[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Senate]
[Pages 26918-26919]
[From the U.S. Government Publishing Office, www.gpo.gov]



                       RUSSIA AND ENERGY SECURITY

 Mr. BIDEN. Mr. President, I rise to point out that while the 
attention of the world is now rightly focused on Afghanistan and the 
war against terrorism there, we should not forget that a large part of 
the oil and gas consumed by the United States and the rest of the 
industrialized world comes from the conflict-ridden Middle East.
  In addition to addressing the issue of energy independence through 
new domestic sources of supply, conservation, and the development of 
renewable energy resources, it is imperative for us to be thinking abut 
the best possible way of protecting the security of alternative sources 
of oil and gas outside the United States. The Caspian Sea is also on 
Russia's doorstep, and we should encourage development that will foster 
positive political as well as economic relations with the world's 
second largest oil exporter.
  Russia's recent refusal to follow OPEC's lead in slashing production 
is one more example of its ability to play a positive role on world oil 
markets, and the recently opened $2.5 billion Caspian oil pipeline, 
Russia's largest joint investment to date, and one in which U.S. firms 
hold more than a one-third interest, is an example of the kind of 
project that will encourage Moscow to continue to look westward.
  Akezhan Kazhegeldin, an economist, businessman, and former prime 
minister of oil-rich Kazakhstan, has written a thoughtful article on 
these subjects that appeared in the Russian journal Vremya Novostei on 
October 15, 2001. In his article, Dr. Kazhegeldin states that oil and 
gas from Kazakhstan and the other energy producing nations of the 
former Soviet Union could provide an important backup source of energy, 
complementing what now comes from the Persian Gulf countries.
  Moreover, referring to the debate surrounding the route of future, 
additional pipelines carrying oil to consuming countries, Dr. 
Kazhegeldin asserts that there is no reason for the West and Russia to 
be at loggerheads now that the Cold War is over. He goes on to describe 
how the West and Russia could, in his view, work together on a 
comprehensive pipeline solution that would benefit everyone.
  Some of Dr. Kazhegeldin's ideas will undoubtedly elicit healthy 
debate. I urge my colleagues to read his provocative article, and I ask 
that the text be printed in the Record.
  The article follows.

                 [From Vremya Novostei, Oct. 15, 2001]

``Global Arc of Stability: The way Russia and the Caspian Can Make the 
                             World Stable''

                        (By Akezhan Kazhegeldin)

       The September 11 tragic events and launching of the Afghan 
     campaign, seen as the first stage in ``the global war against 
     terror'', have changed the world dramatically. Protection of 
     peaceful citizens from possible terror acts appears as just a 
     tip of the huge pyramid of new problems. We are facing an 
     acute and more global problem, the problem of ensuring the 
     industrial world's economic safety.
       The supply of the developed nations' energy, above all, oil 
     and gas, is a critical and vulnerable element in the world's 
     economic relations. A great part of the developed oil fields 
     are concentrated in the highly insecure and conflict-ridden 
     Middle Eastern region, which makes the threat of oil blockade 
     and energy crisis for the industrial countries, the main oil 
     and gas consumers, a perpetual nightmare. Unpredictable 
     dictators are no less dangerous than terrorist groups. Should 
     the interests of both in the region coincide, the rest of the 
     world would find itself in an impasse.
       Even if everything goes very well and the antiterrorist 
     campaign ends quickly, the community of industrial countries 
     will have to make sure that the threat of energy blackmail is 
     ruled out in principle. In the global energy system, it is 
     necessary to use reserve and back-up methods in order to 
     ensure safety. Caspian oil reserves can play a major role 
     here.
       For the past decade, politicians and journalists have been 
     debating about the problem of Caspian oil perhaps more 
     heatedly than the industry professionals. It has almost been 
     made into a stake in the new Great Game, the U.S-Russian 
     rivalry over the control of the region and its riches. This 
     confrontation has become the legacy of the old ``bloc'' model 
     of the world. Wayne Merry, a former U.S. State Department and 
     Pentagon official, now a senior associate at the American 
     Foreign Policy Council in Washington, describes its sources: 
     ``. . . Washington concentrated its efforts on one great 
     strategic project to assure US primacy in the region. . . . 
     The idea was to bypass existing pipelines in Russia, squeeze 
     out Iran, bring energy supplies from the Caspian region to a

