Tag Archives: Caspian Sea

Noam Chomsky Unpublished :the War in Yugoslavia and the Geneva Convention

 

Backing Up Globalization
with Military Might
by Karen Talbot
CovertAction Quarterly, Fall / Winter 1999

The U. S. Senate recently labeled Serbia a “terrorist state,” in an act of obscene hypocrisy-yet another case of blaming the victim for the crimes of the perpetrator What could be more “terrorist” than the relentless blitzkrieg of 23,000 bombs and missiles rained upon Yugoslavia for 79 days by U.S.-led NATO forces? Is it not terrorism to drop on civilians radioactive depleted uranium weapons and outlawed cluster bombs designed to rip human flesh to shreds, from the sanctuary of thousands of feet in the air, or using terrain-hugging computer-guided missiles? Is it not terrorism to target deliberately the entire infrastructure of a small sovereign nation, including electrical and water filtration systems critical to the survival of civilians? Is it not terrorism to ferociously obliterate 200 factories and destroy the jobs of millions of workers? What of the constant air assault-“fire from the sky”-against cities, villages, schools, hospitals, senior residences, TV towers and studios, oil refineries, chemical plants, electrical power plants, transmission towers, gas stations, homes, farms, schools, marketplaces, buses, trains, railroad lines, bridges, roads, medieval monasteries, churches, historic monuments-destruction amounting to more than $100 billion? What of eco-terrorism, biological and chemical warfare, the incalculable result of the destruction of the environment, including the deliberate bombardment of chemical plants? Above all, is it not terrorism to kill, maim, traumatize, impoverish, or render homeless tens of thousands of men, women, and children?
Not only was NATO’S war a reprehensible act of inhumanity, it was in contravention of all norms of international law, including the Charter of the United Nations. This was an unprecedented war by the most powerful military force in history involving the 19 wealthiest nations with 95% of the world’s armaments against a small sovereign nation that ultimately had little chance of countering such an attack.
WHY THE BALKANS?
Yugoslavia is strategically located. The peoples of this region have had the great misfortune of living on real estate coveted by empire after empire, all of which employed classic divide and conquer tactics by pitting one people against another. Not much has changed.
The determination by the U. S and NATO to occupy Kosovo and virtually all of Yugoslavia is spurred on by the enticement of abundant natural resources. Kosovo alone has the richest mineral resources in all of Europe west of Russia. The New York Times observed that “the sprawling state-owned Trepca mining complex, the most valuable piece of real estate in the Balkans, is worth at least $5 billion,” producing gold, silver, lead, zinc, and cadmium, as well as tens of millions of dollars in profits annually. The New York Times also revealed that a “number of unofficial partition plans have been drawn up for Kosovo all raising the question of who would control an important northern mining region.” Trepca was also a glittering prize taken over by Hitler to fuel the Nazi war machine during W.W.II. “Kosovo also possesses 17 billion tons of coal reserves and Kosovo (like Serbia and Albania) also has oil reserves.”
Serbia as a whole is rich in minerals and oil including in Vojvodina, the northern part of the Yugoslavia. That coveted area of Vojvodina is also extremely fertile land-a major “breadbasket” for Europe. Then there is the allure of enterprises to be privatized at bargain prices, and the anticipation of exploiting very cheap and highly skilled labor potentially available to work in sweatshop conditions.
Perhaps most significant is the fact that Yugoslavia has strong elements of a socialist economy-the last in Europe, however tattered it may have become by years of economic destabilization by the West and financial institutions like the IMF and World Bank. Sixty-five percent of all firms are either state-owned or self-managed cooperatives. s Most heavy industry is state-owned. The factories bombed during the 79 days of NATO attacks were exclusively state-owned. The banking and financial system is also state-controlled. Only 20 percent of the workforce was in the private sector 6
The U.S. had joined Belgrade’s other international creditors in imposing a first round of macroeconomic reforms in 1980, shortly before the death of Marshal Tito. “Successive IMF-sponsored programs since then continued the disintegration of the industrial sector and the piecemeal dismantling of the Yugoslav welfare state. Debt restructuring agreements increased foreign debt and mandated currency devaluation also hit hard at Yugoslavia’s standard of living…. [The] IMF prescribed further doses of its bitter economic medicine periodically… Industrial production declined to a negative 10 percent growth rate in 1990- with all its predictable social consequences. “7
ABOVE ALL IT’S ABOUT OIL
Perhaps above all, this U.S.-led onslaught is about oil. It is related to the drive to extend and protect the investments of the transnational corporations in the Caspian Sea region, especially the oil corporations.
The Balkans are strategic for the transshipment of oil and gas to Europe and beyond. They are critical in the competition between Europe and the U.S. over these riches. Time is of the essence. The first tanker shipment from the port of Supsa in Georgia on the eastern Black Sea coast- the terminus of a pipeline from the Caspian Sea oil fields-took place recently Another pipeline passing through Russia, in particular Chechnya, and also ending at the eastern shore of the Black Sea at Novorossiysk, will add to the tanker traffic.
The predicament is how to get that oil beyond the Black Sea. The Bosporus straits, at Istanbul, are narrow and pose considerable hazards, especially for the tremendously heavy tanker traffic expected. And so far plans to build a pipeline through Turkey (Kurdistan) are thwarted by the struggles of the Kurds and by competing interests Hopes for a pipeline through Iran are also on hold. Though preferred for several reasons, those routes would not provide the best access to Europe and the Western Hemisphere. The oil can be shipped by tanker up the Danube River, a waterway crossing Europe from the Black Sea where a short canal connects it to the port of Constanza in Romania. The Danube runs through Belgrade and Novi Sad in Yugoslavia. The recent completion of a grand canal-about the time the turmoil started in the former Yugoslavia-between the Danube and Rhine Rivers now makes it possible to ply those waters through a great inland system of canals and waterways to the industrial Ruhr Valley and clear to the North Sea. Undoubtedly this route is favored by the Europeans in the competition over the Caspian Sea treasure chest.
PIPELINES ACROSS THE BALKANS
There are also plans to build pipelines across the Balkans. One from Romania- which has considerable oil wealth itself- would extend from Constanza to Trieste on the Adriatic Sea. At Trieste, the oil would be piped northward or shipped westward out of Europe by tanker. A pipeline through Bulgaria from the port of Bourgas on the Black Sea to the Vlore port on the Adriatic in Albania is a project of the U.S.-owned Albanian, Macedonian, and Bulgarian Oil Corporation (AMBO).
These would be part of a multiple pipeline system in the Balkans, some connecting with existing “Soviet-era” pipelines from Russia that would need upgrading. But these oil and gas pipelines extending through Serbia from Russia to Central Europe, are extremely valuable. In the competition with European-based companies, the U.S. backs the Caspian Pipeline consortium led by Mobil.
As noted, Serbia also has oil reserves. And the port of Bar on the Montenegrin coast is the most valuable, cost-efficient, deep water port in the entire eastern Mediterranean Sea-the cheapest route for the flow of goods in and out of Eastern Europe and beyond.
Also, Kosovo is in a corridor used for centuries, even by the Crusaders, as a route between Europe and the Middle East. The route follows river valleys connecting with the Danube River Valley near Belgrade. The southern arm of the trans-Balkan railway runs along these valleys. Control of this overland passageway was critical to the German fascist war machine in World War II, and to other conquerors. It remains vital to getting the oil riches into Europe from the Middle East and for other two-way commerce.
Neighboring Albania, whose economy has been completely transformed to the “free-market,” with domination by western transnational corporations and banks, has vast untapped mineral resources including oil reserves. These are already being gobbled up by transnationals including the major oil companies.
The application of strong structural adjustment policies imposed by the World Bank and IMF “had contributed to wrecking Albania’s banking system and precipitating the collapse of the Albanian economy The resulting chaos enabled American and European transnationals to position themselves carefully Several western oil companies, including Occidental, Shell, and British Petroleum, had their eyes riveted on Albania’s abundant and unexplored oil deposits. Western investors were also gawking at Albania’s extensive reserves of chrome, copper, gold, nickel, and platinum. The Adenauer Foundation had been lobbying in the background on behalf of German mining interests.”
So this entire region is bubbling with activities over the profits to be had, particularly from oil.
STOKING CONFLICT IN THE CAUCASUS / CASPIAN SEA REGION
There is a growing contention between Russia and the West over the oil wealth of the Caspian Sea basin. This was manifested not only in the NATO war against Yugoslavia, but also increasingly in the Baltics, the Ukraine, the region of the Caucasus Mountains, and among all the littoral nations of the Caspian Sea. The main pipelines for the Central Asian oil, the Baku-Novorossiysk pipeline and the Baku-Supsa pipeline, pass through the Caucasus. In the mounting disputes, Russia allies itself with Armenia and, it is suspected, with the Abkhaz separatists, to counterbalance NATO influence in Azerbaijan and Georgia.
Chechnya and Dagestan are also critical in this struggle as the Baku-Novorossiysk pipeline passes through its territory. Recently separatist military actions by Dagestan against Russia have flared up in Dagestan and in Chechnya. Dagestan is located between Chechnya and the Caspian Sea.
“For Russia, Dagestan retains an important strategic value. Dagestan commands 70 percent of Russia’s shoreline to the oil-producing Caspian Sea and its only all-weather Caspian port at Makhachkala. It provides the crucial pipeline links from Azerbaijan, where Russia maintains important oil interests….”
The recently opened Baku-Supsa route through Georgia, favored by the West, bypasses Russia altogether, undermining Russian influence on the region’s oil and Russian revenue from that oil. This route was opened following military maneuvers for training to defend the line by Ukrainian, Georgian, and Azen troops, as part of the GUUAM alliance.
Intensifying competition between Russia and NATO has escalated after a battle with heavy losses, June 14, between Azerbaijan and Armenia over Nagorno-Karabakh.
Another pipeline route favored by the U.S. is the one between Baku and Ceyhan passing through Turkey However this is more expensive and transverses the area of intense struggles by the Kurdish people. This is leading the U.S. oil companies to revive their interest in other routes. One of these is through western Afghanistan, the other, south through Iran.
Richard Morningstar, former special adviser to the President and Secretary of State for Caspian Basin energy issues, said it was essential that the two Caspian states-Azerbaijan and Turkmenistan- agree as soon as possible about a trans-Caspian gas pipeline to transport oil from Turkmenistan to Turkey via the Caspian Sea. Washington has urged these governments to ignore Russian and Iranian hostility and move ahead with this pipeline even if it means violating the existing legal status of the Caspian Sea in which all the littoral states are to be consulted about its future. Russia and Iran “feel increasingly irritated by the U.S. activities in Central Asia, aimed at preventing Moscow and Teheran from reasserting their economic and political grip over the former Soviet republics in the Caspian region.”
Also at stake in this region is the growing competition from China which recently has established significant military and economic ties with Turkmenistan. China’s National Petroleum Company has helped rebuild over 100 wells in Turkmenistan resulting in an increase in the nation’s export production. It is estimated that Turkmenistan soon will be the third largest gas exporter in the world.
China, the second largest energy consumer in the world, is expected to require 40 percent of its oil through imports by 2010 up from less than 20 percent today.
According to a report in the Journal of Commerce: “A bitter ethnic battle in the Caucasus spilled over into Congress this week as U.S. corporate and oil interests won a key vote on aid to the region in the Senate Foreign Relations Committee. The panel approved the Silk Road Strategy Act…[which] would ‘target assistance to support the economic and political independence of the countries of the South Caucasus and Central Asia.’ But behind the measure’s bland title is a widening web of international and U.S. business alliances with stakes in the outcome of a 10-year old war….”
So once again we can expect that oil interests will lead to interventions predicated on “national liberation” or “human rights concerns.”
NEW WORLD ORDER ONSLAUGHT
This information age of high technology communications and transportation is catapulting globalization forward at warp speed. A borderless world is increasingly attractive to profit-driven corporations seeking to extend their tentacles without impediment into every conceivable niche on Planet Earth. Indeed the pundits of the “new world order” speak openly now about the demise of national sovereignty as necessary and inevitable to permit capital to flow anywhere free of restrictions. The U.S./NATO destruction of Yugoslavia established the desired precedent for military attack, cloaked in a democracy and human rights disguise, against any sovereign country that might have the temerity to stand up to the encroachment of the transnational corporations (TNCs).
The U.S. and NATO will thus be vastly emboldened by their latest “success” in the Balkans, continuing to destabilize what’s left of the federal structure, while disciplining the breakaway states of Croatia and Slovenia. We can also expect the new declared mission of nuclear-armed NATO- its commitment to override the principle of national sovereignty and intervene in the name of “humanitarian concerns,”-to be implemented elsewhere, possibly in the Caspian Sea/Caucasus areas of the former Soviet Union.
Burgeoning military alliances, with the U.S. at the helm, will similarly target North Korea, China, Congo, Colombia, and elsewhere. Any country refusing to be incorporated into the “New World Order” by allowing its wealth and labor power to be plundered by the transnational corporations will be vulnerable to attack. The assault against Yugoslavia threw open the floodgates for new wars, including wars of competition among the industrial powers, with nuclear weapons part of the equation.
An article by Thomas Friedman in the New York Times entitled “What the World Needs Now” tells it all. Illustrated by an American Flag on a fist it said, among other things: “For globalism to work, America can’t be afraid to act like the almighty superpower that it is…. The hidden hand of the market will never work without a hidden fist-McDonald’s cannot flourish without McDonnell-Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the United States Army, Air Force, Navy and Marine Corps.”
There could not be a better description of how the U.S. armed forces are seen as the military arm of the globalizing TNCs.
President Clinton, in a speech delivered the day before his televised address to Americans about Kosovo, admitted: “If we’re going to have a strong economic relationship that includes our ability to sell around the world, Europe has got to be a key… That’s what this Kosovo thing is all about.
After the war, Clinton praised NATO for its campaign in Kosovo, saying the alliance could intervene elsewhere in Europe or Africa to fight repression. “We can do it now. We can do it tomorrow, if it is necessary somewhere else,” he told U.S. troops at the Skopje, Macedonia, airport. However, it soon became clear that, even though we can do it, we would like Europe to bear more of the cost. At the September NATO defense chiefs’ meeting, U.S. Secretary of Defense William Cohen, with British support, pressed Europe to spend more money on defense, to close the “growing technology gap” between Europe’s lagging forces and the state of the art U.S. military British Minister of Defense Lord George Robertson’s pitch was blunt: “Kosovo has shown people for real that this world is going to be more dangerous and that defense is not some luxury that can be cut in times of trouble.”
Despite this push for more spending by Europe, a clear objective of the Kosovo campaign has also been to add more billions to the already bloated U.S. military budget and to fill the coffers of the military-industrial corporations with super-profits. Congress, with bipartisan fervor, approved a $20 billion increase for the Pentagon, with a total of $290 billion for fiscal year 2000, with an extra $15 billion appropriated for the war against Yugoslavia. At the same time, all other domestic discretionary spending, including education, job training, housing, environment, and health, totals $245 billion, “the biggest disparity in modern times,” according to the Center for Defense Information.
AN END TO NATIONAL SOVEREIGNTY ?
In today’s world, TNCs, and governments running interference for them, are pushing for an end to national sovereignty and democracy in order to achieve total unimpeded access for investments, cheap labor, and consumers in every nook and cranny of the globe. This is being accomplished, among other ways, through mechanisms like multilateral agreements on investment, free trade agreements like NAFTA, and the dictates of the International Monetary Fund (IMF), World Bank, and World Trade Organization (WTO).
Globalization fever is running rampant. It is epitomized by the feeding frenzy taking place across the Asia-Pacific region among U.S.-based transnationals and banks as they gobble up assets at bargain basement prices-in Japan facing a prolonged recession and in other nations stricken by the Asian economic crisis. In the early weeks of that economic tsunami, the New York Times described U.S. banks and corporations as poised to “snap up some corporate bargains…. Chase Manhattan, General Electric, General Motors, and J.P Morgan are all said to be looking at ailing companies in the region.”
To achieve maximum profits, these transnationals will stop at nothing. After all, they are non-human institutions that must expand through ever-greater profits, or go out of business. In so doing they have shown willingness to violate human rights-particularly workers’ rights-to throw millions out of work, destroy unions, use sweatshops and slave labor, destroy the environment, destabilize governments, and install and bolster tyrants who oppress, repress, torture and kill with impunity.
Is it surprising, then, that wars and military intervention, including attacks on civilians, are waged on behalf of corporations? It has been an integral part of the history of imperialist powers. Why should we believe it is any different today?
THE COSTS, AND THE PROFITS, OF WAR
NATO nations spent an estimated $65 million daily on the war. The U.S. paid the bulk of this cost, estimated to be $1.65 billion in the first 57 days. The second largest funder was Britain, which spent an estimated $120-$180 million 2s
Tapping into this lucrative bottomless well of funds, the “Big Three” weapons makers-Lockheed Martin, Boeing, and Raytheon-now receive among themselves over $30 billion per year in Pentagon contracts. Companies like Lockheed Martin are actively engaged in shaping U.S. foreign and military policies. Their efforts have yielded among other things: the “payoffs for layoffs” subsidies for defense industry mergers such as the Lockheed/Martin Marietta merger; the elimination of royalty fees that foreign arms customers had been paying to reimburse the U.S. Treasury for the cost of weapons developed at taxpayer expense (this adds up to a loss for taxpayers of roughly $500 million per year); and the creation of billions of dollars of new grants and government-guaranteed loans to support the export of U. S. weaponry Pentagon contractors, conservative think tanks and advocacy groups lobbied heavily and successfully for the “Star Wars” missile defense program.
The bombing and missile strikes are, more than ever, giant bazaars for selling the wares of the armaments manufacturers. An article in USA Today said: “The USA’s defense equipment, such as the satellite-guided smart bombs, has stolen the international spotlight as NATO air forces pound Serbian forces. That could mean increased foreign interest in U.S. military equipment….” Raytheon spokesperson David Shea was quoted: “We are expecting the Kosovo conflict to result in new orders downstream.” Then in early June, just after President Clinton signed the bill appropriating $12 billion in emergency military funding, officials at Raytheon announced that replacing munitions used in the Balkans could lead to about $1 billion in new contracts.
No wonder stock of the large military manufacturers shot up. Since the beginning of the war against Yugoslavia, March 24, 1999, the stock price of Rockwell International (maker of the Lancer, B-1 bomber, etc.) was up 48 percent; Boeing Aircraft (maker of the B-52 Stratofortress, etc.) up 30 percent; Raytheon Systems (maker of the Tomahawk cruise missile, HARM missile, etc.) up 37 percent; Lockheed Martin (maker of the F- 117 Nighthawk, F-16 Falcon, etc.), up 18 percent; and Northrop Grumman (maker of the B-2 bomber, etc.) up 16 percent 29 Jaynatha Dhanapala, U.N. Under-Secretary-General for Disarmament Affairs, said recently that “television coverage of modern warfare has effectively created an ‘advertising dividend’ for the manufacturers of high-tech weaponry and the countries and alliances that use such weapons… He observed that during the 1991 war in the Persian Gulf and the recent NATO bombing of Yugoslavia, tiny video cameras enabled hundreds of millions of viewers to “experience vicariously” the flight paths of attacking missiles to their intended targets.
Defense and aerospace companies have either announced or completed mergers and acquisitions amounting to nearly $60 billion in just the first half of 1999. That amount is already well above the total for all of 1998.
HEIGHTENED ANTAGONISMS BETWEEN THE U.S. AND EUROPE
Another factor driving U.S. policies is economic competition with the European Union, which is surfacing increasingly in spite of cooperation and commonality of interests on other levels. This is epitomized by the recent banana trade wars in which the World Trade Organization (WTO) ruled in favor of U.S. TNCs, as well as the rivalry over such prizes as the oil riches of the Caspian Sea basin and access to the markets and resources of Eastern Europe.
The U.S. has warned openly that it will not tolerate a purely European military alliance to take the place of NATO. The military might of the U.S. must prevail.
This was clearly spelled out in “The Defense Planning Guide,” which said, among other things: “We must account sufficiently for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order…. We must [deter] potential competitors from even aspiring to a larger regional or global role…. We must seek to prevent the emergence of European-only security arrangements which would undermine NATO.”
Nevertheless, on the very day that Yugoslavia adhered to the G-8 agreement, the leaders of 15 European countries announced the European Union would establish an independent military force.
Commerce up the Danube was completely disrupted by the bombing of bridges in Novi Sad which infuriated Europeans whose economies continue to be adversely affected. It was perceived as a manifestation of the intensifying economic rivalry between the U.S. and Europe.
Indeed, two world wars were fueled by such competition.
At the same time, rivalry is tempered increasingly by the corporate imperative to survive at all costs and to make maximum profits, including through mergers and partnerships. Lockheed Martin, maker of missiles and high-tech weaponry, has created Lockheed Martin UK Limited, based in London. Its largest U.K. operation is the Royal Navy Merlin helicopter program, among many other military programs. In fact, Lockheed Martin has more than 200 international partnerships around the world
U.S. aerospace companies are determined not to be locked out of the lucrative profits to be had from the establishment of a separate European military alliance. This pressure has led to a shift in policy by the Pentagon. Mergers between U.S. and European defense contractors are being given the go-ahead. “U.S. Undersecretary of Defense Jacques Gansler has admitted being in talks not only with European governments such as the U.K., Germany, France, and Italy but also with leading defense companies including British Aerospace, France’s Aerospatiale Matra SA and Germany’s Dasa.”
THE NEW NATO
The giant corporations especially the military-industrial corporations-have been pushing vigorously for expanding and extending the role of NATO. Their blatant salivating over potential profits was indisputable during NATO’s 50th Anniversary celebrations which became “the ultimate marketing opportunity” as described in the Washington Post. The host committee included the chief executives of Amentech, Daimler/Chrysler, Boeing, Ford Motor, General Motors, Honeywell, Lucent Technologies, Motorola, Nextel, SBC Communications, TRW and United Technologies. These companies sell weapons but also other products. They have been busy lobbying for the expansion of NATO to avail themselves of the lucrative markets in Eastern European nations which have been pressed to join NATO. In order to be a part of the Alliance these nations must spend billions to upgrade their military forces.
The Ukraine, part of the NATO-sponsored Partnership for Peace, held joint naval exercises with the United States in July Perceiving this as a threat, Russian Prime Minster Sergei Stepashin was quoted by Interfax Ukraine news agency as telling the officers and men of Russia’s Black Sea fleet to prepare for a naval exercise to imitate the military action in Yugoslavia during the Kosovo crisis.
The Ukraine, along with Georgia, Uzbekistan, Azerbaijan, and Moldova, are members of GUUAM, a bloc of “western-oriented” Commonwealth of Independent States (CIS) members. Moldova and Uzbekistan joined during the NATO anniversary summit in April, and a charter was established encompassing military cooperation within the group and with NATO. GUUAM members have opted out of the CIS Collective Security Treaty.
“The pendulum of Ukrainian foreign policy swung closest to the West on June 12, when Kiev briefly closed Ukrainian airspace to Russian aircraft trying to reinforce Russian troops at Slatina airbase in Kosovo…. Russia’s military commanders were furious. It was bad enough that NATO convinced ostensibly neutral Romania and Bulgaria to deny their airspace to Russian aircraft, but Ukraine was a step too far. Ukraine had to clarify its relationship with NATO and with Russia.”
Moreover, NATO has repeatedly deflected protest over its possession of nuclear armaments and its refusal to renounce first use of these weapons.
NATO, then, is projecting its new role as action “out of area” and intervening anywhere on the basis of “humanitarian concerns,” regardless of national sovereignty and international law. The purpose is to send a message to nations of the entire world that if they do not do the U.S. bidding, they too could be a victim of the kind of devastation unleashed upon Yugoslavia and Iraq. They too could be divided up, balkanized, turned into banana republics or emirates. Especially vulnerable are those countries involved over the oil riches of the Caspian Sea basin-Russia, Turkmenistan, Kazakhstan, Azerbaijan, and Georgia-and where there are already related conflicts including over Chechnya, Nagoro-Karabakh, Dagestan, and Abkhazia.
U.S.-LED GLOBAL MILITARY ALLIANCES
NATO expansion pertains to what Washington calls a “new strategic concept,” an expensive new program to have NATO, under U.S. Ieadership, become the key player globally This new blueprint for NATO not only sees it extending throughout Eastern and Baltic Europe, possibly taking in Russia itself, it goes considerably beyond this, as indicated by Zbigniew Brzezinski in his new book, The Grand Chessboard. He defines the alliance as part of an “integrated, comprehensive and long-term geostrategy for all of Eurasia,” in which NATO would eventually reach Asia, where another U.S.-led military alliance would connect Pacific and Southeast Asian states.
The unfolding events in Indonesia and East Timor appear to be closely related to plans for establishing a U.S.-controlled NATO-type military alliance in that region to counter a purely Asian military association.
Steps are well under way for new relations with Southeast Asia in which the U.S. is acquiring access to military bases in Asian countries in exchange for financial help to buy U.S. arms. The Pentagon’s East Asian Strategy Report defines this program as offering the United States “a credible power projection capability in the region and beyond.”
Dr. Joseph Gerson succinctly describes the developing situation in Asia and the Pacific:
“In the Asia-Pacific region, the U.S. is enforcing its 21st century “Open Door” policy by means of the IMF, the World Bank, APEC, bases and forward deployments, the Seventh Fleet and its nuclear arsenal; as it seeks to simultaneously contain and engage China, to dominate the sea lanes and straits through which the region’s trade and supplies of oil must travel (the “jugular vein” of Asia Pacific economies), and to “cap” Japanese militarism and nationalism.
Since 1951, the hub of this strategic architecture has been the Mutual Security Treaty with Japan (MST). During the Clinton years, the MST has been “redefined” to reconsolidate U.S., and to a lesser extent, Japanese power.”
A “U.S.-Japan Joint Declaration on Security Alliance for the 21st Century” proclaimed at the April 1996 Summit between President Clinton and Japanese Prime Minister Hashimoto, cited “the alliances, new enemies and public rationales: tensions and instability on the Korean Peninsula, China’s nuclear arsenal, and territorial disputes with China.”
The regular gigantic war games conducted in the Korean region by the U.S. and South Korea have been stepped up substantially in the recent period.
Echoing the Gulf of Tonkin provocation used to justify U.S. intervention in Vietnam, South Korean warships sank a North Korean boat and badly damaged another allegedly over a dispute about a crab-fishing area of the Yellow Sea.
Plans for U.S. deployment of Theater Missile Defenses (TMDs) around China, sensationalized and unproven allegations of Chinese nuclear spying, claims of Chinese nuclear panty with the U.S., the blocking of China’s entry to the WTO, the bombing of the Chinese embassy in Belgrade, and recent independence moves by Taiwan encouraged by U.S. Congress members, place the world on the brink of a U.S.-orchestrated confrontation with China. Taiwan is “the most likely trigger for U.S.-Chinese nuclear confrontation and war,” according to Gerson.
With the bombing of Yugoslavia barely over and with continuing and escalating air strikes against Iraq, the U.S. appears to be moving rapidly toward such a confrontation with China over Taiwan. In mid-July, Taiwan’s President, Lee Teng-hui, announced the island wants “special state-to-state relations” with China, meaning a rejection of the “one China” policy that has kept the peace for many years. This led Chinese President Jiang Zemin to tell President Clinton, July 18, that China would not rule out using force regarding Taiwan.
Washington is regaining even greater access to ports and bases throughout the Philippines under the “Visiting Forces Agreement.” Considerable attention is also being focused on Indonesia, to prevent the U.S. Ioss of access to its natural resources and markets, and its control of the strategically important shipping lanes. Recent events in Indonesia and East Timor will undoubtedly be used as strong leverage for the establishment of a NATO-type military alliance in that region with the U.S. in control.
Nothing could describe U.S. military goals better than the British American Security Information Council’s recently published partially declassified text of the U.S. Strategic Command’s 1995 “Essentials of Post-Cold War Deterrence”:
” [T]he United States should have available the full range of responses, conventional weapons, special operations, and nuclear weapons. Unlike chemical or biological weapons, the extreme destruction from a nuclear explosion is immediate, with few if any palliatives to reduce its effect. Although we are not likely to use nuclear weapons in less than matters of the greatest national importance…. Nuclear weapons always cast a shadow over any crisis or conflict in which the U.S. is engaged. Thus, deterrence through the threat of use of nuclear weapons will continue to be our top military strategy…That the U.S. may become irrational and vindictive if its vital interests are attacked should be a part of the national persona we project to all adversaries….
The Americas are not to escape this buildup of U.S.-controlled military alliances. The U.S. Army War College has urged a “NAFTA for the military,” with joint command between Canada, Mexico, and the U.S.”
CALL TO RESIST
Resistance to war, to the corporate globalization offensive, and to their manifestations at home, is needed today more than ever in history, as events move at astounding speed. Such a movement is bound to grow every day
Multitudes of the world’s poor and working people are resisting in rapidly growing numbers. In the process they are coming to understand the commonality of interests they share with all those victimized by the corporations and the policies of the U.S. and other governments the U.S. sword and dollar marching hand in glove-in the brutal, relentless drive for ever-higher profits. Nothing is more important than to quicken the pace and strengthen the unity to resist this imperialist onslaught toward global corporate rule.

