Energy resources and regional geopolitics

September 20, 2000

USA AND IMF OPPOSE CONSTRUCTION OF ARMENIA-IRAN GAS PIPE-LINE, SAYS

PRESIDENT KOCHARIAN

YEREVAN, SEPTEMBER 22, ARMENPRESS:

"Armenia's policy is based on the principle of complementarity, that is we

try to come to terms with all. Armenia is a small country and we just need

to be flexible if we want to secure prosperity and peace for the people,"

Armenia's president Robert Kocharian told a Moscow-based Izvestia daily on

the eve of his September 24 official visit to Russia's capital.

President Kocharian said that the main stress during his talks with

Russia's leadership would be placed on economic cooperation issues. " The

biggest share of issues I would like to discuss with Russian key officials

refers to economic cooperation where we face some complexities, both of

objective and subjective nature," said Armenia's president.

He described the Armenian-Russian military collaboration as "a dynamically

developing sector."

He said there is a mutual understanding between Armenian and Russian

leadership on political issues, "that is why it will be easy to come to

terms with Vladimir Putin." Kocharian added that both Putin and he take the

hint while communicating with one another.

Referring to the construction of Armenia-Iran gas pipe-line, Kocharian

evaluated it as "not an easy project to carry out," adding that the project

is strongly opposed by the USA and IMF.

"Negotiations with the IMF are proceeding with difficulties, the

feasibility of the project is neither an easy one," stressed Kocharian.

Despite this, Kocharian said Armenia has managed to attract the European

Union's interest towards it and "I think we shall not face major

difficulties

[ November 11, 2001: Message edited by: MJ ]

September 24, 2000

HART'S AFRICA OIL AND GAS

September 20, 2000

IRAN-ARMENIA GASLINE WITHIN A YEAR

Armenia's energy minister, Karen Galostian, has suggested that

the first phase of a gas pipeline from Iran to Armenia will be

completed by next autumn. "Around 100km [of] pipeline will laid down

on Iran's land and another 40km on Armenia's soil," the minister told

Azerpress agency, adding that the pipeline would carry 1.5 MMcm/d of

gas to his country. He said that that a consortium comprising Russian

company Gazprom, French company Gaz de France, the National Iranian

Gas Company (NIGC) and Armenia's ministry of energy would be set up to

oversee the project.

It is estimated that the pipeline project, with a capacity of 1

Bcm/year, will cost around US $124m. The minister stated that in his

recent visit to Tehran he had talks with the Iranian authorities on

the price of the gas and discussions were ongoing.

September 25, 2000

YEREVAN, 25 September. /ARKA/. International Monetary Fund has not ever expressed any position concerning the issue of Iran-Armenia gas pipeline construction. The Head of IMF representation in Yerevan Garbis Iradyan informed ARKA. He made this announcement commenting the "false" talks having appeared in press that IMF is against the gas pipeline construction.

It should be reminded that the first stage of Iran-Armenia gas pipeline construction may be accomplished by Autumn 2001 on condition if the construction works begin this Autumn before the creation of consortium. The first stage stipulates the construction of 100 km. of the gas pipeline through the territory of Armenia which will permit Armenia to receive 1,5 million km. of cubic gas daily.

Note that it is planned to create an international consortium with participation of Gasprom, French Company of Gas de France, National gas Company of Iran and the ministry of energy of Armenia for construction of Iran-Armenia gas pipeline construction.

Intergovernmental agreement on construction of the gas pipeline was signed in 1992 and supplemented in May 1995. The suggested cost of the pipeline is estimated at $124 million while the primary project facility makes 1 billion cubic meters per annum with further increase to 3 billion cubic meters. --0-- L. Sh.

September 26, 2000

I cam across the following, very interesting material.

____________________________________________

The Armenian Reporter Int'l

September 23, 2000

The Cyprus Tragedy and Lessons to Be Learned

By Murat Acemoglu, MD

Released by I. B. Tauris Publishers, "The Cyprus Conspiracy,"

co-authored by Brendan

O'Malley and Ian Craig, is a breathtaking and chilling account

of the Turkish invasion of the

small eastern Mediterranean island at 4: 20 a.m. on July 20,

1974. Before this act of blatant

aggression, the inhabitants of this island, mainly Greeks,

Turks and a small number of

Armenians, were living rather a prosperous and relatively

serene life, and were working

together to build an independent state in the post-British

period. The Turks, however, never

reconciled with the idea of an independent Cyprus dominated by

Greek Cypriots, even

though the major burden of the fighting against the British

occupation in the war for liberation

was shouldered by the Greeks before the island declared its

sovereignty in 1960.

The island is strategically located in the eastern

Mediterranean Sea. In 1960-1974, Greek

Cypriots made up 77 percent of the island's population; Turks

comprised 18 percent, while

the remaining 5 percent were Armenians, UK citizens and

others. During the Cold War

period, the island became a target of US and Soviet

subversions, since it was in close

proximity to the Suez Canal and the Middle Eastern oilfields.

