Baku-Tbilisi-Ceyhan pipeline and tts significance

On 25 May the opening was announced of the Baku-Tbilisi-Ceyhan (BTC) pipeline built to carry oil from the Caspian region to the Mediterranean sea. At 1,094 miles in length, it is the world’s longest oil pipeline, crossing Azerbaijan, Georgia and Turkey. It is not expected to be fully operational until 2009, but at that time it is projected that it will be carrying 1 million barrels a day (mbd) – 1% of global oil production.

At a cost of £2.1 BILLION, it was far from the cheapest option for oil transportation. But the 11-member consortium that built it (controlled by the British oil giant BP, which has a 30% stake, and financed by inter alia the World Bank and the European Bank for Reconstruction and Development) obviously considers the cost to be well worth it. For, as The Times indicated on 14 February 2003 (‘Oil pipeline has the power to change lives’ – Carl Mortished), “By 2008 the Azeri, Chirag and Guneshli oil platforms in the Caspian will be sending one million barrels of high-quality crude to Ceyhan. If oil then fetches a mere $20 a barrel , a third less than today’s [2003!] price, the gross margin AFTER DEDUCTING PIPELINE AND DEVELOPMENT COSTS is about $12 million A DAY” (our emphasis). The pipeline will be transporting a good proportion of the production of US-owned oil deposits in Azerbaijan and Kazakhstan to market. Between them, Azerbaijan and Kazakhstan have oil deposits estimated to be 3 times the size of America’s, and having a value of up to $4 TRILLION. No wonder that the project received the warm support of the US imperialist government, which has been enthusiastically purchasing the right to have military bases throughout the region, obviously to defend American “property rights” in the oil deposits and in western-imperialist owned pipelines. The Observer of 1 December 2002 (‘BP risks its reputation on Caspian pipeline’ – Nick Mathiason) informs us that:

“BP didn’t want to build the line until 1998 when US pressure, following its takeover of Amoco, forced it to reconsider. The company admits it will need interest-free public money to complete the scheme. The International Finance Corporation …- an arm of the World Bank – and the European Bank for Reconstruction and Development … are deciding whether to fund the pipelines. … If they give the green light [which in the event they did] they will each pump in $100 million … and that will lever in a further $400 million from other sources.” Thus it is clear that the pipeline is not just a money-making venture, for this would certainly not attract ‘interest-free public money’, but is of major importance in America’s bid for world dominance.

The “great game”

The Times of 25 May 2005 spelt out the purposes of the pipeline (‘Black gold brings hope of return to the glory days of a century ago’ – Jeremy Page): “It will provide the West with a long-sought alternative energy source to the Middle East, and consolidate the strategic foothold of the United States in Moscow’s traditional backyard.” Thus, the construction of this pipeline is an important move in the “great game” that is being played throughout the oil producing regions, whereby US imperialism and its allies seek to monopolise what remains of the world’s oil, while being opposed by rival imperialists as well as countries who would not want to be held to ransom by any country or bloc monopolising the world’s oil – US imperialism and its allies being the only ones able and anxious to do so at the present time. Among the opponenats are Russia, China and Iran all of whom would want to secure and enhance their own oil supplies, and, in the case of Russia and Iran, their position as independent oil producers. Above all they would want at all costs to avoid the horrible fate of being turned into neo-colonies of western imperialism, which would bleed their economies dry in its desperate bid to fight off the dire effects on its rates of profit of the world economic crisis of overproduction which blights it at every turn.

Were it to have effective control of all the world’s oil supplies, the destructive power of US imperialism would be horrendous. For some 100 years, oil has been the lifeblood of modern industry, transport and war. Deprived of energy, a country would be virtually helpless in the face of imperialist predators.

The new BTC pipeline enables western imperialism to pump oil from the Caspian without having to pay hefty transit fees to Russia or Iran or of having supplies cut off in retaliation for its overbearing behaviour. So to the extent that the pipeline is now built and operational, this is a boost for US imperialism. However, the game is very far from over.

