20.12.2005 *** Geopolitics –
China Gauntlet
By F. William Engdahl
On December 15, the
state-owned China National Petroleum Corp (CNPC) inaugurated an oil pipeline running
from Kazakhstan to northwest China. The pipeline will undercut the geopolitical
significance of the Washington-backed Baku-Tbilisi-Ceyhan (BTC)oil pipeline
which opened this past summer amid big fanfare and support from Washington.
The geopolitical chess game
for the control of the energy flows of Central Asia and overall of Eurasia from
the Atlantic to the China Sea is sharply evident in the latest developments.
Making the Kazakh-China oil
pipeline link even more politically interesting, from the standpoint of an
emerging Eurasian move towards some form of greater energy independence from
Washington, is the fact that China is reportedly considering asking Russian
companies to help it fill the pipeline with oil, until Kazakh supply is
sufficient.
Initially, half the oil
pumped through the new 200,000 barrel-a-day pipeline will come from Russia
because of insufficient output from nearby Kazakh fields, Kazakhstan's Vice
Energy Minister Musabek Isayev said on November 30 in Beijing. That means closer
China-Kazakhstan-Russia energy cooperation - the nightmare scenario of
Washington.
Simply put, the United
States stands to lose major leverage over the entire strategic Eurasian region
with the latest developments. The Kazakh developments also have more than a
little to do with the fact that the Washington war drums are beating loudly
against Iran.
The new China pipeline runs
962 kilometers (598 miles) and will take China a third of the way to Kashagan
in the Caspian Sea, one of the world's largest accessible oil reserves.
Kashagan is the largest new oil discovery in decades and exceeds the size of
the North Sea. This is a major reason Washington has such a strong interest in
supporting democratic regime change in the Central Asia region of late.
In the next 10 years,
Kazakhstan plans to almost triple oil production, prompting the landlocked
nation to seek new export routes because the country wants to avoid pipelines
through Russia and excessive Russian dependence. China is now among
Kazakhstan's major target markets.
Best public estimates are
that Kazakhstan has 35 billion barrels of discovered oil reserves, twice the
amount in the North Sea, and may hold about three times more, according to a
Kazakh government report released on November 18 in London. German oil
engineers have privately reported that recent drilling by Italy's AGIP, the
current oil consortium leader for Kashagan, a huge field offshore Kazakhstan
southwest of Tengiz, has confirmed enormous oil deposits there.
The government of President
Nursultan Nazarbayev plans to produce 3.6 million barrels a day of oil from all
fields in Kazakhstan, onshore and off, by 2015. For 2005, they expect to
average about 1.3 million barrels a day, making Kazakhstan far larger than Azerbaijan,
and second in oil production of the former Soviet states only to Russia.
The December 15 opening of
the new Kazakh-China pipeline was a major event for Beijing. Zhang Guobao, vice
chairman of the National Development and Reform Commission, China's top
economic planning agency, attended the opening. CNPC has invested more than
$2.6 billion in Kazakhstan since 1997.
In October, Beijing scored
a second major geopolitical coup when China completed a $4.18 billion takeover
of PetroKazakhstan Inc. It was, in a sense, revenge on Washington for the
blocking of the China acquisition of Unocal. US oil majors had made major
efforts to lock up Kazakhstan oil after discovery of major oil offshore in the
Kashagan field. They failed. ExxonMobil was charged with bribery of Kazakh
officials to win a presence in the Kazakh oil business, and a senior Mobil
executive was later jailed on US tax evasion in New York tied to the Kazakh
bribery payments.
Nazarbayev enjoys good
relations with Russia's President Vladimir Putin. He was general secretary of
the Communist Party when Kazakhstan was part of the USSR, and is regarded as a
sly fox in terms of dealing with Moscow, while also keeping a clear distance
from Moscow.
In October, Russia's Lukoil
failed in its bid to buy up the Kazakh state oil company, PetroKazakhstan, in a
privatization. Nazarbayev indicated a major geopolitical shift in strategy,
compared with a decade or more ago, when it appeared that Washington was to be
the major foreign ally of Nazarbayev. At that time Secretary of State
Condoleezza Rice's company, Chevron, became the lead oil contractor and
operator in the Kazakh Tengiz oil field. That was just after the breakup of the
Soviet Union and the US oil presence in Kazakhstan was a major US political
priority supported by the Bill Clinton administration.