The British continued to

operate their military bases even after independence, based on

mutual agreements between

the government of Cyprus and UK. The US also maintained very

important military bases

scattered throughout Turkey, and one of the most important of

them, the Incirlik airbase, was

and still is located in Adana, in close proximity to the

island. The Soviets used to have their

naval base in Latakia, Syria, which is also in close proximity

to the island. The entire region

was full of spies, naval activities, and aerial military

surveillance by both spy satellites and

aircraft. The famous US 6th Fleet and Soviet Mediterranean

Naval Armada used to shadow

one another during the entire Cold War period.

PAWN IN COLD WAR

Cyprus used to have a large pro-Moscow Communist Party, making

this strategically

located island a security risk for NATO. This was the era when

the aggressive Soviets were

infiltrating the Middle East, establishing treaties of

friendship with Egypt, Syria, Yemen, later

Iraq, Sudan, Ethiopia, Sudan and distant Libya and Algeria.

Until the Cuban Missile Crisis in

1962, the US used to station nuclear-headed ballistic missiles

at the Incirlik airbase; this was

later dismantled, following the US-Soviet agreement to

withdraw Soviet nuclear missiles

from Cuba. The East-West confrontation during the Cold War era

created areas of hot

spots and flash points all over the world, and the island of

Cyprus was one of them.

Following independence in 1960, both Greek and Turkish

Cypriots tried to share

government ministerial posts, establish inter-communal harmony

and build a democratic

common state. In 1965, following constitutional violations by

Greek Cypriots, the Turkish

Cypriots abandoned the parliament. Turkish threats from the

mainland to invade Cyprus

were defused by the timely intervention of US President Lyndon

B. Johnson, when he bluntly

warned Turks to stay out of Cyprus, so the Turks had no choice

but to retreat. In 1974,

extremist Greek Cypriot nationalists overthrew President

Makarios, the wartime hero against

British occupation, with the intention of uniting the island

with mainland Greece. This was a

golden opportunity for Ankara, inasmuch as the Turkish

military planners had been looking

for a pretext to invade the island for a long time. Finally,

this opportune time had arrived.

For national security reasons and on the pretext of protecting

the Turkish Cypriots minority

rights, Turks massed 100,000 troops in the southern military

district of Anatolia, and an

impressive naval armada was gathered along the Turkish

Mediterranean coastline. The CIA

was fully aware of the situation, which it reported to

Washington.

TURKS ENJOYED US SUPPORT

Retrospectively it was questioned many times, was it possible

that the Turks could invade

this small island without consent of the US? The topic of this

book, 'The Cyprus Conspiracy,

is about the betrayal of the Greeks, diplomatic maneuvering,

collisions of the national

interests of the global and regional powers, and violations of

the rights of small nations and

international obligations in the interests of the dominant

power. This book gives chilling

accounts of how US Secretary of State Henry Kissinger deceived

his British colleagues and

approved the Turkish invasion of Cyprus. Every Armenian should

read this book and get

lessons in history, geopolitics, hegemony and global power

plays. They will learn how the

rights of small nations are sacrificed for the interests of

the dominant power, and how

behind-the-scenes deals are made, and fabricated lies and

deceptions can mislead public

opinion.

Revelations made in The Cyprus Conspiracy are reminiscent of

The Ally Conspiracy,

whereby the so-called allied nations delivered Armenian

territories to the Turks in the Treaty

of Lausanne in 1923 in order to protect their financial

interests and investments.

The authors ask the following legitimate question: "Why did

Britain, as a guarantor of

Cypruss independence, with a major air base, numerous spying

facilities and thousands of

troops on the island, take no military action to prevent the

crisis from erupting?" The authors

continue: "US Secretary of State Henry Kissinger fought long

and hard to prevent key

officials from releasing documents or answering on the period

and, in his memoirs 'Years of

Upheaval,' he was uncharacteristically reticent." In one of

the most revealing accounts, the

authors claim that "Britain came close to war with Turkey

during the crisis, but America

vetoed military action. Then they continue: "We discovered

that Prime Minister Harold

Wilson had sent a potent military task force to the

Mediterranean and pleaded with Kissinger

to take joint military action to stop the Turks. But the

Americans were working on a grander

design."

A DELIBERATE COLD WAR PLOT

According to the editorial, "this book argues that the Cyprus

crisis was no failure of

American diplomacy, but a deliberate Cold War plot to divide

the island and save the

top-secret spying and defense facilities from the twin threats

of a communist takeover or

British withdrawal." Shaken by spy scandals, the British were

not in the position to influence

events around Cyprus; neither did Soviet threats to place

Soviet nuclear forces on full alert

deter the US planes from giving the green light to Ankara to

begin the invasion of Cyprus.

Once the invasion was completed, the State Department issued a

statement: "We regret this

military action by Turkey, just as we deplore the previous

action by Greece that precipitated

the crisis." According to the co-authors, " The Turks were

convinced that Kissinger was

encouraging them to reinforce their bridgehead during the

first part of the invasion for the

second part of their two-stage operation.

According to the Turkish writer Mehmet Ali Birand, the authors

quote, "Kissinger said (to

Turks), it was essential for you to seize a bridgehead and

this you have done. Now, you will

have to await reinforcement before you can advance further."

According to the authors, "The

implication was that Kissinger approved of the Turkish

landing, and accepted that any

cease-fire would only be temporary, to allow the Turks to

prepare to take more territory."

