Spectator's Journal: To Baku and Back
Stevenson, Matthew
SPECTATOR'S JOURNAL by Matthew Stevenson To Baku and Back L ike Charlie Chaplin in The Gold Rush, I recently joined the list of those panning for oil in the murky waters of the Caspian Sea. In...
...Once Congress discovered that Azerbaijan was heir to an oil fortune, it reopened its doors as if to the Rockefellers...
...With a stroke, Azerbaijan would reduce its inflation to that of the United States, join the dollar trade zone, and allow its citizens to count their savings in something other than Marlboros...
...Edwin Drake in western Pennsylvania...
...But the war ended not with Iraqi crude oil as a spoil of war, flooding into Western markets, but with Hussein's wells shut in, as if his true war crime had been to threaten OPEC's cozy supply quotas...
...As government officials, most implemented policies struck when President Jimmy Carter made his cardigan sweater the symbol of American energy dependence...
...Snow and a biting wind swirled off the sea, making it feel like Cleveland in January...
...Although most kapitalists doing business in this part of the world dream of selling prefabricated iron curtains, when the meetings start they usually lapse into discourses that could well be lifted from the collected speeches of Leonid Brezhnev...
...Hitler invaded Russia with the dream of fueling the Thousand Year Reich with oil from the fields around Baku, which in early days collected in puddles on the ground...
...The Heritage Foundation Phone 1-800-544-4843, FAX - (202)543-9647, or EMAIL pubs@heritage.org...
...Since the so-called energy crisis of the xpo's, crude oils have been ranked not according to price, but by the measure of moral refinement they bring to the American consumer, much like cabernet sauvignon...
...As models for its economic develop-ment, Azerbaijan has chosen Turkey, with whom it shares both linguistic roots and preferences for secular modernism, and the duty-free emirates such as Kuwait or Bahrain...
...Down the alleys of the old city it is still possible to sip mint tea and haggle for carpets while the waterfront evokes Red Square and the sea is awash with drilling rigs if not Yukon dreams...
...In Greenmantle, a novel of the Great Game, John Buchan writes: "The Persian Moslems are threatening trouble...
...It is always a temptation of a rich and lazy nation, To puff and look important and to say:—"Though we should defeat you, We have not the time to meet you, We will there pay you cash to go away...
...In fact, the very sum and substance of The Heritage Foundation...
...As Bill Buckley says, "historian Lee Edwards has caught the special magic of a foundation that began as small as the first tinkertoy engine of Henry Ford and rose in 25 years to become the dominant think tank in America...
...0 ne of the more curious aspects of Baku is to discover that many of the other prospectors dancing in the saloons are American politicians...
...has supported the cartels that fixed the price of world oil as though it were tobacco in North Carolina or sugar in Louisiana...
...Unlike either Belarus or Latvia, Azerbaijan had the good fortune to depart the Soviet Union with large reservoirs of oil and gas...
...Most Azeris are Muslims, and a diaspora of zo million Azeris make them the largest minority in Iran...
...Azeri crude oil production predates the discoveries of Col...
...Along the shore were dockyards, ships swinging at anchor and the ferries that ply the waters of the world's largest inland sea...
...etween meetings I walked through B a park overlooking both the city and the shores of the Caspian Sea...
...diffidence toward Azerbaijan has meant preferences for Russian, French, and English companies...
...The country has a population of 8 million, of whom a large minority are Russian and Armenian...
...In the distance, brushed with white caps, were the skeletal towers of drilling rigs, linked in a few places by an offshore highway like 71 that which connects the Florida Keys...
...Azerbaijan will be a good measure of American prospects...
...But few of these men, as either Washington insiders or prospectors, have ever championed the cause of cheap oil...
...Without a supply of raw materials from the union of socialist republics, the Soviet assembly line no more creates wealth in today's world than did the Bombay Cricket Club after the departure of the Raj...
...Azerbaijan's full faith and credit rests with President Aliyev, whose portrait in shops and meeting rooms conveniently fits into the frames that once held the likenesses of Lenin...
...In the office of the head of the central bank, warmed by the tea and stale chocolates that go with every meeting, I advanced the theory of letting the dollar circulate legally, as it can, for example, in Bermuda or Panama...
...One of the few successes of the Soviet system was the common currency of the ruble, which was legal tender across nine time zones...
...la Elsewhere in the same park were the headstones of soldiers who died fighting the 1988-92 war with Armenia...
...Across the gray waters of the Caspian are the khanates of Turkmen and Kazakhs whose untested political institutions are struggling to franchise the gas stations opening along the Silk Road...
