Author: Kalantarian Kevo

PM MARGARIAN: GEORGIA’S BLOCKADE BY RUUSIA HAS NOT YET AFFECTED ARMENIA
Noyan Tapan News Agency, Armenia
Oct 4 2006
YEREVAN, OCTOBER 4, NOYAN TAPAN. The transport blockade of Georgia by
Russia has not yet affected the Armenian economy, RA Prime Minister
Andranik Margarian stated in the RA National Assembly on October 4.
According to him, the crossing points on the Georgian border were
already closed prior to that, and since June Armenia has been deprived
of the opportunity to transport goods in vehicles through Lars.
The prime minister said that in accordance with the agreement reached
with the Georgian side, goods are transported by Batumi and Poti
ports. “We have no additional problems that would make us reach new
agreements with the Russian or Georgian side,” he said.
Responding to deputy Victor Dallakian’s question about whether the
government is ready to act as a mediator in the Russian-Georgian
relations, the prime minister said that so far no such proposal has
been made. “If the Russian or Georgian side makes such a proposal,
the Armenian government will discuss it,” A. Margarian noted.

ANKARA TO HOST MERKEL
By Azamat Damir, Berlin
Zaman, Turkey
Oct 4 2006
Shortly after the EU Commissioner Olli Rehn’s visit, Turkey will
welcome German Chancellor Angela Merkel Thursday.
During the visit, bilateral relations between Turkey and Germany,
Turkey’s EU membership bid and the Cyprus issue will be discussed.
However, because of the anti-Turkey stance of her party, full support
for Turkey’s EU membership from Merkel is not expected.
The German Chancellor will arrive in Turkey for a two-day official
visit tomorrow. Merkel, who will meet with President Ahmet Necdet
Sezer and Prime Minister Recep Tayyip Erdogan, will also touch on
Turkey’s EU membership process and intercultural dialogue. However,
experts assert that Merkel, who will have to consider the promise
her predecessor’s support for Turkey’s full membership in the EU,
as well as the anti-Turkey views prevalent in her party, has to take
a very balanced view during the visit.
Merkel, who will head to Istanbul, will attend the Turkish-German
Business Congress. She will also meet with Greek Orthodox Patriarch
Bartholomew I, Patriarch of Turkish Armenians Mesrop Mutafian, and
officials from the Directorate of Religious Affairs. In the meetings,
the status of Turkish minorities, and the tension caused by Pope
Benedict XVI’s remarks that Muslims found offensive will be discussed.

OF HEARTS, MINDS AND WALLETS IN SOUTH OSSETIA
By Shaun Walker
The Moscow Times, Russia
Oct 5 2006
My visit to Tskhinvali this summer, the capital of the breakaway
republic of South Ossetia, provoked a sense of disappointment
similar to that which I felt when visiting Tiraspol, the capital of
Transdnestr, last year. With my information about the places filtered
through the occasional sensationalist Western media report, I turned
up in both cases excitedly expecting to find the final frontier;
a gangster-ridden epicenter of weapons and human smuggling; a dark
and wild version of the Soviet Union. Instead, what I got in both
wannabe capitals was a sleepy provincial town, with tree-lined
streets and ordinary people going about their business trying to
make ends meet. Tskhinvali is little more than a village, with a
population similar to a medium-sized dacha colony somewhere outside
Moscow. Children play on the swings, old ladies chatter noisily on
benches and mothers carry enormous circular lavash bread home to
their families.
As Georgia and Russia this week moved beyond verbal sparring into
something more serious, the fate of these breakaway regions again came
under discussion. That Moscow supports the Abkhaz and South Ossetian
separatist regimes is one of the biggest problems Georgia has with
Russia. The South Ossetian leadership promised Monday to withdraw
from peace talks, and the conflict over the small patch of land on
the southern side of the Caucasus Mountains rumbles on with no end
in sight. While South Ossetian leader Eduard Kokoity is something
of a suspicious character, and many in the leadership there are
obstructionist and unhelpful, the idea of them as Soviet throwbacks or
Russian puppets resisting the forward march of a modern and democratic
Georgia needs some adjusting. Actually visiting the unrecognized
republic has made me rather skeptical about pronouncements about
re-integrating South Ossetia in order to restore Georgia’s territorial
integrity, in the way that many Georgians seem to think is possible.
