Complexities in the Iran-Pakistan pipeline deal.

Bruce Pannier [Radio Free Europe/Radio Liberty] provides further information on the recently announced pipeline deal between Iran and Pakistan [What Are The Prospects For Iran-Pakistan ‘Pipeline Of Peace’?, May 25, 09].

Deals for infrastructural development like this are important because they establish new long term mutual relationships and effectively reduce the cost of, in this case, the transport and accessibility of a good that is vital to the maintenance of a modern society. They indicate practical arrangements that become possible only in certain friendly contexts and that can establish a mutual dependence that in the long run will be costly to disrupt. So we see this announced deal as evidence of a willingness to become mutually more interdependent, thus tightening relations of mutual interest in the Middle East-South Asian region. It’s one more way of making the world smaller and vital goods (gas for Pakistan; money for Iran) more accessible to wider numbers of people.

But in this case, as in most such arrangements, there are serious issues yet to resolve. Here are some details of importance that are mentioned in the article:
• This is a 25-year deal that could export some 150 million cubic meters of gas to Pakistan per day.
• The pipeline would extend 2,100 kilometers from Iran’s South Pars field into Pakistan, starting in the city of Asalouyeh. Even though India is not a part of this deal it is hoped that an agreement could be made for the pipeline to be extended into India, another 600 kilometers.
• One of the main problems is how to fund the project. The Asian Development Bank has shown no interest in supporting this project even though it is willing to back the rival gas pipeline from Turkmenistan through Afghanistan to Pakistan.
• That Iran and Pakistan abut each other in Baluchistan means that the new pipeline will have to pass through an unstable region, as Baluch nationalists who want more autonomy have already disrupted Pakistan’s only local gas pipeline.
• The project could start within the next three or four years and take five years to build.

A gas deal between Iran and Pakistan

According to AFP Iran and Pakistan have announced that they are about to sign an agreement to export gas to Pakistan. India was once to be part of the deal but they withdrew from talks about the deal last year. The report says, “The 900-kilometre (560-mile) pipeline is being built between Asalooyeh in southern Iran and Iranshahr near the border with Pakistan and will carry the gas from Iran’s South Pars field.” It says that only 250 kilometers of pipeline was still to be constructed. The infrastructural mechanisms for integrating south Asia and Central Asia is proceeding apace, with large implications. Pakistan’s need for gas will soon be desperate. It will pass through Baluchistan, making a zone of dissidence that is already vital because of its own gas reserves all the most vitally important to the country of Pakistan.

Tajikistan’s troubles are mounting [Wired]

Below I highlight some issues of interest. RLC

“Central Asia’s cold war over heat” Pulitzer Center Wired

By Ilan Greenberg

March 26, 2009

Wired

Ilan Greenberg, a journalist based in New York, lived in Central Asia from 2002 to 2007. The Pulitzer Center on Crisis Reporting contributed funding for the reporting of this article from Khojand, Tajikistan.

“This is why we have no electricity, no water,” says Alovutdin Sololiev, waving at the broken-down traffic lights as he speeds into a major intersection, asserting a right of way not recognised by other drivers. His gesture extends from the dead signals to the belching little gas generators with rubber hoses, which colonise the pavements like a maze of octopuses stranded on cement. “Nobody wants to stop and figure out rules.”

Since gaining independence from the Soviet Union almost 20 years ago, most of Tajikistan – including big cities like Khojand – has little access to electricity or running water for the majority of the year. Tajikistan generates electricity from hydroelectric dams, which don’t work when the country’s alpine lakes freeze during winter months. Without electricity, the country can’t run the Soviet-era pump technology that delivers clean water to cities, villages, and farms.

Central Asia’s political problems compound Tajikistan’s resource problems. A deal it struck this winter to buy electricity from neighbouring Turkmenistan, for example, was terminated by Uzbekistan, which controls a critical piece of the grid between the two countries. The governments of Tajikistan and Uzbekistan are currently having back-room talks, according to diplomats in the region, but the two countries have long been engaged in a resource-driven cold war. Each side has multiple grievances against the other, but key among them are Tajikistan’s demands that Uzbekistan supply its energy and Uzbekistan’s demand that Tajikistan release more water downstream.

The volatile resource conflict flares beyond Tajikistan across Central Asia, the massive centre of the Eurasian continent which stretches into Russia. However, unlike Europe’s recent energy crises, which were rooted in Russia’s foreign policy goals, Central Asia’s energy issues are mostly homegrown. The region is rich in oil and gas – and in Tajikistan, rich in water – but hampered by state rivalries, quixotically drawn borders, authoritarian modes of government and daunting pipeline problems informed by geographical isolation and crippling geopolitical calculations.