...Although the flags of American oil companies fly over paperweights in various ministries around Baku, the sense even from a short trip is that U.S...
...Like many new democrats of the old Soviet bloc, he took his political education on the central committee in Baku, at the KGB, and as a member of the Politburo in Moscow...
...Kipling understood that not all countries have a taste for geopolitics, as he wrote in "What Dane-geld means...
...But the shadow over Caspian oil is that for it to reach Western markets, it must flow either south to Iran, north through Chechnya, or west through the Caucuses, routes that prompt many investors to reach for a second sweater...
...Only with artificially high prices would Saudi princes or ARCO geologists bother to search for new oil...
...Most cloak their divining rods in the guise of benevolence, and speak of the public good that will flow west with Azeri oil...
...Azerbaijan shares borders with Armenia, Georgia, Iran, and Russia, all of which have fought regional ethnic or religious wars in recent times...
...Little about the borders of Azerbaijan relates to the Azeri nation...
...others here raise the heralds of large corporations, like crusaders before the gates of Jerusalem...
...The fighting filled Baku with refugees and prompted Russia to send $1 billion in weaponry to the Armenians, whose troops still hold the enclave...
...Some, like Bentsen, are direct investors, risking their own capital...
...The call to arms was to keep Saddam Hussein's hands off the oil spigots in Kuwait and perhaps Saudi Arabia...
...After the socialist realism of Baku, a magazine so devoted to fashion, political and otherwise, made me realize how fine are the distinctions in American foreign policy between good oil—that of the North Slope or Mexico—and the oil ofevil—that controlled by mullahs or agents of terrorism...
...The savings of the Soviets tended to be denominated in the perks of party officials...
...briefing memos in my briefcase...
...Among the liabilities of the Newly Independent States are their currencies, which in most cases are as air worthy as the repainted Aeroflot jets that constitute their national airlines...
...Everyone referred to our group as a "delegation," as if we were there to negotiate a treaty on Joint Economic Understanding, and all the meetings were held in conference rooms that undoubtedly held planning sessions for the five-year plan...
...Signature Name Address City State Zip The American Spectator • March 1998 69 barrow currency, it cannot be exchanged at the Zurich airport, and the only restraints on its supply are the checks and balances of a one-party government with marginal opposition...
...lost another bid when Turkmenistan chose to export its gas through Iran...
...Many of those now chanting "Open, Sesame" to the caves around Baku are also among those who drew lines in the sand during the Gulf War—the battle, as it turned out, that made the world safe for expensive oil...
...Former national security advisors Brent Scowcroft and Zbigniew Brzezinski, recent cabinet officers James Baker, Lloyd Bentsen, and Richard Cheney, and ex-White House aide John Sununu are among those panning for contracts...
...While the Azeri manat is not a wheel"Success in politics is about issues, ideas and the vision we have for our country and the world...
...More recently, President Bill Clinton has embraced President Heydar Aliyev, as part of a sales pitch for American oil companies, and then Energy Secretary Hazel O'Leary picked up some frequent flyer miles around a Baku trade show...
...W ere Azerbaijan in Scandinavia or on the North Slope of Alaska, it would be hailed as the antidote to the Organization of Petroleum Exporting Countries (OPEC) and lavished with export insurance and unsecured bank loans...
...I cited the example of Bolivian silver coins circulating freely in revolutionary America, but the blank looks around the table suggested I was carrying the cross of gold discarded by William Jennings Bryan...
...Nevertheless, Azeri assets are contingent, what accountants call below the line or, in this case, the sea...
...Recent offshore discoveries in the Caspian have prompted a more subtle invasion in which the assault troops come armed with lawyers and production-sharing contracts...
...will need to try its hand at the Great Game, which as Kim discovered is usually played out on remote mountain passes, perhaps like those that twist through NagornoKarabagh...
...In contrast to the offshore dreams of plenty, the markers were engraved with the portraits of each fallen soldier, as haunting as Edgar Allen Poe's "Masque of the Red Death" which casts a pall over the glitter of a sumptuous house party...
...Although the government of Azerbaijan banned a political party devoted to Islamic fundamentalism, it coexists with minarets on its skyline much as it once lived with the stem faces of Lenin and Stalin calling their faithful to prayer...
...His son is the effective power at the state oil company...
...Other reports allude to subterranean oceans of natural gas...
...68 March 1998 • The American Spectator Both countries staked claims to NagornoKarabagh, an ethnic beehive inside Azerbaijan...
...But no one I met spoke ill either of President Aliyev or his government, for whom foreign investment has replaced the dictatorship of the proletariat as their revolutionary theory...
...Congress cut aid to Azerbaijan, for a while adding the country to the list of politically-incorrect nations...
