Bush makes peace talks in Caucasus a priority

U.S. seeks to limit Russia, aid oil firms

April 02, 2001|By Jay Hancock | Jay Hancock,SUN NATIONAL STAFF

WASHINGTON - While crisis swirls in the Middle East and the Balkans, the Bush administration's first intensive diplomatic negotiations will be devoted to bringing peace to a troubled land in the Caucasus, countering Russian influence in a critical part of Asia - and helping the administration's friends in the oil industry.

Tomorrow, Secretary of State Colin L. Powell will be in Key West, Fla., to begin five days of talks aimed at settling a dispute between Armenia and Azerbaijan.

Sponsored by the United States, France and Russia, the Key West conference will seek to resolve the status of Nagorno-Karabakh, a tiny mountain enclave that is historically part of Azerbaijan but is controlled by ethnic Armenian rebels.

After he opens the talks, Powell is scheduled to leave, and negotiators from the sponsor countries will try to strike an accord between Azerbaijani President Heydar Aliyev and Armenian President Robert Kocharian.

Caucasus analysts see strategic and humanitarian reasons for Washington to push for a settlement on Nagorno-Karabakh, which Kocharian recognizes as an independent state and which Aliyev wants to bring back under Azerbaijan's control.

A deal could allow more than half a million Azerbaijani refugees to return to their homes and could thwart Moscow's ability to exploit Azerbaijan-Armenian friction to further its own interests and control Western access to Caspian petroleum.

At the same time, a peace agreement would benefit the U.S. oil industry, which has strong ties to the Bush administration, has heavily invested in the region and stands to lose in heightened Armenian-Azerbaijan tensions.

Among other projects, U.S. companies are interested in building and using a $2.7 billion pipeline that would pass to the north of Nagorno-Karabakh and would connect Baku, the capital of Azerbaijan, with the Turkish port of Ceyhan on the Mediterranean. The pipeline would be a crucial distribution channel for American and other producers drilling in the Caspian off Baku, about 150 miles east of Nagorno-Karabakh.

"At first, the United States was not as much involved" in the region, "but of course, Baku has the oil, and many major U.S. companies have signed major, lucrative agreements," said George Bournoutian, a Caucasus specialist at Iona College in New York. "We need to keep that oil flowing. Without a peaceful solution there, that oil will not flow."

The administration's sponsorship of the Nagorno-Karabakh talks, which U.S. officials said was kindled by a Feb. 1 phone conversation between Bush and French President Jacques Chirac, occurs as Washington is stepping back from diplomatic involvement in other bloody ethnic disputes, such as those in the Balkans and the Middle East.

Several senior administration foreign policy officials, including Vice President Dick Cheney and National Security Adviser Condoleezza Rice, until recently worked for companies with major interests in Azerbaijan and significant stakes in the success of the proposed pipeline.

The pipeline is considered crucial for Western interests because it would offer the only export avenue for Caspian oil that wouldn't go through Russia or Iran - countries not known for their cooperation with Western capitals. The Caspian region is estimated to contain a 10th of the world's oil reserves, five times as much as those found in the United States.

Washington's stepped-up involvement in Nagorno-Karabakh follows what many considered to be eight years of relative neglect under President Bill Clinton.

Ariel Cohen, a Russia and Caucasus specialist at the Heritage Foundation, called the Bush administration's engagement on Nagorno-Karabakh a result of "the nexus between oil politics and geopolitics."

Until last year, Cheney was chief executive of Halliburton Co., an oil services company with extensive operations in Azerbaijan that was named a finalist in January to bid on engineering work on the Turkish portion of the Baku-Ceyhan pipeline.

Rice stepped down Jan. 15 from the board of directors of Chevron Corp. Chevron, which named a tanker after her, owns a large stake in an Azerbaijan offshore oilfield and announced Feb. 9 that it was interested in helping build the pipeline.

It was unclear whether Cheney was directly involved in the administration's backing of the Key West talks, which were announced March 20. But Rice had a central role, at one point talking with Russia's national security adviser on the subject, U.S. officials said.

Bush's administration and family have many other links to U.S. oil interests in the Caspian.

Bush family adviser James A. Baker III sits on the U.S.-Azerbaijan Chamber of Commerce's advisory council, which until recently also included Cheney. Richard Armitage, deputy secretary of state under Powell, is a former co-chairman of the chamber.

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