While the problems begin at home, Russia’s role in the politics of energy in Central Asia is starting to grow. “Russia in various ways has started to insert itself into these intra-regional power conflicts,” says Katherine Hardin, senior director for Russia and Caspian research at Cambridge Energy Research Associates, an energy consultancy in Cambridge, Massachusetts. Russia is Central Asia’s major customer for natural gas and weakening demand from Europe is likely to affect gas deliveries to Russia, said Hardin.

Russia sells Europe all the gas Europe will buy, gaining foreign currency and profit in the process, but it doesn’t have enough gas to meet both European and domestic demand. Russia therefore buys Central Asian gas on the cheap, using its control of the supply route to Europe as a bargaining chip to demand low prices, and then marks up the gas and re-exports it to Europe. Slackening European demand for gas means Russia can meet most of Europe’s needs with its own gas supplies, and that has pushed down demand for Central Asian gas. That, in turn, could jeopardise a large portion of some Central Asian governments’ revenues. “It’s interesting to me that we’re seeing Gazprom sticking itself into the region, and to ask how that will play out,” said Hardin.

Russian economic difficulties are poised to exacerbate the region’s resource conflict. The global financial crisis imperils the payments from Russia on which Central Asia relies, potentially destabilising regimes, expanding powerful criminal networks, and disrupting Nato strategies in Afghanistan, which shares a long northern border with Tajikistan, Uzbekistan and Turkmenistan. In a recently released report widely cited by Western diplomats here, the International Crisis Group concluded that there is a risk of social unrest in Tajikistan, and that the country is no longer a “bulwark against the spread of extremism and violence from Afghanistan.”

Back in Khojand, Sololiev drives his car through the city’s dangerously laissez-faire intersections to pick up home repair supplies. His visit to Tajikistan is a brief one: he has returned from a job as a construction worker in Russia to spend March with his family, but plans to return to Russia next month, when he hopes Russia’s massive building spree will resume. This pattern of work is not uncommon. More than a million Tajik migrants work in Russia’s seasonal construction industry, as well as in Russian factories and in its agriculture sector. According to the International Monetary Fund, half of Tajikistan’s GDP is derived from the income of workers in Russia.

Tajikistan has almost no jobs to offer returning migrant workers. Sololiev knows of only two factories in Khojand, Tajikistan’s second largest city: a spirits factory, and an Italian-Tajik jeans manufacturing co-venture. The government has promised to hire 5,000 workers to build one of two new planned dams, but wages are expected to be low. The energy problem, meanwhile, has encouraged an across-the-board lack of business investment. Money from pay cheques have been poured into home repairs and used cars imported from Russia and Europe, but without electricity in winter, few returning migrants have started new businesses.

“How can I work in Tajikistan without electricity? I have to go back to Russia. Whether there is work in Russia for me is something I can’t think about. Let the Russians think about it,” said Sololiev, still driving his car, newly purchased.

See the story as it ran at Wired.co.uk

For related reporting and dispatches from the field in Tajikistan visit the Tajikistan: Winter of Discontent project page.

Tajikistan: Winter of Discontent is part of our Food Insecurity project that includes Nigeria: Oil Rich but Hungry and Stalking a Wheat Killer.

China and Iran: $3.2 billion natural gas deal

LA Times is reporting this deal as if it were a surprise. It has been in the works for years. But it is important, not because it shows how ineffective economic sanctions are (what LATimes makes of the deal), but because it shows how many ways infrastructural investments are tying Eurasia more tightly together, much of it centering on China. Iran’s saber-rattling to the west is pomposity and hubris; its deals with China, India and Pakistan to the east are investments for the future.

For those of us interested in Central Eurasia, this deal is yet one more sign of how strategic Central Asia is becoming. For those of us who would like to assess trends for the future in Eurasia infrastructural developments are a pretty good index of trends that are likely to hold up for a long time. RLC
[click on the title above for a link to the source article.]

Iran signs $3.2-billion natural gas deal with China

By Borzou Daragahi March 15, 2009
Reporting from Beirut –

Iran announced a $3.2-billion natural gas deal with China on Saturday, a move that underscored the difficulty of using economic sanctions to pressure Tehran to bow to Washington’s demands on its nuclear program.

Iranian state television quoted a senior government official as saying the deal with a Chinese consortium, announced two days after the Obama administration renewed U.S. sanctions against the Islamic Republic, would eventually include an unnamed European country as a partner.

Under the three-year deal, China will help develop the South Pars field, a sprawling cavity beneath the Persian Gulf seabed that is part of what geologists describe as the world’s largest natural gas reservoir.

Washington has routinely renewed embargoes on doing industrial-scale business with Iran since the 1990s, even barring foreign companies that do more than $10 million a year of business with the Islamic Republic from operating in the U.S.

Under Washington’s pressure, the French energy giant Total has quietly scaled back plans to develop Iranian gas fields. But many companies still do business with Iran, especially from the rapidly expanding Asian economic and political powerhouses of India and China and in countries with few commercial ties to the U.S., such as Russia.

