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Actions count: New gas cartels, old friends, etc

A UPI report announcing the potential formation of a new world gas cartel has political and economic implications for Central Asia:

Actions count: New gas cartels, old friends, etcHigh oil prices have lent Putin's Russia an apparent  power in the world market, and fears of a new Russia-led gas cartel have been fanned over the past year.  A meeting in Doha, Qatar between Russian, Venezuelan, Iranian, and other national exporters wound up yesterday, with greater moves toward cooperation in this newer OPEC-like cartel, the Gas Exporting Countries Forum (hereinafter, GECF).  According to the article, they have officially delayed full organization to set up a study (what kind of a study? a world-wide canvas of potentially cooperating states, that's what kind of a study). 

Should the GECF be formed, one can expect Uzbekistan to join it immediately, and no EU diplomacy in Uzbekistan will stop that.  Should Turkmenistan be reluctant, pressure will be applied.  The real wild card in Central Asia is Kazakhstan.  Joshua Foust at Registan has one post that details some of what looks opaque about Kazakhstan's energy diplomacy: check here.  But IMHO, Kazakhstan is in the sometimes precarious, but sometimes fortunate position of having good relations with the US, the EU, the Russian Federation, and China.  Depending upon which allies and how many of them cut up stiff about the GECF, Kazakhstan's situation is perhaps precarious. 

The fear of a gas cartel is really based on another, more critical paranoia , one that relates directly to consumer states’ failed diplomacy on both collective and bilateral basis.  First, Putin says, “if consumer organizations such as the International Energy Agency (of the EU) coordinate their policies, then suppliers can coordinate their policies also”.  The truth is that EU states have been breaking ranks for over a year to secure bilateral deals with Russia.  Like blackleg miners, they have been taking any deal offered, thereby breaking EU solidarity.   The EU is in the position of looking like a cartel but not acting like one. . .

. . .while the gas producers, whom Putin says, “should coordinate prices” have their prices already coordinated, 1. by market forces, and 2. in the shadow of OPEC.  “NOPEC”, the non-OPEC oil exporting countries, may not be members of the “evil” cartel, but in practice inter-NOPEC and OPEC / NOPEC diplomatic relations are extensively cultivated. Furthermore, the NOPEC loose alliance has always priced with reference to OPEC.  As free riders, they often undercut OPEC, but extreme price differences between NOPEC and OPEC (as in the 90's) has never been in NOPEC states’ interest.   

A second paranoia, also to do with failed diplomacy, has to do with those rogue states/pariah states/states that hurt our feelings.  Iran, that neighbor of Russia and Central Asia across the Caspian, remains the focus of a nuclear issue with profound security implications, but Iran's nuclear acquisition is also related to its energy disinvestment problems.  Unlike what we read or hear in the U.S. news media, Iran does not stand alone: it lives in a neighborhood.  The Iran-Russia relationship is multivalent and important to Central Asian/Caucasian prosperity in the long run.    Inter-Caspian trade is absolutely necessary to Central Asia's continued development.  It might also introduce a new civility in Iran v. the West relations, because prosperity means you have so much less to prove.

Venezuela is beyond the purview of this blog–but oh, well, what the heck:  U.S. news agencies concentrate far too much on the nasty rhetoric between Venezuela's Chavez, Iran's Ahmadinejad, v. US's Bush II.  What counts: actions.  Venezuela is still supplying oil and gas to the US.  When we get our feelings hurt and respond verbally in kind, we jeopardize outcomes.  Sure, Chavez’ domestic economic policy is not rational, and we can disapprove.  But in the end, a less-adversarial approach to Venezuela that is based upon economic relations, and more nuanced attention to Latin America in general will help the U.S. obtain the gas that it wants.  Chest-beating and pique are counter-productive.

Now, about the GECF: what can we do in Central Asia to ameliorate its potential effects?  Well, a combination of direct and indirect initiatives would probably be the most useful.  However, all of them look like a long shot, because of Western intransigence, and not anyone else's obduracy.

a. We can empower Turkey–by admitting them into the EU, protecting them from Kurdish terrorism, and so forth.  Turkey's EU integration offers a model of assimilation and structural reform to the rest of the Caucasus, Central Asia, and the Islamic World.  By doing this, we can also strengthen gas transit via the Mediterranean, to the EU's, Japan's, Turkey's and U.S. benefit.     The past five years have not been ones in which Turkey can completely rejoice in its Western alliances.  Yet Turkey has been a force for the good over the last decade, under increasingly difficult odds, and they have alliances with Iran, burgeoning relations with Russia, and in the Caucasus, and Central Asia (especially Turkmenistan and Kazakhstan).

b. We could actually make Turkmenistan a priority, which we have yet to do.  All our diplomacy there has been low-to-medium level, while Russia and Iran have been extremely attentive.  Until we make Turkmenistan a priority, no Turkmeni gas will transit the Caspian and travel the SCP line through Azerbaijan and Georgia to Ceyhan (and thence to Europe & Japan).

c. We could do as Martha Brill Olcott suggests, and give Kazakhstan the prestige it deserves, as one of the most rapidly developing states in Central Asia, critical to our interests, and–like Turkey–more than sufficiently competent to be our friend and intercede for us with China, Russia, other states of Central Asia, and even Iran.

d. We could engage China in a mutual cooperation as another gas-consuming state who is critically interested in developments such as the GECF.  As the prime mover of the SCO, they have more power in Uzbekistan than we do.  Of course, that means we might have to practice energy cooperation rather than energy competition with China. . . . ditto, India, who is fast developing relations in Central Asia. . .

In short, the UPI article was conventionally framed and reported official comments alone.  Therefore, it explains nothing well, but at least it gives the heads-up.  Actions count: the quality of Western friendships, between themselves and with others, may well dictate the power and scope of any new gas cartel.  We can nurture our friends -or- create new enemies and stiffen the backbones of our adversaries.