Baku to Ceyhan: Pondering Pipeline Politics.

• Author: Howell, Llewellyn D.
• Position: Oil and gas pipe lines from Caspian Sea - Brief Article

While still barely recognized city names for such of the world, Baku and Ceyhan have become sites of great strategic and economic importance over the course of the last year. Baku is in the newly independent state of Azerbaijan and Ceyhan is in Turkey. They are the two ends of a proposed pipeline that would carry oil and natural gas from wells in the Caspian Sea to a port in the Mediterranean and from there to Europe by tanker. The question is which among several proposed pipelines from the Caspian Sea area should be supported and completed. The pipeline would be paid for by the oil companies or by investors. The Clinton Administration is lobbying hard for the Baku-Ceyhan connection. Since this is the most expensive choice, the debate between the Administration and the oil companies (including Exxon, Pennzoil, and BP Amoco) has become one of business expense vs. more nebulous factors.

The battle to determine the selection is hard fought. What factors have brought a pro-business administration into conflict with the parties it ardently has sought to work with? The multiplicity of issues that evolve from the pipeline question encompass the complete spectrum of international political economics:

Oil and natural gas supplies. On the face of it, this is what the issue is about. Additional fuel sources would help keep the price under control, assure supply, and intensify competitiveness. New and expanded alternate sources would diminish energy dependence on the unstable states of the Middle East and the high volumes of oil that have to pass through the Strait of Hormuz. Both sides agree on the importance of future supply, even though current prices are low.

Development of democratic institutions. The national profits for the oil and gas producers would bolster democratic institutions in countries long a part of the Soviet Union and previously (and sometimes since) ruled by oligarchies that are anathema to free markets and to political and legal structures that maintain their free functioning. U.S. strategic interests would be served by more financial stability in Kazakhstan, Azerbaijan, and Turkmenistan in particular. The Clinton Administration remains focused on these matters, while the oil companies apparently see this issue as remote.

Economic development. The Baku-Ceyhan pipeline would result in adding to energy resources, advancing the application of technology in manufacturing and agriculture, expanding the profitability of private...