If Tskhinvali seems for all the world like a normal provincial town
in the Caucasus, the one thing that is noticeably different is the
lack of working- age people, especially men. Almost every family
has someone working in Russia earning money, which they send home to
support their families. In South Ossetia, as Vakhtang Dzhigkayev, an
economic adviser to the administration, told me, there are two choices:
“Work in the government, or go to North Ossetia.”
Unlike Transdnestr, there is no Soviet-era industrial complex
and there are no natural resources. Unlike Abkhazia, there is
no strategic coastline providing an outlet to the world beyond
Russia and Georgia and the chance to attract tourists. And unlike
Nagorno-Karabakh, there is no wealthy diaspora coming to invest in
rebuilding infrastructure. This makes the Ossetians dependent to a
large degree on support from Moscow.
The Georgians would have people believe that Russian influence in
South Ossetia is simply the Kremlin maneuvering to punish Georgia for
its pro-Western stance. There is certainly an element of that. But
aside from the Russians installed in high positions in the Ossetian
leadership and the propaganda posters of a grinning Vladimir Putin
with the slogan “Nash Prezident,” any visitor to Ossetia will notice
significant ground-level pro-Russian sentiment, or at least an
appreciation of the possibilities that being close to Russia offers.
The “passportization” of the region by Russia (more than 90 percent
of residents hold Russian passports) is usually represented as
Moscow’s meddling hand stirring up trouble. But on the ground,
a Russian passport represents a lifeline for South Ossetians — a
way to get an education or a job in Vladikavkaz or Moscow. Walking
the streets and talking to people, it seems inconceivable that these
people could integrate back into the Georgian state without it being
a long and painful process. For a start, only the eldest generation
speaks the language well. On the streets, people speak Ossetian, an
Iranian language very different to most of the surrounding Caucasus
languages. Almost everyone speaks Russian fluently, but as for
Georgian, “We only know the swear words,” one young man told me with a
smile. These people would not be able to get jobs or study in Tbilisi.
Russia provides them with their only chance to do something with
their lives.
Few in the Ossetian leadership seem ready to address their image
problem, however. When I visited, I was told by the head of the
republic’s press and information committee that for many months
entrance had been barred to foreign journalists, because they weren’t
trusted to write positive articles. Dzhigkayev, the economic advisor,
told me that he had worked for days to persuade people to allow
three constitutional experts from the Council of Europe to visit the
republic. Officials had been suspicious of the experts and had wanted
to keep them out. But it is exactly this type of contact that will help
the Ossetians in the long run — letting in as many Western experts
and journalists as possible, explaining their position and problems,
and putting across their side of the argument. It might not lead to
recognition of their right to self determination, but it would at
least help people to understand their position better.
As things stand, it’s hard to see any progress any time soon. One
respected Georgian journalist told me: “There is not a single person
in Georgia who would be willing to compromise over South Ossetia
remaining part of Georgia in some way.” Meanwhile, a senior Ossetian
official said: “While there is anyone still alive in Tskhinvali,
the Georgian army will not be here.” These sentiments are so far
apart that a solution in the near future seems inconceivable. If the
starting positions of both sides were two circles in a Venn diagram,
they would not even come close to touching.
But the Ossetians’ hatred for Georgia does not translate into
unquestioning admiration for Russia. “We know Russia only supports us
because it’s in their interests to do so,” Irina Gagloyeva, the head
of the republic’s Press and Information Committee, told me. People
are wary of Russia and its intentions, and admit they are no more
than Russia’s plaything in the South Caucasus. “But we at least want
to be a plaything treated in a dignified manner,” said Gagloyeva.
It really doesn’t seem much to ask. It also suggests that if Georgia
begins to offer more carrots than sticks and works at trying to
build a prosperous society, one day more ordinary Ossetians might
come to think that looking south towards Tbilisi is a better option
than looking north to the North Ossetian capital of Vladikavkaz and
Beslan. After all, when joining the Russian North Caucasus seems like
your best option, your other options must be pretty bad.
For now, the Georgian rhetoric, especially coming out of the Defense
Ministry, confirms all the Ossetians’ fears about Tbilisi’s intentions.
Military construction in Gori and the insistence that the New Year
will be celebrated in Tskhinvali are clearly more reminiscent of
shock and awe than hearts and minds. Back in Tbilisi, Mamuka Kudava,
the Georgian deputy defense minister, met me in his office — which
contains a large NATO flag – and told me: “There are only 10,000
people in Tskhinvali. It makes no sense to talk about what they
want.” Barring the unlikely options of an ethnic cleansing campaign
in South Ossetia or a Chechnya-style destruction of the territory,
Georgia might have to start talking about it soon.
