What Is Cooperative Energy Security, and Why Can’t They Practice It Around the Caspian?

Robert M. Cutler

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[0. Introductory Remarks]

Increasing energy demands by the newly industrializing countries in what used to be called the Third World will enhance the importance of the search for new energy sources in the world as we move towards the early 21st century. The countries of the European Union, for example, already import half of their primary energy requirements, a figure that will increase to 75% by the year 2020. The energy resources of Russia and Central Asia therefore present enormous potential for the West. This potential presents great possibilities but also great problems; both the possibilities and the problems are unavoidable. In Central Asia, the security threats to the West are obvious and considerable, even when energy security is excluded. Terrorism, drugs, refugees, and armaments threaten instability in this region. Wise development of the energy and other natural resources of Central Asia and the rest of the former Soviet Union (FSU) will enable the balanced socio-economic development of the region, so rich in natural and human resources. If this development is unbalanced, Central Asia will become prey to the destabilizing effects of Islamic fundamentalism and the “demographic transition”: the fact the population growth accelerates in industrializing countries because death rates decline before birth rates do. Western energy security, key to both Central Asia and the West, will therefore inevitably become a critical issue for both as time passes.

The littoral states of the Caspian Sea and Black Sea have been the focus of particularly keen attention in the search for oil and natural gas. This region, larger than Western Europe, is central to the new geo-economics of natural energy resources. It opens onto China and the rest of Asia in the East, Iran and Afghanistan and the rest of the Islamic world to the south, and Russia and Eastern Europe to the north and west. The region needs positive assistance to assure its integration into both the global economy and pluralist political culture. Developments there are important not only to Western energy security but also to traditional geopolitics in general. Western companies are concerned mainly with economic investment in the region, but Western states must be concerned with its balanced economic development and related ethno-political equilibrium. Turkey occupies a crucial place in the geography, politics, and economics of the region, and the West has been counting on it to act as a bridge in all these spheres. The venture attracting greatest attention has been Chevron’s signature of a contract with Kazakhstan to develop the Tengiz oilfield near the Caspian Sea, a joint venture projected to spend $20 billion over 40 years. The difficulties in realizing this project, of which some are mentioned below, are indicative and exemplary of greater problems throughout the region in respect of Western involvement. They also point up the simultaneously economic and political value of these ventures to the West.

The potential of the unbridled economic development of transnational oil and gas projects in the FSU represents an enormous challenge to the governments (and the publics that they represent) that will carry the social costs of that economic development. The oil and gas conglomerates, or transnational corporations (TNCs, are necessary for that development, but they have until now been “free riders” profiting form the “security goods” provided by states and international organizations. Even tax laws are no guarantee that they contribute to picking up the costs, since the oil and gas TNCs are frequently able to negotiate special treatment. TNCs create massive social costs that political institutions must cover. This has always been so, but today the situation is qualitatively different. In contemporary Central Asia, where states are still trying to institutionalize themselves, consolidate their political authority, and penetrate their societies, the security problems caused by unbalanced social and economic development are not merely national but international and transnational. A transnational association of governmental, nongovernmental, and intergovernmental organizations would rally all levels of international society in order to safeguard cooperatively their own economic security and thus guarantee to the TNCs, and in concert with them, the political stability that the latter require for their development projects.

1. The Main Issues in Eurasian Energy Security

Financial-legal issues include banking, currency, and other monetary issues usually regulated by implicit or explicit international regimes, or by multilaterally determined international norms. These differ from economic issues, which concern mainly bilateral commerce in goods and services, trade balances, and related bilateral commercial matters. Military-strategic issues involve the deployment of instruments of the exertion of physical coercion and the strategic geopolitical implications of this. These are more complicated, so I break them out for more detailed discussion in the next major section of this talk. To these may be added one synthetic issue area, the political universe comprising those just mentioned but which is greater than their sum due to the interactions among them. I break this topic out also below into another major section.

1.1. Financial-Legal Issues

After the disintegration of the Soviet Union, western corporations and especially western oil companies—the “economic West”—rushed into fill the entrepreneurial vacuum. Western states—the “political West”—supported this transfer of capital because it seemed to complement their own goal of helping these newly independent states to integrate into the world economy and democratic political culture. One authoritative survey estimates that three-quarters of undiscovered oil and gas resources in the FSU are in Russia; that half the remainder is in Kazakhstan; that Turkmenistan possesses the largest remaining undiscovered gas resources; and that Azerbaijan, Ukraine, and Uzbekistan have the other major deposits of undiscovered oil and gas resources. A principal structural problem in these countries is their inability to finance their own modernization and resource exploitation. Since the countries receiving this investment do not command a monopoly of technical capability, they must tap western companies for investment and the know-how. Even if they have significant bargaining cards when it comes to negotiating with Western companies, they often do not have the experience to recognize them or to play them wisely.

