Pipe Dreams
Navigation Bar
Navigation Bar

Related Items
In This Series
  • Part Two: The Politics of Pipelines
  • Part Three: Saving U.S.-Russian Relations

    From The Post

  • Though awash in oil, Azerbaijan finds affluence elusive.

    On Our Site

  • Azerbaijan Page

    On the Web

  • Photo tour of Baku
  • Bio of Azeri President Heydar Aliyev
  •   Azerbaijan's Riches Alter the Chessboard

        T. Don Stacy
    Amoco's T. Don Stacy educated U.S. officials on the Caspian's wealth.
    First of three articles

    By Dan Morgan and David B. Ottaway
    Washington Post Staff Writers
    Sunday, October 4, 1998; Page A1

    BAKU, Azerbaijan – The message that Amoco Corp.'s T. Don Stacy took to a small political gathering on the morning of Aug. 6, 1996, seemed hopelessly obscure compared with the usual concerns of the lobbyists and business tycoons assembled at the White House.

    Stacy, who directed Eurasian operations for the Chicago-based oil company, was incensed at what he considered misguided U.S. policies toward a remote Central Asian country on the western shore of the Caspian Sea – hardly a preoccupation of, for example, New York Yankees' owner George Steinbrenner, one of those on hand.

    But as Stacy pressed his points on the strategic importance of Azerbaijan's oil deposits, one listener was riveted. Without waiting for Stacy to finish, President Clinton jumped in to clarify several geopolitical points, then strode to a blackboard and drew a remarkably accurate map of the Caspian region.

    Before the meeting ended, Amoco – the largest U.S. investor in Azerbaijan's oil boom – had what it wanted: a promise from Clinton to invite the Azerbaijani president to Washington. Six months later the company, which traditionally donated heavily to the Republicans, contributed $50,000 to the Democratic Party. In August 1997, Clinton received President Heydar Aliyev with full honors, witnessed the signing of a new Amoco oil exploration deal and promised to lobby Congress to lift U.S. economic sanctions on Azerbaijan.

    The ties between Amoco and Azerbaijan – and Amoco's role in pushing the United States closer to this Caspian nation – reflect a complex new choreography involving oil companies, big powers and regional governments vying for influence in the strategic borderlands between Russia and the Middle East.

    The key players are not only familiar companies such as Amoco, Mobil Corp. and Chevron Corp., but also senior officials of governments stretching from Washington to Moscow, and Beijing to Tehran. The stakes are enormous financially and, as Clinton's energetic intervention suggested, geopolitically. Azerbaijan, like neighboring Turkmenistan and Kazakhstan, sought to lure American oil companies and then the U.S. government to help shore up its financial and political independence.

    The ultimate prize is an oil and gas patch potentially larger than those discovered three decades ago in the North Sea and Alaska's North Slope. U.S. experts estimate that the region could produce at least 3 million barrels of oil a day by 2010, worth $14 billion a year at current prices. That is far less than Saudi Arabia but more than Kuwait – although a vocal minority of analysts believes the Caspian's reserves have been substantially overestimated. The region's reserves of natural gas – a relatively clean fuel for a world fretting over pollution and global warming – are the world's third largest behind the Middle East and Russia, according to a State Department report.

    The drive by U.S. companies to exploit these resources already has produced a political realignment of historic dimensions, including an unprecedented American presence in a region that had been under almost continuous Russian control since the mid-19th century.

    Azeri refugees
    Oil companies claim U.S. sanctions against Azerbaijan limit U.S. aid to Azeri refugees like these at Saatli.
    (By Dan Morgan – The Washington Post)
    But U.S. interest in the region also poses risks and policy dilemmas for the United States that seem likely to intensify.

    Foremost is the U.S. relationship with Moscow. Both imperial Russia and the Soviet Union viewed the Caspian resources as a birthright. Now Russia accuses Washington of maneuvering to limit Moscow's control and establish a U.S. sphere of influence in the region.

    Caspian oil also is central to the Clinton administration's internal debate over U.S. relations with Tehran. Some American oil companies view Iran as the cheapest, fastest exit route for Caspian oil; that's counter to other interests – and Clinton administration policy – favoring continued U.S. government efforts to isolate the Islamic state.

    American involvement is just what the leaders of the newly independent nations of Azerbaijan, Kazakhstan and Turkmenistan wanted when they set about early in the decade to woo companies flying the flag of the world's only superpower.

    "They recognized that with the forces they have around them – Russia and Iran – only a strong relationship with the United States provides an opportunity for stability and for not being totally dominated," said a U.S. oil executive who requested anonymity. "Since the U.S. government was slow to pick up on the importance of the region, they forged relations with U.S. business."

    "We used oil for our major goal ... to become a real country," said Ilham Aliyev, vice president of Azerbaijan's state oil company and son of the country's president.

    By investing more than $2 billion in the three former Soviet republics with most of the Caspian's oil and gas, American oil companies helped revive collapsed economies and end more than a century of economic dependence on Russia. But there were political and strategic gains as well.

    American oil companies became advocates in Washington for the Caspian governments, calling attention to Caspian wealth, supporting Caspian political causes and putting the Caspian on the agenda of Washington's policy debates.

    Representatives of American oil companies in Azerbaijan, for example, pressed administration officials "at every forum, meeting and luncheon" to become more involved in ending a bloody territorial dispute between Azerbaijan and Armenia, according to one U.S. executive. Last year, with Clinton's support, they also lobbied successfully in Congress to ease U.S. economic sanctions on Azerbaijan imposed in 1992 because of its war with Armenia.

    Chevron Corp., the U.S. oil company with the largest investment in Kazakhstan, has battled in Moscow and Washington on behalf of a Kazakh plan to redirect the country's oil exports from the Russian market to hard-currency Western ones – crucial to the economic independence of Kazakhstan. Mobil Corp. placed advertisements in U.S. newspapers earlier this year extolling the accomplishments of the government of Turkmenistan, led by a controversial, former Communist strongman.

    These relationships are binding the U.S. government closer to a region beset by ethnic rivalries and armed separatist movements, and ruled by corrupt, autocratic regimes. The United States, in pursuing Caspian oil, risks becoming embroiled in a "zone of instability and crisis," according to Martha Brill Olcott, a Russian specialist at the Carnegie Endowment for International Peace.

    The ties that bind the United States to the Caspian region seem certain to tighten, if only because U.S. energy companies have few alternatives as attractive. They are blocked by U.S. policy from investing in Iran and Iraq, and prospects elsewhere pale compared with the Caspian.

    The blunt truth, according to one American oil man, is that "there are not a lot of Caspians out there."

    How the United States came to be a player so far from home is a story of post-Cold War geopolitics and old-fashioned wildcatters, of a weakened Moscow and an emboldened Washington, of oil and money and power. And it is a tale with an ending still being written.

    Page Two | Printable Full Text

    © Copyright 1998 The Washington Post Company

    Back to the top

    Navigation Bar
    Navigation Bar