Shaun Walker is a Staff Writer for Russia Profile.

OSCE MG CO-CHAIRS RETURN TO BUCHAREST OPTION
PanARMENIAN.Net
03.10.2006 18:00 GMT+04:00
/PanARMENIAN.Net/ In case of agreeing to another round of talks
the parties to the Nagorno Karabakh conflict will have to discuss
a modified documents over the Karabakh settlement, OSCE MG Russian
Co-Chair Yuri Merzlyakov said. “During coming talks discussion of a
document, proposed in Rambouillet, then edited in Bucharest and now,
having undergone changes, will be presented at the next meeting,”
the Russian diplomat noted.
Merzlyakov also said that the new ideas are based on specification
of the document, presented to parties in May, Day.az reports.

PRESIDENT ALIYEV: “NO TRADE-OFFS IN NK ISSUE DURING MY PRESIDENCY”
Today, Azerbaijan
Oct 2 2006
President Ilham Aliyev participated in the opening of the parliament’s
autumn session.
Azerbaijan’s President Ilham Aliyev said on Monday he was in favor of
an active policy in the settlement of the conflict around the mostly
Armenian populated Azerbaijani enclave of Nagorno Karabakh.
The President emphasized a need to use all possibilities for a
peaceful settlement of the conflict, noting that “Azerbaijan will
continue cooperation with international organizations on that issue.”
He told a parliament session that co-chairmen of the OSCE Minsk group
for Nagorno Karabakh arrived on Monday in Baku and stressed that his
country “is not going to reject that format of the settlement.”
“However, we believe that the activity of other international
organizations can also contribute to a peace process,” Aliyev said.
At the same time he stressed that “Azerbaijan will never allow the
setting up of a second Armenian state on its territory.”
“Azerbaijan will never sign a peace agreement that would not meet
the national interests of the country,” he said. “As a President,
I will never sign it,” he emphasized.
The president also said that under a 2007 draft budget, Azerbaijan’s
defense expenditures will grow 17.8 percent, and will reach 900
million dollars.
“The growth of military expenses must not worry anyone. This is our
sovereign right. Besides, a growth of the military budget cannot
automatically lead to a war. We must ensure our security and be ready
for any development of the events,” the President said.
URL:

MOSCOW ITSELF PROVOKED IMPUDENT ACTIONS OF GEORGIAN AUTHORITIES
by Vladimir Mukhin
Translated by Pavel Pushkin
Source: Nezavisimaya Gazeta, September 29, 2006, p. 3
Agency WPS
DEFENSE and SECURITY (Russia)
October 2, 2006 Monday
Collapse Of The Ostrich Policy;
Seizing Of Russian Officers In Georgia As A Consequence Of
Contradictory Foreign Policy Of Russia In Transcaucasia; The insolent
seizing of Russian officers in Georgia is a quintessence of the
unclear, contradictory and ostrich foreign policy of Russia in
Transcaucasia.
The insolent seizing of Russian officers in Georgia is a quintessence
of the unclear, contradictory and ostrich foreign policy of Russia in
Transcaucasia. Without taking public opinion of Russians, secretly,
on March 31, Commander of Russian Ground Forces Colonel General
Alexei Maslov and Senior Deputy Defense Minister of Georgia Mamuka
Kudava signed an agreement on withdrawal of Russian military bases
and other military objects of the group of Russian forces in
Transcaucasia from Georgia. This document was not ratified by the
Duma yet and the government only considered it and submitted it to
the President for signing. Meanwhile, 25 trains with personnel and
armament of the Russian forces were already sent to Russia and
Armenia this summer. This was equivalent to more than a half of the
entire combat potential of the group of Russian forces in
Transcaucasia.
Back in May 2006, when illegitimate withdrawal of Russian forces from
Georgia was only starting, Lieutenant General Yury Netkachev, former
deputy commander of the group of Russian forces in Transcaucasia who
was in the Adzharian government of Aslan Abashidze in capacity of the
head of the security service between 2001 and 2003, already predicted
the situation regarding seizing and humiliation of Russian officers.
Then the general said, “Withdrawal of Russian forces from Georgia is
the biggest geopolitical mistake of Russia. They will taunt us and
our officers.”
Many politicians in Russia agree with him now.