An interview with Noam Chomsky in which he exposes the hypocrisy behind the “humanitarian” bombing of Yugoslavia and outlines its real causes.

NOAM CHOMSKY, world-renowned linguist, political analyst, philosopher and activist, has been called “arguably the most important intellectual alive” by the New York Times. Recently, in a British magazine poll, he has been voted by a landslide as the top public intellectual in the world today. According to the Arts and Humanities Citation Index, between 1980 and 1992 Chomsky was cited as a source more often than any other living scholar, and remains the eighth most cited scholar ever. A professor at MIT, he is the author of more than 80 books, including The New Military Humanism: Lessons From Kosovo. His most recent book is Failed States: The Abuse of Power and the Assault on Democracy.

Danilo Mandic: Professor Noam Chomsky, in your, if I am not mistaken, first TV media appearance for Serbian media, thank you very much for being with us.
Noam Chomsky: I am glad to be with you.

[b] Last month marked the seventh anniversary of the beginning of the bombing of Yugoslavia. Why did NATO wage that war or I should say why did the United States wage that war?

[/b] Actually, we have for the first time a very authoratative comment on that from the highest level of Clinton administration, which is something that one could have surmised before, but now it is asserted. This is from Strobe Talbott who was in charge of the…he ran the Pentagon/State Department intelligence Joint Committee on the diplomacy during the whole affair including the bombing, so that’s very top of Clinton administration; he just wrote the forward to a book by his Director of Communications, John Norris, and in the forward he says if you really want to understand what the thinking was of the top of Clinton administration this is the book you should read and take a look on John Norris’s book and what he says is that the real purpose of the war had nothing to do with concern for Kosovar Albanians. It was because Serbia was not carrying out the required social and economic reforms, meaning it was the last corner of Europe which had not subordinated itself to the US-run neoliberal programs, so therefore it had to be eliminated. That’s from the highest level.