Iran says it supplies China with 14% of its oil and recently announced that it was signing a $1.3-billion deal for two methanol plants with the Danish firm Haldor Topsoe and a $260-million deal for a tire factory with Italy’s Maire Tecnimont.

On Thursday, the Obama administration extended U.S. sanctions for another year, a move Iranian President Mahmoud Ahmadinejad dismissed as “childish.” President Obama has called for talks with Tehran as a way of resolving a years-long dispute over the nature of Iran’s nuclear energy program and its support for Lebanese and Palestinian militant groups opposed to Israel.

Some European officials, frustrated after years of attempts at dialogue with Iran, say that Obama must work harder to coordinate his policies with Moscow and Beijing.

“The big challenge will be to get the Russians and Chinese on board for tougher actions and sanctions once [the Americans] try to engage and fail,” said a Western diplomat in Tehran, speaking on condition of anonymity.

Advocates of sanctions say they keep Tehran’s ambitions in check and its leadership isolated by denying Iran revenue and technical expertise.

But Iranian officials say sanctions hurt mostly ordinary people while convincing all Iranians of the need to forgo Western partners in favor of cultivating their own technological advances. That includes Iran’s controversial drive to master the enrichment of uranium, a process that can be used to produce fuel for a nuclear reactor or fissile material for a bomb.

daragahi@latimes.com

Los Angeles Times

Russian geopolitics, gas pipelines, and underlying health trends in Central Asia

From the recent New York Review (Feb 12, 2009): Christian Caryl’s review of Edward Lucas’s book, The New Cold War: Putin’s Russia and the Threat to the West brings together a number of sensible insights about Russia today.

For one thing, there is the discussion of the practical entailments of producing and distributing gas as opposed to oil in Eurasia.

Natural gas pipelines are immensely expensive. Once a line connecting a particular field with a particular consumer has been built, investors tend to be leery of putting money into duplicate or partially overlapping routes. And if the builder of the first pipeline refuses to allow it to be used by competing suppliers, consumers will be left with only one choice. This means that the monopolistic supplier can exploit its route to its own advantage in a myriad of ways—including, in the case of Russia, to exert political pressure.

And this, indeed, is precisely what Gazprom, Russia’s powerful state-dominated gas monopoly, has done. Gazprom—whose chairman during much of the Putin administration was Medvedev, the current president and close Putin ally—doesn’t just own most of Russia’s gas fields; it also controls access to the pipelines that bring that gas to markets—above all to the European Union, which despite its status as the world’s largest economy has relatively little in the way of indigenous energy resources and finds itself correspondingly dependent on Russian petroleum products. (By 2004, Russia was the sole gas supplier to Estonia, Finland, Latvia, Lithuania, Moldova, and Slovakia; and the principal supplier to Germany, Greece, Bulgaria, Hungary, Poland, Austria, the Czech Republic, and Turkey. Overall, it accounts for nearly 30 percent of the EU’s gas supply.) Gazprom has already shown its willingness to employ its stranglehold over energy supplies as a political weapon, even if it often does so in the guise of dispassionate adjustment to market realities.

As we have seen in the startling recent dispute with Ukraine, governments that disagree with Russian policy have been punished by overnight price hikes or interruptions in service. The Ukraine standoff began in the last days of 2008, ostensibly over Russia’s demand for a large increase in the price Ukraine pays for its gas; but the ensuing shutdown affected much of Europe, including leading nations such as Germany, and some analysts suggest that the standoff has been a way for Russia to warn the West about exerting too much influence in Ukrainian affairs. In fact much of the gas Russia sends westward actually comes from the Central Asian republic of Turkmenistan, which is forced to sell to the Russians at bargain-basement rates since Gazprom pipelines are the only way the Turkmens can get their gas to market.

Another issue: He also points out a contradiction (possibly an emerging issue in the future?) between how the Russians view Ukraine and how the Ukrainians view themselves.

But the real flashpoint—the fulcrum of Eurasia’s destiny, as the recent natural gas crisis reminds us—is Ukraine, a big and unstable country that has always been a focus of geopolitical competition. A large chunk of Russia’s navy, the Black Sea Fleet, is still based in Crimea, and many Russians continue to regard Ukraine in much the same way that Serbs see Kosovo—as a heartland of their own national culture. At the same time, although more than 20 percent of the Ukrainian population are ethnic Russians, a large and apparently growing number of Ukrainians increasingly link their own national identity and historical destiny with Europe rather than their neighbor to the east.

And the contradiction is already imbedded in the Ukrainian cabinet: There has been a

long-running feud between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, who recently traveled to Moscow for a round of surprisingly convivial negotiations with Putin.