Meanwhile, general Netkachev believes that Moscow itself is to blame
for the illegitimate ascent of Saakashvili to power. It turned out
that when Saakashvili was only going to become the president and
Tbilisi was turbulent, Moscow was able to prevent his ascent to
power. Netkachev said, “I knew for sure that at the end of 2003,
Abashidze arrived in Moscow and addressed the Defense Ministry and
the government with a request to support him and to prevent coming of
Saakashvili to power. Just agree, all this so-called orange
revolution in Tbilisi and dismissal of Shevardnadze, all this was
illegitimate. Residents of Adzharia supported Shevardnadze. However,
Russian officials in the Presidential Administration decided not to
interfere because they believed that this was an internal affair of
Georgia. Abashidze left Russia without any results, although the
terms that he offered in case of Russia’s support for him were very
beneficial for Russia. He promised to leave our 12th military base in
Batumi indefinitely. If we recall the recent past we can say that he
has often helped our Adzharian garrison with food, has given fuel and
lubricants for exercises etc.”
Netkachev fully denies a possibility of espionage of Russian
servicemen against Georgia, “If we were doing this and organized
“intrigues, conspiracies” etc against Saakashvili, believe me, the
illegitimate regime of the young reformers would not exist even for a
few months. Unfortunately, we stay aside. Other countries support
Tbilisi. I will not say which because you will understand by
yourself. They act against Russia in a concerted way and are very
successfully ousting it from Transcaucasia and other regions of the
CIS.”

PRESIDENT SEZER: FUNDAMENTALIST THREAT AIMS AT CHANGING BASIC CHARACTERISTICS OF OUR STATE
Turkish Press
Oct 2 2006
ANKARA – “Fundamentalist threat aims at changing the basic
characteristics of our state,” said Turkish President Ahmet Necdet
Sezer on Sunday.
Addressing the parliamentary general assembly to mark the beginning of
the new legislative year, President Sezer noted, “the globalization
process deepens mutual dependence and shapes geo-political and
geo-strategic situation in the world. Global security and global
economy became the most important concepts in our century.”
“The new security atmosphere has changed traditional perceptions of
threat. As a result, dimension of security has changed from the concept
of national security into the regional and global security,” he said.
“Turkey has been face to face with gradually increasing internal
and external threats and risks targeting its territorial integrity,
national unity and political regime. Those risks and threats stem
from separatist and fundamentalist activities, international
terrorism, proliferation of weapons of mass destruction, and
regional problems. Turkey has succeeded in protecting its stability
and prosperity against these security issues thanks to its sound
democratic and secular structure, and our social attitude rejecting
all kinds of ethnic and religious discrimination,” he stressed.
“Success of the fight against terrorism requires a global
cooperation. And success of such a cooperation depends on definition
and evaluation of all terrorist organizations as a joint target.
Supporting terrorist organizations and remaining silent against acts
of terrorism targeting the other countries affect the global fight
against terrorism negatively. Any country cannot win this fight on
its own,” he said.
President Sezer noted, “as one of countries which suffered most from
terrorism, Turkey supports the global fight against terrorism with
great determination. Unfortunately, our friendly and neighboring
countries failed to support Turkey in its fight against the terrorist
organization. A common attitude and an active cooperation are the
only way of solution against the separatist terrorism stemming from
the northern part of Iraq. Turkey preserves its legitimate right to
defense itself against external terrorism.”
“Separatist terrorism is a universal crime against humanity. Turkey
is determined to maintain its fight against separatist terrorism
within the rules of the state of law till the terrorist organization
is totally eliminated. I want to highlight the importance of efforts
to resolve socio-economic problems of the eastern and southeastern
regions besides our armed fight against terrorism,” he said.
-“THREAT OF FUNDAMENTALISM”-
“Another threat targeting our security is fundamentalism.
Fundamentalist threat aims at changing the basic characteristics
of our state. The key point in our fight against fundamentalism is
secularism. The fight against fundamentalism entails us to protect
the secular structure of our Republic, to prevent use of religion and
religious values for political purposes and to inform our people,”
he said,
President Sezer emphasized that the Turkish Armed Forces is the
guarantee of existence and continuity of the Turkish state and
political regime.
-“DEVELOPMENTS IN FOREIGN POLICY”
“There are important developments in the foreign policy. In line with
our national interests, we have to provide a convenient atmosphere
around us with the aim of sustaining our development in security.