That is all well and good so far as the TNCs are concerned, especially if the political West offers nothing to the NIS that the latter could use to counterbalance against Russian demands. However, that is not in the interest either of Western governments or of their voting publics who need dependable and reasonably priced Eurasian oil and gas, because it is not in the interest of the political West for the NIS to be powerless vis-à-vis Russia. Such a situation would strip the West of leverage vis-à-vis both Russia and the TNCs, and effectively makes the West politically dependent upon Russia alone for its own energy security. TNC acquiescence and compliance in the 1973 oil embargo and the TNC response to the Iranian revolution make the 1970s a watershed for American perceptions of economic security. The unmistakable conclusion must be that TNCs will bend in the direction of greatest economic gain unless, as in the case of the U.S. embargo on Iran, there are clear and unambiguous financial and legal penalties. The U.S.–European rift in the early 1980s, over the provision of pipeline technology to the Soviet Union, illustrates that even then the behavior of the TNCs is not always what the governments prefer.

The reason is that TNCs have grown more powerful than governments and have developed divided political loyalties. They are no follow unquestioningly the interests of the political entities called states, which nurtured them when they were nationally based and where their physical headquarters are nominally located. TNCs are not only constrained by legal norms; they will not generally act in a legal vacuum of legislative uncertainty. They are dependent therefore upon states, whose political authority and autonomy their expansion has done so much to weaken over the last quarter-century. The only tool through which states can defend their interests and those of their citizens is law, national and international. For the most obvious obstacle standing in the way of energy resource development, other than the threat of political instability, is the general absence of national and international legal frameworks for any such private ventures. Much contemporary political analysis ignores this fact, due to the idiosyncratic disciplinary training of the analysts, but managers in the TNCs are well aware of it.

1.2. Economic Issues

The stable development of energy resources in central and southwest Asia are as important to the West as was turning back the Iraqi threat to Kuwait. Inasmuch as central and southwest Asia have a population today equal to that of the United States and a land area greater than that of all Europe, however, the situation is much more complex. It is also much longer term. It is the long-term nature of the problem that represents a threat of eventual explosion but also creates a window of opportunity to resolve issues of development before they become critical. (The Zhirinovsky phenomenon is only a precursor of the political instability that will arise in the absence of economic security.) Developing all these resources and bringing them smoothly to market could mean stabilizing global energy balances for decades, making prices more predictable, and reducing Western dependence on Middle East oil. Despite the multitude of deals with Western companies being negotiated with the NIS, only a few projects are operating. Oil and gas development hold the key to assuring food, shelter, and access to medical care for the population of the NIS, but they also threaten to sow geopolitical and geo-economic rivalry in the former Soviet space; indeed, they have already done so. As is already happening in Kuwait and Saudi Arabia, an increasingly educated middle class in Central Asia will seek a greater voice in the political process. With Muslim fundamentalism on the rise across the East, Central Asia remains relevant to U.S. and Western policy even after the disposal of Kazakhstan’s nuclear arsenal. Yet American attention in the broad region habitually goes to the Arab–Israeli conflict. But since the fall of the USSR, “the East” has once again come to signify the broad belt of cultures stretching from North Africa to the Pacific that it was under the British Empire: the Near East (which we now call the Middle East), the Middle East (which we now call southwest and central Asia), and the Far East (which we now call the Asian Pacific Rim). The sooner the West adjusts its perspectives and shifts its focus accordingly, the better.

2. The Military-Strategic Obstacles to Energy Security

The acute conflicts presently ongoing in the South Caucasus and Central Asia will look tame in retrospect if the medium and long-term sources of these forthcoming conflicts are not treated. The sources of future conflicts are easily predictable: they are demographic and geographic. In central and southwest Asia, where the median age of the population is in the low 20s, there will inevitably be a demographic explosion. The population of the crescent of countries from Turkey through Kazakhstan, already over a third of a billion, will double in the next quarter-century. To this demographic fact we must add geographic facts. There is already an evident shortage of water, whether for drinking or for agriculture, and there is little if any currently uncultivated arable land on which to raise more food for that exploding population. An average annual growth rate of 5% would be necessary in the GNP to cope with the demographic explosion, but GNP is currently declining. As a result people will migrate to the cities—they have already started—and there, following the economic and social pattern of Iran in the 1970s, they will become a lumpenized mass. In Central Asia, the tinder is not Islam per se, nor water nor territory, but this predictably explosive lumpenized mass of humanity that either by religious slogans or by other fuses may set off. What is needed now is neither the ad hoc preventive diplomacy that seems to keep a lid on potential conflicts, nor crisis management that keeps existing conflicts from boiling over, but real preventive policy.

