by F. William Engdahl

December 19, 2005
GlobalResearch.ca

On December 15, the state-owned China National Petroleum Corp. (CNPC)
inaugurated an oil pipeline running from Kazakhstan to northwest
China. That pipeline will undercut the geopolitical significance of
the Washington-backed Baku-Tbilisi-Ceyhan oil pipeline which opened
this past summer amid big fanfare and support from Washington. The
geopolitical chess game for the control of the energy flows of Central
Asia and overall of Eurasia from the Atlantic to the China Sea is
sharply evident in the latest developments.

Making the Kazakh-China oil pipeline link even more politically
interesting, from the standpoint of an emerging Eurasian move towards
some form of greater energy independence from Washington, is the fact
that China is reportedly considering asking Russian companies to help
it fill the pipeline with oil, until Kazakh supply is sufficient.
Initially, half the oil pumped through the new 200,000 barrel-a-day
pipeline will come from Russia because of insufficient output from
nearby Kazakh fields, Kazakhstan's Vice Energy Minister Musabek Isayev
said Nov. 30 in Beijing.


That means closer China-Kazakh-Russia energy cooperation--the
nightmare scenario of Washington geopolitical strategists such as
Zbigniew Brzezinski or Henry Kissinger.

Simply put, Washington stands to lose major leverage over the entire
strategic Eurasian region with the latest developments. The Kazakh
developments also likely has more than a little to do with the fact
that the Washington war drums are suddenly beating more loudly against
Iran.

The new China pipeline runs 962-kilometers (598-miles) and will take
China a third of the way to Kashagan in the Caspian Sea, one of the
world's largest accessible oil reserves. Kashagan is the largest new
oil discovery in decades and exceeds the size of the North Sea. This
is a major reason Washington has such a strong interest in supporting
democratic regime change in the Central Asia region of late.

In the next 10 years, Kazakhstan plans to almost triple oil
production, prompting the landlocked nation to seek new export routes
because the country wants to avoid pipelines through Russia and
excessive Russian dependence. China is now among Kazakhstan's major
target markets.

Best public estimates are that Kazakhstan has 35 billion barrels of
discovered oil reserves, twice the amount in the North Sea, and may
hold about three times more, according to a Kazakh government report
released Nov. 18 in London. German oil engineers have privately
reported that recent drilling by Italy's AGIP, the current oil
consortium leader for Kashagan, a huge field offshore Kazakhstan
southwest of Tengiz, has confirmed enormous oil deposits there.

The Government of President Nursultan Nazarbayev plans to produce 3.6
million barrels a day of oil from all fields in Kazakhstan, onshore
and off, by 2015. For 2005, they expect to average about 1.3 million
barrels a day, making Kazakhstan far larger than Azerbaijan, and
second in oil production of the former Soviet states only to Russia.
(Source: Stratfor)


The December 15 opening of the new Kazakh-China pipeline was a major
event for Beijing. Zhang Guobao, vice chairman of the National
Development and Reform Commission, China's top economic planning
agency, attended the opening. China National Petroleum has invested
more than $2.6 billion in Kazakhstan since 1997.

Beijing takes the geopolitical prize

In October this year, Beijing scored a second major geopolitical coup
when China completed a $4.18 billion takeover of PetroKazakhstan Inc.
It was, in a sense, revenge on Washington for the blocking of the
China acquisition of Unocal. US oil majors had made major efforts to
lock up Kazakhstan oil after discovery of major oil offshore in the
Kashagan field. They failed. ExxonMobil was charged with bribery of
Kazakh officials to win presence in the Kazakh oil business, and a
senior Mobil executive was later jailed on US tax evasion in New York
tied to the Kazakh bribery payments.

Nazarbayev enjoys good relations with Russia's Putin. He was General
Secretary of the Communist Party when Kazakhstan was part of the USSR,
and is regarded as a sly fox in terms of dealing with Moscow, while
also keeping a clear distance from Moscow.

