Washington is losing its sway over Southeast Asia as its chief competitor China emerges as a global power with a diplomatically attractive no-strings-attached policy on aid and investment. As US hegemony gradually comes to an end, so too it seems will the region's short-lived experiments with democracy and financial liberalism.
ASIA HAND
US, China square off
By Shawn W Crispin
BANGKOK - Of all the factors that contributed to Thailand's mid-December decision to impose restrictive controls on short-term capital flows, which subsequently flattened the stock market and sparked howls of discontent from foreign investors, Thai authorities' primary motivation for the fateful policy was left unnamed, but clearly it was China rather than the US.
The rapid appreciation of the free-floating Thai baht against the fixed-rate Chinese yuan rather than the US dollar had in recent months severely eroded Thailand's overall export competitiveness, particularly in the crucial electronics sector, which accounts for about 35% of Thai exports. If the baht-yuan gap had widened further, Thai central bank authorities feared that a stronger baht would have bankrupted its exporters and severely crimped economic growth.
It's not the first time that China's rigid exchange-rate policy has sent ripples of financial instability through Southeast Asia. In retrospect, some economists believe that Beijing's decision in 1994 to peg the yuan to the US dollar at the artificially low rate of 8.2 per greenback was a crucial determining factor in the 1997-98 Asian financial crisis, which devastated the region's currencies, bourses, banks and broad economies.
The move to a pegged rate facilitated China's emergence as a global economic powerhouse, in many respects at the expense of Southeast Asia's financially crippled export-driven economies. Then, Beijing extended a symbolic US$1 billion to the region's suddenly debt-ridden governments. Since, Beijing has launched an economic charm offensive across the region, facilitating trade and investment linkages for regional countries to share in the Middle Kingdom's explosive growth.
China has firmly emerged as an important new destination for the region's natural-resource exports, a supplier of cheap goods and services and, increasingly, a source of badly needed foreign direct investment. Southeast Asia's growing economic reorientation toward China is expected to accelerate into 2007, as the United States' appetite for the region's exports tapers off because of slowing economic growth.
Geographical pull means Southeast Asia will increasingly look toward its giant northern neighbor for new trade and investment opportunities, a trend that should accelerate as regional business seeks ways to make up for lost sales to the US. That's already happening: Sino-Southeast Asia trade surged to $130 billion in 2005 and is on pace to grow even faster this year. The two sides are now negotiating a free-trade agreement that would potentially form the world's largest free-trade area in the world by 2010.
Double-edged sword
But China's economic advance into Southeast Asia has not been a strictly benign phenomenon, as frequently characterized by Chinese officials upon the announcement of "mutually beneficial" trade, investment and aid pacts. Thailand's recent drastic reaction to China's pegged exchange rate tells a significantly different story, one that threatens to undermine the region's broad post-1997 trend toward more financial openness, particularly in export-oriented economies in Malaysia, Indonesia and the Philippines that, like Thailand, are seeing their exports squeezed by an appreciating exchange rate vis-a-vis the Chinese yuan.
Moreover, Chinese aid and investment, while stimulating much-needed economic growth, has also helped to prop up some of the region's more authoritarian regimes, including those in Myanmar, Cambodia and Laos. With China's rise, Southeast Asian governments are increasingly able to pick and choose between economic engagement with either the US or China, and many are opting to open their economies to Beijing because Chinese capital comes without the political baggage of US finger-wagging about the need to move towards more democracy and universal economic openness.
China's fast rise and the United States' slow fade from Southeast Asia is unmistakably undermining the region's often tumultuous but at the same time highly important experiments with democracy, economic openness and financial liberalism. This represents a significant course shift, one that threatens to undermine the region's once bold, now fading, democratic aspirations.
During the Cold War, when the US, Europe and Japan fueled the region's rapid economic growth through free trade and manufacturing-oriented investments, the economic privileges were often predicated on a loose understanding that recipient countries would move toward more liberal democracy and economic openness - a policy that in retrospect worked to varying degrees of success.
When the 1997-98 Asian financial crisis broke out, the US-influenced International Monetary Fund predicated its multibillion-dollar bailout packages on a commitment to more, not less, economic and financial openness. That strings-attached counsel included the abandonment of the region's fixed-exchange-rate regimes for free-floating ones, and the subsequent market-driven devaluations helped to spark the region's exports and economic recoveries.
At the same time, Washington often scolded and in some egregious cases even imposed sanctions on Southeast Asian countries for their poor rights records, including an arms embargo on longtime ally Indonesia over military-related abuses in East Timor, and full-blown trade and investment sanctions against oil-and-gas-rich Myanmar related to its long-standing abysmal rights record.
Bygone moral era
Those demands and sanctions, however, hark to an arguably bygone era when the US was widely perceived in Southeast Asia and elsewhere in Asia as a moral force for democratic change. The George W Bush administration's recent policy emphasis on regional cooperation for its counter-terrorism campaign, and its attendant restrictions on civil liberties, including the implementation of anti-terror codes allowing for detention without trial, policies the US previously scolded in the region, has badly eroded the United States' stature here.
Moreover, Beijing's mix of political repression and economic success has sent a bold new message to the region's leaders that democracy and financial openness are not necessarily preconditions for economic prosperity. China's various anti-democratic policies, from its brutal crackdowns on free speech and political dissent, to its sophisticated control and censorship of the Internet, to its outrageous official land grabs from urban squatters and rural peasants, are gaining currency across Southeast Asian countries that increasingly see China as a development role model.
Worryingly, that trend is taking hold not only in Southeast Asia's underdeveloped but emerging economies, but is also prompting anti-liberal backtracking in the region's more established economies, including Thailand and the Philippines.
Consider the US-versus-China contest now under way for influence in Cambodia. In recent years, Phnom Penh has relied heavily on Western donors for its economic sustenance, including aid that accounted for more than 60% of the government's annual budget. To sustain that Western aid, the Cambodian government was required to move toward more democracy and economic openness - a policy that was arguably successful by half.
When Cambodian Prime Minister Hun Sen jailed a journalist in 2005 for his critical reporting, the authoritarian premier was forced to back down and release the scribe by US and Western pressure. Hun Sen was also apparently persuaded by the US and European countries to amend Cambodia's criminal-defamation codes and eliminated jail terms as a possible penalty for libel.
Enter China into the mix: in April, Beijing extended $600 million worth of no-strings-attached foreign aid, on par with the Western-led Consultative Group's contingency-laden $601 million. Since, Hun Sen's government has resumed jailing critical journalists on so-called "disinformation" charges, a popular tactic Beijing uses against Chinese journalists. And there are growing indications that the government is trying to wiggle out of its commitment to a United Nations-backed tribunal for former Khmer Rouge leaders which promises to unearth details of China's past support for the murderous Maoist regime.
Myanmar represents another case in point. Myanmar's ruling junta for years teetered on the brink of financial collapse under US-led economic and investment sanctions, imposed for the military regime's abysmal rights record. Beijing sometimes provided a helping hand when finances were particularly tight, including in the wake of the 1997-98 regional financial crisis, but Myanmar's sorry financial state then reflected the still-tentative state of China's own national finances.
Now, Myanmar's generals are swimming in cash and politically secure as an economically empowered China invests heavily in the country's untapped oil, gas and hydropower resources. China provided crucial funds to finance the junta's bizarre and expensive 2005 move of the national capital from coastal Yangon to inland Naypyidaw, a move apparently motivated by the junta's peculiar fears of a possible US-led preemptive invasion.
Abandoned high ground
As China gains more economic and political influence in Southeast Asia's less developed peripheral states, the US is increasingly abandoning the democratic high ground and subordinating its regional diplomacy to plain economic and strategic interests - that is, the US is contesting the region on China's terms, not its own.