Other details of interest:
• “Russian spying in Europe and the US … has, in fact, reached levels comparable to the bad old days of the Soviet Union.” [p23]
• “What he insists upon very strongly is that Europe must make every effort it can to reduce its dependency on Russian energy supplies by creating a Europe-wide energy market with diversified sources of supply. [He proposes that] … European countries should cooperate in developing pipelines that would connect their market with Central Asian suppliers such as Turkmenistan and Kazakhstan while bypassing Russian intermediaries” [p23] [That would be nice, but how effectively could they manage that, given that Russia, recognizing that possibility, seems eager to position itself as the hegemon in Central Asia? Russia has demonstrated its readiness to intervene in such affairs, as it already has for other reasons in Chechnya and Georgia.]
• “Russia, contrary to all the feverish talk about its presumed status as a revived superpower, is nothing of the kind. It is a rising regional power that enjoys the benefit of immense geographical reach and huge natural resources. Yes, it has a nuclear arsenal and a big army—but, as Lucas correctly notes, the former is outdated and poorly maintained, . . . Meanwhile, the financial crisis has dramatically highlighted the anemic basis of Russia’s supposedly formidable economy. . . . Russia’s international image has deteriorated sharply, and investors both domestic and foreign have bolted. . . . Russia’s stock markets [have lost] up to 75 percent of their value …. Meanwhile, the country’s extraordinary demographic decline—aggravated by a nationwide drug and alcohol epidemic, a catastrophically underfunded health system, and the rapid spread of AIDS—continues seemingly unchecked. . . . One good start, though, might be to exercise a bit more caution in how we employ historical analogies. In reality we are not entering a “New Cold War” or anything like it. What we are facing is the messy challenge of figuring out where a big, ailing, mournfully post-imperial Russia fits into the chaotic twenty-first century.” [p24]

This last note on the internal decay of Russian society makes us wonder what’s going on in the other states of Central Asia, not only the “stans,” but also Iran, Afghanistan and Pakistan. If anything, health conditions in those countries are worse than in Russia. Even if, presumably, alcohol is less of a problem in those countries, we do know that drug consumption in some of them has been rising rapidly. A friend of mine has seen the figures on Iran: Iran has the highest incidence of drug abuse in the world.

The real reason Kyrghyzstan threw out the Americans [?]

Joshua Kucera has given us some insight into why the Americans were thrown out of the Manas airbase in Kyrghyzstan. His explanation seems consistent with the trends in Central Asia anyway: That is, that Russia holds the strategic cards and seems to be ready to play them aggressively. The effect could be to establish Russia as a formidable hegemon in the region between Europe and China, because it has the advantage of strategic location and a surfeit of energy reserves that are vital to the populations at both ends of the Eurasian continent. This is the connection of Russian activities in Georgia and before that in Chechnya.

The old arguments about the difficulty for the Russian- Soviet empires to define “where to stop” in their dealings with their frontiers seem still relevant; there are few natural boundaries eastward from the Russian metropol, and there is a continual worry about what can develop on the frontiers. Prudence under such conditions suggests that it is wise to address frontier issues aggressively before they threaten the integrity of the system, given that it is already threatened by many internal faultlines. For an empire that stands on feet of clay, geography still matters, even in this post-modern world — and thus, geopolitics.

guardian.co.uk, Thursday 5 February 2009 15.00 GMT
Kyrgyzstan shows US the door, by Joshua Kuceea

More than a rent dispute, America’s eviction from a key military base is fallout from Russia’s fight with Georgia
The war between Russia and Georgia last summer has claimed another victim: the US airbase in Kyrgyzstan.

The details of the US’s apparent ejection from its only remaining base in ex-Soviet Central Asia remain murky, but initial reports suggest that the US was simply outbid by Russia. Russia offered a $2bn aid package to Kyrgyzstan, and the US’s $150m annual payments to Kyrgyzstan suddenly looked pretty paltry. Underscoring the point, the president of Kyrgyzstan made the announcement not at home, but while on a trip to Moscow.

So it’s tempting to write this off as bazaar politics. But the seeds for this move were sown last August in Georgia, when the US failed to do anything substantial to support its close ally in its war against Russia. Georgia, remember, sent a quarter of its armed forces to Iraq, despite the presence of two festering conflicts on its own soil, solely to curry favour with the US. It enacted free-market economic reforms so quickly, and in spite of significant social dislocation, that it was named the top reforming country in the world by the World Bank.

So when Georgia went to war with Russia and the US stood by, it sent a strong signal to the rest of America’s would-be allies in the former Soviet Union. (Remember also, while it’s now clear that Georgia and Russia were both culpable for that war breaking out, as soon as fighting started US officials immediately blamed Russia.) If the US isn’t going to defend Georgia, would it defend Azerbaijan, or Ukraine or Kazakhstan?

