Chechnya: More Blood for Oil

By Karen Talbot
Source: Covert Action Publications
Date: Summer 2000


Media analysts and U.S. officials have been nervously trying to assess the "bewildering" policies of Russia's Acting President Vladimir Putin, especially his actions in Chechnya. As the Russian elections approach in which Putin is favored to win the presidency, he increasingly is being dubbed as a nationalist even though he claims to be defending the territorial integrity and economic base of Russia in the face of escalating incursions on the part of the U.S. and other western countries. That there are grounds for these concerns on the part of the Russians is confirmed by numerous statements and articles in the western press such as the following one by William Pfaff: "The United States also is intervening in the Caspian region to establish an American-dominated oil pipeline route across Azerbaijan and Georgia, cutting out Russia, which is linked to a larger effort to displace Russian influence in the Caucasus and Central Asia."1

Chechnya, the Caucasus, and Caspian Basin Oil

Nine years ago, the peoples of the 15 republics of the Soviet Union voted on the question: Should the Soviet Union dissolve itself, so Russia, Ukraine, Georgia, Azerbaijan, Kazakhstan, Tajikistan, and the other republics would become independent countries? Boris Yeltsin, supported by the Bush administration, championed such a breakup of the U.S.S.R. in an intense year-long campaign across the country.

On March 17, 1991, 75 percent of the Soviet people voted overwhelmingly to retain the U.S.S.R.; nevertheless, within nine months, the Soviet Union was dissolved as Yeltsin took power.2

Now, those "independent" former republics of the U.S.S.R. are economically and militarily dependent on the U.S., major countries of Western Europe, and pro-western Arab states. Among these are Azerbaijan, Georgia, and Kazakhstan. A tiny group of lites have become super-rich proxies for western corporations while the vast majority of the people are indescribably poor.

These three republics are in the region of the Caspian Sea. Because the Caspian Sea is landlocked, the oil and gas have had to be transported mainly by pipeline. There is a major route through Chechnya and other parts of Russia to Novorossiysk on the Black Sea. In fact, the largest network of pipelines in the world had been built during the Soviet era, when the Soviet Union was the number one producer of oil and natural gas in the world.3 Its gas and oil fields, refineries and pipelines extended from western Siberia, as well as from the Caspian Sea Basin, to the Black Sea, the Ukraine and the Baltic and East European countries.4

The U.S. wants the Caspian Sea under total U.S. domination. A consortium of 11 western oil companies now controls more than 50 percent of all oil investments in the Caspian Basinthese include Atlantic Richfield, Chevron, Exxon-Mobil, Pennzoil, Phillips Petroleum, Texaco, and British Petroleum-Amoco.5 Therefore, Washington is pursuing other routes, some or all of which ultimately may come to fruition. The intent is to bypass Russia, as with a proposed pipeline through Turkey to the Mediterranean Seaé——the Baku-Ceyhan route.

So long as Chechnya has been kept broiling with conflict and war, the pipeline through that region usually has remained non-operative. In early August 1999, Shamil Basayev and other insurgents invaded Dagestan, located between Chechnya and the Caspian Sea.6

The Russian government expressed fears that this was part of a larger conspiracy by the U.S. to detach the countries surrounding the Caspian Sea from Russia.7

Lewis Dolinsky, writing in the San Francisco Chronicle said: "The incursion by Chechen warlord Shamil Basayev into neighboring Dagestan, where his guerrillas seem to have little support, was an assault on the integrity of Russia with the stated intention of carving out an Islamic state. In addition, there are stories of ties to Osama bin Laden, Pakistani intelligence, Islamists from several countries and the complicity of former Soviet republics in the movement of arms and fighters into Russia."8

The developments in the Caspian and Trans-Caucasus regions involve a dangerous complex of hostilities fed by growing militarization. "Russia and the U.S.-NATO alliance (and their proxies) may be inching ever closer to a shooting war in Central Asia."9

Georgia: Cozying Up to NATO

"Georgia is...central to U.S. plans to exploit the oil and gas riches of the Caspian basin."10