Again, we could have guessed it, but I’ve never seen it said before. That it wasn’t because of the Kosovo Albanians, that we know. And this is a point of religious fanaticism that the West can’t talk about for interesting reasons having to do with Western culture, but there is just overwhelming documentation, impeccable documentation. Two big compilations of the State Department trying to justify the war, the OSCE records, NATO records, KIM Monitor records, long British Parliamentary inquiry which led into it. They all showed the same thing – and sort of what we knew, I mean it was an ugly place, there were atrocities there.

Given this clear documentary record I want to ask you about the elite Intellectual opinion, what you call…

In the United States.

…in the United States and in the West in general, because reviewing it you would get the impression – you would be forgiven for imagining that every critic of the NATO intervention was one of two things: either a “Milosevic sympathizer” or someone who doesn’t care about genocide. What does this mean?

First of all that’s a common feature of intellectual culture. One good U.S. critic, Harold Rosenberg once described intellectuals as the “herd of independent minds.” They think they are very independent but they are a stampede in a herd, which is true; when there is a party line, you have to adhere to it and the party line is systematic. The party line is subordination to state power and to state violence. Now you are allowed to criticize it but on a very narrow grounds. You can criticize it because it is not working or for some mistake or benign intentions that went astray or something, like you see right now in Iraq war, the tone of debate about Iraq war but take a look at it – it’s very similar to the debate in PRAVDA during the invasion of Afghanistan. Actually I brought this up to a Polish reporter recently and I asked him if he had been reading PRAVDA. He just laughed and said yeah it’s the same. Now you read PRAVDA in the nineteen eighties, it’s you know: “the travail of the Russian soldiers that are going to get killed and now there are these terrorists who prevent us from bringing justice and peace to the Afghans, we of course did not invade them, we intervened and helped them at the request of the legitimate government, the terrorists are preventing us from doing all good the things we wanted to do etc.” I have read Japanese counter-insurgency documents from the second WW, from the ninety thirties – the same, you know: “…we tried to bring them an earthly paradise, but the Chinese bandits are preventing it …” in fact I don’t know of any exception in history. If you want, British imperialism is the same, I mean even people of the highest moral integrity like John Stewart Mill were talking about, well we have to intervene in India and conquer India because the barbarians can’t control themselves, there are atrocities, we are to bring them the benefits of the British rule and civilization and so on.

Now in the United States it’s the same. Now take bombing of Kosovo; that was an incredibly important event for American intellectuals and the reason it had to do it all was for what was going on during nineties. And the nineties are for the West, not just the U.S. and France and England were the worst – probably the low point in intellectual history for the West, I think. I mean it was like a comic strip mimicking a satire of Stalinism, literally. You take a look at the New York Times or read the French press, the British press, there was all full of talk about how there is a “normative revolution” that has swept through the West, for the first time in history, a state namely the United States, “the leader of the free world” is acting from “pure altruism”, …Clinton’s policy has entered into a “noble phase,” with a “saintly glow” on and on, I am quoting from the liberals.

Now, this particular humanitarian charade was…

That’s pre Kosovo.

Right. And it was specific in a sense because it was based on the claim that it was preventing genocide.

Now this is, see there are no examples yet.

Let me just read something that you said in an interview around the time of the bombing. You said that “the term “genocide” as applied to Kosovo is an insult to the victims of Hitler. In fact, it’s revisionist to an extreme.” What did you mean by that?

First of all let me just fix the timing. The things I’ve been quoting are from the late nineties.

Before Kosovo.

Yeah. Now, they needed some event to justify this massive self-adulation, OK? Along came Kosovo fortunately and so now they had to stop genocide. What was the genocide in Kosovo? We know from the Western documentation what it was. In the year prior to the bombing, according to Western sources about two thousand people were killed, the killings were distributed, a lot of them were coming in fact according to British government, which was the most hawkish element of the Alliance, up until January 1999 a majority of killings came from the KLA guerillas who were coming in as they said, you know, to try to incite a harsh Serbian response, which they got, in order to appeal to Western humanitarians to bomb. We know from the Western records that nothing changed between January and March, in fact up until March 20 they indicate nothing. March 20th they indicate an increase in KLA attacks. But, it was ugly but by international standards it was almost invisible unfortunately and it was very distributed. If the British are correct, the majority was coming from the KLA guerillas.

And as it later turned out the KLA was also receiving financial and military support.

They were being supported by CIA in those months. And to call that genocide, is really to insult the victims of the holocaust, you know, if that’s genocide than the whole world is covered with genocide.

In fact it’s kind of striking; right at the same time the Western intellectuals were praising themselves for their magnificent humanitarianism, much worse atrocities were going on right across the border, in Turkey. That’s inside NATO, not at the borders of NATO… “how can we allow this on the borders of NATO,”… but how about inside NATO where Turkey was carrying, had driven probably several million Kurds out of their homes, destroyed about 3500 villages laid waste the whole place, every conceivable form of torture and massacre you can imagine, killed nobody knows how many people, we don’t count our victims, tens of thousands of people, how they were able to do that? The reason is because they were getting 80% of their arms from Clinton and as the atrocities increased, the arms flow increased. In fact in one single year, 1997, Clinton sent more arms to Turkey than the entire Cold War period combined! Up until the counter-insurgency.

That was not reported in the West. You do not report your own crimes, that’s critical. And right in the midst of all of this, “how can we tolerate a couple of thousand people being killed in Kosovo, mixed guerillas and …” In fact the 50th Anniversary of NATO took place right in the middle of all of this. And there were lamentations about what was going on right across NATO’s border. Not a word about the much worse things going on inside NATO’s borders, thanks to the massive flow of arms from the United States. Now that’s only one case. Comparable things were going on all over where the U.S. were supportive of much worse, but this, you had to focus on this, that was the topic for “the herd of independent minds.” It played a crucial role in their self image because they had been going through a period of praising themselves for their magnificence in their “normative revolution” and their “noble phase” and so on and so forth, so it was a god-sent, and therefore you couldn’t ask any questions about it. Incidentally the same happened in the earlier phase of the Balkan wars. It was awful, and so on and so forth. However, but if you look at the coverage, for example there was one famous incident which has completely reshaped the Western opinion and that was the photograph of the thin man behind the barb-wire.

A fraudulent photograph, as it turned out.

You remember. The thin men behind the barb-wire so that was Auschwitz and ‘we can’t have Auschwitz again.’ The intellectuals went crazy and the French were posturing on television and the usual antics. Well, you know, it was investigated and carefully investigated. In fact it was investigated by the leading Western specialist on the topic, Philip Knightly, who is a highly respected media analyst and his specialty is photo journalism, probably the most famous Western and most respected Western analyst in this. He did a detailed analysis of it. And he determined that it was probably the reporters who were behind the barb-wire, and the place was ugly, but it was a refugee camp, I mean, people could leave if they wanted and, near the thin man was a fat man and so on, well and there was one tiny newspaper in England, probably three people, called LM which ran a critique of this, and the British (who haven’t a slightest concept of freedom of speech, that is a total fraud)…a major corporation, ITN, a big media corporation had publicized this, so the corporation sued the tiny newspaper for lible. Now the British libel laws were absolutely atrocious. The person accused has to prove that the, what he’s reporting is not done in malice and he can’t prove that. So and in fact when you have a huge corporation with batteries of lawyers and so on, carrying out a suit against the three people in the office, who probably don’t have the pocket-money, it’s obvious what is going to happen. Especially under these grotesque libel laws.

So yes, they were able to prove the little newspaper…and couldn’t prove it wasn’t done out of malice, they were put out of business. There was just euphoria in the left liberal British press. You’ve read The Guardian and The Observer, they thought it was wonderful.

Mentioning The Guardian, what you describe is…

Sorry, incidentally…, after they put the newspaper out of business under this utterly grotesque legal case of the British laws, the left liberal newspapers, like The Guardian were just in a state of euphoria about this wonderful achievement. They had managed to destroy a tiny newspaper because it questioned some image that they had presented and they were very proud of themselves for it, which was probably misunderstood or misinterpreted.

Well, Philip Knightly, he wrote a very harsh critique of the British media for behaving in this way, and tried to teach them an elementary lesson about freedom of speech. He also added that probably the photograph was misinterpreted. Couldn’t get published. Well, you know, that’s when Kosovo came along, it was the same thing. That you can not tell the truth about it, look I’ve gone through a ton of reporting on this, almost invariably they inverted the chronology. There were atrocities…

But after the bombing.

After the bombing. The way it’s presented is: the atrocities took place and then we had to bomb to prevent genocide, just inverted.

Let me ask you about the conduct of the actual war. You mentioned The Guardian, it’s interesting because you yourself had recently had an unpleasant experience…

Over this.

… when The Guardian misquoting you over Srebrenica. It misquoted you to make it appear as if you were questioning the Srebrenica massacre. But let me bring you back to the conduct of the actual war. That was another…

… the 1999 bombing.

The bombing, which was also overlooked or selectively covered by the Western media in general. Now, Amnesty International, among others, reported that “NATO committed serious violations of the rules of war during its campaign”, numerous human rights groups concur and document various war crimes. One of them had its anniversary two days ago, when the Radio Television Serbia was bombed, the national television, its headquarters, killing 16 people. First of all, why were these crimes completely unreported, and secondly, is there any prospects for there being any responsibility taken for these crimes?

I’d say the crimes were reported but they were cheered. It’s not that they were unknown, like the bombing of the radio station, yes, it was reported and the TV station, but it’s fine. Because the TV station was described as a propaganda outlet, so therefore it was right to bomb. That happens all the time. It just happened last year, in November 2004. One of the worst war crimes in Iraq…

Al Jazeera …

… was invasion of Falluja. Al Jazeera’s one thing, but there was worse. The invasion of Falluja was kind of similar to Srebrenica, if you look, but … They invaded Falluja; the first thing the invading troops did, U.S. troops, was to take over the general hospital and throw the patients on the floor, they were taken out their beds, put on the floor, hands tied on their backs, doctors thrown on the floor, hands on their backs, it was a picture of it in the front page of the The New York Times, they said it was wonderful.

The Geneva Convention forbids hospitals to be…

It’s a grave breach of the Geneva Conventions and George Bush should be facing the death penalty for that, even under the U.S. law. But it was presented, no mention of the Geneva Conventions, and it was presented as a wonderful thing, because the Falluja general hospital was a “propaganda center,” namely it was releasing casualty figures, so therefore it was correct to carry out a massive war crime.

Well, the bombing of the TV station was presented the same way. In fact, as I’m sure you recall, there was an offer from NATO that they would not bomb if they agreed to broadcast six hours of NATO propaganda. Well, this is considered quite right.

How can it be dealt with?

A group of international lawyers did appeal to the International Tribunal on the Yugoslavia. They presented a brief, saying they should look into NATO war crimes, but what they cited was reports from Human Rights Watch, Amnesty International and admissions by the NATO command. That was what they presented, the…I am forgetting, but I think it was Karla Del Ponte at the time; she would not look at it, in violation of the laws of the Tribunal, because she “had faith in NATO.” And that was the answer.

Well, something else interesting happened after that: Yugoslavia did bring the case to the War Court…

Which also rejected the case.

The Court accepted it and in fact deliberated for a couple of years it may still be, but what is interesting is that the U.S. excused itself from the case and the Court accepted the excuse. Why?

Because Yugoslavia had mentioned the Genocide Convention and the U.S. did sign the Genocide Convention (after forty years), it ratified it, but it ratified it with reservation, saying “inapplicable to the United States”. So in other words, the United States is entitled to commit genocide, therefore and that was the case that the U.S. Justice Department of President Clinton’s brought to the World Court and the Court had to agree. If a country does not accept World Court jurisdiction, it has to be excluded, so the U.S. was excluded from the trial, on the grounds that it grants itself the right to commit genocide. Do you think this was reported here?

The World Court, though, excused itself from hearing the case trying the illegality of the war, on the grounds that Yugoslavia was not a full member of the United Nations at the time when the case was brought to the…

Maybe they’ve finally reached that…

…they finally did that…

…for several years they were deliberating but that’s the sequence, does any of this get reported? You can ask your friends at Princeton, ask the faculty. They don’t know. I mean these… any more than… they will know that, they sort of probably remember the bombing, the capture of the General Hospital in Falluja but, was there any comment saying that was a war crime?

What struck me was that you compared the Srebrenica massacre with the Falluja invasion, why is that?

Because there are similarities.

Like what?

In the case of Srebrenica women and children were trucked out and then came, you know, the massacre. In the case of Falluja, the women and children were ordered out, they weren’t trucked out, they were ordered out, but the men weren’t allowed to leave and then came the attack. In fact, it turned out that the roads out were blocked.

Well, I mean all things, it’s not the same story, but that part is similar. I actually mentioned that a couple of times. Storms of protest hysteria, you know. Incidentally this Guardian affair – part of it which was totally fraud is on the part of the editors, not the reporter. They blamed it on the reporter, but it was the editors.

One other thing that they were infuriated about was that she asked me what about the thin man behind the barb-wire, isn’t that a horrible atrocity? I said well, you know, it’s not certain that it was correct. OK, that led to the hysteria. That’s when Philip Knightly tried to intervene to present once again his analysis and once again his critique of the media, but couldn’t. He is a very prominent, prestigious person. You just cannot break ranks; that’s not tolerated. I mean, we are lucky, we do not have censorship, it’s free society, but the self-censorship is overwhelming. Actually, Orwell once wrote about this, in something that nobody has read. Everyone has read Animal Farm and almost nobody has read the introduction to Animal Farm…

Unpublished.

Unpublished, came out in his unpublished papers, thirty years later. In it what he said is, Animal Farm is a satire of this totalitarian state, he said free England is not very different. In free England unpopular ideas can be suppressed without the use of force and he gave examples. It’s very similar here. And it does not matter how extreme they are, I mean the Iraq invasion is a perfect example.

There is not, you can not find anywhere in the main stream a suggestion that it is wrongful to invade another country. If you had invaded another country you have to pay reparations, you have to withdraw and the leadership has to be punished. I mean, and I don’t know if you have read the Nuremburg Judgments, but after the Nuremburg Judgments, Justice Jackson, Chief of Council of Prosecution of the U.S. Justice, made very, very eloquent statements about how we must…we are sentencing these people to death of the crimes for which they committed or crimes when anybody commits them, including when we commit them, we have to live up to that. He said “we are handing the defendants a poison chalice, and if we sipped from this chalice we must be treated the same way.” Can’t be more explicit!

They also defined aggression. Aggression was defined in terms which just apply absolutely and without exception not only to the invasion of Iraq but to all sorts of other invasions, in Vietnam and many others, actually even terrorist war against Nicaragua, technically falls under the crime of aggression as defined in Nuremburg.

Does the NATO bombing of Yugoslavia?

Yes. And that’s not even questioned. In fact there is a, there was a so-called, an Independent Commission of Inquiry on the Kosovo bombing led by a very respected South African jurist – Justice Goldstone – and they concluded that the bombing was, in their words, “illegal but legitimate”. Illegal makes it a war crime. But they said it was legitimate because it was necessary to stop genocide. And then comes the usual inversion of the history.