Kyrgyzstan has apparently answered that question for itself by jettisoning the Americans in favour of Russia. The US base has been controversial in Kyrgyzstan. There were disputes over fuel dumping, the shooting of a Kyrgyzstan citizen by an American base guard and the rent paid by the Americans. In 2007, Kyrgyzstan raised the rent from $2m a year to about $63m a year, and the US provides a total aid package to the country of about $150m a year. While Kyrgyzstan officials frequently complained about the base, US officials believed it was just a bargaining technique, intended to drive up the price. (Russia has its own airbase in Kyrgyzstan, for which it pays no rent.)

I was in Kyrgyzstan about 18 months ago, and one diplomat told me: “I don’t think Kyrgyzstan is interested in driving out the base. … The US is providing about $150m a year in aid, and they have to expect that if the airbase leaves some of that will disappear, and Russia and China won’t be able to compensate for it.” Well, Russia has called America’s bluff, again.

The base is a supply hub for US operations in Afghanistan, and the implications of its closure on the US effort there would likely be dire. The US has already been kicked out of one base in Central Asia, the Karshi-Khanabad air base in Uzbekistan. And the US – about to double its footprint in Afghanistan – was already struggling to figure out how to get the extra supplies there, even before Kyrgyzstan’s announcement.

Which makes the apparent Russian hand behind this move all the more puzzling. Conventional wisdom about the base said that Russia, while occasionally complaining about it in public, privately wanted it to stay. Russia was just as afraid of Islamist extremism as was the US, this logic went, and was perfectly happy to have the US spending its blood and treasure defeating the Taliban.

According to Russia’s Nato representative, that logic has now been reversed, arguing that the US presence in Afghanistan is actually fomenting instability there: “Americans’ failure in Afghanistan is creating a bigger threat to neighbouring countries. Military actions, which are being aimed against civilians, helped those who were not going to take sides with the Taliban movement and other extremists,” he said, by way of explaining the Kyrgyzstan government’s decision.

It’s not clear whether we should take this statement at face value. Were Churchill alive for Putin’s Russia, he surely would have added a couple extra layers of inscrutability to the “riddle, wrapped in a mystery, inside an enigma” line. The second part of Churchill’s quote, though, is less often remembered: “But perhaps there is a key. That key is Russian national interest.” Russia has apparently decided that thwarting the US military presence in Central Asia is now more in its interest than supporting the US in Afghanistan.

But Kyrgyzstan should be able to stand up to Russian threats or bribery, as long as it has a little backup. What the US showed in Georgia, though, is that in the end Kyrgyzstan is on its own.

[Joshua Kucera: The real reason the US is being evicted from its airbase in Kyrgyzstan] This article was first published on guardian.co.uk at 15.00 GMT on Thursday 5 February 2009. It was last updated at 15.00 GMT on Thursday 5 February 2009.
guardian.co.uk © Guardian News and Media Limited 2009

Problems of access into and out of Afghanistan

To the bombing of a crucial bridge in Khybar is added the closing of the Manas Air Base in Kyrghyzstan. And along with that is the Russian posturing over American influence in Central Asia. All this threatens the American project in Afghanistan at a time when the situation seems ever more precarious.

But there are even other reasons to be concerned about Afghanistan. To me, one of the most worrying aspects of the situation is the conflicting opinions of “experts” claiming to know what to do about Afghanistan: We need to add more troops, says one; we need to reduce our troop presence, says another (George Friedman in today’s New York Times); Afghanistan isn’t worth it anyways, says another; it’s very important according to others [like me]; anyway it’s the graveyard of empires, some say (we just heard a list of such cliches on Bill Moyers’ PBS show the other night).

I distrust the cliches: Instead I hope the American project in Afghanistan and Pakistan is taken on seriously, professionally, as a long term commitment to these ever more strategic countries. There is no other way.

Come to think of it, that’s another reason to worry: For the Americans have rarely made that kind of commitment to far-away places.

Below is McClatchy’s report on the problem of supplying the American/ European war in Afghanistan. [at http://www.mcclatchydc.com/251/story/61394.htm today]

McClatchy Washington Bureau

U.S. supply routes to Afghanistan suffer two huge blows

By Tom Lasseter and Jonathan S. Landay | McClatchy Newspapers

February 03, 2009 07:59:35 PM

MOSCOW — The U.S.-led campaign against the Taliban suffered two logistical blows Tuesday as the president of Kyrgyzstan announced that he’d shut a U.S. airbase in his country and insurgents in Pakistan blew up a bridge, disrupting the main U.S. supply route into Afghanistan.

The developments were the latest reminders of the vulnerability of the long and complex transportation system on which the 60,000 U.S.-led forces in Afghanistan depend for fuel, ammunition, construction materials and a great deal more.

The announcement by Kyrgyzstan President Kurmanbek Bakiyev that he will close the Manas Air Base also gave President Barack Obama a first taste of the challenge he faces from Russia, which is trying to restore its clout in countries that were part of the former Soviet Union.