After the Turkish invasion, the UN backed the proposal of a

two-zoned federation for

Cyprus, which was supported by both the Greek and Turkish

governments, eager to resolve

the dispute. Under the plan, each community would have its own

territory but share a

number of government functions and ministries.

STATUS REMAINS UNCHANGED

Yet, since the 1974 invasion, UN- and American-sponsored peace

negotiations have been

held numerous times but havent achieved anything. In fact, de

facto partition of the island,

imposed by the Turks, is already a reality, Turkey has already

recognized the Northern

Turkish Cypriot government. 180,000 Creek Cypriots were forced

from the northern zone

controlled by the Turks, and more than 100,000 Turkish

settlers were brought from

mainland Turkey to increase the Turkish population. De facto

annexation of northern Cyprus

is in progress and negotiations are being conducted to

legitimize the de facto partition and to

pacify world public opinion.

Yet, the Turks are against the self-determination rights and

de facto independence of

Karabagh and also the separation of the disputed Karabagh

region from Azerbaijan under

similar circumstances.

In conclusion, forty percent of Cyprus was given to Turkey,

and Turkey is rejecting

proposals for a federation or common state, treating the

internationally unrecognized

Northern Turkish Cypriot Republic as a sovereign state. The

annexation process is under

way, as was the case in the annexation of the formerly Syrian

province of Hatay

(Alexandretta) by the Turkish Republic in 1939.

Turkey remains a very important ally for the US. It is the

home of US military

intelligence-gathering centers, as well as numerous military,

naval and air bases. Following

the collapse of communism, Turkey now has a new role, claiming

to be a bastion against

Islamic fundamentalism. It also wants to be an energy

transportation bridge between Central

Asia, Caucasus and Western Europe and the US, through the

Caspian and Baku-Ceyhan oil

pipeline project.

Armenia, if not protected by the US, Russian Federation or

Iran, could be the object of

Turkish bullying -- and even invasion -- in order to finalize

the Armenian question.

Depending on the national interests of the US at such a time,

as was in the case of Cyprus,

Washington may not confront or restrain the Turks, and the

invasion of Armenia could

become a possibility.

IMPLICATIONS FOR ARMENIA

In the case of Russia, the events leading to the Turkish

invasion of Armenia in 1920 are still

vivid in Armenian memories. We still remember how Bolshevik

Russia and Nationalist

Turkey's interests collided and the Bolsheviks allowed the

Turks to invade Armenia.

Armenian rights once again were sacrificed this time for the

sake of proletarian

internationalism, when the Russians thought that the Turkish

nationalists were fighting against

worldwide international capitalism.

The only way for Armenia not to become victimized again in the

world of dirty international

politics is to be economically, financially, democratically

viable, socially stable, militarily

strong, technologically advanced, and internally unified. Any

weakness in those areas will

expose Armenia to external threats, mostly from Turkey;

therefore, Armenian unity and

vigilance is a must if we want to live free. Independence for

Karabagh is a must for the

survival of the Armenian nation, if we don't want to be

surrounded by hostile forces. The

invasion of Cyprus in 1974 and the occupation of Armenia in

1920 proves the point that

weakness brings disaster to nations, and the rule of fairness,

internationally agreed principles

of respecting the rights and territorial integrity of

sovereign states could be violated, if that will

serve the national interests of the other powers.

Newtonville, NY

September 26, 2000

SNARK BUSINESS BULLETIN

SEPTEMBER 26, 2000

SHORTEST AND MOST PROFITABLE ROUTE FOR EXPORT OF IRANIAN GAS TO EUROPE IS

VIA ARMENIA

According to Head of Iran's Foreign Ministry Mohammad Ali Musevi, the

shortest and the most profitable route for export of the Irainian gas lies

through Amenia. Musevi said a tender on technical-economic preparation for

the construction of an Iran-Armenia-Black Sea gas pipeline will be announced

soon. Iran's share in the project will be determined after calculating

expenses on the construction of the pipeline. An appropriate agreement was

signed by the governments of Armenia and Iran.

Construction of the gas pipeline via Armenia may solve the problem of gas

export to Europe via the Caspian region, said Musevi. According to

preliminary data, the construction of the Iran-Armenia gas pipeline is

assessed at $120 million. This amount is required for the construction of a

section of 36 km on the Armenian territory and 110 km on the Iranian. At

the initial state, the volume of annual gas export must be 1 billion cubic

meters.

September 27, 2000

CRU DENOUNCES INTERNATIONAL LENDING ORGANIZATION FOR PUTTING TOUGH CONTROL

ON ARMENIA

YEREVAN, SEPTEMBER 25, ARMENPRESS:

The Constitutional Right Union (CRU), a minor Armenian party, denounced the

international lending organization for placing a tough control on the

Armenian government.

A senior member of the party Hayk Babukhanian, who is also a parliament

member, told a September 23 news conference that "Armenian authorities are

not allowed to make a step or resolve a question without a prior consent by

the international financial organizations."

In Babukhanian's opinion, "we have to free ourselves from the international

organizations' dictates," to secure the country's economic growth.

Babukhanian said Armenia must instead develop ties with countries which are

not dependent on international financial organization, such as China or

Iran.