Turkey`s unique position between the west and the east entails us to
pursue a realistic, influential and multi-dimensional foreign policy,”
he said.
Referring to the EU membership process, President Sezer said,
“our target of EU full membership is one of the priorities of our
foreign policy. The EU has put forward a strategic point of view by
formally opening entry talks with Turkey. We believe that progress of
our accession process without interruption will also make valuable
contributions to global peace. However, some circles oppose to our
membership on the basis of cultural and religious differences, and
support Greek Cypriot efforts for opening of Turkish ports and airports
to the Greek Cypriot traffic. They encourage the uncompromising
attitude of the Greek Cypriot administration. The EU should direct
the Greek Cypriot administration to a comprehensive solution based on
political equality and bi-zonality in line with the United Nations`
parameters.”
“Our target of the EU full membership and the bilateral relations
with the United States are leading topics of our foreign policy. Our
relations with the EU and the United States complete each other and
form the European-Atlantic tie. Current conditions in the world has
increased importance of the Turkish-American relations. We attach
great importance to our cooperation with the United States in the
fight against the terrorist organization. Creation of a zone of
harmony and stability is one of our essential targets,” he said.
-RELATIONS WITH NEIGHBORING COUNTRIES-
“I believe that development of Turkish-Greek relations on the basis
of mutual confidence and friendship will help efforts to resolve the
bilateral problems. Any progress to this end will also have a positive
impact on the Mediterranean region. We expect Greece to fulfil its
commitments stemming from the international agreements and to resolve
problems of the Turkish minority in Western Thrace,” he stressed.
Highlighting importance of stability in the Balkans, President Sezer
said, “Turkey attaches great importance to creation of a peaceful
atmosphere in the Balkans on the basis of mutual understanding and
cooperation, and will continue maintaining its contributions to
protection of regional stability.”
Referring to relations with Russia, President Sezer said, “Turkey
and Russia maintain their cooperation to reach their joint target
of a multi-dimensional partnership. Development of the cooperation
between Turkey and Russia, two important countries in Eurasia and the
Black Sea region, will contribute to peace, stability and prosperity
in the whole region.”
“One of the most important targets of our foreign policy is
to make Eurasia a region of stability and cooperation. The
Baku-Tbilisi-Ceyhan oil pipeline became a meaningful symbol of the
regional cooperation. This cooperation will extend to the Central Asia
after participation of Kazakhstan in the project. We aim at creating
an atmosphere of friendship and cooperation in southern Caucasus,”
he said.
Expressing Turkey`s pleasure with steps taken by Azerbaijan to
consolidate its distinguished place in the international community,
President Sezer said, “the Upper Karabakh dispute should be resolved
and Azerbaijan should regain its territorial integrity.”
-IRAN-
Stating that they have been monitoring developments regarding Iran`s
nuclear program with a great concern, Sezer said, “Turkey respects
Iran`s right to develop nuclear technology with peaceful objectives.
However, Iran should have a transparent cooperation with international
community.”
-IRAQ-
“The situation in Iraq where several people die every day has turned
into a tragedy of humanity. Turkey will keep assisting Iraq and Iraqi
people during their difficult days. The main goal of our relations
with all sections in this country aim at maintenance of territorial
integrity and political unity of Iraq.”
-MIDDLE EAST-
Stating that problems in the Middle East prevented the region from
reaching a lasting stability in the region, he said, “Turkey hopes
that the Middle East will be a region of friendship and cooperation.”
“Turkey believes that if all countries in the Middle East adopt
universal democratic values, it will contribute to peace and
cooperation in the region,” he stressed.
Sezer noted that there was no need to redefine universal values like
democracy and modernism with additions like `moderate Islam`, stating
that secularism was the criterion of modernism which regulated the
relation between Islam and democracy.
Recalling that Turkey condemned terrorist attacks on the United States
on September 11th, 2001, Sezer indicated, “some circles` efforts
to make a parallelism between Islam and terror are meaningless. It
is clear that mentioning terrorist activities (in the Middle East)
together with Islam can cause dangerous results. Within this scope,
leaders of Christian world should refrain from statements and attitudes
which may cause the people who have different belief to offend.”
Sezer said, “the solution of Palestinian issue is the key factor for
settlement of peace and stability in the region.” He stated that the
solution frame that was put forward by the UN is that “Israel and
Palestine should live together peacefully within borders recognized
by international community.”
“Turkey believes in this solution frame. Turkey`s close relations with
Israel and Palestine will contribute to this objective. The country
will continue its initiatives on this direction,” he underlined.