Bakiyev made his announcement in Moscow, not in his own capital, shortly after the Russian government reportedly agreed to lend Kyrgyzstan $2 billion, write off $180 million in debt and add another $150 million in aid. The timing and place of the announcement indicated the Kremlin’s involvement.

“It’s a direct challenge to the new American administration. Russia is going out of its way to close an American base,” said Pavel Felgenhauer, a Moscow-based military analyst.

Manas is the main transit point through which U.S. troops fly into and out of Afghanistan. As such, it is vital to plans to send 30,000 more American troops to stabilize Afghanistan. A U.S. Air Force Web site calls it “the premier air-mobility hub” for U.S. and allied operations in Afghanistan, with about 1,000 military personnel from America, Spain and France stationed there.

A senior U.S. military official said the U.S. military hopes Bakiyev’s decision is not final but is the latest gambit in what has been a lengthy effort to squeeze more money out of Washington.

“There is a long list of things that he wants, some of which we can’t do, like debt relief, relieving the debt he owes other governments,” said the U.S. military official. “The bottom line, we hope, is that this is simply a card being played as part of the negotiating process. Obviously, we don’t want to lose Manas.”

Another U.S. official, who also spoke on condition of anonymity, said Bakiyev had been trying to play the U.S. off against Russia for months in order to secure more funds. The official could not be identified by name because he was unauthorized to speak to reporters.

The U.S. has been paying Kyrgyzstan about $63 million a year to use Manas. The money is part of some $150 million in annual direct and indirect U.S. aid.

Gen. David Petraeus, the head of the U.S. Central Command, which oversees U.S. military operations in the Middle East and South Asia, said senior Kyrgyz officials had assured him that there were no discussions between the country and Russia about closing the base in exchange for aid.

The senior U.S. military official said the base is also used to “bed down” U.S. tanker aircraft used for mid-aid refueling operations over Afghanistan.

Bakiyev explained in Moscow that the decision had been made because “we have repeatedly raised with the U.S. the matter of economic compensation for the existence of the base in Kyrgyzstan, but we have not been understood,” Russian media reported.

Bakiyev said that after the base opened in 2001 the understanding was that “it was one or two years that were being talked about. Eight years have passed.”

The Soviet invasion of Afghanistan in 1979 touched off 30 years of war, and Moscow is again turning into a player in Afghan politics. Two days before Obama’s inauguration, the Afghan government said that Russia had accepted a request from President Hamid Karzai for military aid.

And last month, the Kremlin said it would open transportation lines through Russia to Afghanistan to help U.S. forces circumvent the violence-plagued route across the Pakistani border.

Although he didn’t cite the base closing, Russian President Dmitry Medvedev made a point of saying in Moscow that Kyrgyzstan and Russia “are open to coordinated action” with the U.S.-led coalition in Afghanistan.

Analyst Felgenhauer said the message from the two actions was clear: The Kremlin is willing to help the American military in Afghanistan, but only on the condition that the U.S. recognizes its authority in central Asia.

Or, more simply put, “we will not allow their bases in our sphere of influence,” said Felgenhauer, a critic of Kremlin policy.

In Pakistan, meanwhile, Islamic insurgents allied with the Taliban blew up a bridge in the Khyber Pass, disrupting one of two truck routes from the port of Karachi by which U.S.-led NATO forces in Afghanistan receive about 80 percent of their supplies.

(Landay reported from Washington.)

Uzbek electricty to Kabul

News that Uzbekistan is supplying electricity to Afghanistan is important. MOre sign that the infrastructural relations are getting established, so far.

Reuters India reports:
Afghans see capital city in a new light
Tue Jan 27, 2009 11:04pm IST

By Jonathon Burch

KABUL (Reuters) – For most people in the Afghan capital Kabul, electricity used to be something of a luxury, but thanks to neighbouring Uzbekistan many homes now enjoy almost uninterrupted power.

Afghanistan is one of the poorest and least developed countries in the world. Three decades of war have destroyed what little infrastructure existed and, despite millions of dollars of aid, progress has been slow.

Only about 7 percent of the country’s population has access to electricity, according to 2007 government figures, and Afghan energy distribution ranks among the lowest in the world at under 20 kWh per capita.

But a new power line from Uzbekistan began transmitting electricity to Kabul less than a week ago as part of an Afghan long-term energy development strategy.

“Five days ago we started receiving 20 MW (megawatts) from Uzbekistan and today we will start receiving another 20 MW,” Engineer Wahid Qayum, in charge of electricity provision for the entire country, told Reuters.

“We are now able to provide 180 MW of power to Kabul at peak times, and 160 MW at other times,” Qayum said.

