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USA out-flanked in Eurasia energy politics?

Publication time: 24 July 2006, 13:06

Curiously and quietly the United States is apparently being out-flanked in its now-obvious strategy of controlling major oil and energy sources of the Persian Gulf and Central Caspian Basin.


The US' global energy strategy it is now clear was the actual reason for the highly costly regime change in Iraq. The quest for energy control has informed Washington support for high-risk ‘color revolutions' in Georgia, Ukraine, Uzbekistan, Belarus and Kyrgystan in recent months. It lies behind US activity in the Western Gulf of Guinea states of Africa, as well as in Sudan, source of 7% of China oil import. It lies behind US policy vis-à-vis Hugo Chavez' Venezuela and Evo Morales' Bolivia.


In recent months, however, this strategy of global energy hegemony, a strategic US priority, has shown signs of producing just the opposite: a coalition of the unwilling, states who increasingly see no other prospect, despite traditional animosities, but to cooperate to oppose what they see as a US push to control it all.


Washington is beginning to realize it might have been too clever by about half, as is evident in recent public statements to both China and Russia, two nations whose cooperation in some form is essential to the success of the global US energy project.


Offending both China and Russia


Contrary to advice from older China hands, including, former Secretary of State Henry Kissinger, architect of the Nixon 1972 opening to China, the White House denied visiting Chinese President Hu Jintao the honor of a full state dinner when he visited in April, serving instead a short lunch. Hu was publicly humiliated by a well-known Falun Gong heckler at the White House press conference and by other obvious humiliations. In other words, the White House welcomed Hu with a diplomatic slap in the face.


At the same time, Vice President Dick Cheney slapped Putin's Russia with the most open attack on its internal human rights policy as well as its energy policy in a speech in the Baltic state of Lithuania in early May, where Cheney declared, ‘the government has unfairly and improperly restricted the rights of her people,' and accusing Russia of energy ‘intimidation and blackmail.' Some days later, Secretary of State Condoleezza Rice reiterated that Russia should be ‘pressed' on democratic reforms. Rice also slapped China in the face in March during a trip to Southeast Asia, calling China a ‘negative force' in Asia. Curiously, Washington has accused China of ‘not playing by the rules,' and declaring that China is ‘seeking to control energy at the source,' conveniently ignoring the fact that that had been US energy policy for the past century.


The significance of taking aim simultaneously at both Russia and China, the two Eurasian giants, the one the largest investor in US Treasury securities, the other the world's second most developed nuclear power, reflects the realization in Washington that all may not be as seamless in the quest for global hegemony as originally promised by various strategists in and around the Bush Administration.


SCO takes on new weight


At the June 15, 2006 SCO meeting, China and Russia initiated discussion that Iran become a full SCO member. Iran's President was received as an honored head of state, holding private talks with both Russia's Putin and China's President Hu Jintao, an obvious contrast to Hu's recent snub by the Bush White House. And a Sinopec-Iran energy deal worth upwards of 0 billion is about to be signed. That's hardly the kind of diplomatic pressure on Iran Washington hoped for.


That SCO meeting was held in Shanghai. Even if full membership for Iran was postponed, the fact remains that Russia and China both want to seal closer cooperation with Iran in Eurasian energy development. Washington is obviously uneasy with that development. On the eve of the SCO summit,US Defense Secretary Don Rumsfeld criticized Russia and China for trying to draw Iran into closer co-operation with SCO, declaring, ‘It strikes me as strange that one (sic--w.e.) would want to bring into an organization that says it's against of the leading terrorist nations in the world, Iran.'


Indicative of the new independent stance of the SCO nations, the Chinese Secretary-General of SCO, Zhang Deguang responded to Rumsfeld, declaring that the SCO did not consider Iran to be a terrorist state, a comment unthinkable until recently.


The Shanghai Cooperation Organization, SCO, was founded in June 2001 by China and Russia, and includes Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Its stated goal was to facilitate ‘cooperation in political affairs, economy and trade, scientific-technical, cultural, and educational spheres as well as in energy, transportation, tourism, and environment protection fields.' Recently, however, the SCO is beginning to look like an energy-financial bloc in central Asia consciously constructed to serve as a counter-pole to US hegemony.


In the last months their members have taken several potentially strategic steps to distance themselves from US dependence, both in energy as well as monetary dependence.


Russia's energy geopolitics


In his recent State of the Union speech, President Putin anno unced that Russia is planning to make the Ruble convertible into other major currencies, such as the Euro, and to use the Ruble in its oil and gas transactions. The convertible Ruble is due to be introduced according to latest Russian comments in July, 2006, six months before originally planned. Russia also has stated it plans to shift a share of its now considerable dollar reserves away from the dollar and that it will use billion in US dollars to purchase gold reserves.


Russia's state-owned natural gas transport company, Transneft, has consolidated its pipeline control to become the sole exporter of Russian natural gas. Russia has far the world's largest natural gas reserves and Iran the second largest. With Iran, the SCO would control the vast majority of the world's natural gas reserves, as well as a significant portion of its oil reserves, not to mention potential control of the Strait of Hormuz, the narrow corridor for a majority of Gulf oil tanker shipment to Japan and the West.


