“We strongly believe that further delay in reaching a balanced agreement on the framework for a comprehensive peace is unacceptable, and urge the leaders of Azerbaijan and Armenia to focus with renewed energy on the issues that remain unresolved.” Barack Obama, as part of a Joint Statement on Nagorno-Karabakh, 2013
“Come ‘n listen to my story ’bout a man named Jed, Poor Mountaineer barely kept his family fed An’ then one day, he was shootin’ at some food, An’ up thru the ground came a bubblin’ crude. Oil that is! Black gold! Texas tea! Well, the first thing ya know, Jed’s a millionaire Kin-folk said, “Jed, move away from there.” Said Californy is the place y’oughta be, so they loaded up the truck, and they moved to Beverly. Hills that is! Swimmin’ pools, Movie stars!” – From The Ballad of Jed Clampett, The Beverly Hillbillies
There is a funny thing about research. Every researcher and analyst begins with something called a hypothesis. A hypothesis is a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.
I began this three-part series with a pretty certain idea of what my conclusion would be. I was certain that the current conflict in Nagorno-Karabakh was fomented by centuries-old xenophobic patterns, historic anger, and anxiety over previous horrific events, which included the murder of hundreds of thousands of civilians, women, children, and militants. I do not want to minimize the impact of historical events on the current situation in the South Caucasus. They are real and they still elicit an intense emotional response from families and governments.
During all my study on this matter, however, something kept bothering me. I am not sure I put my finger on it until writing this particular (Part 3) edition, but one thing is for sure, there is much more than meets the eye in the course of the previously mentioned tragic events. There are occurrences happening even today that nobody is talking about. There are also patterns of behavior that are very consistent with the alliances which have taken shape over the course of the past decade, powerful alliances that are altering the calculus of past events, as well as setting the stage for continued conflict. There are billions of dollars at stake, as well as the political survival of the states of several nations. We will look at what no one is talking about this week, situations that are very real, and active across the South Caucasus region.
In Part 1 of this series, we discussed the parties involved, their histories, national development, and linguistic make-up. These factors have played key roles in causing chaos in the Caucasus region to remain consistent. But, there is more….
In Part 2, we looked at a more contemporary history of Armenia and Azerbaijan as they were ruled by the Soviet Union. It is difficult to really grasp why these two nations are still fighting if you don’t understand this variable. We will discover that many of the problems as they exist today are the direct result of failed nationalistic policies under the leadership of Lenin and Stalin, and then later, Brezhnev. But, there is still more…
In Part 3, we will look at the implications of the current progress and outcomes of this conflict. We will discover that there are many significant players who have their fingers in the conflict, fingers that are not easily noticed or understood as they are deeply hidden under many layers of private and secretive negotiations. These countries are not forthcoming about their involvement, partly because they involve large corporate interests, often with vestiges of guilty stains. They are also not eager to be transparent because of the strange bedfellows they are keeping, and as atrocity, after atrocity unfolds they are not interested in being held accountable or connected in any way to the substance of these horrors. The evidence shouts loudly to their culpability.
What we will discover in this edition of “More than Meets the Eye” is that there is an entire force at play that hovers just below the surface, hidden beneath the facia in peculiar alliances that reveal themselves when one follows the massive amounts of money involved.
In a 2018 article published by the Journal for Foreign Policy, it was written, “there are only three ways for energy and trade to flow overland between Asia and Europe: through Iran, through Russia, and through Azerbaijan. With relations between the West, Moscow, and Tehran in tatters, that leaves only one viable route for hundreds of billions of dollars’ worth of trade: through the tiny Caspian Sea nation of Azerbaijan.”
When I checked into the above quote more deeply, other variables began to make sense. The conflict between Armenia and Azerbaijan has been dubbed, the ”frozen war.” For many years, perhaps hundreds, there has been little peace in this region. Only when we recognize the incredible economic value to the entire world, will we begin to see the strategic value of this small piece of land, known as Azerbaijan. Not only is it significant to the men and women who live thereabout, but to the rest of the developed world as well.
The Caspian Sea area is one of the oldest oil-producing regions in the world. Surface oil seeps, in what is now Azerbaijan were known since 4 B.C. when Alexander the Great’s soldiers used oil from shallow hand-dug wells (Abrams and Narimanov, 1997). The first oil well in history was drilled by a Russian engineer, F. N. Semyenov, in the Bibi-Eibat area of the Apsheron Peninsula in Azerbaijan in 1848 (Narimanov and Palaz, 1995). The first true offshore well was also drilled in Azerbaijan in 1924 from a wooden platform not far from Baku. Petroleum lies at the heart of this South Caucasus conflict. More specifically, the transportation of petroleum, in and of itself, is a mammoth economic driver, globally. It is a billion dollars industry on its own, enough so to cause nations to strong-arm one another for the economic advantage.
Just how significant is this situation economically, and who benefits from it? The most conservative estimations of the Caspian basin’s energy wealth set it at 200 billion barrels of oil and natural gas. Most reports agreed that it was closer to 200 billion barrels of oil alone, an amount exceeded only by the reserves of Saudi Arabia. The reserves of the Caspian basin were estimated to be at least the second richest in the world. This also means that the Caspian area stands to make a fortune. Even by the prices of the 1990s, the total estimated oil and gas reserves had a value of roughly $5 trillion.
