YOU ARE HERE: LAT HomeCollections

U.S. Dives Into a Sea of Major Rewards--and Risks

Resources: Billions of barrels of oil will be tapped in former Soviet region, reshaping economic and military ties.


ALMATY, Kazakhstan — The lure of oil--as much as $4 trillion worth--is drawing the United States deep into distant and dangerous lands around the Caspian Sea.

Although few Americans know the region, the prospect of enormous energy deposits is likely to make the Caspian as familiar a part of the world for the next generation of Americans as the Persian Gulf is for today's. It has already pulled in a who's who of oil industry giants and let loose a multibillion-dollar wave of international investment.

And in a development laden with long-term significance, it has even spawned a nascent American military link to the region spanning southern nations of the old Soviet Union and Iran.

But as the United States moves to the forefront of the century's last great oil rush, two simple truths stand out about this former imperial outpost, which has churned with political discontent in the six years since the collapse of the Soviet Union:

For the Record
Los Angeles Times Sunday March 8, 1998 Home Edition Part A Page 3 Metro Desk 2 inches; 49 words Type of Material: Correction
Promoting democracy--In a Feb. 23 report about U.S. interests in the Caspian Sea region, The Times incorrectly characterized a U.S. law restricting aid to Azerbaijan. Section 907 of the 1992 Freedom Support Act was amended late last year and now does permit U.S. government assistance for projects in that country, including democracy-building.

* Rarely has the possibility of new, world-class oil strikes seemed greater.

"The Caspian Sea is the greatest unexplored and undeveloped oil province in the world," summed up British Petroleum's chief executive, John Browne. "We're just at the beginning of something there."

* And rarely has the potential for political headaches seemed stronger.

Since the collapse of Soviet rule, the Caspian Sea basin has experienced four wars, two attempted presidential assassinations, a coup and countless attempted coups.

"The Caspian is not an economic problem or a geological or an engineering problem," commented former Secretary of State James A. Baker III, who helped forge Washington's initial diplomatic relations with countries of the region during his tenure in office and whose Houston law firm is an active player in the Caspian oil rush. "It is a geopolitical problem of the first magnitude."

Added Sen. Sam Brownback (R-Kan.), a respected congressional voice on the region's fledgling oil states, "They're caught in a tough neighborhood."

Suddenly, so is the United States.

Last summer, 500 U.S. airborne troops led by a Marine general parachuted into central Kazakhstan as part of multinational military exercises that underscored heightened American interest in the region's stability. It is an interest that is welcomed by the Caspian nations.

A Delicate Political Balancing Act

In Azerbaijan, senior officials like to cast their country as the Caspian's version of small, oil-rich Kuwait in the Persian Gulf.

"When Iraq invaded Kuwait, remember what the United States did and why," said Azerbaijan's deputy economics minister, Oktay Ali Haqverdiyev. "The Americans went to war because the U.S. had oil interests there."

Most political analysts believe that, as long as global crude oil supplies remain abundant, any direct U.S. military involvement is unlikely. But they voice concern that the United States might be sending a false and potentially dangerous message, especially to the more remote countries in the region, such as Kazakhstan.

In the Caspian Sea basin, U.S. efforts to isolate Iran become more contorted as the Clinton administration works to limit Tehran's participation in an oil boom unfolding in the Muslim country's own backyard. Frequently, American attempts to contain Iran collide with the interests of the Caspian's fragile new states or Washington's regional allies, such as Turkey.

With Russia, the jostling against U.S. interests is only slightly less intense. The government in Moscow, which ruled much of the Caspian region for nearly 200 years, is especially sensitive to the arrival of major outside powers in a region Russia has come to see as its natural sphere of influence.

"The Caspian is their Caribbean," noted one Moscow-based American oil industry analyst, who declined to be identified by name. "It can be as delicate as Cuba is for us."

During the initial post-Soviet period, Russia worked actively to destabilize the fragile newly independent states as a way to force them back into its orbit. It backed separatists in Georgia and stoked tensions between Armenia and Azerbaijan, which already had a history of armed conflict.

But in the wake of such debacles as the failure to put down a rebellion in the separatist republic of Chechnya, Kremlin leaders appear to have had a change of heart, although there have been questions raised about possible Russian involvement in the attempted assassination of Georgian President Eduard A. Shevardnadze earlier this month. But at least for now, Moscow seems to be pursuing its interests more through the commercial strength of leading energy companies such as Lukoil and Transneft than through crude political power plays.

Besides Russia, at least six other nations once part of the Soviet Union--Kazakhstan, Turkmenistan, Uzbekistan, Azerbaijan, Armenia and Georgia--also have a stake in how the oil fields are developed. All make dicey partners for the foreign oil companies.

Los Angeles Times Articles