This complex of factors can be summed up under the rubric of threats to the economic security of the NIS, including Russia. In developing areas such as the NIS, Western security concerns since the Second World War have historically been about preventing political conflicts arising from such economic security problems (even if these were not at the time explicitly recognized as such). This traditional Western focus has been covered over in the former Soviet Union by the focus on disposal of the nuclear arsenal inherited from the USSR. Yet the West’s interest in the economic security and peaceful development of the NIS is compounded by its own search for energy security in the decades to come. Secure and dependable access to the energy resources in the NIS is key to the West, to Russia, and to the other NIS. This issue is a political leverage issue between the NIS and the West, between the non-Russian NIS and Russia, and between Russia and the West. Effective Russian control of the means of transport of energy supplies risks turning into control of the rest of the NIS. Switching the taps on and off is a way to bring recalcitrant satellites to heel; payments issues are also a tool for this. But Russian hegemony over CIS-space is not in keeping with the international norms to which the West proclaims its adherence; nor, frankly, is it in the West’s interest either.

An unavoidable but frequently ignored fact about making the oil and gas resources in the region a strategic economic and political asset, both for the region and for the world, is that no one party alone can successfully exploit this wealth. The project to develop the region’s natural resources is as unprecedented as was the relatively peaceful disintegration of the Soviet Union. The total of all resources in Kazakhstan alone makes their development in that one country the greatest such undertaking since the British developed Saudi reserves a half-century ago, and Chevron’s Tengiz project in Kazakhstan is by itself the largest such project since Prudhoe Bay was opened for exploration in Alaska. The technical and geophysical obstacles themselves, by their very nature and variety, require pooling of financial resources and transport facilities. The complexity of the technical problems in the Tengiz venture has already required new forms of organization and decision-making. There is no reason to suppose that existing political and economic structures and incentives are less outdated. The present situation of complex interdependence involved in bringing the oil and gas of Eurasia to market requires analysis of three old categories of fundamental problems that are interrelated in new ways. These are security, stability and strategic systems.

2.1. Security

Security means questions of dependence and interdependence, especially the guarantee of access and predictable supply at reasonable prices. These all depend on the evolving political geo-economics of the region, which differ entirely from any historical international system. Specifically, the newly emerging international system, replacing the void left by the fall of superpower bipolarity, enhances the importance and relative autonomy of regional intern a tional systems at the same time as it links these regions indissolubly together. Well before the end of the Cold War, the very expansion of the agenda of world politics since the early 1970s had rendered obsolete even the seemingly most authoritative notions of regional international systems and regional security. Today whole new categories of international regions have become significant. In particular, littoral basins have become a central focus for international action on the systemic level. This development goes hand in hand with the autonomous movement toward regional security regimes that focus on rel a tively new issue areas of international public policy such as ecological security, pollution control, and the regularization of water-borne trade. The creation of a regional international system around the Black Sea littoral thus adds an entirely new aspect to international relations in the area.

Former President Özal of Turkey first proposed a Black Sea grouping in 1990, before the Soviet Union disintegrated, to promote free trade and freer movement of goods and services among the USSR, Romania, Bulgaria, and Turkey. By mid-1991 the agenda had expanded to include coordination of shipping and fisheries policies, and industrial dumping in the Danube. By the time the agreement on economic cooperation was signed on 25 June 1992, the signatories included Russia, Turkey, Greece, Bulgaria, Romania, Ukraine, Moldova, Georgia, Armenia, and Azerbaijan. For most of 1991 and 1992, the Central Asian republics looked to the West and Far East for economic and political support; they were disappointed. The Central Asian republics then began to look closer to home, specifically toward Iran, Pakistan, and Turkey. An additional reason for this shift was their realization of the importance of land trade routes for the export of natural resources. Iran, fearful that the Black Sea initiative would inaugurate a Turkish push for “economic expansionism,” Iran sought a counterweight by re-invigorating the Economic Cooperation Organization (ECO). An ECO summit in May 1992 agreed to study the expansion of road and rail connections (including one from China to Turkey), seek the mutual reduction of trade barriers, and construct a gas pipeline from Turkmenistan to Western Europe. By 1993 all five Central Asian republics plus Azerbaijan were full members of ECO. The February 1993 summit discussed detailed maps and feasibility reports concerning routes to the Persian Gulf and put together a plan to construct an interdependent regional economic bloc including most of the countries of Central and Southwest Asia, stretching from Turkey to Kazakhstan. ECO has since sought to unite this region through joint ventures funded by an investment and development bank, to settle disputes and differences between member-states, and to foster the cooperation necessary to deal with environmental issues such as the dying Aral Sea and pollution in the Caspian.

