BY MEGAN ARNEY
The Chinese government recently signed two deals to buy state-owned oil companies in Kazakstan and offered to build a 1,860-mile pipeline across the land-locked country. The deals, finalized in September by Chinese premier Li Peng, formally commit China to $9.5 billion in investments in Kazakstan.

A Japanese company, Chori, is also maneuvering to expand the rail line between Kazakstan and China. The upgraded line could transport some 5 million tons a year -mostly steel imports from Kazakstan's mills. Total trade between China and Kazakstan was about $500 million last year. "Overnight the center of gravity in the transport equation has shifted due east," said David Skeels, a British Gas representative in Almaty, the Kazak capital.

The Caspian Sea, Caucasus, and Central Asia have some of the world's largest concentrations of energy resources, including up to 200 billion barrels of oil, worth about $4 trillion, plus a comparable reserve of natural gas. The recent competition over control of the region has highlighted conflicts between the imperialist powers, as well as tensions between Washington and Moscow.

More than 50 foreign oil companies have flocked to Kazakstan since the collapse of the Soviet Union, looking for lucrative investments. That country contains some of the largest oil reserves in Central Asia. The biggest problem for imperialist exploitation of energy resources in the region is how to transport the oil and gas. Kazakstan is bordered by Russia to the north and China to the east. To the south and west there have been wars in Afghanistan, Armenia, Azerbaijan, Chechnya, and Georgia. And to the southwest, the almost 20- year-old U.S. sanctions against Iran, tightened just last year, make capitalist investment difficult.

On July 27 Washington announced that it had no objection to a gas pipeline begin built from Turkmenistan to Turkey across northern Iran. But lately the U.S. government has been pushing for an alternative pipeline through Azerbaijan, Georgia, and Turkey to the Mediterranean Sea. Almaty says it will drop the plans for a pipeline through Iran, but only if Washington comes up with funding for the other project within a year.

Another pipeline proposal, costing $2 billion, is to run from western Kazakstan to the Russian Black Sea port of Novorssiisk. This is the pipeline preferred by the U.S. oil giant Chevron, which was forced to transport oil from the giant Tengiz oil field in western Kazakstan by rail to China up until November - an awkward route.

U.S. drive to dominate region
Last July U.S. deputy secretary of state Strobe Talbott outlined a major foreign policy shift for Washington - a drive to establish unquestionable U.S. domination over the huge oil reserves and other natural resources in the Caspian Sea region, Caucasus, and Central Asia, opening up a new "Silk Road." About a month later Caspar Weinberger, the chairman of Forbes magazine and a former advisor in the Ronald Reagan administration, said that Talbott's speech was a welcome policy shift, but argued for an even more confrontational approach to prevent Moscow, Tehran, and other governments from hampering Washington's goals in the region. "The U.S. currently consumes more than a quarter of the world's oil, even though we only have about 2 % of its proven resources. The question is not whether we import, but from where," Weinberger wrote in Forbes.

Several major U.S. oil companies are investing nearly half of the capital going into oil production in the region - some $20 billion. And major U.S. oil companies have signed an $8 billion deal to begin drilling next year in the Karachaganak oil and gas fields in the northwest corner of Kazakstan.

Kazak president Nursultan Nazabayev signed a bilateral defense agreement with Washington November 17. This was another step in opening the Central Asia and Caspian region for a greater U.S. military presence. Last September 500 troops of the 82nd Airborne Division flew 19 hours from Fort Bragg, North Carolina, to participate in week-long U.S.-led military exercises in Kazakstan.

U.S. Marine Corps Gen. John Sheehan, who headed the operation and was the first to parachute out of the lead U.S. transport jet into Kazakstan, bragged, "The message is that there is no nation on the face of the earth that we cannot get to."

Meanwhile, Paris has stepped into the modern version of the "Great Game," as the fierce colonialist rivalry over Central Asia in the 19th century was called.

In September, the French oil company Total SA, Russia's Gazprom, and Petronas of Malaysia defied the U.S. ban on investment in Iran with a $2 billion deal to develop a gas field there. Gazprom and Total SA said that the profit to be made outweighs the costs "incurred by sanctions against us." French prime minister Lionel Jospin earlier this year declared that he "rejoices" such a project.

"This attitude, particularly prevalent in France, greatly annoys U.S. policy makers, as it should," the Wall Street Journal editorialized October 6. "It is especially annoying when a French prime minister seems to be reveling in yet another exercise in twisting America's tail."

The European Union stepped in behind Paris, warning Washington against retaliation. Total had a legal right to make the deal, the European Commission chairman, Sir Leon Brittan, said in a statement in early October.

Total's action is a challenge to the U.S. government's Iran- Libya Sanctions Act, signed by President William Clinton last year. The measure calls on Washington to impose sanctions on any company investing more than $20 million with energy industries in either of the two countries.

In a move to shore up its own interests in the region, Moscow announced a policy shift in October, according to foreign policy advisor Sergei Karaganov. "As we get nearer to the big oil deals, we have more interest" in stabilizing relations between Armenia and Azerbaijan, Karaganov said.

Major Russian oil companies including Gazprom - the biggest enterprise in the country - and AO Lukoil are increasingly aggressive in moving in to exploit Caspian Sea oil contracts. Officials of both Turkmenistan and Azerbaijan went to Moscow in August to pursue a dispute over an oil field that lies between them.

Gazprom said in August that it wouldn't carry gas from Kazakstan's giant Karachaganak field, which is developed by U.S. oil barons Texaco, and British Gas, Italy's Agip, and Russia's Lukoil. And since March, Gazprom has stopped Turkmenistan from exporting gas through its pipeline in Russia to states in the former Soviet Union and Europe.

Not the safest investment
Capitalist investors are finding other challenges in turning a profit in the workers state of Kazakstan. Two U.S. companies, World Wide Minerals, USA, and Nuclear Fuel Resources claim they have lost millions of dollars because the Kazak government refused to honor contracts. Several other corporations in Germany and Canada say they too have lost money there. World Wide Minerals, for example, alleged that it went into Kazakstan, paid off bad debts and wages for 4,500 workers, and then was refused an export license by the Kazakstan government.

When Hurricane Hydrocarbons Ltd. from Canada ventured into the oil-rich area of Kyzylorda, Kazakstan, it had similar problems. "Apart from a near-absence of export routes, the deal was accompanied by an array of obligations," complained Wall Street Journal writer Hugh Pope. "As the oil majors in Central Asia have discovered, companies seeking a long-term role here soon find they have to step into an expensive, unaccustomed social role left empty by the withering away of Soviet-era rules and rubles."

Hurricane took on 5,500 employees, promising not to lay off anyone for 18 months. Along with the oil drilling, it was forced to build roads, create a construction company, supply a 2.3 million-acre farm, and now "bears on its shoulders the expectations of a region of 700,000 people," reported Pope.

"When I arrived and saw their stony faces, I realized how much we had to do if we were not going to be tossed out," said Keith McCrae, president of Hurricane.  
 
 
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