Washington Report on Middle East Affairs, August/September 1997, pgs. 49-50

Central Asia

Revival of "Silk Road" Underway

by Gordon Feller

Kyrgyzstan has declared that it strongly favors the proposal to develop a viable Eurasian transportation corridor stretching from Asia to Europe. Kyrgyz President Askar Akayev made an official visit to the ex-Soviet Republic of Georgia and put his signature on an agreement of political and economic cooperation between the two countries, which includes transit of goods through Kyrgyzstan. "Kyrgyzstan was a little late, but it is going to actively join the implementation of Eurasian projects," said Akayev at a press conference held in Tbilisi.

A number of ambitious projects have been launched, each of which is focused on establishing networks of effective transportation in countries of the Black Sea and Central Asia. The goal in each case is their integration into the all-European transportation system. Projects include the BISEK-Black Sea Economic Project and TRACECA-Eurasian Transportation Corridor. Central Asian republics have started creating a Caspian Sea-Azerbaijan-Georgia-Black Sea-Europe "Eurasian bridge." Georgia, Turkmenistan, Azerbaijan and Uzbekistan concluded last year a special agreement on cooperation in railway transit of goods. Ukraine, Kazakhstan, Armenia and Bulgaria have expressed their wish to join this agreement as well. Ferry transport connecting Georgia with Bulgaria, Romania, the Ukraine and Russia on the Black Sea is now successfully operating and developing.

That's why the notion of the revival of the Great Silk Road (Jibek Jolu in the Kyrgyz language) has been the focus of intense negotiations between Kyrgyzstan and Georgia. Georgian President Eduard Shevardnadze was pleased that his pet project, which many world observers call "the core of Shevardnadze's political and economic program," was backed up by his Kyrgyz counterpart. In the Georgian president's opinion, integration will materialize primarily on the basis of reliable and effective systems of transportation for both goods and raw material. The volume of transported goods on the TRACECA route already has increased noticeably. Thus, Uzbek cotton and Kazakh oil from the Tengiz oil field now are traveling via this route. If the project is fully realized, the Caucasus may become a desirable rather than a dreaded link between Europe and Asia. Turkey and Azerbaijan are obviously gravitating toward this notion.

The transportation and communications capacity of the Europe-Caucasus-Asia corridor will, in turn, help to make the idea of a North-South transportation route more realistic. Traffic may soon cross the territory of Transcaucasia and connect northern and central Russia with Turkey, Iran and other countries of the Near East and Greece.

Russia, Chechnya Sign Pipeline Pact

Russian Prime Minister Viktor Chernomyrdin and Chechen President Aslan Maskhadov, meeting in the Black Sea resort of Sochi, have signed a "memorandum" that includes an agreement on the transit of Azerbaijani oil, ITAR-TASS reported on June 13.

The agreement envisages that the "early oil" from Azerbaijan's offshore fields will be exported to the Black Sea port of Novorossiisk via a pipeline transitting Russia. The 153-kilometer stretch of the pipeline that transits Chechnya was badly damaged during the war.

Armenia, Iran Hold Talks

Armenian Foreign Minister Aleksandr Arzumanyan held talks June 12 with outgoing Iranian President Ali Akbar Hashemi Rafsanjani and Foreign Minister Ali Akbar Velayati. Arzumanyan welcomed Iran's "key role" in resolving regional crises, and added that Armenia gives "special priority to its relations with Islamic Iran." Arzumanyan also called for multilateral cooperation with other countries in the region, "particularly with Turkmenistan, Georgia, and Greece." Velayati, for his part, said Tehran is interested in an "honorable and just" peace agreement between Armenia and Azerbaijan.

Iran-Kyrgyzstan Trade Rises

Kyrgyz President Askar Akayev met with Iranian Foreign Minister Ali Akbar Velayati on June 11 and said he is pleased with his country's relations with Iran.

Akayev noted that trade between the countries was $3.9 million in the first quarter of 1997 and is steadily increasing. An Iranian consulate will open soon in Kyrgyzstan's second-largest city, Osh, while a Kyrgyz consulate will begin operations in Meshed, Iran.

Kazak-Azerbaijani Accord

Kazakhstan President Nursultan Nazarbayev met with his Azerbaijani counterpart, Heidar Aliyev, in Almaty on June 10. Their talks focused on the transportation of oil across the Caspian Sea and Kazakhstan's participation in a 1996 agreement signed by Azerbaijan, Georgia, and Uzbekistan. They signed a memorandum on cooperation in transporting oil to international markets and discussed the proposed underwater pipeline in the Caspian Sea. Nazarbayev said he did not mind whether the oil was shipped through the Russian port of Novorossisk or the Turkish terminal of Ceyhan after it crossed the Caspian.

Iraq Food-for-Oil Extension Offers Boost to Russia

A decision by the U.N. Security Council to extend its food-for-oil program with Iraq has set the stage for Russian oil companies to earn millions of dollars in lucrative contracts selling Iraqi crude on world markets.

The resolution to allow Iraq to sell another $2 billion of crude oil on world markets came just days before the June 7 expiration of a U.N.-sanctioned deal agreed upon last December which has allowed Iraq to sell almost $2 billion worth of crude in exchange for food and humanitarian aid.

The extension offers huge potential for Russia, which has turned to Iraq as a Middle Eastern counterbalance to its lost influence in Eastern Europe and Central Asia.

Russia has also supplied about $18 million worth of food and consumer goods to Iraq. Oil executives and industry analysts say Russia's prior experience in Iraqi fields during the Soviet era, backed by political clout, should position its oil firms ahead of competitors from South Korea, Canada, China, France and Italy.

