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From: wolda002@umn.edu
Date: Mon Mar 15 2010 - 23:39:08 EST
http://www.diplomaticourier.org/kmitan/articleback.php?newsid=486
The New Persian Gulf
February 26, 2010
By Mark Ericson, Contributor
It’s no secret that the modern world is addicted to oil. Much conflict
can be either directly or indirectly linked to the resources in oil-rich
countries including those in the Persian Gulf. While the U.S. is no
stranger to shuffling for position in oil-rich countries, the battle for
positioning may slowly be shifting. Central Asia may be the new Persian
Gulf with reserves in excess and with neighbors being China and Russia, the
U.S. is the odd-man out in regards to preserving their place in oil exports
in the region.
For the majority of the 19 years since the Soviet Union’s break-up, China
has been waiting in the wings as the fierce competition between Russia and
America took center stage. Clearly both nations have sought influence in
this resource-rich region since the fall of the Soviet Union. With the
energy needs of its exploding economy perpetually increasing, China emerged
from the wings to take part in the on-going performance between two giants
and an exposed nation. China woke up to new opportunities in its western
backyard. The West’s recession spurred on China’s hunt for energy
supplies in its own backyard.
Since the global financial crisis left Russia and America struggling with
their budgets, China has swooped in like a mouth-watering predator. By
offering a helping hand to the financially strapped Central Asian
countries, China positioned itself to be favored in future investment in
their vast oil reserves.
Last November China’s largest oil-and-gas provider, jointly with
Kazakhstan’s oil-and-gas firm, bought Mangistau Munai Gas, a big oil
producer in Kazakhstan. In exchange, China lent the country $10 billion
earlier last year.
With the U.S. so dependent on oil and China equaling that dependence the
sovereignty between Central Asia becomes a critical factor for both trade
deficits and continued dependence on this oil-rich country. At what cost
does an oil addicted America go elsewhere? The catalyst for change does not
seem to hinder on cost alone, as witnessed by the U.S. government’s
willingness to absorb over $4 trillion in debt.
Meanwhile, the former Soviet republic welcomes the competition as they
emerge as one of the potential players in the region. While the resources
are being pillaged the GDP continues to climb. A rising concern for the
Kazakh government is the diversification of exports. Relying solely on the
oil sector to lift the country out of poverty is as limited as the source
itself. And with Russia, China, and the U.S. all vying for their resources
the oil-rich country may not remain that way for long.
Kazakhstan’s economy is larger than those of all the other Central Asian
states combined, largely due to those coveted natural resources and a
recent history of political stability. In the energy sector, the opening of
the Caspian Pipeline Consortium in 2001, from western Kazakhstan’s Tengiz
oilfield to the Black Sea, substantially raised export capacity. In 2006,
Kazakhstan completed the Atasu-Alashanku portion of an oil pipeline to
China that is planned in future construction to extend from the country’s
Caspian coast eastward to the Chinese border.
The oil-rich Caspian nation has been intent on raising its weight in the
strategic energy sector controlled by Western majors and raises fresh
revenue through taxes and export duties. Kindled by its growing role as a
leading regional energy supplier, Kazakhstan has long threatened to exert
its influence in the sector. The latest policy included changes to the
corporate tax code to favor domestic industry as a means to reduce the
influence of foreign investment and foreign personnel.
Most Western energy majors, under current law, working in Kazakhstan under
production-sharing agreements are not susceptible to changes in the
country's tax legislation.
Elevating state influence in the oil sector has political connotations in a
former Soviet country where ordinary citizens have long accused the
government for selling out its natural resources to Western multinationals.
With Kazakhstan’s grasp of power shaken by the economic crisis and a tide
of public frustration, the government is keen to unveil its resolve to put
vital industries under firm state control.
"For the first time the government has shown a very clear political will to
review contracts, and look for new investors if the current ones do not
implement our programs," said Kenzhegali Sagadiyev, a member of parliament.
For China, the new line forms part of a global effort to secure energy
supplies for its rapidly growing economy. For Kazakhstan, it is a chance to
reduce dependence on Russian and US demand.
While China may have bided its time before pursuing its interests in
Central Asia, it seems it is invested in Kazakhstan for the long term.
Within the next 10 years Kazakhstan may come to control Central Asia’s
political, economic and military spheres, thanks in large part to the
modern world’s addiction to their most prized asset.