It would be a mistake to see ECO’s weak institutional development as a failure to establish regional networks of interdependence. The organization has promoted communication and consultation, and these contacts have facilitated the projection of limited economic power by Turkey, the only ECO member with any significant capital for foreign direct investment, through an aggregate of small-scale projects. Thus Turkey hardly opposes ECO because of Iran’s involvement; indeed, Turkey and the West see ECO as a possible counterweight to Arab economic influence in the Islamic world. Yet Turkey’s policy in Central Asia is not expansionist, despite the superficial impression given by former President Özal’s rhetoric. Turkish press and public opinion disagreed with his attempt to project Turkish cultural hegemony into central Asia, and the newly independent Central Asian states have learned that Turkey cannot provide the huge amounts of capital necessary to infrastructure construction. Turkey’s international position declined along with the strategic importance of the Bosphorus in the late 1980s, but the new situation is Central Asia is greatly to her advantage.

Turkey’s relations with the former Soviet republics of Central Asia are of three kinds. There are cultural initiatives, involving the spread of the Turkish language as a lingua franca and of the Latin alphabet. There are economic relations, including cooperation to help the transition to the market and assist in infrastructural development and schemes of regional cooperation such as the Black Sea initiative. Finally, the decline of the Islamic fundamentalist system in Iran increases the relevance of Kemalist secularism for the rest of the Islamic world, including the Turkic former Soviet republics. At the same time, Iran also looks to Central Asia and plays a triangle with Russia and Turkey. Thus Iranian diplomacy in the South Caucasus was pro-Armenian in the beginning, Russia saw this as an important counterbalance to the increasing role of Turkey. However, as Iran began to show greater interest in Central Asia, Russia invited Turkey to participate in settling the Karabakh problem.

At the same time as the new Black Sea grouping takes shape, historical continuities covered over by the Cold War are now reasserting themselves. Russia and Turkey are the main players in this new “Great Game” in Central Asia (though not the only ones). “Central Asia” referred, in Russian history, to the Asia that was part of the Russian Empire, including the northern regions of the Indian subcontinent up to the borders of the Western imperial powers. In the Soviet period, the Russian term “Middle Asia” was used in reference to the five Asian republics minus Kazakhstan. This usage reflected Moscow’s strategic and geopolitical perspectives, including Soviet Russian claims of various sorts on northern Kazakhstan and the Caspian Sea littoral that are now openly voiced. By contrast, the same term “Middle Asia” in the Turkic languages historically referred to the broad swath of lands populated by the Turkic-speaking peoples from southwest Asia to Mongolia, including China’s Xinjiang province, which the native inhabitants to this day call “Eastern Turkestan.” Following the decision of the Tashkent summit of the five former Soviet Central Asian republics in January 1992, “Central Asia,” as the term is now used, refers to the collection of those five states. It is useful to point out to native English-speakers that the use of this seemingly natural terminology is motivated by the political decision of central Asian leaders themselves but means different things in the context of different cultural histories. Central Asia is today becoming geopolitically integrated into the historic present Russian and Turkic cultural and social spheres, while a Chinese presence will also grow.

“Southwest Asia,” on the other hand, was a creation of Western strategists and never really existed as an organic unity of a cultural, economic, or any other kind. It was a Cold War construct arising first from the CENTO treaty and then transformed by the bipolar context in which the Iranian revolution took place. Southwest Asia as a geopolitical unit is disintegrating, dissolving into the broader band of countries stretching into Central Asia from the Black Sea littoral. This band of countries is a post-Cold War successor to what used to be called the “Northern Tier,” also known as Russia’s soft underbelly, itself also a geopolitical concept inherited from Western strategy during the Cold War. This new “Northern Tier” (really a misnomer but still Russia’s underbelly), extending from Turkey in a crescent east-northeast through Kazakhstan, will survive the disintegration of the Soviet Union even though it is based upon an artefact of Western Cold War strategy, because many of its members have decided to maintain and extend it in their own interests. In this sense, Central Asia and the South Caucasus are becoming (once again) a part of the Middle East as broadly conceived under the British Empire.

It must be seen, then, that the Cold War distinction between central Asia and southwest Asia is in fact disappearing. International regions are not what they used to be, nor are they, despite their increasing autonomy of great power conflict, any longer as mutually separable as they were earlier this century. The whole macro-region from the Caspian Sea to the Black Sea, and all their littoral states from the Balkans to Central Asia, is becoming the focus of new sets of regional international networks of interdependence. These changes plus the primacy and the immediacy of the need for economic and social development, condition and redefine the problem of security in the region and for the West.

2.2. Stability

Stability means the political stability in the region that is necessary to develop the energy resources. Such stability requires harmonious if not cooperative relations among the states of the region, this being a basic precondition for the social and economic development of the countries there. A framework is necessary that will allow capabilities to be pooled, costs shared, and benefits distributed. At the same time, the West’s interest lies in finding political means that enable the non-Russian NIS to deal evenly and negotiate effectively with Russia and the TNCs. Only that combination of economic and political cooperation will enable the NIS to harness the driving dynamic of the TNC investment to develop existing energy resources, allowing the West to help guarantee stability in the interest of the region’s larger economic and social development that will in turn assure the West’s energy security.