September 27, 2000

2000 ITAR-TASS News Agency

September 26, 2000, Tuesday 04:46 AM Eastern Time

Russia and Armenia to sign declaration on ally's interaction.

By Aleksei Agureyev

MOSCOW, September 26

The declaration on ally's interaction directed toward 21st century will

be signed on the results of talks between the Russian and Armenian

presidents. Russian President Vladimir Putin said this opening the talks

with Armenian President Robert Kocharyan in the Kremlin in an enlarged

format.

September 27, 2000

NATO chief postpones visits to Azerbaijan, Armenia

BRUSSELS, Sept 26 (Reuters) - NATO Secretary-General George Robertson has

postponed a planned visit to Azerbaijan and Armenia this week because of the

illness of Azerbaijan's President Haydar Aliyev, a NATO official said on

Tuesday.

The official said the visit was called off at the request of Azerbaijan, and

the postponement was not related to Yugoslavia's elections. "There is nothing

political in it," the official said.

But a Reuters correspondent in the Georgian capital Tbilisi quoted Robertson

as saying during an international conference: "As you know, I have cancelled

visits to Armenia and Azerbaijan due to the crisis in Yugoslavia."

The NATO official said Robertson did not want to be seen to be taking sides

in the decades-long dispute between Armenia and Azerbaijan over Azerbaijan's

mountainous enclave of Nagorno-Artsax, governed by separatist ethnic

Armenians.

Aliyev was reported last Friday as being in a U.S. clinic. Rumours had swept

Azerbaijan that he had fallen seriously ill during a trip to the United

States.

05:48 09-26-00

September 27, 2000

Turkey, Georgia to hold wargames

ANKARA, Sept 27 (Reuters) - Turkey will hold military exercises this week

with Georgia, a former Soviet republic seen by Ankara as one of its chief

allies in the volatile Caucasus region, the Turkish Army said on Wednesday.

``The scenario of the maneouvres is based on preventing illegal border

crossings from one country to another,'' the Land Forces Command said in a

statement. It gave no details.

Tensions rose between Turkey and Georgia's transcaucasian neighbour Armenia

this week over a tentative step by the U.S. Congress to recognise accusations

that Ottoman Turks conducted ``genocide'' against Armenians in 1915.

A vote by a House International Relations subcommittee, pressed by ethnic

Armenians in the United States, was welcomed in Yerevan on Tuesday as ``a

serious step towards determining the truth.''

Turkey, which denies genocide took place, could adopt measures against

Armenia if the U.S. Congress votes approval to the non-binding resolution

calling on President Bill Clinton to ``characterise the systematic and

deliberate annihilation of 1.5 million Armenians as genocide.''

Georgia, like Armenia, has thousands of Russian troops on its territory.

But while Armenia looks to Moscow for support, Georgia is uneasy about the

troop presence and sees Turkey as a close ally in its economic difficulties

and its efforts to stave off any spill-over of Russia's Chechen conflict onto

its soil.

President Eduard Shevardnadze has escaped several assassination attempts. The

fate of the country, and its retention as an ally, deeply concerns the

Turkish government and General Staff.

October 1, 2000

Iran has all potentials of becoming major oil, gas distributor

IRNA (Iranian News Agency)

Oct. 3, 2000

Tehran, Oct 3, IRNA -- In light of Iran's effective role and strategic

importance in the region, Tehran possesses all the superior

capabilities and potentials to become the major distributor of oil and

gas in the region, stressed Foreign Ministry's senior expert in

economic strategy.

In an interview with the English-language daily `Iran News'

published Tuesday, Taheri pointed out to the fact that Turkey which

neither has any capabilities nor any geographical advantages is

currently playing this role.

Following the comprehensive agreement between the Azerbaijan Oil

Consortium with a number of major oil companies in 1994, many

countries including the U.S. and Turkey became particularly interested

in what they saw an an opportunity to pursue their political,

economic, national and even personal interests in the region, he noted

adding that Russia and Iran also became equally interested in these

developments.

He said that Iran possesses `20 percent' of the world's natural

gas reserves making it second only to Russia which is estimated to

have 48 percent of the world's reserves.

Since it has been determined by a number of prominent oil

companies including Exxon Mobil that the controversial Baku-Ceyhan oil

pipeline project is not economically feasible, "Iran's role with its

estimated oil reserves of 110 billion barrels will become more

receptive, said Taheri.

He noted that the Republic of Azerbaijan is becoming more and more

a gas-producing country rather than an oil-producing state.

In fact, its inadequate capabilities in the oil sector was a major

obstacle in the realization of the Baku-Ceyhan project, he pointed

out.

However, with the cancellations of the said project, both Turkey

and Azerbaijan fully know that many countries are now once again

looking at Iran as the best choice as far as economics is concerned in

order to secure a route for such a project, he continued.

Touching on Iran's other pending projects with central Asian

countries, he referred to the agreement with Turkmenistan for annual

gas supply of 3-8 billion cubic feet.

In this light, he noted that Armenia would prefer gas from Iran

through such a channel.

Regarding the joint project with Armenia and the European Union,

Taheri said the construction of this pipeline will commence from both

ends in the near future and the project is expected to be completed by

2001 when both lines will be linked at `Meghri' on the border between

the two countries.

