18 July 2006

852) Internal Resources & Diaspora Weighed Against Baku-Tbilisi-Ceyhan Pipeline

The official opening of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline took place on July 13, 2006 at the Turkish Mediterranean port of Ceyhan. The ceremony was attended by the presidents of Turkey, Azerbaijan, and Georgia as well as by dignitaries from over thirty countries. "BTC is one of the greatest projects of the 21 st century," John Brown, CEO of British Petroleum - the main operator of the pipeline - said in his remarks. The Ceyhan ceremony was the most expensive such undertaking in the history of Turkey, at a cost of some $4 million. The pipeline construction was also very expensive, at of total of $4 billion. A message from the US president addressed to his Turkish counterpart Ahmet Sezer was read at the ceremony. George W. Bush called the BTC project implementation a "historic event". . . .

The idea to build the BTC pipeline originated in the 1990s. On September 20, 1994, after three years of negotiations, the "Contract of the Century" was signed to exploit Azerbaijan's Chirag, Azeri, and Guneshli oilfields for 30 years, at an estimated capacity of 4 billion barrels (511 million tons). Three transport routes were discussed at the initial stage - the Georgian Baku-Supsa route (Supsa is a Georgian Black Sea port), the Russian route to the Black Sea port of Novorossiysk, and the Turkish route to the Ceyhan port.

However, the BCT was first of all a political project, and British and American companies backed by their governments hoped to transport the Caspian oil to Western markets bypassing the territories of Russia and Iran. It would have been possible, meanwhile, to transport the Caspian oil to the international market through the Baku-Novorossiysk pipeline, without building the BTC pipeline. It is no accident that, as experts note, politics will flow along with oil through the BTC pipeline. It would also have been possible to transport the oil through the shortest route - via Armenia - if the Nagorno Karabakh conflict had been settled. In that case, the total construction expenses would have amounted to $3 billion.

On November 18, 1999, the presidents of Turkey, Azerbaijan and Georgia signed in Istanbul a package of agreements related to the pipeline construction. In October 2000, the companies involved in the project led by British Petroleum signed a contract with the governments of Turkey, Azerbaijan, and Georgia on financing the construction of the pipeline. The construction began in September of 2002 and was just recently completed. The length of the pipeline is 1,767 km (1,096 miles), with 443 km passing through the territory of Azerbaijan, 248 km through Georgia, and 1,076 through the territory of Turkey.

Even according to the most optimistic calculations, Azerbaijan will be unable to fill the BTC pipeline on its own, and it will be necessary to persuade Kazakhstan to direct some of its oil to the BTC pipeline. On June 16, 2006, Kazakhstan officially joined the BTC project - Nursultan Nazarbayev and Ilham Aliyev signed an agreement on cooperation in transporting Kazakh oil to the West through the BTC pipeline via the Caspian Sea and the territory of Azerbaijan. The agreement provides for the creation of an Aktau-Baku infrastructure for transporting Kazakh oil through the Caspian Sea in tankers and pouring it into the BTC pipeline. At the initial stage, it is planned to transport 7.5 million tons of Kazakh oil, eventually increasing the volume to 25 million tons. Washington has welcomed the decision of Kazakhstan to join the BTC project.

Azerbaijani President Ilham Aliyev has great expectations from the pipeline and, evidently, is not in a hurry to settle the Karabakh conflict, considering that the exploitation of the pipeline will bring billions of oil-dollars, strengthening Azerbaijan's economy and its Army. In other words, it will force Armenia to its knees, if necessary - with a new war. It is also evident that in the coming two decades, Azerbaijan will be able to get between $100 and $150 billion dollars from the oil sales. But the question arises as to whether the Western companies who have invested billions of dollars into the Azerbaijani oil sector will allow Aliyev to embark on such adventurism. Even if they do, will Azerbaijan be able to force Armenia to its knees? These are questions that may have differing answers and interpretations. One thing is clear, however-Armenia is being left out of regional projects, is being isolated economically and politically, and is becoming an unattractive country.

Especially now, when the Baku-Tbilisi-Ceyhan pipeline is being exploited and Armenia is facing the challenge of not lagging behind Azerbaijan economically. What does Armenia have to offer instead, what does it have to set off against the pipeline? Most likely, in the coming years, the Baku-Tbilisi-Erzrum gas pipeline and the Kars-Akhalkalak-Tbilisi-Baku railroad bypassing Armenia will be called into existence. This means that our country is no longer a factor. Add to this the contradictions we have with our neighbors (it doesn't matter who is to blame). To the west, Armenia's border with Turkey is closed; to the east, the border with Azerbaijan is mine-strewn. Although the relations with the two other neighbors are normal, the southern neighbor, Iran has serious problems with the international community (besides, geo-politically, the Islamic republic cannot serve as a reliable link with the outside world), and to the north, the roads and the (Abkhazian) railway linking Armenia to the world come to an end in the territory of Georgia.

What does the Armenian government think about this? Last Friday I posed this question to the foreign minister. Vartan Oskanian believes that Armenia has great resources, and he mentioned three kinds: internal, Diasporan, and international. By noting the internal resources, the foreign minister meant economic and political reforms, the democratization processes in Armenia. "Second, the resource of the Diaspora. Today we only utilize one or two percent of this resource. Why? Because there are some problems with the trust toward the country, the illegalities and so on," Oskanian said. If the Armenian government succeeds in using the internal resources and the resources of the Diaspora correctly and in the best way, then the third, the international resource, will mount up. "In such an event, Armenia will become a more reliable partner and there will be a greater flow of investments. Of course, a lot has been done over the past years, but if you link your question with Baku-Tbilisi-Ceyhan, with Azerbaijan's great opportunities, we have no other resources than the ones I have mentioned," the foreign minister stressed.

However, if the resources the foreign minister describes are correctly utilized, it will only be possible to achieve some results, since though the human factor is important, it is not crucial. There exist deeper causes, as was noted above - complicated relations with our neighbors, geographical location, etc. If among our main resources are economic and political reforms, the democratization processes, why then has Armenia, instead of democracy, chosen a direct path to authoritarianism? Why then has it mortgaged Armenia's economy to Russia and a few local oligarchs under the guise of the free market? If Armenia adheres to political reforms, why then are elections always falsified, and why are the falsifications more obvious and more horrifying with every new election? There will be parliamentary elections in 2007 and presidential election in 2008. Do the events taking place in the political sphere in Armenia-for instance, the creation of new political parties with tens of thousands of members in the course of a few weeks dictated from the top of the power pyramid-attest to the adherence to democracy?

As for the resources of the Diaspora, in 1998, when the change in power took place, the current officials blamed the former administration, among other things, for not properly utilizing the potential of the Diaspora. More than eight years have passed since; has the aid from the Diaspora increased in volumes? Eight and a half years ago we were told that it was possible to get $500 million a year instead of $10 million. What has prevented the current authorities from getting the promised $500 million, getting by instead with the same amounts as before? Not to mention notorious cases like that of the Nazarian family, Diasporan philanthropists who were simply swindled.

And finally, international resources. If in the early 1990s Armenia aimed to become an "oasis of democracy" in the region and had surpassed at least three out of its four immediate neighbors - Azerbaijan, Georgia and Iran, today when one reads the annual reports by various international organizations it becomes clear that the oasis is disappearing from year to year. Today Armenia is even compared with Azerbaijan, where a sultanate -type regime is in place.

By Tatul Hakobyan
© 2006 Hetq Online. All Rights Reserved.


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