Central Asian oil finds fuel Iran's isolation
Monday 09 October 1995
The struggle for influence over Central Asia's oil and gas reserves is much more than a contest for wealth and power among the countries of the region. The development of these resources will mark a fundamental shift in the 21st century away from Western dependence on Gulf oil. It will diminish the importance of Saudi Arabia and other Gulf monarchies. It could also condemn Iran, the big loser, to isolation and economic collapse.
Only a few American strategic planners and politicians have been aware of these high stakes. One who has grasped the enormous implications is Senator Bob Dole. He recently voiced the hope that the United States could diversify its sources of energy and reduce its commitment to the volatile Middle East.
At the moment, statistics point to the continuing predominance of the Gulf in the oil market. The US consumes 26 per cent of global oil production. It produces only 8.6 million barrels per day (bpd) against demand of 18 million bpd and will continue to depend on imports.
The Gulf countries provide about 27 per cent of world oil production. The name of the game, however, is not present production but future reserves. It is in this strategic sense that Central Asia could hold the key to a transformed map of global economics and security.
About 63 per cent of proven world oil reserves are in the Gulf. Saudi Arabia alone sits atop 25 per cent, while Iraq holds 9.9 per cent and Iran 8.8 per cent. But if the resources of the Caspian Sea and Kazakhstan live up to their promise, an alternative set of sources could offset the Gulf's predominance. To take one example: some oil industry analysts believe the Tengiz field in Kazakhstan could hold as much as 10 billion barrels. In comparison, the North Sea Forties field held only 3 billion.
The politics of oil are therefore set to change. "Stable" and "pro-Western" Gulf countries such as Saudi Arabia will continue to play a key role in supplying Asian markets. But the twin pariahs, Iran and Iraq, could find themselves pushed out in the cold under the US policy of "dual containment".
For Iran, the geopolitics look far worse. Since 1979 its economy has staggered under inflation, war and now a unilateral US trade embargo. It is pumping around 3 million bpd but cannot pay its bills.
The success of the US in its deliberate policy to cut Iran completely out of the Central Asian oil and gas pipeline plans is a significant blow to the Islamic republic. It is a dire warning that Tehran could one day find itself isolated from its markets. Any regime faced with these prospects would consider its options. Iran is spending scarce state funds on conventional arms to rebuild its army, navy and air force. If the US is to be believed, it is also developing a clandestine nuclear weapon.
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