At the Organization for Security and Cooperation in Europe (OSCE) summit in Istanbul, November 18-19, Georgia signed several crucial agreements including the Ankara Declaration supporting the building of the Baku-Ceyhan and trans-Caspian pipelines. The proposed trans-Caspian pipelines will go beneath the Caspian Sea from its eastern shore to Azerbaijan and connect with other pipelines, bypassing Russia. Also at the OSCE summit, Russia and Georgia issued a joint statement on the Conventional Armed Forces in Europe (CFE) treaty setting terms for the complete withdrawal of Russian forces from Moldova and Georgia.11

Leading up to the elections in Georgia on October 31, 1999, the removal of Russian bases was a key campaign promise. Georgian President Edouard Shevardnadze asserted that Georgia would "knock on NATO's door." Georgia's regime has accused Russia of using the Gudauta military base to supply the Abkhazians who are engaged in a separatist struggle with Georgia.12 The Abkhazi-Georgian conflict has received little attention in the U.S. media.

The CFE agreement signed in Istanbul spelled out cuts in Russian military equipment in Georgia and called for the withdrawal of the military bases at Vaziani and Gudauta and the tank maintenance plant in Tbilisi by December 31, 2000. OSCE member countries will provide financial assistance for the program.13

The U.S. Congress was urged to increase financing to Georgia over the next 2-3 years to ensure "Georgia's political and military integration into NATO and Western structures as soon as possible."14

All of this exacerbated the already strained relations between Russia and Georgia. The Russian media expressed outrage that Georgia and Azerbaijan were aiding terrorists in Chechnya. But as we will see things shifted, at least temporarily, following Putin's leadership in the subsequent CIS meeting.

Trans-Balkan Pipeline

Following the OSCE Summit, however, the U.S. began reviving its plan to help finance a trans-Balkan oil pipeline going through Bulgaria, Macedonia, and Albania, thus bypassing Turkey and delaying preparations for the Baku-Ceyhan route. Completion of this pipeline would consolidate U.S. influence in the Balkans while simultaneously avoiding the greater expenses tied to the proposed oil pipeline through Turkey. 15

Interest in the trans-Balkan project was renewed in a meeting, January 12, of international oil investors, U.S. Eximbank, the European Bank for Reconstruction and Development, the World Bank and the U.S.-based Albanian-Macedonian-Bulgarian Oil Company (AMBO).16 The trans-Balkan pipeline is expected to cost only $825 million.17 It would enable Central Asian and Caucasian oil to be transported by tanker across the Black Sea, and then to Western Europe, and would avoid not only Russia, but also the environmental complications of transporting oil through Turkey's Bosporus Strait.18

This strategy may hinder the U.S. in its relations with its NATO ally, Turkey, particularly because it has relied on Turkey to extend U.S. military and political interests in former Yugoslavia and the Caucasus, including in Georgia. With Georgia in confrontation with Russia over the war in Chechnya, the U.S. may want to count on Turkey to intervene. Turkish President Suliman Demirel met with Georgian President Edouard Shevardnadze on January 14, "to guarantee that Georgia's loyalties lie with the West" in advance of the mid-January Commonwealth of Independent States (CIS) summit in Moscow under the leadership of then Acting President of Russia, Vladimir Putin.19

Meanwhile, the Clinton administration has yet to place any financial resources behind the Baku-Ceyhan route,20 though it certainly has not been abandoned as one of the several proposed pipeline routes.

CIS Military Exercises

In the tug-of-war for Georgia's loyalties, and those of other states of the region, Russia gained the upper hand, at least temporarily, as a consequence of the CIS summit meeting, January 24 and 25. At that meeting, Russian Acting President Vladimir Putin was rumored to have held separate meetings with Georgian President Edouard Shevardnadze over increasing tensions stemming from Georgia's forging of closer ties with the West and its suspected aid to rebels fighting Russian troops in Chechnya. The Summit produced measures to tighten security and to combat terrorism, Islamic fundamentalism, arms trade and drug trafficking. ITAR-Tass reported that the purpose was to crack down on paramilitary activity along the borders of the three nations.21

As a result, joint military exercises were held in the days immediately following the CIS meeting, "covering the entire Caucasus, including the Russian republics bordering Georgia and AzerbaijanDagestan, Chechnya, Ingushetia, North Ossetia, Kabardino Balkaria, Karachayevo-Cherkessia and the Krasnodar regionas well as the Stavropol territory."22

