[Peakoil] Yushchenko, Ukriane and Oil

[roland mccall]

www.spectator.co.uk
Issue: 5 March 2005 Issue:

One for oil and oil for one

Michael Meacher says that the fuss over Ukraine was about the geopolitics of 
oil, and the growing conflict between the US and China


Yes, our man (Yushchenko) and our system (democracy) won in Ukraine, and 
once again good triumphed over bad. Yet this presentation, so characteristic 
of the Western media, misses the point about what the struggle is really 
about.

If the issue was fair elections, there would have been an equal furore about 
the grossly rigged elections by which Ilham Aliyev assumed the presidency of 
Azerbaijan in 2003 from his father, a ruthless KGB hardman in the former 
Soviet state. In fact the West turned a blind eye, in order to maintain 
access to Azerbaijan’s oil supplies after a $13 billion contract had been 
signed with BP in 1998. Equally, there would have been uproar when the 
pro-Russian Shevardnadze was ousted as President of Georgia in 2003 and the 
West’s favoured candidate won 96 per cent of the vote to replace him. But 
nobody raised any complaint.

If the issue was legitimate government, much more attention would have been 
focused on Yushchenko’s aides and the tenor of his administration. His 
closest aide, Julia Timoshenko, known as Ukraine’s ‘gas princess’, and now 
appointed Prime Minister, has been widely accused by both the Russian and 
Ukrainian authorities of bribery and embezzlement. Another aide admits that 
‘the key people in the Yushchenko team are from the same oligarchic mould as 
our opponents’. Economic interests, not political principle, pitted them 
against the Yanukovich camp. Many fear that turning over state power to 
entrenched oligarchs like these will make Yushchenko’s government little 
different from its predecessor.

What is really at stake is something quite different, almost entirely 
unmentioned in the Western media. It is rather more prosaic than a ‘people 
power’ revolution. It is primarily a battle over oil transit routes from the 
second largest remaining oil deposits in the world, and, more long term, a 
US attempt to pre-empt Chinese designs on the key strategic space round the 
southern rim of the old Soviet Union.

In May 2000 an oilfield containing 20–50 billion barrels of oil was 
discovered in the Caspian Sea off the Kazakhstan coast, probably the biggest 
hitherto untapped reserve in the world. But, with major exploration only now 
getting under way, early seismic studies suggest vast resources of 
hydrocarbons ranging from 70–200 billion barrels of oil and some 250 
trillion cubic feet of gas — less than in the Middle East but much more than 
in the US and Europe.

The geopolitical problem, however, centres on the fact that the Caspian Sea 
is landlocked, so that oil and gas have to be transported by pipeline to a 
terminal on the open sea. One relatively short route runs through Iran, but 
that is not acceptable to the US. Another plan, from the US oil company 
Unocal, was to extend Turkmenistan’s existing route through Afghanistan and 
Pakistan on to the Arabian Sea, and this was a consideration behind 
launching the war against Afghanistan in 2001. A third alternative is a 
pipeline westwards from the Caspian port of Baku through Georgia to the 
Turkish port of Ceyhan on the Mediterranean; but this has been heavily 
opposed on grounds of environmental destruction. A fourth option is a 
pipeline from Kazakh to the Black Sea, but this has the severe drawback of 
tanker congestion in the Bosphorus.

Against this background, Ukraine’s geographical location makes it an ideal 
corridor for oil and natural gas from the Caspian region to Western markets. 
The most suitable conduit is the Odessa–Brody pipeline which was completed 
in 2001 and runs north from Ukraine’s Black Sea port to the city of Brody, 
and is thence extended to the refinery at Plotsk in Poland and a further 
link to the Baltic port of Gdansk. However, this has been blocked hitherto 
by Moscow’s stubborn insistence on operating the pipeline in the reverse 
direction, to move oil from Russia southwards to tankers in the Black Sea 
for onward shipping to world markets. Moscow has also tried to drag Ukraine 
into a customs or even an economic union in the framework of its so-called 
Integrated Economic Zone. By depriving Ukraine of its European prospects and 
hence of its opportunity to become more independent economically, the 
Kremlin has been trying to pull Kiev back into Moscow’s orbit.

What has been at stake in Ukraine is less a fight over democracy than a 
struggle over the geopolitics of oil and military reach. If Ukraine is 
absorbed into the Nato orbit, Russia will be deprived of access to its naval 
bases in the Crimea, and Russian oil and gas exports will be squeezed by a 
new US straitjacket.

But the significance of the Ukrainian confrontation goes even wider. China 
remains the sole long-term challenger to US hegemony, and while the Chinese 
economy has been expanding at a phenomenal rate, its weakness continues to 
be its energy supply. Once oil-independent, China has over the last decade 
become increasingly reliant on imports, which now account for 60 per cent of 
its oil consumption, compared with only 6 per cent in 1993. Within the next 
five years, according to Beijing, China will be importing 50 million tons of 
oil and 50 billion cubic metres of gas annually.

Chinese petro-diplomacy already extends worldwide, including Africa, and it 
is busily establishing surveillance stations, naval facilities and airstrips 
to safeguard the oil route from the Gulf to the South China Sea. But its 
main goal in escaping dependence on maritime oil supplies is access to 
Russian and central Asian oil. Another facet, therefore, of intense US 
pressure on Ukraine is to forestall any Chinese encroachment on this 
oil-strategic area in the soft underbelly of the former Soviet Union. 
Ukraine is in reality a key flashpoint in the new Great Game being played 
out by the US, not so much with Russia, still a declining force, but with 
China, the emerging long-term threat.


www.spectator.co.uk