The Chevron Tengizchevoil
consortium formed the Caspian Pipeline Consortium (CPC) in 1993 amid great
fanfare. After years of haggling with the Kazakh government, Chevron finally
constructed a pipeline from Tengiz on the Caspian's northeastern shore to the
Russian port of Novorossiysk on the Black Sea. Following years of pressure,
most members of the CPC group, including Chevron and Oman Oil Co, decided to
not pursue future expansions of the CPC line.
Now, a decade later and
with the scope of Kazakh oil deposits dwarfing any in the region, with its
recent confirmed drillings in the Kashagan field, Nazarbayev has scored a
political balance of power coup by turning to Beijing.
In October, Nazarbayev
announced that CNPC had won the bid to buy PetroKazakhstan. What will be
important to watch, now that Nazarbayev won re-election on December 4, further
extending his 14-year reign, is to what extent Washington begins to play up
"human rights abuses" by Nazarbayev.
A fledgling
"Orange" revolution a la Ukraine has sprung up behind opposition
candidate Zharmakhan Tuyakbai and his party, For a Just Kazakhstan. He came in
second with 6.6% of the vote and cried fraud, but Washington's and the US media
response were muted this time. Rice, in a major trip to shore up sagging US
influence in Central Asia on October 10-13, held a private meeting with
Tuyakbai. He is clearly being groomed for a possible future role, but clearly
not yet.
A major setback for
Washington's Eurasian encirclement strategy vis-a-vis China and Russia came
several months ago when Uzbekistan's autocratic president Islam Karimov told
Washington it could no longer use the Karshi-Khanabad military air base in
southeast Uzbekistan, a major piece in Washington's Eurasian chess board play,
put into place after September 11, 2001.
Since strong US protest
over the government's bloody suppression of protests against a state trial of
alleged Islamic fundamentalists in Andijan last May, Karimov's relations with
Washington have deteriorated. Karimov's decision to move so aggressively was no
doubt influenced by the successful March "Tulip" revolution which
toppled Askar Akayev in neighboring Kyrgystan and set the stage for the July
election of opposition and US-backed candidate Kurmanbek Bakiev.
On July 29, Karimov
announced he was evicting the US entirely from the airbase with a January 2006
exit date. In October, the US Senate, as retaliation, voted not to pay $23
million in base user fees to Uzbekistan for past use. Moscow and Beijing have
both moved into the vacuum. A look at the map will indicate why. Uzbekistan is
strategic for control or to prevent control by foreign powers such as Washington,
of Central Asia and pipeline routes linking Russia, China and Kazakhstan. In
October 2004, Moscow secured a long-term military base agreement to station
thousands of Russian troops in the capital, Dushanbe, a move by Moscow to limit
the spread of Washington-backed "color revolutions" in the region.
That appeared to redraw the
Eurasian geostrategic map in Moscow's favor, with the recent US loss of
Uzbekistan. Uzbekistan is now effectively Russia's main ally in Central Asia.
Washington's position in
Eurasia and its future relations with Kazakhstan suddenly assumed high
priority. Clearly, the Bush administration decided the time was not ripe to try
a full-blown "Orange" revolution in Kazakhstan this month, at least
not until Washington's position in the region was stronger. That was a clear
purpose of the October Rice visit.
But now with the strong
geopolitical turn of Nazarbayev toward playing Beijing to offset potential
Washington domination in the region, the situation has begun to change dramatically.
A year ago, China attempted to buy out a 16% share in the Kashagan consortium
from British Gas, which was willing to sell. That sale was blocked by US
consortium member ExxonMobil, the company subsequently charged with bribery and
convicted. Now China has opened an oil flow out of Kazakhstan to the East, not
the West.