In recent weeks the OSCE contact group on Karabakh has been working feverishly to find a settlement. The EU has even dispatched its own mediators to Yerevan in the attempt to promote a breakthrough. This is in their direct interest: oil from Azerbaijan exported through Armenia and Turkey would go straight to Western Europe. In early 1995 Washington its diplomatic support for the Turkish route asacounterweight to Russian influence in the region. Under this plan, natural gas from Turkmenistan as well as oil from northwest Kazakhstan could also be pipelined through the Caspian to Turkey and across Turkey to the Mediterranean. The Turkish military operation in eastern Turkey and Washington’s acquiescence in it are at least partly motivated by the wish to guarantee political stability inaregion through which this pipeline would be laid. (Russia has made it known that she does not object to Turkey’s military operation against the Kurds and, moreover, appreciates the Turkish government’s reciprocal position on Chechnya. The two states seem to share a deep concern for the principle of “territorial integrity.”)

2.3. Strategic Systems

The category of “strategic systems” represents the interaction between security and stability, specifically the technological and other specialized issues (including organizational design and political leadership) that are the nuts and bolts. It is these systems, which render the issues of stability and security so difficult and complex, and interrelate them in a manner that makes them inseparable from political geo-economics. For example, the technical and technological problems of constructing the pipelines are inseparable from the political issues of who will build and control the pipelines, who will finance them, and where will they be built. The Russians seem to be demanding both a political veto and an economic interest in any project. Perhaps Russia worries that development of Kazakhstani resources may threaten her own share of the world market. She consequently seems to wish to control how those resources are developed and allocated. Its trump card is control over access to export pipelines through her territory. Indeed, Moscow has forced its way into a financial say in the Karachaganak gas project in northwest Kazakhstan near the Russian border. Since the problem of agreeing terms for construction of an export pipeline for Caspian oil from Tengiz in northwest Kazakhstan is a key to Russian-Kazakhstani relations, and the Russian-Kazakhstani relationship is key for the future development of Eurasian gas and oil, it is instructive to examine that particular situation a bit more closely.

3. The Political Obstacles Are Greater Than the Sum of Their Parts

Post-Soviet economic reintegration of the NIS with Russia is already occurring, partly because of the West’s failure to define and promote its own interests. With the exception of the Baltic states, whose road to Europe is increasingly clear, that reintegration between Russia and the NIS has reached the point where it cannot now be avoided. The question for the West, and the U.S. in particular, is whether to continue to do next to nothing and allow that reintegration to become an iron lock (the Chechen example should give pause here), or to act so that its own interests are reflected in the way that reintegration occurs. The answer is to establish a EurAsian Oil and Gas Association (EAOGA) to realize the vast energy potential of the NIS, guaranteeing the West’s energy security and preserving U.S. interests by short-circuiting the Islamic fundamentalist fuse threatening to set off the demographic time-bomb in Central Asia.

If the West allows Russia to set its own terms—which it can do if left to its own devices because of the geography and the dependence of the NIS upon it—then the development of energy resources outside Russia will be stunted. It will not occur fast enough to defuse the demographic time-bomb in Central Asia. The eventual explosion of Islamic fundamentalism there will become inevitable. Only economic development can provide the food, shelter, and access to medical care that will render narrow ideologies impotent. Today, only Western governments, working actively together with the oil companies and democratic forces in the NIS can provide the vital incentives. Only this pragmatic coalition, realized through EAOGA, can push and pull the former Soviet republics, and especially Central Asia, along the road to reform and a commitment to businesslike practices. Without EAOGA, the necessary development of natural resources to assure the West’s energy security and defuse the demographic time-bomb in Central Asia is unlikely.

This practical multilateral cooperation would be already framed by the Energy Charter Treaty, which will soon enter into force. That Treaty requires the harmonization of national legislation and international practice. Oil and gas will be the engine of economic development in CIS-space. Only on the basis of this will can real progress be possible towards satisfying the basic human needs of food, shelter, and access to medical care for the publics, not to mention the transfer of know-how, technology, expertise, and training. This cooperation is not best undertake within the institutional structure of the CIS, which is already preoccupied with its own development as a security organization, even though since summer 1994 there have been moves toward reinforcing the economic integration of Soviet successor states in the CIS framework.

The development of energy resources in the NIS is too important to be left to the NIS and oil executives alone. The oil companies have economic clout but they need an environment of investment stability, businesslike ethics, and the necessary legal framework so as to promote that development. All that takes political clout, which only Western governments can offer. It is hardly in the West’s strategic interests, or in the political interests of its elected leaders, to allow Russia to consolidate a new COMECON on former Soviet territory. Moreover, the West can do something, very cheaply, to prevent it.