In October, Russia's Lukoil failed in its bid to buy up the Kazakh
state oil company, PetroKazakhstan, in a privatization. Nazarbayev
indicated a major geopolitical shift in strategy, compared with a
decade or more ago, when it appeared that Washington was to be the
major foreign ally of Nazarbayev. At that time Condoleezza Rice's
company, Chevron, became the lead oil contractor and operator in the
Kazakh Tengiz oil field. That was just after the breakup of the Soviet
Union and US oil presence in Kazakhstan was a major US political
priority supported by the Clinton Administration.

The Chevron Tengizchevoil consortium formed the Caspian Pipeline
Consortium (CPC) in 1993 amid great fanfare. After years of haggling
with the Kazakh government, Chevron finally constructed a pipeline
from Tengiz on the Caspian's northeastern shore to the Russian port of
Novorossiysk on the Black Sea. Following years of pressure, most
members of the CPC group, including Chevron and Oman Oil Co. decided
to not pursue future expansions of the CPC line.

Today, a decade later and with the scope of Kazakh oil deposits
dwarfing any in the region, with its recent confirmed drillings in
Kashagan field, Nazarbayev has scored a political balance of power
coup by turning now to Beijing.

In October, Nazarbayev announced that China National Petroleum
Corporation had won the bid to buy PetroKazakhstan. What will be
important to watch, now that Nazarbayev won re-election on December 4,
further extending his 14-year reign, is to what extent Washington
begins to play up 'human rights abuses' by Nazarbayev.

A fledgling 'Orange Revolution' copycat opposition has sprung up
behind opposition candidate, Zharmakhan Tuyakbai, and his party, 'For
A Just Kazakhstan.' He came in second with 6.6% and cried fraud, but
Washington and US media response was muted. US Secretary of State
Rice, in a major trip to shore up sagging US influence in Central Asia
on October 10-13, had held a private meeting with Tuyakbai. He is
clearly being groomed for possible future role.

Washington suffers strategic setback

A major setback for Washington's Eurasian encirclement strategy
vis-à-vis China and Russia came several months ago when Uzbekistan's
autocratic President, Islam Karimov, told Washington it could no
longer use the Karshi-Khanabad military air base in southeast
Uzbekistan, a major piece in Washington's Eurasian chess board play
put into place after September 11, 2001.

Since strong US protest over the Government's bloody suppression of
protests against a state trial of alleged Islamic fundamentalists in
Andijan last May, Karimov's relations to Washington have chilled and
Putin has moved skillfully to fill Uzbekistan's power vacuum.
Karimov's decision to move so aggressively was no doubt influenced by
the successful March 2005 'Tulip Revolution,' which toppled President
Askar Akayev in neighboring Kyrgystan and set the stage for the July
election of opposition and US-backed candidate, Kurmanbek Bakiev.

On July 29, Karimov announced he was evicting the US entirely from the
airbase with a January 2006 exit date. In October the US Senate, as
retaliation, voted not to pay $23 million in base user fees to
Uzbekistan for past use. Moscow and Beijing have both moved into the
vacuum. A look at the map will indicate why. Uzbekistan is strategic
for control or to prevent control by foreign powers such as
Washington, of Central Asia and pipeline routes linking Russia, China,
Kazakhstan. In October 2004, Moscow secured a long-term military base
agreement to station thousands of Russian troops in the capital,
Dushanbe, a move by Washington to limit the spread of
Washington-backed 'color revolutions' in the region.

That appeared to redraw the Eurasian geo-strategic map in Moscow's
favor with the recent US loss of Uzbekistan. Uzbekistan is now
effectively Russia's main ally in Central Asia.

Washington's position in Eurasia and its future relations with
Kazakhstan suddenly assumed high priority. Clearly, the Bush
Administration decided time was not ripe to try a full-blown Orange
Revolution, a la Ukraine, in Kazakhstan this month, at least not until
Washington's position in the region was stronger. That was a clear
purpose of the October Rice visit.