[[Page 26919]]

     transhipment point in a NATO country, and thereby assure the 
     independent futures of the producing and transit countries.''
       Understandably, Moscow clearly saw the threat to its 
     interests and resisted U.S. plans. However, both sides played 
     their parts by force of habit, without their usual passion. 
     The reason is that the interests of Russia and the West (not 
     only the U.S.) in the region are actually not conflicting. 
     Some regional leaders tried to artificially keep alive the 
     conflict between them as they hoped to secure foreign support 
     for their authoritarian regimes.
       Now that many old patterns have been left behind in the 
     20th century for good, the common interests of the industrial 
     and democratic countries allow them to work out joint 
     approaches to ensure their energy independence. Owing to 
     this, Kazakhstan, Azerbaijan and Turkmenistan have a historic 
     opportunity to become stable partners of both Russia and the 
     West, and to be integrated into the world economy.
       Naturally, this integration should entail bringing their 
     political systems in line with the international democratic 
     and market economy standards. ``A glance at other post-
     colonial regions in Africa and Asia shows that the first 
     generation of `Big Man' leaders often does as much harm to 
     their countries as did the departing imperial powers, 
     creating a painful legacy for future generations to sort 
     out,'' concludes Wayne Merry. ``American long-term interests 
     in Central Asia are best served by seeking to engage 
     tomorrow's leaders and assuring that, when the region's 
     energy reserves do become important to the outside world, 
     these leaders will look to the United States as a friend and 
     not as yet another external exploiter.''
       Setting aside the controversial definition of the Central 
     Asian countries as post-colonial ones, one should admit that 
     the time when the region's energy reserves do become 
     important to the outside world is nearing. Though geological 
     exploration of the Caspian shelf is far from being completed, 
     and many experts are not inclined to share the fanciful 
     expectations of ``dozens of new Kuwaits'', it is clear that 
     the region's oil and gas reserves are extremely large. 
     However, energy projects can't become global automatically, 
     thanks only to rich oilfields. Stable export routes are 
     required to deliver oil and gas to the global markets. Even 
     all the reserves of the Caspian states put together won't 
     make the Caspian project global. It is necessary to select 
     and develop the routes to transport oil and gas to the global 
     markets--to the consumers in Europe, U.S., and Asian 
     countries.
       The most politically and economically viable option is to 
     transport the Caspian ``big oil'' up to the north, into 
     Russia and further on into Eastern and Western Europe, to the 
     consumers and transshipment ports. Economically, this option 
     seems much more attractive, since the construction is to take 
     place on a plain, in populated areas with a developed 
     infrastructure. Russia's European region has enough qualified 
     manpower and electricity for oil pumping. Russian plants 
     produce pipes and other equipment. Stability in Russia and 
     the neighboring countries guarantees safety of the route and 
     its uninterrupted operation.
       If chosen, the Russian option would mean turning the energy 
     flow from south to north. It will permit the in-depth 
     integration of Russia and Central Asia into a united Europe 
     and simultaneously charge Europe and Russia with a common 
     political mission of ensuring energy independence for the 
     industrial countries. It will allow oil-producing countries 
     of the Caspian region to play a major role in the global 
     energy market. Russia, Kazakhstan, Azerbaijan, and--in the 
     long term, Turkmenistan, could, along with the North Sea oil 
     producing countries, become a real alternative to OPEC and 
     get significant political benefits.
       The main advantage of the northern export route for Caspian 
     oil consists in the availability of a branched pipeline 
     network in Russia. It is much easier and cheaper to improve 
     and develop the existing system than to construct a new one. 
     I mean the pipelines owned by the Transneft company and the 
     recently constructed CPC line from Western Kazakhstan to the 
     Black Sea. The CPC alone cannot provide exporters with access 
     to the global market. For natural reasons, the Bosporus and 
     Dardanelles have a limited carrying capacity. The Black Sea 
     ecosystem is vulnerable, as this sea is warm and almost 
     closed. Turkey has already announced its intention to limit 
     the number of giant tankers passing through its straits. 
     Instead of forcing Turkey to agree by means of political 
