NBR Analysis: Volume 10

Foreword

Foreword Competition among government leaders, corporate interests, and opposition groups for access to energy resources is profoundly influencing geopolitics in the Caspian Sea basin. Regional leaders jealously guard oil and gas resources and the resulting revenues, while politicized religious movements and continually developing ethnic identities compete with each other for the favor of ruling elites and access to energy. The Caspian region is rife with border disputes and ethnic discord, and competition over the disposition of energy resources exacerbates the potential for violent conflict. For regional leaders, foreign governments, and corporations, the maintenance of security in Central Asia and the Caucasus has become linked to the politics of energy. This issue of the NBR Analysis contains case-studies of energy development and the sources of potential conflict in the three primary energy-producing states of Central Asia and the Caucasus—Azerbaijan, Kazakhstan, and Turkmenistan. The leaders in all three countries expect their energy resources to attract foreign investment, stimulate economic growth and modernization, and ensure integration into the global market. Yet, as the essays illustrate, despite their common goals, Caspian leaders have adopted varied policy approaches. U.S. policy toward each of the Caspian countries has also varied widely, and the essays consider the implications of these policies. In the first essay, David Hoffman, senior associate at Cambridge Energy Research Associates, examines how the oil sector has been politicized in Azerbaijan. While foreign energy companies have occasionally benefited from the “one-stop shopping” method of contract negotiation, weak state institutions have given President Heydar Aliev and SOCAR, the state oil company, autonomous control of the oil sector. The erratic and capricious energy policies that result are destabilizing Azerbaijan’s development. Further damage to Azerbaijan’s development is caused by the continued conflict over NagornoKarabakh . Mr. Hoffman examines these issues and the implications of Section 907 of the 1992 Freedom Support Act, which restricts U.S. government assistance to the government of Azerbaijan. 85 NBR ANALYSIS Pauline Jones Luong, professor of political science at Yale University, addresses the short- and long-term consequences of Kazakhstan’s current energy policies. Rapid privatization of the energy sector has increased revenue to the state budget, but it has also led to overspending, overborrowing, and underdevelopment of non-energy sectors of the economy. Professor Luong describes a scenario in which current policies could cause Kazakhstan to devolve into a quasi-state that is internationally recognized but able neither to meet the basic social needs of its population nor to achieve minimal levels of economic growth. In the final essay, Nancy Lubin, president of JNA Associates, Inc., discusses the effects of President Saparmurat Niyazov’s inconsistent energy policies, the expansion of organized crime and narcotics trafficking, and the destabilizing influence of ethnic tensions on foreign investment and domestic development in Turkmenistan. As concerns over Niyazov’s health are more frequently voiced, questions about Turkmenistan’s mechanisms of succession are important to consider. Dr. Lubin suggests a number of steps that could be taken by Turkmenistan and the United States to ensure that the transfer of power is peaceful and that Turkmenistan’s economic and political development is stable. Drafts of these papers were presented at NBR’s conference, Energy, Weapons Proliferation , and Conflict in Central Asia and the Caucasus, which was held April 20-21, 1999 at the United States Institute of Peace. The private conference concluded a year-long research project on the role that competition for energy resources plays in the propensity for violent conflict in the Caspian region. An edited volume of conference papers will be published by NBR in conjunction with Rowman and Littlefield Publishers. For their generous financial support of the project, NBR would like to thank the United States Institute of Peace, the Monterey Institute of International Studies, and the Henry M. Jackson Foundation. Richard J. Ellings Executive Director The National Bureau of Asian Research 86 ...