Other projects mentioned by Taheri included, "The pipeline to

Pakistan and India", and the "8-10 billion cubic feet gas project with

Azerbaijan", which are both under review.

Furthermore, the reactivating of the gas pipeline between Astara

and Baku, which has been out of operation since the collapse of the

ex-Soviet Union and the 1,400 km Iran-Turkmenistan-Kazakhstan oil

pipeline with a capacity of 500 million to 1,000 million barrels, and

the Neka-Rey portion relating to this same project will become

operational in two years time.

He said that it is really fortunate to note now that `economic

reasoning' has replaced `political reasoning' in this region and Iran

as the most important Caspian littoral state believes that the legal

regime of the Caspian Sea must be determined only by the five littoral

states and that other countries should not interfere in this matter.

In fact, he pointed out that it was only after the failure of the

Baku-Ceyhan agreement that it became clear to the five member states

that issues relating to the Caspian Sea must be resolved by the member

states and hoped that the upcoming meeting of the deputy foreign

minsters of the said five countries will have a positive effect.

He described the recent proposal regarding the involvement of the

United Nations in the Caspian matters as unprecedented and said that

those making such proposals are after their own self-interests.

Taheri stated that Iran was currently reviewing the union's

proposal concerning Tehran's becoming a member of the Interstate Oil

and Gas Transport to Europe (INOGATE) and added that the proposal was

made due to Europe's interest in the region's gas resources.

He described the goal of this organization in which Iran currently

has an observer status, as one that would ensure the security of the

corridors through which oil and gas supplies from the Caspian region

are transferred to Europe.

He concluded by stating that Iran is presently in the negotiations

stage with the EU on this matter and hopes to be able to expand

working relations with this organization.

Should this happen, it will lead to increased cooperation in the

energy field in the region as well as with the EU in order to benefit

from the Union's investment capabilities in the oil and gas sector.

[This message has been edited by MJ (edited October 04, 2000).]

October 14, 2000

Transcaspian Project

Oct. 12, 2000

UKRAINE PROPOSES CONSTRUCTING IRAN-ARMENIA-GEORGIA-CRIMEA-EUROPE GAS

PIPELINE - YEREVAN

Ukraine deems it possible to build a gas pipeline along the route

Iran-Armenia-Georgia-Crimea-Europe. Kiev Gas Transportation Institute is

carrying out a feasibility study for the project, Neftegaz Ukraine PR

Director Artur Gubar told the press.

"The Georgia-Crimea section could be underwater and could bejoined to the

main pipeline system to Europe, he said.

According to Alexander Sverdlov, director of the oil, gas and oil product

department at the Ukrainian Fuel and Energy Ministry, Ukraine is ready to

import up to 10 billion cubic meters of natural gas from Iran through

Armenia. The Iran-Armenia pipeline is considered be a major future option,

which may be joined by Turkmenistan. In addition, it is planned to use the

Trans-Iranian main pipelines No. 1 and No. 2. According to Sverdlov, it is

planned to lay two sections of pipeline from Iran to Armenia, with a

diameter of 1,000 mm each, which would be capable of handling 25 billion-30

billion cubic meters of gas per annum. The gas pipeline should go to the

Georgian port of Supsa, and then travel 550 km along the floor of the Black

Sea to Feodosia.

Apart from the Armenian Energy Ministry and the Iranian national gas

company, interest in this project has been expressed by Gazprom, Gaz de

France,the National Gas Company of Greece, Bridas (Argentina), Wanbao

(China), a number of Japanese companies, the European Bank for

Reconstruction and Development and the International Finance Corporation

(the investment branch of the World Bank).

12.10.2000

October 17, 2000

Turkey, Turkmenistan Ready to Back Iranian Route

Tehran Times

Category: Economy

Date: Tuesday, October 17, 2000

TEHRAN Turkey and Turkmenistan are said to be ready to back the

Iranian route for gas exports, according to the energy newsletter

Petroleum Argus.

The political fallout between the two countries and the U.S., who had

been opposing Turkmenistan's gas exports to Turkey via Iran, may be

in the process of resulting in exactly what Washington does not want,

the weekly said.

Until now Turkey, under U.S. pressure, had been in favor of the

Trans-Caspian Gas Pipeline (TCGP) project, which is led by the

Anglo-Dutch firm Shell and proposes the construction of a pipeline

under Caspian Sea, "but a change of policy could be afoot," IRNA

quoted the newspaper as saying.

As the U.S. Congress prepares to vote on whether to recognize a

genocide against Armenians living in Ottoman Empire during the World

War I, Turkish officials have recently warned that U.S.-led energy

projects may be adversely affected.

Speculation in the Turkish press has suggested that an adverse vote

could prompt the country switch its preference for the gas project to

the Iranian route.

A land route would anyhow "make better economic sense," Petroleum

Argus said adding that the Iranian route "would be much cheaper and

capable" of bringing Turkmen gas to Turkey, as well as being "more

quick." The real advantage of Iran's route however is the deal signed

in 1997 with Turkey, for the annual purchase of 10 billion cubic

meters of gas over a 20-year period.

