Robert M. Cutler on Energy and Eurasia

A key point is the little-noticed movement towards gas imports from the Kurdish region of northern Iraq into Turkey. Industry figures from the scene now estimate that 8 billion cubic meters per year (bcm/y) will flow from the Kurdish region into the Nabucco pipeline by the time it enters service, at present forecast to be in 2016. Added to the similar amount already committed from Azerbaijan, this makes up just over half of the projected 31 bcm/y volume of the pipeline.

The agreement on gas supplies from northern Iraq follows from the visit by Turkish Foreign Minister Ahmet Davutoglu in late October to Irbil, the capital city of Iraqi Kurdistan, to open a Turkish consulate there. His delegation comprised no fewer than 70 officials and businessmen.

The visit was itself a knock-on from one by a large and high-level Turkish delegation headed by Prime Minister Recep Tayyip Erdogan to Baghdad in the middle of October, when literally dozens of cooperation agreements were signed in a wide spectrum of policy areas.

These events suggest a tentative resolution of certain instabilities in Southwest Asia that have persisted since the break-up of the Ottoman Empire nearly 100 years ago. They represent the emergent re-integration of two economies rent asunder by the division of the empire in the early 20th century, together with an incipient consolidation of the post-Cold War "Southern Corridor" for energy from the Caspian Sea region to Europe. The significance of such a development of the evolution of post-Cold War international relations in the region is clear.

Recently announced oil industry contracts have garnered the most attention in this regard, and some background helps to put these in their proper perspective.

The Turkish Petroleum Company (TPC) was established in 1912 in opposition to US companies' interests. Two years later, the Anglo-Persian Oil Company (APOC) achieved 50% control of TPC. APOC later became the Anglo-Iranian Oil Company, then British Petroleum, then with the purchase of an American company BP-Amoco, today known as BP. The Iraqi government recently agreed with BP and the China National Petroleum Corporation (CNPC) on a deal for the development of the Rumaila oil field in the south of Iraq, which CNPC estimates to hold 17 billion barrels of reserves.

By 1927, when oil was discovered at Kirkuk, in what is present-day Iraqi Kurdistan, the TPC was divided into equal shares among APOC, Royal Dutch Shell, and the Compagnie Française des Petroles (CFP), and a US consortium called the Near East Development Corp, with a non-voting 5% share to the Turkish-born Armenian Calouste Gulbenkian, the original "Mr Five Percent", whose impressive collection of ancient art is now exhibited in his eponymous museum in Lisbon.

By 1929, when the TPC became the Iraqi Petroleum Co (IPC) and Iraq was under British mandate from the League of Nations, a difference of interests had emerged within the companies comprising it. While Shell and the CFP (which became the French company Total in 1991) sought to develop the Kirkuk deposits as quickly as possible, the APOC (today's BP) and the American company Standard Oil of New Jersey (which became Esso, then Exxon, and is today ExxonMobil) sought to delay it because they had other holdings and didn't mind keeping the oil in the ground there.

This soup of companies gives a hint as to continuities in the story.

Skipping the next three hardly uneventful decades, the IPC by 1960 was still developing only one-twentieth of all the resources in Iraq to which it had rights. That year, a meeting of oil producers in Baghdad led to the foundation of the Organization of Petroleum Exporting Countries (OPEC), and the next year the Iraqi "Law No 80" expropriated all IPC concessions not already in production.

Following these events, OPEC members began negotiating with Western consuming countries independently of one another, leading to increased production and undercutting of Iraq, which suffered a significant decline in market share. Throughout the 1960s, the Iraqi National Oil Company (INOC) contracted first with the French and then with the Soviet Union, asking for help to development the North Rumaila fields: the ones just signed over to BP and CNPC.

By 1975, and following its strong advocacy of the 1973-74 oil embargo on the West, Iraq nationalized all foreign energy interests still remaining in the country, then throughout the rest of the decade autonomously developed the domestic energy extraction industry. This went relatively well until the disastrous Iran-Iraq war began, lasting for a decade. Then came the First Gulf War, followed by United Nations sanctions.