The decision to host those military drills was a turnaround for Uzbekistan. In March 1999, Uzbekistan's military had withdrawn from the CIS Collective Security Pact and the Uzbek military has often trained with direct U.S. assistance.23

The CIS Summit marked a shift in the stance particularly of Georgia and Uzbekistan regarding Russia. Other CIS states including Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Armenia, have maintained fairly strong ties with Russia.24

The West Retaliates

Responding to these recent diplomatic gains by Russia, high-level delegations were dispatched "to entice much of Central Europe to join the western fold." The delegationswhich visited Estonia, Latvia, Lithuania, Romania and Moldovaincluded European Commission President Romano Prodi, the NATO Secretary-General, and NATO's supreme commander. But most significantly, NATO also sent a delegation to Georgia February 9, "to further prepare Georgia for cooperation with NATO's Partnership for Peace Program." A U.S. delegation began visits on February 7.25

Romano Prodi issued a statement in Latvia, February 10, signaling a major policy change for the European Union from the purely economic to the security realm. Prodi essentially announced de facto NATO expansion under the guise of EU security guarantees.26

The statement made it clear that there are plans "to integrate NATO into the EU." If the EU fully adopts Prodi's plans, it would involve fully absorbing all of Eastern Europeincluding the Balticsinto the EU. An economically powerful EU, backed by a militarily powerful NATO, would become entrenched along vast lengths of Russia's eastern border.27

IMF Funds Delayed

In December, the International Monetary Fund (IMF) announced it would continue to delay a $640 million loan payment to Russia. Senior Clinton administration officials acknowledged that Moscow's campaign against Chechnya influenced the decision.28 In Moscow, a spokesman for the Foreign Ministry said: "The language of economic sanctions and diktat is unacceptable, all the more so when it concerns the issue of Russia's territorial integrity."29

In a clear attempt to assuage Russia's growing concerns on all these fronts, and to regain its diminishing dominance over Russia, NATO Secretary-General Lord George Robertson also traveled to Moscow to hold talks with Acting President Putin, a meeting initiated by Russian Foreign Minister Igor Ivanov last December. The session took two months of negotiation to prepare. Moscow had raised disagreements over the agenda and it looked as if the meeting would not take place at all.30 Significantly, these talks also were held one month before the Russian presidential election.

NATO Strengthens Ties with Ukraine

In a demonstration of how lightning fast events are moving, NATO's decision-making bodythe North Atlantic Councilmet in Kiev, Ukraine, March 1-2, after being hurriedly organized. This was seen as "a direct challenge to the Putin government's assertive new foreign policy."31 Furthermore, it is likely these actions partly were aimed at trying to pressure Putin and the Russian electorate on the eve of the March 26 elections.

Ukraine is viewed as the most strategically important nation on the periphery of Russia. It is economically dependent on Russia but continues to be pushed closer to the West.

Indicative of the deepening military ties between NATO and Ukraine are new plans for naval exercises in the Black SeaNATO's Cooperative Partner 2000to be held June 19-30. (See sidebar: "U.S.-NATO Military Operations in the Caspian Basin.")

The vast network of oil and gas pipelines, built during the Soviet era, include routes through Ukraine to Eastern Europe. So Ukraine is another potentially vital country for the transshipment of oil and gas into Europe.

Many Wars The Caucasus:

Azerbaijan: The oil state of Azerbaijan, on the west shore of the Caspian Sea, is the source of tremendous oil reserves. In order to transport the petroleum to market it must use currently existing pipelines: one running through Georgia to Supsa, which has limited capacity, and another traversing Russia through Chechnya to Novorossiysk. The Azerbaijani leaders along with the western oil companies are going ahead with plans to construct a pipeline through Turkey to Ceyhan, but the expense of that project is causing delays. In order to by-pass Russia, the other alternative is to go through Iran. (The recent parliamentary elections in Iran and the victory of pro-western candidates there may have a major impact on the future of such a pipeline.)