Actually, Justice Goldstone who was a respectable person, later recognized that the atrocities came after the bombing. And that they were furthermore the anticipated consequence, he did recognize that in a lecture in New York, couple of years ago, he said: “well, nevertheless we can take some comfort in the fact that Serbia was planning it anyway, and the proof for they were planning it is” guess what – “Operation Horse-Shoe”, – a probable intelligence fabrication that was publicized after the bombing, so even if it was true, it wouldn’t matter. And furthermore, even if that was true, it was a contingency plan. Now look, Israel has a contingency plans to drive all the Palestinians out of the West Bank if there is a conflict, so does that mean that Iran has the right to bomb Israel? Now, the U.S. has contingency plans to invade Canada, OK so does that mean that everybody has a right to bomb the United States?

That’s the last straw of justification on the part of a respectable person. But for the “herd of independent minds” it just does not matter. The bombing was because of their “high values”, and their “nobility” and was to stop genocide. Say anything else, you know… tons of vilification and abuse comes. But it’s not just on this issue, it’s on every issue. So try to bring up the idea…take, say, the Vietnam War, a lot of time has passed, a huge amount of scholarship, tons of documentation, blew up the country…

Let me just interrupt, I’m sorry, we won’t have time to go into that…

OK.

I want to ask you about some of the present developments that are being used again to fabricate a lot of these issues. Slobodan Milosevic died last month. What is the significance of his death in your view?

Milosevic was, he committed many crimes, not a nice person, terrible person, but the charges against him would have never have held up. He was originally indicted on the Kosovo charges. The indictment was issued right in the middle of bombing which already nullifies it. It used British, it admittedly used British and the U.S. intelligence right in the middle of bombing, can’t possibly take it seriously. However if you look at the indictment, it was for crimes committed after the bombing. There was one exception: Racak. Let’s even grant that the claims are true, let’s put that aside. So, there was one exception, no evidence that he was involved or you know, it took place,

But almost the entire indictment was for after the bombing. How are those charges going to stand up unless you put Bill Clinton and Tony Blair on the dock alongside? Then they realized that it was a weak case. So they added the early Balkan wars, OK? Lot of horrible things happened there. But the worst crime, the one that they were really going to charge him for that genocide was Srebrenica.

Now, there is a little problem with that: namely there was an extensive, detailed inquiry into it by the Dutch Government, which was the responsible government, there were Dutch forces there, that’s a big, you know, hundreds of pages inquiry, and their conclusion is that Milosevic did not know anything about that, and that when it was discovered in Belgrade, they were horrified. Well, suppose that had entered into the testimony?

Does this mean that you are a “Milosevic sympathizer”?

No, he was terrible. In fact he should have been thrown out, in fact he probably would have been thrown out and in the early nineties if the Albanians had voted, it was pretty close. He did all sorts of terrible things but it wasn’t a totalitarian state, I mean, there were elections, there was the opposition, a lot of rotten things, but there are rotten things everywhere and I certainly wouldn’t want to have dinner with him or talk to him, and yes, he deserves to be tried for crimes, but this trial was never going to hold up, if it was even semi-honest. It was a farce; in fact they were lucky that he died.

In what sense?

Because they did not have to go through out the whole trial. Now they can, you can build up an image about how he would have been convicted as another Hitler.

Had he lived.

But now they don’t have to do it.

I just want to bring you back to the bombing of the RTS. Some have argued that this particular act of NATO’s in 1999 set precedants for targeting of media by the United States afterward – in the wars in Afghanistan and Iraq – that it set a precedant for legitimizing media houses and labeling them as propaganda in order to bomb them in U.S. invasions. Do you make any connection there?

Well, I mean, the chronology is correct. But I don’t think they need excuses. The point is: you bomb anybody you want to. Let’s take 1998, so it was before. Now in 1998, here’s another thing you’re not allowed to say in the States and the West that leads to hysteria, but I’ll say it – in 1998 Clinton bombed the major pharmaceutical plant in the Sudan, OK? That was, this is the plant that’s using the most of the pharmaceuticals and veterinary medicines for poor African country that’s under embargo, can’t replace it. What’s that going to do? Obviously they killed unknown numbers of people, in fact the U.S. barred an investigation by the UN so we don’t know and of course you don’t want to investigate your own crimes, but there were some evidence. So the German Ambassador, who is a fellow at the Harvard University to Sudan wrote an article in Harvard International Review in which he estimated the casualties in the tens of thousands of deaths. The research of the Head of the Near East Foundation, a very respectable foundation, their regional director had field work in Somalia and in Sudan, he did the study, he came out with the same conclusions, probably tens of thousands of dead.

Right after the bombing, within weeks, Human Rights Watch issued a warning that it was going to be a humanitarian catastrophe and gave examples of aid workers being pulled out from areas where people were dying and so on. You can not mention this. Any mention of this brings the same hysteria, as criticizing the bombing of the TV station. So it’s unmentionable, it is a Western crime and therefore it was legitimate.

Let’s just suppose that Al Quaida blew up half the pharmaceutical supplies in the U.S., or England or Israel or any country in which people lived. Human beings, not ants, people. Fine. Can you imagine the reaction, we’d probably have a nuclear war, but when we do it to a poor African country – didn’t happen! Not discussed, in fact the only issue that is discussed if there is discussion is whether the intelligence was correct when it claimed that it was also producing chemical weapons. That is the only question. Mention anything else, the usual hysteria, and tirades…This is a very disciplined, Western intellectual culture is extremely disciplined. And rigid. You can not go beyond fixed bounds. It’s not, you know, it’s not censored, it’s all voluntary but it’s true and it’s not, incidentally, not free societies like this. In fact the third world countries are different.

So take, say, Turkey, half third world; I mean in Turkey, the intellectuals, the leading intellectuals, now best known writers, academics, journalists, artists I mean they not only protest atrocities about the Kurdish massacre, they protest it constantly, but they were also constant in carrying out civil disobedience against them. I also participated with them sometimes. And they go publish banned writings which reported presented them to the Prosecutor’s Office, demand they were prosecuted. It’s not a joke, you know, facing… sometimes they are sent to prison, that’s no joke. There’s nothing like that in the West. Inconceivable.

When I am in Western Europe I hear them telling me Turkey is not civilized enough to enter the European Union. I burst out laughing! It’s the other way round.

Speaking of democratic movements, there was a…

[crew]: This is the last question.

[b] OK, two more quick questions; one: you mentioned the democratic movements in various countries. There was of course a promising democratic movement in Serbia before and, of course, during the bombing. And people like Wesley Clark had claimed that this bombing would be of benefit to the anti-Milosevic forces, when it of course turned out to be a disaster. Was this a sincere evaluation on behalf of NATO?

Well, I can’t look into their minds. When you commit a crime it is extremely easy to find a justification for it. That’s true of personal life; it’s true of international affairs. So yes, maybe they believed it. I mean, I think there’s convincing evidence that the Japanese fascists believed that they were doing good when they carried out things in the Second World War. John Stewart Mill surely believed he was being honorable and noble when he was calling for the conquest of India right after some of the worst atrocities which I mentioned, you can easily believe you are noble. I mean, to me it’s obvious that it was going to harm the democratic movement, I heard about it and I couldn’t get much information but it was obvious that it was going to happen. I mean it is happening right now in Iran. There is a democratic movement in Iran, they are pleading with the United States not to maintain a harsh embargo, certainly not to attack, it is harming them, and it strengthens the most reactionary violent elements in the society, of course.

Let me ask you one final question about the future. Negotiations over Kosovo’s final status are under way right now, the United States is backing Agim Ceku, who was someone involved in ethnic cleansing not only in…

Not someone. He was a war criminal himself. What about the Krajina expulsion, which he was….

First of all, what do you see as an appropriate, realistic solution for the final status of Kosovo and how does that differ from what the United States is now promoting?

My feeling has been for a long time that the only realistic solution is one that in fact was offered by the President of Serbia I think back round 1993 [Chomsky is referring to the proposal of former Serbian President of Yugoslavia, Dobrica Cosic], namely some kind of partition, with the Serbian, by now very few Serbs left but the, what were the Serbian areas being part of Serbia and the rest be what they called “independent” which means it’ll join Albania. I just don’t see…I didn’t see any other feasible solution ten years ago.

Shall we wrap up? Professor Chomsky, thank you very much. [read more]

 

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BP’s Secret Caspian Sea Blowout Foreshadowed The Gulf Oil Spill

 

BP, government leaders, and other oil executives covered up a secret blowout in the Caspian Sea two years before the Gulf spill caused by the same reason.

BBC investigative reporter and Guardian reporter Greg Palast reveals shocking details about a secret blowout that BP covered up which occurred on the Central Azeri platform of the coast of Azerbaijan in the Caspian Sea two years prior to the Deepwater Horizon Blowout.

Greg reveals how he was contacted by a source and then flew to Azerbaijan to document BP’s cover up of the blowout which was caused by a blowout in the cement used when drilling the well, just like during the BP Gulf Oil Spill.

Greg learned that the Caspian blowout was die to the use of a quick drying cement that is highly prone to failure when exposed to gases, such as methane, during the drilling process.

For that reason, following the Caspian Sea blowout, the use of the quick drying cement should have been discontinued in the use of deep-sea drilling operations.

Yet BP continued to recklessly use it anyway for the sake of being able to increase profits and cut costs by drilling wells faster.

Two years later when the Deepwater Horizon Blowout occurred BP played dumb and pointed fingers at Halliburton for the cement job failure even going as far as testifying under oath before Congress they didn’t know cement could fail.

Meanwhile, Halliburton who did the cement job for BP on the well, pointed fingers at BP saying as a contractor performing all work according to BP’s specifications they were not responsible.

These new revelations reveal that BP knew full well the cement would fail and the Caspian blowout taught them full well what the risks were the next time a well failed.

Adding insult to injury, the media ran repeated footage of BP and other Big Oil executive’s testifying before congress that the BP Gulf Oil Spill was unprecedented and nothing like this had ever happened in history.

Even more sickening, as documented by Wikileaks ambassador cables showed in the interview, is the entire time these psychopaths where lying to congress on national televisions, the U.S. government and other world leaders knew about the Azerbaijan blowout.

BP committed what is nothing less than reckless manslaughter if not outright second degree murder of 11 people when the rig exploded.

Congress and other oil executives help them to cover it and it was all to achieve nothing more than being able save money by drilling wells faster.

Meanwhile, the Gulf remains pollution with oil still washing up on shore as giant plumes float beneath the water’s surface and massive slicks continue to be spotted coming from the site site of the blowout

The BP Gulf Oil Spill Cover Up Continues! Watch the entire interview.

READ THE REST OF THE ARTICLE

 


The Mossadegh Case (Iran) & the Kashagan Case(Kazakhstan)


Where is the Oil? Where there is a WAR or a DEFAULT

INTRODUCTION

The appearance of new states in Central Asia and the Caucasus region at the collapse of the Soviet Union caused a radical shift in the foreign policy of Turkey, and triggered a search for means of tactical political-economic penetration into these countries.(1) Turkey’s efforts in this regard have been motivated by a desire to spread the Turkish model of government and society — consisting of parliamentary democracy, relatively free-market economy, and secularism in a Muslim society — as well as to take advantage of the mutual development opportunities that cooperation can create. For Turkey these opportunities include guaranteed access to vital energy resources, lucrative oil transport revenues, as well as increased diplomatic clout and strategic importance. For the new republics these opportunities include the prospect of attracting investment and technological expertise, as well as of establishing a secure route for distribution of their products to the West.

Azerbaijan, a Turkic-speaking former Soviet possession that shares borders with Russia, Georgia, Armenia, and Iran, has attracted the greatest interest on the part of Turkey among the newly independent states. The source of this interest is not only the linguistic, ethnic, religious and cultural affinity shared by Turkey and Azerbaijan, but also the tremendous oil reserves possessed by the tiny Caucasian state.

It is not difficult to understand why Turkey has oil on its mind. It has been estimated that to maintain the present course of its economic development, Turkey will require the importation of vast amounts of crude oil in the coming decades — roughly 22 million tons annually by the year 2010.(2) But as the Turkish president said recently: “We see this rich region of oil and gas reserves not just as a source of energy, but as an element of stability. Just as the founders of the European community saw coal as a source of peace and stability for Europe, so we see oil and gas in our region serving the same role.”(3) Turkey knows that forging trade and investment links with Azerbaijan and throughout the region will facilitate good relations and create an atmosphere of cooperation which may go a long way toward preventing petty squabbling and opportunistic land-grabs among the ethnically and religiously diverse states that occupy the Caucasus and Central Asia.

Yet since Azerbaijan gained its independence in the early 1990s and the first talk of developing its phenomenal oil reserves began, multiple controversies have arisen which have delayed implementation of various strategies for exploitation, and that have at least temporarily frustrated both Turkish and Azerbaijani ambitions. These controversies are by no means limited in their implications to Turkey and Azerbaijan, or even to the region as a whole. Rather, they have caught up dozens of players — both at the national level and below — which stand to benefit, or lose, from the successful exploitation of Azerbaijani deposits.

This study addresses these controversies, discusses the players involved in them, and offers some limited suggestions for their resolution. In doing so we focus on the perspective of Turkey and its stake in the outcome of these controversies. In the first part of Section II, we discuss the first of the major oil controversies, namely the dispute over the legal status of the Caspian and the alternative approaches to dividing its resources that follow from that status. In the second part of Section II, we discuss the debate over the location of the route or routes to transport Azerbaijani oil to the West, which represents the second major oil controversy. Next, in Section III, we analyze the strategic regional policies of the two powers that pose the greatest obstacle to a resolution of these controversies in a manner favorable to Turkey: Iran and Russia. This is followed in Section IV with a limited blueprint for the successful contribution of the United States to the achievement of Turkey’s oil-related ambitions. Finally, in Section V, we offer some concluding thoughts on these controversies and the policies of the powers that have a stake in them.

THE AZERBAIJANI OIL CONTROVERSIES

Lake Caspian?: The Debate Over How to Classify an Enormous Inland Waterbody

For the last three years, the five littoral states of the Caspian — Azerbaijan, Russia, Kazakhstan, Turkmenistan, and Iran — have been involved in a dispute over whether this body of water should be legally designated as a “lake” or a “sea.” This arcane debate stems from the dramatically divergent methods of dividing the Caspian’s resources that follow from the choice of term. The Caspian contains some of the largest deposits of oil and natural gas in the world, and so billions of dollars ride on the outcome.(4)

Under the 1982 United Nations Convention on the Law of the Sea,(5) (U.N. Convention) if a body of water is a “sea,” those countries which border on it have the right to claim as their own the waters closest to their shores, with exclusive rights of resource exploitation within those waters. Technically, coastal states are entitled to claim as their sovereign territory only those waters within 12 miles of their shores,(6) but they are allowed to exploit as their “exclusive economic zone” those waters within 200 miles from the edge of their territorial waters.(7) Therefore, under the “sea” designation, those states in closest geographical proximity to the largest oil deposits will reap the greatest economic rewards from the exploitation of the water body’s hydrocarbon deposits. However, unfortunately the U.N. Convention never defines the term “sea,” and so this agreement is of no help in determining the Caspian’s legal status.

