Iran: Caspian oil soothes troubled waters for West

Iran's gradual reopening to the world comes at a time when Tehran is increasingly on the minds of Western policymakers.

Iran is assuming an increasingly central role in the Caspian region, and given its huge energy resources, that has big implications for America, Europe and Russia. New oil and gas links between the Caspian nations and Iran are beginning to take shape, despite United States opposition.

Neighbouring Turkmenistan recently opened a modest but important pipeline for transporting gas from the Turkmen Korpedzhe field to the Iranian town of Kord Kuy. This signals a big shift in regional politics.

For the first time Moscow's former Central Asian colonies are bypassing Russia when exporting energy products, while America turns a blind eye. Washington has decided that an agreement to transport gas via Iran to Turkey does not violate a 1996 sanctions act, and it has become clear that the Caspian nations with their unlimited resources are not going to abandon the Iranian option.

Given the ethnic conflicts and complicated regional politics which dominate the Caspian region, Iran has naturally emerged as the most reliable country for pumping out the area's vast oil and gas resources.

One consequence of Iran's active role in the region will be the Central Asian republics' ability to pursue policies independent of Russia. At present Transneft and Gazprom, Russia's oil pipeline monopoly and gas monopoly respectively, have almost total control of the transportation of resources from the region.

It is impossible for the Central Asian republics to make serious profits as long as they are effectively dominated by Russia. Since last March, Turkmenistan has refused to transport gas to Russia, Ukraine and some other former Soviet republics because of a dispute over gas prices, accumulated debt and transit fees.

The three proposed routes for transportation of Caspian oil backed by the West all avoid Iran. But they are by no means trouble free. All three pass through complicated Caucasian geography and territory which is dogged by ethnic disputes.

Of biggest concern to oil executives is, however, the danger of sabotage. For although the region is relatively quiet at the moment, the countries' fragile democracies mean they cannot make any firm promises.

The US had hoped that, following the collapse of the Soviet Union, Nato ally Turkey would play a major role in the Turkic countries of Central Asia. At the same time, Turkey dreamt of stretching a Turkic belt from the Adriatic to the Great Wall of China. However, both plans failed.

In contrast, Iran has played a steady game of pragmatic diplomacy: it has dropped its emphasis on Islamic fundamentalism and opted for more traditional Iranian foreign and trade policy; throughout the conflict between Shia Muslim Azeris and Christian Armenians Iran has maintained a strong relationship with Armenia and is smoothing its relationship with Azerbaijan by signing a trade and economic cooperation agreement; and it has adopted a neutral position between Islamist guerrillas and ex-communist rulers in Persian- speaking Tajikistan.

It has also signed agreements of mutual cooperation in economic, trade and other areas with most of the republics of Central Asia and the Caucasus.