BACKGROUND:Kazakhstan is flirting with the United States in anticipation of President Nursultan Nazarbayev’s September, 2006 visit to America and Washington is trying to develop gas pipelines from Turkmenistan through Afghanistan, Pakistan, and India, or alternatively from just Afghanistan to India. In other words, the connection between energy, foreign relations, and security is growing closer and the rivalry for influence among the great powers and Central Asia’s neighbors continues apace. In conjunction with these trends recent Russian, Iranian, and Uzbek proposals that the Shanghai Cooperation organization become or create within it an “energy club” take on a new meaning. At the most recent summit of the Shanghai Cooperation Organization in Astana, Russian president Vladimir Putin proposed that the SCO become an “energy club” or that such a club be formed from within its membership. Such proposals are not new for Putin, who has steadily implemented a strategy formulated in 2002 to set up a gas cartel in the CIS that would be dominated by Russia. This cartel would be the equivalent of an OPEC for natural gas and would allow Russia both to set the global market price for gas and to exercise uncontested sway over the gas policies of other producers in Central Asia, i.e. Turkmenistan, Kazakhstan, and Uzbekistan. Indeed, by late 2005 Putin had already come most of the way to achieving this cartel, relegating these other gas producers to more or less exclusive dependence upon Russian natural gas pipelines and subordination to Gazprom, now an arm of the Russian state. This domination is essential to the continuation of the current domestic economic and political status quo in Russia, as well as to Moscow’s recovery of its coveted great power status abroad. However, it now appears that Putin’s vision may be expanding to link up with Iran to form this club. Recently Iranian officials have been urging Russia to form an oil and gas arc. If Moscow and Tehran successfully combine to form such a “club”, then they would be able to exercise the same power in this new cartel that Saudi Arabia possesses in OPEC as they are the number one and two producers of natural gas in the world. Iran’s overtures to Russia reflect its weakness and fear of American pressure over its nuclear program. But this weakness also expresses itself in the fact that Iran has just agreed to buy 20 million cubic meters of Turkmenistan’ gas for the next two years to overcome expected winter shortages of gas. This deal highlights Iran’s less well know energy weakness in developing and indigenous refining capability. But such an energy club would counter Saudi Arabia’s leverage in respect of oil while dominating Asian gas markets. And it might allow Russia to provide Iran with needed help in developing its refining capacity. Inasmuch as Turkey too is figuring in discussions of the SCO’s future, it too could prospectively become a member of any such oil and gas association in the future, adding further to the Russo-Iranian domination of gas markets and the continuing submission of Central Asian producers to Russia.

IMPLICATIONS:The idea of such bilateral cooperation is not new. In both 2003 and 2004, Moscow made overtures to Iran abut the possibility of joint operation to develop gas markets. The most promising potential operation today from Moscow’s standpoint is the possibility of an Iran-Pakistan-India gas pipeline. Gazprom has already indicated its desire to participate in building this pipeline and providing gas, seeing this as a way to enter the South Asian gas markets in a big way and to contribute as well to one of the more grandiose transport and trade networks of Russia’s current vision, namely a North-South corridor. Were India and Pakistan, both observers at the SCO like Iran, to join as members, this deal could become more attractive to them because then they might get a more favorable rate at which to buy gas at the price of long-term subordination to Russia’s interests. But the implications of such a gas cartel do not end here. Certainly any such organization would constitute a rival to any American-organized plans to utilize Afghan and/or Turkmen gas to supply Afghanistan, Pakistan and India through a new pipeline that bypasses both Russia and Iran and would also check Turkmenistan’s new desires for a more independent stance and more voice over setting prices for its gas exports. Thus it would further consolidate Russia’s past gains in materializing Putin’s vision of a gas cartel in Central Asia and extend its control over regional producers still further. In this connection it bears noticing that Putin and Ahmadinejad are not the only ones calling for an energy club or a gas cartel in Central Asia. Gulnara Karimova, the very powerful daughter of Uzbek strongman Islam Karimov, and his representative in or to Moscow, called for just such an energy club in December 2005, merely three weeks after the signing of the Uzbek-Russian agreement of November 2005 that essentially consigned Uzbekistan to the Russian sphere of influence. Karimova observed then that the SCO could utilize its experience in fighting terrorism to establish a members’ dialogue that would coordinate political decisions among producers and consumers implement, programs and projects for developing the energy sector, pipelines, and transport, and track changes in global supply and demand for all energy resources. Inasmuch as Uzbekistan has been a rival to Turkmenistan with regard to gas and seeks to sell gas to the same customers of Turkmenistan, Russia, China, other CIS countries, it is entirely possible that here Karimova was acting on behalf of her family’s interest as well as Russia’s many-sided interests in pushing the idea of an energy club within the SCO.

CONCLUSIONS:Although no tangible results have come of such suggestions as of now, it appears indubitable that Russia is trying to lock down its gas cartel, tie up Turkmenistan, Kazakhstan, and Uzbekistan so that they cannot produce and market gas independently, and extend its influence over Iran. If Iran can be prevented from producing nuclear energy on its own and must depend, as is now the case, on imported gas, this would certainly add to Russia\'s clout over it and Central Asia, not to mention the opportunities such a situation would open up in South Asia and against U.S.-backed plans there. Despite all the other crises now tearing at Central Asia, the Gulf, and South Asia, nobody should think that Moscow has relaxed its vigilance in playing for a monopolistic role in Asia’s and thus the world’s gas markets. The formation of a genuine energy club in the SCO might not be far away. And if it does materialize, then it would be the next major step in a far-sighted and profoundly important global Russian strategy.

AUTHOR’S BIO:Professor Stephen Blank, Strategic Studies Institute, U.S. Army War College, Carlisle Barracks, PA 17013. The views expressed here do not represent those of the US Army, Defense Department, or the U.S. Government.