If a body of water is not a “sea” and thus not regulated by the U.N. Convention, then by default it falls under the classification of a “lake.” While no international convention defines the term “lake” or establishes a rule for dividing such a body’s resources, precedent has established that those countries which border on a lake are to divide its resources equally between them, as has been done with the American Great Lakes on the U.S.-Canada border and with Lake Chad in Africa.(8)

The positions taken by each of the five littoral states of the Caspian over the water body’s legal status are predictable when one considers the geographical distribution of deposits beneath its waters. Azerbaijan and Kazakhstan both assert firmly that the Caspian is an inland sea, and it is these states which have the richest deposits within what would be their “exclusive economic zones” under the U.N. Convention.(9) Azerbaijan is the most vocal of the two, and has even written into the text of its Constitution the assertion that the waters off its shore are within its exclusive sovereignty.(10)

Russia, whose waters have perhaps the most meager deposits, has been the most outspoken in advocacy of the “lake” characterization. For example, Russia sent a document to the United Nations General Assembly entitled “The Position of the Russian Federation with Regard to the Status of the Caspian Sea,” in which it asserted that the U.N. Convention is inapplicable to the Caspian. Russia pointed out that the legal status of the water body was previously defined by treaties negotiated between the Soviet Union and Iran in 1921 and 1940, which cast it as a salt-water lake whose resources were to be divided communally.(11) Russia has demonstrated some willingness to compromise; at a regional conference in November 1996 Foreign Minister Yevgeny Primakov came forward with a settlement offer which would have allowed each littoral state exclusive economic rights within 72 kilometers (45 miles) of its shore, as well as in those hydrocarbon fields beyond where extraction had already gotten under way.(12) This was not considered seriously by Azerbaijan, as 45 miles of exclusive ownership is a far cry from the roughly 212 miles contemplated by the U.N. Convention.

Iran also adjoins an area of the Caspian with relatively meager mineral deposits, and not surprisingly its position is very close to that of Russia. Teheran supports the Russian suggestion that the U.N. Convention has no application, adding that all issues related to the Caspian’s exploitation should be settled by the five states which touch its shores, without any external interference.(13)

Turkmenistan has swung back and forth on this issue. Initially it supported the “sea” characterization, but at the end of 1996 it began to move toward the Russia-Iran camp. Yet early this year, Turkmenistan again switched back as Turkmen President Saparmurad Niyazov came forward with the assertion that two oil fields previously claimed by Azerbaijan, both among the richest deposits in the Caspian, lie in the Turkmen sector.(14) Again, we see the correlation between the extent of mineral deposits over which each country claims a territorial association, and the legal designation for the Caspian which it advocates.

The countries involved in this dispute are all convinced that the anticipated revenue from the exploitation of the Caspian’s mineral reserves will provide a significant boost to their economies and bring in much needed foreign currency. But due to its small size and relatively low level of economic development, perhaps the country that stands to gain or lose the most is Azerbaijan.

The Azerbaijani government has asserted that development of Caspian shelf deposits will turn around its lagging economy and allow it to alleviate the suffering caused by the ongoing conflict that began in the early 1990s with neighboring Armenia over the disputed Nagorno-Karabakh enclave. Doubtless Azerbaijan also hopes that the ownership of massive energy deposits will bring it into a position of greater strategic significance, thereby boosting its currently weak diplomatic bargaining power vis-?-vis energy-hungry states around the globe, including the U.S. and members of the European Union. The ideal outcome from the perspective of Azerbaijan would surely be to induce these countries to pressure Armenia into settling the Nagorno-Karabakh dispute in a manner favorable to Azerbaijan, ending the Armenian occupation of some 20% of its territory.(15)

The people of Azerbaijan simultaneously suffer from despair over the Armenian occupation of Nagorno-Karabakh and feel burgeoning confidence in the country’s future as a major oil producer.(16) The Azerbaijani government has vigorously set about trying to realize the country’s oil ambitions. Its first move was to begin negotiations through the State Oil Company of the Azerbaijani Republic (SOCAR) with a group of foreign oil companies in 1993, culminating in the signing of a deal on June 4, 1994 that has been widely dubbed the “Contract of the Century,” worth around $7.4 billion.(17)

Officially named the “Agreement on the Joint Development and Production Sharing for the Azeri and Chirag Fields and the Deep Water Portion of the Gunashli Field in the Azerbaijan Sector of the Caspian Sea,” the contract called for the establishment of a business entity known as the Azerbaijan International Operating Company (AIOC), whose purpose is to exploit some of the richest oil reserves over which Azerbaijan claims sovereignty. The shares of the AIOC consortium are currently divided between the SOCAR and foreign companies as designated in Table 1.

Table 1. The Oil Companies and Their Shares

Company
Nation Shares in AIOC (%)
BP UK 17.12
AMOCO USA 17.01
SOCAR AZERBAIJAN 10
LUKOIL RUSSIA 10

PENNZOIL
USA 9.8

UNOCAL
USA 9.52
STATOIL NORWAY 8.56
TPAO TURKEY 6.75
EXXON USA 5
MCDERMOTT USA 2.45
RAMCO UK 2.08
DELTA SAUDI ARABIA 1.68

Originally SOCAR was to have a 20% share, which would have given it a majority interest, but it subsequently transferred 5% of the total shares to TPAO state oil company from Turkey, and an additional 5% to Exxon when SOCAR proved unable to come up with the necessary capital.(18)

In addition to this monumental project, SOCAR has since signed a separate deal to extract and distribute the oil and gas of its Karabakh field, an agreement purportedly worth $1.7 billion over 25 years. Ownership of the Caspian International Petroleum Company (CIPC), an entity formed pursuant to this agreement, is divided as follows: 32.5% to LUKoil of Russia, 30% to Pennzoil, 30% to Italy’s Agip and 7.5% to SOCAR. CIPC began drilling in the Karabakh field on August 6, 1997, and has set a deadline to complete all prospecting in the field by February 1999. (19)

As a Russian expert has pointed out, the Azerbaijani policy with respect to its oil reserves has been “to move ahead on existing projects even before all of the outstanding issues, including those related to legal matters, are resolved.”(20)

Who Gets to be Middleman?: The Debate Over Alternative Routes for Oil Transport

Further development of Azerbaijani oil reserves will necessitate the establishment of adequate methods by which to transport the oil to consumers in Europe and beyond, and various alternatives are currently under consideration. From the perspective of Azerbaijan and the companies extracting the oil, the factors of principal importance in selecting the optimum route are of course cost, available financing, and security. But such business factors alone will not determine the outcome of the debate, as the economic, political, and environmental interests of the countries through which the oil would pass have largely come to eclipse such factors.(21)

Before it fully realized the politically-charged nature of the debate and the complexity of the factors to take into account, the AIOC consortium initially decided to transport its oil to Western markets via an existing pipeline to the Russian port of Novorossisk in Russia, then by tanker through the Black Sea and into the Mediterranean via Turkey’s Bosphorus Straights.(22) However, this proposal raised objections from Turkey due to the grave environmental threat posed by the increased shipping volume that this alternative would entail.(23)

Ankara intends to issue a tender for a Vessel Tracking System to facilitate safe passage through the Straits,(24) but no technology can completely eliminate the potential for a spill. 19 miles long and a mere 700 meters wide at its most narrow point, the Bosphorus is one of the most difficult waterways in the world to navigate, with tankers having to change their course at least 12 times due to abrupt shifts in topography.(25) According to Turkish figures, nearly 45,000 vessels pass through the Straits each year, and there are frequent accidents. The Bosphorus witnessed 167 large scale accidents in the decade between 1983 and 1993, with the average annual rate of accidents having increased 35% since 1988.(26)

The International Maritime Organization (IMO) warned in 1994 as follows: “Navigation through the Bosphorus straits… presents an increasing potential risk to shipping, safety, the environment and the well-being of the local community.”(27) The 1994 Nassia tanker accident is an unforgettable example of the threat that shipping poses to the 12 million residents living on both sides of the Bosphorus. In March 1994, the Greek Cypriot tanker Nassia collided with another ship, killing 30 seamen and spilling 20,000 tons of oil into the ocean. If this accident had occurred a few miles to the south, Istanbul itself would have faced a major urban disaster.(28)

The Convention of Montreux, adopted in 1936, still regulates the passage of cargo ships through the Bosphorus. It requires the Straits to be kept open to merchant ships of all nations, regardless of the nature of their cargoes. This agreement greatly restricts the ability of the Turkish government to adopt the regulations required to ensure safety of passage through the Bosphorus, but on July 1, 1994 Ankara did what it could under the circumstances. Turkey issued a new set of regulations designed to promote safer traffic, one key objective being the establishment of a traffic separation scheme to maintain safe distance between vessels.(29)

Russia and some other states that border on the Black Sea have complained that Turkey’s unilateral interference with shipping in the Straits is illegal(30) — despite the fact that “[f]reedom of passage [required by the Montreux Convention] does not mean uncontrolled passage,” as pointed out by the Turkish representative to the IMO.(31)

Following the Turkish government’s expression of hesitancy to allow the massive increase in shipping volume that would be involved if the Black Sea route for Azerbaijani oil were used exclusively, the AIOC began to contemplate various alternative routes. One such route would involve transport of oil from the Azerbaijani capital of Baku to the Turkish port of Ceyhan on the Mediterranean near the Syrian border.(32)

A few other options have also been put forward. The first of these is that of shipping oil from Azerbaijan to the Black Sea port of Poti in Georgia, then on to Odessa in Russia, where the oil would channel into the Druzhba pipeline that extends across Russia and the Ukraine and on to Europe.(33) Gunes Taner, the Turkish Minister of Economy, has proposed yet another alternative called the Novorossisk-Samsun route, which would involve shipping oil by tankers to Turkey’s Black Sea Samsun port and then transporting it south across the Anatolian Peninsula to Ceyhan via a pipeline that would have to be constructed in part. He argues that since there is already a pipeline from Kirikkale — a city in Central Turkey — to Ceyhan, the construction costs would be manageable.(34)

The options that have been the subject of the most serious consideration are the Baku-Ceyhan route, and either of the northern routes going through Russia, with Turkey and Russia each fervently advocating the route passing through their respective territories. Ankara supports the direct Baku-Ceyhan alternative because this route would protect the Bosphorus from the dangers of tanker shipping, still allow Turkey to reap the financial rewards of being a conduit for the oil, and would be more direct than the vertical trans-Anatolia alternatives. However, since Turkey has no border with Azerbaijan, for the direct Baku-Ceyhan route to be viable a stretch of connecting pipeline through a neighboring country would have to be constructed.

The shortest route from Azerbaijan to Turkey would be through Armenia. However, ongoing conflict between Armenia and Azerbaijan over Nagorno-Karabakh makes this option unrealistic for the near future for security reasons. The U.S. government objects to the transport of oil through Iranian territory pursuant to its general policy of limiting the international trade and investment prospects for the fundamentalist republic. This factor seriously diminishes the likelihood that this alternative will be chosen. Recently the White House announced that it would not oppose transportation of oil from Turkmenistan through Iran to Turkey,(35) which can be taken as an indication that the Iranian route through Azerbaijan is not out of the question after all. But until Washington actually gives the nod, its acquiescence cannot be counted on.

If U.S. resistance to the Iranian route remains strong, the only alternative for the transport of Azerbaijani oil into Turkey would be through Georgia, in a deviation from the Novorossisk-Samsun route proposed by Gunes Taner. Again, this route would take the oil from fields in Azerbaijan to Georgian ports, and from there by tanker to Turkish ports on the Black Sea, then by pipeline across Turkey to Ceyhan.(36) Another Georgian option is a route from Baku directly across Georgia, then down through Turkey to Ceyhan, thus bypassing the Black Sea altogether. The length of the pipeline from the Georgian border to Ceyhan would be about 1,900 kilometers, and the cost of construction of the pipeline would be an estimated $3 billion. The Turkish government has declared that it is ready to finance the entire cost of any pipeline that would pass through its territory.(37) Turkish President Suleyman Demirel and Georgian leader Eduard Shevardnadze expressed their joint support for a route through Georgia during a visit by Demirel to Tbilisi in November 1994.(38)

Ankara is quick to point out that Ceyhan can handle many times the capacity of the Russian port of Novorossisk. In addition, Ceyhan is open all seasons of the year due to the calm climate of the Mediterranean, whereas Black Sea ports are shut down in the winter by dangerous weather conditions.(39) As expressed by Ahat Andican, a state minister and an influential figure in shaping Turkish policy toward the Turkic republics of the former Soviet Union: “With new the oil field development project under discussion, the total output from the Caspian and Central Asia will eventually be 50 to 60 million tones a year, but the Baku-Novorossisk and Baku-Supsa routes have a combined capacity of 16 million tones [a year]. Therefore the Baku-Ceyhan pipeline is the most inevitable and stable option.”(40)

Some critics of the Baku-Ceyhan route have attempted to bring the Kurdish insurrection in Eastern Turkey to the forefront of the debate, portraying it as a potential threat to the security of the pipeline. Yet as we near the end of 1997, this argument seems to be losing its force, given that the Turkish army and security forces have had considerable recent success in suppressing Kurdish military activity.(41)

Turkey is far from alone in its advocacy for the Baku-Ceyhan route. The president of the AIOC, Terry Adams, has thrown his weight behind this proposal as well.(42) Jim Norosky, vice-president of the U.S. petroleum company Amoco (which holds a 17.01% stake in the AIOC), has also suggested that the Baku-Ceyhan route is preferable, despite the extra cost imposed by its greater length. Such extra cost, he suggests, should be offset by tax breaks or other measures on the part of the relevant authorities.(43) Turkey has also succeeded in gaining the support of Azerbaijani President Aliev, who has stated that he is in favor of giving priority to the direct Baku- Ceyhan alternative. He expressed this position during a visit to Turkey, and then later during a visit to the U.S.(44)

At this point the most significant obstacle that Turkey faces in its efforts to establish the Baku-Ceyhan pipeline is Russian opposition. Russia has a deep fear that if any route for transporting Azerbaijani oil bypasses Russian territory, Russia will not only lose a lucrative source of revenue, but will also experience the diminishing of its economic and political influence in this resource-rich region.(45) It is for this reason that the Turkish decision to restrict tanker passage on the Bosphorus was received so bitterly by Russia.

As part of their efforts to ensure that a northern route through Russia is selected by the AIOC consortium, foreign policy officials in Moscow have recently entered into a series of agreements. First, on July 11, 1997, Boris Nemstov, the Russian Deputy Prime Minister and Minister for Fuel and Energy, signed a five-point agreement with the heads of the Chechen and Azerbaijani state oil companies. The following day Russian and Chechen representatives signed an agreement setting out a plan to fix a war-damaged pipeline that crosses Chechen territory on its way to the Black Sea.(46) This was followed by a third agreement on September 9, 1997, also between Russia and the Chechen government, which provided that Russia would pay Chechnya 43 cents per ton of oil transported, plus a surcharge of $768,000; these terms are to apply for the first 200,000 tons transported.(47) It is apparently hoped by Russia that these agreements will ensure the viability of the first leg that would have to be followed by any of the possible northern routes — the journey from Azerbaijani oil fields to Russia.

