Chechnya oil riches fuel war

By Giles Whittell
Source: The Times
Date: January 5, 2000

In the chaos of the Chechnya war, one image stands out as a sign of why both sides are losing - that of the rebel who has run out of petrol for his Jeep, dashing between dugouts on a bicycle.

This is an old-fashioned war, for Chechen independence and Russian self-esteem, but also a more modern one, for oil. Grozny's dwindling supplies will please Russia's generals, but for Kremlin strategists they are a reminder that Moscow's long-term goal of dominating the Caspian basin and its vast oil and gas reserves is as elusive as ever.

Before the 1994-96 war, Grozny's network of refineries made it the second biggest oil city in the region after Baku, the capital of Azerbaijan. Geologists said up to 200 billion barrels lay beneath the Caspian, and there was every sign that Moscow would retain a leading role in the lucrative business of selling it. The Russian pipeline which pumped 100,000 barrels of crude a day to the Black Sea has been closed since summer.

Behind the rhetoric of an "anti-terrorist operation", it is clear that Moscow launched this war partly to keep a toehold in what may be the world's richest oil region outside the Middle East.

Yet as a policy initiative it has failed: the fighting has boosted two huge US-backed schemes to build pipelines through the Caucasus to Turkey, while a new Russian one that bypasses Chechnya may have nothing to pump when completed.

In an important sense Russia lost the first decisive battle of the war last month in Istanbul. After President Yeltsin's abrupt return to Moscow from the OSCE summit, Turkey, Georgia, Azerbaijan and the US signed a treaty paving the way for a $2.4 billion (£1.48 billion) oil pipeline from Baku to the Turkish port of Ceyhan. An American spokesman called the project part of "the strategic vision of new Eurasian co-operation". This is widely seen as code for an American policy of curbing Russia's role in the Caucasus.

Moscow lashed out at Washington for its "meddlesome role" in the Caucasus. The State Department professed bewilderment, but experts talk bluntly of an all-out race for Caspian dominance that America appears to be winning. The opening of a pipeline across Georgia to the Black Sea in April was its first victory.