However, a EAOGA is a possibility among the newly independent states, including Russia, that are not tragically distracted by overwhelming civil war or other military conflict. EAOGA is not what Nazarbaev had in mind when he proposed the (stillborn) EurAsian Union, but Kazakhstan would undoubtedly support it. Oil and gas development is the best and most sensible place to start. Of course such an economic development organization would not require the elaborate structure that was part of Nazarbaev’s proposal for an EAU. Russia judged that the EAU was not really in her interest. EAOGA could coordinate the development of legal frameworks, assure the consideration of environmental concerns, and act as clearinghouse for funding on projects. No international institution currently does this. It is in the common interest that someone should do it.

In the early 1950s France and Germany, in order to prevent yet another European and world war, created the European Coal and Steel Community (ECSC). The ECSC placed under international control those resources upon which conventional war-making depended. EAOGA would be inspired by the same project of guaranteeing national and international security multilaterally; however, it would work differently. EAOGA would be an association, not a community. This means that not just governments would participate. Transnational oil companies would be there; from the NIS, local political groups, even environmental groups, would be there, not just the governments: this would promote “civil society” in these countries still making the transition to democracy and the market. EAOGA would not only promote international regimes for the development of energy resources. It would ensure that the national systems of banking, finance, and legislation in the NIS would dovetail with international requirements. The Energy Charter Treaty, which will enter into force with support from the U.S. government and the international oil industry, can provide a point of reference for EAOGA’s activity. But EAOGA would not create an international bureaucracy like UNCTAD, nor would it seek to cede national authority to an international body like the Law of the Sea Treaty. Nor would EAOGA control those natural resources or their extraction and sale. It would do no more than establish the rules of the game, provide a forum for coordinating initiatives for crisis management, establish the general framework for fleshing out the necessary cooperative regimes, define criteria for guiding behavior, and provide stable expectations for routine commercial and political transactions. These desiderata are all held in common and mutually interrelated. It makes good sense to mobilize that common interest through EAOGA, so as to interrelate them in practice.

What kind of organization could EAOGA be? This question will be answered in practice, but some reflections may be sketched here. EAOGA need not be an international organization in the classical and traditional sense; indeed, this may not even be politically feasible. EAOGA would be a bit of a hybrid animal: an organization of limited (but not so limited) membership and with specific (but not always so specific) purposes. Not being a universal international organization, it could nevertheless have as many as fifty members, if all interested states in the former Soviet area, Eastern and Western Europe, and North America were included. Indeed, the combination of sets of producer countries, consumer countries, countries over whose territory the energy resources would transit, and great powers with interests that they may credibly assert in the region, this collection looks remarkably like the membership roster of the Organization for Security and Cooperation in Europe (OSCE). A start toward such a lean institution could be made with a limited series of international conferences like those called in 1992 on assistance to the newly independent states after the USSR disintegrated. That differentiated series of large international meetings, structured as a set of Coordinating Conferences and Technical Assistance Working Groups, could even serve as a model. The key and indispensable function of that series was to gather together in one venue of a large number of responsible decision-makers and highly qualified experts, and so to focus their attention on issues with political overtones but which are not in and for themselves political, in a manner that even an electronic world town hall could not.

How could EAOGA be organized? A fanciful but nonetheless descriptive acronym for the type of organization it might be could be QUINGPO (QUasi-International Non-Governmental Proto-Organization). In the beginning, possibly only states would have the organizational resources and political authority to convoke EAOGA. However, existing international organizations that both be necessary and add to the credibility of the project. The vast technical expertise available through them could be tapped without being duplicated. It would be difficult if not impossible to exclude the international oil and gas companies or to keep them out of the corridors. Indeed, their practical expertise will motivate much of the implementation of “strategic systems.” Moreover, representatives of national nongovernmental organizations, particularly ecological interest groups in the FSU, should have the opportunity to attend and participate. The attendees should not necessarily be limited to governments even if delegations are organized along existing lines of political authority. Indeed, like the earlier series of conferences on assistance to the NIS, EAOGA could at first be organized at least partly along working-group lines. Unlike those 1992 conferences, however, EAOGA should include both general-purpose and specific-purpose forums.

Who might undertake to provide the organizational umbrella for EAOGA in the beginning? It was noted above that the list of all interested states is, for all intents and purposes, equivalent to the membership roster of the OSCE. It is worth noting that the OSCE is, as EAOGA would be, a limited (but not too limited) membership, specific (but not too specific) purpose organization. The CSCE, from which the OSCE originated was itself a kind of QUINGPO: a general-purpose permanent congress followed by a series of regular, increasingly specific-purpose conferences. In response to events, it developed some specific-purpose capabilities and has been given a small permanent secretariat. OSCE nevertheless remains weakly institutionalized, yet, given the strong anti-institutional tendency in some Western countries on the international level, this could paradoxically be a potent political argument in its favor. OSCE might therefore be a first focus for institutional support, though the convocation of EAOGA should not necessarily depend upon OSCE infrastructure. OSCE has the prestige and authority necessary for this project and is already involved, for example, the Karabakh crisis-resolution, which as explained above is key to bringing Azerbaijani oil to market.