Russia’s efforts in this regard will be in vain if the Chechens attempt to use the pipeline as a bargaining chip in future conflicts with Moscow and do not respect the letter of the agreements. As the Sevodnya daily newspaper in Russia quoted a Russian government source as saying: “For Chechnya, the pipeline is a political instrument, which is why it is impossible to resolve questions over the transit of Azeri oil separately from political, customs, border and other issues.”(48)

Due to this concern, the Russian government has threatened to build a bypass pipeline through Daghestan, an ethnic-majority state within the current borders of Russia, to the Black Sea port of Novorossisk.(49) But Russian oil companies have not been willing to commit to the investment for several reasons, including the factors discussed above that Novorossisk has such a limited capacity for conducting oil, and that weather conditions on the Black Sea result in it being closed to tanker shipping at least a third of the year.(50)

If a northern route for Azerbaijani oil were selected, the only alternative to the use of tanker transport to convey the oil from Novorossisk to Western ports would be the use of the antiquated, decrepit Druzhba pipeline network inherited from the Soviet Union. That this network is in a dangerous state of decay is illustrated by a rupture that occurred recently in Novorossisk, which resulted in the spilling of 386 tons of oil into the Black Sea.(51) As of yet Russia has not been able to obtain the financing necessary to address the network’s deficiencies, and it is doubtful that the will exists to come up with it in the foreseeable future. Accordingly, Russian efforts to resist alternative transport possibilities for Azerbaijani oil, if successful, could result in the indefinite postponement of the exploitation of the Caspian’s rich reserves.(52)

IRAN AND RUSSIA: STANDING BETWEEN TURKEY AND THE LIGHT

Iran: The Pragmatic Radical
Iran is one of the most prominent players in the first Azerbaijani oil controversy, and a principal obstacle to Azerbaijan’s ambition of becoming one of the world’s great energy producers. Given that Turkey hopes to continue to play a significant role in the extraction of Azerbaijan’s oil reserves through participation in international consortia, and expects to become host to at least one of the pipelines that will carry oil to the West, Turkey’s interests in the resolution of the dispute over the Caspian’s legal status are closely aligned with those of Azerbaijan. For this reason the Caspian policy of Iran is watched closely not only by Azerbaijan, but also by Turkey.

Iran’s policy with respect to the Caspian is currently characterized by a marked hostility to investment in the region by Western businesses. For example, Ali Akbar Nateq-Nouri, the speaker of Iran’s parliament, was recently quoted as saying that the U.S. should be restricted from participating in Caspian ventures since any involvement by U.S. companies would simply represent an effort by the U.S. government to satisfy its “historical dream” of establishing influence in the region.(53) Nateq-Nouri added that Azerbaijan’s President Aliev is “making a historic mistake by laying grounds for U.S. interference.”(54) In August, Iranian Vice-President Mahmoud Vaezi stated that “certain states have caused unrest in the sensitive region by signing unilateral contracts with foreign companies.”(55) Vaezi did not mention Azerbaijan by name, though it was obvious that it was the target of the barb due to its demonstrated willingness to do business with Westerners.

One might conclude from such heated expressions of disapproval of Western participation that Iran’s Caspian policy has been dictated by ideology, and rather predictably so given Iran’s general hostility toward the West rooted in fundamentalism since the 1979 Revolution. However, it is our opinion that such an interpretation of events would be flawed, and that on the whole Iran’s Caspian policy has been decidedly pragmatic and driven by economic concerns.

When the idea of joint Western and Central Asian oil ventures was first proposed, Iran demonstrated approval — or at least acquiescence — and expressed a willingness to participate in any such venture. Indeed, Iran sought to obtain a 5% share in the AIOC consortium called for under the “Contract of the Century.” However, Teheran quickly saw this ambition frustrated by U.S. pressure to exclude Iranian interests.(56) The official excuse put forward was that U.S. law forbids American companies from doing business with Iranian companies, and so the American interests that were already part of the consortium would have to pull out if Iranian participation were allowed.(57) So it was the West that sought to exclude Iran from the divvying up of profits, rather than vice versa. It is this event, this inflicting of an economic wound, that one can identify as the trigger of Iran’s vocal opposition to Western investment activity in the Caspian.

Iran’s position with regard to the legal status of the Caspian is also indicative of its pragmatic, economics-oriented approach. As mentioned in Section II, Teheran has sided with Russia in its stance that the Caspian is a “lake” rather than a ‘sea.” If the former classification is ultimately agreed upon and the water body’s resources are divided up communally rather than territorially, Tehran stands to gain a much larger share of the Caspian pie than it would under the alternative arrangement.(58)

The fact that Iran and Russia both stand to benefit from the “lake” classification has provided an incentive for Iran to align its overall regional policy with that of Russia where possible, so as to create an atmosphere of solidarity and cooperation between the two countries. Thus, for example, Iran joined Russia in support of Armenia in its conflict with Azerbaijan over Naborno-Karabakh(59) — despite the fact that Armenia is a Christian country, while Azerbaijan is a Muslim one. This is solid evidence that the Islamic Republic’s Caspian policy is dictated by pragmatism rather than ideology. Other evidence of the growing alignment between these two powers include a series of arms sales by Russia to Iran, and an avowed mutual desire to see a change of leadership in Afghanistan.(60)

In contrast, relations between Iran and Azerbaijan have been worsening over the last few years. Iran’s act of siding with Azerbaijan’s enemy on the Nagorno-Karabakh issue is only one manifestation of the ill-will between these neighbors. Another came two years ago when Iran virtually closed its border with Azerbaijan and temporarily cut off electricity to an Azeri enclave dependent on Iranian power.(61)

The break-down in relations apparently stems from three factors. First is the obvious fact that Azerbaijan has as of yet refused to accept the Russian-Iranian position with regard to the legal status of the Caspian. Second is Azerbaijan’s eagerness to do business with Western companies despite the exclusion of Iran, as demonstrated by Azerbaijan’s continued blessing of the AIOC deal. Third is Iran’s fear that a prosperous, independent Azerbaijan would be an unwelcome role model to the enormous Azerbaijani minority that makes up a quarter of Iran’s population, and which constitutes a majority in multiple northern Iranian provinces.(62) Iran surely fears that increased affluence and international strategic clout will embolden tiny Azerbaijan and give it the courage to incite nationalistic sentiment in its ethnic brethren across the border.

Azerbaijan has made some efforts to placate Teheran, as when it granted Iran a 10% share in a separate oil venture to develop fields in the Shakh Deniz area(63) — a move which Baku was able to manage without unduly raising the ire of Washington because no American companies were involved in the Shakh Deniz deal, and thus no violation of U.S. law would follow from Iranian participation. However, such efforts have not brought about much of a thawing of relations between the two neighbors.

Russia: Government Policy at Odds with Industry Prerogatives

The second significant obstacle to the achievement of the aligned ambitions of Azerbaijan and Turkey is Russia. This former world superpower faced the humiliation of losing its historical possessions earlier this decade, but is beginning to have something of an economic resurgence and seems to be flirting with the notion of reembracing its old imperialist ways on a regional scale.

Not satisfied with presenting legal arguments at regional and international fora in support of its call for a communal division of Caspian resources, Russia has also reportedly attempted to force the outcome by direct interference in Azerbaijani domestic politics. According to The Economist, Russia has “left its fingerprints on one or two past attempts to unseat Azerbaijan’s president, Heidar Aliev,”(64) who has stood unwavering in his resistance to anything but a strictly territorial division of the Caspian.

Russia has also amassed troops on its Caucasian borders in excess of the limits established by the 1990 Conventional Forces in Europe treaty (CFE), asserting that Russia’s current security needs require an even greater presence in the region than was necessary during the Soviet period.(65) Russia previously expressed the desire to increase its forces in the area to 2,000 tanks, 5,000 armored vehicles, and 2,500 artillery pieces, an amount well over the threshold set by the CFE.(66)

While events in the last few years in Chechnya and Nagorno-Khabarakh suggest that Russia is not unreasonable in recognizing a security concern in the Caucasus, it is not unlikely that Russia has overstated the concern, and is attempting to use its still- formidable military might to intimidate its recalcitrant former possession to the south into ending its resistance to Russian ambitions in the Caspian. Indeed, Russia has not tried to hide that it is keeping the option of military intervention open. Russia stated in the document sent to the United Nations that it “reserves the right to take necessary steps at any time that it considers appropriate in order to restore law and order and liquidate the consequences of unilateral actions”(67) on the part of any of the littoral states with regard to the Caspian’s reserves.

Russia has also been accused by Azerbaijan of feeding the ongoing conflict over Naborno-Karabakh by transferring large amounts of sophisticated weaponry to Armenia free of charge.(68) Even if such allegations are unfounded, at least some weapons deliveries are taking place. This is confirmed by the fact that a Russian official recently admitted to an arms sale to Armenia in the amount of $1 million.(69) Again, such weapons transfers may be a method of intimidation designed to bring Azerbaijan into line.

Yet another example of Russian pressure on Azerbaijan was its act of closing their only land border in 1995 — a move that virtually cut off trade between the two countries.(70) Moscow’s aggressive posture toward Azerbaijan, while obviously motivated by a desire to increase Russia’s economic opportunities in the Caspian, may end up hurting Russian economic interests in the long-run. This is because Azerbaijan has sizable oil reserves on land as well as in the 45 kilometer coastal strip that it would be allowed to exploit exclusively even under Foreign Minister Primakov’s settlement offer mentioned in Section II; if ill-will prevails between the two countries, then Russian oil interests will likely be excluded from participation in future ventures to develop these deposits. Indeed, Russia’s relentless efforts to guarantee a larger exclusive share of the Caspian output has already cost the principal Russian private oil companies one major deal in Azerbaijan. This occurred in August when the Russian Government forced the “cancellation” of a contract signed by the LUKoil and Rosneft companies, forcing them to renounce participation in an international consortium organized to develop the Kyapaz offshore oil field.(71) The Kyapaz field is claimed by Turkmenistan, which views its exploitation under Azerbaijani supervision as an illegitimate appropriation. Accordingly, in making this calculated move Russia was hoping to win Turkmen favor and draw that country over to its side as an advocate for the “lake” characterization of the Caspian.

But even beyond missed opportunities in Azerbaijan, Russia’s aggressive policy runs the risk of alienating other countries in the region who may view Russia’s efforts as a return to its old imperial ways. Without goodwill and amiable relations with the newly-independent countries of Central Asia and the Caucasus, they are less likely to encourage the development of stronger trade ties with Russia, or to incentivate Russian investment in their economies by offering tax breaks and other carrots. Indeed, they may even put up barriers to Russian investment, as long as alternative sources of technology and capital are forthcoming. These new republics are likely to be pushed farther from their historic trading partner to the north, into the increasingly eager embraces of the capital-rich West and an ever-more-developed Turkey, or even pressed into closer affiliation with Islamic Iran.

There is growing evidence that private oil interests in Russia are becoming disenchanted with Moscow’s strong-arm approach to the Caspian dispute. Upon being forced out of the Kyapaz consortium by the Kremlin, a LUKoil representative reportedly expressed “bewilderment” over the move.(72) Moreover, oil interests seem mindful of the risk of alienating other new republics south of Russia’s borders. As related by Yuri Federov, an official in the Russian Ministry of Foreign Affairs, “the oil people want to respect national aspirations of other new independent states, while at the same time expecting that those states would decide to make maximum use of the scientific, technological, human potential still possessed by Russia.”(73) Respect for national autonomy in exchange for government facilitation of economic relations seems to be shared only nominally by the Kremlin at this point, and it is the private sector in Russia that stands to lose from this posture.

While Russian businesses may suffer in the long run from their government’s Caspian policy, Turkey may well stand to gain from it. Turkey has already benefited from the development of Azerbaijani oil reserves, as the state-run Turkish oil company, TPAO, received a 6.75% in the consortium developing the Azeri, Chirag and Guneshli oil fields, and a 9% stake in the consortium developing the Shah-Deniz field. Moreover, any shares in future projects that would have gone to Russia but for Moscow’s alienation of Azerbaijan may be picked up at least in part by Turkish entities.

Even apart from participation in the direct exploitation of oil deposits, Turkey would benefit from Azerbaijani enmity toward Russia when it comes to the making of a final determination on the pipeline route for the transport of Azerbaijani oil to the West. As mentioned in Section II, Part B, prominent figures in the AIOC (which is highly responsive to the dictates of the Azerbaijani government due to the large profit share of the state oil company and the AIOC’s dependence on official recognition for its very legal existence), has recently expressed tentative approval of the Baku-Ceyhan route through Turkey.

Finally, the more alienated from Russia that Azerbaijan and the other new republics of the region become, the more likely they will be to seek out the support of Ankara and to elicit Turkish participation in their economies. With relations between Turkey and Russia increasingly strained over the pipeline controversy and CFE violations, the old adage that “an enemy of my enemy is a friend of mine,” may come to the minds of the region’s new republics, with Turkey seeming increasingly attractive as a partner in diplomacy and trade.

Indeed, Turkish companies have already set up operations in Azerbaijan, including such industrial giants as TPAO, Bayraktar Holding, Ko?’s Ram Division and Borusan Makina’s Caterpillar Division, not to mention many smaller firms.(74)

A CONSTRUCTIVE ROLE FOR THE UNITED STATES

From Turkey’s perspective, its long-time ally the United States has the potential to play a very constructive role in the region, as a counterweight to the ambitions of Russia and Iran and as an advocate of Turkish interests to which the AIOC is likely to be responsive given the substantial stake of U.S. businesses in the consortium. The effectiveness of any U.S. efforts in this regard will be commensurate with the extent to which Washington can manage to avoid raising nationalistic ire in Russia when promoting Turkish interests, and contribute to stability and prosperity in Azerbaijan, the country that is the key to Turkish oil ambitions.

Some nationalist-minded individuals influential on Russian foreign policy view the prospect of any U.S. influence within the territory once controlled by the Soviet Union as a security challenge, and have proposed serious measures to resist it. Russian military expert Anton Surikov is one such figure. He has argued as follows: “We are witnessing U.S. intensive efforts to create a sanitary cordon around Russia in Ukraine, Georgia, Azerbaijan and the Central Asian states. The euphemism for this plan is creating a so-called “Eurasian transport corridor.” Our duty is to counteract these plans.”(75) A report prepared by the Russian Institute of Defense Studies calls for Moscow “to take concrete steps, including, if necessary, the use of force in order to stop any activities of foreign companies in the former Soviet part of the Caspian until its legal status is defined.” Such threatening words, while not voiced by the Kremlin itself, should not be taken lightly. The U.S. government will have to tread carefully if it is to avoid doing anything Russian nationalists could misconstrue as aggressive intent and point to in their efforts to raise the bristles of those who wield power in the Russian government and military.

Every effort should be made to convey the image that the players in the oil controversies are not involved in a zero-sum game, that everyone will win in the long run if cooperation and moderation prevail. But Washington should not be so timid in response to Russian blustering that American businesses will be denied the opportunity to share in the profits to be reaped in the Caspian, and so that Russia will gain exclusive control over the distribution of Azerbaijani oil. Such a development would allow Russia not only to price gouge on a day-to-day basis but even to hold potential consumers of Azerbaijani oil hostage if an oil crisis like those which occurred in the 1970s and early 1980s should ever again arise. A country like Turkey, which is expected to become increasingly dependent on fuel imports in the coming decades, would be particularly vulnerable to such maneuvers.

Aware of the threat that Russian monopolization of oil transport would pose, U.S. Energy Secretary Federico Pe?a recently stated that the U.S. supports “the concept of multiple pipelines and multiple pipeline routes through the region as oil and gas are extracted.”(76) Washington has advocated the selection of the Baku-Ceyhan pipeline route, among others, in tune with its multiple-pipeline policy. Indeed, President Clinton personally lobbied Azerbaijani President Aliev to consider the Turkish pipeline.(77) Such advocacy of the Turkish position is a prudent one for Washington, as the Baku- Ceyhan route is not only likely to prove viable and secure, but should bring significant revenues to Turkey to finance future development projects. This is in the interests of American foreign policy, because a strong Turkey represents a positive, secular model for the newly independent Turkic republics of the region who are always being courted by fundamentalist Iran. Yet Clinton also wisely encouraged Aliev to consider the northern route through Russia in addition to the Turkish route,(78) a move which was well calculated to avoid the appearance that Washington stands in opposition to Russian interests.

