Politique �trang�re

A Not-So-Grand Strategy: U.S. Policy in the Caucasus and Central Asia Since 1991

Reprinted with permission of Politique étrangère

This article, "Une stratégie incertaine: la politique des Etats-Unis dans le Caucase et en Asie centrale depuis 1991" was published in French in Politique étrangère, Review of the French Institute of International Relations (IFRI), Paris.

United States policy toward the Caucasus and Central Asia over the last ten years has been marked by a distinct lack of direction. The U.S. stumbled into the region with only the vaguest idea of its geography, history, or political complexities. It has since failed to transform improvised responses to regional challenges into a coherent strategy. Bureaucratic wrangling over jurisdictions and attempts by domestic interest groups to push their own regional agendas have further undermined the rationality and unity of policy.

Competing policy priorities, in turn, have served to confuse regional states. Instead of acting as an integrating or unifying force, U.S. policy has ultimately served to divide—although not to rule. The states of the Caucasus and Central Asia have become objects of policy rather than allies or partners. As a result, anti-American sentiment and disenchantment have replaced what was an enthusiastic embrace of relations with the United States only a few years previously. In looking forward to a new Administration, the U.S. government must finally decide what it wants to do in the Caspian region and set clear strategic priorities.

No Vital National Interest

The United States has no discernable vital national interest in either the Caucasus or Central Asia. It had no history of significant engagement with these regions before the 1990s and the regions were entirely inconsequential in U.S. bilateral relationships with the neighboring powers of the USSR, Turkey, Iran, and China both before and during the Cold War. Had it not been for the re-discovery of the energy resources of the Caspian Sea, and the collapse of the Soviet Union, the regions would have likely remained a marginal backwater for crafters of U.S. foreign policy.

As a consequence of this historical disinterest and inexperience in the regions, the U.S. made two fundamental mistakes from the very beginning of its active engagement in the early 1990s. The first was to view the Caucasus and Central Asia as one extended unit despite sharp differentiations in the historical experiences and political-cultural formations of the individual Caucasus and Central Asian states. The second was to fail to recognize the historical vested interests of the neighboring powers in the regions. Although they remain peripheral to China's interests, the Caucasus and Central Asia are a strategic border zone not a marginal backwater for Russia, Turkey, and Iran. The regions secured places on the geopolitical agendas of these three states long before large-scale energy exploitation in the Caspian Sea. These complexities are now apparent to U.S. policymakers, but only after a decade of interactions.

The United States first official foray into the Caucasus and Central Asia came in 1991, as the Bush Administration grappled with the unexpected dissolution of the USSR and diplomatic recognition of the 15 new independent states (NIS) that emerged. But it was not until major oil contracts were signed between U.S. oil companies and the governments of Kazakhstan and Azerbaijan in 1993-1994 that the region really began to register on the radar screens of the American public. The commercial interests of U.S. oil companies in exploiting new energy reserves gave U.S. policymakers a specific interest to protect in the Caucasus and Central Asia. The U.S. has come to see Caspian resources as one of the few prospects for diversifying world energy supply away from the Middle East.

Setting Parameters for U.S. Policy

The first U.S. policy parameters in the Caucasus and Central Asia were set before oil emerged as a specific strategic concern. In the absence of a vital interest, these parameters were less than clear. Although formal U.S. recognition was granted quickly to Armenia, Kazakhstan, and Kyrgyzstan (along with Russia, Belarus, and Ukraine) in January 1992, the establishment of diplomatic ties with Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan took until February. Diplomatic relations with Georgia were further delayed until March 1992 in response to its civil war. These delays created the impression of a two-, if not three-tier, hierarchy of states in U.S. policy.

This impression was reinforced later in the year, between April and October 1992, as the U.S. Congress debated the Freedom Support Act. This legislation was intended to provide for a wide range of U.S. bilateral assistance and economic cooperation activities with the NIS to help the states transform themselves into democracies and open markets. The consistency of the Act was immediately undermined by an amendment (Section 907) that precluded assistance to the government of Azerbaijan. The amendment was pushed through Congress by the representatives and supporters of the U.S. Armenian diaspora in response to Azerbaijan's blockade of Armenia during their territorial conflict over the disputed enclave of Nagorno-Karabakh.