That was plain in the recent trade deal the US brokered with Vietnam - a country that both Washington and Beijing are bidding to sway into their diplomatic orbit. Earlier, the US had pushed Hanoi to improve its abysmal religious- and human-rights record substantially before the US would back its bid to accede to the World Trade Organization. In November, Bush blatantly backtracked on that requirement and endorsed Vietnam's membership to the world trade body even as the communist regime brutally cracked down on the country's nascent pro-democracy movement, including while Bush was attending the Asia-Pacific Economic Cooperation meeting held in Hanoi.
Even where US interests are firmly entrenched, China's growing influence is altering the United States' diplomatic calculus, prompting it to drop democracy promotion from its policy priorities toward the region.
In November 2005, the US dropped an arms embargo it had maintained against the Indonesian military after it went on a death and destruction rampage in the wake of East Timor's 1999 vote for independence. The flip-flop came soon after China extended $300 million in credits for Indonesian infrastructure projects and more than $10 billion more in private-sector investments. The policy U-turn also notably came at a time the Indonesian military was coming under new fire from international rights groups for alleged human-rights abuses in Papua province - where the Indonesian government tellingly bans foreigners from traveling.
Similarly, Washington repealed about $14 million in military aid to Thailand in the wake of the September 19 military coup that abolished the progressive 1997 constitution and ousted democratically elected prime minister Thaksin Shinawatra - who coincidentally was viewed in Washington as moving its erstwhile strategic ally in the region closer to China.
Tellingly, in the wake of the coup the US quietly maintained aid earmarked for Thai-US anti-terrorism cooperation, including funds for the Bangkok-based Central Intelligence Agency-led Counter-Terrorism Intelligence Center, which apparently played a role in establishing the secret prison Thailand hosted for the US to interrogate regional terror suspects, as first reported in the Washington Post.
Concerned that the US might lose a step to China - which significantly remained mum on the military coup - US Ambassador to Thailand Skip Boyce in a meeting directly after the coup reassured the country's new military leaders that Washington was obliged by law to sanction the military intervention and that bilateral relations would stay on track despite the Thai junta's suspension of civil liberties, according to a senior Thai official.
Even in the Philippines, where the US has now stationed troops to help the Philippine armed forces flush out Muslim insurgent groups that Washington believes have links to international terror groups, China is making distinct economic inroads. In September, China announced its intention to extend $2 billion in loans to the Philippines, a generous offer that dwarfed the $200 million the US-influenced World Bank and Asian Development Bank tabled. Moreover, Beijing's backing to a an official Code of Conduct for the South China Sea helped to ease Philippine concerns about the two countries' longtime competing claims to the Spratly Islands.
Shifting strategic calculus
China's economic diplomacy is in effect easing Southeast Asia's historical skittishness about Beijing's long-term intentions toward the contiguous region. In turn, that's slowly but surely starting to erode the United States' rationale for maintaining and expanding a strong strategic position in the region, and is in effect undermining Washington's apparent designs to fragment the region into competitive pro-US and pro-China camps. To be sure, certain regional countries such as Vietnam, the Philippines and Indonesia remain wary of China's growing strategic clout and still favor a counterbalancing US presence.
Yet the US is tellingly having a tougher time selling new strategic regional overtures, because of a growing number of countries' concerns that overtly siding with the US could irk China, which has long feared US strategic designs of encircling its porous southern periphery. In July, landlocked and impoverished Laos rebuffed a US offer to send military engineers to help build schools, clinics and roads. Laotian Defense Minister Major-General Duangchay Phichit said his country would welcome US funds, but not US troops on Laotian soil.
More significant, Vietnam, which fought a border war with China in 1979, has reacted coolly to recent US overtures to gain access to military port and airport facilities at Cam Ranh Bay because of its concerns about how China might react. And strategic analysts say Indonesia's recent decision to purchase as much as $3 billion worth of Russian rather than US armaments was partially made to allay Beijing's concerns about US-Indonesian military interoperability during a potential US-China conflict where the US might attempt to block the nearby Malacca Strait, through which about 80% of China's imported oil currently flows.
All this means that the US has lost a significant step to China - economically, politically, and strategically - in Southeast Asia's increasingly important strategic theater. All indications are that the region is moving toward more Chinese and less US influence, and as US hegemony gradually comes to an end, so too it seems are Southeast Asia's short-lived experiments with democracy and financial liberalism.
Shawn W Crispin is Asia Times Online's Southeast Asia editor.
Copyright 2006 Asia Times Online Ltd.
Showing posts with label Southe East Asia. Show all posts
Showing posts with label Southe East Asia. Show all posts
Friday, December 22, 2006
The Great Game on a razor's edge
Over the past year, it has become clear that the US will not be able to become the single dominant power in Central Asia and thereby control oil and gas and their transportation routes. Russia and China have together put up dikes delimiting US influence, though they are far from being a tight couple. The death of Turkmenistan's president Saparmurat Niyazov, however, could dramatically shift the center of gravity of the Great Game.
Dec 23, 2006
By M K Bhadrakumar
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for more than 29 years
The accidental killing of Alexander Ivanov, a Kyrgyz fuel-truck driver, by Corporal Zachary Hatfield, a US serviceman, at the Manas Air Base on the outskirts of the Kyrgyz capital Bishkek in December is threatening to snowball into a first-rate crisis for the United States' regional policy in Central Asia.
Manas is the lone US military base in all of Central Asia - close to the Chinese border of Xinjiang. Curiously, this was also how the year 2006 began, as Washington was grappling with the call
made by the Shanghai Cooperation Organization (SCO) for a timeline for the withdrawal of the US military presence in Central Asia.
In a nationally televised address, Kyrgyz President Kurmanbek Bakiyev called for reviewing the Manas base agreement with the US. The Kyrgyz Parliament passed a resolution that given the "negative perception of the American image among our country's population", Bakiyev should examine the continuance of the base. The Foreign Ministry made a demarche with the US that Hatfield shouldn't leave until the Kyrgyz due process of law took its course.
This is rhetoric out of Latin America. Yet Bakiyev had only come to power on the crest of the US-backed "Tulip Revolution" of March 2005. But US-funded Kyrgyz "civil society" groups are nowadays arrayed against him on account of his increasingly pronounced foreign-policy leanings toward Russia and China.
They turned rowdyish in November, and humiliated him, forcing on him a new constitution curtailing his presidential powers. That is to say, Washington must now seek Bakiyev's help while backstage it could be funding and instigating political activists bent on overthrowing him. Bakiyev's overthrow may help the US firm up its grip on Manas, but today his helping hand is useful for preserving US interests. Nothing could be more surreal. Nothing would so vividly epitomize the complexities of the geopolitics of Central Asia.
Great Game slows down
The Great Game in Central Asia itself may appear to have considerably slowed down in 2006. But nothing could be more deceptive an impression. True, we've witnessed nothing like the cataclysmic events of the previous year - "Tulip Revolution" or the Andizhan uprising in Uzbekistan. Yet great-power rivalries most certainly continued - passions that were largely driven underground, where they simmered without taking a confrontational character.
Partly this was because the bickering over geopolitical influence became somewhat manifestly lopsided, with Russia and China not only retaining their gains of yesteryear but also consolidating them, and the US painstakingly attempting to recoup its lost influence in the region.
The single biggest "success story" of US diplomacy in the Great Game during the past year has been that Washington prevailed on Russia and China to give consideration to its reasoning that granting full membership to the Islamic Republic of Iran in the SCO might not be consistent with their own long-term interests. This was no mean achievement, considering that both Russia and China have such high stakes in their bilateral relations with Tehran. But Iranian President Mahmud Ahmadinejad attended the summit as a special invitee. The SCO evidently keeps open the "threat" of Iranian membership.
