Oil Rolls Back the Former Soviet Borders: Control of Azerbaijan's Vast Oil Resources Has Long Been an American Ambition. Now, after Years of Cajoling and Arm-Twisting, the $3Bn Baku-Tbilisi-Ceyhan Pipeline Project Is Becoming a Reality

By Walsh, Maurice | New Statesman (1996), September 15, 2003 | Go to article overview

Oil Rolls Back the Former Soviet Borders: Control of Azerbaijan's Vast Oil Resources Has Long Been an American Ambition. Now, after Years of Cajoling and Arm-Twisting, the $3Bn Baku-Tbilisi-Ceyhan Pipeline Project Is Becoming a Reality


Walsh, Maurice, New Statesman (1996)


The fate of the oil under the Caspian Sea illustrates how the worlds before and after the Russian revolution appear to join up, as if Soviet rule were a hiatus and history has taken up where it left off as the Bolsheviks triumphed in Moscow. At the beginning of the 20th century, the oilfields of Azerbaijan made Russia the world's biggest oil producer. The boom brought investors from Europe to the Azerbaijani capital, Baku, where they lived in the plush mansions near the shore of the Caspian, built from the fortunes that oil brought.

The streets of the old town are still overlooked by ornate balconies, vines curled around their railings. Decades of Soviet privation have not erased a certain grandeur. Azeris like to boast that the first opera house in a Muslim country opened in Baku. After the revolution, Azerbaijan was absorbed into the Soviet Union and the oilfields of the Caspian were largely neglected. After Azerbaijan won its independence in 1991, the international oil companies again descended on Baku.

Traces of the old Baku and the bold intrusions generated by the repeat oil boom can be seen side by side in the historic town centre. From the top floor of a Soviet-era hotel overlooking the seafront, you can sec ancient, rusty oil rigs out to sea. Behind the promenade is a new hotel with a penthouse bar where American engineers and geologists sip cocktails. Down charming streets, alongside clothes shops and delicatessens, are the Irish, Scottish and English theme pubs where the oil rig workers drink. It is easy to believe you are in Dundee or Dunstable.

This summer, Baku was abuzz with its annual oil conference, which takes place in an indoor sports stadium where stands exhibit the essentials of the oil business: pumps and compressors, drilling tools and submersible suits. Germans, Russians, Britons, Frenchmen and Americans mill around in suits. Billboards with obscure acronyms and glossy brochures extol the competence of companies you've never heard of, with a sprinkling of familiar names such as Exxon Mobil and BP.

In 1994, the government of Azerbaijan and a consortium of international oil companies signed a contract they called "the deal of the century". Expectations of the size of the Caspian reserves were high and President Bill Clinton decided the oil would be a perfect alternative to Middle East supplies. Clinton's main concern was a new pipeline to bring the oil out. He didn't want any more oil to run through the Russian pipelines already there. And he especially wanted to keep Iran isolated. A pipeline through Iran--which shares a long border with Azerbaijan-would make geographic and commercial sense, and the Iranians had designs on exercising their influence as the major regional power. But the Americans wanted Turkey to play that role and so their preferred route was from Baku, west to Tbilisi, the capital of Georgia, and then into Turkey, ending up at the Mediterranean port of Ceyhan. Clinton had to work hard on the governments and on the oil companies, who doubted the pipeline's commercial viability.

Since the early 1990s, Azerbaijan has been ruled by President Heydar Aliyev, a Brezhnev-style member of the last Soviet politburo who had transformed himself into the champion of Azerbaijani independence, a firm ruler who promised to protect the country from the Russians as well as from its own potential for disorder. Aliyev is now gravely ill, close to death. But his face stares from the entrance to every ministry in Baku and his slogans and exhortations shout from billboards on major roads. He won his presidency in elections, but no foreign observers have said they were free and fair. In Baku, I met Vafa Guluzade, Aliyev's foreign policy adviser during the 1990s. Now retired to a small dacha outside the capital, he is eager to talk of the days when he met one Washington luminary after another. Guluzade would take Clinton's calls and translate them for Aliyev. Clinton was pushing the idea of "multiple pipelines"--the route through Georgia to Turkey. …

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Oil Rolls Back the Former Soviet Borders: Control of Azerbaijan's Vast Oil Resources Has Long Been an American Ambition. Now, after Years of Cajoling and Arm-Twisting, the $3Bn Baku-Tbilisi-Ceyhan Pipeline Project Is Becoming a Reality
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