US loses out to Russia over Azerbaijan oil

THE UNITED STATES fears it has lost the battle to persuade oil companies to ship oil from Azerbaijan to Turkey. The defeat would indicate a US retreat in a much broader war - the Great Game for influence in the vast region which encompasses the Caucuses and Central Asia, newly liberated from Soviet control.

Azerbaijan is a vital piece in a struggle for political mastery between Russia, Iran and the US - a struggle that America may be losing, the New York Times reported yesterday. The country is set to become one of the world's most important oil producers, and is of immense strategic importance to the West. But Washington fears it will slip back into the Russian orbit. It wanted Azeri oil shipped by a new pipeline from Azerbaijan through Armenia and Georgia to Turkey. But oil companies have balked at the $4bn (pounds 2.3bn) cost, and instead are likely to go ahead with a much shorter alternative which terminates on Georgia's Black Sea coast when they announce a decision on 26 October.

The pipeline to Georgia will disgorge its riches into tankers which will then have to use the Bosphorus to reach the rest of the world. Turkey objects to a vast increase in Bosphorus traffic, and wanted the oil to go to Ceyhan on its Mediterranean coast instead.

Meanwhile, the Azeri President, Heydar Aliyev, one of the former Soviet Union's most enduring political strongmen, asked voters for another five years in office yesterday as they cast ballots in the first round of a presidential election.

"We have solved a lot of problems in the country, but many still exist. We will solve them," he told reporters after arriving to vote.

Mr Aliyev, the subject of a sometimes bizarre personality cult in which he is revered by some followers as an envoy of God, campaigned on his accomplishments of bringing Azerbaijan stability and concluding deals worth $40bn to develop its offshore Caspian Sea oil reserves.

The 75-year-old leader is widely believed to be a shoo-in for a two-thirds majority and first-round victory over five challengers amid a boycott of the poll by opposition parties who say it will be rigged.