Sezer indicated that the countries in the Middle East should fulfill
their duties and should be in favor of peace.
-CENTRAL ASIA-
Stating that Turkey aimed to boost its relations with countries
in Central Asia, Sezer said that Turkey would keep assisting these
countries in its efforts on development, democratization and the area
of human rights.
“Humanitarian aids that Turkey extended to several regions of the
world, our location and our sound attitudes made the country which
is wanted in solutions of global problems,” he stressed.
Sezer added that the motto of Ataturk, the Founder of Turkish Republic
who said, “Peace at Home, Peace in World” caused Turkey to advance
in the course of history.

OCALAN URGES KURDS TO RECONCILIATION WITH TURKEY
PanARMENIAN.Net
28.09.2006 18:37 GMT+04:00
/PanARMENIAN.Net/ Kurdish leader Abdullah Ocalan, who is in a Turkish
prison at present, urged activists of the Kurdish Working Party
(KWP) to announced ceasing hostilities against official Ankara,
reports AFP referring to a source, close to Kurdish separatists.
“The KWP should not use arms, except cases it is actively attacked
in order to kill,” Ocalan writes in a message.
Having been indicted for terrorism, the KWP leader also noted
the importance of arranging the democratic union between Turks and
Kurds. “With the start of that process a way for diplomatic dialogue
will open,” Ocalan is sure.
We remind that the Kurdish separatist leader is serving a life sentence
in a prison on Imarli Island.

FIGHT IN PRISON
A1+
[02:11 pm] 29 September, 2006
According to the information provided by the office of the Public
Prosecutor, on September 1 prisoners of the Vardashen prison
G. Mnatsakanyan (born in 1966) and G. Qaramyan (born in 1962) had a
fight. During the fight G. Mnatsakanyan stabbed G. Qaramyan with a
knife as a result of which the latter was taken to hospital with a
wound on his chest.
The Erebuni department of the RA Police has initiated a criminal case
in connection with the incident.

THE POLITICS OF OIL: CASHING IN ON THE FEAR FACTOR
By Michael T Klare
Asia Times Online, Hong Kong
Sept 27 2006
Just six weeks ago, gasoline prices at the US pump were hovering at
the $3-per-gallon (79 cents a liter) mark; now they’re inching toward
$2 (53 cents a liter) – and some analysts predict even lower numbers
before the November elections. The sharp drop in gasoline prices has
been good news for US consumers, who now have more money in their
pockets to spend on food and other necessities – and for President
George W Bush, who has witnessed a sudden lift in his approval ratings.
Is this the result of some hidden conspiracy between the White House
and Big Oil to help the Republican cause in the elections, as some
are already suggesting? How does a possible war with Iran fit into
the gasoline-price equation? And what do falling gasoline prices tell
us about “peak oil” theory, which predicts that we have reached our
energy limits on the planet?
Since gasoline prices began their sharp decline in mid-August, many
pundits have tried to account for the drop, but none have offered
a completely convincing explanation, lending some plausibility to
claims that the Bush administration and its long-term allies in the
oil industry are manipulating prices behind the scenes.
In my view, however, the most significant factor in the downturn
in prices has simply been a sharp easing of the “fear factor” –
the worry that crude-oil prices would rise to $100 or more a barrel
because of spreading war in the Middle East, a US strike at Iranian
nuclear facilities, and possible Katrina-scale hurricanes blowing
through the Gulf of Mexico, severely damaging offshore oil rigs.
As the summer commenced and oil prices began a steep upward climb,
many industry analysts were predicting a late-summer or early-autumn
clash between the US and Iran (roughly coinciding with a predicted
intense hurricane season). This led oil merchants and refiners to fill
their storage facilities to capacity with $70-$80-per-barrel oil. They
expected to have a considerable backlog to sell at a substantial
profit if supplies from the Middle East were cut off and/or storms
hit the Gulf of Mexico.
Then came the war in Lebanon. At first, the fighting seemed to confirm
such predictions, only increasing fears of a regionwide conflict,
possibly involving Iran. The price of crude oil approached record
heights. In the early days of the war, the Bush administration
tacitly seconded Israeli actions in Lebanon, which, it was widely
assumed, would lay the groundwork for a similar campaign against
military targets in Iran. But Hezbollah’s success in holding off the
Israeli military combined with horrific television images of civilian
casualties forced leaders in the US and Europe to intercede and bring
the fighting to a halt.