This has major strategic
implications for the future of the Washington-backed BTC oil pipeline. That
pipeline was built by the Caspian Oil Consortium headed by British Petroleum,
and was backed by both Clinton and George W Bush, despite the fact that it was
the most costly and least viable oil route out of the Caspian.
Former US national security
advisor Zbigniew Brzezinski had been the chief Washington lobbyist advocating
the BTC route to circumvent Russia. Its construction was undertaken on the
assumption that it would carry not only Baku oil, but also a major share of
Kazakh oil from Tengiz and offshore Kashagan oil fields. Oops!
The December China-Kazakhstan
pipeline opening is one part of a massive Chinese plan to secure as much Kazakh
oil riches as possible.
The Chinese plan to connect
several pieces of infrastructure - part Soviet-built, part Chinese-built - then
reverse the flow of some of them and forge a new export corridor stretching
from Kazakhstan's oil-rich Caspian basin, including Kashagan, through a series
of western and central-Kazakh oil zones, and ultimately into China. With
completion of this major project, China will for the first time have secured a
source of imported energy not vulnerable to US aircraft carrier battle groups,
as is the case with present oil deliveries from the Persian Gulf and Sudan.
Before opening the new
pipeline, China imported only 25,000 bpd from Kazakhstan. Once the link between
Kenkiyak and Kumkol is finished, connecting existing infrastructure near the
Caspian with the portion inaugurated on December 15, the project will pump 1
million bpd. That would be about 15% of China's crude oil needs.
China then plans to tap
into production from dozens of Kazakh sites it has acquired during the past
several years. This is oil that currently goes west, or north through Russia.
Beijing has also studied
the Washington-backed series of regime changes across Central Asia and the
"color revolutions" from Georgia to Ukraine and most recently
Kyrgystan, and has evidently decided to "nip in the bud" any similar
non-governmental organization efforts within China, or in areas strategic to
long-term China energy security.
Kyrgystan's
"Tulip" revolution last July sounded alarm bells in Beijing. Possible
Chinese pipeline links to Kazakhstan, Turkmenistan, Iran and or Russia would
clearly be threatened by a ring of new pro-North Atlantic Treaty Organization
neighbors and states between western China and its potential oil sources. Their
alarm led to warmer ties between Uzbekistan's Karimov and Beijing in recent
months, as well as an invitation from Moscow-tied Belarus President Yuri
Lukashenko.
The Washington journal
Foreign Policy ran a short item in its October edition by an apparent Chinese
dissident. The article, titled, "China's Color-Coded Crackdown", is
worth quoting:
In China's halls of power, the fall of post-Soviet authoritarian
regimes has raised the uncomfortable specter of a Chinese popular uprising.
According to the Hong Kong-based Open magazine, a report by Chinese President
Hu Jintao, titled "Fighting the People's War Without Gunsmoke", is
guiding the Chinese Communist Party's "counterrevolution" offensive.
The report, disseminated inside the party, outlines a series of measures aimed
at nipping a potential Chinese "color revolution" in the bud.
Some Chinese apparently
call it the Battle of the Two Georges - George Bush and global financier George
Soros. The Foreign Policy piece continues:
Perhaps the most telling sign of China's concern has been its
crackdown on non-governmental organizations (NGOs). Beijing believes that
international organizations, especially advocacy NGOs, have acted as
Washington's "black hands" behind the recent regime changes in
Central Asia. A recent issue of a biweekly journal run by the Communist Party
Propaganda Department referred to Washington's "$1 billion annual budget for
global democratization" and identified NGOs such as the International
Republican Institute, the National Endowment for Democracy (NED), the US
Institute of Peace and the Open Society Institute as organizations that
"brainwash" local people and train political oppositions.
In late August, ahead of a visit by the UN high commissioner
for human rights, Chinese police raided the office of the Empowerment and
Rights Institute, a human rights group supported by the NED. A new regulation offering
more freedom to NGOs was initially expected later this year. No longer. The
Ministry of Civil Affairs has now stopped processing registration applications,
effectively freezing many groups' operations. Instead, the only government
offices taking an interest in NGOs are the national security agency [China's
secret police] and public security forces.