A second way that the U.S. can further Turkey’s interests is to lend greater support to Azerbaijan than it has previously offered. Such efforts would not simply represent gratuitous favors to Turkey, but would be in the interest of American oil companies given that Azerbaijan has demonstrated consistent eagerness to deal with Western businesses even in the face of stolid Iranian and Russian opposition — two powerful neighbors with a presence much more tangible than that of the U.S. on the other side of the globe.

The first step that Washington should take in this direction is to lift Section 907, a provision of U.S. law enacted in 1992 as part of the Freedom Support Act.(79) This Section forbids direct U.S. aid to Azerbaijan, including humanitarian assistance.(80) It was passed by Congress at the insistence of a powerful Armenian lobby, and it has been the continued advocacy of this group that has kept it in place. According to The Washington Post, Section 907 “was enacted over the opposition of the Bush administration and now is opposed by the Clinton administration.”(81) At this point Armenia clearly has the upper hand in the conflict between the two countries, considering that it still holds 20% of Azerbaijan’s territory,(82) and so the concern over aggression against Armenia or ethnic Armenians in Nagorno-Karabakh which was used to justify the measure now lacks foundation. The lifting of Section 907 would allow Washington to provide a much needed infusion of funds to this impoverished nation. Specifically, funds could be provided to buttress attempts at electoral reform and supplement programs for democracy-building, a project which has taken on a vital importance given the centrality of President Aliev in the Azerbaijani political system and the fragile quality of the prevailing stability that such centrality entails.(83)

The movement to scrap Section 907 seems to be picking up speed. U.S. Congressman, Lee Hamilton (D-Indiana) recently argued that “Congress should lift the ban on Azerbaijan to give us maximum leverage on behalf of peace. A better relationship with Azerbaijan serves the U.S. national interest, the interest of peace, and the long-term interests of Armenia as well.”(84) Deputy Secretary of State Strobe Talbott has pointed out that “[w]e want to see all the responsible players in Central Asia and the Caucasus be winners,”(85) Azerbaijan included.

CONCLUSION

The staggering magnitude of Caspian hydrocarbon deposits represents a tremendous economic boom to each of the five littoral states which border on that body of water, as well as for those states such as Turkey which may benefit indirectly from them. The discovery of resources on such a terrific scale offers the potential for every one of these nations to increase its overall level of economic development, raise the standard of living of its population, and carry itself into the twenty-first century with a newfound strategic importance and international prestige. Yet mutual enmity and distrust have stemmed from controversies born from this fabulous potential, and such bitter emotions have eclipsed the excitement and optimism that it should have inspired. Indeed, neighbors that stand only to gain from their fortuitous proximity to such rich deposits are faced with the prospect of economic blockades, severed diplomatic relations, or even military clashes in a region peppered with nuclear weapons left over from the Soviet Union. The latter is a prospect that threatens not only those with a direct stake in the controversies but also their allies and those unfortunate disinterested countries that might suffer the spill-over of refugees or other combat externalities merely because of their location on the map.

Given these facts, each of the countries with a stake in the controversies should strive to maintain at all times an atmosphere of cooperation, patience, and goodwill. The respective governments should do their utmost to maintain the lines of communication through elaborate diplomatic channels and regular regional and international conferences, and should move slowly and avoid any unilateral action which could be perceived as attempts to preempt resolution of these debates.

As for the first major controversy — the debate over the legal status of the Caspian — Russia and Iran need to recognize the enormous stakes that Azerbaijan has in its outcome. From the perspective of Azerbaijan, something approaching an equal distribution of the Caspian’s resources would mean giving up its ambitions of becoming a player in world energy markets and of making a pervasive impact on its backward economy. While revenue from the Caspian’s exploitation would be substantial even to such large powers as Iran and Russia, their futures will not be made or broken over the outcome of this issue. If Azerbaijan is to be shaken from its staunch advocacy of a territorial division of the water body’s resources, it will be only by the extension of a settlement offer that will not require it to give up such ambitions — or by force. But in this day and age only the former option is a viable one. Western capital interests are becoming entrenched in the region, just as they were in Kuwait at the time of Iraq’s invasion in 1990, and while Russia is a nuclear power and a far cry from Iraq militarily, the fact remains that the West would not respond kindly to any overt aggression and might well be inclined to cut off financial assistance to Russia, and perhaps even call for an embargo.

As for the second major controversy, the principal rivals in the dispute should accept the notion that both can play host to pipelines to transport Azerbaijani oil. Yet in the short-term Russia must come to terms with the fact that absent an affirmative effort on the part of the Kremlin, the Russian private sector, and international capital interests in addressing the deficiencies of Druzhba pipeline network, Russia cannot safely be a conduit for the huge volume of oil that increased exploitation of the Caspian will entail. Russia may have to step aside for the time being and devote itself to developing its carrying capacity, rather than holding up the process indefinitely and alienating all of its neighbors with aggressive behavior. It may well prove to be the case that once Russia concedes that the northern route will not be the exclusive avenue for the oil and turns its attention to developing a modern network, the financing will materialize and the wait will be shorter than currently expected.

Outside powers such as the U.S. should step in and encourage progress along the lines outlined above, extending an olive branch to Azerbaijan in the form of technical and financial assistance, and maintaining Russian goodwill through incentivation of investment by American businesses in the development the country’s pipeline network.

The key for Russia, Azerbaijan, Turkey and each of the other states with a stake in the outcome of these controversies is to view one another as partners rather than as rivals, and to realize that when another country among them benefits from an economic opportunity and furthers its prosperity, this does not represent a loss to the others. Rather, the domestic stability that prosperity on the part of one country facilitates will ensure every other country in the region the opportunity to develop and prosper in its own right, free from the threat of opportunistic aggression.

NOTES


Case Name: Azerbaijan Oil Consortium(BP,Exxon,Saudis,DNKL,Lukoil etc)

1. The Issue

On 20 November 1994 a consortium of oil companies signed a
contract with the nation of Azerbaijan. The consortium, led by
British Petroleum, is to invest $8 billion for oil production over
a period of 30 years. The consortium is made up of the American
companies Amoco Corp., Exxon Corp., McDermott International Inc.,
Pennzoil Co., and Unocal Corp.; British Companies, British
Petroleum PLC and Ramco; Norway’s Statoil; Turkish Petroleum;
Saudi Arabia’s DNKL Oil; Lukoil, the State oil firm of Russia; and
the State Oil Company of Azerbaijan. The consortium believes it
can extract up to 4 billion barrels of oil from three wells in the
Caspian Sea. However, a problem has developed dealing with the
route the oil will take to the world market. At the moment there
are three alternatives to choose from; One which would transport
oil north from the Azerbaijani port of Baku through Russia;
second, which would transport the oil through Georgia; and
finally, a southern route through Armenia and Turkey.(Pope 1994,
1) There are many environmental aspects to the issue. They all
basically deal with the possibility of damage or destruction of
the pipelines. This is due to the fact that this is a politically
volatile region of the world.

2. Description

In 1990 the government of Azerbaijan began negotiating a
possible oil deal with the British oil giant British Petroleum.
Both sides saw that there was chance to earn large profit from the
deal. Azerbaijan needed desperately to redevelop its obsolete oil
drilling and refinery equipment (production had fallen to 1900
levels and was declining at a rate of 6 percent per year.) As for
British Petroleum, this was a chance to enter into a vastly
underdeveloped market. In addition, Azerbaijan no doubt
recognized the political benefits to come from an agreement,
namely independence and hard currency, which mattered greatly in
the early post-Cold War. Finally, after three years of
negotiation a deal was struck.(Pope 1994, 3)

A consortium of oil companies led by British Petroleum, known
as the Azerbaijan International Operating Company, signed a $8
billion 30 year contract with the nation of Azerbaijan.(Pope,
1994, 2.) The consortium was between what grew to be twelve
companies from England, Norway, Turkey, Saudi Arabia and the
United States, as well as the state oil companies of both Armenia
and Russia. The agreement calls for the development of three
Azerbaijani oil fields in the Caspian Sea. Oil production will be
phased in in increasing increments starting in 1996. By the end
of 1997, it is hoped that the peak sustained output of 700,000
barrels per day will have been reached.(Pope 1994, 4) In all,
there is believed to be a reserve of 4 billion barrels of oil.
These fields are thought to hold enough oil to be “a bonanza that
rivals Kuwait.”(Southerland 1995, A11)

While the consortium finally have the agreement signed, there
was a problem that required immediate attention. Their plan is to
sell the oil on the world market. As such, the oil must be
transported from Baku, the Azerbaijani port of origin to potential
world clients by way of the Turkish port of Ceyhan. There were 3
possible routes to be taken. The first involves constructing a
pipe line from Baku to the west in neighboring Georgia. From
there it would be shipped to Ceyhan. A second would involve
constructing a pipeline that would travel south through Armenia
into Turkey to Ceyhan. Finally, an existing pipeline could be
used by sending the oil north to the Russian port of Novorossiysk,
from there it would be shipped to Ceyhan.(Daniloff 1995, C2)

All the nations involved stand to earn a great deal from the
agreement, particularly Russia. For one thing, Russia wants to
retain a ‘special’ (influential) relationship with those states
that were former members of the Soviet Union. It would lose this
opportunity, it feels, if a distribution route that bypasses
Russia is chosen. In addition, there is a great deal of money to
be made from this agreement through sales, profits and tariffs
from oil crossing the Russian border. . . hard currency that the
nation is in dire need of. Lastly, and perhaps most importantly,
there is the issue of Russian security. Russia is fearful that it
will be in a negative position if it did not have a hand in oil
distribution because the deal is between a former member of the
Union and current members of NATO. In addition, if the
Azerbaijani consortium turns out to be successful, there is
another former republic, Kazakhstan, that is in a position to be
as successful as, if not more so than Azerbaijan. This is due to
the large reserves of oil it holds in the Caspian Sea.

For Azerbaijan, the issue also relates to security.
Azerbaijan will gain both physical and financial stability. The
chances of increasing its per capita income are much greater due
to its contract with the consortium. This increased financial
stability will allow it to have greater control over its dometic
and international affairs. In addition, it will be provided with
perhaps true and final independence from its former overlord,
Russia. The West also can gain security from the consortium. It
would be a chance to reduce its reliance on the Persian Gulf as a
source of oil.

The choices to be made are thus influenced by a myriad of
details. However, there is one rather important issue which has
not been discussed, the environment. The environment serves to be
severely damaged if any number of very likely events occur.
Firstly, the threat of terrorism on every possible pipeline route
is very high. The first route is through Georgia, which has not
yet rid itself of the horrors of civil war. Thus there is the
possibility of the pipeline being targeted by the combatants. The
second route, through Armenia, is the sight of an almost 7 year
clash with Azerbaijan over the disputed Ngorno-Karabakh region.
The final route through Russia directly traverses the Chechen war
zone. In addition, the Russian oil pipelines are in a horrendous
state of upkeep, with over 700 spills per year.(BBC Monitoring
Service 1995, 2) There is also the likely possibility that the
Caspian Sea itself will be polluted by any number of possible
mishaps. Finally, if one of the first two oil routes were chosen,
oil would have to be shipped to Turkey through the already
overcrowded Bosporus Sea channel. Thus animal or fish life, the
very ecosystem itself, could be adversely affected by pipeline or
shipping spills. For other relevant TED Cases, see Ecuador Case,
Norwoil Case, and Shetland Case.

The decision on which route to use faced a lengthy debate.
Finally, on October 9 1995, in a show of compromise, the twelve
member consortium agreed to have 2 pipelines. The first will be
the Russian route. The 1400 kilometer route will traverse Chechnya
and end at the Black Sea port of Novorossisk. The construction of
27 km of new pipeline is required. The second route will be
through Georgia to its Black Sea port of Batumi. This 920 km
pipeline requires the construction of 140 km of new pipeline.
This decision reflects, in part, geo-political influences. In one
sense, the consortium was influenced by the Western governments to
accept a Russian route, this was done so Russia would not feel
alienated. Secondly, selecting 2 routes disallows Russia from
having a strangle-hold over oil distribution.(Clark and Levine
1995, 1) Though a decision has been finally reached, it leaves
much to be desired environmentally.

3. Related Cases

See BOSPORUS Case
See EXXON Case
See ECUADOR Case
See SHETLAND Case
See SHELLRIG Case
See OGONI Case

KEY WORDS

(1) Trade Product= Oil

(2) Geography= Azerbaijan

(3) Environmental Problem =oil spill

4. Draft Author

Michael Goulet

Legal Cluster

5. Discourse and Status: AGR and INPROG

The consortium has recently agreed on a pipeline route, however,
there is still work to be done concearning construction of new
areas of pipeline, as well as security for the line running
through Georgia.

6. Forum and Scope: NGO and 3-Regional

7. Decision Breadth

Number of Parties Involved: 12 – United States, England,
Norway,
Azerbaijan, Russia, Saudi Arabia, Iran ,Turkmenistan, Kazakhstan,
Ukraine, Romania, Bulgaria

These are the nations which are involved in the consortium, as
well as those nations which surround the Caspian and Black Seas.

8. Legal Standing: NGO

This is a nongovernmental agreement between several oil companies,
albeit that 2 of these companies are state owned.

Geographic Filters

9. Geography

a) Geographic Species Domain: Asia

b) Geographic Conflict Site: West Asia

c) Geographic Impact: Azerbaijan

10. Sub-National Factors: No

This is a non-governmental agreement between oil companies that
was approved by the government of Azerbaijan and corresponds to
the laws regulating business agreements of the other signatories.

11. Type of Habitat: Ocean

The environmental impact of this agreement will be felt in and
around the Caspian and Black Seas.

Trade Filters

12. Type of Measures: NAPP

13. Direct vs. Indirect Impact: NAPP

14. Relations of Measure to Impact

a.Directly Related to Product: No

b.Indirectly Related to Product: No

c.Not Related to Product: No

d.Related to Process: No

15. Trade Product Identification: Oil

Indirectly related to this issue are the petrochemical and plastic
industries.

16. Economic Data

Industry Output: Varies with price per unit, measured in
barrels
of oil which was $17.31 as of 19 October 1995.

Employment:

17. Degree of Competitive Impact: High

18. Industry Sector

PETROLeum

19. Exporters and Importers

Case Exporter: Azerbaijan

Case Importer: Many

Leading Exporters: Various-Persian Gulf Nations

Leading Importer: Various-Europe

Environmental Cluster

20. Environmental Problem Type: POLL

21. Species Information: Many

If an environmental accident were to occur, there would be a
large number of species, including both land, air, and sea life.

22. Impact and Effect

Resource Impact: HIGH

Resource Effect: STRUCTure and SCALE

The outcome of an accident such as an oil spill in the area of
the
Caspian or Black Sea, or in the pipeline system on land would
undoubtedly have a high impact on and effect both the composition
and scale of the wildlife and its habitat.

23. Urgency and Lifetime: NAPP

An environmental problem has not occurred. The possibility of an
incident warrants concern for many species, but a determination of
the urgency for species protection is not applicable (yet?).