The total still falls well short of the 300 MW that Kabul needs, but the new transmission line, jointly funded by India and the Asian Development Bank, will gradually increase output over the next couple of months, Qayum said.

In two months the new line is expected to deliver 150 MW of power, 120 MW of which will be allocated to Kabul and the remaining 30 MW to the northern city of Mazar-i-Sharif.

“In two months, all of Kabul will have 24-hour electricity,” Qayum said.

“LIGHTER AND BRIGHTER”

While some homes in the city are still without electricity and others are subject to power cuts because of load sharing agreements, the increase in power has already made a difference to many ordinary Afghans.

Rohullah, a television shop owner in Kabul’s central shopping district, told Reuters sales had never been better.

“Business has increased by 50 percent in the last five days,” said a smiling Rohullah. “I used to sell two or three televisions a day. For the last few days I have sold four to five a day.”

Abdul Hafiz and his wife, wearing her all-enveloping burqa, stand outside one of the many shops with their newly bought 17-inch colour television.

“We had a black and white television but now we came to buy a colour one because we have more electricity,” said Hafiz. Asked what the increased electricity supply means to him, he says he is very happy.

“Electricity is very important for us. Everywhere is getting brighter and lighter. I only hope the security situation will also get brighter,” he said.

Sayed Najib, however, sits alone among the bustling television shops, his head leaning against the wall of his store — which sells electric generators.

“Business has decreased, maybe by 80 percent,” said Najib. “I think in the future I’ll start selling televisions.”

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Russia’s Strategic Location for both Europe and the Far East

Today’s article on Putin’s commitment to build Russia’s future on its ability to control the energy resources to Europe seems to me significant. In a sense Putin has limited options, but the one he has, the fossil fuels of Russia and Central Asia, is powerful leverage. Discussions of the topic so far seem to be about the provision of energy to Europe, but as China grows it will also demand huge amounts of energy; we know the Chinese have already been busy establishing connections withe the oil and gas rich Central Asian states. So, Russia and the neighboring states over which Russia will continue to be hegemonic are strategically situated for the future.
It is hard to see how the great populations of Eurasia cannot become desperately dependent on the Russian/Central Asian consortium, which controls the gas and oil fields critical to both ends of the continent. As much as I respect Parag Khanna’s ideas about the future trends for the world (see his Second World), I think he mistakenly writes off Russia, noting its population problems. No matter how few people live in northern Eurasia, that area will be the energy source for billions of people.
Here I merely quote from a few statements in the article. [Click on the title for the link to the source.]

NYTimes January 29, 2009
Putin’s Grasp of Energy Drives Russian Agenda
By ANDREW E. KRAMER

. . . from his earliest days in power in 2000, Mr. Putin, who left the presidency in 2008 and became prime minister, decided natural resource exports and energy in particular would not only finance the country’s economic rebirth but also help restore Russia’s lost greatness after the collapse of the Soviet Union.

. . . he ordered natural gas shut off to Ukraine, in the process cutting supplies to Europe. It was portrayed by the Kremlin as a protracted commercial dispute with Ukraine. But the hundreds of thousands of shivering gas customers in the Balkans and Eastern Europe sent an unmistakable message about the Continent’s reliance on Russian supplies — and Mr. Putin’s willingness to wield energy as a political weapon.

. . . In fact, the standoff in Ukraine was just one part of a far larger Russian playbook on natural gas policy under Mr. Putin. In the past year, Russia has formed a cartel-like group with Middle Eastern nations with the goal of dampening global competition in natural gas, sewn up sources of supply in Central Asia and North Africa with long-term contracts to thwart competitors and used its military to occupy an important pipeline route in Georgia.
. . .

“He has been thinking for some time, ‘What are the means and tools at Russia’s disposal, to make Russia great?’ ” said Lilia Shevtsova, a researcher at the Carnegie Moscow Center. In the post-Soviet world, she said, Mr. Putin concluded that “military power would no longer be sufficient.”

. . . A spokesman for Mr. Putin, Dmitri S. Peskov, said that the energy market “was, is and will remain a strategic sphere for Russia”

. . . In this contest, Russia’s overarching goal is to prevent the West from breaking a monopoly on natural gas pipelines from Asia to Europe. Boris E. Nemtsov, a former Russian first deputy prime minister who is now in the opposition, said: “It is the typical behavior of the monopolist. The monopolist fears competition.”

. . . The Nabucco pipeline was proposed in 2002 by executives from European energy companies with the express intent of undercutting Russia’s gas monopoly. It would pass through Turkey and Georgia to the Caspian Sea.

Under the best of circumstances, building an international pipeline is an intricate and arduous process, technically, financially and politically. However, Nabucco’s planners rapidly discovered that their biggest obstacle was not a mountain chain or a corrupt local politician, but Mr. Putin himself. When OMV, the Austrian energy company, formally created a consortium for Nabucco in 2005, he responded with a competing idea: a pipeline called South Stream that would terminate at the same gas storage site in Austria, but originate in Russia and bypass Ukraine by traveling under the Black Sea.