Currently, there are 12 Baku-Tbilisi-Ceyhan (BTC) shareholder companies. They are:
British Petroleum (30.1%) UK; AzBTC (25.00%) Azerbaijan; Chevron (8.90%) USA; Equinor (8.71%) Norway; TPAO (6.53%) Turkey; Eni (5.00%) Italy; Total (5.00%)France, ITOCHU (3.40%)Japan; INPEX (2.50%) Japan, ExxonMobil (2.50%) USA and ONGC (BTC) Limited (2.36%). Notice the countries that are involved in the ownership and management of the company. Maybe, more importantly, notice which countries are not stakeholders in this project.
It is here that mysteries begin to unravel and realities come to the fore. The Caspian Sea petroleum and natural gas reserves are among the largest in the world. They represent great wealth. They also represent a great influence globally. All of a sudden we see man’s two greatest challenges placed on the table: money and power.
After the fall of the Soviet Union in 1991, the Russians lost an enormous amount of influence and ownership of the Caspian Sea oil. They were also out-maneuvered by Western nations through the construction of the Baku-Tblisi-Ceyhan (BTC) pipeline, completely bypassing traditional Western adversaries; namely, the Russians and the Iranians. They were able to accomplish this by building the BTC pipeline through Azerbaijan, Georgia, and Turkey, extending a pipeline through Turkey in a project called, the Southern Gas Corridor.
So what does all this mean? Essentially, the Caspian Sea has the capacity for producing trillions of dollars of wealth. The wealth would be owned by four nations which border the Caspian: Azerbaijan, Russia, Kazakhstan, and Iran. Of course, Russia and Iran are interested in controlling as much of that as possible on the global market.
Many of the world’s oil reserves are steadily drying up. The San Francisco Chronicle has reported, “All but a handful of the globe’s current oil-producing giants will have emptied their proven reserves during the next two decades”(Vinono). Indonesia and Canada’s reserves were estimated to last another nine years, those of the United States was projected to run dry in ten years, and Russia and Nigeria’s in twenty years. Therefore, the Western world knew that in order to continue development and industry at its current rate, the tapping of the Caspian oil reserves would be essential.”
Western companies, backed by their governments, out-maneuvered the Russians and the Iranians by investing billions of dollars in developmental funds to, not only increase extraction technologies and create environmentally safe conditions for extraction but also built a pipeline to transport these petroleum products to the West, bypassing both Russia and Iran in the process. This has not made the Russians or the Iranians happy. They consider it a “foul” in global economic gamesmanship. They have done all they can to be a thorn in the side of all the players in this costly game.
Western nations are keen to protect the investments of their national assets and investments. Former British Special Operators as well as former French soldiers are engaged in securing sections of the BTC pipeline. US Unmanned Aerial Vehicles (UAV’s) patrol the Georgian section of the BTC pipeline 24/7. There is a nervous sensitivity to the vulnerability of a pipeline that is thousands of miles long.
There is an enormous interest in maintaining some form of peace in the region, due to the extreme economic impact of the conflict on this private venture. Already, on October 6, 2020, there was an Armenian missile attack on an Azerbaijani section of the pipeline. No damage was done, but it is postulated that these attacks will increase.
The consequences of these kinds of attacks will draw more Russians into the conflict, since it is completely within their interests to see this BTC pipeline compromised, gaining a position to transport billions of dollars of petroleum through their pipelines just north of Azerbaijan through Makhachkala.
There is another interesting partner who has gotten involved. Israel receives 40% of its oil from Caspian Sea oil reserves. Israeli drones are currently patrolling the skies in Azerbaijan along Armenian borders.
Turkish troops with American built F-16s have been seen supporting combat missions as well, in Nagorno-Karabakh. The Russians have stationed over 400 combat troops in Armenia, and Syrian fighters have been brought in by Turkey to support Azerbaijani soldiers in the fight.
The stage is being set for some serious combat. It will create a situation that will lend itself to increased hostility and division. This could be difficult for Western Europe especially as petroleum products increase in demand for heating and transportation. This has the potential to be a long winter for the people of the South Caucasus, Russia, Iran and Europe.
Stay informed. It will be easy to marginalize the part of the world which we’ve been discussing because it is such a mystery to us. However, the conflict in the South Caucasus region has the possibility to affect a lot of lives. It has the potential to disrupt the global oil markets, which in turn will, as always affect every aspect of the global markets, from transportation to agriculture, utilities, and manufacturing.
For your comments or questions about any of our digests please feel free to write to me at: email@example.com
Why Armenia and Azerbaijan are fighting, and why it could get uglier… https://www.cbsnews.com/news/armenia-azerbaijan-nagorno-karabakh-caucasus-lands-why-it-could-get-uglier/
A new weapon complicates an old war in Nagorno-Karabakh… https://www.latimes.com/world-nation/story/2020-10-15/drones-complicates-war-armenia-azerbaijan-nagorno-karabakh