But now with the strong geopolitical turn of Nazarbayev toward playing
Beijing and China to offset potential Washington domination in the
region, the situation has begun to change dramatically. A year ago,
China attempted to buy out the 16% share in the Kashagan consortium
from British Gas which was willing to sell. That sale was blocked at
the time by US consortium member ExxonMobil, the company subsequently
charged with bribery and convicted. Now China has opened an oil flow
out of Kazakhstan to the East, not the West. (Source: Stratfor)

This has major strategic implications as well for the future of the
Washington-backed Baku-Tbilisi-Ceyhan (BTC) oil pipeline. That
pipeline, recall, was built by the Caspian Oil Consortium headed by
British Petroleum, and was backed by both Bill Clinton and George W.
Bush, in the face of strong charges that it was the most costly and
least viable oil route out of the Caspian. Zbigniew Brzezinski was the
chief Washington lobbyist advocating the BTC route to circumvent
Russia. Its construction was undertaken on the assumption that it
would carry not only Baku oil, but also a major share of Kazakh oil
from Tengiz and offshore Kashagan oil fields. Oops!...

A larger China energy strategy

The December China-Kazakh pipeline opening is one part of a massive
Chinese plan to secure as much of Kazakhstan's oil riches as possible.

The Chinese plan aims to connect several pieces of infrastructure --
some Soviet-built, some Chinese-built -- then reverse the flow of some
of them and forge a new export corridor stretching from Kazakhstan's
oil-rich Caspian basin, including Kashagan, through a series of
western- and central-Kazakh oil zones, and ultimately into China. With
completion of this major project, China will for the first time have
secured a source of imported energy not vulnerable to US aircraft
carrier battle groups, as is the case with oil deliveries from the
Persian Gulf and Sudan at present.

Before opening the new pipeline, China imported only 25,000 bpd from
Kazakhstan. Once the link between Kenkiyak and Kumkol is finished,
connecting existing infrastructure near the Caspian with the portion
inaugurated Dec. 15, the project will pump 1 million bpd. That would
be about 15 percent of China crude oil needs.

China then plans to tap into production from dozens of Kazakh sites
they have acquired during the past several years. This is oil that
currently goes west, or north through Russia.


Beijing still likes the color 'red'

Beijing has also studied the Washington-backed series of regime change
across Central Asia and the Color Revolutions from Serbia to Georgia
to Ukraine and most recently Kyrgystan, and has evidently decided to
'nip in the bud' any similar NGO efforts within China, or in areas
strategic to long-term China energy security. Kyrgystan's 'Tulip
Revolution' last July sounded alarm bells in Beijing. Possible Chinese
pipeline links to Kazakhstan, Turkmenistan, Iran and or Russia would
clearly be threatened by a ring of new pro-NATO neighbors and states
between western China and its potential oil sources.

Their alarm led to warmer ties between Uzbekistan's Karimov and
Beijing in recent months, as well as an invitation of Moscow-tied
Belarus President, Yuri Lukashenko. The Washington journal, Foreign
Policy, ran a short item in its October 2005 edition by an apparent
Chinese dissident. The article, titled, 'China's Color-Coded
Crackdown,' states:

'In China's halls of power, the fall of post-Soviet authoritarian
regimes has raised the uncomfortable specter of a Chinese popular
uprising. According to the Hong Kong-based Open magazine, a report by
Chinese President Hu Jintao, titled 'Fighting the People's War Without
Gunsmoke', is guiding the Chinese Communist Party's
'counterrevolution' offensive. The report, disseminated inside the
party, outlines a series of measures aimed at nipping a potential
Chinese 'color revolution' in the bud.'

Some Chinese apparently call it the Battle of the Two Georges-- George
Bush and George Soros.

The Foreign Policy piece continues, 'Perhaps the most telling sign of
China's concern has been its crackdown on nongovernmental
organizations (NGOs). Beijing believes that international
organizations, especially advocacy NGOs, have acted as Washington's
'black hands' behind the recent regime changes in Central Asia. A
recent issue of a biweekly journal run by the Communist Party
Propaganda Department referred to Washington's '$1 billion annual
budget for global democratization' and identified NGOs such as the
International Republican Institute, the National Endowment for
Democracy (NED), the U.S. Institute of Peace, and the Open Society
Institute as organizations that 'brainwash' local people and train
political oppositions. In late August, ahead of a visit by the U.N.
high commissioner for human rights, Chinese police raided the office
of the Empowerment and Rights Institute, a human rights group
supported by the NED.

