The September 11 terrorist assault on the US has the potential to alter the existing geopolitical landscape around the Caspian Basin, which in turn could have significant implications for the region's future oil and gas export routes to world markets. In this framework, developments on two fronts could prove groundbreaking. The first would involve any sign of rapprochement between the US and Iran.
Iran opposed the Taliban movement from the outset and the presence of Bin Laden in Afghanistan had been a source of irritation for the US since 1998. The two countries secretly co-operated in supporting the anti-Taliban forces in Afghanistan and since the fall of the Taliban, Iran has supported Kabul's pro-West government.
The second important development would be the end to the decades-long civil war in Afghanistan and the emplacement of a central government following the military defeat of the Taliban. Moreover, the coming about of either event would necessitate a rethink of both Russian and Chinese strategies in their pursuit of the Caspian's hydrocarbon riches.
In short, pressing strategic adjustments could influence the export options for Caspian energy over the long term: the old North to Russia, South to Iran, West through Georgia and Turkey, East to China, or Southeast to India.
Indeed, since the collapse of the Soviet Union, Russia and the US have operated in the region on an increasingly competitive basis, on the assumption that Caspian development is a zero-sum game. Both states are politically highly active in the region and are building military alliances with local governments and engaging in exercises with local troops.
During the 1990s, as the US extended its arm into this former Soviet South, Russian officials began gradually moving away from their hitherto belief that the bulk of former Soviet Union's hydrocarbons were to be found in Siberia and ostensibly concluded that regardless of the size of its energy reserves Russian participation in the Caspian is crucial in the face of American hegemony.
Although Moscow is doing its outmost to keep Russia dominant in the region, it faces a number of impediments, which weaken its position. Most importantly, Russia has inadequate infrastructure capacity, including port outlets, which cannot guarantee that it will be able to meet the future export capacity needs of the Caspian energy producers despite the Caspian Pipeline Consortium (CPC) and additional Baltic pipelines in place. Safety restrictions on traffic through the Turkish Straits pose additional limits on the Russian option, although bypassing the Bosporus via a Balkan pipeline could provide a solution to this particular problem.
In the US, the competitive outlook is intensified by a consideration of energy as a national security issue. As the US is taking steps to diversify its energy supplies, the recommendations of President Bush's national energy policy task force focus substantial attention on all Caspian projects, including the Baku-Tbilisi-Ceyhan oil pipeline, the Shah-Deniz-Turkey gas pipeline and energy developments both in Kazakhstan and Azerbaijan.
America's thus far resolute stance in minimising Russian and Iranian stakes in the development of the Caspian energy network arise from a desire to secure the supply of energy by reducing reliance on states that are either perceived to be hostile or rivals of the US. Although the South route through Iran is widely regarded as the most commercially viable of all options, antagonistic US-Iranian relations have meant that both the Clinton and Bush administrations have forcefully pushed for the main pipelines to go West through Georgia and Turkey.
However, the Baku-Tbilisi-Ceyhan project is still in its infancy and any signs of upturn in relations between the US and Iran could be enough ammunition for the US energy industry to undertake a lobbying offensive aimed at influencing both Congress and the White House regarding the merits of the South route through Iran.
Already corporate anti-sanction coalitions such as USA*Engage, whose membership includes ExxonMobil, Chevron and Conoco-all of which are heavily involved in exploration in and around the Caspian-are pressuring the US government to refrain from imposing unilateral sanctions against states like Iran. The prospect of returning to the Iranian market would make good news for US energy companies and with a shift in attitude among politicians in Washington the viability of the Baku-Tbilisi-Ceyhan project would have to be strongly reconsidered.
However, political stability in Afghanistan could undermine the South route as it is equally commercially attractive to the producers themselves to build a pipeline from the Caspian through Afghanistan and Pakistan to either reach the Arabian Sea or the huge Indian market. The Indian option is the most unlikely given relations between Pakistan and India and Indian reluctance for its energy supply to transit Pakistani territory. Short of a Pakistani-Indian understanding on this issue, the Southeast option need substantial justification as Pakistan itself is not a significant energy importer.
Past discussions between Central Asian states and the Taliban on the construction of a pipeline through Afghanistan is indicative of the sense of desperation in Kazakhstan, Turkmenistan and Uzbekistan to find an outlet to world energy markets. Moreover, experience shows that political instability is not a deterrence for the energy industry which is accustomed to operate in high-risk environments.
Indeed, the US company Unocal was as late as 1998 involved in the construction of a US$2 billion gas pipeline in Taliban controlled-areas which was meant to supply Turkmen gas to Pakistan. An urgency by Caspian states to play a role in global energy markets combined with the presence of a host of energy companies willing to operate in difficult conditions mean that even small adjustments in the geopolitical scene of the region could prove crucial for envisaged pipeline routes.