Although Section 907 was a congressional act, rather than an explicit initiative of the U.S. executive branch, it put Azerbaijan in a different category from all its neighbors in its relations with the U.S. This division was underscored by the fact that there was no similar response from Congress to the subsequent occupation of one fifth of Azerbaijan's territory by Armenian forces from Nagorno-Karabakh in 1993. The occupation has persisted, and although Azerbaijan became central to U.S. oil interests in 1994, attempts by the U.S. government to rescind the legislation have failed.

The Evolution of Clinton Administration Policy

These inconsistencies in the U.S. approach to the NIS, and the tepid response of the Bush Administration to the independence of the Caucasus and Central Asian states set the tone for the Clinton Administration. Although the new U.S. government recognized the importance of formulating a coherent policy toward all the states of the former USSR, and underscored this with the appointment of Clinton confidant Strobe Talbott to the position of Ambassador-at-Large to the NIS in March 1993, the Caucasus and Central Asia were still viewed as second or third tier states.

For the first four years of the Clinton Administration, Russia was the center of U.S. policy in the NIS and U.S. observers were skeptical of the viability of the other states. Policy initiatives in the NIS were all adjuncts to the Russia-first policy and to a strategic priority to dismantle the Soviet military machine and nuclear arsenal and confine it within Russia. The withdrawal of former Soviet troops from the Baltic States was secured in August 1994, and the removal of nuclear weapons from Belarus, Ukraine, and Kazakhstan was completed by 1996. With the exception of some initiatives related to conflict resolution, the Caucasus and Central Asia were largely incidental to United States policy until relations with Russia began to sour with the failure of its Western-inspired political and macro-economic transformation, and until the course of energy development in the Caspian began to conflict directly with U.S. policy toward Iran.

In the meantime, between 1992-1996, responsibility for each NIS state and for various issues was parceled out to different U.S. government departments and sub-departments. The promotion of initiatives related to the democratic development of the NIS, for example, was split among the U.S. Agency for International Development and the State Department. In the Pentagon, Central Asia was assigned to the purview of the U.S. Central Command, while the Caucasus states fell to the U.S. European Command. In the absence of strong direction from the center on policy priorities, U.S. departments pursued their own narrow institutional policies. In 1995, for example, the Department of Commerce created its own ombudsman for energy and commercial cooperation with the NIS to promote the activities of U.S. companies in the Caspian.

In this state of institutional confusion, a unified policy was rendered virtually impossible by conflicts over jurisdictions. A senior interagency group on the Caspian under the chairmanship of the National Security Council (NSC) had to be established to coordinate the various policies of the Treasury, State, Commerce, and Energy Departments, along with the Pentagon, Central Intelligence Agency, Environmental Protection Agency, the U.S. public sector financing agencies, and the Office of the Vice President. Within this group there were additional interagency working groups on foreign policy, commercial policy, and financial issues, and an entirely separate set of groups in the individual departments.

As the agency closest to the U.S. President, however, the NSC played the dominant role in addressing the security implications raised by U.S. involvement in the exploitation of Caspian oil. Here, worsening U.S. relations with Iran as a result of its sponsorship of international terrorism and pursuit of a nuclear weapons program were a major factor in shaping policy decisions in the Caspian. In 1995, the U.S. Congress demanded that the government take firmer action against Iran. By August 1996, with the passage of the Iran Libya Sanctions Act (ILSA) imposing penalties on major international investors in Iran's oil and gas industry, the U.S. had moved firmly toward a policy of isolating Iran in the Persian Gulf and elsewhere—including the Caspian. As a result, between 1995-1996, NSC analysts were the architects of a U.S. policy to construct multiple pipelines for the export of Caspian oil that would link the Caucasus and Central Asia to global markets while minimizing links to Iran. These pipelines would also serve to increase export options for regional governments by breaking Russia's monopoly on existing pipeline routes.