     pressure, we should respect its fundamental interests and 
     seek other solutions in addition to the CPC capacities.
       The pipeline would enable Russia to solve several of its 
     specific problems. For instance, to strengthen the special 
     status of the Kaliningrad region as Russia's outpost in 
     Western Europe. If the pipeline goes via the Kaliningrad 
     region, the region could not only solve some of its economic 
     problems, but also get additional security guarantees in case 
     of NATO's expansion to the East. A place of its own in the EU 
     economy would be the best guarantee for the region.
       In any case, with any combination of routes, Russia would 
     be the main player in a Caspian-European project. Moreover, 
     Russia should initiate its realization. Technological and 
     economic calculations will give optimal solutions. However, 
     political will and vision are still primary considerations. 
     History teaches us that it is they rather than mathematical 
     and economic calculations that have brought into existence 
     such giant projects as the Suez and Panama Canals that formed 
     the global markets of those days.
       Looking into the future and putting aside the required 
     political decisions, I would like to stress that the Russian 
     route could give an incredibly promising opportunity of 
     opening up global markets for Eurasian oil and gas. This 
     opportunity includes building an oil-carrier port in the 
     Murmansk region on the Barents Sea. The non-freezing, deep-
     sea port would become the gateway to the global market for 
     Caspian, Siberian and, prospectively, for Timanoperchersk oil 
     as well, as the northern oil will require outlets to world 
     markets. In the Murmansk region, some former military ports 
     can reportedly be used right now by tankers. From there, they 
     can quickly and safely reach not only Western European ports, 
     but also the U.S. and Canada's eastern coast.
       If gas-liquefying installations are built there, it would 
     be hard to imagine a more natural route for a pipeline which 
     will transport gas from the Russian polar regions and the 
     Arctic Ocean's shelf.
       In addition to the oil pipeline, a parallel gas pipeline 
     should be built to provide Kazakh and Turkmen gas access to 
     global markets that will not compete with the existing 
     Russian gas routes to Western Europe. Constructing gas and 
     oil pipelines simultaneously will make it possible to 
     significantly cut capital expenditures and make 
     transportation for long distances economically viable. By the 
     way, the length of this route can be compared to the gas 
     export line running from Tyumen's north to Western Europe.
       Today's situation on the gas market is such that the 
     Central Asian countries will long sit on their riches waiting 
     for investors hindered by the lack of access to global 
     markets. I am speaking not only about the Turkmen gas. The 
     share of gas in the Caspian hydrocarbon reserves can be much 
     higher than those suggested by the most optimistic forecasts. 
     On the one hand, Caspian gas should be available when the 
     industrial world needs it badly. On the other hand, Caspian 
     gas won't be a rival for Russian gas and a source of 
     contention between Russia and its neighbors in Central Asia.
       Where the two huge pipelines run side by side, where a 
     joint exploitation system exists, one will naturally expect 
     to have a transcontinental highway and info-highway--a 
     powerful communication line originating from Europe and going 
     further to the south.
       These prospects are both exciting and distant. However, 
     they should be taken into account when addressing today's 
     problems. No doubt, the global economy does have enough 
     investment resources for such a large-scale project. The U.S. 
     Congress has given $40 billion for primary measures to 
     safeguard national security. Much less investment is needed 
     to ensure energy security of the industrial states. 
     Especially as it is much more reasonable and profitable to 
     invest in crisis prevention than in recovering from them.
       A pipeline bridge between the Caspian region and Western 
     Europe, Central Asia and the world's oceans will help solve 
     the problem of the globalization of Eurasian energy 
     resources. It could become a basis for an ``arc of 
     stability'' in Europe. It not only shifts the so-called arc 
     of tension running close to Russia from the Balkans via the 
     Caucasus, Central Asia, Iran, and Afghanistan, but will also 
     exclude the Caspian states--the critical link--from this 
     chain. When involved in the global economy, these countries 
     could turn into strongholds of stability in a part of Asia 
     that today poses major threats to the world.

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