Meanwhile the conflict continues with Armenia over Nagorno-Karabakh, an enclave within Azerbaijan currently occupied by Armenian militias with Russia supplying arms to Armenia. On June 17, the Azerbaijani Minister of Defense Safar Abijev asked that "NATO be involved in solving the conflict." Earlier, Azerbaijani spokesmen had floated the idea of a NATO military base in Azerbaijan. They also have held maneuvers in the framework of NATO's "Partnership for Peace."32

Dagestan: Since the transport of petroleum through Chechnya had been interrupted by the conflict, Russia had been planning an alternative pipeline through Dagestan. But after Basayev invaded Dagestan last August and September, these plans were temporarily thwarted.33

Karachay-Cherkess: Chechnya could also be bypassed to the west by means of a pipeline through the Russian region of Karachay-Cherkess. It clearly is no coincidence that a separatist movement is also flaring up there. On August 27, there was a major confrontation by separatists demanding that Karachay-Cherkess secede from Russia.

According to the historian Rachid Khatuev, the first aim of such a secession is to control the Baku-Novorossiysk pipeline. The Cherkess have a large diaspora abroad, especially in Turkey, where they have considerable influence.34

Armenia: Armenia is strategically significant in the shipment of oil and gas from the Caspian Sea.

In speeches before the summit of the Organization for Security and Cooperation in Europe (OSCE), November 18-19, 1999, both Azerbaijani President Haidar Aliyev and Armenian President Robert Kocharian called for the creation of a security pact in the South Caucasus, involving Armenia, Azerbaijan, Georgia, Turkey, Russia and the U.S.35

Until now, Armenia has been Russia's greatest ally in the region. But this pact would require the withdrawal of Russian troops from Armenia, undermining that long-existing alliance. Instead, Armenia would be in the camp of its traditional enemies, including Turkey.


The author wishes to thank Jef Bossuyt for his contributions to the sections of this article dealing with individual countries of the area.
1."Nothing Very Romantic About Putin's Russian Nationalism," International Herald Tribune, Feb. 28, 2000.
2.David Remnick, "Soviets Vote on Future of Union," Washington Post, Mar. 18, 1991, p. A1.
3.Brian Becker, "New "freedom' to exploit: The link between Chechnya war and Caspian oil," Workers World, Dec. 2, 1999.
4.International Petroleum Encyclopedia, 1999.
5.Steve Levine, "U.S. Seeks to End Russian Domination of the Caspian," New York Times, Nov. 20, 1999.
6.Becker, op. cit., n. 3.
7."Russia says U.S. wants to oust it from Caucasus," Reuters, Nov. 12, 1999.
8.Lewis Dolinsky, "In Chechnya, This Time It's for Keeps," Notes from Here and There, San Francisco Chronicle, Nov. 24, 1999.
9.Jan S. Adams, Director Emerita of International Studies, Ohio State University, "The U.S.-Russian Face-off in the Caspian Basin, Problems of Post-Communism (Washington, D.C.), Jan.-Feb. 2000.
10.Ian Traynor, "Neighbors fear that, after Chechnya, they are next," The Guardian (London), Feb. 28, 2000.
11.Tony Abdo, Institute of War and Peace Reporting, Jan. 9, 2000.
14.Jim Nichols, "Georgia: Current Developments and U.S. Interests," Congressional Research Service, updated Jan. 27, 2000.
15."Trans-Balkan Pipeline complicates U.S.-Turkey Relations," Stratfor.Com, Global Intelligence Update, Nov. 24, 1999.
18.Karen Talbot, "Backing up Globalization with Military Might," CovertAction Quarterly, Fall/Winter 1999.
19.Global Intelligence Update, op. cit. 16.
21.Quoted in Vladimir Isachenkov, "Putin Meets Leaders of Ex-Republics," Associated Press, Jan. 25, 2000.
22."CIS States Give in to Moscow," Stratfor.Com, Global Intelligence Update, Jan. 26, 2000.
25."Diplomatic Blitzkrieg: The West Responds to Russia's Assertiveness," Stratfor.Com, Global Intelligence Update, Feb. 11, 2000.
28.Celestine Bohlen, "Russia Reacts Angrily Over Western Criticism on Chechnya," New York Times, Dec. 8, 1999.
30.Douglas Hamilton, "Robertson hails revival of NATO-Russia ties," Reuters, Feb. 15, 2000.
31.Op. cit., n. 25.
32.Jef Bossuyt, Solidaire (Belgium), Oct. 13, 1999.
35.Stratfor.Com, Global Intelligence Update, op. cit., n. 22.

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