"That deal may now pave the way for the arrival of Turkmen gas in

Turkey through Iran," it suggested.

With the Iranian export pipeline to the Turkish border now complete,

the weekly estimated that the pipeline may be capable of taking "all"

the additional annual 16 billion cubic meters of Turkmen gas which

Turkey has agreed to buy.

This would also have the added benefit of a "slower rise in gas

supply volumes" in tandem with the gradual rising of demand in Turkey

rather than the sudden burst of gas supply following the completion

of the TCGP project, it said.

In the meantime Russia's Foreign Minister, Igor Ivanov, announced

that it backs plans to organize an international summit on the

Caspian Sea's oil and gas resources.

In a press conference after a meeting with his Azeri counterpart,

Vilayat Guliyev, Ivanov said that "the dates and venue of this

meeting have yet to be fixed." The Caspian Sea's hydrocarbon

resources, considered the world's richest after those of the Persian

Gulf and Siberia, are the object of fierce rivalry between Russia,

Iran, Azerbaijan, Turkmenistan and Kazakhstan.

The division of the Caspian's waters has never been formally

clarified, with the result that the rival nations continue to dispute

the share-out and exploitation of its natural resources.

The planned summit could play "a major role in concluding efforts to

define the (legal) status of the Caspian Sea," AFP quoted Ivanov as

saying.

October 17, 2000

Armenian Government Negotiates on Iran-Armenia Pipeline Construction

MOSCOW, Oct 16, 2000 -- (RosBusinessConsulting) The government of Armenia

is holding negotiations with potential investors in the construction of

Iran-Armenia pipeline, Armenian Energy Minister Karen Galustyan informed

ARKA agency.

As announced earlier, the first stage of the construction may be completed

by autumn 2001, if the construction woks start this fall. The first stage

presupposes the construction of 100 kilometers of the pipeline in the

territory of Iran and 41 more in Armenia. According to the minister, the

project will allow Armenia to receive 1.5m cubic meters of gas annually. It

is planned to create an international consortium for the construction of

Iran-Armenia pipeline with Gazprom, Gaz de France, Iranian National Gas

Company and Armenia's Energy Ministry participating in it.

The international agreement on the pipeline construction was signed in

1992. The estimated cost of the project amounts to USD 124m.

October 19, 2000

SCHEDULE FOR POWER GRID PRIVATIZATION APPROVED BY GOVERNMENT

YEREVAN, OCTOBER 19, ARMENPRESS:

The Armenian government approved today the schedule and procedures of a

privatization commission that will be charged with preparation of the

package of documents for sell off of four energy distributing networks. The

procedures set forth March, 2001 as the final deadline for concluding the

entire privatization process.

Energy minister Karen Galustian told reporters that the preparation of

privatization documents would be concluded by November 10 to be followed by

preparation of legislative acts necessary for ensuring the deal's

transparency, which would be concluded in December.

The next privatization stage is to begin in January 2001 with preparation

of a second option of documents. The privatization tender is scheduled to

be announced in February 2001 and the agreement on shares sale will be held

in March.

The minister also said that documents on the terms and conditions of the

privatization had been submitted to Chadborn and Park legal consulting

company that had been chosen to coordinate the process and is expected to

propose its suggestions by the end of October.

It should be noted that the privatization commission consists of 17

members, of which seven are parliament members and the rest are from the

executive. At least 51% of shares are to be sold with four companies from

the USA, Switzerland, France and Spain having qualified for the tender.

It also should be noted that the release of World Bank new loan programs

for Armenia, and the fate of some $46 million worth of funds which are due

to cover considerable part of the government's budget deficit is contingent

on the privatization of Armenia's energy distribution networks.

The Armenian government believes that World bank credits will provide an

opportunity to help sustain macroeconomic stability without drastic cuts in

budget expenditures. World Bank officials have said repeatedly that Yerevan

will obtain the loans in question after it declares winners of the

international tender for the state-owned electrical companies.

October 19, 2000

Geopolitics and prices at the gas pump

Insight on the News; Washington; Oct 23, 2000; J Michael Waller;

Newer big players are emerging. Communist China is developing large oil

fields in Sudan, providing the militant Islamic theocracy there with

weapons and military personnel to crush the Christian population that lives

in the oil-producing areas, according to Sen. Sam Brownback, R-Kan.

Washington Times Corporation Oct 23, 2000

New oil supplies may prove easy to extract but they will be difficult to

get to market. Some of the biggest oil reserves are in areas with few, if

any, pipelines or are surrounded by ethnic and tribal warfare, civil

strife, geographic isolation or forbidding terrain - and, in the case of

the oil- and gasrich former Soviet republics of Central Asia and

Azerbaijan, all of the above.

Azerbaijan, a former Soviet republic sandwiched between Iran and southern

Russia, illustrates the dilemma. With oil reserves equal to Kuwait's,

Azerbaijan wants close ties with the United States. But getting that oil to

market is a highly complex matter.

Azerbaijan sits in one of the most politically unstable areas of the world.

Earlier in the decade it fought a bitter war with neighboring Armenia; it

borders the strife-torn Republic of Georgia, which is divided among

warlords and partitioned by Russian troops and still faces Chechnya on its

northern frontier. Moscow, as Radio Free Europe's Paul Goble notes, is

trying to dominate the region and its oil.