Meanwhile, international oil prices tumbled ahead of the U.N. decision on the news that Iraqi would likely be unleashing more oil upon world markets. Brent Bland crude, the world benchmark grade, closed at $18.90 a barrel, 49 cents lower than the $19.39 average of past months.

Ukraine, Iran Sign Agreement

Iranian Foreign Minister Ali Akbar Velayati and his Ukrainian counterpart, Hennady Udovenko, signed an economic cooperation treaty in Kiev on June 9. Iran wants to help Ukraine complete both an oil terminal near its Black Sea port of Odessa and a pipeline linking the terminal with an existing line that transports oil to Europe. Velayati also visited the Antonov airplane factory, which recently unveiled a new turboprop passenger plane to be produced in Iran under Ukrainian license.

Kazakhstan's Oil From Troubled Waters

Azerbaijan's President Heidar Aliyev's visit to the Kazakh capital, Almaty, to sign a deal allowing Kazakh oil to be transported through Azerbaijan, is part of a complicated game about the definition of the Caspian as a sea or a lake. The Caspian area will be one of the main sources of oil in the 21st century. According to data provided by international consortia working in the area, the Caspian region has about 15 percent of the world's proven reserves of oil and gas, to say nothing of the resources still expected to be discovered.

After the collapse of the Soviet Union, three newly independent countries became, with Russia and Iran, owners of Caspian Sea shores: namely Kazakhstan, Azerbaijan and Turkmenistan. International oil companies are eager to gain stakes in the oil industries in these newly established countries, something which irritates both Iran and Russia. Because of its mentality developed over centuries, Russia still considers Kazakhstan, Uzbekistan and Turkmenistan to be within its own sphere of influence. Iran too sees itself as a major player in the area, taking into consideration her historic, ethnic and religious ties with Kazakhstan, Azerbaijan and Turkmenistan.

Both Moscow and Tehran view the Caspian as a lake, which would mean that its natural resources would belong jointly to all five Caspian states.

But Kazakhstan and Azerbaijan insist that the Caspian is a not a lake but a sea, and therefore has to be divided into exclusive sectors, which must be distributed among the Caspian states according to the length of their coastal areas. Turkmenistan used to share that point of view, but has vacillated in recent years between the two opposing positions.

International experts say that if the lake definition favored by Russia and Iran is adopted, Kazakhstan will lose about one billion tons of oil and one billion cubic meters of natural gas. Azerbaijan and Turkmenistan could lose even more than that. In the case of the Azerbaijani-Kazakh sea definition winning out, Russia and Iran could lose around five billion tons of oil.

Both Aliyev and Nazarbayev, as experienced politicians, will be very careful with any statements or agreements about the Caspian in order not to irritate the Russian bear and the ultra-Islamists of Iran.

The newly emergent countries tend to view the continuation of cooperation between Iran and Russia as a shadow over their own independence. And Russia's interest in the region is strengthened by the knowledge that its oil production complexes in Siberia are in very bad condition. Moscow realizes that the international oil giants are more interested in the new oil markets of the former Soviet republics in the Caucasus and Central Asia, ignoring the dilapidated Russian oil sector, which needs much investment to be revived.

All this adds up to the likelihood that continued Russian political and economic pressure will in the future count as a continuing obstacle for Azerbaijan, Kazakhstan and Turkmenistan on their way toward real independence.

In Central Asia, Germany Is Satisfied With Aid Progress

A high-level German economic team has returned from a visit to Central Asia expressing satisfaction at the results of Germany's assistance programs there.

Bonn's minister for economic cooperation, Carl-Dieter Spranger, who is in charge of Germany's foreign economic aid program, visited Kyrgyzstan, Uzbekistan and Kazakhstan. His spokesman said German support will continue in the coming years at approximately the same rate as at present. Kyrgyzstan has received some $60 million in German assistance since 1993, Kazakhstan the same amount, and Uzbekistan has received double that amount.

Central Asian Routes Linking Uzbekistan, Tajikistan Reopen

The main highway and rail link connecting Uzbekistan and Tajikistan reopened on June 13. Tajik Prime Minister Yakhye Azimov and Uzbek First Deputy Prime Minister Ismail Djurabekov signed the protocol reopening the routes in the Uzbek border town of Bekabad on Tuesday. The Tajik civil conflict had prompted the Uzbek government to close the road and rail line several times since 1992. The rail line is particularly important for Tajikistan as this route is the best means of connecting the Tajik capital Dushanbe with Tajikistan's northern regions. The railroad avoids the mountains north of Dushanbe by running through the more level territory in neighboring Uzbekistan.

Kazakhstan's Security Chief Concerned By Uighur Unrest

The head of Kazakhstan's Security Council said today he is concerned about events across the border in China's northwest province of Xinjiang.

Beksultan Sarsekov told a news conference in Almaty, however, that Kazakhstan had nothing to do with any separatist movements in China. He also said that there were no organizations or centers connected to Uighur nationalists in Kazakhstan.

Recent anti-Chinese riots in Xinjiang left nine people dead and dozens injured. Beijing has blamed Uighur separatists for the riots. Kazakhstan, which has a long border with China's Xinjiang province, is home to around 200,000 Uighurs.

Representatives of ethnic Uighurs from the former Soviet republics of Kazakhstan, Kyrgyzstan and Uzbekistan met in Almaty in an effort to create an exiled separatist Uighur movement. No decision was taken on where the movement, to be set up by autumn, would be based.