In October 1995, the U.S. successfully lobbied for early Caspian oil to be transported from Baku in Azerbaijan to Georgia's Black Sea port of Supsa in addition to Russia's port of Novorossiisk. A decision was also made to push for the construction of a major export pipeline from Baku to Turkey's Mediterranean port of Ceyhan, in addition to a pipeline from Kazakhstan to Novorossiisk. The Baku-Ceyhan pipeline was explicitly intended to reward Turkey for its support of the U.S. in the 1991 Gulf War and willingness to forego transit revenues from Iraqi oil. The NSC, not the Department of Commerce or U.S. oil companies, set these priorities for pipeline construction. Pipelines became a U.S. strategic tool rather than an aid to regional business.

A Strategy is Declared

All of these policy decisions were ad hoc responses to increasing U.S. engagement in Caspian oil development. They were not part of a grander strategy for the Caucasus and Central Asian states based on a consideration of their internal dynamics. A more specific policy for the states themselves only emerged during the second Clinton Administration when it became apparent that Caspian energy resources could not be successfully developed without stabilizing and strengthening the Caucasus and Central Asian states.

In 1996-1997, in a series of speeches by Strobe Talbott and others, the Administration defined four general objectives for the Caucasus and Central Asia that combined strengthening political and economic reform and mitigating regional conflicts, with bolstering energy security and enhancing commercial opportunities for U.S. companies. This coincided with the U.S. co-chairmanship, along with Russia and France, of the Organization for Security and Cooperation's "Minsk Group," whose objective was to negotiate peace in Nagorno-Karabakh. A Special Negotiator for Nagorno-Karabakh and Regional Conflicts in the NIS was appointed and Strobe Talbott declared that conflict resolution should be "Job One" for U.S. policy in the region.

In spite of the espousal of a specific strategy in 1997, U.S. policy toward the Caucasus and Central Asia remained hostage to other foreign policy priorities, particularly the bilateral relationships with Iran and Russia. These priorities continued to focus U.S. policy in the Caspian on the narrow goal of creating an East-West transportation corridor that would reduce energy flows and regional trade and communications along the North-South axis between Iran and Russia. Indeed, at this particular juncture, the U.S. had reason to be concerned about activity along this axis. Given its location on the Caspian, its highly-developed energy sector, and its existing domestic network of pipelines, Iran offers the cheapest, most secure export route for Caspian oil. In 1998, a number of international oil companies explicitly challenged U.S. sanctions policy against Iran. The U.S. oil company, Mobil, for example, placed newspaper advertisements requesting that ILSA restrictions be eased so that the company could conduct oil swaps with Iran in the Caspian.

Russian energy companies were particularly active in pursuing projects with Iran. In addition, the Russian government was concerned about the threat posed by U.S. pipeline projects to its formerly dominant role as the transit route for Caspian energy flows. Between 1995-1998, Russia applied considerable pressure on Azerbaijan, Kazakhstan, and Turkmenistan to export oil and gas through its pipeline network rather than pursuing U.S.-backed export options. In the same period, Russia also began to move against the unipolar international security system established by the U.S. after the Cold War, reviving old alliances with powers inimical to U.S. interests.

In response, in 1998, the U.S. declared its intention to promote the development of an additional pipeline across the Caspian Sea that would link Central Asian energy resources into the Baku-Ceyhan pipeline, further diverting energy exports away from Russia and Iran. The Trans-Caspian and Baku-Ceyhan pipelines became the cornerstones of U.S. regional policy. Recognizing the diffusion of authority for Caspian affairs among a plethora of competing agencies, the Clinton Administration also created a new ambassadorial position in the State Department of Special Advisor to the President and the Secretary of State for Caspian Basin Energy Diplomacy. The expressed intention was to assure maximum coordination within the executive branch of U.S. policy and programs relating to Caspian oil and gas resources.

The creation of the Caspian energy coordinator in the State Department, rather than in Commerce or Energy, underlined the fact that by 1998 the geopolitics of energy development had become more important for the U.S. than other commercial considerations. The U.S. emphasis on geopolitics and on oil and gas resources in turn fed popular perceptions of a zero-sum game in Caspian energy development with the U.S. pitted against both Russia and Iran. Prior to 1998, Russia and Iran had tried to block the exploitation of Caspian resources by the other littoral states and international companies by demanding a new determination of the status of the Caspian Sea after the collapse of the USSR. In 1999, Russia and Iran went a step further, signing a cooperation memorandum on energy that could easily be extended to cover strategic issues; and in 2000, Russia appointed not one but two high-level officials with special responsibility for the Caspian.