24. Substitutes: CONSV

There are a number of alternatives to the use of oil as an energy
source. If there was a serious attempt made at using these
alternatives then this could alleviate the dangers of oil spills.
However, considering that this is not very likely, then the next
best alternative would be using energy substitutes.

Other Factors

25. Culture

No

26. Human Rights

No

27. Trans-Boundary Rights: Yes

The conflicts between Azerbaijan and Armenia and between Russia
and Chehnya (also less obvious is that between Russia and the
former republics of the Soviet Union) serve to raise caution
against terrorist incidents against the pipelines/drilling
equipment or outright conflict between members.

Read

 


Case Name: Kazakhstan (Chevron)

1. The Issue

According to petroleum scientists, the Caspian Sea region
contains the third largest reserve of oil and natural gas in the
world, behind the Gulf region and Siberia (see map on preceding
page). Drilling for oil in the region is not new. Oil derricks
dotted the landscape during the latter decades of the nineteenth
century. Oil was a major source of hard currency for the former
Soviet Union, but drilling methods were technologically inferior
compared with western firms when it came to large-scale oil
exploration. This inhibited Soviet exploration in the Caspian
region. Western firms for decades had longed to be given the
opportunity to exploit the former Soviet empire’s massive oil
reserves, but the Cold War relationship did not allow this option.
When the Soviet Union implemented perestroika and glasnost in the
mid 1980s, its oil exploration sector was poised to reap benefits
from the west. The breakup of the Soviet Union, however, put a
hold on these plans, as several nations emerged in the former
Soviet lands around the Caspian Sea. There are environmental
concerns associated with drilling for oil in the Caspian region, in
addition to the already well articulated effects from drilling
itself. The major issue regarding oil exploration in the region is
a question of how best to deliver the oil to world markets. The
Caspian Sea area is landlocked, thus the only way to efficiently
transport the oil to world markets is via pipeline. The exact
route of such a pipeline is as of yet undecided, and may prove to
be the single most important factor in determining the ultimate
success of oil exploration in the region.

2. Description

Oil exploration in the region predates the travels of Marco
Polo. Legend has it that the “eternal flame” of the Zoroastrian
religion was fueled by natural gas around Baku, the present capital
of Azerbaijan, before the eight century. Serious exploration and
exploitation began in earnest in the 1850s, and by the 1890s, this
exploration instigated rapid development in the Baku region. By
the outset of World War I, Azerbaijan commanded 10% of the world’s
exports of oil and kerosene. This was down from the 30% figure
during the 1890s. It was only in the 1980s that modern technology
entertained the notion that the deeper fields (where the most of
oil reserves are) were more accessible.

The area around Azerbaijan, on the southwestern shores of the
Caspian Sea, is not the only portion of the region to have oil
reserves. One of the world’s largest oil fields, the Tengiz in
western Kazakhstan, was discovered in 1979. The Soviets had been
drilling in the Tengiz region, in the northeastern section of the
Caspian Sea, for many years. The Tengiz discovery dramatically
altered oil exploration potential for the region as a whole.

By most accounts the reserves in the region are very large.
When the region was still part of the former Soviet Union, western
oil companies were aware of the vast potential, but were not able
to gain access to the deposits. The Soviets wanted to develop the
area on its own, however, and focused more on the Siberian region
instead. When the Soviet Union splintered into several nations,
western companies began negotiations with the new entities.
Contracts have since been signed, but there are still many
obstacles, notwithstanding the negotiating hurdles. First, the
region is basically desert terrain, with dramatic seasonal
variations.

Second, there are extreme mountains in the northeast into
Russia. According to the Oil and Gas Journal, there is deep
sediment covering most of the predicted deposits. There is also a
phenomenon called salt tectonics which could effect the quality of
the product. These factors may prove burdensome to most companies,
but they should not render exploration futile. Modern technology
can overcome some geologic impediments. If the oil can be
reached, petroleum engineers believe it to be of high quality.
Because of the aforementioned deep sediment cover (up to 24 km)
and the fact that the Tengiz field is the biggest of the super
giants, some journals believe the project marks a new stage in oil
exploration.

The intricate political climate in the region is the factor
which will ultimately determine how oil can be delivered to world
markets. Kazakhstan is in the best position to profit from the oil
reserves. When the Soviet Union collapsed, the Kazakh government,
recognizing the importance of foreign investment, implemented the
most protracted effort to elicit foreign investment as a
cornerstone for development.

Chevron, the largest and to date the most successful oil
company in the region, initiated negotiations with the Soviets over
the Tengiz oil field in the latter 1980s. After the Soviet Union
imploded–and after a brief lull in activity–Chevron continued
negotiations with the Kazakhs. The investment is worth roughly $40
billion over approximately 40 years.

As mentioned previously, the oil in the region still ranks
behind reserves in the Gulf and Siberia regions. But companies are
looking more favorably to the Caspian region because of the
difficulties in the Russian system and harsh climactic factors in
Siberia. Another important reason why firms favor the region over
Siberia is the greater ease of dealing with the government.
Kazakhstan coddled western companies and facilitated a fairly
standard and efficient contract review process. Additionally, the
president took a personal interest in negotiations.

The region, however, is not without its own political turmoil.
Developing oil fields in Kazakhstan and Azerbaijan present unique
difficulties and extricating the oil from the region will be even
more tenuous. According to Chevron and oil analysts, a pipeline is
imperative to justify an increase in production. In the short-
term, production capacity is approximately 200,000 barrels a day.
Existing production can be transshipped by rail or road. But an
increase in output would be economically irrational unless there is
a more efficient method of transport. The route that the proposed
pipeline would traverse is probably the most difficult aspect of
the whole issue because there are several political “hot spots” in
the region that make a pipeline a difficult proposition.
Additionally, there is the realization that the nation which
controls the pipeline will be able to exert a substantial amount of
control over most aspects of oil exploration as well. Thus
several nations are jockeying for the pipeline in their territory.

The conflict between Armenia and Azerbaijan threatens to
disrupt not only the oil production slated off Baku’s shores, but
the proposed pipeline route through the region. Additionally, the
Azeri power struggle may end Turkey’s influence in the region,
which the western nations have been counting on as the moderating
influence. Because it is questionable who will even rule
Azerbaijan, any negotiations are less than definitive. Russia has
been adamant regarding its desire to have the pipeline be routed
through its southern territory to its Black Sea port of
Novorossivsk.

Perhaps strategically, Russia has ties to some of the
competing factions in the Azeri power struggle. But there are two
problems with a pipeline through Russia. Russia has been embroiled
in a bloody conflict in Chechenya and the rest of the region is not
very stable. Secondly, Turkey is against such a route. Their
official reason is that the Dardanelles Straits (a thin waterway
connecting the Black Sea to the Mediterranean) cannot handle the
excess tanker traffic. Such a route would place extreme pressure
on ecological efforts to protect the region. More importantly,
however, is the Turk’s desire to increased their sphere of
influence in the region by having the pipeline go to their ports on
the Mediterranean. The problem with this is that it would have to
go through the Azeri-Aremenian corridor or Iran. The latter route
is not popular with the west, especially the United States.
There have sporadic media reports of late that point to a pipeline
going through Russia and Turkey. It remains to be seen when a
definitive solution will concocted.

Heavy tanker traffic thorough the Mediterranean, Red Sea and
Persian Gulf have already alerted states to the polluting effects
of such activities. Increased production in the Caspian region
will increase the above effects, no matter which pipeline route is
eventually chosen. Unique to the Caspian region however, is the
fact that the Caspian Sea is rising. It could rise possibly three
meters in the next twenty-five years. Resultant environmental
damage would be immense. In the last decade, the sea has risen
one meter, inundating some parts of Baku already. Some of Iran’s
most productive fields lie on the southern shores of the sea and
would be submerged if it were to rise.

More damaging to the environment, however, is the potential
flooding of refineries on the coastal plains of the region. These
regions are some of the most polluted areas in the former Soviet
Union, according to US Embassy reports. This trend might be
cyclical however. The Caspian sea was falling, much like the Aral
Sea to the east. Old photographs of Baku show the shoreline much
closer to the center of the city. But the sea is definitely rising
now. Russian archeologists claim to have found the ruins from the
1,000 year old Khazar empire at the bottom of the sea. Geologists
believe that the sea bed might actually be rising, giving way to
springs of water.

Existing oil drilling in the sea is a major cause of
pollution. The US Embassy in Baku reports that one can see oily
film on the sea’s surface. Another problem is the flaring of
natural gas; about 4.5 million cubic meter a day. Natural gas
flares, however, can be contained with the appropriate western
technology. While the sea is less polluted than the Black Sea,
much needs to be done to lessen the harmful environmental effects
of oil drilling, and the potential disastrous effects of the rising
Caspian Sea.

3. Related Cases

BOSPORUS case
AZERI case
CASPIAN case
CAVIAR case
BLACKSEA case

Keyword Clusters
(1): Product = OIL
(2): Bio-geography = DRY
(3): Environmental Problem = Pollution Sea [POLS]

4. Draft Author: Vincent P. Bonner

B. LEGAL FILTERS

5. Discourse and Status: Disagreement and incomplete

The major disagreement is over the pipeline route. The
countries involved primarily include Russian, Azerbaijan, Armenia,
Turkey, Iran, Georgia, Turkmenistan, and the United States. There
is no agreement on an international framework that governs the
development of the region. Indeed, there is considerable
disagreement in this regard. Some western firms have signed
contracts to develop the fields, but these agreements are
ineffectual if regional conflicts proliferate. Current regional
conflicts already make extraction of oil from the region very
difficult.

6. Forum and Scope: Kazahkstan and Regional

At this point there is no deliberative body that can step in
and “take charge.” The United Nations would hardly be appropriate,
if not effective in the first place. Russia claims the region
within their “sphere of influence,” a dubious distinction indeed,
since Turkey and Iran claim this also. Because Kazahkstan
surrounds the largest reserve in the region, considering monetary
reasons alone, it probably exerts the most influence with regard to
oil exploration. The fact that it is further along oil development
than the others bolsters this contention somewhat. If and when
conflicts ease in the region, only then could some sort of
organized entity figure the best way to develop and extract the
resources to markets.

7. Decision Breadth: 5

It may not be exaggeration to state that whatever is
eventually decided would have affects resounding beyond the Caspian
region, for the nations involved directly in the extraction and
those that are potential customers (please see appendices). The
existence of another oil area beyond the Gulf region would be very
welcome by many nations. Prices of oil would inevitably be
altered, depending on the amount and various other factors. Still,
analysts believe that Kazakhstan could become “another Kuwait” in
that oil development would spur development of the nation. This is
not a forsworn conclusion of course, but the other nations in the
region are anxious for the fruits of providing the world with oil.

8. Legal Standing: Kazakh Law

C. GEOGRAPHIC FILTERS

9. Geographic Locations

a. Domain: Asia
b. Site: West Asia
c. Impact: Kazakhstan

10. Sub-National Factors: No

11. Type of Habitat: TEMPerate

C. TRADE FILTERS

12. Type of Measure: REGSTD

Once developed, the trade restriction would probably be export
restrictions to manipulate the price of oil in the market, not
unlike the operations of the OPEC oil cartel. It is feared
however, that the increase of oil on the world market, if not
regulated, could depress prices. Prices that are too low would be
anathema to the Caspian region because of their initial dependence
on consistent prices to boost export earnings. Inadequate earnings
from such an ambitious endeavor would be disastrous for the
region.

13. Direct vs. Indirect Impact: Indirect

14. Relation of Trade Measures to Resource Impact:

a. Directly related: Yes Oil
b. Indirectly related: Yes Fish
c. Not related: No
d. Process related: Yes Sea Pollution [POLS]

15. Trade Product Identification: OIL

The product at issue is oil, refined for export and usage in
international markets. Oil is often called the “blood of the
economy” and therefore is extremely important to all nations, with
little difference to the various stages of development (please see
appendices). The oil shocks in the 1970s proved the vulnerability
of nations reliant on oil imports. The shocks instigated inflation
and recession in many industrialized nations and is frequently
mentioned as a catalyst for the debt crisis that emerged in the
early 1980s. Thus the importance of stability in the world’s oil
markets cannot be overstated. Oil from the Caspian region can have
dramatic effects on the world market. OPEC levels are near full
utilization and their share of world markets are growing (please
see appendices). Another major source beyond the Gulf region may
allow a “safety” if instability engulfs the Arabian region. For
example, succession is not clear in Saudi Arabia (the king is 75
years old), and Iraq and Iran continue to threaten stability in the
region.

16. Economic Data

According to NatWest Securities, an oil consulting firm, world
demand for oil is roughly 70 million barrels a day (see
appendices). Thus, this is no small business. OPEC has already
demonstrated its ability to manipulate demand by alternating
supply. Existing oil exporters are not operating at capacity to
supply world demand. What the future holds is far from certain.
A conflict that breaks out in the Gulf can have dramatic affects
immediately on the supply and price of oil. The United States is
the largest consumer of imported oil.

Because of the uncertainties surrounding the exploration and
extraction of oil from Kazakhstan, it is difficult to place a
dollar figure on its potential earnings. Most analysts place the
figure to be billions annually.

17. Impact of Trade Restriction: HIGH

Any major increase in the amount of petroleum on the world
market will instigate price fluctuations unless some sort of
agreement is reached among oil-exporting members. It remains to be
seen whether or not oil exporting nations in the Caspian region
will form an agreement or partnership with Gulf members and other
oil exporting nations. Pure competition can be detrimental to all
nations in the long run. A massive drop in prices can have regime-
destabilizing affects on the member nations because these nations
rely heavily on oil revenues. Thus an arrangement, given the
potential instability due to pure competition, would be beneficial
to oil-exporting nations. It is imperative for the region, which
will rely on stable prices to a greater extent than the already
established oil exporting nations.

18. Industry Sector: OIL

19. Exporters and Importers: KAZAKHstan and MANY

The exporters in question are primarily Kazakhstan and
Azerbaijan. Every nation in the world will have a need for oil.
The exporters will in the longer term probably evolve into state
enterprises, after western assistance is completed. In the
interim, western drilling firms will share in the profits and
engage in exporting, with the nation taking credit in international
financial statistics.

E. ENVIRONMENT FILTERS

20. Environmental Problem Type: Pollution Sea [POLS]

21. Species Information

Name: MANY
Type: MANY
Diversity: ?

22. Impact and Effect: HIGH and REGULatory

The extraction of oil from the region can have major
consequences of the ecology of the region. This is due to the man-
made effects of such development, perhaps further exacerbated by
the rising of the seabed.

23. Urgency and Lifetime: LOW and long term

Because of the high demand and importance of oil, the
potential effects of environment damage to the region will be
probably be understated although the rising of the seabed may grab
more attention and demand more scrutiny of ensuing actions. The
regions populace, however, is starving for development and
prosperity. It is likely for this reason alone that environmental
concerns are downgraded in importance.

24. Substitutes: ALTERnative Energy

Alternative fuels are technically another option to oil, but
because of their price they are not realistic in the short term.
Conservation is always an option, but price determines the severity
of such movements. If oil prices dramatically increase, there will
inevitably be some conservation. For example, citizens may not
drive their autos as much.

VI OTHER FACTORS

25. Culture: YES

Culture is a factor only in the sense that such differences
seem to instigate regional conflicts, which as already stated, will
ultimately determine how the oil gets to the market.

26. Human Rights: NO

27. Trans-Boundary Issues: YES

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