Challenges to US hegemony

The pipeline, important though it is for western imperialism, will not put its domination beyond the ambit of challenge. For instance, China is also building a pipeline, even longer than the BTC pipeline to take oil direct to China, thus securing supplies for the virile young industries developing in China which are already causing headaches for the imperialist powers. As Ben Aris in The Business of 13 February 2005 says: “…the arrival of the Cinese pipeline trumps both Russia’s and America’s pipes”. The Chinese pipeline will have to cross Turkmenistan and Kyrgyzstan, so it is hardly a coincidence that ‘opposition’ movements in those countries are being heavily supported by US imperialism in particular and by western imperialism in general. Russia too not only has its own oil supplies – the oil fields in Siberia are even larger than the Caspian ones – but pipelines under its own control, including the newly-built 1,075-mile Caspian Pipeline Consortium (CPC) pipeline are still needed to carry oil to the world market as the BTC can only handle a very small proportion of what needs to get there. Russian pipelines go through or near Chechnya, which is why the US has been heavily financing the insurgency in the region, but this insurgency, though causing massive suffering to the people of the region, has not prevented the flow of oil through Russia, even if that has been less than it might have been. In turn, Russia has stymied certain western imperialist moves to increase its domination of the region. In particular, “Gazprom [a Russian state-owned gas supplier] blocked efforts by TNK-BP to develop the massive Kovyktinskoe gas field in the Irkutsk Region, which has gas reserves of 2.13 trillion cubic metres and to build a gas pipeline to China”. This meant that it is the Chinese who have built a pipeline that will open next year, plus a further pipeline that will run east from two fields China owns in Kazakhstan. A further Kazakhstan-China gas pipeline will be built by a Chinese/Kazakh joint venture, and is due to open in 2008. And according to The Independent of 21 May 1997, Russia is “strongly suspected of having a hand in two failed coups against Mr Aliyev [the Azeri leader who in the 1994 ‘Sale of the Century’ brokered the sale of Azeri oil wells to mainly US companies], and of masterminding the 1995 assassination attempt against his ally in neighbouring Georgia, Eduard Shevardnadze”. So there is no way that western imperialism can hope to have things all its own way, pipeline or no pipeline.

Even states like Azerbaijan, Kazakhstan and Georgia which have been, and are, prepared to sell themselves to US imperialism, also cause it headaches by making demands that US imperialism is unwilling to concede, and by continuing to have dealings with Russia. For one thing, the transit fees that the BTC consortium is prepared to pay the “host countries” are extremely low: the Turkish government, for instance, has agreed to as little as $1.50 per barrel, a price that secures its abject agreement to everything and anything, but Georgia is to get $0.43! There is obviously a limit to what the local Caspian bourgeoisies will do for that money. They have trading connections with Russia which they would be loath to lose in the interests of what US imperialism would like, namely, that all these countries give up all independent production and trade and instead spend their oil money on purchasing even the most basic necessities from western imperialist multinationals. Bill Richardson, secretary of energy under US President Clinton, in referring to the former Soviet republics of the Caspian region said “We would like to see them reliant on Western commercial and political interests rather than going the other way. We’ve made a substantial political investment in the Caspian, and it’s very important to us that both the pipeline map and the politics come out right” (quoted in the New York Times, 14 October 1998). The rulers of the countries in question, however, while they are happy that they can no longer be held to ransom by the Russians on such questions as transit fees, are nevertheless not willing to accede to western imperialism’s every whim. There is no desire to afflict their countries with what is known as the Dutch disease, which afflicts most countries ‘blessed’ with oil that is looted by imperialism. This has been described by Lutz Kleveman in his book The New Great Game [Atlantic Books, London, 2003] in the following terms:

“‘Today, Saudi Arabia and many other states suffer from double-digit inflation rates and immense foreign debt. Economists have blamed this on a phenomenon called ‘Dutch disease’, striking countries that rely too much on one particular branch of industry while neglecting all others [note that is not considered polite to mention imperialist looting]. Often, governments, that collect high revenues from the export of raw materials no longer deem it necessary to sustain manufacturing and agriculture [i.e., at imperialist insistence they open the doors to multinational competition]. Companies in those sectors go bankrupt, causing people to lose their jobs and sending well-trained workers abroad. A sudden oil wealth also keeps national currencies artificially overvalued, harming the country’s exports. … ‘In all of the Caspian countries, the Dutch disease is beginning to be rampant'”.