Only the West can provide the vast amounts of capital and know-how necessary to develop the energy resources there. If this is done wisely, then there is a potential for diminishing or immunizing Central Asia from the destabilizing effects of that development and fundamentalism and demographic upheaval. It could, moreover, co-ordinate the work of those and other institutions as appropriate, including perhaps the International Energy Agency set up by the West in Paris after the 1973 oil embargo. Also in this regard, the worst sticking point taken seriously by gas and oil industry executives as well as by most governments, but glossed over by most academic research, is the absence of legislation in the NIS. Here the Inter-Parliamentary Assembly of the States-Participant of the Commonwealth of Independent States (IPASPCIS) might be able to help. The European Parliament could help develop its committee structure and provide expertise. Like the Tsarist Duma, is IPASPCIS is only place in CIS-space where elected representatives of all regions can gather to discuss common problems on a regular basis. Its legislative committees could play a crucial role in hammering out draft laws for adoption by national parliaments and guaranteeing the complementarity of their provisions. The incorporation of international norms into national legislation, which is provided for by the newly entered-into-force Energy Charter Treaty, is an important case in point.

Most important, the political juncture is now ripe. Russia especially recognizes the need for guarantees of the security, stability, and strategic systems described here. In early June, Yeltsin to declared to an international energy conference in Moscow the need for Europe to concert its efforts toward energy security with Russia. He conveniently neglected to mention any participation by the South Caucasus or Central Asia. Such issues as the integrity of the CIS external border will always be of special interest to Russia, and other military-security concerns cannot be resolved without her participation. However, what Yeltsin is calling for here is nothing less than Russian control over the nature and pace of economic development in the other CIS countries. That is equivalent to an infringement of their sovereignty (an economic Brezhnev Doctrine) and cannot be tolerated. This would aggrandize a Russian sphere of influence in CIS-space, a development not in the West’s interest, nor in that of the non-Russian NIS, nor for that matter in Russia’s.

The real test of Russia’s multilateral pretensions today will be whether she wishes to move beyond bilateral balancing, playing her neighbors off against one another (such as bilateral deals for natural gas with Turkmenistan, playing Ukraine’s interest in the Druzhba pipeline against Turkey, or stark economic pressure against Kazakhstan). The West’s development of oil and gas resources in the former Soviet Union also has an indirect influence on the multilateral resolution of military questions. Foreign direct investment can promote the conversion of former military-industrial plants to civilian production, with resulting effects upon the evolution of political and social forces in the CIS, such as the predominantly ethnic Russian work force in northern Kazakhstan. All realistic possibilities, including the pipeline, today depend on Russia; she cannot be excluded. EAOGA would permit the other NIS to have a collective voice that can only be of benefit to Western energy security. It would decrease Russia’s ability to be arbitrary and encourage her positive cooperation and involvement. It is likely that over time Russia will further redefine and restrict its claims of special interest to the existing territory of the Russian state. On that basis, it will be possible in the future for multilateral relations among at least some of the Soviet successor states to go forward; and in that future development, Ukraine will play a leading role, much as France in the EEC at first hesitated before any expansion of the West European integration, and then in the EC became one of the greatest proponents of that expansion. As with France, for Ukraine this will occur when the state is sufficiently secure to wish to seek multilateral initiatives in order to restrain the expansion of Russia’s influence, once Russia has defined its interest as falling totally within its own existing borders. This development will signify, to Ukraine, the end of pretensions to post-Soviet multilateralism in Russia, and upon Russia’s rejection of a Russian “Monroe Doctrine,” Ukraine will be able to seek multilateral cooperation with other post-Soviet states without the fear of ulterior Russian motives.

4. Conclusion

It is commonly recognized, and it is even commonly and correctly said, that this entire situation is unprecedented; but everyone tries to deal with it in old ways. Moreover, for reasons that are not immediately clear, it is not frequently remarked how crucial are international organizations to the development of the region. Part of the reason is undoubtedly that it is taken for granted that such institutions as the IMF and the IBRD will make their expertise silently available. Another reason is that the mass media of all countries, on those relatively rare occasions when they present world events from other than a mainly national perspective, tend to focus more on multinational and international rather than on specifically transnational affairs. Moreover, the scholarly and research communities of many Western countries, under the economic pressure typical of advanced industrial democracies worldwide, are constrained by the national political discourses, by which their research agendas and programs are increasingly set due the paucity of private funds.

