Putin decides the rules in fuel game

IT'S LIKE THIS: Vladimir Putin (left) has a word in Nursultan Nazarbayev's ear.PHOTO/AP

Russian politician Andrei Zhirinovsky is all mouth, so it would not normally have caused a stir when he suggested Russia should simply annex the parts of neighbouring Kazakhstan that have a large Russian population. But the ultra-nationalist leader of the Liberal Democratic Party frightened the Kazakhs, because there is a bigger game going on.

Kazakh President Nursultan Nazarbayev, in power since before Kazakhstan got its independence from the Soviet Union in 1991, was so alarmed he expressed doubts about joining Moscow's "Eurasian Economic Union" (EEU), which launches in January. "Kazakhstan will not be part of organisations that pose a threat to our independence," he said in August.

The EEU is the same organisation Ukrainians rebelled against joining last year when their pro-Moscow former President, Viktor Yanukovych, abandoned plans for closer ties with the European Union (EU). But Kazakhstan under Nazarbayev has always been on good terms with Russia, so Russia's autarch, Vladimir Putin, cracked the whip.

"Kazakhstan never had any statehood (historically)," Putin said, Nazarbayev had "created" it. The clear implication was that it might, if the wind changed, be dismantled. With Russian troops in eastern Ukraine "on holiday" from the army (but taking armoured vehicles and artillery with them), it was a veiled threat Kazakhstan had to take seriously.

Putin's strategic objective is to control oil and gas traffic across the landlocked Caspian Sea. The last thing he needs is cut-price competition from Central Asia in its European markets.

Moscow at the top of the Caspian Sea and Iran at the bottom have pipelines to get oil out to the markets. Azerbaijan, on the western shore, has built pipelines through Georgia into Turkey, one of which reaches the Mediterranean, so Russia cannot control its exports. But Moscow still has a stranglehold on the big oil and gas producers on the eastern side of the sea, Kazakhstan and Turkmenistan.

Neither former Soviet republic can escape Moscow's grip unless they can move oil and gas in pipelines across the Caspian seabed to Azerbaijan, then out to the Mediterranean. So Putin has been trying for years to get in a veto on any such pipelines. He's nearly there.

If the International Law of the Sea applied, each country's Exclusive Economic Zone, with control over seabed developments, would extend 300 nautical miles from its coast. The Caspian is not that big, so all five EEZs would meet in the middle - and Kazakhstan and Turkmenistan's zones would touch Azerbaijan's - so the question of trans-Caspian seabed pipelines would be beyond Moscow's control.

But since the Caspian Sea is not part of the world ocean, the five countries around it can agree on any rules they like. The rules Russia likes would confine each to a 15-nautical-mile sovereign zone and a 25-mile exclusive fishing zone.

The middle of the sea would remain a common area where any development would need the consent of all five countries. Hey presto! A Russian veto on any pipelines crossing the Caspian Sea, and continuing control over oil and gas exports from Central Asia to Europe.

After a summit meeting of the five countries' leaders at the end of September, it's practically a done deal, although the final treaty will not be signed until 2016. Late last month, Richard Hoagland, US assistant secretary of state for South and Central Asian affairs, said the US supported Kazakh independence and territorial integrity, but everybody knows who's boss in the region.

Sidelining Kazakh and Turkmen competition in the European gas and oil markets will not help Moscow much, however, if Putin continues to frighten the Europeans. They will be scrambling to cut their dependence on Russian gas and oil, and the US, with soaring production, will gladly help.

-Gwynne Dyer is an independent journalist with articles published in 45 countries