Not only does the Dutch disease affect the working masses, it also undermines the interests of the national bourgeoisie which it would seem that in the Caspian region cannot for the moment be ignored by the region’s governments. They have also reason to fear further impoverishment of the masses who have been led to expect great riches as a result of the regional oil boom, riches of which as yet little have come their way. It is improbable that the bourgeoisie of Azerbaijan has forgotten that “Russia’s socialist movement … had its origins in Baku. When the Tsarist regime began to crumble in the early twentieth century, oil workers in Baku repeatedly went on strike to protest against working conditions. One of their workers was a young Georgian agitator named Joseph Dzhugashvili, later known as Joseph Stalin” (Lutz Kleveman, op.cit.). All this may make them more anxious than is customary to ensure that the ordinary masses also obtain some benefit from the oil boom, which cannot be secured if they sell themselves outright to US imperialism.

Besides, even in relation to oil alone, they may well be able to negotiate a better deal through China’s pipeline than they currently receive from either western imperialism or Russia, leaving open even the possibility at some future time for demands to be made for nationalisation of the oil wells that are now owned by Anglo-American companies. It is not for nothing that western imperialism has been showing a great interest in “human rights” in these countries, i.e., looking to instal even more subservient governments through their Hollywood formula “popular” revolutions fomented by crowds rented with US dollars. In the lead-up to the announcement of the opening of the pipeline, on Saturday 21 May, “pro-democracy” demonstrators came out in the Azeri capital, Baku – only to be arrested and beaten up by the Azeri police – thereby causing considerable embarrassment to the western imperialist worthies who were about to travel to the region to celebrate the opening of the pipeline that had been built with full Azeri government backing. In Georgia the US staged a “rose revolution” to instal Mikhail Saakashvili, because his predecessors were not servile enough to US imperialist interests, but much good has this done them: In disgust the ultra-conservative Mail on Sunday (4 July 2004, ‘Long live our heroic president’, Peter Hitchens) has to admit that “The ‘Rose Revolution’ in which the 36-year-old President [Saakashvili] swept to office, to the approval of the West, was a pretty shabby affair if you value fairness or the rule of law. And he has acted in a highhanded, autocratic fashion ever since [read – he won’t do everything the West tells him to do]”. The article concludes: “Oil is important. The West would be dark and cold without it. It is reasonable that our need for it should involve us in other countries. But we should admit this is what we are doing and be a good deal more modest in our claims to bringing light and liberty with us when we come with our drills and pipelines”.

If the US has been having a field day fomenting unrest in order to make things difficult for Russia, now that the US has its own pipeline, this is a game that Russia too can play. There are plenty of disgruntled minorities along the BTC pipeline route who would be only too happy to blow it up. A resurgence of the conflict between Armenia and Azerbaijan, for instance, over Nagorno Karabakh would pose a severe threat, as would a resurgence of Kurdish rebellion in Turkey.

Ecological considerations

In the pursuit of profit, capitalism in general and capitalism at its imperialist stage in particular, can afford to have very little interest in ecological considerations. They are a luxury that can only be afforded by monopolist concerns at a time when nobody is challenging their monopoly and massive monopolist profits are rolling in unhindered. This is not the situation at the moment, as we have seen, even for the giant oil monopolies, who need to watch every penny.

In relation to the BTC pipeline this means that polluting oil leaks are only too likely as a result of shoddy construction work – over and above the danger of pollution through sabotage in the course of likely political upheavals along the pipeline route. The Independent of 26 June 2004 (‘Exposed: BP, its pipeline, and an environmental timebomb’ – Philip Thornton) says that “… BP’s contractors and sub-contractors are cutting corners to get the job completed on time.