We may never know exactly what led the White House to shift course on
Lebanon, but high oil prices – and expectations of worse to come – were
surely a factor in administration calculations. When it became clear
that the Israelis were facing far stiffer resistance than expected,
and that the Iranians were capable of fomenting all manner of mischief
(including, potentially, total havoc in the global oil market),
wiser heads in the corporate wing of the Republican Party undoubtedly
concluded that any further escalation or regionalization of the war
would immediately push crude-oil prices over $100 per barrel.
Prices at the gasoline pump would then have been driven into the
$4-$5-per-gallon range ($1-$1.30 per liter), virtually ensuring a
Republican defeat in the mid-term elections. This was still early in
the summer, of course, well before peak hurricane season; mix just
one Katrina-strength storm in the Gulf of Mexico into this already
unfolding nightmare scenario and the fate of the Republicans would
have been sealed.
In any case, Bush did allow Secretary of State Condoleezza Rice to
work with the Europeans to stop the Lebanon fighting and has since
refrained from any overt talk about a possible assault on Iran.
Careful never explicitly to rule out the military option when it
comes to Iran’s nuclear enrichment facilities, since June he has
nonetheless steadfastly insisted that diplomacy must be given a chance
to work. Meanwhile, we have made it most of the way through this year’s
hurricane season without a single catastrophic storm hitting the US.
For all these reasons, immediate fears about a clash with Iran,
a possible spreading of war to other oil regions in the Middle
East and Gulf of Mexico hurricanes have dissipated, and the price
of crude oil has plummeted. On top of this, there appears to be a
perceptible slowing of the world economy – precipitated, in part,
by the rising prices of raw materials – leading to a drop in oil
demand. The result? Retailers have abundant supplies of gasoline on
hand and the laws of supply and demand dictate a decline in prices.
Finding energy in difficult places How long will this combination of
factors prevail? Best guess: the slowdown in global economic growth
will continue for a time, further lowering prices at the pump. This is
likely to help retailers in time for the Christmas shopping season,
projected to be marginally better this year than last precisely
because of those lower gasoline prices.
Once the election season is past, however, Bush will have less
incentive to muzzle his rhetoric on Iran and we may experience a sharp
increase in the bashing of Iranian President Mahmud Ahmadinejad. If
no progress has been made by year’s end on the diplomatic front,
expect an acceleration of the preparations for war already under way
in the Persian Gulf area (similar to the military buildup witnessed
in late 2002 and early 2003 prior to the US invasion of Iraq). This
will naturally lead to an intensification of fears and a reversal
of the downward spiral of gasoline prices, though from a level that,
by then, may be well below $2 per gallon.
Now that we’ve come this far, does the recent drop in gasoline prices
and the seemingly sudden abundance of petroleum reveal a flaw in the
argument for this as a peak-oil moment? The peak-oil theory, which had
been getting ever more attention until the price at the pump began
to fall, contends that the amount of oil in the world is finite;
that once we’ve used up about half of the original global supply,
production will attain a maximum or “peak” level, after which daily
output will fall, no matter how much more is spent on exploration
and enhanced extraction technology.
Most industry analysts now agree that global oil output will eventually
reach a peak level, but there is considerable debate as to exactly
when that moment will arise. Recently, a growing number of specialists
– many joined under the banner of the Association for the Study of
Peak Oil – are claiming that we have already consumed about half the
world’s original inheritance of 2 trillion barrels of conventional
(ie, liquid) petroleum, and so are at, or very near, the peak-oil
moment and can expect an imminent contraction in supplies.
In the autumn of 2005, as if in confirmation of this assessment,
the chief executive officer of Chevron, David O’Reilly, blanketed US
newspapers and magazines with an advertisement stating, “One thing is
clear: the era of easy oil is over … Demand is soaring like never
before … At the same time, many of the world’s oil and gas fields are
maturing. And new energy discoveries are mainly occurring in places
where resources are difficult to extract, physically, economically
and even politically. When growing demand meets tighter supplies,
the result is more competition for the same resources.”
But this is not, of course, what we are now seeing. Petroleum supplies
are more abundant than they were six months ago. There have even been
some promising discoveries of new oil and gas fields in the Gulf
of Mexico, while – modestly adding to global stockpiles – several
foreign fields and pipelines have come online in the past few months,
including the $4 billion Baku-Tbilisi-Ceyhan (BTC) pipeline from
the Caspian Sea to Turkey’s Mediterranean coast, which will bring
new supplies to world markets. Does this indicate that the peak-oil
theory is headed for the dustbin of history or, at least, that the
peak moment is still safely in our future?