Equally, the fact that, unlike its previous year's summit, the SCO meeting in June 2006 did not assume an overt anti-American overtone must remain a matter of relief for Washington. In many ways, the SCO demeanor has come to be the litmus test of the United States' geopolitical standing in Central Asia at any given time. Contrary to earlier US estimations, the SCO is increasingly acquiring a swagger that is suggestive of its potential to become the main powerhouse of the Eurasian region - arguably, a leading Eurasian economic and military bloc. The SCO comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
During the five-year period since its birth in 2001, the SCO, which has as members a number of underdeveloped countries including some desperately poor ones with nothing ostensibly to bind them together except their common geography, has not only held together but has grown in size and influence.
Initially drawing on the Chinese tri-fecta of "terrorism, separatism and extremism", the SCO speaks today about the establishment of a free-trade area and about common energy projects such as exploration of hyrdrocarbon reserves, joint use of hydroelectric power and water resources. But from the US perspective, the SCO agenda continues to be laden with a heavy cloud of suspicion regarding the United States' geostrategic intentions in the Central Asian region.
This impression gets further confirmed by the SCO's decision to hold large-scale joint military exercises scheduled for the coming summer in central Russia with the Collective Security Treaty Organization (CSTO), the military alliance that is Moscow's answer to the North Atlantic Treaty Organization's enlargement into the post-Soviet space. The CSTO includes Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan.
That the military exercises will take place against the backdrop of the chill that has descended on Russia-US relations in the past year or two, and in the light of the likely deployment of the first interceptors of the US missile defense systems in Central Europe and the Asia-Pacific region, is no doubt significant.
It is irrelevant whether the SCO can be called a latter-day Warsaw Pact or a "NATO of the East". What is important is that on a practical plane, when it transpired that the US aircraft deployed at Manas Air Base might be undertaking reconnaissance missions into sensitive military regions in central Russia and China's Xinjiang, Moscow and Beijing put their foot down and acted in concert within the framework of the SCO, insisting that the stated purpose of the US military presence in Central Asia must be fulfilled in letter and spirit, namely that it restricted itself exclusively to undertaking resupply missions for the "war on terror" in Afghanistan.
The then-Kyrgyz president, Askar Akayev, was caught in the middle and overthrown from power in the process as a furious Washington let loose the "Tulip Revolution" on him for his perceived intransigence in turning down the US request for the stationing of AWACS (Airborne Warning and Control System) aircraft in Manas. But the SCO quietly and firmly held its ground. Thereby it made an important point - that it had gained traction as a security organization. Not only that, the SCO proceeded to follow up at its summit in June 2005 with the call for the vacation of the US military presence in the region.
Indeed, going one step further, the SCO emphatically rallied behind the leadership of Uzbekistan in its move to ask for the vacation of the US air base at Karshi-Khanabad. On both counts - restrictions placed on the use of Manas and the eviction from Karshi-Khanabad - Washington meekly had to give in. In the process, Bishkek even renegotiated the bilateral agreement on Manas a few months ago by getting Washington to increase the annual rent of the base from US$2.7 million to between $150 million and $200 million.
The year 2006 has thus made it clear that the US is unlikely to become a single dominant power in Central Asia. Simply put, Russia and China have together put up the SCO dikes delimiting the US influence in the region, which will be difficult for Washington to breach for the foreseeable future. During the year, by and large Washington has vainly exhausted its energies in attempts to create misunderstandings between Russia and China and in pitting one SCO member state against another.
The heart of the matter is that apart from the bleeding wounds in Iraq and Afghanistan, which remain a major distraction for US diplomacy worldwide, US policy in Central Asia is seriously handicapped in two other respects. First, the United States' complete loss of influence in Tashkent after the Andizhan mishap in May 2005 is cramping overall US diplomacy in the region.
There is no denying that Uzbekistan is a key country in Central Asia. In the Soviet era, everyone from Josef Stalin down knew the axiom that Uzbekistan was the hub of the geopolitics of the region. True, the US put out several feelers to Tashkent through intermediaries for reconciliation, and lately even the European Union lent a hand, but Tashkent wouldn't budge. The laceration of Uzbek national pride by the US over Andizhan opened such painful wounds that forgiveness may take much time coming and will extract sincere repentance on the part of Washington for its role in the Andizhan uprising. Meanwhile, the US has been left with no option but to watch Russian and Chinese influence in Tashkent expanding by leaps and bounds.
In a similar fashion, but in an even more fundamental sense, US diplomacy in Central Asia is seriously hobbled by Washington's alienation from Iran. Ten years have gone by since the famous article by Zbigniew Brzezinski in Foreign Affairs magazine calling for unconditional abandonment of the US policy of containment of Iran. Brzezinski had brilliantly argued the case (which most US career diplomats assigned to the region then also believed) that for US regional diplomacy to be anywhere near optimal in the Caucasus, in the Caspian region and in Central Asia, it must befriend Tehran. But Washington's mental block over Iran persists.
Meanwhile, the "Greater Central Asia" strategy unveiled by Washington last April with so much elan has already fizzled out. The strategy was avowedly intended to roll back Russian and Chinese influence in the region. Testifying before the US Congress that month, a senior State Department official said, "A lot of what we do here is to give the countries of the region the opportunities to make choices ... and keep them from being bottled up between two great powers, Russia and China."
The US official conjured up visions that could only belong to the world of fantasies: "Students and professors from Bishkek and Almaty can collaborate with and learn from their partners in Karachi and Kabul, legitimate trade can freely flow overland from Astana to Islamabad, facilitated by modern border controls, and an enhanced regional power grid stretching from Almaty to New Delhi will be fed by oil and gas from Kazakhstan and Turkmenistan and hydropower from Tajikistan and Kyrgyzstan."
No wonder there are no takers in Central Asia for Washington's policy construct. Central Asian states are aware of the Taliban's resurgence in Afghanistan, and reckon that peace is a distant goal. Even New Delhi seems embarrassed. Islamabad keeps quiet. The only capital to evince enthusiasm for Washington's paradigm of steering Central Asian states toward South Asian allies has been Kabul.
Sino-US convergence?
But failures may often hold the key to success. In a way, the current failures in regional policy may open a window of opportunity for the US in the period ahead. The point is: Without the glue of a serious US geopolitical challenge to bind them together into undertaking collective countermeasures, can the Sino-Russian condominium hold together in Central Asia for long? It is apparent that divergences have already appeared in the respective Chinese and Russian interests in Central Asia.
China has used the SCO forum and the Russian influence in Central Asia to return to the region, which is indeed its back yard, for the first time in nearly 1,000 years. It is important to bear in mind that Beijing launched the idea of the SCO, and Russia accepted it. China views Central Asia as its "near abroad". As China's economic muscle grows, Beijing can afford to be more assertive.
China's soft power is already at work in the region. It is increasingly able to invoke its bilateral-cooperation mechanisms with Central Asian countries. There is hardly any need for China to ride piggyback on Russian goodwill or Russian influence in the region. China has used the SCO for acquiring local knowledge, and in building relations with the region's indigenous political, economic and military elites.
It is in the area of energy security that Chinese interests and concerns have already begun diverging significantly from those of Russia. The trend during 2006 has been that Russia's energy interests - in controlling the region's transportation routes for oil and gas, in sourcing the region's energy for meeting Russia's domestic needs that would leave an exportable surplus for meeting its commitments in Europe, in having a say in determining the price of energy in the region - are increasingly affected by China's robust quest for oil and gas in the region.
The early signs of this contradiction in Sino-Russian cooperation in Central Asia began appearing in 2005 when the China National Petroleum Corp acquired the PetroKazakhstan oil company for $4.18 billion.
China's gas deal with Turkmenistan in April 2006; the commissioning of an oil pipeline from Kazakhstan; China's proposal for an energy-pipeline grid for Central Asia and connecting it with Xinjiang; China's cooperation agreement with Iran in the Caspian region; China's gas deals with Uzbekistan; China's interest in participating in a Turkmenistan-Afghanistan-Pakistan gas pipeline - all these are happenings within one calendar year, each imbued with strategic significance.
