testimony is clearly the most important for any understanding as to why President Bush feels such urgent need to displace the Taliban governing party. (Keeping in mind that the only opposition to the Taliban is the Northern Alliance whose human rights and record of atrocities against the Afghan people makes the Taliban pale to insignificance).
STATEMENT OF JOHN J. MARESCA, VICE PRESIDENT OF INTERNATIONAL RELATIONS, Unocal CORPORATION
Mr. John J. Maresca: Thank you, Mr. Chairman. It's nice to see you again. I am John Maresca, vice president for international relations of the Unocal Corporation. Unocal, as you know, is one of the world's leading energy resource and project development companies. I appreciate your invitation to speak here today. I believe these hearings are important and timely. I congratulate you for focusing on Central Asia oil and gas reserves and the role they play in shaping U.S. policy.
...I would like to focus today on three issues. First, the need for multiple pipeline routes for Central Asian oil and gas resources. Second, the need for U.S. support for international and regional efforts to achieve balanced and lasting political settlements to the conflicts in the region, including Afghanistan. Third, the need for structured assistance to encourage economic reforms and the development of appropriate investment climates in the region. In this regard, we specifically support repeal or removal of section 907 of the Freedom Support Act.
...Mr. Chairman, the Caspian region contains tremendous untapped hydrocarbon reserves. Just to give an idea of the scale, proven natural gas reserves equal more than 236 trillion cubic feet. The region's total oil reserves may well reach more than 60 billion barrels of oil. Some estimates are as high as 200 billion barrels. In 1995, the region was producing only 870,000 barrels per day. By 2010, western companies could increase production to about 4.5 million barrels a day, an increase of more than 500 percent in only 15 years. If this occurs, the region would represent about 5 percent of the world's total oil production.
...One major problem has yet to be resolved: how to get the region's vast energy resources to the markets where they are needed. Central Asia is isolated. Their natural resources are landlocked, both geographically and politically.
...The other project is sponsored by the Azerbaijan International Operating Company, a consortium of 11 foreign oil companies, including four American companies, Unocal, Amoco, Exxon and Pennzoil. This consortium conceives of two possible routes, one line would angle north and cross the north Caucasus to Novorossiysk. The other route would cross Georgia to a shipping terminal on the Black Sea. This second route could be extended west and south across Turkey to the Mediterranean port of Ceyhan.
...But even if both pipelines were built, they would not have enough total capacity to transport all the oil expected to flow from the region in the future. Nor would they have the capability to move it to the right markets. Other export pipelines must be built.
...The second option is to build a pipeline south from Central Asia to the Indian Ocean. One obvious route south would cross Iran, but this is foreclosed for American companies because of U.S. sanctions legislation. The only other possible route is across Afghanistan, which has of course its own unique challenges. The country has been involved in bitter warfare for almost two decades, and is still divided by civil war. From the outset, we have made it clear that construction of the pipeline we have proposed across Afghanistan could not begin until a recognized government is in place that has the confidence of governments, lenders, and our company.
...Unocal foresees a pipeline which would become part of a regional system that will gather oil from existing pipeline infrastructure in Turkmenistan, Uzbekistan, Kazakhstan and Russia. The 1,040-mile long oil pipeline would extend south through Afghanistan to an export terminal that would be constructed on the Pakistan coast. This 42-inch diameter pipeline will have a shipping capacity of one million barrels of oil per day. The estimated cost of the project, which is similar in scope to the trans-Alaska pipeline, is about $2.5 billion.
...Given the plentiful natural gas supplies of Central Asia, our aim is to link gas resources with the nearest viable markets. This is basic for the commercial viability of any gas project. But these projects also face geopolitical challenges. Unocal and the Turkish company Koc Holding are interested in bringing competitive gas supplies to Turkey. The proposed Eurasia natural gas pipeline would transport gas from Turkmenistan directly across the Caspian Sea through Azerbaijan and Georgia to Turkey. Of course the demarcation of the Caspian remains an issue.
...Last October, the Central Asia Gas Pipeline Consortium, called CentGas, in which Unocal holds an interest, was formed to develop a gas pipeline which will link Turkmenistan's vast Dauletabad gas field with markets in Pakistan and possibly India. The proposed 790-mile pipeline will open up new markets for this gas, traveling from Turkmenistan through Afghanistan to Multan in Pakistan. The proposed extension would move gas on to New Delhi, where it would connect with an existing pipeline. As with the proposed Central Asia oil pipeline, CentGas can not begin construction until an internationally recognized Afghanistan Government is in place.
...The Central Asia and Caspian region is blessed with abundant oil and gas that can enhance the lives of the region's residents, and provide energy for growth in both Europe and Asia. The impact of these resources on U.S. commercial interests and U.S. foreign policy is also significant.Without peaceful settlement of the conflicts in the region, cross-border oil and gas pipelines are not likely to be built. We urge the Administration and the Congress to give strong support to the U.N.-led peace process in Afghanistan. The U.S. Government should use its influence to help find solutions to all of the region's conflicts.
Congressman Bereuter then asked Mr. Maresca if, given the history of violence in Afghanistan, did he believe that a pipeline could be reasonably secured? Mr. Maresca said the following:
...First, on the question about Afghanistan, of course we're not in a phase where we are negotiating on a contract because there is no recognized government really to negotiate with. However, we have had talks and briefings with all the factions. It is clear that they all understand the significance for their country of this pipeline project, and they all support it, all of them. They all want it. They would like it to start tomorrow. All of the factions would like it to start tomorrow if we could do it...It's not going to be built until there is a single Afghan Government. That's the simple answer. We would not want to be in the situation where we became the target of the other faction. In any case, because of the financing situation, credits are not going to be available until there is a recognized government of Afghanistan.