. . .
To pay the hefty upfront construction costs, a pipeline needs both an assured source of supply and a market for the gas it transports. The South Stream pipeline would flood the gas market in southeastern Europe, locking up the customers the bankers behind Nabucco were counting on to finance the project.

At the same time it would undermine Ukraine’s domination of gas lines headed west, one of the biggest obstacles to Russian domination of the European gas market.

But Mr. Putin did not stop there. Leaving nothing to chance, he also took steps to choke off potential sources of upstream gas supplies deep in Central Asia.

. . . While energy executives around the world rushed to Ashgabat, the Turkmen capital, to meet the new leader, Gurbanguly Berdymukhammedov, a former dentist, Mr. Putin was the first to cut a big deal.

. . . Mr. Putin and Mr. Berdymukhammedov agreed in 2007 to build a pipeline north, to Russia, depriving Nabucco of potential supply. It was not until 2008 that European Union officials got to Ashgabat with a memorandum of understanding for a trans-Caspian pipeline that could link to Nabucco. . . .
The West still had an important pipeline partner in Georgia, a critical geographical link. But that all but evaporated in the brief war last summer.

By 2007, a pipeline section had been laid across Georgia, the Baku-Erzurum pipeline, which is now used for local distribution but will become a part of the Nabucco pipeline, if it is ever built. This brought the struggle for Nabucco to a pivotal stage, for it was now playing out along a storied trade route in the petroleum business, and one highly sensitive to the Russians.

. . .
The August war sent a chill through boardrooms in the West when, for example, Russian tanks scurried back and forth over one of the buried pipelines and one crew occupied a pumping station. Russia, said Svante Cornell, a specialist on Central Asia and the Caucasus at the School for Advanced International Studies at Johns Hopkins University, sent a simple message: “We can blow this up at any time.”

. . .
Despite its best intentions, Europe is likely to remain dependent on Russian energy supplies for the foreseeable future and, perhaps, indefinitely if Mr. Putin has his way. And that reflects his long-held beliefs.

Copyright 2009 The New York Times Company

Economic crsis in Central Asia

EurasiaNet’s report on the impact of the economic crisis on Central Asia.

Business & Economics:
CENTRAL ASIA FACES CURRENCY CRISIS
1/21/09

Central Asia’s national currencies are plunging against the dollar and may sink still further as the global monetary crisis continues to shake the region’s fiscal foundations, financial chiefs have warned. Kazakhstan, which boasts the region’s largest economy, has vowed to hold the line at no more than a 10-percent devaluation of the tenge against the dollar. “It is necessary to ensure the equilibrium and sustainability of the financial system, as a sharp devaluation will exacerbate banks’ problems in paying external debts,” warned Kazakh Economy Minister Bakhyt Sultanov, Kazakhstan Today reported on January 19. Falling currencies make external debts more expensive and contribute to domestic inflation. Other countries expect to take more of a hit. According to the Kyrgyz news agency 24.kg, the chairman of the Kyrgyz stock exchange has forecast an exchange rate later this year of 45 soms per dollar. The dollar stood at 40.1 soms on January 21. However, bankers in Tajikistan have admitted that there is little they can do to stop the freefall of the somoni. “The National Bank of Tajikistan has limited opportunities to maintain the stability of the national currency rate,” National Bank Chairman Sharif Rahimzoda said on January 10. Rahimzoda added that “about $235 million” per month needs to be injected into the domestic currency market to prop-up the somoni against the dollar, Avetsa news agency reported. However, the government does not have the resources to hold exchange rates steady, he said. “Unfortunately, we do not have such [an] opportunity. [T]he amount of the country’s gold and foreign currency reserves have already decreased from $350 million to $198 million in the period from January 2008 to January 2009.” Uzbekistan, too, faces a currency crisis and local media have speculated that if uncontained, popular discontent could grow. The official exchange rate stands at 1,396 soums to the dollar, but on the black market the rate climbs to 1,700 soums per dollar, the news site Uzmetronom.com claimed on January 16. The declining value of the soum coupled with inflationary pressures, growing unemployment, non-payment of salaries and a series of government tactics to control the economy are pushing many families to the brink of financial disaster, the report said. “The situation, as estimated by experts, will result in an additional and very painful leap in inflation, which would make a large proportion of the population of Uzbekistan insolvent,” it added. Early last month, Uzbek President Islam Karimov maintained that the “Uzbek model” of economic development would steady the state against market fluctuations. However, on December 27 the International Monetary Fund cautioned that “increasing protectionist measures and implementing foreign exchange restrictions” would harm Uzbekistan’s prospects for 2009.

Editor’s Note: Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan