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Detained Tajik publisher awaits word of his fate   Detained on charges of sedition & insulting Tajik president 7.10.01   Ana Uzelac Moscow Times Contrary to defense lawyers' expectations, prosecutors did not begin hearings Monday on the extradition of an opposition Tajik publisher detained last week in Moscow at Dushanbe's request. Dododjon Atovulloyev was detained late Friday on charges of sedition & insulting the Tajik president, filed by the Tajik prosecutor's office, as he was passing through Sheremetyevo Airport en route from Germany to Uzbekistan. His lawyer Andrei Rakhmilovich said in a telephone interview Monday that he had been denied access to his client for a third consecutive day because the prosecutor in charge of the case, the only one who can issue permission to see Avtolluyev, has not been answering telephone calls. The Prosecutor General's Office declined to say why the extradition hearings did not start Monday, or whether the

3 Uyghur political asylum seekers deported from Kazakstan to China 2.12.99   E.Turkistan Information Ctr Channel 31 of the Kazakstan's TV reported on 2.11.99 that Kazakstan's Ministry of National Security deported Khamit Memet, Qasim Mekhpir, and Ilyas Zordun to China. All three are Uyghurs who had been seeking political asylum in Kazakstan after the Chinese govt's crackdown on the participants of the demonstration in Ghulja on 2.5.77   The social security department of the city of Ghulja (Yining) issued warrants for their arrests and posted an appeal to the residents of Ghulja to assist in detaining the "national separatist elements". Until the deportation, these Uyghurs were under the investigation of the Ministry of National Security of Kazakstan, and were kept in the ministry's cells for preliminary detention.

delay was connected to Atovulloyev's appeal for a political asylum, submitted to President Vladimir Putin over the weekend. Atovulloyev, who now lives in Germany with his family, fled Tajikistan in 1993. For the past several years, he has been publishing the Moscow-based Chirogi Ruz, or Daylight, newspaper, which appears in Tajik & Russian. The paper has criticized the Tajik govt, especially President Emomali Rakhmonov & his ally, Dushanbe mayor Makhmadsaid Ubaidulloyev. Atovulloyev accused them of supporting Islamic rebels and profiting from the region's large-scale drug smuggling.

According to press reports, Ubaidulloyev was in Moscow two weeks ago, and some observers believe the publisher was blacklisted during that visit. Citing unnamed sources, the Kommersant daily reported that Russian secret service agents tried to wrestle the publisher from prosecutors, but failed due to a lack of proper documents. In an interview published in Kommersant on Monday, Atovulloyev said the Tajik Embassy tried to pressure the prosecutor's office to hand him over quickly. The embassy's third secretary, Bekhruz Faizulloyev, denied these claims in a telephone interview Monday, saying the embassy had "nothing to do with the whole thing." Russia & Tajikistan are both signatories of a convention on fighting terrorism, extremism & separatism, signed last month by the so-called Shanghai Five - a group that also includes China, Kyrgyzstan & Kazakhstan. According to press reports, the convention foresees enhancing cooperation between the countries' law enforcement bodies.

The price of oil   What was Mobil up in Kazahstan & Russia?
7.9.01   Seymour Hersh New Yorker

Mobil investigators also uncovered an array of unseemly business dealings that took place in Russia & Kazakhstan in the mid-nineties. More than a billion dollars of Mobil's cash was paid to Russian companies in unorthodox transactions; questionable accounting practices were followed: and multimillion-dollar transfers were made that, as a Patton Boggs report put it in one case, "did not have any apparent valid business purpose." The investigators' working papers and summary reports, many of which were obtained for this article, suggest that Mobil's activities' in Russia & Kazakhstan were not driven entirely by a desire for quick profit. The company also had a strategic goal: access to Kazakhstan's rich Tengiz oil field.
Tabbah's court papers and the internal Mobil documents gathered for this account provide an unparalleled view of a major American oil company's dealings in the former Soviet Union. They raise questions about the company's decisions to enter deals that ultimately benefitted powerful figures in the region, including President Nursultan Nazarbayev, of Kazakhstan, and former Prime Minister Viktor Chernomyrdin, of Russia.

A federal grand jury in Washington has been hearing evidence on the swap allegations, along with allegations of money laundering & bribery, since last year. Before a second grand jury, in New York, Mobil and other American oil companies that do business in Kazakhstan were being questioned about possible violations of the Foreign Corrupt Practices Act. Under the F.C.P.A., which was passed in 1977, it is unlawful for any American to bribe foreign officials, either directly or through an agent, "for the purpose of obtaining or retaining business."
Exxon Mobil has refused to permit any of its employees to be interviewed for this account, and has asked former Mobil employees not to cooperate. The company has stated that it was not involved in the swap, did not own any of the oil that was swapped, and did not authorise any employees to participate in the planning & execution of the swap. Bryan Williams refused to be interviewed, but, in a written statement, he denied any involvement in the swap. Williams also declared that Mobil had approved all the deals & contracts he worked on. When The New York sent details of the allegations to Exxon Mobil for comment, an outside attorney, Martin London, responded on the company's behalf, stating that many of the allegations were "erroneous,'' and that "the broad theme of your attack on Mobil's business integrity is both incorrect & actionable." It would be "inappropriate" for Exxon Mobil to discuss the allegations specifically, London wrote, because "there are on going grand july investigations relating to the matters addressed in your letter."

The oil industry has long used swapping as a way to reduce the cost of transporting crude oil, by pipeline or other means, to refineries. The arrangement also provides a way to get oil from remote oil fields and isolated nations, such as Kazakhstan, to market. In a swap, the title to oil in one location is transferred to oil of an equivalent value that may be hundreds, or even thousands of miles away. Because of the potential for abuse in such complicated transactions, major oil companies carefully monitor & record their swaps.
"Its extremely rare for a legitimate company to play pricing games in a transfer," said Thomas Stauffer, a retired economics professor at Harvard and Georgetown who specializes in oil & taxation issues. "But in the Third World - and especially in places like Kazakhstan - it's an invitation to corruption. You can hide a lot of sins in an oil swap. Title to oil in any tanker might change a dozen times before it gets to port." Such sins include oil laundering - concealing an illegal source of oil-and sanctions busting. "Oil is oil." Stauffer said. "It can be sold in any given market at any time." Men like Marc Rich, the fugitive financier who was pardoned by President Clinton in January, have earned hundreds of millions of dollars over the years by brokering oil deals with pariah nations such as Iran & the former regime in South Africa.

In Mobil's case, the company's in-house investigators came to believe that the proposed swap between Kazakhstan & Iran was but one element in a complex of seemingly high-risk business deals that were devised by Bryan Williams. The investigation also led to the two other Americans named in Tabbah's suit: James H. Giffen, a New York merchant banker & adviser to Kazakhstan's President Nazarbayev; and Friedhelm Eronat, a businessman who often acted on behalf of Mobil overseas. The business dealings & friendships among the three men date back many years, and they have done billions of dollars'worth of deals worldwide. The three might never have become the focus of grand-jury scrutiny if they hadn't fallen out with Farhat Tabbah.

I   Getting in
Kazakhstan and the other former Soviet Republics in the Caspian Sea region (Uzbekistan, Azerbaijan, and Turkmenistan) have become notorious for exploitation, corruption, and seemingly bottomless fields of oil whose bounty seldom benefits the average citizen. Almaty, the business capital of Kazakhstan, still has the stolid look, the unemployment, and the pollution of the Soviet days, despite a decade of increasing oil & gas production. Close to the Presidential palace, however, two new luxury hotels have been built for the foreign businessmen drawn by the country's natural resources. The Tengiz oil field is one of the most important finds since Alaskas's Prudhoe Bay, in 1968. The Soviets tried to develop it in the nineteen-eighties, but instead triggered a gigantic blowout & a fire that burned for a year, with a column of flame six hundred feet high. Tengiz was not put into systematic production until the early nineteen-nineties, when newly independent Kazakhstan sold a half interest in the field to Chevron, the American oil company. Tengiz's output has steadily expanded since then. "It's a geologist's dream, the sort of field you see once in a generation," Edward C. Chow, a retired Chevron executive, said. "It's a mother of an oil field, and we still don't know how much oil is in it."
Bryan Williams turned out to be crucial to Mobil's efforts to get into Tengiz. As executive vice-president of Mobil Sales & Supply, he bought crude oil from oil companies controlled by foreign govts. A lawyer turned oil man, Williams had graduated from the University of North Carolina & New York University Law School and spent several years at Shearman & Sterling, a prominent New York firm. In the early nineteen-seventies, he joined Mobil. His first major assignment was in Saudi Arabia,where Lucio A. Noto, who later became Mobil's C.E.O., was in charge of company operations. At Mobil, Williams was respected by his peers for his ability, his panache, and his daring. One retired Mobil senior executive said he was widely known as a "cowboy"-a high-flier in a high-flying business. Intl spot-market crude-oil prices are extremely volatile-the price of oil varies constantly from country to country-and narrow profit margins can change within minutes, necessitating snap judgements. It was accepted at Mobil that successful oilmen like Williams needed autonomy, with no second-guessing, as they routinely committed millions in the hunt for profits. Williams repaid the trust with smart deals.

He consistently produced high profits, former Mobil officials told me, and eventually became a favorite of Noto. "Noto & Bryan were close," Don Voelte, a former vice-president who left Mobil in 1997, recalled. Although Williams reported not directly to Noto but to the head of sales at Mobil headquarters, Voelte said that "Bryan was the go-to guy in the intl trading area." Noto would "always chastise other Mobil folks, saying, 'Just go to Bryan. He knows how to handle these things. " Another Mobil insider tells of a high-level meeting at which Noto singled out Williams as "the only entrepreneur in the whole business." To get into Tengiz, Mobil needed the help of James Giffen, who represented the Kazakh govt. (Giffen was identified in press reports last summer as a target of a federal investigation into corruption & money laundering.) Giffen grew up in Stockton, California, where his father ran a men's-clothing store. He graduated from the U.C.L.A. law school in 1965 and spent eleven years with the Armco Steel Corporation, which struggled during the Cold War to gain export approval for the sale of oil-drilling equipment & steel goods to the Soviet Union. In the mid-eighties, Giffen set up a banking company called Mercator, based in New York City. He was bras, intelligent, and eager to make money. "I never had any evidence that he was anything more than a smart operator. "Jack F.Matlock.Jr., who was the U.S. Ambassador to the Soviet Union from 1987 to 1991, recalled. "He was always working for No. 1, Jim Giffen. But I could understand that. I didn't detect anything irregular."

Giffen spent years cultivating senior officials of the Communist Party, such as Nursultan Nazarbayev, who was the Party's rising star in Kazakhstan. In the late eighties Nazarbayev, a former street worker & engineer, became First Secretary of the Kazakh Communist Party. After the Soviet collapse, in 1991, he won the Presidency of the country. Giffen then became an important Presidential adviser. Nazarbayev's regime was quick to cooperate with the first Bush Administration's plans to denuclearize the break-away Soviet republics; more than a thousand warheads that had been deployed by the Kremlin in Kazakhstan at the height of the Cold War were sent back to Russia, without incident. The Clinton Administration's initial approach was to emphasize the building of democratic institutions - a largely futile effort - but it soon turned to security issues, such as reducing drug trafficking. Diplomacy concentrated for the most part on providing opportunities for American oil companies seeking to do business in Kazakhstan, and on plans to build pipelines that would allow the new republics to deliver their oil) and natural gas directly to the West by way of a Black Sea port in Turkey, thus bypassing both Russia, to the north, and Iran, to the south.
American intelligence officials say that Nazarbayev has misappropriated hundreds of millions of dollars. He has also shared generously the perquisites of his office (as he defined them) with his immediate family. His eldest daughter, Dariga, controls the national television network, and a son-in-law is the president of a state oil-&-gas pipeline. The country has not prospered under Nazarbayev's rule. Social conditions have deteriorated steadily; per- capita G.N.P. is just thirteen hundred dollars a year. The nation is also burdened with an external debt of more than eight billion dollars, and with a huge & rapidly growing level of capital flight: a fifth of the country's total money supply is now stashed in Swiss banks. Nonetheless, Nazarbayev has been viewed by many in Washington not as a despot but as a charismatic political leader who could hold his nation together.

According to William Courtney, who was the first American Ambassador to Kazakhstan, Nazarbayev became "more authoritarian as his power grew, and came to depend on Jim Giffen more & more." By 1995, Courtney says, "Nazarbayev had inserted Giffen as an indispensable go-between for some key projects." In the late nineteen- eighties, Given had helped Chevron buy into the Tengiz field. But a new president of Chevrons overseas division, Richard Matzke, decided not to deal further with Giffen, and Chevron's relationships inside Kazakhstan quickly soured. Matzke is said to have proudly told one colleague that his company "didn't pay a nickel in middlemen's fees after getting into Tengiz. However, Giffen subsequently demanded a "success" fee and received it - seven & a half cents per barrel of Chevron's share of the Tengiz oil. It earned him millions of dollars in royalties - at least three million last year alone.
More & more, Kazakhstan insiders told me, Giffen's power became tied to his ability to help Nazarbayev & his govt cronies, including Nurlan Balgymbayev, the oil-&-gas minister, benefit from the oil business. Balgymbayev, who was named as a defendant in Tabbah's suit, began his career, in the nineteen-seventies, as an engineer in the Soviet oil fields. He became friendly in those years with Viktor Chernomyrdin & the other men who created Gazprom, the powerful Russian energy consortium. In 1994, after an unhappy year with Chevron, Balgymbayev was appointed Kazakhstan's oil-&-gas minister. He routinely told foreign oil companies seeking to do business in Kazakhstan that any prospective deal had to involve Giffen & Macerator, which had offices there. Dan White, a former ARCO executive, said that when, in late 1995 he arrived to open an ARCO office in the former Soviet Union a senior American diplomat in Kazakhstan told him, "The best way to get what you want is to see Giffen." One afternoon, White happened to encounter the Kazakh oil minister in a hotel lobby. They exchanged a few pleasantries, and then Balgymbayev raced off to the airport. At that moment, White recalled, "the fellow next to him says, 'I'm Jim Giffen" and told him, "Dan, nobody gets to Balgymbayev without coming through me." Giffen paused. White told me, and said, "You know, this is a strange place here. A lot of people carry guns, and bad things happen to people."

Giffen's ties to President Nazarbayev are not limited to the oil business. He now advises Kazakhstan on economic planning, investments, health care, and education. Yet he has been careful, over the years, to maintain contact with the C.I.A., the F.B.I., and various American officials. "He saw a fair amount of us & always debriefed us," Ambassador Courtney said. "My personal take is that Jim was trying to be a law-abiding middleman. I encouraged him to register as a foreign agent"-with the Justice Department, as Americans acting on behalf of foreign govts are generally required to do - "but he wanted to stay away from that." (Giffen denies that the conversations with White and with the Ambassador took place).

II   Gentlemen's agreement
Cash from Mobil began flowing into the former Soviet Union in the early nineties, at a time when the region was burdened with enormous debt & rampant corruption: it was not an easy time for foreign businessmen. Mobil's early goal was to establish contacts and find out what it took to do business in Russia & other former Soviet states. One immediate realization was that men like James Ciffen, with their connections, could make the difference between success & failure. Mobil began negotiating the purchase of a stake in the Tengiz field in 1995. The middleman in the deal was Giffen. When I asked a former Mobil executive why the company chose to work with Giffen, he told me, "Giffen was a promoter. He brought investors in. He took the risks. He was agile & nimble, and had a small company with tremendous capitalization when needed. He was his own man, well positioned to bring people to the table."

In the fall of 1995, Lucio Noto, by then Mobil's C.E.O., and a few senior executives flew Giffen and President Nazarbayev on a company jet to a resort in Nassau, in the Bahamas, to discuss what Mobil needed to do to get into Tengiz. One of the Mobil executives at the meeting told me that, while on the island, he and his colleagues joked about how upset Chevron's Richard Matzke must have been upon learning that his company might have to share Tengiz with another American company. "Matzke's anger added to the pleasure," the executive said, with a laugh. A Mobil employee who took part in the discussions in Nassau said that the Kazakhs made a series of extraordinary demands, seeking, among other things, a new Gulfstream jet aircraft for Nazarbayev, funds for tennis courts at his home, and four trucks with satellite dishes to be used by his daughter's television network. Don Voelte, who became involved in the Tengiz negotiations in early 1996, confirmed that Nazarbayev had asked for the airplane. "We said absolutely no way," Voelte said. It is not known how Mobil reacted to the other requests. (In a statement for this article, a Mobil spokesman said that the Tengiz purchase was "subject to extensive review . . . with regard to the Foreign Corrupt Practices Act." and that the company was "not then and is not now aware of any illegal payments.")
Demands for tennis courts were part of the shabby routine of doing business in the former Soviet Union. President Nazarbayev's real problem was obtaining Russia's good will, and that of Viktor Chernomyrdin, who has been cited by American intelligence agencies as being responsible for the diversion of many millions of dollars in state money. Despite a modest govt salary, Chernomyrdin is a billionaire today- one of the ten wealthiest men in Russia. He had been the oil-and-gas minister in the Soviet era, and he made the transition to capitalism as the mastermind of Gazprom. In 1992, he became President Boris Yeltsin's Prime Minister, but he continued to maintain an active interest in oil. He controlled Russia's pipeline system, and, since ail pipelines out of Kazakhstan went through Russia, he was able to keep the Kazakhs dependent on him by putting limits on the amount of oil that they could pipe out, by setting high tariffs, and by siphoning off a percentage of the oil into the Russian domestic market- Any effort by Mobil to buy into the Tengiz field would require his blessing.

In 1995, Bryan Williams set in motion -La confounding business deal involving Kazakhstan and Russia. Its overriding result seemed to be to benefit, at Mobil's expense, Viktor Chernomyrdin. At the center of the deal was a project to transport liquid condensate (a natural-gas by-product) by pipeline from Kazakhstan's Karachaganak field, near the Russian border, to processing plants in and around Orenburg, a town in southern Russia, just over the border from Kazakhstan. Earlier in his career, Chernomyrdin had been an engineer and the director of one of the Orenburg plants. After the collapse of Communism, in -1991, he and his family obtained a controlling interest in the plant. By the mid-nineteen-nineties, the aging plant, which was dependent on outside suppliers for raw materials, was barely functioning. Mobil, through Williams, came to the rescue. It did so with the help of Friedhelm Eronat.
As a businessman and oil trader, Eronat has managed to amass a substantial fortune while keeping a low profile; he recently bought a four-and-a-half-million-dollar home in London's Carlyle Square. Those who know him describe him as tall, well-spoken, and personable, with striking jet-black hair. He loves to talk about the oil business-"He's a kommersant" one oilman told me, using the Russian word for a businessman. Eronat's personal history is unclear. He was born in 1953. Germany was listed as his country of birth on his U.S. passport (in the mid-nineties, he apparently held at least two passports, one from the United States and one from Greece), but he has told some of his oil-business acquaintances that he is a native of Austria and that his father spent twenty years as an overseas employee of Mobil. He studied production management and oil engineering at Nicholls State University, in Louisiana, and graduated in 1975. In the nineteen-eighties, Eronat began doing business with Bryan Williams and Mobil in Nigeria, and he worked closely with Williams over the next dozen years. Eronat controls or acts on behalf of at least six companies that engaged in oil trading in the Persian Gulf, the former Soviet Union, and Africa.

Wlliam advanced the Orenburg deal by financing a company known as Vaeko Europe Limited, which Eronat controlled. The plan was that Vaeko, using Mobil's money, would pay the Kazakhs for raw materials and send them on to the Russians; the Russians were to send refined products back for resale. Vaeko Europe would be repaid, and Mobil theoretically would recoup its investment, with the profits. But Mobil documents from the internal inquiry indicate that more oil went from Kazakhstan to Russia than came back- much more. The facilities that Chernomyrdin's family controlled reaped enormous profits, presumably, since they did not pay the Kazakhs in full for the raw materials they processed and sold elsewhere. The money Mobil had put into Vaeko disappeared. A Mobil document fixed the loss. as of October, 1997, at seventy-six million dollars.
James Giffen was directly involved. In December of 1996, Williams, writing on Mobil! Sales and Supply stationery. with a copy to Eronat, told a colleague in Mobil's office to draft a "side letter" and "get it to Jim Gitten." The letter was to deal with Karachaganak and the delivery of inventory. "You do not need to include any condition." Williams added, "since that is part of the gentlemen's agreement." The letter did not specify which agreement, and which gentlemen, Williams was referring to. The contract Mobil had in the Orenburg deal was with Vaeko Europe, the company controlled by Eronat, and not with the processing plants, and thus the company's sole legal claim for the lost millions was against Eronat. But going after Eronat posed risks. Eronat knew much more about his and Williams's dealings in the former Soviet Union than did most senior executives at Mobil. In an interview last fall, one of Eronat s lawyers told me that he had warned Jerry R. Bidinger, the senior Mobil lawyer on the investigating team, that Mobil "did not want Eronat as an adversary." Eronat himself told Mobil during the internal investigation, one official said, that "it was always understood that the debt would never be collected."

The Orenburg losses were noticed by financial analysts at Mobil's headquarters, in Fairfax, Virginia, but they didn't take their concerns to the C.E.O. "These accountants went to Williams and said 'What's going on?' a former company officer recalled. "He said Noto knew all about it and had approved it." Nothing more was done. The losses soon became known throughout headquarters. "It wasn't that the money was lost but the specifics of how it was handled that shook Fairfax up, "Don Volt, the former Mobil vice-president, told me. "When I ran into Bryan and said, 'What happened?' he said the Russian mafia had got hold of it, and it was gone." Mobil's lawyers eventually concluded, according to one internal summary, that "Mobil had long-term projects and interests-Tengiz-in mind when it entered this transaction."
There is also evidence in Mobil's files that the company's top executives had been told that the Orenburg deal was deeply flawed. In late 1998, Mobil's lawyers prepared a memorandum for Noto, suggesting that the Kazakh leadership had a personal stake: "Karachaganak is a delicate matter for high Kazakh officials, particularly Mr. Balgymbayev." The Russian processing plants, the memorandum said, "are run, controlled or influenced by a number of... political. personal, familial and, to some extent, even criminal interests." Mobil concluded its negotiations for the Tengiz oil field on May 3. 1996. The final price was just over a billion dollars, and bought Mobil a twenty-five-per-cent share in Tengiz-chevroil, or T.C.O., the consortium that managed Tengiz. Chevron maintained its fifty-per-cent investment in the Held. leaving the Kazakhs with twenty-five per cent; both Mobil and Chevron set up offices in Almaty to market the oil. Tengiz now produces well over a billion dollars in crude-oil revenues each year. Edward Chow, the former Chevron executive, told me that Kazakhstan's willingness to let another American company buy into the Tengiz field without competitive bidding surprised insiders in the oil business, given the strong interest of European oil companies.

It is clear that James Giffen had an influential role in advising the Kazakh govt on Mobils purchase, and had every reason to anticipate earning a huge fee for his banking company, Mercator, in doing so. Forty-one million dollars of Mobil's billion-dollar payment eventually went to Mercator. In June of 1995,however, according to a document from Tabbah's court papers, Macerator had quietly signed a partnership agreement with one of Friedhelm Eronat's companies providing for the two companies to share any fees from the sale of stakes in Tengiz and other oil-and- gas fields in Kazakhstan. It could not be learned what Eronat did to justify his share of the Tengiz money.
Mobil participants in the Tengiz negotiations worried constantly about the possibility of payments going astray. Don Voelte told me that the company was concerned that the purchase payments it was sending to the Kazakh govt via Swiss banks might be diverted for personal use by the Kazakh leaders. "It would be easy," he said. "That was our nightmare scenario- that the money would end up in the wrong hands. That scared us to death. You wonder and speculate, but you just don't know." Paul Soane, a retired Mobil vice-president who helped negotiate the final purchase price of Tengiz, recalled that the company's lawyers reviewed the wire transfers with "a fine-tooth comb to insure that everything we were doing was perfectly legal." Mobil's responsibility ended at that point. Soane said. "We confirmed that the accounts designated by the Kazakhstan govt were in fact Kazakhstan govt accounts. Beyond that, what could we do? Who the hell are we to question the Kazakhstan govt's choice of banks? Once the money leaves Mobil and enters Kazakhstan govt accounts, we have no way of determining where it goes."

Former PM Akezhan Kazhegeldin, who was Nazarbayev's political rival and is now living in exile in London, and who directs the opposition against him from there, told me that by the end of 1997. when he left office, Mobil had paid between $550 million and $600 million of the total Tengiz purchase price, but that only $350 million had actually reached the Kazakh treasury. Kazhegeldin said that he did not know what happened to the remaining Mobil bank transfers. But, he said, "I know the money never came in." Similarly, in July, 1997, the Financial Times described unnamed Kazakhstan govt officials as saying that "it has proved impossible to pinpoint" the final destination of five hundred million dollars of Mobil's Tengiz payment. The money, which amounted to three per cent of Kazakhstan's gross domestic product, "did not make it into the Kazakh budget," the newspaper reported.

III   The swap
According to Farhat Tabbah's complaint, plaint, it was Friedhelm Eronat who first spoke to him about a swap of oil between Kazakhstan and Iran. on February 12, 1996. Eronat's pitch was provocative. Eronat assured him. Tab-bah said, that he and Giffen had "great influence with ministers in the govt of the State of Kazakhstan." A ten-year, multibillion-dollar oil swap involving Kazakhstan. Iran and Mobil were on the table. According to Tabbah, Eronat claimed that Bryan Williams had designated him to represent Mobil) in the negotiations. Tabbah was an obvious choice as a middleman. He and Eronat had known each other for a tong time and shared office space. Tabai, a naturalized British subject who was born fifty years ago into a prominent family in Jordan, operates several trading companies from offices in Amman and in London's Mayfair district. In the past decade, he has worked for himself or as an agent in Africa, the Middle East, and Russia for firms such as Siemens and Babcock Intl.
He also has extensive business ties to Iran and Iraq. His friends include two former high-level American intelligence officials, who describe him as a reliable businessman. His enemies include the men he named in connection with the Iranian oil swap, who describe him as an angry, bitter man, a liar, and a thief, driven by a personal vendetta. Kazakhstan's desire to swap oil with Iran was widely known in the oil industry. Kazakhstan's only ports are on the Caspian Sea, which has no route by water to the ocean, whereas Iran can ship oil south through the Persian Gulf and on to the Indian Ocean. In May, 1995, however, the Clinton Administration had issued an executive order strengthening the sanctions against Iran. Under the executive order, American companies were prohibited from trading with Iran, which included any involvement in a swap. without a license from the Treasury Department.

Kazakhstan had had on-and-off swap talks with Iran, but they intensified after Mobil bought into T.C.O., the Tengiz consortium. In the documents and contracts that passed between the two countries in the next months. Mobil was not named as a party. Instead, Munay-Impex, a state-owned Kazakh oil company, agreed to the swap with the National Iranian Oil Company, or NIOC. Oil from Tengiz would be sent by rail to the Kazakh port of Aktau, on the Caspian Sea. It would then be blended with oil from Buzachi. a field that was owned solely by the Kazakh govt, and transported by tanker to the northern Iranian town of Neka. to be refined and delivered to Tehran for use there. In return for the Kazakh oil, crude oil of an equivalent value from Iranian fields close by the Persian Gulf, more than four hundred miles south, would be picked up by a shipper, designated by Kazakhstan, for profitable resale on the world market. None of the oil in the Kazakhstan-Iran swap would directly belong to Mobil, but U.S. sanctions law barred Americans from facilitating such a deal, even if they didn't own the oil.
Tabbah claims that Eronat wanted him to be one of the facilitators. He was to arrange the first stage of the shipping to Neka and an Iranian visa for Eronat. and was to introduce him to the right people in Iran. Tabbah says Eronat told him that he would be paid a fee or commission on each barrel of swapped oil; the exact terms were to be agreed upon later. According to Tabbah's affidavit. Eronat assured Tabbah and two colleagues that Fulton Intl Limited, the trading company Tabbah was associated with, would receive a letter of appointment from Mobil signed by Bryan Williams. A copy of a fax on letterhead from Mobil's headquarters, dated 2.26.96, 2 weeks after Tabbah says he met with Eronat, and signed by Williams, was obtained independently for this account. In it, Williams sets out "my Company's wish to engage the services of Fulton Intl Ltd. to supply consultancy and operations support in connection with activities that are to be specified." The request was conditional. Williams added, on the involvement of a certain Fulton aide with experience in the former Soviet Union "to undertake the work we intend to pass to you." In Tabbah's view. Mobil] was in. (Williams denies that this letter had anything to do with the swap.

Tabbah's most important contact in Tehran was Kambiz Salehi, an Iranian businessman who, as a teen-ager, had participated in the 1979 uprising against the Shah. Under the Khomeini govt, Salehi had worked for the Ministry of Oil and then set up a successful engineering business in Tehran. In a lengthy affidavit prepared in support of Tabbah's claim, Salehi wrote. "As I had been a revolutionary since age ten. the govt and its advisers saw me as part of themselves, and I am trusted by them." In early 1996, Salehi said, Tabbah came to see him about the swap. Although Tabbah was a family friend, Salehi expected to profit from the deal. "I expressly discussed about what would be in it for me," he wrote. He says he arranged a visa for Eronat and then met him at the Tehran airport on February 26, 1996 (the same day that Willimas sent his fax engaging Fulton Intl's services). A delegation of officials from the Kazakh Ministry of Oil, headed by Nurlan Balgymbayev. Had arrived as well, for a meeting with their Iranian counterparts.
In his affidavit, Salehi says he went directly to Hashemi Rafsanjani, the President of Iran, to insure that API, an Italian shipping company with ties to Mobil, was nominated to be the over-alt operator for the swaps. Biagio Cinelli, the managing director of API, had worked with Eronat and Williams before, and had done business for Mobil in Africa and Europe since the 1980s. In May, 1996, Salehi wrote, he accompanied Eronat and Cinelli to their first negotiating session with Dr. Ghanimi Fard, the director of intl affairs at NIOC, at the company offices in Tehran. According to Salehi, "Eronat: was representing himself as Mobil's representative, and every half hour or so Eronat would report back to Bryan Williams, of Mobil, and would also on occasion telephone James Giffen, of Mercator."

Ghanimi Fard, interviewed by telephone at the NIOC offices in London, confirmed that an American had attended the meeting with Cinelli, but was unable to recall his name. Ghanimi Fard did remember that the American "was introduced to me as being from Mobil" and had given him a business card with Mobil's name on it. "Once in the first meeting, they were telling us that Mobil was not in because of the sanctions, and it'd be better to do it through API; API was there to solve the problem." Cinelli, asked about the meeting, said that he made many trips to Tehran. Asked if he knew Eronat, he responded, testily. "Why should I say yes or no?"
Salehi wrote that when he asked Eronat for a written commitment from Mobil on how much he would be paid. Eronat told him, "Mobil cannot give it because of sanctions and so forth, but I can give it. I am 'Mr. Mobil.'" Mobil denies that Eronat was the company's agent in the swap, as does Williams. "We never admitted to any dealings with Tabbah in the swap," a company employee told me. "We have deals with Eronat s companies, and if he wants to do a swap that's his business." However, the in-house investigation found evidence that Eronat's business was also Mobil's business, especially at critical points in the swap talks. When Eronat was meeting with the Iranians. Williams asked a subordinate at Mobil headquarters, in Virginia, to fax a chemical analysis of the Tengiz crude to Eronat's room at the Esteghlal Grand Hotel, in Tehran. Williams also acknowledged to the investigators that he had twice offered comments on an early draft of the Iran-Kazakhstan swap contract. He had done so not because Mobil had any financial interest in the swap, he explained, but simply because of his "friendship and business relationship" with Eronat.

While Eronat was allegedly communicating with Williams, Giffen coordinated other aspects of the negotiations on behalf of the Kazakh leadership, receiving updates by fax and telecom on pricing and other issues as the negotiations proceeded. Giffen brought something else to the swap talks: bonhomie. He was famous for providing the best Scotch and the most exotic party gifts to the Kazakh leaders. One consultant who was hired by Giffen during Nazarbayev's 1998 Presidential reelection campaign told me that Giffen spent hundreds of thousands of dollars on gifts. Salehi says he got a firsthand glimpse of the largesse. He wrote that while he and Giffen were waiting for a flight to Almaty Giffen showed him "a watch which he said was a Patek Philippe costing thirty-five thousand dollars which he was taking to Minister Balgymbayev as a present." (Giffen denies the story.) Giffen was also vain. "He bragged about his suits from London, bragged about his shoes from one particular shoemaker, bragged about his suite at the Dorchester," the consultant said. "He bragged about how he could force anyone to do anything. That's why he's in all this trouble now. "Giffen also bragged about his authority inside Kazakhstan, the consultant added, but he always referred to Nazarbayev as "the boss." (The consultant was interviewed at length by the F.B.I, this spring.)

By the spring of 1996, word of the pending swap deal was circulating in Washington, and Clinton Administration officials began to get edgy. One govt official recalled that Sheila Heslin, a National Security Council aide who dealt with Caspian energy issues, summoned Mobil executives, including Bryan Williams, to a meeting to ask them about any plans they might have to swap oil with Iran, and to remind them of the U.S. sanctions. "The Mobil people didn't react at all," the official told me. "They kept asking. 'What do you know? What do you know?'" Later, James Giffen, who was on a routine visit to Washington on behalf of the Kazakh govt, was told by Heslin that the Nazarbayev govt would face huge political problems with Congress and the Administration if it did a swap with Iran. Giffen quickly emphasized that it was Mobil, and not just Kazakhstan. setting up the swap. When he was reminded that Mobil could not legally participate, he tried to reassure her, according to the official, that Mobil was "smart. They'll do it through a European trader." (Giffen denies making the statements.)
Soon afterward, Heslin called in Mobil executives for a second meeting. This time, she told them she had "information from a pretty good source" about the planned oil swap and its potential illegality. (When I asked Heslin to comment, she said that keeping American businessmen "up to date on U.S.policy, including the meetings with Giffen and Mobil. was a normal and routine part of my job.") Mobil was put on notice. Ann Pickard, a Mobil executive in London who attended the second meeting, later told Mobil s lawyers that she felt "blindsided" by Heslin's warning. The notes of a subsequent interview show that Pickard returned to London with instructions to "investigate" Heslin's warning. She learned, according to the notes, that Bryan Williams had set up an introduction between API, the Italian shipper, and the Kazakhs, and had done so because the Kazakh leaders "were worried that Iranians would take advantage of them" in the swap negotiation. Pickard told the investigators that the Kazakhs had "asked Mobil for help."

IV   Recriminations
In May, 1996,President Nazarbayev, accompanied by his oil minister. Balgymbayev, flew to Tehran for a meeting with President Rafsanjani. and they signed protocols on transit fees. The swap deal was done, with only the technical details to be ironed out. The swap contract was summarized in a two-page memorandum prepared in December of 1996 by Peter Felter, a London lawyer who represented the Italian shipper API, the Kazakh govt, and Eronat himself during the negotiations. (He still represents Eronat.) API would be given title to the Iranian crude at Kharg Island, in the Persian Gulf, and then would arrange the sale of the oil on the world market. The oil from Tengiz, Felter's memorandum stated, would represent "the Kazakh govt's share in TCO"- that is, the proceeds would be paid to Kazakhstan.There was no provision in Felter's memorandum for any funds to be paid to Mobil and Chevron, the other partners in T.C.O.
Even so, the pending swap put both Mobil and Chevron in a delicate position in terms of American sanctions law, and Chevron took steps to insulate itself from any allegations of illegal trading. Edward Chow, who was then manager of intl affairs m Chevron's Washington office, decided to visit the N.S.C. to inform officials there of the proposed swap. "I was concerned about being involved," Chow says. "The swap was against the law. and I wanted to make sure that Chevron's hands were clean."Chow, accompanied by a company lawyer, also visited the Treasury Department, and formally advised officials there that Chevron, despite its stake in T.C.O., had nothing to do with facilitating the swap.

Salehi's and Tabbah's accounts differ on the details of the proposed swap commissions, but both men became convinced that everyone but them stood to make a great deal of money. They focus on what they describe as a double cross by their American and Kazakh partners. "I couldn't believe the greed of these guys." Salehi wrote. In midsummer, Tabbah said, they were informed by Eronat that their commission would be fifteen cents a barrel each. Two months later, Tabbah said, the commission was reduced to ten cents a barrel and, subsequently, to ten cents. As they saw it, their big deal was evaporating, nickel by nickel. Salehi was enraged. According to his court statement, at a heated meeting with Giffen and Eronat he called Eronat "a fucking liar." In Salehi's words, Eronat said that "he wanted to get out of this shitty deal," stating. "I am an American. I cannot do this." Eronat was afraid, Salehi wrote, that the United States would put the Kazakhstan-Iran swap contract "under a microscope."
'"The first and only swap between Kazakhstan and Iran took place in early 1997. It was reported in the trade press. But there was no mention of the rote. if any, of Mobil or of any other American player. There was again an angry confrontation over commissions, after which Tabbah told an associate that Eronat had called him "a fucking Arab." (Eronat denies using this language.) According to Tabbah, this, from an old friend, was the final blow. More than a year before the swap talks began, Tabbah and Eronat had begun sharing space in the Mayfair office suite, and they stored their files in a common area. Tabbah had access to reams of documents, faxes, and draft contracts received and sent by Eronat. Now he photocopied hundreds of pages from Eronat's files,documenting Eronat's many years of association with Giffen and Williams. Eronat recently asserted, through his lawyer, that, his house had been burglarized twice at about this time, and that some of the stolen items had shown up among Tabbah's court papers. (No charges were filed, and Tabbah denies Eronats accusations.)

No more oil was swapped between Kazakhstan & Iran. Most published accounts attributed this breakdown to the difficulties posed by sulfur compounds in the blend of Tengiz & Buzachi oil, which made it difficult for the Iranians to refine. Another factor, according to Tabbah, was Kambiz Salehi. who took his complaints about not being paid to the top of the Iranian govt. "Kambiz didn't get his money, and went to the Iranians and screwed the deal." Tabbah told me. Eronat was also incensed. Tabbah, who had stolen his files, was now threatening to use those papers to force Eronat and Mobil to pay him. "I went to them for a settlement." Tabbah told me. "They said it was blackmail." Tabbah eventually met with Bryan Williams,who,Tabbah says,offered to pay all his expenses plus three or four million dollars. Tabbah then insisted on more than ten times as much: forty-one million dollars, the amount he claimed he would have earned on commissions had all the swaps taken place. (This was also the precise amount that Giffen's company had been paid in the Tengiz deal.)
Bryan Williams's lawyer, David Schertler, said. in a letter to The New York, that although Mobil never had a business arrangement with Tabbah, Williams had acted as an intermediary and attempted to resolve the dispute: "Mr. Tabbah said he had nothing against Mr. Williams or Mobil but that he wanted to ruin Mr. Eronat because of a personal insult. . . . During the next several hours, Mr. Tabbah made many highly emotional outbursts against Mr. Eronat." But any talk of three million dollars, Schertler wrote, came from the overwrought Tabbah: "Mr. Williams told Mr. Tabbah that neither he nor Mobil would ever pay Tabbah a cent but that he would relay his settlement demand to Mr. Eronat." On July 29th, Tabbah telephoned Williams from Washington and told him that he was meeting with his lawyer, and had decided to sue everyone: Mobil, Giffen, Eronat, and the Kazakhs.

A meeting was scheduled at Tabbah's lawyer's office. Eronat was accompanied by two lawyers from Akin, Gump, Strauss,Hauer & Feld. who represented both him and Giffen. (Williams. who was invited to come. had declined. saying that the papers, and the swap. had nothing to do with him.) Many of the documents were placed on a table for Eronat and his lawyers to examine. Eronat became visibly agitated when he found a document that purported to list detail bank accounts belonging to nu companies in Switzerland. Liechtenstein, New York. Scotland, and Spain He and his lawyers then reviewed t papers in private. After they left, a secretary took count and determined that the list of bank accounts was mining. A call was made to Akin, Gump. Within a few hours, the document was returned. On being asked to comment for this article, Eronat said through a lawyer that he had "merely recovered his own document that had been stolen from him."
Tabbah's threat failed: his former associates denied that he was owed anything, and they certainly had no intention of paying the full commission for a ten-year swap that had been aborted. (One Akin, Gump attorney said, "The documents made no sense," and did not no their face provide evidence of wrongdoing.) Tabbah says that his Washington lawyer advised him not to file a civil suit in the United States, because his grievance-breach of an oral) contract to pay commissions-originated in an alleged swap agreement that apparently would have violated federal sanctions law. "He told me that you can't sue a thief for the money he stole," Tabbah recalled. "He said I had to report everything to the U.S. govt. He advised me to go to the Justice Department." After some hesitation, Tabbah said, he arranged to meet with two special agents of the U.S. Customs Service. "I gave them copies of everything." he told me.

By midsummer of 1997, Mobil headquarters was on full alert. There was anxiety among some executives about being closely allied with Giffen and Eronat. Notes from the Mobil investigation also express concern about putting too many documents in the hands of such "dubious individuals and their lawyers," adding that their "disclosure would serve only to expose Mobil's inner workings and high-level judgments to avowed enemies, suspect characters and the press." On September 19,1997, in London, Tabbah sued Eronat, Williams, Giffen, their companies, and the Kazakh oil minister. Balgymbayev. Mobil moved to protect its documents from public view. In May of 1998.Mobil s lawyer in London, Ian Taylor, informed the court that "many of the documents were written by Mobil employees and sent to Mobil employees or are internal Mobil documents." and should be considered confidential.
The court agreed, and ruled that Tabbah had no right to disclose the contents of Eronat's documents to any third parties. Giffen and Eronat filed counterclaims, through their companies, as did Mobil, denying Tabbah's allegations. Over the next two years, alt the parties agreed to settle the suit, without any admission of liability, thus avoiding a trial. The counterclaims also dropped away, but Tabbah was still the big loser: he was compelled to pay Eronat and the others more than five hundred thousand dollars in court costs, in part because, by attempting to tell the swap story with his initial, lengthy filings in open court, he had violated British court procedure. Tabbah also agreed to turn over to Eronat all the documents in his possession, and never to disclose the confidential information they contained.
At one point during this period, Mobil's top management decided to formally seek a license from the Treasury Department to swap oil with Iran. The company withdrew its application after being unofficially advised, company executives said, that the license would be denied because the Administration's priority was to keep Iran economically isolated. Mobil also could not get a license to swap a small amount of oil between Turkmenistan and Iran.

V   Mobil & the mob
On 5.5.97 Mobil's Global Security office was ordered to help Samuel H. Gillespie III, the company's genera! counsel, review alt business dealings in the former Soviet Union "with respect to compliance with applicable law." The company's lawyers specifically wanted to learn more about the swap and about Bryan Williams's dealings with Eronat and Giffen. By the fall, with Tabbah's affidavit and some of his documents in hand, they had expanded the investigation. Over the next several months, Mobil's team of lawyers and investigators, buttressed by the attorneys from Patten Boggs, conducted more than forty interviews with employees in various parts of the world and reviewed thousands of contracts, telexes, and E-mails. The investigation encountered unexpected difficulties; in some cases in which Williams appeared to have committed Mobil resources to deals with Eronat, a person close to the investigation says. "we couldn't even locate contracts inside Mobil."
The inquiry led the investigators deep into the corrupt business world of post-Communist Russia. Under the terms of Boris Yeltsin's privatization programs, huge profits could be made from Russia's vast oil reserves, which were controlled mainly by a new class of oligarchs.Most of these oligarchs amassed fortunes by exploiting their political connections in the Kremlin or the provinces to buy up state assets for comically tow prices. In theory, hundreds of millions of barrels of oil were to be sold domestically at govt-controlled prices, to help ordinary citizens get through the Russian winter, a barrel might be sold for the same price as a few packs of cigarettes. In practice, brokers could buy the price-capped oil using rubles, the exchange rate in 1995 was roughly five thousand rubles to a dollar, and then make the payoffs necessary to get export licenses. They would sell the oil to foreign firms for dollars or Deutsche marks, and all involved, the brokers, the bureaucrats, the buyers, and the oligarchs, got rich.

To buy oil for Mobil, Bryan Williams turned to an aggressive broker named Peter Yantchev'sYantchev's company. Balkar Trading, was initially an automobile importer and used-car dealer, but his employees soon began swapping cars for crude oil and selling gasoline from tanker trucks on the streets of Moscow. Even as Yantchev built Balkar into one of Russia's most successful oil-trading companies, the Balkar headquarters retained the appearance of a glorified chop shop. Tom Hoist, who had been an area manager for Mobil, described to Mobil investigators a visit to the company. "I was asked to visit the vice-director of Balkar," Hoist recalled. "I was expecting to find an office. Instead I found an auto assembly plant which was surrounded on the outside by people selling car parts. I thought to myself that this was a perfect cover for money laundering." Hoist told the investigators that he had reported his concerns in writing to company superiors but "never heard anything from them about it." Aziz Jhaveri, a chemical engineer from India who joined Mobil] in 1968, told an investigator that he thought Balkar was "not the kind of company Mobil would do business with." According to the Moscow press. Balkar was a corrupt enterprise, and Yantchev was able to buy oil at bargain rates because of his good relationship with Prime Minister Chernomyrdin.

None of this stopped Williams.Between August of 1994 and June of 1996, Mobil signed contracts worth more than a billion dollars with Balkar Trading. It then disbursed more than six hundred million dollars to the Swiss bank account of a second entity, Balkar Intl. When the Mobil investigators looked into these transfers, they learned that Balkar Intl appeared to be controlled by Fhiedhelm Eronat. (Eronat signed the company's invoices, and, according to a Mobil memorandum, it appeared that he and his lawyer, Peter Felter, had "complete access to Balkar's books & records.') In January of 1995,according to a report printed later that month in Nefte Compasan energy- business newsletter, Yantchev accompanied Williams and Mobil s C.E.O., Noto, to a meeting with Chernomyrdin. Russia was then in the midst of a currency crisis and the war in Chechnya, and Noto offered to help by tending the govt a billion dollars. In return, he asked for a five-year supply of crude oil on preferential terms. (The proposal fell through.)
Several months later, Russian federal authorities for allegedly paying bribes and for tax evasion arrested Yantchev. One of his deputies was also jailed. Nevertheless, a summary by the Mobil investigators noted. Bryan Williams "continued the relationship with Balkar for approximately one year after Mr. Yantchev's arrest." The govt never brought Yantchev's case to trial. and he was released after two years in jail. In 1997, a Mobil senior vice-president in London was chastised by V. P Kolbayev, a Russian Central Bank official, for the company's delay in providing records that the bank had requested for an inquiry into Balkar Trading. "As you have not sent the required document to the Bank of Russia," Kolbayev wrote. "we regret to admit that Mobil Sales and Supply Corporation does not seem to be interested in rendering assistance to the currency-control authorities of the Russian Federation. The above fact may testify to your company's participation in illegal operations, which might undermine Mobil s high reputation."

Williams had also insisted, over the objection of Mobil treasurers and in violation of company rules, on setting up a special bank account for the Balkar transactions at the Banque Indosuez, in Geneva-the bank that Eronat was using for Balkar Intl. Williams explained to company offcials, according to an investigative summary, that the new account had been opened to receive payments from Kazakhstan. However, the summary noted, it was "not used for that purpose until twelve months later."Meanwhile, in the fall of 1995 at least twenty-three million dollars was transferred in the course of four days from the new Mobil account to Balkar's account. "These payments,"the summary noted, were "outside normal payables procedures." In a section on Balkar marked "final comments," a Fatten Boggs memorandum described how. in an interview with investigators. Attila Kovacs, a Hungarian who worked for Williams in Mobil's Moscow office, "got a bit defensive and stated that the objective in the F.S.U.", the former Soviet Union, "was not to make a profit, but to get into the F.S.U. and make contacts."
Williams, & Mobil, had also agreed to a series of contracts in the mid-nineties with Atlas Trading, a notorious oil-dealing firm controlled by Yosif Kobzon. a popular singer who was often referred to as the Russian Frank Sinatra. Kobzon was a former member of parliament who had been denied a United States visa after being cited in American intelligence reports as a leader of the Russian mafia. Attila Kovacs acknowledged to investigators that Atlas was known as a "strong company", one with which "most Russians would not like to deal." Another Mobil emptoyee described a meeting at which one of Mobil's bankers stated that he would not touch Atlas "with a barge pole."

Williams authorized Mobil to advance an estimated fbrty-five million dollars to Atlas to enable it to buy Russian crude oil, which it would then trade elsewhere, at a high profit. Atlas was to pay off the advance in monthly installments of five million dollars, but after a few months it simply stopped paying, blaming the chronic Russian monetary crisis. Atlas had essentially stiffed Mobil and dared it to come after its money. Florence Fee, a Russian- speaking oil manager, was hired by Mobil in 1997 and assigned to the Moscow office. She sent an E-mail on June 1,1998, to a dozen Mobil executives warning the company to be careful in pursuing the money. "When you are talking about attaching the assets of Atlas," she wrote, "you are basically talking about crossing the mafia. The mafia do not play by the same rules as Western business or legal circles, and have no regard whatsoever for the law.. .. There have (so far) been few attacks on foreigners in this country, but those there have been have always been linked to attempts to cross the mafia."
Mobil now found itself in a Russian version of Dodge City. Would it really be dangerous to attempt to recover the Adas money, as Fee said? Mobil's Global Security office looked into crime statistics in post-Communist Russia and noted that at least five American businessmen had been "killed due to disputes (presumably)." Bryan Williams, meanwhile, had made extraordinary efforts to minimize the extent of Mobil's losses to Atlas.He arranged on paper for the sale of Mobil products to a company that, in turn, sold them to an Atlas subsidiary. Mobil then repurchased the Mobil products- again, on paper-from the Atlas subsidiary. at a higher price. The "profit" Atlas made was supposed to be credited against its debt to Mobil. The deal went forward, Fatten Boggs noted in a report, "although it did not have any apparent valid business purpose."

One insider said of the Atlas deal, "If the shareholders ever look at it. they'll ask about due diligence." An attempt had to be made to force Atlas to return the money, but it had to be done in a way that did not endanger anyone. Mobil's solution was simple. It initiated arbitration proceedings with Atlas in Stockholm, and won a judgment-and then it did nothing. A Mobil official told me. "We got a default judgment and wrote it off, but it looked tike we tried to recover the money." Mobil made little effort to find Atlas's assets outside Russia or, as some still urged, to compel repayment of the money, because, an insider said, the tough guys running Atlas "wouldn't like it." In a letter to The New York, Williams's lawyer stated that Williams "is unaware of any connection between Atlas Trading and organized crime."

VII   Betting the company
Mobil investigators interviewed Bryan Williams in February, 1998. He denied or offered an alternative explanation for every major point raised in Tabbah's affidavit and his documents. He had no authority to negotiate a swap deal on behalf of Mobil, he said, and had not done so. He had never met Kambiz Salehi. and had discussed the swap with Balgymbayev only to tell him that Mobil could not be invotved. His business dealings with Vaeko, he said. according to a Patton Boggs summary of the interview, were always "at arm's length." He had "no idea" what involvement Eronat might have had with the swap. The fax engaging Fulton Intl for services "to be specified" was sent, Williams explained, not to secure Tabbah's services in the oil swap but to get an employee's help in recovering Mobil's money in the Orenburg deal.
Williams did acknowledge that he had commented on the early draft of the swap agreement that had been sent to him by Eronat. The Patton Boggs lawyers then showed him a fax from James Ciffen. dated September 26,1996, and addressed to him and Eronat at Mobil. In it, Giffen reported "on the status of Karachaganak and the swap transactions." The Patton Boggs summary noted, "Williams had never seen this." Williams, while maintaining that he had done nothing wrong, told the Mobil lawyers that he was 'Just a laborer in the vineyard." He would not go into details. "He gave us the kiss-off/'some-one close to the Mobil investigation said. The Mobil lawyers also tried to determine whether Williams had any hidden assets. None were found. The investigation did team that Williams, white working full time as a Mobil executive, had been one of the directors of a highly successful solid-waste- management company. United Waste Systems, that had offices in Greenwich, Connecticut. He held more than a million dollars in stock in the company. Two months after his meeting with Mobil's lawyers, Williams took early retirement.

Some at Mobil found it difficult to believe that Williams's investment decisions in Russia could have been made without higher authority. It could not be learned whether the full extent of the investigative findings in Russia was conveyed to Mobil's top leadership. (Lucio Noto, who after the merger became vice-chairman and senior deputy to ExxonMobil's C.E.O.. Lee Raymond, announced his retirement in January.) The company's official position was- and continues to be-that there is no evidence that any of Williams's putative actions were sanctioned by his superiors. One former Mobil vice-president recalled that "Williams was a loner"-a "crude-oil boy" who did not report to management through the normal corporate hierarchy. Another former Mobil executive, Don Voelte, told me that if there was any serious contemplation of an oil swap with Iran the number of corporate executives who knew of it "had to be very small-one or two persons-because we were terrified of anything like that."
By early 1999, with Bryan Williams gone and Tabbah's lawsuit still unsettled, Mobil had cut its business ties to Eronat and his various trading companies.Eronat, through his London lawyer. Peter Fetter accused the company of unfairly freezing him out because of the Tabbah allegations-claiming, as a Mobil document put it, that lie had become an "institutional pariah" inside the company. Although Mobil remained confident of its ability to show that it had not authorized any involvement in the swap, some in the company were concerned about balancing the desire to end the relationship with Eronat against the need to insure that he would be a friendly witness in the Tabbah case if it did go to trial.They worried that Eronat would testify that he had been Mobil's agent in the swap and other dealings. Mobil repeatedly told Eronat that Williams's retirement and the company's decision to stop working with Eronat had nothing to do with Tabbah. Internally, however, as one March, 1999,memorandum stated, "it cannot be said that Tabbah's agency-related allegations and the concerns they raised were of zero significance in the circumstances leading to Williams's departure."

There were complications with Williams, too. He was being difficult about his pending testimony in the Tabbah case, testimony in which he was supposed to reaffirm emphatically that Eronat was not an agent for Mobil. Williams was now insisting on being paid for his testimony, and also on being provided with a full release from Mobil for any adverse consequences. On 2.24.99, Ian Taylor, Mobil's London lawyer, told Williams in a letter what he. as a former practicing lawyer, surety knew, that "the grant of a release as a precondition to any testimony would significantly undermine the weight of that testimony." A few months later, Mobil went to federal court in northern Virginia to compel Williams's testimony. The internal documents reflected the growing anxiety at headquarters about just what Williams, identified in the papers as "JBW", would say. The fear was that he would try to help Eronat get compensation for his lost business. Williams "can't help Eronat win it while at the same time screwing Mobil," a memorandum noted. "He can't say 'my buddy wasn't involved at all' ", in the swap "because his buddy has already admitted involvement. If Williams tries to sneak in that Mobil was involved, he contradicts himself because he's already sworn that Mobil wasn't. In so contradicting himself, he destroys his credibility.
" A May memorandum noted. "We all seem to agree that Eronat (with JBW perhaps in tow) wants money when al! this litigation is said and done. and is wilting to go to great lengths to get it." By early summer, the documents show, a solution had been proposed; Mobil would offer Eronat $2.4 million. Eronat would not pursue his complaints against Mobil and would support the settlement with Tabbah. If the company decided to act on the proposal to pay Eronat something, a Mobil document reasoned, that payment should be delayed, so that there could be no suggestion that it was being made "to avoid troubling testimony" It is unclear whether Mobil actually paid Eronat any money.

There was one Further step. A few months before the merger, Mobil notified Fatten Boggs,which had been involved in at least two other sensitive inquiries for the company in the late nineteen-nineties, that its work on the matter was done. A senior Fatten Boggs lawyer later complained to a colleague in Washington that Mobil's top management had "deep-sixed" the investigation into its dealings in Kazakhstan. Williams's view today of his former employer is not known. He and Mobil agreed, in negotiations over his retirement, that neither would publicly disparage the other. In 1999, Swiss banking officials discovered that about eighty-five million dollars that was destined for a Kazakhstan govt account had been shifted to what seemed to be a personal account belonging to President Nazarbayev. Some of the money had been transferred there through accounts linked to James Giffen. The evidence was passed on to the Department of Justice-Giffen was. after all, an American citizen-and the U.S. investigation got under way.
There were published reports last summer that payments of more than sixty million dollars from three American oil companies, Mobil, Amoco, and Phillips, operating directly or through foreign subsidiaries, had allegedly been made to Swiss bank accounts linked to Giffen. Some thirty million dollars of that money, Swiss officials say, was subsequently shifted by Giffen into accounts controlled by Nazarbayev, his oil minister, Balgymbayev, and the opposition leader, Kazhegeldin. Kazhegeldin publicly admitted that he had received six million dollars via the bank transfers, but insisted through his attorney that he had returned the money. Later, it became known that a second federal investigation, focussing on the swap, had begun in Washington.

Giffen's attorney told the Wall Street Journal last year that his client "has served as an official of the Republic of Kazakhstan since 1992 and has always acted lawfully and at the direction of that nation's leadership." Any funds that Chiffon disbursed, he added, were used in developing Kazakh natural resources, promoting democracy, and building public works. Giffen and Eronat,through a lawyer. Thomas Yannucci, refused to be interviewed for this article. In statements relayed by Yannucci, both men were evasive. Documents made available for this article demonstrate that Giffen and Eronat were intimately involved in the proposed oil swap between Iran and Kazakhstan. Giffen's statement to The New York said that, as "Counselor to the President of Kazakhstan," he "obviously was aware that the swap transaction was under negotiation." Nevertheless, he said, at no time did he or any of the companies with which he was associated "violate any law of the United States, including the sanctions regulations." Eronat answered a list of specific questions about his role with a general assault on Tabbah's credibility. This response was accompanied by a three-page letter from Peter Felter, the London lawyer who was the attorney for several of the parties in the Iran-Kazakhstan swap talks, including APL Felter, too, denounced Tabbah as a fraud and a thief, and "an unreliable and discredited witness," and added, "As far as we are concerned, there is no comparison between the credibility, standing and veracity of Mr. Tabbah as compared with Mobil." Williams's responses to questions from The New York, as conveyed by his attorney, David Schertler, denigrate Tabbah as well.

Richard Lilley, Tabbah's solicitor, responded to the attacks on his client by describing him as "keen to cooperate with the U.S. Govt, not out of vengeance but because he wants the matter to be investigated so that the truth about this extraordinary matter can be told."LilIey has been retained by the Justice Department in a continuing effort to persuade the British court to permit Tabbah to testify before an American grand jury. The govt's sanctions case may yet hinge on his testimony. Today, President Nazarbayev is said by State Department oficials to be anxious about the inquiries, which he views as politically motivated. "He brings up the investigation with everybody," a former American Ambassador to Kazakhstan said. Last summer. the Kazakh parliament passed a law granting Nazarbayev lifetime immunity from any legal liability stemming from his actions in office, with the exception of high treason.More recently, the President angered his critics by pushing through passage of a bill that gave all Kazakh citizens the right to bring money into the country with no questions asked-and no tax assessed. Opposition leaders, declaring that the legislation amounted to little more than the legalization of money laundering, suggested that the biggest benefactors would be Nazarbayev and his intimates.

Nazarbayev has been cracking down on the press and on opposition political parties. During a visit to Almaty last winter, t met with dissident editors, who told of newspapers and radio stations being closed. One prominent journalist was convicted of insulting the President in print. An American lawyer who has practiced in the booming oil economy of Kazakhstan for the past five years explained that corruption had spread throughout the society: "Every act is something you have to pay for, and every job is bought and sold." He provided some going prices-three thousand dollars to become a policeman and the same amount to join the state customs service. It would cost hundreds of thousands, he added, to become a supreme-court justice.
In a speech in The Hague at the end of May, John Ashcroft, the U.S. Attorney General, said. "We must come to a recognition. Personally and culturally, that corruption is not just a violation of the taw. not just an economic disadvantage,and not merely a political problem,but that it is morally wrong." It should be "no longer seen as an accepted cost of doing business," he went on. "It is now widely recognized that the consequences of corruption can be devastating:devastating to economies, devastating to the poor. devastating to the legitimacy and stability of govt and devastating to the moral fabric of society." Ashcroft's concerns apparently are not shared by alt in the intl oil community. It may never be known why Mobil's leadership exercised so little oversight on the executives who dealt with Russia and Kazakhstan, and whose activities posed such enormous legal and financial risks. Indeed, the actions alleged in connection with the Tabbah case "bet the company," in the words of one person close to the Mobil investigation, "with maximum criminal and civil exposure." This person has concluded that people in the industry believed that the importance of oil in the national and world economy would insulate them from any complaints of wrongdoing. He summed up the oilmen's attitude this way: "What's man afraid of? The cold and the dark. We make it warm. and we make it light."

Kazakh police charge former premier Kazhegeldin Opposition says the move is politically motivated 7.12.01   Agence France-Presse ¹ ALMATY   Kazakh police said Thursday they have collected enough evidence to charge the country's former prime minister with taking bribes and abusing his authority. … Chief Kazakh taxman to use tax-dodgers' amnesty Evaded taxes himself before taking office 7.6.01   Reuters ASTANA   Kazakhstan's chief taxman said on Friday he had evaded taxes himself before taking office and planned to take advantage of a tax dodgers' amnesty to legalise funds he had squirreled away. "I will take advantage of this scheme," State Revenues Minister Zeinulla Kakimzhanov told a news conference in Astana, the country's new capital. "I used to earn decent money (as a businessman), but not everything was registered under my name." Kazakhstan has offered the amnesty, a pet idea of President Nursultan Nazarbayev, in a bid to do away once and for all with a "shadow economy" dodging tax collectors. Businessmen were given a month from June 14 to deposit money in banks, no questions asked. But for the exercise to be a success, officials have had to convince businessmen that they are serious - that those who come forward won't be punished, while those who continue to hide their funds from the taxman will get caught. Kakimzhanov, the first senior official in Kazakhstan to admit possession of "grey capital", said he had earned his funds "by generating multiple schemes to minimise tax payments" when a businessmen, before joining the govt. He did not say how much money he would legalise, or just how he had earned it. "It would be silly not to take advantage (of the amnesty). This action is serious and guaranteed from any kind of negative consequences (for businessmen). There won't be another such opportunity," he said. "Those hoping tax freeloading will continue unabated are wrong, and we will take most serious measures," he warned. Official data show that local banks have received a total of $147 million since the start of the amnesty. The central bank said earlier this week that former "grey" money deposits might exceed $250 million by July 14. But amid official optimism, domestic critics say the amnesty may allow corrupt bureaucrats to legalise bribes and kickbacks. Dining with dictators; White House fetes Kazakh president Nursultan Nazarbayev is 8th richest man in the world 12.20.99   Wash.Times

Belgian judge charges trio from Kazakstan Businessmen are accused of money laundering 7.6.01   Steve Levine & D.Bilefsky WSJ ALMATY, Kazakstan   A Belgian judge has charged three prominent Kazakstan businessmen with money laundering involving the purchase of a villa near Brussels, according to the Brussels city prosecutor's office. The men, Alexander Mashkevich, Patokh Shodiyev and Alidjan Ibragimov -- are Kazakstan's leading industrialists, heading an empire that includes metals, coal and banking, and in the past have been close to President Nursultan Nazarbayev. The complex case appears to be linked with a Kazak political feud that has triggered money- laundering investigations in the U.S., Belgium and Switzerland involving senior current and former Kazak political figures. Jos Colpen, a spokesman for the Brussels prosecutor's office, said in a telephone interview that the three men had bought "a big villa in the region of Brussels with money of criminal origin, we think." The villa is in the Waterloo region, he said. The men were charged last month, Mr. Colpen said. He said he didn't know how much money the men are accused of laundering, and couldn't release further details. In a written statement, Mr. Ibragimov said he and the two others "categorically deny and refute the accusation of money laundering and all other possible accusations related to our activities. All of our income is legitimate and transparent." The men's legal problems appear to be linked with Mr.Nazarbayev's long-running dispute with a former Kazak prime minister, Akezhan Kazhegeldin, an opposition leader who lives in self-imposed exile in London. In 1999, the Kazak govt reported to Belgian authorities that Mr. Kazhegeldin had bought Belgian property and asked that his finances be investigated. That eventually triggered U.S., Belgian and Swiss investigations of bank accounts and offshore companies that U.S. and Swiss officials say appear to be linked to former and current top Kazak officials and their families, including Mr. Nazarbayev. The trail also led Swiss & Belgian authorities to investigate Messrs. Mashkevich, Shodiyev and Ibragimov. In addition to the money-laundering case, investigators are examining a $55 million (65 million euro) payment to the men by Tractebel SA, a Belgian utility company, Mr. Colpen said. Jacques Van Hee, a Tractebel spokesman, said the company paid the men for legitimate consulting services in a 1997 deal in which it acquired a Kazak natural gas pipeline concession that it later sold.

space " … from the same launch pad where the Space Age began 43 years ago, a Russian rocket blasted off today carrying one American & 2 Russians, first crew bound for the intl space station. NASA astronaut Bill Shepherd, space station's first commander, became only the second American to be launched aboard a Russian rocket. … 10.31.00   Detroit News Locals worry at Russian threat to leave Kazakh space site   12.16.99   RIA news agency Baykonur inhabitants are worried about the threat to shut the cosmodrome down Europe's Mars Express launches from Russian base 6.2.03   Dmitry Solovyov Reuters Baikonur, Kazakhstan  European Space Agency's Mars Express launched from Russia's Baikonur base on Monday, tasked to find whether there is or ever was life on Mars. Dozens of scientists on arid Kazakh steppe watched the midnight launch, applauding when the Russian Soyuz. "Highly emotional! I had tears in my eyes when the Soyuz lifted off," Mars Express project manager Rudi Schmidt said after. "We will answer at least 2 key questions, is there water and, finally, is there life on Mars," he said. After 6 month journey to Mars, British-built Beagle 2 space probe, named after scientist Charles Darwin's ship on his voyage to the Galapagos islands, will parachute down from the orbiting Express. Beagle 2 will burrow into Mars's surface, analyze rock, and hunt for water. Beagle should relay information back to earth through the orbiter for 6 months. "(What happened on Mars) is very important because it could happen to us on Earth," ESA science dir. David Southwood said. Mars Express is the latest of some 30 missions to the Red Planet. Only handful of those, spread over 4 decades, have been successful. Last mission launched outside U.S., Russia's Mars 96, crashed into the Pacific Ocean after a booster rocket misfired, preventing it from breaking out of Earth's gravity. "When you work in the space industry, you know the risks, but you also know that you have prepared yourself in the best way," Jacques Louet of ESA told Reuters. The launch date, though delayed by 10 days over a technical hitch, will allow scientists to exploit a particularly favorable position of both Mars & Earth. Opportunities to go to Mars occur every 26 months, when the Sun, Earth and Mars form a straight line, but this year the planets will be at their closest, a position which comes about only every 15 to 17 years. The 300 million euro mission used modified version of Russia's Soyuz rocket, one of the world's most reliable boosters. The Soyuz/Fregat was specifically developed to carry interplanetary probes.

Russia's missile hint to Bush 6.27.01   CNN MOSCOW   Russia test-fired a 1970s ballistic missile on Wednesday, hinting at a possible nuclear build-up to counter U.S. defence plans. The Russian military announced it had test-fired a huge Stiletto missile from its space base at Baikonur, Kazakhstan. Missile tests are mounted routinely in Russia, but Wednesday's came a week after President Vladimir Putin threatened a nuclear expansion if President George W. Bush's plans for a missile defence shield, NMD, went ahead. Putin repeated at the weekend his threat to put multiple warheads on existing missiles to counter U.S. moves to abandon the 1972 Anti-Ballistic Missile Treaty. He said the U.S. would not be able to counter multiple warheads for decades. SS-19 Stiletto was built between mid-1970s & 80s, and can carry 6 warheads, each with a force of 1 to 2 megatons. At one stage Russia deployed 360 of the 80ft giants, and the Stilettos were regarded as the backbone of Russia's nuclear arsenal. But under the START II treaty Moscow can keep only 105, and each must be downgraded to just one warhead. Putin said last week that START II, signed by Bush pere 1993, would be automatically void if Washington pulled out of the ABM treaty to build NMD. As well as the Stiletto Russia also has the even older SS-18 Satan missile, which can carry 10 to 12 warheads. The Satans were to be scrapped altogether under START II. Russia's most modern strategic missile, the Topol-M, could also be refitted to take more than one warhead but only carries one tonne of payload. Itar-Tass news agency said a military source had told it Russia's older, larger missiles would be "the only way of resolving strategic tasks in contemporary conditions." "Compared to the Topol-M, the Stiletto has a considerably higher chance of overcoming the ABM system of the likely enemy," due to its larger payload, it quoted the source as saying. Putin told reporters after a meeting with Austrian President Thomas Klestil on Saturday that world stability had been preserved "thanks to the balance of powers and interests" in the nuclear sphere. This means that all countries, including Russia, will have the right to install multiple warheads carrying nuclear weapons on their missiles," he said. For Russia, he said, installing multiple nuclear warheads on existing missiles "is the cheapest response." American officials have said the aim of a missile defence system would be to protect against possible attacks by unpredictable nations such as North Korea, Iran and Iraq, not former U.S. Cold War foe Russia.

United Nations   T^km joined 3.2.92
IRIN NYC mission email FAO UNHCRefugees UNDP OCHA latest OCHA profile links UNEP UNECE UNESCO Ukraine mention Iran mention G77 mention OIC search Turkestan U.S. NYC mission all missions D.C. embassies missions' email U.S. Geneva mission all Geneva missions U.S. Vienna mission all Vienna missions GPT UNFPA LDCs § archive

House   HIRC subcommittees   Europe   MidEast & S.Asia   IOHR
Cong. Smith 2.7.01 Cong. Hoyer 3.21.00 CSCE § archive

… Turkmenistan is not a democracy, yet USAID provides critical support for the growth and development of country-wide citizen initiatives. We are providing this support through the ISAR (formerly the Institute for Soviet- American Relations) grant program for assistance to environmental non-governmental organizations. While government policy prohibits the import of foreign magazines and newspapers, the Turkmen NGO, Catena, working with its U.S. partner, the Sacred Earth Network, provides free NGO access to information from all over the world through Catena's Internet link-up. Catena pays for its work with local NGOs by offering reasonable and reliable paid Internet service to Turkmen businesses and government officials.

Turkmen NGO Promotes Civic Education. Another Turkmen NGO, Dialog Center for Civic Education, can be counted along with Catena, as one of the few indigenous groups actively working in the rather restrictive environment of Turkmenistan. With USAID funding through the National Endowment for Democracy and a grant from the USAID funded NGO, Counterpart, Dialog recently took a significant step towards wide dissemination of the concepts of civic education by publishing a book entitled "The ABCs of Civic Education." This book has been well received as a vehicle for disseminating and promoting democratic principles and the concepts of civic education.
… In Kazakstan, Turkmenistan, and Uzbekistan, the US through USAID provided technical assistance for upgrading and improving water systems to supply potable water to populations at risk. By focusing on providing safe drinking water supply, which is an environmental problem of the highest priority to each national government, U.S. credibility and access was greatly enhanced. USAID's tangible investments in potable water improvements have helped in turn to create strong working relationships with the region's new governments on issues of water management. Beginning in 1995, this credibility was used to establish a new USAID-supported regional program on water resources management to introduce concepts of water economics and conservation prevalent in the U.S. & Europe to the broader Aral Basin.

State Dept   bkgd º   U.S. embassy   regional bureau º ª
latest regional issues human rights FY2000 NIS Assistance report index NDF Clinton UNPax USAID IATP DOJ DTRA Moscow SAO § archive

Pentagon   6 U.S. soldiers stationed in T^km 9.30.00   OSCE ¹   § archive

SOCCENT   Special Operations Command Central, MacDill AFBase Tampa, FL
"Assignment of Special Operation Force Liaison Officers (SOF LNO) to selected American Embassies is SOCCENT's most successful Traditional CINC Activities program. Liaison officers assist in planning and execution of SOF exercises, reducing the burden of such activities on small embassy staffs. Small Unit Exchanges (SUE) bring small groups from AOR countries to train in the US with SOCCENT components. … SOCCENT forces often provide the initial "foot in the door" for access, and nurture relationships with key counterparts throughout the region."

T^km NOT included in NATO Partnership for Peace training for combined peacekeeping & humanitarian relief ops. 1997/98 ¹
Exercise Regional Cooperation 2001 nee CENTRASBAT Central Asian Peacekeeping Battalion ¹
conference   "21st Century Problems of Security, Consolidation and Stability in the Central Asian Region" re terrorism, drug trafficking and border insurgency 9.15-16.00 Alamaty, Kazakhstan
  [ exSoviet troops now trained in Germany by & for Pax Americana ]
Las Vegas cum Ashgabat: Central Asian sister armies of Staples Center security squads.

  Nuclear deterrence force still essential
  3.31.98   asst sec.defense strategy & threat reduction Edw.Warner Senate Armed Services Committee
… Cooperative Threat Reduction "Nunn-Lugar" pgm provides equipt, services & technical advice to T^km …
DoD officials said emphasis in these countries will be on improving border controls and safeguarding material & technology related to weapons of mass destruction. Despite accomplishments so far and activities presently under way, DoD officials say, more work is needed; threat remains a reality. Russia still has about 6,700 nuclear warheads and 1,200 missiles to carry them. DoD officials say the potential also exists for the spread of nuclear weapons material from Russia's "vast, underpaid nuclear weapons complex." About 40,000 metric tons of chemical agents and the ability to produce nuclear, chemical and biological agents remain in the former Soviet territory. "Hostile regimes and instability threaten U.S. interests in key regions," DefSec Wm. Cohen told House National Security Committee in February 1997.
U.S. arms sales ¹ ª ² º ³ ª   T^km 1997 grants $½ million materials ¹   $¼ million IMET   MEAN ¹ ²

Russian national interests & the Caspian Sea ¹ ²
12.99   Timothy L. Thomas Foreign Military Studies Office, Ft Leavenworth KS Perceptions vIV n4 p75-96.

Intl Narcotics Control Strategy rpt 1997
3.98   Bureau for Intl NLEA State Dept

The Road Ahead. Over the next year, the USG will work to implement the delivery to the Turkmen of the equipment described above. In addition, the USG will continue to encourage Turkmenistan to expand its drug control activities and establish the necessary legislative institutions. The USG will continue to offer law enforcement training opportunities, and will work to foster increased cooperation among Turkmenistan, the NIS and Russia in their counternarcotics efforts. Finally, the USG will continue to assist Turkmenistan's border interdiction efforts.

2000   Accomplishments. A national drug intelligence information center sponsored by the UN Office of Drug Control and Crime Prevention (UNODCCP) should be completed and operational beginning in 2001. It connects a central server in the Ministry of Internal Affairs with computer systems in the State Drug Control Commission, the Committee for National Security, the Border Guards, the General Prosecutor, and the Ministry of Health to facilitate collection, analysis and exchange of drug-related intelligence and enhance the effectiveness of Turkmen counternarcotics efforts. At the October 2000 UNODCCP/OSCE international conference on drugs, organized crime and terrorism, the Government of Turkmenistan formally approved its participation in the UNODCCP- sponsored precursor control project for Central Asia and signed the conference draft agreement on priority areas … Despite a lack of modern equipment and sufficient transport, Turkmen border forces are remarkably effective in detecting and interdicting illegal crossings by armed smugglers. …

IV. U.S. Policies and Initiatives
Bilateral Cooperation. The USG seeks to assist Turkmenistan in updating its law enforcement institutions and body of law to more effectively counter the illegal drug trade. Turkmen officials participated in USG-sponsored training programs in 2000, including courses for narcotics interdiction for border forces, regional and in-country drug enforcement seminars, and law enforcement seminars at the International Law Enforcement Academy in Budapest, Hungary.
The Road Ahead. The USG will continue to cooperate with Turkmenistan in its fight against the illegal drug trade. Through international and non-government organizations and programs, such as UNODCCP and the American Bar Association, the USG plans to assist Turkmenistan enhance its judicial and legal institutions to combat narcotics smuggling organizations and crime associated with illegal drugs. The USG will encourage long-term demand reduction efforts and foster supply reduction through interdiction training, law enforcement institution building and the promotion of regional cooperation.

NGOs   Amnesty Intl HRWatch U.S. Committee for Refugees CFR CPA: Ferghana Valley CLW CSIS (regional) FAS FIDH OECD Brookings Institute § archive re T^km

corporations & resources   DOE country brief 6.26.01 DOE regional analysis Tkm Caspian reserves rpt IMF NSRC info networks World Bank Ex-Im Bank A. Kilgore WRMEA 6.00 § archive   oil v. demographics map

To make the project viable it will have to transport one million barrels per day of oil from Azerbaijan, Kazakhstan, and elsewhere around the Caspian Basin. Azerbaijan produces 100,000 barrels of oil a day which is about one- tenth of the targeted production amount. Construction is supposed to begin in 2001 and the pipeline is expected to begin operations in 2004, supplying refineries largely in the Mediterranean and Western Europe. •
For Washington, the main problem after Russia is Iran, which is still subject to sanctions but, because of its geographical situation and well-developed pipeline net, offers the most cost-effective and profitable route for bringing Caspian oil to the West. … OSCE summit took place in Turkey … Russian assault on Chechnya: a power struggle over Caspian oil 11.18.99 NATO at war with Yugoslavia for oil & gold 5.24.99 • ¹   ¹ ²   4.22.98 ¹   Cent.Asia conf. C.Asia-Caucasus Inst.
Let's Make a Deal
4Q.99   Kersten Wetenkamp New World
5.21.01   New gas exporters GECF organization est. 5.19.01 in Tehran.

Baku-Ceyhan pipeline cost maybe higher than expected 5.6.01   NewsBase David Woodward, president of the Azerbaijan International Operating Company (AIOC) and head of BP-Amoco's Azerbaijan unit, said on June 4 that the cost of constructing a Baku-Tbilisi-Ceyhan (BTC) oil export pipeline might be higher than expected. Previously, he noted, the companies involved in the oil transport project had figured the cost of the pipeline at $ 2.4-2.7 bn. However, a basic engineering study completed last month indicates that the price tag is likely to reach $ 2.8-2.9 bn, he said. The latter figure is more in line with industry analysts' predictions that the Baku-Ceyhan pipeline would cost at least $ 3 bn and perhaps as much as $ 3.5 bn or more. Woodward stressed, however, that it was too early to make definitive statements about the cost of the BTC project. The figures in the basic engineering study are preliminary and bear a 30% margin of error, he stated. Once the partners in the project submit information on the expected cost of equipment, he said, it will become possible for the Main Export Pipeline Company (MEPCO) to estimate construction costs more precisely, with only a 10% margin of error. BP-Amoco noted that the sponsor group was due to meet in June to approve plans for a detailed engineering study of the BTC pipeline route. It will take about 12 months and $ 150 mm to complete this study, the company said. BP-Amoco is the operator of the AIOC consortium, which would be the first to use the BTC pipeline, and the second largest shareholder in MEPCO, which was set up to build the pipeline. Equity in MEPCO is currently split as follows: the State Oil Company of Azerbaijan (SOCAR) holds 50%; BP-Amoco holds 25.41%; Delta Hess and Unocal of U.S. hold 1.25% and 7.48%, respectively; Statoil of Norway holds 6.37%; Turkish Petroleum (TPAO) holds 5.02%; and Itochu of Japan holds 2.92%. Ramco Energy of Great Britain, which has sold its interest in the AIOC to Amerada Hess, Devon Energy and Unocal, holds the remaining 1.55% Other major intl companies have expressed interest in joining the pipeline group. SOCAR's President Natik Aliyev said negotiations had begun with 3 companies, Chevron (US), Alberta Energy (Canada) and TotalFinaElf (France). Nazarbayev favours transporting Kazakh oil via Russia 5.24.01   Itar-Tass via Newspage Kazakh President Nursultan Nazarbayev came out in favour of transporting Kazakh oil via Russia. Nazarbayaev told that in choosing ways to transport oil, Astana will first of all be guided by economic expediency, search for profitable directions. Nazarbayev stressed that it would be a right thing to transport oil via Russia. "Russia is our ally, partner, we have signed a protocol on friendship and cooperation aimed into the 21st century," he emphasized. "However, Russia has not realized until recently the advantage of having Kazakh oil go via its territory," he regretted. Nazarbayev stressed that his country was gradually developing into a major oil-producing country. Foreign investments in its oil and gas sector have amounted to 8.5 bn $. Annual oil production makes up 35 mm tons, 20 mm tons of which are now transported via the Caspian Sea, via Russia. The North Caspian pipeline to Novorossiisk will be put into operation in August. However, by 2005-2010, after Kazakhstan starts developing its biggest Kashagan oil field, oil production will increase by another 20 to 30 mm tons. That is more than the oil pipeline can pump, and Kazakhstan will have to look for new routes to transport its oil. "Time will show whether it will be an oil pipeline via Russia to Baltic states, or via Iraq to the Persian Gulf, or via Baku- Ceyhan," Nazarbayev stressed. The Great Gas Chase Tractebel, once a sleepy European utility, takes big chance on business in Kazakstan 10.26.98   WSJ When Tractebel SA bought Kazakstan's natural-gas pipeline network last year, the Belgian utility wasn't allowed to move into its gas-storage facility in Poltoroskoya. The government had rented it out. The standoff escalated when a new government, which was more averse to foreign investment, posted militiamen on the facility to keep Tractebel at bay. Then this February, when the Kazak prime minister left town for a day, the Belgians struck. Tractebel hired 50 interior-ministry troopers and took them down to Poltoroskoya. … The fight for new markets is, in some ways, like a giant game of Monopoly. Utility companies such as Tractebel, which is half-owned by French water and waste management giant Suez Lyonnaise des Eaux, are in a race to acquire gas, electricity and water assets world-wide. They'll continue doing this for a while, analysts say, before a second phase of asset swaps and large utility-industry mergers. Right now speed is key. And with its aggressive move into Kazakstan, Tractebel has seized one key street corner on this global Monopoly board. "Our strategy since embarking on our international operations has been to be opportunistic," Mr. Bodson says. In his view, the entire Eurasian continent is in the process of evolving into a single, vast, interconnected and competitive gas market. The companies that come out on top, he adds, will be "those who will have acquired positions in many parts of the picture." …

Blue Stream closes door to Turkmen gas 7.14.01   Kemal Ilter Turkish Daily News interview Ferruh Demirmen, petro consultant, Houston, TX; . Ph.D geology Stanford Univ., 30+ years Shell Intl retired 1994 "I am afraid Turkmen gas is lost to Turkey, at least for the next 10 years. The political leadership would not want to admit it, but in my view this is the stark truth. This did not have to be so" Ankara   Nearly 2 weeks ago Italy's Saipem engineering company broke ground to build twin natural gas pipelines under the Black Sea from Russia to Turkey, known as the Blue Stream natural gas pipeline. A few weeks later Kazakh oil will commence to be transported by ships via the Turkish straits, which have been under threat of oil transportation not only from Kazakhstan but also Russia and early production of Caspian oils. These two hot issues have been on Turkey's agenda and it seems they continue to be there. Therefore, the Turkish Daily News wanted to discuss these issues with an expert. We interviewed respected expert Ferruh Demirmen, who is a petroleum consultant and has spent more than 30 years working on oil issues. He made informative comments concerning Blue Steam, Turkmen gas and Baku-Ceyhan pipeline issues. TDN   You have been critical of the Blue Stream project in the past. Some of your concerns have been the technical difficulties associated with this project. Vittoria Mincato, the CEO of ENI, stated in the recent energy conference (The Story of Three Seas) in Istanbul that ENI is experienced with such projects. What is your reaction? F.Demirmen   Blue Stream is not like any other subsea pipeline that ENI has built. Its implementation will require a technological leapfrog, and that will not be without risks. The deepest pipeline built to date is the Mensa field pipeline in the Gulf of Mexico. There the pipeline is 100 kilometers long and the water depth is 1,600 meters. In contrast, the subsea section of Blue Stream will be 380 kilometers long and the water depth over much of the pipeline route will be much deeper than the Mensa field, reaching a depth of 2,150 meters in places. Furthermore, in terms of geohazards, the Black Sea poses far more serious technical challenges and risks than the Gulf of Mexico. I mentioned these risks in one of my articles published in your newspaper (TDN, 4.23.01), and I do not wish to repeat them here. The one thing I want to emphasize is that some of these risks, such as pipe corrosion due to ambient acidity and pipe collapse due to high hydrostatic pressure, can be mitigated by taking certain preventive measures (at cost). But in a subsea setting no effective or reliable measures can be taken against earthquakes, slope instability and mass-gravity flows, all of which could cause pipe failure. Fortunately, such geohazards occur rarely in human terms; unfortunately, they are unpredictable. They are left pretty much to the vicissitude of nature, or chance. I should also clarify that the risks I am referring to relate not so much to the construction phase of the pipeline, but rather to its operational phase -- expected to last at least 25 years, and possibly 50 years. There is a distinction between building a pipeline and operating it safely over a long period of time. Currently, we do not have enough experience with the operational phase of deep-sea pipelines to realistically assess their safety over prolonged periods. In the case of Blue Stream, facing rather unique geohazards, scarcity of empirical data is all the more troubling. Pipe failure during the operational phase of Blue Steam could cause not only interruption of gas supply for a long period of time (and very costly repairs), but also serious environmental damage to the Black Sea. After the Aral Sea in Central Asia (as a legacy of the Soviet Union), the Black Sea is already the most polluted inland sea in the world. Why jeopardize its fragile environment even further? Let me hasten to add in this connection that I am not at all opposed to new technology. Innovation and technology, in fact, are a part and parcel of petroleum industry, and in a sense, they form the bloodstream of the industry. New technology, however, always entails a learning curve, and brings with it the risk of failure. New technology, therefore, must be justified on a need basis (such as cost reduction or lack of an alternative), and the risks associated must be acceptable. In the case of Blue Stream, I see just the opposite. Compared to the Azeri and Turkmen gas projects, Blue Stream will be the least competitive cost-wise, and the risk of failure, including potential environmental consequences, is high. A far more sensible alternative to Blue Stream would have been an overland gas pipeline from the Russian town of Izobil'noye to Erzurum across Georgia. The transit fee payable to Georgia under this scheme would have been far outweighed by the lower cost of construction, ease of construction, and negligible environmental risks. The project would have also contributed to the economic prosperity and political stability in the Caucasian region. The only advantage, as it were, I see with Blue Stream is the prestige it may bring to ENI (Saipem) and Gazprom -- prestige that I am afraid may be short lived. In any case, what Turkey has to gain from Blue Stream that it could not have gained from the overland Izobil'noye- Erzurum alternative, is not at all evident. Turkish energy officials, politicians and business circles defending Blue Stream have been mysteriously silent on this issue. TDN   Mr. Mincato of ENI also stated during "The Story of Three Seas" conference that Turkey will need so much gas in the near future that it does not have time to discuss or argue about Blue Stream. F.Demirmen   Mr. Mincato must have made that statement

with a tongue in cheek. Turkey, indeed, will need lots of natural gas for domestic consumption and to fuel its economy, but it has committed itself to buying so much gas that it runs the risk of oversupply. Concern for oversupply was the reason why Turkey did not want to purchase more than 6.6 bcm of gas a year from Azerbaijan. The same concern is reflected (or hinted) even in the language contained in the new Natural Gas Market Act that took effect recently. Blue Stream figures prominently in Turkey's gas demand-supply equation, and it is appropriate that it receives close scrutiny in public forums.

Furthermore, Blue Stream has ramifications that go beyond gas demand-supply question. At present, Russian- sourced gas already makes up more than half of domestic gas consumption. Depending on what the forecast is regarding future gas consumption, in the next decade Russian-sourced gas including Blue Stream will constitute from 50 percent to nearly 100 percent of Turkey's domestic gas consumption. Such heavy dependence on Russia is obviously excessive from strategic and energy security points of view. It amounts to mortgaging to a large extent the country's energy needs on Russia. It could also be cause for concern for industries and businesses that rely on Russian gas for power generation, etc. How could Turkey be so relaxed or complacent about this issue? Not long ago, Poland passed a law that limits its reliance on Russian gas to no more than 40 percent of its domestic need.

TDN   How do you see the future of Turkmen gas as far as Turkey is concerned?
F.Demirmen   In so far as domestic consumption, Turkey had to make a choice between Blue Stream and trans-Caspian Turkmen gas projects (TCGP). Having made the decision to go ahead with Blue Stream, Turkey closed the door for Turkmen gas for domestic consumption purposes. The gas demand-supply equation simply makes Turkmen gas a nonviable option for Turkey.
Turkmen gas can in principle be imported to southern Europe via Turkey and Greece (the so-called INOGATE project), and this is purportedly what the Turkish energy officials and some politicians still have in mind. However, unless somebody is willing to put up capital in pursuit of political goals -- which is very unlikely -- I believe INOGATE's prospects as an economic entity are very dim. TCGP gas in southern Europe will face fierce competition from alternative sources, in particular Algeria. Azeri gas also has clear market advantage over TCGP gas.
Russia and Iran, both of which have vast gas reserves, have also tried to obstruct TCGP on ecological grounds and by raising the legal status of the Caspian Sea as a thorny issue. Russia does not want to loosen its historical grip on Turkmen gas, and Iran is a long-term competitor to Turkmenistan on gas exports.

TDN   Do you mean Turkmen gas is lost for Turkey?
F.Demirmen   I am afraid so, at least for the next 10 years or so. The political leadership would not want to admit it, but in my view this is the stark truth. This did not have to be so. After the breakup of the Soviet Union in 1991, the Turkic republics in Central Asia and the Caspian region wanted to look beyond Russia for guidance and economic prosperity and to foster their newly gained political independence. Turkey's geographic position and its close ethnic and linguistic ties to these republics (not to mention religious affinity) gave Turkey the perfect opportunity to fill the role of leadership toward these nations. What was needed was a long-term strategic vision that transcended short-term commercial interests.

Turkey was only partially successful in such a leadership role, and in the case of Turkmenistan, its policy was a dismal failure. For Turkmenistan, exporting its rich gas resources westward along an east-west corridor was of vital importance. It saw the TCGP project as the embodiment of such aspirations. With much fanfare, Turkmenistan and Turkey signed inter-governmental protocols and a gas-supply agreement involving TCGP, which was strongly supported by the United States. The project had the backing of a reputable and financially strong Western consortium (Bechtel-GE Capital-Shell) that was seriously interested in the project.
But once Blue Stream entered the scene as a firm project, TCGP effectively lost its "raison d'etre." From then on, TCGP was primarily a political project, useful for some Turkish politicians to talk about but holding little real promise. Projects supported by mere political rhetoric and not backed by real need rarely become a reality. Turkey could not absorb both Blue Stream and TCGP at the same time.

It is true that some other obstacles arose in the path of TCGP, such as Turkmenistan President Suparmurat Turkmenbasi's insistence on some advance payment from the United States and more importantly, the Shah Deniz gas-condensate discovery in Azerbaijan. There were also personality conflicts. However, these were not insurmountable problems.
With regard to Shah Deniz, Turkey, acting as a benevolent "big brother," could have brought Turkmenbasi and Azerbaijan President Haydar Aliyev together to resolve their dispute on the sharing of a gas pipeline from Turkmenistan to Turkey. That required good will and smooth relations with both countries. Having lost credibility, in fact good will, in the eyes of Turkmenistan because of Blue Stream, for Turkey such a role was hardly conceivable.

TDN   What do you think about U.S. position on Blue Stream?
F.Demirmen   U.S. has not advocated Blue Stream mainly because it saw it as a rival to TCGP, which it supported. The TCGP is part of the east-west energy corridor extending from the Caspian region to the West, bypassing both Russia and Iran. By supporting the east-west energy corridor, including the TCGP, the United States has tried to reduce the influence of Russia, and to some extent Iran, on the economic development of the New Independent States of the former Soviet Union. For the United States, this had the dual advantage of promoting the welfare and independence of these states while at the same time increasing the energy security of the West. I believe the U.S. also opposed Blue Stream because the project increased Turkey's dependence on Russia in terms of its energy needs. The United States has historically valued Turkey not only as a NATO ally, but also as a secular and democratic Islamic country in a critical region.

TDN   When we look at recent events, the Baku-Ceyhan option seems to be more powerful than before. Do you agree on this issue? Is there any obstacle in front of Baku-Ceyhan?
F.Demirmen   The Baku-Ceyhan project gained a major impetus, in fact experienced a near- breakthrough, within the last few months. There were several reasons for the dramatic turn of events. One reason was that the basic engineering study that was completed in May alleviated cost concerns. The new cost estimate is now $2.8-2.9 billion, higher than the $2.4 billion previous estimate, but still within the economically acceptable range. It is also worth pointing out that the additional cost pertains to such items as upgrade of the Azerbaijan terminal for oil batching operations (to include Kazakh oil) and expropriation of land in Azerbaijan and Georgia. These additional cost items had been foreseen but not included in the earlier cost estimate.
The second reason was the confidence that the potential investors gained regarding the economic significance of the Kashagan field in Kazakhstan. The Kashagan West well, completed in June, found oil, which was from the same reservoir as oil found in Kashagan East. This confirmed that Kashagan is a major oil field that could contribute to Baku-Ceyhan's throughput in the event of reserves insufficiency from the Azeri side.
The third reason was the affirmation, in the last month or so, by the Bush administration that it would continue the Clinton administration's energy policy in the Caspian region. Among others, this meant continued support to Baku- Ceyhan. All the signals coming from the Bush administration indicate that the U.S. trade sanctions against Iran will not be lifted in the foreseeable future. This means the Iran option will remain effectively closed, giving a further boost to Baku-Ceyhan.

The major development, perhaps overshadowing all these developments, however, was the BP's confirmation in recent months that Baku-Ceyhan is economic. BP went ahead even further, by declaring that reserves in Azerbaijan alone were sufficient to render Baku-Ceyhan viable. In other words, the Kazakh oil, while welcome, was no longer essential. The seal of approval given by BP was a crucial endorsement that Baku-Ceyhan needed. The sponsor group has approved expenditures ($150 million) for detailed engineering, and other oil companies, including Chevron, TotalFinaElf and ENI, all outside AIOC and previously not supportive of Baku-Ceyhan, have expressed interest in the project. Even Russia, probably prompted by the desire to deflect intense criticism of Blue Stream in the Turkish media in recent months, has softened its criticism of Baku-Ceyhan.
To return to your main question, I now see Baku-Ceyhan as a near-certain project with 90-95 percent chance that it will materialize. Barring exceptional and unforeseen circumstances, there is little that stands in the path of the project. Investor support for the construction phase seems all but certain.

TDN   You mentioned BP's crucial endorsement. BP, like other oil companies, had previously opposed Baku-Ceyhan. And many analysts had given little chance to Baku-Ceyhan. Why did BP change its position, and why were many analysts so pessimistic?
F.Demirmen   BP's endorsement was long in the making, and its announcement did not come as a surprise. In fact, in some subtle ways, BP had been hinting its assessment since last fall. I am sure BP knew since early last year that Baku-Ceyhan was economic given prevailing oil-price scenarios. Considering reserves in the ACG fields and Shah Deniz, I suspect Baku-Ceyhan was economic even at $15/barrel (real term). With oil prices becoming more robust and oil prices, at least for the midterm, expected to remain at $20 plus level, Baku-Ceyhan's viability was not in doubt. This is what I had maintained repeatedly myself on different occasions.
BP, however, chose to delay its firm endorsement of Baku-Ceyhan until recently partly because it needed to be more confident about oil-price forecasts and partly because it wanted leverage vis-a-vis the Iran option. With the Iran option remaining closed indefinitely, gradually an element of inevitability about Baku-Ceyhan emerged. Further waiting or uncertainty would have meant further delay in full-field development of ACG, which the company did not want to see happen. Shah Deniz development and gas export to Turkey was also in the offing.

As expected, project economics also improved with technology. Thanks to technology, wells in the ACG fields that were originally predicted to produce 5,000-7,000 barrels of oil per day (bo/d) came onstream at double these rates, some reaching 30,000 bo/d. This reduced field development cost. I am sure further reductions in cost will be forthcoming.
As for the analysts and pundits who were pessimistic or critical of Baku-Ceyhan, they ignored the dynamics of the oil industry, including the nonstatic character of reserves, underestimated the significance of Shah Deniz, and underestimated the growing concern, in particular in Europe, for increased tanker traffic in the Bosporus. Many also misread Vice President Dick Cheney's role in the Bush administration. Mr. Cheney played a key role in formulating Mr. Bush's energy policy. Many analysts and oil companies that had thought or hoped for Mr. Cheney to steer a pro-Iranian oil policy have been proven to be wrong. The pundits who persistently claimed insufficiency of reserves for Baku-Ceyhan have also been wrong. BP chief Sir John Browne's announcement In "The Story of Three Seas" conference last month, that the Azeri reserves were sufficient to make Baku-Ceyhan economic, was very significant.

TDN   Can you elaborate on the role of Shah Deniz with Baku-Ceyhan?
F.Demirmen   Shah Deniz played a pivotal role in bringing Baku-Ceyhan to its current stage. Discovery of the field in mid-1999 prompted BP and Statoil, both of AIOC, to change their basic strategy toward Baku-Ceyhan. The prospect of exporting gas to Turkey gave these companies a strong commercial incentive to support Baku-Ceyhan. Shah Deniz also provided badly needed liquid (condensate) reserves for Baku-Ceyhan.

TDN   What about Chevron and ExxonMobil? Do you think they will join Baku-Ceyhan?
F.Demirmen   Early this year Chevron expressed interest in Baku-Ceyhan. Where the company stands now in this respect, I do not know. Chevron's eventual participation in the project will heavily depend on the results of Absheron-1 exploration drilling results. The company has been keeping a tight rein on the information from this well. Unconfirmed reports indicate that the well found gas, but the commercial significance of this find is not known. If the Absheron structure holds commercial oil or gas, I very much suspect that Chevron will join Baku- Ceyhan. As for ExxonMobil, so far it has shown no interest in Baku-Ceyhan. The recently announced discouraging exploration results from the offshore Oguz concession in Azerbaijan, where ExxonMobil has an interest, are a disincentive for the company to join Baku-Ceyhan. However, ExxonMobil has other exploration interests in Azerbaijan, and its position vis-à-vis Baku-Ceyhan may change over time.

TDN   Is Baku-Ceyhan the only route to protect the Turkish straits environmentally?
F.Demirmen   Before I answer that question, let me briefly point out the magnitude of the problem facing the Turkish straits. At present, some 50,000 commercial ships a year transit the Turkish straits, of which 5,500 are tankers that carry oil or oil products. The CPC pipeline that became operational this summer will eventually have a throughput of 65 million tons a year. The oil, coming from the North Caspian region, will reach the Russian port Novorossiysk and is currently destined for shipment to the West via the Turkish straits. That means oil tanker traffic through the Straits will easily double or triple.
However, this is not all. The CPC pipeline was designed before the Kashagan field was discovered. It is almost certain that some of the Kashagan oil will also find its way to Novorossiysk. That could mean oil tanker traffic through the straits increasing easily four or five-fold. That would certainly be not acceptable. It is therefore very important to find ways whereby Caspian oil would reach Western markets without transiting the straits.

Baku-Ceyhan is certainly a step in the right direction toward that goal. But it will not be enough. Some of the North Caspian oil reaching Novorossiysk should also be diverted away from the straits. Some Balkan options bypassing the straits have been considered in the past. The most notable of these is the Albanian-Macedonian-Bulgarian route known under the acronym AMBO. This is an oil pipeline project supported by the United States (which funded the feasibility study carried out by Brown & Root) and the European Union. I understand Russia also is interested.
I should stress that the bypass options such as AMBO are not ideal from an environmental point of view. They should also not be viewed as alternatives to Baku-Ceyhan. AMBO will help lessen oil tanker traffic through the straits, but oil must still be transported from Novorossiysk to Bourgas (the Bulgarian port) by tankers across the Black Sea. So, the Black Sea will remain exposed to dangers caused by oil tanker accidents. But a project such as AMBO at least offers a realistic alternative to maritime oil transport through the straits.

TDN   What about the current infighting in Macedonia? Will it affect the AMBO project?
F.Demirmen   The current political turmoil in Macedonia has certainly thrown cold water on AMBO, but once the political situation there settles, the project will undoubtedly attract renewed interest. I would also add that there has recently been an increased concern at international level about the safety of the straits from oil tanker traffic. This was quite evident in "The Story of Three Seas" conference. The start-up of the CPC pipeline, the increased campaign by nongovernmental organizations against the CPC, and the Turkish government's more proactive stance in this regard have helped bring about this situation. This is all a very positive development. Perhaps now is the time to capitalize on this momentum and try to divert some of the Novorossiysk-bound CPC oil away from the straits.

environment   UNEP Forest Conservation language § archive The Caspian's False Promise 6.98   Martha Brill Olcott Foreign Policy   oil ¹ ² TURKMENISTAN   size 188,456 sq. mi.; pop. 4.19 million   Former party boss Saparmurat Niyazov became president Oct. 1990. Niyazov sees himself as a modern Ataturk but rules the country like a medieval khan. Despite Niyazov's promises of great oil & gas wealth, the country's population still has lowest life expectancy of any former Soviet republic.

Tough issues addressed at C.Asian env. conf. ¹ 3.6-8.01   Marshall Center, CENTCOM, USArmy War College, and Off. Deputy UnderSec. Defense (Environmental Security) co-sponsored conference re critical environmental security issues. 65 delegates represented Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Armenia, Turkey, U.S. and various intl organizations. Presentations scientific-technical aspects of regional environmental issues and case studies on role of Philippine, Turkish, and U.S. militaries in responding to natural & man-made environmental disasters.

borders Russia, Iran renew ties 3.12.01 A. Kilgore WRMEA 6.00 § archive archive Taliban aid A.Rashid, Dushanbe News.telegraph.co.uk Afgh Fdtn (Scowcroft) Afgh Online Afgh Daily emigres § archive Taliban aid archive Tkm gas key to Ukraine economy Tkm president approves Ukraine barter deal Baku embassy closed 6.20.01 Tkm calls for Azb halt in disputed oil fields

6 Turkic-speaking nations pledge closer economies 4.26.01   Dow Jones Leaders of 6 Turkic-speaking countries have met in Istanbul for an annual summit and pledged to build closer economic ties between their countries. The summit brought together the presidents of Turkey, Azerbaijan, Kazakhstan, Turkmenistan and Kyrgyzstan, and the parliament speaker of Uzbekistan. Pipeline projects to transport the region's oil and natural gas resources to world markets, and a scheme to revive the historic Silk Road route from Europe to China, are likely to figure in talks during the summit's two days. "These meetings have come to symbolize the mutual respect and common interests which exist among us," the summit's host, Turkish President Ahmet Necdet Sezer, said in opening the meetings. A pipeline that would bring oil from the region to Turkey's Mediterranean coast is likely to be a key topic of discussion. The pipeline would bypass Russia and Iran and strengthen the region's ties with the West.

Revolutions In The East
Michael Albert & Robin Hahnel   Z magazine

various posts   Thorn Tree

excerpts   FY2000 NIS Assistance report
Jan. 01   re Turkmenistan

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