As it happens, nothing in the current situation should lead us to
conclude that the peak-oil theory is wrong. Far from it. As suggested
by Chevron’s O’Reilly, remaining energy supplies on the planet are
mainly to be found “in places where resources are difficult to extract,
physically, economically and even politically”. This is exactly what
we are seeing today.
For example, the much-heralded new discovery in the Gulf of Mexico,
Chevron’s Jack No 2 Well, lies beneath 8 kilometers of water and
rock some 280km south of New Orleans, Louisiana, in an area where, in
recent years, hurricanes Ivan, Katrina and Rita have attained their
maximum strength and inflicted their greatest damage on offshore
oil facilities.
It is naive to assume that, however promising Jack No 2 may seem in
oil-industry publicity releases, it will not be exposed to Category 5
hurricanes in the years ahead, especially as global warming heats the
gulf and generates ever more potent storms. Obviously, Chevron would
not be investing billions of dollars in costly technology to develop
such a precarious energy resource if there were better opportunities
on land or closer to shore – but so many of those easy-to-get-at
places have now been exhausted that the company has been left with
little choice in the matter.
Or take the equally ballyhooed BTC pipeline, which shipped its first
oil in July, with top US officials in attendance. This conduit
stretches 1,675km from Baku in Azerbaijan to the Turkish port of
Ceyhan, passing no fewer than six active or potential war zones along
the way: the Armenian enclave of Nagorno-Karabakh in Azerbaijan;
Chechnya and Dagestan in Russia; the Muslim separatist enclaves
of South Ossetia and Abkhazia in Georgia; and the Kurdish regions
of Turkey. Is this where anyone in his right mind would build a
pipeline? Not unless one were desperate for oil, and safer locations
had already been used up.
In fact, virtually all of the other new fields being developed
or considered by US and foreign energy firms – the Arctic National
Wildlife Refuge in Alaska, the jungles of Colombia, northern Siberia,
Uganda, Chad, Sakhalin Island in Russia’s Far East – are in areas
that are hard to reach, environmentally sensitive, or just plain
dangerous. Most of these fields will be developed, and they will
yield additional supplies of oil, but the fact that we are being
forced to rely on them suggests that the peak-oil moment has indeed
arrived and that the general direction of the price of oil, despite
periodic drops, will tend to be upward as the cost of production in
these out-of-the-way and dangerous places continues to climb.
Living on the peak-oil plateau Some peak-oil theorists have, however,
done us all a disservice by suggesting, for rhetorical purposes, that
the peak-oil moment is … well, a sharp peak. They paint a picture
of a simple, steep, upward production slope leading to a pinnacle,
followed by a similarly neat and steep decline. Perhaps looking back
from 500 years hence, this moment will have that appearance on global
oil-production charts. But for those of us living now, the “peak”
is more likely to feel like a plateau – lasting for perhaps a decade
or more – in which global oil production will experience occasional
ups and downs without rising substantially (as predicted by those who
dismiss peak-oil theory), nor falling precipitously (as predicted by
its most ardent proponents).
During this interim period, particular events – a hurricane, an
outbreak of conflict in an oil region – will temporarily tighten
supplies, raising fuel prices, while the opening of a new field
or pipeline, or simply (as now) the alleviation of immediate fears
and a temporary boost in supplies, will lower prices. Eventually,
of course, we will reach the plateau’s end and the decline predicted
by the theory will commence in earnest.
In the meantime, for better or worse, we live on that plateau today.
If this year’s hurricane season ends with no major storms, and we get
through the next few months without a major blowup in the Middle East,
Americans are likely to start 2007 with lower gasoline prices than
they’ve seen in a while.
This is not, however, evidence of a major trend. Because global oil
supplies are never likely to be truly abundant again, it would only
take one major storm or one major crisis in the Middle East to push
crude-oil prices back up near or over $80 a barrel. This is the world
we now inhabit, and it will never get truly better until we develop
an entirely new energy system based on petroleum alternatives and
renewable fuels.
Michael T Klare is a professor of peace and world security studies at
Hampshire College in Amherst, Massachusetts and the author of Blood
and Oil: The Dangers and Consequences of America’s Growing Dependency
on Imported Petroleum.