Martha Brill Olcott is a Professor of Political Science at Colgate College and an expert on issues relating to Kazakhstan

The debate about possible routings for a delivery system which would bring oil to world markets from the Caspian basin is not so much about "best" routes as much as it is about "least worst" routes. Whether such a system ran through Russia, Iran, or Turkey, the geo-political realities of this landlocked region would give enormous influence to the state or states through which the oil must pass on its way to the markets.

Despite generally strong western support for Russia and its attempts to foster a market-oriented economy--to which an oil pipeline across Russia would give a significant boost--there is equally strong western hesitation about giving Russia so much commercial and political advantage over the other new republics, whom the west also feels a need to support and encourage. Thus objections to a Russian route for an oil pipeline are usually phrased in terms of encouraging the new states to create commercial conditions which will permit them to become less dependent upon Russia, economically and hence politically.

While there is real merit in this concern, such a position fails to recognize that the desires of the new states to be independent of Russian influence are not equal. While all of the new Caspian republics--Kazakhstan, Turkmenistan, and Azerbaijan -- are undoubtedly genuine in their determination to be fully sovereign states, all of them recognize that a certain Russian presence in their affairs, especially those having to do with oil, is inevitable. However, where the last two of these seem to be trying to keep this presence to as small a minimum as possible, Kazakhstan is unique for desiring much more Russian participation in its affairs than it so far has been able to gain. Indeed, there is abundant evidence that Kazakhstan sees its only hope for continued existence as a state in Russian guarantees, for which the present leadership is prepared to pay virtually any price.

Kazakhstan's determined search for ways to make its continued existence be in Russia's best interests is firmly grounded in reality. The state is landlocked, more remote from open ocean than is any other large nation of the world, and hence more dependent on its neighbors to be both customer and vendor. It is also demographically vulnerable, almost equally split between two ethnic groups whose interests, desires, and cultures are all but antithetical; what is worse, as the legacy of the Kazakhs' historical division into Great, Middle, and Lesser Hordes increasingly reasserts itself, the interests of the Kazakhs in the west (where the oil is), the southeast and center(where the capital is), and the north and east(where the industry is) are increasingly divergent. Kazakhstan also shares an enormous and undefendable border with Russia, which would no more permit Kazakhstan to become a strong independent military power than the US would permit Canada or Mexico to do so.

President Nazarbaev has always been acutely conscious of his state's essential fragility. While Kazakhstan was still part of the USSR, Nazarbaev fought simultaneously to increase his republic's share for the national economy and to insure the continued existence of some form of Soviet Union. After the USSR collapsed, Nazarbaev has struggled desperately to pump life into the Commonwealth of Independent States (CIS) and, as that effort has seemed increasingly fruitless, to foster the creation of an Euro-Asian Union (EAU), which would equally well serve the purpose of making Russia, in essence, the guarantor of Kazakhstan's continued existence.

Where multilateral efforts have failed, Nazarbaev has also pursued bi-lateral attempts to bind Kazakhstan to Russia. In the early days of their independence, Nazarbaev and his officials tended to approach their Russian counterparts in terms of Soviet-era putative equality, which the Russians rejected, wishing now to be simply primo, rather than primo inter pares. Particularly since November 1993, when Kazakhstan's willingness to hand over responsibility for its policies on customs, taxes, trade and economic development still failed to satisfy Russia's escalating conditions for inclusion in a new "ruble zone" and so forced the introduction of the tenge, the republic's leaders have demonstrated a more sophisticated approach to bargaining with Russia.

This is especially evident in the lengthy negotiations over control of the Baikonur space-launch facility and in disposition of the 1360 nuclear warheads which the collapse of the USSR had stranded on Kazakhstan's territory. Although the sums involved are much smaller than would be the potential profits from the Tengiz and other oil fields, neither negotiation was insignificant. For Baikonur Kazakhstan was demanding as much as $7 billion in back rent and $3 billion per year in rent (eventually reduced to $115 million), while the republic yielded its nuclear arsenal for $1.2 billion in prepayment against sale of the warheads' enriched uranium, plus another $311 million in US aid for military conversion.

In both instances, Kazakhstan was in physical possession of assets which it had not created and which it could not use. Thus the purpose of the state's negotiations which Russia became the securing of the best possible price for return of these objects to Russian control (or in the case of the warheads, their destruction), in a situation where Kazakhstan had almost no means by which to prevent Russia from simply seizing these assets, either directly or after encouraging the republic to split apart from its own inherent tensions. In both instances Kazakhstani negotiators played their weak hands brilliantly, shopping their assets around the world to create the appearance of alternative customers, and so managing to secure substantially higher prices for outcomes to which there had been no real alternative.

There is growing evidence that Kazakhstan has come to understand the oil development and shipment issue in similar terms. Kazkhstan knows perfectly well that, at least in its own case, there is no realistic way that Russia can be cut out of the Caspian oil profits, because it is too easy for an excluded Russia to insure that no one else can have the oil either--pipeline or no pipeline. For Kazakhstan the only real choice is between giving Russia s share and having no oil profits at all, which leaves the republic with only one realistic goal in its negotiations--to extract the greatest possible benefit to itself in return for submitting to the inevitable.

This is not to say that Kazakhstan has no interest in an alternative pipeline route; Nazarbaev has spoken frequently of his support for an Iran or Turkish variant. However, this should not be construed as Kazakhstan's desire to evade sharing with Russia, but rather as a bargaining ploy, to raise the price which it might eventually be able to extract for the share it knows it must give. Although the profits which Kazakhstan might realize if a Turkish or Iranian pipeline allowed it to cut Russia out entirely are potentially vast, that money is small compared to the much greater cost of having a disappointed Russia destabilize and destroy its upstart neighbor. The profits which the republic might make by shipping its oil through a route entirely in Russian control would inevitably be much smaller, but they would at least have the benefit of allowing the continuation of a Kazakhstani state.

The greatest possible profit, however, and the one towards which Kazkhstan seems to be groping, lies in fostering a symbiotic relationship between itself and Russia, especially along the southern flank and in Siberia, with Kazakhstan's oil shipped to Russia for refining, then shipped back to Kazakhstan, in part to fuel the development of Russian-controlled industries in the republic's northern tier. In this scenario, kazakhstan materials, but also a customer for refined products, and as a further producer of Russian profits. The benefit of this scenario to Russia may be debated, since the profits it would generate might well be less than if they simply sold Kazakhstan's oil to the world, through a pipeline which they control. The benefits to the Kazakhs, however, are immense; if the republic can succeed in making its further existence economically indispensable to Russia, then the oil it will have bartered away to do so will be a small price to pay indeed.

Caspian Crossroads, Num.1, Winter 1995