This past year, too, China has waded into the controversial waters of the Caspian Sea in search of oil when last January Iran's North Drilling Co and China Oilfield Services Ltd signed an oil-exploration agreement relating to the disputed deep waters of the southern Caspian. In one way or another, all these developments cut into Russian interests in Central Asia's energy sector.
Having said that, however, the China-Russia strategic partnership has a much greater regional and global logic than Central Asia, and the attempt in Moscow and Beijing will presumably be to harmonize their differences in Central Asia from spinning out of control. Also, both Moscow and Beijing realize that Central Asian states themselves will seek out Russia to balance their relations with China.
How these contradictory tendencies will play out within the SCO processes presents an engrossing topic. Clearly, the opportunity arises for the US to establish a dialogue with the SCO. A breakthrough may come in 2007. The prominent Russia hand in the Heritage Foundation in Washington, DC, Ariel Cohen, wrote recently, "Given that the SCO primarily serves as a geopolitical counterweight to the US, Washington stands little chance of ever receiving full membership in the group ... But US officials do not necessarily need full membership in the organization in order to work closely with the Central Asian states. It would serve Washington's best interests to remain in close contact with the SCO. To do so, it could resubmit an application seeking observer status.
"To boost the chances of success," Cohen added, "the US should engage Central Asian states by balancing democracy promotion and democratization with its other national interests, including security and energy."
Conceivably, we may expect even a NATO overture to the SCO in the coming year. In an exclusive interview with People's Daily last month, NATO secretary general Jaap de Hoop Schaffer held out the interesting suggestion to Beijing that there doesn't have to be a contradiction between China's membership of the SCO and China's future cooperation with NATO.
Without doubt, a palpable sense of urgency is already apparent in US thinking to the effect that the Chinese-Russian strategic partnership poses a serious threat to the United States' geopolitical position in Central Asia, and second, that China is actively remaking Central Asia's order. Last September, the US
Congress held a special hearing titled "The Shanghai Cooperation Organization: Is it Undermining US Interests in Central Asia?"
Moscow seems to anticipate that another US bid for observer status with the SCO is looming - and that unlike in 2005, Beijing may not oppose it this time. Curiously, at the end of December, Russia formalized a mechanism for regular political dialogue with the Mercosur grouping of Latin American countries, which has a definite slant (comparable to the SCO's) against US economic hegemony in the Western Hemisphere.
Speaking on the occasion in Brasilia, Russian Foreign Minister Sergei Lavrov said, "We have, by and large, been watching with the most sincere sympathy the integration processes in South America. We consider that the strengthening and elevation of the level of integration within the region works objectively in favor of the creation of a more stable and more fair world order in which all problems will be tackled multilaterally. I am certain that the partnership between Russia and Mercosur will be instrumental in attaining this goal."
The US estimation is basically that behind the facade of unity, China, Russia and the other SCO members and observer countries harbor serious differences of opinion. While "discord" may be too strong a word, to quote a US strategic analyst, "It is quite possible that differences will grow behind the facade of [SCO] unity. Washington must be alert to exploit any openings to gain geopolitical advantage. While the political, ideological and military dimensions of the New Great Game in Central Asia continue to heat up, it should be clear to all players that plenty of time remains in the contest. The SCO now appears to have momentum on its side, but such an advantage can dissipate quickly."
Thus the US would tell China that Russia was needlessly dragging it into an anti-American bloc, and that there was nothing irreconcilable involving US and Chinese interests in Central Asia. US strategic analysts have been arguing that both the United States and China are interested in the stability of the region; both are against the ascendancy of extremist forces in the region; both are interested in Central Asia's transition to market economies and in the region's globalization; both have stakes in the rapid development of Central Asia's hydrocarbon sector and in the diversified and efficient flow of the region's energy to the world market.
There are signs that the US is also using the oil-price issue as a wedge to divide Russia and China. The US has also been campaigning in the capitals of SCO member countries (and observer countries) that Russia is aspiring to transform the SCO into a club of energy producers and to be its dominant partner, and that if the Russian stratagem is allowed to proceed unchecked, that will be detrimental to the interests of Central Asian energy producers - and even of China and India. These are interesting straws in the wind.
The recent five-nation energy summit of major Asian consuming countries (China, Japan, South Korea, India and the US) hosted by China is partly at least an expression of Beijing's commonality of interests with Washington in leading an energy dialogue of consuming countries vis-a-vis Russia. Conceivably, Beijing may be harboring grievances that Moscow is keeping Chinese companies out of investment opportunities in Russia's strategic oil and gas fields in Russia's Siberia and the Far East, and even in the Russian pipelines leading to the Chinese market.
China may also be displeased with Gazprom's insistent attempts to get in on the Sakhalin energy projects. ExxonMobil is under pressure for a proposed gas pipeline from Sakhalin-1 to China. Russia's gas monopoly seems to want to discount any competition for its own plans for a gas pipeline to China through the Altai highlands near the Russian-Kazakh-Mongolian border. Its preference seems to be to buy all gas from Sakhalin-1 so that it remains the sole exporter of gas to China. China is also keenly watching the holdup in Sakhalin-2, being the highest-profile foreign-investment project in Russia's energy sector to date.
Important investment decisions are pending in 2007 with regard to Sakhalin-1, Sakhalin-2, Sakhalin-3, the Shtokman gas fields and the vast Russian energy reserves in the Far East on the whole. How the Kremlin makes these decisions will have a significant bearing on Chinese thinking and, indirectly, that can cast shadows on the geopolitics of Central Asia.
Besides, the ground reality is that according to recent studies, Russia will need to import 79 billion cubic meters (bcm) annually from Central Asia's gas-producing countries (Kazakhstan, Turkmenistan and Uzbekistan) to meet its domestic needs and to fulfill its export commitments. How this plays out in Russia's overall political and economic ties with Central Asian countries will have a significant impact on the regional milieu.
It is obvious that Gazprom views Central Asia as a priority area. A major development in 2006 in Central Asia's energy sector was the agreement between Gazprom and Uzbekneftgaz to undertake a geological survey of Uzbekistan. Gazprom is committing $260 million in the coming three years alone for the exploration of the Ustyurtki oil and gas deposits in Uzbekistan. Again, Russia and Kazakhstan entered an agreement in October to set up a gas joint venture at the Orenburg gas refinery in Russia - the first time Kazakhstan was making a major investment in the Russian economy.
The joint venture is expected to process 30.6bcm gas in 2012, including 15bcm from Kazakhstan's Karachaganak gas field (which has an estimated 1 trillion cubic meters of reserves), which Russia and Kazakhstan are pledged to develop jointly.
Niyazov's secret
The struggle over control of oil and gas and their transportation routes is bound to intensify in 2007. It will remain central to the geopolitics of Central Asia. In turn, pipeline politics in the Caspian can be expected to produce strange bedfellows.
Already, geopolitical circumstances in the Caspian Basin have led to a sharp deterioration in Russia-Azerbaijan relations. Again, despite all the wooing of Kazakhstan by Washington, the indefinite postponement of the Odessa-Brody pipeline project last week has stemmed from Kazakhstan having to be mindful of Russian sensitivities.
Least of all, Iran remains the wild card in the pack. Depending on which way the Iran nuclear issue develops in 2007, Iran can impact on the energy map of China, Central Asia, the Caspian, the Caucasus, Russia and Europe - and, conceivably, the United States itself.
But an entirely new ball game opens up with the sudden demise of Turkmen president Saparmurat Niyazov on December 21. It calls attention to the fragility of the Central Asian calculus. The political uncertainties centered on Niyazov's successor come at an extremely tricky time when Russia, China and the US are virtually preparing to besiege Ashgabat with offers and counter-offers for gaining access to Turkmenistan's gas reserves.
Will Niyazov's successor follow his policy of "positive neutrality"? Russia strives to retain its strategic leverage as the monopolist transporter and re-exporter of Turkmen gas. The European Union, supported by the US, on the other hand, is attempting to resist the Russian leverage by opening direct access to Turkmen gas.
