Central Asian gas

At the SCO summit last week, Iran proposed a joint gas venture with Russia, but today the Russian Foreign Minister denied there was any plan to create a "gas OPEC."

Russia's foreign minister Tuesday said Russia and Iran had no plans to create a "gas OPEC," and criticized a Polish proposal to establish an "energy NATO."

Iran proposed at a Shanghai Cooperation Organization (SCO) summit last week to set up a joint gas-industry venture with Russia that the media quickly dubbed a "gas OPEC," drawing an analogy with the Organization of Oil Exporting Countries that works to regulate global oil prices.

"There are no plans to create a 'gas OPEC,'" Sergei Lavrov told reporters. "I have not heard of such plans."

The analogy was also prompted by an Iranian proposal that the two countries fix global gas prices together.

Russian President Vladimir Putin earlier said Iran had proposed starting a JV that would allow the two countries to join efforts in exploration and production.

"There is no talk of a 'gas OPEC.' The proposal was to set up a joint venture to work together on some deposits in both countries," Putin said.

Perhaps any such venture wouldn't be called a "gas OPEC", but Putin himself proposed an energy club while at the SCO summit.

Russia's president Thursday proposed creating an energy club within the Shanghai Cooperation Organization and said Russia could finance some economic projects pursued by the six-nation regional forum.

Speaking at the SCO's annual heads-of-state summit, Vladimir Putin said: "I believe that creating a SCO energy club is a pressing issue, as is more intensive cooperation in transport and communications."

"Russia is considering financing some projects in the economic sphere," he said, adding that the forum had the "appropriate organizational and legal structure" to advance lucrative economic projects.

As I've talked about here any number of times, Russia is using its energy resources as an instrument of foreign policy. As such, Russia would like to use the SCO as a way to bind Central Asian nations together through energy ties, and in turn push the US out of the region.

Russia already has Europe in a tough position, as Europe is quite dependent on Russian gas. The effects of that dependence are showing in preparations for the G8 summit next month.

The US would like to use the summit to talk about problem areas involving Russia, such as Moldova and Georgia. Not surprisingly, Russia doesn't want to talk about such things. In a column this week at the Washington Post, Jackson Diehl described the machinations going on.

Vladimir Putin must wait another month before he can play the coveted role of host to the world's most powerful democratic leaders at the Group of Eight summit in St. Petersburg. But already the Russian president appears close to accomplishing his principal objective: preventing a serious response by the G-8 to his autocratic domestic policies and imperialist bullying of neighbors.

A couple of months ago Western officials were confidently promising that Putin would not be allowed to strut among the elected presidents and prime ministers in St. Petersburg without being reminded that he is not their political peer. At the insistence of the Bush administration, Russia's interventions in Ukraine, Georgia and Moldova -- former Soviet republics trying to establish themselves as independent democracies -- were placed on the agenda of G-8 preparatory meetings. U.S. diplomats pressured NATO to allow the first steps toward membership this spring for Georgia and Ukraine.
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Putin's strongest move was his agreement to participate in a pending Western bid to freeze Iran's nuclear program. In exchange for its support Russia won the postponement of a U.N. Security Council resolution that would have ordered an end to the program; it also delayed a looming rift between Russia and the West over sanctions against Tehran. As long as Moscow is nominally on board with its most important foreign policy initiative, the Bush administration is constrained from pressing the issues raised by Cheney -- though officials insist that they haven't been dropped.

European policymakers don't suffer such scruples. In Washington and in Brussels, they are arguing straightforwardly that Putin's noxious policies should be tolerated -- not just because of Iran but also because of Russia's importance as an energy supplier. Brussels has been intimidated: At a meeting at the Black Sea resort of Sochi in late May, Putin flatly rejected European Union appeals that Russia loosen its stranglehold on pipelines carrying gas and oil to Europe and allow greater European investment in Russian fields. Last week his government confirmed that Western companies will be allowed only minority stakes in all but the smallest projects.

Putin's intransigence has produced a response that a U.S. official summed up in one word: "appeasement." A senior European official explained the logic to me this way: For the foreseeable future, European economies will depend on Russian energy. But that energy won't be available unless Russia makes huge new investments in the coming years and chooses to continue marketing its oil and gas in Europe, rather than China. "That means we have no choice but to support a powerful center in Moscow," the official said, "so that the necessary investments are made and the supplies are available to us."

With Russia and China highly unlikely to use their leverage against Iran, and indeed are moving towards welcoming Iran into the SCO as a full member, and with European nations unlikely to cross Russia, thorny issues like Iran and North Korea are left to the US to deal with.

This article from the Asia Times points out the friction that is arising. Some of this you've read about here before.

This was perhaps first signaled on May 4, when Vice President Dick Cheney went to Lithuania, a former Soviet republic, to lambaste the Russian government at a pro-democracy confab. He accused Kremlin officials of "unfairly and improperly" restricting the rights of Russian citizens and of using the country's abundant oil and gas supplies as "tools of intimidation [and] blackmail" against its neighbors. He also condemned Moscow for attempting to "monopolize the transportation" of oil and gas supplies in Eurasia - a direct challenge to US interests in the Caspian region.
The next day, Cheney flew to another former Soviet republic, Kazakhstan, in oil-and-natural-gas-rich Central Asia, where he urged that country's leaders to ship their plentiful oil through a US-sponsored pipeline to Turkey and the Mediterranean rather than through Russian-controlled pipelines to Europe.

Then, on June 3, Secretary of Defense Donald Rumsfeld weighed in on China, telling an audience of Asian security officials that Beijing's "lack of transparency" with respect to its military spending "understandably causes concerns for some of its neighbors". These comments were accompanied by publicly announced plans for increased US spending on sophisticated weapons systems such as the F-22A fighter and Virginia-class nuclear attack submarines that could only be useful in a big-power war for which there were just two realistic adversaries - Russia and China.

Like Russia, China has also aroused Washington's ire over its aggressive energy policies - but in China's case over its increasing attempts to nail down oil and gas supplies for its burgeoning, energy-poor economy. In "Military Power of the People's Republic of China", its most recent report on Chinese military capabilities, issued on May 23, the Pentagon decried China's use of arms transfers and other military aid as inducements to such countries as Iran and Sudan to gain access to energy reserves in the Middle East and Africa, and for acquiring warships "that could serve as the basis for a force capable of power projection" into the oil-producing regions of the planet.

I've also said before that such times require a strong national will, and yet the rabid anti-war Left is sapping the ability of the US to act decisively in the face of such opposition in Asia.

We may indeed eventually find our allies in Europe and Asia at the mercy of a "gas OPEC". Venezuela is cozy with Iran and China. Who knows what would happen to Iranian oil in the event of a crisis. Nigeria is still a trouble spot. And on and on. Can we do more than just issue weak statements about the desire to "talk"? Talk is cheap and will constrain no hostile nation without a demonstration of will to back it up.