By the end of the 1980s, the USSR had agreed to assist in the development of the West Qurna field; LUKoil inherited this agreement after the end of the Soviet Union, but it is now out of luck. After the fall of Saddam Hussein, the government of Iraq declared all contracts signed during the Saddam era were invalid and were to be reviewed and subjected to new Iraqi law. LUKoil accordingly put in a new bid for West Qurna earlier this year, but has lost out to Western rivals. The Iraqi government has just reached agreement with America's ExxonMobil (Standard Oil of New Jersey when it was a member of TPC in the 1920s) and Anglo-Dutch company Shell (also a TPC member) to develop the West Qurna field, of which the reserves are estimated at 8.7 billion barrels.

The signature of these agreements with Western firms (and there are surely more to come) represents the historic reversal of the nationalization policy introduced in 1960, seven years after the coup in neighboring Iran against Iranian prime minister Mohammad Mossadeq, who had pursued an analogous policy.

The agreements also coincidentally signify the irretrievable downfall of the ideology and practice of the transnational Arab socialist Ba'ath party, of which remnants are present and active throughout a number of state structures in the Arab world, although an Iraq-Syria split dating from the mid-1960s had already destroyed its pretensions to any sort of universalism.

The Ba'ath party had taken power in Iraq in 1963 and Saddam was its last significant representative in power, although it survives through the Assad clan in Syria. This era of the 1960s also marked the Soviet foreign-policy initiative to curry favor with such regimes, categorized in Soviet doctrine of the time as "revolutionary democracies", adding Third World intelligentsia and other miscellaneous social strata into the already eclectic mix of the "popular front" line of Seventh Comintern Congress (1935).

That Soviet doctrinal shift had been made authoritative in the 1960s through writings and speeches by Boris I Ponomarev, chief of the Third (Communist) International before its dissolution in 1943, thereafter head of the Soviet Communist Party Central Committee's International Department and eternal candidate member of its Politburo.

So the new energy agreements allow one to see in still clearer retrospective focus the final extinction of a whole so-called (in Soviet doctrine) "national anti-imperialist" social stratum that came into state executive power throughout a number of former European colonies, at the head of the anti-imperialist independence movement about half a century ago.

The names of its representatives are well known: Algeria's Ahmed Ben Bella, Ghana's Kwame Nkrumah, Indonesia's Sukarno, and others. Iraq's Saddam was the last.

So this half-century mark seems indicative, but of what? One reason it begins to stand out so clearly is that other things begun about 50 years ago are also coming full circle. Although the Sino-Soviet split can be traced to Joseph Stalin's wrong-headed revolutionary strategy in China between the two world wars, nevertheless it was in the early 1960s, following Nikita Khrushchev's 1956 denunciation of Stalin, that the split became public and undeniable to all but a few.

The Sino-Soviet split in turn made possible the US-China rapprochement inaugurated by president Richard Nixon; and while in the early 1970s a commonly used phrase was Nixon, by going to Beijing in 1972, had "played the China card [against Russia]", China is today increasingly able to play the Russian card against the US as well as the American card against Russia. Within the past decade, China signed its first treaty with Russia in the last half-century, and one that includes the classic phrase "Good-Neighborly Relations" in the title.

Today, in one of those impossible-to-invent scenarios, China finds itself perfectly positioned to take advantage of the synergy between (1) Russia's need for export markets for hydrocarbon energy, where Europe is slow-growth and East Asia is accelerating; and (2) its own surplus of US dollars with which to purchase and invest in a discount shopping mart of world-economic crisis-depressed industries.