“The whistleblowers, all qualified professionals …say BP made a major mistake [in the interests of profit no doubt] in handing over control of the entire section of the line through Turkey to a government-owned company, Botas, on a fixed-price contract. Their allegations relate to this part of the 1,000 mile pipeline running from the Caspian Sea to the Mediterranean port of Ceyhan in Turkey…

“Dennis Adams, a senior engineer who quit after six weeks after not being paid, said the contractors’ construction work was disorganised and mismanaged. Pipes were left exposed for longer than specifications allowed and trenches were filled with materials that might allow uncontrolled movement of the pipes. He added: ‘Safety violations were occurring at all times including workers in deep unprotected and unstable areas’ …

“Colynn Burrell, an American with 35 years’ experience, says he was dismissed after 10 weeks working at the Ceyhan terminal for highlighting major design problems. He said that he had complained about a problem with the drainage system that meant toxins flowed straight into the ground…

“Mr Burrell said he was told at one point that all pipe welding being carried out was being failed by the inspectors; the normal failure rate is 6 per cent. Mike Morley, a Briton who was sacked as a weld-coatings inspector, said ‘numerous’ welds had to be redone; many others had been laid before they could be inspected. Even when inspections did take place, the results were not filed so it was impossible to see where the faults were.”

Furthermore, George Monbiot, writing in the Guardian of 3 September 2002 (‘Trouble in the pipeline’) tells us that consultations that were supposed to have taken place between the BTC consortium and Turkish villagers living along the route of the pipeline, were nugatory at best:

“The mission [a fact-finding mission to Turkey] visited eight of the villages Botas claims to have consulted. Four of them, it discovered, had not been contacted at all. In the mission’s report there is a photograph of the village of Hacibayram, which Botas says it ‘consulted by telephone’. The houses are little more than piles of rubble: the entire village was deserted years ago. It has no telephones.”

Incidentally, although villagers are supposed to be not only consulted but also compensated for losses they might otherwise suffer, this again is more of a publicity stunt than a genuine compensation scheme. George Monbiot continues:

“Though the construction of the pipeline will destroy homes, fields and roads and damage many people’s livelihoods, only a minority of those it affects are likely to receive compensation. Most of the land along the route is either not officially registered, or is held in the name of dead people. BP’s partner has told the villagers that it will compensate only those whose names are on the official register. No compensation at all has been offered to the fishing communities affected by the construction of the tanker point at the end of the line”.

But Turkey at least has set a fine example of the kind of behaviour expected by US imperialism of a truly loyal puppet: “The pipeline’s ‘host government agreement’ [with Turkey] effectively grants the corporations executive power over the government.

“The contract overrides all Turkish laws except the constitution. It insulates the oil companies from any change in either Turkish law or international law: if, for example, new taxes or new environmental or health and safety rules are introduced, the agreement takes priority. In effect, it forces Turkey to flout international law in order to protect the consortium. BP appears to be legally exempt from paying compensation to anyone affected by oil spills or other impacts of the pipeline project. Turkey has promised that its security forces will defend the consortium from ‘civil disturbances’, but neither the government nor the companies are obliged by the agreement to respect human rights. BP may terminate the contract at any time. Turkey may not.” (George Monbiot, ibid.).

Earthquake zone

As if this were not enough, “Turkey lies in an earthquake zone with 17 severe shocks in the past 80 years. Since the Baku line will be in place for some 40 years, … there is a high chance of a major earthquake during its operation”.

But who cares about the probability of ecological disaster when there are billions in monopolist superprofits to be made!

“Other things being equal”, said Marx, “the rate of profit … falls and rises inversely to the price of raw materials …” (Capital, Vol 3).

The development of monopoly merely serves to intensify the struggle for the seizure of raw materials. Developing the Marxian analysis, and applying it to the era of monopoly capitalism, Lenin concluded: “The more capitalism is developed, the more strongly the shortage of raw materials is felt, the more intense the competition and the hunt for sources of raw materials throughout the world, the more desperate the struggle for the acquisition of colonies” (Lenin, Imperialism, the highest stage of capitalism).

What distinguishes oil, and gives it added importance, is that as an increasing source of energy which it has been from the beginning of the 20th century, it has become a commodity of all commodities, the basis on which is built the entire edifice of modern society. It is also the material that fuels the war machines of the imperialist powers. While the Middle East and Central Asia are richly endowed with oil, most of the imperialist countries are dependent on its import from this region. No wonder, then, that this region has become a centre of major contradictions, not only between imperialism and the oppressed nations of this region, but also between the various imperialist powers who are waging a furious struggle against each other for the monopolisation of this commodity of commodities.