In 2006, the US and Turkey revived the 10-year-old idea of a trans-Caspian gas pipeline project (as part of the so-called East-West Energy Corridor) to supply Turkmen gas to Europe via Turkey. Turkmenistan's gas output may well approach 80bcm annually at present. The trans-Caspian pipeline envisages an annual draw of 16bcm from the Turkmen output in the first stage, to be expanded to 32bcm in the second stage. In the US geostrategy, the project is vital for reducing Europe's heavy dependence on Russian energy supplies. Niyazov had prevaricated in the light of Moscow's opposition. But what will be the outlook of Niyazov's successor?
Russia, on the contrary, will insist on the fulfillment of its April 2003 framework agreement with Turkmenistan, which provides for a 25-year contract on gas supplies to Russia, with Ashgabat pledging to supply 100bcm per year of gas from 2010 onward (a total of 2 trillion cubic meters cumulatively over the 25-year period). Moscow now seeks to tap even more deeply into Turkmenistan's gas reserves for meeting Russia's domestic needs and for re-export to Europe as "Russian gas".
Meanwhile, Turkmenistan also stands committed to supply 8-10bcm of gas to Iran's northern region, apart from occasionally voicing interest in the Turkmenistan-Afghanistan-Pakistan pipeline project. China, on its part, entered an agreement with Niyazov in April for purchase of 30bcm of Turkmen gas annually from 2009 onward for a 30-year period, and jointly to explore and develop Turkmen gas deposits on the right bank of Amu Darya River.
Besides challenging Russia's monopoly control of Turkmen gas hitherto, China has also undercut the Russian practice of buying cheap Turkmen gas, by agreeing that China will pay a price "set at reasonable levels, and on a fair basis, pegged on comparable international market price". At the same time, China's deal also threatens the West, which will be a strategic loser if Turkmenistan decides to send its gas eastward instead of Europe.
The European Union's 3,400-kilometer Nabucco gas pipeline from eastern Turkey to Austria and central Europe at an estimated cost of $5.8 billion, to be commissioned in 2010, will be a net sufferer in that case, as it is predicated on the expectation that Turkmenistan can be a key supplier country.
Niyazov was always an enigmatic figure on the Central Asian political chessboard. But the biggest puzzle he has left behind was no doubt his chance remark shortly before his death in a conversation with visiting German Foreign Minister Frank-Walter Steinmeier in Ashgabat that Turkmenistan recently discovered a super-giant gas field, South Iolotansk, with proven reserves of 7 trillion cubic meters of gas.
Like Corporal Hatfield in his sentry post in Manas Air Base in Kyrgyzstan, Niyazov didn't probably realize what a maelstrom he was creating. If South Iolotansk indeed holds such untold treasures, the impact on the energy map of Russia, Europe and China will be dramatic. And certainly, the center of gravity of the Great Game will overnight shift eastward to the home of the fabled Ahalteke race horse - away from the SCO and all that. Central Asia, then, may never be the same again.
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for more than 29 years, with postings including ambassador to Uzbekistan (1995-98) and to Turkey (1998-2001).
Copyright 2006 Asia Times Online Ltd.
Dec 23, 2006
By M K Bhadrakumar
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for more than 29 years
The accidental killing of Alexander Ivanov, a Kyrgyz fuel-truck driver, by Corporal Zachary Hatfield, a US serviceman, at the Manas Air Base on the outskirts of the Kyrgyz capital Bishkek in December is threatening to snowball into a first-rate crisis for the United States' regional policy in Central Asia.
Manas is the lone US military base in all of Central Asia - close to the Chinese border of Xinjiang. Curiously, this was also how the year 2006 began, as Washington was grappling with the call
made by the Shanghai Cooperation Organization (SCO) for a timeline for the withdrawal of the US military presence in Central Asia.
In a nationally televised address, Kyrgyz President Kurmanbek Bakiyev called for reviewing the Manas base agreement with the US. The Kyrgyz Parliament passed a resolution that given the "negative perception of the American image among our country's population", Bakiyev should examine the continuance of the base. The Foreign Ministry made a demarche with the US that Hatfield shouldn't leave until the Kyrgyz due process of law took its course.
This is rhetoric out of Latin America. Yet Bakiyev had only come to power on the crest of the US-backed "Tulip Revolution" of March 2005. But US-funded Kyrgyz "civil society" groups are nowadays arrayed against him on account of his increasingly pronounced foreign-policy leanings toward Russia and China.
They turned rowdyish in November, and humiliated him, forcing on him a new constitution curtailing his presidential powers. That is to say, Washington must now seek Bakiyev's help while backstage it could be funding and instigating political activists bent on overthrowing him. Bakiyev's overthrow may help the US firm up its grip on Manas, but today his helping hand is useful for preserving US interests. Nothing could be more surreal. Nothing would so vividly epitomize the complexities of the geopolitics of Central Asia.
Great Game slows down
The Great Game in Central Asia itself may appear to have considerably slowed down in 2006. But nothing could be more deceptive an impression. True, we've witnessed nothing like the cataclysmic events of the previous year - "Tulip Revolution" or the Andizhan uprising in Uzbekistan. Yet great-power rivalries most certainly continued - passions that were largely driven underground, where they simmered without taking a confrontational character.
Partly this was because the bickering over geopolitical influence became somewhat manifestly lopsided, with Russia and China not only retaining their gains of yesteryear but also consolidating them, and the US painstakingly attempting to recoup its lost influence in the region.
The single biggest "success story" of US diplomacy in the Great Game during the past year has been that Washington prevailed on Russia and China to give consideration to its reasoning that granting full membership to the Islamic Republic of Iran in the SCO might not be consistent with their own long-term interests. This was no mean achievement, considering that both Russia and China have such high stakes in their bilateral relations with Tehran. But Iranian President Mahmud Ahmadinejad attended the summit as a special invitee. The SCO evidently keeps open the "threat" of Iranian membership.
Equally, the fact that, unlike its previous year's summit, the SCO meeting in June 2006 did not assume an overt anti-American overtone must remain a matter of relief for Washington. In many ways, the SCO demeanor has come to be the litmus test of the United States' geopolitical standing in Central Asia at any given time. Contrary to earlier US estimations, the SCO is increasingly acquiring a swagger that is suggestive of its potential to become the main powerhouse of the Eurasian region - arguably, a leading Eurasian economic and military bloc. The SCO comprises China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
During the five-year period since its birth in 2001, the SCO, which has as members a number of underdeveloped countries including some desperately poor ones with nothing ostensibly to bind them together except their common geography, has not only held together but has grown in size and influence.
Initially drawing on the Chinese tri-fecta of "terrorism, separatism and extremism", the SCO speaks today about the establishment of a free-trade area and about common energy projects such as exploration of hyrdrocarbon reserves, joint use of hydroelectric power and water resources. But from the US perspective, the SCO agenda continues to be laden with a heavy cloud of suspicion regarding the United States' geostrategic intentions in the Central Asian region.
This impression gets further confirmed by the SCO's decision to hold large-scale joint military exercises scheduled for the coming summer in central Russia with the Collective Security Treaty Organization (CSTO), the military alliance that is Moscow's answer to the North Atlantic Treaty Organization's enlargement into the post-Soviet space. The CSTO includes Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan and Tajikistan.
That the military exercises will take place against the backdrop of the chill that has descended on Russia-US relations in the past year or two, and in the light of the likely deployment of the first interceptors of the US missile defense systems in Central Europe and the Asia-Pacific region, is no doubt significant.
It is irrelevant whether the SCO can be called a latter-day Warsaw Pact or a "NATO of the East". What is important is that on a practical plane, when it transpired that the US aircraft deployed at Manas Air Base might be undertaking reconnaissance missions into sensitive military regions in central Russia and China's Xinjiang, Moscow and Beijing put their foot down and acted in concert within the framework of the SCO, insisting that the stated purpose of the US military presence in Central Asia must be fulfilled in letter and spirit, namely that it restricted itself exclusively to undertaking resupply missions for the "war on terror" in Afghanistan.