Complicating Regional Relationships

U.S. efforts to exclude Iran and reduce Russia's role in Caspian oil development have distorted an already complex set of inter-state relationships in the region. While the U.S. has the luxury of distance and can only claim an Armenian diaspora, the ethnic borders of all the regional states are blurred, making it imprudent to ignore or antagonize neighbors. Kazakhstan, for example, has a large ethnic Russian population and its own Kazakh diaspora in China, and Russia and Armenia have close historic, political, economic, and military ties. Iran has an Armenian diaspora and a huge Azeri diaspora. Inter-state politics reflect all of these realities. Kazakhstan, for example, has pursued close relations with China and Russia, while Armenia has forged close ties with the U.S., Russia, and Iran. Azerbaijan has played a balancing act with the U.S., Iran, Russia, and Turkey. Inter-ethnic conflicts in Nagorno-Karabakh, Abkhazia, Chechnya, and Central Asia's Ferghana Valley underscore the fragility of regional relations.

U.S. domestic politics have further distorted regional geopolitics. Although there have been modifications to the prohibitions of Section 907 to permit assistance to Azerbaijan, the Clinton Administration has been hamstrung in attempting to act as an honest broker in the resolution of the Nagorno-Karabakh conflict. Since the conclusion of a cease-fire in Nagorno-Karabakh in 1994, and with the increasing involvement of U.S. oil companies in operations in Azerbaijan, the frontline of Nagorno-Karabakh has in effect shifted from the Caucasus to Washington DC. Here the representatives of the Armenian diaspora and their supporters in Congress are pitted against the Azerbaijan oil lobby, which controls petro-dollars rather than constituent votes. Instead of acting as a disinterested mediator in the conflict, the U.S. has become a player with its own set of interests.

In contrast, U.S. policy in Central Asia has not been hamstrung by domestic agendas but has instead been dominated by security issues, primarily the focus on dismantling and removing the Soviet nuclear arsenal from Kazakhstan. Because of increased congressional funding to the security agenda, the U.S. military has taken the lead with the U.S. Central Command spearheading joint exercises, language instruction, and training programs for Central Asian forces in peacekeeping and counter-terrorism. Because Central Asia is grouped with the Middle East, Iran, the Persian Gulf states, Pakistan and Afghanistan in the Central Command, policy toward the region has focused on meeting the challenges of porous borders that offer access to Russia and Europe for terrorists and drug traffickers emanating from Afghanistan.

Fears of these incursions have tempered attempts to implement other U.S. initiatives such as democracy-building under the direction of the State Department. Flawed elections and human rights abuses have been met by lukewarm reprimands from top U.S. officials rather than meaningful penalties on regional governments. In 2000, civil society development programs for Central Asia were also cut by 30% in favor of an increased budget allocation to U.S. defense initiatives. As a result of simultaneously pushing and yet compromising on the democratic principles because of the security agenda, the U.S. has earned the resentment of regional leaders. During a visit by Madeleine Albright to Central Asia in April 2000, Kazakh President Nursultan Nazarbayev publicly rebuked the U.S. Secretary of State for lecturing the government on its conduct of domestic politics.

Policy Failures

On the ground, the U.S. focus on Caspian oil politics and pipelines, and the Central Asia security agenda has been to the detriment of overall political and economic development. Oil company agreements and top-level U.S. government contacts with state governments have entrenched aging regional leaders and helped to transform governments into corrupt oligarchies that have enriched themselves with wealth generated through control of energy resources and suppressed opposition.

In lieu of a large-scale economic assistance program for the region, the pipelines linking Central Asia to the Caucasus and Turkey were intended to provide the catalyst and framework for regional economic integration and development. However, the U.S. government decision to make the construction of these lines a geopolitical imperative has had the effect of removing the commercial underpinnings of the projects. In 1999, the Clinton Administration set a series of deadlines for completing the Baku-Ceyhan pipeline by 2004, in spite of the fact that the ultimate oil volumes in the Caspian are still uncertain and 2004 is the earliest possible date at which full production levels could be reached.

In 2000-2001, international oil companies and regional governments must now secure financing for the pipelines in a period when long-term high oil prices are not guaranteed, regional conflicts persist, and Caucasus and Central Asian states face potentially violent changes of executive power as elderly leaders die. The U.S. government has made it clear that it will not subsidize construction beyond offering public sector loans and insurance. Other infrastructure development projects in the region have also failed to move ahead because of a lack of private and public sector financing.

A Seriously Flawed Policy

Ultimately, American engagement in the Caucasus and Central Asia has been seriously flawed. Since the collapse of the USSR in 1991, the U.S. has been long on rhetoric and short on capacity for reasoned, concerted action. Articles in the U.S. press on Caspian oil discoveries fostered false confidence in the regional states in the extent of U.S. interest in their development and in American willingness to ensure the region's security against hostile neighbors. This misplaced confidence prompted policy steps by regional states—including explicit official discussions in Azerbaijan and Georgia about seeking NATO membership—that merited the ire of Russia, or Iran, or both.

In isolating Iran and diminishing Russia's role in Caspian energy development, the U.S. has skewed regional integration by seizing on pipeline projects that precluded infrastructure development to the South and North as well as the East and West. In excluding Azerbaijan from U.S. government programs, it also prevented itself from promoting cooperative projects between the governments of Armenia and Azerbaijan. Current attempts at regional integration reflect the exclusionary approach of the United States. The Caucasus and Central Asia states have become involved in competing arrangements for political, economic, and military cooperation. The most pointed of these arrangements is the GUUAM organization of Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova that excludes Armenia.

Where To Go from Here?

With the end of the Clinton Administration, a new U.S. administration in January 2001 will have to deal with an increasingly complex situation. However, ten years after its first forays into the Caspian Basin, the U.S. has gained a better understanding of the larger dynamics and geopolitical significance of the region. In the last two years of the Clinton Administration, regional task forces were created and numerous high-level U.S. delegations visited the region.

A new approach to policy can build on this experience. The first task is to set clear priorities for U.S. policy and to streamline decision-making. This would involve removing the legislative barriers to regional integration, such as Section 907, and delinking security issues from energy development to enable commercial and infrastructure projects to move ahead at their own pace.

A change in the United States Iran policy, however, would have the most profound impact on regional development and integration. Shifting U.S. attitudes toward Iran and the emergence of a cautious rapprochement suggest a complete volte-face at some juncture that will negate the current policy of sanctions and isolation. Regional governments and oil companies are watching this closely—although the results would not be in everyone's favor. The reopening of Iran to U.S. commerce might increase Caspian export options, but it might also divert energy investment dollars from the Caspian to the more profitable Persian Gulf.

In the absence of major policy changes, the U.S. needs to recognize its limitations and join forces with its allies to create a coherent broad-based development policy for the regional states. While Europe is also not a unified actor in foreign policy, collective European interests overlap with those of the United States in the region. Europe has been consistent in its approach to assistance through the European Commission and has not been constrained by domestic lobbies or policy toward Iran. The Commission has engaged in concrete projects outside the oil sector—particularly in infrastructure initiatives under the umbrella of its Transport Corridor Europe-Caucasus-Asia (TRACECA) program. The U.S. would be well-served in joining these endeavors and in targeting U.S. aid to the non-oil sector at the grassroots level beyond the reach of corrupt elites.

In the meantime, the U.S. has squandered a decade of opportunity. Paraphrasing former Russian Prime Minister, Viktor Chernomyrdin's comment about attempts at Russian reform—"[the region] hoped for the best [from the U.S.], but it turned out as usual." Perhaps the most salient lesson for regional states from the past ten years of U.S. inconsistency is that they should allow their own interests to guide them rather than look to Great Powers for support. As one prominent Kazakh official remarked to me in August 1998 during a discussion of the U.S. role in Central Asia: "We don't want to replace one demagogue [Russia] with another [the U.S.]." Similarly, President Nazarbayev's criticisms of Madeleine Albright in April 2000 were a warning to the United States. In the future, the U.S. is likely to see itself played off against Russia, Iran, and others as regional governments make their own calculations based on the larger geopolitical dynamic, not on the economic, political, and security priorities of the United States.