'A new regulation offering more freedom to NGOs was initially expected
later this year. No longer. The Ministry of Civil Affairs has now
stopped processing registration applications, effectively freezing
many groups' operations. Instead, the only government offices taking
an interest in NGOs are the national security agency (China's secret
police) and public security forces. Both have launched investigations
into local NGOs. Some senior Chinese managers working for
international NGOs have been called in for "private talks" with
authorities, though no related arrests or detentions have been
reported. Some NGO offices have had plainclothes security officers
show up in an effort to clandestinely ferret out information on
foreign staff and organizations. Environmental groups have been
singled out for a massive government survey, most likely because they
have angered powerful agencies by successfully initiating public
debates on controversial issues, such as genetically modified foods
and huge dam projects, and because only around 10 percent of green
groups are currently registered with the state.

Meanwhile, Beijing has commissioned researchers from several
provincial academies of social science to study the activities of NGOs
in China. NGO publications such as directories experienced
unexpectedly strong sales in recent months, as they no doubt became
convenient study tools. Likewise, experts have been dispatched to
Central Asia to study how those color revolutions first sprung roots.
In a May 19 Politburo meeting, senior administrators from the Chinese
Academy of Social Sciences, where foreign research funds are usually
well received, were reminded of the "acute and complicated struggle in
the ideological realm in the new millennium." In other words, be
careful about the political implications of your research.

According to sources in Beijing, final decisions on the government's
approach to NGOs will be made in a November meeting of the State
Council, China's highest executive body. As long as the clouds of
color revolution are hovering over Central Asia—some, for example,
expect storms in Belarus—the Chinese government will stay on high
alert…Beijing's moves against the country's NGO community remain
largely unnoticed outside China. If the international community wants
an open and democratic China, it should pay more attention to the
survival and growth of Chinese liberal institutions. Otherwise, the
country will be destined to remain the same shade of red.'

Beijing-Teheran-Moscow

At the end of 2004, Beijing signed a $70 billion energy agreement with
Teheran, China's largest OPEC energy deal to date. Sinopec agreed to
buy 250 million tons of LNG over 30 years from Iran, as well as to
develop the giant Yadavaran field. That agreement covered the
comprehensive development by China's state Sinopec of the giant
Yadavaran gas field, construction of a related petrochemical and gas
industry including pipelines. As part of the huge Iran-China economic
cooperation agreement, China's state-run military construction
company, NORINCO, will expand the Teheran Metro underground.

A second phase in the Iran-China strategic energy cooperation involves
constructing a pipeline in Iran to take oil some 386 kilometers to the
Caspian Sea, there to link up with the planned pipeline from China
into Kazakhstan. Indeed, the

At that time, Iran's Petroleum Minister announced that Teheran would
like to see China replace Japan as Iran's largest oil importer. As
well, Iran has what are estimated to be the world's second largest
reserves of natural gas after Russia. It is a place of enormous
strategic importance to China, to Japan, to Russia, to the European
Union, and for all these reasons, to Washington as well.

Iran supplies 14% of China's oil. Along with Russia, China has been
involved since the late 1990's in supplying nuclear technology to
Teheran. In 1997 Beijing under Washington pressure nominally agreed to
stop shipments, but the flows are believed continuing as the Iran
relation is strategic and critical to China energy security. China, a
veto member of the UN Security Council has repeatedly called for the
issue of Iranian nuclear development to be dealt with by the
International Atomic Energy Agency, whose chief, Nobel Peace Prize
awardee, Mohamed ElBaradei, has earned the enmity of Washington war
hawks for his open declarations of lack of evidence in both Iraq and
now Iran of atomic bomb capability.

Given the nature of the Bush Administration's rush to war in Iraq in
2003, where China had a major stake in oil development, and the
subsequent US blocking of other Chinese attempts at securing energy
independence including Unocal, it is not surprising that Beijing is
taking extraordinary measures to secure its long-term oil and gas
supply.

Energy is the Achilles Heel of China's economic growth. Beijing knows
that only too well. So does Washington. A decision to take military
action against Iran would pull a far larger cast of actors into the
fray than Iraq.

Global research Contributing Editor F. William Engdahl is author of
the book, 'A Century of War: Anglo-American Oil Geopolitics and the
New World Order, Pluto Press Ltd. And can be contacted via his
website, www.engdahl.oilgeopolitics.net

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