The then-Kyrgyz president, Askar Akayev, was caught in the middle and overthrown from power in the process as a furious Washington let loose the "Tulip Revolution" on him for his perceived intransigence in turning down the US request for the stationing of AWACS (Airborne Warning and Control System) aircraft in Manas. But the SCO quietly and firmly held its ground. Thereby it made an important point - that it had gained traction as a security organization. Not only that, the SCO proceeded to follow up at its summit in June 2005 with the call for the vacation of the US military presence in the region.
Indeed, going one step further, the SCO emphatically rallied behind the leadership of Uzbekistan in its move to ask for the vacation of the US air base at Karshi-Khanabad. On both counts - restrictions placed on the use of Manas and the eviction from Karshi-Khanabad - Washington meekly had to give in. In the process, Bishkek even renegotiated the bilateral agreement on Manas a few months ago by getting Washington to increase the annual rent of the base from US$2.7 million to between $150 million and $200 million.
The year 2006 has thus made it clear that the US is unlikely to become a single dominant power in Central Asia. Simply put, Russia and China have together put up the SCO dikes delimiting the US influence in the region, which will be difficult for Washington to breach for the foreseeable future. During the year, by and large Washington has vainly exhausted its energies in attempts to create misunderstandings between Russia and China and in pitting one SCO member state against another.
The heart of the matter is that apart from the bleeding wounds in Iraq and Afghanistan, which remain a major distraction for US diplomacy worldwide, US policy in Central Asia is seriously handicapped in two other respects. First, the United States' complete loss of influence in Tashkent after the Andizhan mishap in May 2005 is cramping overall US diplomacy in the region.
There is no denying that Uzbekistan is a key country in Central Asia. In the Soviet era, everyone from Josef Stalin down knew the axiom that Uzbekistan was the hub of the geopolitics of the region. True, the US put out several feelers to Tashkent through intermediaries for reconciliation, and lately even the European Union lent a hand, but Tashkent wouldn't budge. The laceration of Uzbek national pride by the US over Andizhan opened such painful wounds that forgiveness may take much time coming and will extract sincere repentance on the part of Washington for its role in the Andizhan uprising. Meanwhile, the US has been left with no option but to watch Russian and Chinese influence in Tashkent expanding by leaps and bounds.
In a similar fashion, but in an even more fundamental sense, US diplomacy in Central Asia is seriously hobbled by Washington's alienation from Iran. Ten years have gone by since the famous article by Zbigniew Brzezinski in Foreign Affairs magazine calling for unconditional abandonment of the US policy of containment of Iran. Brzezinski had brilliantly argued the case (which most US career diplomats assigned to the region then also believed) that for US regional diplomacy to be anywhere near optimal in the Caucasus, in the Caspian region and in Central Asia, it must befriend Tehran. But Washington's mental block over Iran persists.
Meanwhile, the "Greater Central Asia" strategy unveiled by Washington last April with so much elan has already fizzled out. The strategy was avowedly intended to roll back Russian and Chinese influence in the region. Testifying before the US Congress that month, a senior State Department official said, "A lot of what we do here is to give the countries of the region the opportunities to make choices ... and keep them from being bottled up between two great powers, Russia and China."
The US official conjured up visions that could only belong to the world of fantasies: "Students and professors from Bishkek and Almaty can collaborate with and learn from their partners in Karachi and Kabul, legitimate trade can freely flow overland from Astana to Islamabad, facilitated by modern border controls, and an enhanced regional power grid stretching from Almaty to New Delhi will be fed by oil and gas from Kazakhstan and Turkmenistan and hydropower from Tajikistan and Kyrgyzstan."
No wonder there are no takers in Central Asia for Washington's policy construct. Central Asian states are aware of the Taliban's resurgence in Afghanistan, and reckon that peace is a distant goal. Even New Delhi seems embarrassed. Islamabad keeps quiet. The only capital to evince enthusiasm for Washington's paradigm of steering Central Asian states toward South Asian allies has been Kabul.
Sino-US convergence?
But failures may often hold the key to success. In a way, the current failures in regional policy may open a window of opportunity for the US in the period ahead. The point is: Without the glue of a serious US geopolitical challenge to bind them together into undertaking collective countermeasures, can the Sino-Russian condominium hold together in Central Asia for long? It is apparent that divergences have already appeared in the respective Chinese and Russian interests in Central Asia.
China has used the SCO forum and the Russian influence in Central Asia to return to the region, which is indeed its back yard, for the first time in nearly 1,000 years. It is important to bear in mind that Beijing launched the idea of the SCO, and Russia accepted it. China views Central Asia as its "near abroad". As China's economic muscle grows, Beijing can afford to be more assertive.
China's soft power is already at work in the region. It is increasingly able to invoke its bilateral-cooperation mechanisms with Central Asian countries. There is hardly any need for China to ride piggyback on Russian goodwill or Russian influence in the region. China has used the SCO for acquiring local knowledge, and in building relations with the region's indigenous political, economic and military elites.
It is in the area of energy security that Chinese interests and concerns have already begun diverging significantly from those of Russia. The trend during 2006 has been that Russia's energy interests - in controlling the region's transportation routes for oil and gas, in sourcing the region's energy for meeting Russia's domestic needs that would leave an exportable surplus for meeting its commitments in Europe, in having a say in determining the price of energy in the region - are increasingly affected by China's robust quest for oil and gas in the region.
The early signs of this contradiction in Sino-Russian cooperation in Central Asia began appearing in 2005 when the China National Petroleum Corp acquired the PetroKazakhstan oil company for $4.18 billion.
China's gas deal with Turkmenistan in April 2006; the commissioning of an oil pipeline from Kazakhstan; China's proposal for an energy-pipeline grid for Central Asia and connecting it with Xinjiang; China's cooperation agreement with Iran in the Caspian region; China's gas deals with Uzbekistan; China's interest in participating in a Turkmenistan-Afghanistan-Pakistan gas pipeline - all these are happenings within one calendar year, each imbued with strategic significance.
This past year, too, China has waded into the controversial waters of the Caspian Sea in search of oil when last January Iran's North Drilling Co and China Oilfield Services Ltd signed an oil-exploration agreement relating to the disputed deep waters of the southern Caspian. In one way or another, all these developments cut into Russian interests in Central Asia's energy sector.
Having said that, however, the China-Russia strategic partnership has a much greater regional and global logic than Central Asia, and the attempt in Moscow and Beijing will presumably be to harmonize their differences in Central Asia from spinning out of control. Also, both Moscow and Beijing realize that Central Asian states themselves will seek out Russia to balance their relations with China.
How these contradictory tendencies will play out within the SCO processes presents an engrossing topic. Clearly, the opportunity arises for the US to establish a dialogue with the SCO. A breakthrough may come in 2007. The prominent Russia hand in the Heritage Foundation in Washington, DC, Ariel Cohen, wrote recently, "Given that the SCO primarily serves as a geopolitical counterweight to the US, Washington stands little chance of ever receiving full membership in the group ... But US officials do not necessarily need full membership in the organization in order to work closely with the Central Asian states. It would serve Washington's best interests to remain in close contact with the SCO. To do so, it could resubmit an application seeking observer status.
"To boost the chances of success," Cohen added, "the US should engage Central Asian states by balancing democracy promotion and democratization with its other national interests, including security and energy."
Conceivably, we may expect even a NATO overture to the SCO in the coming year. In an exclusive interview with People's Daily last month, NATO secretary general Jaap de Hoop Schaffer held out the interesting suggestion to Beijing that there doesn't have to be a contradiction between China's membership of the SCO and China's future cooperation with NATO.
Without doubt, a palpable sense of urgency is already apparent in US thinking to the effect that the Chinese-Russian strategic partnership poses a serious threat to the United States' geopolitical position in Central Asia, and second, that China is actively remaking Central Asia's order. Last September, the US
Congress held a special hearing titled "The Shanghai Cooperation Organization: Is it Undermining US Interests in Central Asia?"
