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A SENSE OF ASIA

The cold war for energy heats up


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By Sol Sanders
SPECIAL TO WORLD TRIBUNE.COM

Sol W. Sanders

April 26, 2006

When Presdient went on a gas price political offensive – anticipating November mid-term elections – his tactics also reflected heating up of the energy issue worldwide. Whatever the rhetoric, ultimately competition for international energy dictates rising prices.

That is why oil pricing is a hot button worldwde – whether in Iraq or Indonesia where it’s almost cheaper than water because of subsidies or in Western Europe three or four times U.S. prices because of taxes. As it becomes increasingly important in domestic political equations, regimes jockey for access to oil, gas, and coal supplies, and the doubled-edged sword of nuclear energy.

The competition creates some strange bedfellows.

Arrival in Washington in late April of a relatively obscure Central Asian chief, Azerbaijani President Ilham Aliyev, is another piece moving in this giant chess. Aliyev is a pale imitation of his late Communist apparatchik father who after reaching highest Soviet echelons led his country to full-fledged independence after Moscow’s implosion. But he owes his continuing patrimony to U.S. strategy linking Caspian oilfields to Western markets by skirting Russian infrastructure. Washington has looked the other way at some of his domestic political arrangements But a U.S. sponsored pipeline will link Azerbaijan and its immediate neighbor’s considerable oil and gas, eventually, to Turkish spigots on the Mediterranean and Western markets. And tight Washington-Baku relations could also serve to get at the mammoth oil reserves of Azerbaijan’s neighbor Kazakhstan.

Alliyev will get royal treatment, not least because he recently has been flirting with Moscow as it campaigns to reassert old Tsarist hegemony over Central Asia. It may just be a case of the old Rayburn Texas law on maintaining the loyalty of a constituent: “But what have you done for me lately, Sam?” In addition to oil, Azerbaijan lies next to Iran with twice more Azeris than Aliyev’s domain..Basses there could be critical if and when the Iranian WMD crisis explodes.

Alliyev’s oil-related travels aren’t unique. German Chancellor Angela Merkel is meeting President Valdimir Putin in Tomsk, western Siberia, a petroleum treasure trove. Merkel will be walking a fine line; she won’t be lecturing Putin on human rights as at their first meeting. She will be coaxing Russian’s oil tsar [Moscow is now No. 2 exporter] toward a new European Community energy agreement, seeking to level the playing field between Russia and its biggest customers. But oil is a weapon Putin hopes to use to recover superpower status. Unfortunately Merkel had the rug pulled from under her when her predecessor – in a scandalous abuse of power as he left office – signed a huge new gas pipeline deal. Gerhard Shroeder got plushy retirement as chairman of the new enterprise. But since it runs through the Baltic skirting Poland and the Baltic states, it gives Putin additional leverage over his EU customers. Merkel’s calls for diversification of EU’s energy sources, however grim the prospects, rings very true.

It’s a problem all around. Although China’s mushrooming imports have tapered off a bit, President Hu Jintao made a beeline for Saudi Arabia after departing a somewhat cool Washington visit. Never mind the Saudis abetting Moslem Uighur rebels in China’s westernmost province of Singkiang where Beijing’s own relatively minor new oil and gas is found and where they will soon connect with Kazahstan, and perhaps, even Caspian oil. Nor is it the only place where Beijing’s supposed alliance with the U.S. in the war on terror collides with oil hunger. In Sudan, Osama Ben Ladin has just declared war on American-backed peacekeeping forces before they arrive to halt genocide on fellow Moslems in Dafur. But his murdering Khartoum allies are selling China oil after Canadians retreated in the face of human rights activists.

Hu’s trip to the Big Pump [Saudi is the largest exporter and has the largest reserves] was preceded only a few weeks with agreement on proposed Chinese purchases of Australian uranium. Down Under has 40 percent of world uranium reserves. That deal came after offshore Australian gas was sold to a Chinese government oil firm, according to Ozzie commercial media, at disadvantaged prices in the heady Antipodean “China boom” atmosphere..

The competition’s intensity has sworn enemies, India and Pakistan, talking up energy collaboration to pipe Iranian gas to the Subcontinent. [The Indians have even proffered getting in on a Turkmenistan-Afghanistan-Pakistan pipeline deal. That’s a decades promotion by the American firm UNOCAL. Beijing recently tried unsuccessfully to buy it before blocked on American national security grounds.] Both New Delhi and Islamabad have thumbed their noses at American protests, Washington arguing such deals would vitiate the effort to halt Iranian nuclear weapons efforts, perhaps with economic sanctions. All this comes amidst hard bargaining over the Bush Administration’s offer to extend nuclear power plant technology to India.

It’s not the first time, of course, commerce and politics were indistinguishable – or indeed when they led to warfare. But in a globalized world economy, the intensity of the interplay has probably never seen its equal.

Sol W. Sanders, (solsanders@cox.net), is an Asian specialist with more than 25 years in the region, and a former correspondent for Business Week, U.S. News & World Report and United Press International. He writes weekly for World Tribune.com and East-Asia-Intel.com.

April 20, 2006


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