...The new money pegged only to political expedience, without an anchor to either a basket of world currency or monetary discipline, also makes it impossible to save anything of value under a mattress...
...The Great Game—in the pursuit of expensive oil...
...For Azerbaijan to raise cash against its petroleum legacy—much as it once sub-sisted on allotments from the Supreme Soviet—it must rely on the invested billions of large multinational corporations, whose fickle capital markets are one of the dialectics of materialism...
...In the former Soviet republics deals more complicated than short cab rides require dollars, although most governments have issued decrees against the circulation of the greenback, as if the Bill of Rights came with its acceptance...
...B usiness etiquette in Azerbaijan is still conducted along Soviet lines...
...It wants its oil billions to fuel a secular society and, once the petroleum runs dry, to live as remittance men on the invested fortune...
...20002-4999 THE POWER OF IDEAS is available in bookstores for $29.95 or through The Heritage Foundation for only $18 postage paid...
...On the western shore of the Caspian, Baku is the capital of Azerbaijan, one of the Newly Independent States of the former Soviet Union...
...Suite 520A Washington, D.C...
...More than one billion tons of oil are in the entrails of Azerbaijan," read one of the MATTHEW STEVENSON is a Geneva-based banker...
...The fractured republics that surround the Caspian could well become the Balkans of the twenty-first century...
...Existing oil production simply feeds the country's power demands and inefficient refineries, and only a trickle has reached foreign markets...
...Enclosed is my check for $ Please charge my ^ VISA ^ Mastercard No...
...Set on hills that roll down to the sea, the city mixes metaphors of a bazaar, socialist provincialism, and the oil patch of east Texas...
...0 n his trip home from the territories, Chaplin staked his second claim, that for true love, while I settled for a flight that departed at 4:5o a.m., breakfast, and a back issue of the New Yorker that described the contributions of grateful emirs to the political libraries of James Baker and George Bush...
...The colonial ties with Moscow have meant generous concessions in the Caspian for Lukoil, the Russian conglomerate, and the U.S...
...That sentiment perhaps explains why the Azeri martyrs chiseled into the black and gray granite face the same waters that cover the wealth of many nations...
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...But the Soviet ruble was company-store script that was neither convertible beyond the corporation towns nor which stored any wealth of the society...
...President Ronald Reagan THE POWER OF IDEAS One cannot begin to understand the modem conservative movement in American politics without knowing the 25-year history of Heritage...
...If Germany and France can give up their national currencies, I asked, why not Azerbaijan...
...Unfortunately, it straddles the fault line not just between the West and Islam, but also the seismic plates that shift between the United States, Russia, and Iran, without belonging to any one camp...
...His election combined elements of the Risorgimento and a ward meeting on Chicago's South Side...
...Pressured by well-organized Armenian lobbyists, the U.S...
...At least late in their careers America's best and brightest have taken to his majesty's service...
...In the company of other prospectors, some lined with fur and others whispering into portable phones, I flew Lufthansa from Frankfurt to Baku and checked into a frontier hotel, which, although managed by Hyatt International, had its share of Black Larsons huddled near the bar...
...04 70 March 1998 • The American Spectator...
...With coordinates inside Rudyard Kipling's Great Game, it recalls his: But there is neither East nor West, Border, nor Breed, nor Birth, When two strong men stand face to face, though they come from ends of the earth...
...As Chaplin discovered, it is not always easy to find both the gold and the girl...
...Imagine the furor if Iran, not Oman, had given money to the James A. Baker Institute of Public Policy...
...There is a dry wind blowing through the East, and the parched grasses wait the spark...
...Will not the next Cold War be between Islam and the West over control of Central Asia's hydrocarbons...
...Even at today's market price of $15 per barrel, that would be worth more than $100 trillion...
...But as long as the American dream runs on high-test, found at the pumps of countries like Azerbaijan, the U.S...
...Men like Baker, Scowcroft, and Brzezinski have made diplomatic careers—almost like wine tasters at the court of Louis XIV— for their ability to distinguish those oils fermented by the faithful and those that are grown in the vineyards of heresy...
...The crumbling infrastructure inherited from Lenin's colonialists, like the visions of the British midlands that haunt the suburbs of Calcutta, produces little of value for export markets...
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...The so-called "contract of the century" that includes companies like BP, Exxon, and Statoil in an off-shore field calls for $8 billion in development costs and dreams of 500 million tons, for which the street value runs to the trillions...
...On the grounds that the world was running out of oil, the U.S...
...Otherwise Western economies would be held hostage either to tyranny or price fixing...
Vol. 31 • March 1998 • No. 3