Moscow seems to anticipate that another US bid for observer status with the SCO is looming - and that unlike in 2005, Beijing may not oppose it this time. Curiously, at the end of December, Russia formalized a mechanism for regular political dialogue with the Mercosur grouping of Latin American countries, which has a definite slant (comparable to the SCO's) against US economic hegemony in the Western Hemisphere.
Speaking on the occasion in Brasilia, Russian Foreign Minister Sergei Lavrov said, "We have, by and large, been watching with the most sincere sympathy the integration processes in South America. We consider that the strengthening and elevation of the level of integration within the region works objectively in favor of the creation of a more stable and more fair world order in which all problems will be tackled multilaterally. I am certain that the partnership between Russia and Mercosur will be instrumental in attaining this goal."
The US estimation is basically that behind the facade of unity, China, Russia and the other SCO members and observer countries harbor serious differences of opinion. While "discord" may be too strong a word, to quote a US strategic analyst, "It is quite possible that differences will grow behind the facade of [SCO] unity. Washington must be alert to exploit any openings to gain geopolitical advantage. While the political, ideological and military dimensions of the New Great Game in Central Asia continue to heat up, it should be clear to all players that plenty of time remains in the contest. The SCO now appears to have momentum on its side, but such an advantage can dissipate quickly."
Thus the US would tell China that Russia was needlessly dragging it into an anti-American bloc, and that there was nothing irreconcilable involving US and Chinese interests in Central Asia. US strategic analysts have been arguing that both the United States and China are interested in the stability of the region; both are against the ascendancy of extremist forces in the region; both are interested in Central Asia's transition to market economies and in the region's globalization; both have stakes in the rapid development of Central Asia's hydrocarbon sector and in the diversified and efficient flow of the region's energy to the world market.
There are signs that the US is also using the oil-price issue as a wedge to divide Russia and China. The US has also been campaigning in the capitals of SCO member countries (and observer countries) that Russia is aspiring to transform the SCO into a club of energy producers and to be its dominant partner, and that if the Russian stratagem is allowed to proceed unchecked, that will be detrimental to the interests of Central Asian energy producers - and even of China and India. These are interesting straws in the wind.
The recent five-nation energy summit of major Asian consuming countries (China, Japan, South Korea, India and the US) hosted by China is partly at least an expression of Beijing's commonality of interests with Washington in leading an energy dialogue of consuming countries vis-a-vis Russia. Conceivably, Beijing may be harboring grievances that Moscow is keeping Chinese companies out of investment opportunities in Russia's strategic oil and gas fields in Russia's Siberia and the Far East, and even in the Russian pipelines leading to the Chinese market.
China may also be displeased with Gazprom's insistent attempts to get in on the Sakhalin energy projects. ExxonMobil is under pressure for a proposed gas pipeline from Sakhalin-1 to China. Russia's gas monopoly seems to want to discount any competition for its own plans for a gas pipeline to China through the Altai highlands near the Russian-Kazakh-Mongolian border. Its preference seems to be to buy all gas from Sakhalin-1 so that it remains the sole exporter of gas to China. China is also keenly watching the holdup in Sakhalin-2, being the highest-profile foreign-investment project in Russia's energy sector to date.
Important investment decisions are pending in 2007 with regard to Sakhalin-1, Sakhalin-2, Sakhalin-3, the Shtokman gas fields and the vast Russian energy reserves in the Far East on the whole. How the Kremlin makes these decisions will have a significant bearing on Chinese thinking and, indirectly, that can cast shadows on the geopolitics of Central Asia.
Besides, the ground reality is that according to recent studies, Russia will need to import 79 billion cubic meters (bcm) annually from Central Asia's gas-producing countries (Kazakhstan, Turkmenistan and Uzbekistan) to meet its domestic needs and to fulfill its export commitments. How this plays out in Russia's overall political and economic ties with Central Asian countries will have a significant impact on the regional milieu.
It is obvious that Gazprom views Central Asia as a priority area. A major development in 2006 in Central Asia's energy sector was the agreement between Gazprom and Uzbekneftgaz to undertake a geological survey of Uzbekistan. Gazprom is committing $260 million in the coming three years alone for the exploration of the Ustyurtki oil and gas deposits in Uzbekistan. Again, Russia and Kazakhstan entered an agreement in October to set up a gas joint venture at the Orenburg gas refinery in Russia - the first time Kazakhstan was making a major investment in the Russian economy.
The joint venture is expected to process 30.6bcm gas in 2012, including 15bcm from Kazakhstan's Karachaganak gas field (which has an estimated 1 trillion cubic meters of reserves), which Russia and Kazakhstan are pledged to develop jointly.
Niyazov's secret
The struggle over control of oil and gas and their transportation routes is bound to intensify in 2007. It will remain central to the geopolitics of Central Asia. In turn, pipeline politics in the Caspian can be expected to produce strange bedfellows.
Already, geopolitical circumstances in the Caspian Basin have led to a sharp deterioration in Russia-Azerbaijan relations. Again, despite all the wooing of Kazakhstan by Washington, the indefinite postponement of the Odessa-Brody pipeline project last week has stemmed from Kazakhstan having to be mindful of Russian sensitivities.
Least of all, Iran remains the wild card in the pack. Depending on which way the Iran nuclear issue develops in 2007, Iran can impact on the energy map of China, Central Asia, the Caspian, the Caucasus, Russia and Europe - and, conceivably, the United States itself.
But an entirely new ball game opens up with the sudden demise of Turkmen president Saparmurat Niyazov on December 21. It calls attention to the fragility of the Central Asian calculus. The political uncertainties centered on Niyazov's successor come at an extremely tricky time when Russia, China and the US are virtually preparing to besiege Ashgabat with offers and counter-offers for gaining access to Turkmenistan's gas reserves.
Will Niyazov's successor follow his policy of "positive neutrality"? Russia strives to retain its strategic leverage as the monopolist transporter and re-exporter of Turkmen gas. The European Union, supported by the US, on the other hand, is attempting to resist the Russian leverage by opening direct access to Turkmen gas.
In 2006, the US and Turkey revived the 10-year-old idea of a trans-Caspian gas pipeline project (as part of the so-called East-West Energy Corridor) to supply Turkmen gas to Europe via Turkey. Turkmenistan's gas output may well approach 80bcm annually at present. The trans-Caspian pipeline envisages an annual draw of 16bcm from the Turkmen output in the first stage, to be expanded to 32bcm in the second stage. In the US geostrategy, the project is vital for reducing Europe's heavy dependence on Russian energy supplies. Niyazov had prevaricated in the light of Moscow's opposition. But what will be the outlook of Niyazov's successor?
Russia, on the contrary, will insist on the fulfillment of its April 2003 framework agreement with Turkmenistan, which provides for a 25-year contract on gas supplies to Russia, with Ashgabat pledging to supply 100bcm per year of gas from 2010 onward (a total of 2 trillion cubic meters cumulatively over the 25-year period). Moscow now seeks to tap even more deeply into Turkmenistan's gas reserves for meeting Russia's domestic needs and for re-export to Europe as "Russian gas".
Meanwhile, Turkmenistan also stands committed to supply 8-10bcm of gas to Iran's northern region, apart from occasionally voicing interest in the Turkmenistan-Afghanistan-Pakistan pipeline project. China, on its part, entered an agreement with Niyazov in April for purchase of 30bcm of Turkmen gas annually from 2009 onward for a 30-year period, and jointly to explore and develop Turkmen gas deposits on the right bank of Amu Darya River.
Besides challenging Russia's monopoly control of Turkmen gas hitherto, China has also undercut the Russian practice of buying cheap Turkmen gas, by agreeing that China will pay a price "set at reasonable levels, and on a fair basis, pegged on comparable international market price". At the same time, China's deal also threatens the West, which will be a strategic loser if Turkmenistan decides to send its gas eastward instead of Europe.