To get its oil to Western refineries, Azerbaijan must send it out by

pipeline to seaports. The shortest and most economical route is to ports on

the Black Sea, where the oil would be pumped aboard tankers to the

Mediterranean. To control Azerbaijan's oil flow, Moscow wants the pipelines

to pass through Russian Black Sea ports.

Herein lies another problem. Last year, President Clinton signed a deal to

support a $3 billion pipeline from the Azerbaijan capital of Baku westward

through Georgia to the Mediterranean coast of Turkey, bypassing both Russia

and the Bosporus completely. But this route is very expensive and not as

secure as a more practical route, according to Goble, which would be to

pipe Azerbaijani oil through Iran and south to the Persian Gulf.

Even though more oil reserves are being discovered and tapped, a larger

supply might not mean a lower price for the American consumer. Global

demand is rising. The developing world, as well as rising industrial giants

such as Communist China, are building an insatiable thirst for oil. "Of the

20 million bpd [barrels per day] increase in world oil consumption in the

past decade, 17 million bpd of that demand came from the developing

countries," Saudi Petroleum Minister Ali AI-Naimi told a Center for

Strategic and International Studies conference on oil geopolitics. "This

trend is projected to continue into the future."

Democratic retired congressman Lee Hamilton of Indiana, a former chairman

of the House International Relations Committee, advocates rethinking U.S.

policy toward Iran, Iraq and Libya because U.S.-led attempts at isolation

of the regimes have failed to moderate their behavior. The three countries

together, he says, control 23 percent of the world's proven oil reserves.

Newer big players are emerging. Communist China is developing large oil

fields in Sudan, providing the militant Islamic theocracy there with

weapons and military personnel to crush the Christian population that lives

in the oil-producing areas, according to Sen. Sam Brownback, R-Kan.

Venezuela, the United States' single largest supplier of foreign oil, has

been taken over by a military strongman hostile to the United States and

friendly to Libya and China and has invited the Chinese to help develop the

country's offshore oil fields. And Turkish intelligence sources tell

Insight that they see parallels between Chinese activity along the Bosporus

and Beijing's port-controlling efforts at both ends of the Panama Canal.

By J. Michael Waller

October 19, 2000

Do you think the passing of Armenian Genocide resolution in Congress will have any affects on regional geopolitics, and if yes how?

October 19, 2000

I don't think it will have any impact on the regional geopolitics, since it is not driven solely by Turkey. In fact the regional geoppolitics of our region is more international than regional, I think.

But it may be just one instrument of preassure in the hands of the Republic of Armenia, if it puts it in a proper context.

But who knows, in some very implicite manner, with the liberalization of Turkish society, it may have some. I don't know.

October 23, 2000

Interfax Russian News

October 18, 2000, Wednesday

GAZ DE FRANCE CONSIDERS PARTICIPATING IN IRAN-ARMENIA PIPELINE

French gas company Gaz de France is looking into the possibility of

participating in a project to build a pipeline from Iran to Armenia,

to supply Iranian gas to Armenian consumers, Company First Vice

President Jacques Deyirmendjian said.

According to Deyirmendjian, the implementation of this project will

unite two large gas systems- the Russian and Iranian systems-and will

also guarantee Armenia's energy security.

Deyirmendjian noted that the route of the future pipeline is already

known. It is necessary to resolve a number of problems for Gaz de

France to participate in this project, he underlined.

According to the Armenian Energy Ministry, construction of the Iran-

Armenia pipeline is planned to start in 2001. It is planned that work

on the project will last nine-10 months. The pipeline will stretch 140

kilometers and will cost an estimated$ 120 million. In addition to the

Armenian Energy Ministry, the Iranian National Gas Company and Gaz de

France, other companies interested in the project include Gazprom, the

National Gas Corporation of Greece, Bridas (Argentina), Wanbao

(China), a number of Japanese companies, the European Bank for

Reconstruction and Development and the International Finance

Corporation (the investment arm of the World Bank).

November 7, 2000

Oil Riches: A Cure or A Curse?

By Thierry Malleret

Eurasianet

2 NOVEMBER 2000

Might possession of vast amounts of natural resources represent a

stumbling block on the road to reform? Possibly. It may be a

misfortune in that it provides a false sense of security and

enables governments to delay the hard decisions concerning the

implementation of reforms.

Fragmented evidence (economic reality is much more complex than

that) suggests that states that lack oil and gas wealth -- such as

Armenia, Georgia and Kyrgyzstan -- are more willing to consider

reforms than resource rich nations. Officials in Azerbaijan and

Turkmenistan, for example, seem to feel that an abundance of oil

and gas revenue can buy time, postponing change.

Now that the price of oil has almost tripled since the end of 1998,

what are the countries that benefit from this "positive supply-side

shock" going to do? Higher prices transfer income from economies

that import oil to oil exporters. These receive a windfall which

they can either save or spend on imports. What are the two main

regional beneficiaries - Azerbaijan and Kazakhstan - going to do to

ascertain that oil wealth is not wasted?