So what has this to do with Iraq? And who was Nicolas Spykman? Spykman (1893-1943) was a Dutch-born American professor of international relations at Yale University who took English geographer Sir Halford John Mackinder's idea of the Heartland being surrounded by an Inner Crescent (comprising Europe, Arabia, the wider Middle East and Asia), criticized and internally differentiated the crescent, distinguishing in Asia, for example, between the spaces occupied by Indian and by Chinese civilizations. He renamed it the Rimland, and turned Mackinder on his head by asserting that "who controls the Rimland rules Eurasia ... [and consequently] the destinies of the world".

On a map, the Rimland outside Europe looked at the time as if it were unified by little other than the British Empire. Yet it is not for nothing that Spykman is sometimes called the "godfather" of (George F Kennan's) "containment theory". His Rimland is meant to contain Mackinder's Heartland. And that is where the before-our-very-eyes shift in Iraqi energy and foreign commercial policy achieves its world-historical significance. The Iraqi energy contracts would be impossible without the political security of the Turkish-Iraqi rapprochement. (Some have even suggested the word "integration".) That rapprochement mends a broken link in the Rimland.

The main winners in this shift are the corporate descendents of the British and American companies that were part of the TPC 80 years ago (but not only them). The main losers are the others: France and Russia; although the latter was not a player early last century, it become one during the 1960s in concert with the French. Although industrial trusts these days dictate states' foreign policy more than the other way around, it is possible to see, in the co-opting of Chinese and other Asian energy companies to these projects, a pattern whereby the North Atlantic powers and the North Pacific powers cooperate against the powers of Mackinder's Eurasian Heartland.

It bears mentioning that the North Atlantic powers are not limited to the US and the United Kingdom, but also include Norway (by way of StatOilHydro), Italy (by way of Eni), and other smaller European state companies, just as smaller Asian state companies are also included: Japan, Indonesia and South Korea, for example; not to mention (once again) China. These are companies that were not players when the "game" began a century ago because they did not have the educated technicians, industrial plant and access to capital that a century of social and economic evolution has now brought them.

Those North Atlantic powers even include Germany, which is not present in the region's oil patch but whose national champion RWE is the moving force (along with Austria's OMV) in promoting the Nabucco pipeline: which, recall from above, the new Turkish-Iraqi cooperation is helping to fill with gas from Iraqi Kurdistan. Such is the emerging macro-structure that will govern international relations for the next decade and a half, until it becomes clear what is the outcome of the ongoing turmoil in Iran, Pakistan, Afghanistan and (sooner or later) Uzbekistan. For those countries represent a geographical wedge that could divide the Rimland in two.

But even Russia surely knows that their eruption in mass social unrest would not necessarily be to the advantage of any Eurasian land power; such an eruption would constitute itself a new Eurasian land power, transnational and trans-societal in scope. Such changes have already made inroads among the Muslim peoples of Russia's North Caucasus. This does not stop Russia today from preventing concerted action against Iran in the UN Security Council (even though one of the best ways to understand present-day Iran is to study the history of the Safavid Empire of the 16th and 17th centuries).

This is not any anti-French or even anti-Russian plot. According to George Liska, the European-born American theorist of international relations, the "structure of international relations" comports ever-changing triangles, spanning the centuries, among land and sea powers whose strategies are determined as much by geography as by anything else.

Any seafaring North Atlantic and the North Pacific powers would have common interests vis-à-vis any Eurasian land power. It is Spykman's Rimland against Mackinder's Heartland, although in the details it is much more complicated than that.

It will take until the early 2020s before we will have a better idea about the resolution or irresolution of the social eruption in the "wedge" identified above. That outcome will in turn condition the evolution of the first post-Cold War international system's third phase (we now live on the cusp of the second), until a crisis in the early 2040s may lead to a system-wide transformation that we cannot yet well imagine.

[For a conceptually-framed historical analysis of international relations since 1648 that sustains the above prospective argument, see the author's 1999 article, "The Complex Evolution of International Orders and the Current International Transition".]

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URL:  http://www.robertcutler.org/blog/2009/11/the_rise_of_the_rimland.html
First published in Asia Times Online, 13 November 2009.