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Shanghai Cooperation for Oil

Brian Hicks

Written By Brian Hicks

Posted August 22, 2007

A colleague of mine once suggested that I write a book called “Stuff that Stinks.” It’s not because I’m an olfactory snob, but because I find it hard to smell the rosy side of what most people call “progress.” I find international energy to be particularly malodorous business.

Consider, for example, the Shanghai Cooperation Organization. It’s like the Warsaw Pact with more oil, pivoting around China and Russia as the latter drools over the prospect of a new Sphere of Influence. Founded in China’s commercial capital, the SCO gleefully includes a smattering of -stans. I’ve rattled them off so many times that they roll off the tongue: Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.

Peering in from just outside of the clubhouse are India, Pakistan, Iran, Mongolia and Turkmenistan. Though the first of this group of “observers” is preparing to receive a bounty of Yankee nuclear know-how and the second needs to display a compliant smile if it wants to stay on Bush’s good side in the wild-goose War on Terror, both are knocking at the door of the SCO while its countries conduct massive war games on the Central Asian steppe.

Of course, they don’t just crave validation. Russia, India and China leave out only Brazil in that emerging market pantheon called BRIC. All are growing rapidly, and in the case of China, its mighty economic growth (11.9% for Q2 ’07 over last year!) is rivaled only by its energy consumption, which has steadily outstripped gross domestic product increases over recent years.

So across the Eurasian heartland, from the grasslands of the Chinese frontier that I know personally from my time in Qinghai province all the way to the Caucasus Mountains, China’s energy quest is making Mao’s Long March look like a springtime stroll.


This past weekend, while SCO tanks rolled around firing Nerf rockets or whatever inert material they use, it was petro-politics as usual for China.

Kazakhstan’s President Nursultan Nazarbayev, the former head of his country’s Communist Party, will be in power for a long time to come. This May, he was approved by the parliament to stand for re-election as many times as he would like, which was a de facto assumption since he has already held the post since 1991.

During the weekend his Nur Otan (“Fatherland’s Ray of Light”) party won an 88.05% majority in the legislature, amid hundreds of protest motions by opposition parties over polling irregularities. Nazarbayev didn’t lose any sleep.

In fact, the President used his epoxy grip on power to cement a new agreement with SCO partner China. On Saturday in the capital city Astana, Nazarbayev and Chinese President Hu Jintao signed an agreement to bring oil and gas from the Caspian Sea (where Kazakhstan has 1,894 kilometers of shoreline) to China.

Combined with a pipeline from central Kazakhstan to northwestern China, the conduit from the rich Caspian Sea will add another link to a major Chinese energy source with Kazakhstan as its hub.

But Kazakhstan, with a quarter of its people below the poverty line, is not the only Caspian littoral state hoping to make a fortune off of production around what is technically the world’s largest lake. On the western side of the Caspian, the BTC pipeline from Azerbaijan to Georgia to Turkey is a major point of hope for European countries.


As the BTC pipeline, built by a BP-led consortium, pumps through three non-SCO nations to the West, skirting the problem of Russian gas dominance that is so troubling to European policymakers, we are set up for a possible NATO-SCO conflict.

Vladimir Putin is asserting Russian superiority at the North Pole, where a submersible dropped the national flag in a titanium capsule this month to claim that region’s oil and gas, and lakeside in Siberia, where the judo master proves that he can put the smackdown if need be:

And we should assume that were Russia to pound its chest and even go to war over the North Pole, or the Caspian, the SCO would have its back.

As I told my friend who proposed the idea for my book (I still haven’t gotten down to a manuscript), I’m an equal-opportunity critic. I would have to be a lobotomy patient not to realize how much my own country has done in the way of reshuffling priorities and alliances to secure energy supplies. And even though I think a lot of it stinks, I still smell money in the international energy race.



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