In late May it was reported that Russia and Algeria, the two largest gas suppliers to Europe, have agreed to increased energy co-operation. Algeria has given Russian companies exclusive access to Algerian oil and gas fields and Gazprom and Sonatrach will co-operate in delivery of gas to France. Putin also has cancelled Algeria's .7 billion debt to Russia, and for its part Algeria will buy .5 billion worth of Russian advanced jet fighters, air defense systems and weapons.


On May 26 Russian Defense Minister Sergei Ivanov also announced Russia will definitely supply Iran with sophisticated Tor-M1 anti-aircraft missiles, reportedly as a prelude to supply far more sophisticated weapons.


Then, in one of the more fascinating moves by Putin's Russia in the area of energy geopolitics, the Kremlin-controlled Gazprom gas monopoly has entered into quiet negotiations with Israeli Prime Minister Ehud Olmert through Olmert's billionaire friend, Benny Steinmetz, to secure Russian natural gas supplies to Israel via an undersea pipeline from Turkey to Israel.


Olmert's office has said, according to the Israeli paper, Yediot Ahronot, it will support the Gazprom proposal. In several years Israel faces gas shortage from Tethys Sea drilling and soon gas from Egypt. Tethys Sea gas is projected to run dry in a few years. British Gas is in talks to supply gas from Gaza but Israel disputes BG right to drill.


But even with Egypt and Gaza gas, shortages are expected by 2010 unless Israel is able to find new sources. Enter Gazprom and Putin. The Russian gas would be diverted from the underutilized Russia-Turkey Bluestream pipeline which Russia built for increasing influence over Turkey two years ago. Putin clearly seeks to gain a lever inside Israel over the one-sided US influence on Israel policy.


China energy geopolitics also in high gear


Beijing for its part is also moving to ‘secure energy at the sources.' On May 26, Kazakhstan crude oil began to flow into China from a newly-completed oil pipeline from Atasu in Kazakhstan to the Alataw Pass in far western China Xinjiang province, a 1000 kilometer route announced only last year. It marked the first time oil is being pumped directly into China.


Kazkhstan is also a member of the SCO, but had been regarded by Washington since the collapse of the Soviet Union, as its sphere of influence, with ChevronTexaco, Condi Rice's old oil company, a major oil participant.


By 2011 the new pipeline would extend some 3000 kilometers to Dushanzi where the Chinese are building its largest oil refinery due to complete by 2008. China financed the entire 0 million pipeline and will buy the oil. In 2005 China's CNPC state oil company bought PetroKazkhstan for .2 billion ands will use it to develop oilfields in Kazakhstan.


China is also in negotiations with Russia for a pipeline to deliver Siberian oil to Northeast China a project that could be completed by 2008, and a natural gas pipeline from Russia to Heilongjiang in China's Northeast. China just passed Japan to rank as world's second largest oil importer behind the United States.


Beijing and Moscow are also integrating their electricity economies. In late May the China State Grid Corp announced it plans to increase imports of Russian electricity fivefold by 2010.


The Shanghai Co-operation Organization, with inclusion of new observer candidates Iran, India, Indonesia and Mongolia, also includes in addition to China, Russia and Kazkhstan the Eurasian states of Kyrgyzstan, Tajikistan and Uzbekistan. A close look at the map of Eurasia will indicate the devastating geopolitical implications for the post-1990 Washington Eurasia domination strategy.


It's little wonder that some neo-conservative Washington hawks are getting alarmed. Suddenly the world of potential ‘enemies' is no longer restricted to the Islam-centered War on Terror. Leading neo-conservative ideologue, Robert Kagan, whose wife, Victoria Nuland, had worked as Vice President Cheney's Deputy National Security Advisor until being named as US Ambassador to NATO, wrote a prominent OpEd recently in the Washington Post.


Kagan declared, in reference to Russia and China, ‘Until now the liberal West's strategy has been to try to integrate these two powers into the international liberal order, to tame them and make them safe for liberalism.' Kagan co-founded the hawkish Project for the New American Century (PNAC) in the late 1990's to among other things advocate a major US military buildup and forced regime change in Iraq.


Kagan continued, ‘If, instead, China and Russia are going to be sturdy pillars of autocracy over the coming decades, enduring and perhaps even prospering, then they cannot be expected to embrace the West's vision of humanity's inexorable evolution toward democracy and the end of autocratic rule.'


Kagan charged that China and Russia have emerged as the protectors of ‘an informal league of dictators' - that, according to Kagan, currently includes the leaders of Belarus, Uzbekistan, Burma, Zimbabwe, Sudan, Venezuela, Iran and Angola, among others - around the world, who, like the leaders of Russia and China themselves, resist any efforts by the West to interfere in their domestic affairs, either through sanctions or other means.


‘The question is what the United States and Europe decide to do in response,' wrote Kagan. ‘Unfortunately, al-Qaeda may not be the only challenge liberalism faces today, or even the greatest.' The question, as Kagan wisely states it, is what the United States or Europe can do in response. The Washington pre-emptive hawk strategy is showing some tattered edges.


* F. William Engdahl is the author of ‘A Century of War: Anglo-American Oil Politics,' Pluto Press Ltd. His website is Revised June 16, 2006

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