Despite Uzbekistan’s greater population, Kazakhstan has superseded it as Central Asia’s diplomatic motor in part because of its greater political openness, and Almaty has supplanted Tashkent as the region’s economic center because of Karimov’s refusal to marketize. In the meantime, Russia has moved closer to India, inheriting the USSR’s longstanding economic and military cooperation. In a situation where Uzbekistan finds a “natural” partner in south Asia in Pakistan and looks sometimes in a friendly manner upon Iran despite the Islamic “threat” to Karimov, Kazakhstan will find itself isolated in south Asia if it does not act fairly soon, and south Asia is its nearest outlet to international ports. For a complex of reasons that are difficult to understand, Kazakhstan has not even considered an oil pipeline through India to the Indian Ocean and international commerce. Yet even an overland road from Almaty to Delhi is hardly beyond the realm of possibility. Such a pipeline would have to pass through Afghanistan; but pipelines in Afghanistan laid during the Soviet period to export natural gas from Afghanistan to the USSR continued, and still continue, to function without a problem despite the military situation there. Both Uzbekistan and Russia recognize and support a breakaway Uzbek state in northern Afghanistan. If Russia wished to help guarantee “safe conduct” of Kazakhstani oil through northern Afghanistan, whose breakaway government it recognizes, then it could do so; but then, if it wished to facilitate export of Kazakhstani oil to western markets across southern Russia, it could do so as well.

States have more complex agendas than the transnational corporations, which regard the exploitation and marketing of these resources as not only the principal but even the sole problem. The complexity of states’ political agendas derives from the multifaceted functions that states perform, by contrast with TNCs. States are necessarily concerned not only with the economic development of foreign countries but also with their political and social development. Political stability is especially important to stable economic development, because conflict generates refugees and refugees flee to adjacent countries. Refugees in the recipient country create social tension, exacerbating the recipient country’s relations with the refugees’ home country. This is why international migration has become a security problem, and why international organizations and great powers have become intensely concerned with this once marginal issue. (For example, the recent Pact on Stability in Europe, familiarly called the Balladur Pact, was tailored with a special eye to the ethnic Magyars displaced from Romania to Hungary, and other expatriated Magyars such as in Slovakia. Because of the universal threat to all countries from many possible situations of migration instability, this international agreement was required, in order to frame a settlement of the issue in a regularized manner, in view of other potential ethnic conflicts in Eastern Europe are present, even not counting the Wars of the Yugoslav Succession in the Balkans.

When Western elites and publics are myopic, only businessmen and TNCs are able to drag their attention beyond their narrow national concerns. For where Western business goes, there Western governments will follow. Yet the responsibilities of states are broader and deeper than those of TNCs. The latter, motivated by quantifiable economic gain, have depended on the former to assure the political stability necessary to realize that gain. They have essentially been “free riders” profiting from states’ capacity to provide security goods, but not contributing to that security. States have benefited from TNCs insofar as the latter have acted in consonance with the states’ strategic political goals. This was the case when TNCs were essentially international corporations whose capital and headquarters were nationally based. However, that era is over. “State-capitalist” corporations still exist in the world, but nowadays-genuine TNCs do not serve the interest of any state. Great powers have been slow to realize this because the Cold War cast their perspectives in terms of the bipolar opposition to other states. States are now beginning to realize that their common interest can be opposed to those of TNCs, whose respect for environmental security, for example, has grown only under pressure of domestic and international public opinion, as states have adopted legal measures and instruments constraining or requiring TNC activity on the national and international levels, consonant with state-created, sometimes innovative, legal norms.

The NIS countries cannot finance their own modernization and exploit their own natural resources, and therefore they depend upon foreign direct investment from outside. Yet there is a clear absence of economic structures in the newly independent states that could digest those vast inflows of capital and expertise. Another problem is the need to dovetail the development projects of the transnational corporations with reasonable plans for the balanced development of the various concrete economic sectors of the countries concerned. Not only must the resources be exploited, but also their benefits must be captured in a manner to the advantage of the economic development of the region. Balanced economic and social development is in the West’s interest, because unbalanced development gives rise to social and then political instability that could threaten the guarantee of Western access to the natural resources they need. Otherwise the risk would be simply to reproduce the Soviet pattern of creating a half dozen or so "monofunctional" company towns. Moreover, a stable political environemnt is needed, as well as a clear cut sense of ownership and a way to deal with more indirect concerns of ethnic conflict and succession questions. This implies a mutual complementarity in development plans among the various countries of the region.

Dr. Robert M. Cutler [ website — email ] was educated at MIT and The University of Michigan, where he earned a Ph.D. in Political Science, and has specialized and consulted in the international affairs of Europe, Russia, and Eurasia since the late 1970s. He has held research and teaching positions at major universities in the United States, Canada, France, Switzerland, and Russia, and contributed to leading policy reviews and academic journals as well as the print and electronic mass media in three languages.

 
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