The European Union's 3,400-kilometer Nabucco gas pipeline from eastern Turkey to Austria and central Europe at an estimated cost of $5.8 billion, to be commissioned in 2010, will be a net sufferer in that case, as it is predicated on the expectation that Turkmenistan can be a key supplier country.
Niyazov was always an enigmatic figure on the Central Asian political chessboard. But the biggest puzzle he has left behind was no doubt his chance remark shortly before his death in a conversation with visiting German Foreign Minister Frank-Walter Steinmeier in Ashgabat that Turkmenistan recently discovered a super-giant gas field, South Iolotansk, with proven reserves of 7 trillion cubic meters of gas.
Like Corporal Hatfield in his sentry post in Manas Air Base in Kyrgyzstan, Niyazov didn't probably realize what a maelstrom he was creating. If South Iolotansk indeed holds such untold treasures, the impact on the energy map of Russia, Europe and China will be dramatic. And certainly, the center of gravity of the Great Game will overnight shift eastward to the home of the fabled Ahalteke race horse - away from the SCO and all that. Central Asia, then, may never be the same again.
M K Bhadrakumar served as a career diplomat in the Indian Foreign Service for more than 29 years, with postings including ambassador to Uzbekistan (1995-98) and to Turkey (1998-2001).
Copyright 2006 Asia Times Online Ltd.
Monday, December 18, 2006
Clandestine military teams clash with CIA, allies
By Greg Miller
Times Staff Writer
7:41 PM PST, December 17, 2006
WASHINGTON -- U.S. Special Forces teams sent overseas on secret spying missions have clashed with the CIA and carried out operations in countries that are staunch U.S. allies, prompting a new effort by the agency and the Pentagon to tighten the rules for military units engaged in espionage, according to senior U.S. intelligence and military officials.
The spy missions are part of a highly classified program that officials say has better positioned the United States to track terrorist networks and capture or kill enemy operatives in regions such as the Horn of Africa, where weak governments are unable to respond to emerging threats.
But the initiative has also led to several embarrassing incidents for the United States, including a shootout in Paraguay and the exposure of a sensitive intelligence operation in East Africa, according to current and former officials familiar with the matter. And to date, the Special Forces espionage effort has not led to the capture of a significant terrorism suspect.
Some intelligence officials have complained that Special Forces teams have sometimes launched missions without informing the CIA, duplicating or even jeopardizing existing operations. And they questioned deploying military teams in friendly nations -- including in Europe -- at a time when combat units are in short supply in war zones.
The program was approved in the aftermath of the Sept. 11 attacks by Secretary of Defense Donald H. Rumsfeld, and is expected to get close scrutiny by his successor, Robert M. Gates, who takes over Monday and has been critical of the expansion of the military's intelligence operations.
Senior officials at the CIA and the Pentagon defended the program and said they would urge Gates to support it. But they acknowledged risks for the United States in its growing reliance on Special Forces troops and other military units for espionage.
"We are at war out there and frankly we need all the help that we can get," said Marine Maj. Gen. Michael E. Ennis, who since February has served as a senior CIA official in charge of coordinating human intelligence operations with the military. "But at the same time we have to be very careful that we don't disrupt established relationships with other governments, with their liaison services, or [do] anything that would embarrass the United States."
Ennis acknowledged "really egregious mistakes" in the program, but said collaboration has improved between the CIA and the military.
"What we are seeing now, primarily, are coordination problems," Ennis said in an interview with the Los Angeles Times. "And really, they are fewer and fewer."
The issue underscores the sensitivity of using elite combat forces for espionage missions that have traditionally been the domain of the CIA.
After Sept. 11, the Bush administration gave expanded authority to the Special Operations Command, which oversees the Army Green Berets, Navy SEALs and other elite units, in the fight against terrorism. At the same time, Rumsfeld, who lacked confidence in the CIA, directed a major expansion of the military's involvement in intelligence gathering to make the Pentagon less dependent on the agency.
Officials said this led to the secret deployment of small teams of Special Forces troops, known as military liaison elements, or MLEs, to American embassies to serve as intelligence operatives. Members of the teams undergo special training in espionage at Ft. Bragg and other facilities, according to officials familiar with the program.
The troops typically work in civilian clothes and function much like CIA case officers, cultivating sources in other governments or Islamic organizations. One objective, officials said, is to generate information that could be used to plan clandestine operations such as capturing or killing terrorism suspects.
In a written response to questions from the Times, a spokesman for the Special Operations Command in Tampa, Fla., described MLEs as "individuals or small teams that deploy in support of (regional military commanders) in select countries, and always with the U.S. ambassador and country team's concurrence and support."
But critics point to a series of incidents in recent years that have caused diplomatic problems for the United States.
In 2004, members of an MLE team operating in Paraguay shot and killed an armed assailant who tried to rob them outside a bar, said former intelligence officials familiar with the incident. U.S. officials removed the members of the team from the country, the officials said.
In another incident, members of a team in East Africa were arrested by the local government after their espionage activity was discovered.
"It was a compromised surveillance activity," said a former senior CIA official familiar with the incident. The official said members of the unit "got rolled up by locals and we got them out." The former official declined to name the country or provide other details.
He said it was an isolated example of an operation that was exposed, but that coordination problems were frequent.
"They're pretty freewheeling," the former CIA official said of the military teams. It was not uncommon, he said, for CIA station chiefs to learn of military intelligence operations only after they were underway, and that many conflicted with existing operations being carried out by the CIA or the foreign country's intelligence service.
Such problems "really are quite costly," said John Brennan, who was director of the National Counterterrorism Center before retiring from government last year. "It can cost peoples' lives, can cost sensitive programs and can set back foreign policy interests."
Brennan declined to comment on specific incidents.
There have also been questions about where teams have been sent. Although conceived to bolster the U.S. presence in global trouble spots, the units have carried out operations in friendly nations in Europe and Southeast Asia where it is more difficult to justify, officials said.
On at least one occasion, a team tracked an Islamic militant in Europe. "They were trying to acquire certain information about a certain individual," said a former high-ranking U.S. intelligence official who spoke on condition of anonymity. The official declined to name the country, but said it was a NATO ally and that the host government was unaware of the mission.
Critics said such operations risk angering U.S. allies with a dubious prospect for payoff. In some countries where MLE teams are located, "There's not a chance ... we're going to send somebody in there to snatch somebody unilaterally," said a government official familiar with the program.
At a time when the military is stretched thin, the official questioned the priority of using Special Forces for espionage, noting that the MLE program has not produced a significant success in terms of disrupting a plot or capturing a terrorist suspect.
"These are a highly trained, short-supply resource of the U.S. government," the official said. "What ... are they doing there instead of Pakistan or Afghanistan?"
Gates, the former director of the CIA poised to run the Pentagon, has voiced concern over the military's encroachment on CIA missions. In an opinion piece published this year, Gates said that "more than a few CIA veterans, including me, are unhappy about the dominance of the Defense Dept. in the intelligence arena and the decline in the CIA's central role."
In response to such conflicts, the administration previously designated the CIA director as the head of all U.S. human-spying operations overseas, with CIA station chiefs serving as coordinators in specific countries.
Ennis, whose position at the CIA was created last year, said the agency and the Pentagon are developing a more rigorous system for screening proposed military intelligence operations.
"Like a pilot with a checklist," CIA station chiefs will be required to sign off on all aspects of a proposed military intelligence operation before it is allowed to proceed, Ennis said. The CIA station chief, he added, "would look at the risk in terms of embarrassment to the government. Do they have the right level of training to do what they claim that they want to do, and is this already being done somewhere else?"
Col. Samuel Taylor, director of public affairs for the Special Operations Command, dismissed the suggestion of coordination problems with other agencies, saying, "We have an excellent, effective and productive working relationship with the CIA."
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