Selling Snake Oil
George Szamuely
New York Press


"It is a strategic agreement that advances America’s national interest." When you hear such words coming from the mouth of a government official–particularly one as sleazy as Energy Secretary Bill Richardson (he of Monica Lewinsky job offer fame)–you can be pretty sure the "agreement" has nothing whatever to do with the "national interest" and everything to do with politicians having their snouts in the trough. Only bribes could ever have got off the ground an idea as silly as building a 1000-mile pipeline from the Azerbaijan capital of Baku on the Caspian Sea to Ceyhan, a Turkish port in the Mediterranean.

The idea is to make sure that Iran and Russia are cut out of the oil and gas riches of the Caspian Sea. Since these two countries are also the two biggest powers in the region and have historic claims on the Caspian, U.S. policy is reckless to say the least. And for no reason. Oil prices are low. There is no shortage of oil in the world.

Recent drilling results have raised suspicions that the Caspian reserves may not be as large as originally thought. The pipeline will cost something like $3.7 billion to build. To justify such expenditure, a minimum of 1 million barrels of oil a day would need to go through the pipeline. Since Azerbaijan cannot guarantee that amount of oil, countries on the other side of the Caspian will be forced to make use of this pipeline. This in turn will mean building yet another pipeline under the sea.

So why is the United States pushing this nonsense? Several years ago the oil companies got terribly excited by the vast oil and gas reserves that supposedly lie in the Caspian Sea. Some estimates suggested that there might be 200 billion barrels of oil there as well as 100 billion barrels of gas. But nobody really knew. The wonderful thing about the Central Asians was that, unlike the Arabs, they were more than happy to have foreigners come in and get the oil out. This naturally made the sinister former Soviet leaders who were in charge very appealing to Westerners.

However, as is the way with greedy corporations, they threw away billions of dollars before they realized that their investment made no sense. The Caspian Sea is landlocked. How were they going to get the oil out? The existing pipelines went through lands that were run by bandits, warlords, terrorists, Islamic fundamentalists, ethnic separatists and drug traffickers. So they turned to Washington for help.

Archived Columns by George Szamuely

Selling Snake Oil

Chinese Puzzle

That Was No Lady, That Was the Times

The Red Tide Turning?

Pat & The Pod

United Fundamentalist States

Let Them All Have Nukes!

Liar, Liar

Gangster Nations

Puerto Rico Libre – and Good Riddance

Leave China Alone

A World Safe for Kleptocracy

Proud To Be

All articles reprinted with permission from the New York Press

Here they came up against a problem. Thanks to the power of the Armenian lobby, their client state, Azerbaijan, was out of favor. Article 907 of the 1992 Freedom Support Act barred the U.S. government from assisting the government of Azerbaijan as long as it maintained the embargo against the Armenian enclave of Nagorno-Karabakh. The oil companies did what everyone does in Washington. They hired a lot of out-of-work politicians and third-rate habitues of NewsHour and lobbied like mad to get this legislation repealed.

Former Secretary of State James Baker was on board. His law firm represents the Azerbaijani International Operating Corporation (AIOC)–a $7.5 billion oil consortium consisting of twelve shareholder companies including Pennzoil, Exxon and BP Amoco. Former Defense Secretary Dick Cheney was also on hand. He is chairman and chief executive officer of Halliburton Co., the world’s largest oil-field services company. Former National Security Adviser Brent Scowcroft was not to be left out either. He picks up a cool $130,000 as adviser to Pennzoil. John Sununu also took part. His management consulting firm, JHS Associates, has been very active in Azerbaijan. Lloyd Bentsen, never one to go without, is a shareholder in Frontera Resources, an oil services company working in Azerbaijan. Frontera’s chairman is William H. White, a former Clinton deputy secretary of energy. Then there is our old friend Zbigniew Brzezinski. He is a consultant to BP Amoco.

With so many palms being greased, it was not surprising that payday soon came around. In 1997, with enormous fanfare, Clinton received the repulsive Azerbaijani dictator Heydar Aliyev at the White House. There Chevron, Exxon and Mobil signed contracts with the State Oil Company of Azerbaijan (SOCAR). But greed got in the way. Bill Clinton’s greed, that is. Remember Roger Tamraz? He was a frequent guest at the White House. He liked to sit down to coffee with Clinton and have barbecues and movie dinners. Tamraz also contributed about $300,000 to the Democratic Party during the 1996 campaign. He planned to contribute a lot more.

Tamraz and Clinton got on well together. They had a lot in common. In 1989 an international warrant was issued for his arrest on charges of embezzling $200 million from a Lebanese bank. In 1992, a Jordanian court convicted him in absentia on these charges and sentenced him to two years in prison. In addition, a French court has ordered him to turn over $56 million in connection with a financial dispute. It was Tamraz who suggested to Clinton that the U.S. government help build a Central Asian pipeline that would bypass Russia. Clinton, panting as ever for more money, got on the phone to his Chief of Staff, Mack McLarty. He told him to meet Tamraz and then to pressure the Energy Department into taking up Tamraz’s pipeline idea. From then, the U.S. Government became obsessed with the Baku-Ceyhan project.

However, this was not what the oil companies had in mind. They thought the Baku-Ceyhan route was ridiculous. Modernizing the existing pipelines from Baku to the Black Sea port of Supsa in Georgia or the port of Novorossisk in Russia would cost less than half as much. Their real preference was to transport the oil from Baku through Iran to the Kharg Island terminal on the Persian Gulf.

Such a notion would cause Administration officials, not to mention the Bill Kristols and John Podhoretzes, to chew the rug. Yet pipelines across Iran make a lot more sense than pipelines anywhere else. Georgia scarcely exists as a country any longer as it falls apart into innumerable secessionist wars. There have been innumerable assassination attempts on its President, Eduard Shevardnadze. Azerbaijan could renew its war against Armenia at any time. There have been at least two coup attempts against Aliyev in the last few years. Turkey’s war against the Kurds appears to be ending, though it could start up again.

These then are America’s friends and allies. Compared to them, Iran is a model of political stability. Yet logic never enters into the calculations of our demented leaders. Recently the loathsome Strobe Talbott warned the "nations throughout the [Caucasus] region about the development of close relations with Iran. As a state-sponsor of terrorism and a nation bent on the development of weapons of mass destruction, Iran still poses a threat to all its neighbors… We will continue to work with all the states of the Caucasus to thwart the growth of Iran’s influence in the region."

Happy days are here again! Iran is forever the Iran of 1979. Russia is forever ruled by Stalin. And anyone who lived under Soviet rule is forever a freedom fighter. Today’s heroes are Azerbaijan’s Heydar Aliyev and Georgia’s Eduard Shevardnadze. Through its Partnership for Peace program, NATO established the Central Asian Peacekeeping Battalion, or CENTBAT. One of the first exercises involved 500 members of the U.S. Army’s 82nd Airborne Division being parachuted into Kazakhstan following a 23-hour flight from Ft. Bragg. Shevardnadze regularly demands that Georgia be admitted into NATO. As in the Cold War, absurd dictators are hailed in Washington as forces for "stability." In other words, they can be relied on to protect American investments. This time America may not get off so easily. One of these tin-pot Central Asian dictators will get himself involved in a fight with Russia. Then we will see how feeble the "new NATO" really is.

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