Both countries are entering their first oil boom cycle. High oil

prices have sent their economies into high-speed growth (projected

for this year at 8 percent and 7.5 percent in Kazakhstan and

Azerbaijan respectively). For the first time in years, industrial

production is growing at double-digit rates. Although little is

known about the precise sensitivity of these

economies to oil prices, preliminary estimates suggest that budget

revenues in Kazakhstan increase by 0.2 percent of GDP at a 10

percent increase in the oil price. There, oil and gas exports

amount to roughly 50 percent of total exports, with mining

accounting for a further 30 percent. Thanks to non-anticipated

higher oil prices, the first six months of this year showed a 1

percent fiscal surplus on IMF estimates. In Azerbaijan, recent

estimates indicate that the energy sector makes up 22 percent of

value added against a 2 percent share of manufacturing.

To prepare for the eventuality of a commodity price decline, both

countries ought to maintain tight fiscal management (fiscal

deficits in 2000 are likely to amount to 2 percent of GDP in

Kazakhstan and 7 percent of GDP in Azerbaijan), and to accelerate

structural reforms to increase robustness in the face of trade

shocks.

These are the two big, outstanding issues. Indeed, long-term fiscal

challenges remain acute, particularly in Kazakhstan, where the 1999

Budget System Law has decentralized responsibility for social

security, health and education to the local government level,

without concomitant improvements in the allocation of revenues, and

the system of withdrawals and subvention. In Azerbaijan,

structural reforms began slowing at the end of 1998. Public sector

reforms have stalled and major regulatory reforms have slowed,

while the financial sector remains weak.

Sustainable fiscal management of oil wealth is therefore a crucial

issue. With oil and gas revenues predicted to rapidly increase, the

authorities of both countries admit that a priority should be the

strengthening of governance structures to ensure that the windfall

is well managed. In Kazakhstan, a National Oil Fund was set up

under a decree by President Nazarbayev last September. It

stipulates that the head of state (in coordination with the

Parliament) will instruct the government on how to spend the funds

resources. Similarly, an Azerbaijani Oil Fund was established in

December 1999. It has already accumulated about US $230 million,

but it is not clear yet whether the fund will be subordinated to

the President or the Parliament.

At the moment, we know very little about the way in which these

funds will be managed. Their transparency and accountability will

be crucial for the future macroeconomic performance of both

countries. Should authorities allow mismanagement by vested

interests, a seriously flawed development path would become

increasingly likely, with the balance between the oil and non-oil

sectors becoming more and more distorted.

Structural reforms, including, above all, improvements in

government administration and regulatory practice, but also renewed

efforts toward a more transparent privatization and the

modernization of infrastructure, are paramount for the non-oil

sector to grow. It is therefore essential to limit the ability of

government officials to tilt the business environment in their

favor. In both countries, officials could best demonstrate their

intent to foster public accountability by addressing the entire

package of public sector reform and improved governance advocated

by the international financial institutions (primarily, the World

Bank, the International Monetary Fund and the European Bank for

Reconstruction and Development). This includes public expenditure

management, administrative and civil service, legal and judicial

and anti-corruption reforms.

The funds will be well utilized only if the authorities resist

demands for profligate investments (such as empty five star hotels

in Ashgabat, Turkmenistan), and save accumulated funds for

well-targeted projects with high returns, as well as for loans to

private sector ventures. Also, governments should avoid the

creation of subsidy programs that pass part of the oil and gas

profit windfall directly to domestic consumers. At the same time,

the funds might be used to finance principal repayments of the

countries foreign debt. Both choices are tough on the population,

and could come under considerable pressures in the short term

because they are highly unpopular. They are needed though, to

ensure that the next generation benefits from the current

situation.

The next few months, when we learn more about the modus operandi of

these funds in Azerbaijan and Kazakhstan, will tell us whether oil

in these countries will prove to be a cure or a curse.

Editors Note: Thierry Malleret is the Director for Europe of the

World Economic Forum. The opinions expressed in this article are

Mr. Mallerets own, and do not represent the views of the World

Economic Forum.

November 18, 2000

TransCaspian Project

14.11.2000

Turkish Flirt With Baghdad

CAN IRAQ BECOME AN OEC MEMBER?

Turkey does not intend to lose the "regional game" to Iran showing nowadays

an aggressive activity by intensifying its influence in the Caspian basin

and the Middle-East regions.

The Turkish analysts comment today in this key the statement of the Turkish

president Ahmed Sezer that Ankara is going to promote in every possible way

the development of cooperation processes within the Organization of

economic cooperation (OEC) framework.

As it was noticed, the absence of the Turkish president on the latter

summit of this organization that took place in Teheran and the considerable

gains of the Iranian party caused the reinforcement of the Iran position in

OEC and opened for it serious capabilities to "direct" the activity of this

organization according to the Iranian concerns. According to the majority

of the analysts, the resolutions reached in Teheran regarding the

development of regional power projects and transportation of the Caspian

power resources taking into consideration the "Geo-economical advantage" of

the Iranian route and the Iranian "key role" generally, is of special

interest. Such perspective, naturally, is radically unacceptable for

official Ankara attempting today to make the "Turkish route" the main

arterial for transit of Caspian oil towards the Western markets.