Congressman Rohrabacher then added the following, "I am reminded of a joke where God is asked when peace will come to the Middle East. He says, "Not in my lifetime." I am afraid that this may well be true of Afghanistan as well. In fact, I am more hopeful right now, having just returned from one trip to the Middle East and another trip to Central Asia that there is a greater chance for peace between Israel and its neighbors than there is for peace in Afghanistan. And I know Afghanistan probably better than anyone else in the Congress. I hate to tell you that. But let me ask a few questions. So there will be no pipeline until there is an internationally recognized government and a government that is recognized by the people of Afghanistan too, I would imagine that you wanted to put that caveat on it. Right? It's not just internationally recognized, but it has to be accepted by the people of the country. Right"?
The following exchange took place and it is here that the parties make the point all too well:
Mr. MARESCA. It depends on who you mean by the people. I assume that no matter what government is put in place, there will be some people who are opposed to it.
Mr. ROHRABACHER. I found something here. There seems to be a little attachment onto there that may be a little more controversial than people understood when they first heard what you were saying. So the government doesn't necessarily have to be acceptable to the people of Afghanistan as long as it's internationally recognized? The current government of Afghanistan or the current group of people who hold Kabul, I guess is the best way to say that, and about 60 percent of the country are known as the Taliban. What type of relationship does your company have to the Taliban?
Mr. MARESCA. We have the same relationship as we have with the other factions, which is that we have talked with them, we have briefed them, we have invited them to our headquarters to see what our projects are.
Mr. ROHRABACHER. Right.
Mr. MARESCA. These are exactly the same things we have done with the other factions.
Mr. ROHRABACHER. However, the Taliban, who are now in control of 60 percent of Afghanistan, could you give me an estimate of where the opium that's being produced in Afghanistan is being produced? Is it in the Taliban areas or is it in the northern areas of Afghanistan? What about the haven for international terrorists? There is a Saudi terrorist who is infamous for financing terrorism around the world. Is he in the Taliban area or is he up there with the northern people?
Mr. MARESCA. If it is the person I am thinking of, he is there in the Taliban area.
Mr. ROHRABACHER. Right. And in the northern area as compared to the place where the Taliban are in control, would you say that one has a better human rights record toward women than the other?
Mr. MARESCA. With respect to women, yes. But I don't think either faction here has a very clean human rights record, to tell you the truth....I am not here to defend the Taliban. That is not my role. We are a company that is trying to build a pipeline across this country.
Mr. ROHRABACHER. I sympathize with that. By the way, you are right. All factions agree that the pipeline will be something that's good. But let me warn you that if the pipeline is constructed before there is a government that is acceptable at a general level to the population of Afghanistan and not just to international, other international entities, other governments, that your pipeline will be blown up. There is no doubt about that. I have been in and out of Afghanistan for 15 years. These are very brave, courageous people. If they think they are being stepped on, just like the Soviets found out, they are going to kick somebody back. They are not going to lay down and let somebody put the boot in their face. If the government that is receiving the funds that you are talking about is a government that is not accepted by a large number of people in Afghanistan, there will continue to be problems. You say you have had a positive relationship with all the factions. That is what you are presenting to us today.
Mr. MARESCA. We are hesitant too, Mr. Congressman. I appreciate the fact that you are a person well-read into these issues. I think you would agree with us that the international community needs to pay a lot more attention to this problem. We would like to see the international community focused hard on this problem and pushing for that kind of a peaceful resolution that you described.
Mr. ROHRABACHER. If I could just say just a couple more words. During the break, I did manage to take a swing through Central Asia that took me to Turkey and Azerbaijan and Uzbekistan, Turkmenistan, Kazakhstan. I, Mr. Chairman, agree with the witness. The most important thing we can do now is to try to get this region that's been isolated for so long into the global economy. There is so much potential there, wealth as well as the people there, are fine. They are the traders of ancient times. They could do very well in the global economy. I think Turkey is playing a very positive role there. It's not trying to dominate like it was before--earlier on they thought they might dominate the region. Instead, they are playing a very positive role economically and bringing those people into the world economic system. So the subject of this hearing was well chosen. I do hope that, and I don't know if anybody else is going to get involved in Afghanistan now, but I would hope that people of the world focus a little more on these poor people. They helped us end the cold war. If it wasn't for the courage and the bravery of the people of Afghanistan, we would still be in the middle of a cold war, spending $100 billion a year more trying to defend ourselves from the Russians. It was their strength and courage that broke the will of the Kremlin leaders. They decided that they could not stand up to this kind of resistance among the people of the world. So we owe them a lot. They are still suffering. This pipeline will help them, if we can ever get it built. But in the meantime, we owe it to them to help try to bring peace to Afghanistan. The rest of Central Asia depends on it. Thank you very much. (my emphasis)
Nobody will argue that bringing peace to the Afghan people is something that ought to be done. But bombing their country into the stone age in an effort to capture Usamah bin Laden, whether he was significantly involved in the commandeering of the four airliners or not, seems somewhat odd. Moreover, if one of the real political objectives is removal of the ruling Taliban party from power, to replace it with another regime which will act more favorably towards the Western and American multinational oil companies, then this is something else altogether. We know from Mr. Gee's testimony above that this is without question what the policy objective is. We also know from the proposed legislation, The Silk Road Strategy bill. H.R. 2867, that the U.S. House of Representatives has been studying the problem and has also made this policy objective an issue. We know what Unocal, Exxon, Pennzoil and Amoco (and at least seven other foreign firms) want, and the testimony of Mr. Maresca couldn"t be plainer: they want the United States government to do something about the regime in Afghanistan which is holding up the construction of a trillion dollar pipedream.