Both have launched investigations into local NGOs. Some senior
Chinese managers working for international NGOs have been called in for
"private talks" with authorities, though no related arrests or
detentions have been reported. Some NGO offices have had plainclothes security
officers show up in an effort to clandestinely ferret out information on
foreign staff and organizations. Environmental groups have been singled out for
a massive government survey, most likely because they have angered powerful
agencies by successfully initiating public debates on controversial issues,
such as genetically modified foods and huge dam projects, and because only around
10% of green groups are currently registered with the state.
Meanwhile, Beijing has commissioned researchers from several
provincial academies of social science to study the activities of NGOs in
China. NGO publications such as directories experienced unexpectedly strong
sales in recent months, as they no doubt became convenient study tools.
Likewise, experts have been dispatched to Central Asia to study how those color
revolutions first sprung roots. In a May 19 Politburo meeting, senior administrators
from the Chinese Academy of Social Sciences, where foreign research funds are
usually well received, were reminded of the "acute and complicated
struggle in the ideological realm in the new millennium". In other words,
be careful about the political implications of your research.
According to sources in Beijing, final decisions on the
government's approach to NGOs will be made in a November meeting of the State
Council, China's highest executive body. As long as the clouds of color revolution
are hovering over Central Asia - some, for example, expect storms in Belarus -
the Chinese government will stay on high alert ... Beijing's moves against the
country's NGO community remain largely unnoticed outside China. If the
international community wants an open and democratic China, it should pay more
attention to the survival and growth of Chinese liberal institutions.
Otherwise, the country will be destined to remain the same shade of red.
At the end of 2004, Beijing
signed a $70 billion energy agreement with Tehran, China's largest Organization
of Petroleum Exporting Countries energy deal to date. China's state Sinopec
agreed to buy 250 million tons of LNG over 30 years from Iran, as well as to
develop the giant Yadavaran field. That agreement covered the comprehensive
development by Sinopec of the giant Yadavaran gas field, construction of a
related petrochemical and gas industry including pipelines.
As part of the huge
Iran-China economic cooperation agreement, China's state-run military
construction company, NORINCO, will expand the Tehran Metro underground.
A second phase in the
Iran-China strategic energy cooperation will involve constructing a pipeline in
Iran to take oil some 386 kilometers to the Caspian Sea, there to link up with
the planned pipeline from China into Kazakhstan.
On signing the deal, Iran's
Petroleum Minister announced that Tehran would like to see China replace Japan
as Iran's largest oil importer. As well, Iran has what are estimated to be the
world's second largest reserves of natural gas after Russia. Iran is a place of
enormous strategic importance to China, to Japan, to Russia, to the European
Union, and for all these reasons, to Washington as well.
Iran supplies about 14% of
China's oil. Along with Russia, China has been involved since the late 1990s in
supplying nuclear technology to Tehran. In 1997, Beijing, under Washington
pressure, nominally agreed to stop nuclear-related shipments to Iran, but the
flows are believed continuing as the Iran relation is strategic and critical to
China's energy security.
China, a veto member of the
UN Security Council, has repeatedly called for the issue of Iranian nuclear
development to be dealt with by the International Atomic Energy Agency (IAEA).
The IAEA's chief, Nobel Peace Prize awardee, Mohamed ElBaradei, has earned the
enmity of Washington war hawks for his open declarations of lack of evidence in
both Iraq and now of Iranian atomic bomb capability.
Given the nature of the
Bush administration's rush to war in Iraq in 2003, where China had a major
stake in oil development, and the subsequent US blocking of other Chinese
attempts at securing energy independence, including Unocal, it is not
surprising that Beijing is taking extraordinary measures to secure its
long-term oil and gas supply.
Energy is the Achilles'
heel of China's economic growth. Beijing knows that only too well. So does
Washington. A decision by Washington to take military action against Iran now
would pull a far larger cast of actors into the fray than Iraq.
F William Engdahl is author
of the book, A Century of War: Anglo-American Oil Politics and the New World
Order from Pluto Press Ltd. He can be contacted via his website,
www.engdahl.oilgeopolitics.net.
(Copyright 2005 F William
Engdahl)